Prepathon: the (now, seemingly) inevitable evolutionary outcome of Pagalguy

prepathon-logoChapter 7, The Portfolio Chronicles

Sometimes organisms grow slowly year after year and wait patiently for a dramatic change in environmental conditions to morph into a more powerful and stronger creature. One doesn’t expect this phenomenon to occur at a startup but we’d decided against conventional wisdom to back such organisms in the past and while the verdicts are always delivered after a long gestation period in our business, we are clearly not shying away from such risk.

pagalguy-logoWhen I was told in late 2015 that I should meet Allwin Agnel of Pagalguy, the reaction was knee-jerk: “Hasn’t he been around for a long time? And we’ve been rather disappointed with the ideas around transforming education in this country. Is this really for us?”

And though I had indeed met him about 8-9 years (between his semesters at Wharton) and though he went to same b-school that I did and though every Indian b-school aspirant post-2005 seems to know of Pagalguy, what could he possibly want from Blume? He’s clearly found himself a niche educational media company that’s profitable and independent of venture funding. So, what gives?

Its rare for a small early stage fund like ours to advance an investment decision into a company that’s over a decade old. When we spoke first,  I had no idea that there was something afoot – Allwin and Sandeep  had found that there was a mobile first approach to solving more problems for college and professional courses / entrance exam aspirants.

We had the debates that every founder and investor have – is the idea mature enough that someone will back it with a few million $? Will a small Blume cheque even matter for this goal? And then eventually, I think I convinced Allwin that we are the partner to guide him there with a small cheque and a large dose of enthusiasm. We knew that the market is ripe for a take-off.

We’ve been invested in Prepathon since middle of 2016. A gradual build-out of an assembly of bots that simplify communication and clusters of partners for each of the key prep test areas from the offline world now position Prepathon for what can be a staggering 2017!

A marketplace for connecting students with top experts and courses in the country, aided by various guidance mechanisms built by Prepathon. 

In the interim, I must admit that we didn’t anticipate Byju’s success in fundraising and selling its proprietary content through its own distribution channels. However, it only showed that what Byju’s exploited was the inability of the traditional offline coaching and tutorials businesses to morph into a winning product offering for students and learners in the online world.

This intuition of Allwin’s – to convince the offline partner that he can never create a better platform than Prepathon for their own content – is the winning strategy. Prepathon will, both, a) deliver their high quality offline content online now and b) evolve the process of learning, that is being constantly made more and more intuitive and powered by their “let the bot guide thy learning process” approach.

Prepathon’s focus is the Student, as was always, since the inception of Pagalguy. By taking the best brands in the country and making their courses available to students, the best teachers are being made available. And Prepathon has become the only way to directly access star teachers at these brands. We’ve already onboarded Bansal Classes, Khan Study Group, GATE Forum and several others.

Bots are not the product but they keep evolving to assist the student through the learning process and is important to keep engagement high without human-assisted intervention.

2017 will mark the first full year of the Prepathon’s marketplace, one that will shape and guide the future of millions of competitive exam aspirants.

While I’ve not blogged about the other related portfolio additions as yet, we quietly built out a thesis of education and edu-towards-employment through late 2015 to mid 2016. They’ve all been announced – Unacademy, Mockbank (sarkari.jobs), and Flipclass, in addition to Prepathon. We are very bullish that rich content marketplaces aided by mobile-first learning tools finally deliver the promise of widespread quality education to millions more in India. Ergo, this portfolio. We’re very happy with it and are unlikely to add much to it though in 2017, other than follow-on cheques.

Investment announced: 2016 (Blume Fund II)

 

 

Servify: one destination!…for any gadget, anywhere in lifecycle

Chapter 6, The Portfolio Chronicles

servify1

Once in a while, you come across this second-time entrepreneur, even more wired than his first stint as a founder, even though she or he has a very good (sometimes, great) story already chronicled. When you chat with Sreevathsa (Prabhakar) and see him operate, flying from city to city to convince brands and service partners to be onboarded onto his new baby, Servify, its remarkable to witness the energy levels.

Sreevathsa’s first venture, The Service Solutions (TSS) was acquired by B2X, one of the companies under the German supply chain solutions conglomerate called the Barkawi Group. Sree had painstakingly convinced brands like Apple (no less) to hand over their entire backend for authorized service (software, outlets, parts, warranties etc) to the service store chain he set up for them in India. It’s a commendable bootstrapped story and since it’s a private company that’s now in B2X’s hands, I can’t reveal much. Let’s just say that B2X is very happy (revenues are now at 6x from when I first ran into Sreevathsa 4 years ago in a different context) and are, grudgingly yet willfully, happy to see him leave a new leadership team behind at B2X India and launch himself into the most challenging of problems – fixing customer service across all electronics and white goods brands in your home or office.

Clearly, from the TSS experience, Sreevathsa is the rare founder who knows how to build frugally and bootstrapped, all the way to a sizeable exit. And while this is a tougher consumer play and requires much more upfront capital to scale rapidly, he didn’t need to work with Blume from the earliest days, given his personal resources from the exit. But he chose to; and for that, we’re both glad to have partnered. We’ve always said that Blume is not about the money and we love working with founders who get that the most about Blume! Its about having a partner for a lifetime. This rare ability to know that greatness comes from partnerships is why everyone loves Sree. And he’s begun to add them in all directions – most importantly, building a versatile and seasoned leadership team: Pravin, Chandresh, Anupam, Mahesh, and Sriram; adding to the team he had when our cheque went in – Vivek, Swapnil and Naveen). Servify has already onboarded 20+ brands to work with the company. And most recently, we added Teru-san and Beenext to this party! They’re great co-investors and great allies to have, as Servify will explore South East Asian pastures sometime soon.

Sreevathsa has always believed that Customer Service and After Sales Support are seen by the brands as a pain to deal with. These are never perceived as cool jobs or departments inside companies and in a resource-starved country, top talent is NOT likely to be opting for these functions as a first priority. Its not surprising that nothing has seemingly changed even after a few decades of large foreign brands entering the country. Whether its your water purifier or an air conditioner or a TV or a mobile or a laptop, whether the frequency is once a quarter or once a year, installation or service or repair, the average experience always seems to end with an emotion = “what a nightmare!” One prays that they don’t ever have to call that brand’s service center again till they’re ready to replace the gadget / appliance.

servify_logo

That’s where Servify comes in!

Stripping out the nuisance of dealing with over a dozen brands, that are likely present today in every household, is going to be the promise to deliver on, for Servify. Would you guessed that the average middle class household they surveyed had between 15 and 35 different gadgets /devices/ appliances per home?! (basically, anything that needs electricity and is not a light bulb or a fan) It’s staggering when one puts the size of the problem out there as a sum total, even if we just added the numbers amongst the top 50 Indian cities. (Clue for scale prospects: And the ambition doesn’t stop with India)

And contrary to popular opinion, only about a small % of the entire market is serviced either a) outside of its warranty / extended warranty period and b) by a non-authorized repair shop. So, while every “aggregator” out there is struggling to bring sanity to this “unorganized / non-authorized” market opportunity (which is just like adding a layer of unreliability to the existing nightmare), Sreevathsa and team @Servify know the ins and outs of what they’ve done for over half a decade – delivering authorized service and the best possible service / parts / installation that you can get. In this organizing of the service network and delivering standardized pricing and predictable service levels lies the holy grail of this problem.

Servify will change the way you map your household and not deal with the randomness of gadget and appliance servicing. Next time the TV or refrigerator or your laptop or phone breaks down, don’t fret or sweat yet; see if the brand is covered by Servify. In a year, if not earlier, they should’ve mapped out close to the top 75-80% of all brands in every category!

 

I’m already a happy customer, with a TV repair done and a full home A/C service package scheduled for later this week. I can see every one of my gadgets getting onboarded over the next 12-24 months, as and when they are needed to be serviced, replaced or installed anew. (you can download Servify on the app store / play store and enjoy the same luxury)

Our bets on the founding teams of Dunzo and Servify are testament to our thesis on a remarkable pattern of seeking new ways to solve for the new Customer Service / Customer Delight paradigm in India. Wherever these journeys leads the founders and us, we know we’re going to be delighted by the journeys that will unfold. (We’re on the verge of announcing a third company in this space that will further augment the value chain in Customer Service in mobiles, complementing our Servify and Cashify investments)

Investment announced: 2016 (Blume Fund II) + Follow-on Investment announced: 2016 (along with Beenext and existing Round I investors)

A year’s Musings, Learnings, and a Call to Arms for 2017

Wow, and another year has flown by !

We’re all hopefully a bit wiser and grayer after the ebbs and flows of 2016, and further hardened after witnessing the year’s notable events globally and at home.  So, some musings and personal learnings as we close out 2016 [The Year of The Monkey], and enter an interestingly-named 2017, The year of the [Red Fire] Rooster.

First, a picture of perhaps what most first-time entrepreneurs sometimes think their journey will be like…

i-day

Versus – what the entrepreneurial journey turns out to be!  

cardboard

Pictures are indeed a thousand words (or cardboard boxes, or tons of G-force twists and turns!)

RC.jpg

Brexit, Trump, Demonetization – and Startups? 

These three stood out amongst developments with significant impact

  • Incumbents will always have challengers (the status quo is always temporary!).  In the Brexit case, despite the general malaise that had crept into the Anglo-Euro bureaucracy and fabric, the British referendum holders would never have guessed the time for the status quo was up.  Moving west to the US – regardless of one’s allegiances, it is fair to say Secretary Clinton could be seen perhaps as bordering on overconfidence – especially given her proximity to the White House establishment.  Most surprising was Trump’s sudden and unexpected victory blindsided the entire world; most of all, even himself!

Why should startups care?  In a sense even the most innovative of tech startups – Facebook, Apple and Google are no longer startups per se, but have become today’s incumbents!  They have to constantly look in the rear view mirror and avoid falling into the same trap.  The words “startup” and “constant reinvention & innovation” are tightly coupled and co exist.

(Chief Digital Officer @Salesforce, @ValaAfshar has some very relevant references showing companies started in the 90s/2000s that no longer exist, and vice versa – some of the fastest growing giants today were born in only the past 10 years!)

Demonetization – our own PM Modi’s surprise announcement trumped even the US President-Elect’s surprise win in some global circles.  Of course, the devil lies in the details (and jury is mixed whether the execution so far has been stellar).  But clearly, demonetization overall throws up a plethora of opportunities, ripe for disrupting the world of fintech!  One advantage is its ability to build on the excellent foundation already laid out by the UPI, Adhaar, and other similar pillars of the Government’s ambitious financial inclusion plan.

Similarly, the advent of NSDC (National Skills & Development Corporation) for Recruiting / HR-Tech companies, and #MakeinIndia for manufacturing (covering robotics, shop floor efficiency solutions, embedded hardware etc) are similar developments positively impacting and enabling disruption.

Moving to the micro – personal learnings 

Investing, especially venture, is about backing disruptive startups who are ahead of the game and hence don’t play into any “macro” themes and trends.  As one peer has put it, the venture business is unlike the fashion business where hemlines change from season to season.  While AI, VR, Machine learning may be the next new thing, overarching, long- term first principles that guide investing, scaling, growth, and value realization are what matter.

  • Are we getting better at picking entrepreneurs?

If you had to really ask, here’s a gut answer! 

NTMO.png

We think some of the better entrepreneurs (and this applies equally to us, as entrepreneur-VCs, navigating the shifting dynamics of early stage investing in India) : 

  • spot large-marketsize spaces but also adjust/pivot around shifting dynamics
  • never lose their love for product innovation (at Blume, we don’t generally back pure business founders, as we believe tech can’t be “outsourced”)
  • when they are about to hit a wall, quickly decide whether the biz is better scaled up OR scaled down, or find a home where the entrepreneur can paint on a larger canvas
  • are able and willing to hire A+ players to build kick ass teams around them. @Freshdesk (which is not a Blume portfolio company, incidentally) is an example I like, where Girish, founder and ceo has been able to recruit top flight talent from companies like LinkedIn amongst others. In addition, two of Blume’s companies have also been aqui-hired and are seemingly very well integrated. Our own @Nowfloats, while in early days, is also a similar example
  • know what their core metric is and have systems in place to measure how close/far the deviance is at almost any point

On SaaS (caveat – as the B2C consumer story has been chronicled fairly extensively)

  • Sales cycles are incredibly long.  Biggest reasons for failure is the “tired CEO”
  • Its quite common for the first 10-15 key enterprise accounts are usually founder/CEO led. However, the failure to scale thereon usually stems from an inability OR unwillingness to hire an experienced sales head – who in addition to closing key accounts manages the salesforce and sales processes, incentives, and targets
  • Needs a strong ‘internal champion’ buyer, often multiple internal champions, where independent threads can help re enforce the final sale
  • The ‘no man’s land’ is being stuck is the $1-3M ARR, despite attractive growth rates.  We’ve seen its not difficult for a good team with a differentiated product/platform to get to $1M ARR. However, crossing the chasm beyond $4M is the real kicker (largely due to the “long tail” / fragmented dynamic of the SaaS providers market)
  • Given SaaS companies are not as capital-intensive as their B2C counterparts, and enterprise customers have much higher switching costs than the typical “free or fremium” B2C user, B2B companies find it easier to raise from larger investors as early as Series A/A+ rounds (relative to consumer, which attracts large infusions at Series B or C)

There are two, actually three, “Indias”

1) “The China model” i.e. the B2C India consumer story.  However, here, the horizontals and verticals game has been played out already. The next big things are the enablers (or the ‘picks and shovels’) fueling the consumer story e.g. payments, logistics

2) the SMB model” i.e. products, platforms and services focused on the Small & Medium Business segment. This also includes the important hybrid Offline @ Online (O2O) sub segment

3) the “Israel model” i.e. Made-in-India enterprise tech-for-global markets. SaaS (eg Freshdesk), automation (eg Grey Orange), clothing & apparel DIY platforms (our very own Source Easy and Threadsol) are the “other India” segment

In the end, the scoresheet matters

“Winning is a habit. Unfortunately, so is losing” – famed Notre Dame college football coach, Vince Lombardi 

So while we have a long way to go, a recap of some of the year’s notable highlights :

  • closed our first fully institutionally raised fund, Blume Fund II
  • one of the first VCs to be a recipient from the Government-sponsored AIF (via SIDBI)
  • consistently ranked in the top five most-active VCs
  • Karthik & Blume featured in the ‘top 40 who matter in the ecosystem’ @Livemint
  • A number of our stellar portfolio companies including Grey Orange, Instamojo, Locus, Healthifyme, Nowfloats and others emerging as category leader contenders
  • Our portfolio companies today span >100, across Fund I, top-up pools and Fund II, making our scale, diversity and network-effects a key differentiator
  • Blume was one of the first (and few) VCs to back core-tech, non traditional enterprise startups, away from the popular B2C plays.  Automated warehousing (Grey Orange), apparel and fashion DIY and supply chain platforms (Threadsol, Source easy), carbon capture (CCS) are just three examples showing that India a) is more than just business model/process innovation and b) deep-tech innovation “made in India” does exist
  • made significant steps in building out a full-stack platform (with preferred partners to help our portfolio on Hiring & Talent management, Business Development, Investor Relations, Marketing and others)

There’s still a long way to go….. 

Looking to 2017 – All hands on deck

While we enter 2017 with firm and rooted conviction in India’s fundamentals, explosion of mobile penetration, young workforce, and attractive growth rates – one of the painful reactions from LPs when asked about investing into India goes something like this

“We think India is very interesting but we’re still studying it. We’re almost there – but not there as yet.  Can you share some data of the number of exits and their associated sizes?”

Its heartening here to see here, that both the frequency and size of exits have been increasing year on year. However, its very clear the game changer for India-tech will be a full cycle of value creation and realization playing out.

So, here’s a call to arms to us as an investor community broadly – to collectively roll up our sleeves and ensure India-tech delivers, showing the world India delivers and makes money – so we can continue backing India’s most innovative, brightest and best.

Finally, as we transition into the New Year, its worthwhile asking ourselves @ValaAfshar:

  • What will I leave behind? 
  • What (and who) will I bring with me? 
  • What can I create thats new (and who will help me)?  
  • Which global standards do I benchmark against and aspire to?

The next few days are a wonderful, opportune time for each of us as stakeholders in the community – investors, founders, early employees, portfolio mentors, advisors, board members, to self-reflect and make these simple yet core decisions as we step into 2017.

bitcoin

Trust 2.O – Demystifying the Blockchain

Banks, remittance giants, almost all financial institutions seem to be intrigued by the growing popularity of Bitcoin and the underlying technology of Blockchain and heavily investing into it. This long-overdue article is aimed at presenting a working explanation of the technology which will be followed by articles on Blockchain’s use in particular sectors like Banking, Governance, E-commerce, Healthcare, etc.

What is BitCoin or Ether or Altcoin?

BitCoin(BTC) is a virtual currency – which is created, stored, validated by a decentralized peer-to-peer network. For easy understanding, lets draw an analogy to a traditional currency, say the Rupee.

A BTC is similar to the Rupee in the following ways –

  1. Transactions : A BTC transaction is similar to making a digital payment – say via Paypal, NetBanking – for any goods or loans.
  2. Storage : There are BTC wallets akin to existing payment wallets like Paytm etc.
  3. Trading : Similar to USDINR forex trading platforms, there are BTC exchanges which facilitate liquidity in the BTC markets.

Now, lets look at the differences : –

  1. Clearing: Rupee’s valuation against USD or any other country is influenced by India’s monetary policy and thereby, the Reserve Bank of India (among a lot of other factors) and each monetary transaction/transfer undergoes the approval of the central governing body. In case of BTC, due to its peer-to-peer decentralised nature, it doesn’t rely on a central body. It is a completely open financial network. It doesn’t need any central clearing body to monitor each transaction. It relies on the robustness of the idea of decentralised trust to self-monitor the network, thereby democratising trust.
  2. Tracking: BTC transactions are recorded using the blockchain technology, in a special log book, which can be described as an immutable ledger of transactions (to be discussed later in the article).
  3. Acceptance: Unlike Rupee which is accepted in India alone, BTC is universal in nature as it is accepted as a mode of payment throughout the world. It is unfair to compare it to the US Dollar (which is the most widely accepted and traded currency in the world), but for the sake of over-simplification, BTC is a much better version of a universal currency as compared to the USD or the Euro.

What is Blockchain?

Blockchain is a distributed database that maintains a continuously-growing list of records. These records, called blocks, are secured from tampering and revision as each block contains a timestamp and a link to a previous block(working explanation provided in the next section). These are the underlying building blocks for BitCoins and other cryptocurrencies.

Blockchain is part database, part development platform (upon which newer products can be built), part network enabler and more. Blockchain exhibits the following 10 properties :

  1. Cryptocurrency
  2. Computing Infrastructure
  3. Transaction Platform
  4. Decentralised Database
  5. Distributed Accounting Ledger
  6. Development Platform
  7. Open Source Software
  8. Financial Services Martketplace
  9. Peer-to-Peer Network
  10. Trust Services Layer

The digital currency function is perhaps the most ‘visible’ one given all the talk on bitcoins. As mentioned earlier, BTC transactions are not monitored by a single central entity but rather by a decentralised set of non-cooperating nodes/entities. These nodes/entities break down the transaction details into smaller parts and store it securely in their databases with a timestamp to indicate the time and a hash pointer/key (ownership pointers) to indicate the transfer of BTC from party A to party B.

The concept behind a blockchain/digital ledger is similar to say, a safe (which has money) being operated by a master key (owner) which is made up of smaller keys given to different individuals (where no two individuals know each other) to ensure security.

How does Blockchain technology work?

Following is a visual explanation of how Blockchain technology powering BTC works.

Lets run through an example transaction, say ‘1BTC is being transferred from Bill Gates to Warren Buffet’. The information of the above sentence is first converted to a unique (to avoid repetitions/collisions) cryptic (to avoid attacks) short form (for efficient storage) via advanced cryptographic algorithms (SHA 256 in case of bitcoins). This cryptic short form, say ‘1BTC-BG-WB’, is now stored in a block and approved by Bill Gates with his secret key (akin to a password) and a public key (akin to an email id) transferring the ownership to Warren Buffet. The block which has recorded this transaction will get 0.001BTC (say) as mining fees.

A block is a part of a blockchain which records some or all of the recent transactions, and once completed goes into the blockchain as permanent database. Each time a block gets completed, a new block is generated. There is a countless number of such blocks in the blockchain. All blocks are linked to each other (like a chain) in proper linear, chronological order with every block containing a pointer to the previous block and a cryptic short form (hash) of all the data on the previous block.

To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are.

Why should we use Blockchain technology?

The short answer is – We should. Else we’ll fade into oblivion.

The long answer is – We should use blockchain for the following important reasons :

  1. Disintermediation – Two parties (Bill Gates & Warren Buffet) are able to make an exchange without the oversight or intermediation of a third party (banks), strongly reducing time, transaction costs and largely eliminating counterparty risk.
  2. Tamper Proof – Following up on the above example, when ‘1BTC-BG-WB’ was stored in the block, it had been signed by a secret and a public key. IF someone were to change the details of the transaction, the keys will no longer be valid, thus preventing any tampering of old records.
  3. Empowerment – Users are in control of all their information and transactions

What are the current bottlenecks?

Despite all the good things, we are still a long way to go before Blockchain and Bitcoin become status quo. Major bottlenecks in this not-so-long journey are –

  1. Regulations : Blockchain is challenging our existing version of Trust, Security and Reliability. Hence, we see resistance from government agencies and policy makers who are trying to understand and regulate this new technology. Sovereign currencies are being challenged by the emergence of Bitcoins, which in turn leads to several central banks, including RBI, to setup teams to fully understand the implications and finally regulate bitcoins.
  2. Scalability vs Decentralisation : Increasing adoption of cryptocurrencies has raised concerns about their ability to scale while maintaining the decentralised nature. While Visa does ~2000 transactions/sec, the blockchain network currently does 7 per second.
  3. Polarisation of mining power : Nations, like China, having cheaper computing hardware and energy rates currently own a large share of the blockchain mining power (the share is expected to increase further) which goes against the philosophy of decentralisation.

In conclusion, as with any upcoming technology, there is still a large amount of skepticism and reservation against the Blockchain Technology. But due to increased awareness owing to the pioneering efforts of the early adopters, this technology is now being used by several startups and corporations to develop new products and improve the existing ones. Over the course of the next few days, we shall explore the applications of this technology in different industries.

P.S – Thanks to one of Blume’s portfolio founder Abhinand Kaseti of Unocoin for lending his copy of ‘The Business Blockchain’ and my friend Aakash Rao for sharing the relevant tech resources.

Money without boundaries

cash-online

The concept of money is central to our civilization. Barring a few people who can live far from the attachments of physical world, everyone else interacts with money on an everyday basis, usually several times in a day. It drives a large part of human behaviour – our aspirations, ambitions and our self-worth are all intricately linked to money.

Naturally, money is also central to power and politics between nations. It is only in their best interest that they put reasonable restrictions around the flow of money such that they can manage the flow in and out of their physical boundaries. Yes, you can deliver customer service from a remote country, you can also buy stuff made in another, but whenever you want to exchange the currency you will have to go through a myriad of regulations.

The concept of money as we know, came into existence back in 1944 with the Bretton Woods system being adopted by Allied nations. Internet came along decades later and the concept of ‘electronic money’ became popular over last 20 years. But, the 1940s definition of money is severely limiting in the 2010s. Thankfully in 2008, Satoshi Nakamoto created Bitcoin as the first ever digital-only currency that truly harnesses the power of internet. Alongside he made the concept of Blockchain popular again.

Money, liberated

The jury is still out whether Bitcoin is the ultimate answer to the needs of our hyper-connected world, or something better will emerge. Some say that the power of underlying Blockchain technology is the most exciting aspect of Bitcoin. We don’t know as yet. What we definitely know is that this is an idea whose time has come. Bitcoin and/or its successors are here to stay.

We are fully aware that RBI hasn’t yet accepted Bitcoin as a store of value or put regulations around it. We love that Unocoin team had the maturity to understand the concerns of the regulator. Hence, every single person who transacts on the platform goes through rigorous KYC check, arguably even better than what some banks do. On top of it uses the most advanced fraud detection and order settlement processes.

Why Unocoin

It helps that Sathvik is an ace techie himself. He joined hands with Sunny, a Bitcoin community leader from Toronto and childhood friends Harish and Abhinand. Together they started the Bitcoin India community and organized India’s first Bitcoin conference that led to starting up of Unocoin. Within this company, they have also been experimenting on several use-cases around Blockchain.

Today, Unocoin is the largest BTC-INR exchange in the world. It processes more than ₹20 Crore worth of transaction every month for its 100,000+ customers, and fast growing. With their new round of funding the company is looking to scale up on its team and technology and establish the networks that allow them to truly realize the power of Bitcoin in the time to come.

The Sprint and the Marathon

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It’s only been one and a half years into Fund II, but the stark realities between the exuberance of 2015 to the rationalization of 2016 inspired me to pen down some thoughts on my Fund II learnings.

Disclaimer: It’s a 7 min read..

A traveller came to a village and asked the sarpanch what kind of people live there. When asked what people lived in his village, the person replied, ‘evil and rude’, to which the sarpanch replied that the same people lived in his village. When another traveller came by and told the sarpanch that good and kind hearted people lived in his village, the sarpanch gave the same answer”… you attract what you are.

I genuinely believe that people is what makes successful companies, not the market nor the idea.. Both the latter are being disrupted and are changing at a phenomenal pace and thus one can only hope that the people you have chosen can keep up with this pace and relentlessly execute. Having a well balanced team has become imperative while working with portfolio or looking at new opportunities. It no longer can only be good technology, folks, though that will always be the bedrock of teams that I would like to work with.

The first three months are the most intense, and basically decide the equation one shares with the team throughout the investment. This constitutes mainly softer issues like trust, humility and respect. Some companies have taken us on roller coaster rides, whether it was due to changing market realities or competition and the only anchor that held fast was our implicit confidence in the team and hopefully, visa versa. I am proud of the kind of disruption that the companies have created in their own spaces be it hyper local logistics, student lending, insurance or re-thinking the communication layer. Unfortunately in today’s shallow investment world it’s sometimes more about vanity metrics as compared to building an economically sound, well thought-of model.

Our success, assuming we have chosen the right founders, is, I think, to ensure that we spend an inordinate amount of time getting senior level hires to ensure that scalability does not become a challenge when all else is working. Moreover, strategic and tangential thinking can be helped with recruiting seniors / advisors from different industries and not necessarily from the ‘startup pool’.

Warren Buffet puts their acquisition/investment philosophy very succinctly. “Berkshire, however will join only with partners making friendly acquisition. To be sure, certain hostile offers are justified: Some CEOs forget that it is shareholders for whom they should be working, while other managers are woefully inept. In either case, directors may be blind to the problem or simply reluctant to make the change required. That’s when new faces are needed. We, though, will leave these “opportunities” for others. At Berkshire, we go only where we are welcome.” 4 years of your life should be spent with people you want to work with..

“ Most people think of Alibaba as a story, it’s not a story it’s a strategy.”… Jack Ma

At every stage of the journey either the market changes or the competitive dynamics change. The only thing that’s constant is change. How one adapts to it is going to determine ‘temporary success’. Being in complete sync with how the founders are thinking helps in ensuring that advice/feedback is in line with what their focus is at that point of time. Every quarter, I think a founder can focus on one thing and plan for another for the next quarter. Strategizing on how to keep having a differential strategy or competing intelligently is critical. Some insights can be derived from research papers, publications and secondary data.

Moreover as each of us is trying to assert our credibility with our companies so that we are the first port of call (whether it is the next round of funding, who to raise from, people leaving, hiring people), getting very deep into the business is a good option. This also helps enormously when a company is looking to raise future financing or potentially getting acquired. Helping them veer their way to an acceptable and reasonable ask from the right parter in a fund is quite critical to ensure that the probability of success post Series A is also high.

Ensuring that the promoter teams remain humble (Mohit@Runnr), rational (Arpit @Runnr, Deepak@Slicepay, Mukund@Dunzo), passionate (Kabeer@Dunzo), persistent (Rajan@Slicepay), thoughtful (Anand @Turtlemint) and aggressive (Dhiren @Turtlemint) with laser sharp focus (“Customers first, employees second and shareholders third” .. Jack Ma) is quite an uphill task.

“A butterfly coming out of the cocoon was given a helping hand. The man cut the cocoon to enable it to come out due to which the butterfly came out swollen and could never fly.” … value-add the right way.

Identifying the right functional gaps in the organization and getting the best people to fill them is quite critical. Identifying the specific right gap was the tougher one. Moreover, focusing on providing assistance in one area as compared to distributed assistance turns out to be more helpful.

In my experience, convincing the promoters on potential hires only happens when you review the current people in the organization handling that function, with the founder, and then get an expert in that field to expose the gap. Most of the time the promoters will potentially see this once an expert has given his feedback, so following this route has been a helpful aid. It’s also helpful to interview candidates that the promoter has liked and then have the promoters talk with some of the candidates that you have identified without providing your feedback. This helps eliminate bias.

“A king saw circles with a bullet hole dead centre, all through the town and assumed there was an excellent marksman. He then discovered that the person shoots first and draws circles later!” Do VC’s do the same, building conclusions first and then creating the premises?

External Investors are probably not the best judge of a model and thus having them decide what might be wrong / right and letting them dictate the future of the company will be detrimental to the confidence and success probability of the entrepreneur. The optimum amount a company should need to raise to try and reach unit metrics and trending towards profitability in my opinion is around $1.5-$2mill. Thus as investors, if we can get aggressive and shut out the noise in the ecosystem and build companies that sustain without necessarily requiring another round of capital then I would call ourselves successful.

“The rule in the monastery was not ‘Do not speak’, but ‘Do not speak unless you can improve on the silence.’”

Collaborating with the Series A / B fund is a tricky one and I have learnt to be the underdog. They have the responsibility to be be able to deploy large sums of money and create a potential to make the company a $200mill+ company, so working with them / assisting them even if they take the credit might still be worth it.

Keeping points focussed on what the lead VC is trying to ascertain (generally though a questioning round as compared to an authoritative voice) has helped me. Trying to ensure that both the investors’ advice / language / opinion are communicated together either through f2f meetings or con-calls ensures that the entrepreneurs do not play one against the other and the value is amplified.

I’d like to end with Jack Ma’s words

Today is brutal, tomorrow is more brutal, day after tomorrow is beautiful. However the majority of people will die tomorrow night.”… so how does one create immortality even though they are mortal?

Disclaimer:

Thoughts shared above are based on my experience working with the sub-portfolio of companies that I actively manage at Blume Ventures.

How to save 3M lives per year?

savingDr Charit is a curious cardiologist. While most others would be happy with the fact that there are too few hours in the day to see patients, he wasn’t content with just making money. He noticed that far too few people are coming to the hospitals and when they come it usually gets quite late for them. That too in a metropolis like Bangalore. The situation in hinterland is obviously far worse.

The reason? Analyzing an ECG – which is the only way to determine if that pain in your chest is a heart attack or just acidity – is a complex thing. Even though the ECG machines are relatively cheap (starting $750 and above) and well penetrated, it is not uncommon to hear that a person was being treated for severe acidity for 48 hours till she was finally diagnosed with an artery blockage.

Myocardial Infarction (as Heart Attack is called in medicine jargon) is start of an irreparable damage to a person’s heart. Every minute after an attack matters. It is a pity that average time for emergency cardiac care in India is between 5-6 hours, as compared to about 45 min in US. This is the problem Dr Charit decided to solve.

His meeting with Zainul through a common friend was a turning point. Zainul, a PhD in signal processing, knows a thing or two about cloud. He volunteered to make the first Tricog Communicator device early last year. Then they got on Udayan, another PhD, to work on machine learning and Abhinav to put these together in a software workflow.

They have put together a command center with doctors on duty 24×7 looking at incoming data from far and wide. Using Udayan’s algorithm that improves their workflow, the doctors are able to send a response within 45 seconds to the clinic. They also follow up on the care in case a critical case is identified.

Dr Charit’s charm and the team’s product capability ensured it didn’t take much effort to sell it to clinics and hospitals. Today they have over 250 devices on their network, all around Bangalore and some in north Karnataka, each effectively saving 2-3 lives a month.

That it is possible to save 500+ lives a month (just in Bangalore) and a business built by a team so capable, it was a no-brainer for us to invest. We are glad to have found a partner in Inventus to be a part of this company!

Going ahead, the company is looking to deepen its partnership with GE Healthcare and go to South East Asian countries. It is also furiously working on the algorithm that can detect critical cases automatically. This will become truly transformative as soon as the personal/wearable technology becomes capable of capturing heart signals reliably.