In 2015, when Ananth Narayanan took the charge of Flipkart’s fashion subsidiary Myntra, fashion ecommerce was still a new segment even as the market grappled with the opportunities in ecommerce. Narayanan was sitting at the cusp of the market opportunity and in over three years, he drove the task of making Myntra one of the leading fashion destinations it is today. The company even became a global attraction when Walmart acquired Flipkart in May 2018.
Therefore, when in January 2019, Narayanan announced his exit, his new job had to be something totally new and different. Amid a lot of speculation, Narayanan announced his entry in another segment of ecommerce— medicine delivery. He joined Medlife, one of the top epharmacy startups in the industry, at a time when epharmacy is expected to be a major market, but is grappling with regulatory hurdles.
In October 2018, the Madras High Court announced a ban on the online sale of medicines. The same was followed by the Delhi High Court and in January 2019, the ban on epharmacies was stayed until a decision is announced in the matter.
The investor sentiment in the sector therefore, took a hit. But having grown and nurtured Myntra and Jabong from niche ecommerce plays to mainstream fashion ecommerce platforms, Narayanan had no illusions about the task in hand and what it will take. In fact, he is aiming to bring in the company’s first external funding of about $150 Mn in the next few months.
And incidentally, Medlife has been celebrating August as its most successful month. Speaking to Inc42 recently, the CEO said that the company overachieved its planned targets for the month and is now ahead of its yearly targets. “We are well on track for 100% year on year growth, improving unit economics dramatically. Our unit economics will improve by over half, it would be 50% growth Y-o-Y,” he told Inc42.
Pharmacies is the large portion of the business, diagnostics is the fastest growing and consultation is also growing very rapidly, but we are using it mostly to onboard labs and diagnostics.
Founded in November 2014 by Tushar Kumar and Prashant Singh, Medlife began life as an inventory-led epharmacy and to help doctors digitally manage and store patient records. It now includes online doctor consultations, wellness products and laboratory services.
The company claims to service over 20K deliveries every day across 29 states and 25K pincodes. It also claims to have crossed the INR 1000 cr plus run rate as of March 2019. It further expects to achieve overall sales of INR 1500 Cr with an exit run rate of INR 2000 Cr over the next financial year. Narayanan said that in the next 12-18 months, the company wants to hit breakeven in terms of unit economics.
In a candid conversation, which delved into a lot more than the first external funding round for Medlife, Narayanan touched upon the future growth prospects of the company, and the innovation need in healthcare. Here are a few edited excerpts:
Q: When you joined, you talked about raising external funding. How has this need come about now after years of bootstrapping?
Ananth Narayanan: It is not a need per se. We believe that to continue to get the next level of growth, external funding will be helpful. And therefore, we’re in discussions with multiple people for the external funding. We are looking to raise about $150 Mn over the next six months. We will invest in a few different areas: team, building up a product and tech team, marketing, supply chain and infrastructure and some acquisitions.
Q: Medlife has been engaging with startups through acquisitions — similar to Myntra. Can you tell us more about this and where does the acquisition strategy fit in the long term at Medlife?
Ananth Narayanan: When we think about acquisitions, we think about two things: the capability and the customers we are acquiring. When we acquired MedLabz, we were not doing diagnostics, but it was a good business. In terms of Myra acquisition, we wanted the express capability and that is why we did it. We continue to look for the right capabilities in the acquisition and we are open to more and we will continue to scout the market for acquisition.
Q: What has return on investments been like in this case?
Ananth Narayanan: It has been wonderful, I think every time we have got a capability, we’ve been able to scale it across the network. The labs business is one of our big success stories. It has grown 4x-5x in the last one year, and it’s been wonderful as a business. The express business which we acquired recently is also scaling up really rapidly.
Q: How do you define customer success at Medlife?
Ananth Narayanan: In terms of consumer experience, which is net promoter score, in the industry we have the highest NPS. So, we have over 60 NPS, which means out of every hundred customers, there are 60 who promote our brand. We want to continue to improve that number.
Q: How have you balanced the need to grow your addressable base with the need to retain customers?
Ananth Narayanan: Eventually customers are retained because we have given them a good product, we give it to them on time and we give them a good value. In doing all these three things, the customers will get retained. In my mind, there is no trade-off here. The more you grow, as long as you have a good process and you’re tech-enabled, the customer experience will also get better. So, I think scale and consumer experience is not at odds with each other, you can do both well.
Q: You talked about interacting with customers, as well as employees and partners as much as you can. What have been your lessons?
Ananth Narayanan: Firstly, I will tell about the customers that I met — that is the most important constituent. Second thing is interesting for me is, unlike ecommerce, the range of users is very large. For example, we have people who are aged 26 buying from us, and also those who are 86. And the customers fall in this range. Third, which is quite humbling for me is because it’s chronic medication that’s getting there, you actually make a big difference in the life of the customer. So making sure that you’re on time, the promises on time, the experience is good is really important.
From talking to employees, the clear takeaway is that they are very excited about the vision and mission and want to make a big difference in the lives of consumers. I think everybody is very well intentioned and very tech-driven.
Q: What excites you the most about using technology to solve major problems such as access to medicines?
Ananth Narayanan: I think technology is the only way to get access for 100 Mn indians. There’s no way even physically to do this, so that’s very exciting. Second, is you can use technology to solve everything from making warehouse operations completely error free to make the app very user friendly, so that people from 20-80 years of age can use it.
Q: And in your opinion, which are the other areas of healthcare which are seeing most disruptive innovation?
Ananth Narayanan: I think every aspect of healthcare is starting to see innovation. But I would argue that compared to retail actually, the amount of technology innovation in healthcare is much lower. Okay, so therefore you see in every idea there is a huge opportunity.
Q: You have been known as a transformational leader. You joined Myntra at a critical time and you left it as a byword for online fashion shopping.
Ananth Narayanan: I don’t think of myself that way. I think of getting a group of people motivated about something that we can go after and then, how do I actually make people work together, so they can solve difficult problems. That has always been my philosophy and how I handle it and I look to do the same at Medlife as well.
Q: What about your personal interest areas from the point of view of investing?
Ananth Narayanan: I look at education and mobility. I have invested in Vogo, which I’m very excited by. I think about startup investments as a way to learn a new business or a new area. I am very excited to talk to younger founders, and just see how well they do it. I do it for learning, both in terms of founders, and learning from them, as well as learning about the industry.
Q: You’ve been a CEO before and now you’re CEO again, but also a cofounder; have you ever thought about starting up yourself?
Ananth Narayanan: I think my skills are actually taking a business which has a product market fit like Medlife and scaling the business. It is very entrepreneurial and as I said I have invested in our business, am joining as cofounder, I am not just CEO. So I’m very excited about building this into an institution over the next 10 years.