Vidit Aatrey was working with InMobi, India’s first tech unicorn, in Bengaluru in 2014-15 when he faced an inflection point. He realised that startup founders were people like him, with a background in technology, not necessarily in business. Not many came from established business families but they were people with a good idea, who got support from a venture capital fund or someone who believed in them.
“I believed there would be some big opportunities and I would become part of the ecosystem soon. So after working there for a year, I realised I wanted to do a startup of my own,” says Aatrey, the co-founder and chief executive officer of social e-commerce platform Meesho.
He had also met some managers in their 30s, business graduates who wanted to start something of their own but were held back by children or responsibilities. Aatrey, then 24, called up his friend Sanjeev Barnwal, who was working with Sony in Tokyo. Barnwal, who was Aatrey’s batchmate from the Indian Institute of Technology (IIT), Delhi and had shared the same hostel, departments and social gatherings, chucked his job and landed up in Bengaluru.
The two felt they had a mission—they just didn’t know what it would be.
Today, Meesho, the company they co-founded in 2015, is valued at close to $5 billion (around ₹41,000 crore). It has about 130 million active monthly users, almost a million sellers and about 140 million people have made purchases on the platform so far (at least one product across categories). A large percentage of Meesho’s approximately 1,800 employees work on tech, product design and basic R&D, led by Barnwal, the chief technology officer.
Meesho does not compete with Walmart-led Flipkart or Amazon because it does not serve the top 20-30 million of India’s buyers, explains Aatrey. “We serve everyone beyond,” he notes, adding that Meesho doesn’t sell smartphones, TVs or any famous brands.
It’s the middle of the afternoon when we meet at Italian restaurant Chianti in Bellandur, popular with working professionals. Aatrey is in a grey T-shirt, tucking into a grilled salmon he has to sometimes eat hurriedly so he doesn’t leave my questions hanging. The music adds to the ambience—this is not a place for quiet conversation, it requires slightly higher decibels.
Aatrey describes his childhood as a “conventional lower middle class upbringing”. His father, Ravi Datt Sharma, worked in the Delhi Jal Board, the waterworks department, while the family lived in a government-quarter-style two-bedroom apartment in Rohini, north-west Delhi. The people living there were either working in the government or sitting in shops. Encouraged by his father, Aatrey aimed to write the civil service exam—at some point.
“Going to IIT, Delhi was also one of the steps in the same direction,” Aatrey says. “But once I went through IIT, my world view became broader. The world was not so polarised between only these two opportunities. My seniors were part of investment banks, people were running companies…. Those four years (2008-12) changed me. I came back to tell my dad that I don’t want to do a government job.”
In 2012, campus placement at IIT took him to Chennai as a management trainee with ITC, a century-old giant that was a great place to start his career, with a lot of people reporting to him and none speaking any language except Tamil. Over two years, he realised that things moved slowly, and technology adoption was poor, in a traditional industry. His friends in Bengaluru would talk about being part of the next big thing, so it may have been the fear of missing out that prompted him to reach out to a friend at InMobi and move to the city.
“So we had nothing to lose,” he says, explaining how Barnwal and he quit well-regarded jobs, “and we will fail. But we will just come back. If you don’t do it now, like five years down the line I don’t know what will hold us back. So that was another big reason why we wanted to do it then. So that was the reason we ended up leaving (their jobs).
“I have never seen some big outcome come out of doing something on the side,” he says, explaining why they could not build their company while holding on to their jobs. “It’s like you should (reach a stage of desperation when you are) not be able to sleep.”
So the founders created a sheet of ideas, with one column for the size of the market in that field and another marking their level of interest in the idea. One of their ideas included a more affordable ride-sharing app but the one concept that stayed with them was bringing unstructured small businesses online.
“Smartphone e-commerce and a small business selling saris are different things. Since we started the company, until today, every time I tried to go out to raise funds, people say, hey, how will you compete with a Walmart? Like, these are unlimited cheques coming from America. They are irrational players and you can’t compete with irrational players. So one of the biggest things on our journey has been that people always discount you.”
The two started with small businesses in HSR Layout and Koramangala that had a trusted clientele in the neighbourhood. They created a local app, Fashnear, which gave access to shops in the vicinity. Consumers, however, began comparing the product to a Myntra or Flipkart, looking for discounts and a massive selection.
Since many shopkeepers already used WhatsApp to stay in touch with existing customers, thereby already selling online, the two founders created a newer version of the product, Meesho (standing for meri—my—shop), which created a store seamlessly connected to WhatsApp (the parent company is still called Fashnear Technologies Pvt. Ltd).
“Again, we realised, two-three months later, that no one (really) was using it,” says the boyish 32-year-old. “The shopkeepers asked: What are you solving for me? Are you getting me new businesses? No. Are you reducing my cost? The answer is no. You are asking me to learn a new tool, which I have no willingness to. What they really cared about was getting a new customer or reducing cost.”
A silver lining emerged when Aatrey found there were, in fact, some users: not offline shopkeepers but women who didn’t have shops and had created WhatsApp groups to sell their products. “So we then basically changed our product and started to focus on these WhatsApp, native entrepreneurs. Meesho became a product which will enable a woman to start her boutique on WhatsApp.”
In 2017, the company grew a hundred times in that core business, allowing users to sell items by sharing product listings with friends via Meta Platforms Inc.’s WhatsApp, along with Facebook and Instagram. At the time, they had about 10 million women running WhatsApp groups, using Meesho to sell their products. Meta is also an investor in Meesho, with an undisclosed stake, according to news reports.
What works for Meesho, Aatrey adds, is that it’s one of the lightest apps (14.5MB) available on the Play Store, so a low-end phone without a lot of space can download it too. There aren’t just glamorous models posing in attractive clothes to woo customers. In the most likely scenario, the seller will put the product on a table and take a photograph with their phone. Shirts can cost upwards of ₹130, kurtas, ₹200 and jeans, ₹250. Active mainly in tier 2 and 3 towns, they generally use third-party services for delivery.
Most of Meesho’s revenue comes from advertising, though they make a bit on shipping and are adding more revenue streams, like experimenting with financial services for sellers. Aatrey says they hope to be profitable by the middle of 2023, though the platform reported a big increase in net loss, at ₹3,247.8 crore, for the financial year 2022, against a loss of ₹498.7 crore the preceding fiscal year. They attribute this mainly to investment in growth, marketing and advertising to acquire customers.
When Aatrey was first trying to raise money in 2015, he realised the usefulness of having gone to IIT, for he could reach out to college seniors. Within two weeks, they had collected their first crore. WhatsApp’s former chief business officer, Neeraj Arora, became their first angel investor and Elevation Capital followed, helping them to raise $2.4 million in a series A round in August 2017. At the time, they had 4,400 entrepreneurs and 450 daily orders on an average. “Bangalore didn’t matter as much. The question is, would we have been able to do this if we were not from IIT, Delhi? That I don’t know,” Aatrey says.
In 2021, riding on the back of a pandemic-spurred consumer interest in e-commerce, Meesho raised over $870 million in two tranches from Fidelity, SoftBank and B Capital, to be valued at $4.9 billion in September 2021.
“We had raised a substantial amount of funds in 2021, which were beyond our requirement, and currently we have sufficient money left in the bank (close to half a billion),” he says. “At the present stage of the business, we have significantly reduced our burn. This has negated any need for external capital in the near term.”
His next challenge is groceries. In 2021, the company segued into this segment with Farmiso; it didn’t work and they had to lay off about 150 people. “We have brought a million small businesses to sell online but in India, the biggest category in which most small businesses exist is grocery. I want to solve that—how do we get these kiranas to come online? That’s the next frontier for us,” says Aatrey.
“Sometimes I get surprised by the ambition and aspiration people have in India,” Aatrey says, talking about the thousands who sell on his platform. “Nothing is enough. They want to do more. They are doing 4,000 orders per day. But they ask, What can I do to get to 40,000?”