Full Transcript

Dhruv Sharma: Hey there listeners, happy Monday. It's our live stream number 11, it's either 112 or 113. It's 112. But today we are speaking with Subeer Monga, who's with Sorin Investments, he's joining us from Bombay. Subeer, welcome to the show. Welcome to The Offline Network. How are you, Vikas? Subeer, I think maybe our first question for you is going to be about the paths that led you to where you are right now, which is Sorin. We'd love to just get started there.

Subeer Monga (Sorin Investments): Yeah, for sure. I have a very, I don't know whether it's unusual, but a different path to getting here. I think most of the people who got into venture are folks who have either been operators themselves or folks that have come from esteemed organizations, such as the IITs and the Stanfords of the world. But I think for me, it was just right time, right place, and somebody taking a bet on me eventually, which were my partners at Mayfield back in the day. So you know, I'm born and brought up in Bombay, did my undergrad, like a good Punjabi from Canada, and realized that Bombay boy probably may not survive in Canada, just given how slow it is. And so decided to come back to venture also. Whether you're Punjabi or not, that's fine. But came back to India, I think started my career in a firm called InvestSmart, doing investment banking. And then three days before Lehman, that got acquired by HSBC. Somewhere in that middle is when I got exposed to venture as an asset class. And then come 2009, started looking for a venture role, which is when I met the folks at Mayfield. They were very kind on taking a bet on me. And, you know, I tried my best to repay that I was with the firm for almost 13 years. So started there as an analyst, left them as a partner. Again, was very fortunate to see what I describe as venture 2.0. 1.0 being the Naukri and the Baazi era, 2.0 being, let's say, 2010 to about 2020 or so. And then we had a gorgeous 2020 to 23, which is 3.0. And then everything after that. So in my view, we're living venture 4.0 in India right now. So anyways, you know, that was Mayfield. After the Mayfield stint, restarted ICICI Ventures venture business, which they had stopped doing in the year 2000. So you may have seen that recent investment, that company Innovest, which got acquired by L'Oreal. So that was the first investment out of that fund. Wow. I was not part of the firm at that point in time when they made the investment, but set it up and then sort of handed over to the firm. And middle of 24 is when I partnered up with Sorin. Sanjay was kind enough to bring me on board. And just building the firm. So it's been about, what, better part of 16 years doing venture out of Bombay.

Utsav Somani: And what does Sorin look like right now?

Subeer Monga (Sorin Investments): Sorin is a very differentiated firm. So we're a 1350 crore fund. We're on fund one. So while we're new kids on the block, we are all folks that have done this before in different capacities. Sanjay used to be, you know, CEO of Citibank until 2009, then was handpicked by Henry Kravis to be the founding MD and CEO of KKR in India. So he built KKR in India for over a decade and then decided to set up Sorin. His co-founder in this is a guy called Angad Banga. Angad today is the CEO of Caravel Group, which is like the 10th or 12th largest shipping fleet management company in the world. And Angad's dad, Harry, also built a business called the Noble Group out of Hong Kong, which is one of the largest commodities trading businesses in that part of the world. Took it from startup to IPO. And the family were also first check in Nykaa, which is Sanjay's wife's company. So both families saw large businesses get built out. And so they came together to set this up to offer a very differentiated platform. We don't have too many firms in India right now, which are started by entrepreneurs themselves.

Utsav Somani: Is it true Henry is an LP in Sorin?

Subeer Monga (Sorin Investments): Very much, yes, yes. His family also is an LP, not just Henry, many, many other esteemed folks. So, yeah, we do check sizes up to 40 crores for a Series A round. We do up to 80 crores for a Series B round. We're ownership sensitive, as one should be in this trade. Time has taught me that. And we're agnostic. We do consumer financial services enterprise. Today, if you look at our portfolio, we're about 12 companies. We've got a few financial services companies. We've got a few consumer. We've got a bunch of enterprise companies. Four of those are AI, four are non-AI on the enterprise side. So we're very well spread out, not only by sector, but even by geography. So if you look at our spread of portfolio, we are out of the 12. We've got two in Bombay. We've got three in NCR. We've got three in Hyderabad. We've got three in Bangalore and one in Coimbatore. So we're very spread out. We don't necessarily center ourselves on one city or the other.

Utsav Somani: Talking about your personal point of view about the Indian venture ecosystem. So you joined Mayfield in 2010. And I mean, you've stayed the course for a very, very long time, of course, in the venture industry. What is one view that you came in with and developed in those early years, which has changed now?

Subeer Monga (Sorin Investments): I think that's a double-edged question, man. I think there's just a lot more in terms of breadth that is happening now than was happening in the past. Like earlier, when people came out to become entrepreneurs, like we were discussing earlier, people would see it as a lot more of like risk when you came out. And so you would have a very different style of building businesses, right? Like I was very fortunate to have been part of the journey of Lishis when they started building. Very different journey. The boys at Box8, what they built out today, which is EatClub. Very different journey. Amagi Media, as I was telling you, very different journey. Today, just because of the breadth of companies and the amount of capital that's there, which wasn't there at that point in time, I think the option value has gone up a lot more, which didn't exist at that point in time. So I think it becomes that much more critical to see how many people are doing this for the right reasons versus how many are doing it for option value, right? That has, I would say, materially, materially changed. But equally, I think the ones that are doing it for the right reasons, I think they're putting in a very different level of effort because they're starting to see the wealth creation that can happen. And a lot of people are starting to see those exits, right? So Lenskart is an exit. Mishra is an exit. Nykaa is an exit. Large, large, large outcomes, right? So I think those who get it really get it. And hopefully we can partner with those kind of folks.

Dhruv Sharma: Subeer, you earlier made a comment about ownership and why it's important, especially for a firm like yours. Is it important enough for you to let go of deals?

Subeer Monga (Sorin Investments): Yes, very much.

Dhruv Sharma: Say a little more about that.

Subeer Monga (Sorin Investments): Yeah, see, at the end of the day, it's all linked to economy and economy size, purchasing power and all of that stuff, right? So let me ask you a reverse question, right? Like in the next 10 years, do you see a trillion dollar SpaceX coming out of India?

Dhruv Sharma: Highly unlikely.

Subeer Monga (Sorin Investments): Highly unlikely, which means that…

Dhruv Sharma: The market cap of our entire listed universe is close to Apple's market cap.

Subeer Monga (Sorin Investments): And therefore, so I think if you work backward from there, I think there is a natural limitation, not a created limitation, but a natural limitation to the kind of outcomes, right? And within that, as a portfolio manager, while I'm supposed to take risk, I'm supposed to take risk on founders, execution and whatnot. And therefore, you have to be compensated for the risk that you're taking at the earlier stage. And I think if you don't get compensated for that risk, then you're not doing right by your LPs because your LPs are giving you this capital to sort of ensure that while you're taking the risk, please generate the returns for us. While VC is what VC is, at the end of the day, if we're truly honest to ourselves, it is a financial product amongst all other financial products that are available, right? So I don't think these questions are necessarily asked of a public market investor, right? So why should they be any different from a private investor in that sense?

Utsav Somani: There was a statement that you made before the show, so I'll build on this thesis of yours, where you said that India is not Silicon Valley and Silicon Valley is not India. India is more focused about dhanda-led businesses or businesses having that sort of inherent nature of being, I mean, cash flow or dhanda mindset from the get-go. So want to elaborate more on that, just for our audience to learn?

Subeer Monga (Sorin Investments): Dhanda, I mean, see, the number of buyers for tech within India exists, but they're limited, right? I think a good proxy to see is, I don't know if you saw, I remember reading this article, for FY25, if memory serves me right, Salesforce's India revenue was about 9,500 crores, right? If that is at 9,500 crores, it tells you that there are enough people out there buying Salesforce, right, in the Indian context, which means, can you build a tech company out of India? You can, there are buyers. But do Indian buyers necessarily sit and debate with an SAP or with a Salesforce on price? They'll do a bit, but beyond a point, you don't have a choice, right, whether you take it or you don't take it. But when there's an Indian company that comes in, there's just this natural, you know, situation to want to negotiate the price down to a point where, you know, sometimes founders who are selling this are like, maybe not worth my time. But when you're building an India for India business, it's a very different way in which you're building it, whether it is consumer, whether it is financial services. So my previous point was, when you are building an India for India business, you want to ensure that you are building it within the cultural requirements and cultural way in which India operates. If you try and take that same model and try and build in the US, it probably won't succeed and vice versa, right? So if you're building a tech product company to sell product in the US, then you build it with a culture of which your buyer in that market will buy it at and in India, vice versa. So that's what I meant, like India will be India, India is not the valley. If you're building in India, build it the Indian style way, in the Indian style way, no matter what industry you are in, whether it's consumer or enterprise or financial services, there is constant downward pricing pressure, no matter what you do. So you want to ensure that you build towards that and you have enough sort of P&L runway, unit economics runway, operating leverage, scale that you build out that ensures that, you know, a sustainable business can be built over a period of time. In the US, it's the other side, expenses are so high in the US, just hiring like, you know, enterprise salespeople, cost of marketing, travel, conferences. So you ensure that you sell product and you're compensated for that, which is what the US market does. The US market appreciates that building that business is expensive. So you want to be compensated for that. So I don't know whether that's enough, but broadly, that's where India is India and the US is the US.

Dhruv Sharma: Helpful, helpful. We definitely want to spotlight one such India for India company that you've recently led an investment into, which is HomeRun. So we were very fascinated about the QuickCom opportunity for the B2B segment. So talk a little more about how that investment came about.

Subeer Monga (Sorin Investments): Yeah. So firstly, in my own words, I don't call HomeRun even QuickCom. I think the way I describe it is it is a Home Depot on Darkstore, but not QuickCom. Because I think in what they're doing and what they offer, you don't necessarily need it in 10 minutes, let alone 30 minutes. And therefore, the way the business is getting built out is materially different. Like I don't need density. I don't need 200 dark stores. But I think the supply chain that is getting built out there is materially, materially different to most other, let's call it QuickCom supply chains. Because the way you would handle cement bags and the way you would handle plywood and all of that stuff is so different from an ITC protein bar, right? So I think the opportunity is, from a market standpoint, is there in your face, right? I mean, if you think about it from a fragmented standpoint, an Asian paint shop and another Indigo paint shop is different from a Badger paint shop. It's not even sold in the same sort of shop, right? So today, if a contractor has to go and procure material, plywood shop is different, paint shop is different, cement shop is different, glass shop is, like everything is different. And the biggest problem a contractor has today is not necessarily business. Like there is now enough houses getting built across the country, enough people with income to sort of get their houses made. But the consumer got very discerning, right? Because it is outside of, let's say, the kids' education and marriage expenses, house is probably in the top three most expensive assets that an average Indian spends on. Now, because cost of construction went up and people got discerning, they're even more careful about if they're spending money, they better get their money's worth. And so contractors have to be that much more careful that their workers on the ground are actually delivering. So the contractor's focus now has to be on ensuring that he delivers towards the work that he's doing. And so in the life of this contractor, he's already earning enough where his kids and his family are buying Swiggy and Zomato and Swiggy at home, right? So he's seeing this inside his home. And if we go to him and tell him that, hey, you know, we're reducing one level of complexity in your life where the product is such where you don't have to apply your mind, right? You're used to buying UltraTech cement, just place an order for UltraTech cement. You're used to buying CenturyPly, buy CenturyPly, doesn't matter, whatever you are used to as far as available on the platform. And more importantly, we'll have it delivered to you. We will get it unloaded. People don't realize just unloading material in this world is like a big pain point.

Dhruv Sharma: It is, yeah. Anyone who's actually done construction or renovation for their own home realizes how much- I've done three homes, man. You're at the mercy of contractors. So you're saying it's almost like pairing what's essentially an unorganized industry with just-in-time delivery for them, which is like purpose-built for them, and that changes the game.

Subeer Monga (Sorin Investments): Yeah, it's not even just-in-time, right? If you look at how the offline world works, like, I'm sure you've built your home. If you ask your contractor that, you know, did the cupboard count or not? No, we're waiting for the plywood. Where's the plywood? He'll call him. Then he'll say, it's coming out of the warehouse in two days. Then he'll putter. Then he'll come. No one knows where it is. Right? Here you place an order for plywood, you place an order for cement. I'm giving you a very Uber, Ola, Swiggy type, you know, experience. You place the order, you'll be told at what hour that order is going to leave. As soon as it leaves, you get a notification. You can track it. So that experience is something that elevates.

Utsav Somani: But this is such an obvious, this thing. Why did it take so long to get, I mean, built? I mean, the technology for this existed for a very, very long time, right? And you've done back-to-back investments in this company. So something must be working. So nine crores and then 60 crore round, announced within a three-month gap, I think.

Subeer Monga (Sorin Investments): Yeah, no, I think it's just execution. Pokhraj is a great executor. He's been in this ecosystem. So he was a contractor himself for a brief period of time, delivered like multi-crore worth of projects. So he's felt the pain as a contractor. And then he's felt the pain because there's another company that he was working on, which was trying to organize labor, right? So he understands his value chain deeply well and understands how to play that game. And so he's just been executing. This is an execution business. This is not one of those, you know, I need to make a very deep AI tech product and go do this hardcore execution.

Utsav Somani: And I think Dhruv wanted to bring up one of your AI companies as well. I see that you made four AI bets in one year. Beacon, Enmovil, Aivar, Spike AI. Dhruv, do you want to pick a company for a case study, a breakdown?

Dhruv Sharma: I think Aivar is the one we were chatting about just before the show, Subir. I mean, for the longest time, services, and we're just like oversimplifying, like used to be a no-go for venture, but all of that has changed now. And I'm sure there's a lot of thought behind it. So we wanted to, you know, get you to tell us why.

Subeer Monga (Sorin Investments): Yeah, I think each of these four companies are so unique. And again, you know, I have this very deep hypothesis that the journey for AI in India, very similar to the previous comment that we had, right? The journey for AI in India will be materially, materially different to the AI journey or what's going on in the US. So even Aivar's case, they're not only selling to Indian consumers, they're selling it to US as well or other parts of the world in that sense. I think one of the things that is happening today is if you look at, and you know, you asked about Aivar, I know, but I'll take probably all the examples because it'll then give you a view of how they're different and what they do. Beacon is a very interesting product. If you think of any vertical AI or vertical products, enterprise tech product company, Beacon plugs into them. So if you have an enterprise tech company that sells to a customer, you've sold, you've contracted that sale and then there's an implementation period and then there's cash ERR, right? That can take as much as one month, three months to 12 months, depending on how complex that integration period is. Beacon plugs in and brings that down to seven days, right? So that entire human layer where implementation used to happen, there was this SI industry, it's just been eaten up, right? Beacon has grown, I think, 5X in the last 15 months since we gave in. And this is a classic enterprise AI company. This is not your Harvey and Nagora, which is like, or Claude, which is more prosumer like, right?

Dhruv Sharma: In most categories, the SI industry is bigger than the product itself.

Subeer Monga (Sorin Investments): Exactly, right? So this is very unique in that, right? It is going after a niche, which usually doesn't necessarily get automated and they've managed to create a product for that. Similarly, so this is an example of how an Indian company is built to sell in the US market, right? Then we've got N Mobile, which is an AI supply chain automation company. They plug into your ERP or sometimes even without the ERP and they will manage your entire backend supply chain. So let's say forecasting, production planning, dispatch planning, dispatch orchestration, visibility, everything, right? And I think proof of the pudding is in the eating. So they run this for Maruti, Hero, TVS, Bajaj, Nestle India, Mahindra, Mahindra, like blue chip contracts, right? And they built all of this with next to no capital. And we came in and pumped in a fairly large round, about 50, 55 crores. And from then they've done a bunch more. So they've recently signed on Nippon Express out of Japan, right? Like why would a large Japanese company want to work with a small Hyderabad based company? I think the product speaks for itself. So it's a, again, very different product compared to what you're probably used to seeing. And Aivar sort of covers all of this stuff. So Aivar's core is they've got three specific product lines. They've got everything to do with voice as a product line. They've got data governance as a product line and they've got a Kubernetes product as a product line. So I think in 1.0 of AI voice, there was this belief that a lot of these guys would come in and like a standard AI product, a voice product would plug in and you could just run it, right? But actually it doesn't work that way because privacy in financial services is a very key thing. So these guys are coming and building, let's say, SLMs inside banks and helping them implement a bunch of the voice on their customer data, which then takes away all the pain points that you have on privacy. And so whether this is in India, in the US, it doesn't matter. The use case has changed depending on which that customer is. And married to that is a governed data product. So I think over a period of time, as you will see, an enterprise AI hasn't even begun yet in the grand scheme of things. Whatever's happening is happening largely either on consumer or prosumer. As enterprise AI starts, the biggest need for any enterprise is going to be data privacy, more so in India and more so in the US markets. And imagine like financial services, like RBI is so, so strict about some of these things. So you can't just go about building open source frontier models or even closed models, but on the cloud, it has to be SLM structures. So who's going to do this, right? You need companies like an Aivar that come out and do this. So very different use cases.

Dhruv Sharma: What you're seeing is specific to this point about certain enterprise customers being very sensitive to data and privacy. You're seeing more local models, more on-prem deployments.

Utsav Somani: That's what Palantir and even Satya Nadella as of yesterday I think were talking about.

Dhruv Sharma: I think broadly the point they're making is rent the intelligence, but own your own data.

Subeer Monga (Sorin Investments): Yeah, I think because... OpenAI in its day got a lot of flack, right? Because there was a lot of claims that they stole data and stuff like that. And I think after seeing that public headline, there was a lot of, at least awareness, right? That how do we manage our customer data? And this doesn't hold true necessarily for financial services alone. It holds true across the board. It doesn't matter which industry you're operating in. And so I think a lot of enterprises are careful about how they want to operate and at what scale, what point, what ROI. ROI is becoming a huge question, right? I don't think ROI... ROI question was never coming up when you have a consumer or prosumer, right? Because you're just using it. The moment you get into enterprise and you're being asked to spend millions of dollars just on tokens, right? Then suddenly there is now a question of what is going on on ROI. And therefore now there is a sudden shift, if you see, even in the narrative in the US that we are going to start using orchestrators that use open source and closed source models and use closed source only where you really need it and open source where you can. So the cost of all this stuff keeps going on. It just keeps, it's like a cycle. It keeps evolving over time.

Utsav Somani: So, Subeer, this was super fun. Thank you so much for coming on our show. Wishing you the very best.

Subeer Monga (Sorin Investments): Thank you for having me, guys.

Utsav Somani: All right, listeners, moving on to our next segment. We've got Rhea from SafeGold. Rhea, welcome to the show.

Rhea Chaterji (SafeGold): Hey, guys. Nice to see you all again.

Utsav Somani: And...

Rhea Chaterji (SafeGold): Thanks for having me.

Utsav Somani: And let's start with the story. You were training to become a lawyer at LSE and now you're running a company doing digital gold. Why does that arc sound very exciting?

Rhea Chaterji (SafeGold): Honestly, I don't think anyone... It's not an arc that came out of any kind of careful planning. It's very zigzagging. I am a lawyer from LSE. In fact, I have two law degrees. But at some point, I think I realized that I wanted to actually be closer to the doing of something and the building of it rather than sort of coming in to advise before or after or watching the decisions being made elsewhere and then just being left to implement. And that's probably true for a lot of people who get into startups, right? We're all, in a sense, we don't want to be cogs in a wheel and we want to be building ourselves.

Utsav Somani: Inspiring. And what is SafeGold now? What all do you do?

Rhea Chaterji (SafeGold): So, broadly, we offer a variety of digital precious metals or rather I would say it's precious metals which are stored in a vault. There's gold, silver, platinum. All three of them are live. And it's exactly like owning any physical commodity but it's just that we've made the entire layer of transacting, storage, what you can do with it super convenient and extremely simplified. So you open up your choice of app and we're on most of the popular consumer FinTech apps today. And you can then decide whether you want to buy gold, silver, platinum, etc. You can eventually sell it if you want. You can exchange it for jewelry. You could get it delivered to your home. You could lease it out and earn an interest against it. So that's the only way that your gold would actually grow for you. And yeah, that's the universe that we're trying to digitize and expand further.

Utsav Somani: What happens at the backend? Can you explain the plumbing? Like suppose I'm putting in 100 rupees via one of your partner apps. I buy 100 rupees of gold. Then what happens at the backend? Like how does this move? The vault storage I think is a very interesting aspect of this thing.

Rhea Chaterji (SafeGold): Yeah. And I think it's the first question that everyone has because mentally, especially as Indians, we're used to owning gold. But the idea of 100 bucks of gold, like how do you even imagine that, right? So at the back, there's this entire vaulting infrastructure and safeguarding infrastructure that we've put in place. We have a vaulting partner. It's Brinks, which is the largest in the world, which specializes in this kind of thing. And we also have a trustee administrator whose job it is to actually have oversight in many ways on the daily transactions, money flow. Is there actually gold in the vault? Things like that. And when a customer, when you...

Utsav Somani: On a Fort Knox situation, basically.

Rhea Chaterji (SafeGold): You know, let me put it this way. I couldn't take out any gold. I can't access the vault without like three layers of approval.

Utsav Somani: I mean, is it as shiny?

Rhea Chaterji (SafeGold): I have. It's quite an interesting experience because one part of it, just on a human level, is that we're attracted to shiny things. And then you go into this room and it's like completely sort of... I mean, when it comes to silver, it's stacked one on top of the other in these 30 kg bars, which one of them I tried to pick up, much to the consternation of the vault staff who were quite concerned. But no, honestly, it's the nonchalance of someone running that place, which, weirdly enough, made me feel very assured when I was visiting because they treat it as so routine. And they are literally dealing with, on a daily basis, you know, tons of gold, silver, platinum, whatever it is, right? But for them, it's just another brick to be lifted up, put in the right place, categorized in the right vault part. So that bit is certainly very interesting. As a customer, when you buy from us, there is an existing amount of gold. It could be a bar, which is 1 kg, 10 kgs, whatever. And you are basically owning a fractional part of that. And we have, of course, the entire information depository of who owns how much. The trustee has access to that, most importantly. So even if we disappear tomorrow for some reason, the trustee would be able to step in and tell Brinks that, hey, Utsav and Dhruv own this much of gold. I need you to get it to them, right? So that's basically how all of it comes together and works together.

Dhruv Sharma: Superb. I think, Rhea, what you described to us is like all the many reasons customers should trust you. But then, you know, when you're dealing with customers, you don't always have the opportunity to sit them down and explain everything to them. So I think the lesson we want to get from you so that it's helpful to other founders is when you're in a high-ticket category, like gold, for instance, how do you create that impression of trust in the minds of your consumer? What are the different steps you take to do that?

Rhea Chaterji (SafeGold): Right. I think that from the start, the way that we've looked at it is, one, what are the highest trust networks and systems that we can adopt in terms of best practices? And in our case, for example, what that meant was creating this entire infrastructure, which no one had ever done before. We've actually replicated it in other countries because we feel that even there, it's the most robust way. And we've spoken to other central banks who are like, yes, this makes sense. And what we did was very consciously take that idea of, let's say, a mutual fund or a securities product and build on that same trustee and custodian infrastructure, whatever it then translates to in terms of having a physical commodity. And the second area that I would really...

Dhruv Sharma: Sorry, go ahead. You did all of this when you didn't have to. So you did it in a self-governing, self-regulating sort of way.

Rhea Chaterji (SafeGold): Yeah. So Gaurav is the founder at SafeGold. Both Gaurav and I kind of come from these very institutional sort of backgrounds, in a sense. I'm a lawyer. He's ex-JPMorgan Deutsche Bank. He's done large private equity firms. So in both of our cases, we were just thinking of if we had to honestly sell this to our own relatives, what is the level of safety that I want when I'm telling a cousin or my aunt or my mother about a product? How can there be something that is set up that would 100% keep it safe for them and reduce any risk? That was definitely one. The second is, I think we've tried to keep it as transparent as possible. So from day one, we've been very open about the way that we set it up, but also just the fact that it's not a regulated product. We're not trying to pretend that we are something that we are not. And we feel that that's very important for customers, especially as you're approaching higher ticket sizes. Customers are aware of what they're getting into and people are certainly very curious about it. They will call us. They will have a hundred questions. For example, when it came to our leasing product, which doesn't exist in any form, you know, kind of elsewhere in the world when we first started it, they went into the details of what is the form of collateral you have from the borrowers? What kind of banks are you taking bank guarantees from? So people really get into the details of it when it comes to their money and their wealth. They want that transparency and that's what we've really tried to build and push from day one. And we've also tried to build up a track record in terms of our credibility. You can see us on, as I said, most of the large apps. And I think that then also tells, it's a signal to the ecosystem that we're not trying to make a quick buck and go away. We want to build something which is seen as an institution or the rails that power institutions at the end of the day.

Utsav Somani: And, I mean, gold price has run up quite a bit in the recent few times, right? Almost doubled to 1.44 lakhs, I believe, right now. How does that affect business like yours?

Rhea Chaterji (SafeGold): We see very interesting behavior when it comes to digital gold versus, let's say, something like jewelry. Part of the reason is that jewelry is a large ticket size product where you have to put in a certain amount of money at a given point in time. So then when the gold price goes up there or whichever metal it is that you're purchasing, it kind of affects your overall outlay at that point in time, which you may or may not be looking to then spend in terms of a discretionary purchase. When it comes to digital gold or silver, what's interesting is that it's just whatever you want to put in at that point in time. So in a lot of cases, what we see is that as the prices have been going up, customers have really adopted something like an SIP type behavior, especially daily SIPs, or even then in certain cases, looking at linking it to our price alerts, which we offer, so that they are able to consistently keep purchasing over a period of time because they know that they can buy whatever amount they can afford at that time without it being a stress. And secondly, they don't have to shell out a large amount at any given point in time.

Dhruv Sharma: So Indian households have more privately held gold than any place else in the world, but most of it lies idle. What is it that Indian households can be doing to, in a sense, monetize that asset? Do they have options?

Rhea Chaterji (SafeGold): Lots of them, at least from our perspective. In fact, I think the last time I was chatting with Utsav about this, is that we have launched with Bluestone a way for customers to bring their gold, and this could be coins, it could be broken jewelry, it's anything that you're not using, right? And anything that you don't have any sentimental or emotional attachment to. And you can come, melt the jewelry or melt that coin, so you know exactly how much the purity is, the weight is, you don't have any doubts over there. And we will digitize it and then lease it out. So just the fact that it is coming back into the system firstly is a huge thing, because like you said, that 35,000 tons, that is the sort of fabled large wealth of India that's sitting there untouched. We want to be able to bring that back in, get customers to feel like they can make use of it again. And it really unlocks a switch in someone's mind. I'll give you an example. There was a customer who, I mean, she's in her mid forties and she had been given a certain amount of jewelry at the time of her wedding 20 years ago, but it's all stuff that she doesn't really wear. It's been a while. And she was just like, this is just sitting in my cupboard or my locker. And it was 20 or 30 grams when she brought it into the store. And then when she walked out, it was that tangible feeling of, I have actually got, whatever four and a half, five lakhs, et cetera, out of that, right? Because that was the amount of gold that was just sitting. Now, if I told you that you had five lakhs and you're just leaving it in your cupboard, no one in their mind would really think of that as a very rational aspect, right? You would want to do something with it. You would put it in some form of- You would put it to work.

Dhruv Sharma: Exactly.

Rhea Chaterji (SafeGold): And in this case, what happens is that every month, 4% comes back to her, or I mean, eventually over the course of the year, let's say you had put in 100 grams, that becomes 104 grams. So over the course of the year, right? So it's actually compounding because the gold is getting added back. You see it on a monthly basis. It's a great moment of joy to open that email and be like, so much of gold has been added to your account. And then you suddenly feel like, now I can treat myself to something that I hadn't earlier expected to.

Utsav Somani: And I know it's very contextual, but if you were to rank the ease of investment into gold, like all, I mean, just what are attractive investment options for gold? How would you rank like say ETFs, sovereign gold bonds, and mutual funds for gold, and of course your product as well?

Rhea Chaterji (SafeGold): So sovereign gold bonds are now discontinued pretty much, right? So I'll move that one off the table. I think they were a victim of their own success to some extent. But the way that I would look at it is, what is it that you want out of the investment? Are you looking at doing this purely to track gold? You don't ever want the physical, you don't particularly care about it. In that case, potentially an ETF is the right option for you, but there are the related aspects of a DMAT account being needed to be opened, which may or may not be something that's in everyone's comfort zone or something that they're used to. And the other side of it is that both ETFs and gold MFs, which are basically mutual funds owning ETF units, they do have fees, right? And in the case of a gold MF, which say doesn't require the DMAT account, it is the underlying units fees as well as the mutual funds fees that you're eventually shelling out. Digital gold on the other hand is perhaps much simpler in terms of the first step, certainly because you don't need to create a DMAT account or anything like that. We have tiered KYC instead and you can buy a hundred rupees, 500 rupees, whatever amount you wish to, 10 rupees if you want. But of course there is a 3% GST. So if you are someone who is looking to buy and sell within a short amount of time, I don't think that it would be the ideal product for you. So if you want to save up over a period of time, your goal is to eventually, let's say, put that gold to use, lease it out or get it in some physical form, digital gold is great. If you're someone who's just looking to track the gold price movement over a shorter period of time, you're more financially savvy or aware of how to navigate those areas, then perhaps an ETF makes sense.

Dhruv Sharma: And everything you've obviously called SafeGold and everything we've spoken about up to this point is gold, gold, gold, but let's talk about silver as well, Riya. What was up with all of last year? What is silver like as a precious metal? And also platinum, who's buying platinum? Why are they buying platinum? Is it seen as a store of value? Is it something else?

Rhea Chaterji (SafeGold): Yeah, I'll address the first one, the second one first, sorry. Platinum has been an interesting one. We actually started it partly because we were hearing from customers who were slightly more experienced or had gone down this path for longer that they felt that if they'd seen the ride of gold, they'd seen silver, and now they wanted to capture that next bit of value generation. And so they really wanted platinum. And what's interesting is that in India, there is actually no way to invest in platinum as a commodity or as a precious metal because the only way to buy it otherwise is in the form of jewelry. So we really felt like this is a unique and an interesting opportunity for us to enter. It's already seen a lot of customer interest and volume. And what's also interesting, I think, as an approach is that customers are not, you're not cannibalizing the share of it. What customers seem to be doing is that, let's say you had a hundred bucks in gold, you will come back and add another 30, 60 bucks in silver, and then probably another 20, 30 bucks in platinum. So they are looking at this as a combined outlay in terms of their precious metals investment rather than just looking.

Utsav Somani: Even for us, I think it might be useful to just see like 10 years back, what is the XIR for all three of these metals that you've mentioned?

Rhea Chaterji (SafeGold): Over a period of time, I mean, obviously now if you take the last two or three years into account, I think gold has been giving something like 18 to 20% now annually. Again, taking the last two, three years into account. And silver and platinum, silver and platinum was interesting is that they're a lot more volatile because to some extent with silver, certainly you cannot predict when there will suddenly be an increase in the availability in the market. So there is a lot more movement that happens when it comes to silver and platinum. For example, I think in the last year, it went up something like 120 or 130% or even more than that. So you see really big highs, but then it also comes down at certain points. Again, I think that for people who are looking at this over a slightly longer duration, they are taking their cues from geopolitics and just the way that there is an increase in uncertainty overall in the world. And to some extent, these are very much seen as a safe harbor in comparison to markets or in comparison to even currencies right now, which are a little bit more volatile than anyone has been used to or anyone is really prepared for.

Utsav Somani: Can you bring out that correlation for us or your thoughts on how INR and gold prices are correlated or not correlated to each other?

Rhea Chaterji (SafeGold): I'm not sure I would say that there's a correlation between INR and gold prices. Gold prices, I mean, again, I'm not a professional and I'm not an analyst in this space. So I will very much hold my hands up and say I'm not probably the most astute person to follow specifically globally when it comes to this.

Utsav Somani: But people who want to reduce the gold import and lending product or the leasing product, I think can be helpful there, right?

Rhea Chaterji (SafeGold): Yeah, so certainly we see this as unlocking. So at least one of the factors that is contributing in some sense to the overall import because we want to eventually get to the point where we're reducing that number by making domestic gold more of an asset that is in use and is making sense for the customer also in terms of working and earning more for them. There are many aspects of the currency overall, which I think are outside of any individual's control. A lot of the times it ends up being about bigger institutional players. There's also been a lot of purchase of gold in the last year by central banks. So it's large institutional players who also end up having a lot to do with the gold price movement and things like that.

Dhruv Sharma: And while all of this was going on, Rhea, you guys have also found a way to expand into adjacent markets internationally. Tell us a little more about that journey. What are the gold markets like in the neighborhood and the extended region?

Rhea Chaterji (SafeGold): They're interesting, but also very humbling. You feel that you've got a certain format and you've nailed certain aspects of it, but then you find that each new geography that you expand to comes with its own set of unique challenges. And also, especially with gold, everyone's got a slightly different variation or tweak that they want to put in. So we're currently live in Thailand and UAE, and we're also talking to various other central banks in that area to then expand further. There's a lot of interest there. What is very cool is that on certain days, let's say on the 29th of January, where we suddenly saw gold prices and spikes everywhere, there was a spike in India, but also in Thailand and UAE. So you could tell for the first time that it's a global effect rather than it just being about Indian consumers having a certain feeling about gold in reaction to something. What you also see is that average ticket sizes are very high when it comes to, let's say in Thailand or UAE, both of them, we're seeing very high ticket sizes, but also a very strong interest in getting physical gold delivery done there as well. So these are all customers who feel very strongly. And over there, you can invest in gold sitting anywhere in the world, or you could invest in, let's say an ETF sitting out of the US, right? But even there, at that point in time, the customer does want to have options when it comes to a coin or a piece of jewelry or something like that. So interesting similarities in customer behavior, but definitely challenges in terms of making something work at a local level. One of the stranger stories that I hadn't expected to ever experience was that, again, in the course of the recent conflicts that have been happening there, one of the infrastructure accounts that we were using, it went down at a particular point in time because there was a missile that had hit that building. And so then we had to quickly deploy onto a completely different infrastructure. And again, like you guys were just talking about, data privacy and stuff like that, you can't just pin it up elsewhere in a different country. You have to still have it localized. So how do you navigate those challenges where it's a very small and it's a fixed group of faces? It's not as though someone can come up with a data center all of a sudden in a completely different zone. Nor are the laws going to change for you overnight, but you still have to navigate these kinds of challenges.

Utsav Somani: Yeah, this was super fun and informative for us. Thank you so much for coming on our show.

Rhea Chaterji (SafeGold): Thanks so much, guys. It was a pleasure to speak to you both.

Utsav Somani: Cheers. All right. Dhruv, we have one news item to cover today.

Dhruv Sharma: Why was Elon and Sam going at it all over again? What's happening?

Utsav Somani: Always in the news, they just cannot keep themselves out of it. So I'm going to take my stab at it on whatever I understood from X. We're going to show some tweets on screen as well for people to understand this, but they can obviously look it up online because the court documents are up. So Apple went ahead and sued OpenAI, basically, and then Elon Musk jumped into this fight where he said Sam is a scam Altman. And then now that he's defrauded or at least tried to scam two companies, including stealing hardware secrets from Apple, what is the encore going to be for Sam Altman, which is the third company that he's going to go after? But that's the fun aspect of things which went down on social media, all the drama. But interesting. I think it's a fascinating read because some of the stuff that Apple employs is to track leaks from getting out and then pinpointing who the leak came from. There are so many fascinating use cases.

Dhruv Sharma: You're talking about a very elaborate mechanism that Apple has put in place.

Utsav Somani: Elaborate mechanisms. Over hundreds of different techniques. So even including like a small pixel in an employee's device, which is very unique to that particular employee, along with a combination of four or five other such techniques, like, I mean, a sound thing, screen, I mean, everything. It's such a fascinating read about how they pinpoint that employee. So they actually knew that there were 400 Apple employees which were poached by OpenAI, and they were asked to bring hardware secrets. There was actually one employee who had an Apple laptop where they just downloaded hardware data. So they basically went at it. And this was basically with, I mean, a person, a lady called Tang Tan, who was working with John Ternus, who's going to be the next CEO. So this is personal for him. They worked together for 24 years. She was going to be the next hardware chief for Apple. And now she's the hardware chief at OpenAI because OpenAI is, of course, building their own device. And they mentioned Jony Ive' company as well into this lawsuit. So Apple's going, I mean, I don't know how Steve Jobs feels about that, but they're going after him as well. So this is definitely serious. You've not seen Apple throw frivolous lawsuits around. So this will, I think, be a big blow to OpenAI. So hopefully we'll...

Dhruv Sharma: That's what people say. They fight very rarely, but when they do the fight to win, they're going to put everything behind this.

Utsav Somani: I mean, Apple's, like, I mean, done this for a very long time and they're super serious about this. They don't want to, like, be involved in a new cycle unless they really have to be. So yeah.

Dhruv Sharma: Incidentally, I'm reading a book on Apple right now, which is...

Utsav Somani: The Steve Jobs one?

Dhruv Sharma: You know, there are two. There's one that is, again, re-entered the imagination, the public imagination, which is becoming Steve Jobs, like his years in the wilderness. So that's the one.

Utsav Somani: That's the one during his time at Next, right?

Dhruv Sharma: Next and Pixar. So, you know, again, those in-between years, that 12-year period when he was, again, in the proverbial wilderness. I'm about 115, 20 pages in, but it's quite a... Like, if you haven't read the book, I'd strongly recommend it to our listeners as well. It's fascinating.

Utsav Somani: Look at it. And something interesting also I remember because we're talking about, like, Steve Jobs and stuff. I think Bill Gates' daughter, I think her startup was... I mean, discovered fudging some numbers as well. I haven't read into it, but Phoebe Gates' startup also, I think, was fudging some numbers, apparently, according to a New York Times investigation. And, yeah, they had a funding announcement which looked like a Coachella poster. Like, they actually had a Coachella poster for their list of investors when it came out. All right. I think that's it from us. I'm taking a break for the next three, four shows. So the TON universe is going to be in safe hands with Ro, Vyashvi, and everyone. So, yeah, I'll see you when I'm back. Have a good one. Thank you. Bye-bye.