Decoding the Founder – VC Relationship

Avnish Bajaj
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Joining us in this episode of Matrix Moments is Asish Mohapatra, Co-Founder of Ofbusiness– India’s leading tech driven B2B lending platform, and is also a Matrix portfolio company, along with Avnish Bajaj, Founder & MD, Matrix India. Prior to founding OfBusiness, Asish actually worked at Matrix as part of the investment team and worked very closely with Avnish during that time. This episode follows a role reversal of sorts, where Asish in the capacity of a founder interviews Avnish on all things fundraising, early stage and VC investing, he asks the hard questions that first time founders have always wanted to know but haven’t got the answers to. Tune in.

Avnish: Hello and welcome to a very special episode of Matrix Moments. I am Avnish Bajaj. The episode is special, exciting, and a little bit scary as well. And I will give you the context for that. I am here with Asish Mohapatra who is the founder of Ofbusiness, one of our star portfolio companies. The most interesting thing about this relationship, which is a very special relationship for me personally as well as for Matrix, is that Asish used to be at Matrix. He was a venture capitalist before better sense prevailed. And actually better sense has prevailed for him multiple times. He was at McKinsey prior, then Matrix. Then, decided to start out on his own. Business has done really well. Episode is a little bit scary because it is about Asish asking me as a founder asking a venture capitalist any questions. And for those of you who know Asish well that’s probably a bigger risk that I am taking than investing in Asish’s company.

Asish: Well, to be very honest, I think most people still believe that I am at Matrix. And when I tell them that I have moved on from Matrix to become a founder, they refuse to believe. And refuse is with a capital R. Avnish and I actually share a special I would say bond in some ways. So, we both have been busy founders though in the reverse order. So, it’s in some ways a reversal of both order as well as this session. So, he was a founder first and then became a VC. I was a VC first, got fired from Matrix, and hence then became a founder. So, glad to be a part of Matrix Moments. And hopefully…

Avnish: Firing is interesting because I got fired from Goldman and became an entrepreneur.

Asish: I am sure you got fired from the other places too. Avnish has always been - just on the record Avnish has always deflated his own achievements. He is a humble person as you can see. I know that he got fired from both Goldman and Apple. Thank you.

Okay, so Avnish, first of all thank you for giving me the opportunity. I think I will represent the entire brethren of founders as I speak to you. So, most of my questions as you said should be scary to you.

So first of all, tell me – I think I see a lot of founders who come to me particularly in NCR, who are aspiring founders or just gotten into it, thinking of being a founder, probably have taken baby steps of getting the initial founding team together. Tell us a little bit about when do you think in your opinion is a founder investment ready? Because a lot of people come and tell me, hey, should I be putting in my own money? Or, should I be getting VC money? Some of them are on to something. They all believe in their ideas and stuff like that. So, they are passionate. They are almost there. But, what’s your opinion?

Avnish: Clearly no easy answer. But, I would say when failure is not an option. When we think or when we feel that for this founder failure is not an option basis their life stage, basis putting all the eggs in one basket, but potentially also basis conviction in the idea. But if I had to separate the – you know about Matrix and intrinsics, right? If I had to separate the intrinsics from the extrinsics of seeing conviction in the idea, I would go more in this bucket. And I love to see – I remember when you were leaving and you started a business which has nothing to do with what you are doing right now. And you said, Sir, woh toh

Asish: That’s how it should be.

Avnish: Exactly. And we put in 5 million. And you said, woh toh option hi nahi hai. Kuch toh banahi dunga. That conviction – see, because it’s going to be a very very you know this even your journey you should recount, it’s not easy. I don’t know when you feel you hit PMF. Maybe it was a year and half into it. So, that level of grit that is required, that intrinsic desire motivation. I am going to call out Ruchi because I know when you quit, she was pregnant and she was – and both of you just we are going to do this. At the most riskiest place in life where you are having your first baby, you are ready to take, I think that’s where a founder is ready. If there is always a plan B, yeh nahi hoyega toh kuch aur karunga, I don’t think you are ready.

Asish: What about a little bit down the road? Let’s say he has the conviction. He has already put eggs in one basket. He has already started something. He has probably put in a little bit of money on his own. When is he VC ready? Let’s say he has also taken a seed money as well. When is he Matrix ready? Lot of people ask me that question. I am in Matrix, right? So…

Avnish: Yes. No, but see – look, we make seed investments also. So it is not as much – I mean with you we made a seed investment. So, I think – no, let me phrase it a little bit differently. Often when somebody is not VC ready or Matrix ready, we feel that there is a good business. But, it’s not a VC venture backable business. And I don’t want to be derogatory, but even a kirana store makes money. It’s a profitable business. But it is a lifestyle business. So, I find that if the intrinsics are lined up, the reason we may say that this business is not VC ready is because we feel it’s not a venture fundable that hockey stick nonlinearity. Or, even if nonlinearity at least compounding 3 – 4X every year find of a business. That’s generally where the gap comes.

Now if you want a textbook answer. Obviously, VCs like to see proof-of-concept and this that. But if you look at our investments this year, we have invested in so many entrepreneurs where we felt that if they hit PMF, it’s going to be big. There was no business. It was a business plan.

Asish: Right. So, in these cases should they wait for you to find them? Or, are there platforms for them to come out and seek you guys out? Lot of people ask me should I be writing to 20 VCs at the same time. Lot of people say that, hey, I have met like 10 VCs. What is the right way to start an engagement.

Avnish: So we are a bit different in the market as you well know. We tend to respond to everything. But, the world is changing. And I don’t know if we can even keep up. So, globally even in India with most of the firms, get a warm intro. Get somebody – get Asish to write to Matrix, you will get a meeting.

Asish: I am not so sure, but please continue, Thank you.

Avnish: But I think this concept of warm intro, also be clear are coming to brainstorm or are you coming to pitch.

Asish: Would you encourage the former?

Avnish: Yes.

Asish: So, give us a good example.

Avnish: No, but with clarity. I just came out of a meeting. We haven’t announced the investment yet. You know the founder. We brainstormed for six months before we converged on an idea. And by the way, for me as a VC, during that brainstorming my conviction kept going up even though the ideas kept changing and getting dismissed. So I actually think if you set it up correctly. It’s important to set it up correctly. If you are going for brainstorming and also realize that VCs everybody is busy. So, being a little bit respectful of the time and setting up correctly, I would strongly encourage brainstorming.

Asish: But are you saying that Matrix is very different on this front because typically what we founders and I am speaking on behalf of a lot of people, we think that we will get 30 minutes with a VC, we have to have elevator pitch?

Avnish: For a pitch, yes. But for a brainstorming also, you will get 30 minutes. Come structured, but set it up like that. Like you said, I have also been a founder. Even I like to think of things and ideas. So, it’s actually fun.

Asish: But you wouldn’t take it otherwise that the guy has not really thought it through. He has not really solved all parts of the puzzle?

Avnish: So like I said, we tend to respond to everything. But I would say a brainstorming session, you better come – it’s far more advisable to come through a warm intro. Because I believe like say you intro me, I believe you have done the filtering because you also recognize what the VC funnel looks like, and you are sympathetic of it. So, you would have done the filtering.

Asish: No, this is a big change from what VCs are perceived as. I am hopeful that it’s not just Matrix, but other people also who encourage that as well.

Avnish: It is going to become more and more – actually some of our peers do a better job than us on this.

Asish: Okay. And tell us a little bit about what kind of founders do you invest in because there is this general perception I Matrix that or about Matrix in the market that you look at hungry, hustling kind of founders and all that. Has that evolved with time? Has that shaped along with time? Has it always been the same?

Avnish: Which not hungry, not hustling founder has won?

Asish: They shouldn’t win. But give us a little bit of a nuisance.

Avnish: There is a deeper question. And I will tell you even from the time you were there, there is a huge change in the archetype of the founders. So if you remember kind of we discovered ourselves when we missed Kunal Bahl, we found Bhavish. There was this whole archetype of Ritesh. All this we will go change the world; fearless founders. So this cohort – so, I would say 80% of our deal flow used to be these young 20 somethings cohort. Today, 70 to 80% of the deal flow is the experienced founders; 30s and 40s. Within, experienced…

Asish: That’s your deal flow or that’s what you…?

Avnish: As in terms of also the investments.

Asish: Okay, so that’s the market too.

Avnish: That is a market. Today, it’s the market. And there were some articles about us backing a lot of repeat founders which we have this year. So within experience, there is repeat and there is L – 1, people who have – see, until 3, 4, 5 years ago, where were the large companies? Where were the training grounds? We used to say find people from Amazon, find people from Google. Today, you have Flipkart, Myntra, Ola, OYO. All these have become breeding grounds. I know you have a built a lot of your team from people – so that cohort is very interesting. So that has changed. Our evaluation layers have had to change as a result. So to your point, hungry, hustling, we used to really value 2 am response and this and that versus some of these experienced founders also have a life. And there is nothing wrong with it.

Asish: Right.

Avnish: Right? And we need to respect that. They are much more deliberate sometimes and thoughtful. I believe both will win. But I have a theory. I believe the largest or large market cap outcomes may still come from these young inexperienced guys.

Asish: Fearless guys.

Avnish: Because they have no baggage. They are just going out there and trying to create I mean look Google, Facebook like some of these really large companies. It’s reimaging the future. And, I think to re-imagine the future, sometimes not having a past helps. So, I think some of these guys are just going to create very large companies. I think the hit rate of experienced ones will be higher.

Asish: But here, returns will be lower.

Avnish: I don’t know if the returns will be lower. If the hit rate is higher, net net returns also – more of them will succeed. So, it will make up in aggregate. But they are very deliberate about choice of market. The other day we had a Diwali event where I was asking Sachin – you missed that. I was asking Sachin Bansal what made you – how did you choose? And Bhavish says the same thing. They are thinking about profits pools in the market. And I know you think you about this. You have a profitable business. They think about GTM, whereas the younger guys they don’t care about. They are like woh bana lenge.

Asish: Just size.

Avnish: No, PMF; market. By the way, these guys are saying we won’t take market risk. So those are the nuisances. I would say median quality of entrepreneur has gone up many fold over the last few years.

Asish: The quality.

Avnish: Quality.

Asish: This is on deal flow or what you have invested in?

Avnish: Well, hopefully both. Meaning deal flow for sure but hopefully we have also invested in the highest quality ones.

Asish: Okay. Make it a little more real. So tell us a little bit about your portfolio in the sense that you invested in a few. You wins are very well known. There is Ola. There is Quikr and host of other stuff. So tell us a little bit about where you have invested and you figured out that you picked up the wrong archetype of business or the founder and how has it evolved? How have you learnt from things that you invested in?

Avnish: See, there a bunch of them I don’t think those founders would like for me to speak about them.

Asish: No names basis.

Avnish: On a names basis, one of the founders of Matrix in the US, I once asked him, I said in your history where have you seen the highest correlation with success. People would normally think it’s team or market. Like Sequoia for example is a very market first. We say we are very founders first. Actually most investors will say it comes down to timing. Market timing. And you can’t time timing by definition. I think where we have invested in great founders, where it hasn’t work is either choice of market has turned out to be more limited than we expected which I think also comes down to timing that the market is not fully ready yet. It’s not that it will never be ready. So I think it’s generally even that and that’s been the hardest investments because you like the guys. They are grinding. They are working very hard, but you are burning through money. Not seeing a great outcome for either side. I think there are some that will turn around. Again, I don’t want to name them. But there are the ones that turn around or the ones that go let’s say not so well and then change is generally due to some other external factor like hyper competition. Somebody spring. Then, I keep telling my founders sadly have been through I mean we have all watched the Amazon Flipkart war and maybe Snapdeal war. Today, there is a food delivery war. I have lived through Ola Uber war. We have lived through Quikr OLX war. There is always a war. And it should be expected. If it is going to be such a large category and worth so much, nobody is going to give it to on a platter. They have to last out 18 to 24 months.

Asish: Let us a little bit about – let’s expand this a little bit. So is it just about the founder? Or, you believe that it is also about the broader founding team? Initial set of employees? Do you actually put some focus on that or is it…?

Avnish: We don’t enough, Asish. And I think you are one of the founders who started out with – and I think I had told you at that time probably the strongest team we have seen out of the gate. See, there is no rocket science to it. Obviously, a great founding team is better than a single founder.

Asish: But do you actually give credence to that?

Avnish: Not enough.

Asish: Does it result in a higher evaluation for a bigger team and than just a founder?

Avnish: Yes. So if you look at this cohort of these last investments we have talked about making 20 million?

Asish: Those were the teams, I am guessing.

Avnish: It wasn’t teams, but you knew that they had – let’s put it differently and again I will take your example. They had followership and they are and hopefully not piped piper, but where they go, people come. We have started giving that far more value than we maybe even in evaluation. It generally doesn’t come down to valuation. It comes down to check size. You are willing to take more risk because ownership uthna hi chahiye so beyond a point, it’s not going to be as much about valuation. So you are willing to take more risk. And I think my own personal learning is that I used to undervalue A) Followership and B) Selling skills, and they are somewhat related.

Asish: Selling skills you always had.

Avnish: Well, undervalue a little bit because I have realized that founders need to have excellence – founders with excellent selling skills will get more shorts at the goal whether it’s because people follow them, because investors follow – basically people follow them whether it’s investors.

Asish: And to just change tracks. What if some of the founding team, which is a very common thing these days in the startup ecosystem is founding teams actually split. They start different ventures mostly amicably and stuff. Some of the initial employees leave. So how do you deal with that? What do you suggest we do with that? I mean obviously the 30 plus years guys will actually find a more amicable settlement. They will probably end up working together as well. So, as a VC firm how do you view it? Is it always negative? Is it something that you budget into when you get into some of these relationships?

Avnish: So the way we budget it, so we have been through maybe 10 plus such situations. They are generally very hard on the founder. We budget into it by not taking that risk which is we are backing one key person. And we are very clear. This goes back to your earlier question. Even if it’s a 2 or 3% founding team. Lately although we have broken this rule. In our business, one thing you realize is sooner or later you have to break the rule. So maybe we have backed one team where we haven’t really figured out would we back this guy without that guy. But the chemistry so strong, so if that is the situation, we stress test the chemistry in our own ways. And you know some of those ways, references, going and figuring out, going drinking with them, all of that.

Asish: But would you let the founder have his own way?

Avnish: Where we haven’t been able to take that risk out and this advice I will give on camera and I think we have spoken about this in the term sheet discussion. Always have reverse vesting because the equity also has to come back.

Asish: But that’s just 4-5 years, right?

Avnish: No, usually it is breakup within the first year or two. Hundred percent of the cases, it’s been in year one or two in 100% of the cases. So that reverse vesting is critical for the founding team itself. Two, what you said, well two, deal with it immediately, clearly but gracefully. The message has to be given with grace. The parting you have to respect each other. There I think there is a challenge. I think generally people have been a little bit, but deal with it immediately gracefully, recognize that – I think there is a karmic view which is this is a small community. You want people to be saying good things about you. But, deal with it immediately. I have always found where the problems has been addressed immediately when it was – when it first surfaced and I am a little bit extreme in this. There are founders where they have floated the thought with me and I have told me them if the thought has come into your mind, it is the answer. And every time I found where they have said, nahi, we will give it six more months, it still played out like that. And then we lose time.

Asish: And how do you deal with other founder problems? I think another issue that I used to face a lot of times in Matrix as well as lot of other companies that haven’t faced myself is people are not tracking to plan. They haven’t given you the adequate return as you would expect. So, how do you deal with that? Do you get into their underpants? Do you stay away?

Avnish: It is a very tricky and very hard situation. But, let me ask you this, how does a founder raise money from a VC?

Asish: How does a founder raise money from a VC? By making sure that he has beaten whatever he has promised.

Avnish: No, you haven’t…

Asish: When you haven’t had a round? Okay.

Avnish: Yes.

Asish: I think in my opinion if you can convince a VC that there is a large market at play, today to be very honest with you I only think of a large profit pool at bay and you believe that you have all guns blazing going after him, have a team together, the only missing thing in my opinion is the money is when I would approach a VC.

Avnish: And you would then in your pitch make some promises.

Asish: I would make some promises, yes.

Avnish: And what promises would the VC make to you? By the way, where I am going I may become unpopular and no founder may want to work with me, but we will see.

Asish: So, I think the promise that I would make would be more an assertion to myself rather than to VC because I believe that a good plan is actually very different from what you have. I good plan which I believe I should make is the one that I beat by 10%. I know the standard metrics…

Avnish: No, but I agree with you. But, what promise is the VC making to the entrepreneur?

Asish: The promise that VC is making to the entrepreneur is that if he tracks to plan, then he will at least do pro rata if not more.

Avnish: Yes. And if we end up in the situation you just mentioned, who has not kept their end of the bargain?

Asish: Me as a founder.

Avnish: You entrepreneur, right? I think there is a little bit of a challenge and we call ourselves founders first which we are, but that doesn’t mean Matrix last. The reality is I have a contract with you as a founder. Moral contract - actually frankly in lot of our cases emotional contract, legal contract all of that. I have a fiduciary responsibility to my investors, genuinely. So, I think the challenge becomes that somehow the narrative shifts which is that I have misplanned but it’s not because of the VC that you are missing plan. So those are hardest situation because remember I am a founder also before. I can empathize, but I will tell you at Baazee I was not meeting plan for 2 – 3 years. I told my VCs, I will never come to you for money. I fired half my company - me and Suvir maybe 60%. Started new business lines. Somehow hustled and figured out a way where we were self sustainable.

Asish: No, let’s say you do some of that. Now, as a VC what is the step that you would take? Would you get into the underpants? Would you be a little more operational in business?

Avnish: No, I think my only request to founders – I think a plan, I think people sometimes people may say, yaar, why are VCs looking at this plan and what not. I think a plan is far more than a plan. A plan tells me you as a founder what is your assessment of the market. What is your ability to forecast your business. What is your ability to identify the right business drivers, staff them accordingly. What are your management practices. What are your interventions. Because if everything in place you will be – dude, you have been beating plan for the last 2-3 years. Every year you up your plan. So to me, not missing plan or meeting plan sometimes can get trivialized. I think it’s far more than that. It tells you everything is falling into place or not falling into place.

Now in cases in tricky situations where things are not falling into place are only – my request and I have done this with a number of founders and one of them really took it to heart and hopefully tomorrow is closing a $10 million round, I said boss, take your destiny in your own hands. That’s my only request. I am not going to get into your pants. In fact, I am not going to call you, but I am one phone call away because if I keep calling you, you will feel I am breathing down your neck. I know it’s very tough. I have been through this myself. But don’t come to me for more and more and more money. Please understand my fiduciary as well. Take your destiny in your own hands. As long as you are funded through profitability or you are funded through figure out a way, come up with new business models, hustle, figure stuff out, I am not going to breathe down your neck. Best ones, 1-2 years maximum they come out of it and they start.

Asish: Right, okay. Just moving on, I think one of the questions that a lot of founders face especially early into their business is what value add they should expect from a VC. I think the standard stuff that most of them hear is that VCs are great sounding boards like Vikram, you have been great sounding boards to me. And frankly, it’s because it’s lonely at the top. You probably can’t share things with employees or cofounders and stuff like that, so one is that. A lot of people talk about hiring, strategic interventions, market knowledge, which is of these is really real? And if you can quote a few examples because I have also heard the other part of the narrative is that you should be the smartest person in the room, not the VC.

Avnish: No, that - every early when I started Paul Ferri was the founder of Matrix, he said if you are the smartest person in the room, get off that investment. See, in the US context people talk it about as role of board members. It could be the same as VCs. You can be a cheerleader. You can be the truth teller. You can be the domain expert. You can be the arms and legs. And if you remember you and I used to talk about teach people how to fish; don’t fish.

Asish: I have fished a lot myself. And I realized late into my journey that was not…

Avnish: But, I still fish because I think with the best guys you have to earn your right to teach them how to fish. So, I still recruit. I still interview people myself. So, I think there is strategic and there is tactical. The aspiration for a founder and for a VC is to be at that strategic thought partner level and maybe even the crying shoulder because it is lonely at the top. I think if I achieve that with a founder, I am in bliss. But you have to earn your way up there. You have to do work for them.

Asish: And what’s the work that you think is most relevant?

Avnish: So, recruiting. I don’t think it gets more than recruiting. See, you built right from the start a very strong team. I think we genuinely can help at multiple levels and we have a recruiting for it. Business development, opening doors, making people go for meetings. In India, people don’t do it as much as they do it in the US. And people will put in the call…

Asish: Some of us actually feel shy to come to you saying that, hey, - will I be perceived as somebody who cannot actually manage his own business and hence taking help from a VC who is…?

Avnish: See, the founders who make us the most money with least work for us, we will obviously love all the time. So, let’s get that straight. But I think, Asish, it’s a judgment call. I don’t think you will ever be judged. And I think some of our best founders actually put the last slide, help needed from the board. I think the question is it the same thing over and over again. That means that you are not building the muscle internally. If it’s different things and non-incremental – you know incremental versus non-incremental that we talked about, I think it’s absolutely we should be doing it.

Asish: Yes. And about sharing market intelligence and lot of that? Confidential stuff, can you share a lot with us? Can you tell us what’s going on in other companies and all that?

Avnish: We can’t share confidential of other companies because you know that is just against the ethics of this business. But, market intelligence, global intelligence, what is happening in different markets, organizing market visits to different markets? Absolutely.

Asish: Right, okay. And tell us a little bit about exit. So when should a founder start thinking about giving VC exit? Will you tell us way in advance that you know a year from now is when we will think about? Should we wait for that signal? Because I know that SHAs are more a commitment from our side, so…

Avnish: So two years from now, we need an exit.

Asish: From us?

Avnish: Yes.

Asish: Please at least give me a year’s notice.

Avnish: I do. And I think - what is your exit? What do you want to do?

Asish: I will always first look for an IPO. I think we are well on the path to it. We are probably about 2 to 2-1/2 years away.

Avnish: And excellent. Ultimately this industry will thrive when companies like yours start going public. The best news is that the current set of founders just thinks like that. And, it is exciting. I wish…

Asish: But there is no other option. There are no M&As in the Indian market.

Avnish: Well, no, no.

Asish: They may come once in a while.

Avnish: M&As will come. But ultimately for me also as an investor if you are going to go public and it’s in a duration where I have to extend my exit by a year, I will – because the ultimate value creation comes with IPO. Now, the reality though is we are fund with certain lifecycles which is why we put five years, six years that gets negotiated back and forth. What is starting to happen which is a sign of maturation in the Indian ecosystem is that because IPO is becoming an option, because founder like you are not building to sell, we have a new secondary market that has opened up. All these later stage guys who come in looking out two years, it’s a win win. It gets the pressure off you to say, yaar, Matrix ko… I have to get an exit because somebody will come and give me a partial exit. It works for them because they can also anchor your IPO. So, I think the market is kind of getting to that stage.

A related question is as an investor it is very clear for me – actually it’s not very clear because whenever the exit option is there, you feel more greedy.

Asish: Right, and you stay on.

Avnish: And the exit option goes away. But I think as a founder just reiterating this, you guys should build to not to sell. Just build to go public and that is most exciting part. It’s the biggest service you can do to the Indian startup ecosystem.

Asish: Right. So talking about exits, give me a little bit of sense about - I know Matrix has done a few recent exits as well. Were there investments wherein you thought that they weren’t making too much money and they actually ended up making good money for you on exits and stuff like that? And what kind of things - or were they always momentum exits?

Avnish: No. So, I would say somewhere between 18 to 36 months of an investment, you know the answer.

Asish: That doesn’t change? Does it go downward?

Avnish: Yes, sometimes. But, let’s not talk about edge cases. I think 80 to 90% of the time between 18 to 36 months, you know the answer. And then, you have to be disciplined enough to stick to the answer which is this may be a base hit. So when you are getting the base hit, 2-3X take it. This is a flyer; ride it as far as you can.

Asish: Do you communicate that you know.

Avnish: Did you meet your plan? I don’t even know if you had a plan. But, I think for the first 18 months probably, you didn’t meet your plan.

Asish: Yes. To be very honest with you, we were meeting our numbers. But, we were not very sure…

Avnish: It wasn’t building a business.

Asish: Yes. We were not very sure that we were building a profitable…

Avnish: And last 2-1/2 – 3 years, you have been…

Asish: Every quarter.

Avnish: The most leading indicator of the homerun is companies start beating plan consistently.

Asish: Right. So, Avi, tell me what is your preference, so is it always a founder who you believe that is involved? When should a founder be more strategic, more operational? Who do you back? Does it change? Do you help them grow along the journey?

Avnish: So I read a great analogy in a VC book, which is 0 to 1, 1 to 10, and 10 to infinity.

Asish: Like I was always 0 to 1.

Avnish: So, 0to 1, you are hacking your way through a jungle. You have the machete or whatever – axe, and you are just hacking your way through the jungle. One to ten, you are driving on a dirt road probably in SUV. And 10 to infinity, you are the driver of a bus that’s on a highway. You tell me is it the same person? No. But the best people are all weather and they feel.

Asish: And in your understanding, who is one who evolves? How do you help him along that journey? Or, can you help him along the journey?

Avnish: You can help him along the journey. And you can help him along the journey by – see, you can take a horse to the water, but…

Asish: Give us a real example.

Avnish: I think you have grown a lot. And I think that hustle to planning to thinking IPO, to profit – I think you made profit an objective maybe two years ago. That’s hacking your way to the dirt road, to the highway. Now, carrying a team – your LinkedIn post, everybody should see. But every Sunday, that newsletter that goes out and there is the message of the week and message of the month, that’s large scalable organization behavior. That’s the driving the bus on the highway. Before when you started, I remember you were on the road all the time in all these small cities, going and meeting the customers. That’s hacking your way through the jungle. So, the best ones are able to transcend. And we have to recognize that they are special. And that’s how it works.

Asish: And how can VCs actually help people along that journey? Give us a real example.

Avnish: Yes, you asked that. I think you create exposure. So taking the horse to the water…

Asish: Within the portfolio, within your network.

Avnish: Within the portfolio, within the network. You take them in different settings. You expose them to - we did a founders’ retreat in Israel, create exposure amongst yourselves. You were very inspired by Pathy.

Asish: Yes, I still continue to have that relationship.

Avnish: That’s what you do.

Asish: Yes, okay. So as founders one of the things that is of interest to us is that how do we deal with VCs when they are like – I mean this is my personal example, I gained a lot from my Matrix relationship in the first one year. A little less in the next two years. Now, I have moved on. I have four other investors and all that. So, how do I deal with early stage people who are on my cap table? What is the best way to – I always keep people informed. But what is the value that I can extract?

Avnish: No, I think it’s great. The less - like I said, see, for us also.

Asish: No, from my perspective is to say what value I can have from you?

Avnish: For us it works very well because lesser time, more money. We have to be able to take on more portfolio companies and do that same work. I think you should just have that same conversation that create - the early stage VCs still have the network to create more and more exposure. I remember you and I had a chat in the this JW Marriott maybe a month – not month, maybe a few months ago. And you had pushed to say next level, next level. I think that’s how you extract the value. What is the – can you tell me something that I am missing. And I think that is a reasonable question to ask.

Asish: So, I tell you the prelude to this question. I was meeting a prospective investor, and I told them, hey, whatever plan you shared with me – there was a plan around the next round and stuff. I said let me just bounce it off with Vikram. Vikram is the member on board from Matrix. And his immediate retort was, hey, they won’t even do pro rata. Why do you want with him? So, when do you…

Avnish: We haven’t done pro rata in Ola for a while.

Asish: You didn’t do pro rata for me in the couple of rounds.

Avnish: But fortunately I still speak a lot with Bhavish. I think that’s the thought partnership. Because somebody who knows your entire journey, I think can still add value without pro rata. The value add should be super pro rata. It’s a bad joke.

Asish: So building on that, are there times when you stop supporting a company? When do you decide – Ola is a great example, right? You could have continued investing in that and still made excess. So, is there a cap in terms of where you would go with 20 million?

Avnish: See, that’s I think more VC fund mechanics. So typically, you will go up to 8 to 10% of your fund maximum in a company. And typically, we will do 3-4 rounds in a company, and that’s standard. And by the way, if we didn’t do that, there would be no space in the cap table for the new people to come in. So many times even in your cap table, we have been asked to cut back. I know you said didn’t do pro rata, but we were asked to cut back. That’s fine; it works for us.

Asish: Right. And tell us from your learning which kind of founders or what kind of initial behaviors you have seen in terms of people who have actually changed, evolved and all that? What are some of the early traits that you look for?

Avnish: Curiosity. I think if there is one trait – so, girt and all that helps you. It helps you get the company going. It helps you hack through that jungle. Not to repeat the analogy too much. Ultimate trait is that learner profile. And I know you used to talk about learner profile, playing to your strength, growth mindset. All of those lingos, they matter. They really matter. And, the best founders are sponges. I think the person that I meet like Bhavish, he will still pepper me with 20 questions. Just that curiosity. That’s ability to learn by osmosis. The ability to be exposed an environment and take the best out it. Or, see that, hey, this is a watch out, I may be a mistake like that. That’s the ultimate indicator, and it’s very apparent. You just see the trajectory in a person as you are interacting with them.

Asish: Great. Thank you. I mean curiosity is something we would all like to have. Tell me a little bit about yourself in this journey. You have been around for like 15 odds years investing. What keeps you going till now?

Avnish: People like you, Asish. My passion is the founders. But I think we will have to end on a lighter note. So, why don’t you tell people a little bit about what you discovered about working with me which will probably put this question in a different light?

Asish: Okay. To be very honest with you, working with Avi was a harrowing experience in the beginning. The reason for that is that Avi was extremely detail oriented and I was not. I will give you two instances of it. The first instance is the following that when I first sent Avi something to read and Avi was my last boss. He is the last person I reported to and I reported to him for 4-1/2 years. So when I presented my first thing to him, I realized Avi actually goes through everything. And, he figured out a lot of mistakes on the desk, on the plan and all that. So kind of innovative, creative guy as some of us know.

Avnish: Jugaadu.

Asish: Jugaadu guy. So I came up with this plan that whenever you send Avi anything, you do mistakes on the page numbers or you would do very silly mistakes like you would spell Matrix wrongly or put Matrix Partners India with something else. And, Avi will bash you up. He will catch that upfront. He will bash you up for that and then…

Avnish: He will miss the whole bigger picture.

Asish: And then everything else will be forgotten.

Avnish: Okay, on that note, Asish…

Asish: Thank you very much.

Avnish: Thank you. Great to have you. And thank you for doing this. Really appreciate it.

Asish: Thank you very much.

Avnish: Great to be partners with you.

Asish: Thanks.

Avnish: Thanks everybody.

Salonie: Thank you for tuning in. And you can find the transcribed version of this podcast on You can also follow us on Twitter and LinkedIn for more updates.

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