Meesho: A No-Frills Approach to Democratising E-Commerce in India

Introduction

Dewi Fabbri: India’s e-commerce space is expanding rapidly as millions of people come online for the first time every year, thanks to affordable mobile phones and data plans. In 2017, e-commerce platform Meesho – which is an abbreviation of ‘my shop’ or ‘meri-shop’ in Hindi – was launched. The platform is on a mission to help small business owners digitise, and allows sellers to list their goods, process orders, track payments and manage inventory. On this episode of Moonshot, Meesho co-founder and CEO, Vidit Aatrey, chats with Mohit Bhatnagar, Managing Director at Sequoia India about how the startup is lowering barriers to entry for millions of merchants across India by making e-commerce more affordable, and how Vidit has evolved Meesho’s organisational structure as the company scales. This conversation took place during a session at Surge, our rapid scale-up program for early-stage startups.

Mohit Bhatnagar: Hi everyone. And awesome to see you here, Vidit. Welcome. I actually have great pleasure in introducing my buddy and my friend, Vidit, the co-founder of Meesho. Vidit, along with Sanjeev [Barnwal], all the way back in 2015… Sanjeev, Vidit’s co-founder, started Meesho. And the vision for Meesho is to democratise e-commerce, so that it’s available to everyone. The company itself is well on its way of doing that. We have, at last count – and maybe it’s already increased to about 25 to 26 million people – who shop on Meesho every month. Meesho delivers products across 5,000 plus cities, towns, small villages of India, across 25,000 PIN Codes. So, already, to give you a sense of what that scale is that they have achieved in the last five years, Zomato, which is our leading food delivery company in India, has about 15 million people who buy from them every month. So, you know, clearly in a very short period of time, Meesho has been able to build a brand for a lot of buyers around the e-commerce platform.

So Vidit, before we go into these massive insights around Meesho and all the lessons you’ve learned while we’re building it. Super important for folks to know you; get to know you as a person and understand where you’re coming from so that they can just sort of put things in context.

Bucking tradition: How college changed Vidit’s world-view

Mohit Bhatnagar: So for everyone’s benefit Vidit, if I may, grew up in a typical middle-class upbringing in Delhi. Delhi in the Northern part of India. His dad, by the way, and I got to know this two years back, when he was visiting us, spent the better part of his life, you know, I think over 25 to 30 years working for the same company, which is the Delhi Jal Board. And for those that are not in India, that’s the water utilities for this part of the country. And his mum is a homemaker. Vidit, I actually, don’t know if you had siblings and, and whether you grew up with any. But would love to sort of have, folks, just understand those early years and especially talk a little bit about stuff that sort of shaped you.

Vidit Aatrey: Yes. Lots and lots of interesting stories there. And my dad worked at Delhi Jal Board for almost 40 years. Right. So I can’t even imagine people doing that anymore, but he started his career in the same place and then retired at the same place. It’s crazy. So basically, I come from a family of farmers, like both my mom and dad, the entire family is full of farmers. Like my dad, I think, was the first person from the family to ever go out of the village. All my cousins are still back farming. Now, even after retirement, the thing that he likes doing now is back farming. I think it’s a very different worldview. And even when I was growing up in Delhi, I was growing up in Rohini, which is north-west, it’s not as much Delhi. I don’t think I ever spent enough time beyond that north-west part of Delhi.

So, I think being there; from the kind of family you come from shapes you in many ways. Everything, starting with aspirations, right? And when I was growing up in Rohini, I think the only thing I could see around me was people either running these shops or people working in government jobs, right? So I knew that I didn’t want to sit in a shop and sell products every day. So I thought, “Hey, eventually I will take up a government job.” My dad kept pushing me, “Hey, study, study, study – so you can eventually become an IAS officer.” So, I think that was what shaped me for a very long time. And, that’s what I saw around me. And I think everything changed for the first time when I went to IIT. I got exposed to so many things. I realised, I never knew that people come to an engineering college and start companies.

All of this was so new to me, in so many ways. And I think, just getting exposed to all of this in the first few years started to shape my ambition as well. I think, after the first two years, I just went to my dad and said, “Hey, the whole plan of becoming (an) IAS officer is gone.” I just realised there are so many possibilities in the world.

So, I don’t think I ever aspired to do something like this. The thing I started to feel [was], “Hey, I want to be part of something really big. I want to be in a place where I can create a lot of impact.” That decided the kind of job I took after college – I graduated, I joined ITC. I came to Chennai, and had a very different experience. I realised a lot of my friends are part of these tech companies in Bangalore, and they’re somehow enjoying what they’re doing quite a lot. Like, every time you speak to them, they’ll talk about how things are just going up really fast. They’re doing this, they’re doing that. Like, everything’s so cool. So I said, “I don’t want to be part of this traditional company.” So I asked someone to refer me to some company and I joined this company called InMobi. And I remember I came here in Bangalore, I think in 2014. And I think that one year after that was very different and extremely special because I got introduced to an ecosystem for the first time.

Mohit Bhatnagar: What were you doing there, Vidit? What were you working as?

Vidit Aatrey: So, the role was called ‘Strategy and Operations’, kind of a Chief of Staff role to the Chief Revenue Officer then. And, I think, the reason I took up that role, was because I had no idea what I wanted to do. All the roles that were part of this were very different. The beautiful thing about that role was that I could see everything end-to-end. Like you see tech, you see product, you see sales, you see… Like, there’s nothing that you don’t touch. So, I was part of that role for about a year and learned so much – a crazy amount of learning in a single year. And then, I think, the thing that happened, which was the most important is, I realised during that year that if these guys can do it, then why can’t I? Because I could find people who are like me, who are not 60-years-old, at the top. Like, people who are young, and started this a few years ago, have been able to scale this up. It’s not that they were born with a silver spoon, that they had money to start this business. They went out to these professionals who could give you money to start a company, right? So again, a big inflection point because I just saw people like me doing this. People with similar backgrounds and so on.

Six to eight months in this job and then I realised, “Okay, everything else is gone. I’m going to start up.” Now, I need a tech co-founder because I was not coding. So then I started to reach out to all my techie friends. And I’d ping them and ask them to come and have dinner, lunch with me. And I would take these guys and keep convincing them that we should start up. And, I think, I did that for like a few months. And even then, because I was part of this, I could see a lot of them were part of traditional companies, again, like Microsoft and so on. They didn’t want to take risks. Someone wanted to get married, someone wanted to do something else. So I struggled, and I was trying to figure out what to do because I was not getting someone to work with me.

And I think, and that’s where serendipity plays so much of a role. The story is still mind boggling to me. Like, one particular event decided whether we start the company or not. And if that hadn’t happened, I don’t know what I would be doing today. So, I was in the office and randomly, I got a call from Sanjeev [Barnwal]. And Sanjeev and I used to be part of the same hostel in the same department in college. After three years, he was working with Sony in Tokyo. So after three years, he calls me, out of the blue. And he said, “Hey, I’m bored with working in this traditional company. Things move very slow. I want to be part of the cool thing, which is being part of the tech ecosystem, being part of a startup. I’m thinking of joining one particular company.” He mentioned that time, in Bombay – “Can you do a ref check? Because I haven’t been in Delhi for a long time”. So, I just told him on that call, “Why do you want to join this company? Why don’t we start up?” I spent a few minutes convincing him. He said, “Fine”. The next day I resigned, he resigned. Two weeks later, we took some place in Koramangala [a locality in the south-eastern part of Bangalore].

Affordable fashion, cheap t-shirts, and the ‘aha!’ moment

Mohit Bhatnagar: Oh, wait a minute. Did you even know what he was resigning for to start up or you had no idea?

Vidit Aatrey: Both of us had no idea. So we said, “We’ll come together and figure out what to do”.

Mohit Bhatnagar: Amazing. That’s crazy, dude. That’s crazy.

Vidit Aatrey: And, if that call hadn’t happened, I just sometimes think what would have happened? I have no idea, by the way.

Mohit Bhatnagar: That’s crazy. And then you guys went on to start Fashnear, the highly successful Fashnear. I spoke to Sanjeev, and he told me about Estilo Canta. You remember that, I bet. Tell the guys a little bit about those early days when you and Sanjeev said, “Let’s do this”, and then Estilo Canta came into your life.

Vidit Aatrey: It’s quite crazy. So what happened was, we got together and then we said, “We have to figure out what to do.” So we created an Excel sheet of problems that we want to work on, and we said the framework is very simple. So, anything that we work on should satisfy these two things. One is, it should be really large for us to get inspired by that problem for a very long time. And second, it should be a problem that I can connect with and he can connect with. And that’s very important. Because, if you work for someone else that you can’t relate with, I don’t think it can be very inspiring that you will give everything that you have, to work towards it. So basically we just said this… So, we created an Excel sheet of things that we think are problems around us…Eventually, we landed on this one. So we said, if you look around, I could see so many small businesses. We were in Koramangala, in Bangalore. So, many small businesses around me. I couldn’t find a single one that was selling online. And this is 2015, like some e-commerce companies in India have been there for about seven, eight years, but none of the shops I could find around me were selling online.

I just meant, it was weird to me. Like, how can these guys not go online? Everyone’s eventually going online. So we said, “There’s something structurally wrong.” Because everything that you can find online at that point in time was big brands, electronics, white goods, branded fashion and that’s it. Everything else was primarily offline then. So we said, “We will solve this. We will bring every small business online.”

Mohit Bhatnagar: And just for everyone’s context, who is not in India. By this time, Flipkart has raised billions and billions of dollars. Amazon, the big bad Amazon has decided that India is the market that they’re going to make sure they never miss, because you know, they missed China. And so you’ve already had a fistfight of epic proportions, where these two companies have been trying to win e-commerce in India and are firmly now established as the incumbents. So, here comes Vidit and Sanjeev, who’ve never done the ‘E’ of e-commerce before, but want to change the world.

Vidit Aatrey: Yeah, it’s quite crazy. And I think you can only do it when you’re a 24-year old, and not think about ‘how’ so much and just do it. You start to become more reasonable as you age. So basically what we did, we said, “We have to bring these small businesses online”. So, we started to go to all of these shops. We’d go to all the shops that we could find around us. We’d go to them and ask them, “Why are you not selling online?” It’s simple. And after spending a lot of time, we realised these guys say, “All of my customers [are] in this locality, why would people [from] beyond buy from me? So, I would want to sell it to people in this community only”. So we said, “Why don’t we help you acquire more consumers in this particular community, in your locality.” And that’s when we started Fashnear, fashion nearby. So on an app, you could see all the shops close to you. We launched it – six months down the line, we realised it doesn’t work because for the customer, it’s not a very great experience, you can’t see a lot of selection, you can’t get access to a lot of deals, when people buy online, that’s one of the big things that is required.

So, we shut it down. Then we go back to the shops again, we say that, “We have to figure out something else that we can start for them”. And I think that’s where Estilo Canta comes in. So, it’s like a very small shop that sells unbranded t-shirts to men.

Mohit Bhatnagar: Four t-shirts for INR 699 or something killer like that.

Vidit Aatrey: Correct, correct. Like, super crazy cheap. And so basically at that time, we realised that we’re not going to ask them about problems, because people don’t know what to say. So, this time we will go and ask the shopkeepers, “Hey, we will just sit on the side and observe you. We will not bother you. We’ll just observe you from the side. Please let us be here and you keep doing your work.”

So, we used to sit. So, we used to go to a random shop, in a small business shop. And we just sit on the side and observe everything that this person is doing, when people walk in what they do. So, we spent time and we realised there’s one pattern, which is happening again and again. So in this shop, which is Estilo Canta, we realised that people will walk into the shop, pick up a product, go to the counter, ask this person, “Hey, I want this,” give the money, collect the product.

After this, the shopkeeper will say, “Hey, also give me a WhatsApp number. I will add you to my WhatsApp group, because this is where I send all the new selections I get in my shop.” And he was doing this every single time. So at the end of the day, we went to the shopkeeper and asked him, “Why do you do this? Like, I’ve never seen this happen anywhere else before, simple. Why do you do this?” He says “Like, my brother told me, he runs the shop in Whitefield. He figured out that, “Hey, many of these customers never come back. They come, visit once, buy something and then go away”. So a good way to re-engage these consumers is add them to the WhatsApp group. Every single time I get a new selection in my store, I share it on this WhatsApp group, many people just buy it here. Then I send the chhotu from my shop to their house, collect the money and the transaction is done.” The Estilo Canta guy said, “I’m doing 40% of my total sales on WhatsApp.” And basically, that was mind-boggling to me. What did we just see?Someone is selling products on WhatsApp and almost half of their business is on WhatsApp. So, it’s like an opportunity that some people know about, most people don’t. So, we said, “Why don’t we solve this? Why don’t we create a product that every small business is able to grow their business by leveraging these social platforms. This will also be the first way that they will go online”. So again, we were solving the same problem that we started with. Can we do this? Then we created the first version of Meesho. Meesho meant ‘my shop’ or ‘meri shop’ put together into a single word. We said, “We will give you a shop. We will build neat integrations with social platforms,” and we will go and tell them, “Why don’t you use this app to re-engage with your customer, re-market to them, and grow your sales, because see the success stories of these people who have grown their business by leveraging this.” It’s simple.

We did this for two, three, four months and realised they started to grow. A lot of people were intrigued – so they’ll download the app, use it for a few weeks, and then their attention starts to go down again. A lot of people did this. So we said, “It’s not working again. What’s happening?” But we again found something, which is – there are certain users on the app, very small – but certain users on the app who are using the app day in, day out, crazily. They come to the app in the morning, and stay until the evening, and they keep doing this again and again.

That’s very weird. So I said, “Who are they?” So, I figured out all of them are women. All of them were women. So, I reached out to them. I used to, at that time, stay in touch with all of our users who were using our app on WhatsApp. So, all of them are women. All of them were homemakers and all of them will say, “I’m running my boutique on WhatsApp”. And first of all, when someone says something like this to you, it won’t make sense to you. What does WhatsApp boutique mean? And then, I went and met many of them in Bangalore, and they would spend hours and hours talking about the story. And that’s when the eureka moment happens. You realise the problem, which you feel inspired by, which is extremely large and say, “I will leave everything else in life and just do this, day in, day out”. Because all of the stories were exactly the same. Their stories will go like this. “Hey, I’m very educated. I’m very ambitious. I used to work before I got married, or I had kids, [and] after that to take care of the family, I gave up my profession, but now, I don’t have an identity of my own, so I’ve been trying to start a business from home for a very long time. And, I knew that I have a good sense of fashion, so I wanted to start a boutique”.

Some of them realised that Flipkart or Amazon in India are basically running their business without having inventory – “Why can’t I do the same thing?” Which is, [she said], “I’ll create this WhatsApp group, add all my potential neighbours, my potential customers who are mostly neighbours, friends, and family onto that group. This time, I would go to a Chandni Chowk [and] instead of buying these products, I would just take the WhatsApp numbers of four of these shopkeepers, come back and ask them to keep sending me newer products, and on a daily basis I’ll curate it on WhatsApp with my customer base. Whenever they buy, I let the shopkeeper know to directly drop-ship it to the consumer, and I will make some margin in between”. So, she basically created her own marketplace, her own small marketplace, and she is running a boutique now on WhatsApp. She is making money, and not getting access to capital is no more a blocker in her life. Which means she can now realise all her dreams. Now, doing this on WhatsApp back then was extremely cumbersome, like collaborating with these shopkeepers, doing it herself here. So she went online and said, “Sell on WhatsApp, sell on something,” to find something that will help her. And the only app available online was Meesho – that we had built for these offline businesses.

Talking to your users gives you a competitive edge

Mohit Bhatnagar: And, how many of these folks do you have now on the platform?

Vidit Aatrey: We now have 15 million of them, in a matter of five years.

Mohit Bhatnagar: And, obviously now you’re not going and talking to them. So, how are you able to stay [in touch], keep the pulse?

Vidit Aatrey: I’m still connected with a lot of them on WhatsApp. I still speak to them very often. Like, just yesterday, I had four conversations with some of our consumers and entrepreneurs, and everyone would, by the way, spend half an hour, 45 minutes with me, and tell me everything. And, I think that’s the thing I enjoy the most also. When you speak to them, and you understand those insights that we go back [with] and build something very valuable on. By the way, it’s part of the culture. It’s just not me. If you see, it’s part of the entire company and we always made sure that the friction in reaching out to users was always very low. The first thing that anyone who joins the company, even today, irrespective of what role engineer, non-engineer – the first thing before you can get to [the] job, is you have to speak to some 10, 20, 30 users, and basically submit a report of what insights you got. You can’t do anything in the company before that. What it does is, it makes people who have never spoken to users before, at least get over that line of hesitation, “I don’t know if I can do it”. So, that’s the first thing they have to do. I think that culture has stayed since we started, because that’s the core of all the insights we have figured out, and weighted on.

The path to PMF is non-binary – prepare to change your approach

Mohit Bhatnagar: That’s awesome, Vidit. That’s a super story. Thanks. But this early period of trying to get product-market fit, this early period of really finding out what your own true, authentic, and deep insights are, sort of stand the test of time. This is when you get confused later on, and there is competition coming left, right, and centre, trying to outspend you or outmanoeuvre you. In many ways, this is sort of the core learning that nobody else can take from you – to really go back to, and build products, and scale up there. So Vidit, I’m going to ask you one question, [the] last one on this PMF (product-market fit) part, and then maybe we’ll move to other issues you are now facing as a larger organisation, which is, when did you actually know you had PMF? And, when you got the PMF, did you ever sort of lose it, and had to go re-establish it?

Vidit Aatrey: I think the way to think about it is, all of us think that PMF is some binary stage. Either you have it, or you don’t have it. I have realised, you always start to have some weak PMF and you have to make it stronger and stronger, right? And that’s the stage all of us go through. I’ve never seen… Something happens – obviously the step changes, but even after [the] step changes, you get to a weak PMF, and you have to keep making that flywheel better and better, so that people come and prefer you over any other platform. So, that’s how I saw it.

But, if I go back to our own story, after speaking to some of these women, we came back and we said, “Forget all of these offline businesses, we’ll enable a hundred million women in India to start their own business and basically become independent and have their own professional identity”. We were very, very clear. And we just let go of everything else and then we said, “We want to first test this’”. So, we created this WhatsApp group, added these women, and we said, “We will give you everything that you need to become a great WhatsApp boutique owner – access to supply, access to logistics, access to payment”. It’s simple.

And, we used to send it to them by forwarding things on WhatsApp, and we realised, the retention value was 100 percent day on day, and people will ping you multiple times a day; there’s no app, there’s no website, nothing. Extremely bad experience, lots of friction, [but] they’ll still come back to you. We did this for three to four months, and I think until then everyone got convinced, “Hey, this is going to work”. So, we again created an app, only focused on these women and killed the other product. And then, I think the thing that happened – we launched our product by the way, in March or April of 2017 – we raised our first round, I think six months later… We spent zero rupees in marketing. We literally had no money, we ran out of everything that we had, so no money. We doubled every month. And that’s when we knew we had something. At least a weak version of PMF – we obviously have to do a lot, but now we are solving the core problem for someone. One thing that we used to do in the beginning is because we said, “We don’t know what’s working and what’s not,” so we used to do every single thing ourselves, because we believe every single thing that we do is a touch point where we get feedback. So, in the beginning we used to take photographs ourselves, [in a] full day. Every single order – I used to deliver on my bike. Every single order, morning to evening. And, we used to alternate [between the Co-Founders] because every single time we get to the customer, they will tell us something which they wouldn’t otherwise on a call. So, we just wanted access to all the information. So [that] we are able to get to that product faster. We can iterate very fast. So, access to the user feedback, we always valued from Day One.

Don’t do 10 things

Mohit Bhatnagar: I want to move the conversation forward to business strategy. And, I want to pick one aspect of it that I think Meesho really underlines, and that is price. See, in our part of the world, you can almost think of price as a commodity, something that you can drop prices to win. And, people almost feel like it is one of the many things that people do in terms of discounts and incentives, and so on and so forth.

But, I want to put out a little bit of a theory that a lot of companies here in this part of the world are actually built because they can create a massive differentiation because of their lean and mean cost structures, because of how they think about price. And, if they can actually offer the same high quality product, or service, at a price point that others can’t, it suddenly opens up the underbelly of a market that others have ignored forever. And, in a similar fashion you’re now going to hear, I’m going to ask, Vidit, that maybe we should talk a little bit about this. I love your clarity of thought when you say, “Price greater than convenience”, explain that, and why you’ve taken that strategy to beat your incumbents?

Vidit Aatrey: I think it’s been a journey since we started. I think one single attribute that we’ve always had is we always knew that [at] some point of time, we’re going to go and compete with companies who are going to have a lot of resources. So, if we start to build everything out and compete with incumbents and so on, it will be almost impossible. We can’t do it. So one thing that we always valued internally is [an] immense amount of focus.

We don’t do 10 things. We always do a single thing. So, we keep asking, “What is the one thing that if you change for your customer, everything else, they will live with for some time again?” People have been investing some hundreds of millions of dollars, maybe more than that every month just around solving this, “How do we activate the next 100, 200 million people?” We said, “We can’t do a hundred things. We have to do only one (thing). What does it take to solve for this?” And, we realised that the kind of products and selection – because small businesses were not online – the kind of selection that was available online; most consumers, who are the next 200, 500 million potential shoppers online, just couldn’t afford that selection. So, they would come, maybe look at the price, look at the product, maybe buy a Xiaomi phone once in a while, but everything else always seemed unaffordable to them. So, you can solve a hundred problems for them, but that doesn’t get solved, which is affordability. So, we said, “Why are things unaffordable for so many people, after e-commerce has been there for about a decade in India?” And, we realised that e-commerce in India, started by serving the top four, six cities and the top five percent of the population.

Less is more: A no-frills approach to pricing and strategy

Vidit Aatrey: So, all the design decisions in the ecosystem that were done, were to serve that customer base, to solve for their NPS, to solve for the expectations that they have, everything. And now you take the same product and you want everyone else in India to buy the same product, and serving that particular customer, who are mostly you and me, is much more expensive because all of us have very different service needs.

But, if you go to the next 500 million [or] a billion consumers, the expectation that they have in terms of services is very different. But the thing they care a lot more about is affordability, because they have very limited means. So we said , “We will remove all of these frills that exist today in the ecosystem, like every single thing. And we will challenge everything”. And we did this by the way not for a month, not for two months, not for a year. We’ve been doing this consistently every month for the last two, three years. That’s all we do. We go and figure out what is that thing that they don’t need, we unbundle it and make that product more affordable for them.

Many people think, “Hey, the customer won’t come back,” and they come back more and more often, retention only goes up every quarter. So I think, that amount of focus brings clarity and to question things that were otherwise not questioned, people gravitating to those fancier answers of solving this problem, whereas the core is something else.

Mohit Bhatnagar: And Vidit, maybe just one more line around your ‘zero commission as a strategy’ for that, right? To try and make it a scalable differentiator over time.

Vidit Aatrey: Correct. So we said, “Another big thing that has been added” – you have all of these costs, and to fund these costs. Before us, a lot of e-commerce companies were there in India; they would charge 20, 30, 40 percent commission. If you go back and look at it, it’s not that they make a crazy amount of margin, their contribution margin is still negative in most places. So, people are charging so much commission but their cost structure is so loaded. We said, “We will remove all of these costs and not charge a single rupee of commission and hence the product will become much more affordable to this consumer, as compared to what it was earlier.” We did that, and we saw people coming in plenty from everywhere in the country. So, ‘zero commission’ is one of them. Like, removing a lot of these services that were given for granted before to people, so many other things. We just kept going after them, and we see that people reward us every single time. Every single time we do something which is very counterintuitive, people come back to us.

Design your organisation around problems

Mohit Bhatnagar: Great – Vidit, let’s dovetail this and maybe anything else on your mind around, into organisation design. One of the things you’ve done quite differently, is organise people around these metrics, as you tell me, and you and I have actually debated this, I’m not even sure I get it fully. So, maybe using this cost and removing frills from every part, having crystal clear clarity around the four or five metrics that are the most important for your business and then more importantly, organising around those. Talk a little bit about how you’ve designed that.

Vidit Aatrey: It’s a thing that I’ve spent the most amount of my time on in the last few years, in solving for this problem, and I think it’s still a journey.

Basically, one thing that I realised is, most people want to solve problems but most of their organisations are designed on solutions. You have a Head of Marketing, you have a Head of… For example, Supply Chain, you have a Head of XYZ. All these are here, by the way, as solutions to solve this problem. And then, someone has to do something, and oversee who will come together to solve this problem. And then there’s so much of this communication gap that happens. So, the thing that we have done is, our entire organisation by the way, is aligned around problems. So, we have a value which is called ‘Problem-first Mindset’. Every single person is aligned around a problem. Their job title, their role, talks about the problem they have, and not the solution. How you do it doesn’t matter. And we took that decision, about two and a half years ago. It took a while for people to become okay with this. But once the organisation also becomes ‘problem-first’ and you’re trying to solve problems, the amount of velocity by the way you get, and the amount of alignment that you get is crazy; because everyone talks in the same language, “Hey, you’re solving this problem, I’m solving this problem, let’s do what we can do together.” Rather than saying, “Hey, this is my job. My job is PR, someone’s job is marketing, someone’s job is this. This is what I do. [If it is] something related to this, I’ll do it, otherwise I won’t”.

Start your year with ‘BHAGs’ (Big Hairy Audacious Goals)

Mohit Bhatnagar: Vidit, make this real for us. So, there are short-term problems and there are longer-term problems. There are problems that need, you know, individuals and then there are problems that need a large part of the organisation to execute. How do you make these different pods who are working on these independent, somewhat isolated problems, come together?

Vidit Aatrey: Yes. So, by the way, one thing that I hate generally is collaboration. So, I feel like collaboration requires a lot of time, [and] takes away a lot of time from people. I hate collaboration – the need for collaboration, rather than the quality of collaboration, right? So, I’ve always believed in organising people so that the need for collaboration is very low. I have a problem, I have all the resources that are required to execute and achieve this problem and I am done. Forget everything else. We’ll obviously have some ways of knowing what other people are doing so silos are not there. But I don’t want a lot of collaboration to happen all the time. But I think that’s just one principle. Now, let me bring this to reality. Like how we do it. So, the way we have designed our organisation [is] we have five GMs in the company. Five General Managers, all of them are aligned to the problem.So one problem is, the number of users on the platform transacting. One problem is, the number of sellers on the platform transacting. Third problem is the number of orders per customer on the platform, which is the customer frequency. Fourth is cost, and fifth is monetization. So, these are the five dreams I have. And these, by the way, are problems.At the beginning of the year, we take what we call BHAGs [Big Hairy Audacious Goals]. All of these guys take one. It’s simple. They have to take it themselves. No one is going to come and impose it on them. Again, we have one value, which is called ‘Think 10x’. We reward people who take larger goals rather than people who meet goals. So, in our company, it’s perfectly fine if you don’t meet a goal. No one is going to come after you [saying], “Hey, you did not achieve it”. But the thing that we reward and recognize is when people take unreasonable goals. Like something which is unprecedented, when you take it, everyone’s going to come to you [saying], “Okay, very inspiring, thank you for doing this”.So, these five folks will take unreasonable goals for themselves at the start of the year and do what we call a broad plan of how they will achieve it. These are not OKRs but these are broad plans of how they will achieve it. And that particular team is always self-staffed, so that they don’t have to collaborate with anyone else to do this. So we don’t have people shared across multiple orgs ever for any role. Redundancy is totally fine. We’ll have two people doing the same job across two orgs. Even if they have no other work, they will chill and [there is] no problem.

Optimising for speed: An organisational design choice

Mohit Bhatnagar: Actually, so that’s an important point, right Vidit? This is the design choice you’ve made. You grew your number of monthly buyers 10x last year in a COVID year. And that was after you grew crazily the year before and I know your BHAG for this year, which is nuts again. So, speed sounds like a very big beneficiary from the way you are organisationally designed, but it may not be the most efficient. Fair?

Vidit Aatrey: Exactly. So again, it comes from the same thing which is speed over efficiency, one of the values for us. So the org is again, designed for the same thing. Now, massive amounts of focus, very little collaboration required, everything that I have is here. I don’t have to stand in front of someone’s queue to get something that I have, getting prioritised. None of that ever exists. Because the organisation is designed so that all of that is avoidable.

Mohit Bhatnagar: But to be fair, someone like Sanjeev would manage a lot of the engineering talent across, and they would still be attached to these five. There will be some horizontals to be fair.

Vidit Aatrey: So, we have horizontals, but their job as horizontals is to enable the leaders to achieve their goals. They don’t get their own OKRs also by the way, to make sure there’s no divergence. So no horizontal leader can ever have their own OKRs. Because if they have OKRs, their own OKR takes precedence over where the team is.

So their goal mostly is staffing, growing people, right? And basically enabling people to achieve their goals and they are part of solving everything they’re doing, so that alignment is way strong. But that’s what they’re doing. All of these functional leaders are essentially making people part of these orgs and these orgs are always self-sufficient.

Mohit Bhatnagar: Vidit, other than cost, which we’ll have a separate side discussion about, is there any other thing that doesn’t work in this org design, which you feel has been a pain to deal with?

Vidit Aatrey: So one con of this model is one which is very apparent, which is efficiency, right? So you can centralise a lot more to save certain costs, very simple. If you have certain unutilized orgs spread across, then you are spending more than what you would otherwise do. That’s a more obvious one. The second, which is a bit less obvious, which is also very important is, because when you put these general managers, these are not specialists owning this… So if you really want a lot of depth, sometimes, that sacrifice will happen.You really want someone to make a lot of innovation happen in a particular function, it can become harder because the understanding of this GM in a particular field may not be very high, right? So the way you do it, is again, you put functional leaders next to them in a place where they’re able to influence it. And I think that’s the big change we did. When we started, we said everyone lies here, there are no functional heads. But overtime we realised, because you put the general guys at the top, that starts to hurt. So we put these functional leaders who were there as advisors, as enablers who are helping all of these orgs to achieve their goals. So, the element of functional innovation also doesn’t take a backseat when you’re trying to optimise for so much speed in the org.

Evaluate team members against values and celebrate them