Win the Heart of the Customer. Money Will Follow.
A Q&A with the Founder of 786 Pharmacy
A breakfast interview with Zabihullah Hidayat Aimaq, the Founder of 786 Pharmacy Chain Stores. Business DNA team had the opportunity to have a friendly chat with Zabih and ask him a few of the common questions people wonder about 786, Afghanistan’s first pharmacy chain.
What is the first question you think we’re going to ask you?
(Chuckles) Are you married?
Are you though?
Yes, I am. I also have kids.
How do your wife and kids help or hinder your business?
They have helped me go through difficult times. When I go home to my little angels, they give me a different feeling. It’s a gift that can’t be measured (smiles).
Describe yourself in 3 words.
I am different!
If you ask what I mean, I think I am innovative, fearless and passionate.
Tell us about yourself?
After finishing my business studies at Delhi University in 2007, I came back to Afghanistan and began working at my family pharmaceutical company. But I just couldn’t work under someone else! It’s just a characteristic.
I love being the first person to do something. So a group of us started the first rock band of Afghanistan called Raaz. I was the lead singer. However, it collapsed because we all had different expectations. Then Kabul Dreams hit the market. Seeing Raaz fail, I lost hope in pursuing a music career.
Talk us through your businesses.
First I established Alhadi in 2008. I imported medicine but the management and the processes weren’t technical. So I decided to import HELL energy drinks but that also didn’t go right because we had 50,000 bottles leaked during transportation. Then I started 786 because it was original – both the idea and the system.
786 is the first pharmacy chain in the country with 22 operating stores across Kabul. We focus on high quality, genuine medicines and offer credible health advice. Our ambitious plan was to set up 100 pharmacies in a year, but in reality, it took us three years to set up just seven.
786 began very unprofessionally. I had to do A to Z of the business from purchasing medicine, making entries, placing barcodes, packaging, and delivering; all on my own. Now after 4 years, when I visit our beautiful warehouse, I still remember carrying cartons on my shoulder up and down the four-story building.
So technically you are a virgin entrepreneur who has never worked for a company?
Yes. I have never been through employment, didn’t know anything about management, and came straight from being a student to establishing a giant system like 786. I kind of wish I had a boss. I haven’t had a break for 4 years. It’s like torture.
Do you consider yourself a zero to hero?
Knowing myself, I never felt being a zero.
Income doesn’t make me a hero either. Heroes do things for others. I think every successful entrepreneur is a hero because they change the way things work & create jobs. All entrepreneurs are heroes; some big some small.
What are your contributions to the health sector?
We are the first chain in the health sector. Second in Afghanistan, after Finest.
We introduced the concept of 24/7 despite Kabul’s uncertain nightlife. Now over 200 pharmacies, as well as restaurants, hospitals, and supermarkets operate 24/7. That’s a big change. It’s creating jobs in the market. Somebody had to take the risk and pave the way for others to follow.
Where did the idea of a chain business derive from?
(Chuckles) Are you We wanted to remove the unnecessary middlemen in the importing process. There are commission workers, wholesalers, sub-distributors, retailers, and then customers.
When did your first store open?
We secured funding in July 2012 and opened our first store 15 months later.
Why did it take so long?
It is government procedures. We wanted to obtain 15 licenses in 15 days, but the first one was issued in 6.5 months. We had to help create rules within the rules.
Our pharmacies were meant to be in front of hospitals, but we weren’t allowed. So we changed our model to community pharmacy.
“They say first do something for yourself, then for others. But I say, when you do things for others, you’re already doing it for yourself.”
How did you come up with the name of your company?
Initially, it was Al Ferdous. But then 786 sparked my interest when I was looking at U.S. stores such as 555 and 711. 786 is numerology internationally known by the Muslim world. So it’s catchy. Ministry of Culture made a huge fuss over it but we managed to get the name in the end.
Approx. how big is the size of the pharmaceutical sector?
Over 500 million dollars a year and it continues to increase.
Considering the fierce competition in the pharmaceutical world, how would you highlight your company’s competitive advantages?
Our services are our competitive advantages, which include:
We haven’t had a single case where our customers complain about our product’s quality. Complaints are about prices. But it’s difficult to provide a quality product at cheap prices.
“Somebody had to take the risk and pave the way for others to follow.”
Is 786 present everywhere in Afghanistan or just in Kabul?
We are only in Kabul, but we have a very high demand from provinces since inception. We are developing a structure to move to other provinces.
A while ago we had an offer to expand to Bangladesh, but we decided not to. It feels great to see 786 having the potential to go global.
How do you manage all these chains? Do you have a large management team?
We have a country director and regional supervisors, who lead a few stores. Pharmacy doctors serve as store managers and control everything at the store level. It was a nightmare to manage all these chains initially, but now, having received additional investment, I serve at the board level and avoid engaging in day-to-day operations.
“ We turned an impossibility to a possibility and now we are even changing trends in the market.”
In your opinion, what is the market share of 786?
Very small compared to the 500 million dollars. But we are growing.
We hear you are really good at attracting external funding? What’s the secret?
We have had 4 rounds of private investments and 2 donations so far.
First the Indians invested in my idea. I spoke fluent Hindi & I had a great understanding of their thinking. The orange color of the 7 and 6 in the 786 logo were suggested by them.
786 received a grant from Afghanistan business innovation fund (ABIF) that really helped us for a while. Soon, we needed additional financing. Despite our loss-making trajectory, we were lucky another venture capital firm invested in 786 because they saw the long-term potential of the company.
Despite the investment, we had so many errors in our operations. We had major cost drivers and leakages that could really hurt the business. But it all improved and then received another round of funding to 786.
Some people say you are crazy! Close your business. The typical afghan way of business is to invest this month, get the profit the next month, or else it isn’t a business. I am much more patient than a month. [chuckles]
What was the biggest issue you had to deal with?
There is no regulation for chains. Two licenses under one person isn’t allowed. This was problematic especially if we wanted 20. I got the second license under my brother’s name.
Two pharmacies can’t have the same name. So I named my stores 768 unit 1, unit 2, and so forth. Regulation couldn’t stop me.
They stopped issuing us licenses after our second store. So we went ahead and bought out existing pharmacies and changed their names to 786 units. We bought every license for $10,000 to $15,000 whereas we could have gotten licenses from the government for less than $1,000 each.
Another issue is that we cannot find suitable locations because we cannot establish a pharmacy within 200 meters of another one. This is wrong since it stops competition. That’s why you have substandard pharmacies around.
I have faced numerous problems, but as a young entrepreneur, I haven’t given up and I am determined to find my way out.
Tell us a unique story about your experience at 786.
A big local distributor offered to buy 60% of 786 and in return, they would get us 30 licenses. What surprised me is that we have been trying for 4 years and cannot get 3 licenses. How come these guys can get 30?
At the time, we had many financial problems. It would have made sense to accept their offer. But after a week of thinking, I reminded myself that God made the universe and he knows what to do with it. I made 786, I know what to do with it. I rejected the offer.
How do you challenge the stereotypical doctor-pharmacy relationship that monopolizes medicine sales? What is your sales strategy?
We are a community pharmacy. We are connected to every customer directly. We educate our customers as to what they are paying for. Our belief in value for money distinguishes us from others. That is why we are making educational videos and have even chosen a brand ambassador.
Who is your greatest support when facing hardships in business?
God. Then myself. Having faith in myself has helped a lot. Financially, it was my partners especially first venture capital investor.
If not an entrepreneur, what other career would you choose?
Singing – this is my true love.
If I sit down for 5 minutes and calculate profit and loss, I get a headache. If I play the guitar all day all night, I won’t even know how time flies.
Do you think you have a good voice?[Chuckles] I think I am very confident. I have been singing since I was 4, so it’s been 25 years.
What kind of songs do you sing?
I sing Sufi rock. It is purely for delivering messages and raising social, cultural, and religious awareness.
“Win the heart of the customer, and the money will come. How do you win a heart? you build trust.”
Top 3 mobile apps that make your work more effective?
WhatsApp & Viber. Facebook maybe.
Do you believe there is a winning formula for becoming a successful entrepreneur? What is yours?
- Believing in yourself
- Staying persistent
- Being honest
- Having business ethics
- Giving your customers the real value for money
What would be your advice to start-up entrepreneurs?
Do what you love. It is wrong if you touch anything else. I am not what I wanted to be. My heart is with music but I walk around with a calculator. This is because my father was never supportive of me becoming a musician, so I just became a businessman just to prove myself to him.
This is a big issue in Afghanistan where parents force their children into becoming doctors or engineers. Parents should understand that there are opportunities in everything, whether it’s business, arts, or entertainment. They shouldn’t stop you from pursuing your dreams. So start with what you believe in, stay persistent and don’t give up.
Can you summarize your 786 journey in a few words?
“What you see here is your own reflection. I am still raw, and at the same time well-cooked, and burnt to a crisp.” Rumi
786 made me grow up. I feel I am still raw yet burnt down too. At any case 786 is special to me.
What are you planning for 786 in the next five years?
Many things. We also plan to expand to the remaining 4-5 major cities in Afghanistan.
“The typical Afghan way of business is to invest this month, get the profit the next month, or else it isn’t a business. I am much more patient than a month.”