The Exchanges

Q And what do you charge in software for?

A So a lot of features, uh, there are a lot of, uh, advanced ride assist features. So for example, you want to turn auto hold on. So it's a, it's a pretty nifty feature where, uh, if you bring your scooter to a stop and you leave your brakes, Your scooter won't roll back and forth. So you could be on a little bit of a slopey surface, the scooter will just stay there. So you don't have to keep your brakes pressed. And the minute you throttle, it'll start going forward. Uh, actually very well implemented. So this algorithm is part of the software pack. Uh, there are some advanced regenerative features. There is the entire connectivity suit turns on. So, four G connectivity in the vehicle, Bluetooth connectivity in the vehicle, uh, the ability to take calls, the ability to, uh, listen to music, uh, mobile phone tracking, remote service booking, Uh, many, many, many, many. So, everything with software in it, they're kind of bundled in a single pack. In a sense, in a sense, a little similar to how Tesla does a single software pack of its autonomous features. Obviously, this has nothing to do with autonomy, but everything non-hardware-ish kind of comes in this one package.

AI assessment note: “everything with software in it, they're kind of bundled in a single pack.”

Q Bike is better than active on any day, right? For high performance.

A Important question. Splendor is not better than an active one. Splendor is not better than an ether. At all. Ok. What is better is typically a one 80 cc bike and beyond. The market of one 80 cc bikes and beyond in India is I think about, um, six percent of the Indian doula market, uh, and about 10% of the bike market. 90% of the bike market in India is basically splendor. 9080, 90%. Now that market is also increasingly buying it less for ruggedness. Ruggedness was a factor when roads were like absolutely shit in India. And highways were like not present. It was just all bad, uh, village quality roads. Roads have changed radically in India in the last five, 10 years. Um, tier one, two, and especially tier three. Tier three road quality is actually quite phenomenal. Interstate highways is like pretty good now.

AI assessment note: “What is better is typically a one 80 cc bike and beyond.”

Q So, so why is it so hard, right? Because one is VCs don't understand, as you said, right? Why is the second most hardest VN Why hardware doesn't sell in India? Is it because people take time to build the value in their minds, like, especially consumers, for a new hardware?

A No, I don't think that's the case now. I think India has enough demand. I am, I'm a firm believer. Somebody said this from Lance many years ago. India has never been historically, actually, really, if you think about it, it's not really been a demand-constrained market. We've been a sub, genuinely, we've been a supply-constrained market. We don't get the good stuff. We get the good stuff at a ridiculous premium in India, historically. So I think there has been, just like Japan, Of the sixties and seventies. I think we have a huge market wanting and willing to buy good high quality products. It's just that there are not enough domestic champions building them at, at the sense, at a sensible cost in India today. Um, I think if you were to start a consumer focused hardware company today in India, you would find demand actually an easier problem. Uh, distribution actually is an easier problem because we've cracked distribution in India. There's phenomenal leadership that can, That can quickly join you at a moment's notice and scale up your distribution, uh, across the country. Uh, whether it's FMCG, whether it's, uh, EV or anything. Um, I think what we have historically missed out are two things. One is access to capital. I would still say that's a very serious challenge. Uh, we were talking about it before, right? Like there are no, there are no traditional name VCs on a cap table…

AI assessment note: “No, I don't think that's the case now. I think India has enough demand.”

Q And how, you know, you mentioned you have been You're able to build a large distribution branding muscle over the last few years, and you, you, you also don't come from that background, right? Pure engineer was, was a product developer at heart, and you loved innovating. Can you share that journey? How did this distribution muscle get built over a period of time and what you did for it?

A Um, I think they're still building it. Uh, uh, we may have a 140 stores, but our ice competitors have 3000. So I think there is a long way to go. Uh, but a 140 has been extremely educational. See founders have to learn. Uh, I, I think it's a rare founder who's truly experienced in the industry. Uh, so neither were we. We've learned, uh, as the years have gone by and generally we've realized that, um, It's best to build a muscle in the company yourselves first and fail a little bit at it before you bring in the real leadership and before you bring in the big guns. Every time we've attempted something as a lazy approach, let's just hire a solid VP for this and get out of it. It's generally not worked. So yeah, we've gotten closely involved with, uh, sales. We've always been involved in marketing because we care of the brand right from day one. When I said at the start, Sopran was very careful about, hey listen, we should own the brand. That'll be the fun thing. That'll be a good story. So brand we've always been very particular about. So we're involved in marketing right from day one. Sales is something that's only the last year, I would say, that we got involved in. So thinking about its systems, you learn from failures. We opened the last 60 stores, terrible results, so now you get in, and I try to figure out what they do right in the first 60. What can you, we are big believer…

AI assessment note: “It's best to build a muscle in the company yourselves first and fail a little”

Q And how do you drive sales to, let's say you have one 40 locations right now. How do you drive sales to each of those locations? What are you doing for that?

A Let me think. What do we do? So there are fairly granular targets, broken down store by store, day by day, at every step of customer's interaction, from booking a test ride, to doing the test ride, to making a booking, to making the full payment, to taking delivery. All these steps are tracked. Multiple times a day, and they get discussed at leadership level every week. I think one big learning for me is, India needs marketing. So we had this, ah, very pure view at one point, probably inspired by Xiaomi, and also Tesla, that boss, we should not do marketing. No marketing dollars spent by us. We will only be like this online, community-driven, cool thing. And then I realized that's good for some D to C brands. But if you want to do like thousands of crores of automotive revenue in India, how do you drive awareness? Yeah. Like, your competitors are a hero. Like, if you say Aether, early market research has told us most people, they don't believe that we are an Indian brand. It sounds very European. Unfortunately, that does not board well for us because they're not sure if we are here for, for the long stay. So we realized this in, uh, I am a big believer that you have to market. I think a strategy of, listen, marketing I think is a mistake in India. We are not a country where you can sell stuff on Twitter to a meaningful audience.

AI assessment note: “there are fairly granular targets, broken down store by store, day by day”

Q And in today's market, right, what would your aspiration be, right? Let's say, uh, not, not in EV, but, but let's say in two-wheeler, would you want to be Bajaj? Would you want to be Hero?

A Uh, I, I think, uh, the EV market, I think that overall automotive market will change considerably this decade. I think the current frameworks of Royal Enfield, Hero, Bajaj, TVS, they will not operate, uh, frankly. I think in a very different world. I think as a brand, we're not necessarily too hung up on doing the lowest cost product. We think it's difficult to build a very valuable business doing that. Um, equally, we don't want to do super niche. We don't want to be, so if I were to give polar examples, Hero is super mass market, but obviously with beautiful margins, uh, and Royal Enfield is super niche, but amazingly Apple-like margins. I think I think the right, I think the opportunity in India is now to be more mainstream than Royal Enfield without necessarily trying to do very entry-level products because our per capita GDP is rising. Um, I think that's, I think some of the middle is very thoroughly. Um, our true north on the product side will be experiences. We want to deliver pretty amazing experiences. I think the new customer in India AC Kingdom, which is why they're buying iPhones, which is why they're buying compact SUVs, uh, which is why premiumization of two wheels is a pretty massive phenomenon. Uh, we want to, we want to solve that customer's needs, their mind states, uh, solve for them in a big way.

AI assessment note: “the opportunity in India is now to be more mainstream than Royal Enfield”