Raising Money, Wealth Creation & Brand Building ft. Matrix Founder Avnish Bajaj | FO91 - Raj Shamani

why is Tim Cook coming here into in 2016. he didn't because now I India has six. billion dollars of revenue for iPhones. why is Samsung Foxconn setting up plans. because we tried the same policies in. 2016-17 and we said if you want to sell. in India you have to make in India why. few Founders are able to raise better. build better show better dreams and have. more conviction you have to sell boss. don't ever imagine that you are not. selling you're selling 24 7 you're.

selling to your investors you're selling. to your employees you're selling to your. customers if by the way if I wanted to. be a billionaire I would really create. wealth I shouldn't be doing what I'm. doing I should become an Ola practo. recipe you have heard about these. startups which was so crucial in. building the startup economy in India. but today we have the man avnish Bajaj. from Matrix Partners India who invested. in these startups at a very early stage. in today's episode we have talked about. what do big investors look in small.

startups and Founders why do they back. them how to raise money from large. investors why pick companies like apple. coming to India now and what are the. similarities between growth of China and. India in today's podcast we've also. tried to discover. that what are the winning traits of. entrepreneurs and how you can develop. them please look forward to this episode. till the end because you're going to. learn a lot about startup ecosystem.

raising money becoming wealthy building. a billion dollar company all from the. man who has backed multiple billion. dollar startups in India. okay just quickly you tell me you were. saying I'm just curious you said. environment in 2023 yeah tell me about. it like what do you mean by that I think. what will happen and it's hard to. predict if I knew exactly then I would. be doing something but uh.

maybe by the next quarter and I'm. thinking more August September what. happens is in the US people go on. holidays and may they say in in the U.S. stock market sell in May and go away so. basically people do that and then. they're back typically by August okay. then they start planning for next year. so my guess is that September onwards. later stage activity will pick up. but that's from uh more from Asian.

investors. you know. um I think the Americans will come back. later in this that's the largest pool of. capital. then you will start seeing some of it. but early stage is pretty steady early. stage in India that's where I was. corrected about. depending on the background between 30. to 40. so the wild valuation which we. saw in like last two years that's never. coming back they're never coming back or. like not for seven eight years not for.

seven eight years so why did that happen. like because free money zero percent. interest rates last time there was zero. percent interest rate was 2008 nine. after GRC. so now at five percent interest rate. there is a serious question I mean U.S. is five percent interest rate so there's. a serious question on risk reward. allocation changes lots of things change. interesting okay tell me one thing you. know we keep talking about India and. everybody's bullish on India and I'm. super on it as well yeah and so are you.

are we already on yeah okay I didn't. realize. we'll just keep talking the way we're. talking and we'll continue. right so you're pretty bullish on India. as well yeah but there's always like. when you talk when you listen to critics. okay when you read their blogs and when. you read when you hear them talking they. say India doesn't have like big Market. everybody keeps talking about growth. potential of India but we have like five. million people who have paying capacity. or the potential to pay what are you.

views on that is it true it's true but. it's wrong uh because it's it's backward. looking so if you look at I call it. driving forward looking in the rear view. mirror so uh India what is true is we. are a pyramid like this and so was China. and so was America and so was any other. Market that it is called in economic. macroeconomic Parliament middle income. Journey. we. are a poor country you start moving out.

of poor country into middle income. Journey at two two thousand five hundred. dollars per capita income what is our. GDP do you know. three and a half trillion dollars what's. the population you would know about 1.4. so exactly right. and the and I don't know that what is. the next Journey called I think it is. post middle so middle income goes from. two two and a half thousand. till eight to ten thousand dollars per.

capita income so for that we need to be. a 10 trillion dollar record right not. just six seven. but when this journey happens you know. the the English sophisticated way of. saying rotica or makan is Maslow's. hierarchy yeah Maslow's hierarchy where. your basic human needs are met when. basic human needs are met every. incremental rupee you make. suddenly 30 40 50 starts going into. discretionary Spence yeah then things. start booming that people didn't imagine. do you know so even though when people.

say this which is true. how much do our sales of luxury cars. increasing year over year. 30 percent because this right now it's. this one percent that is getting more. and more income affluent yeah more and. more affluent and therefore spending on. luxury. my belief is that will continue new for. the next decade at luxury. but because per capita income is going. up and the pyramid is going to go from. this to this right this will become much.

more broad-based and you'll start seeing. this across you know many many markets. so little known factors we had brought. in 2006 or seven we had brought nine. luxury Brands to India's Matrix we had. invested in a company. which which had brought Ferragamo Gucci. um. Calvin Klein fcuk not luxury but upper. market so uh nine Brands we almost lost.

our money on that investment. we made our return because CK and FC UK. took off and everything else we had to. basically sell at distressed prices like. Sanjay Kapoor I don't know if you know. him his group Genesis luxury bot my. prediction is next decade you will see. luxury booming like anything here yeah. because the time it is all about timing. so when people say it's a tiny Market. yes but not 10 years from now China was. also a tiny Market in 2008 but it boomed. over the next decade or not 2008 but. five so.

that's the reason why I don't I don't. agree with that and I think it is. backward looking but also. a lot of people have. India is a country where you know. foreign investors often say India never. misses an opportunity to miss an. opportunity okay explain me this I oh. basically but everything gets lined up. promise but actual execution okay right. so people have just seen the story too.

many times that's never bad but even if. you look at internet how many bubbles. have we had we had 2008 nine maybe 10 11. 14 15. just now so every time people have ended. up being disappointed and they have lost. money so now when it is looking. different people are like yeah. what is different this time difference. is we are a three and a half trillion. dollar economy why is Tim Cook coming. here went to in 2016 he didn't because.

now I India has six billion dollars of. revenue for iPhones. why is Samsung Foxconn setting up plants. because we tried this same policies in. 2016-17. and we said if you want to sell in India. you have to make in India otherwise. we'll have all these high custom duties. which is what we are telling Tesla right. now. they all said okay bye we are not coming. to India that's what Tesla is saying. because market for Tesla is not big. enough here right now but look at Tata.

what is that Exxon or whatever that EV. is it selling well so you have to price. so the point is once your domestic. Market has deepened all these things. fall into place you know there's also I. believe like every time when we talk. about Indian story I believe there are. three reasons and you correct me if I'm. wrong. that because of that India now is like a. really lucrative market for everybody. first there was a study which I was. reading that our parents generation and. the generation before that they used to.

say 54 of their income right and the. generation now only say 17 of their. income so this difference of like. somewhere around 36 40 percent this. people are using in spending more rather. than saving more so obviously when. people spend more there has to be a need. for consumerism and things need to. happen so that is first. second reason is the middle class in. India is actually growing now right the. affluent people are if you look at. from rural areas people are now moving.

to from tier 4 to tier 3 tier two to. tier one like all of that is happening. so affilin that thing is coming and. everybody wants to do that right and. third and the most important thing is. when we talk about Maslow's hierarchy I. believe that was made after looking at. very individualistic societies like. America right India is a Community. Driven Society so in Community Driven. societies what usually happens is we are. very status driven we. even though we would be living like at a. very basic life we don't want something.

that is like you know on the level two. or level three we directly want. self-actualization we directly want. status we directly want everything else. so in India it's very different from. level one we directly go to level four. or level five there is no just Roti. couple hours. right so I think that is why we'll start. buying like little expensive things so. what are your views on that so I agree. with one on one and two and I disagree. with three uh but let's go quickly to. the second one completely agree that the.

middle class is growing and that's what. I mean by the flatting of the pyramid. right so pyramid is like this and it's. going to become more like this because. this piece the middle is becoming bigger. you know if you look at uh even a lot of. us sadly have been in this situation. where there are different classes in. society we have staff uh my if I look at. my driver's own. life over the last she's been with us. maybe 10 plus years uh he always he had.

got a bike very early now he absolutely. wants a Ola electric Eevee right and. he's saving up for it and obviously. maybe we help a little bit with that uh. move has bought his own uh house it's. not very large but in the last three. four years so that's what's happening. once you buy a house you want to buy a. TV and then you want to buy a fridge and. yeah stuff like that so middle class 100. last point is actually uh most. interesting debate so I'll come back to. that later. the the yeah savings so you know that's.

a double-edged sword actually a country. grows. so China has when China was growing. their savings were very high and if you. look at overall. economic macro economic structure. when a country has to grow fast it has. to spend fast on growth you know. infrastructure you know so actually. savings rate has to be high uh I think. India 30s.

I agree with the fact younger generation. saves lesser and and older generation. saves more but I'm just saying it's a. double-edged sword and I'll connect this. to your third point so I don't believe. India is different I believe. people everywhere in the world are the. same animal. there is some. layering that I will give on this. because of just digital and your first. point because people have grown up. differently right I I when I was growing. up I had to to make a phone call to the.

US to actually go and stand in line at a. PCO and put those coins and today my. kids can't even imagine what a phone. booth looks like right so it's a very. different world. but my theory is and I think I've seen. it play out everywhere and I think it's. playing out in India is that everybody. is at different stages of Maslow's. hierarchy it depends on their income. levels.

spirituality religion unit uniting or. dividing because. [Music]. so and now notice in the last three four. years they have had to crack down. because people are starting to behave. similarly they want more freedom they. want more this they want more that and. then the power is threatened so you. throw you know supposedly the. billionaires left so I think India is.

not different I think everything will. play out the same way I will tell you if. anything to your point key actually. employment generation employment. generation okay because. demographic liability I don't worry. about social unrest yeah I just feel bad. if people are unemployed I mean I get uh. on Twitter and here and there you you'll. get inputs from people who are uh.

be computer science and unemployed now. why are they unemployed because their. college from which they are graduated. graduating is unemployable right. but that's a big problem so how many so. I am very excited about age of. manufacturing because manufacturing. because agriculture may be unemployment. underemployment or these high-tech.

Industries when they get set up uh will. help us employ people so I was just. reading in today's paper only that. Apple's push in India has generated a. hundred thousand jobs direct and. indirect right so I think if we have to. roll out the red carpet. foreign brand I think we should forget. all that we should focus on can each of. these large companies give us 500.

000 to 1 million you know uh jobs a year. because that's what we really need and. that's where I worry about uh over the. next decade. so then what happens is. unlike in China where this flattening of. the pyramid happened because a lot of. jobs were getting created in a very. massive way like you know somebody was. telling me if you just look at the. history of Alibaba okay before Alibaba.

also China was exporting. but access to export markets was limited. to people who could go sell in the. export markets. it was a very the the pyramid was very. narrow. when Alibaba came. foreign. [Music].

right now I'll give you the Contra. argument also so equality of access.

right so but I think India May equality. of digital access and I think what I am. uh excited by is that. and which is the story I think people. miss the story I think people Miss has. is what has changed in India digitally. subscribers.

[Music]. me personally and I think a lot of us. used to be envious of the China story. and when I visited China I was very. envious of their hard infrastructure. bullet trains salary the freeways. Western World. although you know more crowded uh cities.

look like we I don't think we'll ever. get there uh maybe gurgaon some Pockets. look like that but even gurga is like. tier three in China yeah right. um. I think so we've always had an Envy of. the hard infrastructure of China I think. India is the Envy of for soft. infrastructure. and if you look at uh just a UPI evident. discuss UPI you know us may Abita just. launched because.

that's basically UPI and their banking. system and infrastructure so the. advantage of being developed all can. sometimes become a disadvantage of being. developed because you are the technology. LeapFrogs you um. so that's why I'm I'm much more. optimistic but I worry about so I think. the. the digital Bridge across this economic. and physical infrastructure as your.

divider. I think that's why I'm optimistic. and we look at some even like an attack. I bet you when you congratulations on. launching your brand I'm assuming it's. public not if not by the time. thank you otherwise you can edit it out. so so you will see the demand from tier. three tier first yeah it used to be. and by the way to the to your uh first.

point aspiration because accessories. so you will see very soon we are seeing. in our companies. tier two tier three tier two topics. because tr2 has become almost like tier. one yeah yeah tier three tier four has. gone from call it five seven percent of. sales for some Brands to like 30 40 25.

30. yeah 30 40 25 30 depends on the. price point they're very price sensitive. 700 and less. yeah yeah. so so I think that's what makes me. excited uh and net net I think. especially. negative use. often is foreign driven.

um and in a good way like they are. covering the market and I think the full. impact of this digital infrastructure. they don't see on a daily basis we see. it on a daily basis right life has. completely changed uh for a lot of us so. I think that's the thing but you know. the like I said weariness is uh that. employment generation should happen with. the growth okay you know you are there. was one question I was looking at all of. these in this thinking that your and you.

have said it in multiple places at a. very excited about fintech right so in. finance and I just read something and. I'm asking because I'm very less like. I'm not well read in this space but that. makes me excited so you talked about us. right us make when workers. [Music]. three days to do it right it doesn't. happen yeah so what do you feel like Neo. Banks and stuff India whether that will. work or no so but venmo is a great.

example when Mo it worked because UPI. wasn't there exactly actually. when boom now has to change its rails. and therefore that business model may. actually get decent uh get margin. pressure because. exactly. so absolutely now I'll tell you the big. difference India the reason we are. optimistic is India as the best of both. worlds. it has a highly under penetrated Market.

on credit so versus the US you know how. many credit cards does us have. close to a billion for a population of. 300 million how many credit cards does. India have 100 million for a population. of 1.4 billion and unique credit card. holder holders only 40 million so by any. projection you take that's going to go. to about a 100 150 million in a few. years which also will still look under. penetrated and.

infrastructure therefore gives us a. easier way to do it five years ago. there's no way you can so whatever has. changed normally underwriting Banks okay. strict rules. and generally and a concept what a fat. file because you asked about fintech. I'll tell you what why this is important. foreign.

most of us well my guess is you have a. thin file even though you are you are. financially very illiterate now I have a. fat file because I'm older and I took up. my first loan when I was actually not. having a loan we'll make it a thin file.

so they only know how to process things. a cert Banks only know how to process. things a certain way and since there's. so much penetration left they don't have. to think of innovation these fintechs. come and innovate. and they say you you may be shocked. there may be people of your profile you. may get rejected for a credit card. but the. fintech will go look at your Instagram. your YouTube stuff your bank account. statements they don't they don't rely on.

just one thing and with the aspect and. they will look at for example uh a 14. spending a saving rate for a bank is a. very bad thing for a fintech it's a very. good thing they want to underwrite such. people yeah but you have to be careful. because you can get into trouble with. these people as they may overspend. right so the way I think of it is in for. India if you look at core pillars of the. economy Financial Services have. so we talk about it internally that.

these are such deep and wide sectors. normally people think. these are deep and wide sectors where. even if you own one small piece of it. [Music]. a particular consumer persona. like a specific somebody may say I will. create a credit card for Gen Z somebody. may say I will create a new bank for. creators yeah that's creators have their.

own set of issues and that's actually an. idea that people have been in US yeah. yeah so I just believe and if it's in. the U.S imagine here and and we've. actually we have a thesis on that and we. do think that there are problems to be. solved but just on a lighter note. ultimately created with bank Banks. so it's a different business so okay I. as hard it is for me to consume but.

that's the reality yeah that's what you. all want yeah in fact I'll tell you. since you were talking about a consumer. Persona right there's one of my friends. she's a Creator and she made 2.5 crores. a year okay post tax yeah and she was. denied loan because bank doesn't. recognize her profession correct exactly. so there you go and they realize the. opportunity so. um so I think there are plenty of such. people not just profession so.

self-employed will actually be a very. big source and. this is where the first part and the. third part that we were talking about. right I am actually you know very. I am a big bull on India and in India's. nation building in fact we use this term. internal internally digital nation. building. digital nation building. actually privileged. he is a participate you are part of it. we are part of it on a different side.

this would only happen once in a. generation for this country Joe Joe. America May World War II. China May last 15 years. 90s remember that is happening in India. right now so there are enough naysayers. enough things that can go wrong but I. think that's the part that excites me. the most but coming back to this point. that also creates a new to your point on. personal it's a new generation of. entrepreneurs right people didn't think. of this kind of an entrepreneurship. three four five years ago so how can old.

institutions cater to New Age. economy came also there was this. question how do you like so. uh we actually had invested in a company. you know other you know during covert it. got acquired uh called Avail Finance. which was Neo bank for the economy they. also want that health insurance actually. you know one of the most interesting.

products for economy is I forget what. the term of that product is but it's. basically income guarantee product which. is. by the way. banks are used to monthly emis software. in each other. Umi how do you set that up so. the one of the products for example was. if you are sick.

a lot of these people have they don't. have savings like people their cash flow. and literally day-to-day income. dependent right so then how do you uh. insure them so you get a you get a a. piece of each transaction and then you. insure them further so I think the. opportunity in this new digital way of. building an economy is just it's crazy. you know in fact the interesting part is. like I started this podcast two years.

ago and the idea was figuring out the. Indian dream yeah that's whatever your. idea was like okay let's go talk to the. people who have figured out the Indian. dream and let's how do you know and I. think it's very very endearing how you. do it it's very natural. um and yeah it's it's great to see thank. you okay addressing question. now slightly different you must have. seen so many businesses you've evaluated. things you have seen people succeeding. failing all of that you read about. economy a lot right what are the like.

top three four or five kind of. businesses that work in India like what. are the. which is why is it that buildings. businesses don't work in India and we. will go back to the original piece so. first of all let's separate two types of. so ultimately any business is catering. to a customer but that customer could be. a consumer or it could be a business or. it could be an Enterprise or it could be. anything right so I think.

separate view here. consumer businesses don't work because. people or haven't worked historically. because people forget. the the there is a simple game in in. almost any business for any business to. work you should make more money from. your customer than you spend in. acquiring them yeah and I think people. forget that in India because we we. discussed earlier about this GDP per.

capita hamari GDP per capita is. maximum most cases maybe twenty percent. fifteen percent if at all by the way in. some cases people are losing money on. those transactions you need four or five. such transactions from this person can. is that person going to do it so I think. basic customer economics.

is. by the way that also will change with. GDP per capita uh going uh going up so. what works in India one big if you. believe. that your Revenue potential is kept. which I think it is Gap because of GDP. per capita even though it will go up. what do you have to do you have to be. very frugal in cause. and across consumer businesses and B2B. and business I think that's where people. forget and where businesses have done.

really well is they do so in this in. India. there used to be a term called cost. engineering okay uh and Frugal. businesses and oh but that used to get. interpreted as jugar what jugar is not. scalable. in Innovation. if you look at Ola electric like. completely redoing the bomb the bill of. materials uh thinking about which. material is better and how do you get. and then how do you get scale economics.

going to me by the way this Tata car uh. at 13 lakhs I think it's great 13 lakhs. is a reasonably as the market is going. more affordable it's a great car and you. know I've been inside it so I think. that's Frugal engineering so net net. there could be 20 other things but the. most important has been that people have. not been uh cost focused enough one. second so you mean like cost of. distribution when that is reduced at a. significant level any cost it depends on.

your business if it is a manufacturing. business cost of manufacturing electric. I'll give one example from our portfolio. have you seen a single ad of Ola. electric anywhere and by the way you. would have seen ads of our competitors. or their competitors why because all the. product is selling itself and the. product is being sold at a positive. gross margin actually to a very positive. gross margin such that the overall. company is profitable. or hamare your competition engineering.

negative. so it depends on your business if it's a. manufacturing business cost of. manufacturing if it's a distribution. business customer acquisition cost right. if it's a marketing driven business if. you think of successful stories like. mini Cosmetics right. and I think that applies for you uh. specifically with what you're doing.

right so uh so I just think that. razor sharp focus on cost is critical. second and this is a little bit more of. a generalization but it is it is true I. hesitate because it's changing is. customer Obsession and customer focus. you know what other top best customer. service experiences you've had often. people will give foreign Brands right. they will say an apple they will say an.

American Express maybe I I don't I can't. even think of that many but those would. be the Amazon right really they will not. necessarily say the Indian Brands right. that applies by the way even in B2B. India was actually proud to Market and. push a model of good enough. but cheaper hmm. by the way China was not even good. enough and cheaper at one point but look. at how quickly that story unraveled in.

the meantime China actually went up the. technology curve and which brings me to. the third Point technology adoption so. three things in my view. big cost and cost focus and cost. engineering second customer Obsession. third disrupt do some disruption with. with technology see you know like I have. two points on this specifically from the. consumer point of view because we. specifically brought Winnie Cosmetics. right so darshan Patel used to be like a. hero childhood hero for me because I.

would just read about him in books and. magazines and every time he would like. and he would just come up with something. yeah there's move and then there's live. on and then there's your fog right he. just comes up with some new thing. so I went deeper in this right so in. consumer business if you look at. historically in India people have like. the mncs I'm specifically talking about. mnc's or the large companies they have. spent in acquiring a customer for a very.

long time. so they have taught us to do this. but then they already have like some. moat to be played on right if you talk. about Brands which have worked from. scratch and look at the regional players. as well there are very few exceptions. who have built who are actually a price. leaders and our lead another Regional.

players every other brand which has went. on to become like a national brand in. the country they've all played on price. and the good enough Story Only yeah yeah. if they have if there's anyone who's. played in a new category and trying to. acquire customers they spend for like. three four five six seven years I was. reading another story of uni charm yeah. so when they entered Huggies was a. leader Pampers was a leader and Mammy. Poco pants for six years they spent like. thousands of crores just to get in the. market and now they're leaders yeah so I.

think that consumer brands have taught. us to just do it this way I agree with. that Raj but this is why also when we. originally said Kia India story. um. they may have put a 10-year business. plan and by the way the companies that. have been around like a hundred years or. 50 plus years they can take that view so. they took a 10-year view on the market.

right. negative okay but again because I can. now let me give you exam another example. from our portfolio country Delight it's. a consumer brand yeah what is it priced. at so in fact Joe good enough. we said there are three levels to play. at mass mass premium or premium premium. May or had already burnt our fingers and. re and by the way this was a call we.

were taking in 2018 we said premium. Market. by the way just connecting to where we. are today our current view is a premium. okay we said. yeah then we said. okay we always you have to take. summaries yeah turned out to be great. country Delight has consistently. positioned itself. not even just above good enough products. they have positioned themselves above.

Nestle and amul by 30 to 35 percent per. later basis and today's you know it's a. it's a company that's doing very well. and making money right but they must. have spent in the beginning like a lot. to acquire that no zero because that. again have you seen a country Delight ad. so what does it mean what is the unique. Point here I think the unique point is. context has changed markets are Depends. so just go with that and and therefore. there is more opportunity but then what. do you do I think all of them had a.

unique customer insight. so when we say consumer Obsession what. is that unique customer Insight that you. as a business are seeing that if you. solve I think. my view is darshan Patel has that genius. yeah that is his genius foreign. [Music].

then you have to you can afford to spend. on marketing and grab those customers uh. I think one of the companies by the way. new new tech that has done a decent job. has been created in terms of branding. now now they have a business around you. know a lot of the things that they've. spent. by the way I also have consumed a lot of. those. unique customer inside care.

foreign. so if you look at move uh some of these. brands that he's created I think I mean. it would have hit a set of customers. right so I think that's the difference.

it's not but the the Cokes and the. Pepsis are very well respected Brands. because they want to own the country. they want to go across Mars everything. right so that's the difference so it's. you know there's one more thing which I. believe in and like largely all the. consumer Brands you'll see here. they they play on a very strong branding. game yeah okay and they focus on. building a new category yeah right even. though it's a deodorant yeah but darshan. Patel would never promote it as it's a.

deodorant yeah it'll always promote. their lifestyle first you know it's a. first no gas deodorant yeah so it's a. new category so you always become first. in leadership so they promote their. leadership I think that's a very good. Insight I actually internally we talk. about boss category leadership. category leadership this is where the. marketing genius comes in that work. category leadership deodorants. exactly. right so that's what like all the all.

the good consumer countries they build a. new category and they play on that and. the second which they're really good at. is building an emotion yep absolutely so. if you look at Red Bull right Red Bull. is not an energy drink their Adventure. yeah yeah so and all their marketing. around the country will not be about buy. Red Bull yeah you'll always be like by. this adventure yeah yeah so if you've. got an emotion. GoPro has done a fantastic Extreme. Adventure so all these Brands which come. out they're premium they sell at a.

higher price they own an emotion and. that's what really works for people in. The Branding Place absolutely and look. they the only counter example to that is. see branding is emotional connect or and. or functional. connections. where you show before and after of a. garment and all of that I think both are. needed but I think the marketing. Geniuses do both apple is Apple is a.

market Engineers right they create the. aspiration but on top of a great. differentiated product right so Apple. differentiate a product I believe apple. is a fashion company yeah I generally. believe that like apple for me. it's it's a fashion company which is. just using Tech as a medium no no but. they did massive Innovation right so. they were of course I'm talking about. now like now okay. just scaled everything up but uh and. made it more fashionable. iMac was an innovation I thought was it.

iPhone was in fact airport also was like. and they were never forced to the market. on any of this they were never first to. the market it's just a different level. that's amazing to play on okay give me. like last last two three questions I. have one is. so when you value a company okay let's. say like young entrepreneurs are. watching this they wanna raise. Investments they want to look at how do. you value them because. I'm just asking you from the point of. view a lot of it has to be some level of.

gut yeah like it can't be like pure play. data I'm just talking about a purely. early stage because you're better in the. future it's got informed by data so what. does that mean so. interestingly and I think if bhavesh is. watching this he will also laugh. um. and Ola became like five billion within. like three years for us right.

now that model didn't uh this is 2012 we. didn't know that this model moves not. should not be sized based on the taxi. Market but should be sized on personal. personal Mobility including own car and. all that right. so but the reason I'm saying that is we. got the market sizing wrong. fortunately we managed to therefore get. in we were more price disciplined at. entry. but Market sizing does matter right.

Market sizing and what is your you said. category leadership We call we also say. damn total addressable market so that. does matter and it is goes into the. model see it depends on stage. at the absolute concept business plan. stage. it is not you will say it it doesn't. matter now the good news is. Market kind of is already set for these. kind of things.

you know depending on. and this is where the the size of the. market matters depending on the. background of the entrepreneur and the. size of the market and the excitement of. the investor you can raise anywhere. between one to one and a half million to. six seven million but you will dilute 25. percent foreign.

because that spreadsheet that you built. or the entrepreneur has built. 99 that spreadsheet won't get hit or met. but it tells us what is the way to think. about this um. and so it's kind of more like the way.

this is how and by the way. and now I'll come to the next stage uh. at which you value companies then it's. not concept then we say it's traction. okay attraction traction metrics uh and. valuations are much more in range. actually podcaster and I would encourage. the users to to listen to It's called. marginal value add. so then what we have to do at concept. stage is.

and typically at an early stage you want. to see between. I would say ideally three to five x. between rounds. 2x is the absolute minimum. then people end up with 1X 2x also but. the right way to think about it is what. we call next round backwards. it's less gut and there's more numbers.

and that works at everything. some scaled company. that and also that profile of investor. changes. yeah they become more irr investors so. my bet is nobody will invest. in any company at later stages. unless their internal models that they. have tested very deeply show like a 2X. minimum or the high expect topic.

typically. sometimes they actually make you uh. agree to that in the term sheet which I. think is a terrible idea to give any. guarantee irr or return to investors but. sometimes Founders do it. okay all right so just a hypothetical. question I'm asking because I read. another article I just lovely reading. and asking very good curiosity is one of. the first or one of the most important. ingredients of success thank you so. hypothetical situation there are two. Founders okay both of them has like div.

in different markets different. categories but both of them are safe. kind of traction. one founder ends up raising like let's. say 10 million the other founder ends up. rating 1 million. why is that like why few Founders are. able to raise better build better show. better dreams and have more conviction. like what is there about Founders which. you believe that okay this founder can. actually go places see there are two. parts to. that answer one is.

I am assuming you're saying in your view. they have the same capability huh like. from the public point of view. judgment on that capability means. lots of referencing uh negative. how we may go through some scenarios. about the future with the founder where. we will kind of figure out. my bet is that the guy who's raising 10.

million and then I'll come to the second. piece of it has net net made people. believe that he can create a much larger. business than the guy who's create. raising 1 million. yeah so and those things we actually it. is more scientific than than it appears. we actually test it in multiple ways. okay and most Founders actually find out. because. we try to figure it out but let's say. now let's make it harder let's say.

then why you have to sell boss this. entrepreneurship you are an entrepreneur. don't ever imagine that you are not. selling you're selling 24 7 you are. selling to your investors you are. selling to your employees you're selling. to your customers uh. and in my view the three actually. connect. so a person who's able to raise a lot. more will also see the flywheel turning. where great potentially good employees.

I would rather join this versus. I think again you spoke about darshan. Patel and pankaj Patel and like all. these guys who have become large I mean. they are great sellers so selling skills. never underestimate. um. one input for your audiences. don't people should not get. um they should not get disappointed or.

think that array you know I'm not a. natural seller selling doesn't mean. flamboyance EQ only in some cases it. does look at Tim Cook I mean I hope he. doesn't see this I mean he's just a very. he's not Steve Jobs but I think he did. excellent in I was watching his. interview last night he was just so. genuine.

you could just feel. genuine warmth and affection for India. right it's a great cell so we also have. another episode It's called founder. market fit also Matrix moment we talk. about this which is. right and if you are in a business which. requires Showbiz you are almost in a. show-based business you have to have a. certain different type of selling skills. which we see with the people in Showbiz.

if you are in a business where your B2B. it's a very different type of selling. skills you interviewed Ashish Ashish is. a outstanding seller yeah outstanding. seller see Ashish is a little bit unique. so bad example because. um but he's a but he's he's a natural. seller in every setting but many of our. portfolio are not like that if you look. at bhavesh is great on social media. right so he's a he's able to pull the.

consumer in. um but we have we have ah B2B companies. or Enterprise focused companies. where if you met the person and you. judge them by a normal yardstick. and you know back slapping it would say. not a great seller and they their. businesses might be doing the best. because they are great sellers in their. setting right and they have built great. teams because they're able to attract. the right Talent interesting take okay.

the last question of the day is. people who are watching this give me. some insight on the VC side of the. things how can people become like what's. their typical Journey from going joining. a VC company to becoming a partner. how rewarding this career is like okay. how much how much an average partner in. a good company would make in a year like. how do they make yeah so I'll actually. give you a little bit of a different.

answer which you probably weren't. expecting you know I've been an. entrepreneur before I would actually say. that if by the way if I wanted to be a. billionaire I would really create wealth. I shouldn't be doing what I'm doing I. should become an entrepreneur again so I. believe that who are the richest people. in the world how many of them are. investors they're all business builders. right very few may be hedge funded but. most of them are business Builders so. the best way to compound wealth is to. build a business and to make it.

successful. that's what by the way my with my with. my kids with my son and sometimes at. Matrix and I'll come to answer your. question also when people are debating. if you are interviewing somebody and. they are debating between VC and. Entrepreneurship I say close your eyes. and be an entrepreneur. um if they are at Matrix and they're. considering entrepreneurship we actively. encourage them to become and we invest. so Ashish we invested we have investment. in a company called jodo which was also.

X Matrix we have investment in a company. called DSLR which is also X Matrix so uh. entrepreneurs if the next decade digital. nation building is happening do you want. to be in the middle or on the sidelines. in Venture Capital you're on the. sidelines I think you want to be in the. middle so that's the answer on go become. an entrepreneur and please come and meet. us now if you for whatever reason. want to become a VCU and VC is a great. career why do I do it I have been an.

entrepreneur. I love uh interacting with Founders and. I'm privileged that I'm surrounded with. just in the founders I interact with as. Matrix maybe 100 plus as Founders I. interact with maybe 15 to 20 and I. derive my energy from that I derive more. energy from that than if I was operating. a business but then it's also because I. have operated a business and it's a. different stage in life so my view is. young people should not be looking to. enter VC directly they should be looking.

to even if they were able to enter VC. then the question is what does it take. to succeed in VC what it takes to. succeed in BC is actually being able to. be the best partner to the founders and. if you are a kid out of MBA how can you. be that unless you are operating. experience before right so my advice. would be first go build operating. experience where a Founder says. by the way doesn't have to succeed but.

what Journey. so that has to be do it in any domain. don't don't necessarily have to be a ex. become a Founder maybe go work in an. early stage company large company. backgrounds don't help so much as Google. Amazon Facebook they are great training. grounds Microsoft. entrepreneurial uh. so I would say go build uh background in. something.

how much money do people make the the. money actually in this business is a. people think it's a lot there are uh. there is you know your salary your. income from whatever but the main money. is a share of profits um. right so again the point is at a senior. partner level you would make exactly the. same at the same age that you would make. in a McKinsey maybe even less than you. would make in some of the other places. uh what's that range what's that what do.

you feel is there it's a few crores few. crows like maybe starts at three four. but again like I said I actually I'm. sure if we Benchmark to mckinsey's and. there's that one one has a number but my. point is but what's the point of doing. that yeah right because this is a very. different and and harder career in some. ways because if your Investments are not. doing well uh then it's a problem right. so uh but the real money comes from the. profit but even that my view it's.

one. 20th to 1 to 100th or whatever or what. one would make as an entrepreneur but. yes it does uh it it is in some ways uh. less risky right because in in an. entrepreneurship thing you're putting a. life into one thing uh and here. obviously you are hedging yeah you're. hedging your risk yeah thank you so much. that was a great chat I really liked it. I hope it was a great experience for you. it was awesome thank you Raj and very.

welcome on your channel thanks for. giving us few insights which we really. needed sure super perfect cheers thank. you so much for watching this episode. till the end please like subscribe. comment and share it with at least one. person who's gonna learn a lot from this. episode and who learns about leadership. in India and how to win in this country. until the next episode keep figuring out.

thank you.