Razor Group: 300 Acquisitions, $700M Revenue, Zero BS

The first business that I built in hindsight would have been an awesome asset. The giant reason why things

asset. The giant reason why things didn't pan out is that in critical moments the dynamic between the lead investor and myself was not fruitful.

I'm speaking to a 55year-old woman who is obviously the lead investor and I was like 24 years old and I would have wished for a little bit better management. There was a lot of turmoil

management. There was a lot of turmoil and it it just felt that we were not so much priority. What's your take on how

much priority. What's your take on how India will develop especially when it comes to e-commerce and D2C? India is by far the biggest opportunity and there are a couple of factors. The biggest

factor probably is [music] >> Hi everyone to a new episode of the icons podcast today with a very special guest um one of the heroes and legends

of e-commerce roll-ups and everything beyond cross geographies Tushara Alawalia great to have you >> thank you uh thank you very much for the title I'll put it on my LinkedIn profile

>> exactly next to the LinkedIn top influencer >> voice exactly Um but look, it's it's amazing to have you and I think um we obviously everyone knows you from your um last company that

that you started the Razer Group. We

actually met even before um when you were going through the same pains and challenges of of uh building a fast fashion or a fashion business um in a different geography in India. So maybe

you want to talk about that. How how did you end up moving from Germany to India, starting a company there?

>> Yeah. Uh it's funny because I always say that you know our uh career yours and mine went in parallel. So when you were doing fashion >> up until the last couple of years ago but certainly until I came to Berlin um

you know you were doing a furniture business I was doing a furniture business you were doing a fashion business I was doing a fashion business just in different geographies. Um and so my story is uh I'd say unique uh in the

Berlin ecosystem context. I grew up in Dudov um into an Indian family. Um most

of my siblings wanted to become bankers uh because my eldest cousin is a banker.

Okay.

>> Uh and so there was a lot of pressure.

>> So not the stereotype of uh doctors.

>> No, no doctors.

>> Doctors. In fact, all of uh all both of my parents are entrepreneurs.

>> Okay. Cool.

>> Um and so I studied business in Germany and the UK with the intention to eventually become a banker.

>> Yeah. And um that didn't materialize uh because right after university uh I met uh two interesting gentlemen three interesting gentlemen uh who convinced

me to quit or not start my job at a private equity firm in Frankfurt but instead fly to India the country of my roots. Um and that's where I spent the

roots. Um and that's where I spent the first gig in my career which was building uh West Wings India operations for Rocket Internet.

>> Mh. Um yeah and and and that sort of you know led uh one thing led to the other and probably like by 2012 um which was a year and a half in uh to

to rocket in India um I had the opportunity to either come back to Germany or stay back in India and I had this brilliant idea of building a vertically integrated direct to consumer

fast fashion brand.

>> Yeah. Um which I think from a western perspective it feels like yeah okay cool a DTOC brand but if you look at India now the Indian ecosystem

DTOC is actually quite big in India.

>> Yeah.

>> Um because the Indian consumer story is quite huge. So you'll see if you look at

quite huge. So you'll see if you look at Indian IPOs uh in the last let's say six months 12 months >> you have a lot of these huge giant DTOC

companies coming live. Lens Cart and Co.

Um, and I was in India just last month uh and I see all of my former competitors um having big shops and doing like billion dollar IPOs.

>> Um and people still speaking about D2C like people speak about AI in the west.

>> Um and I felt a little bit sad that SPL didn't work out because at its point >> it was quite a large business within the Indian context. Um but yeah, SPL is

Indian context. Um but yeah, SPL is obviously the DTOC fashion business. I

mean a amazing story and I I think um maybe just to to come kind of come back to to your decision to move to India in the first place.

>> Um I know that back in the day even e-commerce here wasn't as huge. It's

like almost 15 years ago, right? Um and

you had a lot of those um infrastructure problems um especially with furniture, you know, how do you do white gloves shipping payment systems? That was

prehopify basically. uh India was must have been like even even further back.

Um so so um walk us through kind of your first your first few weeks month of being on the ground in India. What were

some of the big insights, big challenges there?

>> Well, you know, obviously given my Indian heritage, uh I knew India, I knew Delhi, I know knew Gura, which was is now one of the tech hubs over there. And

so I knew the chaos. Um but of course, you know, sending furniture uh with back then non-existent logistical infrastructure

was u funny because I remember we delivered our first piece of wardrobe in a tuk tuk or an auto. [laughter]

Um and that obviously didn't work >> because it broke. Okay. [laughter] And

so then I realized CM3 which is contribution margin uh should be uh probably measured after write-offs [laughter] returns and then TVD if that

made sense or not but um that was a funny experience obviously what has happened since you know a lot of venture dollars have gone into uh developing out India's logistical infrastructure

>> and so I would say in many ways today it's significantly advanced um so you companies like delivery or even the DHL subco blue dot that have invested a lot

into e-commerce >> and even in India now you know as you think about Indian commerce and online commerce it has ventured beyond just e-commerce it's now into quick commerce and quick commerce is like India is

actually the only place >> in the world where quickcommerce is working on a unit economics level and so really the Indian online consumer has evolved tremendously since my time there

>> uh but it you know back in the day we're speaking 2011.

It was uh insane. I mean uh I was somewhere at the outskirts of New Delhi.

I didn't have any AC air conditioning.

It was super hot in the summer. Probably

got a bunch of malaria uh here and there. Um and um it was a a very shaping

there. Um and um it was a a very shaping experience and a lot of I'd say things that are understood in the west that were not understood um in terms of work

culture in terms of >> um you know how you have to operate the nuances let me just very high level put it that way.

>> Yeah.

>> Um in terms of uh you know capital I was an outsider in India. I wouldn't have been an outsider in Germany just given my background. uh but in India I was not

my background. uh but in India I was not an IIT which is sort of the TOM or WH uh equivalent in in in Germany um but still

had to sort of cycle through fight through and you know ended up onboarding I think top tier capital for some of the businesses that I've built over there so it was a very shaping experience I still

nurture from it gave me a lot of resilience it gave me um the sense that you know often times things don't work out and so you just have to continue Yeah.

>> Um and it was uh very shaping I'd say I'm more Indian now I would say than I was before.

>> Is that true? Okay. I mean we'll come maybe to to what you kind of took from your Indian e-commerce experience to kind of your your building building Razer Group here. But

>> I mean it also comes down you mentioned that and you alluded to it >> to timing. Timing is like so important right then and probably just like rocket it. you were also maybe ahead of the

it. you were also maybe ahead of the time because to to a certain degree because everyone was very excited about India as a market also in the 20 2010s.

Yeah.

>> But um it didn't really materious up until maybe postco now when you had all of those IPOs and big market cap. So

what what did you learn from from from that?

>> I think the timing was certainly probably 2 three years ahead of its time >> but I don't think that's a bad thing necessarily. Um, I think if the company

necessarily. Um, I think if the company can survive, it's a great thing because you can capture uh more market share, you can be better on metrics, you have more time to refine product, whatever.

The question really is, can you survive?

And I think you are probably no um, you know, you're no stranger, you're no stranger to that dynamic, right? The

first business that I built or stock by love, uh, that business in hindsight would have been an awesome asset. That's

probably one of the best assets I've worked on particularly in the context of how DTOC businesses are becoming large now in India and it would have been unique. At the end it didn't succeed in

unique. At the end it didn't succeed in my view. Obviously there are many many

my view. Obviously there are many many many reasons why things don't succeed but in that specific instance I'd say it was the dynamic at at board level that was really really difficult. We had

onboarded I'd say a what would look from the outside a top tier uh capital provider in India >> in Indian and VC basically >> a VC uh Indian VC and I think from a 2000

>> and what numbers are we talking about in terms of dollars >> so the business so SPL at its uh you know at its um peak did 100 crores

>> mh >> in in revenue now 100 crores for Europe sounds like a small number because if you just sort of convert it into euros

that would probably just be 156 million euros topline >> but 100 crores in India >> feels probably more like a 5060 million euro uh in like

>> people see the vision the upward trajectory market >> because there particularly from a 2016 perspective so I'm speaking about SPL in 2016 >> there would be very very few other

direct to consumer companies that would hit that mark on their own URL it would you know average ASPs or average basket sizes would be 12 12 so you can imagine the amount of transaction

>> that produces that kind of business >> also multiples would be tremendously larger right so a $15 million business you could raise at an 8x >> revenue >> crazy

>> in in 2016 in 2016 >> probably still today it was still today a high trajectory D2C business in India you could raise at five times revenue that sounds insane from from a European

perspective that's why I say you know from a operational complexity from sort of logistical complexity from the amount of or quantum of customers that you serve from the multiples you know I'd

like to say we did 100 crores which is a better emotional number than $15 million in topline at its peak and we raised total for uh from you know different kinds of investors German investors but

also high quality Indian investors probably in total I don't know maybe 15 to20 million or something like that.

That was my first business. I was 24 years old when I started >> which is impressive, you know, new to the country, raised raised tons of money with some one of the hottest uh uh D2C

brands in there. And then um what happened at at at the board level and um what would you do differently also now as a as a serial entrepreneur in in managing the >> look I think there were multiple layers.

Uh I think operationally um you know in hindsight there are two things we could have done differently and maybe they would have changed the trajectory of the business back then. I

think number one is you know obviously the idea was online online that was great but not many transactions were happening online. So I think many

happening online. So I think many probably two years after let's say by 2018 or so many DTC companies figured out the approach to profitability in India is multi- channelannel. So you

have to have offline stores you build the brand capture exactly you capture voice online or capture a market you're on. Till date

on. Till date >> you know we had half a million Instagram followers in India in 201617 we still have 256,000 today

>> at the SPL account which is uh insane.

So what we I think we could have done probably 12 months earlier is set up shops >> and shops on a unit level were very profitable and they have been the key driver for success for businesses like lens card

>> or other fashion companies that are coming up now because they are very very profitable. The dynamic is that CAC

profitable. The dynamic is that CAC online CAC is more expensive than offline KC.

>> Yeah. Um and uh but in the period from 2012 up until 2016, Facebook was just so new that in a very rapid amount of time,

we were able to be extremely famous as a brand.

>> So I would go out for example in my 20s in New Delhi or Mumbai and I'd say I'm the founder of SB and everybody would knew >> because of Facebook lookalike audiences.

[laughter] >> That was that was insane. It was

underpriced in that period and you like it extremely so like I I can't say like it was a glitch in the matrix. Facebook

lookalike audiences from 2012 13 14 and it's obviously also what >> you always have to find those you know under under value >> so operationally I could have done that differently operationally I could have

probably you know what made SPL grow so fast was that we did made to order because we had our supply chain manufacturing just around the >> um warehouses because you know I've

always supply chain has always been a a part of my DNA for the last 10 15 years >> and we could have probably switched MTO made to order which we did to conserve

capital and just stitch together you know goods and fashion when the order comes in I could have probably switched that to pre-produce to have faster and quicker delivery timelines >> which would then inside cohorts and so

maybe my online channel would have been slightly more profitable but not that much >> um yes I could have done those things but I think that the the giant reason why

things um um didn't pan out is that in critical moments and that was a moment where we needed not much money maybe $2 million from Razer's perspective laughable right from Razer's perspective

we've solved $100 million problems >> in like 10 days >> that was a $2 million problem >> u to to maybe bridge to another round or or just you know you know those

situations >> and it's just the dynamic between the lead investor and myself >> was not fruitful not fruitful and it's at the end of the day I think it is.

>> And that was just something that you figured out along the way or was it like >> No, I it was it was very fruitful when we closed the deal. So that person was an extremely good deal closer and made

me feel really really special and happy and wow >> and then sort of as things progressed I think that fund also had problems in 2017. They were on the board of of Snap

2017. They were on the board of of Snap Deal. Snap Deal had a massive fallout

Deal. Snap Deal had a massive fallout with SoftBank. There were like many many

with SoftBank. There were like many many many small fires at fund level that this uh founding partner had to sort of navigate a couple of you know co-partners leaving the business in fact

one of our board members that was also part of that firm leaving the business and so there was a lot of turmoil and it it just felt that we were not so much priority and the interaction some you know went away from the rational they

sometimes very >> became emotional >> emotional that's when >> and I'm 100% sure if we had made it through that cycle this could have been another lens cut or or more, but at the

end of the day it was um and you know we had we even had last minute acquisition opportunities from large strategics um that then didn't materialize because there was just a communication gap. was

extremely toxic towards the end. Um, and

that was that was uh >> crazy to to see actually also for me.

I'm speaking to a 55year-old woman and who is obviously the lead investor and I was like 24 years old >> and um you know I would have wished for a little bit uh better management. I

could have been better of course um you know and I always think about those moments.

>> Yeah. But um yeah, I mean then 2019 um just with co I came back to Germany. I

was in Mayora for a couple of months uh to just understand what happened in Asia in the last 10 years. I was not in Europe. I reconnected with Alex. We we

Europe. I reconnected with Alex. We we

brainstormed and >> came up with Razer Group.

>> Came up with Razer Group. There was

another guy obviously M who's been very very influential in my life.

>> Yeah.

>> Uh in Korea uh who was my boss at Rocket and you know many different roles. um

involved in various companies that I've built you know we started to brainstorm about e-commerce etc and that's sort of >> the ignition of razor group >> amazing and m maybe just to close that

that India chapter off I mean I I feel you 100% sometimes I had very similar situations and especially as a first-time founder >> um it's so hard to get emotions out of the way because you know in your 20s you

also take things way more personal I feel >> um and and you know probably the bored people should be the ones that are the adults in the room, but they also at times get personal and have their own

struggles and challenges. And I think otherwise >> um challenging situations that could be solved cuz let's face it, every company that you that is successful now has had

those downfalls. Um and it's just how

those downfalls. Um and it's just how how you kind of manage and navigate through those, right? Um that's that's where it matters. And

>> and LinkedIn doesn't speak about those moments.

>> No, LinkedIn doesn't speak about those moments. That's why we have those

moments. That's why we have those podcasts. [laughter]

podcasts. [laughter] >> Maybe maybe more so. But no, so so I definitely feel you and and and and it's a lot of a lot of missed opportunities I guess, right? And missed chances. But

guess, right? And missed chances. But

maybe just uh wrapping up kind of um your your in experience because you probably have have a unique insight and a unique view of where ecom and D2C

landscape is now as well and where it's going. Um so

what's what's your take on you know how India will develop especially when it comes to e-commerce and D2C cuz I I feel like in China you have already an ecosystem that is established you have a

very different one in the US and Europe um like is is India going to be a unique setup in terms of ecosystem is it going to move more towards kind of a western type of ecosystem when it comes to to

>> I think in DTC India is by far the biggest opportunity >> and there are a couple of um still today even it's 10 years after stock by love is just getting started and there are a

couple of factors >> the biggest factor probably is that India now has functioning capital public capital markets >> a lot of IPO this is insane that

companies are built in India and they I don't go to the US >> they don't wait for a strategic acquirer >> they IPO in on Dalal Street which is the

Indian wall street in Bombay >> they IPO there and Dal Street for some reason prices in India's future very confidently and so multiples

um in on Dalal Street for some businesses for local businesses >> are quite high from a Frankfurt or a >> a New York perspective a lot of my

friends have IPOed their businesses um in in in Bombay >> or Mumbai I should say I'm sorry um Bombay is obviously the old colonial for the city that is now called Mumbai. some

of their businesses you would say well you have a $15 million business why should you trade at half a billion dollars and um it's you know maybe a SAS business which is super super unique and so

>> in some ways you know there is a huge opportunity there on the liquidity scale size >> then of course you know the big bet that

you have in India is right now there may be 50 million consumers that you would honestly target or maybe with one of your companies Yepa or Maybe it's 20 million and those are

wealthy individuals. But the promise is

wealthy individuals. But the promise is that in the next 15 years another 300 or 400 million will come into the fold.

>> And so the you know if you just have a let's say a,000 cr business >> again saying kors not millions. Yeah,

>> thousand cr business is maybe $150 million business >> you know and if you just sit on it you know that should be a very very big business in 10 years from now

>> and so we are just at that inflection point where hundreds of millions of people are becoming consumers and so that is what makes D2C so exciting over there >> and and in terms of competitive

landscape and just the the the way kind of people work there is is there a few things that you learned that you kind of take on back back to

back to kind of uh Europe and the other >> landscape in terms of DTOC or just work culture >> both work culture D2C and and vice versa like are there certain things that you feel oh this is something where the

country can still improve >> I think there there are many nuances to India it's very difficult to operate I think if you don't understand those nuances

>> I think you know there will be another 10 indas Consumer 10 India's created >> and you know let's say we have 40 million consumers that are truly relevant from 1.5 billion

>> right for high-end luxury kind of products >> there will be another 360 that will come into the fold in the so I don't know how to you know yes there are comp there

competitors yes there are many entrepreneurs yes there are many entrepreneurs trying to do stuff and covering each niche >> but there are also so many more consumers coming into the fold so where else do you have that dynamic. So you

know that's I think that's on competitiveness. Yes, there are many

competitiveness. Yes, there are many competitors. Yes, the market is

competitors. Yes, the market is expanding tremendously.

>> Your choice and I think mistake not to play in India next 20 years. In terms of work culture, it is very different. It's

also very different from city to city.

So Bangalore would have a different work culture than Delhi. Delhi would have a different work culture than than Mumbai.

Um I think on the plus people in India are very open-minded uh and very flexible in thinking. They

are um not stuck in a you know preconditioned idea or an idea that they have come up with and so top down they have to execute that idea and you know they're not they're intellectually

flexible and so you know in India there is a concept called jugar.

>> Yeah.

>> Which is a bad and a good word. Jugar

means out of the box just somehow do it and that defines a little bit of the work culture. So they are very I'd say

work culture. So they are very I'd say uh >> so it means kind of thinking pragmatic by the times cutting corners.

>> Yes, basically pragmatic cutting corners but making sure customer is somehow happy. In Germany it's much more

happy. In Germany it's much more foundational. I have to build a really

foundational. I have to build a really great platform. That platform needs to

great platform. That platform needs to be extremely robust. I don't care what the customer thinks, [laughter] >> you know, and sort of probably if you can cross-pollinate both ideas that can

be very helpful.

>> What what what I think certainly is difficult to establish in an Indian company >> is the discipline that maybe is more natural to European business. Making

sure everybody starts 9:00 a.m.,

>> you know, can can sometimes be >> mission impossible. Yeah. A challenge.

>> Yeah. Cool. I mean the other and let's talk about so you moved back back back to to Europe and and Berlin um and you also mentioned you continued to to work with one of your first business angels

which are which I who I also know Mato Pidge who became almost a mentor and I had also um you know I know obviously M he he ended up buying when he was still

at Pim second company actually am that I was involved with Amari and then um the one thing that I um that I really like is that you

went out and started looking or kind of continued working with with with good mentors. So kind of walk walk me a bit

mentors. So kind of walk walk me a bit through that thinking and why it's important to have kind of mentors in in in in your career and how you kind of >> identified that. Arguably, I didn't have

a normal career. Like my last three positions were co-founder and CEO. And

so it is obviously very difficult to get structured feedback uh and uh sort of improvement loops into place where in a more structured setting, you know, you

have somebody to tell you, okay, that's wrong, that's not wrong. and having

someone who just sees more stuff beyond the universe that you have access to and can give you sort of some oxygen uh from outside of your bubble. Um and then

continuously over time I think is quite valuable. So you know for sure M has

valuable. So you know for sure M has been that person um and there have been others as well and you know of course he has been incredibly successful in his

own right. Um and so that has actually

own right. Um and so that has actually helped to evolve. Um and I think wherever you are in in your journey, it is very important to have not maybe one

but many of these kinds of people. You

can call them mentors, you can call them non-transactional long-term relationships that in some way influence how you think reality checks,

motivators, um you know, people can be incredible assets uh to your to the pace that you evolve with. And obviously

evolution is I would argue the most important thing in life. I really

cherish uh people people like M or Alex uh from 468 previously Rocket >> uh that has had a similar position. I

mean the mental model that helps me and I think it's very aligned with what you said is that I always try to kind of envision myself 10 years from now >> and where like look at actually people

who are 10 15 years older and see how their life is and what the lifestyle is and the people that I actually feel okay they have a they're happy they're balanced they have a good life try to get those type of individuals as as as

as mentors and that's actually how I ended up in entrepreneurship because I was at uni like in 10 years do I want to be a banker >> doesn't look too happy the guys that that come back to university and the same with consultants and entrepreneurs

were the ones that actually resonated the most. So I I I think that's very

the most. So I I I think that's very much aligned with with your mentor model as well.

>> I do think you also need to hang out with very very young people.

>> Yeah. 100%. Yeah.

>> To just not you know feel to to be uh you know in the moment to understand what's happening.

>> Um you know >> 100% 100%. So, so then you kind of came back and you you decided to kind of I remember we we had a chat when when you started or when you were about to start

Razer Group and um I was literally asking okay this is the only we had both the scars from e-commerce fashion >> and I was like this is the only model

that is even more complicated than than the one that we had before. you're not

only buying one kind of building one company, you're buying multiple that are selling on Amazon. Um it's you have to convince you know people to sell the

businesses to you. You have to integrate them. So so um what excited you about

them. So so um what excited you about about this rollup game um in the first place? I think you know it certainly was

place? I think you know it certainly was not a visionlet founding where I said oh my god >> I have the best idea in the world let's

roll up Amazon businesses [laughter] >> I'm going to change the world right >> was not make it a better place >> um I think that there were certain I

think it was very much mechanics focused it was very much opportunity that >> um and I think you could build something of scale.

>> Yeah.

>> And honestly like after SVL I needed something to do and so every >> I know the itch. [laughter] I know the itch. You know how to get started.

itch. You know how to get started.

>> And then from the opportunity set that I had >> in 2020.

>> Mhm.

>> Um >> you launched right before CO or around CO or what was >> in CO?

>> In CO. Okay.

>> Yeah.

When was CO?

>> 2020. March 2020. Yeah.

>> March 2020.

>> Yeah. Yeah. Well, like three months after that, maybe four months, five months after that.

>> So, um, yeah, it was a very much much an opportunity-led, I would say, thing. I

thought, you know, this could be big.

And so, my hunch said, let's let's do it. Yeah.

it. Yeah.

>> And I also had a great support system that would start that business with me, including the mentors that you mentioned, but also other founders that I knew from before I could bring in. And

so that was the first time I would say we we I piloted the unorthodox Tushar founder structure which is many founders >> which is the exact opposite of what I'd

say VC 101 tells you >> but you know Razer was initially five then four founders. I was able to pull in the people that I want and so I had people capital the initial execution was

great and that's when it solidified and then sort of one thing led to the other.

Um and because I'd say be uh you know we were not private equity in nature. Most

of our peers were like private equity guys or girls uh that uh build their businesses. Um we were more techy

businesses. Um we were more techy venture battle scard.

>> So that was your USB as well. So so

maybe kind of to back up 2020 you had >> a few companies. So it was peak coh >> um e-commerce was booming. Um everyone

was sitting at home.

>> Yeah.

>> Buying buying things. you were basically sitting in the office buying Amazon sellers. Um but you you had a handful of

sellers. Um but you you had a handful of companies um in their own rights back then in the US Razor I think an example.

Then you had um in in Europe seller X Razer Group >> they started simultaneously.

>> Yeah. Um you had also in Latin America in Southeast Asia a lot of a lot of aggregators right. um your kind of uh um

aggregators right. um your kind of uh um USP was from the get-go to also build a tech platform, right? To to be kind of a tech leader, not only a financial

arbitrage type of type of business. Is

that is that correct?

>> For sure.

>> Or let me let me just before we go into Razer's TechUSP, >> uh chart out sort of the um environment

in 2020. aggregator was sort of starting

in 2020. aggregator was sort of starting in 2019 pre-COVID people were not really buying into it but what happened in

during co were two things um that just you know created so much momentum for that space that probably most funds

across asset classes venture private equity private credit family office you know just jumped into this >> and that was number one COVID induced tailwinds.

>> Yeah.

>> So, all e-commerce businesses, but particularly Amazon e-commerce businesses >> all of a sudden had a revenue curve that went something like that.

>> It didn't need to do anything.

>> And then the other piece was along with that the margin profile also increased because distribution efficiency >> uh because more velocity just produced

more more margin. But essentially just your margin also improved. So on an IDIA level things improved tremendously.

>> Yeah. And um obviously you know there were two prevailing narratives. Many

founders said we are just great right we are so awesome at operations. Um the

other discussion that was there in the market was like is this a sustained change?

>> Yeah.

>> So has co now produced forever faster adoption curve? So will the adoption

adoption curve? So will the adoption curve continue to rise up?

>> Yeah.

>> That was part of the core underwriting thesis.

>> Yeah. of all aggregator investments which is this curve >> will continue to >> will continue maybe not at that pace but it will somehow continue or even flatline.

>> There was no underwriting case that this will normalize which eventually then happened and then the second vector that drove that space was super cheap cost of

capital. people had pressure to deploy

capital. people had pressure to deploy >> and then there was this deal that Thrazio did where they pull in top tier private equity money um I don't know who

who who that was but uh it was like top tier private equity money and um all of Advent was the advent deal in 2020 uh of

um of the thru and that validated one very important thing for global private credit investors and that was the start of the unlock that you could

actually take assetbacked dollar assetbacked buckets. So there is a

assetbacked buckets. So there is a lending strategy called assetbacked lending >> which is you don't just lend to the company but you collateralize assets which means if you can collateralize

assets that means I can give you money more more cheaply because in case you default I have the asset and somehow global private credit came to the conclusion that FBA merchants are great

underwritable assets. Okay. So, you

underwritable assets. Okay. So, you

don't have to be a genius to say to to kind of >> challenge that. [laughter]

>> Well, that that you know, I mean, >> maybe in hindsight, >> in hindsight, of course, but back then, this is what actually happened. This is

sort of what nobody tells you. Okay,

this was the the one thing that happened. So, because that happened all

happened. So, because that happened all of a sudden, you had billions billions not not hundreds of millions, billions

>> of dollars of capital. And that was the who is who of of uh privity right and private credit. So that was

private credit. So that was >> let's not speak private equity private credit.

>> Yeah >> they have driven whatever has happened >> and you had also some of the big names.

>> I also had some of the big names.

>> So tell tell us who who kind of invested into Razer Group.

>> I I mean across the space >> uh I think the lenders um or private credit providers have been similar. So

the top 10 or 15 players in that space um have always been a mix of a top three big ones. A Black Rockck would be and

big ones. A Black Rockck would be and Black Rockck is a huge institution. They

have like hundreds of funds. So some

pocket within the Black Rockck universe >> um and and you know for sure other >> um >> uh investors and it's publicly available information but basically those two or

three lender groups and there were two other big ones uh next to um to to BlackRock are were invested in all of the large ones and the large ones by the end of the FBA aggregator story have

been Thrazio Razer Group obviously last man standing seller X Right. Those were

the three and perch.

>> Perch then obviously Razer Group acquired Perch. It was just three

acquired Perch. It was just three >> and then all small ones were sort of put together in infinite commerce and in

different allocations all those three uh private credit providers invested billions behind these four or five uh players. That's what happened. And a

players. That's what happened. And a

bunch of stuff happened in between. So

now we started from the beginning >> and we ended up at the end but there was so much stuff that that happened in between.

>> So so that was more on the capital structure side. Right. So um

structure side. Right. So um

>> I mean which is in in a way interesting right because you have this um this business model or that >> no one actually has touched right cuz

all the Amazon sellers for years who are looking out hey can I sell to someone and there's no buyer market right >> um and I think then one or two of those companies like like you guys come in say

hey we would be buying you obviously for very low bida multiples and that only works because at some point in time as you said you people underwrite that risk maybe because of

>> their assumptions, maybe because of negative interest rates, but you had people underwrite that and that's what just opens up the whole the whole >> and let me be clear about it from a 2020 2021 perspective. It was an absolute

2021 perspective. It was an absolute valid underwriting case for sure. It

would it was like a dream case to make unlimited money from a 2020 and 2021 perspective. If you're on the right to

perspective. If you're on the right to this um hypothesis that e-commerce is going is >> well two two hypothesis that then lead to the to the third thing which is

number one the sustained growth in e-commerce margin profiles will continue >> um >> cost of capital remains equally cheap or maybe gets a little bit more expensive.

>> Um >> FBA assets are >> underwritable. underwritable, yes or no,

>> underwritable. underwritable, yes or no, for private credit and so large amounts of capital can be unlocked. If those

three things would have held true >> throughout time, this would have been amazing. you would have and there is

amazing. you would have and there is even an alternative reality >> where even if those three things didn't hold true let's say post 2022 with where

a lot of these assumptions were kicked upside down in in in since the Russia Ukraine war there's still an alternative reality that could have been a huge single business which didn't end up happening because of what I can only refer to as Game of Thrones like

behavior.

>> Yeah.

>> Yeah.

>> Tell us more about that. [laughter]

>> We love Game of Thrones.

>> Yeah. up until 22 you know what let's say up there's two phases of Razer so phase one is you know extreme hype for the entire space everybody acquires

everybody operationalizes >> and you know in many ways you know the core complexity you were speaking about brands >> the core complexity of businesses of

aggregators has been in putting together supply chain and supply chain infrastructure and operations because contrary to what the initial equity narrative is. 95% of uh customer

narrative is. 95% of uh customer journeys never started with a branded term you know they were not like buy or any other brand that we had the

majority of revenues for I would argue and anybody saying that anything else it's not true right I would argue for all of all of the companies

>> uh that were then acquired and then were part of an aggregator business probably like 70 to 99% you know anywhere between there depending on how aggressive or not

aggressively required >> were like generic terms I want to buy a XYZ >> toothbrush >> tooth toothbrush is extremely homogeneous products I think they were

more differentiated products than toothbrush I want to buy whatever you know product with an ASP below €20 or €10 >> you land on the landing page and Then

the business is actually convincing that of the set of options you have the best PMF that has been the revenue generating customer journey. The vast majority of

customer journey. The vast majority of the revenue generating customer journeys once all of those businesses has been acquired.

>> And so the house of brands narrative that people spun in the first half we are going to build the proctor and gamble of the future >> had a flawed assumption. Well, they

didn't have a flawed assumption from a financial perspective, >> but the financial guys that have invested in that space never built Proctor and Gamble in the first place.

They have deployed debt capital, so they just sucked it up. Like, okay, of course you're going to do that. Amazon

businesses are going to be brands.

>> But anybody building e-commerce businesses knew that, well, customer journeys are non-branded. How do you get a billion dollar worth of revenue that has non-branded customer journeys flip

into branded customer journeys? That

usually takes years.

>> Yeah.

>> And you need >> different different skill sets, >> different skill sets in different product. And so really the focus um and

product. And so really the focus um and look some companies did a you know fairly good job in in relative terms in relative terms >> in building out the brands or

>> yeah in building out more being more brand focused um you know and this uh what's this branded comes to mind yeah >> uh this guy called Pierre you know who

previously led uh Lazada >> I think he he you know it seems like from the outside you know that he did a comparatively good job, you know, on the on the

branding side. And I'm sure

branding side. And I'm sure >> again that's an assumption, but I think it's a 99% assumption >> that not not all of his revenue >> is branded customer journeys. Of course

not. And probably my assumption is that a a large part of uh his revenue is generated through non non-brand customer journeys.

>> But uh yeah, I mean that that was sort of one piece of it.

>> Okay, got it. And then um maybe so we talked a bit about the financial side. I

have to ask you obviously if you do Game of Thrones assumptions illusions we have to go in there. So so so why why is there no because I know that there's obviously um if you if you talk with

credit and generally debt providers have a different mindset than VCs and equity investors. Right? So it's one of the few

investors. Right? So it's one of the few um you know uh few industries in the in the tech ecosystem that very early on already got a lot of depth um and in and

private private >> before we go to Game of Thrones I think it's important to um I don't know how much time we have and if I'm talking too much but uh so good there you know there

maybe like spend like two minutes on >> let's say the good times.

>> Yeah. [laughter]

>> You know the king of the good times. Um

so you know the good times let's say 2020 to you know halfway to 2022 marked by obviously those three assumptions um you know equity story

we're going to build the brands house of brands of the future um you know um that unlocked huge amounts of private credit capital for

the the key players um they went on to acquire all of these businesses. I think

our um year one um assumption was that we're going to do $25 million in topline. We did $250.

topline. We did $250.

>> Yeah. I mean, [laughter] we don't talk about that enough. You guys built a billion dollar business in what two years right?

>> At at its peak, Razer Razer Group did $700 million.

>> Wow.

>> In top line.

>> And that's after how many years? After

>> like three and a half to four years.

It's less now because it's more focused on consolidation and and efficiency. But

at some point, you know, the business had $700 million in in revenue.

>> We had like 500 plus employees, but we were operating across continents. We're

still operating across continents. We

still have >> Did you acquire for that? Cuz that's

>> probably we've acquired 300 micro businesses and integrating. We had also had 300 different warehouses that are now just 13 >> or 10 or 13. Um I suppose I mean Max now

the new CEO is closer to the operations but you know my last uh understanding is that we probably like 10 to 13 >> uh of those. So

>> I mean incredible operational work >> that is not seen on the outside because you've been constantly working against postco which is when those assumptions flipped.

>> Yeah.

>> But so much operationalization has happened uh where you go from 300 warehouses to 10 warehouses. you build

your own uh sort of tech infrastructure to be able to operate 300 different seller accounts. Uh you have to

seller accounts. Uh you have to integrate Netswuite 300 times over. You

need to you need to pass audit by PWC.

>> Yeah.

>> But after having acquired 300 unstructured businesses, I don't really know if our shareholder base shareholder base appreciates what it requires to

pass a big four audit, >> you know, and what the systems you have to build.

>> Yeah. a after having acquired 300 different kinds of business. So a lot of operationalization, a lot of discipline, a lot of putting you know the supply chain into order.

>> I mean the sourcing as well, right? So

>> sourcing we had five, we had 500 different Chinese suppliers. ASPs have

been well below $10. Just imagine the amount of micro product >> that you have to uh you know sort of get from point A to point B.

>> Yeah.

>> Um and 80% of our revenue by the way has been in the US.

>> Yeah.

>> Right. impressive. Yeah.

>> So, uh I think >> in terms of complex monster that that you've built in two three years, >> it was it was >> extremely complex >> and then we added to that, you know, uh other channels that we start to expand

very aggressively into into other marketplace channels. Um so,

marketplace channels. Um so, >> and and I think like in hindsight, we did a fairly okay job.

>> Yeah. I mean, just making sure that it doesn't break is already impressive.

Yeah.

>> Yeah. A fairly

>> And a lot of competitors struggled with that.

>> Yeah. Competitors struggled with that.

Um and of course from the outside it always looks like okay you know these you know these um businesses don't don't really work. Um but from the inside

really work. Um but from the inside um and they didn't work because primarily because of the capstack.

>> Yeah.

>> The capstack essentially ruined decision- making >> inside the business.

>> By that you mean the obviously liquidation preferences the depth. So

the waterfall the sheer amount of capital that went into those businesses with 2021 assumptions >> when then assumptions changed.

>> Yeah.

>> Uh and what are those assumptions?

>> You know um there there is no sustained COVID insane growth.

>> There is no sustained COVID insane margin.

>> Add to that Chinese supply chain bottlenecks. All of a sudden you don't

bottlenecks. All of a sudden you don't even get the products you need to sell.

Yes. That hits your your top line. Add

to that um central banks uh experiencing inflationary pressure and therefore they have to raise interest rates and you have a floating >> $400 million credit line.

>> Yeah.

>> And so the the result of this for all of those businesses has been tremendously less CM3.

>> Yeah.

>> Contribution profit and tremendously more interest.

>> Yeah.

>> So it's like a double punch.

>> Yeah.

>> In your face. Um and

>> which hurts.

>> Yeah. was like second half of 2022.

>> Uh and all of a sudden if >> you know in in and your target is in your head you can build a 20% IDITA business with this from a 2021 perspective

>> and you then realize actually >> I don't know if I'll reach double digit IDA with this business group ITA.

>> Yeah.

>> Um but you have raised capital for a 20% IATA business and >> sort of 2021 multiples. Yeah.

>> Right. Which is So you have less margin, less cash.

>> Yeah.

>> Much smaller multiples.

>> Yeah.

>> But you have a billion dollar price.

>> Yeah.

>> Right. And then that's 22 for you.

>> Yeah.

>> That's when Game of Thrones started.

>> Yeah. And I I can imagine I mean what maybe kind of walk me because I know mentally as a founder you see things before maybe the outside world sees it, right? Um I mean a lot of it was micro

right? Um I mean a lot of it was micro and external but kind of mentally it must be tricky if you it's easy if you go with the with the with the tailwind

but when you see oh all the assumptions are probably not materialized but I have to kind of somehow >> push against the wind um like how do how did you how did you uh

>> I think the the experience in India >> really helped me yeah because I was always trying to sort of see what what is the next best path Yeah.

>> And end of 22 we we had a next best path >> which is I think one of the primary reasons Razer is still around >> as a company and it is now sort of consolidating. It's becoming more

consolidating. It's becoming more healthy.

>> You know it is coping with the >> exuberance of 2021 and and the prest and you know things are moving forward.

>> The idea was we need to consolidate our peers.

>> Yeah. because all of them are struggling and we need to find deal structures wherein we bring the weaker ones almost like a most draconian form of capitalism.

>> Yeah. [laughter]

>> You know, it's like big fish eat small fish capitalism >> and what we need to do is we need to go to these companies and tell them you have no future. Uh please give us your

IDA.

um you need to downsize your cap stack and you know jointly we unlock synergies so we get more group evita for less cap stack >> for less holding

>> uh and that is then what we ventured out to do >> um since the second half of 22 starting with factory 14 you mentioned the Latin American player Valorio

>> uh St which was then the the third largest player in Berlin >> and then that obviously culminated in Perch, which was a much bigger player than Razer.

>> They were softbank funded.

>> Yeah.

>> Right. And they had much more capital than us.

>> Uh but that culminated in 2024 in in um in Perch. And it happened one more time

in Perch. And it happened one more time this summer, not under my leadership. Uh

but under the leadership of the current CEO, we're in infinite commerce, >> which was in itself like a merger of all of the small businesses in that space

with the civil lender group.

>> You know, we were able to, you know, get together with I mean the the press release says Razer Group and Infinite merge, the surviving brand name is Razer Group,

>> but in my head Razer Group acquired Infinite Commerce. Um, and so the

Infinite Commerce. Um, and so the trajectory for that business, so with all of the the dark signs of the assumptions that don't make sense, that doesn't make sense, we have too much

capital, why are we even here?

>> Um, >> for us to then push through that was true entrepreneurial spirit because at any point of time we could have said >> that doesn't make sense. How, you know, how are what is in it for us?

>> Yeah.

>> We never asked what's in it for us.

>> Yeah. You know, we always said, let's somehow proceed >> because as a common shelder, you would be kind of anyways >> is a billion is a billion dollars of money sitting on top of me.

>> For me, for this to make sense, it needs to be a 234 billion outcome.

>> What are the odds that this is going to happen?

>> From a 2023 perspective, >> yeah, >> could be quite dark, [laughter] you could could potentially be >> uh yes, maybe in 10 years, we just need to power through.

>> Yeah. or ah that doesn't make any sense.

Let me just go home and sleep.

>> Yeah.

>> Right. And so you're constantly between these ah but I'm proud >> what 80 100 work weeks.

>> Yeah. And and then you have all the stress.

>> Yeah.

>> Because obviously your shareholder base is stressed like hey this FBA agree your lenders are stressed.

>> Yeah.

>> Which is an alltogether different kinds of stress level >> right because lenders can if they want just take over your business.

>> Yeah.

>> Those conversations are tough. Yeah. Um,

>> so you had a lot you you learned a lot about tough conversations because you had basically only tough conversations, right? Even the the companies that you

right? Even the the companies that you want to acquire just I I can imagine going to them with that pitch, [laughter] they weren't too excited about.

>> Are you sure you wouldn't say that? You

would say that.

>> You would say, "Let's build something great together."

great together." >> Yes. [laughter]

>> Yes. [laughter] >> But uh yeah, it was uh Yeah, it was just an array. It was one [ __ ] conversation

an array. It was one [ __ ] conversation after the other. Yeah.

>> And um >> so what kept you going then basically >> I think like some invisible sense of wanting to succeed.

>> Yeah.

>> Um that kept kept me kept us going. We were

a big team again. We were three four five founders. All founders stuck with

five founders. All founders stuck with us >> through that period >> and you know we everything that we did we did together. Even as we stepped out of Razer Group and handed over to the current management all of us did that

together. Yeah.

together. Yeah.

>> So that that has been an incredible source of power is found us being aligned.

>> Yeah.

>> You know, and no matter what happens, that's the core group uh you know that that sticks with with each other. Uh but

yeah, I mean we we kept going and um there were many times where I didn't know if Razer Group would survive.

>> Yeah.

>> Um >> at least three.

>> Yeah.

>> Right. Um but it did.

>> It did. Yeah.

>> It did. And today it, you know, it produces jobs for 500 people. Yeah. It

may not have $700 million in revenue, but it's certainly hundreds of millions of dollars in revenue.

>> Um, it's a business that will still have to solve many things. Yeah.

>> And Max is a great guy. You know, he led a billion dollar P&L before.

>> Yeah.

>> Uh um he was a CEO of a >> Excel Springer subco.

>> Yeah.

>> I don't know which one exactly. and um

something with Bonvito or something. I

don't know. Um Buna, sorry. Yeah. Bona.

And um he he'll do he'll do a great thing. He brings in I'd say more of the

thing. He brings in I'd say more of the >> relaxed management.

>> Yeah.

>> Uh energy, whereas I would bring more of the founder, we have to do it no matter what, even if we burn through.

>> Yeah.

>> Uh uh energy. Um cool.

>> And so yeah, I think Razer Group is in good hands. uh and um you know that that

good hands. uh and um you know that that that is the game of thrones for you.

>> That's that's a good story.

>> Tusha [snorts] I mean you talked about the complexity the struggles you you've built a team of well which was at peak 500 people right you

integrated a lot of a lot of individuals um what are some of your um leadership principles that that kind of helped you get the best out of out of the team?

>> Agency and urgency. Yeah,

>> I think that is um when I set up a company, I want to you know in a or there's agency urgency and um uh honesty

or trust >> which trust enables agency and urgency.

When I set up a founding team, it is usually what people would say is unorthodox. Even my new company, I have

unorthodox. Even my new company, I have five founders. At Razer Group, we had

five founders. At Razer Group, we had four founders.

>> Yeah, >> we started with five. And the idea is that only works if you have high amounts of trust.

>> Yeah.

>> And there you know you don't spend time on conflict and alignment. But if you are aligned because you have a history, you know how the other person ticks, you know, strengths and weaknesses. And if

you can reproduce that across and you have complimentary skill sets and if you can reproduce that uh across let's say four or five people which I think beyond

five people the cap table breaks.

>> Yeah. But up until five people I think and if you have differential equity allocations you know that's fine the cap table does not actually break but it allows you to work in parallel.

>> Yeah.

>> And so I think working in parallel is much much more important than working really hard.

>> Mhm.

>> You know I think one of the the Instagram uh truths or Instagram inspiration and motivational videos I really need to work hard. You just need to work 15 hours a day. If you don't

work 15 hours a day you're worthless.

That is yes I mean there should be phases there may be phases like that but I think to be fast on a sustained basis quarter after quarter after quarter

>> you need to have many people working on different projects >> um at a fast pace >> making independent and correct decisions >> you can make independent decisions that

are wrong which then you become slower.

>> Yeah.

>> Yeah. Um, and so I think that the team structure that I have now with the new company and also at at uh uh Raza was pretty near perfect for me.

>> Yeah.

>> And it only works if you really trust the people. I would never build or have

the people. I would never build or have a new founder that is a first-time founder build a fiveperson founding team with people that he doesn't know. So if

you were to do a rocket internet 2011 >> Yeah. a company building exercise. Yeah.

>> Yeah. a company building exercise. Yeah.

>> And just smack together five people, >> it's going to break.

>> That is going to break because you need that invisible like what were the criteria? Are you looking for

criteria? Are you looking for complimentary callers? Like how did you

complimentary callers? Like how did you go about kind of selecting?

>> So my advantage is that I've been doing this.

>> Yeah.

>> Since I was 23.

>> Yeah.

>> So I had had a lot of time to harvest >> Yeah.

>> people around me. Uh you know some from my rocket days, some from my SPL days, some from my Razor days. Yeah,

>> some people that I met randomly but >> you know came closer into touch with >> and so I have the luxury of probably

having 10 people around me and I know many many more than 10 people but 10 people where I'd say I will found with these people.

>> Yeah.

>> And they would found with me.

>> Yeah.

>> That's a luxurious position to be in.

>> Yeah. Um and particularly you know of different character caliber not caliber but character and and and sort of um >> competence

>> right in areas of expertise.

>> Um and so for the current company you know I have pulled in three technical founders.

>> Yeah.

>> All of them I would go on vacation with.

>> Yeah. all of whom would sleep on my couch um if they come to to Berlin or if they are in my part of town >> uh and two uh nontechnical founders of which I'm one

>> and the other guy I went to high school with >> right so I think that invisible thread um is extremely important that is the most important thing >> you create a structure where you

basically hang out with friends and then work with them yeah >> yes um although I like to say we are not friends.

>> Yeah.

>> Uh in when we are in the business.

>> Yeah.

>> Because I think friends gives you that emotional security that you can [ __ ] up >> which I don't like. [laughter]

>> But I would say incredible the the most important thing for me when I build teams is this invisible threat that I can rely on the other person.

>> Yeah.

>> And even when things are tough, that person will stand by my side.

>> Yeah. If I have that feeling that is 80% of the game, then you just need to be smart.

>> Yeah.

>> Right. Uh but that is the more scarce resource. That's the more scarce asset.

resource. That's the more scarce asset.

The the whether you're smart or not, that's not scarce.

>> What what's scarce is if I have that kind of equation with you >> and I have access such that you want to work with me.

>> Yeah.

>> Right. If I have that, that's that's great. That's the first filter. That's

great. That's the first filter. That's

the biggest filter.

>> Yeah. And then after that it's um is that person incredibly smart? Is that

person the validictorian of their Stanford computer science class like my CTO?

>> Snuck that in. [laughter]

>> Then you know that is a that's an added benefit.

>> Amazing. I mean it's it's great that this works >> so well for you because I feel uh >> a lot of people are are at times struggling with the right co-orner

matchup. there's so much

matchup. there's so much >> um drama down the road. Um

>> that's the worst.

>> Yeah, that's that's that's always emotionally the worst. But it also I think is a testament to kind of >> you as a being a good leader if people after you know 5 10 15 years of knowing

you still want to co-ound something with. So I think that's the ultimate uh

with. So I think that's the ultimate uh >> Thank you.

>> badge of honor. Yeah. Um I think the other thing let's talk about um um and transition to your new company. Um so

there's this joke that you know um first time first time founder does something in the consumer space >> um second time founder does something in the B2B space the third and then you

become a VC. So you're in a second you kind of uh >> I will never become a VC.

>> Yeah. Okay. There's no

>> the two consumer businesses and and now the third one I >> the consumer B toc roll up um >> B2B but everything all of these three stints

>> had to do with supply chain complexity in any any shape or form in the first two I was >> I'd say the user of complex supply chain >> and um in the third one I'm the solver

>> of complex supply chain with new technologies of course.

>> Yeah. So so let's talk about that Ara Corp. So what what are what are you guys

Corp. So what what are what are you guys doing? What was the unique insight?

doing? What was the unique insight?

>> So funny story on Ada Corp. We don't

actually have a name for the business yet.

>> Yeah.

>> It's supposed to be still in stealth.

>> Yeah.

>> So I guess now the world knows.

>> Now the world knows.

>> Um and we are still debating whether it's called Sunlight or ADA.

>> Uh depending on which URL we get. I hope

that doesn't drive uh up prices.

[laughter] >> You have to be quick. You have to be a quiz. I mean, sunlight.com is probably

quiz. I mean, sunlight.com is probably also pretty expensive and >> ADA.com as well.

>> We tried to acquire Sunlight AI, but that was a half a million dollar. So, we

thought, nah, maybe not at this round.

>> Uh, but we are probably it'll come down to ADAI.

>> So, the current URL that we are using is adai.com, which has a makeshift website right now.

>> Uh, although I think the company progress has been quite tremendous since we started in April. So, we're in our sixth month.

>> Yeah.

>> And we have uh I think some large customers signed up uh and contracted.

>> Um we promise to put more attention to our website in another couple of weeks.

>> Okay. [laughter]

>> So, yeah.

>> Then we'll link it as well.

>> Adaai.com.

>> Yeah.

>> So, what's uh what what was the unique insight and and why did you go into >> So, the unique insight stemming both from my first stint building supply chain. So, you know, at at SPL, I

chain. So, you know, at at SPL, I actually walked a manufacturing unit where people were stitching stuff, um, >> had goods sort of moved to the warehouse, then shipped logistics, that

was all local supply chain.

>> Razer was an incredibly complex global supply chain, right? So, at some point, $200 million purchase order budget, 10 euro ASP. Yeah.

euro ASP. Yeah.

>> So, you understand sort of how much goods are being shipped around the world. uh most of our sourcing in China

world. uh most of our sourcing in China but not only also in Latin America. So

multi-country sourcing um 13 different warehouses which have been consolidated down from 300 micro >> makeshift warehouses into 13 professional >> different production times from two

weeks to six month >> lead times some sometimes in market sometimes outside of the market.

um you know inventory risk um and and delivery deliver last mile delivery timelines uh selling through Amazon selling direct to consumer >> uh selling through shop

>> selling through Walmart >> uh multiple channels so it was like multiple geos multiple channels uh multiple sourcing countries >> uh different and at 5,000 different SKUs

>> I'm I'm happy to hear that you stick with very complicated [laughter] business models So like in terms of um BTOC complexity

>> it not only an M&A complexity B2C complexity operational complexity 300 different businesses integrated probably 5,000 core SKUs that work but probably

in the catalog 10,000 >> uh SKUs 500 plus vendors >> probably five [snorts] different sourcing countries um 80% of the revenue

is in the US but all of us all of Europe most of LATAM.

>> Yeah.

>> Uh so so many different geos, multiple channels beyond just Amazon.

>> Mhm.

>> That were growing growing quickly, >> right? Um that is the definition of uh

>> right? Um that is the definition of uh how complex it can get and side by side uh sort of implementing Oracle Netswuite for all 300 unstructured businesses that we had. I mean Sha didn't so my uh

we had. I mean Sha didn't so my uh technical co-founder, she's now chief product officer at at the new company Ada.

Um she uh basically we laughed that she had to integrate Oracle Netswuite 300 times over and Oracle Netswuite is not only an accounting system, it is also >> sort of procure to pay goods flow

system, managing your goods flow system.

Um and uh that was incredibly painful.

>> Yeah.

>> Incred. And that has shaped in many ways in addition to the experience that I had in India what we're building now.

>> Mhm. And the insight started from my China office >> or our China office at Razer, which was

the China office, basically 30 people uh that was coordinating with the 500 vendors um via WeChat.

>> Yeah.

>> To follow up on production and they would then take that information and update our system of records which was Oracle Netswuite. Mhm.

>> Once everything was integrated and everything was flowing >> and you know I you know me being Asian I

know that if somebody has to disperse $200 million worth of purchasing budget I just ask myself whether there's another percentage point of potential margin improvement if you know what I mean.

>> Yeah.

>> Yeah. And um

the question was you know obviously with the advent of CH GBT4 and 01 in the second half of 2024

whether humans still need to do that and >> to do the purchase like to to negotiate follow up on the purchase >> unstructured stuff.

>> Yeah. So or let me put it in in a more abstracted way. Now as we have spoken to

abstracted way. Now as we have spoken to many many enterprisegrade clients what emerges is a structure that in along supply chains in operations companies

you have three levels. You have the legacy system of records >> that may be SAP for many German businesses that maybe Oracle Netswuite at Razer >> um that may be Microsoft Business

Central. On top of that, you have what I

Central. On top of that, you have what I would call the human glue. That's a very nice way to put it. I actually call it something else, but you know, this is the human glue.

>> Yeah.

>> Which are human beings doing repetitive previously nonautomatable stuff.

>> Yeah. placing a PO, following up on the PO, making sure quality control goes to the vendor in China, checks the checks the goods, making sure pickup through

the freight forwarder happens, you know, making sure customs are cleared, dispute resolution, overd delivery, oh my god, under delivery, money didn't come, where is my money?

>> Uh, the goods are on the ship now. When

will they come?

>> Why haven't they come?

>> Where are the goods? You know,

[laughter] and wrong goods.

>> Wrong.

>> Exactly. Then they're at the warehouse at the inbounding >> wrong goods. Oh my god. Dispute

resolution. Um now they are sort of lost in front of the warehouse. Can you

please find where are the goods?

>> You know um once they're in the warehouse um you know somebody has to sort of sort them in >> and oh no they're at the wrong location.

I cannot find the goods. Uh then you have to do outbound. Um you have to do some logistics. Um that logistics uh

some logistics. Um that logistics uh need to re needs to reach the customer.

>> Mhm. There needs to be like that kind of follow-up work doesn't actually happen in SAP, doesn't actually happen in Microsoft Business Central. It happens

with the human glue.

>> Yeah.

>> Right. The human glue is basically human beings that have >> a laptop open.

>> Yeah.

>> Where on the left side they have Outlook.

>> Yeah.

>> In the middle they have Excel Word or any kind of system that they have to do some micro work, reconciliations or some quick math. And on the right side they

quick math. And on the right side they have the system of records uh Oracle or whatever >> and on the phone's WeChat >> on the WeChat it's on the phone and context is in their brain and the finger presses the button.

>> Yeah.

>> Right. So that setup uh happens >> you know in the example for Razer in its procurement team.

>> Yeah.

>> Which was the China unstructured communication >> procurement team. Um and as we spoke to more and more customers,

we realized that blueprint of having Outlook on the left, Xlo in the middle, uh legacy system of records on the right, all in one window and the human

being sort of understanding context and solving tickets, email tickets, >> right? Email is nothing else but the

>> right? Email is nothing else but the ticketing system of white collar workers around the supply chain, >> right? You get a ticket, you do some

>> right? You get a ticket, you do some work, you send a that's done, followed up.

>> Yeah.

>> Settled dispute, made payment.

>> Yeah.

>> Right. So, it's like all of like automatically a lot of like these white collar workers in the human glue on top of legacy system of records which earn like 25K to 75K.

um essentially transition from SAP Oracle automatically into Outlook >> or into phone and a lot of the

records in the legacy system of records is actually in those systems which is we call it system of communication.

>> Yeah. Um and so that was the big insight uh for us and that evolved from the uh Razer experience from the China team >> uh which obviously we wanted to can we

just auto can that just be software >> uh and we then quickly now realized >> it's actually a much bigger problem than procurement.

>> Mhm. And so while a lot of I'd say our a lot of enterprise AI companies today say we are going to solve procurement, >> we are going to solve freight

forwarding, we are going to solve customs clearance, we are going to solve >> uh I don't know order processing, B2B orders, most of our you know most of the

enterprise AI companies that we take seriously they have a vertical approach.

>> Yeah. And um I almost feel like an idiot saying that we have a horizontal approach because like your VC common knowledge would say that doesn't make sense. You need to be super intentional

sense. You need to be super intentional about your product, super deep.

>> But um what we have seen is that across the chain and we've been users I mean we have built we've seen it from the inside. We're not like theoretical

inside. We're not like theoretical founders that are building that from the outside. We're deeply technical and

outside. We're deeply technical and we're deeply supply chain experienced.

We feel like supply chain is a very big word. Supply chain is usually like 10 or

word. Supply chain is usually like 10 or 12 subdivisions that come together.

Procurement, you know, freight, whatever we just said, warehousing, >> um quality control, uh inbounding, outbounding logistics order processing, even customer care

sometimes. And it's not the exact same

sometimes. And it's not the exact same but some shape of a similar problem like we had the razor uh procurement problem

happens at handover points of all of those supply chains uh the supply chain divisions. So when you are in

divisions. So when you are in procurement you have messiness that's what I would describe uh you know our problem is that we are solving with the supplier email back and forth where are

my goods why are they not here you have the same messiness with your accounting team AP >> right why haven't you paid the payment they have not released the goods >> all right can you please be faster why do you not respond you know you have the

same messiness with the freight forwarding team have you finally picked up the goods [laughter] right and then as you go to the next division You have the same messiness to the left, you have the same messiness to the right, and you have the same messes on

top.

>> And so in our view, if you're able to solve messiness across five major supply chain journeys, which is the purchase order journey, goods come from and every journey encompasses multiple divisions.

Goods come from supplier to company.

Transfer order journey. Goods go from warehouse location one to warehouse location two to store. Sales order

journey. Goods go from company to customer. And the corresponding money

customer. And the corresponding money flows, monetary journeys. AR journey.

Money goes from >> customer back to company. An AP journey u money goes from company to uh supplier

and solve messiness at handover points.

Yeah, >> that's a big enough problem to solve.

It's a huge problem to solve. It's much

bigger than because I think that solves most of the problems why supply chains aren't working today.

>> Yeah, >> supply chains don't work not because the forecasting is bad and sort of the intellectual intuition for any Ph math

PhD would be let me do better forecasting with AI. Nothing could be further from the truth because I don't know if an AI would be better at

forecasting today and you know analyze I don't know whatever uh the math the underlying drivers to better predict the future. I I don't subscribe to that.

future. I I don't subscribe to that.

>> I do subscribe that these new systems can do communication and tasks microtasks that are complex but not complex enough that are currently done by white collar repetitive uh workers.

They can do that 100 times better. And

so people say, "Look, are you building AI agents?" Right? We use the word AI

AI agents?" Right? We use the word AI employees on the sales side um to better communicate uh what we are doing and it's easier for our customers to

understand what we're doing.

I'd say internally we we like to speak about system of action >> that sits on top of system of records.

So we don't want to work against legacy system of records. We want to complement want to help them um be better system of records actually because if we are

layered on top and we sort of >> take over what is today the messy human operating layer on top of the system of records we actually produce a better functioning system of records because we

can ingest data in a in a much better way. So that is sort of

way. So that is sort of >> you want you plan to coexist with the oracles and SAPs of of the world not >> I think there is no choice like you know I think the narrative that I'm going to build the ERP of the future and

therefore I go into companies and ask them to rip out their Oracle Netswuite or SAP that is such a bad pitch. I know

many like very wellunded businesses from top tier investors are going after this is super audacious. is just too much politics, too much gatekeeping and also operationally like a death sentence for any heavily

operating business to do that for even a day. Maybe that works for small and

day. Maybe that works for small and mediumsiz businesses to be honest. Uh

but for uh businesses that have an existing system of records, I mean SAP is a great company. They should continue to do what they're doing. uh what we want to go after is can we automate the

actions that an SAP produces >> to wrap things up and and I think that that's an a really um you know big potential uh uh outcome

outcome idea um and wishing you the best of luck. Um, two personal questions

of luck. Um, two personal questions maybe. One is what made you decide to

maybe. One is what made you decide to kind of go in there again as an entrepreneur knowing what you know of building two very

uh successful um but also you know tough businesses over the past few years.

I basically didn't take any break. Yeah.

>> Uh between Razer.

>> Why?

>> Um and um between Raza and um the new business.

>> Um and so while let's say the last six months were preparatory officially the launch of the business is obviously after my notice period at Raza

which concludes September 30th.

>> So officially I'm building the business since October. But um the reason is I

since October. But um the reason is I feel I don't I don't think there is anything better than building business like that's it's the best feeling in the world.

>> Yeah.

>> It's almost like the hero's journey you know I don't know this campal guy wrote about the hero's journey where you chart out on a path. It's like Lord of the Rings where you have a group you chart

out on a path you succeed you don't succeed you get better and you move forward. And it goes to one of the

forward. And it goes to one of the comments that I made earlier. There is

nothing more thrilling than evolution going into the next phase becoming better or whatever you want to call it like having some trajectory and I don't think there is any other instrument than

company building that produces this at the speed that company building does not being a VC not being like you need to be

in the trenches and if it works it's extremely extremely exciting it is the best I wouldn't say dopamine but serotonin shot. It doesn't come easy.

serotonin shot. It doesn't come easy.

Dopamine comes easy. It comes very difficult. But the highs that you get

difficult. But the highs that you get when you succeed in business, there is nothing better than the highs that you get when succeeding business. Um so much so that you're willing to accommodate

the lows which are incredibly tough. So

emotionally, it's almost like power distributed seeking of good vibes.

[laughter] So it's not very different how VCs think about capital, but I think about emotions. [laughter]

emotions. [laughter] Yeah.

>> Cool. And then and then maybe last question which we always like to ask kind of if if you give some advice to you know yourself 10 15 years ago if you're out there to start this

entrepreneurial journey from from scratch what what kind of advice would that be? I think uh people tend to

that be? I think uh people tend to overindex on being rational and there is there are problem sets that you can solve with your neoortex but you need to

know when to use the neoortex uh and and when not to use the neoortex. I would

say there are many moments where I have listened to my neoortex uh but I should have listened to my inner voice and what my gut tells me. The truth is the future

is so uncertain. Um and neoortex works in an excel sheet. You could take decisions now um that makes perfect sense to the

analyst but in your gut you say ah I don't know the problem is like the world happens in scenarios you know at any point of time you need to be able to think about 50 different scenarios

um and um I think that is that is important I think and also think about bad scenarios very very deeply even if it's uncomfortable >> often times I think about myself I'm

there to avert the worst scenarios and my team is there to make sure we reach the best. So an indirect way I'm also

the best. So an indirect way I'm also responsible because I hire those people right as a as a leader. So um I think having being that schizophrenic so one is understand when is neoortex when is

amydala time often times the inner voice is much more powerful I would >> overindex on inner voice anytime if it doesn't feel right don't do it >> agree >> even if the deal is amazing another uh

second thing that I wanted to say oh yeah being schizophrenic schizophrenic so you you need to exist in I'm going to die and I'm going to be the best in the

world all at the same time. And you need to be fine with that. Um and um and both can be true because you need both sort

of perspectives to ensure uh you know you're prepared. Um and um certainly at

you're prepared. Um and um certainly at Raza I'm going to die and being afraid of death was one of the

reasons we didn't end up dying because 6 months before we thought about how do we not die that helped us succeed. I hope

that we I don't have to use that skill set in the new company because we we'll just focus on winning >> right and things are going extremely fast for us right now. I'm very excited.

It feels like the best company I've ever built. I'm so grateful that it has come

built. I'm so grateful that it has come together as it has right now. Uh I mean we have some really really good investors. We're well capitalized. We

investors. We're well capitalized. We

have an awesome team between Berlin and Bangalore. Um we have awesome customers

Bangalore. Um we have awesome customers and partners that we're working with. uh

and we are injecting really great cutting edge technology that works which in AI is a is a is a different thing do you actually work in the 99th percentile >> for some of the leading businesses of

Germany and al that's also contrarian we're starting with Germany people say hey why why don't you go global I think there is like a bunch of great companies here that you can work with but yeah I'm digressing your question was obviously

around what what the advice is and that would be my advice >> cool so it's been a really big pleasure having you >> we uh looking forward forward to what you'll succeed with the with the next

company and uh >> Awesome. Thank you.

>> Awesome. Thank you.

>> [laughter]