Recode makeup brand left the sharks wide-eyed and utterly shocked at their amazing entrepreneurial skills, unbelievable profit margins, and business scaling in a short span of time. The two co-founders represented the typical Indian mentality of ‘Jugaad’ and captured the Indian market with the perfect business model. Recode is an economical makeup brand that resells international premium makeup products at low prices after offering an educational class and food at a 5-star hotel property.
This business model of attracting young college girls to learn makeup while enjoying delicious food, helped them succeed tremendously. This method of scaling a business in India left the sharks surprised and shocked. Although none of them agreed to crack a deal, let us see what is Recode all about and how did the pitch go.
About Recode Studio
Recode Studios is a high-end cosmetics line with an emphasis on value. Although Recode does not produce its own goods, it imports them from China, Germany, and Thailand and conducts internal quality controls. We purchase materials for private labeling from Parwanoo, Sonipat, and Mumbai. Ingredients used by the manufacturers are sourced from France, Japan, Taiwan, and Italy.
With 5–6 SKUs, including eyeliner, kajal, nail paint, liquid lipstick, and bullet lipsticks, they conducted market research to launch their business. They began selling their cosmetics at Re 1 during the Pandemic, which enabled them to receive significant customer feedback. More than 55 brands now have beauty product lines available on the platform, including Ofra, Power Gummies, Riyo Herbs, Colorbar, Wow Skinscience, and Shopparel.
They provide a carefully curated selection of the most reputable brands in the makeup, skin care, hair care, bath and body, grooming appliances, personal care, and health and wellness categories, all of which are 100% authentic.
Pitch
The founders made a pitch of 1 crore at 1% equity at the valuation of 100 crores.
Founders
Rahul Sachdeva is a native of Panchkula City and is 36 years old. 35-year-old Dheeraj Bansal is a native of Ludhiana. They are Recode Studios’ creators. Rahul previously worked in an unorganized sector of this industry. He went to school there, where he also produced the best cosmetics and distributed them throughout five states. Dhiraj, on the other hand, had a business relationship with Rahul’s brother-in-law since 1998 and had previously sold bicycle parts.
Revenue
Last year, they earned a 70 lakh profit. The projected sales are 30 crores for FY 2022 to FY 2023. They made 15 crores in sales during the fiscal year 2021–2022. They have already closed 11.5 crores worth of sales this year. They mentioned having about 2,36000 followers on Instagram as well as the fact that sugar cosmetics follows them. They generate 50% of their total revenue from direct-to-consumer transactions. In the market, they hold a 25% share. In 2018, there were between 5 and 7 SKUs, which is why they started the marketplace, according to them. As the recession set in, they were forced to sell the goods at a loss and chose to do so in flat sales for 1 rupee. the public then tried their product, and later their demands skyrocketed.
Business Scale
With their one crore rupees in savings, they launched this cosmetics company. The brand is currently bootstrapped, and to raise money, they participated in Season 2 of Shark Tank India. Given that the company has a 50% customer retention rate, makes 40% of its revenue online, and makes the remaining 60% from offline stores, they are confident enough to grow the business.
Check out Recode Studios’ Income Chart:
Rs 25 Lakh – 2018-2019
Rs 2 Cr – 2019 -2020
Rs 5 Cr – 2020-2021
Rs 15 Cr – 2021-2022
Aiming Rs 30 Cr – 2022-2023
Discussion with Sharks
After listening to their pitch and the way they scaled their business, shark Namita Thapar said that she was quite impressed. But, she chose to exit the deal saying that she never invests in a company that is her friend’s competitor (she was referring to Sugar Cosmetics Brand Owner Vineeta Singh, co-shark at the show). This decision and logic of hers received quite a backlash from Shark Tank Viewers on social media. Many people did not agree with this logic saying that it is unfair for people in the same businesses as the other sharks.
Next, shark Aman Gupta also exited the pitch for the same reason. He recalled his decision to crack the deal with Hammer brand in season 1 of Shark Tank, as a result of which he made his friends (other sharks) quite unhappy. Again, this decision of his did not go very well with Shark Tank followers.
Shark Peyush Bansal refused to agree with this reason of exiting the pitch. He refused to pitch in because he felt that the co-founders were already doing very well and that he will not be able to add any more value to the business. He also mentioned that he has learned a lot from their business model, especially the free lunch strategy.
Shark Vineeta Singh said that she was impressed with their products and their business scaling sense. She loved the idea of educating the target audience about makeup and the method of application. She exited the pitch saying that she does not feel that this business can scale to a height of 200 to 300 crores. She said that since she is already in the makeup business, she is not willing to pitch in.
Shark Anupam Mittal praised them saying that they are the future entrepreneurs of new-age India. He said that although he loved the business and its strategy, he felt that he will never be able to reach their target valuation. Another major reason why he felt that he wants to exit is chemistry. He was not too keen on their funda of cracking a business idea in just 2 hours without much detailing or discussions. He did not gel with quick business decisions and therefore he wanted to exit.
All the sharks loved their business sense, especially their idea of running a flash sale of Rs. 1 and then scaling their business to such heights. Shark Peyush Bansal specially mentioned that he was impressed with their business model of educating the customers and offering a free lunch at the venue.
Final Offer
The co-founders were not able to crack any deal with the sharks.
Final Thoughts
The way the Recode brand has scaled its business through clever strategy and ‘jugaad’ is amazing! This kind of business sense runs in many small-town dwellers of India, waiting to get a chance to reach out to a wider audience. Social media has immensely helped small-town entrepreneurs to grow successfully in India and Recode is an example of this methodology. Although they could not crack a deal with the sharks, we feel that they do not need any mentorship or funding as they are doing amazing already!
