SoftBank’s India investments have weighed heavily on its financial results. However, Deep Nishar, Managing Director at SoftBank Group International, who joined the company from LinkedIn in July last year, remains extremely optimistic about the Indian market. In an interview with BusinessLine , he talks about how India will be the last frontier for the Japanese telecoms conglomerate, which has committed $10-billion investment in the next 10 years. Edited excerpts:

You joined a year-and-a-half ago. How has the journey been so far?

The journey has been exhilarating. What really attracted me towards SoftBank was Masa’s (Masayoshi Son) vision and the way he thinks about the world. He doesn’t think in one or two years. He thinks in decades and centuries at times.

In terms of areas of focus for us, two things that I have personally been passionate about have been confluence of computation and biology. That was not an area that SoftBank was very focused on before I came in and I’ve started working with Masa closely on that topic and we have since made three investments in that area.

The second area has been around machine learning and artificial intelligence and its impact not just as a technology platform but also in terms of applications, especially in areas like IoT and robotics.

How important is India in your overall investment strategy?

I think India is the last frontier for any company, any investment firm that wants to really have a massive global presence.

China was that way 15 years ago. Unfortunately, we haven’t seen a non-Chinese internet company be very successful and be the number one player in China for a variety of reasons. But India does not have those constraints. India has a growing middle class, India’s infrastructure is getting better. But India still is also not as advanced which means we know where it can be. So it’s a super important market.

People who come in with the right thought process and the right capital are going to win big. And winning is not just about getting a new user base which could be of billion strong but also in terms of the revenue that would be generated as things start coming together.

I left this country 26 years ago and this is the first time in 26 years that I’ve come back and I’m consistently getting 4G signal.

I started Google’s mobile group in 2005 long before the iPhone came out. At that time we were using 2G connections. We built the first Google maps app, gmail and search apps for the phones but until we had high speeds, the usage was always sporadic.

That’s going to happen here soon enough. I cannot over-emphasise how important is India for us and anyone who things otherwise is going to miss out on a huge market.

What’s your view on the cash burn in some of your portfolio companies?

Marking to market is an accounting thing. So, we have our own Japanese accounting practices. In terms of cash burn, helping the market grow in the right way, that’s not a bad thing. That’s an investment into your future.

Doing it without a clear strategy is a burn. All companies go through this curve. In the beginning, Google wasn’t profitable, Facebook wasn’t profitable. But they all had a point of view of when they would become that way. Our companies do too.

We help them and coach them and guide them along with our other investors in those companies to be very prudent about it.

One of our portfolio companies Grofers’ Albinder talked about it openly about how he is thinking about the discipline and the rigour of running a business in a fairly competitive market.

The other part is how do you react to competitive pressure. Because if somebody else is doing irrational things in the market if they have, say an unlimited checkbook, then you cannot just fold and go away because now you’re playing by two different rules.

That’s where we have to make a strategic call. There are cases where we say India is an important market, this particular space in which our company is, is going to be a huge market and we are willing to take that pain of unprofitability a little bit longer because we believe we want to be a true winner in this market.

People are concerned over the ability to exit their investments in India. What’s your view on that?

You have to decouple value from valuation. They come from the same root word but the meaning is very different. I think people can generate a lot of value in a market that is growing the way we are with the intellectual capital that’s there in this country.

The valuations will come up and down. They are dependent on a lot of different macro-economic factors, not all of which are under our control.

Infosys and TCS are very successful companies but people don’t talk about them as much. The lesson for them is that you can generate a lot of value but to also get a large valuation, you have to be a global player. You have to have global ambition.

Chinese companies started creating a lot of value within the China market but then every single one of them have global ambitions.

We need to have the same here. We need to have global ambitions. Once we start doing that, then the value you create will start getting reflected in the valuation you generate.

Would you be encouraging and take your portfolio companies in India to go global?

First you want to secure your own backyard and make sure that you are being successful here but a lot of them have the opportunity to become global players. They can start with regional play. If you think about Ola, we already have investments in GrabTaxi, which is a big investment of ours in South East Asia, which is similar to Ola. If you look at Snapdeal, we have a company called Tokopedia in Indonesia. They can be collaborative with each other and create regional power houses that can effectively compete and create unique value to their customers and consumers in the region.

What kind of synergies do you see possible within your portfolio companies?

You learn a lot from each other. In e-commerce, for example, before demonetisation happened, you would see anywhere between 20-40 per cent of your orders for CoD (cash on delivery). When you have CoD you can have fraud, theft, a lot of last-minute cancellations that cost you a lot of money. You compare that with Tokopedia in Indonesia and they have barely any CoD whatsoever.

We asked them why you don’t have CoD and the founder William said he doesn’t believe in CoD. But then the question was that the trust issues are the same in Indonesia as it is in India.

So they’ve created a mechanism where customers can go and pay their nearest store to pay us. They have recruited shop owners who collected money on their behalf and that fosters trust among customers.

Such exchange of ideas is super important. We foster mechanism where our founders come together and talk to each other and reach out to each other. There are times when we hear things in board meetings and if they are not confidential, we share the ideas with them actively.

How do you plan to invest the $10 billion committed for India?

We said $10 billion over 10 years and it’s been two years and we’ve invested close to $3 billion already. In ten years, I think we will be investing more than $10 billion in this country because we see a lot of opportunity here. If we find an opportunity worth $5 billion, we’ll do that too. Our model is very flexible at SoftBank in terms of investments because we are sector agnostic, we are timing agnostic and we are extremely patient. We took the first dollar out of Alibaba after 15 years of investment.

A lot of technology companies are thinking about AI and IoT. Is there any difference in SoftBank’s approach in terms of where you want to be in these areas?

In computational biology, it is such as nuanced field, most people are not even thinking about it in terms of making investments after quite a bit of work in them. Some of the investments we’ve made are for example in a company known as 10x Genomics and what they do is long read of gene sequencing.

If you follow human gene sequencing, over the last 15 years, the cost has come down from a billion dollar to sequence to now at $1000 to $2000. That cost has fallen faster than Moore’s law has taken hold.

When you see another law taking hold which is even more exponential than Moore’s law, you know something major is going to happen.

So you have to go so deep to understand in the way technology works, understand it and then find a company that’s doing it. And then work with that entrepreneur to help them be successful. That’s the approach that we take in this place, which is truly understanding what we are investing in.

Similarly, AI has become a buzz word and a lot of people talk about it but very few people actually do real AI. The real companies that are doing real AI are few and far between and our approach is also unique from the standpoint that not only looking for companies that are doing real work in AI and machine learning but also applying it to problems that are very big.

So industrial IoT is a great example of that.

How do you see the Indian start-up ecosystem compared with Silicon Valley. Do you see Indians turning into trend setters instead of being just trend followers?

The fact of the matter is that many of these companies around the world are managed by Indians or Indians happen to be the brains behind them. I don’t think Indians are followers.

The infrastructure in India is getting better every day. I think the government is spending a lot of time.

Simple thing like having GST across the country is a big deal. We didn’t do it for so many years since independence. We are now getting to a point where we’ll get it implemented over the next several months. So things are happening. They are happening at a slower pace unfortunately. Second thing that you need is good infrastructure whether it is regulatory, physical infrastructure or financial infrastructure. Ten years ago we didn’t have sufficient financial infrastructure. I think that is changing. There’s a lot of investment available in this country both from indigenous as well as overseas firms.

The regulatory infrastructure is getting better every day. People are understanding it. Things like Niti Ayog are very specific initiatives the government is taking in order to focus on this particular sector.

In terms of exposure, the fact of the matter is there is no other Silicon Valley in the world whether you look at any other advanced country in the world. The reason for that is Silicon Valley was not created overnight. It took us 40 years to get to where we are today.

There is a lot of evolution and growing up and maturation of ideas and failures and looking at other people around you. India is not going to get there overnight. But there’s no particular reason when you have first two factors coming in place that the third factor is not going to get there as well.

You worked closely with a lot of Silicon Valley start-ups. The common problems here seem to be what Silicon Valley start-ups also had when they started. Do you think start-ups here needn’t reinvent the wheel and leapfrog some of these problems?

Both by virtue of my work in India at Google and at LinkedIn and then my current job at SoftBank, I get to meet a lot of Indian entrepreneurs. The big advice I always give people is that success is when you create value, not when you raise money.

Being an entrepreneur, you think that your goal in life is to raise that next round of financing. That’s just the means to an end. The end is not investment. The end is value creation.

Value creation happens when you create something of tremendous value for your users and your customers, which in turn generates value for your shareholders.

I think people are beginning to learn that. Over the last few years, sometimes we got caught up on who is the unicorn, who raised a billion dollar round. That one-upmanship ultimately ends and it ends very poorly.

I think the smart entrepreneurs raise money but they don’t get caught up in the hubris.

Masa has talked a lot about Singularity. What is your view on short-term play on singularity?

There’s a science fiction definition of singularity, which is we’ll all live forever. More interestingly singularity talks about the exponential part of how technology is going.

Singularity is just about are technologies getting to the pace where the innovation we see next years is going to be bigger than all the innovations we’ve seen in that particular field.

That’s why Moore’s law went at a particular pace which was a huge deal at that time but you look at the cost of human genome sequencing and that’s gone down even more.

Our notion of AI would move even faster than human genome sequencing going forward. That will make things possible that we have not even known to be possible.

What kind of innovation quotient do you see among Indian start-ups? Would you say they are more of me-too companies?

I don’t believe that. As Indians we have a great habit of self deprecation. Humility is a good thing, self deprecation is a bad thing. Silicon Valley runs on Indians. Innovation is not just about inventing the next molecule or something, which by the way plenty of Indians have done and they continue to do.

It’s also demonetisation happened and overnight all kinds of Indian companies decided to do interesting things.

Innovation is about taking what the world gives you and making something out of it. It is making lemonade out of lemons and Indians I think are the best country to make that lemonade out of lemons.

I think there’s plenty of innovation in this country.

What’s your advice for budding entrepreneurs in India?

The biggest advice I’ll give is that value creation is different from valuation. What I would want people is to reflect on that. That will help create companies that will really endure. 95 per cent mature IT companies in the US do not survive the 20-year mark. As it is in the start-up world, 95 per cent start-ups fail within two years.

These failed companies include Netscape and Pixar each had billion dollars in revenue at their peaks. Company building and company sustaining is an incredibly difficult task. Every single day, the best entrepreneurs in the world focus on value creation for every one of their stakeholders. That’s the only way you endure the test of time.

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