Episode 21: Aviral Bhatnagar- Building & Scaling “A Junior VC” Community; Democratise Start-up Conversations
About Aviral Bhatnagar:
My next guest on The One Percent Project is Aviral Bhatnagar, Founder of “A Junior VC” Community and he is A Junior VC at Venture Highway. Aviral is a graduate of the Indian Institute of Technology Bombay and the Indian Institute of Management Ahmedabad. Aviral’s Quora responses have more than 30M views and his start-up essays have led to the creation of the 20,000-member strong “A Junior VC” Community and earned him 170,000+ followers on LinkedIn.
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In this conversation he talks about:
Non-Linear Decision Making & How it has benefitted Aviral.
Building a community- A Junior VC, AJVC: Why & How?
Views on the Indian Venture Capital Ecosystem.
What does intellectual honestly mean to Aviral and why is it important in a founder?
How has Amazon been able to penetrate Bharat?
Are Indian start-ups improvising or innovating?
Aviral's views on investing in a bottom-up start-up
How Amul & Haldirams have been able to build multi-billion businesses by listening to the customer at scale.
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Transcript:
*The transcripts are not 100% accurate.
Pritish: Welcome Sanjay to One Percent Project.
Pritish : Hi, Aviral welcome to the One Percent Project.
Aviral : Thanks, Pritish for having me really looking forward to this. I am quite feeling impressed about myself being on this seeing the previous folks who've been here. So, thank you for having me.
Pritish : I'm a big fan and I'm sure 200,000 plus subscribers are big fan of your essays and the work that you do. So, definitely we all are looking forward to hearing from you and definitely I am here to actually listen to you and learn. So, let's start it off. I think the first thing I want to know is your nonlinear decision-making process. What is it and how it has actually benefited you?
Aviral : So, I think it's a thing I coined on one of my conversations with someone and I realised that my decision making is nonlinear, but it's just more jazzy way of saying that, I think more first principles and I tend to think differently from the group. Generally, linear decision making is when you go with consensus, which is like, Hey, you should be doing this and you go with the group, which is like everyone else is doing this and I've tended not to follow both, in most cases. So, for example, taking up a venture role very early on during my MBA after my MBA was pretty nonlinear, I think and I think that was the first time, I actually took like a very different consensus from other people but if you really go back, the first time I actually took a nonlinear decision was when I was preparing for JEE and this was not a lot of people making that decision. So, it was not a group thing or anything but the consensus was that you should go to a CBSE College and study, and you'll be able to JEE and I realised that I can't go to school and prepare for JEE at the same time. So, for me, what made sense was going to college because in Maharashtra, I'm not sure if you're aware of how the structure is, colleges tend to be and I know whichever college professors are going to hear this, they're going to be like I want to kill you. Attendance is not a big deal. So, they don't really care and I was like a Puna topper and people were like, "dude, you're crazy. why are not you going to college people at 80% go there and 97% people go to army public school and I am like no. So, that was a non-consensus thing and I think it played a very big part in me getting into IIT because if I had to go to college, I would have got stuck with studying in school, I mean, and just doing that work an hour and a half time to actually prepare for G. Then when I went to IIT pick physics, which again was slightly nonlinear. People would pick up chemical or mechanical at my rank, or take electrical computer science. In some other IIT not IIT Bombay.
Again, I took physics because I felt it was what I enjoyed and what I liked and I still do like it. I'm just not pursuing a career in it and these nonlinear decisions continued, like I had a choice between going for the US MBA and doing an Indian MBA. I took the Indian MBA, although the US MBA was possible for me. By that time, it was all groupthink. There was no consensus, it was like my batch mate people. People on my profile, what are they doing, and they all want to go to the US and things like that. So, I guess this process means that I don't care about what people think a lot and that's I think a superpower for me. It also allows me to write online, and there's So, many people who... Many who think positively but there are also many who think negatively and I am pretty aware about it and it allows me to think independently. So, the decision making generally, the nonlinear decision making in my opinion is just being very first principles and being independent and doing something that is relevant to your context and what people end up doing is that they don't know the other person's context, they just think that the decision that the other person made is correct for them without really importing the context. My context is never going to be the same as anyone else ever, like your context, and my context will never be the same. Even if you're making the same decision about the same thing at the same time very different context. So, I think that tends to look like it's really nonlinear, not the linear decision making but I think it's turned out pretty well. That's my summary and a few examples of nonlinear decisions.
Pritish : You talk about decision making, and I'm now reading a very intriguing book, how to decide by this author who has also written how you think in bets and she talks about this concept of, we usually correlate our outcome to a quality of decision and outcomes, are actually based on two main factors. One is luck and the other one is quality of decision and if there is a positive outcome, then we think the decisions we made were great and if there's a negative outcome, then we think the decisions we made are just crap. Right? But actually, they're not correlated, because there are a number of factors that work towards an outcome. So, it intrigues me now that I'm trying to improve how to think about my decision-making process that every outcome which didn't go well was my decision-making process good enough and something else impacted it. So, I think this definitely rolls into the response you gave. Do you analyse your decisions? And I think this is a key part when you are also investing and how do you analyse your decisions?
Aviral : It's a good question. I think that human beings, we have this innate problem of analysing our decisions. Like there are some decisions we take which we over analyse. I'm sure everyone who's married, they're always running jokes about Oh, you're stuck with me forever, you stuck with him forever, right? It's a decision you took, and there is some merit to that joke because I'm sure every spouse is always analysing whether they took that decision, maybe not all the time, but pretty regularly and why I take that example, is that the big decisions that you make in life, you're always analysing them. So, the question really is, how do you analyse them? Should you analyse them So, much? are they worth even analysing, and I think the ones that are I would say repeatable and the ones that you need to take on a regular basis. Those are the ones that are worth analysing, for example, investing or similarly deciding where to put your marketing dollars or making a call on who to select in a football team. There are regular decisions, and you need frameworks, right? That's why frameworks are important. You don't need to have a framework to decide who to get married to because that decision is once in your life, hopefully and why I'm giving that example is because we tend to over analyse that single one decision we made, which never actually required a framework.
So, frameworks are useful and reviewing your decisions are useful when you have to make a decision like that again. I'm not saying that investment is the same as be investment but the general outcome is, you're looking for the same thing, like as an investor, you're looking for a return. So, analysing our decision is important, where you're going to make a similar kind of decision again and again, which was the point I was making about marriage and same thing people do like, Oh, this college and this thing that I did. Changing jobs is a repeated decision you make So, it's good to have if you think about there the things like that. Now, how do you analyse decisions that should be reviewed again and again or are made again and again, I think from an investment standpoint, there are frameworks from let's say, making career decisions that are frameworks, I think you need to come up with and I quote this book by Ray Dalio called Principles, you should come up with principles for yourself and that's what I call the framework. So, you can have like, for me for my career, for example, I have two principles that are very important for me. First is I must be learning all the time. There should never be any phase where I'm feeling like I'm not learning and the second is, I greatly value my independence and being able to do something by myself autonomously. So, that means that I might not fit very well in a big organisation.
So, as you would see, I've never worked in a big company. So, these are my two principles over time, hopefully, I think more principles will come three or four but I don't think they'll go beyond five. Similarly, on your investments, you will come up with a few principles. For example, I'll say that I care that the founder has to be really ambitious. The market has to be really big in the next five or 10 years, there must be crazy amount of customer love that shown for their product. So, I've given you three principles, I could come up with five or seven but in general, like everyone will have a framework of five principles and what you usually do is after you made the decision, you went with the hypothesis. So, I took a job with the hypothesis that, hey, I expected freedom, and I expected learning and then you evaluate that decision after some point of time, when you decide that how I do it generally, is that I will say I'll do it after a year, two years, three years, four years, whatever, right? For my job, I think like in four to five years for investments as well, I think in four to five years. So, generally, I'm not that kind of person who's like, every six months thinking is this the right decision I made? I just park it because you take time. So, what I'm trying to do is answer the questions that I asked earlier, when is the time to reevaluate a decision, which other decisions you should reevaluate. So, you should decide a timeframe, when you will reevaluate that decision for investments, I think it's more important to do it more regularly than your career because you're just an individual your career and you can make those decisions changes very fast is that moving a company is much more difficult than moving a person. Let's say if I want to decide to change my job, I can do it much faster than changing the course of a company. So, reevaluating your decisions in the company scenario is probably better if you do it on a more regular basis for your career longer and then we can talk about other examples but these are the two that I think are important. You can do the same for relationships, by the way, as well. Like, who do you want to build relationships with people? Like what are the two principles? For me, for example, I really value transparency as number one like the person I will go with, I'm looking for a really transparent person and the second as I should be able to learn from this person. Again, that's something that's there at work as well but in the relationships, I build will have two three other principles. In summary, decision making principles and frameworks are useful when you have to make a similar kind of decision repeatedly, you should decide how regularly you want to make that the reevaluation of the decision, and then just generally stick to it. So, I think it's important, and those help you tune your principles. So, you're like I went with these principles, they worked for me. I'll double down on them. This principle doesn't seem to be working for me, maybe it's the wrong one. Things like that and it's evolving. So, today, maybe these two things are important. 10 years later, I don't know if they will be.
Pritish : No, absolutely analysing additions is definitely important ad they will evolve and as you mentioned, Ray Dalio is one of the key principles is radical transparency. So, the first time I actually read that, I found it difficult and I think when I try to exercise it, also people and environment finds it difficult. So, I think you need to bring and build an environment and people to that principle but yeah, again, I'm a big fan of Ray Dalio and the book. Moving on, I think this is interesting and intriguing. You started writing on Quora, around 2015, landed having 30 million views, then started writing on LinkedIn and then you went on to build this community, which is a junior VC, which is amazing. I'm a part of it. Great, big subscriber. So, when I see the activity on Slack, So, for me, I think, an under estimated amount or an effort that goes into building a community, I think it's a very underrated, I would say, ability, or people think it's very easy to build a community, which is not true. So, I would start I think a successful community has a very specific purpose and it fills a certain white space or a need. So, tell us what is the purpose of the community that you've built? And what is the space that you're fitting into?
Aviral : The one line answer is its democratising startup conversations and that's the core of everything we do. Now, I'll elaborate on that, why I think that is required. I started like my career in venture four years back and I've always seen myself as an outsider, insider kind of person. I'm not being an insider and I felt like there is So, much richness in the experiences that happen in the startup ecosystem, and they're not truly captured anywhere the startup ecosystem is described in a very binary way. It's either euphoria when a fundraise happens, or high criticism when something bad happens. There's if you look at any startup conversation, it's not about the normal way of life, which is what the most interesting experiences are. Right making those decisions about shipping a product or how to hire someone. How did you start a company? And I think one conversation I had with one of the founders, who actually ended up starting a company but I had this conversation before he was starting the company. He said, Dude, I can't be like, these unicorn founders. They are amazing. They're superheroes and I'm like, what they were like seven years back and he's like, no. So, that really got me thinking, because nobody will focus on the early struggles and if you actually talk to the sort of founders are very transparent about it but nobody asked them, nobody says, hey, how is your first year when you hired two people on your team, no money in the bank, and you're struggling to survive and that story is there like, for really, a lot, many founders have actually become very successful.
My idea was that let's provide access to these conversations and stories in a more authentic way and that really has always been the goal. When I was alone, starting doing the newsletter, it was the same when we started doing stories, same concepts, community podcast, they're all trying to do the same thing, right the core is that there are So, many people who want access to these conversations. They're either the ones that already exist or not completely focused on what really happens, they're always on the extremes and there's no place to do it in an authentic way. So, we're just trying to solve that, essentially. I mean, but the one line is democratising sort of conversations, bring people together and discuss this particular thing. So, this is the focus for us.
Pritish : And what are your success KPIs? How did that this engagement or what are the KPIs that you look at saying that this is definitely going the direction you want it to go?
Aviral : We actually started measuring NPS a few, I think, half a year back and if I remember correctly, we're at like 69 or 72 or some very high number but that aside, I think, actions really dial you if something is working right, people might just rate very high but never use it. So, what we look at is subscriber growth. number of hits to an article that we do, we just do one article every two weeks, So, it's really low frequency. So, it's imperative that people open it and read, it should be worth it. Then we look at average session durations, our numbers are like really high, going up to as long as 10 minutes per piece. So, for content, usually, it's like less than a minute. So, we are 10 times better. subscribers, as I said, growth rate and we measure KPIs for each product differently. For example, a podcast, we look at retention at halfway, for example, which is how many people stayed on. It's crazy. It's like 82%, it's insane. I mean, I never thought that it will sit in their earphones on 20 minutes down listening to a founder, who they've probably hearing for the first time. Similarly, for the community, we look at weekly actives, as a percentage of the total base. Then for the concepts that we've done, we look at how many people are clicking on because we can track, we have 17 concepts, only people are clicking on the concepts eating it. So, I think it's a mix of engagement and user retention that we really focus on and the acquisition tends to follow. So, our KPIs are all built around the retention and usage kind of metrics, because they really show that something's working and I'm just caveat and all of this is done by Team it is fully part time. Like they're literally spending a day a week at max and that is not the whole day. It's So, it's crazy to see this kind of outcome.
Pritish : No, absolutely. I think this is a great part actually segue into how you structure and build these essays because now the team is big and I understand that I think one of the major roles you play in actually getting all the pieces together. I would like to know that what are the other partners doing in this? Are they assigned to a certain part of it once you have come up with a topic? Is somebody looking only at data? somebody's looking at the body? So, how do you go about it?
Aviral : So, I think we split the products by my colleagues. So, the podcast is owned by a couple of my colleagues, concepts owned by a couple of my colleagues, community stories. So, each of these are owned by a couple of my colleagues, we have designed storytelling, etc., etc. So, that's how we split roles internally but the most like our anchor product is the stories. So, what we generally do is we have a call once every two weeks, which is in the week, between two additions. In the build up to that conversation, which we have every Sunday, which is tomorrow, we will discuss a few topics and that's a really interesting conversation that oh, let's pick this up, oh, this is trending. Have you tried this? So, we come up with like four or five topics, and we hash it out, debated, amongst other things. So, in our conversation, we'll discuss what's happening in the community, what can we do next? What are the new products we can try? Should we expand to other geographies, areas, things like that but the story making processes what I'll focus on, because that's, that's what I think you're asking.
So, we'll come up with topics and then we will fix one. So, by tomorrow, we'll have decided that we want to do a topic. Like for this next edition, we actually decided five days back because he knew this is going to be interesting. So, once we decided the topic, three or four members of the team, say that, hey, I'm interested in writing this and how we structured the pieces is that there are nine sections, and they follow a story flow. So, they'll be the origin, the early success, the initial fundraising, what the business model is, why is this a big opportunity they draw trajectory, some issues, I faced the future of the company right. So, we played out like an actual story, like you read any of the essays, you'll feel you've been transported back to that particular time when the decision was being made by the founder and once we've decided these nine sections, this is going to be our flow, which is a story lining, we'll divide it amongst ourselves. So, someone would pick up part one, two, some will become three, four, and So, on and So, fourth and it's not like one person will do data or someone will do research. Everyone tends to, at least at a high level understand the company basically. What does it do? What's its model, but it starts things like that? And then they'll pick up one of the nine sections, they'll pick up usually, too. So, the team pulls it together and we brainstorm, I trade, things like that, usually, by Friday or Saturday, it's in decent shape, draft shape and then I do the easiest job which is just cutting it down and pulling it all together. I think now, the we've come to such a stage where there's very limited editing needed from me, because we've got the process and the playbook is in place.
So, I tend to not spend a lot of time now editing. If I go back to the early days when I was writing, it's probably one 10th of the time now. Then the editing is done, then we have the newsletter. So, we align on that and there's particular members of the team who take care of that and then we link the article to the newsletter and we send it out. That really is a process. There is no secret sauce to it. It's just that we've built it and I think the most important thing I've realized in this whole journey is that once you set the rhythm It is very tough to break it somehow. Setting the rhythm is damn hard. Setting the rhythm is really difficult. Like we will do these ama's once a week, we will do this once a week but once a rhythm gets started. Like we started a podcast and I was like, super apprehensive about doing it in the beginning because I've never done a podcast and we deliberated for five, six months before starting it but now we have guests for the next I think about half a year. So, when we started, we were like, Who's next? Who's next and now it's like, hey man can't do this just taken off for this week. So, it's about setting the rhythm and that's the real hard part and that's where I'm usually most involve because once the rhythm is set then it kind of gets done on auto-pilot and we have a very helpful community by the way, there are a lot of people who are helping us who are not part of the team, technically but they're helping us with that feedback. They're helping us with that time and it's a good. It’s pretty humbling. And it shows that we are when you're authentically doing something to help other people, like there is no, I would say, I'm not getting any monetary upside or anything out. It's just my way of giving back. So, people understand it and I think they appreciate that.
Pritish : Absolutely. Actually, this leads to me, two quick questions. One, do you build these essays with a conclusion in mind or you look at all the research done, and then you come to a conclusion and the second is anything which is more key, which is, how did you actually land up building this team?
Aviral : Yeah, So, I don't think we ever go with the conclusion in mind. That never is the goal. We see how it evolves in the story, we look for things that contradict our view and then we try to build our view and usually our view is always more often than not showing potential in the company. We are not the guys who will dis accompany or destroy it or make it look like crap because I think it's easier to criticise a startup then talk up its potential because our 10 things happening in a company nine are wrong. This is this getting screwed. So, we don't go with a conclusion, generally. But what we try to do is we layer insights and I think one of the most important exercises we do as a team is list down at least 10 insights or 12 insights we had and those insights can also be unknown facts, hidden gems, that's also an insight. For example, for me, one of the insights in the Amul sorry, that we did, was that Varghese Kurian had to battle the Paulson monopoly, which I was not aware of and it has So, many similarities with tech companies trying to battle big tech today. It's, I'm not saying that big tech is exploitative like the Paulson monopoly was, but the fact that our mood was a startup at one point of time was my big insight, when you see that, like, hey, this company is combating a big but Amul for us has always been this massive organisation but what was it when it started?
So, I think we look for insights and then we layer the conclusion, in there our view on that. How did I build a team? It's a good question and it's happened very organically, I never forced it. I think there was one point of time, while I was writing my newsletter, I was like, either I've got to reduce the frequency with which I do this or I need some help but I can't do it alone. Like my work was obviously becoming a lot more I was getting involved boards and things like that and actually did both. So, reduce the frequency of the newsletter, we reduced, and we got the team and I was like, very surprised when I send a newsletter saying that hey, I need help and 170 people applied It was crazy and that was at a base of when we were like not even 1000. I was like just 1000 subscribers, it's 20% of the subscriber base. So, we pick, there were three or four folks who came very close to the beginning and I was very grateful. They picked me and trusted me and so, we started as a small team of five people in the beginning, including myself and I always look at it as them in trusting me and the rest of the team with their aspirations and how can we help them achieve what they're looking to achieve? Everyone's in this for their own learning and there are personal incentives involved in. I'm not stupid to say oh, there's some charity going on. It's not like that.
So, I think the most powerful thing is to understand what people really want, and enable them and help them to do that. I think one of the things that everyone on the team really enjoys is that they get to own something and then build it themselves. I'm a very principles slash culture kind of person versus, let's do this, let's do that and once we had like, aligned on the broad goals, then it's for the team to do it and I just see myself as a cheerleader, on the side thing that is awesome, the faces keep building So, and then after that start, the team just kept getting built because we will keep reaching out and, and we are quite selective as a group and the most important thing as I mentioned was transparency is number one. So, this culture fit thing is like the most important thing because as you realise it's a part time.
Pritish : Needs a lot of component
Aviral : And needs a lot of commitment, it cannot be something that you're like, I'm kind of doing it and to take time out of your job and do these things. It's a big deal. So, I'm very respectful of that and I'm very grateful to the team. So, I think we are in good shape and we we take it slow, we don't have any such aggressive growth ambitions and we need to return money to some investors. So we are a startup without all the pain,
Pritish : All the bells and whistles.
Aviral : Yes.
Pritish : Great, I think it's a genuinely great community. And one of the examples in the recent startup community within India, I haven't seen this in a big way. So, I really am looking forward to at least contributing and learning and reading your essence. Let's get to venture and business. What are your initial views about the venture capital space in the Indian ecosystem?
Aviral : On this, I'm too young and too early in the game to give a sweeping statement. So, I'd say I'd take 10 years to actually say I know something but I think my view very early on is that there's a lot to do and there's a lot of room for growth. Both on the startup side, as well as the investor side and I call this ecosystem, the startup ecosystem, and not the VC ecosystem, because it is the startups who define us, and not the other way around and I feel like one of the things that is improving is that there are more variety of teams that are being funded now. Initially, it was like really concentrated. I was having a conversation with one of the founders who had started a company in 2013 or 14 and he was like, dude there just 30 people and we would all just meet each other at investor offices because those are the only people raising money and those are the only people investing So, there's a lot more with now, along with depth. And I think that should continue to happen. If a few companies take all the capital innovation will get stifled and essentially our job is to identify innovators and support them. So, these are the Edison's and the Tesla's of our generation, right? A lot, many of them and innovation doesn't necessarily have to mean you build a bulb or discover or invent AC, DC. You can have a better business model as well and I think India has So, many basic problems or need to be solved, because we're a growing country, and So, many aspirations will be met. I think that founders end up doing things that are phenomenal. For example, I don't see this highlighted a lot but one of my friends, was able to manage a COVID scare with his family entirely through some of the health tech startups and he was terrified because he could not go to the doctor in a city and well to do big city with 10 hours of waiting line as you realize cases are growing up through the roof and tele consulted. I don't see this anywhere. I mean, I don't see the government saying wow, what are these guys doing but he was telling me that without these startups, I would have been and we would have been in really bad shape.
So, they are impacting lives, and they're doing No, we were systems and structures in a country that is as young as ours cannot support it. Especially because we are such a big country again, health is such a important example because it's related to life and death. But there are also other infrastructures like logistics, and we get our parcels at home and there are So, many startups innovating there are So, many startups in innovating in education, So, many startups innovating and food and I think that all these companies are just doing a phenomenal job and my view on the venture ecosystem is we should enable these companies and nudge them along and help them and they need to get hurt. So, my view of the manger ecosystem is that that this is how I think we should operate as investors
Pritish : And I think you do say that investments are broadly in three buckets, founder product and market and you think that they are associated to the series of funding. So, what I mean is founder lever investor is looking at a seed stage investment cycle. Do you think there's a correlation there?
Aviral : No. So, it's a great question. Actually, all those three things are looked at, at every stage is just that the stage you are in defines the risk that you're taking. For example, if you're very early on, you're taking risk on everything. Like market is unproven product is unproven team is unproven. When you go to an A, you can say with some conviction that potentially the product is not that much of a problem it is working, there is some traction. So, the product risk reduces, then you go to a B or C, like this team is able to execute and scale. So, the founder is reducing and finally, when you become like really big, and it's still keeping on growing, market risk is getting reduced but all these three remain forever and their importance keeps going in a cycle. For example, when you reach like a billion and a half again, you'll be like, do we need to think of our business model in a different way? Do we need to expand, we need to add products, and you start thinking very different things? But it's always a mix of these three, and you're always working with these risks and at each stage, these risks get reduced. And then as you become bigger and bigger, they become very different kinds of risks. But fundamentally, every investor will look at all these three, I just feel like the hardest stage on picking a good team in a good market with a good product is the earliest because there's no data and it's there's all the risk, which is why the most upside is there for seed investors.
Pritish : Yeah, I think you had defined also how you evaluate a founder of the team and there was one specific thing you mentioned, which was intellectual honesty. So, can you can you define what that really means? Because honesty I get but when you add intellectual honesty, how do you define that?
Aviral : Right? So, one thing I learned is that, neither does the founding team know what will work, they have a hypothesis, and the investor for sure, doesn't know what will work they are backing a hypothesis and I am very humble and admitting that the founder always should know much more than the investor otherwise it's a difficult situation. And some of the biggest successes are companies which have changed their approach to a market. They call it the model and they call this thing, the pivot. I just think that reminds me of that old Hindi story, which I think is a Ashoka and Chandra one of them, where his mother is explaining that you don't make the roti from the center, because it's the hottest you go from the edges. So, I started with basically like the kyogen market, and they trying to enter into the market through different wing and then they find one works, the others probably didn't. So, that's a model, at least how I look at it visually and it's not a circle and it's not somebody entering a fort or something like that but it's a good visual example of how it works and you really don't know what will work that this is an opportunity and you are the team but how do you get in and tag this market and founders who think that they know it are more likely to fail and succeed because like honestly, nobody does.
Everyone goes with a hypothesis and it's proved to some extent or disproved to some extent, you need to always take the data and accept it for what it is. and be honest about it and I'll explain what intellectual honesty means that I had an idea and it was disproved by data or through conversation or through something and I accepted it honestly, that my idea was wrong or my approach was wrong. Intellectual honesty is that and it's really powerful and really difficult. I myself, don't think I'm 100% intellectually honest because it's this we are tangle of ego and you have the ideal link to your personality in your life and this idea succeed means I succeed, and founders who are intellectually honest, and to really never have an ego and they're like, Okay, this is not working and we try this and we try this, there's So, honest about their approach, that they figure out what works and it's always a process of discovery. You might be lucky in your first head, and you're like, fuck this works but after some time, you'll be like, Okay, this is not working, I need to figure something else out. So, an intellectually honest founder, will find their way through this maze of discovering what really works as a founder is a process of discovery and if you're not intellectually honest, you can be honest, but you can be intellectually dishonest, which means that I always tell everyone truth but when somebody disproves my hypothesis or my ideas, I don't agree with them, and I don't believe them and that's like the death knell for a founder because that curiosity is extremely important.
Pritish : I think this tie back to the fact of radical transparency, whenever you are questioned, and right, you need to analyse your position and agree or disagree with high facts? How would you say that a company like Amazon, is able to actually build its way into Bharath versus the indigenous companies like Swiggy and Zomato?
Aviral : I leave my hypothesis; I don't know if it's true. I've never worked at Amazon, but it's just as an analyst is that they have intellectual honesty as a process as a company and that intellectual honesty is translated into their mission which is putting the customer first. They are like if the customer wants this, that's the truth. Whatever you think, or what I think doesn't matter. It's intellectual honesty, encapsulated and they operate the organisation in that manner that they are able to discover what works for a market in a very Amazon type way, which is why I said the process is intellectual honesty. So, at the core level if you talk to anybody who is potentially like a manager or a senior person at Amazon, their very first principle, they care about the customer and whatever is working for that market, they will push and make it happen, make, they will ever go with their set approach that Amazon US works like this. So, Amazon, India will also work like this. In fact, they have radically different ways of operating in India and the US. So, many things, for example, the cod, they could have just said we don't do it in the US. But they do it in India. I'm not saying that they discovered it but it's flexibility of an organisation and it's in their DNA. I mean Swiggy as an example, I don't know if it is because I think they also done a good job but I'll just talk about Amazon because it's such a unique company. It's not scaling the same product everywhere. For example, WhatsApp or Facebook, or an Instagram, the same platform. I know it's their algorithms, recommend things based on your tastes but the physical nature of Amazon makes it So, different and such a different beast that I really admire how they do this, and they unlock value in every market and they have not one in every market, right? For example, in China. They failed in Southeast Asia, they failed in India, they're doing pretty well and I think it is because they've honed their processes and they have got this intellectual honesty and culture of putting the customer first, very deeply embedded into their teams and I think that's why its books.
Pritish : Do you think Indian startups are improvising or innovating?
Aviral : How do you define improvising? What is your definition.
Pritish : My definition is they look at what others are doing and implementing it into the Indian ecosystem I'll give an example. I think WeChat is an innovation in China, creating the whole super app concept. I haven't seen something which is very unique to India, which has scaled within India to almost ignite 70% of the market and actually gone beyond.
Aviral : It's a good question. So, I'll tell you what, I think I'd thought about this quite a bit. There are phases of innovation in society or in our country and we should not forget that China was literally an optimisation machine. Not very long back, maybe, let's say 1015 years ago, what they were essentially doing is improvising at scale, manufacturing. They were not doing anything new. They're just doing it better and costlier and I don't even know if it was correct for the correct way or the right or no, all those things aside, it was improvisation at scale and only after you improvise, can you innovate? You cannot innovate from day one, if you don't have the resources and I don't recall the exact source but there are these four stages of technical innovation and China has reached stage three, India is not there yet, where they have started building their own tech but they are still not at the cutting edge like the US and you will start seeing shades of this happening in India as well. Maybe there was startups that were improvising in the first phase but there are So, many that I can point to know that are unique innovators, for example, when PTM started, I don't think any country has seen that at any scale, potentially China, but definitely not the US and as we enter the new decade, there will be tons of examples.
I think one that I really like is postman. In India, they built a gold standard product. It's nothing like it in software and that's to innovation. So, you need to improvise first, as a society, to build the capability to innovate, because innovation is costly. It cannot happen overnight because so, many things have been discovered. So, many resources have been spent already. In fact, I was having this discussion with my professor and he said, the fact that big tech companies are so, big allows them to innovate because they have the money to do it, like Google cannot spend billions of dollars on DeepMind to figure out how proteins fold, which is unrelated to search, if they didn't have that balance sheet. So, there have to be big enough companies to innovate and those companies probably are improvising at the beginning, and that country is improvising. But as a society, I think we will, will start we're already seeing pockets of innovation. Most of us actually don't see what real innovation is happening, which is not at scale, could be ad could be at a local level, I would say like a moon, for example. It was an innovation, the way they solve the milk problem has put India at number one from being a daily staff country. So, there are pockets of excellence and innovation and I think that this will continue to happen. But I firmly believe improvisation first, then innovation. It's absolutely fine as well.
Pritish : True. That actually brings me to another thought that you had mentioned that investing into bottom up businesses, looking at the portfolios of Bill and Melinda Gates, when you think of such businesses, the matrix that you look into them, because they are very difficult to scale because they are really looking at markets, which are more heterogeneous and homogeneous. Would you actually look at SAS businesses differently than compared to somebody which is coming from a top-down approach?
Aviral : I actually don't know how to evaluate those kinds of businesses. At the end, there are specific funds that are impact focus that do it. The metrics that they're looking at, tend to be slightly different, because they're looking at more things than just economic returns but I think fundamentally every business which is for profit has the same rubrics to be evaluated. Can it grow by itself? is its cash flow good enough? How is the team shaping up? Is the market big enough? And I would ask these questions for anything and everything. I think the ones that are actually trying to solve societal problems. I think entrepreneurship does solve societal problems, it's just not very direct. employment is like the biggest panacea to everything like poverty, education, all that follows if someone's employed but if you're like solving for I want polio to be eradicated, or things like that, sometimes those don't have any return on investment, even in 10 years, but they couldn't 20 or 30 and there were very few balance sheets, and very few investors who could tolerate or Kind of, yeah, So, you don't have that to do ii but if you're looking at pure economic returns, generally, the metrics are the same when the societal changes and indicators need to be improved, which are much more difficult and very long term, then you have to look at it with different metrics, of which I'm not aware what I can just think that there are a few metrics that are important.
Pritish : Sure, I think Gio, to me is a bottom of case, because they're the product quality or the brand equity is not a key factor. I think accessibility is yes. So, do you think that in a bottom-up case, product accessibility is a bigger factor than...
Aviral : Yes. 100%, you put it very well, I actually think that what has been solved in India and my observation is that Indian access has been solved, which is why a lot of startups play on the Dow Mow but the income and access to wealth has not. So, that second part is where you build a business. Otherwise, you just have a user base.
Pritish : True and I think you've talked about Amul, you've written about Amul, you've written about Haldiram and these guys have definitely built a massive business and a successful business but you do talk about the brand equity, quality and marketing, which defies all the aspects of what in a modern day be school start. So, these guys look at or analyse consumers and their needs differently.
Aviral : I think they are very intellectually honest. Again, this point of intellectual honesty as a business, I think is putting your customer. I mean, there's this quote that says customer is god that if we were.... To Gandhi, I don't know if he ever said it but anyway, customer is god. person was giving him money, should know his or her needs and I think that they are just So, honest and humble about the fact that the customer knows everything, they'll put the customer in front of them, and ask the customer what they want and some people just don't do this basic thing and doing it at scale is a real hard nut to crack which they have obviously cracked, which is why the brand has ramped up So, much equity. I don't know their how they came up with these processes but they have like really deep RND divisions. They will do customer dipsticks; they will do group testing the taste testing. The thing about food is how it works. If it does not, someone would like. It's not like 20% retention Amul paneer. It's like people like it, or they don't like it. So, a product will work or it will just fail. They'll it'll never, they'll never be a use case. It's half and I think the fact that they have to be So, close to the customer allows them to be really honest and you have to remember that these companies have been around for decades, which really helps to know venture business can get these kinds of returns.
Pritish : Absolutely I think they have very customer centric and they are I think solving the basic needs of the customer, specifically the Indian customer, we may think that bhujia that we eat from Haldiram is not a basic need but if you ask the Gujarati.
Aviral : It is basic need for me as well I'm not a Gujarati but it is.
Pritish : Okay, in closing, I think I have two questions. One, are you leaving money and opportunity on the table from the dishes that you have made given the kind of trajectory and traction that you've built over the years?
Aviral : Have I left? What are the two things?
Pritish : Money or opportunity on the table?
Aviral : I've never optimised for money. So, I don't care and I don't think I've left any opportunity on the table. Yeah, that's my sense. I may be wrong, but that's my understanding. I've always optimised for learning opportunity. I'm not a monetary leader and I think money is a byproduct if you have to create value to make money. If you're not creating value, not make money. It's fine.
Pritish : Brilliant. Now, quick three rapid fire questions. One sentence or one word, your most favorite book?
Aviral : This is a toughest question. I don't have an answer for this. I don't know. Which one should I say? Because I've read So, many. I don't know. I don't have an answer for this one. Sorry.
Pritish : Sure.
Aviral : I'll give you three. It's Shoe Dog by Phil Knight, Harry Potter series and Alex Ferguson's biography. These are my three favorites.
Pritish : Great. The hardest thing about your job?
Aviral : Saying no.
Pritish : Your most favorite superhero?
Aviral : My dad.
Pritish : Brilliant. Aviral it was a pleasure having you on the 1% project. Thanks for your time.
Aviral : Thank you, Pritish.