Summarizing my exit interview with a venture capital intern 

Two interns finished their learning cycle with Artha this week. One of them wanted to speak to me and get my feedback on his performance during his 4month internshipThe schedule short feedback session went on much longer, and at the end of it, we got into an exciting topic – the importance of forming an opinion.  

I believe our discussion applies to anyone who wants to work in the investment business, especially earlystage venture capital. I am sharing a synopsis of that conversation with the permission of the intern.  

 

Intern: What is one piece of advice for me? 

Me: Form an opinion and be vocal about it. It is acceptable to be wrong, completely wrong, and heinously wrong. However, it is cardinal mistake to have the ability to accumulate and analyze data but lack the courage to form a decisive opinion. The best investors have often sought out views from their peers and from people who could provide them with a fresh perspective. In fact, the investors I emulate often seek out contrarian views to their own to test their hypothesis.  

 

Intern: Why is the trait of forming and communicating our opinions so important? 

believe that investing is the ability to predict future outcomes of current decisions, and an investor’s brilliant foresight finds appreciation only in hindsight. That is why I consider investing more of an art than scienceA room full of experienced appreciators of art would almost inevitably have deep-felt disagreements on the value of Van Gogh. They could all be right or be wrong – we would only find out once the money gets transferred into the sellers account 

 

What should an intern do?  

fondly remember eyeopening realizations I have had during discussions (sometimes heated) with interns, associates, principalspartners, coinvestors, and even entrepreneurs over the last 10 years in venture capital. Initially, it was intimidating for me to showcase my opinions in front of the experienced hands of this game. But I realized that I wasnt learning anything by keeping them to myself. I learned more by expressing my incorrect opinions and recognizing the gaps in my understanding, over keeping my opinion to myself for fear of getting called out.  

A newcomer to the investment industry should seek out experiences where they can form these opinions. Join investment clubs, seek out investors who have strong opinions, even if they are contrarians to their own, but learn how to build and present your investment viewpoint. 

 

Don’t be afraid of being wrong; we learn best through the mistakes we make. Expressing your opinion is a win-win situation. You either get called out and learn where you went wrong, or your opinion contributes valuably to the discussion. Most importantly, you grow with each interaction and learn to receive constructive criticism. 

Family & Friends – Please Save Your Capital!

A couple of months ago, I found my jaw hitting the floor during a start-up pitch. The founder of an early-stage B2C startup revealed that he had previously raised a family and friends’ round of the princely sum of 5+ crores (~$900k). That capital was exhausted in less than 18 months; the monthly burn was over 50L per month with a double-digit staff strength. All this effort was delivered less than 25 lakhs in sales – since inception!
Runaway spending, low traction, running out of cash are situations that I regularly encounter as an early-stage investor. What worried me was the lack of oversight the family and friends had on how the founder invested their capital and their lack of experience steering the founder from avoidable expenses.
For example, precious and expensive capital found itself funneled into:

  • A massive PR & Branding campaign which wasn’t delivery but continued to burn a hole every month
  • Lobbying for international “paid awards” that cost a bomb but did not deliver results.
  • Massive allocation on R&D, but it was a ruse. The money got spent on traveling to different countries to find manufacturers to white label their products to the company
    • I have seen others do it at 1/10th the cost & time

I cannot hold the founding team entirely at fault here too – part of the blame should be on the investor class. They infused excess capital into the business, thereby encouraging the founder to burn the money on things that don’t matter, ultimately setting up things to fail.
My presentation of these entrepreneurial misadventures is not an attempt to rub salt on the wounds of the family and friends’ investors or the founders.
I want to point out something fundamental. Except for unusual situations* family and friends must limit the amount of capital they commit to an entrepreneur. Leave the larger rounds of capital to the professionals. Not only will it save capital for generous family and friends, but it will also save founders from committing hara-kiri with their startup ambitions.
If this were a one-off situation, I would not have written about it, but I am witnessing a marked increase in the number of ventures backed by family and friends and coming to us for a seed round. We like family and friends supported investments because it shows that those closest to the founder also believe in them, but like healthy foods – too much green can be injurious to health.
Most of the time, family and friends judiciously put in a small amount of capital, just enough to get the venture started. However, there were many examples where family & friends have drowned a lean start-up culture with a deluge of capital – killing the enterprise and blowing away the capital.

So, the obvious question that arises is, how much should a family or friend commit to an entrepreneurial family member or friend?
The good news is that a family or friend need not look too far.

The best accelerator programs in the world, i.e., Y-Combinator or TechStars, commit $150,000 (~₹1 crore) for a 7-10% equity stake in pre-seed ventures. Similar programs in India like 100x.vc, Indian Angel Network accelerator, or VentureNursery (in the past) invested between 25-75 lakhs for a similar equity position.
All the branded investors mentioned above have many good and bad investments; therefore, with their experience, they can guide founders on promoting the right and shunning wrong behaviors in their start-ups. So, for inexperienced family and friends’ teams, the correct amount of capital would be between 50% to 75% of what these guys invest, i.e. anything in 40-75 lakh range.
Family and friends can decide where to invest in this range based on the domicile of the venture but ensuring that the founder has 6-9 months to find a professional investor while they continue to grow their start-up. It is the founders’ responsibility to consistently update their investors whether things are going well (or not). Developing this habit is vital but critical in case things are going well, but finding a professional investor is taking time. Family and friends could opt to put in some more capital IF they are comfortable with the start-up’s progress and are objectively taking the additional risk.
However, the family & friends’ capital tap must end at that.
 
* While It is still advisable to leave the more giant cheques to a professional but in certain situations, it makes sense for a more significant allocation from family and friends. These are exceptional situations, not the norm.

  1. If the family and/or friends have in-depth domain knowledge and are objectively backing one of their own
  2. In Meditech or Healthtech like start-ups that require more massive upfront investments and the family and friends’ investors have in-depth domain knowledge

I Invest in Risky Assets but I am not a Gambler!

A few days ago while rushing into a meeting, I heard someone call out my name. I was in a hurry, but I knew the person, so I politely spoke to him for a few minutes. During the conversation, he reminded me of a venture he had recommended that I almost invested in i.e. I committed capital, but backed down due to serious concerns with the founding team. I am aware (and as he went on to remind me) that that company went onto become quite big and it frequentlty comes up in conversation with people and our prospective LP’s as a part of our “anti-portfolio”, but I do not think that I “missed out” on making the investment, because even if it were offered to me today (under the same conditions), I would stand by my decision and refuse to invest in it.

I have been thinking about why I continue to abide by certain principles because eventually monetary returns are every investor’s ultimate goal, right? I know my reasons for abiding by by certain principles, but it is only today as I was getting ready for my day, that it struck me how to explain it.

I am not a gambler, but an investor in extremely risky early stage companies. Each investment has a thesis behind it. That thesis is validated by my team, my close circle of investor friends, my inner circle, venture partners, the external and internal due diligence teams. They ensure that these theses are in fact not a figment of my own imagination. I also have an independent investment committee (IC) who have to agree with my investment decision (Thesis) for the fund to be able to invest in it. Out of the 8 deals that we have taken to the IC 3 have been rejected. Although it may be disheartening at the time, we have later thanked them later for making those decisions. All these steps and hurdles are taken to mitigate the risks of early stage investing – these are done by design and that design is respected for the risks it mitigates.

That is not to say that I don’t test out new theses or edit my theses from time to time. Last year, I invested in Lyft (through my family office) to test whether the precursor to pre-ipo rounds in tech companies makes investable sense. For the record, even though we’re up 2x, I would’nt do it again.  That being said, these are educated guesses and even though it may look like a gamble to an outsider – it isn’t. Whether that thesis is right or wrong is a different matter.  

Therefore, I believe that when I allow a sense of adventure and gambling in our investment style it can quickly spiral out of control for both me and my team i.e. if the gambling starts to make us money. Our risk mitigations, the paranoia that we could be missing out on something, and the fear of the risk that comes with each investment would quickly dissipate because with gambling success comes a sense of invincibility that encourages taking larger risks. This process ultimately ends (and has) disastrously when the market drops which is inevitable at some point.

Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffet

So yes I am aware of all those investments that I missed out on that could have made me millions, but it would have been a gamble and gambling is not my business.

38/2019

When is the Best Time to Reveal that Your Cofounder is Related to You?

It is important that founding teams declare if two of the co-founders are married to each other, blood relatives or cousins. The team can choose to reveal that after the pitch, but I prefer if the team takes the bull by the horns and reveals the full extent of the relationship before they start the pitch. Investors that have apprehensions about investing in founding teams where the members are related, should decide if they will be willing to look over those issues before the pitch, not after.
Unfortunately, many founding teams are advised to withhold such information or to mislead investors by playing around with the last names to avoid detection, but such sneaky tactics only reinforce the fear that the founding team with familial ties drown out the ethical voice that should discourage actions that shake investor confidence.
To allay the fear of those investors that have the first-hand experience of watching their investment value destroyed due to factors like, family feuds, withholding important information or the family member opening a competing venture, founding teams should be as communicative as possible so that these fears aren’t allowed to fester.
The investor may still decide not to invest in the company but at least the founding team does not lose face when investors find out that the founding team used diversionary tactics to slip one by them!
85/2018

Why did we Invest in Haazri?

There is a serendipity in deal-making once one summarises the events that lead to its closure. Today, as I announce our investment into Haazri, that is how I feel. My first interaction with Haazri was unbeknownst to me, during the long hours that I spent at Yash’s office ordering numerous cups of the chai that almost immediately gave me a kick. I profusely praised Yash’s peon assuming that it was his magical hands that had prepared the perfect cup of chai every time, when in fact the magic was happening downstairs, at Haazri’s kiosk in the Naman Midtown lobby.
It was at an IIM-Indore event that I realised my praise had been misdirected. Haazri was pitching at this event and had brought in batches of their freshly prepared chai for the investors to enjoy as a part of their presentation. I immediately recognized the flavour and feel of the chai. It was intriguing how the young founding team – Dhruv Agarwal, Karan Shinghal and Arjun Midha had cracked the code of making the exact same awesome cup of tea without having any previous experience in the food industry. To test the product further, I invited them to our office for a follow-on presentation nudging them to bring a batch of their tea. They arrived with a thermos full of the chai that I had grown to love. It tasted the same and gave the same kick which was hard to replicate; I was hooked.
What I found interesting about Haazri’s business model was their approach to standardize and limit each menu item right from the outset. For example, ingredients for the chai are individually weighed at a central warehouse and distributed across their stores, which are then used to make a single batch of fresh chai. Perishable items like milk are procured directly from brand distributors and delivered straight to the store, thereby ensuring that there is no adulteration. A similar practice is also followed for the food items on their menu.
In fact, the founders have gone a step further to train the staff on when to add specific ingredients using a stopwatch. This ensures that there is no alteration in taste and that the final product is identical to the last, every single time.
I have studied and invested in many food plays in the past; my family also owns a couple of restaurants & cafes, but rarely have I ever found the level of preparedness that the Haazri team displayed. In their quest to provide the exact flavour & texture of tea to the nth customer, they have developed robust SOPs which have had an exponential effect, something that they themselves could not have imagined. For example, since each food preparation comes with the raw ingredients weighed and individually packed at the central warehouse, the founding team keeps a tight lid on pilferage. They make sure that the number of packets consumed from the inventory either lead to a sale or have a solid alibi. When there is a discrepancy, the founding team investigates and penalises the store staff responsible, thereby letting them know that they are always watching. This level of granular control is what made me jump out of my chair and pursue them further.
The Haazri team maintains a limited menu of food & beverage items which reduce wastage, inventory, staff requirement & sophistication. Additionally, it reduces the capex investment per store to the sub 5 lakh range (including rental deposits). The low capex, opex and wastage significantly improve their bottom line, allowing them to provide items at a fraction of the cost of Chaipoint or Chaayos but at a slight premium to the roadside food & tea vendors – a premium that people are willing to pay for standardised items with better hygiene. The more we dug into Haazri, the more we realized that this fits perfectly into our fund’s investment strategy. Therefore, we decided to start working with them to gain a better understanding of the team.
First, we asked them to explore a B2B option for small offices that in our opinion run an inefficient pantry and delivered substandard products. With Haazri’s low-cost base and fresh standardized products, they could easily replace the live tea & coffee services, or machines. They made an earnest effort towards this approach and have more than 50 B2B partnerships onboard today. This avenue helps them pay for the stores fixed costs and provides a fixed base revenue each month.
Then I asked all three founders to join me in Kolkata where I had convinced the founders of Wow Momos and Chaibreak (an AIV investee), to share their experiences on finding a niche, building a bootstrapped brand and continuing to innovate & dominate their respective niches. While there is no better teacher than experience, learning from the experiences of others comes in at a close second. I am thoroughly indebted to Sagar Dariynani, Muftir Rahman, Aditya Ladsaria and Anirudh Poddar for taking out the time to guide these young entrepreneurs because these interactions led to a positive change in Haazri’s founders’ attitude towards their business.
Once the boys were back from Kolkata, we were ready to issue Haazri a term sheet. The team decided that the company should raise enough capital to be able to open 20 new stores in the next 12-15 months and produce an MRR of Rs. 2 lakhs from each store, so that they could break even at both a store and central level. The founders immediately subscribed to this advice and were excited about the scale that Haazri could generate. However, the DNA of the company to provide products at a slight premium to the roadside vendor but at a fraction of the cost of competitors was always a priority for us as well as the founders. Our research indicated that people in our target market were increasingly concerned with what they had been consuming and didn’t mind paying a slight premium for the guarantee of a standardised, hygienic product.
The investment committee was happy with the work we had put in so far and suggested that we add a coffee option to go along with the tea so that it catered to the larger palate of the target market. I pursued a vendor from Bangalore to provide the raw material that would allow Haazri to sell filter coffee without having to build the complex infrastructure that is required to deliver the perfect taste of filter coffee. The investment committee was happy with the terms of investment and gave their approval. We were all ready to roll.
After a couple of days, our team noticed that the margins had started to plummet. Since Haazri was on our weekly tracker, we investigated the matter further immediately. This revealed that the founders had expanded their menu options based on customers’ feedback. The number of menu items skyrocketed from under 10 to over 30! Deeper questioning revealed that the founders were trying to increase revenues per store by providing more items. My counter view for them was that: while it is easy to maintain the new menu for 4 stores, it would be a nightmare when they achieve scale, running 25-30 stores. They would either have to raise prices or suffer major losses. So, the founders and I concurred on eliminating the menu items that weren’t selling and introduce new ones.
Their fear that the revenues would drop after this change was quickly dispelled as Haazri’s revenues & margins per store improved within just a couple of weeks. This short experiment convinced the founders even further on the value of staying close to their DNA.
Besides the objective of opening 20 new stores, this round aims to build Haazri’s management team to prepare them for rapid scaling. We are looking for a Marketing Head to build a digital presence for the brand through a quirky marketing campaign and an Operations Head who has the experience of selecting, opening and successfully operating multiple stores. The job descriptions for these positions are almost ready and we will share them soon but if you know someone who could be apt for these roles, please do refer them to us.
In addition, Haazri is on the lookout for store locations within Mumbai’s Metropolitan Region. The ideal location would be in a corporate tower; food court, lobby or next to a cigarette vendor’s store. You can reach out to my team by emailing us on portfolio@artha.vc with leads.
In conclusion, I am excited to add Haazri to the Artha portfolio and see a bright and exciting future for them. Now let’s get back to work!
83/2018

The Paripassu is Killing Investor Interest

A marked increase in the number of angel investors joining the ecosystem has led to a problem of plenty for many angel networks. Most of them boast of having hundreds if not thousands of investors spread across the globe. The problem of too much capital chasing too few deals led to a drop in the quality of deals that were/are getting funded by the networks. I wrote about the ills of investments bankers mongering around as angel networks in a post earlier this year called “Angel Investor Networks in India are Dead”. The other major issues that this problem of too much capital in a single angel network have led to are – oversubscription, pro-ration and low investor participation post-investment.  
I strongly believe that founders that have made a deal with a large group of passive angel investors have made a terrible… terrible mistake. This defeats the entire purpose of raising an angel round, which is to get the “value adds” that the angel investor group will provide i.e. help in business development, recruiting, guidance, sales & marketing and so on. A significant factor that motivates investors to pitch in this help is ensuring that each angel investor has enough “skin in the game” to be obliged to invest their time in addition to the money they’ve put in.   
However, due to a large number of angel investors in the ecosystem and lack of good deals, there are situations where active angel investors have to reduce their commitments to accommodate the neuvo angelsWhile I am sure that this is important for the ecosystem, it is truly detrimental for the startup because a lower investment amount reduces the excitement of the active angel investors to work with the entrepreneur.  
A personal example from my angel investment days is a company where I had committed 15 lakhs (~$25,000) in the seed round but got paripassu’d down to the awesome figure of Rs. 95,000 (~$1500) to accommodate 50 odd other investors that were all committing sub 5 lakh amounts. Since I usually calculate a 3x multiple in the follow-on round, the company should be worth at least 45 lakhs in the new round for me to be interested in putting in my time to work with them. In this case, the startup would have to deliver a 45x return in the next round itself to keep me interested, a figure that just isn’t plausible. Therefore, it was a struggle to convince me and my team to help this startup, because a competing investment where we could invest 15 lakhs would just make a better return for our time.  
I am not in any way endorsing that founders reject passive angel money as long as it is a decent amount per angel, but it is extremely important that the founders set aside a large chunk of equity to be taken up by active & prominent angels with decent sized checks that will keep them motivated them to stay engaged.  
Otherwise, founders might realize that along with their company’s equity they have diluted their investor’s interest in it.  
64/2018

KISS for Your Customer

Firstly, I want to thank all the people that have taken the time to reach out with words of encouragement for Artha Venture Fund – I. I have been trying my best to reply to each person individually but if I have missed you out, please do know that your encouragement means a lot to me and my team and due to your support we are more motivated than ever to prove to be ‘the’ investor that an Indian startup founder is looking for.

Last week I connected an investee company in the lending space with an investee company in the product space that was coming up with a higher range of products and wanted to provide a financing option for their customers. The objective was to create a symbiotic relationship between the two parties to create more business for both, so it was a no-brainer from my perspective. However, a week after they were introduced, things were moving much slower than anticipated. Therefore, on Monday, I set up a lunch meeting with the founder of the fintech company to understand the roadblocks that were holding things up.

In an attempt to keep things transparent (his intentions were good) the financing company founder sent over a detailed excel sheet to try and educate the product company founder on how his financing model worked and how the interest that was calculated and collected was accounted for. This excel worksheet completely broke down how this product loan worked. Unfortunately keeping things transparent is not the same things as keeping things simple.

The financing excel sheet became the epicentre of confusion for the product startup and its team and no matter how hard they tried to decipher it, were unable to make any sense of it. This is just like how you or I would look bewildered if a Maruti dealership handed us a bunch of bills detailing out the price of each component that went into our car instead of the final price that we are supposed to pay, the spreadsheet led to little panic at the product company HQ.

Therefore, the financing startup founder, the AVF team and I brainstormed over lunch to bring the loan product to a maximum of 4-5 points. Thirty minutes later we were able to achieve our mission in only 2 points. To test out whether a simpler product would move things along quicker, I reached out to the production company founder yesterday and the interaction you see below is self-explanatory.

Founders make the common mistake of overestimating their customer’s sophistication levels and instead of making the decision to purchase easier – they end up making things more complicated without reason. Founders want to “sound” smart and therefore start to make simple things complicated instead of dumbing them down. This leads to a situation where the customer is overloaded with information that he/she cannot process so they are compelled to ask for time to “think about it”. Although the founder may feel that a person asking for time is a good sign, this may be a clear signal that the customer feels overwhelmed with excess information.

Therefore, I believe that any product’s or service’s value proposition (big or small) should be communicated as simply as possible. The other person should understand the proposition clearly enough to make a quick decision whether he/she wants to purchase the product or not. There shouldn’t be a period of pondering over it, wherein the customer is actually just trying to understand the deal. You can sound smart and make your customers feel dumb (no have no sales) or you can sound dumb so that the customer feels that they are making a smart decision. The choice is yours.

33/2018

It's Official, AVF-I is Finally Here!!

After what seems like a lifetime, I am happy to announce that Artha Venture Fund-I (AVF-I) is officially an Alternative Investment Fund (AIF) after SEBI’s grant of the approval. Our team is ecstatic about receiving this news and we are currently working on the final leg of processes, i.e. signing up Limited Partners (LPs) that have made soft commitments to the fund.
AVF-I will invest in pre to early revenue startups, preferably where we are the first investor (in India we would be called the seed investor). We will invest between Rs. 1-1.50 crores in each early-stage investment and participate in the follow-on rounds with larger cheques i.e. 3-4 crores in pre-Series A and 6-9 crores in the Series A round. Therefore, once we invest in a company, they can (provided they perform) expect between Rs. 10-14.50 crores over the course of 3 rounds, from us (an institutional investor). This is a significant USP compared to the other seed funds because we have earmarked a portion of the fund corpus to invest in follow-on rounds.
We made this adjustment because we noticed that when the seed fund doesn’t invest in the Series A round, often, these companies are unable to raise ‘the’ round of capital that separates the men from the boys. So, we did some research on developed startup ecosystems and found that the top-performing seed funds wrote significant, if not larger, follow-on cheques for the Series A round. To further strengthen our hypothesis, we analyzed the MCA records of the Indian unicorns (startups with a valuation of $250 million or more) and also conducted research on the Artha India Ventures’ (AIV) portfolio startups that have raised their Series B rounds. This research concluded that it is possible for Series A investors to make as good a return (on an IRR basis) as the seed & pre-series A investors. This in turn also led to an adjustment in AIV’s investment strategy over the past couple of years (we started writing Series A cheques in our portfolio companies) and the results have been very encouraging, to say the least.
Even in my informal conversations with partners, associates & analysts of later stage investors I have noticed that there is a common lack of confidence in startups that come from seed investors who cannot or aren’t willing to write the cheque (that is significant enough) for the Series A round. The more investors I spoke to the stronger my conviction was that AVF-I had to make this an important USP i.e. getting the confidence of later stage investors in AVF-I’s recommendations for Series A investments, thereby catalyzing the decision-making process for new investors. Most later stage funds that knew our strategy started actively engaging with us on deals in the pipeline and even sending us deals that were too early for them to invest in. I see this as their endorsement of our strategy and look forward to working with the many family offices and later stage funds that are looking for high-quality deal flow.
Besides our investment strategy, we also bring our founders a large network that spans across the globe. Many of these connections are part of to the business relationships our sponsors have (more on them below) as well as the ecosystem created by AIV’s investment in 56 startups (10 of them domiciled outside India). The close connection we maintain with our network will give our investees a leg up in whatever help/access they require along the way.
I want to thank the people that played a part in taking this idea from a mere concept to a final business model:

  1. Yash Kela who came up with the original idea of starting AVF. He is more like a brother than a partner and it is his vision has become my mission. He introduced me to a slew of fund managers, venture partners and single-handedly recruited the entire Advisory board for AVF-I.
  2. Madhusudan (Kela) uncle for devising our unique fund strategy that ensures that the fund team will only make money if we deliver outsized earnings for the fund and of course the investors. I also want to thank him for his personal mentorship every step of the way and the endless support from his family office. Yash and I promise to take AVF to a level that will make all his efforts worth it and make him proud.
  3. My chacha, Ramesh Damani who immediately endorsed his commitment to the fund idea and got me all the help I needed to remove myself from the daily responsibilities at the companies under the Artha Group of Companies. It is well understood what an early endorsement can do for an entrepreneur’s confidence, and I have him to thank for that initial boost of confidence.
  4. My brother, Animesh, and sister Apurva who joined Artha when I needed them the most and took over Artha Energy and Artha India Ventures, respectively.
  5. Sanjay Gandhi, the legal head of Artha Group. If it wasn’t for his persistent follow-ups with our advisors and the SEBI officers, this approval could have taken twice as long. (He must be the most relieved as he won’t have to avoid me when I ask why the approval is taking this long!)
  6. Vinod Keni and the entire AVF team – Dhiral, Nikunj, and Karishma for continuing to believe as things moved slowly and working on building out the entire referral ecosystem which will power our deal flow going forward.
  7. Sandesha for managing what can only be described as the most gruelling job that anyone could ever have i.e. managing my travel & meeting schedule and doing it with an alien-like accuracy.
  8. Last, but not the least my family for being understanding & supporting me throughout the emotional turmoil that a founder of an early stage venture fund goes through.

Going forward, we are in the process of issuing term sheets for 2 very exciting startups and have also made a warehoused investment for a third (will announce it shortly). We expect to achieve our first close in the next 3 months.
Therefore, if you are a startup looking for a well-equipped and experienced investor, reach out to us on prospects@artha.vc.
If you are interested in investing in the fund you can reach out to us on lpprospects@artha.vc
32/2018

Desperation is the Name of the Game

If all things are equal between two candidates that want me to be their mentor, what would be the difference, that would make all the difference? No, it’s not how equity you will give me or how much respect you have for me… The correct answer is – desperation.
I am not referring to the desperation to get time, money or references, but the desperation that burns through the eyes and words of the prospective mentee to succeed. The desperation that cannot be dissuaded by failure, drowned out by rejection or simply because they didn’t get an immediate response from someone they attempted reaching out to for help. I am referring to that desperation that will make a person turn the world upside down to get what they want – yes that desperation.
In a world of unlimited opportunity, this is the kind of desperation I look for, to decide who I should devote my limited time (a precious resource) to. A person must innately want to achieve the skill he is seeking my mentorship for, and not only be attempting to achieve it because he ‘has to’. This distinction leads to a visible difference in the amount of passion and desperation a person exudes.
The lack of this type of desperation and conviction in the importance of achieving that skill doesn’t bode well for my ROTI (Return on Time Invested).
So, if you think I’m being arrogant, standoffish or aloof to your call for help, I am only checking to see if you are as desperate as you are making it out to be.
29/2018

Fluff Metrics

An interesting phenomenon has been noticed in startup presentations over the past few weeks. Founders have come up with innovative ways of showing large numbers that have nothing to do with what counts as revenues to the startup.
Let me share a few examples with the explanations as provided.

  1. Gross Transactional Value: this the value of the transaction that is taking place because of the service provided by delivering the service. Therefore, a simple example would be that if a truck delivers 5 MT of steel the GTV is the value of the 5 MT of steel which has no correlation to the revenues of the trucking company since that is dependent on the route or no of kms
  2. AUM (Assets Under Management): the value of the videos that have been uploaded to sell to customers. This has no correlation to the revenues as they are made on a pay per click model. How the videos are being valued and by whom – I have honestly no idea
  3. MRP Sold: the sticker prices of the items that were sold. These were very different from actual revenues as there were coupons and discounts that were given. So, if I stick the price tag of a Mercedes on a Maruti the MRP sold would be ginormous but the actual number would be a fraction. These MRP’s are set by me so MRP sold is also in my hands. Do you feel fooled just yet?

Do founders really want to attract investors that are awed by such numbers? Of what use will those investors be who themselves don’t understand that these numbers are useless?
My sincere request to founders is to have the courage to tell me the real numbers. They may not be as awesome as the fluff metrics, but I’ll respect you for your honesty and I’ll work with you until your actual metrics look like the fluff metrics that your peers are showing me.
Just remember this immortal quote attributed to Abraham Lincoln:
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24/2018