Tarun Mehta on Starting up Ather in IIT, Tesla & Future of EVs in India

every single one of them hated the EV that they bought. Love the sector, hate the product. We said no, electric vehicles need to beat petrol vehicles. They need to be better than an active one. When we launched in 2018, 8 of 450 was the fastest accident scooter ever produced in the country. I mean all scooters. All petrol scooters included. And this was an electric. I have a big believer that you have to market. I think a strategy of, there's no marketing we don't need. I think there's a mistake in India. We are not a country where you can sell stuff on Twitter. Too meaningful audio. You can sell stuff for like 5 pro people. But tool is about like 30 crore people. But you almost need a washing powder and nirma camp. Like go mainstream. And that's very difficult for a Bangalow startup. To like pivot so mass. That's what time looks like. The same DNA. Isn't this more major mainstream DNA? That sitting in your ivory towers and Bangalore. It's very difficult to understand. You have to do a washing powder. You have to wait in the middle of the month. This episode is super inspirational. Because building a hardware startup is the toughest battle. You can choose to fight as an entrepreneur in India. And not only when you are building one hardware. What about creating 100 pieces of hardware from scratch. To fit together and making sure they all work seamlessly. This is the mother of all challenges. Today I have with me an entrepreneur. Who has not only taken up that challenge. But has delivered it successfully. I have with me the one who has built the most love electric scooter from India. A company that did 1800 crores of early revenue. We have Tarun Mehta, founder of Aether Energy on the Neon Show. Tarun is just 34 years old. And today we talk about his life-building Aether for the last 12 years. I would like to thank the sponsors. Prime entrepreneurs for sponsoring the Neon Show. Hope you like it. Hi, this is Siddha Talwal here. Welcome to the Neon Show. Today I have with me Tarun Mehta, founder of Aether Energy. Electric vehicle has taken India by storm. And Aether has taken the electric vehicle industry by storm in India. I would say that. And I would equate you to the Apple in India. Because you are one of the very few brands that believed in creating the end-to-end ecosystem. You own your manufacturing, you own your distribution, you own the experience that you provide to the customer. So it becomes very important for a customer that I am interacting with Aether at all touch points. There is no separate distributor, there is no separate service agency at any point. And I think that's the big reason that today Aether is at what 1800 crores of annual revenue. Yeah, F-23. F-23. This is fantastic. And you guys are what, you launched Aether in 2016. No, no, it's been a while. Most people don't know that. We launched Aether and this is the 10th year. The product is actually late 2018, so it's about 5 years. Wow, and in 5 years, so much traction. Yeah. And it took good like what, 6 to 7 years to, right, from the first investment round, from Fetch & Beneve, which happened in 2014. Yeah. And before 2 years, Aether was still as a part of the IIT Madras lab, right, where you, the story is very popular. It's a very garage story. It's as garage as it gets, building hardware, starting from one of the labs inside a department in the engineering college inside IIT Madras. So what happened for us first, several of them I always used to think about starting doing something in the energy space. And we already figured out the name Aether Energy in second year of college. So it's an extremely old passion. The passion is actually electric vehicle game secondary. The passion really was more about the energy industry. Yeah. And what we've been always passionate about is how can we make a meaningful contribution towards reducing the cost of energy. And electric vehicles came much later. Actually, after we graduated, you graduated about 2000 level. 12, 12, yeah. So graduated and then a year later came back to the exact same lab where we graduated from. We've convinced the professors to let us hang around in good faith as we kind of figure out way around these batteries and electric vehicles. And a few months later, we came convinced there's an opportunity and and you've got a lot of photos and videos from that time because for about six, nine months, we used to sleep in the department. So every night, I would sleep there, wake up, walk out of the campus, take a shower at a friend's place who used to live outside and then walk back inside the lab. So as garaji story as it can get. And you know, you guys have believed in the philosophy of first you created or first principles, the philosophy, first you created a battery, right? And you thought that why would OEMs adopt this battery, right? Because the products are not so good. So nobody would notice a battery experience if the end product is not so good correct. And then you thought like let's build the end product, which is an electric tool. So yeah, so see, I said right at the start that we were more interested in the energy industry, which spent three, four years at college trying to try to figure out what can we build in the industry. And we're actually built of bunch of engines, which we sort of written off most of our internships and did nothing but did that. So when this idea came, the idea originally was we should build lithium and battery packs for electric vehicles. The belief was that actually vehicles only mainstream in the future. And it looked like the customer problem was around charging the customer problem was the quality of the battery pack. And that resonated really well with us because we're like boss, battery, we're not going to be a back to being an energy company brilliant, like the dots have all connected really well. So and you get to use the name it and you also which is something we've been calling us since 2009, the time you're here. So we originally when each said we went back to the labs, we were actually just building the battery pack. And we thought will be this nameless, faceless B2B supplier to auto companies building high quality battery packs. Then the idea expanded well like you know, the battery is being made, so we should be a genuine energy company. You should not just build a battery, but you should also refill that fuel. So we should also be charging in the structure. Then with this idea, we went it and started doing customer trials. We started doing customer clinics met dozens and like 50, 60, 100 customers. We met over a pair of few months. And that's very real is he. We can't we can't do this business. Every customer that he used to meet would love electric. They believe this was the future. They were big supporters, believers, everything. And after a while, we started asking ourselves, was he looks so much like a gali to the electric vehicle that they bought? How exactly because initially idea was we will build these battery packs and offer them as a refurbishment. So when they're old battery packs die, uncom upgrade getting it to lithium. And I was they hate their products so much. Who will spend 40, 50,000 rupees buying a new battery pack to fix a product they hate in the first place? This was a dead honorable idea. Then we said, can you OEM go with you? So we went to the OEMs and we tried to pitch them and disaster. We realized OEMs are in two camps. Either they're very smart and they know that we won't be able to win. Okay. He is still like a 10 year old story, later story. Or they idiots and they think importing from China is a brilliant strategy who needs to buy from India. And like listen OEM is a very bad strategy. We can't sell to them either. So there was a very brief period when we were both sketching ahead and said, looks like classical thing has happened. We just went up to the wrong market with the technology. And then it was very sad. So it was very passion about building a brand. Why were we even thinking of doing this nameless faceless thing? We should just build a brand no. We should just build a vehicle. Okay. I was not convinced. I said, you know, just to sort of test out, we should just build a mock scooter to try and convince the OEMs. Yeah. Can we make a good scooter or using our batteries? In the process of building the scooter, we fell in love with the scooter. And then I also gave you a convince. He was the one who made the vehicle brand. This was which here? This is 2030. This is 2030. Almost one year after you put your jobs. Almost no, almost at six months. We left our jobs in February 2013. By August September, we started a game convinced of this. And by October 2013, we can convince enough that this should be a company. Okay. And we should build an EV brand ground serve. We need to own the full stack. So that's how we landed up. And that's how it began from the battery and charging. But then everything became. So the EV never took off in India for a long period of time. Yeah. And it suddenly took off. Yeah. What are the market dynamics for this? So. Actually, electric vehicle is not the first time it's happening. Electric vehicles had multiple waves in India. The first wave I think was back in. I think 2007 when some brands started importing electric scooters from China. Yeah. They kept importing volumes actually hit a peak of I think one lakh units per year in 2019. Another industry crashed. What happened is a lot of crap vehicles imported because nobody knew better. Yeah. And customers bought thinking. Yeah. How bad get it? Yeah. It'll be like an active one. But without needing to spend on petrol. Very bad. And that's the reality hit them because Indian consumers actually got it's point. Indian dealer buyers have never experienced a truly bad product until electric vehicles hit them. And electric vehicles are really bad. Like these vehicles will not go over a flyover. And that when when that word of mouth started spreading, they we industry pretty much collapsed. It went from 80 brands like 15 brands. It went from one lakh units per annum to like 15,000 units per annum. Major collapse happened. This 2010 11 something like that. So when we started in 2013, the industry was doing pretty bad frankly. When we launched in 2018, I would say that's the second or maybe the third wave of electric vehicles. I believe what Aether launched changed the market dynamic massively. There's a very clear pre and post Aether time. Before us, the market was very clearly. Very small power electric vehicles. These are vehicles that would do 25, 30, 40 kilometers per hour. Basically toys there. And the customer profiling is terrible. Like I could never figure out who wants to buy this vehicle. Because the pitch used to be, please save the environment. And you need to be an early adopter to buy this product. And you need to have money to try and experiment like this. And everybody who had money and was an earlier adopter. Also fundamentally wants to be proud of or something. They don't want to make an apology about it. But these electric vehicles are terrible. Like you go slower than others. Your performance is worse. The vehicles look bad. You look like a dog on them. It is like terrible from every possible perspective. You can't say to anyone that you don't want to say anything. Listen, this is a very proud thing to do. So we can't do anything. So our view was fairly radical at that point. Like on most parameters that matter to consumers. We were inspired by Tesla. Tesla had launched Model S in 2012 to serve ridiculous early success. With surprising, the auto-community India had not understood that. We had seen and understood that. So we said, "Banana, the Tesla strategy makes sense. Lawn something seriously leaps ahead of others." When we launched in 2018, 8/450 was the fastest accident scooter ever produced in the country. I mean, all scooters. It was mind-boggling for everybody. This was the world's first aluminum frame, bolted aluminum frame on a scooter in production. This was the first scooter anywhere in the world to deploy a touch screen dashboard. And the first one to have Google Maps. There were so many first ones that it became the modelers' equivalent of some sort. Actually, I still am not modelers. This became the roadster equivalent of some sorts. And so it attracted a different customer. And then for the next two years, we did not die. Typil, you were expecting a mistake. You launched a Manga product in India. No one would do it. Next two years, we did not die. What was the cost of the first product? A terrible. It was minus 300% negative loss margin. Yeah, negative 300% loss margin. That was the cost. What was the real cost? And for some sort of company? 3-4 lakh rupees. It was like 3-4 lakh, like really, really high. But it came down super fast. It came down to like two in the first year itself. Then it came below two. And it kept falling. And now we are positive cross-model. But the first two years were difficult. But we did not die. We kept pulling and changing perceptions. And I think our biggest success happened when multiple OEM started copying us. So the wave three, which is what we were, what we had started was, was high performance electric scooters. Today, high performance electric scooters, which is 1890 cut-top speed, range of 1890, 100 kilometers, all lithium-ion. Every scooter with the connectivity, with the touchscreen dashboards, this became the market standard. Today, 60-70% of the Indian scooter markets are products like this. So not really awkward to call this the high-performance category. If 75% of your market is a high-performance category, then you have to recognize, this is mainstream now. It's going to a point where the Indian scooter market is the most advanced scooter market in the world. Not a single country, not a single two-wheeler market, competes with the technology standards of India today. Not even in China. Coach, no. A lot of China, I can't even define a number of viewers because how far behind they are now. Volumes when they are ahead, but volumes will catch up in the next three four years. When terms are just sheer technology and product quality and product, the feature list. No, I'm not just sitting right there. I'm just, I'm sitting here at the entire east of the market in India. Far ahead. Taiwan, Korea, Japan, China, all of Europe, and nothing in the US. Nothing matches up with it. And would be top five players in two-wheeler in even India? The top three are us, TVS, Ola. After that, it's a slightly longer list. But Bajaj is an important player. Ampere is an important player. But Ampere imports from China. Or used to imports from China. See, early on, everybody imports from China. I think Ampere has a reasonable portfolio now. But it's in the low-speed category. Yeah, it's generally not high-speed. That's the only primary difference. Yeah, the other top four-five players. And in the bike category? The bike is still not prevalent in India. Electric bikes have not been cracked yet. We've asked them multiple times. I think they'll take time. School is a far more successful. And why has the reason for that? Electric bikes will take more time. Well, for that, you'll have to understand why do people buy bikes first? Why do you think people buy bikes? I think part of it is show off. Part of it is high performance vehicle on a two-wheeler. And the bike person is either if you see, go back. If people use to buy a hero splendor. Yes, they do. This is the highest selling two-wheeler in the country, even now. For crappy roads, that's the best vehicle in India. For crappy roads, for village roads, for tier three roads. Bajaj Palsar became a rage in tier one and tier two. That's my understanding. And then everybody build on top of it. Whether they want to build for tier one or they want to build for tier three. You can fundamentally get three reasons. One was performance. Yeah. Next was show off. Third was ruggedness. Yeah. Now, number one, number two. Vehicles that are bought for performance are show off. Vehicles which have to be better than a scooter at least. Yeah. The scooter performance is the point here. It's better than active on any day, right? For high performance. Inbound question. Splendor is not better than an active one. Splendor is not better than an 8th. At all. Okay. What is better is typically a 180cc bike and beyond. The market of 180cc bikes and beyond an India. Is I think about. Six percent of the Indian to the market. And about 10 percent of the bike market. 90 percent of the bike market in India is basically splender. Ninety ninety percent. Now, that market is also increasingly buying it less for ruggedness. Ragnest of factor. When roads were like absolutely shit in India. And highways were like not present. It was just all bad village quality roads. Roads have changed radically in the last five to ten years. T1, 2 and specialty of 3. T3 road quality is actually quite phenomenal. Interstate highways is like pretty good now. I'm talking about inside villages or inside more. Inside villages is not again large enough volume. Indoor village road quality is also no longer terrible. So our side happiness. Somebody buying a Splendor. It still does buy it for the bigger wheels. So better suspension. But that's becoming less and less of a factor. Today people are buying a Splendor because it's cheaper than an Activa to buy. And it has more mileage, which means it's cheaper than an Activa to run. So Splendor is fundamentally linked to purchase capacity. If you could afford, you would buy an Activa. If you can't afford the running cost or the upfront cost, then you have to opt for a Splendor. And in my opinion, electric challenge is that completely. Electric TCR is way better than an Activa and way better than a Splendor also. If you're a Splendor also, you will spend 2000 rupees a month. Electric school, you will spend 300 rupees a month. Compare it to an AI. I think the real bike market in India long term is the number one and number two reason. It's the show off and the performance bike. But that's 5-10% of the impact over the market. I think 90% of the Indian tour market really has got to be scooters. If you buy a bike in a city, if you buy a Splendor, you're kind of condemning your entire family to not travel. Because then your wife can travel on a Splendor. Your 60-65-year-old parents can't travel on a Splendor. If you've got a young teenage kid, he or she can't travel on a Splendor. Only you can travel on a Splendor. If you have storage, you're screwed. If you buy one, Apple, you don't have space. Buying a bike in India is actually a lot of inconvenience. No storage. Really bad ergonomics. But the foot pegs forget about the perspective. And a very limited mobility. The primary reason is cost. Electric brakes are completely. My belief for the last several years has been electric scooters will decimate the commuter entry motorcycle market in India over the next 10 years. What will be left as motorcycles is the premium and the high performance category. 180-180cc and beyond. Which will be meaningful chunk but 10%, maybe 20%. So I think multiple people have sort of concluded the same. Which is why they're not attacking bikes very aggressively. Obviously, the expanding business, all of us will launch bikes. But the reason it's not central to our pitch yet is because of these reasons. So you fold one last scooters in F-122-23. Overall in India, if you would have the number or the approximate number, how many two wheels got fold? So last year, I think about six, seven lakh vehicles is old electric. Us, OLA, TWS were about I think 50% of it. I think we did one lakh, I think OLA did 1.5 lakhs. And TWS did again just under the lack. So about three and a half lakh between us. And what would be the non-electric vehicle fold in India? Oh, huge. Talk about what had to do. 1.6 crore last year. And how much of that would be by one versus scooter? Roughly two thirds one third. Two thirds is bikes, one third is scooters. But bikes still owns like a one third chunk of it. It still makes sense. Because affordability. If you can't afford a scooter, you have to settle for a bike. Commuter. Electric scooters don't solve. Electric scooters solve that very differently. Electric bikes don't change that. That's the prime reason. If you build an electric bike, it's got to be a little bit of a performance bike. This is a market. It's just that it's not the market that you think it is. If you've got to beat a splendor, you will likely beat it with a scooter. And not a bike. And splendor still sends right to the number one bike. It is outrageous. It is so wrong. It is unbelievable the success of that product. 30 years later, it is still the market leader. I think if ever a sector needed disruption, it is the splendor. I think it is a bit difficult. I think it has the best cross margins. Like, auto-decorpies, I think globally, would kill themselves for 20-25% gross margin. splendor. I am sure has way more gross margin than most premium auto-decorpies in the world. The splendor starts at 60,000 I think. 67K. Actaverse today is 80-90K. Yes. It's phenomenal. The splendor would sell what? 10-20 lakhs units a year. What? NSLs 35-40 lakhs units. And that number is still growing. No, it is growing. Growth has stalled now. So it will get disrupted now. But the lead has been just phenomenal. I have like 4 million units. And in two-wheeler scooters, non-electric. What is the number one in how many units? Two-wheeler electric or non-electric? Non-electric. Non-electric activa. Every other scooter sold in the country is an activa. So Indian scooter, Indian Tourer market is a very unique dynamic. Generally passenger car, only car market globally are fairly fragmented. Like if you want to be successful as a car maker in US, you need a wide enough portfolio. You need like 10 product lines. You need like 10, 10, 12, 12 variants on each. You need a pretty rich portfolio. In India, the market leader, into wheelers, always gets 50% plus market share. Spender dominating market share, more than 50%. Activa, winner, 55% market share. Pulsar, winner in the commuter sports category. I think more than 50% market share. Royal and field winner in the kind of what to call that category. But 350CC category, 90% market share. So India, two-wheeler winners never have to settle for scraps. If you are a winner, you will just like 50%, 60%, 70% market share is given. Which is what creates a really rich margin profile. The Indian dual companies enjoy. Indian two-wheeler, gross margins. Maybe I'm jinxing them. I hope I don't jinx them. Another rich is globally. Not one. I think they are the rich. 25% right? More. I think close to 30%. It's outrageous. Premium luxury products get to those kind of margin structures in automotive. Not commuter products. And globally, the less than 10% gross margin, this is? 15-ish. 15-ish. If you get to 20, you are a Tesla. Tesla got to like, I think, late 20s and it was like. It's considered. Anomaly. Two-wheelers to that regularly in India. I think one area where electric vehicles won't make that much revenue is the cost of service in parts. Right. So do you bake that into the product? It's a very interesting dynamic. You're right. On a per unit basis, servicing of an EV will not generate the same revenue as ice. You don't have an engine oil change. You don't know how much revenue you have. Right now, we have an interesting dynamic where, because all of us are new players, while per vehicle revenue might be like one-third compared to its ice counterparts, every vehicle has to come back to the dealer for servicing. So typically, petrol vehicles have nothing to do with it. Only one-third of the vehicles come back to the dealer. Two-thirds goes to the network, informal network outside. So on a fleet, capture is only 30%. Electric per unit economics is one-third, but then fleet captures 100%. So ineffected balance is out today. But okay, long term, I do think that electric vehicles are not going to make money on servicing. They just can't. And as quality improves for each one of us, then number will drop even further. I think long term electric vehicles will have to make money on something else. They'll have to make money on most likely upgrades. They'll have to make money on accessories. They'll have to make money on generally technology upgrades. Battery upgrades, tech screen dashboard upgrades, software upgrades, those kind of things. So you have a business model, underlying business model, is changing for sure. And to rate the price of a third is between 1.35 to 1.65. 5.5, but EIO. It'll rise a little bit now. Because of the subsidies getting reduced. So we'll increase prices marginally. We'll try and maintain prices with newer product launches. But yeah, the current products will become more expensive. And how many products SKUs you have right now? That's true. Just these two. In fact, that's actually one SKU. Because what you see is 1.555 is essentially at 20,000 to be software upgrades sold. So in a sense, our revenue is, I've said about 85% is hardware. 15% is already software. And what do you charge in software for? So a lot of features. There are a lot of advanced, right assist features. So for example, you want to turn auto hold on. So it's a pretty nifty feature where if you bring your scooter to a stop and leave your brakes, your scooter won't roll back and forth. So you could be on a little bit of a sloppy surface. The scooter will just stay there. So you don't have to keep your brakes pressed. And the minute you throttle, it'll start going forward. And actually very well implemented. So this algorithm is part of the software pack. There are some advanced regenerative features. There is the intact connectivity suit turns on. So 4G connectivity in the vehicle. Due to the connectivity in the vehicle. The ability to take calls, the ability to listen to music, mobile phone tracking, remote service booking, many, many, many, many. So everything with software in it, they kind of bundle in a single pack. In a sense, in a sense, a little similar to how Tesla does a single software pack of its autonomous features. Obviously, this is nothing to do with autonomy. But everything non hardwareish kind of comes in this one package. So I would say Tesla had a big influence on ether. Right. If we removed Tesla from the picture, let's say Tesla had existed. Right. Would ether be today where it is? I think, I think our philosophy would have been very similar. Because that's how we were wired. Ferry first principles. And very strong, very strong confidence on a product. But I think if Tesla never existed. Some of the supply chains would have been very different globally. I think electric vehicles owe a lot to the lithium-ion supply chain that Tesla created. Tesla created this entire model of using these small form factor cells and stacking them together to build a battery pack. This was difficult. I think it would have been difficult for most other companies to think through. Because it's a giant heap for Tesla too. Tesla basically said that, listen, before Tesla automatically companies would say, "Six Sigma". So you don't have to make a big battery. So you will buy these small modules and you will stick them together. But how many modules? Like 2030 modules. You will take 2030 modules, connect positive negative, positive negative, positive negative, positive negative. And then end to end, positive negative, take an out, connect to the motor, very simply simply put. Even with 2030 modules itself, you will be sweating. It was 2030 modules in 60 wells out there. 6 Sigma per operate. You can only have like 3 failures in a million. You are already signing off for like one failure for every few thousand vehicles. It's already sounding scary. Tesla came and said, "You know what? We'll have a battery pack with 6,000 cells." Which means something like 24,000 wells per pack. Even if you operate at 6 Sigma, 3 failures in a million or something like that, means you are guaranteed a failure in every 40th car. Even if you operate, sir, a failure every 15th car. If you have a failure in every 15th car, you are doomed. Even if you operate at 6 Sigma, you have no business here. And Tesla took that challenge and cracked it. And I think the world owes a lot to Tesla because of this leap that they were able to make. Particularly this leap. In the absence of it, there is no way lithium ion prices would have become affordable. Because it changed the underlying economics of the industry radically. These small-form factor cells were very affordable. But the small-form factor cells would have never, never come into automata. In fact, automotive OEMs kept risen. We were obviously very very early because we loved how Tesla thought about these decisions. But most major auto-guys kept resisting this until like a few years back. They were like, "Well, this will catch fire." But they are not catch fire. So I think Tesla has been influential, but not on everything. I think core philosophies, I don't think we would have been very different. In Tesla, open source, this right, this technology. The open source, the IP, I think that's more PR. See, IP is truly open source value if what you have is fundamental science. Like a chemical compound or like a pharma, some medical compound. Open source saying designs, design patents. Anyways, companies find a way around them. So nobody needs to use a waiter. They would reverse engineer, right? That's what happens. So I think open sourcing the patents was ultimately served more PR purpose than genuine extra industry purpose. Want to capture the journey from 2018 to till now, right? If you can recall how many scooters you would have sold in 2018. FI18, 19, maybe 1000 scooters. As I expected that across how many stores? One. In the end, that's 200 a month. Demand was healthy only. We, however, could not produce more than 200 a month because our economics was terrible. And I could never justify burning money to sell more hardware. Hardware has no lifetime value of the customer. It's the same sale. The customer was out for the next six to seven years. So that was one challenge. Second also was this was the first time in evil of this caliber was being built in the country. So the underlying quality was very uncertain. Like I didn't want to be in a situation. We have sold 10,000 scooters and batteries catch fire across the entire country tomorrow. We can't even like storm all of them out. So we wanted to fairly controlled pilot for the first couple of years. The idea was Panglo first year, Chennai by year two. And then Pan India and year three. So 2020 was meant to be the Pan India push. 2018 was the beginning of August. 2019 is the opening of the year. And if you can say recall how many scooters you sold in second year and third year. So are you going to revenue numbers better? I think first year revenue was probably FI 19 was 2030 crores. FI 1920 was I think again. Something like that only 3035 crores. FI 2021 was 75 crores. FI 2021 22 was 410 crores. And 20 to 23 was 1800. So this is a massive jump, right? Yeah, it's a massive. It's 75 to 420 to 800. I think a lot of people think that now you're going to sell the old company. I'm going to say once in a year. Like nine years ago R&D research is going on. So it's a, it's a legacy company now with extremely young sales and business processes. Like forget even in FI 2023 till august are monthly revenue was like 3040 crores. Finish the year with like 200 something. Yeah, much more than that. I think close to about two 60 to 70. So it's last few quarters have been particularly crazy growth. But see, that's how hardware works. I think a lot of things. I think what's going to happen now is gradually. I think today most investors don't have a mental model of how hardware makes money. Right. And that's because we haven't seen hardware so easily out. So all we know about hardware is. It's a lot. It's a lot of time. It's a lot of R&D. It's a lot of R&D. It's a lot of R&D. It's a lot of R&D. The differences that you will start gradually understanding as more and more stories like ourselves play out is that once you build hardware, once you've stabilized your platform, you've got a really powerful lead. You've got a really powerful mood that internet businesses can never deliver on. Almost never. SAS maybe. Internet powered businesses almost never. Think of it. Etherase 12 million and series A. 30 million and series B. Etherase roughly like about 300 odd million till now. With the exception of OLA because its entry was very lateral. That's not a regular startup process. OLA was a giant when they entered. All those already very large cat business. It had an ability to bring in a lot of money. So forget about OLA. The exception of OLA the next company after Etherase has raised 20 million. 30 million. Which one is it? I think ultra wallet has raised some. Followed by I think simple energy and some of these startups in the 5, 10, 20 million range. You never see this dynamic play out in the internet business. Internet business. If one startup raises series B, there are five others who are 100 with series A and 6 months. Somebody gets to series C. Four others get to series B after that. They happen. Food delivery. Scottish shopping. Quick delivery. Quick commerce. Everywhere. Because the fundamental because all you prove out is that there is market demand. But the servicing of that demand. It's not like I am Amazon. I have built like 30 years worth of understanding of how to build these infrastructure. No. Everybody is on the same footing. Hard when that's on the case. You build. You build. You build. You stabilize. You stabilize. You learn from mistakes. You beat quality metrics. You beat them down. You beat cost down. So whether then you launch. And if you find success. I would say it's a high risk high reward strategy. You have to go all in for a long while. But if it works, you will see a sudden explosion of revenue. Like 10 years later, I would argue that. There are so many other startups. So many other. Software businesses. Internet and Apple businesses. Who would probably have the same. Gross margin or revenue profile as ather. But they are genuinely become maybe five years, six years before us. So as hardware generally is the most paiky. Success situation. If you are successful, you will certainly skyrocket. But it takes. It comes at a time. And over the other three, four hardware. Start up from India that you respect. I think there's a lot of good work happening on the. On the satellite side. A lot of good startups. Hyderabad. Some of them. They've done really good work. Along with us. I'm blacking on the name just now. But there was. There's another tiger funded hardware startup. For e-commerce. Logistics. Grey orange. Yes. Just forgot the name. It's been a few years. I think grey orange had done a lot of really, really credible work. Back in the day. Obviously, I understand difference. I haven't tracked them in recent times. There is. I think we're seeing a lot of hardware companies come out of IT. Madras in particular. And many of them are. Fully niche topics. But very solid businesses. That's what I'm seeing. There's a lot of good work that's happened on the drone side. A lot of really good drone startups that have come up in the country. Who was a pioneer out of ID Bombay. Idea for. So there I think is a. Pretty fast expanding hardware ecosystem. The country and it's no longer. It's no longer an art to do hardware. I think there's an ecosystem of engineering talent coming out now. That's kind of seen. These systems built out. They mean so many hardware started to come out of ether. There's a plans in cooking. There is an exponent energy. There is. Another one in the battery side. I'm blanking on the name right now. There are actually like seven eight startups that are popular from ether. So that ecosystem of hardware is just starting to pop up. And I think on the consumer side, because most of the names that you said, right. There are orange. Right. It's on the idea for. They are on the B to B side. Right. So this. Still don't require the marketing branding distribution muscle. Oh yeah. Yeah. They're more excellent. If you build a great product able to prove the value. And know how to sell to enterprises. Governments will still make that cut. So companies like appliance or on the cooking side, I think they are a favorite of consumer. Focus hardware companies are coming together. And they're all trying very different, very interesting models. Very design heavy, very product heavy, very, very manufacturing heavy. I think I have a very interesting model signed to emerge. Now that existed when we started 10 years ago. Being on the consumer side only you are there. And you are the largest. And second would be ultra human with builds range. I don't understand. Yeah. Yeah. So why is so hard, right? Because one is we she's don't understand. As you said, right. Why is the second most hardest. We and my hardware doesn't sell in a day. That because people take time to build the value in their minds. Like especially consumers for a new hardware. No, I don't think that's the case now. I think India has enough demand. I am a firm believer somebody said this from lands many years ago. India has never been historically actually. Really, if you think about it, it's not really been a demand constraint market. We've been a sub genuinely. We've been a supply constraint market. We don't get the good stuff. Yeah. We got the good stuff. I had a ridiculous premium in India historically. So I think there has been just like Japan of the 60s and 70s. I think we have a huge market. Wanting and willing to buy good high quality products. It's just that they're not enough domestic champions building them at the sense. At a sensible cost to India today. I think if you were to start a consumer focus hardware company today in India. You would find demand actually are easier problem. Distribution actually is an easier problem because we've cracked distribution in India. There's phenomenal leadership that can quickly join you at a moment's notice and scale up your distribution across the country. Whether it's FMCG, whether it's EV or anything. I think what we have historically messed out are two things. One is access to capital. I would still say that's a very serious challenge. We were talking about it before. There's no traditional name VCs on our cap table. You would imagine. No Indian VCs there. Because I think historically it's been very difficult for Indian investors. They've just not been exposed to how hardware makes money. So you need a few champion success stories that, oh yeah, you know what? A hardware company can become worth like 50 billion dollars. Then suddenly capital access will just skyrocket. Then we should be pouring in 5 billion dollars into the sector, not like 50 million. So that's a whole new thing. Second is there's a very historically a very serious shortage of engineering and manufacturing engineering talent. Because India has not done enough core product development. We have amazing number of engineers. We have really good engineers. But unfortunately either they are pure, pure software. Or if they are working on hardware, they get what I call as the backroom work. More often than not. They will get a German automotive company. They will not send their good work to India. What they will send as well is that we already have this car. When you indignize it, right? So make a few changes, it means Indian compliance. It means Indian cost requirements and that's it. But how do you fundamentally come up with that platform? How do you fundamentally think of manufacturing constraints in day one of design? How do you think of the marriage of design and manufacturing constraints coming together? How do you think of supply chain as a thinking of product specs? You can't just say, "Oh, I just do the textbook machining technique." There may be not a single supply in this country who does die-custing in that way. So it's very theoretical. What you're thinking is very theoretical. You need experienced manpower who's seen this happen. And India's, I don't think we have a very robust ecosystem of talent in that front. Or new talent getting created? Now it is getting created, even as about 1000 engineers today. I think we are obviously creating some of that talent. So will Hola, so will maybe TVS as they build their own TVs. In fact, I think electric vision, electric vehicles, because of the amount of lead India has, is going to create one of the first waves of genuine platform builders on hardware in India after a very long time. But those two I think have been the biggest missing pieces in the past. And do you think the engineers on the manufacturing side are getting paid as well as on the software side the top minds? Because if that doesn't happen, people will still aspire from colleges to become the best software engineers, rather than the best hardware engineers will still be a passion project. They will follow that root because of passion like you did. I don't think so. I think we're still a gap. But the gap has started narrowing a little bit with, again, electric vehicles coming in automotive gap has started narrowing. Because you suddenly, historically, you never needed these mechanical engineers to do new work because platforms bunch you care. The scooter that you built today was perfected 30 years ago. So what's the, what's the new value of a new mechanical engineer brings to table? Not much. But the minute you say, listen, I need to build as an industry, we need to build like 50 different electric scooters. Somebody should come in and do the platform work for the first time. And the person who can do it becomes extremely valuable. So I think in electric vehicles we're seeing a considerable correction today. There is demand and supply at play still. So I think software stills commands premium, but I think premium has narrowed. And I think the more the more businesses are created, they'll get created that get funded. Those businesses will demand more of this talent, a talent shortage will continue to exist. And their payrolls will continue to shoot up, which is good because that will then be a very useful feedback system back to engineering colleges. Boss, yeah, EV companies are paying like, you know, mechanical engineers like this really sweet salary. Why am I, why am I trying to get it in my case? Why would I get a 20 lakh package if I joined like a like a realized EV company? Obviously, a long cycle won't happen like in one year, it takes like a decade, I think in the middle of that cycle. That's why you're right. Why are mechanical engineers? We have seen shifting into consulting, even for marketing and banks. Because it's the demand and supply who will pay more. And I think you'll see some of the correction now. Do you go for a day when you're hiring at IIT for these mechanical manufacturing? On and off, not necessarily every year. We went last year, we did not go the year before, when the year before. We're still not very stable as an organization. How much talent will need is still for us untractable. So we go on and off. And how big is the overall team that's fully on payroll? 1500, 1600 on payroll. And about another 1500 contract. All of that 1000 is engineering. Proud development testing. Okay, I should correct. Not technically engineering, but yeah, proud development and testing. Yeah. And how, you know, you mentioned you have been able to build a large distribution. Branding muscle over the last few years. And you yourself don't come from that background, right? Pure engineer who was a product developer at heart. And you loved innovating. Can you share that journey? How does this distribution muscle get built over a period of time? And what you did for it. I think it's still building it. We may have 140 stores, but our ice comp traders have 3000. So I think there is a long way to go. But yeah, 140 is being extreme educational. Say founders have to learn. I think it's a real founder who's truly experienced in the industry. So neither would we. We've learned as the years have gone by. And generally we have realized that. It's best to build a muscle in the company. Your sales first. And fail a little bit at it before you bring in the real leadership. And before bringing the big guns. Every time we've attempted something as an easy approach. Yeah, you can build. Let us hire a solid VP for this and get out of it. It's generally not worked. So yeah, we've gone closely involved with the sales. We've always been all in marketing because we care of the brand right from day one. Well, I said I start stuff. I was very careful about health and we should own the brand. That'll be the fun thing. That'll be good. So bang we've always been very particular about. So we're involved in marketing right from day one. Sales is something that's only the last year I would say. That we were involved in. So thinking about its systems. You learn from failures. We open the last 60 stores. Terrible results. So now you get in. And I try to figure out what they do right in the first 60. What can you? We have a bit of a process. So wherever we can chip co five process. Set up and proper speed. We will. Our minds are automatically. That's. It helps learning. And if you can share like what worked for you in marketing and sales. What initiatives. What cost. What. Some of those processes. So that other hardware. Start up listening to it. Can learn. I'm not sure either. Nicely. Good feedback for the hardware status. Particularly. See, our big learnings. Our marketing strategy was. Go with a very high conviction pitch. Market adding sees through it pretty quickly. If you are testing something with them. So you're going to go with very high conviction. Because I'll reflect in the product will reflect in the design and reflect in the communication. What works for us is having a very. Clear and transparent communication. We generally will not sugar code. Or try and. Confuse you. Yeah. If you were bad news, for example. So very transparent communication. Generally, most people are surprised. So there was a time. 2020 being increased surprises. Our product was one lack 15,000. In January, 2020, I announced a great to the product and increase the prices to one lack 65,000. Obviously, response was not. Good. So we called an all hands. Not so we call the consumer catch up. We call about 350 people to office. There. We can catch up. And I open up the panel front of them. I open up the communities. As I think they feel you piano. This is the cost of goods. Clearly, you're not making money. This is what I long to believe. First principle, this is how our cost will add up. And this is where I think we'll be able to get to. And I do believe, hand on our. They will have the best first structure. This product, if I price less than one lack 65,000. Without subsidies. Will not make business case. It worked wonders. We got so many people signing up in that. Let's get into it. Because you guys told us this will now be the vehicle. And this is amazing. And those guys became champions for us. And they became the earliest community leads. Who went out. And even today on social media about fight for us. Like if if there are a lot of campaigns that run against us. There are a lot of paid campaigns that run against us. Like if somebody will post like something bad about it. They'll suddenly will see. 100 retweets with like three likes. You obviously want something. These guys become the champions. Certainly, you know, kind of. Cleaning up the mess there. So trans clear transparent. An honest communication has been one very, very, very big thing for us. I'm finding for. I think best to do it yours is first. Like while we have dealerships today. The first three shows that we set up for all owned and operated by it. So it let us perfect the design, the placement, the training. The ride down to the uniforms and. And you know, like what is the story that you're telling of it? If you out shows this. Just like anything else, then you kind of this will not become your. Yeah. Moat. This will not become a differentiator for you. As far as the importance of it at first. And how do you drive sales to listen? You have 140 locations right now. How do you drive sales to use of those locations? What are you doing for that? Let me think what we do. So there are fairly granular targets. Broken down store by store. Day by day. At every step of customer interaction. From booking a test ride to doing the test ride to making a booking to making the full payment to taking delivery. All these steps are tracked. Multiple times a day. And they get discussed at leadership level every week. I think one big learning for me is. India needs marketing. We had this very pure view at one point. Probably inspired by Xiaomi. And also it is that. That was vision or do marketing. No marketing dollars spent by us. We will only be like this online community driven. Cool thing. And then I realize that's good for somebody to see brands. But if you want to do like thousands of roles of auto revenue in India. How do you try? Yeah. Yeah. Your company does. Our advantage is that they are the hero. Like if you say either early market researchers told us most people did not believe that we are an Indian brand. They call it an important brand. I don't know how long it will take. It sounds very European. And for sure that does not bore well for us because they are not sure if we are here for the long say. So we realize this in 2021. I am a big believer that you have to market. I think a strategy of. Listen marketing. We don't need anything. I think is a mistake in India. We are not a country where you can sell stuff on Twitter to meaningful audience. You can sell stuff for like 5-4 people. But the tool is about like 30 crore people. So you have to. You should almost consider which actually even we have not been successful yet at. But you almost need a washing powder nirma campaign. Like go mainstream. And that's very difficult for a Bangal start up. Yeah. To like pivot show mass. That time. That's what I'm looking for. As a momentous mainstream DNA that sitting in your ivory towers in Bangalore. It's very difficult to understand you have to do a washing powder nirma boss. You have to do a washing powder nirma boss. You have to do a five crore TV campaign. [MUZIRA]