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For over five decades, Azim Hashim Premji has been one of the trailblazers of India Inc. Taking over his family business of vegetable oils at the young age of twenty-one after the untimely demise of his father, he built one of India's most successful software companies along with a multi-billion-dollar conglomerate. As of 2019, he was the tenth richest person in India, with an estimated net worth of $7.2 billion. Yet, the one facet of the man which has overshadowed even his business achievements is his altruism. He’s given away most of his wealth!
In this episode, we’re joined by Sundeep Khanna, veteran journalist, and author of the book “Azim Premji: The Man Beyond the Billions”. Sundeep peels the layers off Premji's life while chronicling his professional and charitable work in the context of his many strengths and shortcomings. The episode is sponsored by Gaja Capital as part of the Gaja Capital Business Book Prize 2021.
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Few brands inspire the kind of devotion that an Enfield does. Its distinctive look and feel, the sound of its engine and the image that it creates of its rider have all contributed to putting the brand on the kind of pedestal that others could only dream of. But the story of how Royal Enfield became the brand it did today is filled with ups and downs, from its robust origins in the early 1950s to the rock bottom that was the 1980s to the lifestyle bike it is today trying to make a presence internationally. Enfield has truly come to epitomise successful business turnarounds and a case study in branding.
In today’s episode we’re joined by Amrit Raj, the author of the best selling book “Indian Icon: A Cult Called Royal Enfield” for which he’s been nominated for the prestigious Gaja Capital Business Book prize 2021.
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In 1956 at the Dartmouth workshop, the idea we’ve now come to know of as artificial intelligence was sown. John McCarthy of Dartmouth college named the field, Artificial Intelligence. After the initial excitement, the artificial intelligence winter set in. With the availability of large amounts of data and computing power, we’re seeing a revival in AI. Several fields are being transformed by artificial intelligence now. And that includes writing.
A few months ago, I’d interviewed Paul Yacoubian, the founder of Copy.ai. He is easily one of the most interesting entrepreneurs to watch out for. In just four months, his startup, Copy.ai had gone from $0 to $50,000 in monthly recurring revenue. The company uses the language model GPT3 to write marketing copy. And the traction it is seeing is proof that thousands of people are using it.
It’s not just writing that’s being transformed by AI. It has found applications in several fields, including healthcare, manufacturing, banking, and finance. We figured it is about time we had someone on the show to talk about AI.
In this episode of the Use Case podcast, we talk to Manish Singhal, the founder of Pi Ventures on investing in AI and deep tech companies. Pi Ventures is a Bangalore-based fund that only backs companies that uses deep technologies like AI to solve real-world problems.
Timestamps
3:01: Why did Pi Ventures choose to invest in deep tech and its thesis.
6:36: On cancer screening tech from Niramai and mental health company Wysa.
10:50: On Pi Ventures fund II.
13:02: What has changed in deep tech for it to become investible now?
14:52: How Pi Ventures invests.
17:08: Understanding Demand & Supply Resonance Maps
24:24: India’s place in deep tech
28:33: Incremental innovation and 10x innovation
29:34: Domestica capital in deep tech
32:03: Pi Ventures has 42% women-founded deep tech companies
Link to Pi Ventures blog.
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There is a saying that debt is often cheaper than equity.
Our topic for today is venture debt, which has become mainstream in the Indian start-up ecosystem of late. In 2019-20, the total amounts raised by venture debt funds was about $62 million which jumped to about $85 million in 2020-21.
As the pool of growth stage start-ups increase, it is fast becoming an attractive non-dilutive alternative to equity financing. Not just that. In many cases, it is a great additive to equity financing as a bridge round. Say you are at a Series B stage company and you know you have to raise the next round in the coming year, but if you were to go out to the market today and raise capital you will get a lesser valuation than what you would if you improve your numbers over the next 10-12 months and then raise. To get that extra 10-12 months runway, Venture Debt can be an alternative to bridge rounds.
Our guest on the podcast today is Ishpreet Singh Gandhi, the Managing Partner and Co-founder of Stride Ventures, one of India's leading venture debt funds. You could listen to the episode on the browser above or on Spotify/ Apple Podcast/ Google Podcast by clicking the play button below:
Here are parts of the transcript (edited slightly for better readability):
Ravish: A good point to start off with might be to understand what venture debt is. Traditionally, we've looked upon debt as a bad thing. Now, venture debt comes in at the stage where a lot of companies do not have the traditional cash flows or even assets (which has been the traditional way for underwriting term loans by banks). You've worked with multinationals as well as start-ups. I know that Lendingkart and Rivigo were some of the first start-ups that you lent to while you were at IDFC. Two questions – what is venture debt and at what stage of a start-up’s life cycle should one explore raising venture debt?
Ishpreet: So venture debt becomes available in eligibility once you've raised your first institutional capital. So moment you raise a venture capital round with an equity infusion of around $4-5 million, you become eligible for venture debt for a very early stage company. And it can go to later stages as well because you remain backed by some of the institutional investors by then.
In terms of standard offering, a traditional venture debt product is typically coming on top of venture capital round. So the moment you have a venture capital infusion, you can club your financing with venture debt. Say hypothetically you're a company that is planning to raise ₹50 crores, and you believe that ₹40 crores are getting committed from the VC. The remaining ₹10 crores, you say, okay I do not want to dilute for this capital and that 10 crores can be replaced with the venture debt option, which ends up getting repaid over a period of next 2 to 3 years.
And while doing that you pay a certain interest rate plus you give a certain portion of warrants in the company, which can be 10-15% of the debt amount. And that typically ensures that you do not dilute your stake in the company for those ₹10 crore rupees.
It's been a very widely used tool in the US and the mature economies. It came in existence in the 70s-80s in the US when Venture Capital started coming in and today constitutes a very large portion of the US equity market. Its size ranges anywhere from 13-15% of the Venture Capital market in the US. And some of the other economies like Europe, it will be 8-10%. It's gaining steam in India – it will be around 3-4% of the Indian Venture Capital market today. We think it can be a billion-dollar market in the next one and half years because it is closely correlated with the Venture Capital market and we have seen that grow exponentially over the years.
Our whole purpose remains - how it can be used by founders. Because a lot of founders realize while raising rounds that they end up diluting a lot, which could have been replaced by debt.
The other point, which you have to understand is that this debt can be replaced by equity because this has to be repaid. It's a loan ultimately. A founder must understand that this should be done at a time when you can afford to repay. So it can backfire if you have not timed it well or have not done it in an educated manner. And that's where it's very important for the founders to realise the importance in terms of creating non-dilutive structures which can be repaid.
Another benefit is that the turnaround time is faster than the typical equity venture capital fundraise.
Ravish: What are some of the other pros and cons to taking venture debt? When receivables aren’t coming in or if you’re using it just as a way to prevent dilution and not using the money - then effectively you might just end up paying interest on undeployed capital! When is the right time to take it? And also at what point should you not take debt?
It's a very valid question. When you raising the capital round, you have to be very sure of how much capital you're looking for. And I'm sure generally founders are aware of that. So of the 40- 50 crores of capital being required upfront, it's very important for a founder to understand and forecast the revenues and losses. And then back-calculate that this is the type kind of runway I want for my company for the next couple of years. to check if they should take venture debt.
When I started Stride in 2019 and went to the Venture Cap ecosystem and founders, there were mixed reviews. People are clear of the fact if they’d be pre-revenue or very minimal in revenues - so revenues are not very clear. That's where the traditional venture debt of long-term loan comes in. And, and more importantly, this is an instrument that works beautifully where you're sure that this is a fix-six year story.
That's why I said it's very critical for the founder to time it, well, they should be on top of their business.
Ravish: How do incoming venture capital investors (ex: a Series B investor coming in) look at companies or start-ups that have already some amount of debt on their balance (say debt taken while/ after raising Series A)?
Ishpreet: So venture capital investors have started realizing the importance. We work very closely with all the top funds in the country. Our portfolio has a lot of companies funded by Sequoia, Accel, Elevation, Chiratae, and others. The whole purpose is that they also don't want to dilute in good companies and they would want debt funds to contribute, to grow their portfolio companies.
Ravish: But this is for existing investors, what about incoming ones?
Ishpreet: In both the cases we have seen it is complimentary. And that's where your first aspect of the question comes in handy - asking what the use case is and how do they intend to repay debt- do they repay when they raise equity capital or do they immediately repay or do they keep on holding onto it. We have, I think in our portfolio, already seen more than 15 companies raising or about to complete the follow on equity rounds. In fact, they were talking about augmentation of further debt!
Because the genuine capital requirements cases can be replaced by debt.
Most would not want to raise large equity rounds if that capital requirement can be complemented with debt. Especially where the marketing spends are high and that additional capital can generate the delta revenue for you.
Ravish: Is that the same as Accounts Receivable financing?
Ishpreet: No. AR financing is more of receivable financing for corporates. That is typically like capital provided for you for a marketing spend. So it's more prevalent in the B2C companies where you say, okay, I have to increase my Google spends and my marketing spends by 10% - on that I can generate 20% more winnings, but I do not have that source of capital to do it from equity investor. In AR financing the repayment happens as a share of revenue every month. In Venture Debt the repayment also happens monthly but it is secured lending done on the assets of the company. AR financing is unsecured and it is done as a share of the revenue. There the return for the lender can be as high as 25-26% because they are taking a larger risk because if a company is unable to pay you back, you practically can’t do anything.
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Why this topic for this season’s first episode - A few days ago, one of my best friends from college got an offer from a Thrassio like set up to buy X% stake in her D2C company. Now she had bootstrapped and built this business from absolute zero to a multi-crore turnover company with ~30% margins on each sale! Yet she felt absolutely lost and helpless during the negotiations because she had no clue how pre-money and post-money valuations worked. As a builder and an operator, her primary skill set was building stuff. On the other side of the table were multiple ex- PE guys whose only job was to do these calculations and negotiations inside out.
At that stage, I realised how important it is to understand how valuations, dilution and investor rights in term sheets work. I figured, if ever I want to start up myself - THEN would NOT be the right time to know about these basics.
Moreover, working at start ups mean you’re working for ESOPs and to know what the value of ESOPs could be at various stages, one must understand how dilution and liquidation preferences work.
So, in this episode of the Use Case podcast, I’m thrilled that Kushal Bhagia, who is the founder and CEO of First Cheque, could join us to explain these important concepts. He’s a super founder friendly investor who has been trying to educate the market on these concepts with his Youtube series called “Know your termsheet”.
These are some of the things we cover in this episode. They’ll help you make sure you’re getting a fair deal.
* 04:00 - Context setting
* 07:50 - Your company has a value only because an investor is putting money in it - fir that new shares are created -> dilution happens; pre-money and post-money explained with an example
* 13:20 - Key items agreed in a term sheet; terms and conditions that come with this collateral free money that you get; tag along rights, pre-emptive rights.
* 26:00 - If an exit happens, in what order and how much will people get money; preferential shares, participating and non-participating shares
* 35:00 - Special case of accelerators, pre-seed rounds, convertible debt (YC specific - SAFEs)
* 44:00 - What bets do VCs like to make? Honestly, expect a no.
Listen to this episode in your favourite podcasting app:
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One of the most common things you hear in the world of startups is “We weren’t able to monetise.”
The theme that often plays out is this - the team gets excited about an idea - they start working on it - they talk to customers and if everything works out, they build a great product with an obvious demand in the market. However, in this entire journey as engineers and product enthusiasts we first build the full product and then, almost as an afterthought, decide what to price it at and how to sell it!
Pricing strategy is an important concept that must be incorporated into the plan from Day 1 - even before execution because if you know what your potential customers are willing to pay for, you will automatically prioritise features to fit the price (a.k.a cost based pricing).
In this episode with Dr Sreelata Jonnalagedda, Associate Professor at IIM Bangalore - we discuss how startups can adopt a pricing strategy that is right for them. In the short 30 minutes, I think Dr Sreelata managed to squeeze at least 6 case studies and examples discussing everything from decoy pricing to predatory pricing.
Here are 3 of my favourite examples from the episode:
Framing - Make it difficult to compare competitors’ features! Especially for SaaS.
Prof Sreelata gives a very interesting example comparing Dropbox and Google Drive. Now, there is not a lot of difference in cloud storage, right? Whether you store your files in A or in B, ultimately as a consumer you are deriving similar value from both. So what would you do? You would go with whatever is the cheapest!
But here is something successful startups do - they make it difficult for users to compare features against their competitors’ products. This works where there is not a lot of scope for differentiation in product offering. Dropbox has a loooong list of features across its plans and even if I open the website from India, it still prices the storage in US $. ¯\_(ツ)_/¯
Most users hate doing complicated maths and making detailed price to value comparisons for every purchase. Framing your pricing with the offering in a way that makes it harder to compare your product is a smart option.
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Predatory Pricing: Uber, Ola, Swiggy, Jio, Delhivery, Bounce
Many times market disruption involves new habit creation. Think about the early days of e-commerce when products were priced at massive discounts to incentivise first time online shoppers to buy goods online. Or when as Indians we first learnt to ditch the then omnipresent autos for cabs because they cost the same as taking an auto anyway.
Predatory pricing is a technique where you price your product (say, P1) lower than the equilibrium price in the market (P0 in graph 1) for same or similar products. This allows you to capture a significant market share. Once you’ve built enough customer loyalty to your platform/ product, you change the demand curve altogether.
Now if you increase the price from P1 to P2 (i.e., P2>P1), some customers will stop buying your product but some will stay back because there is an exit cost/ switching cost to leaving your product.
It’s a very aggressive pricing strategy that only those startups that are heavily funded by big growth stage investors are able to follow. It is not something that you can do for a short duration as an experiment and hope to build enough customer loyalty to achieve customer loyalty.
Building loyalty at scale takes both time and big coffers! So do it only if you can afford both.
Bundling - Get Amazon/ Times Prime for ₹999!
Perhaps one of the best example for bundling implemented in the Indian context is Times Prime. For just ₹999 you get subscriptions from Gaana, Sony Liv, ET Prime, TOI, Google One apart from several other benefits from other partners.
I’m not a Times Prime user, but when I looked at the list of offerings under the subscription, I felt like purchasing it just for the sake of perceived benefits it offers.
From the bundled meals at McDonald's to Zoho’s bundled list of enterprise offerings, bundling is everywhere.
Say you are an Ed-Tech platform offering government exam test preparation services. Now the content tested in most of these exams is the same. While making your course pricing catalogue you could offer an SSC exam preparation course for ₹599/ month or you could make a combination and offer SSC + RBI + LIC exam for ₹799/ month.
The first price is a decoy placed to make the consumer find greater perceived value in the ₹799 bundle.
These are just 3 of the many examples Prof Sreelata shared in this episode we did in collaboration with NSRCEL at IIM Bangalore. Do give the episode a listen.
By the way, NSRCEL is a great place for entrepreneurs to start up. Not only do you get support from the faculty at IIMB, but as an incubator, they support you with office space, industry connects and much more. Also, being in the beautiful green IIM-B campus has its perks. Reach out to Shloka for more information!
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If you’re a data driven professional, in all likelihood this episode is for you.
There are also some interesting analysis techniques I came across this week, that I thought I’d share. Check them out at the end of this email below !!!
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On the show today JPK and I got a chance to speak with Shripati Acharya, Managing Partner at Prime Venture Partners on how to measure various SaaS Metrics and why valuations are a geometric function of growth. An astute mind, I’m just surprised how calm successful people like him are and they way they structure their thoughts so well.
Of the many cool things Shripati shares, here were my top 3 learnings from him:
A better way to measure LTV
As common as this metric is, it is also the most mistaken one.
Broadly Lifetime Value or LTV is a measure of how valuable a product is to a user. At the very basic level it can be defined as the Average Revenue Per User (ARPU) divided by the churn. The numerator is a signifier of how much value the product has to the client/user over an average contract period. Shripati argues that instead of using revenue, one should use contribution margin in the numerator. Using ARPU would imply a $1000 product with 10% CM and a $1000 product with 20% CM have the same LTV. But this false sense of pegging value to revenue can lead to costly errors in customer acquisition, he argues.
Next, the denominator relates to the customer lifetime. The lower the churn, the higher the customer lifetime. As Sripathi puts it, “If monthly churn is 10%, customer lifetime is 1/0.1. = 10 months. Meaning in 10 months substantially all the customers acquired today would leave (pretty bad business).”
But there is a problem here. Shripati has written quite extensively on this before:
Startups frequently arrive at pretty attractive customer lifetime figures in their initial days. If a service launches and in the first 6 months only 5% of customers churn, it appears like the startup has achieved a 10% annual churn or a 10 year customer lifetime! Calculating customer lifetime by inverting churn can lead to sky-high customer life-times. Early data does not truthfully reflect customer behaviour over the long term and also suffers from skew due to early adopter behaviour being very different from mainstream users
This can lead to all kinds of disastrous downstream effects such as investing in expensive sales channels that soon prove to be uneconomical.
His advice:
Early-stage startups should focus more on customer payback, ie the time period for recovering customer acquisitions cost (CAC), than calculated LTV. In the absence of customer data, using a sub-24-month payback to inform the choice of sales and marketing strategies is prudent.
Companies A & B have same revenue today, A’s revenue growth rate is 2x of B’s. Why should B be valued 4x/8x/ possibly16x of B?
The chart below from a paper by Morgan Stanley, ‘The Math of Value and Growth’ (link here) shows that the relationship between growth and the P/E is convex. Small changes in growth expectations can lead to large changes in the P/E, especially when growth rates are high.
The key point is that a company growing faster should enjoy a multiple that grows geometrically with the growth rate, not linearly.
This is why SaaS companies that make the same revenue can have very different valuations - and as Shripati notes founders need to recognise this before asking “Why is that company valued so much and not mine?”
How much is 20% NDR worth in the long run?
In a similar context, JPK also made an important observation of how important Net Dollar Retention or NDR is to SaaS companies.
Imagine three companies: one at 120% NDR, one at 140% NDR and the last at 160% NDR. In five years, assuming all else is equal, how much bigger is the last company than the first?
The answer is 4.2x - four times bigger! Each marginal 20% of NDR is a doubling of company ARR in 5 years!
Some interesting links/ readings to help you do better data analysis:
* Using RFM analysis to derive customer insights: RFM analysis is a customer behavior segmentation technique. Based on customers’ historical transactions, RFM analysis focuses on 3 main aspects of customers’ transactions: recency, frequency and purchase amount. These 3 key behaviors can do wonders to analyse the business. Check out this post for how it works: https://towardsdatascience.com/simple-customer-segmentation-using-rfm-analysis-1ccee2b6d8b9
* Two Methods of estimating LTV with a spreadsheet: A nice summary of how you can go about modelling complex scenarios to come up with a measure of LTV using simple excel. Linked to within the presentation is a spreadsheet that showcases examples of the models discussed, each built on a data set of 100,000 rows of fake user profiles. Check it out: https://www.slideshare.net/EricSeufert/ltv-spreadsheet-models-eric-seufert
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The importance of thinking in outcomes
When Gaurav Munjal, the founder and CEO of Unacademy was pitching to Nexus, he was asked - how could a company offering video test prep solutions scale in a country with such poor internet bandwidth (this was the pre Jio era)?
He simply pointed the committee to the fact that the lessons were not a video - they were instead a slide deck with a pointer made to look like a video! He could have switched on mumbo jumbo mode and talked about fancy compression algorithms for running videos on low bandwidth that would give Pied Pipper a run for its money, but instead he was thinking not about features, but about the outcome - which at the end of the day was to help people crack UPSC and not stream high quality videos.
As founders and PMs it’s often that we get lost in a complexity of our own design and forget to think about the problem that the company/ product is trying to solve. We get obsessed by features.
When I asked Pratik Poddar of Nexus Venture Partners, our guest on this episode of the podcast about his thesis for evaluating companies, his answer was quick - Is the company/product outcome oriented? And that got me thinking, just as for a company (for a founder) it is important to think about outcomes, for us as PMs it becomes imperative to ask ourselves - will this feature/ product solve something or is positioned in a way that the user feels an intrinsic need to use the product?
If so, then the outcome of using the product will automatically be clear to the user - enticing a willingness to pay/ try out the product. Not only that, it would also lengthen the average time spent by the customer on your product.
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Personally, I’ve seen the massive difference this approach brings. When we started indiagold, we set out to build a Gold backed Open Credit Enablement Network (GOCEN) offering gold loans. But in order to increase our topmost acqui-funnel and encourage word of mouth, we offered a product called Digital Gold. Now, digital gold is something you can find on almost all major apps like Paytm, Google Pay, etc. People buy and sell gold - mostly with a trader mindset. But that is not something we wanted. We asked ourselves, what is the intrinsic motivation for Indians to buy gold and how do we replicate that virtually? We found the answer in the fact that deep down in the our minds, gold is a form of savings for an Indian household. We immediately changed the positioning of the same product designed for a trader mind to that for a savers mind. We pictorially depicted a user’s progress in saving gold in grams which encouraged them to keep buying again and again in an amount of their choice like ₹50,₹100, ₹200 (rather than trading in a one of instance). We also gave the option to a user to convert this digital gold into physical gold (again, the emotional satisfaction of holding physical gold in your hand bought out of your own savings).
This encouraged stickiness.
And it’s abundantly clear that VCs like Pratik value that. Which is something he also talked about on the podcast on the 2 kinds of business models that he looks out for.
Now, to listen to the 2 kind of models, you will have to listen to the show. It’s a ~30 odd minutes episode and very insightful. You could listen on the audio file above or on your favourite podcasting app. Let us know what you think! Share it with your friends if you like it - you could forward this email/ share it on Twitter/ do you thing buddy - get those bragging rights!
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Byrne Hobart called it “the Vegas Wedding Chapel of liquidity events” - quick and easy.
One of the hottest trends of 2020 among late stage tech companies was to go public via a SPAC or Special Purpose Acquisition Company. SPACs are essentially blank cheque companies set up and listed with the sole purpose of merging and taking another company public in the next 2 years or so.
This episode however is much more than just about SPACs. For anyone interested in Venture Capital, growth investing and tech - it is a must listen!
Our guest on the show, Gopal Jain co-founded Gaja Capital, one of India’s leading Private Equity firms, in 2004 and is a managing partner at the firm. He has led several of the firm’s investments in sectors including education and financial services. He is one of the more experienced private equity investors in India having led or co-led over 25 private equity investments since 1995.
This episode is part of a 4 episode series on the best Indian business books nominated for the prestigious Gaja Capital Business Book Prize 2020.
Don’t miss out Gopal’s 1 key tip at the end of the show on how to break into Private Equity. Hope you enjoy the show!
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Why are Amazon, Reliance, Walmart backed Flipkart, and several others competing for a piece of the action in online grocery retailing? Consider some numbers from Redseer:
⚡️Grocery is expected to be a $790 billion market by 2024. Of this, online grocery is expected to be around $18.2 billion.
⚡️ The market, currently around $603 billion in size, is dominated by traditional retail (95.7%).
⚡️Only 0.3 % of the market is served by online retail and 4% is served by modern retail. The remaining is still catered to by traditional stores.
What do these numbers tell us?
The headroom for growth is massive! At the risk of sounding cliched, I’ll say this: even if you end up with a modest 1% of the market, you’d have a business that sells goods worth over $7.9 billion a year.
What will help drive this growth?
* Improvement in supply chain infrastructure
* Expansion to smaller cities
* Government policy that allows 100% FDI in food and retail
Did the lockdown slow them down? Not at all. On the contrary, after a slowdown in the months of March and April, they grew faster.
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Since I started tracking the sector in 2012, dozens of startups have come and gone. But one company has been constantly on my radar: BigBasket. The company, which mostly focused on heads down execution, was valued at $1.2 billion in their previous round of funding (2019). As per reports, their valuation is likely trending upwards of $2 billion now.
BigBasket is not our typical startup with young founders, snazzy tech, and headline-grabbing public relations machinery. Its founders are older, it works in a business with razor-thin margins, yet is inching closer to profitability, and it has held its own even when hyper funded startups unleashed deep discounting blitzkrieg.
How does the company win? What makes it tick? In the book ‘Saying No to Jugaad: The Making of BigBasket’, authors T N Hari and Subramanian MS tell you how. The book gives us an insider’s view of what helps the company succeed. It talks about culture, strategic decisions, and focused execution. In this episode of the podcast, we discuss the book. This episode is brought to you by the Gaja Capital Book Prize which was instituted to celebrate the best books on contemporary Indian business.
Listen in!
JPK & Ravish
PS: Also check out this episode on getting startup hiring right on The Orbit Shift Podcast. It is a podcast that I’ve been working and brings you practical insights from founders, investors, and experts.
★ Giveaway alert ★
We’re giving away five copies of the book ‘Saying No to Jugaad: The Making of BigBasket’ to our listeners. All you have to do is to say something (be nice 😊) about this episode on Twitter or LinkedIn with the hashtag #UseCasePodcast. Tag me and Hari.
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Did you know that in 2020 on an incremental basis, more deposits went to private banks in India instead of Public Sector Banks for the first time in history?
What is happening to the bad loan mess and NPAs that Indian banks have been forced to deal with by the RBI? Is the worst over?
Forced by the rapid pace of technology, can India’s gigantic banking system rapidly evolve to meet the consumer demands? What’s stopping them?
In this episode, we’re joined by Tamal Bandhopadhyay to get answers to all these questions and more. As a business journalist, Tamal has covered India’s banking sector for more than 2 decades. He’s published 6 books on the subject and is constantly speaking to the top bosses to get a lay of the land. Now, like Tamal we can’t get the ex-RBI heads or Aditya Puri on our podcast, so he’s really the best person to give a rundown on where India’s banking sector stands today.
His latest book HDFC Bank 2.0: From Dawn to Digital has been nominated for the prestigious Gaja Capital Business Book Prize. And ̇we’re delighted that this episode was sponsored by Gaja Capital, one of India’s largest Private Equity firms.
Tamal called his latest book ‘Pandemonium: The Great Indian Banking Tragedy’, but is that really so bad? We’ll leave it for you, the intelligent listener, to decide.
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Welcome to yet another episode of The Use Case Podcast. I hope you've started thinking about your new year’s resolutions because if you are then you've got to listen to today's show. Believe me, it's going to change how you think about money. Our guest today is Monika Halan, the author of the best-selling book Let's Talk Money, published by Harper Collins in 2018. Monika has worked across several media organizations in India and has run many successful TV shows around personal finance in NDTV, Zee, and Bloomberg.
She's also a consulting editor at Mint. And ever since I read her book, I just wanted to have her on the show to talk about personal finance, because this is such an important topic for people in the startup ecosystem.
★ Giveaway alert ★
We’re giving away five copies of Let’s Talk Money to our listeners. All you have to do is to say something (be nice 😊) about this episode on Twitter with the hashtag #UseCasePodcast. Tag me and Monika.
★ Show notes ★
In this show, we talked about a mental model called ‘The Money Box’ that helps you think about your personal finance better. Some of the basics of the Money Box we talked about are:
✅ Understanding cashflows (income, expense, and savings)
✅ Creating an emergency fund
✅ Insuring yourself and the people around you from shocks
✅ Investing your money smartly
We also talked about why it’s a bad idea to (subject to caveats):
❌ Confuse insurance with investment
❌ Invest in real estate
❌ Buy gold as an investment
❌ Take on debt for instant gratification
Links to the stuff we talked about in the show
👉🏾 Buy Let’s talk Money on Amazon (contains an affiliate link)
👉🏾 Follow Monika on Twitter, LinkedIn, Blog
👉🏾 Thread by Dhimant of Better India on Personal Finance
I really enjoyed this conversation. I hope you do too! Like the podcast? Spread the word.
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There are very few VCs in India who have seen more than 2 Venture Capital cycles play out. Then there are those select few who have raised more than 3 funds. And then there are even fewer those who have seen their portfolio companies go all the way and IPO.
Then there are the likes of Rahul Chandra who have started not one but 2 VC firms over the years apart from investing in some mega startups like MakeMyTrip and Bigbasket and companies that went all the way to do stellar IPOs like the micro finance firm, Spandana.
Starting all the way back in 1998 to co-founding Helion Venture Partners in 2006 to now starting a second innings with Arkam Ventures, Rahul has had a ringside view of the VC industry and the barren honesty is honestly, delightful.
No PR. Just plain talk.
This is a stellar episode and by far one of our favourites this season! 🔥
Timestamps of topics covered:
* 2:15- 3 phases of Indian VC since 2006, changing criteria, how valuations have become frothy, shift in VC biz from a ‘rule based businesses to an ‘exception business’
* 8:55- How multiple VC funds compete and collaborate in the same rounds, enter Tiger Global and cash burning competition (Ola vs TaxiForSure case)
* 15:50- Is India really innovating? Early stage companies behaving like big consumer brands
* 20:30- Irrational exuberance, shift in Masa Son style investing vs value investing; impact of low interest rates in early-stage VC investing
* 27:30- Rahul’s anti-portfolio, missing BookMyShow because of small TAM
* 33:30- Credit landscape then and now; How Spandana recovered from Tamil Nadu government banning microfinance industry to IPO in 2019
* 49:50- Dissecting the “Middle Income” 400 million base in India; why Arkam Ventures has a thesis for targeting this base
* 1:03:00- Book reading from The Moonshot Game, covering what happened when Helion Venture Partners was being shut down. What was going on in Rahul’s mind?
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This episode was sponsored by Gaja Capital, one of India’s leading Private Equity funds. Rahul’s book, The Moonshot Game: Adventures of an Indian Venture Capitalist has been nominated for the prestigious Gaja Capital Business Book Prize 2020.
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There’s no template to success. That’s for sure. But, there are traits.
In this episode Chris Saad, who was previously the Head of Product for Uber Developer Platform and is presently a strategic advisor to several startups joins us to share his learnings on what leadership characteristics set our favourite CXOs apart.
Chris fundamentally believes that leaders look at the world in a special way. In the episode he shares concise, pragmatic insights into how leaders think and act - their lens; and gives actionable advice on how to implement those strategies in our daily lives.
3 important traits we discuss in the episode are:
* Intention: Most people do not fully understand or shape their intentions. Instead, they allow them to remain subordinate to the whims of the current circumstances. Consequently, their intentions haphazardly change from moment-to-moment without being subject to a deliberate process of critical reflection. It is such carelessness that translates to ineffectual behavior - which, in turn, leads to failure, anxiety, frustration, and anger.
* Curiosity: Curiosity-suppression has been institutionalised in our world. With few exceptions, the education system is mostly anachronistic - designed around the conditions and requirements of the industrial age. During that era, workers needed to remember facts, sit on an assembly line, repeat the same task over and over - responding to bells and queues. The thinking was done by rote. Consequently, the education system designed to cater to that era’s needs is effectively a regime of Pavlovian conditioning, bereft of edification, wherein critical thinking took a back seat to being able to remember and follow the rules. In the 21st century the strategies for learning will be completely different.
* Agency: Do it as a thought experiment. Ask yourself, “In an ideal world, if I had no constraints or obligations, how would I want this aspect of my life to change?”… Have an abundance mindset. Remember, almost everything is possible - you just have to figure out how. The most successful people, especially among entrepreneurs are those that have the ambition and drive to go out there and achieve what they want. Cultivating that agency is what matters.
The episode is filled with examples and some very fun anecdotes about Uber India. This is such a wonderful way to start a Monday with! Hope you enjoy this episode:
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I was on my way back from a long day at work a few months ago. Went straight to bed. The next morning was busy. The day after too. And it was only a few days later that I noticed that my wallet has been missing.
All these days, I did not really have to take out my wallet. Almost everyone, from the grocer to the vegetable vendor accepts mobile payments in Bangalore. But then I had to fly out a few days later to Chennai and I started to panic.
How will I enter the airport without an identification card?
That’s when I downloaded Digilocker, the app launched by the Indian government to download and store all documents in a digital format. I downloaded my Aadhaar card, my driving license, and registration certificates for my vehicles.
These certificates are legally valid and I don’t’ really need physical copies anymore. It works at the airport and most other places I need it. And that’s when it struck me that Digilocker is really one of the most underrated apps in India today.
On Digilocker, you can download and store hundreds of documents issued by the government — even your education records and pension certificates.
I knew one of the people behind Digilocker. Amit Ranjan. He’s one of the few people who’ve gone from the private sector to join the government for a salary of Rs 1 to help deliver better digital governance in India. Amit had sold his startup Slideshare for $119 million to LinkedIn.
Every time I go to Delhi, I made it a point to meet Amit. Sitting at a coffee shop near IIT- Delhi, we’d talk about the startup scene in India. It was always an insightful conversation and I’d walk away feeling good that he was doing what he was doing.
So a few days ago, when Amit tweeted about a design agency that did some great work reimagining Digilocker, I had to get in touch and ask them to be on a podcast. From my past experience, I’ve noticed that most of the time, design firms, code shops, and companies don’t come together properly, and in most cases, it ends up in a disaster. So this was different and I wanted to figure out what’s different.
After the revamp, 30-Day retention rate for the Digilocker app jumped by 280% and it is also ranked #1 on the iOS top charts. The design agency is called Parallel and the founder of the agency is Robin Dhanwani. And he’s our guest on the show today.
About the guest
Robin is a techie turned designer and runs Parallel, a product design and innovation studio in Bengaluru. He is passionate about the power of workshops to help teams align, focus, deliver and specializes in Google's design sprint technique to help companies build better products. Believes the purpose of design is not just to create good experiences, but to move metrics. You can reach him on @robindhanwani on Twitter.
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Vikrama Dhiman is presently the Head of Mobility Products at Gojek and has been a builder for more than a decade across firms like Bharti Softbank, WizIQ, and Zeta- a Directi company.
Vikrama says that having such becoming a Product Leader today has come at the expense of making several mistakes. He’s grown from making them, and gained an almost anticipatory sixth sense in prioritizing and responding to challenges - a critical skill for all founders, PMs and builders alike.
Here’s what we talk about on this short yet insightful episode:
* 1:07- Launching Gojek in Singapore, the challenge of localization
* 7:15- Hiring strategies and measuring PM competence
* 14:50- Shift from glorified Project Managers as Product Managers
* 16:40- Anticipation vs adaptation - being agile
* 19:20- Mistaking features for product strategy
* 22:30- A politically incorrect rapid fire
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On this podcast in the past, we’ve talked about product-market fit, minimum viable product, jobs to be done, lean startup model, blitz scaling and several other ways startup founders approach company building.
In today’s episode, Dr Ajay Sethi, venture partner at Accel talks about a new way of looking at startup building. He calls it the engagement centric model. The model tells you when the lean startup or minimum viable product just doesn’t work.
In fact, it offers an improved framework to understand many of the questions founders grapple with. As you know, we’ve interviewed dozens of people on this topic before. And this is among the best of all. Listen in.
🙏If you like this podcast, please do give us a ⭐⭐⭐⭐⭐ rating on Apple Podcasts. It helps!
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Let’s be honest. The title is every bit deceiving. Yet, there’s truth in it.
It is true because this conversation with Vindhya captures so much of what building a product for India and being a Product Manager is about. It is deceptive because hidden within it are so many elements that are relevant even if you’re not a product manager.
For example, the transcript below is from a part of the episode that touched upon user privacy. It’s got 1) an interesting book recommendation, 2) some masala as to what could have been a mega scandal between Uber and Apple, and 3) a prefix to a more detailed guide on building great onboarding experiences for customers.
JPK: I’m reading a book called Future Crimes by Marc Goodman, who has worked with the FBI and the Interpol and he talks about how crimes will look like in the future. I'm fairly aware of privacy, but you know, this just scares you a lot. You know, interestingly, I think a lot of things that Product Managers like yourself complain about are getting permissions and things like that. I think Apple does it in the interest of the consumer. I don't have to worry about malware and, you know, some random dude going and launching some crazy app on the Appstore.
Ravish: Yeah Vindhya, how do we better integrate privacy in products?
Vindhya: A lot of people, like JPK said, on Android do not care about privacy and you know, they're (PMs?) always trying to find a way through it. Especially if you are a B2C app - you will take any data that comes your way. Apple does not let you do that.
In fact, I remember that whole Uber story, where they were trying to do a lot of things. (Context: This NYT piece showing how Uber was fingerprinting iPhones secretly, a violation of Apple’s privacy policy.) Apple's really good with the team that they have in place, to go through your code and understand what kind of permissions you're asking.
But I think fundamentally also we need to think about how we're sending notifications and when & where you’re sending them. Unfortunately, I don't think a lot of apps have it in their ethos to be honest. So let's start from there- really being honest.
Companies that are starting up, they’ll be like let’s just get all the contacts and all the information- “We have 50 million contacts” - I’m like what are you even going to do with that?" Consciously asking yourself (why you need this data) is very very important.
I can’t think of a better way to start a Monday, and Season 2 of the podcast, than with Vindhya on the show. Hope you enjoy this one. Cheers!
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It’s not often you meet old friends and take a trip down the memory lane and wind up with a podcast decent enough (I think) for other people to listen to. I caught up with Vineet Devaiah, the co-founder of Teliportme (10 mn + downloads on Play Store) after long and had a fun talk about venture capital, startups and we even talked about GPT3, a la hype cycles.
The last we met, was at the Indian Coffee House (not the one on Church Street) in Bengaluru. We were both at the crossroads. I was about to move on from FactorDaily and he was about to move on from Teliportme.com. I moved on and joined Freshworks. He stuck to his guns and continued to build. Go ahead and give it a listen. You might like it.
If you’re listening to this episode on a podcasting app, please give us a positive rating so we reach more people. Also, subscribe to our newsletter on turnaround.substack.com. Give us a shout out on social media. It means a lot to us.
Ravish joins me next week for an episode with an amazing episode, with an amazing product manager.
Cheers — JPK
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“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather…
…You have not engaged in our great and gathering conversation, nor did you create the wealth of our marketplaces. You do not know our culture, our ethics, or the unwritten codes that already provide our society more order than could be obtained by any of your impositions.
You claim there are problems among us that you need to solve. You use this claim as an excuse to invade our precincts. Many of these problems don't exist. Where there are real conflicts, where there are wrongs, we will identify them and address them by our means. We are forming our own Social Contract. This governance will arise according to the conditions of our world, not yours. Our world is different.”
John Perry BarlowA Declaration of the Independence of CyberspaceDavos, SwitzerlandFebruary 8, 1996
What many call a rhetorical dartboard for Internet libertarians and a dot-com era hubris of mis-founded optimism, the document “A Declaration of the Independence of Cyberspace” still remains relevant in a world of data surveillance and increasing nationalization/ regulation of the internet.
More than 20 years have passed since Barlow first first typed it out as an email in his hotel room at Davos to some 600 odd friends after being pissed with President Bill Clinton for signing the Communications Decency Act into law, empowering the FCC to ban the transmission of "obscene" material on the Internet.
Now, I wouldn’t call Nikhil Pahwa the John Perry Barlow of India, for his stance, is almost always balanced between the libertarian ideals of freedom and the practical implications of leaving the internet unchecked, but he has done much for the freedom of internet in India, which both you and I often take for granted.
You’d remember when Facebook decided to bring Free Basics to India, it led to a huge outpour of criticism against the move and a cry for net neutrality led to the birth of the “Save the Internet” campaign. Nikhil was one of the key people behind the movement.
As the founder of Medianama, Nikhil has spent more than a decade working in and for the internet space in India and I can’t stress enough, how informative listening to him talk about the legal, ethical, and market implications of restrictions on the internet is - the most recent restriction being the app ban that Indian imposed, for which justification can be made, but it raises serious questions. For example, if code is speech then is imposing a ban on code a ban on Freedom of Speech?
We talk about everything ranging from the hypocrisy founders show while sucking up to the government and taking foreign money to the geo-political implications of banning Chinese apps, what is likely to happen to them as they appeal against the order in the judiciary ++ much more!
It’s a very informative discussion that personally opened my mind up and I have to urge you to check it out as well!
You could listen to the show on the audio above or listen to it on your favorite podcasting app:
* Apple/Google Podcasts: http://link.chtbl.com/yj6meSpk
* Spotify: http://spoti.fi/2n4elRe
NEW SECTION ALERT:
We’re calling it “HOW TO SOUND SMART DURING A DINNER PARTY” where we will try to give you fodder for interesting conversations.
New Non-Personal Data Governance Framework released by the Government, which would impact the competitive advantages of some startups if enforced (clarity awaited).
Our country’s policymakers and legal experts view data in 2 types. Personal and Non-Personal Data.
While an individual’s own location would constitute as personal data; the information derived from multiple drivers’ locations, which is often used to analyze traffic flow, is referred to as non-personal data.
So far, India’s regulation of its citizens’ data and their privacy online was governed under the Information Technology Act, 2000 but last year the Personal Data Protection Bill was tabled in the Lok Sabha. It was sent to a Joint Committee for review and is yet to be passed by both houses. The bill brings several laudable changes to the powers vested with the Indian consumer (“data principal”) on how their data can be used by startups and companies (“data fiduciary”). You could find the details of that the bill and how it would likely impact your business here.
Meanwhile, in important news this month - even as the PDP Bill was being considered by both houses, a nine-member panel, headed by former Infosys vice-chairman Kris Gopalakrishnan, released a draft of the Non-Personal Data Governance Framework. Under this framework, as Anirudh Burman writes in the Indian Express:
“the draft report proposes an expansive regulatory regime that would mandate data-sharing by anyone collecting data above a certain threshold, and require registration with another new data regulatory body for anyone collecting or deriving benefits from non-personal data.”
This means that if as a startup you are collecting non-personal data above this threshold you’d be required to register with a regulator and share this data. Which in the draft’s own words:
Factual information will mandatorily need to be made available for free, but data where there is value-add might be available to your competitors by the government, for a “fair, reasonable and non-discriminatory” price.
Many including Nikhil, as he outlined it in this op-ed, are calling it India’s Nationalisation of Data while some like to draw comparisons to the license raj days.
While it is laudatory that an open data regime exists where the barrier to entry for new startups is reduced with open data sets, the question is if it is fair to those who were innovators and tapped the first-mover advantage in collecting and owning that data.
This could be a nightmare scenario for founders and investors who define valuation for several young AI startups based on the data they own. We’ll be sure to watch this space closely in the coming days on this newsletter. Till then, if you haven’t already, do forward this email to your friends! Maybe this will be a fun way for you to connect with friends during these times and chat about something interesting!
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