The Exchanges

Q Vijay told me exactly that, right? I'll, I'll not name the company, but said the, the, the founder went to jail for unnecessary reason and only Z-Forty-Seven was one to, to bail the founder out of jail.

A I mean, we were all there. Nobody ran away. My colleagues, Tarun and Rajinder visited him. He remembers that forever, forever. I was speaking to him six, eight weeks ago when his new round was going on and he still remembered that, right? Reputation matters. So I think why Super Ops, I'll give you an example. So Super Ops, Arvind started a company the first time called Zarget. He exited to, to Freshworks. Second time he came and told Tarun that, you know, you have a right of first refusal on my route, right? And I asked him why. He said, because Tarun was the only one who was giving me advice that was the right advice for me. Not just, you know, what, what I, you know, for himself and, and stuff like that So I think that really matters. So how do we win these? Uh, you know, for me, I think if you look at venture capital, if you look at most businesses, almost everything can be copied in no time. Reputation cannot. Reputation is a moat. Reputation compounds with time. And I think that's what's getting us.

AI assessment note: “I mean, we were all there. Nobody ran away. My colleagues, Tarun and Rajinder visited”

Q And you are spread across, you know, so many sectors also, B to B software, D to C, you have fintechs like Razorpay, stable money, B to B marketplaces, like Off Business, Captain Fresh. So how do you win across these many categories? It's not just one category.

A I think it goes back to what we discussed, which is we have operators who are experts in each of these sectors, right? So if, and so I personally, and now clearly as a firm, we, we don't believe in the generalist model. We are a specialist firm. So, and sometimes it's not easy because you know, these, all these sectors go through ebbs and flows, right? So, and I joke up to everybody here is tenured. So people also have seen this, but every year, some sector is hot and all the other sectors are formal about that sector. Everybody wants to work in that sector, whether they know anything about the sector or not is irrelevant, right? So Sudipto does B to B, he's doing advanced manufacturing, Pranay does SaaS and AI, Cash knows. A bunch about AI. CV is doing consumer. So, so on and so forth. We have, uh, financial services, you know, and we are all paired, uh, at various levels. We think of us ourselves as squads. We, and the idea is like a pod structure, right? But that pod is a sector pod, right? So that sector pod, I tell the sector leads that think of yourself as a CEO. You have to win the most deals in your sector. So therefore many of our podcasts you will see are actually around depth of content in that sector, right? So I think that's what gets us, um, into, into a bunch of these. And then of course, ultimately portfolio referenceability, right? People, people want to associ…

AI assessment note: “we have operators who are experts in each of these sectors, right?”

Q And how are teams, like you said, the teams are structured like pod. How are teams independent in their own decision making?

A We call it conviction investing, not consensus investing. So actually the pod gets to decide. Now, obviously, if people who have vintage in the business are negative on something, then the pod should think harder. But ultimately the way it works is the pod does the work. The pod may be paired with somebody who has vintage and they may, you know, do a, what we call a two piece, second pair of eyes. Um, but then they bring it to a team meeting, team meeting people vote, um, that, that vote is opened up later for everybody to see, but people vote and they write their, you know, comments on what they think. But ultimately that is to give the, um, pod, the, the pod and the leaders of the pod. Input on what others think. That's not the decision. The decision has to be made by the power. So it's fairly independent.

AI assessment note: “We call it conviction investing, not consensus investing. So actually the pod gets to decide.”

Q But is, is the team, uh, weekly or monthly KPIs measured on coverage?

A So the until 2000, 15, 16, uh, they used to get measured on coverage. And, uh, you know, we had, we had some review meetings where people would say, how many companies have you met and this, that. So it created what we call a met culture meeting. The quality of the meeting may have been nothing. So people were just Filling out spreadsheets. So also again, context was different. Younger people today, they are more, you know, uh, people with experience also in the business. So I would say, and this is, I learned from somebody, uh, very wise in this business. When the markets are thin, coverage is a good measure. So, including me, we used to go to IITs, we used to go to conferences, we used to speak at conferences, you know, honestly conferences, you get mobbed later, you are, you know, taking, giving out your card. It's a lot of hustle, but also in a not so good way, it creates a hustle culture. We now joke misdirected hustle, mindless hustle. When the markets deepen, that becomes a bug, not a feature. Because there is so much going on, then you will end up boiling the ocean. You will end up doing a hundred things. So it's okay. You have to keep creating the top of the funnel. Now there's so much in the top of the funnel that the processing becomes much more important. You have to be much more thoughtful, right? So, so I think that is a, actually a big change, uh, that happens as…

AI assessment note: “until 2000, 15, 16, uh, they used to get measured on coverage.”

Q You have, you know, a few of them. I would say Razorpay, Off Business, Ola, Ola, Trekrutrim, all our contenders to be ten billion dollar companies. Are you able to identify them when they are starting in the beginning or?

A No, no, no chance. But I can tell you that let's take one card as an example. See what makes a ten billion dollar company? It's not just the founder. Is there a TAM and is there a profit pool? If you look at the TAM or profit pool, it didn't go. And if you look at SBI cards, by the way, when we invested, it was what, 10 to twelve billion. So then theoretically, you would say a credit, and by the way, Bob cards, I think might get spun out, whatever. It was also valued pretty highly. So you could say, right? Then you meet a founder like Anurag who's built ICICI as credit card business. Now RBI as assuming RBI keeps blessing us forward, uh, is there, you know, five billion, but not at start, but it was clear that this is not one, two, this is five, um, country delight operating in a category when we started was milk. So it was hard to underwrite even a billion dollar outcome. Although milk is a very deep category, it's the margins, right? But Chakri was outstanding. And then as the grocery basket started becoming the mainstay, what's the time? So you have to look at the time and the, and other parts of it, but to answer your question, you don't know at the start you, but you typically, my experience has been. 18 to 36 months, mostly 18 to 24 months, one starts getting an idea. Is this a multi-billion dollar outcome or is this a capped out?

AI assessment note: “No, no, no chance. But I can tell you that let's take one card”

Q So now a question on previous trajectory, like you have been founders like Bhavish in all their ventures. How do you do that?

A Yeah. So, you know, I think the difference is When you look at a traditional view of tech founders, and by the way, this has changed, and obviously Elon Musk has now gone into a different orbit, but if you look at all the images here, you know, there's Jeff Bezos, there's Steve Jobs, there's Mark Zuckerberg, Elon Musk. Um, in the last decade, They have really emerged as business builders who are far more than your traditional tech founders, right? And obviously much larger, um, much larger businesses that have been built. So I have, I have had that thought. Remember you asked me what changed in the last five years. I said, we started thinking bigger. We started thinking of our destiny with some linkage to the country's destiny and the founders, man, we have always been founders first. And I looked at those founders and even it's not just Bhavesh, uh, in our portfolio, but even if you look at Dipinder, um, you look at them and they're like, why are these guys not the new age digital industrialists? And I remember using that word first internally on a podcast here. When you look at Tata, Ambani, Birla, Adani, all of these guys, they are in multiple businesses. That's considered a feature. When a tech entrepreneur wants to do multiple businesses, it's considered a bug. Why?

AI assessment note: “why are these guys not the new age digital industrialists?”