If you follow cricket or the Indian Premier League (Yes, ‘or’ is the right conjunction here), you already know that the latest season is underway. As is the case with every other season, much of the pre-tournament hype was centered around the millions of dollars spent by teams to acquire certain players. This time around, it was <a href="https://medium.com/r/?url=https%3A%2F%2Fsports.ndtv.com%2Findian-premier-league-2017%2Fipl-auction-ben-stokes-becomes-most-expensive-foreign-player-ever-no-takers-for-ishant-irfan-1661525" class="markup--anchor markup--p-anchor" target="_blank">Ben Stokes’ turn to become the expensive player at the auction, for the sum of Rs. 14.5 Crore ($2.1 Million)</a>. As <a href="https://medium.com/r/?url=https%3A%2F%2Ftwitter.com%2FProfDeano%2Fstatus%2F833538309175517184%3Fref_src%3Dtwsrc%255Etfw%26ref_url%3Dhttps%253A%252F%252Fwww.crictracker.com%252Ftwitter-reactions-ben-stokes-fetches-14-5-crores-in-the-ipl-2017-auction%252F" class="markup--anchor markup--p-anchor" target="_blank">Dean Jones half-correctly pointed out</a>, Ben Stokes’ price is nearly twice the salary cap of entire teams at the <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FBig_Bash_League" class="markup--anchor markup--p-anchor" target="_blank">Big Bash League</a>. The rationale for this generous price tag appears solid. After all, Ben Stokes is amongst the best All-Round players in international cricket today.<blockquote class="graf graf--pullquote graf-after--p" style="margin-top: 55px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em; background-color: rgb(255, 255, 255);">However, even given the uncertainties of competitive sport, <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.espncricinfo.com%2Fiplcountdown%2Fcontent%2Fstory%2F1089382.html" class="markup--anchor markup--pullquote-anchor" target="_blank">why do so many of IPL’s most expensive bets perform so poorly,</a> and what could this teach us about investing?</blockquote>
	
	
	
	
	
	
	
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 Let’s start off with a look at how the players fared in IPL 2016. Approximately <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.espncricinfo.com%2Findian-premier-league-2016%2Fcontent%2Fstory%2F1021917.html" class="markup--anchor markup--p-anchor" target="_blank">Rs. 441.8 Crores </a>(~$68 Million)were spent by franchises on building their teams that season and a total of <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.iplt20.com%2Fstats%2F2016%2Fplayer-points" class="markup--anchor markup--p-anchor" target="_blank">30285 MVP points</a> were earned by players. This implies that, on average, franchises spent Rs.1.46 Lacs (~$2260) per MVP point earned. This allows us to actually calculate in-match contributions of each player and evaluate investment performance. 

	
	
	
	
	
	
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 The fact that Virat Kohli tops this list is hardly a surprise. A record-breaking 973 run season deserves no less. <blockquote class="graf graf--pullquote graf-after--p" style="margin-top: 55px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em; background-color: rgb(255, 255, 255);">However, does that also make Virat Kohli a great investment ? The answer might surprise you.</blockquote>To earn the Rs. 14.3 crores through in-match performances, the Royal Challengers Bangalore franchise had spent Rs. 12.5 Crore on Virat Kohli for a net return of Rs. 2.3 Crore (Or an ROI of 18.4%). <blockquote class="graf graf--pullquote graf-after--p" style="margin-top: 55px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em; background-color: rgb(255, 255, 255);">Virat Kohli’s best IPL season could only yield a decent, but not winning return.</blockquote>So, if not Kohli, which players actually ended up being the investments of IPL 2016 ? 
	
	
	
	
	
	
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 Whoa !<section> Except for David Warner (who, at 5.5 Crores was much ‘cheaper’ than Virat Kohli for nearly the same output), none of the top performers make the list of top investments. If we were to exclude David Warner as an outlier, every other top investment was priced either in the vicinity of Rs.2 Crores (Which, <a href="https://medium.com/r/?url=http%3A%2F%2Findianexpress.com%2Farticle%2Fsports%2Fcricket%2Fits-nothing-rs-2-crore-is-peanuts-ravi-shastri-backs-team-indias-reported-demand-for-pay-hike-4598048%2F" class="markup--anchor markup--p-anchor" target="_blank">in the words of Ravi Shastri, is “Peanuts”</a>) or significantly lower. <blockquote class="graf graf--pullquote graf-after--p" style="margin-top: 55px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em;">You might even say that these players were ‘undervalued’, making them perfect picks per <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.forbes.com%2Fsites%2Fgurufocus%2F2017%2F03%2F08%2Fstocks-buffett-hinted-are-undervalued-based-on-buybacks%2F%232dae645513ff" class="markup--anchor markup--pullquote-anchor" target="_blank">Warren Buffet’s value investing philosophy</a>.</blockquote>In particular, look at no. 2 on the top investments list — Yuzvendra Chahal. His price of Rs. 10 Lacs returned an 82.6X multiple on the investment ! But this isn’t the first time “cheap” players outperformed at the IPL. In fact, <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.espncricinfo.com%2Fiplcountdown%2Fcontent%2Fstory%2F1090031.html" class="markup--anchor markup--p-anchor" target="_blank">it happens rather often</a>. For example, <ul class="postList"><li class="graf graf--li graf-after--p">Shane Watson was bought in the second of two auctions in the inaugural IPL in 2008 for a sum of Rs.50 Lacs ($125,000) and ended up as the Player of the Tournament.</li><li class="graf graf--li graf-after--li">Shaun Marsh was purchased for his base price of Rs. 12 Lacs ($30,000) in 2008 and ended up as the highest run-getter of the season.</li><li class="graf graf--li graf-after--li graf--trailing">Andre Russel, no. 3 in the list of best investments of IPL 2016, finished as the Player of the Tournament in 2015, at the price of Rs. 60 Lacs ($97,000)</li></ul></section><section>And which players represented the worst investments in last year’s IPL ?</section><section> </section><section>
	
	
	
	
	
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</section><section> With the exception of Pawan Negi (What might have been the rationale that appeared to justify a Rs. 8.5 Crore investment in Pawan Negi ?), each of the worst investments — David Miller, MS Dhoni, Mitchell Johnson &amp; Suresh Raina represents a proven international star worthy of the price tag. In fact, for all the star power in the IPL, only two teams returned a meaningfully positive return on investment in 2016, the two finalists — Sunrisers Hyderabad and Royal Challengers Bangalore.</section><section> </section><section>
	
	
	
	
	
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 <section><blockquote class="graf graf--pullquote graf-after--figure" style="margin-top: 64px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em;">Would you have guessed that the ROI on Virat Kohli (18.4%) is less than the aggregate ROI on the entire RCB team (25.1%), the side Kohli plays for?</blockquote>Turns out that investing in IPL player auctions is just as risky and the outcomes are(dare I say it) just as difficult to predict as VC investing. </section><section>What might the best VC investments of all time have in common with successful IPL bets ? </section><section> Lets take a look at the snapshot below:</section><section> </section><section>
	
	
	
	
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</section><section> Each of these companies (Tencent, LinkedIn, Snapchat, WhatsApp, Google, Facebook, Juniper Networks, and Alibaba) represents an excellent investment because they all ended up as large standalone firms or acquisitions. <blockquote class="graf graf--pullquote graf-after--p" style="margin-top: 55px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em; background-color: rgb(255, 255, 255);">But more importantly, in each of these cases, the investor decided to take a leap of faith by investing early in an unproven company. </blockquote>The most recent of these examples is how <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.businessinsider.in%2Fhow-snapchats-first-investor-found-snapchat-when-it-had-less-than-100000-users%2Farticleshow%2F56945155.cms" class="markup--anchor markup--p-anchor" target="_blank">Lightspeed Venture Partners’ benefitted from being the first investor in Snapchat</a>. How much of a difference does acting early on a successful investment make? A timeline representation of AppDynamics fund-raise journey up until its $3.6 Billion acquisition answers that question:</section><section> </section><section>
	
	
	
	
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 </section><section><section>Lightspeed yet again gets to be one of the first investors here and the value of the $5.5 Million investment ($572 Million) is greater than the appreciated value of any subsequent round at the time of the acquisition by Cisco. <blockquote class="graf graf--pullquote graf-after--p" style="margin-top: 55px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em;">And while investing early in <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fpulse%2Fselection-dilemma-shubhankar-bhattacharya" class="markup--anchor markup--pullquote-anchor" target="_blank">non-consensus deals</a> is highly risky, it probably is the one strategy that is most directly aligned with achieving outsized returns,whether in the world of startups, or professional sports.</blockquote>The following extract from <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.recode.net%2F2017%2F4%2F12%2F15274220%2Fjeff-bezos-amazon-shareholders-letter-day-2-disagree-and-commit" class="markup--anchor markup--p-anchor" target="_blank">Jeff Bezos’ 2017 shareholder letter </a>appears particularly relevant in this context: <blockquote class="graf graf--blockquote graf--startsWithDoubleQuote graf-after--p graf--trailing" style="margin-top: 29px; margin-right: 0px; margin-left: -23px; border-left: 3px solid rgba(0, 0, 0, 0.8); padding-left: 20px; padding-bottom: 2px; --baseline-multiplier:0.179; font-family: medium-content-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 21px; line-height: 1.58; letter-spacing: -0.003em;">“…most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”</blockquote></section><section><blockquote class="graf graf--pullquote graf--leading" style="margin-top: 64px; margin-right: 0px; margin-left: -1.75px; color: rgba(0, 0, 0, 0.6); border-width: initial; border-style: none; padding-left: 50px; --baseline-multiplier:0.157; font-family: medium-content-slab-serif-font, Georgia, Cambria, &quot;Times New Roman&quot;, Times, serif; font-style: italic; font-size: 28px; line-height: 1.48; letter-spacing: -0.014em;">Whether as investors or entrepreneurs, we must always ask ourselves if we are making enough early contrarian bets, or waiting to pick “safer” options.</blockquote></section> </section></section><meta content="cms.next" name="cmsei" />

What the IPL can teach us about Investing

<img class="gwt-Image" src="/photo/58006909.cms" />Mobile intelligence firm Sensor Tower recently revealed that mobile game developer <a href="https://sensortower.com/blog/clash-royale-one-billion-revenue">Supercell’s game Clash Royale grossed more than $1 Billion in revenues in its first 12 months</a>. 
 
For those of who you haven’t heard of <a href="https://en.wikipedia.org/wiki/Supercell_%28video_game_company%29">Supercell</a> or <a href="https://en.wikipedia.org/wiki/Clash_Royale">Clash Royale</a> (Congratulations on having an interesting life!), these numbers might seem extraordinarily hard to believe. 
 
<img class="gwt-Image" src="/photo/58006762.cms" /> 
 
Source :Dilbert.com 
 
For all you noobs, here is a (overly theatrical) primer on Clash Royale : 
 
<iframe allowfullscreen="" frameborder="0" height="393" src="https://www.youtube.com/embed/5qFaiYY6oUY" width="700"></iframe> 
 
<a href="https://www.youtube.com/watch?v=5qFaiYY6oUY&amp;t=26s">Video source</a> 
 
But if you are one of the hundreds of millions of gamers who have played Clash Royale (and continue to be addicted beyond remedy), news of the game’s success is hardly surprising. 
 
Games are often seen as a business characterized by that rare hit in a sea of misses. 
 
But to trivialize Clash Royale’s blockbuster status as being equivalent to finding that lucky lottery ticket would be a huge mistake. 
 
Having played Clash Royale for hundreds of hours over the last few months (At work, I have actually used the line, “I am playing this for a deep dive into the gaming space”), here is why I think Clash Royale makes for an excellent case study on designing a great product 
 
Instant gratification 
Want to know what I dislike about most mobile games? 
 
Most games take too long to load, and in many cases, a loading screening leads to…an advertisement that loads slowly. 
 
With Clash Royale, you can start playing any game in less than 10 seconds from the time you tapped on the app’s icon. 
 
Particularly impressive given that every game is you playing against a real-life human opponent from anywhere in the world. 
 
Why is this so important ? 
Because mobile users are a particularly impatient lot, with <a href="https://blog.kissmetrics.com/loading-time/?wide=1">Kissmetrics finding that about a half of all users abandon a page that takes more than 10 seconds to load</a>. 
 
<img class="gwt-Image" src="/photo/58006833.cms" /> 
 
<a href="https://blog.kissmetrics.com/loading-time/">Image source</a> 
 
While consoles still remain my preferred option for a “complete” gaming experience, there is no matching Clash Royale for its ability to offer an instant fix. 
 
Low-Bandwidth friendly 
Earlier this year, I had travelled to a relatively remote part of India. For all the promises made by Indian telecom operators, they hadn’t yet found a way to deliver either 4G or even a 3G network there. 
 
Under the constraints of a rather slow mobile internet connection (Which,I presume, was 2G), I found it rather difficult to use either Facebook or LinkedIn. 
 
In fact, during the entirety of my stay, other than the Google App, only two other apps which required an active connection were functional to a satisfactory degree. 
 
The first was Whatsapp. 
 
The other was Clash Royale. 
 
To put this into perspective, I was playing live matches of a feature-rich game against opponents all over the world over a 2G internet connection. 
 
All I could think of was, “What wizardry is this ?!” 
 
Many in the startup ecosystem in India today talk about designing products for “Bharat”, the next 100–300 Million mobile internet users in our country. 
 
Ironically, a Finnish gaming company might be the greatest showcase of this vision. 
 
Sonic Branding 
The other day, while waiting at the billing counter at a department store, I decided to play a quick game of Clash Royale. 
 
(After all, it takes less than 10 seconds to start a new game. 
 
Also, “I am playing this for a deep dive into the gaming space”) 
 
As soon as Clash Royale’s opening jingle played, the cashier at the counter asks me, 
 
“Clash of Clans khel rahe ho kya ?” (“Are you playing Clash of Clans ?”) 
 
For those of you who don’t know, <a href="https://en.wikipedia.org/wiki/Clash_of_Clans">Clash of Clans</a> was Supercell’s most popular game until Clash Royale stole that spot). 
 
The cashier wasn’t really at fault though. The fact is that all of Supercell’s games have a similar underlying musical jingle with each game carrying its own distinctive theme. 
 
How many brands could you recognize within the first second of their signature sound ? 
 
Only a handful of companies/products have truly nailed the power of Sonic branding : Intel, Nokia, Apple and the Windows operating system come to mind. 
 
Supercell seems to be heading in that direction. 
 
As for the cashier, he gave me an interesting lecture on how he had tried Clash Royale, followed by a debate on why Clash of Clans was the better game. 
 
Yes, that’s how us gamers roll. 
 
Free and yet complete 
So how much have I paid thus far for playing hundreds of hours of live-matches of Clash Royale ? 
 
A grand total of Zero Rupees 
 
During this time, I have never been served a single ad. The only prompts for in-app purchases came up when I desperately wanted to open a chest and did not have enough gems to speed things up. 
 
Mobile game developers face a dichotomy that seemingly represents an existential dilemma : Their games need to be fun and enjoyable. They also need to make money. 
 
How has Clash Royale (or Supercell) solved this dilemma? By exploiting the power of price discrimination. 
 
I have never payed a rupee to play Clash Royale because I don’t mind losing a few games (OK I confess, I have been losing a lot of games since I reached Arena 7). 
 
But by sticking around, I offer other players (Especially those paying up hundreds of dollars for gems and magic chests) the greatest experience in the world : 
 
Utterly pwn other free-loading noobs like me 
 
$1 Billion in revenues within the first year is clear evidence that enough players see value in that proposition. 
 
Now, if you'll excuse me :I have to do a deep-dive into the gaming space. 
 
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Creating a great product : The Clash Royale case study

<img class="gwt-Image" src="/photo/57393690.cms" />If you have been reading recent media coverage on many of India’s prominent early-stage companies (or is “Technology” a more appropriate term?) , you might have noticed that things look just a tiny bit grim for most of them. 
 
Things are so bad that protectionism and lobbying to the government have become important, seemingly overnight (Does this count as going from ‘Zero to One’ ?) 
 
Many of the media requests I have been getting recently seem to be along the lines of : 
 
“Is there any exit in store for investors in these companies ?” 
 
“Will these companies ever be profitable ?” 
 
“Will they manage to IPO or get acquired at their current valuations ?” 
 
The cynicism towards many of these startups and the fate that awaits them is understandable. 
 
However, ups and downs are part of every company’s journey and some of the greatest companies in history have recovered from catastrophic losses in shareholder value. 
 
Staying true to #vclogic, I hope that these two examples offer a template that can inspire a truly remarkable turnaround story. (Spoiler alert : Neither of them is Apple) 
 
<img class="gwt-Image" src="/photo/57393356.cms" /> 
 
<a href="http://dilbert.com/">Image source</a> 
 
McDonald’s 
I know what you are thinking. 
 
The world’s most beloved red &amp; yellow brand, in trouble ? Impossible ! 
 
For the most part, McDonald’s has been a dream stock to hold. Had you purchased 100 shares at the time of the IPO in 1965, <a href="https://www.fool.com/investing/2016/08/29/mcdonalds-stock-history-a-fast-food-success-story.aspx">the $2,250 would have been worth $8.8 Million by the end of 2015</a> (Not accounting for reinvestment of dividends). 
 
<img class="gwt-Image" src="/photo/57393345.cms" /> 
 
But for the three year period from 2000 to 2003, McDonald’s saw dramatic erosion in shareholder value. 
 
The company reported its first ever loss-making year and the stock tanked from about $48 at the end of 1999 to less than $13 in late 2003 (For start-up enthusiasts who talk of devaluations in terms of percentages, thats a nearly 75% reduction in market cap) 
 
As the stock price history history shows though, McDonald’s bounced back (Of course it did!). How did it pull this off ? 
 
With a revamp of many of its restaurants to encourage patrons of “slow food”, with a ‘healthier’ set of menu offerings that included salads and fruits, and through its McCafe line of beverages that helped it stay relevant in the contest with coffee chains. 
 
In fact, take a look at this McDonald’s in New York. Does it remind you of another iconic food chain ? 
 
<img class="gwt-Image" src="/photo/57393416.cms" /> 
 
<a href="http://freshome.com/2010/09/23/mcdonalds-redesign-a-new-era-for-fast-food-restaurants/">Image source</a> 
 
Speaking of which… 
 
Starbucks 
You know how many companies today are complaining about the recent drought in funding and how it is a bad season for entrepreneurs ? 
 
Well, the present times ain’t nothing compared to the 2008 financial meltdown, a time when Starbucks went through some serious challenges to its existence. 
 
<img class="gwt-Image" src="/photo/57393433.cms" /> 
 
Between 2006 and 2008, the Starbucks stock nosedived from a high of $19.82 to less than $4. 
 
<a href="http://www.businesstoday.in/magazine/lbs-case-study/how-starbucks-survived-the-financial-meltdown-of-2008/story/210059.html">Over 2008 &amp; 2009, Starbucks had to shutdown 900 shops and laid off 6,700 employees</a> as many of its customers opted for cheaper options for their everyday coffee ( <a href="http://economictimes.indiatimes.com/small-biz/startups/snapdeal-to-lay-off-600-people-over-next-few-days/articleshow/57287838.cms">Déjà vu</a> ?). 
 
In fact, McDonald’s advertising campaign that marked its own turnaround mocked Starbucks as “Fourbucks” (Oh the irony !)and many felt that Starbucks’ expensive coffee was history. 
 
<img class="gwt-Image" src="/photo/57393458.cms" /> 
 
<a href="http://www.seattlepi.com/business/article/Starbucks-won-t-slug-it-out-in-ad-wars-1294360.php">Image source</a> 
 
Much like a very recent incident, Howard Schultz (Founder of Starbucks), who had returned as the CEO of the company, <a href="http://www.seattletimes.com/business/starbucks-ceo-howard-schultzs-memo-to-employees/">shot off a letter to the employees</a> (or as he refers to them, “Partners”). 
 
While the letter proposes several cost-cutting measures, it also suggested retaining the generous healthcare benefits it has been famous for, even though reducing them would have led to massive savings. 
 
While the typical turnaround strategy for a retail business would have been to “redo the store layout”, Schultz realized that Starbucks’ core was happy employees creating a delightful coffee experience for its customers. 
 
Every store in the chain <a href="http://money.cnn.com/2008/02/25/news/companies/starbucks/index.htm">was closed for half a day so that staff</a> could be retrained in the basics: making coffee well and serving it with zest. Cleanliness and efficiency were brought back to the forefront. The central processes in the stores, how coffee was made and served, were reviewed with great rigour, reducing wastage and <a href="http://www.sunwords.com/2009/11/02/guess-what-starbucks-did-bounce-back/">saving $500 million in annual costs</a>. 
 
Oh, and <a href="http://fortune.com/2011/11/17/howard-schultz-brews-strong-coffee-at-starbucks/">Starbucks also spent $30 Million</a> on a week long pep rally for 10,000 store managers which included being entertained by U2’s Bono. 
 
<iframe allowfullscreen="" frameborder="0" height="393" src="https://www.youtube.com/embed/EEJFelReAd0" width="700"></iframe> 
 
<a href="https://www.youtube.com/watch?v=EEJFelReAd0">Video source</a> 
 
Guess Starbucks really loves its “partners”. 
 
Who would have thought such a strategy could save a company ? 
 
(Main Image: Flickr) 
 
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How Companies bounce back

<img class="gwt-Image" src="/photo/56811052.cms" /> If you are or have been an entrepreneur trying to raise funds from Venture Capital (VC) investors, you have, in all likelihood, had to deal with a LOT of rejection (Or, no response to your mails/follow-up). 
 
Fund-raising can seem like a hellacious gauntlet for every entrepreneur. 
 
After all, <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.quora.com%2FWhat-percentage-of-ALL-start-ups-raise-angel-seed-VC-funding">less than 1% of startups end up raising money from a VC.</a> 
 
(…and I know what it feels like to be part of the 99%.) 
 
You may even be forgiven for thinking that VCs have no interest in actually financing a company. 
 
If you have received yet another rejection from a VC, do take a few minutes out to read this post before you judge yourself unfairly or let your (uncensored) opinions go wild. 
 
1. It is a Numbers Game 
 
Raising funds from a VC isn’t an ordeal just for the 99%. 
 
<a href="https://medium.com/r/?url=https%3A%2F%2Ftechcrunch.com%2F2015%2F06%2F08%2Flessons-from-a-study-of-perfect-pitch-decks-vcs-spend-an-average-of-3-minutes-44-seconds-on-them%2F%23.ols2kx%3AJsiz">A study </a>showed that even for the 1% of the firms that are successful in raising a seed round, they end up contacting an average of 58 investors, which result in 40 meetings (Most of which, undoubtedly, do not end with a positive investment decision) 
<img class="gwt-Image" src="/photo/56811007.cms" /> 
The monopsonistic nature of the VC-Entrepreneur market puts entrepreneurs at an unambiguous disadvantage. 
 
No wonder the odds are so overwhelmingly against them. 
 
2. A ‘No’ can become a ‘Yes’… 
 
Here is a rather interesting and unusual observation : 
 
Nearly two-thirds of all fresh investments we have done at Kae Capital since the beginning of 2016 (Most of which haven’t been announced at the time of this writing) were companies we had rejected in the past. 
 
While it might be a <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FSampling_bias">sampling abberation</a>, the power of this empirical evidence suggests that a ‘No’ from a ‘VC’ can indeed become a ‘Yes’. 
 
There might be several plausible explanations for this. Here are just a couple: 
 
The overwhelming effect of the Numbers Game can lead to (as much as we VCs hate to admit it) a hasty decision (<a href="https://medium.com/r/?url=https%3A%2F%2Ftechcrunch.com%2F2015%2F06%2F08%2Flessons-from-a-study-of-perfect-pitch-decks-vcs-spend-an-average-of-3-minutes-44-seconds-on-them%2F%23.ols2kx%3AJsiz">Studies show that the average time VCs spend on each slide is 12 seconds</a>). A second, or even a third look, when backed by greater rigor, or a stronger gut-feel, can lead to a reversal in the decision 
 
Time offers several luxuries, including those which allow entrepreneurs room for a well-suited pivot, a more refined business model or approach, or simply, traction that becomes hard to ignore — All of which are very desirable from a VC’s standpoint. 
 
There is a catch though. 
 
3. …But only if you are worthy (Otherwise it can become “Hell No!”) 
 
To give credit where it is due, the vast majority of entrepreneurs I meet are very polite and gracious when it comes to accepting rejection. 
 
Ever so often though, I receive a response such as 
 
“What makes you think you know how to pick a good investment ?” (The answer to which is, “Nothing at all. I am just another dude with an opinion”) 
 
or 
 
“You will regret this. We are going to be a Billion/Trillion dollar company !” (Wouldn’t be the first time we have missed a company that went on to be valued at over a Billion dollars. As for the Trillion dollars, leaving <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.telegraph.co.uk%2Fbusiness%2F2016%2F05%2F01%2Fsaudi-aramco-how-do-you-put-a-price-tag-on-the-worlds-most-impor%2F">Saudi Aramco</a> aside, the world is still waiting for its first Trillion Dollar company, so I wish you the best.) 
 
If as an entrepreneur, you see a clear disconnect with a VC, or are that sure of building a Billion dollar company, surely starting petty squabbles isn’t the most productive use of your time ? 
 
But such an outburst is likely to prevent the VC from ever revisiting an investment, and negative word-of-mouth is likely to poison future fund-raising prospects further. 
 
Speaking of which… 
 
4. Don’t underestimate the power of goodwill and referrals 
 
Of all the sources that result in a flow of deals to a VC, the most precious are undoubtedly those that come through high-quality referrals from close-knit networks. 
 
At Kae Capital, our recent history shows that referrals have accounted for a majority of our investments (Including those we had rejected in the past). 
 
What, perhaps, is underappreciated though, is that when the referral is from a fellow VC, it implies that the company was rejected during their own evaluation and yet, was deemed good enough to be referred to other VCs. 
 
We have also referred a few deals to other VCs. Over time, some of them have gone on to do rather well and raised significant external funding. 
 
As bittersweet the competitive nature of the VC industry might be, it always feels good to see a company that you had referred do well, even if it means you missed out on the deal.<meta content="cms.next" name="cmsei" />

Here's what you should do when investors say no

<img class="gwt-Image" src="/photo/56333196.cms" />“You are not so smart” my colleague <a href="https://in.linkedin.com/in/amitsy">Amit</a> told me. 
 
“What ?!” was all I could say while getting ready to deliver a ferocious speech to defend my intellect (and any other virtue that needed defending). 
 
“<a href="https://youarenotsosmart.com/">You are not so Smart</a>. It’s a book. You will love it.” said Amit. 
 
He was spot on. 
 
David McRaney’s book is a light and yet comprehensive guide on one of the most human qualities of them all — Biases 
 
Reading a book which covers a seemingly infinite number of biases that each of us face every day has a powerful disarming effect (Can you really trust your judgement any more ?). 
 
But it can be really enlightening (and fun!) to see just how much sway biases have over our thoughts and decisions. 
 
<img class="gwt-Image" src="/photo/56333227.cms" /> 
 
(<a href="http://dilbert.com/">Image Source</a>) 
 
For example, what was going through your mind when you read the title of this post ? 
 
Did you feel like your own intelligence was being challenged (The <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FSpotlight_effect">self-as-target bias</a>) ? 
 
For those of you who have made New Year Resolutions ( <a href="https://youarenotsosmart.com/2010/10/27/procrastination/">The Procrastination bias</a>), did you start thinking more seriously about them ? 
 
Those of you who have not made New Year Resolutions, did you start thinking about one after reading the previous question (<a href="https://en.wikipedia.org/wiki/Priming_(psychology)">Priming-induced bias</a>)? 
 
You may think you are not as easily susceptible to biases as everyone else (<a href="https://en.wikipedia.org/wiki/Third-person_effect">The third person effect</a>), and are capable of steering clear of any fallacies that can cloud your judgement ( <a href="https://en.wikipedia.org/wiki/Self-serving_bias">The self-serving bias</a>). 
 
But then, 
 
You are not so Smart 
 
One of the most common questions every Venture Capital (VC) investor has to answer (or dodge) is : 
 
“Whats your thesis for &lt;Insert any market / sector / business model/ tech innovation&gt; space ?” 
 
Sometimes, I have an answer (which, in spite of all my embellishments, is nothing more than an opinion). 
 
Most times though, I have no choice but to acknowledge that I don’t have a thesis (or anything that is even passable as a point of view). 
 
This is a difficult thing to admit. After all, in the world of startups, <a href="http://economictimes.indiatimes.com/small-biz/startups/foodtech-resembled-a-startup-graveyard-in-2016/articleshow/56276369.cms">investors are often looked up to for advice, and for strong opinions that can be used to predict the future</a>. Admitting that you do not have or follow a thesis-driven approach can make an investor look not so smart. 
 
For an investor, a structured and thesis-driven investing approach comes with obvious merits, such as focus and greater depth of knowledge and understanding in sectors of interest. 
 
Might there be a benefit to not actually following a thesis-driven approach to investing ? 
 
You are not so Smart (the book) describes an interesting experiment conducted by Tim Wilson at the University of Virginia in 1990. 
 
He brought a group of students into a room and showed them a series of posters. The students were told they could take any one they wanted as a gift and keep it. He then brought in another group and told them the same thing, but this time they had to explain why they wanted the poster they had picked. 
 
The first group, the grab-and-go people, usually picked a nice, fancy painting. The second group, the ones who had to explain their choice, usually picked an inspirational poster with a cat clinging to a rope. 
 
Wilson then waited six months and asked the two groups what they thought of their choices. The first group, the ones who just got to grab a poster and leave, all loved their choice. The second group, the ones who had to write out why they were choosing one over the others, hated theirs. 
 
Might VC investors be denying themselves the best choices simply because of the obligation to conform to a (pseudo)intellectual framework ? 
 
For its many virtues, focus can also lead to surprisingly debilitating effects. 
 
For example, the video below demonstrates one of the most popular experiments on this phenomenon. Give it a go yourself ! 
 
<iframe allowfullscreen="" frameborder="0" height="525" src="https://www.youtube.com/embed/vJG698U2Mvo" width="700"></iframe> 
 
(<a href="https://www.youtube.com/watch?v=vJG698U2Mvo">Video Source</a>) 
 
If you didn’t already know of this test, did it surprise you ? 
 
It certainly caused me to think about all the obvious investments I might have completely missed out on because <a href="https://www.linkedin.com/pulse/vc-emotional-cycle-shubhankar-bhattacharya?trk=mp-reader-card">I was looking for something else</a>. 
 
The book also argued that a pre-conceived belief in the validity of information or a certain approach leads to <a href="https://en.wikipedia.org/wiki/Confirmation_bias">confirmation</a> and <a href="https://en.wikipedia.org/wiki/Subjective_validation">subjective validation bias</a>. For example, if one chooses to believe in the validity of horoscopes, you will ignore obvious facts that undermine them. 
 
I decided to put this to the test. So, on a recent flight, I decided to compare what the horoscope in the in-flight magazine had to say about the future. 
 
For Gemini : 
‘Focus will be on love. You will manage to impress someone. Someone may take you to meet an old friend. Praise comes in plenty for professionals. Better opportunities await those considering a job switch.’ 
 
For Cancer : 
‘Professionally, there will be no stopping you. Financial front will be strong. A friendship may blossom into romance. You can expect support of your well wishers. Spiritual endeavours will help bring peace.’ 
 
For Capricorn : 
‘Chances are you get into the good books of a senior. A little praise will be enough to raise your spirits on professional front. Some will focus at the larger picture on social front. Love will come knocking at your door.’ 
 
For Sagittarius : 
‘You will enjoy family time this month. Financial problems end through your efforts. You will find things moving in a positive direction at work. You will enjoy some romantic moments with lover.’ 
 
For Aquarius : 
‘Love relationship gets strengthened. Don’t neglect health. Financial condition improves substantially so expect to have a good time. Chart out a fresh course of action on romantic front.’ 
 
Do these predictions describe the same future for 5 different zodiac signs ? You decide. 
 
Would you know if you missed a gorilla in plain sight or bought into the validity of a horoscope ? 
 
Or would you claiming to know merely prove that you are also vulnerable to the <a href="https://en.wikipedia.org/wiki/Hindsight_bias">hindsight bias</a>? 
 
(Main Image: Pinterest) 
 
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You are not so Smart

<img class="gwt-Image" src="/photo/55893966.cms" />So <a href="http://www.recode.net/2016/12/1/13802154/angellist-product-hunt-acquisition">AngelList acquired Product Hunt</a>. While this may not necessarily count as headline news, an unusually high number of high-profile acquisitions seem to have taken place in recent months. 
 
Some of these include : 
 
<a href="http://www.reuters.com/article/us-monsanto-m-a-bayer-deal-idUSKCN11K128">Bayer acquired Monsanto for $66 Billion</a> 
 
<a href="http://www.wsj.com/articles/microsoft-to-acquire-linkedin-in-deal-valued-at-26-2-billion-1465821523">Microsoft acquired LinkedIn for $26 Billion</a> 
 
<a href="http://www.cnbc.com/2016/08/01/chinas-didi-chuxing-to-acquire-ubers-chinese-operations-wsj.html">Didi Chuxing acquired Uber China in a deal that valued the merged entity at $35 Billion</a> 
 
<a href="http://www.wsj.com/articles/wal-mart-to-acquire-jet-com-for-3-3-billion-in-cash-stock-1470659763">Walmart acquired Jet.com for $3.3 Billion</a> 
 
A similar trend is unfolding in India as well and some of the more prominently covered acquisitions include : 
 
<a href="http://economictimes.indiatimes.com/small-biz/startups/online-travel-portals-makemytrip-and-ibibo-announce-merger/articleshow/54921415.cms">MakeMyTrip’s merger with GoIbibo</a> 
 
<a href="https://techcrunch.com/2016/09/14/naspers-payu-buys-citrus-pay-for-130m-in-cash-to-expand-in-india/">PayU’s $130 Million acquisition of Citrus Pay</a> 
 
<a href="http://timesofindia.indiatimes.com/deals/-ma/Myntra-acquires-Jabong-for-70mn/articleshow/53394760.cms">Jabong being acquired by Myntra for $70 Million</a> (OK, so not all of these acquisitions are of equal stature) 
 
Many are alarmed by the possibility that these acquisitions are creating powerful monopolies that could potentially marginalize consumer interests. 
 
<img class="gwt-Image" src="/photo/55893773.cms" /> 
 
(<a href="http://dilbert.com/">Image Source</a>) 
 
These concerns have a very strong basis in fact. 
 
For instance, the <a href="http://fortune.com/2016/09/14/didi-china-users-prices/">Didi-Uber merger already seems to be antagonizing its customers with high prices and poor service</a>. It beckons a sobering, and rather grim future for the on-demand taxi market in India where mega-consolidation seems inevitable. 
 
But perhaps an emerging monopoly is already imposing its dominance in the transportation sector in India. 
 
A recent Indigo flight that I was on was scheduled to leave at 5:55 PM. 
 
It ended up leaving at 1:20 AM. (Thats a near 7.5 hour delay, for a 1 hour 40 minute flight) 
 
Just like every other flight, it had its fair share of business professionals who had planned meetings and onward journeys with the assumption that the flight would be on time. It also had senior citizens who needed medical attention and mothers having to devote all of their attention to their infant children. 
 
Many of us requested (demanded ?) temporary accommodations until there was some certainty in the schedule. 
 
We were told, in a rather matter-of-fact manner, that 
 
“We don’t provide such services” 
 
On that day, almost every other Indigo flight was delayed by at least 2 hours while many other airlines operated per schedule. 
 
When we finally did board the aircraft, not a single apology was forthcoming. 
 
For some reason, the first thing I decided to Google when the plane touched down was to check on Indigo’s market share, and found that <a href="http://www.livemint.com/Companies/4BOficqz7aIfoahLwEyxBL/Indias-air-traffic-grows-over-25-in-July-from-yearago-per.html">Indigo today has a 40% market share of India’s air travel space</a>. 
 
To provide a perspective, Indigo has nearly as much market share as the next 3 competitors (Jet Airways, Air India, and Spice Jet) combined. 
 
Clearly, monopoly allows you the luxury of not having to conform to the protocols of professional etiquette. 
 
Experiences such as this have created an inherent aversion to a monopolistic market, especially for those who believe in “free-markets” and the democratic nature of capitalism. 
 
We would like to believe that economies go through waves, alternating between peaks where a few companies exert considerable monopolistic power, and troughs where there is intense competition and disruption of the existing paradigms. 
 
But is that really the case ? 
 
A look at how the top 500 companies have stacked up as a percentage of total World Income reveals a surprisingly monotonic trend. 
 
<img class="gwt-Image" src="/photo/55893845.cms" /> 
 
(<a href="http://monthlyreview.org/2011/04/01/monopoly-and-competition-in-twenty-first-century-capitalism/">Image Source</a>) 
 
To add a layer of nuance, here is a graph on industries in the US where the top 4 companies have accounted for at least 50% of the shipment value 
 
<img class="gwt-Image" src="/photo/55893863.cms" /> 
 
(<a href="http://monthlyreview.org/2011/04/01/monopoly-and-competition-in-twenty-first-century-capitalism/">Image Source</a>) 
 
We have decidedly been moving towards an economy where a few dominant companies control an ever increasing share of the market and are therefore in a position to exert an ever increasing amount of power and influence. 
 
But first, do we truly understand what competition and monopoly mean ? 
 
Think back to the time you referred to the cabs market as highly competitive because of the price wars between Uber &amp; Ola, about how the telecom business was difficult because Airtel was now under threat from Reliance, or used a similar argument to describe (dare I say it) the airline industry. 
 
Do you notice that in each of these markets, the competition comprises of only a handful of players (sometimes exactly two), each with significant market share and pricing power ? 
 
Most markets that we think of as being competitive, are in fact those with an <a href="https://en.wikipedia.org/wiki/Oligopoly">Oligopoly</a> in place, a characteristic that makes them distinctly similar to a collection of monopolistic firms. 
 
However, the omnipresence of Oligopoly might not necessarily be a bad thing (Even if <a href="https://www.techinasia.com/flipkart-ola-seek-policy-help">Oligopolists themselves say otherwise</a>). 
 
Some would say that the vast cash reserves that the big four internet firms (Apple, Google, Facebook and Microsoft) have accumulated through their monopolistic power allows them the resources to continuously focus on innovation in a manner no fledgling firm burdened by competition would ever be able to. 
 
There is a reason innovation matters so much in a monopolistic setting. 
 
While Kodak and Nokia remain recent examples of monopolies eaten alive due to their inability to adapt to a rapidly changing technology paradigm, a more profound case might be made of the <a href="https://en.wikipedia.org/wiki/Keiretsu">Japanese keiretsu</a>. 
 
The keiretsu comprise of large conglomerates that continue to control an intricately connected empire of oligopolistic firms, such as Mitsubishi and Toyota, that have spread their influence across manufacturing, banking and financial services, food, metals and chemicals, mining and infrastructure as well as content and entertainment. 
 
With such densely connected networks whose interests were protected by the government, there was little incentive for innovation and little chance for new entrants to break through. 
 
If Japan’s GDP has been growing at the negligible rate of 0.5% annually since 1980, might that be attributed, to a significant degree, to the keiretsu that continue to exist today ? 
 
However, innovation can also allow a monopoly to create an entirely new monopoly. 
 
Case in point : Blackberry (Wait, what ?) 
 
I know what you are thinking : Isn’t Blackberry dead ? 
 
Not in Indonesia. 
 
<iframe allowfullscreen="" frameborder="0" height="393" src="https://www.youtube.com/embed/bIcb_jONAlQ" width="700"></iframe> 
 
<a href="https://www.youtube.com/watch?v=bIcb_jONAlQ">(Video Source)</a> 
 
While this video is dated, and the Blackberry device sales have been declining in recent years, it turns out that Blackberry’s BBM messenger is incredibly popular in the nation, <a href="http://blogs.wsj.com/digits/2016/02/29/why-blackberry-is-a-hit-in-indonesia/">more so than Whatsapp or Facebook messenger and is used for much more than just messaging</a>. 
 
Indonesians don’t seem to be complaining about either of Blackberry’s monopolies. 
 
I am still working my brains to figure out what the monopoly that disrupts the airline industry will look like : 
 
Will it be a company like <a href="http://www.prnewswire.com/news-releases/airline-startup-aims-to-make-flying-the-new-driving-300364810.html">Blackbird</a>, with an Uber for X model to bring private jets to the mass audience, using existing aircraft inventory? (Example : Uber, obviously) 
 
Will it be an entirely breakthrough technology like <a href="https://hyperloop-one.com/">Hyperloop</a> that makes existing transportation solutions obsolete ( Example : Apple and Samsung, over Kodak) 
 
Or will it be a company like SpaceX looking inward to create an inter-planetary transportation monopoly (Example : Hmmmm…) 
 
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The Monopoly Game

<img class="gwt-Image" src="/photo/55494851.cms" />I recently came across an intriguing piece of research discussed in the book <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FThinking%2C_Fast_and_Slow">Thinking, fast and slow</a> written by Daniel Kahneman (BTW the book is a masterclass in behavior analysis). 
 
A large-scale study of the impact of higher education collected data from about 12,000 people who had started their higher education in elite schools in 1976. 
 
When they were 17 or 18, the participants had filled out a questionnaire in which they rated the goal of “being very well-off financially” on a 4-point scale ranging from “not important” to “essential”. The questionnaire they completed twenty years later included measures of their income in 1995, as well as a global measure of life satisfaction. 
 
A whole 19 years after they stated their financial aspirations, many of the people who wanted a high income had achieved it. 
 
Among the 597 physicians and other medical professionals in the sample, for example, each additional point on the money-importance scale was associated with an increment of over $14,000 of job income in 1995 dollars. 
 
Nonworking married women were also likely to have satisfied their financial ambitions. Each point on the scale translated into more than $12,000 of added household income for these women, evidently through the earnings of their spouse. 
 
Evidently, goals offer a great deal more than a mere climax for our ambitions. Goals have the power to create reality, or as the Buddha said : 
 
“What we think, we become” 
 
The aforementioned research also threw some light on why goals make us work harder to achieve our objectives. 
 
In the sample study, the effect of income on life satisfaction was larger for those who had listed being well-off financially as an essential goal : 0.57 on a 5-point scale. The corresponding difference for those who had indicated that money was not important was only 0.12. 
 
We end up deriving greater happiness from the same outcomes if they are aligned with our goals. 
 
<img class="gwt-Image" src="/photo/55494859.cms" /> 
 
<a href="http://dilbert.com/">Image Source</a> 
 
It shouldn’t come as a surprise then that ambition and the desire to achieve extraordinary goals are amongst the most desirable qualities Venture Capitalists (VCs) look for in entrepreneurs. 
 
However, ambition is also one of the most difficult qualities to assess, especially <a href="https://shubhankar.co/why-humility-is-an-unfair-advantage-c216ef54cd95#.s6nycfjjl">when certain pretentious actions and behaviors are thrown into the mix</a>. 
 
In a <a href="http://timreview.ca/article/1023">comprehensive study of 21 Finnish technology companies, conducted by Arto Wallin, Kaisa Still and Katja Henttonen</a>, the trio found an elegant correlation between an entrepreneur’s ambition and how (s)he articulated the firm’s aspirations and growth plans. 
 
<img class="gwt-Image" src="/photo/55494903.cms" /> 
 
Since goals tend to become reality, a startup’s future can be predicted (with relatively more favourable odds) based on the scope of its goals. 
 
But then, it would be preposterous to suggest that most certain entrepreneurs are not ambitious enough to be crazily hungry for success. 
 
The distinction that needs to be made though is that different entrepreneurs define ‘success’ differently, either overtly, or in more subtle ways. 
 
In other words, 
 
An entrepreneur who defines success as the act of raising external funding would derive much greater happiness (Economists call this “utility”) from a successful fund-raise than anything else. 
 
An entrepreneur who defines success as achieving profitability would likely be quite satisfied when said goal is accomplished because the marginal utility of incremental effort might not be worth the trouble. 
 
A great case study in how the best entrepreneurs use goals to define their companies is <a href="https://medium.com/r/?url=http%3A%2F%2Fmedia.corporate-ir.net%2Fmedia_files%2Firol%2F97%2F97664%2Freports%2FShareholderletter97.pdf">Jeff Bezos’ 1997 letter to Amazon’s shareholders</a>. The fact that Amazon continues to attach this letter with every annual shareholder letter bears testament to the hallowed position the company’s goals occupy. 
 
The following extract from the <a href="http://media.corporate-ir.net/media_files/irol/97/97664/reports/shareholderletter01.pdf">2001 annual letter</a> in particular is very revealing : 
 
“In every annual letter (including this one), we attach a copy of our original 1997 letter to shareholders to help investors decide if Amazon.com is the right kind of investment for them, and to help us determine if we have remained true to our original goals and values. I think we have.” 
 
Nearly two decades since the 1997 letter, I think we can all emphatically say based on how things have gone with Amazon : 
 
‘Yes, they have’ 
 
Speaking of entrepreneurs and their goals, Elon Musk had a pretty elaborate <a href="https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me">‘Secret Master Plan’ for Tesla Motors back in 2006</a> which he neatly summarized as : 
 
Build sports car 
 
Use that money to build an affordable car 
 
Use that money to build an even more affordable car 
 
While doing above, also provide zero emission electric power generation options 
 
Don’t tell anyone. (Sure !) 
 
With the early reception to the <a href="https://en.wikipedia.org/wiki/Tesla_Model_3">Tesla Model 3</a> and the <a href="http://www.teslarati.com/tesla-solarcity-merger-ok-institutional-shareholder-services/">Tesla-SolarCity merger</a>, the master plan seems to have been executed to prophetic levels of perfection. 
 
The obvious follow-up was the <a href="https://www.tesla.com/blog/master-plan-part-deux">Master Plan, Part Deux</a>, which, in short, is : 
 
Create stunning solar roofs with seamlessly integrated battery storage 
 
Expand the electric vehicle product line to address all major segments 
 
Develop a self-driving capability that is 10X safer than manual via massive fleet learning 
 
Enable your car to make money for you when you aren’t using it 
 
<img class="gwt-Image" src="/photo/55494955.cms" /> 
 
<a href="https://medium.com/r/?url=https%3A%2F%2Fyourstory.com%2F2016%2F07%2Felon-musk-master-plan-2%2F">Image Source</a> 
 
Determined entrepreneurs have time and again proved that focus can help achieve some pretty audacious goals. 
 
<a href="https://www.washingtonpost.com/news/the-switch/wp/2016/09/15/jeff-bezos-on-nuclear-reactors-in-space-the-lack-of-bacon-on-mars-and-humanitys-destiny-in-the-solar-system/">Jeff Bezos</a> and <a href="https://spaceflightnow.com/2016/09/27/spacexs-elon-musk-announces-vision-for-colonizing-mars/">Elon Musk</a> have now set their sights on seeing millions of humans across outer space. 
 
Hopefully we will all be working on our own set of ambitious goals while enjoying the new neighbourhood. 
 
(<a href="https://shubhankar.co/">Shubhankar ​Bhattacharya</a> is a Venture Partner at Kae Capital, an early stage VC fund.) 
 
(Main Image: Thinkstock) 
 
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Why Ambition & Goals Matter

<img class="gwt-Image" src="/photo/55375462.cms" /> 
 
A lot of people are understandably very excited about <a href="http://www.businessinsider.in/Explained-How-Modis-move-to-discontinue-Rs-500-and-Rs-1000-notes-exactly-put-money-launderers-in-a-fix/articleshow/55317612.cms">Prime Minister Narendra Modi’s recent initiative to discontinue the Rs. 500 and Rs. 1000 notes</a> , throwing down a direct challenge to the existence of India’s notorious black economy. 
 
People are also excited (Say…whaaaat?)about <a href="http://www.businessinsider.in/Donald-Trump-shocks-world-wins-presidential-election-in-biggest-upset-in-political-history/articleshow/55329108.cms">Donald Trump’s victory in the 2016 US Presidential elections.</a> 
No wonder many are referring to these events as the 11/9 or the new 9/11. 
 
One would imagine everyone ought to be concerned with policy changes as significant as one affecting the currency in the hands of over a billion people, or a highly polarizing figure now becoming the Head of State of the world’s most powerful economy (No China, that isn’t you. <a href="http://www.businessinsider.in/Chinas-GDP-is-expected-to-surpass-the-US-in-11-years/articleshow/47807930.cms">At least, not yet</a>.) 
 
The truth though, is a little bit more nuanced. 
 
For starters, as many as 100 Million Americans might have sat out the elections, possibly because they believe that voting doesn’t matter a great deal . 
 
This would imply, as a corollary, a strong belief in an inability to change the status quo, that neither choice would result in either significant good or significant bad. 
 
That would explain why a day after the demonetization of the Rs. 500 &amp; Rs. 1,000 notes, an Uber driver told me : 
“Chor tho chori karte rahenge (The thieves will continue stealing)” 
 
But then this feeling of helplessness is also not without a valid basis. After all, this isn’t the first time India has demonetized high value denominations. In fact, it has happened at least twice before, in 1946 and 1978, when notes with denominations as high as Rs. 10,000 (Yes, you read that right, Rs. 10,000 notes)were taken out of circulation. 
 
Technological progress and the government are often seen as two sides of a rather unusual dichotomy. Perhaps the greatest appeal that the concept of capitalism offers, is the faith that the best and most deserving individuals and businesses rightfully earn that place, and the government has hardly any role to play in this ecosystem. 
 
For the proponents of Free-markets, it is therefore difficult to accept a situation where the government holds considerable power in influencing business and market outcomes. 
 
In this context, any intervention or influence from a government in a capitalist democracy would be seen as a rather glaring irony. 
If we were to put these inclinations aside though, the evidence that government leadership and policies have a direct bearing on innovation and economic growth is overwhelming. 
 
Perhaps the most obvious example of this in today’s times is the <a href="https://en.wikipedia.org/wiki/Great_Firewall">Great Firewall of China</a>, which many might see as draconian and narrow-minded, but which has also led to the creation of an entire generation of Chinese entrepreneurs and businesses that have capitalized on the opportunity it represents (I am thinking Jack Ma &amp; Alibaba). 
 
If we were to go back in time, we would find that the government had a strong role to play in one of the most successful companies in history — <a href="https://en.wikipedia.org/wiki/Dutch_East_India_Company">The Dutch East India Company</a>. 
 
The Dutch East India Company, also known as VOC, is, by most accounts, the first ever multi-national corporation, the first company to issue equity ( For just shy of 200 years the company paid an <a href="http://www.thetypicalindian.com/news/the-highest-valued-company-ever-would-be-worth-769970931263072-today?page=2">annual dividend ranging from 12%-63%)</a>. By some estimates, VOC would be worth nearly $7.7 Trillion today. 
 
Numbers like these leave little room for debate. 
 
VOC’s mind-boggling success was the result of a monopoly it enjoyed over the Asian trade, beginning with spices. 
This monopoly was the result of a royal charter awarded to them by the Dutch Government. 
 
The first and most successful global and publicly owned corporation in history was the result of government intervention. 
 
Until not too long ago, the list of top-10 largest companies in the world (by market capitalization) was dominated by oil majors such as ExxonMobil , Royal Dutch Shell &amp; PetroChina (At the time of this writing, <a href="http://money.cnn.com/2016/05/10/news/companies/saudi-arabia-aramco-oil-ipo/">Saudi Aramco</a> is privately held, but should it go public, will almost certainly find a place in the list). 
 
The modern oil industry is celebrated as a triumphant demonstration of how technology can impact the lives of generations and create massively successful businesses. 
 
But what if I told you the oil industry might never have taken off if not for some help from the government ? 
 
In the early 1800s, <a href="https://en.wikipedia.org/wiki/Whale_oil">whale oil</a> emerged as a leading source of lighting fuel and found other applications (Engine fluid, Soap manaufacture etc.) 
The use of whale oil eventually posed some (obvious?) problems, especially the diminishing supply of whales, which made the whaling process more and more cumbersome, dangerous and expensive. 
 
The fact that kerosene had become the dominant lighting fuel by the late 19th century is used to present a very elegant narrative that explains how the petroleum technology and industry arrived in the nick of time to save the whales as a cheaper and more environment-friendly alternative. 
 
If only that was the truth. 
 
Owing to the dwindling supply of whales, whale oil production peaked out in 1846. 
 
<a href="http://www.environmentalhistory.org/brilliant/bioenergy/the-whale-oil-myth/">By 1850, a consumer had a choice of:</a> 
Camphene or “burning fluid” — 50 cents/gallon (combinations of alcohol, turpentine and camphor oil — bright, sweet smelling) 
Whale oil — $1.30 to $2.50/gallon 
Lard oil — 90 cents (low quality, smelly) 
Coal oil — 50 cents (sooty, smelly, low quality) (the original “kerosene”) 
Kerosene from petroleum — 60 cents (introduced in early 1860s) 
 
In 1860, shortly before the introduction of Kerosene, alcohol-based fuels were already the cheapest source of fuel and at 90 Million gallons annually, had 5 times as much production as whale oil 
 
Why then do we use kerosene today and not alcohol fuel ? The answer lies in just one powerful word : Taxes 
 
Use of kerosene rose quickly after 1862 when, a tax of $2.00 per gallon was imposed on alcohol to pay for the Civil War. The tax quickly forced burning fluid and camphene off the market. A far smaller tax (10 cents per gallon) was imposed on kerosene. 
 
An entire technological and business paradigm can be created or lost based on what the government supports (or ‘taxes’). 
Is the demonetization of the Rs. 500 &amp; Rs. 1000 notes the ‘kerosene moment’ for the Indian economy, one that threatens the existence of the black economy by ‘taxing’ them for not being connected to the digital ecosystem ? 
 
Time will tell. 
 
Oh, and about Trump…… 
 
South Park might have nailed it in a recent episode : 
 
 
<iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/TlqKFlU7YAs" width="560"></iframe> 
 
For more of such posts, head to <a href="https://shubhankar.co/">Shubhankar.co 
 
I</a><a href="http://indiatoday.intoday.in/story/donald-trump-us-president-pm-narendra-modi/1/806337.html">mage source</a><meta content="cms.next" name="cmsei" />

The Invisible Hand

<img class="gwt-Image" src="/photo/55028207.cms" />An interesting consequence of the release of <a href="https://en.wikipedia.org/wiki/M.S._Dhoni:_The_Untold_Story">M.S. Dhoni : The Untold Story</a> is that many little-known anecdotes from MS Dhoni’s career can now be appreciated by a larger audience. 
 
The one that caught my attention the most was the story around Dhoni’s selection into the Indian cricket team. 
 
While many in the selection panel, such as <a href="http://www.espncricinfo.com/ci/content/story/143058.html">Sandeep Patil, were pushing for Dinesh Karthik</a>, Dhoni made it to the side on the back of a <a href="http://www.espncricinfo.com/ci/content/story/135231.html">firm recommendation by then-captain Sourav Ganguly</a>, and Ravi Shastri. 
 
For all of his astounding success, MS Dhoni started off as Non-Consensus selection. 
 
Why is this significant ? 
 
Most of us start with the assumption that extraordinary sporting talent is obvious to spot and should lead to a unanimous approval by the selection panel. 
 
Nothing could be further from the truth. 
 
I began to see interesting parallels between sporting selections and the way Venture Capital (VC) investors pick their investments, inspired by a set of <a href="https://25iq.com/2014/06/14/a-dozen-things-ive-learned-from-marc-andreessen/">quotes from Marc Andreessen</a>. 
 
“We think you can draw a 2×2 matrix for venture capital. …And on one axis you could say, consensus versus non-consensus. And on the other axis you can say, successful or failure. 
 
<img class="gwt-Image" src="/photo/55028080.cms" /> 
 
<a href="https://25iq.com/2014/06/14/a-dozen-things-ive-learned-from-marc-andreessen/">Image Source</a> 
 
And of course, you make all your money on successful and non-consensus. … it’s very hard to make money on successful and consensus. Because if something is already consensus then money will have already flooded in and the profit opportunity is gone. 
 
And so by definition in venture capital, if you are doing it right, you are continuously investing in things that are non-consensus at the time of investment. 
 
And let me translate ‘non-consensus’: in sort of practical terms, it translates to crazy. You are investing in things that look like they are just nuts…..The entire art of venture capital in our view is the big breakthrough for ideas. The nature of the big idea is that they are not that predictable… 
 
….Most of the big breakthrough technologies/companies seem crazy at first: PCs, the internet, Bitcoin, Airbnb, Uber, 140 characters.. It has to be a radical product. It has to be something where, when people look at it, at first they say, ‘I don’t get it, I don’t understand it. I think it’s too weird, I think it’s too unusual.’” 
 
Of course, making a non-consensus selection, whether in the world of sports or startups, is easier said than done. Consensus by definition, represents a balanced, sensible, rational view that is, in most cases, also correct. 
 
What then does it take to cross the line in order to make a crazy non-consensus selection ? 
 
It turns out that the story of Sachin Tendulkar’s selection into the Indian cricket team might hold the answer. 
 
Back in 1989, the selection panel was debating whether the 16-year old Tendulkar was ready for international cricket. 
 
“What if he fails?” some in the panel asked. 
 
When it came to decision time, the ball was thrown to senior selector Naren Tamhane, who said, <a href="http://archive.mid-day.com/news/2009/sep/130909-Raj-Singh-Dungarpur-sad-demise-Cricketing-Legend-Sports-Mumbai.htm">“Gentlemen, Sachin Tendulkar never fails”</a> prompting a <a href="http://timesofindia.indiatimes.com/bharat-ratna-sachin-tendulkar/top-stories/It-was-3-2-in-Sachin-Tendulkars-favour-for-1989-Pak-tour-Selector/articleshow/23919252.cms">narrow 3–2 win in favour of Tendulkar</a>. 
 
Given how Tendulkar’s career played out, Tamhane’s audacious statement appears prophetic, courageous, and even, badass. 
 
Think any longer though and you realize that it was a ludicrous, heavily biased, and quite simply, incorrect statement to make. 
 
But perhaps bias, a strong optimistic bias, is the only way we will ever make a non-consensus bet on an unproven rookie, or a crazy start-up idea. 
 
Bias repeatedly causes us to make many of our worse judgements and decisions. 
 
However, an optimistic bias is also the driving force that makes the entrepreneur believe that his odds of success are infinitely higher than his competition, the selector believe than an unproven teenage cricketer never fails, and a crazy, incomprehensible idea can be the next technological breakthrough. 
 
To borrow from <a href="https://www.techinasia.com/rare-insight-sequoia-startup-investment-calls">Shailendra Singh</a>, a winning non-consensus investment happens as a result of someone 
 
“…willing to put his neck on the line and is literally pounding the table to assert investment in a startup he believes in..” 
 
That sort of conviction will always necessarily need to be loaded with bias. 
 
But why go through all the song and dance of a heavily-biased non-consensus selection when the stakes are so high ? 
 
Wouldn’t it be safer to just go with a consensus selection ? 
 
Wouldn’t it ? 
 
In the 1984 NBA college draft, the Portland Trail Blazers <a href="http://www.npr.org/2012/12/20/167677752/film-bad-legs-hindered-bowies-time-in-portland">chose Sam Bowie over a certain Michael Jordan</a> (Who was then picked up by the Chicago Bulls). 
 
And no, it was not even close to being a Non-consensus decision. In fact, according to “Dr. Jack” Ramsay, the head coach of the Portland Trail Blazers at the time, 
 
“It made the most sense for us to select Sam Bowie. It was almost a no-brainer.” 
 
<img class="gwt-Image" src="/photo/55028160.cms" /> 
 
<a href="http://www.pictaram.com/media/1250834033860699165_2869843864">Image Source</a> 
 
Yes, it was a consensus selection to not pick Michael Jordan. 
 
So the next time you are considering ranting about how investors and sports selectors get their picks wrong, remember that someone once called the decision to not pick Michael Jordan a no-brainer, and was paid for it. 
 
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The Selection Dilemma

<img class="gwt-Image" src="/photo/54482539.cms" />Forbes recently announced that <a href="https://en.wikipedia.org/wiki/Dwayne_Johnson">Dwayne Johnson</a>, better known to many as “The Rock” from his time at WWE, <a href="http://www.forbes.com/sites/natalierobehmed/2016/08/25/the-worlds-highest-paid-actors-2016-the-rock-leads-with-knockout-64-5-million-year/#25cf9ac845da">had topped the list of the World’s highest paid-actors for 2016, at $64.5 Million</a>. 
 
I must admit that the news took me by surprise. 
 
While I knew that The Rock has been a high-profile Hollywood star for a while now, I never quite expected him to be №1. 
 
There were also two important observations that came to mind : 
 
Much like The Rock had made the transition from wrestling to become the world’s highest paid movie star, Arnold Schwarzenegger had shifted careers from bodybuilding, <a href="http://www.slate.com/articles/arts/the_hollywood_economist/2005/05/concessions_are_for_girlie_men.html">eventually becoming the highest paid movie star of his time when he did Terminator 3</a>. (Another case of the <a href="https://shubhankar.co/the-past-is-the-future-80c2b88d0355#.velxyyv1n">Past being the Future ?</a>) 
 
Even though I consider myself a WWE fan, The Rock’s best years as a wrestler (1998–2002) coincided with the time I stopped watching WWE (1997–2003). I never actually got to watch The Rock in his prime. 
 
I was therefore curious about how this wrestler had become the biggest movie star in the world and decided to watch some of his segments on YouTube. 
 
I didn’t realize I would uncover a very interesting and yet forgotten chapter in history and lessons that can be learned from a true legend. 
 
Did you know that there was a time, not too long ago when the WWE was not the leading wrestling brand, and that its very existence was threatened by a larger, more popular, and better funded competitor ? 
 
Yes, it’s true. 
 
Back in the late 1990s, the dominant wrestling company was in fact World Championship Wrestling (<a href="https://en.wikipedia.org/wiki/World_Championship_Wrestling">WCW</a>), owned by media mogul <a href="https://en.wikipedia.org/wiki/Ted_Turner">Ted Turner</a>, and whose flagship show was <a href="https://en.wikipedia.org/wiki/WCW_Monday_Nitro">WCW Monday Nitro</a> (Which, you might realize, is a rather clever phonetic play on WWE’s Monday Night Raw). 
 
WCW’s popularity was driven by their risqé storylines and deep pockets that allowed them to poach most of the top wrestlers of the time, such as Hulk Hogan, Macho Man, and the Hitman ( My decision to stop watching WWE was prompted by the <a href="https://en.wikipedia.org/wiki/Montreal_Screwjob">Hitman’s infamous exit in 1997</a> ). 
 
The rivalry between WWE Raw &amp; WCW Nitro is now popularly referred to as “<a href="https://en.wikipedia.org/wiki/Monday_Night_Wars">Monday Night Wars</a>” — A phase where each show was locked in intense competition to better the other’s ratings. 
 
Starting from late 1996, <a href="https://en.wikipedia.org/wiki/Monday_Night_Wars">WCW Nitro beat WWE Raw in the ratings for 84 consecutive weeks</a>. 
 
The story seemed awfully similar to a theme that investors and entrepreneurs believe themselves to be familiar with : A stronger and better-funded firm crushing a weaker (and weakening) opponent. 
 
But this story had a very different ending. 
 
<img class="gwt-Image" src="/photo/54482311.cms" /> 
 
(<a href="https://www.reddit.com/r/SquaredCircle/comments/1sgy5y/its_back_baby_markout_monday/">Image source</a>) 
 
Might The Rock have had a say in this dramatic reversal ? 
 
The turning point came in 1998, when the WWE embarked on a highly edgy campaign, which is now recognized as one of the greatest plays in marketing and branding — <a href="https://en.wikipedia.org/wiki/Attitude_Era">The Attitude Era</a> : A series of characters and stories that were designed to inspire shock and awe. 
 
But a campaign as audacious as this would not have been even remotely plausible without its two leading protagonists : <a href="https://en.wikipedia.org/wiki/Stone_Cold_Steve_Austin">“Stone Cold” Steve Austin</a>, and The Rock executing their roles to perfection. 
 
(Is it a coincidence that both these characters adopted names inspired from geological formations ?) 
 
Eventually, not only did the WWE beat WCW in the Monday Night Wars, it went on to acquire it in a distress sale, and today exists as a near monopolistic leader in the Wrestling entertainment business. 
 
(How competition, or the lack of it [in a monopoly setting], affects the quality and the customer satisfaction that businesses deliver upon is a subject I intend to cover in a future post) 
 
What is it about The Rock that allowed him to, almost single-handedly, not only save the WWE, but completely rewrite the course of an entire industry, and then also become a trailblazer as a movie star ? 
 
I dug in to try and answer this question and found a video where The Rock revealed what he felt were his <a href="https://www.youtube.com/watch?v=yYzBxqYum6I">top 10 rules for success</a>, and should you have the time, the 15-minute video is absolutely worth the watch. 
 
For this post though, I decided to throw the spotlight on what I felt were the two rules that every entrepreneur and VC investor could relate to : 
 
Be Yourself 
 
It might seem ludicrous now, but there was a time when The Rock wasn’t popular with the fans. 
 
Why ? And what changed since then ? 
 
Watch the video below for The Rock’s own account : 
 
<iframe allowfullscreen="" frameborder="0" height="393" src="https://www.youtube.com/embed/eeSwVWKJ0CA" width="700"></iframe> 
 
<a href="https://www.youtube.com/watch?v=eeSwVWKJ0CA">(Video Source)</a> 
 
Just two words that are so powerful (and no, I am not referring to <a href="https://en.wikipedia.org/wiki/D-Generation_X#Suck_it.21">D-Generation X’s taunt</a>) — Be Yourself 
 
Borrowing from The Rock’s own words, are you trying to shove a version of yourself (or your business) down your customer’s throats, that isn’t really you? 
 
And what did “being yourself” mean to The Rock ? 
 
Here is an entertaining throwback : 
 
<iframe allowfullscreen="" frameborder="0" height="393" src="https://www.youtube.com/embed/l5UzUHaTpSY" width="700"></iframe> 
 
(<a href="https://www.youtube.com/watch?v=l5UzUHaTpSY">Video Source</a>) 
 
Yes, it is extraordinary silly and juvenile. 
 
But it cannot be denied that the segment has been executed with extraordinary theatrical skill, and a rather distinctive quality that is endearing because it bears The Rock’s signature style. 
 
A style that allowed The Rock to enchant the millions (and millions!) of his fans. 
 
See the Potential in Others 
 
How often have we judged someone negatively based on an initial fact-check or evidence of negative conduct ? It might, in fact, be one of the de facto aspects of every VC investor’s job description (Not to call the kettle black, I most certainly am guilty of this myself) 
 
Perhaps there is merit in <a href="https://shubhankar.co/why-humility-is-an-unfair-advantage-c216ef54cd95#.vfe9ge1e2">swallowing the humble pie</a> and giving everyone a fair chance as The Rock found out himself 
 
<iframe allowfullscreen="" frameborder="0" height="393" src="https://www.youtube.com/embed/e8D2eTmHG4I" width="700"></iframe> 
 
(<a href="https://www.youtube.com/watch?v=e8D2eTmHG4I">Video Source</a>) 
 
The Rock’s rise to the top was no fluke. It was in fact, richly deserved, and inevitable. 
 
So, do you smell what The Rock is cooking ? 
 
Have you read my debut book <a href="http://books.juggernaut.in/#/details/3200b1f8637f4a68865fe5f7a8e8c76f">“VCs are from Venus, Entrepreneurs are from Mars”</a> yet ? 
 
For more of such posts, head to <a href="https://shubhankar.co/">Shubhankar.co</a> 
 
(Main Image: Indiatimes) 
 
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Be The Rock

<img class="gwt-Image" src="/photo/53957965.cms" /> 
A leading media group recently reached out to us with an interesting question: 
 
What is the future of Venture Capital (VC) Investing? 
 
There is an <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FInception">Inception</a>-like quality to this question that I found particularly intriguing. 
 
Why? 
 
One of the more obvious, and yet under-appreciated, aspects of a VC’s job is that we are constantly predicting (or trying our best to predict) the future. 
 
<img class="gwt-Image" src="/photo/53957887.cms" /> 
 
<a href="https://medium.com/r/?url=http%3A%2F%2Fdilbert.com%2Fstrip%2F1992-07-23">Image source</a> 
 
In the vast majority of cases, these “predictions” go spectacularly wrong. 
 
That might be because we aren’t as good at predicting the future as we would like to believe, or maybe it is because the future is, by design, unpredictable, as Nassim Nicholas Taleb posited in <a href="https://en.wikipedia.org/wiki/The_Black_Swan_(Taleb_book)">The Black Swan</a>. 
 
However, that might be hard for the followers of <a href="https://en.wikipedia.org/wiki/Nostradamus">Nostradamus </a>to accept. After all, many credit the 16th century prophet with predicting world events as significant as World Wars, the rise of Napoleon and Hitler, and even, believe it or not, <a href="http://ca.nberra.com/index.php/2011/07/nostradamus-predicts-the-rise-of-facebook/">Facebook</a>. 
 
If even a fraction of his predictions are legitimate, or can be attributed to skill, Nostradamus would make a damn fine VC. 
 
<img class="gwt-Image" src="/photo/53957892.cms" /> 
 
<a href="http://hubpages.com/education/Nostradamus-Prophet-or-Poet">Image source</a> 
 
Recently, I was watching a documentary that claimed that Nostradamus’ “predictions” were nothing more than a retelling of past events. It proposed that Nostradamus believed in <a href="https://en.wikipedia.org/wiki/Historic_recurrence">Historic recurrence</a>, the concept that similar events and patterns keep repeating themselves over time. 
 
As Niccolò Machiavelli, one of the greatest writers of the Italian Renaissance era wrote in his Discorsi : 
 
“ Whoever considers the past and the present will readily observe that all cities and all peoples… ever have been animated by the same desires and the same passions; so that it is easy, by diligent study of the past, to foresee what is likely to happen in the future in any republic, and to apply those remedies that were used by the ancients, or not finding any that were employed by them, to devise new ones from the similarity of events.” 
 
In other words, the Past is the Future. 
 
How might such a thought be useful for us if to we are to attempt even a guess about what the future holds for the VC industry ? 
 
In many ways, VC investing today shares similarities with where stock market investing was in the 1950s. 
 
The 1950s was a time when stocks were still a relative novelty and the transaction process was time-consuming and expensive, besides being largely under the control of brokers. 
 
The extent to which the penetration of stock market investing has grown can largely be attributed to three factors : 
 
Reduction of the cost and time taken to invest 
 
Reduction of the information asymmetry between buyers and sellers 
 
Reduction of the minimum investment sizes (Think of the small monthly mutual fund investment plans) 
 
Today we find ourselves in a time when a significant proportion of consumers are either already stock market investors, or are considering entering the market, even if it is with a small starting position. 
 
But regular stock market investing is still primitive in comparison to <a href="https://en.wikipedia.org/wiki/Algorithmic_trading">algorithmic trading</a>, and in particular, <a href="https://en.wikipedia.org/wiki/Algorithmic_trading#High-frequency_trading">high frequency trading</a>, both of which refer to the process where trades are automated, executed and turned around real fast, and are driven by automated processes. 
 
To appreciate what this means, consider <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.equedia.com%2Fthe-shocking-truths-about-high-frequency-trading%2F">this</a>: 
 
Not only are stocks being held for no more than 16 seconds, the software’s decision to buy or sell a stock is made in less than 10 milliseconds. Some say it’s as fast as half a millionth of a second — that’s more than a million times faster than the human brain can process a decision. 
 
<a href="https://medium.com/r/?url=http%3A%2F%2Fwww.equedia.com%2Fhow-fast-is-high-frequency-trading%2F">High Frequency Trading already accounts for more than 50% of all stock trading volume</a> in the US. 
 
It is no longer the future. 
 
If anything, it is the past and the present. 
 
The possibility that VC is heading in the same direction might not be a ludicrous one to suggest. 
 
After all, we already have an <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.theaivc.com%2F">Artificial-Intelligence (AI) powered VC firm</a>. 
 
<img class="gwt-Image" src="/photo/53957916.cms" /> 
 
<a href="https://medium.com/r/?url=http%3A%2F%2Fwww.theaivc.com%2F">Image source</a> 
 
(Spoiler Alert : Don’t get your hopes high, at least not yet) 
 
Shouldn’t we be celebrating how technology is making investing a more convenient and presumably, more intelligent process ? 
 
What might we be overlooking ? 
 
Ivan Lo has some <a href="http://about:blank">pretty grim prophecies</a> over trading being taken over by software : 
 
“The world is literally on the brink of a financial collapse and we have software programs running and gauging our day-to-day markets. It’s a scary thought. 
 
Software programs have bugs. At any given time, the wrong input our output could cause catastrophe. I am sure everyone has had their computer crash or had some kind of weird malfunction with a software program before. Imagine when it happens with software trading programs that control billions of dollars worth of wealth — ie. flash crashes.” 
 
If you think such dire predictions have no precedent in the world of investing, think again. 
 
<a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FLong-Term_Capital_Management">Long Term Capital Management </a>(LTCM) began in 1994 with a team that included Nobel laureates and a game-changing quantitative investment model that returned 21% in the first year, 43% in the second year, and 41% in the third year. 
 
Nothing could go wrong for LTCM, until it did — With a spectacular loss of $4.6 Billion in 1998. 
 
So how can we use technology in a way that helps us and yet saves us from a potential (inevitable?) implosion ? 
 
Think of a time when the prevalent transportation solution takes the blame for urban pollution and congestion and exacerbates housing woes. 
If you are thinking of the present times and fossil-fuel based transportation, think again. 
 
I am talking of 19th Century London and New York. And Horses. 
 
I first read about this problem in <a href="https://medium.com/r/?url=https%3A%2F%2Fffbsccn.wordpress.com%2F2009%2F11%2F17%2Fsuperfreakonomics-and-the-parable-of-the-horse-manure-there-is-so-much-i-dont-know%2F">Superfreakonomics </a>(And for those interested, it makes for an absorbing read), described in the book as one of “Horse Manure”. 
 
To appreciate what this problem was, imagine travelling back in time to 19th Century London and New York. The most dominant technological solution and one which require little/no human effort was horses, or vehicles that ran on horses.Everything was transported by horse-drawn vehicles of one kind or another — people, goods, food — everything. 
 
Why would that be a problem though ? 
 
As <a href="https://medium.com/r/?url=https%3A%2F%2Fnofrakkingconsensus.com%2F2011%2F03%2F29%2Fthe-horse-manure-problem%2F">Donna Laframboise</a> puts it, 
 
“Horses are lovely animals, but when crowded into cities they cause a variety of problems. The 15 to 30 pounds of manure produced daily by each beast multiplied by the 150,000+ horses in New York city resulted in more than three million pounds of horse manure per day that somehow needed to be disposed of. That’s not to mention the daily 40,000 gallons of horse urine.” 
 
But that was not all. 
 
In 1894, the Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure. One New York prognosticator of the 1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows. 
 
<img class="gwt-Image" src="/photo/53957928.cms" /> 
 
That is horse poop on the streets of New York (<a href="https://www.petpooskiddoo.com/blog/dirt-carters-to-crossing-sweepers-to-white-wings-the-original-pooper-scoopers/">Image source</a>) 
 
So what saved us from drowning in Horse manure? 
 
Superfreakonomics believes it was the adoption of the automobile. While that is an elegant and largely correct answer, I believe credit is also due to a more humble missing link : The Bicycle. 
 
Mass-produced automobiles could only be used if there were smooth, paved roads on which they could be driven. 
 
And what triggered the decision to produce such roads ? You guessed it — Bicycles. 
 
How bicycles might have contributed to cleaning and decongesting urban centers is not a very difficult thing to explain. Bicycles are pollution-free and because they became the first ubiquitous transportation solution (Everybody could afford a bicycle), they allowed people to live further away from city centers in less densely populated and more affordable areas. 
 
Bicycles solved the problem of pollution, traffic and expensive housing rentals. 
 
Should we be surprised that all these problems were solved by a technological innovation (The bicycle) that actually increased the extent of physical human exertion during travel ? 
 
Technological improvements aren’t always about reducing human effort. 
 
What would our history lesson on horses and bicycles have to do with investing ? 
 
I decided to ask Google who the best investor in the world is, and the response wasn’t a surprise : 
 
<img class="gwt-Image" src="/photo/53957949.cms" /> 
 
I see poetic beauty in the fact that by popular opinion, the gold standard of investing today continues to be Warren Buffet, an individual who has been investing since the 1940s and 1950s. 
 
One of the defining qualities of Warren Buffet’s investing style, popularly called ‘Value Investing’, is <a href="http://www.morningstar.in/videos/617497/greenblatt-patience---the-secret-to-value-investing.aspx">Patience </a>— A distinctly human quality (Albeit a rare one), and a clear anti-thesis of High-frequency trading. 
 
Warren Buffet’s example is something all VCs, whether current of aspiring, should constantly remind themselves of. 
 
In all likelihood, the future will be a time where millions of people will be eligible to call themselves Angel Investors and will directly compete with VC funds for access to deals. AI systems will reach a stage of maturity when they are able to analyze early-stage private companies and give us a direct recommendation on whether to Buy or Sell (Much like similar systems exist in the public markets today). 
 
It might also be reasonable for us to speculate that such AI systems will be able to predict the next “hot” business model to invest in. 
 
However, the best VCs will continue to be defined by a uniquely human power, their ability to make sense of the indecipherable : The -X-Factor that defines the best entrepreneurs. 
 
For all the advances in technology and learning systems, identifying a truly remarkable entrepreneur will remain one of the final frontiers that technology might not be able to conquer. 
 
The vast majority of decisions made by VC investors will largely be driven by machine recommendations, the sort of decisions that attract a consensus. 
 
The best VCs though, will differentiate themselves by backing their conviction in exceptional Entrepreneurs that have crazy ideas, even when such decisions conflict with a machine-driven recommendation, and be patient enough to not act on market speculations. 
 
In most cases, such ideas are too crazy and hare-brained for AI systems to understand (Which, is a rather beautiful irony). 
 
<a href="http://thestudioexec.com/wp-content/uploads/2015/06/inception-1920x1080-wallpaper-829789.jpg">Image source</a> 
 
About the author: Shubhankar Bhattacharya is a Venture Partner at Kae Capital, an early stage VC fund. He can be reached via his <a href="https://in.linkedin.com/in/shubhankar-bhattacharya-a1063a3">LinkedIN profile</a>. 
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The past is the future

<img class="gwt-Image" src="/photo/53772622.cms" /> 
By now, much has already been said, and written, and experienced, about the two apps that have been making the headlines in the last couple of months (i.e. ever since they released) : Pokémon GO and Prisma. 
 
To state the obvious, Pokemon GO and Prisma are the latest Blockbusters, a highly exclusive and hallowed set of products, brands and trends that define or change user behavior and consumption, and do so really fast. 
 
Apart from the more common usage of the term in movies and music, the pharmaceutical industry reveres its <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.investopedia.com%2Fterms%2Fb%2Fblockbuster-drug.asp">blockbusters</a> (A blockbuster drug is one that generates more than $1 Billion in annual sales) and so does the gaming industry (Think of Angry Birds, Candy Crush &amp; Temple Run before Pokemon GO ever happened). Harry Potter, iPhone, Tesla are also examples of the fact that Blockbusters take many forms. 
While our own affinity towards our favourite (or most recent) Blockbuster may make us feel otherwise, the truth is that in most cases it is near impossible to spot a Blockbuster a priori. 
 
<img class="gwt-Image" src="/photo/53772530.cms" /> 
 
<a href="https://www.pinterest.com/pin/211739619954966718/">Image source</a> 
 
(Should you disagree, I would love to read your thesis on how you would have predicted, before its release, that <a href="https://medium.com/r/?url=http%3A%2F%2Fmashable.com%2F2014%2F12%2F03%2Fpsy-broke-youtube-gangnam-style%2F">Gangnam Style would become the most viewed video on YouTube</a>) 
 
With that said, an exercise in pattern recognition is an enticing proposition for most VCs, and in this post, I look at 3 ( or is it 4?) features that 
seem to set Blockbusters apart. 
 
Aspirational 
Soon after Viagra’s launch, TIME magazine ran a story on the pill titled ‘<a href="https://medium.com/r/?url=http%3A%2F%2Fcontent.time.com%2Ftime%2Fmagazine%2Farticle%2F0%2C9171%2C139084%2C00.html">The Viagra Craze</a>’ in which Bob Guccione, publisher of Penthouse magazine, prophesied that the drug will : 
 
“…free the American male libido from the emasculating doings of feminists. ….and the ability to have sex by older men will make them 
healthier and live longer. It will fool the biological clock when men are still active in the later years. It is a very significant effect of the drug that many haven’t contemplated.” 
 
<img class="gwt-Image" src="/photo/53772534.cms" /> 
 
<a href="http://content.time.com/time/magazine/0,9263,7601980504,00.html">Image source</a> 
 
Coming from the Publisher of the Penthouse Magazine, the dream of everlasting youth and good times is an aspiration too potent for a lot of men to resist. 
 
Viagra’s annual sales peaked at <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.drugdangers.com%2Fviagra%2F">$2 Billion </a>while Pfizer (The makers of the drug) predicted that the best case would be <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.businessinsider.com%2Fpredicting-new-drug-sales-2014-4%3FIR%3DT">$500 Million</a>. 
Blockbusters are able to trigger aspiration to powerful and unpredictable effect. 
 
Other examples of aspiration driving a Blockbuster’s adoption and growth , include : 
 
• The “Gangnam Style” video was a parody of <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.theguardian.com%2Fmusic%2Fshortcuts%2F2012%2Foct%2F25%2Fgangnam-style-seouls-most-exclusive-neighbourhood">Gangnam, Seoul’s most expensive and most exclusive neighbourhood</a> 
 
• People have always to get their portraits done. A desire served well, both by selfies and the Prisma app (More on this later in this post) 
 
• In the beginning of the 20th century, cars were nothing more than a rich man’s horse, until the <a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fpulse%2Ftoo-expensive-game-changer-shubhankar-bhattacharya%3Ftrk%3Dmp-reader-card">Ford Model T came along in 1908 </a>with Henry 
Ford boldly calling out its mission as “ “This car will be so low in price that no man making a good salary will be unable to own one.” 
 
• And what would explain the Pokémon GO hysteria ? The prestige that comes with <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.complex.com%2Fpop-culture%2F2016%2F07%2Fpokemon-go-player-complete-pokedex">catching them all</a>, and the fear that the Pokémon “<a href="https://medium.com/r/?url=https%3A%2F%2Fplay.google.com%2Fstore%2Fapps%2Fdetails%3Fid%3Dcom.nianticlabs.pokemongo%26hl%3Den">might get away!</a>”. 
 
Scarce and Imitable 
 
After its triumphant launch for Apple users, there was much excitement for Prisma’s launch on the Android Play store. 
 
Within just a matter of days though, it was found that over <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.scmagazine.com%2F15m-downloaded-fake-app-prisma-from-google-play%2Farticle%2F513750%2F">1.5 Million users had downloaded fake versions of the Prisma app</a>, much the same way that <a href="https://medium.com/r/?url=https%3A%2F%2Ftechcrunch.com%2F2016%2F07%2F18%2Fbeware-the-fake-pokemon-go-apps%2F">large numbers of users had downloaded fake Pokémon GO apps</a>. 
 
If you have searched for blockbuster games such as Candy Crush Saga or Temple Run, you would know that many imitation versions of the games exist, to the extent that Candy Crush and Temple Run have almost becomes genres, not standalone games. 
 
Outside the world of apps, the proliferation of “fake iPhone” manufacturers in China has now become a well-known and well-accepted fact, <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.reuters.com%2Farticle%2Fus-apple-china-idUSKCN0RN2EF20150924">one that many believe has in fact helped build Apple’s brand awareness in China</a>. 
 
Imitation, of course, can take many more forms, as <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FDuck_face">Duck face selfies</a> and <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.teenvogue.com%2Fstory%2Fnew-selfie-face-fish-gape">Fish gape selfies</a> constantly remind us. 
 
They say imitation is the sincerest form of flattery. 
 
Might this be corroborated by the observation that scarcity tends to heighten the demand of a Blockbuster ? And is it possible that imitations of a Blockbuster actually do it more good than harm, by extending its access ? 
 
So much for <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FPorter%2527s_five_forces_analysis">Porter’s five forces</a> and what it taught us about barriers to replication being a good thing. 
 
Technological Relevance 
 
Duck face sefies got me doing some research on the origins of the modern selfie. 
 
From 2006 to 2009 (back when MySpace existed), the term ‘<a href="https://medium.com/r/?url=http%3A%2F%2Fwww.newyorker.com%2Ftech%2Felements%2Fthe-return-of-the-selfie">MySpace </a><a href="https://medium.com/r/?url=http%3A%2F%2Fwww.newyorker.com%2Ftech%2Felements%2Fthe-return-of-the-selfie">pic</a>’ described an amateurish, flash-blinded self-portrait, often taken in front of a bathroom mirror. Self-portraits shot with cell phones, or “selfies” — cheap-looking, evoking the MySpace era — became a sign of bad taste. 
 
Facebook, on the other hand emphasized photos that were presented in crisp focus. Owing to cameras’ technological limitations, a well-focussed photograph was typically taken from at least three feet away, by another person. 
 
The subject of the MySpace bathroom selfie — with its tableaux of bathroom counter, mirror, face, and upper body — always looked alone. Selfies were for people without friends; the savvy moved on to the more advanced network — Facebook. 
 
<img class="gwt-Image" src="/photo/53772537.cms" /> 
 
<a href="https://medium.com/r/?url=http%3A%2F%2Fwww.chethstudios.net%2F2010%2F04%2F40-hilarious-facebook-comic-strips.html">Image source</a> 
 
Facebook conquered MySpace because it distanced itself from the Selfie. 
 
Yeah, that happened. 
 
Selfies came back with a bang when the iPhone4 became the first iPhone to introduce a front-facing camera, a feature that is now a staple of every smartphone. 
 
Selfies, and therefore Instagram, Snapchat, and now Prisma could not have become Blockbusters before the front-facing camera became ubiquitous. 
 
What if cellphones with front-facing cameras had been mass produced while MySpace was still alive ? 
 
What if… 
 
<a href="http://i.imgur.com/Od0OkrG.jpg">Cover Image Source</a> 
 
About the author: Shubhankar Bhattacharya is a Venture Partner at Kae Capital, an early stage VC fund. He can be reached via his <a href="https://in.linkedin.com/in/shubhankar-bhattacharya-a1063a3">LinkedIN profile</a>. 
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The blueprint of a blockbuster

<img class="gwt-Image" src="/photo/53537390.cms" /> 
 
At any point of time, there seem to be enough opinions and analyses about what makes an entrepreneur or his business attractive to Venture Capital (VC) investors. 
 
Take Mark Suster’s excellent post on <a href="https://medium.com/r/?url=https%3A%2F%2Fbothsidesofthetable.com%2Fentrepreneur-dna-c1c5d312aaaa%23.d5phzhrac">Entrepreneur DNA</a> for instance, which calls for entrepreneurs to clear a very stiff gauntlet of demanding tests, to be considered worthy of being called an entrepreneur. 
 
And yet, there is precious little information to answer another question which has co-existed all along: 
 
What makes certain VCs better than others? 
 
I propose answers to this critical, and yet almost unknown facet of the mating dance between entrepreneurs and VCs. 
 
Answers that seem to point to the possibility that the best VCs are the ones who treat their “customers” well. First things first, who are a VC’s “customers”? 
 
In a dipstick test done by Larry Cheng on <a href="https://medium.com/r/?url=https%3A%2F%2Flarrycheng.com%2F2009%2F09%2F27%2Fwho-is-the-venture-capitalists-customer%2F">“Who is the VC’s customer?”</a>, about 85% of the respondents (Interestingly, the group of respondents included several entrepreneurs, but no VCs) said that the VC’s sole customer is the Limited Partner (A firm or an individual who invests in a VC fund). 
 
More revealing was the fact that not a single participant in the survey said that the entrepreneur is the VC’s principal customer. 
 
One would assume that if entrepreneurs are the VC’s customer, entrepreneurs themselves would know about it. 
 
Might the observation that not a single entrepreneur considered themselves the VC’s principal customer be attributed to the possibility that most VCs do a terrible job at taking care of their customer (The entrepreneur)? 
 
For the most part, the perception that there is a huge skew in the power balance between VCs and entrepreneurs (In favour of the VCs) runs very deep. 
 
The truth though is that <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.businessinsider.in%2FVCs-are-from-Venus-Entrepreneurs-are-from-Mars%2Farticleshow%2F53449860.cms">without entrepreneurs, VCs would be out of business</a>. 
 
More profoundly though, in the case of the best entrepreneurs, they are always free to choose another investor that takes better care of them. 
 
<img class="gwt-Image" src="/photo/53537330.cms" /> 
 
<a href="https://medium.com/r/?url=https%3A%2F%2Fsmctoday.wordpress.com%2F">Image source</a> 
 
The revelation is surprising and yet hard to refute: Entrepreneurs are VC’s customers and therefore, deserve (Maybe even demand ?) excellent customer service. 
 
Borrowing from Suster’s piece, what are the qualities that make up the DNA of a truly customer-focused VC? 
 
This post offers a primer on some of these traits: 
 
Approachable &amp; Responsive 
It is perhaps every entrepreneur’s greatest pet peeve: VCs either don’t reply to emails or take too long to respond. 
 
<img class="gwt-Image" src="/photo/53537335.cms" /> 
 
<a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fpulse%2F5-signs-you-may-email-jerk-hilary-wagner-">Image source</a> 
 
On the other side of the table, it needs to be appreciated that VCs get a LOT of email. For instance, Ted Serbinski estimates that he gets nearly <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.crainsdetroit.com%2Farticle%2F20130910%2FBLOG111%2F130909890%2F5-secrets-for-getting-a-vc-to-respond-to-your-email">100,000 emails a year</a>. 
 
For most people, that translates to an email almost every minute while they are at work. 
 
For a VC, it is a daunting task to go through every mail and provide a detailed response within a reasonable turnaround time. And yet, there is no other way for a VC to make a great first impression and (possibly) close the sale. 
 
Much like in the case of McDonald’s &amp; Dominos’, service delivery and turnaround time are not only critical to maintaining the VC’s brand ethos, but if done wrong, can result in the loss of a customer and create negative word-of-mouth. 
 
The time and the effort that goes into timely and well-written email responses is well worth a VC’s investment. 
 
[BRB, clearing some more emails that have been pending for a while] 
 
Knows the Customer 
 
Companies that have mastered the art of customer service have been able to do so because they have identified just who their customer is, and, just as importantly, who isn’t. 
 
The same is true in the context of VC firms : They need to know their focus sectors / business areas, preferred ticket sizes, and stage at the time of entry. Entrepreneurs and ventures that remain excluded thereafter, are by definition, not the VC firm’s customers. 
 
Wait, surely this is too trivial and obvious a matter to even be mentioned? 
 
But if that were the case, why do so many entrepreneurs end up receiving responses such as: 
 
“This space is not of interest to us” 
….after weeks of diligence ? 
A good VC knows how to quickly and efficiently say No when an opportunity doesn’t fit the firm’s investing interests. 
 
Not doing so wastes a lot of time and creates unnecessary clutter in the mailbox. 
 
Offers Relevant Feedback &amp; Adds Value 
Being an entrepreneur is hard enough, without having to hear what is passed off as “feedback” in many VC conversations, and then keep a straight face. 
 
One of my favourite entrepreneurs told me about how during one of his meetings with a VC, the VC “took the whole of 30 minutes to tell us that our company name will never work. Why ? Because it has more than two syllables!” 
 
Perhaps there exists a study out there which has established a correlation between the likelihood of a startup’s success and the number of syllables in its name. 
 
But even if that were the case, every VC owes an entrepreneur some feedback, either on how he could improve, or on why he chose to decline the investment opportunity. 
 
It is a responsibility that continues to apply in even greater effect if the investment is consummated, especially over board meetings and other reviews (No, pseudo-intellectual one liners used in B-Schools or consulting firms do NOT count as feedback). 
 
<img class="gwt-Image" src="/photo/53537341.cms" /> 
 
<a href="https://medium.com/r/?url=http%3A%2F%2Fwww.quickmeme.com%2Fmeme%2F36keat">Image source</a> 
 
(BRB, need to work a bit more on a sector to be able to give real feedback) 
 
Becomes your greatest Cheerleader 
The popular portrayal of the entrepreneur-VC relationship is one where the VC is, by some distance, the dominant partner in the relationship. 
 
The reality though is that the natural dynamic of the relationship implies that the risk-taking and fearless entrepreneur takes charge, and the VC supports and nurtures the business, especially during its tough times. 
 
In other words, the VC needs to become the Cheerleader for the business. 
 
When I had a chat with Sachin Bhatia, Co-Founder of MakeMyTrip &amp; Co-Founder of TrulyMadly about this, his views brought home an under-appreciated truth: 
 
‘Though the colour of money is the same, only one thing differentiates a great VC from all the others in my mind: will they support the venture and founders during tough times? Every venture will go through a bad phase, especially when it comes to raising a round of funds. As an entrepreneur I need the comfort that the VC will be good with the support needed to swim through these rough waters.” 
 
<a href="https://medium.com/r/?url=http%3A%2F%2Fa16z.com%2F2014%2F07%2F21%2Fa-dozen-things-ive-learned-from-marc-andreessen%2F">Marc Andreessen doesn’t disagree</a>: 
 
“You spend most of your time actually dealing with your companies who are struggling and trying to help them. Because it’s the companies that are struggling or failing that actually need the most help. The companies that are succeeding are generally doing just fine without you. The companies that are failing are really the ones that need help and support. And so a lot of what you end up doing at the job is supporting struggling entrepreneurs. It’s kind of continuously humbling. You are a trouble shooter. There’s always something going wrong. Psychologically–we talk about this with our partners–you have to be psychologically prepared for the opposite. It seems like it’s going to be a life of glamor and excitement. It’s more of a life of struggle and misery. And if you are okay with that–because it’s part of the package–then the overall deal is pretty good.” 
 
So the next time you find yourself in an investment pitch meeting, whether as an entrepreneur or as a VC, remember that both sides are evaluating each other’s attractiveness, and there is only one chance to make a strong first impression. 
 
<a href="https://assets.entrepreneur.com/content/3x2/1300/should-go-east-west-venture-capital.jpg">Image source</a> 
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Why VC is a business of Customer Service

<img class="gwt-Image" src="/photo/53449985.cms" /> 
 
If you were to ask a random group of 100 entrepreneurs about whether they understood how a VC investor acts and behaves, you would almost certainly get an emphatic “No!” as the unanimous response (For the time being, let us overlook the fact that a group of 100 entrepreneurs is anything but “random”). 
 
The failure to understand VCs is a sentiment shared, not just by rookie first-time entrepreneurs, but also by seasoned veterans, as <a href="https://medium.com/r/?url=http%3A%2F%2Freidhoffman.org%2Fwhat-i-wish-i-knew-before-pitching-linkedin-to-vcs%2F">Reid Hoffman, Co-Founder of LinkedIn revealed on LinkedIn’s 10th anniversary</a>. 
 
Such a feeling of helplessness is, no doubt, exacerbated by the observation that <a href="https://medium.com/r/?url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fneilpatel%2F2015%2F01%2F16%2F90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10%2F%235597b70555e1">90% of startups fail </a>and <a href="https://medium.com/r/?url=http%3A%2F%2F1m1m.sramanamitra.com%2Ffront-page%2Fover-99-of-startups-face-rejection-by-investors%2F">more than 99% of the pitches made to VCs end in rejection</a>. 
 
There have been a few attempts to bridge this information gap that have taken the route of drama (and maybe even caricature), such as <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FDragons%2527_Denhttps://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FDragons%2527_Den">Dragons Den</a>, <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FShark_Tank">Shark Tank</a>, <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FSilicon_Valley_%28TV_series%29">Silicon Valley</a> and <a href="https://medium.com/r/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FTVF_Pitchers">TVF Pitchers</a>. 
But do they really reveal the truth about the entrepreneur-VC relationship? 
 
And then, it struck me! 
 
Is it just coincidence that a very similar level of ignorance and helplessness is on display when you ask a random group of 100 men, single or otherwise, on whether they understand women? 
 
Many assume that VCs say no to a startup because they have no desire to invest. 
 
Nothing could be further from the truth. 
 
VCs capitalize on the high-risk nature of startups to generate disproportionate returns for themselves and their limited partners (individuals and firms that invest in VCs). 
 
These disproportionate returns come from outstanding entrepreneurs with game-changing businesses that grow faster than any other asset of which an investor could claim a share. If there were no entrepreneurs and startups to fund, VCs would go out of business. 
 
To put it simply, entrepreneurs and VCs need each other to complete the purpose of their existence. 
 
How romantic! 
 
This new paradigm triggered a wave of memories from my experiences on both sides of the Entrepreneur-Investor table. 
 
I began to think…can the tension between entrepreneurs and VCs be attributed to an analogy that is best described as Entrepreneurs being from Mars, and VCs being from Venus’? 
 
It was a thought that eventually led to the birth to my debut book, ‘<a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fpulse%2Fvcs-from-venus-entrepreneurs-mars-shubhankar-bhattacharya%3Ftrk%3Dpulse_spock-articles">VCs</a><a href="https://medium.com/r/?url=https%3A%2F%2Fwww.linkedin.com%2Fpulse%2Fvcs-from-venus-entrepreneurs-mars-shubhankar-bhattacharya%3Ftrk%3Dpulse_spock-articles"> are from Venus, Entrepreneurs are from Mars</a>.’ 
 
<img class="gwt-Image" src="/photo/53449988.cms" /> 
 
It might be preposterous, even loony, to suggest that Venture Capitalists, a male-dominated group of professionals holding great power through their investment decisions, might share similarities with women. 
 
But patterns are hard to ignore and it is quite a strong and coherent pattern that I found emerging from my personal experiences, first-hand accounts from meeting entrepreneurs and investors, as well as from anecdotes of startups that have today become the stuff of legend, such as Infosys and Paytm. 
 
My observations revealed that the truth was, in many cases, the exact opposite of conventional wisdom and of the popular portrayal of entrepreneurs and VCs in the media. 
 
There does seem to be a way for entrepreneurs and VCs to effortlessly fall in love with each other, and yet the nature of this romance has not been well understood until now. 
 
In fact, only when you understand that entrepreneurs are from Mars and VCs are from Venus can the nature of their romance and relationship be clearly understood and explained. 
 
“<a href="https://medium.com/r/?url=http%3A%2F%2Fbooks.juggernaut.in%2F%23%2Fdetails%2F3200b1f8637f4a68865fe5f7a8e8c76f">VCs</a><a href="https://medium.com/r/?url=http%3A%2F%2Fbooks.juggernaut.in%2F%23%2Fdetails%2F3200b1f8637f4a68865fe5f7a8e8c76f"> are from Venus, Entrepreneurs are from Mars</a>” is the result of several insights gained from my personal and professional journeys that have converged into this simple but profound reality. 
 
<a href="http://corporatemonks.com/wp-content/uploads/2015/06/VC-firms.jpg">Image source</a> 
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Shubhankar Bhattacharya

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