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Dulith Herath, Founder Of Kapruka.com Reveals How He Became Successful

Dulith Herath, Founder of Kapruka.com reveals how he became successful

Kapruka.com is the pioneer in Sri Lankan ecommerce. They are by far the largest when it comes to ecommerce in Sri Lanka. Kapruka was started in 2003 and their revenue is Rs. 1.2 billion annually. They have 16000 products listed online and they fulfill around 700 – 900 orders a day. That is without the sale of Kapruka Global Shop.

Kapruka Global Shop is another innovative initiative of Kapruka. They connect Sri Lankans with US giants like Amazon.com, eBay, Walmart, Best Buy and many others. If you want to buy something from any international website, they can do it for you. They only charge a 5% commission for their service. Kapruka Global shop is now getting close to half a billion rupees in revenue.

But the biggest problem when it comes to Sri Lankan ecommerce is delivery. Who does Kapruka delivery? That’s when Grasshoppers come into the picture. Grasshoppers is Kapruka.com’s unique delivery fulfillment arm with the promise of offering the cheapest and the quickest service in door-to-door delivery in Sri Lanka.

It doesn’t end there. Kapruka has received so many awards like Sri Lanka’s Best Ecommerce Application (ICTA), 2015 Online Brand of the Year (SLIM Brand Excellence), and the list goes on.

So who is behind Kapruka? He is a person who works 18 hours a day, coding while the rest of the world is sleeping. He has become the 2013 Asia Pacific Young Entrepreneur of the Year, and Entrepreneur of the Year at Sri Lankan Entrepreneur Awards. The man behind Kapruka.com is (drumroll please)…Dulith Herath. He revealed his best hacks and tips for success with Jump.lk. Grab a cup of coffee (because Dulith is a huge coffee fan) and start reading to learn how he created Kapruka.com.

What gives Kapruka that “edge” over other ecommerce sites?

I think there are few key elements. First is, we do our own delivery.  100% fulfillment is done by us.  Second is that every item is sourced directly by us and we own the inventory. We are not a market place. We own our inventory. We have two 40 feet containers coming every month. We have our own flower gardens and we bake our own cakes. Kapruka has backwardly integrated everything. The 16000 items that you see on Kapruka.com is available in our warehouse. That’s why the experience is so great when you order something from Kapruka. This is not to be seen in other Sri Lankan ecommerce sites. Because of that, their margins are lower than 10% and once the delivery is done, most of them are left with very limited profits.

Kapruka has been growing organically since the beginning. The secret behind Kapruka’s financial success lies in our net profit. Normally net profit in ecommerce is close to 5% but when it comes to Kapruka, it’s a staggering 36%! That’s the reason behind all the awards Kapruka has received. While non-of the Sri Lankan ecommerce sites have a single award, Kapruka is filled with so many. That’s because most ecommerce sites have topline; but when it comes to profit, most of them are struggling.

We don’t sell anything that doesn’t fit our high profit margin concept. That’s why you don’t get laptops, TVs or mobile phones in Kapruka. These are lower margin items and they outdate soon. So we don’t sell them.

How would a typical day look like in Dulith’s shoes?

I work 18 hours per day. I’ve been like that since childhood. I normally wake up around 8.30 but sleep at 3.30 a.m. past. Today is a marathon. I have 24 things in my to-do list. First thing I do in the morning is write down the things that I have to do during the day. I finish the list when I run out of space. Then I do the Eisenhower matrix. This is President Eisenhower’s famous way of prioritizing. This immediately reduces my stress.

eisenhower-box

For an example my wife has written cherry blossoms in her hand writing in the “Do now” box because she wants to go see the cherry blossoms in Japan next week. She has also added an exclamation mark!

Mondays, Wednesdays and Fridays, I work till 3.00 a.m. in the morning. Tuesdays and Thursdays my wife makes me go to bed at least around 10.30 p.m.

I’m a huge coffee person. Actually we have the Starbucks franchise, known as the Java lounge. I’m not a huge addict but I have about 3 cups a day.

Isn’t it bad for your health? What do you do for your health?

I guess, but I think it depends on the person. Some people need 6 hours of sleep and some need 8 hours. From childhood it’s been like that for me. I haven’t had any bad effect from it.

Usually my exercise is swimming. I can swim 2 miles easily in the sea. I don’t workout extensively but I monitor the little that I do, but it’s not enough and I think I should do more. It’s just that I love what I do so much that I forget to workout.

Do you have any meditation practices?

Coding is my meditation. I still code. What do you think I do till 3.00 a.m. in the night? While rest of the world is sleeping, I stay up and code. Even last night I’ve been coding. There are lot of tools involved in Kapruka fulfillment platform. About 50% of that complex system is written with these hands. We have 250 people working here and only 3 in the IT department. They directly work with me and the whole development of Grasshoppers to Kapruka Global shop to all these tools have been coded by myself. I code the core and I hand it over to others. New features are added by them but generally core is written always by me.

How do you manage your time to do all these things? Productivity hacks? Apps you use?

I just use Google Keep. Look I’m a tools fanatic. I love tools. But I ended up coming back to pen and paper on the daily list. Sometimes you have that satisfaction when you strike off your daily tasks. Pen and paper is the best tool for productivity. Also I use X mind, a mind mapping tool that helps extensively for all my meetings and pretty much every little thing I do.

What is your favorite aspect of being an entrepreneur?

There are different types of entrepreneurs. There are businessmen and there are even social entrepreneurs. I’m an inventive entrepreneur. My satisfaction is innovation. It’s not about making money at all. I’m really bad at finance and that’s why you have teams to help you to do all that. Now Kapruka Global Shop is an invention. Grasshoppers is an invention. I get satisfaction out of inventing something. Then I hand it to my team and ask them to make some money!

Can you name 3 must have skills for Sri Lankan entrepreneurs?

Love your idea

Most important thing is that you need to really be in love with your idea. When you fall in love with a girl, what happens? You go to sleep thinking about her. You wake up in the morning thinking about her. Throughout the day you’re day dreaming about her. That’s when you’re really in love right? Same thing applies for your business idea. That’s when you really start believing in your idea. You dream about it. You wake up for it. You sleep thinking about it. That is a very good trait I see in an entrepreneur. If somebody is pitching an idea to me, I try to see if he is in love with the idea or is he struggling with the idea. I try to understand how pretty that idea is in his head.

Giving up

Second thing is you have to have the guts to give up. I don’t believe in the “never give up” concept. If you remove the school time and older years, you only have about 20 years of productive life. You don’t have time to waste on an idea that doesn’t work. If you realize that your idea isn’t working, you need to give up. If you have about 100 years you could follow the “never give up” theory but I think you should have the courage to give up and change directions.

Taking care of your team

Any entrepreneur can have the best idea and all the money in the world but if he doesn’t know how to take care of a team he is gonna fail. See, you can’t buy a manager and give him the idea and tell him to run it right? You need to know how to care for them, how to regard them. You have to understand human psychology. As an entrepreneur, if you really suck at human psychology and if you’re a real stuck-up guy, you will not succeed.

There is a Ying yang. There’s always the positive side and negative side of people. Imagine a guy who is good at selling but he never comes on time to work. So the typical scenario is you will get annoyed with the guy and you will kill his confidence. But if you can figure out a way to make him work extra hours in a different way and complement his real skill of selling, you may be able to save that guy and make a gem out of him. There are so many unpolished gems we lose because we are picky on the little defects they have.

What was the biggest fear you had when launching Kapruka?

With Kapruka the timing was really good. I rushed to the market really early. So there were no competitors. Because of that the risk was very low. I could change directions multiple times. I think the timing worked in my favor.

Then again, if you talk about Grasshoppers, timing is not good. There are so many competitors in the market. In that case, we need to counter those worries right at the beginning. Kapruka had no business plan in the beginning! Started with the vision to become the ecommerce giant in Sri Lanka and we went for it. In Grasshoppers, we have mapped 2 and half years almost at a weekly level. If we’re diverting or something is not working, we know immediately.

dulith herath

How important was your formal education in becoming an entrepreneur?

For me it was very important. See, we get many talking about all these entrepreneurs who have become millionaires by not going to school. But nobody talks about the failures of those who didn’t go to school. You never hear about them. They are out there doing some laborer jobs. But you talk about 2 or 3 “Mudalalis” who made it.

I believe that you must get your education right. Then go and work somewhere, get some real corporate experience and while working, focus on your idea. You kind of have to transition from corporate to entrepreneurship. There’s only 1 or 2 Mark Zuckerburg’s. How many people fail that path?

Think about it. Will you tell your kids not to take an education? You’re gonna make them go to school. Then why can’t you do it yourself?

What were your biggest mistakes, or biggest wastes of time/money?

The most important thing for entrepreneurs is when they are starting out is to do a proper pilot. If you don’t do pilots and start on things, you will learn it the expensive way. One was the Kapruka Global Shop. I rushed to the market without a pilot. Right at the beginning, we lost about Rs. 50-100 million. In the first two years we lost huge shipments, duty calculation was wrong, there were thefts in the warehouses.

But for Grasshoppers for last 7 months, we’ve been doing nothing but pilot testing. We learnt so much from the pilot.

If a person with a 9-5 job wants to start their own business, what is the best advice you can give them?

There’s no one-line answer but you can look at it this way. Your employer wants you to work 200% right? But I think you can get away with 80%. Because most of the people work only 50%. Do 80% for your employer because in the back of your mind you’re in love with your idea. Use that 20% plus extra 100% that your employer expects from you. Use that extra time to work on your idea. You can do a pilot while you’re working. Get some traction on it and slowly convert to fulltime entrepreneur. There are so many entrepreneurs who have started their business while working somewhere.

What is the toughest decision you had to make in your life? How do you feel about it now?

I’m very comfortable in what I do. Kapruka, I grew it organically. 100% of Kapruka belongs to me. No investors, no shareholders, no board, nothing.

But when it comes to Grasshoppers, I wanted to grow it at a staggering speed. I had to decide about getting an investor to come in. That was one of the toughest decisions. So I made that decision and there is an investor. It’s almost like getting married because once you get an investor in, he sits on your board and everything is different. If you considered other ecommerce sites in Sri Lanka, all of them are powered by investors. In a space like that, there’s so much red tape. That can very well kill the company. Entrepreneurship gets crashed. It was a tough decision.

Who did you want to become when you grow up?

I never looked up to anybody from the beginning. All I did was collect bits and pieces from everywhere. But from childhood, my passion was robotics. I was really into electronics and it led me to computers and then I found computers better than electronics. Actually I went to do my degree in robotics to US; then I switched to software engineering and now I’m into ecommerce. But I still code. I love it. That is my meditation. I need at least 2 to 3 hours of coding every day.

What is the best investment you have made so far?

I think the best investment I have done so far is Kapruka Global Shop. It’s very unique and at any given point we have about $100,000 worth of items flying into the country. Up to now it’s been 3 years and nobody had even tried to copy it. Because the model is so strong. My margin is 5%. If somebody wants to compete with it, it’s very difficult. That’s why I never made it 10%. Then somebody would have done it for 9%. If you make it 5% somebody had to be very personal with you to compete with you!

Can you give 3 tips to manage your employees?

Genuinely care for them

You have to genuinely care for them as if you would care for your children or family. No expectations from them. I believe that you can’t really train a skill like that. You can’t just tell from tomorrow onwards, you have to care for this guy. It has to come naturally.

Ayya, Malli culture

Using the traditional Sri Lankan way of connecting with people. I always call Ayya, Nangi, Akka Malli to my people.  That removes my ego. When you have absolutely no ego, it’s very easy. That’s the culture I have created here. That’s part of giving up your ego right? There is always a gulp and you have to remove that gulp by letting go of your ego.

Give them a chance

Allow them to fail and make mistakes. I have people here who have stolen from me. Stolen multiple times. You should try and forgive them. There are times that it might not work out but majority of the time I have had good luck.

Take care of your exes!

There’s also a fourth one which is really taking care of your ex-employees. I do that a lot. Every year we send them birthday cakes and calendars. They have helped us even if they have worked one day at Kapruka. True that they got paid but their skills came into the company. I’m here because of so many ex-employees who helped me to get here. I get great satisfaction by connecting with them.

What’s the potential for Sri Lankan ecommerce? Any trends that you see?

I see that there is a 100% growth almost year-on-year. It’s growing like crazy. That’s why I’m building Grasshoppers because I want to get others to do ecommerce. Grasshoppers is a delivery company. We are delivering for mydeal.lk, ikman.lk, and for daraz.lk. They are my competitors but we are delivering for them. The ecommerce industry is mushrooming and the biggest problem is delivery. I’m not talking about delivering to Rajagiriya or Dehiwala. What about Puttalam and Anuradhapura? Grasshoppers is all about island wide delivery.

Imagine a Sri Lankan teenager who is just out of university wants to become an entrepreneur. What’s the best actionable advice you can give?

First find an idea. Then get some seed money from parents or family and run a pilot. Run a small scale pilot and try to get at least 2 or 3 orders per week. Then go to an investor and negotiate to get an investment. With that investment, start accelerating your project. Go to an investor only if your family can’t give you money or you can’t finance it through a bank.

Don’t go naked to an investor and put it on PowerPoint and say look, I want to do this and that. Show them that you’ve already tried and it has worked. That places you in a much higher valuation than just going with the idea. Go with little bit of data. That really differentiates you from others who are pitching. Otherwise the validation also has to be done with the cost of the investor.

What are some of your favorite books? Movies?

I read about philosophy. There is this thing about disconnection right? You need to be able to give up things and when I’m 70 years and when you’re 70 years our bank accounts doesn’t matter anymore. We are not taking them with us. So it’s about leaving your legacy behind. Steve Jobs is dead but we all talk about Apple. That’s because he left a legacy. Mine is about leaving a good legacy.

Also I’m a huge fan of quantum physics and quantum computing.

How can someone reach Dulith Herath?

LinkedIn is the best option.

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