First rule of first principle thinking, do not use first principle thinking when a mental model is available

On Designing Antifragile

World has found a new interest in understanding antifragile again. With the onset of a pandemic, global survival is at risk.  Everyone is pondering how could we have built an antifragile health system, financial back bone and an economy. 

Antifragile is not a theory. It is a set of heuristics at best. Antifragile is a property of a system. 

Everything can be thought of as a system, humans, humanity, an organization such as a village, apartment association, government, stock market and several more. Studying a system is not easy. Understanding the component of a system does not help in understanding the system. For example knowing about a neuron does not help in understanding the brain. Similarly knowing an ant’s behavior is not useful in understanding the ant colony. 

A system is called antifragile when upon getting shocks from outside makes it stronger. 

Antifragile does not fit into nice scientific theory. Carrot hardens in boiling water while potato softens.  Fire increases in wind while candle wick blows out. This is hard to understand for logic or a linear thinking mind. Same stressor makes some systems fragile and others antifragile. 

To understand Antifragile, one must first understand ‘Black Swan’. And to understand  ‘Black Swan’ you must understand ‘Fooled by Randomness’

And thereafter to design antifragile system you must learn about ‘Skin in the Game’ as an important design tool. 

Fooled by Randomness 

Fooled by Randomness is where people see patterns where none exists. Confusing noise for signal or vice versa. Also known as attribution bias. It is mistaking luck for skill. People that become successful attribute their success to their skills. While they attribute to luck, for failures that they face. Safer bet however is to assume that it was only partly true.  World only celebrates the stories of those who came on top, we discount the role chance may have played in helping the winner get there.  The lottery winner will be invited to give a keynote speech and he will champion to buy lotteries and never give up. This is Survivorship bias. 

Decision making under randomness therefore requires a full rethink. One must not look at outcomes  to evaluate the quality of decisions.

In the world of randomness, It is not the presence, absence, frequency of random events but the magnitude that is more critical in making decisions. 

Scientists, engineers & economists are the most prone to not understand randomness. They clutch to the formulas of math without letting the reality give context to equations. The fundamental limitation of science that they forget is that science is right only until it is proven wrong. Folks working in extreme domains recognize it, entrepreneurs, small business, actors, traders, cab drivers etc. They know it through experience. 

Investors and founders therefore are better off to write down their process to learn from how much of their success was skill and how much it was luck. 

The most actionable piece from this knowledge about randomness is to decide to never play Russian roulette. Russian Roulette is a game where you put a gun with one bullet and five empty chambers on your head and shoot. If you live then you get $10m. The probability that you may survive is a huge 5/6, or 83%, but the consequence of failure is death. You become a statistic.

Black Swan 

As humans we live life looking into the rear view mirror of experiences and beliefs. We are confident that which we have not experienced or thought before does not exist. 

Black swan challenges this fallacy. It says that absence of evidence does not mean evidence of absence. Black swans are not always bad, it can be both a treasure or a landmine. Thumb rule of navigating life should be that you must expose yourself to positive black swans and reduce exposure to negative black swans. Black swans exist in different levels, black swans at an individual human level and at the humanity level. 

This understanding of black swan is something that must be taught to everyone that studies science. For all those who think science can save us and believe science like god don’t understand what are the limits of science. Scientists are people that should be constantly looking for evidence that shows that their theory is wrong. Normal folks let that burden be carried out by the scientist and willfully believe that the new theory is universally true i.e across time. 

Normal brain can’t muster emotional energy and go after things that it has doubts about. That is why scientists must have emotional certainty but intellectual uncertainty. 

How to make something antifragile. 

We must design systems that are going to survive shocks, they must infact thrive under stress. Today’s systems such as economy, banks, markets are neither resilient or antifragile. To make them antifragile following heuristics must be kept in mind. 

Units must be fragile – One counter intuitive premise to start with is that for a system to become antifragile, its unit must be fragile. Humanity is antifragile because humans are fragile. For the banking system to be antifragile, individual banks must be fragile and allowed to fail. Yet we do the exact opposite for sick banks. 

Trial and Error – Allow the system to learn through trial and error as opposed to being driven by theory.  Give small shocks that may tear its individual units. Just like how muscles become strong through strength training.  Key in this is that stress given should not create ruin events because then after that it is game over. 

Option, Convex – Expose to option, a convex one. In any option if there is more upside than downside it is called convex option. Options that provide unlimited upside while taking limited downside exposure. Just like how an angel investor bets an affordable portion of wealth on startups.  Downside is all money may be lost, upside is that the startup could become the next Google. 

Lindy Effect  –  Old wisdom is better than recent insights. if something has survived for long then it is more likely to survive for longer. 

Remove not add – It is better to keep things simple as opposed to making it complex. Before adding anything new, remove an existing one.  Also called via negativa. via negativa simply means for survival eliminate all things that would kill you. Greatest contribution in life is by removing what we think is wrong. In life antifragility is reached by not being a sucker.

Do no harm – In complex system understand that first instinct should be that of doing no harm. 

Redundancy – Do the exact opposite for just in time efficiency, pad with redundancy. Always have a buffer. In the investment it is called margin of safety. 

Skin in the game – Keep risk transferers away, i.e folks that do not have skin in the game. Always look for skin in the game. In an interaction with others (family, work, market, life etc) when the other does not have skin in the game then it does not lead to a convex option for yourself. Never ask anyone for their opinion, ask them what they have in their portfolio. Don’t get on a plane without a pilot as that is without skin in the game. People who had religion have survived, it brought cohesion: people who eat together hang together. 

Avoid Ruin Risk – If you die playing, a billion dollar prize money is not worth it — In a strategy that entails ruin, benefits never offset risks of ruin.  Most rational thing therefore do is to avoid systemic ruin. 

Some of the heuristics described above when actioned on a system increase the odds of that system to be antifragile.

Too much head and not enough heart

Life is a constant search of finding your own game player fit.  

What is the game that I am the best player in ? 

What are games that can provide me money (safety), meaning (love), identity (belonging) and more ?  

Being the best hockey player in a country that is devoted to cricket may not serve you financially. At the same time winning the genetic lottery, piling investment returns not directly connected to your sweat and blood does not give you any meaning either. 

Terms such as FLOW or IKIGAI say the same thing. 

The generation before me had limited choice so had to be content with less. My generation and yours are awash with plenty of choice and that makes these choices hard. But even back then, it was well understood that there are two plays in every game. 

  Outer Game and an Inner Game. 

Popular chatter is always about the HOWTO of the Game outside. These are the discussions that become viral. However winning the Outer Game consistently requires dealing with your Inner Game. Sports makes you deal with the Inner Game explicitly. Another place where it is apparent is Entrepreneurship. 

i.e. Being a founder.

Kanwal Rekhi once said to me in a small group discussion

“ Entrepreneurship is a ‘Tapasya’

“It is the journey of self-purification, getting to know yourself “ 

Score is therefore always internal.

But yet as founders we boil ourselves seeking scores from the outside.

I have been following Jerry Colonna’s work (through for 14 years and finally had the chance last week to experience his transformation program to examine my Inner game. 

As the Buddhist saying goes 

”When the student is ready, the teacher will appear” 

Name of the program is aptly titled Reboot. A Reboot is needed for transformation.  Last year he also released a book with the same name. It is hard to summarize the experience of a program like this. What you have is a set of simple yet profound questions. You ask them to yourself with assistance from peers and coaches who help you reflect on it. The answer for each question can be diametrically opposite for different person. 

These questions are designed to guide self inquiry. A radical self inquiry that helps align a person to her Inner core. In other words get to Game Player fit, Flow. 

Following five questions from Reboot shook me hard.


1 – Who are the ‘Agent Smith’s’ that are no longer serving you ?


Beliefs formed when young may have served well growing up, may not help any more. These beliefs could be about anything, about money, independence or intimacy (or lack of ) in a relationship. These outdated beliefs are like the old maps that are no longer right. 

To add a Matrix movie spin these may be the Agent Smiths that have run rogue and are no longer serving you. 

Who are these Ghosts in the machine?  Can you name them? 

As Jerry would say 

“What are my beliefs that are no longer serving me ? “ 


2 – How much of ‘Track’ vs ‘Driver inside’ is driving you ?  


Our beliefs shape our behavior. They are at times called mental models but we may have no name for those.  To rephrase Rene Descartes it is not “I think therefore I am”, it is “I mental model therefore I am” 

Do you know which mental model of yours are the ones that are silently driving you ? 

As Carl Jung said 

“Until you make the unconscious conscious, it will direct your life and you will call it fate”

When examining these mental models and looking to replace them you face the paradox of Ship of Theseus.  If you change each and every mental model that you held dear then are you even the same person that you once were ? Does it not change your identity? 

What is your unchanging core ?


3 – How can I tango dance you? 


We pick up peculiar phrase and words and abuse it without being aware of the abuse we mete out. 

You don’t ask someone how can I tango dance with you.  

Yet you say “How can I help ?” at the end of a meeting.  

If you have to ask then you can’t or don’t know how you can help

You and I learnt to mimic that phrase from others that we work with. Cabal of ‘fake it till you make it’ has encouraged us to use this for fewer even have the courage to challenge the fakeness of that question. 

What phrase are you going to stop using going forward ? 


4 – How old is that emotion  ?


A founder deals with a landmine of emotions.  Every founder goes through some or all of these emotions.


Anxiety - “I don’t have the skills for doing the task at hand but everyone else around has put faith in me.”

Burden  - “Too much advice and often conflicting, not clear which to pick” 

      “Of having to learn and perform at the field, on my own dime.” 

Confusion - “Should I put my hand in the profitability jar now or 10 years later ?” 

Disappointment - “Of others especially my employees not seeing the world the way I do”. 

Discriminated - “For not having popular skin color or the right Y chromosome.”  

Depression - “Due to envy or anxiety” 

Distrust -  “Of those whose incentive is not as aligned to mine, often times an co-founder, investor or advisor who sees me as a chess piece to be sacrificed in her larger game"

Envy - “Of the ‘Top 25’ or the ‘X under Y’ or some other ‘midas list’ that a fellow founder has been featured in.” 

Flying (albeit Blind) - “Others think I am flying blind, it is they are the ones that situationally un aware” 

Hero Complex - “I must save the world”

Lonely - “At the top of the mountain or the bottom of the pit” 

Panic - “How will make payroll and pay bills this month and the next one”

Yearning - “Be on the front of the TIME magazine cover” 

And several more

To suppress emotion in work is what is considered as a sign of strength. But as Rumi said hundreds of years ago, name them, invite them into the house of your soul for they are travelling guests.

To deal with them even more powerfully ask

‘How old is that guest called guilt that you have been harbouring?’


5 – Am I a good man? What I do, does it matter ? 


All of this finally stops at a question like this . 

Am I a good man ? 

or a different version of it 

Am I a  good manager 

Am I a good father 

Am I a good brother 

Am I a good husband 

Am I a good leader 

Am I a good founder 

Am I a good investor 

All these questions can torture if asked through too much head. It can give a chance to heal if sieved through the heart.


Heart feels the right why


In a country that desires to transform as a product nation, the future is here but unevenly distributed.  For better or worse, it has got more venture capital last year than the last 10 years put together.  Fred Wilson (Jerry’s old partner) has pointed out that amount at $17b per year is way too much for even the US venture ecosystem to handle. A young 10 year old India venture will be grappling with a lot of similar problem that US went through. 

As the song goes ‘Mo Money, Mo Problems’ 

There are going to be several heartaches due to fake maps that are going to lead scores of founder astray. And even worser riches of gold worth hundreds of million of dollars will leave many Midas still feeling empty  

My takeaway from Reboot is that finding your game player fit flow is not an analytical exercise measured by some numbers through the head but what is it that feels right for me felt through the heart.

Jerry has gone through this journey over 3 decades and lived 3 different careers to help many global founders & investors deal with this. Undoubtedly it makes sense to learn from that experience. 

If you are India based founder or Investor consider going through a Reboot 

For some reason if you can’t make the leap across the sea to Colorado, I would encourage you to talk to a few of my friends in India who can help with these heart to heart conversations. Prasanna K, Shekar Nair (my current co-founders at Upekkha), Avinash R & Sharad Sharma (my prev org co-founder),  Manju Nanjiah and Shoaib Ahmed (old friends who have taken up mission of helping founders with self inquiry

Product Nation, first decade

Nation means an imagined community. It stokes a certain pride in every human who belongs in it. Prefix it with Product and that makes it even more elite. In business terms it means climbing up on the value chain. Which in turn means more margins, more visibility and more power.

I heard the word Product Nation first inside a motley crew that was responsible for organizing the largest conference on building products from India. Ten years have passed since then and that sprout of an idea called Product Nation is a toddler now.

Lot has been learnt in this decade.


Take away for founders

  • “Playing in India market, Pay close attention to the regulator “
  • “Affordable bet for founder is not same as investor“
  • “IPO is not liquidity for the founder.”
  • “Second time founders swear not to build Vanity startups. Learn from one, work with them closely”
  • “Valley Playbook don’t work for India, even though they get funded. It is not adequate to win”
  • “Capital will not be the bottleneck. But being equity efficient is more critical to keep control”

Take away for limited partners, investors in funds

  • “If you think of India as the India market alone then you view it with only one eye”
  • “In IT services Indian were masons of software. Now not only they are becoming designer architects of the new global products but they can do it all from India“
  • “Axis of global product software generation is no more based out of Valley”

This additional sight is required to see the full picture of India and its role globally.

Take away for policy makers

  • “Not to think 5 year windows for policy but think 20–30 years”
  • “Allow time for policies to work and don’t create new ones that limit the impact of a previous one”
  • “When creating a policy beware of second order effects. More importantly beware of Iatrogenics”

1 – Product is not same as Engineering

Founders especially those from engineering background realize eventually that weaving code together is engineering not product. Silicon valley celebrates 10X engineer, had even invented new words like ‘product engineer’. But product goes beyond that.

Building a product involves a category understanding, shifting to a problem first mindset, sculpting the packaging and framing the right pricing model to position the product. And most important of all is cracking the product distribution. It requires sticking the neck out and make a bet on what a customer might want. While doing so making sure there is no over building.

Left to themselves engineers would want to build a new electric Porsche, a beautiful, next generation technology, hand crafted creation that make them proud. And it may sell only a few hundred. What is needed instead is a Toyota Etios. Something that meets expectations and delivers promise. This may sell in hundreds of thousands or even millions.

This is the key lesson learnt again by many founders new and old. I heard Suresh Sambandam of Kissflow once say that

“First 3 years was figuring out that we should have not built the infrastructure business from India. The next 3 year was in realizing that doing world class engineering is not the same as doing a world class product” 

2 – Bleeding edge is not our comparative advantage

Every startup hub in the world envies Silicon Valley and desires to copy it. Country governments allocate budget and sponsor PhD scholars to study this and replicate. However such copying never works.

Keith Rabois paraphrasing Peter Thiel’s ‘Zero to One’ mindset says this for how investors that win do.

“All investors are assessing their best comparative advantage, Andreesen and Khosla are technology wave investors, Mike Moritz is good at assessing people, there are market based investors. If you copy another investor, it makes no sense. It’s less about investors copying one another but it’s more about what their specific comparative advantages are and how they maximize or optimize for those.” 

Same applies for startup hubs. Each region must find its own comparative advantage.

Looking back it turns out that understanding the local needs of the market and delivering better is not enough. Also that Indian founders have no edge in doing this compared to other founders from outside India.

Google of India is Google not Guruji. Facebook of India is Facebook not Minglebox. WhatsApp of India is WhatsApp and not Hike

Also building bleeding edge technology startups is not where the unique comparative advantage lies for Indian founders. For most of the decade no bleeding edge Indian startups have ever become big. It is only recently some of the bleeding edge startups found landing spots . Good recent example is Reverie Technologies that did pioneering research and technology on Indian language (better than Google’s work) that led to its eventual acquisition by Reliance Jio.

Saas is where comparative advantage for Indian startup ecosystem lies at a global scale. In Saas distribution does not depend on relationship based selling. Here the location of where software gets made and distributed from does not matter. 

Comparative advantage will continue to be the most important question of the next two decades of the Product Nation growth. Some are therefore considering should India as ProductNation be instead called as SaasNation

3 – Global front office moved to India

Kanwal Rekhi once said that

“One in two billion dollar enterprise company in Valley has an Indian founder in it.“

Each of these companies had their engineering center i.e their back office in India. Due to the tailwinds supporting Saas, many of the emerging Saas companies have their back office and both front office in India. Founders are present only occasionally or move very late to Silicon Valley. Examples are Druva, Zoho, Freshworks.

This trend is only going to be more prevalent of the future global software product companies.

4 – Playing before designing game

In the first decade founders learnt crawling, now it is time for running. Companies such as Druva, Zoho or FreshWorks survived and succeeded in well entrenched categories, a.k.a Red Ocean.

Building new categories is a different game play a.k.a Blue Ocean. While there have been great attempts no breakouts so far. Next wave of companies such as Whatfix will win big where they are designing their own categories and also the rules of the game.

5 – Regulation first is the local game

Investors placed a lot of faith in the growth of local digital market in India. Lot of these investments led to consumer surplus. End consumers had a great time receiving discounts, offers over online shopping, cab ride and food orders.

No one however found a successful working business model that the stock market will approve of. By the time it could be figured, incumbents ended up changing the rules of the game through twisting the arms of regulation.

I once heard Nikhil Pahwa of Medianama once lament

“Thanks to all the change in regulation e-commerce is harder now than Mobile VAS was 10 years ago. “

Eventually every Indian market gets regulated

While Digital Transformation will happen in India but it will not be led by startups. It will be steered by incumbents. The paint industry blue collar jobs will transform and move to digital but it will most likely be led by AsiaPaints than a mobile first craiglist like startup.

Bharat opportunity will happen but through the hands of an incumbent because they are stronger and better player in a regulation first game.

6 – In the name of help, they make it hard

One of the last jobs of a government should be in market making. However every government overestimates its role.

No industry body, think tank would take the courage to publish this fact due to its political overtones. More startups have withered due to governments than those that have benefitted.

Many groups of people have tried to shape policies that can help startups. It is a frustrating process for addressing the smallest of problems. Then there are big industry level problems. For instance, there are only 11 product IPOs in the last 11 years. Instead of fixing the liquidity friction, policy has focussed its efforts in things that can lead to selfie moments of bureaucrats and founders. It is also so un-coordinated that effort of one policy team cancels the others. For example creating StartupIndia on the one hand but terrorizing with AngelTax.

In policy circles it has become a well known joke

“In policy you make 2 steps of progress forward and 2.1 steps backwards.” 

Best help a government can do in market making is to do nothing. It should continue to serve the function of protecting citizens.

7 – Lee fixel saved the fountain spray

When Lee Fixel invested in India first he was branded a casino capitalist. But thanks to him the entire venture capital industry that was being questioned for returns got two decades worth of lifeline to continue.

According to research by Prof Thillai Rajan, “Mean returns of Indian PE-VC asset class is 13.25% in the decade 2008–2018”. Prior to that there was no data to even study it. In the US these return average 15–20%.

In the previous decade, i.e 1997–2007, many reputed global VC firms that came to India bolted back due to inadequate returns. In the time period 2007-2017, about $16b of investment by VC had been done in India. Only $4b had been recorded as exits. By orchestrating Walmart Flipkart acquisition in 2018 Lee added $17b to the tally of exits to take it to $21b. Else the 13.25% return of the VC asset class may not have been possible

He showed how to capture value, spread wealth to startup employees and saved the entire VC Industry in India. Lot of venture capital therefore will continue to be available.

8 – One in many is not the same as Many in one

A startup ecosystem’s maturity can be measured by how balanced are the terms between founders and investor collectives. Is it lopsided one way ? Silicon valley saw the balance favored the founder while in India the exact opposite was true a decade ago. That has changed gradually, Initial years saw many founders celebrate a fund raise. Experience has taught that it comes with obligation which when not fulfilled can take the control away.

Founders have learnt that control is as important if not more than capital. Because the game played by founder and investor are different therefore the averages are different a well and cannot be compared.

Average outcome of a gladiator is not the same as the ringleader outside the game. If in a game gladiator dies, it does not matter what the winning prize is because he can’t play the game again. For the outside ring leader even if one bet is off there are others that can still take a shot at the reward.

“Meaningful investor outcome is not usually the same as meaningful founder outcome.”   

Economist are giving it a new sophisticated name, “Entrepreneurship is not ergodic”. Nassim Taleb said it long ago that entrepreneurs do not play russian roulette.

Taking affordable bets is critical for founder anywhere. In India now we have rich class of second time product founders who take bets that keep control of their fate in their hands.

9 – Building Commons is hard

In a new economy where markets don’t form on its own it is argued that well meaning folks must come together and pay it forward. However building a commons, driven by a community is hard. Open source software created GPL license to protect the commons and therefore preserve ‘paying it forward’ contributors. This does not extend well to non-code based communities.

Every year new communities kick start however they fizzle out in a few years. In the last decade I have witnessed three communities breath its last in my arms. Have attended the last rites of three more. When commons become big, it attracts fascists. If the commons is not protected those fascist take over.

Tragedy of commons is an age old human problem, not solved well. The first decade of Product Nation saw that it has not solved this well for itself.

New ones continue to emerge and they continue to be hopeful.

10 – Race to the first billion dollar ARR (annual recurring revenue)

One of the most exciting things now is that there are many contenders for the first to get to a billion dollars in ARR. Druva is at $100m, Freshworks is at $200m while Zoho is at $500m. Between them there is a race to get to the first billion dollars in ARR. Once the first one does it, floodgates for the rest to follow will open up.

In conclusion

“Nations are born in the hearts of poets, they prosper and die in the hands of politicians” – Allama Mohammed Iqbal.

Founders are the poets of Product Nation. They shoulder the responsibility of ushering India as Product Nation to its adulthood in the next two decades. Responsibility of the rest is to be their cheerleader and affirm them.

When looked through a global trillion and billion dollar market cap lens it looks like a tiny speck now but they have done well to set the foundation for the next stage.


First published in medium –

Myth of Services DNA

Surprise is a rock under which lessons are hidden. Don’t throw it away.

Scott Cook, when coaching product teams often asks this question: “What is your biggest surprise?” 

First time I heard it, I marveled at the power of this questionUsing this question is like the situation when the examining eye doctor puts that one lens which changes your blurry vision into a crispy clarity.

Last week, when Malavika asked me that question for Upekkha, I was stumped for a moment.

I had always believed that building a product business requires a different kind of mindset compared to building an IT services business.

In 2009, I joined a group of passionate folks under NASSCOM Product umbrella who all had worked in product building but were disgusted that IT services in India was hogging the limelight. We rallied to create a space for products, called it product working group, and declared the IT services mindset as enemy. Often quoting that Finacle never made nonlinear revenue and was trapped in the dollar per hour mindset, we did not ever want to engage with anyone from that type of organization.

We believed it needed a DNA change and that cannot happen.

When Vijay Rayapti, a close friend from that group, asked me to join his then services startup, I declined saying he has the DNA challenge I know of. I just did not believe that services and product can happen within the same organization.

Not only did he transform Minjar and built Botmetric, he eventually sold it in 2017 for a handsome non linear multiple. I cursed myself later for missing out that interesting journey with him. I am glad that I still played a role with the exit in that as an outsider.

My belief was challenged slightly challenged then. With the Upekkha experience it was fully shattered.

Founder of the fastest company to get $1mn in ARR was someone who ran an  IT services company earlier. Infact all the founders of the three fastest to grow, came from IT services business background.

I had not expected this.

One of the startups was a mobile apps developer that moved to social media management space, another was a generic IT services provider doing multi-million revenue but decided to pivot to skill testing . The third one is one of the fastest growing in ad security space. My initial expectation of them was they would take the longest time and go through big struggle.

These has shattered my old mental model about there being a services and product DNA.

Amit Mishra CEO of InterviewMocha, UpekkhaTribe founder says well that “moving from the dish washing for dollars to vim soap business is not easy”. It requires changing the founder itself.

But so many have done it now.

Once is an anomaly, twice is a semblance of something, thrice is pattern or trend.

Prasanna K my colleague often says when you see a surprise that means your mental model and reality does not match. It is time for updating your mental model, not ignore that reality.

IT services founder can and have built successful product business.

Now I believe that services experience isn’t the enemy, vanity mindset is.


Originally published at

World is not flat

At least for enterprise software startups.

Fact, one of two enterprise startups in the valley has an Indian founder or a co-founder

Fact, earlier they had back office in India now they have front office as well. Largely due to how SaaS is changing how buying & deploying is done inside an enterprise.

Still pause before you quit your job at NetApp, Cisco or Microsoft or any other MNC R&D India office. Starting up a B2B startup from India you must think of few things before jumping in.

Thomas Friedman won awards and accolades for writing that the World is Flat in non-fiction category. In your reality, you have to cross at least four big chasms.

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Capital Chasm

There is more money in India than there are good ideas.  However this money is on a blood-thirsty hunt for unicorns. Flipkart turned real, was not a mythical unicorn. It means more unicorn chasing.  This money therefore stays blind to outcomes that can happen via relatively smaller yet meaningful exits. An outcome any typical enterprise software company is more prone to. Moreover as an ‘Aam Aadmi Founder’ (Average Joe Founder) capital for you will still need the collar tags of IIT, IIM & Harvard. Your experience tag at NetApp may not cut it.

Industry reports will surprise you with the claim that there are thousands of B2B startups in India.  Still funding to your kind of venture will be a trickle. [side note – Remember that an Industry report exists to make things look rosy and get someone a promotion]

Billion dollar funds may announce of writing cheques for B2B. They may momentarily focus their money hose at a few. The key to understand here is that unlike the consumer world, enterprise is not winner takes all. Raising massive funding does not give an edge over the competitor.  After not meeting their appetite size many will even drift away leaving you laden with a bloated cap table.

It will be easier to find a global executive that writes small cheque across the sea for you. Someone who is willing to make ton of phone call but for him the chasm will be more real than just mindset.

RBI and the archaic piece of regulation called FEMA will dread him with torture of moving the money in and out of India. While designed to catch fraudulent diamond merchants, it will let those exact merchants flee and but strangle the handful well intentioned angels.

Where you anchor yourself and head quarter will matter more than pundits are willing to admit.

Anchor yourself right

Customer Chasm

If you setup both front office and back office in India first, your tendency would be to hop a few neighborhoods and chase the big elephants of banks and insurance players in India. Dancing with these elephants is no different than a casting couch experience. Yet you can’t see beyond this chasm because we are all prisoner of our own experiences. An apt corollary for ‘out of sight , out of mind’ is ‘what is not in sight is not real’. It may be easy to drive a sales process across geographies but the lack of experience traps you into believing that you should sell local.

Outsourcing industry first proved it. What has not changed in last three decades is that it is easy to make a dollar than a rupee.

Data from the upstream global software products industry will tell you that half the $650 billion in software revenue comes from US.  Still that trap in the mind will stop you from thinking of yourself as a global brand from day one.

Think Global, Act Global

Product Market Fit Chasm

Product market fit is warm a fuzzy feeling. One that you get through speedy iterations of your focus. Focus of problem, messaging & pricing to a segmented set of folks. When you get it you will know you are headed in the right direction.

But product market fit is not exportable from one geography to another.

The business case you make before you get product market is a big hand waving narrative you must tell. To sell a story for fund raise at this stage you will need to be referencable.  Therefore before product market fit moving the front office (includes founder) to new geography can sometimes be fatal. It will be like putting a a star cricket player to a baseball game, he can swing his bat alright. But winning is whole new different game.

Being #ValueSaas i.e getting to product market fit capital efficiently before the move can ease that move. Your business case will be more data and less narrative. It will need less of relationship and references and stand more on the merit of business.

Don’t jump before you are ready

Distribution for Scaling Chasm

Post product market fit, distribution & scale is the next big step.

As you re-jig front office presence you realize that hiring in US does not solve the local sales and go-to market problem.

After firing the 3rd VP of sales and 2nd marketing head you will realize that you the founder is still the best sales closer.  At this stage you must move to the new geography to solve that problem.

Your situation will need a solution that needs thinking through ground up. What works for Freshdesk does not work for Whatfix. In fact quite the opposite. There is no single playbook for this.

Every one must arrive at their own. And then only rinse and repeat.  Strategic partnership can become a big part of that answer. If a lead to customer cycle can take 2 months, strategic partnerships can take 2 years. Investing efforts for this a bit in advance would be a good move

And If you have laid the foundation well during the previous three chasm then this will be lot less stressful.

Design your own playbook.

They will tell that there are no chasms, it sells more to say the world is flat. It is not.

Knowing about these chasm and being prepared in advance increases odds of becoming a global software brand whose anchor you want to start from India.

Learn from the mistakes others faced but chart your own path err playbook.


What is a product?

Typical answer from engineering founders is that, ‘A product is a set of features’.

This mindset leads to a never-ending spiral of building ‘new features’. Over time, the number of features gets so enormous that it is not clear what the original vision of building the product was. Prasanna is very fond of calling this particular type of Indian product startups as a ‘Thaali Startup’.

A more appropriate definition, which a product person would suggest is that “A product is something that (physical or not) is created through a process and provides a certain benefit to the market”.


At first glance, it seems as if the issue is the lack of good definition. A better definition will not help in deciding when and how to add a new feature. The root cause of the dilemma is not the definition, but a lack of conviction. The conviction for targeting a specific problem. Not just that, a unique point of view on shaping the solution to that problem.. For first-time product founders, when they start with a brand new idea, it is often difficult to have a conviction. Every interaction with a new person, be it a customer, mentor or even a passerby brings new inputs that suggest the addition of a new feature. The issue is more pronounced for a software product.


Imagine a first-time founder built and sold a ‘CHAIR’ in a retail showroom. A customer walks into the store and asks that he is looking for something in which one can stand on and clean the ceiling.

He looks at the chair and says this is almost perfect, however, the cushion must be removed and the legs should be made 6 inches taller. Moreover, he says that he would further like to place an order for 1000 such products.

This puts a product founder in a big soup. If the founder was a sales professional all his life, then there is no internal struggle. He will go find a supplier who can give the new product to him ready-made. However, if the founder designed and manufactured the chair (which most early-stage founders do) then he would contemplate if a change has to be made in their design studio and manufacturing plant.

Should the founder change marketing collateral and redo the showroom?

Most likely, the answer is either no or to at least think through the implications of such a change in the request. In the case of physical products, it is easy to understand the ramification of making this change. Right from changes involved in manufacturing, all the way to how users perceive you and keyword descriptor (category name) of the problem that your product intends to solve. Everything gets affected

The founder’s choice should be to send him to another store that already manufactures products that has no cushion and are taller. The more apt category descriptor may be called a ‘LADDER’.

Product is something that solves a problem and has a shape and a form. Often, the problem has a well-understood keyword across the minds of its audience. Example, Chair is not intended for standing and cleaning the ceiling but perfect as a seating option.

When these questions are posed for physical products that have a well-defined shape, then it becomes easy to decide on what to do when a new customer request comes.


In software, since the cost of change is massively low, the first inclination is to make the change as soon as the customer asks for it.

Most software products, therefore, look neither like a pot, nor a potter’s clay. Ask a software product founder, he will mould the software to whatever the customer needs.

For engineer turned founders that have worked in IT services, it tends to get far worse. They don’t even offer the customized potter’s clay, they price the entire potter and send him away.

This is one of the big reasons that products built for the Indian market don’t look comparable to a global product. It may even do well in India.

Therefore when building a product it is useful to ask whether it is a pot, potter or potter’s clay?

Asking these questions will help decide where it falls.

  • What is the core job that a customer is trying to hire the product for ? (Hint – What job customers wants to get done and what is the friction. Think problem domain)
  • If Colgate is Toothpaste, your Product is —————- . (If this question does not have an answer, then product is building a new Category).
  • Adding a change request will it force a change of category descriptor ?
  • When new feature request is made by customer. Is it an extension of previous job or adjacent job. Adjacent job may change the shape (Chair that can have wheels to move around while seated or Chair that can be used for cleaning the ceiling).

Meaningful founder exits

Most startups die, only a few exceed expectations and become successful beyond imagination. These successful ones become the talk of the town, while the failed ones quietly fade away into the background. Nevertheless, it is the story of the moderately successful ones that get buried on the other side. In the purview of unicorn-chasing investors, it is these moderate success stories that come in the way of spectacular ones.

A Better Narrative for the Founder – The One That Is Often Suppressed

Compare this

  • Founder of Startup A, let’s call it LittleBox, raises $200K.

LittleBox extends its outreach to 50 well-paying customers within a span of 2.5 years. It is then acquired by a multi-billion dollar corporation, all within 3.5 years of its inception. The founder then spends another two years to complete her millions of dollars of earn-out and is then back to start the next. Here, the Angel Investors are happy with the return, while employees are super thrilled about the positive outcome.

  • Founder of startup B, let’s call it BigDeal raises more than $1.5b.

BigDeal gets to unicorn status and indulges in one of the biggest brands spend ever in India. Eventually, can’t sell at scrap value even after being ten years in existence. Investors and employees feel cheated, even if it may or may not be the fault of the founder.

Which is a better story? If you ask the storytellers, they prefer celebrating the BigDeal one. After all, Blockbusters are a far more intriguing story to tell.

Inside the closed room of SaaSBoomi where founders share real lessons, startups like LittleBox were given its due highlight. Data that reflect the naked reality was shared without any distortion to showcase the right picture.

Pic credit – @KumarSachi

Praxify ($60m acquired by AthenaHealth), Minjar ($50m acquired by Nutanix), Martjack ( $30m acquired by Capillary), ($10m+ acquired by Nutanix ), Mettl ($25m+ acquired by Mercer), Recruiterbox (acquired by Turn River Capital), Mezi ($100m+ acquired by Amex) , Little Eye Labs ($10m+ acquired by Facebook), CucumberTown (acquired by Cookpad), Threadsol ($12m acquired by Coat) and most recently ShieldSquare (acquired by Radware)

All these LittleBox-type startups have raised very little money compared to their exit price and have created far more founder impact and employee wealth.

Against the narrative & counter intuitive

Most founders join the startup race without knowing when it ends. Anyone beginning a venture is expected to plunge into fundraising. However, going on a mindless chase for fundraising reduces the odds of a meaningful LittleBox story while it pushes towards the possibilities of BigDeal glory (or burn).

According to Kumar Rangarajan, CEO of SlangLabs who earlier sold LightEyeLabs to Facebook in 2014 said.

“One has to be thoughtful when fundraising. I am thankful to few advisors that guided on being very thoughtful in raising very little funds. Else I would have not been in a position to exit the offer that came up with Facebook. Acquisition conversation messes up founder’s head. A startup is like a baby to a founder. The self-talk inside the mind is hard. The way to find peace is to think of your startup is the girl/boy given away for the marriage. Responsibility of the parent founder is to find the right other family in marriage where you know your kid can grow.”

Founders should not only be open to this possibility but should also actively learn from the experience of other founders on how to do the matchmaking. Only 11 technology startups in India could ever consider IPO in the last decade. Every other success story including Flipkart was an M&A.

According to Girish Redekar, co-founder of RecruiterBox (sold to Turn River in 2018)

“Once startups hit $1m in SaaS, there are now standard templates available for the M&A matchmaking discussion to happen.” 

In most other cases where it is strategic, it is always concerning whether the outlook on the future is aligned. Startup M&A is the story of fear meets greed on a treasure hunt journey. Hence, knowing how an acquirer thinks about the future is very important.

“What an acquirer looks for is does this help in add or expand TAM? Does it shave off R&D cost? Or strengthens the competitive positioning in the market “

This is as per Aneesh Reddy, CEO & Co-founder of Capillary who acquired Martjack Sellerworx, Ruaha.

Not just knowing, better prepared

Takeaways for a founder from LittleBox contrast with BigDeal is that M&A is likely default path. It is useful, therefore, to do multi-threaded thinking early on and build strategic relationships.

  • Right preparation at the start matters a lot (such as incorporation & finance discipline) and it helps reduce the regulation mess in a deal-making.
  • Important to prepare the way in advance before the money runs out. To re-quote an often used idiom in this context “A terminally ill patients don’t get marriage proposals”.
  • Chemistry fitness is far more important than haggling over the math of valuation. .

As per exit deal math laid out by Bryce Roberts of “A $20m exit with little or no funding creates more founder wealth than $200m exit with venture funding“

In conclusion – Founders should be aware of endgames, choose their path wisely and prepare multithreaded thinking in advance learning, a takeaway from other founders.

LittleBox stories are far more likely with meaningful founder outcomes than the BigDeal ones.


Published initially at

Best Indian Founder

of 2018

or the entire last decade 2008–2018

Is Undoubtedly Lee Fixel of Tiger Global.

Every founder attempts to create value. It is not that hard. If money is handed out for a purchase, it is bound to create a consumer surplus. As Bill Gurley, legendary VC at Benchmark Capital says

To turn it into a business it is critical to capture some of that value back. Best founders are those that are good at capturing value after creating it. Capture that value for themselves, investors and employees.

Employees even in a typical valley based startup don’t make much money. As Hunter Walk, VC at Homebrew Capital says

Lee made two of his employees near billionaires and close to 200 others multi-millionaires.

When Lee first moved into India he was branded a casino capitalist. But thanks to him the entire venture capital industry that was being questioned for returns got two decades worth of lifeline to continue.

As per the research by Prof Thillai Rajan in 2018, “Mean returns of Indian PE-VC startups investment is 13.25% in the decade 2008–2018”. In the US these return average 15–20%.

In the previous decade, i.e 1997–2007, many reputed global VC firms that came to India bolted back due to inadequate returns. In the next decade till 2017, about $16b of investment by VC had been done in India. Only $4b had been recorded as exits. By orchestrating Walmart Flipkart acquisition in 2018 Lee added $17b to the tally of exits to take it to $21b.

Else the 13.25% return of the VC asset class may not have been possible.

For just that one reason he must be celebrated.

Even technology natives like Google, Microsoft, Intuit, Yahoo have a poor track record in integrating and digesting an acquisition. It will be harder for a non-digital incumbent like Walmart. It is anyone’s guess whether Flipkart will be an albatross on Doug McMilon’s (CEO of Walmart) neck. Chemistry between Walmart and Flipkart culture seems like water and oil, not something that is easy to mix.

But that is a story for another day.

A tremendous amount of wealth transferred into the hands of commoners who could have otherwise not imagined hitting such a jackpot.

For his stellar performance, we cherish Chris Gayle as our top IPL player. Similarly, Lee Fixel is our best Indian startup founder.

He showed how to capture value, spread wealth to startup employees and saved the entire VC Industry in India.

Disclaimer: I am in no way connected to Lee Fixel or Tiger Global. Have never met him. Neither did he influence any of our common friends to write this 🙂

Just admiration for someone who fueled a new reality.

Indian SaaS Drumbeat

Change is easy to miss, hard to get right.

Policymakers take pride in thinking that they create markets. Many believe that the 1992 World Bank report which called India as likely software superpower was responsible for the creation of $150bn IT services industry.

In emergent systems like markets, it is hard to say which inputs change the outcome. Internet was an important ingredient, the outsourcing industry was an unintended consequence of the internet. It made it possible for sending back office (R&D and Support) from US to distant parts in the world where it created efficiency.

Thomas Friedman, renowned New York Times journalist was quick to declare this in his book as World is Flat. He said “Several technological and political forces have converged and that has produced a web-enabled level playing field that allows for multiple forms of collaboration without regard to geography or distance, soon even language”

He was only half right. Ten years since his claim the Indian IT industry at $150 billion is only 10% of the $1.2 trillion US market.

What started with Internet will get completed with the cloud. Cloud enables to move front office i.e sales & marketing of software as well.

Business model type change is most potent.

As the world moves sales process from selling to assisted buying, front office need not be where the customer stays but where it is the most efficient to set it up. For the customer, there is no difference whether the software he buys is built, marketed from Alabama (US) or Alwarpet (Chennai). This decimates existing business models.

Business model changes are second-order effects, most fail to notice it initially. Leaders that do and act before others emerge as winners and those that do not perish.

Satya Nadella’s rallying phrase to lead Microsoft into the future is “Mobile First, Cloud First”. However after becoming the CEO, he did not hesitate to write off the big $8 billion Nokia acquisition while continuing to do big investments in the direction of cloud based business. LinkedIn at $22billion was one of the biggest acquisition for Microsoft in its entire history. Mobile is a big tectonic shift but do not create a business model change. Cloud on the other hand does.

Adobe was a leader in the PC application business. In 2007 its Rich Internet Application strategy was lead by a heavy client server led thinking. However, as recession-hit consumers stopped upgrading to their apps in 2011, they had to burn their boats to shift to an entirely cloud-based business. Fast forward seven years today Adobe & Shantanu Narayen serve as the ideal role model of a public company CEO that can navigate a business model change of cloud-based business.

New markets, technology changes are critical tailwinds to be in tune with however it is one that is related to business models that change fortune.

Change has global consequences

The business model change enabled by the cloud is called SaaS (Software as a service). It was earlier called as ASP — Application Service Provider a term coined by research firm IDC that meant software that can be rented

The first such software application that can be rented was built by Jostein Eikeland of Telecomputing in 1995. Like the pivotal moment of Wright brother’s first flight, no one noticed it. Not for several years until 1998. It is only in 2003 with the founding of Salesforce that SaaS found its way in business lexicon.

“It takes 30 years for a new idea to seep into the culture.” is a famous quote from Futurist, Stanford Professor Paul Saffo.

23 years since start SaaS has come far along, farther than how many trend watcher would have estimated. In 2018 roughly about one-fourth of software revenue is SaaS. At its current growth rate, it won’t be a surprise within a decade all software revenue is dominated by SaaS.

The world would be truly flat when more than half of that SaaS is from India.

When a helium-powered flight sporting a tagline #failsforce circles around San Francisco’s tallest building of Salesforce and creates a crack in it, it is quite telling on ‘Happy Feet’ of SaaS dance will play out.

When Mario plays Soccer

Can he become a Super Mario?

Everything about the future is so clearly visible when looked through the rearview mirror.

Wish I knew what influenced outcomes for a tech startup founder in India.

When you look back decade-long to sketch the picture from 2007 till now, leaving out the frenzy of funding peaks & disappointment three distinct picture emerge.

In all cases, the rules of the games for Indian founder are not apparent. The game itself is very different.

First in how consumer technology businesses are built, second how enterprise business evolves. And the third in how technology led acquisition happens.

Software is eating an unevenly distributed world of India

Wiliam Gibson, the famous science-fiction author has said, “The future is already here, it’s just not evenly distributed”

When you spread technology on the world, the thinnest layer gets cornered in emerging markets like India. Combine that with what Andy Rachleff, founding investor of Benchmark Capital has noted “Software is eating the world” it is easy to make sense of consumer tech in India.

It turns out that

Google for India is Google. Not Guruji as Sequoia had thought.

Facebook for India is Facebook, Not Minglebox, Sequoia’s second such bet.

WhatsApp for India is WhatsApp. Not Hike as Airtel had thought.

Jury is still out on whether Amazon for India will be Amazon. (Looking at the skeletons that are tumbling out of Walmart India’s closet, the last word on this may be by Amazon)

Also, the Jury is still out on whether Ola will be Uber of India. Only time can tell.

In a winner takes all market, only one rule exists. Become biggest & largest at any cost. Not just in that geography but globally.

If you are not #1 then you don’t exist.

You can exist for 2 years, maybe 5 years but after a decade only the last man standing residues in the mind.

Once a category is taken, it is better to go after a new one, AgriTech is the flavor of today. Or invent a new one like the mobile mediated ‘Handyman Services’

In all this as Bill Gross, founder of Idea Labs says, timing matters more than anything else.

TIming is the difference between IndiaPlaza & Flipkart.

Selling to Assisted Buying

There is a bigger story than cursory ones on Freshdesk & Zoho reveal.

In 2009 all SaaS revenue as a % of Enterprise Software globally was very small, less than 3%. In 2018 SaaS revenue is more than one-fourth of total Enterprise Software revenue. Given the rate at which SaaS is growing, it will not be a surprise if 90% of revenue of all global Enterprise revenue turns SaaS in the next decade.

This is happening because of an important shift, shift in how software purchase process happen. It has moved from selling to assisted buying.

This shift has provided a big edge that Zoho & Freshdesk leverage. If the product trial experience is good enough, price not too large you can close sales remotely sitting in any part of the world.

Sales acquires a new meaning here, it is not being the door to door roaming water filter salesman, but the sales assistant inside Levi’s jean showroom helping customers try out a fitting and gently nudging them to make a purchase.

In this type of sales, you don’t always be closing, you land quickly and always be upselling. Here the product has to take the lead on triggering emotions and do the initial sell by itself.

Enterprise software never had a winner takes all behavior. Many companies in a category can co-exist sustainably. Several Indian startups have therefore mushroomed in global SaaS

Fear meets greed on a treasure hunt journey

Only a handful of startups grow like a rocket ship to become some of the largest companies in the world.

Majority of them walk down the path of an acquisition. Whether planned or forced this entire process looks like dark art.

Walmart tried partnering with Airtel and Tata group independently to gain entry India and both failed, It felt the heat in the US with Amazon and China market was shut to outsiders. Getting into India was crucial in defining the new phase of the company their stake in the $100b+ market of global online retail.

Billions were at stake for Flipkart, smart late-stage investors pushed the right emotional buttons at Walmart to extract a huge strategic multiple.

In a much smaller case, AthenaHealth from Boston was heading for mobile-first world, their gap in mobile product offering led them to pay $60m in cash to Praxify in Pune. Or most recently Nutanix’s repositioning in the market from hardware box to SaaS company in the public market led them to make a spate of acquisition including the acquisition of Bangalore based Minjar.

In the startup land, a key thing that is missed is what happens in the terrain outside is more important than what happens inside in the making of the startup’s engine.

When a large technology company goes after the same future that a small startup is heading, a lot of emotions get triggered amongst all the players.

A heady concoction of fear and greed inside the large company trigger conditions for the acquisition of the startup to unfold.

This is mostly serendipity and sometimes engineered

A challenge for Indian founders is that even when aligned on the future direction conversations of merger and acquisition don’t happen.

This is because startups don’t come on the radar of the global corporations often enough.

Which explains the lackluster M&A ecosystem in India.

Therefore, it is important to know the play

As is the game, so is the play.

If playing in a winner takes all market, must find a way to be the biggest & largest not in just a geography but in the entire world. And Time it right.

In enterprise software, it is about nurturing a product led, inside sales DNA not the suitcase hogging salesman tribe of the yesteryears.

Finally, for technology-first business, with an acquisition as a likely outcome, it is creating the condition for coming in the radar of a strategic.

Not getting the game being played will see the Mario do a lot of activity.

Which may err into a foul and not becoming a SuperMario.

Rajesh Jain

Marketing, Entrepreneurship, India. Updated daily.

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