Elevation Capital Blog Notes
All notes below may be treated as taken verbatim from the blog other than my personal comments under AG.
What excited Ravi Adusumalli about Vijay, he wanted to do the impossible.
AG: To generate alpha, one type of bet is on great founders.
Today, only 10% of the Indian population is covered by health insurance (excluding public sector schemes)
Therefore, despite being offered with the best intentions, traditional health benefits end up being used by only 6-8% of employees.
The top 10 cities in India, by our estimates, have ~25K apartment complexes, housing ~15-18 Mn people.
India has 65-70 Mn SMBs in a highly fragmented base. Approximately, 8-10 Mn of these are now estimated to be using different tools and software for enhanced productivity. These somewhat more digitally savvy businesses are largely composed of manufacturers, traders, and retailers operating across categories. Discovery has always been a huge pain point for each business persona. Manufacturers are always on the lookout for distributors while retailers are on the lookout for suppliers. Wholesalers and distributors require both.
Robotic Process Automation (RPA) robots automate manual processes and complete tasks just like a human would, except the bots are a million times faster and make far fewer mistakes.
On Youtube, T-Series Bhakti Sagar, a channel dedicated to devotional content, with 43 Mn subscribers is the 33rd most subscribed channel globally and 11th in India. Its top video with 1.9 Bn views makes it the 5th highest ever viewed Indian video. To put this into context, the top video on the world’s most subscribed channel, T-series (191 Mn subscribers) has 1.2 Bn views. On Facebook, the Pope successfully delivered sermons through live sessions to a staggering size of audiences during the COVID-19 lockdown. On the Google Playstore, any keyword search around religion shows hundreds of content-first apps, many of which have 10 Mn+ downloads. On top social and content platforms like Facebook and Sharechat, devotional content accounts for 10-20% of all content and most family WhatsApp groups continue to buzz with devotionally inclined shares and forwards.
A truly disruptive customer-first model will be curated by high-quality advisors while remaining low cost; tech-led, while providing the ability to consult experts; tailored to individual needs, while being a breezy experience; and, in the end, deliver superior risk-adjusted returns and help fulfill financial and life goals!
Spinny follows a full-stack O2O model, where it buys, refurbished, and sells used cars, and provides a detailed inspection report to the buyers. It also offers free 5-day replacement and a 3-month warranty to give additional comfort to the buyers. The full-stack approach allows Spinny to know every nuance of the car. This coupled with its razor-sharp focus on consumer experience and transparency enables Spinny to inspire trust which so far has been elusive in this market. On the unit economics side, a full-stack model allows Spinny to capture maximum value in the chain, which earlier was being split across 3-5 intermediaries in the used car supply chain.
Unlike lenders that take an individual-level view of incomes and liabilities, SarvaGram focuses on the household. This helps them better assess cashflows and obligations, as well as household-level, cross-sell opportunities. The appraisal is based on a mix of documented and assessed income, with the team’s relationship officers supported by proprietary scorecards for standardization. SarvaGram then matches borrowers with a relevant product on the basis of this appraisal. This is productive credit, that helps the household enhance their income generation capacity.
Credit card penetration in India is <5% - a long distance away from China at >50%, Singapore at >150% and the US at >330%. Uni has nil defaults.
India has 64M SMBs. But building for SMBs is non-trivial. It requires both: a simple, intuitive, mobile-first interface as well as a powerful platform that adapts equally to the requirements of a small shop, a large trader, or a regional manufacturer. We had long been excited about the digitization of SMBs through foundational use-cases that could capture the business’ core source of truth. (+build sticky, habit-forming product)
It took the company ~3.5 years of iteration to gather these learnings and figure out the right playbook to scale. One of the biggest learnings for the company through consumer interactions was that in a market like India solving for convenience alone is not enough. We are a low trust economy and customers demand proof before buying into a brand’s promise.
For a consumer residing in a multi-storey apartment in Gurgaon, convenience > choice > price. On the other hand, for Tier 2+ consumers, it’s the exact opposite: price>choice>convenience.
Developer tools -
Focus on solving adjacent pain points, leaving developers more time to focus on development of the core product. Developers are curious tinkerers, who like to play around with stuff and explore, and often improve upon, what’s under the hood. It is not unusual for developers to build add-ons/extensions for existing products. Thus, a rigid black box product doesn’t appeal to them.
AG: I was reading the funding news of Hashnode and found two main reasons: developer-friendly (Additionally, the platform has developer-oriented features like markdown, embedding, and syntax highlighting. - Naval). I have usually seen developers making their own website so in line with the Elevation quote above, I may not be convinced with this reason (I have not used it myself yet, so not sure how it works but looks like no-code for developers). I agree with Shekhar (Accel) that this can help build a high-quality community of developers.
Atlassian -
Though the company raised a total of ~ US $210 Mn before IPO, it was bootstrapped for the first 8 years (2002 - 10). During these years, it implemented a unique self-serve GTM strategy and was able to achieve an impressive ARR of US $60 Mn by 2010!
Leveraged channel partners exclusively to achieve sales velocity and focused on bottoms-up adoption
Inherent network effects in the products
Built a suite of related tools where customers could start from one product and expand to any other product seamlessly
AG: This reminds me of the two approaches of building a SaaS company: top-down where you sell to the CXOs first and then the company starts using (requires strong sales team) and bottom-up where few employees start using and then you sell to the company (product-led growth). I will try to find and link the article.
To read -
https://elevationcapital.com/summit/insights/investing-in-turnip
https://elevationcapital.com/summit/insights/investing-in-detect
https://elevationcapital.com/summit/insights/investing-in-airblack
https://elevationcapital.com/summit/insights/investing-in-fampay
https://elevationcapital.com/summit/insights/investing-in-bliss-club
https://elevationcapital.com/summit/insights/investing-in-zeni
https://elevationcapital.com/summit/insights/investing-in-souled-store
https://elevationcapital.com/summit/insights/investing-in-murf-ai
https://elevationcapital.com/summit/insights/investing-in-vegrow
https://elevationcapital.com/summit/insights/investing-in-brite
https://elevationcapital.com/summit/insights/investing-in-yellow-class
https://elevationcapital.com/summit/insights/consumer-loyalty-D2C-Part1
https://elevationcapital.com/summit/insights/consumer-loyalty-D2C-Part2