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Upgrade with Vivek Khare on everything you need to know about Angel Investment.
86 Plays4 years ago
He defines his journey to angel investment as “Serendipity”. Having been an investor in Zomato, PolicyBazzar.com, Cashify, Jaypore and Happily Unmarried to name a few, our guest on the show, now has a portfolio of 17-18 startups!
Tune in as host Nakul Kumar settles in for a candid conversation with Vivek Khare as he shares the story behind his genesis as an angel investor and his take on how to get started as an angel investor, scaling a startup, and how founders should balance business and technological evolutions.
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Transcript
Introduction and Guest Background
00:00:00
Speaker
Hello guys, welcome to upgrade with Naakon. The point of the show is, we meet interesting people, they give us their productivity hacks, the technologies they use.
00:00:31
Speaker
Hi guys, welcome to another interesting episode of Upgrade with Naqul or Aj. I'm very lucky to have Vivek Khare with me and I now know Vivek for almost 3-4 years. Vivek? Yeah. And Vivek is the only angel investor we have in Cashew Fire. Welcome Vivek to the show. My pleasure sir, thank you for having me.
00:00:59
Speaker
So guys Vivek has a very interesting journey of where he started and where he has reached now. And so he has a huge portfolio of companies where he has invested in. And he was earlier with InfoH. And I think still an advisor to InfoH. But Vivek, please tell us how you started. How did you become an angel investor?
Vivek's Journey to Angel Investing
00:01:28
Speaker
What was that journey?
00:01:30
Speaker
So my journey to angel investment is serendipity. I joined Sanjeev and nakri.com in 99 and that itself is a very interesting story because I went there as a client. I didn't know how to, you know, convey what I was doing. I started my career at FIDG. And FIDG, as you know, is a test prep school.
00:01:56
Speaker
So that was an interesting journey. I was at FIDG for four, five years, saw the massive growth there. When I joined, there were 80 students and 11 faculty members. And six years down the line, we had 27,000 plus students across all programs. We had more than 100 faculty members.
00:02:17
Speaker
And so I was, again, very lucky. I thought that was very normal that an organization grow. So actually, in the hindsight, that was, again, an explosive growth that I saw of a startup into a full-fledged company. I've never thought it that way, but you would model FIDG truly a kind of a startup with a hockey stick growth.
00:02:43
Speaker
Nobody, nobody thinks about it like that. Exactly. Exactly. So it's only the hindsight that I look back. That is a period when they discovered everything. What kind of marketing will work? What kind of pricing will work? How will you scale up? How will you get more and more faculty? So, you know, you were experimenting. Some of those things were working. Some of the things were not working, but
00:03:10
Speaker
More things were working than the things which were not working. Let me put it this way. And then you were selling something to Sanjeev. No, I was buying something from Sanjeev. Even Nokri was a very, very early stage startup and they had all kinds of services. One of the services where they used to help people write their resumes.
00:03:33
Speaker
And I was kind of getting bored of Fidji because I was not very sure this is what I want to do all my life. And you know, that's what I'm saying. At early stage, people should try out various things and then figure out what they want to do eventually. But if you don't experiment early enough in your career, then you get stuck in the wrong job.
00:03:56
Speaker
So lucky for me that I kept on experimenting and as a part of that experiment, I ended up being at Sanjeev's place for help and trying to figure out what I should be doing next. So the idea was too that, you know, they will help me articulate what I want to do on my CV.
Joining Nokri.com and Overcoming Initial Challenges
00:04:14
Speaker
And the next thing I knew was that Sanjeev's partner offered me a job. You know, we are looking to augment our team. Why don't you join us?
00:04:26
Speaker
So both the jobs you had were through first time you were being a faculty and second time you were using the services and converted into job, which is very interesting. Again, I would not call it luck. I would say that people saw something in you.
00:04:48
Speaker
Yeah, I mean, the thing is, I have to say, I was taking the risk and they were taking even bigger risk with me, I agree. So even today, when I talk to Sanjeev, Sanjeev's recollection of the whole thing is very, very different from mine.
00:05:01
Speaker
His whole thing was, I think you were one of those disgruntled people whom we were not able to help. And we said, why don't you join us? That is his version of the meeting. And my version of the meeting is, you guys were looking for somebody. You said, if you can earn your own salary, you are welcome to come and work with us. So that is the way I remember it. Then what happened? So what happened was that, by the time I left Fidja and joined Nokri,
00:05:31
Speaker
I was doing reasonably, okay, I won't say exceptionally good or anything like that, nothing like what my other batch mates were doing, who were either in technology or they were in management, but I was doing reasonably fine. And Sanjeev said, you see, we can't afford you. In fact, I remember that conversation. The run rate for nochre.com in that year was 20 lakhs.
00:05:53
Speaker
At that rate, they would have done 20 lakhs and I'm talking about, I had met them in November and they said, if we go at this rate by March, we will do 20 lakhs for this year. And so I was like, will you be able to afford me? So he said, no, it's not a question of me affording. You will have to come and earn your own salary. You said, you have to grow your own salary.
00:06:22
Speaker
So all we will do is maybe protect your take home salary that you are getting. And you know, obviously the thing is all the cash components and all of that got away. So I actually joined at a 40% salary cut I joined. And by the time the pie was there, and there was a lot of people from FIDG were joining pie. And both of them wanted me to stay back in that domain.
00:06:52
Speaker
And I was getting a huge salary jump. If I were, if I would have agreed to join PI and I said, no, I don't want to. And so, you know, those are the kinds of things when you look back, people said you were getting a double the salary and you went to a place which where you took a 40% salary cut. And today, if you asked me to justify or figure out why I did that, I have no idea.
Building Nokri.com with Customer Focus
00:07:10
Speaker
I have no answers to that, but it was just the charm of doing something different. I wanted to experience it. Uh, that ended up joining.
00:07:19
Speaker
So this is very interesting and I'm trying to relate it to the existing setup nowadays. When you're looking for people to join your setup, especially from an established company, they expect more because they are joining a startup.
00:07:39
Speaker
And you are not a startup, by the way. I mean, you have raised your Series B, you have all the resources. But is that expectation wrong? Hamla, the risk is very less. Yeah. Yeah. Yeah. So that's what I was trying to say. There are different kind of people and, you know, organization at a different level. So what I've realized is that he and, you know, today, I mean, we can come to this at a latest point.
00:08:01
Speaker
It is very important to get the right kind of people at the very, very early stage when you are genuinely a startup. And by definition, a startup is somebody who's trying to figure out things, doesn't have resources, has everything stacked against their success. And just by diligence and just by hustle, they're able to survive. That is the definition of a startup.
00:08:23
Speaker
I mean the founders need people who will do the heavy lifting on various aspects. You need to get your sales right, you need to get your marketing right, you need to get your HR, finance, admin, product, tech, all of those things right. You don't know what will work. So you need very very committed people who will not look at this from the point of view of transaction. They need to have the faith in your vision, what you're trying to do.
00:08:50
Speaker
And people you will succeed. Otherwise, you know, it would be a tougher journey. Yeah. I love my expectation early on. For example, the interview, the interview of Lana, the short list, the timeline set, the greet, the coffee Lana.
00:09:20
Speaker
I remember some early joinees said that I had an interview with them and they said please schedule it for us. I don't know if you want to schedule it for us or not. It was weird that the founder of the board had to interview us. I don't know. I don't know if the board of the board will be recruited.
00:09:51
Speaker
Okay, so then how was your journey with Nokri?
00:09:56
Speaker
So when I joined, there was no fixed agenda. There was no job description, nothing. They figured out you come. So, and maybe, luckily for me, what had happened at that was that because I'd seen the Nokia scale up, I was instrumental in putting a lot of processes at FIDG. And I won't say key. So one of the very important things we learned at FIDG was the importance of marketing and leads.
00:10:27
Speaker
You have to take it to the logical conclusion. You have to keep tracking him.
00:10:57
Speaker
and keep sending him, now we have a two year course and a one year course and the correspondence, then test series, yeah, oh, yeah, oh. Try to get him to take at least some course. So I was very particular, he was the larger my funnel is, more enrollments I'll have. So, you know, we were very, when it came to the leads, we were very sacrosanct about that. That no lead should ever get wasted. You have to be very, very careful with those leads.
00:11:29
Speaker
And when I came to Nokri, because Sanjeev, all of them were struggling, that discipline was not there when it came to the leads. And the leads in case where the companies
Funding Challenges During the Internet Bubble
00:11:41
Speaker
who wanted to recruit the recruiters, the phone calls which are coming, and things like that. So the first thing I said was, this is something which I know I let me put the system in place.
00:11:58
Speaker
I had learned access which was the Oracle Cast version, the Microsoft version of database.
00:12:10
Speaker
So I knew how to program a little bit there, and it was basically Excel. So when I came here, so one is obviously I did that, whatever little bit of marketing which was happening, I used to do that. Because this is what I had done at FIDJ. So the first thing I said was anybody who's coming in to buy anything, I'll handle that. I know how to handle that part. Let me do that. And I still believe that I was a reasonably good
00:12:39
Speaker
I used to do that part and there was a lot of free time and that's the time when I started picking up what are the technologies which are there for internet. And they were all evolving at that point of time. I mean, even database, there was MySQL and there was other databases which are coming up. There was a question of what you want to do as far as the language was concerned.
00:13:09
Speaker
So anyway, I had a very close friend who tell me that eventually it will be PHP MySQL, which will win this battle. So you learn PHP MySQL. So one thing I want to clarify is only to target individual knocker seekers and not
00:13:30
Speaker
The current model where you are targeting actually companies who are looking for candidates. No, so the way it was decided was that our thesis was that there are lots of jobs which are there. We aggregate all the jobs which are there. And so that point of time, all the jobs were in either the newspaper or the classified sections of some of the business magazines. So, how did you get the jobs?
00:13:58
Speaker
The market was published, the media was published. The aggregate of the website was aggregated with the same contact details. The number of emails, the job, etc. had been applied to the website. So, they had to apply to the website. And there were lots of IT jobs at that point of time. I mean, this was the 1999-2000 wallet period. And there were a lot of IT recruiters who wanted the guys to go for the Y2K.
00:14:27
Speaker
Job-shoring, onshoring, because they needed these IT guys. And then they realized, boss, they were getting a far better response from Nokri compared to when they used to give this small classified ads in either times of India or Hindustan times. Nikhil, how did you solve for attribution? Because you were... That is something which I realized. You know, if you don't have a job, how do you do it? How do you do it?
00:14:55
Speaker
He has this knack to figure out that he has a response. So these guys, though they realized that the ad had come from, they had given the ad in the newspaper, but the response that they're getting is not coming from the same newspaper. The response is coming from nokre.com.
00:15:15
Speaker
when you're talking to the clients, the people that you recruit, you will talk to them and they will say, and then they realise it was far easier to give that same ad to us. It was cheaper. It had a longer shelf life. And there was a natural selection because the ad was only available to the people who had access to the internet.
00:15:39
Speaker
rather than to every internet job. So they were the first, you know, the first set of happy customers. They were the first one who dished the traditional way of recruitment to Nokri's way of doing recruitment.
00:16:05
Speaker
And when I look back today, I mean that learning is very, very important. You need to have these one set of customers who are extremely happy no matter how crappy your product is, how buggy your product is. They are the ones who will ditch the old way and pick up you as a new way. Newer evangelist. They are your first set of evangelists. They are the early movers.
00:16:30
Speaker
Even early movers were the enthusiasts. They were the ones who will pick up the new things and then the early movers will come in because they will realize they will have an advantage over others who are still continuing with the old way of doing things. So for every startup going into a new product or service, finding your initial set of really early adopters is the key.
00:17:04
Speaker
Even when I look at my paradigm of angel investment, I always look at these things till you have that one set of clients, one set of users who are exceptionally happy with you. They just love your product. Till that time, your discovery
00:17:26
Speaker
is not over. Don't try to, you know, scale up till you know there is some sort of people who are very happy with you. And as an angel, that is what you need to do. You need to, you know, keep hold back the founders. Don't go to other cities. Don't go to other domains. Don't go to other niches. First, get the things right here.
00:17:50
Speaker
So we were able to get it right for the IT consultants and then the IT companies came and then other people came and then you know then there was no stopping us. Then you again you will get that hockey stick growth because it works and you try to you know overgrow you will keep making losses and the more you sell more you'll lose.
00:18:17
Speaker
Got it. Okay, now let's continue with your journey.
Transition to Jeevan Sathi and 99acres
00:18:23
Speaker
Yeah, so this is basically 99. So 99, again, as I said, the things were going right, we were at the right time, IT consultants started using us, they were having good time. So the listing piece worked very well for us.
00:18:39
Speaker
And in 2000, 2001, during the internet bubble, first one, we started facing the... We first got a whiff of the competition. There were a lot of people who came in who were far better funded. Had a far better idea. They came from Silicon Valley. They had seen the monster's journey and things like that. There was a competition which came from Singapore, Malaysia. JobsDB was there. Quite a few websites came and they were very well funded.
00:19:09
Speaker
And Sanjeev was of the opinion, we are doing a dhanda, we are doing a startup, we are making money, we are profitable, so we don't need to do anything different. So the initial few meetings, you know, he simply refused, I don't even want to talk about it, I don't need it. And you know, it's a very interesting coincidence. We were in sector 2 of Noida.
00:19:38
Speaker
And, you know, five offices down, we had India Mart. And you had 197. So all three of us were in the, you know, within the walking distance of each other. All the companies had a Saturday, 98, 99 on first April. New financial year.
00:20:06
Speaker
Well, Apsap by 2K Valle. Apsap by 2K Valle. And all of us got chased. Mala, at least, you know, when you talk to Dinesh, he also got chased like crazy. For instance, and we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we were like, you know, we got chased like crazy. And we
00:20:45
Speaker
So for me to understand the concept of VC and how that works took me at least two years. The luckiest thing for us was that eventually by the time we came around and we realized that we'll have to raise money because otherwise we'll get outspent on marketing.
00:21:05
Speaker
You know, by the time that the bubble was subsiding and when we took the money, I remember Sanji kind of shielded the executive and the starter from that discussion. So that is a discussion we front-ended and the guys like me who were working in the company were not privy so much about those discussions.
00:21:30
Speaker
But eventually we realized, okay, we have been able to raise money from ICICI and the money will come in three tranches. It was seven crore. The amount was seven crore, which was supposed to come in three tranches. And we had taken the first tranches. I remember we used to have a restaurant in which we used to write, you know, all the collections which were there for that day.
00:21:50
Speaker
because Sanjeev had a full-time job somewhere else also. And we used to get a check of 300. And if you're very lucky, we'll get the check for 6,000, which was our the highest product, the annual job listing unlimited jobs for 6,000 bucks. So those, if you get two or three of them in a day, we used to be very happy. And there was this pion whose job was to write down all the checks which were coming in.
00:22:20
Speaker
So in the evening I was sitting and I went to the restaurant and I saw this one check of 1 crore, 99 lakh, something, something, something. I was like, what kind of service? Why has this check come? And then we realized that was the disbursement from ICICI, which had come. So the draft had come and we entered into our sale.
00:22:52
Speaker
Exactly. But so it was a very interesting time, but it was very innocent times for us at that point of time. We made a lot of mistakes, but the time was more forgiving than it is now. We kind of survived. And so what happened was that once we had taken the money and we had just started doing a little bit of advertising that the bubble burst.
00:23:19
Speaker
And luckily for us, and so we simply shut down all the marketing. But what happened was that we shifted to a bigger office. We had opened seven, eight more cities. We had had a lot of salespeople by that time. So we had a fair bit of burn by the time I remember the burn was to the tune of around 25 lakhs. We were doing 40 lakhs of Karcha and we were making 15 lakhs of revenue every month.
00:23:51
Speaker
And we had basically six, seven months of money left in the bank. And I still remember that is the time and the cool was that, I said, we will not dispose the second tranche. And I do the tranching bit. There's the tranching and they said, because things have completely changed, we will not release the second tranche.
00:24:19
Speaker
And so that's what happened when Sanjeev came and said, you know, okay, boss, we'll have to do something very, very drastic. So all the people like, they were what we had, we had a concept of EC, the executive committee, where we had these five or six divisions of senior people. He said, all of us will have to take the salary cut. And the only way for us would be to try and see if we can grow out of this problem rather than trying to,
00:24:46
Speaker
you know, curtailed the company. So we said, we will do whatever it takes to sell more and all the other kharchas will go down, but we will not touch the sales. So salespeople incentive, their salaries, their, you know, travel budgets, nothing was touched. Only our salaries, the only the salary head was curtailed. And
00:25:13
Speaker
That's even a long story because we eventually went to the ICSN set, because we are meeting our numbers, we are exceeding our numbers, how can you not give us our second tranche? There were 32 companies in their portfolio, they didn't give money to any one of them, we were the only company who got the second tranche because we were meeting our numbers. But the fun part is that when the second tranche came, we never used that second tranche.
00:25:37
Speaker
We were able to break even. So the whole of Nokri got created with two and two crores of investment. And we actually didn't take that third branch. Sir, let's tell me more about your Nokri strength.
00:25:57
Speaker
We were able to manage the operations of the technology we were able to handle. We were able to manage all the resources we needed. We were able to hire more people. People who understood the technology better. We were able to manage all the materials we needed. We were able to manage all the materials.
00:26:25
Speaker
Ustaka Dhanothi was doing very well, it was very successful, so not many people wanted to take chance with a new business.
Investment Philosophy and Involvement with Zomato
00:26:31
Speaker
And again, as I said, you need to keep experimenting till you figure out what you are good at. So as a part of my experimenting for operations or technology, then I moved to handling the business. And by the time I started handling Jeevan Sathe, Taptap Shadi and Bharat Mattri Mini were fairly well established. So they had a massive lead over Jeevan Sathe.
00:26:54
Speaker
And in the classified, what happens in a small place, you can't have two or three players. But luckily for us, the learning was that, I mean, luckily what happened at Jeevan Sati was that people marry in their caste, they marry in their community. So there are multiple segments within matrimony. So we considered the markets where we knew we will never be able to compete. To analyze, Shadi was very, very strong.
00:27:21
Speaker
You are very clear to your boss, you can't compete with Shadi as far as the NRI market is concerned. So we considered that market to them. South Tamil, Telugu, Malayalam, Kandar. Bharat's matchmaker is very, very strong. So we were like, you boss, you can't compete. I mean, you'll do the same search. I'll get 50 results. They'll get 4000 results. So I was like, why will anybody come for those 50 results? So we kind of considered that, but we understood the Hindi hard belt far better.
00:27:51
Speaker
So we considered it there. And that's the reason why Jeevan Sati still survives in that space. It's now profitable. Not profitable, I would say, but yeah, it's not losing money. So we can kind of control the spend there. And it has been growing. So that was a very, very interesting journey. I handled Jeevan Sati for five years. In all the five years, we grew both volume and value.
00:28:21
Speaker
And so that was that. And in the meanwhile, we also had 99 acres. So I got the technology and the product was reporting to me for 99 acres. And in Jeevan Sati, what also happened was that I realized that the data was very, very important. It was all a game of marketing. It was at what cost are you getting the profile and can you monetize those leads or not? So
00:28:51
Speaker
There I realized, again, as I said, I mean, I always had this bent in marketing. I always understood it's a question of how valuable I always valued the lead. Spending money, you get the lead and you convert that lead. That's the paradigm, right? You spend money, you get the people to try out your product, and if they're happy, they will pay you. So the question is, how much money are spending?
00:29:14
Speaker
in marketing and against that thing. So it's a question of CAC versus LTV. So I didn't understand those terms, but I understood the paradigm. It was spending money, you need to be able to make enough money out of that marketing. So I had put a very, so what happened when Jeevan Sati was very, very fascinating. That's the time when Google had just came in. Marketing was still between Yahoo, Rediff, Hotmail,
00:29:42
Speaker
And you know, all these kind of places. And what I very quickly realized, that's what I was telling you earlier also. As a marketer, you realize, boss, the guys who are paying you, from where are they coming? And I realized very quickly, the guys who were actually converting, whether not switch were coming from Redef or from Hotmail, they were coming more from Yahoo and from Google.
00:30:10
Speaker
Which were more far more expensive for us to advertise on but I said he was this that's where you have to spend money because that's from where you get the conversions you may get the cheaper profiles from rediff but the point is that if that guy doesn't convert what's the point and how maybe it was very mother intuitively it made sense if you're gonna get an 18 year old boy to restore and even Sati he's not gonna pay you and you know at that point of time for the cricket they used to have this you know pop-ups of this cricket scorecards
00:30:41
Speaker
and they use to advertise Jeevan Sati there. So obviously the guys who are watching cricket are not the people that you want for Jeevan Sati. So that was a paradigm I understood and that is something. So we hired a lot of very, very intelligent people for data analytics.
00:31:03
Speaker
So I take the credit for introducing the rigor of data in, uh, info edge. And then that thing was something which was, you know, taken to not create to a very large extent. Even because they're also the same thing was there. Okay. You want people who have four or five years of experience. You don't want freshers, right?
00:31:22
Speaker
And, you know, the marketing was only, uh, being judged on what is the cost of profile. And I was like, it's not about the cost of profile. If those profiles are not wanted by recruiters, what's the point of getting those profiles? We'll spend more money on getting the profiles, which your recruiters want. So now there's learning that not all leads are equal was something which, you know, that, uh, that paradigm shift in marketing happened because we started looking at data more rigorously.
00:31:53
Speaker
So, I understand that on Nokari, but Jeevan Satyime, and first of all, for our listeners, I want you to explain what is CAC and LTV, so that when I ask more people questions on both CAC and LTV, then they understand. So, CAC is basically cost of acquiring a customer. So, there is a funnel, Apne Advertising Curry, some people click on your banner, although those people who click on your banner, some of them come and register with you.
00:32:21
Speaker
And registration, maybe you may have a process that is if, you know, just the lead capture and then there is more detailed capturing that you do. So you figure out what is the cost for a lead? What is the cost for somebody who comes and complete the profile? So, so what may happen is a thousand people clicked on your ads out of those thousand people, four or five of them have ended up completing their profiles. And then out of a hundred profiles, maybe one person has paid you.
00:32:50
Speaker
So what do you look at is keep, you know, by how much did you pay to get a one person to your paying member? So what's the cost of that customer? And if 1000 clicks makes you one paid customer, so the cost of 1000 clicks is one paid customer. That's your that's my CAG.
00:33:13
Speaker
and what is LTV? LTV is a lifetime value so if it may happen that you know the person may end up taking a service twice or thrice in the lifetime therefore you say okay if a person comes so for example I'll give you the real life example in our case my CAC was 2500 rupees I was paid 2500 rupees of marketing to get one person to pay me
00:33:35
Speaker
And my LTV was around 4,000 bucks. He will come and take the service twice. My average cost was 2,000 rupees. So I'll make 4,000 rupees on that person. That is one part of the story. And the second thing was that of the 100 profiles that I was getting, I had to pay for 60% of them. 40% of them were organic because my brand was strong.
00:33:54
Speaker
How much money did you make? How much money did you make? So the idea is that if you want to make a brand strong, if you want to make a marketing product, people will come simply because your service is very strong, there is a word of mouth. But if you are spending money, you should be very clear how much did you spend to get a customer and how much money did you make from those customers. And that is what I say, you should always be positive. I remember when we invested in policy bazaar.
00:34:23
Speaker
The biggest scare we had was that the amount of money that they were spending to get one lead was humongous. And the money that they made from the commission was so less that this ratio was completely loop-sided. So I have two specific questions. One is regarding Jeevan Sati.
00:34:52
Speaker
For Nokia, it is a recurring customer or a person changing a job every two years or a company will always be floating. But G1 Satik, you get married for most of the people, it will be once. So, LTV Thomas, A key bar one. And it is always acquiring new customers every time.
00:35:16
Speaker
So how do you? So I mean it's a very good question because you know that if your service is very good then you basically drive away your client. Yeah. The successful client is off the platform. Off the platform, yeah.
00:35:33
Speaker
So the important thing, so that's the reason why it's very, very, the testimonial part is very important. The people should be very happy and that testimonial root will ensure that your organic growth is high. So that's exactly what happened that, you know, you will become a known or a preferred brand in a certain community. And once you are the preferred brand, then you will get, you know, more and more of those profiles. They will find value and therefore your cause of acquiring those profiles will keep going down.
00:36:01
Speaker
And if your cost is very less than your LTV is, you know, then that ratio becomes very, very in your favor. So, but were you also measuring the other successful marriage? How many new customer would a successful marriage bring you? Because the sad part about the business is that even the testimony is not many people.
00:36:31
Speaker
So let me rephrase. So I'll come to another. What you said was very important key. What I realized was that when I used to, I used to do the sales for Jeevan Satya also, I would call up people and say, why don't you take our membership? And when I was calling up, I realized there were certain kinds of profiles that you want to call. And what were the characteristics of those profiles, which you knew that you will, you will be able to convert the characteristics where that key does that profile has a photograph or not.
00:37:01
Speaker
So if you find that the person has not even put the photograph, you knew there is very little chance that you will be able to convince him to pay. Because only the people who were serious and genuinely wanting to get married would put up the photograph. So photograph was one big indicator whether the guy is serious about paying you or not. And also maybe the quality. I'll come into that. So that is second thing used to be who has put the profile.
00:37:28
Speaker
If the profile was posted by the parents or the sibling, then the chances that you'll get the payment was much higher. Then the third thing was the detailing. Have they given details about their family, about the job, education, things like that or not? So that became a very important criteria. And then the fourth criteria was just the age factor. The girls at a certain age and the boys at a certain age will pay you more than the younger lot.
00:37:55
Speaker
So if you know that the profile has a photograph posted by the parents has have lot written in their profile, you know, then the payment would be higher. So what happened was that key just by looking at the profile, I was able to figure out here out of these hundred, these 80 profiles will not pay you. My conversion was around 12%. So out of 100, only 12% would pay and they would take one and a half years for that conversion to happen.
Approach to Angel Investing
00:38:20
Speaker
So today, if I get 100 profile, one and a half year down the line, 12 of them would have paid me.
00:38:25
Speaker
And I knew from the day one key out of this 100, these 20 will only, I'll get my 12 profiles only from these 20. I was so confident my model of propensity to pay was so strong, was so accurate that I knew that I just have to work with this 20. The 80 was drunk.
00:38:48
Speaker
Interesting. And my second question was on technology part. Now, now you have seen no great technology then see you. And I see this in cash if I ever did a every one year we are changing stack. How do you think that works? So I work more on the business side less on the technology side. So I get more irritated. Right.
00:39:14
Speaker
I was in the operation part and the technology part from around 2000 to 2010-10. I saw the evolution of the technology.
00:39:41
Speaker
And so what I realized was that there are people like me who are on the business side. For us, this is a support. The technology is providing the support. And it will evolve. So what's going to happen is that you need to have very, very smart people who will keep the eye on it. I'm not saying it's easy, but it's not also very, very difficult in the sense that
00:40:07
Speaker
as a technology evolved that evangelization happens in that developer community. So if you have the smart people who have the ear to the ground, they will figure out what's happening and they will keep adopting and evolving is my experience. The only thing is that those people are expensive. You have to kind of manage. You need to know how to manage the people who are managing technology for you.
00:40:35
Speaker
So they will not get enamored by what kind of business you are doing and how the business is doing. They just want to ensure that the technology is the latest. So they have a very different motivation. Let me put it this way.
00:40:51
Speaker
And you need to be able to understand what works for them. It's not the money. You can't get the best from the technology guys by promising them more money and more off-sites and things like that. You need to give them the free hand to experiment it out. They will make mistakes. It would be very frustrating because you will not be able to help them. They will have to figure out and they will have to get out of their own created holes on their own. You need to be able to trust them enough that they will be able to do that.
00:41:21
Speaker
So it's not an easy thing and especially for the business founders who don't understand technology firsthand on their own and to find that the dependency on these sort of people.
00:41:36
Speaker
It takes some maturity and some evolution on the part of founders to manage technology. Unfortunately, there is no easy answer there. It is that you have to be lucky to find the people who love technology, who would be able to help you. And if you find somebody who understands the business and technology both, you have to be successful.
00:41:58
Speaker
But if I invite a person like that, then you know, handle him well. For example, Kashify is my tech co-founder. I have left it to him. I don't agree with him. I don't agree with him. But I'm sure he always has his reasons. We are right.
00:42:26
Speaker
But because I'm on the business side, I don't know if I can fix it. So this was my operation part till 2010. At that point of time, what happened was that our board said that you can't keep adding more and more businesses. And therefore, rather than trying to do everything on your own, you should start investing in the other businesses, which has a similar DNA.
00:42:55
Speaker
By the time we had decided Shiksha also, so 99 acres was already there. So this is 2010 when Sanjeev moved away from CEO position. He gave the executive role to Hitesh and he said, we will start investing. And I was again kind of getting, why don't you come and help me in this.
00:43:23
Speaker
And I had absolutely no idea what angel investment was. My whole idea was that, okay, we are investing in other companies which are in the similar domain. There is a whole, you know, knowledge base at Nokri on various aspects. So I said, I'll help these new companies in our portfolio to manage their growth.
00:43:50
Speaker
And with that mandate, I joined. And what happened was that I had went and worked for some time at Merit Nation, was one of the companies which we had just invested in. And you know, Merit Nation, the same thing. You were leads, you had to conversion. So, you know, the same thing was there. And unlike in Jeevan Sati, you knew if you're doing a good job that the student will, you know, pay you at least seven, eight times. So, I was like, yeah, the LTV would be high if I can get my customers happy.
00:44:20
Speaker
And unlike Jeevan Sati, the cost of acquiring was negligible. I mean, here, I mean, you were getting a people to register for as less as 50-60 bucks. So, Jeevan Sati, this is a far more lucrative business to be in. So, Vivek, if a policy bazaar would come to me in 2010, I would still understand because there would be a revenue model. There was margin available, right? But as a matter type of company,
00:44:51
Speaker
who was trudging into a new territory where the revenue model was not sure. I remember 2010, it was more like a menu listing platform with maybe future potential in ad revenue. But I think they did not start doing that till later on. So how did you go about
00:45:15
Speaker
evaluating Zomato or when it first came to you? Zomato, we invested only because we love the founders. We were like, hey, boss, these guys here, these guys are too good. And I'm telling you very, we did our and we were not very good at that ourselves in terms of market sizing. But I remember a discussion very clearly where we had discussed and we said, if lucky, then, you know, this will end up being 70, 80 crore kind of company.
00:45:44
Speaker
So even we had absolutely no idea how they're going to scale or what they will do. We just invested because we love the guys. And that was one company where, you know, we had three or four people who used to decide and all of them were like, I mean, these guys are so good that let's just invest behind them. I mean, I don't know whether I should be telling you this or not. They had a term shift from IN.
00:46:08
Speaker
And our term sheet was exactly the same. The only thing was that Ayan insisted on a two tranches, and we said, he will give you all the money in one tranche. And that's it. They came to us. And Sanjeev said, that was the time when I had joined Sanjeev in the Cobb Dev role. And all our life, we were data driven. We were KRA driven. And Sanjeev was like, this is the first time that you will have no target on your own. You're not choosing any number.
00:46:38
Speaker
It's not even like a product or a tech role where there are deliverables. So how will I judge you? So he said, why don't you do one thing? Why don't you invest your own money into these companies? Then I don't have to worry about your motivation. So I said, that kind of makes sense. And I said, so tentatively, we agreed for every other ad, you know, in every company which infoshes investing, I'll also invest a small amount.
00:47:08
Speaker
And nobody knew what's going to happen. This kind of makes sense. As a motivation for Vivek, let's agree to that. So I got a chance to invest in all the portfolio companies of Infoed, including Zomato and Policy Bazaar.
Measuring Success in Investments
00:47:26
Speaker
So my genesis of being an angel investor. So that's how angel investment started for you. I would love to
00:47:35
Speaker
I remember that's the time when you guys came. I remember meeting you at that point of time. I think we met you in 15 or 16 when we had come to pitch to Info Edge.
00:47:47
Speaker
And see, remember, we were not a fund. We were investing from our balance sheet. So we had no pressure of a VC that, you know, you have raised money and therefore it has to be invested over a period of mother infinite period of time. And you need to get an exit in a, you know, over a finite period of time. We had no pressure like that. So what happened was that key in 2010 to 1112, we were very, very prolific and we were investing. And then, you know, real estate market boomed.
00:48:18
Speaker
And a lot of investment happened. We got scared about 99 acres because there were other companies which had raised a lot of money and were spending. So we said, let's pull back on external investment because we need to keep our powder dry for 99 acres. And therefore, there was a period when we were not investing outside in the, you know, from our balance sheet. And period when I was getting slightly frustrated because if you're not going to do that, then, you know, what will I do?
00:48:49
Speaker
And he let me then, you know, move away from a nine to five job. And by the time, you know, I mean, I remember I was very keen that info should invest in cash if I. We love people there and we will. But we were not very sure whether we should be investing or not. And I remember I telling you that also.
00:49:10
Speaker
while we were doing the round and the info had said no. And Vivek said, I like you guys. And for example, we were not taking angel money at that time. And we just like, yeah, we like Vivek so much. And he's such a good ear to bounce off things. Why not? And that was the conversation between me, Amit and Malik. Why not? Malab, there is no harm.
00:49:39
Speaker
I remember you were my first investment which I had done without InfoEdge. So, so then and there was another company Jaipur and I think I've told you about them also. He's a, he was also an employee of InfoEdge who had started this company and I loved what he was doing. So, these are two companies where I wanted to invest and InfoEdge was not interested and therefore I kind of moved away from and
00:50:05
Speaker
I became an advisor, that gave me flexibility to start investing outside of Infurge. And my first two investments, one was you guys and other was Jaipur. And again, both the companies have done well. So what's happening now? How are you looking at the Indian investment for the last two, three years? What is your view?
00:50:32
Speaker
So apart from YouTube, what happened was one more company where I had done my angel investment was Let's Venture. And Let's Venture, again, the reason I invested is because they were what I call the platform play. It is like Nokri or 99 acres of Jeevan Sati, where people are discovering each other. The only difference is that startups, the angels are discovering other startups. So a lot of learnings are common. It's the same paradigm.
00:51:02
Speaker
And so that has really helped because that gives me access to tons of startup which are raising money. So that's what I do now. I work closely. So now my portfolio has now 17, 18 startups.
00:51:19
Speaker
Some of them have done well if companies like you have done well. And my definition of well is that if they are able to go and raise their follow-up round, then you know they are in the safer hand and their growth is now... At least one of the things is that they are on their way. Nobody knows. But the moment a company is able to get the follow-up round,
00:51:41
Speaker
then you know key there in the right trajectory. So for me the definition is key after angel investment, if they're able to get the series B or C then you know key as an angel you have done your job.
00:51:54
Speaker
So so so that is my that's what I call success. And obviously, if you're able to get them some kind of exit, Sonape Suhaga. So today what has happened is that two of my companies have been acquired. Seven, eight of them have raised their Series B. So I know they're on the on the right track, obviously, as my share of failures, also the companies have not done well, and they also teach you a lot what
Advice for Aspiring Angel Investors
00:52:22
Speaker
you know, what are the kind of things that you need to avoid or what are the things which will which will which will lead to the company's demise. So you learn a lot from your failures also. Okay, so my final two kind of questions which are to a very separate audience space. So first, if somebody wants to get into angel investment, what are the key things you want to know, for example, if I want to get into angel investment, what what should I keep in mind?
00:52:55
Speaker
So if you're going to start, please remember that there is a huge difference between the public market and the private market. In the public market, there is no information asymmetry. There are same 200, 300 companies which are listed. You have access to all the information about those companies. In private market, what happens is that's not the case. So you cannot do it unless you are very, very serious about it, because otherwise what's going to happen is that you will not even know
00:53:24
Speaker
What is the landscape? What are the companies which are raising money? What kind of founders are coming in? What is the competition and things like that? So this is slightly more involved process. That is one thing you have to remember that you will have to keep giving constant time to angel investing.
00:53:41
Speaker
So it can't be like a share market kind of thing where you have invested and you forget or an SIP. You can't never ever forget once you have made the investment. Second thing is that you don't pick the winners, you make the winners. You have to keep working closely with them. You have to give, you have to do whatever it's in your
00:54:01
Speaker
power to ensure that they are successful and there are basically three or four asks which a startup will have. They will have an ask around mentoring and mentoring may be though one is the general mentoring and second is the domain specific mentoring.
00:54:16
Speaker
So if there is, for example, if there's an agriculture startup, they will need expertise around agriculture and they'll need expertise general, how to do they're getting the marketing right, their sales right, their operations right. So one is the mentoring part. Second is what I call the customer connect.
00:54:33
Speaker
you will have to help the startups get more and more business. You need to open up your network to the founders. You will need to figure out which are the people who will be ready to experiment with this particular startup's product or service. So you need to become a salesperson for your startup. Because by definition, startup by definition is something new. People will have to start using the product.
00:55:02
Speaker
So you need to become the salesperson for your startup. Introduce them to potential clients. That's the second role that you need to play. Third is that obviously you need to help them in raising more fund. So you need to help them in the fundraising. You need to open up your network for them. You need to be the guy who will, you need to be the investment banker for your startup. You will go and convince other investors why it's a good company, why you have invested and why they should be investing.
00:55:30
Speaker
And you need to understand the investor's mindset and help that selling process. So, mentoring, customer connect, investor connect, these three things. And the fourth and the most important thing is what I call the regulatory framework. Every startup works in some kind of regulatory environment and many times the startups don't focus on the regulatory minefield.
00:55:54
Speaker
So you as an investor will have to help the startups manage that regulatory minefield. So those are the four areas in which you have to keep helping your startups all the time. So unless you have the ability and the patience to put in 15, don't get into this class. Yeah. What I'm also hearing is that if you don't have money to lose, don't invest. If you don't have money to lose, don't invest. That is, yeah.
00:56:24
Speaker
you have to this is only for the people who have the play money if you lose let's say realistically speaking that you're going to invest let's say 10 lakh rupees at the minimum and you're going to do it in at least 10-15 companies unless you have that kind of money to write off completely don't get into this asset class this is the last asset class you should be getting into so you ensure that your
00:56:50
Speaker
your real estate thing is done, your mutual fund thing is done, you have bought enough of the safe assets, the education, then get into this asset class, otherwise please don't. That is my sincere advice.
00:57:12
Speaker
If you have a saving, maybe 10% of that saving which you... I won't even say 10%, it should be maybe 5% or 7%. Malab, your ability of risk taking is super high. Okay. And that, so that is one part. But how, how do you attract Vivek as an Indian investor if you're a startup? See, the thing is that every angel will have his own thesis.
00:57:43
Speaker
So the thing is, if you ask me, I'll tell you my thesis. My thesis is that, and I've seen that, I mean, if you remember 99 May internet, the internet, they say a lot of value got created. And one of the companies which got benefited was nochri.com. And I benefited from that value creation. Then in 2008, 9, the mobile and the app ecosystem developed.
00:58:12
Speaker
And in that process, other startups came, Cashify came, and Zomato came, and I benefited from that change. So the point I'm going to make is that every few years, there is a new technology or a new behavior change which happens, and you need to be able to figure out key.
00:58:34
Speaker
how to benefit from that. So I'm saying, ask your company, cashify if I'm successful. And I'll, you know, I've been part of the journey of value creation is because I invested in cashify five years back, 10 years back. The company takes five to 10 years to create value. You cannot come into these companies after 10 years. You can't get into Zomato now. How the cost is very, very high.
00:59:02
Speaker
Take care. So, the point I'm trying to make is that you have to put yourself, you have to ask yourself, which are the companies which will become very, very big? So, they may have a miniscule market or they may not have no market today. When I joined Nokri, as I said, they were 24,000 net internet connections. When I joined, I took a life risk there. I put my life into that company and that risk paid off.
00:59:25
Speaker
So the point I'm going to make is that key. Today you have, you know, there's India stack, the payment is going away. Logistics are becoming very, very simple. AI ML is there. So what's going to happen is that key. Lot of businesses will get reinvented because of these new technologies, new way of doing things. Lot of the old ways will give way to new set of companies. You need to be able to figure out which are these companies and work with them.
00:59:52
Speaker
So for me, the thing is that I will look at a startup only if I'm convinced that they're using the today's technology to solve a problem which will make them very, very big 10 years down the line. So that means identifying trends correctly or having a greater thesis on trends.
01:00:34
Speaker
So Abhi, what are the trends you are looking at right now which you think will go back in the next 5-6 years?
01:00:42
Speaker
So in India, see the thing is, if I look at the last three or four investments which I have done, one of the things is agriculture. So agriculture is something which is going to get completely transformed in the next seven, eight, 10 years. So my last two investments have been in that space. I strongly believe that the lending landscape, the FinTech landscape,
01:01:12
Speaker
will completely change in the next 7-8-10 years. The way the finance happens in this country will completely change.
01:01:26
Speaker
You know, it's a very, very bipolar thing. There are other things which are very, very good. The technology is going to make life much, much simpler. But there are other things which are going really, really bad. So, you know, you need to, you have to take both. I mean, I'm the most optimistic person and I'm the most pessimistic person simultaneously.
01:01:52
Speaker
That's the right way of doing angel investment, I think. You have to be the positive guy and the devil's advocate at the same time. So a lot of things will go away, a lot of value will get destroyed. But Uss destruction may say new things will come up and you need to be able to figure out what is the companies which will rise from the ashes.
01:02:22
Speaker
But there will be a lot of blood on the street, a lot of businesses will get destroyed. You will see a lot of blood on the street after Covid. I can already see it. Yeah, it's really sad, but yeah. And start changing with it. I think the most important lesson I have had with cashifiers is you have to constantly change your world with the environment, with competition, with technology.
01:02:50
Speaker
Otherwise, if you keep things for granted, you die. So, I mean, in my senses, the COVID will be very, very beneficial. I mean, I don't want to use the word beneficial, but the thing is that because of the circumstances we are in, because of COVID, a company like yours will
Episode Wrap-up and Contact Information
01:03:14
Speaker
We'll do very well. But thanks a lot Vivek for chatting with us. I took a lot of your time, but I could not stop with the questions. It's my pleasure. If a startup needs to approach you, how do they get in touch with you? They can contact me on the LinkedIn. My email is vivek1804 at Gmail. So they are most welcome to contact me.
01:03:42
Speaker
But send me a mail or on LinkedIn. I'm active on LinkedIn. So guys, perfect for your next startup. Send your debt to Vivek. And yeah, you should fit into thesis and we will show you in depth. So guys, upgrade work here. You will be listening to Update with Knuckles, a production of the 14.0 team. Call the gates to like and subscribe.