My Proficorn Way (Part 71)

Startup Capital

Cash is the oxygen for a startup. Without cash, there is no venture, adventure, startup, entrepreneur. One of the entrepreneur’s early decisions is to decide how the initial capital is going to come. This is the decision that determines whether the startup will be a proficorn or not when it grows up.

When I started IndiaWorld in late 1994, the initial capital came from my savings in the US with some additional help from the family. Before IndiaWorld, there had been a couple other failed ventures which had consumed much of the capital. So, I had a very limited runway when I started IndiaWorld to turn profitable. At that time there was hardly any funding available for new companies from either angels or VCs. So, the choices were very limited to self, family and friends.

I had to go out in search of revenues almost immediately. Two streams helped me survive the initial months – subscription fees helped fund US expenses while website development took care of the Indian costs. It was later that advertising started coming in and that boosted the surpluses each month.

I got interest from a VC within a couple months of launch. But the deal never materialised. Through the five years of IndiaWorld this same story was repeated many times – many conversations but no deal. I was in no desperation to raise funds because we were generating profits each month by the end of the first year of operations. And thus was born a proficorn.

For entrepreneurs today there are many external sources of capital available. The question is: should one raise capital or not? If the business is capital intensive, then one has no choice. However, for many businesses not raising external capital can be an option. It forces a discipline on spending and drives the early push for revenues – both are good for the longer-term survivability of the venture. Besides, the search for external capital takes away a significant time of the entrepreneur – time which should really be spent building the business. Also, no capital comes in without giving up some freedom and control – again the entrepreneur can do without having to worry about MIS statements and monthly review meetings.

Risking one’s own hard-earned money is never easy. That’s why it is important to think through the worst case scenario and have clarity on how much capital one is willing to spend in building the venture. The reality in India is that most ventures are still self-funded – very few are able to raise startup capital. We only read about those who got the funding and not about those who did not. In software it is the entrepreneur’s time that is actually the investment; so it is much easier to get started.

In short: the entrepreneur’s early focus should be to stay away from external capital, put in one’s own money to get going, focus on building the product, and work on getting early revenues to fund the expansion. Success on these fronts is what will create a proficorn.

Thinks 50

How the parting of two market forces helped spur the equity rally: by Michael Mauboussin. “In 2020, companies with real options had a valuation boost for their current operations because of a fall in the cost of capital and a gain in their real options because of an increase in volatility…This might help explain some of the large stock price movements in the past year, particularly in the tech sector.”

Politico on the rise of email lists: “Renting, swapping and selling campaign email lists to new candidates and causes is a booming political business, but it comes with risks.”

The Future Will Be Decentralized: by Tyler Cown. “Why not, for example, put social media on blockchains and have efficient cryptocurrency micropayments to reward those who help maintain such mechanisms? Censoring postings on such a service would be as difficult as trying to overwrite a blockchain ledger, which is to say very difficult. (Indeed such postings would be a blockchain ledger, albeit in a more digestible form.) And instead of having to deal with the content rules of Twitter or WhatsApp, perhaps you could customize and build your own rules.”

India Awaits its Washington (Part 4)

The Indian Revolution

Over the past six months, I have written what can be thought of as the Revolution series.

I do not use the word “Revolution” lightly. It is exactly what India needs. A revolution results in a new political and economic system. We need both. We need a revolution to give ourselves freedom and prosperity. We need to take power away from Them – because They are simply the new Governor Generals of India. The British never gave Americans their freedom. The Indian Britishers will never do so either. That is why Revolution. Changing rulers by voting for a different symbol is not revolution.

We need to imagine a new India, a free India. An India where for one generation we set aside all that divides us to create prosperity for ourselves. An India where we trust ourselves and each other more than we trust government. An India where we do not self-censor what we speak, write and think. An India where They become our agents and not our masters. An India where Their power is limited and our freedom is not. An India which we can bequeath to our children pride and not a passport to a foreign land. An India where our surnames do not determine our admissions, jobs and benefits. An India where our farmers are freed to set up factories. An India where our entrepreneurs do not have to flip their startups to foreign lands. An India where proximity to Them does not determine business success. An India where we celebrate Lakshmi and bring her into every one of our homes.

How do we make this India a reality? How do we make a people believe they are free and understand what freedom really means? How can we muster the courage to rise against Them who control the levers of power to crush all dissent? The How is not easy or obvious. And yet, we must. Some amongst us have to rise. India doesn’t need another Father, what it needs is a Founder – one who can truly set us free. This is the Washington India awaits.

Thinks 49

India’s farm crisis is of the middle peasant, not the chhota kisan: by Harish Damarodan. “It is the rural middle class — which experienced a roughly four-decade spell of prosperity from the 1970s and now has its back to the wall — that’s at the forefront of the agitation against the farm reform laws.”

India needs empowered cities to nurture elected mayors for top political jobs: by Swaminathan S Anklesaria Aiyar. “India needs a political system enabling dozens of politicians to prove their capabilities as mayor of cities, some of which have populations of tens of millions, more than that of many nations.”

Hercule Poirot at 100: “A hundred years ago, Agatha Christie introduced British readers to a small man with an impeccably maintained moustache who, with the help of his “little grey cells”, was very good at solving crimes.”

India Awaits its Washington (Part 3)

Who Will Free Us?

A nation once rose as one to fight those who ruled from afar. It was a nation born out of revolution. It declared Independence and crafted a country forged in liberty, filled with optimism. It created a Constitution that put constraints on those in government and not the people. It believed that prosperity came as a consequence of free people being left to trade on their own. It limited government and not the ingenuity of the people. It was an experiment at that time – unlike anything the world had seen.

That nation was America. Its founding fathers – led by George Washington, and ably supported by James Madison, Alexander Hamilton, Benjamin Franklin, Thomas Jefferson and others – created a land of hope, a people who were truly free. Liberty meant something. They wrote new rules for their young nation that laid the foundation for the greatest prosperity machine the world has ever seen.

Amongst all of America’s leaders, Washington stands tall. As the first President, he safeguarded the Constitution. He fought for freedom and ensured it survived against all odds. The team he picked, the decisions he made — they made America. He made America.

India is at a similar moment in its history. The people need to first recognise that just a Constitution and democracy are no guarantors of freedom. If the people were not free before August 15, 1947, they surely cannot be considered free after that – because the rules have not changed. We can change the symbols of the political parties we vote for but that does not bring us any closer to freedom. Only when we the people realise that we are not free will anything change in India. They – the rulers – are a continuation of the long line of conquerors who have enslaved us. We have never really experienced freedom in India. August 15, 1947 is a date that has been used to continue the domination of few over many, of Them over us.

What we need is the Indian Revolution – a change in the political and economic system. India awaits its Washington, a leader who can truly lead the charge for liberty and lay the foundation for a free and prosperous India. Every past leader we trusted has chipped away at our freedom. They all had the opportunity to set free the people, but They did not. None of Them ever will. They benefit from the absoluteness of power to command and control a billion people.

We need a Washington who can make the Indian Revolution happen so we can truly experience not a mirage but the miracle of freedom, so we can live not under the law of the ruler but under a rule of law, so we do not plan poverty but perpetuate prosperity. When will India get its Washington? Who will free us and create a new united nation of Indians?

Thinks 48

Nouriel Roubini: Bitcoin is not a hedge against tail risk: from FT. “Crypto has no income, no utility, no payment or other services. It isn’t even anonymous because the underlying blockchain technology makes it easy to trace payments. It is only a play on a speculative asset bubble, worse than tulip-mania as flowers had and still have utility. Its store of value against tail risks is unproven.”

Steve Hanke: “ Carl Menger, founder of the Austrian school of economics, formulated the process by which institutions are created and evolve. This has come to be known as spontaneous order, an order that is not consciously designed by anyone… Menger demonstrated that it was spontaneous order that gave rise to money. No one invented money. Instead, money emerged unplanned out of people’s attempts to improve their condition by moving away from bartering and engaging in indirect exchange via money…This brings us to the rise of cryptocurrencies. Lack of trust in central banks and national currencies set the stage for the arrival of private substitutes. While technology played its part in making cryptocurrencies feasible, it is the lack of trust in central banking that has paved the way for what might be a new spontaneous order.”

Ray Dalio: “Bitcoin looks like a long-duration option on a highly unknown future that I could put an amount of money in that I wouldn’t mind losing about 80% of.”

India Awaits its Washington (Part 2)

Freedom Fraud

The greatest fraud perpetrated on us is that we are free. Freedom silences us. Because we think we are free and we can vote, all sins that They do are washed away. In our eyes, because They are us, they can see no evil, speak no evil and do no evil. They rule us with our consent – secured through free and fair elections. We live in the land of free. The British left on August 15, 1947. We hoisted our flag. The Father of the Nation told us we were free. So we must be free. The fraud continues.

They took over from the British. They liked what They saw. They loved the power that was now Theirs. No one would question Them. They made the police, courts and media their own. They even moved into the same houses the British lived in. They just changed a few titles so we could call ourselves free. The Queen became President, the Governor-General became Prime Minister. The ICS became the IAS. The Government of India Act of 1935 became the Constitution of India. The Dominion became the Republic.

The rulers changed, but the rules never did. They still want to decide what we are free to speak. They still decide what we are free to eat. They also want to decide whom we can love and marry. They divide and rule by deciding which religion and which caste gets what benefit. They control what our free press is allowed to tell us. They control the news we hear on the radio. They appoint their own to run our independent institutions.

They have done so since August 15, 1947. Nothing has really changed. But we refuse to see the obvious. Not because They have put blinkers on our eyes. But because They have brainwashed us into believing we are free. So They have a legitimate vote-given right to do anything they want. They use their own precedents from the past to justify every action. Some of Them (who are now Others) did it in the 1960s and 1970s, so They are fully justified in doing it in the 2010s and 2020s. Because if we did not object then, how can we object now? We were free then and we are free now.

No Indian could win in a court of law against the British. Can any Indian win in a court against Them? Can They be jailed for a scam they perpetrated? Can They be held accountable for killings on their watch? Without a rule of law that treats every Indian the same, how can we claim freedom? Without a rule of law that provides justice in a time-bound manner, how are we free? Without a criminal justice system that is independent of Them, where is freedom?

Only if we open our eyes to the fraud in the name of freedom can we change our present and future. A century ago, we had freedom fighters who gave up their lives in trying to free us. In post-1947 India, the mirage of freedom has taken away any fight that we had. We fight for admitting our children into schools, we fight for hospital beds, we fight for seats in IITs, we fight for getting into trains, we fight for non-existent jobs. We fight ourselves. We do not fight for freedom. We do not fight to be free. Because They tell us we are free.

Are we ready to fight Them if we realise we are not free?

Thinks 47

How Socialism Wiped Out Venezuela’s Spectacular Oil Wealth: from Reason. “Chávez held power from 1999 to 2013, when he died of cancer. He dubbed his policy agenda “socialism of the 21st century.” It turned one of the most prosperous countries in Latin America into the site of a humanitarian crisis. Chávez rewrote the constitution, clamped down on the freedom of the press, nationalized over a thousand private companies, and destroyed the national currency through hyperinflation.”

Chapter 1 of Steven Sinofsky’s new book

To Understand This Era, You Need to Think in Systems: Zeynep Tufekci: “When I say systems thinking, I’m saying looking at the whole and its interactions as much as possible to understand both each part of it, but also how it all comes together.”

India Awaits its Washington (Part 1)

They Who Rule

We have always been told that India attained its freedom on August 15, 1947. We celebrate it as Independence Day each year. Before that day, the British ruled us. On that day, power was transferred. To…? That is where the story gets complicated. On paper, an Indian government did take over. But, did the rules really change? Did the extractive and exploitative institutions created by the British really end? The reality we live in today…how different is it from living under British Raj?

These are questions most of us would rather not consider. Those fortunate enough to live in cocoons do not have to think, while others do not have the time to think. Memories of the pre-1947 era are mostly from what we read in history books and told to us by our parents or grandparents. The reality of India we experience is the present. We are free to speak what we want. We vote for our leaders. Our leaders don’t report to a King or Queen thousands of miles away. We even have our own Constitution. We don’t have white-skinned Britishers telling us what to do. We have a Parliament where we pass our own laws. We even have a Father of the Nation.

Yes. But probe deeper and unpleasant truths await us, truths we would rather not know because that would cause dissonance and challenge what has been ingrained into us school year after school year. We are free to speak what we want as long as we don’t criticise Them, our Rulers. We choose our representatives from a shortlist They decide. These local leaders report to a Master hundreds of miles away. We have our own Constitution – derived from the Government of India Act written prior to 1947 by a colonial power to enslave the people. We now have (br)own-skinned people telling us what we cannot do. We have a Parliament that rubberstamps what a few of Them decide.

We worship Them. They are our modern day Gods. For some among us, They can do wrong. Even as simple freedoms we took for granted have been chipped away. Ask the farmers for whom it began with the First Amendment and the Ninth Schedule of the Constitution shortly after Independence. (The first Amendment was supposed to guarantee freedom of speech and expression – it did exactly the opposite. The Ninth Schedule is a repository of laws that cannot be challenged in the courts.) Ask the free speechers for whom the threat of a charge of sedition is never far away. Ask those seeking justice through the courts who have to wait through innumerable adjournments. Ask the vulnerable who are entrapped by the police. Ask the young whose dreams are crushed by an education system controlled by Them. Ask the entrepreneurs who flip their companies away from Indian domicile and jurisdictions. Ask the migrants who walked hundreds of kilometres after a lockdown imposed by Them in the peak of the Indian summer. Ask those whom They jail, raid, threaten, extort at will.

They can buy anything – from our land to MLAs and MPs. They make rules as They please. They suppress alternative voices in the media. They tax our income and wealth again and again. They are never jailed for the laws they break or any corruption they do. They can imprison us even for what we tweet – or were planning to. They discriminate among us based on our caste and divide us by our religion – so they can rule over us. They buy or pressurise the media to stream into our headphones. For Them, we are not equals, just serfs who produce so They can take and rule.

They are our Masters – the netas, babus, police, judges, cronies. They were there even before August 15, 1947. They worked in exactly the same manner then. Does their skin colour really matter? I ask you again: what really happened on August 15, 1947? Did anything change? If we were not free before that day, how are we free after?

Thinks 46

There is no political freedom without economic liberty: by Shruti Rajagopalan. “All our actions—economic, political, civic—are deeply entangled. Letting the government control the prices and sale of diesel can be as harmful to our freedom and democracy as direct censorship.”

Customers don’t care about your Business Silos: by Ajay Kelkar.

Here comes everyone (again): by Azeem Azhar: “The Gamestop story is about more than financial markets. It’s about the true power of the internet to organise.”