[YS Learn] How Paytm, Zomato, Flipkart, and Zynga mafias are changing the face of Indian startup ecosystem

In 2007, the Fortune Magazine put out a picture of a group of men sitting in a bar, all looking very ‘mafia-like’. But these men were nowhere associated with the mob or the mafia, but it was the PayPal Mafia. 

Unlike the usual connotation of mobsters and gang lords, a startup mafia is made up of a group of former employees, managers, executives, and co-founders. Coming with intense experience, these people come together to start new ventures and companies on their own, and in turn create more jobs and products in the market. 

For example, the PayPal Mafia, formed by a group of former PayPal employees, has founded some of the most influential companies in the Silicon Valley such as LinkedIn, YouTube, Yelp, Yammer, Tesla Motors, SpaceX, and Palantir Technologies, which are worth over $1 billion. Apart from the PayPal mafia, there are several other mafias - from Google, Facebook, Twitter, and many more. 

According to Topica, an online publication, the biggest success factor in the Silicon Valley ecosystem is not venture capital funding, policies, or access to talent, but it is the ‘Mafia Network.’ This network provides support, investment, gives mentorship, helps each other and also many upcoming startups.

The Indian Mafia world 

The same is true closer home as well. The Indian startup ecosystem may not be decades old like the one in the Valley, but the number of mafias and serial entrepreneurs in the country are creating a mature and robust startup ecosystem. 

Flipkart, Paytm, Zomato, redBus, Freecharge, Zynga (while a Valley company, the startups grown out of the mafia in India cannot be ignored), and the list is endless. 

Sujeet Kumar, Amod Malviya, and Vaibhav Agarwal of Flipkart started Udaan, a unicorn in the B2B ecommerce segment. Bhavik Rathod, Founder of Kyt, was an Uber executive; Alex Peter, Co-founder of The Quartile Company, was with Zynga and later with Matrix Partners India; Shan Khadivil, Founder of FreshToHome, was also with Zynga; and Mayank Bidawatka, Co-founder of Vokal and Koo App, was with redBus. 

It is not just the mafia, but several second time entrepreneurs such as Aprameya Radhakrishna (Vokal and Koo), Kunal Shah (Cred), Ashish Kashyap (INDWealth), Pankaj Chaddah (Mindhouse), Ravish Naresh (Khatabook), and many more are responsible for making the Indian startup ecosystem a success.

“Fortunately, I have had the privilege of hiring and working with a company that churned out some amazing entrepreneurs, namely Zynga. A 300+ member team in India churned out a whopping 25+ companies and the first thing they did while forming these companies was to hire or work or mentor or advise folks whom they’ve worked with in the past,” says Alex Peter, Co-founder and CEO, The Quartile Company, who was with Zynga and later with Matrix Partners India.  

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The significance of mafias 

Sujeet Kumar, Co-founder, Udaan, who was responsible for setting up the entire logistics operations at Flipkart, says, “Mafias or second-time entrepreneurs - they bring in a certain validation to the ecosystem. If you look at mafias, they have seen the journey of starting up and setting processes from scratch. They understand the nitty-gritties. But on a larger view, it also means better capital, talent availability, infrastructure, creating opportunities, all of these are part of being a mafia.” 

The operational experience that comes by working in such teams brings in a certain trust factor that makes it easier for them to hire talent, get funded, and even build the product. 

Alex points out the key advantages of a mafia-driven approach: 

1) Familiarity 

2) Cultural alignment from day zero

3) Ability to scale best practices quickly 

4) Easier to align vision, mission, and goal

5) Trust 

6) A strong support system - procuring seed cheques, mentorship, etc., from the outside and the ability to hire, align, and work quickly and efficiently. 

These people have a certain DNA and they are entrepreneurial in nature. They are not looking for a cookie-cutter model of working. They learn the ropes, and identify the problem statements and work to solve for it. 

“If you look at the mindset of the mafia entrepreneurs, they are mostly risk takers. They joined a startup in the early days, and believed in the founder. It’s a gutsy call. Today, Flipkart, redBus, and Zomato may all look like big companies, but back in the day, nobody had a clue if these would survive, or what would happen,” says Mayank Bidawatka, Co-founder, Vokal and Koo. He was also in the founding team of Goodbox, and was one of the early redBus executives. 

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The second-time rush 

“Serial entrepreneurs are a rare breed of individuals who are fearless about taking the leap of faith (for the second time) and making things happen. If you take a step back and look at their lives - you notice something very interesting: these are individuals who have a lot to lose because of their previous exits, success stories, etc. Their success precedes them, which gives rise to doubts, perform based on others’ expectations, etc,” says Alex. 

He adds that serial entrepreneurs have seen and dealt with the good, the bad, and the ugly. They have insights, ideas, plans, etc., that are tried and tested. They have better ability to navigate through issues, experiment faster, and raise funds quickly.

On the other side, for VCs, it is an easy decision - these are tried and tested folks; folks they have trusted their money with in the past and have done justice. 

“These people also generate belief either with the investor or the colleagues, and can attract better talent. It is now getting better and real in India,” says Sujeet. They also give an opportunity to other people with talent to learn the ropes of building a business or function within a business. 

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Bringing back the resources 

Many of the second-time entrepreneurs are also angel investors and mentors. Sujeet himself has invested in startups like Vakilsearch and celebrity-engagement platform Tring. Kunal Shah, Founder of Cred, was earlier the Founder of FreeCharge, has been an angel investor for a while now and continues to make a few investments. 

Before starting up Vokal and Koo, both Mayank and Aprameya Radhakrishna played an active role as angel investors and advisors to several startups. Over the last few years, Aprameya has invested in 12 startups – some public, some not – and his investments range between Rs 10 lakh and Rs 40 lakh. 

His investments include Goodbox, a hyperlocal app that enables business operating in a brick-and-mortar structure to go online; Unacademy, which offers online tutorials; Vyomo offers on-demand beauty services; Daily Ninja, an online platform to manage daily needs; and YourDost, an online counselling startup.

“There is an understanding and experience the mafia and serial entrepreneurs bring in to the startup ecosystem. They understand the complexities in terms of the models, people problems, investments, and financing,” adds Mayank. 

As more mafias and second-time entrepreneurs become a part of the startup ecosystem, the system becomes more robust, with better founders, better jobs, and talent in the market. 

“There has never been a better time than now for building a business in our country. The availability of talent, resources, and funding is increasing with each passing day,” says Sujeet.