You have to be the secret sauce in your startup: Prime Venture Partners’ Sanjay Swamy

Entrepreneur-turned-investor Sanjay Swamy believes failure is ‘overrated’, the trick is to ‘keep learning and improving’.

Most people in the Indian startup ecosystem will vouch for entrepreneur-turned-investor Sanjay Swamy’s stellar track record. From starting mobile marketing platform ZipDial, which marked Twitter’s first acquisition in India, to co-founding mobile payments company, mChek, at a time when digital payments weren’t even heard of in the country, he has done it all.

Donning the investor hat, Sanjay co-founded Prime Venture Partners, an early stage investment firm that looks to invest in category-creating technology-driven startups. He is also the Vice Chairman of the Board, Co-founder and investor in payments provider EzeTap, which has been funded by Silicon Valley-based Social Capital.

A leader has his own set of 'brand lessons'. When asked what his were, Swamy cheekily replied:"Send me Rs. xxxx to theswamy@upi and I'll tell you." The conversation was peppered with his whacky sense of humour, giving light undertones to the conversation.

Featuring in this week’s YourStory Conversations, Sanjay offered his take on Indian startups, entrepreneurs, his investment philosophy and more.

Is there too much on his plate?

Sanjay is well known as a serial entrepreneur and an active investor, but doesn’t it get too much?

With his finger in many pies, Sanjay doesn’t see it that way. He believes that at heart he’s an entrepreneur, and treats Prime Venture Partners as a startup.

Speaking about his journey, he says,

“Being an entrepreneur is always challenging. The ability to multitask, prioritise and keep re-prioritising without losing the big picture is a crucial skill for any entrepreneur. It’s also very lonely sometimes, but who said it was going to be easy?”    

In a world of never-ending priorities, how does Sanjay prioritise and tick off all the tasks on his to-do list?

Sanjay accepts he doesn’t get every task on his list completed, and chooses to live with it. Prioritising and ensuring all big things get done is all he can do; that includes his personal or family time.

But there’s a catch for entrepreneurs.

“When you are running a company, as the founder you have to do everything others don't [want to] do. And this is where prioritisation and stepping back from time to time are crucial!”

Enjoy the entrepreneurial journey

Apart from EzeTap, which was recently in the news for raising funds, Sanjay sits on the board of Happay, KredX and NiYO.

Three startups and a handful of investments later, he says: “I have to say being a VC is a lot more hard work and many responsibilities [of managing other people's money]. Success is determined over a much longer time frame too! For now I don't think about this – I just focus on enjoying the journey, and learning from the industry and the amazing entrepreneurs I get to meet and have the privilege to work with. I wouldn't trade what I'm doing for sure.”

When investing, he feels it ultimately boils down to the entrepreneur, the opportunity they are targeting and their differentiated approach/insights/distribution mechanisms.

Looking at a 10-year horizon, Sanjay feels India is in the nascent stage of a massive boom, which makes it even more important for entrepreneurs to think long term, choose the right problems and attack them in a differentiated manner.

From acquiring the right customers to building partnerships, Sanjay reiterates the need to build right, since it is tough to “change the DNA of a company later”.

“Over the past couple of years, the Indian startup ecosystem has seen some sanity, seeing the end of vanity metrics based assessments [like GMV], along with a change in perception for founders who now want to build lasting businesses,” he says.

He adds, “In my opinion, the best time to start your company was yesterday - if you're a fast learner, you'll learn on the job. A few mistakes [hopefully non-fatal to your business] are to be expected, but that is likely to happen even if you get two more years of experience. So do it now!”

Sanjay’s thumb rules on investment

Having set his sights on some category creators, what does Sanjay’s rule book on investment say? He lists it as a few questions:

1) Do the founders have unique insights to make the status quo substantially better?

2) Is the opportunity big enough? At say 10 percent market share, can a startup be making Rs 100 crore in revenue or more?

3) Will the startup require a significant amount of capital? Are the unit economics sensible?

4) Is there a “network effect” in the business?

5) Is the startup’s customer sticky or is it a leaky bucket where one keeps adding customers at one end and they keep falling out the other end?

6) Hustle, which compliments the learning quotient

Sanjay also talks about the importance of looking at other quantifiable but business-specific metrics such as Customer-Acquisition Cost, which define the health of the company.

His assessment doesn’t stop there! He also believes the founding team is crucial. Apart from gauging how they complement each other, this venture capitalist looks at the team’s learning quotient, the ability to make quick decisions based on data, motivation of the founders to solve real problems, domain insights, and the “ability to think long term and execute short term”.

Highlighting sectors apart from the ones he has invested in, Sanjay predicts that SaaS, agri, education, SME, healthcare and government solutions at the domain level present a massive upside!

For entrepreneurs in the making

In a country where only a very few startups see the light of the day, not everything works according to plan.

In this harsh environment, Sanjay has a rather interesting take on failure and recalibration.

“It's easy to say failure is a stepping stone to success, but I don't necessarily think people care about failing first. Failure is over-rated by many. To me, the trick is to keep on learning and continuously improving through controlled experimentation. You have to be a continuous learning machine and willing to go back and throw opinions and ego out of the window if data proves you wrong; that's crucial.”

Sanjay adds, “You should do whatever you can to make your startup successful; that should be the only goal. The moment you bring in other constraints, you are doing a sub-optimal job! Why would you want to take ANY risk, considering the probability of success in any startup is so low. My advice is to think from the startup's perspective and do what’s right.”

Sanjay sums up his learnings as advice for budding entrepreneurs:

1) Only focus on why the world will be better for others (your customers) if your idea succeeds and why it won't if you fail! Convince yourself first that this is the right thing to do.

2) The next step is to convince yourself that you can do it better than anyone else - and that involves some insight you have that very few others might. In other words, YOU have to be the secret sauce!

3) Convince yourself that the customer base already believes this is a pain point for them. I always use the analogy Aspirin, not vitamin – a vitamin is nice to have, but an Aspirin solves a key pain point and has promise.

He goes on to speak about the importance of brand value.

“Brand is everything. You have to be very picky about how you represent your brand. Never let your brand get diluted - whether it is your email signature, your website, your team etc. As long as you value and respect your brand and keep constantly correcting people [for example, spelling my last name Swamy, not Swami], you will build a brand! In other words, never think your brand can be built later, it starts now!”

That clearly solves the curious case of why his Facebook, Twitter, Skype and LinkedIn accounts have a common username – THESWAMY!