GrowthStory is one of India’s largest startup platforms. How did it start? What is the vision behind it?
K. GANESH (KG): I would like to call GrowthStory a venture build up platform. We promote ventures under GrowthStory. BigBasket was the first company we invested in. After selling TutorVista to Pearsons for $213 million, we were looking at how to participate in the Indian startup scenario. Eventually, we came up with the idea of a ‘parallel entrepreneurship’, which basically is promoting greenfield ventures under our venture builder platform GrowthStory. BigBasket, as I said earlier, is the oldest; and then there are Bluestone, Portea, FreshMenu, Homelane etc. Primarily, these are direct-to-consumer companies and consumer internet companies, which address the ‘roti-kapda-makaan’, healthcare and education sectors and spaces.
4Ps B&M: You once said, “Where the government fails is where the new entrepreneurs should pitch in…”
KG: Yes, that’s right. Basically, there are a lot of basic infrastructure – things like education and health care – which, in countries like Europe and USA, are taken care very well by the government. In India, unfortunately, the government and the public system for both education and health care are abysmal and inadequate and that’s the opportunity for entrepreneurs to do startups in those spaces. The same principal is involved in startups like BigBasket and Portea. In an evolved economy, you do not need so much of logistics and delivery kind of solutions, whereas in India, you need it because infrastructure is inadequate. Also, it gives entrepreneurs an opportunity to start without really being transformational geniuses. You don’t have to be extremely innovative or a genius to start something here in India, whereas in places like USA or Europe, where the basic problems have already been solved and done with, it’s a much tougher game to start with something. In India, there are still so many basic problems to be taken care of, so many challenges, so much that needs to be done to build the basic existing ecosystem.
4Ps B&M: Disrupters are the new entrepreneurs. In fact, Portea is in itself a disrupter in the health care space. It literally shook up the whole health care segment by bringing medical assistance right to door step to the common man.
KG: I think that’s a slightly exaggerated view (laughing). In India, tertiary care is of world-class standards because of world-class doctors, hospitals, latest medical equipment available in hospitals; so, if you take Medanta, Manipal, Fortis, Max, any of those, you have world-class facilities. But outside tertiary care, there is a complete vacuum, complete as in zero – there is no organized player, no branded player, where you can get things like physiotherapist at home or a nurse, a nursing attendant, or a doctor/GP coming home or a place to get medical equipment at home. It’s completely unorganized.
So, I would not say disruption; I would rather term it as identifying a virgin market, an open space, and moving into it very fast with scale and technology and capital. That, basically, is the Portea model, a first-mover model. In terms of size and scale, in India, the entire health care market is about $80 billion; out of which $40 billion is related to tertiary care, inside hospital and hospitalization treatment. For the remaining 50%, there was no player.
Take the case of Big Basket – I won’t really call it innovation. We are buying the same grocery and delivering it home, but if I use technology correctly to the last mile, use analytics, it’s a better way of doing the same thing. So, it’s not rocket science; it’s really all about finding an opportunity. The simplest way is just look around you and see where the challenges are and build up a framework around it. Whether it’s Flipkart, or Big Basket or Portea, all have been based on this simple model about identifying challenges.
The second thing that makes us really bullish at GrowthStory is our ability to build brands in India. In India, you don’t really have brands. You have high-end brands but we don’t have any brands at the non-higher-end segment, the day to day segment. For example, if you take the case of rice, sugar, pulses or other staple foods, people really don’t know what are the brands. They will know of a high end atta – Ashirwad Atta – which they will be able to buy. But sugar or salt brands? Most of them wouldn’t know. In India, the previous generation was not really brand conscious. What has happened today is that because of the prevalence of the television and media channels across the country, thanks to direct-to-home, today Indians are brand conscious and desire to have brands, but those brands are not available. This is where GrowthStory steps in and is aiming to build brands for India.
4Ps B&M: Even today, reports mention that women find it very difficult to attract venture capitalists. Is that true? If so, then what is the main reason?
KG: I don’t know about the statistics but I feel that venture capitalists, as a group, as a category, do not discriminate. Statistics is a reflection of the fact that at the beginning of the funnel, there are a less number of women coming in through the system. The number of women entrepreneurs per se is small. I would attribute it more to the number of women entering and seeking venture capital as a percentage of total number of people, than to any specific discrimination. Obviously, right from representation on the board to the CXO level, in all of that, there is a disparity in the number of women.
Secondly, we should not look at entrepreneurship purely from the point of view of only venture capital funding. That is only one small sliver of entrepreneurship, even though that gets maximum media attention, front page news because of valuation, because of boom, bust and all that stuff – it gets too much attention. The real entrepreneurship [is that] 99% of entrepreneurs don’t take money. So it’s not that women are not entrepreneurial. VC is only one part of the reason.
Another perhaps potential reason could be the financing nature of VCs in India is mostly technology-led. They typically invest in technology firms; and again there, it becomes a question of supply. How many women technology entrepreneurs are there vis-à-vis men in terms of technology entrepreneurship? So the same disparity, you will find between a tech entrepreneur and a non-tech entrepreneur. The amount of VC funding for a non-tech entrepreneurship will be very, very low. So, I would say it’s more a function of the sector and the lack of women per se rather than any bias.
Ignoring women would mean missing on 50% of the big potential candidates, which is a pity for VCs, investors as well as the startup ecosystem, by not having proportionate or at least close to proportionate representation. It’s an opportunity missed for all, forget about equality or parity.
There is no lack of enterprise as far as women are concerned. If I take the example of TutorVista, then we had a model where teachers used to work from home and teach students in the US. Now, 95% of those teachers were women. I would call each one of them entrepreneurs. They were required to wake up at 2:00 am in the morning, learn the US curriculum, learn to deal with the US students. We gave them the opportunity to have flexibility in their time, so they could choose their time, whether they wanted to start at 2:00 am or 3:00 am at night, whether they wanted to work for 8 hours a day or 4 hours a day. Also, they were required to work from home. The moment they got the flexibility, they lapped up the opportunity. So, in terms of enterprise, I saw no lack of it among those women. In fact, a woman is best suited for multi-tasking. She has to play the role of a mother, a caretaker, a homemaker etc. She also has a higher emotional quotient and by nature can do multiple roles. So, I don’t see women in any way less than the men.
4Ps B&M: It’s amazing you had 95% women at TutorVista. It reminds one of Mr Muhammad Yunus, the founder of Grameen Bank, who always believed in the entrepreneurial spirit of women; above 90% of the Grameen loans have gone to women.
KG: Yes, it’s absolutely true! Take the case of Portea. Here too, in terms of nurses and nursing attendants, we have more women than men. Of course, many may argue that as a job, it’s more suited for women. But take the case of TutorVista, which is more gender neutral and here too, we have had more women than men and they did a fabulous job!
4Ps B&M: So it just makes pure business sense if you do not discriminate between men and women and give them equal opportunity.
KG: Absolutely! Otherwise, you are ignoring 50% of the population. You are trying to fish in half the pond. The objective is to get the maximum amount of fish and the best fish, then why would you want to do it in half the pond? Statistically, it’s unwise to ignore one half the population and to say that I will only focus on the other half. You are losing out on talent.
TutorVista did not just have 95% women, but 25% of them were also PhDs. They were from all over India – from places like Jamshedpur, Teensukhia, Vizag. All PhDs who were teaching kids in the US. So a US student got a PhD to teach him at the dial of a call. We could do that because we could remove issues about location and space and get the best quality.
4Ps B&M: Israel has been called the ‘startup nation’ and it has shown the world how a nation can achieve huge economic growth. Can India learn something from this economic miracle ?
KG: Yes. The fundamental challenge in India in my opinion is what we call the ‘demographic dividend’. There is a significant number of young in India’s population; and if we want to get any kind of advantage from this, we need to provide employment to these young people. Without this, it is very difficult to expect any change.
4Ps B&M: You are the golden couple of the Indian startups. Whatever you touch turns to gold! How do you choose where to invest? Is there something special that you look for in a startup or its founder?
KG: Like they say in mutual funds, past performance is not indicative of future returns. So, whatever has happened in the past to our one startup has no relevance to the next startup, because every startup is new and the jury is out on every startup; so till the time we monetize things, it’s only work in progress.
Secondly, at GrowthStory, we don’t just invest in companies; we become the promoters of the company. We start the company. We don’t just look at a startup but we look at the next 5-10 years. We evaluate where are the open areas, where can we create value, where are the opportunities… the wide spaces where you can build brands and build valuable businesses. So we start with a thesis like that, we do some research on it, speak to people, and then the core founding team, along with some of the resources that have worked with us, spends 3-6 months doing pilot, pivoting, testing the market and all that.
Afterwards, after one has identified the right spaces, open areas, and for that area has obtained the right core founding team, free experiments, running/failing fast and doing pilots… and after all this work, go ahead with the business. So that is the formula that we have. It’s worked out so far so well; but again, that has no importance because for us, each startup is a new story. Every entrepreneur in the morning is naked in front of the mirror, so there is no past that gets 100% carried into the future. It’s like every test match is a new test match.
4Ps B&M: When you are not starting startups, what is it you are doing in your free time?
KG: I play tennis everyday. I’m a fan of tennis. Plus I like to spend time with my family. I don’t party.
4Ps B&M: Your opinion on this whole concept of ‘unicorns’.
KG: Unicorn is a creation of the media. During the early days, it got hyped up. From a purely startup ecosystem point of view, the positive aspect of unicorns is that it has shown that in India, it is possible to create a billion dollar company. Till two years back, one of the biggest question was “Can India have a billion dollar company?”
The world knew that US and China are big markets which can create big companies – but could India do the same? That question got answered by the unicorn status. That, I would say, is the only good part of it. Other than that, I don’t think you as a consumer – whether you are buying from Flipkart or are taking an Ola – are not worried about the valuation of your service provider, whether it’s $15 billion or $10 billion. Personally if you ask me is the valuation right – I don’t know. It’s a question of the buyer and seller in the ecosystem. Even if a unicorn is worth half whatever it was valued last, it’s still a very valuable company, and more importantly, doing an extremely good job.
So I don’t think we should get too much worried about the changes in valuation. We swing from one extreme of euphoria to the other extreme of gloom and doom. Personally, for me, it does not matter as long as they are there and delivering the services. Ultimately, for an entrepreneur, it’s only monetization that matters.
4Ps B&M: You have been an inspiration for a lot of people. Is there anybody who has inspired you? Is there someone who motivates you to face everyday with fresh enthusiasm?
KG: I have been motivated and learnt a lot from a lot of people. Specially for me, on a personal level, my motivation has been my mother. On a professional level, my first job was working with Shiv Nadar in HCL, and between by first and second venture I worked with Sunil Bharti Mittal. So both of them had a strong influence on me. I had just two jobs in between my ventures and both were under these people and they have been my biggest inspiration.
Are Prime Minister Modi’s initiatives like ‘Make in India’ and ‘Startup India, Standup India’ going to change things in the future?
It is nice to see the government recognizing the importance of the startup sector as a key one for creating growth and employment opportunities. The policies announced, the focus and centre-stage attention given to entrepreneurship, steps to remove bottlenecks and bureaucratic formalities are all welcome. The steps are very encouraging and in the right direction. But before we open the champagne, we need to see the implementation.
Some concerns are still unaddressed and open ended. The issue of angel tax , the need to get a fair market value estimate, not being able to give stock options to consultants, advisors, trying to get certified as an approved “startup” by agencies to avail of the benefits… are all grey areas and need to be addressed.
The allocation of Rs. 10,000 crores for startup funding is a great move and will provide much needed impetus to a lot of sectors that are starved of risk capital. Again, the smooth implementation without red tape, channelizing this without leakages and corruption, ensuring it reaches the under-served sectors and regions instead of going to technology-only startups – which anyway get considerable VC funding – is important.
You and Meena are a great team. What are the unique perspectives she brings into the business?
Meena brings lot of unique and complementary strengths to our ventures and especially GrowthStory. She is very good at execution and scaling. She can go from a macro view at 10,000 feet to micro details at the ground level very quickly. She has a great EQ and builds professionals around her very well. She is very good in developing leaders and building a strong “A” team. She is an inspirational role model to professionals.