The Exchanges

Q And, uh, what was the thought process behind the exit? Uh, was there a, uh, parallel, uh, plan that you could have built from six and a half million? The first six and a half million is very tough, but you could have compounded even two X annually and reached, let's say, 30 to forty million dollars in a few years.

A You're right. I mean, there could have been, uh, you know, and there's always a fork in the road where you say that, yes, you know, you could, you could have, uh, you know, taken the company maybe to 30 to forty million dollars. But I think that would have also in our mind, it was sort of clear that going more than ten million dollar would need a different approach where we would need to build up a sales force in the US, a sales force in Europe. We would need to raise capital. Uh, so it would be, uh, it would, it would be a different type of a game. It would be a game where we would raise capital dilute. Um, you know, then when we get investors, we are also driven by their priorities, by their growth rate, by their expectations. Managing all of them, then, you know, building a sales force in Europe and the US, then growing that. Uh, the founders also, uh, my co-founders also had been around for about seven, eight years in the journey. They were also like me and saying, okay, you know, we haven't seen any exit. We don't really know. Uh, you know, everybody was getting a bit restless. They also wanted to see some money, uh, you know, and we thought, okay, let's explore, uh, you know, looking at what an exit could look like via sale. Right. And then see if we get a good deal. Uh, maybe we do this now because the other thing is that at the end of the day, you know, it's not only ab…

AI assessment note: “going more than ten million dollar would need a different approach where we would need to build”

Q And, and can you share the current scale and how much time it took you to build it of one digital stack and scale in terms of ARR, in terms of the top marquee clients that you have?

A So we started in, uh, we formally, uh, you know, incorporated in November of 19, um, uh, we brought in our first employee on Feb of, uh, 20, uh, and, um, today we are a 40 person company. Um, we have, um, about 24 clients. 25% of the businesses outside India. We're about, um, in, by end April, we are looking at 1.2 million dollar ARR. Um, we are working with some of the most marquee clients that there are. I mean, we are very fortunate. We've been very fortunate in our journey. Uh, they include the likes of HP, Nestle, Philips, uh, Glambia Nutrition, um, Havas Media. Um, et cetera, all on the enterprise side. Um, we are slowly onboarding also some, some in the end, we've been working with these clients for the last one, one and a half years and demonstrated considerable impact. We are just onboarding a few other marquee names, including Mars, Pet Foods, uh, Mariko, uh, and so on. Um, and also on the D to C side, we've been working with the likes of Neiman Shoes, Pilgrim, Uh, Blue Tokai Coffee, Zynga Vita, and so on. So a number of brands, um, and, um, so far, yeah, the, you know, it's, it's, we, we started, uh, it took us about six, eight months to build the first prototype. Uh, once we had the first prototype, um, as in the case of Value Edge, we had a game-changing moment in July, August of, when, uh, HP invited us Uh, and they looked on us to help them power what they call t…

AI assessment note: “by end April, we are looking at 1.2 million dollar ARR.”

Q Uh, and, uh, what were the metrics at that point in time that you figured out in 2017, 2018, that Shiprocket is the platform that you want to focus on or build?

A Yeah, I think it was, it was pretty crazy. You know, now that I think about it, uh, we were seeing CACs like we had never seen before. We were seeing self-service sign up, you know, almost like almost 70, 80% of the merchants, they were coming in, signing up, putting their address, uh, paying money into a wallet without a single human intervention, right? It was all happening in a few hours of them exploring the platform. And Uh, we always thought this was stuff that was available. I mean, that was, uh, you know, uh, visible only in the U S where the merchants were more evolved, but we were, we were, we were amazed to see that happening on the platform and in such a seamless manner, you know, our leads were converting at 25%, 20%, uh, again, unheard of in a B to B business. And, and to be fair, you know, we weren't really a traditional B to B software business. This was more of a B to very small B Kind of a kind of a model. So some level of consumer, uh, influence in the product, in the funnels, you know, in the behavior as well. Uh, but still, those are the kind of numbers that that were just jaw dropping for us. Uh, retention was another big one, right? Uh, in terms of, uh, uh, you know, volume retention or transaction retention, uh, that was again, something we had never seen. It was north of 150%, you know, uh, right. As early as like the sixth month, uh, into, into the coh…

AI assessment note: “we were seeing CACs like we had never seen before... self-service sign up”

Q your buy now, uh, button and on the backend, uh, they are able to select, you know, uh, uh, which, uh, Korea or, or which, uh, delivery partner, uh, they can go ahead with ship rocket. And, and then you take care of everything between the merchant and the consumer, the, the tracking part, Notification for the consumer, right? So, so this is the tech layer which you have built.

A That's right. So the, the buy button is, is still sort of, you know, is under beta and we're trying various models there. Really today, the way it works is, you know, once the order is done, right, we'll integrate into folks like Shopify, Magento, you know, other ERPs like Unicommerce, et cetera, and we'll pull in, uh, whatever order information, uh, the merchants are generating there to give it to them in a single dashboard. It's a self-serve. You can come and connect your channel. Or a large part of our, almost 40% of our volume of our transactions actually punched in by hand, right? So there's a lot of social commerce, unstructured commerce going on, uh, you know, so players like Misho obviously are trying to capture some of that on their platform, but there's still so much happening on social channels that, uh, you know, people, we, we're, we're like the app of, you know, the hour in many ways for them to be able to help them Um, process those orders, collect cash on delivery, or whatever it is. So regardless of where they generate the order, it'll, it'll reach our OMS, our order management system, from post which the merchant can then allocate various carriers, you know, uh, they can see quality metrics, they can see pricing, uh, we'll print sort of compatible labels, you know, we'll let them generate the pickup, we'll ensure the ops are working, we'll ensure the pickups a…

AI assessment note: “That's right. So the, the buy button is, is still sort of”

Q years. I'm very grateful that Hundred X Entrepreneur Fund is a part of Rocketium's journey, and I have seen Satej evolve as a phenomenal leader in the last couple of years. So Satyaj, you know, our listeners would love to learn from you. First of all, your journey before Rocketium, where did you grew up? Where did you study? And, and then to the current avatar, the pivots at Rocketium.

A Absolutely. And thank you so much for having me. I'm a big fan of the podcast and kudos to you for building this amazing community where people pay it forward, share their learnings and failures. So I'm happy to do the same today. So in way of introducing myself, I'm Satyaj, founder and CEO of Rocketium. I have about, uh, 18 years in the industry now, primarily in engineering, technology, product development, product management, that sort of a thing. So started my, did my schooling in Mumbai, and after that I moved to Bangalore. So now I've been a Bangalore person for over 20 years. Did my engineering over here from RV College in Bangalore in computer science. Joined Microsoft straight out of college. So even though it was a large behemoth, what we were trying to do out of the India office was very different. The first set of products being built out of India, so got to work with leadership team quite closely. Got to build a lot of technologies for the first time, and I was there for a few years, and then the startup kind of in each hit me, but I didn't know that I had all the skills to start up right away. So what I felt was maybe education could help me. So like a lot of people who are not sure about what to do next, I did a degree and thought that would give me the answers. I went to Cornell, did my masters in computer science, did a few B school courses as well, because nai…

AI assessment note: “did my schooling in Mumbai, and after that I moved to Bangalore.”

Q And, uh, can, can you elaborate the eight four five?

A Yeah, absolutely. So, eight, four, five was a reaction to, uh, what happens in some Chinese companies, uh, whether publicly espoused or not, which is nine, nine, six, which is nine AM to nine PM, six days a week is what, uh, their team's timings are. And that's a way to motivate those teams also to say that we are working harder than anybody else. And that's why we are going to win. But as somebody who has read deep work and honestly believes in The fact that all of us are doing creative work. Creative work is not limited to only some teams or the others. Every team is doing creative work. So, uh, you know, we strongly believe that you need to work regular hours because, you know, that has these knock-on effects like, you know, sleep on time, you'll eat well. So, you know, without really getting into people's personal lives, these sorts of keystone habits can ensure people have a more, uh, regular sort of a lifestyle, right? And a lot of people come back to us and say that, Hey, you know, my, uh, health has become so much better because now I have more regular, uh, timings, and, you know, I'm eating on time, and, you know, I feel a lot better because of this one. Earlier when I could work at any time and, you know, uh, sleep at any time, I used to have a lot of trouble with that. Um, so, eight, four, five is meant to be eight m to four pm five days a week. So, obviously, uh, yo…

AI assessment note: “eight, four, five is meant to be eight m to four pm five days a week.”

Q Rajesh, uh, you did your masters from Columbia University. You tried many businesses, nothing worked. Then you decided to return to India. It was during this process that an idea that would later become hundred and fifteen million dollars came to you. Tell us about this journey, right? All the failures during this time.

A Sure. I finished my I.D. Bombay, and then I went to the U.S. like many others for, for the studies. But when I went, my father told me something which I could not, of course, forget. He said, finish your master's in nine months, work for two years, and then come back to India. He had done the same in the mid-sixties, so he saw no reason for me to hang around any more time after that, and that's exactly what I did. I came back to India in May, uh, 1992. And for the first two and a half years, a lot of initiatives, uh, that I tried actually didn't work. I created along with my, uh, co-founder, uh, Sanjay Jain at that time, uh, we created a multimedia database. We built an image processing solution. We tried some enterprise software solutions, but none of these actually got any traction. And then, uh, Mid to late 94, I realized that whatever we had created had to die. It's only when you close some doors can you then start opening new doors. Things were not working. I thought of myself as God's gift to India, you know, uh, IIT, US education coming back, and my dreams sort of lay in tatters because nothing was working. But at that time, I was also reading a lot about, uh, Uh, the internet. You know, my father had, uh, used to always subscribe to some of the best publications, um, and foreign international publications, magazines, and we used to get them at home. Uh, this was, of cou…

AI assessment note: “for the first two and a half years, a lot of initiatives... didn't work”

Q And, and you came from a well-to-do family so that your family could send you to US, uh, right? Or how was your upbringing like?

A So, uh, my father was a self-made entrepreneur. I mean, he's, when he started his life, he had a family debt of almost a couple of lakhs that he had to repay. He had come back to India. His father had passed away in the sixties. He had four siblings to essentially take care of and get married. Um, and he, I saw him firsthand as an entrepreneur. I mean, my earliest memories were where there were probably 10 of us staying, uh, in a small sort of, uh, probably a few hundred square feet place in Chichpokli, uh, just after I was born. My mom would carry me from one bus stop to another bus stop because it would say five paise on the bus fare if she walked a distance of a kilometer. I mean, she tells me some of these stories. I don't have too many memories, but, uh, what I do also recollect is at the end of every month, Every day we would sit and write down the expenses in a diary at home because we had to manage on the limited money that my father was basically earning. But my father essentially became an entrepreneur. He tried many things in his life. Some worked, some did not work. But I saw from him firsthand that, you know, failure is part of the terrain, part of the journey that is there. So the early beginnings were not great. Uh, but, um, by the time I had gone to IIT, of course, we were doing quite well. My father had made some very good investments. He was a civil engineer, …

AI assessment note: “So the early beginnings were not great. Uh, but, um, by the time”

Q And, uh, why did you choose to build a Proficon? You, you, you are a very, you know, uh, big advocate of Proficon. What is this word and why, why is this approach? And, uh, uh, that also comes to my mind, right? The next question is, uh, the patient approach of building it in 25 years. Venture capital companies are built in seven to 10 years.

A So I'll take the second one first, and I'll come to the Proficon. So I think I have to write off the first 10 years of Netcore. When I was leading it, I think I was the problem there. So really Netcore, if I look at it that way, the growth journey is about 15 years old. Um, now, what happened about Proficon was, you know, about a couple of years ago in one of our internal advisory board meetings, uh, someone said that, look, everyone talks about Unicorn, Unicorn, Unicorn. Netcore has a very interesting model. You are profitable. You are growing. You have been bootstrapped. Okay. You have not raised external capital. How can you tell your story better to the world? And it sort of just struck me that, okay, we can call ourselves a proficon. So just the word sort of just came to me. And I said it at that time and people liked it. Hey, you know, that's a nice word. And then when I started talking about it to other people, I realized that that's one word which sticks to people, you know, unicorn, proficon. And I defined Proficon as a company which is private, profitable, promoter bootstrapped, and highly valuable. Highly valuable I would say is at least say over a hundred million dollars because you have a lot of private companies who are not, uh, sort of valued. And then I realized that, okay, India world was a Proficon. I had not raised capital. Netcore is also a Proficon, uh, now…

AI assessment note: “I defined Proficon as a company which is private, profitable, promoter bootstrapped”

Q And how is your investing journey evolved over the years? What core set of ideas did you start off with and what ideas did you slowly inculcate in your investing mindset as you started learning new things?

A So my personal investment philosophy has significantly expanded over the years with the time and experience in the market. Initially I started off by investing in low price to earnings and low price to book stocks or cheaply valued stocks, statistically cheap securities because I started off Like most investors by reading Benjamin Graham's The Intelligent Investor. Later on, I read Warren Buffett, Charlie Munger, Phil Fisher, and I started buying quality businesses at reasonable to fair valuations. But today, it covers multiple areas of the investment universe, including deep value, cyclicals, commodities, turnarounds, and special situations like de-mergers and reverse mergers. Instead of being restricted by my personal biased views, as was the case in my initial years, I am now able to invest in a variety of industries and situations wherever I find mispricing of value and a highly favorable risk return trade-off. You see, no single strategy works all of the time and in every kind of market. And that is why it is essential to build up one's investing arsenal to be able to hunt for value from within different areas. And over the years, I've come to realize and appreciate just why this is so critically important. It is because a bull market is always going on at all points of time In some specific sectors of the Indian stock market, for instance, during the 2009 to 2013 bear mar…

AI assessment note: “Initially I started off by investing in low price to earnings... Later on, I read”

Q Your firm, Sterile Wealth Partners specializes in identifying emerging and fundamentally strong businesses. Based on variant perception and long-term structural trends. Could you please elaborate on these two investment themes?

A Sure. So let me talk about variant perception first. Variant perception refers to having a differentiated view on the short to medium-term trajectory of a business. And variant perception refers to situations where you get ROC or return on capital employed expansion coupled with earnings growth. This gives you valuation re-rating and you end up getting multi-baggers. And there are various triggers for variant perception. Namely, product mix change into a higher margin category, a big capacity expansion, which is then followed by operating leverage, and deleveraging. Deleveraging refers to cutting down your debt. As debt goes down, interest costs go down, net profit goes up, market cap goes up. Variant perception can also come from an industry cycle shift. So we have seen how the residential real estate in India has turned around after almost a decade from middle of 2020. And it has already led to many multi-baggers from the real estate and building materials space. Variant perception can also come from a favorable government regulation. So since early, we have seen a heavy emphasis by the government of India on ethanol blending. That in turn has led to many good opportunities and multi-baggers from the distillery space. Variant perception can also come from improvement in asset turns. This is an information which you can easily get from the conference calls. You can ask the man…

AI assessment note: “Variant perception refers to having a differentiated view on the short to medium-term trajectory”

Q And, um, You know, I know I may be repeating the question again, but just want to, uh, get more clarity from you. Uh, so when a farmer is using Beechat, he's using it to compare the price of its produce in various markets, right? What are the other use cases you solve for a farmer besides, uh, the price comparison?

A So I think it invariably starts with comparing prices. Yes. Right. Across different geographies. Um, now that, and, and these prices change every day, right? So, uh, today, you know, Lucknow could be a, could be the best market for you. Tomorrow, given the, you know, supply that Lucknow is getting, uh, Kanpur might be a better option for you, right? So, uh, it's, it's a dynamic thing. Uh, now, Once a supplier identifies the region that he wants to trade in, uh, then the next thing is which buyer to trade with, right? So once you have identified Kanpur, there are hundreds of traders in Kanpur who should you, you know, supply to. Uh, that's second. Uh, so first it starts, you know, users come in, they just keep checking the prices, right? Then they keep checking, seeing that, you know, their buyers that they are supplying to Uh, there are better options available out there. Um, once they, you know, that, that's our discovery funnel, right? So them discovering a counterparty. Once that counterparty is discovered, then the other, uh, things come in wherein you try to keep the counterparty more accountable, right? So somebody has committed a seven-day payment cycle, so I should get paid on seven days. So how do you keep the counterparty accountable that our rating system takes care of? Uh, so this is where users start. Now, invariably as the volume grows, so because suppliers are no…

AI assessment note: “then the next thing is which buyer to trade with... rating system... financing”

Q And this would be useful for many, uh, you know, uh, audience listening. How do you balance, like, what kind of, you know, how, how much percentage of your wealth you want to put into startups, right? And how do you balance it, right? Between US stocks, Indian stocks, startups, and any other asset?

A So if I have my way, I will put all my wealth in startups. I don't understand any other asset class only in 2021, uh, when, uh, you know, we were all locked down due to COVID. I started thinking about, uh, you know, how the wealth should be deployed. And I kind of figured out the 50, 50 formula, that 50% debt, 50% equity. And from that 50% equity, half should go into startups and half should go into, uh, you know, uh, the traditional, uh, businesses into stock market. I mean, you might be a little shocked to understand this is the first time in last six months is the first time that I have actually looked at stock market ever in my life. And I started investing in some companies. And I think there is a very interesting learning that from the startup world that you can apply on stock market. And I think there are some learnings from stock market that you can apply in startups also. So I'm finding it very interesting. And I'm continually discovering that.

AI assessment note: “I kind of figured out the 50, 50 formula, that 50% debt, 50% equity.”

Q And what are the problem exactly you were solving for the first three years for travel agents?

A See, the problem statement was actually very, very simple. You know, as a travel agent ourselves, uh, airlines used to give us three to four percent commissions, and we needed to put money in various airlines in order to be able to book, uh, using their systems. Now, the solution which EZMATRIP offered to travel agent was that, hey, instead of putting 50,000 rupees in each and every airline account, why don't you put money only in EZMATRIP? And as we are aggregating bunch of you, uh, we will get six to seven percent commissions from the airlines, and we'll pass on five percent to you. So your margins will improve, and, uh, your capex will also reduce. So this, this was a very simple solution, which we were offering. We integrated all the airlines on our website, and we're offering service exclusive to travel agent for the first three years. Now, through this means, uh, we were able to, we, we were the only salespeople in the team. So we, we met thousands of travel agents, uh, you know, all across India, And then soon the word started spreading, uh, as the service, which is my trip was providing. And by, by that we, we could basically go out the business.

AI assessment note: “instead of putting 50,000 rupees in each and every airline account”

Q And, uh, at the end of three years in 2011, if you could remember, right, how are your cash flows looking at that point in time?

A So business was growing, uh, at the end of the third year, you know, we had almost about 11,000 travel agents who were using us, uh, business was growing, but that business wasn't profitable. It was barely breaking even. See, I mean, um, we, we would get seven to eight percent commissions from the airlines. We would pass on six percent to the travel agent. So within that one and a half to two percent, we had to manage all our operations. We had to manage all our cost, our technology cost, our operation cost, our sales cost. Uh, several costs and everything, right? So the business wasn't very profitable at that time. We were breaking even, but we were growing pretty well. Now that is when we actually decided that, Hey, why don't we open up ourselves to the regular consumers? And as soon as we did that, we realized that, Hey, I'm getting seven to eight percent commissions from the airlines, but I don't have to pass this six percent discount, uh, to the regular consumer. Just giving them one minute and a half percent discount is good enough because that's what market was doing. And also, you know, at that time we decided that we will not charge consumers convenience fees, which everybody was charging at that time. I don't know if you know about what convenience fees is mostly OTAs and even airlines for that matter charge convenience fees at the end of the page. So at ease matter, …

AI assessment note: “business wasn't profitable. It was barely breaking even.”

Q Uh, your co-founder, uh, Sunil, moved to U.S. like quite early. Was it a strategic move to build the U.S. sales team and you build the U.S. base?

A Yeah, it was, uh, it was less for sales, I would say, but more for product thinking. Uh, so Sunil, prior to, uh, us starting Clevita was based out of the U.S. And, uh, when we started clever tap, you know, there was a decision that North America is going to be a very significant market for us. And the, and it's probably the most mature market there is in the world for not only SAS products, but everything to do with marketing, retention, customer acquisition, analytics, all of those things. Uh, and, uh, what we wanted to do is wanted to learn from that market. Uh, we always believe in, in learning from the best. So what was it that the market could teach us? So when it was time, like, you know, right after our seed funding, uh, we have one of us had to move to the U S and we decided it's going to be Sunil. Uh, and what Sunil did was, uh, of course he established a beachhead. Uh, he was there in the market very early, but he also kind of, uh, you know, spoke to a lot of entrepreneurs, spoke to a lot of businesses to gauge what is it? Uh, that they are missing in the current stack, and, you know, overwhelmingly we, we heard that, you know, hey, there's just too many tools. Uh, I'm sure you know this type stack, but, uh, there are probably more than 500 tools being used in anyone's growth stack, uh, which is we believe is like a lot of them, right? And then it is Data inconsistenc…

AI assessment note: “it was less for sales, I would say, but more for product thinking.”

Q And when was your first investment, if you go back in time, in which startup, if you can recall? Either in personal capacity or through an institution.

A Probably very first wouldn't would have been make my trip way back in 2001, but, uh, and then for a long period of time, did not do as much in the startup space. Came back with one of my earliest investments would have been Nika in a personal capacity other than TPG, of course, and TPG have been involved with Lenscart and a number of other successful, both in India and overseas investments. But Nika, I think in some ways has been such an inspiring journey, having known Falguni for a long time. And, uh, seeing a very, very successful woman at the top of her career to give up what she's done in her entire career. She was a top banker and, uh, go into a completely new field. It was so inspiring. Um, and I'm just privileged to have had the opportunity to be a part of the journey.

AI assessment note: “Probably very first wouldn't would have been make my trip way back in 2001”

Q seen the last two decades, India shape, the startup ecosystem shape in the last two decades. 20, uh, uh, uh, uh, 20, you know, we had only a couple of public companies like, uh, MakeMyTrip and Naukri, and today, Every day we see a startup going public and that's phenomenal. But, uh, is it a bubble or is it going to continue the momentum, which is we are seeing today?

A So I wouldn't say that it is a bubble or not a bubble. I think there are always cycles. We are probably seeing, uh, we are towards the top of an up cycle. Will there be some volatility? Absolutely. At the same time, the momentum will absolutely continue. So volatility may create some uncertainty in the short term, whether it is short term, medium term. I don't have a crystal ball. I wish I did. Um, but despite the volatility, I think the momentum is here to stay. For all the reasons I've mentioned before, I think secularly we are sitting on the convergence of some very, very powerful trends. Uh, one, as I mentioned earlier, is this the incredible, uh, quality and the positive quality of entrepreneurial talent, the kind of young people we see who are taking risk and absolutely fearless in experimenting and trying new things and not looking for a job. So that combined with the availability of capital plus technology, I think India is very uniquely positioned because, uh, from a, not just from an industry point of view, but also from a policy regime, We are unique in the world in the sense of having large public digital infrastructure and population scale. So we have 1.3 billion people with a biometric unique ID, right? So they are identifiable. They're discoverable. They are serviceable as consumers of anything, whether it is product or our financial services. One, two, having a …

AI assessment note: “At the same time, the momentum will absolutely continue.”

Q SaaS? Because earlier it used to take 10 years for a, for a company, like Freshworks is one of the very unique companies which lead three hundred million in 10 years, but not, not the top 20 SaaS companies are growing at that speed. So do you see the Darwin boxes of today becoming bigger than Freshworks, uh, in, in the years to come, and would there be many more?

A I would like to think that there will be many more Darwin boxes. Um, but that said, I think Rohit, Jayanth, and Chaitanya are a very, very special team. They are a very well, um, aligned team. I mentioned complementarity. There's tremendous complementarity across the three of them in their skill sets and how they work. They have also been able to attract kind of the right capital. They have used their initial earlier networks as well as insight to build a really strong product, very differentiated unique product, and then be able to take, take it to market in the right way. They have, uh, sort of been strategic about assembling a band of angels who are supportive, um, influencers in various markets, whether it was India or Southeast Asia. And, um, so yeah, I, so I think that the speed has increased of go to market as well as scaling up, uh, if anything, COVID has actually helped because what required enterprise sales earlier required you to be there in person and meet people and, and because of COVID all sales have happened remotely and virtually. So I think it has actually helped to accelerate the growth of enterprise SaaS. I see this in large companies as well, by the way, I sit on the board of Siemens and, uh, some of our processes that you could never have imagined that sales and service could be done remotely. And somehow everyone's figured out how to sell switchgear remot…

AI assessment note: “I would like to think that there will be many more Darwin boxes.”

Q And, uh, Deepak, uh, is investing you think in 2021 becoming mainstream for a general public? Because, uh, you know, the, the signals that we see, right? For example, during IPL and T-twenty World Cup, uh, 90% of the ads, uh, are about investing platforms or brokerages like Upstocks, CoinSwitch, and others.

A So what's happened right now is the surplus of money that's making its way into investing into such companies. They are using the money to buy into IPL ads. They're probably driving up the price of IPL ads so much that the traditional advertisers, the car manufacturers or the Um, or the FMCG companies are no longer advertising on the IPL because the prices are too high because these people have come in, and they have come in with deep, deep pockets. So you see cred, you see up stocks. All of them have raised significant rounds, um, of capital in the recent past, and that capital is going towards ads. Now, this is not very different from the US. You had a period in the US when such companies were the only ones advertising in the Super Bowl. Um, so, uh, that's because they had extreme amounts of capital and they were able to finance those, uh, large, even now, if you see, if you see what's on the t-shirts of the Indian team in the, in the, in the t-twenty. It's got buy juice on it, or it's got a Paytm on it. These are all startups. Earlier there used to be SEAT and all that. Even now SEAT makes BATS and MRF makes BATS and that's what shows on the front of BATS. I'm telling you tomorrow a startup will start making BATS and you will see some Paytm or something like that in that. It's a function of money that has been pumped in into these spaces. It is not because investing is mains…

AI assessment note: “It is not because investing is mainstream that they have got They're doing this.”

Q And, uh, since your journey, right, you have built wealth for yourself and wealth for many number of clients. Uh, uh, if you can start from basic, what is it required to build your first year in wealth, uh, in public stocks or in assets, as you say?

A So in general, and I write this in my book also, your first rupees will always come from the amount you earn from your job, from your, From your work and so on. It's very rare that you find a person who says, you know, I'll put some five lakhs and it becomes 20 X, it becomes a crore. That is hardly the case. Most of the people who earn their first crore million, whatever, earn it from the job that they do. And that is possibly how most people will eventually build wealth. So you build, build your first crore. Through your job, through your savings. Your savings can grow, but the incremental amount that you will earn from the job and savings is higher than how much of a return you get from the money you put in. So a person saving one lakh a month will add 12 lakhs to his savings every year. If he starts off with a saving of 50 lakhs, he has to make a 25% return, 24% return, just to make that 12 lakhs. And you won't. Most likely, 24% returns are obscene. They're not going to happen to everybody. You'll make 1012, 13%. And therefore, what you add to your portfolio at a 50 lakh level will be another six lakhs or seven lakhs. But your income savings are giving you that one lakh extra a month, which is 24%. So, you can change these numbers. You can say, okay, I save 50,000 a month, but I have a 25 lakh corpus. No matter how you do it, your first crore will come mostly from the extra …

AI assessment note: “your first crore will come mostly from the extra money you save every year”

Q because as a VC, you have to analyze the size of each market, let's say. So, so let's, let's do that. What would be the size of, uh, uh, the battery, uh, market, right? Which is used in three wheelers and in a positive case, if all, uh, 2.5 million, uh, Electric three wheelers start using the swappable battery. What would it amount to in terms of a market size?

A So, uh, we have a company portfolio company called, uh, Battery Smart. It's one of the recent investments. This company allows for replacement, uh, of lead acid batteries into lithium ion batteries on a swapping basis. Uh, I will tell you why it works for consumers in a bit, but very important part is that each vehicle will take about two batteries, uh, roughly, uh, at, at a time, and then you can replace them. So, 2.5 million rickshaws can eventually take five million batteries. And these are small batteries, about two kilowatt kilowatt hour or smaller. Uh, and you can, you know, they're also very light, about 10, 12 kilograms can be lifted by one hand. So, that is a market in just electric rickshaws. Uh, if you talk about two million, and this is again, installed base. Uh, this is not per year. Per year, I think, About, uh, 100,000, uh, sorry, about, um, between half a 1,000,001 million e-rikshahs get sold every year. So that's, that's a separate market. But I'm using installed base. India has more than twenty million two-wheelers being sold every year. And if I simply make 10 X of that number as installed base, we're talking about 200,000,002, 20 crore two-wheelers which are installed. Each of those can carry one of these batteries. So the battery market is, is, you know, mind-blowingly large, and I'm not still talking about, you know, trucks and cars, which are much heavier…

AI assessment note: “2.5 million rickshaws can eventually take five million batteries.”

Q What, what, what were these institutions, enterprises using before Euler Motors for transportation?

A I see engine vehicle. In Delhi, CNG is very popular. So people use CNG. It's also cheaper. Uh, in most of the, in every other city, people use diesel, uh, diesel three-wheeler cargos. These three-wheeler cargo vehicles have a higher maintenance, have a higher running cost, and as a consequence, they become much more expensive to run. The simple argument, uh, you know, simple sale for any of the e-com express or delivery or Odan is that earlier, a monthly cost of three-wheeler would be about 35,000 rupees. And you cannot bring it, ah, below that, because, you know, the driver will have to make money, the owner will have to make money, the financing will have to be EMI, etc, etc. But now, the only hope that you have to reduce this cost, which is roughly about, 75 to one 20 rupees per last mile delivery, is by moving to a new technology called electric. So you can reduce a dollar down to 75 cents, and that is the only way they are going to make a lot of money, which means, which is the reason why, and of course they are smart people, so they figured this out, and they are just waiting for a good quality supplier of the vehicle around. Once a good quality supplier vehicle is available, they will simply lap it up. They will get all their vendors to buy those vehicles and put them on their fleet. Yeah.

AI assessment note: “I see engine vehicle. In Delhi, CNG is very popular... people use diesel”

Q These are very three interesting markets which you have taken, you know, positions in Arpit as Bloom. What are other parallel unexplored areas in EV space which you think entrepreneurs can still explore and renovate where there is still large opportunities left?

A Okay. I think that we have only begun. So yeah, three opportunities, uh, three investments made, but lot more, you know, remains to be captured. Let me take a step back and give you a overall framework of how to look at, uh, auto market. See, one important activity is to make the vehicle. So that's, that's the OEM world, you know, like Euler and others. Euler's three wheeler, maybe two wheeler, there'll be four wheeler, there'll be others. And older OEM, you know, Bajaj and Tata and Mahindra and Uh, and TVS are very, very strong companies. Why wouldn't they make an Aether and Ola? All of these are the OEM businesses. Second, you will need someone to be able to put the energy in them. So buying a vehicle is one thing, but putting energy another. So it could be Sun Mobility, it could be Battery Smart, could be their competitors, and there are, you know, five or 10 companies which have also raised small amount of funding in India. Those will also come in this market and The opportunities to have hundreds of such companies because the, imagine if there are millions of vehicles on the road, millions of charging ports also have to exist. Otherwise it's not going to work out. So someone has to install all of those. So energy providers is one behind the energy providers, grid providers have to work up. So there's a massive opportunity of someone to be able to give and block energy supp…

AI assessment note: “energy providers is one behind the energy providers, grid providers have to work up.”

Q And, and the third market, which, which you said is that Bloom is serving is, can you throw more light on that market? And which is your, uh, portfolio company which is solving it?

A So one of our most recent investment is a company called Electric Pay. Electric Pay is solving the very, it's a diametrically opposite problem of Uh, of charging infrastructure. The reason why charging infrastructure does not exist, very interestingly, as I mentioned, because not enough demand exists. If demand doesn't exist, then why will someone install charger? If there's no charger, how will people supply? So, you know, if you go to a three wheeler or any electric vehicle dealer, the key challenge they will tell you is that not enough charging points exist, which is why people don't buy them enough. What you want, what one needs to do is, if I can reduce the cost of installing an infrastructure to really, really low, let us say, just for argument's sake, I make it 15 dollars, right, as compared to, you know, today it may cost you as much as a couple of lakh rupees, ah, to install a charger. If I can reduce that to so low, then I wouldn't mind just installing them everywhere. Right? Suppose I have, uh, 15 dollars worth of, uh, 15 dollars per charger, and this is the cost of operating a charger. It's a simple low-cost AC charger. It runs on a mobile app. You can simply scan a QR code. It switches on, and you can charge, and then this is how much time you have used, uh, it will give you a billing, and if I install them everywhere, your office, your home, your residential compl…

AI assessment note: “one of our most recent investment is a company called Electric Pay.”

Q Got it. And, uh, let's, because you are already an investor with many early stage companies, which you highlighted, what, what does, what does it go into making an electric vehicle, right? If an entrepreneur wants to build an electric vehicle for the future, what are the capabilities and the capital he needs today?

A So, um, I, I'll tell you what, Yeah. What people have taken so far. So, uh, again, nothing against them, but Aether Energy took about 35 to fifty million dollars to come out with for their first scooter. Uh, they are very, very smart people. I'm sure this was money was well, well spent, and they were also working in an era when no one understood this. Everything had to be built from scratch. So they had to really reinvent a lot of builds, uh, to come this far. However, Euler has gotten there in less than ten million dollars, right? So this is definitely a, you know, very big change, but Euler successfully launched a vehicle. Second, I think in future, at least in two-wheeler market, you should be able to launch, when I say launch defined by generating hundred vehicles sales per month or more in less than 1.5 million dollars in less than 18 months. So back in the day when people used to, you know, work with these Chinese mobile phone ODMs, this is what is going to happen here in India as well, where the cost of making it will come down. And if you are an entrepreneur who's trying to make a new vehicle, I would ask you what, why will I invest in you? The answer should always be, I can do it faster and cheaper than what Euler etc have done. Only then you will be able to find a lot of people investing in you. It is not an easy thing because you are, if you're delivering, developing…

AI assessment note: “launch... in less than 1.5 million dollars in less than 18 months”

Q And, uh, how did your interest in cryptocurrency started? When was this?

A It started back in 2013. Uh, when I read the Bitcoin white paper, I still don't remember how I've stumbled upon it. Uh, maybe through Reddit for chance and, and other places. Uh, but once I read it, it kind of opened up, uh, the entire financial ecosystem to me. I, I being an entrepreneur, being an introvert, uh, I, I always thought that, you know, finance industry is kind of, uh, you know, kind of closed for closed ecosystem where only the participants could You know, wait, and anyone coming from outside has no value add to that industry. But by reading the Bitcoin white paper, I understood that, you know, the financial tech can be opened up, can be made, made, uh, you know, based on code rather than people. And that's what excited me towards Bitcoin. It was very hard in, in 20, 1314 to get into crypto. I, uh, started a node, uh, running a node for Bitcoin validation. Then, you know, got my first Bitcoin in 2015, started trading it, and then over time got my interest, uh, completely aligned with the crypto world. And in 2017, then we started, uh, CoinSwitch.

AI assessment note: “It started back in 2013. Uh, when I read the Bitcoin white paper”

Q And what made you start CoinSwitch, right? What was the gap in the market that you were seeing?

A So, uh, just to give you a little background into us, uh, a bit more, which helps you relate to why we started CoinSwitch. So we are hackers. So all three of us have been friends for 14 years, me, Go and Wimel, uh, right from day one of college, uh, have been hackers, any hackathon in India that you can think of, we would have won it, uh, including Sequoia hack, Google code for India, LinkedIn hack. And the idea of CoinSwitch actually started as a hack, which later grew to what it is today. We started with a very simple problem that we were ourselves facing. Price of a crypto was varying across exchanges. There were tons of exchanges in the market, global phenomena, 24 seven market. So the price, uh, fluctuations kept on happening. It was harder for a trader to get in at the right time, know the best price at any given point in time and convert, uh, at that exchange as well, because then you need, you know, accounts across exchanges, be familiar with their UI UX. So what we thought of building for ourselves is, can we aggregate the data from all the different exchanges? And help convert crypto to crypto at the best rate, any given point in time. Uh, we made the, think of us like a make my trip for cryptocurrencies, helping you discover the best price as well as convert, convert one crypto to another, uh, very easily.

AI assessment note: “Price of a crypto was varying across exchanges. There were tons of exchanges”

Q And, uh, you suddenly came into limelight in. Any strategic reasons that you kept a low profile during the first three, four years?

A So, uh, since it was a global product, right? And we were not operating in India because of the RBI ban itself. So we grew very rapidly in the other countries, but in India, our presence was mostly unknown. Uh, we never, uh, you know, we, we are not a company who runs after, uh, we see money and, you know, do a lot of marketing. Uh, started very, uh, uh, very humble start, uh, trying to solve the user problem and never discount, never, uh, you know, no, no marketing at all for the first three years, trying to grow very steadily into the market. In 20, 20, we almost had over ten million dollars in profit, uh, recorded, but in 20, 20, something drastic happened when the RBI ban Got reverted, uh, in India. And at that point we decided to launch in India because we saw a very big gap, uh, in India. What we realized was, uh, retail users in India were underserved, uh, retail user who is used to the experience of Swiggy or Zomato, you know, add to cart checkout, food is at your home, or, uh, you know, uh, one click cab booking, online ordering, uh, from Amazon and Flipkart were kind of forced to go to an exchange, understand complicated graphs, complicated order books to get into First crypto is so complex. Now you put that experience on top of it. We assume that people will never get into crypto unless we simplify it. And that's where we launched Kubeir back in June, 2020, almost 17…

AI assessment note: “we were not operating in India because of the RBI ban itself”

Q And, uh, uh, if you have an internal scorecard of these hundred companies from the first fund, so, so how have these companies performed, uh, write these hundred companies where have you invested in like? How many of them?

A It's been pretty fantastic. I think about 45 have already raised follow on rounds. And the last 30 40 deals have happened only in the last like 12 months or so. We did basically around say 30 35 deals in 2019 40 deals in 2020 and another 35 40 deals in 21. Um, so I'll put together the last, if you look at the first score, the first 32 deals we did out of those 20 21 have raised follow on rounds now. If you look at our second cohort, which is the next sort of 3035 deals we did out of those 12 13 I've raised follow on rounds and out of the last cohort of 30 deals that we have just finished doing already three four I've raised follow on round overall about 45 or Companies have raised follow on rounds. Uh, the number should go up soon. I think the last, you know, uh, the last 40 odd companies that they've done are still in the station mode. So we'll know that maybe in the next six months or so. Uh, usually what we see is once we, most of our deals are, you know, pre-product, pre-revenue, uh, companies. Like at least half of them are pre-product. And almost all are pre-revenue. So once we fund the company, they then ship product, they show some traction, you know, build out, um, build out what they set out to do, and, and that is when a VC round really happens. Um, so that takes about, you know, you could say anywhere from six to 12 months to 18 months. Um, so yeah, we'll see how th…

AI assessment note: “I think about 45 have already raised follow on rounds.”