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Episode 56 · Consumer · 36 min

Manufacturing the demand, not just the flowers

Itsy Bitsy makes 120 million handmade paper flowers a year out of rural Karnataka, and for the first few years nobody who walked into the Bengaluru store knew what to do with them. The founders' claim is that a category which doesn't exist yet has to be taught before it can be sold — and that exports, not venture capital, buy you the years it takes to teach it.

D2C & commerce Founder journey Manufacturing

Harish and Rashmi

Co-founders, Itsy Bitsy · with Vishal Krishna

36:30

Said in this episode

▶ 18:59

120 million

Handmade flowers made a year

Stated in the intro and confirmed on air by the host — the flagship export product, handmade from recycled cotton paper by rural workers.

▶ 29:00

3,000

Women in rural manufacturing

The manufacturing headcount, alongside about 400 retail staff and a warehouse back end of roughly 120; the intro counts the 3,000 as direct and indirect employment.

▶ 16:22

38 + 2

Stores today

Thirty-eight stores plus two inside Smartworks offices; plans for 100 and then 200 stores were paused during the pandemic to optimise the existing base.

▶ 16:09

13 → 7

Rural factories, then and now

Thirteen or fourteen small centres in poor parts of Karnataka were consolidated into seven larger ones — partly because the original sprawl was unmanageable and unreadable to investors.

▶ 25:56

10,000

SKUs in a store

Seven to eight thousand of them are manufactured in-house and the rest traded in; the intro cites 12,000 products across retail and online, so treat the two figures as different counts.

▶ 33:35

80%

Inventory that turns over

Old stock is washed out to make room for 300-400 new products every fortnight — which is why, the founders say, the 80%-off is a genuine 80% off.

The brief

The argument in sixty seconds

The founders' claim runs against fifteen years of Indian startup orthodoxy: when your category does not exist yet, the scarce resource is time, not capital — and exports buy more of it than a term sheet. They came back from Singapore and Australia in 2004 with two convictions: that rural women needed work they could do with their hands, and that Indian parents hunting school-project supplies had nowhere to shop. So manufacturing came first, because an impressed export customer pays an advance while retail eats capital. It nearly ended there — they sold a house in Melbourne to fund a first buyer who went bankrupt before paying, and a UK customer they still call the saviour rescued the business. Export growth, not investors, paid for the first store in 2007, where on day two nobody came and the few who did assumed the colour-coordinated papers were imported and had no idea what to do with them. So the founders taught: apartment workshops, in-store demos, tutorials. The customers taught back, telling them to drop the bangles and gift ware and be a DIY store. Investors did knock, but thirteen factories scattered through poor parts of Karnataka were illegible to them, and the founders decided the rural ecosystem mattered more than the round. Today: 3,000 women in manufacturing, 38 stores, 10,000 SKUs of which they make seven to eight thousand — with corporatisation, and maybe an IPO, finally on the table.

Worth your time if you are

Founders who intend to never raise venture money

Retail operators building a category from zero

D2C brands that own their own factories

Anyone building rural livelihoods at scale

Episode map

Where the conversation travels

Every block is a chapter, coloured by what it's about. Click any of it to jump straight to that minute on YouTube.

D2C & commerceFounder journeyManufacturingConsumer IndiaVenture capitalProduct strategy

01Cold open: 120 million paper flowers 0:00 Vishal sets the scale before the guests speak — a 2007 Bengaluru shop grown into India's biggest art-and-craft retailer, 12,000 products, close to 40 stores, 3,000 rural women employed and 120 million handmade flowers a year. 02Born in the same hospital, met in 1992 1:19 The couple correct each other on the date, trace a shared National College history back to the early eighties, and insist neither of them is a hands-on artist — the eye for what an artist needs was built by the business, not before it. 03Singapore, Vishwa, and artisans who couldn't market 3:39 Working for a Chinese company in Singapore led them into a Karnataka state handicraft project called Vishwa, where they found artisans with excellent product and no idea what a barcode, an inner-master carton or a display was. 04Australia's everyday-low-price school 5:35 Retail, wholesale and a chocolate factory in Australia — plus a 720-store discount group that never ran discounts because it already priced like Walmart — is where the aggressive-value instinct visible in Itsy Bitsy stores was formed. 05Hands, not machinery 7:07 Back in India in 2004 with two goals — rural women's employment and the Western scrapbooking culture they had seen — they chose handmade flowers from local recycled cotton paper precisely because the work needed skill rather than machines. 06The school project with nowhere to shop 8:37 Stationery shops were the only craft supply in a period when the internet was pulling people away from making things by hand, and Rashmi's store-to-store hunt for her children's school projects exposed the one-stop-shop gap. 07Export first, because retail eats capital 10:08 Exports let an impressed customer pay in advance; retail demanded capital they didn't have — so they sold a house in Melbourne, lost everything when the first buyer went bankrupt, were rescued by a UK customer named Stuart, and funded the store out of third-year export growth. 08A store nobody understood 12:09 Opening day was friends and family and the next day nobody; visitors assumed the colour-coordinated papers were imported and had no clue what to do with them, so the founders started teaching scrapbooking in apartment workshops. 09Thirteen rural factories, zero investors 14:05 Investors knocked repeatedly but could not comprehend a business with thirteen or fourteen factories in poor parts of Karnataka and no corporate team to send in; the model has since been simplified to seven bigger centres, 38 stores and two more inside Smartworks offices. 10The bangle years and the identity crisis 16:38 Seven years of trying to lure customers with kids' bangles, fashion jewellery and gift ware — a bit of Archies, a bit of everything — until customers themselves insisted they were a DIY store that had no business selling finished goods. 11Exports, flowers and the certification treadmill 18:39 Handmade flowers ship by the million to top US retailers who audit and certify the factory, and the founders argue that lead-free rules, FSC, EN and ASTM standards are existential when one buyer's policy change can collapse a workforce overnight. 12Overpriced, then courted by impact funds 20:45 Copying the export markup — sold at 50 cents, retailed abroad at five dollars — made them an overpriced retailer with a heavy handmade back end and no Indian benchmark; later, impact funds came calling and were declined for fear of corporatising a self-established rural ecosystem. 13No pressure to scale; 10,000 SKUs 23:36 Against the unicorn-a-day headlines they claim no growth pressure, only the pressure to sustain a large workforce — 100 and 200-store plans paused to optimise existing stores, and 10,000 SKUs looks small to people who ran 250,000 in Australia. 14Art's revival and the D2C spike 27:12 The become-an-engineer mindset has given way to social-media artists and a pandemic in which doctors, engineers and lawyers all took up craft; resin, macrame and alcohol inks are new categories, and the D2C spike has settled into a stable channel. 15Three thousand women, two shop dogs 29:17 The team breaks into 3,000 rural manufacturing women, 400 retail staff and a 120-person warehouse back end, and the 30-second guide to happiness turns on the social angle, customers' stories, working in colour, the store dogs and a family that plays the what-venture-would-you-start game. 16Why come back: 80% churn, and the two-dollar man 32:30 Their pitch for Itsy Bitsy 3.0 is 300 to 400 new products every fortnight, an 80% inventory churn that makes the 80%-off genuine, demos and tutorials over shelves — closing on The Secret and the Australian discount pioneer they still call their inspiration.

Takeaways

Ideas to carry out of this hour

Exports were the financing strategy, not a side business

Retail is capital intensive and export is not: impress the customer and they pay an advance you use to produce and ship. That asymmetry is why a couple who wanted a store built a factory first, and why the 2007 shop opened only after the third year of export growth threw off surplus to experiment with. The route nearly closed before it opened — they sold a house in Melbourne to fund a first buyer who went bankrupt before paying, and a UK customer they still call the saviour kept the business alive.

▶ 10:51 ▶ 11:09 ▶ 11:39

In a new category, the customers police the identity

For seven years the founders assumed the problem was that nobody understood art and craft, so they stocked bangles, fashion jewellery and gift ware to lure people in and explain the real business — becoming, in their own words, a bit of Archies and a bit of everything, with no identity. The customers refused the drift, telling them every single time that a DIY store has no business selling finished goods. Discovery took a full seven years, which is the founders' warning to anyone who thinks category creation can be financed on a two-year runway.

▶ 16:52 ▶ 17:24 ▶ 18:09

Being socially committed made them uninvestable — and they took the trade

Thirteen or fourteen factories scattered through poor parts of Karnataka were organically illegible to investors, who could not send corporate people in to make sense of the model. Impact funds circled later, but the founders judged that a naturally self-established rural ecosystem would be disturbed by corporatising it. The concession is that scale eventually demands structure: they now run seven bigger centres and say corporatisation, and possibly an IPO, is what they are working on.

▶ 15:07 ▶ 15:39 ▶ 22:52

Demand had to be manufactured before the product could sell

The first store drew friends and family on day one and nobody on day two; the curious who did walk in assumed the colour-coordinated papers were imported and could not name a single use for them. The founders — who knew every rule of scrapbooking from making its components but had never sat down to make one — started running workshops in apartment complexes. That teaching reflex became the business: today it is demos in store, tutorials on social media, and a network of artists and crafters across the country and beyond.

▶ 12:35 ▶ 13:12 ▶ 14:05

A category with no benchmark has to be priced from first principles

Watching international buyers take goods at 50 cents and retail them at five dollars, they assumed the same multiple would work in India — and were promptly branded an overpriced retailer. The second trap was structural: one store carrying the cost of a labour-intensive handmade back end. With no Indian comparable to benchmark against, pricing became years of experimentation rather than a spreadsheet exercise.

▶ 20:45 ▶ 21:02 ▶ 21:17

Certification is existential when one buyer can end you

Supplying top US retailers means audits and vendor certification, and the founders argue the standards treadmill is not compliance overhead but survival: if the biggest customer announces it will buy only lead-free products tomorrow and you are not ready, the whole setup collapses. EN and ASTM standards are already in place across what they manufacture and FSC is next. With 3,000 people dependent on the factories, they say, unprepared processes come back to bite you.

▶ 19:30 ▶ 19:59 ▶ 20:30

The craft buyer is not the child

The intuitive customer is a six-to-twelve-year-old, and that cohort is well represented — but the biggest basket belongs to 30-to-40-year-olds, partly because the billing carries the parent's name and partly because adults have rediscovered making things. The founders read a genuine cultural shift behind it: parents who once said become an engineer now watch artists grow on social media, and a pandemic in which doctors, engineers and lawyers all took up craft. Resin, macrame and alcohol inks are the categories that grew out of it.

▶ 26:40 ▶ 26:57 ▶ 27:42

Freshness is the retail engine, and the discount is real

A customer returning after two weeks will find another 300 to 400 new products, because roughly 80% of the inventory turns over. That churn is also why the 80%-off rack is genuine rather than theatre — old stock is washed out to make room, not marked up first. Combined with in-store demos and tutorials, it turns a supplies shop into a reason to come back, which is what a category-defining retailer needs when its products have no fixed replenishment cycle.

▶ 33:18 ▶ 33:35 ▶ 33:51

The numbers, drawn

What the episode measures

Every figure below was said on air — timestamps included, caveats kept.

Conversation share

portion of the hour spent on each theme

D2C & commerce21%

Founder journey17%

Manufacturing14%

Consumer India13%

Venture capital11%

Product strategy10%

Computed from the chapter map of this episode.

Who makes the 10,000 SKUs

SKUs

Manufactured in-house75%

Traded in25%

As stated in conversation: of roughly 10,000 SKUs, 'maybe seven or eight thousand are all manufactured by us' and the rest are traded — the midpoint is plotted. The episode intro separately cites 12,000 products across retail and online.▶ 25:56

Where Itsy Bitsy's people work

people

Headcounts as stated on air; the head-office figure given alongside them is garbled in the auto-captions and is left out.▶ 29:00

Worth keeping

Lines that stay

Because we started factories in rural areas, our business organically became a very complicated business for an investor.

— Itsy Bitsy's founders ▶ 15:07

These customers reminded us every single time — you are a DIY store, don't sell finished goods. They kept bringing us back into art and craft.

— Itsy Bitsy's founders ▶ 17:24

There is no pressure to grow here. Although we have to sustain — that is probably the huge pressure, being a large workforce. We are growing at our own pace.

— Rashmi ▶ 24:10

Every single time we walk into a store, people tell us their experiences — the health benefits they've had, or the kind of happiness it has given them. That gives us huge happiness.

— Rashmi ▶ 29:46

I've always liked a life full of action. I don't like any dull moment in my life — that gives me a lot of happiness.

— Harish ▶ 30:59

Clips that travel

Short on time? Start here

Bootstrappers deciding what to fund first

The buyer who went bankrupt, and the one who saved them

The financing logic of the whole company — advances from exports versus capital-hungry retail — told through a sold Melbourne house and a UK customer they still call the saviour.

10:08 → 12:41 · 3 min ▶ Watch clip

Founders creating a category from zero

A store nobody understood

Day two with no customers, visitors who thought the papers were imported, and the apartment workshops that turned teaching into the go-to-market.

12:41 → 14:38 · 2 min ▶ Watch clip

Founders who intend to never raise venture money

Why the investors never made sense

Thirteen rural factories that no investor could comprehend, the choice to stay unfunded, and what the model looks like after simplification.

14:52 → 16:38 · 2 min ▶ Watch clip

Retail operators fighting an identity crisis

The bangle years

Seven years of stocking the wrong things to lure customers in — and the customers who refused to let the store be anything but a DIY store.

16:38 → 18:39 · 2 min ▶ Watch clip

Anyone building a reason for repeat footfall

Why you should come back to the store

The freshness engine — 300-400 new products a fortnight, 80% inventory churn, demos and tutorials — plus the customer stories that explain what the brand actually sells.

32:30 → 34:38 · 2 min ▶ Watch clip

Glossary

The jargon, unpacked

DIY / do-it-yourself

The Western hobby culture of making things yourself from supplies rather than buying finished goods — the category Itsy Bitsy imported and had to teach India.

Scrapbooking

Building decorated photo-and-memory albums from papers, embellishments and handmade flowers; the export use case that Itsy Bitsy's factories were originally built to supply.

SKU

Stock keeping unit — one distinct sellable item. Itsy Bitsy carries about 10,000 per store, of which seven to eight thousand are its own manufacture.

Everyday low price

The Walmart-style discipline of pricing low all the time instead of running discount events — the doctrine the founders absorbed at a 720-store Australian discount group.

FSC certification

Forest Stewardship Council certification that paper and wood come from responsibly managed forests; the next standard Itsy Bitsy is preparing for at its buyers' insistence.

EN / ASTM standards

European and American product-safety standards — including lead-free requirements — that export buyers audit against before certifying a vendor's factory.

Impact fund

An investor that underwrites social outcomes alongside financial returns; several approached Itsy Bitsy about its rural manufacturing base and were turned down.

Connections

If this resonated, go here next

EP 168 · Consumer

Full transcript

The whole conversation, searchable

Auto-generated captions, lightly cleaned. Click a timestamp to open that moment on YouTube.