02: Dhvanil Sheth | Skillmatics

Founder @ Skillmatics | Building Innovative Educational Products from India, for the World.

Ingredients for Success:

• Consider the nature of the business and competitive dynamics to determine fundraising strategy. Dhvanil’s focus on capital efficiency, rapid growth, and sound unit economics stems from his realization that Skillmatics isn’t operating in a ‘land grab’ market. Raising capital from external investors might seem like the ‘thing to do’ for entrepreneurs, but looking inward and assessing threats might indicate otherwise.

• Diversity of thought always wins. Small teams with varied backgrounds typically catalyze the innovation process. Dhvanil’s mix of product managers, educationalists, and designers to guide R&D at Skillmatics is a case-in-point.

• Engineer company culture to the product being sold. We all want a collaborative, healthy culture. But an often overlooked aspect of culture is if the people represent the product being sold; Dhvanil ensures that his hiring process reflects the needs and nuances of the US market.

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The typical founder targets a personal pain point when starting a business. They just know that they are the ones to solve the problem. But for Dhvanil, that never seemed to be the case. “During my time at BCG, I kept my eyes wide open. I kept asking myself, what new-age business could I build in India?” His answer: Skillmatics – a full-stack consumer brand focused on producing innovative education products from India, for the world.

Set the Stage

When Dhvanil set his sights on building a consumer business, one thing was clear to him: he wanted to leverage India’s structural advantage. “Looking back, we see the likes of Tata Consultancy Services and Infosys create value from India. And if you think about it, their business model boils down to: India cost, US price. We’ve seen B2B business models do this several times over, so I wanted to flip this on its head and build a global consumer brand from India. With Skillmatics, I picked a consumer category with a high IP component and decided to use India’s strength in technology and content, as well as its cost advantage to build”.

Dhvanil’s willingness to ‘set the stage’ for building a global consumer business from India is backed by strong overarching trends. Previously, being based in India was linked to a limited selling market; the ability to sell to global consumers was often, an afterthought. Today, there is a stark shift - Amazon’s Global Selling Program being a prime example. The entire premise of this initiative is to empower and provide Indian sellers with a platform to sell their products globally. “The opportunity has completely altered the way goods are being bought and sold. Amazon has already enabled sales of $2 billion/year through the Global Selling Program, and they aim to hit $10 billion/year by 2025. It’s a game-changer”, says Dhvanil.

Ambition aside, one of Dhvanil’s biggest barriers early on was how to build products that resonated with consumers in developed markets like the US. “We realized early on how different the US market is. We needed to build a company that resonates with the needs and wants of the American buyer”. While trying to figure this out, Dhvanil was simultaneously learning about how critical early team culture is from Sequoia’s Surge program.

“Sequoia’s emphasis on culture made us intentional of the people we needed to hire at Skillmatics. We knew we were dealing with a completely different market and consumer mindset. To combat this, we ensured that our management team has people that have either lived or worked in the US. This helps us empathize and relate. It helps us build a unique culture that has a strong grip on the US market.”

Across the board, it’s no wonder the emphasis founders put on building the ‘right’ culture for their company; it determines how the firm thinks, behaves, and breathes for the remainder of its existence.

1+1=3

Building consumer products is hard. Building educational tools that keep children engaged seems even harder. My hope was to take a closer look at the innovation process on how Skillmatics continues to build highly relatable and successful products for the US market.

The answer: it all links back to building the right team. In line with my previous post on Krishnan, cross-functional thinking and diverse perspectives forms the foundation to innovate at Skillmatics, too.

“Each product that is being built has a diverse set of eyes: we typically have one product manager, two designers/engineers, and one educationalist.”

Through this, the team is able to build formidable products that satisfy two key requirements: being educational and engaging. This habit of building teams with diverse skills links back to Dhvanil’s time at BCG, where each member of the ‘project team’ had a blend of expertise.

The act of hiring and providing autonomy to a different set of minds within a group is what leads to impact. It’s where each hire is not an incremental gain, but a compounded gain. It’s where 1+1=3. That said, Dhvanil chooses to not only highlight the positive outcomes from his experience in crafting a team. “One of my early key learnings was that letting go of people that aren’t a good fit is key. It’s important to cut your losses - especially as it relates to building out the team early on.”

Principled, Measured, Flexible Leadership

Dhvanil’s journey into entrepreneurship seems intentional. Every critical decision seems thought-out and disciplined. “When I launched, I knew I wanted two things: to have a global business and to be capital-efficient”.

For one, the global outlook and vision for Skillmatics is clear. Each thought that goes into building a product or hiring at the firm passes through the unified filter: will this resonate with the US consumer market? The entire company is engineered to take that view.

The capital-efficiency piece, to me, is even more interesting. We celebrate the slew of media reports that accompany a startup’s fundraising round. It’s viewed as a beacon of progress; it represents, to many, a yardstick for success. So, through that lens, coming across Dhvanil’s relentless focus on capital efficiency is refreshing.

“To me, fundraising strategy has to be linked to the business you’re building. If it’s a tech platform where a ‘land grab’ is imperative, then you need to raise capital to reach consumers, fast. But for Skillmatics, we focus on both, growth and feasible unit economics. It’s one where we need to get things right. Yes, there are multiple competitors, but there is low competitive intensity. We are not in a scenario that’s similar to Uber vs. Lyft or Swiggy vs. Zomato.”

Yet, with these strong principles comes the ability to be agile. For example, Skillmatics’ product approach has broadened substantially since the company was incepted. “Initially when we launched, our target age group was 3-6-year-olds. For this group, we focused on a hardware-only approach. Since then, as we’ve expanded to an older age group, we see a larger opportunity in building for a much broader ecosystem. Our vision is not linked to form factor; we hope to use technology whenever it could enhance the educational experience or solve a different use case for our user.”

Handful of Logic with a Dash of Intuition

A few of us try to break away from our experiences in the past. We want to reinvent ourselves. Dhvanil, on the contrary, has picked up several key learnings from his previous stint at BCG. His lean towards taking a data-driven approach is at the crux of what Skillmatics stands for. In fact, it’s how Skillmatics started. “When I was in consulting, I was covering the Consumer & Retail sector. I painstakingly studied the retail industry and tried to form a view on where margins can be captured.” Dhvanil’s aha! moment fell into place when he realized the culmination of India’s cost advantage combined with a direct-to-consumer approach could be the path to success. So far, it’s proven true.

This analytical approach (with a “slight” emphasis on intuition) has informed Skillmatics’ product development process, too.

“We’re really analytical. It’s part of our culture; every decision we make is backed by a trend we are seeing in the market. The more time we continue to spend on learning about the US market, the more we learn about what works and what doesn’t. Today, we’ve developed a ‘playbook’ that informs a range of our critical decisions. This allows us to ideate and commercialize products in a robust and efficient manner.”

Strike When Trends Are Hot!

Skillmatics seems to be at the intersection of several tailwinds. On the domestic front, there are trends in its favor: COVID’s acceleration of online retail, the Bureau of Indian Standards’ tightening of “toy safety” rules, and the increase in import duties across the board.

Globally, amplified by the tension with China, we are seeing companies veer away from relying on the country as a sole manufacturing hub for their products.

“People used to look at cost as the key metric in building their supply chain; now, we have moved to a world of ‘risk-adjusted cost’, where COVID has shown structural deficiencies in having a single source of supply. We will see a move away from China and into countries like India. We are poised to benefit from this trend.”

And benefiting, they are. In 2020, Skillmatics’ revenue is on track to push past $7 million, a 5x increase from 2019. ‘Customer love’, a key metric for Dhvanil, is 4.6/5.0 on Amazon. And brand keywords for Skillmatics on search platforms are hitting new highs on the daily. I am, and I’m sure many of us are, rooting for this homegrown Indian brand to continue to make its mark on the global stage. From my conversation with Dhvanil, if there’s one thing I’m sure of, it’s that he won’t stop until Skillmatics is a household name.

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