Full Transcript

Utsav Somani: All right, folks, here we go for the second stream of February. Today, I have a special guest with me who's co-hosting the show. He's a friend and supporter of ours for a long time, Kashish of EquityList. Kashish, welcome to the show.

Kashish Sharma, EquityList: Equally excited. I must say I'm slightly nervous about the whole live format, but come on, I mean, you guys have been killing it and I'm trying to fill in big shoes of Dhruv's absence. So I'll try to do my best.

Utsav Somani: No, man, we'll have fun. I think you'll love the show as well. And people feel free to leave comments and questions in our chat box as well. We'll try to bring them up. There is a long news segment today. So stick with stick around with us. A couple of things have happened. A lot of movement in the world of venture in India is, I mean, Elon Musk making moves. I mean, it's hard to leave Elon and SpaceX and I mean, anything related to the world of AI. These massive giant labs that operate and run the tools that we use, they're always in the news. So let's start off with the first one. XAI is joining SpaceX to accelerate humanity's future. Did you read into this news, Dhruv Kashyap?

Kashish Sharma, EquityList: Clearly sounds messing, Dhruv. But yeah, no, 100%. How can you not read this news? It's all over the time, dense newsletters. I mean, just for our audiences that last night, effectively SpaceX or Elon, whatever, they're pretty eponymous. So SpaceX announced the acquisition of XAI, which, by the way, you know, for our audiences, Elon Musk's AI company. Grok is the more popular product that people may be a bit more well-versed with. And this is pretty monumental, right? Because SpaceX is already valued somewhere close to a trillion dollars in the private markets, of course. XAI is somewhere around 200 billion. Collective is 1.235, roughly, you know, like a billion dollars. So 1.25 billion dollars. Elon Musk now becomes, you know, like one of the highest individuals again. I mean, it's just how can you even keep track of that?

Utsav Somani: Actually, at 850, which was the latest number that I saw on Twitter today, 850 billion is his net worth. He'll be the first trillionaire on Earth.

Kashish Sharma, EquityList: It grew from 500 billion, right? If I'm not wrong, just after the acquisition, which is crazy. But here's the thing, Utsav, did you get a chance to go through the entire narrative around shifting data centers from, you know, terrestrial data centers to orbital data centers using, you know, the rockets and SpaceX infra?

Utsav Somani: Man, I honestly did not. But I think the manifesto that you were mentioning before the show, I think it reads pretty interesting. Do you want to read the most important paragraph that you found interesting?

Kashish Sharma, EquityList: Well, in all honesty, a lot of things interesting. But here's here's the thing, right? So currently advances in AI are dependent on large terrestrial data centers, which require immense amount of energy, power and cooling, which of course is there. And global electricity demands for AI simply cannot be met with terrestrial infrastructure solutions that we currently have today. So effectively, the entire idea or the narrative behind this acquisition is that there will be orbital data centers. And of course, you know, this is a massive leap in just like, you know, humanity and technology from that perspective, wherein there will be like imagine, you know, like thousands of satellites orbiting around, you know, like the solar system using and harnessing, you know, solar energy and the power directly being harnessed from the sun, you know, for data center needs, etc. Effectively taking all of that load away from all of the earthian activities and shooting it out to the space, because of course, as it's mentioned in the manifesto space has a lot of space to it. So, I mean, this is the most typical, sorry.

Utsav Somani: So data centers in space is what I gathered mostly from this. I mean, it's crazy what the scale and scale of Elon's ambitions, I mean, lie.

Kashish Sharma, EquityList: And it's not unprecedented, like Elon has put these moves in the past as well, right? Like the acquisition of what SolarCity by Tesla. So he has a way of, of course, building these like insane companies and organizations and building that IP and technology and then figuring out how to house, you know, which product and company into another. In fact, somewhere, you know, on Twitter, someone on Twitter was mentioning that X is now the first social media or rather the first global townhouse. Sorry. To be acquired thrice. To be acquired thrice and now this is the first space, social global townhall, right? That Elon always wanted to build, I suppose, so it finally happened. This is like the Twitter saga playing out.

Utsav Somani: Man, this is extremely, extremely funny, right? Because in October 22, Elon puts out a tweet about acquiring Twitter for 44 billion. 23, XAI is founded after all the drama with OpenAI. And then there is 6 billion at 24 billion. And suddenly we're building this Memphis super cluster and they've raised at 50 billion. Then there's a tender offer, then they raised at 136 billion, then they raised 20 at 230 and then acquired by SpaceX. And the SpaceX IPO is going to be a 1.5 trillion dollar IPO. And with Anthropic and OpenAI possibly coming to the market this year, I think what's going to be tested is how much liquidity or the depth there is in the public market as well. And I mean, it's just fascinating. But the best part is the employees at X now have free IPO SpaceX exposure, which was, of course, a secondary stake to get for a lot of people. So how this all played out. But I mean, SpaceX is a cash engine, right? I mean, Starlinks, which is almost 70 to 80 percent of SpaceX revenue when they want to scale to 1 million satellites. By what you mentioned, the solar powered orbital AI data centers. And today, I mean, I mean, SpaceX is the largest, I think, the launch vehicle company in India. Yep. Sorry, globally. Globally, of course. Globally. And I think they will diversify into a lot more. And no single one company can sort of has the balance sheet to sustain the needs of AI CapEx growth. Right. Because XAI was burning almost a billion dollars a month. So there is so much structural thinking that has to go into all of this. And people will eventually think that Islam, which is, I think, the largest collector of AI data in the world, like real world data. Their cars are really just data sources. I mean, data gathering on the road. They're running in different countries, different geographies. And eventually, I think he's cut down two models as well that he's not going to build just because he wants to make space for the optimist robots. And they're targeting 1 million optimist robots to be out in the wilderness. And I think imagine the kind of data that can power like real world usage. And he thinks that AI is going to make money irrelevant in the future. So all of this is exciting. But Tesla, there's a poly market thing which was going around where they said that Tesla might be next to come into this fold of Elon Musk companies, where Tesla plus SpaceX plus XAI would complete the full industrial AI loop, given that Tesla is huge in terms of collecting your money.

Kashish Sharma, EquityList: Can we just admit that we're just living in this large Musk metaverse of sorts, right? Everything is just simulation. I think that's it's a matrix that he's trying to build around us. But have you have you read the part where he talks about the sentient sun, right? So basically, what Musk is saying is that the ultimate goal of the merger is that it's going to that the merger is going to create a sentient sun, which is basically, you know, like artificial, you know, like sun made of millions of satellites, right? They'll be powering everything around. I mean, you have to like give a tip to man, right? Like forever just talking about just, you know, like intergalactic traveling and, you know, finding the right space and figuring a few things out and really making this happen. Also, Utsav does this kind of, you know, position Grock at a pretty interesting leverage point. I mean, it was falling behind its peers, right? In the AI race, like OpenAI, Anthropic, they were totally killing it in their, you know, like individual use cases.

Utsav Somani: The funny thing with all of these labs is, man, their tools and offerings, I think, capture the audience's mind for a little bit. But Gemini also came up with a feature where you can import your chat. So now people are not locked into the world of chat TV because memory is there or context is there. You can literally export that out. You can take your own context, memory and your data and just export, import it in any other chat. So, I mean, first it was like chat TV. I think that started off the whole trend of like these chat bots, which, I mean, exposed us to this world of on-demand intelligence. Then I think Gemini with their Nano Banana Pro and everyone was just gung-ho about how Google was catching up. And suddenly, like, I mean, in the last couple of months or even the last month, Anthropic is pushing out stuff at crazy velocity. You can control Excel sheets. It can do better coding than others. So every three months or six months, I think we see a cycle where somebody new is coming up. Grok, I think the only use case that we've seen is the X where people are using it, like at least people in tech that I know. So it's that little bubble that they've created on Twitter where people tag Grok and ask them to like modify some images or answer a question. It has to be seen. Maybe there's real world users.

Kashish Sharma, EquityList: You know, what's interesting though, I was talking more from a B2B standpoint, can't help it, I'm a B2B founder, right? But from a B2B standpoint, do you think now, I mean, you know, all of the models essentially become potential customers for SpaceX and, you know, like XAI in general, because they want to leverage the data centers themselves as well, get that contractual money coming in?

Utsav Somani: It'd be funny. Like, I don't know. Like, I mean, it's the same as answering AWS clouds being used by, say, Microsoft 365. So TBD, I don't think they'll become customers. Eventually, there might be a neutral party that comes up where somebody's becoming the cloud fair of space.

Kashish Sharma, EquityList: You have a Blue Origin doing this, basically.

Utsav Somani: If that happens, sure. There'll be fast followers for sure. I mean, if the technology we're putting, I mean, putting data centers in space, somebody else will do it. We're already putting in factories and Starlink stuff. And I mean, there are other competitors to Starlink as well. Blue Origin also, I think, is doing a 6Mbps satellite also. So there will be competitors. I don't think they're going to overlap too much, though. But Google is a big winner in all of this, right? The major AI lab wars. Google, of course, has their Gemi. And they have a SpaceX ownership of 10%, which translates to approximately 4% to 6% of XAI. 14% of Anthropic. And DeepMind was an acquisition that they did. So I mean, man, they're just winning it overall in this whole landscape. Except OpenAI, they have an exposure to all the other major players.

Kashish Sharma, EquityList: Yeah, I mean, in all of the like, you know, just AI chatter, it's usually like we hear about OpenAI, we hear about Anthropic. But it's usually these like massive corporate giants like Google and Microsoft that just silently have all the right stakes that they need to. They've indexed it across all of these different potential platforms, etc. They're always the sleeper winners.

Utsav Somani: Let's go back. Let's return back to Earth. Something that's happened close to home. Probably the first case that I've seen, I think, in my time in the Indian startup ecosystem, some big firm has openly come and said that they've parted ways with a partner because of economic differences. Typically, it's all hush-hush where people discuss this all privately. And I mean, it's going around, there's gossip amongst all the junior VCs and analysts. But this is the first time like head of a global, I mean, it was global when it was firm coming out on record and saying that there was differences that they had with Ashish and then Ishan and Tejas V walked out with him. So they, I mean, put out a curt message where they said that it was a mutually decided move. But today, I think the Economic Times interview of Shahindra confirms that it was due to economic differences as well. Peak15 has, I mean, crushed it. They've had 25 IPOs, 40 companies at 100 million revenue, 50 unicorns in a 400-odd company portfolio with their 17-year journey in India. So insane. I think it's all because of the growth investment where it generated over 1.5 billion for Peak15 on a pretty small investment of, I think, 35 million. What do you think? Roughly 65x, right? Yeah, no 100%. I think 65x was the multiple, if I'm not mistaken. Yeah.

Kashish Sharma, EquityList: Yeah. Money control actually has also been trying to kind of report. In fact, it's kind of funny. You know, the Indian Twitterati, it's become like breaking news, you know, live reports coming in after like four or five years of time span, four or five hours of time gap. But apparently, according to money control, Ashish, who I believe led the growth investment, he was one of the partners, decided to move out. That's where the carry kind of, you know, whatever, just the conversation or the conundrum about the carry split, revisiting the fund economics emerged from. And when Ashish, when they decided to move it, Aishan and Tejaswi also decided to follow through. So it seems like people aren't entirely happy with the fund economics when, you know, the winners, when the winners finally, you know, deliver on the outsized returns. But here's the thing. It's not entirely unprecedented, right? I mean, throughout the history of venture capital, you've always had great, great VCs, great brand names, you know, like generating potential emerging fund managers and people splitting out and forming their own funds. West has that all the time. And of course, we don't really bat an eye. It's just like a news in the West where people celebrate. In India, also, of course, you know, like Sequoia India earlier, which is now branded has had a lot of funds emerged from it. Westbridge back in 2011, A91 Partners in 2018, Spring Market Capital in 2019. And then, you know, followed by a host of exits over the last two to three years. So not unprecedented.

Utsav Somani: Yeah, not unprecedented. And why are these economic discussions coming up? So there was an article which said that we've not really been this close to assets and money before. So people have not had these discussions or had context to what these discussions should entail earlier. Right. So this is the first time like firms are actually making money with these IPOs and exits. And some of them have different waterfalls, like European waterfall or American waterfall, where it carries deal by deal or carries after returning a fund. So all of these discussions are now coming to light. And I think peak 15, what the Money Control article, I think, says that they were in the middle of a billion dollar fundraise. And Ashish, I think, as of four or five days ago, wanted to basically revisit his economic terms while this discussion was going on or the fundraise was going on. And I don't think they saw eye to eye. And that's when I think the exit happened. But you're right. Like, I mean, Inside Partners has spun out a lot. Rahul Mathur put out a good tweetstorm about this, where he's discussed some of the previous spinouts from like Inside Partners and a few others. And in India as well, we've had many others. I mean, the Helium ventures led to the formation of Fireside, Stellaris, Arkham Ventures, and they've raised over a billion collectively in AUM. In AUM. Yeah, 100%. And A91 is a big one. Like I think, I mean, Westbridge, of course, is now B, C, late stage, all those territories. They've had good successes. But A91 is one that's done exceptionally well also. I think Gautam Margo led the OYO investment and they've done many other heavy hitters, Atomberg in their portfolio as well. So A91 is a good one to watch recently.

Kashish Sharma, EquityList: And in all honesty, this is probably a positive some game in some shape or form, right? At least from an entrepreneur standpoint. Because now you have another fund that hopefully you can have a conversation with, try to bring them aboard on the cap table. You don't just have star GPs that are part of one consolidated fund. So basically, I mean, the ecosystem should end up benefiting from it. You know, with more investors playing into the ecosystem, a lot more kind of diverse capital, you know, being deployed. Of course, probably worth tracking in the future if, you know, just like a lot of these spin out funds also end up becoming like some sort of a feeder fund, right? Because of like just strong alumni connects at, you know, at times. And we'd like to see if these are independent investments that will be carried out, you know, and not a lot of overlap, because the founders will then end up benefiting a lot more.

Utsav Somani: But I think why this thing was very, very important and curious. I mean, because not important, but I think, I mean, it just highlighted the fact that these discussions do happen. And in private, like you've seen spin outs happen because of various reasons and differences. And but this was probably the first time that I think economics was the forefront or the headline on why this breakup happened. And that was, I mean, two, three people walking out of a, I mean, prestigious firm as well. So I think a lot more to the eye than what the headlines tell you, basically.

Kashish Sharma, EquityList: Yeah, I mean, and also I think it's safe to say it's not a developing situation anymore. Like whatever information probably had to come out has come out. Anything else is just unwarranted, scintillating news around it. But yeah, like.

Utsav Somani: We'd love to have one of these guys on the show as well. I think just to hear their perspective, I think once things settle down, I think we'll try to invite them to the show just so that we know what goes on behind the mind of a venture capitalist who's delivered 1.5 billion exit for the firm. And they've been asked, not asked, but like they've walked away from a firm. Fascinating. These numbers are huge.

Kashish Sharma, EquityList: Outsized. In fact, you know what? I think we'd like to wish them best of luck in setting this up and just, you know.

Utsav Somani: No, no, it should be exciting. I mean, like you said, it's great for founders. There's more options, more capital. And I mean, competitive dynamics in the world of venture, I think always ends up benefiting the founders the most. And that's truly great. Talking about venture newcomer, it's a substack subscription outlet. And they put out this interesting post yesterday where they discussed access number for the first time. These numbers are, I think, from a 2025 deck where Axel was raising their new fund. Yeah, I don't know what the fund size was. Northstone mentioned that. But I mean, the crazy thing is that their 2014 fund, I mean, Swiggy and Urban Company, of course, have now gone public. So these numbers might look different. But the DPI on that 2014 fund, which is a 12-year-old vintage, is 0.15x. So they're not even, I mean, in 12-year journey, of course, with Swiggy and Urban Company, the numbers might look different when they distribute those stocks. But I mean, in 12 years, you've just returned 15% of the fund. I think that's pretty low in terms of performance, right?

Kashish Sharma, EquityList: Do you know what? I was, I mean, of course, the DPI numbers are pretty stark. And as we can, like, of course, understand, this is what we talked about 12 years ago, right? Like a fund's lifecycle is typically 10 plus 2, 2 years with, like, an additional kind of, you know, extension. And some of these, of course, some of these holding positions are still in public companies. So that is still liquid capital that can be unlocked. And as the market grows for them, such as Swiggy, for example, so should the positions. But I mean, of course, the DPIs are low. I was sort of a bit more kind of intrigued about the TVPI, right? I mean, wouldn't you expect the TV, I mean, like, the DPI is always like, of course, you know, it's the golden metric that usually no one really talks about because those numbers aren't, you know, like, amazing for most folks, most funds. But wouldn't you expect the TVPI to be a lot more higher considering the home runs that Axel has already had?

Utsav Somani: Yeah. So these are all dependent on the time of the capital call as well, right? I think that matters. And then, of course, the big, big outcomes and the ownership that you have in them. So IRRs for their funds, like, at least from the 2008 vintage, which had Flipkart and stuff vary from 37% till, like, say, if you were to see 2017 as the last one, because anything else is very recent. The numbers vary from 17 to 22% and around that range. So the, I mean, and they're investing in USD terms as well. So, I mean, the USD has moved significantly as well with 4 to 5% movement every year, mostly depreciating. So I think they have to beat that as well to cross that hurdle to overcome the currency risk as well. But the numbers don't look that exciting in terms of net IRRs to NLP. Like 17 to 22%, you can probably earn more. I mean, you know, gold and precious metals are heavy, but public markets or the illiquidity feature of venture, which sometimes people think it's a benefit so that you can't sell out of your positions early and go through the whole wave of company building. But IRRs do look pretty worrying overall. And I don't know what implications this has when any fund manager is going, what kind of story they can tell to their global LPs as well, because they'll start questioning the potential of India as a venture ecosystem. It is a sober reality. Let's say that all of this improves even significantly. I think we've had some vintages in the middle where I think they've not delivered the liquidity that the venture outcome would have probably.

Kashish Sharma, EquityList: Right. And you know what? It's a bit more important to tell our audience that AXEL India is, of course, part of a broader AXEL as a brand, right? Like every geography has its own version. Like there's AXEL US team, there's AXEL, I believe, Europe team that sits at UK. I don't know how active they are, but they used to be pretty active earlier. And of course, AXEL India. And while we're discussing, of course, past performances and, you know, like just the net IRR rates across the past funds. It's also important now to understand what happens in the future, right? Because a lot of upcoming and ongoing investments right now these days are NEI companies. But those companies are being contested for on the Western fronts already, right? You have, I mean, you know, like founders are raising capital from just like, you know, US American investors or people have set up some sort of a corridor shop of sorts. Nexus, for example, Peak 15 has done some. That's exactly it.

Utsav Somani: Very early to the game. They always have. Very early to the game. Yeah. I think Peak 15 is the one which is making moves in the US. They've had a US partner from what I see as well.

Kashish Sharma, EquityList: Yeah. Lightspeed India, of course, has done a few large AI investments such as in Emergent over the last few weeks that have publicly been disclosed as well. I mean, I'm not hearing a lot about AXEL in the public, like, you know, with respect to like, I don't know, just publicly disclosed investments in the AI space. Maybe that's, that's, I think, is coming up.

Utsav Somani: They're working hard. They've got some really smart people behind the wheels as well. But AXEL, of course, has a solid brand name. They've got so many companies that have gone for an IPO. The Flipkart was literally the defining moment of this whole boom of the world of startups in India. And then, of course, Urban Company, Swiggy, and many of the positions that they have, I think, are pretty big household names as well. Interesting. I mean, it'll be interesting to see where this all heads. I think there's some discussion around right sizing of the fund, like what kind of fund size makes sense for India. The India venture opportunity is here to stay, but I think depending on fund size, allocation, opportunity sizing, and all of that, and market sizing and GDP per capita increasing, I think larger fund sizes might start making sense. Of course, all of this is in the future. So anybody's guess on how this all plays out.

Kashish Sharma, EquityList: That's true.

Utsav Somani: All right. A couple of quick things that we saw on the internet. India-US trade deal. Modiji has done it. 25% tariff has gone down to 18%. A bunch of things mentioned there where India had to stop buying Russian oil, and we're buying much more from US, which includes Venezuela as well. So exciting. India-US will always be friends. There's 500 billion worth of US purchases which were committed as well from India's side. And we do 30 billion of export to them, which was these tariffs. So great that the public markets welcome this with open arms as well. Cool things we saw on the internet. Did you see Y Combinator's 2026 request for startups?

Kashish Sharma, EquityList: Yeah. I'd like a cursor for product managers, by the way. You've been using white coding, right? How's that going for you? Honestly, more than white coding, I've been hardcore using cursor. So in fact, I'm... So of course, yeah.

Utsav Somani: But can't the cursor say Claude Pinay? Like a lot of people have shifted loyalties.

Kashish Sharma, EquityList: Not really. So here's the thing, right? Like, especially when you're in the mix of just building a product, and then of course, delivering for customers, etc. A lot of the model changes can be a major distraction for the teams, right? So like, for example, at least for someone like me, who's not a co-developer per se, but you know, you've got to keep shipping. And there are a few things that you could take off the plate of the engineering team if you have great written PRDs, like product documents, etc. Cursor is pretty fantastic for it, right? Now, the last thing I want to do is just keep switching my, you know, like, just like IDs and keep switching the tooling because it's such a... It's such a distraction. Every three weeks, there's a massive movement in the world of models.

Utsav Somani: But the good thing about cursor is... You also keep, right? Like, I mean, every day, we were discussing about Whisperflow before this, and there's going to be a better voice to text model, maybe three months down the line. So how many subscriptions can you actually end up taking? And yeah.

Kashish Sharma, EquityList: Yeah. And most importantly, for example, Cursor is not into the LLM game, right? I mean, they could very... They very easily allow you to integrate with any of the latest models that Cursor has a partnership with of sorts, right? So, like, honestly, if there's an Opus Open, whatever, right? I don't have to worry about switching over to Cloud Code. I can just, like, start using that model as long as I'm a paid customer and I get the tokens. Of course, people have thoughts about how many tokens you burn on Cursor, so on and so forth. But at least for me, I think it works out. But yeah, but... What are the tools that you're looking for right now, AI tools specifically? That we're using currently at EquityList? Personally, yeah. Personally. Cursor is one. Whisperflow, you know, we were just talking about it before the show. Absolutely love it. I'm just frightened that my typing abilities will massively degrade over a period of time.

Utsav Somani: Reading some emails and messages that I do from Whisperflow, sometimes I'm probably... It's probably making some mistakes, but I'm just in such a hurry now that I just send out the message and then worry about the consequences later.

Kashish Sharma, EquityList: That's true. Canola is a pretty interesting note-taking app. I don't know if you've used it.

Utsav Somani: Their refrags look horrible, by the way.

Kashish Sharma, EquityList: Yeah, I mean, it's just, you know, the entire idea of, like, non-invasive note-taking, you know, like, just happening in the background. It's kind of seamless from that perspective. Makes lives a bit easier.

Utsav Somani: Fathom.ai. But most of these tools, like even Zoom and everything, Google, etc. now have their inbuilt note-taking this thing. So I don't know, like, how many times do you actually go back to a note taken from one of these meetings to actually refer to them? Of course, some meetings are more important than others. So maybe you do that. But quickly coming back to the topic. Granola, finish. Sorry.

Kashish Sharma, EquityList: No, no, not at all. I mean, Granola is another note-taking app. Only goes to show that there is a plethora of note-taking apps right now. The question is, how often are you kind of referring back to them? But yes, but going back to the news itself.

Utsav Somani: Going back to the news, the only thing that I would have loved to see is AI guidance for physical work. I think, I mean, so much of this is, like, the work that we do is digital. Like, I mean, emails, note-taking and stuff. But, like, co-pilots for real-world tasks. Like, I think people need to improve efficiency when they're doing offline work as well or physical work. I think it'll be exciting to see how AI can enable all of that. On Monday, we actually had a good discussion about Moldpoke. I don't know if you read into all of this stuff that's happening with the bot. So, there's somebody who...

Kashish Sharma, EquityList: Saw the episode as well.

Utsav Somani: There's somebody who launched Rent-a-Human.ai. And 150 people have signed up where literally AI is hiring humans to basically just do some tasks for them. It's absurd, the world that we live in. Like, reality is stranger than fiction right now.

Kashish Sharma, EquityList: Dystopian. It's absolutely dystopian and bonkers. So, those... I mean, for example, in the early 90s... I'm sorry, not in the early 90s, in the early 2000s, Amazon had a product or a service called Amazon Mechanical Turk, right? And basically, Mechanical Turk was supposed... MTurk, right? So, it was like a crowdsourced model where anyone sitting around the world could do any multitask for anyone at any point of time. And now, the dystopian reality of, you know, like, machines taking over humans is actually coming to light. So, not only do they have their own social media to crib about humans, but now they're making us work as well, which is just crazy.

Utsav Somani: So, let's return back to real businesses. Let's welcome our first and only guest for the show today, Mayank. Welcome to the show.

Mayank Jain, Cleevo: Hi, Utsav. Hi, Kashish. It's great to be here.

Utsav Somani: Boring you with all the AI talk, I hope you didn't get bored. You found some parts of that interesting.

Mayank Jain, Cleevo: Not at all. I've been contemplating to use a note-taking app. And now, I just listed down all the names that you guys actually were discussing. But again, going back to what you were discussing, right? Will I go back and refer to these notes? I doubt. So, it's a loop.

Utsav Somani: Sometimes, like a sticky paper-pen pair, if you note down the important points, I think that's more than enough in a meeting. But we've become this hyper-productive, like this thing. But of course, for sales calls, sometimes you might want to refer to a customer's notes as well. I think that's probably your use case, right, Kashish?

Kashish Sharma, EquityList: It is. So, each and every conversation that we have, of course, with the consent of a customer or with the sales prospect, every call is recorded using, for example, we use Fathom.ai. It's pretty fantastic. So, not only is the entire call recorded, but then we have a repository internally for it. So, we have like 500 call recordings over a span of two years.

Utsav Somani: You learn from that collectively.

Kashish Sharma, EquityList: You learn from it, right? So, any sales deck, collateral, etc., everything is prepared using that information. Even newcomers and new joiners, right? You don't want to repeat the same thing again and again. So, here we go. Watch all of these recordings. It's pretty helpful. But Mayank, here's the thing, right? You could have an agent to go through all of your notes.

Utsav Somani: Kashish, this has become a bit technical. You're a B2B founder, right? But Mayank, this is not an idea of ours. So, you'll have to explain what your business does again. Congrats on the funding from the show as well. And tell us, for our listeners, what does the business do?

Mayank Jain, Cleevo: Yeah. Firstly, thanks for having me here. So, I'm the founder of Clevo. We are a fast-moving consumer goods company operating in the home hygiene space, right? To explain what we do, a very simple scenario, right? You go to a store, you buy cleaners. You buy a floor cleaner, you buy a dish liquid, you buy a bathroom cleaner. You carry about, say, 15 liters of liquid in your hand. Say, you're stocking for a few months, right? And only to realize that you are carrying water in a plastic bottle because your cleaners are up to 90% water, right? So, what we did was we eliminated that water. And we're like, we give you concentrates. You already have a bottle. Use that. Why not? Right? And that is where the whole concept was evolved. And yeah, today we've replaced about 15 lakh plus bottles from being reused. And we've been able to do this for the masses, right? So, basically, we've reimagined the way people, I would say, consume cleaners, right? And while keeping it non-toxic and whatever is the new must, right? And...

Utsav Somani: Did you start with sustainability or space as a problem constraint for this industry?

Mayank Jain, Cleevo: No, I think I started, I mean, just by applying some common sense in the space, right? I mean, see, today, I think any product that comes or anything that you consume, sustainability is like having MRP on a pack. That it has to have some sort of sustainability tack to it, right? But then when I looked at it initially, the whole thought was about operational efficiency. That from more of a business point of view, right? Operational efficiency. We operate at a price which is half the price of market leaders. I'm talking about, say, a Lysol, say, 50% cheaper than BHT, right? So, sustainability became a part of our story, right? And we realized that we are actually building this for the mass. So, we are making sustainability accessible for the mass, right? Where your help is today going and asking the owner, can you buy this for me? I don't know where to get it. So, we've been penetrating that way. And I think, yeah, I mean, at least we feel that we are truly sustainable because of the whole eliminating the bottles and sustainable to the pockets as well. Not just to the environment. I think the holistic approach is what was missing.

Kashish Sharma, EquityList: Nice. Mayank, I mean, you've spent, what, over a decade in the D2C space, right? So, what were the insights? Like, I mean, one day you don't just wake up and say that, hey, I want to build something against Lysol. Like, it's done. I've seen Lysol all over my place. I have to do something, right? So, what was the trigger and what market kind of numbers, you know, made you kind of get the conviction up and running?

Mayank Jain, Cleevo: So, I had a brand before as well, right? I was running a D2C business before, which was acquired, right? And I did have certain understanding, very, very, very operational understanding, I would say, because I would say I'm a hardcore operator, correct? I feel that if you're rightly distributed, obviously the product is right. And if you're rightly distributed, it will sell, correct? The brand and everything is secondary. So, I felt this was a fundamental problem in the category for e-commerce. Everybody today is buying cleaners. Everybody, right? People are cleaning your house and also buying cleaners, right? So, but it is expensive. It is, I mean, it is not, I don't know if it's expensive or not, right? But it can be a way a lot cheaper and a way a lot economical and sustainable just by eliminating the water. So, that is where the thought seeded, ki mereko pata hai operationally what are the things that I will have that nobody in the market has today, right? And I think that was the driving factor, if I'm able to crack the product, I know the market is very big. And that took us about a year and a half. And I think now it's almost the curve that we are starting to see. So, I think, yeah.

Utsav Somani: About the R&D process. Like, I think that must be where the magic happens for a new product development or even existing ones. Like, run us through that journey on what it looks like. How do you decide? How do you identify a category? How do you think about a product in that space? And you must have shelved many ideas as well. So, maybe talk to us about the R&D process. What do you take to the market? What do you do?

Mayank Jain, Cleevo: Yeah. So, for us, it was a long journey, right? At least to launch the first product. So, we had some inspiration from the West, right? Where there were tablets as a concept. And then what happens is, I mean, we also realized ki jo West mein chalta hai, wo idhar nahi chalta hai, correct? And we did. So, the initial thought was we'll do tablets. Then we'll do liquid concentrates, right? But a tablet does not dissolve fast enough, right? And your health does not have enough time. They want, they are probably more busy than we are, correct, today. So, we then thought ki dissolution has to be low. Then we moved to powders where we saw ki log tan hair dye use karte hai, tan peete hai, paani mein mix karte hai, right? So, when we started to pitch that to consumers, then we saw immediately they could relate ki yaar yeh toh humko aata hai, right? And I think that was the starting point. So, consumer front is where R&D should start, no matter what you are building, at least in D2C, or I would say consumer brands, right? If your consumer is not going to use it, then doesn't matter whether you spend a decade or if you spend 10 days, right? Today we launched, we've even launched products where we've done R&D only for seven days. And those are becoming our best sellers because we know what the consumer wants, right? And luckily in our space, regulations are next to nil, right? So, we don't have to wait for certain certifications or licenses to launch a product. So, that helps.

Utsav Somani: You can take the product very quickly.

Mayank Jain, Cleevo: Yeah, yeah, very quickly. And today we're building a full-fledged manufacturing unit. I mean, we manufacture all our products, right? We are truly building for the world. Our vision is to be one of the only cleaning brand in the world that actually ships cleaners because hum paani mein paani nahi bhejenge, right? That's a nice tagline. And yeah, and I think we're working towards that, you know.

Utsav Somani: Tell us some numbers, like give us a scale-ka picture for our audience to visualize what does the Clevo brand look like?

Mayank Jain, Cleevo: So, when we started two and a half, two years back, I mean, it's when we started selling. A year and a half back is when we started selling. We're selling about 50 liters a day, right? As of today, we are shipping about 1,500 liters a day just on our B2C website, right? We're shipping about 2,000 liters a day on QuickCommerce and e-commerce marketplaces. And this number is growing by about- 2,000 liters.

Utsav Somani: So, in liters, this will just translate as like, I mean, you're basically translating it with, you know.

Mayank Jain, Cleevo: Yeah, yeah, right. So, I'm translating weight to it. And we're doing this from 7,000 square feet space in total, right? Now, imagine if this was actual water, right? Imagine the amount of space and people I would have needed. We are a team of about 30 people, out of which 20 people are in the manufacturing and the warehousing place. And just 10 people operating, and we're doing it comfortably, right? So, and that is the optimization that I'm talking about, right? For us, one truck comes and they take all the load and go. And if it was liquid, there would have been 10 trucks standing right outside, just waiting to collect this. Everybody drowning their faces like, I don't want to carry so much weight. Correct. So, this is just a very small snippet. And then QuickCommerce and e-commerce, and all these marketplaces are also starting to realize the sort of value we are bringing on the shelf.

Mayank Jain, Cleevo: Correct. And yeah, I think the whole perspective for us also is that we are not just building for the consumers today, but I think we are looking at a category at an industry upside down and changing the rate of its.

Kashish Sharma, EquityList: Pretty fantastic. Mayank, do you want to quickly tell our audience about the potential, I don't know, like what kind of toxins are we looking at in the existing products, et cetera? And how is Clevo really kind of ensuring that not only is it sustainable, but it's also like chemically a better alternative than, I don't know, any product that's out there that's usually in our homes?

Mayank Jain, Cleevo: Yeah. So, the base detergent, right, that is used for cleaning. Correct. Generally, there are harmful acids in that, right? Hydrochloric acid, for example. But what we use as a base is a coconut-derived surfactant. So, this is derived out of coconut, cleaning as well as your any other acid, right? Then for germ killing, we use citric acid, which we use in food also. For a dishwash, we use an ingredient which actually moisturizes your hand. So, your dishwash is your new hand wash, right? When you're washing utensils, generally people complain that their hands are getting rough. For us, it's the other way around. People are saying that our hands are getting moisturized, right? So, yeah, I mean, these are a few things that we've done differently just from the ingredients point of view, right? The only drawback today that we have again, right, and when you move to a cleaner version, there is a reason. I mean, there's something that you have to let go of, right? And for us, that's not efficacy. But is this the tag that 99.9% germ killing sort of a claim we are not able to make today, right? We are at a, I would say 87, 89% sort of an efficacy, which is still great, right? And we're working on that. I mean, we are seeing how we can, nobody in the world today who's using cleaner ingredients is able to claim that. So, we're trying to see how we can do that.

Utsav Somani: And tell us, what are the hero products and what are the major channels that your sales come from? You said DPC is a big, I mean, that's fascinating, right? I mean, for a customer to come up on your website directly and just order, I mean, I'm guessing the repeat usage is also pretty high. So, hero products and repeats are doing well?

Mayank Jain, Cleevo: Yeah, so I think our hero product today, we're pushing just two to three products given our operational efficiencies as well. But I think our floor cleaners are one of our heroes because we see about 55 to 60% repeat rates on that already.

Mayank Jain, Cleevo: Right, our kitchen cleaning spray, the de-greaser is one of the viral products which goes, which gets like, which eats like 5 million views for its breakfast, I would say, right? So, that sort of viewership we get on those content because we just show people cleaning their house. And that's one of our viral hero products, which is a great introduction to the brand. And one of the interesting products that we are seeing come up is your washing machine descaler, right? For now, you sell LG, you sell Bosch, right? Those expensive powders and liquids. We figured out that we have everything as an infrastructure, correct? And I mean, we sell it again at, the pricing is not comparable to anybody today. I mean, we sell it literally one fourth of whatever these guys are selling at, right? But I think the efficacy and everything also is starting out to be really good. We are operating at a four and a half reviews out of five stars, right? And then I think that's across our portfolio. So, I think these are the three hero products as of today, but I'm very sure our dishwasher is going to be the star. We're just fixing a few things in ops before we take it out.

Kashish Sharma, EquityList: Mayank, you already have a crazy tagline, by the way, your dishwasher is the new hand washer. Can you imagine all ads running on TVs centered around that theme?

Speaker 4: Yeah, yeah.

Kashish Sharma, EquityList: Crazy, you know, like the marketing agency is already thinking about how to market this. But Mayank, one thing is that, so I think you mentioned that, you know, roughly like a good chunk of your orders are coming from tier two and tier three cities, right? Contributing to like 45, 50% more or less. That's crazy, right? Like, isn't that narrative violation as well, right? Like D2C products in tier one cities is usually the go-to kind of market that you think about. But how have Mayank, how have you cracked tier two, tier three in early stages while you're running so lean, right? Like a team of 30 and owning everything yourself.

Mayank Jain, Cleevo: So I think the one strong insight that I had from day one was like, you know, Indian consumers are value conscious. They're not price conscious. And then this is something that I have, you know, integrated or I've, you know, set as a thing in the whole team that people have the money, show them value, they will give you money. Right? And I think it's something that a market leader is selling for 800 bucks when you're selling for 300 bucks. And then you have people out there telling that, you know what, this is great. I've been using it. And then these people are buying and they're going and telling other people that this is great. Was this, it was this, I don't know, by design. I mean, we just built for the consumers. I don't believe in tier one, tier two, tier three to be very honest, right? Because unless I'm able to show how much I'm spending, I won't spend that much. As an Indian consumer, I don't know globally, but at least in India, right? I'll buy a Gucci because you see the bag, it's just a Gucci, I mean, in all due respect, but it doesn't look good, right? It does not look good. It's just a logo, right? Abhi cleaner kisi ko dikhana nahi hai. Toh log saste pe saste pe jaate hai, right? Kyunki abhi jo new age brands hai cleaners mein, they sell at a very expensive price point. So you might get scared and you'd be like, chalo ek acha cleaner ek baar karita ho. But the next month when you go to buy the same cleaner, you'll be like, theek hai na, my help is only using it. Let me buy the older one itself, right? Why to spend so much money on that? So that, I think that is something that is something which operates in the category. Like a lot of people don't agree to me, but deep inside a lot of people do that, right? And I think we just eliminate all of those assumptions. And tier 2, tier 3 ka itna penetration ho raha hai by content. So the influencer reach outs that my team keeps doing or even I keep doing, right? And the content that is being built is just, I mean, I think people in tier 2, tier 3 just watch too much deals.

Utsav Somani: I mean, there must be a lot of learnings that you have as a second time D2C founder, right? I mean, you sold one company before this and now you're doing this. What is that threshold for, say, repeat purchases? I think your number is pretty high for at least the one category that you mentioned, 55%. Usse neeche ka repeat chale jaye toh the business is not sustainable. What is that number as per you?

Mayank Jain, Cleevo: I think it takes at least one and a half to two years, right? To understand repeats. And that also, if you have been able to achieve scale. Humko abhi pichle chaar maine se ya six months se we are able to understand repeats to be very honest, right?

Utsav Somani: Because... Cleaner toh somebody would buy like every month or every couple of months, right? And if they, I mean, don't buy in the middle then you've lost them as a customer to something else.

Mayank Jain, Cleevo: So the challenge Utsav today is that how do you track repeat, right? Because see, I acquired you on my D2C website, right? You saw a reel, you bought it for once. You really liked it. And the next time you go to a quick commerce or an e-commerce and you add it to the cart and you just buy it. So I don't know whether Utsav idhar aakhega and then the next time you probably go on a Zepto you look for it, you find it, then you buy it from there. The next time probably you're shopping something on the Blinket app and then you buy it from there, right? So it's very difficult to track repeats. So we track it at a P&L level, right? We try to see how our ads are getting optimized. And what is the organic sort of orders that we're getting on a D2C? And then we go to the marketplaces wherever available. For Amazon, I have a great tool called Amazon Five, right? Which gives you a very strong benchmark against the market competitors and the market leaders in that category. So for us, well, we operate at 55% for Florentiner, a Lysol or a Presto operates at a 62%. So we are very close to the market leaders who've been operating on that platform for 10 years, right? So it is very difficult to track repeats today, right? Because there are just so many touch points for a consumer, right? We are profitable on our Amazon channel already because we spend heavily on Meta. We realized that there's a lot of spillover, right? We are growing 10, 15% month on month on Amazon because we're doing heavy activities on Meta. So there's just so much spillover that it's almost impossible today to actually track repeats. You just need to have a very strong MIS and track your numbers. I think that is the way to do it.

Kashish Sharma, EquityList: Kashish, any final closing question from you? Mayank, long-term plans. What's next for QO? Hansam, are you going to tease some new... I think...

Utsav Somani: Do you think cosmetics in powder format will do well? Like you can make your own, like, I don't know, face wash, like...

Mayank Jain, Cleevo: Sir, it's a very difficult category. Everybody knows that. And also I think it's, I mean, I think it's already... There's too many things happening, right? And I don't think price also is a concern in that category. So, I mean, not looking at that. I think home care as a category is huge. We are launching something, Kashish, in the next two weeks, right? Something that will solve your bathroom problems. The line scales and everything in your bathrooms, right? The tiles, we're building a paste for that, right? And it's one of my... One of the products that I think is going to be the hero for us because it's a very big problem and we're able to clean rust also with that, right? So, I think that is something that we're very excited about. But at a business and a brand level, I think now is the time for us to start talking more about our story, right? The national television feature gave us a lot of insights. I mean, we're seeing a lot of authority on social, at least today, right?

Utsav Somani: How was that experience? Sorry to distract you, but that experience. Like IdeaBars, a lot of these shows have come up. Shark Tank, IdeaBars, there's something on Amazon also now. Do you think it helps boost visibility and credibility?

Mayank Jain, Cleevo: Yeah, I think visibility... It again depends on... See, organic visibility is next to nil, to be very honest, right? Because there's just, I think, an overconsumption for this now. I mean, there are three different platforms having the same concept, right? Shark Tank being the largest, obviously, because it's a global brand and it's at a first mover advantage. But I think for a brand, it is a confidence booster, right? Especially a show like IdeaBars or Bharat Ke Superstars where the founder is the hero, unlike Shark Tank where the sharks are the heroes, right? I think the narrative setting is a little different, right? So, the moment the founder is a hero, what happens is the show might not get that many eyeballs. But for a founder, it is a very big confidence booster because they feel like people are listening to them, right? Nobody is... And the panel is not allowed to demean you, right? The moment they do that, they take the panelists out and they make them sit aside, right? And for us, the journey has been great, right? I mean, we went in with an ask for 75 lakhs, we came out with a 5 crore deal, right? So, I think that... Yeah, so I think that was... And we got Rishabh Mariwala to invest in us. I met him thrice before, I mean, his team. And I think it was TV where he was supposed to invest. So, I think that was great. And the content that we got after that, I mean, the sort of content that we are able to build, at least for us, the storytelling that we are able to do. Today, I don't have... I'm not sitting in front of a camera and talking to you and trying to sell something. I'm having a conversation with someone and just read the comments. We have about 200 comments on all of these saying, love the brand, why did... You know, love the products. Why did someone not do this before? And I think that is what matters in the end, right? Everything else is the showbiz. So, I think...

Utsav Somani: That's the... You described it perfectly. I think recognition for the business and the founder.

Mayank Jain, Cleevo: Yeah, and founders have to be smart enough to use it the right way. And I think we are doing that. And a lot of businesses do that. But like Shark Tank, for example, doesn't allow you to use the clips. So, there's nothing much you can do. But that's not the case with us. So, we are doing left and right.

Kashish Sharma, EquityList: So, yeah. Mayank has been dropping truth poems after truth poems in this entire segment, by the way.

Utsav Somani: One segment. And thank you for coming on the show, Mayank. Wishing you all the best. Hope to have you back soon. Best of luck.

Mayank Jain, Cleevo: Thank you so much. Thank you. Thank you.

Utsav Somani: All right, listeners. That's it from me and Kashish today. We'll see you on Friday. I'm guessing Dhruv will join us back. But otherwise, Kashish is most welcome to take my seat. Let's, yeah, I know for sure. Cheers, guys. Thank you for tuning in.