How To Turn Idea Into A Billion Dollar Business?
Story of Asian Paints
So many times we have an idea and we think it’s a billion dollar idea, then we call some friends and discuss it with them, currently everyone is dreaming about estates, cars that they will get when the idea gets successful.
But after sometime, no motivation is there, no more dreaming we are back to our daily lives.
But founder of Asian Paints Champaklal Choksey was not like this when he was young. During world war 2 and quit India moment, there was a ban on paints. Choksey found an opportunity in this period.
He called his three friends and discussed the idea with them, and built a paint brand. But during that period no one wants to buy their paint, not industries nor local distributers.
Asian Paints was not a popular brand, so they focused on decorative pants, but his competitors were focusing on industrial paints. He noticed that In industrial paints only that person will get the deal who offers least price. Choksey want to build a brand that directly sells to shopkeepers, not distributors, so that their profit margin is high.
Then they opened their first shop in Sangli village in Maharashtra. Shopkeepers were also happy because they are not talking to distributors, they are directly working with product manager.
Pongal festival was coming in Tamil Nadu, and Pola festival was coming in Maharashtra. He found people color horns of bulls using bright paints and they need small packets of paints to do this, Choksey saw an opportunity in it and started creating small packets.
He also noticed in villages people color their house with red stripes, and later he also captured that market. In cities he saw, people are using distemper for their house. The quality was inferior, and it leaves stains on clothes, another option was plastic emulsion paint which was 5X expensive then distemper.
Choksey made an intermediate which he named washable distemper, and advertisement went successful, because of this Asian Paints captured maximum market share.
In 1969, Choksey made a decision that they will not use distributers to sell their paint, they will sell directly to the shopkeepers. Then they went to shopkeepers and told them that the company wants to sell you. But shopkeepers said they don’t have enough money and space to keep the stock.
Choksey said that in every 3 hours a truck will come and refill the stock four times a day. Everyone thought he got mad Asian Paints had 40,000 dealers, so they have to repeat the process 160,000 times in one day. But he did it and because of that from last 60 Asian Paints is the only company in the history who grew the revenue by 20% every year.
In 1982 the company went public and from that day company has grown 1800 times. It means if we invested 1 lakh (one hundred thousand) when company went public then today we will get 18 crore (180 million) for our investment.