Golden Tap: Reflections from the Book

The venture investing playbook deployed by Tiger Global to scour and pick the market winners. ‘This of that investing’. This is established market spaces and that is emerging market countries.

Friction and cost of collecting money is much higher in India than in the US, High enough to change the user’s behavior of the product and therefore the company’s business model. It is due to the ability of Indian consumers to out wait you and live with the pain. It is easy to get user growth when you give away a valuable service for free or at a discount. But it is very hard to get consumers in the habit to pay for the value consumed.

Ashish Gupta’s insight on unit economics for consumer tech startups in India that unit revenue is a fourth or fifth of the US consistent with PPP but unit cost is only half or same of the US. Then how do you really make money as a copy-cat business.

Bezos Regret Minimization framework which he invented as he deliberated to quit his job at DE Shaw and now uses it to clear out daily confusions in decision making

Timing and access to right network is the biggest factor for a startup to succeed not just to raise further rounds but also provide an exit pathway to founders and investors- Seen from the fact that Deorah’s third company ‘Chalo’, a post restaurant reservation platform was acquired even before the team launched a beta product. Ash the angel investor knew the CFO of Open Table the leading restaurant reservation platform on San Francisco who bought them out. The fact that the product had not been launched, it was still closely held and did not raise any VC money further tipped the scales in their favor.

Without funding startups are forced to build something of value for customers who are willing to pay for it. They do so because their life depends on it. On the other hand funding eliminates exit opportunities under the last rounds valuation. The higher the valuation the lesser the exit options. The lesser the exit options the higher the onus to make up for it in growth and earnings. The startup gets on the hook to deliver insane revenues growth followed by insane profit margins to deliver their valuation

E-commerce companies that are scaling at a scorching pace at negative margins are not only eroding future profitability of e commerce, they are eroding profitability of retail. They are not just eroding profitability of organized retail they are eroding it of all the small stores and supplier, traders and merchants that are the life and blood of India. They are commoditizing India’s consumption economy while pandering to the whims of a small group of investors and corporations for whom India is a column in a spreadsheet that they wish to own. These companies are not creating the market but destroying it.

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