A school dropout & coolie’s son, Musthafa, built a Rs 2000 Cr startup selling idli-dosa batter!
iD Fresh:
1) 2005 ⇒ Rs 50,000 investment & small 50 sq ft kitchen
2) 2022 ⇒ Rs 411 Cr revenue & 6 manufacturing plants
Here’s how iD Fresh sells batter for 1 MILLION idlis/day! 🧵
iD Fresh:
1) 2005 ⇒ Rs 50,000 investment & small 50 sq ft kitchen
2) 2022 ⇒ Rs 411 Cr revenue & 6 manufacturing plants
Here’s how iD Fresh sells batter for 1 MILLION idlis/day! 🧵
Structure:
1. From school dropout at 10 to an IIM MBA
2. The seeds of entrepreneurship
3. India's resistance to packaged foods
4. How did iD convince people to buy their batter?
5. Building an INR 400+ crore business selling idlis!
1. From school dropout at 10 to an IIM MBA
2. The seeds of entrepreneurship
3. India's resistance to packaged foods
4. How did iD convince people to buy their batter?
5. Building an INR 400+ crore business selling idlis!
1/ From school dropout at 10 to an IIM MBA
PC Musthafa hailed from a small village in Kerala. His father was a daily wage worker and his mother a homemaker.
Coming from a financially challenged background, Musthafa had a very difficult childhood.
(contd.)
PC Musthafa hailed from a small village in Kerala. His father was a daily wage worker and his mother a homemaker.
Coming from a financially challenged background, Musthafa had a very difficult childhood.
(contd.)
He would walk 6 km to school, rarely could afford to have 3 meals a day and on top of this, helped his father at the farm at the mere age of 10, to earn Rs 10/day.
At one point, he even dropped out of school after failing his 6th standard exams.
(contd.)
At one point, he even dropped out of school after failing his 6th standard exams.
(contd.)
He later joined back his school and eventually studied Computer Science at NIT Calicut and went on to do his MBA at IIM Bangalore.
Soon enough, Musthafa was working at reputed MNCs with his work spanning across India, Europe and the Middle East and was making a good living.
Soon enough, Musthafa was working at reputed MNCs with his work spanning across India, Europe and the Middle East and was making a good living.
2/ The seeds of entrepreneurship
From a young age, Musthafa had a very strong entrepreneurial spirit.
He started his first profitable venture, a makeshift Kirana shop, at the age of 10.
In his 20s, he started an online used car showroom, which was later shut down.
(contd.)
From a young age, Musthafa had a very strong entrepreneurial spirit.
He started his first profitable venture, a makeshift Kirana shop, at the age of 10.
In his 20s, he started an online used car showroom, which was later shut down.
(contd.)
A few years later, given his tech background, Musthafa wanted to create a chat app so he could talk to his family and friends in India while he was in the Middle East.
He had the prototype ready, but he gave up midway.
(contd.)
He had the prototype ready, but he gave up midway.
(contd.)
After years, when Musthafa came across WhatsApp, he realized that his prototype had all the same features as this app which was eventually acquired by Facebook for $19B.
That’s the cost of missing an opportunity and not doing the right thing at the right time!
(contd.)
That’s the cost of missing an opportunity and not doing the right thing at the right time!
(contd.)
So, in early 2005, when Musthafa’s cousins approached him to help them with their small idli batter business, the opportunity was too BIG (INR 2000 crores worth) to miss!
In hindsight, Musthafa's "go-getter" attitude aided him immensely in his journey with iD!
(contd.)
In hindsight, Musthafa's "go-getter" attitude aided him immensely in his journey with iD!
(contd.)
💡 Lessons:
1. As a startup founder "shamelessness" is a super important skill. In fact, early on, it can be a BIG superpower.
2. DON'T build startups based on popular trends. Build one that solves real customer problems.
1. As a startup founder "shamelessness" is a super important skill. In fact, early on, it can be a BIG superpower.
2. DON'T build startups based on popular trends. Build one that solves real customer problems.
3/ India's resistance to packaged food.
iD started out in a small 50 sq ft kitchen with just 5 members and INR 50,000 investment.
In the beginning, there was more than one problem plaguing iD's initial growth. Let's explore them one by one.
(contd.)
iD started out in a small 50 sq ft kitchen with just 5 members and INR 50,000 investment.
In the beginning, there was more than one problem plaguing iD's initial growth. Let's explore them one by one.
(contd.)
A) Problem 1 — Hygiene
Poor hygiene can KILL a ready-to-make brand.
The initial setup was vulnerable to bug infestations. In fact, there were some customer complaints about cockroaches.
The simple plastic bag with an elastic band also had a high chance of spillage.
(contd.)
Poor hygiene can KILL a ready-to-make brand.
The initial setup was vulnerable to bug infestations. In fact, there were some customer complaints about cockroaches.
The simple plastic bag with an elastic band also had a high chance of spillage.
(contd.)
B) Problem 2 — Indians HATE packaged food
In 2005, India's population had a less than favourable impression of packaged foods.
These people were accustomed to cooking fresh food at home.
So iD's success depended on the acceptance of packaged products.
(contd.)
In 2005, India's population had a less than favourable impression of packaged foods.
These people were accustomed to cooking fresh food at home.
So iD's success depended on the acceptance of packaged products.
(contd.)
C) Problem 3 — Preservatives are a BIG NO!
One of the reasons why people don't trust packaged products is that they usually contain preservatives.
That's a BIG NO, especially when the aim was to replace a homemade staple that most households could whip up overnight.
(contd)
One of the reasons why people don't trust packaged products is that they usually contain preservatives.
That's a BIG NO, especially when the aim was to replace a homemade staple that most households could whip up overnight.
(contd)
D) Problem 4 — Keeping food fresh
Finally, if iD were to skip preservatives and decide to sell all food completely fresh, the major challenge would be to make sure that every package remains fresh till after it reaches the customer.
(contd.)
Finally, if iD were to skip preservatives and decide to sell all food completely fresh, the major challenge would be to make sure that every package remains fresh till after it reaches the customer.
(contd.)
That's a massive task, especially in high-humidity weather where fermented products don't last very long outside of a refrigerator.
More or less, Indians didn't trust packaged food. So, for iD to gain their customers' trust they had to deliver quality products every single time!
More or less, Indians didn't trust packaged food. So, for iD to gain their customers' trust they had to deliver quality products every single time!
4/ How did they convince people to buy their batter?
A) Solution 1 — Skip preservatives
The preservatives problem was a no-brainer.
If iD was to replace a homemade staple they had to match their quality on every front.
So, they entirely skipped preservatives.
(contd.)
A) Solution 1 — Skip preservatives
The preservatives problem was a no-brainer.
If iD was to replace a homemade staple they had to match their quality on every front.
So, they entirely skipped preservatives.
(contd.)
B) Solution 2 — Fix packaging
Creating proper packaging would address both the hygiene issue and makes sure the food stays fresh.
So, the team experimented with different packages to pick the one that protects the batter and ensures durability during transportation.
(contd.)
Creating proper packaging would address both the hygiene issue and makes sure the food stays fresh.
So, the team experimented with different packages to pick the one that protects the batter and ensures durability during transportation.
(contd.)
C) Solution 3 — Ace supply chain
Every morning, iD would supply their packets to retail stores who would then sell them to the customers.
They had a system to calculate the volume of batter that could be sold in a couple of days.
(contd.)
Every morning, iD would supply their packets to retail stores who would then sell them to the customers.
They had a system to calculate the volume of batter that could be sold in a couple of days.
(contd.)
The end goal was to make sure that they only sell freshly produced products and not have these packets sit in their inventory for weeks.
Also, they only sold their packets in stores that run a 24/7 refrigerator after one of the packets blew up due to over fermentation.
(contd)
Also, they only sold their packets in stores that run a 24/7 refrigerator after one of the packets blew up due to over fermentation.
(contd)
Solving these core issues really helped enforce trust for the brand among the customers.
As the years went by, the city demography also shifted more towards the millennial population with disposable income. This shift helped them scale further.
(contd.)
As the years went by, the city demography also shifted more towards the millennial population with disposable income. This shift helped them scale further.
(contd.)
But, in the end, their impeccable implementation is what helped them most. And once the product was a HIT, the word quickly spread!
💡 We can learn a few things here:
1. Startups are built by doing simple and "boring" things, consistently, over long periods of time.
(contd.)
💡 We can learn a few things here:
1. Startups are built by doing simple and "boring" things, consistently, over long periods of time.
(contd.)
2. Never outsource anything that should be a core competency of your startup.
3. The best marketing for your startup is done by your customers.
3. The best marketing for your startup is done by your customers.
5/ Building an INR 400+ crore business selling idlis!
iD is one of the few product companies that has grown organically.
All their individual products are profitable which is one of the reasons for their steady rise. But, it was not all easy sailing for the company.
(contd.)
iD is one of the few product companies that has grown organically.
All their individual products are profitable which is one of the reasons for their steady rise. But, it was not all easy sailing for the company.
(contd.)
When iD tried to enter into Chennai, its idli batter product couldn’t survive in the already thriving and competitive market.
So, iD decided to diversify! They sold
a. parathas - another item that needs preparation
b. dairy products - high failure rate during prep
(contd.)
So, iD decided to diversify! They sold
a. parathas - another item that needs preparation
b. dairy products - high failure rate during prep
(contd.)
They also spent a lot of money on expanding overseas. This strategy definitely paid off. Today, it makes a sizable share of its revenue selling parathas!
💡 Lesson ➝ Discovering competitors for your startup idea is a validation of the market, NOT a source of sadness.
(contd)
💡 Lesson ➝ Discovering competitors for your startup idea is a validation of the market, NOT a source of sadness.
(contd)
What’s more incredible is their rags-to-riches journey.
Maintaining the product quality of perishable foods in a 50 sq ft kitchen is itself a huge task. Now scaling it to produce millions of idlis daily is something else.
(contd.)
Maintaining the product quality of perishable foods in a 50 sq ft kitchen is itself a huge task. Now scaling it to produce millions of idlis daily is something else.
(contd.)
The most satisfactory bit is the fact that Musthafa who once couldn't get 3 meals a day now is able to feed breakfast to millions of Indians.
💡 Lesson ➝ All startups don't have to become unicorns. Buildd something that can give you the lifestyle and happiness you seek.
💡 Lesson ➝ All startups don't have to become unicorns. Buildd something that can give you the lifestyle and happiness you seek.
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