 Candidate conversations with me is Rajeev Thalreja. Rajeev is a business coach, he's an author, a TEDx speaker and entrepreneur and the first thing which I'm going to be posing to Rajeev is the first question is Rajeev, you know, a lot of layoffs which are taking place in the startup industry, some pretty scary statistics coming out. So what exactly is the reason for this and what are we looking at in the months to come really? Well, we honestly, I think the fundamental mistake that most startups make is that the founder has a business idea, but they've not worked on the detailed business model as to how will it actually function and how will it become revenue generating, how will it become profitable and most of these founders take this idea, they take a basic proof of concept, go raise investments and lastly, these investments are raised through network of networks and the thought process of the founder is key, I will raise the money and I will hire talented people who will come in and build the business model for me. So what ends up happening is when you have 50 crores, 100 crores, 200 crores, 300 crores lying in your bank account, you feel the solution to all your problems is hire talented people and when you hire these people, they are expecting you to give them direction as to what exactly you expect them to do, but most of these founders are like, no, I hired you because I want you to come up with the direction of creating this business model and turning it into something that is a viable business model. So most of these startups actually have what I call as payroll cholesterol. They have accumulated a layer of cholesterol or fat in their payroll where they have people who even the founder does not know why they are there, even those people don't know why they are there and when winter comes and we see say that, hey, we can't pour in more money and your sustainability period with the existing funds has to be extended, then automatically everybody becomes prudent about their cash flows and everybody starts cutting costs and they realize that, okay, I have this massive payroll cholesterol which is not really productive, which does not really have direction, but the challenge is that the founder is expecting them to come up with the direction which is unfair to those people and these professionals obviously have taken jumps from established organizations or from cushy job thinking, I'll go into a startup and I'll get an ESOP and that will be my wealth creation strategy without really understanding whether that startup has a foundational business model which has fundamental business value or not and now they're having shocks of their career saying, hey, I sold myself for a very high payback but today that longevity of career is not there in that ecosystem because the business owner, the founder himself or herself is not clear, so I think this is nothing but a correction happening, it's a correction and a lesson for founders as well as for professionals who need to make their career choices with prudence and not just based on heavy paychecks that they're getting. Very simply put really, now a frequent topic which keeps coming up again, going in line with what you just mentioned, you know, sort of related to that is the reality of valuation, okay, what is, what is the actual valuation, what is the actual reality of the valuation, so what are the thoughts on this? So I have two thoughts on it, one is to be fair to the startup ecosystem, to be fair to the founders, to be fair to the VCs, the valuation is based on a projection of what most of these startups see as a total addressable market who will adapt to the behavioral change that they are trying to create through their startup and that estimation is something that most of them have gotten wrong. Recently I think Nitin Kamath of Zero that put out a beautiful thread of tweets talking about the total addressable market and how the projection of the total addressable market in the fintech space is something that most fintech startups have gotten wrong. So one I think is the flaw in the projection or the anticipation of how many users will actually end up being paying customers for that startup solution is something that most people are realizing today is that hey, we've overestimated that and therefore we've overestimated our valuations. So that is one side of the spectrum to give benefit to the founders and the VCs. The other side of the spectrum is that honestly I see an interact with so many startups where the fundamentals are missing in the principle itself. Most of them are becoming founders because capital is available with ease. Most of them are looking at valuation rather than value creation and this is a nexus even of certain VCs who come in with the thought process of I'll be Angel. I know who will be Series A and Series A knows who will be Series B. Series B knows who will be Series C and eventually now there's a loophole in the system that you can list a loss making company to an IPO. So I also see there's a lack of intent and integrity in the ecosystem where people are seeing this loophole and exploiting this loophole. But I don't think that will last long. We've already seen that the stock market is ruthless and it will show you your true value in the names of Rakesh Jhunjhunwala. In his words, he says, So I truly believe that that bubble is not something that people can ride on for a long time unless and until they bring fundamental business value and they focus on genuine value creation rather than just playing this game of valuation. Right. So with regards to what you said, do you think that it will be difficult? I mean, from what you're saying, could I say that it's difficult to trust what we see because of all the smoke and mirrors which are there in the industry? 100%. I mean, at the end of the day, the fundamentals of business don't change. The fundamentals of business is you need to provide a product or service for which people are willing to spend their money and you're able to charge a price on which you can make profits. So while it's great that startups are chasing, they call themselves experiments of creating behavioral change for improved efficiency. Now, that's great. Some of these experiments will work, but most of them want if they don't have fundamental business value and rational that is riding in their business plans. And this smoke is created because of the amount of money they have, because of the amount of money they're pumping into their PR and media engines because they're creating trust in the common man's mind. They're creating space in the common man's heart where the common man is trusting these brands. They are advertising during IPLs and people feel that, hey, this is an established business. Just today, I was having a conversation with a group of entrepreneurs and I asked them, as a consumer, have you ever bought a product or a service just because the brand was well marketed and were disappointed with the actual output? And they gave me seven, eight lists of names and all of them were startups. All of them were startups where they said there is little remorse for customer quality, customer delivery, and it's just purely naam, bikra hai to kam, bikra hai, kind of a thing. But you can fool people only once. You can't fool people again and again. So you're seeing that happen in the edtech space, right? Edtech is the biggest hit industry of layoffs. Why is it happening? Because people are realizing those edtechs are not solving the education problem. They are just technological platforms for the same information being disseminated to people and people rather sit in classrooms. So they were a great temporary replacement during the pandemic when there was a lockdown, but people are craving for human connection. So technology is not the be-all and end-all solution for everything in our lives. And until and unless these startups don't acknowledge that and recognize that, they are only going to be fascinated with the codes that they are writing, not necessarily with the practical application and the acceptance of the consumer in the market. And if you don't provide what the consumer will use, you are bound to lose in business. So I think the rationale doesn't change. It's all the PR and marketing engine that is creating the smoke. Yeah, well said. The advertising and what you see is obviously clearly not what you get. Last question for today is I'd like to focus on your background a bit. You became an entrepreneur at 20 and by 23, you shut down two of your businesses. Now take me, I mean visit in a nutshell, take me so that period in your life is starting the shutdown continuing. Well, firstly, I was not an entrepreneur by choice. I was an entrepreneur by force. My career plan was to finish my BCOM, sit for campus placements, get a job, work for two years, prepare for an MBA entrance exam, get into one of the top B schools in the country and take a job abroad after the B school earn in dollars, spend in rupees at the age of 40. What's what is four times feel patriotic, come back to India and be an entrepreneur. So that was the path I had charted out for myself. I was going as per plan. I got a job from campus placements. I took the offer letter went to my dad who's an it standard dropout from school retailers in the businessman. And I took the offer letter to him expecting him to be proud of me and he tore the offer letter. And he said, why would you take a job? Go start your business. So he didn't give me an option, which is a very rare breed of father in 2006. I'm talking about today, of course, parents are fully encouraging their children saying start up, but I'm talking about 2006. So the only thing that I knew was training and coaching because in my internship during my college days, I was interning in a youth organization where we used to run workshops for college students. So as a 20 year old, I started my journey as an entrepreneur with my first venture, quantum leap learning solutions, private limited thinking I'll do corporate training without even asking myself, will corporates accept a 20 year old baby face with no facial hair? And I went out in the market. I got 102 rejections before I cracked my first client. And I cracked my first client saying, don't pay me a single penny. Give me a team. Give me a goal. I'll make sure I help them achieve that goal. Pay me on performance. I didn't even know this is called coaching. But that's what I did. I handheld that organization stop management to achieve that result. They gave me a testimonial saying revenue went up by 30%. I took that went to other organizations and started taking up coaching and consulting projects, which were based on revenues and production outputs of the company. So people were happy to engage with me. But then what happened was I was very clear. I don't want to be a solo consultant. I want to build a business. I want to build an organization. So I started hiring people, but the people I was hiring could not do what I was able to do. And I could not afford the people to afford to hire the people that could do what I was doing. So I had a bunch of freshers at one point of time. I had 32 people sitting out of my office without knowing what they're supposed to do. And my payroll cost increased. I went into a loss. So what I did was I started multiple businesses. I started a recruitment consulting business because I thought I have a network of HR managers. They need recruitment services. We'll sell that also. I got in Africa. So I set up an outsourcing project management company where I put a team of callers, call auditors, operations executives from a BPO background. The London based bank did a contract with me through another third party agency because we did not have our entity registered in London. So that third party agency got paid, but they didn't pay us. So I went into a 70 lakh loss and a 45 lakh rupee debt. When I went in through that loss and debt, that's when I had to shut my outsourcing business down. That's when I had to shut my recruitment business down and I had to streamline my focus. So that was the stage of my life where I feel I didn't just lose money. I also lost a lot of confidence in myself. And it took me two years of continuing to fail even after that. It took me two years of continuing to fail even after that to achieve some sanity and ask myself the right questions because I was asking myself the wrong questions. I was asking myself questions like, how can I repay this money quickly? How can I make quick money so I can repay these debts? And that led to an opportunistic mindset where I was running behind get rich quick methods. And that's what taught me the lesson that when you do something out of desperation, the more desperate you are, the more the result does not happen. So I went through that churn for a good two years. And then finally, in 2014, October, I told myself the most important words I said to myself ever, which was, you don't know how to build a business. And saying those words to myself was liberation because that made me open to learning. And that's when from October 2014 to December 2015, for 14 months, I went across India and I interviewed 300 business leaders who built some of the most successful brands in India. I interviewed people like Kiran Mazumdar Shah, who's built Biocon, Ashok Suta, who's built Happiest Minds Technology, CK Kumar Vail, who's built Natural Salon. And I interviewed these people to understand the psychology and systems of building a scalable business. And those 300 interviews was the biggest learning journey of my life because it taught me that for eight years as an entrepreneur, I had just wasted my time. I was busy doing everything, feeling like a superhero, feeling like a sincere victim, thinking my luck is bad. My talent is there but luck is bad. So I had all these misconceptions that got shattered. And I realized that building a business is a science. You got to get the right business model in place. You got to be proactive in marketing. You got to be good at selling. You got to do the building teams. So all of this kind of helped me tie up the loose ends of my own journey as an entrepreneur. Quite a journey. Also, the first half of our interview could be seen as you being that pin who's sort of bursting the startup problem. But what you said, actually, it's all true. It's all facts that, whether it's the evaluation or whether it is what we see is not what we get. But thanks a lot for talking with us, Rajiv. And all the best for the future. Thank you, Kabir. Thank you so much.