Since his appointment as Director of Engineering at Backpack two and a half years ago, Mozammel Haque has been instrumental in building a team, spearheading a rapid growth of Backpack as a two-sided platform that connects shoppers with travelers, has successfully positioned Backpack as the destination for high-end, original products from the US in the country, and has significantly grown the user base.
In this fascinating interview, Ruhul Kader sits down with Mr. Haque in Backpack’s Dhaka office to find out more about his personal journey to what he is doing today and the Y Combinator-backed startup and to pick his brain about the strategy of Backpack, the state of its business today and ambition going forward, future of ecommerce and digital payment in Bangladesh, startup ecosystem in the country, and his lessons from his journey and contemplates what 2018 may bring for the tech industry in Bangladesh.
Future Startup
First of all, take us to the beginning of your story. Where did you grow up? And then tell us about your journey to what you are doing today.
Mozammel Haque
I was born and bred in Dhaka. I went to St. Joseph Higher Secondary School for my high school. I studied at Notre Dame College when I was in higher secondary.
After the HSC examination, I went, for a brief period of time, to North South University (NSU), I was at NSU for two semesters only. Then I went to Canada where I completed my graduation from the University of Windsor majoring in Computer Science and Engineering with an especial concentration in software engineering.
Growing up, I was a computer nerd. In fact, I started my first business when I was in college. The business was doing good. We developed a local game named Dhaka Racing, which received quite an attention at that time. However, after college, I decided to pursue higher studies and that was the end of my entrepreneurial journey. But the bug of taking initiative and fixing problems has remained with me. That’s one of the reasons I love Backpack.
Anyways, long story short, I came back to Bangladesh in 2004 and started my career. Most of my earlier jobs included the responsibility to build a team from scratch and lead them to productivity.
For instance, just before Backpack, I worked at Vantage where we designed a team collaboration software which we used it in internal operation, initially and then later sold it to other companies as well. There too I was mostly responsible for managing a team of software engineers. Vantage continues to operate in Bangladesh and it is one of the best places for engineers to work.
It was 2008 when I first came to know about Backpack. I knew one of its two founders, Fahim, from a karate school we both used to attend in the past. But I wasn't aware of the fact that Fahim was also an entrepreneur and got into Y Combinator and so on.
From our days at the karate school, Fahim and I formed a good friendship despite our age difference. So, when he, and Sauro, started Backpack, they used to reach out to me for advice and consultation. I wouldn't deny thinking that Backpack wouldn't go that far. But its founders have proved me wrong. They have shown remarkable determination which eventually led me to believe in the potential of Backpack.
We kept in touch and used to exchange ideas and opinions while I was still working at Vantage. Later on, two and a half years ago, I left Vantage and joined Backpack as the Director of Engineering. That’s how my journey with Backpack began.
Backpack, at that time, had a small operation. The engineering team was comprised of 3 members, and, in total, we had 8 members in the entire Backpack team. It has grown over the past years and now we are a team of over 40 people in 5 different departments. It has a been a wonderful journey for me so far.
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Growing up, I was a computer nerd. In fact, I started my first business when I was in college. The business was doing good. We developed a local game named Dhaka Racing, which received quite an attention at that time. However, after college, I decided to pursue higher studies and that was the end of my entrepreneurial journey. But the bug of taking initiative and fixing problems has remained with me. That’s one of the reasons I love Backpack.
Future Startup
What does it take to build a great team?
Mozammel
Let me start by telling you what I seek when I recruit new people in the team. First, I ensure whether I enjoy spending time with that person. Second, I try to imagine what it would be like to work with that person. Besides the technical requirements, these are the things I think is important for team members.
Now, a great team is all about collaboration and working together. The prior two points that I mentioned help to find people who you would love to work with. Finding right cultural fit is also critical to building a great team. However, that’s the starting point.
On top of that, your culture within the organization should promote and facilitate teamwork by encouraging collaboration, autonomy and so on.
Future Startup
Let's get back to Backpack. How much has it evolved since you joined here?
Mozammel
I have already mentioned how our team has become substantially bigger. But I wouldn't put the growth of this company merely in terms of the team size. To give a better picture of Backpack's evolution, we can look at how close we are to our next milestones.
For instance, we have been able to achieve an extraordinary sales growth. Compared to the early days, our sales have increased by 60 times at present.
Although I can't provide you any figures for confidentiality reasons, I can tell you that, in terms of daily sales, ours is the largest e-commerce site in Bangladesh as of today. The basket size of our customers is usually bigger than those who purchase from other sites. It may be because our customers mainly trust us more thus buy more expensive products from us. We ensure warranty service for our products.
Backpack, you see, is essentially a technology company. We engineer software. If we want to resolve any issues in the existing setup or to expand the operation, we think of it from an engineering mindset first. That's I think one of the key differentiating factors for us.
Let me start by telling you what I seek when I recruit new people in the team. First, I ensure whether I enjoy spending time with that person. Second, I try to imagine what it would be like to work with that person. Besides the technical requirements, these are the things I think is important for team members.
Future Startup
Please give us an overview of your current operation. How big is your operation now? How does your operation work? How many countries do you cover now?
Mozammel
We are basically a two-sided marketplace. On one end there are travelers and on the other end shoppers/purchasers who want to buy products from the same country the traveler plans to visit. Our job is to establish the connection between this traveler and shopper so that the former can procure products ordered by the latter to bring it to the shopper's own country.
The advantage for the shoppers is that they can buy often unavailable and high-quality original product at an affordable cost with quality assurance. For a traveler, it allows him to fully utilize his/her luggage space and subsidize his travel cost through the interaction.
We have separate teams for dealing with both the travelers and shoppers. Travelers management team maintain close communication with our travelers' group and focus on onboarding new travelers and helping travelers to make their interaction easy. And the shoppers' management team deals with our customers.
Initially, we planned to make our service available worldwide. But we soon understood that we couldn't sustain the operation in that way. So, we focused on a specific country first: Bangladesh and for importing the US, because we have a better understanding of these two markets.
There was a lot of demand for importing products from China but we decided to open up our US channel first because we understand both US and Bangladesh markets better. Currently, we only provide the importing service. We definitely plan to expand our operation to other countries. But in order to do that there should be a business case which we can solve. In fact, we tried to start sending products to the US from Bangladesh, but the demand is not that high yet and we had to stop it due to operational limitation.
Our business does get affected by several contingencies that we have been trying to get around. For instance, the rate of business with our customers varies depending upon the season. During the traveling seasons, like in the winter or the government holidays, transactions spike. It remains rather slow the rest of the years.
Our operation has a pretty much hands-on process. The official website works as a landing page for the traveler. When travelers visit it and register there (mostly organically), we reach out to them individually. Through our meetings, we try to build the trust, get their itineraries and security documents. These details are then stored in our database and when a shopper from a particular country places a product order we match with a traveler who is planning to visit the same country.
That is one way we operate. We also reach out to different communities directly and ask them to register as travelers and shoppers in our system. The response we have been getting an amazing response from people.
At present, we have offices in Silicon Valley, California, and Dhaka. We are planning for aggressive expansion within the US in the coming days.
we have been able to achieve an extraordinary sales growth. Compared to the early days, our sales have increased by 60 times at present. Although I can't provide you any figures for confidentiality reasons, I can tell you that, in terms of daily sales, ours is the largest e-commerce site in Bangladesh as of today. The basket size of our customers is usually bigger than those who purchase from other sites. It may be because our customers mainly trust us more thus buy more expensive products from us. We ensure warranty service for our products.
Future Startup
Due to the nature of your business where you depend on a traveler for bringing a product, you are likely to face challenges related to timely delivery, for instance, a traveler may arrive late or something else may happen, which is pretty important in eCommerce business, how do you deal with it?
Mozammel
First of all, since we deliver products not via our registered couriers but by independent travelers, we mention that the delivery period is estimated; and, under certain circumstances, it may take more than the initial estimation. This does not mean that we don’t put active effort to ensure a better experience for our shoppers. Our team works really hard to deliver superior customer service to our every customer.
Secondly, our shoppers do not "order" products from us. They "request" it. We treat it that way because they are basically requesting a product be carried to them by an individual who's visiting their area of business.
But, as there are separate moving parts in our operation, things sometimes go wrong. To counter the crisis, we keep in touch with the traveler to stay updated about the product being delivered and ask response from shoppers to whether there've been any unmet requirements. We maintain a constant communication with our travelers and shoppers and make sure that they remain updated about their orders.
We are basically a two-sided marketplace. On one end there are travelers and on the other end shoppers/purchasers who want to buy products from the same country the traveler plans to visit. Our job is to establish connection between this traveler and shopper so that the former can procure products ordered by the latter to bring it to the shopper's own country.
Future Startup
Do you think your operational model, not having direct control over delivery, puts you in a sort of competitive disadvantage against Amazon or Alibaba or other ecommerce companies who have control over delivery? If so, how do plan to tackle that?
Mozammel
To some extent, yes, it does. I would not deny the fact that we do have contingencies issues when it comes to on-time delivery. Although theoretically, we have some contingencies, in reality, our service and delivery time are better than many other similar options that are available in the market. In fact, what makes us different are the delivery time and our commitment to customers.
If you order on Amazon or Alibaba, the average delivery time to Bangladesh is at least two weeks; and it can run up to a month. But we are ensuring the shortest delivery time possible by finding travelers who are going to trips at the right moment and returning within a scheduled period.
More importantly, we are always dedicated to building a trustworthy relationship with our customers. We never compromise with our customer service and, in case of products being faulty or other inconveniences caused to shoppers, we even provide refunds or replacement if that’s what our customers are looking for. Amazon can’t do that. If you buy a product from Amazon sitting in Bangladesh, it is quite inconvenient to return the product or get a refund for it because they don’t have a pick-up point in Dhaka. But you get that with us.
Moreover, our business has prospects for becoming an international courier service in the near future. If you want to, say, send a gift a product to someone staying in Bangladesh, you can't use Amazon because they have no pick-up point here. In such cases, our approach fits right in.
At Backpack, our mission is to connect pockets of economies. While other e-commerce businesses think about products, we are focusing on increasing connectivity between segregated economies.
While we are enabling shoppers to get their desired products, we are also trying to introduce an effective way for people to subsidize their travel. This is a need that travelers would soon understand. They would realize the luggage space they are not using can be monetized. This is where Backpack has an advantage.
As I mentioned, we are a two-sided marketplace and we deal with both travelers and shoppers and we can see that we can explore opportunities on both ends.
Future Startup
You are a two-sided marketplace, and the traveler is an important node of your model. At the same time, it is an opportunity where you may offer travel related services and collaborate with travel service providing companies like airlines, hotels, agencies etc. to create a separate revenue stream. Are you considering anything related to travelers?
Mozammel
Yes, there are opportunities to explore for us and we do plan to explore some of these areas. However, for now, our priority is to get our existing business tick and then we will explore other opportunities.
I would not deny the fact that we do have contingencies issues when it comes to on-time delivery. Although theoretically, we have some contingencies, in reality, our service and delivery time are better than many other similar options that are available in the market. In fact, what makes us different are the delivery time and our commitment to customers.
Future Startup
How have you attracted users and grown your business?
Mozammel
At Backpack, we are always experimenting, always trying new things. For example, during the last Black Friday, we have run an awareness campaign on the tradition in the US among shoppers in Bangladesh so that they can leverage it. Trying has its upside, it consistently leads you towards better solutions.
As I was describing earlier, we look at problems from an engineer's perspective first, arranging them into equations and contemplating a mathematical solution. Through this unique approach to our everyday operation along with the help of our increasing credibility among people, we have been able to reach this growth level.
Our growth mostly came from word of mouth and referral - both have been a consistent source of growth for us.
Apart from that, from the very beginning, we have tried to identify small communities of different product enthusiasts and then create interesting offers for them.
For instance, on Facebook, we have reached out to groups such as Fountain Pen enthusiasts and so on and designed special offers for them. It has helped us to grow our user base. These are the things that you probably can’t scale but once you start doing these things, new doors of growth continue to open.
Future Startup
You get a commission on every transaction that takes place on your platform, right? How does your revenue model work? Do you have a uniform commission rate?
Mozammel
No, our commission rates vary. For products worth $1-$500, we charge 21% commission. For $500 to $1000, the rate is 18%; and, the commission for products having a price over $1,000 is 15%.
We also have something called the weight-dimension charge. We didn't have it in the past, but we realized over the time that some products might weigh more than the price implies causing extra cost on our part.
For instance, during the month of Ramadan a while ago, we observed that people were requesting lots of pantry products which unit price was only $3 or $4, but they were taking a fair amount of the traveler's space. This started to become very inconvenient for the travelers to manage.
To resolve this issue, we came up with the weigh-dimension charge which would require the shoppers to pay a premium if the requested product weighs more than a certain limit. But it's not something we have introduced to generate more revenue. This mechanism merely helps us to cover the cost of the shipping so that we can be sustainable and continue offering services to our customers.
At Backpack, we are always experimenting, always trying new things. For example, during the last Black Friday, we have run an awareness campaign on the tradition in the US among shoppers in Bangladesh so that they can leverage it. Trying has its upside, it consistently leads you towards better solutions.
Future Startup
How does your marketing and communication work? How do you reach out to both of your shoppers and travelers?
Mozammel
To reach out to our stakeholders (i.e. shoppers and travelers), we follow the traditional marketing techniques. We distribute leaflets physically in crowded places and run advertisement campaigns on social media and other digital platforms.
As I mentioned earlier, for travelers, we reach out to traveler communities in Bangladesh and the US. We have a team who maintain communication with our travelers and they also look after onboarding more travelers.
We believe that building trust is more important for us than anything else. That's our key focus area now. We are maintaining close connections with our customers. We are ensuring that we offer best possible services to our customers so that we can build a reliable relationship.
Future Startup
What are your major challenges for now?
Mozammel
In order to grow Backpack, we need talented people here. We are actively recruiting new faces. But finding good people remains to be one of the enduring challenges for us.
Another challenge that we face now concerns managing our two-sided marketplace. Traveling, as I have mentioned, is a seasonal thing, but shopping is not. We often find it hard to balance out our shopper's demand with the traveler's convenience. This also hampers our growth at times. We are currently working on a few strategies which I believe will allow us to get around this challenge.
Future Startup
Please tell us about your organizational culture. How do you people work at Backpack? And what do you mean when you say that you look at problems from an engineer's perspective?
Mozammel
Generally, for yearly planning, we set up something that we call a 'north star,' a signpost toward which we are to direct our current year's activities. This 'north star' can be a milestone that we want to achieve.
After planning for the year, we break it down into smaller parts, say, on quarterly plans. Then, we further break it down and set OKRs for different teams. These OKRs help individual teams to set their own objectives and strategies. And, every part of our grand plan must align to the North Star.
One practice that differentiates Backpack from other organizations is that we follow a competent-based hierarchy model here. If, say, an intern who just joined shows enough eligibility, the management will reward him/her with promotion to higher positions. In fact, we want employees to push their limits.
As for the engineer's perspective of looking at a problem, let me illustrate it with an example. Say, a media company wants to reach out to 1 million audiences. If we look at this target from an engineer's perspective, we first need to determine your number of visitors and how many visitors you have been able to turn them into regular viewers. So, there are two things here: customer acquisition and retention. Suppose, the retention rate is higher than the acquisition rate for this company which indicates that they have a quality product. So, from an engineer's perspective, the media company should focus on increasing rate of retention rather than focusing on both. This maximization of your operational strength is called an engineering mindset.
We have followed a similar strategy at Backpack. Primarily, we concentrate on retaining the travelers and shoppers that we have already acquired. And, now that we have achieved a steady retention rate, we are running ad campaigns to acquire more customers.
Future Startup
Backpack is an e-commerce business at its core. With that into account, what do you think about our overall e-commerce industry?
Mozammel
One of the key things that trouble our current e-commerce industry is payment methods. Existing payment options are simply not easy for the users. SSLCOMMERZ has been doing a good job, but we have a long way to go. That’s one.
Another enduring problem paralyzing the industry is the lack of an organized delivery network. The government has a lot to do in this regard. Government postal service can take this huge opportunity which is not happening fast enough.
Other than these challenges, ecommerce is a highly potential sector in Bangladesh. We are just seeing the tip of the iceberg and the industry is just getting started.
One practice that differentiates Backpack from other organizations is that we follow a competent-based hierarchy model here. If, say, an intern who just joined shows enough eligibility, the management will reward him/her with promotion to higher positions. In fact, we want employees to push their limits.
Future Startup
How does the digital payment work for Backpack?
Mozammel
The shoppers can pay us via an MFS service, such as bKash or others. S/he has to input the transaction ID to our system so that we can know that payment has been made.
Additionally, you can use your bank account and pay via debit/credit card. We also accept payments through PayPal.
Future Startup
What are the future plans?
Mozammel
We have two key priorities for our business now: one being the expansion of our operation to a few more countries. We have already started working on it.
The other priority is making the business sustainable. We are almost there in terms of number. We want to have infinite run rate and we, hopefully, will be there for the next few months.
Future Startup
What is your management philosophy?
Mozammel
We are a horizontal organization. We maintain a close relationship with our co-workers and it does not remain limited to work alone. Because our life is more than work and if we want to understand our people, well, we have to know more about them.
I feel concerned about being truly connected with my teammates. Management responsibility, in my opinion, is to create the right chemistry. I don't believe the prevailing notion that people are usually duty-averse and ignore their responsibilities whenever they get the chance. I think that if you put the right person in the right position, delegate meaningfully, and do not interfere, performance and productivity spikes.
A manager, you see, is like a gardener. You need to trim the hedges, of course, but you also need to water the plants. You need to create the right chemistry for the seeds to flourish.
We follow these rules at Backpack. We invite ideas from every level of the organization. Then, we discuss it, experiment with it and, if feasible, we advance with it.
For example, we have been facing problems opening up a call center recently. We approached several call centers first, but their pricing was simply infeasible for us as a startup. So, we organized an internal Hackathon on the theme. And then we set up a call center on our own based on the ideas that came during the hackathon where our employees attended to our customers. The result is very satisfactory.
Future Startup
What are some of the biggest lessons from your journey so far?
Mozammel
My first lesson would be to always tell the truth and live by it.
People have a tendency to sugarcoat things to please their superiors or even peers. But I've learned that it doesn't bring you any meaningful consequence. Only truth can do you good in the long run.
A manager, you see, is like a gardener. You need to trim the hedges, of course, but you also need to water the plants. You need to create the right chemistry for the seeds to flourish.
Future Startup
3 pieces of advice you would give to your 20 years old self.
Mozammel
The first advice would be about career choice. I'd advise him to take a job not just for money salary alone, but for the people he'd be working around. Because superiors sometimes play a vital role in building your professional traits and understanding. If you could, choose your boss because you basically learn from your co-workers.
I'd also suggest him to never back down from telling the truth because it contributes to one's overall personality and future success.
I'd also tell him to invest at least 10% of his income in exploring himself and in personal development. A clear understanding of one's own potential is a great way to push the limits.
I think we are turning into a hedonistic society where we only seek pleasure at the cost of everything, where happiness is everything, but that’s a limiting way to look at life and living. A better way would be to looking at life through the lens of meaning and impact and contribution. Am I making a positive contribution? Am I doing good for others? I have been trying to change my lens for a long time.
Future Startup
What advice would you give to early-stage founders?
Mozammel
To reiterate, I would tell everyone to find good people to work with from whom the could learn.
A leader/CEO should never think that s/he is the only person who runs the organization and brings in the money. One person alone can never build an organization, it is always a teamwork. Instead, s/he must need to work side by side with the team.
A collaborative work environment helps cultivate a cult-like attitude in people. And if managed effectively, this attitude can bring about positive consequences. This would also give them a sense of community. And if you can build a sense of belongingness and community in your people, you will go a long way.
Future Startup
A couple of books you have read and enjoyed recently.
Mozammel
The first book that I would recommend is Twelve Rules of life. I just finished reading this amazing book written by Jordan Peterson, a clinical psychiatrist at the University of Toronto.
Another book that I'd recommend is the 5 -Second Rule written by Mel Robbins. This book encourages people to take action rather than merely thinking about it. There's also the Speed of Trust by Stephen Kobey which emphasizes on the necessity of trust to build a great team.
I'd also tell him to invest at least 10% of his income in exploring himself and in personal development. A clear understanding of one's own potential is a great way to push the limits.
Future Startup
What do you think about life, given the fact that life is temporary and short?
Mozammel
Previously, I used to think that life is only about being happy and having fun. But I came to the realization that it's a shallow attitude towards life.
Not everything is about having fun. Waking up from sleep in the middle of the night to discover your child is crying in a wet diaper is not fun. Assuming managerial responsibilities is also not fun. But does that mean that I should consider life as depressing? Of course, no.
I think a better way of living a good life is looking from the perspective of meaning and impact. When you seek meaning over the material, everything makes sense. The sufferings and challenges that you go through daily become easy to endure. The key is to understand and accept life as it is. Where there is a strong why you can almost endure any how.
I think we are turning into a hedonistic society where we only seek pleasure at the cost of everything, where happiness is everything, but that’s a limiting way to look at life and living. A better way would be to looking at life through the lens of meaning and impact and contribution. Am I making a positive contribution? Am I doing good for others? I have been trying to change my lens for a long time.
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Notes
1. Interview by Ruhul Kader, Transcription by Rahatil Ashekan
2. Further reading on the future of eCommerce in Bangladesh here.
3. Update: This interview was conducted in Mid-February, 2018, Mr. Haque has decided to leave Backpack in mid-March 2018 which we came to know later.
