A Report, Two Writings, and Three Readings
Sajith Pai's irregular newsletter #14
My last substack newsletter was dated 30-Jan, about two and a half months ago. The intervening period was consumed with preparation and publication of The Indus Valley Annual Report, a 100-slide deck that looks at the Indian startup ecosystem, takes stock of its evolution and progress. (Here is a Twitter thread that serves as a good introduction to the piece).
It is the hardest I have ever worked on a narrative work. My colleague and co-creator Amal Vats likely concurs. Given this, we were gratified at the largely positive reception it has garnered. A popular comparison has been to the Mary Meeker report (which seems to have ceased publication; at least it hasn’t been seen in the past two years).
Post the report, I appeared on three podcasts (and there have been queries for a couple more) and one interview (another scheduled) and I am slated to give two talks soon. Phew!
One pattern I have noted is that the long-form works or ‘epic pieces’ I write, tend to have significant and disproportionate impact - not only do they get noticed and spread more - but they also result in coverage by other publications - podcasters, newsletter writers, journalists etc., resulting in even more chatter. I now aim for at least one, if not two long-form pieces a year - either a long form article or a report. Yes, I do intend to ensure that Indus Valley Report becomes an annual affair!
A look at Indus Valley Report coverage and appearances.
The Week newsmagazine (not the UK one; this Week is the one that is popular in Southern India) did an interview with me. (Link)
Puliyabazi podcast (a popular Hindi podcast) got me to speak in Hindi! Oh well, not entirely, for my Hindi isn’t as fluent as my English. I grew up in Kerala, and started learning Hindi only when i was 9 yrs old. (Youtube, IVM Podcasts, Spotify)
The Great Indian Dream, a podcast that is centred around startups / tech, featured me this week talking about the report. (Apple Podcasts, Spotify)
Will update more as they get published.
(Other) Writings
I wrote a twitter thread on encouraging founders to build a scalable GTM (Go To Market) engine, that I turned into a linkedin post.
In the article I propose the following definition for PMF or Product-Market Fit - ‘Scalable GTM enabling predictable unit-positive customer acquisition indicating a large / expandable TAM’, and then unpack it further.
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The book Venture Adventure by Amir Hegazi is a compendium of practical tips and hacks from investors around fundraising, aimed at founders. I was featured alongside other investors as Brad Feld, Fabrice Grinda, Jenny Lefcourt, Bilal Zuberi etc.
I contributed the following advice to the book
Beware of your dilution level’s impact on future rounds
Have differential stakes between cofounders
Avoid buzzwords like the plague
Present the right metrics based on your business, as well as fundraising stage
Here is what I shared on the second point, which is a point that surprised Amir Hegazi as well as other folks including founders who I have shared this with.
Have differential stakes between founders
When you have multiple co-founders, especially say three and above, it's more encouraging to see founders having differential stakes. For example. one founder having 30%, another having 22%, another having 15%. VCs actually prefer this versus a more uniform or equal shareholding among the co-founders. The reason being is that this shows that the co-founders have already had a difficult discussion to decide how to break the equity among themselves. It shows that they have identified the senior or lead founder who, is in effect the CEO, and who will play the casting vote, and that it won't come down to a deadlock. It also shows that they went through the exercise of figuring out who brings what to the table and weighing out the contribution of each, and reflecting that in terms of their share of the equity.
Even if there are two founders who started the business together and seemingly play equal roles, VCs like to see one founder having slightly higher share. Ironically enough, companies where there are differential stakes tend to actually have less infighting, and less chances of breakup. The reason is that, there is clarity amongst the founders as to who is the key founder, who will focus on fundraising, who will run the company, who will be the CEO of the company, and who is number two, number three, and so forth. So, if you already have an equally distributed equity shares with your co-founders, it’s worth revisiting and adjusting according to business needs and contributions. Remember, the fair thing to demonstrate is that each founder is compensated and incentivised according to their specific value to the business rather than imposing an artificial egalitarian distribution of the equity just to keep anyone happy. So, you are always better off going for differential shareholding, not just for the purpose of optical influence with VCs, but internally as well in terms of setting the tone within your company that individuals are rewarded based on contribution, not on seniority or other non-relevant factors.
Readings
Work on the Indus Valley Report and travel meant a lot less reading than in previous periods, and away from tech pieces towards books, and especially fiction (spurred I am sure by wanting something lighter). This was satisfying for I have been keen to up my fiction reading which had slipped in past years.
I read:
Two novels
The Accidental Collector by Guy Kennaway - funny read, set in the art world
Eight Detectives by Alex Pavesi - clever murder mystery / detective fiction; perhaps a bit too clever. But fun to read.
A business novel
The Goal by Eli Goldratt - the big learning from this was that you can look at any startup / biz model as a manufacturing operation, and identify constraints. So a WhiteHat Jr manufactures teaching slots, and a key constraint is teacher hours.
Two works of faction (my moniker for non-fiction)
The Cold Start by Andrew Chen, on how to succeed in businesses with network effects
The Power Law by Sebastian Mallaby - exceptionally good work this; a history of venture capital
Presently reading a novel, House of Cards, by Michael Dobbs, which was the basis for the Netflix series.
Those of you who follow me closely or know me personally know that I have been systematically resetting my tech readings in favour of podcast transcripts, away from posts and newsletters. Unfortunately I couldn’t read as many transcripts or articles as I would have liked, primarily led by the demand prep for Indus Valley Report.
Here are a few pieces I have enjoyed particularly.
Nandini Ramnath, Scroll’s film critic, wrote a piece on Manish Shah, a Bollywood movie distributor who licenses South Indian, especially Telugu Cinema, and releases it dubbed in Hindi. He seems to have cottoned onto a gap for action content in the Hindi cinema market, emerging as a kind of arbitrageur of content, licensing Telugu action titles to be released in Hindi.
There is a telling passage in the piece, speaking of a divide between Hindi movie creators who live in India1A and have moved upmarket, while the large audience in India2 and India3 waits expectantly for escapist fare.
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Young Pranav Manie wrote this well-researched and perceptive piece about seeing Gurgaon through the lens of its liberal liquor licensing regime. I found it particularly interesting because liquor economics and policy has been a big interest area for me. In ’17, before conversations with Blume hotted up, I set out to write a book on the history of prohibition in India. Once I joined Blume, it became very hard to take time out for a book, unrelated to my work. There are about three chapters of the book in one of my google cloud folders somewhere. Here is a piece I wrote on the topic a while back.
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Mario Gabriele’s briefings / posts (now free; they were earlier paywalled) are educative and entertaining. In particular, these on Solo VCs and Coatue were fun. He is a prolific writer - one long-form briefing a week. I am well behind. The next one I am hoping to read his three-part series on the leading crypto fund Multicoin. Complete list of briefings here.
Fin/
That is it folks, for this issue. Feedback in the comments or at sp@sajithpai.com (on anything re the newsletter). If you want to reach me for a funding request then write in at sp@blume.vc (replies in 3-5 days please).