Attention to cash, empathy, no ego – Ashish Gupta spills the secret behind successful startups
Veteran investor Ashish Gupta
Ashish Gupta is a popular figure in both the Indian startup ecosystem and the Silicon Valley Bank. He founded in 1996, which was acquired by Amazon in 1998, and took the entrepreneurial plunge for the second time in 2000 with Tavant Technologies. The BTech graduate from IIT Kanpur is also a Kauffman Fellow. Ashish holds a PhD in Computer Science from Stanford University.
Ashish has been an early investor in startups likeand Mu Sigma. In 2005, he co-founded Helion Advisors and currently serves on several boards including Ezetap, , , SMSGupshup, and Naukri. His past investments include (acquired by Pine Labs), Daksh (acquired by IBM), , , , and .
In the recent episode of Prime Venture Partners Podcast, a series featuring the makers and doers of the startup ecosystem, Ashish spoke to Amit Somani, Managing Partner of Prime Venture Partners, on entrepreneurship and investing in India.
(Listen to the podcast here.)
Investing - myths vs reality
Ashish has been an angel investor and a VC for more than a decade. While sharing his learnings from investing, Ashish says he has heard from many, especially from those who are not investors, that angel investing is a way to make money.
Ashish clarifies, “I found that angel investing is more a way to exercise one’s passion, and it costs a lot of money. So, it is probably more expensive than golf or tennis as a way to keep yourself entertained.” However, once in a while, one might get lucky.
Another myth of investing that Ashish usually comes across is people believing that one can become a good investor by learning what works for others. He says, just by reading Warren Buffet’s books one cannot become a great investor. In investing, like in tennis, “We all play a certain stroke,” he explains.
According to him, all one (an investor) needs is three good deals in an entire lifetime.
Ashish believes there is a FOMO or Fear Of Missing Out in the private investment market. He connects the scarcity of resources to the reason for existing FOMO in the private world.
He compares a startup to a motorcycle, and public market investing with a bus. “The motorcycle will only take one rider on the pillion with them..it is equally hard as to which bus to climb. But that perception of a bus versus a motorcycle exacerbates the sense of FOMO in venture investing,” Ashish says.
Additionally, he says the Indian market has only a limited number of motorcycles as compared to the US. The number of investors outruns the number of startups, leading to FOMO.
Indian vs US markets
Comparing the investing landscape in India and the US, Ashish says the two markets are significantly different from each other. However, since 2006, the Indian market has gotten more depth, with people becoming more specialised.
However, in the venture business, the maturity curve of the Indian and the US market is very different. “The fact that there (US) exists on a regular basis, makes the market very different,” Ashish says.
The US has had a startup culture for 60-years. There is a VP of something all around in the US neighbourhood, while one can only find VP of engineering in India, people who specialise only in backend and performance-oriented companies.
Having said that, Ashish believes, “The Indian market is growing at a much faster pace than the time it took the US (market).”
There has been a notion of investing behind trends in India. The year 2015 was all about investing in hyperlocal startups, and now, edtech and healthcare startups are the rage.
However, Ashish says, “Trends are very dangerous because most of them turn out to be misleading and venture is a micro-business.”
Successful investments are the ones that involve finding the right micro in the right macro. Going by the trends, one tends to pick the right macro but ignore the importance of micro. Picking the right company in a large market comes with a room to make mistakes, as opposed to picking the right trend, but getting the wrong company. “Most trends turn out to be wrong,” he says.
Stating the example of ecommerce, Ashish says that between 2008 and 2012, dozens of ecommerce companies got money, but only one is left standing -- Flipkart. “I was an unfortunate investor in several of the others,” he says.
Explaining further, he says the essence of investing in the right micro involves selecting the right team. What makes the difference, Ashish says, is the “team’s ability to be intellectually honest, learn, and correct their mistakes within a trend.”
Tips for young entrepreneurs
For potential entrepreneurs or founders who have started up in the last six to 12 months, Ashish says young entrepreneurs need to pay attention to cash. “It’s the single biggest reason companies die,” he adds. While it may sound obvious, Ashish says one would be amazed at how little attention people pay to cash.
On the other hand, startup founders need to be empathetic. “Empathy towards the customers and your team actually increases the odds of success,” he adds.
Finally, Ashish says while it may sound spiritual, but having no ego is a fantastic way to succeed.
Whether it was Albert Einstein, Warren Buffett, Jeff Bezos, or Bill Gates, there is a recurring theme in all of them -- “That self is trumped by fact and market. And these are all signs of having no ego,” Ashish says.