India's Leading VC Rajan Anandan on India’s AI and Tech industry

what we focus on is to say number one are you solving a real problem right and are you able to solve it 10x better with AI our view is that just in India we can become the AI use case capital of the world and I'm a big subscriber to that I'm an entrepreneur I get 30 minutes with rajin I'm going to catch your attention and get you interested enough to give me second reading what do I need to focus on my 30 minutes yeah okay that's a good question what we want to do I think as a nation is where it should be as mainstream starting up a company be as mainstream as being an engineer going to an i becoming a doctor you know like whatever it is right if you keep asking yourself whether you have you don't have PM if you have pmf you don't have time to ask the question you have pmf you must have gone through thousands of back now like class in a couple of decades you think you qu this you know now Instinct built out and you are able to pick up certain patterns very early on [Music] [Music] Raj welcome to spax you may not realize but this is second time interviewing you last time was I think about 10 years ago you were a guest speaker at mintra in our early days oh wow it was that kug gate office you know little funky office you might oh that's recall right but was a great thing to have you at that time because we were kind of starting to take off you were running Google in India and I think you had all these ideas about you know the exponential growth of internet and so on remember like team being quite inspired so thank you for that and thank you for course of course thank you for having me so Raj you've been very deeply involved in the startup World Angel Investing and so on we'll talk all about that but uh you know in your current role as running surge which is I think the preminent program for incubating nurturing startups in India I'm guessing 70 80% of action has been around AI last 12 months and you must have probably lost count of how many AI companies you probably evaluated talk to what is your sense where are we at you know are is AI starting to become real as far as startups is concerned or we need to be patient to let this you know really play out so you are you talking about globally or in India in India India India so I think in India um the Indian ecosystem Mukesh today is is really about AI but uh it's AI squared which is it's all about India and it's also all about AI right so what's very interesting is if you look at the US uh specifically Silicon Valley today right it's only about AI I mean if you're building anything other than an AI company and especially if you're trying to raise Capital it's going to be very hard to raise right whereas actually in India what we're seeing is it's it's very broad-based it's really all about India right including AI so so whether it's consumer Brands vertical Commerce gaming Financial Services Healthcare um education deep Tech right uh as well as AI so I think that's very important because if you actually uh look at our last cohort of Surge and our next cohort of surge which is going to be in a couple of months uh it actually represents now our cohorts include both India and Southeast Asia but if you look at the cohorts they represent sort of what's going on in our Innovation ecosystem of course there's AI companies 30 40% are sort of AI software type companies but then there's also consumer Brands there's gaming companies uh in our next quarter sech we're going to have some very very interesting Next Generation fintech companies so so I think that's the first thing now when it comes to AI look um India's game is going to be at the application L right so if you look at Ai and you say look there's going to there the llms right now of course India is going to have a few of those companies I think sarw is very very interesting uh uh then there's sort of the next level which is tooling and infrastructure we think that there India does have a clay we already have So within the Surge and Peak 15 portfolio uh mesh we have about 30 AI companies today right about 10 of them are these tooling and infrastructure companies right could be you know how do you deploy LMS in Enterprises a company like a true Foundry or it could be how do you make um you know GPU serverless platforms and so on and so forth but the real game for India is going to be at the application layer so what we're seeing is uh application companies that are focused on different kinds of application companies right one is sort of a prummer yeah right so invido which is probably the by the way we think is the fastest growing 0 to 25 million AR mhm it took eight months to go from the new J app to go from 0 to 25 million AR and free cash flow positive um took eight months uh think it's the fastest growing prum app in the world to in that in that that phase right we think there's going to be a lot of companies like that because building for prosumers around the world there's hundreds of millions of them uh second would be uh vertical AI which we think is probably the most interesting of all the application AI because there you can have a data mode uh there's workflows that are very complicated things like that so Healthcare retail you know to name it uh we beginning to see some very very interesting companies and then the last thing would be Enterprise AI but essentially functional right so customer support sales marketing and so on and so forth so I'd say where we are in India today is its early days uh if you look at the B Silicon Valley they're very focused on llms right you look at the large funding grounds either it's llms and then now we beginning to see Harve you know basically vertical AI companies like Harve illegal and so on I think what where we are in India is we're beginning to see uh sort of an acceleration of these application AI companies but they're across the board it's not uh it's not in any particular any particular area but our view is uh like this is a this is a you know 20 30 year Trend and this is Ground Zero yeah uh models are models keep getting better right so uh I think the most important thing that if you're building an AI company I know a lot of entrepreneur watch your show is to what I you know avoid open AI road kill meaning you don't want to be wiped out by the next open AI release right so um so and I think one of my partners just came back from a conference and he heard this thing which was very interesting which is to say uh you know is your company going to benefit if let's say the next set models get 10 times better if the answer to that is yes then you're probably on to something but if what you're really uh betting on is that you're going to you're you only exist because there are some gaps in the current models that's probably not a good thing right so so and that means it's almost a given that these models will get 10x better absolutely absolutely absolutely they'll get better I think how do you think about seeing the you know in early stage one of the key things for company is to get to some Revenue fast because you don't have too much runway but in some way you know the current a revolution depending upon how you count has been either one decade in the making or maybe five decade in the making yeah as still lot of things are not ready Ian the these models do need to get 10x better before they in some truly production ready how are you seeing AI companies navigating this is one great example of you know getting 25 million in 8 months that's incredible yeah but I think what I thing is lot of um AI companies are not able to find you know they they are able to build this very interesting prototypes and demos but not something which is production ready where you know consumer or Enterprise ready to pay because there's some gaps in technology is that a concern no actually it's not so so I I think there's a couple of things going on right one what we're seeing is consumer adoption is the fastest right because simply because the consumers make a decision themselves so that's why we think that's why the pruma apps grow very fast and even if you look at the the vertical apps right let's take har har is not selling to an Enterprise right uh there's an individual making a decision given the nature of the business so so the the adoption Cycles are much faster where an individual is either for themselves or for a small business uh where they're able to right so we have a company uh they're based on a noer called attentive right so they're a vertical AI company focusing on Outdoor Services these are smaller firms yes there are some larger Enterprises but largely there smaller firms right this company is growing really really fast because the decision making Cycles aren't as long and also you know those small businesses don't worry as much about hallucination or data privacy or governance right I think where you're seeing longer deployment Cycles where there's you know if you talk to infosis or V or TCS right they'll say like almost every client that they have is running one or more pilots usually multiple Pilots with an Enterprise but very few have gone into production I think the only functional use case that is where two functional use cases that are in production right one is coding uh uh and the second is basically customer support right customer support I mean the benefits are pretty high uh but outside of that it's still very much in Pilot mode because you you know you can't have these models hallucinate you're worried about your data you're worried about governance you know things like that so so I think that's a matter of time so the way the way we look at it uh what we focus on Mukesh is to say number one are you solving a real problem right and are you able to solve it 10x better with AI you know be it gen AI be it computer vision be it you know NLP whatever it is they're using uh lately it's been mostly about gen but we have some very very interesting computer vision companies right still is is are you able to solve it in a 10x better way right so the reason in video is growing so fast is because it took it used to take a YouTube Creator 4 hours to make a video now they make it in 2 minutes so if you're able to say like let's say you're able to you know do this podcast in like 2 minutes right you will pay $20 an hour $20 a month you'll pay a lot more than $20 mon absolutely I don't know what a team here think about it but exactly I mean I don't know what all of you would do but U uh so so this idea of can you one one are you solving a real problem right uh but second are you able to build a 10x better solution and the third question that's really important is how will you defend that position if the models get 10x better if the answer is if the models get 10x better you can't defend the position then I think you have a challenge because your models won't get 10x better in the next year but certainly over the next few years right so so that's where that's where the vertical use cases right uh get very interesting because there you have a lot of data that is specific to the vertical that you know the the large models are not you know they won't get access to them or they won't really care because you know it's like a a specific area and then second the work flows are quite complicated right you have to have a lot of uh sort of workflow Automation in that particular uh use case so we don't worry as much we're seeing a lot of look I you know our view is that just in India right India will become you know nandon said this I think about a month ago right we can become the you AI use case capital of the world and I'm a big subscriber to that because both we have Indian use cases and we have literally a billion people a billion problems to solve but also historically we've proven that we are very good at application right the reason infosis witho I don't know whether you know this but two out of the top five and five out of the top 10 IT services companies globally are Indian companies what do they do they solve problems for large companies that's what they do right using technology right they didn't invent the operating system Hardware they just are very very good at applying they're really good problem solvers and applying sort of technology that exist to solve large Enterprise problems so so we think that this this is this is the next wave and uh we'll do very well no no I think I want to reiterate some you're making some very important points and again a lot of probably early entrepreneurs who will listen to this as worth you know for them to M over this what is the idea of you know making something TX better that is not necess gener for early St startup that's how you earn the right to exist because you make something incrementally better the company who is already in that space will see what you're doing and they'll catch up their increment they have their their existing advantages this idea of 10x better it's uh you know it's easier to EAS to articulate when you interact with entrepreneurs or Lage companies what you know how do you assess that this thing is going to be 10x better you know this 4 hours to 2 minutes is you know outlier case but lot of it may not be obvious like are there things you look for saying this has the potential to be that you know 10x better yeah so I think the the you know before you get to the 10x better I find that for early stage because you know I by the way every day I will listen to except Mondays because we have I's on Mondays Mukesh every single day I listen to at least four or five new pitches brand new first time and usually in my first meetings of 30 minutes right um I find the single biggest thing that entrepreneurs many entrepreneurs need to get better at is getting much better at articulating what the problem is yeah right because if you can't articulate the problem in a compelling interesting way right where I say wow that's really that's interesting right then getting to the solution itself right because look the reality is we don't know what the problem is or the solution is right we're depending on the entrepreneurs I think that's first I think second look 30% at search um mukes 30% of the Investments that we make or companies we partner with haven't written a single line of quote okay so there's no product we don't know whether it's 1X or 5x or 10x better so the bet we are making is two bets one we betting that this team usually you know the pre-launch companies are very technical in nature uh that there is enough history there and enough experience and and capability that they can actually build and second we're saying look depending on the technology approach you're going to do take this can be 10x better right we actually do think that gen can make many things 10x better right same thing with computer vision same you know you pretty much so we do think AI can make many many things 10x better uh I think the first big question is you know what are you focusing on and do people really care about uh care about things like let's take marketing MK MK is going to get completely reimagined now some of the incumbents existing incumbents we buil large businesses but you know new entrance can build very interesting companies because why do you even need most marketing functions anymore you know we have a company U uh one of our search companies in the last cohort Mukesh their first they landed uni liver as a customer not H Jun liver globally without a sales R right they didn't have a human sales their AI bdr landed you know got them un I mean they got to uner got to the right and then of course the founder had to had to pitch right so so this idea that wow and you know and by by the way we invested in this company we invested they were doing some other stuff in AI MH and but this is now become the product because we were saying how do you get un La as a customer and they were like right we said who like we didn't know you had a sales rep they said we don't have a sales rep so we said how do you like how do you do do this is so you know we have a agent you that got us the meeting so if you think about it like wow so that means you can take function like sales right 70 80% of what a sales function does right prospecting setting up the meeting converting an inbound lead you know like all of that stuff and then eventually we think in a year or two The Voice based models right the video based voice based models will be big enough you know good enough where you can have a no latency pitch with a customer right I'm your mesh is the human I'm the machine I'm the AI agent and I can have a chat with you and maybe I can even close so I think we're like a few years away from that so so we think that in many many many different um areas right AI can help you build 10x product 10x better products but I think you got to really start with the what is the problem you're trying to solve and be probably as sharp as possible because very sharp so we you know like one of the things we look for deep insights and specific insights right and then also like you know last week we talked to a very pedigree I mean like really pedigree team uh coming you know building an air company um but they were just too generic now partly you know because they're very seasoned they'll probably raise a r around and I'm sure they'll build something interesting but they weren't as specific saying this is exactly how at least this is how we're going to start right now what they'll end up as we know they'll pivot and they'll change and they'll do all but at least that initial idea needs to be very specific what have you seen like you know that process to come up with that uh that specific idea Insight what does it take you know people obviously don't wake up with a deep inside about I mean I think there's two most of the time they've experienced themselves right uh so in our next go of search we have a former CTO one of India's most valuable companies um you know he is building software it's a Dev tools company not AI company he's building a Dev tools company uh for a problem that he solv that his team solved while he was at this company right so he said okay so they you know he he's solved it before he's seen it in large you know High transaction you know systems right so um so so that is you know I'd say most of the time we are backing a Founder who has experienced this problem and either has solved it within a big company or thinks knows that it's a problem because they've seen it so that's you know that's most of the time but then there are times when you know this great entrepreneur spent the last 6 months looking at lots of different actually just just before I came here uh you know we listen to a picture again a very very interesting ai ai ai company but this this entrepreneur spent six months yeah uh you know just looking at different models studying different types of things and then finally holding in and saying and then he did a lot of customer Discovery he talked to like dozens of potential customers saying look is is a problem because that's the other thing right like you go if you haven't faced it yourself right you don't want to start building until you talk to some potential users of the product to make sure that it's uh make sure that it's real so so we do see that good Founders building companies or problems they haven't faced but usually they do it after some real exploration and so on no that's very good input a lot of times you know the entrepreneur especially one with the experience have you know they think the first Port of Call is VCS try raise some money let's just throw some slice together and go and pit and you know cook up some story but either you know you have been an environment where you're facing some problem and you can be proactive or all companies have unsolved problems the bigger the company more unsolved problems and you you can be on the sidelines of those to develop a lot more context deeper insights like you that's why Google and Facebook so many people you come out of those and start amazing companies or you do what your second part you know which is just been six months six months is not that long of a time I remember in the early days of cure fit you would have probably talked to about 500 people you know just what do you do for your health you know what do you think about health and then eventually the business know we have some thought process but the lot of sharper insights came from those conversations so that's probably a critical you know if you don't have Insight in your company then spend six months talking to just lots of uh I and I think that's something that more Founders should do because before they both before they you know horn in on the idea but also I think M especially for technical Founders right um after they start building you know like because they like to build and build and build and build and build at the end of the day you have to sell you know so so the sooner you can even if you like so we we big proponents of this notion of Des Partners right you go sign up five or 10 or 15 uh companies to work with you so that you're co-building the product with them usually like 3 to five so that at least you know you're solving a real problem right because uh especially if you haven't faced it and and it's and you kind of have an intuition that this is a larger problem it's very very important to get this validation sooner I mean it's easier with consumer internet right because you build something you launch it nobody uses it then you keep ating any trating so now some status may say that you know look we are too early we have no money how do we send design Partners but then the counter to that is look you have to learn to sell you have to you know you must have sub Network go just beg borrow Ste yeah by the way getting a design partner doesn't require any money right what what it requires is for you to be able to articulate the problem uh and convince and figure and find a a customer that actually thinks that this is a problem so in fact if you can't find a few design Partners to because you're saying a design partner before you build right saying you're going to co- build now you have to obviously do a bit of selling because they can't think that you're you know got nothing yet right so you've got you're in the process of building uh and then what we find is like you know in our next quad of Serge Mukesh we have a company when we invested in them they had one the founder mhm and one of India's largest companies as a customer one person yeah you know so you know because you know he can build and of course you know he's not a seller but it was a problem right where you can go land uh not one of the largest one of the largest companies in that space so um uh so so you know we think that this is really important because I I do think I agree with you that what what I find now is you know too many too many Founders it's less so now 2021 we saw this in Spades too many Founders were just trying to raise Capital yeah right like okay you know but like what are you going to do with it right so you you mentioned you every day are listening to four or five pitches pretty much four five six days a week for who know like I know you've been very active in the say inv even before your search stin no I couldn't do it before when I was at Google I didn't have time to meet but probably I'm guessing you were doing more every company you invested you probably know 10 PES at right so where is going to get to it I mean you must have gone through thousands of by now or like last you couple of decades tens of thousands probably tens of thousands right and then that you know so there you go your 10,000 hours of listening to PES already done do you think you youve got this you know now Instinct built out and you are able to pick up certain patterns very early on like most of it has to be like look familiar to at least pattern wise you know like how people are pitching what I think yes and no mesh you know so look at I was a very active angel investor before I before I joined p15 and the time Sequoya but you know the last 5 years I've learned so much every single day I learned something new right um so if I thought I knew anything about investing I knew absolutely nothing you know so so I think this is a it's like everything else right I think you need 10,000 hours in Venture Capital right uh because you have to wake up every morning thinking about it go to sleep every morning and I've been only doing this five years so I think I have another five years to go I can I can say so I look at all my partners right at P 15 look they are all so good you know it's remarkable right because you know me like shalendra GV and moit have been investing for 18 years right right um I think all my shales has been investing for 15 years I think all our other partners have been investing at least for decade some like 10 12 years right so so you have this institutional knowledge so so one of the things that's been very helpful for me is I get to learn from all of them right and my team so I'd say yes you get better but you know one thing in investing uh like you know I used to say uh even when I joined for the first few years is you know we're not going to do this you know it could be a sector could be a kind of don't say that because I know now if I say we're not going to do this we're going to end up doing something because the thing is you have to have an open mind you have to assume that you know anything is possible Right but at the same time I think you like I think in individual investors have things that they prefer right right like uh and things that maybe they're not as excited about yeah and your point about you learning is obviously spart on for all of us you the world is unfortunately or fortunately moving in a faster Pace than we can keep up so learning is I think an absolute imperative including the folks who have work for 18 years it's just in a word is not going to pause but no my question slightly also on in terms of May it differently I'm an entrepreneur I get 30 minutes with Rajan I'm going to catch your attention and get you interested enough to give me second meeting yeah what do I need to focus on my 30 minutes yeah okay that's a good question uh so I'd say look firstly keep your introduction to a few minutes MH but tell me something about yourself that I can't find on LinkedIn MH and also that's going to make me say wow now I understand why you're building this yeah right like why are you the right person for this business so that's number one so keep that sometimes you know Founders have 10 minute introductions look I mean unless you're Bill Gates or mark up you know or you're M mukes if you're mukh everybody knows who mukes is anyway right so um just don't like you know sometimes just just being very just being thoughtful about what are you going to say and be authentic you know be authentic about who you are but like why so that's one I think second is look spend 10 minutes on the problem yeah get get get me or get whoever pitching to excited about why is this such a critical problem bring it to life right like so for instance if you're building a consumer company talk about consumers why are they facing this problem right if you're talking about an Enterprise buyer or you're talking about a developer or you're talking about a small business bring it to life and in that 10 minutes if you get if you really and and you have to have deep Insight right like you have to really you have to say I mean I have a simple saying in 30 minutes if I don't say wow a few times I'm not that excited I mean I'm not telling saying wow to the founder but I'm think exactly right so so I'm I'm thinking to myself say wow that's really interesting you know and U so that's I I'd say that's the that's the key right so within 10 to 12 minutes so 2 minutes okay now I understand why you're building this company um so I'll tell you very interesting so in our in our next quad of searge we have a company that's actually offline Healthcare right we've never had offline Healthcare company in search we have our first one and this found found has been through this particular I can't tell you what the company is but you know this founder has been through this particular U thing that she's trying to solve several times I mean by the time she took 3 minutes I'm like yeah I get it I understand why you're trying to solve this there's deep empathy for the problem she's you know like the person's gone through it so that's then the next 10 minutes is about the problem and then I think the rest of it should be how are you going to solve that problem as opposed to like some big like you know platform you of tech entrepreneurs want to build a platform how can you build a platform before you sol this you know you don't ever build a platform right you start by solving very specific thing and then the last thing look what I'm looking for is um somebody who was successful really wants to build a large company so you know some Founders say yeah you know in three or four years um I can sell this company and you're going to make 5x and I'm thinking to myself I like I'm not going to get out of bed for that you know like I want to see that at least you're going to aim to build a very large company um and of course very few will get there so I'd say those are the things but if you ask me like sell the problem if you can sell the problem clear so instead of you know launching into like you know how cool my product is and these are 10 features start with the demo I don't know what like what problem you're trying to solve yeah that that's so what are the mistakes that not mistakes but things that Founders could do better right one they took too long on the but firstly they're late I mean 30 minut meeting late no I mean you have 30- minute meeting if you're 1 minute late by the way that if what people don't realize is and this is my training from McKenzie and working for M all these guys you cannot be late you know um because see what I learned was if you're late it's not about what what you're essentially saying is other person's time is not important not important yeah it's not about your time it's other person's time right so if a Founder is one minute late I mean there itself now you're do few points now you have to your buy is even higher right so so I think don't be late second be very focused with your intro and don't Ramble On right and then just sell the problem and this probably also requires some preparation you know if like I'm going to come pit to you if I spend you know few days thinking about it doing sh rehearing versus just it so at at surge we have a whole week like you know we run weekly I mean we have three four hours a week right it's not the whole week but we have a whole module uh mes on how to develop your story yeah we do that early in the search which is like what is the story the founder origin story what is the story about the company you're trying to build and then we have another whole week later towards the end uh three four hours just focused on what does a great pitch look like what needs to be in it and by the way there's a lot of there's a lot of resources on the internet I encourage Founders to go like do that because sometimes like and by the way very few Founders can pull off without like you pulled it off without a deck you know uh Mukesh bans you don't need a deck everybody else probably needs a deck I was in my 20 years so hope no no no I mean like you know some people come and like okay if you're like if you're a master Storyteller right in the old days if you were yoa okay maybe but if you're like a normal engineer leaving up great company trying to build like please get a deck because it helps you structure your thoughts and then the investor is not wandering off otherwi what's going to happen you're going to wander off right if you're not you know so so yeah get a deck and then tell the story there is a way to tell a story that's very compelling I mean literally on a scale of one is to 10 Mukesh there are very few 8 n 10 decks yeah okay most Decks that I see because I do so many meetings is like a one or two and if you you know like one or or two deck it's hard to get excited and the longer the deck the probably worse it gets no you can't have a long deck it's only 30 minutes you 2 three minutes is your introduction so is not sometime people just find difficult to stop you know I think 10 slides for 30 minute is more than enough eight 10 slides yeah is more than enough right because your introduction you have to sort of talk about that and then just maybe one slide on the team if you have a team uh or co-founders or whatever and then the you know a couple of slides on the problem and then a couple of slides on how you're going to solve it if you have bu if have a product the demo is really important actually there are founders we were excited about problems we were excited about but the demo was just really bad that's not good yeah I mean especially if you're building a tech company and your demo is really bad that doesn't that that's going to help you yeah because also giving you a message because ultimately I'm going to use the same demo to push to clients going to push to customers customers are going to yeah and also it shows us like okay like at the end of the day right Excellence is important yeah you know if you're going to just so I think yes you should launch fast and iterate but not with a crappy product right you know I mean some people sort of take this launch fast and iterate I'm going to just get a crappy product you get a good product out and then you iterate yeah I think this is reminding there saying right you know how do you one thing is how you do everything right so some of these are signs of you know going to late here you're probably a customer meeting with your teams right you're t with your presentation and so on you know just reflects everywhere just uh just maybe you know I ask you a reflection question uh you know last 20 years you would always seen the entire you know entrepreneur ecosystem evolve a lot and both you know I think quality wise and quantity wise that I don't know it's difficult to count but tens of thousands of entrepreneurs probably every year were coming in you know what about the maturity and the quality for entrepreneurs just subjectively how have you seen that evolve yeah I think the the best Founders in India Mish now a THX better because see the thing is starting out now we have no chance no I mean you you have huge shance you know you're probably a,x better right when you when you move 2006 compared to then you're probably 10,000 hopefully the uh no I think see the thing is the first unicorn in India was 2011 that was in mop okay by 2015 maybe there were six or seven there weren't more than that right and then so so I think what has changed is a lot of Founders who are starting up now have actually grown up right um like in our next sege go we have two fintech companies both te world class I can we can I can confidently say m you can put both teams up against any fintech team in the world amazing anybody Silicon Valley China you pick your favorite country they are that good because they have they have grown up in these scaled up you know they've seen the journey they built products they've shipped products they I mean like you know one of them literally within three months had signed up 10 backs okay like how yeah I'm not talking about little Banks HDFC Bank SBI how does because they've done this before they're not waking up and saying who do I call it SBI you know so so I think the especially in certain spaces uh fintech certainly we have world class today I mean I I I can confidently say there is no ecosystem in the world that is as world you know that comes even close to us right um consumer Commerce Brands you know we're getting very very good right uh I think in software in some parts of like applications software we we're pretty good in other areas we have some ways to go so so the the quality of the best so look two things have happened okay one the number of entrepreneurs increased right we have 120 what 110,000 DP registered start that's a large number by the way there's less than 10,000 companies that funded most startups you know are bootstrapped and they they'll build their way but if you look at the top let's just call it the top 1% of the founders today compared to even a decade ago they're literally 100x better and I think every year that goes by they just get only because they growing up in this this in this ecosystem right like if you if you built and Shi product before if you've done Partnerships if you've sold like when you start up you're just going to know what to do right you still have to go through the Journey 0 to one find product Market fit but it's just much much easier so ecosystem is many ways training these people AB lot before when you're ready to start on your own because you're observing all this context and I mean I'll come to Serge in a minute you know that's you know significant you know enabling component um you know among many others but in this all where where do you think the role of something like Shark Tank you know it's become immensely popular yeah I think I think look what what what sha tank it seems to have done uh by the way in our next search Court we hoping to have a shock Tank Company okay first shock Tank Company you know that that went to shock tank and then and then I've been trying to get one or two of our companies to go to shock tank but you know anupa and all are like uh maybe we're too late whatever um I think what it has done Muk issues it is mainstreamed entrepreneurship right uh where it doesn't it doesn't matter where in India you are you know people understand right like it's mainstream it's mainstream television so in that context I think it's very very positive because you know what we want to do I think as a nation is where it should be as mainstream starting up a company should be as mainstream as being an engineer going to an IIT becoming a doctor you know like whatever it is right so uh so I think I think that's what and also people have begun to understand like what does it mean to ra capital of course that's not the way Venture Capital operates you know uh so I I think I think we need more of that I mean it's great that you and many others you know like part of what you do with startups you know your podcast is about many many other things uh I think we just need more of this where you know I think the I mean we just you know India is a land of entrepreneurs right for thousands of years it's been entrepreneurial and it's coming back yeah so is Shark Tank you know is probably helping Stoke ambition people are able to see these people mainstream television saying look you know this is how getting some exposure to how I can start up a company you know I can uh I can raise funding and also like I think it makes the I mean for a lot of young people as you know right parents have to be accepted right right so I think at least what I'm hoping is that it's impacted the parents as well where you know like yeah it's okay that's pretty cool you know you can go start up a company I mean you could be like that person so let's start let's talk about s now you joined I think about five years ago to help start the whole program was SE then Peak 15 now I think many cohorts and I think some understanding companies already come out what was the thought process behind you know in some way I don't I I don't know what you call it you know whether incubator is right word or stud is Edward or yeah so we call it a scale up like a scene platform right it's U so I think the thinking uh so surge was launched before I I joined Mukesh and and uh we we just finished our ninth cohort so I joined towards the end of the first cohort I joined because of search I mean I joined squ at the time Peak 15 now because you know I was very inspired by this idea of SE so so they're thinking there was uh given the stage of our ecosystem that was 5 years ago right uh it would be beneficial for Founders if you could provide a lot more than Capital right uh what is lot more than Capital it's Capital you know help them understand how to build companies what is it that you have to do very early uh in your journey right so that you can end up with an enduring company so that's number two third can you provide world class capability support recruiting tech product marketing uh early days early days in a concentrated way so to help you get to product Market a bit faster and then once you start scaling do all the things that you need so that's a third fourth we said look it'll be great to have a community that is very active right uh uh and because there wasn't anything like that in our region right I mean of course if we live in Bangalore you have your friends set of a Founder friends that you can hang out with same thing in Gaga Bombay but there wasn't sort of so that's a third and then finally we said look we should also um uh sort of enable you to um raise capital uh and make you just you know simple things right like really help you prep right where you when you pitch you should be like Steve Jobs on a stage so we said look let's just do more than that right like because there were you a lot of seed investors they invest capital and and then they'll work with you right a partner we'll work with you we said look let's bring the whole firm and and you know our partners shalindra and and the rest of our partnership their idea was you know can we leverage sequa globally the 50 years of history at the time whatever it was 48 years of institutional knowledge right back companies like apple and Cisco and WhatsApp and Linkedin and whatnot to really bring that knowledge to bear so so what sures so that was the that was the thinking right and so what surges is we invest up to 3 million first check uh uh right average is a little more than 2 million from us but we're also open architecture so our company 80% of our companies raise capital from us and others at the same round uh and then once the company has launched because about 30% of our companies haven't launched we take them through a 16we program so think of it as a Founders Academy you've been kind enough to come and come to several of our uh where it's a mix of every week is a different topic uh so we start with Mission values you know sort of the most important things then we spend a fair bit of time on building world-class products finding product Market fit Etc then we go into uh sales go to market sales marketing things like that and then we kind of end with fundraising governance so we try to so our our you know surge is is is a lot more than just launch right our view is launching is we don't want you to launch fast uh and raise your next round we already give you enough Capital we want you to build an awesome product and of course you're going to have to get to product Market fit right that could take you 6 months could you 12 months so we give you enough Capital MH so that you can find product like really fine product Market fit and our view is if you can't find product Market fit after a few years it's time to go do something else because you know it's opportunity cost is higher so so that's the founders Academy we have a community so our our team we have about 25 full-time team members investors and non-investors so recruiters product marketing engineering who work with these companies individually on their needs and then lastly we have a community that's quite quite vibrant now so that's sort of the what what it is today uh we have small cohort so our whole thing is uh you know we want to keep our cohorts very small uh Mukesh so we will evaluate between 3,500 to 5,000 companies per cohort per cohort and we will have 10 to 20 companies so our large our largest cohort was 23 compan means yeah so 2% is the acceptance rate uh largest cohort was 23 smallest cohort was 12 yeah so I think our last Cort was 12 or 13 so so we because our thinking is you know like let's really focus try to absolutely the best you think is there opportunity someone to do a coaching Center for serge that kind of acceptance right hopefully not that I mean that that that that's good in a way that you there is so much demand and so many people want to oh there's so much demand I I think the uh you know India I mean look there's 100 there's over 100,000 registered registered startups and now keep in mind we're not just India right we India southeast Asia now in Australia uh we're quite quite Regional um so but India is 70% of the uh the companies that we Val and we have a mix of inbound applications so that's like 3 4,000 and then we also have outbound got it we have your team that's always looking for companies and looking for spaces and so on and once these folks are admitted do they they continue to work from where they are or they come yeah yeah yeah no so we so we our model is um by the way so we're meeting companies every week right so we're not a we have an application process but the way our model works is we meet companies every week companies that we like we invest in right and then once they launch they will join whatever cohort that makes sense because we don't want a company to join a cohort meaning the founders Academy yeah before they launch because wear we used to have a lot of that and then they don't really want to focus on anything except just launching right so we said launch bus um so the way our model Works Mukesh is we have 3 days in person at the beginning yeah then we go on Zoom it's 4 hours once a week on a Thursday usually and then we end with three days uh three days at the end so for instance last the last cohort we started in Singapore with three days we ended in the US uh with four days uh and and last last cour when we ended it we had in addition to the court we invited about 60 of our search Founders we spent uh half a day at the Nvidia campus we spent time with Jensen uh because you know AI was such a big deal right was a big part of our cohort so go and as you know now that you guys have done these nine cohorts in some way do you think you are teaching some aspects of Entrepreneurship uh or you are giving access to tools or mental models way of thinking what in some way I like to believe that you know if sech model is working you are somehow increase the probability yeah of success not only because your 2% acceptance rate something happens after that what will you like boil it down to like in what ways yeah I think look well firstly as you know we won't know for another five seven years right we are 5 years in so my view is anything that happens within 5 years may or may not be a great signal uh I think our best companies are scaling very very fast they're very large uh it's a interesting stat I can't tell you the exact uh Revenue data but our top 10 companies combined annual revenue is getting to nine digits almost right which is a large number but what is much more impressive is five of them already profitable so one of the things that we focus on is you build companies the right way yeah like our view mes is you know if you have to you know if you raise 2 billion and you're worth 3 billion not be like a great place to be you know uh now if you raise 2 and a half million and you're worth 2 billion now that's a great place to be right um we're hoping by that's our goal is one one company will get to be 10 billion only Serge Rock we haven't won that yet so so I think what we're seeing is companies are just being built differently right so for instance we focus a lot on being missionary right so all our most of our companies will have values not just like write your values on a wall but they will try to live those right many of our companies by I say probably more of 60 70% will do employee NPS survey which normally very few Indian startups do if you talk to the x210 X team you know emps in the Indian ecosystem ain't great right uh I know your your firms have always been great so so you know it's a bunch of these things I think they're practicing but you know so what we're hoping is that all of this decade from now 5 years from now I think by 2030 we can look back and with quantitative data how many companies went public how many companies got to you know let's say 500 million or billion dollars of Revenue per because today my view is look getting to $100 million Revenue yeah it's interesting but it's not that great you know what I mean I mean like we're a three and a half trillion dollar economy going to 10 trillion and if you only give me a 100 million or what I'm going to do with that mean like so so I think we'll see that right how many companies really got to many hundreds of million know like let's say thousands of CRS of Revenue uh became very profitable free cash to so I think we're there but already we can see that so simple things right we encourage all our startups M to do a weekly All Hands M very few startups do that right it's a just a simple basic thing to do right it just improves visibility transparency empowerment people feel more you know so simple practices send a monthly update to your investors even when things are going badly and we really try to hammer this in because most entrepreneurs as you know things are not going well they won't update anybody and then everybody forgets about them you know so so whether it's a simple things like that more substant things like importance of values Etc and then the most important thing which is build an enduring enduring company so those early signs are there yeah but you know we have we still have a ways to go yeah some of these tools you know you're right they may sound very simple but I think they profound impact on the culture that you end building the organization and Google till this dat have there this TGIF thing I'm sure you were part of that you know time sometime they're massive company but you know almost like 3 4 hours every week we will get together and share everything transparently so no reason for start bar and Sergey did it for 19 years right I think now I think in the last 2 three years after Co I don't know what they've done after I left I don't know what they've done but but yeah for 19 years the two co-founders Google every single week except the week of Thanksgiving and the week of Christmas every single week at on all hands for all company right I mean that's pretty remarkable yeah yeah so so I think these are the things that I think a lot of people don't a lot of Founders don't realize how important these things are because you build the right culture like hiring great talent we have a whole like we spend a huge amount of time we on this notion of build an A team right what does it mean what do you look for right how do you and and then also then you know manage performance right because you can't really hold on to low performance for a long period of time so a lot of we have a lot of softer sort of culture team Talent leadership we try to bring a lot of that into sege uh apart from building great products get to launch get to product Market fit so part of what you are saying Rajan also is you know this this early stage startups don't need to be this black art there is lot of you know hygiene things as well as best practices and also kind of keeping up with the times that's right and if you just you know embrace all of that I think you know you just look at the end of the day if you can just improve your odds by 1% yeah right uh you're pretty good now if you can improve your odds by 10% now you're really right so so it's very interesting if you look at we have nine cohorts in but if you look at up through our fifth cohort or fifth or sixth cohort Mukesh 70% of our compan companies have raised series a okay the market average in that period was 20% incredible so 3X 3X right so so by the way raising a series a you know doesn't mean anything because you know eventually the question is can you build an enduring company but I think these things really help because you just get better at like we have this whole thing which is until you get to product Market fit try to keep your team as small as possible the magic number is eight and if you're building a let's say pure software company or consumer company it's harder if you're building spaceships you can't have eight people or Rockets um but yeah everything else you're building let's say a new consumer brand do you really need more than eight people probably not right get something out there try to see whether you know it can work and and and then you can start adding people that's an amazing Mentor model I want to have followup question so try to have your product Market fit with the eight people yeah that probably transfers some money question as well half a million million Yeah couple hundred thousand but the thing is the the thing we've learned mukes is it could take you 6 months or it could take you 3 years right right so one of the reasons we believe that capitalizing at C with a few million dollars not a few crores is important is because then you can really make sure that you can get to P because you know what we find is most startups scale before they have real pmf because they're able to raise some Capital right so you raise a seed round of one or two million then whatever you raise 5 six million series a and then you start scaling but you don't have pmf which means it's not going to sustain you will not raise a b when if you raise a b one a c c so so so that's why we we actually give we invest more capital than what you would need because we don't know look even if you have the best founding team a great idea big big pain point the reality is it's never been done before so it could take you 6 months I mean this is one of our biggest you know there are like few big learnings for us at surge one of them is getting to pmf could be 6 months or 3 years okay and you've got to just keep iterating until you can find but eventually you could Al you should also say because for a Founder at least we believe for the kind of Founders we invest in we partner with r Mukesh the single biggest cost is the opportunity cost right right because the reality is all of them can work for four five 10 times 100 times what they get what they're paying themselves as a Founder but more importantly they can launch another company right different idea right that could that could be much more scalable and do you also in this in the you know surge coaching you communicate to them what is a you know precise pmf criteria is it yeah so you know uh we've had nine versions of our pmf session remember like when you came always question I ask you right how does how do you measure a pmf so we are trying to find pmf for our pmf session right so look there are some basic things right do how many customers would be deeply disappointed if they don't use your product uh you know if you're building a consu so what we have developed is for different types of businesses Mukesh what are some set of metrics that we give you so if you're building an Enterprise software company okay get to 10 customers get to a million dollars of Revenue with one you know 110 or more nrr which will probably take you one or two years then you can safely say yeah we have right if you're building a gaming company it's D30 retention right if you're building a consumer brand if you can actually get some data on repeats that's repeats and unit economics are probably the best so what we have done is we've developed a set of metrics for different kinds of businesses but that being said look the pmf session that we do at Serge we keep pivoting on it because we haven't found the model because I think the final thing we've concluded is every business is very specific so we should we work with Founders but some having at least you know even if it like some somewhat subjective but having a criteria that you take seriously that becomes you know your no no so we we are very clear so for every search company uh we're very clear of what it is so like for instance right two cohorts ago we had two vertical Commerce companies right so in vertical Commerce unless you can get to unlike in you know when you all built mintra and flip cart today Mukesh if you're cm2 negative no chance you know thank

2024-07-19 01:05

Other news