Who, in recent days, hasn’t heard of Ather Energy? From being the dream child of two fresh IITM graduates, the company has gone on to become a thriving business with a hundred – odd employees. On 23rd February 2016 Ather unveiled its first product, the S340 – India’s first electric scooter. We speak to Tarun Mehta, one of Ather’s founders, about Ather’s journey, its future plans and what it takes to be a successful entrepreneur.
Your interview was last taken two years ago, when you had infinite passion and 13 employees. I don’t think your passion has in any way decreased but your company is definitely bigger and way cooler than what it was, it’s all we hear about in campus nowadays. Can you tell us a bit more about how you managed to expand and get to where you are now?
From day one we’ve wanted to become an automotive company, and unlike other automotive companies we wanted to control the entire supply chain – design, production marketing and sales and so on. Nothing much has changed. We’ve just added more resources to the company.
I still remember the first time we were trying to raise funds, we got fifteen or twenty times what we expected. We’ve had a steep learning curve; we’ve gone from two people to a hundred people.
From day one we’ve wanted to become an automotive company, and unlike other automotive companies we wanted to control the entire supply chain
When we were building battery packs, we had a strong feeling that we needed to build vehicles. Our professors here took care of hostel, mess etc. This was the single most important support we got in our journey. We then went and met a lot of professors, both within and outside the institute. All of these guys loved electric vehicles but there weren’t any products which were good enough in the market. So we figured that there was a lot of scope for these products.
So we proposed to these guys that we would produce vehicles whose features – like power, charge speed, aesthetics – would be ten times better than a normal scooter. This would cost Rs 20,000 more than an Activa, though. We got a great response; we told them that we would charge Rs 80,000 – Rs 85,000 and five professors gave us 100% upfront. The others paid Rs 20,000 – Rs 30,000.
That was the genesis. Later we got into the incubation cell; we got a bunch of advisors and mentors…
And the rest, as they say, is history.
We got our first round of funding from an IITM alumnus, Dr.V Srinivasan (25 lakhs). Together with the money from RDBI we went had 45 lakhs.
We started in November 2013 and ran out of money by October 2014. We had a very hard time fund raising because there aren’t too many automotive or hardware start-ups in the country or the world. Many investors are not comfortable with this as the time frames, expectations and deliverables are different.
We tried to do a pitch, asking them if we need to modify what we were trying to build. One piece of advice you’ll get if you’re not a Bangalore start-up is – don’t be super ambitious. I think this is sound advice, but it’s not good advice for a high growth start-up and it also depends on your temperament.
We basically were advised to build small batteries, break even, build bigger batteries and go on to eventually reach to the level of Exide or Amarraja, then to try building our own vehicles. To us it didn’t make sense because we want to build vehicles, not batteries.
One piece of advice you’ll get if you’re not a Bangalore start-up is – don’t be super ambitious. I think this is sound advice, but it’s not good advice for a high growth start-up and it also depends on your temperament.
But few people were willing to listen to what we were trying to do. Sachin and Binny were one of them. They responded our mail in less than 12 hours. We asked them and they advised us to just go with our vision, and not to change anything in our presentation. This is the second most useful feedback we ever got. Because when guys of a certain caliber say that you can raise money it gives you confidence – especially when they (Flipkart) have just raised a billion dollars.
Two years later we ran out of money and went to them again. We explained our progress and explained the situation. This was just a week before the big billion days. They asked us how much we wanted; we said half a million. They smiled and asked if we would let them put in a million. We were like “oh, sure” since nobody else was there.
At that time, there were just 12 of us and each of us was a complete department. The million dollars allowed us to move to Bangalore, get more people with actual experience in product design and that kind of stuff.
…when guys of a certain caliber say that you can raise money it gives you confidence – especially when they (Flipkart) have just raised a billion dollars.
We then reached out to Tiger capital. It wanted to make investments in the hardware space. We didn’t need funds then but it made sense to take Tiger’s funding of 12 million. We finished all design testing and so on.
Now we are 95 people at Ather – 75 are engineers and the remaining are either in business or support groups. We are hiring a lot more.
One thing we believe is “vertical” integration – everything that goes into a product should be designed for the product’s needs.
If you look at most start-ups, you have a CTO and a CEO for tech and business respectively. If you look at Ather you have a Head of Technology, Head of Products and two different heads of Engineering – hardware and software.
A hardware start-up will force you to do a lot of engineering work and is an amazing experience unlike software start-ups. Everything you sell has real margins, real revenue and you understand the fundamental of the product really well. There is no speculation.
There is a very little competition in the hardware scene. There is a serious dearth of talent. If you know your basic engineering well enough you can do phenomenal stuff. Companies like goPRO, Xiaomi, One Plus, Tesla and so on have seen returns of a hundred or a thousand times. This was never expected before.
Our biggest problem is to convince investors the reason we don’t have competitors is not because we have a bad idea but it is because there is a dearth of talent in design in India. So I think we should be starting a lot more hardware companies.
You’ve been through IITM life and have seen different kinds of people .What kind of people in the institute do you think are cut out to become entrepreneurs?
If you are graduating from IIT and come out in the industry, you will probably feel bad – like, if I start my career from here, will I earn enough money? This is all bullshit; if you are an IITian and your seat is good enough you will be very well off in life. I haven’t seen a single IITian in life who feels that he or she is not well off.
If you say “I’m going to spend the first three years doing a start-up” – well, if you fail at the end of it, then you have to restart your career. But if you get even a little growth, it’ll be the best MBA that India can give you. No other MBA can even come near.
Although after three years in Ather, I started understanding the value of an MBA – you do not know how to manage people, you do not know how to process funds, how to manage projects and so on when you graduate from IIT. There is some value in getting an MBA but I still think that it’s far better to go through a start-up.
I think one of the stupidest things that we do is immediately go for an MBA after graduating. I think it’s a very, very bad career choice. You can get an MS, do a start-up or join a high growth start-up. All these three things easily beat an MBA.
But the institute is the best place to find your co-founder. People who figure out who they work best for, whom they can start new initiatives with, they’re in the best place to start-up after graduating. I’m a little biased towards having a co-founder, it’s too much pressure for one person; especially in a technology intensive start-up. It’s very hard to find a co-founder after graduating so people who’ve found a co-founder while they’re in IIT are in a good position.
After that it depends on the start-up you’re doing. If you’ve spent time in CFI, if you have a sincere understanding of the consumer, of the market, of how big the potential is, then that’s another very good.
It’s the instinct of a lot of people to just make a great business plan, a great sounding presentation and stop there. People who are a little hands – on won’t stop there. The people who make the best business plans are the ones who are worst suited to a start-up – that’s something I’ve seen. It’s a useful skill, it’s very good for a consultant but not for an entrepreneur.
That’s another thing – people who can be great consultants will have a harder time doing a start-up. Consulting requires you to be super logical and take a third person perspective on everything. It requires you to be less passionate. Passionate people will not be good consultants. But an entrepreneur needs to be stupid. Consultants are the opposite – they’re very very smart. Entrepreneurs tend to be people who are a little stupid and have all the wrong ideas. I’ve never seen a successful entrepreneur who isn’t classified like that. So people who work in CFI, people who work for Raftar – people who do a lot of hands on work, they seem to be the ones who have a higher chance of success in starting up.
After my time at CTIDES the only thing I learned was that we should stop holding business plan competitions – they make no sense. Asking people to think through excel sheets isn’t helping anyone. Let’s have them go out, actually talk to people, actually have a story. I think if you have a great story then that’s all the business plan you need.
Entrepreneurs tend to be people who are a little stupid and have all the wrong ideas
What is your ultimate dream/vision for Ather? Where do you see it headed?
We want Ather to be a great product company first. What a good product company is, to my mind, is something that creates its own custom and builds an entire world around it. Most Indian companies are not like that. They are fundamentally trade communities, they started out trading a lot of things under their own sticker, and then they realised that for operational efficiency maybe they should start making cars also, and that’s how they became automobile companies . They weren’t started by people who said that “You know what makes sense in this market? A scooter that does XYZ”, and then sat down and made something with those specifications.
Apple is one of the best product companies. Tesla is a great product company. We want to make a great product company, one that will outlive us; we don’t want to spin this off into a success and then move on to the next big thing, because I don’t think that we can do anything bigger than producing automobiles. So we started from producing scooters, we’ll start producing bikes, we’ll go deeper and deeper into energy storage – yeah, that’s our vision.
…a good product company, to my mind, is something that creates its own custom and builds an entire world around it
How long before we see your first product on the road?
We’re opening an experience center in Bangalore, and another one in Pune. We wanted to open one in Chennai but we haven’t taken a call on that yet. So in the experience center we’ll have a little augmented reality, a little data science and analytics, a nice database. So it’s a place where people can take a test ride, order our products and we’ll tell them about our plans. And we’ll wait another five or six months after that before we’ll start shipping the products. So all going well, we’ll start production and shipping by the end of the year.
Do you have any advice for the budding entrepreneurs in IITM?
If I could go back, then one thing that I would do is build more stuff. Most of us don’t build enough stuff while we’re in IIT. There is enough funding, enough teams building stuff, but most of us just skip all those stages. If you skip all those stages, I feel you’re skipping out on a big part of what IIT could have offered. So that’s one thing I’d say to all the people in the institute, build more stuff. It doesn’t even have to be physical; it could be software or an app or anything, just build stuff. Because building things starts with thinking about the consumer, and doing a little bit of that management stuff where you talk about your product. It’s just the entirety of product thinking that you start imbibing. So yeah, that’s my advice – build more stuff.
Photo taken from Vogue India: How Bangalore became India’s startup capital (http://www.vogue.in/content/how-bengaluru-became-indias-startup-capital/)