Debneel Mukherjee: Decacorn VC

In this episode, Debneel Mukherjee Decacorn VC shares his journey from India to becoming a venture capitalist and building a fintech startup in Singapore. He discusses the contrasting perspectives of venture capitalists and founders, offering insights into contrarian investing and early challenges. The conversation delves into investment strategies, startup ecosystems, and financial strategies for growth. Debneel highlights exit strategies, particularly differences between Asia and America, and the role of secondary markets. He provides hiring advice, discusses the democratization of VC investments, and explores future technology trends. The episode concludes with thoughts on community building in VC, humility, and advice for emerging fund managers.

Episode Transcript

(00:00):
You know that you have a big problem in hand.

(00:02):
And you know that these guys can deliver, theymay require some mentoring and some guiding and
something here and there.
And he says that help me decide you don't evenhave a tent here.
And how do I trust you?
I said, you take my source code.
Yeah.
Oh, wow.
Welcome to The Investor, a podcast where I,Joel Palofinkle, your host dives deep into the

(00:26):
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.

(00:49):
Grew up in born and brought up in India in amega city called Calcutta which is on the
Eastern side and right at the mouth of the BayOf Bengal and where the India's biggest river
Ganges meets Bay Of Bengal and this place isvery famous because the British came into India

(01:12):
to colonize India through this city.
In fact, they set up this city in 1490 and thenfrom there it went on and then went to do CPA
which is in India called Chartered Accountancy.
And then instead of joining an audit firm, Ijoined a bank.

(01:37):
And they were in development financing andinvestment banking.
So basically doing brown framed and greenfieldprojects for the development of India's economy
as well as taking them eventually to listing.
So in a way they were although a bank, it'spretty much a very earlier format of what we

(01:59):
pretty much do today in the private market.
Although that we are not like a PE, are notdirectly participate in the management.
It's rather reverse inquiry basis that we doparticipate if the founders want us to help
them out in some way or the other.

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So there was a lot of learning across a crosssection of industry from mining to tea gardens,
from hospitals to glass making that was one ofthe best period of Indian banking sector.
It was literally coming out and redefiningmoments.

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So that gave us a lot of flip and that's whereventure capital started coming in even.
So the bank eventually came into a venturecapital arm and that's what we had financing
from the bank with which I came in Singapore in02/2001.
Yeah.
They may call it expat but here they call itexpat but in a way you can say I was just

(03:07):
moving in as an immigrant in a way.
I had no business, I had no employees, I had norevenues and only just one investor who has
given me some initial seed capital.
And from there in the next ten years, I buildup a startup that would have today been called

(03:29):
fintech, B2B fintech and that has a verywonderful outcome at the end of ten years at
least for me.
I could earn my first carry and that made methink that I need to stay on to technology but
no more doing a startup but trying to invest inthe millennials, the Gen Z and the Gen Ys and

(03:54):
try and be part of their journey to make thisworld few shares better than what we inherited.
Yeah and what I'll say too is I was gonna saytoo, Dibneel wanted to add this is like, so
when you're a founder all of your energy is inone venture, right?
You're kind of spending all of your time andenergy.
So all of your eggs are in one basket.

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But I think the benefit with venture and beingan investor is you can support multiple
ventures at scale, I would say.
Absolutely.
And in the process, we get an awesome learning.
The main theme, so common denominator for mylife's journey, even today, I pursue, if one
single thing that I really wake up to everymorning is that how could you be contrarian yet

(04:39):
correct?
Ultimately- That's That's
true.
When I was on the CPA, the basic thing waslike, go and join an audit firm, PwC, Ernst and
Young or do consulting with McKinsey.
But I didn't do that.
I'd rather joined a bank that was intodevelopment financial and investment banking.
And very few people knew about it.

(05:00):
We didn't have physical branches so to say.
So a lot of my senior relatives, they told me,is that a scam?
Do you really hope for a bank or they are goingto really scamming us?
So that was the way and the same thing we doit.
And that's where you see our tagline inDecacon, we say the world is our oyster.

(05:23):
Basically what we try to mean is that we don'tbelong to any nationality or any race,
religion, caste, creed.
It's all about where the best work is happeningin our space at this moment, at this time and
time.
And therefore we go there and that's where 64%of our portfolio today is in America.
It's not that something we embarked upon with anumber in mind, but then that's where we found

(05:49):
the most awesome businesses, the most awesomefounders, and also the most awesome ecosystem
in the community.
And the second largest today in our portfolioabout 20 is Israel.
Although, we are far away in Asia.
So that's a very different narrative.
And even the same way, we have set us up in avery different way.

(06:13):
We are not those 100 mile radius VCs who go andinvest in people out of garage and then try to
tell them or mentor them their way up.
Because I believe that if I can mentor someoneand do him a startup, then I should do it
myself.
It should be if somebody comes in.
So we try to do a string of pearls.
We try to see that there's an ecosystem oftraction or a community that we build within

(06:38):
that string of pearls.
So that one of my startup could be a vendor toanother startup and the other startup has a
problem and he can use one of my other startupto actually solve that problem.
So we are just now looking at an automation forthe programmers and for the founders, a company

(06:59):
based in LA.
And they're basically doing DevOps automation,but in a very, very unique way.
And that's what we often like.
And this could be some company that could beused by every other company in my portfolio.
The companies can complement each other.

(07:21):
Exactly.
And that's something when people are not likejust now we finished doing a cyber security in
Israel, and they were full with money becausegood companies you really have to sell them.
They will come and tell you why should I takeyour money?
I have money.
Tell me what you can bring and if you tell themoh I'll give you network.
I'll give you some connection with thegovernment in Singapore and the home police in

(07:41):
Singapore and the defense ministry, that's notgood enough.
Every other country, they may not be eveninterested right now to look into Singapore,
they may be more interested to look intoAmerica.
So those doesn't work.
And so this is where we create that value,where we make them talk to our other founders.
And then we have some awesome people in ourteam.
We basically talk our way through when peopledoesn't want to give us a foot in the door in

(08:06):
their cap table, so to say.
So basically, when we start talking theirbusiness, the things that they don't expect
other people or investor may know in such greatdetail, that's where I think the ice melts.
So this is short, I'll stop here.
In brief, this is what we do.
And this is what's our schematics orphilosophies are.

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I mean, you have to be at the right place atthe right time.
And today's time, I think most of the trueinnovative work solving the hard problem.
I think it's most happening in America andwhere you can actually get a very transparent
or a level playing field.
I mean, you don't have interventions comingfrom regulation or from governments in such big

(08:54):
way that you don't even know what's happeningin that industry or you have protect, there is
a strict protectionism as in some parts of theworld.
So taking a step back, one thing that I alwayslove is entrepreneur stories.
So tell me a little bit more about how youstarted the company, how you came up with the
idea and then who the customer was and how didyou get your tell me about your first customer.

(09:19):
So yeah, I love to love like you probably gotto think back a little bit, but you'd never
forget your first customer.
Of course.
I mean, it's like first love.
So we were a bank and the bank was expandingvery heavily.
By the time I had joined, it has moved fromdevelopment financing into consumer banking
license.

(09:40):
Very rarely India has given consumer bankinglicense.
In my whole life, I think India has given fourconsumer banking licenses, the central bank and
three of them were given in that period andthink two, five later on.
And so we were one of them.
And so we were expanding very heavily and notjust into banking, into insurance, into risk

(10:05):
management such as AML and ALMs kind of so antimoney laundering.
So there were like very new words like I firstheard AML back in the turn of the millennium
kind of thing when it was really softwarestarted coming out of it.
They So were all going into all this and thebank wanted to be a differentiator.

(10:27):
So therefore they didn't want to hire run onthe mill or buy run on the mill products from
elsewhere which every other competitor isusing.
And that's where we came in the exposure intotechnology from a business standpoint.
So we used to give the business knowledge andTata Consultancy used to write codes for us.
And that was like our proprietary.

(10:47):
We had a separate division that was created todo this kind of technology related mode or
differentiator for the bank so that it can moveoff or march ahead and quickly become the
number who know which it did.
So once, by the time the dot com bubble bursthappened, I felt that again, the Quantarian

(11:11):
thought process, I felt it has given us a timeto refresh ourselves, reboot ourselves.
And that's where I moved on.
Why could I have gone to America?
But I felt that's quite a crowded space.
Why go into Red Ocean?
So let's try and go somewhere where there is alot of opportunity, hardly anything has
happened.
And there is there I can gain pricing power.

(11:34):
And that's where I came into this part of theworld.
So Singapore, Southeast Asia, North Asia, EastAsia, whatever America calls in American White
House parlance is Far East.
So just for the context of everyone else, thegeography that I'm talking about.
So when we came in here, first of all theproducts that I had, I realized that insurance

(11:55):
companies are way far behind the curve.
So I started with actually going after theinsurance industry and luckily from the bank
sources, we had a product and which we couldgiven the mandate that we could go out and now
sell it and monetize it.
And we have to pay them some kind of licensefee for a limited period of time.

(12:18):
And that's when we went in, I priced theproduct very differently.
And I first went in despite being Englishspeaking, I started going in non English
speaking markets.
Again, contrarian trying to head after the blueocean, trying to take the deep end of the pool
first while everybody else is trying to startfrom the shallow end.
And somehow that worked for me.
And my first customer came in Malaysia, theywere Islamic insurance company, like they had

(12:45):
just got a bank and an insurance company whogot just a Islamic insurance company license.
And much of that I didn't even have in myproduct.
And then by then I don't even have a tent intheir country.
So I still remember at 8PM, the CEO who was atthe final stage, they really liked our product,
what we gave them, and they liked us more.

(13:06):
It's more like, you are now liking the foundersmore than their solution.
And you know that you have a big problem inhand.
And you know that these guys can deliver, theymay require some mentoring and some guiding and
something here and there.
And he says that help me decide you don't evenhave a tent here.
And how do I trust you?
I said, you take my source code.

(13:28):
Yeah, oh wow.
That's the kind of thing.
Then he agreed, no, I don't want to take yoursource code.
Let's put the source code in escrow.
Oh interesting, okay.
At least I can take it out if tomorrow you areno more and my IT department then can work and
one of the cornerstones of our investment inyou will be you have to do knowledge transfer.

(13:49):
You have to teach us.
And then they gave us again a lot of domainknowledge, how to do Islamic insurance.
And we quickly figured them.
In fact, they did a pilot with us, gave us oneproduct, which they said, I give you two weeks,
map the product and bring it back to us.
We brought in, we did it and that was a milliondollar contract.

(14:11):
And I had almost like 70% gross margins.
Wow.
When I bid it for it, some of the people, thefolks you knew whether my board or my
investment committee or people even in my team,they said that I'm extremely foolhardy and a

(14:33):
thing which they have by then tried to sellinto Middle East for 150,000, 200,000 range,
I'm selling for 1,000,000.
I told them that the main thing remains, I'mnot selling them 1,000,000 because I'm greedy.
But because along the way, there will be a lotof reworks.
And these reworks I need to budget for andbuffer for now, I can't go back to the client

(14:55):
for every rework and tell him pay for it.
He can be extremely frustrated and we won't beable to deliver to him.
So let's start with a lot of margins in handand buffers in hand, so that we can do them a
wonderful product.
And that worked and then we never had to lookback.
He didn't just become my first customer, he wasmy best referral customer.

(15:17):
Until about five years down the road, whoevergot in.
So eventually, we got market leader status inVietnam, in Thailand for this product.
And the product then, I mean, literally becamean awesome solution for the insurance industry,
especially anybody who'll be starting from thescratch with a new license.

(15:37):
And for almost like next five years, thiscompany and this CEO was my reference customer.
So whenever my customer in Vietnam say, can Italk to one of your customers?
Yes.
They will come for a site visit, and they willjust get floored.
I mean, then even a lot of customers told me onthe sites, you give them free after sales

(15:59):
service or annual maintenance contracts thatthey give you such good reference.
Can't believe it, man.
So
did you raise any money or did you work rightoff of the margin, I guess in the beginning?
No.
It's a high margin business.
Yes.
And we continued like that.
So that 60%, 70% doesn't remain ultimately, itwill fall down to about 40%, 45% gross margins,

(16:22):
but still you will manage a net margin of about25 plus.
And then if you look at EBITDA levels, you willstill have fifteen-sixteen.
So company started generating a lot of cash.
And that's like one of the best places you haveto be.
And we started increasing our product pricing.
So finally, we almost went in for about$45,000,000.
So literally got into a position where we havepricing power.

(16:46):
Yeah, and that's a common mistake of earlystage founders.
Thing that you want to look for is can thefounder raise money?
But if they raise too much money too early,then that's also an issue, right?
Because they're giving away too much.
I mean, it's not good for the founder eitherbecause you're giving away too much of your
company.
But then the other piece is if you raise toomuch money, there's a lot of higher

(17:06):
expectations and you got to fit in those shoes.
And if you fit in those shoes, I think the riskis that you might have to take a down round in
like the next round, right?
Absolutely, absolutely.
I mean, spot on.
And that's one of the worst thing to do, right?
As I say to all my founders that valuation isnot something to defend in this round, or it's

(17:28):
not something to brag about at the Fridayevening party with all your friends and
colleagues.
Valuation is you have to defend in the nextround.
And if you haven't prospered chasm by way ofthe value creation, then you are in big
trouble.
Even if you don't do a down round, in today'stime, probably they can still avoid making down
round because so much liquidity is around.

(17:50):
But still, I mean, you're literally nowfighting with one hand tied.
Instead, I always believe that why it workedfor and why even it works for the founders that
have done some amazing work and the good onesfrom the gruesome is because they focus on the
product.

(18:10):
You have to really build something good.
And you have to really put that ahead of you,not your dilution, not your investors, not your
quick successes.
And often, our immediates become our biggestenemy of our ultimates.
If you cannot grow that product, then you willnever have that virtuous cycle of upward

(18:33):
spiral.
Yeah, and the key too is to build once and selltwice.
Right.
So once you I think what you did that was smartwas you probably had a lot of the you learned
like what the main features are probably fromyour first client.
And then they gave you a bunch of enhancements.
And then I think was probably after thoseenhancements, that was probably a good place to

(18:57):
be able to sell.
All you had to do was sell, right?
I mean, you probably have like multiplefeatures, but when I think of like what you're
building, it's what you build.
It's almost like Bloomberg, right?
I mean, there's the Bloomberg standardterminal.
And then really, do get funding or if you justinvest off of your cash, really, you need to
just put money more on sales, right?
Like and building the pipeline and thenclosing.

(19:20):
Yeah, and another thing happens, Joe here isthat in B2B kind of sales, these are not many
customers around, even in each of thesecountries, maybe we are looking at half a dozen
to a dozen customers.
So there are two sets of customers, there areone who are new joinees, because the central
bank is giving licenses.
These guys need to get off the block as quicklyas possible.
So therefore these guys are looking forsomething which is proven and trusted.

(19:43):
So if anyone has got it, so like looking at myfirst customer, three new or more customers in
the next three or five years got licenses.
Their first port of call was call that vendor.
And already you have a product which fits them.
Yeah, because if they can't even offer, theycan't even be in business without the insurance

(20:04):
software,
right?
Exactly.
The first American company I sold, they were inVietnam, they just got license.
The CEO's requirement is that I in fact, I'vegot my license.
I'm already behind the curve.
And my IT team hasn't done a good job inselecting the vendor.
So you
said five weeks, want my motor insurance up andrunning.

(20:25):
Otherwise, I don't start my shop.
You have to give
me that else I'm going to pull out the contractfrom you.
And we went for it because we were very readywith Motr.
Motr was like our backbone product.
And once I succeeded helping him out, that's aFortune 50 insurance client in America.
Mean, one of the top boys, big boys in town.

(20:47):
And then on back of him, I got Bangkok.
That means Thailand, I got Hong Kong, then Igot Singapore and I went on keep on getting.
Mean, you see how even once I went to Boston tomeet the top CTO out there and they are all in
IBM shop.
And he says in that meeting, he told me that Iwas very reluctant to move out of my legacy.

(21:12):
But somehow, Tom who was an American CEO inVietnam, he convinced, he says that, look, I
can't use the IBM monolith to start my businessin five weeks.
Guys won't even be able to arrive here in fiveweeks.
So these things all fall in place and you startgetting lucky.
You need to know where your weaknesses are andwhere your strengths are.

(21:37):
And then along the way you have to count yourblessings.
Yeah, and I think luck really comes from hardwork.
The harder you work and I think even withgetting customers, the more customers you talk
to, the luckier you get.
So it's not really like a random luckiness butI think that luckiness just compounds over just
the effort.

(21:58):
Would say, I mean, sometimes you get lucky,too.
People hit the lottery.
That first order that I got and at that valuethat I was looking, that was lucky.
It was really lucky.
But then it worked because, you know, we knewthat are we were humble, we were amiable, the

(22:18):
chemistry worked.
That happened because we knew that, you know,we have to learn, we have come to a new market,
don't know the localization, our productsdoesn't work, we have never sold for this type
of.
So normally in Islamic insurance, there's nolife.
But these guys have a form of life, which theycall it something else.
And that's their main business.
And therefore, that we have to get that lifeinsurance piece and then you are done, you get

(22:43):
an extremely strong component in your product.
So those came in through their knowledge.
Well, the thing too is when you enter a newmarket and you're also like a new company,
you're like a clean slate.
So whatever you build, that's exactly what theyneed because the problem is like the other
vendors, they have like an existing technology,And then they're like putting a band aid on top

(23:07):
of it where like I think when you came in, justbuilt exactly like from scratch.
This reminds me, there was another business, Ithink it was called like Farmigo.
This one company, I think the company exited afew years ago, but it was a company for farming
goods and they would work directly with thefarmers and get the farming goods directly to

(23:28):
the grocery store.
So what they did was they didn't even buildanything.
They just built like a clickable mock up, likea flat screen.
And then when you click it like goes to thenext page.
So they showed that and then they got somefeedback and then they said, hey, you know,
this is what you want, just pay us.
So they got the money first and then they builtit.

(23:49):
But again, once you get that product, yourcustomer pays for it.
As long as you don't have like some exclusivitycontract, can literally just use that same
software and resell it.
Yes, absolutely.
And
then what was the outcome of that?
So you just had a liquidity event, I guessbecause you didn't raise too much money.

(24:12):
Guess you had the majority ownership and thenyou just did you sell it to like a strategic or
something or?
Yeah, so we sold to a strategic by then we hadbeen even into Taiwan and there was one player
who almost has bought everything from us.
Yeah.
So they were very keen.
So it's one of your customers that bought likethey're using all of your services anyways.

(24:36):
Yes.
And that's another lesson too.
Mean, a lot of times it instead of hiringpeople and paying the vendor every year like
when you really do the math right like thesubscription that you charge every year if they
can if they just own the whole company it'sprobably just more beneficial for them.

(24:57):
Only financially, but I would say also juststrategically, if that's like a part of their
business, then I feel like that could probablyallow them to actually own the whole market as
well, which I think is more valuable than justcost savings of acquiring versus paying for the
service.
I'm assuming, right?
Absolutely.
And then you become quite strategic for someonethat has given you speed because you have less

(25:22):
vendor management.
And as you said, we had very little legacy.
Therefore, we could do a lot of stuff.
I mean, I see that even play out even today.
I mean, why Elon and Tesla is able to take allthese automobile companies out because he
doesn't have legacy and the world doesn'trealize that the Wall Street or the Main
Street, the Volkswagen fans, they don't realizethat.
They have ICE business which they have toprotect.

(25:44):
There are 500,000, 400,000 people who areworking there and they have to be paid
salaries.
Elon doesn't have those problems and thereforehe can march ahead without.
So that's the advantage we always had.
So we've always been able to create ourselvesalways short of legacy and hence when we were
doing everything for one client, we were quiteimportant for him and therefore it was like, I

(26:08):
mean, were more than keen to take up their fairshare so that they can have a control or at
least they can save impairment of theirbusiness.
Yeah, thing that I think would be good foreducation for the group is maybe some pathways
that could happen if you get acquired.

(26:29):
So I know one way is you sell the company, butyou're still the CEO.
And you might have like a vesting period forfour years.
So that's a great deal, right?
Because you get, obviously you get a big payoutin four years, but then you still get the CEO
salary and you still get to run the companybecause there's no one else that could run it
better than you.
But then I think at some point you might haveto replace yourself.

(26:52):
That's one pathway that I'm familiar with.
But maybe you can educate us on just a coupledifferent ways, maybe even in Southeast Asia
that the exits happen and that might be goodlearning.
Yeah, I think in a way I believe and I could bewrong that this part of the world doesn't
anything we do very differently.

(27:13):
We actually learning from America.
I think we just now had a SPAC and America hasdozens of SPAC, I think SPAC came out of
America.
So this is very different and that's why we tryto always play in America because the kind of
opportunities you get there, you will see therest of the world is emulating and then using
protectionism to play to a large market whichis three, four times bigger than America.

(27:35):
Like you see in India, we have six fiftymillion WhatsApp users.
America doesn't even have that population.
And then there are other countries in Asia whowill then convert that into a local play, ban
WhatsApp and then make a mega cap come out andthen one day the government will go and kill
them.
So those kinds of stuff they happen there.

(27:56):
So I don't think that in Asia, the expectationis that when you walk out or when I'm buying
you out, you will give me two, three, fiveyears.
But essentially I have seen in all my life andmost of the acquisitions that we had even done
in the banks and all, actually this is wherethe things fail.
And that's where I see a very new normal cominginto our world.

(28:20):
Again, coming out of America and that isprobably first, at least in my recollection,
first they were put in place by Google andTencent uses them very, very closely.
So when you acquire, you don't merge them withyou, you don't make it part of your building
and your glass houses, you keep them in thegarage.

(28:41):
So you let them still do that disruption thatthey were doing because the moment you bring
them in your glass house and you put them inthe corner office, disruption is lost.
Sure.
That's one way you do them And although you mayhave a bigger stake, you don't micromanage
them.
There are a lot of things.
Look at AlphaFold in Cambridge.

(29:01):
Google is master in doing this.
I mean, much of Google's value, I think peopleget it wrong.
It doesn't come from search engines and itsprofits.
Yes, it does come.
But I think the real value comes.
Google is an awesome VC in my mind.
The way they pick up those texts.
I mean, they really pick up the right ones.
So the same thing Tencent does in a big way.
So I think that's a very new normal or anarrative that I see coming out and that's

(29:26):
very, very productive and healthy.
And I think my advice to every founding teamwill be, the entrepreneurs will be that try to
not give up your independence if you really,really believe in what you are doing.
And even in fact, another very good case inpoint is Snap.

(29:48):
He had a 4,000,000,000 offer from Facebook.
He refused it and he went to shit, man.
But look at his licorious spirits.
Today he has given it back to Facebook in thesame coin.
So that's the kind of a true founder and thesekinds of founders is very hard to find outside

(30:08):
America.
And the way his investors have backed him.
If it is in Asia or in Europe, I am 200% sure,Joe, the investors would have taken him to the
woodshed.
They will say, are you kidding me?
You have a 4,000,000 offer from Facebook, goand sell it.
But that's where the real outcomes come in.

(30:30):
Just now we had a fantastic outcome with thecyber security company that sold off to Cisco
and Cisco paid us cash.
We got almost like nearly 4x in less than threeyears.
Great outcome for our fund, for our investors.
In fact, in just one, this exit, we are able todouble our dividend from last year, this year.

(30:54):
But then I would have always felt that if thiscompany hasn't been acquired and they went on,
in another two years time or maybe one year'stime, it would have become a unicorn.
And then in another three years time, wouldbecome a Decacon and listed thereafter.
And by the time, we are into seven, eightyears, that is we are into the harvesting

(31:14):
cycle.
We have a great listed company which hasprobably given us So this company went into sub
million, sub billion dollar valuation.
It didn't still become Unicorn when Ciscopicked it up.
If we would have just stayed there for anotherfive, six years, I think this company could
have been a $100,000,000,000 company.
So you just see five years we could haveactually got 100 times.

(31:39):
So that's a great outcome, not just for us, butfor the founding team, for the entrepreneurs.
It's like very hard to sell off and startagain.
It takes a lot of work, at least in the initialyears.
Yeah, the funny expression I've heard issometimes being a VC is like being a
grandparent, right?
Because grandparents, they give you money forChristmas and you see them, you give them a hug

(32:05):
and then you let the kids do their thing.
But parents are different, right?
Parents are going to be on top of you to doyour homework and make sure you do everything
on time.
I thought that was an interesting analogy.
And I think that kind of goes along with whatyou're saying.
Like, you know, the founder, especially ifthey're a good founder, they're a fiduciary for
the money.
They want to make the most money possible too.

(32:27):
So they're going to use their judgment,especially the really good founders, and
they're going to be right to hold out if theydon't sell too early.
So they're going to hold out and try to get thebiggest return.
But I guess on the flip side too, there couldbe founders that are just trying to cash out as
soon as possible.
But I believe that's what secondaries are for,right?

(32:49):
So sometimes you can leverage secondaries toget a little bit of liquidity if it's not
because it's been so long.
So some of the founders over time, they'regoing to have kids, their kids may have to go
to college.
So that liquidity may be helpful.
And I think that's what the secondary.
And I think the market is there and I think thesecondary market I see is most vibrant in

(33:10):
America.
You see every piece of the puzzle almost likefalls in place.
I have not seen a more vibrant secondary marketanywhere else.
That's such a great thing to be right.
It's like the company that we lead here inSingapore, we also get funding from the

(33:32):
Singapore government where we act as aninvestment managers under one of the programs.
But it has to be Singapore companies and wehave to be lead investors in them.
That's the only place where we lead.
Our first main aim is to push them to go toAmerica, first in terms of market, then in
terms of investment or investors.
And because that's the Holy Grail someday onehas to crack.

(33:53):
See, the Israelis again, we look for is thatwho very clearly are already in America, or
their main goal is that no, no, I'm notinterested in looking at anywhere else.
After raising this money, I'm going to America.
I have looked at and talked to this customer,that investor.
That's the kind of thing that what we have tolook for.
And that's the kind of investments that we tryto do because from every aspect, the ecosystem,

(34:18):
the community is probably the most efficientout there.
And constantly we see that, I mean, five yearsearlier, the secondaries was like such a damn
square, but today it's like so much liquidityavailable in the secondaries.
So you're based in Singapore, Do you have aninvestment thesis in Singapore as well or are

(34:44):
you only mainly US and Israel?
What other regions do you cover?
Do cover any other geographic regions outsideof those three?
No, we do.
Again, world is our oyster.
You will be very surprised.
We have investments in Estonia.
So a lot of people will say, where is that?

(35:05):
So we have investments in Poland and these areall the companies who are really doing some
groundbreaking work, technology work and whatwe try to see next is that why the entrepreneur
is an entrepreneur?
Is it that he wants to be his own boss?
Is it that he's looking for a corner office?

(35:28):
Or is it that he wants to get rich very fast?
And then retire in Hawaii?
Or that he's really, really up there to solve alarge big problem?
And that what keeps him going and he will go tothe shit to take that problem out.
And then we see is that a large big problem andwhat this founding team really knows more than

(35:48):
anyone else who are trying to track thisproblem know about so that they have a better
chance to take a shot at it and that's what welook at and then finally we try to see have we
got anything wrong?
We are the only ones in this lonely roads orthere are other investors also who are willing

(36:08):
to put in there, I would say unconstrainedmoney, not easy money or free money coming from
the government sources or from the governmentfunding agencies, which is a order of the day
for Europe.
That's another very big problem we have.
We normally try to avoid Europe becauseEuropean countries are, although there's

(36:29):
European Union and looks like one homogeneouslarge playing field, but it is really, really
very fragmented.
It's very hard for a French founder to go toGermany or for a Spanish founder to go to
Germany and things vice versa.
So therefore, even if you do a good stuff, it'svery hard to grow that up.
And also again, the European the VCs normallybehave more like these, they take a larger

(36:52):
chunk of your capital.
And therefore, a while, they start takingcontrol of your business, and then pushing to
sell it to Siemens and to Bosch and so thatthey can get their exits and they can write
their returns to their stakeholders.
Those I think is very detrimental to the basicnarrative of a VC play.
You have to really look for the long haulbecause the good and the great stuff doesn't

(37:17):
come overnight, doesn't come in two, fiveyears.
And to get something from ground zero, from5,000,000 to 500,000,000 is the toughest thing.
Once you get to 500,000,000 and cross that,then you have 1,000,000,000 and then
10,000,000,000, they will likely become muchfaster.
And that's where you need to do the rightthings and keep going and not throwing the

(37:37):
towel.
So that's where we try not to do and again,it's contrarian place.
So we go to markets where they don't have muchand the next thing they will looking for larger
markets and they will actually go to the deepend of the pool, which is America.
Like the Polish company we have there in nocodes, slow code, but we invested in a Delaware

(37:57):
C Corp.
The founders are all in Poland.
They have some awesome technical guys.
So this is the way we look at it.
We have done in Asia as well.
We have an investment in India.
We have in China.
And of course, we have investments inSingapore.
But our narrative is more or less the same.
So we are basically looking for those threecriteria.

(38:20):
Are you solving a hard problem, big enoughproblem?
Do you know something more about that problemthat gives you a fair chance to crack at it,
take a crack at it?
And then are we the only guys or there areother people who are willing to give you?
Are you prone to valuation or you are willingto give up dilution, take more dilution because

(38:44):
your company needs it?
Are you a VC or a founder who normally webelieve founders go wrong, entrepreneurs go
wrong on two count mostly.
They take advice from wrong people and theyhire the wrong people.
The moment the money comes in, they starthiring.
They go for a new office.
That's where we have to really, really beextremely frugal.

(39:06):
And that's where you have to see whether youwant to spend today engineers are so very rare
commodity.
You want to hire some awesome engineers, doawesome product, or you want to spend on
DevOps, which is basically plumbing for youthat you can outsource to somebody going for
automation.
So that only way today, for example, we believethat the productivity gains can only come

(39:29):
through automation because workforce is fallingapart.
That's a really good deep piece of advice.
Wrong advice and just hiring the wrong people.
What should somebody think about when they comeinto liquidity?
The only reason why I ask is because there's apodcast called My First Million and they

(39:53):
interviewed the CEO of HubSpot and they askedhim how he's thought about his life once he
became a billionaire.
And what he was saying is no matter how crazyyou spend your money, there's only so much you
can spend, right?
Like, I mean, you can eat at like the highest,fanciest lobster restaurant, but there's still

(40:18):
really like only really so much you can spend,right?
So he's planning on just giving all his moneyaway and he doesn't really want to give his
money to his kids either.
So that's kind of interesting because you cameinto that well.
So you talk about that when you raise a lot ofmoney, but you are getting into a new venture.
You launched a company, you came into someliquidity, sorry, you sold the company, came

(40:41):
into some liquidity and then you wanted tostart a venture fund.
So what was going on in your mind?
Guess, did you think about possibly startinganother company or what were the options that
you had as you came into liquidity?
And then what made you finally decide to be aVC?

(41:01):
Right.
Think that two or three top recalls that I haveof that moment is that probably, I wanted
something new.
I wanted to do because I felt that the time andtide waits for none, even I believe.
And life is one journey and this is one life.

(41:24):
So we have to start trying other things.
So I've already been a banker then I had afounding journey that has given me a good
outcome.
Let's try and do something new without losingthe value proposition, without losing what I
see from here in the next ten-twenty years.
So there what I felt is that the values willreally get baked in the private markets.

(41:47):
Why?
Because regulations are stifling and regulationhas a lot of baggage, governance baggage,
independence of board baggage and all thosekinds of things.
While it doesn't save you in my opinion,although I come from accounting or financing
background, I feel while audits and all that isnecessary, but if you really look through time,

(42:12):
there has been biggest of the biggest fraudshappened right under the nose of those auditors
who were world class, so to say.
So this is nothing, no fail safe.
So you have to basically go somewhere wherethere is the new world that is emerging, is
disruptive world that is emerging because thevalue is all out there.
And secondly, I realized that technology is allpervasive.

(42:35):
The power of technology is so humongous that ithas made our world flat.
There is now no way, I mean, today we have asupercomputer in our pockets.
You go down 50 years back or by the time theman landed in moon, we needed a house to house
those computers.
And then we needed a room to house thosecomputers.

(42:57):
And we today have, you look at when we went tomoon, the kind of computing power those
computers had and what the Apple phone has.
I mean, this has happened because we could dareto dream and dare to change our world, the
status quo of our world.
And that's what technology has done for us.
As a result, what information today we have inour fingertip two hundred years back, the

(43:21):
nobility used to have them, five hundred yearsback only the royalty used to have them.
And therefore they could control us.
So today we are our own masters, we can chalkour own destiny.
We can provide us the opportunity.
We don't have to wait for anybody to give us anopportunity if we really aspire for and we
deserve for.
So with that being there, then that's somethingwhich is a constant and we need to latch onto

(43:44):
it.
So technology was a And how I get to play thebest.
So that's where I came in, if I can invest inawesome journeys led by some very resourceful
founders.
And then in that case, I have such a wideplatter, not that I'm being part of an

(44:06):
ecosystem and a community that is doing somereally cool stuff.
But in the process, look what I'm learning.
And the same these two stories is what myinvestors come in.
Another thing we do, we don't takeinstitutional money.
If you're an institution, I will tell yousorry, I don't take your money.
My aim is to democratize on the other side ofit, VC investing, private market technology

(44:30):
investing for accredited investors.
Today, the accredited investor definition, weare quite affluent to very easily cross even a
manager level guy in a fortune 50 or a fortune100 company, maybe even fortune 500 is an
accredited investor.
He has more than 250,000 income in a year.

(44:50):
But can he write a check to Sequoia?
Will Sequoia take their check?
A16z, we can check, take their check?
No, this is where we take them and we show themthat ringside view, the fireside chat, where
they can see what's happening in this amazingworld of technology.
And therefore, the investor side, also, I'munlocking a huge disruptive life cycle.

(45:13):
And that's where my investors come in.
And for them, the one and two, that meansability to be part of something really, really
cool happening.
And then learning along the way.
It's like, lifetime course in Berkeley or inMIT or in Harvard.

(45:34):
Although I think we are teaching you far behindwhat the actual world is.
The engineers that come out of the best ofengineering colleges in America, I think they
are not the ones that Google is looking for.
And they have to really retrain them in much ofthose stuff.
So that's another area where and then if youcan do this one and two so well, automatically

(45:54):
your third thing will come in place that isreturn of capital and return on capital.
So your investors are happy.
And that's the kind of thing I thought ofmyself.
And then initially I thought I will not eventake anybody's money.
Whatever little I have, I will make some smallbets out of that from whatever little I like,
because now I don't need to pay for my billsand think of how to bring food to the table.

(46:20):
But then first friends came in, they startedsaying, oh, you have an awesome exit.
What are you doing next?
Have done a fund.
Why don't you take our money?
I said, no, I can't take your money.
I need license then.
Go and take a license.
We can help you this, that.
I know this lawyer, I know that regulator.
But then it started getting really ugly.
They started complaining to family, to my wifesaying that this guy has now become so big that

(46:46):
he doesn't want to even take our money.
So it started out with them and then it's likeword-of-mouth, they started referring some
people And that's how even today I get most ofmy investor money every year either by re ups
from existing investors, which is a hugeendorsement or existing investors referring

(47:06):
their friends, their colleagues, their extendedcircle of no, and they coming in.
So that's like a real very different play thatI'm looking at.
And the whole idea today is how to dolongevity.
So this is like the second innings, but this isthe last innings and there is no retirement.
You want to dive with your boots on.

(47:28):
In that, Charlie Munger and Buffets are ourgurus.
If they can work at this age with so much ofbillions then why not?
So that's the narrative.
Yeah and I think keeping your mind stimulatedthat's also helpful to kind of keep you
engaged, right?
Because I think once you start being lessactive, I think that's what kind of triggers a

(47:54):
lot of these issues when you get older, likefrom the cognitive standpoint, right?
I mean, people get Alzheimer's, but there'sdifferent reasons why, right?
I mean, it could be just, but I just think ingeneral, like keeping your mind stimulated
definitely keeps the blood flowing and keepsyou engaged and gives you some type of sense of
purpose.
And it's again, gratifying to be in the leagueor getting invited, if I may say invited in the

(48:20):
parties of the millennials, the Gen Y and theGen Zs.
I mean, the way they think, the way they act,the way they work because today it's a very
different generation.
In our generations, our parents often knew morebecause they were longer in terms of time
duration in this world.
So they had experience.
But today the Gen Zs and the Gen Ys, they canfind out Google can give them a quick bump up

(48:47):
whatever you knew about and probably knew wrongand Google tells them the right one.
So what do you think the phone is gonna be liketwenty years from now?
Because people are going to think we'redinosaurs like, oh, wow, you know, my dad used
this thing called a phone.
You know, it's like this black thing that heused to hold.
So what do you think it's because we thinkabout the phone in the 80s, right?

(49:11):
And now we have a supercomputer.
So what do you think is gonna be the next formfactor?
Is it gonna be like Neuralink?
Yeah, of course.
So I think the phone will be gone in nexttwenty years.
Then, precisely.
I mean, that's where we are headed.

(49:35):
I look at it, even I started off with a Nokiaphone, it was like a brick.
You can't even carry it in your pocket, youhave to put it in your bag.
That's the kind of thing.
But the people who bought those phones then,it's only because of them that we get to use
the phones that we are using today, they havetaken much of a rapid stride.

(49:58):
And also if you see ability of these foundersto break away, I think the phones biggest
journey, smartphones biggest journey which Ifully give credit to Apple is I think mainly
happened because Apple decided to do its ownchip design, its own chip and later make its
own chips.
And that's where it literally changed the levelplaying field for everybody.

(50:20):
And if you really look at it, Intel couldn'teven get that.
Although then Intel CEO played ball with SteveJobs saying that he's interested in doing all
that.
If there are videos also in YouTube, you cansee them, he's talking about it.
But we all know from later on Intel didn't walktheir talk.
He felt that Apple phones will not sell andeven if they sell, they will not be such a

(50:46):
cannibalize or finish Nokia, make NokiaEricsson history.
But and Wall Street analysts give them a thumbsdown because they are now going into areas
which they should live to chip makers and chipdesigners and they're just phone makers.
But the ability of these founders to really gofirst principle down the road and then take
control of what they need to really use tounlock their dream and make the whole world

(51:13):
stand on his head, I think is what hashappened.
Many years later, Elon has done the same thing.
He's taken these leaves out of Apple's book.
He may not like Apple but that's where and thislearning goes on and I see Apple now learning a
few things back from Elon.
Yeah, no, I agree.
Mean, look, I mean, Tesla is pretty much a datacompany, right?

(51:36):
I mean, as much as we believe it's a carcompany, it's a data company.
And I think what I'm seeing now is a lot ofbusinesses that have multiple sub businesses
that feed into each other, right?
Because you got the data that feeds APIs thatcan feed into other software and systems.
Then got the batteries, Then you got to refillthe batteries and then the batteries power your

(52:02):
home.
So there's a lot.
I think if you can build businesses that kindof have several different flywheels, that
generate multiple lines of revenue.
I think that's a common thing that I'm going tosee now.
One thing I want to ask is you talked about thecommon mistakes that founders make.
Now you're an investor.
So any advice?

(52:23):
There's a few people here that are emergingfund managers.
Any learnings that you want to share with usabout becoming a VC and then the top mistakes
that you think?
Obviously never lose money.
That's the first mistake.
But any other advice you would give and justthings that you think are top mistakes that

(52:43):
you've seen from maybe other investors?
Right.
I think the top mistakes as VCs we would say isto follow the crowd.
By the time crowd has figured out something,it's actually fully baked in.
It's either fully valued or overwhelmed.
That's where you know, hype, we fall into hype,like recently, if you see, I give you a

(53:07):
practical example, just now after this conflictstarted Russia, Ukraine.
So now there is a very clear possibility, whicheven I agree with, that with the sweeping
sanctions that has been slapped on Russia,Russia will now take the war back to across the
Atlantic by cyber attacking American posterboys.
And they are quite vulnerable in my opinion,American Airlines and so on and so forth.

(53:29):
This will name and shame them.
It's a very likely possibility.
If I were like them and what is going on us,somewhere some retaliation will come.
So if today we start buying cybersecurity,cybersecurity has all gone up.
In fact, there's a cybersecurity ETF, look atthat.
That ETF itself has gone up so much in thiscrashing market.

(53:51):
So this is where you are making the wrongmistake, you are behind the curve.
You have to tell yourself, yes, I missed it.
And I'll give this a pass.
Don't jump in now.
That's where you make all those mistakes.
Rather, we were investing in cybersecuritysince 2018.
And we always believe that even today it is avery, very under invested space.

(54:13):
The amount of investment that goes in writingsoftware, hardly put a fraction of that money
in protecting those softwares.
And our home Wi Fi's are the most vulnerableand the more we work out of home and remotely,
which is a constant, I mean, no matter COVID orno COVID.
The ease and convenience that these has givenus, we will continue to work remotely and from

(54:38):
home.
And with startling coming in, now I can workfrom Grand Canyon or in Yellowstone.
So
why do I really need to go back or to the bigwalls of New York?
So with that coming in, there will be a lot ofwork that needs to go there.

(55:00):
And just, there's a hype now from the investorcycle, there's a form of fear of missing out
and they're jumping in big time and that'swhere the pricing is getting inflated.
There's also a lot of startups startingthemselves or pivoting into saying that, oh, we
are cybersecurity, from cloud cybersecurity.
This is where you have to really, really bevery, very careful.

(55:22):
You have to catch them when the waters aretranquil and not when the water already have a
tsunami.
That's one main mistake we do and for that, wehave to see the long hill.
You have to really ask yourself every day fromwhatever you are reading and whatever real or

(55:42):
fake you have been sold by CNBCs and Bloombergsof the world, New York Times, Washington Post
because they are also mouthpieces.
You have to remember of their owners.
You have to really take them with a pinch ofsalt.
And then whatever you are learning, reading,you have to do your own narrative.
And that narrative should show you what's inthe next ten years.

(56:03):
Like you asked me, where is the phone?
I think the phone is gone.
And therefore, if Apple cannot change tosomething new that will survive then Apple is
also gone.
So that's the kind of thing we have to lookfor.
And then what's coming in next ten years?
We have to start looking for outstanding playsin those next ten years.
I give you another example.
Many of them may not even see light at the endof the tunnel.

(56:28):
Web three is an area where there is a lot ofpromise.
But the way today Web three is working, much ofthis may not even fructify.
The final end game or near about the end gamethat being sold about Web three is much of that
is imagination.
It's Steven Spielberg movie or Star Warsmovies.

(56:49):
Today we are nowhere near that.
So there's a huge journey that has to happenand a lot of things has to change in the
ecosystem and in the community before that canhappen.
It may not even happen.
And more importantly, we see is that investorshave already jumped into that bandwagon of Web
three they're putting This money left, is wherethings will really can go wrong.

(57:09):
Then there is a lot of naysayer.
Even today as compared to Web three, I see alot of shorts in Tesla who says that this is
the reasons why Tesla will fail and why Teslais overvalued.
So this is a very good thing when the mainstreet is telling you that wrong, wrong, wrong,
wrong, wrong, overprice, overprice.
That's probably where the value is rather thanwhen the main city is saying, oh, no, no, Web3,

(57:30):
Web3, cybersecurity, cybersecurity.
This is what kind of narrative I have alwaystried to avoid.
And for that, I have also missed a lot ofopportunity.
I tell myself the error of commission is muchmore brutal than the error of omission.
Let me omit a few opportunities.
I miss them.
Sorry, too bad.

(57:50):
But the ones I really grab on, they should notmore often fail than click.
Yeah, there was a mentor of mine that gave methe expression.
It's easier to miss a wedding than go to afuneral.
I'll probably use that next time.
It's like you missed a couple of weddings, butlook, you're still alive.

(58:13):
So you didn't have to go to a funeral.
But this was a lot of fun.
I know you're really busy and I know we're pastthe hour, but appreciate you taking the time
out.
I'm really blown away about your story.
And I always love hearing the entrepreneurialorigin story.
So it's always great to hear just buildingsomething.

(58:34):
And I think what was really great is justreally thinking about what the customer wants.
So if you can build exactly what the customerwants, I think the three pieces you said, to
recap, it's really doing something different,having unique knowledge and then just solving
like a really huge problem.
Right.
So I think that's really helpful to keep inmind for the audience.

(58:55):
So again, thanks for coming out and reallyappreciate your time and hope we get to hang
out in New York at some time.
Yeah, sure.
In fact, I come to America quite often.
In fact, six months I spent here and then sixmonths I'm traveling, mostly in That's America
and great.
Well, if you come out to New York, let me know.
We'll do something.
Of course, and we'll stay in touch and we'llcircle back.

(59:17):
I'm happy to join in any such conversations ifyou think the audience will be benefited from
there, because it's all about our community.
If you can really create a very vibrantcommunity, everything else will fall in place.
And last of that is return on capital andreturn on capital.
Yeah, I totally agree.

(59:39):
So I met Joshua through my Slack channel.
So I have a Slack channel.
So I think he posted something and then Idirect messaged him and now on a web show.
Awesome, man.
And that's the great thing about our community.
I mean, this is how we forge our relations.
I mean, it's so amazing and so gratifying.

(01:00:01):
Yeah, totally agree.
I mean, VC is a CRM business, right?
So you're really, you're managing your CRM,you're connecting with people and sometimes,
know, what's crazy is sometimes, you know,person that you're engaging with, right?
They may be a founder now and you know, you'rea VC that passed on them.
And hopefully you're nice to them because younever know ten years from now, they may be your

(01:00:26):
LP because they maybe came into some liquidityor something.
So it's definitely a small world.
Absolutely, we have to always tell ourselvesevery day that there are always people better
than us out there.
So never be flashy, never be jazzy.
Humility is the first and the only mantra ofwhatever we do.
We have to be humble.
And the moment we are doing that, we will findout more than others And we will do more than

(01:00:52):
others.
That's the crux of it.
Even if you see in that, the entrepreneurstory, said, what we look at entrepreneurs, do
they know something more than others in theirfield, or that problem that they're trying to
solve?
That's the most vital important thing.
And that you will only be able to see they'reactually lying in front of us.
We can only be able to see once we are humble.

(01:01:12):
Yeah, no, I totally agree.
And on to our blessings.
Yeah, well, really good advice and appreciateall the wisdom and yeah, hopefully we all get
together, get together sometime and and I guesshave a good rest of the week.
And likewise, if you're ever traveling thisside, do not give us a shout more than happy to
host you.
No, thank you so much.

(01:01:33):
Appreciate it.
And Joshua, thanks for bringing us together forthis.