Peyush Bansal believes that as an entrepreneur, choosing the right partners early on makes a big difference to a company’s fortunes. The Co-founder, Chief Executive Officer and Chief People Officer of Lenskart, an e-commerce portal for eyewear, is on a mission to provide spectacles to 50 per cent of the people in India and says the country presents a huge opportunity as 90 per cent of the eyewear market is unorganised. And while the Indian market has undergone a huge transformation, the former Microsoft employee says that Lenskart does have international ambitions in the long term. In a freewheeling interview with Business Today’s Global Business Editor Udayan Mukherjee, Bansal talks about his journey, how Lenskart wants to create a global impact, and his Shark Tank experience. Edited excerpts:
Q: Peyush, you were entrenched into a career track in the US with Microsoft when you suddenly turned course and said, ‘I’m going to do something of my own—a private enterprise, and that too focussed on eyewear’. What was the genesis of this transformation?
A: Well, I was at Microsoft and quite inspired by the impact that its products had on the lives of ordinary people—you know stuff like Excel and PowerPoint— and I wanted to do something similar with my life... [and] leave an impression. That is when I decided to quit and reboot.
I came to India literally with no business plan but kept exploring opportunities [that] would make that kind of impact and started working on student housing as a problem. [And did it] for a few years [but it] wasn’t big enough. Then I read articles about how India is the blind capital of the world. How 75 per cent of people who need glasses don’t wear them; and almost 50-60 per cent of India today needs glasses. It looked like one of those far-reaching problems that hadn’t been solved [yet]. My grooming at Microsoft was all about using technology to solve problems. Then one thing led to another and it’s been almost a decade now. And I still feel we can work on it for another two-three decades to complete that transformation. But, it definitely is one of those spaces where I can say I have found my own calling in terms of the impact I wanted to create on the lives of ordinary people.
Q: Along the way, you have had the benefit of mentorship from some of the smartest minds in business—from an early angel investor like Ronnie Screwvala, later a legend like Ratan Tata, and then an iconic PE fund like SoftBank. Would you say their contributions were significant, not just in terms of capital but also insights and confidence?
A: Oh absolutely! In fact, my first investor was Chiratae [Ventures], formerly IDG Ventures. The partners there—Sudhir Sethi and TCM [T.C. Meenakshisundaram]—were my early mentors followed by Ronnie [Screwvala], who continues to be my biggest mentor till date. I learnt about work culture and how to build an organisation that is sustainable from Ronnie; from TCM I learnt about how to spend time on growth. SoftBank and KKR brought in serious long-term thinking, dreaming much bigger than I ever could. So yes, I would say choosing the right partners early on makes a huge difference. I don’t think Lenskart would be what it is today, wouldn’t be what it will be tomorrow, if it wasn’t for these partners.
Again, I’ve been fortunate that our first early-stage investors are still investors in Lenskart and participated quite uniquely in our last round of investment… It’s not often that an investor comes in as a Series A investor and then stays on for a Series F/H round.
Q: Speaking of funding Peyush, what’s the future looking like? The kind of ambitions you seem to have, do you still need a lot of PE capital going forward? I ask because this digital valuation game is under a cloud; could that crimp your growth in any meaningful way?
A: So, at Lenskart, we haven’t been burning significant cash for almost two and a half, three years now. Because of Covid-19, we had some losses, but this coming year the company will be profitable. It has been profitable for many quarters over the past two years. So no, we no longer need an enormous amount of capital to grow the business. We have been running on good unit economics with a clear path to profitability.
In terms of the money that has been raised at Lenskart, which the media reports about, is a lot of secondary [fundraising]. We’ve probably done more secondaries than primary in the company, and while we have raised capital lately, those are for investments in the long term when it comes to building supply chain and technology, because eyewear is a complex category, and our dream is really big. We want to give glasses to 50 per cent of the people in India. For that, we need to invest in infrastructure. But as a company, we don’t burn operating capital as much.
Q: It’s interesting to learn that you’ve been profitable for much of the last year because there is an impression that Lenskart is growing very fast on the top line but in trying to grow the market and expand its footprint, it is keeping price points too low and sacrificing margins. So, tell us what your profitability ratios are like and if it is a fallacy that you’re not profitability oriented?
A: Look, we have a sound business model. The unit economics are good. The business is on the path to becoming decently profitable but perceptions are perceptions. On whether we sell eyewear cheap, it is people who can afford a lot, who make that comment. If you ask me frankly, 40 per cent of our customers still find us expensive. We still have a long way to go in terms of opening more price points, and even lower price points. We essentially want to be the Maruti of eyewear in India. From that perspective, I would say that over the last four years we have grown only on volume and not by constantly increasing the average ticket size as some of our peers may have. But at the same time, we have done that on the back of a very strong supply chain and maintained margins. That’s a fact, though I can’t fight perceptions.
Q: How fast are you growing, Peyush? Give me a sense of Lenskart’s growth relative to the eyewear market per se.
A: We grew about 60 per cent-plus last year, and are on track to deliver another 50 per cent-plus growth in FY23. I think the eyewear market in India would be growing just north of 20 per cent. The segment is so unorganised that it’s difficult to put accurate estimates on these numbers. But, I would say about 20-30 per cent growth is where the market is because we see about 30 per cent customers who are first-time wearers of glasses, which by the way is a very good number. In India there are 400 million-plus people who need spectacles today and are not wearing them. So I’m not surprised by that number. [It is] safe to say the market is growing about 20-30 per cent and we are growing about 50 per cent-plus year-on-year.
Q: In eyewear, there are a clutch of organised players, such as you, Titan, Bausch & Lomb, etc. But, would you say that a very large part of the market is still unorganised, presenting a penetration opportunity for a player like you?
A: Yes, I would say about 90 per cent of the market is still unorganised. So, Lenskart, Titan and all the other chain players who are doing maybe `80-100 crore in revenue, all put together would not be more than 10-12 per cent of the total market. The market is still quite nascent so there are two parts to this: one, which exists where people are buying—[some] 200-250 million Indians who are actually buying eyewear; and then there is that part of the market that is not even getting an eye test [done]. That’s a large part of the market too. So, even on the market that exists, almost 85-90 per cent is still unorganised, both at the retail level as well as the product level. So the retailer is unorganised as well as the product that they are selling is largely unorganised. You will be surprised to learn that Luxottica [Italian eyewear conglomerate EssilorLuxottica], all put together, forms only a very small portion—even from a product perspective—of the Indian ecosystem.
Q: So, you spoke about this 50-60 per cent growth. Where is it coming from? Is it through your ever-growing collection of stores which is the offline part of it? Or is it mostly online? What would you say is the real thrust area, between offline and online?
A: The two feed into each other. I would say that the lines between channels are diminishing. Gone are the days where you can bucket consumers and say this is an online customer or [this] is an offline customer. If you look at the last four- or five-year trajectory, you would see that consumers overlap between these channels. And that’s actually the strength of Lenskart. We are not a company that pushes people to a particular channel by offering special discounts. I’ll give you an example: if you want to buy an iPhone, you really don’t care whether you buy it on Amazon or Flipkart, or an Apple store. You want to buy an iPhone and sometimes you buy it online, sometimes you buy from an Apple store, and sometimes you buy from a Croma. So yeah, we’re constantly looking at adding more channels at this point. We are quite bullish on our phone channels and we get a lot of orders every day with people calling us and placing orders on board. A lot of people are just chatting and taking advice on WhatsApp on video calls in terms of styling. So we literally are of a firm view that we are a consumer-backed business and not a channel-backed business.
Q: And in terms of a geographical break-up, could you give me a sense of where most of your growth is coming in from—still the metros or primarily B&C cities?
A: I would say in the past few years, growth from the Tier II and Tier III cities has… seen a huge spike. Some of it is market dynamics, as a lot of people moved there [to non-metros]. But, I would say we’re still a 60 per cent metro-driven business today. However, there’s a huge untapped opportunity in Tier II and Tier III markets; it is on our radar and we will get there step by step.
Q: Do you have any international aspirations or is the India opportunity so large that most of your mind space will continue to be focussed on addressing the home market?
A: Over the past two years, we have been piloting the Lenskart proposition in some international markets like Singapore and we see positive results. India is a large opportunity and we still have a lot of work to do here. But we are not a company that only thinks three years ahead. We are thinking 7-10 years ahead and from that perspective, we have to think international.
But, I must tell you that the transformation that has happened in eyewear in India is parallel to none. There is no other geography in the world where a transformation has happened at this pace. Having said that, when we look at the scope, the opportunity exists all over the globe for us. So, globally I would say 4.5 billion people need glasses, 2 billion people still don’t have access to glasses or they don’t get glasses for whatever reason. In India this number may be 75 per cent, but even globally that number is 50 per cent! The myopia rate today, in most parts of the world, is 50 per cent. If you look at Asia, the Southeast Asia number is already 80 per cent. So yeah, if we want Lenskart to be the Microsoft of eyewear or Amazon of eyewear, we do have to have global aspirations and invest in it for the long term.
Q: But the giant there is Luxottica with an almost $75-billion market cap last I checked; do you intend to gun for their position at some point in the future?
A: From an impact perspective, why not? You know, it’s difficult to build business valuation backwards or market cap backwards, but in terms of the impact, absolutely! I will say that we definitely want to pack a lot more people in that revenue; we constantly feel that there is half of the world that is left out. We also believe that if there was a Netflix to Disney, there has to be a Lenskart to Luxottica, right? So from that perspective, yes, we do. We do have aspirations of creating a global impact.
Q: Finally, I want to ask you about the Shark Tank experience because you became quite the popular participant there. What was that experience like?
A: I’m a fan of Shark Tank. I have grown up in this entrepreneurial journey watching it, and when the opportunity came, I literally got advised by my family and my co-founders to not say no to this. Well, I would say it was a great experience, more so from a learning perspective. Getting out there, meeting entrepreneurs from across the country, I could see that the pace at which we used to do things is very different from the pace at which the new generation is doing things. I also saw that if we used to do something in $10, people are now doing it in under $1, and they’re doing it in less time. So, I was able to bring back a lot of fresh perspectives and learning to my own business. It has been great to partner with some of these entrepreneurs. I go back and talk to my team now, ask them why are we not doing this? Tell them this is where the world is moving. So, all in all, it’s been way richer than I thought it would be.