Ep546: Akshat Malik – Don’t Get Too Invested in Just One Partner or Brand

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win in investing, you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives to reduce risk in your life, go to my worst investment ever.com today and take the risk reduction assessment I created from the lessons I've learned from more than 500 guests fellow risk takers, this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guests. X shot Malik X shot. Are you ready to join the mission?

Akshat Malik 00:45
Absolutely, Andrew.

Andrew Stotz 00:47
I'm excited to have you on and it's time to have some fun. Let me introduce you to the audience. I shot a serial entrepreneur and a risk taker during the week and a happy dog dog dad on Sundays has certainly had his shares of good and bad investments. He started his entrepreneurial tryst early on in the times when e commerce and E services were just seeping in trying to get a foothold in India. Fast forward to today. And he has revolutionized and enhanced the health and wellness industry by reshaping the niche in cosmeceutical, Derma and nutraceutical sector, he is the founder and CEO of click on care retail Private Limited. Why don't you actually why don't you take a minute and tell us about the value you bring to this beautiful world?

Akshat Malik 01:44
All right, so we started off back in 2013. And it was I think, almost about nine months since I started my career with the banking sector. So I started off road early where I had my very limited knowledge of the entire ecommerce segment. And fortunately, unfortunately, there were only two players in the market back then in the commerce segment, were big enough and hiring, hiring big time. But then, but then I really wanted to learn things on my own. And that's where I get started, click on care, and started selling generic products. Now, whenever I say generic, these words as generic as what you would find in a supermarket, but then But then the initial years of my stint with the the business actually helped me understand what are the pain points, which a customer faces or what regions are demographics, the pain points exist, where I can find the solution, it took a good amount of money, it took a good amount of time. But then I caught on to that. Now as we grew about as we grew about the one thing which which I learned was, you know, burning money by raising funds is not something which I was good at. And I shouldn't be taking that out. So still today, whatever we have achieved and wherever we are, we are self sustaining. We haven't taken even a rupee from the market. We have grown from say 10,000 worth of investment two crores of money in which we were generating today. So what I'm adding to this poll, difficult question, maybe too early for me. But then what we try and do is make difference in the lives of people who are part of click on cap, who come on board and join us work with us either directly indirectly. We try and make a difference that

Andrew Stotz 03:53
maybe one way of understanding your business is to talk about the kind of the top products that you sell, let's say that the cosmeceutical versus the nutraceutical You know that very different areas, but what are the top one or two things that you're selling in those areas. So, we get to understand like exactly what your products are.

Akshat Malik 04:15
So cosmeceutical pharmaceutical is very new for the Indian market specially. Now, how we define the cosmeceutical is anything which is manufactured by a pharma segment, which biopharma company in India or abroad wherever, but it's not part of your mainstream availability. Now, if I have to turn it this way, if you sitting out of talent, you go to 711 you probably would find a brand called Ukraine or when on the shelves there, but that isn't the case in India, in India, those are called as cosmeceuticals and pharmaceuticals. So that's where we're trying to make a difference where people are still not Oh, aware of the ill effects of generic cosmetics. And another simple example another simple example, which I would like to take a minute to explain. Now, Johnson and Johnson recently was sued for XYZ reasons because of some nasty ingredients and their products. Now, in India, Johnson and Johnson was a premium buyer for middle income auto, every guru family now until until the educated mass actually found out that there is a difference in the pH levels of usage of these products for their kids, for their children for their babies, they were still sticking onto these generic brands, until cyber mint came and revolutionized the entire segment and said, boss, I'm a generic product to I'm a product which is costing the sale. But my products are not nasty. My products are from the DOMA segment, not your generic cosmetics item. So this is where our Indian market is growing right now. And we have tried to tap into that place. nutraceutical versus Kosma and Derma. Has has gained potential in the last two or three years, especially with the onset of COVID. So new PRI has picked up big time, and is offering more or less the same kind of solutions, which Cosma is but in a nutraceutical format. Again, a simple example, I apply sunscreen for my SPF protection. Now nutraceuticals in India are existing for the same solution where you don't need to apply but eat something eat or eat a capsule for your own for your sunscreen protection. So this is this is where the nutraceutical segment is getting real potential and

Andrew Stotz 06:42
interesting. And you know, when you think about the big companies sometimes having nasty things and as you say, when I look at it take an example of something like milk, you end up having to pasteurize it and treat it and get rid of all of these actually what would be really good things. But because the government and others and the end the companies, they don't want the liability and you know, they don't want bacteria coming out or whatever those things are, all of a sudden they destroy the nutritional value of it. Right? For the purpose of safety?

Akshat Malik 07:22
Absolutely, absolutely. And that's what's

Andrew Stotz 07:25
I assume that what's happening with the big, big brand names is that they ended up you know, having to use all these different types of chemicals, and then they use all kinds of smells and stuff that may not be good for. So it's not so much that they're evil. It's said that that's the way they do the business. I don't know what is the reason why they're doing it.

Akshat Malik 07:46
Oh, again, economies of scale, I guess. Now, I'm not sure what happens in Thailand, or probably in us or America majorly. But let's talk about genetic stuff, what happens? And then they are you look up, look out for all these chips, or snacks which you have off the shelves, majority of them use palm oil. Now palm oil is actually not really good. But when and the government is neither stopping it, or they're not, then they're just promoting the entire segment altogether. Now, people aren't aware that palm oil is not good for them. Right, but it's still growing. And the entire segment is actually being promoted by the government and the non common segment sport. So economies of scale. It's about to happen.

Andrew Stotz 08:33
Hmm. Well, it's interesting, I appreciate you sharing a little bit about it. And now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to it then tell us your story.

Akshat Malik 08:49
Sure, so the worst investment was also my best investment in the initial years. Now, when we started off earlier, during our conversation I mentioned that click on care is a self sustaining bootstrapped organization where we haven't taken up funds from anyone. So back in 2017 18 is when we started exploring how the customer Derma segment is going to help us. Now, the best investment which we did was engaged with a particular brand to help build their entire segment and entire nutraceutical market. Now, it helped us immensely in the initial years 2018 to say about 20, where the brand group 100x We grew, say 80x of it. And that actually helped both of us. But then as we went about the brand had its own intentions of moving around and partnering with other people in the segment. And that's where we started losing market share and our revenues got hit Okay, now this, this ended up images and not going into details right now. But images, this was a worst investment because as we grew, the problems which we faced before our growth kicked in, I'm much more. And now the dependability on one brand was actually not really good for the organization. So during the entire scenario didn't touch the end of that growth from, say, 0x to say, 80x. You know, we never realized that we were surviving on one brand. We never explored large, larger brands to sell, sell, sustain, or even grow long. And that that actually turned out to be one of our worst investments.

Andrew Stotz 10:46
And did it end up that they you stopped working with that brand, or they started reducing what they were ordering. And then all of a sudden, you were in a situation where you thought, oh, wait a minute, now we really got to fill this gap. Oh, no.

Akshat Malik 11:00
So luckily, we still with them, we still one of the largest sellers, so we still catering . We're still probably contributing about 60% to their sales, the entire sales. So we're still doing that. But then, but then we must realize that when we grow the responsibilities, which come along with the infrastructure growth, or the investments, which you have done during your board stage are much higher, and then that gap, which gets reduced from 100, to about 60. That's a lot. And by the time you realize and start investing into other brands, it becomes a little difficult to sustain. And that was a tough call, that was a tough call, which we have to make.

Andrew Stotz 11:45
So how would you describe the lessons that you learned from this?

Akshat Malik 11:50
Alright, so with this particular brand, what they had a couple of SK use, not going into much detail. But they had a couple of stos, where our initial understanding was that people would be exclusive sellers for the particular brand all across. And when I say that, we will also be co investing in all the marketing expenditures. And that was a big, big mistake, which we did. Now, what started happening was, the brand was also an offline player, they were also distributing their products offline to their retailers, their distributors. Now, if we were the only one selling that product and click on care, it's fine. But then distributors started selling it on Amazon, you know, XYZ, eBay, or multiple other websites, that the pandas are really getting its profit share, because wherever it sells, it sells, and we are simultaneously co investing into the product into the branding into the marketing. But we aren't enough getting enough of the entire ROI. Now, that's where we got hit. So as of today, the major lesson which we learned was don't get too much invested with any one partner or brand.

Andrew Stotz 13:11
That's a core lesson, maybe I'll share some takeaways that I get from your story. I think the first thing that I got from it is the idea of when we think about risk in a company. There's a few very common risks that any business owner out there listening knows, they probably know about it. And they know when they're going to expose them. The first one is debt. If you bring on too much debt, it could be very difficult to overcome that. So you want to keep your debt down as low as possible. Even in the world of finance, we say oh no, bring on debt, because it's low cost and all that. Well don't believe all that? Absolutely, it's being on a small amount of debts, okay, but try to prevent yourself from going, I would say more than funding yourself 20 to 30% from debt. So that is one of the mistakes. And I've seen so many companies get crushed. The second mistake is foreign exchange exposure. Many companies have some foreign exchange exposure that you didn't realize or that just really hurt them. And the third one is revenue concentration. If you have all of your revenue concentrated in any one or a small number of clients, if something happens to them, then you're going to be in trouble. And I know a similar thing happened with me in my coffee business, one of my businesses is that we did get one particular customer to become pretty large. And we really, really, really worked hard to try to expand our revenue into other customers that were big also, to say we got to monitor the percent of the total sales that this one customer is about total and we've got to make sure it doesn't go over a certain amount. I think our are at that point it was like 15 to 20% That would be a huge hit to our revenue and to our business. You If we were to lose that, so revenue concentration is a big one that you're talking about. The other one that's interesting is that, you know, any type of partnership is difficult, you really have to clarify what we're doing with the who's doing what With what money and all that. It's very common in it reminds me of a friend of mine asked me to invest in a business of his and I think it was interesting business and all that. But I asked him, Are you doing other business? Yeah, I'm gonna still do this, I'm gonna still do that. And does this business own vows business? No, that's separate. And I realized that he could take his energy and apply it a little bit on his own personal stuff in on the business. And I said, look, the only way I would invest, is if all of the business activity that you did was under the umbrella of this business, same umbrella. Right, right. Yeah. And that's where we have to make sure that the the efforts that you're going to end the commitment that you're going to get don't get, take the word siphoned off, right into another area, which is just natural people will do it. Oh, yeah. But it's, you know, blah, blah, blah, it's gotta be super clear. And I think that's a lesson for everybody out there. When it starts off, it seems like oh, no, that won't be a problem. But it won't become a problem. And therefore, you've got to make sure, and basically, don't allow any of the resources that you have to be used in a way that doesn't generate revenue for you. Don't be the nice guy, you know, that type of thing. You know, I have to protect, as I often say to people, when I'm negotiating and discussing, I just say, I have to protect the interests of my business partners. It's not me alone, and my employees. And there's nothing wrong with that. And so that's one way to handle it. Anything you would add to that,

Akshat Malik 16:50
oh, I actually picked up good points there, where you've, you've you've actually phrased things in a way precise and a great way. So being a nice guy is what I would like to talk about. So with this band Association, we actually try to play the same trick as being the nice ones and trying to give our 1,000th person towards the brand's growth. And we always thought that you know, that reciprocation would come back, maybe not today, but probably say, a year down the line six months down the line, and we keep them a lot of our time, energy resources, building up their website, refining their website, you know, putting putting together their processes, right? Because we believed in them too much. So. So I think there should be a limit, there should be a cap, where you should know your limits and your boundaries . this is where I'm gonna stop. This is where I monetize and get out or maintain. And this is, this is where I'll not exceed.

Andrew Stotz 17:56
It's a great point. And I think, one way to think of it for the listeners out there, if you're in a kind of an uncomfortable situation where you feel like, Hey, this is stretching it a little bit, you know, stop and speak out. Because if you don't do it at the beginning, it will continue to grow, and it will become harder and harder.

Akshat Malik 18:20
Right, right. And then stick on it there at the back of your mind. And you'll keep thinking about it. At least for 10 seconds in a day.

Andrew Stotz 18:26
I remember someone saying it's like the camel, don't let the camel get its nose under the tent. Because once he gets his nose under that it's gonna get his face on there. And then it's full body and have your limits and have your boundaries. And don't don't hesitate to tell your business partners, you know, and your customers and that to say, Hey, this is not okay with me, I think can we discuss this? So that's great, great lesson. So based upon what you learned from this story, and what you continue to learn, what one rep one action, would you recommend our listeners to take to avoid suffering the same fate?

Akshat Malik 19:05
Oh, you know, you've been, I think I've come across such a situation again. And I think there will be mistakes, but new ones, not the same ones. But one thing which I would recommend not others to fall into is a point which I picked up from your last sentence, never hesitate in speaking out. Never hesitate in speaking out. What's that at the back of your mind? Because if your partner values you, they'll listen to you. They'll discuss it out, they'll actually come to a common ground which doesn't disturb your mental peace of mind and is fruitful for the relationship. And this is where, you know, this is actually one of the points where we suffer too. And this is I think, the primary reason for all the problems you don't speak you keep it in your head you want to hold on to But you have a fear of losing something in the entire process. And that fair is actually poisonous. So, my takeaway would be speak out, but don't don't keep it at the back of your mind.

Andrew Stotz 20:14
Yeah. And the other thing I would add to that is, it's not easy at that time, because you're vulnerable, you need that customer, you need that rep. It is important. So, you know, in hindsight, we can look back and go, just speak up. But you know, it's hard. And for the listeners out there that are in that situation, just trust us to say, to know that if you speak out, now, it's going to be hard. It's going to be an issue, maybe, but it's going to be solved, as opposed to letting it grow. So what let me ask you, what is a resource that you'd recommend for our listeners?

Akshat Malik 20:49
Alright, so this is where if I would like to offer something, maybe just read, right? So I started this a couple of months back during the second wave of COVID, in India, and I started mentoring a couple of people from my alumni, groups, and I went to my school, I went to my school clubs, and I went to my college groups and said that, hey, if someone is starting out, let me just put in some inputs, or let me just contribute something where, if it helps, helps, if it doesn't help, it doesn't. But let me just put out a word there. So I started taking about five people in a month, giving about, say, an hour to all of them through the week, listening to them, and probably helping them out in areas, whatever I can contribute. So this is again out there to whoever's listening to this podcast in case I can add value to your business or make a difference to your lives, I'd be more than happy to do so.

Andrew Stotz 21:53
In one and best way for them to reach you

Akshat Malik 21:57
shoot out an email, reading to em one at click on care.com. That's alhfam. Mike, number one, at the rate, click on care.com.

Andrew Stotz 22:07
Perfect. And we'll have that in the show notes. And feel free to reach out take the opportunity to get some help get some support. One of the things that I love about this podcast is that the people that come on are the people who really are the type of people that you can trust because they're willing to go back and look at their mistakes and work through them. That's the kind of person that I want to work with. So here, for the listeners out there, you've got a chance to get to know and get some support. All right, last question, what is your number one goal for the next 12 months?

Akshat Malik 22:42
All right, so to all the mistakes which I have done, I've realized that in the last seven, eight years, I've been building brands, I have been putting in a lot of effort, my team has been putting on a lot of effort to build someone else's brand. And what we ultimately get is an X amount of margin, which is not enough at the end of the day. But what we have decided to do along is invest into more and more research to develop our own brands. And we are almost done with it. So in the next 12 months, we plan to bring about a couple of SK use, which will help add brand value to the organization. So our own line of products.

Andrew Stotz 23:25
Fantastic. Well, listeners, there you have it another story of loss to keep you winning. If you haven't yet taken the risk reduction assessment, I challenge you to go to my worst investment ever.com Right now, and start building wealth the easy way by reducing risk. As we conclude our shot, I want to thank you again for joining our mission. And on behalf of ACE dots Academy I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Akshat Malik 23:59
Thank you so much for your time, Andrew, it was lovely speaking to you. And I think more than me contributing to my failures and my experiences. I think I learned a couple of things from you as well.

Andrew Stotz 24:09
That's the beauty of podcasting in this podcast is that we're all learning and that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Thank you for joining our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.