YouSaid · the spoken record

Ram Parameswaran

lines on the record: 74
first: 2021-01-05
most recent: 2021-01-05
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I'm so grateful, Patrick. Thank you for all the good work you do. And I'll tell you that this is my must listen podcast. I literally have not missed a single episode. But man, like the amount of karmic value you created the world is commendable, man. So I really appreciate this.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is always the hard part about bootstrapping a firm. And so I would say that in the last 12 months, the most contemporary kind thing somebody has done for me is what Asheem did. And he literally helped me on my way starting a firm.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“The kindest thing I'm going to point out is there's this gentleman called he works at Greylock. His name is Ashin Chandna. He's a very under the radar, but a brilliant, brilliant venture investor, one of the best in the world, by the way. And I met him serendipitously, I'd say, 12 months ago. We had a quick discussion. And I was sitting on starting a firm. And literally on the spot, he committed his first check. Like literally, he was my first money in when I knew him for 45 minutes. I'm not sure what he saw in me, but he saw something. So especially with the contest of building a firm in the early days where you're not quite sure whether there are so many reasons to fail when a kindness of a stranger comes in and an ashim in this case and he's now become a dear friend, obviously, committing a few million dollars to you in 45 minutes, I think that really from a company building perspective, the money is a token, but they gave me the confidence that I could go and raise capital.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“And I love the way you ask this question every single time. And in fact, sometimes I just forward to the end of the podcast, ignore the content. But I'll tell you, listen, so obviously starting a firm has been front and foremost to me. This is my third baby right now after my kids.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“When the next helping hand comes from, and I'll tell you at least in my life, I wouldn't call myself exceptionally smart or off the charts impressive, but I have absolutely been helped by the kindness of strangers.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Culture in investing firms generally, culture in our firm. I've come to the conclusion that I want to only hire givers and not takers. And I think it's a wonderful thing to be a giver. Because what happens is you then create your own platform effects around you. And this is why Twitter and frankly, I think about what you do, like you are a giver because you're just giving knowledge from a bunch of smart people, giving in a world of investing where everyone is very short-sighted, very sharp elbowed, the culture of the firm, at least our firm, is about find people who love giving and sharing. Because what happens is tangibly, you become smarter for yourself. The reason we put out a quarterly update on this is what we learned in the quarter. Because guess what? I get more feedback than what I put out of the world because people tell me other things they learned very selfishly. We get smarter. But number two, I think, is there is a strong view on karmic connections. You create so much karmic goodwill in the world for yourself when you give that you never know.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Number two, incredible work ethic. Half of life in this business just turning up and busting ass. I can't teach you work ethic. You either have it or you don't have it. But you can test for work ethic and people can showcase work ethic to you. The third one, I've come to the conclusion, and again, it's been told by smarter people than me before, but investing is an EQ business and not an IQ business. You don't have to be really smarter to be an investor. It's about mental flexibility. The way I've thought about this is I look for people who have showcased to me persistence and grit. The capacity to be beaten down, punched in the face, and coming back stronger than ever is so important to me. Again, what I've noticed with resumes are when people have been very successful in life, they've never seen hardship. When they see that first hardship, they cave. I don't want that. I want people who have seen hardship and who've just come back with the heart of a champion. And then the fourth thing is something I really have thought deep and hard about respect to.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“I've been hiring people through my engineering days, through my investor days for a few years now. And I love mentoring young people. It's one of my personal pet passions in life is to find that diamond in the rough, like who doesn't even know how good sheer he is. It makes me very excited because that's just the small part I can give back to this amazing community of thoughtful people. What I come to the conclusion is resumes are pretty much useless to me. I look for what I call four uncoachable traits. And this goes back to my original point of man, I would love to find that brilliant young investor hiding in South Africa that nobody knows about. Because I promise you.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“That option engagement usually freemium tools, which is why also like Atlasian Australia. I love Canva out in Australia as well. Amazing company. And guess what? We had to build a logo. I had to choices. I could either hire a designer. I'm like, you know what, screw it? I'm just going to build it on Canva. It took me 10 minutes to build a logo. It looked beautiful. Me, I just became part of the TAM of Canva. I'm a designer in quotes. Again, reducing friction, making life easy for developers. and usually open source sold by a freemium model are four or five of those key kis i'm looking for”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Look for virality again. I look for number of Gits, number of developers using it, the amount of interaction on developer forums. So for me, I look at, and mostly these developer tools happen to be open source companies. The MongoDBs are super interesting. The Octas are super interesting, providing single sign-on for companies. Anything that can allow a developer instead of integrating an SDK and doing a bunch of work, we do a simple API call and get your job done just the way a consumer wants to click and get food delivered in 30 minutes or less, it looks and feels to me like an internet company. Companies, I look at the outside again. I wouldn't call us as experts in developer tools just yet, but it looks and feels to me like these companies can create that 50, 100, 150 billion dollar businesses. I mean, Twilio, in my mind, will absolutely bim a 200 plus billion dollar business. For me, the few things are.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Acquiring Slack. I think it's about changing the mentality of a organization, which was going down the path of being a little archaic.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say for enterprise, listen, I don't do enterprise software because generally I don't understand businesses that need large sales forces, big closing times. It's not part of what I call internet style investing. So I would not be the right person to talk about it. But I'll tell you, like, listen, with Slack being acquired by Salesforce, I actually think part of the entire acquisition there is to bring that mindset into a hulking organization like Salesforce, which is getting long in the tooth at this point because the products are not exactly friendly or consumer facing. I think Mark Benioff being the genius he is, he realizes that we can't go down the path of Oracle, which basically everyone hates. Instant, why not transform the organization within? I think it's very smart because that's why there's a Brett Taylor and a Stuart Butterfield in the business going forward. Look at the change in mentality happening in that business. We don't own Salesforce stock, but I would suspect there is more to the acquisition of Slack than just”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Both these companies, but consumer facing companies for the enterprise, I actually think consumer companies have a really good shot at cracking this. Now, they have to focus on it. Facebook has tried Facebook workplace. By dance is trying Lark. I look for entrepreneurs or companies that are bringing consumer-facing behavior like internet companies to the workforce. This reminds me of times back in the day where people would refuse use of BlackBerry because they said, we have one device. We want to use our Apple device. Let the CIO change their security motion around me. I refuse to go to a different device. His consumers are powerful at the end of it and employees are powerful at the end of it. For consumer software, the exact same feature said that we think about on internet companies applies to enterprise companies as well.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, for consumer software, I'm talking about things like Zoom and Slack. I look for the network effects associated with them. I remember a time when, gosh, before Stuart ended up sending his company to Salesforce, Microsoft Teams was going to dominate the business and crush Slack. And I was like, this is actually impossible. They actually cannot do it. What they can do is bundle teams with all their corporate customers, but every forward-looking consumer in the forward-looking business and consumer in the world will be on Slack. So that was Slack specifically. Zoom actually, I think, used the original internet concept of reducing friction. Go back three years before Zoom. Remember how painful it was to download an app like BlueJeans or Skype? It was so painful. People sent me a Blue Jeans link. I'm like, please guys, let's not do it. Let's go to Zoom. You want one click, start talking to somebody. It has to be like your natural behavior. So I think.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of all its regulation and legislation that drives the difference. So in the UK, if I'm not mistaken, I've looked at this company called Monzo in the UK, which is a phenomenal kind of like next gen manager finances, credit card for consumers, and now for businesses. I think when I met the CEO one day, they were talking about, hey, what do we do in the US? Everyone wants to be in the US because I think the stat goes something like this. For every order that they process in the UK, the equivalent order would make them six times more money. because of the regulation in the UK and Europe more generally, the payment processing rates are far lower. Also, by the way, unlike the US, debit is a bigger portion in Europe, generally speaking. And German is just a capital.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's gone, the product is flying off the shelf square once you build this unfair piece of hardware distribution layer. Well, you can put software on top of it and monetize that, which is what they did with payments. Those are the two things I look for. Can you add value to the merchant by increasing conversion rates, reduce transaction losses? And if you're omnichannel, same story. Can you actually reconcile your omnichannel, your online and your offline trades kind of in the same ecosystem? And so which is why Adian so powerful because they have one of the best payment systems in the world period.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Recreat is a rake too far. Only way to justify that is can you increase conversion rates for the merchant and bring new customers to them, either via buy now, pay later or some financing or whatever you have to justify that 200, 300 bips you are charging them. This is for the bigger merchants. Now for the smaller merchants, it's equally the smaller merchants are not that price sensitive. But again, you are bringing new customers and allowing them to start a business, which is why Square is so powerful. I mean, when we invested in Square, gosh, three or four years ago at $12 a share, I mean, there was no cash app, but it was so brilliant to see how they had this piece of hardware that looked and felt like Apple that you go to almost every wall race. So the test we did, I went to Walgreens all over San Francisco. I know it's the wrong sample size. I get it. But I asked them, how many days does it take for these square dongles to get stocked out? And they would say typically two days.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, companies pay between 150 and 300 bips, which is ridiculous. It's very expensive. It's a tax on the entire system. So the only way to justify the tax is as payment schemes get more and more complicated across multiple kinds of payment schemes, are you able to bring more people into the ecosystem, so your sales increase? Square Cash app is powerful because it brings 100 million underbank people in America, making less than $75,000 into the formal payments ecosystem. That's why it's so powerful. Stripe is powerful because arguably it has the best conversion ratios and the lowest kind of transactional loss ratios of any payments company in the world. And the same thing is true with Adian. Now, and financial in China is a different beast altogether. That's an entire super app, which is just a completely different ecosystem. So that's what I look for in payments companies. I mean, especially in America, that.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Them aside, but almost in every other case, there are merchant processors that are aggregators. And just the way there are usually three to ten to 15 local as well as national ecosystems around payments processing, I think there won't be as many offline, but there will be two or three or four. The three companies I personally love are Adian and Square in the public markets. We own both those companies and the private markets obviously have Stripe NV. And one of my biggest mistakes is not investing in Stripe, $92 billion ago, $8 billion in market cap. So I guess I'm the doofus here, but my God, they have built a machine that works. What do I look for primarily in a payments business? I actually look for what conversion gains are you able to create for a merchant? Payments, by the way, is a tax and a bane on the universe. Nobody wants to pay for payments. And the US especially is very expensive.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“When people talk about these winner-take all markets, I don't have a view on these, except for that I look at what has happened in the past. People talk about, oh my God, Amazon will rule e-commerce. That's just not true because guess what? There are many large companies built in the offline world servicing consumers. So you have a Walmart, which by the way was the old version of Amazon. This tool will evolve, but around a Walmart also came a TJ Maxx, also came a William Sonoma, also came a Target that I'm going to be many of these companies. There's nothing called winner take all anymore. Athletics in my mind, in fact, one of the biggest mistakes I made in my life, and I think a lot of investors is be scared by what the big platforms will do. Now, in certain social and in search, you don't really have a winner take all market, but in e-commerce, I'm coming to the conclusion that's just not true anymore. So back to payments. It's the same thing. It's very hard to dislodge VSI and MasterCard. I think those are the two best businesses in the world, period. You can't do anything about them. It's like Google and Facebook, you can't touch them.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“World, I've seen that has changed their DNA to go from a capital light high margin business to be able to be street fighters is a company in India called Zamato. Another company that will go public in the next 12 to 24 months to close the loop in India, they have really impressed me in the way they've changed their DNA to be able to do kind of a high CapEx, high burn operational heavy business. Look at Google, for example. struggles to do shopping struggles cannot do it. In fact, Google's been selling phones for a long time, but I'm still an Android user, but you do the unboxing who nobody gets delighted opening up an Android device. You get delighted opening an Apple device or even an Oculus device is delightful. Google just cannot do it. But guess what? Amazon pivoted to turning on advertising on the dime. So that's my point. Once you build that process muscle, that is your moat. I don't think anybody can touch you after that. It's too hard.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“At supply side and local network effects. I love on demand businesses because, one, the TAM is huge. Two, once you crack it, that's your mode. Nobody can touch you after that because you've either gotten to some level of dominance either because of product excellence, process excellence. And back in the day, we used to seduce by the fact that capital was a competitive mode and capital is no longer a competitive mode. So product and process work. On demand is a hand-to-hand street fight business on the ground. Street by street location by location street fighter business. For me, product and process and supply exclusivity is what drives on-demand companies forward. Which is why DoDash does so well because they have the best process in the world to go and fight street by street. And it's very hard for a traditional marketplace to change their DNA. In fact, I would argue the only company in the world.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Class in it to make sure you either control the supply side so that nobody else can come in and take the supply away from you.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the thing is, marketplaces ultimately, I think, have to devolve into some sort of full stack solution. We were all seduced into the world of, A, a pure play marketplace will work forever. I think we have now learned over the last five or six years that that's not going to work, which is why Grubhub is facing a difficult scenario right now. A pure play marketplace when somebody with a first party solution that provides price slash inconvenience gets you faster, a pure play marketplace cannot survive. So I actually think as e-commerce companies evolve. There's nothing called an e-commerce company anymore. There's only omni-channel businesses. Amazon has offline and offline businesses do e-commerce just the way you have a full stack solution for food and car railing, et cetera, et cetera. I think a pure marketplace as a standalone basis may have issues going forward. Every CEO, every entrepreneur thinking of building up your marketplace, it'll work to hack your way into some growth, but you really want to put some.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“I did not realize it, but mole walking is a thing. People love going to a mall because it's a form of entertainment. So for me, I am looking for products that delight the customer, which is why, by the way, etc works. It's cute, interesting stuff made by artisans with love that consumers enjoy browsing and shopping. This is why Poshmark works. People love selling their stuff to other people and people love browsing stuff. It's just a human need to connect with. It is why Pindodo works wonderfully well in China. It's a human need to make things fun. Let me buy a few things together. Back to e-commerce, unity economics, convenience, and then going forward, is there something that hooks the consumer that makes it really entertaining? It's something I look for.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“It may even be a problem for Amazon. For me, on the product side, it is about unity economics on actually selling the product and making money on every single unit to sell. On the consumer side, the convenience factor of actually getting it within a period of time that doesn't annoy you. Number three, and this is what's really getting interesting in marketplaces, is man, US e-commerce is so boring. It is so boring. Think about the offline world. You've got big box retailers, which is by the way very much an American phenomenon. It doesn't happen most of the rest of the world. You've got the mall and you've got High Street, luxury fashion. Luxury is for a few rich people, so ignore that for a second. Amazon effectively is the big box retailer with infinite selection. What about the mall? I came to America for the first time. I learned the concept of mall walking. I did not notice it.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sometimes e-commerce companies are marketplaces and vice versa. When you talk about e-commerce, I'm assuming you talk about first party. So the first thing you want to see in an e-commerce business is, do you get to positive contribution margins on a product sold? This is excluding all discounts. Number two is I look very carefully for logistics. How long does it take for it to get to you? This is a world where I think people will pay for convenience and I don't see that trend changing anytime soon. If you ignore the obvious bear case of, oh, you know what, it's too expensive to order a burrito because it costs seven bucks more on Uber Eats, people will pay for convenience. And again, in that spectrum of, hey, can I get Amazon became a big deal because they went from one week shipping to two day shipping to one day shipping? The problem is, can't they get to two hour shipping, which is what Doorash and Instacard does for you? If they don't cross that cast,”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Assuming you're talking about Netflix, for example NFS or Spotify. It is the depth and quality of content. That's the only thing that matters. If you have high quality content, the question then is, is it affordable? Is it cheap enough to use it every day or every month and pay $8, $10? And then I would assume that retention of users, time spent again, would be really important. So quality of content. So Netflix is a wonderful model because it's a true utility. If you're cutting the cord, before you buy Disney Plus and Hulu, you're buying Netflix. So it's water in the tab. Again, I would say with Netflix, it is affordability, quality of content, and stickiness abusers.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Only two things that matter in ad business. One is scale of users and therefore time spent. So time spent per DAU per day. That's the one thing that matters. And second, on the supply side, the quality of tools to onboard advertisers. Because the first, many advertisers are going to be small and medium businesses. You can't sell to big enterprises. So when we invested in ByteDance, only one thing that mattered. Can you retain users? Did you get to some scale of 100 million users? How much time do they spend on the system? Same story with Roblox, by the way. Now, Roblox will not advertise on an advertising basis, but guess what? They could turn it on and it'll be incredibly bad. People spend two hours a day. For me, a pure play ad model is scale of users, time spent per DAU per day, ideally. And on the supply side, the quality of tools available to very quickly onboard users.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“About the three part framework that helped Amazon scale price frequency convenience. Well, let's give price to the local store. Let's give them convenience and let's give them infinite selection. Well, did you have a real business? Odan went from zero to close to gosh, two and a half billion dollars in volume exiting this year in less than three years. That is hyperscale India. And again, they burn money, but again, if you look at them on a unit economic basis, contribution margin positive. And guess what? The local stores love them. And they've created that trustee equation between the local store and the manufacturer. Once you build an infrastructure, nobody can touch you. Udan will be another candidate that goes public in a few years, will be listed on the NASDAQ. And the best part about India is Indian companies already realize that the real value equity creation happens in the US. What do they do from the get-go? They are organized as Singapore.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“That you could reduce prices and you could collapse the six or seven layers of distribution via internet scale distribution. That's internet scale again. You're increasing efficiency in these markets. Once we saw that worked, we're like, well, this should work in India because you've seen these case studies in India where Unilever has to put the special supply chains in place to basically be able to sell a satet of shampoo for 10 pennies in a fourth tier town. It's a supply chain nightmare. Now, what if you collapse that? If you collapse that, you went to the manufacturer or the wholesaler and directly send stuff to the small store. Well, that should produce a very big company with lots of margin to be taken out of the system. And then why is the small store important? Because again, Indian consumers are frugal. They do not trust e-commerce companies, which is why no e-commerce company front-end can really scale. They still trust the local store.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“They go public whenever they go public, they will be compared to an after pay, to an affirm, to a square, and they have all the right characteristics to do so. So look at the quality and people want access to growth markets. And India is absolutely one of the big growth markets of the world. And they have a business model that works really well. The other company we would talk about is Odan. This is the beauty of international investing in internet because human nature is the same. Whether you live in America, Western Europe, India or China, you're the same person. You want to eat food, you want to buy your groceries. You want to get stuff from a shop. It's the same thing. This is different than software where it's a very unique system that works in one part of the world, maybe not in a different part of the world. So with Pindo, though, when we invest in the IPO a couple of years ago, outside of the gamified front end, which is all valuable everything else, the genius there was to go to the manufacturer and go to the source and go to the farm to buy produce wholesale.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Time will be different. The data and the scale these companies tell me it's different this time. Now we will see. Cover companies that I've invested in will likely go public next year and that is very exciting. And these companies are doing $30, $40 billion of volume already in payments, for example. So I want to highlight two companies here. Two companies I'm excited about in India right now is Pine Labs and Udan. They're both investments I made. Pine Labs think of it as a square of India in many ways. They have this POS system. It goes to hundreds of thousands of SMBs and people accept credit cards. What is COVID done for them? Obviously, during a couple of months of COVID, volumes declined 70%. But again, you see the resilience, how they came back strong. And now they're above COVID levels. And frankly, now there's this huge pull function because every merchant in India is like, I've got to take digital transactions. L's, I don't have a business number one. Number two is I want credit so that paylaid a business is on fire right now.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“When you take it to a different part of the world, it becomes a walk in the park, which is why I think over the next 20 years, a lot of SaaS companies are going to come out of India because you have this unfair advantage of low costs in India, but yet you sell to American consumers and American businesses. Now, the last thing that ties us all together is now the emerging scale of companies and the number of IPOs that have come out of India in the next one to five years. And these are going to be billion dollar exits, three, four, five, ten billion dollar companies. This is why India is so exciting. I think where the cusp of kind of that hockey stick opportunity, because you've now got a young and extremely entrepreneurial ecosystem that all wants to go and build wealth, that should remind us of America in the 1800s. And then the last piece, of course, is getting the exits going. India is always disappointed on exits. I am hoping.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Area, learn from the best here and move back. So that's number one. Number two, though, is the democratization of knowledge. I mean, Patrick, think about the service you're doing on this podcast. 10 years ago, the smartest people would not be teaching us everything. And now they are. Knowledge thanks to the internet, thanks to Twitter, thanks to the amount of information on blogs and the access to smart people has basically allowed everybody to create solutions when they didn't have a chance to do before. Knowledge has been democratized. Now, when those two things happen as people get richer, what happens? Ambitions get bigger. And now the ambitions of Indian entrepreneurs are world class. I can put them in front of anybody and they want to build world-class companies sitting in India. Why can they do it better than most? Because again, all these entrepreneurs grew up in an era of frugality. Indians are extremely frugal people. If you can build a business and have the unit economics work in India,”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“And they would hold their own. There are smart entrepreneurs, every part of the world, and the beauty of the next 20 or 30 years are all these geniuses will be discovered because capital will find them and the opportunity is going to be there in front of them. The quality of people and the quality of product every single wave, every single couple of years just getting better and better and better. Why is that the case? Pre-COVID, I think it's something as simple as innovation in airline ecosystems. Now you can fly San Francisco to Delhi and SF and to Bangalore direct in 19 hours. I remember coming to America 20 years ago. It was a chore to come to America, get on a plane from Mumbai, end up somewhere in Europe and then connect to America and then go to the third town. It's just painful. Now we have one stop direct flights between San Francisco and Bangalore generally speaking or Delhi. And I am seeing over the last few years almost every month we would have Indian entrepreneurs come by the base.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“And again, those were good, those created the first I would call billionaires in India on the back of technology investing when Flipcot sold to Walmart. Then after the great financial crisis where we kind of saw what I call wave after wave of super smart entrepreneurs willing to build for India first because the market obviously was very big. It's a very young market and it's upwardly mobile, which has all the right characteristics to go and to build big companies. But through 2010 till 2020, it's been a bit of a slog. But at the end of 10 years, if you want a successful ecosystem, you need three things. You need talent, which is there, aplenty. You need capital, which was there, but keeps going in and out as investors come in and go out because of the market. But then you need exits. First of all, what I'd say with talent is I've been investing in India for gosh, close to nine years now. I would be confident putting some of those entrepreneurs in front of any entrepreneur around the world.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's start with India first. I mean, obviously, I am of Indian origin, so brought a little bit of a soft corner there. But I also cut my teeth investing in the private companies in India first. So this is where I actually learned investing in private companies. Now, let's level set this a little bit, acknowledging the negatives. India has always had a lot of opportunity, but has disappointed for the most part. We haven't seen, except for one, maybe a make-by trip on the US exchanges, we haven't seen major Indian companies come to scale and become real long-term public companies we can all invest behind. But this is not to say there's a lack of talent or a lack of opportunity in India. So let's talk about the waves of Indian entrepreneurship. We had the first wave in the late 1990s. There were a couple of good companies built, a couple of private exits, but it kind of fizzled out. And then we had a bit of scarcity or a bit of a black hole.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's almost evil genius, and this is what creates trillion dollar businesses. Once you get those things going, there is no limit to which you can grow. It's literally as far as the eye can see.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“For internal productivity. It's called LARC. It effectively is file sharing, meets collaboration, meets on-click video chats and video streaming, meets email, meets a couple of other things. And they took that and they started using it internally and everybody had to use as a wonderful gamify consumer driven product for the enterprise. And these guys do consumer really, really well. And now they've taken that product out and they basically said, okay, let's sell it to the rest of the world. Starting in the UK, I think a couple of years ago, you can actually buy LARC, I think, for $8 per person per month. I haven't used the product internally, but again, it tells you that they are looking at the great companies in America and saying, how can we be that? It's a learning organization at its core. So I would be, unless something untoward happens, this is going to be one of the trillion dollar businesses the world is seeing.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“What about such an interesting point on AWS? Because a lot of what Amazon's genius was is they took pieces of OpEx for themselves and set it free in the world and then created that platform for everybody else. I see the same patterns in ByDance as well. So let's talk about this product. Imagine that P&L in 2021 when they hopefully go public. It'll have three line items. It'll have the advertising business. It'll have a value added services business. And it'll have an enterprise business. Let's talk about the enterprise business for a second. So one of the challenges in China is there are no great homegrown solutions for software. We have a Slack and we just have a bunch of things we can use off the shelf. This morning I was sitting on drone research and I thought it was a wonderful product. But those products don't exist in China, which is also why I think the opportunity for cloud in China for companies like Baba is so immense ahead of them. What did ByteDance do? Well, ByteDance basically put together a bunch of products and they found it quite anemic and mediocre. So what they did is they built their own product.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Being conducted on Google. You've heard all the stories about it. At its core, there is a software and machine learning driven enterprise. So then the question is, how do they create applications? What's going to be interesting when Bytance goes public next year? And if you look at this company over the next four or five years is people will not quite know what to make of it. We in the Western world look at Facebook and say, we've got four big applications, right? We've got WhatsApp, Messenger, the Big Blue app, and Instagram. Google has 10 properties. 10Cent has two properties. Bytance will look like one or two properties and a bunch of rats, cats, and dogs. And the reason why it looked like that is I don't even think, unlike many companies that we're used to in the US where you've got a big visionary leader who has a view on this is the way the world looks like. Zhang Yi Ming is what I call, he's an amazing leader, but he's sort of one of the most flexible minds I met in my life. What I mean by that is the company.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“That guy clicked on a couple of pictures because it was right there because they're going to entice you. And then the machine went off on a complete tangent of its own and just kept showing him picture after picture. And he's like, this is a really crappy product experience. A couple of clicks took him down the wrong rabbit hole. But that is what really struck us as my God. It's the personalization algorithm that is so powerful here. The machine just adjusts to your requests very, very, very quickly. So that's number one. Number two, people don't understand the infrastructure and the depth of hardware and software being built inside the organization. This company is one of the biggest buyers of Nvidia GPUs in the world. If you talk to the management team a few years ago, the company they would really idolize is Google. And what is special about Google? Google basically built some of the most incredible internet infrastructure for its own because the technology at the time was not enough to satisfy the volume of search queries.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, to be clear, when we invested in Byte Dance Gosh four years ago, they did not have TikTok. There was no TikTok. Bytance is not an application business. A lot of people don't understand about Byte Dance is right now everyone thinks about us as big consumer phenomenon in the US and in China, but it wasn't always the case. And it's important to understand what underlies the business. First of all, the company at its core has the best machine learning and the best personalization algorithms in the world period, one of the best. Almost to the point if in the Western world, we would call it creepy, but it works really well. I see this with respected felt creepies when we were doing the testing of the old TR application across five or six different phones sitting in our office in Menlo Park. I distinctly remember one of my colleagues telling me, man, why are we investing in this piece of crap? It's just showing me pictures of skimpy women, skimpily clad women. What are you talking about? Like I'm seeing sports and it turns out that”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“When DoorDash is talking about adding new verticals and multiverticality with their food business, which is also why we invested in RAPI, because that has to be a multivertical business starting in the beginning. Frequency is absolutely preferable. But if you don't have it, it doesn't matter. You can create loyalty around it and programs around it that keeps you sticky on the platform. I mean, this is what booking.com. Booking.com is wonderful because one, if you want to go to Europe and book a hotel, well, you've got no choice but to do booking.com. But number two is the guaranteed cancellation with no pricing. So you don't feel like you've got to call Expedius icky customer support to get your hotel reimbursement. And then they have the genius. And by the way, loyalty has been a marketing technique from the beginning. Uber did a really good job, for example, with their fintech platform and their Uber car. The Uber car, you collect so many points on Uber that it engenders loyalty to the Uber eats and the Uber platform.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is not bundled into my car. When I buy a car, bundle me cheap insurance. There are many ways, even in a non-high frequency purchase channel to engender loyalty and engender frequency. All things equal, I love frequency. But on the other hand, let's talk about food, which is the highest frequency business model. I love DoorDash. I love swiggy. I love Zumato. I love Rappi, the more frequency you have, the better. The challenge, of course, in those models are because the AOVs are so small, the average order values are so small at this point at least, the worry always is, man, the consumer surplus, what the consumer has to pay on top of the cost of food, for example, may be too much to bear to engender high frequency over time. High frequency also kind of in e-commerce cuts the wrong way. The happy middle is somewhere in the middle, where that's why Amazon is such a wonderful business model, which is why I'm very excited.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“I tell you, but if you ignore that for a second, see frequency matters, but again, even if a company doesn't have a high frequency use case, you can insert frequency in the mix. So one thing I've been telling the Carbana team for a few years is you should build a community around Carvana. Once you have a car, I should have a subscription product where I pay, I don't know, X amount of dollars per month of a year, but I get all my checks done instead of buying a maintenance package and paying, I don't know, five grand for it or whatever or buying an extended warranty, just maintain the vehicle better for me. Let me pay you X amount of dollars per month where I can get my oil checks in your network. Just general checkups, et cetera, et cetera, and build a loyalty program around it. Because again, if you build a loyalty program, in itself that creates stickiness. Two, because again, you felt taken care of, you know, bundle and insurance, everyone has to buy insurance. I still don't understand why insurance.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“All things being equal, high margins are better than low margins and high frequency rather than low frequency. But again, we're talking about converting the entire global GDP into the internet. So not everything is high frequency in life. If you have a business model that has high margins and high frequency, well, you're going to build a trillion dollar business and carbon is going to build a $50 billion. That's the only difference. The equity scale is going to be bigger. Hey, if you find me the next Byte Dance, please tell me about it.”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“Single day better before you know it, the compounding effects put you so far out of the competition nobody can touch you anymore. So we can argue about the unit economics and oh by the way the numbers are padded etc etc but from a internet consumer perspective”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source
“My car, the first thing they did is send me an email said, Okay, here's a FedEx label. Please ship one key back to us. And then we will call you in a week as to when we can pick the car up and then do 10 different things. Oh, that was terrible. Carvana was paying me $1,000 lesser. I go there literally within two minutes of filling the application up. I get a automated link to set up a time to pick up my car within 48 hours. What do you think I did? Listen, unfortunately enough to give up $1,000. Many people are not, but it is the obsession on reducing friction that people just don't get about Carvana and none of the competitors come close to it. Every day they increase their operations just a little better and a little better. They just put base between them and everybody else behind them. Hamilton Helmer talks about his seventh power, which is process. You've got to be in the works. You've got to do it, do it just a little bit every...”
2021-01-05 · Invest Like the Best · Ram Parameswaran - Internet Scale Businesses – [Invest Like the Best, EP.207] · IDENTIFIED FROM THE TRANSCRIPT · source