Sramana Mitra: Let’s double-click down on a couple of issues across your portfolio. What are you seeing by way of successful business models? What appeals to you the most? When you see a company and you’re pattern-matching against the business models that are working, what do you like the most?
Anup Jain: What we like the most is capital efficiency. When we see the way that the market has been approached with a solution that is creating the necessary virality and bringing down future customer acquisition costs, it is the healthiest sign of a business. It means that the initial set of consumers are satisfied. It means that they are passing on referrals to others free of cost to you. That is bringing down the cost of consumer acquisition which points to scalability.
Consumers of a similar kind existing in great numbers and coming into you organically is a sign of scalability. It all points to capital efficiency, which means you can reach that destination much faster than others. It is this magic formula that founders and talented founders are able to crack through a mix of product and go-to-market strategies.
Sramana Mitra: What you’re looking for is more effective go-to-market strategies against whatever business model is working?
Anup Jain: Yes. Two sets of talented founders can probably crack a product that is not too dissimilar to each other. Eventually, it’s going to be the go-to-market strategy, finding that mix of new customer acquisition and improving the product, and the pace of it. One is going to race ahead of the other much faster and become number one. It’s the difference between number one and number two, and a number two and a number three.
That bodes very well for scalability. We are investing behind high-growth models where the problem is large. When you launch a product the right way, you can keep finetuning the product, but if you don’t have the right go-to-market strategy, it becomes very difficult.
Sramana Mitra: Especially in the companies that are becoming successful in the early stages and getting flushed with capital, how much discipline are you seeing on unit economics?
Anup Jain: I must say that we’ve been lucky to find founders who are extremely conscious and responsible with the funds that they have. Indulgence is not something that I’ve heard them discussing either with us or privately. They guard their money. They guard their ideas. They test and experiment. That’s the lifeblood of any startup, but do it in a pragmatic and judicious manner.
Generally, I think what you’re alluding to is the situation may not be so. It is inevitable that those companies will run out of cash pretty fast. They have made large commitments that they can’t walk out of. That’s extremely dangerous. Also, we have seen the recent macros have not been too favorable with the geopolitical situation and inflation. Some of the sounds have been quite negative on the funding front. Our general advice is to put your money to good use. Don’t wait for the right opportunity to do that.