Discover how homegrown brands like Zeno Health, Cityflo, and Bombay Shirt Company are leveraging technology and brand storytelling to create unique products and services for the Indian consumer. From affordable healthcare to premium shirts and seamless urban commuting, these businesses are shaping India's consumer landscape.
[Sandeep Murthy] Akshay, let's start with you. You, like a lot of these guys, were in college in the US, worked there and for some reason decided it was not for you. You wanted to come back. Let's start with that. How did that happen? And then from there, how did the BSC story start?
[Akshay Narvekar] So I went to school in Michigan, Ann Arbor. I studied Economics and... and unlike most of my friends who ended up getting into banking or consulting, I always knew that life wasn't for me. So I packed my bags and moved out to California. I started working for a company called BCBG Max Azaria, it's a large women's wear label and spent roughly five years there on the strategy and operations side. Decided to move back to India around 2009. At that point, I thought that private equity was the life for me. I did that for a couple of years and then realized I want to start my own business, rather work at growing my own business rather than helping other people do theirs.
And honestly BSC just started off as... It was a bit of a coincidence. So I had a personal problem. Nothing off the rack fits me. I have to get stuff tailored. And I found it was a very fragmented market. There's no brand built around it, no experience, no consistent promise. And I thought there was something there. And honestly, the model was also born out of a few constraints. I had no capital. I started with a few thousand dollars, which means I didn't have money for inventory... And that's kind of how it just evolved from there.
I had no capital. I started with a few thousand dollars, which means I didn't have money for inventory... And that's kind of how it just evolved. Sandeep mentioned earlier, I think there are benefits of the model, externalities, like no wastage. I don't know if you guys know, but apparel is the second or third largest contributor to environmental waste because mostly it gets burned or finds its way into landfills. So a lot of it was born out of the constraints. But there were positive externalities. It's tough to make the order at scale. There's a reason why not many companies have done that. For us, it's taken us, I think, almost 10 years to perfect the model, for the supply chain, for the front end. Hard things take time and I think we've reached an inflection point now. So hopefully the fun part of the journey starts now.
[SM] One of the interesting things was that we were talking about slow fashion versus fast fashion. And I think the world has been driven by faster... There's a logic for being different. And I think that's what we're really playing upon there.
[AN] Yeah, we're focusing at the top of it, right? So the market size is not very large. You know, we're not exactly the cheapest brand you'll find. It's, I guess, you call it somewhat expensive. Our focus is on repeatability. So if you may have a smaller TAM, but if you put up a good product and service you can get customers to repeat and there's still large business to be had there. So it's a very operationally focused business, a lot of heavy lifting...
[SM] Rushabh, when we look at commuting, I think the thought early on was that you've got Uber, you've got Ola putting more people in cars, just adding more mess on the roads... the reason this makes some sense in India, especially a place like Mumbai... Can you talk a little bit about the nature of the way in which people live and the way in which people commute that makes it conducive to being able to commute by bus.
[Rushabh Shah] I think in one of our first meetings with Lightbox, there was a quote in our presentation... a developed country is not one where the poor have cars. It's where the rich use public transportation. When we started, I was 23, straight out of college. I was working at Nariman Point for BCG and you had two options. You could either take an Uber or an Ola, which was expensive but comfortable, or you could get into the local train. I think someone mentioned that it costs a few cents. But you will reach the office... We actually have a term, which I found out, which is 'super dense, crunch load' -- which is what the local train density is at peak hours. It carries eight times 'super dense, crunch load'. It carries eight times the number of people that it's built for. Eight people die every day using the Mumbai local train because they are hanging out of the train. We don't have doors. We don't have doors because the load is so high that people actually hang outside the train.
So we believe that this is something uniquely Indian, which is that we have very high densities. If you look at our cities, Mumbai is the densest city in the world. But we don't have the public transportation infrastructure to support it. And, you know, obviously by then, India started using apps to book cabs. We said that's not the solution because of how dense the city is. So can we get shared mobility using the convenience of technology to move people from point A to point B? And that's how the idea was born. It was basically a problem that we faced ourselves.
When we started, it was actually more mass market. We were targeting people who were in the trains, in the city buses. But we realized that the person who's actually driving has the same problem. No one enjoys their commute... you could ask anyone and satisfaction is going to be very low. So we said, can we design a service for the person who's actually driving and what does that mean? That means you need to pick them up close to their home and drop them close to their office so they're not wasting time in the first and last mile. You need to have multiple options to give them the flexibility to leave whenever they want. You need to have fewer stops because you don't want to lose time in the journey itself, and you need to make it comfortable.
Using data, we look at the dense residential hubs and connect them to dense commercial hubs where there's a lot of traffic. We run 10 or 15 buses over a span of two hours in the morning and three hours in the evening. So you get a bus every 10 minutes. On the app, we offer tracking, free rescheduling, free cancellation, and no stoppages along the way. There are routes where we've actually seen data where it's actually faster than your car, which is counter intuitive, because it's a bus, it's a 35 seater... because the amount of time that you'll spend looking for parking in a city like Mumbai would offset the extra time that a larger vehicle takes.
[SM] The economic structure of the pharmaceutical industry is quite... The number of the margin that goes out, when we talk about what the actual medicine costs to make and where all that's lost along the way, and how that is what we've tapped into here. I think the US, you guys may have seen Mark Cuban start Cost Plus Drug Co... we have our own version of inefficiency. Sid, at Zeno, you've managed... to attack it differently. So can we just talk about that value chain a little bit.
[Siddharth Gadia] So let's just understand the market and then we'll understand what the value is, and that is where Zeno comes in... So India is a generics market by law. So India does not provide any patents to any pharma companies. That's why we're the generics capital of the world. A lot of patents that have expired in America, they send them here. India manufactures and sends it to other countries. A lot of medicines are also being consumed in India. To sell those medicines in India, what the companies do is that they put a brand name over, for example, paracetamol. And then they started incentivizing the doctor so that the doctor prescribes that brand. So for example, if the manufacturing cost is Rs 5 per unit, the selling price is Rs 20, and incentivize the doctor. That is how generics have become branded generics in India.
We said that this is not how it should operate. Consumers should know that they are taking paracetamol and it costs Rs 5. We can definitely sell it even after adding… Rs 30-40 to the consumer. And that is what we did and that is essentially how India will evolve… there's an industry inflection point coming where generics will be sold as generics. We will move towards generics as real generics, and players like us will be the ones who are dealing with the consumer providing them the best quality genetics at the most affordable prices.
[Audience Question] What is your plan when it comes to convincing customers? Because if I go to a pharmacy, or a regular patient is going to a pharmacy, maybe they're trusted better… So how do you convince an average patient to come to you instead of going to their trusted source, even if it's cheaper? How do you make sure that they believe that's the correct medicine?
[SD] We have a lot of pharmacies which are present across Mumbai. Bombay. The discovery of the pharmacy happens because whenever we open a store, we do marketing so that people know that the pharmacy is there. The marketing message is also that you can get affordable medicine here. Now when people walk in, what we essentially do is we always have both the products (branded generics and unbranded generics). We educate them that your medicine is not the brand… this will cost you only 30. But please show it to a doctor. They take it to their doctor before consuming and that’s how trust gets generated.
[Audience Question] Where my family is from, in Ludiana, if you want to get something done, you'll go to the tailor that your friend recommends. In Mumbai, I'm not sure if it's different in metropolitan cities, but how do you compete with tailors? The influence of people sharing their recommendations, that's often stronger than marketing and digital advertising.
[AN] So it's a very sticky business. Customer acquisition is not easy, because everyone has their favorite tailor… So one is consistency of product for the tailor, you may not get the same thing and choice. We have the ability, because we're centralized, we’ve invested in very high end machinery… So with the machinery, the quality of the clothes is better. And then when you package that all together with the brand, selling a lifestyle, hopefully that's coming back to us. Once you have acquired a customer it just becomes a very, very long term relationship. How do you acquire these customers? A lot of it is word of mouth. I think you have to be sort of present and salient in your customers’ minds. I think if you keep doing the right thing long enough, it eventually compounds.
[Audience Question] I think you're doing great work in providing more transparency. But I'm just wondering, what stops the consumer, once they're aware that this is happening, doing future research by themselves and finding generic medicines. How do you keep customers coming back to you?
[SG] Once a consumer becomes aware, whenever they have to make a choice about a medicine that a doctor has prescribed, they will come to Zeno and ask whether we have an alternative for that brand. Also, if it's a chronic medicine, they will want to repeat it. We make sure that all the costs are so tight that we are able to provide the best price. So if you are providing the best price, always offer the best experience to consumers…
[Audience Question] So tailoring is a service, right? You can only scale it so much. And also, I don't know, at least for me, when I'm tailoring, I pick, like, my top two or three clothes and get that done. Just use it for the rest of the year. And since you're already, like, aiming for high end customers, I feel like there’s like, a certain ceiling. So how are you working around around that?
[AN] The focus is on repeatability. So the lifetime value for someone who shops with us, some of the data tells us that if you shop two or three times with us, you're likely going to be with us for life. So the question is, how do you keep them coming back more and more… We do start at more affordable price points, get people into the brand, and then over time, might bring them up the chain.
[SM] Rushabh, could you talk a little bit about the tech in Cityflo and also maybe contrast with the airline industry… So even thinking about this, it's a bus. How complicated can it be, right? Put the bus on the road, put some people on the bus, grab the bus, right? Maybe talk a little bit about how you think about pricing, about tech. How do you think about optimization?
[RS] So I think the tech has two aspects. The visible aspect and easy to understand aspect is the consumer facing tech, right? We have the app, the booking platform, you have the tracking platform, and you know, you can have passenger authentication, etc, which is on the app. And then there's the 90% of our tech, which is actually our operations, which is, how do you ensure that the buses leave on time? That they're following the route that they were supposed to, in terms of the punctuality, how do you ensure that they're always available within schedule, how do you ensure that the bus quality is what you promised? How do you minimize the amount of returns, etc, as well as even before that, if you think about it, what are the routes that you want to design? What is the time that they want to travel? And then, most importantly, what you spoke about, which is something that we're getting really into right now, is, how do you fill the bus with this maximum capacity, and how do you extract because the bus seat is the most perishable item that there is, right? It's like milk, because once the bus leaves and the seat is empty, I can't make any money off it. And every day I have 20,000 seats, and I have to ensure that they keep selling. And the revenue per seat is basically the fare I'm charging per person into the occupancy percentage of the bus. So how much of my bus is filled into… The higher charge per person, the fewer people are likely to use the service. So what is the optimum price point that maximizes, not the occupancy, but actually the revenue per seat…
