How Mstack cracked the code of cross-border chemical manufacturing

Summary

Indian founders are scripting a revolution in cross-border manufacturing. These are category defining business models that are recalibrating the established ways of doing business. Mstack is one such player. A cross-border manufacturing platform that capitalises on lower Asian production costs to disrupt the US specialty chemicals market. Understanding buyer needs, implementing a full stack solution for quality control, and leveraging industry veterans are the highlights of its very interesting story.

Manufacturing is undergoing a dramatic transformation across the globe. Geopolitical boundaries are blurring thanks to the increased use of technology across sectors. Traditional areas such as manufacturing are making great strides, and more founders are building cross-border models from the word go.

In the process, Indian startups are creating innovative models in traditional industries. Mstack is doing this with its cross-border, custom manufacturing platform, which is vertically focussed on leading specialty chemicals. It capitalises on the cost advantages of Asian production to manufacture specialty chemicals in an asset-light model. This allows them to offer competitive pricing to mid-sized and large enterprises in the US, Latin America, the Middle East, and Asia. 

Mstack also functions as a full-stack platform that takes ownership of quality control and delivery. This ensures a smooth experience for their customers. The company is also solidifying its focus on innovation by ramping up investment in its R&D platform. This investment aims to achieve two key goals: streamlining processes through innovation and developing intellectual property (IP) around custom formulations.

But in a traditional industry such as specialty chemicals, where relationships run deep and long, how do founders get a foot in the door? More importantly, how do they disrupt the existing way of doing business?

Shreyans Chopra, the founder of Mstack, talks about this journey of understanding and changing the way this industry does business. 

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Finding your niche

In the initial stages of understanding your market, it is easy to get overwhelmed by data. 

"Take a leap of faith and commit to the 80/20 rule: focus on the 20% that delivers 80% results, is Shreyans’ advice. Pick a specific product category and geographic location to find product-market fit (PMF)" - Shreyans

The global specialty chemicals market size was estimated at $641.5 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 5.2% from 2024 to 2030. 

So where does one get started? Take a leap of faith and commit to the 80/20 rule: focus on the 20% that delivers 80% results, is Shreyans’ advice. Pick a specific product category and geographic location to find product-market fit (PMF).

“Double down on this niche, and take the next six months to try and find PMF in it,” says Shreyans. “For us, the niche was a category-geography combination,” he adds.

The next question was: how do you approach the initial sales conversations?

Founders need to get their hands dirty

Mstack is Shreyans’ second entrepreneurial outing. His first gig was an Indian-focused initiative to promote live music. Before committing himself to disrupting chemical manufacturing, Shreyans was a consultant and early-stage investor. So he had a ringside view of the developments in the cross-border manufacturing space. 

“Founder-led sales is the most important thing in the initial days. Hiring a specialist on day one, especially in a traditional industry, will not lead to a disruptive or scalable business” - Shreyans

While researching the areas that required cross-border supply chains, specialty chemicals were among the top contenders on the list. As he further narrowed his focus to the US, he knew the importance of hiring right in the initial stages. But he was also wise enough to not outsource sales too early. 

The initial customer conversations are crucial for understanding market pain points and iterating on the product and sales approach. 

“Founder-led sales is the most important thing in the initial days. Hiring a specialist on day one, especially in a traditional industry, will not lead to a disruptive or scalable business,” says Shreyans. 

He does admit that founders will face several rejections in these initial conversations with customers, but each "no" provides valuable insights for improvement.

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Embracing influencer-led growth

To break through the tight-knit networks of the chemicals industry in the US, and meet the decision-makers, Mstack weighed all their options. 

In the initial conversations, Shreyans realised two things: 

1. Decision-maker challenge: The key decision-making roles at prospective customers are held by individuals with long tenures, often running into four or five decades. These executives are not always open to new ways of doing things. 
2. Startup limitations: A young startup doesn’t usually have the budget to hire senior executives very early on. Younger industry executives may not have the required depth of knowledge or connections in the industry. 

To overcome these limitations, Mstack adopted the influencer-led channel for growth. “We started working with advisors to help us establish initial credibility to help us get an initial set of meetings with our target customer base. That's how we could scale rapidly after we put this into motion,” says Shreyans. 

Choosing the right influencer is critical. Mstack put together a panel of retired CEOs from global chemical companies and individuals who are passionate about the industry.

These veteran advisors provided much-needed initial credibility for the young startup. Their connections facilitated crucial meetings with the target customer base. 

“We started working with advisors to help us establish initial credibility to help us get an initial set of meetings with our target customer base” - Shreyans

One key aspect of onboarding advisors is to ensure they are excited by the potential of your new approach and find themselves relevant in the initial setup. 

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The disruption

So how did Mstack become the go-to name for cross-border specialty chemicals manufacturing for US-based customers?

“This is where technology becomes a game-changer. We codified our entire operation onto a single platform. From sourcing raw materials to testing, shipping, and delivery, every step for every order is tracked and managed” - Shreyans

On the supply side, Mstack works with fragmented factories and suppliers globally, who find it difficult to expand overseas on their own. With Mstack taking ownership of the managed platform, global manufacturers can tap into new international markets and navigate the complexities of cross-border exports.

With the influencer-led motion, once they got a foot in the door, Shreyans understood that the US buyer cares about three things:

• Price: Buyers in the US are seeking alternative suppliers to Europe, where production costs are high, and China, where trade restrictions are affecting reliability. This presents an opportunity for global chemical manufacturers to expand their footprint. 
• Quality: Marketplace models have not been successful in the chemicals supply space in the past, because that industry is very sensitive to quality. Mstack provides an end-to-end supply chain alternative, where it works with global suppliers, quality checking the material, thereby establishing trust with its buyers in the US.
• Consistency: On-time delivery is crucial. A single late shipment can damage customer trust and jeopardise repeat business. That is why the overall timeline of operations is essential. 

“This is where technology becomes a game-changer. We codified our entire operation onto a single platform. From sourcing raw materials to testing, shipping, and delivery, every step for every order is tracked and managed,” Shreyans explains. 

This meticulous control ensures that Mstack consistently meets its value proposition of reliable and timely delivery. 

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Parting thoughts

The cross-border manufacturing space is an exciting one for founders. There are many industries waiting to be disrupted. But it is important to remember to use technology in the right context, instead of as a blanket solution for every problem. 

The Mstack model has deep learnings in the importance of prioritising buyer behaviour, embracing a global mindset, and leveraging technology strategically. 

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#manufacturing #chemicals #crossborder