Hello everyone! I had just disappeared after 3 issues of this supposedly bi-weekly newsletter. A lot happened between last post and now. Since being a VC investing in startups, I have come on the other side of the table. Boy it is a rollercoaster 🎢 - “so many ups and downs, but crazy fun”
I spend a lot of time reading content, gathering information, and reflecting on my learnings. I thought why not just put these out through this medium. I will cover (1) learnings from the startup journey (2) Anecdotes which I found interesting (3) Summary of my reading with summary/comments. I will try to keep this biweekly.
🌻 Last week in building
To set some context, I am building Shopflo (a checkout SaaS platform for D2C brands) which will help improve website conversions (currently at 1-3%) for these merchants. We are building the beta product at this stage.
I discovered a very interesting hiring app called “Hirect” this week - which is for lack of a better word is “Tinder for founders” I have spend more time here than Instagram last week. Its simplicity is its biggest strength.
Post a job > Look at profiles to approach/that approach you > Swipe Start chatting > They have button to request exchange nos > Move to WA when they accept
It being mobile first itself is such an amazing thing, beats employee hunting from LinkedIn anyway.
📰 Some readings that caught my eye
Early pitch decks of 29 startups before they became Bn $ companies
https://www.cbinsights.com/research/billion-dollar-startup-pitch-decks/
Insights from these decks →
Airbnb
Insight - Hotels make you disconnected from the local experience
Early GTM - events like Oktoberfest Mardi Gras were big focus, they also used craiglist to post all their AirBnb and feel off their audience
Brex (A corporate credit card company focused on startups)
Problem Statement was clean one liner
Right rewards for this customer i.e. entrepreneur vs Hotel stays etc given by consumer card companies
Very attractive part of targetting startups as customers: Negative churn i.e. churn of customers is much lower that more revenue coming from the cohort (as they are growing so fast)
PS: We are customers of Brex and got a fast track because of having common investors with them. They prolly believe we have a higher chances of growing fast. (ghee shakkar to them)
Tagline was so interesting - Your network is bigger than you think
They were playing on Search evolution from,
LinkedIn is the new way of trusting listing not by their claim (but instead their relationship with other users of the network)
They wanted to be the search engine to find service providers (and run adwords on top of it like google to make money) - looks like they stopped this
It is unfortunate however that to find anyone on LinkedIn, we need to Google them first though :P
Sendgrid - A SaaS infrastructure company which allows sending emails using APIs
Solving non deliverability of email - 20% were not delivered which had revenue impact eg. for marketing emails for companies
They came up deep tech solution for this, basically tracking delivery, diagnosing why it didn’t get delivered, and rectifying the problem
At the time, they were also reducing the servers needed in house to do this i.e it scaled on demand
and provided insights into emails sent
Wework
They were riding on a few fundamental shifts
Freelancing and small business formation was booming
Community was the driver of network effects in this business (in an industry such as Commercial Real Estate which could not have ever been thought of as one with network effects)
Avg center was operating at (in 2014)
~100% occupancy
730 desks
Revenue per member = $628/mo
Revenue per center = $5.4 Mn per year
Rent + Opex = $2.2 Mn per year
Unit EBITDA ~55-60%
With revenue growing from $40 Mn per month in Dec 13 to $400 Mn per month in Dec 15 🚀
They had companies across the size spectrum
Capex per member went from 7100 in 2013 to 3000 in 2015 by getting the landlords to co-invest in Wework
Stronger brand for them created a pull from Landlords to convert their properties to a Wework (they leveraged on this big time)
CRED - https://the-captable.com/2022/03/kunal-shah-cred-plots-smallcase-acquisition-new-funding/
4.5 Mn MAU and 7.5 Mn overall
pre covid this was ~700K
Seems like all those IPL ads are working
Tanmay Bhat must be filthy rich by now for helping them do this
25% of credit cart bills generated in the country are paid through Cred i.e. 35,000 Cr i.e. $500 Mn per month (MASSIVE)
They want to acquire companies to provide offering to this customer
Smallcase - raised 70 Mn so far, valued at 200 Mn, could be valued by CRED at 300-400 Mn
While all of us will keep hating on Cred, they will create the first real super app of India
Myglamm - https://www.morningbrew.com/retail/stories/2022/03/25/how-india-s-myglamm-found-dtc-success
Revenue run rate - $100 Mn
35% is offline and remaining is online (largely D2C)
12 month retention - 50% which is not actually great (I have seen high quality brands operate at 70-100% annual retention)
This metric is basically saying if $100 were spent by customers who bought first time in Jan, they will spend $50 more throughout that year
CAC upto $15 (this is quite high) as in beauty AOV is generally $20-25 and that too for premium brands
To solve this, they are going big on content to commerce play
MAU on website 30K to 60K in 6 months acquiring content and influencer cos PopXo and Plixxo
Acquisition of Baby chakra came next which counts 20 Mn young mothers in their community
HUL is looking to buy MDH for Rs10-15K Cr i.e. 1.5-2 Bn $
Reliance acquired Clovia for $125 Mn (89% stake) valuing the company at $140 Mn
Started in 2013
They were at 15-16 Cr per month scale i.e. $25 Mn annual sales which means a sweet 5x Price to sales
Fun fact - Zivame and Amanter are also owned by Reliance
I had interacted with Clovia team, they have done an amazing job at building a large brand
This category should exist online as “women’s experience buying lingerie from uncles who try to predict their sizes” is just sad
Also, especially with bra category - no of SKUs (sizes x colors x styles) is huuugee (Clovia has total 3500+products) > such large SKU depth is comparable to books which are particularly suitable for online purchases
How Zomato plans to go from 30>10 min delivery
That’s it for this edition! Have a good week folks :)