Growth Story’s third phase - finding future millionaires in asset-light businesses
K Ganesh and Meena Ganesh are known to be maverick serial entrepreneurs because they were able to spot trends that could become business opportunities. But everybody in the industry knows them for their skills as operations experts. They know what the world wants and execute their ideas to precision before they sell their business to a larger entity. Their history is well documented. Starting from BPO services to analytics to education services, each of these three businesses were sold to larger entities at respectable valuations. Some say their net worth is well over Rs 300 crore. But yes they have had successful exits. One such company - Tutor Vista - was sold for a whopping Rs 700 crore to UK-based Pearsons PLC in 2011.
They did not retire after they made their money. In fact, they rolled out a factory model for startups and are becoming dream catchers. For the last five years, their company – Growth Story – has become a platform that scouts for new ideas and enables entrepreneurs to become successful. The Growth Story model is simple; they take substantial stakes – in startups – for risking to launching these ideas into sustainable businesses.
“Working with the Growth Story team has always been about thorough execution to make the startup’s idea work. That’s how they test the market’s potential with all their startups,” says Vipul Parekh, Co-founder of BigBasket.com.
When one visits the Growth Story office – in Bengaluru – it looks like the person has arrived inside a nationalised bank. There are people everywhere and there is a lot of chatter. Then you look around those dull walls – in their office – and you notice that the people hovering around are not pensioners, but they are kids buzzing with ideas. There are several founders whose average age is 20-something and are surrounded with high energy. Their whiteboards are filled with ideas and business strategies are penned on walls. Make no mistake because these are some of the brightest minds in India who are working with Growth Story to ride the startup wave. K. Ganesh and team have been successful so far and are now looking to make new bets.
Their bets are on the changing face of consumer interaction with the smartphone. From chat bots to intelligence in the app, Growth Story looks towards its current set of startups to building full stack services companies on mobile.
Growth Story has been through two phases of growth. In the first phase (2011), companies like Big Basket, a grocery e-commerce business, and BlueStone, a custom jewellery e-commerce site, focussed on vertical business lines rather than going after the horizontal business like Flipkart and Snapdeal. Big Basket has raised a total of $246 million and BlueStone has raised $31 million because they were early entrants to the vertical business line race on the internet.
In Growth Story’s second phase (between 2013 and late 2015), there were companies that further delved into the internet story. They bet on the smartphone’s proliferation in the country and focussed on delivering services such as healthcare, education, gourmet food and home improvement. Companies like Portea, Avagmah, FreshMenu, HomeLane and Housejoy were able to scale up in major metros and raised major money in the process. All these companies put together raised close to $150 million. The first two phases showcased full stack service businesses, which connected the offline and online world.
“There are a few things that I look at every time I meet a startup or float my own ideas. They (ideas) must be ahead of the game,” says K. Ganesh. He says that these ideas should own a category and become the best in engaging consumers on the mobile.
Growth Story’s third phase looks like this in 2016:
- Fully digital companies
- Asset light
- Light on operations
- Mobile as a revenue earner
- Building a lasting brand
“The focus is on aspiring Indians who are consuming services only on the mobile,” says K. Ganesh.
The companies that Growth Story is betting on are MagicX, AcadGild, Grow and HelloClass. MagicX is working on machine learning and expects its bots to solve consumer needs such recharging bills, buying grocery and tracking payment history in just one app. Today, there is a huge war between software engineers over the benefit of apps versus bots. The jury is still out there.
“Bots are in their very early stages. Consumers will continue to download apps for their experience, while bots work for digital media companies. It is still a hype cycle today,” says Abinash Tripathy, CEO of Helpshift.
However, Growth Story is known to bet on things that are in the cusp of a hype cycle. Some of them work and some don’t. They have invested and run over 20 startups in the pre-seed round. Growth Story’s success rate is based on how quick the ideas can scale up the business and raise Series A and Series B money. This is one consistent theme across its phases. At any given point in time, there are fresh ideas that become part of Growth Story. A source who ran one of Growth Story’s ideas that shut down says that the team has no emotions attached to anything that fails. “In many cases, Ganesh and team move on to the next best idea,” says the source.
That said, Growth Story is a constant flow of ideas that are defining the Indian internet ecosystem. AcadGild, for example, is a mobile/web-only engagement model for engineers or any student to learn new computer programmes and operating systems. It offers live classroom sessions and projects to transform students into developers. It is a certificate course that can be the answer to make students employable. “We are a controlled market place of mentor-led courses,” says Vikalp Jain, Co-founder of AcadGild.
Then there is Grow, a fitness app that is piloting its service in Bengaluru. “The best way to follow fitness is to have a proper diet plan that is customised and intelligent. It also has to understand Indian cultural diversity,” says Jyotsna Pattabiraman, founder of Grow. Then there are several other companies that are getting ready to be funded, one of them being – HelloClass, an app whose chat bots connect you to tutors on any subject at any given point in time.
Yes, GrowthStory follows the Y-Combinator and Rocket Internet model to fuse growth in a startup or an idea floated from within. But clearly it has the track record to say that it is a platform for future ideas. It is also a common resource pool where the seed stage startup gets the marketing and admin support. In the end, it is K. Ganesh and Meena who shape the startup world within the platform. The story of their success continues.
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