Every rejection taught us how to build our pitch: Dream11's Harsh Jain

How difficult was it to convince your father that you wanted to break away from the family business to start this?

It wasn’t very hard to convince him. Because my dad is also an entrepreneur and he broke away from his family business to start his own. So, in that sense, it wasn’t something different for him. That was easy. But the idea of the business wasn’t easy for him to fathom.

For someone like my dad, who is very strong in the finance and real estate segment, someone with a traditional business mentality, where one builds things, factories, real assets, real estate, to have an idea from his 22-year-old son saying ‘I am going to change the world with this fantasy cricket’ was difficult. He didn’t support it as much, but he supported my wanting to pursue entrepreneurship.

It would have been equally difficult to convince investors. How many pitches was it before you landed your first cheque?

I don’t even remember my first pitch. We had hundreds of pitches back in the day, all met with rejection. But you learn from every rejection. Like one investor asks you about TAM, and then you look up what TAM is. And then you understand that, okay, I’ve got to present my business in a way that the TAM is large enough for investors to understand that this can be a huge market.

You can’t say I am only going to do fantasy cricket, and that is going to be used by all the fantasy sports fanatics in India. At that time there were 100,000 to 200,000 of them. It was an incredibly small audience. Then you’ve got to look at whether I am targeting those 100,000 people or am I targeting every cricket fan in the country that wants to actively engage with the sport they love.

So, every pitch that got rejected was a learning lesson. Questions like what is your DCF (discounted cash flows), how do you build your DCF, how do you build your valuation, how much money do you need, why do you need this much money, what does your team look like, do you have a diverse and experienced team, what’s the story between you and your co-founder… these made us prepared for the next pitch.

So, for all the young entrepreneurs out there, in the early stages, your idea doesn’t matter that much, because your idea and the business model for 99% of the cases is going to change, is going to pivot, and you are going to have to keep adapting and pivoting, and refining your idea and the business model.

Every early-stage founder really looks at two things–the team and time. The people behind it matters and how big is the market. Because if the market is very small, it will be very unforgiving. If you have a TAM of 1 lakh people and you get to half of them with the wrong product, you are dead.

They are never going to come back. But if there are a billion people, and you get to the first million, also with the wrong product, you still haven’t even scratched the surface of your market.

How does one build the right team at the onset? You don’t have money and neither is Esop an attraction.

At the very beginning, you can’t attract the A-level players. If you’re going out there and say you’re an e-commerce company, if you’re a first time entrepreneur, you can’t expect to reach out to a VP at Flipkart or Myntra.

You know they’re probably not going to join. You can’t afford them. So, it’s very important for entrepreneurs to focus, like we did, on their culture, defining the culture, understanding what is the culture of the company they want to build.

And if you can get B-level or sometimes even like C-plus kind of skill set, but a plus culture that forms the core of your company, if you can get high potential skilled people with a strong culture alignment, that should be your core of the company.

You can always teach skills. Skill can be learned. Skill can be advanced. Skill can be evolved. Culture is very hard to build. If you get your roots wrong, then the whole tree turns out to be rotten. You really need a very strong culture orientation in your earlier initial set of employees.

Talking about culture, how much of the culture is defined by the kind of investors you get on board?

Fundraising was difficult in our time. At that time, 10 years ago, when we were fundraising there were only 10 VCs in India. There wasn’t this seed capital, series A capital, pre-series A capital, pre-seed capital, and then Series B and C, growth-stage kind of capital available. You had to pitch to all of them. We didn’t have the luxury of being picky about who will give us money.

Today, there is a problem of plenty. I would say more than the fund, people give a lot of importance to the brand. I would say it’s not about the brand, it’s about the person. You get the best brand in the world, but a person who’s your champion there, who’s investing there, who doesn’t align with your culture, your mission, your vision, that’s going to be difficult.

I would tell all the young entrepreneurs out there to stop chasing the brand, because the person in that fund has to fight for you, has to love what you’re doing, has to be behind you all the way.

And you found those people who were ready to give you $800 million in a funding round at a never-heard-before valuation. What led to that massive round?

We were able to raise the amount of capital we wanted to because we could always show strong unit economics, which meant that we could be profitable, literally, anytime. When investors see that, that gives you the maximum leverage as a founder, because you don’t need the money.

Ironically, if you don’t need the money, then it’s much easier to raise money, because you can do so at your terms, at your time, and when investors know that as well, then it’s an open conversation. It’s a two-way street.

When it’s a one-way street, then you’re going to have to take the short end of the stick.

You keep your eyes on executing and suddenly sweeping regulatory changes take you by a storm. How do you handle that?

Regulatory changes will keep happening. They happen in the smallest businesses, they happen in the largest businesses. The government also has to keep looking out to protect the end customer, at where taxation is the right balance... Regulations play an important part to make sure that users are protected.

Sometimes markets will hype up certain sectors, certain verticals of industries, where you will see a crazy amount of innovation, but that usually also leads to a couple of players doing the wrong kinds of innovation. That’s why regulations are important.

Of course, regulations need to be done with common sense and a global perspective of what is right and what is the wrong way of doing it. What has been done? What can we learn from other countries that have done it, other sectors that have been through this?

As an entrepreneur, it’s important to be able to adapt and pivot your business according to regulations and work with the government. What I have at least seen as we’ve scaled up in the last few years is that despite being at the receiving end of quite a few regulatory and tax hits, we’ve seen the government is willing to listen.

If you are transparent, if you’re open, if you’re talking about the industry and not selfishly about your company, the government is more than happy to listen. They have all the data. They have all the numbers. You can’t hide or change any of those. If you’re transparent about it, they’re open to listening, and they’re open to doing what is best for India.

As a founder, who is your sounding board?

As a founder, you’re so focused on your product or service that you know that you have mastery over, hopefully, that piece. But as you build up and scale up a company, there are so many different challenges that come your way, in terms of leadership challenges, building up a company, scaling up a company, that have nothing to do with your product or service.

That’s where we can rely on others to help us. Like I said, my father’s been a very important mentor. The rest of the family has been equally supportive. My mom has been my biggest supporter since I was born. My wife has been a phenomenal pillar of strength. Despite whatever challenges I have at work, she’ll always be there trying to help me get over that. Family support is very important.

Some of your early investors should also be your mentors. Vani Kola (of Kalaari Capital), for example, has been one of those motherly figures in terms of growing up as an entrepreneur. She has been very helpful in evolving me as an entrepreneur and talking me through phases that were tough.

Even in the good times, entrepreneurs need to be held down a little bit, because we just want to fly. In bad times, it’s important to lift us up.

Even Navroz D. Udwadia (of Alpha Wave Global) has been a very early supporter and cheerleader. Alongside Vani, Shashin Shah of Think Investments backed us when no one was backing us in a Series A and B.

Younger entrepreneurs can rely on more experienced entrepreneurs to be their mentors. That’s why this community is very important to build together so that we can help each other out.

How important is work-life balance to you?

If you want to be an entrepreneur, there is no work-life balance. If you really want work-life balance, go work somewhere instead. If you want to start something of your own and create something from scratch, you have to be able to give up your work-life balance.

There is nothing like work-life balance for the first 5 or maybe 10 years. After that, if you build something of scale, then you can be lucky enough to try to get some balance.

I love sports, tech, and gaming, so my work is more of my passion. It’s what I love doing. If you’re not putting in those 80-100-hour weeks, then it’s not very likely that you’re going to succeed. Nothing replaces that hard work, and that flows down the entire company.

Only if the boss as an entrepreneur shows that he or she is giving it all, can they demand that from people. You can’t demand something from people that you’re not willing to do.

How has your role as a founder changed over the years? How difficult is it to delegate responsibilities?

I did hold on to my role very closely. For the longest time I have. Even today, I’m constantly struggling to delegate more, micromanage less, but I can say I’ve gotten better.

It’s also the fact that you’re able to afford people who are way more experienced than you in their sectors. That’s the goal. To hire people who are way better at their job than you are in their field. Then it becomes easier to delegate. But even then, it is tough to give up control. It’s like being a young parent.

I have a six-year-old and a two-year-old and you want to be there to make sure your baby doesn’t fall, doesn’t get hurt, doesn’t make any mistakes. But until they make mistakes, fall, and get hurt, they’re not going to learn. You just must be there to make sure that nothing seriously wrong happens. Entrepreneurship is similar to this and it’s like my first baby.

But the small things, you learn over time that they’re good to fail, make mistakes, so that they can learn over time.

Entrepreneurs have to develop an ability to accept that we can stand here watching someone fail and do something that we don’t think is right, because either they’ll do something we don’t think is right, and it’ll go really well and that’ll be amazing, or they’ll fail but they’ll learn from that, and will do better next time. So that even when you’re not there, they’ll still do it the right way.

That’s a lot like entrepreneurship. We all must learn to give up control a little bit and focus more on the critical decisions there. Entrepreneurs still need to be hands-on. You can’t just go from being hands on to hands off. That doesn’t work.

How early do you think conversations around governance practices need to begin?

It’s very important from the start. There are different parts of governance that are very important. From the start, integrity, POSH (prevention of sexual harassment), are basic things that you must be there. Your books need to be clean, and your workplace needs to be friendly. These are basic constructs of building a good company.

Then comes the things that are required from a law point of view. For instance, as you start scaling up, you need an auditor. You don’t need a serious audit until you build something of value. As you grow, governance needs to keep scaling up because your business gets more complex.

In the early stages of your business, if you put too much unnecessary governance, you might slow things down. You need to keep balancing the right amount of governance and the complexity of your business.

It becomes even more important as you get more investors and move towards becoming a public company. You need the highest levels of governance because you have millions of shareholders who don’t have access to the way you’re doing things, and they will rely on that governance to hold you strong.

Different stages of businesses require different amounts of governance, but at every stage of a company it is very critical to get governance right.

How critical is investor management?

Investor management is based on expectations. It is what you and your investors decide on your’s and their expectations. If you expect active or passive investor participation, let them know that. People are happy being passive investors if the company and the founder is delivering.

If you’re not delivering, you can’t expect them to be passive. They have to protect their investment. They must come in and help to make sure it’s performing well.

How serious are you about an IPO?

Right now we have a pretty large matter of a retrospective tax case that we’re fighting. So the question of an IPO doesn’t arise until those matters are resolved.

Also, going public must solve a problem. We can’t go public because there’s nothing else to do now. Going public has a lot of cons as well. There are a tremendous number of pros, but a public company requires a completely different skill set as compared to running a private company. It’s not good or bad but it’s just a different experience. So you must be prepared for it.

You must have a finance team that’s ready to run a public company with quarterly numbers going out there on the clock, being available to analyst questions, watching your stock price every day, and deciding how the mood is within the company.

So, whenever this retrospective tax case is amicably resolved, and we have a problem that going public will solve, we’ll go public.