EP101x – Do Your Venture | Prof.

Suresh Bhagavatula
Week 3

Sachidananda Benegal: So, when I began my venture, the difference that we wanted to make
in this specific field is what drove us towards it. So, we looked at ourselves we said, “Okay!
Yes, we think there is a need for a difference, so can we make the difference, that was the
second question. We felt yes, the answers to both these were yes. So, we did not get into the
operational thinking about how would we do it. We said this is the space, this is the kind of
problem that we would have, and let's jump on to fixing the problem. So that's pretty much
what we had done in that circle. In the sense that we looked at what we had, we looked at
what is the gap according to us and then jumped into execution directly. So many years later,
I think, I would have taken slightly more cautious approach in terms of sensing whether we
sense an opportunity is really an opportunity in out there, right? So is this opportunity real or
is it my fiction, my imagination. This is kind of fundamental difference that I would do if I’m
starting off now.

That's when I realized that yeah, the customer-driven approach of starting up gives a very,
very interesting flavour to how you can mould. Where is the gap that you would like to adjust
or contribute to, I think that's a more difficult task to find that out? So, I think beginning with
the customer, beginning with what resources you have these two are something that I would
look for when I'm starting off. Because that, kind of, reduces the uncertainty that I have in the
environment. Second, it's a customer-centric environment uncertainty, which I reduce further
by working with them. So, this is what I would do.

I think most of the people who at least climbed the ladder of growth to a certain degree had
an innovative component in what they were trying to do. But this innovative component gave
them a few initial edges, but if you ask them in the long term were they able to climb
accelerated growth kind of a state, I think, that puzzle remained a huge challenge for a lot of
people. Especially because a significant portion of these people were B-to-B businesses in
some form for these people who had moved past a first few customers. But when it came to
actually being able to move the next mile, they had lost interest by that time. So, interest in
or persisting with an interest seemed to be a very strong influence in whether they actually
made the move to the second one.

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 EP101x – Do Your Venture | Prof. Suresh Bhagavatula
Week 3

And that also gave me another perspective of what pulls people through this perspective.
Those people who had given up in some ways had some misalignment in terms of
expectations that they would have in terms of timeframes to achieve milestones. And the
more patient ones, the more persistent ones seemed to have just lived through those phases
of uncertainty to really be able to get that accelerated growth.

If you look at the external environment in which a system or a startup is trying to operate,
that external environment which is there is, kind of, forcing pressures. So, you have more
imitating kind of ventures that emerge out. That seems to say that there is a lot of attraction
in this kind of a space, typically driven by policies, changes, etc. Now, when that is happening,
you might actually tweak a few things. So, there are multiple, though it is imitation, there is a
lot of variation that you have to get in. It is just pure imitation, then you do not know why
somebody succeeded or why did somebody not.

I mean, for example, you have let's say the Flipkart’s competing with the Storrz. Storrz was a
firm which was around the same time but did not persist to raise around. Both were kind of
trying to attract the same kind of a audience, the e-commerce audience. Storrz was trying,
they were doing decent. Flipkart was also trying. What, I think, flipped a lot of favour and
confidence in the venture for, "note this word confidence in the venture", was that specific
tweak of cash on delivery kind of a thing, right?

So, though it is mimicking of the large phenomena, the specific venture idea that an
entrepreneur is thinking of has to constantly be tweaked. So, it's like saying, I know I need
these different people to work with me. But even my competitor, who is in the same space,
might also have access to the same people. So, there's some role where these small
experiments, or if you can call them as tactics, have to be experimented out. And that changes
the confidence that an individual would possess in that specific venture. So, if the tactics are
actually worked, then you realize that it has worked. It's out in the market. Then others
imitate, and the platform is then to a different level.

Yeah, you're right, in the sense that, at least, I can get very lot of analogies that I can draw
from my own experience. But, what the academic papers that we read do is, kind of,

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 EP101x – Do Your Venture | Prof. Suresh Bhagavatula
Week 3

abstracted to a sense. And, then, then you have heuristics when you are mentoring, which
comes in into working. So, one simple heuristic that I just realized a few days back, though
I've been practicing it for quite some time, when an entrepreneur comes in with an idea, I
seek to understand if that idea is, kind of, very closely building on something that is already
existing, or is it something very radical?

So, if it is an incremental, kind of, thing that he's getting on an existing observation that he
has in the surrounding, then I find that it is easier to test a few assumptions, and then build
your model. Build your own specific hypothesis which you want to test and improve it, further.
But, if it is completely uncertain, then you do not know where the market exits itself, right?
So, you, kind of, say let me be more flexible. So, you ask them what their background is, what
inputs they get to the table. So, to a certain degree, the social network affects. The social
network and the capital that exists there begins playing a much greater role in highly
uncertain unexplored territories. Whereas, there is a slightly more certainty it is more
hypothesis testing, where I can actually test it with that. So, that's some heuristic that I have,
kind of, found useful.

Yeah, and very often what happens is, when you are speaking with these entrepreneurs you
realize that yeah somebody else also went through the same state, then you see if that guy
has been able to successfully bypass the challenge that they faced, and then you figure out
yeah, how did he do that? And then becomes a more, what do you say, fertile cross-
pollination that as a mentor I could contributing to the journey. But, what I remember all the
time when I'm mentoring is that it's that individual’s idea. So, I'm not evaluating or
discouraging them. Maybe they do not want to build a large empire based on this business.
Maybe their scope is small. I let them decide whether it is an idea that they would like
pursuing. But, when they come to me it's more in terms of helping them figure out their route
than anything else. So, I'm not evaluating anything. But, primarily just saying, “Okay do this
be aware of this, or speak with this person and then you'll get to know about these things.”
So, that's how the mentoring, kind of, gets all these things that I've gone through together.

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 EP101x – Do Your Venture | Prof. Suresh Bhagavatula
Week 3

So, it's grounded, one in the reality outside, one in the reality inside. And then you're tapping
it from both sides to say, "Okay! Is this grounding really strong enough? Should I try
something, or has somebody else done it for me?”

Naga Prakasam: First and foremost is about not following any trending sectors, right? So, if
they are trying to copy that, "Okay! There is something working this way. I will make a small
change. I’ll do it this way.” Just remove that element.

The second is about how passionate about the particular solution or a particular problem
you're about. And, so that is a second criteria. You go really deeper and see that what or no
matter what, whether somebody funds or not, this is what I'm really passionate about.

What is that one out of these five-six ideas you have, just pick one and go really deeper into
it, right?

These days, we are looking at the common trend, or what we call as equity investment. This
is what the moment, today entrepreneurial ecosystem, the journey, it is all about equity
investment, right? So, in a equity, the major criteria that, as an investor, I see, I look at is the
scalability of the venture. So, because if it scales, that I'll make money. If it doesn't scale, I
don't. So that’s, we call as a lifestyle businesses, which doesn't grow much. So, that element
has to be there. So, I'm really awesome, I'm really passionate about it, but will this business
scale? So, you got to, you know, apply that parameter into that. What is the scalability
element in this business that it has a potential to scale?

The other element is about, "Okay. I have a passion. There is a scalability, but am I the right
person?" Right. Because entrepreneurs should have some idea about what he’s talking about,
right? We have seen cases that, you know, there may be somebody really
awesome technically, but lack in the business side of it. So, at that time of it, when you're
validating some of these thoughts, "Okay, I can provide a technical solution to this problem,
but scalability I may have a problem. So, who can I take help in selling it?" So, you look out for
a co-founder as well. So, look at your weakness so that you will augment that weakness with
somebody you know, who can have the strength in the sales side.

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 EP101x – Do Your Venture | Prof. Suresh Bhagavatula
Week 3

So, and the major point, I think when you validate, is about the scalability element. In the
scalability, automatically what we call product-market fit comes, right? So, that's very
important, because if you're done there is no product-market fit, it won't scale.

The last element is about, today people are so, you know, hooked into the internet way of
doing idea validation, right? As you rightly said, "Ideas are dime a dozen." It's all about
execution, right?

So, today, you know, sitting in a search engine with, I'm trying to validate my idea that may
not work. So, we call it as a "Get out of the building." Right. Just go as many people possible
who could be a potential investor, or potential consumer, and then potential domain experts.
You may not know the area, validate the idea.

So, other area when the moment the idea validation comes, I always get this question about,
"How will I protect my idea?" Right. And, last month, there was a person who walked in at
NSRCEL, into my office, and says, "Can I close the door? Because it's a very amazing idea, and
I don't want anyone to hear about it.” I said like that the ideas are dime a dozen, it's all about
execution some of the major search engines, like 12-13 search engines, right? It's all about
how well you execute. You cannot patent an idea. So, there is a myth around if I talk
about idea, somebody is going to copy it. So, if you cannot execute, copying an idea may not
make sense.

So, I will encourage all the entrepreneurs to talk to as many people possible to validate that
idea. Your potential customer, maybe a potential investor, potential domain experts,
advisors. Validate the idea, because most of the time what happens is also that people come
to me and say that, "This is a fantastic idea. I have been thinking about it last six months."
Then, I'll give five people an example that already doing it. They'll go shocked, and say, "No,
no, no. I've been thinking about it six months." I said, "You're only thinking. Somebody started
executing, right?" So, that is why don't, you know, analyze things too much. Jump. Just get
out of the building, jump into it, and validate that so that your

potential of success is faster. When you talk to more people, you are also finding some more
help into that. People will say, "Hey! This is amazing problem. I'm glad somebody is solving it.

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 EP101x – Do Your Venture | Prof. Suresh Bhagavatula
Week 3

What help you need." So, that opportunities also will open up. So, go talk to as many people
possible.

I think today, right now is what we call digital consumer, right, so which is a bit exaggerated
because we have some success stories in China, which brings a thinking that "Is there a
potential in India as well?” Right? So, there is quite a lot of people and, you know, half of the
people I meet today it's all about digital consumer space, right, and the argument I get is
about India is big enough. The second is about the digital conception is increasing; the third
is about, you know, its growth potential, right? But that data need to be validated.

So, in India, we have 350 million internet access today, but at the same time, 400 million live
below poverty line. So, yesterday or few days back, there was an announcement that we have
a billion connections in India, phone connections. It's a fantastic story, but how many are
really smartphone users, how many really have internet access, and people have to go
deeper, right? Because today, they read about something and something got so much. So
they start writing a business plan. So, it may not help them to validate that part. They got to
peel that and go look at the data deeper.

So, someone will ask, "Oh, there is one billion phone connections. The mobile is the future."
I said, "There is a math to this problem. There is one billion connections here, but there are
400 million, you know, below poverty line. They don't even have food to eat, what
about phone." So, then I've told them that there is something called subscriptions and
subscribers. So, you know, dual SIM was invented in India. So, you got to put those kind of
thinking and peel the data, not follow the trend and good. That is one element.

The second trend what I see is about more on IT, right, technology-based one and also
following the western world. So, something is funded in the valley, then immediately start
writing a business plan, right? So, you today look at the share economy, here it is that
something that's been popular in the US, and I see quite a lot in that. Then, this Internet of
Things, right? So, you know, I joke most of the people that we don't have any power at home
most of the time, where is IOT is going to work, right? From IIM to say, Whitefield, or not even
Whitefield, just somewhere in BTM, if I'm getting on a call, the call would drop at least 10

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 EP101x – Do Your Venture | Prof. Suresh Bhagavatula
Week 3

times before this place, right? Let's fix that problem first, right, before we say that. So, like
that, I want people to go really deeper to understand not to just go with the trending but go
really deeper in understanding the problems first and the potential.

So, don't yeah, I think, India's strength, what I call it as people, problems and tag, but that
doesn't mean that if you have this solution, will the billion people could buy it? Then, you
have this great potential. So, look at the data a little more seriously, and talk to as many
people because the digital consumer is a big frenzy right now in India, but hardly one crore
people buy in India online, out of 120 crore people, and out of this 1.2 billion, only 250 million
speaks English. One billion people cannot understand English. So, most of the digital
revolution today, it's all about English. So, how you’re going to reach them? So, this is where,
you know, some of these areas people need to look at.

In part of the Nativelead Foundation, there are four pillars we have: enable, nurture, incubate,
and invest. The enable part, we've looked at around 46 colleges, so we go and talk to them.
The first question I ask every student is about "Can you hear the sunrise?" So, people, will say,
"No, how can I do that?" But some very intelligent children will get up and say that "Yeah,
yeah, the bird chirps." So, this is what I say, for an entrepreneur, you need to see that. You
need to see through all your senses. Then, you will start identifying the problem which are so
unique. So, what strength today India has? What I call it as like people, problem, and
technology. So, every complaint that we make in the morning we get up till we go to bed, not
about the relationship, that's a different business, but each one is a business plan, like energy,
you know, the water, the garbage, everything is a business plan because that's our strength
today. We have enormous number of problems need to be solved, but, you know, that is
where I mentioned earlier about the trending side. People just copy the Western world and
then go on the information technology side. Yes, there is some validity there, but these are
all the problems. When you start solving these, it's very tough for people to compete. Because
I have a few investments, I've zero competition in that space because it's very tough to
execute. It's not a glamorous business, right? I got to go deep into the garbage and look at,
but there are companies in the US, it's like 14-billion-dollar Fortune 500 Company; it's a waste

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 EP101x – Do Your Venture | Prof. Suresh Bhagavatula
Week 3

management company. So, you don't see that in popular media. So, that is what as an impact
investor I need to go deeper into look at these problems.

At the same time, we look at it from the investor angle, right? It has to be scalable, okay
another way, I won't make money. So, I will look into that, you know, you get that really
deeper problem and put a fantastic execution capability, and it should scale as well.

As an impact investor, you know, the word impact which gives two more elements into it.
What that is in the mainstream, people are more, little bit impatient, you know, the investors
that "I want, you know, very quickly for you to grow because, you know, I need to get your,
you raise more money, so the valuation goes up, so I'll make money." But in impact
investment, we call as a patient capital. We have little more patience because the problem
that people are solving, whether it is a water issue or energy issue or a garbage issue, it is
going to take time to execute that problem and put a solution properly, right? So, we'll have
little more patience, and the return-wise as well, right? Because, you know, it cannot go very
viral, you know, it cannot go very fast in executing it, so it'll take little bit time.

So, that means that the returns may be modest. So, that this is two major elements that we
do.

The third element is about, you know, India being a pretty big country and most of India lives
still in rural areas. So, for impact investor, that makes a lot more difficult, right? So, there is
one of my investments called GoCoop, which took meet a weaver, you go in a bus. From the
bus stop, you walk a kilometer at 42 degrees centigrade. So, this is where, you know, we have
to consider that effort these entrepreneurs are putting on because it takes time, you know,
you need to have that patience and the passion towards, “Okay, yeah, so I'm going to go meet
the weaver, and I have to convince him and how can I help him.” That element. So, that's few
other parameters that we will have to look at from the impact investment perspective.

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