The Exchanges

Q You were backers of Big Basket from very early days, and there were a lot of grocery starters previous to. To, to Big Basket. How did you identify that's the right type to solve for, for example, Big Basket?

A So Big Basket, um, Actually was a business model where everyone remembers Webvan, right? Webvan was a classic, you know, colossal failure, uh, and it was very embarrassing for VCs because, uh, um, you know, it, it just stuck that, uh, such a high profile company failed. So getting into online grocery actually came with that baggage that, you know, there's only been disasters along the way, and it's very hard to make money because margins are so thin in grocery that, uh, You know, the businesses cannot be self-sustaining, and this is, you know, still a time where gross margins and contribution margins were, you know, actively being considered. Um, so big basket, I think there were three things. One was that the founding team had done two startups before. I think the kind of, ah, challenges in a, in a hard business like grocery, we felt was best handled by a team which had been there, done that, right? So, I mean, the gray hair really helped in, Taking a problem, acknowledging again that it was a hard one, and then doing something about it. So, we were assured, uh, to some extent by the experience of the founding team. Second is, uh, there were, uh, examples of companies that were, uh, breaking out, not in India, but outside. Um, there were companies that were going public in UK, which were doing similar businesses. Of course, the density in London is totally different from a den…

AI assessment note: “So big basket, I think there were three things. One was that the founding team”

Q And, uh, currently you have seen, like, many cycles of the founders, you know, come and go by. What is the quality of the founders in 2019, 20, which you are bullish on? Still starting, you know, almost your third journey in venture capital.

A Calm, composed, and ambitious. I think these are the three words I would use to describe the founder of 2019. Um, I think the ambition part, of course, is, um, consistent. Of course, the number has grown. Um, but in terms of, um, um, co-founder dynamics, I think, um, people who have seen, um, the chemistry not work out, are being, you know, are more careful about who they do their startups with, who they want to Uh, be partners with on the long journey. So we are seeing, uh, co-founding teams come together with more, with more thought. Uh, we are seeing, uh, the ambition, uh, leading to, uh, markets outside India. Uh, we are no longer restricted to thinking of this as a purely, you know, Indian business, uh, where the Indian, uh, you know, expectation and constraints exist. So people are going to US markets much sooner. Um, of course, the, you know, the composure of, uh, being able to maneuver startups, um, you know, and raise capital faster, I think that is, um, um, certainly in play because the sources of capital have changed, right? If I again go back to 2006 to now, um, Um, the first check, you know, would come from a VC in 2006. Now it could come from a family office or an individual or a group of angels. So getting the first check is not as hard, and many more people are now getting that first check. So there, there is certainly a, you know, a broader community that has h…

AI assessment note: “Calm, composed, and ambitious. I think these are the three words I would use”

Q You shared earlier in the podcast and also in your book that VCs are also humans and they are as cool as anybody else, which people think, you know, they are a different breed altogether. What are the challenges or hardship you have faced with a VC which most of us don't know about?

A Yeah, I think the, um, VCs, um, unlike founders, uh, are in this, um, isolation chamber again, where there is, uh, transmission being received about the good news and the bad news that's happening to their portfolio, but then they're supposed to just make a call from that isolation cell. Right, so it's very frustrating to actually be sit there and process bad information, and I think emotionally be ready to, you know, to either suggest solutions, um, or, you know, just digest it, because, uh, you know, the benefit that a VC has is that, you know, when you look at 10 year cycles, you know, from a seed to an IPO, your lens is, um, Looking at a much longer time frame than a founder's is. Founder's probably looking at, you know, the next financing or, you know, maybe the end of the year. So, you know, as VC, I've learned to discount disasters because I've seen so many, right? So I think that was, that's a helpful learning I've had. But amongst challenges, um, you know, in my, uh, Uh, in my investments in some of the companies which, uh, one of them was hit by a regulatory change, and that was an overnight, uh, disaster which actually took out most of the company, uh, almost leaving it, um, you know, very close to, um, fading away. In fact, most of its peers, uh, were swept by that big change, and the, Um, problem was that we had actually committed a large amount, so it was, ah, one…

AI assessment note: “one of them was hit by a regulatory change, and that was an overnight disaster”

Q Well, you have observed founders work with them for the last 25 years. What would you say the traits of those founders who really break out or build a hundred X companies? Part from the rest of the founders, you know, who tried their best, but, you know, particularly luck is not favoring or not able to make it.

A So, um, I think because, uh, your question is great and I want to answer it with something which, uh, resonates, you know, I think my one word answer to that Siddharth would be transparency. Uh, and I think founders who follow an approach of transparency with their employees, with their co-founders, with their investors, I've seen that, that, uh, is a reflection of, you know, just honesty and acknowledgement of, um, whether the shit is, you know, hitting the ceiling or things are going great, but at any point in time, uh, they keep a consistent standard of transparency. I think, uh, acknowledging a mess, uh, is, you know, is a trait of a good founder, right? Because then people can help, they can ask for help, Uh, and where it is always, you know, let's cover it up and, you know, let's present a very, um, you know, normal picture. Let's not take help from, from our investors. Let's not really call out situation. That's when things start becoming harder to deal with when, you know, I, I think environment turns for every startup, right? It's, it's a constant war that a founder undertakes every morning he goes to work, uh, because the environment completely changes. I think, uh, Um, no day is ever similar for a founder. So, for me, I think consistently what I've seen is that once you are, ah, funded, and you're running a startup, I think it's very important to keep a high degree o…

AI assessment note: “my one word answer to that Siddharth would be transparency.”

Q And what do you think on the weaknesses part?

A Weakness, um, part, I think the part which, um, always is intriguing and hard for me to, to judge, um, in consumer companies, it's very hard to tell if there is a real traction or not. Uh, and, um, in India especially, you know, one thing I've come to rely on, and I think still working on, is how to use data to be able to predict Uh, better or to actually judge better if there is some traction that is going to stick or is it just temporary? So the, um, path I'm on really is to fix that using some data to be able to understand, you know, whether the product market fit is happening or not. And I think the, um, external help or the indicators that You know, help me. I'm, I'm trying to build those, which is to understand whether, um, talking to consumers will help of, or for that product, you know, taking feedback surveys, uh, will that help? And, you know, or, and to rely on the product thinking of the CEO, I think that would be something that, um, would also lead me to then to make better, uh, judgment on whether that product is going to evolve. Uh, with, you know, with changing consumer needs. So I think that, um, you know, that vagueness in backing consumer startups, unlike a B to B startup where, you know, you absolutely get a fair idea, you know, from an enterprise customer of the, you know, the need and value for that product. I think it's very hard to, you know, get feedbac…

AI assessment note: “in consumer companies, it's very hard to tell if there is a real traction”

Q And what do you think, you know, evaluating back, taking back your strengths and weaknesses unique to you as a VC have been?

A You know, I started off, uh, Um, as someone who's, uh, not come from an operating background, you know, so I've spent, uh, so much time, I think, uh, looking at startups, spending time with founders, uh, and I value my time spent in the valley where I really understood technology better than, you know, if I had been an operator. So I've come to VC with a handicap which was not to be an operator, but, you know, so that question was actually, um, A very common question in the Valley, which is what makes a good VC? Is it an operator or is it a non-operator? And I think the world has enough examples of both. Um, at the end of the day, I think the, um, the role of a VC is, um, the full stop button for even an operator to stop thinking like an operator. Uh, and, uh, as long as you have the, Empathy to actually think like a founder, uh, you can overcome any handicap, and I think the time you spend with, uh, with founders understanding, uh, real situations, right? Not, uh, one step removed from an entrepreneur, which is, um, usually going to lead to giving advice, which is, uh, so, uh, off the charts that most founders should actually ignore it. Uh, keeping the context and keeping the reality in mind and being able to give usable advice to the founder. I think that is the end test for VC. And for that, you have to keep things very real, right? You have to be, um, uh, actually factoring…

AI assessment note: “I've come to VC with a handicap which was not to be an operator”