As Sudeep looked over the mail he was about to shoot off one more time, his sight turned to the results of the UP elections that the news channels had been running all day. The news host was talking about how demonetization had been a great move. He smiled wryly and glanced over his laptop screen once again. He hovered over to the bottom and clicked send. He shut his laptop and called for a cab and we were fortunate enough to talk to him on his long ride back home to the other end of town. It is then that we got talking about his whirlwind tour around the country in the last few months, demonetization and business.
His past few months have been spent moving from one city to another, working on a novel project, rent renegotiation for the retail centers of CARS24. As strange as the project sounds, it has piqued our interest and we get around asking him on how this all got started.
How did you think about this whole project?
Sudeep (smiling): “In fact, it all got started on a cab ride like this way back in November’16. Demonetization was the talk of the town and I happened to share the cab ride with Ruchit and Mehul. With the unsure market scenario, customers were scared to sell and buyers were not easy to come by for used cars.
Mehul suddenly drifted to a separate discussion away from the core business and it was about how he had read about companies like subway and other global brands re-negotiate the rentals of a store location in case the market slows down or if a particular store is not performing as per expectations. This triggered the first thought that we could renegotiate rent for our stores and I set out exploring this”
But this as a project would have few benchmarks in India, how did you go about this?
Sudeep: “To be honest, my first thought was that no landlord would be open to the idea of rent negotiation when there is a signed lease with a stipulated time period. The idea blew me away initially but I held on to the sails and looking back now, 26 stores and millions in saving later, I would say I weathered the storm well.”
The very next day I started working on this new project. It was a challenging task and I wanted to be fully prepared for it since I had not done something like this in my 8 years of work experience. The preparation was the key. I realized that the more prepared I was for a meeting, the more confidently I could negotiate with the landlord. I did the research on how and when the tenants re-negotiate on rentals for a commercial property. “
So, did you just pick up the phone and start working from one deal to another?
Sudeep: “Unfortunately I did, I thought it would take about 2 weeks and a few phone calls to discuss with the landlords over the phone and make them understand the current market situation and what we are capable of offering in the given circumstances.
But I was to be proven wrong, as soon as I spoke to a few landlords over the phone I realized that they were neither entertaining the idea of rent negotiation over the phone nor were they appreciating the present uncertain market situation”
And what was your next step?
Sudeep: I changed my approach and decided to go and meet the landlords personally and explain to them about the current market scenario and the support required from our landlords.
The first store that I re-negotiated rentals for was a store based in Central Delhi. I met the owner/landlord, explained to him the current market condition emphasizing on how the uncertain market scenario had changed business dynamics.”
Oh don’t hold back, we want to know some tricks that would you had up your sleeve
Sudeep: “Looking back now I can now say I had some structure going when doing this job. Listen up, I got some trade secrets to reveal”
Sudeep is proud as he says this and there is a glimmer in his eyes that shines through even in the dark cab as he starts telling us the tricks he had up his sleeve, even the cab driver slows down as he tunes into the conversation.
Sudeep: The most important strategy was to connect with the landlords on a personal level.
I even had a script prepared
“Sir, you are fully aware of the present circumstances created due to demonetization. Just like every other business, demonetization has affected our business as well so I have come to discuss the reworking of rentals. Please understand that I am a professional and I am doing something like this for the first time in my 8 years of business development experience.” As most of our landlords are businessmen themselves, as soon I said this, the Landlords would relate to our situation and say that “Mr. Modi has made it tricky for all the businessmen so we understand your situation”
Both sides of the table had businessmen so we had a lot in common. A general discussion about life for 15-20 minutes helped in sort of forming a fiduciary relationship with the landlords, as a result of which the landlords started relating to me on a personal level. I felt that it was important to let the landlords know that I was not there just to re-negotiate the rent, but also because as a company we valued and cared about them. The idea was to have a chat about some common talking points not related to Cars24 which helped in making the landlords more comfortable and open to discussion”
But surely another factor that Sudeep talks about with much enthusiasm is the brand value of CARS24 and how it helped him to get a foot in the door.
Sudeep carries on: “I asked the landlords, how had their experience been with Cars24 as a tenant. What I found out was that 90% of the landlords were extremely satisfied. Some of the reasons which I could understand are as follows:
- Cars24 is a company and all the landlords prefer to have their tenant as a company vs. an individual.
- Cars24 always makes the rental payment on time i.e on or before 7th of every month.
- Cars24 always makes the payments via RTGS. This fact was important as post demonetization all the landlords were concerned about the fact that whether the new tenant will make the payment in cash/ cheque.
As Sudeep finishes up the point in a trademark consulting bullet style of 3 points, he takes out a black notebook and flashes it to us.
Sudeep: “To all the 40+ stores that I visited, I used to carry this black book and a black pen. As soon as I placed my Back book on the table and opened it, the landlords could see all the notes scribbled in it in black ink, related to the previous discussions with other landlords. This fact gave the landlords a little assurance that they were not the only ones I had been negotiating with. After I had the initial 2-3 breakthroughs of successful renegotiations for bringing the rentals down, it became clear to me that for the landlords, to see that I had actually negotiated with others as well, helped in building the trust factor. I also carried the print out of the list of store locations PAN India and keep it on the table while having the discussion.”
Sudeep firmly believes this transparency and open approach helped him to seal so many negotiations, we tell him that this diary could one day be published as a book on negotiation and he laughs mildly and shrugs his shoulders.
But we still have questions, was there an intrinsic company value that drove him to do all this? Sudeep is quick to answer.
Sudeep: “While the renegotiation discussions with landlord, it was very important to make them understand that our company was not just another start-up. Although our company was backed up by funding, we keep account of each and every penny that is being spent at all levels of the organization.
The primary idea behind this was making the landlords understand that we are building up a company which will be sustainable in the long term. The idea was to show them the longevity of our existence on their properties which would give them peace of mind. As in today’s scenario start-ups, boom and suddenly vanish from the market and the newspapers are replete with such stories.
As a firm, we are fundamentally built on the approach of “Do more with less”
So, did you walk away with a deal on the spot for each negotiation?
Sudeep: Yes, the efforts paid off and after all the discussions, it was time to seal the deal. Instead of making an offer to the landlords and giving them a definite figure, I only mentioned that we were expecting a 30-40% reduction in rentals. Then the landlords would make an offer and after some more negotiations, we agreed on revised rentals. This allowed the landlords to have power in the whole equation, which I believe really helped a lot.
As we hit the final red light on the route and we make a quick turn for his home, Sudeep gets wistful and without us asking breaks into an inspired monologue.
Sudeep: “All I can say is that when I accepted this task, I was not aware of the challenges it will bring and how I would tackle them. Now when I analyze the entire process I can say with certainty that anything can be achieved with preparation, hard work, and perseverance. The most important thing was getting the initial 2-3 breakthroughs which gave me confidence and were critical in keeping the momentum going.
Also, I would like to thank the entire Cars24 team for keeping me motivated throughout this journey. I would like to mention some of the encouraging messages and comments that I received from the co-founder and core pillars of the organization:”
As he gets off, we are left with some great negotiation tips and a profound sense of respect for Sudeep. He mentions as gets off that the journey is not yet over and we hope to meet with greater stories in the future and bid him good luck.