Behind The Scenes Of Shark Tank India | The 1% Club | Ep 14

I don't have a lot of money like these four it's um what is a lot of money that's that's why she was just smiling at me when I said Financial Independence what's that you know in this uh third season uh in 2 weeks there is a deal which is already shown that guy is not responding already [Music] yeah hey guys welcome back to another episode of the one person Club show on today's episode we have none other than the shars let's begin all right so the first question that I want anybody can answer right um very interesting question I don't know if you guys thought about this but if you guys were last your last one CR what would you do to look she's laughing at it right it's a it's a possibility right if you're last year one CR what would you do to become rich how do you become rich so you be you'll not do anything yeah so if there was no business I would have probably rebuilt the same company but probably from the learnings from the past you uh I would I mean assuming I don't have this business I I would probably one CR means I would look at what is Amazon May trending buy inventory of something which is you know can be easily built as a product with reviews and you know a few uh there isn't enough competition there and uh build an Amazon Marketplace business because I think you right now you have the opportunity to uh service 19,000 PIN codes in India sitting in one place with a very little working capital and I would capitalize on that that's a very good answer I like it [Music] one of them one of the options would definitely be in shorts I think I am a complete Healthcare buff um they you call me farmer for a reason I'm obsessed with Healthcare um I study healthcare for a living and I think um I'm most optimistic about Healthcare and specifically Health Tech in India because our issues the 3 a like I like to call it the awareness access and affordability there's such a massive Gap in our country that only Health Tech can bridge that Gap so that's where I would put my money nice nice and you sir I would put my one in the four Ventures they are starting I knew be the answer like this like it and 25 liks each 25 likes each and I think that would be it and then I'll judge them but jokes apart uh you know there so it's much easier to build a business now than it was like 10 years back uh in terms of get you know if you prove something then you get a lot of investors I think today there are more Angels than entrepreneurs also sometimes right understand the consumer little uh what what their needs are and find a niche and start something and and money will flow you guys have invested in a lot of startups on Shar Tang I wanted to understand from you guys Beyond giving money right what are the value additions that you guys bring to the startups that you invested in maybe you guys can give me like one story each of the value addition that you have added to your company and you also had a recent exit right so you have a good story but not bad you start story bro great story yeah you start please and more dollars just s Madam um yeah so I think rare planet is just fantastic because um they own airports that's the their USB and they started when they came to pitch they had four stores and currently they have 50 stores across airports in India uh in terms of helping him I would U discuss a lot with him on pricing because you know I'm such a big shopaholic when it comes to um all these Heritage and these like really authentic stuff I buy a lot of stuff as gifts as well and I I would find his pricing very off at time so I think the most power we've had were overpricing the second thing I helped him is connecting him to a lot of investors because I we know a lot of people from the investor community and when they go and talk to those investors they get a different perspective uh Instagram page I used to hate his Instagram page and so I would keep bugging him that because these guys taught me so much about d2c and storytelling are you comfortable sharing the return on your investment with this inv so the partial exit the partial exit that I took um and it's partial because I think he's going to really become big and I want to be part of that journey is 3 and a half times valuation so he's 5x revenue and he got a 5x valuation but I got a discounted secondary at 3 and 1/2 x which I was fine with over what time period over a year and a half year and a half you 3 and a half X ger very nice I'll give you a small example bummer Skippy all these all these companies I feel they they are at uh where we were like a few years back so they need help on as namita rightly said on sometimes on social sometimes on investor connects sometimes on what exactly do they should they do uh where they are because I got stuck at at a at a time when I was at 100 crores probably revenue and same now Skippy is at the same place where he now needs to double down on marketing double down on brand building that he can't live out of the same season 1 uh Skippy Legacy which people saw on television he has to do something extra right and how do we build Brands how do we build uh Marketplace that's an interesting thought like how do you get out from that 100 CR Revenue Mark and grow further yeah it's like 0 to 100 then 100 to th000 and 1,000 to probably 5 ,000 so they're all they're all in that space where we were and uh I want your answer to be more about what are the mistakes that you've seen your investor Founders invest Founders making which you help them solve I I think a lot of times uh at Shark Tank we invest in few companies that are in the 15 to 20 lakh phase and uh they feel that they have product Market fit but they don't have and uh I how do you how would you know if a brand has product Market fit or not so if you have product Market fit then you know when you as a shark unlock certain marketplaces for them and quick Commerce for instance the products should fly without investing your Performance Marketing if you have product Market fit my sense is in the sub 100 CR Zone your Performance Marketing cost should be less than 10% of Revenue just as a thumb rot so first thing I've done with a lot of Founders even after they've done Shar tank what happens is that when they pitch airs they get a lot of orders and then we help them with you know putting them on zepto zepto is our neighbor in the building so I'm always putting them on zepto and then we measure and you they do many of them have like 10x jump and then the first thing I do is that you know a lot of them are women consumers I tell them come to my office the are 100 women here test your product get real feedback what is the problem if you're consumer or somebody else go read comments but you know go back to the drawing board because you don't have it and I think since this is a finance show we should talk about it a lot of people have clueless when it comes to the count of Investments because what they don't realize is when we start doing a due diligence there are multiple things that there's there's literally a lack of Integrity on the on the part of Founders there are many Founders who have ghosted me there are many Founders where when we do the due diligence the numbers they quoted at the tank right from a GC to a sales they're completely off not just marginally but substantially off there are a lot of Founders who have two companies and as a finance person you know that the biggest governance issues related party TR transactions and then when we tell them hey you didn't reveal the fact that you're CEO of two companies can you merge them they refuse to do that um so what people don't realize is that they see us giving these offers and then they say but what they don't realize that there is a lot of Integrity issues I just mentioned three examples which is why the count goes down substantially um so I think this is one thing that everyone who following Shark Tank must be aware of that there's a margin between what's revealed at the tank versus what really comes out in the new diligence you know in this uh third season uh in 2 weeks there is a deal which is already shown that guy is not responding already yeah what also happens which is why some of them don't go through is that you know once they air they get better deals outside uh so then they prefer to go with those so and it's at the end of the day I understand where an entrepreneur is coming from where they're optimizing for valuation it feels unfair but you have to I mean that's the rules of the game because we talking about finances now let talk about how you guys manage your own finances um almost 40 to 50% is startups okay so because I feel like 40 to 50% ofh your wealth is startups no no outside of oo whatever cash outside 45% of that is in startups so a lot of money for Shark Tank we seen that watch his Investments no no but I have been I had a family office before I came to Shar Bank where we were making some Investments Okay so I think uh that's one rest of the 50% is probably um let's say 30% of that is in absolute terms not relative 30% of that would be Equity uh 15% would be debt and 5% would be gold but how much perc of your money is in U company versus personal like how do you decide how much should be in the business how much should be personal no look I think uh I have uh because a lot of Founders make this mistake of going all in also yeah yeah right and that's also risky no first off I think as an entrepreneur I in that cohort of going Allin so I have gone Allin but I think that said over the years um you know uh there's been some liquidity uh purely by means of uh you know compensation and bonuses and few other things that got accumulated and I of course opportunistically still try to buy more shares of oo if I get access uh to them at uh interesting prices but outside of that I think there's a small cus which I have um you know uh put between startups because I feel like there's so much to learn right like you come to the shark tank in a full day I almost feel like it's like uh mental exercise because you go from one pitch which is a completely different industry to a completely different pitch and you to make a decision of investing in them so how long are these days was a long days the typically would start at 9:00 in the morning if everybody's on time but goes on till like 9: or 10 at in the evening or probably longer so it's a really yeah yeah 9 or in 15 hours a day sh start to end wow right and literally going one pitch to another so uh so that's one I think the second is I think Equity I truly believe in the India story I still have friends who say that I put my money in FD so I say whichever company you're putting FD in the bank choose those Banks and invest in Bank Nifty or the same thing and you'll get substantially better return what about you I feel that in the next 30 40 years the biggest compounding of my wealth will be whatever you know I've done in Sugar because that I know everything else there are that you don't have a house you don't have a vehicle youve just gotten married would you still go all in where you're coming from is basically saying if the basics are not taken care of I think where Vinita is coming from is once the basics are taken care of then it is only about compounding so I think uh you know until the basics are taken care of of course you should focus on that but once you're done with the basics then you should put everything in your own story what do you think I think concentrated effort makes sense makes sense Nam what about you I'm sure you have a family office uh we do and now I don't know if you know but we're going public so we filed at drhp we're doing Road Show in March and IPO is coming up in June so hopefully the family office will be slightly larger and you need to do a family and friends round family and friends around yeah we need some allocation before IP for sure for sure pre IPO pre IP it's going to be an IPO to definitely watch out for and no no bias here I think for me personally everything outside of mure is a combination of startups Shark Tank and things related to Shark Tank takes up a lot of money and then there's a a lot of equity that I because what happen sharan is when you invest in companies um specifically Equity across Industries you read up on them what about you am man how do you invest your money I invest I don't have a lot of money like these four right so uh what is a lot of money first I'll ask your first question and then go to your second question sir if you ask me I didn't have money uh 2 years till before 2 years back I uh I got a uh secondary exit done uh last year and before that you know my um my wife was working and now she's not working so we used our house used to be run out of her money then I got a lot of money uh decent money uh when the secondary happened and that's when I started becoming an investor in fact the first before Shark Tank season 1 I had only three Deals I had done in my life and that two was piggy banking on investors like these who had already invested I just said just put my 5 lakh 10 lakh and you know just just learning how to invest but actual learning happened on season 1 when I was not an investor and these you know the others were investors and I learned from them but uh season 2 and season 3 I think they learned a lot from me on how to invest but sorry jokes apart for me uh you know uh the I I I I invested in a in real estate in gura and that has given me the best results for some reason Financial returns also with the sensex at 72 73,000 is giving a good return yeah in my first season if I if a Skippy does well uh you know the total money I invested in season one will come back from one deal wow so if we invest in I've invested in season 12 companies one breakthrough probably a Skippy or a Le dry or a banana chips for me will give me more money than the whole season so I'm just saying that's how we take risks so for example in season one there was 17 companies I invested and I'm very clear that like Aman said there are three companies that are going to do well and will are not going to do well so that's that's the engine Investing For that's the mindset we go in that's a mindset we go in with so as long as you have Clarity of that wanted to understand from you guys how do you evaluate what is a good investment in uh in Shark Tank like what do you look at like is it more about the founder is it more about the numbers you know you talked about irr and all of that so how do you evaluate um a good business on Shar time because it'll also help our audience to know that this is what I need to be a good entrepreneur or be a good founder yeah look I think most of the entrepreneurs who come to the tank are very early stage companies right they're just getting started so to be able to identify the business model numbers Etc that will only be an indication you can't do like a standard private Equity style maths of past financial future Financial you have to have high conviction in the entrepreneur so it's like a gut feeling your gut feeling and gut feeling where you believe that the business will go through highs and lows but the entrepreneur knows their business their customers their financials so well that they'll figure it out I think in Hindi I would often say that is basically the person who is the person driving the ship rather than the ship itself because the ship can have challenges right I think everybody's going to say Founders because that is the number one thing but I mean so I'm going to go beyond that I think um two things for me firstly um I always you know tell my team also that numbers is my love language so you know if you don't know your numbers well uh that's a big turnoff uh so knowing your own numbers and what are the numbers that your most interested and apart from sales fundamentals like gross margin because you could be making losses but if you have gross margin then you can tip to The Other Side by like tweaking your marketing s right uh similarly just understanding of like things like you know repeat percentages like so you're looking at the right metrics because it if you're not even looking at the right metrics I can't get in 30 minutes whether your product Market fit is done or not you have to tell me that right but if you don't know the numbers what how do I take that got it got it aely repeat use cas rep irrespective of everything else broad belil basically so Sharon when I joined my father's company about 15 years back we were for 400 CR what about 7,000 CR now global and 20 plus% IA right so I have seen scale in my career at mq and I've seen what it takes to scale so the first metric I look at is is this business capable of scaling and like Vita said that can happen if there's a very attractive Tam and the second is if you have a very strong USB a differentiator so these are the two specific things that I look for because if they don't scale I'm not going to get my exit because as an investor you get your exit in three scenarios if they go public if they have a secondary or they get Acquired and none of these are going to happen if you don't scale so for me scalability and looking through that mq lens that I bring that can they scale through complexity is the number one thing I look at so for me you know profitability Roi driven marketing Roi driven sales Roi driven financing Roi driven business mindset is very important public markets has taught us a lot uh look at how zomato uh has proven that you know how they are performing now and with with the profits coming out look how Market is rewarding them and how Market was the one which bashed them when they were not profitable right uh so uh so I think now realization is there in in a lot of Founders and entrepreneurs so just one last thing just open-ended question uh one of the you know biggest drivers of success is the people that you surround yourself with and how you network now of course you guys have fantastic personal brand anybody will reach out you know anybody you send a message to you'll get a reply but for some body who is starting out and doesn't know anybody how do I get that Mentor how do I get that right person to surround myself with so that I also have that Jo come to Shar tank that's hard also no it's not hard if you got a good business come find mentors at Shar tank there are people who are ready to invest in you look I think one of them is of course Shar tank is probably the best medium because you get many things yeah apart from Founders you get marketing you get money you get you get quite what is the chance of su application that's one but I think I'll give you the more broader application yeah so when I was starting so uh there are two things I would do I would make a list of people I should reach out and I would write an email saying this is what I'm doing I think this is going to be very big but I need 19 minutes of your time and that was like the catchphrase hopefully some people will respond out of 100 people only three or four would respond and you know you would reach out to them and out of that hopefully one or two people will introduce you to other people so there you have to start somewhere you that's how I did it so to start is the hardest but once you get the first few people then the networks develop but people don't respond generally to cold emails always so it is you know you should always look for companies that are slightly ahead of your stage because you can also find the conversations relatable so I I think that you shouldn't always everybody starts with saying that if I want to invest I want Warren buffer as my mentor okay guys that brings us to the end of this episode very excited to put this out obviously thank you so much for your time

Channel: Finance With Sharan

Views: 1,808,874

Keywords: finance with sharan, finance with sharan podcast, the 1% club show, shark tank india, shark tank season 3, sharan hegde, sharan hegde finance

Id: d7YXPHU8Dr4

Length: 21min 32sec (1292 seconds)

Published: Mon Feb 12 2024