99% Rich People Do This: Money Making Habits & Opportunities | Karan Bhagat | FO431 Raj Shamani

How much is born rich?

I think today in India, a good house and 5 crores is very very rich.

What is the difference in the mindset of people who are stuck on 1-2 crores versus those who make 500,000 crores?

If I look at entrepreneurs who hit the ball out of the park, they add a certain discipline to their process. So if every day you can do slightly more than the previous day, you are bound to be successful.

What is the biggest fear of the rich people?

The biggest fear is that can we pass on our values to our children or not?

Tell me problems of being rich?

The biggest problem is how to handle expectations. And second, I think you're more in the face everywhere. And therefore, peer pressure also to do is much, much more.

Where will we make the most money in India in the next 10 years?

So that this 20-year-old something can start focusing on that particular space. I think, money.

Because you study these guys. You live with them, you prepare with them, you understand them. How do you make money? You will see that there are six sectors in our country.

Financial services, consumer, technology services, industrials, defence, pharma, and healthcare. And these six sectors have a lot of alignment of interest with the growth of the country.

Second, I think, innovation can lead to a lot of innovation. Pharma and healthcare. And these six are very much in alignment with the growth of the country. Second, I think innovation can lead to very disproportionate growth.

Have you seen any difference in the behavior of Indian billionaires and Chinese billionaires or American billionaires?

Americans and even Chinese are able to make business out of everything. In India, I think it's a little inclusive. If you go to China, every billionaire wants to also go out of China. So I think these are the big differences.

Billionaires get information first. There is going to be a change in policy. There is going to be a decision somewhere. Today our guest is Karan Bhagat, Founder, Managing Director and CEO of 361, one of India's top wealth management firms. In today's episode, we will talk about how people's fears remain the same even after money increases.

What is the old money vs new money mindset? And how much money can change life and how much not? And how do the top 1000 families in India manage their money and what is their biggest fear. Watch this episode till the end. It will explain the equation between money and peace.

And if you want to keep your wealth and values in balance, check out 361. The link is in the description.

Tell me three problems of being rich. But you see all this, right? You want to know. I think...

I think obviously the first problem of being rich is expectations are always very... Okay, before even we do that, tell me, sorry, but tell me that how much is rich in money? That is also very different. But still, we are the problem so that it sets the level. 10, 20, 50, 100, 200, 500 crores.

I think today in India, according to me, a good house and 5 crore is very very rich. It's not a...

Okay.

So, we are talking about the problem of the one who is born with 5 crore.

5 crore plus a good house. I think you will definitely qualify in the top maybe 0.2% of the population.

Okay. maybe 0.2% of the population. So, this 0.2% country, the children above 5-10 crores, what are their problems? Tell me the top three problems.

The top three problems are that whatever you do, you feel like friends, parents feel that it will get worse. And every time, I feel and people tell me, now that you guys are grown up, kids won't see all those problems in life.

How will they learn? They will never become competitive. They will never learn the challenges. They will never work hard. But in reality, kids are not like that. They really work hard. So I reality, kids are not like that. They really work hard. So, I think the burden of…

When we were there, the expectation was very low. It was not like that… To be honest, if we were making 5000 rupees a month, parents were super happy with it. It became 10,000, parents were even more happier with it. I think our expectation was...

Too much.

Too much. So, for me, the biggest problem for kids is how to handle expectation. And second, I think, generally speaking, more socially upward mobile, more exposure to entire social media, today everything. You are more in the face everywhere. And therefore, peer pressure also to do is much, much more. And everybody is out there trying to show somebody or the other has done something extra.

The concept of parents.

And there is pressure on the parents. Every parent wants to say, my kid has done this extra, that extra. So I think that is constant pressure. And I think honestly, if we look at our childhood, there was nothing like that. Honestly, the only thing we used to do is play sports. And all the rest of the things were not there.

I also believe, I have noticed this,

people of my generation. You are not there. I also believe, I have noticed this,

people of my generation.

You are not married?

Not yet.

Good, good decision.

Okay.

At 29 is good. I think now you are thereabouts. You are thereabouts. Don't delay it too much. Because what happens is that at 29, you have to imagine when you have grandkids, you will be approximately mid-60s now, more or less.

So then you want to enjoy 15, 20 years, if possible. Healthy life with grandkids. Hopefully, science and technology will change. So I am a good believer. I love that 27 to 30 kind of age bracket.

There was a stat that, this is American standard, that most reliable and stable and healthy marriages

happen when couple gets married between 28 to 34. Okay, so I'm seen 27 to 31.

But whatever you said, I feel like, Papa, please, real ideas. Dad, don't hide behind parents. But what I see in my generation, whether you have a lot of money or not, you have a good background or not,

you have 10 rupees in your pocket or 10 crores or 100 crores. I feel the biggest fear of our generation is fear of insignificance and irrelevance. Everyone has so many metrics of comparison. So everyone feels like, hey, I have potential too.

Hey, I have a lot of expectations. There are so many opportunities that people become heroes from zero.

And after that, I did nothing. Whatever you did, you feel you did nothing.

So, whatever I do, I have not done anything. And even if I am doing something, the constant question is that I have not been able to do anything.

I think we have not addressed that point. But I think middle India. So, let's just for example, I think the younger kids who are not rich, I think last five, ten years, the talent that you have seen is phenomenal. I think that kind of hard work and effort which is happening in middle India is just unbelievable. The kind of people we are getting and the kind of talent we are getting is just impossible. The change that has happened in the last 20 years is just insane.

So, I think, we are talking about the problems of the rich, but the opportunities which we have taken in the middle ground, we have really taken a super, super impressive.

But everyone, whether you are from any background, fear is irrelevant. That's pure pressure like crazy. And someone is doing something. I know so many people who are doing good in life, but they question every day, that I am doing something or not.

And they are opening Instagram every day,

so they are thinking about this. They are opening news, so they are thinking about this. They are talking to their family, so they are thinking about this. Everyone's ambition has increased so much, which is great. But the fear has also increased. And everyone feels that another layer to this fear is that

my potential is not being unutilized. I am not going to remain average.

But that fear doesn't end anywhere. I think about it even today. That is impossible. It has grown because you guys didn't have enough comparison. There is only one answer for that. I think a glass is half full and half empty.

Whenever you think like that.

But I believe on that point that you should change your thinking age wise. I think at our age, you should think that the glass is half empty.

Fair enough.

India needs young, hardworking, ambitious, hungry people. You should always think like that. We should not think that if we are the fourth largest economy in the world, then we should be happy. We should think how to become the world's number one and what are we doing for it.

No, I think that I believe... In fact, even at my... There's nothing at your age. Even at my age, I want to stay hungry and I want to stay foolish. So, I think these two, you have to be foolish and hungry. It's not, you always have to be hungry for more. And you also always have to be wanting to learn much more.

If these two things are over, anyway you are finished.

So, you have to feel foolish and you have to stay hungry. In my home, they say that we should wake up every morning and say that we are nothing and we have to work a lot today. And we should sleep at night and say that everything is good. No tension, we are very fulfilled. So you sleep with the glass full,

but you wake up with the same hunger that we are nothing.

I will learn this from today.

I am going to repeat this to my kids at home today. Sleep with gratitude, wake up with hunger.

It's a good line.

We talk about it a lot because my father is a fulfilled and gratitude kind of person. And I'm a hungry person. So my father and I made it up. Look, half of it is from you. We do it like this. We don't sleep in tension.

But...

How old is he?

He's 56. But he's always been that once the family settles, then he used to tell me not to do so much. But his moments come. They kept telling me not to do so much. But there are moments when they say, did you do this much? A little more.

A little more.

I said, let's do half and half.

Let's do half and half.

So when you started your own thing, when you started your own company, 361, first IFL and now 361, right? So how did you convince the first billionaire client or first somebody with very big money, how did you convince them? Because here's my question.

The person who has 4,000, 5,000, 10,000 crores, he has people from all over the world to manage his money.

Right?

He has everyone.

He has a lot of people who trust him, a lot of fake people, a lot of smart people. He has global firms.

He has everything.

Like, JP Morgans of the world is sitting to take their money. We will do it for you. We will do it in different countries. We will save tax. I don't know how much financial engineering would have been done for them.

So, they have a lot of options. Why will they trust you in the beginning? Because in the beginning, you don't have an experience and pool of 10,000-8,000 families, I run a business. Don't you have anything?

No, it's a very tough question and a very good question. There is no easy answer to it. So, when we started the business in 2008, then the IFL gave us some capital to start the business. And from 2008 to 2013, we went to the same problem as we had in 2001-2002. The IFL name was not known in South Delhi, South Bombay.

Bringing one meeting in South Delhi, South Bombay, that was a big win. Client conversion was a very far-off thing. If you get a meeting, it's a big deal.

So how did you bring the first meeting?

Meeting was a big problem. Because we thought that the clients who were with us in Kotak, most our clients will move. Reality is less than 10% of the clients moved. Less than 10% of the clients moved. And that 10% clients, except 4-5 clients who started from the beginning, everybody started with a small portion of the portfolio.

So, if someone had 10 crores, they started with 1 crore. They said, Karan, go, settle down, we are a new company, we like you. But at least let's see. Make a platform for 1-2 years, do everything. I can't transfer everything today. And every person has 3-4 supporters who say,

I will transfer everything, start. But it can't make a business, it can only be a start. I think, but in general, again, like I told you earlier, 90% opportunity is same for everyone. Hard work and effort is the most important. So, from 2011 to 2014, we focused only on companies where there was an event of dilution or liquidity event. And they were ending up with some liquidity event

because of which they were getting money. And those were the people we started chasing. And when someone is getting new money, he always wants to challenge the status quo. He says that whatever I have today, I want to see it beyond. I want to see what I have today beyond that. I want to see what else is available. And he is ready to meet everybody fresh one day. And he is also ready to meet a new kid on the block. So, that was our opportunity between 2013 to 2016.

And I think, all the transactions that happened at that time, we converted 80% of those transactions. Now, why it comes back to the same thing? People associated with us as entrepreneurs, they liked our business model. We changed the model that time. We became advisors. That was the biggest change. Instead of earning from product manufacturers, we were earning from clients. So, basically, now us and the client earning from the client instead of the product manufacturer.

So, basically, now us and the client are on the same side of the table instead of the opposite side of the table. I think that change was the most important change.

But tell me this. Now, when your first client got converted, did he ever say anything? What was that meeting?

That meeting was actually the client just passed away. He is still a big client of ours. The grandfather passed away in Bombay. How much portfolio did he give? At that time, I think it was around 500-600 crores. At that time, it was around 100-150 crores.

They had sold some land in Ghatkopar. And they were moving the factory from Ghatkopar to Daman. So, that's how they ended up getting the 150 crores.

When he invested with you, what did you say? Walk me through that meeting. Let's relive those memories.

Actually, I can walk you through two very interesting meetings that time. So, this is a Bombay client and then I'll talk about a Delhi client.

First, Bombay client, then Mark Hopper, 150 crores.

So, he basically is a very, very old man. Maybe among the smartest people I've ever met in life. They're a glass company.

Okay.

And actually, in that meeting, he spent two hours. But he enjoyed three things a lot. One, it is an Indian company started by somebody who's 29. Commercially smart. So, he was very, very quick on his numbers. Super, super quick on his numbers. And he loved the fact that I was also super quick on numbers.

So, our chemistry on numbers was...

It was vibrated.

It was immediately vibrated. That was something. Because he was a businessman. He was an entrepreneur., so he could understand the business.

So, Marwadi was your choice.

Yeah, that he really, really, really loved it. Second, most importantly, I think he had dealt with everybody in the past, and he always felt a lack of trust, because of the fee structure. With us, we were able to establish that very, very, very, very quickly. And third, I think, somewhere in India, a lot of these businessmen want to give you a, if they find you genuine and honest, they want to give you a chance.

That I agree.

They want to give you a chance. That I agree. They want to give you a chance. That I agree. And we did not get 100% of that. They got 300 crores. We got 50% of the 300. We got 150 crores. And actually, like I'm talking, at the same point of time,

I got another client from Bombay, actually, who's today maybe got more than 7,000, 8,000 crores. And with us also, he's got more than 5000 crores. He's one of the largest clients in the country. He's still alive. Again, maybe he's a very sharp guy in numbers. He's 78.

And actually, the good thing, the most important thing for me is that in both the families, the children and the grandchildren are equal friends and equal clients today. So that is our biggest achievement. It is not only converting the client in 2011, 2012.

Today, if I fast forward today 14 years, all of them are clients. All of them are friends. And they have got more money with us, maybe 10 times more money with us than they had in 2011, 2012. My Delhi client actually is even more funny.

He was one of the clients I got from those W36GK2. And he was right now in Bombay two weeks back. And we had a dinner and we actually did a photograph with him, his son, his grandson. But he came home, it's just phenomenal. With him, we just kind of hit it.

He just felt that he's a person he likes to back, and nothing financially, okay? And he was just very different from, a little bit more different from Bombay, but much, much more relationship-oriented. And we just kind of... And he's a person who's so trusting that he actually doesn't look at his portfolio at all

because he knows that with you, you will not take a decision which is not wrong. You can always take a decision which is wrong, which you don't intend to be wrong. And I think, and these things come out, yeah. I think at the fundamental level, I don't know how to put it.

But trust and effort are two qualities which are way ahead of anything else, everything else.

OK.

Coming to your experience with people. Like you said, some have 5,000 crores, some have 500 crores. What is the biggest fear of the people who have a lot of money? With their money. What are they afraid of? Because everyone has fears, right?

No, look, I think fear is not like that. Just because someone has a lot of money, their fear doesn't change. Ultimately, all of us are human beings. I think across the board, the fear of my, fear of our staff working at home to the fear of my richest client is the same. I'm saying, ignoring our hardworking 90% of the working population where they have to also fear basic needs. I'm removing that.

Those who don't fear basic needs, I think the needs are the same. The most important need that I think of today is that if I sleep at night, and I slept 10 years ago, nothing to change with the amount of money you have. The biggest fear of all of us is that our values, can we pass on to our children or not? That is the biggest fear all of us have. Now, you must be thinking, you were asking me, what is the most valuable thing for you in the last 20 years?

The most valuable thing for me is that the adversities I have faced, I could convert that into an opportunity. Hopefully, my children never have to face the adversity. Without facing the adversity, I can't put them in adversity. For them to turn mature in this thing. I don't even a wish. So how do we translate all these values that we have learned to our next generation?

This is, I think, one of the biggest fears all of us have. And I think across the board, I think, if I look across all friends, clients, I think that's one of the biggest fears. Second fear I think people are not really worried about making money 10%, 11%, 9%. I don't think that's a really a fear. But people, I think people have really started now in India for the last five, 10 years. What can we do during our

life also to make ourselves happy? And I didn't see this before. Before there was this entire infatuation with money. Everything else aside, we have to just focus on it. I think the last 5 years...

Accumulate money.

So, there is something for everything. And parents obviously, rightfully, especially in India, you discussed that the maximum wealth in India was made in the last 35 years. Everybody wants their kids to be humble.

Yeah.

Like they were humble when they were kids. Everybody wants their kids to not waste away the money they have earned. Everybody should be equal. And second, I think, there is a little concern that you had this old thing that does money last after three generations. Your first generation earns it, second generation stabilizes it, third generation blows it away. I think in India, I am very happy. I feel very secure actually. I meet everyone, to be honest. I think our third generation is not like that. I think 60 to 70% of it, again,

everything has exceptions. There is no rule. But 60 to 70% of third generation rich India, actually is using the money to expand, which is a very good thing. So I have that fear in my clients, but I don't see that fear. I'm feeling very happy about the third generation of our kids. And third, I think people have a fear, what if something happens to me tomorrow morning?

What if I don't get up in the morning tomorrow? That is obviously a fear. And I think that's a topic which our clients spend a lot of time spending on. Succession, I don't have a will.

Most importantly, can my family manage after me? So you're saying that the rich people, especially the ultra-rich, they don't have a big fear of how their capital inheritance will be. They have a bigger fear of how their psychological inheritance will be. It's not about capital inheritance. So psychological inheritance, meaning my values, my emotional thinking, my deep rooted beliefs,

the way I made my business or the principles I follow, how do I pass on all that so that my next generation is better than me?

But that's a double edged sword. And they shouldn't be egoistic.

Like if the parent is not egoistic, then they want the children to have the same values. Because the parents have grown up in poverty, but the children are rich. Born rich. Don't you think this is a double-edged sword?

100% double-edged sword.

You can pass on two things to the children. One is, the way you think, the way you make a business, the time you make it, the way you treat people. This can be very good for the kids. But maybe time has changed.

Things have changed. The way leadership has changed. Control has changed. And if you give that to the kids today, they will spoil it and make even worse. Imagine if grandpa and grandson became the same

in the way we're dealing people.

It's trouble. Gen Z can we're dealing people. Impossible.

It's trouble.

Trouble.

Gen Z can't be led as boomers, right?

Impossible.

Impossible. Wo hoi nahi sikhta.

Nahi, nahi. Wo hi main bol rahe ho. I think, and that's why that thing, pura thing of problem of being born rich. It's not that easy. But I think, you can talk to anyone, talk to 8 out of 10 people, and ask them what are their top 3 concerns. I think this will be the answer.

First will be kids, kids, kids, kids.

What do you think, what's the difference between when you manage 1 crore and when you manage 1000 crores? What's the difference?

No, no, the objective changes. Because risk-taking appetite is very different.

What do people with 1 crore think? What do people with 1,000 crore think?

A person with 1 crore will need at least 50 lakhs on debt at all times. Safety and security is important for him. So that he can withdraw 50 lakhs at any time. Yes, I need liquid, I need safe. I grow the remaining 50 lakhs, but I keep the 50 lakhs safe. The one with 1000 crores, he doesn't want 500 crores safe. He will keep a fixed amount safe. 50 crores, 100 crores. The remaining 900 crores becomes growth capital for him.

So we call it a safety pot. If the wealth increases too much, your safety pot becomes a fixed amount. It doesn't become a percentage. When the amount is small, it becomes a percentage. And different people have different ideas on small amounts. Some people want to take more risk. It is such a small amount, how can to grow it at 8%? So there are different concepts, but according to me, most more often than not, the one who has 1 crore, his priorities are different. He needs a little safety, security, college education is there, now education costs a lot of money, have to buy a house,

have home EMI's, insurance is important, 500 crores, 250 crores, 1000 crores, all these things are out of the window. The question only is that I will take care of all of these things and more. So, how do I grow on I grow? That is their main. So, the biggest difference is your ability. What is your ability to take a little more risk and grow? So, I think that is the biggest difference. The remaining operating principles beyond a point are the same. The one who has more can think a little long term. His money can be less liquid, he can lock in his instruments for 3, 4, 5.

He can also do more complicated instruments. Those who have less money should not do complicated instruments, they should keep everything simple, available at all points of time. Obviously, financial understanding of that investment also might be lower because those who have 1000 crores, he has a family office. Someone is running his family office. Internally, there is somebody to guide him on what is right and wrong.

So, he is more sophisticated. Our regulators also rightly have introduced a concept called accredited investor. So, the one who has a net worth of 5 crores and above, now he can become an accredited investor. So, who has a net worth of 5 crores and above, now he can become an accredited investor. And once he becomes an accredited investor, he can do slightly more.

Risky.

Complex instruments. Things which are not that easy to.

Like?

Like, for example, let's say you are doing a locked in product, Alternative Investment Fund, for 5 years of private equity. So ideally you should be an investor who is able to understand what risk you are taking, that your money is locked in for 5 years. Okay, you can get 4-5% return extra, but what sacrifice you are making for that,

is very important to understand. And what's the difference between high net worth individuals versus ultra high net worth individuals? How much do they get activated? Who can you call HNI and who can you call Ultra HNI?

There is no logic for all this.

But people call it Ultra HNI.

Every company has a different logic. What's your logic? Our logic is, so broadly for us, high net worth individual is between 10 crores to 50 crores. Between 50 crores to 500 crores, we have ultra-high net worth individuals. Above 500 crores of financial assets, we call them first families. First families.

So, it is every company can have splits. Now if you go to a bank, then for that bank high net worth individual will become 1 crore to 10 crores. 1 crore to 5 crores or 1 crore to 10. Ultra high net worth will become 10 crores and above. And then there will be two splits. So, there is no such universal logic identified or defined. But yes, those who are not retail bank and are doing wealth management, they will typically have three kinds of cuts,

starting from typically 10 crores and above. That's really the case.

So, like you must have had clients who started with 1-2 crores.

A lot of them.

And now they have become ultra high net worths. Or they have become family first. They have become first families.

Most of those clients who have started with 1 crore or 2 crores or 3 crores because you have to build confidence.

And today that will be a very big portfolio. There will be a lot of people, right? What have you seen that people who are 1, 2, 5, 10 crore, how do they make 100,000, 500,000 crores? What is the difference in the mindset of people who are stuck on 1, 2 crores versus those who make 500,000 crores?

Great question, Raj. And I think I have a very simple answer for this. But for me, I will give a term in English which I really believe in. Incremental is exponential. So, our entire world for the last 10 years, everybody wants to do exponential. I don't understand that. Okay, it can work for one person out of. There is always an Elon Musk. There will always be somebody.

But that is one example. Nine examples will be people who are doing everyday things right every day. And they are doing every day slightly better than what they did the previous day. And I like to call this incremental is exponential, okay.

So if every day you can do slightly more, okay, than the previous day, you are bound to be successful because the compounding is massive. So to be honest, I think if I look at entrepreneurs who've in 10, 15, 20 years really hit the ball out of the park, okay, They had a certain discipline to their process. They've got up in the morning. They've not tried to do 50 things.

They try to do 10 things or one thing, but do it with a certain amount of discipline. And that is very, very important. And for me, I think that small incremental steps, but steps in the right direction is the most most Important has to come with a lot of focus hard work is a common denominator. Okay, I think that

life my partner digital For see and you can't build your life on that out of hundred people five people end up getting wealth Okay, one person may get it by luck, by inheritance. One person might get married into it. That's a separate issue altogether. Okay, third person might just win a lottery. Okay, for all you care. Fourth person, who whatever it is worth, blindly invested somewhere. Okay, that companies ended up becoming very large. But these will be one, one, one, one examples.

You can't really build your life saying, let me become one out of these four. It's not possible. So, you look at the remaining 95 examples, okay, there will always be very, very driven hard work, lots of sacrifices, lots of moments of failure, lots of moments of disbelief, lots of moments of struggle, lots of moments of lack of confidence in yourself also. But every day you get up and do slightly, slightly more.

So, you are telling me that among rich and very very rich, the difference is largely that some people make money and get distracted,

versus some people who are disciplined for a long time.

They keep doing it.

And that's how they end up winning.

They end up winning. And second, obviously, I think, again,

Discipline and distraction.

And values. It's not only discipline, values. End of the day, values have to be right. Values have to be right because you have to be honest, you have to have a certain degree of integrity. You have to, honest and integrity doesn't mean you don't earn money. It means you earn money the right way.

You do deals. So, I'm saying that has to be there. Again there will be examples of 5 people who reached without that. But that can't become the operating principle. But even if you look at the stories of exceptional people, it's same.

So, have you seen a video of Michael Phelps?

Yes, I have.

Michael Phelps.

Yeah.

Right, okay. So, there's this one video. I love that.

I've seen the video. And he says that...

He talks about... Somebody asks him a question.

Michael Phelps asks him that

you are such a person, such an individual who has won the most Olympic medals in the world. I mean, no one has won as much as you. It's humanly not possible to win as much as you. How did you win so many gold medals? So he says, just practice every day. And everyone laughs there.

I said, practice every day?

Exactly.

He says, practice every day. Then the interviewer asks, yes, just practice every day. He says, you're not getting it. For 7 years,

practice every day.

Every day.

It was Christmas, I practiced. Diwali, Holi, whatever, in their case Thanksgiving, New Year's, I practiced. It's cold, it's hot, there's a flood, I practice. There's fever, no fever, I practice. 7 years of my life, I don't remember what day it was, rest day or recovery day. I practiced.

That's it.

And the way he says it, I'm like, that's so true.

I think that's really what is...

What's the game at the end of the day.

Tell me about different mindsets of people. So, let's say, region wise, compare. No, no, no. Billionaires and money people from North, how they behave? How do South people behave? Or East or West?

Or maybe there is a difference in communities. Maybe Punjabi would differently or Jain would differ. I don't know if the community will be so different. But the area will definitely be different.

I think there are three ways to cut it.

Okay.

The easiest cut in a sense is big cities and… Small cities. I won't call them small cities, but next set of cities in some senses.

So, tier one, tier two.

Tier two. Not in the Indian definition of tier two. I'm still saying. I think generally speaking, Bombay, Delhi, Bangalore, Calcutta, Chennai, very, very open. So they are very, very open to new ideas. They are ready to deal with everyone. They are not like, I will deal with him. They are in a sense much more confident about themselves.

That we will end up taking the right decision. So it is one thing that we will choose two advisors, three advisors, but at the end of the day, they feel that we can work around it by taking the right decision. And they have the right exposure also. Now, I am not talking about tier 2, but next set of cities, let's call them Pune, Bhavnagar, Indore, Rajkot, Surat, Udaipur, Ahmedabad to a certain extent also. These are cities which I will call as next cities. Your relationship and trust is even more important than anything else, than even ideas. Because see, now you go to Pune, Ahmedabad, now it's changing,

Pune-Ahmedabad. But earlier, what was there in Pune? Someone would come from Bombay and then not come for 3 months, okay. That was the attitude. Pune and Ahmedabad was practically saying that people come from Bombay and then leave. So, there's a very deep-rooted conscience to deal, that I have to deal locally. So, what we call independent financial advisors. If you see, Bangalore, Pune and Ahmedabad are the most historically popular. Because connection.

One on one relationship was very strong.

Very strong and people felt more connected and comfortable. Nothing wrong with it.

Okay.

Today, obviously, Pune, Ahmedabad, Hyderabad has become a big market for us. But we have to be there physically. So, there, even today, a little relationship comfort is very important.

But have you seen the pattern? Like, I'll tell you what I mean by this.

Okay.

I have not given any data. These are just my friends whose families are very rich. Who have made a lot of money. First generation or second or third generation money. I have seen that some of my friends from the north. After they make money, they are interested in such things that they want to buy a hotel.

Which is more that we should have a name. That money is made, we have bought the hotel for the name. Or we need an automobile dealership. Which is more name driven, status driven businesses. Which means where money is managed a lot. Versus the one who has very first generation money.

They are happy that I don't want any building, I don't want real estate, my name is not so much, I am first generation, I am just interested in increasing money. I don't want name-driven businesses. And then my friends, few of them in South, I have seen that they have to do everything.

Like it's like if they are in real estate business, then they have to do it. Like it's like, if they are in real estate business, they have to do finance from there. Then they have to do insurance in finance. If there is insurance, then they have to do something else. Then they have to do something else with someone else. It's like more conglomerate approach.

No, I think you are right. I think all three points you are right. I think, according to me, it's not just South, North, East or West. According to me, it's also a little bit of how you grow up. In Western India, everyone's growth is seen by capital markets. In Bombay, Calcutta and Ahmedabad, exposure to the stock market is substantially higher. So, that's the core part of our life. So, everyone has a portfolio.

So, beyond a point, there is a business and a portfolio. If you go to Delhi, historically, I was doing wealth management in Delhi from 2001 to 2005. I hardly, I didn't have much exposure. Sir, in real estate. It's okay, I have clients, I have relationships, but I don't have any deep exposure of capital markets. So, in Delhi, obviously, the second alternative is not quickly financial portfolio, but it is businesses. And in those businesses, there is no such hard asset, infra, that is not there. Infra is a little bit more in the south. So, and then naturally, then what do you gravitate towards? Land, real estate and hotels. And obviously, I think, everyone wants names. It's not like that. Everywhere, every part of the country, people want names.

But in the south, it's okay. In the North, it's a little more. So, therefore, you see a little bit of hotels, car showrooms and stuff like that. But generally, I think, fascination for real estate is very high in North and in South. But Conglomerates, you're absolutely right.

In the South, I think, all the entrepreneurs have to do a lot of business. And I think they have done well also. But they have to broaden their business. And they really want to believe in investing into multiple businesses.

And historically, if their fourth, fifth, sixth generation business is all conglomerate. Big examples of...

They are planning for individual businesses for each of their family members.

Yeah.

This family member will do this business, this family member will do that.

True. That I have seen, I have noticed. That there are five brothers in the house, and dad has opened five different businesses.

So, it's a big, the Patriarch is doing a lot more succession planning. Yeah. Now it has become a little less in Bombay. Kids will work out themselves. So, it's a stage of evolution.

True. Okay.

Then tell me the difference between old money and new money. How do they have different mindsets?

No, no. I think there's old money obviously is kind of more focused on preservation. I think in India, I think the money that was there in 1960s, 70s, once in 90s, 2000s, a lot of people lost that money. So, I think that has carried on. Old money people want to preserve. And secondly, I think even now, make a new to experiment, they are willing to consume also. I won't say that they are not disciplined. They are disciplined, but they are open to consume a little. Plus, they want to look at overseas investments, new age investments, what can they invest in AI, what can they invest in tech. They are more open to ideas. Old money has more risk-taking ability. Old money also has risk-taking ability, but business has more risk-taking ability.

Their own business, control, that is, its value is a little more. In new money, you don't have to control everything. They are happy to invest with professionals where they own 15-20% or 30% and professionals own the rest of it. That openness is lesser in old money. But remember, we are also reaching a point where old money is in new generation. So, the distinction between old money and new money is also changing every day. I think in next 10-15 years old money will be practically new money. In some senses. In our business we see everyday because today most of the clients, half the clients have changed automatically.

Because it has moved from one generation to the other. In the last 15 years. In the next 10 years, the entire client base will change. So, I think in that sense, the decision making road keeps changing. But there are a lot of similarities in old money and new money. Just because you are saying 2-3 differences, it doesn't mean that it is completely different.

80% of the things are actually same. 20% of the things are different. And it seems like risk taking ability is different, but it is nahi hai. Risk taking ability khud ke business mein aur hard assets mein jyada hai, old money mein. New money mein risk taking ability is more on naye assets, tech, AI, new businesses, without control. Toh risk taking ability dono mein hai, but see risk taking ability insaan ko kya cheez about risk taking ability? For example, you in your business, you can take a lot of risk in your business. Some day it goes up, some day it goes down.

You will fight. You will get up the next morning and fight. I can see up and down. I understand that. When you invest, your risk taking ability is half.

The thing you are controlling, the risk taking ability is high because you have conviction about it. is anecdotal evidence again. The difference between old money and new money is in their investing behavior. So, the behavior of old money investing, I have seen two major differences. One is, when they invest in others, they have more faith in profitable business from day one. New money is okay that we will make profit in 2 years, 3 years, 4 years, 5 years, we will be ready to invest in loss making businesses

because they have seen examples of loss making businesses that can make money even after 10-20 years. Old money doesn't do it that easily. Old money needs cash flow positive business on day one, it needs bad business, right? They don't understand anything else.

So that's one risk taking difference I've seen. Old money doesn't put money on loss making so soon. And second which I've seen, old money is very open to invest money on their family members, friends, etc. They are like, okay, something will happen to my relative. They give them money, invest it in their business, increase it.

Just that it will done in the family. They want to make sure that everyone around us gets it. New money looks a bit more logical.

For sure.

I am not investing it just because there is an uncle in my family. Why should I give him money? And he does old money.

No, actually, Raj, I agree with your second one fully. First one, I think old money will also go there and it's going. It's not like that.

But not as if they're going there, but today, don't you see a difference? Like tech, new entrepreneurs, new money, tech entrepreneurs who have earned money today, they are okay.

They are okay, but they are more open. But old money is also going. It's not like that. It's not as if it's not going. But look, I think that argument is also up for debate. Whether you can just keep making losses and become profitable at some point.

Just for one, Zomato and Swiggy and 10 more names, there are 9,990 names which have not done, which have not been able to move from profit to loss. Okay. So, there is a little bit of wisdom in both the things. Okay. There is some...

100%. I am just saying, behavior is different. Yeah. Behavior is different. Don't you see, I am asking you because you see, you meet these people every day, you know better.

I think people are open. But the quantum of money which will go will be different. Especially if you made, see in India, if you see tech entrepreneurs, nobody has really made huge money. It's only in the last 8, 9, 12 months that you finally seen some good IPOs come. I think these people will invest, they will invest a lot in backtech.

So, that brand of new money, which will go into all these businesses, is developing in India right now. We don't have that. Like we don't have Facebook or Google. They haven't come yet. Because it will not come yet. It will develop now. It will hopefully develop now.

Now we will have Flipkart mafia, Zomato mafia. Hopefully it will come. So, that type of investment has not come in India, to be honest. But if you are talking about that type of new money, then I fully agree with you. Because that new money will go in this investment. It will go very less in traditional format.

So, people will be less interested in mutual funds, PMSs, listed stocks, bonds. Their interest will be substantially more on this side. But I think we are just at the starting point of that. But it will come. That will more and more go in the new age investments. Have you seen any difference that Indian billionaires or Chinese billionaires or

American billionaires, how is their behavior? They think differently, their behavior is different regarding money. What do you think about money? Three different things. Do a comparison.

There is not much difference, to be honest. But I think billionaires outside, as I was saying earlier, there is a little more interest and investment outside of work.

Whose? Americans?

Both. Americans and even Chinese. But Chinese in a different way. But Chinese also are very, all the work is calm. US billionaires are much, a little broader. Okay. Every billionaire owns a sports team, this, that. Everything is there. I mean, they have, there are lots of passions and they are also business people.

They're able to make business out of everything. India, I think, is a little more inclusive. It's a little more focused on business inward. If you go to China, every billionaire wants to also go out of China. So he's done something in Hong Kong.

He's done something here or something there. So I think these are big differences. I think, generally speaking, US billionaires and European billionaires are able to do more outside the business. Now, whether it is either for passion, or it is for, again, a different business,

or it is something to do with sports, or to do with media. Sports and media are two very, very big themes in the culture, sports, media, all three. It is very, very important for them. I think in India, it is a little less. In India, a billion, you want to become two billion, two billion, you want to become four billion, four billion, you want to become 15 billion. So, I think a focus is a little more, which is nothing good or bad.

It's just that's the way it is. I think generally speaking, outside, you see them a little bit diversified. That's about it.

And Arab billionaires? What's their story? They are having generational families.

Arab billionaires are very interesting to be honest. I think they've actually done quite well. And whatever I have got from them, I feel that they are not doing anything, but they are doing a lot actually. Somehow they are able to outsource their professional management very well. Most Arab billionaires don't do it themselves.

Most of them. Most of them have got very, very good teams to do it. To bose aap dekhayo to Arab billionaires are enjoying the most in some ways. Because they have the highest amount of free time in that sense. But they are very, very good teams for the operating business also and for the investing also.

So, I don't know how they manage it, but they are able to figure out a way. They are able to figure out a way where their involvement on the primary businesses is substantially lower. It might happen because their business is so much based on single commodity. Oil has a big role to play there. So, in some senses, it is possible that that is a big reason.

Okay. Tell me how, because you study these guys, you live with them, you prepare with them, you understand them. How do they make money? Like, what I have heard from the podcast, all the people who have come on the podcast, that whenever, apart from passion,

I am talking about strategic, that once the money is made on core business, after that, how do you make more money after that?

They are not the core business. Not the core business.

Because there are 50 types of fundamentals of core business, which are a combination of 50 things, you don't know when and for whom they will work.

Right?

How do you make the next business? Whenever you align your business interests with national interests, you end up making more money than normal. If the country has said that we... Let's say, the top government or the country has said that we will make India a green country.

So, it's obvious that if you do something in green energy, then money is going to be made. Or the country has said 10 years ago that we will make roads because there is no road in the country. So, the infrastructure, who will get tenders or who will bid at some level, they will end up making more money. Right. It's national interest and when it is made on it.

Like when it was pharmaceutical, then in India, there is a lot of pharma billionaires. Correct. Correct. Correct. Because when all of this happened, that India will make generic drugs for the whole world. So whenever you align national interest and country interest, you make more money.

Like this.

What other insights are there?

Yeah, I think at the highest level, whatever you are saying, national interest and billionaires interest, now that can be actually extended to every industry, right? So now you take pharma, steel, infra, cement, real estate, hospitals, in some senses, there has to be a national, I won't only say national interest, also national need. Cement, steel, these are the sectors. Now, you will see that in our country, there are the sectors. Financial services, consumer, technology services, industrials,

defence, and to a certain extent pharma or healthcare. These are the six which really kind of make up. And these six are in alignment of interest with the growth of the country. Alignment of interest. Second, I think, the other place I would think where it's kind of leading to a fair amount of growth, which will come now, I think a little bit of innovation will lead to the next phase of huge amount of growth. We need that in India. And I am purposely using the word innovation, not invention. So, invention happens once in a century or once in a decade. Innovation can happen in many things. And I think, in the stage of India, innovation will happen every day in some ways. Now, innovation can happen in process, in the stage of India, innovation will happen every day in some ways.

Now, innovation can be in process, in manufacturing, in consumption, in manufacturing, in financial services. There will be a lot of innovation in India. And I think innovation is a something which can lead to disproportionate growth. Now, innovation happens with small things. It's not really. Like example of innovation in our business. For example, there was a notified bond of the government. Now, it's not there. NABARD bond. That used to be bought only by insurance companies.

But it was a notified bond. So, it is like an effectively fixed deposit. NABARD is owned 99% by RBI. When we started the business in 2009, most of our clients came from NABARD bonds. Because it was 8.2%.

But it was a notified bond. So, its tax was only 12.5%. So, 7% post-tax. But there was no brokerage to sell it. If you do a fixed deposit, then it is 7.5-8% in fixed deposit, but 40% is tax. So, it is effectively 4.5% post-tax. But now, you leave that interest that you have to earn brokerage and look at the client, then suddenly, obviously, you have got 100 clients because of that.

So, I think this is a small innovation. It's not that I am discovering a lot or doing anything. It's just a small innovation, really small innovation. Now, there are thousands of such things in our country. There is innovation everywhere in small processes. And I think there will be a lot of innovations. And the full world is changing. It is becoming inclusive and exclusive. Today we are seeing US tariffs are there.

We are becoming inclusive with other partners. None of us know where this is going to go. But all countries generally speaking will become a little inclusive. And when they become inclusive, there will be a little more innovation. Half glass full and half glass empty. I think, the status quo will break a little. And because of the status quo breaking, I think, there will be a little adversity and we will all become stronger. will discover again. And in some ways, all these challenges will become good. Because status quo changes, we will think and work more.

Let's talk about this. Because status quo, world and all these are my favorite topics.

Yes.

First tell me what do you think are the hidden opportunities in the country? Today, what are the opportunities? What data do you read? What insights do you read that make you believe strongly? I think the biggest opportunity is in... Okay, let me start. There are opportunities everywhere in India.

If I look at my own business, there are opportunities in ultra and ultra-individual, middle-sized individual, retail. There is opportunity everywhere.

How? What is inside your case that you think?

You see for example, on the ultra high net worth side, let's see our data. We have around about now 4.5 lakh people. There are 4 lakh people who have more than 1 crore in mutual funds. 4 lakh people in India with more than 1 crore in mutual funds. 4 lakh people in India with more than 1 crore in mutual funds. It's not a small number. It's a very, very big number. So, theoretically, those 4 lakh people today can consume pretty much everything. The same number used to be 30,000 thousand people, not too long back. Maybe 8-10 years back. You fast forward it,

10 years ahead, it will be 4 lakhs, 15-20 lakhs. Now, with this kind of wealth creation and financial savings, pretty much everything is going to be here. Everything is going to be opportunity. There is nothing that is not going to be an opportunity. You take real estate, because of real estate, cement, steel, you take roads, commercial assets, whatever you take, everything is an opportunity. Take your business, media distribution, everything will become an opportunity. Because people will consume, people will consume data, people will consume information, people will consume houses, people will consume homes, food, everything will get consumed.

CapEx will happen to build businesses, CapEx will happen in agriculture, industry, everything. So, I think there will be 10-12% growth every year. There is no doubt about it. Obviously, there is inflation in India, 4-5%. Real growth will be 6-7%. 12% growth for 20 years is practically, you gave the example earlier, but 12% growth for 18 years will make it 8 times of today's number. Today, our economy is 4 trillion dollars. It will potentially become 30 to 32 trillion. So, 30-32 trillion economy in 20 years is a massive opportunity. Now, let's say dollar depreciate, it will be 3-4% depreciate, so instead of 32, it will be 20-25 trillion.

But that is a massive opportunity. So, I think, what you sectors that you talked about earlier, together with agriculture, because there, today our exposure is less in agriculture, but the opportunity in agriculture is equal. These seven things will be very, very large, all seven sectors. Second, I think, like what happened in the US in the mid-80s, number of cities in India will change dramatically. Number of cities in India will change dramatically.

Number of cities?

Relevant cities.

What happened in US and India?

See, in US today, there are 40-50 massive cities. They are not like, they are not small cities. They are like huge cities. Today, in India, honestly, there are 8 to 10 such cities. But that number of 10 cities is going to be 30-40. Nagpur, I was in Nagpur yesterday, it is unbelievable. Nagpur, Bhopal, Indore, everything is changing in a very very massive way. According to me, big growth will happen if you can capture Any entrepreneur can capture 10th to the 40th city. The problem is that Bombay is also growing at the same pace. So, you cannot do that, that in return of Bombay, you do 30 cities.

Then you will get stuck. That is a different problem. But in those 30 cities, there is absolute growth. There is a lot. First, you have to focus on 10 cities. But in the next 30-40 cities, there is a lot of absolute growth. You have to focus on the first 10 cities, but in the next 30-40 cities, there is a lot of growth. And in the next 150 cities, there is a lot of growth. Now, it depends on your business stage, where you can reach.

Because in the next 150 cities, there is a lot of growth, but the impact of the absolute number will not be that much. So, it depends on your stage. number ka impact utta jyada nahi hoga. To abhi depend karta hai aapke stage pe ho. But apne ko poora in that sense mujhe lagta hai, we will become 40 to 50.

Cities?

Very big cities. Okay. So, number of airports, everything will change dramatically. And teesra mujhe obviously I think, generally speaking, is cheez ka experience, especially because your audience is also in that age group. I am finding, at least in my interaction, the average 25-year-old male and female are at least three times smarter than what they were 10 years back. At least three times smarter. And smarter, I am not saying this just because of intelligence. Smarter in terms of they are aware about what is good for them, what is not good for them. They are aware about their own strengths and weaknesses. They are socially much more at ease. They used to be socially awkward before. Now they are socially at ease. Earlier, we were socially awkward, now we are socially at ease.

They are not afraid to ask questions. They are willing to ask questions. Overall, I think demographically also next 10-15 years, I think we are in a very good position. When this 25-year-old becomes 35 or 40, he is likely to do much better than the existing 35-40

year old. I think these are some changes which we'll see. Unfortunately, and it is possible that a lot of the Indian NRIs and so on and so forth, if the world becomes more inclusive, so a lot of them might actually send back much more capital investment to India also. That is also a big, big opportunity.

That's a great thing.

It's a great thing for us. It's a great thing for us. So if that, because these people, if you look at our NRI population in US, Middle East, London, Indonesia, Singapore, they made crazy money, Africa, crazy money. And even if you can redirect 10-15% of that rupee back into the country for productive

use. It's a huge, huge amount of money. So, I'm not saying it negatively. Geopolitics has not been the best for everybody in the last 10 years. But again, it is on us to deal with it. If we can look at it, manage it well and at the same point of time,

develop it and make it a little more base strong, it will be good for us. It's not a problem. True. And what do you feel about geopolitics now? Straight up question. Do you think that there is a change of world order in the world?

I think generally speaking, generally speaking, I think every world will have, every nation will have to look out a little bit for themselves. Okay. Everyone will have to do it themselves. It is dependent on the soul. You have to do it yourself. Self-reliance.

Yes, self-reliance. There is no problem in that. Okay. Modi ji came 10 years back. Rightly he said, self-reliance, which is perfectly fine. I think generally speaking, that will be a little bit in the world. But I don't think everything is so easily fungible. It's not like you pick up a business from here and the skill set of India will come to the US the day after tomorrow, and the skill set of the US will come to India the day after tomorrow. The world will have its own way to set up its own equilibrium.

It will happen. Now, there will be some winners and some losers. Now, we will figure out as a country also, what are our points of winning and what are our points of losing. And we should not see it from 2-3 months or 2-3 weeks length. I think, honestly, it won't make much difference. It does make a difference, unfortunately, to businesses which are directly impacted. They have to look at it from a 2-3 months and 2-3 weeks length, unfortunately. And there, obviously, whatever as a country, we can do to help those businesses which are directly impacted. We should do.

But from a full country perspective, it's a much longer battle. But you think it's a longer term trend because the US and India have been inherently friends for a long time.

I think we're still friends. God knows what is happening, right?

I mean, trade-wise, there is no friendship. Overall, everything else, you're friends. There, you can see, arms deals have just happened. I don't see much friendship. Overall, everything else, we are friends.

You can see, arms deals have been done. Very early.

Everything is being dealed.

Tariffs came on 25th. Today is 28th, 29th. What do you see?

You have made it 50, 70. What do you see?

As I told you earlier, it's all on your pay grade. What conversations are there, what is not, I mean, honestly.

But what does it mean for you as a business?

I am a business to be honest. We are a second order and a third order impact, if there is impact. So, there is no direct impact. Second order obviously is sentiments.

But first order will be there, let's say if you have more people in pharma, so if their US sells more, then tariffs will be first order, right? Let's say, if you have more people in pharma, then if you sell more in the US, then tariffs will be more.

My first order impact will be, if generally speaking, if the surplus of all clients decreases to invest. But okay, pharma clients can have a little impact in this.

Because it is large.

Yes, it is large.

Technology services clients.

But you see, the markets are also smart. Nothing like this has happened in the last 4-5 days. See, at the end of the day, our trade also has a 2.5% impact on GDP. If you split that 2.5%, then the largest is, to be honest, gems, jewellery, handicrafts and textiles. In these three, obviously, we have to be careful in these three. Not only because...

Gems is big for us in this.

Actually, all three are labor intensive for us. So, more than the rupee impact, we have to take care of our people. Because these three sectors together will be employing, I don't know the right number, but let's say, lakh, two lakh, three lakh employees will be there.

So, I think that's a directly, what I mean first order impact is that. So I'm saying that we can ideally, I have full trust in the government, they'll manage the plus minus something we will manage. So that is what I'm calling is the absolute first order impact. So I think overall, I'm hoping and there's always substitution and smartness in the world. Let's see, I think I'm concerned but not disturbed.

Let's put it this way. What are you concerned about? See, we have to, it should be peaceful, right? We don't need change every day. It's not… there has to be some stability to make decisions. And see, stability is important everywhere, right? At the end of the day, if you are a US businessman, and you make a business on the basis of tariffs in the US,

and then the tariffs are removed, And now your business is not competitive. So, that is also a problem. See, problem is not only here. Everything you do has an impact. Because now tariffs are removed. So, now because of that, somebody else has become more competitive. Now they have increased their capacity. And after 1.5 years, tariffs have reduced. Now it has become more competitive. The capacity that was made has become non-competitive. So, all this will continue. It's not going to happen in 2-3 days.

Everything is going to be here. And whoever will make the new capacity, see, we have to consume it. The one who was buying JMO and JLV yesterday, he will not stop it day after tomorrow. He has to buy it now. He will buy it from somewhere else

because he will say that 50% is more expensive. And someone else should have the capacity to make it. He does not have it. So he will have to increase the capacity. If he increases the capacity, he will question how long it will last. So, everything has a...

Yeah.

It's not that easy to just change. And I think these are... Let's see. I think, let's see. I'm sure there is enough logic and this thing and everything. So, they will solve it. Do you think because of this, which is happening between India and China, do you think we will come close?

Or that will not happen so much?

No, I don't know. See, I am a very, unfortunately or fortunately, I like to think about things which I can control. The things which are out of my control, I will…

So, when the crisis happens, all this news comes in the world, your control is there,, don't move it. So, do you ever see that a lot of people say war opportunities are there, opportunities of the country which is mismatched.

See, fundamentally…

Do you see that as an opportunity?

We see it as an opportunity but don't know as a big opportunity, I'll tell you. Generally speaking, as wealth managers, we are not massively opportunistic people. We are not fundamentally, our job is to again like do everything more and more right process driven. So if we have client's portfolio, 100 rupees are invested, then 5-10% of 100 rupees always remains in liquid for opportunities. So, if there is a lot of opportunity in 100 rupees, or if there is a war-driven opportunity, market is corrected 15-20%.

Out of that 10%, we will put 5%. Because see, war is an opportunity if it ends in 10 days. If it doesn't end in 10 days, it can become an adversity also. And then you need that last 5% to really help you protect that remaining 95%. So, there is an intent for everything. And you don't know when the war starts. It's going to happen in 10 days or it's going to take 3 years. Nobody knows.

So, opportunities are there. But there has to be a discipline. There is nothing which… And if everyone knows that this is going to end in 9 days, then that opportunity will not come. See, generally speaking, to approach all this, we should never think that this information is only with you. The information is with everyone. And you have to be tactful about it. You can't go all in on it.

We can't do that. But isn't it that the top 0.01% people in the country, the billionaires, people who are operating at the top level, do they get the information first? They are privy to first-hand information in a lot of cases. There is going to be a change in policy.

There is going to be a decision somewhere. They can make decisions based on certain things. Either take a decision and then use some influence to lobby in policy.

There is more exposure. I won't say that information comes first. There is more exposure. And there are more people servicing them right so like there is an institutional broking house, there is a research house, now what does institutional broking house do? It serves mutual fund managers. So you have more information to take rational decisions. It's not that you have more access all the time. But isn't it like that? I have noticed this.

Some people have a very strong insight of a certain place very quickly. See, I think those information, those edges are there in every part of the world. There is nothing like that.

So how do we get access to that?

No, so there obviously you are meeting more people. The more people you meet, the more information you get. You have to build a network, you have to study more. It's not something which you have to eventually, it's not that somebody is coming and giving you information. You have to find patterns, okay.

And basis that you would take a intelligent decision. And sometimes it works, sometimes it doesn't work.

And have you seen information and trades and money making,

there are different sectors, different types of businesses are made in it,

when the country is on a different stage. So, if it is a developing nation, then money will be made from different types, if it is a developed nation, then money will be made from different types,

if it is an emerging economy, then there will be different types of money. If it is a developed nation, then there will be different types of money. If it is an emerging economy, then there will be different types of money. See, obviously, emerging economies have more money getting made out of real assets. So, in real assets, I am saying anything real estate, infra, roads, therefore cement, steel, power, all of those things are very large. That's where the capital has to go first. And money is made there. Now, in every 10 years, such a big infrastructure can't be spent in every country.

Okay, but every 30 years, you have to spend on infrastructure. So, emerging to development, you have to spend a lot of money on infra. A developed nation will have more money coming out of capital market or innovation, financial services, innovation, lending, the capital market, stock market, that is really stage 2. And stage 3 which only few countries have been able to do is really do invention, path

breaking invention. So, for example, in the last five, seven years, to a certain extent, US and China, if you see AI, you see biotech, what these countries have been able to do is just phenomenal. So that kind of wealth creation,

we have not seen in India yet. That's a totally different element. Now in the US, you have, if I'm not wrong, around about 7-8 companies, more than 2.5 trillion dollars. So you have 10 companies, nearly 60-70% the size of India, from a GDP perspective. Now that is all made out of last 4-5-6 years of growth. So, I think invention of that nature, biotech and AI is maybe stage 3, post to become a developed, emerging to this thing is real assets.

And India, if you see, is broken city-wise and country-wise. I mean, in Bombay, more money is out of capital markets. If you go to tier 2, there is more money out of hard assets. So, hard assets to financial assets to innovation is the way I would put it.

So, at what stage will India be now?

I think the first two for sure. I think third one we have to get there. Are we still in hard? Yes, for sure. Outside of the top 5-6 cities, we are still in hard.

Will the money still be in hard infrastructure? Yes still in hard. Money is still made in infrastructure.

Yes, a lot of money. Where do you see maximum money getting made in India? Absolute maximum money, I think, is still being made in consumption. In consumer.

Explain.

Anything. Tell me 2-3 opportunities. Biscuits.

Even today?

Okay, now, Haldiram, for example, I'm just giving example, just did a, it's a public fundraiser, right? Whatever it got valued at. Then obviously, you've got the entire, everything. India is consuming pretty much everything.

Even today?

Even today.

It's just a start.

Biscuits like...

I mean, biscuits are an example.

Like, even in basic things, will it be made today? For sure. Don't you think the market is, just asking, don't you think the market is being dominated by few large players and many small players? And they are doing it. Now, there is not much opportunity there.

No, no. See, everything changes. For example, when I am saying biscuits, I am just using it as a term. Last three years, see the amount of growth in protein bars, in cosmetics, in deodorants. I'm just saying I'm using all of the consumption, all of these. And you have now, if you just go back five years back in today

and see the number of brands, the number of brands which are now 1,000 crores plus every year, I think the number will be 100 plus, okay, with such brands. And now there's so many closed brands, niche, this, that, everything, right? So, I'm just saying, India will consume, India is going to earn and India will.

So, and in this consumption, do you think this premiumization story will run more or

just the unorganized and organized story? Both, India will consume across the board. So, it's very competitive in cheap and expensive as well. or just an organized story? Both. India will consume across the board. So, it is very often in the cheap and also in the expensive. 100%. I am not this believer that only premiumization will do well. It is tougher to make money at the lower end. Because obviously, cost is very important. You have to go to 150 cities.

Manpower is continuously becoming expensive., logistics is tougher to handle. So it is tougher to make money. But those who can go to that level and make money, their valuation is also very high because it is very consistent. Anything which is built on urbanization and this thing sometimes can also be a fad. People might like it and consume quickly and then leave.

Because there the competition to replace is also very high. So, if you go to the bottom level, then your sustainability is also much more.

Give me an example of both.

DMart at the lower level, for example.

It's not getting replaced, it's not getting separated.

No, it will, everything will have a model, but it's not getting replaced. D-Mart is definitely, see it's in so many cities, so many, it's just impossible to, for us to get tech and internet penetration to so many different cities, different, different ballgame. The ability for D-Mart to set up logistics and acquire at such low costs is very, very difficult to replace.

But for a DMART, there will be something else also. Okay, that's not that it's going to be only just DMART. But that will always, always be there.

Give me an example of, give me more example of.

Let's say, Nika is at the higher end of the pyramid, just to give you an example. They're getting more premium brands. Or let's say the Reliance retail is at the higher end of the pyramid also. They're getting all the brands there.

Initially, you are building it out. You're maybe serving a very small portion of the day. But there is a huge amount of premium. Today, between these two platforms, you end up getting 40% to 50% of all the items you would get in a Dubai or a London.

So in that sense, you'll have both kinds operating at the same level.

SAURABH MADAAN-KURUL And give me two more examples. Of bottom of the pyramid and premiumization story.

See, premiumization actually is there in every item today. If you see burgers, pizzas, cakes, ice creams, that premiumization is across the table. Today you go to every average house, you know, the average pizza order today is 350, 400, 450, 500 rupees very, very easily. Today you don't, you know, you're not really killing yourself for ordering a 200 or 250 rupees pizza. At the same time, for example, there's this company called Box8. They have this pizza, I forget, what's it called, I forget, but it's still 50 rupees. It's still a 50 rupee pizza doing extremely,

extremely well, phenomenally well. And this company Box8 was largely doing kind of office kind of panties and COVID there to more or less wind down that business, ended up launching a pizza brand. And because of, but they wanted to stay at the lower end of the pyramid. So, I launched a pizza Mojo, I think pizza is called Mojo, at 50 rupees. And it's done phenomenally.

So, there is opportunity in both.

There will be a lot of opportunity in both. There will be a lot of opportunity in ultra-high net worth. But there inflation is the highest in the world, in ultra high net worth. Because luxury items today are highest in inflation.

But in India, can any brand of India be made for ultra high chennai? Can any service be made?

No, see in everything, you have got some kind of ultra high net worth. Today, if you look at real estate, there will be 3-4 developers who are ultra high net worth. You are able to charge a certain amount of premium. Today if you go to small things, today if you want to go to bespoke, everything you do in life, you want ultra high net worth car, the car is on wait list. I am just saying it's…

But all this is outside, right? I am talking about opportunities for Indian brands in India. For Indian brands. Ultra-Honest, because Ultra-Honest has the whole globe in front of it. So, they compare it with the global standard.

Ultra-Honest is the toughest place to build a global brand. Toughest place to build a global brand. And toughest place to build an Indian brand.

Because they have global access.

Sorry, I mean Indian brand in India because global access is much more easily available.

Like the only example I think that an Indian has killed on Ultra China is Sabvesachi.

That's true. I think he killed it by a specific market, specific tradition and built it. And hopefully 361. Yeah. But I say I agree with you. I think I agree with you. It is a toughest segment to, it is a very tough segment to make it.

Because every ultra high net worth individual has a global choice. And he has the ability to consume, pay a little bit of import duty. What do you usually read about reports and things? Because I was looking at your data, where I found very interesting, that the highest number of ultra-HNAs, which are at the last stage, Dathrum, Udaipur.

You must be reading our high net worth report. So, I think...

Tell me, where are the most profitable companies being made?

The money is in Bombay. Bombay?

New millionaires, multi-millionaires are also being made here?

For sure, Bombay and Bangalore. Bombay, Bangalore and Delhi, that sequence. Tell me the top 5 cities. Bombay, Bangalore, Delhi.

Bombay highest?

Yeah, by margin.

It is above Bangalore in making money.

These are startup boom, tech boom, nothing. Bombay is just got too much money. It's not, it's just not comparable, right? And the capital markets are, you know, see number may sometimes, I mean, for example, if Flipkart goes for listing, number might increase in Bangalore, but the quantum will eventually, it will be.

Number of people making millions is higher in Bombay.

And may become for one year, it may become Bangalore, but generally speaking, it's going to be Bombay. Bombay, Bangalore, Delhi. And Delhi is now Delhi, Gurgaon, Noida. So, if I include all those three there, that still might be slightly more than Bangalore also. But if I'm talking about NCR as a region. Delhi NCR one. Then it will still be more than Bangalore also. Okay. But if I'm talking about NCR as a. Delhi NCR one. Then I mean it will still be more than Bangalore.

Okay. So, Bombay then Delhi, Delhi NCR, then Bangalore.

Then there is a big dip. Then there is a considerable dip. But Ahmedabad, Hyderabad, sorry, Hyderabad, Ahmedabad, Pune, Calcutta and Chennai will be the next.

Big ones. Next next big ones.

Next five big ones.

Small cities tell me, I mean, the tier two definition like Indore, Udaipur, Nagpur type, where is the most money being made?

I think everywhere. So, I think everywhere, for example, even if you look above 100 crore families, there will be at least 40 to 50 families in each of these locations. Still like Surat, Indore, Rajpur, Nagpur, Jaipur, Baroda.

So everywhere there's money.

Everywhere. No, a huge amount of money in the right places in Kanpur, Lucknow, Chandigarh, Ludhiana, all of these places. UP is doing very, very well also. UP is doing very well.

And over like on books money or off books money?

We can only deal with on books money. I'm only talking about on books money. And then there are obviously exceptions. There are two or three families in Bhavnagar, two or three families in... But those will be more, it's not as if it's across the board. But all the other cities which we've spoken about, there are at least 40-50 families.

Now, 100 crores on books which they are able to track.

And if you look at the business value.

100 crores in liquidate money, financial assets.

Financial assets. If you look at business valuations, it's a lot. That's a separate. 100 crores tores in the market. I think there will be approximately 30 to 40 thousand people now with the ability of having 50 crores plus financial assets.

What are you saying? In India?

30 thousand people, yeah.

30 to 40 thousand people have 50 to 100 crores to invest.

50 crores. In financial markets. In financial assets, yeah. Do you count real estate? No, I am not counting real estate.

Just market.

Just financial assets, including fixed deposits.

And tell me top three fields from where this money comes? It's across.

Top three would be still financial services would be the first. Financial services. So, MBFC, lending, banks, that would be the largest. Second, obviously, will be all the five sectors. Consumption, healthcare.

Give me one. What do you think?

I would still go then, I think I still stick to consumption. New money in consumption in the last 10 years has been.

So, FMCG money.

FMCG money. And third, then if you're looking at the full country, it's still be industrials. Because manufacturing is.

Industrial products in manufacturing.

Manufacturing, massive, massive, massive. Everybody is doing something or the other, right? Chemicals, adhesives, healthcare health care equipment. Every place has got businesses doing 100, 200, 250 crores of revenue with 10, 15, 20% of bidda margin. So, make 8, 10, 12 crores that's compounding every year for the last 8, 10, 12, 15 years. You've not sold your business or you've not monetized your business, but this keeps compounding, keeps compounding, keeps compounding. And

basis whether your next generation wants to do this business or not, then you take a decision, should I sell it, should I not sell it? So in that sense, that's a much later decision. And that is also happening a lot in the last 10-15 years. A lot of the next generation does not want to necessarily go back into the same business. In India, every week there are five businesses getting sold for some number between 100 to 4000 crores.

Every week? And where is maximum sales and buying, selling is happening? Which industry?

Same industries.

Manufacturing, is there a manufacturing facility being sold daily?

Same five sectors. Same 5 sectors. The most is obviously manufacturing because strategics in Europe and the US consolidated into...

And what's a consumer? Let's say, do you think, because if you are talking about consumption and you are saying that there is a lot of selling and buying, so consumption, what I understand is that apart from the top 20%, the 80% which is from your 10 crore to 500-600 crore range, the revenue range, that is very regional. They are also sold.

They are getting sold by... For example, let's say, if you see ice cream as a category, there are at least four big transactions in ice cream in the last five years. Loto, for example, bought...

That was Habmor. That was one of the biggest like, which is national, nationwide, right?

Hardly, now nationwide. When Habmor was there, it was more...

Just Gujarat.

More regional, yeah. More Gujarat. In every sector, you take your pick. And what are the multiples these guys are getting sold? Multiples, it can be all over the place, but it can be very rich. It can reach from 15 times to 70 times. Of profit multiple?

Of EBITDA. EBITDA. Or even profit, that depends. But these are very, very unique to every industry, every business. India consumption multiples have always been rich. They've always been 30, 40, 50, 60 times.

Healthcare multiples are always rich. Hospitals can quote from anywhere from 15, 16 times all the way to 30, 35 times for the bigger hospitals. Financial services companies can again be very very broad. You've got financial services companies quoting at 15 times all the way to 50 times of profit. So these are very, see people like to see three things in business right. So for multiples, number one strong and credible management is

most important. Because you are effectively backing those set of people. Second, the most important thing is that how many times can the same business repeat. Challenges come in every industry. So, what is the repetitive value of business? Now, what can you measure the repetitive value with? How is the revenue coming? What is the pull of the brand? If the management is in difficulty, how will it handle? All of this is repetitive value of the business.

The more the business is repetitive, the more the business is multiple. Third, how much is the market size of the business? Today, you have assumed 5%, 10% of the market share. How much more can you grow?

And fourth, how much more can you grow?

And fourth, how much capital are you using? Because if I am buying your stock, and I am buying your stock at a price where your profit is only 10%. So, as a business, your return on equity should be 15-20%. So, multiples can change. So, something which is doing 100 crores of profit can be worth 1000 crores. Something else which is doing 100 crores of profit can be worth 4000 crores. Something which is making

100 crores of loss can also be worth 4000 crores. So, based on these patterns. So, there is multiple is one of the parameters. It is not the only parameter. But in these 4-5 things, I think things kind of get. And also get decided between the desperation of the deal. Obviously, obviously, sometimes if you are buying an asset and it's making you number 2 to number 1, then you will pay.

But typically, premium is 20-25% for strategic reasons. It's not like it will be 200% of 100. And there's obviously...

If you want to sell it, you will give it in 25% discount.

So, it's not 100 becoming 200. But 20-25% premium is there. So, yeah, coming back to what kind of reports and data and things that you read? I consume everything, but I don't like to read too much of finance again because that's... Not finance, like country data or insights, you read something. Oh, country.

What you have read recently, interesting, tell me. I am just interested in that. I love to meet people more than read.

What insights do you have from people?

Fortunately, whatever I'm doing, my ability to meet people is very high. So, I was in the US two weeks back. I think one thing which was really alarming and I was in Frisco for three days. And there were only two hoardings all the way from the airport to all my meetings. A hoarding was only and only AI. And the second hoarding was only sports. So, whole of that part of the US is only two things, artificial intelligence and sports.

Okay.

So, all the hoardings were about these two? 90% of hoardings were on this.

Which city are you talking about?

Frisco.

Okay.

And the biggest shock for me was, I was, at least I felt that…

Frisco or San Francisco?

San Francisco, yeah.

So, I felt that this entire, I mean, even coming from me, I'm more or less embarrassed to say, I thought that artificial intelligence is still some time away. Now, valuations have run away. Let's leave valuations for now. We are talking about our use case. Even people like me sitting here, I feel that artificial intelligence is really some time away. Let's go there and see that 90% of the things that we think are going to be innovated, is already being

used on a daily basis. It is here and now. It is not something which is going to happen after 5, 10, 15 years. It is here and now. For example, I was standing in the main city square of Frisco. And you won't believe, 40% of the cars, 40% of the cars,

not one, two cars, 40% of the cars were driverless cars. Not one or two cars. 40% of the cars were driverless cars. 40%. OK, so imagine 150 cars went in front of me in five minutes. 60 cars were driverless cars.

I've been honestly sitting from here. I think driverless cars are going to come in 3-4 years.

Looking at India, I think it's probably going to be 10-15 years old.

It will come in India in 10 years. But there, it's done. India is probably 10-15 years old. India will be 10 years old. But there, it's done. It's no longer a test.

It is what it is.

It is now being used every day. AI, everything is just unbelievable. Whether it's a Grok, whether it's a Claude, whether it is a chat GPT, whether it's perplexity, whatever you want to call it. But these are here and happening now.

So somewhere I think, for me it was an eye opener. I think we need to kind of... We have to see the use case, it's going to come to India very fast.

So, okay, there's a last question. Because we have talked a lot about the world, India, capital coming to India, new industries, opportunities. If someone in their 20s is watching this podcast, purely based on insight that you have, to make money, to manage money, where will you make the most money in India in the next 10 years, so that this 20 year old something can start focusing on that particular space.

I give you a very specific opportunity where first thing, maximum money, whatever you're doing in life, it will be made there. Whether you're doing a job, you're doing a profession.

You don't know where you're doing and what you're doing.

Whatever you do, where you're spending 14 hours of your life, there you'll make the most money.

Where should they spend 14 hours of their life?

According to me, the right answer is, unfortunately, as much as I am going to ask you about one sector, I don't have an answer. Because according to me, money is going to be made in all six sectors. There is nothing like that, see okay, I am going to say the same thing again. First 90% of India is a tick box. There is no sector where you can do where money will not be made. It is not possible.

In India it will be made.

It will be made. So, now that choice is not very important. If you have a lot of capital already, then do financial services. You have a lot of ability in that. If you don't have capital, then do something in services. Because there is a lot of opportunity in services because there are many options in services. If you have the ability to go and do a great amount of work across many regions, then do it in consumer or digital distribution because you will be able to understand and reach more. If you are creative and you feel you have the ability to pull people, then you can go online, digital, everything you

can do. Fifth, if you have a, which is maybe I fear the lowest amount of people, you want to go out and spend time in the factory and make small changes in the process, deal with actual labor, and that gives you a high. Usme bhi bahut zyada opportunities hai. India will continue to produce to send money out. And sixth, even in culture, there's a lot of opportunity in India. Okay, the kind of investments you're seeing, kind of interest you're seeing in India, in culture, art, music, sports. Sports is huge opportunity in India. Every sport is getting democratized in India.

All these 6-7 things, there is tons of opportunities. And especially for a 24-25 year old, the opportunities here are unbelievable. All 6-7. News is also good. Most of these businesses don't need a lot of capital. And where capital is needed, capital is available. It's not that capital is not available. Small thing like Shark Tank, all the way to all private investors willing to fund every

good business where there is a hardworking entrepreneur. I am not saying smart entrepreneur, I am saying hardworking. Smart is not as important as hardworking. Hardworking, I say 70%, passion 25-30%, talent 10%. That is my descending order. These three come, especially passion is very important. Because without passion, you cannot enter any sector, where money will be made.

You don't have passion. It's not possible. Honestly, if you put me in manufacturing, I cannot make money. It's not possible for me. It's not my first love. I will not be able to optimize it. It's not my edge. I will may ask for optimize the economy edge name Yeah, the only possible near to subset. I live first is still going to be passion and hard work and then everything else will Follow I need India made to be honest Again a sponsor some a coach passive anonymous a challenge name a year, there will be no challenge of making money. How you treat yourself, what hard work you do,

what is integrity, what are the values, what is the trust system, how much effort you can put in, all those things are going to be more important. I think money will be an output, it will never be an input. It just cannot be an input. Money is an output. Effort, hard work and interest will be an input. And according to me, there is no need to focus on output. I will give you one last example. Our top educational institutions, you take IIT, IIMs, whatever. Why do you think they have the best output? Only because they take the best input. They obviously do a lot in those two years. They really make us good. But they make the good better.

So in two years you can't change a human being. So the input has to be good only then you can get to the output. So money is an output, everything else is the input.

Perfect. Thank you so much, sir. Thank you.

Thank you. Thank you. What do you do apart from all of this? Apart from wealth?

I like to work. I'm a bit of a workaholic. Whether it's wealth or it's personal investing or it's I've kind of started collecting a bit of art very early days for last 4-5 months but I like to read I'm not a...

What kind of interesting?

Not, I don't like to read fiction, non-fiction but I like to read about topics so right now I'm reading a bit about art, the artists I like, I read a lot about... I'm spending a lot of time with my son. He plays a lot of chess. So I'm reading about that.

Oh nice. Thank you so much for watching this episode till the end. Now you have to do 3 things. First of all, subscribe to this channel. Because the more you subscribe, the more valuable and better guests we will be able to bring for you.

Number 2, tell me in the comments what you liked and what you didn't like in this episode so that we don't repeat those mistakes. And which guests do you want to see on our podcast so that we can bring them and give you more value. And which guests do you want to see on our podcast so that we can bring them and give you more value. And number 3, do share this episode with one person because one conversation can change someone's life.