Full Transcript

Dhruv Sharma: Hey there listeners, this is stream 110. Yes, 110. It's been 10 episodes since we streamed that special for our 100th. And today we are chatting with Pranshu Singhal, who's the founder and CEO of a company called Karo Sambhav. Pranshu, welcome. So, it's great to have you with us.

Utsav Somani: Pranshu, welcome. Should we get started? Tell us the story behind the name first, and then maybe you can explain what the business does.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: So, let me start with where I started from. So, I used to head education and sustainability at Microsoft before starting Karo Sambhav. And the idea of starting Karo Sambhav was to figure out solutions for electronic waste management. Now, largely, anything related to waste has been discovered. And not just in India, at a global level, I can say in most countries wherever, you know, I've seen things. So, when I discussed with my friends, family, anyone said, this is not going to happen. This is too crazy. Waste is always about mafia. Waste has so many issues, challenges, misgovernance. So, one was that. Second was anyone that I was talking across the ecosystem said the same thing, that this is not going to happen. You can't crack it. This is just too infertile a ground, you know, to be converted. So, just Karo Sambhav name came from there, that okay, it was so difficult, Karo Sambhav. So, at least we will take power from the name on a daily basis.

Utsav Somani: And you've been doing this for a while, and you did Nokia also before, where you created the program for collecting devices, but tell us about the industry and why is it relevant right now?

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: So, if I were to talk of electronics, and I also had a bit about what I did at Nokia. So, spent almost, I started with Nokia in 2003. So, spent a very, very long time building solutions for Nokia at a global level. Started from Finland, then in Singapore, then India. But the core issue is, you know, electronics is the fastest growing industry. Almost anything and everything is electronics. You know, even clothing is now becoming electronic. And with AI, this is only going to grow from an exponential to super exponential if there is something like this. Now, with this quantum of waste which is going to be generated, first of all, it puts a crazy amount of load from a material. From a material point of view, too much waste is being generated. Sorry, too much mining has to be done. So, we are going to run out of almost all critical minerals which are required for electronics. And second, you know, in mining, the whole energy consumption is, energy as well as the overall environmental footprint is very, very high. So, the only way to bring that down, if I were to wear my old Nokia hat, for me, it was very clear. If I have to offset 99% of the lifetime impact of the phone, then I have to recover only the tiniest amount of gold which is present in the phone. That tiny amount of gold offsets 99% of my lifetime environmental impacts. So, that is the benefit of recycling. So, while, you know, we were paying too much attention to design a phone, to, you know, how do we work with people on our supply chain and so forth, what became very clear after doing multiple analysis was focus on end of life, get these materials recycled, and you would have done more than what you could ever do to solve the problem in a meaningful way. So, hence the, a very strong focus from my side, you know, in my personal life became how do I solve this end of life waste problem, which essentially meant working with people because this is, this is for me more than materials engineering and material science problem, I find this a behavioral science problem. You know, so our fight in most cases, if I talk about phones, is with drawers, it is not with anything else. How do you get people to empty their drawers?

Dhruv Sharma: Pranshu, I mean, we started off with phones, but please give us a sense in terms of categories, is phones like, I mean, in terms, let's, I'm going to call them emitters, but which devices or consumer appliances are the top three emitters? And then when we try and recycle them or upcycle them, you know, what components can we harvest? What materials can we harvest? What's that? What does that list look like?

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: So, a very simple way of thinking about this is one has to look at material energy intensity of materials. So, gold, for example, is a metal with the highest energy intensity. So, if any product contains any amount of gold, that will always be in the top two to three. So, if I would look at a relative amount, a mobile phone has today the highest amount of gold in comparison to most other products. But this high is not high. We are talking of petty amounts. We are talking of worth of 20 rupees of gold in a phone. So, the amount is very tiny from that point of view. But that tiny fraction makes it super heavy from an environmental footprint point of view. Now, let's compare an air conditioner, which is a huge product, very heavy on metals, very high on copper. But it does not contain any precious metals. So, from an environmental footprint, it may, on a per kilogram equivalent, it will still be significantly lower as compared to a mobile phone or a server or a laptop. So, anything which is, let me call it very high on compute is a product which will always be a focus area and must always be a focus area because compute requires high amount of conductivity in your circuits. And for that high amount of conductivity, you need these super materials or precious materials or all sorts of things which are super difficult to mine. So, we, while I am talking about phones, we work on any type of electrical or electronic devices. So, whatever it be, because copper is mostly available everywhere. Copper in El Nino. If we talk of copper, you know, with the whole AI revolution and transformation that we have seen, also the whole transformation from a great perspective, you know, movement towards renewables. Copper is the king. So, you need copper for transmission, for your products, anything and everything. And we don't have so much copper now. So, suddenly, you know, electronic waste has become a space where one should really have very strong strategic focus at a country level, at a company level, because this is no more about recycling for environment. This is recycling for survival and growth of the organization. And at a country level, I would say the same.

Utsav Somani: So, when I was reading about your industry, this one word or term keeps on coming back up again and again, extended producer responsibility. And you studied under Professor Thomas who actually invented this concept. So, maybe like for our listeners and for our benefit, maybe share some insights on that. Sure.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: So, yeah, thankfully, I happen to be a student of Thomas Lindquist. He coined this term way back in 1992. And we have been writing about it now for many, many years. So, what does the term simply break it into three parts? Extended, producer and responsibility. So, traditionally, waste has always been a municipality problem. If there is waste, then municipality and not just in India, across the world. If there is waste, then municipality will take it and figure it out. But 1990s onward, one thing started becoming very clear that products are becoming increasingly complex. And municipalities just don't have the ability to solve this. You know, they don't have the wherewithal. They don't know how to design, how to, you know, how do you deal with such complex products? Think of simple things like plastics packaging. The multilayered packaging has aluminium, paper, plastic, it's all composite. Even simple things became overly complex. Hence, the idea came that it can't be a municipality function. It has to be extended in terms of who will actually do it. And that extension fundamentally came towards the second term, which is producers. The one who produces, he has the most knowledge of what do I do with this material? How have I manufactured it? What is the material?

Utsav Somani: Were they actually lobbying against this? Because this puts them in somewhat of a liability, right? I mean, to collect the devices and stuff. And this was back in the 1990s.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: Yeah, yeah, we are talking about 1990s when it came in all the country. So, obviously, whenever there is a change or resistance, it will come. I mean, that's the nature's law. So, without that, nothing will happen. So, you know, is it something to blame? I would not say it. I would not put it in that negative light. If I was there, I would also say, hey, we are doing this till now, you do this. So, obviously, there is going to be resistance. But eventually, society accepts because there is no other choice. I mean, where do you get materials? Where do you extract? How much can you pollute?

Utsav Somani: And you did it at Nokia as well, right? I mean, you built the program at Nokia.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: So, you have to internalize these externalities, so-called externalities. So, it should have been internalized already. But because we have our whole construct of economies is different. So, it is looked as an externality. How long has the environment been an externality? I mean, we breathe air every single day. You know, our all resources are mine. For any product, you need resources. So, it was never an externality. So, coming back to the EPR point. So, producers became the center primarily for two reasons. First, they know what has gone into the product. So, they can design better products. They can eliminate toxicity. They can solve the problem by design. Second, who is going to finance this? Because there will be a cost. Now, when we do distribution, we give away products. There is some money for distributors. But when you are taking back, who is going to finance that collection? So, producers were kept because they have the ability to increase the pricing of a product so that they have at least some money to finance the collection and recycle. So, this is how extended producer responsibility term came to be. For me, I first got introduced to the term in 1997 and then studied under Thomas. But surprisingly, it has got so much traction in the last 2-3 years at a global level that every country is now using EPR as a baseline principle for policy.

Dhruv Sharma: Ranshu, I think maybe I'll take a step back and ask you a slightly sort of long-term question which is our consumer economy is developing and will continue to develop. It will go through upturns and downturns, but it will continue to develop. And if we are consuming more, someone will have to produce more. If someone is producing more, someone will have to extract more. That will continue. Over the next 50 years, what will our cities actually look like? Now, all of us want to live in clean cities. What can we be doing as private citizens like in terms of our responsibility? And our show is watched by startup people. So, what are the business opportunities for startups to ensure that we align incentives and everything in such a way that our cities certainly look better in 50 years from now than they look today?

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: See, this is a very, very fundamental point. And I don't think any environmentalist has real answers to this because here you start clashing with the classical economics of how do you run a business, how do you run a society, and how do you even measure progress? It's a very classic tussle between these two things. Now, the very fundamental of a society which can live on with growth happening is when we'll have to start in some way biomimicking the whole production and consumption patterns, which means, you know, until and unless your designs are following how nature works and nature manages waste, you actually can't. And this is a very fundamental design principle which has been used over the years, but not to the deepest extent possible. Today, the whole economy is based on a, you know, take, make, break sort of a model. Now, even a circular economy will have its own limitations. How much you collect, how much you recycle, it has its own limitations. You know, you can't keep on recycling anything and everything because recycling also consumes energy.

Dhruv Sharma: And comes at a cost.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: And also the cost, yeah. So, until and unless we go to fundamental, TBR in some way has also failed in this aspect that it has powered recycling, but it has not powered the redesign of products at a very fundamental level. So, one will need to, you know, really rethink, okay, do we need products or do we need services? So, there are now business models which are changing from products to services. You know, from material intensity to functional intensity. So, until and unless those very fundamental things are, you know, changed.

Utsav Somani: Do you think regulation catches up much later in this case or like it's a strong lobbying effort by businesses to protect their own economic interests? Like, what's the block out?

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: It will always see businesses, again, you know, we have to again empathize. If I were them, what should I do? Would I not resist? I would always resist. So, you know, the issue is not that who is right and who is wrong. The thing is, how do and where do we find the turning point for the economy? And that turning point must be found, otherwise we are destined to fail. As a society, as a species, you know, and we always say save earth, but we have to essentially think of save us as a species. We may not survive, but there will be a species which will survive, which will go on. So, the fundamental rethink is that somewhere, and I really don't know, there is a whole struggle in the whole environment. Where do you find this tipping point that people truly get it? It's a real matter of get it. I mean, you see all the universal political parts. You're seeing all the science now. I still don't understand.

Dhruv Sharma: I think what I think about this, Franshu, it's not a question, it's more a statement, is that as human beings, we forget that sometimes we have to share the earth with other creatures as well. It's not just ours, you know, and we treat it as that. But, I mean, it's not all bleak. Let's talk about some success stories as well. So, for instance, those dirty black polybags, you no longer see them anymore, right? Like we've managed to achieve, I think, some level of success when it comes to single-use plastics. So, please talk to us about some recent success stories as well, in terms of the expansion.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: You see, if I talk only about India, I don't want to go beyond India, at least for this dialogue. So, you know, just the fact that in 2017, EPR-based regulations came in, and, you know, I talked to them, you know, all about resistance. Why are we even bringing, why should I spend this cost? That dialogue has 100% shifted to how should I spend this money? What is a better way of spending this money? You know, how much should be enough? So, what we have seen is a fundamental shift in how we are talking, how we are delivering, how we are, you know. So, businesses are no more in the space of resisting. They are saying, okay, I have to do this, but how should I do it? So, cost minimization has come instead of zero cost. Now, so, what I mean to say is there is progress and it will continue to happen. Like, let's take a new space of critical raw materials. These are materials which are present in very tiny quantums, in electronics and in most other products, be it your EVs, quantum computers, you know, in all types of things you will find critical raw materials. Now, there is a very strong focus because everyone realizes that it is critical and rare, that is why it is not there. So, a good thing which has happened is we are finding a very nice synchronization between economic growth with environmental growth, or environmental development or redevelopment, whatever we call it. So, which means that if we want compute power in the long term, then I will have to take care of the environment, which means circular economy model should be there. Functional products should be there. My design should be a lot different. If you just look at the startup space in the past three years, forget, you know, there are no more numbers than that. Just look at the amount of startups which have come in alternate material space. Just in alternate materials. You know, things that were never even thought of. So, again, where is this all coming from? Because people are at least hedging their bets. They are finding, yes, economically I will be successful if I take this path because the way I feel as a founder is that it is not happening right now. There is resistance right now, but it will happen tomorrow. If it doesn't happen, then we won't survive. So, I think a lot of people who are putting faith in that and belief in that story, this is going to happen nonetheless.

Utsav Somani: The question is, I mean, in the room now. Like, I think, any decision, any big thing. But, I mean, ESG norms and like, I mean, all of these took a while to catch up. Like, and some people said that they were just, I mean, financial dressing to existing investments, just to like suit CSR criteria and stuff. But I think in your business, I think the biggest challenge you must have faced is formalizing the, I mean, the agri-network in India. Like, I think that must be the biggest challenge that you would, I mean, come.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: I would say it's bigger than that. It's bigger than that to tell the common man why recycling should be done properly. You know, you can move informal by looking at the economic incentive. Because people are informal not because it's a choice. In most cases, it is an economic imperative. You know, I don't have any other livelihood. So, the moment you give an alternative incentive, you find ways of, you know, providing better money, people will shift. What do I do with regular people who expect crazy amount of money for waste?

Utsav Somani: Oh, wow.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: So, you know, for me, it becomes a citizen's problem rather than informal sector problem. Informal is because citizens misbehave. How did it go to informal? Because I didn't treat it properly. I didn't question the right agency. If we as individual citizens start questioning the ecosystem, questioning, you know, whosoever is the seller of a product to us, that you sent me this T-shirt, where do I return it? At the end of its life. Like, think about shoes. The number of shoes that is produced in shoes is one of those things which just doesn't get recycled at all. Almost impossible to recycle as a product. But only present. So, as long as we don't take ownership anywhere as citizens, it will be only a few percentage point of the total citizens which will start asking the question and we will hit that tipping point. I think we are nearing that tipping point and the moment that tipping point comes, we will see a dramatic change in how businesses operate, how products are created, how they are managed, the definition of product in itself. Is it about functionality or product? Why so much focus on materiality?

Utsav Somani: And congrats on your recent raise by Rain Matter as well. Give us a sense of the scale of the business now.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: So, when we started Karush Humbug, I had a, again, having worked at Nokia and Microsoft, one thing was very clear to me, that if the unit economics is not sensible, then we should not continue. So, it was a very clear decision that for first, let's say, at least 5 years, we will not do any fundraisers. And our clients were very large companies like Apple, Dell, HP, you know, all the large companies. So, we can't be subsidizing by using someone else's money. They should understand the true cost of business, especially the true costs of EPR, most companies should understand. So, with that thought, the company was bootstrapped. However, what, you know, immediately came, not immediately, after a few years of operation, but it became a clear realization, was we are talking about infrastructure. Circular economy is actually an infrastructure issue. How do you create collection systems where everyone has accessibility? You know, if you want to recycle any product, it's dead for you. Where do you go? Today, you know, even with Karozum being a founder, I don't know where I should give my product. Because even with all the network that I have, it's very difficult for, you know, people to find what do I do with X, Y, Z products. So, that was the, you know, point where, you know, it really occurred that in TLS, we create a massive infrastructure. And massive infrastructure cannot be done by being bootstrapped. It will require market creation as an exercise. It will require very different sort of infrastructure. Infrastructure which is not just ours, it will be shared, it will be overlapping, but this is a huge push towards market creation. Now, so we reached out to a few organizations, but I am so thankful that, you know, an organization like Rainpatter picked it up because it was such a delight to meet with him when I met him the first time. You know, the kind of emphasis, the kind of depth in terms of, you know, why to do this investment, why is it important? And for us, it's a great start because it opens doors for so many other things to happen.

Dhruv Sharma: Pransh, I am wondering, which is the world's most valuable company in waste management? Because every six months, I would say, there's somebody who comes out and makes a statement that there's a trillion dollar opportunity, the world's in waste, and the world's first trillionaire is going to be, it's been a long time, but is going to be in waste. Why do people say that? And what are the facts on the ground?

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: I honestly don't believe in a lot of these things. I think they are just a story in most cases. I don't see waste as a crazy money earning opportunity. It's a problem that has to be solved. Yes, there will be some money to be made, but it is some. If it is done properly, again, I'm being very open and candid here. I don't think, you know, people sometimes say waste is gold, you know, it's a mine of gold. No, if it was a mine of gold, everyone would have done this job. It is something which no one wants to touch because it's messy, ugly, dirty, anything and everything. And with tiny margins, if everything is done with a good governance hat. I would like to emphasize this very strongly. Ethics or governance. If you do this, give everyone fair wages, do everything properly, then there is small margins to be made. And again, you will have to work hard. So as compared to most other product categories where you can start your businesses, is this the way? Maybe not. But is it the most satisfying way? The answer is a huge yes. You know, I am doing what I like to do. So for me, this is my passion. This is my hobby. This is my work. Everything in one. So again, you know, how do I say, the intensity of the work is very different than any other work that you can do. And that is, I think I can say the happiest person could be this instead of saying that, you know, unicorn guy or XYZ. For me, I think that would be a better statement.

Utsav Somani: But as a final closing question, if you were to invite you back on the show, maybe in a couple of years, what is one metric that you would be proud of as a business? Like tons per sales, recovery yield, cities, brands, emissions, formal jobs. What is the number that you look forward to most on improving further?

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: I would say people engagement. For me, that would be the most important thing because until people engagement is not there, all other metrics fail. You know, I can keep on saying we are doing X ton each. We would have done 10 times. But if we have not engaged people, people are not really participating, not questioning. Because this is an ecosystem game. This cannot be solved by one company. And the play can only happen when people truly participate. You know, it has to become a movement of sorts. And only then, so I would be super happy, you know, five years later, with or without our efforts, you know, every person is starting to question brands. You gave me this phone, what do I do with the old one? This product has toxicity, I got to solve it, right? So, you know, this whole ability to be critical, which means we are taking ownership of anything and everything. For me, that would be the paradigm shift, which is required.

Utsav Somani: All right, Pranchu. Thank you so much for coming on our show. Wishing you and your team a very, very best on this journey.

Pranshu Singhal - Founder & Managing Director, Karo Sambhav: Thank you. And thank you, Dhruv, for being with me. Thank you.

Utsav Somani: All right, listeners, moving on to our next guest. We've got Ishit from Select. Ishit, welcome to the show. Thank you. Hi, Dhruv.

Ishit Lakhani - SELEQT: Thanks for having me.

Utsav Somani: Where are you dialing in from?

Ishit Lakhani - SELEQT: Sorry?

Utsav Somani: Where are you dialing in from?

Ishit Lakhani - SELEQT: From Ahmedabad.

Utsav Somani: Nice. And welcome to Select as well.

Ishit Lakhani - SELEQT: Thank you.

Utsav Somani: Let's do a quick introduction of what the business does.

Ishit Lakhani - SELEQT: Absolutely. So, I run this company called Select, which is primarily a wealth management company. When we say wealth management, we are a wealth management in true terms because we help our clients with wealth creation, wealth preservation, and wealth transfer. So, we have got four divisions, starting from global investments to taxation, to insurance, to succession planning. We are a one-stop solution for our clients. And apart from wealth management, we also have started doing multifamily office out of Gift City. So, we are trying to leverage Gift City as much as we can. I sit in that part of the country wherein Gift City is hardly 30 minutes away from me. So, we are trying to make sure that we utilize it very well.

Utsav Somani: And how is the Gift City? I mean, since you mentioned it right now, how is the Gift City ecosystem coming up? And what can companies do to leverage that infrastructure more?

Ishit Lakhani - SELEQT: So, Gift City is coming up great. I mean, earlier, maybe there was lack of vision, maybe there was lack of execution, but current scenario of Gift City is extremely good. Gift City, you won't believe, it's hardly a 900-acre piece of land. Currently, it manages more than 100 billions of assets under management. Any founder who is either into finance or into tech is welcomed by Gift City. If they are setting up a company, they get tax incentives of, it's like 20 years tax holidays, they get support in fundraising, they get support in talent, they get support for global expansions, and the opportunities are tremendous. You should tell us a little more about your client base. So, primarily, my 60-65% clients would be NRIs and foreigners. Remaining 25% would be HNIs from India, and some portion would be trusts, societies, NGOs, hospitals, etc.

Dhruv Sharma: So, let's talk about NRIs, I guess, to begin with. What excites NRIs about India?

Ishit Lakhani - SELEQT: So, NRIs definitely, whichever part of the world that they live in, majorly the returns of that country as compared to India and other global markets would be very different. NRIs, especially in countries like UAE or Saudi Arabia, they know that at one point of time they are going to come back in India, they start allocating money from right away. People who are in US, Europe, they know very well what returns that they get there versus what they can get here as a very good difference. So, Gift City becomes a bridge to facilitate that. Earlier, there was no option or opportunity for anybody to invest into India from their home currency. They had to convert it to INR and then invest. But now, Gift allows you that whatever respective home currency is, you can directly invest from there.

Utsav Somani: And you run Select with a very lean team, right? Yes. And you're CIO as well. So, I mean, what is the edge? Because wealth advisory generally is a very competitive space.

Ishit Lakhani - SELEQT: It is.

Utsav Somani: Relationships also sometimes get diluted by, I mean, this shiny sales page where you get lower fees and other things as well. So, how do you maintain your edge as Select?

Ishit Lakhani - SELEQT: 100%, great question. So, usually people do have somebody to manage their investments, somebody else who manages their taxation. Maybe they've never thought about creating a private family trust. So, in our case, we become a one-stop solution with a technology in place. So, people never really had a dashboard of their personal finance. They never knew how much are they worth, what are their liabilities. They never had anything on their mobile or on their desktop that they can get to know all their information about their finances. So, we provide that. Usually, majority of times, our clients usually are onboarded through succession planning first, not investments first. They've got a lot of people to do their investments, but not all of them have got somebody who can create their private family trust, who can manage it, who can execute it. So, that's how clients start their journey with us.

Utsav Somani: And are people using private family trusts a lot more in India?

Ishit Lakhani - SELEQT: Very much, very much. The issue is of awareness as of now, but people who are getting awareness, they are trying to utilize private family trust as much as they can.

Utsav Somani: And at what wealth level? Sorry, I'm just asking a follow-up question. At what level of wealth or liquid and investable family corporate should they think about?

Ishit Lakhani - SELEQT: So, there are two scenarios. If there is any chance of dispute, maybe into the business or family, do not think about how much wealth do you have. Simply go for a private family trust. If everything seems good, once you have liquid asset of 50 crore or more, then private family trust makes sense for you in terms of costing, the complexities, the structure, the time involved. So, it makes sense after 5 million.

Dhruv Sharma: And Ishit, how do you advise your NRI clients in, let's say, currency depreciation risk? And then, conversely, your Indian HNI clients on global diversification?

Ishit Lakhani - SELEQT: Exactly. So, that's exactly where Gift City comes in place. Any HNI of India who had invested for maybe 20 years and he has got great 15-16% of CAGR. When you compare it with dollar depreciation, that return is not even 5-6%. So, that's where something like Gift City comes in place where any Indian investor can expand his portfolio outside India. Similarly, when there are NRIs, Gift City is not just something where we bring in money to deploy it into India. We use Gift City to deploy it anywhere across the globe. So, for example, if somebody wanted to invest into defense, India does not have great opportunities. India is growing, but not already available great opportunities. So, there are countries like Russia who has great opportunities when it comes to semiconductor or maybe chips. Taiwan is great. So, we utilize Gift City as a platform or an intermediary to invest anywhere across the globe.

Dhruv Sharma: In fact, you brought up Taiwan. So, I ask you, if we were to map the world right now, let's just do a thinking exercise on the go and pick out the number one investment theme or trade across geography. So, Taiwan is a semiconductor trade. The Gulf is an energy trade. So, yes, walk with us. Like, where in the world is the prime investment location?

Utsav Somani: Oh my God, that Samsung has become the most profitable company overtaking NVIDIA. Correct, correct, correct. It's been one year than they have in 40 years combined. It's the most valuable company right now.

Ishit Lakhani - SELEQT: It is.

Speaker 6: Yes.

Utsav Somani: Wow, crazy. Sorry.

Ishit Lakhani - SELEQT: Yes. So, absolutely. So, when we start from the West, when it anything around tech, US has to be the leader. There is no comparison for things like semiconductor or chips. Taiwan is again great. Hong Kong is great. Just to give you a recent figures, New Zealand used to be a place where the most wealth was sold. Now it has changed to Hong Kong. Hong Kong has got more money, the more asset management. Has Hong Kong found its motor back? It had embraced, it had lost it. Yeah, when it comes to defense, Russia is great. When it comes to fashion, when it comes to similar products, Europe is one of the great place. For mining and different purposes, Africa happens to be one of the best. Energy, again, UAE is one of the best. When it comes to dealing with these companies, Gift City and Singapore structures become the ideal to do that.

Utsav Somani: What are Indian H&Is getting wrong? What is the one common mistake that you see when you talk to like new clients?

Ishit Lakhani - SELEQT: Asset allocation. They would have majority of their assets placed into some kind of real estate or precious metal. They would have equity into their portfolio, but it might not be more than 25-30%. The highest CAGR would be generated towards equity, but the portfolio asset allocation would be such low that it won't make much difference. And they've not really focused that much on what will happen after I'm gone. If there is a, I'll talk about a recent client who are stainless steel manufacturers, extremely successful, publicly listed. They themselves know that my next generation is not coming into this business. And so how do we deal with that? They've never thought about it. So that's where we come in. That's where we help them with those things. So Indian H&Is primary mistakes, asset allocation, and not diversifying enough outside of India.

Dhruv Sharma: In fact, on this note, Ishit, you know, you're from Gujarat. It's one of India's most prosperous states. It's maybe the only state where we measure cities by their GDP, right? GDP is X, Y, Z. You almost never hear that about cities. Right. Which means, of course, it's heavily industrialized. And then families, like you said, are maturing now. The second, third gen, we no longer have a dog in the fight. And so talk to us a little more about succession. What is the plan? Who's going to take over? Who's buying family interest out? Like what's going on?

Ishit Lakhani - SELEQT: So yeah, usually it has been seen that in Gujarati families, the second generation is something who usually joins the business. When it comes to third generation, when it comes to Gen Z and Gen Alpha, very less chances that they might be joining the business. So in such scenarios, a private family trust, a succession planning, a family constitution, it makes a lot of sense for them to have that. And these families are now coming out of the mindset that this is a family business. They are trying more towards, they are trying to go more towards the corporate structure where they are bringing in people. The CSO level.

Dhruv Sharma: Are they professionalising?

Ishit Lakhani - SELEQT: Is there private equity capital infusion? Private equity capital infusion is not that heavy, but they are professionalising in terms of their day-to-day operations and their involvement into the business. They are trying to delegate their decisions onboarding CSO level team members who can then take over the business.

Utsav Somani: Because there was this chatter where I think one of the leading industrialists of India also I think posted where the next gen is just interested in running family offices.

Ishit Lakhani - SELEQT: Family office. 100%.

Utsav Somani: Instead of joining the traditional family businesses.

Ishit Lakhani - SELEQT: Yes.

Utsav Somani: Is that a trend that you've noticed?

Ishit Lakhani - SELEQT: It is. We are facing a lot of challenges because the second generation, because these businesses are usually boring businesses and the next generation is not that, you know, about running those boring businesses. So they feel like maybe running a family office is much better than managing that big boring hassle.

Dhruv Sharma: But how do you advise such a family, Ishit? My question is if the family's business has compounded at 15-20% or more, no portfolio is going to catch up with that. So how do you talk to a family like that? The other question I had was are a lot of your clients hands-off or do they have a point of view and do they make it known?

Ishit Lakhani - SELEQT: They do. And so it's all about educating them. So the conversions or the transactions don't happen on day one. It's about educating them for at least 6-8 months and then they start realizing, this is an actual need and maybe we should start looking into them and giving them examples of their competitors or maybe their people with a similar level of wealth, how they've done it. Those success stories help them understand that yes, this is a need and we should proceed.

Utsav Somani: Ishit, thank you so much for coming on our show. This was fun.

Ishit Lakhani - SELEQT: Thank you. Thank you so much.

Utsav Somani: Cheers.

Ishit Lakhani - SELEQT: All the best.

Utsav Somani: Dhruv, a couple of things that we saw on the internet. So Fable 5 gets an extension. We can still use it until July 12th. And there was a joke that I read about OpenAI's new model 5.6. All of them are named after mostly failed crypto projects. Terra, Luna, and Solana. And that I think is generally going to be available publicly tomorrow.

Dhruv Sharma: But is Fable 5 going to be available to us like one week at a time? Will they drip feed it?

Utsav Somani: I don't know why they're doing this. I mean, yeah, they probably want to get people to just start paying for these APIs and tokens and stuff. Although it's supposedly very, very expensive. But Elon Musk is also dropping the office level model, the thing which is supposedly very, very cheap. So I think that should be out soon as well. But at this point, I don't think a general person like us will notice any much difference. I think maybe for those very incremental changes in very specific tasks that you can clearly see. But our usage, I think, was pretty good. There was a map that you highlighted. Let's bring that up. And why don't you explain that to me?

Dhruv Sharma: Yeah, and it's very timely given the first conversation we had today on the show. And so the map, I think, is a world map. And it talks about how, over the last three or four years, we've been going on this quest to pretty much create an international grid of rare earth suppliers to India. India has been forging partnerships around the world at the sovereign level, an outcome coming out of each of these visits that the prime minister embarks on. And I was, in fact, just before the show, looking at a press readout from one of the ministries that looks at this. At a general level, people will say that India doesn't have great resource endowment, et cetera. It turns out we do. We have traces of rare earths here and there. It's just not very high quality stuff. And that makes us dependent on external suppliers. And AI is, of course, one big trend right now. I can't really call it a trend. It's more of a super cycle. The other one is this giant energy transition that's underway from hydrocarbons to EVs. And guess what? Batteries are everywhere. I was, in fact, thinking about this when we were chatting with our first guest. 15 years ago, we used to have one charger at home, maybe for the emergency light or something. And now you have at least 10, which means you have a lot of batteries at home. And all batteries need the same kind of materials. And we don't have a lot of them, which is why it's important to recycle, upcycle, and increasingly find alternate materials to change battery chemistry. And we'll keep bringing, to our listeners, we'll keep bringing guests on the show who can break down some of these really large tectonic shifts that are taking place in real time.

Utsav Somani: I think we're going to have the founder from Batex on the show as well. So I think it'll be interesting to see their perspective and hear their perspective on this, because you rightly mentioned, everything is literally charged up, juiced up batteries. So, yeah. Awesome. Excited to end the show here now. And I'll be back to the studio on Friday. And we'll see you on Friday at four o'clock. Bye-bye, everyone.

Dhruv Sharma: See you Friday.