How Top VCs Pick Founders, Evaluate Startups & Fund Them | Sasha Mirchandani | FO564 Raj Shamani

Figuring Out with Raj Shamani

In this episode, Sasha Mirchandani shares his deep insights into the venture capital mindset, focusing on how to identify founders with extreme determination

Key takeaways

• The most successful founders are often 'pain-driven,' starting companies to solve problems they or those close to them have personally experienced.
• VCs look for 'hell or high research' personality traits, specifically conscientiousness and the refusal to quit despite extreme setbacks.

Main topics

• VC investment criteria
• Pitch deck optimization

Notable quotes

If you can't sell, there is no business.

Conclusion

This episode serves as a masterclass for entrepreneurs on how to demon

Transcript preview

Speaker 2 (0:00) If I put you in a room with 10 entrepreneurs, one of them in next decade will become a billionaire, the other 9 won't. What are the other 9 people are doing wrong versus one who did right? Speaker 1 (0:08) A lot of people are starting companies because it's sexy, opportunistic, but not really for the right reasons. So the main reason a really good company is created is, is there a pain point to solve that the founder personally had or someone close to them. So those founders are the best of best because you have a clear purpose. These founders and founding teams, we believe outperform the... Let's say, Opportunity Founders 9-1-1. Speaker 2 (0:36) Tell me, who are the top 3 or 4 people you need in a founding team and what kind of skills they should have so that people can build their ideal founding team? Speaker 1 (0:51) You know, some people can sell. If entrepreneurship is selling, then if... If you can't sell, there is no business. Then someone who can actually build the product. Can someone be a great salesperson who is not only selling the company but raising capital, getting in front of people like me. Do you need a seller and a builder? Speaker 2 (1:05) Yeah. You said... Founder is everything. How do you identify right from Speaker 1 (1:10) wrong? One, Raj, is personality traits. Is founder a founding team? Are they entrepreneurs that are hell or high water? No matter what, they will figure it out. No excuse. And what are the other traits? Trait of success, Raj, is are you a conscientious person? You say what you do, you'll do it. Which is very important. Talk is cheap. Both of them say, I'll do this, I'll do that. But are you really doing it? Speaker 2 (1:32) Give me a step-by-step formula to make the best pitch deck and the easiest pitch deck will give you high conversion. If Speaker 1 (1:38) I had to see 100 pitches, 90 will be cluttered. What do entrepreneurs think? That if you put more data, more excitement comes. Actually, it's the Speaker 2 (1:46) other Speaker 1 (1:46) way around. I want clarity of thought, simplicity. That is what works. How many slides? Maximum 10 slides. What should be the first slide? I like the team in the front. Okay, Speaker 2 (1:53) so Speaker 1 (1:53) first is the problem, then the solution and then why now. After that, one slide on product if you can show us how it works on a video. After that, attraction, then competition slide. One slide on how much money you want to raise. That's Speaker 2 (2:05) it. Who is the most competitive founder Speaker 1 (2:07) you've met? Mukesh Ambani, what he has done. People forget that when Mukesh Bhai took over, he took only couple of thousand crores. Now I know, the numbers have become zeros. I mean, luckily I met Mr. Adani last year. Remarkable entrepreneur. Speaker 2 (2:22) If I give you 100 crores today and I show you 5 sectors, how much money will you put where? We'll give you chips and you put the poker chips on 5 sectors which are hot and booming in the VC world right now. Okay, so these are the only options I have? These are the only options you have. So 50 % is what I have to put here. What are you saying? What is a personal problem that you're going through today for which you'll pay someone if they solve that problem for you? Speaker 2 (2:55) I have a small favor to ask you. I need you to subscribe to our channel. The more subscribers we have, the better and bigger guests we can bring and provide you more value through these conversations. And the full audio experience of this show is also available on Spotify, where you can follow us and listen to the new episodes as well. As a startup grows, the logistics needed to run it grow too. And those small costs start adding up faster than you can handle. That's the exact problem. Porter Enterprise solves. Instead of getting a separate bill for every single trip, you get one consolidated invoice for everything, which keeps your accounting organized and fully GST compliant. You also get one dashboard to track all your orders and trips in one place, so nothing slips through. And with the online wallet, your team doesn't have to pay from their own pocket and claim it back later. Porter handles it all in one place. To know more about Porter Enterprise, check the link in the description below. Speaker 2 (4:01) Why do you think you're loved? Because I Speaker 1 (4:04) had a first-hand experience. I don't know. I don't know if it's over myself that whether I'm loved or not loved. I think we want to be genuine people. Like genuinely have the entrepreneur. When you Speaker 2 (4:14) have Speaker 1 (4:14) a tough time, tell him that Raj, this is tough, do this. But at the end of the day, have the best interest of the founder also in place. Not just our best interest. And be patient. And see, we've been entrepreneurs ourselves. We've seen tough times. There's no straight line in life. So how can we help the entrepreneur through the tough times to come to where they are? True. Speaker 2 (4:33) Is it true, like your own story starts with you were not able to raise funds and that's why you started a capital? Speaker 1 (4:39) My story is very different. I had actually, when I came back, I joined my father's business. So my father is founder of a company called Oneida. Speaker 1 (4:56) When I joined the company, it was at its absolute peak. It was doing phenomenally well. And I thought that within six months, I'll Speaker 2 (5:03) become Speaker 1 (5:03) a director. And then after that, MD. And guess what? I became a director of Oneida last year. You can do maths. I joined in 1995. How many years has Speaker 2 (5:15) it Speaker 1 (5:15) been Speaker 2 (5:16) now? Speaker 1 (5:16) 2025. What are you talking about? Yeah. You see the public records. After 30 years, you became director. Yeah. In your own father's company. Yes. That was the biggest reason for wherever I reached today. Because my father said, no entitlement. Boss, if you want to do it, you must do it yourself. So day one, first thing he said was, how are you going home? I said, in your car. He said, no, no, you must take the train. I said, okay, I will take the train. So my brother also used to use the train. Andheri is local, only doubt Andheri. So I also went. When I reached, I had been out of India for so many years. I was in the US, I was in boarding school. So I had been out of India and living in a parallel universe. So when I reached Andheri East Station, till today I can remember that thing. I was like, what? What is this? Like there's thousands of people and my brother was jumping. And how could I? Because I was just paranoid. Speaker 2 (6:08) Not Speaker 1 (6:08) paranoid, but I was like in shock. Speaker 2 (6:10) So Speaker 1 (6:11) then I went out, took a taxi at that Speaker 2 (6:13) time. Speaker 1 (6:13) There was Speaker 2 (6:14) no Speaker 1 (6:14) Uber. And I went home. Two hours to reach Malabar Hill. I said, this is madness. Next day again, I met my brother. So my brother said, dude, you have to do this. You can't waste my time. I'm not coming in a taxi with you again. In fact, sorry, my brother came back in Speaker 2 (6:26) a Speaker 1 (6:26) taxi with me. So I said, you know, life, what is my ethos? You have to jump into it. You cannot be sitting on the sidelines. So I jumped. Somehow I managed to get in and the train reached Churchgate. Speaker 2 (6:40) When Speaker 1 (6:40) I reached Churchgate, Speaker 1 (6:43) So obviously I went to the gate, I mean I went to the exit, because the train is by then empty. But no one told me that a huge crowd will come running in. So when I entered, there was a crowd from here to there. I was taken and my back smashed. I think for 10-15 years my back was hurt. Speaker 1 (7:01) I smashed my back. I was like, damn, what is this? Welcome to Mumbai moment. You know, and then of course, the very next day I went and then I became an expert of trains. No problem. And my dad said, only second class, no first class train. So second class, up and down. Who were my friend circles? South Bombay kids. They would tell me, Sasha, so how many bathrooms does the train have? I said, boss, you can't stand. Which world are you living in? But that really toughened me up. And then my father said to be area sales manager. So I remember first day I went to the villa. So when they said Mr. Mirchandani's son is here. So I put garland. Mr. Mirchandani come sit. How many TV orders should I give? So I said 10. And he said of course. Take it. Take TV. Whatever you want. I said this is an amazing job. Come. I got some snacks. Then I left. Next shop same thing. One week later I went back to the same shop. 1 minute, 10 minutes, 15 minutes. After 2 hours, he was not even looking at me. So that was the reality. That he had forgotten that I was Chayamanga's son. It was Speaker 2 (8:07) an Speaker 1 (8:07) equilibrium. Speaker 2 (8:08) And Speaker 1 (8:09) I realized how hard it is to sell even one television. You know, without the support of having been Guru Michrani's son, where the average employee in my company young executive, leaving work, joining us, and we were at our peak, number one brand in India. But to sell one TV, because it's so competitive, you've got to find a reason to sell that television. And so, one year there, then my father said, you must get more experience. So then I went to Mangalore. Mangalore branch, two years. So Mangalore, I've never been to a small city in India. In Speaker 2 (8:40) that Speaker 1 (8:40) small hotel, five times a day, electricity used to go. True. But all these experiences really taught me only one thing. He appreciates what people have to go through at the bottom to go to the top. Speaker 2 (8:52) But why would, you were born in privilege, right? You were born in a very rich family in Malabar Hill, you went to states, boarding school, all of that. So why does your father want all of a sudden for you to leave that privilege and start from scratch? Speaker 1 (9:06) Because I think he wanted to, I never asked him this question actually, but I think my guess is that he wanted to not have entitled children. And he came through the struggle. See, when he graduated from BIT Spillani, there was a very tough time. It was 60s. Everybody from BIT Spillani, from his class, 90 % of them, maybe more than 90%, all of them Speaker 2 (9:27) left. Speaker 1 (9:28) So the rest, someone got a job in Tata, someone got billahs. And he was the only entrepreneur from that class. from what I remember. Speaker 2 (9:37) Right? Speaker 1 (9:38) And then obviously subsequently more entrepreneurs came out. And that time raising capital, doing what he had to do, it's a story by itself. Speaker 2 (9:45) And then, okay, so this was Onida days and then you do it in Onida. So how did you start the fund from Speaker 1 (9:49) there? Speaker 2 (9:49) No, Speaker 1 (9:50) so what happened was, in late 1999-2000, I was attending a talk, I think it was a YPO or EO talk, so I won't talk about who the person is, it was a private talk. Very, very famous industrialist was speaking and he spoke about how we move from textiles to pharmaceuticals. And the reason was simple, move to a better industry. Speaker 1 (10:13) So I just thought about it. I said, you know what? We are in electronics as a family, but it's a very hard industry. Low margin, tough to build real value. Only very few companies at that time, Sony and now, of course, subsequently Apple have built multi-trillion, multi-billion dollar business at least. Apple now, of course, is multi-trillion. So I said, what else can I do? So I just kept it parked in my head, this thought. And then the time went by, six months, one year. And then one day, another thought came to my head. Look, My father graduated from Bits Pilani. When he started his first company, it was so hard to raise capital. Second company, so hard to raise capital. Finally, Unida started. Damn hard to raise capital. But that was in the late 70s, early 80s. Now, fast forward to 20, 25 years later, situation is the same. If I don't have Sasham, if I don't have Gullu, awesome. Access to capital. But Raj is an indoor, why not him? Maybe Raj is much smarter than me. So why can't he get the capital? So now I'm not some Gandhi, but I just felt that that's not fair. Apparently, I got that thought in my head. What about getting into a new industry? So, at that time, in 1999-2000, VC industry barely existed in India. So, there was no VC concept in my mind. But the concept was, can we help entrepreneurs and at the same time get into a new industry? So, I went to my dad. I said, dad, how about we do this? And being an entrepreneur, he thought, very good idea. He said, let's Speaker 2 (11:36) do it. Speaker 1 (11:37) So, my colleague was Kiran, Kiran Chandra. He was IIM Calcutta. He used to work at Onida. He has become my very good friend till today. So, he said, Kiran, you are very smart. I want you to do one favor for me. Any awesome entrepreneur you find, please tell me. I would love to meet them. And this is what I want to do. So, he was also confused. What to do? I said, you can meet them. So, he started making me meet entrepreneurs. So, finally, when I met this one team, I immediately liked them. I said, wow, what a great team. And they had not come for funding. They were also confused. Speaker 2 (12:06) Why Speaker 1 (12:06) are they getting from us? And they were a comparison website, comparing products. So the motive to come was, Sarsha, can you give us some Onira TVs? We like to compare them and put it on our website saying, this TV is better than that and this, this, this. And Raj can buy it or not buy it. And I told him, take my money. He said, what's going on here? So anyway, long story short, he left. I also left. Then a few months later, they came back. And they said, you know what? Remember we talked about raising capital. If you're interested, we can do it. So I said, why not? You know, let's talk. So to cut a long story short, Aagai. Speaker 1 (12:46) And I really liked them. Showed it to my father. He was a little bit confused at that point. And he said, you know, not sure. But we had people on our board who my father respected a lot. And I spoke to one of those gentlemen. And he said, okay, I would consider doing it. And that time my dad said, okay, I think it's a good idea. Let's just do it. So this became my first investment. We invested from the Oneida balance sheet. Now within... Three months, my father put a new board of directors in the company. And many are very prominent people like Mr. Harsh Mariwala from Marico and several other luminaries. So the new board said, this is a software company. We had pivoted and I'll explain that story also. Why is a listed TV company investing in software? And I had no rational reason. So that's when I went and bought the shares out of the company. And that's my first investment. That company, 25 years later, became Fractal Analytics. I know. So it was a great journey. It still is. I'm still on the board. And Shrikant and Pranay have done an incredible job. It started as Voodle.com and became Factual Analytics. So Speaker 2 (13:51) why did you invest in Voodle Speaker 1 (13:52) .com? Just the founders. I did a lot of diligence on them. A lot of diligence. Because it was my first investment. But at the end, the root cause of any investment is founders. How much money did you invest? 2 crores. And then over the years, it became 7 crores. But initially, it was 2 crores. Speaker 2 (14:10) And this is a theme across most of your companies, right? As an investor, you've invested in a lot of companies that have been great outcomes as well. But look at Fractal Analytics. They were making something else before, now they're making something else. Right? This Porter, 10-11 times, these people were almost dead. So multiple times, this is the theme. Why? Because Speaker 1 (14:37) my only... Speaker 1 (14:42) clear insight that, you know, company is all about the entrepreneurs and the best founders will figure it out. You start, obviously, in a dream world, this team, this timing is good, this market is also correct, move forward. Speaker 2 (14:57) But Speaker 1 (14:58) most often, things change when you hit the ground running. Right? And realize, oh God, this market actually was not what I thought. So can we move fast enough? Can we think quick enough to move and do things that are different? In some cases, like in Fractal's case, when there was a boodle, so when we decided that that boodle was not going anywhere, but by then I already started to like the founders a lot. So we had two choices, close the Speaker 2 (15:22) company Speaker 1 (15:22) or do something. And they were very mature people. So I say, guys, you are rock stars, we are with you. Just let's... fold up the operations here and then you all come up with any ideas you may have within IT which is my original plan. I don't want Speaker 2 (15:38) to Speaker 1 (15:38) get into IT industry but that's if it makes sense to you all. And three months later they came with a plan which became at that time data mining which then morphed into AI which is now AI company. And that's where we are. In Mobi I remember Naveen's phone came and said, Sasha we may need a board meeting this M.Koch company. It's not working. I said, Naveen what board meeting do you want to do? You're a rock star. You quickly figure something out. And he was probably the most, probably the most fast thinking entrepreneur I've ever funded. The most flexible and quickest to really figure this out. So, another plan came. Finally, we had a meeting in Opera House, I remember. The fourth plan was going on. The topic was 10-20 lakhs. Speaker 2 (16:22) And Speaker 1 (16:22) I was like, Naveen, what's going on? But now I've got this new plan. And I did it. And just 2 to 1.5 crore funding. And the rest is history. Today it's, you know, the largest, you know, mobile advertising company out of India. Yeah. In Mobi. India's first unicorn. Speaker 2 (16:35) And now they're building this whole AI with Glance. Yeah, Speaker 1 (16:38) they're doing globally well. So it means that the company has reached a different level. And Speaker 2 (16:42) India's first unicorn, right? Speaker 1 (16:44) Yeah, 2011. 200 million from SoftBank. That's a story by itself. You Speaker 2 (16:49) said founder is everything, right? Regardless of who he is. in any sector, right? How do you identify a right founder? Speaker 1 (17:01) You know, this is an evolution. But maybe I'll come to the main point and I can talk about other things as well. One, Raj, is personality traits. What we're looking for are hell or high water. This founder or founding team, maybe to be fair to the founding team, are they entrepreneurs that are hell or high water? No matter what, they will figure it out. No excuse. I remember, you know, I mean, lucky enough to have Deep Kalar as a LP investor in our funds. So whenever I meet him, I call him, sir, he's a complete legend. Please understand, make my trip's journey. And how many times they almost died and how they re-walled their companies. It's incredible. Like, what problem did I have? I think in 2001, Dotcom came. There was some funding issue. I don't remember. Murky. So suddenly, your company with 400-500 people is down to maybe 20-30 people. And restart. But will not die. I refuse to die. Come hell or high water. You see, book my show, Ashish M. Jirani. He is also an investor in our funds. Same thing. Multiple crashes. Once Ashish said, at one point, he went from 300 people to 6 people. Then COVID came. Now look at this week's news, KKR is in its captive. What an incredible story. Ship rocket. Amazing story. He told us a story about once when he was down to 1 crore. But he told his team, make a plan for 1 crore. We will not die. And now IPO. 40 % up. What an incredible guy. And not only him, but all his co-founding team. What a story. So I refuse to die. I will figure it out. Speaker 2 (18:45) But how do you identify that there is a quality in an entrepreneur? That entrepreneur refuses to die. Speaker 1 (18:52) So we do a Speaker 2 (18:53) lot Speaker 1 (18:53) of diligence on entrepreneurs. We do a lot of questions. So for example, we ask all the personality trait questions that I asked. How conscientious is the person? The number one trait of success, Raj, is are you a conscientious person? You say what you do, you'll do it. Which is very important. Talk is cheap. Speaker 2 (19:12) A Speaker 1 (19:12) lot of people say that I'll do this, I'll do that. But are you really doing it? Speaker 2 (19:16) Is Speaker 1 (19:17) this the person that if he or she says it, they will figure it out, hell or high water and do it. So, conscientiousness is very important. Determination, never give up. And some of the, one of the key questions we ask is, among many others is, individual. Speaker 1 (19:34) Tell us an example where from all reasons said that he or she should give up doing this. It's like too hard. Chhor do. But he or she didn't give it up and figured out a way to solve it. And now here they are in that particular business they were working or that job they were working. That gives us clear traits of how determined that individual is. That everyone else said, Chhor do. He did it and did it. So that's something that we, because we have data. Speaker 2 (20:01) Because Speaker 1 (20:01) we're coming to, you know, when we do your company, it's just a concept. It's nothing. There's no balance sheet. There's no P &L statement. It's just three, four young founders. Not young, but depending on what age we fund them. But new founders. Speaker 2 (20:16) And then, but you will try to find out in their journey specific points where they have not quit. Yeah. That's one trait. Speaker 1 (20:25) And what are the other traits? The other traits are, at the end of the day, are they complimenting each other, the teams? You know, because if you get two Rajis, what's the point? Are you complimenting each other? Does each of them bring something to the table that is complimenting each other? Which is very, very important. So, a good founding team is smart. They say, okay, let's get so-and-so for this skill, so-and-so for this skill, maybe even a third. And that makes a lot of difference. Speaker 2 (20:53) Tell me, who are the top three or four people you need in a founding team and what kind of skills they should have? So that people can build their ideal founding team. Speaker 1 (21:01) You know, at the end of the day, all this evolves. Fair. So what you need in day zero is very different from day one to day three to day four or day five, right? But like another skill set we need is clarity of thought. You know, like how clear is him or her in explaining their pitch to us? When you see a muddled pitch, you know that this entrepreneur is going nowhere. But in two minutes, I should be fully engaged into the pitch by then. And to your question, you need a builder. You need someone who can sell. See, entrepreneurship is selling. What are you selling? Nothing. There is nothing. So if you can't sell, there is no business. Fair. Right? Then someone who can actually build a product. Because if you have a crappy product, no one is going to buy it. Initially, they will sell it. But after some time, it kind of peters out. So can someone build a world-class product? Can someone be a great salesperson? who she's not only selling the company, but raising capital, getting in front of people like me. And then of course, the third could be other parts of the business as a scale. But that's what we need initially. Do Speaker 2 (22:03) you need Speaker 1 (22:03) a seller and a builder? Speaker 2 (22:04) Yeah. Have you seen any founder who has both these qualities together? Yeah. Who's a seller and a builder together? Speaker 1 (22:10) Yeah. I mean, we see so many, so many founders like that. And initially, what happens is, both have to do it sometime. Because teams are small, right? Everybody's doing everything. As they scale, then they realize, okay, I'm still good at selling. I'll continue. But the building part, I'll leave it because I can get someone much better than me. Or he or she comes in the company, just moves. Speaker 2 (22:29) Who's an exceptional founder you've met who's seller and builder both? Speaker 1 (22:33) Someone like Srikanth Velakam, a fractal, he loves to build. So if you go with me to the office today, you never know, he may be sitting and developing something. He's a genius. I mean, time name is too busy right now. And he can sell to anybody. He's too good. Speaker 2 (22:49) And why is this quality so rare? Because so many people all around the world talk about it. And they say that a builder is very rarely a seller. A seller is very rarely a builder. But Speaker 1 (22:59) that's why it's rare because it's so hard. I mean, if you want world-class, right? Otherwise, if you want average, then there will be a lot. We will get a lot of things. We will get a lot of things. Like Speaker 2 (23:09) a lot of people use terms like dreamer and developer. That's right. So you need a dreamer, you need a developer. Because, Speaker 1 (23:15) you know, you have to dream big. Like, okay, like, you know, it's not like, see, when they come in front of me, what are we looking at? We're looking at 50x, 100x outcomes. We're not in the business of bunts. We're in the home run business. So that entrepreneur, entrepreneurial team has to come just not to me, but to my partners and my colleagues and show us that they're building something insane. Speaker 2 (23:38) Interesting. Let's say if I put you in a room with 10 entrepreneurs, one of them in next decade will become a billionaire. The other nine won't. All of them look like they have great ideas. They've all raised funds. They're exceptionally good founders, look like it, at least in the seed fund. What are the other nine people are doing wrong versus one who did right? Speaker 1 (23:59) You know, the one who's doing right is doing it for the right reasons. What do you mean by that? I mean, you know, when we ask entrepreneurs, you know, when pitch starts, at some point we start asking them, leave all this. Why did the company start? Speaker 2 (24:13) This Speaker 1 (24:13) is a very important point. Because a lot of people are starting companies because it's sexy, opportunistic, but not really for the right reasons. So the main reason... a really good founder gets, company gets created is, is there a pain point to solve that the founder personally had or someone close to them? So those founders are the best of best because you have a clear purpose and you say, okay, this pain point was suffered by, let's say my father or mother or myself. I need to solve this. And I'm going to have a mission around it. I've got a world-class team around it or if not a founding team. So we spend a lot of time to understand the reason the founder started the company. These founders and founding teams, we believe outperform the, let's say, opportunistic founders nine is to one. The one always works, opportunistic. You cannot be so bookish that all like this will not work and all like this will work. But we rather focus on the founders who are having a clear playing point and they have to explain why. Speaker 2 (25:12) But this used to be an old playbook, right? Today's playbook is more. Speaker 2 (25:18) Like entrepreneurship today is a choice. It's not out of some compulsion or pain point. A lot of people, because it's so sexy and so lucrative as a profession. Speaker 1 (25:30) A lot Speaker 2 (25:31) of people choose because they want to do it. Yeah, but they choose it for the wrong reasons, Speaker 1 (25:34) Raj. They choose it for glamour. They choose it for wealth opportunities. But when you pick for glamour, the entrepreneur, the possibility of success is almost negligible. Anyway, any startup, even with the best founder, the probability of success is almost zero. If they're starting for just glamour. Yeah, sure. No, there are two entrepreneurs. One is starting for the correct reason, the other is starting for glamour. Entrepreneurship and starting a company and making it successful, anyways, the probability of success is remote. So if you say, if they're starting for the right reason, the first signs of trouble, the glamour entrepreneur runs away. Speaker 1 (26:18) But is it Speaker 2 (26:19) wrong to want to build a company just Speaker 1 (26:22) for money? No, of course not. It's not wrong. But, you know, when we are evaluating an entrepreneur, we only have limited data points. So we are playing with those data points. Like I said, out of 10, there could be one or two people who are saying, I just want to do it for money. They'll do fine. But anyway, the probability of us succeeding and picking the right founder is so hard. There are so many different factors. So it's better that I don't do this. Now, have we done that also? And founded people, yeah, we have. So you will say, I haven't said it yet. But there's something exceptional about that founder that comes up in that meeting. When you realize, okay, there was no pain point. But they really thought through the business. Now, what are we looking for? You know, you said. It's a simple thing. How much you truly understand your customer. When an entrepreneur comes to the border and talks, Speaker 1 (27:10) Are they truly understand the customer? Have they really spent time with the customers and seen the customer's pain point that they want to solve? So maybe it wasn't a pain point for them. Speaker 2 (27:19) Fair Speaker 1 (27:19) enough. But I have to win Speaker 2 (27:21) in Speaker 1 (27:21) entrepreneurship. I'm going to truly understand the customer. And those entrepreneurs are outstanding because then they can come with a clear plan as to what to do. So yes, you can make it for money. My goal is money. They've done fine. And one more thing, you know, we were evaluating. Diligence ki entrepreneur amazing hai. Timing correct tha. Team amazing hai. Sab kuch hai. Dusse company bhi chal gay. In the category. Then why is this company not done well? And we were scratching our heads ki hai kya? And then when some very basic thing came up. And we realized it's called. This happened quite a few years back. Abhi nahi. Founder market fit. Aap amazing entrepreneur leke yao. On paper sab Diligence. Jo bhi maine bola. Tik tik tik. Founding team. Tik tik tik. Timing achai. Other companies are running. But we realized this founder Raj is the wrong founder for this business. And whatever he does, it won't work. So then we said, oh my God. So now we spent a lot of time. Why is this founding team, the right founding team for this business? And we have to qualify that this is the right reason for these reasons. And if not, we don't do it. And that has saved us a lot of money. Speaker 2 (28:30) Tell me how do... How do you identify founder market fit is right or wrong? Speaker 1 (28:36) Because it's pretty simple because you know what the background of the founder is and why they're doing this business and why they will be able to play a part in this business. Like I remember, let's say you want to do a alcohol brand. We don't fund alcohol. On the other hand, you know, building an alcohol brand is... hard work, you have to go into the trenches, you have to go and go to distribution, do a lot of other things. There's not sitting in your office in Diamond Point and doing spreadsheets, right? So, but the reality is on paper, the entrepreneur looks amazing, everything is tick-marking. But the minute that hard work starts where he or she has to go to the market and obviously that's just the start and many other things. You have to manage customs officers, you have to manage all kinds of things. So, you lose your breath, boss. On the other hand, there's some founders who think, boss, no matter what, I have to do this. I did it in a previous job. And my DNA is like that. I'll do it. I'm simplifying it. There's far more detailed work we do to pick what is founder market fit or not. Speaker 2 (29:35) But do you think sometimes an outsider can build a big company in a category where they have no clue about? Speaker 1 (29:43) In fact, that's a very good question. 100%. Because what happens is there's this saying that you're naive. Young founders, why do they click sometimes? Because they don't realize how tough it is. So they say, we'll do it. So when they jump in, oh shit, this category is so hard. Super hard, but I'll figure it out. Speaker 2 (30:00) Look at Speaker 1 (30:01) Bhavesh in Ola. He's done an incredible job. Who would have said that you can build a gigafactory and make a large public company making electric scooters? Right? If he had known how hard it is, maybe he wouldn't have started. But he said, let me figure it out. And no matter what, people say about him today, I have the highest regard. He'll do phenomenally well because he's jumped in. Speaker 2 (30:22) And what excited you about Bhavish? Just Tiger. Speaker 1 (30:27) He was like, I will get it done. Hello, high water entrepreneur. Speaker 2 (30:31) He didn't make anything then. He was at zero. In the Speaker 1 (30:34) back. See, last week, suppose I met 8-10 entrepreneurs. If you force me to tell you who they all were, I'll struggle to remember 50 % of them. Speaker 2 (30:44) But Speaker 1 (30:45) how do I remember Bhavesh's pitch in 2011? I think 2011 in four seasons. Something exceptional. Speaker 1 (30:54) It's not like some hero entry and he's screaming. It's not like that. It's not a movie. But there's something about it on the best founders that whether they're calm and collected but will explain very well or they have that aura but just that energy. Amazing. Speaker 2 (31:10) And what's going wrong with him today? Speaker 1 (31:12) There's nothing going wrong with him. The internet hates him. Well, you know, I look at it differently. I say, look boss, self-made man. Three companies started, right? And two of them are worth billions of dollars. Of course, ups and downs happen to everyone. But like I said, entrepreneurs who never give up, who are hello high water founders, and Bhavesh is very much a hello high water founder. He'll figure it out. He'll have the last laugh. I'm not an investor in him, but I'm a well-wisher. Speaker 2 (31:38) But why do you think that he will win regardless of everything which is going wrong for him? There has to be something that you must see him. You must see him. Speaker 1 (31:47) He's incredibly determined. And he has a... crazy desire to win. So he knows what's going wrong and what he's doing wrong and what he's doing right. I hope and I'm confident if I'm a betting man, I'm not a betting man, that he'll figure it out. And for me, he's already done remarkably well. So that chapter is not a discussion. No one can tell me that Babish Agarwal has not done well. Well is an understatement, boss. He's done incredibly well. Coming from Louisiana, where he's reached, it's remarkable. Speaker 2 (32:18) Do you think? Speaker 2 (32:22) Competitiveness is the most important trait in an entrepreneur. Speaker 1 (32:25) It's not the most, but it's very important. You need to, you need to win. You know, this is not a business where, you know, entrepreneurship is not just to be second place. You have to be wanting to win. That's our job. We love it. We want to be winning. We want to be number one. We want to be border. Number one company. You meet Pranab and Uttam. They're so quiet, so calm. But they're quietly determined. Remember I said, pitch pay, you don't have to come in and have aura. Calm, collected. clear, you know, the key is what insight you have. You know, you're talking about other things. What is the insight the entrepreneur has? So Uttam and Pranav and of course other founders as well, just so mature, determined from inside, resonating, you know. Till now, after so much success, no one will recognize them, they'll walk past on the street, no one will recognize them. Amazing founders. I'm just blessed to be partnering with them so many years. True. They have did incredibly well. Incredibly well. And Speaker 2 (33:20) in a space which is So goddamn hard to crack. I used to, I remember, I used to deal with a lot of empo, trucks, rickshaw wala for, for sending goods to each other, for figuring out everything local, you know, from one small village to another village, from one city to the city center and all of that. It was a mess. It's a mess. There are five people from exactly same place, five exact same trucks and they'll have five different rates. And they have to lead with five different cartels. Some are goons of some village. And in that space, they have standardized things. Like it's incredibly hard. Speaker 1 (34:00) Actually, Raj, you picked up a good point. Speaker 1 (34:04) What we love is entrepreneurs who go after hard problems. Why? Because, although the probability of success is very low, as you can imagine, if I told you that this portal will be built in a day, you would Speaker 2 (34:17) have Speaker 1 (34:17) said, come on, leave it. Speaker 2 (34:18) Right? Speaker 1 (34:18) But if you can crack it, then you have left all your competitors behind. You get it? So, as a VC, when someone comes to me with a hard problem, and if I find the team to be exceptional, I am super excited. Speaker 1 (34:33) Make sense? Fair. But Speaker 2 (34:35) won't the chances and probability be less? But Speaker 1 (34:38) no problem. When it's big, our fund will be returned at least four times. The entire fund. Just because Speaker 2 (34:45) of Porter. Speaker 1 (34:46) The entire fund. We're raising so much money from good investors thanks to Porter's hard work. Speaker 2 (34:52) So, Speaker 1 (34:52) the entire fund is 4X. And Speaker 2 (34:54) do you think that we can do it with such hard problems outside? Speaker 2 (34:59) Because the insider who Speaker 1 (35:01) deals daily, he will say, this can't happen, I'll make something else. Speaker 2 (35:05) Because I'm already tired with this. I Speaker 1 (35:07) told you, sometimes there's a combination of naivety and determination. That combination is very deadly and very powerful. We love it. If they realize it's so hard, not potter-bombsing in general, leave it. No, we can do it. And then when they get in, oh shit. But what was the trait? They had that determination, right? They had clarity. They had the hello, high water. Now, do Speaker 2 (35:31) you think Uttam or other founders from Porter, all the other founders, right? If Speaker 1 (35:39) they Speaker 2 (35:41) would have been from the industry, do you think they would have been able to crack it? Speaker 1 (35:47) Yeah, I think, yes, of course. I'll tell you why. It depends. In fact, a lot of times you get founders who have domain expertise and we sometimes quite like