#Asia When the big daddy of startup investing Ram Shriram talks, you just listen!


Ram Shriram of Sherpalo Ventures

Ram Shriram of Sherpalo Ventures

“Even the strongest climbers need a guide.”

This is the line you see, when you open the page of Sherpalo Ventures, the investment firm founded by Ram Shriram. As a person who wrote a cheque to two Stanford graduates—Larry Page and Sergey Brin who went on to set up search giant Google—when they were starting out, Ram knows what he is talking about.

Ram was in Bangalore on Wednesday for an event hosted by [24]7, an IT services firm headquartered in US founded by two Indians PV Kannan and Shanmugam Nagarajan, a company which he had invested in its early stages. Dressed in a formal black blazer, black leather shoes, black trousers, and a light pink shirt, he seemed very comfortable to be back in the southern part of India where he grew up in.

Ram says that he is happy to see the startup scene emerging in India but he is unhappy about the infrastructure available in the country. He thinks that there is not much change when it comes to infrastructure. Ram grew up in South India and graduated from the University of Madras decades ago. He wants to see better roads and more 4G connections in India. But he admits that the “switch to mobile has been interesting.”

An app only opens a door

He has a word of caution though for entrepreneurs who are building apps.

According to him, everyone thinks that building an app itself guarantees success. But he says it just creates an opportunity.

“The mobile app in itself doesn’t create success. There have been only three mobile apps that have become multi-billion dollar businesses. Of those, only one – Uber – is a real business. The other two are Whatsapp, which has a lot of users but isn’t a great revenue business, and Instagram, which has a lot of users and is a wonderful product. So, if you are building a consumer app on the mobile phone, remember, either you have to have highly engaged users or you need to have a lot of revenue on the product. By revenues, I don’t mean food delivery or those kinds of businesses because they are losing money on every order. I am talking about businesses where you can make money with each transaction.”

Where are the disruptive ideas?

Ram wants to see more universities for higher education in the country, so that more talent is produced which can be used by startups. He points out it is tougher to get into an IIT than Stanford.

Even though he didn’t comment on a question about skyrocketing valuations of startups in India, he said it is easier to get funding in the US if you stay private. “You see a lot of startups staying private in the US, because it is easier to get funding rather than going public,” says Ram who has worked with Amazon’s Jeff Bezos and Netscape’s Marc Andreessen.

He says there is a copy-cat mentality in countries like India and China where you see a lot of clones of successful companies in the West. “Uber was a success because it solved a real problem. But there are going to be clones which will get funded.”

What Ram would like to do is early stage investing in one of India’s “disruptive” ideas. So there is a ray of hope for Indian entrepreneurs who are in the software product business.

See: Top 30 Indian B2B firms with market cap over US$6 billion

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