Transcript
0:00 so one of the things we make peace with an industrially is proba we get the direction right right M miti I love this word MTI right Burstein report which said that the top 5% of India account for 40% of discretionary spends the next 5% account for 28% India won firing on all cylinders will give you half of whatever growth that India get but it's only half is manufacturing the only Playbook which is there have you seen
0:24 any other Playbook being played out in the world where you know countries have scaled up by doing let's say some specialized services and and have become developed countries and the other thing that interestingly stood out for me was how big construction is like you know and and construction really saved India's ass BCS today if you actually look at it strangely love manufacturing businesses today the fundamental truth is that India is an over ventured country what is the one silver bullet
0:47 that is holding us back from taking this 133% to maybe a comparable to at least at least half of China what what would that be hey everyone welcome to episode 16 of the asymmetric podcast we've had an amazing 15 episodes we love reading your comments and last time we heard a comment on can you do a breakdown of the indust valy report that was done by Bloom Ventures and you know we thought we'd oblige and why not should we oblige
1:19 with someone who's been the author of the report alongside his team for the last four years it's really been an inspiration to follow sajit Pai on Twitter and here we have him today as our guest and honor and to cover the indust value report in as much detail as possible please welcome sajit delighted to be here thank you thank you for having me welcome sajit you know thanks for sparing time and also giving all of us this wonderful
1:46 fourth edition of Bloom presents the report it's fantastic before we even get into it you know how has been the weekend in terms of you know it was all there on Twitter I think for my feed every third tweet was about Bloom I could see some very interesting memes where people are saying okay how long a flight should I book to people ordering a blinket you know print out and saying 10 minutes and I'm ready very
2:12 very interesting things going on but I'm sure you have been in the thick of action people asking you different questions reactions so let's start with that so delighted to be here I would say that you know each year when you publish you're a little nervous about because a lot of Works gone in and I've typically bullied like the analyst who works with me sometimes an associate this time there was an analyst and Associate and we got this editorial
2:39 fellow I bully them for three months like drive them nuts and then you hope that the 180 plus lights this time I thought we went amak you know but there was a clear story line so I said okay this should work but you're always very nervous about the reception and you wonder is it going to be you know the fourth time unlucky or what you know but it turned out to be a rousing reception and especially on Twitter I
3:07 mean I think LinkedIn was a little more muted than I expected but Twitter was amazing and I think all of Friday I got sever of feedback saying hey I'm hearing more about the Bloom Report than the ICC Champions Trophy no congratulations on creating a Content asset that every founder slvc wants to be a part of as Peter the said in 0er to one right don't play other people's games create your own game you have successfully managed to create a new game in venture
3:37 capital and it's very hard to replicate that's the best part about the game right you are one of n in that sense so congratulations on that maybe with that note we should get into some of the most exciting takeaways I know there's a lot of analysis being done on the 180 plus slides I'm sure you already tired of covering more and more slides in detail but the reason to have you on this podcast such as apart from you
4:00 being such a great person in venture capital and being the custodian of this report with your team is we take our our fans and our listeners very seriously and we got a comment last week at the podcast saying please cover the indust valy report so we said who better than to get sjit on the Pod and maybe get his views and give our listeners sort of a view into I know 180 slides but maybe we can capture eight or 10 of the best
4:28 insights in the next 1 hour for the teams well y absolutely happy to do this yeah so sjit I think just to add I think there was one tweet which said that the best content Marketing in the country is done by OBC there is lots to learn here for all startups which are funded by use and other VCS that you know this is how content marketing can really really do W scale you know I have got people
4:55 messaging me from Global VCS saying that oh now we understand you know some of the situations in India some of the market in India so I think a great job done in terms of you know telling people about India what India is about and why it's so unique yeah I think first one of course you know let's let's pick up these slides on consumption and I think the most interesting part you know when I was going through is that you know
5:19 typically I would go through a slide and I'll write questions the most interesting part is the follow on slide will be answering my question so which is which is I think job job superbly well I think one is you know as we know 60% of India's GDP is consumption dbon and it has stayed there for like you know for the time we know this is the beautiful breakup of how India consumption stanks up you know if you
5:46 break up the GDP $2.1 trillion is consumption and then further broken down into retail is a trillion dollars and services is a trillion dollars and then you know a trillion dollars is then broken down into various different retail segments with gross and fmcg being the largest almost 50% I think the very interesting one is the last the chart last right side one wherein online is 7% so it means that e-commerce is close to $70 billion and branded has
6:14 become 37% right so that that that was quite an interesting takeaway for me and if I look at you know compare this India to other countries we are today at as you were saying 2.1 trillion in terms of retail which is the fifth largest consumption Market globally you know largest one being us at least when I was thinking about this and marrying the right side chart that we're growing at 7% if you if we continue to grow at 7%
6:44 we should double you know in 10 years so 2.1 would become 4.2 at least my immediate reaction was okay in 10 years we'll be third largest yeah should be yeah but what was you know what was your other takeaways from this one what does India need to do to get right you know there are slides which have compared in terms of what China where was in 200 maybe I'll take you to those slides I think this is the SL it Compares India with
7:14 Indonesia and China so we were roughly where China was in 2010 I think I have seen different versions of this slide every year I think sometimes it was 2011 sometimes it was 2009 but roughly at ballpark you know and China today is almost $5,000 so I think then the question is okay what does it take for India to go there while we have been seeing that trajectory that gap of almost 15 years can that be bridged or even if not
7:43 bridged will we be there in 15 years where China is today yeah so I think it's a great question and I think you know a question like this can take like an hour just and if you give it a two economists they write a tretis on this but I think in start I'm optimistic about this consumption number growing okay will it be double in 10 years H possible like you know but I also feel that the next few years we're
8:13 going to be hitting a mild air pocket and we're already beginning to see signs of that I think what you're seeing here is really the past decade of 77% growth that might kind of be a little that taper down a little bit U will it go down to like 3 4% no I don't think so but I think it might be a 1 2% lower so the 10 years might go up a little bit more going with the rule of 72 right 72
8:36 by 6 might be 12 years Etc I think my bigger worry is that you know a lot of the growth that we seeing because finally consumption is going to be driven by the dis the savings that I have right I can only consume out of I have to have my needs I have to put Ro C down Maan education you know and then I have products and all of us all of you are creating what called what are
9:02 products which are well beyond the needs and for that I think you need discretionary you need to have discretionary spends discre spends are out of savings and I think for savings to happen income need to go up and my view is I'm very hopeful though that we will start seeing some shifts but unless you're able to see income growth slightly more democratic income growth and an income growth that leads to more savings across the
9:35 sphere per capita consumption or per capita spends will not be as democratized as as it will be and we're going to see a little bit more inequality so that's my only qualification and I feel like a few more structural reforms are required just the just before coming in I was reading an article and it said the last so many years a very different topic it said the mobile production the country has not moved Beyond 120 140
10:02 million or 140 160 million and for the last four years so five years and so sort of what's happened is India gets India moves in these step functions we get this big bump like Gio gave us one pulled us five years ahead and then we kind of kind of just stabilize there and so you need the next positive shock so to say and yeah so say like that is my view to really say that we now
10:26 need to go beyond the slightly lopsided growth that we seeing and am I hopeful about that I'm broadly hopeful about that just to pick up on the threat sjit we saw cuts of consumption which is in retail through online offline and branded unbranded and discretionary non-discretionary have we looked at cuts on India 1 2 and 3 because there are multiple ways to look at this right that you mentioned that we may need structural reforms because you want the inequality to maybe
10:58 reduce for you to you believe that we will not achieve 7% for the next 10 years broadly unless the inequality reduces but if most of consumption is happening let's say in India one and let's put a number like you know Kunal has been saying it's 60% there are various like you're saying 2/3 of discretionary spends happen here but discretionary is not full retail chak for example the full retail May discretionary or non discretionary be right to if India one and two only move
11:28 forward with a certain like we are very familiar with weighted averages so on a weighted average do we believe that we could technically still grow 7% in consumption if India one and two maybe hit the ball out of the park in terms of consumption is that a I'm not sure that's the right thing for India but I'm just from the numbers sake mathematically should be still possible right I would say that I'm very confident about India one okay I'm not
11:59 super confident about I would say India to really the because if you look at India 1 to India 2 India 1 is I would say about 30 million households anyway from I would say 10 $10,000 for Capital Income upwards I kind of rounded it off to 15,000 because it's a very wide range and typically in averages the peak pulls pulls you okay s interrup on this sjit but when you say 10% of population which is roughly 150
12:28 million people and we talk about 30 million households this maap actually never hit me that five people in every household in India one seems a little off no yeah but fair enough I mean it could be a little shorter than smaller than that about 120 to 140 million my sense is that many households are not as small as we make it out to be the average household is 4.8 and you're right typical indiaan household could be
12:53 more like 4.2 to 4.3 but I like take a simplistic one you could if you wish take it around 120 130 also I'll be very honest with you India is a nightmare to get exact data okay so if you want to get exact data you have to spend a lot of time and invariably there'll be some issues there you can't compare to numbers or some issue Etc so one of the things we make peace with an indust is
13:15 broadly get the direction right right M miti I love this word m right Beast broadly what you're saying is you want exactitude dude is going to take you six hours and six in terms of five analysts but if you want broadly ball paath figures I mean you can get it off the back of an envelop in 30 minutes what do you want right you know I take the ball back I'll take M give it to me right you
13:36 know so so yeah so I would say like take it anywh from 4.2 to 4.5 4.6 maybe 4.8 is a little bit of a stretch I grant you that so I would say 120 to 130 million Etc yeah yeah I think but you're right so but the number of 120 130 is also interestingly very large right it's bigger than Germany it's bigger than France it's like you know it's a a huge number like you know so that's you are
14:01 very confident that spending yeah yeah so let a Burstein kind of report which said that the top 5% of India account for 40% of discretionary spends the next 5% account for 28% so roughly top 10% accounts for 68% of discretionary spends and now if you take now discription spend is not like 100% right discription spend is actually smaller portion like of retail so of course it's other way around so broadly out would say
14:31 discretion spends about half like you know of of of of our consumption so if you're looking at 70% half like you know it's around like 35 40% so I would say then their spends also lead to a kind of a what do you call that the it Le to more money and the Fly effect fly effect so I would say India won firing on all cylinders will give you half of whatever growth that India gets but it's only
14:58 half right and the the the fact is you won't get the kind of growth which like for example if you've seen the kind of growth we have seen in India has been that we're not selling enough Hawai Chapel you know we're not selling enough two wheelers is below last seven eight years right we're selling SUV cars we don't selling if you say maruti maruti struggled they lost like thousand bips market share over the last six seven
15:26 years because they had bigger strength Alto and you know your ENT level cars yeah yeah and and the growth is really been in SUVs SUVs has hit like 50% so so I think that's the thing if you want a little bit more growth in the basic products the mass products which are all the your fmcg counterparts bre are screaming because of that they're saying where's the growth in these 8 rupee 10 rupee packs like you know yeah so s has
15:53 isn't that a little opposite of what happened in China I think you have made it interesting point around this that India one or consumption seems to be like going more deeper than it being widening yeah whereas what we read about in China I think after this point of hitting the inflection point where we were in or China was in 2010 it became more widened they had more people coming in and it became more broad-based
16:25 that was a secular Push by the government but your view at the moment is that it looks like that it's going to be it will of course have a ripple effect or second order effect on you know this consumption leading to India to becoming more wider but you are saying it becomes more wider it becomes more deeper before it becomes wider so this deepening not widening has been a postco trend specifically you know I think before covid it was a it
16:52 was it wasn't as Cas shaped as it is now China in contrast in I've seen the numbers 2008 to 12 13 was incredible growth I think double digit grouth and I think they also you know industrialized tremendously which we haven't done as yet right and I think a lot of what we saw in China was really moving people from agriculture which is sort of very unproductive into manufacturing making people travel and a lot of it is not like for example they
17:23 have the hooku system where by you're a migrant in Shanghai or Beijing but you're you're not a citizen yet and you to get a hooku and which gives entire it's almost like someone travels to like Bombay and Bombay are told you can't aail off you can't vote locally you can't awale of services because you don't have this hooku Etc so they been they can be ruthless about many of these things right we can't so in India I
17:44 think manufacturing land is a challenge and many friends I think we can get into that if you want we haven't been able to make those dramatic shifts which China was able to do in the 2008 to 13 14 range so this is yeah interesting I think it takes me to two questions one is let's say if you are running a business in India then how should you be thinking and I think maybe rant and chant can come in that you have you have
18:09 targeted a segment which possibly lies in India one and now you want to expand and build out let's say a VC sizable outcome if let's say that's the case then how should one think about it because you know this base doesn't seem to be widening at the pace at which you want you're going to most likely run out of audiences so then what are the options how should one people think we have different playbooks going around
18:30 where different Etc and I think second question is more macro that you know I've been wondering that what kind of asset creation is India doing really if you think about it you know are we creating assets fun or at least as first principle it looks like that we are still solving most of the things by trading people you know even if you look at it Services it's mostly you know it's it's a great business by the
19:00 way no disrespect for the business but it's a it has a flavor of Arbitrage which we leverage right and more so today in hii world where it comes in and we are not putting in emphasis or is maybe my question is more is manufacturing the only Playbook which is there have you seen any other Playbook being played out in the world where you know countries have scaled up by doing let's say some specialized services and have become developed countries maybe
19:23 those are the two two things which you want to pick up okay what's say it's a long question and there's lots to unpack maybe I I'll start with the last last two so I think you know there are clear histories of countries I mean the four Asian tigers and Japan and off off late I think Malaysia to an extent which have been able to move from the underdeveloped world to developing to develop okay and all of
19:54 them have had us been had had manufacturing at the CLE because it's only manufacturing where you able to move large swaters of the populace from agriculture which is typically where they are working into something right Services is not I think challenge Services is India made it work but historically services are not tradable right like like like like know you like lot of services are like like your barber shop or medical like you historically you I mean for for some
20:23 time now I think the barber shop is not going to be tradable medicine is still not tradeable because you have Tel consult but India incredibly discovered this tradable Services model through it and not professional Consulting Etc right so we were able to move some people but numbers are tiny like if you look at for example our entire Workforce 1.4 billion people 500 to 600 million 600 close to 600 million people in the labor force of whom the formal
20:50 labor force is under 10% which means the people who go to these offices like Services Company Etc they less than 50 million people and and and that's tiny right like what you want is like 150 million people moving into that and that the stuff right and now with AI coming it's scary so I think that's the fundamental challenge like it's just not sizable and I think we we kind of looked at the labor this thing and I
21:20 have this charts which actually talk about how many people are in in the labor force and what I've kind of noticed is IND Tre is about close to a third of GDP but only not even a quarter of the populist works there and I think you need to kind of change that like you know and I think struggle has been really like and the other thing that interestingly stood out for me was how big construction is like you know and
21:45 and construction really saved India's ass really to say like you know because manufacturing has been not as dramatic as we expected and but construction has been sizable so I think these are some of the thoughts what are going through my head so I think should think without manufacturing without industry tough I mean India is impressive in the sense that you created these gig workers who are like low in services and I I grant you that it's impressive right and
22:11 we've got I don't know how many the actual numbers 4 million 5 million I grant you that it's impressive and startups in a way are really powering so many jobs but I think without the big manufacturing sector moving you will struggle but I could I'll pause you and are you you know are you guys seeing any early signals of you know India having you know manufacturing boom in place let's say in the next decade or so while we keep seeing you know some of
22:38 these low assembly Works you know Electronics which is started to happen in India but the kind of Boom we need are we seeing you know inputs of that or essential ingredients going there yeah you know been very impressed by some of the steps that the government has taken and you know I mean announcements and but when I actually look at the data and you know I actually saw Decline and and there's this chart on page 49
23:06 which talks about manufacturing value Ed as a percentage of GDP and if it's declined by a percent odd in the last 49 and it's declined by a percent odd in the last few years and that kind of took me by surprise and so and if you look at it India's reacted well whenever we've taken harsh steps like for example toys is a great segment just our room air conditioner was very impressive we just banned it and once we
23:34 banned it local folks came up but you can't consistently ban and you know otherwise Mr Trump is going to come calling saying what are you doing like you know you got the highest tariffs up and all that so where have you taken these steps both toys as well as bands it's worked where you become incentives it's worked like smartphone industry Etc to it's work it's just that why isn't it working by natural like you know why isn't it working organically
23:57 they're not too too many strong stories of organic manufacturing you know because and I think it's just hard to get like you know get that land skill labor you know combination going I think I think that's a fundamental chall I think you have made this interesting point around land Capital land come yeah I think we'll I I'll actually answer your question one later CH but just on
24:28 this manufacturing point I have a followup sagit why would it be not okay to continue Banning this see I don't think I don't think Trump would have a problem because most of manufacturing anyway is now happening in China when we Bann toys actually What stopped or what became expensive is the Chinese Imports so my understanding is that the Indian government broadly has to incentivize Indian manufacturing but they also need to make sure that the Chinese cheap import Stop because nobody
24:55 can compete with China on efficiency cost it's just mindboggling how efficient they are in terms of cost and speed both right actually cost speed quality all three it's just absolutely amazing right so it's not ever going to be a Level Playing Field unless we actually ban and take that step which I think from a nationalistic perspective is fine every country is in some way reversing their globalization stance that they took for the last 15 years because they are now realizing that hey
25:25 when we were taking the STS the only nationalistic 's country has actually outpaced everybody in GDP and is now self-sufficient so they have realized that there's a new sheriff in town and the only reason that they are who they are is because they took nationalistic approach versus a globalization approach and now everybody seems to follow I think India's taken that stance 5 years back Trump will now take that stance at least it seems that more and more governments will start taking
25:53 that stance at least that seems to the common sense way of approaching the next 20 years so I don't necessarily think there is any other way and it's okay IND if we have to be in some way little Shameless about saying that what serves India's interest is the right way in the end we because nobody's coming and solving for India's interest Whatever USA money was coming in is also going to now stop any right so we only have ourselves to
26:22 we can only save ourselves and the way to save it would actually be maybe to be more nationalistic and then incent manufacturing which has worked as you said in toys AC's mobile manufacturing seems no reason why it will not work in quite a few other sectors as well and the other point I wanted to make chak was on your first question that if India one consumption will continue to grow how do startups think about you know
26:45 deepening of markets I actually have a contrarian view if you look at the last 15 years all VC companies and all startups that have gone IPO have built for India one largely except for maybe someone like misho so they have found gold at the bottom of the pyramid but one of the rare cases in that case right whether you look at even just pure e-commerce in that sense broadly while Flipkart may serve 200 million e-commerce users I can guarantee you
27:11 that 90% of the profits would be coming from the top 50 million users itself sui makes most of its money from the top 200 PIN codes so you can't beat the fact that 60% of consumption is with India 1 will remain maybe 50 to 60% I don't see any reason why there wouldn't value creation or I mean does it rate limit the number of startups that can succeed every year yes I think that could be does it rate
27:36 limit the fact that VC funds suddenly can't become $2 billion like in the US yes to deliver a mik I'm sure sjit will have to still keep the fund size a little smaller than what right so but it's okay right we we've done well in the last 15 years we just have to be patient and believe in compounding as such so does it is it more nationalistic to have a more nuclear inclusive India 2 and India 3 growth yes but I don't think
28:00 the Venture Capital ecosystem or the a Founder who wants to worry that hey how do I become a make a large startup if I only focus on India one I don't think that should be much of a problem at least that's my view I completely agree I think if you if you are I think s point if if top 10% of India is accounting for 70% of discretionary spend I think that that becomes obvious then that especially if
28:21 you are going to that that's the market that's the creb you want to have first and kind of get to product Market fit scale Etc and then and because getting to India 2 India 3 also comes with tremendous logistical battles whether whatever whatever product or space you're in India is a complicated country like we have GST registrations in 26 States like it becomes complicated even at our scale to kind of make it work in India so I
28:46 think J to your first question I agree with rant that I think fundamentally if you a Founder in the space starting out today then if you're able to get the cream quickly then your ability to kind of then influence growth downwards and and and peripherally to to Metro India becomes a lot higher I have a different questions for you when it comes to manufacturing so like you're right I think on page 49 of of the report it's
29:11 very clear that electronics toys air conditioning I think whether because of structural things or you know kind of even Enterprise Investments we' have seen things take off but what is what is like you have spoken about the underperformance what is holding us back I always like even I think ran chag and I have discuss this multiple times on this podcast also before that why are we not able like 13% compared to Pi much lesser is it a talent issue is it an
29:35 intent issue is it a is it is is it is it a government blessing issue where you know sometimes just you know hard brutal calls are required like what you were discussing with with what China did maybe 15 years back but what is if you were to say what is the one silver bullet that is holding us back from taking this 133% to maybe a comparable at Le at least half of China what what would that
29:59 yeah oh it's a great question shanto so wondered about this a lot I don't think there's one Magic Bullet but I would say a lot of India's challenges are really down to land and land related aspects right and we'll I'll give you three four areas in which land becomes complicated okay one we've spoke land addresses are not consistent okay the same land will have two different three different addresses and
30:29 sometimes they're registered in two different names and you know because they're two different addresses Etc and that's one two the way land use is regulated like for instance in construction I think in Maharashtra or some place when you U if you have a thand square yard plot you can't construct on more than 55% of it or 45% of it I forget what you can't do 70 80% you got to 45% now I understand
31:01 there was a reason for this in the past maybe you wanted some space for the fire engine to come fire engines at the time maybe could not have those things which could reach there and spray they had to physically go close by or I don't know what other reasons were for example it's legal to keep a spit in the workplace God why like you know you know the hundreds of rules and but fundamentally what it means is
31:25 businesses struggle to acquire land and the government such particularly good at that is Gujarat like you know and which is why a lot of manufacturing is Flowing there or maybe in Tamil Nadu where like for example a little more better land records and it's not so challenging Etc so anyone who sorts out land I would say as a government has just focused on let me get large land PS together like why are you seeing NOA grow like you
31:48 know for example like we are ourselves evaluated setting up a university as I used to live in Bombay and in 2015 shifted to Noida like why did I shift from this thing is because we looked at where large land passes were available and it finally came down to NCR because you know and and and the government there was a little more willing but really it's about large land PS because NOA it was lot of reclaimed land or whatever and you know so I think
32:11 it's a lot to do with land I think is one where if you can improve regulate usage of it if you can kind of incentivize that better like you know you can have dramatic impacts there's actually a very interesting part about why India like holds so gold and one of my Joseph has like made it his life's mission to evaluate this I keep joking that he's malali and as all malis are obsessed with gold which he say it's
32:35 true like you know but yeah so Joseph has that made it his life's meion to work on this and one thing you found out was because land is land records are so bad addressability is so bad collateral is so hard to enforce on like you can't take land and get a loan against it as a result people keep gold like you know so and that leads to all of second order effects Etc so land I think is one area
32:58 where I would say I would try and streamline that but there are other aspects as well on land s is this is this a design issue or is this a choice issue like do you think do you think that when you when you see opaque asymmetry you typically assume whether it's happens chance or someone is designed it that way because clearly it's the most important asset right so what's your view on that because if that is the case then then it then it
33:22 is then it needs to be solved if it is something that just happened then we have to figure out other way so I'll give you an examp a parallel example it's like why is Gujarat a dry state right like you know Gujarat is a dry State because at a certain point they said no we don't want anything now Gujarat is a very prog now Gujarat is like really growing fast Etc but it's not got as big of a tourism industry
33:43 it's not got as big of an IT industry why because you know people look at and say yeah driet whatever whatever today they can't change it easily why because there's a mafia there that has come up which is very happy for the D state so that they can make money up so what I mean to say in like land over time see India is a wonderfully adaptive country right over time people have come up whose job is to make money Sol problem
34:06 of land they'll manage this they'll manage that Etc and so they will never for now there will be a strong check on making anything streamlined there will be enough reasons Etc to say why we should not do this and lots of arguments will be given Etc so I would think it initially starts out by choice but over time it just gets stuck on whatever you want to call it Des I not yeah wow interesting I think what you're saying
34:31 is that it's been there long enough time for people to now make Industries in that status in that and assume that it's going to be like that and whenever there is an attempt to you know change that status quo there is a lot of resistance which comes in whether it is in form of red tape form of Mafia it does come in but C for example if the GDP of the country has broadly and even I think the
34:54 the report also says it a large part of it has been propped up by government spending a large part of that on infrastructure s s is saying construction has really of Saved India's ass at the same time land is where opaqueness of of of of of value creation is maximum there is there is clearly something there that that you know that that people are kind of holding in in in in a way whether it is information or
35:14 or the asset itself that that maybe kind of now now might be a a headwind for our growth because you can't like a few just a few people cannot cannot cannot hold access to that yeah abely yeah the other one today you know building on on what you had shared that why can't the Indian government just banned certain sectors and I put High tariff WS Etc I think they will try and you're
35:45 right it's not like the US has flourishing Industries there that they can come and object I think the fundamental issue is and you valuted to it it's so cheap so what happens if you ban typically Indian products are more expensive so there will be it will be inflationary the second thing is for all these products right the intermediates also come from China it's not like the intermediates are made here and you know the intermediates will be come from
36:07 China and so that is I think the fundamental issue I think the government would like to have more industry but the challenge is that all of Indian because the volumes are much smaller China not only makes for its domestic Market which is large which is five times more than India like you know the GDP and this thing but it also makes for the world so what what what it means is that you scale manufacturing means it's far
36:32 cheaper to make there so India I think the challenge for us will be yes we can encourage atbar we can do all that we want but in a country of ours with $2700 per capita income it will be inflationary we will be comfortable we we are okay we are anyway the people who have most of our products coming from the West we typically buying uni CL which is made in Vietnam we buying Apple which is today Made in India but till
36:53 now it is made somewhere else like you know or China so we will be comfortable but poor people will struggle a little bit so I think these are the hopsing choices facing the Indian government yeah but I have a question again there s if 60% of consumption is India one and if you see what has been banned was mobile phones ACS Toys effectively I think the government is specifically going after the India 1 consumption and I know pinch
37:20 will be failed by India 1 also because India one is also was on Twitter for the last one year saying B the taxation is too much the government did help right we will figure out out of w for put more money in your pocket because I had the same question on what Trump is doing right now and wouldn't it be inflationary but I think in the it's a question of what is it's exactly what I keep telling my team as well right
37:41 hard today easy tomorrow you need to sometimes take a few hard calls so that the compounding effect will actually give you a lot of easy life in the future to short-term pain I fully simp I fully agree with what you're saying we have to take these short-term calls and I think a good way to approach is to specifically choose India one heavy consumption items like you know and AC is a good thing okay so for example air
38:09 purifiers why does the government incentivize air not that the poor people don't need it but every rich person will say that I don't mind having five in the house correct like you know because you want it to complete so yeah government and finally it's a very simple device like you know it's not not a very complicated rocket size like you know so I think some of these things can be encouraged by the government for sure I agree with
38:33 you on a side note air purifier in bathroom is a separate use case one must be one must discuss separate separate very true very very true very true I think people will also get a Quee on this sjit that I think you're going to get three applications in the next one month from Founders saying I'm building the air purifier from India so please watch out for some of those yeah no absolutely happy to if it excites
39:00 one founder to build for India happy to outcome achieved if you're in NOA I don't know you been to the zetor facility we we visited like a few few days back boss like on that note I think some of the two lakh square foot of just state-of-the-art stuff like my team came back and said like you know this is this is something like we've not even seen in China so some somewhere I think people are kind of really kind of pull
39:25 pulling pulling their attack together I think and that's the thing right I think how much how much time can we kind of really depend on government spending to prop up the GDP I think private Enterprise has to step up from an innovation standpoint and scale and it's good to see this happen even at at younger younger more new age companies as opposed to kind of just depending upon Automotive sector or you know phones and electronics have typically
39:46 been more established companies and by Design obviously take much longer to from a decision-making standpoint it's good to see younger companies do it as well I think in our in our we you know in our in our office building Aman and the both team is on the ground floor I think panel who heads their supply chain has spoken very publicly about how how kind of bringing it all to India and setting it up I saw Aman the
40:07 other day with president macron and Mr Modi kind of talking about Manufacturing in India as well so I think top of mind to he across across the board no love to see zetor and all of these really take you know kind of hit acceleration love to I'll pause you yeah but generally you know out of curiosity Rand chandu is it easy setting up Manufacturing in India or is it like really really tough I have no clue
40:34 by whenever I was at McKenzie now whenever I was at McKenzie and we used to serve like large clients right like large revenues in the few thousands of crores cash you know cash in the bank the moment there was there was an opportunity to deploy cash in manufacturing Factory people would just immediately whether it's vanta group adani Amani you know UPL whatever the first first thing they would do is that was the mindset because you know
41:01 the kex Ros was so clear in those spaces and if you look at China also the thing that they have done across across product lines is that they just put crazy Supply and they pick up like for example plastic polymers they picked up category by category and just put in Crazy supplies and then kind of push the cost cve to the left fully and you know kind of out competed to the world right so if you know how to do it and and
41:26 the play book is kind of standardized it's it's it's it's it's a no-brainer to do it the issue is a lot of us are kind of doing it for the first time you you start off you know you can't you can't I can't go to S get out there's no way we're funding that right so you to like for younger companies to to set up manufacturing is a difficult thing but most traditional businesses have always kind of been
41:49 Factory are you saying cost of capital is also a factor here a different class of capital for to be fun because VCS will Capital yeah generally we are like entrepreneurs are like more inspired by doing more Tech things and these physical offline things come out to be as and you know some of these things become a dread whereas India needs asset creation to happen no let's break it down into two things right first Venture
42:20 is usually for nonlinear models and Manufacturing is a linear model in some case so Ros let's leave that on the site but to that case like I can give you a Nuance context because we have backward integrated the difference is we don't operate that factory we were not experts we didn't know how to do it but we partnered with someone who knew how to do it and we effectively funded that so I went to the board which is VCS and said that I need
42:50 to deploy x amount of money and the obvious question was that what's the net benefit and the benefit had to clearly crew in terms of you have to show that in the pnl that was it lower CAC was it higher conversion was it exclusivity of Supply what is it that you will get that effectively you will get a alpha on your business where you are trying to scale nonlinearly because a factory can't scale nonlinearly but can a factory help you scale nonlinearly
43:18 is where I think the mat fits in which very few people have done so let me give you an example of how e-commerce companies do Logistics like for Mish show to have said that I will first build out a business model where I connect buyer and seller and build a network now they are saying that I will put in the logistics capex to build out the logistics also because it is going to help me compound this nonlinearity of
43:39 scale on the platform and that investment then becomes more like a kex heavy investment but it's still to power the nonlinear outcome versus actually create the nonlinear outcome in a standalone setup I I hope that sort of made sense no but R I would disagree I don't think factories are not are are linear out factories have historically been linear outcomes in India because I don't think manufacturing promoters or manufacturing first CEOs actually thought nonlinear in the way they could
44:03 kind of sweat the factory so let me give an example right if we look at Samir at Hindustan Foods he put in the factory and then start started linear stacking brand on top of it and suddenly it's a 2 and a half th000 CR business that that is built off of like a like a three four factory base but multiple brand on top of it so our traditional approach Factory you know conversion that will never have nonlinear outcomes which
44:28 let's say a VC or you know that kind of capital will look for but if you're able to say I will own the manufacturing and then kind of build brand on top of it which is for example what you're doing or what lenscart would do or a lot of lot of companies are now thinking about that's where you're able to combine both and I don't think it's an either or I don't think there's a choice there I
44:43 think you can actually do both if you're smart about it I think Fair Point the only limited point I was making was Dem Factory and maybe R double click on that key let's say if you were to go day one and say and I will get demand will it be very hard for you to raise because of the scarcity of capital and maybe it originates there I would actually still sell and assume that let's say my gross
45:12 margin today is 50% because I don't own the factory I will sell at a loss and say that factory 50% 70 but I still need to prove the demand price point or marketing dollar demand I losing money right now on cm2 but this will become positive if I put the factory but I don't think anybody will back the fact that demand see even for AAS if you look at what he did he bought existing factories which had clients by the way
45:39 even for Hindustan food shantu you have worked with Hindustan Foods where you were his client they already had a demand book where your asset turnover was clear where you were actually making money and then a right so I'm just saying that that's still a linear model that has potential for nonlinearity because lot of Manufacturers are now building Brands right and coming they are part of forward integrating they second generation third generation are putting that but I think if you look at how to
46:08 get Venture scale I would still get an existing like I tell you another interesting model that I just backed a Founders is a second time founder he's going and taking licenses of existing brands in a category that they don't operate in and he's saying I will get in manufactured and create this brand for you but demand set like so his point is will back that because
46:39 likeis will take but I don't know maybe we are three operators debating this AIT you are the VC you should tell us what would you back no I think with wec see there's capital for every kind of risk and I think what inv don't like is uncertainty RIS they can live with and RIS they can price whatever can be priced they will they will be and I think I think the seed to say I think sometimes even the
47:08 series a stage but typically at seed seed pre series a I think to a certain extent we're willing to take some of the demand risk to a certain extent but yeah but this example that you gave where super super kind of reduces that risk so I would say that that improves the the the the the the VC transaction gains for the founder right it kind of improves the thing that oh wec wow this is like drisking of the model so to say right so
47:36 but I would say see to I think PR serious stage some of the VCS can take this risk and the other one is I think I love the example that shanto gave of zetor and zetor has been one of my favorite favorite modles right it's very unique to India I don't think ZW type of model like people ask me yeah give me one or two models that are only in India right and then I have these
47:57 Choice set of three four Etc and zetor is one of them because Zork took advantage of India's fundamental issue that undersized manufacturing and they said a this guy's got only some 400 workers this guy's got only some 600 workers but if I combin them then I can kind of you know pull together like 2,000 workers so but fundamentally created the initial product was Cloud factories like I would take your order I would split it across these three four
48:22 and then it thought of very interesting things like oh the real reason why delays happen is these guys wait for the lowest prices they don't care if it's late or something they wait for the lowest prices and then they put out this thing so if I give them the material and treat as a labor only this day then I can get it faster and now I love the fact that they have the confidence to set up these huge plants Etc yeah I
48:44 think I love the debate on between here and I think VCS today if you actually look at it strangely love manufacturing businesses today okay I don't know what has changed but there was a time when I came in 2018 to a little question able like you know so and I think one of the most interesting things that happened is from 2018 to 24 a lot of businesses that were very hot have become not so hot education lot of
49:08 businesses that were little questionable key you know have become manufacturing is one of them for example bold care type taboo products have become a lot more acceptable even therapy it was not as like you know acceptable Etc so I really love the way these one has gone down one has gone up very interesting oh this this keeps swinging between thin stack versus thin stack thick stack you know that India May because Revenue
49:39 pools areed how do you build out a decently sized out if you're building a thin stack business and then you know while that manifestation is also right that you start with proving demand get to scale and then you can always integrate backward and get to thick stack but it's easier said than done companies have proven it you know another s unique company which you were mentioning is lcard I'm sure it's on your list they have also done a very
50:04 unique fully integrated full stack yeah lenscart is of course not unique in the sense like it's a it's a definitely a special Indian company but the business model their say is not unique but I love the way they've been able to kind of work backward the other one I would say you know chaga that a lot of the companies we you start out with India 1 and then at some point you'll have to say that can I for
50:29 example there is a certain kind of tan or really like aom a serviceable obtainable market and then what you will look at is and say that can I kind of expand that t by adding more skus second is going a little more full stack then there are ways in which you can kind of go into what we call India zero which is abroad right which is sort of one Trend we are seeing the second is to really rethink some aspect of your
50:54 product and make it more amenable for India 2 like even Ran's products right India 2 also has some of these needs they also want to look good they also don't want to kind of lose hair right they they have their things but it's just at the price point at which he operates right now so he'll have to rethink fundamentally what it means right right you know so one favorite example of late is this whole truth which is this energy bar for people like
51:19 us right and there's this biscuit that I Rec came across called takat which is really you know which is energy energy biscuit it's not even energy bar energy biscuit because if you look at why glucon sells why glucon is such a huge brand is it fulfills that need for cheap carbs you know chai glucon d whether it's a driver to this famous picture of the Indigo owner was snapped having Gluk on D with you know chai so everybody loves this carb kick
51:48 and I think so would say like really that would be the other way around where you take your product as it is engineer it for what is acceptable a mass level really and and that is sort of the other way to kind of grow D interesting we can go on and on we have been only discussing India one you know I can spark another debate by saying Red Bull versus Ting but let's I think in interest
52:15 of time let's move on to one another interesting section on the report which is also you know one of our favorite topics quick Commerce I think I'll quickly take you you know or SJ do you want to take us through the report and by the way by the way sjit big big kudos for putting Feats tweets throughout the report it made it such a good read explaining India one 123 to Modi G that is fantastic but yeah yeah you know I think
52:45 with regard to Qui Commerce I think broadly there are you can read that as a set of slides which cover a few themes one is that it looks at the growth W like grow so crazy okay then it looks at why is quick Commerce worked in India and not in too many other markets and there I think the fundamental story is that we kind of India is a great example of Leap Frog leap frogging right like we have like whether you take
53:11 landline phones whether you take Wi-Fi whether you you know we've kind of skipped them to go into Mobile internet and s same way we have skipped modern retail dmart is about the only one and of course it will grow art will grow specifically but the whole modern R category is a tough fun for India because India is country where baring a few of us right but even folks like us our type of shopping is UN is very
53:39 different from how people like us when we go to the West shop we people like us will go to the West once in two weeks we'll go to the Costco or kers or Walmart or something like that we stock up we have humongous huge eyes refrigerators we'll put everything and and very rarely will we do what are called topup runs topup are expensive like like the like you can and this is one of the thing someone told me that I
54:04 can't do impulsive shopping in the US in grocery if you do impulsive shopping from the coral store you will spend for exra amount because us is like that right there's no MRP anyone can charge what they want basis this thing so so modern L doesn't exist in India and that is what is given basically the foothold for quick commos to kind of come in and then of course the whole density and all that angle so so this is the second
54:27 section that why does quick Commerce work in India third is and yeah so there are the slides Etc third is how is quick growing and one of the most interesting thing is quick started out and zof CR to them they started with thousand skus and blinket came and said hold my be like you know whatever they hit 10,000 SKS right and they're selling Electronics they're selling this thing Etc so and they also expanded fast into more
54:55 locations then zapto to its credit has grown in a little more Capital constrain Manner and they got into private meat Etc so zit has not been so much into private labels they been more sked then advertising yeah so these are all ways in which they've expanded time or margins and so we looked at some of these growth levers so to say that's really third section then we look at implications like what is who
55:26 who is goodcom good for great for Brands such as yours right like you know chanto and this thing because fundamentally it's a new channel right it's a channel that allows you to get democratized very fast and something you know makes a Level Playing Field and this sort of like we invested in a small amount in the S brand the of numbers are getting on blinket is crazy right Soom is very friendly to disruptor Brands which d2c
55:51 Founders are building so d2c Founders love quick Commerce but at some point you know Amazon we've been there done that with Amazon some point some of these guys will say hey the staty looks really good these guys all manufacturing in China I can also manufacture in China and bring it here then we'll have to see what happens right so as of now K is a friend to d2c sort of a friend me to fmcg and for Kira they're just
56:16 eviscerating kirana so if you if like and and and and that's sort of I think the fourth one and finally we actually said look let's take a first principle look at this and one of the things I've seen it in India like is India is a country of like eses and the way eses come in India is the they have this the vertical part of the es is very steep right once once a category like if you
56:39 take food food delivery take e-commerce suddenly you see you have this year of crazy growth like 2015 or so in e-commerce 201 of 1718 in wood delivery and quick Commerce is now one two years so then what happens tapers fast because there is a natural see end of the a $2,750 per capita income there are only 30 40 million households finally like you know how at some point the discounts stop and already if you look at some
57:08 of the data that some of the analyst reports are sharing and it really has two kinds of analyst reports right one is analyst report hopes to kind of be a left lead Banker or one of the bankers for zepto right and there I've seen like this report which actually looks at blinket in fy4 I did you not to f49 to get the data to do it DCR okay so that's the sort of this thing the project f49
57:33 then there the people who know that let's write a very provocative report and build a brand so we've collected all kinds of reports the looked at some preed reports and finally my colleagues had to beg me like you know so so so so so then so I think some of the the two reports if you looked at very interesting and one was a Burnstein report one was an HDFC report which kind of said boss pin coding which are so
58:05 attractive now querce would prove it wrong see no founder is sitting and waiting for Equity analy to tell me how to run my business the great Founders right they don't read all of this everybody said down down down and he said you like you know I'll show you how start the chart of the estimated versus actual zato yeah number I think that's very very very eye opening right yeah but slight disagreement there sjit I'm sure when zato was going for
58:33 IPO even they believe that these numbers they would hit because everyone says management estimates in the end right now the fact that I completely agree with you the steepness of the scures also stops very quickly especially because zepto will go public this year and the pressure on all three stocks is going to be livid considering how much money they have raised right so they will have to rationalize if I can call it their spending on on customer
59:03 acquisition on you know discounting and stuff like that very soon and that will bring some sort of Sanity to the market but completely agree on this that we we seem to have a period of very rapid growth and then we have the stabilization framework where the real gmv starts appearing like nobody expected food delivery to slow down so much but what we are seeing is as soon as you wean off wean people of discounts wean people of the free deliveries the
59:33 real gmv of India start showing up absolutely discount discount to move channels suddenly we are seeing people moving to onc yeah I want to build one build on one point ran said that the real gmv I think it's a very perceptive Point vs had something similar to me like he said now he said we never look at MTU million like whatever like monthly we look at twice monthly transacting users he said monthly like for example here actual zato monthly transacting
60:03 users you look at people who do at least two transactions the number dramatically reduces in India and I've looked at stock market data on this the moment you put some size crer whatever number that is being claimed account number it just drops dramatically so India is a country with like the depth only at the top right 10% so this is other point I want to say that and broadly agree with ran that the real GM that is of discount of the
60:31 steroid shots right I play GM steroid whether is Discount free all that really you get to see what is the truth right yeah I agree with him yeah we've seen this with ubera also no like we always thought that that's the large Mobility Market but the moment the discounts went away then it suddenly became became a lot smaller Market so and then that's where the whole amount of capital to go in did not did not you
61:00 know kind of live up to the abely on top of it we realized that there is a new India specific model which emerged the namay yatri which said that you know you can't charge as a it as a percentage of let's say the gmv flowing through you for cars rights it has to be monthly subscription it Chang it has changed the entire Revenue business model of that sector right now in fact Uber is also admitted or have
61:26 changed their India pricing to saying that Autos they will charge subscription fees yeah no I think I see this as three levels right first is that yeah I'll do what is working there I'll do it here right which is like which is like your Ola Etc right then you look at then there are the more intelligent variants of that like Rapido which says yeah let me look at the fundamental product like you know two wheeler people need to go
61:52 the two wheeler so that comes with much better unit economics Etc then there are people who already question this whole thing that know let me go even more deeper that what really do we need to achieve and then they change the model itself to like namay so Ola Ola Ola Auto Rapido nayri I see as like they like Version Control version you know version one version two version three whatever you want to call it I love the way you
62:16 have put it we have been here before yeah I think that's you know we have certainly been here before if you speak Toc he would say that you know whether are a rider on quick Commerce or not they will say that we've been here before we have seen this happen before you know all money going in and suddenly you know grow tapering off and like you know there is no excitement around the sector yeah but you know sometimes
62:40 all of this realism can be dangerous in my profession my profession is about at least at this St a little bit of Unwritten optimism so I do I do fight it and sometimes you can be too intellectual about it right both angra like you know you can you can bring in too much angrai and right now anything quick Commerce anything it smells of quick Commerce will get funded right so whatever quick Commerce Services they'll get funded so it's a it's a
63:04 particularly interesting time to be a VC who is not as bullish on quick Commerce but appro full I like some models like for example we met this company I mean of course he got funded super fast when I met him and he said sir oh I know if the appointment so I said okay no problem sir I got it like you know so he said like he met a VC met in the morning and then they told him AR you fly with
63:30 us today so he did not change he flew with them from Bangalore to Delhi met the partner and then either that night or the next morning they gave him a TS so he was in quick Commerce for some particular this thing so and I heard the story I blow like like wow V also quick not quickest sheet yeah it's quick sheet yeah quick good work one company which should get valued
64:02 more is go quick then absolutely is never happy with his valuation so sir a little hard question for you s and sorry for putting you on the spot on this but no not all considering Venture returns from India have taken a lot of time like the average return for the first few vintages has been
64:34 roughly 14 odd years and while it's getting faster now for funds the most lucrative option that we will all now talk about is the deepening of the Indian Capital markets so the Indian Capital markets are now turning back and saying that boss you guys really scale a lot but when it times to deliver profit the real gmv or the real Market size is shown which is not as exciting as what you projected when you wanted to go IPO
65:02 right do we see a tapering of expectations or maybe some of these realistic questions coming in that yeah great at seed and series a we can be excited about the potential but the eventual exit that we will get is going to be on a successful IPO and every VC is very proud to talk about seed to scale to IPO and the because at least from what I read on the street and I am old enough to have friends in mutual
65:26 fund industry because that was you know when we passed out in 2007 8 9 this was a big industry right and most of them stuck around half of them are fund managers who just give me a very big dose of reality when I talk about my business and they're like BOS free cash flow right and like today I was having this meeting with my team and they were super excited saying 70% growth I'm and so we still seem to be making that
65:51 choice between growth and AA and eventually free cash flow where the real growth rates even for maybe traditional businesses like Brands seem to taper off and we seeing that with honasa as well right as there is question mark on ABA growth rates are coming down so in a limited time like India and if we are saying that we are still constrain to India 1 which is just deepening and we are not able to grow broad some of these
66:15 things just sort of beg to question as to how do we really see Venture outcomes in India and what's been your thought process and how's it been evolving over the last one or two years seeing the data that we are seeing from the public markets as well it's a perceptive question and it's it's the it's like a Chuck view each each thing each each answer or continuing answer pulls me more and more into a dangerous trap right because
66:42 the fundamental truth is that India is an over ventured country I done this analysis in 2018 where I looked at India one which is really the consumption size and Tor India took a 10% up l know I added it and I said looked at equivalent countries like Mexico turkey which are in size right and I saw that we are like 22 exercise 18 exercise so then I sat and analyzed why it is and there many interesting reasons India is like
67:10 lot of people in Silicon Valley then India is a big Market the next China all of that combination of these factors so the thing is and and the Western you know funds who deploy money they are some of them have seen good returns it depends on which fund like if you put money in the Axel flip cart fund you did well now the other part want you as operators Founders you would think about that is the exchange rate so I met
67:39 someone who had put in 2014 or 15 into a fund 61 rupees today it's at 87 he's saying by like you know how like like you will have to generate far more returns and that's a pressure on us right so the exchange rate is fun so because a lot of us have foreign Capital as a pressure to generate to do even better to return money back now negative is the fact that we do have an undersized stand and even though
68:09 people have got a little real estate they know it's not like the 400 million middle class but still they get carried away right the moment they see growth and the other thing is I would love to do a study at some point if I get a summer intern of these these sharp growth patterns right they tend to be very sharp and short right so it's it'll be like a like this but at brief period it be like vertical and everybody say
68:28 wow it's going to the mood right and then it quickly it's that grow paper so I would say when we looked at last year I think year before looked at the large Indian companies which are the top 100 most valuable listed companies I divided them into three categories one where regulatory rajas like you know which is your Reliance anyone who gets a license and then leverages that adani L&T Etc not that they're doing anything just that the way in which you grow is
68:59 very different you get the license and you build out because the government benefits coming a later even a Dyson I would put in that category then there are these what I called Big build in India for Global Big Wigs I call them which is enforces Etc anyone whose labor force is in rupees is you pay in rupees and sell in dollars the middle category I call them consumer Compounders your HDFC Bank Li Etc it's basically tax on
69:23 the Indian consume wallet one big learning is they never created the market they never invested ahead of the market they said maybe because they were not Venture investor they said we'll grow with the market and they never had to over invest in creating the market now where Capital has gone in from ventur is in creating the market U Market the moment you took off the steroid shorts like you know eCommerce money has gone in that I don't
69:52 think anyone has made any profit n just the profit B I'm not denying it and quick Commerce we see intrinsically it's a better model each generation is much better it's laed better intrinsically it's a better model but it's like 3% contribution margin 4% even at best scale people can't see it about 3 4% the rosi is okay it's interesting we have to see what it finally settles down at so I think my big learning finally from all
70:15 of this is that India Venture is a tricky Market you have to be very careful in being Capital efficient because the outcomes are not as large you may get lucky occasionally you are razor pay occasionally you are a phone pay so you may get lucky okay and and I'm saying great here it really doesn't matter so I call these hypers scalers but typically 90% of Indian unicorns even will be Capital C scalers or what I call Capital efficient scalers you be a
70:43 little more careful in how much you invest Etc now this is as demand is the supply side now has now why do Venture investors still put money the thing is I realized that Venture investors also have some unique challenges one they also have to deploy money they have deployment pressure it's the highest of the first problems lowest of the first buy NE made NE oh my God like it's a problem man like you know highest of the first problem somebody WS
71:11 up soft bank or some of these Middle East say cracks his knuckles and says I have to deploy 300 million I have to deploy 50 million here 100 million year oh my god there so much stress so where does that money go that money then has to find socially acceptable use of deployment socially acceptable deployment of capital which means I have to put money into things where my friends won't call me a fool that is where I'll put in AI I'll put in quick
71:34 Commerce Etc so there's huge appetite for these because these are the socially most acceptable places to deploy my Capital then of course there's a China plus one where else will you go Indonesia is declined Indonesia Indonesia world has declined like that's a scary thing so funds have got equalent like blo equalent funds there in Kudo and all have had to reduce size because and so India is one of the last few standing right you know like so so money has to find its way
72:02 into India so I think so Indian Venture Market has got in this very interesting thing like slightly on the smaller side still growing for True Venture scale outcomes but just to exciting and no Alternatives but to keep getting Capital right and I think there's always these pulls and pressures which come along I hope I'll find a job in this industry after this and yeah but that's the truth no no very very nice to hear candid views on this we've discussed this on
72:29 the podcast before where you actually echoing exactly our views and this is us being optimistic Founders not only optimistic for the last five or seven years but we are also optimistic for the next 10 but we do agree that we are over funded in terms of venture space we've discussed the the seoa framework which was more about pmf but we applied it to markets where hard markets are where new habits get created hair on fire markets are where
72:58 existing habits are there I love your analogy of consumer Compounders which operate in hair on fire markets all of venture dollar and Venture outcomes have got created in hard fact where a new habit has got created which requires compounding of time as well as money but yeah how those like a Uber or a Airbnb have become outliers in terms of even profitability and free cash flow while being hard fact markets has not happened
73:28 yet in India is still a function of the time and therefore we may need to wait 10 more years for maybe a zato or maybe 20 more as you said 2047 DCF the share price will make sense is at least the reality that India lives in today so amazing amazing candidness and really appreciate that that view sjit no super sjit you know I have always you know been a fan followed you on Twitter good to be doing this with
73:59 you I think it's become a master class on many many ends so same here enjoyed this chat hugely and yeah it's been a pleasure meeting you all and I think I've spoken once with ran never spoken to shanu and chag of course we have spoken so it's been great and it was an interesting chat and likewise I learned a lot too and hopefully made three friends like you know so no I think the thing with with with with
74:27 podcast like this is and I you know Rand and chag have come on the one that I you know that I run called the barber shop also is that you actually get one and a half two to two and a half hours with someone talking one-on-one with zero Interruption with from anyone else and you know any networking event or a dinner or even like a casual C catch up at home we'll always have like five other people like family members or
74:49 other friends or whatever but this is like high intensity like kind of super person one two hours so always I always find myself kind of feeling like oh I feel like I've known this person for a long time and you know having going through through through your report thanks for putting me right next to Shar bimu and dender by the way that is extrem Company by I love I love that is there but you know amazing to see what
75:15 you have built and all the thoughts because I think for us frankly we are so sometimes Founders people watching this are also so close to their business so unid dimensional in their overall worldviews that this kind of intelligent data driven exhaustive commentary on on on business in India I think is is is is super helpful so thank you I think this is a lot of work by the way I don't know how how do you guys do this like do
75:41 you have like analysts and Associates kind of like doing this for months or do you work with a consulting firm to do this how do how do you guys do this there is a lot of work yeah so we don't have work at a consulting firm it's basically this time there were four of us there was like a full-time intern so to say an editorial fellow so fundamentally we start kind of slowburn process somewhere in I would say
76:02 September October where we basically start collecting stuff we go through ideas we try and meet once a week and the like intern like you know starts chopping fellow drove we starts snipping some of these reports Etc but the intense part is from Jan like I would say late December for me and I think my only crib with the last four years of the report is I probably need to change the timing or it like Delhi Winters I haven't enjoyed the last four
76:25 Deli Winters Because by the time December comes and the good Deli Winter comes I'm like yeah indust valy report so my so the most Pleasant time of course you know of Delhi the winters and when people call you and say yeah so that has been M crib and yeah but otherwise the heavy burn period or the heavy heavy intense period is typically from Jan mid late December for May mid Jan for the team so there's one
76:54 analyst and one associate and I think from mid janary semi we're almost full time what a month we full time into this so it does take time and sometimes you can't move fast on some of these Investments so I'm always questioning ke like you know but but that's that's how life is you know so it's it's a rich piece of literature by the way it's I would I would assume this would be a lot more people by the way yeah yeah no what
77:18 smart we do a lot of interesting hacks like you know so I I saw the pre-launch tweets s k verified think this know fact check some of these things I knew something great was in the offing when I saw you fact checking a bunch of things by the way thank God for saying no consultant was involved in this shant like how dare McKenzie not bill you for this by W doing this wik should do this
77:50 pro bono I think they learn a lot more from s and team than the other way around lot of people ask us who was involved ETA tell us the truth and people are genuinely like surprised that it's like ear it was just me and one yeah me and one analyst now we' expanded it just the what input has gone up like suddenly we're getting lot more reports Etc so so that that makes a difference but yeah help a lot yeah and then of
78:14 course once you know while you get Founders like churak to share some of the numbers this time chur delivery delivery was very kind like you know so to share some numbers and I hope to kind of get more people from the industry sharing numbers we can index some of these numbers we don't have to kind of show the actual numbers but actual numbers help and the idea is eventually this is sort of for Founders shared by
78:37 Founders right and we sort of become the intermediary like a clearing box to say that hey let's kind of show what it is right you know yeah brilliant brilliant stuff thank you for that the time I do think that s I think I think once the report goes out other than Twitter I think coming onto platform like this Etc would be amazing to kind of put the word out I think the more people who read it
78:59 are able to understand the nuances of it the better the the more bang for buck in terms of effort that all of you put into this yeah yeah we we we do an explainer as well it's got a bit delayed it release I think this coming weekend somehow we do this explainer and then of course there are a few this is the first show I'm coming on so make sure to kind of launch it early like you know
79:19 so but yeah there are a few more shows lined Etc on Friday so is that late that's it no you're the earliest we we we'll keep it day later we'll keep it on Saturday like really appreciate that