The Exchanges

Q Yeah. But the thing is, what could we have done in the past and which we can do also in the future to have made India a 10 trillion dollar economy faster, right? We are sitting at three.

A I mean, first, this is all a hypothetical, but I think there are two or three things that we could have done. Number one, more politicians must come clean that something is a good policy and persuade people that their opposition to it is misconceived. Take a simple thing like public sector. I'm of the view that with the exception of very, very small areas, we should actually privatize the public sector. Okay. And I say this whenever I get a chance, but politicians resist saying that. For a while, they did. I mean, Yashwan Sinah, who was the finance minister of the BJP, he actually said that, you know, except for a very few, uh, enterprises in certain sectors, we really don't need public sector, ok? But within the BJP, although the BJP traditionally viewed the public sector as a Nehruvian fixation, within the BJP, once they realize that if they're in government, the public sector will report to them, they lost that conviction. I think it's still relevant today. You will find all kinds of people telling you from all parties why you need the public sector. For example, many people think that we need the public sector In order to produce either medicines or vaccines. It's completely untrue. Because on vaccines, the best job has been done by the Serum Institute of India. It's not a public sector company. Public sector pharmaceutical companies have been a disaster. Now people are try…

AI assessment note: “with the exception of very, very small areas, we should actually privatize the public sector.”

Q We are going to discuss your paper, you know, that you have published recently, relative economic performance of Indian states from 1960 to 2023, 2024. Uh, uh, first of all, uh, uh, what, what was the intention of publishing this paper? Uh, what did change do you want to have through this?

A Well, the paper that you're, uh, referring to is about the relative performance of Indian states. Uh, going back to 1960 61, which is the earliest proper data set we have, uh, till basically, till today, till 23, 24, uh, data that we have. Um, and the idea was to basically show, uh, over this very long period of time, um, uh, uh, of, uh, six and a half decades, how different states have done on two parameters. One is their share of national GDP, national economy, and their per capita, uh, income level as a, Proportion of the national average. So we have stripped out of it, uh, you know, overall growth and absolute growth and looking at their relative performances, um, so that, you know, we have a sense of what local or other, um, state level policies, how they affect overall story, um, and what are the regional disparities, uh, and so on and so forth. So it, uh, you know, so I thought, first of all, A lot of the work there is not so much analyzing the data, which we can also discuss, but simply to present the data that this is what the hard data says. It's a different matter. Different people may interpret it in different ways.

AI assessment note: “and the idea was to basically show, uh, over this very long period of time”

Q And is it fair to summarize that all the states that kept agriculture as their main forte, Uttar Pradesh, you know, Punjab, saw the decline over the six-year period?

A Well, yeah, yes. I mean, in, in the sense that, um, in the end, if you want sustained high growth, you will have to industrialize, urbanize, uh, and build services and construction and other sectors. Agriculture can only grow, even if it's in good times, it can only go at a certain pace. Now, there were, there were periods where certain states did do very well for, for some time, based purely on agriculture. And Punjab is a, Uh, a good case of that. Um, it did, uh, very, very well during the Green Revolution period of the 19 sixties, even into the seventies, and then it stagnated. Uh, again, my paper doesn't get into why it stagnates, but one of the things I mentioned there is maybe we should investigate whether or not it suffered a Dutch disease problem. So what is the Dutch disease problem? The Dutch disease problem is supposing there is an economy that is doing spectacularly well in one sector. What happens is that the other parts of the economy can then just relax because one sector is doing very well. And then what it does is skews the whole system. So that supposing there's a shock to that one sector, or you reach the limits of growth from that sector, you, you are unable to move to the next. You kind of become a prisoner of your own success. And Punjab seems to be, uh, one of the places where it's a prisoner of its own success, uh, in that it does well in agriculture, uh…

AI assessment note: “Well, yeah, yes. I mean, in, in the sense that, um, in the end”

Q Let's talk about this, right? What are the events that were leading up to this event that you mentioned since

A Uh, well, you know, uh, the Soviet Union, uh, was, uh, unable to maintain its, uh, its, uh, its cohesion. The economy was doing badly. They couldn't keep up with the arms race. And when Gorbachev came to power in 85, he decided that, uh, look, I cannot do this. And he's embarked on a process of, uh, Internal liberalization, the perestroika and classness. And externally, he wanted to have a normal, friendly, cooperative relationship with the West. So there were many arms control treaties, uh, uh, that were signed at that time between, uh, Reagan and Gorbachev and then later with Bush. And, uh, he was an idealist. He thought that, you know, this is time for new thinking in the nuclear age, and I think he was right. But unfortunately, it didn't work out that way, and I think the world lost a great moment of opportunity there to reset international relations in a new mold, more suitable for our times. Well, the Soviet Union's economy was a centralized economy, and it was very inefficient. It was not innovative. They couldn't keep up with the West, particularly when Ronald Reagan started his Star Wars program, and it became very difficult for the Soviet Union to keep up with the USA. So Gorbachev decided that for the sake of his country, he needed to modernize To reform. Earlier on, also, there had been efforts under Khrushchev, under Andropov to liberalize, but he went about it wit…

AI assessment note: “when Gorbachev came to power in 85, he decided that, uh, look, I cannot”

Q What, what, what are the causes that led you to, you know, uh, all the changes that you saw in India that led you to believe so much in India, the 20% of your portfolio sitting in India?

A Well, a number of reasons. So first and foremost, it's about growth. Uh, the Indian economy, as you know, is growing at a very fast pace. Uh, one of the highest in the world. And of course, the company that's growing at seven percent, a country that's growing at seven percent means that the companies are growing at 14%. So, uh, that's the first thing, growth, rapid growth. Second, population. Uh, India now has far more people than China. And most importantly, it's a young population. Uh, the average age in India now is about 26, 27, compared to about 37 for China. So that means that you're in a, uh, not only a high-growth economy, but an economy that, because of the young population, will continue to grow at a fast pace. The third thing is, uh, really connected to, uh, Mr. Modi, because he introduced the idea of Digitizing the Indian economy and making digital communications open to all Indians people. What does that do? What it does, it accelerates education. It accelerates productivity. And it provides jobs. I know India is facing a demand for more and more jobs, and I think that, that demand will be, be satisfied as a result of what's happening in terms of the technological growth in India.

AI assessment note: “Well, a number of reasons. So first and foremost, it's about growth.”

Q And Mark, uh, uh, can you describe your journey, uh, that at what age, you know, you started your first work?

A Oh, I started very early when I was in primary school. I delivered newspapers. I mowed lawns of neighbors. I did gardening. And then in high school, I also worked, uh, for, uh, Companies to help them do their paperwork and so forth. Then in college, I worked my way all the way through college, uh, being a waiter, uh, playing piano in, uh, in nightclubs and all kinds of odds and ends in order to make ends meet. So, uh, that was really the journey that I had throughout my education. And in fact, I, I loved being in university so much and learning that I almost became a professional student. I, I started at Boston University, then I went to University of Wisconsin, Syracuse University, I studied in Japan, then I went to University of New Mexico, and then finally ended up with MIT, Massachusetts Institute of Technology. So, um, I enjoyed learning. I think that's another very important point. If you're going to become a successful investor, you've got to have curiosity, and you, you have to, ah, be constantly learning. You can never give up learning.

AI assessment note: “I started very early when I was in primary school. I delivered newspapers.”

Q independence. That's the title of your book, right? India at hundred. Ernst & Young says that it will be 26 trillion. Goldman Sachs predicts it will be 50 trillion, but by 20, 75, uh, right. And you have tried to prove that by mathematical means, uh, right. So for a common man, how would you explain it? I will go into detail of various, but sitting at 3.7 trillion today.

A Yes, no, I think, uh, see, the first thing that we have to understand is over a long period, like 25 years, um, The power of compounding becomes very important. And, uh, let me give a couple of examples to anchor this idea. Um, you know, examples from other countries. Uh, let's take Japan from 1970 to 1995. During this period, the Japanese economy multiplied its GDP by 26 times, um, precisely 25.6 times. You know, in 1970, its GDP was about two hundred and twenty billion. Uh, by 1995, its GDP had multiplied to five and a half trillion. That's a 26 times multiplication. Um, Second, you know, take China. 1996 to 2021. And I did not give China as the first example because the first retort would be, oh, that's not a democracy, and that's why I chose Japan as the example. Um, and China, for instance, from 1996 to 2021 multiplied its GDP 22 times. Now, uh, again, over a 25 year period. What I am projecting here is about a 15 times multiplication, you know, compared to 26 times for Japan, 22 times for China. It's actually is not as, as aggressive. Um, and as you know, I have shown in the book, it's, uh, it's, it's based on very rigorous analysis, even the growth rates that I'm assuming in, you know, real, real growth rates. I've spent an entire chapter, you know, uh, building up From, you know, grounds up, you know, uh, based on investment rates, based on productivity, and not just ba…

AI assessment note: “The power of compounding becomes very important. And, uh, let me give a couple of examples”

Q And what were the first Two or three acquisitions, like, and how did you finance those acquisitions?

A Well, we financed them with the, a little less, the, the, the, the less than 40,000 dollars paid the rent, meager salaries for, there were five people at the, at the time, and, uh, four of us lived in the same small apartment, um, so it was really, uh, frugal. More than frugal. The first acquisition, uh, we paid for it about 10,000 dollars, and it was a, uh, an app to personalize your iPhone's keyboard. 20 14. Probably, yeah, make it eight or nine months into Bending Spoons. Um, so that was the first one we, we turned, uh, That thousand dollars in a few tens of thousands. Of course, it's easier on a small scale, um, and then reinvested into hiring a few people, improving at what we do, and, uh, slightly bigger acquisitions. And then, 11 years later, you know, uh, naturally not an overnight success. A lot of compounding being a little bit better with each passing day. Scale increases.

AI assessment note: “The first acquisition, uh, we paid for it about 10,000 dollars”

Q So what is the real number of our GDP right now if it's not 3.6 trillion? Where do we stand at then?

A So I think we are probably at still 2.5 trillion dollars because in the last eight years since demonetization from 2016, we have not been growing at an average of six and a half, seven percent, but more like one or two. And in some years like demonetization, we declined. Uh, then again, you know, when the government said before the pandemic, The rate of growth was 3.1%. So if the organized sector is growing at 3.1% and the unorganized sector is declining, that would have been also minus one, minus two percent. So of these years, the average could not be more than one and a half percent. And therefore we are still probably at about two and a half trillion or thereabouts. And that's why you see you have unemployment. That's why you see continuing poverty. That's why you see the various kinds of problems. The disparity also that you see is because the unorganized sector is declining, the organized sector is rising. So you cannot explain, ah, if the economy is growing at seven and a half percent or seven percent, then why is unemployment so high? Why is the youth protesting so much? You know, ah, why is the distress so much in the agriculture sector? It is, it can only be the problem that we are confronting can only be explained if the unorganized sector is declining and the rate of growth is really only one to two percent and not seven percent. At seven percent, the picture of the…

AI assessment note: “I think we are probably at still 2.5 trillion dollars”

Q And, uh, uh, he set up the cancer, like the foundation of the cancer research center, which got later, you know, built by, uh, his son and the grandson and so excited, but let us start, you know, for our audience by how did the Tata group get formed?

A So, uh, Siddhartha, it's my pleasure and privilege to speak on this show. And, uh, you know, we've just about, my co-author, Mr. Gopalakrishnan and me have just about completed the writing of our book on Jamshedji Tata and the lessons that we can learn from Jamshedji Tata that every manager, entrepreneur, leader today can learn. It was a fascinating voyage writing that book. And, uh, therefore, uh, You know, going, going to the foundation of the Tata group, which we have also briefly described there. The Tata group was founded in 1868 by Jamshedji Tata, who was a Parsi merchant of Mumbai. He was born in Navsari in Gujarat. He came from a line of priests in the Parsi religion, but his father had already ventured into the world of business. He came to Mumbai with his father at the age of 13, stayed there, studied in Mumbai. And in 1868, he founded this company, which is known as Tata Sons today, the parent company of the Tata Group. Jamshedji Tata initially made a foray into the textiles business. He first bought an old mill and converted it to textiles in Mumbai, but later he built his first greenfield enterprise, the Empress Mills in Nagpur, which became one of the most prosperous businesses of its time. It returned to its shareholders within a few years, very, very significant returns on their capital. And he did that by using the best quality of long stapled cotton. He did th…

AI assessment note: “The Tata group was founded in 1868 by Jamshedji Tata, who was a Parsi merchant”

Q And how are these, how are these foreign investors seeing Indian market? Like in terms of exits that we are now seeing earlier, it was said that we don't have Indian market doesn't have exits.

A So what happened in 2016 is Flipkart got acquired for 17 billion dollars by Walmart, and it was said to be the largest exit. And after that, for four, five years, we didn't have exit. But now what has happened in the last three, four years, we are constantly seeing at least 10 to 15 startup IPOs every year. Uh, this year, Mahmurth went IPO, uh, right? Companies like IdeaForge, which produced drones. Went IPO. Companies like Swiggy have filed to go IPO or Electric has filed to go IPO. Zomato went IPO, uh, last year and very successful IPO. PTM went IPO. It was not a favorable one for them, but still the company continues to exist. And so these have shown that India has produced now fifties of exit, uh, through startups for public market and private investors. Uh, now the question is, uh, foreign investors are betting on India, thinking that these 50 will grow to thousand. So can India still continue its momentum of Uh, the live, uh, the lively IPO market that we have today. Uh, in the past three, four months, we were seeing one IPO every two weeks on some weeks. It was like when I, one startup IPO every week, like Exego went IPO. And before that, there were a couple of more IPOs. So if we continue this trend, then foreign investors would, uh, you know, keep on betting more in India because the U.S. IPO markets are closed. And globally, there's no robust IPO market as, as robust …

AI assessment note: “foreign investors are betting on India, thinking that these 50 will grow to thousand.”

Q Can you tell us more about that? Like, how does an unprofitable company goes to?

A For example, when tomato filed for its IPO, it was still unprofitable, and it showed a path that within three to four years, they will become profitable. As of today, they have become profitable, and earlier investors hammered them when they went to IP at ten billion valuation, and the valuation in public market came down to, uh, five billion. Today, the company is valued at twenty billion. Uh, right? So, uh, Even the public markets are celebrating risk taking. When Zomato acquired Blinkit, the share went down. Almost the company valuation went down to four billion dollars. Today, they say the Blinkit occupies more than ten billion dollars in Zomato's valuation of twenty billion. So, the public market investors are appreciating risk taking and they are rewarding you by the increase in share price. And the government is supporting Uh, that kind of risk taking.

AI assessment note: “when tomato filed for its IPO, it was still unprofitable”

Q And how many unicorns or how many hundred mil revenue companies would have EF produced till now?

A Uh, so I think, um, we have two unicorns so far, uh, and we have probably another dozen that I would expect to become unicorns over the next couple of years, you know, that are sort of valued in the mid hundreds of millions. Um, uh, you know, and, and, and we have a lot of companies that are very serious revenue companies. Uh, we were talking before we started about You know, one of my favorite EF companies, Clio, which they tweet out their metrics so I can talk about them. Uh, they're not secret. You know, Clio is an incredible company that, that company we funded, I think in 2016. So before the large language model revolution, but they had a vision about the future of, um, AI and conversation within finance. So, you know, their view was like, you know, if you're a wealthy person, You can go pick up the phone to your wealth advisor and they'll give you advice. But, you know, if you're a younger person, you don't have a lot of money, you know, you can't do that. So they wanted to build a sort of conversational financial advice application for, for everyone. And, you know, they, they start building Clio and, um, uh, they, they were sort of focused on a younger audience. And today that company does over a hundred million dollars of ARR. It's growing like over two X every year. It's profitable. You know, it's like, it's a, it's a beautiful company. I think it's going to be one of …

AI assessment note: “we have two unicorns so far, uh, and we have probably another dozen”

Q The number of AI companies getting produced from India will be huge, right? Because we are now running the way of where people have made money from Freshworks. They have made money from a car. And I assume in the next 10 years, there might be hundreds such outcomes. Now we have a handful of outcomes.

A So I'll tell you, it's a very interesting, you brought up the statistics, right? So in Together Fund, when ChairGPT was launched, first six months, any silence. We saw maybe one company a month, which is an AI. We thought something is really wrong. Maybe Indians are not getting it. We are not able to get it. What we can do as a fund. After six months, we started seeing more 10 companies a month. Right now, for last three months, we're seeing a hundred companies a month. Yeah, that's the scale. And all kind of people are jumping in. So the first time we are seeing actually people from MNC is also coming. Facebook, Google, LinkedIn, they've all worked on, you know, AI teams, and Indians are there everywhere thanks to technology and our superior education. So we are seeing that cohort. We are seeing very young people from the college who are coming in saying, I want to do a small project in AI. We started seeing that. We're seeing a lot of second time founders who are coming into play as well. I think it is because the scale of the value creation opportunity is huge. So you're absolutely right. So we're going to see huge amount of companies getting started. And some will break out from that.

AI assessment note: “Right now, for last three months, we're seeing a hundred companies a month.”

Q Uh, Raja, uh, would love, you know, before I introduce you to the background, but would love to hear from you, right? What's your background? What brought you to the U S and how did you came into Churchill? And then next set of questions would be from mine would be what's Churchill's background, right? And, uh, what's the broader industry that the firm operates in?

A Yep. Um, thanks for, again, thanks for having me. Uh, like everybody, you know, a lot of people in my generation, Um, I'm one of those people that made my way to, to the U S from India at the age of, I want to say, 22, 23. Um, and at that time, this was sort of mid to late nineties. Uh, you know, all the immigrant Indian immigrants. Um, at that time I started in tech as a software engineer. I've done that a few for a few years. Um, then went back to business school. And took an interest in starting businesses inside of large companies. And then, you know, that sort of progressed into, uh, corporate venture capital, investing in startups on behalf of large corporations. And then that sort of progressed into more and more into the venture ecosystem. Um, you know, as a venture allocator, uh, now at Churchill Asset Management and Churchill Asset Management is a Fifty billion dollar AUM private capital asset manager, and Churchill's businesses are, uh, private equity. We're an LP in, uh, three hundred-odd private equity firms, and largest, uh, private credit provider in the US for middle market, um, companies. And venture and growth equity, um, is one of the businesses at Churchill that I manage. Um, our business at Churchill and venture and growth equity is we are a, an investor in venture capital funds, primarily in the U S and a little bit, um, internationally, but primarily in t…

AI assessment note: “I'm one of those people that made my way to, to the U S from India”

Q Shripati, the global macro outlook about India, what are the things that global investors, you know, still are unsure about? I still don't understand about India.

A Yeah. I mean, we all understand the excitement about, about India, the China plus one being, uh, you know, one major one, of course, the tailwinds, which we are getting for all the infrastructure investments, which the country has made back in starting in 2010, 14 onwards. Right. The things which I would say as a private market venture investor, which people are still, uh, have question marks on, is around liquidity and exits. So, of course, part, ah, limited partners who are investing money in India want to have a view of when they are going to get returns. In what time frame are they going to get it? And I feel that that questions are being answered slowly, ah, but still the predictable, repeatable nature of that remains to be proven in India.

AI assessment note: “people are still, uh, have question marks on, is around liquidity and exits.”

Q companies of the decade in the, like, starting 2015 till 24. And previously you had briefed inside Bain Capital, Bridgewater, uh, in investing, and then a scout at Sequoia. So, so tremendous amount of things to discuss with you, Sri, today. So excited, uh, you know, uh, before that, right, would love to know about your background. Uh, Sri, right? Where did your parents come from about your own background?

A Yeah, happy to chat about that. Uh, so my, um, I was born in South India in Hyderabad area, and so that's where I grew up until I was about 11 years old, when my family moved to the US as part of, if you recall, they were importing a lot of computer programmers because of the Y to K crisis in the late nineties. And so that's how my dad, who is a COBOL mainframe programmer working at the ECIL in India, ended up moving to Madison, Wisconsin, like, you know, it's pretty suburban Midwestern. Uh, town. Uh, and, uh, and that's where I grew up. Uh, I went to middle school and high school and, uh, ended up going to college on the east coast, uh, to, to Dartmouth. Um, that's interesting about kind of even the early careers, you know, how, how much influence your, your parents have, especially in an Indian family, uh, in what choices you make. Uh, and, uh, and I was actually at the time, you know, Going to do, um, uh, you know, my dad, of course, gave me two options, you know, be an engineer or a doctor, uh, and, uh, and I, I was gonna, uh, considering going into computer science, but, uh, he actually discouraged me, given that he was, uh, you know, uh, a programmer, a computer scientist, because his view at the time, which I think in retrospect, you know, was probably not the right one, you know, 20 years later, was like, He was like, look, uh, the technical people are not where the val…

AI assessment note: “I was born in South India in Hyderabad area... my family moved to the US”

Q And now coming onto right. People believe they can enter VC, but VC is such persistent asset class, which means that the best funds keep on winning the best deals and hence driving the best returns. So, so for another fund, uh, to, to replace the top five is super tough, right? It's so competitive at the top.

A Yeah. Um, yeah, and, and this is obviously I'm not a professional venture investor, so you have to take everything I say with a mountain of salt. These are just observations from an outsider. But, uh, yeah, I think what you've observed, I've also observed, right, that there, there is persistence of returns among a handful of firms over long periods of time, right? Uh, although there are examples of top-tier firms going through tough patches like Kleiner that have now come back, and there's also rare examples of You know, new firms that really find success, right? Uh, I think in the grand scheme of things, A-sixteen Z and Thrive are relatively new firms in the US that seem to be doing well, right? Uh, and, uh, and so there's an interesting dynamic as to, like, why this is happening. One, like, obvious example is early stage venture is hard to scale, right? So as we talked about, there's only so many deals that you can get High conviction on and also win, uh, in a given year, right? Uh, and, uh, and because the return profile typical target for a fund is 35 to 40 deals or what have you, right? And the larger the fund, the harder, uh, it becomes to return. So what some firms have done is taken this to heart and have kept their fund sizes relatively small, actually, um, which means that they have had the ability to Select and get into the best deals. Right. And rather than focus on…

AI assessment note: “there is persistence of returns among a handful of firms over long periods of time”

Q Wow. And how many managers do you manage on the venture side today?

A So in order to fully answer that, you know, we have to factor in what we do on the discretionary side of our business, and then also what we do in separate account, uh, and advisory work. And that number of venture growth managers is over 200 at this point. And so we have very comprehensive global coverage of venture and growth equity, which is very different. I think from others, um, you know, who are only doing a handful of managers and working with them because of the way that we're set up, we're able to work with a much A much broader swath of the venture community. And that includes people on the seed and micro side up to people that are doing crossover strategies. And you can imagine that that allows us to have pretty interesting sourcing channels for direct and secondary when you're working with all different types of managers. And that's just from a stage standpoint. If you layer in what we're also doing in terms of industry specialists and geographic specialists, Um, that gives us a pretty interesting perspective and purview across the entire asset class.

AI assessment note: “that number of venture growth managers is over 200 at this point”

Q I agree with you, sir. So, so, before we dive into some parts, right, of, of your book, I would like to understand for our audience, what, what is the term, and where do these terms originate, like bureaucrat, collector, and district magistrate? Because these are used in various parts of the books.

A Yeah, bureaucracy, I, I can't really describe or indicate where the word came from. Bureaucracy, as we understand, is the delivery arm of a government, and it used, sometimes it's used preservatively, like the communist countries, bureaucracy, etc. But bureaucracy is, as much as it is a delivery arm, it is also used in a non-complementary way, that bureaucratic hurdles, bureaucratic resistance, etc. Collector, of course, came from the colonial era because the district level officer, the head of the district, his major responsibilities were just to collect taxes and maintain law and order. So because the primary responsibility was collecting taxes, the head of the district came to be called collector, and that has continued even after collecting taxes has become one of the least significant. Items on the job chart of the so-called collector. District magistrate, of course, comes from the law and order, ah, dimension of a district officer. In fact, in North Indian states, the head of the district is usually called a district magistrate, whereas in the South, we call the head of the district as the collector. But they perform roughly similar functions. In the South, collectors are also DMs. In the North, DMs are also collectors.

AI assessment note: “Collector, of course, came from the colonial era because the district level officer”

Q Do you think this, the, we have, ah, unnecessarily bogged down the IES machinery? Was it better earlier, the way the mechanism, it worked?

A Yeah, from my, you know, I, limited Understanding of the current situation, current recruitment pattern, I believe that there is a need for rethinking on the recruitment examination, the structure of the exam, certainly, but also in the number of chances given to a candidate to appear, and the age span. You know, 30, 22 to 32 is too long a span, and six attempts is too many. What happens when you give so many attempts is that the people who typically qualify, I'm making a, you know, ballpark judgment, which is that those people who qualify are more likely people who master the technique of the examination rather than people who have the inherent competence, capability. So I think you must give more than one chance, certainly, because there's an element of luck, but two chances, at the most three chances. But giving three, six opportunities under a long lifespan of 20 to 32 years is pushing youngsters into this sunk cost fallacy that they keep attempting, then they don't succeed, but having invested so much time and effort, they must, they think that they must continue to Try, and most people will not make it even after six attempts because there's so many people are repairing and so few who get in. So their entire time when they should be looking at other opportunities is lost. So there is a strong case for reconsidering the eligibility criteria and the number of chances offere…

AI assessment note: “there is a need for rethinking on the recruitment examination, the structure of the exam”

Q Since we have mentioned about our portfolio companies, what are the other companies that are doing some exciting work that we should be sharing with our audience?

A For example, you know, Vijay, Rayapati, Kiran, and Pursu were co-founders of Atomic Work. That's one of the companies, uh, you know, I'm, uh, uh, seeing that they'll, they can become the next Freshworks or even bigger than Freshworks from India. The large VCs in the US have said that this is the best ever SaaS company that has come out of India. Uh, and it's surely because the founding team is so good beyond the founders. Each member of their 30 member team is such that, you know, uh, they can, if they themselves start a company, they'll be able to raise a couple of million dollars just based on their own credibility of what they have built in the past at Freshworks and Nutanix and the other companies like ThoughtSpot that they have worked at. And, and the second thing is that they're, uh, trying to disrupt such a large incumbent, which is ServiceNow. ServiceNow, uh, is a eight billion dollar Revenue company, eight billion dollars, growing at 30% every year on year, almost valued in public markets, uh, mostly at hundred billion or more, right? So, so when a founder is such a good team, is trying to build a product to disrupt such, such a large incumbent and has some early success in it, right? There's a real shot that they'll build a very, very large company. If, if they are able to figure out the right product and the right GT emotion for it. And because these are founders who…

AI assessment note: “Vijay, Rayapati, Kiran, and Pursu were co-founders of Atomic Work. That's one of the companies”

Q Any of your portfolio companies have gone public?

A Um, we've had, uh, a few, um, in the public markets. We had a company called Prodigy that sold to Upstart. Upstart went public in the United States. It's more around machine learning and AI for lending. Um, they made a company called Momentus on the SPAC side that went public that didn't do as well. Um, and then we've had a numerous amount of protocols that have gone from, uh, what we call, uh, seed private, um, funding to, um, protocol listing on the exchanges like, uh, Binance, Kraken, et cetera, that are out there, uh, within the United States and outside the United States. So all in all, I think we probably had like, you know, tens of twenties of, uh, folks that have gone, uh, liquid. And I call, I consider it liquid because when a company goes public, That's not the end of their journey, and we do have a tendency to hold in our companies and make sure that we're there for the long term or long duration if we believe they're going to continue to compound.

AI assessment note: “we've had, uh, a few, um, in the public markets.”

Q Right. Among the companies that are returning the most amount of capital today, or have returned the most of, what is, what is your pattern recognition say about the background of these founders?

A I mean, if, if you take a look at any of these, um, founders and or management team members that are running these companies, it's so different. So I'll talk about Carta. So Henry started the company. He's got no financial background. He didn't know anything about capital markets, illiquid markets, private markets, but he learned and iterated very quickly. So his insights were that cap tables are gonna digitize. And so he formed a version of those, uh, that product. It didn't work first. And then he created another product, which is called, which is a regulatory product in order to take a look at fair market value of people's stocks and options. And then he fused those two products together to create his product market fit. Um, he didn't know anything about any of these regulated products, right? He's just learning and iterating very quickly, which is what is the problem in the market? What am I trying to solve? What's the software I'm building in order to solve it? And how do I grow compound, retain, and gain new customers through that? So he created a, he created a product that was a marketing wedge product. That eventually, uh, people then realize why cap table was really strong, created a network effect between employees, fund managers, and limited partners, because there's lots of people that are stakeholders and shareholders, and then his atomic value was shares, and then…

AI assessment note: “it's so different. So I'll talk about Carta. So Henry started the company.”

Q And how do you get government, like said, by doing these podcasts or writings?

A Yeah. So governments have various ways of, uh, interacting. Now, for example, uh, many of the laws or many of the, uh, Policies are put into the public for draft comments. So every, let's say Ministry of Electronics has made a policy. They'll put generally into the public domain for draft comments. Anyone can respond to it. You know, you and I, we can just respond to it. There are many organizations which are trying to bring together people to systematically respond to these draft comments. So that is one way. The other way is there are standing committees that the parliament has. On each of these ministries, there will be an equivalent standing committee, which will question the, it's a check and balance where the legislature will question the executive, that defense, for example. So it'll be a standing committee of defense where there'll be people from the opposition parties and, uh, the ruling party. They will ask questions from the, uh, ministry of defense that why didn't you do this? So you can respond to those. There are, you can depose before a parliamentary standing committee. Then, uh, more indirectly, the idea is, uh, just our, our, uh, what theory of change is to just flood the system with good ideas. So at Takshashila, what we are doing is just write a lot, write policy papers, which make the argument to move the overturn window in the direction which we think is an…

AI assessment note: “So governments have various ways of, uh, interacting.”

Q So what, just to summarize it, what you're saying is, you're saying the good policy, uh, That the government will make in the future, or is it making right now? These are the things that have been Discussed over the last decade. And some of these things would have captured the masses attention and thereby capturing government's attention that either timing is ripe right now to make it happen.

A Yeah, absolutely. Yeah. It, it might not have captured the masses attention. That's the only correction I'll make, but it will largely, uh, arguments would have been made. So that's why, you know, for example, the, uh, Ajay Shah and Vijay Kelkar who also have a very good book on public policy called In Service of the Republic. They talk about a idealized policy pipeline. You know, how does a change happen in India? So first they have around seven steps. I'm not going to discuss all of them, but first step starts with having good data on that particular area, right? So for example, health, you should know what is the problem in public health in India. So first you have a good statistical system in place. The, Next thing is once that statistics is largely accepted, then there will be the role of think tanks and where you then propose ideas that, okay, this is a problem. This is the way to go about it. Some others will have completely other, uh, you know, opposing ideas. That's fine. There is that intellectual sparring as a natural selection of ideas takes place, right? Just like in biology. So people will argue, et cetera. People will write in opinion pieces or discussion documents. Some of them ideas will go away. Then comes the role of, uh, committees. So out from outside the government, we think of committees in a very cynical way that government committee, but change will nev…

AI assessment note: “Yeah, absolutely. Yeah. It, it might not have captured the masses attention.”

Q So, you are saying this budget is given to the state government by the union government to work on education and health?

A So, there are two things. One is, there is a constitutional division, right? For example, you pay GST, there will be a SGST and there will be a CGST, right? So, that SGST directly goes into the state's kitty. So it's constitution. The union government doesn't give. It's their right according to the constitutional division of ours. That is one. And then union governments run certain schemes when state governments like Sarva, Shiksha, Biyan. So for that union government gives some portion of the money and state governments give some portion of the money. But the implementation of all these is done at the state level. So if you want India to jump to the next level, if you want India Uh, to progress. You need strengthening of the states, of the union, of the, uh, uh, local governments, and then for the union governments to do what it should be doing, which is defense, external affairs, etc. But so that's the conceptual jump we have to take. It has happened in China in extremely centralized systems where there would have been no incentive. So it can happen in other places as well.

AI assessment note: “The union government doesn't give. It's their right according to the constitutional division”

Q And who, according to you, has been the most iconic finance minister of India?

A Well, without doubt, it's Manmohan Singh. I mean, not just because he implemented the hundred-day reforms that were not only necessary, overdue reforms, but also if those reforms had not been introduced then, India, the Indian economy would have been a different story. The kind of, the growth that you saw after them, After those changes is something that we all as Indians are very proud of. And the interesting thing is what Manon Singh did in those five budgets, the broad tenor of those policies have been maintained even now. So the reforms, the, the, the direction that he gave to the Indian economy that have by and large been followed. Yes, there have been changes, deviations, some sort of rollback has also happened. For example, in the tariff policy, there is some rethinking going on. Some sort of subsidies for economic production, like the production linked incentive schemes. There are some rethinking going on, but the broad tenor of government should not be in the business of running businesses. That has been accepted. So that is Manmohan Singh's biggest contribution. And the second biggest contribution of Manmohan Singh has been the way he built Uh, team of expertise, uh, in the finance ministry. We did not see it in any other time. Any other finance ministry could build that kind of resources. So his team was actually the, if I may call the dream team that he created to i…

AI assessment note: “Well, without doubt, it's Manmohan Singh.”

Q And, uh, can you tell us more, as you mentioned in your book about this scandal, like what happened and, uh, how did Manmohan Singh get involved in it?

A Well, uh, Manmohan Singh was not involved. Uh, uh, it was under the watch of Manmohan Singh and the finance minister, uh, that, uh, stock market operators led by Harshad Mehta, uh, they used the banking system, uh, to, to, uh, raise loans Against what is called the bankers receipts and play the stock market. So what was happening was the stock market was, was bullish. The stock prices were going up, but the, the fueling of the stock market was largely because of these stock market operators using the banking sector money to buy, buy up stocks. The mistake of the finance minister was to have made a statement in parliament that a finance minister cannot lose his sleep just because the stock market price is going up or going down. He did ask his officers, ask Sebi to look into the causes of this sharp spike, but he, he did not Uh, follow up, uh, adequately enough. Uh, and simultaneously what happened was when the scam, the security scam came out, uh, the stock markets fell. Uh, there were this allegation by Harshad Mehta that he had given money, one crore rupees in his suitcase to the prime minister at his residence. Now it was an allegation that was made by Harshad Mehta. So, so it became a Political controversy. It was an economic controversy. And Manmohan Singh's failure was not to have anticipated it, not to have taken adequate steps in, in, in preventing that scam. Instead, p…

AI assessment note: “Manmohan Singh was not involved. Uh, uh, it was under the watch of Manmohan Singh”

Q back and learn, right? And, uh, the counterpart countries of India, like Singapore, China, right? They, they never let momentum go in the last seven, roughly 40 years, right? Uh, from 19 seventies or eighties, I would say, but India has almost every five to six years, uh, stop in this momentum. Why was that so that India could never run a momentum for at least a decade or two?

A Well, you know, I think one, one reason could be, one reason could be that we are a democracy, a very functioning democracy, and when people are unhappy, Uh, powerful, uh, segments, uh, uh, among the voters are unhappy. Uh, then, uh, there is a pushback. So, so it's a, it's a, it's a function of the government also to, to, to enlighten, to make people aware of the, the benefits or the short-term pains and the long-term gains of any economic reforms. You take a look at even the Narendra Modi government. Now, it did try to reform land laws. It did try to do reform the labor laws. Land reform laws were withdrawn. Labor laws have been passed, but not to be notified yet. The farm sector laws, they were very reform-oriented laws, but they had to be rolled back. Now, why? Because of the pushback and the fear of the political capital of the party being undermined. Now, uh, it is important that we, we keep the momentum on growth intact, but along with that, we also have to keep the reforms momentum also intact. Because if you don't keep the reforms momentum intact, then how do you make sure investments keep taking place? How do you make sure that now, for example, right now we are talking about judicial reform so that decision making process, uh, is easier. The BJP is manifesto. It talks about judicial reforms, e-courts and everything. Now the question is, if this faces resistance from …

AI assessment note: “one reason could be that we are a democracy, a very functioning democracy”