Your stores were often defined as dirty.
No, no, my stores were never dirty. It was not dirty. Dirty is the wrong word. Probably a right word. I think Big Bazaar was an idea that India should have a market, air conditioned and with facilities. People come in cars, buy goods and go. India lives in its past too much. We should live in the past only to learn something. Hmm. I believe that without destruction there is no creation. OK. And destruction of old thoughts because no thoughts are permanent. I think I wrote something to myself: don't get attached to what you create. I have layered my thoughts into three things: first is strategy, second is design – how do you organize yourself and design yourself to – and third is execution. OK. Once I was talking to Neil, he had a thought that a startup city should be built. Acha. Good idea. Let's do it in Goa.
Tiger is still alive. If today's book of the human library had a cover, that would be the title of it. The man we have with us this afternoon here on the podcast of the human library is someone who actually personifies resilience. You don't lose everything when you lose your wealth. You can make a comeback, bounce back. And the calm on his face even after what has happened to him is, I think, inspirational for all of us. Many, many, and most wouldn't have it. Mr. Kishore Biyani of the Future Group has a bright future again and we have with him this afternoon on our podcast. Welcome Kishore ji.
Kishore ji, I want to take you to a traditional Marwari home, a joint family, a well-to-do family. Of course. I want to understand that home, to see that home through your eyes, the smell of that home, what used to happen inside? What was the rhythm of your life? How did you all live together? I don't know that you used a word 'affluent family' – never that. Highly affluent.
We were 13 children. Ji. Parents, father, six brothers. All lived together. So never got a room of my own. Six-six, seven-seven children slept together. So today's times are a bit different. But I think that is one of the best things in a sense – living in a joint family is the biggest learning you can have because you are dealing with so many human beings, so many personality types. Hmm. So many human behaviors you can observe. So childhood memories are very interesting. We lived on Malabar Hill, Pensi Road. There was a big building. Lots of people. And when we were 13 children, if someone slept outside, no one would know. So parenting was a different type at that time. Ji. I think in parenting, no one ever asked how many marks you got or what grades you got. So I think life turned out well. Daily playing, jumping, climbing trees, I think cricket, langori, anything you can think of that was done in those times – I would say marbles. So sporty, outdoor. The friends were from the building itself, any fights in the building, and I think my introspection would be that human relationship is what I understood living in a joint family. A typical Marwari home. We used to eat on the floor. Eat on the floor, all together. Dining table came later. OK. I have seen the advent of a sofa in a house. Yes. Dining table in a house. So it was an interesting journey.
That joint family at that time, when you lived together, you were talking about games you played together. Any incident that comes to mind? Any interesting incident from that time? I think house politics (laughs).
House politics used to happen in the kitchen. So I think at that time, my mother, there were six of them. Hmm. And I think there was a system that every week or every month, someone would manage the kitchen. I don't remember the system, but there was some system. There was also a ritual for turning on the lights in the evening. Pujas, very religious family. Hmm. So a lot of memories around religion, also a lot of rituals.
Do those rituals carry on even now with you, Kishore?
I was not a ritualistic person. Hmm. And a temple-going person as such. OK OK but I believe you are a spiritual person. No no no, I was not religious. I was a rebel in a way, but I never believed in... I am saying, I will, I will, I would be an atheist in a strong word, but I have been agnostic, I would say.
OK OK, but you would delve into things quite in depth, understanding.
I think logical. I think maybe my questioning ability at that time came from the system I saw in the family. Why are people religious? Why are they doing puja? Why is this ritual? I think that probably, if I look back, that shaped me: why people do what they do. Why people do what they do, and this and that continues today also. Also, and that was the reason. Maybe that was a reason.
We will continue later on this part. Tell me, where did you have your schooling?
Schooling was at a building I lived in, Jeevan Vihar, on Manav Mandir Road. I would say I was born and moved there. Hmm. So that building is nearly 64 years old now. Hmm. Next to it, walking distance, there was a school, two-three minutes, Manav Mandir School. Hmm. So life was around that street. That was only Mumbai for me. In front, there were two shops, sometimes Pepsi Cola or something, some shops, some hawkers, what do you call them, sitting outside the school. So I think life was around. Then some friends from school are still friends. In school, I don't remember anyone. No one at all. No one at all. Did you do 10th there? 10th also from there. Still, a name or two are remembered. But I don't have any friends, any memories, and I would have maybe in life one or two people might have crossed paths. But virtually no memories of school. After that, any picnics with family or outings? I remember one movie I went with the family to see: 'Hathi Mere Sathi', that's Rajesh Khanna. Some Minerva Theatre and something, but not many memories of childhood. Maybe we used to go drink Sukhsagar juice. So I think one Minerva Theatre is remembered, one Sukhsagar juice is remembered. And that's it.
Then after that, HR College. College, that is where life started. Yes, tell me about college.
I think in college, from the first day, standing in line to fill forms, friends started from there. Hmm. And in college, exposure came for the first time, stepped out. I think whenever movies released, we would watch them all, and started going to restaurants. So I think that's why life began in a way, the outward life, as they say. OK. But I think during the school days, I remember being a member of the library, going to the library every day, getting books, reading comics. The habit of reading was picked up during college. I was an avid comic reader, I must have read every character. And I had a passion for reading books.
Yes yes. So learning started from there. Kishore Biyani ji, what kind of student were you? Would you classify as excellent?
I never studied much. I would say I was a reasonably okay student. OK. Never failed. Never studied much either. Never came in the top five. OK. But also never came in the last 15. Meaning, from the middle, like a little above average. Little above average. There is a story that your father showed your horoscope and it was said that you will always have wealthy people around you. No, they said, I think in the horoscope it was that those around me would become very prosperous. Yes, that's why I am sitting here. So I think it has been to some extent, when I look back, it might not have been a bad prediction. Yes yes, but did I also say that you will never have a lot of wealth? That they didn't tell me. They didn't tell me. And what was your relationship with your father like?
I think in India, father-son is always a challenging relationship. Yes. But that's natural. I think father has expectations, son has to do something to understand the next generation. I think in India, when you see Amitabh Bachchan's films, it was all about father-son relationship. Hmm hmm. And father-son relationship in India is a celebrated thing, not in a positive way. OK. So. And I was no exception. But you probably don't have the same problem with your two daughters? I think in the relationship of parent and child, it's a very interesting relationship. Hmm. I think this generation tries to understand the next generation far, far better. Hmm. They understand their point of view and there is space for everybody. So in our home, the relationship is a very democratic house now. Hmm hmm. And the power they have over me is far greater than what power I had over my parents in that sense.
Ji, and also in business, your style was different. His way of running Basi Silk Mills was different. So you wanted to do something different. What was it?
I think my parents' business was different. I think it was very traditional. Lots of people in the business. I got fascinated by advertising. Oh OK. Very early in life. My first influence of the outside world was through marketing, advertising, I would say more. And I felt the desire to learn why advertising is done, how it is done, how do you shoot, what do you do? Yes yes. So from there, I would watch every ad, try to understand them. OK. So you organized disco dandiya in your college, made films, sold stone wash fabric. Did you always know you were a different kind of personality than the rest of the mass, a contrarian in a way? No, very late realization. Acha. I think it took a lot of time. I never felt that I am more different than others. That feeling never came. Earlier, now you have a very clear distinct idea. I don't know, it's a journey of life. So maybe I have handled more events in my life than a lot of people. So. Hmm hmm. I think it's about how much you handle in life, how much experience you have, how many people you met, how many things you did. Maybe in that sense, maybe more.
OK, and when did you earn your first own money in life?
I think when I started, there was someone living in our building. Hmm. So I got an order to send medicine to Oman or Muscat somewhere, for some doctor who was a family of ours who was shifting there. So I think I made my first money in that. I started a side business. Making money didn't seem so difficult. OK OK. I had a lot of ideas. Yes yes. I had tremendous ideas. Since childhood, I felt I have many ideas. We can do a lot. So I sent medicine, maybe that was the first money I made. How much money was it and what was the feeling? I don't remember as much. Yes yes. But. But then I started making some fabric. Hmm. It succeeded. It became quite popular, my first fabric. Stone wash? No, before stone wash, I made a fabric from waste yarn. Acha. Acha. That ran very well. It ran for many years. That was very unique and original to me. So that was a fabric you had invented in? Or? OK. So that is quite popular. Stone moss came after that. Then jeans denim came. So in the journey, I never did one thing. I just kept doing many things together. Doing them.
Your stores were often defined as dirty. Was it because of the like, once Target tried to copy Walmart? No no, my store was never dirty. That's what is said. No, it was not dirty, it was a little disorganized. Yes, by design, disorganized, not dirty. Dirty is the wrong word. Chaotic is probably the right word. Yes. It was chaotic because in India there is a culture of hustle and bustle. If you make it too straight and clean, people won't come. As we used to say, 'butt and brush' – if you don't bump into someone, what's the fun in the store? Where did this insight come from? Through this building, in India there were always fairs, everything was set up. So in India, 100% order doesn't work. Hmm hmm. A completely clean look doesn't work. If you look at design architecture in India, there are carvings and such things a lot. Straight lines have become Scandinavian design. So you consciously, by design, created such slightly chaotic layouts? Or? Or it was through design. Hmm. And you had this Indian insight that here they don't want straight things. To some extent, it's subconscious mind. When you look back now, you'll think there was some thinking, but subconsciously you accept something which you understand, which is natively accepted by Indians.
OK, you famously said that thought leadership was about building scenarios and making them happen at one point in time. You believed that our mental sequences work. Syntax becomes a mental thing. So if you look back and look inside, what are the mental sequences that were working in your mind?
I think this is what every other retailer in India missed when you... Mental syntax is what thoughts come first and how do you layer your thoughts. Hmm. So after so many years, I have layered my thoughts into three things. First is strategy. Hmm. Second is design. How do you organize yourself and design yourself to? And third is execution. OK? So strategy: when you are building something in creation, you should not frame up too early. So I don't believe in framing answers so early. Let it flow. Hmm. Let as many thoughts come, let them come, then organize them and get into framing a thought. Then finally it gets framed. Then you design it: how to organize it for execution. You start thinking of design thinking, organization, using the idea to use the right and left side of brain both together in creation. I think this is after going so far that we are looking back to see how we did it. Maybe this principle probably holds true now also.
So if you take the example of Big Bazaar, did this play out in Big Bazaar then?
I think Big Bazaar was an idea that India should have a market, air conditioned and with facilities. Hmm. People come in cars, buy goods and go. Hmm hmm. So that idea was there. I had seen a Century Bazaar in my childhood. Hmm hmm. So those memories were very strong. And I had not seen any foreign store until I built Big Bazaar. So the idea was: in a big hall, how does one organize so that everything is available? Acha. And at such prices that people get surprised. OK OK. So that was an idea, and it was an Indian idea that there should be a chemist shop, clothes should be available, groceries, vegetables, all household items, utensils. Create a store where everything is available. OK. So that was the idea.
And you launched the first store in 2007 in Kolkata?
Big Bazaar was launched something in 2007, in Kolkata, two-three, I think. OK in Kolkata but the first... No, we started three stores together because if we don't buy more goods together, we won't be able to reduce prices. Hmm. So I think in 22 days we opened three stores. Three stores, but one was Kolkata, one was Hyderabad, and the third one was Borivali. OK. So the first research says Hyderabad and Borivali in span of 22 days. 22 days. Why did you choose Kolkata? Because a lot of people get surprised by the... I started trousers from Kolkata at 97 rupees. OK. And I had started understanding Kolkata's rituals, what the people are like, what the behavior is, what appeals to them. Hmm. And Kolkata had a thing: it is an urban market. There are a lot of people in a nirvana state. Acha. And Kolkata believes in itself. Yes. And I used to like it a lot. OK. Personally. So I thought Calcutta is a very ripe market. Bombay was probably, we thought we will learn something from here and then do Bombay. OK OK. I think our fourth store was in Bombay.
OK OK. Now, my first memory of you is when the Nagpur store was being opened. You were everyone running around doing this or that after the inauguration. You were standing in one corner observing people. Nothing but people going which shelves etc. I was watching you and I didn't know you then. So I could come up and speak to you. And you are observing things. Now what is it that? And you are known as a highly highly observant – if I respect someone for understanding consumer behavior, I have said it often enough. It's you because you have not learned it from books etc. You have learned more from direct experience and your penetration of what is happening is far different perspective etc. So what does Kishore Biyani make mental notes of while seeing people move around? Give me some examples, live examples, what did you notice things that others probably miss, and then how did you implement them?
I think what you get to see in a retail store is hardly seen anywhere. At the cash counter, you see a lot of things. Like many things. Hmm. I think first is, first is the people entering the store: what clothes are they wearing, what is the group size? Yes. Do they go left or right, and what excitement do they get from the first thing? OK. So in the early days, that was the main: how is their movement? Hmm hmm. We used to track how they are circulating in the store. Hmm. What thing is getting them interested, and finally at the cash counter, what did they buy? Hmm. And what I had thought the family would buy when they entered. OK. And what exactly they bought. So your assumptions were built then, and what they bought tells you whether you are right or wrong. OK. So gradually, I think it becomes a predictive engine in your mind, and you can predict to a large extent quite well. Because at that time, data was perhaps not as available as it is today. Even today, the data from personal observation is difficult to convey with technology, but technology can also give you a lot of patterns. Correct. We were reading patterns: we would see what community people might be, what family size, if there is a child, what will they buy, what is their ticket size? Any such thing you remember observing that you changed in the store and had a direct impact? Immediately, that happened every minute. Acha. Any major change like that? Many many things: how to place goods, where to place them, what to place at eye level, what to sell today, what sale to run, whose throughput to increase – all these change every minute. So there is no particular, I would say, whenever I went to the store, everyone knew that today something big is going to change. OK. So change was part of learning. Yes yes. Hmm.
So despite having 600 million consumer touch points at one point in time in your peak through the year, you famously reluctant at that point to trust data, you trusted your gut instinct. And at some point you said, 'Data is the only secular truth.' What moment changed you?
No, data is always a secular truth because data has no emotions. Yes. When a human sees and rates patterns, their biases and emotions come in. Yes yes. Data has no emotions. And data... Actually, I met someone very interesting. Yes. I met someone from a firm called 3G Capital. OK. I engaged with them. So this was a firm from Brazil. OK. A private equity firm which was known to be a very ruthless firm in terms of understanding consumer businesses. And their founder once I met told me that they only work on data, just because data has no emotions. I loved that word: 'data has no emotions.' We used data in a different way. Hmm. We used it to validate our assumptions. They did everything from data alone. So that is a difference. Which ultimately proved better. I think you need both. OK. So what they were doing was also not 100% correct. You cannot create from that something. Hmm hmm. You can create operating efficiency from that. You can optimize from that data. Hmm. But you cannot build something from that data. For creation, you need your own gut, your own instinct, and then you have to validate in the real world.
So tomorrow is Big Bazaar's inauguration. In your first big store, your first baby, you've gone and done something which is never ever attempted in this country of ours. You were in a way on your path to becoming the Sam Walton of India, which is how you've been described also. So night before that, what was going through your mind?
I think at night, shelves are being set up, goods are being arranged, everything is happening – how to open the store the next day. Yes. We were never scared. I don't know, fear never came. No, not fear, but some thought. Even today, if someone asks what is the fear in retail business? The fear that the store will open and there will be no customers – that fear was not there. We always believed everything will be good. Hmm. And when the first store opened, there was never any stress that it wouldn't work. Not at all. And I think the first day of any store opening has always surprised us on the positive side. OK OK. And even the first store, every store, every business hours. So that never happened because you are creating something, and the first day first show is a variant. It's not like a movie where the first day first show decides everything. Here, there is a chance to correct also. OK, yes yes, there is a lot of chance to correct. And retail is all about learning while doing. Also at that time, there was no reference point, so learning while doing was quite a lot. Had you been abroad before this? Till the time of Big Bazaar, I had not seen a Walmart. I had only seen Marks & Spencer. OK OK. So I had not been to USA till then.
OK, you also once said, 'We believe in destroying what we have created. Most entrepreneurs are terrified of cannibalism, of killing their own cash cows.' What gave you the courage of madness to operate that way?
I don't know somehow, it is, I think it's a misinterpreted thought. Yes, yes. I believe that without destruction there is no creation. OK. And destruction of old thoughts. Hmm hmm. Because no thoughts are permanent. Because consumers learn. After that, every step, the world looks different. So, you cannot have the same formula to win on whatever you do. That is what I mean by destruction. Destruction of all thoughts. OK? And by destruction, you cannot have a permanent thought that this is an eternal truth. Eternal truth? Consumer is telling you something every day. If a consumer used soap yesterday, then they want to move to body wash, then they want to move to gel. The consumer will keep on evolving. And you cannot say that I will do the same work. I think we are servants for the consumer in a way. And we have to keep listening to him. Whatever he says, we have to do. So you will have to destroy your thoughts. OK, maybe that's why Brahma, Vishnu, Mahesh come in. Yes, but this is the internal truth. Yes yes, hmm.
So you made two films: 'Na Tum Jaano Na Hum' 2002 and 'Chura Liya Hai' 2003. Both lost money. How did you get into the movie business number one, and what did these failures teach you which probably success could not have?
I think my first film was made around the fact that there was a particular issue we used to face. Hmm. That people were not wanting to join private retailers at that time. Sales staff. Acha. So sales staff were not available. Acha. And quality sales staff, those who looked good, they would go to hotels, airlines, or retail was the last level of job. We thought we should make this glamorous and interesting – the retail business. OK? So when we cinema, everybody has grown up on cinema in this country. So our desire was to make a movie where the hero has to be a work person working in the store. So that's how the idea started. OK? So we thought it will glamorize the role of sales staff. So the idea came from there that once we are able to do that, our brand also gets built, Pantaloons. Yes. And we will be able to get good staff. What a thing? When people were not even talking about product placement in films. That era hadn't come. You made a whole film – and the film was totally shot in the store, in your store. Pantaloons? OK. But incidentally, the story happened that we started with Hrithik Roshan's film, we signed Hrithik Roshan when 'Kaho Naa... Pyaar Hai' was not released. OK. And 'Kaho Naa... Pyaar Hai' got released, he became a big star. And then he could not, we could not depict him as a sales staff. Then what happened to the film? He became a photographer in our film. Acha, the script was changed. The script was changed. OK. So that's where the shift happened. But the original idea was to be a sales staff. And the second one then, after one failed, the second one? That was because a film company had been formed, so we made another film. So in one year, two films were made. The second film had no logic. We did lose money, much as such, but we did make money? And the films were not box office hits. Yes. But they broke even? I don't know whether they broke even or not, but we did make money.
But what are you learning from film? Film?
I cinema when the first film got released. We were a little bit attached to that film in a way because your first creation.
And I was very fond of music. So after that, I think I wrote something to myself: Don't get attached to what you create. Oh. Because you will get attached and you will start liking everything. And the consumer's business is such that the consumer tells you in one minute whether you are good or bad. What cinema taught me, maybe if I hadn't made it, I would never have learned.
Repeat once again. You don't get attached to what you create because when you create something, you will like your children, right? You see their mistakes less. When you are creating something, you get attached. And everything around it seems good. That film taught me: don't get attached. [laughter]
So in filmmaking, your interest but the conversation we were having that even today you are a keen observer of films.
No, I think I am an observer of society, and society cinema reflects society. Hmm hmm. And we build all our businesses around societal insights and societal shifts.
If you want to understand society, you also have to understand cinema. Any cinema which becomes popular is a reflection of society. And you will find something in it about what shifts have come in society.
And you will find something in it that society has shifted.
Even now you are associated with cinema in a different way.
I think cinema is a subject which fascinates. Any storytelling fascinates me.
Hmm and cinema is one of the better forms of storytelling.
You in my opinion were an irrepressible brand builder. I don't think you will remember the number of brands you actually created. Total once it was 120. 120 brands means most multinationals also will not be probably able to match up to it. I want to understand Kishore Biyani ji's method of brand building. You didn't do an MBA, you didn't go into any theory. You have seen the world. You have your own perception of how things get done. What was your framework, if we can call it that, and the method that you look at now: we need for this particular brand and how do you go about it step by step? So there are young audiences who can learn from it.
I think I believe that brand is a variant because brand is a name with some meaning. Right? And that meaning is variant to connect with a consumer. So any brand you have to build some emotion into the brand, something which it stands for, something which conveys something, something which invokes attention and somebody feels good about it. So brand creation is a very, I think the most fascinating subject as a marketer which I thought I was interested in.
So in the beginning, I think when I started business, my first brand was Pantaloons, which was a trouser brand. Hmm. It became a store brand. Then I made a Bare denim brand which became quite popular. Then I made a John Miller shirt brand, that also became quite popular. So I kept making brands like that.
Now like [clears throat] you thought, for example, a shirt brand is needed. Why needed? What need does it address? Please explain a little from there.
I don't start with a need. I have a personal principle that most of the people are told that there is a problem, solve it, make something for that. Yes yes. I think when you look at life philosophy, there is no such problem. OK. So now trousers: I started my first journey by making trousers. At that time, ready-made trousers were not there, and everyone has to wear something. So such a need. But then how do you build that emotion? So I think the first brand I built, Pantaloons, its baseline was 'Never Ending Collection of Trousers.' OK. And I think you became quite popular.
OK. And I think you became quite popular. That baseline tagline you yourself didn't give.
I don't remember, but we were doing this work daily. Kept brainstorming, yes, daily something or other kept doing. So similarly, Bare Bare became a very very big brand. Bare was kind of a rebel denim brand. OK. First we started with Bare Necessities as a brand and it became quite quite popular. Yes yes. John Miller brand broke records, inspired by America. That was a positioning then.
Yes, so now how did you think this? For example, in India there is a craze for foreign, and we were not a foreign brand. John Miller [laughter] shirt in consumers. [clears throat]
We never said this is from America. And the shirt was inspired by America. Its packaging was different. We made it quite interesting.
Did you ever think in those terms that today we talk about, you know, like every brand has a personality and...
We used to think absolutely that. Yes yes.
So how did you all think?
I think around us, people from the circle of influence, communication, advertising, were quite good with us. I would have worked with everybody. I think John Miller was made by a very interesting person called Abhinav Dhar, Ajit Hon? Yes yes. He made that brand. Bare and Pal were built around concept that time. OK. Then we had. I think I would have worked with Piyush Pandey, Prasoon Joshi, Balki, Sonal Dabral, the biggest. Everyone has worked together.
So you were like a sponge absorbing a lot of...
No, it was interesting, I enjoyed the subject, so people keep connecting. Hmm hmm hmm. And I remember Aishwarya Rai's first commercial might be one of the brands we built, Knight Hood shirts that time. Oh. Everybody was part of our fashion shows which we used to do. Hmm. So every name: Arjun Rampal did a campaign with me, Mahar Jasia did a campaign with me, Villin Soman at that time did a campaign with me. I think you name the person, Anupama Verma, any name. I think we would have worked. And.
Because ultimately when we are speaking about [laughter] Kishore Biyani ji and Big B, we have to come to that incident when things started going slightly wrong. I want to hear in your words how did that whole thing pan out.
I think before COVID hit, we had a crazy imagination of something. Correct. Which is that we want to own 1 crore customers in India and we want to sell them ₹1 lakh each. For that we need to build a membership program, collect data and use predictive science, hmm, to build a business model. We were in insurance that time, we had an NBFC. Hmm. We started acquiring stores, small stores, and we acquired a lot of businesses: HyperCity, EGD, Nilgiris. Hmm hmm. I would say Heritage Fresh, all the small shops, Sangam Food World. Correct. We acquired 11 businesses. And the whole idea was to build membership stores and then we created a data engine. We partnered with a very big US data science firm. Hmm hmm. And we started collecting data and we created a format called Future Pay. OK. Future Pay was our wallet. Hmm. To make people give them credit, use them, use data. This program we invested a significant amount of money in the acquisition and this data part. Hmm. And this data was very very strong. Hmm hmm. And imagine having data of 8 crore people. And [clears throat] membership started making, we had some 1500-1600 small shops became. Hmm. And COVID hits. Yes. And that [clears throat] data, once the stores were closed for six months, that data had no meaning. Hmm. 65% of our stores which were last stores were in malls. Hmm. They were the last to open up. Hmm. And we had committed a lot into these mall stores and so we became overleveraged.
Overleveraged was kind of an understatement.
It was not an understatement because retail had its own challenges. In retail, FDI was not allowed here. Hmm. Yes. So there was a different challenge. Above 24% FDI couldn't come in, so we had our own restrictions of growth. Hmm hmm. And our balance sheet was not as strong as it should have been. Hmm hmm. And that COVID hit us and we thought we will have to sell a business. And because during COVID everything was closed, we were not able to sell a part of our business. Had we sold a part of our business? We would have because we had many businesses. Hmm. We had planned that worst case scenario would be, so many businesses we had: Future Consumer, Future Lifestyle, Future, many businesses were there. Hmm. And we were not able to get a buyer during COVID to sell one of the businesses because during COVID who would buy you? Hmm hmm. And that's where things went wrong. Hmm. And earlier once something like this, not exactly like this, had happened. There was no COVID moment but there was a Lehman moment that time. We sold Pantaloons or to deleverage. Hmm. And that time sold Future Capital Holding, so there were enough businesses with us. Hmm. COVID hit badly that we were not able to. Then we finally got somebody to buy but they wanted the whole. Hmm hmm. And we were OK with that also.
Yes, but the value was...
But value was also not a challenge because we were repaying everyone. Yes yes. And I think we were not, I think we were retaining some piece of business for the Future Consumer and the supply business. And the transaction was done where every rupee of liability was getting paid to the lenders and to the creditors and everybody, and we were happy with that addition. Hmm. And then the Amazon issue came about and they objected to it, they got some order from Singapore. Finally we have settled with them also, but but that upset the whole deal. Then the whole saga of Reliance happened. It was a everything went tragic, or I can, I would say, to see and create. So it was a real business failure in a way that what we wanted did not happen. And everything got destroyed in the process. And everyone lost money.
Where were you at that point in time when it sank into you that all that had been built, the game is almost over now? Where were you? Who were you with? Who were you confiding in? Who was supporting you? What was happening going on in your mind?
I think that was the... I remember one day in February where I got a call from somebody that we have to speak in the evening. I am not naming anybody. No. And before that we started getting calls. OK. K. They are taking over. Hmm. The stores, some warehouses. Hmm hmm. And it started sinking in that this is something is happening which is very incorrect and unethical in a way. I don't know about unethical, I don't use that word, but to recover from here will be very challenging. We called a board meeting in the night. Hmm hmm. Spoke, it was a difficult time. At that time it was also COVID time. And COVID was just, meaning everything was going wrong. Hmm hmm. And we didn't know what to do because there were 55,000 employees. What will happen, what will not, so the idea [clears throat] was now how do you salvage every situation. So lot of things I can't say, but those six months were, I would say, the most difficult period of one's life.
You have known to attract the best people around you, whether it's Mr. Santosh Desai, whom I respect a lot, and others of that caliber. You know how you were able to really, and you got some very good talent from other large corporates also who wanted to work with you. And you are able to because it is often said that if you don't have the capability to take this kind of people with you, you are not able to utilize their knowledge also. Lots of there have been failures where the best of the CEOs from HLL were taken by some people and the businesses collapsed also. How are you able to attract these people, the best of the best, and ensure that work is a team with you?
I think people, what we realize, that people need. We created a framework on this also which has become quite a popular framework. Every human being needs LSD: Lakshmi, Saraswati and Durga in equal measure. If you give more of any, then there is a challenge. If you give too much Durga (power), then there is a problem. If you give too much Saraswati (knowledge), it gives trouble, then they think very differently. And if you give too much Lakshmi (wealth), there is also trouble. So how do you balance this out? And in our organization, the intellectual growth was crazy.
I know, that's why I ask this.
And Lakshmi in the sense we were setting the standards and people get excited to work in a growth company. And we compounded at some crazy rates for many many years. Right. I would say from the beginning till the end, we must have compounded at something which is unheard of. So I think people love growth and people love the environment which we had. We had a very interesting environment of working. When we meet people, people miss Future Group. And I think the environment which we built, the born army which we had, hmm, the whole excitement of building something every day, serving the consumer, and every day everyone enjoyed coming to office. We all looked forward to going to office today, will sit and talk. Hmm. Which normally doesn't happen, people go to office out of compulsion. Yes, here everyone used to look forward to coming to office that every day something or the other would happen, action. Yes.
How frequently did you go to your stores when you were also operating from office?
I think every week, some store or the other, or we used to travel three days a week. OK. Hmm. If...
Kishore Biyani ji of today, set with the Kishore Biyani ji who was then at the peak of his store, highest number. OK. What advice would this Kishore ji give to that Kishore ji?
I think it's all about what I look back and reflect back that what could I have, what could have been different. Hmm. Is I would say optimization. OK. This new generation engineers, they have some skills which probably I didn't have at that time, was optimizing. Hmm hmm. Because we had big, now 26-27% margin model, unheard of. Hmm. We had some crazy productivity per square foot, productivity was fantastic, margin model was so good. Now to extract juice from it, a team is needed to full time extract juice. I think we were very much in growth. Kept doing. Optimization needs different skill set. Probably I didn't have that skill set as much as what I should have had. And maybe people used to ape me rather than we got in. We knew that I am not the best optimizer. We had people who could optimize much better in the organization. But then people look at the leader more than anybody else and they try to ape the leader in every organization. So here we had more passion for creation. Of optimization, if I would have been a great believer of optimizing, hmm, I think the organization would have been different. Totally different. Hmm.
So the businesses of success today. The D-Marts of the world. D'To's and Blinkits, when you look at them today? How do you see them, their success etc.
D-Mart is a fascinating business, 19% gross margin, 10% cost of operations. Imagine they run a business at 10% cost. Our HO cost itself was 4%.
Is that because they own the properties also? That is irrespective of that.
So they. I think Zepto, if you meet Aadit Palicha, he is the greatest optimizer in our time right now. I don't understand his model which is separate. He. Blinkit very good optimizer. I think data helps you to optimize now. So these new are all data driven businesses.
Yeah, these new set of enterprises which come from the technology side.
They are the engineers. They are more from the engineering background.
Technology or or or.
Coming to quick commerce now, there have been many rumors. Should not say. But many believe that the mom and pop stores and even some larger ones are threatened because of quick commerce, and we will get so used to quick commerce, probably will not go to a small store. How do you see it panning out? Your vision?
I think quick commerce also has a role to play. If you look at the history, we came in with modern retail, we were not able to break the kiranas and nothing happened to them. In fact they would have prospered only. We created new demand. We created new categories. We created new SKUs. We started selling larger pack sizes. Hmm. Then e-commerce came. Hmm. E-commerce was able to sell long tails. Hmm. And lot of items. Hmm. There search was done differently. Hmm. After that now quick commerce has come. So I would say there is a place for everyone. And I believe everyone has a role to play. Quick commerce has its own needs. Hmm. E-commerce does have its own need. So I would say quick commerce cannot have 100,000 SKUs and 200,000 SKUs. True, a large store modern store cannot have more than 20,000 SKUs. Hmm. E-commerce can have more, so everyone has a role to play. So in quick commerce, ticket size is still very poor. I think if I know Blinkit, it must be the highest, it is not above 700. Zepto still low. So our ticket size in those days was also ₹1400-1500. Hmm. I think D-Mart must be at around ₹2000 and something ticket size. So ticket size makes a lot of difference to the transaction cost.
What is the relationship between ticket size and frequency?
And frequency is also important.
Because if I am ordering three times a day on Blinkit, but then the cost of order goes up. Operations. Hmm hmm. So in e-commerce they have their challenges because you place one order, it comes from two or three places sometimes. So it's all about cost of delivery. Hmm hmm hmm. So every business has its own nuances.
But you believe that in India, in a country like India, they will co-exist. All these models, the mom and pop store will not get? It will get reinvented in a certain way. But it will all co-exist. How do you see, how can you see reinvention?
I think people, lot of people would like to buy their groceries very differently. So the large packs. Secondly, you imagine that the cost of doing a quick commerce, the best operator won't be able to do it less than 22-23%. And you can't sell oil, ghee, flour and groceries at that cost. So, everything has limitations. So that's why I believe that every format will survive. But you can, you will love to buy an ice cream out of quick commerce. You will love to buy a chocolate in the last minute. So there are lot of needs which will be fulfilled by quick commerce. Secondly, quick commerce cannot go in a less dense region. So the cost doesn't work. If any dark store doesn't get more than 1000 orders, they have a challenge. Secondly is the cost of delivery. That will always be under pressure. So it's all evolving thing and I believe there is a limit. Quick commerce, lot of people believe it can go deeper in the market in tier 3 [clears throat] tier 4 towns. I don't personally believe in, but in urban centers maybe they can penetrate quite a lot.
So your daughters Ashni and Avni, ah they are doing exactly what you do, Think Nine Studios, building brands and they raise quite a lot of fund now. When they are doing the same thing, how much if you do see yourself in what they do and what is it that they are different than what you did?
I think when everything got over at Future Group, hmm, there was a thought what to do next in life. And that time as a family it was a very difficult period because starting all over again from zero. In handset you can say zero is always better than minus. Not minus, I would think living with the remnants. Hmm. So in a way, so we thought let's not look at what skill set we had earlier, let's look at being part of the new economy, the new age ecosystem, digital world. And it was a difficult decision because we didn't know anything about the digital world. In a way, I think they decided to build a company. And then the idea was to where you get money. Hmm hmm. And that's where lot of families, hmm. I think I must have helped them speak to 22-23 people, and 19 and 18 of them invested in this venture. And they were able to start Think Nine which started building businesses and brands, all consumer. Some got success, some did survive, but overall there was an interesting learning around the new age business. And I had a chance to mentor all the family members, hmm hmm, who started multiple businesses. Was seed of Foundry soon there. Foundry. To a great extent, yes, hmm. Because I wanted to do something with the entrepreneurship in the country. Right. So the seed of Foundry and seed of Think Nine has been about building entrepreneurs. The first generation of first entrepreneurs breed in Think Nine were built one of the family members who were part of it. Hmm. And then we had more ideas again. The ideas don't stop. Correct. And we didn't have founders to build on those ideas. Because you need people and you need people with skin in the game. Hmm hmm. And that's where the idea of Foundry came about: how can we build something for entrepreneurs on the ideas which we have? And that's where the whole ideas started.
Explain to our audience about the Foundry concept. The philosophy that you had and also how it's been now put into operation.
Foundry, an idea came that India is going through a shift. There is a big shift happening because of social media. Hmm. The other shift is coming because of AI. Hmm. And that will allow us to build new businesses. [clears throat] The new generation doesn't want to consume what their parents consume. All legacy categories were created long time back and they will be challenged. Old will always come back in new form and. The medium of communication has changed. How brands were built earlier, Piyush used to build a campaign and it used to last for two to two years. Correct. Here you have to build at least two three reels a day. So the span of attention has shifted. The generational shift, the consumption of the amount of consumption people do now a days to digital medium is very very high. It's a new model of building brands. Hmm. So there was an opportunity getting created and we thought one can build so much. So the idea came in that how do you build so much? So the first idea came that let's build a school of entrepreneurship. Hmm. And school of life: how can we train people to be more resilient, how to deal with situation, how can we make them smarter? At that time the Found idea came with school of life for entrepreneurs? OK. And then we thought we have so many ideas. Why can't we create co-founders alongside and build businesses? Hmm. And then the name got converted into the Foundry.
I think Foundry has been a very collective thought of so many people came together. So this idea, whatever ideas we have, we, me and Santosh, we share every idea. OK. And I think I went with him to Kunnoor and we documented for five days about entrepreneurship. And that's where the idea started. Hmm. We stayed together. Hmm. And then when this idea came about, this idea, a bit of practice, I met Nikhil and he said I would be part of it. And that's how the idea started. So with Nikhil we got. I think Nikhil represents a new age medium of communication, new age entrepreneurship. Hmm hmm. So then we thought this idea is powerful and we started building a team. So we got in one of my very old colleague Jacob. He is a design thinker, he has created design courses and curricula. He joined in. I happen to meet Aditya Sahgal, who was the CEO of Racket Benic? Sir was investing a lot of time in AI. He would, he came in. I met Garima Bel. Hmm. She is joining in as a leadership coach so help in building the talent. So like this we, 12-13 people gathered. OK. And every day we started meeting at 4 o'clock, started working on this idea of Foundry. Hmm. And every day we kept on progressing how this idea will shape. It first, this idea. This happened in last June. OK. So it's just a year old. OK. And I think July ninth will be out in the market with 20 businesses, raising money for them. So first 90 days are over. The model was we are in, it's a 13 week program. We are in, I think 8th week I have started. OK OK. So we are nearly 50 days in the program now. So before the 90 days, first 20 out of the 30 businesses are ready to. 20 businesses, we are only 20 businesses, businesses are ready to roll. There would be raising money on July ninth. Raising money on July. Or meaning there is something which is ready. OK OK OK. So it's been a very interesting journey.
So how does the typical day pan out at the Foundry for?
Foundry is a crazy place. It's exactly we want. It's a residential program. Like I have out of 50 days, I must have stayed there for 40 days. It's intense. Hmm. You are working nearly 16-17 hours. Hmm. You are reviewing, helping all the entrepreneurs. We have created a whole ecosystem for them, whether it is governance, whether it is accounts, whether it is brand thinkers. There are 21 design firms working along with them. There are 15 brand professionals working with them. Hmm. There is a supply chain experts out there. There are formulators. So we have given them entire ecosystem in which they are building the businesses. And we review every week. OK. What progress every founder/co-founder has made. Hmm hmm. And it's very fascinating that it seems that.
So how do they this, how do they access this ecosystem? Suppose they want to talk to a brand designer now.
They are paying for, they are paying for it. Hmm hmm. I think everybody has a brand resource and a design resource now. And they for.
They have a supply chain, a lot of parts, a lot of them are part of the ecosystem. There are some outside support services for the paying. We have a packaging consultant, we have a supply chain team, we have a formulating, formulation team, we have consultants. So there are outside and inside. They have a full-fledged support of people, and then there is the entire community. I would say the entire ecosystem has come together to help this form.
What I'm trying to... Till now, Sanjay ji, there are 100 speakers who have come to speak to them.
And everyone has told them to have open access. Now imagine, we have seen Prasun Joshi come there, we have seen Balki come there, Sonal has come there. Rama Baker has come to them. The Titans Ex MD has come there, Venkat Raman. We have several scientists. Five of them have come there. You name the person, Plex Founder came in, Falguni has come there. So every day there are two or three speakers. That kind of wisdom... it is an idea of wisdom and energy. People's wisdom are coming to speak to them, and this generation has energy.
Wonderful. Everyone is a call away, and they are speaking to everybody. In fact, whoever came must be troubled, getting so many calls. But they are enjoying that too.
I think there's no time for anyone.
Yes, yes. Everyone is busy. Something or the other is being created. Some progress is happening.
What is your best case estimate that out of these 20 businesses, how many will really be unicorns?
I don't look at that. I believe... you know, you have...
