Against All Odds: The Extraordinary Pivot Journey of Oakter
Join us for an exciting journey as we delve into Oakter’s pivot from a home automation B2C player to an original design manufacturer of some of the most innovative products of our time, including the Paytm Soundbox and Saregama Carvaan. In this story, you will discover how Oakter established itself as a prominent player in the manufacturing of IoT products and emerged as a noteworthy contender to China’s manufacturing industry from India.
Beginnings👣
After graduating from IIT Delhi with a BTech in mechanical engineering, Shishir worked as an R&D engineer for around 1.5 years. In 2005, he teamed up with fellow IIT Delhi alumni and an electronics engineer from Punjab University named Varun Gupta, who had become his friend through regular visits to IIT Delhi. With support from IIT Delhi’s incubation center, they developed simulation software for engineering. Meanwhile, Shishir cleared the CAT exam and got admitted to IIM Lucknow.
In 2006, while pursuing his MBA, Shishir realized that his passion lay in entrepreneurship. He made the bold decision to drop out of the program and return to his venture. However, the start-up encountered significant obstacles while developing simulation products as they required substantial financial investment. Given the nascent state of the Indian venture capital ecosystem at the time, the team found it challenging to obtain sufficient funding to support their plans. To address this concern, they established a services business that generated revenue to fund product development.
Despite the success of the services business, which expanded into lucrative markets such as the USA and the Middle East, their products failed to gain traction. Realizing that the niche services business was not scalable enough to support their long-term goals, the founders opted for an operational exit and handed over the company’s management to early employees in 2013.
Oakter’s Birth and Initial Growth💡
In 2014, Shishir teamed up with Varun Gupta and Nithin David, who had completed his M. Des. (Masters in Design) from IIT Delhi and had previously collaborated with Shishir on design projects to develop IoT devices. One of their initial products was a solar air conditioner, which unfortunately failed to gain commercial success due to its high cost. However, the team’s research on the air conditioner led them to create an IoT controller that drastically reduced the running cost of AC units at night, resulting in energy savings of up to 30%. This achievement marked the official start of Oakter in 2015.
Around the same time, Google acquired smart home automation company Nest in the USA for over $ 3 billion, which inspired the team and gave them hope for the potential growth of the home automation market in India. Fortunately, the team’s vision received early support from investors such as India Quotient and angels like Flipkart founders, Sachin Bansal and Binny Bansal.
Oakter made significant strides in the B2C market by introducing more than 20 IoT products and an easy-to-install IoT kit that could control non-smart appliances in homes. The team made a conscious decision to manufacture their products in India, contrary to the trend of sourcing and manufacturing from China. They realized that by doing so, they could enjoy greater control over their production process, accelerate product iteration, and take advantage of lower costs and quicker time-to-market. By 2016, the company gained market leadership in the smart plugs market. In 2017, the company became a launch partner for Amazon Alexa in India, further cementing its position in the market.
However, Oakter faced challenges due to the slower growth rate of the home automation market in India compared to the USA. With a moderate growth of around 20% YoY over three to four years, the company only made about $3 to $4 million in revenue by 2019. The company needed money for growth, but new investors hesitated to fund a hardware company in a sluggish market.
Reflecting on the challenging times, Shishir said, “I still remember those tough days vividly. Whenever I felt unsure about the future of our company, I would turn to Anand Lunia at India Quotient. He provided us with both emotional support and rational thinking, sharing stories of other companies that had successfully pivoted and achieved growth. He advised us to ‘count our blessings and keep moving forward.’ His perspective always gave us a positive outlook.”
Pivot to Contract Manufacturing and Spectacular Growth📈
Fortunately, fate had a positive turn in store for Oakter. One day, a leader from Sony, who was also a customer of Oakter’s products, reached out to the team to inquire about their manufacturing capabilities and whether they would be interested in manufacturing a product for Sony. Following multiple rounds of discussions, Oakter became a vendor for Sony. Starting in April 2019, Sony launched its BRAVIA Smart TV range with Google Voice Assistant in collaboration with Oakter’s smart home kit. This kit allowed users to automate their rooms for lights and appliances, all of which were voice-controlled.
After successfully completing a contract manufacturing engagement with Sony, Oakter diversified its focus to include both B2B and B2C businesses. Initially, the team approached several companies for contract manufacturing projects, but the response was slow. However, the tide turned in Oakter’s favour due to factors such as the COVID-19 pandemic, geopolitical tensions, and global supply chain issues. As companies began to look for alternative manufacturing options outside of China, Oakter started gaining traction thanks to its own manufacturing facility.
In 2020, Oakter collaborated with DRDO to manufacture Covid safety products. Then in 2021, Shishir and his team were impressed by Paytm’s IoT product, the Paytm Soundbox. They reached out to Paytm to become their contract manufacturer, and Paytm agreed to do a pilot with Oakter. Impressed with Oakter’s work, Paytm agreed to extend its partnership further. Oakter’s team also took note of the Saregama Carvaan and approached the company. After successful pilots, Saregama chose to partner with Oakter as well, cementing its position as a reliable contract manufacturer for top companies.
Shishir reflects on this experience, saying, “We learned this lesson late, but as entrepreneurs, we should prioritize the market, and opportunity instead of solely concentrating on product and R&D. Though developing solid technology is crucial, 80% of success is dependent on the market and opportunity that exists.” Oakter found that the B2B market for contract manufacturing was a more lucrative option than the B2C market.
As Oakter started receiving numerous B2B contract manufacturing orders, the team began contemplating shifting their focus entirely to B2B. After discussing this strategy with their investors, who supported the idea, the team made the switch. As growth continued, the team members proved to be highly adaptable, quickly shifting their roles to meet the needs of the business. Their sales head, for example, became their chief operating officer.
Since its pivot to contract manufacturing in 2019, Oakter has experienced significant growth. Over the last three years, Oakter’s growth has been staggering, with a 300% YoY increase. As of FY 2022–2023, the company hit an impressive revenue of Rs. 500 crores. Such explosive growth is often described as a “tornado,” a phenomenon that occurs when a company finds product-market fit and experiences rapid expansion.
Oakter’s story provides a valuable lesson for entrepreneurs:
“Technology alone does not guarantee success. Staying put to grab market opportunities suitable for the organization’s competence and constantly looking out for product-market fit is more important. To evaluate the viability of a market, one must fully engage with it, closely observe user behavior, and monitor competitors. Only through active and sustained involvement can one fully understand the nuances of the market.”
We extend our best wishes to the Oakter team and hope for their continued success on their entrepreneurial journey.
Oakter’s story is the second in IndiaQuotient’s latest series on entrepreneurial pivots, where we aim to uncover inspiring tales of entrepreneurs who have successfully pivoted their businesses towards success. If you haven’t already, check out the first story in this series which details the incredible journey of PagarBook’s founders. Stay tuned for more!
