Lesson: Picking Winners with Ullas Naik

Step #2 Capital Light: Early stage startups now need less initial capital

Cloud services are one of the major factors. So today I don't need to buy servers, I don't need to buy computers. I can buy a laptop, start coding on the laptop and use the cloud as the backend, I can use Amazon web services, use a whole variety of rack space, a whole variety different services for both my computation as well as my storage. In addition frameworks exist, application development frameworks exist. A lot of open source code exists and I can build very scalable enterprise-grade product utilizing a whole bunch of these services.

In addition, API enabled models have been developed where people are developing applications that I can access through an API which means that I don't have to develop that functionality myself as a developer; I can lever somebody else's functionality and add it to my application stack. So if you add it all together, it just doesn't require that much capital anymore to build these companies or to at least build a product.

The go-to-market still requires capital if you have a direct sales model. But you have an inside sales model or a web-based sales model again the cost of distribution can be very low. So depending on what technique you're employing, you could be targeting developers with a developer evangelism technique. You could be targeting enterprises with an inside sales or a web-based marketing technique. All of these things can also be accomplished with very limited amount of capital. That's the reason why both product development as well as product distribution have become cheaper and cheaper. That could not have been possible, again, as recently as two, three, four years ago because enterprise buying behavior or business buying behavior is not at the point where they were willing to buy things off the Internet or utilizing internet models.

I haven't been investing in consumer in the past as much. I've been investing in the business applications a lot more and so that naturally drew me towards the business use cases. In addition, the entire ecosystem of funding early-stage business oriented companies, especially with these new capital light model, was nascent and underdevelopment and so it was underexploited and underserviced. I thought this would be a better place to be.