Tarun Kumar
@tarunmallappa
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deep-dives & long-form content on business, macros, finance, economics, venture-investing; not a VC; long on India 🇮🇳; bibliophile📚; apolitical;
Bangalore, India
Joined November 2009
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Playing the long-game is not fashionable anymore. It's a lost/losing art. Everyone wants success as of tomorrow. A collection of reads to help you better at long term thinking.
1) Jason Roberts' Luck Surface Area which essentially means that the amount of serendipity that will
As a species we do well by getting as many people as possible to be more long term v/s short term.
All social norms, religions and laws are tools that allow the species to be more long term.
All periods we didn’t do well and caused destruction was when we were short term.
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There's a culture in Big4s - if someone leaves office at 6PM, the managers ask "half-day kya" ?
EY will undertake a massive campaign internally, to undo the damage this episode has done to them;
In the short-term, there will be 'forced' relaxations on work-hours; there will
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If you are,
- in India
- in your 20s
- have the urge to get into manufacturing
Get a small set-up going & start manufacturing engineering goods for exports. Cater to the OEMs and large exporters. You will thank me in 10 years.
India's engineering exports is a $100 Bn industry
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For the un-initiated, EY India is not a real company. Its just an Indian family firm who has signed-up to adopt the brand and policies of a global structure.
Mr Rajeev Memani is the un-contested emperor of a famiky-run kingdom which he 'bequeathed' from his father in a very
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The Birlas want a slice of the Indian paints’ pie. And they are going after the market-leader, Asian Paints.
1. Just 2 months ago, this nondescript store near my house carried an exclusive Asian Paints board for over 10 years. But today, I saw a new one.. 👇
Piqued by
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Airports are supposed to be 'shitty' because they are just a transit point. In India people don't understand that the cost of having fancy airports ultimately shows up on the airfares.
Facts: SF airport is owned by the state. Many fancy airports in India are owned by
Why is the San Francisco airport so shit?
Had the worst experience ever!
Extremely rude staff at United Air. Literally throws bags on the belt!
The whole terminal has a very depressing vibe to it(I'm used to Bangalore T2 airport)
Seats/floors are dirty.
Dissappointed :/
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After analysing the ice-creams market in India, I have come to this conclusion that one cannot build a profitable ice-cream company in India without owning the milk supply-chain.
Almost all of the leading (profitable) players incl Amul, Arun, HUL, MotherDiary source the key
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The single most important factor fuelling India's consumption story is not purchasing-power or mobile penetration, It's not even e-commerce. It's a cultural one - Growth in nuclear families. This cultural change will cause a tectonic shift in the social fabric of our country. 👇
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If I said that, Britannia created share-holder wealth not by increasing revenue or adding new products but by optimising their truck utilisation capacity, you will mock me. But it's true. A story of picture-perfect execution in CPG business/.
- This P&L snapshot is from
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Rare Rabbit - A story of how companies can ride the 'premiumisation' wave in India if they get the CM1 & CM2 right.
> 25+ years old company. Was largely earning from exports. Stable GMs of 65%+. Net margins of ~5-6%. But high-risk. Not a sexy business to be in.
> 2nd
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There’s a crisis waiting to implode in China’s EV industry and India must take advantage of it.
International Energy Agency (IEA) in it’s ‘Global EV Outlook 2024’ has claimed that in 2023, China has used less than 40% of the batteries it produced which implies that 60% of the
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The Premium-isation of India:
Earlier this year, a global bank came up with a hypothesis that number of ‘affluent’ Indians will grow from 6 Crores to 10 Crores in the next 4 years and this growth will fuel an unseen demand for mass-premium products among the consumers.
[ We
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Is Uber's exit from India imminent now ?
Or will the global management relegate India to a 'crucible' for innovation and keep the lights-on ?
1. Uber Inc reported revenues of $19 Bn from ride-hailing in fiscal 23 apart from their delivery business which contributed another .
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Next time, you are at a BlueTokai and the cashier tries to upsell a croissant or muffin, pull this thread and be reminded that they just need an extra 108/- from your wallet to turn profitable.
Want to know how, read this 👇
1) Blue Tokai operates 92 outlets. Assuming all of
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@kritarthmittal
I don’t why people are confusing niceties of a man and regulatory oversight; these are two totally different universes; and both can exist; it’s normal; everyone should move on and let the man figure out his next step - step down and let a professional team rebuild the trust of
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If you are in your 20s, one of the most important things to develop is self-awareness; This alone can help one make better career choices in life.
Watch this 2 minute video to understand the nuance between Skill Vs Talent and you will understand why India has a (very big)
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It's official - India's population has started it's decent. Not population growth. But the population itself.
1. India's fertility rate as per official estimates has fallen below the gold-standard of 2.1 which is regarded as the replacement rate. This is expected to go down to
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India is at a certain (arithmetic) inflection point where China was in 2006 which IMO is a rather important milestone in the economic history of this country.
Where we grow from here,
....how we go &
.......... how fast we go, is now upto us, as a nation.
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While the entire tech-twitter was busy deciphering the drama that is unfolding at OpenAI's office,
@BlumeVentures
decided to drop a diamond.
They published a detailed work on 0-$1Mn (cross-border) journey for Indian start-ups . I read the entire report and agree with each and
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@GabbbarSingh
I don’t think you understand the gravity of the guy and the terrain in which he operated. You should speak to someone about this and then voice your opinion.
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Exhibit: On what to manufacture for export.
Source: Engineering Export Promotion Council of India (EEPC) website.
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Nazara Tech is not your usual company. It's an 'acquisition platform' with a lot of similarities to a VC !
Fundamentally, the promoters of Nazara leverage their distribution network (and cash) to help young companies find ground & achieve profitable growth.
(A unique story of
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How to win in the Indian consumer game 👇
Just a fraction. But I hope you get the drift ? ;)
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Ather's capacity utilisation at their existing facility is just under 30%.
Yet, a third of (fresh-issue) proceeds from this IPO, will go towards setting-up a facility in Maharashtra at the cost of ~1000 Crores.
Wild.
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1. The government of India has set itself an ambitious goal of taking it's goods exports to $10 Tn over the next 23 years; i.e. by 2047 & engineering goods take a lion's share in it.
Yes, the graph looks beautiful and all but the task ahead is nothing short of a miracle and
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Ather sells ~70% of it's volumes in South; Is this a company problem or country problem ?
Genuinely asking.
Source: Ather's DRHP
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Ice-cream - The Achilles' Heel of non-diary companies.
Unilever - A $60 Bn global juggernaut exiting it's $10 Bn ice-cream business world-wide is the story you need to read, if you want to learn about diversification & focus. 👇
It'll be interesting to see what HUL's strategy
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India should disproportionately incentivise apparel manufacturing if it has to win the 'Viksit Bharat 2047' game.
I postulate on ...
The curious case of
- the 'flat-decade' in India's exports
- the ambitious 'viksit-bharat' goal
- why apparels industry is important for us
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All D2C brands are not created equal:
D2C is a hard business to build; The glamour which comes by the brand's popularity cannot be a proxy for success;
So, if you are thinking of going down the D2C route, it's good to be mindful about choosing to be a 'category creator' or
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Wow!
This is exactly the kind of news that founders building for Indian consumer sector, need to see at the start of a new year. Just maniacal execution by the team at
@UltrahumanHQ
Congratulations team. Wishing you the $100Mn and beyond, soon.
@deeppurpled
🫡
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Bro promoted venture funds to publish their DPIs like no one else.
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Engineering has it's share of downsides;
- It's very capital intensive
- There's cyclicity in demand
- Requires patient-capital to create tech-driven IPs
How do we then go from here ?
1. The government has to create pools of 'patient capital' which will encourage entrepreneurs
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Build 'in' Bharat & not 'for' Bharat
(a long contrarian read)
The next generation of unicorns will be built for Bharat, says
@Accel
's
@_AnandDaniel
.
Bharat, representing middle-income households in India's Tier 2, Tier 3, and rural areas, is a substantial market filled with opportunities. In this interview with
@TechCrunch
, Anand shares
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Next time someone tells you I'm buying a EV for environmental reasons, show them this.👇
So much for 'end of ICE-Age' rhetoric;
PS: Appreciate Ather's honesty to actually put this out in their DRHP;
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If you are wondering what to build, here's how the D2C market is expected to evolve in the next 4 years.
- Home-essentials is expected to grow the most but remains the hardest to crack with least margins.
- Beauty, personal care & Fashion is high-margin and has fastest path
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7. Conclusion:
Asian Paints has led the industry for over 75 years through consistent product innovation, technology and superior distribution. The brand has fortified its name in the minds of home-builders as a synonym for trust & quality.
Paints, although a commodity, is
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The FirstCry juggernaut is unstoppable but they can definitely do more with less. 👇
(Part II of FirstCry DRHP deep-dive)
1. FirstCry is a 14 year old juggernaut taking with it almost 35+ group companies which are either selling or purchasing various forms of goods or services
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3. Ice-cream is a ~20,000 crore market in India and 5 players own the market of which Amul has the lion's share of almost 50%.
This market is expected to double in the next 2-3 years and some new brands are trying to play for the crumbs thanks to q-commerce which has made it
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2. Just to put things into perspective, we need to grow our exports consistently at 17% over the next 6 years untill 2030 to reach the 1st goal of $ 2Tn.
The next 10 years (2031-2040) @ 10.8% consistently.
The last 7 years (2041-2047) 9.5% consistently.
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If this trend line doesn't go up, many consumer DCF models are at risk.
Private consumption in Indian households is yet to breach the pre-covid levels. So, all the frenzy in consumer-investments backed by buoyant outlook on demand, will go through some, much-required, validation
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3. The war-chest is big & available immediately.
Aditya Birla Group, the parent of Opus Paints has spent 7000 Cr towards setting-up of 3 plants to manufacture paints which would cater to bring the group Rs. 10,000 Crores in revenue over 3 years.
The plants are operational, as
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2. Asian's stranglehold up for disruption ?
Asian Paints has 44% of the Indian paints market and it has maintained this stranglehold for over 50 years ever since their founder found an opportunity when paint imports were banned by govt of India in the pre-independence era.. but
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The founder of Arun Ice-creams when asked why he doesn't interviews often 👇
".. the brand & the product should speak about the Company. Not the personalities behind it."
Hatsun Agro's market-cap is 22,000+ Crore.
This is all the more important today because cries for Mr
🇮🇳founders are spending an *unprecedented* amount of time on events and podcasts --- am not sure how they are measuring the outcome and if it is better than everything else they could dedicate that time too.
often the content is *about them and their company* instead of about
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3. Historically, we have grown exports at 20%+ consistently for few years but then again there's been a big gap since those 'golden years'.
The last (forgettable) decade perhaps went in postulating on what's the right way forward, COVID took-away a few years. So net, we have to
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2. The outcomes are for anyone to see 👇This after raising almost 450 Cr in venture capital from marquee investors.
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There's a trend that is playing out in the consumer space.
1) Take an old-fashioned (commodity) product - coffee; tea; snacks etc.,
2) Work on branding & packaging;
3) Invest 2-3 years in building distribution - Outlets; presence across super-markets; franchises etc.,
4)
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4. Nervousness has set-in at home.
Investors of Asian Paints are not happy with the pace & manner at which the Birlas have been executing their plans. All loyalties are being put to test for Asian Paints.
a. in the last 2 years, their employee loyalties were tested as the
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All is (still) not well in the M&M household. A classic case of vital-few & trivial-many !
*long post alert*
A look at the group’s FY24 profit pool concentration clearly shows that the entire market-cap of 3.5L Cr is singly dependent on one segment – Automotive.
And if one
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1) Raising a venture fund is incredibly hard first-time;
2) The 7-hour rule for taking a LP cheque;
3) The 15-20 year gestation period in venture;
This and many more mind-blowing facts from a hard-lined VC who also happens to be from my alma-mater :)
1)
@BlumeVentures
's
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Let's wait for EY to fix the work- culture and then I will highlight the other side of these big firms - how they treat women.
How few men in the garb of managers and partners, raking in high billings for the firm, 'ask' for women on their team so that they can exploit them,
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Sequoia, the Educationist:
Between 2006 & 2010, Sequoia India made some reluctant bets in the India's education eco-system although these opportunities were ahead of it's time.
It took some time before Sequoia regained the confidence to put money in the sector until they met
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The law of increasing marginal returns playing out for Trent 👇
> Revenue per store keeps increasing for the group as the juggernaut rolls.
E.g. In RR Nagar, Bangalore, there are 3 Zuido stores within 2 kms range. I was shocked to see this speed of expansion for a retail
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If you are a electronics engineer in India, what's stopping you from building a home-security start-up
- The Indian home-security market is worth over a $Bn and two Chinese companies control more than 60% of the market. (With a third company (TP LINK) controlling some more.)
-
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The tear-down period in D2C.
There’s a very small window for a (product-led) D2C Company to break into the incumbent market. I’d say, it’s 2-3 years.
By the end of this crucial time, the incumbents will have had enough time to tear-down your product & launch similar products
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@IshwarBagga
I shouldv'e clarified.
I wasn't referring to artisanal & impulse segments. This analysis was purely for take-home category.
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Just how important is volume growth for a product company ?
Ans: Very Important.
See this 19 years chart of Royal Enfield’s volume growth & share-price movement. They are in perfect sync. Well, almost.
Volume growth is a leading indicator which indicates strong demand for the
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I will show you what's wrong with the current market:
TLDR: Zero corporate governance. Everyone's sleeping including the independent directors.
1. "The company is NSE-Listed AI-focused hyperscale cloud platform, offering Advanced Cloud GPUs and a comprehensive ecosystem of
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Highly nuanced takes on US-GTM (🇮🇳<>🇺🇸) for first-time Indian founders. 👇
Here's a link to Anurag Wadehra's (
@awadehra
) practical nuances on US-GTM written for
@BlumeVentures
in which he answers many fundamental questions on accomplishing the US GTM journey for first-time
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6. What’s the wedge Birlas are using to enter the market, you ask ?
Ans: Pricing
Competitors are betting on the fact that Asian Paints is a pricier by 15-20% as compared to others. And customers would buy in to the promise of offering more for less.
Source: own analysis
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How many of today's investors have the courage to have this kind of conversation with founders ?
Truly
@sbikh
is the GOAT of corporate governance.
1) This company is no longer just yours. Therefore you will look after minority share-holders including ESOP holders, just as you
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Some businesses are inherently hard. And coffee is one of them.
Essentially, it's a commodity. So, it intrigues me how can these owners go so wrong in building these businesses.
Perhaps this is proof that,
- if you don't get unit-economics right on day 1
- if you grow at all
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5. Time to focus ?
While Asian paints maintains a stranglehold in the paints sector, over the last few years, as a group they have forayed into multiple interests.
Somewhere, with the limitation of human mind, there’s only so much attention one can give to a business, unless
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Sunday food for thought - India is essentially running on just 8 cities. (MUM/DEL/BLR/CHE/PUN/HYD/KOL/AHM)
If these 8 cities don't replicate job-creation across their respective states in the near future, our development will not be sustainable and poverty alleviation will
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(one of those ‘can’t believe Blume gave it for free’ property)
Not all marketeers are created equal:
If you are building an early-stage SaaS or for that matter any Company, this toolkit with extremely nuanced takes on customer-marketing will be of immense help, especially in
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Goes without saying that there are quite a few assumptions, I have made. Please be generous in correcting me where you think I have gone wrong :)
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The excitement is palpable
@BlumeVentures
Can't wait to lay our hands (...eyes in this case) on this year's report.
We need some ceremonial soft-launch invites please ;)
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Going public is not an end-goal anymore. In fact, it is the first-step to becoming fit. This is the new corporate-India that retail investors must awaken to. Gone are the days, when companies will be profitable at IPO.
'Building in Public' is the new strategic tool available
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@kritarthmittal
Resilience will be proved by what he does next;
as for humility - these days its the most ‘common’ celebrities are gaming on the internet; so let’s leave that aside.
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Prediction: Bangalore will become un-livable in another 3-5 years; The gig economy will not sustain itself beyond this timeline; Everyone is on 'Make hay when sun shines' mode.
It's checkmate KA; Advantage TN. For certain.
Ps: High vehicle density X Poor road infra = The End.
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@BlumeVentures
Dear Blume Team
Sincere request: Please slow down your releases; we are not able to catch-up with you 🙃
I have still not finished feasting over the Omega files; Sajith updated his VC article; and now you are serving us this;
We have a day-job too. Please remember that. 😂
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The IPL of State Governments - If there ever was such a face-off between Indian states, one state would emerge as a consistent winner and that wouldn't be Tamilnadu or Gujarat or even my home-state Karnataka.
1. Maharashtra adds almost 15% to India's GDP and they have been
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India will have a American problem to deal with, in the next 3 decades. 👇
While we are focused & determined to make $30 Tn a reality, let's not forget that we need to take care of the tree which is bearing the fruits.
The size of the elderly population in India by 2050 is
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Government finances are very difficult to understand forget breaking-down. I took the budgets documents of 3 Indian states (for 2024-25) and simplified it for a common-man to understand; 👇
A few takeaways;
1. By far, MH is the best among the 3 states in terms of relative
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D2C & E-commerce companies frown returns from customers termed as RTO (return to origin) within the industry, because the costs of fulfilling a return can eat into their profits. Sometimes as much as 25% !
Read how here.
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2. The Indian Childcare Products market is estimated at INR 280,000 Crores majority (79%) of which is in unorganized brick & mortar segment. That still puts the Organised segment (21%) to be ~INR 56,000 Crores.
FirstCry’s YTD24 (9M) revenue is INR 4841 Crores and will perhaps
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4) Based on the above, store-level unit economics is as follows. (at a very high-level) and therefore, the company needs to increase it's average order value by just 108/ per order and they will be profitable.
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5. India is at a strategic advantage with the current state of industry & Chinese state of affairs.
Advantage India 👇 under 3 heads - Policy, Demand & Supply.
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This post is to those who got baited by "Jupiter spends 54 rs to earn 1 Re of Income" reports in Media.
Putting out some facts about NeoBanking in India - Specially, to debunk some negative comments I see floating around this platform after
@TheJupiterApp
announced their FY23
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1500 applications for 1 role !
This is either bad or an aberration on the state of data-science jobs.
Perhaps a wake-up call to all those Data Science graduates who fell for the ‘data is next oil’ narrative from online learning providers in the Covid era ?
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Two very similar businesses yet the efficiency in execution at Uber is way better than Airbnb 👇
Typical of technology businesses, the economic benefits accrue over a long period of time as technology creates defensible moats for the business.
Both Uber & Airbnb operate a
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2. Uber's AOV per user in India is a third of its world average and perhaps even lower when compared to leading geographies like Australia where the AOV can go as high as $30 per ride.
With limited room to grow in India market + increased competition from local players, the
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Both India & China saw very important regime changes in the last 15 years. Both had the common-man in mind when postulating growth plans.
Yet, one failed the common-man.
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Just because you are a rookie doesn't mean you've to think like one.
#harveyspectre
lessons for work place.
@Suits_USA
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I took a cluster of companies and grouped them into Roti, Kapda & Makaan categories. The results were not inspiring confidence. What's going on ? Are we slipping into inflation ?
The pace at which the clusters grew in FY24 was definitely worrying when one looks at FY23's pace of
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3. Uber has admitted to the increased competitive & regulatory pressure in geographies such as India in their latest annual report which will continue to put pressure on earnings.
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The most under-rated manufacturing story coming from India - Bounce !
- World-class product
- Built in India
- Deep dealer network
- Top class customer service
This needs more love ❤️
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3. FirstCry literally has no meaningful competition in the game it’s playing. The one that it treats as competition are general e-tailers like Amazon, Flipkart, Meesho and a few small vertical retailers like Hopscottch, Myntra & Ajio.
Huge huge opportunity for D2C brands
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1. Maruti Suzuki ALTO was India’s largest selling car for 16 years straight. But in the last 4 years, since 2020, it was toppled from the top slot by it’s premium siblings Swift & WagonR.
More & more customers are going for a more-expensive Swift over the humble Alto !
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4. Uber's future is based on a formula in which 2 of the 3 factors are showing a down-ward trend for India.
- MAPC (monthly active platform consumers): With players like Namma-yatri (NY) operating a commission-free model, more & more users are less-active on Uber and Ola.
-
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@MeeraRotti
@KiranKS
@BMTC_BENGALURU
Please don’t advocate this. You were lucky to be safe. It’s not safe to be on the road alone at such hours. One can easily get mugged.
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5. As Uber's TAM in developed economies expand through autonomous fleets there will be very less or no incentive for the global management to anticipate a EBITDA accretive business from India.
Hence, it is very likely that India will be relegated to a market where innovation
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A simple table to explain why many urban-married stop at having just one child. This is also one of the biggest reasons for drop in India's total fertility rate (TFR).
Assumption: Income earned is 3.6 LPA
Having a second child just leaves no room for the family to meet any
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The life of a auto-driver in Bangalore is hard; very hard;
1. In the peak hours, they could sometime spend almost 75 minutes to complete a short-ride worth just 100-120/- ; this reduces their day's earnings drastically;
2. Each one of them is up against tremendous
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2. Over the years, the Chinese government gave away subsidies in excess of $200 Bn to Chinese manufacturers & consumers in a bid to fast-track their adoption of alternate energy vehicles.
Many term this as bordering on excess as this kind of support doesn’t generate organic
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This is an appreciation post for a platform which is creating & adding much value to the innovation eco-system in India for almost a decade now. Such intensity in execution rarely gets talked about because everyone is busy hunkered down in getting things done, perhaps.
It is
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Vernal Hanging Parrot, Coorg KA
#vernal
#birds
#birdphotography
#indiaves
@IndiAves
#bbcwildlifepotd
#nature
@NatureIn_Focus
@pnkjshm
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At the outset, I have nothing but immense respect for Girish M because he really put India on Global SaaS map.🙏 No effort comes close to what him & his team endured during the early days of FRSH.
This post is an objective take on state of things at Freshworks. Also, a reminder
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