Triple Shot Saturday - Edition 14
Three of the highest signal-to-noise ratio snippets from the startup/tech podcasts for founders/operators.
Here are my favorite three snippets from the podcasts I read this week.
But before this, it would mean a lot to me if you could take 30 seconds to complete this reader survey.
Sagar Kochar, co-founder of the cloud-kitchen juggernaut Rebel Foods and CEO of Eatsure, spoke to Akash Bhat on the Desi VC Podcast. It was fascinating to read about how they created Rebel OS, a centralized platform to manage their cloud kitchen operations.
Rebel Foods began in 2011 with Faasos, focusing on a traditional QSR model. Around 2014, they recognized the potential of cloud kitchens and started experimenting with this model. By 2016, they had adopted a multi-brand strategy. That’s when they realized that if they had to scale rapidly and cost-effectively, they needed a tech stack that integrated all parts of the business. This was when Rebel OS was conceptualized.
Rebel OS has three components.
Number one is the Culinary Innovation Center and culinary expertise.
This allows you to come up with a great recipe and then scale it up consistently, which is what separates a brand from a single-location outlet. When you’re heavily dependent on skills in the kitchen, today the food might be prepared correctly, but tomorrow it might not be.
That’s where culinary expertise comes in—to create a great recipe and scale it in a way that maintains consistency.
The second pillar is the entire tech stack—covering everything from consumers to our kitchen, to the back end. It manages the whole supply chain model, inventory, manpower planning, fleet management, forecasting models, and data science. Everything is powered by our own tech stack.
We have a portfolio of about 15 brands. Each brand has close to 40-50 dishes, and the total number of SKUs goes up to around 500-600. Just consider the complexity we have to manage. Operating in the traditional way would have been a complete disaster.
We manage everything—from sourcing each ingredient with complete safety to tracking it. Today, we know exactly which ingredient is in which city, at which pin code, when it will reach us, and the temperatures it’s maintained at during transit in the supply chain. And at the consumer end, we have all these aggregator platforms, as well as our own channels, all plugged into this tech stack.
The third pillar is the supply chain. Today, we’re present across 350 locations in about 70 cities. The supply chain is so powerful that it’s like a virtual pipeline, enabled by the first two pillars as well. For example, as I mentioned earlier, think of the lunch box service during Shavan Navratri. During these times, as you know, many Indians observe fasting, abstaining entirely from non-vegetarian food, so volumes tend to dip. But with our lunch box service, thanks to our supply chain pipeline, we can launch festive dishes specifically for occasions like Navratri.
For instance, we introduced Thalis made with sendha namak, no onion, and no garlic during Navratri; modak and puran poli for Ganpati; offerings for Shraavan; Gujiyas and thandai for Holi—traditional, festive, authentic dishes. This time, we even launched an Onam Thali, which sold out almost immediately. We completely ran out within a couple of days.
That’s the power of our supply chain: the ability to quickly toggle these great dishes on and off across the network.
Bill Gurley (ex-partner at Benchmark) and Brad Gerstner (Founder of Altimeter) hosted Jamin Ball (Partner at Altimeter) on the BG2 pod this week. They had an interesting segment about the misalignment of founder-VC incentives with mega venture funds pumping previously unimaginable quantum of capital into AI startups.
They argue that earlier, VCs' and founders' incentives aligned perfectly because both parties benefitted from maximizing the value of the investments. Today, however, mega funds can become wealthy solely through the 2% management fee, distorting the venture dynamics and misaligning founder-VC incentives.
If you wanted to get rich, you had to maximize your carry—and the way to maximize your carry was to maximize the value of the underlying investments. This alignment meant that if founders got rich, investors did too. Today, however, the landscape has changed. Funds have grown exponentially; what used to be a $400 million fund is now $4 billion. Now, with the 2% management fee alone, there’s a path to wealth—for example, $4 billion translates to roughly $80 million per year in fees. A managing partner might take home a substantial portion of that, perhaps $10-$15 million annually. So now there’s a way for GPs to get rich regardless of the founders’ outcomes. The incentives are no longer aligned. Rationally, why not maximize the guaranteed 2% rather than focusing on the 20% carry? This creates pervasive incentives to deploy capital quickly rather than building long-term value. A downstream effect is that early-stage companies showing traction get flooded with offers, leading to overcapitalization and inflated valuations, which can pose significant risks to sustainable growth.
Mega-funds may struggle to match the high returns of traditional top-tier VCs. With large investors focused on downside protection, overcapitalization risks create "zombie unicorns"—companies with inflated valuations but limited liquidity and growth options.
You know, I love Fred Wilson's rule of thumb: a third of companies fail, a third underperform, and a third deliver 5-10x returns. Dreon breaks it down further, saying it ultimately comes down to the 10% that produce the 10x outcomes for a fund. StepStone data shows that top-tier funds—meaning the top 5%—earn about a 4.5x cash-on-cash return. Looking back over the last 20 years, the question arises: can today’s mega-funds of $4-5 billion achieve these same returns?
The reality is that newer LPs—pension funds, sovereign wealth funds, and others—often view these investments as strategically important and focus less on venture-style returns, prioritizing downside protection. Perhaps these funds can promise lower mortality and reduced downside risk. But this is where the real test lies—whether mega-funds can deliver comparable returns to historical top decile funds.
One unknown is the “zombie unicorn” class. If these companies hadn’t been flooded with capital, would they have grown in a more organic way, leading to better liquidity, stronger investor returns, and more acquirability? There’s an observer effect here: when VCs become too large, they may actually influence outcomes on the field. Many of these companies, if they had grown more organically, might have had more viable exit paths without the high valuations holding them back.
Lastly, they suggest that moderate exits, which could have been life-changing, are now off the table, pushing founders to chase extreme outcomes to satisfy investor preferences. This shift amplifies misaligned incentives and fuels a “call option” mentality, adding pressure to achieve rare, outsized returns.
It’s essentially a call option. If one of the companies they invest in happens to be the next Google or Meta, they benefit from compounding returns over time. Or, if just one out of the ten companies they invest $400 million in works out, they’ll be fine. As investors, they get to make many bets; founders, however, usually have only one.
For founders, there are implicit risks when taking on too much money at too high a valuation. The preference stack is sometimes understood within the founding community but not always. There are companies that could sell for $100-$200 million, which would be life-changing for founders and early employees, but if you raised $100 million too early, that path is no longer an option—you can’t sell for $100 million and make a profit because that would only repay the preference stack. The investor’s call option didn’t succeed, but they still get their money back.
Shane Parrish sat down with John Mackey, the founder of the US retail chain Whole Foods, which is now owned by Amazon. John spoke about balancing the founder’s idealism with market realities and the importance of ‘meeting the market where it is.’
He first started the Safer Way food store.
It was a vegetarian store, very pure. We didn’t sell meat, white sugar, alcohol, or even coffee. Needless to say, we did very little business. We weren’t meeting the market where it was; instead, we were driven by our own ideals. We ran it that way for a couple of years and ended up losing about half of the $45,000 we’d raised.
Then, they rebranded and started again.
We got more money from the shareholders, relocated, and changed the name to Whole Foods Market. That was the first natural food supermarket in Texas.
There’s a saying that you have to meet the market where you find it, not where you’d like it to be. And another saying that ‘the perfect is the enemy of the good.’ If you just want to hold on to your ideals, you can, but you may not have a business. You have to engage with the market. You can try to influence it, you can try to educate it, but at the end of the day, customers vote every day with their pocketbooks for exactly what they want.
It may be different this time, but human nature isn’t changing. Our original store was idealistic, but I had to meet the market where I found it, not where I wanted it to be.
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Rohit