Kunal Shah: Find your pot of gold — Transcript

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1. 0:06I'm the most unusual founder in the
2. 0:10technology world. I am not an engineer,
3. 0:12but I'm actually a guy who holds a
4. 0:15degree in philosophy.
5. 0:17Yeah, it's funny because it doesn't make
6. 0:19sense, but
7. 0:21that's what kind of got me to a stage of
8. 0:23thinking how can somebody who's
9. 0:27not as smart as some of the other people
10. 0:29that are exist in the field can create
11. 0:32wealth versus the guys who are smarter
12. 0:34than somebody of that level not able to
13. 0:37create wealth. And that's where the
14. 0:39philosophy kicked in and for me to go
15. 0:42and probe further. So, what I did
16. 0:45that we we sold our company close to
17. 0:46half a billion dollars last year. And
18. 0:49and since then I have been traveling to
19. 0:51different startup ecosystems to
20. 0:52understand
21. 0:54what it means to create wealth and also
22. 0:57by the same rule what does it mean mean
23. 0:59to erode wealth, right? Behind the
24. 1:02startup idea. And that's where I have
25. 1:04come up with this theory. Obviously,
26. 1:05it's very early stages, but I'm
27. 1:06presenting it for the first time.
28. 1:08Hopefully, you guys will like it.
29. 1:10It's wealth creation and erosion through
30. 1:12startups. Before we jump onto the
31. 1:14theory, I have a question for all of
32. 1:16you.
33. 1:16Any goods or services
34. 1:19that were more efficient 10 years ago?
35. 1:22Anything that was more efficient 10
36. 1:25years ago?
37. 1:27Traffic is a state, but vehicles were
38. 1:29not more efficient, correct?
39. 1:32It's a state. It is a combination of
40. 1:33being more vehicles,
41. 1:35fuel-efficient cars, more safer cars and
42. 1:38so on and so forth.
43. 1:39You'll find it very hard to find these
44. 1:42things, right? But if imagine if you
45. 1:43were let's say
46. 1:45a lion or a deer or a rabbit, this
47. 1:48question will not apply to you. It's
48. 1:50kind of the same. You have to wait for
49. 1:51evolution to kick in for something to
50. 1:53become more efficient. Let's say you do
51. 1:55forget more stronger ears or efficient
52. 1:58legs, and so on and so forth. Humanity
53. 2:00is the only one which is hacking
54. 2:02evolution and becoming more efficient.
55. 2:05Where we have a law, kind of law, which
56. 2:08is basically saying that all the
57. 2:09efficient stuff exists in the future,
58. 2:11and all the inefficient stuff exists in
59. 2:14the past.
60. 2:15Right? If you think about this for a
61. 2:17second, and you'll understand that this
62. 2:19is true for us, and we are moving really
63. 2:22fast. Right? Look at the amount of
64. 2:25technology innovations that have
65. 2:26happened in the last thousand years,
66. 2:28right? And the speed of it now with the
67. 2:30platforms being created for some of
68. 2:31these things. We have identified methods
69. 2:34to keep making things more efficient.
70. 2:37Now, we talk about every hurdle that is
71. 2:40preventing us from being efficient is a
72. 2:43pot of gold. Let that sink in for a
73. 2:45second, and and think about it. If
74. 2:48somebody wants to be more efficient at
75. 2:50anything, and it is kind of not there
76. 2:53right now, it is a pot of gold.
77. 2:56Right? For example, I want to earn more
78. 2:58money, somebody will create a great
79. 3:00degree
80. 3:02which will help you unlock that pot of
81. 3:03gold, and therefore that business will
82. 3:06become pot of gold. Let's say somebody
83. 3:07wants to figure out a way to make people
84. 3:10see better
85. 3:12versus having these spectacles, and
86. 3:14they'll invent that and create an
87. 3:15innovation and move there, right? If you
88. 3:18think about every single thing, if it's
89. 3:20made efficient, and somebody who makes
90. 3:22that efficient claims that pot of gold.
91. 3:25Now, how do you know if your idea is
92. 3:28going to create wealth or remove that
93. 3:30hurdle or not? And that's where we'll
94. 3:32think about this mechanism called as
95. 3:34efficiency scoring. Now, before we jump
96. 3:37into that, let's just understand that
97. 3:39every idea can be thought from an old
98. 3:41state versus new state, and we'll take
99. 3:43some examples over here, but I want you
100. 3:45to also think about examples beyond that
101. 3:47in your mind that you've come across.
102. 3:49First question, how many of you have
103. 3:51booked a railway ticket in India? Please
104. 3:53raise your hand.
105. 3:54Okay.
106. 3:55How many of you have uh experienced both
107. 3:57the formats, offline?
108. 4:00And how many of you have used online?
109. 4:03Okay, great. A question for you. If you
110. 4:04have to give a score of efficiency out
111. 4:08of 10 for the old behavior
112. 4:10that is going to railway station,
113. 4:12standing in the queue, or whatever that
114. 4:13is, versus going to IRCTC.
115. 4:16What is the score you will give out of
116. 4:1710 for the first behavior and the second
117. 4:20behavior, state A and state B?
118. 4:24Three and eight.
119. 4:25What What I have noticed is kind of
120. 4:26between that for most people, two and
121. 4:28eight. Right? You will see that the
122. 4:30efficiency is dramatically different
123. 4:32between the old behavior and the new
124. 4:34behavior.
125. 4:35And therefore, we have this theory which
126. 4:37is called delta four.
127. 4:39Whenever the delta of efficiency is
128. 4:41greater than four,
129. 4:43that's where you will unlock the pot of
130. 4:45gold. Now, what what is the beauty about
131. 4:49uh
132. 4:50delta fours? You'll find that they are
133. 4:52irreversible.
134. 4:54UBP
135. 4:55All of us know about USP, but the real
136. 4:57thing for today's world is UBP and I'll
137. 4:59explain that in a bit.
138. 5:01UBP stands for unique bragworthy
139. 5:03proposition.
140. 5:04Everybody who will experience a new
141. 5:06efficient state will scream at everybody
142. 5:09at an inefficient state and tell them to
143. 5:10move there.
144. 5:12I'll give you a small example. How many
145. 5:13of you have used Truecaller in India?
146. 5:15Please raise your hand. Okay. How many
147. 5:17of you discovered Truecaller because of
148. 5:19an advertisement?
149. 5:21Nobody. I'll tell you how you all
150. 5:22discovered it. Somebody came to you and
151. 5:24told you, "Give me any phone number and
152. 5:27I'll tell you the name of the person."
153. 5:29And they did a magic trick.
154. 5:31And that's how you discovered Truecaller
155. 5:33and everybody downloaded it, right? That
156. 5:35is unique bragworthy proposition.
157. 5:38Everybody who moves to an efficient
158. 5:40state will scream at everybody at an
159. 5:42inefficient state and say, "Hey, move
160. 5:44here.
161. 5:45You're wasting your time in that
162. 5:46inefficient state. Don't go to the
163. 5:47railway station to book a ticket. You
164. 5:49just move into this. Or don't book the
165. 5:50cab in the old way. Book it through Uber
166. 5:52or Ola, right? We will scream at the
167. 5:54inefficient state and move the humanity
168. 5:56forward. But that is only true if the
169. 5:59delta is large enough, right? And we
170. 6:01have high tolerance for delta force.
171. 6:03If there is a bad experience with IRCTC,
172. 6:07we will continue to use it because there
173. 6:09is nothing more efficient than that. The
174. 6:11delta four exists in that product. The
175. 6:15delta four exists in Uber and Ola. We'll
176. 6:17crib, "Why doesn't the driver know how
177. 6:19to use maps?"
178. 6:20Go back to the old behavior and book the
179. 6:22other methods. You will not move there
180. 6:24because the delta is large enough
181. 6:27compared to the previous behavior,
182. 6:28right? So, what you will notice is that
183. 6:31any product or service that offers delta
184. 6:33four creates wealth. Now, with that the
185. 6:36same rule, we will understand what
186. 6:39is not creating wealth. For a second,
187. 6:42let's just take one more example before
188. 6:43we go there.
189. 6:44Buying shirts offline.
190. 6:47Buying shirts online.
191. 6:49Anybody wants to give an efficiency
192. 6:51score for that?
193. 6:53Please raise your hand and give a score.
194. 6:5610 and 0. Okay, 10 and 0.
195. 6:59Anybody else?
196. 7:02Online is uh six
197. 7:05and online is four. So, you'll observe
198. 7:07that there are different answers to
199. 7:08this.
200. 7:10Sometimes you will see the delta is
201. 7:12great, not great, even minus in some
202. 7:15cases,
203. 7:16right? Every time you come across
204. 7:18something that has lower than delta
205. 7:20four, right? It results
206. 7:23in it being a reversible behavior. One
207. 7:26bad experience in buying shirts online,
208. 7:29you will say, "This is absolutely
209. 7:30useless. Nobody No, I'm not going to buy
210. 7:32this again."
211. 7:34There is nothing to brag about. You will
212. 7:35not find people screaming about it and
213. 7:38telling other people, "Hey, try this
214. 7:40particular new format of trying new
215. 7:41things, right? And you'll have very,
216. 7:44very low tolerance for that, right? And
217. 7:46that is the beauty of this.
218. 7:48You'll also observe sometimes that the
219. 7:50delta four behavior is not just function
220. 7:53of efficiency, but also affordability.
221. 7:55Sometimes the delta four, let's say
222. 7:56flights are more efficient than trains,
223. 7:59but nobody is moving to flights as much
224. 8:01because they cannot afford it. But what
225. 8:02if they can afford it? They will not use
226. 8:04the trains anymore, right? Therefore, it
227. 8:06is important to understand the
228. 8:07affordability angle also over here. So,
229. 8:09going back over here, whenever the delta
230. 8:12is less than four, right? You will
231. 8:15observe that it does not really create
232. 8:17wealth or stay there. It sometimes even
233. 8:20uh retains the wealth. Sometimes what
234. 8:22happens, however, is that people pour in
235. 8:25more money
236. 8:26to increase the delta, right? For
237. 8:28example, I will start offering 30%
238. 8:31discount on shirts
239. 8:33to increase the delta artificially. The
240. 8:35natural product does not have the delta,
241. 8:37so I put more money to just artificially
242. 8:40increase the delta, and therefore, you
243. 8:42will see it will actually erode wealth.
244. 8:45A lot of times, in fact, 99% of times, I
245. 8:48have seen entrepreneurs pick ideas that
246. 8:51do not even have delta one,
247. 8:54right? And I'll tell you why they do
248. 8:56that. They pick the ideas from the West
249. 8:59and China and try to copy it over here.
250. 9:02Here's the problem to that. Let's just
251. 9:03imagine for a second.
252. 9:05I have less time. I need to get my
253. 9:07clothes washed.
254. 9:09Western option, let's create a laundry
255. 9:11startup.
256. 9:13I'll tell you what is a more efficient
257. 9:14solution in India, which all of you are
258. 9:15already doing. Get a domestic maid.
259. 9:18That is the more efficient solution than
260. 9:20versus using a laundry startup, but
261. 9:23guess what? Close to five, six startups
262. 9:25got funded millions of dollars for
263. 9:28running laundry startups,
264. 9:30which was not a delta four behavior for
265. 9:32consumers. And that's the beauty about
266. 9:34humanity. We know what is delta four for
267. 9:37us.
268. 9:38Right? We don't need to worry about and
269. 9:40understand and think that
270. 9:42let me act be cool and order stuff
271. 9:45through this laundry app. No, you will
272. 9:46not do that. Right? And that is the
273. 9:49beauty about this particular model.
274. 9:51Also, what I have noticed is that when
275. 9:53somebody discovers a Delta 2 Delta 3,
276. 9:56everybody launches the exact same
277. 9:58startup. Right? There will be eight nine
278. 10:00clones of the exact same model.
279. 10:03That is a problem. When there is a pot
280. 10:04of gold, it's of a certain size. When 10
281. 10:07people come for that pot of gold,
282. 10:10the pot of gold disappears because
283. 10:11amount of money deployed to capture that
284. 10:14pot of gold is more sometimes than the
285. 10:17actual money available over here. A lot
286. 10:19of times we make that mistake one more
287. 10:21time is that when we look at the
288. 10:23previous slide over here,
289. 10:25investors invest in companies when they
290. 10:27see Delta 4 in the first 500,000
291. 10:29customers. They feel there is a Delta 4.
292. 10:32This is great investment. Let's go bet
293. 10:33on it. Then they move on beyond million
294. 10:36customers, the Delta 4 is not felt.
295. 10:39And that's where you will see a
296. 10:40challenge that sometimes there are false
297. 10:42signals that people invest on these
298. 10:44companies because they look at limited
299. 10:46data so far, but they don't cut it by
300. 10:48different segments of users.
301. 10:50So, coming to the thing, whenever you
302. 10:53see that people actually put more money
303. 10:56behind
304. 10:57Delta 4
305. 10:59less than Delta 4s, this is exactly what
306. 11:01happens. Uh
307. 11:02we we will erode wealth. And and I I
308. 11:05request all the guys who are seeing this
309. 11:07online or some of you guys who are going
310. 11:09to do a startup, do not do something
311. 11:11that is just a Delta 1. The humanity
312. 11:14will not brag about it. Uh make
313. 11:16something brag-worthy. Thank you.