Suresh Venkat 0:02
starting up a business is hard really, really hard. Your chances of failure are high, you're likely to lose both your sleep and your hair. But luckily for you, you're not alone. Welcome to ET startup school, your step by step guide to starting building and consolidating your startup business idea. Your teachers at the ET startup school will be some of India's best known entrepreneurs, VCs and domain experts. So grab a notebook, pay close attention school is about to start. Today's class at startup school is called I have a great idea. What do I do next? And our teacher for this class is a person who's had multiple good ideas so far. His previous company citrus pay was acquired for 130 million US dollars in 2016. And his current venture is called cube wealth . Meet your teacher, Satyan Kothari founder and CEO Cube Wealth. Welcome to the first episode of at startup school today's class is called I have a great idea. What do I do next? Our teacher for the day is Satyen Kothari, Satyen is the founder and CEO of Cube Wealth and the founder and MD of citrus pay Satyan, first question, what does cube do?

Satyen Kothari 1:12
Hi Suresh Good to be here. Cube is what we call private banking for your everyday busy, middle class affluent professional. It helps people understand based on their lifestyle and their risk profile and their psychology around money on what are the right assets to add to their portfolio. And we find the best assets in the market based on our diligence on quality, diversification, etc. and bring them all together. So it's kind of a curated marketplace. If you can have imagine that with a lot of self service using technology, but a lot of personalized hand holding with our wealth coaches as well, because money is very personal and very important. So this is our mission to help as many people as we can to achieve excellent financial health and financial freedom.

Suresh Venkat 2:01
Satyen How and where did you get the idea for Cube?

Satyen Kothari 2:05
So this is great question, right. So my previous venture in India was a company called citrus payments, which I'm sure a lot of your viewers have heard of. We were processing payments for 15,000 merchants to make your checkout easier on a bunch of airline websites bunch of bill payment, e commerce etc. When citrus pay was sold in 2016. It was sold for a sizable amount of 130 million$. All the founders, team members etc, made quite a reasonable amount of money. And before I knew it, suddenly, I was exposed to this world of private banking because suddenly I had Kotak and Avendus and HDFC and everybody else you can think of marching to the door of this middle class boy, and saying we can help you manage your money. So first of all, I was like, wait a minute, right? Who are you guys? What are you selling? So it took me a little bit of time to understand that. Then as it sunk in that I needed help to manage my personal portfolio. The entrepreneur in me kicked in and said, Wait a minute, why were you guys not there? When I had less money? A couple of honest guys amongst them said, You know Satyen, it was just not worth our time. right for us to service you before you have a lot of money. And you know, being an acquarian. being an entrepreneur, there was a natural sense of injustice that, that in that statement that really bothered me. And I said how can this be right? This is the lopsided world. So we dug in deeper, and we said why not build something using our abilities and technology, our abilities and understanding what is a good investment from a bad investment. Because let's be clear, even a private banker will try and Hawk you some really crappy investments. So he says there's a chance here to one not just cater to somebody who needs to grow their money, but also to do it ethically by simplifying the problem statement by buying higher figuring out what are the right quality assets based on risk timeframe, etc. Suresh that's the other main thing, right? So everybody wants to sell your mutual fund is an investment or stock, stock broking platform. And that's great. But most people forget that that's only meant for long term. If your monies that you need in the next one year, six months, two years, let's say for a trip for your child's education, you should absolutely not be putting it in the equity markets. But nobody wants to tell you this because they don't make any commission from this that sizable. So we looked at the entire spectrum. And we said we must solve this problem. And this is where cube came in. So I also wanted to find a space that was somewhat defensible against a big player coming in or a government entity coming in. Wealth tech is very different. Right? The banks, as we discussed, are operating at too large and too generic level to actually try and take over that space. So I think these were the factors that contributed to saying let's do this with Cube.

Suresh Venkat 4:59
Why the name cube how important is the startups name?

Satyen Kothari 5:03
So if you look at traditional Indian companies in FinTech, right, we had stalwarts before Citrus called CC Avenue, we had Bill desk, we had tech process. And one of the big things that I wanted to do when we started Citrus was give create a name that could be visualized, and was associated with positive sentiments. You know, we have the apples of the world, which have already done that. On the flip side, you have the IBM's of the world also, which have not done that they've gone with the geeky name. So it's citrus itself, it started with, I created the name, which meant freshness, energy, vitality, and the logo itself was a nice splash of orange, so that it could be memorable. So with cube, it was similar saying, let's be trying to simplify wealth. So we have a very simple visual of a cube element. And cube means raise to three, of course, so we want to exponentially create wealth for you, along multiple dimensions of simplicity, ethics and quality. So three variables that we want to bring in, hence cube as well. And we love the name because it's simple. It's not a people see the sign, or they can use it as a generic name, hopefully, in the future as well. I'd like to cube my wealth.

Suresh Venkat 6:22
Okay. Are those some of the important guidelines for startup founders looking to name their startups,

Satyen Kothari 6:27
I think it's important to try and capture the sentiment of what your startup is trying to do. And then also remember, there's always an element of branding and marketing that you have to do. And I think if you're a b2c startup, you must absolutely evoke something that the customer when they say the word they feel good about it,

Suresh Venkat 6:45
you know, Satyen lot of startup founders after they're successful, say, you know, I was sitting in a cafe, and I wrote it on the back of a napkin and this startup started from the back of a napkin.

Satyen Kothari 6:54
Yeah,

Suresh Venkat 6:55
I hear use the word we a lot.

Satyen Kothari 6:57
Yeah,

Suresh Venkat 6:57
in your in your earlier answer. So Should one discuss the startup idea with other people who keep it secret?

Satyen Kothari 7:05
Um, this, this topic is a great one, because many first time founders think it's all about the idea, right. And the reality is, the idea is very critical. And we'll talk I think, later on about how to come up with the right idea. But execution absolutely is the key. So the reason I use we I was very fortunate from Citrus I had a core team for Cube that I really loved working with, and I trusted, and a lot of this formulation of what we're doing at Cube Wealth was done collaboratively with them. Initially, cube was supposed to be a newer banking company. Right? So we were building a software app, which will simplify your banking. And for the reasons I mentioned before, I felt like the government would intervene or the top big banks would intrude, we pivoted away. But that pivot was always done in collaboration with the larger team. And at Cube we have a culture of having an all hands where everything is shared very openly. So we created that collaborative environment from the start itself from the genesis of the idea.

Suresh Venkat 8:06
So what exactly do first time entrepreneurs need to know about this magical word called pivot?

Satyen Kothari 8:11
Yeah, the dreaded word, I would call it non magical so much, because when you have to pivot, you have to take a big, big sip of humble juice. And say, I was wrong, the first time in everything that I convinced my entire team to sign up for investors to sign up for. But it's also very important to constantly be learning from the market and from your customers. And sometimes the market doesn't pan out, as you expect, right? That I mean, a startup by definition, a high growth startup is a low probability success event, if you knew it was going to work for sure. It's not really a startup, somebody's done it before. So I look at it as, as you know, a series of things that could go wrong. And as you start dismissing each probability of what could go wrong, you come closer to the answer of what potentially could go right? If so many things go wrong, that your own original thesis itself cannot survive, then you have to pivot. And I think at that time, you have to take the hard decision. The problem is Suresh. There's no scientific method, here right, because there'll be a big school of thought, which will say, Oh, you must persevere. The reason you're failing is you know, you're in the chasm of despair. Only if you persevere, you will come out of it. And you'll have legendary stories of how the Airbnb guys almost failed, and then they succeeded, etc. Versus you will have legendary stories of companies that pivoted at the right time and succeeded. So what is the founder supposed to do? I think it's a lot of experience a lot of intuition about it. But also being honest that you are on a long journey for yourself, which involves your family. You're on a long journey, because you have a responsibility towards your team members and employees because they've had faith in you to join you and they've taken a risk as well with you. And I would say 30 is a response possibility to your investors. Why? Third, because most of you investors will be professional funds, and it's their job to bet on low probability events. So it's less of a risk for them. They're hoping for two out of 10 will succeed. Right? But for yourself and for your team, it's a one out of one. It's a very binary outcome. Either you succeed or you don't

Suresh Venkat 10:20
Satyen who did you discuss your idea with? Did you have a mentor? Who told you you're doing this wrong? Or did you have somebody to help you reflect upon the idea?

Satyen Kothari 10:29
Yeah, so I, as I mentioned before Suresh, I had some core team members that had come from Citrius itself and some that we recruited very early at cube. Apart from that, I had very supportive VCs, like B next, Teru Sato, and Dirk out there, who were always open with ideas with very positive reinforcement, saying, Okay, give it a shot. But also think about ABC. And I think as a VC, that's like the perfect attitude to not impose your will. But to say, these are ideas, but look, you have to figure it out on your own, it's your business to run, right, you see more of the business than we'll ever see running it every day. So I think this was the group. And then I had a couple of friends who are also fellow entrepreneurs, that were very helpful to just bounce things off. I've set up a small club called the Bombay founders Club, which is a curated group that meets for breakfast, once in a few few weeks. And the idea is, you know, you just talk about anything you're facing as difficulties and talk about it openly of bounce ideas. And that has really good founders from Haptics, Akrit to dream 11 to Miten Sampat of Cred, etc. So really good people that you trust to bounce ideas off as well.

Suresh Venkat 11:45
Sort of a support group for founders.

Satyen Kothari 11:49
Absolutely, absolutely a support group for the good days. And more often than the good days, the bad and the tough days. This is actually a you didn't ask me this, but absolutely recommend that every founder have a support group of other founders, not family, etc. They always there, but just founders who are going through the same stuff that they are all these are hard, but Monday's almost always the hardest. Because reality sets in once you do your all hands, you're juggling leadership meetings, and you're like, Oh, my God, the problems and never stopping

Suresh Venkat 12:18
Satyen you found success first with Citrus pay, and then again, with Cube, like a 2on2 entrepreneur, instead of particular framework that you use to assess a startup idea?

Satyen Kothari 12:28
Well, no, I wouldn't call Cube Wealth a success yet. I mean, we are still in the journey, we are doing Touchwood, we are doing well for our customers. And we are doing well as a small company. But success is a little bit far away. Citrus, I think was an economical success. I actually had a couple of other companies in Silicon Valley, which I would call emotionally very satisfying and big successes for me in learning and making some money as well. And that's really helped me Suresh to create a framework of what I personally use to evaluate anything I'm about to do. So the framework is quite simple, right? It's and it's copied from many sources. It's not something I've invented, right? It says, what do I really care about? What do I enjoy doing my passions? Combined with what am I good at doing? Right? And and this is an important part, right? Instead of just saying I can do anything over time with experience, what am I good at doing? And then the third Venn diagram element is very important. Can this business actually succeed as a business and make money or grow fast enough? Because of the opportunity, depending on whether your your motivation versus valuation versus value creation? Right, very different things. But on top of this Venn diagram, I also have a converse element, which over time I've done after my very first startup in 99, which is, what are the things I hate doing? So that becomes the not factor? Right? So these are the things I really don't want to do. For example, in India, I don't like dealing with any domain, which has government influence, because I can't predict it, I can't influence it, I'm not the type who will be able to go and meet a politician or an IAS officer and sit for four hours to negotiate or see what I get. So that's a personal trait of something I really don't enjoy doing. So I would never do something like that. Right. So I think once you have the three positives working in your way, two of which are very personal passion plus skill. And then the third is like the macro Tam, right, total addressable market kind of size, meets business model. And then the negative element, I think, you start coming up with ideas that you can start with as a brainstorm, which is a long list. But as some of them violate some of these other factors, you start crossing them off. You I see so many young entrepreneurs Suresh who say, Oh, this is exciting. I want to change the ad tech world. I'm like, Are you going to be passionate for the next eight to 10 years about this problem? Because trust me, it's easily that long if things are going well. If things are not going well, it's going to be way more brutal and shorter, because it might not even have the company surviving. But when things are going well, you have to live with the choice you made of the domain for way longer. Even if you have a successful exit, you might have to continue running that sub business inside the acquires company. So you better care about it a lot based on these four factors.

Suresh Venkat 15:22
What is cubes business model? How do you make money?

Satyen Kothari 15:27
Yeah. So this is something Suresh, which concerns me. Right? I'd be very transparent. Cubes business model also relies on commissions we make when we sell assets. The reason why it concerns me is, in a sense, it violates my principle that my incentives are not aligned with my customers. If I had my way, I would only charge my customer, when the customer makes money makes wealth, I will take a percentage of the profits. Now there are many regulations in India, I can get geeky and go into them. But many regulations in India, which don't let me do that. So we are very open about the fact that we make money on every asset. And we are like, this is what helps us build the platform and service you.

Suresh Venkat 16:09
Alright, now the interest of full disclosure, I am one of Cubes, customers, and I have been for the last three years.

Satyen Kothari 16:18
And hopefully you are happy to be with us.

Suresh Venkat 16:20
I'm very happy to be there as well. Yes, I think so. How do you define Cubes customer? Exactly. And has a definition changed over time?

Satyen Kothari 16:28
Yes, it definitely has. So a Cube customer is typically somebody who's mass affluent. They're typically somebody who is a professional. So they have the education to know that they're good at a few things that they specialize in. But also the humility, you know, they're not necessarily very good at maybe managing their money, right? So that combination is there. So they're earning money, but they don't necessarily know how to manage it. Typically, they have tried investing on their own or through some other channel, and they've had a setback. So then they're looking for a better quality solution. We see Sadly, in a way, the vast majority of Indian households have men controlling and investing money. We would love for professional women to also take charge of their finances and invest for themselves for the future as well. Typically, then their 30s and 40s. As I mentioned, typically IT professionals, media, people, finance people, doctors, these are the typical profiles we have as customers

Suresh Venkat 17:33
Satyen let's change track a little bit now every day when you open the papers or you go online, you hear startups that don't seem to make too much money, let alone profits, not too much money, but are highly valued. In your view. How important is a profitability b a clear path to profitability? You may make losses in the short term, but you have a path to profitability. Yeah, I remember I think it was Sachin Bansal of Flipkart. When Flipkart hit $20 million. They asked him about profitability. He said, Wait till we hit 100 million customers profitability can wait. Yeah. So what's your view on both profitability and the path to it?

Satyen Kothari 18:09
So I think the core statement service should be we should take a few steps backwards, right? And say, whatever company you're starting, is solving a real problem. If you're solving a real problem, there's a good chance you'll make money down the line. Right now what is the nature of the problem the nature of the problem by be immediate, right? If I can say, I'm a DSA, trying to help you a bank account, open up a bank account, by giving you a comparison website, which compares different bank account benefits, you could make money right away, because the bank will give you a commission from it, the customer is not paying, all you have to do is spend on enough traffic to come to your website, that that you can drive, you can increase the volumes. On the flip side, you have companies which have bet so much on innovative technology, that that has value, right? The famous example I always think from from the 90s is when Google said search is broken. I want to fix search because there's absolute value in a human being wanting to search for something and seeing the best quality results in the first five results of whatever plates they search. If you remember,

Suresh Venkat 19:18
they were the they were the 14th search engine to enter the market or 21st search engine to enter the market

Satyen Kothari 19:24
Exactly. So it was already a market but they said let's use technology and software to solve this in a fundamentally different way. And I remember Larry Page's famous statement he said when he was asked once Well, Google always shows 230,000 results found. They're like, When will you stop? He said we'll stop when we can show you one results with confidence. This is the right result for what you're looking for. It's it's such an innovative way of thinking. So in a company like that, which is using tech and software and algorithms as its DNA to innovate, profitability could wait because they said if customers trust us so much will fit Without how to make money, and very few people know that Google was super profitable today, the ad engine business was bought was the source of an acquisition of a company they had made much further down the line after they had become the leaders in search. I think if you build a business, which says I'm not adding any value, I'm a me too player, I'm not doing anything innovative, but at the same time VCs love me, and they're gonna give me money. So I keep showing the right metrics to the VCs. So it's, it's going to be hard to make money there, right? Because you're not adding any value to the user. That's very differentiated from the other 1015 20 guys out there. So again, comes back to my original point, a VCs job is to bet and find one winning horse out of a stable. Your job as a founder is you have one horse, right? You better be the jockey who rides it properly. I think entrepreneurs who remember that delta, that differences are going to really suit themselves well,

Suresh Venkat 20:56
and all it takes is a little downturn or a little, I guess, the Fed raising interest rates or some such thing for every founder to suddenly discover we need unit economics, we need profitability. Let's get an all hands meeting. And let's focus on that. Do you think this sort of lurching towards profitability, then towards growth and towards profitability is harmful to employee morale to a business?

Satyen Kothari 21:17
I think so because also the systems you build, the marketing team you build has to be aligned between one and the other, of course, great founders balance both of them, right. And that's, that's power to them. But that's a learning curve that you have to go through before you can hit that kind of perfect balance. I think having a clear vision at the very start of a company do I want to be a bootstrap business that drives towards profitability, or minimally funded business that might raise some small amounts of angels, etc. And then I moved towards profitability, versus I want to be a hyper growth company that relies on outside capital, so that I hit the right metrics, I think is very critical. Shifting gears halfway, you've gone to mid level, and now you're like, Oh, let me go back to something else. I think he's going to change the entire DNA of the company. And it can be done, it has been done, you just have to reboot yourself. It's not a fun exercise, you have to lay off team members, you have to go back to your investors and board members and answer very difficult questions. Maybe one or two of your big investors might say, that's not what we signed up for. But you still have to address that. And as a founder, too, you have to change your personal psyche and say, Oh, I have to give up on that vision, which I personally bought into, and now go for this direction. So I rather have that you have a clear path upfront, and then only pivot or change only when it's absolutely necessary, as opposed to seeing a deck come from some famous Silicon Valley company saying, Oh, now we must shift everybody to this and keep swaying back and forth.

Suresh Venkat 22:49
Alright, Satyen Kothari lots of learnings for first time entrepreneurs, so forth. I'm going to now ask you a few personal questions. How much did growing up in a Gujarati family influence your entrepreneurial instincts?

Satyen Kothari 23:01
That's a great question. I think the predominant influence was that we were from an Engineering Family. Right? So there was always a question of can you solve a problem? So not just my father, but my three uncles, my grandfather, we were always they were always running factories, which made industrial parts, consumer parts, etc. They were manufacturing them. You know, the typical Gujrati stereotype is of the Dalal a broker, right, or a trader, which is very much focused on the bottom line making money. I think we were engineers first. And in some cases, like my father, engineers, only, he was not very good at marketing. Some of my uncles were much better at that. So I think the entrepreneurial gene was there. But it wasn't a complete gene. And I also personally really suffered from not knowing how to do marketing sales in my first startup. And that's when it did not work as well as I wanted so I went back to the drawing board. But of course, that Kida was there of saying, always be your own boss. I think being in the US first when I got there, I was so happy I made it there, right, like every Indian middle class boy saying, okay, escape. Now the vision is to live in the suburbs in a garage with two cars. But I think for me, that vision lasted for maybe two years, and then then it was just like, come on, this is not enough. I want to be my own boss. There are enough problems to solve. I have the right credentials, the right knowledge, the right hunger, and that's definitely the DNA coming from either Gujarathi family or an engineering family are both

Suresh Venkat 24:34
both Gujrati and engineering, the confluence of the two to use your ikigai model. Satyen entrepreneurship is said to be a lonely, difficult journey. Did entrepreneurship extract a cost on your personal life?

Satyen Kothari 24:46
Absolutely. Absolutely. And I think this is one of the biggest things as a first time entrepreneur. I would give some advice on right that you have to be passionate about it. There's no ways right the number of problems you will solve on a given day. is just insane. Everything from hiring to why the hire didn't show up to there's a problem between these two employees to the software is not working a do a AWS is billing us too much, too. People are complaining that the Office coffee sucks, what should we do? Right? It's the entire spectrum. Having said that, you know, I made the big mistake of letting my personal life suffer a lot in my first startup, from working long hours to missing, you know, very memorable events, like my two best friends, weddings I missed in India, because I thought my work as an entrepreneur, being a first time founder in Silicon Valley was so important that I couldn't spare five days to fly out for a wedding. And you know, these are memories that, that, or occasions or situations that never come back. So I think it's very important to keep that balance of saying you need to be healthy, both physically, mentally, emotionally, to do your best job as an entrepreneur. So whether it's setting up a routine for yourself of I won't go as far as the crazy Silicon Valley guys who say, Oh, 4am, I wake up and I go for a one hour jog. And then I meditate and I do push ups. My green smoothie. I mean, we're not robots, right? I hope for hope. That's not how we all want to live. But keep a balance for yourself, keep a balance for your family, especially if you have children, you know, that's the time you're never going to get back with your children as they're growing up. So where's the healthy balance? And I almost every second time entrepreneur, Rhino, has a much better work life balance. And many first time entrepreneurs say, oh, that's because you already achieved success. No, even if there was not successful, they realize when the journey ends, in hindsight, how messed up they were, and not having that balance.

Suresh Venkat 26:48
Satyen Kothari thank you very much for being part of the startup school.

Satyen Kothari 26:51
Suresh, thank you so much for this. You know, I have to say to your audience, it's it's because it was Suresh asking that I wanted to do this because the questions are always deep, intelligent and positively inclined. My last parting words to entrepreneurs, is just that it's an amazing journey. I wouldn't choose any other life path, but just be very, very deliberate in what you pick to do, because it takes up so much of your life energy. And it's okay to fail multiple times. I didn't face real real big financial success as the media recognizes it till my fourth startup, but I enjoyed the journey each even in the first three, I would argue maybe even more so in the second and the third one, because I kept learning about what mattered most to me. So hopefully all of you change the world in a small way as Steve Jobs says, you know, put a dent in the universe. And hopefully, we all make the world a little bit better because of that.

Suresh Venkat 27:51
So that brings us to almost the end of today's class at at startup school. If you'd like to be a good student, check out and do the homework assignment in the show notes. If you liked the podcast, share it with family friends, even your frenemies ET startup school is produced by Animesh Das with inputs from Anupriya Nair Erica D'Souza, Arijit Berman, Shilpa Sharma, Haresh Chawla, Govind Mundra and Vishal Bhandari, ET startup school is available on economic times.com and et play, as well as Amazon music, Apple podcasts, Spotify jiosaavn And Google podcasts.

Show Notes

Your Homework

Build three columns and fill in the following prompts:

Column 1: What you Love

Column 2: What you are Good at

Column 3: What you Hate doing

All columns should be as exhaustive as possible and should take many days or even weeks to build as you are making a determination of what to do for many years.

Columns 1 and 2 start showing career options, while column 3 is used to remove items from that list.