Ep218 - Nipun Mehra (Co-founder & CEO - Ula) On Ula’s hypergrowth, Bezos backing & the hard call to shut down

Speaker A: Growth is a mindset. If you set aggressive targets and you dedicate the resources, both time, human and capital, the goals are achieved. I think one of the things that I used to say in Oola was let's aim for Mars. We miss Mars, we hit the moon. But if you aim for the moon and you miss, you come back crashing to earth. So how about we try to aim higher? And I think that generally has stayed with me throughout wherever we set aggressive goals and then found a way to chase after them.

Speaker B: Hi everyone, I'm your host Rohit Bhargava and you are listening to episode 218 of the Startup Playbook Podcast, a weekly series where I sit down with successful tech founders, investors and operators to unpack their journey lessons and insights to help current and future entrepreneurs. Our guest for this episode is Nipun Mehra, the co founder and CEO of Oola Nippon has had an incredible track record in his career at Amazon. He launched their first ever real time inventory management system before going on to becoming an early team member at Flipkart, helping to grow and scale the company into one of India's most iconic startups. He would then go on to become an investor at Sequoia India. In 2020 he co founded Oola, uh, a B2B E commerce platform that aimed to modernize retail supply chains for millions of small businesses in Southeast Asia, starting with Indonesia. Oola quickly became one of the fastest growing startups in Southeast Asia, growing from zero to $50 million in less than 18 months before ultimately going on to generating over $250 million in annual recurring revenue. ULLR also raised over $140 million US in funding from leading investors such as Sequoia, Lightspeed, Tencent, and even from Jeff Bezos himself, making it his first investment in the region. But in this very candid and honest interview, Nippon, for the first time ever, shares the full story of what happened behind the scenes at ULLR and his decision to ultimately shut down the company and return the remaining capital to investors. From hyper growth to hard calls, this episode looks at the realities of what it's like building a high growth startup and ultimately having to make difficult decisions during challenging times. In this episode we cover a wide range of topics including Nippon's lessons from his time at Amazon, Flipkart and Sequoia, the hyper growth of Ullr, and how he was able to raise over $140 million from leading investors including Jeff Bezos.

Speaker C: What led to the difficult decision to

Speaker B: shut down ULLR and return the capital to investors versus going down Another path, navigating the emotional rollercoaster of building and ultimately walking away from a high growth

Speaker C: startup and much more.

Speaker B: But before we get into this interview, I'm also excited to announce that Nippun will be joining as a featured speaker for Cohort 2 of the Como Club. The Como Club is the world's first human accelerator, designed to help ambitious founders and executives implement the systems and frameworks to help them succeed and win, not just in their business, but in all aspects of their Life. Applications for Cohort 2 are now open at TheCoMoclub.com that's Tier T-E K O M O C L U B.com all right, without further ado, here is my interview with Nipun Mehra.

Speaker C: Hi Nippun, welcome to the Startup Playbook podcast and thanks so much for taking the time to be on the show today.

Speaker A: Thanks for having me.

Speaker C: So, Nipun, for those of our listeners that may not be as familiar with you and your story, do you want to share a little bit about your background and what got you here today?

Speaker A: Sure.

Speaker C: I know there's a lot to the story.

Speaker A: There is, there is about 20 years or maybe a little bit more to compress into a few minutes. I've worn many hats in my life, but I know that I've always wanted to be a founder. I started my first company, or if you could call it a company, when I was in college and this was in the year 1999 and I was a kid in India in college and with aspirations of making it to the valley at some Silicon Valley at some point. And then life happened, many things along the way. I was, I worked at Amazon as an engineer and then as an engineering manager after that, got my mba, went to bcg, became a consultant. Very quickly realized consulting wasn't exciting me as much as the fast paced startup world. And so I was in the midst of figuring out whether to move to the Valley or go back to Seattle where I used to live. But someone, a friend of mine, introduced me to the founders of Flipkart. And this friend, his common friend, is actually now the founder of Phonepe, which is one of the largest UPI companies in India. His name is Sameer. And then he introduced me to the Flipkart founder and one thing led to another and I found myself packing up 10 years of life in the US and deciding to move to Bangalore, India to participate in what would be the rise of E commerce. So it was fantastic because short of being a founder, I got a chance to be with the founder to Witness firsthand, sort of like front row seats to this amazing concert that was playing. India was also starting to boom at that time in the startup ecosystem. New VCs coming up, more maturity coming in, uh, and I was growing with that. Loved it. Uh, after that stint I became an investor. I joined Sequoia Capital India, which was the India fund of Sequoia Capital, the US fund which is now called Peak 15 by the way. Became an investor again, loved my startup life. So I think that one thing that has been consistent everywhere that I've gone is like uh, with the exception of bcg which taught me different things, everything else has been focused on fast paced tech companies. Uh, and eventually I found myself that urge that got suppressed after that college, flirting with a startup world came, became so strong that I said that I just need to do this myself. And that led to the founding of a company called Oola. Oola was a dream of sorts. I was in Delhi, in New Delhi and India and uh, Indonesia was taking off. And we all thought that Indonesia would be follow the same playbook as India did. And many of us believe that India would follow the same playbook as China did. And I think we may still be right about that, but not in the time frames that we had imagined. But Anyway, this is 2019 and I decided to pack up my bags and move to Singapore with the eventual goal of moving to Indonesia. But then as luck would have it, Covid happened and I stayed on in Singapore and Mula grew while I was here thanks to a phenomenal team. And finally, when about a year or so ago, we somewhat exited the uh, Oola business, I say somewhat because uh, it wasn't exactly a clean M and a type of an exit. It wasn't as simple. And now I'm on to my new thing.

Speaker C: Incredible story. Obviously so many different parts of that that I want to dig into. But maybe as a starting point it started with you always had this urge, do your own thing to have a startup. Where do you think that came from for you?

Speaker A: I actually was, let me go back one, one, one step back further to when I was even younger than college. I remember my dad got me a computer. Uh, this would have been I think early 90s maybe. Uh, it was a very basic uh, level computer and I would play Prince of Persia and Carmen Santiago or whatever on that, on that machine. Just fell in love with computers. Uh, and I knew I wanted to be a, uh, founder when I realized that that was the way innovation was moving. Like you had to script your own story. Um, I remember there was a time when the Internet first came in India and it was really expensive. But in all his wisdom, my dad decided that it was a good thing for his kids to learn what would be the future of the digital economy. And he subscribed to it at a time when most people didn't even know what it was. Then the stories of Sabir Bhatia, uh, and Hotmail happened and then Jeff Bezos and Amazon happened. So there was a whole bunch of, whole bunch of really interesting things that were happening at that time, which I feel are happening again now with AI by the way, which motivated me to say that, okay, I do feel like I want technology to be the centerpiece of my life. The second part of being a founder was I think just comes a little bit with maybe I take more risks than other people. And I do feel like if you, if you, if you want to make a change, you have to drive the change. It's less comfortable to be a founder than to be an employee in the tech world, right? I mean if you're every stage of a new technology that is coming in, there are always people who will make more money, if that's your metric, being an employee, than on a risk adjusted basis being a founder. If you were an early Google employee, an early meta employee or even later, you probably make more money with arguably less risk or less hard work. I don't know, I don't want to comment on hard work, but definitely less risk. But you don't shape your idea. And for me that was somehow very important. So when technology and shaping an idea comes together is when it was very much like there's gotta be a better way to do whatever thing you pick, whatever thing you're passionate about. And that drove me to startup.

Speaker C: And so that experience in university, I think a lot of people have that type of an experience very early on. I think there's a certain amount of naivety that you need to, especially just to launch your first company. What was that experience like for you and what are some of the lessons, if anything that you took away and

Speaker B: I guess did that.

Speaker C: You've mentioned that it's pressed you wanting to launch a company for a while, is that uh.

Speaker A: Yes, that's right. It wasn't like that was a big company or anything. It was really a college initiative. With a friend of mine, a classmate of mine, we made significant progress for two college kids who would barely. I remember being laughed out of people's offices saying, look at this 19 year old, look at what he wants to do we persisted. And uh, in the end of course it was not the time where even the ecosystem was ready. Uh, there wasn't enough Internet usage, there wasn't enough VC money available or even just the way in which the startup world was viewed was just too early. In India, this is like 1999 in India. It was a very different story. So I wouldn't call it a full fledged initiative, but it was like I said, it was flirting with the idea of a startup. Some of the lessons it taught me to be very like I would go and do business development work. I would wait outside people's offices, I would finish college in the morning, do all my classes, then go do business development work for the company, then come home and do homework and assignments and whatnot. So it took a lot to do. So that persistence, that hard work just stayed with me beyond as well. The second thing was I think I realized that I wasn't ready. I didn't know how to do this. I jumped in without knowing how to swim and there was just not enough time to learn to swim. Right. So but if you think about the positive effects of that, for me it pushed me to say, okay, if this didn't work, what's coming next in my life? And that's when I started thinking about, okay, where do I go after I graduate? Do I want to be in a job? I really didn't want to be in a regular, uh, job coding type of job. I needed something which was more exciting, something new, something more business Y But funnily enough, and this is not a story that has been told very much, I my dad found something called bioinformatics. Okay, genomics more specifically in the year 2000, I think the human genome had just been sequenced and everybody was discussing about how medicine was going to get revolutionized with computer technology. It is happening, but it's probably more appropriate of a conversation for 2025 than it was for the year 2000. But nevertheless, I committed to genomics and I committed to doing research in computer technology. Meeting life sciences, which of course hasn't yet been something which I've applied in my life. But it was great because I was on a frontier piece of innovation, lots of research happening on what role do genes play, how do genes become proteins and yada yada. And I have a feeling, obviously I have no way to prove this. That plus the startup got me into Stanford for my computer science degree. Now when I was in masters in computer science at Stanford, you can imagine this is the year 2002 to 2004. Google hasn't gone IPO yet. It's very. The technology ecosystem is still early and very vibrant. So we had access to people like Larry Page and Marissa Meyer, and these people would visit campus. I've met them more than once in my life. I'm sure they don't remember me, but it was that phase where all of this stuff was just happening today. Google's huge, but at that time it wasn't as huge. So that inspiration that came alongside meeting people like that is then was that something which stayed with me again because that original startup thing didn't work. The bug was still strong, but I knew I was limited in my ability to execute on that. Still didn't know anything. Plus, I had other things happen. Family responsibilities and stuff took over. Somewhere along the way, I decided that an MBA was a good idea, which it was, but for not the reasons I thought it was. And it took me a few years. Actually, if you think about it, almost like 15 years before I got back to actually starting up.

Speaker C: I think that, like you said, there's so much that you m. My experience running my first company was you. It was a very humbling experience. And you learned that. There's so much that you don't know, especially at that time. But obviously, as you mentioned, being at the coal face of that experience through Flipkart would have been incredible journey to experience. What were some of the things that you took away from that, that you think about applying at Ulla and, uh, with what you're working on now.

Speaker A: It wasn't just Flipkart, but I will talk about the. It's. It's the mindset. And for me, that mindset actually came from Amazon in 2004-2008 while I was there. I don't know how many of your viewers might remember this, but in the year 2000 or after the. After the whole bubble burst, 2001, sorry. There was a moment where Amazon almost went bankrupt. Like we're talking about one of the largest companies in the world which had an existential crisis. But once that crisis was behind, and which is why I so admire the man, Jeff Bezos. He persisted and he managed to steer the company, with a little bit of luck, of course. But that persistence again, things that you just imbibe and look up to. Amazon was still growing at 30, 40% a year when I joined them. And I remember that there was a time when some people used to say, I'm testing my memory limits here, but I think Amazon used to be a 5, $6 billion valuation company, which is unbelievable today because many private companies are worth way more than that. But it was. Somebody said, we're going to be a $50 billion company in no time. And I was like, how? How? But then once I got in, I realized that the system drives itself. It isn't just one man, of course, it's the esos that start from the top, but it's everybody's mindset was about set that aggressive target, work towards the inputs to get that target, and who knows, you will come close or you will beat it. But either way, you would have done everything you can with that kind of gross mindset. Same thing in Flipkart. By the way, when I joined, we were also having a bit of an existential crisis, which of course I didn't. In a way it's a good thing. I didn't know that there was a moment where a company was. It wasn't clear whether the company would even have money left to, to see another year. Otherwise I may not have moved from Chicago to Bangalore. Right. But I didn't know. So I moved. But as a result of that, I came at that time where the company was just like in survival mode. And the only goal was can we get the business metrics to be strong enough? Which means you had to show growth, you had to show profitability, and there was no choice or you were dead. Having gone through that experience and then, I mean, the rest, of course is history. Where I think when I joined the company, it was less than a billion dollar valuation company. And in two and a half, three years, it was a $10 billion valuation company. Uh, of course some of it was aided by the fact that the investor interest drove the valuations up. But we had grown 3.4x and every year we were just talking about doubling. And uh, no matter what the scale, we had to double. We were told at one point, I remember, we were told, it is not your problem on where the money will come. Um, that's my problem. Figure out how do you achieve the growth? Because again, I think one thing that many people don't realize is that fast growth isn't just about money. There's this belief that if you have a lot of money, you can just grow fast now you can, but those will be the wrong ways of growing. It's very difficult to grow the right way, even if you have a lot of money. And that was one thing that we did really well at flipkart in that 2012-2014 era. Growth is a mindset I think probably is the biggest Takeaway. Uh, if you set aggressive targets and you dedicate the resources, both time, human and capital, the goals are achieved. I think one of the things that I used to say in Oola was let's aim for Mars. We miss Mars, we hit the moon. But if you aim for the moon and you miss, you come back crashing to earth. So how about we try to aim higher? And I think that generally has stayed with me throughout. Wherever we've set aggressive goals and then found a way to chase after them.

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Speaker C: Uh, it's one of the challenges for startup founders is like their exposure to uh, companies is usually one of one, so they're fully focused on their own business versus I guess one of the benefits of your experience at Sequoia, um, or as an investor is you get to see a multitude of different companies and even your experience at Flipkart, you get to experience Flipkart, uh, Amazon, you get to experience what that looks like. So when you talk about setting aggressive targets or setting that sort of company culture, can you give people a taste of what that actually looks like? So what does setting aggressive targets look like?

Speaker A: Aggressive targets are by definition things that would be out of reach. As a founder, I think the biggest and the most difficult thing to do is to know when you've pushed the limit of aggression far enough where it's not setting yourself up to be a stupid target. You want aggressive, but it should be somewhat achievable. And I think that's been one thing which it seems very obvious, but when you sit down, the planning behind how do you get there needs to be a lot more detailed because nobody knows. Is 100% year over year growth good enough? Should it be 200% or should it be 50%? It has to be backed by some pressure tested assumptions and you've got to see which ones can you really push and what would it cost. So things that are, yes, it's great to have moonshot targets, but if they're not backed by a plan, then you don't know what you're actually going to end up with.

Speaker C: One of the things that. So I spoke to a couple of people in the lead up to this interview. Two of them were investors in Oola, Carl and Ganesh. Something that they both mentioned was being blown away by your ability to storytell really effectively at the early days, but also just really understanding both sides of the, of the table. And that being very important, you know, given that you've got previous experience as an investor as well. What are some of the things that potentially founders miss when they think about fundraising or talking to investors about the market opportunity that you think you got right, that helped you fundraise for Oola?

Speaker A: That's a great question and uh, I wish there was one answer because you could argue there are different styles for everything. There are examples of founders who have raised money out of college, uh, without having any relationship with any investor. Literally they have something that is cool, that is taking off and boom. But that's a little bit of a outlier scenario for me. What worked and what I think is probably the better way of raising money is it's not an overnight journey where you just literally show up and make a bunch of presentations and then walk away with a term sheet or something. Right. If you think about my own journey through 2012, when I moved to India, I built, I got a chance to build relationships with a whole bunch of investors. These investors were. And of course later in the decade that passed, they also grew. Right. So I guess what I'm trying to say is for me, having that relationship established a track record of credibility and consistency. And that credibility and consistency, the story and the logic behind why certain moves were being made, how it made sense, I think that to me was the most important thing. I don't think anybody buys a story alone. A story is really important, but there is no substitute for track record of consistent delivery. To me, I think that was probably the most important things. And if I have to explain that to a young founder, I would be like, get out early, not at the time when you have to raise money, show people that you can deliver on what you're saying. And when the time is right, investors will come. Because people like to believe that behind an Excel model is actually a real human being who can deliver. So that's my philosophy. I continue to believe by it almost all, other than a couple of folks who participated in the Oola investments were all people who were known to me.

Speaker C: I guess there's that like you said, in the right time, uh, those sort of things happen. I think a lot of the time people think about the, like fast forwarding that, that relationship or I guess like they haven't had the benefit of working at a VC fund previously or having had that experience of being at Flipkart. Do you have any advice to founders in that particular position in terms of how to think about building those relationships or demonstrating um, credibility with investors at the early stages to try and convince them to believe in them and believe in their business?

Speaker A: As far as credibility is concerned, credibility isn't a function of what you believe. Credibility is established by what people around you believe of you. And it doesn't matter if you're in college, if your classmates, your professor, people can see even your grade sheet. Frankly, I mean I'm not a big believer in grades. But still, uh, if all of these pieces come together, it shows that you have some fundamental ingredients that could lead you to become a great founder. I'm going to digress a little bit from the question to share an anecdote which I think is quite effective. I was once at a panel discussion at some investor event on stage and I remember someone got up and asked the question of all panelists, uh, that why do VCs only fund kids from Iits or top tier colleges and not from other places? So uh, someone answered in a different way. My point was very simple because I have gone through that journey myself. When you're 15, 16, 17 years old, whatever your late teens, uh, there are many distractions that come in life. Many, many, many types of distractions. But when you're sit for that test which gets you into a premier institution like iit, it goes after years of hard work and sacrifice. So when I see that signal, for me personally, it's not about IIT or no iit, it's about uh, has this person demonstrated at any point in their life that they have made significant sacrifices to get to achieve some goal? You could be a national uh, level swimming champion and you've woken up at 5am rain or shine or Cold and gone for a practice swim consistently at the cost of. Yeah, you can't go out and party every day then. Right. So those are the traits that you look for. At least I look for even when I hire today. And when I see those traits, I double down. So I'm sure investors also see those kind of signals in the absence of a professional track record. When you have a professional track record, it's a lot simpler because in the kind of culture that you have worked in, the kind of environment you have seen, what do your peers and bosses say about you? So actually having that credibility is one part. Second is being able to socialize that credibility. If you, if nobody knows about this, then there is no point of it existing. So I'm of the view that you, if you have substance and don't talk about the substance, that's almost as bad as not having the substance. What's only thing that's worse is in my opinion is not having substance and talking substance, that's worse for sure. But the ideal is build the substance and talk about the substance.

Speaker C: Yeah, yeah. I love what you mentioned. I mean, for us at uh, Playbook Ventures, our investment syndicate, so we invest pre seed, seed stage, a lot of the time we're investing pre product, pre revenue. So a lot of our investments goes into the founder. And like you said in professional, credibility is one marker or one signal of that. But there's generally signals and clues that people leave in the background. So it could be sports, it could be they started a YouTube channel and those sort of things. But I think it's that almost that level of obsession that people get, um, with a particular skill set and their ability to constraint, an ability to perform better than average.

Speaker A: Sure. Look at yourself. You've been doing it for nine years now. How many, as we were discussing before this, like how many people move past episode seven or eight or something. Right?

Speaker C: Yeah.

Speaker A: Uh, that persistence, that tenacity, it really matters no matter what the field is.

Speaker C: Makes a big difference for sure. What was the catalyst for Oola? Uh, so, uh, from what I recall you mentioned that you were in India at the time, looking at the market. How did you land on the market opportunity in Indonesia specifically of all places?

Speaker A: It was a combination of a few things. First, when I was at Flipkart, which is way before I was running the P and L of low price categories. Think books, stationery, beauty and personal care products, um, toys and baby care products. These are all generally low priced products which rotate really quickly in the retail world. All of these products in India largely go through mom and pop stores and neighborhoods. And when I was running this P and L at Flipkart, I realized that it was very difficult to compete with an unorganized sector person who's literally just opening, uh, running a shop out of their house and selling to their neighbors the same products that you're probably flying in from somewhere else and also trying to price discount. The economics don't work very well in those scenarios. And in India, I think about 85% or so of these category kind of market continues to go through the unorganized sector. And the organized sector, which is called modern retail, which are like the supermarkets and stuff, is actually pretty small compared to most other modern economies. So it's like, okay, B2C E commerce the way it has been done in the Amazon way, and Flipkart is trying to do it in the Amazon way adapted to India may not be the right answer. Then two more things happened which I, uh, will quickly touch upon. Some of My friends from Flipkart days launched this company called Oran. It was to take on the B2B segment. And that is something which was one path into the puzzle that I was talking about in Flipkart is to say that, okay, can you actually sell to the mom and pop stores and do what B2C commerce did Amazon and Flipkart did in the B2C world? Can you do something similar in the B2B world? How do you digitize and how do you bring digital technology to these small stores? And the idea was, and I think maybe ahead of its time, was that because of the unparalleled access that a small store has into a neighborhood, you could break into the neighborhood commerce, which was otherwise not possible to do in the Amazon Flipkart style playbook. Uh, so that the reason for the B2B side, the Indonesia bit happened more because I, when I was at Sequoia at the time we had started exploring the Southeast Asia market and a lot of growth was observed. We, as in the Sequoia capital India invested in companies such as Gojek, Tokopedia and so on. And we saw very rapid adoption of tech. And I really felt like I would be missing out if I didn't participate in that story. So it was a huge leap of faith. And it's like, in a way, I hadn't really been to Indonesia before, didn't speak the language, didn't know anybody. Like it was in hindsight, something which only I could have done at that time in my life. I took that leap of faith and moved here. And to make it even more exciting, Covid showed up. So life just went from a very predictable answer to, uh, something complete chaos.

Speaker C: Yeah. And if my timeline's correct, did you raise, um, your seed round prior to moving to. Before anything was really set up in Singapore?

Speaker A: That is correct, yes. Huh. And I'm still very grateful to both my seed investors, Lightspeed, and back then it was Sequoia Capital India, and now it's called Peak 15. Uh, who believed in me and this idea and the vision, even though they perfectly well knew that. I don't know a soul in Indonesia. But I think there is something going back to the point about trust and credibility, uh, which I think played a big role in, uh, enabling that. Yes. I would not have been able to move here if, uh, by the way, we are in Singapore. So when I say here it is here, if I had not raised that money, because that allowed me to create a company, sponsor my visa and so on.

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Speaker C: Getting both Lightspeed and Sequoia, which are both, you know, Tier one investors, is rare, especially for a seed round. What was the story that you pitched to them? Because obviously, I'm sure that they, like you said, you can't come with a lot of credibility, especially with your previous background at Sequoia and some of the things that you've done previously. But they're not just going to fund anyone with credibility as well. Part of that is marrying the credibility with the market opportunity.

Speaker A: It is, it is, and I think you had alluded to some of that, which is what is the vision? You can call it storytelling, but what you're really trying to explain to someone is you're trying to show what the future could look like as you see it. And if that is credible, and backed by how do you think that craziness can be achieved? People will believe in you. I think I'm a small example. You take the latest and greatest example of Elon Musk, right? Like that. That individual at one point, I think he said we will have some x hundred thousand GPUs by summer or something.

Speaker C: He.

Speaker A: And nobody believed that it was possible. Or if you look at Reliance JIO where somebody said all of India is going to get almost free data, nobody believed it. But I think it takes some people to have that vision, explain how it will work and then show that it can work. Uh, and I think that is, um, that any investor, whether you're big or small, are actually counting on that story.

Speaker C: And so when you're just to dissect that a little bit for our listeners, when you're talking about painting that big vision and then translating that into like, how you'll actually get there, what does the, how you'll actually get there look like? Because I guess painting the vision is the relatively easy part. What does the detail of that sort of look like? At the very early stages, which, at the very early stages of company, there's still so many unknowns.

Speaker A: I was just going to say that there are just too many unknowns. So there is only, uh. And that is why early stage rounds are not that large typically. Now, of course, things have changed a lot in the AI space. But when I started my career, a $500,000 seat check was considered a big deal. It grew to 2 million, 5 million and so on. And now of course we hear some pretty crazy numbers as well. But the idea behind an early stage fund is usually that they will have. It's a bit of. Because of such a high mortality rate in companies and in ideas, they're not even companies yet. In such a high mortality rate of ideas, you cannot afford to over index on one company as a fund. So the math ends up becoming, okay, how much exposure as an investor, how much exposure am I willing to take on this idea and this individual? How does that fit into my overall portfolio? Uh, and what is the potential upside of that if it works out now in E Commerce, which, uh, is what Oola was. It's a little bit of a binary situation. It requires a lot of capital to build in the emerging markets. Actually, most people in developed countries don't understand how difficult it is. It's not just about capital. It's human capital. It takes an enormous amount of energy because you're, you don't have beautiful roads laid out for you. You don't have predictable schedules of delivery and yet you're trying to achieve that with all those constraints. But when it does work out, we've seen phenomenal outcomes. Whether we look at Flipkart itself, we look at Shopee, which is Sea Garena here in Southeast Asia, or other large e commerce companies around the world. Right. Amazon, of course everybody knows about, but there's MercadoLibre, there's Coupang, there's so many, so many companies in this space that have worked out really well. So what is the bet that an investor is taking? They're looking at the founder, the space, and can this person, does the founder and the opportunity fit?

Speaker C: I think part of your law with ULLA is that this was Jeff Bezos or Bezos Ventures, first investment in this part of the world.

Speaker A: Yes.

Speaker C: How did that come about?

Speaker A: So I think, as I was mentioning earlier, I have been a huge admirer. It was an inspiration for people like me. I started my career with Amazon and everything I learned some good and mostly good, I would say, came, uh, from that first few formative years of being thrown into the fire. And from there the admiration began. And so when someone I know here, and again very grateful to that individual, introduced me to, uh, this lady who runs, or at least runs part of the family office called, uh, Bezos Expeditions, I had a very good chat with her and I'd say very, very smart person who, despite not being from this part of the world, just got it then. At that time, uh, Jeff was still CEO of Amazon. And she said, look, I really like what you're trying to do, but because Jeff is still the CEO of Amazon, there could be a potential conflict. So no dice. And for me at that moment, actually it was good enough because I understand the constraints. You can't be investing in E commerce when you also have an interest. So totally get it. But then this whole thing happened where he transitioned out of executive role. And incidentally that was also around the time when series B was starting, or rather it was in the middle of series B. And I reached out again saying that, hey, now he's not in an executive role anymore. And I remember this, uh, she said, send me the deck, but you know how it is at Amazon. I have to write a six pager type of memoir. And I said, hang on, I know how it's done, I'm not sending you the deck, let me write it. So I wrote the memo and I'm sure, of course she edited it and changed it and whatever with her view, but for me Having that understanding that how to write the six pager at least made her job easier, if not anything else. But I would like to believe that it actually was aided. It helped basically close that. And of course, when she responded that we would like to participate, I was ecstatic. I called all my co founders and we were like, guys, this may not be the biggest amount of the Series B, but it is my favorite.

Speaker C: Amazing. And obviously with Ulla, you had an incredible rise with the business. So from what I understand, uh, you went from 0 to 50 million in revenue in like an 18 month period.

Speaker A: Oh, yeah. Way more than that. Way more than that. I think we were tracking to about 300 million in two years. Right. But it's a goods business, so it comes with thin margins. But nevertheless, the scale is. The scale was enormous. And I think that was compounded by the fact that it was built in 2020 and 2021, which were the peak Covid years where international travel was curtailed. How do you run a physical goods business where you need warehouses, salespeople, warehouse staff, truck drivers with all sorts of restrictions? I had a team in a, uh, technology team in Bangalore which could not travel to Indonesia. Uh, they had no idea what they were building for. They couldn't talk to customers. So it was quite. In hindsight, I don't know how we did it. Many things came together, but if I were to pick one thing, it would be a phenomenal team, uh, because I was stuck in Singapore. Singapore at that time, uh, like many other countries, had enormous travel restrictions, especially if you were a foreigner. And I'm on a work visa. Right. So it wasn't easy for me to go in and out of the country. And in Covid anyway, people couldn't go in and out of the country at that time. So I'm sitting here in Singapore and we have decided that we need to open a warehouse. And now how do you decide to open a warehouse without being able to see one physically? Is it even real? So having one of my co founders, he went and saw a whole bunch of warehouses. I remember doing some video calls, uh, and then trying to figure out, okay, what would be a good fit for us. Yeah, I think I'm really grateful to having that, like the good team, like a team makes such a difference. Such a difference. It was pretty crazy.

Speaker C: Pretty crazy. And then, as you mentioned, the world changed.

Speaker A: The world did change.

Speaker C: And that, you know, I could change the economics around the business for you. Do you want to share a little bit about that?

Speaker A: Yes, of course. And I think it's probably the more, the more difficult part of the journey by far. By the time at our peak, I think we had a give or take 1500 people on roll and off roll. Um, there were a lot more off roll people, also warehouse staff, salespeople, delivery people and so on who indirectly got business from us. Right. Because we were there, they got business. And then we had about 5, 600 of core employees in the company. In late 2022, early 2023, the markets turned. Okay, and when I say markets turned it was, we went from, we went suddenly went to a 5% interest regime. And what happens when interest rates go up is that investors take a uh, more conservative view of capital. A more conservative view of capital means that if you are in a high risk geography or what they consider high risk to be honest, or if you are in a high risk business model, any form of risk is perceived as low priority to negative priority. You don't want to be there. In fact, to the point, uh, I don't know, some of your listeners might even Remember in late 2022 I think Facebook Meta stock had crashed by I think 70, 80% or maybe even more, which is bizarre. This is one of the greatest companies to have been built over the last two decades. Loses 85% of its value. But such was the nature of things. And Indonesia is a peripheral geography for a lot of us investors uh, in the tech world. And it became very clear to me that capital was not going to come, uh, more capital is not going to come. And whatever I had was what we had to continue down this path with. So that was on the capital side. Now the base requirement of the business is the way a B2B in small sort of mom and pop store economics work is that you have to invest in a particular region. Imagine like ah, a, a collection of neighborhoods, like a district before those places will start to become profitable. And there are thousands of such districts which means you have to keep investing, investing, investing until the ship actually becomes overall profitable. For that you need a lot more money. So if more money is not going to come, your choices are really two One, keep growing the way you're growing and risk that more capital may or may not come and therefore you may end up in a situation where money is run out or you shrink the business to some inconsequential size. Huh. Which frankly is the logical thing to do if you are not an investor backed company. Uh, because then the outcome for the investors is going to be not what they're looking for. And frankly capital has a choice to make on whether what is the best return on capital. So that extra dollar that needs to be spent, where should it go? And I think as a founder, as a CEO, the responsible thing to do is to know whether the best use of that dollar is in your company or not. And that's incredibly hard. I cannot describe how hard that is because you live and breathe your dream. But you have to also have the ability to step back from that dream and say, is this still the best use of that money? It's almost like the field changed. You went to play cricket, but you found yourself on a football field. Now you've landed in the field with a bunch of cricketers, a, uh, batter and a bowler and so on. But what you need is a goalkeeper and a striker. It's a very different environment. So the old world did not fit the new world. And then some tough calls had to be taken.

Speaker C: There is the logical aspect of getting to the point that you make the decision which I want to dig into. But there is also the very human side of getting to that point, of making that decision as well. Because again, from what I understand, I spoke to Prithvi, who was.

Speaker A: What was his official kind of heads of finance?

Speaker C: Yes, yeah, head of your finance. And uh, even through conversations with you, from what I understand, you know, it wasn't yet plenty of cash in the bank, plenty of sort of Runway ahead. Playing devil's advocate. There was maybe some people would have taken a very different decision of trying to pivot the whole business and find a way of, of utilizing that capital in a different way. Why did you decide to go down that path or feel like that was the right. Right path. And again, it's one thing to kind of make that as a logical decision. What was that process like for you in terms of coming to terms with that for yourself?

Speaker A: It still gives me a few shivers when I think about that phase in life because as I said, there was a whole bunch of employees. We were a relatively, uh, well known face in this part of the world. And a whole bunch of investors had bet on us. And it was my duty to make sure that I am watching out for my shareholders at the same time. And I will put this only in perspective. Only to put things in perspective. I want to share this because I haven't previously shared this. When we were at our peak, the paper valuation, again, it's not real money. The paper valuation of my net worth was close to US$100 million. It takes enormous guts to walk up to your, even look in the mirror and say, I'm going to pull the plug on this. Which necessarily means that it's definitely not going to be worth 100, probably a fraction, if at all. So it is. It's not just about the money. That's one big aspect that. So the employees, the dream. Ah, it's okay. Do you. I guess there's a fine line between persistence and insanity. And it's hard to know when you're on which side of that line. I had to make sure. I have done everything in my human capacity to make sure that I have. I've checked all the boxes, I've tried everything I can and then made that decision. So that was quite a bit of a journey. I did a few. I followed a pretty diligent process. We tried various things in the company. Some were. Actually did have green shoots. They did have green shoots, but not to the point where it would have offset the need for capital in that 5%, 5.5% interest rate. So now you have a choice. Do you keep growing and hope that the weather will turn? Or as I was saying earlier, you shrink to a smaller size. We first chose to shrink to a smaller size. Shrinking to a smaller size means reducing how much business you're doing, shrinking to a more profitable subsegment, and letting go of a whole bunch of people. The first time we did that exercise, and I've definitely been around the block long enough to have gone through that more than once, but it hurts equally every time, especially in our case, because we were not just. We weren't just a pure HQ shop. Right? Like people who can easily find other jobs or whatever. Some of these people were warehouse workers, delivery drivers. And that's where it hurts. That's where it really hurts. But I think I would say I'm grateful to the investors on my cap table who were okay with us taking care of every employee that was leaving. In the grand scheme of things, it adds a little bit of, like, solace to, uh, what is otherwise a very difficult exercise that you at least took care of them. Could we have done better? We can always do better. But I think if I look at how most people responded after that and how they still keep in touch, I think we did all right. So that was another tough one. Another thing that we did after that was, or at least I did after that was I was like, I've done most of the work here that I can on shrinking the business and the organization and whatever, but how do I know that even if I keep executing, there is light at the end of the tunnel. So then I met. I made multiple trips and had multiple conversations with other founders who were in a similar space, people in Philippines, people in India, people in even Latin America, to just see how their journey has been. And I came back with the same conclusion that people who had been in the business longer than I had, people who had raised more money than I had and maybe were. Who are even smarter than I am, have not been able to crack the code after eight years or nine years of trying to work at it, then what makes me think I can? Uh, so, okay, you don't want to listen to investors, okay, but listen to other founders. And I found everybody struggling with the same puzzle. And coupled with the fact that Indonesia was not as prominent as India in the investor roadmap, it made the problem more acute for me. So I knew at that point that, okay, if they have not been able to crack the nut open, and I have my own set of issues over here, maybe it is not something which is ready to be cracked yet. And then begins a difficult conversation with. With investors. Like, you have to explain your point of view. And I think, again, I was fortunate enough that most people were invested in other companies such as ours, and they saw why I was doing what I was doing. I remember getting on a. On a call with one of my investors, and this is. It's almost funny in hindsight, because I knew that he was coming with lot of questions on, why are we doing this? Why are we doing this? I imagine that conversation, and I remember logging in at 9pm to the Zoom call because this person was in the US And I. Because I'm not naming the person, I told him that, I hope you have heard about the big decision that we've taken. Okay? And he's like, no, I don't know what you're talking about. So then someone else pointed him to the email that I had sent a few days ago. And he reads it, he reads it, he reads it. And he goes, oh, my God, thank you, thank you, thank you. Okay. I, uh, was like, okay, thank you for being supportive all this while. But it is my responsibility to make sure that I'm doing right by what I think is right by my investors. Five years of my hard work had to be unwound. Uh, but sometimes that's what it takes to just do the right thing.

Speaker C: There is, I guess there are other situations where investors are extremely grateful for getting something back, as opposed to losing all their money or all that money being burnt. There is also, like, speaking of that human element, different interests within, uh, individual interests. That kind of happen when individuals, uh, are investing via a fund and sort of ramifications of a decision like that. And so I guess there's not just you getting to the point where you make this decision. You then have to try and get, convince your investors to go alongside with you. As you mentioned, the majority were on your side. How do you handle or wrangle complex shareholder, uh, or stakeholder, um, negotiations when not everyone is necessarily on the same page or sees the decision in the same way?

Speaker A: Again, I will caveat by saying everybody has their own way of doing things and mine has always been about consistency and credibility. So what I did was I made sure everything that could have been tried was tried, uh, before actually returning capital. We tried. Okay, let's think about pivoting to a new business. Okay, now what happens when you start a new business in a, uh, company that is series B and above stage? The people who have put in more capital, for example, for me, the people who came in series B, tiger, global tencent process and so on, have come at a certain assumption of risk that, okay, the company has hit this milestone, that milestone, whatever, and now it can absorb this level of investment. But then you go back to seed stage, early stage, and take all the risk where the mortality is much higher. That's not okay with people who are late stage investors. I know that. But unless I show it that I've gone through that exercise, it's very hard for the early stage people to say, okay, you know what, why don't you try something new? Ah, and you can keep saying that until you've shown that it is not possible to do it in that cap table structure. Then another idea we ran with was to buy a company because, remember, the markets were bad and we have a lot of money in the bank, so what do you do? You go and buy assets across such a large cap table. It was very hard to drive consensus on the key opportunities that we liked. Some opportunities our uh, early stage folks really like. Some opportunities our, ah, late stage folks really like. Some opportunities nobody liked and some opportunities everybody liked because people just didn't want to take the capital back. So we had to deal with a whole bunch of, uh, competing interests. And as I said, these are people I know and admire and it was not easy to navigate those relationships. And uh, again, once you've shown that you've done everything you possibly can to recover from a situation, even though in my case it came at a cost of enormous amount of time, at least I sleep with a clean Conscience. Because when I took the decision to return capital, it was after everybody knew that I have done everything that is possible. Why does that matter? It matters because of two, three things. One, over the course of you trying these things, remember, an investor is not a human being. They're a partnership and they are accountable to their LPs. The partner who's on my board or in my company, that person has to be able to go and socialize whatever is happening with their partnership. And as you go through the journey, the partnership is also made aware that this is what is happening in the company, this is what they're trying, and so on. So when the end result comes, even though it takes longer, it's not a surprise. Uh, everybody has had the time to prepare their other partners as well as their limited partners, that things are not going as well as we had thought. And that's just the reality of life. Uh, things don't always go as well as we think. Second, it's really important to understand the incentives. And you can only do that when you. Maybe for my case, I'd been on the other side of the table. I'd been an investor before, so I could really emphasize, like, it's very hard. Nobody likes to lose money on an investment and nobody likes even more to have a famous investment that then doesn't work out. So it was really important for me to make sure that I am putting myself in their shoes and helping them with that journey as well. That said, not everything was perfect. There were some who were very supportive and there were a couple who were not. And it took time to get everybody over the line, uh, because it was the right thing to do for the whole, for the collective. I think I had at 1.14 institutional investors. It's very difficult. Not all were equal in size, but everybody had to sign off. So, yeah, uh, it took many months to get through.

Speaker B: We're going to take a very quick break from this podcast to talk about something really important and meaningful and probably something that a lot of you listening can relate to. For the last few years, I've had a front row seat into how challenging and difficult it can be to build something meaningful. The late nights, the constant pressure, the feeling that no matter how well you're doing, there's always more to do and that whatever you're doing is never enough. For a long time, I thought that was just a trade off. To be successful in business, everything else, your health, your fitness, your relationships had to take a backseat. But what if that wasn't true? As an investor I know that the most successful and impactful businesses are built over decades, not over months. But so often we approach life at our businesses as if we're running a 100 meter sprint rather than the marathon

Speaker C: that we're truly running.

Speaker B: These are the questions and insights that led me to launching the Como Club, the world's first human accelerator. Earlier this year. We brought together 26 incredible people, from founders, investors, professional athletes, to senior executives at some of the largest companies. It's an eight week program designed for high performers to implement systems for long term success in their business in all areas of their life, from fitness to mental health, relationships and leadership, all within a, ah, trusted and high caliber community that just gets it. So if you've been doing well but know there's another level, or if you've been running hard and want to recalibrate, I'd love for you to check it out. Cohort 2 kicks off in August and applications are now open. You can find out more details or apply at the Komoclub. That's T H E K-O-M M-O-C-L-U B.com all right, let's get back to this episode.

Speaker C: Knowing what you know now, what would you do differently if you were to start Oola again?

Speaker A: Well, since you take the specific name of Ulla, I don't think I would start that business again for two reasons. I also realized that a business in the long term must rely on its own gross margin profile. And in distribution, no matter how you cut it, distribution margins are always going to be thin. So the bet that you're actually making is that you can compensate for the low margins with better free cash flows in the long run. But that means that you have to sustain low margins for a very, very long time. And frankly, the Oola model doesn't fit in today's interest rate regime. Nobody is going to fund a, uh, 3%, 4% gross margin business or 6% that fundamentally needs to change. But two, if you ask me, what would I do if I started any company again, which is what I'm in the process of doing, I would start with, go back to my core. And my core is technology. I studied information retrieval at Stanford, which partly was the early green shoots of AI's applications in, uh, the real world. It wasn't really AI at the time, or at least not as the way we understand it today. A lot of it was, but it was a lot about A lot of the algorithms that were designed back then actually are, uh, still used. But it is Something which I believe is core to me and who I am. And second, I will focus on businesses that come with high gross margins. I think, uh, a big revolution is coming, and in our part of the world especially, because traditionally the way the US economy grew was. And when I say traditionally, I'm talking over the last 30, 40 years is that as the rise of Asia has been propelled by manufacturing in China and services in India, Philippines, and a lot. I think a lot of that needs to be transformed in the age of AI. The AI is the. We've reached that point. And actually that was one of the things that. Around the time when I was closing Oola, I also realized at that time that there was a, uh, that AI had turned. There was an inflection point of sorts of. It turned a corner and finally commercial applications would emerge. It took me some time, obviously, for obvious reasons, to get out of that, to start what I'm going to do now. But I know I want to commit to the space in general. I think the specifics, uh, even I'm working on, and I will share in good time.

Speaker B: So obviously, very exciting to hear that

Speaker C: you're onto something new and different. And obviously it sounds like a lot of sort of opportunities ahead for you on that front. But I guess, uh, there's a lot of learnings that kind of happen. We have mature and develop as well. Um, what are some of the things that you think about doing differently with the new company a second time round that are a little bit different to how you compare to approaching ULA the first time?

Speaker A: For sure, I think there's a lot of learning, a lot. I think I've only been able to share the tip of the iceberg in this time that we've been speaking. One of the things that, what I learned along the way is that I'm good at. Once I get a vision, I get obsessed by it. And I feel like I came this close to delivering it. Various reasons I didn't cross the line, but that hunger still remains. However, this time I'm smitten by a different bug, which, like I was saying, goes back a little bit to my roots of studying at Stanford, but also in my now mid-40s. Uh, there is a different stage and type of business that is probably more appropriate for my stage of life, uh, than it was five, six years ago. I dreamed of something really enormous and radical and the way Flipkart was built. And I've been, not just me, a whole bunch of Flipkart, ex Flipkart people are obsessed with creating something massive. I still want to create something massive. It's unfinished business, but I think I would be a lot more measured, more calculated in risk, and definitely more patient about outcomes. Not patient about inputs, but patient about outcomes. I think I've graduated beyond permanent impatience.

Speaker C: Love that Nipun. Thank you so much for coming on the podcast and for sharing your journey. I know this is one of the first times that you've shared.

Speaker A: It is actually the first time.

Speaker C: Yeah. Well, appreciate you coming on and being so open with your journey and lessons and insights and very excited to hear, uh, about the new business in due time as well. For those of our listeners that want to find out more, say hello, get in touch. What's the best way for them to do that?

Speaker A: You can drop me an email.

Speaker C: I'll make sure we add that into the show notes. Um, once again, everyone, thanks so much for coming on the podcast. It's been a pleasure.

Speaker A: Okay, thank you so much.

Speaker B: Thanks for listening to episode 218 of the Startup Playbook podcast. As always, full show notes from this episode will be available at startupplaybook.co. i'll be back next week with another episode, but in the meantime, if you enjoyed this interview, please don't forget to,

Speaker C: like, share and subscribe.

Speaker B: As always, thank you for tuning in and I'll see you next week.