Companies you didn't know were bootstrapped—part 1: the FMCG giant

• The world's highest-selling___
• The world's largest manufacturer of___
• The country's biggest___

For an article about Indian companies that have always said no to investors, you'll find that this series has some surprising heavyweights.

But before we reveal who they are, let's talk about bootstrapping. The term refers to the process of using one's own capital to grow a business. Bootstrapped businesses are becoming increasingly rare among large enterprises today and occupy less space in the public's collective consciousness than ever before. In previous decades, it was listed companies that tended to overshadow their bootstrapped peers in terms of media coverage. In today's landscape, most business journalism (and social media dialogue for that matter) is concerned with reporting on superlative valuations and funding rounds.

Over the last decade, we saw the unprecedented rise of tech startups and the escalation of the venture capital arms race. Then and now, companies that have paved their own thorny path to the top are often left out of the conversation as a result.

However, at Zoho, as a bootstrapped company ourselves, we believe that there are a lot of lessons to be learned from such organizations. In this blog, let's take a look at some familiar names that are entirely bootstrapped. Let's start off with...

The FMCG giant

Origins

It's strange to think that one of India's most successful FMCG brands would have never existed if its founder had continued to live as a sadhu in Varanasi. Luckily for us, he decided to leave his spiritual path to return to his entrepreneurial one—and because of that, today we have Hide & Seek, Parle-G, Monaco, Mango Bite, and so many more delicious treats that we have fond memories of and still enjoy today.

For Mohanlal Dayal Chauhan, Parle was not his first venture. In the early 1900s, he had moved from Gujarat to Mumbai (it was Bombay then) at the age of 18 to learn the trade of tailoring. He set up his own tailoring business in the city but it was not without its hiccups. Only a year later, he left everything behind and went to Varanasi to live as a sadhu. As the days passed, however, he realized he did not like asking for alms very much. He decided to return and helm a business once again.

Born in a cattle shed

Over the years, Mohanlal's five sons joined him in his venture. As the tailoring business grew, it required frequent visits from the family to England for buying cloth. As someone inspired by the Swadeshi movement, Mohanlal did not like that they had to rely on foreign silks. But traveling abroad for business would become a habit that would serve the Chauhans well in laying the foundation for their future empire.

In the first half of the 1900s, British confectionery brands sold large volumes in India. Combining the Swadeshi spirit with an eye for opportunity, the Chauhans felt they could establish an Indian alternative to these foreign brands and carve a chunk of the market for themselves. Narottam Chauhan, Mohanlal's son, travelled to Germany to learn the process of manufacturing boiled sweets and to purchase the machinery required to produce them. Unable to afford engineers, the sons set up the entire factory themselves in the family's cattle shed. Thus, in 1929, their first confectionery factory was born, its name derived from the area it was located in—Vile Parle.

A decade later, the Chauhans decided to manufacture biscuits, since most of the products available at the time were imported, British-made, and consumed by upper-class Indians. The family wanted to create a biscuit that the common man could afford. One of the sons went to London to study the process and later came back with another shipload of equipment and machinery.

This led to the genesis of Parle-G (then named Gluco). Monaco, another Indian pantry staple, rolled out of the one-oven factory six months later. Gluco didn't start out as a success though. In fact, Indian consumers of biscuits at the time preferred British brands. Let's not forget that the other big biscuit brand in India—founded in 1892—is literally called Britannia. What turned the tide for Parle, interestingly, was the Second World War. It not only created demand for biscuits from the army, but also dried up the supply of British brands in India. This vacuum allowed Parle and Parle-G to flourish.

Same but different

Today, it's perhaps difficult to think of a brand more "Indian" than Parle-G, which in 2001, became the most sold biscuit in the world. Even as many generations have come to find joy in this product, the Parle-G girl stays forever young on its iconic packaging, which has remained unchanged, in large part, since the 60s.

However, the history of this biscuit also holds a lesson in brand differentiation. When copycat brands started appearing years later with "Glucose" or "Gluco" in the name, Parle shortened the name Gluco to "G" and became Parle-G. This helped in setting itself apart from its competitors, cutting off the slipstream of brand-name similarity that competitors could have leveraged.

Cultivating relationships

Part of the company's success can be attributed to its philosophy towards business and its relationships. This philosophy can be seen in action in its 2021 dispute with Udaan, a B2B ecommerce marketplace. The startup's objective was to disrupt the existing supply chain paradigm, procuring goods directly from manufacturers, and cutting out middlemen. Udaan requested Parle to supply their products directly to the platform, but they refused.

FMCG dealership networks are the result of decades of effort, and there were tens of thousands of exclusive distributors and entrepreneurs whose livelihoods were dependent on the current system. It would also not result in lower prices for end customers and, in the long run, might make the company dependent on Udaan. Udaan proceeded to file an antitrust case against Parle, claiming that they were abusing their position as the dominant player in the market.

On one side was a nearly century-old homegrown business, and on the other was a young startup with a valuation of $3.1 billion. The former had built itself up on self-accrued revenue over several decades, while the latter's VC-funded model involved racking up giant losses and debt for years before ever seeing a profit. Parle stated in its defence that Udaan's lawsuit was an attempt "to interfere with the independence of Parle" and that it "desires distributors who are capable of surviving in the long run.” Parle added that Udaan's strategy was "based on accumulating massive debts through raising funds from venture capitalists and other markets and, as per publicly available information, it is a massive loss-making enterprise year-on-year." In 2022, Parle won the case.

Catering to the world's tastes

Over the years, Parle has diversified its portfolio into a wide variety of brands across categories, and also expanded its geographical footprint, selling in 40 countries and manufacturing in seven. At home, what has remained constant, however, is its focus not only on India, but Bharat. Its carefully cultivated dealership network penetrates deep into rural India. This focus has helped make Parle-G the tea-time companion for millions of Indians across economic and geographic divides.

You've read about the world's highest-selling biscuit and the bootstrapped company that makes them. In the next part of this series, we'll discuss another bootstrapped business—they're the world's largest manufacturer of an item we've all used at some point.