Equanimity Entrepreneur - Sharing Experiences On Pivots In Businesses
On May 11, 2020, our Managing Partner, Rajesh Sehgal hosted a webinar organized by TiE Mumbai. The panelists were founders of three of Equanimity’s portfolio companies: Naiyya Saggi (BabyChakra), Sachin Chhabra (Peel-Works) and Atul Kumar (FreshVnF).
The webinar focused on the founders’ experiences in dealing with this unprecedented situation and navigating the challenges with undeterred optimism, strategic pivots and relentless execution. A common aspect displayed by all founders has been equanimity. All three have managed drastic pivots in their business models, deftly and with poise, ranging from a change in sales mix (FreshVnF), having to choose between growth or adding value to the brand (BabyChakra) and moving from a marketplace to an inventory led model (Peel-Works).
The most important focus area for them was taking stock of the cost base and cash flow visibility on a granular level. One cannot stress the importance of maintaining liquidity during such times and each of them took immediate action in reassessing their cost structure and extending their runway. For most early stage businesses, salaries and rent make up the majority of costs and with the current COVID-19 situation limiting access to physical office space in the foreseeable future, founders have given up on excess space and also completely moved out wherever feasible. The capital saved was reallocated towards RoI generating avenues, like working capital, inventory storage, achieving Product-Market Fit for a new line of business, etc. Salaries have been impacted as well with founders deciding not to take any compensation for the next few months or along with their teams, above a certain pay grade, pitching in with voluntary pay cuts. It is critical to maintain team morale and productivity in such times of pay sacrifices. All three companies believe that over-communicating in these times is essential to ensure everyone is on the same page. BabyChakra decided to contract consultants for specific projects and periods of time rather than hiring new talent. FreshVnF decided to provide teams with well-defined problem statements and decision-making frameworks to completely eliminate any friction for their on-the-ground operations. Peel-Works deferred all leaves to the latter half of the year and initiated an extra day of work per week during the course of this crisis. It has been heartening to see how their teams have stepped up to these challenging times and are aligned to deliver success.
And lastly, the founders spoke about outcomes and the road ahead.
Leveraging their brand equity, BabyChakra decided to launch their new line of products. Pivoting from a content platform to a consumer brand was a herculean task in itself, the company was also saddled with supply chain and logistical challenges brought forth by COVID-19. Insights garnered by the company over the course of the last five years helped find a product-market fit fairly quickly. The company is looking to add value to its users by onboarding paediatricians and gynaecologists. In the last one year the company has partnered with 1,800+ doctors and are in the process of partnering with a pharmaceutical company to help bring more doctors in their network.
Peel-Works has been in the midst of changing its business model even before COVID-19 hit us. Born out of the need to solve some of the biggest problems experienced by retailers – price, convenience and reliability, Peel-Works decided to pivot away from being a marketplace to an inventory-led model. Even though a marketplace model afforded the convenience of no working capital concerns, true pain points were inadequately addressed. Working capital issues were addressed, by negotiating favourable credit terms and only storing the top 400 SKUs that contribute about 50% of a retailer’s Gross Merchandise Value (GMV).
FreshVnF has experienced a complete shakeup of its sales mix. From being 80% in favour of institutional sales they have deftly inverted this ratio in favour of retail sales contributing 80% of sales post-lockdown. This shakeup impacted margins in the near term and brought forth challenges in the supply chain, last mile logistics and procurement at the farm level. The FreshVnF team did not just tackle these challenges head-on but went a step ahead in using technology to put in place a set of operating procedures enabling the business to navigate this pivot smoothly. The team banded together to design, test and roll out its consumer app within a week while also successfully redesigning the entire delivery chain to adapt to the new reality. This led to the company reaching operational profitability during the lockdown – a feat no one thought was possible in these COVID-19 times.
Each of these businesses is a critical part of their customers’ lives and by maintaining the sanctity of supply chains for essential groceries, delivering fresh fruits and vegetables to households and helping new parents fall back on a trusted brand for wellness, health, hygiene and nutritional needs, we are proud to have partnered with teams that have worked tirelessly during these times to reduce the burden and stress of their customers.
The experiences above paint a very rosy picture but we can assure you that each success has been built on a ladder of challenges and failures. Every business is unique and we would like to take the opportunity to appeal to all entrepreneurs out there to take a very hard and objective look at the current state of their businesses. Tough decisions and resilience are what can get the ecosystem through this tumultuous time. This reminds us of the age old adage: when the going gets tough, the tough get going.
We hope you enjoyed reading the experiences of our rock-solid entrepreneurs. If you would like to hear the entirety of the webinar, we suggest you head on over here.