Kicking The Habit

Growth for the company was steady for the first two and half years, growing at 1.8X a year. And then came the boom — in 2014, the time when companies went giddy raising money. Urban Ladder, too, was one such that went from having a modest $6 million in the bank in November 2013 to a cash pile of $77 million in two rounds by the summer of 2015.

So what does so much cash do to a company?

Simple, you grow like you never did before.

Until 2014, the company was a team of 40 people operating out of a 6,000 sq ft bungalow making revenues of Rs 2.7 crore (as per Registrar of Companies filings) from selling an assortment of about 500 products on their platform in three cities.

But when you see competition raise money and see that the macro environment was upbeat (for funding), you start making bigger bets, says Srivatsa. Dressed in a pair of blue jeans and a black shirt with the company logo emblazoned on it, it’s evident he wears Urban Ladder on his sleeve.

So with two consecutive rounds of 20 million in July 2014 and 50 million in April 2015, Urban Ladder’s ambitions suddenly expanded into a 42,000-sq ft swanky office. Everything assumed larger proportions in those 16 months–it had more than double the people, eight times more products were made available, expanded to 10 more cities and surely to keep them going four times more coffee was consumed.

With this ramp up, the company was making close to Rs 19.2 crore in revenues by FY15, about six times more than what they did in the previous years.

And Urban Ladder was hooked to this.

“When you have more money, you start to think, we grew close to 1.8X earlier, so we thought let’s grow a bit more,” says Srivatsa confessing to the addictive nature of growth.

And that bit became 4X.

By now, the company also wanted to be seen as a big brand. So from 2015, it spent big bucks on running three different TV campaigns for nearly 15 months in prime time slots.

Besides chasing growth, what came with the money was the restlessness to solve problems. Goel and Srivatsa were emboldened with the money in the bank and felt this was the chance to put an end to all the bottleneck woes the business had, could have and would have.

Of slight build but big ambitions, Goel stands up to make a point: “Typically, you choose one or two areas that are bottlenecks today or are likely to be in the future. And you debottleneck them. This you keep doing as a principle. But when the growth you gun for is significantly high, you say let there be no bottlenecks.”

As a result, the company invested on a host of things much ahead of the curve.

Could there be a problem with stock?

“When an order comes I should have no bottleneck. I should have excess stock. Stock cannot be the reason that I cannot service the order,” says Goel. So pop went that block.

Next, was the availability of products.

The number of products grew from 500 in early 2014 to 4,000 by 2015 and they experimented by adding different designs in upholstered beds, dining chairs and bedside tables, for the first time.

One by one, the management targeted the entire supply chain and began busting bottlenecks that they could encounter anywhere from three months to even 10 years in the future.

Now, is that too much for foresight?

“An 18-month horizon is the maximum a young startup should take considering the changing consumer needs and ecosystem changes impacting new businesses,” says Sreedhar Prasad, partner – e-commerce and startups at KPMG.

Slowing the speeding train

By November of 2015, the founders began to see a mix of internal and external signs to have a more pragmatic approach to business.

Goel, a self-confessed nerd, saw it coming first. The signals from overseas began coming in that the ecosystem was headed for a funding crunch. Internally, they saw that their ballooned product catalogue was not pulling in more customers as it should have. It was time for Goel to have a conversation with his team.

 

Leave a Reply

Your email address will not be published. Required fields are marked *