It’s natural for people to get caught in romantic narratives of an idea. The idea, which would have come to Steve Jobs before making of Apple and which would have struck Mr. Zuckerberg, before what became of Facebook.
Ideas tend to dominate the discussions around entrepreneurs’ journeys. But, success goes beyond an idea, which is just the beginning, and lies before the final feat, which is the end result. Success lies in the journey. What matters more is the chapters in between- their struggles, trials and tribulations.
This is the story of a start-up which began with nothing. Not even an idea. It started with the want of being an entrepreneur. This is the story of an entrepreneur who failed, got up again, saw the potential in ordinary, and transformed it into extraordinary to eventually dominate the market. This is the journey of P C Mustafa, who started from being a daily wage laborer to becoming the owner of a multi-crore company, ID Fresh.
HE WAS AN AVERAGE UNTIL
P C Mustafa, 42, was born into a small village in Kerala with no roads and electricity. His father was a coolie in coffee plantation and he didn’t have any big dreams either. He started assisting his father as a daily wage laborer right at an early age. There was never much enthusiasm about education. His father was class 4 dropout and mother never went to school. Knowingly or unknowingly, Mustafa had accepted his fate. Then happened something, which changed his life for-forever. He failed in class 6th.
Being an average student that he was, his father thought it was best for Mustafa to stop studying and work with him in coffee plantation for full-time. So, Mustafa quit his school.
The question that shook him: Mustafa was below average in every subject, except one, Mathematics. His mathematics teacher, Mr. Mathew didn’t want Mustafa to settle for what life had given him. He asked one question from Mustafa that shook him to the core. He asked- ‘Mustafa, Do you want to be a coolie or a teacher?’ Mustafa could clearly see the difference between his father and Mathew Sir and answered, ‘I want to be a teacher like you’. Reality had hit him. He could see his future as a coolie in coffee plantation if he didn’t study and change his fate.
Next he changed his fate: Mustafa took help from Mathew Sir for weak subjects and came first in 7th class. Everybody was surprised. There was no looking back after that. Mr. Mathew had taught Mustafa to be more! To dream!
He stood first in Class 10th and later got admission in Regional Engineering College (now NIT). After graduation, he got into a job at Motorola. From there, he was sent to Motorola branch in UK. Some years later, he took up a job at CitiBank in Dubai, where he worked for quite some time.
Mustafa had no dreams of becoming an entrepreneur until then. First thing he did after getting his salary in Dubai, was to send INR1 lakh to his father to pay off his loans. A friend told Mustafa that his father cried uncontrollably after seeing the cash.
His father couldn’t believe, his son’s monthly salary was more than his entire life’s debt.
And then was crafted an entrepreneur: Mustafa’s yearning for further studies and love for family brought him back to India in 2003.
The hardest decision he took after coming back was to quit his job. He had great bonding with his maternal cousins. One of his five cousins said to him, ‘If it doesn’t work out, you can always go back to work. Quitting isn’t the end of the world. Ultimately, you shouldn’t feel that you didn’t try what you wanted to’.
The most hilarious thing in this whole scenario was- like thousand other aspirants, Mustafa also didn’t know what he wanted to do in entrepreneurship, but he knew he wanted to become one. This is one thing which makes Mustafa’s story so connectible.
In meanwhile, Mustafa enrolled in an MBA course at IIM Bangalore. While studying, he would often discuss business ideas with his cousins. It was then that one of his cousins, Shamsuddin, had a breakthrough.
He saw dosa batter. Having been born and brought up in Kerela, seeing a dosa batter was nothing new, but this time they saw it differently. Dosa Batter was going to be their business idea. They saw that dosa batter was being sold in plastic bags by retail stores. That was their Eureka moment!
This way, 5 cousins- Naseer, Shamsu, Jaffer, Naushad and Mustafa, joined hands to start a company called ID Fresh, which would sell dosa batters to retail shops who will then sell it to the end consumers. Partnership in the company is such that Mustafa owns 50% of the shares in the company and his four cousins own other 50%.
Early Business Strategy: Mustafa and his cousins didn’t dive deep in the beginning. They gave themselves small milestones, before launching completely into the market.
They rented a small place of 550 sq. ft. and bought two grinders, one mixer and a sealing machine with a small investment of INR25,000/- (out of INR15 lakhs Mustafa saved from Dubai). Their initial target was to sell 100 packets a day within six months to the targeted 20 stores in the neighborhood. Even when more stores approached them for stocking their products, they denied. They decided to stick with initial 20 stores and wait to attain their 100 packets/day aim. Once that was achieved, they expanded.
Mustafa invested another INR6 lakhs into the business and moved to a bigger kitchen with bigger capacity, some employees and more packets/day. In 2007, after Mustafa got his MBA degree, he joined the company for full-time and expanded the capacity of the company by leaps and bounds.
I was lucky to have my cousins with me. Otherwise, finding right people you can trust becomes difficult.
ID Fresh’s business motto is to compliment the efforts of Indian women and ease her work-load while not dominating the praises she deserves by getting into the ready-to-eat food segments. Their aim was, if idli becomes fluffy and tasted well; the credit should go to her.
Today, ID Fresh sells in 8 different cities, touching more than 10,000 stores a day. Taking cue from childhood, Mustafa ensures to employ smart youngsters from rural areas only. Those who work in the company earns about INR40,000/month. The total investment is around INR4 cr. and revenue comes about INR100 cr. The company has also embarked its footprints in international market with sales in Middle East. In next six years, ID Fresh plans to expand in over 30 cities.
COMBATING STARTUP CHALLENGES
What worked in our favor was- we tapped into the right city with the right product at the right time.
First Challenge (Wastage Management and Market Penetration): ID Fresh started very small. They could sell only 10 packets/day. Since dosa batter has low shelf-life, it is a daily distribution business. Their first challenge was to reduce the amount of waste per day and successfully penetrate the market. In early days, the wastage was as high as 25%. Besides that, there were other competitors already in the market, so in order to penetrate the market; they had to do something which would help them turn apprehensive shopkeepers to willing takers of their product.
Combating Challenge: By leveraging Mustafa’s IT experience, ID Fresh reduced its wastage to the minimum. He developed an application which would capture real-time data and suggest them the optimum amount of batter which should be produced, thus cutting wastage. In order to penetrate the market, ID Fresh gave a special offer of ‘Cash After Sales’ to retailers, under which they proposed retailers to pay later, that too, only for the batter they will end up selling. This helped ID Fresh get free and valuable initial feedback from kirana (retail) customers.
Second Challenge (Scalability): Another challenge in front of ID Fresh was that of scalability and meeting operational demands. Expanding in other cities was a challenge because they weren’t physically present there and on-the-top-of-it their product had a short shelf-life. This is why, their initial attempts to crack Chennai market failed, because the quality of refrigeration and AC facilities was very poor.
Combating Challenge: They understood that their business was as much about logistics as was about food-quality. To combat scalability problem, they ploughed all of the profits back into the business, instead of borrowing. This enhanced the quality of their logistics manifold. Along with this, they partnered with thousands of retail stores to aid expansion. Newly formed online channels like BigBasket, Grofers, etc. also helped them scale their operations, but as Mustafa says, online sales are only a little fraction of our sales.
Third Challenge (Sustainability): It is interesting how ID Fresh overcame its sustainability challenge. There was a time when Mustafa and his cousins thought of diversifying into products with more shelf-life, like snacks, cookies, etc. But it didn’t take off. That was when they came abreast with the biggest risk/challenge posed by businesses with short shelf-life products, i.e. sustainability.
Combating Challenge: What ID Fresh did to combat this challenge was amazing! This truly shows the decisiveness, risks and courage it takes to be successful. They decided NOT to diversify in ready-made-products which use preservatives to increase shelf-life. The decision was taken to stick with what they represent, their core strength i.e. making 100% natural and fresh food products with short shelf-life. Because that’s what differs them from all others in the market.
Once a management consultant said, ID Fresh’s market is very small and hard due to regional variations in taste. They might have succeeded in selling batter, but they wouldn’t be able to succeed in other food categories.
Mustafa, still maintaining the spirit of a startup at 100cr. company valuation, said with a smile, “For a guy, who failed his 6th class, I don’t think I have done badly selling batter. I know we will do well in future too.”