We are all constantly making decisions every second that we are awake. Some of these decisions come to us as second nature: such as eating, drinking water, saying good morning to your loved ones when you wake up and deciding to wear clothes when you go out! There are multiple factors such as social or cultural customs and norms, past experiences, influence of friends and family that form certain cognitive biases based on which knowingly or unknowingly we choose to make decisions that could alter the course of lives. 

Personally through this article, I want to share with you certain business learnings and decisions which saw our companies revenues increase by over 400% in a span of a year but plummeted our profits into the negative territory putting both the company’s & my personal finances in the ICU. 

In the year 2016 one of my trading companies was clocking a revenue of about Rupees three crore ($500,000) yearly, while my core business of waste management was on the upswing and doing well. I decided to focus on aggressively on growing this trading company of mine focusing specifically on purchase & sale of recyclables from bulk generators. I remember my team and I sending out over thirty emails a week to prospective clients for months on end. We had the system send out the first mail on Monday & a follow-up mail on Fridays until such time as the prospective client did not revert or told us to stop harassing them. Receiving negative replies did not stop us, instead we targeted some one else within the same company, restarting the entire process with them again. 

I believed we had an edge of the competition, which like today, consisted of mostly small regional mom & pop scrap dealers. Armed with historical data from our waste management business I believed that we could beat them not only in the quality of service provided, but also with the prices we offered. After about seven months of constantly bombarding companies with emails, we finally got a revert from an e-commerce company with warehouses located in multiple cities, requesting us to share our rates for purchase of recyclables generated in bulk from their warehouses. 

For those of you who are not from the scrap collection & trading Industry, I would like to point out that sector here in India, although unorganised, is highly competitive and price sensitive. With price given priority over quality of service, conditions in which the contractor works, treats their labour, along with little attention paid by the client on what actually happens to their waste post-collection. In short, it’s all about the money both from the client and contractors perspective. 

In September of 2016 we shared our commercials with this e-commerce company. Our commercials were based on past trends of price fluctuations in the cardboard, plastic & metals market. Armed with this data and the picture it had painted for us, I was certain that rates of scrap cardboard, plastic & metals will only be going up in the future and so our offer rates reflected the certainty and confidence I had within me on this. The rates offered by us jolted the market, they were almost rupees four per kg above what the company had been getting on almost every item that we quoted for. Again, there are multiple reasons for lower or extremely high rates being paid to companies, ranging from weight manipulation, corruption within the company, cartels & of course the famous ‘scrap mafia’ that has its tentacles deeply entrenched in this sector. Around a month after signing the contract with this company, we started seeing results of persistently emailing perspective clients that we were targeting. 

Within the span of four months of signing our first contract, we had signed up to start providing recycling services to four of India’s largest e-commerce companies. Our commercials shared with the pack was based again on historical trends and my certainty that rates will only be going up. The magnitude and scale of setting up such operations was mind boggling, so we broke it down into two categories. Cities where client warehouses were generating large amounts of recyclables and cities where the volume was not that large. We had over ten cities in seven different states to cover, so we decided to set up operations run by our company in cities that generated large volumes and sub-contract the work to third party vendors in cities that generated less volumes. It was a maddening task, with team members flying out to different cities, to finding vendors and negotiating with them on rates, getting them to sign contracts, finding warehouses in cities were we would do all the work, negotiating on rent, all the while increasingly pouring in money to build our logistics and pre-processing capacity by buying new trucks, shredders & bailing machines, completely funded by cash generated from our waste management operations and bank debt.

It was now mid 2017, we had set up a new warehouse in Taru (Harayana), Bangalore (Karnataka) and had sub-contractors in six different cities doing the collection of recyclables from our clients sites on our behalf. Our pricing model hypothesis was delivering results as rates of cardboard (the biggest chunk – 80% in weight generated from e-commerce warehouses is cardboard) sky-rocketed to the highest levels ever seen. This left us more than enough margins to enjoy a more than healthy profit, further cementing my certainty in my belief system and in our pricing model. 

We were doing staggering numbers! More than a 1000 tons a month in just cardboard, grossing us over rupees One Crore Sixty Five Lacs in monthly revenues! But like every thing in life – what goes up must come down and I certainly was not mentally prepared for the carnage that was about to be unleashed upon us. Starting 2018 the price of cardboard scrap in India started to steadily decrease slowly eating away our margins. By mid-2018 we were in a no-profit, no-loss situation and by the end of the year we were loosing almost rupees two per kilogram after taking into account the cost of collection, bailing & transportation to the mill. 

Certainty coupled with hope is the enemy of growth. 

You must confront reality. And the reality was that we had started bleeding cash and eating away into our financial reserves at an alarming rate. Yet a false sense of certainty in my own belief system and our pricing model coupled with hope that prices will again start their upwards journey soon shackled my thinking and I refused to confront reality. Initially i convinced myself that rates will eventually go up and we can see this time through, but when it started becoming clear that this may be a long-term trend, certainty and hope turned into fear of confronting the obvious. There was no way that we could sustain these losses and I must take an executive decision to ask the clients to reduce rates in our contract. The question was by how much and based on what metrics, as it was now clear that our pricing model did not capture certain metrics and important developments in the international scrap market that had started to adversely effect the Indian market by the end of the year 2018. 

Starting early 2018, the government of china banned the import of waste into china along with putting severe quality restriction on imported paper and OCC. The effects of this were devastation on the global recycling market as China was the worlds largest importer of paper and plastic waste. With the western countries desperately looking for avenues to get rid of their waste India became a key market for paper, OCC and plastic scarp. By the beginning of 2019 Mills and traders in India were importing thousands of tons of waste OCC into the country at discounted rates, to a point where it costing them less to import waste from abroad than to pay for domestic scrap. This was coupled with the fact that the Indian economy had started to slow down, with demand for automobiles and other discretionary items falling. I knew about the china ban, knew that the increased amounts of OCC coming into the country will subdue domestic rates, yet I did not act by reaching out to some these clients, servicing whom was haemorrhaging us. Even though we had a dynamic pricing model for local scrap dealers from who we bought or who would their recyclables to our warehouse, I was afraid to change the status quo in with these large companies out of fear of loosing business and the prospects of our companies revenues falling drastically. 

By the mid-2019, we had eaten into our cash reserves and were barely supporting operations by funding it through our profitable but stretched waste management activities. I remember sitting down and thinking hard about the decisions I had made and continued to make that led the company to its current financial state. Instead of trying to find doubts in my thinking, I was striving to prove myself to be correct all the time. I had read many come-back stories where the author narrated how path breaking change happened for them when they found themselves in the corner, where the only option was to either perish or change. Reading something and experiencing it are two different things, and while reading those stories were motivating one rarely thinks that it could happen to you. How many of you dream of living through hell due to choices you made only to change and emerge out of the crisis with a new found meaning for life, versus you dreaming of becoming successful, having a big house, a few fancy cars in the garage, vacationing in exotic places with your family and having a bomb shell spouse or partner that you can show-off to the world. We all have a vision of ourselves which is detached from reality in one way or the other and we create stories to ourselves to convince us that our decisions are justified, even though the results are painting a picture that we choose to ignore. 

I had spent 15 years building a business and it was crumbling in front of me. Thoughts of being considered a failure, thoughts of shame, thoughts of what people will say was all running through my mind. Then during a short vacation with my family to the Himalayas, sitting out in the balcony sipping a chilled beer I asked my self a simple question. What do you value and what brings you happiness. I realised that I was valuing the wrong things in life, basing my happiness on what others think of me which was leading me to make decisions based on the opinions of others. I realised that no body gives fuck if Manik Thapar is a success or not, if EcoWise exists or not, or how much revenues it generates, how profitable it is, what car I drive or where I live. The only person really concerned about this was me and my ego, and it was my ego that I was trying to satisfy. It was not bringing me any closer to my goals, more importantly it was making me miserable. So I set our to write on a piece of paper what truly makes me happy and build a set of values around it. 

Call it a epiphany or whatever you may, accepting accountability for the situation you find yourself in and realising that no one but you are responsible for how you react to any situation you may find yourself in is the first step in making your condition better. Being honest with yourself and learning from your own shortcomings and failures so that you don’t repeat the same mistakes but progress to make better and smarter mistakes is a fundamental aspect in the process of make better decisions. For some higher enlightened beings the process may be easier, but my experience reaching the stage of questioning my own belief system was tough and full of avoidance. There is no mastering the art of questioning yourself and your belief system, rather it is a journey with no real end in sight. Problems and the constant need to adapt through the change are the only things that are certain in life. How we choose to react by realising that we are responsible to change our current state so that we keep growing by encountering better problems is completely our responsibility. 

That evening sitting on that porch, I made a decision to take accountability and confront the problem at hand no matter the consequences. In a span of one year we renegotiated many of our contracts and let go of some major clients to move towards a more sensible goal of attaining profitability by delivering transparent and traceable service value. We decided to not compete on price, rather I created a new set of values from myself and my company based on honesty with myself and others, open communication both internally and externally, and an open mind towards constantly striving for change by questioning your own certainty. 

Failure, the ultimate teacher

It’s been an expensive lesson, one that cannot be taught in any Ivy League school or through reading case studies. You have to experience it to accept personal responsibility for it and implement change by questioning your values, so that you may move on to better problems that you actually like solving. Some reading this article may relate and others may say what a fool – I would have changed directions, especially when the picture was so clear, but we each have our own way of dealing with problems, some confront them early others avoid them till they are forced to confront them. It is how we are wired as individuals and what values they hold that determines the decisions they make. In the end I would like to state that failure is not something that you should be afraid of, rather it is your best friend. Failure will never lie to you if you are honest with yourself. Failure is the best schooling you can get, so fail often, learn from your failures, and keep moving forward towards better problems.