S1E10 | Truths About Modernising The $15B Ayurvedic Wellness Market | Ameve Sharma, Kapiva

How do you get millennials to buy something usually recommended by their grandparents? And how do you keep their attention when the product you sell takes months to show results? How do you know when you’ve achieved product-market fit?

Discussion Topics: Truths About Modernising the $15B Ayurvedic Wellness Market

• Ameve’s story and the inception of Kapiva
• How Kapiva Retains Customers
• Vertex and Kapiva
• Partnering with movie star Malaika Arora
• Hard Truths about building D2C brands
• Launching new products and 
• The case for geographic expansion
• Sometimes timing beats product
• A simple test for Product-Market Fit
• A simple tactic for customer centricity
• How a best-seller was built from customer feedback
• Finding good investors
• Honest investor conversations
• Vision for Kapiva

Transcript: Truths About Modernising the $15B Ayurvedic Wellness Market

Elise Tan, Vertex Ventures: Hi, I’m Elise Tan, and I’m your host for this episode of Hard Truths by Vertex podcast. So I’m really glad to have Ameve Sharma, founder and CEO of Kapiva. So Kapiva is a modern Ayurvedic brand and a leading one in India. We invested in Kapiva a while ago. So today, we are going to learn more about what Ameve has been up to, as well as learn more about this space in health and wellness. Nice to meet you.

Ameve Sharma: Pleasure to be here. Thanks for having me.

Elise Tan, Vertex Ventures: You really come with a certain experience that maybe other founders didn’t have. So maybe you can quickly tell us more about what was your journey before Kapiva?

Ameve Sharma: Sure. So yeah, Elise I grew up in Calcutta, I did my undergrad in the US, NYU. My family has been involved in manufacturing and selling Ayurvedic products for almost 105 plus years. So I’ve spent about six years working with them, kind of in every function in the family business. 

That was a great experience. I learned a lot and that business is purely about product quality. There’s almost no marketing there. The entire mindset is about procuring and product quality, not even R&D-based, but more procurement-based right, getting the best quality raw materials and best manufacturing practices, right, the best quality product possible. So I got a lot of learning from there about consumer understanding and actually building the best product possible.

Post that, I did my MBA at INSEAD. And then I worked in McKinsey for a few years. McKinsey really gave me that kind of ability to look at data and analyse things in a better way, take a large problem, break it into smaller pieces, and then really kind of solve it more effectively.

I think that was a great combination of a traditional business with the right values, and the right kind of consumer thought process, as well as a new-age approach to looking at data and kind of really leveraging insights more effectively and at scale and in a structured way. So I think the combination of those tools was I feel very helpful in my journey.

Elise Tan, Vertex Ventures: How did you discover that this is an opportunity to start Kapiva, and then, when was that?

Ameve Sharma: Sure. So Elise, Ayurveda, which is India’s traditional medicine system, is a very large category in India. But what we saw a few years ago was that it was still a very traditional category, catering to the primary, primarily the older generation. And there was a gap that needs to be bridged for the younger generation to actually start using and consuming Ayurvedic products and medicine, right? Ayurveda done right requires guidance, or Ayurveda done right requires a lot of focus on sourcing and ingredients and things like that. I was a big believer in Ayurveda and I noticed that everybody that I knew in my age group believed in Ayurveda, but nobody was currently using it. 

At the same time, there was this funny, conundrum where people were suffering from more and more lifestyle issues, right? So we saw things like hair fall, weight, sugar, right blood pressure, these are problems people are getting at a younger and younger age.

Ayurveda has very good solutions to these problems, primarily through good nutrition. And people want to take Ayurveda, but they don’t know how to. So I would get so many calls. Just random calls that, hey, what? I’m getting high sugar, I have pre-diabetes. What should I do? And I would be like, okay, try these ingredients. And they would call back and say, well, thank you. So I would keep giving them.

And I’m like, why are you calling me? What’s the problem? And everybody’s common issue was what should I do? If I want to buy the product, either I go online, or do a bunch of research, right? Or I go to an Ayurvedic doctor, which is very difficult to find, not really available, especially in larger cities, and don’t really understand the modern lifestyle, right? He will be like, okay, stop doing everything -Start waking up at 5 am and change your entire life around, which people can’t do, the average person was not able to do.

So I saw this huge opportunity to make Ayurveda kind more relatable and more usable for the younger generation and keep bringing it into the 21st century right. So what we like to believe is that we are building the future of Ayurveda, right, not only by creating the best product possible product by using scientific methods for R&D, procurement, and product development but also by creating a very seamless journey for a customer to find the right product. So that’s the big opportunity that we saw on day one. That’s how the company was founded.

It’s been five years. We do 100,000 plus consultations, we use AI (artificial intelligence) to help guide consumers through their Ayurveda journey, both pre and post-purchase, as well as having a very detailed health coach team to kind of help consumers in any touch point where they have to solve the healthcare needs.

The industry is valued anywhere between 10 to 15 billion, depending on what you include in that rough number.

Elise Tan, Vertex Ventures: And then this is very different from Western medicine. So how do you make sure that people are compliant? Do they stay on the products?

Ameve Sharma: Very good question, Elise. What is Ayurveda at the end of the day? Ayurveda is actually good nutrition – fruits, roots, leaves – it’s actually very high-quality nutrition. If you want to solve your stomach through good food, it’s gonna take time. You’re not going to get results in one day. After a month, or two months of eating healthy, your stomach will start functioning better, better, better. So you might be improving overall skin health, the outer layer is what you did two months ago. So if you’re taking ingestible healthcare for skin, it’ll take two, or three weeks to even see the first signs of it.

What we’ve developed here is the entire process, an entire protocol we developed not only to push product education, but a big part of that education is actually this simple thing that takes time. And we do a lot of interventions in the journey to kind of ensure adherence. So everything from a health coach calling the person after one month, saying you would have seen ABCD impact in the first month. But to see more impact, you need to kind of re-stock to us making an automated AI-based journey through WhatsApp or email to keep the person motivated and to push adherence, right? 

So promoting adherence and even on an app right. So we have for our weight management product, we have a forbearance program on our app, which will give you reminders to take the product which will help you track progress and which will actually keep you motivated to actually go through the entire journey. So we’ve actually built the entire tech and human-led journey post-purchase with the one clear intention to push and make people understand the importance of real.

Elise Tan, Vertex Ventures: Yeah, I mean, this is definitely going above and beyond the usual direct-to-consumer products that I heard about. Amazing. And when did you meet Vertex I think maybe the first person you met was it Kanika.

Ameve Sharma: Yeah, actually I spoke to Kanika initially. So I was introduced to Vertex by our first investor which was Fireside right? So they had a connection and I’ve always respected Fireside because I always found them to be very entrepreneur-first. And when they made a recommendation, I took it seriously. And then I found some of those same great values in Vertex where they were very much entrepreneur-first, they wanted to understand how the company functions. They were more than just your very typical financial investor. They had more insights and thoughts. 

And I really connected well with Kanika when I spoke to her, so it was quite a, I would say, destined journey. This was about three years ago, roughly. We were just about to start our round. And basically, we spoke to Vertex right before that. And we started the round. And we had actually decided to go with Vertex within one week. So we moved really quickly. And yeah, we haven’t looked back since. I think it’s been a fantastic journey. There have been times in the business when we’ve had to make a few decisions, which the average investor might balk at, but I think they were very supportive and it’s paid off.

Elise Tan, Vertex Ventures: That’s good to know. And I think that definitely, Kanika has definitely been a great partner for Vertex. She has been bringing a lot of great brands, and startups to our Vertex family. I also know that you have Malaika Arora, who is a fitness guru, on board. So that’s amazing. How did you manage to convince her to be on board?

Ameve Sharma: I never wanted to get celebrities on board. The reason was I always wanted us to be expert-led, not celebrity-led, right? Either expert-led or genuinely people who are using the product, right? I want them to talk about their experiences. That’s always been my belief.

So I was initially very clear that celebrities are a path we don’t want to go down. But funnily enough, I met Malika through another entrepreneur. And it turns out, she was one of our first consumers. So she started using Kapiva back in 2017. And I met her and I started talking to her, and she’s like, Oh, I love your products. And she actually had a little book, an Ayurveda book, which she would follow.

So if she had a problem with what to take, and what ingredients to take. So I realised very quickly that she’s a genuine user of Ayurveda, right? She’s not somebody who’s going to come and just endorse the brand. If she’s coming on board and saying she’s the actual consumer of this product. So then I found that to be a much better fit. So that’s how the relationship started.

And at that time we were just launching our Skin & Hair vertical, which is primarily a very different take on skin and hair. So the whole point of view of Ayurveda is that your skin is an organ, right? What you put on it only lasts for 28 days. So if you want complete skin health, ingesting is more important than what you put on it right? Because that will actually help your overall health of your skin to get better. 

She came on board to help us launch that vertical. It was a very successful launch, she helped us kind of grow that very aggressively. And I think the reason was that she was a genuine customer. And she was genuinely on board. So it worked out well.

Elise Tan, Vertex Ventures: Yeah, I think it’s amazing to know that she is one of your first supporters and then now being invested in the brand. And I’m just wondering, it’s been almost six years. What are some of the hard truths you learned along the way in building a high-performing D2C brand?

Ameve Sharma: Sure. So I think a couple of things immediately come into mind, Elise. If I think about it. I think, when you want to build something, I think a lot of companies in the early days don’t focus enough on the product. And that’s the first thing I’ll say. I think a lot of people focus a lot on how I market this product, how do I sell this product? But you really need to get into the nuts and bolts of what is the product. And is it the best product that I can potentially make?

We spend a lot of time and effort into everything from procuring the right raw material, to making sure the formulation is best in class, doing clinical studies on the formulations, doing a lot of consumer tests and consumer feedback, right, taking that very seriously. So I think to some extent, people need to spend a little bit more blood, sweat, and tears on the product itself, right? And it might take longer to go to market. But you will be able to kind of go to market a lot faster.

I think the second hard truth is that product market fit is something that you really need to spend time and effort building. Many companies that I saw today, to some extent, have maybe 70-75% product market fit. But they are able to grow through funding, through burn. So to some extent that masks real product market fit, do you get me?

So I would tell companies that hey, spend a lot of time making sure that you’ve actually built a product that is exactly what the consumer needs. And you build a product that is actually solving, truly solves a consumer pain point, enough for a consumer to actually pay a premium for it without getting a significant amount of discount and advertising. Spend that extra time figuring out product-market fit.

There are a lot of smaller things like the importance of data, the importance of customer understanding, and the voice of the customer. But I think those are the two main things that come to mind for building a successful startup.

Elise Tan, Vertex Ventures: Definitely made a lot of sense. And I love the product-led approach because that would really kind of build a good foundation for the business. You also mentioned how I guess, you really build everything from the ground up instead of really looking for brand advocates and other such because this could be a really short-term kind of marketing strategy. How many SKUs does Kapiva now have?

Ameve Sharma: So we have a very large R&D team where we are constantly trying out new products, new formulations. So on our own D2C website, we would also have about 20-25 products, which are in the soft launch phase at any given time. So soft launch means that we’ve done R&D, we’ve done our consumer work, but we’re still kind of, we’re not marketing that product, we are actually still assessing product-market fit, actually.

So the process we’re following, so we have about 40 SKUs officially being marketed, being sold, out of which 5 get the majority of revenue and marketing. And then we have about any given time 20-25 products, which are developed fully but are still finding the exact product market fit. So they are available, R&D has built them but they are not being marketed. That’s the overall structure that we follow.

Elise Tan, Vertex Ventures: That’s cool. And would you say that your consumers are mainly from tier one cities or you have now expanded to tier two, tier three?

Ameve Sharma: So when we started the company a few years ago, the thought process was that okay, we are premium, right? So obviously the customer who’s going to buy us is going to be more from a metro or from a tier one city. So a lot of marketing, a lot of our D2C, was focused on tier one.

But about two years ago, we started finding that organically tier two, and tier three started growing more and more. So in the last year, right, we started kind of investing more into tier two, tier three. And you’ll be surprised to know that on our own website, for example, the majority of revenue comes from two to three now, only about 45% comes from Metro tier one. 

And the reason is that number one, what we find is that if your product has delivered, is delivering a health benefit, people are very much willing to pay a premium. Number one, right? The second thing that we kind of found was that there is also a lack of choice in tier two, tier three cities, so online becomes a larger kind of channel for D2C for tier two, tier three, because they’re not able to get as much choice in the average offline store. So they look to D2C to get access to more kinds of products.

Elise Tan, Vertex Ventures: Wow, interesting. And are you also available outside of India now?

Ameve Sharma: We have just launched in the Middle East. And we are doing a large launch in the US actually, right, we’ve hired a team in the US. And what we found is that a lot of Ayurvedic ingredients – ashwagandha, turmeric – have already become very large in the US, and a lot of new ingredients are actually becoming bigger and bigger.

And what we found is that we actually have a lot of the R&D backend and knowledge to actually take Ayurveda global. So our next big aim for the organisation is actually to take Ayurveda globally and start with a couple of different geographies. But we’re also looking at markets all over the world where we want to eventually start launching.

Elise Tan, Vertex Ventures: They’re super exciting. And I’m just wondering, in terms of the hard truths about running DTC brands, do you think there are elements of luck and hype, like the element of timing? Because for Kapiva, if it was launched previously when wellness wasn’t been something that people were aware of, then would it look very different?

Ameve Sharma: Absolutely, you have to kind of do a lot of things right? Get the right product, understand your customer needs correctly, get your go-to-market strategy right, and get your communication strategy right. But you can get all of those things right. But if the macroeconomic factors are not with you, it’s almost impossible to succeed. I think there are a lot of people who’ve done a fantastic job, but they were not there at the right place, the right time so they struggled.

So I think one big factor for us has definitely been that we’ve done this at the right time. When more people are getting more and more conscious about health care, people are actually spending more and more on living healthily. And also there’s a generally larger need for health care supplements. Because the fact of the matter is that we are working longer hours than ever before, our quality of food is reducing pollution levels are going up, right? So we are living in an unprecedented time where we do need support to actually live our best and live healthily. So yeah, I think definitely macroeconomic factors or tailwinds, as I like to call it, are very important for any company to kind of take off.

Elise Tan, Vertex Ventures: Yeah, I’m really glad that we found you at the right time. Yeah, and besides that, I just wonder – you mentioned about product market fit. So I think a lot of people who listen to our podcast, are entrepreneurs. So how do you know when there are signs of product market fit?

Ameve Sharma: In the early days for me, it was a very simple explanation, right? If you don’t have product market fit, you’re constantly figuring out how to sell. If you have product market fit, your biggest problem is how to supply!

A very simplistic way of thinking but literally the day where you’re like – okay, this is a growth, how do I kind of make my supply chain work? That’s when you hit something, right? The minute you’re struggling to actually sell that next piece, it’s not because you’re doing a bad job, it’s probably because the problem, the value proposition you’re offering is not something that people are responding to.

But I think now there’s also a quantitative way to define it. The bar that I would put right as an entrepreneur, is that, am I raising this money to find product market fit or to grow? And the way to figure it out is a simple CAC LTV calculation. So let’s say your CAC-LTV, right, is breaking even less than six months, okay, or five months or four months. Then you have the option to grow the company slightly slower but profitably.

So you’re raising money, actually, because you’re spending more on acquisition, acquiring people faster, and that’s why you’re burning – to grow, right? The second your unit economics don’t make sense in that way, that means you don’t have product market fit.

But now I think with data and with the right insights, you can actually quantifiably define it. Am I burning money as a way to acquire more people faster? Or am I burning money because my customer payback is either too long or not happening? So I think that’s a tough question you have to ask yourself. And I would say that as you grow larger and larger, that’s a better way of defining it.

Elise Tan, Vertex Ventures: Oh, I really love the way you use data to quantify product market fit. This is the first I have been able to get it so clearly from an entrepreneur that I interviewed. So great!

I just wanted to ask you – were there any memorable customer moments while you were building Kapiva in the last five to six years?

Ameve Sharma: That’s something that keeps us going all the time and keeps getting motivated, right? So we use Slack as an organisation and we have a centralised group in Slack where almost entire company’s present. And every single customer review, be it on our website, be it on Amazon, be it on QC gets uploaded for the entire company to read on a live basis. So we are reading customer reviews every day.

We are getting hundreds and thousands of customer reviews. And we’re very happy to say 90% of them are overwhelmingly positive, where we’ve actually solved a health need for a customer. So when a customer comes with high blood sugar and we are able to reduce their blood sugar, or when a customer comes with high BMI, and you’re able to help them lose weight, the importance of that in their life is so much more, right? So the customer stories that we hear are so inspiring and inspire us to kind of do better. 

And at the same time when you get a bad review, that inspires us to do better on a daily basis that the entire organisation is looking at it, we do an RCA (Root cause analysis). Okay, why did it not work for this customer? So there’ll always be a minority of people where it doesn’t work. But that inspires us to make a better, better product. 

We also do something called Golden Hour, where every week we spend some time looking at the best customer and the worst customer. It’s a journey, right? So what can we do better the organisation and what – and look at some of the achievements we’ve made along the vision. So the customer is at the heart of everything we do. So I would say it’s something that on a daily basis, inspires us and helps us to do better.

Elise Tan, Vertex Ventures: I really love the customer-centricity of the company. And really, this is so important. I wanted to ask you if I was reading about the Glow Mix product, which within three months of launching, garnered significant revenue. So what happened there? Was it like, you already understand what it’s a product market fit? And that’s why it did well?

Ameve Sharma: So I think it all starts with a real consumer insight. What is the consumer pain point that is not being addressed today by what’s there in the market? And how do I effectively address that pain point? So Glow Mix was one such example, right?

Initially, we started with a very healthcare-focused approach. Beauty was not really a focus from a company point of view, let’s say until two years ago, right? But a lot of customers reached out to us and said can you guys also start looking at beauty products? I really believe in the brand. I love the brand. After 1,000 or 10,000 requests, we said – okay, let’s start a bottom-up process of understanding what is the opportunity in beauty.

What we very quickly found, right, was the gap was that there are a lot of brands selling beauty topical products. And some of them actually were doing a good job. They were selling good quality products as well. But let’s say acne, which is a perennial issue, right? Then almost, there’s very little you can do about acne externally. Right?

So there’s the big two big issues that lead to acne, right? One is gut health, that your stomach is bad, right? Your acid, you have gut issues that actually come up in your face. The second big one is actually PCOS (Polycystic Ovary Syndrome). So applying something to your face is a very short-term solution, right? You’re hoping that your body will sort out the problem. Nobody was actually looking at the root causes of these issues.

So we actually found that, look, let’s take a scientific approach to beauty.? It will require a little education. That’s fine. That’s a challenge we took up. So when we started the product, we decided to do a campaign. And that’s how you got Malaika in and people saw real results, for the skin for the first time. So we found that people who bought us two years ago continue to use the product. So it was actually getting to the root of the problem, taking a very consumer-first approach, and actually solving the consumer pain point from the core. And that’s what we kind of aspire to do in all of our products.

Whenever people say I’m getting into beauty, the first thing they think about is, okay, creams, gel, right? When we told the board members that, hey, we’re getting into beauty, and we’re gonna start with ingestible, the first question was – okay, is there any market for it? Is it large enough? But of course, as usual, our board is very supportive. And yeah, we grew to become the largest sort of ingestible beauty product on Amazon today. So we are very, quite proud of that.

Elise Tan, Vertex Ventures: Yeah, amazing. You literally help customers to get that glow from within and in a sustainable way. So I think that is amazing. You mentioned Vertex and Fireside ventures. For a new entrepreneur, who is fundraising, what kind of advice would you give him or her about finding a good investor partner fit?

Ameve Sharma: I think solving for valuation backfires, right? Primarily, because the higher the valuation you take, the more pressure you put on yourself, right? If you’ve taken a very, very high valuation, then basically the promise is that oh, I’m gonna grow 10x.

But in a consumer business like ours, I think 3x is the right – 2 to 3x is the right number – simply because you need to grow sustainably, you need to acquire customers sustainably, right? So we wanted to get partners who understood that, bought into the vision, and would support us throughout the vision. So I think that was a key thing.

I think beyond the personal connect with the investor and sharing a vision with the investor,  I think just understanding that what you – being very clear about what to expect from the investor, what kind of support you expect, what kind of sort of interaction you expect, setting that expectation, then making sure that you see eye to eye on the expectation. I think that was very important.

Having very open conversation and very honest conversation. I think very often people don’t have an honest conversation for whatever reason. But I think it is very important to be open and honest about expectations of each other before you kind of start. So yeah, I think we’ve been lucky to have fantastic investors, including our last investor. And I think they’ve kind of really bought into the vision that we’ve, what we want to create, and supported us throughout.

Elise Tan, Vertex Ventures: Yeah, I’m glad you mentioned the valuation part because it could be a vanity metric for founders. So he’s glad that I’m glad that you kind of demystify that. And then for Vertex as well, we really believe in honest conversation with our founders, because that’s how we are able to see how we can add value. Is there an example of how Vertex or Kanika has been able to support you along the journey?

Ameve Sharma: Yeah, I think multiple examples, just a couple of them come to my mind. COVID was a time when we saw a huge jump in immunity sales, right? Immunity was never a large category, but it became our largest category. And then obviously, it was a category that was getting the best return on investment. So obviously, as COVID kind of grew, we were very conscious about that, we wanted to make sure that we were never overselling. But still, it became a large category for us. And it was where most of our acquisition funnel was targeted.

However, one fine day right after the second wave kind of went away, people just were just fed up. I think our immunity revenue just crashed. It went from like 10x to zero month on month, and it was a big time for turmoil, time of turmoil for the organisation, because we had built the organisation for a certain scale, we suddenly lost almost 30% of our revenue, 40% revenue overnight.

And I think at that time, a lot of people would have been like, you have to grow and put pressure. What I realised very quickly was that we need to take a step back, and need to kind of look at our strategy again. And we need a breather for that, right? So we need to make the right decision. And then we need a month where a month or maybe even two months where things will be on the lower side. There’s no point trying to push and get revenue. And then I went to the board and obviously Kanika with the feedback. I thought the reaction would be very strong from that point.

I said, guys, you guys, you got to give me two months, right, where we need to kind of reassess our strategy because immunity has just fallen off a cliff. And they were extremely supportive. They turned around and said, yes, we get it, makes sense, we will do what’s right for the company long term. It’s not about one month, it’s about six months.

And honestly, Elise, at that point, it would have not been unjustified for investors to be like, no, you can’t do this. A lot of investors would have done that, right? No, you have to worry, you cannot just lose revenue for two months. If we had done that we would have been in probably terrible shape today.

But the ability to take that step back… and this was, what, about two and a half years ago. We’ve grown since that time, I would say almost 5x, 6x. And because we took our time and we were given that space and that freedom for investors to take the right long-term decision. I think that’s the example that comes to mind, right? We got a lot of support from my investors, including Vertex.

Elise Tan, Vertex Ventures: And I start to see a parallel between the other companies that I interviewed for example, our unicorns Patsnap, Nium that’s always this kind of near-death experience. I’m not saying that Kapiva has reached that stage, but there’s this time when they will take a step back and kind of reassess. And oftentimes they actually come out stronger. And my last question, actually, I want to circle back to what you mentioned about vision. Tell us about your vision for Kapiva.

Ameve Sharma: Our vision is to improve healthcare outcomes for millennials across the world using Ayurveda, right, that is the high-level vision of the organisation. But if I had to put it in a more poetic way, right, I think what we’re looking to do is build the future of Ayurveda, right? We want to redefine. So if you look at, let’s say, an example of yoga. 20 years ago, it was very inaccessible. People didn’t know what it was. But today Yoga is a substitute for jogging. That’s how widespread it is, right?

I think Ayurveda can be the same, right? It has a lot to offer to the world, it can actually improve the quality of life and healthcare outcomes for billions of people, not millions, right? And it can be a world-changing force for the better, especially in the world we live in today. So we want to build that future. We want to make Ayurveda easier, more accessible, and global. That’s the vision that we have.

Elise Tan, Vertex Ventures: Thank you so much Ameve, I learned a lot about becoming the best version of myself using Ayurvedic products. And definitely, the hard truth that you mentioned about starting and running a business – this is really valuable information for entrepreneurs hearing this. Thank you so much for your time. Enjoyed our conversation.

Ameve Sharma: It was a pleasure being here.

Our Guests: Ameve Sharma

Ameve Sharma is the founder and CEO of Kapiva, a leading Ayurvedic brand in India. Kapiva offers a wide range of natural and effective products for health and wellness. Using only the highest-quality ingredients and traditional techniques, Kapiva is committed to delivering better health outcomes to its customers through holistic Ayurvedic solutions.