Gazi Raffan is the founder and CEO of BanglaMeds, a fully owned subsidiary of Chaldal. Founded in 2017, BanglaMeds is one of the earliest players in the vertical. In 2021, Chaldal acquired the company in a cash and stock deal. Mr. Raffan joined Chaldal as the CEO of BanglaMeds after the deal. BanglaMeds continues to operate as a fully-owned independent subsidiary of Chaldal.
In this final installment of our interview with Mr. Raffan, we talk about his path to entrepreneurship, the trials, and tribulations of early-stage founders, the origin of BanglaMeds, what were the early days of the company like, strategies and tactics that worked, the secrets of online pharmacy business, psychological challenges of entrepreneurship, lessons from his journey so far, and much more.
This is the final part of the interview, you can read part one here.
Ruhul: I want to learn more about you and your journey. Can you please tell us about your background and your path to entrepreneurship?
Gazi Raffan: My journey to entrepreneurship started back in 2008. I had just finished high school and got super interested in business. I started with several small businesses including investing in the stock market, getting involved in trading activities, etc. I did various things and tried many businesses. Most of them failed. I founded my first company in 2012 which did not survive.
Fast forward to 2014, I started a digital marketing agency called Quintos Business Solutions. While working on that I got introduced to the world of tech startups. I got fascinated with tech and wanted to do something in the sector.
The idea of BanglaMeds first crossed my mind in 2015. I noticed a gap in the healthcare industry, that people living outside the capital face difficulties in getting authentic drugs. That was the origin of the idea of launching a platform where people could order authentic medicine online and get them delivered to their doorsteps anywhere in the country.
Around this time in 2015, I came across an online pharmacy company in India. It was a quite successful company at the time and raised quite a bit of money. That also inspired me to do something similar in Bangladesh.
I spent the entire 2016 doing background research. I built the backbone of the company throughout 2017 and launched BanglaMed in December 2017. We delivered our first order on 16 December 2017.
We did not have an online pharmacy license at the time. Getting an online pharmacy license is a stringent process. We got our official license on 1 January 2018.
The first company I founded went out of business in no time. BanglaMeds is my 10th attempt at building a company.
Gazi Raffan: I completed both my O level and A level from Scholastica in 2006 and 2008, respectively. Then I did a BSc in Economics from the North-South University with a second major in Finance and Accounting. I graduated in 2013. I later did an MBA in Finance from Dhaka University in 2016. I had almost completed my MBA when I started working on BanglaMeds.
Ruhul: You mentioned that you spent almost a year studying the online medicine delivery market. What was your approach to the research? Afterward, how did you put together the initial investment and other resources to get started?
Gazi Raffan: I believe that to start a business you do not need capital, but a lot of willpower and courage to begin.
When I finally decided to pursue BanglaMeds, I just had the idea. I did not have a product or a prototype. I called up some of my friends and shared the idea with them. I told them I want to start an online medicine delivery company and would you be interested in supporting me? My friends have always been supportive. They encouraged me and some of them agreed to invest. So the initial capital came from friends and family. I also invested from my pocket.
To understand the market and the dynamics of the industry I did extensive research, mostly online. I studied anything and everything related to the online pharmacy. I downloaded annual reports of publicly listed Pharmaceutical companies in Bangladesh. If you want to understand an industry, study the annual reports of the public companies in that industry. These reports are treasure troves.
Reading the annual reports of the pharmaceutical companies gave me a basic idea of the market. I tried to get a grasp of the market size, opportunities for scalability, and other relevant aspects. I found out that this is a fascinating industry and offers an incredible opportunity.
I hired a CTO and got to work. I put BDT 500,000 from my pocket and took money from a few friends and family. That was it in terms of investment. We never raised any meaningful external capital.
Ruhul: What is the regulatory process for starting an online pharmacy? You also mentioned that the process is quite stringent, why is that?
Gazi Raffan: Let me give you an example with a regular pharmacy. To get a regular pharmacy license you need to meet several conditions:
1. You must have a space of at least 300-500 sq ft with a good ventilation system.
2. The temperature should be regulated with an air-conditioning system and you need a refrigerator to store medicines that need to be kept at a low temperature.
3. The procurement and sales of the medicines should be conducted by an A-grade pharmacist. An A-grade pharmacist is a person who has completed a 6-year undergraduate degree in Pharmacy and is registered with the Pharmacy Council of Bangladesh. Every single model pharmacy has to have an A-grade pharmacist.
4. Finally you need a drug license to sell the drugs.
Now let’s talk about online pharmacy. Online pharmacy is still a very new concept in Bangladesh. Even in India, the government started to give out licenses to online pharmacies in 2017. After that, Bangladesh started to provide licenses for online pharmacies. The Directorate General of Drug Administration (DGBA) first took the online pharmacy initiative.
Between 2017 to 2019, about 3-4 companies were given the online pharmacy license.
In my opinion, an online pharmacy license should not be a widespread thing. And I think it will not. A similar thing has happened in India. In India, the government has made the issuing of online pharmacy licenses stringent. In my opinion, the logic behind this is that an online pharmacy can cover a large area and thus there is no need for 100 online pharmacies. Moreover, it can also create monitoring and regulatory challenges.
Now to get an online pharmacy license, you need to provide detailed information about your business. You need to have a well-built website with well-maintained security measures. It has become extremely hard to get an online pharmacy license in Bangladesh.
BanglaMeds had to wait for 3 years for getting a license. As far as I know, there are only a few other licensed online pharmacies in Bangladesh. Once you have the license for the online pharmacy, you have to show/mention it online on your website.
Gazi Raffan: The chances of malpractices are much higher online. While in a regular pharmacy usually you need to show a prescription to buy a drug, in the online pharmacy people can buy sensitive drugs without any prescription. One of the concerns of DGBA while giving us the license was about how we deal with issues like selling sensitive drugs that have the risk of abuse. So we showed the proof that every single order on our platform is backed by a BMDC-approved doctor’s prescription and every single order is vetted by the patient.
This boils down to the fact that there are chances for online pharmacies to run an unregulated platform and get involved in malpractices. That’s why I think DGBA is very skeptical and stringent when it comes to giving licenses to an online pharmacy. Because when it comes to the service of online pharmacies, it is hard to monitor. So when an online pharmacy is given a license it should be very responsible regarding its operations.
Ruhul: BanglaMeds officially started its journey in January 2018. What were the major challenges in the early days? How did you deal with them? And any lessons from those days?
Gazi Raffan: When we started the first question we were asked was about the authenticity of the drugs we were delivering. But there was no other way than saying that we buy our medicines directly from the manufacturers.
The only thing that could prove our authenticity was time. With time people saw our operations and branding and eventually, we became a trusted source for authentic medicines. So gaining the trust of our customers was the biggest challenge in the beginning.
Ruhul: How did you establish that trust gradually?
Gazi Raffan: When it comes to healthcare, people are extremely cautious and are willing to spend extra money to get quality service. Personal references and recommendations work best in these sectors. Word-of-mouth is very useful marketing in healthcare. If someone recommends a doctor to you, you will visit that doctor even if his fee is higher than others.
This is how we gained trust, through word-of-mouth. Our users recommended us to others. And when a new user came to us, we ensured we served them well. It helped us to gradually gain trust.
Compared to an online grocery delivery business, an online medicine delivery business is straightforward. In the online grocery delivery, there are chances that the perishable foods can be rotten or not in good condition, while in the medicine delivery there can be no other version of a drug manufactured by a certain manufacturer. For example, Seclo is only manufactured by Square Pharmaceuticals Ltd and no one else. So it was easy for us and when people started buying from us they started to notice this convenience as well.
Almost 75% of our customers are recurring customers. Of every five new customers, three become our recurring users.
Ruhul: Going back to the early days of BanglaMeds. You launched in December 2017, what happened after that?
Gazi Raffan: In the beginning, the progress was extremely slow. The first 5 orders we got were fake orders, where the customers had no intention to order medicine from us and were just checking our platform out. In the beginning, we used to get a lot of orders like this. But eventually, people started to notice us and buy medicine from us.
We kept providing reliable service consistently. Even during the pandemic, when all online pharmacies stopped their operation, BanglaMeds didn’t stop for a single day.
Since it was difficult to buy medicine during the lockdown, we got a huge boost in orders and also received quite a bit of PR attention. Then we received several acquisition offers including from the Chaldal. We eventually decided to go with Chaldal.
Ruhul: How big was your team in the early days?
Gazi Raffan: We started with a team of three people: I, a friend of mine, and a delivery man. We also hired a CTO.
Now as of June 2022, we are a 30 people team. The core team looks after the operation, account, and marketing sectors. We share the tech and finance team with Chaldal.
Ruhul: How did you manage different aspects of your operation in the early days such as logistics, sourcing, etc. How did you operate in those early days?
Gazi Raffan: There was a time when I used to buy medicines, pack them, and then deliver them. I never saw it as a challenge, rather I enjoyed every bit of it. If someone asks me to do it all over again, I will do it in a heartbeat.
I made a good amount of money in my previous businesses. But BanglaMeds gave me good memories and I will cherish those memories all my life.
Ruhul: How long did you operate with a team of three people?
Gazi Raffan: We operated with that team for six months and then we hired new people. We hired my friend Islamul Hoque as our COO who just returned from Canada. He joined the company in June 2018 and still is our COO. He and I run the company.
Before he joined, I was the only guy in the company with formal education.
Ruhul: So you ran the business all by yourself for six months. How was the business doing when you decided to expand your operation?
Gazi Raffan: The first six months, we bootstrapped. We grew 10X within six months and I realized that it would be hard for me to handle everything by myself. So when my friend Islamul Hoque came back from Canada, I requested him to help me out in my business. He agreed to join and we started to run it together.
Ruhul: What was the number of deliveries per day back then?
Gazi Raffan: We were doing around 40 deliveries a day.
Ruhul: So what happened after that?
Gazi Raffan: 2019 was a good year for us. We signed several corporate deals. We signed a deal with Telenor Health. Between 2018 to 2019, we grew another 5X. Then the pandemic happened and we saw another 10X growth between 2019 to 2020.
But the pandemic was very difficult for us. It was extremely difficult for us to run the business due to the lockdown. When both online and offline pharmacies stopped operating during the pandemic, BanglaMeds kept its operation going. We used to source our medicines from the offline pharmacies which were closed to people during the lockdown. While our delivery man used to deliver medicines during the day, I, along with two of my friends, used to deliver medicine in the evening. Pharmaceutical companies were not delivering medicine at the time. We had to source medicine from other offline pharmacies. Our delivery people faced movement challenges. But we kept going.
While working in BanglaMeds, I never thought about making money. My first and foremost target has been to serve people. When you are given a drug license you are told that delivering medicine is a sacred task. Just like a doctor’s job is sacred, delivering medicine is an equally sacred task. I believe this is a service that has to be taken very seriously and should be well regulated.
Behind whatever success we have achieved at BanglaMeds, it was never my effort alone. BanglaMeds has come this far because of the dedication and hard work of the BanglaMeds team.
Ruhul: You mentioned you had to go through several episodes of difficult times throughout the BanglaMeds journey. Was there a time during your journey when you thought, "this is not working. Time to close up shop"?
Gazi Raffan: It felt like that almost every day. The first major crisis we faced was in August 2019. We went completely out of money and I had to borrow money from my friends and family to run the company. We faced similar challenges several times throughout our journey. For instance, when the pandemic started, the company needed more money to operate. We did not have money to pay our people. I sold my car and injected my wedding funds into the company. The financial pressure was immense throughout this period.
Not everyone could take this much pressure. But when you are a founder, you have to pay your employees on time and this is something I have maintained throughout my entrepreneurship journey. My employees also supported me during those tough times and things worked out in the end.
Ruhul: But there must be something that helped you to keep going.
Gazi Raffan: I believed in myself. Besides, I was not selling something that people need. Medicine is something that people need and I saw that the number of recurring customers was 3000+ each month. I knew that in the next two years that 3000 could turn into 30000 and we could become a highly profitable company. But we have to survive two years to get there.
I had faith in myself, my dream, and my team. The belief that people will eventually start appreciating my work was what drove me in the first place.
Once upon a time, people didn’t think of opening email accounts. If 30 years ago you would ask someone if they wanted to buy bottled water, they would probably laugh at your face. But now it is a reality.
The world changes all the time. If you are honest and dedicated to your work, you will become successful. You may lose small battles, but if you keep fighting you will win the main war. For BanglaMeds, being taken over by Chadal was like winning the war. We might have lost several small battles, but in the end, we won.
Ruhul: You just got married and had to inject your wedding fund into your business and you were borrowing money from your friends and family to run the business. What was the reaction of your family?
Gazi Raffan: In the beginning, my family was very positive about BanglaMeds. But gradually they also started asking questions about why I needed so much money in the business and why I was not making any profits.
Building a tech company in Bangladesh is difficult. The concept of burning money to build a dominant market position is relatively foreign in Bangladesh still today. It is common to expect positive cash flow immediately after starting a business. But a business like BanglaMeds, where building a dominant market position can offer you significant upside, you have to invest in product validation and growth for several years. And it is difficult to make people understand it.
So as time went on, even people near me started to get impatient. I started to lose support from my close friends. That is the time when you go through the ultimate test as a founder. That is the time when you question yourself whether you should shut down the company or you should continue.
I believe every single startup can survive if the founder is resilient enough. This is why I think investors look for founders who are resilient and never give up.
Moreover, raising capital is very difficult for Bangladeshi founders which makes survival extra hard in this market.
In all honesty, I wanted to give up. But I did not have any backup plan. Before BanglaMeds, I had another company called Quintos Business Solutions. It was a very profitable business. But I shut it down in 2019 to give 100% of my time to BanglaMeds. I believed that if I gave my 100% effort, the company would eventually become profitable. But when the company started to run out of money, I couldn’t shut it down due to not having a backup plan. Besides, I have never worked a regular job. I have been doing business since I finished my O-level. So I did not know how to navigate that path either. So I was stuck in a way.
BanglaMeds is my 10th company. My failure rate is approximately 85%. But I have also learned, from this journey, that you just have to keep going to be a winner in the end.
Ruhul: A couple of books you would like to recommend to our readers.
‘Rich Dad Poor Dad’ by Robert Kiyosaki and Sharon Lechter.
‘The $100 Startup’ by Chris Guillebeau.
‘Outliers’ by Malcolm Gladwell.
‘The Hard Thing About Hard Things by Ben Horowitz.
A common thread that runs through all these is that no one is more blessed than anyone. No one is more privileged and more advantageous than you. It’s you who can decide your success. Blaming others for your failures is one of the stupidest things you can do.
I could blame others for my failures. There were a lot of reasons to blame others. But what would be the point of it? In the end, it’s my life, my struggles, and my success. The more effort you will put in, the more return you will get.
Ruhul: What advice would you give to people who are just starting out?
Gazi Raffan: Be prepared to fail and love failure. I have failed more than anyone I know. If you keep going, you will succeed. It is not the failures that matter, it is your ability to stay in the game and not give up.
Making money is not rocket science. You just have to work on your business without thinking much. Don’t have any expectations. Expectations can create dissatisfaction. Keep doing your work as best as you can. Things will happen. As long as you work hard and give your 100%, you will get paid in full. It might take time. You might have to suffer through a few stumbles but I can guarantee you that you will succeed eventually if you do not give up.