Author Archive for Sunil Bhargava

Muscle Capital : Delivered

I am not a car guy. I had my last car for 15 years and put over a quarter of a million kilometers on it, but a couple of months ago I bought a Tesla. It felt like a piece of history so I had to have it. It is thrilling to be able to go 0-100km/hr in 4 seconds with only the hum of the tires and no engine roar. It is also fun to lift up the hood of the car to show off its “engine” when there is nothing there.

Elon Musk, the founder of Tesla, is an amazing guy. He is fearless, going after goals that defy conventional wisdom. His brain doesn’t register risk the same way most folks do. Even more fascinating is the fact that he is one of the few company builders that can focus on multiple spaces simultaneously and do a good job. Many entrepreneurs are able to build very different companies in sequence but few can do it simultaneously. His ability to attract and deploy human capital is outstanding.

When we started Tandem our biggest motivation was to be able to work side by side with passionate founders and help them be successful. Tandem was designed to be different from other forms of capital. We are company builders with capital rather than financial investors that can guide and connect.  We really roll up our sleeves and get to work.  Unlike Elon, we don’t have the ability to work simultaneously on many distinct spaces so we have chosen a narrow focus on a segment of mobile first companies. This focus and our ability to provide company building ‘muscle’ alongside patient financial capital – “Muscle Capital” – is what defines and differentiates our approach.

We have always wanted to work with Indian entrepreneurs and have been doing an Indian company here and there over the last many years. However a little over a year ago it became clear to us that the Indian market was becoming primed for significant activity in our space.  We have decided to actively seek Indian entrepreneurs looking to launch in the Indian and US markets

We will unveil more of our plans shortly, but as we begin this journey, Rohit Bhagat (my partner at Tandem) and I are visiting India from now through the 1st of June. We will be in Delhi, Mumbai, Bangalore and Pune. We would love to meet people who are passionate about the startup ecosystem.  Founders, Funders, Bloggers, Mentors, Angels etc.  Please send us an email at if you think it would be useful to meet. Please add a link to your Linkedin profile in the email.

If you are a founder who would like to be considered for funding, please complete an application and then send an email at the address with your company name in the subject line.


Visiting India


I run Tandem Entrepreneurs, a mobile accelerator in San Francisco Bay Area. I am visiting India and will be in Pune from Tuesday 7th Feb for about 10 days. I would be happy to meet with a few entrepreneurs if you want to use me as a sounding board.

At Tandem we work with 6 companies at a time. We invests $200k in each mobile startup and works closely with the team for an initial 6-month period. This allows each team to focus on gaining traction without having to wait for other capital. We work with founders to bring in other investors as the business gains momentum.Tandem has the ability to invest considerable additional time and capital in each business as needed.

You can learn more about us at You can also look at this discussion on Quora

If you want to meet with me please fill out an application at Apply and if I think I can help I will ping you.

Just to be clear I am not going to consider these applications for an investment, unless we meet and things make sense and you can move to the Bay Area for the six months that we work together. (Just dont want to set any false expectations).

ZumoDrive expanding team in Asia

One of our startups – Zumodrive is expanding its operations to Singapore. It is still a very small team and this is a fun opportunity for a couple of people who could move to Singapore to join the team. Kevin West their CTO will be relocating and will build a small team in Singapore. If you are interested and a fan of Zumodrive here is the link to the jobs. Zumodrive started as a YC company and then we partnered with them.

On another note, A couple of our other companies and I presented at Berkeley Business School a few months ago. They have put the video up in which Sarah from Juice Box Jungle and Ray from Playhaven both talk about their experiences building their companies. I start things off and here are my slides.

Would love any feedback.



With 3 talented founders, today, you can build a service leveraging Internet platforms from the likes of amazon, google, paypal, salesforce and 100’s of others. You can then get your service to users by leveraging social and search engine marketing and you can do this with no expensive infrastructure, very little money and all in less than a year.

Sounds like a Hindi formula film where the founders live happily ever after. So whats the catch?

The problem is that this formula is not a big secret. There are thousands teams out there that can do the same and this creates a ton of noise. The hard part is finding the right problem to solve, solving it right and getting people to adopt in spite of the noise.

Its been a year since I started Tandem Entrepreneurs and its brand of co-entrepreneurship. It has been a lot of fun and a lot of work. The best part is the quality of entrepreneurs that we have the privilege to work with. For those interested here is the list.

In this year of working with our companies if I had to highlight one observation it would be about the complexity of the 15 sec WHY?

The service a start-up offers may have a lot of value, but you have to find the one reason (the WHY) a user will pull the trigger and adopt the service in less than 15 secs. (This shouldn’t be confused with the company elevator pitch, or tag line)

Nailing this WHY down is not easy, and most often the discovery continues for many many months, but it is something to focus on right from the very start and keep on it till it is absolutely proven.

There is a great temptation to have a laundry list of whys, a very generic why or a why that is too obscure. What you need is one COMPELLING reason that appeals to sufficiently many in 15secs or less.

We as entrepreneurs get bogged down in all that can be done once our service is adopted and don’t put ourselves in the shoes of the user who is reluctant to mess his already messy world with a new services.

Think of the services you use and you will probably be able to explain why you use each in 15 secs, shouldn’t people be able to do the same for whatever you build?

The WHY is the first W of the touchstone I currently use to evaluate and evolve companies – there is another W and two V’s that are all needed but those can wait for another day.

BTW: I am visiting Delhi from the 28th July – 9th Aug. I am not sure I will have much time, but if there are any teams out there that would like to learn more about Tandem let me know and I will see if I can make it happen.

Twitter and the Rickshawalla

A few days ago I decided to try out twitter and came across an interesting post by Josh Kopelman titled Some new thoughts on the Atomization of Conversation. Here is a part of the post

On Sunday morning, our seven-year old daughter awoke with sharp pain in the lower right-hand corner of her stomach. Fearing appendicitis, we took her to the hospital, and they operated. I canceled my calls and meetings and basically disconnected from the Internet for the week. The only hint I gave was a brief Twitter message. My wife also cleared her calendar — but she provided some Facebook updates about the situation.”

And what happened next really amazed me. Her phone started ringing with calls of support and help. Friends offered to pick-up and drop-off our son at school. Home-cooked dinners arrived at our house. Balloons, stuffed animals, and cards arrived at the hospital room. Old friends from high school and college called her saying that they were there to listen if she wanted to vent or talk.

Her brief Facebook status update was all it took to activate her real-world support network. It was incredible.

It got me thinking that in India, this would happen pretty naturally without a tweet and it would be appreciated but not seen as incredible.

As I was mulling this over my wife got off the phone with her mother and told me a funny story. She said that her mother, who had been living in the same apartment complex for 20 years, took a rickshaw to the neighborhood market.

As she settled in, the rickshawalla asked her why she had never taken a rickshaw before. He then went on to ask about her daughter (my wife), who he knew was in America, about her son and his kids and expressed how bad he had felt when my father-in-law had passed away. This rickshawalla had been outside this building for years and years and knew everything that was going on even though they had never ever interacted.

I wonder if Facebook and Twitter is the answer to the atomization of american society and is India headed towards such atomization to be glued together by social networks? Or is all this redundant in societies which have plenty of “rickshawalla”?

What do you folks think? Are the roles of social tools significantly different in different parts of the world?

Team, Product or Market

It been a while. I just read a couple of posts on the relative importance of Team, Product and Market that motivated me to write.

Here are the post. The first is from Marc Andreson (Netscape fame) and the second is in response to Marc by Paul Buchheit (Gmail fame). I think both are worth reading.

If I read Marc right he states that the market wins and the product-market fit defines success.

Marc refers to Andy’s (Benchmark) quote

Andy puts it this way:

When a great team meets a lousy market, market wins.
When a lousy team meets a great market, market wins.
When a great team meets a great market, something special happens.

Paul reiterated this but claimed that if your product is conducive to fast frequent iteration (web products) a good market will draw out the right product.

Paul says…

For web based products at least, there’s another very powerful technique: release early and iterate. The sooner you can start testing your ideas, the sooner you can start fixing them.

I think they both have good points however I would frame it differently.

When I look at a startup for Tandem Entrepreneurs, I look at the market as a target, the bigger the market the higher the probability of hitting the target. And I look at the team as the archer, the better the archer the more likely that they will hit the target. The product at the start should be at best treated as a guess of where you should aim.

Now having said this I would caveat it with the fact that defining a large market is easy. Defining the right market is an art and it is hard but critical.

The market becomes the focus of the startup and any startup without a focus is hard to execute. So I agree with Marc that the market is very important but it need not be huge. It needs to be big enough and clearly defined.

Once the market is defined and the team understands that the market and not the product is the focus; then begins the job of tuning the product-market fit whiich can be done well by releasing early and often (if your product and market are conducive to this) as Paul suggests.

A thoughtful definition of the market and a good team are critical to success. But I would contend that if you have a good team that understands the importance of the market, they will in the right environment, be able to find a good market – there is no dearth of opportunity.

It’s about the People, People

This is motivated by the Alok’s post on “Miniaturization of VC” that asked what technologies would enable VC’s to manage a large portfolio of companies to moderate exits. My contention is that for such companies no armchair quarterbacking will suffice, no matter how good the remote control is.

It is all about human capital – the team. When you build a company, to get reasonable odds of success, you need an outstanding team. The traditional model has been to get the core team together, go raise a pot money and then use that money to hire the rest of the team. This works for companies that are clearly going to go big or go bust – building an electric car for the masses, building a two way GPS system, building a 4G network, or even our very own Sanjay’s Eko project. But for companies that will require small investments and have moderate outcomes it is very hard to go down that path any more.

The reason is simple – Everyone wants to be a founder and no one wants to be an employee.

If all it takes to start something is an idea (everyone has one), a small amounts of money (maybe just go without a salaries for 6 months), and skills. Then the real barrier to entry is skills. Anyone that would make a good hire has skills. So they think – I have skills, I have an idea and I can go without a paycheck for a while and my uncle can put in a bit of money. Hey, I should do a company myself. It is much easier and more fun to nurture your child than someone else’s.

So a company that is going down the path of small investment, moderate exit will find it hard to build a team, even if they have the money they need to pay their employees a decent salary. Hence the abundance of founders and absence of employees.

Now switching to the investor side.

I have a lot of VC friends who have gobs of talent and energy but as an industry the VC’s have one broad core competency. Their ability to get institutions (pension funds etc) to trust them with 100’s of millions to invest. A small set of VC firms (less than 10) have a repeatable process of discovering and nurturing big hits. None have the human capital required to make many small investments and take them to many moderate exits and they most likely will not change their stripes.

The reason is simple – Their model is a hits centric model and it is very comfortable. Today a majority of VC’s are making most of their money from fees and not from the 20% carry (their share of the proceeds the fund gets from successful exits) and they are still living a good life.

For a VC firm to exist it must have the ability to raise gobs of money and they do. They then pay themselves a fee of 2% annually. So if you raise 200M fund (which in the US is not a big fund) then they get 4MM annually as a fee from which they pay themselves salaries. If they can keep the number of partners low then they can pay themselves great salaries and they do. Hence there is little lifestyle risk if they fail to execute, they still get a decent salary.

For VC’s to accommodate many small investments that result in many moderate exits they will have to lower the size of their funds by 10X or increase their number of partners. Consequently they will reduce their salaries substantially and increase their dependence on the “Carry” for their lifestyle. This is not going to happen unless there are no places to deploy large sums of money.

It is much better for a VC to find new places to deploy large chunks of money and continue to enjoy a good risk free lifestyle than find a way to change their stripes and deploy across a large number of moderate exits and put their lifestyles at risk. The best VC’s will find these opportunities and some but not many will be in web 2.0.

We created Tandem Entrepreneurs to address this class of company. Tandem has efficent deployment of human capital at its core. We are often confused with small funds. But these fund are often just VC’s with one partner or organized angels. Neither deal with the human capital issue. The best model for these funds seems to be to make many small bets. In some sense create an index fund of startups. It is a reasonable idea and one that has brought success to Ron Conway in the past.

We try and make it clear than Tandem is not a VC or an angel fund, but are a team with money from a powerful network of individual investors.

Since we invest human capital, this makes the number of deals we can do small , else we will be spread too thin. The areas we can invest are also narrow (based on where we can successfully add sweat and bring an unfair advantage of some sort – an edge). But when we do invest we serve as the extended team and address the human capital (team) problem as well as the financial capital issue. We make it possible to keep the number of people sharing the pie small, making it possible for the founders to make their million(s) with a moderate exit of 10-20MM and in a short period of time. The door to a big exit always stays open.

I think it is a great time for entrepreneurs to start companies but entrepreneurs need to think carefully about how they are going to build their team. A startup could succeed with an incomplete or subpar team, but they would have to be extremely lucky. Startups also need to be realistic about their exit value. I can make almost anything look big on paper but the inconvenient truth is that 85% of exits are less the 50MM.

Technology has been a big enabler for creating this environment. Amazon’s EC, Open Sources software, Social network api’s, Hosting services like Engine Yard all lead to startups not needing much in the way to enabling infrastructure and if it isn’t there today it will there soon. At Tandem we have made 3 investments in the last 3 months and not one of them has a machine to its name outside the founders’ laptops and their budgets for software spend is next to nothing.

Here is data showing a nice paycheck inspite of dismal returns

VC Compensation

VC Compensation: Rising

Somewhat Questionable

Private Equity Returns : Somewhat Questionable

The Knobs on a Social App

Some of my friends asked me to walk them through the virality of a social app so I put this little calculator together. With many building apps on a social graph such as facebook, I thought others may find this useful. It could help folks start to think about the metrics they may want to collect to tune their apps. Hope people find this useful.

The live version may only work in IE.

Clicking on the image should take you to the live calculator

Social App Virality Calculator

Facebook = Comcast (Lean Forward Entertainment)

This is along the lines of Alok’s post but different enough that I thought I would do a new post.

When I look back in history for a model that may predict how the broad social networks will evolve, the Television industry comes to mind. Facebook would be Comcast and there will emerge channels like HBO, PBS, NBC etc. Slide and Rockyou are trying to be these on Facebook. And then there will be the shows that these channels have, some produced internally and others acquired. They will all make money off advertising, market research, virtual goods and ecommerce.

The big difference will be in value of all this. Attention is moving. This all could be many many time more valuable as this is a 2-way medium and the dream of interactive entertainment on a global scale is being realized (interactive tv never took off).

Am I on drugs? What does this blog think?

Tandem Entrepreneurs Pt 2

Folks, thanks for the comments and questions both on the blog and that were sent to me through email. I do appreciate the feedback and it is always welcome. I decided to answer the questions in a post as opposed to a comment and hope that is appropriate.

There were 4 main questions

1. Does Tandem invest in Indian companies/entrepreneurs?

Yes, we will invest in Indian teams as long as we add value. Typically, we can help if the business is serving a market beyond just India (with users and partners in other regions) or if the business is based on a model that we already know well. Technical and business discussion are more efficient with everyone in the same place, but we can still be very successful with geographic divide in place because the teams are so small and we partner only with motivated, self-driven founders. With this in mind, we look for all the founders all to be in the same place, but that place can really be anywhere.

2. How does the Tandem team spread its time across many companies?

We support two new companies per partner per year, so a Tandem company would typically have one or more Tandem entrepreneurs available to it on a daily basis. If we’re looking at competitive landscape, it may be Sunil, if there is a partner deal to be done, it may be Doug, if you have a performance issue it may be Joyo. There are times when all of us are pitching in and other days when none of us is required. In addition, we have many individual investors from companies like Adobe, Bebo, Google, Microsoft, Macromedia, etc who are available to help us as sounding boards and more. We also have service providers who will provide help in areas like finance, legal and public relations. These advisors and service providers will take their fees in stock, allowing us to extend our runway even further and still get great human capital.

3. How do you differentiate yourself from others incubator-like funding vehicles?

There are 3 things that differentiate us from these operations. We are entrepreneurs partnering with other entrepreneurs.

    We will invest in companies and ideas that may not end up huge “hits.” We will try and make every company take the best and most lucrative path it can but will not force any to go down the path to extreme success if it’s only possible in a powerpoint.
    We support companies all the way to liquidity, and we usually will not need any external money. Our investment of is tranched – the first tranche is for building (6 months), the second to get credible traction (6 more months), and the third is to scale (another year). If we do not invest fully in each tranche, we lose much of our equity.
    We support independent companies – you are still founders of your company and not employees of tandem. You still bear the burden and enjoy the glory of building a successful business by understanding your users and delivering a service to them. We help you keep your focus on enrgy on the users.

4. When would you take an individual founder without an idea

Ideas are not that important to us. We have some, and there are many sources of inspiration these days. And even if you have one, it’s very likely that it will morph considerably once you implement it. So if you are a strong candidate, we’ll pair you up with others on a promising business.