The husband-wife co-Founding duo of Tanuj Shori and Kanika Gupta have made square yards india’s top residential estate distributor; 4ps B&m meets up with them to find out how
4Ps B&M: How did you think of starting Square Yards? Tanuj Shori: I’m an investment banker and Kanika had done her stints with the wealth management industry, apart from Bollywood & modeling before we moved to Singapore. So there was a point of time where she wanted to start an entrepreneurial venture, and I started more as an investor. So how did Square Yards and real estate come along? We used to invest heavily in personal capacity into real estate. We had a portfolio of products not just in India, but globally too. But every time we went and invested something specifically in India, a big pain area was that there was not a single professional who could sit across the table and tell us what we wanted and what we did not want, lesser so in terms of numbers, in terms of accurate market trends and so on and so forth; people were just blindly telling us that the market doubled in the last four years and will double in the coming four years. That’s when we realised there was significant need for an intelligent, number- and process-driven player in this market.
Kanika Gupta: Another front where we felt there was a dire need for professionalism was client servicing. This was one of the areas that had a very big gap. As Tanuj says, whenever we wanted to reach out to developers for inputs on various fronts, there was nobody to help us and guide us through even the transaction cycle.
4Ps B&M: How did you think of the name Square Yards? Kanika: The first thing that comes to anyone’s mind when they go for purchasing a property is how many square yards is the area. So I would say that the name was purely intuitive.
4Ps B&M: But why go online? Did you feel there was a gap in the industry with respect to online presence of players? Tanuj: Online was never actually a prime focus for us. We thought of online only as a supportive platform at that point in time. That was simply a starting point. When we thought about the idea, we both came to India, spent a few months here and met some industry players like IndiaHomes, Housing.com, Investor’s Clinic, and others. Every day that we spent here, our conviction grew that this is the sector where fortunately or unfortunately no one has tried to build a truly professional organization. No middleman has tried to build an organization. Anywhere in the developed world, in any industry whatsoever, manufacturers have a role to play, distributors have a role to play and clients too have a role to play. But in India, because no one ever attains scale, manufacturers (builders and developers) themselves were distributors. Developers were selling 70% of the stock either themselves or mostly through the unorganized market. But there was no B2B platform or an organization to organization platform present.
4Ps B&M: Real estate is not recognized as an industry in India. In such a case, would not establishing something organized be tough? Tanuj: I would say it is the opposite; as no one has done it before, it becomes far easier for us. One could get the right talent as one is the only organized choice in the industry. You can also say that being organized would provide one with a significant amount of bargaining power with developers. The entire sector being fragmented, disoriented, disorganized has been a big opportunity; and we still haven’t done anything noticeable out of that. What we have is simply a 2% market share!
4Ps B&M: One successful husband-wife startup is Infosys, where the wife took a backseat while the husband led the business. How have you organized your individual roles? Kanika: We have demarcated our roles and we both do very different things on a daily basis, which are totally independent. I take decisions for various verticals and have enough independence to work. Tanuj: Well, the fact is that Kanika started Square Yards and I became involved only six months later. Subsequently, she stepped down from the CEO’s post for me. Because we run a sales organization, apart from taking strategic decisions, I also take care of the sales numbers. She takes care of the remaining structure – whether it’s expansion of international footprints, marketing, CRM and call center.
4Ps B&M: How have you managed to grow so fast? The so called ‘real estate mafia’ generally is quite omnipresent and ready to be of nuisance value to high growth corporations… Tanuj: We haven’t actually faced any such thing. Our organization is a very organized one with systems in place. In the initial months, when we started going out, we needed management people. And those were early days. So, like any other startup, we would also have trouble hiring key people. We took an alternate route. We pretty much put a chopper on the heads of everyone we grew up with and studied with, anyone we felt could make a difference. Now, in our management team, we have these 16 principal partners who come from significant positions in banking, branding, technology and the real estate industries. The only difference is that they have not been hired. We all know them personally, so overnight, from two cofounders, we grew to 16 co-founders. All of them have equity participation in the company and we now have 16 mini-CEOs. The reason why we grew faster than any of our competitors is that we did fifteen different things at the same time; and these are professionals who have significant ownership to run those mini-ships as mini-CEOs. And it’s my job at the end of the day that everyone has synergy while people head separate verticals and separate regions. Very rarely is there an overlap between the fifteen of us.
4Ps B&M: How would you describe your organization in two to three lines? Kanika: We are a bunch of passionate people who are doing something which we love doing. We have the freedom to innovate, we have the freedom to do what has not been experimented; so this is still a young startup at heart. Although we are now two years old, that startup feeling, that startup culture is still there, and that is what is keeping us alive and taking us to the next level.
4Ps B&M: How do you define your core service? Tanuj: We are India’s largest real estate aggregator and distributor. Now, how we are building it up? We are amalgamating various verticals. We started by building a purely offline direct-sales business; that was the starting point. We started it in one city and replicated it in other cities. What we did differently is that we went to NRI markets and started replicating the sales model in those markets. Although we had a unique model, we were then still small. Concurrently, we recognized that growth could not come purely imagining of this as a scale business. Then we started introducing technology and that is the time when acquisitions came along. You have to understand that 90 odd percent of the real estate market is driven by brokers. With the real estate industry not being transparent and there being no bill in place, we can’t expect to replace this 90% of the market. This is similar to the cab space in India, with a majority of players being unorganized. That’s why we decided to do in this industry what Ola did with the cab industry. We’re enabling the brokers to make faster money, more money, and efficient money. So it’s a real estate aggregation model, starting with Indian real estate, extending to international real estate, which has been extended further to mortgage. Now, we are setting up new verticals like portfolio management services and facility management services. To put it this way, I believe there are 36 boxes which need to be ticked in real estate, and we have scratched only one box. How would you see Square Yards three years down the line? We would have a very dominant market share in any value chain related to real estate – whether it be mortgage, real estate investment, land acquisition, NRI segment sales or related global sales.
4Ps B&M: Your focus on NRI markets is unique. What are your other differentiators from the competitors? Tanuj: Scale. I will still say that the best answer is scale. I think in any industry, any sector, the best way to get bargaining power is scale. Unless we have scale, we are not entertained across the table; at the same time, if we have scale, we can enjoy bargaining power. What we did different from other players is that we went berserk when it came to growth, we did not hold back. We didn’t put any rule that we’ll focus on a new city only after handling one city. The reason why we did that is because every city has multiple micromarkets – also, what happens in Gurgaon does not drive what happens in Mumbai, and what happens in Mumbai does not drive what happens in Bangalore. So we expanded in one big leap; and this also helped us diversify the management risk. Honestly speaking, we pretty much ran the same business model that our competitors were running. We just did it on a far larger, far more differentiated and far more faster scale.
4Ps B&M: How is it that you could do it and they could not? Tanuj: Organizations are built, organizations are broken, but not around capital, not around technology – it’s all about people. Capital is a commodity. You give $20 mn in the hand of five people and how they handle it is basically a function of how they want to spend it. Effectively, it all boils down to people. Like Kanika pointed out, the sixteen of us haven’t taken a holiday in the last one year. And when you have people who are so passionate running their verticals, trying to make them successful, it becomes almost like a combination of 16 startups. I think that’s why we are a powerhouse.
Kanika: We scaled up both vertically and horizontally. There are verticals which we could start at the same time, something that would be difficult for any startup to do. For example, we have simultaneously started our India plans, and at the same time, we scaled up in the commercial sector and in the NRI business arena; we are also engaging a space called International Project Marketing (IPM) that is bringing global properties to India, which nobody is doing currently.
4Ps B&M: Can you tell us something more about IPM? Tanuj: Eventually, India is India and the globe is the globe. Our belief is that we won’t get into any vertical where we can’t be a leading player in 12 months. We first thought about getting into wealth management, but we didn’t. It’s similar with secondary resale and rental. It is a massive market. Do we want a share of that market? Yes. Are we best placed amongst the industry incumbents to do that? Yes. Why are we then not doing that? Because, we do not have the right business model yet. But when we cracked the IPM code, the primary code, it applied everywhere. It applies here, it applies in Dubai, it applies in London, it applies in Australia. So we started Dubai as a test case a few months back. Today, we are seeing massive results. IPM now contributes 10% to the revenue and its doubling up every month. So, in the next three years, more than 50% of our business revenues will be non-India.
4Ps B&M: You did not go for institutional investors initially. Why was that? Tanuj: There’s a reason behind that. To understand that, you have to know that we also take wrong decisions. But as long as we get seven out of ten decisions right and as long as we have the agility to repair the wrong decisions and make it right, it’s alright. So that was the basic reason due to which we did not want an institutional investor on our board for some time. Then we started looking for alternative sources of capital. We structured our products as such in terms of convertible instruments. We raised $15 mn from the market, mostly retail clients spread over 50 odd people, all personal contacts. When we reached a sizeable scale about six months back , then we started reaching out to institutional investors and very soon, we should see a big deal. I have always believed that if you have the right business model and the right economics at heart, investors would come automatically. I am again the kind of entrepreneur who strongly believes that business should not be built on traffic, or with the belief that we shall earn 25 years later. The main job of a business is to make money. It may make more money, it may make less money, or it may be at a stage where it may make money at double the scale, but a business model should know how to make money.
4Ps B&M: In this whole thing, you haven’t talked about your advertising strategies and plans. Tanuj: A Coca Cola has to go for advertising, It has 5% of its revenues set aside for advertising. We also have 10% of our revenues set aside for marketing, but that is for lead generation marketing and not brand marketing. A brand will be built at some point of time when we believe that we have an offering. We are still evolving, processes are not strong, we are still an early baby. For example, we will avoid doing a full=blown campaign at this stage. Yes, that may make sense when we control the monopoly in the market. Yes, when there is a demand generated by one million hits on my website everyday, and I am able to cater to them and am able to transact with them, then yes, I might advertise to keep those eyeballs coming.
4Ps B&M: You have had a PR campaign where you have told the world that you have achieved operational profitability in such a short time. How did you do that? Kanika: We reached operational profitability in 22 months flat. Tanuj: Without taking the name of our competitors, our cost is the same as them, but our revenues are four times higher. And we are running our business with the same people that they used to have. It’s just that we have been a sales-centric organization. I have never been a fan of technology taking over the organization. I have always believed that technology should be central to an organization to enable it to grow 100 times faster. The mind and heart of the organization should be in the industry where they are. We were and are very clear – we are a sales organization. Our DNA is sales; and technology has to play a very important role so that we are not limited in our growth. If we are doing “x” revenue per month now, how do we make it “10x” in a few years with the help of technology? It could be usng internal ERP, it could be using lead generation campaigns, it could be digital marketing, it could be portal traffic, it could be anything, but the focus has to be sales-centric.
4Ps B&M: How would you see the growth going forward? Tanuj: Our target is that by 2019, we should be earning an income of over $100 million. We’re targeting a 15% market share of the Indian real estate market, which means around seven to eight times growth from here. In the global real estate arena, we are still tiny. Only 5% of our work force is in the global market, and this we need to increase to 20 to 25%. In mortgage, we are already India’s third largest player and our target is to become the largest player in the next 12-15 months. Then, we are planning to launch estate portfolio management services. No one in India, in a sizable scale, does residential portfolio management services; we aim to be the largest player there. These will be our four key verticals. What Kanika is concurrently focusing on is to create a marketing agency, which is a non sales vertical. This will create a digital army and will help in lead generation for all the developers, irrespective of the fact whether they have a working relationship with us or not. There can always be a relationship on the marketing front.
Kanika: Especially in the global markets.
Tanuj: I truly believe it’s over a billion dollar organization opportunity…
4Ps B&M: With a no-weekend-off culture at your office, how do you manage your personal fronts? Kanika: There is a lot of support from our respective families. Both our parents support us considerably and take turns to stay with the children when we’re not there at home and are travelling. Currently, we’re on a mode where Monday to Thursday, we’re in India and Friday to Sunday, we’re in Dubai because that’s the time when we can spend some time with the kids.