Summary

The Offline Network Episode 16: Lifestyle Tech Playbook (aired 2025-10-06). Guests: Gaurav Khatri, Archit Nanda from Noise, KNOT. Gaurav: "I think an honest answer on that would be that I did not know or probably we did not really care when we were building noise, you know, about raising the point." Gaurav: "So it gives you confidence of the partner, of course, give you an exposure of the technology, giving you exposure of the global world, how the global customer thinks." Topics: venture capital and funding, AI and LLMs, consumer brands and D2C, health tech. The Offline Network is India's live show on startups, tech, and venture — streaming M/W/F at 4 PM IST on YouTube.

Full Transcript

Speaker 5: This is a test.

Dhruv Sharma: Hello and welcome to Wednesday, the Wednesday live stream of the offline network. If you're tuning in live, chances are you're not at the at the GFF and we'll be talking about that in just a bit with two very interesting founders as guests coming on today. Gaurav, Gaurav of Noise, Gaurav Khatri of Noise and Archananda of Not. What's up? How are you doing?

Utsav Somani: Awesome. Let's turn on the news quickly. We've got a lot to cover as well today. Of course, nothing is complete without the world of AI, bro. But I'm finding it very hard to keep up with all of these numbers. It's becoming a fill in the blank. You just put in 10 to 100 number and just press announce. But something closer to home, Anthropic CEO is in town. He's visiting Bangalore as well. And they're opening up an office in Bangalore. So I think Indian talent or Indian companies will now have to fight with these global counterparts which are setting up policy or development offices in India. And it's going to get exciting. I think AI talent war is going to increase and it has reached our shores as well. The world of OpenAI and AMD is exciting as well. They've announced a six gigawatt compute deal worth 90 to 100 billion. And funny enough, OpenAI just raised from Nvidia. And now OpenAI has a warrant to purchase up to 10% of AMD at one cent per dollar. So Nvidia money is basically flowing into AMD. I don't know how he manages this kind of conflict. But he's become the hype man for this latest AI super cycle or bubble. Jury is still out on that one. XAI, of course, you can't leave Elon Musk as well out of the picture. He's raised 20 billion across two vehicles, equity and debt. 7.5 billion in equity and 12.5 billion in debt as well. And of course, Nvidia is participating with their own $2 billion into this. And OpenAI has a Dev Day that just finished. What did you make of that?

Dhruv Sharma: I'm going to get into the Dev Day in just a moment. So did you know that the AMD CEO and Jensen Hong are related?

Utsav Somani: Yeah, I did actually.

Dhruv Sharma: Taiwan. The other such fun fact I recently learned was SoCZ of Binance.

Utsav Somani: Yeah, Citadel, right?

Dhruv Sharma: Citadel Securities is like power siblings or whatever you want to call them. The OpenAI Dev Day. So this just happened. And of course, it's not like they were waiting for the Dev Day to happen to announce stuff even in days prior. And we covered this in the show. They launched Sora to the app, which is the second sort of companion app to chat. GPD for AI generated videos. The agentic come along with Shopify and Stripe, like an instant checkout directly from the chat GPD app. But at the demo day, I think we saw what might just be a preview to the chat GPD app store at some point in time. Not too far in the future. They've started by launching an SDK where devs can just come and start building in the app. And not just that. They can build an app within the chat GPD, within this ecosystem, and then distribute that app to existing chat GPD users. And how many do we have?

Utsav Somani: 800 million weekly users. That's almost one tenth of this planet. Weekly active users.

Utsav Somani: And you can chat and create your own Spotify playlist. It's already used to connect to some of the existing apps like Terminal and Text Editor on your Mac. But now I think they're expanding this by as well. So awesome. Like this is the iPhone moment. I think the app store moment of AI.

Dhruv Sharma: And you can now start calling apps from within the chat interface. And you only have to do it once. So that is new. There's an agentic builder that's pretty new. You won't typically find it on the chat app. It's in the platform app. But I encourage everyone who's curious to go try it. Just pretty cool stuff. So on the deal making, right? If you pick the book of anyone who's been like a rainmaker or a dealmaker, they'll typically talk about two or three mega deals over the course of their careers. This company is announcing three such deals a week. And the way I think of it, it's like OpenAI is this really hungry and thirsty monster at this point in time. They're hungry for compute. Because they're obviously training models. And the models are getting a lot better. And then, of course, we're using the app. So they're hungry for compute for inference as well. And then all of this data also has to be stored somewhere. And so they're very hungry for storage. So all these partnerships with chip makers and GPU companies and with cloud storage providers is because they can't get enough of this stuff. Like six billion tokens being processed on their API per minute. It's crazy.

Utsav Somani: All right, let's quickly talk about GFF. Everyone's there. It's the global fintech fest for those who are not aware. Even Hrithik Roshan was talking about the future of digital banking. Run down the quick highlights from the GFF week that's going on.

Dhruv Sharma: Yes, this is an extremely well attended event, guys.

Utsav Somani: A little bit too well attended, I would say.

Dhruv Sharma: Very extremely well attended.

Utsav Somani: Mobile signals don't work when you're at GFF at that geo center, unless you have a geo connection.

Dhruv Sharma: They don't. So I was there last year, not this year. Maybe we take TON on the road over there next year. But yes, I think one big update that we're hearing from GFF is something, in fact, Bhavik. Bhavik, of OTPless, who was on our show just a couple of episodes ago, was talking about, which is that OTPs for authentication are still sort of frozen in time. And when all of us got our Aadhaar cards, we also got our biometrics done. Never really used them beyond just a few sample use cases. Apparently, UPI transactions are going to be authenticated with biometric data right now. So that's one big announcement. Also, were you tracking that? Were you tracking that announcement?

Utsav Somani: Not really. I mean, nobody looks like their Aadhaar picture, so I want to stay away from that. I hope they're not using that picture. But it's interesting. I think everyone's trying to solve the lack of connection to the Internet. And I think remove any security hazard or security lapses that can exist when you use like OTPs or anything that comes on different networks, basically. So on device, I think all devices now are smart enough to have, I mean, either face ID or fingerprint reader. So I think this will be interesting.

Dhruv Sharma: And a lot more secure in all of these digital scams that the country is so prone to and vulnerable to. And then revenue is also starting to now expand in India in a big way. They've acquired a few licenses, the prepaid instrument license that allows them to issue prepaid cards, wallets, and then also an authorized dealer license that allows them to sort of foray into crossborder remittances and, you know, Forex services and so on and so forth. This is, of course, one of UK's largest fintech companies now also setting up shop and expanding in India and increasing innovation and also the competitive intensity in India's fintech landscape.

Utsav Somani: All right. So let's quickly talk about this big report that's come out. Iconic State of Software 2025. What are the top three things?

Dhruv Sharma: This report, by the way, is reminding me of a similar report covered on the show a few episodes ago. The benchmark, the Bessemer report, which is, yes, which is it's taking AI native companies like eight quarters or less to get $200 million in annual recurring revenue. And with extreme capital efficiency, like the churning, I mean, less than 150 people headcount. Exactly. So the revenue per head is five or ten times as much as it used to be for the best SaaS companies in their generation.

Utsav Somani: And I think one thing that's interesting is forward deployed engineer. That's a term that I recently picked up. The job postings for that has gone up by 12x. And what is a forward deployed engineer? He sits somewhere closer to the customer where they can iterate quickly on the requirements of a customer. And that number, I mean, those number of job postings have gone up by 12x. And these people can iterate faster because they're powered by AI. So I think these on demand, highly close to customer sort of engineers are going to go up in demand as well.

Dhruv Sharma: I think that term, by the way, was either coined by Palantir or Andiril for the engineers who sat with the military while building software for them, which is by forward deployed. And then, of course, it's a catchy term. It's interesting that it's caught on.

Utsav Somani: All right. Now, let's welcome our first guest. Let's make some noise for Gaurav. Gaurav, welcome to the show. Hey, thank you. How did you like the welcome? Very nice. Very nice. Sharp, I would say. Awesome. So bootstrapped, I think that's a word that's been associated with you a lot. You recently raised from Bose as well, the big sound company globally that we've recognized world over. But the bootstrap journey, like why bootstrap?

Gaurav Khatri (Noise): I don't have a right answer for this. Why bootstrap? I think an honest answer on that would be that I did not know or probably we did not really care when we were building noise, you know, about raising the point. We did not come from the background of raising funds. We started in a very honest way of starting a business where you have to make money and with every unit that you sell. We were fortunate, I would say, that we could survive for first eight, 10 years with profitability, with scalability altogether being bootstrapped. But yeah, probably not coming from the background of fundraising and having people around us probably was the honest reason.

Utsav Somani: And once you've tied up, I mean, you've raised capital from Bose. What has changed now?

Gaurav Khatri (Noise): I would say there's much more security. Much more security. I would say, you know, that there is a genuine tech giant who is sitting behind you to provide you the global technology and give you an experience of not a decade, but almost five, seven decades of experience that you get from them. Very limited companies have been relevant for like three, four, five decades in last tech innovation. So they are the ones. So it gives you confidence of the partner, of course, give you an exposure of the technology, giving you exposure of the global world, how the global customer thinks. And of course, the partnership always helps to build the perception in India as well. Your trust value, your brand association, just go very high in the consumer mind.

Dhruv Sharma: Gaurav, I want to stay with the bootstrap question for just a few minutes. So being bootstrapped or venture funded, it's obviously a choice. And you made this choice, but it never really held you back from getting to the revenue scale that you're at right now, which is you've crossed 2000 crore rupees in GMB. Correct me if I'm wrong.

Dhruv Sharma: And so help us understand how did you start and how did revenues from one product start paying for the next product? And how did you sort of tune the revenue engine so that even without external financing, you still managed to get where you guys what you'd envisioned for the company?

Gaurav Khatri (Noise): See, I would say it took a lot of time. If you just go back in today, when I see that whatever revenue we have been doing and net revenues are over and above 1000 crores, it's probably, you know, seven years time. A lot of tailwind in the category that we chose the wearable as a category, you know, choosing when probably it wasn't obvious that Indian consumer will pay for a wearable device. Will Indian brand be able to give you the high quality or aspirational designs that at a price which probably Indian can afford that or Indian would see a return on investment. So I think that probably worked in our favor. And I would say an early mover advantage for sure helped us to remain bootstrapped and still do not dilute a lot of money to the early consumer because these early consumer in the tech space are the one who pay you well and allow you to, you know, get some gross margin, which you can invest for the marketing or next product development or brand building, whatever you want to do. So if you see our entire and, you know, the margins that we were generating were either going into the inventories or going into the tech and R&D were not spent on highly on brand marketing on the large spends on any other competition where you are just fighting for larger players. What also worked with us was that we've been able to crack India as a market better than the global giants that were existing. So it was very difficult for any mobility or a tech giant who was sitting in US to come to India and solve for Indian customer. They were all solving for a global customer. But I think what worked for us an early mover advantage of solving for Indian consumer and probably taking that advantage to quickly turn around the quantities and build volumes on that.

Dhruv Sharma: Share some nuggets of what you learned about the Indian consumer, Gaurav.

Utsav Somani: I think in perspective of these global giants, like why was Noise able to win when all these global giants with all their global R&D might try to enter India and did enter India as well? What was the unique insights that Noise had?

Gaurav Khatri (Noise): I think to be very honest, I think overall agility that as a brand we had, which probably all these giant global brands or the mobility brand so-called never had. Right. Second, they were not working for the portfolio in the category. They were just working for one device. They made it and they were just sitting idle because that was not the core business for them, at least in the mobility brand that exists in India. Plus the large global fitness brand that we call it maybe the Fitbit or the Apple. They were not solving for the Indian audience. They were creating the aspiration in the Indian audience that these devices are cool. These devices helps you to track your health, brings a lot of productivity in your daily life, your calls, your meeting reminders, alarms, all what or not. So I think they helped us in terms of creating the market. We were the one who were catering to the Indian consumers with different set of problem solving devices rather than just giving one device in a black color and not getting. I mean, not just solving for that one device rather solving for the small, small use cases that Indian consumer wanted. So that was the one thing that worked in our favor. I would say agility and the speed versus what you asked Dhruv primarily on the Indian consumer. Honestly, I think it's not very different from any consumer tech brand or any consumer brand that exists in India. People are here to pay you money if they see the value in the product. They are not seeking for the cheapest product, though it just get mistaken a lot of time that Indian consumer are seeking the cheapest product. But that's not the thing. They are looking for the valued product where they genuinely get the best solution for their own specific problem. You give them more a product that solves more problems and you ask for a higher price. Probably consumer would not pay for it.

Utsav Somani: What is the average price of a noise product right now across your portfolio?

Gaurav Khatri (Noise): If you see the brand wise, I think twenty two hundred to twenty five hundred is a pricing where we exist across all the portfolio, whether it is audio wearable. Yeah, that's the consumer buying prices where we are operating at. And which, by the way, improved in last one and a half, two years since the collaboration of Bose product has come in. Our focus on the mid premium price, which is five thousand and above on the wearable has gone up.

Utsav Somani: All those things have helped us to, you know, those new headphones are pretty insane, actually, by the way. And very good design also. But on that note, like I mean, India is the second largest smartwatch market of the world, right? What's stopping us from taking this design and product language across the world? Like how China or say even Korea's exported their design and product know how across the world?

Gaurav Khatri (Noise): I think I honestly feel that the time has come when Indian brands can go out and target that consumer. Having said that, because I am working very, very closely on expanding the global for India. But I'm also seeing the trends are that the consumer outside are very, very different from what we have in India. Their per capita incomes are different for them. A hundred dollar product is just a very casual spend versus an Indian consumer whose casual spend today is approximately, let's say, a fifteen hundred or two thousand rupees where they don't think too much about getting into details of the tech and R&D and the specification that you want in the product, which is very same for the other people in a hundred dollar price segment. So I think the portfolio mix that you need for that market is a little different from what you need for India. So what we are now doing is trying to solve for the global market, trying to build a portfolio that helps to that market and take up through the design and innovation that we are able to create. And I think there is no doubt, there is no second thought that why Indian brands cannot go out and create a larger market share. And I think there have been some recent examples if you see where people have gone out into different categories and been able to take a decent market share outside India as well.

Dhruv Sharma: Gaurav, when consumers make that purchase decision, so the first thing is they decide, okay, they set some money aside, they decide that decision is made, I'm going to part ways with this much money, then they're comparing products. And if they find similarly priced products, but of course vastly different in value, as the manufacturer, as the owner of the brand, how do you differentiate yourself and how do you bring out the advantages of your product?

Gaurav Khatri (Noise): See, honestly, beyond a point, it has to be beyond the hardware, right? It has to be the brand value, the brand proposition that you are trying to solve. When there are tailwinds, when the category is new, you know, a hardware or a specification game box. Today, I'm not sure how many people honestly really care how much megapixel camera is there in the phone, right? It is a brand aspiration or you know the what product that you want to buy. Unless you have just a budget constraint. So it's not the specific constraint. Of course, people would have the secondary parameter is the specification versus either the brand or the product that you know of or the budgets, then the specification and everything comes in. But what we are seeing is after a certain price point or the entry-level price point, the next set of a consumer only comes with the love of the brand. Is there a lifestyle brand or there's a culture in the brand or there's a reason why they should believe in the purpose of the brand. I think all those things start playing a lot of value. What I've also learned is the consistency as a brand being available for so many years and the partnership that we have been able to build or some other brands have been able to build brings the trust factor. So overall, I think it's a larger, you know, multiple touch points that consumer thinks of before taking up any purchase. But yeah, ultimately it has to be a brand play which differentiates you better than the hardware or the specification. You really can't compete always on the price and the hardware. There will be always someone who will be selling it cheaper or doesn't care about the right set of hardware. He will still publish it that best hardware, best tech, best this, but that does not really have any value. So ultimately it has to be your brand trust.

Utsav Somani: What percentage of your spends are in marketing annually?

Gaurav Khatri (Noise): To be honest, I think it would be around 10 odd percent, but that includes all the brand spans and the perf spans and everything that would be there.

Utsav Somani: And there was a recent report by IDC that I read where they said that the wearable categories, especially smartwatches, the numbers are declining or stagnating. What are your thoughts on that?

Gaurav Khatri (Noise): See, it was supposed to happen with worldwide. The category took, let's say, eight years to reach to X number. India took just four years to reach to that number or maybe even lesser. So what really happened was that one brand or two brands were doing good. Everybody in the category thought this is a category that we should enter in. And there were at one point of time, there were 200 odd brands available in this category. Today, if you see out of those 200, only five brands would be the relevant brands in the category who are doing substantial volumes. People who are doing, let's say, an electronic, typical electronic business also thought that I can do it. People selling power bank thought I can do a smartwatches. People thought I am making it hospital work and stuff. I will also do it. So everybody and anybody started doing this category, which was not the game for a long time. They had no connection with innovation. Then nobody knew the hardware and the software connection. What worked for us was probably though, you know, the five, seven years of journey, we understood it better. We were always ahead in the learning curve in terms of what are the consumer needs. And our own app that we always had probably was also one of the reason that, you know, we could read the consumer trends much earlier than what genuinely other brands or the local trading that was happening in the country. So I think that has completely vanished. Now there are serious brands and there are serious consumers. So there is stagnancy. That is sure. That's OK. But I think with time, it will also help at least to correct the pricing and generally give the right experience to the consumer rather than just selling dirt.

Dhruv Sharma: Related question. If preferences change so rapidly, how do you how do you tune your R&D cycle for them? Like what's the shortest span in which you go from idea to shelf?

Gaurav Khatri (Noise): See, as you grow older in the organization and as your brand grow older and R&D tech and innovation just gets or takes the front seat in the business, things does not turn around in probably a month or two. Now it starts taking time because you are now working with the global topmost chipset manufacturers, solution manufacturers who are working with you to solve for 2027-2028 now sitting in 2025. You are working on 2027-2028 innovation versus whatever the ready solution that you get from China or any South Indian country are temporary. So what is permanent is working on the right solutions, solving for the consumer needs for the longer duration rather than just thinking about what you need to do for the six month. So ultimately it is your tech innovation and R&D that helps you to remain relevant in the category. Of course, speed and innovation is an agility is the key, but having the right partners around you is the only solution that we have been able to figure out to stay always relevant in the category.

Utsav Somani: And make in India, I think was a big move announced by Mr. Modi, but all the consumer brands, I think are trying to shift consumer electronic brands are trying to shift their manufacturing onshore as well. Have you made that move at Noyce as well for some categories or some schemes?

Gaurav Khatri (Noise): No, so we are doing almost 95% of the goods that we today do is made in India. And I think that has also been one of the reasons that a lot of these trading brands did not could not solve for themselves. I think that has also one of the reason that probably a lot of these brand existed. They could not solve for the make in India did not understand the overall ecosystem play that a manufacturing setup would require. I think for us, it has been 95% and more.

Utsav Somani: And during this trade war that's been going on, DIS licenses also became tough to get, right?

Gaurav Khatri (Noise): Yeah, they're still very, very difficult. Now doing businesses from China or any South Asian country is not going to be easy because the moment clearly says that you need to start doing it in India. So, which is like I said, I think a lot many mobility brands, a lot many people who are not able to solve for Indian manufacturing are seeing a huge decline in their businesses.

Dhruv Sharma: Gaurav, one thing we keep hearing often these days is people are glued to their screen all the time, their phone screen. How long do you think that's going to last and what form factor might take over from here? We've seen early prototypes from every large brand, but how do you think about it in Noyce?

Gaurav Khatri (Noise): See, I'm not very sure how the screen time is going to be going down because we are all addicted to the screen time. But I see because AI is taking a larger move in our life and not just a screen led AI, but generally what Alexa was supposed to build in 2012-2015. I think with that, now the voice plus AI will be able to solve a lot of these things that you would use your phones or screens for. But in our ecosystem, if you see a lot of devices that are doing well, at least in the health and fitness category, like the smart ring and the smart bands like whoop and other stuff that have been doing well, they do not have a screen. So I think in our form and factors would change. There would be devices for specific use cases where you don't need to have device on that device specifically, all will be centrally controlled by the mobile phones or the apps. But I'm not really, really, honestly, if you ask me, I'm not putting screens on your face. That's what I was about to come. I mean, it's, it's not going to be easy for us to live without screens for sure. Maybe those screens become much more safer and stuff, but I think they're going to be relevant for next few years for sure.

Dhruv Sharma: So Gaurav will be the best person to ask this question. Like what form factors are you seeing around the world, Gaurav? So glasses, watches, rings, what else?

Gaurav Khatri (Noise): Pendants, friend.com and devices for each and every organ that you have in your body you want to track for. All those are possible now. The world is tracking everything.

Utsav Somani: Apparently there's a whoop for your morning poops as well that gets attached to your bathroom and you can literally get a reading of how your gut health.

Gaurav Khatri (Noise): There are devices for your sexual encounters as well. Everything can be tracked. People are working all across the world on everything. How many breaths you've taken, what all things you've done. It's going crazy.

Utsav Somani: All right. I think that's a good note for us to close on. Gaurav, thank you so much. Next time we'll talk about the other devices that you're doing as well. The headphones and I mean the rings as well. I saw some pictures of Berlin as well. Looked lovely. See you very soon. Thank you so much for coming on the show. Thanks.

Dhruv Sharma: Great seeing you.

Utsav Somani: All right. Our next guest, Archit, is literally bringing fast fashion to your doorstep. Let's welcome and ask him to introduce what he does at Nott. Archit, welcome to the show.

Archit Nanda (KNOT): Hey, hi Utsav, hi Dhruv. Thanks for having me here. To our listeners, please explain what Nott does. Sure. So with Nott, we're building a 60 minutes fashion delivery app where we're delivering some of the top B2C and legacy brands to your doorstep in under 60 minutes. We have another feature which is another way of sort of, you know, so if you really look at it, the pinnacle of fashion shopping experience is still offline shopping where you walk into an offline store, have access to a limited set of styles, but highly curated. So we bring that offline shopping experience to your doorstep with a feature which is try before you buy, where we let the users add multiple products to their basket. Rider comes with everything to your doorstep, waits outside for a while, while you are, you know, taking feedback from your friends, family on exactly what you want to purchase. And that's how the shopping experience is sort of being revamped. So we also have this virtual try on feature where we let the customers choose and discover styles at the click of a finger. And that's panning out really well, like the returns have drastically reduced. So that's what we're building with Nott. Lots to share, but yeah, that's a quick gist.

Utsav Somani: And horizontal versus vertical, I think in vertical commerce, I think quick commerce as well, a lot of players have emerged, right? And they're solving like different verticals. Somebody's doing quick house help, somebody's doing quick commerce. I mean, fast, I mean, fashion goods as well. Somebody's delivering like baby goods. Many of these companies got funded recently as well, announced rounds. Why is fashion so geared up to just having a separate platform? Sure. And specifically in quick commerce?

Archit Nanda (KNOT): Two ways to think about it. One with horizontal players. There's this fundamental issue that of perception where a woman who's shopping for vegetables on a Zepto would not perceive Zepto as a place to shop for the best of the best fashion out there. Sure, they will continue solving for some impulsive driven use cases. But the reason for verticalization and not really trying to borrow conviction from the past where Mintras of the world did it, despite the fact that Amazon and Flipkart fashion existed and were really deep before Mintra even existed, is that the category is very long tail. You require, you need to have extreme level of focus on curation and the merchandising. And that boils down to, and especially in our case where we're not an infinite listing marketplace, we, given the fact that we are by design limited to keep only the top 10% styles in our dark stores, we have to be extremely selective. And the inventory turnarounds have to be fast enough for the economics to make sense. And that happens when you're dedicatedly focused on the specific category. From a user standpoint, your traditional e-com marketplaces, which have been selling fashion are extremely overwhelming. And the reason for that is their business model is built on the fact that they have nine to 10% ad revenue and that's a hundred percent gross margin product. So why would they want to do away with that? But that means that the user is having to scroll through 10 lakh options before they come to a purchase decision. And that's extremely hard. India still 90% fashion shopping happens offline. There's a reason for that. You are walking into an offline store, have a very curated selection. You check the fit, the fabric, the size, and then you make an extremely decisive purchase. And that's exactly what we're trying to solve with building a more verticalized quick commerce play here. And that's, that's why, you know, verticalization is sort of super important for certain categories. Even other categories like pharma and food to a certain extent.

Dhruv Sharma: First of all, you recently announced your seed rounds. Congratulations on that. And two questions for you. So I get like, I get it when you, when you view quick calm from the lens of speed, you might see that, you know, the platforms are common in whatever sense, like in a logistical sense. But when you, when you see it from the lens of discovery, so different. So one, talk to us about that. And two, when you, when, when one thinks of fashion, you obviously want the consumers to purchase something that is on trend, but also personalized for them. So how do you, how do you kind of, you know, reconcile those two factors?

Archit Nanda (KNOT): Sure. That's, that's a very interesting direction. In fact, one piece that we've been actively focusing on before this, we were, we come from a product background. We were building a consumer social app before this, and we realize the kind of value that the customer can have by just having an elevated product discovery experience, for instance, as you pointed out. And especially when it comes to fashion, right? Like, how can you minimize the number of scrolls that a user takes before they come to a purchase decision? On some of your existing marketplaces, you search for a red dress, you will be pushed red kurtis, because again, coming back to the point of ad revenue, right? But is that the ideal user experience completely against the ideal user experience and their incentives as a business are completely misaligned. We have launched these two features more recently. One is a Tinder way, a Tinder style way of shopping, where you swipe left and right on products. Now, why we do that is one, it's gamified. Sure. People love interacting. We do limited 20 drops per day and people are literally, you know, users reach out to us. Why don't you increase the number of swipes that we can do in a day? There's a reason why we have limited it because the other side of, okay, let's not get into the details. But like a swipe left means you don't have affinity for that style. A right swipe means you love it. But now, because on this feature, 80% of the real estate is covered by a single product. The app is reading every single second of your activity. And that means that you've scrolled through a couple of pictures and then you swipe right means you have an affinity for that style, but you're still not sure. And similar is the case for, you know, having gone through a couple of pitches and then swipe left. So we will continue pushing more styles before we conclude that these are your preferences. And obviously it's a very dynamic space where your preferences change really like your mood for the day is decided by your Instagram feed in the morning. And that's where there's a lot of focus on having a lot of recency bias on the more recent products that you swipe left or right. So that's one way to personalize users' preferences. How can you minimize the number of scrolls to come to a purchase decision? That's one. And another way, another thing to think about when it comes to discovery is when it comes to online fashion, the traditional mechanisms have been very slow. Like you discover something and then it takes six days for you to even put it on your body, right? And then you don't like it. You have the whole return hassle going on. Women have created really good processes around it. Men are extremely lazy and have wardrobes filled with products which they wanted to return, but just never ended up, you know, putting in the efforts behind. So we have a virtual try-on feature, which is the best-in-class virtual try-on model that you can get out there where a user can beforehand try the product. It's extremely close to reality. In fact, What have you developed it on? So it's leveraging an existing model called Fashion AI, but we are taking in a lot of custom attributes. Attributes like what is the exact blend of the fabric? What is the stretch type? Is it two-way or four-way stretch? If it's a pair of denims, then what's the distress type of the denim? And based on all these factors, it actually determines how close can we bring the outcome of that virtual try-on to reality is what we're trying to optimize for. And, you know, overall, our platform return percentages are averaging at around 9%. But for the cohort, which tries the products virtually before purchasing, that has come down to 7%. Now, it costs me three and a half rupees per virtual try-on. And it costs us 75 rupees to pick a product from the customer's doorstep back to our warehouse. So we continue doubling down on a lot of interesting product discovery features, which have just not existed historically. And with AI, it's just been a game changer for us and glad to be at the forefront of that.

Utsav Somani: And talk to us a little bit more about the numbers. How many dark stores do you have? What city are you live in? And also the general unit economics of, say, a quick commerce platform, a vertical quick commerce platform, specifically yours, or the fashion space? The last part is like... Unit economics, like suppose a customer comes, spends 1000 rupees.

Archit Nanda (KNOT): So in terms of our traction and scale, we live in Mumbai with two dark stores serving all of Bombay. It's phased deliveries depending on your location. It's either 60 minutes or max three hours of delivery. And the customer knows it as soon as they type in their pin code. We have been... We live with over 100 set of brands right now. And we've been live for the last six months. In terms of unit economics, the bigger... I'll talk maybe about the bigger cost overheads for us. The first one being the last mile logistics, which is purely a function of higher throughput. And in fact, in our case, given that we have a leeway of being able to deliver in 60 minutes, we can batch orders together. Already at a 400 orders per day throughput, you can batch easily around 30 to 35% of your orders. And that brings down the costs drastically because there's enough movement happening in every pin code that you can wait it out before dispatching the order for the next order to arrive. Also given the fact that the peak activity of ordering happens at similar times on the app. So last mile is one big cost overhead. Storage and warehousing cost is another one, but that's as a function of higher throughput. That will be a very minimal cost in steady state, sub 20 rupees. And the last is the customer acquisition cost, where we've been historically been smart about what is the kind of customer we want to onboard early on. Because it's an interesting proposition, but what is the proposition that's selling out best for us or initially attracting customers is a 60 minutes fashion delivery. So how do we identify use cases and occasions for any customer out there where we know for a fact that they're going to have the need for a product and also have the propensity to pay for in that particular month. Now, in the interest of not sharing a lot of details here for other players out there, I'll restrict it to this.

Utsav Somani: Whatever you're comfortable with.

Archit Nanda (KNOT): So that's broadly the bigger cost overheads for us. But in steady state, these will come down significantly for the economics to make sense.

Dhruv Sharma: I really feel like sharing this one thing with you, Arjit, which is in a certain, let's say alpine town in Switzerland, actually, really small, very few people. And of course, you're talking about a different age group and so on. The retail experience there looks something like this, where people go out of their homes and go on this one sort of narrow street where you have a bunch of stores and you go roam around and you like some things. And, you know, you say, I'd like to try these on. And then you just get back home and someone comes to you with items from each of these stores. And whatever you explicitly said, I'd like, sure, it comes to your doorstep. But if you just went past something and felt it or whatever, that's also sent to you. And you don't have to pay in the moment. So that might not be such a good idea. But you can just keep a tap with them.

Utsav Somani: So, but I'm also curious, like from, so this is the alpine version of dopamine hits, basically.

Archit Nanda (KNOT): I'm glad to hear this because that's the place where I want to retire.

Dhruv Sharma: And you should and, you know, all the best you for that. But before you get there, what kind of a retail experience will you deliver for consumers, right? Futuristic retail experience before you can just go live in the place that we're talking about.

Utsav Somani: Sure. With you, please, on that break.

Archit Nanda (KNOT): Yeah, absolutely. That's going to be a long break towards the latter half of the career. But I think a very ideal shopping experience, like I was talking about earlier, like any of the design choices that we make on the app are extremely, like heavily inspired from the offline shopping experience. Where with one of our, one of the top ethnic wear brands, we are doing an extremely deep partnership. See in steady state, right now we're operating on a dark store model, but that limits the kind of inventory that we can, or the kind of style with that we can offer to any customer. But India being the country of hustlers that it is, we feel that if there's any kind of an offline demand, that offline supply has been created, which means that unlocking the omnichannel experience is going to be a massive unlock where any customer sitting at their house in a 10 kilometer radius, they have access to all the inventory of all the stores that are in their vicinity. And that is then serviceable in 45 to 60 minutes. Now, it's more in terms of, see, I think in terms of convenience, you can bring it down from 60 minutes to possibly 30 minutes in the future. But the real net conversion or the real ideal user experience would be a function of the number of styles that you offer, multiplied by the time that it takes for the products to reach your doorstep. And the omnichannel experience is something you want to unlock, which has historically been a massive challenge for your bigger brands. Sure, they have very well built out systems, but for a customer who's purchasing a 500 rupees shirt from a local store, why should they not have this experience accessible to them instantly, right? And that's a massive market, like in terms of just the overall size that you talk about. So unlocking that offline shopping experience really, and unlocking the offline inventory is something that's a big vision. And not just restricting it to brands, but every single offline fashion store out there is one vision that we are actively working towards.

Utsav Somani: And you mentioned, I mean, one stat that's sticking with me is that 10%, you have to predict the 10% of the trends, right? So culture and commerce, you're sort of blending them together in your listing. And one company that's done this really well is SHEIN, by merging the supply chain, manufacturing to design picking, all of that seamlessly across their app. Is a private label on the map for you? Like on the roadmap for you?

Archit Nanda (KNOT): It's on the roadmap, but not a shop. See, I think the company would evolve in sort of three broader phases. One, we started out with a lot of big D2C homegrown brands, Snitch, Soul Store, Bonkers Corners and the likes. And they have continued working really, really well for us.

Dhruv Sharma: I think we missed asking, what's the proposition for the brands?

Archit Nanda (KNOT): Sure. I'll maybe cover that right after the private labels part. The second leg of the evolution is now going after brands like Jack and Jones, Vero Moda, Only, Mannever and the likes. And we have a whole host of such brands, which are already aligned and starting to go live before Diwali itself. Then the third leg is when you've built the trust, when you've understood enough data points, that is when you want to go back to the users and offer them exactly what they need. Because as a marketplace, the kind of data points and the learnings that I can have, brands individually won't be able to have access to that kind of data. And that's where more than better margins or more than just a bigger play that we are sort of going after. It's more about the ideal customer experience. And that's literally like predicting, them typing that this is exactly the product I'm looking for, just in words. And if we don't have that kind of style, then having a supply chain so well backward integrated, then we can literally manufacture it. Part of the ideal shopping experience that we were talking about Dhruv, is you literally like put a picture from Pinterest and this is what I want to purchase. And can we have a strong enough supply chain to deliver that exact product to your doorstep without having to produce a lot of supply for that.

Dhruv Sharma: One challenge with that always is what looks good on someone else may not always look good on you, right? Like different body types and so on and so forth. And I'd imagine tech will come to play a role in solving that also at some point. Definitely.

Archit Nanda (KNOT): Yeah. And like with virtual try-ons, we are trying to solve exactly that. And the model keeps getting better with every passing week and as we get access to more data. Also, coming back to your other point of what is in it for the brands. Unlocking a new sales channel is an easy sell. It's something that you can definitely do for them by just opening up access to some newer distribution, newer eyeballs. But what is in it really for them? See, the biggest problem that fashion brands have historically faced is that of dead stock and inventory that they have overproduced. How do you solve for that? One of the reasons that happens is that a brand launches a new collection. They run ads for that. They track the click-through rates and suddenly for a certain product, they see a very high click-through rate. They double down on the production. But what ends up happening, given the feedback loops in fashion are so slow, in fast fashion are extremely slow because, you know, offline, it is like a sixmonth cycle on myntras of the world. It's like a 30-day cycle. So what happens is that the users receive the product. And because they're seeing massive returns on that overproduced supply. How do you solve for that? We are now running experiments with some of our partner brands, going to the extent of them launching a new collection exclusively with us, doing very limited drops, like 10 to 12 pieces per style. And then what we do is a user who has created a try-and-buy basket of, let's say, two denims from two different brands. And this is an experiment that we're doing with one of the new brands who have those products in their basket. And then we track what are the real-time conversions that the customers are seeing once they have received the product in their hand, literally. And that is the data that we feedback to the brand's merchandising teams. And that's how they decide what's the production level that they want to achieve. Rather than having a massive delay in the feedback loop, our purchase loop gets closed in literally three hours, right? From the time you discover a style on the app to the time the rider comes, waits outside, the product gets reimbursed, your refund settlement happens. All of that is happening in three hours. So that's literally real-time feedback for the brands to sort of feedback to their teams. So I think, apart from sales analysis, it was sort of an obvious answer. But this is what is really happening behind the scenes for brands.

Utsav Somani: Awesome. I hope you launch in Delhi and Gurgaon soon. Dhruv and I can get new wardrobe before every show then. Thanks so much for tuning in. Arjit, thank you. Absolutely. Thanks for having me here. Great chatting. Awesome, folks. We'll see you on Friday at 4 p.m. Thank you so much for tuning in. Please always send us a comment. We posted about our WhatsApp community as well online and hope to see you there. Me and Dhruv are hanging around and please leave us feedback brutal, direct, as much as possible. We want to improve and we want to bring this show to many different new platforms as well. So keep us posted on what you feel. Thank you. See you.