Why I decided to invest in product ideas

My fascination with start-ups started sometime in Jan 2015. That was the time when crazy investments and valuations were making headlines – enough to draw the attention of even moderately interested crowd. I am privileged to have worked together with Vijayan Seshasayee, a colleague of mine at ITC (who later moved on to Apple, Singapore and is now headed towards HBS), who at that time had few founder friends in the early start-up ecosystem. It was through my discussions with him, that I learnt about the start-up ecosystem in India, companies which were stars back then and that we should consider quitting and do something more fast-paced and ‘interesting’.

In August’15, I got connected to Pranav, co-founder and CEO of Porter (www.porter.in), an intra-city logistics start-up, funded by Sequoia. Without thinking too much, I finalised things with Pranav (decision made in 60 seconds) and quit ITC to join Porter’s energetic team, to handle their institutional sales. It has been about a year and a quarter now with Porter and I believe I would be spending my time in the start-up world in the near future at least. The challenge, fast-paced work culture, mission orientation, flexibility and space to utilise my capability to build something — all of which I find in the start-up world, make it something that is too much fun to leave.

In addition to that, after

• looking at numerous start-up customers succeed/shut shop very closely
• hearing investor gossip as daily routine and
• reading Paul Graham’s essays & watching his videos

my interest on the start-up world has grown at least 100X and I feel fortunate to have landed myself in a field where I relish every second that I spend working in.

What more can I do

The current way I am involving myself in the start-up world, enables me only to get involved with one start-up at a time, by working full time with them. Thats fine and much needed to have the deep contribution that I wish myself to have and its not possible to contribute so deeply in multiple areas. However, my thirst to contribute at a much larger level means I am simultaneously excited about multiple things and have this urge to engage myself to work on a greater breadth as well.

Also, instead of waiting for someone (read VCs) to hand me over an opportunity to let me do what I love (its not easy to get into VC firms anyways — there are so few opportunities that the probability of that materialising is almost zero), I have decided to do something about it myself, by taking a calculated risk.

Taking things into my hands

As I got to hear from Ram Gopal Varma, I strongly believe that “Real power can’t be given, It has to be taken”. In line with that thought, I decided to start investing myself into ideas which I believe would be successful. This is just a thought at the moment and I would need to figure out the systemic way in which this needs to be done within the legal framework.

However, I have thought about certain parts of this idea and putting them down here:

• Smaller amounts: This must be obvious, but given the fact that I am going to use my personal money, I am capped on the amount I can invest. Though I am going to get 2 more partners, even they would be investing in their personal capacities and hence the amount/investment/person won’t be higher than 1.5 lakhs.
• Product ideas only: This follows from the smaller amounts decision. Operations heavy ideas need higher initial capital to get started. Software product ideas have only the people cost, infra-structure cost and customer acquisition costs as major components. This brings me to-
• Hacker teams only: This eliminates the people cost, since people who can code well eliminate the need to hire any developers, at least initially. I would also have one partner strong in technology to pick A class hackers.
• Young, Full time and Zero work-ex teams: There are a few reasons for this: a) Younger people are generally more aware of the technology trends. They’re also more likely to work on personal pet projects which may turn out to be full fledged products b) Full time teams commit more time and energy compared to others. They are also compelled to succeed due to social pressure to succeed in the one area of their choice c) That’s where I can actually add some value through guidance on growth/product d) They are the ones who would need money from me since they might not actually have capital to get the initial traction to approach angels/VCs. People with work-ex can easily arrange the capital by themselves.
• In Bangalore/Flexible to move to Bangalore: This is needed to ensure we can meet every week to ensure quality interaction.
• Multiple teams: Instead of putting all the eggs into one basket, I feel it is better to bet on few ideas together, so that the returns would make sense and be actionable. What if we invest in one start-up and something fails? Instead, we would stand a better chance of discovering whats wrong with our process, when we have multiple investments, where the only common thread is our evaluation of them.
• Selection process: Applications would be invited and about 20 ideas would be shortlisted. They would be encouraged to build an initial version to demonstrate their ability. Post that we would select the final 3 basis the team, potential of the idea and execution in the initial version.
• Involvement from me and my partners: We would spend limited time and ensure we do what the teams need us to do within that (once/week dinners). Since we have full time (start-up) jobs, it won’t be practical to do anything more than that. Good teams would not need anything more than that anyways.
• Exit strategy: Me and my partners are personally writing off the money we are investing in this initiative. Hence we don’t have any pressure to deliver results to anyone other than ourselves, that too for the sustenance of the idea. Honestly, we are doing it for the fun in the process and nothing else. Having said that, I feel we need to think more on this. More on that, once we finalise.

First Steps: The initial steps might involve us working with few angels and putting money in the start-ups where these angels put their money, just to understand the dynamics of the game. This might help us test our 5 leap of faith hypotheses:
a) There are teams out there who can create great products, if not for lack of initial capital
b) Those teams would want to work with us
c) We would be able to help them with their growth/product
d) The capital we are trying to invest is sufficient to put a product in the market
e) We may exit by making enough money to sustain this initiative

Disclaimer

These are purely thoughts at the moment and have not seen any efforts to take them into reality. Such efforts might see resistance from various unknown forces and may create difficulty in realising this vision of mine. May be we don’t receive enough quality applications/or we may not receive any applications at all. May be we invest and fail because we could not gauge the opportunity properly. All of these are highly possible. I am posting this online to create pressure of judgement and failure on myself and believe that would act as a driving force to make this initiative progress. It may take a month, or a year or even longer, only time will tell.

If you have any suggestions/criticism, I would love to hear from you. Pls write a response or connect on abhirjy@gmail.com.