Episode 86 / October 11, 2020

Rahul Chowdhri, Stellaris Ventures on surge of Direct to Consumer brands in India

hr min

Episode 86 / October 11, 2020

Rahul Chowdhri, Stellaris Ventures on surge of Direct to Consumer brands in India

hr min
Listen on

In this episode of 100x Entrepreneur Podcast, we take you through the investment thesis of Rahul Chowdhri, behind investments in D2C, E-commerce & Edtech platforms like – Mamaearth, Shop101, & Swiflearn respectively.

We also discuss the common question a new founder thinks about while entering the Edtech sector, “Is the Indian Edtech sector saturated with the large players like Byju’s, Unacademy, and other presents in the market?”.

Rahul’s insights which we discuss during the podcast are on-

00:56 – His journey from working at BCG to joining Helion Ventures & then founding Stellaris Venture Partners

03:25 – Sectors at which he looks after – Consumer Retail, Edtech, Agritech, Horizontal Content & Social Network platforms

04:07 – Thesis behind investing in Mamaearth – Founder’s understanding of brand-perspective & online-thinking

11:14 – Can digital-first D2C brands achieve $100M+ ARR & achieve $500M+ Valuation?

12:10 – Moats which digital-first D2C brands can build to stay ahead of competitors

14:10 – Indian D2C brands which he admires and why – OZiva, FableStreet, Yoga Bar

16:35 – Are there still opportunities left for new players in Edtech, with large businesses like Byju’s & Unacademy already present?

20:10 – Thesis behind investing in Swiflearn and the problem they are solving?

25:56 – Thesis behind investing in Shop101 & the company’s growth so far

30:21 – Investments where their thesis didn’t work out and what were their learnings from it?

36:53 – Biases among VCs & founders about “What models & monetizations would work out?”


Read the full transcript here:

Siddhartha 0:02

Hi, this is Siddhartha Ahluwalia, welcome to the 100x Entrepreneur podcast. Today, I have with me, Rahul Chowdhari, Managing Partner, Stellaris Venture Partners. Stellaris is an early-stage fund focused on seed to Series A fund and has invested some of the well-known company like Mamaearth, Shop101, WhatFix, Vogo. Prior to Stellaris, Rahul was a Partner at Helion Venture Partners, where he invested in companies like Shopclues, Bigbasket, Simplilearn, and Livspace. Also, before he settled on investing, Rahul had stints in product management and consulting roles at Microsoft, MarketRx, i2 Technologies, and BCG. Rahul, welcome to the podcast.


Rahul 0:44

Thank you. Nice to be here.


Siddhartha 0:46

Rahul, I have just summarized your journey. But we’d love to know from you, You know, how did the various dot connected themselves after IIT Kanpur or even during IIT Kanpur, what led you into made various fields.


Rahul 1:01

So, I won’t say this was a very planned journey, you know, doing engineering and MBA back to back. In hindsight, maybe even not the best of the idea. But I did do so as you know, it was the trend with a lot of people at that time. And after MBA, again, consulting was quite glamorous. So, ended up joining BCG, but very soon, I realized that without any operating role, or any operating experience, at least, I was not very comfortable advising people who have been running their businesses for 10, 20, 30 years. So, I decided to take some operating experience and end up joining a software business out of the US called i2, again, had no idea what the rule was, did project management, didn’t like large company setups, and ended up joining a smaller startup in East Coast called MarketRx. And around 2005, I was trying to start a company in India. And Microsoft seemed like a good soft landing platform. So, came back to India with Microsoft, that company never took off. One of the big lessons was that we were always scared to leave our jobs. So, we’re trying to do it in parallel, which in hindsight, looks like obviously a bad idea. But this was 2005. And during Microsoft, I ended up interacting with some venture firms. And somehow found that to be an interesting idea because it was a kind of, mix of, you know, working with founders, building companies, which I liked at BCG, but it was a much longer commitment, you didn’t give a recommendation go away. And again, coincidentally, Helion was looking for someone so, I ended up joining Helion. And that role, I really liked, spent nine years there. And maybe that’s when I found my calling to be an investor. Also was very lucky that this was a time when venture capital was gaining ground in India around 2006, and 2007. So, I also got to see a lot of, you know, large companies being built. And then when the time was right, the three of us left and started Stellaris. So, yeah, so that’s been my journey. As I said, not too much planning, all just happened by coincidence, we’re really lucky.


Siddhartha 3:24

Rahul, In Stellaris, which are the sectors you focus on?


Rahul 3:28

So, I look at three or four broad areas, I look at anything in retail, which includes brands, commerce place, I also look at Education. I look at agriculture, or agri tech, as we call it. And then I look at horizontal content and social network kind of platforms. So, these are four broad areas, obviously, as a fund, we are somebody who look for tech as core to the business model or software product itself. And we come at early stage, so those are the two criterias where we make an investment.


Siddhartha 4:03

And Rahul, by consumer brands which is one of your love. How did you invest in MamaEarth, like, how did you find it? And what was the conviction at that point in time that you invested in Varun and Ghazal because now everybody knows the story. You know, in hindsight, yes, yes.


Rahul 4:25

So, you know, at Helion, I, again had the pleasure of investing in a consumer brand, iDfresh. And at least that gave me and before that we had invested in few retail-oriented businesses like saloon chains, like YLG, so I had a good appreciation for what scale consumer brands can get once they are successful. And around the time when we left and started Stellaris, it became clear that some of these horizontal commerce platforms like Amazon and Flipkart are all gaining good attention span from consumers. And it looked like that digital-first brand could be an interesting play, where you have very high margins. At the same time you have the scalability, if the brand and the product, find a right fit with a consumer. And there are three or four broad areas that we still look at personal care is one large base fashion is the other one, home and high value food items. And the reason being that we needed to find areas where things can be sold online, both on these commerce platform and also direct to consumer through your own website. And that meant two things. One is high gross margin, and good enough up so that you can make money on every order. The second criteria we had was stickiness for the consumer, which meant high frequency products. So personal care, food, fashion, these are all high-frequency products. And then we started looking at companies. And clearly, you know, Mamaearth, when I went and met with Varun for the first time, it was very clear that he was a founder, which had a good mix of both brand thinking, and online thinking. And that’s something that is hard to find in one single team. Varun while came from fmcg background, had taken online courses to learn digital marketing, SEO and all while he was building Mamaearth, so I found that passion to understand and appreciate online is quite well, while his whole his life was, you know, doing traditional FMCG at coke and Unilever. And, you know, same goes for Gazhal. So, it was a very good combination that we found. And clearly the space made sense. Obviously, nobody, at least we didn’t have, you know, the kind of growth-inducing didn’t anticipate that. So clearly a lot of other things also, in some sense, you know, went right for the business and the environment was all suitable for the group. But a lot of kudos goes to the founding team at Mamaearth on how they thought of the brand and how capital efficient they have been to build the business and to reach where they are.


Siddhartha 7:22

And you are the second check after Fireside, the second institutional check-in that. So, they initially focused on a niche space, now they have broadened to personal care, you know, initially focused on mom and babies, especially during pregnancy to post-delivery? What made you think the space, it can become so large that it could be in a billion-dollar play?


Rahul 7:54

So, actually, it has nothing to do with the D2C brand. In general, the way we look at some of these startups is are they solving one problem well, and can they expand from that one problem to multiple other problems? So, that holds true here as well, what they were solving was one problem. And once the brand becomes successful and well known, there are a lot that can be done from that one particular problem to solving other problems. And that’s what they ended up doing. So it is not something you know, you look at kind of businesses that have worked, well. Flipkart started by selling books, then electronics and then everything. So, this is a classic example. And there are multiple of these examples worldwide of companies that become large, they do end up solving multiple problems. So, that was the case here. And that has been demonstrated in multiple offline brands as well right in the brand itself, you see one brand like Himalaya started with one category and they expanded into multiple categories. You know, only there are boundaries for a brand. But within that boundary, there is enough room to expand from one single product range. And that was the thesis that worked as well for Mamaearth.


Siddhartha 9:09

And when you focus on consumer brands, so you do believe that you know, one single brand in India can become a let’s say 100 million ARR business tomorrow, five to six years down the line.


Rahul 9:22

Yeah, so Mamaearth is already hitting that number very close to that. So I don’t see why that can’t happen. Aren’t there enough examples from the offline world where that has happened? So, enough of personal care brands are you know, a few thousand crores in revenue, enough of fashion brands are of that size. So, there is no reason why a new brand can go cannot do bedside, the online part, and a lot of fire to the time it takes. You know the traditional brand takes a lot more time. The reason online brands have a better chance one the distribution is democratised. So if you have a good product, you don’t need to work with distributors and then place your products in multiple retail shops and then hope their consumers pick up. Now that shelf is infinite. So, that helps. The second is, a lot of brand building can happen online through the influencers and other channels that are available. And last, the iteration that the company can do with product, the brand value proposition can be done much faster online, because, again, the consumer is giving you direct feedback, when they’re buying your product, there are ratings, there is repeat, there are a lot of those signals that you can get. This tells you whether this particular SKU or this particular fragrance is something that comes in likes or not. Now, these are all advantages, which clearly Mamaearth, you know, took, and which is another speed to say, you know, how much time it takes could be much faster in case of maybe a D2C brand, versus trying to build it through the traditional route.


Siddhartha 11:07

But for a venture capital firm, that’s why I’m asking you, do you think multiple such brands, you know, if you invest in can go to 100 million arr thereby becoming a $500 million, $600 million company?


Rahul 11:21

Yeah, I think so. I think that is clearly possible. A business has to build in the right manner, a lot of companies end up burning a lot of money. So, I think if you build it in the right manner, you actually can be a large and very good outcome for every stakeholder in the company. So, obviously, you have to be in the right space, you have to get the brand, right, you have to protect your moat, there are a lot of things that have to go right. But, the advantage of the control grant is that the margin structure is very favorable. And, you know, if you do it in the right way, you actually can do it in a very low amount of capital also.


Siddhartha 12:01

Yeah. So, till the time the brand is built, what’s the moat, let’s say discuss this in the case of Mamaearth when they were building it.


Rahul 12:08

So, see, first of all, the brand also goes through its own evolution. When you start, it is typically a functional benefit that the consumer needs to like, and it has to be different than what is otherwise available in the market that’s any standout. Now, those functional differentiation doesn’t stay too long. Because others will copy you. And what you need to do is to move from a functional differentiation to an emotional differentiation. And that’s the journey you know, that allows you to stay ahead of your competition. The other piece is your ability to figure out new trends ahead of your competition, which was the point I was making around product iteration that you know, are you able to find let’s say certain kind of ingredient will become important six months from now. Now, if you can build it into your NPD you actually can launch products at right time and third is utilizing different channels to basically not only do marketing in transaction-oriented business but also do brand-oriented activities. So right set of influencers, the right set of branding activities, so all these three things have to match together to build a moat and there is nothing which cannot be copied, you know, the innovations are not very different and that may vary from sector to sector. So let’s say if you’re a fashion brand design becomes important. If you’re a food brand taste becomes important. If you are a personal brand, maybe let’s says skincare and then the product experience becomes important when productive being applied. So, all those are like kind of given that if you don’t do a good job there then anyways none of the what I otherwise said comes. But after a good product, those are some other things to keep in mind.


Siddhartha 14:13

And what are the other online first, you know, D2C Indian brands that you respect and why?


Rahul 14:21

You know, I would say in D2C space, you know, I really like the value proposition Oziva has. Yeah, so that’s one brand that I like. In fashion, I like Fablestreet a lot. I’m just thinking and just thinking of different categories. I think mattresses have few and very interesting brands in India. I would say Yogabar has done a good job, though, obviously, they’re not just D2C, they are D2C plus offline as well as in they have both the components. So yeah, these are some of the brands that are quite interesting in the D2C space.


Siddhartha 15:15

Also, because I ran a company in a mom and baby care space called Babygogo, which was, you know, building online experiences for mothers, for example, it was a community you can imagine, Quora for mothers which was finally acquired by SHEROES, which is a women’s social network. But in those two, three years, I saw these because it was from 2015 to 2017, I saw the evolution of MamaEarth, and The Mom Cos two known brands in this space very closely. And I remember meeting Varun at a Starbucks when he had just launched and I think one of the VPS of Coca Cola had put his money and was an advisor to them. From that point of time to every three months, when I met aggressively, the pace was fast, it was almost looking like an online company, right, which hasn’t raised money, but the pace was fast. I was myself amazed, you know, the way they were going and they were sellers on Babygogo. Hats off to the team, the way they executed.


Rahul 16:25

Very true.


Siddhartha 16:26

Rahul, another area, you are really excited about his Edtech, and you look at Edtech at Stellaris. I want to ask is Edtech too much crowded today because of the opportunity or is there space for any other billion-dollar company, you know, because Byju’s and Unacademy and Toppr, have they taken the shelf entirely?


Rahul 16:52

I don’t think so. So if you think of the largest or the large companies in this space, I don’t have exact numbers may be the largest would be like few hundred million dollars in revenue, if you look at the education spend in this country, beyond formal education, that runs on 10s of billions of dollars, right. And at least I feel there are multiple ways to cut the pie. And it will be hard to imagine one single company ends up being the winner in all of them. This is a services business, it is not selling, you know, mobile phone or a book that one single player will be able to be the dominant guy doing those activities, because of different experiences in some sense, I think there are multiple winners possible in each piece and there are multiple species available. So, there are you know, the higher ed there is k 12 there is in K 12 there is test prep, there is tuition there is extracurricular. So, there are a lot of activities and the other piece is that increasingly, global market for India Edtech companies is also opening up. There are several areas in which I would say Indian Education companies will be considered as the legitimate owner of that space, just like in Ayurveda, India would have you know, very known standing in the world. Similarly, in yoga, I would say in STEM (science, technology, engineering and mathematics) globally, Indians are respected. And there are so many other areas in which Indians could play a very interesting role in building tech companies globally from India. So at least I don’t think this space is crowded. So, that is why we are excited about the space we just invested in Swiflearn, also looking at other companies and we want to know is why would you be able to win? And yes, other guys will also try somebody will have more money less money. So, you know, more capital will not deter your growth. So, those are questions we ask when we invest we ask ourselves, at least I don’t think this space is saturated as far as opportunities are concerned. Global market is available. And we do ask ourselves this question when we invest in a company is to why would others be not able to do it what will be your reason to sustain after 5-10 years and will more capital from some other player be a deterrent to your growth? So those are the questions we ask. At the same time, we feel, there are enough opportunities in education that are still not tapped. And it is very hard for one or two companies to do it.


Siddhartha 20:06

Right. So what are the problems Swiflearn is solving, and what made you invest in them?


Rahul 20:13

So, there are a couple of things. One is what we saw as a trend, that you know, more and more parents want their kids to succeed in computer exams at some point in time or in schools. And because I was an investor in Toppr, I have seen that for Test Prep very clearly. The second was that the option that these parents have, see teaching as a profession is not something that has been gaining momentum in our country. In generally, General teachers get paid poorly. So it is not as the quality of teacher is improving in general. So that is true everywhere, including schools as well as after school. So, the option that parents had were very limited in the K10 segment. And third is emergence of live video that it was becoming after 4G and you know 4G expansion, it was clear that live video was way of life. What we felt about SwifLearn, you know, when Abhinav, the founder, he came, the idea was basically to solve the problem of tuitions, or after school activities on the academic side, using an online delivery method, the challenge is that this segment that these guys are going after, which is, you know, maybe six to 16-year-old kids, there, they are not motivated to study, unlike somebody preparing for a medical exam or engineering exam, where they have a lot of motivation. And what that means that the business model has to change. When a kid is motivated to study, you can have them sit in a hall of 500 kids, and a star teacher will teach you and they will they learn, which is what some of the test prep they started doing, where there were class 100 kids, and they will learn and it works. But when you are in a grade six studying for your math exam for half-yearly, students attention span is very low. So what you need is a model, which is smaller class, where the teacher keeps the kids engaged. The second challenge is, there is no standard test that happens for grade six math, in a school in Gurgaon, their test or whatever that exam is specific to that school for that board. So unlike a JEE, you know, medical entrance preparation, which is one single exam that you’re preparing for here, the curriculum and the program you create varies from school to school. And that makes the business very complex. And that is why we felt that standalone business makes sense. For both these reasons, the model as well as how the pedagogy has to be designed. And Abhinav had that insight and that’s how we invested in them.


Siddhartha 22:59

So, basically to summarize they provide a platform for teachers to host life classes.


Rahul 23:08

Sorry, maybe I didn’t make it clear. The third thesis that we do not feel that this can be a marketplace platform. Because parents have no way of figuring out who is a good teacher. It is very hard for parents unlike let’s say e-commerce where you buy a shirt if you don’t like it, maybe you don’t wear it too much. Here the currency is students’ time. So, it can’t be that after three months, I realize the teacher is not a good teacher because then my kid’s time is gone. Right. So the third angle was that it would be a full stack play. So as far as the customer is concerned, it is Swiflearn who’s teaching the kid, it is Swiflearn, who’s taking the onus of good quality teaching and if the teacher is not working out, Swiflearn will replace the teacher.


Siddhartha 23:56



Rahul 23:57

But it is not a parent choosing a teacher, that’s not in this marketplace. Obviously, in the back end, they do have teachers who devote a full week half a week depending on their availability, but that is Swiflearn’s problem that is not a parent’s problem.


Siddhartha 24:10

So for example, if a kid is studying in Delhi in DPS RK Puram when a parent reaches out to Swiflearn, they would know which teacher to place and what content to teach or not?


Rahul 24:25

And they collect feedback so if let’s say over a period of time, the student is not liking teacher they will figure out why if they need to change the change to replace some other teacher so that’s all Swiflearn’s responsibility.


So that’s the SLA they have taken.


Siddhartha 24:41

And what are the other open spaces in Edtech where you believe, you know, large companies can be created because as you mentioned in the podcast earlier, the unicorn can focus on only so much in the sectors they are operating in.


Rahul 24:57

So, one I said global place. Clearly, WhitehatJr is doing it, few other companies than that it’s just coding. I would argue similar Globe places are possible in a lot of other areas. So any co-curricular activity extracurricular activity, similarly in higher ed, things like, you know giving online degrees that is something that you can do for India as well as globally. You know there are enough of these training companies preparing you to become a good software programmer. Again, there is no market leader yet. And that could be a large space well. So, there are enough of these kinds of player plays that are possible, which are purely online and can be large opportunities


Siddhartha 25:43

and coming to you know, the third area where you focus on is Shop101. Help us understand your thesis when you invested in Shop101 and the company’s growth till now.


Rahul 25:58

Sure, sure. So, first of all, so basically, the third area is broadly commerce. Shop101 is one example of that investment, the reason to invest behind Shop101 was again, very clear, we made this investment I think in early 2018. And it was clear that there were enough online influencers who had started doing commerce, people who will build their own brands get items from their local area, sell it on Facebook, Instagram, WhatsApp, but the tools and the technology they were using, well Facebook Messenger, some bank gateway to take payment and standalone logistics arrangement, where they will send the item to the customer. So, it was very clear that there was no ecommerce platform that they were using. So that was the first thing that shopper known started doing, which is to build a ecommerce kind of play for these individual entrepreneurs, where they stay connected with their social media accounts through this technology platform. But they could offer a catalog, a website a payment gateway, very important. Too often logistics which has COD till before that an individual guy could not get a COD on DTDC or any other courier. But because they combine this offering and they rent an negotiated they could get a COD and a return possibility for these individual influencers and resellers. So this was a tech and logistics two pieces. The third piece that they solved for the sourcing part that these individuals are always limited by the suppliers they have always been dealing with. In that sense, they they are unable to expand that range and variety in their offering. And what Shop101 does is they go entire with more than few thousand manufacturers across the country and make their product available to these influencers who then curate based on their follower base. So, somebody in some geography might decide that, you know, silk yellow color works well in somebody in some other place might design their cotton, black and you know, darker shades work well in my follower segment. So they don’t showcase all the possible combinations from the sublime. They choose and pick and share only those that they think will sell. In that sense, they do the curation. And as in the order comes it’s a dropship model. So, the influencers don’t have to increase their inventory and still be able to increase their business.So that was a thesis. The company has grown quite well. In fact, in last several months, they also I would say, you know, they make good cash on every order that they do. So, that’s something that we have been availing now that’s been close to two years, at least that that gives us a lot of confidence that there is good money to be made in the business while you are building and growing this business.


Siddhartha 29:13

And does it directly come compete with Meesho?


Rahul 29:16

To some extent, yes. But there is one part which as I was mentioning, this whole commerce, or you know what people call a lightweight Shopify integrated with logistics. Now that is something that I think Shop101 was one of the unique companies from that time, which has been continuing. Most of the other guys have been primarily doing the supply side, which is to tie up with manufacturers and help people sell those items. But the first model allows, let’s say I’m a fashion designer who does not want any other item other than my own products to be sold on my website. Now, that is a model which Shop101 supports, other people don’t?


Siddhartha 30:03

Rahul, going forward, we discuss about the companies and the sectors, which worded well and which you led at Stellaris. So, tell us about the things which didn’t work, which you led? And what were your learnings from them?


Rahul 30:22

Yeah, so, we had invested in this startup, again, a business plan stage called Munch, what they were trying to build was, you can call them, quote, unquote Twitter for Indian customers. And the idea was to have slightly knowledgeable conversations, but more in the way Indians wanted to be. So in some sense, you can argue what we discuss on our whatsapp group in our families in our college groups and or if that could be brought on to one single platform. So, that was the idea. We really like the team that has started, I think the challenge we realized was that at least in those years, most of the New Age, online population that was coming in, in India. The entertainment state is their biggest mindshare. And when I say entertainment, that would mean social media platform gaming, and having conversations of that kind of public platform was unfortunately, something that we could not make happen. And I think it is just a question of timing, maybe another few years, and we’ll find such players also emerge. But given where we are in, you know, our internet journeys as a nation, I think entertainment has taken a much larger share than all other conversations. So and you see that in the usage of Twitter versus let’s say, Instagram or Facebook, even within not only in India, but globally also, but in India, I would say that difference is even more stark.


Siddhartha 32:01

Even when TikTok was there, it was occupying huge mindshare.


Rahul 32:04

same thing. So yeah, so it was clearly my mistake on reading the market wrong as far as timing is concerned,


Siddhartha 32:15

and any other things which you missed investing in very closely?


Rahul 32:25

Oh, there are more than enough of what we have missed? So clearly, and I think I once tweeted, you know, we were very close to and we would have loved to come into this company called, Pratilipi, amazing founder amazing company. That is one of the big misses from that year.


Siddhartha 32:43

But do you still believe in the Indian content space, because we have seen a lot after Tick Tock got banned, and n of such platforms emerge, monetization still remains a challenge. A part of global players to spin up an app overnight still there.


Rahul 33:04

Yeah. So see, I think. So more than one monetisation, my challenges, and this is what I really liked in Pratilipi was that the virality and organic growth, which is missing in most of the social media, apps we see and there’s nothing wrong in you know, spending money to acquire and retain customers, if you have the money, we as a fund, don’t have that philosophy that you keep on investing in growth. So at least we’ve stayed away from that model. As I said, there must be I’m sure there will be other successes there will emerge. And if somebody can figure out an organic, you know, or a viable way to grow or retain their customers, I think that will be model that will still be of interest to us.


Siddhartha 33:59

Got it and you don’t see monetization as a problem.


Rahul 34:06

I’m saying, the monetisation will happen. The question is when. So, see, with the online ad spend going up, there is, you know, if you wait for another four or five years, these businesses will start making good money. The challenge is how much cash do you need to reach that timeline. So, if you are a more organic growth driven business or the model itself, you allow for yourself to use less cash and be relevant as the monetization starts kicking in. So today, the impression eCPM that you will get for these users could be very low, but tomorrow it will grow. If people are spending more time they’re sticking around and there’s no reason why it will not grow. What you need to have the staying power to be around till that day happens.


Siddhartha 34:57

Rahul, over the last, I would say, three years at Stellaris if you have done only four investments. Why is that? Hello? Hello, can you hear me down? How


Rahul 35:15

are you going to do that?


Siddhartha 35:17

Yeah, so I said that, in the last three years at Stellaris, you have done only four investments led only four investments. Why is that?


Rahul 35:28

So see, as a fund, we do between four to six investments a year.


Siddhartha 35:33



Rahul 35:34

And till last year, we had three people who used to lead deals. Now, we have four people who lead. See, we typically end up taking quite a bit of time before we decide to make an investment. So there is a lot more thought that goes in. And in that sense, at least, our view is that between one to two deals per year per person is what has worked for us in the past. So, at least there’s a pace we have maintained. There’s one more investment that we have done, which we have not announced. So in that sense, it is not four, but five, but that doesn’t matter, at least argue is that one to two per partner per year is a good number. So, at least I think this is the number that we had planned for.


Siddhartha 36:23

But you mentioned that there is now a fourth lead in the fund, I believe who is Arpit. Yes. So now we’ll see a couple of more investments coming up every year, from Stellaris. Rahul, you know, I follow you guys very closely on Twitter, you mentioned you three all together discuss about biases a lot, one of the biases in investing, you know, which plays a role in your decision making.


Rahul 36:57

See, so there are certain biases, which are around founders, you know, x kind of founder or y kind of founder, or what traits have we seen in the past? How did they play out? So, some are sometimes team-related biases, then there are modeling devices, and then there are sector related biases. So, I’ll give you an example. And this is before COVID. So, during COVID, it might look very obvious, but late last year, we did a session where there is a team, which is three of us who have been around and maybe slightly, you know, above 40 in age, and then there is a team which is in the 30s age group. So obviously a lot of time around a model when we have a discussion and we say you know, we have seen when it does not work. The other part of the team will always ask why do you guys say so? And it is very interesting to have that discussion. So, we did a session one of the examples we discuss was this whole retail oriented models. And there was a pushback from the rest of the other members of the team, the younger members, as to why do you guys believe that retail-oriented models don’t scale well. And at that time, we were seeing people running extracurricular classes inside OYO’s for example. So, there are companies doing that there are companies who are sending teachers to your home. So not exactly always retail but which had a physical component. And then there are people who are running stores also. So, we had a long discussion. At the same time, there are models where people sell software for free and one day hope to make money or by lending make money. So these are all different biases. Three of us come with, on what model will work which sector will have a challenge or not have a challenge. But what is important is also to keep on questioning these biases, which is the session that you know, Alok might have talked about, or you might have heard of that before because things also change, right? And as somebody who’s been around too long, we also start believing in your own Quale, or drinking your own Kool-Aid and at least we try to make efforts to keep on questioning those biases, sometimes we change it sometimes we still continue what we have.


Siddhartha 39:16

And what changes have you seen in yourself, you know, in terms of growth as an individual over a period of time and what biases you have lost I would ask?


Rahul 39:31

I think till about four-five years back, I had a lens for who might be a good founder, what might be a good model. But this whole notion of founder market fit was something that I was not as conscious of when we were investing. I think, over the last few years that at least for me, work has also been part of the evaluation framework that while the market might be the great, team might be great, but will they be the right team in this market. And sometimes it’s a question of how glue in the market is or of the red ocean, the market and you might need a different kinds of founders for that.


Siddhartha 40:17



Rahul 40:19

So I think that is like one area that I have changed and said early on, we used to try to size the market a lot, at least, I stopped doing that more or less. Because in the early stages, what we realized is the final shape of the business could be very different than where you start. So trying to build models and say that after five years, this company with this size and it will exited this value, I think, either will be totally wrong, it will be a zero outcome or it will be totally otherwise. And it will be very larger or much larger outcomes, which is very hard to model how large the outcome will be as long as we believe that model has scalability. And it is the right team. And there is you know, large pain point, at least, that becomes more important than trying to find what could be the size of the market. I think this is one bias we had but increasingly, as a team, we’re also very open to global markets on the consumer side. Now with us, it is not true for every sector or every product. It was even there you need to have the right to win and just like in SaaS, just by building a company from India doesn’t mean you’ll have a right to win. So you need to find that. But I think there are several sectors in which that is possible, as the world is becoming increasingly more amenable to global offerings. So these are some of the examples that come to mind. I was also saying that there is another area, where we have now started to become much more open and it was a bais which is building consumer businesses from India for global markets. Yeah, till I would say early last year, at least we were not very enthusiastic about it. But there are certain sectors in which it is possible to build consumer businesses from India may not be in all sectors, but at least where there is right to win from India. So we are increasingly more open about that piece as well.


Siddhartha 42:57

Any current examples you see right now?


Rahul 42:59

So, not from our company, like clearly Mamaearth is finding good traction, but it is more of pull versus a push today. As a lot, more people are coming from other countries wanting to carry their products. But I would say clearly, Whitehat is a classic example. There are a few companies that are doing that. In the toy space, you have play Shifu and a few other skill matrix that are doing that. So it is starting to happen. And then on the larger side, you obviously examples like Ola and OYO, and Zomato who have tried doing this sometimes successfully, sometimes not successfully.


Siddhartha 43:37

And Rahul, coming to the conclusion of the podcast, or what do you read? Or, you know, what do you watch for your personal growth as an investor as an individual?


Rahul 43:46

You know, unfortunately, that entertainment example I gave applies to me also. I do watch all kind of stuff on Netflix and Amazon and Hotstar. But I do like reading some of the history books, in the sense trying to understand real history. So, currently, today only, have started this book called The Ocean of Hurn by Sanjeev Sanyal. So I like reading history. And I also like reading history mixed with fiction. Yeah. So at least those are two broad topics. And then third is behavioral economics. Yeah, it is fun to read about,you know, biases. So, these are the broad areas of topics that I like reading.


Siddhartha 44:38

Thank you so much, Rahul. It’s been wonderful to have you on the 100 x Entrepreneur podcast. Thank you so much for sharing your experience and your wisdom, your learnings as an investor.


Rahul 44:50

Thank you, Siddhartha.


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