Farid Ahsan, Co-founder & COO ShareChat chats with Amit Somani, Managing Partner Prime Venture Partners.

Listen to the podcast to learn about

01:00 - Founding ShareChat: Rejections & Insights

12:45 - How First-Time Internet Users Use Internet

20:00 - Content, Commerce, Livestreams & Monetisation

36:00 - Dealing with Down Moments as a Founder

Read the complete transcript below

Amit Somani 01:05

Welcome to the Prime Venture Partners podcast. This is your host Amit Somani. And I’m delighted to have with me today Farid Ahsan, co-founder of ShareChat. Welcome to the show Farid.

Farid Ahsan 01:14

Hi Amit, thank you for hosting me.

Amit Somani 01:16

So the last time Farid and I were together was at a physical RCB match courtesy of our friends at Matrix Partners. And unfortunately, RCB lost again this year. But, it was quite a fascinating chat that we had during the match. So I thought it’d be great. So it’s three years coming to get him on the show. So Farid, for our listeners, if you can talk a little bit about your journey and the early kind of ShareChat journey. What was the inspiration for the idea and a little bit about your own journey as well?

Farid Ahsan 01:45

Sure. So it’s almost been eight years since we set on this journey back in 2014. That’s the time when I graduated from my IIT Kanpur along with Bhanu and Ankush. Ankush was actually still in college, he graduated a year later. And we were going through a lot of ideas, a lot of products, which we were trying to build. We knew that it was just the three of us. We do not know a lot of logistics, ops, commerce. We don’t know a lot of things about how business is done. But, we do know how to use our coding abilities, our product designing abilities, our user understanding abilities, and build an experience for people on the internet. And with that in mind, we set out trying to build various social products at that. Back in the day in 2014, 2013 rather there was a lot of buzz around anonymous messaging apps in the US, whether it was Secret, Whisper, YikYak, and a bunch of others.

And we thought that, while they establish the core use case, they’re still subject to some sort of abuse, and that will become a hindrance in their scaling. And well, that actually played out like that. And we thought of a product which would be probably a different kind of a WhatsApp group chat, wherein people would make content and share anonymously within a group of people that they knew. And that’s how our journey began. But as soon as we launched that product, we did not really get a lot of good feedback. That’s generally the case with any soft launch. Whenever you are trying out a new product, as a product manager or a product developer or an engineer, you feel that what you’ve made you want everyone on the globe to use, but doesn’t necessarily work like that.

And so with that product, we actually went out to investors. We had about a thousand odd users. But we went out to investors. We tried meeting a bunch of them, and most people just rejected us. But there was Madhukar Sinha from IndiaQuotient, who met us and said that, look, you guys make great products. You guys are good. This is not something I will fund. But in case you’re interested in doing something else that’s social, please feel free to ping me. And actually, this was right before graduation. So once we graduated, I just decided to move to Mumbai and meet Madhukar Sinha, brainstorm with him and see what we can build. And once we did that, we figured that there is a chance, there’s a potential opportunity for anyone to build a platform for first time internet users.

Back in 2014, there were no first time internet users. The logic was that someday India would come online, and when all of the Indians come online, they wouldn’t want to use the internet only in English. They would want to use the internet in their own language, in the comfort of their own language. And hence, there will be an opportunity for this first time internet user, for someone to build a platform which acts as a launchpad for this first time internet user. Eventually the internet user would obviously do everything right from payments to commerce, to banking, to very advanced use cases also, like people will do each and everything using the internet. But, as a first pit stop in this journey, they would want to jump onto a content platform first. And that’s how we came up to the idea of building a content platform.

And then still ShareChat wasn’t born for the first six months from 2014, July till 2014 December. We were tinkering with the idea of launching a debate platform where people can come in, take sides, chat, debate. And at the end of, let’s say a couple of hours, it’ll be decided which side won the debate. Now, to grow that product, we were trying a bunch of growth hacks on Facebook groups and WhatsApp groups, a lot of many places. And there Ankush noticed a very interesting and very interesting pattern wherein there was a Sachin Tendulkar fan club on Facebook, where people were posting things like “I’m making a WhatsApp group of Sachin Tendulkar, please give me your phone numbers.” And there was this one particular post, which has some 86,000 phone numbers in comments below it. And we were like, “This is not normal. This is not regular behavior. Why are people putting their phone numbers to join a WhatsApp group when they’re already on a Facebook group, right? It’s not making sense.”

And so we just decided to, we just had the idea that look, 86,000 people can’t know each other. There cannot be one person who knows 86,000 people. And they cannot be 86,000 people knowing one person as an admin, right? Unless that person is really, really famous, right? So, it just struck us that, why not? Let’s just parse all these comments, take out the phone numbers, put them in our WhatsApp, make WhatsApp groups. So at that time, WhatsApp allowed only a hundred people per group. So we had 200 WhatsApp groups each on the three of our phones with 60,000 phone numbers. And we just started observing the behavior of these people. We made like Sachin Tendulkar group once, Sachin Tendulkar group two, Sachin Tendulkar group three, like that. We had like Sachin Tendulkar 600 groups. And we just started observing what these guys were doing. And meanwhile, trying to push them to download the debate app on the side. But, that wasn’t working for us.

Though, we figured some very interesting nuances about this user. Like they like WhatsApp because WhatsApp is very reliable on 2G and Edge. Most of these people were coming from tier two, tier three towns. And in the WhatsApp group, because it is a chat driven interface, you don’t really have to worry about hard vocabulary. Because my vocabulary is not much better than your vocabulary in the tier two, tier three world. Everyone in the tier two, tier three world has a limited vocabulary. You’re not looking at a thousand words or 10,000 words. You’re probably looking at 50 to 100 words each. And then on top of it, because most of our movie banners, most of our media communication happens with titles being coming in English, like when you imagine Kuch Kuch Hota Hai et cetera, Kabhi Khushi Kabhie Gham is called K3G and not Ka3Ja, right?

So because this popular media is a lot more around English, Telekish, Tamilish, and Manglish, all these Anglicized versions of their own languages. It also became apparent to us that people don’t really want English in the language keyboards. Though they want content to be in their own language. And then a bunch of other things about these users, like they don’t really have great smartphones yet. They don’t have a great internet connection. And the most important piece is that since most people were not internet natives, like I are you, we started using the internet back in the early 2000s, or maybe I believe Amit, you may have started in the late nineties, right? So because we have grown on the internet alongside the growth of search engines, like we have used Yahoo as a search engine, right? So our understanding of search is far more nuanced. It’s far more advanced, compared to the first time internet user. And the first time internet user doesn’t necessarily know how to do Google search.

They definitely know how to do YouTube search. They definitely know how to do playstore search, but not generic Google search. And that is where for doing those generic queries, they really depend on joining WhatsApp groups, telegram groups, and asking other people for content, for media, for help, for suggestions. And this particular observation, and also because of this very strong behavior around search, almost all of them have this tendency to share content onto WhatsApp. So combining all these observations together, we figured out that maybe let’s build a product where we have a continuous speed of content in Indian languages, which works the feed, which should work on very low-end smartphones. It should work on patchy internet connections. So the backend has to be a lot more like WhatsApp and a lot less like Facebook. And also just put the people who belong to one language together. Don’t let multiple languages mingle together.

We don’t have to worry about a keyboard because most people don’t care about typing in their own language. They care more about having the same, understanding the vocabulary. And more so, if you have Tamilish script or a Telekish script or a Manglish script, the youth is able to understand it far more easily, as most people who are taking primary education or secondary education, beyond class 10th, they don’t read their regional language or Hindi. In 11, 12, if they’re taking commerce, if they’re taking arts, if they’re taking science, they are not necessarily reading a second language. They’re mostly reading English, right?

So, with all of this observation we launched this product and we called it ShareChat. We called it ShareChat because share and chat were two words that we felt that nobody would make a spelling mistake in any language. And secondly the words share and chat were things that people would understand whether they are from Tamil Nadu, whether they’re from Assam, whether they’re from Gujrat, quite easily. And yeah, we actually had another option in mind. We were thinking of ChaiTime versus ShareChat. But then we felt that a lot of people have coffee instead of chai, so it might not fly with them, so let’s not do that. So, we stuck with ShareChat. We always used to think that we’ll keep another name someday, but that day never came. ShareChat became the brand that we ended up building. And yeah, this was December, 2014. It’s been-

Amit Somani 12:20

Yeah. So I have a lot of follow up questions. I think there’s a lot of things to double click on. But let me take kind of fast forwarding to 2022. If there is somebody else, right? Some other Ankush or Farid or Bhanu, on a ShareChat platform now, which has a few million users. And finding interesting patterns about consumer behavior, which I’m sure you and your product managers and your co-founder are doing every day. What are some of the behaviors you’ve circa 22, that were perhaps not there in 2014 or 2015?

Farid Ahsan 12:55

Okay. I think one of the biggest things that have changed is people have started to learn how to do Google search. That’s one big difference. People can now fill up basic forms. We earlier… see a lot about the internet is about filling up forms. If you can fill up a form and send a request, or you fill up a form and join a queue. If you fill up a form and get a ticket. If you fill up a form and get a certification, be done. Or if you fill up a form and query your board exam results, or if you fill up a four query job openings. Or if you fill up a form query what courses you can study about? Most of these things people have started understanding.

Moreover, back in the day, if you would do CBSE class 10 exam results, there will be five bogus links. And then there will be a sixth link by an IC, which would be the real link which people would try and click onto. Today, the user doesn’t click on the bogus links. The user has figured out that these links are bogus, these are ads, and no longer you can fool the first time internet user. The user has become more informed. They have become more open to the idea of doing payments online. They know that if they’re paying online, their money can come back, if they’re paying to trusted sources. For instance, we are having micropayments happening on ShareChat platform for our chatroom product, for our live streaming product. There’s a lot of virtual gifting happening on our platform. And yeah, we are doing numbers in the millions per month in revenue for just through micropayments and gifting.

So that behavior has changed that people are ready to tip people, as ready to spend small amounts. And I think that’s because of the UPI revolution, people have started trusting digital as a way to pay. And then again, people have started valuing influence and people have started valuing the fact that they can come close to someone who they appreciate. Back in the day, people would be more like yeh tumko kya de dega agar isko aapne gift kar diya, right? So, people have I would say the internet user is far more sophisticated today, knows how to pay, knows how to question, knows how to ask, knows how to answer.

Amit Somani 15:45

So, Farid, I will go back to your original dream, which was to build a platform for first time internet users in general, and then specifically around the area of content, community collaboration, chatting, whatever. And then different people build different rails, like you said, UPI, micropayment services happened. Video was happening in a different way. So have we collectively now trained, quote-unquote, another couple of hundred million users to be more, dare I say, be on the regular big internet? Or will we keep having the next generation of first time users keep coming? Like have the rails been built that now some new person in Bhubaneswar, Rajkot or whatever, just like, it’s very trivial for them to come onto the internet, whether it’s through ShareChat or through the micropayment, or whatever it is. And they want richer services. That was one question.

And the other one, if you can specifically focus more on the content behavior and how that has changed, right? With respect to, are people, for example, now that they’re trained and hang around on ShareChat a lot. Do they want to type in their native language or have they just skipped all that and just point to video and vocal and say, “We’ll never type, we’ll never write content. We only speak and do videos.” So both of those, right? What do you think about the next 500 million internet users? And what do you think about the content behaviors?

Farid Ahsan 17:10

Yeah, I think the rails have definitely been built. I think the fact that there is the first… The new internet user only comes from like three broad population demographics. One is the oldest generation. The second is the youngest generation. And the third is women, right? This is where the majority of the major demographics that are hopping onto the internet are coming from. Now, for the youngest generation, it is not actually us or anyone like us who is solving. It is an Unacademy. It is people like who are working in education, like Byju’s and Unacademy and all these other edtech players. They are the ones who are making this user adapt to the internet very quickly. And then people like us, people like Instagram, people like YouTube, all the media players are helping them procrastinate.

And then on top of it, you’ve got PUBG, you’ve got games, you’ve got a bunch of these live streaming apps and chatting apps and dating apps. And so many people have built so many kinds of dating apps already in India. If you know about this company called Friend, and then there’s a lot of people who are involved in the mind of the youngsters now. So the rails do definitely start from EdTech, but there’s a lot of… the ramp is quite well built for the youngest generation. Whether they’re from tier one city, to tier four city, to tier five city. You must have seen it in your household or within your family that very, very young kids are using YouTube kids. They are all watching Cocomelon, whether they’re from the highest echelon of the pyramid or the lowest possible financial strata for the internet, right? So for the youngest it’s all, for the oldest, again, the fact that YouTube is preloaded in all Android phones, right? The fact that YouTube is a Google service, and the fact that they love WhatsApp. And the fact that ShareChat exists, where they can find content that they get to share on WhatsApp. I think that part is solved for them through just these three platforms, YouTube, ShareChat and WhatsApp.

Now, when we come to women, I think that’s where it gets a bit tricky, that you are talking about middle-aged women between the ages of 25 to 45, who are neither in the youngest generation nor the oldest generation. They are, in some cases, also earning members of the family, but they are yet not, I would say, well acquainted with the smart phone internet. Part of the reason is the financial situation of our country. We need a lot more jobs. We need a lot more per capita income for that information democracy to trickle down to the second most important member of the family.

The second thing is that a lot of utilities are yet to be built for the woman of the house, right? And if you look at behaviors between men and women in general, men tend to pick things which are more famous, which are catching fire, which are becoming viral. Women tend to pick things which are more utilitarian in nature. And because of this difference in the first choice of things, women…there are still a lesser number of products available which women can adopt. Now, having said that, YouTube, ShareChat, Moj, such products, definitely do provide one entry point for this set of women to find credible content that they can use, that they can utilize, with which they can manage their house better, probably start a secondary income, start becoming a reseller on Meesho. Start becoming a reseller, someone who’s a partner of Amazon, Facebook or any of these commerce websites. When I say Facebook, I mean like the Facebook Marketplace, right?

So, the rails are not yet established. I would say they are in the making for this segment, but I don’t see a reason why it would not be established in three years or five years or so. And we will continue to play an important role in all three demographics. And of course, men, young men, old men, middle aged men, they have adopted smartphones and the internet quite early. And we have, I think content as a category has grown alongside the growth of the internet. And I think for this demographic, the rails are very well established. Everything is very well oiled, right from BharatPay to ShareChat to let’s say any of these services that any of our unicorns that we know in India, right?

Now, if I come to the second part of your question around content, how has content changed? I think there was… when we started out, if you look at the content profile of ShareChat, about 90% of our content was text. 9% was image. 1% was video. Eventually it started changing to 50% text, 40% image, 10% video. But then when Jio happened, it started changing very rapidly to the point where I think in 2019, I remember we were 70% video, 20% image, 10% text. And as of today, we are 90% video, 9% image and 1% text, which is a complete reverse. Now what happens post video? So that’s where the headwinds have started to come up. If you look at ShareChat chat rooms, or if you look at Moj live, or if you look at any other live streaming platform, this is the next level of video streaming. Why was this transition not possible earlier? Because people were data conservative.

People wanted to spend less on data. Data was costly. Now when Jio happened, data became cheap. So people jumped onto video. As people started spending more data, people became habituated to the fact that I don’t really need to see recorded videos. Why can’t I see the live stream? And that has actually led to the increase in things like viewership of live sports. We are now seeing a lot more people, while of course people still watch live sports on TV because it’s the cheapest way to watch live sport, live content, eventually we’ll see all the content or a major portion of the content profile becoming live. That includes live video commerce. That includes live music shows. That includes live sports. That includes live influencer, top shows. That includes everything around live. So I believe live will be the next biggest category of content. It is not video. It is not text. It is not image. It is everything and anything under the sun coming live right at the moment at the point. And I think that’s where we are headed to.

The interesting bit is that people like you and me who have been on the internet for a long time now, we might be more apprehensive towards live compared to the first time internet user. Because for us, the change is not the norm. We have been consuming… we have been using YouTube, for instance, for… I have been using YouTube for 12 years now, right? And I’ve been using Facebook for, unfortunately I don’t have a Facebook account anymore, but I came on Facebook the first time in 2008, which is like 14 years ago, right? And then back then we were on Orkut and we used to be on like so many other social platforms. So for people like you and me, I think as per the internet age we have become old. I am 29, but I…

Amit Somani 25:25

To say the least, I won’t even say what my age is. I’ve been using these before you were even born. No, it’s very interesting. Actually, I was doing a podcast with Tanmay Bhat last week and he said very, very, very long ago how YouTube was in 2013, it was just so different than it is now. So I can’t even imagine what it was like in 2013. That was not very, very, very long ago. That was just like nine years ago, right? But, fair point. I loved your categorization of the oldest, youngest, kind of the middle-aged women and so forth.

I would be remiss and we’ll switch gears a little bit and talk a little bit about this monetization angle. Because there are a lot of founders who are doing very interesting content driven play, social driven play, where it is a lot about distribution and reach and engagement, but maybe not so much about monetization, certainly not in the early days, right? How do you deal with that in the journey as a founder, because you’re passionate about it. You say, “Look, I will build on ramp for middle aged women who don’t get good, precise content.” Let’s say some founder is listening to this podcast today, not to mention all of your product managers or whatever. But now you say, boss, kuch paise toh banega nahi. I’m not going to make money on this for a while. So how do you play that journey as a founder? I’d love to hear a little bit about that. And what was your journey like?

Farid Ahsan 26:45

Yeah. So I think first of all, you have to be very clear with yourself that paisa nahi banega. You don’t lie to your investors, to yourself or to your team members that you’ll make money the next morning. The fact remains that in business models like ours… Madhukar Sinha, from IndiaQuotient, coins it very well, that it is like a factory building business… it takes 10 years to build a factory, you make money when the factory is ready. All the money gets returned between 15-20 years and from 16th year onwards you make a lot of money. And that is why building a factory is very hard and very profitable.

Amit Somani 27:30

I love it. It’s a long gestation business. I used to be in travel for a while. Hotels were like that. Hotels start producing cash after 10, 12, 15 years. So another example from our friend Madhukar.

Farid Ahsan 27:45

Yeah. No. So our business is pretty much like that because you have to build the, first of all, you have to build a reason why your top of the funnel will keep expanding. A reason why people will keep coming back to your platforms. And then secondly, you have to build those experience traps, if you may call them, with which people get addicted to your product, or people get stuck onto your product. They may not believe that they are addicted. But when someone’s spending 30 minutes on average on a day on your platform, no matter how much they criticise your platform. Even then they love it. it’s the same with us. It’s the same with TikTok, and it’s the same with YouTube. It’s the same with Netflix. It’s just the same with any content platform who’s been able to retain users. The user at the end of the day will not feel ki, waah mera toh life change ho gaya. It’s less of an aha moment. It’s more of a what the f moment, right?

So, I think the fact that to build these traps, to build these experiences, to build these situations where people want to stick long enough to probably have a discourse in the community that they have built there, or probably just decorate their content, which they want to show to everyone on the platform. Or, just want to, while away time, while being on their daily commute on train, bus or anywhere else. To build these traps, it takes time. To build these experiences it takes time. To build the top of the funnel it takes time. And even though one may be able to, like… I’m talking about the potential founder or the potential product manager listening to this podcast, even though you may be able to attract, let’s say a first bunch of users, there’s a certain critical mass before which your product will not be monetizable. That generally, if you…

I use this analogy a lot, but there’s no proof to it. It’s just that I have trained my mind to believe in it. There was one curve that I saw about the adoption of scooters in India. And the same curve was applicable to the adoption of television sets. And the same was to mobile phones, that beyond 20% adoption by population, the time taken to adopt by the next 80% is shorter than the time taken to adopt by the first 20%, right? And once you are on that 20% number, somewhere around that, let’s say you are building for middle-aged women. Let’s say you target Telugu as a demographic, that you will target Telugu middle-aged women. Then you’re looking at, let’s say about, I think about 25 to 30 million people who are using the internet, the Telugu middle-aged women. So now 20% of that, that meets about four to five million people. So you need four to five million MAUs first. If you’re not getting there, monetize nahi hoga.

You do your experiments to prove to your investors that yes, we can monetize. But they are experiments, they will not scale. Because monetization again is something which is done by 1% of your user base, or 3% of your user base, or 5% at best right? It is not done by 20% of your user base. Like on eCommerce websites, it’s different, because the intent to come to eCommerce is to buy. The intent to come to a content platform is not to buy. It’s to while away time, right? So agar aap 5 millions user base hai, usme aap 1% user dekh rahe hain, So you are talking about 50,000 users. 50,000 users are buying stuff.

Then again, you have to look at what you are selling. If you are selling something, which is just one Rupee, you are never going to break a profit. You have to figure out something that you can sell to them, which probably covers up for the CAC of the five million people. Only then you will have a LTV/CAC ratio which is positive enough for your factory to make sense in the long run when you have 50 million users, right? So, being honest to the maths, being honest to the destination is something which is very important. And being honest to the fact that monetisation won’t happen from day 1 you need that critical mass. I think this is very key to keeping your sanity alive. And of course you need to find investors. Not all investors believe in this. Not all investors like this idea. Not all investors are patient enough for that. And there’s nothing wrong with those investors. They have their certain investing style. And that is why pure content has only traditionally seen only a few sets of investors doing well and not everyone else because, well, it’s not everyone’s cup of tea.

Amit Somani 32:30

So, I have a quick follow up question as we get to the end of the podcast. In that journey from zero to five million users, before you really experiment on monetization, right? Like you said, there’s maybe one, two or 3% that will monetize. How do you keep your intellectual integrity, that is the product connecting, right? Is it just engagement and retention? Is there something else you’re looking? Forget the monetization, that, okay, this is going to lead to something, right? This is not going to be just some random utilitarian app, another 10th clock app or 15th alarm app or whatever it’s right? Because that’s the downside of utilitarian or content things where you may never make it past that initial valley, as it were.

Farid Ahsan 33:20

So I think for that, there are two important metrics that you need to look at. One is the organic install rate. And you should actually be building experiments with which you can try out various viral loops. Like if you’re not having a viral loop embedded in your product, then you’ll find it very hard for a content platform to take off. Because otherwise you will end up giving a lot of money to Google, Facebook, and now to us also, and maybe to a few other people to get installs from users. And you’ll have to wait for that brand to get built. And once that brand is built, you can expect arre organically users aaenge. But honestly, what happens is that when you spend so much, you end up advertising to almost everyone on the internet.

And even then if people are not using your CAC it balloons to something very, very big. So unless you have a fairly large, and it works for ed tech, by the way. Because the LTV is very large. The amount of money they can charge is very large. It actually doesn’t work for any other content platform or such, right? So it’s about getting that organic loop baked in. You have to have that in place because that gives you a good marker of whether people are referring your product to other people. Sometimes they do it intentionally. Sometimes they do it unintentionally. But in both cases you have to have those mechanics baked in.

And then secondly, your retention is definitely important because once you have a good retention number, you know that for every dollar spent how much dollar you don’t have to spend again, right? Dollar retention is far more important. Like if you’re completely organic, like if you’re growing organically, you have an organic loop in place and you are not spending dollars. Great, fantastic. That’s actually how our journey was in the first two, three years. We were majorly 90% organically growing as a company up to, I think seven, eight million DAUs. We were up to like, I think this was till 2018, up to 8 million DAUs. We were majorly organic. Now being organic is a superpower because your retention automatically is higher. And your CAC is automatically very low. And so I think that’s something which allowed us to keep our sanity in place, that we had those organic loops. We had organic growth coming in. And if you look at our organic growth, it was very simple.

The most important thing that any user could do on ShareChat from day one was share content. And whenever you would share content outward, we would just attach a link to it, like a very small, simple thing. Out of 10 shares, out of 10 people who view your shared content, one would click on that link. Out of 10 people who click on the link, one would install the app. So that was a one person conversion. Now, if somebody shares a hundred content pieces to 10,000 people, I still get hundred users, right? And that one user has been able to give me a hundred users by sharing just a hundred content pieces. Now, how much time does it take to share a hundred content pieces? Four days. Because every day, somebody who shares, shares about 20 to 25 times. Now this is back in 2015, 2016. Now this itself was fantastic.

Now again, some people would click on this link intentionally, some people would click on this link unintentionally. Some people would share the content with the intent that people should install ShareChat. Some people would share the content without the intent that they should install ShareChat. I don’t care. For me as an entrepreneur, what I care about is my top of the funnel was ballooning. I don’t really have to spend dollars to do that. And then I have to build those moments of experience with which the user who has come in retains for the long haul.

Amit Somani 37:15

Hey, wonderful. Farid. This is just a gold mine. Lots of interesting insights. I have many more questions, but we do need to wrap here. So I’m going to ask you just one last one, and maybe you can give a brief answer. We often talk about the ups and ups of the founder’s journey. And there are enough down moments in the founder’s journey. And as we’re going through one broad down moment, right? Like funding seems to have dried up, et cetera, there are some sort of rumors about your own funding, but nonetheless. Can you talk a little bit about how you keep your energy levels and spirits high during the down moments, right? That will be a good way to potentially end the podcast.

Farid Ahsan 37:55

Sure. Again, I would use a quote and analogy that we had been taught about, we had somebody tell us, but probably we told someone that when you’re baking a cake, you don’t congratulate the chef when he gathers the ingredients. So capital is something as gathering ingredients. If there is bird flu and chickens disappear from the market and you have less number of eggs, that doesn’t mean that the chef is bad, or the cake will not be baked. The cake will still be made with less number of eggs probably. But, good chefs will find the eggs, irrespective whether there is bird flu or not. And good chefs will make good cakes, even with lesser number of eggs. So you should focus on the act of baking and not worrying about how many ingredients you have. Because, you got to make due with whatever you have. When times are great you’ll be able to gather a lot of eggs, milk, and flour. And when times are bad, obviously the markets will be like this.

So if anybody is lucky enough to, as a founder, they will end up seeing a lot many downturns in the market. It’s because upswings are things that you can see quite easily. Most of the time markets are not bad actually. Markets are bad once in three years, once in four years. But markets are good. That’s like the general status quo for a growing economy like ours. So, I would say that we have seen this, we have seen different kinds of downturns. We’ve seen the funding winter of 2015, 2016. We were born in that timeframe. We raised our first funds in early 2015, and then in the middle of 2015. And then in the middle of 2016, we raised a lot of our early funds. But it didn’t really bother us with what’s happening in the market because the fact remains that all VCs, all investors, it is their job to invest.

Founders should understand that it’s not that people will stop investing because they don’t feel like it, right? People are in the job of investing. They will become a bit more conservative with respect to valuations, with respect to the capital that they can deploy. But you necessarily did not need a lot of the capital that you were taking up earlier. If you are a good chef, you’ll bake your cake well, irrespective of the number of eggs you get. And that’s what people should focus on. They should understand that while we say we should raise for 18 months, like all of us, me as an Angel, you as a VC, we would’ve always said, and me as a founder has also done this, that we raised for 18 months, we raised for 18 months. But the back of our mind, as a founder, Ankush, Manu and I, we always used to imagine that this will be our last fundraise we won’t raise after this round. Because one, it is a very painful process.

Going through the discussions, going through term sheets, going through the fear of not getting a term sheet, going through the fear of rejecting the good VC or rejecting a good source of long term money. So, there are lots of fears when you are raising. And we always used to have this frame of mind that this will be our last round iske baad nahi raise karenge. And when you play the game like that, you really plan for longevity. But what happens is that when you plan for longevity, you do so well and your economics are so good, that at the end of seven, eight months, your numbers start looking very good for the next round to happen. And then the VCs, the investors you have on board will push you in that direction, will introduce you to people who eventually will give you the next term sheet.

So, that as an operating method has helped us so far. And again, we’ve been lucky in so many ways to have survived this path. And another kind of downturn is when you have competition, like competition that’s crazy. I hope that kisi ki zindagi me Bytedance jaisa competition na aaye. But, we had that competition. It’s super hard to fight people who are so passionate. But, it’s also very inspiring that as a country, as an ecosystem, how far behind we are from China. All of them, like their entire team, their entire work ethos is far more aggressive and far more business oriented than our ecosystem. So, I think down turns teach you a lot. You should focus on the fact that you have to stay long enough. Every capital, every dollar you raise, you should treat it as the last dollar you raised. And be honest to the destination, be honest to the process, and believe in the process. If you are really a great entrepreneur, you will sail through irrespective…

Amit Somani 43:00

I’m speechless and that’s rare. This is like almost coming on our hundredth episode for the Prime Ventures Partners podcast. But, this is absolutely terrific advice from a terrific founder, that consider every funding round as your last one. And then it won’t be your last one because you’ll operate for longevity. So, thank you so much Farid, for being on the podcast. Delightful to talk to you. And so good to see you after several years.

Farid Ahsan 43:25

Thank you very much, Amit. Thank you for having me over. It’s very good chatting with you as always.

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