Scaling across borders
Sumer Juneja and Peyush Bansal, co-founder and CEO of Lenskart, on stage at Slush 2023, discuss the challenges of scaling companies domestically and internationally
00:00:00 —
Sumer
Hi, good evening. Good afternoon, everyone. Super excited to be here. Introduce you to Peyush, who is the CEO and founder of Lenskart, the largest eyewear brand across Southeast Asia and India. At SoftBank, super privileged to be part of the Lenskart cap table. We invested in 2019. I've been on the board since then. Been a unique position to see it grow from $100 million of revenue close to a billion. So, Peyush, welcome and thank you for coming. Before I get into the Q and A, I'm not sure everyone knows the depth of Lenskart and what they've achieved. So a little bit of introduction and then we'll get into the Q A.
00:00:48 —
Peyush
Thanks, Sumer, and happy to be here at Slush. So Lenskart is a platform for you to buy loads of eyewear for fashion, for utility, whatever you want it to be at a surprisingly great experience every time. We're a full-stack company, so we design, manufacture, and ship glasses directly to you. So we also end up saving you a lot of money and give you a lot of choice almost every week. Now, we've been around for about twelve years. We operate India, Southeast Asia, Japan, and Middle East. We are about 15,000 people now across these markets, we ship close to 25 million pairs a year and touching about a billion dollars in revenue. Profitable and still a long way to go.
00:01:41 —
Sumer
Yeah, that's the key word. Profitable tech startup, which is amazing. I think the first question for me, Peyush, is you came back from the States to India, which had a big opportunity. You had a white sheet of paper. I would have thought you would have gone for horizontal e-commerce, a bigger opportunity. Why vertical? Why not horizontal? And why eyewear?
00:02:05 —
Peyush
Know we, Lenskart didn't start with a business plan, right? We are missionaries in a lot of ways, because for me, I used to work in Seattle at Microsoft, and Bill Gates invited some of us to his house and he was talking about how he's going to change the world with the foundation after having already changed once already with Microsoft. And I was building new features in Microsoft Office, and I was young enough to think that, why am I not changing the world? And that's when we came across the whole problem of it was just accidental that I came across that about 50% of the world today needs glasses, which is about four, and only 50% of them have it. So about two and a half billion people globally don't have glasses.
00:02:50 —
Peyush
And according to WHO and World Economic Forum, they say that this is the biggest health ailment in the world. And on the other hand, I was constantly seeing that the evolution that has happened in apparel, shoes, everywhere, where the quality of life has improved. I used to run, and there's running shoe and walking shoe, but in eyewear, we've kind of stayed pretty boring and non-evolutionary. So I think it was like, let's go change the world. Let's transform the way people see. So it wasn't literally a decision between horizontal and vertical. It was like, let's do something that would be worthwhile doing.
00:03:28 —
Sumer
But early in your journey, and I remember asking this question also, when we invested, is big opportunity, very focused. But I know you flirted with other verticals, and that's a question I asked when were investing, like, oh, man, are you going to be focused on lenses or are we going to do other stuff? Why was that? Why the temptation?
00:03:48 —
Peyush
Well, that was the side effect of raising money, I think we raised money, and suddenly, I think in the middle, we got distracted and were chasing GMV. We were working not for the purpose, but for the next fundraise. And we never realized when that happened, because there was a point in time were reflecting back in a conversation, and it just occurred that about 80% of our revenue was coming from non eyewear. And that wasn't the reason we started the company. We started the company to transform the way people see. And it was a tough decision, because if we wanted to go back to our purpose, we had to shave off 80% of our revenue, which means no fundraise and from growing company to a degrowing company. But I'm glad we took that call. It was a tough one.
00:04:40 —
Peyush
We shaved off 80% of our revenue, went back to our purpose, and we had all this team, which is working on all different accessories. We put them back into eyewear, and there's no looking back, ever.
00:04:52 —
Sumer
Okay. That's pretty impressive that you managed to cost correct and accept that there's a change of strategy.
00:04:58 —
Peyush
I think it's important to write. I think I've realized when we write these things and we can go back to the manual, it helps because we often get distracted.
00:05:06 —
Sumer
That's true. That's true. So the next question I had for you is, and I think there are a lot of investors and founders here. Your cap table is a plus. SoftBank, if I can call it A plus. And then you have TPG growth, Ardian, Temasek, KKR, the who's who, and one of the few companies India which has actually given large secondaries to a lot of their investors. I think from your perspective. Why? When? Which investor, who adds, what do you look for? And I'm sure it's not been a super easy ride. You don't need to tell me here who you want off your board. I'm sure you want some people off your board. But I think from a founder, love to get your perspective on because you selected them very carefully. So what was the thought process?
00:05:56 —
Peyush
So, first rule, I think, of the game, in my view, is that beyond money, you have to have a good chemistry with the person who's going to invest money. And there have been times where you walk out of the meeting thinking everything is good, valuation is good, check is good, money is good. I understand that sometimes you don't have that privilege, but am I going to feel good about working with this person? So that was obviously the benchmark initially. But over the years, I think it was very clear to me that this is not a short term journey. It's going to take maybe 10, 20 years. And at each stage it's important to get the investor, at least in my view, who's aligned to that stage. And also before signing the final documents, I always used to ask the investors, like, why are you investing?
00:06:47 —
Peyush
What is in it for you and what is your expectation? I remember once you were about to sign the deal just before SoftBank with someone, and I asked in the car, we are so expensive, where do you see? And every time I felt that is misaligned, I won't take the money. I remember in SoftBank case, we took, what, six months to align on what we want to do with Lenskart and what SoftBank wants to do with Lenskart until that alignment happened. And then SoftBank, we took money literally when about after five, six years, we felt that we have a product-market fit.
00:07:21 —
Peyush
And there was a big debate between the co founders saying, if we take this much capital in the company, because it was pretty much more capital than we had raised over the last six years collectively, would we be able to justify? And so the idea was, okay, if we have this capital, let's invest behind talent and technology and see if we can make it big. So that was the purpose of the SoftBank bank round. And I think in hindsight, that was a very good decision and allowed us to take some of the big bets. We never ended up consuming that capital till we did this acquisition recently. And so it was helpful with that. And then once we started sort of seeing profitability, we wanted to get investors who don't have a short time horizon.
00:08:04 —
Peyush
So went with the sovereign funds like Ardian and Temasek who can stay invested pretty much lifetime in a company, or at least 10, 12 years, as long as you're going and delivering what you want to deliver. So, yeah, I think we have been fortunate to have that. But if there's expectation mismatch, I think things go wrong. So you have to be very careful about the partners. I have often gone with a lower valuation with the right partner versus a higher valuation, but maybe not the best-fit partner. And I've also seen that if the value system between the partner and you are not aligning, there'll always be a problem.
00:08:44 —
Sumer
That's perfect.
00:08:45 —
Peyush
I want to ask you, why did you guys invest in Lenskart? Because in those days, were not so big. We were not so maybe not so tech first, as SoftBank would call it, in terms of your equation, were not the platform business. So what was in it for?
00:09:04 —
Sumer
No. So I think two things. So I think, one, know, you do the model, you do the mathematical. It's a very high margin business. You were definitely the leader there. But I think more for us was the way you and the team approached the business. They were truly focused on this single mission. The tam for us was big enough. And I think the fact that we got a good feeling that you're not going to get distracted, really excited us. You can build a retail business, a lot of people can build it, but I'm not sure how many people can build it by being tech first. And that paranoia about consumer excellence, everyone kind of, until you don't have that, I don't think you're going to build a really kick ass brand.
00:09:50 —
Sumer
And with Peyush and team, we said every time we spoke to him, he didn't talk about valuation, he didn't talk about kind of how big this company could become, and that's our job. But he spoke about customer obsession, and I need a really good team around me. And I think that really excited us to say, okay, this is someone and the team who we would love to back. Two questions I had while you built Lenskart to this scale. And I think the two questions which worried us a lot, one is, I know you used to get a little bit annoyed every time you said, oh, you like the Warby Parker of India?
00:10:24 —
Peyush
Trust me, I've been at Slush. And everybody asks me, what do you do? And I say, we run eyewear companies like, oh, like Warby Parker. I think they've definitely done. It's a good thing, I think, because it's a good starting point. It's not the best starting point.
00:10:38 —
Sumer
Yeah, but it's a Warby Parker with I think 5x the revenue and 5x the value. So I know, don't compare me to a Warby Parker, but I think the most important point for investors and coming into I guess until maybe two or three years ago is how would you compete with Amazon and Flipkart? The question was Amazon in India is doing extremely well. They can enter this segment anytime and with the might of technology, capital, etc. So how did you keep Amazon never even tried messing with Lenskart, if I can say that. How did you manage that?
00:11:16 —
Peyush
Well, I never say never. I think by staying grounded and staying core to our proposition, not getting distracted, learning from our mistakes, solving the tough problems, knowing that if someone came with all the money and all the might, you would still be able to deliver a great surprising experience all the time to customers. I think it's all about staying super focused. We have to be prepared. I won't say you can just assume that they would not do it. We have to be prepared. We have to know our customers better than they would know this category. We have spent twelve years in it and if we don't do that well, one of the things I would say is as the company grows, I used to spend like 200 days with customers earlier and as the company grows that time reduces.
00:12:14 —
Peyush
And I think what we need to do is go back to the basics. Go back to the basics, spend time with customers, know if we know our customers better than we can.
00:12:24 —
Sumer
I guess with the amount of founders et cetera in the room, 25 million prescription glasses a year, 25 million customers, I think you're going to get close to a billion dollars of revenue. What were the biggest challenges scaling? Normally companies get stuck at the 200 odd million. You're going to be 5x of that and profitable. Top three learnings or top three issues founders should keep top of mind?
00:12:51 —
Peyush
Yeah. To be honest, when were at about that 200 million dollar number, were worried and those were the time we were growing at maybe 25, 30% a year. And people used to come and tell us why did you not grow faster? This is not the fastest growing startup. And what I realized was that while the initial years of the company was about customer obsession, to go beyond this 200 million dollar we had to do something different. And that was we had to now create a team and a culture which can deliver that customer obsession versus doing it ourselves. I think this doing versus creating a system which can deliver, which can take decisions was a big shift. I would say that were only customer obsessed. We were not talent obsessed.
00:13:44 —
Peyush
As you know, I took the role of Chief People Officer for two years because I wanted to get deep. And we just kept raising the bar. We knew one thing very clear, that if we don't cross this, it is something internal, because the market is there, the problem is there. I mean, India alone, there are about 700 million people who are without glasses right now. So it has to be execution. And so we stayed persistent. It wasn't easy. We failed many times, but I think we kept at it and were very clear, if we are failing, it is internal.
00:14:16 —
Peyush
And we kept raising the bar of talent and kept learning from the Googles and the Amazon on how they are, even from deciding how to attend a meeting, how to write a meeting note, how to document it, what kind of talent needs to bring in how deep we want to go into the problem. And I think that's probably paid off. And then a lot of people say that the first eight years of lens card, we grew at 30%. And last three years we grew at 60%. I think it's to do with people and culture.
00:14:43 —
Sumer
Got it. And I think when India was humming and by far the leader in the country, you said, okay, this is not enough, let me go and expand to Japan and Southeast Asia. And Lenskart bought a company in OWNDAYS, which is a Japanese based company, but operations all over Southeast Asia, a large acquisition. What gave you the confidence that you could. I don't know if you speak Japanese, but what gave you the confidence?
00:15:13 —
Peyush
I understand when a Japanese says something in Japanese, what they really mean.
00:15:18 —
Sumer
If they don't give you a meeting, means they don't like you, maybe. But why do you think the company was ready? I think even without OWNDAYS, Lenskart could be an 8-10 billion dollars outcome. Where did that confidence come from? I know you chased the founders. They said no to you, I think five to six times. Why that perseverance? And what was the learning there?
00:15:40 —
Peyush
Yeah, I think this was about the time that I think we had pretty much become very obsessed about our mission. More obsessed than were in the first 8, 10 years, where we had clearly said that we are not in for the IPO, we are not in for the outcome, we are here for the impact. We're going to impact X number of lives. And Southeast Asia has about 80% myopia. Today when you go to Korea and Hong Kong, it's 90%, Singapore is 80%, and by the age a kid gets to 18, 80% kids are myopic in India, teenagers. And so for us, were doing a lot of tech India now and at a scale, and we knew that we could extend this, and were looking at markets, but this seemed like a market which needed it the most. So I think went back to our purpose.
00:16:34 —
Peyush
So that's why Southeast Asia largely, and it was know we just turned profitable. It was a big bet. And the conversation at the board was like, if you want to do it, we'll support it, but if you don't want to do it, there's no pressure. So it was a big bet. I think my neck was on the line more than anything else. But what gave me the confidence was, again, the mission. And the second part about why Japan, and know again, there's a risk there. And we made about five offers, and then we made the 6th offer. So were very persistent. I think this was the time when I had taken the HR role, right. And I kind of started figuring out that what works at Lenskart, right? What kind of things work?
00:17:22 —
Peyush
So what I realized is that the relationships that work at Lenskart are the one, whether it's investor, whether it's employees, whether it's vendors, where there's a commonality of cultural values. We've often seen that we can hire people who may not have done that before, but if we hire people who sort of align with us the way we think in terms of obsession, 10x thinking, agility, discontentment, then that relationships last long. And MNA is always like, the success rate is what, 1%, maybe 2%. So the chances of failure was higher than success to me. I'd known these founders, and every time I go back and I used to visit, we had the same values. Customer obsession, frugality, agility, collaboration, the thought process on how you are taking decisions.
00:18:20 —
Peyush
And I kind of felt that while we may get other opportunities, we may not get this alignment, and then the risk is higher, so it's okay to pay that premium. And I think we stayed persistent. It took a lot of convincing. I had to literally live in Japan for a long time, and I'm glad we got it done. It's been one and a half years. Phenomenal journey. I think we have now 13 cultures at Lenskart from one Indian company, and we have 13 cultures. So it's been an amazing learning about diversity, inclusion, and how to.
00:18:49 —
Sumer
And what have you learned from OWNDAYS? Obviously, the Lenskart culture is good. What have you benefited from their culture?
00:18:56 —
Peyush
The Japanese planning and excellence in customer experience. I think we do a lot of things with technology, they do just a lot of things with culture and the training and just the planning. I think we plan, but I think where our planning stops, it starts. I've been to events. I know the meticulousness with which, and we are bringing a lot of that now into Lenskart India and Southeast Asia.
00:19:27 —
Sumer
Got it. And I think a little bit I do want to focus on. I don't think people maybe here don't appreciate the volume of eyewear that you ship and the remote parts of India where you've promised next day delivery. I just want them to appreciate and just talk a little bit about the new manufacturing plant you've built and how you manage to ship 25 million glasses a year and next day delivery India, where the infrastructure is not the best.
00:19:58 —
Peyush
I think you asked this question about that tomorrow if Amazon comes into this business, what would you do? I think the answer lies there. We have to solve the tough problems, the easier problems everybody can solve eventually. I do feel that as consumers we are used to these great experiences in all other categories. We are getting spoiled every day with selection, with choice, ten-minute delivery. But in eyewear we kind of don't expect it, somebody's going to do it. When the whole Covid period started, we did a vote in the company and we asked if we could deliver glasses next day, which nobody has really done from a centralized ecosystem, what do we think our business would grow by? And the minimum answer I get was 50% and the highest was like ten hundred percent.
00:20:45 —
Peyush
We had all the money that SoftBank had given us, which we did not consume. So we said, let's build the largest factory in the world. Let's put all the automation and work backward. To say that if a pair of order comes at 09:00 p.m. In the night, can I get it delivered next day? And on the paper it looked impossible. So I think we put in $100 million of cash in building a factory with a clear purpose. And now we are delivering, right? We are delivering glasses next day. We recently did a survey. There's nobody else in the world who's able to do this. But eventually what I have seen is that the tough problems are difficult to solve and it's the basics that you need to get to. And I remember the journey. We were about 14 at promoter score.
00: 21:40 —
Peyush
We went to 50, went to 60, went to 70. All happen every year. But then were stuck at about 71, 72 for four years. And it won't move because it was good enough. I mean, were at 80% promoters, 10% detractors, 10% passive. What's wrong? And then when we built this factory, we started delivering next day. Now we just recently crossed 80.
00:22:03 —
Sumer
Oh, wow. Okay.
00:22:04 —
Peyush
Right.
00:22:05 —
Sumer
We don't have time today, but I think the other story, if you ever meet Peyush, is how the company India went through a very strict lockdown overnight and we have 2000 plus retail stores. And how Lenskart coped with that, both morale for the organization as well as keeping costs under control was just remarkable. I don't think you have time to go through that, but that was exceptional. We're sitting in Europe OWNDAYS, is going according to have, I know your balance sheet extremely strong. You have lots of investors knocking on your door. When is the MA in Europe? You've done a small one in France. I know, but is Lenskart going to be seen on the streets of Helsinki and London?
00:22:52 —
Peyush
Well, we've made a little bit of start with Paris. We just invested in a brand called La Pathid Lunitaire in Paris. We have a lot on our plate, to be honest, and I want to make sure that we are able to, we only bite as much as we can chew, but with the vision that we have to serve a billion people, we'll eventually get here. What do you think? Should we, I mean, you manage both India and Europe.
00:23:14 —
Sumer
No, I think the quality of your glasses, the design, the price at which you offer them, I think the market is wide open. And I think just like any other country, I think the retailers here are still more offline than online. And I think you can really shake that up by being online first mentality. And if you offer next day delivery of prescription glasses, that's going to be phenomenal.
00:23:44 —
Peyush
See, I think as this culture of multiplies, of being able to take decisions in multiple geographies with the same mindset, it becomes much easier to scale.
00:23:56 —
Sumer
Correct. I'm going to ask you, I guess, two questions. One, I do have to ask you about AI. I know you're a very tech first brand, but where do you see or what is your vision for AI, for Lenskart? Right, let me spend 30 seconds on that. But more importantly, what's the next five years for Lenskart and where do you see it in scale, in geography? I know you have the capital, but what will be the biggest constraint to get there?
00:24:26 —
Peyush
So, look, when I was at Microsoft, Bill Gates used to speak about AI, right? And I always believe that technology and AI is not, its a means to an end. You can't start with saying, okay, let's do AI. You have to say, okay, this is the problem. And what can technology do? And what can AI do? I'll tell you example. I mean, we do facial recommendation. Now, we've been doing it for ten years, and it got better and better with AI. But I'll give you a use case, which probably is not as common. We open now 50 stores a month. And I used to sit in those meetings where everybody would present a property and people would say, okay, this location will do this much revenue. This location would do this much. And we used to get it wrong 50% of the time.
00:25:15 —
Peyush
And then we started building a machine learning model based on our existing locations. And today nobody makes a decision. We have been opening, we opened 400 stores last year. We opened 400 stores the year before. We can today, with 95% plus accuracy, predict the revenue of a store before we open it, and we can deliver payback in eight months. So this is good use of AI. And what generative AI is doing is it's opened doors now for vision correction on the phone. So that's what I'm excited about most. So doors are opening, but I think you have to start with the problem, and the problem has to be big. Where I see Lenskart, firstly, I don't think five years, I think, I'm sorry.
00:25:58 —
Sumer
I look at five years and which.
00:26:00 —
Peyush
Is why we now have Ardian after you come in, because they think 2030 years and Temasek, two things, right? We want to serve a billion people. There are two and a half billion people without glasses. If we can serve a billion people, I think that would be, we internally call it vision for billion. And the second thing I think is it has to become self propelling. Like, I'm a big fan of what Amazon has built in terms of an ecosystem, a culture which can replicate and you can continue to grow consistently and make the impact. So I think it has to become an ecosystem, an organization which can keep solving the problems and transform the way people see and experience the world.
00:26:47 —
Sumer
Fantastic. I think my timer is blinking. I hope you guys enjoyed the session. For me, we've been associated for five years, known each other for six to seven years, as exciting and thrilled to always hear Peyush, what he's built and what he's continued going to build. Thank you.
00:27:03 —
Peyush
Thank you.