Episode 12: In Conversation with Sneh Vaswani, Founder & CEO, Miko

No, thank you so much, Kiran, thank you so much for having me here. I remember a meeting very, very well where we were building prototypes at Wadala in a tiny room, and the room is still there. I sit out of that room quite often even now. The whole objective at that point was the startup revolution had started in India, and we wanted to build deep technology for the world from India under the vision that our honorable Prime Minister Narendra Modi had said that this is what 'India for the world' should be the focus, and we wanted to solve unmet societal needs leveraging technology. At that point of time, we realized that the challenges a parent goes through in raising a child are deepening with every decade. The social emotional well-being of children is declining, learning levels were dropping, and not only India, across the globe it's a global challenge overall. So we felt, how can we build a technology platform that can be loved by kids and trusted by parents, that engages, educates, and entertains a child and reports the developmental metrics back to parents, and grows with the child as a companion. So what this platform would do is take the form of a character, it would talk to the child, play games with the child, teach them something new, and it's constantly working with the parents on what their needs are and adapting to the family needs and growing with the child through the early years of childhood that the child and the family are going through. Within that, the parent gets quantified results on how well the child is doing, it aids in their parenting journey, it becomes a friend of the child. Over a period of time, the device became an entire ecosystem of content and services that it was delivering to the family. Now we have over 25 plus content partnerships with Disney, Paramount, Oxford, and a whole bunch of content companies across the world who publish their content on Miko, and Miko is now able to be culturally relevant to different geographies. So in India it will be a very different Miko, in the US it will be a very different Miko. It's personalized to each child who's using it. The backend technology was built in house, the AI stack was built in house. We built our own SLM, we've now built our own LLM. We've trained it over the past 10 years, made it significantly better than any of the contemporaries of the big names available in the market right now when it comes to children's interaction, when it comes to quality engagement with children. Over a period of time, now we've become a team of around 75 plus people with almost 200 people in R&D positions across product, design, technology roles, 14 disciplines continuously working on the intersections of learning and technology. We've rolled out four variants of these robots over the past few years, now connected products around chess and board games have also been rolled out, content, services, and now we've become the leading brand in the US market where we've been growing at a CAGR of 60-70%. Three out of five know about the brand very well in the US market. We've forged strong partnerships with Walmart, Kohl's, Costco, and some of the top retailers in the world where now we are deepening our journey of the brand in these markets. I want to thank the Chlorophyll team. It was the early days of 2017 when we only knew tech, not even product or branding or retail. This was absolutely unknown where we were like three boys from IIT Bombay with no background in building consumer journeys who had a lot of tech knowledge at the background. But I think you guided us with the initial focus. And to be very honest, just before we get deeper into the conversation, I wanted to bring up that without having even a formal relationship before a formal relationship started with Chlorophyll, you introduced us to the late Sri Dhashim from Reliance, and in 2017 that opened up Reliance door and Hamley's door for us. Today it's one of our strongest relationships over the past seven to eight years. So I owe that entire single introduction to you, Kiran. I think it was amazing, and then the relationship with Chlorophyll only got deeper. The branding and the support that you and your team offered to us was phenomenal.

Great question. I think first and foremost, while we have different geographies, we try to homogenize a geography, we try to create different cultures that the robot should abide. We need to understand that parenting in Japan is very different from parenting in India, which is very different from parenting in the US. Within India itself, we have many countries, you can call many cultures that exist. You walk from one city to the other, the parenting mindset and the expectation changes drastically. So first and foremost, building over a period of time, we realized that the backend technology has to be culturally reconfigurable for that family. A very simple example: the robot cannot casually tell a child to have a chicken sandwich at a Jain home, like it just cannot be possible. So it has to be culturally relevant for that geography. We are building in layers to make it culturally relevant. But what came out very strong was from region to region, the communication on the way you present your brand has to be aligned with the broad cultural alignment for that geography overall. When we were in India, I remember that Indian parents used to view Miko in 2018 as an educational tool to give their children a competitive edge and focused on structured learning and the academic focus which is very heavy in Asian parents. American parents, when we did our qualitative surveys with you and when we went deep in speaking to parents, the key need of parents at that point was to focus on all-round development of the child, the emotional engagement over academics. And that was the focus that came out across our research that we had done. So a positioning aligned with that was needed for the market. I think at that time we said rather than suggesting Miko helping the child, it should be Miko helping the parents help their children's all-around development, so parents stay in the driving seat of the child's development. And remember, today we have AI and the fears of AI taking over everything, but at that point of time, this was way back in 2019 when we consciously took a call that let the steering wheel be in the hands of the parents who are taking the decisions for their kids. This worked out very well for our communication in the subsequent series of robots that came out across the US market. Remember we had that surprising thing you were telling me about in the UAE, the parents wanted the child to learn the Quran because nobody else was doing that for the child.

In the Middle East, the expectation of a family is very different where they want the child to focus on the religious path at a young age, learn about their religion and culture at a young age. This came across very, very strong across Middle East families. So we started working on such content partnerships. Even the kind of content that children view in different geographies is very different. So getting the content partnerships localized, getting the cultural alignment localized, getting the AI frameworks localized has been a focus all along.

Yes. I think broadly the mindset has been very clear. We have been working on our foundation models for the past 10 years in the product and building a moat in the product and the offering to the consumer. But there has to be a moat in the go-to-market as well for a startup because you are building this for the next few decades and not for a few years. So we felt rather than everyone adopting the same journey, raise capital, flow the money into marketing, and CACs go through the roof when you start scaling into large numbers, we had to do something different to ensure that our go-to-market also has a strong resilient structure and foundation in itself. So we started onboarding data science folks, we started onboarding people with a growth mindset within the marketing team who come from a strong technology-heavy mindset, and ensured that there is a clear focus within our marketing stack as well. So what we've done is we've built some tools over the past few years which have helped us reduce our CAC overall across different platforms. Just to give you some insight, we were able to create our own audiences through RFM campaigns and we see them performing better than the audiences created across Google and Facebook. We've been able to reduce CAC by 80% year-on-year improvement in CAC across our leading e-commerce channel where we've been selling. And all that has been rather than just simply leveraging the ad platform, we've been leveraging first-party data to target audiences on and off their platform. Now the team is working on, in fact, we've not had a proper creative agency for a while. We built generative AI tools to create creatives based on campaigns which have worked very well for the past four years. And at any point of time, when we have 400 campaigns running, it's looking at different campaigns and trying to create creatives based on which has the best CTRs coming out across regions and the messaging, and coming up with creatives and those lines. Now we're working on data clean rooms, we are working on cookieless advertising and taking solid challenges in marketing. Because I think the future aspiration should not be just building a unicorn. The aspiration should be to build a multi-billion dollar revenue-generating engine. And when you are on paths to build that, it is absolutely crucial that we are having a moat with strong innovation coming in our go-to-market as well. With that singular mindset, we've invested in building these tools.

No, I think to be very honest, we are very fortunate that we've had the same set of investors over the past 10 years, and they have only continued to reinvest and double down on the journey of growing Miko. We've had some of the best family offices, some of the best serial angels who continued to invest in every round even in the growth stage rounds as well. One of the notable angels is Mr. Keshav Murugesh, CEO of WNS Group. He's backed us in every round with strong partnership and strong wisdom that we get every time we speak to our current set of venture capital investors, be it Chiratae Ventures, be it your Nest, be it IVCap. They've been backing us subsequently in every round as we grow the company. I think most Indian investors feared deep technology because of the long gestation period that comes in, which is obvious. But what matters is if you're able to deliver as a founding team on execution and you're able to deliver on what you're committing to time and again, and if there are disruptions that happen, be it COVID or whatever the world is going through now, or however the situation, you have a clear path of execution which is backed by data, which is backed by rock-solid execution. I think investors are happy to take that bet. The common string across all our investors, be it the VC funds, be the family offices, be it the angel investors, each one of them has been in an operating position in running a business in some form or fashion through their career. So they can relate to the journey of building a company ground up, of building a category ground up, and how we are executing. Just plain theoretical background of investing and academic knowledge of investing, those guys have never backed Miko. And thankfully, we also don't approach those investors anymore. It's purely those investors who've continued to build businesses and gotten into the investing world, and they have continued to back us. And we are absolutely honored to have such a vibrant group of shareholders and investors with Miko. Our manufacturing has grown. We now manufacture the product in India. Some of the most complex products are now completely done in India end-to-end. India is, and I think the way the global macros are positioned, India is a very neutral country and does not take sides in any of the contexts. So it's very well positioned, and there will be no hurdles in the journey of growth of India as a manufacturing hub. So we see that hey, those decisions that were taken a few years back, we're reaping the benefits of those right now, and I think we'll continue to reap those benefits.

I think, to be very honest, today's world is very different. In 2015, it was very different. At that point of time, we had some great partners who helped us get here, so all due credit to them as well. They helped us get through the early years of building it. But today, the geopolitical situation and the global macros require any brand to ensure as much diversification of supply chain as possible and ensure that you're getting top quality products at the right price point from every possible geography, because the situations keep evolving every 48 hours. It's not even months or quarters. The situation is evolving every 48 hours. So you need to be ensuring that you are able to ramp up or ramp down any country based on how the situation is.

100%. I think there is enormous scope of leveraging automation, and automation need not just be replacing humans and bringing in machines. That's a preconceived notion. No, that's not the case. We are working with a lot of manufacturing partners who have approached us to leverage our technology for productivity assessment of factory workers, to see how productive they are at an emotional level while they are assembling products and so on. So different use cases where machine and human can work together to improve the manufacturing yield is also being prototyped and deployed. So I think the beauty of tech is that it can be expanded into multiple verticals one step at a time, and there is enormous scope of bringing in AI into manufacturing as well.

Yes, so ultimately we will bundle it into products and services in due course and have them rolled out for other companies to take benefits from them as well.

Over a period of time, yes.

Established players as well.

Enormously. It's been a huge learning experience, to be honest. And I'm still the same person in terms of very rooted and down-to-earth person overall. But at the same time, what it has shaped me is it's made me introduce a lot more patience and humility in my conduct than what it was always. I think I had the opportunity of closely learning from parents, children, from you know, witnessing the impact firsthand. And that itself, we've done plenty of wins and even more number of misses over a period of time. And I think that has been an entire learning experience for my entire team and myself. So I think the biggest change is this deep sense of responsibility. It's not just to create something successful, but to build something meaningful that can positively shape the lives of the next generation. That responsibility is very high, and each person, be it the product, be the business side, be the support functions, everyone carries them at Miko with a lot of sense of responsibility.

Oh huge. I mean, massively different. I mean, there's a huge cultural difference that is there. There's a strong sense of commonality between them is that each parent wants to take the extra step forward for the best interest of their children. That's the common thread which is there. But the way each parent looks at it of each region is very, very different. Like one of the things that I brought up is the strong focus on all-round development and the strong academic focus in India is there. And broadly, we've also witnessed changes in the consumer way of thinking in India and in the US over a period of five years. Just to give you a very simple example: 2018-2019, a Miko-like product, 98% were purchased by fathers and 2% by mothers. Mothers were not the decision makers in India at that point of time. Even if they were buying, they would take the opinion of the fathers. Today, mothers are very different. In a lot of places where Mikos are sold in India, the mother and father ratio would be I think 60-40, where mothers are now also into the decision-making process. They take their decisions on their own and they are moving forward to take a call that this is in the best interest of my child, I'm buying this gadget, let's take it. So this was something that we didn't see five to seven years ago. So I think there have been constant changes in the way consumers shop, consumers consume communication, which we are witnessing firsthand very closely by being at the ground in the US and India and making a track of that so that we can better be able to serve our customers.

Thank you so much. Thank you so much for the guidance and mentorship all these years. Thank you, thank you, thank you.