Summary

The Offline Network Episode 10: GST 2.0 Reforms & H1B Visa (aired 2025-09-22). Guests: Dhruv Dhanraj Bahl, Darayus Mehta from Sadev Venture, True Diamond. Dhruv: "And the idea of creating a family office was that, you know, I had not seen in India generational wealth survive." Dhruv: "So I think, so when you say values, right, I think one of the big things is we do CDDs, commercial due diligence, you know, the slide I hit the most in Dex, right?" Topics: venture capital and funding, AI and LLMs, consumer brands and D2C, space tech. The Offline Network is India's live show on startups, tech, and venture — streaming M/W/F at 4 PM IST on YouTube.

Full Transcript

Dhruv Sharma: And many people say this was also a bargaining check, but if the worst had happened, so what would it have meant? Thankfully, it hasn't, but what could it have meant for our people?

Utsav Somani: Honestly, your guess is as good as mine, but I think it would have affected Indian students going to U.S. universities because their future prospects would be looking not as bright. So they would have to return to India and spend. I mean, most people go to U.S. because they want to get a high paying job after spending a lot at their universities as well. So that route would have been not shut, but at least had a limited window of opportunity. And also, I think Infosys, TCS, all of these companies have big outsourcing centers or onshore centers in the U.S. as well. So those would have been affected as well. So I think those companies took a hit in the stock market opening today.

Dhruv Sharma: I think it's reflecting in the share price of some of the Indian big tech companies, also large IT companies. Thankfully, nothing too bad happened today. Is also when the new GST rules come into effect, is it not?

Utsav Somani: I want to mention the Trump card. I think that's very interesting by Trump as well. So he launched when he signed this bill, the Trump card or the golden visa, what many of the European nations also have. So he's taking 1 million and you can get fast track access to green card. Or there's now a platinum card as well, where you pay 5 million and you can stay in U.S. 270 days with no taxes on your global income. So that, I think, is a very interesting move. He's doing something that seems like it seems like it. The website is pretty cool. They've got an eagle, which is moving. You know who's designed it, though?

Dhruv Sharma: No, it's the Airbnb design co-founder, Joe Gebbia.

Utsav Somani: Oh, yes, yes. I saw a post about it.

Dhruv Sharma: He's like chief design officer of America now. Fascinating. Nice. Airbnb is that good design always. Awesome. We have an overhaul like that underway also in India, where a lot of our .gov.in sites are undergoing massive design rehaul.

Utsav Somani: They should be, as they should be. So happy new GST day to our folks as well. 5 and 18, the two numbers that we've discussed before, 40, of course, for luxury and sin goods, that comes into effect today. So I think it's expected to boost a lot of the consumption in home electronic items and a bunch of other stuff. Cars are cheaper now, so I think hopefully a big spending boost will come about with this change. What do you think?

Dhruv Sharma: Well, I hope it does. I'm just thinking for a minute about the manufacturers. They would have had a lot of work to write. Like, do you think they actually to peel the labels off of goods and just apply new stickers and make changes in the ERP systems and so on?

Utsav Somani: I honestly don't know. I actually opened a bunch of D2C websites that I ordered from, including the Whole Food Foods and a few others. I think they have updated their MRPs as well. So many companies are passing on benefits very quickly.

Dhruv Sharma: The discount you were waiting for, you mentioned that in the previous show.

Utsav Somani: Loading up on my protein. And what's next?

Dhruv Sharma: What is next? Shark Tank. Yeah. Where time and again we've heard and read in mainstream media that not everyone who receives a commitment on the show actually gets money in the bank. Is that true?

Utsav Somani: Yeah. So even in the US, I think the statistic that has been discussed publicly is 50%. All the US is much simpler in terms of compliances and stuff. In India, I think what clearly happens is many of the founders who pitch come with, like, say, proprietorship firms or complicated structures or related party transactions that do take time to unwind. So there are both sides to the story. Right. I think when you pitch, say, or the episode airs in December and takes four or five months to close, your business might have grown as well. So as a founder, they want to walk away from such a deal where they're more attractive in the open market now, where they can get better investors, better valuation, better pricing.

Dhruv Sharma: Deal structures and deal constructs are very unconventional, what one would hear on air. It's very different from what you would see in live deal making.

Utsav Somani: It's refreshing to have Kunal Bell on the show and actually talk about royalty, right? Because if you're taking a true bet on a company, I think royalty arrangements don't really work. That's a different kind of investing, which I think should stay away from the startup and the venture world in general, when these companies are trying to hit profitability as well. But India, I think the number which was shown in Economic Times today was around 30% of the companies that were pitching ended up closing the transaction so far.

Dhruv Sharma: At this point, a lot of companies are coming more for the attention than the capital. I mean, capital, they can find in other places also, maybe even at better terms.

Utsav Somani: But this was the first season of Shark Tank, which was aired on OTT. So companies didn't get that much benefit by being on air, but I think they're changing that this season. But according to some statistics, a company pitching on air and getting that airtime for 20 minutes is worth 4 to 5 crores of media spend. It's worth it for many companies. All right, so we're ready to welcome our first guest. He's an operator turned VC as well, much like the guest that we had on Friday. They actually are from the same company as well. They were peers earlier at Bharatpe. And now Dhruv, who's a close friend of offline again, is running his own fund. He's rebranded recently from Eternal Capital to Sadev Ventures. So let's welcome him and ask him what the rebrand is all about. Did we get the name right? Welcome Dhruv.

Dhruv Dhanraj Bahl (Sadev Ventures): Sadev. Thank you so much for the invite. And thank you for having me. It's always good. I think all of our conversations are very memorable when they're offline. And now it's just online offline. So that's a great experience.

Utsav Somani: Many thanks for being on the show. Tell us, what's the story behind the rebrand? Knowing you, I mean, there must be some Mahabharata, Ramayana, all kinds of exercise that was involved. What were the shortlisted names and what does Sadev mean?

Dhruv Dhanraj Bahl (Sadev Ventures): So, you know, interestingly, this name was November 2019, which is the first time, you know, I ever saw a big secondary and something comes into the bank and you want to see that sort of ventures. Let's start investing in venture. My son was about a year, a little over a year old and his name is Dave. And we were always very clear that when we have a daughter, we're going to name her Sana. And the idea of creating a family office was that, you know, I had not seen in India generational wealth survive. Right. And when you and the whole idea of India's growth story was that something has to be an institution and you have to build an institution. Institution is based on two things, right? It's based on ambition and it's based on value. The problem for me was I, whenever I looked around, I either saw ambition and then a degradation of values or I saw very strong values and it sort of bottleneck people into an ambition. So we were very clear that, you know, when we created Sadev in 2019, the idea was, my wife Sonal had always said that if you have a daughter, her name will be Sana. And we just combined, she combined Sana and Dave and made it into Sadev. And that sort of fed into my philosophy of saying, if I build something that should be built for my children to have pride in, it should be institutional in nature. It should have strong values, but it should also be independent of individual idiosyncrasies and biases and otherwise. So how do you build that? And I think from 2019 to 2024, when we launched the fund, we kept perfecting that strategy. Now, what happened along the way was, and, you know, I'll be very candid and honest. It was just a little bit of that sort of, you know, when I go abroad, Sadev is so difficult to say. And we kept Eternal as a name, even though we were still in that sort of getting the pack. So we have the, you know, we have the copyright, we have the trademark, everything. But Eternal was something where we had only managed to get one class and the rest of them were, you know, a lot of other people had applied for, including our friends at a larger food delivery app. And so we did it, started a fund and didn't think too much of it. Sadev and Eternal. So whenever I had to explain what a Sadev means, it means forever, it means eternal. And there was actually a philosophy beyond it, beyond also what we were building is, I fundamentally believe that when you go to venture, and especially this is true for, especially true for angels, if anything. And I've, you know, I've done about 60 odd angel investments before this fund launched. It's the bets you take and the bets you pass on. They are both forever with you. So what you win and what you don't, you pass on, right? But it's also, you know, the bigger back of the t-shirt message you develop is the Sadev message that you develop as an investor is how do you partner with the people you back? How do you help them? What do you do when, you know, when a person calls you and says, I'm shutting the company down and your money is a write off? How do you react? And I realized that a lot of these forever eternal sort of things that stay with you need to be solved for when you become a good investor. Right. You need to know how to be patient. You need to also then develop that level of due diligence and, you know, insight and connecting the dots so that you're not wrong as many number of times as you are right. Right. So that sort of, you know, what is that eternal message about me became what eternal capital is all about. Now, fast forward to a time when our friends go out and rebrand and we're having a conversation with a couple of lawyers and the lawyers speak and they say, you know, it's OK. You guys can keep the name, but we'll see you in court. And I said, look, why will I burn good fee income on fighting court cases for a name? And that's when this whole decide to go back to our roots came in. And that's when the whole eternal to Sadev thing happened. The capital to ventures world, you could have gone to Sadev Capital as well. The reason was, you know, now I'm beginning to see we are now again in an up cycle in the venture world. Right now, at least I see there's more up rounds than there are bad rounds, bad news is coming through. And what I really see and hear. Maybe, maybe we're lucky that way. But but at least what you know, you know, it takes me back to a to something which I the first time I ever disagreed with the founder. There was a term that I use and it was a heat of the moment statement I made, but it stuck with me for life. It's that, you know, the model is not predicated on the capital. The capital is predicated on the model. So, you know, you don't because I've raised so much money, let's build a business. And there are enough and more examples of this, how things can go really wrong. The problem is people fixate on that one company that managed to get it right. And it's still sort of, you know, flying against headwinds and use it as an example. And it distracts from all those other people who are building solid, hardcore businesses, layering on capital and just solving problems. So the venture word became a very strong part we wanted into Sadeh Ventures so that we remember that we are an operator led VC fund. We remember that we are backing good businesses. We remember that our focus is not on creating alpha, but on creating great businesses that by virtue of a derivative, give a great alpha. So that's what the Sadeh Ventures story became.

Dhruv Sharma: So Dhruv has really thought this through.

Dhruv Sharma: I mean, all US private equity and hedge funds were mostly named after trees and birds.

Utsav Somani: And in India, we now have an alphanumeric trend, but this is one of the solid name branding unpackings that we've done. Yeah.

Dhruv Sharma: Does it help unlock capital very quickly Dhruv?

Dhruv Dhanraj Bahl (Sadev Ventures): You know what, we are, as we, you know, start talking about what next in Sadev and, you know, one of the big thing that's emerging is that, as I said, we're seeing a lot of up rounds.

Dhruv Sharma: Actually, I'm going to maybe just ask another question, then we just wait to hear from you, which is, I mean, when people go on the road to raise capital, they talk a lot about performance and expected returns and everything. I'm not sure how many people talk about values. You may be one of, you know, you're a rare emerging manager who does. So talk to us a little bit about that.

Dhruv Dhanraj Bahl (Sadev Ventures): Okay. So I think, so when you say values, right, I think one of the big things is we do CDDs, commercial due diligence, you know, the slide I hit the most in Dex, right? Because you can make, you can reverse engineer the numbers from anywhere. And then you talk about FDD and the whole, you know, CPCS process and all of those things, right? Then you talk about LDD. But we never talk about VDD, the value due diligence that you sit across the table and look in someone's eye and say, you know, what is it that you are capable of? What are your shortcomings? How does what you cannot do factor in? To give you an example, we ask five questions when we invest. Who, what, why, how, and valuation. And in the who, one of the big things that we ask people is how secure are you in yourself as a human being? And literally we ask people and say, convince us that you are an emotionally or a functionally secure person. Because tomorrow my expectation is you will hire, when you become a, build a great business, you'll hire a person smarter than you, more experienced than you, slightly more gray-haired than you, who might actually school you, teach you, guide you as your employee, but someone you have to also, who's respected to maintain for the larger organization. Do you have that capability to grow into that person? Right? That value is something that's important to us. When we talk about something as how, there's a lot of ways to skirt the letter of the law and the spirit of the law and play in the gray, but do you have the ability to call out what is the letter of the law and, and, and live and build a business which, which maintains a certain degree of compliance and governance around it? So these are the kinds of things that we look for because we did.

Utsav Somani: I think that latter one comes from your time in Bharatpe.

Dhruv Dhanraj Bahl (Sadev Ventures): I think it comes from my time in Bharatpe. Yes, you're right. It also comes from more so, you know, being the son of a CA who has seen more his share of forensic investigations, come back and really, you know, tell some of the stories to us. And I've seen my dad being, you know, like maybe the hero in my life, the pivotal figure, breaking down what could have been a great business, what could have been a great institution. And for, you know, that, that irrelevant pound of flesh that the founder extracted cannot, you know, while it might be a great business is, is untouchable now or someone will not get it or, and so it becomes very important to understand it. Now, look at the India opportunity, right? If you, if you look at it, I don't think India is going to have, India will have mega unicorn outcomes, right? I'll give you an example. I think one of the best unicorn listings would be maybe grow, maybe after that off business, great businesses built by great founders. But I think India will have a larger share of sub unicorn, you know, that 200 to $700 million, half a billion plus minus range. I think we're going to do thousands of those, right? Now, when you do many of those, the idea that you, that you fundamentally need to get is how do you go from being a privately held company to a publicly held company? And pass the sort of gauntlet of public scrutiny, governance, and so on, so forth. So there's a different kind of discipline that needs to come in to be able to achieve that scale. That's the only way India, India's growth story is going to be there.

Dhruv Sharma: Given the evaluation process, have you also found a way to sort of tease out just raw commercial instinct? Because I know that's important to you as well.

Dhruv Dhanraj Bahl (Sadev Ventures): So the way we do that is we take all our founders, we take them in a room. And that's the day that I sort of, you know, we've gone through the first meeting, the second meeting, the data, the data room, all that stuff. And then I sit down with them, we get in. And if I managed to show you my office, I think every wall has a whiteboard, which is, you know, culturally, what we want to do is, you know, we want to work on first principles. And what I do is I hand them a pen and I say, draw me a roadmap to 100 crore ARR. And tell me how you're going to get there. And we're going to spend the next three, four hours, we're going to order a meal, we're going to have some coffee, we're going to sit here till you convince me that you'll get to 100 crore ARR. And let me tell you, there are a couple of founders who I found who are just so methodical about how they've thought about it. And they, and you know, the beauty of it is, how do we tease out this exact thing you're asking is, they will call out all of those things that could be wrong assumptions that an investor might make. You might think this might be in value. No, this is not going to generate value for us. This is not going to get us there. This is not going to get us there. This is not going to be as good as people think it is going to be. You know, we were talking to one of our portfolio companies, which is doing quite well, solves depigmentation in India, hyperpigmentation in India, called Asaya. And Neeraj, who's the next co-founder of PaperBoard, he, you know, convinced me in one conversation that, you know, while yes, the Indian diaspora globally is great. You know, it might not be as big as some of the other people are making it out to be. And it's a great margin enhancer, but it's not a great, you know, it's not the, you know, Ramban to solve everything. Right. But at the same point in time, he was so fortunate. I'm saying, okay, but how do I solve the India problem? And we talked about influencers and the influence. So I think commercially, their ability to identify what will work, but equally what will not work. And agree what is grey and be ready to be coached on it. Even if you're someone who's built like a hundred million dollar organization already and, and has walked away from it, like, you know, that that coachability matters a lot. But yeah, coming back to the question you guys are asking on, on, on fundraising, right? Does it, does values matter? I think India's growth story is Chardikala. You just put money in any asset classes, real estate. The next 10 years, everyone's going to get a, you know, a variety of returns and it'll work. Then why should you do venture? I think the question is around social, intellectual and financial capital and the convergence of these two. Which is a big fund philosophy for us, right? How do we bring all three things together? And that matters significantly to us. And I think that's that a lot of that comes from saying, does this fund value sustainable social and intellectual growth as well as much as they talk about it.

Dhruv Sharma: So just for our listeners tuning in who are founders, day zero founders, you know, people who maybe want to raise funds, what does this translate to in the day to day?

Dhruv Dhanraj Bahl (Sadev Ventures): First and foremost is you need to roll up and get your hands dirty. A 36,000 feet founder CEO doesn't work. Sooner or later you get called out, right? Second, you need to have an absolute mastery on numbers. I think breaking down, you know, you know, any, anything from what your margin looks like, what does your CAX look like? What does your, and I don't know what ratios, I don't believe in ratios, LTV to CAC and all these nonsense ratios. I don't believe in all of that. Like, I genuinely believe dhande ke usool kya hai. You make margin, you spend a hundred bucks, you at least make a hundred and one, or there's a roadmap to get to that hundred and one and everything else seems like an investment. And so your numbers and your ability to defend those numbers is something that really matters when you're sitting in front. I think the third is, yes, we are unfortunately in a world of 30 second ads and reels and memes, but I think a institution vision matters. Do you have that one, three, five, seven, 10 year plan for your startup? Do you know what all products, so if you're a consumer business, what is the next SKU you're going to launch? What are the next five you're going to launch? What are the next 10 you're going to launch? You're doing deep tech. What's the next problem you're going to solve? Are you a one trick pony? Are you a, are you, could you be a, could you become a platform? Are you going to be a feature? Are you vertical? Are you, are you horizontal? The clarity of thought is something which is extremely rare and the ability to layer it and connect the dots over a period of time, especially in a very sort of VUCA environment in the world is something that, you know, just sort of becomes very, very attractive beyond just the numbers and the opportunity that you're looking at.

Utsav Somani: Define once in a year kind of founder, man. Very hard to come by these who have, I mean, check boxes on all three of them, but I mean, a two part question for you as a follow up for our listeners. We've covered a lot about the brand and your investing philosophy, but tell us a little bit about the numbers. Sadev Venture, fund raised, how much have you invested in?

Dhruv Dhanraj Bahl (Sadev Ventures): 240 crore fund fully raised. We have invested, we have, we have already put money into 15 companies. We have five term sheets out right now. We are about 12 months into investing. Our investment horizon is five years. We will have finished close to about 25% or nearly 30% of the port of the fund, about $9 million invested by the end of this calendar year. By a year from today, you know, we are looking at close to about currently active term sheets, rounds closing or future term sheets to come. Of the 20, we 15, where we have already put in the money. Six have already raised follow on rounds, three more active term sheets. We are seeing a significant move. We are sector agnostic, so we invest everywhere, but broadly, we are beginning to see three big buckets that are becoming really good for us.

Utsav Somani: That also brings me to my next question. You've answered how you pick founders, but how do you answer that question when founders ask you why Sadev? In a world of capital abundance, like, I'm sure that question must be asked in competitive rounds and founders who become masters of fundraising.

Dhruv Dhanraj Bahl (Sadev Ventures): Always a bridesmaid, never a bride. We are always co-investors. We are never the lead investor. We attach ourselves with some dear friends in the industry, fund managers whose portfolio investing style I really like, who I think are great operator VCs, the likes of Peer Capital or OTP Ventures, which are friends from offline as well. And what we do there is we put in anywhere between half a million to a million dollar check along in that round. And our thesis is that the time that we conserve in boiling the ocean, trying to come up with that opportunity that we want to lead and then close all of that is the time that we conserve is the time that we use to help you out. So today, when we look at our LP base, we have, you know, the likes of Deep Kalra, we have the likes of Roman Saini, we have, you know, we have the CEO of VLCC, we have the CM of Kotak Mahindra Bank, so the CEO of Jubilant in Graveyard. So we have, we've curated a list of investors who brings color of money to the table. So, and today, even in our 15 companies, what we see is three or four LPs have adopted as mentors, coaches, guides, one portfolio, at least one portfolio company. So what you as a collective, you know, and I, and I go back to my, my, you know, what I would say my theological philosophy of Vasudev Kutumbakam, you look after the world, the world will look after you, right? So you, what we see is that, you know, a lot of people say, hey, I'm looking after this company, someone else is looking after the 14 others, and it's okay. And we, and that's why we see higher gains and lower mortality rates, right? Even 18 months into our investments, we are yet to see a company sort of, you know, fold the towel, which, which at least hits about 20% in industry standards, we are at zero right now. So which is a big, which is a big win for us. Awesome.

Utsav Somani: Dhruv, any final questions for Dhruv? Book recommendations.

Dhruv Dhanraj Bahl (Sadev Ventures): Are you finding time to read? Yes, I am finding time to read. So book recommendations, I think, I love biographies. What's on your nightstand right now? Tell it as it is. Rakesh Maria, the longest serving commissioner of police for Mumbai. Beautiful book to read. Talks about leadership, talks about how do you still be positive in the face of adversity and personal cost? Fantastic book. Another great one, which I always go back to reread is Last Man Standing, Jamie Dimon's story from birth till the 2010 crisis. And then something that I'm really enjoying reading right now, actually is a very old book, which I found on my, on my nightstand is a book called Vedanta Treatise. And it, you know, it has some really nice poems from literature from all over the world, put together by Swami Vivekananda. So that's what it's a mixed bag.

Dhruv Sharma: Can I ask one final question before we go like short answer? Do your friends come to you when they're picking names for their kids? I'm sorry, I had to ask that.

Utsav Somani: I can see that happening. I can see that happening.

Dhruv Dhanraj Bahl (Sadev Ventures): Yeah. You know, they're, they're... Nomenclature specialist. Nomenclature specialist, I guess. No, but I think the short answer is no. The long answer is, I wish they did. I have some really nice, because I'm also a Bollywood fan, right? So I want someone to name the child, Crime Master Gogo, at least once, you know.

Utsav Somani: All right. I think that's as good a note to end this awesome segment on. Thank you so much for coming on the show, Dhruv. All the best. Pleasure, guys. See you guys.

Dhruv Sharma: Thank you so much for coming on.

Utsav Somani: Awesome. So we have spoken about Capital, both Dhruv and Sohail were peers at Bharatpe. So you can see how our creators have turned into successful VCs as well. And we wish them all the best. And now we're talking about a lady's best friends, Diamonds, with Darius. Thank you for joining us, Darius. Am I getting the name right? Or is there a better way to pronounce it?

Darayus Mehta (True Diamond): It's fine. I'm used to the name being abused. It's Darius. But it's fine. I'm used to it. Yeah, fine.

Utsav Somani: That's fine. Darius. Darius. Awesome. No, thanks for clarifying. So I think, I mean, a question on everyone's minds. We've all read the statistics in US, the number of the percentage, I know you sell all kinds of diamonds, but a percentage chart has been shown circulated widely, where they've said that the number of lab-grown diamonds has made an increasing growth in terms of the rings being offered in the US. And I'm guessing India is following that same trend as well. What's your insight into all of this? Are Indian consumers finally accepting that lab-grown diamonds are here to stay versus say, the original, I don't know what the comparison is like, but like, real grown diamonds?

Darayus Mehta (True Diamond): Yeah, absolutely. So India's gobbled it up since the day Modiji gifted that 7.5 carat diamond, lab diamond to Jill Biden. Since then, it's just exploded. And it's already a big trend in the US. So lab-grown diamonds have existed for almost, I think, a decade now. It's just never been mainstream. In the US, I think by last year, it was already 60% of all diamond rings sold are, you know, labgrown. So it's already big there. The drivers are slightly different there. But over here, you know, a few more barriers that Indian consumers have to overcome. And now, you know, with the introduction of, say, POM, which is a brand by trend, they've kind of legitimized it. You've had big jewelry brands like Senko also launching lab-grown brands. So now the whole category has been legitimized. There's a lot of trust that's now already in the category. So, you know, it's, you know, giving consumers understand that this is, it's a diamond. In fact, you know, you said ladies' best friend. It's funny because, you know, now we had a guy who told us that, you know what, I could buy my wife not just a half carat, but a two carat diamond and still save, you know, three lakhs of rupees to go buy myself a scooter. So now this is not just a woman's best friend, this is now a man's best friend too. And that was very, very interesting with lab-grown. But it's growing every, every day. We're actually seeing the demand grow. So it's very interesting.

Utsav Somani: And the flippening in India has happened? More lab-grown is sold than actual diamonds?

Darayus Mehta (True Diamond): No, no, no. Still far from it. Still a very, very long way to go. Not across the 50% mark? No, no, no. Much, much lower for sure. Sorry, I just wanted to clarify. There's one flip side to this, right? There are a lot of jewelers who are traditionally natural diamond jewelers, who are now possibly selling lab-grown, but it would not be very official. They would not let anyone know. So it becomes a little difficult to track, right?

Utsav Somani: Does it mean that they're not telling the consumers that it's happening?

Darayus Mehta (True Diamond): No, no, no. 100% that the consumers want it.

Utsav Somani: It's all certified, I'm guessing.

Darayus Mehta (True Diamond): Oh, yeah, yeah. It's all certified now.

Dhruv Sharma: Yes, I was saying, let's maybe directly talk to the consumer a little bit and talk about what's the difference between natural and lab-grown. And how is it actually grown? What happens inside of a lab? You have a reactor. What's the starting point? How long is that process? And maybe talk a little bit also about how these are actually, they're real diamonds, they're not fake. Yeah, yeah. And they're not expensive, they're not cheap, but they're just inexpensive or less expensive.

Darayus Mehta (True Diamond): Absolutely. So there are 8 billion people in the world. Not even the most experienced jeweler, not even Superman can actually tell you the difference between a lab-grown diamond and a natural diamond. Even if you take a 20X magnifier glass and you look carefully, you won't be able to tell the difference because they're chemically and optically the same.

Utsav Somani: Chemically, it's the same. Or is that not even like point?

Darayus Mehta (True Diamond): Chemically, optically and physically, they're identical.

Dhruv Sharma: They're both made of carbon?

Darayus Mehta (True Diamond): Basically, you can look at it this way. The same process that happens 100 kilometers below the Earth's surface is now just recreated, but in a lab. And so therefore, your raw material, the end product, is all the same. The only way you can actually make out is using some very high-tech machine. People do carbon dating and they do various other methodologies like that to really tell the difference, which is why actually it's exploded. There are a few ways of manufacturing this. The one that's used more prevalent in India, you take a small seed of a diamond, very small flat seed. And then through a process called CBD, chemical vapor deposition, you're blasting it with lots of hydrocarbons and then over a period of about four weeks.

Dhruv Sharma: The seed looks like a film almost.

Darayus Mehta (True Diamond): Yeah, it's like a film. Like a glass film. Yeah. And then you blast it with high pressure and temperature, just like what would happen below the Earth's surface. And then carbon atoms form on top of each other and eventually you get a rough stone, which looks just like the rough that you mine anywhere. This takes about four weeks. The following processes are the same, which is cutting and polishing. It goes through the exact same process that a natural diamond does, which also I think 90 percent of the world's cutting, polishing happens in Surat. But that's why the Indian government has also pushed it so much. Now we can technically own the entire supply chain by owning the rough manufacturing as well.

Dhruv Sharma: And within the lab grown category, are there quality bands and price bands?

Darayus Mehta (True Diamond): It's exactly the same as natural diamonds. So you will grade it. You know, color matters. Clarity matters. Cut really matters. Just the way two diamonds can be priced very differently because of these parameters in natural diamonds. It's exactly the same with lab. However, with a natural diamond, a lower quality one versus a higher quality, the price might almost say double or triple. In lab, the price differential is not so much. It might go up by 30, 40 percent. But it wouldn't double or triple.

Utsav Somani: I mean, it's somewhat like Moore's law playing out in diamonds as well, right? Where the price for lab grown diamonds is decreasing. But overall, I mean, of course, diamond has the backing of such a great marketing campaign. Probably the best one. Diamonds are forever. But diamond prices have not increased. Unlike gold, where gold is on a tear right now. But diamond has not turned out to be a good investment. Is that because of lab grown or is that because of some other factors or is just generally not a great store of value?

Darayus Mehta (True Diamond): So here's the interesting thing. Diamonds have never been a great investment. Unless you really find that one very rare piece to go and auction out at Sotheby's. Historically, also a CAGR for diamonds has typically been about two to three percent. It's not it's not what people say. It's never been a great investment. In India, it's been sold as an investment. That's that's the only challenge. However, recently, with the introduction of lab, overall prices of diamonds have also dropped. So, in fact, that has come down even higher. So I think today and most jewelers now for the last two years, I think we've stopped hearing jewelers kind of sell it as an investment. It's a luxury item. You enjoy it like you enjoy an iPhone. And yeah, I appreciate it. What does what is of value is that if I bought it at X amount, at least I will get a decent amount back when I want to go and exchange it if I want to change it and get something new. So those those policies are yet very relevant. But I think the number of people that are not looking at it as a, you know, something that I can invest in and grow is not a mutual fund. So I think that is now that education has really grown in the country.

Utsav Somani: And a number of players have cropped up in this, right? Of course, the traditional players have jumped in, people who were doing jewelry as well. I think Dhanesh is also rebranding. I mean, they're part of diamond business as well. And a number of new age companies have come up as well. What do you think? I mean, with so many companies trying to do the online sale model in this, will they have to come offline as well into this? Or what does the landscape look like for anyone looking at this as a business opportunity right now?

Darayus Mehta (True Diamond): So, yeah, it's first of all, it's extremely cluttered. It's it's one of the most cluttered, I think, spaces. Every every jeweler, even a mom and pop store is now selling laptops. So it's it's as competitive as it gets. I do believe that online, offline can survive alone. Online cannot survive alone. Online with offline is the right way to go. Omnichannel is the best approach.

Utsav Somani: But any of them own the full stack where they actually manufacture the diamonds themselves?

Darayus Mehta (True Diamond): Very few, because you tend to choose your area of specialty, right? Even the biggest retailers in the country are their retail experts. They're not necessarily managing the rough at all. Right. So there are very few players who do kind of own that. But you can clearly see a certain strength in a certain segment of the business.

Dhruv Sharma: Do you see merit in that, Darius, as you as you grow the business and becoming vertically integrated?

Darayus Mehta (True Diamond): No, no. For us, I think we see merit in building closer relationships with customers, understanding them far better, connecting with them and, you know, controlling that entire service level. So we control the jewelry manufacturing to an extent that that is yet, you know, we're very, very, we work very closely on that. That's what we ensure. But the raw material, I think it's far more efficient if we focus our energies on other aspects versus trying to solve for that at the moment.

Utsav Somani: And when we talk about business in this space, the key differentiator then becomes the relationship with the customer. Sorry, just trying to unpack for our listeners as well, who might be running different businesses, but trying to build, I mean, unique advantages or defendable modes for themselves. So unique relationships and the design factor, basically, or disruption, you would say. So amongst these three things, like I think you can pick and choose on what the brand's strengths end up becoming.

Darayus Mehta (True Diamond): Yeah. Customer relationship above everything else, right? That just seems to be the most important customer acquisition. It's just focusing on understanding the customer so well that that leads into your design. That leads into everything else that you do. Distribution is in the jewelry space. It's a luxury to have. It's a function to an extent of capital as well. So it's not as easy to go very, very wide. People would love to continue to play just the online game. However, given the fact that the average order values are so high, retail is required. And that means a significant amount of capital as well is required. So distribution is a limiting factor to an extent. But given a choice, I think at least for us, this customer orientation is above everything else.

Dhruv Sharma: So and as you're learning, you're learning more and more about your customers that are beyond price. What's the draw for them to buy lab-grown stone versus natural mine stones?

Darayus Mehta (True Diamond): Oh, that's a great one, because price is what everyone talks of, right? I think I think it's it's a lot of innovation. There are some concepts that are very, very hard in natural solid as in diamonds. I'll give you an example. A normal solitaire has about 57 cuts. A normal diamond is 57 cuts. That's what allows it to sparkle. Now, there's this Portuguese cut, which is one of the things that we had actually launched. It's existed. But in the natural diamond space, it's very, very rare because it's got 160 cuts. That's three times more than a regular round diamond. Very, very hard to execute because one small mistake while cutting the whole diamond is lost. And you can only appreciate this in a larger stone because it's so intricate that you need a two, three carat to appreciate it. Now, in the natural diamond space, therefore, it's could go anywhere. I don't know where you'd ever find it has to be custom made. But with lab-grown now, this is very, very accessible. And, you know, people can play with shapes and cuts like this, which sparkles almost five, ten times more than a regular round diamond. It's beautiful.

Dhruv Sharma: So I think it's unlocked. Have lab-grown stones done anything to the price elasticity of natural stones?

Darayus Mehta (True Diamond): Yeah, yeah, of course. Significantly, I think natural natural prices are also down at the moment.

Dhruv Sharma: It's almost sounds like, you know, in the watch industry at the moment, people talk about very often the quartz moment. When, you know, Japanese watch manufacturers brought about quartz movements and all the Swiss manufacturers were making automatic watches. Suddenly, you know, had lost an advantage because the quartz watches were obviously more accurate. They were significantly cheaper. And then the, you know, the Swiss watch industry had to do a complete rethink and brand itself is more luxury and more aspirational and so on and so forth. It looks like the same thing might be happening in the jewelry industry also globally.

Utsav Somani: But tell us a little. I mean, so I think two points that I want to cover is that average order value is high. You mentioned that. So do people what percentage of your sales are typically for a lab-grown business or even a jewelry business is actually online?

Darayus Mehta (True Diamond): So here's the interesting thing. We started the brand last year in January and it was 100 percent online. And and we scaled quite well. However, I think over a period of time, the minute you start going offline, the ease of consumer experience is so high that today is possibly about 80 percent offline and maybe 20 percent coming from online. That being said, the discovery is all online. So if we were to stop that discovery or our efforts online, offline would tank.

Utsav Somani: And the price differential, like a one carat in today's prices, natural, the best cut natural diamond versus a lab-grown one?

Darayus Mehta (True Diamond): Yeah, give you say a BBS clarity, EF color, one of the higher ones would cost anywhere between four to five lakhs if it was natural and costs about thirty five thousand at two diamonds.

Dhruv Sharma: Man, that's 10x the price. That is insane. Yeah. No one can tell the difference.

Darayus Mehta (True Diamond): No, no one can tell the difference. And that's a certificate, of course. That's it. Yeah.

Utsav Somani: Awesome. Dhruv, you want to close us out? Any final questions?

Dhruv Sharma: What's next for the brand? Tell us.

Darayus Mehta (True Diamond): Yeah, awesome. Yeah. So so for us, we don't just sell lab. We actually sell lab and natural. We let the consumer. What we've done, our point of view is very different. We felt all jewelry brands just look too similar. They market very similarly. Everyone has, you know, they do this. You have a pretty model who does this and does this and with classical music in the background. We've started to leverage some fun content, questionable, risky, sexist, racist, narcissistic content. Very, very just fun, hilarious stuff that we do online.

Utsav Somani: We checked out your Instagram. You're doing pretty well. Yeah.

Darayus Mehta (True Diamond): Yeah. Yeah. So. So. So we've been leveraging a slightly disruptive micro series content that engages the customer in a fresh way with a category that's pretty boring, if you'd ask me. So that's that's been really working. So we're going to leverage this, you know, create, build this brand into a fun, edgy, bold brand where we focus only on jewelry. The ingredient, whether someone wants natural or mine, that's a customer's choice. We we do both. But the interesting thing is with this, we're able to launch categories which are new. So we launched titanium as a new concept since gold's gold prices have also gone through the roof and titanium is used in SpaceX rockets and stuff. So why not bring that into fine jewelry in a big innovation? So innovations like this titanium Portuguese cut solitaires. And that's what we're going to continue to build. Let us be known as as a brand that's made me seriously fun online and very, very innovative in design.

Utsav Somani: How many of your buyers are like younger? Like I mean, Gen Z was like this thing. What's the average buyer like for you?

Darayus Mehta (True Diamond): It's still a young millennial. I think 28 to 40 year old is really the core. It's like it's not cheap, but it's just there is a price advantage, but it's not cheap. It's just more accessible. So, yeah, you know, young millennial.

Utsav Somani: All right. Thank you so much for coming to chat with us this Monday. Wishing you all the best for your Instagram game and also for the venture.

Darayus Mehta (True Diamond): Awesome. Thank you, guys. Thank you.

Utsav Somani: All right, folks. Thank you so much for tuning in for our Monday stream of T1. We'll see you on Wednesday, 4 p.m. Cheers.