This year 11 IIM A grads and one from IIM Calcutta have opted out of placement to start their own companies. This is now a yearly phenomenon. In the spirit of the season then, Rashmi Bansal has the dope on a company started by Bschool grads of 2004 vintage.
No, it’s not a dotcom, tech or consulting start up but a real, live sweat and blood business. But stress is
something they probably don’t worry about. Or at least have a way to deal with.
Company: CMYK Health Boutique Private Limited, operating the ‘Four Fountains’ spas.
Started in: Jan 2007
Anurag Kedia (IIT B ,IIM A (2004)
Saurabh Garg (IITB, IIM A)
Sunil Rao (Sydenham, SP Jain)
Arnab Mitra (IIT D, IIM C)*
*was part of original team but recently quit for family reasons.
The business: Four Fountains is chain spa. Therapies are priced very reasonably – from Rs.199 to Rs.1,349 (at most spas prices begin at Rs.2,000 upwards).
Four Fountains aims to set up day spas in the top 20 towns of the country. The first two are already operational in Pune in Koregaon park and Aundh.
I met Anurag and Sunil in Pune last month. They gamely agreed to come see me at 11 pm, and share the journey so far.
WHO WE ARE
Sunil, Saurabh and Arnab were all at HLL, I was at KPMG. Saurabh and I were batchmates at IIM A and through him I met them. Saurabh and I were exploring something, the two of them were exploring something. We hit upon the idea of health spas and both teams were excited it. So we decided to join hands and work on it together.
Were you familiar with spas before you started Four Fountains?
Anurag: All four of us had been to Ayush or ayurvedic health centres at some time. But none of us in HLL were associated with Ayush as a business.
Sunil: And at work every once in a while you have a getaway where you are
supposed to indulge yourself with company money, so at one of those occasions we would have gone to a spa.
Also our international stint in HLL was in Bangkok so we had seen the spa market is huge and that there are good quality,
affordable spas. It all came together – the idea that spas need not be expensive in order to provide a good service
So how many months went into thinking and researching the business and how & when did you exit your jobs?
Anurag: Saurabh and I left together in Dec ‘06, Jan ‘07. I got released a bit earlier. Sunil and Anurag were still in jobs. We wanted to make sure we had things in place before we quit. They left in April & May 2007.
While we were brainstorming on ideas they had been researching spas for quite a while. In Feb-March 2007 we decided to join hands. By then, they had spent six months researching the project.
What was the need gap in the spa market which you spotted when you started researching the idea?
Sunil: We talked to people and asked them, what do you understand by ‘spa’. Some thought it’s a gym, others thought it’s a salon. Spas are associated with five star hotels and seen as expensive while some think ok, they’re massage parlours.
We saw an opportunity to bring in genuine spa service in a great ambience but
MAKING THINGS HAPPEN
Next stage? How did you raise money?
Sunil: After the concept was in place, we formulated with evidence, tested on 30-40 people and refined the concept. We then pitched for money.
Who gave the money?
Anurag: A quasi VC fund – they have a couple of businesses of their own and will soon become a professional VC fund. But Four Fountains is their first external investment.
You have two spas right now. What next?
Immediately, Bombay, Delhi, Chennai and Bangalore are on the horizon. We’re just waiting for these two to stabilise and processes being completely in place. Then we can move out of Pune and leave these spas to function on their own.
THE NITTY GRITTIES
Why the name Four Fountains?
The four fountains represent the four
faculties – Fountain of youth, tranquility, abundance and joy.
And what’s special about your spa?
Some of the facilities we have are not in 5 stars also. Individual showers in all rooms, all disposable material, 100% natural
products. For facials we use high end
products like Artistry from Amway.
How many customers come to Four Fountains in a week?
100-150 people. The average amount they spend currently is Rs.700 which is higher than we had expected. We have found that when you offer good value, people tend to spend more.
Also there are more men right now than women which is also a surprise. The ratio is 60:40. Most are not regular spa goers – Pune has spas only in 5 stars and catering mainly to foreigners.
We can do 70 therapies a day at each centre. There are ‘happy hours’ between 10 am to 4pm, Mon-Fri.
What have you done to promote the spas?
Above the line and below the line. We have put ads in TOI Pune and also tied up with Lifestyle store, restaurants, multiplexes, gym. We access their database by providing discount offers to their members and users.
And what’s the break even level for each spa?
Cash break-even is 3-6 months, payback is 2.5-3 years.
Do you take a salary for yourselves?
Yes, a modest one but enough to cover
What is it about this business that keeps you excited? How will you keep learning and growing?
We figured out that we will do something which is going to be appreciated by people, so there was that kick. But rationally, there was also this whole thing of getting into the wellness space. We can branch into other things eg salon, health food, spa product retailing – there are many opportunities. We have tied up for example with Jawed Habib and started a salon at one of the spas.
Where do you see the company 3-5 years from now?
Four Fountains will be present in top 20 towns with 100 spas in 5 years. Estimated turnover: Rs 100 crores.
Has being an MBA helped you in being an entrepreneur?
Anurag: Definitely in planning and marketing yes.
Sunil: The job after MBA was a
big learning experience. I was handling the Modern bread channel. On paper, everything is fantastic! When you
go to the store there is chaos. You find the POP you designed looks crap in the shop…
At times you do miss the comforts, like we can’t go to 5 stars etc.
Finally, if you had not gotten funding would you have given up?
If you have something to show, it’s easier to raise money. We would have borrowed money and started one spa… and kept looking for investors!
So when people really, really want to do something they find a way, right?
Anurag: It’s not that big and bad a world out there.
Nahin karne ke liye bahut excuses hote hain. Sabse pehle naukri chhodo, to phir sab kuch ho jaata hai…!.
Wise words those… as they say,
nothing ventured, nothing gained.
What I liked about these guys: They are so matter of fact, ki bhai kisi na kisi tarah karna hi tha. And they aren’t
letting the obstacles along the way bog them down.
They also seem to have a very well thought out expansion strategy.
Lastly, an affordable spa is a big idea but not a new one. It addresses a valid customer need and latent desire.
We need more such ideas and they
are actually all around us, just waiting to be spotted… by would-be
P.S. I have not personally tried the Four Fountains spa but if any of you have, do share your experience!