Tag: Technology

Time-Price: How Things Are Actually Getting Better

Social media, politicians and public discourse would lead us to believe that everything in the world is increasingly going South.

However, over the long term, the concept of ‘Time-Price’ shows how each of us is enjoying materially better goods and services, all earned at a fraction of the work prior generations had to put in.

I recently came across a compelling economic concept called ‘Time-Price’ in the Lux Capital LP Letter Q2 2023. In this era of social media, any negative news, information, or argument makes instant headlines. This is not unusual, given any unpleasant development typically represents a clear and present concern for readers (see: loss aversion), something that they are currently going through in their lived experience. It could be inflation, air quality, street crime, traffic snarls, depression, rising taxes, quality of education, cost of healthcare, etc. On top of this, a combination of politicians and social media algorithms ensures that these negative sentiments go viral.

While emphasizing negative stories in the short term, mainstream narratives totally ignore the steady improvement that the entire planet has experienced across almost all livelihood factors over the long term. Everyone living today has inarguably, a better quality of life compared to their grandparents. But, can this improvement be represented in a quantitative way?

Introduction to Time-Price

This is where Josh Wolfe of Lux Capital advocates using Time-Price as a metric. Here’s how Lux defines it (reproducing from their letter):

Source: Lux Capital LP Letter Q2 2023

Rather than representing access to any goods or service just in terms of economic price (nominal or real), Time-Price calls for calculating the number of hours of work needed to afford something. It gets over the limitations of classical pricing that reflects only the concept of money (or currency). By smartly incorporating the concept of productivity, Time-Price expands the perspective on affordability beyond just dollar terms, and into the effort that is required to be able to access any goods or service.

The main thought behind this metric is human ingenuity that creates technology-driven innovation which, in turn, drives productivity improvements that, to quote Lux, “allows all of us to consume more for less and free up more time to generate even more new ideas”.

Lux presents some fascinating data on significant falls in Time-Price of multiple categories:

Source: Lux Capital LP Letter Q2 2023

Applicability to Venture Investing

I find Time-Price particularly appealing as a venture investor in tech and innovation, as it helps to elegantly capture the actual delta any technology creates for users in real life. After reading the Lux Letter, I immediately started applying this framework to various startup ideas that went on to become large companies:

  • Apple – A few decades back, one had to be part of a top university to access powerful computers. Apple brought this computing power first into everyone’s homes, and then into their pockets.
  • Uber – Growing up, a chauffeur-driven car was a luxury that only the top percentile could afford. Uber created micro access to it for as low as $10.
  • Airbnb – Traditionally, hotels in marquee downtowns like New York, London, or Sydney were expensive and thus, were accessed largely by business travelers with expense accounts. Airbnb opened up residential supply in the same locations, making staying downtown affordable for even student travelers.
  • Hubspot (or any SaaS) – For decades, only large companies could afford expensive workflow software. The rise of SaaS has now enabled anyone with the Internet and a credit card to access ERPs, CRMs, and pretty much any software.
  • Udemy, Udacity (or any edutech) – cutting-edge curriculums and the best teachers were housed in marquee institutions. Edutech platforms brought them out of these walls, broke them into bytes, and delivered them affordably to any learner anywhere.

Time-Price can also be helpful as a framework while assessing new investment opportunities. While most early-stage startups don’t have enough traction to validate whether their offering is already bringing down Time-Price viably, investors can at least evaluate whether the founder is imagining an end-future (the Mission) that predicts significantly bringing down Time-Price in a particular domain.

Running another set of Time-Price thought experiments, this time on some of my portfolio companies that are still relatively early in their maturity curves:

  • Varda Space – making in-space manufacturing commercially viable and accessible.
  • Yulu – affordable urban mobility solutions that reduce traffic congestion and air pollution.
  • LetsVenture – organizing private markets investing to make it more accessible.
  • Playto – bringing quality and affordable STEM learning to kids in high-cost developed countries.
  • Lore – enabling groups to pool resources to be able to buy previously unaffordable, large-ticket assets.

A few caveats…

There are 2 characteristics any good tech investor needs to exhibit – (1) optimism for the future and (2) a non-zero-sum view of the world that believes in technology innovation expanding the pie for everyone to share. Time-Price encapsulates both these features rather nicely, proving to us quantitatively that humans collaborating on new ideas can help infinitely compound prosperity for the planet. That’s why as Lux says, despite an ever-growing world population and per-capita consumption across countries, we haven’t yet run out of food. Or fuel. Or metals.

However, this narrative around a perennially bright future needs some caveats:

1/ Peace – Historically, while 2 world wars did little to slow down technology progress (and might have even expedited it), the highest-caliber individuals that drive innovation for the rest of us (scientists, engineers, entrepreneurs) strive for security and stability. Amidst various pockets of geo-political tension (US-China, China-Taiwan, India-China, India-Pakistan, Iran-Saudi Arabia, etc.), it’s important to recognize the Time-Price dividends of prolonged peace.

2/ Science – Ensuring a steady stream of useful innovation requires encouraging fundamental scientific research. In addition to attracting the best talent and equipping them with capital and other resources, this also requires inculcating a broader scientific temperament within society that then keeps the spirit of problem-solving alive within communities, particularly among youngsters.

This is where the US and Europe have a massive headstart over emerging economies like India. Countries that generate the best original scientific research will continue to drink from that fountain of innovation for generations, maintaining their lead over others. BRICS countries need to have a 100-year roadmap to catch up with the West on this aspect.

3/ Entrepreneurship – Translating breakthroughs in pure sciences into products and services that can make their way into the lives of regular citizens requires an entrepreneur to take the risk of commercializing innovation. Bringing down Time-Price requires both science and entrepreneurship to work hand in hand. Else, the system becomes sub-optimal.

For instance, Europe is strong in science but lacks an entrepreneurial environment. While India has natural entrepreneurship in its DNA, it lacks the scientific research prowess needed to move up the value chain. Both these regions are, therefore, trailing the US which offers a unique combination of science and entrepreneurship.

Closing thoughts

While all of us get bombarded with various types of negative news daily, most of which is sadly also true, Time-Price provides us a tool to take a step back and look at human progress over generations. Fortunately, it’s all trending in the right direction, demonstrating how humanity continues to collaborate on new ideas that eventually end up making each of our lives better. Entrepreneurship is the core channel for delivering this positive transformation and this is what keeps me excited and motivated as a venture investor.

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.

Ten big ideas for 2023

2022 definitely felt like the end of an era. A decade-long party for US tech, fueled by low-interest rates -> increased availability of risk capital -> price inflation across asset classes.

The last chapter of this post-GFC era was perhaps the craziest – an unprecedented pandemic -> widespread lockdowns -> more fiscal stimulus -> injecting more air into already inflated asset bubbles.

With inflation crossing 7%, the Fed finally started increasing interest rates last year and is expected to continue quantitative tightening over the next few quarters. Public market valuations expectedly turned south (valuations are based on DCF, so as discount rates go up, valuations go down), with tech growth stocks correcting by as much as 80-90%.

The following dynamics are currently at play:

  • Large tech: shrinking macro-demand + adverse public markets -> pressure on companies to reduce costs to bring them in line with lower growth projections -> drastic cost-cutting measures, including major layoffs.
  • Venture Investors: public market corrections -> LPs cut back on venture allocations + downward revision of expected returns on exit -> venture activity slows down + any deals that happen, happen at much lower valuations given new public market comps.
  • Startups: less capital available + higher bar in private markets -> startups need to cut costs to survive -> layoffs in high-cost/ non-core functions + pause hiring unless absolutely essential.

2023 appears to be the “year of transition”, as both the overall macroeconomic cycle, as well as the technology sector within it, move into a new paradigm. I see the following ten big ideas for 2023:

  1. Leaner-and-meaner big tech

For anyone working in tech over the last decade, we have witnessed first-hand the level of entitlement & cultural complacency that has grown within large tech companies like Google & Meta. With more challenging times ahead, I expect large tech companies to take drastic steps towards re-wiring their cultures & operating models. Layoffs are just one piece of the puzzle – expect significant changes to compensation policies, KPI/ OKR philosophies, org. structures, functional locations, work-from-home policies, contractor hiring, operating routines etc., all with the aim to make execution more efficient.

Founder-led companies (eg. Meta, Salesforce, Shopify, Coinbase etc.) will take quicker & braver calls to re-invent themselves, compared to those run by professional management teams (eg. Google). In the latter case, I expect shareholders to put considerable pressure on these professional CEOs to take corrective measures. In fact, I won’t be surprised if some of the big tech CEOs get unexpectedly replaced as many of them come across as peacetime CEOs who will struggle in wartime.

2. Capital efficiency over growth for startups

The last decade in tech startups was all about growth. This year, expect investing thesis & operating models to decisively shift towards capital efficiency. Mirroring the demands for margin improvement by public markets, I expect private market investors to significantly raise their expectations on operating efficiency.

Founders will have to react fast and in several cases, give a 1800 turn to their culture & business models. A silver lining – founders who were heads-down amidst the craziness of 2020-21, building their companies in a capital-efficient way, will have an enviable opportunity (& deservedly so!) to play offense both with customers & investors.

3. Bay Area bounces back

Remote work boomed during the pandemic, as tech companies grew at unprecedented rates. However, we saw signs of a comeback-to-office across both big companies & startups last year. With current headwinds, I expect factors like teams getting together to drive execution & in-person networking to become increasingly important.

With rampant layoffs, tech professionals will also feel more insecure & would need more access & optionality to get their careers back on track. All this bodes well for the Bay Area – I expect significant migration to the region, especially for people in their 20s to mid-30s. In terms of the sheer depth of the tech ecosystem, the Bay Area remains unparalleled. As emerging areas like AI, health-tech & EVs gain strength, they will provide even more reasons for talent to be physically here.

4. “De-angelification” of the startup ecosystem

Amidst the post-pandemic investing frenzy, liquidity-rich, over-optimistic, FOMO-driven tech professionals started dabbling in angel investing. Becoming an angel in a “hot deal” became a status symbol, & rapid paper-markups made everyone feel like a winner.

A majority of newbie angels from this vintage neither understand the nuances of this asset class nor have the depth of resources to play the game effectively over the long term.

As more startups start shutting down this year, combined with layoffs & decreasing compensations courtesy dwindling value of RSUs, I expect a massive churn in 2020-21 vintage angels. In my experience, tourist angels typically drop out of the game around the 4-6 deals/ 24 months mark, as they see portfolio companies starting to shut down & their hard-earned money vaporizing into thin air.

5. More pain in Crypto

If you thought 2022 was brutal for Crypto, brace yourself! FTX implosion is only the beginning of a much-needed cleanup in the space. I expect many more tokens to go to zero, projects to shut down & low-conviction talent to move out. Given the scale of the FTX fraud, am expecting even more regulatory oversight & ramifications for the overall sector this year.

Personally, I do believe there is a kernel of truth in the Web3 opportunity. The faster this cleanup happens, the sooner the next chapter can begin & we can make tangible progress towards discovering its real-world use cases.

On BTC and ETH, I expect both to remain flat at best, & significantly down from current levels in the bear case.

6. The FOMO shifts to AI

Whenever there is too much consensus around a trend or an asset class, I get worried! It was clean-tech pre-GFC, then Blockchain & Crypto pre-pandemic, moving to Web3 & future-of-work post-pandemic. Based on my Twitter feed, I can safely say that with the rise of OpenAI & launch of ChatGPT, the FOMO has now shifted from Web3 to AI. I am expecting the space to see a lot of hype, investor interest & startups being launched in 2023.

Studying how the previous FOMO waves evolved gives a fair understanding of what to expect – those without first-principles conviction & a long-term strategy are more likely to get their hands burned. Those who were anyway committed to the space & were quietly building behind the scenes over the last few years stand to disproportionately benefit from the increased availability of risk capital & talent.

7. The return of “moats” (& rise of deeptech)

As the perpetual-growth era of software ends, I expect the question around “moats” to re-appear in the diligence checklist of investors. The lifecycle of companies like Netflix & Robinhood has clearly shown how hard it is to have a sustainable competitive advantage in tech (one reason why Warren Buffet stays away from investing in it!).

As the likelihood of purely growth-driven exits goes down, I expect venture investors to start looking at deeptech verticals with inherent moats much more seriously. These include space-tech, health-tech (including lifesciences), energy, climate etc.

Each of the above markets seems to be getting unlocked in its own unique way & while these companies can be more capital-intensive & have higher technical risk compared to say SaaS or Social, the resulting market leaders have much more defensible competitive positions & hence command healthy valuation multiples.

8. EVs taking over the transportation stack

EVs are seeing major progress on both the supply & demand side. On the supply side, most major auto companies have an EV product in the market, with use cases evolving from urban sedans to SUVs, pickup trucks & now, even semi-trucks.

On the demand side, record-high gasoline prices have acted as a key unlock. This is visible in the rising hybridization of the latest gasoline car models. With non-Tesla EV products rapidly expanding, consumers have more choices across use cases & price points. I wrote a post a few months back on how I warmed up to EVs & Tesla, in particular. I expect EV penetration to have significant growth momentum this year.

9. Digitization of mainstream healthcare

A positive side-effect of the pandemic has been consumers getting increasingly comfortable with digitally-delivered healthcare services. In my case, interacting with healthcare providers over Zoom and accessing services such as Carbon Health & One Medical via their apps (including getting advice via chat) has really opened my eyes to its value. Even beyond that, I work-out with my trainer via video & our family nutritionist is in India with all interactions happening via Whatsapp.

I expect the overall healthcare stack, including mainstream services, to digitize at an even faster rate in the coming year. These tech platforms will also open up opportunities for niche services to exist eg. virtual monitoring & consultations for chronic patients, pre & post-natal advice, nutrition guidance etc.

10. India as a global greenshoot

Amidst an unstable China, weakening EU, war-torn Russia, one-dimensional Middle East, fiscally-unstable LatAm & fragmented Africa, India appears to be a solid greenshoot both geo-politically & economically. A stable & reformist govt. has worked hard to put together core growth pillars over the last 8 years – from building physical infrastructure & a national digital payments network to ensuring economic development at the grassroots & supporting tech startup activity in the country. India is poised to now reap the dividends of all this hard work, and similar to China, grow its per-capita income from ~$2k at present to ~$10k over the next 20 years, all in a democratic environment.

India’s tech ecosystem has also come of age in the last 5 years. The mega question of “can exits of venture-backed companies happen in India?” has been progressively answered, beginning with the acquisition of Flipkart by Walmart, followed by IPOs of consumer companies like Paytm, Nykaa & Zomato in domestic public markets, & the IPO of Freshworks in the from-India SaaS space on Nasdaq. There is a growing pool of startup talent, courtesy of a decade-long Mobile & software wave, which will fuel the country’s tech ecosystem over the next decade.

The above ideas are making me super-excited for 2023, both as an angel investor & operator. After a 2.5-year hiatus, I returned to angel investing in 2022, doing 3 deals in Q4. With the turning cycle & above ideas as a backdrop, my goal is to make 2023 my most active year yet as an angel, while also keeping a high bar on quality. Excited to collaborate with all founders, angels, VCs & operators out there 👊🏽

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.

Founder vs Investor: both sides of the table

I was a VC in the really early part of my career, then became an operator+angel investor for several years, before founding Workomo. Here’s how my lens for looking at company-building has evolved from an investor then vs. founder now:

#1 Doing 0-to-1 is really hard — as an investor, I never truly realized how hard it is to “make something people want” from scratch & have someone care enough to try using what you have built. The struggles of building from 0 can only be truly understood when experienced first-hand.

#2 Appreciation for engineering talent — as an investor, while one understands the importance of quality developers, the focus tends to be more high-level in terms of looking at leadership (CTO/VPs). As a founder, I now feel gratitude when I work with top-tier functional engineers.

I have seen how a solid iOS engineer can save weeks of extra cash burn while delivering excellent output. Or how quality backend engineers are so hard to find. Or in a small engineering team, a developer with 20% better output can really move the needle via effort-compounding.

#3 Importance of iterations — as an investor, I don’t remember ever asking founders: “how many iterations did it take you to get here? And what did you learn?”. Perhaps, ‘cos I had never been a 0-to-1 founder, I focused more on “outcomes” and never on the “process”.

Now as a founder, my core operating philosophy revolves around 1) “lean” iterations, 2) systems-thinking & 3) agile dev. (hypothesize-build-get users-learn-iterate-repeat). When facing high failure rates & random outcomes, the only thing you can truly control is the process.

#4 Re-orienting from “speed” to “velocity” — a piece of frequent advice I gave as an investor was “do things at even more speed” or “how can we ship even quicker?” or “can we fundraise even sooner?”. It was missing one thing: “are we moving quickly enough IN the right direction?”.

Investors want quick results, whereas as a founder, you know building outstanding products takes time & thoughtfulness. Even if you ship quickly, building the wrong thing without pausing to learn, analyze & re-orient will result in no one using it.

#5 Design is not just UI/ UX, it’s end-to-end product experience — as an investor, my view of a portfolio company’s product was just limited to what “I could see” and what “I could use”. As a founder, I now think about “what the user will FEEL”, right from the landing page, down to repeat usage.

#6 Effective teams aren’t just about assembling the most talented — as an investor, one primarily looks for signals of talent (track record, pedigree, intelligence, expertise). As a founder, I now include commitment & fit in the hiring matrix. Sometimes even as a filter.

While “how can we hire an engineer from Google or FB” is a good question to discuss with investors, other high-impact questions that need focus include “how is the team morale?”, “how can we better reinforce the vision.” or “how is trust being built as a remote team?”.

#7 Limited value of startup playbooks — a common technique investors use to try and add value to the portfolio is sharing what other companies/ founders are doing, their approach, what seems to be working for them etc. I have been guilty of this as well.

While there is some merit to having market intel & learning from other founders’ experiences, you quickly realize as a founder that all so-called playbooks are biased, post-facto analysis & polished versions of reality. You gotta figure out your own unique way.

#8 Who is a co-founder? — when looking at co-founders in a team, the top things I would primarily evaluate as an investor: 1) do they have complementary skill sets (engg+product+biz)? and 2) will this team look good enough on a deck, to be able to raise the next round?

Now with the perspective of a founder, I evaluate many other facets in founding teams: 1) does this person have the same level of passion, desire & commitment to building this company?, 2) when sh*t hits the fan, will this person be last-person-standing, 3) how much can this person sacrifice to see things through till the end?

#9 “Closing” with no logos behind you is damn hard — with IDG Ventures or Alibaba behind me, all doors were open. I could reach anyone, get quick responses, and easily attract people to my projects. Made it easy for me to say to founders: “let’s close this deal” or “let’s hire this person”.

As a founder, I have now felt how hard it truly is to hire, close deals or close any opportunity for that matter, when you are trying to build an unproven company, on a vision that’s new & hard to visualize, with a product that keeps frequently changing & has no scale yet.

#10 Guarding your mental state is everything — startups are a mental game. All the awesome founder qualities that people talk about — grit, perseverance, belief, conviction, are all internal. Perhaps the biggest miss I had as an investor is not observing the mental state of founders.

This becomes especially challenging as founders like to put up a brave face in front of their investors. I now strongly believe that it’s the job of investors to look past this veil of confidence and help unshackle their true mental state. I regret not doing this the most.

Ultimately, investors become successful when they back the best founders, who then get lucky :). Similarly, founders improve their odds by having the best investors in their corner. Personally, it has been incredible to experience both worlds & realize how different they are.

PS: if you are curious about what I am building, Workomo is a Chrome extension that shows you everything important about people, just before you meet, right inside the browser. We are already in private beta — do check us out and sign-up to request access. #peopleinsights

Note: this article first appeared on the Workomo blog.

Welcome Nishant Gairola to the Operators Studio team

Am super-pumped to welcome Nishant Gairola to the Operators Studio team, as a Student Associate. He is currently pursuing his MBA at IESE Business School in Barcelona, and has been a serial founder for a decade, building multiple companies from grounds-up.

Nishant will support me across core investing tracks for Operators Studio, including ramping-up deal flow, evaluating interesting investment opportunities and supporting current portfolio companies on their most pressing challenges. Nishant and I will also work together to further refine OS positioning, value proposition & differentiation in the global angel/ seed investing space, including cross-border themes. Finally, with his presence in Spain, OS will now have access to the European market, in addition to my deep US-China-India networks. I am particularly excited to explore Eastern European markets, as I have met some special engineering & founder talent from there over the last year.

Excited to be adding such high-quality young talent to the Operators Studio journey. If you are a founder, investor or any professional from the venture ecosystem looking to collaborate with Operators Studio, especially in Europe, please feel free to reach out to Nishant!

Geo-economic themes for 2019 & beyond

Recently, I came across two talks by Ruchir Sharma (Head of Emerging Markets and Chief Global Strategist at Morgan Stanley), where he outlined some key geo-economic themes for 2019 & the upcoming decade (Asia Society, NDTV). While I am a big Nassim Nicholas Taleb fan and as a result, don’t care much for macro-predictions or extrapolations by economists, I do like to follow Ruchir’s work mainly because: 1) he presents really interesting data sets, which I can use to draw my own conclusions/ implications, and 2) he is someone who deeply covers both the East and the West. I do think it’s important for both founders and early-stage investors to at least keep an eye on global geo-politico-economic themes as they do impact tech businesses over the long term.

Here are the top 10 themes as presented by Ruchir. I find the supporting datasets particularly fascinating and therefore, have included their snapshots from the NDTV video. Am also including ‘MY TAKE’ for each theme, at least wherever I have a strong view.

  1. Peak America — Is America’s Decade Coming to an End?

This decade has clearly been America’s — as per Ruchir, while the US economy is ~25% of global GDP, its stock market cap is ~55% of global stock market value. Over last decade, while most major stock markets globally have given flat or minimal returns, the US stock market has tripled in value and is at a 100 year high compared to rest of the world.

Interestingly, Ruchir has identified a trend wherein every decade has some sort of a global economic theme that dominates investor interest. However, that theme never gets repeated in the following decade. As per his analysis, the US has ‘peaked’ in both economic and financial terms, and therefore, could see a slowdown starting 2019 and spilling over to the next decade.

MY TAKE: Clarifying the time frame being considered for this analysis is really important. In the short-term — yes, I would agree with Ruchir. With what one sees on the ground (excess liquidity all over, over-optimism at large, tech stocks bull run), it does seem like we are near or at the peak of the economic cycle and over next 24 months, various indicators will definitely tighten. However, over the long term (10yrs+), I continue to be extremely bullish on the US, mainly because of my belief in its inherently-entrepreneurial & innovation-driven economic and social fabric. My personal view is — US will continue to attract global knowledge talent for several decades to come (irrespective of political cyclicality), will lead in IP-driven innovation & deep-tech, and will surely be one of the leaders of whatever wave(s) that happen next (crypto, blockchain, AI & beyond).

2. Rise of Anti-Bubbles

Ruchir defines ‘Anti-Bubbles’ as countries where, despite healthy economic indicators, their GDP is surprisingly, lesser than the market cap of some of the top US tech companies. This, to him, doesn’t make sense. He feels that once the current tech wave slows down, the Anti-Bubble markets that have been unfairly neglected in favor of US tech stocks, will start seeing huge capital inflows.

Just to give a sense of how much global investors have been prioritizing US tech stocks over entire countries — India’s total GDP is less than the FAANG combined market cap.

MY TAKE: ‘Anti-Bubbles’ is a very interesting concept. While I understand where Ruchir is coming from in macro-economic terms, I think there is a larger point here — to me, technology is changing the very nature of the way our world operates & is segmented. Concepts like defined nation-states, insular GDPs, trade borders etc. are being disrupted right in front of us. To keep pace, traditional economic metrics and analysis methods also need to evolve to correctly reflect the updated realities of how markets, economies and societies are going to operate going forward. That’s where the gap is right now!

3. Why Global Interest Rates Can’t Rise Much

Global debt has risen from ~2x GDP in 2000 to >3x in 2018, with China borrowing the most since the 2008 crisis. Given these high debt levels, global interest rates can’t rise beyond a certain level, as central banks need to avoid large-scale repayment failures.

MY TAKE: No particular comments.

4. De-globalization

Trade as a % of global GDP has come down from ~60% in 2008 to ~55% in 2018. There has been a backlash against globalization all across the world this past decade, with protectionism on the rise across countries. Most notable example is the ongoing trade war between US & China.

Interestingly, there are a bunch of Asian countries that are benefiting from this trade war, including Vietnam & Bangladesh. US companies are now shifting their backend supply chains from 100% China, to diversified across multiple manufacturing centers, especially in SE Asia.

MY TAKE: I have a few specific inputs on this theme:

A) Globalization is beyond the control of politicians. Beyond creating short-medium term barriers, they can’t fight the power of technology (the Internet) and stop global citizens from interacting & trading with each other. The real issue is — how do governments create policies to ensure that all sections of society benefit from globalization. Stopping globalization is not the answer, ensuring equitable distribution of its fruits definitely is!

B) The geo-political trend of countries standing up to China is going to get even stronger in coming years. Given China has an openly aggressive international posture politically, economically and militarily, I expect its disputes with rivals such as US, India, Japan, Korea & certain countries in SE Asia to continue.

C) As China transforms its economy from manufacturing-based to consumption-based, countries such as Vietnam, Thailand, Bangladesh and India really stand to benefit from global companies diversifying-out their procurement from China.

5. The Anti-Establishment Wave

There is a clear trend of right-wing political parties coming to power across multiple countries. Interestingly, the average age of world leaders has also steadily been going up.

MY TAKE: No particular comments.

6. Fiscal Indiscipline Rising Everywhere

Global avg. Fiscal Deficit as % of GDP has gone up from ~2.25% in 2013 to ~3% in 2019(P). Case in point is India, where farm loan waivers have increased massively since 2016.

China spends 3x of India in terms of capital investments. While India has focused on waivers & subsidies at the cost of govt. spending on infrastructure, China has doubled down on investments & capital spending to drive growth.

MY TAKE: No particular comments.

7. India Still a One-Engine Economy

India’s growth is primarily driven by domestic consumption. As per Ruchir, it’s hard to consistently grow at 8%+ just with a consumption-based economic engine. Like China, India needs an investment-based engine as well, to complement consumption.

Another concern related to India— with rising consumption, household debt is also rising significantly.

MY TAKE: India’s consumer story is probably one of the most attractive investment areas in the world. Most startup activity is also in this space, be it eCommerce, payments, entertainment or food delivery.

Personally, I wouldn’t worry too much about the household debt situation as current debt levels are still far below developed markets and also, India has a strong savings culture that counter-balances the debt issue.

As a tech founder & investor, I would like other sectors of India such as enterprise software, manufacturing, agri etc. to also catch up with consumption, in terms of growth & investment attractiveness.

8. Growing ‘Tech-lash’

Tech has been the least regulated space across the globe, particularly in the US. This is changing now, as lawmakers realize the impact of these technologies and the need to study & better regulate them.

MY TAKE: Personally, I welcome constructive regulations that make tech companies more responsible towards consumers on issues such as privacy, harassment, data security, financial scams etc. The power of tech in our lives is only going to grow; it would be foolish to assume that it can be left unbridled. In fact, clear, non-ambiguous and forward-looking regulations will create a more sustainable environment for emerging technologies such as blockchain & crypto, AR, VR etc. to flourish.

9. Next US-China battle Will be All About Tech

MY TAKE: Frankly, the only country giving serious competition to the US in new-tech is China. Having developed a walled-garden Internet ecosystem that has spawned local giants (Alibaba, Tencent, Baidu etc.) rivaling the likes of Google & Facebook in scale & market cap, China is now focused on becoming an AI leader. I believe issues such as weak IP protection, outrageous data control and walled-off ecosystems, combined with an aggressive international political stance at a country level, will lead to significant headwinds for Chinese companies looking to expand globally. This is where US tech companies will continue to have an edge, followed by players from the EU, India and SE Asia.

10. King USD No More

The dollar has had a fantastic ride over last few years, backed by solid economic & financial performance from the US. Ruchir feels that the USD has peaked and will get weaker going forward.

MY TAKE: am no currency expert so have no comments :).

To Conclude:

My big takeaway from Ruchir Sharma’s top 10 themes for 2019 is that we are at or near the top of the economic cycle in the US. Excess liquidity & tech has been the main driver of this decade-long bull cycle, and given natural cyclicality, could see a cool-down period over next 12–36 months (which would be good for everyone, I think). In the short term, makes sense to proactively manage for this potential upcoming volatility by diversifying, both from a career and personal finance perspective. Personally, I continue to be a long-term bull on the US, primarily because of my confidence in its inherent entrepreneurial innovation engine & continued ability to attract the best global talent.

China has had a fantastic last decade domestically; however, I see major headwinds for it from a globalization perspective. Having seen its tech prowess, talent pool and national focus from close quarters, I wouldn’t discount China’s ability to pull another growth rabbit out of its hat (similar to manufacturing in the 90s and Internet-consumption in the 2000s). Maybe AI?

India continues to have a strong domestic consumption story, and will continue to chug along. It’s a democratic and highly heterogenous country — given fragmentation & high degree of local complexity across multiple elements, it’s hard to see it growing at China-like levels (which can only result from a China-like centralized political system). Which is fine, as India will continue to grow sustainably & by-consensus. Ideally, would like to see the Indian economy unlock one more major engine of growth — enterprise software for the world? Domestic manufacturing? Commercial use of space?

Overall, looks like we are in for an interesting 2019, and the decade ahead!

Source: all data snapshots are from Ruchir Sharma’s NDTV interview.

Introducing ‘Operators Studio’ — Backing gritty founders who are solving real problems

I am really excited to kick-off 2019 by introducing ‘Operators Studio’ — my endeavor to invest in & support founders globally, by being with them in the trenches right from a really early stage. As you will see on the website, Operators Studio is all about “Backing gritty founders who are solving real problems “ — supporting innovative technology startups through early capital, deep operating expertise, global networks and a personal sounding board.

  1. The Genesis

While I left my Venture Capital career 5 years back to become a full-time operator, I still wanted to keep that one element that I most enjoyed as a VC, in my life — partnering with entrepreneurs to solve really interesting problems and build innovation-driven companies that move the needle for the world. As I transformed myself from an ‘investor’ to a ‘builder’, I also started investing in startups in their angel/ seed rounds, supporting founders at a deep operating level, working with them through their biggest tactical & strategic challenges, as well as most importantly, being a friend & sounding board to them.

Over last 5 years, I ended up investing in & supporting >15 startups across the world, along with my full-time operating stints. As I travel on the path to discovering my own differentiated world-view, investing style and what really excites me both as an operator & investor, I thought this is the perfect time to institutionalize my efforts. Hence, Operators Studio was born!

2. How is the Operators Studio Mandate Unique?

In my experience as a VC, angel and tech operator across US, China and India over last decade, a key gap I have observed is that the entire business & venture environment leans towards only a certain kind of business — that which is attractive to institutional investors. This means characteristics such as potential ‘moonshots’, going after humongous market sizes 
(as per guesswork), exit potential that moves the needle for institutional funds, and aligning with trends in-vogue (AI, ML, AR, VR, Crypto etc.).

Due to these filters, an entire gamut of tech businesses that are solving true ‘operating’ problems for customers/ users, which are often unsexy and lag behind latest trends, get completely overlooked. By the way, in majority of cases, these customer-centric businesses are highly innovative in their own right, and can often be built to be economically-viable without overt dependence on external capital. And in the process, generate solid financial returns and entrepreneurial gratification for all stakeholders over the long term.

The Mission of Operators Studio is to back exactly these kind of companies — those that put the customer’s problems first, leverage practical tech innovation to solve them, and are founded by tech warriors — entrepreneurs who are visionary, humble, resourceful and believers in deep execution. It doesn’t matter if a space or product is considered unsexy, unattractive or out-of-trend by the financial ecosystem or media — as long as the company is solving a problem that matters for the world, customers/ users are vouching for it, and founders are willing to be in it for the long haul and build the company in a way that’s most suited for realizing their vision, Operators Studio will be a believer in it!

3. How does Operators Studio Add Value to Founders?

a) Early & “patient” capital — will mostly invest in friends & family/ formal angel/ seed rounds; will be flexible from a stage perspective (‘Day 0’ co-founders coming together, pre-PMF, post-PMF to even Series A and beyond).

It takes at least a decade for a business to realize its true potential. We take an “evergreen” approach, supporting founders for whatever time it takes for them to realize their vision.

b) Operating guidance — deep-dive product sessions, go-to-market strategy, hiring, user acquisition, customer introductions, pitch decks, investor connects, exit discussions.

c) Global networks — helping companies go global via access to market knowledge, business expertise and networks across the “tripod” — USA, India and China.

Operators Studio will be flexible from a mode-of-involvement perspective, as long as its Mission is being fulfilled — in addition to investing directly in companies, this could involve direct ‘Day 0’ incubation, becoming an LP in other funds to get access to the most-promising companies, partnering with high-quality accelerators/ incubators, collaborating with established tech companies to unlock synergies etc.

4. Why This Name?

I have consciously avoided names like ABC Ventures or XYZ Capital. Operators Studio stands for a fresh venture-building approach —to me, this name is very significant as it communicates key tenets of this approach:

Operators — looking for companies that are solving real operating problems for customers/ users, backing entrepreneurs that have a rigorous operating mind-set, supporting founders by adding operating value to companies, helping them work through on-ground operating challenges rather than giving theoretical advice.

Studio — rather than being a conventional investing entity or a personal asset allocator, the vision for Operators Studio is inspired from boutique movie studio models (the likes of Hello Sunshine founded by Reese Witherspoon; Blinding Edge Pictures by M. Night Shyamalan; or Color Yellow Productions by Aanand L Rai). Its ethos is based on how these studios operate — looking for a unique story (problem to be solved) to tell to a specific audience (target customer), assembling/ supporting a team that brings to the table diverse skillsets needed to tell this story most effectively (backing gritty, execution-focused founders) and executing at economics most optimized for the story to be delivered most efficiently (capital efficiency, driving optimal returns).

5. Active Portfolio

My entire portfolio of companies is now under the Operators Studio umbrella. Following are the companies (currently-active) we are proud to have backed so far (in alphabetical order):

1) Artifacia (Toronto/ Bangalore) — AI-powered platform that helps e-commerce brands create and manage shoppable photos

2) Distributed Systems (San Francisco) — identity solutions for dApps (acquired by Coinbase)

3) Hate2wait (Gurgaon) — queue management product for SMBs and large enterprises

4) Instashift (Estonia) — global peer-to-peer platform to buy/ sell cryptocurrencies

5) Lets Venture (Bangalore) — India’s most trusted platform for angel investing and startup fundraising

6) My Ally (San Francisco Bay Area) — world’s only AI Recruiting solution for fully Automated Interview Scheduling and Recruitment Coordination

7) Scandid (Pune) — eCommerce deals & price comparison platform, now offering omni-channel commerce solutions for the global travel retail market

8) 91Springboard (Delhi) — category-leading co-working space in India

9) Trailze (Tel Aviv/ San Francisco) — making tough-terrain outdoor navigation easy (hikes, trails etc.)

10) Tydy (Gurgaon) — global onboarding & training product suite for the distributed modern workforce, bite-sized+gamified

11) Widget (San Francisco Bay Area) — transforming images and documents into customer communication channels, all without apps, phone nos. or forms

12) Yulu (Bangalore) — re-defining urban mobility in India via smart dockless bike sharing system

6. The Future

Am super-psyched to grow Operators Studio as a passion-driven parallel track, along-side my main operating career. I see tremendous opportunities for using tech innovation to solve really interesting problems and build outstanding companies, in markets as diverse as US, India and China. At the same time, am excited at the growth prospects of the current set of portfolio companies, several of whom are already emerging as category leaders.

Whether you are a founder, startup employee, established tech exec, angel, VC or corp dev professional, am eager to connect with you — for feedback, to exchange notes, collaborate or just brainstorm. You can Email me, as well as connect with me on Twitter and LinkedIn.

I thank all the founders, startup teams, investors as well as other tech ecosystem professionals that I have had the privilege to work with over the past decade. Here’s to leveraging entrepreneurship + tech innovation to solve the world’s most pressing problems over the next 50 years.

PS: for more details on Operators Studio, check out our website.

“Rich keep getting richer!”

Read an interesting WSJ article on how Goldman Sachs investment bankers moonlight as VCs.

Drawing on this article, one of my key observations over the last decade has been how the present global economic system drives the “rich keep getting richer” phenomenon. It’s most likely a by-product of capitalism and free markets the way they have been created & have subsequently evolved. The beneficiaries of these systems are obviously, not incented to complain.

With the way technology is penetrating our planet, and that too in a highly disruptive way, I see even more momentum in this “rich getting richer” phenomenon in coming years. Preferential access to 1) information, 2) knowledge & 3) networks will keep catalyzing this trend. Combine this with additional leverage generated via access to capital.

Have thought about how this can be broken — IMHO, a way is to provide as much “access” to education as possible, which in turn, will better setup citizens to create access for themselves to the aforementioned 3 elements.

Would love to discuss more thoughts on how else can this “rich keep getting richer” phenomenon be constructively broken globally.

PS: views are personal