In the first episode of our playbook series, where we glean insights for entrepreneurial success from leaders in diverse domains, we have a freewheeling chat with Vidit Aatrey, co-founder and CEO of Meesho.

In this playbook, the Meesho founder goes into the challenges of innovation and intricacies of execution in this space, the strategic moves made from its earliest days, and ultimately winning the confidence of big  investors. The first part of the playbook provides answers to five key questions:

1. How did the founders zero in on a problem to solve that would have a large impact?

2. What triggered the startup’s quick pivot to a new product in its very first year?

3. How did Meesho empathize with a new category of consumers, many of whom were first-timers in online buying, and understand their needs?

4. What were the most vital product features at the outset to enable an emerging consumer behavior?

5. How did housewives become central characters in Meesho’s playbook and what’s the game-changing value they brought?

The backstory

In just six years since its founding in July 2015, the startup is halfway to becoming a decacorn, valued at nearly $5 billion in its $570 million funding round in September 2021. After a hiatus in 2020 following the outbreak of Covid, marquee investors bought into the massive scope of the Meesho marketplace connecting resellers in tier-2 and tier-3 towns of India and Indonesia with a long tail supply of unbranded products, providing the value for money and choice that large swathes of consumers want.

Social commerce became a buzz after Meesho validated the need for such a platform taking online retail to consumers and sellers not being reached or served adequately by ecommerce giants in a large and diversified market like India. Many in the hinterland rely on word-of-mouth to choose what to buy, trusting the recommendations of people they know more than brands and advertisements. This is where Messho’s resellers, most of whom are women, bridge the gap through their social media networks. At the same time, consumers who prefer to buy directly, without going through a reseller, can do so on the app, as Meesho responded to this demand. It shows that the attraction of Meesho is not just in the reselling proposition, but also the products being sourced from small and medium businesses that find it hard to gain visibility on ecommerce sites featuring big brands.

But social commerce is a hard nut to crack, and Meesho has hacked through a plethora of challenges in its pioneering effort to establish the viability of this category of ecommerce in Asian markets. Several me-too platforms have struggled to emulate this and some have bitten the dust.

Show Notes

[1:03] Why the earlier avatar of Meesho, Fashnear, meant to be the “best of both worlds”, online and offline, turned out to be “none of those worlds”

[4:00] Market validation trumping VC validation: Why talking to customers is more important than listening to investors, and learning that lesson the hard way after trials and errors

[6:03] Stumbling on WhatsApp commerce in action in the course of first-hand observation of users, showing that proprietary insights can only be found at ground level

[9:10] Meesho’s first attempt to supercharge an emerging consumer behavior that it caught in its infancy

[11:05] The serendipity of discovering a whole different target audience, housewives, and understanding their unique requirements

[14:20] Pivoting to serve the new target audience better, by developing a more efficient asset-light model for them than the women could do themselves

[16.40] The recipe for success is being closer to the customer than anyone else, and figuring out how to make that happen across the company

Meesho raised a series A round in October 2017 with the shift in its business model. Series B and series C rounds followed the next year along with 100x growth. The exponential scaling to serve a massive consumer base, which was in the founders’ sights from the outset, became a reality. The second part of the playbook answers four key questions:

1. How did the founders choose between staying on a path long enough to reap rewards and switching to a potentially higher growth path?

2. What are the drivers that characterize founders who can seize the opportunity to serve a large consumer base?

3. How did the founding team build a company culture that’s in tune with the driving force to scale up?

4. What were the challenges of putting systems and processes in place to support a scale that was many orders of magnitude bigger than at first?

Meesho stayed on this path for about two years, building out the product and ironing out chinks. During this time, the founders recognized that the online shop was an unnecessary intermediate layer and complication for the resellers who were becoming Meesho’s main target audience: housewives mostly selling their curated products on social media channels where they had built a following. This led to the next iteration: Meesho 2.0.

Now the resellers could just scroll through catalogues of products on the app which came with a function to enable sharing selected products on social media channels with the click of a button. This made reselling easy and seamless without the need to bring buyers to a separate online boutique. It also enabled enhanced data analytics to pinpoint consumer needs that vary from one mini-market to another and improve the sourcing of products. Other possibilities emerged down the line, such as enabling consumers to buy products directly on the app, without going through a reseller, which essentially broadens Meesho into an eCommerce platform as well.

Show Notes

[0.00] Great founders analyze problems top down and build solutions bottom up. Top-down analysis identifies the opportunity and ensures the market size is large enough. Bottom-up solution-building helps gain unique insights about consumers and understand nuances about how to solve a problem.

[2.09] An informal contract between the two co-founders was to stick with the first product for two years to see if it yielded the desired results. This ensured striking a balance between rethinking too often and being open-minded to pivot to a new version based on market validation.

[2:58] The motivation to keep going through patches of uncertainty about validation came from the bond in the founding team that gave the startup the vibes of a college project where tackling challenges is fun.

[3:38] The inbuilt DNA across the company, stemming from the founders, is to pursue a high growth path targeting a huge consumer base. This made the focus on Meesho 2.0 razor sharp as soon as the market signaled the path to scaling faster, even if the safer option was to stay on the first path.

[7:59] The founders build culture by what they encourage or discourage. Thus scale is valued and becomes ingrained in the company culture. The other fundamental value comes from a recognition that the homemakers using Meesho have different aspirations and behaviors from those building the product. So user impact guides every proposal, feature, and decision.

[13.15] The only way to stay consistent with a culture as you scale up is to build systems. From setting ambitious goals to breaking them down to individual OKRs, the company’s fundamental values are built into them. Thus the OKR system is contextualized to Meesho, applying its filters of scale and user impact at every level. It’s not a copy-paste from Google.

This section of the playbook answers three questions:

1. How do you define product-market fit for an emerging consumer base in a new category of ecommerce for a potentially large but fledgling market?

2. What are some assumptions drawn from more developed markets that can hinder rather than help a startup validate its product fast and scale-up?

3. How is the second generation of consumer internet startups different from the first wave?

Meesho 2.0, leveraging the widespread use of WhatsApp for commercial purposes in India, represents the second generation of Indian startups. Their mindset is different from that of the first wave which mostly focused on adapting business models tried and tested in more mature and developed markets. This brings its own challenges of foraying into uncharted territory to figure out solutions that work in India. It solves India-specific problems by taking into account local user behaviour and then adapting that to similar markets like Indonesia. So it’s a reversal of the mindset prevalent in the first generation of startups.

Show Notes:

[0:00] Many entrepreneurs make the costly mistake of defining their product-market fit wrongly. Getting that right was what made Meesho move on from its first product instead of carrying on with it too long.

[1:05] The imperative in the West is to hire engineers and automate processes as early as possible. But that isn’t always the best solution in India, where non-tech employees and manual processes can validate a product faster and economically.

[2:31] Meesho scaled 100X in 12 months by ramping up its team from 40 to 700 people. Only after market validation did it expand its engineering team and automation, turning the Western playbook on its head.

[3:20] India-specific models are emerging as the second generation of internet entrepreneurs no longer ape successful companies from the West or China. Expectations of investors have to also change so that models aren’t rejected if they haven’t been tried in the US or China.