Summary

The Offline Network Episode 9: Fintech & Coffee (aired 2025-09-19). Guests: Suhail Sameer, Matt Chitharanjan from OTP Ventures, Blue Tokai Coffee. Suhail: "I realized having raised for a company, it's a lot more fun to raise for a company because one big person says yes, one fund says yes, you are done by and large with your round." Suhail: "Yeah, I think again, it may not necessarily be valid for everyone because there are tons of investors who have only done investing and have done incredibly well." 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

Utsav Somani: Hey folks, welcome back to another episode of TechReviewPro. Welcome to the Friday stream of T.O.N. Today we've got two awesome guests who embody the Friday spirit better than anyone else in this ecosystem. Matt, who's become the coffee king of India, single-handedly changing the way India consumes coffee. And Suhail Sameer, who's an operator turned investor and now leading OTP Ventures. We're going to ask him some really hard questions. He's a fun guy, but make sure that you stick around for that session. So before we begin, our team put together a bunch of memes. The news cycle has been slow, so we thought let's have some fun. And the team has compiled a bunch of memes for us to rate. So why don't you join in for this. And we'll actually run through 10-15 memes before we head to the guest section and rate them with us. Some of them hit close to home because we've been part of the startup ecosystem for long enough. So don't take anything personally. And I'll invite Dhruv to get started with the first one. Dhruv, I'm bringing up the first one on screen now.

Dhruv Sharma: I think I've become the first meme myself. I don't know if you could notice, but I just lost power. It'll be back soon.

Utsav Somani: There's a nice halo around you. So I think it's the blessing of live streams.

Dhruv Sharma: Yes, I think this happens to me all too often. But we've learned to make up peace with it. Okay, what's the first meme you're looking at?

Utsav Somani: Point of view, you're a D2C brand. You're a D2C brand, yes. Spending everything on Meta and Google, basically. Learning terms like return on ad spend and stuff all together with the ecosystem. How much would you give it? 10 is the highest.

Dhruv Sharma: 10 is the highest. I'd give it a 6, a clean 6. The white figurine reminds me of Zuzu. You remember the Vodafone mascot?

Utsav Somani: It's the circular economy, right? Everything, basically, that Oracle thing. Oracle share price goes up, invest more in OpenAI, buy GPUs. That's what is happening. Meta and Google typically take a good chunk of VC dollars raised by these D2C brands.

Dhruv Sharma: It's a generational wealth transfer.

Utsav Somani: We have you on screen now.

Dhruv Sharma: How did this leak?

Utsav Somani: You're doing all the IPO celebrations. Did you get an allotment or what?

Dhruv Sharma: I didn't venture in that direction. What does it say? You rate this one.

Utsav Somani: 11 on 10. By the time, learn a new skill. There is a new AI tool in the market that does all of this better than me. This is actually quite true, man. This is actually so true. Every week, like GPT-5, GPT-6, GPT-25. And then it's just, I mean, absurd. Perplexity. All of these things are just releasing these new browsers. You have to learn basically new things every single day. This one's too close. And it's true for individuals and for startups. How much are you giving this? 7 on 10.

Dhruv Sharma: Everyone's a rapper.

Utsav Somani: Memes actually have become such a big cultural thing. You can actually communicate reality with memes. And offline as well, we tried something new where we wanted to give feedback using memes. So somebody doesn't take it personally, but actually you still get the message across. So pretty interesting that way.

Dhruv Sharma: Pictures speak louder than a thousand words. What's the next one? Me trying to bag VC funding. Got the text and this is small. I'm going to have to look a little bit closer. You can't raise money if you have no revenue model. Do you remember seeing Silicon Valley, the show on, I think, HBO? Yeah, that was full of meme material. Yeah, the whole show was one long meme. But there's this specific scene where there's a VC who comes and says, you can't make revenue. Do you remember that scene?

Utsav Somani: Not that particular scene. So what's your number for this? I think this one's again, I think I'd give it a 6.

Utsav Somani: Yeah, 5 on 10. This is too real, man. Half of the companies that I've invested in probably face the same dilemma every single day.

Dhruv Sharma: Some of these hit home.

Utsav Somani: Oh, this one's nice. Actual Indians equal to AI.

Dhruv Sharma: So this one's saying that the car's running someplace, but it's really being run by someone somewhere in India. Okay. Interesting. Our driving style is markedly different from how driving happens elsewhere in the world.

Utsav Somani: What's your number for this?

Dhruv Sharma: This one's actually funny. I'll give this an 8. 8 on 10.

Utsav Somani: All right. This is too real. This is too real. Was somebody just like the investors in 2025? I mean, this in 2023 would be like Web 3. Yeah. Everyone was chasing Web 3. I was part of that game. And now everyone's chasing AI. Why is it dragons? And it could have actually been herds of sheep. Do you think the VC model is, I mean, we're going to ask Suhail all of these questions as well. But do you think like the venture model is herd mentality? A lot of founders complain about this as well.

Dhruv Sharma: Two ways of looking at it. One is obviously it's herd mentality. But look, I mean, VCs don't act in a vacuum. I think they're going to follow the funders always. So if more founders are building AI companies, you're going to fund more AI companies. And again, VCs deploy capital on behalf of LPs. So what do LPs want you to be investing in? So I think they get pressurized from two different directions. I'm saying that because I work in that industry.

Utsav Somani: It's a factor of many things. Like how I take it is that if upstream or downstream capital, like people who are going to fund companies before you and people who are going to fund companies after you. If they are investing in that trend, you sometimes tend to get into this play of momentum investing as well. So you think that this might get a good markup, might help me raise my next fund better or quicker and all of those paper gains. Circular economy, man. Everywhere. By the way, D.O.N. is not a podcast, guys. We're a live show. So yeah, as you can see, Dhruv has lighting back on. Building a loss-making startup, wasting investor money and founders on every podcast. So that's why I clarified we're not a podcast. It's amazing how these origin stories just keep popping up. It's the same struggle and same story, this thing. Pretty interesting. Good set of memes. Yeah, this one I think is a decent one. This is the next big thing. Christopher Nolan.

Dhruv Sharma: I think this is a million dollar question, right?

Utsav Somani: All right, we're getting too pensive, this thing. Nirvana, true Nirvana. When you have product market fit. How do you know when you have product market fit?

Dhruv Sharma: Well, I think it's a little bit like just hotcakes selling off of shelves. Frankly, I'm in the closest I've gotten to. I think everything internally starts to feel broken. That's always a telltale sign that folks can't get enough of whatever you're shipping, whatever you're selling them.

Utsav Somani: All right, we've had too much of AI. I think our next guest or the first guest for today is ready. So let's actually switch the mood up a little bit. Suhail, welcome to the show. And I was telling Dhruv that there is no better guest to have on Friday than you actually. Because just look at you. You embody the word Friday in a beautiful way. So welcome. My pleasure. You are going to see a bar behind me, but I think I've had to change my place. So it's a pleasure to be here. Should we start with the hard questions or should we start with the easy ones?

Dhruv Sharma: Where are you tuning in from, Suhail?

Utsav Somani: Goa. Oh, wow.

Dhruv Sharma: We should have just waited for Suhail to join us.

Utsav Somani: Amp up the energy on the show.

Dhruv Sharma: What's happening?

Utsav Somani: I want to get started, Dhruv. With Suhail, I love traveling in a lot. So Suhail, you read the news of secondary in India, 2.85 billion. How was it living through the crisis? I think recap that thing. When the whole Ashneet saga was happening, the company every day was in the news for something. How was the team morale? How did you rally the troops when you were the CEO?

Suhail Sameer (OTP Ventures): Yeah, I think to be honest, press keeps talking what they have to talk. You have to get down to business. To be fair, first three, four months were very tough. I think they were tough, not because we were worried. Business kept chugging along. That's the beauty of a tech business. Once you put it in motion, it stays in motion for a while. I think it was tough because we couldn't tell the team what was happening. Everything was under investigation. As you would have seen, a lot of it was anyway leaking, no matter from what source. It was very hush-hush. The team would come to you and ask what was happening. All you could say was, believe in us. We know what we are doing. Give us a few months and we will clarify. At the point where we told the team what had happened, since then it was a lot more external noise than internal, to be honest.

Utsav Somani: Interesting. Come out stronger. The secondary is a validation as well. The valuation now stands at the last round price. Congrats to the team for sticking it out and building a solid, sustainable business as well.

Suhail Sameer (OTP Ventures): Absolutely. It was tough. When we entered the crisis, we were $20 million in revenue. Annualized revenue. When we got out of it, we were around $200 million in revenue. Thankfully, the business kept selling along. The team kept delivering. They kept focus. While I and some of the leadership team were obviously partly distracted. Great effort by the team to get us here. Now the business is profitable. Hopefully, IPO in the offerings soon enough. Great validation to have the secondary round happen.

Dhruv Sharma: Suhail, were you still around when the bikes and the cricket tickets were offered to engineers?

Suhail Sameer (OTP Ventures): Was that your idea?

Dhruv Sharma: Did you agree to that?

Suhail Sameer (OTP Ventures): ICC was front and center of that. I hope I was at the center of the bike idea. I don't think it was a bad idea, to be honest. From the point of view of using a recruiting partner to hire, you end up paying 10-15% of the compensation to them. This created a lot of buzz. If you think about it from a cost point of view, it was cheaper, if anything.

Dhruv Sharma: Paid for itself if you got the engineers you wanted.

Suhail Sameer (OTP Ventures): By the way, what was most surprising is no one took the bike. These are 23-24 year old kids. They're very excited by the prospect of a sports bike. But when they go home and say, we've got a job and we're getting a bike, parents would say, do anything but don't take that bike. So we didn't end up giving a lot of the bikes.

Utsav Somani: You're still following the fintech space because of your previous role at Bharat Pay. What's really happening in the world of UPI payments? Where do you see the whole landscape evolving?

Suhail Sameer (OTP Ventures): It's crazy how UPI has grown. I had the first-hand view in my first three months at Bharat Pay. I joined just at the beginning of COVID. Everything went to zero. We used to roughly do a billion dollars of transaction before I joined. Annualized, not big. COVID happened, Wave 1 happened. Before Wave 2 hit, our UPI transactions had gone to $14 billion a year. We were not ready for it. 14x from the peak we had seen in a few months. We were not ready for it. It continues to go from strength to strength. I think payments will continue to go digital as we see. Obviously, it will become tougher and tougher to make money on payments. Already, UPI, you can't hardly make money. I think there is some money to be made on credit on UPI. Do you think MDR will come in? Unlikely. If you think from the benefit to the economy, from going cashless and everything else, from a GST point of view, tax point of view, I think a cost of 20 bips on a transaction, if I think from a government point of view, I don't think it makes sense. Obviously, the regulator has to also figure out how the industry will remain sustainable. Therefore, there may have to be either MDR or something else to compensate for that. But I would be surprised if MDR came back into being.

Utsav Somani: But there is indirect benefit, right? They are taking cash out of the system, which of course powers the parallel economy. At least now people are in this thing. I mean, vegetable vendors are now getting notices because of their UPI payments.

Suhail Sameer (OTP Ventures): There is clearly benefit to the government, right? Why would they start charging and move back to the world of where people stop accepting UPI? Because that was the whole problem with washing machines in India. It's not the US, right? In the US, a merchant has a 30% margin. He can afford to give you a couple of percentage out of that. No problem. Indian retailers operate at anywhere from 10-15% margin, depending on category. If you are going to take 1.5-2% out of that, that's a reasonable part of the income in the first place. And that's why POS never became big in India. And that's why UPI came in. If you are going to now charge on UPI, it's in a way a regressive step in my view. Of course, I am not operating a fintech company. I can say this now. I don't know what sort of it is going to happen. Would you buy the PineLabs IPO? Why are you getting me into trouble?

Utsav Somani: None of this is financial advice to us.

Suhail Sameer (OTP Ventures): It is a massively overvalued company for no reason. It's a business which cannot grow at more than 10% year on year. It's been 20 years in making and it is still less than $200 million in revenue. It should be valued at $200 million, not $4 billion. Alright.

Utsav Somani: You put it on me. I had no option.

Suhail Sameer (OTP Ventures): You are putting me into trouble. I am like, I can't now lie.

Dhruv Sharma: I think you should say you heard it first in the offline network. So now you have OTP Ventures. How long has it been? How large is the fund? Why is it called OTP Ventures? Are you having fun?

Suhail Sameer (OTP Ventures): Yeah, we are having a lot of fun. The fund is not very old. We started in October last year. Just shy of a year. It's a 400 crore fund. Still raising, investing. Raising is not fun at all. I realized having raised for a company, it's a lot more fun to raise for a company because one big person says yes, one fund says yes, you are done by and large with your round. But when you are raising a fund for yourself, everyone who says yes is 1% of the fund, 2% of the fund. So you basically don't feel happy at any point of time. It's like a constant turn to raise capital. But investing side is incredible fun. So you on an average meet 3-4 founders a day, all trying to sort of build large businesses, unique propositions, getting to learn sort of faster than what I have ever learned. So I think that's sort of the exciting part of the business.

Dhruv Sharma: You also say it's a terminal job, right?

Suhail Sameer (OTP Ventures): Yeah, it's a terminal job. I think this is what we are doing for the rest of the life.

Dhruv Sharma: So talk to the young audience, a lot of young bright people who want to be in venture. What would Suhail Samir say to them?

Suhail Sameer (OTP Ventures): Yeah, I think again, it may not necessarily be valid for everyone because there are tons of investors who have only done investing and have done incredibly well. I actually believe sort of coming to investing after having spent some time in an operating role, having built a business, I think makes you much better suited for the job, right? I think like when I sort of use crude language, I say people who sort of never put anything at risk, have never built anything. When I was interviewing with VC firms out of McKinsey, I used to tell them this is what my compensation is. How much will you pay me? So a person who has never even put his compensation at risk is in my view, not necessarily best suited to take risk decisions, right? And of course, many people will be so bright that they will still prove you wrong. But I think I generally believe sort of having, it's better to sort of go out, build something, work in an early stage startup. You don't have to be an entrepreneur necessarily yourself. Work in sort of a corporate for a couple of years, sort of have a startup stink. And that will sort of make you a lot more appreciative of what it takes to build a business. And that would make you sort of a lot more helpful to a founder who is building and struggling and help him navigate sort of the challenges he goes through, right? So I usually tell people to sort of go and work in a startup before they start investing.

Utsav Somani: And you've raised a 400 crore fund, right? At ODP now. And ODP investments is something that you've done over your career. You've spent time at RPG Ventures as well?

Suhail Sameer (OTP Ventures): Yeah, so I set up RPSG Ventures. Now it's called RPSG Capital. So did the first fund, basically hired Abhishek, who now runs it, is incredibly good at what he does. Hired him. First few investments were solely me, sort of then Abhishek came in and we started scaling. The first fund has actually done very well. Abhishek has raised a much larger fund. We've probably done 15 odd investments from the first fund there. And generally great companies, right? You have something like McCaffeine, Plex, Soul Store, Dr. Vaidya's, and a bunch of sort of good companies got built out of that.

Utsav Somani: And you've always, I mean I've seen in your investing, I mean you were of course one of the first angels, actually the first angel in Marmarts as well?

Suhail Sameer (OTP Ventures): Yeah, first check. But again, like a lot of people give me credit for that. Varun is like my childhood friend. I say this often to people who give me credit for that, that even if Varun was sort of selling cow dung, I would have invested in it. It was not sort of a really...

Utsav Somani: What was the multiple? I know people have done these analysis on LinkedIn.

Suhail Sameer (OTP Ventures): Yeah, multiple analysis of how I have made 2000x on it. I think that was off by a fair bit. I think we would have ended up making a 400x on that investment. Crazy.

Utsav Somani: But you're continuing with consumer investing. Is that majority of the portfolio at OTT as well?

Suhail Sameer (OTP Ventures): So yeah. So I think we, as we thought about setting up the fund and Kunal Saurav, my cofounders, have also been founders, sold their company SimSim to Google. So what we felt was missing in the ecosystem is sort of operators coming in and investing and helping companies build better. As we started sort of thinking about that, I think we also came to the realization that if you are saying that it can't be just a speech, we have to actually have the ability to help. And as soon as that sort of became the guardrail, it became very obvious that if you sort of hear Kunal Saurav's background, it's all about consumer brands, consumer tech, FinTech, but again, B2C, FinTech mostly. We treat Bharat Pay as a B2C business because the shopkeepers, there are like, there are a crore of them, right? So you have to sort of treat them as individuals. So the fund thesis is also consumer. When I say consumer, I don't mean only brands. We do sort of all tech plays. It's more a horizontal, right? When you're doing B2C businesses, that is for us. Now, whether it's tech first, tech enabled or no tech, whether it is in health, whether it's in education, I think what we believe is we have a bit of a pulse on how consumers think and how they make their purchase decisions. And that's where sort of we want to invest.

Dhruv Sharma: So here in consumer, so there's two sides to Sohail, by the way. There's obviously the lighthearted and fun side we wanted you to see, but also there's this really sharp mathematical side. Let's try and bring that out. So with consumer companies, people often say there are these, there are mathematical orbits they have to jump from time to time in terms of how much they're making every month, how much they're making every year, even when you start planning for exits of these companies. So give us a mathematical perspective on this.

Suhail Sameer (OTP Ventures): I don't know. I think a lot of people also say that consumer businesses cannot scale massively. Obviously, like consumer tech has definitely proven that to be wrong with sort of Zomato, Swiggy and the likes. But even on sort of core consumer brands, I think what we really like, to be honest, we don't do as much maths about sort of how big it could become. But I think what is beautiful about sort of consumer brands is once they cross a particular threshold, which some brands can cross like as early as three to four years in today's days, like a hundred crore revenue, it is very difficult for a consumer brand to sort of, for a lack of a better word, die. Right? Because the businesses, by definition, have such high gross margins that a business which is sort of doing 7, 8 crore a month, 100 crore a year, by definition, unless it's growing at a crazy pace, will be profitable. So what we like about the consumer businesses actually is the capital efficiency of the business. And sort of, as we think about sort of investing as well, we basically think about do we have confidence that this founder in this category with or without our help can get to sort of a 10 crore a month number. And if we believe that, then sort of a lot of the hurdles are already crossed. And then you're of course doing your usual how big can this be? What sort of an exit will I get? But I think sort of the core question for us is do we see a hundred crore revenue over the next three, four years? And if we see that, then we invest, right? These businesses, you would have seen multiple cases. Even Mamarth is a great example. When the company went public, founders still owned 40% of the company. When Minimalist was sold, we all have heard the numbers on sort of how much founders owned.

Utsav Somani: Were you interested in Minimalist?

Suhail Sameer (OTP Ventures): You know, it's so weird. I think there are only two companies which we regret not being investors in. One of them is Minimalist. The other is Mokubara. And I'm sorry, I'm missing a few, but these two are sort of companies we are thinking. Why did you not invest in Mokubara and Minimalist both? Mokubara I didn't actually see. I think our core premise at that time, and I love how they have proven it wrong, is India is not yet ready for specific solution-oriented brands. This is obviously a seven, eight-year-old story. We were still grappling with India's per capita consumption of sort of personal care being $8. And we were like, let's solve shampoo and face cream. Saying that we will give you vitamin C, which will sort of help you with this. We will give you minoxidil, which people didn't even know what it meant. We felt sort of the market was not ready. And, you know, one of my, and this has happened to us a few times, and my biggest learning on all of this is, I think great founders prove you wrong, right? And we, I think our businesses anyway, sort of as a VC, we are proven wrong more often than not. And sort of, we've taken a very conscious call that if we really love the founders, even if we are not sometimes seeing the category being ready today, we now tend to sort of back them and believe they will sort of grow with the category. And if the category doesn't sort of jump at the rate at which we expect, then they will figure out a way on how to pivot out of that, right? So Minimalist was just pure of lack of conviction, of having a bespoke personal care brand sort of being large in India. So if you're interested in Traya, they obviously delivered on this. Now we have a couple of investments from the fund, which are actually on very similar lines, solving different set of problems. But I think now it's much easier to see after the Minimalist success that you can go down that path. But to be honest, that time we just couldn't get convinced around this.

Utsav Somani: No, no, you've done exceptionally well, Dhruv. Any final question for Suhail?

Dhruv Sharma: No, no, not really. I mean, I'm just very glad to have seen Suhail today. Thank you for coming.

Utsav Somani: What's the cocktail of choice for today?

Suhail Sameer (OTP Ventures): Friday in Goa? Friday in Goa is, most people like Palomas here, but I will stick to Negroni. All the best. Enjoy the weekend. See you soon. Bye.

Utsav Somani: All right. So we've heard investing in consumer brands from Suhail and his time at Bharatpaye and now the cocktail story as well. But before we end the show, I think this is the segment to watch out for. We have Matt, who single-handedly, almost single-handedly changed how India consumes its coffee. We are majorly a tea-drinking nation and Matt has done an exceptional job with bluetukai coffee so much so that I have my cup ready to have this chat with him. Let's welcome Matt. Matt, good to have you on the show.

Matt Chitharanjan (Blue Tokai): Thanks for having me.

Utsav Somani: Nice. I see the design at your back. I think it's blue-tukai.

Matt Chitharanjan (Blue Tokai): It's blue-tukai in our conference room.

Utsav Somani: Who does this art for you? You mentioned the story on the packets of beans and everything that comes. Tell us for our audience, what's the real story behind this art?

Matt Chitharanjan (Blue Tokai): This art is the brainchild of my partner, Namrata. When we were designing the brand, we wanted to have a brand identity that was really evocative of where the coffee comes from because people didn't know that India grew good quality coffee. We're already paying a premium for this coffee. It's going to be expensive. We need to make the packaging really minimal, basic. She's like, no, no, no. This is really important that we have a nice-looking packaging that tells the story. Luckily, she won out that argument. We partnered with some local artisans. This is all traditional Indian, different styles of traditional Indian art forms. We commissioned artists to depict what they would imagine when we got this art. We put it across our packaging, our cups, in the cafes. It became an integral part of our brand identity.

Utsav Somani: Solid. It's iconic.

Matt Chitharanjan (Blue Tokai): How many stores do you have now, Matt? We're at about 180. They're all in India? 180 in India and one outside right now in Tokyo. We should be opening up in Dubai by the end of this year.

Utsav Somani: Awesome. Let's educate anyone who's tuning in the different waves of coffee. You've had the first wave, second wave, third wave, and possibly a fourth wave very soon. What's the journey like for the coffee industry?

Matt Chitharanjan (Blue Tokai): The first wave was predominantly the instant coffee. The Nescafes and the Folgers, something that was very easy to use and affordable. The second wave was when coffee culture and the big international coffee chains are second wave. The likes of a Starbucks, a Costa, a Coffee Bean and Tea Leaf. They would be having better quality coffee than instant, but not really the best quality. What they did is they brought the cafe culture to everybody. Part of that was this idea of a third place where cafes are not just about to work, to socialize. Then the third wave is when people really started focusing on coffee itself. How is that coffee grown? How is it processed? Where is it grown? Does the terroir impart particular flavors to it? Really focusing on sourcing very high quality unroasted coffee. Roasting that coffee very carefully because actually how you roast the coffee really brings out the flavors. Unroasted coffee just has flavor potential, but how you roast it determines which of those flavors come out. Then paying attention to how you brew the coffee. Upscaling baristas, teaching baristas to extract the maximum flavor from that coffee, teaching them to communicate what's unique about that coffee to customers. That's a big part of it. Really focusing on quality within the beverage itself. That's been the third wave of coffee.

Dhruv Sharma: That's how the consumers also kept up, Matt?

Matt Chitharanjan (Blue Tokai): Consumers probably don't know anything about these waves, right?

Utsav Somani: They don't want good coffee.

Matt Chitharanjan (Blue Tokai): Just give me a coffee. But when each of these new waves have come in, they've changed the market, right? So Starbucks disrupted the market in the U.S. They brought cafe culture there and actually around the globe. I mean, in India, CCD definitely disrupted the market when they came. There was no real cafe culture here. So they were very instrumental in bringing that change about. Now, I think, you know, over time, people have gravitated towards specialty coffee. In the U.S., for example, it's more than half of the market. Here, it's very, you know, it's nascent. You know, it's only been about 12, 13 years.

Utsav Somani: What percentage of India drinks coffee and what percentage is tea?

Matt Chitharanjan (Blue Tokai): I mean, everybody drinks. Coffee in India, statistics are notoriously unreliable. So I would be able to give you an accurate answer. Roughly everybody drinks tea. Everybody drinks tea. That's 100 percent. Coffee is probably right now sitting at about a quarter of that.

Utsav Somani: Nice. And I mean, these newer players that have cropped up, right. I mean, we're doing these 99 rupee latkes and stuff. What's your take on them? Are they trying to replace, say, their blue tobacco coffee? Or is it just more for actually frequent consumption, but lower wallet load?

Matt Chitharanjan (Blue Tokai): I mean, so the idea is that if you reduce the price, you're going to drive increased consumption. And I think there's a couple of challenges with that in the India context. One is that coffee itself is not yet moved to become totally functional. It's still quite experiential. So until that behavior is that I have to have a coffee, I have to have multiple cups of coffee a day. Reducing the price isn't necessarily going to solve that. So essentially, people are coming to a cafe for a coffee for sure, but also for the food offering they have, the environment that they have and the challenge with this kind of grab and go culture is that India is not set up for a grab and go. Right. The infrastructure is not there. I said no one goes on and stops at a cafe, picks up a coffee and walks to the office, maybe in some corporate buildings that happens. But for the large majority that that doesn't exist, that behavior has mostly translated to the delivery channels. So, you know, most cafes in India have a healthy share of their revenue coming from delivery. But this ninety nine rupee coffee is a hard sell because coffee prices have escalated at all time highs right now. So the margin that you're earning from that coffee is not it's only going to be sustainable if you have incredible throughput.

Utsav Somani: And what's the increase in price of coffee? Sorry, we've never paid attention to that.

Matt Chitharanjan (Blue Tokai): Yeah. So it's gone up by almost 100 percent in the last year. So many factors. There's been poor weather in the large producing countries. So Brazil and Colombia, these are kind of market setters. So if the crop gets affected there, that trickles down to the commodity price and the commodity price ultimately becomes a benchmark even here in India for what everybody pegs their selling price to because at the end of the day, coffee is very fungible. If I don't have domestic buyers here in India, I can easily export it. So there's not a lot of price arbitrage that can happen by being in a coffee producing country. The tariffs that the U.S. has put on has also caused a lot of supply disruptions, which again has caused the commodity price to shoot up. But primarily, it's been driven by increased demand, particularly from coffee producing countries, developing countries. Coffee culture has really taken off in those countries and supply being constrained by climate change.

Dhruv Sharma: But today, Matt, when we have a cup of Blue Tokai coffee, it's 100 percent of that coffee is Indian coffee sourced from Indian estates. Give us a sense of the quality bands. And the last time I was at one of your cafes, there was, you know, the thing they hand you over to take back to your table with a number on it. It said there's 60 Q graders in India and Blue Tokai works with four of them. So for us and our listeners who are Q graders, why are you working? What's their job? Why do you work with?

Matt Chitharanjan (Blue Tokai): So actually there is a so in order for coffee to be considered specialty, apart from sort of this focus on quality, there's actually a score that has to be applied to that coffee. And so Q graders are people who are trained to score coffee objectively. The idea is that if I'm a Q grader in here in Delhi and you're a Q grader sitting in Australia, we taste the same coffee, we should score it exactly the same. So in order to be considered specialty grade, a coffee has to score above 80 points on a hundred point scale. So what what the graders look for is, does the coffee have unique flavor notes? Does it have sweetness? Does it have acidity? Does it have does that body? How does it feel on your palate? Are there any off notes? And then all of these things stack up to get a hundred score out of one hundred. Eighty points is the minimum for it to be considered especially good. We typically source anywhere from 83 to 87, 88 point coffees.

Utsav Somani: And we want to congratulate you. You've raised twenty five million as well. Now the aim is to go global. You mentioned one store that you have in Japan and now in UAE as well. Both extremely tough markets as well. Right. I think Tokyo's biggest export, Arabica, of course, that's made waves across the world as well. Tell us why the reason to go to these markets and nowhere else in say Southeast Asia.

Matt Chitharanjan (Blue Tokai): I mean, I think that press release was a little bit exaggerated. Yeah. Yeah. Actually, we see way more opportunity here in India than any other market. We have plans to open I mean, to get to 800 stores in the next couple of years. So we're really the capital was really raised more to accelerate our domestic expansion rather than to go into international markets. We've been in Japan for three years now. It is a very different, very challenging market for sure. Culturally, it's quite different than India. People work very where the working style is very different. The language is different and really have to be established there for many, many years before Japanese customers start to trust you. So now we're starting to see the fruits of that coming to play. And so we'll be opening up a few more locations there with the Middle East. We see it more of an extension of of India, actually, just, you know, there's a lot of Indians who are already aware of the brand there. There's a lot of, you know, resonance with with what we're doing. And it's a huge coffee drinking market. So actually, in the in the Middle East, we've tied up with a partner there who's going to be doing the on the ground execution. And then we'll be supplying all the raw material and the know how to them and they'll be running operations.

Dhruv Sharma: And not the food businesses. So Charlie, is that brand? How did you get us the story of how you discovered them? How did you integrate the two brands and how?

Matt Chitharanjan (Blue Tokai): So, I mean, I wish it was the case that you could run a cafe without having food. But the reality of the business here is that people come and they want something to eat. So we've always had been looking for food partners because food was never our expertise. And so within food, obviously, pastry has a long standing association with coffee. So we were always on the lookout for different pastry vendors. And I think it would have been seven, eight years ago. We happened to connect with Sochali. There's actually a baker named Sochali. And she was running a tiny hole in the wall place in Sona Road. But she had a lot of you know, it reminded us a lot of how we started. We started from, you know, my wife's parents spare bedroom. She was in this tiny little place. She had gone to the US and studied because she really wanted to bring authentic bakery to India. And just her focus on quality and the way that she was operating really resonated with us. And so we started working with her and sort of as we grew, Sochali grew alongside it with us. So they opened up in Bombay and started supplying in Bombay. They opened up in Calcutta. And after a point in time, we were I mean, the majority of Sochali's revenues was coming from from Bhutokai. So it just made sense to kind of merge the two companies and operate together.

Utsav Somani: And I mean, Sato, Sato Bread, which I think Sochali was partly responsible for popularizing, right? Because during the COVID wave, I think during the COVID era when everyone was, I think, doing their own starters at home and Sochali was responsible, I think you guys were responsible for distributing some of the best delivering some of the best Sato Bread. So how much of your business comes from delivery? Because coffee, some of the I mean, it's not fun to order a cappuccino at home if somebody enjoys the microphone and things like it's not built for delivery. But other things are maybe like Sochali's products are.

Matt Chitharanjan (Blue Tokai): So how much of what's the split in terms of your actually overall revenue is around 33 percent coming from delivery.

Utsav Somani: But 33 percent, 33 percent.

Matt Chitharanjan (Blue Tokai): But actually on delivery, the skew is more towards food and less towards coffee. And in dieting, the skew is more towards food and coffee and less towards food. So net it kind of balances out to 33 percent of the total revenue, whereas 45 percent overall is coming from beverages. Forty percent is coming from food and 15 percent is coming from the coffee and bread combined. The packets.

Utsav Somani: I love the Vienna roast and Silver Oak is, of course, my favorite whole bean options.

Matt Chitharanjan (Blue Tokai): Well, you got to go on the light roast coffee. You got to get the fruitier, funkier ones.

Utsav Somani: All right. Give me one that I'll try. Give me a name.

Matt Chitharanjan (Blue Tokai): Riverdale. Riverdale is a good one. Yeah. We launching another coffee from Ratnagiri. That's that's excellent. So I'd recommend you.

Utsav Somani: How do you have your coffee? Like, and how many do you have in a day?

Matt Chitharanjan (Blue Tokai): So I normally drink Americanos because it's fast. In 30 seconds, you can brew a cup. So that's that's my go to on the weekends. I'll make a pour over or I'll order order a coffee on Zometo from from the outlet and get it delivered home.

Utsav Somani: Yeah, I remember you picking up a coffee from the airport when we were going for the Goa poker tournament where you said that you had to pay at your own restaurant, which I think is a good practice as well. And congrats on winning the poker series as well.

Matt Chitharanjan (Blue Tokai): Yeah, it's such a bummer that so now I can be I'm the undefeated poker champion. No one will be able to take that crown from me.

Utsav Somani: Just keep that trophy. Maybe it's going to become like valuable in a while when like poker tournaments. Yeah. People reminiscence about those things.

Dhruv Sharma: This is how I'm having my Bluetooth guy these days, Matt, the Nespresso pods. And so how many different SKUs do you have now?

Matt Chitharanjan (Blue Tokai): I mean, if I count everything at the cafe, there would be almost 300 across. I mean, so actually apart from Sajali's, there's another brand that we acquired, a bubble tea brand. So between these three brands, we have more than 300 SKUs across.

Utsav Somani: And Nespresso, like, I mean, one final question for me before we let you go. I mean, do you like Nespresso pods? Like, do you think that's a good way to make coffee? It's a quick one.

Matt Chitharanjan (Blue Tokai): I'm not the TG for it because I have access to all of the equipment and everything. Right. If I didn't have that, I can see how it'd be a very useful alternative because you just press a button and you get a good cup of coffee. I mean, it's five grams of coffee is in one of those. So the strength is never going to be what you get from when you do it yourself. But I think for people who are looking for smaller cups and a very convenient form factor, it's definitely a good product.

Utsav Somani: How big is your roasting operation now across India? Like, where all do you have roasteries?

Matt Chitharanjan (Blue Tokai): So we currently just operate in Delhi and Bombay now. Sorry, Delhi and Bangalore. We had recently shut down our Bombay roastery just because there is no real advantage of having three roasteries across the country. It makes more sense to kind of centralize. So Delhi can cater to the entire north and west, east and Bangalore can cater to the south. But we just opened up a new, it's almost a forty thousand square foot facility in Bangalore that has bakery plus roasting combined. So that's really become our kind of flagship production location. There we have four roasting machines installed, all kinds of the state of our equipment.

Utsav Somani: And I'm guessing tastes also vary, right? North and south. South is big on filter coffee and maybe other forms.

Matt Chitharanjan (Blue Tokai): No, not within. I mean, within our customer base, tastes are very similar and the roasting style is the same. So whether you your order gets roasted in Delhi or whether it gets roasted in Bangalore, the taste will be the same because we have all the parameters set up so that that is consistent. But we don't really notice a lot of variability in terms of what sells across different geographies. There is some nuance like in Bombay, the delivery percentage is higher than the overall average just because people are used to it there. Calcutta is heavier on food. So AOVs are much higher in Calcutta. The share of beverage is lower there. But apart from that, on the coffee side, it's quite similar across the entire country.

Dhruv Sharma: Awesome. Dhruv, you want to close this out? What's what's next for Blue Ducai, Matt?

Matt Chitharanjan (Blue Tokai): More stores. So we're really, as I mentioned, really feel that the opportunity in India is is tremendous. It will be. I mean, people will be happy to know that we're actually going to be able to drop the prices soon because of these GST reforms. So directly see a benefit from that and glad to be able to pass that on to consumers. So I think that's a that's a good thing, a good step that the government has taken. But we just see, you know, coffee culture as an inflection point here in India and so much room to grow from here.

Dhruv Sharma: Awesome. I think there's more places to go have your Blue Ducais and maybe even save some money on them.

Utsav Somani: Yeah. Yeah. All right, Matt. Thanks for tuning in. Wishing you all the success and 500, 800,000 stores very, very soon. Thank you so much. I wish there was a way for us to send Sohail and Espresso Martini in Goa. Both Matt and Sohail are close friends of offline. So thank you.

Matt Chitharanjan (Blue Tokai): Yeah. Thanks for having me.

Utsav Somani: Thank you, Matt. See you. Have a good one. All right, folks. Thanks for tuning in. I hope you've had a good week with us. You've had fun. We had a mini meme session as well today and we'll keep experimenting with new formats. We've got an exciting lineup of guests for a week for to close out the first month as well. So let's get to work this weekend and hopefully we'll see you bright and not early, but bright and excited at Monday 4 p.m. Thank you. Bye bye. Thanks for tuning in.