Title image of episode 16 with Mahesh Murthy of Seed Fund
Mahesh Murthy of Seed Fund

From Copywriting to leading Channel V, India’s Best seed Fund and the Space Race

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Mahesh Murthy(@maheshmurthy) is a well known name with most entrepreneurs who started up in India between 2000 and 2012. A little background to the name is that fact that Mahesh went from being a copywriter in Silicon Valley to founding India’s popular Seed Funds. Listen to Mahesh from Seed Fund, journey from copywriting to leading Channel V, India’s Best seed Fund and the Space Race

Mahesh from Seed Fund helped Jeff Bezos with the “Everything Store” campaign, led Channel V and then eventually founded Seed Fund, one of India’s best-known seed funds that funded storied names such as Red Bus, Chumbak, Carwale, Voonik etc. Both of his Seed Funds won the best fund award, a rare feat. After having funded some of India’s storied startups and after seeing good exits, Mahesh is now trying his hand at Space, a new and exciting frontier.

In this episode, he shares his wisdom on what makes ventures work. The strategies that entrepreneurs need to employ and what the space race is all about. He knows a thing or two about scaling startups and should we add that the episode is full of rare insights and pointers on how to make your venture tick, succeed and scale.  A must listen!

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Here are some interesting snippets from the conversation

Working with Jeff Bezos 15:41

Jeff had already launched Amazon. It was interesting that I remember I put my hands up. I was on the board for an advertising and marketing firm based in Silicon Valley. In those days B2B was everything and everybody frowned upon B2C . 1995-96 seems like twenty five years ago a huge amount of time. But I said, Hey, you know what? I wrote to them and Jeff said, Okay, come up for a meeting he was in Seattle, I remember going to his office, small office with six, seven people working there. He was sitting at a small table. His table was a desk which was a used door. And decided to launch Amazon and we said lets get started doing the branding. We had two battles there. We won one and lost one.


Amazon was not the first book store in the world and Facebook wasn’t  the first social network and Google wasn’t the first search engine, there’s not really a first not first mover advantage in any of these cases. As long as you are in the early cohort, you know, you keep looking at what others are doing, you can actually start shaping that daily and creating something that didn’t exist.

Mahesh’s Channel V Days


I really loved my time at channel V, because it was completely new and different for me. I came from the US where I was in an advertisement firm and later on in an e-commerce firm building ecommerce product to a point where I was actually sitting with musicians figuring out what kind of music to play for what time of day – who watches the TV at 2 at night, who watches the TV at 2 at the afternoon and who watches it at 9 pm and figuring out what programming I could do for them at different times of day, weekends and how I could maximize revenue from that.


First fund was called Passion Fund. It was actually only my money but not a huge amount of it. It was bare; not even a million dollars. Some money, I came back to India with, back from the US etc, and it was real learning on how to do angel investing – putting money in companies making terrible mistakes, learning later on what I should have done what I should not have done so it was kind of my MBA and how to run a venture fund with my own money


I’ve been investing in India since 1999, so I have been here a while, may be 20-21 years. Things are changing. But the more things change, the one thing that remains the same is that the innovation breaks through. Every time somebody writes a playbook and follows it. You will eventually find out that, you know, you may follow it but that company really didn’t end up anywhere doing very much. 

Listen to another great episode:  Growth and entrepreneurship across the world: Alex Lazarow of OutInnovate: Episode 23, Season 1

Show Notes

Follow @maheshmurthy) on twitter

Some of the storied names he has been associated with:

Logo of Chumbak
Logo of Carwale
Channel V Logo
Redbus Logo

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Episode Transcript

(Automated Transcript)


company, startups, india, buy, amazon, satellite, fund, started, customers, simply, space, build, business, books, big, figured, launch, sit, people, innovation


Krishna Jonnakadla, Nida Sahar

Krishna Jonnakadla  00:01

This is maharajahs of scale, a podcast where we go behind the scenes and talk to founders who are demolishing the myths around building and scaling a big business in India. These are the stories that have shattered the assumptions around Indian consumers and changing the game completely. I am Krishna Jonnakadla, serial entrepreneur, co founder of flip the fashion located in town and startup mentor, bringing you the stories. Hey listeners today we have the inimitable, incredible, irreverent and unapologetic, Mahesh Murthy. This unapologetic term, I wanted to use this term myself, but then you know, when I checked his LinkedIn profile, I realized that he himself is uses that. So my show Welcome to the show. So my issue is great to have you this is a freewheeling conversation about your own career, what you see happening and how you see the Indian landscape now and what you see out in the future. And in some sense, the trigger for this happened because of a couple of people. One is Nathan karma of zerodha. And he was our very first speaker. And while speaking to him, I asked him nithin what are some thinkers and people in the startup ecosystem out there that you respect? And then he said, He's not that active anymore. And then I like Mahesh Murthy, you know, for how he used to say and what he used to say. And then and then we spoke to auditable, we have we resorts and she spoke about the role you played with three resorts. And I said, Well, we've done you know, 15 episodes close to a season's worth of episodes, and his name has come up more than twice and we definitely need to have him on the show.


To be here. And good to hear positive references Korea. Thank you.

Krishna Jonnakadla  01:49

So before we actually jump into your career, I want to get what this fascination with spaces your latest fund is in the inner space race. And I'm certain that beyond the euro for new world and settling humans into places that have not yet corrupted by human beings. There is another angle out there that lowly mortals like us are perhaps missing what's what's the space race about


space actually came about based on an opportunity, it was optimistic. So my last two funds seed fund one and seed fund two both happened to win India's best VC fund of the Year award and not too many funds, by requests. And after that we had we had an interesting thing where somebody from the Government of India called up and said, Hey, you know what, we would really like what you've done. You seem to be reasonably invested, not too bad. And we could be, you know, interested in doing something in hardware, everybody seems to be doing comms and comms and so on so forth. So my first thought was electronic hardware was really boring and you know, doesn't make sense either. How would I said okay, you know, if you give me a little time that we go talk it out and come back and see if there is really stuff that I like to do and more of his stuff, and I could do is I you mentioned red bus, etc, when we were discussing things before the record button was pressed So, or even other people beat etc. And what a lot of the stuff that I like to do is in uncrowded sectors, where we add first players in first, who will maybe have an opportunity to add shift and create a product. When you start like overheated thing, like a food delivery thing or a mobility thing where that 10 guys fighting, each of them wants more money, everybody's paying lots of money. So that said, I look for similar sorts of areas. Now, interestingly, about five, seven years ago, I was sitting with a guy who is we, your classmates in school, I mean, we are simply in a given school estimates. my buddy's name is Asher, and Ferrara, and I at that point, had started mentoring a small company out of Bangalore, which wanted to do something in space, it was 2015, early days, but 2014. And they were not able to really make much headway. And the particular what he wanted to do was, you know, we, we wouldn't take risk as a Hey, what would be better off? What if we made a satellite and you know, these guys were really doing small steps, and we wanted to take giant leaps. So that thought came back when we were chatting again, and I called around again in early 2016, early 2017 when the government has called up and said, Hey, you know, what, can you kind of hardware Freelancer far more qualified guy on the hardware front than I am. He's actually one of the few true geniuses in electronic hardware. So the first thing that came to mind is space. And it actually seemed to click for a few reasons. One, nobody was touching it even now. Two years later, we are India's only space focused on by India can be the world's third a second point. There is no other space focus funding initiatives that we know Second it seemed to be pretty good economics you know unlike an e commerce or the.com which is eyeballs and Valuation Services very much one of those businesses where you sell the satellite to take your you take the money you bank it to me for the next month right so it's it's one of the things where the cash would come early as opposed to you know, having to know something clean. So, this seemed to be interesting when we looked at a few other facts which seemed to really you know, align us we look at the fact that one is so had something like 35 47% global market share and satellite launches. Now very few people knew it in fact, when we met Sivan, the then chairman of fisto, and I told him this, I said, you know, system and you have a 37% global market share, is that right? consciousness? No, we don't. I said, Yes, you do. And I showed him every single satellite launch that we've mapped out. And later on, came back and said, You're right, we didn't know that sells magic. We are a world leader in satellite countries, and we did not prod ourselves. So like I said, we had to launch more satellites than any other country in the world. But we had no space industry, no private industry whatsoever, it just didn't make sense. And we looked at the manpower upfront, you know, this has been there for 60 years in India, all the DMR MDR DLT rodelle all the different sets have been around for a long time. We calculated directly so 150,000 people that have passed through their portals in all this time, who had had some kind of spaces since we put this all together and said okay, we're all these these qualified people, we have launched facilities, we have 1/3 of the global market share and we have no private industry, what if we try to build out this industry so that will be the starting pieces of the fund, we submit back to the government said look, we have these two phases phases one, security, electronics and defense electronic stuff is another and high end you know, the prosumer level taxes. So, we went through this entire So, we looked at this we looked at the fact that there were that we had like the world's largest market share for satellite launches was India's we looked at the fact that we had at least 150,000 people put some kind of spins in India and we also looked at this kind of


sense we had to the world was going from you know typical satellites that cost $100 billion plus which is 502,000 crores and this new those new distributor miniaturization in satellites to micro and nano satellites that India that you know, people with logic 10s of 1000s of satellites can be fed to could be an interesting thing to really build out this entire ecosystem that's what we went back to the government with and said hey, this is what if you want us to do something electronics we'd like to do this so they looked at it and came back and said Okay, sounds good. You know what, if you go raise a fund we'll put in 20% of this up to about 90 crores which means they said okay, we could go raise a foreign particular fund and they give us up to 90 crores for it. We thought that was pretty interesting. So we went out and we got commitments for about a third of that we're kind of on our way to do our first shows right now. So we will be raising but for him, it was was fine. And the title of the of the fund is to basically bait out various parts of this ecosystem. Another way to explain this Krishna is if you if you look at how space has traditionally been done, if I look at how what we saw does in India, what NASA used to do in the US or what the JAXA does in Japan or what Isa does in Europe so essentially you know here's how it works so let's say the some government determinar government or the government or somebody decides that they want some imagery or some you know from space so they go to Israel and say you know what, can you give us some detailed agriculture imagery of you know, we want to understand by a tobacco crop or rice crop is failing Can you tell us what's happening to some pictures from space? So then it's so good See ya okay you know what, we kill the satellite we build the payload we'll build the cameras we'll build the sensors we will build the rocket we build in Launchpad we put the sensors in the camera before the cameras the satellite will put the satellite in our pocket will launch the rocket from our launch pad We will then track it using a ground station we will have our people there you know look at the imagery that comes from there we will analyze and we'll give you the answers now this typically this whole thing is full stack thing is really wanting to be done so quiet you know and and ends typically if you the government department today goes to a store it holds is a two to three year wait before it's looking to get anything done because they're really overloaded. Our simple thought was you know, what do we take this in that stack and this blew it apart exploded and take slice by slice of it. In a sense, what if you bet one company that will lead it optical payloads what we did it did one company that will need a satellite so he would feed it one company that did rocket launches one company that did translations one company that paid in Making some, you know, optical imaging, communication from space one, copy that analytics, and so on, so forth. So we build up every one of these services, more than one company, we mean 1520 2530 different companies. And then these guys all go to market sell to anybody in the world, anybody. And if somebody needs more than one party solution, they can all work with each other. So that was a basic idea. That still is the basic idea behind what we're doing. It's kind of like a Swiss carrot to fund if I was to use that phrase. We think, of course, is fiendishly clever, clever, which doesn't mean it would be end up being very stupid. But that's really where we are, we have to look for companies that five companies that we've already kind of sort of identified started working with. One is a satellite manufacturing company, it is a construction company. There's one data analytics company, there's, there's a communication payload company, and there's kind of a services company. These are five that we already kind of identified. But behind this, we have another 20 that we've lined up that we think we'd like to potentially do business with, or perhaps make investments with. So that's really the thinking behind the fundament

Krishna Jonnakadla  11:04

very interesting. So the even in the US, which perhaps has no lion's share of satellites out there, and is a much more evolved industry in this space is the Amazon Web Services, equivalent moment out there yet for space age, so that a lot of smaller entrepreneurs can build out multiple use cases and use of it. So


yes, and no, I mean, this is there are public datasets out there, for example, there's a bunch of nice at NASA data that is already out there public, there's a bunch of Landsat data that's public, there's a bunch of Isa European Space Agency data that's out there in public, they're available Sentinel, Copernicus, Galileo, this data that's already available out there, you it's not particularly high resolution, I think vehicle data goes up to 10 meter equals one pixel resolution, which is okay, but not great, right. So there is there's a lot of data available, it's not particularly high resolution data that is out there. So you can do some basic stuff, it's already out there, you can already build some, you know, build a bunch of applications. Security study mentioned Amazon, Amazon has just set up at the ground station company where it's doing a couple of things, it's it's kind of sort of extending their own reach of AWS to space in a small way, they're already there. But it's very fragmented, there's no cohesive picture has come together as the first kind of Monopoly type of driving space is happening with SpaceX, which is doing what 25 30,000 satellites launched hundreds of them, and they want to be blanket the earth and offer internet coverage in every rural or urban area, you know, all over so essentially, you will not need any backhaul, any landline connection, first I DDH from space, who you should be able to, that's the idea you can be the middle of the sea and get, you know, broadband, that's really the first kind of mega monopolistic idea, but there's room for a hell of a lot more. And you know, there are two kinds of applications or speaks one is in observation. So I can look at the earth throughout the two buildings and see pictures and you know, if you want to track movements, you want to make sure there is another advocate staff is not coming in from the sea, or you want to look at crops and you can look at them in infrared, visual spectrum as well as ultraviolet etc to speak because you will see some diseases in some spectrum, you will see some, you know, nitrogen deficiency the particular spectrum, you can look for space and say, Hey, you know, that part of the field needs a little more of this kind of fertilizer, this kind of feed, this part of the field has that kind of disease, you can do that stuff. Or you could do other interesting stuff, saying, Hey, you know, that part of the field is going to go bad, you know, tell the farmer to do something there. Or, like other companies working with, which works with people with choke crops, and people who report you know, their customers will come back and say, hey, my crop was quite there they go and say, Hey, you know what, he's covering the cost for the you know, what he's fiddling with this, his crop is perfectly fine, because we can see the satellite because there was nothing wrong with this crop. So there's this that's just observation. In addition, there's some indication where currently we believe mobile phones solve everything, but they don't we don't have towers all over India. I mean, if you're on a place you're in there, you know, just outside that area, you know, on a fishing boat, you don't really have coverage. So you can actually use satellites to give any kind of communication coverage within the country or even across the country. It has to be one of the guys who's talking to us is a company that really wants to build a global Internet, which is off so you know, building kind of hubs, its phones for printing, the new network in space. So there's there's it's exciting times And apart from that there's also the fact that I do agree with Elon Musk, when he says that we have to be multiplanetary species at some point, x years from now, maybe five or 10, or whatever, we will start needing to start moving people out. And the earlier you start, the better. So it's a it's exciting. When there's a huge amount of potential out there from from the really out there moving people into other planets trim all the way down to can you tell me if my tapioca crop has, you know any infestation, so you have a large range of applications. And there's a huge amount of entrepreneurship that's available that that's ready to be done that

Krishna Jonnakadla  15:21

fascinating. So let's switch gears a bit. Talk about Amazon. Now that we both brought it up while Amazon's start the biggest bookstore on the planet. And all of that is well, very well chronicled. Talk to us about the role you played in urging Jeff Bezos to launch Amazon and you know, that time of your life, okay,


so I did urge you to watch Amazon, he had already launched Amazon, in fact. And it was interesting that I remember put my hand up, I bought it for advertising and marketing firm based in Silicon Valley. In those days, b2b was everything. And everybody from B to C, I'm talking about 9596. Seems like a pretty five years ago, a huge amount of time. But I said, Hey, you know what? Let's see. So I wrote to them, and Jeff said, Okay, come up for a meeting, because in Seattle, I remember going to his office, small office manager, six, seven people working there. And he was sitting at a small table, this table was a desk, which was put on its side, essentially, his tables used to go so there was a door. And he decided to launch Amazon. And the certificate. Let's start by doing the granting. So we had two battles there, and we won more than the last one. The The, the, the battle we lost was more interesting. So we wanted to preserve the selling books then. And he needed a identity for Amazon brand design stuff. And he said, Look, you know, books is really about dense, you know, if you think about propellers, because the library of books, it's the only analogy I can come up with is like a really dense forest with comparable luscious trees everywhere and great creatures. And those trees, as I said, the Amazon rain forest, right. So that's just really what your pitch should be all about. So we really built this really, really beautiful branding, which is all about forest in, you know, vines and trees and the mysteries, rain forests, etc, etc. And he took a look at it and threw it out. And he said right there, you know, mash is what he said, Amazon is volume, I will be the largest seller of everything in the world. But remember, this was 96, right? This was 24 years ago, and literally 20 years before we started selling anything other than books. And Amazon is a river. And that's what it will be, it's not about the fault. So we, you know, went back and then built this new identity with kind of a river coming out a two letter E, and so on, so forth. That was a while ago, right? So that was one. We also designed his website and again, learn a lot. I think we're an Internet Explorer two or three at that time. And we were still kind of figuring out how to make various non compliant modes of browsers work together. Frames are just been introduced. So that I mean, if you if you go back on archive.org, and look at what the sites look like, in 9596, they look like crap, right? I just come up, I designed the Yahoo acceptor for that. So come back. And typically look, let's use here we have a really nice looking website with a look great look, blah, blah, blah. And Jeff came back and said, you know what my customers include American soldiers in Bosnia, who use Lynx Lynx was an ally and an extra the tech or the browser that didn't really use any graphics at all, it was a text browser. He says they have they buy books, without using any graphics and text, and I will not use anything that spoils the experience for them. I don't care if I have an uglier sight. But I want to serve every single customer. In fact, the analogy he used was, even though you're telling me to have a three foot wide door for my for my shop, there is there is one customer in a million, whose vases three foot one inch across, that person can't come into my store. And I'll be damned if I don't sell to him. I need the widest possible door in my store. So he did he literally degraded the experience the visual experience to be able to serve even more customers. So those are the matters, he really won back then. And we designed the Amazon website, according to this crazy amount we had we tested it on 104 different browser flavors. I remember when we when we talked with them about the thing that we want to I mean, so this was really interesting, where he was very clear that he he wanted to actually sell books and he wanted to see if that position was how would we add there was no online competition back then. I mean, he was the only guy selling books online. So essentially, we were trying to get people who buy offline from the Barnes and Nobles in the borders of the world within a million times bigger than Amazon to buy from us instead. So he was very clear. He didn't want to anger them at all.


To talk to me, we just do the same by online, we were pretty clear that he really wanted volume. If you want to grow, then you had to actually position yourself against what people saw as extraordinary. Head, which is against the borders in Amazon. And we lost in almost every respect against those guys. I mean, they had a better experience people to tell you everything, we just had pictures of books, except for one thing that because we had about a million books to catalog because we really didn't keep any books, we just had a catalog. And no bookstore had more than 50,000 bucks or 30,000 bucks. So essentially said, Look, let's do this. The book lover wants to know that there are more books out there, he wants to know that you have a better choice. So why don't we actually use that and say that book, our bookstore has a million books. And he created I created this thing called world's biggest bookstore. Right? He fought it. And finally he really stood firm. And that was one that he read with a song. So the entire summer responsible for creating that was his bookstore campaign. It is lots of reasons as to go along with that. So for example, we said, we have 675 books on Marxism, including 43 on culture, or, you know, 1200 books about marriage, and thankfully, 1500 on divorce and you know, 850 books on running a business and including 45, one chapter live and publisher damage. So this was kind of capital departure. And cheeky positioning of Earth's biggest bookstore, DVD end, angered borders, and Barnes and Noble. So we got started getting really angry and, you know, shouting at us. So, you know, the Wall Street Journal picked up the entire story, the pivot David, then those cosmic Goliath and got a huge amount of publicity out of it. And that's what actually kicked off Amazon in 9697. And today, the Earth's biggest trillion dollar company, yes, biggest company. And that's how it all started fighting with Jeff out there, I learned a huge amount from resource management. In fact, today, in fact, a lot of the things I do, I follow a process and actually learn from them. I remember sitting and having breakfast in one morning, and he was giving me some PR, or marketing and advertising. Now, I remember turning around and thinking, you know, with all due respect your program, right, you came here and you know, you set up this company, you've done pretty well. How the hell do you know so much man about advertising and marketing? And he came up with an amazing answer. He said, Mahesh, I own a bookstore. And I understood what he meant by that was that anything he didn't know, he would simply go out and buy every book on the topic, and read it. And he would just simply be informed because he says he read every book on the topic. And I thought that was fantastic. And that has actually kept me in good stead. So it was days, I was a copywriter, you know, web designer and a food because every time I needed to do something, for example, I had to learn interactive programming, habited, reading a book on it. After that, I became an angel investor, I didn't know anything about angel investing, I know I sit on a TV channel. And if I know how to digital productions, I read about it. In fact, we save a huge amount of money by going completely digital in China, which has chatted up Amazon. And then I became an angel investor, I think, but it's I read every book about it, and then I become a VC. And I didn't know about it. So I read a book about it. And the last three, four years, as you can imagine, I've read every book out there that I can about space. So that's really my resort technique of boning up on something I will not think about just read everything about it. So it's, you know, it's something I shamelessly copied from the map. So that's, that's a few of my Amazon stories. I'll tell you more sometime in your book.

Krishna Jonnakadla  23:18

Amazing. So let's, this is not on my set of questions, but in what you mentioned, and this thing has something that people remark there are, there are quite a few people like these those who possibly see 2025 3040 50 years out into the future, right? And for someone who pays just all of our money to say 9096 that we are going to be the world's everything store or the largest store on the planet. Is it just grandstanding? Or what is the thought process that goes on behind someone or something like that, you know,


business has a bigger brain and then me certainly, and he has a bigger brain and many other people out there. But it's not really for whatever antiseptic he didn't. He was never, it was never proud who's very humble, very down to, you know, very straightforward. I am in front of all my interactions with him. All I understood was you know, he said that he was simply follow for the logic. I mean, like he said, the reason he started Amazon was he figured it Look, the internet is growing at 1,000%. And if something is growing the fastest, what do we pay? Well, I don't know where it will end up, it'll end up somewhere big I want to be there. So I think if for most entrepreneurs, that itself is a huge thing. I mean, it's, in fact, I'll probably tell you another kind of guiding principle that I came up not of my interaction with ethos, but with one of the guys who who founded the ad agency has to work with so we discovered two different modes that you do this planning. Right. So and this is story from World War Two, a movie with a couple of anecdotes. So in World War Two, if you recall the Americans We're on one side in Germany was on the other side. And when Germany was defeated for a beat big spoils the war was the German rocket scientists were the one brawn and gang who both both sides wanted. So finally the Americans with a mind he got the big man we got Burnham on Brown and his team and flew him out of the US and the Russians got the rest which is not really any big name for record lows. And the Americans had better computers back then ENIAC, UNIVAC, IBM etc and the Americans were very clear they want to record so in the story as we apocryphal was was we met and sat down with one on one run and steam and said, Okay guys, you know, we need to go to the moon what we need to do and so the sky is the jumps and said, okay, know what we did we the most precise measurements, the diverse trajectory remotes trajectory, we need to know exactly what is where when, because we have one shot at sending a rocket to the moon, we send it off, take it, it takes off at the wrong time at the wrong velocity, will will miss the moon by 1000s of kilometers, etc. So envied the world's most powerful computers, do all the same with all this take us, you know, 10 to 15 years, so the Americans typical computers will give you 10 years. Ba right. And the Russians were this was happening again. And they sat there, Deb's bunch of Germans and rocket scientists and so forth, he was willing to tell us how many workers came back with exactly the same approach to German approach, which is I want complete precision in every single measurement so I can predict the future. In relationship, he said, we don't have computers returning all those great punishments that go back, we still need to work, I tell me how to do it. And finally, they came back with this entire idea saying, you know what, we don't have that amount of precision, we don't know when so here's what we'll do is simply, you know, launch in the general direction of the moon and keep correcting ourselves as we get there. Right. So the approach was really one off, not great decision. But saying, you know, I know there's something that's happening directionally, I'll get in there, it's not like I'm done. I mean, I can maneuver a little here and there once I'm there, and then we'll see what's happening, and probably is, you know, as a result, the Russians got into space, months before the medical strike. So a lot of what I talk with startups about is the Russian approach to it and saying, you know, it's impossible to predict the future, there's way too much chaos, it's possible for anybody to have beers on Saturday. But as long as you believe direction, it's going in my face, and your eyes are open, and you can still active and still cause great launch in the general direction. That's what you need to go, you don't have to, there is no decision. No Excel spreadsheet can tell you what your revenues will be two quarters now, let alone You know, two years from now, but launch in general direction at cost directing, and you get it. And so I hope that answers your question in terms of where and how much planning and how much foresight brilliance is there. And how much is just simply launching in the general direction, keeping your eyes open.

Krishna Jonnakadla  27:50

So I guess this is similar to what one of my friends used to say, start with a goal. And then don't get too hung up on the game plan. Keep course correcting.


This is not even a goal. This is really much saying let's start with the trend of play and see what the player is going towards. And let me go there and FMF early enough, I can actually begin to shape the game. And the good example is, you know, the AWS instance, there was really nobody even thought that there was any such thing because one of the things that came up when you're one of the VMs that Amazon said everybody's going to need computers, you know, what if we actually offer the service as a service, literally. And so let's see where it goes. And you know, today AWS is like the backbone of a million other companies or not, as well, as you know, generating an extraordinary amount of profits for Amazon. I don't think anybody foresaw that. I think as long as you're out there, in roughly the front cohort, you don't have to be the leader, you know that somewhere out there, you spot the opportunities coming up, right, the deeper we get into, for example, the things we do in space with breeding to see opportunities that we didn't even know existed a year ago that I don't nobody else on earth has been thought of that simply because we happen to be early enough to be going around the world and meeting people and see what everybody's doing. And we have a reasonable idea of what we can pull off, right. And as you go further, as long as you live that early cohort, you don't have to be the leader, sometimes better to be number two, the number one guy was number one gets the arrows in the back, and you can post. Again, Amazon was not the first bookstore in the world and Facebook wasn't a social network and Google wasn't a search engine started really first not first mover advantage in any of these cases, as long as it'll be early cohort, you know, you keep looking at what others are doing, it can actually start shaping that that day and feeling something that didn't exist.

Krishna Jonnakadla  29:29

So in that vein, you know, as as one would expect a few. For anybody that knows of you and your points of view. Your Twitter timeline is an eclectic mix of uncanny insights and events. And you know, one particular tweet caught my attention. The one that you posted last year on the 25th of April, you list all the jobs you've held, but funnily enough, it is actually missing the MTV and the channel we stints So of all the things that you've done, what are the ones you cherish the most


for IKEA cherish tourism animals We got the keynote that I was, I would have loved to have mentioned that, but I think I ran out of the 100 important x character limit on predictors, 128 142 60. And I got very interesting, I really loved my diamond channel, because it was completely new and different from I mean, I came from the US where I was in a digital firm, and I was drawn to e commerce, putting ecommerce product to a point where I was actually sitting musicians, and figuring out singing, and figuring out what kind of music to pay for what type what time of day and you know, who watches the team get to it night and who watches it get through at the afternoon and who watches it you get 9pm and figuring out what programming I could do for them at different times of day, eight days a week, and then how I could maximize revenue from that. So it was a huge learning for me. And it was a great time. I mean, compared to being in the US where you went to work at 830 in the morning and you got back home at 530 in the evening and you know, it was a very regimented strict life you pretty much rolled into work around rolled out sometime between 8pm to midnight or between 8pm and for the depending on how much work that was. It was a welcome chaos I simply loved the diamond I was working it's certainly been a bunch of talented people many of whom are you know, household names who you can be Sheree Shawn Porsche a bunch of today's video filmmakers go to the police is all guys that I would work with on a daily basis. It was incredible. I loved the jobs I really learned a lot on I got my very first job as a total sales professional i mean i tell you the sense I couldn't make the quotas man I mean I had guys who's outsold me too as well and I just figured that I you know I got my MBA in marketing and I haven't brought the quality of the sick classical pass so I don't the hell if not by simply having my puppies banging the door banging my face 20 times I had to be pretty positive and make pretty five sales a month and I never had most average sales a month I was typically averaging seven I was one of the really stragglers that their part I liked what I was doing when I was in copywriter interview I liked what I was not like so it's just in that case I ran out of space to mention the kinds of things I've done so yes I designed Amazon that launch timekeeping in India invention not yet mentioned I pre launch satellites together hoops to get simply love what I'm doing here, but I mostly love most of the things I've done i mean i don't think i really good he has level my parents understood the kind of career path which is something like door to door salesman closer to TV announcer copywriter, film ad filmmaker, digital marketing, e commerce guy, music, TV channel, CEO, angel investor, digital advertising, early stage, venture capital investor, and now space for the next phase five. So I think it's a no potential career path. You can think of the theory but it is really Brownian motion, not kind of random motion that's out there. But it's okay. It's in. Rolling Stone gathers no moss, but I don't particularly want to mossy existence, it's been pretty

Krishna Jonnakadla  34:02

interesting, you should say that. That is perhaps a parallel career paths that most people don't even end up changing ones. But that's great. I know, not everybody is cut out for being a door to door salesman. But in marketing circles. I think until some time ago, all of the major Indian Institutes of Management would hold up Eureka Forbes as a amazing example of how, you know they cracked the sales model, because it literally took management grads, none of them had an office, they will all meet together on the street. That street order would be the area manager or the sales manager's office. And in some sense, it was like by ruthless elimination, you would find out the most performing sales guy isn't it? So is it Is it one of those things where in hindsight, it looks like a phenomenal practice that worked for the company? And it was bad for the people or do you think it was genuinely a hack?


Well, when I was a which is 85 to 87? I don't think there were too many management grads around. I mean, it wasn't. I mean, I don't even think MBAs maybe I don't know. I mean, certainly the items are not coming to you record books to sell door to door. It wasn't a poorly paid job. I remember my salary was foreign. My basic fixed was 400 rupees a month. I don't think to me management tell for a contract. So we were going to a strange bunch of people we, you know, I wasn't happy about and I met people with the, you know, from across Iraq reforms around the country, a lot of them had, you know, various ambitions. Remember a couple of guys in our team, the guys who came to Hyderabad from rural Andhra Pradesh, then it was all entrepreneurs to become movie stars. And while they were trying to hack it in Hollywood, they were door to Roskilde swim with us, right? couple of guys. Were kind of rebels who fought for the family. And this was the only way right so i the only reason again, I picked Eureka Forbes, was that they were the only guys who didn't ask you, for us. For you to have a graduate degree. I was 12 class paths. And that was all that was fine by them. Correct. So I, like I said, I don't think it was really at that time. MBA management graduate, you had to be a class 12 Pass they didn't insist on even you being graduated. I certainly wasn't. And a lot of it was really people your ability to think on your feet, while you would certainly get sales training and you'd get the usual, ABC always be closing and all the rules of hierarchies and keep it simple, stupid, etc, all that stuff. But a lot of it, if you had to make your quota as it was, you figured figured out very quickly that you couldn't really categorize the customers as you wanted them to. Some people could blindly lie to customers, I could not do that. So I you know, as you know, I remember one guy once we and we were, it was difficult, we were selling a vacuum cleaner then for 3300 rupees in in a market where the average salary was less than 3000 rupees a month. So you're asking people to cough up, you know more than a month's salary for a product, it's the equivalent to they are going to whom and trying to sell something for more than a lakh door to door. I don't think it's impossible, but I think it would be a little difficult. today. I think whoever did that it was a really bold and ballsy move because there's no other way that product would move at those volumes at those prices. Obviously, a lot of margin was built in that margin was built into reward the salespeople at high volumes, it worked well. It actually taught you a hell of a lot. I mean, a lot of marketing is theoretical. And we will talk about how to, you know, close a sale, how to close consumer attitudes, how you know how to not just build up a brand, but bring it to the sale, you did all of that in the course of every single call multiple times a day. So it's the best kind of training for anybody who wants to be an entrepreneur, I believe because you know, really the value of the sale and you know what you need to do forget the sale. And that sale is the money you make and the money you take home. So of course today in hindsight, I'm extremely grateful for everything I learned out there. Which also again later on coincidentally helped me in my advertising career because I was one of the few copywriters in advertising standard client to say, you know what, I've been sales guy, and not going to bullshit you by giving some nice brand beautiful Miss jamya to sell stuff. It also kind of led me to actually create to found funding this agency called pin strong where it was one of the world's first pay for performance companies saying, Well, you know, we pay for media, we pay for peer review only pays for the results we get you. So we actually set up our entire, you know, created that, that it again comes from the entire background of, you know, everything that matters is sales. So I think that's where we started up. It was probably the only way back in those days to be able to sell a product at this price. Because if he kept it in the store, people wouldn't buy it. You know, people didn't have the latent need for a vacuum cleaner, then you had to go and demonstrate and sell the need people who buy our TV than an auto vacuum cleaner. It's not really something that you're thinking top of your mind. So it was the right way to do it back then.

Krishna Jonnakadla  39:13

Yeah, the only reason I remember you wreck a Forbes is because the guy that sold the vacuum cleaner to house and back then my I think my father's earning was like close to what you're saying. Almost 5000 rupees. And this was me. I remember he paid him and he paid for that in 20 installments or something. And the salesman. You know, go figure that I still remember his name and he that tells you something right that he made a mark I was possibly all of eight years back then. And he was he was a management grad and he had gone to IMDb and he was he was so articulate. He was so well dressed. Wow. And my impression of that one, one it was cool technology because it was our phones. streets are crappy. And my father was a fiendishly big magnet for clean homes and you know, along came this gadget so great


forces to dress well. So in fact one of the reasons I don't own a shirt today is simply because in those days I had to wear a shirt and I every day in sweaty, hot sweaty whether it helped me a couple of times. We were broke by the end of the month and it was a regular thing. So at the end of the month, you had no money I left home I was on the street. So you know, I could not go home I could go back to my dad, it kind of kicked me out of the house back then. Tie and shirt helped me because I would walk into some random strangers wedding receptions, smile shake rooms and imply also on the bright side shake the brides and grooms like to eat dinner and get out of the fray get thrown out. So I did have money for dinner and my tie in my shirt helped me to many meals at the weddings of various random people that I would actually end up going to because I was hungry. The equivalent

Krishna Jonnakadla  41:03

of Steve Jobs going to the Hari Krishna temple. Yeah,


absolutely. So we didn't have a direction of temples and we had proper Telugu weddings with good non rich food available. And we will I mean, it was just one of the things you had to do it. Who comes in a wedding? So yeah, so we heard of people being thrown out later on when they were discovered but we had in those days people trusted us so we just you know, thank you to all the people who got married in the mid 80s I'm one of the guys who at a wedding.

Krishna Jonnakadla  41:34

Well I don't think that scene has changed at all, even if anything, weddings have become grander and more people eat now so so your second fund Seed Fund is your second fund isn't it and of all the funds you've started it's perhaps the most successful till date.


My first fun you know was called passion fund it was actually only my money but not a huge amount of it, you know, it will be not even a million dollars. It's somebody I came back to India with from the US etc invest in. And it was really kind of learning how to do angel investing, you know, putting money in companies making terrible mistakes. Learning later on what I should have done, what I should not have answered was kind of my MBA and how to run a venture fund with my own money. I ended up okay, I had a few winners, I had a company called what bought material launcher which went public so I eventually signed exit 24 years later imagine, you know, that's how long you have to wait for some angel investments. curious if that went public that I got a good 60x return from a few other exits that I had out there. That was the first one so if I look in terms of sheer multiple that was the highest multiple I got my very first one for passion funding. Seed Fund, the first one was a small one. That was where we had the big winners we have had red bus at 25x kind of a thing cardvalet.com aka number 10x data fund was at that time, for that age, it was India's best performing fund by fly. And then see one two is still on. This has a it has a you know some time to go. The new the secondary fund has, you know companies like chumbak my dentist, HEC Munich, V resorts, daily objects, and so on so forth, somebody else's etc. That's kind of still on. And me by my new fund has, like I said, it's more focused on space and high end electronics. So

Krishna Jonnakadla  43:32

how do you go about picking so many winners?


I don't know, man. I mean, I think I have kind of, I remember so many winners. I think the differences that I probably don't have 100 x's and 500 X's that a few people have, but I have a fewer fewer losers. So it's probably more like this is not so much. You know, say about kind of hitting maybe it's a little more kind of uncharacteristic, uncharacteristic, for me more a little more dravet kind of thing. So I think a few things I learned. So the very first founder launched was in the year 99 2099. I think that's when I started investing. And in 2001 2002, we had the great.com crash. And then my second fund was in seafront one that is was in 2006. And in 2008. We had a great you know, Goldman, whatever, Greek over that entire crash. My third fund was in 2010 11. And then 2012 13. We had, you know, one great downturn. So like I said, You know, I have a really great ability to predict downturns. They typically happen two years after I launch your fund. Right? So in fact, it's my my fund even though maybe I started working on it two years ago and we are in an economic downturn right now. The sights to read through all of this is that when that happens, you have it. The first sequence, there was no, there was no environment, it was an ecosystem out there. So essentially, today, for example, when you run when you use to launch adventure, find yourself, you know what I'm going to do, if I'm doing early stage, I'm going to go and you know, soccer for the guys who do growth stage. And you know, because they need to buy my company. So the growth stage guys go and say, No, I'll suck up the soft banks and the sequoias because they'll buy my company. So you want to make sure that there's somebody there to pick up the company from you. But back then there was no ecosystem, right? So and not only was there no ecosystem there, you know, typically two years after you started investing, the world would go to hell in a handbasket, you know, the market would collapse. So essentially, as a start with a hypothesis, saying that, look, let me simply assume that there is no next round. Alright. So what do I need? If there's no next, then I need to make sure that if there is no next round that either the money I give the company for this round, is going to be enough for this company to survive, if even if the world goes to help, right. So essentially, every company should have kind of a plan said, where if the funding dries up and the market dries up, like right now it is drying up for a lot of large companies, you still won't die, right? And so essentially, a lot of it was being very, very frugal with cash saying, you know, no huge salaries for entrepreneurs. I remember in seafront one. At one point, we had a limit of 35,000 rupees a month as a salary for an entrepreneur co founder, right when you So essentially, the employees will get paid more than you at that point in time. Of course, those those numbers have since been revised. But the entire idea was be frugal, make sure that you have enough money to survive. And my thinking then was you didn't need to win big you just if you just survive, you knew that 80 90% of the companies of your cohort would die. So you would simply win by being the guy with your most nostrils about water when everybody else had drowned. I'm still somewhat informed by that kind of thinking when I look at companies today saying Okay, look, where are you going to be two years from now? Is there a chance of you surviving, we reached cashflow breakeven, even though it is antithetical to a lot of Western thinking, which is, you know, spend and spray and pray, right? I can't get my head around that quite yet. And I'm a little more conservative Is that so? So if anything, I've had fewer companies dying. And because we've always kind of inculcated in the founders that we work with, I'm fond of myself, that, hey, the world could really go to hell at any point in time, you can't predict this. If you're depending on the next round of funding, it just may not turn out because you can't control it. If it turns up great. And if you're the one surviving, you'll get the best terms. If not, you know, you still deserve to be a business and the entire focus was on turning an idea into a profitable business. But it is a sustainable business as fast as possible. Right. So it's very unfashionable, but it seems like I mean, I've been doing this for the last whatever, 20 years, investing on pretty much the same terms all the way through. So in

Krishna Jonnakadla  47:59

the in that same line, you long said this, you know, I've I've followed what you've said, You've always spoken about not being the fifth new company to enter in that space. And in some sense, that is also similar to what Peter Thiel says about not going where competition is right. And and you say do that one remarkable thing. I'll come to the remarkable thing. But in that, how do you make sense of if you know, the zoom story, what Eric Yuan did with zoom, when, when Eric Yuan started, there was you know goto meeting, there was WebEx, there was Skype, there was Google Hangouts. And I remember way back in 2011, there was another video conferencing startup that started which called to talk called Mikado gear, it's a Japanese brand. They scaled and eventually quickly got acquired for a couple of 100 million or something like that. So in this sense, is this something like what the last mover advantage that Peter Thiel talks about kicking in? Or how do you make sense of Eric, you're going into a red ocean, so to speak in a competitive place? Is he eating the lackadaisical attitude of WebEx or Citrix and having their lunch? Or what what do you think is applied with that?


So I think if you look at how zoom I mean, zooms when it's from its sheer ease of use. And I since often, I mean, one, it's not like, what I say is there is no point in doing a media company, because you will you will be chewed up, right. But if you do have real sustainable friendship, right, and that sustainable friendship can be a Google was I think, the 20th searching in the world. I remember when I started working. I was on Yahoo in 2005. We were not even heard, right? So it didn't even exist, right? And they came out, they basically figure out a better way to show the results in a better way to make money than Yahoo did. And they simply swamp Yo, yo. ceases to exist now well, Google's whether a trillion dollars, right? Similarly, I think what what zoom It was exactly the same which is figured out I just want ease of use in a corporation a while. So here's the difference while Citrix in and you know, GoToMeeting, etc all assumed some amount of technical knowledge because they were built by geeks. I think what Eric of zoom did was say that, again, would be used by businesses, small businesses, they don't have time to figure out how to use this damn thing. They're not gonna, you know, I just thought they just, I need to be able to give them a link and they touch the link in the room opens and nothing else used to happen. So through extraordinary simplification, so in some ways, they deplete Apple to the words Android, right? By simply making easy to use easy to love. And then the fact is that then the network effect is different. Because you and your company and other guys get on zoom. Yes, typically use it as long as it works for you. You make the whole thing so easy to use. And I think there's a letter there. There's a lesson there for everybody. Even in today's business, you invest in things that help you know, people love you more. So I would say this in the old Flipkart Amazon days that Amazon was investing in, you know, making sure stock got to you faster, making sure if you had even the slightest problem, things were taken care of, to the point where you don't even do that much comparison shopping, you simply go and buy an Amazon, you know, and that's really what they want. They don't want to go to another place they build your confidence to a point where it's the easiest thing in the world to buy. So even in crowded sectors today, you'd sit back and say so for example, even though there is an Uber and there is an Pooler I still believe for example, that sector is open today because there's so much dissonance in over Uber and Ola simply because for example drivers don't turn up drivers call you and say Where are you going I'll decide whether I want to go where you go. So somebody was able to come up today and say, You know what, our drivers will never question you they will come on time and they will go where you want to go no matter where I believe that company will defeat Uber and pull up liquidity in six months time. Right? So because it's it's a different so if you define them as Okay, they're in the shape card business. That's that's one thing but if you sit back and say okay, I figured out what the ease of use problem is, there is still dissatisfaction there people don't even know what you know. And they can be much like Apple basically created a new category by having a touchscreen phone. I think those categories still can be opened if you have a revolutionary different delightful remark or a way of solving a problem even in the state category, that's okay. But if you just have a copy paste now that's I'm going to do it right so that one remarkable thing if you were to let's say pick four or five things that would lead you to a conclusion that this is how that could be remarkable. Is there are there how do you get that insight Okay, I think it really comes from your understanding of the market and this is really what I talked about I mean for me it's not important when you have an MBA or not it's not important what you write in the business plan it's far more important you really understand the customers Okay, have you talked to the guys who will buy this from you or who are buying this from others and have you figured out why they will buy from you What's the reason they would prefer to work with you Like if you know that and you know for example so that's the first thing Do you know that there is a difference you know that you can make a difference? That's one second is that sustainable is something that you can do and you can do consistently for a long period of time but is it just a flash in the pan? Perfect, is that defensible? Is it something that you can do that nobody else can come close to doing it as well as you for no particular reason either it could be sheer incompetence on the other guy's part or whatever some other something else for example, we had banks in India but the private banks came into question simply because they were able to at that point have a better service the public sector bank to the public sector banks fought back and now offer comparable a better service a private sector banks right so they figured out what the q&a was so


I think it starts with a unique Are you you know, can you can you deliver this consistently and sustainably Can you do this defensively where somebody else can do this and then the fourth point I put there is that something that people will talk about? As in I believe for example, use the same Uber and cola and Brand X example if there was a brand x that came out tomorrow and said look, or even just simply saying you know what, nobody from a brand x will ever call you to say Where are you going? Nobody from Brand X will stop 55 minutes away from where you are and say I will keep calling you till you tell me where you're going and decide where to go that you know that you get probably people will switch in an instant. So you know, is that is that too high a cost of switching? There's a high cost of switching in zoom because you suggest you you have to move your entire company to it. Right so there's but in a car It doesn't matter I mean, most people will have both over and over and they'll switch to a third one without a problem because there's no particular network effect out there. It's not a high cost of switching. So I think you look at these questions and these give you an again, there's no certainties, I mean these are things you say okay, this is not there, this is there, this is there. Let's work on thing that's on there. And you know, that's what I'll fund you for. And let's go and let's measure these things that we are funding you for it. Come back and see did we did we actually do the things that we, that we set out to do, you know, the funding is there to prove that point to grow that point not just to pay salaries, it is to it is to establish a particular business difference. So that's great.

Krishna Jonnakadla  55:15

Right now, what are the five Indian companies that you genuinely like? And why do you like them?


That's a hard question. So with some bias, I like a couple of companies that we're investing in, including the satellite company satellites, and a couple of other electronics companies. But that apart I think, Indian companies that have done well, those that have bucked the trend, by setting up things that are not really copy, paste, so PTM is is an example. Even though I think it's a bit of a mixed bag, because they bought growth, and the growth hasn't really led to much. So they did get 100 million users, but maybe not all of them are monetizable, in long term, but they've actually gone and really become, you know, this big company with a significant Indian presence. I think dunzo has done a nice job of again, offering a service that, you know, that is that has taken fiber and turn it into something else, I think they're doing well, these are, you know, three or four of the companies that that I think are doing well. And I also believe that all of us have some kind of startup myopia, we tend to only look at the companies that either come out of Bangalore, written up in TechCrunch, or written up on the startups page of the economic times. There are lots of really interesting small startups, they're in smaller towns in other cities, which are not really doing things on the beaten path of, I'm doing another ecommerce, I'm doing another delivery company, I'm doing another, you know, x of India, kind of thing. And I think those are the ones that I'd like to hear more from. And those are the ones that I would probably be more prepared to, like and admire, because they're not following a pattern.

Krishna Jonnakadla  56:52

So in that way, I'm not sure if you see the same way as I do. You know, there is a set of people that do not take kindly to user incentivization. They believe that people are buying growth. But if it's wisely used, I believe it puts the benefits or rather the takes away the cost of marketing and advertising, and puts the benefits of the product rightly in the hands of the users, as opposed to intermediaries and agencies, you know, who you pay, you know, a ton of money just to get somebody aware of a product, right? So, for instance, I remember there is a supplement company called origami pay in the US, and I was chatting with them. And I was asking his perspective, about incentivizing users for every transaction. And he said, Hey, you know what, in the traditional world of advertising and marketing, by the time I actually got to the transaction, or God His eyeball, I would have already spent a significant amount of money. In this case, not only will I get adoption, I get traction, and the amount of money in creating awareness for that is maybe 1/10 or 1/20, of what I would have otherwise spent. So therefore, it's better it's more power to the user. So I personally believe maybe there is a new playbook or a shift in how marketing and advertising and user acquisition is happening. The first shift is when Google took advertising and marketing from a wholly whole business of impressions to the partial tangible outcomes with pay per click, and then this whole incentive and cashback model, if it is widely used, shifts the whole Pay Per Click model to a pay per transaction model. Do you agree with that? Do you think a new playbook is emerging there?


I think it's a steadily new playbook that is that startups are using but it's an age old playbook that marketers and businessmen have used around the world it's no different from a new restaurant opening up offering a different kind of delicacy you know, let's let's assume it's restaurant offering lucknowi biryani in the header otherwise, if vice versa, nobody's tried it. It's a unique thing and to get trial this year. Oh, come on first day and we'll give you some stuff free tried out. And of course, if you'd like it, the idea is that you will come back the second day and pay for it yourself and that's perfectly fine. I don't really have an issue with that. I think where we've had an issue with it is where the products or the services are essentially undifferentiated. For example, we have such a big huge ton of econ startups that were that had that were no different from each other, you know. And they all offered price offs for buying exactly the same object I mean, you want to buy a Samsung phone, you can get 5000 rupees off if you buy from portal x Swisher doesn't exist to this day and $10,000 a million so everybody went you know got the 5000 or bought it from there, wait for the budget for the next office 7000 went there and bought it and so on so forth. And finally in the end nobody came back to buy the second time because the products within undifferentiated the offering was undifferentiated. So the the core still remains in the sense that you need to have a differentiated offering. And one method of getting trial is is really a freebie Which might be an ex of or you know, try it and so on so forth. But that's not a long term sustainable strategy, you can see that I've got to keep giving people money or they'll never come I think finally the end, the it has to be looked at as a trial for something that is noticeably different that people will remember is different, and that people will come back to and pay full, you know, Football League for football, for a good example of this is Google pay. In the early days of Google pay in India, they incentivize when you had a lot more rewards and little surprises, etc, at every transaction that made you feel good. But as you get into it, as you become more and more, you know, dedicated user you see less and less of that you don't mind it that much. I mean, you came there to try it out, it was a different experience, and you stayed and now you're, you're just simply doing it as a matter of habit. So that's where the price off or the you know, buying growth actually made sense because it was to push to differentiate your product, I'll still come back to that, because it's not a substitute right for not having differentiation. So let's talk about a different kind of set of startups, we have seen a lot of innovation. in tech, we've seen a lot of startups in the e commerce space, but but still vast tracts of the Indian economy. There's, you know, from clean drinking water to reliable electricity,

Krishna Jonnakadla  1:01:18

we are yet to see, you know, innovation happen. And for a lot of it, while we can blame regulatory hurdles, which which I think in many ways to really get in the way, there is a startup in the US called hippo. So for instance, the insurance market in the US is a heavily regulated market for you to get agents, you know, an insurance agent license or an insurance company's license, you have to go through expensive lawyers, laws and a lot of that, but this whole camp, this company called Hippo, does an uncanny job. And there's also a similar that are similar startups that are emerging. So for instance, when if you have to sell your home in the US, you have to go through that whole MLS process, market Listing Service process, you hire an agent, you pick up the home, and there's this other startup that's come along, the name eludes me, that tells you put in your address, and you get a quote, and they are going to buy that home in less than 30 minutes. Right. So this means, you know, somebody did a lot of regulatory hacking at the back end. And it is one of those ease of use use cases because there's so much effort that's put into that. So I was recently reading a book called restart by Mahesh Sharma. And he talks about how in the city of Kanpur, which was once India's storied manufacturing hubs 90%, I forget the number, I think it's 90% of the electricity is stolen, right? When will when do you think we'll see regulatory hacking happened where some startup figures out? Well, there are so many illegal connections, you know, maybe I can get in between and start offering reliability to some of these guys, and maybe work with the state electricity board, and you know, start buying energy, things like that. These are all these all look like very big, big boulders today. But we're not seeing that kind of innovation happen yet? Will it never happen? Or what do you think we will see


innovation happen wherever there is room, I believe, for the private sector to to participate in some of these cases, you know, where there's a water supply board or electricity supply board, which are regulated or which are part of the government system, it may come a little slower. That's because the incumbent has held on to their position, and isn't really particularly welcoming of innovation in that space. But where was places open up, for example, I'll give you a good example it for the longest time, the defense sector was closed to private sector innovation. They've just started opening up. In fact, one of the companies that good companies were interested in invested in have been caught presented one of these large defense exhibitions that's happening out there in India, and we're doing presenting something pretty innovative, which we believe should blow the socks off at that's that's already out there. In terms of the old traditional state sector. These are not things that anybody else seems to have typically worked on. Similarly, in other areas, like clean energy, where the government has increased solar power and is willing to buy back power. There are startups stepping in to say, okay, fine, you know, what I'll fund you to buy the solar panels will also buy the power back from you, etc. All you got to do is give me a place to put the panels etc. So it's happening. I think the key thing is more more that we privatized, the more that we actually get away from government and control. In all those sectors, you will likely see innovation happening. And it's not that innovation won't happen in government sectors. I mean, certainly happens a heck of a lot in countries outside of India, in Northern Europe and Netherlands, France, Germany, in Singapore, etc. There's a huge amount of innovation that happens in government sectors. That's because the government is open to it rewards it hires people who you know specifically for that purpose. If you do something innovative that the government wants to buy, it gives you the money upfront, so on so forth. So there is scope in each of these cases for for this to happen, it will happen a little slower in India in these federal and government run sectors, but it will happen as soon as you open up the sector, you will see a rash of immigration spreading and wherever there is a rent seeking agreement. So, you know, for example, if you already have somebody who's taken a road on Build Own Operate Transfer Mode for 10 years, you're not gonna see too much happen a road for 10 years, because what that person is really trying to do is build that road drive right. So wherever it goes a typical rent seeking thing, so you know, somebody gets a license to in a coal mine, you will exploit that license, somebody gets the license to run railways, you will exploit what license so things which are not so much rent seeking, but to the entrepreneurial nature, will really start seeing innovation. Again, you must understand a lot of the history of Indian business has been rent seeking, you know, a lot of large, monolithic family groups in India, whether it's a data as well as a man is Iran's overarching rent seeking business, they get a license and it's a license Roger for different kinds, and the Explore the license, there's nothing wrong with it, that's where you do business. But that's not particularly conducive to innovation, you will see more in the liberalized sectors which are open for wide and open private sector investment and

Krishna Jonnakadla  1:06:11

so on, while staying on the India story. Wherever you see India as as a market is different. We have our own cultural nuances and differences. So for something to scale here, which I think you're right, people are saying there are operators, people who need to understand the local business. And I think perhaps the poster child for that is the UPI, right, because you had when it comes to credit cards, you have under 1% of real people holding it because they have all of them have more than one credit card. So the 30 million or credit cards, which is 3% on the Indian population is possibly just held by 1% of them. And you needed one, every one of them has a bank account. And since nobody has an identity, you can't underwrite anything. So nobody, almost every one of them has no credit. And then comes along UPI, which truly now looks like something that can scale globally, which is very, very context relevant innovation, right? To give you another example, I remember the Tirupati temple if you've been to that some time ago, a couple of decades ago, they wanted to ensure that the number of touts who were booking all these savers in charity names and then auction them for you know, high price was reduced. And the story is that they had called Accenture, TCS, all these tech companies. And then they came back with this solution, which was about biometric authentication. And then way back then we have the cost of each biometric authentication for each ticket sold, the ticket price was about 1000 bucks. And then the cost of each biometric authentication was close to 350 bucks. And then the TTD, which Ronstadt said you know, I can't be spending so much money on just authentication. And there was some there was one Bangalore company, which came up with this uncanny idea, which was a digital barcode band, when you bought the ticket, it would be nice, you're stuck around your wrist, so that the person buying the ticket and actually showing up for that was one in the same and the cost of that was five is nowhere compared to 350. And that's context shim innovation, right? In your investing experience. Are you seeing similar innovation emerge, not just possibilities, but real contextual innovation and ideas that are being born here that can't be taken, taken into the world? Yeah,


and these are the things that I love to look out for. I'll give you a couple of examples of innovations that that we're we have been involved with in some way. One, for example, is even building satellites, you'd sit back and say, Hey, building satellites, these things tend to cost hundreds of crores of rupees 10s of millions of dollars, is there an easier and lesser cost way to do it, and so on, so forth. And we kind of got into the bill of materials for the satellite, and you, you sit back and say, Okay, alright, this satellite that typically, the Western world builds uses really super high grade space grade solar panels with 29% efficiency, alright, while the regular solar panel that you can get from your friendly supplier on Alibaba probably has 23 24% efficiency, but is 150 at the cost. So sit back and say, all right, so printing 10% can I make do 24% which is actually like you know, 16% less. And you do that by simply, you know, maybe increasing the battery capacity and lowering you know, making sure that you select the electronics a little differently. And you use for example, in this case, three of what we call common off the shelf components, of course, to be able to build a you know, a satellite in which we've done and one of our companies have done and launched we launched a couple of these already, for typically but one 100 the cost of what it's been done before that That's one example. And there are many such that are already out there, right? So a lot of lldb another example of


the different Indian jugaad that we've seen. And this is a story that not too many people know about one of our early investors, this was red bus, that, actually, it was one of the things where we were trying to figure out how to grow the company and how to, you know, build top line growth. And they had gone from, when they started, they were about 0.5% conversion on from click to buy. And it slowly reached but to two and a half percent. And, you know, I had personally some experience with make my trip, etc, where I believed that, you know, conversion would start kind of dropping out in that. So I would sit with funding and say, Look, how do we grow this man, I mean, we now know that we can have gotten the conversion to where it has to be, it's a two, two and a half 3%. But if I need to grow the top line, if I need to grow revenues, I need to grow the funnel bigger, so I need to double, triple, quadruple the amount of traffic to go through to double or triple quadruple the amount of sales. And funny came back with a different solution. So okay, we'll try something and, and the, the true impact of what he what he and the team tried on the kind of came out over the next seven years. So what they did was, they actually did something very simple. They they basically every Sunday, they put up a different version of one page on the site with something changed. So it was a very simple AV test to send half the traffic on that Sunday to a and half the traffic on to B. And it came back on Monday and said you know what work better for whatever reason. And if it was significantly better, more than like 20 basis points or 0.2%. better in terms of conversions, they move to that, right. And they did that week after week, Sunday, after Sunday, year after year for seven years. Guess what happened at the end of seven years, the conversion rate went from two or two and a half percent to over 25%. Alright, this is mind blowing. And why this was mind blowing was that I know Amazon's global conversion rate is around 10 to 12 14%, thereabouts, and mcmutrie, even on over the seven years came to what three or 4%. So he was somebody who hacked you know, and the difference between a 25% conversion rate and a 5% conversion rate is five times the traffic. So if you can convert something at 25%, that means we'll have the same sales at 150 traffic as somebody else converting at 5%. And he was a simple hack where typically anybody else or any other VC or somebody else with a comment said, You know what, I need to throw a lot of money at this, and let's just burn money and get it done. And these are these are some hacks that that are not just hacks, these are really industry changing in the industry defining moves, that will really set up a company for the long run in and we keep looking out for these advantages where the ability, we sit back and say, maybe there's a different way to do it, maybe I don't have to take the playbook everybody else has done and just simply throw more money at it. See the ruling of the reigning playbook in India for startups is, look, there's Uber and there's Ola and I want to fight them. So I need to put whatever money Uber is throwing all those money plus 20% of them. That's that's when we'll be able to make a match of it. And VCs are made to believe that I don't necessarily believe that's true. I do believe that there are ways to be able to innovate, to be able to cut down costs where you can have a truly, truly sustainable and defensible advantage. Because you've thought through things differently. And that's really what we look for that to us as ingredient x it's not just throwing more money. I do believe for example, the association and soft bank way of just chucking hundreds of millions of dollars at a problem is something that has come back to bite everybody in the park. Look what's happening to Uber. Look what's happened to Airbnb looks at what's happened to add on Julio Flipkart had been, you know, gotten out of and so on, so forth. So you can win a temporary better by throwing a lot of money to problem and a few people will get rich, but you're not really solving a problem for the consumers. And I think that's really what we're really concerned about. You're not just, you know, doing a topi company and putting the coffee on to the next hire investor, who then tries to figure out you know, and finally in that case, in the case of Flipkart, for example, Walmart was one when the topia at the end, the dunce cap. So I think you what we look for is not solutions to a problem where throwing a lot of capital will solve it. But essentially, things which are intrinsically different, more capital efficient, these are things that that really make things rock for

Krishna Jonnakadla  1:14:11

us. So on the topic of marketing, by startups, early on, for all startups, beginning moments are very, very tender, fragile like our babies. Evolution is yet the process of getting your first few users or customers is not an easy proposition. What would be some contrarian approaches that you would recommend for startups to get their initial users and eventually scale? I


am a big believer in in actually getting user adoption and user love and user engagement and user referrals. And the standard story I tell every startup is okay, look how many witnesses of b2b setup how many customers would you like to have at the end of year two? And maybe they say, you know, 20 or 50? And I said, Okay, well let's hit 20. If If he should, if those 20 came from kind of referrals, and each customer you had referred you to one more potential customer that worked out how many referrals? I mean, how many customers you need six months before that, is it 10? Okay. And six months before that they say five and six months before that they say two well said well, in six months before that is one in which I said, is it possible for you to get one customer right now who can become a reference in refer to another in six months time, and you can be really big. Going from there. So the key thing out here is again, you're not buying early growth, you're you're trying to get people to use it, like it, love it, hate it, fix the product. And once you find what is mythically now called product market fit, you will find people starting to rave about you and talk about you. And that's really when you know that you've gotten something and find usage going up and people beginning to depart to depend on you. So if you already have this product market fit, you really don't need to, you know, go too much do too much in terms of getting you new users because they you'll have to find a mechanism for them to recommend you either with why the product or the product itself Connect, you know, for example, Gmail, the or Hotmail, the entire thing was all about, you know, you sent an email to somebody where there was a line at the bottom saying get your own female account. And that's what simply that was the thing that actually not even promoted. But the VC in that case suggested to promoted that made that company big. I'm a big believer and referals and, and viral business where there are people who talk about you, because that's the best defense against somebody else spending huge amount of money. The entire business is about outsmarting and not about our spending, at least in the early stages. So if you're a b2c startup, you know, let's say you're, you're selling loans, or you're, you're doing payday loans, or you're doing you know, transactions or you're doing Econ, the key thing is to say, okay, fine, how do I get a customer who can refer me who, and assuming at the core, that you're still differentiated, etc. It's all about, you know, writing to maybe 10 people or 20, people that read something and getting them to come and come to try and buy off you, and calling them after they're done and say, Do you like it as somebody else you'd like us to refer us to. And you will be surprised that if there's any customers even happy happy with your product, they will refer you and they will recommend you to others. Most often, we have ivory tower entrepreneurs who sit back and say, Hi, hon, you know, I'm going to sit out there in an office in a co working space, and we'll need a lot of money, I'm not really going to go out in the field, I just want to do everything online, it doesn't work that way. I mean, there's there is no substitute to be able to get to human contact with your either b2b or b2c customer, to for that person, him or her to be able to recommend you to somebody, whether it's an agricultural startup, whether you're selling food grain, or whether you're sitting satellites, in each of these cases, you sit back and say, who was my reference will customers were the guys that I can talk to who can give me more business directly or indirectly, or even who are the customers that I can talk about to a third customer, who will be impressed that I've worked with customer a for them, for us to get business. And those are the kinds of guys you must carefully target. So don't just talk at an easy customer. In the early days, take the effort of targeting a customer who will have potential referral value or reference value. And that's the only thing I talked God tell the startups about in terms of what were the early days.

Krishna Jonnakadla  1:18:14

So what would be four to five unconventional methods and tactics at a venture level that you would recommend because when when I see playbooks when I talk to founders, most of the playbooks are very, very boring and average. I don't see anything unconventional, which leaves me wondering, gee, they're doing the exact same thing. And I don't think this will go anywhere. What What, what would be your four or five unconventional methods and tactics that a venture should do?


Chris, I would start with trying to figure out what I mean, I think this would depend on what the what the startup is selling or producing or making, right so let's take a few examples and try to work through them. Let's say let's take an example of a b2b startup an example of a b2c startup. So let's say for a b2b startup let's again hypothetically say alright, so I have a product that generates a credit score for you or checks your credit score and gets you you know, something based on your credit score. So what are you looking for you're now looking for customers who would be interested in knowing what their credit score can get them? I think you would start by saying Alright, can I now work with you know, somebody in the in the finance ecosystem, maybe a bank, maybe lender, maybe somebody else and use their lists to say, Hey, you know, can I work with 1000s of your customers? We will go and tell them Look, your credit score went down, your credit score went up, would you like to refinance your loan, etc, right? So it's like a dynamic, I'm just inventing a dynamic credit score based product. So if your credit score 600, you get a loan at say, you know, 12% of the credit score goes to 770. You get a loan at 9%. So let's say that you say okay, fine, you're now at 600. And here, you know, you talk to the you know, you work with them. magnets uh, you know what I'm gonna get get the customer to buy more from you. Because I found two transactions at his core is no longer at 606 90 right now. So you able to then go back to the customer and say you know what we've calculated credit score is gone up and guess what we're going to be giving, we're going to be able to give you a top up in a loan for free or reduced interest etc. And that's one way where you will work through a partner. Let's say you are trying to get this partner you not don't have the partner thing can do as you go and get to speak at a conference. I think that's one of the things has always worked for us, which is you find FinTech conferences, where in this particular case would be a FinTech conference, where potential customers and potential allies are going to be there in the audience or on stage with you or try to get a speaking slot in some cases for example, in Europe you have to pay to get a speaking start it's honestly bad thing but go out there and talk about what you do. You find somebody somewhere in the audience reporting back, you're writing about you, and being able to, you know, find something to to be able to deal with you would one of the companies that we're working with, we went spoke at a conference somebody wrote about us in Montana after we got a call from Google in London, saying hey, guys would like to work together with us because we're interested in your product, right? So you never know who's going to be listening to be able to do that. So that gets at conferences, being able to find allies another way to find allies is to for example, get people on your quote unquote advisory board and advisory board is essentially something meaningless it's a nice kind of sounding position where you be you give people who already have high level you know CXO or senior VP level jobs and companies you say come and be on my advisory board and essentially those people give you the entry into the kind of industry that you want to get into so get a couple of senior VPS or cxos of banks especially the smaller banks in this case, get them on your side and they will help you in to do pilots of various businesses that they're involved with where where you know you have a play that that could help them in some way or enter competitions get noticed, etc. So that's three or four ways on that front if you're a b2c startup I would again come back to this to say alright there are you know, again unconventional different ways to market I started my own life selling vacuum cleaners door to door and it was particularly in unconventional I showed in 1983 1984 so I mean one of the big wins that you will the reason why everybody now goes and says Look man, even on my local child who can and panda condors a PTM sticker it's because Vijay Shekar sent his troop down there and said guru every shooter Mata Khurana Ducati, big small whoever and make sure that my stickers are there. So he went there got an unconventional auto coverage, not too many other people managed to get I think Amazon's trying to do a different thing with getting to merchants in the same way so a lot of it is really down to who are the people you're trying to reach? What is the effort you need to do to take to reach them for example, if you wanted to get your you know, PTM barcode or QR code on to a T level or reduce our chaiwala you're not likely to do you know big budget advertising during the IPL right. So but for a lot of companies, they have the same playbook which is hey, you know what, I need 50 crores in in an ad budget because you know, we need to do XYZ I think more important things say what Where do I need to get my distribution? And in which case you say okay, fine, I need to find, you know, fetal Street to be able to do this. And there are multiple multiple ways I mean, for example, there are good finance companies today which which have 400 or 500 700 outlets around India, can you work with them because there are people going in and working out every day who are boring golden, you know, who are interested in some kind of financial product isn't something you can do with it, there's a plethora of opportunities that for you to be able to find an ally of for you to be able to find your early alpha or early beta customer, your first 10 customers and so on so forth. There is no standard playbook out there in the standard playbook if anything is getting more and more expensive. So I would urge you to just you know, step out of a cubicle go out look at the world and say okay, I need to get there How do I how do I get there, and if it means you need to, you know, dirty your hands do it. One example of dysentery was, again from red bus.


A lot of the wind for red bus, which ended up with them getting 80 90% market share was really about the fact that anybody could sell the bus tickets, but at the base of all that was the system called was the bus operators, you know, solution or whatever the system, which was sold to the bus operators. Now, the fact is the bus owners, you know, then and now we're not your typical swarm MBA guys, I mean, these are guys with fat belly berries in varying booties and pajamas at various, you know, boots scratch around mentioned the parts when you went and sat with them. But funny, this team actually went out to meet with these guys got them on their side sold them a product and that then became the competitive advantage because all the bus owners trusted them, which is why they got the foundation right and once they locked in the foundation, nobody could take the market away from them. So it really involves you, depending on what your startup is doing. To be able to think a little outside the box to be able to get get the customers you want to get awesome. My age, this has been a fantastic conversation. Thank you for spending your time with us. Before we wrap up,

Krishna Jonnakadla  1:25:10

what do you make of the Indian market? You launched four separate funds, the late 2000s, the mid 2000s, the early 2012, perhaps the one fund more than one fund if we put all the last three decades together, and what do you make of the Indian startup scene? Is it too early to say there is a playbook emerging? So what's your take on that? Well, I've


been investing in India since 1999. So I've been here a while, maybe 2021 years, things are changing. But the more things change, the one thing that remains the same is that the innovation breakthrough, every time somebody writes a playbook and follows it, you will eventually find out that, you know, you may have followed it, but that company really didn't end up anywhere doing very much, right. So for a long time people went in thinking India is going to be a proxy for the US that for a long time people went in thinking India is going to be a proxy for China and hence, you know, again, Ctrl C Ctrl V copy, paste, that didn't work out, for a lot of people thought look the way for everything, you know, the interest the secret of all startups is is about getting, you know, Korean matrix into it, and then our CFO and then then popping the company over to SoftBank. And SoftBank is the big God of your giving everybody exits and we'll get a that's not working out. So I think we've come with various playbooks and various assumptions about how the world works here. Some of them, each of them has ruled for a few years. And but each of them has fallen by the wayside. I do believe two things will happen one, we will find out that there is no long term playbook. And second, that there is no Indian playbook, right? If there is an Indian, if there is a Chinese when there is a American Way, and I don't think and those ways are also changing. I mean, I lived in the US late 90s. And the USA Today is nothing like back it was the way it was back then we will find the market dynamic and changing. That's that's that's the broad sense. In a more narrow sense and a more interesting sense, we will find things broadening the, the early 2000s, mid to mid early 2000s were all about very broad eecom companies it was you know the Flipkart Amazon time. Before that was, you know, banks and then came the e commerce and came the travel companies and then came the delivery companies and so on so forth, I think you'll see waves of these come and go. But as more and more of these waves come and go the half life of the wave is getting shorter. If you had a 567 year, kind of half life for eecom company, you'll find the half life of a mobility company being two or three years in increasing refund the half life of next gen whatever even electric vehicle company being one year, and so on, so forth. So you don't have as much room in this courtroom to play about to find founders, you will need to be in your feet a lot more. You'll also see a lot more variance and standard deviation in the kinds of startups that are starting up. So you will see people starting up out of left field you know people starting impact businesses in smaller towns and villages, people starting companies not just in Bangalore, but also in Belgium, people started companies out of Goa, people starting companies out of CO working spaces, people Indians moving to I mean, I've seen a new trend of lots of very smart Indians moving to Kathmandu sitting there because it's a nicer place with lesser pollution apperently to work on their Indian startups from so you will see a lot more change happen. At the same time, you will see this desire to consolidate I mean, there is the value that SoftBank brought in with 100 billion fund was that everybody saw this big idea at the end of the day is this God to be able to sell to they will be people building bigger and bigger funds that will drive towards consolidation quickly. You know, so like I said, there's going to be it's almost like a Cambrian explosion, you know, we started as one proto cellular species, and they quickly devolved into, you know, a period where there was a explosion where hundreds and 1000s of species came about some survived and some right, we're going through that right now we started in a very narrow way, the variance is increasing every two or three or four years in terms of the kinds of startups that are starting and the kinds of startups that are surviving and getting funded, etc. And that's a great thing. So we're seeing a lot more diversity in the kind of businesses being run in the in the kind of people running businesses. So it's not just a 20 something 30 something I mean, interestingly, globally, the average startup founders 46 years old, alright, you will start seeing that in India too. I mean, you'll see that the 23 year olds and 24 year olds will start tending towards that, we will see a lot more change that will happen and lot more rules will be broken. So I know, Krishna, you've been here trying to get a handle on what are the new rules and I'm not being particularly helpful, other than to say the old rules are for you know, breaking apart and falling down. But it's a good thing. It's a good thing because for people listening to this, they can have the confidence that they don't necessarily have to follow the playbook. They don't just have to be a mobility company. They don't just have to be an AV company, etc, that they can actually buy The trend and settling themselves. And now it's it's certainly I mean, it's been 21 years since I started investing in India. And it's certainly we're a lot a lot more opening to finding more of the world's off the beaten track companies and backing them, and so is the rest of the market. So it's never been as good a time as this. And I know I say this half time in cheek because we're going through economic health right now. But still, even through all this economic hell, imagine how bad it would have been if you went through this 20 years ago when there were no startup funds. So we're in a better place than they used to be. And there's a huge opportunity out there for if you're looking to start up, especially if you need the confidence that you're not doing everything that you're not doing something that everybody else has done before. This is

Krishna Jonnakadla  1:30:45

wonderful. Mahesh it's been fantastic chatting with you on a wide variety of topics you've shared with us. Your investments, your journey, I'm sure we haven't seen the best yet. There is a lot more wealth to be created in India, there is a lot more wealth to be exported out of India to the rest of the world in terms of knowledge and models. And I'm sure, somewhere there, we'll see my head hold his hand. Thank you for being a part of the show. It was incredible having you Okay, thank


you Krishna. It was fun being here. And I look forward to hearing from you and everybody listening to this episode again. Thank you.

Nida Sahar  1:31:22

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