Become A Crorepati Before 35 | Full Breakdown

Summary

In this insightful discussion, the CEO of Indd Money, a company valued at 5,000 crores, shares his perspective on financial independence and wealth creation. He explains that founders typically don't make money through salary but through equity and ESOPs, highlighting the potential for significant wealth creation with the right company and investment strategy. The conversation delves into the challenges and opportunities of starting a business, the importance of choosing the right industry, and the CEO's personal investment philosophy, emphasizing diversification across Indian and global equities, as well as real estate and angel investing.

Takeaways

• 💼 The founder of a startup typically does not make money through salary but rather through equity and ESOPs (Employee Stock Ownership Plans).
• 📈 The value of a startup is not solely determined by its current profitability, but also by its potential for growth and the value of its equity.
• 💹 Founders can monetize their investments through mergers and acquisitions or by going public with an Initial Public Offering (IPO).
• 🤔 A common perception is that only a small percentage of startups, around 2%, are successful enough to provide significant financial returns to founders and early employees.
• 💼 Employees can benefit from joining startups by negotiating for ESOPs, which can potentially provide substantial wealth if the company succeeds.
• 💰 The speaker suggests that achieving financial independence through a salary alone is difficult, emphasizing the importance of equity and investments.
• 🏦 The speaker is bullish on fintech, Htech (health tech), and enterprise/SaaS tech as industries with potential for growth and wealth creation.
• 💡 The concept of age and experience is becoming less relevant in the business world, with younger individuals capable of outperforming those with more traditional experience.
• 💸 Having a financial corpus of 4 to 5 crores can provide a safety net for aspiring entrepreneurs, allowing them to take risks with starting their own companies.
• 🏦 The speaker's personal investment strategy includes a significant allocation to equities, both domestic and global, with a smaller percentage in non-equity assets like debt and real estate.
• 🚀 The biggest risk the speaker took was leaving a high-paying, secure position at Google to start his own company, which has been a defining moment in his journey to success.

Q & A

What is the definition of financial independence according to the CEO of Indd Money?

Financial independence is defined as not needing to rely on a monthly cash flow to meet one's financial needs, and having the ability to extend wealth to future generations.

How does a startup founder typically make money?

A startup founder typically makes money not through salary, but through equity and ESOPs. They can monetize by selling the company through mergers and acquisitions or by going public through an IPO.

What is the success rate for startups to have an IPO or get acquired in India?

The success rate is approximately 2%, as only a small fraction of startups manage to have an IPO or get acquired.

How can employees make money in startups if not through a high salary?

Employees can make money in startups by negotiating for more ESOPs, which can become valuable if the company grows and has a successful exit strategy.

What advice does the CEO of Indd Money give to someone starting their career?

The CEO suggests that young professionals should consider joining startups, especially in fintech, hitech, and enterprise SaaS sectors, to derive value from their ESOPs.

What is the significance of ESOPs in wealth creation for employees?

ESOPs can lead to significant wealth creation for employees, as they can potentially become worth much more than their initial value if the company they are invested in performs well.

How does the CEO of Indd Money view the concept of age and experience in the current job market?

The CEO believes that the concept of age and experience is becoming less relevant, as he has encountered many individuals with extensive experience who have not kept up with the changing world.

What was the biggest risk the CEO of Indd Money took in his life?

The biggest risk he took was leaving his highly remunerative position as the country head of Google to start his own company.

What is the CEO of Indd Money's investment strategy?

His investment strategy involves a 70/30 split between equity and non-equity investments, with a focus on diversification across Indian and global equities, and a small percentage in real estate and angel investing.

What is the CEO of Indd Money's view on real estate as an investment?

He considers real estate to be an inefficient asset class and only a small percentage of his portfolio is allocated to it, excluding his personal residence.

Does the CEO of Indd Money plan for an IPO for his company?

Yes, he expresses a desire to go public, not just to sell the asset but also to enable retail investors to create value from the company.

Outlines

00:00

💼 Founder's Financial Independence and Equity Value

The speaker discusses financial independence, emphasizing that it is not about salary but rather the creation of value through equity and ESOPs (Employee Stock Ownership Plans). As the CEO of a company valued at 5,000 crores, the founder explains that the real wealth comes from the company's growth and the equity's appreciation. The founder cannot make money through a salary but can through selling the company or going public with an IPO. The discussion highlights the importance of choosing the right industry and company to join for wealth creation and the potential of ESOPs to make employees wealthy, as opposed to relying solely on a cash salary.

05:00

🚀 Startup Success Rates and Employee Wealth Creation

This paragraph delves into the challenges and potential rewards of working with startups. It reveals that only about 2% of startups may achieve an IPO or acquisition, leading to wealth creation for founders. The speaker advises employees to be discerning when choosing startups to join and to leverage ESOPs as a means to build wealth. The conversation also touches on the importance of saving and investing in SIPs (Systematic Investment Plans) for long-term financial health. The speaker shares personal experiences, including the value of ESOPs accumulated and the potential wealth they represent, illustrating the power of equity in wealth creation.

10:01

🏛 Reflections on Career Growth and Investment Insights

The speaker recounts his early career, including his first salary and his educational background in economics. He reflects on the transformative experience of joining Google and the importance of adapting to change in the professional world. The conversation shifts to discuss the speaker's investment strategy, which includes a diversified portfolio with allocations to Indian and global equities, non-equity investments like debt funds, and a small percentage in real estate. The speaker also shares his views on the inefficiency of real estate as an asset class and the significance of having a financial cushion before starting a business.

15:02

🛫 Taking Risks for Entrepreneurial Success

In this final paragraph, the speaker discusses the risks associated with entrepreneurship, particularly the decision to leave a high-paying job at Google to start his own company. He considers this the biggest risk that has contributed to his success. The speaker expresses his desire for his company to go public, allowing retail investors to benefit from its growth. The conversation concludes with well-wishes and an optimistic outlook for future endeavors.

Keywords

💡Financial Independence

Financial independence refers to a state where an individual has enough wealth to cover their living expenses without relying on a regular income from work. In the video, the CEO of Indd Money discusses this concept, indicating that it means not needing a monthly cash flow to meet one's expenses. It is a central theme as it relates to the broader discussion of wealth creation and the financial strategies of startup founders and employees.

💡Equity

Equity in a business context represents ownership interests, often in the form of shares. The video emphasizes that the real value for a startup founder comes not from salary but from equity and ESOPs (Employee Stock Ownership Plans). For instance, the CEO mentions that if one has accumulated ESOPs, they could be worth significantly more when the company grows or is sold.

💡Startup

A startup is a young company that is typically seeking to develop a scalable business model. The video discusses the challenges and potential rewards of starting a business, including the low percentage of startups that achieve an exit via IPO or acquisition, which is a key part of the discussion on wealth creation for founders and employees.

💡Venture Capitalists

Venture capitalists are investors who provide capital to startups in exchange for an equity stake. In the script, the CEO explains that founders often need to give away parts of their 'pizza' (company) to venture capitalists to raise capital for scaling their business, which is a critical process in the growth of a startup.

💡IPO (Initial Public Offering)

An IPO is the process by which a private company goes public by offering its shares to be traded on a stock exchange. The video mentions IPOs as one of the ways founders and investors can monetize their equity, providing an example of how a company like ZATO or PolicyBazaar has done this to allow public investment.

💡ESOPs (Employee Stock Ownership Plans)

ESOPs are a form of compensation offered to employees in some startups, giving them a stake in the company's equity. The video highlights the potential of ESOPs to create significant wealth for employees, as they can become valuable if the company performs well, as illustrated by the hypothetical example of 10 lakhs of ESOPs being worth 20 crores.

💡Monetization

Monetization refers to the process of converting assets into cash. In the context of the video, the CEO discusses how founders and investors can monetize their shares in a company through methods such as mergers and acquisitions or an IPO, which is essential for realizing the value of their equity.

💡Wealth Creation

Wealth creation is the process of generating assets or value over time. The video's theme revolves around how individuals, particularly in startups, can create wealth through equity participation, ESOPs, and strategic financial planning, rather than relying solely on cash salaries.

💡Angel Investing

Angel investing involves affluent individuals providing capital to startups in the early stages of development, often in exchange for equity or convertible debt. The CEO mentions angel investing as part of his personal investment strategy, indicating it as a way to diversify investments beyond traditional asset classes.

💡Diversification

Diversification is a risk management strategy that involves spreading investments across various financial instruments, industries, or other categories to reduce risk. The CEO's investment strategy, as described in the video, includes a diversified portfolio with allocations to Indian and global equities, non-equity assets, and even real estate, showcasing the importance of diversification in building wealth.

💡Risk

Risk in the context of the video refers to the potential for loss or failure, particularly in entrepreneurial ventures. The CEO shares his experience of leaving a high-paying job at Google to start his own company, which he considers the biggest risk he has taken, highlighting the importance of risk-taking in achieving success.

Highlights

The CEO of Indd Money discusses financial independence and the value of equity and ESOPs over cash salary.

Founder of a startup typically does not make money through salary but rather through equity and ESOPs.

The process of how a startup founder can monetize their stake through mergers, acquisitions, or IPOs.

Only a small percentage of startups, around 2%, achieve an exit event like IPO or acquisition.

Advice for employees on how to choose companies wisely and the importance of ESOPs in wealth creation.

The concept that salary alone is insufficient for financial independence and the power of compounding through SIPs.

An example of how accumulated ESOPs can translate into significant wealth, such as 10 lakhs ESOPs being worth 20 crores.

Recommendations for a 25-year-old on which industries and types of companies to join for potential ESOP benefits.

The speaker's first salary and the value of that salary in today's terms, highlighting the change in economic context over time.

Reflections on the early career choices and the importance of joining transformative companies like Google.

The changing concept of age and experience in the professional world, with a focus on adaptability and continuous learning.

The numerical figure of savings, around 4 to 5 crores, that could provide a cushion for someone to start their own company.

The speaker's personal investment strategy, emphasizing diversification across equity, non-equity, and real estate.

The speaker's perspective on the inefficiency of real estate as an investment class compared to other asset classes.

The potential for an IPO for Indd Money and the desire to enable retail investors to create value from the company.

The biggest risk taken by the speaker, leaving a high-profile job at Google to start his own company.

Transcripts

so are you financially

independent you are currently the CEO of

indd money a company which is valued at

5,000 cror how does the founder of a

startup actually make money I don't

think uh you know salary makes you feel

rich but on the other hand the real

value can only be created through equity

and esops so if I had acumulated esops

of 10 lakhs I would be worth 20 crores

correct and there are examples like this

Lots you were to start your own career

right now as a 25-year old guy which

industry or which companies would you

like to join so that you can derive

value out of their resource I don't

think that if somebody with 20 years of

experience is better than someone with 5

years of experience you're saying only

with the cash salary it is very

difficult for somebody to Achieve

Financial Independence and which is

[Music]

why Mr as kup you you are currently the

CEO of indd money a company which is

valued at 5,000 crores you've been

working in almost four five companies in

your entire uh life so far so are you

financially independent yes I'm

financially independent so how do you

define Financial Independence uh you

know if me and my

family does not need to rely on a

monthly cash flow to meet the ends meet

one if that's financially independent

and I can also extend and then what is

wealth can that wealth be passed on to

certain Generations yeah so that you

know they are able to perhaps use it for

you know doing something better to for

the Mankind in this world what I'm

curious to know is how does the founder

of a startup actually make money right

how does that entire process work

because from the outside when we

evaluate startups we look at okay

they're not making profits what the

point and that's how a common man might

look at it so can you educate us as to

how a Founder makes money yeah no great

so firstly the founder cannot make money

through salary okay okay the second

thing is that typically think of a

company like a

pizza right uh where a Founder who is

building the company with his own money

and does not have any investors then the

whole pizza belongs to

him now when the founder wants to scale

and when he wants to build out a company

and create a large impact he or she

wants to raise Capital but uh but there

there are institutions in this country

Venture capitalists of various stages

and private equity which invest in

companies there are they getting the

money from they get their monies

from investors hni investors University

endowments and so on and so forth so the

minute uh a Founder wants to raise

Capital to scale his or her company that

founder would take money from the

company and in exchange give few pieces

of

pizza to those investors so now let's

assume that there are you know four

pieces of pizza for Simplicity so I

would keep two pieces of

pizza and I would give two pieces of

pizza to these

investors right that's how it happens so

now the investors own 50% of the pizza I

own 50% of the pizza now as my company

grows

further my pizza becomes bigger H and I

put more cheese on

it and what what happens is that I need

to give more pieces of pizza to more

investors because I want to scale even

more or two pieces or or I have let's

say 25% of the pizza and 75% of the

pizza belongs to these investors

now the founder can

monetize and he he and she has to

monetize along with all of these

investors through following ways number

one way is that he or she can do a sale

of the asset which means do a merger and

acquisition meaning sell the company

sell the company as an example M mintra

selling to

Flipkart uh so that's one way to do it

the second way to do it is you say I

want to

list my asset on the Bombay Stock

Exchange or National Stock Exchange

right I want to list it IPO IPO and I

want to invite normal people retail

people to be able to invest in my

company so that's the second way that is

what zato did that is what zato did or

that is what uh you know PM also did

recently or that is what policy Bazar

has done that is what naika has done and

so so that point of time the founder

gets to sell there are some there are

some lockin etc etc but that now

now that makes the founder part of his

pizza liquid right he can go and sell in

the open market nibles of that in the

open market yeah so what is the success

rate for a Founder like you mentioned a

Founder can't make money through salary

because they're taking a nominal salary

so out of 100 startups which are made

coming in India how many startups can

actually have an event of an IPO or

getting acquired by another company

where the founder actually makes some

wealth so I would say two 2% yeah

company which is getting

started uh you know obviously the

failure rates are higher because they

may even fail even before being able to

raise Capital so how does the employees

make money now I understood about the

founder uh but a lot of people watching

over here uh you know are really

hesitant of joining a startup because

they like like you mentioned only two

out of 100 startups might actually

become successful so as a person who is

starting out my career how can I make it

worth my while so how can I become a

part of that wealth creation Journey

along with that founder yeah look I mean

I think just like the way today's date

an investor chooses a company that he or

she wants to invest in same way they

need to be able to have the sense of how

to choose companies yeah that's the

first thing second is that I think the

magic of employee stock options and it's

kind of got proven with so many

liquidity events that has happened is

just

unbelievable it creates like a think of

a person who's 25 years

old you know uh especially if that

person joins the right company and

actually negotiates more esops versus

salary in for a growth stage company in

four to 5 years time that person will

create so much of wealth that he she

will be ready to do a startup of his own

or her own for salaried people if

assuming they don't participate in

uh creating a company or they don't have

esops assuming Pure Play salary I think

it's just I've not seen it very seldom

for people to get financially

independent you're saying only with the

cash salary correct it is very difficult

for somebody to Achieve Financial

Independence and which is why you know

something which I also didn't do when I

was a kid but save and put their money

in sips every month h that is that

compounding is very powerful and that

can you know make you somewhat

financially independent so Ashish after

what salary did you start feeling Rich

so I I don't think uh you know salary

makes you feel rich okay whether you are

earning 10,000 rupees a month or you

earning 1 lakh or 10 lakh the concept of

salary right firstly it doesn't come in

one month a salary when we say is

divided by 12 months and second is that

salary comes to you after tax and tax is

deducted

fully so I don't think uh one can create

wealth with just

salary but on the other hand uh the real

value can only be created through equity

and esops can you give an example what

is the esops that they took and what was

the value of that ESOP when they finally

got the exit got it got it no that's a

good point so let's say a person who uh

joined me in the beginning if he had 100

rupees of esops that 100 rupees of esops

uh you know gave him a value of about 2

lakh rupees so and2 lakh you can do the

maths so if I had accumulated esops of

10 lakhs that would be worth 20 crores

correct and there are examples like this

Lots okay enough to start their own

company enough to start got it so if you

were to sort of let's say start your own

career right now as a 25y old guy which

industry or which companies would you

like to join uh so that you can derive

value out of their esops yeah so I think

I would definitely uh be very bullish on

fintech financial services so your

company my company yes I'm very bullish

right uh and and it's also at the right

stage for sure I'm also very bullish

about

htech uh uh htech you know converged

with aih mhm is going to be very

powerful I'm also pretty bullish about a

lot of uh Enterprise or SAS Tech can you

tell me a little bit about um how your

journey began like what was your what

was your first salary I started working

right after graduation this is before my

postgrad uh and my first job was with

this radio business of times group I

think my salary was like 10,000 rupees

or something like that which year was

this this was 1998 this was many years

ago I was 22 you're making 10,000 a

month yes how much would that value be

today 10,000 a month maybe 60,000 Rupees

that's actually a pretty good starting

Sal yeah okay right so what did you

study I did economics honors first and

then I did my postgraduation uh from

Migel in correct

so in early on when you began your

career what were you optimizing for like

did you think that okay I need to make a

lot of money and be a rich and then

retire or was it something else that you

were thinking about in your 20s or maybe

your early 30s yeah I think so look I

mean I think I had this huge Fortune to

uh join Google which was again very

transformational and join them as their

first country head you know uh this

would have been a little bit later in

your career right yeah I mean it was

actually not that late in the career how

old were you when you became I was I

think about uh 32 years old well how do

you think you became a country head of

Google so far because I worked for I I

built the internet businesses for times

before that okay and internet was just

happening right I also just want to say

that you know the the world has started

changing and it's changed now right like

I have seen that a the concept of

age and the concept of experience is

getting out of the picture completely I

have met

a lot of people with amazing

experience on paper but when I actually

get down to talking to them they have

been in

existence what does that mean which

means that they haven't learned

anything even at indd money there are

people who work with me you know there

could be a 28 29 year old who would be

10x to someone who's worked 20 years

okay so I think the concept of age that

can a 29y old really scale and do things

and you know build

stuff uh I think that is something which

uh has completely

changed so I don't think uh that if

somebody with 20 years of experience is

better than someone with 5 years of

experience so what is that um numerical

figure after which I can quit my job and

think of being a startup founder yeah so

okay so I think that person if that

person can have this 4 to 5 CR of Corpus

then that person also has a cushion and

can also think think of doing a startup

think of failing many times and finally

succeeding so your your advice is that

if somebody wants to start their own

company have at least like four to five

crores in savings yeah my my my uh my

suggestion is that many times a lot of

people jump into starting up chances of

failure are very hard and then you want

to come back to employment and swap back

to you know starting up rather than that

learn work in a startup spend some time

create some Corpus and then jump into

doing a

startup so Ashish can you talk about

your own investment strategy how do you

manage your own money so I you know love

the concept of allocation okay yeah so

broadly my allocation is across Indian

equities global equities can you tell me

the percentages yeah so largely so let's

say firstly let's talk about equity and

non- Equity equity for me

70% non-equity is

30% uh when I say non-equity it means

debt debt mutual funds hybrid and so on

and so forth and bonds yeah and within

Equity uh you know uh there is domestic

and Global equities I like diversifying

between both uh so that's how it is done

of in non equities uh you know things

like Angel Investing and uh real estate

is less than 3% but when you mean real

estate 3% like what is real estate in

this real estate doesn't include the

house that you stay in let's let's leave

that out but real estate as an invest

okay you're not even including your

house here yeah I'm not including the

house so apart from your house you have

real estate investments in which is 3%

of your portfolio less than 3% and what

is this like some commercial building

like it could be like a plot it could be

like an apartment it could be like a

commercial why did you buy it because

you don't like it over over the period

of time I would have bought it but I'm

saying that what I learned over the last

15 years it's an inefficient asset class

basically okay any anything else apart

from these investment products like

bonds fds debt funds domestic Equity us

Equity anything else apart from this

apart from this is my equity in the

company that I work in okay the the in

money correct yeah I'm assuming that is

um the biggest part of your wealth yes

perhaps when we go IPO perhaps yes but

do you think you will one day go IPO I

mean I think this time we don't want to

definitely sell the asset uh you know we

would love to enable lot of retail

people to also create value from us H so

Ashish um what is the biggest risk you

have taken in your life which has helped

you become successful so when I was the

country head of Google that was uh

amazing opportunity

a highly remunerative opportunity and

for me the biggest risk was to just

leave everything leave that and plunge

into starting up I think that was

perhaps the biggest one right I think

you just basically say listen I want to

uh basically build my own startup H and

that has been worth it

obviously I hope

so Co asers I think

um I've asked all the questions that I

could possibly think out of you thank

you thank you and wishing you all the

best thank you so much

cheers thank you guys and I'll see you

in the next one