Partner at Sequoia India, Sequoia Capital
Search every verified Shailesh Lakhani interview, podcast appearance, and on-the-record quote — each transcript cross-checked by AI and human review to confirm speaker identity. At a 2016 TechSparks event, Shailesh Lakhani, a partner at Sequoia Capital India, discussed the challenges facing consumer technology startups. He noted that the cost of compute, storage, and bandwidth has fallen roughly 35% year-over-year for 25 years, and that venture funding in India had tripled in three years despite the economy not growing at the same rate. Lakhani argued that raising money alone cannot make a company defensible, and that large incumbent firms like Google, Amazon, Facebook, and Apple enjoy significant profit and scale advantages that make it difficult for new entrants to compete. Lakhani advised startups to focus on building network effects, customer switching costs, and real business health rather than vanity metrics. He suggested that the best strategy for defensibility is to "play offense" by constantly reinventing the business, and that bootstrapped founders with a strong idea should keep quiet about it until they reach a scale where they can fend off funded competitors. He also observed that in machine learning and AI, acquisitions were more common than companies building their own technology, and that talent scarcity in that area was likely temporary.
“We were fortunate to be early investors in the U.S. in companies like Cisco and Apple and Electronic Arts and Google and Yahoo — it's fascinating to us how some of these companies survive and some of them don't.”
“For the past 25 years there's been an average reduction of about 35 percent year-over-year on costs in compute, storage and bandwidth — a company that starts tomorrow will need to spend roughly 35% less next year than you do today to build the same stuff.”
“The J-curve in venture capital means cash burn before profitability — and there is just basically too much venture money available for companies to get going; in India the amount of venture funding has tripled in the last three years which makes no sense because the economy has not tripled.”
“These consumer tech superpower companies — Google, Amazon and Facebook (and Apple) — have broken away from the pack: they enjoy huge profit and scale advantages and can expand into other areas and steamroll other people's businesses.”
“These companies have generated a lot of profit — for example Apple enjoys over 90% of all smartphone profits — so they can plow money into new products and it's very hard to compete in that market today.”
“Raising money cannot defend you against these trends — the cost of computing will continue to drop and there will be lots of money available to fund people, so you can't simply outspend your way to defensibility.”
“Unless you're very, very special, life is pretty tough as a consumer tech startup — there are a lot more things going against you now than ever before.”
“The best way to be a defensible tech company is not to play defense at all — play offense: make big bets, reinvent your business constantly, knowing that what you did yesterday won't work tomorrow.”
“For machine learning and AI we've seen a lot more acquisitions than pure companies building their own stuff — in the short term talent is scarce, but five years from now they won't be buying companies just for talent.”
“If you have a great idea and you're bootstrapping it, just be quiet — don't tell anybody — and enjoy it until you reach a scale where you can fight off the funded competitors who come after you.”
Sequoia Capital is an American venture capital firm. Shailesh Lakhani talks about Sequoia Capital at TechSparks 2016. Watch this video to know more. Please do like and Share it. Like us - / yourstorycom Follow us - / yourstoryco Check out - https://YourStory.com
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