The Bro Code - Meet The Sound Industry's New Disruptors
Think of music and millennials, and what's affordable that suits their budget.
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Those products are mainly headphones,a lifestyle statement for every youngster. There lies the moolah – the company clocked more than Rs 100 crore revenues - for the brand last year. Aman, a Bollywood buff, knows the big picture and regales me with Salman Khan, Amitabh Bachchan analogies. The story of boAt surely sounds like one, a box-office hit in the making. boAt doesn't operate like one of the fancy startups I get to meet often. Aman tells me that boAt was operating out of Social, a café doubling up as an office space, and also found some of his employees there. In January the company shifted to Lets Cowork.
The company has 15 brand ambassadors on board. It is an impressive line up – Kartik Aaryan, Hardik Pandya, Jacqueline Fernandez, Shikhar Dhawan and more. They all hardsell the brand on their social media handles. boAt has two Co-founders, twin head offices, one in Delhi for sales and marketing spearheaded by Aman and the other in Mumbai headed by Sameer Mehta catering to product, logistics, and the operations side of the business. The founders meet in Delhi, Mumbai or Bangalore where their investor Fireside Ventures has its office. Else they visit China once in two months where the contract manufacturing is happening for all boAt products. "I go more hotel nights with Sameer than with my wife. I call it an arranged marriage between Sameer and me," laughs Aman.
THE BROTHERS OF MUSIC
The founders come from different backgrounds, never interacted prior to setting up boAt and have been sailing in this startup journey togetherfor the past five years. Sameer didn't like being part of the rut, just managing a traditional family business called Kores India Ltd, and Aman, who is a CA byqualification and an MBA from Indian School of Business, found his love in sales and marketing while working with JBL. Both of them wanted to do something in the audio space via the online medium. When asked how his qualification helped in his startup, Aman says, "I ensure wherever we spend we get money out of it. That's thebaniya plus CA in me." In the initial days, Sameer says, "We approached international companies to distribute their products in India but realized we are yin and yang and will complement each other, become better andbigger. Ten days later we found the company. We didn't have enough funds to experiment on 100 products so we decided to first get international brands to know what people want and what price point works, post that we launched our own brand." The company is clear on what to keep and what to outsource. When Aman partnered with Sameer he knew as the latter understands the Chinese manufacturing system well he can take the idea further. Aman always wanted to start something on his own and a friend introduced him to Sameer and both worked on productionand marketing.
AUDIO IS THE KEY
So far audio products have been the domain of established, and mostly international, players such as JBL, Harman, Sannheiser. An Indian player all set to disrupt the audio market was unheardof. The founders spent time on getting the product right from 2014 to 2016. They started with such basic problem solving ideas such as having a charging cable which can endure 5000 bend test (the usual industry standard is 1000 tests) and came up with boAt's first winning product. Says Aman, "Our first product was wire. Every time the charging cable used to break. That is the first pain point we solved, we call it jugaad innovation. Our cable is built so strong it will not break." Most products were driven by market demands, like longer cable, wireless airdopes, tangle-free cables. Since 90 per cent of India likes bass the products were built bass heavy. Apart from durability,the second star value of the brand is being fashionable. Whether it's taking a licence of Chennai Super Kings to launching a special range or getting designers on board such as Kunal Rawal the beautifully designed products are like a breath of fresh air. The third aspect the team worked upon was making it affordable for a millennial. Their airdopes come with an affordability price tag of Rs 2,999. The company typically hires people in the age groupof 20-22, for a reason. "We didn't bring people with baggage, we wanted raw talent. Fresher blood in the company keeps innovation alive," adds Aman. Talking about the challenges posed by bigger brands, Aman says, "As a challenger brand we don't have the mercy of the consumers. If we give them one bad product they will write us off."
But boAt is sailing smoothly. At the Lakme Fashion Week, the brand displayed the product as the only accessory the models were wearing. The brand plans to cash in on the Make in India campaign and base its manufacturing only in India.
Currently, India is a 10,000-crore mobile accessories market. The market is projected to boom to $3.54 bilion by 2024, according to a report by Research Nester. Headphones are more personal, more to do with lifestyle that is cherished. And so boAt's adoption is swift. The colors are disruptive in its newly launched trippy collection. To be sure there were hiccups along the way. Sharing the initial failures of the brand, Aman says, "One year back from wired everything started becoming wireless. We thought we can bring in products fast. And we launched a sub-standard product but that back fired. Then we went back to the drawing room. That failure taught us that you can't take your consumers for a ride." The company now launches 1000 units first, and waits for the customer response. The hit rate usually is 70-80 per cent. If products don't pass they go back to the drawing board.
boAt works with Qualcomm and other technology players to be ahead of time. The company currently has only 60 per cent fill rate. The brand often gets flack on social media for this. Aman says, "The biggest problem in our industry is stock obsolescence. It is better to be sold out than be overstocked."
So the next question pops up. Why only Fireside as an external investor in the company, and that too when the company is profitable? Says Aman: "Once an investor asked me, what is our burn rate, I told him ask me our earn rate. We don't burn money, we earn money." Aman was clear that they would not raise funds like other startups and truly wanted a mentor, and they found one in Kanwaljit Singh. Aman started approaching Kanwal through Linkedin when the company's revenues touched Rs 30 crore and closed the Fireside funding when they were nearing the Rs 100 crore-mark last year. Talking about the value Kanwal brought on board, Sameer shares, "We both were managing the business but he showed us the larger picture, he brought in a lot of discipline. He is now helping us in taking the Rs 1000-crore vision forward." The company is now looking at debt funding for working capital instead of venture funding.
Currently 80 per cent of sales of the brand happen through the online medium largely driven by Amazon and Flipkart. Right now the repeat customer ratio is 30 per cent. The company is planning a B2C website for the brand. Since offline is picking up now, the brand has partnered with Croma, Vijay Sales and others. Aman adds, "Now when we are going offline, retailers are accepting us because consumers are asking for us. Now boAt doesn't have to prove to retailers." The brand has launched five shop-in-shops in partnership with Croma. The brand is also launching voice-enabled products.
What keeps the boAt team going? "I might be passionate but I am paranoid. Every day I feel consumers are changing and I have to change again. Our biggest fear is not to run fast enough else we will be disrupted."
boAt's 30-member crew will grow to 40 soon. They will ensure the company is agile and create a different sound of music to enthrall its customers.
(This article was first published in the June issue of Entrepreneur Magazine. To subscribe, click here)