ET BureauIn 1992, Michael Moe, then an analyst, walked into a coffee shop and came back with more than just an iced latte. Moe predicted that the fledgling American coffee chain had a great future. Today, Starbucks has over 23,000 stores in 68 countries worldwide. Almost a decade after authoring the book Finding the Next Strabucks: How to Identify and Invest in the Hot Stocks of Tomorrow, Moe is now the Chief Investment Officer of GSV Capital, a publicly traded investment fund that seeks to invest in high-growth, venturebacked private companies. The company’s portfolio includes some of the hottest firms in Silicon Valley like Twitter, DropBox, Jawbone and Lyft. In a freewheeling chat with ET, Moe spoke about how Indian startups will grow from being ‘me too’ companies to innovators over a period of time.
You wrote the book finding the new Starbucks in 2006. It has been a decade now. If you wrote it today, how different would that be given the emergence of new economy?
The process that we used to identify the next Starbucks, Google or Facebook would be pretty much the same framework even today. The trends, however, have continued to change from time to time. Globalisation has been a megatrend for the last two decades and it is going to continue going forward. Some of the big trends now are big data and sustainability that are impacting many sectors such as healthcare, retail, education, and in government and security. People are sceptical whether there is any evidence of a bubble, but Uber (the cab hailing service provider) is the fastest growing business in the history of the world. It went from zero to $10 billion in revenues in just five years. We are excited about the businesses that are not just science projects but are commercially viable business ideas.
What are the classic signs of a bubble and how different is it this time?
Back in 2000, I personally could not understand the mathematics done to justify a lot of valuations of the companies at that point of time. During the bubble days, most companies were working on hopes and dreams and most of that was done on the future cash flow expectations. That is not the case anymore. Today’s businesses have proven business models and great volumes.
Which do you think is the most innovative company in the world?
It is very difficult to argue against Google because the very nature of the company is based on innovation. Also another reason why I think Google is better is because of its human capital. That is also why it has been one of the top employers for the last so many years. People often joke about the spa culture and the frills at Google but I think there is a smart reason behind it. That is how you retain your best talent for a long period of time. I see companies such as Salesforce, Dropbox that have done great innovations.
What is your view on the Indian startup system? Most of the new-age startups seem to be ‘me too’ companies, aping the established models overseas and are yet to see profitability coming.
It is early. I think the innovation we see happening is natural. If you look at America, where we see some of the original ideas being created, some 100 years ago it was copying someone else. So, that is the natural evolution where the capital first goes in and then the innovation follows. I think India too will see some really great innovative and disrupting ideas coming out of the domestic market. These ideas will first be developed for the local market and when proven here, it will be taken global.
You wrote the book finding the new Starbucks in 2006. It has been a decade now. If you wrote it today, how different would that be given the emergence of new economy?
The process that we used to identify the next Starbucks, Google or Facebook would be pretty much the same framework even today. The trends, however, have continued to change from time to time. Globalisation has been a megatrend for the last two decades and it is going to continue going forward. Some of the big trends now are big data and sustainability that are impacting many sectors such as healthcare, retail, education, and in government and security. People are sceptical whether there is any evidence of a bubble, but Uber (the cab hailing service provider) is the fastest growing business in the history of the world. It went from zero to $10 billion in revenues in just five years. We are excited about the businesses that are not just science projects but are commercially viable business ideas.
What are the classic signs of a bubble and how different is it this time?
Back in 2000, I personally could not understand the mathematics done to justify a lot of valuations of the companies at that point of time. During the bubble days, most companies were working on hopes and dreams and most of that was done on the future cash flow expectations. That is not the case anymore. Today’s businesses have proven business models and great volumes.
Which do you think is the most innovative company in the world?
It is very difficult to argue against Google because the very nature of the company is based on innovation. Also another reason why I think Google is better is because of its human capital. That is also why it has been one of the top employers for the last so many years. People often joke about the spa culture and the frills at Google but I think there is a smart reason behind it. That is how you retain your best talent for a long period of time. I see companies such as Salesforce, Dropbox that have done great innovations.
What is your view on the Indian startup system? Most of the new-age startups seem to be ‘me too’ companies, aping the established models overseas and are yet to see profitability coming.
It is early. I think the innovation we see happening is natural. If you look at America, where we see some of the original ideas being created, some 100 years ago it was copying someone else. So, that is the natural evolution where the capital first goes in and then the innovation follows. I think India too will see some really great innovative and disrupting ideas coming out of the domestic market. These ideas will first be developed for the local market and when proven here, it will be taken global.
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