Rise & Fall of eShack- The Journey that paved my path into Entrepreneurship

I have been meaning to write about the rise and fall of eShack for a while now. A lot of people who care still don’t know what really went down with eShack and why a once talked about and well to do young business had to pull the shutter down.

Now that we are starting Sleepy Owl Cold Brew Coffee I thought it would only be fair to communicate better and explain what we learnt, what went wrong and what we could have done better in hindsight.

I was fortunate to be interviewed by David Aufmwasser, a student of Entrepreneurship and Innovation at the University of Warick. We chatted for hours about eShack, entrepreneurship and life. He has captured and documented my thoughts with extreme clarity. I am directly sharing his piece on what promotes innovation in small and medium enterprises in emerging economies.

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Back in 2012, Arman Sood was still a student at Jindal Global Law School in India. It was during his 3rd year in law school when he and his good friend Ashwajeet Singh, decided to start their own business to import and sell party and drinking accessories to students. Since there was little to no supply of their products, it was a great opportunity to exploit the gap in the market and “build a bridge between the customers and suppliers” — all whilst making some money from it. Thus, they founded eShack to introduce Indian students and friends at their university to the joy of western drinking games such as beer pong, drinking hoses or even shot glass roulette games.

Neither of them had any experience of handling a business, however, their background in law and experience from internships helped them greatly with all the legal and managerial aspects involved. It is worth mentioning that there was no incubator, government schemes or other sources of funding or support available, which supports the notion of emerging markets to lack the institutional structures and policies to drive innovation.

However, this very fact actually turned out to be their greatest driver for innovation. Innovation occurs everywhere, it can be a form of creative expression or a new way of doing something. In Arman’s case, as a student in such an environment, he had to make do with what he got. And he did.

Instead of worrying that they are just two students with no experience, they embraced it. By emphasizing on the fact that they are “only” students they created a lot of awareness. They pitched their idea first and foremost to their family and friends, convincing them to support their start-up. And then the real innovation occurred, with low sorts of funding and little resources available, they revolved their start-up around having as low costs as possible.

By using Ashwajeet’s house as a storage place they could keep inventory costs at a minimum and started to talk to suppliers over in china to import their beer and party equipment.

Arman said, “We really milked the fact that we were students, you will find that in a university environment there are so many possibilities to save money and create awareness for both yourself and the university.”

First they set up the company, all the legal paperwork etc. was no issue here, since they both had the knowledge from their background as law students. Where they had to acquire new skills they developed it on the go. Market research was primarily conducted by surveying students, feedback and constant involvement of the customers; after all, the customer is king. And as students conducting “primary research” by going out partying and promoting their products “was the most fun part”. All the PR, marketing and branding “didn’t cost us a penny” Arman said.

“We got lots of help from fellow students for logos and branding. Even the name eShack was created that way”. But not everything went smooth. As students they had no means of travelling to China to source the right supplier and inspect their products, it was simply uneconomical to cover such expenses with their limited budget. Instead, they used their own research, skype interviews and Alibaba to find suppliers for their range of products.

This however led in some cases to small drawbacks. In one instance they wanted to introduce a new product, a German beer boot, however, the supplier, that was not verified by Alibaba, received their order and parts of the cash up front, but never got around to send any of the goods paid for. “Learn by doing mistakes” is what Arman’s entrepreneurial spirit picked up as a driver to keep going.

“When you lose money somewhere, you have to account for it somewhere else”.

Arman then decided to pay closer attention to the suppliers and from then onwards only selected verified suppliers for their products. They decided to outsource the website, which was their main sales channel, to a cheap freelancing service and started to create awareness with their means. So as students they send over 100 different writers of blogs, articles, tech magazines and start-up sites information about their launch as students with almost no funds. An innovative and incredibly inexpensive way to create the right kind of awareness. This sparked quite quickly and created a lot of good press for them. Their university picked up on it too and started to support them as well.

The institution seemed to like the idea of two of their law students to start a business on their campus, and thus Arman created a win-win for all parties involved. They actually managed to create a hype so strong that even when their business wasn’t doing well, everyone’s perception was that eShack must be doing really well and “that kept the business running”.

One major change in their business model occurred when they realised that there is a lot more potential selling B2B rather than B2C as initially predicted. Bars, event planners and corporates were quickly attracted by their success and willing to order in much larger quantities than students. Although the profit margin decreased slightly, this solved two important issues that their business faced at the time. One being the fact that they had to order in bulk from suppliers which often caused them problems as this would mean sitting on excess stock as well as the high upfront costs.

The other problem this new sales channel solved was that their products, due to the implications of being imported, were quite expensive for Indian students — about 1500 Rupees at the time for most of their standard products. Corporations and event managers simply had a larger budget for these products and hence their business model became more and more B2B.

Eventually, they had to close eShack. As final year students and entrepreneurs at the same time, managing their life became too much of a hustle. “Everything in life is improbable, events exams, family and friends”. But this wasn’t the sole reason for them to stop their first business.

More and more competitors realised the potential in the market and existing companies with established supply chains took over from where we left off. Some still ask why we don’t redo eShack but I guess we had our run.

“We simply didn’t have the means to keep up with the big players once they picked up the game. So we decided that we had our run, but maybe it’s time for something else”.

Arman just launched his new business called Sleepy Owl, to introduce India to the western hype of cold brew coffee. As such, he is responsible for bringing in new innovation from other markets into his home country. Only this time, as “India being the 2nd largest producer of coffee in the world”, he took the chance to visit his new suppliers in person to ensure that their quality is right.

“Learn by doing mistakes”.

Arman is a prime example of a born entrepreneur. He realised that there is entrepreneurial rather than lawyer’s blood running through his veins. “I loved speaking and debating and I felt law school or the legal profession would allow me to hone that skill in some way or the other. I was keen on being a litigator and kicking ass in a courtroom for the rest of my life. Turns out that wasn’t me”.

So this personal growth and learning experience, as well as creating awareness and branding for himself is already a success story. It will be interesting to see where his “new chapter”, Sleepy Owl cold brew coffee, will lead him.

“After all failure is a matter of subjectivity.”