Nitin Bajaj

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.

(0:02) Hey everyone, welcome to The Industry Show. (0:05) I’m your host Nitin Bajaj and joining me today is Anand Rajaraman. (0:09) Anand, welcome on the show.

Anand Rajaraman

(0:11) Thank you, Nitin.

Nitin Bajaj

(0:13) Thank you for being here. (0:15) So let’s start with who is Anand.

Anand Rajaraman

(0:18) You know, I think of myself as an academic who became an accidental entrepreneur and then became a venture capitalist. (0:26) So I started my career in academia. (0:29) I was doing a Ph.D. in computer science, minding my own business when I met this bunch of crazy dudes and we got this idea to start a company.

(0:39) And then I ended up starting two companies and naturally going on into venture capital while still keeping one foot in academia because I still teach. (0:49) So it’s sort of, you know, my identity sort of straddles the world of academia, entrepreneurship and venture capital.

Nitin Bajaj

(0:56) And a little bit of sport and cricket.

Anand Rajaraman

(0:58) Yeah, we’ll get to that later on in the conversation. (1:01) I saved the best for last.

Nitin Bajaj

(1:03) Yes. (1:04) So tell us about Rocketship. (1:06) What is the mission, the vision, the big idea, why you started this and why do you do this even now?

Anand Rajaraman

(1:14) Yeah, so look, I’ve been doing venture capital for 20 years through many ups and downs since 2000. (1:21) And, you know, when Venky and I decided to start Rocketship 2015, we wanted to do something different, not the same venture capital model that we’ve been doing for many years. (1:32) And so we said, it would be interesting to do a venture capital firm that’s entirely data-driven and algorithm-driven, like a quant venture capital firm almost, right?

(1:43) And so that’s what Rocketship we see as it’s a venture capital firm where all our investment decisions are backed by data and algorithms. (1:51) Our algorithms help us identify companies made from a large data set. (1:55) And then we end up investing in some of those companies.

Nitin Bajaj

(1:58) Very scientific approach, very computer science, PhD-like.

Anand Rajaraman

(2:02) And as I told you, I’m a failed academic who became an investor, right?

Nitin Bajaj

(2:09) We learn from our failures. (2:11) So we’ll talk about that too a little bit. (2:13) Give us a sense of the size and scale of Rocketship, but more importantly, the impact that you and the team have created through this.

Anand Rajaraman

(2:22) Yeah, so interestingly, we are on our third fund, Rocketship Fund 3. (2:28) Our third fund is about a $120 million fund. (2:31) We’ve invested, the one interesting thing is because we’re using data and algorithms, you’re not geographically restricted to any one area.

(2:40) We have a very small team of about five or six people. (2:42) We’re all based in Silicon Valley, but the majority of our investments are outside Silicon Valley, right? (2:48) So we’re not geographically constrained in any way.

(2:51) So about a third of our investments are in the US Silicon Valley, a third are in India, and a third are rest of the world, rest of the world include Indonesia, Middle East, you know, Latin America, Europe, all over the world. (3:05) And these are just the companies the data has told us were interesting.

Nitin Bajaj

(3:08) And you’re in about more than a dozen countries?

Anand Rajaraman

(3:12) Yeah, definitely over a dozen countries, I’d say more than 20 countries probably, and we have about 60 investments so far.

Nitin Bajaj

(3:20) And, you know, when you look at these investments, and when you look at the impact these investments are creating, so obviously, in the VC world, you look at what was the return, how many got acquired, how many got, you know, sold, etc. (3:33) But when you look at the work, these startups do these companies that you invest into, if you were to kind of take a how many lives have they touched how much, you know, that’s what I’m looking at when I say impact, right, just kind of gives you that size and scale, right, which, which would be massive, I would imagine.

Anand Rajaraman

(3:54) Right? (3:55) No, definitely. (3:56) Look, I think that depends on the kind of company that you invest in, so when you invest in a, in a consumer facing company that will naturally tend to touch more people than a, you know, company that is in the business to business space selling automation technology or something like that.

(4:12) So our portfolio has a mix of both. (4:15) And perhaps companies that touch the most people are companies in India that are consumer facing, right, because it’s a huge market, for example, for one of our portfolio companies, Apna, is in the business of, you know, connecting blue collar workers in India and upskilling them and finding them job opportunities, that’s touching, you know, hundreds of millions of people right there, right.

Nitin Bajaj

(4:39) And by the way, congrats on that investment. (4:41) I remember, I mean, we had Karna from Apna on the show a little while ago, and I believe it was the fastest to not that it is the fastest unicorn at the time we invested.

Anand Rajaraman

(4:55) Now, after that, of course, there was a big bubble and things changed, but at the time it was the fastest unicorn.

Nitin Bajaj

(5:01) But they’re doing amazing, impressive work, and they’re touching many lives that do need that level of access. (5:07) So again, congrats and, and, you know, kudos to the team, but also to you for supporting something that had never been done before.

Anand Rajaraman

(5:14) Kudos to the data for showing it to us. (5:16) Yes.

Nitin Bajaj

(5:18) No, Anand, you know, data is awesome. (5:22) It’s amazing. (5:23) And you’ve had many successful exits through Rocketship, not to mention your own.

(5:30) What’s the one big challenge you are facing?

Anand Rajaraman

(5:34) No, I think it’s very, it’s very interesting, right? (5:38) I mean, we live in a very interesting time for venture capital and startups as a whole, where we are sort of at the back end of a bubble, if this is all you can say, because we had incredibly low interest rates, and that drove valuation, a valuation bubble. (5:56) So what happens is right now, a lot of companies that had raised funding during the last couple of years are carrying unsustainable valuations.

(6:05) And even when and for us, therefore, you know, when we find a company, sometimes it’s hard to make an investment, because we cannot justify the valuation that they’re at. (6:15) So I think this is not a problem just for us. (6:17) It’s a problem for the whole sector, at some level, is we need to sort of start seeing, we are seeing, I mean, what we get more excited by now are companies that were started after that, after that era, right?

(6:31) Because then we don’t have to worry about, you know, we can, you can look at the fresh company and not worry about justifying an old valuation. (6:39) So, you know, what I’m hoping for is that some of those valuations come down and some new companies get started that we can get excited by.

Nitin Bajaj

(6:48) So true. (6:49) And, you know, a little bit of this is, I’m guessing the investors who don’t want to let go of a lower valuation, the founders who may want to hold on to, oh, we were at a billion, we don’t want to be at a 600.

Anand Rajaraman

(7:03) Exactly.

Nitin Bajaj

(7:04) Yeah. (7:04) So it takes a little bit of that time, maybe shifting some of those mindsets, but then there’s the awesome thing is there’s always new opportunities coming into the market.

Anand Rajaraman

(7:14) Exactly.

Nitin Bajaj

(7:15) Now on the flip side of challenges come opportunities, and I would love to hear what’s the most exciting one that you’re looking at.

Anand Rajaraman

(7:24) Yeah, no, look, I’ve been talking about Rocketship so far, and so I’ll just go into sports now for this one, just a completely different different space, you’ve touched upon it briefly. (7:34) One of the coolest things that I’m involved in right now is bringing cricket to the USA. (7:39) You know, we launched a, you know, a T20 tournament like the cricket tournament like the IPL in India, launched in the US, it’s called Major League Cricket, MLC.

(7:49) We had our first season in July, it was amazing. (7:52) We have four ideal teams involved as team owners. (7:58) And my partner Venky and I at Rocketship, we own the San Francisco team, it’s called the San Francisco Unicorns.

Nitin Bajaj

(8:05) Of course.

Anand Rajaraman

(8:06) Which ties together the two threads of entrepreneurship and cricket, right. (8:11) And so that’s kind of the most interesting, you know, fun thing that I’m involved in most exciting thing that I’m involved in right now. (8:18) It’s also an area where they have zero experience.

(8:21) So, you know, so I’m just learning the ropes as I go along.

Nitin Bajaj

(8:25) And, you know, as we discussed, this is a truly long term play.

Anand Rajaraman

(8:30) So yeah, absolutely. (8:32) You know, unlike in other countries, the problem in the US is there are no stadiums to play cricket in. (8:39) So we have to build stadiums from scratch.

(8:42) And that takes time and money and capex, right. (8:45) So there’s going to be a lot of capital that needs to be invested in this and the payoff hopefully happens, but it will happen over a long period of time.

Nitin Bajaj

(8:54) But if I could think of anyone to do this, you Venky and some of the other people that I know are involved with this are the best people to do it. (9:03) You have the passion, you have the, you know, when you say you have no experience, but you have experience building things from scratch in many different areas. (9:12) So I’m glad that you’re at the helm of these things and will bring cricket to the US.

Anand Rajaraman

(9:18) Yeah. (9:18) And we are also very excited to, you know, the other investors who are involved in this, for example, Satya Nadella from Microsoft, part of the Washington DC team, Shantanu Narayan from Adobe is one of our co-investors with us in the San Francisco team and so on. (9:35) So we have a good cast of people in the investors involved in this as well.

Nitin Bajaj

(9:40) Now we’re all super excited about that and looking forward to the next season. (9:45) Now, as we look forward, I want to pause and reflect back, take a look in the rear view mirror and ask you to share two instances, one that blew your own expectations and became a success beyond your imagination. (10:01) And another one that did not work out as you had expected and was a failure became a lesson.

Anand Rajaraman

(10:09) So let’s talk about the failure first, always get that out of the way. (10:14) There’s this, you know, this happened a couple of times in my career is that I’ve invested in a company and the company is doing incredibly well, product market fit is great, scaling amazingly well, but then it blows up. (10:29) And why does it blow up?

(10:30) It blows up because the founders didn’t get along. (10:33) So I think what I learned is that one of the biggest risks for startups is founder chemistry. (10:43) And founder chemistry, you know, it doesn’t get tested and then times are good.

(10:49) But it gets tested in these slightly rocky situations. (10:53) And, you know, many startups, you know, fall apart on that even if they have great futures. (11:01) And it turns out to be one of the trickiest things for investor to evaluate the founder chemistry.

(11:09) So that’s a big learning. (11:11) This happened a couple of times in my investing career that promising startups fail because of founder chemistry issues. (11:18) And I feel fortunate that I’ve been able to stick around with the same partner, you know, co-founder across two companies and partner across venture capital firms that, you know, I’m surprised that you’re not blown up yet, but it’s unfortunate as well, right?

(11:33) So founder chemistry is a hugely important thing. (11:38) So that’s the learning failure side, right? (11:41) On the success side, I’d say the single most successful investment that I ever made and that became successful beyond my wildest dreams is Facebook now called Meta, right?

(11:52) So when I remember, when Venky and I invested, we visited the University Avenue office, you know, with Mark Zuckerberg, and they had all these murals on the walls and it looks like all these, you know, you know, kids who didn’t have a real clue of what was going on and be, but they were scaling like crazy. (12:13) And I remember investing and saying, look, we don’t know, we may just have to write off this investment, but what the heck, right? (12:20) So that ended up being the most successful investment of my life.

(12:24) And they just kept scaling and scaling and scaling. (12:26) It takes, you know, tell it to Mark, it takes a bunch of good decisions along the way. (12:33) It takes also a lot of luck along the way.

Nitin Bajaj

(12:36) And again, congrats and kudos to you for making that big bet and for it to have paid off. (12:42) And I’m sure you had a small hand in that overall success as investors and advisors.

Anand Rajaraman

(12:48) You know, not really that much. (12:50) The dirty secret of investing, the dirty secret of venture capital, let me tell you this, is that the companies that do best and return the most are the companies that you spend the least amount of time with. (13:01) You end up spending the most time with are the companies that ultimately return 1x or 0.5x or something like that, because they’re working so hard to save them. (13:09) So unfortunately, as an investor, all your time will be sucked up by the underperformers.

Nitin Bajaj

(13:16) Well, as you said, the right data points you to the right investments, and then you just let it coast along. (13:23) Exactly. (13:23) Words of wisdom.

(13:26) Anand, what do you do for fun?

Anand Rajaraman

(13:29) For fun, look, these days I’m following all this cricket stuff. (13:33) But other than that, I’m into fitness. (13:37) I spend a bunch of time on fitness-related activities.

(13:40) I love to play chess, hanging out with friends and family and so forth. (13:45) So that ends up being the fun part.

Nitin Bajaj

(13:48) That’s awesome. (13:49) Now, we come to the most favorite part of the show for that’s fun for me, is getting you to share your one-line life lessons with us.

Anand Rajaraman

(13:59) Very interesting. (14:01) So let’s see, the first one-liner is Carpe Diem.

Nitin Bajaj

(14:06) Yes.

Anand Rajaraman

(14:07) So you have to seize the day and when opportunity comes to knock in, you better seize it, right? (14:12) It’s not going to you know, multiple, multiple times. (14:17) Second one is, you know, whenever you look at anything, don’t trust the game, look at it from first principles.

(14:27) First principles always been the day or conventional wisdom, right? (14:30) So I think that’s, you know, I write everything in first principles. (14:34) The third is, if the world doesn’t seem to be working according to your assumptions, then you should question your assumptions, not what the world is doing.

(14:51) Fourth is kind of unrelated to, you know, it’s more about living. (14:54) I think you got to live life to the fullest. (14:57) So live life to the fullest.

(14:59) And finally, I think this is the hardest one to do. (15:02) And I try very hard. (15:03) And it applies across sports and across most many aspects of life.

(15:09) And it is from the Bhagavad Gita. (15:15) Don’t worry about the fruit of your action, just do the acts.

Nitin Bajaj

(15:20) Thank you so much. (15:21) And I agree with the last one. (15:22) I mean, as simple as it is, as many times we’ve heard it growing up, it’s extremely hard to follow, but the right thing to do that detachment is something that we understand, but to put it into practice, takes a lot of effort, right?

Anand Rajaraman

(15:41) And because then, especially as you learn in both in cricket, for example, right, you can play the bat, batter can play the same shot and get out once and get a six the next time, but we shouldn’t prevent him from playing the shot, because the right thing to do at the right time, right? (15:54) So it takes courage to follow it. (15:57) And the same thing is true investing.

(15:58) It’s a process oriented thing, you got to keep doing the right thing. (16:01) Sometimes luck works away. (16:02) And sometimes it doesn’t.

Nitin Bajaj

(16:04) So true. (16:06) And thank you so much for making the time for sharing your journey and story and your online life lessons. (16:12) We really appreciate it.

Anand Rajaraman

(16:14) Thank you. (16:14) And thanks for the opportunity.

Nitin Bajaj

(16:16) Thank you.