Full Transcript
https://www.youtube.com/watch?v=dng2KDh5_LA
[00:00] The definition of being rich is not measured in how much rupees you have.
[00:04] It is measured in terms of how many years you can live without having to work for money again.
[00:10] It's a never-ending game.
[00:13] The only thing to know is how to play this game.
[00:16] For you to capture wealth, you need to first look at places which is not that sexy and has very little competition.
[00:23] It is almost the financial suicide in the Indian society to say that you are living on rent at the age of 40 or 45.
[00:30] A lot of people confuse real estate with buying a house.
[00:32] Yes, you can make a lot of money in real estate, but not by buying a three-bedroom apartment in the heart of the city.
[00:39] Every rupee you have in your life is an employee working for you.
[00:42] There are several ways of letting money exit your life.
[00:44] The number one revenue generating machine for banks is not mutual funds, [music] is not your FDS.
[00:52] It is by selling you personal loans.
[00:53] We basically function on fear and greed.
[00:55] That's it.
[00:55] So we are living in a world which is designed to suck out money from your life and keep you poor.
[00:57] We make
[01:00] your life and keep you poor.
[01:02] We make three people rich.
[01:02] Number one is your boss, number two is the bank and number three is the government.
[01:07] Our goal is to figure out how do we keep as much of it to ourselves.
[01:14] So before I begin guys firstly I did not expect you guys to be this smart.
[01:22] So I think um I've underprepared.
[01:25] I I was told that uh I'm going to be teaching uh 21 to 22 year old kids but these are not kids.
[01:30] You guys are really really smart.
[01:32] So I want to ask you guys how much would you guys rate your financial literacy right like anybody who who is think is more than 9 on 10 raise your hands.
[01:46] Every time people just look at each other, you know, instead of looking within,
[01:49] am I nine on 10?
[01:53] Who is nine on 10?
[01:54] [laughter]
[01:57] Guys, let me tell you one thing.
[02:00] Nine out of 10 businesses fail because of who knows the answer.
[02:03] of who knows the answer.
[02:03] Financial mismanagement.
[02:05] Nine out of 10 businesses.
[02:07] So if you do not understand how to manage your own personal finances, forget about starting a business.
[02:11] because running a business is 10 times harder than managing your own money.
[02:16] There are a lot more numbers to deal with, a lot more metrics to look at.
[02:21] So if you are telling me that you're not good with your own personal finances, then I would be very very careful when you run your business.
[02:28] because at a smaller scale when you're spending 400 rupees a day, it's fine.
[02:35] But once you start scaling the business and all of a sudden you are having five employees, 10 employees, a lot of things can break.
[02:42] Business is not going to go in a straight line ever.
[02:45] Businesses can always go up and down and the downs will always happen and it's not going to be like a stock market car 10% 20% drop.
[02:52] There could be a 50% drop 70% drop very much possible in the first 3 years of running your business.
[03:00] So when there is such a big drop in your business and if
[03:03] such a big drop in your business and if you do not understand how money is flowing into your business and out of your business, you can run out of money and then the business is shut, right?
[03:11] If you don't have fund raise, which is very difficult to do in the early stages of your business.
[03:16] So knowing how to manage your own finances is extremely important if you're going to be successful in your business.
[03:24] 2,450 years.
[03:28] That is the number of years Nikl Kamat can live by spending 1 cr a month without having to work for a single day in his life again.
[03:39] So the definition of being rich for the wealthy is not measured in how much rupees you have or how much dollars you have.
[03:47] It is measured in terms of how many years you can live without having to work for money again.
[03:53] That is the true definition of wealth.
[03:57] Now it is also called as financial freedom where money is making more money for you.
[04:01] So every single rupee that is there in your life, think
[04:06] rupee that is there in your life, think of it as an employee working for you.
[04:08] of it as an employee working for you.
[04:10] Today you guys have no employees. What are the leverages that is there in our life?
[04:12] What is leverage?
[04:15] If you look at the definition of physics, leverage is how can you amplify the outcome you get for the effort you put in?
[04:24] Because money does not exponentially increase for the more effort you put in.
[04:26] Right? 9 to 5 is not going to make you rich.
[04:29] I'm sure you have already realized that by now which is why you have started your businesses.
[04:32] Business allows you to leverage the money you you know bring into your life.
[04:34] So what are the leverages that you can think of?
[04:36] Number one leverage is obviously you put in your own time but that's not going to amplify exponentially.
[04:39] You'll probably put 8 to 10 hours maximum in your whole day.
[04:41] That's it.
[04:43] Beyond that you'll get tired and even if you work you're not going to have good efficiency.
[04:44] Second is you will hire people cuz you have 8 hours.
[04:46] If you have 10 people you have 80 hours in a day and you have to give them money right but you amplify your effort.
[04:48] Third is
[05:06] your effort.
[05:06] Third is media.
[05:08] media.
[05:08] How many people you can reach?
[05:11] How many people you can reach?
[05:14] A shopkeeper in Gura can only reach his locality and that's his business.
[05:16] But when you guys are running ads on Google and Meta, you can amplify your reach of yourself and reach more and more people.
[05:22] yourself and reach more and more people.
[05:24] So that's leverage.
[05:27] And the last one is technology.
[05:29] You build your technology once and then millions of people can use that same technology.
[05:32] millions of people can use that same technology.
[05:34] But obviously the capex for that is really high.
[05:36] That's why people raise money to build that technology.
[05:38] And once crores and millions of people are using it, it becomes a zomato.
[05:40] So these are the four leverages of life which you can use to attract money in your life.
[05:42] which you can use to attract money in your life.
[05:46] I was where you guys are at the age of 23.
[05:48] I was making about 27,833 rupees per month.
[05:50] That was my salary in KPMG.
[05:54] And at that point of time I was thinking
[06:07] And at that point of time I was thinking this was when 7 years back 7 8 years back I was 22.
[06:14] I was thinking if I make one lakh rupees a month.
[06:16] I was in Bangalore.
[06:18] If I make one lakh rupees a month then I will never have to then I can basically buy anything which I want.
[06:24] without looking at the price you know because at that point of time in my head I'm like I like to go to restaurants,
[06:32] eat a lot of food.
[06:34] Um I like to go clubbing I like to go on a vacation maybe once a year.
[06:39] So I thought if I make 12 lakhs and if I spend like you know three four lakhs on essential basic stuff and another couple of lakhs or couple of three lakhs on fun stuff my life will be set.
[06:51] And the number I had in my head at that point of time was that if I have about 3 cr rupees of savings then I will be financially free.
[07:00] But then I eventually hit 1 lakh rupees a month during COVID time.
[07:02] I got a I I shifted couple of jobs and I got 1 lakh rupees a month.
[07:07] And then I realized that
[07:13] my expenses.
[07:16] my expenses had actually come down because I was staying with my parents.
[07:18] I was not having any expenses and this entire one lakh that I was making was invested into the markets into the mutual funds and so on and so forth.
[07:28] And because I had a lot of money sitting in my accounts in my mutual funds and all of that, I started increasing my expenses and I started justifying that these are important to me.
[07:40] I started buying an I bought an iPhone and with that iPhone I started creating content and that content eventually helped me make five lakhs a month, 10 lakhs a month, 20 lakhs a month, 30 lakhs a month and today probably about 50 60 lakhs a month just from content.
[08:03] And as that income increased, I realized that to support that income, I need to increase my expenses to support that income because that income
[08:14] support that income because that income cannot be sustainable without having people working for you and without having those other expenses to support that income.
[08:22] So the moral of the story, what I'm trying to tell you is that there is no magic number as such.
[08:27] The game doesn't end.
[08:30] It's a never- ending game.
[08:31] The only thing to know is how to play this game.
[08:34] Because for every level that you reach, for every income that you reach, for every expense level that you reach, all you need to know is how do you play this game of how money is entering your life, how much money is actually staying in you and how much money is exiting your life.
[08:52] If you understand this game of cash flows of money entering your life and money exiting your life that number can be 100 cr, thousand cr, $1 billion, $10 billion, it doesn't doesn't matter.
[09:04] A billion people in India would be happy with 1 cr considering where they're living in India and they can live a very good life where they can eat 10 times a day also if they want.
[09:12] So there is no
[09:15] day also if they want.
[09:17] So there is no such thing as a magic number as to what such thing as a magic number as to what you need to achieve in your life.
[09:21] you need to achieve in your life.
[09:24] And the other interesting thing is that And the other interesting thing is that not everybody understands this game,
[09:27] not everybody understands this game, right?
[09:29] It's common sense, right? Spend less than what you make.
[09:31] It's common sense.
[09:34] Parents would have told us growing up every single day, you know,
[09:35] don't spend a lot of money.
[09:37] Money is like God.
[09:40] If you ask them for a lot of money, they'll be like, "You go out and
[09:41] earn some money."
[09:43] How many of youall have heard this?
[09:44] You go out and earn money.
[09:46] You let me let me see how you make one rupee.
[09:48] See how hard it is to make one rupee.
[09:50] We all heard this.
[09:53] And the problem is that because very few people understand how money works.
[09:56] Money follows a power law which is so
[09:59] disproportionate
[10:01] that even the paratos principle doesn't apply in the money rule.
[10:03] Parto the guy who actually came up with this rule.
[10:07] How he figured this out is that he was living in Italy
[10:09] and he noticed that 80% of the land in
[10:16] and he noticed that 80% of the land in Italy was owned by 20% of the people.
[10:20] Italy was owned by 20% of the people.
[10:23] That was his first reveal and he started noticing that this was happening across.
[10:26] noticing that this was happening across.
[10:30] Now if you come to India though it is not 20% of people owning 80% of the wealth.
[10:32] It is worse than that.
[10:36] It is 10% of the people owning almost 80% of the wealth.
[10:40] 1% of the people owning 40% of the wealth and the top.
[10:44] 1% of the people has more money than the bottom 50% of the people.
[10:48] The top.1% of people has more money than the bottom 50% of the people.
[10:52] The top.1% of people are just 14 lakh people.
[10:55] 14 lakh people in India have more money than 700 million people in India.
[10:59] Let that sink into your head.
[11:02] Now why does this happen?
[11:06] What is the salary hike percentage that has been happening in the last 10 years?
[11:09] 5 to 10% average if you're working in startups
[11:17] average if you're working in startups and if you're a good employee you can
[11:18] and if you're a good employee you can get 20 25% as well.
[11:22] So salary increment is limited and there's also inflation on top of it.
[11:24] is limited and there's also inflation on top of it.
[11:26] So what we need to do is figure out ways to attract large amounts of capital to yourself.
[11:29] So what we need to do is figure out ways to attract large amounts of capital to yourself.
[11:31] yourself.
[11:33] Now nobody is just going to hand cr you.
[11:36] Now nobody is just going to hand cr you.
[11:38] Why will they why will somebody just give you a 100 cr check?
[11:40] give you a 100 cr check? How can you attract ways of letting money flow into your life?
[11:43] attract ways of letting money flow into your life?
[11:47] See it's much easier to convince someone to say that I will manage this money for you.
[11:49] convince someone to say that I will manage this money for you.
[11:52] you allocate this much money and I will manage it for you and build something out of it rather than saying bro give me 10 crores or 100 crores only your dad will do if he has that money but anybody outside your family if you go and tell them see because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[11:54] manage it for you and build something out of it rather than saying bro give me 10 crores or 100 crores only your dad will do if he has that money but anybody outside your family if you go and tell them see because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[11:56] than saying bro give me 10 crores or 100 crores only your dad will do if he has that money but anybody outside your family if you go and tell them see because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[11:58] than saying bro give me 10 crores or 100 crores only your dad will do if he has that money but anybody outside your family if you go and tell them see because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[11:59] crores only your dad will do if he has that money but anybody outside your family if you go and tell them see because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:02] that money but anybody outside your family if you go and tell them see because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:03] family if you go and tell them see because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:05] because we're living in a world where there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:07] there is exchange of resources between each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:09] each other the ber system still exists today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:12] today we exchange value the amount of money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:13] money you can attract is directly proportional to the number of problems you solve in this world be in something which has the least amount of
[12:15] proportional to the number of problems you solve in this world be in something which has the least amount of
[12:17] you solve in this world be in something which has the least amount of
[12:19] which has the least amount of competition let me give you an example.
[12:22] competition let me give you an example So in the healthcare industry.
[12:26] you must have heard of this company.
[12:28] you must have heard of this company called Dr. Lalpath Labs.
[12:30] It's a diagnostics company.
[12:32] It's a B2C diagnostics company.
[12:35] Now firstly I'm sure none of you guys would have that as the first idea.
[12:37] I will do some diagnostics thing as a startup.
[12:42] But there is this company which started a diagnostics company where what they interestingly did is that they go to the government and say boss 90% of hospitals in India are government hospitals and the diagnostic center in these hospitals are You guys are not doing a good job.
[12:57] So I'm going to open up these centers in your hospitals and I'm not going to charge the customers.
[13:05] You pay me.
[13:07] the government will pay me and the customer will go to these government hospitals.
[13:14] They will get free service and the government will pay me.
[13:15] So what has happened over here?
[13:17] Number one,
[13:19] happened over here?
[13:19] Number one, eliminated the competition.
[13:21] There is no competition.
[13:23] There is no competition as once you get into this hospital or government hospital, nobody else can get in.
[13:28] That is a monopoly that they have created for themselves.
[13:29] There is no competition anymore.
[13:33] Second, I don't want to have to do the advertising and marketing because people are anyway coming to these government hospitals for free.
[13:40] They're coming for free service and the onus is not even on me to collect the money from the customer.
[13:44] The government is paying me the money.
[13:46] So, this is just one example of a non sexy non-trendy business which has captured the largest market share in a in an unconventional way and eliminated all the risks.
[13:57] So for you to capture wealth you need to first look at places which is not that sexy and has very little competition.
[14:08] You might not be the first mo but you are probably the fourth or the fifth mo in that space and identifying that and timing it properly.
[14:15] This is called luck.
[14:17] This is what people say you need to be lucky to have be rich.
[14:19] And if somebody becomes successful
[14:21] rich. And if somebody becomes successful we just say it's luck they were in the
[14:23] we just say it's luck they were in the right place and the right time.
[14:25] But it is not luck because people have
[14:28] is not luck because people have identified this as one of the
[14:29] identified this as one of the fundamental rules of attracting wealth
[14:31] in their life and they're doing this
[14:33] time and time again. Probably the first
[14:35] three ventures failed but the fourth one
[14:36] succeeded and we call it as luck.
[14:39] This is the first thing to do. Second thing
[14:41] is to have a proprietary technology
[14:43] which cannot be easily copied.
[14:46] Everybody I've heard today what you guys
[14:47] are doing can be copied.
[14:50] You might be the first mover, but the
[14:52] fifth mover will come and take away your
[14:54] market share by undercutting your price
[14:57] and then it becomes a price over to the
[14:58] bottom. There's no profits left and
[15:00] everybody exits the business. It finally
[15:02] becomes a commodity. So, I've not heard
[15:04] anybody here talk about building
[15:06] something which is a proprietary
[15:07] technology in the world of AI in the
[15:10] world where jobs are being laid off.
[15:13] I've not heard a single person here talk
[15:15] about building something proprietary
[15:17] which cannot be easily copied. Now you
[15:20] might say that I do not understand tech.
[15:22] Might say that I do not understand tech.
[15:22] I'm not a coder.
[15:25] So on and so forth.
[15:25] But that is not an excuse anymore in today's world.
[15:30] You cannot say that I do not know how to code.
[15:32] I do not know how to build technology because that is the world of 2020.
[15:37] The world of 2026 is very different for you to make such statements.
[15:41] So if you crack these two things, half of the job is done.
[15:43] Getting into things where there is less competition.
[15:46] And doing something which is very difficult to replicate.
[15:50] I'll give you an example.
[15:56] In the early 2000s, Google and Microsoft were the largest tech companies in the world.
[16:01] Each of them had a market capitalization of probably 10020 billion back in those days.
[16:06] Already big.
[16:06] And they were both doing very different things.
[16:12] One of them was focusing on software and the other one was focusing on hardware.
[16:17] But then because they were threatened of each other, they started fighting with each other.
[16:20] They started looking at what the other company is doing, what the
[16:23] the other company is doing, what the other company is doing and they start other company is doing and they start copying each other.
[16:27] Whatever they're launching, they this guy's also launching so on and so forth.
[16:31] and they start looking at that competition so closely that eventually Apple comes in and becomes so big that they're now bigger than both Google and Microsoft combined within 5 years time.
[16:42] So within 5 years Apple became worth $500 billion which was more than the total combined market capitalization of Google and Microsoft at that point of time.
[16:55] Moral of the story is that if you start getting into things where there is already a big player and you start competing with them and you think that I will launch something better which is going to be cheaper than that competitor, it's not going to end well.
[17:08] It is not going to be a sustainable business for which you will have a monopoly for decades and centuries to come.
[17:14] So that is one of the fundamental rules of attracting wealth in your life.
[17:16] who has invested more than 80% of money
[17:25] who has invested more than 80% of money in equity meaning stock market raise your hand.
[17:27] in equity meaning stock market raise your hand.
[17:30] your hand.
[17:33] Nobody.
[17:33] Nobody.
[17:33] If you have invested under 50% in equity and rest in debt, real estate, gold, raise your hand.
[17:35] If you have invested under 50% in equity and rest in debt, real estate, gold, raise your hand.
[17:37] and rest in debt, real estate, gold, raise your hand.
[17:40] raise your hand.
[17:40] And if you have invested at least 5 to 10% in crypto or any other risky assets, raise your hand.
[17:42] And if you have invested at least 5 to 10% in crypto or any other risky assets, raise your hand.
[17:44] 10% in crypto or any other risky assets, raise your hand.
[17:47] raise your hand.
[17:47] Okay, you guys are automatically in group C.
[17:51] automatically in group C. All right.
[17:51] All right.
[17:51] Now I want to show you guys something.
[17:54] Now I want to show you guys something.
[17:54] Let me first explain to you how diversification impacts the growth rate of your fund or your assets and your net worth.
[17:56] Let me first explain to you how diversification impacts the growth rate of your fund or your assets and your net worth.
[17:59] diversification impacts the growth rate of your fund or your assets and your net worth.
[18:01] of your fund or your assets and your net worth.
[18:01] Now this is how a typical Indian invest.
[18:04] worth. Now this is how a typical Indian invest.
[18:04] This is the data from RBI total Indian household assets as per March 24.
[18:07] invest. This is the data from RBI total Indian household assets as per March 24.
[18:11] Indian household assets as per March 24.
[18:11] If you notice here, you see that half of the money is in property, 15% in gold, 13% in fixed deposits, 5.7% in your LIC funds,
[18:13] If you notice here, you see that half of the money is in property, 15% in gold, 13% in fixed deposits, 5.7% in your LIC funds,
[18:15] you see that half of the money is in property, 15% in gold, 13% in fixed deposits, 5.7% in your LIC funds,
[18:17] property, 15% in gold, 13% in fixed deposits, 5.7% in your LIC funds,
[18:22] 15% in gold, 13% in fixed deposits, 5.7% in your LIC funds,
[18:26] in your LIC funds, another 5.7% in your provident fund, 3% in cash, and 5.8% in equity.
[18:34] This is what the data suggest of what majority of us are doing.
[18:39] Now, why does this happen?
[18:43] Can somebody answer why does this end up happening for majority of the people?
[18:45] Now I know what you answer you guys said but then why is the data saying this?
[18:51] Again it goes back to the status driven society right.
[18:56] It is almost the financial suicide in the Indian society to say that you are living on rent at the age of 40 or 45.
[19:02] It not only affects your ability to attract the right partner in your life because in the arranged marriage household one of the first questions which is asked do you own a house
[19:16] that's one of the first question that is asked and the second thing is obviously family pressure.
[19:22] So it has become almost impossible to avoid this happening in your life because of the societal
[19:27] your life because of the societal structures that we are living in.
[19:29] structures that we are living in.
[19:29] That's number one.
[19:31] Number two, how many of you all feel that the house is an asset?
[19:33] Raise your hand.
[19:34] If you feel house is an asset, raise your hand.
[19:38] Good.
[19:41] So, for something to qualify as an asset, it needs to be something that firstly grows in value, which the house does.
[19:45] It does grow in value.
[19:48] But the problem with your house is that you're never going to be able to financially utilize it for your other goals, right?
[19:55] Having a 5 cr house versus having a 5 cr mutual fund.
[19:57] And it doesn't even have to be mutual fund.
[19:59] It can also be money kept in a savings account, right?
[20:03] Obviously, it won't grow as fast, but the ability to liquidate it and the ability to use it for other things in your life makes it such a powerful tool.
[20:12] Yes, you can take a loan against your house.
[20:14] The problem with India is we have very high interest rates for our homes.
[20:20] and even the entire prospect of getting a house in the first place.
[20:22] You take a house, you take a 20-year home loan, you
[20:27] house, you take a 20-year home loan, you end up paying those EMIs for 20 years
[20:30] end up paying those EMIs for 20 years and at the end of it, you are stuck with
[20:33] and at the end of it, you are stuck with a property which you will not sell
[20:36] a property which you will not sell because of sentimental value. You are
[20:40] because of sentimental value. You are not able to use it for building more
[20:42] not able to use it for building more wealth. Also, you will probably only
[20:44] wealth. Also, you will probably only sell it when you're in financial ruin,
[20:45] sell it when you're in financial ruin, which happens to some of them where
[20:47] which happens to some of them where they're in ultra ultra financial ruin
[20:49] they're in ultra ultra financial ruin and that is when they will sell their
[20:50] and that is when they will sell their house and that is also seen as a big
[20:52] house and that is also seen as a big disgrace. It's a last resort like we
[20:54] disgrace. It's a last resort like we will never ever think of selling the
[20:56] will never ever think of selling the house. Only if you are in absolute
[20:57] house. Only if you are in absolute financial disgrace and the bank is
[20:59] financial disgrace and the bank is forcing you to sell the house that is
[21:01] forcing you to sell the house that is when you sell the house
[21:03] when you sell the house and even then half of our money is kept
[21:05] and even then half of our money is kept over here which is at best growing at 7
[21:09] over here which is at best growing at 7 or 8%. Now you might tell me Shahon but
[21:12] or 8%. Now you might tell me Shahon but my dad invested in something which has
[21:15] my dad invested in something which has now become 5 crores. Now why can't you
[21:19] now become 5 crores. Now why can't you do that today?
[21:21] do that today? Let us look at real estate as a D2C
[21:24] Let us look at real estate as a D2C product. Okay. At what stage of a D2C
[21:28] product. Okay. At what stage of a D2C product is that product at its cheapest?
[21:35] Like let's say for example you want to
[21:37] Like let's say for example you want to buy a table a wooden table. So if you do
[21:41] buy a table a wooden table. So if you do the work yourself in getting the wood
[21:44] the work yourself in getting the wood negotiating the price finding the
[21:46] negotiating the price finding the carpenter giving him the design and
[21:48] carpenter giving him the design and making it versus going to urban ladder
[21:51] making it versus going to urban ladder and buying it. The price will be 5x
[21:53] and buying it. The price will be 5x difference 5x difference higher in urban
[21:55] difference 5x difference higher in urban ladder. Similarly, when you buy
[21:58] ladder. Similarly, when you buy property, most of us when we look at
[22:00] property, most of us when we look at property, we are looking at a 3BHK flat.
[22:04] property, we are looking at a 3BHK flat. 3BHK flat is like buying a ready table
[22:06] 3BHK flat is like buying a ready table from urban ladder. It'll be there at the
[22:09] from urban ladder. It'll be there at the highest possible price. The entire value
[22:11] highest possible price. The entire value of it is captured by the builder, not by
[22:15] of it is captured by the builder, not by you.
[22:16] you. Now, one step below that is to buy an
[22:18] Now, one step below that is to buy an under construction property. But the
[22:20] under construction property. But the risk over there is completion times. If
[22:22] risk over there is completion times. If the completion time is more then your
[22:24] the completion time is more then your return on equity is very bad. you lose
[22:26] return on equity is very bad. you lose money. You end up losing money. A lot of
[22:28] money. You end up losing money. A lot of incidents like that in India. One step
[22:30] incidents like that in India. One step below that is that you are actually
[22:33] below that is that you are actually buying that land yourself and you do a
[22:35] buying that land yourself and you do a JV with the builder.
[22:38] JV with the builder. And as you can see, the further down you
[22:40] And as you can see, the further down you go in that process, the risk increases.
[22:43] go in that process, the risk increases. So when people say that insane amounts
[22:45] So when people say that insane amounts of money can be made in real estate,
[22:47] of money can be made in real estate, it's by taking risk which may or may not
[22:50] it's by taking risk which may or may not play. Just like investing in a stock,
[22:52] play. Just like investing in a stock, you could very well go and buy a small
[22:54] you could very well go and buy a small stock which is not even having a 1,000
[22:56] stock which is not even having a 1,000 cr market cap, probably 2,000th rank in
[22:59] cr market cap, probably 2,000th rank in the Indian stock market and 20 years
[23:01] the Indian stock market and 20 years later it would have given you 200x
[23:03] later it would have given you 200x returns as well.
[23:05] returns as well. But how many of y'all are willing to
[23:07] But how many of y'all are willing to invest in that stock? You might probably
[23:09] invest in that stock? You might probably invest 10,000 bucks, but if you had 1
[23:11] invest 10,000 bucks, but if you had 1 cr, how many of how many of youall are
[23:13] cr, how many of how many of youall are willing to put 20 lakhs in one stock
[23:16] willing to put 20 lakhs in one stock which is not even big yet today? Same
[23:19] which is not even big yet today? Same story with real estate. If I am able to
[23:21] story with real estate. If I am able to buy a piece of land in the outskirts of
[23:23] buy a piece of land in the outskirts of Gura and Delhi where I feel development
[23:26] Gura and Delhi where I feel development will happen, some road will come over
[23:27] will happen, some road will come over here. But how many of you all have that
[23:30] here. But how many of you all have that conviction and the guts to invest in a
[23:32] conviction and the guts to invest in a piece of land like that and wait for 20
[23:35] piece of land like that and wait for 20 years once development catches up?
[23:39] years once development catches up? That is how money is made in real
[23:40] That is how money is made in real estate. So a lot of people confuse real
[23:42] estate. So a lot of people confuse real estate with buying a house. Yes, you can
[23:45] estate with buying a house. Yes, you can make a lot of money in real estate, but
[23:46] make a lot of money in real estate, but not by buying a three-bedroom apartment
[23:48] not by buying a three-bedroom apartment in the heart of the city. That is not
[23:51] in the heart of the city. That is not going to give you that upside returns.
[23:53] going to give you that upside returns. And yes, real estate can make you a lot
[23:55] And yes, real estate can make you a lot of money, even more than stock market
[23:57] of money, even more than stock market because of something known as return on
[23:59] because of something known as return on equity.
[24:01] equity. Now, what is return on equity? When you
[24:03] Now, what is return on equity? When you invest in a mutual fund or a stock, if
[24:05] invest in a mutual fund or a stock, if you have 10 lakh rupees, you are
[24:07] you have 10 lakh rupees, you are investing 10 lakh rupees. If that mutual
[24:08] investing 10 lakh rupees. If that mutual fund gives you 10% returns, you made 1
[24:11] fund gives you 10% returns, you made 1 lakh rupee profit. 1 lakh divided by 10
[24:12] lakh rupee profit. 1 lakh divided by 10 lakh 10% returns. But in real estate,
[24:16] lakh 10% returns. But in real estate, you can easily leverage.
[24:19] you can easily leverage. You can buy a 1 cr propert property with
[24:22] You can buy a 1 cr propert property with a 20 lakh down payment.
[24:25] a 20 lakh down payment. And if that property becomes from 1 cr
[24:27] And if that property becomes from 1 cr to 1.1 cr. Next year you made 10 lakhs.
[24:31] to 1.1 cr. Next year you made 10 lakhs. And if you're able to sell it in the
[24:32] And if you're able to sell it in the next year, 10 lakhs divided by 20 lakhs
[24:34] next year, 10 lakhs divided by 20 lakhs is a 50% return on equity.
[24:39] is a 50% return on equity. That is the power of real estate. But
[24:40] That is the power of real estate. But how many of youall are doing that?
[24:43] how many of youall are doing that? How many of of these people who have
[24:44] How many of of these people who have 51.3% in property are actually doing
[24:48] 51.3% in property are actually doing this in India? Because that requires
[24:50] this in India? Because that requires effort.
[24:52] effort. Real estate money is only made in any
[24:55] Real estate money is only made in any asset class. Actually, the only money
[24:56] asset class. Actually, the only money you make is if you take that risk and
[24:59] you make is if you take that risk and you put in that effort to do the
[25:00] you put in that effort to do the research.
[25:03] research. And there have been people who make
[25:04] And there have been people who make insane amounts of money in real estate
[25:06] insane amounts of money in real estate as well. I'll give you an example.
[25:08] as well. I'll give you an example. Somebody will have let's say 5 crores.
[25:11] Somebody will have let's say 5 crores. They buy a commercial ready property as
[25:13] They buy a commercial ready property as well. Right? So once you have money then
[25:15] well. Right? So once you have money then you can take lesser risk. That's another
[25:16] you can take lesser risk. That's another thing. When you have less money you have
[25:18] thing. When you have less money you have no option but to take risk because
[25:20] no option but to take risk because without taking risk you are not going to
[25:22] without taking risk you are not going to make that wealth and capital. Nobody has
[25:24] make that wealth and capital. Nobody has become rich without taking risk.
[25:25] become rich without taking risk. Impossible. Same with personal finance
[25:27] Impossible. Same with personal finance as well. Business is the biggest risk
[25:28] as well. Business is the biggest risk you can take which is what you guys are
[25:30] you can take which is what you guys are doing. You're giving up you know going
[25:32] doing. You're giving up you know going for a 9 toive job. The opportunity cost
[25:34] for a 9 toive job. The opportunity cost of a salary putting it in your business.
[25:36] of a salary putting it in your business. It's the biggest risk you can take. 5
[25:37] It's the biggest risk you can take. 5 years later, you might end up zero,
[25:39] years later, you might end up zero, nothing.
[25:40] nothing. Similarly, with personal finance as
[25:42] Similarly, with personal finance as well, without taking risk, you cannot
[25:45] well, without taking risk, you cannot build wealth in the beginning. But once
[25:46] build wealth in the beginning. But once you have let's say a corpus of 5 crores,
[25:48] you have let's say a corpus of 5 crores, that is when the game gets easier and
[25:50] that is when the game gets easier and much much better. That is why we see
[25:52] much much better. That is why we see that partos principle which we saw
[25:54] that partos principle which we saw earlier where the top 1% control 40% of
[25:57] earlier where the top 1% control 40% of India's wealth. I will give you a quick
[25:58] India's wealth. I will give you a quick example of how does this work. Let us
[26:01] example of how does this work. Let us say I have 5 crores. I buy a commercial
[26:04] say I have 5 crores. I buy a commercial property in Mumbai for 5 cr rupees
[26:08] property in Mumbai for 5 cr rupees up front I pay
[26:11] up front I pay and firstly I don't even have to pay
[26:12] and firstly I don't even have to pay this up front because usually when the
[26:14] this up front because usually when the project is under construction I can
[26:16] project is under construction I can spread across three years so I can pay
[26:19] spread across three years so I can pay in parts so my return on equity becomes
[26:22] in parts so my return on equity becomes better because uh my XR looks better you
[26:25] better because uh my XR looks better you guys have studied the concept of XR
[26:27] guys have studied the concept of XR extended internal rate of return so
[26:30] extended internal rate of return so because I'm spreading my investment over
[26:32] because I'm spreading my investment over time the return on capital is higher. So
[26:34] time the return on capital is higher. So let's say I invest 5 crores in a
[26:36] let's say I invest 5 crores in a commercial property which 5 crores
[26:39] commercial property which 5 crores probably gets me let's say
[26:42] probably gets me let's say 7% rent which is what you can get in
[26:44] 7% rent which is what you can get in Mumbai pre-tax which is about 35 lakhs
[26:46] Mumbai pre-tax which is about 35 lakhs in rent this is where most people stop
[26:50] in rent this is where most people stop but the rich don't stop here what the
[26:52] but the rich don't stop here what the rich do is that they will collateralize
[26:54] rich do is that they will collateralize that 5 cr commercial property I go to
[26:56] that 5 cr commercial property I go to the bank and say hey bank I have a
[26:59] the bank and say hey bank I have a tenant with a 2-year lockin period
[27:01] tenant with a 2-year lockin period paying me 7% rent on this it's a 5 cr
[27:03] paying me 7% rent on this it's a 5 cr propert property How much money are you
[27:05] propert property How much money are you willing to give me and at what interest
[27:06] willing to give me and at what interest rates? I go to SBI bank. SBI bank tells
[27:10] rates? I go to SBI bank. SBI bank tells me Shahon this is looking like a very
[27:11] me Shahon this is looking like a very beautiful asset. It is not just an asset
[27:13] beautiful asset. It is not just an asset which is growing in capital value. It is
[27:15] which is growing in capital value. It is also generating you rental income which
[27:17] also generating you rental income which makes it a very safe collateral for me
[27:19] makes it a very safe collateral for me to give you a loan which I will give you
[27:21] to give you a loan which I will give you at a lower interest rate also. So the
[27:22] at a lower interest rate also. So the bank tells me Shahon I will give you 32
[27:25] bank tells me Shahon I will give you 32 crores of fresh capital
[27:29] crores of fresh capital at probably 9 to 10% interest rate.
[27:33] at probably 9 to 10% interest rate. That's what SBI bank will tell me. And
[27:35] That's what SBI bank will tell me. And I'm like, wow, that's fantastic. 3 and a
[27:38] I'm like, wow, that's fantastic. 3 and a half crores and I don't even have to pay
[27:39] half crores and I don't even have to pay tax for this because this is a loan. I
[27:41] tax for this because this is a loan. I don't have to pay tax on loan. So I take
[27:44] don't have to pay tax on loan. So I take this 3 and 1/2 cr.
[27:46] this 3 and 1/2 cr. And I go to another builder and tell
[27:48] And I go to another builder and tell give me a property worth 3 and a half
[27:50] give me a property worth 3 and a half cr. Here is the money and I can
[27:51] cr. Here is the money and I can negotiate also with him saying that I'll
[27:52] negotiate also with him saying that I'll give you three and a half cr up front. I
[27:54] give you three and a half cr up front. I have upfront money three and a half
[27:55] have upfront money three and a half crores. I don't have to work for it.
[27:57] crores. I don't have to work for it. It's an equity release from my older
[27:58] It's an equity release from my older property. 3 and a2 crores of upfront
[28:00] property. 3 and a2 crores of upfront capital. Give me a discount also. he'll
[28:02] capital. Give me a discount also. he'll probably give me a 10% discount also
[28:03] probably give me a 10% discount also because builders suddenly get money from
[28:05] because builders suddenly get money from me and the property is ready also. So
[28:08] me and the property is ready also. So let's say I'm negotiating well and I get
[28:10] let's say I'm negotiating well and I get that 3 and a half cry for 3.2 crores.
[28:14] that 3 and a half cry for 3.2 crores. Now you might be thinking but Sharon
[28:15] Now you might be thinking but Sharon loan you have to pay the EMIs
[28:19] loan you have to pay the EMIs but I have a rent coming in from the
[28:21] but I have a rent coming in from the first property of 35 lakhs. That 35
[28:25] first property of 35 lakhs. That 35 lakhs is going to pay the EMI of the
[28:27] lakhs is going to pay the EMI of the second property. So I didn't have to
[28:29] second property. So I didn't have to take a single rupee from my pocket to
[28:32] take a single rupee from my pocket to pay this loan because that first
[28:33] pay this loan because that first property is paying the EMIs of the
[28:35] property is paying the EMIs of the second property and the second property
[28:37] second property and the second property is worth three and a half crores. So now
[28:39] is worth three and a half crores. So now and the second property can also
[28:41] and the second property can also generate another additional rent for me
[28:42] generate another additional rent for me of maybe 15 to 20 lakhs of rent. So what
[28:45] of maybe 15 to 20 lakhs of rent. So what has happened from a 5 cr initial
[28:47] has happened from a 5 cr initial investment I am now sitting on an 8 1/2
[28:50] investment I am now sitting on an 8 1/2 cr of asset value
[28:53] cr of asset value generating a passive income of 1 lakh
[28:55] generating a passive income of 1 lakh per month. This 8 1/2 cr is also
[28:58] per month. This 8 1/2 cr is also increasing in value
[29:01] increasing in value and I started with just 5 cr rupees as
[29:04] and I started with just 5 cr rupees as the asset. No risk also here because I
[29:06] the asset. No risk also here because I have lease periods locked in for a
[29:08] have lease periods locked in for a couple of years prime real estate
[29:10] couple of years prime real estate assets. So this kind of game you cannot
[29:13] assets. So this kind of game you cannot do it in the stock market. So real
[29:15] do it in the stock market. So real estate can be a very powerful way of
[29:17] estate can be a very powerful way of making money. But how many of them of
[29:19] making money. But how many of them of them are doing this? And now you can see
[29:21] them are doing this? And now you can see the more you start doing this. More the
[29:23] the more you start doing this. More the rich people start doing this, their
[29:25] rich people start doing this, their wealth compounds significantly because
[29:27] wealth compounds significantly because of their ability to take capital from
[29:30] of their ability to take capital from banks,
[29:32] banks, collateralize it and release more
[29:34] collateralize it and release more capital. Remember what I told you
[29:36] capital. Remember what I told you earlier, every rupee you have in your
[29:37] earlier, every rupee you have in your life is an employee working for you. So
[29:39] life is an employee working for you. So from 5 cr I have made it 8 1/2 crores
[29:42] from 5 cr I have made it 8 1/2 crores without having to work for it. I have
[29:44] without having to work for it. I have created additional three and a half
[29:45] created additional three and a half crores of employees working for me. Do
[29:46] crores of employees working for me. Do not have to pay for it and in turn I'm
[29:48] not have to pay for it and in turn I'm making cash flows from it. And once this
[29:51] making cash flows from it. And once this loan is paid off, I entirely repeat this
[29:53] loan is paid off, I entirely repeat this process again and again. Which is why
[29:55] process again and again. Which is why today in Mumbai, you have a lot of
[29:57] today in Mumbai, you have a lot of people sitting on 50 properties by doing
[30:00] people sitting on 50 properties by doing this. I don't know about Delhi, but in
[30:02] this. I don't know about Delhi, but in Mumbai, there's a lot of people that I
[30:03] Mumbai, there's a lot of people that I meet having 50 to 60 properties playing
[30:06] meet having 50 to 60 properties playing the same game. And you won't even
[30:08] the same game. And you won't even recognize them by the way they dress.
[30:09] recognize them by the way they dress. They look very simple, very normal. I
[30:12] They look very simple, very normal. I dress fancier than them.
[30:16] All right. So that is about property. I
[30:19] All right. So that is about property. I think other assets are fairly simple. Uh
[30:22] think other assets are fairly simple. Uh I will go into that later. But I wanted
[30:24] I will go into that later. But I wanted to sort of explain this about how the
[30:26] to sort of explain this about how the rich look at assets because a lot of
[30:28] rich look at assets because a lot of people will look at your home as an
[30:30] people will look at your home as an asset but it's not an asset because
[30:32] asset but it's not an asset because whatever I just told you, you can't play
[30:33] whatever I just told you, you can't play that game with whatever I just said.
[30:35] that game with whatever I just said. Your home is your one. You're you're the
[30:36] Your home is your one. You're you're the one consuming it. You're the one living
[30:38] one consuming it. You're the one living in it. What rent you'll make? You will
[30:39] in it. What rent you'll make? You will not make rent. And even if you give it
[30:41] not make rent. And even if you give it out for rent, you'll probably make 2%
[30:43] out for rent, you'll probably make 2% rent on it post taxes. It's not going to
[30:46] rent on it post taxes. It's not going to do anything for you. Now these are the
[30:48] do anything for you. Now these are the assets available for us. All the assets
[30:50] assets available for us. All the assets I've put over here the most commonly
[30:52] I've put over here the most commonly invested assets and below those assets
[30:54] invested assets and below those assets assets I've put the expected post tax
[30:57] assets I've put the expected post tax returns considering for 2026 onwards
[31:02] returns considering for 2026 onwards cash is obviously 0%.
[31:04] cash is obviously 0%. So any cash that you're holding with you
[31:06] So any cash that you're holding with you savings account forget savings account
[31:08] savings account forget savings account current account you must have business
[31:10] current account you must have business current accounts. Did you know that you
[31:12] current accounts. Did you know that you can open a flex CFD on their current
[31:13] can open a flex CFD on their current account and generate 7% interest on it
[31:16] account and generate 7% interest on it and without withdraw the money anytime
[31:18] and without withdraw the money anytime you want without paying penalty? I call
[31:20] you want without paying penalty? I call HDFC branch manager and I tell him hey I
[31:23] HDFC branch manager and I tell him hey I have four lakhs in this current account.
[31:24] have four lakhs in this current account. Open a flex CFD of this four lakhs. What
[31:27] Open a flex CFD of this four lakhs. What is the interest rate you'll give me?
[31:28] is the interest rate you'll give me? They'll say 6.9%. Cool. 6.9%.
[31:31] They'll say 6.9%. Cool. 6.9%. Interest starts getting credited to your
[31:33] Interest starts getting credited to your account. If you have to withdraw the
[31:35] account. If you have to withdraw the money, you don't have to even break that
[31:36] money, you don't have to even break that FD because whatever money you can
[31:38] FD because whatever money you can withdraw only for that amount of money,
[31:40] withdraw only for that amount of money, the interest will be forgiven. The
[31:42] the interest will be forgiven. The remaining amount continues to generate
[31:43] remaining amount continues to generate interest.
[31:45] interest. So right now your current account is in
[31:47] So right now your current account is in cash generating 0%. It could have easily
[31:49] cash generating 0%. It could have easily generated you 3 to 5% returns but you're
[31:53] generated you 3 to 5% returns but you're not doing it. And as the business grows,
[31:55] not doing it. And as the business grows, you'll have 1 cr working capital, 2 cr
[31:57] you'll have 1 cr working capital, 2 cr working capital all sitting idle while
[32:00] working capital all sitting idle while the bank takes your money and gives it
[32:02] the bank takes your money and gives it uh to him as a personal loan for 16%
[32:05] uh to him as a personal loan for 16% interest rate. Banks will not come and
[32:07] interest rate. Banks will not come and tell you this. Why will they ask to why
[32:10] tell you this. Why will they ask to why will they come and tell you to increase
[32:11] will they come and tell you to increase the cost of their raw material? You are
[32:13] the cost of their raw material? You are their raw material. Why will they come
[32:14] their raw material. Why will they come and tell you, hey, I will give you more
[32:16] and tell you, hey, I will give you more money for your raw material. They'll not
[32:17] money for your raw material. They'll not tell you that. So that's one of the
[32:19] tell you that. So that's one of the biggest mistakes that new entrepreneurs
[32:21] biggest mistakes that new entrepreneurs do that and not just new. I have met
[32:23] do that and not just new. I have met people who have legacy businesses of 30
[32:25] people who have legacy businesses of 30 years old still keeping money in current
[32:27] years old still keeping money in current account earning 0% interest rate. Next
[32:29] account earning 0% interest rate. Next is fixed income
[32:33] FDs
[32:35] FDs fixed deposits
[32:37] fixed deposits you might probably get 7% interest
[32:39] you might probably get 7% interest assuming you are at the 30% income slab
[32:42] assuming you are at the 30% income slab you end up making 3 to 5%. debt funds,
[32:45] you end up making 3 to 5%. debt funds, you have arbitrage funds, equity saver
[32:46] you have arbitrage funds, equity saver funds, uh you have short-term debt
[32:49] funds, uh you have short-term debt funds, guild funds, post tax, you'll
[32:51] funds, guild funds, post tax, you'll make about 5 to 6%. Uh crypto, um I'm
[32:54] make about 5 to 6%. Uh crypto, um I'm assuming 25 to 30%. Going forward from
[32:57] assuming 25 to 30%. Going forward from here, only the blue chipped cryptos.
[33:00] here, only the blue chipped cryptos. Gold, uh we've all seen the phenomenal
[33:02] Gold, uh we've all seen the phenomenal growth, but for the future, I'm still
[33:04] growth, but for the future, I'm still assuming 12 to 15%. Uh real estate 8 to
[33:07] assuming 12 to 15%. Uh real estate 8 to 10%. uh this real estate is um not your
[33:11] 10%. uh this real estate is um not your um three-bedroom apartments. Uh if you
[33:15] um three-bedroom apartments. Uh if you buy in the heart of the city, it could
[33:16] buy in the heart of the city, it could be at best 5 to 6% capital appreciation.
[33:18] be at best 5 to 6% capital appreciation. This is what I'm assuming for commercial
[33:20] This is what I'm assuming for commercial property or land if you are buying in
[33:23] property or land if you are buying in good areas. Then over a 10ear period,
[33:26] good areas. Then over a 10ear period, you can expect 10 8 to 10% without the
[33:28] you can expect 10 8 to 10% without the rental income. um equity 15 to 20% if
[33:32] rental income. um equity 15 to 20% if you're if you know how to pick the right
[33:33] you're if you know how to pick the right mutual funds and the right stocks and
[33:35] mutual funds and the right stocks and alternate assets like P2P lending
[33:37] alternate assets like P2P lending invoice discounting post tax can
[33:39] invoice discounting post tax can generate about 6 to 7%. This is what is
[33:42] generate about 6 to 7%. This is what is available for the retail investors of
[33:45] available for the retail investors of India not the HNI investors. HNI
[33:47] India not the HNI investors. HNI investors obviously have access to PMSs,
[33:50] investors obviously have access to PMSs, AIFS, structured products, lot of other
[33:53] AIFS, structured products, lot of other things open up once you cross the 1 cr.
[33:57] things open up once you cross the 1 cr. You know how many karate paties are
[33:58] You know how many karate paties are there in India? 1 cr liquid net worth.
[34:01] there in India? 1 cr liquid net worth. So about 30 lakh people who have 1 cr of
[34:03] So about 30 lakh people who have 1 cr of liquid net worth. How many are
[34:05] liquid net worth. How many are millionaires in India
[34:07] millionaires in India having 10 cr net worth? about 8 8 and a
[34:10] having 10 cr net worth? about 8 8 and a half lakh people have 1 million net
[34:13] half lakh people have 1 million net worth uh 250 cr net worth this is where
[34:16] worth uh 250 cr net worth this is where we are termed see 1 million is called
[34:18] we are termed see 1 million is called hni high net worth individual in India
[34:22] hni high net worth individual in India then comes ultra high net worth
[34:24] then comes ultra high net worth individual what is the net worth 250 cr
[34:27] individual what is the net worth 250 cr is the net worth you know how many
[34:28] is the net worth you know how many people are there in India about 30,000
[34:30] people are there in India about 30,000 people,000 cr net worth around 1,000
[34:33] people,000 cr net worth around 1,000 people $1 billion net worth about 300
[34:37] people $1 billion net worth about 300 people.
[34:39] people. So you see how the power law increases,
[34:41] So you see how the power law increases, right? Like the billionaires put
[34:43] right? Like the billionaires put together have more money than all the
[34:45] together have more money than all the people have 1,000 crores. People who
[34:47] people have 1,000 crores. People who have 1,000 crores have more money than
[34:49] have 1,000 crores have more money than all the people have 250 crores combined.
[34:51] all the people have 250 crores combined. So it's it just accumulates and
[34:52] So it's it just accumulates and accumulates at the top because the kind
[34:54] accumulates at the top because the kind of financial engineering that they can
[34:56] of financial engineering that they can do at the top is next level. I'll give
[34:58] do at the top is next level. I'll give you one example. Elon Musk has $500
[35:02] you one example. Elon Musk has $500 billion net worth. If he has to go buy a
[35:05] billion net worth. If he has to go buy a company let's say Twitter he doesn't use
[35:07] company let's say Twitter he doesn't use that money he doesn't touch it he takes
[35:09] that money he doesn't touch it he takes a loan against that company
[35:12] a loan against that company and the interest rates over there can be
[35:13] and the interest rates over there can be as when you are taking such a big loan
[35:16] as when you are taking such a big loan of 10 billion $20 billion that's another
[35:18] of 10 billion $20 billion that's another thing the larger the amount of money
[35:20] thing the larger the amount of money loan you are able to take the more you
[35:22] loan you are able to take the more you can negotiate with the bank on the
[35:23] can negotiate with the bank on the interest rates so the better will be
[35:26] interest rates so the better will be your arbitrage of making money and
[35:28] your arbitrage of making money and because he's so rich he can have another
[35:31] because he's so rich he can have another negotiation on that so he can get 2 to
[35:32] negotiation on that so he can get 2 to 3% interest rate as well. Imagine 2 to
[35:35] 3% interest rate as well. Imagine 2 to 3% interest rate for a $10 billion loan
[35:38] 3% interest rate for a $10 billion loan and he goes and buys Twitter. Those are
[35:40] and he goes and buys Twitter. Those are the kind of games you can play.
[35:45] Personal finance is about understanding
[35:47] Personal finance is about understanding how money enters your life and how money
[35:48] how money enters your life and how money exits your life. So let's try to
[35:50] exits your life. So let's try to understand that
[35:53] understand that first. Let's look at the cash flows,
[35:55] first. Let's look at the cash flows, right? We look at your income and your
[35:57] right? We look at your income and your expenses.
[35:58] expenses. Income is salary,
[36:01] Income is salary, business car, profits, uh rental income,
[36:05] business car, profits, uh rental income, what else? What else can be income?
[36:07] what else? What else can be income? Dividends.
[36:09] Dividends. Any other examples? Freelance income. Uh
[36:12] Any other examples? Freelance income. Uh interest income. Correct. What else? Any
[36:14] interest income. Correct. What else? Any IPs that you own for which you're
[36:16] IPs that you own for which you're getting royalties? That's how singers
[36:18] getting royalties? That's how singers make money.
[36:21] make money. >> Friends cast still making money.
[36:24] >> Friends cast still making money. Friends TV show all the actors still
[36:27] Friends TV show all the actors still make money.
[36:29] make money. >> What?
[36:32] >> What? >> Trading income. Right? So these are all
[36:34] >> Trading income. Right? So these are all the money way money enters your life.
[36:36] the money way money enters your life. Now let's talk about the ways money
[36:37] Now let's talk about the ways money exits your life.
[36:40] exits your life. Rent, food, clothing, taxes, insurance.
[36:46] Rent, food, clothing, taxes, insurance. Anything else?
[36:51] >> EMIs.
[36:53] >> EMIs. Never receiving it back.
[36:54] Never receiving it back. >> Ah, okay. Friends, bad friends,
[36:56] >> Ah, okay. Friends, bad friends, defaulting friends. Huh? What is
[37:00] defaulting friends. Huh? What is >> is that a common problem where your
[37:01] >> is that a common problem where your friends take money from you, don't
[37:03] friends take money from you, don't return back? Is that a very common
[37:05] return back? Is that a very common problem?
[37:07] problem? >> Cuz I've never u Oh, yeah. Actually,
[37:09] >> Cuz I've never u Oh, yeah. Actually, yeah. Once it happened. Yeah. Yeah, it
[37:11] yeah. Once it happened. Yeah. Yeah, it happened. 10,000 rupees. I still
[37:13] happened. 10,000 rupees. I still remember. You still remember that guy
[37:14] remember. You still remember that guy and you're so angry. Okay. Okay. Who?
[37:18] and you're so angry. Okay. Okay. Who? What else? Expenses.
[37:19] What else? Expenses. >> Traveling.
[37:21] >> Traveling. >> Traveling expenses. This is a new thing
[37:23] >> Traveling expenses. This is a new thing not existed in your parents' time.
[37:25] not existed in your parents' time. Vacation expenses didn't exist back
[37:27] Vacation expenses didn't exist back then.
[37:28] then. Where is that? Who said entertainment,
[37:31] Where is that? Who said entertainment, right? What is entertainment? Going out,
[37:34] right? What is entertainment? Going out, watching Netflix subscriptions. What
[37:36] watching Netflix subscriptions. What else?
[37:38] else? Movie nights. Date nights.
[37:42] You pay the bill fully. Or 50/50.
[37:46] You pay the bill fully. Or 50/50. >> 50/50.
[37:49] >> 50/50. >> Full. Full. Okay. [laughter]
[37:53] Sorry, what was that? Anything else?
[37:55] Sorry, what was that? Anything else? >> Sufficient B.
[37:58] >> Sufficient B. >> Sufficient B
[37:59] >> Sufficient B >> subscriptions.
[37:59] >> subscriptions. >> Subscriptions. Right. So, these are all
[38:01] >> Subscriptions. Right. So, these are all the way money exits your life. So, in
[38:04] the way money exits your life. So, in this segment, we're going to learn about
[38:06] this segment, we're going to learn about how to optimize the way money exits your
[38:09] how to optimize the way money exits your life. That is where we come to the
[38:11] life. That is where we come to the beautiful world of credit cards. Because
[38:15] beautiful world of credit cards. Because 99% of you will pay for something
[38:20] 99% of you will pay for something by selling your assets,
[38:23] by selling your assets, right? You might take money from your
[38:25] right? You might take money from your bank account. You might take money from
[38:26] bank account. You might take money from your savings account. You might take
[38:27] your savings account. You might take money from by selling some mutual fund.
[38:30] money from by selling some mutual fund. You might pay for it by um uh you know
[38:34] You might pay for it by um uh you know borrowing money from somebody. Right? So
[38:37] borrowing money from somebody. Right? So there are several ways of letting money
[38:38] there are several ways of letting money exit your life. How to do it the right
[38:41] exit your life. How to do it the right way? Because the right way can help you
[38:44] way? Because the right way can help you save up to 20 to 25% on your expenses.
[38:50] save up to 20 to 25% on your expenses. Meaning you can get a lot of value back
[38:53] Meaning you can get a lot of value back into your life. That's point number one.
[38:56] into your life. That's point number one. Point number two is that you don't have
[38:59] Point number two is that you don't have to spend your own money in the first
[39:01] to spend your own money in the first place. In the beginning, you have a 45
[39:02] place. In the beginning, you have a 45 days of free credit period. A lot of
[39:05] days of free credit period. A lot of people will take out money from our
[39:06] people will take out money from our let's say your savings account. Let's
[39:08] let's say your savings account. Let's say it was even giving you the best
[39:10] say it was even giving you the best savings account. Uh for example,
[39:13] savings account. Uh for example, there are banks which gives you 6%
[39:15] there are banks which gives you 6% interest on your 7% interest on your
[39:17] interest on your 7% interest on your savings account as well. So I don't have
[39:19] savings account as well. So I don't have to take money from that. So I'm getting
[39:21] to take money from that. So I'm getting 45 days of free credit period every
[39:22] 45 days of free credit period every time. So I'm also optimizing my uh
[39:25] time. So I'm also optimizing my uh returns on that front. And if there is a
[39:28] returns on that front. And if there is a big expense like for example I bought a
[39:31] big expense like for example I bought a car recently. So I I put 10 lakhs using
[39:34] car recently. So I I put 10 lakhs using my credit card. you know it was like a
[39:36] my credit card. you know it was like a entire purchase was about 58 lakhs 10
[39:38] entire purchase was about 58 lakhs 10 lakhs I paid using a credit card so I
[39:40] lakhs I paid using a credit card so I got 2 and a half lakhs immediately back
[39:42] got 2 and a half lakhs immediately back in terms of uh free flights and hotels
[39:45] in terms of uh free flights and hotels which I'm going to book now uh when I go
[39:47] which I'm going to book now uh when I go to Japan next month so there are a lot
[39:49] to Japan next month so there are a lot of things you can do when you use the
[39:51] of things you can do when you use the right credit cards in the right manner
[39:54] right credit cards in the right manner but the problem is most people do not
[39:56] but the problem is most people do not know how to handle one because when you
[39:59] know how to handle one because when you default the interest rate goes to 38% up
[40:03] default the interest rate goes to 38% up to 42%
[40:05] to 42% Now you will say you know I will not be
[40:07] Now you will say you know I will not be that one of those people but half of the
[40:09] that one of those people but half of the people end up doing it and they want you
[40:12] people end up doing it and they want you to do it because half of the money comes
[40:14] to do it because half of the money comes from there and you know what they will
[40:15] from there and you know what they will do. So for example I'm using the HDFC
[40:18] do. So for example I'm using the HDFC Infinia credit card last month there was
[40:20] Infinia credit card last month there was a 12 lakh outstanding balance. I had
[40:23] a 12 lakh outstanding balance. I had gone to Dubai Egypt spent a lot of money
[40:26] gone to Dubai Egypt spent a lot of money bought a lot of things for my mom and
[40:28] bought a lot of things for my mom and this bank guy calls me sir you have uh
[40:32] this bank guy calls me sir you have uh 12 lakh spending. He's like thinking I
[40:34] 12 lakh spending. He's like thinking I can't pay it back you know. He's like
[40:36] can't pay it back you know. He's like trying to 12 lakhs you are pending sir.
[40:38] trying to 12 lakhs you are pending sir. You want a personal loan only you know
[40:41] You want a personal loan only you know this much rupees interest per day. Just
[40:42] this much rupees interest per day. Just take it sir. I'm like boss I'll just
[40:45] take it sir. I'm like boss I'll just clear it off. You don't have to give me
[40:46] clear it off. You don't have to give me a personal loan. But this is the thing
[40:48] a personal loan. But this is the thing that they do right they're like they try
[40:50] that they do right they're like they try to get you into these loans because the
[40:52] to get you into these loans because the number one revenue generating machine
[40:54] number one revenue generating machine for banks is not mutual funds is not
[40:58] for banks is not mutual funds is not your uh FDs because that is where they
[41:00] your uh FDs because that is where they lose money. It is by selling you
[41:02] lose money. It is by selling you personal loans not home loan not not
[41:05] personal loans not home loan not not education loan because that is forced by
[41:07] education loan because that is forced by the for by the government to say that
[41:09] the for by the government to say that interest rates will not be more than 8
[41:11] interest rates will not be more than 8 and a half%. Right? You have to limit
[41:13] and a half%. Right? You have to limit education loan especially governments
[41:15] education loan especially governments [snorts] have a lot of control on it.
[41:17] [snorts] have a lot of control on it. Personal loans they can charge whatever
[41:18] Personal loans they can charge whatever the hell they want can go up to 24% also
[41:21] the hell they want can go up to 24% also and banks want you to do it because that
[41:23] and banks want you to do it because that is how they make the money and India is
[41:25] is how they make the money and India is a very credit hungry nation and the
[41:27] a very credit hungry nation and the needs of an average individual has
[41:29] needs of an average individual has increased. You mentioned entertainment
[41:31] increased. You mentioned entertainment and travel. Your parents didn't have
[41:33] and travel. Your parents didn't have this as a need but today it's a need. So
[41:36] this as a need but today it's a need. So you will find ways to spend money and if
[41:38] you will find ways to spend money and if you do not know how to use credit cards
[41:40] you do not know how to use credit cards properly, you will end up losing money
[41:43] properly, you will end up losing money instead of gaining money. So the number
[41:45] instead of gaining money. So the number one thing is discipline when it comes to
[41:48] one thing is discipline when it comes to credit card. Now how do you build the
[41:49] credit card. Now how do you build the discipline?
[41:51] discipline? Go through your bank statements right
[41:53] Go through your bank statements right now. Not right now later. Look at the
[41:55] now. Not right now later. Look at the last 3 months. See exactly how much
[41:57] last 3 months. See exactly how much money you're spending on various
[41:58] money you're spending on various categories. first okay you're like okay
[42:01] categories. first okay you're like okay this is what I've been doing so for the
[42:03] this is what I've been doing so for the next 6 months this is what I'm going to
[42:04] next 6 months this is what I'm going to follow right this is the expenditure I
[42:07] follow right this is the expenditure I will follow for every category and stick
[42:09] will follow for every category and stick to that once you get a credit card the
[42:12] to that once you get a credit card the minute every month do an audit and you
[42:14] minute every month do an audit and you see that every anything is that is
[42:15] see that every anything is that is exceeding and generally things do start
[42:17] exceeding and generally things do start exceeding because of the way we work
[42:20] exceeding because of the way we work right we uh greed is a very big emotion
[42:22] right we uh greed is a very big emotion that human beings have we we basically
[42:24] that human beings have we we basically function on fear and greed that's it
[42:26] function on fear and greed that's it fear of losing money fear of not having
[42:28] fear of losing money fear of not having money makes us work
[42:30] money makes us work And once you get a higher salary, the
[42:31] And once you get a higher salary, the greed of wanting more things
[42:34] greed of wanting more things makes you again work hard because you
[42:35] makes you again work hard because you need to have a higher salary to get
[42:37] need to have a higher salary to get those greed things that you want. So
[42:38] those greed things that you want. So having a credit card. So right now in my
[42:41] having a credit card. So right now in my card in my wallet I have
[42:44] card in my wallet I have the
[42:46] the burgundy Magnus Burgundy which has a 15
[42:48] burgundy Magnus Burgundy which has a 15 lakh limit. I have the HDFC Infinia
[42:52] lakh limit. I have the HDFC Infinia which has a 10 lakh limit. And I have
[42:55] which has a 10 lakh limit. And I have the
[43:00] times black which has a 25 lakh limit.
[43:03] times black which has a 25 lakh limit. So 25 + 15 40 40 + 10 50. So if I want I
[43:08] So 25 + 15 40 40 + 10 50. So if I want I can buy a 50 lakh car with swiping three
[43:10] can buy a 50 lakh car with swiping three different credit cards. So if you do not
[43:13] different credit cards. So if you do not understand how those greed things work
[43:14] understand how those greed things work and if you're not able to resist
[43:16] and if you're not able to resist yourself even I can go into this credit
[43:18] yourself even I can go into this credit card debt right? It's very easy for me
[43:19] card debt right? It's very easy for me to go and just keep spending money if I
[43:21] to go and just keep spending money if I am not able to control my expenses and
[43:24] am not able to control my expenses and my expenses have increased. Earlier I
[43:27] my expenses have increased. Earlier I used to think couple of years back I
[43:28] used to think couple of years back I will be very happy if I spend two lakhs
[43:30] will be very happy if I spend two lakhs a month. I'm talking about spending. I'm
[43:32] a month. I'm talking about spending. I'm not talking about earning. Two lakhs per
[43:34] not talking about earning. Two lakhs per month spending.
[43:36] month spending. Now it has gone to four to five lakhs a
[43:38] Now it has gone to four to five lakhs a month of spending on the conservative
[43:41] month of spending on the conservative side. So you need to learn how to
[43:43] side. So you need to learn how to control those urges. Now for me
[43:45] control those urges. Now for me thankfully my income have increased and
[43:46] thankfully my income have increased and all of that. So I've always ensured that
[43:49] all of that. So I've always ensured that 60 70% of my income is you know invested
[43:52] 60 70% of my income is you know invested and I always try to maintain that ratio.
[43:54] and I always try to maintain that ratio. But the minute I feel like oh today
[43:56] But the minute I feel like oh today this month I've spent 60% of what I made
[43:59] this month I've spent 60% of what I made then I'm like okay now it's time to look
[44:01] then I'm like okay now it's time to look into those credit card statements and
[44:03] into those credit card statements and try to understand where the hell is this
[44:05] try to understand where the hell is this happening. And these are the simplest of
[44:06] happening. And these are the simplest of things. You won't even know what is
[44:08] things. You won't even know what is happening. Number one thing is
[44:09] happening. Number one thing is subscriptions. You look at all the list
[44:11] subscriptions. You look at all the list of subscriptions and I'm like oh my god
[44:14] of subscriptions and I'm like oh my god where is this money going? I'm not even
[44:15] where is this money going? I'm not even using these subscriptions. Why the hell
[44:17] using these subscriptions. Why the hell am I paying for all of these things?
[44:19] am I paying for all of these things? Then Swiggy, Zomato, these 500, 800
[44:21] Then Swiggy, Zomato, these 500, 800 rupees bills just add up, man. They just
[44:24] rupees bills just add up, man. They just keep adding up so fast. You have no idea
[44:26] keep adding up so fast. You have no idea how it adds up. And these are very
[44:28] how it adds up. And these are very simple things, but often overlooked by
[44:30] simple things, but often overlooked by us. Now, imagine doing this for yourself
[44:32] us. Now, imagine doing this for yourself and imagine doing this for four people
[44:34] and imagine doing this for four people in your family. How much more
[44:35] in your family. How much more complicated it gets. You cannot do this
[44:37] complicated it gets. You cannot do this in your head. Don't think you can do
[44:39] in your head. Don't think you can do this in your head. You need to do this
[44:41] this in your head. You need to do this on an Excel. You need to track it. Now,
[44:43] on an Excel. You need to track it. Now, if you don't want to do it, if you're
[44:44] if you don't want to do it, if you're too lazy, then get a financial advisor
[44:47] too lazy, then get a financial advisor because it will really be worth the time
[44:49] because it will really be worth the time and the value because you are definitely
[44:51] and the value because you are definitely definitely wasting a lot of money. This
[44:55] definitely wasting a lot of money. This is a fact. Every one of us and it's not
[44:58] is a fact. Every one of us and it's not your fault. It's because how the world
[44:59] your fault. It's because how the world of marketing has evolved in India. FOMO,
[45:02] of marketing has evolved in India. FOMO, social media, the easy ways of being
[45:05] social media, the easy ways of being paying for stuff, uh the ways of envying
[45:07] paying for stuff, uh the ways of envying our friends, all of those things are
[45:09] our friends, all of those things are sucking out money from us. And social
[45:11] sucking out money from us. And social media somebody said psychology major
[45:13] media somebody said psychology major they use the psychological biases that
[45:16] they use the psychological biases that we have to make us spend money. They
[45:19] we have to make us spend money. They frame sentences in way while marketing
[45:21] frame sentences in way while marketing to make us spend money. Just think about
[45:23] to make us spend money. Just think about your life from the moment you wake up to
[45:25] your life from the moment you wake up to going to office and coming back. Just
[45:27] going to office and coming back. Just count the number of brands who are
[45:29] count the number of brands who are trying to take out money from you. Do
[45:31] trying to take out money from you. Do this exercise once. The minute you wake
[45:32] this exercise once. The minute you wake up, you got up from your bed. Obviously,
[45:35] up, you got up from your bed. Obviously, first thing you do is checking your
[45:37] first thing you do is checking your phone. Count the number of brands which
[45:39] phone. Count the number of brands which sold something to you. You go in your
[45:41] sold something to you. You go in your traffic, count the number of brands,
[45:43] traffic, count the number of brands, billboards on the way. You work in
[45:46] billboards on the way. You work in office again coming back see the number
[45:47] office again coming back see the number of billboards because they're going in
[45:48] of billboards because they're going in the opposite direction. So different
[45:50] the opposite direction. So different billboards will be shown and then you go
[45:52] billboards will be shown and then you go back home again you see social media.
[45:54] back home again you see social media. Just count the number of brands being
[45:56] Just count the number of brands being shown to you. That was not the case 10
[45:58] shown to you. That was not the case 10 years back, 20 years back in our
[46:00] years back, 20 years back in our parents' time. So we are living in a
[46:02] parents' time. So we are living in a world which is designed to suck out
[46:04] world which is designed to suck out money from your life and keep you poor.
[46:08] money from your life and keep you poor. So when you say about inflation, it is
[46:11] So when you say about inflation, it is not just about the cost of rising goods.
[46:13] not just about the cost of rising goods. It's about the cost. It it's about the
[46:15] It's about the cost. It it's about the amount of attention that is being taken
[46:18] amount of attention that is being taken from you towards getting these products.
[46:21] from you towards getting these products. So once you start understanding this,
[46:23] So once you start understanding this, you will start keeping a check on your
[46:25] you will start keeping a check on your finances and expenses. It is very easy
[46:27] finances and expenses. It is very easy to say this is very normal. Everybody's
[46:29] to say this is very normal. Everybody's doing it. But if everybody's doing it
[46:31] doing it. But if everybody's doing it doesn't mean it's right.
[46:34] doesn't mean it's right. Right. We always become what our society
[46:36] Right. We always become what our society is doing and we think it's normal. It's
[46:39] is doing and we think it's normal. It's not normal. We have started spending
[46:41] not normal. We have started spending more. Savings rate in India has dropped.
[46:44] more. Savings rate in India has dropped. And if you start like right now India
[46:47] And if you start like right now India has 10 cr credit cards for a population
[46:49] has 10 cr credit cards for a population of 1.4 billion. So 140 cr people have 10
[46:53] of 1.4 billion. So 140 cr people have 10 cr credit cards. Um in the United States
[46:57] cr credit cards. Um in the United States there are 300 million people
[47:01] there are 300 million people 30 cr people
[47:03] 30 cr people and there is 1.5 billion credit cards in
[47:06] and there is 1.5 billion credit cards in the United States. Five credit cards on
[47:09] the United States. Five credit cards on an average for every American. The
[47:10] an average for every American. The problems of personal finance in America
[47:12] problems of personal finance in America is very different from the problems of
[47:14] is very different from the problems of personal finance in India. In America
[47:17] personal finance in India. In America the average citizen their number one
[47:20] the average citizen their number one problem is getting out of credit card
[47:21] problem is getting out of credit card debt. Their number one problem is how do
[47:24] debt. Their number one problem is how do I reduce my expenses today? That's not a
[47:27] I reduce my expenses today? That's not a very big problem in India yet but it is
[47:29] very big problem in India yet but it is going to become in the next 5 to 10
[47:31] going to become in the next 5 to 10 years. To know why just see the number
[47:34] years. To know why just see the number of credit card ads you see. Look at the
[47:36] of credit card ads you see. Look at the number of new credit cards being
[47:38] number of new credit cards being launched every month. Look at the number
[47:40] launched every month. Look at the number of companies which is not even a bank
[47:42] of companies which is not even a bank trying to launch their own credit card.
[47:44] trying to launch their own credit card. Flipkart, Amazon. Why did they launch
[47:47] Flipkart, Amazon. Why did they launch credit cards? because they want to
[47:49] credit cards? because they want to increase the way you sp increase their
[47:51] increase the way you sp increase their ease of access of spending money on
[47:53] ease of access of spending money on those apps. Swiggy launched their own
[47:54] those apps. Swiggy launched their own credit card. Why?
[47:57] credit card. Why? So the minute you start learning this,
[47:59] So the minute you start learning this, you will understand that the world right
[48:01] you will understand that the world right now is not the world which our parents
[48:03] now is not the world which our parents lived in and it is going to be easier
[48:05] lived in and it is going to be easier and easier to go in debt. You might
[48:08] and easier to go in debt. You might think no, I will not go into temptation.
[48:10] think no, I will not go into temptation. It will happen. So knowing that and
[48:13] It will happen. So knowing that and reminding yourself that every day is
[48:14] reminding yourself that every day is extremely important before you even
[48:16] extremely important before you even think of getting a credit card. Before I
[48:18] think of getting a credit card. Before I talk about the good stuff, I want to
[48:20] talk about the good stuff, I want to tell you the bad stuff. Which is why I
[48:22] tell you the bad stuff. Which is why I don't recommend for half of the people
[48:24] don't recommend for half of the people to get credit cards because if you do
[48:26] to get credit cards because if you do not have the mindset, you will not be
[48:27] not have the mindset, you will not be able to succeed. Recently Chiag who is
[48:30] able to succeed. Recently Chiag who is our content strategist u he worked for
[48:33] our content strategist u he worked for one year on his credit card and today
[48:36] one year on his credit card and today you think you booked a what two two
[48:38] you think you booked a what two two nights stay at Japur with my girlfriend
[48:41] nights stay at Japur with my girlfriend >> with his girlfriend that's the key point
[48:48] >> so guys quant mutual fund it's a AMC a
[48:52] >> so guys quant mutual fund it's a AMC a mutual fund company at one year at one
[48:55] mutual fund company at one year at one point of time they were the number one
[48:57] point of time they were the number one ranked fund in across all categories.
[49:00] ranked fund in across all categories. Every category they were number one due
[49:03] Every category they were number one due to which a lot of people started
[49:05] to which a lot of people started investing in these funds
[49:07] investing in these funds from having less than 20,000 crores of
[49:10] from having less than 20,000 crores of assets under management they all of a
[49:12] assets under management they all of a sudden went to 1 one and a half lakh cr
[49:15] sudden went to 1 one and a half lakh cr of assets under management.
[49:18] of assets under management. So from being the first ranked mutual
[49:20] So from being the first ranked mutual fund in that year the following year
[49:23] fund in that year the following year they went to the bottom 20% in each of
[49:26] they went to the bottom 20% in each of those categories.
[49:28] those categories. Moral of the story, don't just look at
[49:31] Moral of the story, don't just look at the highest returns that any fund that
[49:33] the highest returns that any fund that has given. Always ask what is the risk
[49:36] has given. Always ask what is the risk incremental risk that I'm taking when
[49:38] incremental risk that I'm taking when I'm investing in this fund. When a large
[49:41] I'm investing in this fund. When a large amount of money is going into a
[49:43] amount of money is going into a particular fund, it is going to be
[49:46] particular fund, it is going to be riskier to get higher returns. Let's say
[49:48] riskier to get higher returns. Let's say I'm a fund manager sitting on 1,000
[49:50] I'm a fund manager sitting on 1,000 crores. This year I did a fantastic job.
[49:53] crores. This year I did a fantastic job. I got 30% returns this year. All of you
[49:55] I got 30% returns this year. All of you guys give me let's say all of you guys
[49:57] guys give me let's say all of you guys have thousand crores each all of you
[49:59] have thousand crores each all of you guys give me 1,000 crores from managing
[50:01] guys give me 1,000 crores from managing 1,000 crores now I'm managing 50,000
[50:03] 1,000 crores now I'm managing 50,000 crores what is the risk when I'm
[50:06] crores what is the risk when I'm suddenly managing a large amount of
[50:08] suddenly managing a large amount of capital I need to ensure that all of
[50:09] capital I need to ensure that all of this capital is deployed right somebody
[50:12] this capital is deployed right somebody has given me money not to sit on cash to
[50:14] has given me money not to sit on cash to invest
[50:15] invest now when I was managing 1,000 crores
[50:19] now when I was managing 1,000 crores what is the purpose what is the job of a
[50:21] what is the purpose what is the job of a fund manager the job of the fund manager
[50:23] fund manager the job of the fund manager is to find future growing stocks.
[50:27] is to find future growing stocks. Now when I have only 1,000 cr, let's say
[50:29] Now when I have only 1,000 cr, let's say I just need to identify for simplicity
[50:31] I just need to identify for simplicity simplicity sake 10 stocks to invest in.
[50:35] simplicity sake 10 stocks to invest in. Now when I have 50,000 crores,
[50:38] Now when I have 50,000 crores, you might think okay Sharon, why don't
[50:40] you might think okay Sharon, why don't you just put in those same 10 stocks?
[50:42] you just put in those same 10 stocks? But then there's a problem
[50:45] But then there's a problem because the fast growing companies are
[50:48] because the fast growing companies are usually smaller companies.
[50:51] usually smaller companies. I can't put in a Reliance and Adani and
[50:53] I can't put in a Reliance and Adani and make you happy like Sharon I only do it.
[50:55] make you happy like Sharon I only do it. Why are you why am I giving the money to
[50:56] Why are you why am I giving the money to you? My job is to find the small
[50:58] you? My job is to find the small companies which are going to do well in
[50:59] companies which are going to do well in the future.
[51:01] the future. Now I cannot deploy unlimited money into
[51:04] Now I cannot deploy unlimited money into small companies because there is a rule
[51:06] small companies because there is a rule that I cannot own more than 10% of a
[51:09] that I cannot own more than 10% of a company as a mutual fund company. So
[51:12] company as a mutual fund company. So when I have 50,000 crores, even if I
[51:14] when I have 50,000 crores, even if I find an amazing company, if I start
[51:17] find an amazing company, if I start ending up owning more than 10% of that
[51:19] ending up owning more than 10% of that company, I am stopped. I have to look
[51:21] company, I am stopped. I have to look for a new one and then a new one. Which
[51:24] for a new one and then a new one. Which is why if I fund my fund size is very
[51:26] is why if I fund my fund size is very big. Then I will stop beating the index.
[51:30] big. Then I will stop beating the index. I will stop beating the benchmark
[51:33] I will stop beating the benchmark because the benchmark I will start
[51:35] because the benchmark I will start matching the benchmark. Meaning what is
[51:37] matching the benchmark. Meaning what is the benchmark? Nifty50. If nifty50 has
[51:39] the benchmark? Nifty50. If nifty50 has given 12%. My job is then oh I have so
[51:42] given 12%. My job is then oh I have so much money as long as I get same as
[51:45] much money as long as I get same as nifty50 I'm fine because if you're lower
[51:47] nifty50 I'm fine because if you're lower than nifty50 you're screwed in the
[51:48] than nifty50 you're screwed in the market. People will start taking out
[51:49] market. People will start taking out their money. So then as a fund manager I
[51:52] their money. So then as a fund manager I will think bro I will just try to match
[51:54] will think bro I will just try to match the overall market. Forget about beating
[51:57] the overall market. Forget about beating because as long as I match the overall
[51:59] because as long as I match the overall market I my job is safe. If I try to
[52:03] market I my job is safe. If I try to beat the market I can't because I I have
[52:05] beat the market I can't because I I have this much money to deploy I can't do
[52:06] this much money to deploy I can't do anything. And if I underperform by
[52:09] anything. And if I underperform by taking these big risks, I'm screwed. So
[52:12] taking these big risks, I'm screwed. So when a fund has a large amount of money,
[52:14] when a fund has a large amount of money, this is very counterintuitive. We think,
[52:15] this is very counterintuitive. We think, oh, bigger the fund, better the
[52:17] oh, bigger the fund, better the investments, this and that. It does not
[52:19] investments, this and that. It does not work that way. So if you have very big
[52:22] work that way. So if you have very big fund and the problem is I'm supposed to
[52:24] fund and the problem is I'm supposed to invest all this money in Indian stocks.
[52:26] invest all this money in Indian stocks. I can't invest this outside. So when you
[52:29] I can't invest this outside. So when you look at a global hedge fund, you must
[52:31] look at a global hedge fund, you must have heard of uh Ray Dalio,
[52:34] have heard of uh Ray Dalio, right? uh Bridgewater Associates, you
[52:36] right? uh Bridgewater Associates, you know, he manages, you know, like
[52:38] know, he manages, you know, like billions and billions of dollars, right?
[52:40] billions and billions of dollars, right? Think like $500 billion or something.
[52:42] Think like $500 billion or something. Now he can invest anywhere in the world,
[52:45] Now he can invest anywhere in the world, any company, any country, public,
[52:47] any company, any country, public, private, any asset he can invest in. So
[52:49] private, any asset he can invest in. So he can deploy that capital. But if a
[52:52] he can deploy that capital. But if a midcap mutual fund, multicap mutual
[52:54] midcap mutual fund, multicap mutual fund, small cap mutual fund manager gets
[52:56] fund, small cap mutual fund manager gets that much money, they can't do anything
[52:58] that much money, they can't do anything because they have to invest that money
[52:59] because they have to invest that money in India. That is when you will start
[53:02] in India. That is when you will start seeing some underperformance in those
[53:03] seeing some underperformance in those funds. So don't blindly look at the last
[53:06] funds. So don't blindly look at the last one year, two year returns and invest in
[53:07] one year, two year returns and invest in a fund because if it has really
[53:09] a fund because if it has really performed in the last one or two years,
[53:11] performed in the last one or two years, it's a mathematical fact that a lot of
[53:13] it's a mathematical fact that a lot of money has gone into that fund manager's
[53:15] money has gone into that fund manager's account and becomes very difficult to
[53:16] account and becomes very difficult to deploy.
[53:18] deploy. Very important learning from the
[53:20] Very important learning from the personal finance industry. A lot of
[53:22] personal finance industry. A lot of people make this mistake time and time
[53:24] people make this mistake time and time again because inherently when we invest
[53:27] again because inherently when we invest in something, we cannot take our eyes
[53:29] in something, we cannot take our eyes away from last year's returns. And if
[53:32] away from last year's returns. And if the last year's returns are good,
[53:33] the last year's returns are good, automatically we are more comfortable
[53:35] automatically we are more comfortable investing money. If I tell you invest in
[53:38] investing money. If I tell you invest in a fund which has only given 8% returns
[53:41] a fund which has only given 8% returns last year versus a fund which has given
[53:43] last year versus a fund which has given 15% returns last year, you will think 10
[53:46] 15% returns last year, you will think 10 times before putting in that fund which
[53:47] times before putting in that fund which has given 8% returns. It's a it's just a
[53:50] has given 8% returns. It's a it's just a psychological thing. You cannot uh
[53:52] psychological thing. You cannot uh easily convince yourself to do that.
[53:54] easily convince yourself to do that. Which is why we see a lot of
[53:57] Which is why we see a lot of underperformance in people's asset
[53:59] underperformance in people's asset allocation. Now let us see what happened
[54:00] allocation. Now let us see what happened to investor C. So guys this investment
[54:03] to investor C. So guys this investment strategy I put majority of my money in
[54:06] strategy I put majority of my money in safer assets. When I mean safer assets I
[54:08] safer assets. When I mean safer assets I don't mean fixed deposit. I mean assets
[54:10] don't mean fixed deposit. I mean assets which have huge time horizons, good
[54:12] which have huge time horizons, good history and don't have huge draw downs.
[54:15] history and don't have huge draw downs. Draw down meaning it doesn't crash by
[54:17] Draw down meaning it doesn't crash by 70% in a month. Right? So those are
[54:21] 70% in a month. Right? So those are safer assets.
[54:23] safer assets. But if you allocate a small chunk of
[54:25] But if you allocate a small chunk of your capital let's say 3 to 5%. in
[54:28] your capital let's say 3 to 5%. in extremely risky asset class where even
[54:31] extremely risky asset class where even the possibility of losing half of your
[54:34] the possibility of losing half of your money in a month is also possible.
[54:37] money in a month is also possible. But if you do that, this is called the
[54:40] But if you do that, this is called the barbell investing strategy. Now you
[54:42] barbell investing strategy. Now you might be thinking Sharon, how much
[54:45] might be thinking Sharon, how much additional returns can I even get by
[54:47] additional returns can I even get by putting this? Because 5% of my money is
[54:49] putting this? Because 5% of my money is still a large amount of money. Why
[54:50] still a large amount of money. Why should I just lose 5% of my money just
[54:53] should I just lose 5% of my money just like that?
[54:54] like that? But this is how even a VC works, mature
[54:58] But this is how even a VC works, mature capital fund, the VC's concept is very
[55:01] capital fund, the VC's concept is very simple. They know for a fact that 95% of
[55:05] simple. They know for a fact that 95% of those companies will fail. They know it
[55:08] those companies will fail. They know it when investing only. They know they just
[55:10] when investing only. They know they just need one to perform well. Just one
[55:12] need one to perform well. Just one zomato that they need in their books.
[55:14] zomato that they need in their books. One urban company, one lens card, that's
[55:16] One urban company, one lens card, that's all they need. Because that one company
[55:19] all they need. Because that one company will not give them 10x return or 20x
[55:21] will not give them 10x return or 20x return. it will give them a 20,000x
[55:24] return. it will give them a 20,000x return. You have seen stories where one
[55:27] return. You have seen stories where one of the early investors of Zomato put
[55:29] of the early investors of Zomato put like 70 crores
[55:31] like 70 crores and now that amount is at almost 30,000
[55:35] and now that amount is at almost 30,000 cr. 70 cr becoming 30,000 cr
[55:40] in a span of 15 years
[55:44] in a span of 15 years that is called outsized returns by
[55:47] that is called outsized returns by taking next level risk. [clears throat]
[55:48] taking next level risk. [clears throat] So VCs do this right where they know
[55:51] So VCs do this right where they know that nine out of 10 companies will fail.
[55:54] that nine out of 10 companies will fail. Now as a retail investor we cannot put
[55:56] Now as a retail investor we cannot put all our money into that. So do you know
[55:59] all our money into that. So do you know where do these VCs get money from? It's
[56:02] where do these VCs get money from? It's not their own money. If I am a fund
[56:05] not their own money. If I am a fund manager at a VC it's not my own money.
[56:07] manager at a VC it's not my own money. Where is this money coming from? Uh HNI
[56:10] Where is this money coming from? Uh HNI ultra high net worth individuals. So if
[56:12] ultra high net worth individuals. So if you have a lot of money you can actually
[56:14] you have a lot of money you can actually go to a VC and say hey take 5 crores but
[56:17] go to a VC and say hey take 5 crores but an ultra HNI also will not put half of
[56:20] an ultra HNI also will not put half of their money in a VC unless of course
[56:22] their money in a VC unless of course they are super super rich and they're
[56:24] they are super super rich and they're like crazy kind of a investor like Peter
[56:26] like crazy kind of a investor like Peter the but majority of them will not put
[56:29] the but majority of them will not put more than 5 10% of their money even in a
[56:31] more than 5 10% of their money even in a VC so basically let's say I'm a
[56:34] VC so basically let's say I'm a billionaire I have 10,000 cr I will
[56:36] billionaire I have 10,000 cr I will allocate 500 crores in a VC fund which I
[56:39] allocate 500 crores in a VC fund which I might only start and I'll call it heday
[56:41] might only start and I'll call it heday family office fund and I'll say 50 500
[56:44] family office fund and I'll say 50 500 crores stake I will hire one big VC fund
[56:47] crores stake I will hire one big VC fund manager and tell invest in the next
[56:49] manager and tell invest in the next level startups of India which is what
[56:50] level startups of India which is what nicl kmat is doing he's exactly doing
[56:53] nicl kmat is doing he's exactly doing that so he has also allocated a small
[56:56] that so he has also allocated a small percent of his capital but if that blows
[56:59] percent of his capital but if that blows up it will look something like this
[57:03] up it will look something like this that is investor C my friends the green
[57:05] that is investor C my friends the green line
[57:07] line see the difference between AB and C A
[57:10] see the difference between AB and C A and B are sitting on 2.2 crores of net
[57:13] and B are sitting on 2.2 crores of net worth while C is sitting on a whopping
[57:16] worth while C is sitting on a whopping 6.6 crores of net worth by just risking
[57:20] 6.6 crores of net worth by just risking 5% of their capital in something
[57:22] 5% of their capital in something extremely risky. It need not always be
[57:24] extremely risky. It need not always be crypto. It can be anything. But that is
[57:26] crypto. It can be anything. But that is the power of the barbell investing
[57:28] the power of the barbell investing strategy 3x higher money by risking 5%
[57:32] strategy 3x higher money by risking 5% of their capital. It could also be FNO
[57:34] of their capital. It could also be FNO trading if you are interested in that.
[57:36] trading if you are interested in that. If you want to learn how to trade your
[57:38] If you want to learn how to trade your money, it could be that also for you
[57:40] money, it could be that also for you where you are generating uh if the stock
[57:42] where you are generating uh if the stock market is giving let's say 12%. But
[57:44] market is giving let's say 12%. But because you know how to trade your money
[57:46] because you know how to trade your money and you can also use leverage to invest
[57:48] and you can also use leverage to invest in derivative products, you can end up
[57:50] in derivative products, you can end up making 35 40% returns and if you're
[57:52] making 35 40% returns and if you're consistently able to do that year after
[57:54] consistently able to do that year after year, this can also look like your
[57:56] year, this can also look like your portfolio.
[57:58] portfolio. But there is risk and there is effort
[58:01] But there is risk and there is effort which is the fundamental of becoming
[58:04] which is the fundamental of becoming wealthy. You have to take risk and you
[58:06] wealthy. You have to take risk and you have to put in that effort. So this is
[58:08] have to put in that effort. So this is the difference where you just risk 5% of
[58:10] the difference where you just risk 5% of your capital. Now let's look at the risk
[58:12] your capital. Now let's look at the risk management. What is the worst case
[58:14] management. What is the worst case scenario that can happen? Because you
[58:16] scenario that can happen? Because you also need to know if all of this money
[58:18] also need to know if all of this money goes then what do I have? What happens
[58:20] goes then what do I have? What happens if
[58:22] if theoretically or hypothetically bitcoin
[58:24] theoretically or hypothetically bitcoin goes to zero?
[58:28] The difference between A, B and C is
[58:32] The difference between A, B and C is anywhere between 10 to 20 lakhs of
[58:34] anywhere between 10 to 20 lakhs of money. Meaning if that 5% was given
[58:37] money. Meaning if that 5% was given somewhere else, maybe that 5% was put in
[58:38] somewhere else, maybe that 5% was put in the normal stock market instead of
[58:40] the normal stock market instead of taking the risk, the difference between
[58:42] taking the risk, the difference between A, B and C is not more than 10 to 20 lak
[58:45] A, B and C is not more than 10 to 20 lak rupees sitting on a 2.2 2 cr kind of a
[58:47] rupees sitting on a 2.2 2 cr kind of a portfolio and you need to understand
[58:50] portfolio and you need to understand that risk before you do this because if
[58:52] that risk before you do this because if you do not understand this risk
[58:53] you do not understand this risk beforehand
[58:55] beforehand you will pull out the money the minute
[58:57] you will pull out the money the minute you see a small drop in your risky
[59:00] you see a small drop in your risky portfolio you'll be like oh this is
[59:01] portfolio you'll be like oh this is getting too risky in a couple of years
[59:04] getting too risky in a couple of years you'll be like okay okay I'm I'm done
[59:05] you'll be like okay okay I'm I'm done with this crypto crashed by 70% I'm
[59:08] with this crypto crashed by 70% I'm never touching crypto again I'm pulling
[59:09] never touching crypto again I'm pulling out my money tata bye-bye I'm sure a lot
[59:13] out my money tata bye-bye I'm sure a lot of people went through that journey not
[59:15] of people went through that journey not once but twice
[59:17] once but twice 2018
[59:18] 2018 happened in 2022 and now it's happening
[59:21] happened in 2022 and now it's happening 2020 and now it's happening again where
[59:24] 2020 and now it's happening again where a lot of people are pulling out their
[59:26] a lot of people are pulling out their money which is why Bitcoin has dropped
[59:28] money which is why Bitcoin has dropped from $120,000 to $80,000 per Bitcoin.
[59:33] from $120,000 to $80,000 per Bitcoin. I've seen this cycle three times. So if
[59:36] I've seen this cycle three times. So if you do not understand this risk, you
[59:38] you do not understand this risk, you cannot implement this strategy because
[59:40] cannot implement this strategy because the minute you see a draw down in your
[59:42] the minute you see a draw down in your portfolio like he said I will put 20% of
[59:44] portfolio like he said I will put 20% of my money in crypto. He probably did not
[59:47] my money in crypto. He probably did not know that it could drop by 70%. And when
[59:51] know that it could drop by 70%. And when it drops by 70%, will you continue
[59:53] it drops by 70%, will you continue holding 20% in Bitcoin is the question
[59:56] holding 20% in Bitcoin is the question because if you can't do it, please don't
[59:58] because if you can't do it, please don't get into risky assets. So understand, do
[01:00:01] get into risky assets. So understand, do that stress testing of your portfolio.
[01:00:02] that stress testing of your portfolio. see what is the worst case scenario and
[01:00:04] see what is the worst case scenario and if you can live with it then you know
[01:00:06] if you can live with it then you know that even if this happens I'm not going
[01:00:08] that even if this happens I'm not going to touch my portfolio because I know I I
[01:00:11] to touch my portfolio because I know I I expected this as a possible scenario in
[01:00:14] expected this as a possible scenario in my portfolio
[01:00:19] back in the day when I was earning 30k
[01:00:21] back in the day when I was earning 30k per month and I wanted to buy let's say
[01:00:24] per month and I wanted to buy let's say an iPhone for example worth one lakh in
[01:00:26] an iPhone for example worth one lakh in my head I'm not thinking about EMI will
[01:00:28] my head I'm not thinking about EMI will be 6,000 rupees I can pay for that EMI
[01:00:31] be 6,000 rupees I can pay for that EMI easily because I make 30k per month and
[01:00:34] easily because I make 30k per month and I'll ask my mom also to contribute 3,000
[01:00:36] I'll ask my mom also to contribute 3,000 rupees. No, I'm not thinking like that.
[01:00:37] rupees. No, I'm not thinking like that. That's what how most of you all will
[01:00:39] That's what how most of you all will think. I am thinking is this iPhone
[01:00:41] think. I am thinking is this iPhone worth 100 days of working in the office?
[01:00:44] worth 100 days of working in the office? Is it that much adding value to me? Is
[01:00:46] Is it that much adding value to me? Is it worth working 100 days in the office?
[01:00:48] it worth working 100 days in the office? And let's also not forget that one/ird
[01:00:52] And let's also not forget that one/ird of the time that you spend in the office
[01:00:53] of the time that you spend in the office is for the government where you have to
[01:00:55] is for the government where you have to pay the taxes. So at the end of it what
[01:00:58] pay the taxes. So at the end of it what most of us end up doing is that we make
[01:01:00] most of us end up doing is that we make three people rich. Number one is your
[01:01:03] three people rich. Number one is your boss, number two is the bank and number
[01:01:06] boss, number two is the bank and number three is the
[01:01:08] three is the >> government. These are the three people
[01:01:09] >> government. These are the three people that you make rich. Our goal is to
[01:01:12] that you make rich. Our goal is to figure out how do we keep as much of it
[01:01:14] figure out how do we keep as much of it to ourselves because that's how you
[01:01:16] to ourselves because that's how you achieve financial freedom because you
[01:01:17] achieve financial freedom because you are born into this world being an
[01:01:19] are born into this world being an employee to these three bosses in your
[01:01:21] employee to these three bosses in your life. The government, your company boss
[01:01:24] life. The government, your company boss and the bank. These are the bosses when
[01:01:26] and the bank. These are the bosses when you're born with. How do I free myself
[01:01:28] you're born with. How do I free myself from these three bosses is the whole
[01:01:30] from these three bosses is the whole point of financial freedom. So when they
[01:01:33] point of financial freedom. So when they say money buys happiness, it does as
[01:01:36] say money buys happiness, it does as soon as you eliminate these three bosses
[01:01:38] soon as you eliminate these three bosses in your life. When the government, your
[01:01:41] in your life. When the government, your company boss or whoever it is, in some
[01:01:44] company boss or whoever it is, in some cases it's our parents also because they
[01:01:45] cases it's our parents also because they give us money so we have to listen to
[01:01:47] give us money so we have to listen to them. And the last thing is the bank.
[01:01:49] them. And the last thing is the bank. The day we feel like none of these three
[01:01:51] The day we feel like none of these three things impact my life, that is when you
[01:01:53] things impact my life, that is when you are financially free and that truly
[01:01:56] are financially free and that truly brings a lot of happiness.
[01:01:58] brings a lot of happiness. But if you keep increasing your expenses
[01:02:01] But if you keep increasing your expenses and your wants are never ending, these
[01:02:03] and your wants are never ending, these guys will always be your boss. So the
[01:02:06] guys will always be your boss. So the point of life is to figure out how do I
[01:02:08] point of life is to figure out how do I eliminate these guys as soon as
[01:02:09] eliminate these guys as soon as possible. Whether it is 40 or 45, that
[01:02:12] possible. Whether it is 40 or 45, that is up to you guys depending on how many
[01:02:15] is up to you guys depending on how many wants you have in your life.
[01:02:20] Now let's do another exercise guys. This
[01:02:22] Now let's do another exercise guys. This is on ESOPS because a lot of you guys uh
[01:02:26] is on ESOPS because a lot of you guys uh when you guys start your own company or
[01:02:28] when you guys start your own company or probably join another startup, ESOP will
[01:02:31] probably join another startup, ESOP will become a very big component of your
[01:02:34] become a very big component of your life. And just to put this into
[01:02:35] life. And just to put this into perspective of how ESOPs can change a
[01:02:39] perspective of how ESOPs can change a person's financial life, um Grow
[01:02:42] person's financial life, um Grow recently went IPO.
[01:02:45] recently went IPO. Grow IPO created at least 500 kotis.
[01:02:50] Grow IPO created at least 500 kotis. I know one guy who joined Grow two years
[01:02:52] I know one guy who joined Grow two years back obviously as the CFO
[01:02:55] back obviously as the CFO within 2 years ended up with 200 crores
[01:02:58] within 2 years ended up with 200 crores of money. 200 crores 2 years of working
[01:03:01] of money. 200 crores 2 years of working 200 crores. So that's the thing which I
[01:03:04] 200 crores. So that's the thing which I want to tell you guys. It is not
[01:03:06] want to tell you guys. It is not necessary for you to start your own
[01:03:08] necessary for you to start your own company to be rich because it is
[01:03:10] company to be rich because it is extremely difficult. Right? Especially
[01:03:12] extremely difficult. Right? Especially when you are young. Yes. If you have an
[01:03:15] when you are young. Yes. If you have an amazing team where you complement each
[01:03:17] amazing team where you complement each other, there's some guy who's really
[01:03:18] other, there's some guy who's really good at tech, you're really good at
[01:03:20] good at tech, you're really good at marketing, personal brand, product also
[01:03:22] marketing, personal brand, product also is great, very good, very difficult to
[01:03:24] is great, very good, very difficult to copy for competitors. If you have all of
[01:03:26] copy for competitors. If you have all of those things going right for you, then
[01:03:28] those things going right for you, then yes, starting a company at a very young
[01:03:29] yes, starting a company at a very young age could make sense. But always
[01:03:32] age could make sense. But always remember that the chances of it becoming
[01:03:34] remember that the chances of it becoming successful
[01:03:36] successful as per the uh statistics is always going
[01:03:39] as per the uh statistics is always going to be less than 10% for a productled
[01:03:41] to be less than 10% for a productled company. When I'm in product company, I
[01:03:43] company. When I'm in product company, I mean uh where you have a D2C product or
[01:03:46] mean uh where you have a D2C product or you have a app uh and if you're starting
[01:03:49] you have a app uh and if you're starting a service business, then the chances of
[01:03:50] a service business, then the chances of success is about 50%. These are the
[01:03:53] success is about 50%. These are the statistics. But the other way of doing
[01:03:55] statistics. But the other way of doing it is to join a younger company which
[01:03:58] it is to join a younger company which you really believe in. Take a lot of
[01:04:00] you really believe in. Take a lot of ESOPs from the founder because you're
[01:04:03] ESOPs from the founder because you're joining a young company. Make enough
[01:04:05] joining a young company. Make enough salary to sustain your monthly expenses
[01:04:07] salary to sustain your monthly expenses and then some. And if you do that for 5
[01:04:10] and then some. And if you do that for 5 10 years and if you have really done the
[01:04:11] 10 years and if you have really done the research on this company and you really
[01:04:13] research on this company and you really believe in them in 5 10 years you can
[01:04:15] believe in them in 5 10 years you can also walk away with a 100 cr plus net
[01:04:17] also walk away with a 100 cr plus net worth.
[01:04:19] worth. Obviously this is also risky but it is
[01:04:21] Obviously this is also risky but it is orders of magnitudes less risky than
[01:04:23] orders of magnitudes less risky than starting your own company because having
[01:04:26] starting your own company because having 100% of uh nothing is still nothing if
[01:04:30] 100% of uh nothing is still nothing if it fails. But owning 01% of a very big
[01:04:34] it fails. But owning 01% of a very big company like this grow example that I
[01:04:35] company like this grow example that I gave you can still make you walk out
[01:04:37] gave you can still make you walk out with hundreds of crores.
[01:04:41] with hundreds of crores. So now ESOPS is a very important thing
[01:04:43] So now ESOPS is a very important thing if you are ever offered this in your
[01:04:45] if you are ever offered this in your life. And now ESOPs are not very easy to
[01:04:47] life. And now ESOPs are not very easy to get. If you're a very junior employee in
[01:04:49] get. If you're a very junior employee in a company, they will not give you
[01:04:51] a company, they will not give you because they don't value you so much. So
[01:04:53] because they don't value you so much. So to be eligible for ESOPS, you need to
[01:04:56] to be eligible for ESOPS, you need to first bring a lot of value to the
[01:04:58] first bring a lot of value to the company. The founder should feel like
[01:05:01] company. The founder should feel like this guy is a long-term player. I can
[01:05:03] this guy is a long-term player. I can trust this guy with an entire
[01:05:04] trust this guy with an entire department. U so usually um ex-founders.
[01:05:08] department. U so usually um ex-founders. So you guys are all mostly founders. So
[01:05:11] So you guys are all mostly founders. So even if you guys let's say you guys work
[01:05:13] even if you guys let's say you guys work for 5 years, 10 years, if it works out,
[01:05:15] for 5 years, 10 years, if it works out, great. If it doesn't work out, you
[01:05:16] great. If it doesn't work out, you become something known as an exfounder.
[01:05:19] become something known as an exfounder. You guys are one of the most valuable
[01:05:21] You guys are one of the most valuable people to join a startup. Because as a
[01:05:22] people to join a startup. Because as a founder, I know that you guys know what
[01:05:24] founder, I know that you guys know what it means to be a founder. And I know
[01:05:27] it means to be a founder. And I know that you guys know how to get done.
[01:05:31] that you guys know how to get done. You guys will be very very prioritized
[01:05:33] You guys will be very very prioritized when the applications come in when you
[01:05:35] when the applications come in when you guys apply for a job at a startup. And
[01:05:38] guys apply for a job at a startup. And if I feel like you have done let's say 3
[01:05:40] if I feel like you have done let's say 3 years of a D2C business and you've gone
[01:05:42] years of a D2C business and you've gone through a multiple multiple you have
[01:05:44] through a multiple multiple you have built the business to let's say 5 crores
[01:05:46] built the business to let's say 5 crores a year or 10 crores a year you become a
[01:05:49] a year or 10 crores a year you become a very very valuable asset to the company
[01:05:51] very very valuable asset to the company because you have done things which very
[01:05:53] because you have done things which very few people have done even if you failed
[01:05:55] few people have done even if you failed it doesn't matter and when you join a
[01:05:58] it doesn't matter and when you join a company saying that hey my biggest
[01:06:01] company saying that hey my biggest strength is marketing my biggest
[01:06:02] strength is marketing my biggest strength is content my biggest strength
[01:06:04] strength is content my biggest strength is uh building a great app technology I
[01:06:07] is uh building a great app technology I I'm very good at this. Then you can join
[01:06:10] I'm very good at this. Then you can join at a s a senior position in a company
[01:06:12] at a s a senior position in a company which might be four to five years old
[01:06:14] which might be four to five years old and you can be paid at least 20% of your
[01:06:17] and you can be paid at least 20% of your salary in esops which becomes a 10x or a
[01:06:21] salary in esops which becomes a 10x or a 20x in the next few years that is what
[01:06:24] 20x in the next few years that is what you are betting on so it's very
[01:06:26] you are betting on so it's very important to understand what esops mean
[01:06:28] important to understand what esops mean how do they work how does this entire
[01:06:30] how do they work how does this entire process work should you take them or not
[01:06:32] process work should you take them or not so what I want you guys to do I want 12
[01:06:36] so what I want you guys to do I want 12 volunteers from you cuz now it's time to
[01:06:39] volunteers from you cuz now it's time to do a skit to come here and act out and
[01:06:42] do a skit to come here and act out and you guys only have to do the research.
[01:06:43] you guys only have to do the research. You guys only have to come with the
[01:06:44] You guys only have to come with the script and you guys only will have to
[01:06:46] script and you guys only will have to shoot. We will give you the props to
[01:06:48] shoot. We will give you the props to wear different props and play different
[01:06:50] wear different props and play different characters. I need 12 volunteers. If if
[01:06:53] characters. I need 12 volunteers. If if you want just raise your hand then I'll
[01:06:55] you want just raise your hand then I'll explain who are the ones who want to
[01:06:56] explain who are the ones who want to volunteer. Okay. 1 2 3 4 5 6
[01:07:00] volunteer. Okay. 1 2 3 4 5 6 more. Seven.
[01:07:03] more. Seven. Almost raised seven. Who else? Eight.
[01:07:07] Almost raised seven. Who else? Eight. Four more. Nine.
[01:07:09] Four more. Nine. Three more.
[01:07:12] Three more. >> 10. Two more.
[01:07:14] >> 10. Two more. >> 11. One more.
[01:07:22] 12.
[01:07:23] 12. So you guys have a task you will you
[01:07:26] So you guys have a task you will you guys will be four group four each and in
[01:07:29] guys will be four group four each and in each group you will do a skit. The first
[01:07:32] each group you will do a skit. The first skit is about job interview and the big
[01:07:34] skit is about job interview and the big promise. So before you even get into the
[01:07:36] promise. So before you even get into the script, I first you need to research
[01:07:37] script, I first you need to research everything about ESOPS, the pros and the
[01:07:39] everything about ESOPS, the pros and the cons, the what do the different terms
[01:07:41] cons, the what do the different terms mean, what is uh exercise price, what is
[01:07:44] mean, what is uh exercise price, what is uh vesting period, what is cliff, all of
[01:07:47] uh vesting period, what is cliff, all of these things I want you to research
[01:07:48] these things I want you to research about what how and what ESOP works. You
[01:07:51] about what how and what ESOP works. You can use AI and once you've understood
[01:07:53] can use AI and once you've understood the concept, pick the category of skit
[01:07:55] the concept, pick the category of skit you want to work on. The first one is
[01:07:57] you want to work on. The first one is the job interview and big promise. So
[01:07:59] the job interview and big promise. So basically a conversation between a
[01:08:01] basically a conversation between a manager and a person who's doing an
[01:08:03] manager and a person who's doing an interview. Second one is one year later
[01:08:06] interview. Second one is one year later how does this vesting and exercise works
[01:08:08] how does this vesting and exercise works and then skip the last three is 10 years
[01:08:10] and then skip the last three is 10 years later the company has succeeded or
[01:08:12] later the company has succeeded or failed and what exactly happens during
[01:08:14] failed and what exactly happens during that process from a taxation point of
[01:08:16] that process from a taxation point of view exercise point of view and so on
[01:08:18] view exercise point of view and so on and so forth. So do that research, take
[01:08:21] and so forth. So do that research, take 10 minutes and then the 12 of yall will
[01:08:25] 10 minutes and then the 12 of yall will form uh three groups of four people
[01:08:27] form uh three groups of four people each. Take the props and act it out.
[01:08:32] >> Tush and Yash are playing as the
[01:08:35] >> Tush and Yash are playing as the employee who who shared the ESOPs. We
[01:08:38] employee who who shared the ESOPs. We shared with them and we are uh
[01:08:40] shared with them and we are uh >> the founders
[01:08:41] >> the founders >> founders co-founders.
[01:08:42] >> founders co-founders. >> Perfect. Let's start. I like it. Let's
[01:08:44] >> Perfect. Let's start. I like it. Let's begin guys. So uh Tushar and your we
[01:08:48] begin guys. So uh Tushar and your we offering you guys buy back of our shares
[01:08:50] offering you guys buy back of our shares which we have given you guys 10 years
[01:08:52] which we have given you guys 10 years back. Uh we have already given you the
[01:08:55] back. Uh we have already given you the 20% uh 5% down market value.
[01:08:58] 20% uh 5% down market value. >> Yeah, makes sense. But the the market
[01:09:00] >> Yeah, makes sense. But the the market the market price you are offering right
[01:09:02] the market price you are offering right now it's very low for us and the the
[01:09:05] now it's very low for us and the the share we are holding currently the worth
[01:09:07] share we are holding currently the worth is 2.5 C each. So we at least need a 2.5
[01:09:11] is 2.5 C each. So we at least need a 2.5 CR val like 500 CR valuation as you are
[01:09:13] CR val like 500 CR valuation as you are currently raising a money from the
[01:09:14] currently raising a money from the market. So we also expect that same.
[01:09:18] market. So we also expect that same. So what do you guys propose like we want
[01:09:20] So what do you guys propose like we want to come in the middle? We are proposing
[01:09:22] to come in the middle? We are proposing you guys 2.4 CR for the whole 500 shares
[01:09:25] you guys 2.4 CR for the whole 500 shares if you guys want to uh dissolve and give
[01:09:27] if you guys want to uh dissolve and give it back to the company.
[01:09:28] it back to the company. >> Actually we don't want to dissolve the
[01:09:30] >> Actually we don't want to dissolve the whole ESOPs. Actually we want to share
[01:09:32] whole ESOPs. Actually we want to share mainly a 30% esops. Uh that's what we
[01:09:36] mainly a 30% esops. Uh that's what we are looking for. So if you think from
[01:09:37] are looking for. So if you think from the company's perspective uh we want to
[01:09:39] the company's perspective uh we want to do more fundraising and everything and
[01:09:41] do more fundraising and everything and also get get our company to reach new
[01:09:43] also get get our company to reach new levels as well. So we would encourage
[01:09:46] levels as well. So we would encourage you guys to sell full of your shares as
[01:09:47] you guys to sell full of your shares as you have made the right amount as well
[01:09:49] you have made the right amount as well and got the best returns you could have
[01:09:51] and got the best returns you could have gotten.
[01:09:52] gotten. >> So our our pitch was like 4 uh 495
[01:09:56] >> So our our pitch was like 4 uh 495 crores if you can come down as a
[01:09:58] crores if you can come down as a valuation. So the market share value of
[01:10:01] valuation. So the market share value of our own each shares will be around 295
[01:10:04] our own each shares will be around 295 to uh 45 245 cr. We won't go down in a
[01:10:10] to uh 45 245 cr. We won't go down in a market value of from 500 CR but what we
[01:10:12] market value of from 500 CR but what we can do with you guys is discounting
[01:10:14] can do with you guys is discounting purchases back on a discount from you
[01:10:16] purchases back on a discount from you guys probably 5% uh giving you guys the
[01:10:19] guys probably 5% uh giving you guys the maximum value as well. So that would be
[01:10:22] maximum value as well. So that would be I think around similar as well.
[01:10:24] I think around similar as well. >> So it it will make sense. It will make
[01:10:26] >> So it it will make sense. It will make sense.
[01:10:28] sense. >> Great. Then congratulations to both of
[01:10:30] >> Great. Then congratulations to both of us.
[01:10:30] us. >> Thank you.
[01:10:34] [laughter]
[01:10:36] >> Hello.
[01:10:40] >> Why did you shoot him?
[01:10:42] >> Why did you shoot him? >> I don't know. [laughter]
[01:10:45] >> I don't know. [laughter] >> He g he gave me discounting. That's why
[01:10:47] >> He g he gave me discounting. That's why he didn't offer me 500 crores.
[01:10:49] he didn't offer me 500 crores. >> He didn't get what he wanted but he got
[01:10:51] >> He didn't get what he wanted but he got something better. But still he's not
[01:10:53] something better. But still he's not satisfied.
[01:10:54] satisfied. >> I'm that frustrated employee. [laughter]
[01:10:56] >> I'm that frustrated employee. [laughter] >> But good good actor. Good act. Please
[01:10:58] >> But good good actor. Good act. Please give them a big round of applause.
[01:11:03] >> We are disrupting the education
[01:11:05] >> We are disrupting the education industry.
[01:11:06] industry. >> Okay.
[01:11:06] >> Okay. >> You love to be part of our company. Can
[01:11:09] >> You love to be part of our company. Can you tell me your last CTC?
[01:11:11] you tell me your last CTC? >> Okay.
[01:11:12] >> Okay. I got uh 12 LPA.
[01:11:14] I got uh 12 LPA. >> 12 LPA. Okay. Nice.
[01:11:17] >> 12 LPA. Okay. Nice. >> So Deepak, we are not able to give that.
[01:11:20] >> So Deepak, we are not able to give that. We are giving you 20,000 per month.
[01:11:22] We are giving you 20,000 per month. >> Oh.
[01:11:22] >> Oh. >> Uh but you will be happy because we are
[01:11:24] >> Uh but you will be happy because we are giving you ehops. You know what? Esops.
[01:11:29] giving you ehops. You know what? Esops. >> Yes sir, I know about Esops but 20,000
[01:11:31] >> Yes sir, I know about Esops but 20,000 is quite a less.
[01:11:33] is quite a less. >> But you will be the part of the company.
[01:11:34] >> But you will be the part of the company. You have the share. You will own it.
[01:11:37] You have the share. You will own it. >> You will own it. You are the owner.
[01:11:39] >> You will own it. You are the owner. >> Okay.
[01:11:39] >> Okay. >> But not now. But not now. When
[01:11:42] >> But not now. But not now. When >> you have we have four years of vesting
[01:11:45] >> you have we have four years of vesting period.
[01:11:45] period. >> Okay.
[01:11:46] >> Okay. >> Okay. So you have to stay with us for 4
[01:11:48] >> Okay. So you have to stay with us for 4 years.
[01:11:49] years. >> Okay.
[01:11:50] >> Okay. >> Yes. But don't be sad. Keep the joining
[01:11:52] >> Yes. But don't be sad. Keep the joining bonus and come to the work. Okay.
[01:11:55] bonus and come to the work. Okay. >> Okay sir. Okay.
[01:11:56] >> Okay sir. Okay. >> Okay. Yeah,
[01:11:56] >> Okay. Yeah, >> I love it.
[01:11:59] >> I love it. [applause]
[01:12:06] >> We are doing the third skit 10 years
[01:12:10] >> We are doing the third skit 10 years later.
[01:12:16] >> The first scene is this is after 10
[01:12:18] >> The first scene is this is after 10 years when two employees who are working
[01:12:20] years when two employees who are working for a company meet with each other.
[01:12:24] for a company meet with each other. >> Hello. Weather is very nice manov. What
[01:12:27] >> Hello. Weather is very nice manov. What do you think?
[01:12:28] do you think? >> Like I I don't think so.
[01:12:30] >> Like I I don't think so. >> Why? What happened?
[01:12:33] >> Why? What happened? >> We gave interview Satina.
[01:12:34] >> We gave interview Satina. >> Yes.
[01:12:35] >> Yes. >> But I'm still below BPL and you are
[01:12:39] >> But I'm still below BPL and you are open.
[01:12:39] open. >> Because I'm very smart.
[01:12:42] >> Because I'm very smart. >> Do you remember that time when our
[01:12:44] >> Do you remember that time when our founder came in the office and had that
[01:12:47] founder came in the office and had that very serious talk with us?
[01:12:48] very serious talk with us? >> Yeah. Value. Value.
[01:12:50] >> Yeah. Value. Value. >> Yes.
[01:12:51] >> Yes. >> Value proposition.
[01:12:53] >> Value proposition. 10 years ago the company was in a pinch
[01:12:56] 10 years ago the company was in a pinch and founder came up with a solution of
[01:12:58] and founder came up with a solution of offering pay cuts to the employees.
[01:13:01] offering pay cuts to the employees. Let's see what exactly happened 10 years
[01:13:02] Let's see what exactly happened 10 years ago.
[01:13:03] ago. >> Hi guys, as you all sir, our company is
[01:13:07] >> Hi guys, as you all sir, our company is performing really well
[01:13:08] performing really well >> but u our finances is like s little
[01:13:12] >> but u our finances is like s little disturbed u so I really need help of you
[01:13:15] disturbed u so I really need help of you guys that I am I am offering you two uh
[01:13:19] guys that I am I am offering you two uh things. So one is you get a 30 30% pay
[01:13:23] things. So one is you get a 30 30% pay cut and the other other is you get a 50%
[01:13:26] cut and the other other is you get a 50% pay cut but instead you'll get ESOPS in
[01:13:30] pay cut but instead you'll get ESOPS in my company as I really have uh hope in
[01:13:33] my company as I really have uh hope in you guys and I really want you so please
[01:13:35] you guys and I really want you so please think about it and and just uh tell me
[01:13:39] think about it and and just uh tell me >> got it so Manov now do you remember what
[01:13:44] >> got it so Manov now do you remember what happened what did I choose this day I
[01:13:46] happened what did I choose this day I chose the ESOP and now that the
[01:13:49] chose the ESOP and now that the company's He's doing really well. I'm
[01:13:51] company's He's doing really well. I'm finally getting myself a new car, Audi.
[01:13:56] finally getting myself a new car, Audi. So, do you want me to drop you anywhere?
[01:14:00] [laughter]
[01:14:03] >> Thank you. Thank you.
[01:14:06] >> Thank you. Thank you. [applause]
[01:14:10] So really really happy to see that that
[01:14:12] So really really happy to see that that uh you know you guys are able to uh do
[01:14:14] uh you know you guys are able to uh do multiple you know tasks across
[01:14:16] multiple you know tasks across intellectual and creativity together and
[01:14:19] intellectual and creativity together and present something so great. Really loved
[01:14:21] present something so great. Really loved that and appreciate the effort that you
[01:14:22] that and appreciate the effort that you guys have put in. So first thing to know
[01:14:25] guys have put in. So first thing to know is that when you take esops from a
[01:14:27] is that when you take esops from a company there is always something known
[01:14:28] company there is always something known as a cliff period right because you
[01:14:30] as a cliff period right because you don't get it immediately because founder
[01:14:33] don't get it immediately because founder doesn't want you to come first year and
[01:14:34] doesn't want you to come first year and immediately get you know x amount of
[01:14:36] immediately get you know x amount of esops so they even if they say that hey
[01:14:38] esops so they even if they say that hey I'm going to give you let's say 10 lakhs
[01:14:40] I'm going to give you let's say 10 lakhs worth of esops um some of the founders
[01:14:43] worth of esops um some of the founders will say hey you will get it equally
[01:14:45] will say hey you will get it equally over the next four years but some
[01:14:47] over the next four years but some founders will say that first year you
[01:14:48] founders will say that first year you get nothing because that is where you
[01:14:50] get nothing because that is where you show me your loyalty that is where you
[01:14:52] show me your loyalty that is where you tell me that Okay, I'm ready to do it
[01:14:54] tell me that Okay, I'm ready to do it for the long run. And I don't care about
[01:14:55] for the long run. And I don't care about the first year. First year you see how I
[01:14:57] the first year. First year you see how I perform and then you will want to give
[01:14:59] perform and then you will want to give it to me. So, and remember that the
[01:15:01] it to me. So, and remember that the founder can fire you anytime he wants.
[01:15:03] founder can fire you anytime he wants. So, even if something is written on
[01:15:04] So, even if something is written on paper, they can always fire you if they
[01:15:06] paper, they can always fire you if they don't like your work. So, this is you
[01:15:08] don't like your work. So, this is you telling the founder that hey, you're not
[01:15:09] telling the founder that hey, you're not going to fire me because I'm going to be
[01:15:11] going to fire me because I'm going to be so good and I'm also ready to sacrifice
[01:15:12] so good and I'm also ready to sacrifice at one year. So you can put that cliff
[01:15:15] at one year. So you can put that cliff period of 1 year and then that way you
[01:15:17] period of 1 year and then that way you can negotiate a higher esop also with
[01:15:19] can negotiate a higher esop also with the founder saying that hey first year
[01:15:21] the founder saying that hey first year is a cliff so I want a higher esop after
[01:15:23] is a cliff so I want a higher esop after that first year then comes the remaining
[01:15:25] that first year then comes the remaining 3 years let's say it's 10 lakhs and then
[01:15:27] 3 years let's say it's 10 lakhs and then it'll be divided into you know 3.3 lakhs
[01:15:29] it'll be divided into you know 3.3 lakhs each over the next 3 years but in some
[01:15:32] each over the next 3 years but in some companies there will not be any cliff
[01:15:33] companies there will not be any cliff they will just tell you hey this 10
[01:15:35] they will just tell you hey this 10 lakhs will be divided into 2.5 lakhs
[01:15:36] lakhs will be divided into 2.5 lakhs each right which is what I do in my
[01:15:39] each right which is what I do in my company you'll get equally divided
[01:15:40] company you'll get equally divided across four years uh but then you'll
[01:15:43] across four years uh but then you'll have to stick for the entire four years
[01:15:44] have to stick for the entire four years to get it. Um,
[01:15:47] to get it. Um, you will never get everything in one
[01:15:49] you will never get everything in one shot, right? You will never get the your
[01:15:51] shot, right? You will never get the your ESOPs immediately given to you in one
[01:15:53] ESOPs immediately given to you in one year because ESOP at the end of the day
[01:15:55] year because ESOP at the end of the day is an employee retention strategy
[01:15:57] is an employee retention strategy because it will only be given to people
[01:15:59] because it will only be given to people who are loyal to the company and not
[01:16:01] who are loyal to the company and not people who are just here for like one
[01:16:02] people who are just here for like one year or a two-year stint. So that's the
[01:16:04] year or a two-year stint. So that's the first thing. Now when it comes to
[01:16:07] first thing. Now when it comes to vesting every year it vests and then let
[01:16:11] vesting every year it vests and then let us say
[01:16:13] us say it it reaches a point where now you can
[01:16:15] it it reaches a point where now you can exercise these esops. Now remember esops
[01:16:18] exercise these esops. Now remember esops at the end of the day is not equity.
[01:16:20] at the end of the day is not equity. Equity is given to you without you
[01:16:23] Equity is given to you without you having to take an action. ESOP is an
[01:16:26] having to take an action. ESOP is an option if you want to take it. If you
[01:16:28] option if you want to take it. If you don't want you don't take it. Hence it's
[01:16:29] don't want you don't take it. Hence it's called ESOP. It's an option at the end
[01:16:31] called ESOP. It's an option at the end of the day. Now
[01:16:34] of the day. Now when the vesting period comes and you
[01:16:36] when the vesting period comes and you are about to exercise your ESO,
[01:16:41] are about to exercise your ESO, you first need to pay the taxes, right?
[01:16:45] you first need to pay the taxes, right? Think of it this think of it this way.
[01:16:47] Think of it this think of it this way. If it's a publicly listed company,
[01:16:50] If it's a publicly listed company, taking ESOP is a no-brainer. I'm sure
[01:16:53] taking ESOP is a no-brainer. I'm sure you have friends who work at Google,
[01:16:55] you have friends who work at Google, Amazon, Nvidia, you know, Nvidia
[01:16:57] Amazon, Nvidia, you know, Nvidia employees became millionaires and they
[01:16:58] employees became millionaires and they started leaving their job. How did that
[01:17:00] started leaving their job. How did that happen? because Nvidia has publicly
[01:17:01] happen? because Nvidia has publicly traded. So the ESOPS of Nvidia when
[01:17:05] traded. So the ESOPS of Nvidia when people started getting it, it was
[01:17:06] people started getting it, it was immediately cash in their bank. So when
[01:17:08] immediately cash in their bank. So when you go to publicly listed company,
[01:17:09] you go to publicly listed company, taking a ESOP is a no-brainer.
[01:17:11] taking a ESOP is a no-brainer. Unfortunately, in India, uh very few
[01:17:14] Unfortunately, in India, uh very few public companies will give you ESOPS
[01:17:16] public companies will give you ESOPS because their brand value is so strong
[01:17:18] because their brand value is so strong that they don't really have a problem
[01:17:20] that they don't really have a problem with the employees, good employees
[01:17:22] with the employees, good employees joining them because they'll might as
[01:17:23] joining them because they'll might as well give you cash, right? They'll be
[01:17:25] well give you cash, right? They'll be like, I'm not going to give you equity.
[01:17:26] like, I'm not going to give you equity. Just take the cash, take it or leave it.
[01:17:28] Just take the cash, take it or leave it. There are hundreds of other employees.
[01:17:29] There are hundreds of other employees. But in the US it's not like that
[01:17:31] But in the US it's not like that publicly listed companies also give
[01:17:34] publicly listed companies also give ESOPS. Now if it's a private company
[01:17:37] ESOPS. Now if it's a private company which is what most of the time happens
[01:17:39] which is what most of the time happens because a private company which is a
[01:17:41] because a private company which is a startup is the one who is ready to give
[01:17:43] startup is the one who is ready to give their equity because the company is not
[01:17:45] their equity because the company is not big yet and they want you to be there
[01:17:47] big yet and they want you to be there for as long as possible because they
[01:17:49] for as long as possible because they want you to retain as much as possible
[01:17:50] want you to retain as much as possible and because switching employees is very
[01:17:52] and because switching employees is very difficult for them also. Now before the
[01:17:56] difficult for them also. Now before the company goes public right let's say 1
[01:18:00] company goes public right let's say 1 month before or 2 months before that is
[01:18:02] month before or 2 months before that is when that exercise period usually opens
[01:18:04] when that exercise period usually opens and that is when you have the option to
[01:18:06] and that is when you have the option to exercise it now let's say you have 10
[01:18:07] exercise it now let's say you have 10 lakhs worth of esops of 10 shares each
[01:18:10] lakhs worth of esops of 10 shares each now for you to exercise let us say the
[01:18:14] now for you to exercise let us say the face value of those shares is 10 rupees
[01:18:18] face value of those shares is 10 rupees but the act but the market value of
[01:18:20] but the act but the market value of those shares is 1 lakh rupees each share
[01:18:22] those shares is 1 lakh rupees each share is one lakh face value is 10 rupees So
[01:18:24] is one lakh face value is 10 rupees So you will have to pay 10 rupees into 10
[01:18:27] you will have to pay 10 rupees into 10 100 rupees to the company. That is how
[01:18:30] 100 rupees to the company. That is how you exercise it. So you paid 100 rupees
[01:18:31] you exercise it. So you paid 100 rupees to the company and you got 10 lakhs
[01:18:33] to the company and you got 10 lakhs worth of shares. This is what exercise
[01:18:35] worth of shares. This is what exercise of ESOPs mean. Now it's not over yet
[01:18:39] of ESOPs mean. Now it's not over yet because you still have to pay the taxes
[01:18:41] because you still have to pay the taxes before the ESOPs come to you because
[01:18:43] before the ESOPs come to you because from the eyes of the government, you
[01:18:45] from the eyes of the government, you have just gotten income. It's shown as
[01:18:47] have just gotten income. It's shown as salary for you, right? Even though it's
[01:18:50] salary for you, right? Even though it's equity given to you but for the
[01:18:52] equity given to you but for the government it's shown as salary. So for
[01:18:54] government it's shown as salary. So for the government you paid 100 rupees and
[01:18:56] the government you paid 100 rupees and you got 10 lakhs. So your profit is 9
[01:18:58] you got 10 lakhs. So your profit is 9 lakh 90,
[01:19:00] lakh 90, 900 rupees. That's the profit and then
[01:19:03] 900 rupees. That's the profit and then you'll have to pay tax on it which is
[01:19:04] you'll have to pay tax on it which is around 30% 35% tax if it's in a very
[01:19:07] around 30% 35% tax if it's in a very high income range. So remember that
[01:19:09] high income range. So remember that example I gave you of that CFO who was
[01:19:11] example I gave you of that CFO who was in grow two years back he joined and he
[01:19:14] in grow two years back he joined and he walked away with the 200 crores. He
[01:19:16] walked away with the 200 crores. He timed it right because uh there's
[01:19:18] timed it right because uh there's another clause in the ESOPS that if the
[01:19:20] another clause in the ESOPS that if the company goes public or if the company is
[01:19:23] company goes public or if the company is sold or if the company is acquired there
[01:19:25] sold or if the company is acquired there is something known as accelerated
[01:19:27] is something known as accelerated vesting. So instead of waiting for four
[01:19:29] vesting. So instead of waiting for four years if the company is sold or goes
[01:19:31] years if the company is sold or goes public automatically the ESOPS.
[01:19:33] public automatically the ESOPS. So that's another thing. Hence that grow
[01:19:35] So that's another thing. Hence that grow CFO who joined two years before timed it
[01:19:37] CFO who joined two years before timed it well and got all of their esopsed
[01:19:39] well and got all of their esopsed without waiting for it. Now 200 crores.
[01:19:43] without waiting for it. Now 200 crores. Now 200 crores for him to get it he has
[01:19:46] Now 200 crores for him to get it he has to pay almost 60 crores in income tax.
[01:19:50] to pay almost 60 crores in income tax. He doesn't have the money. Imagine you
[01:19:52] He doesn't have the money. Imagine you have 200 crores waiting for you. But to
[01:19:54] have 200 crores waiting for you. But to get 200 crores you have to pay 60 crores
[01:19:55] get 200 crores you have to pay 60 crores to taxes to the government. He doesn't
[01:19:56] to taxes to the government. He doesn't have the money. So what he ended up
[01:19:58] have the money. So what he ended up doing he ended up taking a personal loan
[01:20:02] doing he ended up taking a personal loan to pay for that income tax and he could
[01:20:05] to pay for that income tax and he could not even exercise the entire 200 crores.
[01:20:07] not even exercise the entire 200 crores. He could only probably exercise like 100
[01:20:09] He could only probably exercise like 100 crores. 100 cr he has to pay 30 cr tax.
[01:20:12] crores. 100 cr he has to pay 30 cr tax. So he took 30 cr personal loan paid the
[01:20:14] So he took 30 cr personal loan paid the tax got 100 crores in his account
[01:20:17] tax got 100 crores in his account cleared the personal loan and now in
[01:20:20] cleared the personal loan and now in order to um save as much taxes as
[01:20:25] order to um save as much taxes as possible. The next thing that people do
[01:20:28] possible. The next thing that people do uh is that they park that money in real
[01:20:30] uh is that they park that money in real estate because you get that exemption
[01:20:32] estate because you get that exemption under some uh income tax rules that your
[01:20:35] under some uh income tax rules that your profits from your ESOPS if you invest it
[01:20:38] profits from your ESOPS if you invest it in real estate you can save a lot of
[01:20:41] in real estate you can save a lot of taxes which is why you have seen the
[01:20:44] taxes which is why you have seen the real estate boom in Gura you've seen the
[01:20:46] real estate boom in Gura you've seen the real estate boom in Bangalore it is
[01:20:48] real estate boom in Bangalore it is basically thousands of people becoming
[01:20:50] basically thousands of people becoming karotis at once who are forced to put
[01:20:52] karotis at once who are forced to put that money in real estate which is
[01:20:54] that money in real estate which is hiking up the price of real estate in
[01:20:56] hiking up the price of real estate in those regions. So this is how uh ESOPs
[01:20:59] those regions. So this is how uh ESOPs work guys and uh very important crucial
[01:21:03] work guys and uh very important crucial thing both for you as an entrepreneur to
[01:21:05] thing both for you as an entrepreneur to structure ESOPS the right way to attract
[01:21:08] structure ESOPS the right way to attract the right kind of talent in the company
[01:21:10] the right kind of talent in the company and also for you as an employee to
[01:21:12] and also for you as an employee to understand exactly how it works so that
[01:21:14] understand exactly how it works so that you don't end up saying yes to the wrong
[01:21:17] you don't end up saying yes to the wrong things. I was not sure in the beginning
[01:21:19] things. I was not sure in the beginning because I've never done something like
[01:21:21] because I've never done something like this coming and teaching for an entire
[01:21:23] this coming and teaching for an entire day. The most I've ever done was like a
[01:21:26] day. The most I've ever done was like a half an hour panel discussion uh you
[01:21:28] half an hour panel discussion uh you know on a stage. Never actually come and
[01:21:30] know on a stage. Never actually come and took a class for 50 people for a whole
[01:21:33] took a class for 50 people for a whole day. Uh so I was really nervous of uh
[01:21:36] day. Uh so I was really nervous of uh whether I would even be able to speak
[01:21:37] whether I would even be able to speak for that long. But uh your energy fed
[01:21:40] for that long. But uh your energy fed me. uh and just with the you know Adra
[01:21:43] me. uh and just with the you know Adra chai I was able to do this properly and
[01:21:47] chai I was able to do this properly and um really really uh love the you know
[01:21:51] um really really uh love the you know the passion with you with which you guys
[01:21:53] the passion with you with which you guys have planned out your life I think you
[01:21:55] have planned out your life I think you guys are already way way ahead of people
[01:21:58] guys are already way way ahead of people forget other people I'm just telling me
[01:22:00] forget other people I'm just telling me when I was 22 23 years old I was like
[01:22:03] when I was 22 23 years old I was like absolutely clueless as to what I was
[01:22:04] absolutely clueless as to what I was doing I got serious in life from the age
[01:22:07] doing I got serious in life from the age of 25 only just 5 years back uh and
[01:22:10] of 25 only just 5 years back uh and obviously COVID happened and things
[01:22:13] obviously COVID happened and things moved fast for me. But what I'm trying
[01:22:14] moved fast for me. But what I'm trying to tell you is that you guys are already
[01:22:17] to tell you is that you guys are already ahead of the curve, right? You guys are
[01:22:19] ahead of the curve, right? You guys are average is 22, 23, 24 years old. You
[01:22:22] average is 22, 23, 24 years old. You guys are already thinking of launching
[01:22:24] guys are already thinking of launching your business and I think you guys are
[01:22:26] your business and I think you guys are at a fantastic platform uh to sort of
[01:22:29] at a fantastic platform uh to sort of build the rest of your career and your
[01:22:31] build the rest of your career and your entrepreneurial life. So I wish you guys
[01:22:34] entrepreneurial life. So I wish you guys all the best. I hope you guys are able
[01:22:35] all the best. I hope you guys are able to scale your businesses well. And
[01:22:38] to scale your businesses well. And always remember success is not
[01:22:40] always remember success is not determined by building a unicorn.
[01:22:41] determined by building a unicorn. Success is determined by building a
[01:22:43] Success is determined by building a business that you are passionate about
[01:22:45] business that you are passionate about that you like solving those problems.
[01:22:47] that you like solving those problems. And even if it is generating 10 lakhs a
[01:22:49] And even if it is generating 10 lakhs a month, 20 lakhs a month, as long as it's
[01:22:51] month, 20 lakhs a month, as long as it's generating enough profits for you, which
[01:22:53] generating enough profits for you, which keeps you happy, that is also success.
[01:22:55] keeps you happy, that is also success. So don't go behind the startup uh you
[01:22:57] So don't go behind the startup uh you know craze of okay raising money,
[01:22:59] know craze of okay raising money, becoming a billiond dollar company. That
[01:23:01] becoming a billiond dollar company. That is always an option, right? that is not
[01:23:03] is always an option, right? that is not what determines your success. There are
[01:23:05] what determines your success. There are many ways of building a business.
[01:23:07] many ways of building a business. There's not just one way of just raising
[01:23:08] There's not just one way of just raising venture capital and doing it. And I
[01:23:11] venture capital and doing it. And I believe that um achieving that kind of a
[01:23:14] believe that um achieving that kind of a scale for you to build personal wealth
[01:23:17] scale for you to build personal wealth is very very achievable in today's
[01:23:19] is very very achievable in today's India. You don't need a lot of people as
[01:23:21] India. You don't need a lot of people as we did before. You don't need to spend
[01:23:23] we did before. You don't need to spend that kind of money as we did before. If
[01:23:25] that kind of money as we did before. If you have a good personal brand and if
[01:23:27] you have a good personal brand and if you're really passionate about solving
[01:23:28] you're really passionate about solving your problems and if you have a good
[01:23:30] your problems and if you have a good product and you really care about your
[01:23:32] product and you really care about your customers, success is just knocking at
[01:23:34] customers, success is just knocking at your door. Thank you so much and I wish
[01:23:37] your door. Thank you so much and I wish you guys all the best. [applause]