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CEO Q&A – Ten Big Questions with Sandeep Deshmukh from ElasticRun

News, Views, 18 May 2020

CEO Q&A – Ten Big Questions with Sandeep Deshmukh from ElasticRun

1.      What problem/societal need are you trying to solve and why is your approach unique?

India is a vast country with over 1 billion people, and more than half of the population live in remote parts. Those people are not connected to the modern economy as efficiently as they should be. One of the issues is that traditional distribution networks aren’t very effective in rural areas, so it is hard to get products to rural consumers. We saw that if we could build an efficient distribution network, it would enable more people to get access to the benefits of the growing economy.

The key to success was utilizing a unique asset in rural areas – small neighborhood retail stores called ‘kiranas’. These stores play a crucial role in upcountry India’s economy and are a key conduit to reach rural consumers. However, the infrastructure supporting those small stores is fragmented and unorganized, so ElasticRun is building a store platform, supported by a shared fulfilment network. Through the platform, ElasticRun helps stores multiply their sales and earning opportunities. At the same time, it enables multiple industries such as e-commerce, FMCG, healthcare companies and financial services to expand their customer base deeper into the country. Finally, we are democratizing access to goods and services that people want but currently can’t get.

 

2.      What or who inspired you to start the company? 

The lack of supporting infrastructure in India to enable consumption has been a challenge for a long time, and the possibility of improving the livelihood of a large section of the country’s population really aligned with our personal goals.  The sudden growth in mobile phone usage and the advent of shared economy technologies arriving together around 5 years ago enabled our idea to come to life. So, the three of us decided to take the plunge in 2016 and start the company so we could deliver on our goal.

  

3.      What has been the hardest challenge and the most pleasant surprise along the way?

In the early days when the product was not established, it was extremely difficult for us to convince industry customers to give us an opportunity to handle their business through our model - where we worked with partners instead of traditional full-time employees. They were apprehensive about the ability of a technology platform to deliver the quality they wanted. But once we started delivering numbers, this resistance subsided. We set the quality and scalability bar to new levels, far higher than what was possible using traditional methods. The discussions with new customers now are about further innovations and execution excellence, not whether the model is possible.

The most pleasant surprise has been the initial leadership team building. We had hesitations in reaching out to senior leaders to join us in the early days when the business was limited in size. But we have been very fortunate to have leaders join us not for the current size of the business but for our future potential as well. From what they tell us, it was the connection between their personal goals and what we as a team can do together that made them join. This initial set of leaders helped us deliver rapid fire growth in the initial years even when the systems and processes were still taking shape. Without this team, we could not have delivered as we did. 

 

4.      What’s the best advice you ever got?

Cricket is huge in India, and the best advice I have received from a mentor comes from that sport. He said that being aggressive does not mean you try and hit every ball out of the park. Being aggressive means to wait patiently for the ball that CAN be hit out of the park, but that once you get that ball, you do not hold back and you put everything you have into driving it as far as it can go.

 

5.      What are the future implications of the technology you are developing? 

On the broadest scale, we believe our technology will enable the future of commerce for upcountry India. 

At a more detailed level, we have helped create a digital identity for each of the small stores in our network. Previously the stores were unknown to the rest of the world because they were too small and too distant. Now their identity, capabilities, demand and consumption patterns are discoverable by industries on the ElasticRun platform. This opens up new areas of innovative products and services for the stores, which were just not feasible earlier.

On the supply side, manufacturers, brand owners or ecommerce companies previously were not able to reach thin density regions as the volumes were too low to run dedicated transportation networks. Our stores platform and shared fulfilment network has created a high quality, scalable channel that is available on demand at variable cost to these industries. This has multiplied the reach of these companies in the deeper parts of the country and enabled them to reap the benefits of a dedicated channel at the fractional cost of a shared network.

The impact for end users is simply access to things that just weren’t previously available. Baby diapers is a great example – that sector has seen huge growth since we enabled distribution, proving that there is latent demand. People’s lives have changed as a result of what we do.

 

6.      How do you stay one step ahead of the competition?

The center of our business are the kiranas. We are always talking with the owners about what can make their lives and businesses better. This creates lots of ideas. Many of these aren’t possible right now, but those that are drive our business forward.

We continue to build technology to improve the experience for the stores on the platform and for the customers leveraging the platform. While doing so, we will continue to enhance the value for all the parties on the platform.

As a result, we have increased the income opportunities for the stores on our platforms by 2.5X over last 3 years. We have enhanced the basket of brands available to them by 3X just in the last year. In addition, we have consistently opened up new geographies for our customer companies to reach a new set of customers. While we have added over 400 cities to the physical reach, we have reduced the cost of distribution for our customers by as much as 20%. This is reflected in the stability of our customer base and our growth of dollar share from the repeat customers.

We believe if we stay focused on the constituents of our platform and continue to enhance their values, we will stay ahead of the competition.

 

7.      What top tip for success would you give to other aspiring leaders and founders?

While hiring for leadership roles, you really must be aware of the connection between the personal ambitions and aspirations of the individual and the organization’s goals. They've got to be synchronized for a leader to be fully engaged, so prioritize leaders who have the same goals and cultural alignment with you over leaders who seem to have the necessary skillset and experience, but not the alignment.

 

8.      How has partnering with a company like Prosus helped your business to flourish?

Engagement with Prosus has changed us significantly. We are now far more prepared to scale. While we were always keen on delivering the numbers, Ashutosh and the team at Prosus has brought in much more rigor around measurement of forecasts and delivered numbers. The support that we received from Padma in terms of senior leadership hiring has been precious, and Jill’s help in reaching out Indian media has helped immensely in getting right media coverage. Overall, the association with the Prosus name opens definitely opens doors for us.

 

9.      What other technology or societal trend will have the largest impact on our future? 

We built the technology for stores to operate on extremely low-end phones and to work with sporadic, low-bandwidth data connections. We expect both things to change with time. As more high-end phones become available at lower cost, we will be able to build more content rich products, creating more opportunities. In addition, as data networks get faster and more wide-spread, the interfaces of various systems can become richer. These two changes will significantly alter the scale of consumption on the platform.

 

10.   What is your favorite city to visit and why?

I love to visit Ahmedabad. It is not somewhere I knew much about, but I studied there for my MBA and fell in love with the city. Ahmedabad has a very welcoming air about it, and it is very high energy, full of color and noise and great culture. Even more, the food is amazing. It is home of the Thali, a kind of lunch buffet with lots of smaller dishes - if you visit you will be spoilt for choice!

 


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