Kumar, who founded UpGrad in 2015 alongside serial entrepreneur Ronnie Screwala, believes the most important factor in a founder’s journey, more than skill, talent, or storytelling ability, is persistence—just staying at it. UpGrad was valued at $2.25 billion in its last fundraising round in March last year.
Kumar speaks with Mint for a new podcast series called Founder Diaries, where we take you through the entrepreneurial journeys of some of India’s most high-profile founders, and a peek into what it takes to build successful enterprises. Edited excerpts:
I was the first entrepreneur from my family. Business was not seen as a very good thing to do. I remember even investing in stock markets was not seen as a good thing to do. So for me starting up was like breaking a lot of shackles and starting something ground-up.
I call itbhed-chaal (herd mentality). When you are in school because you like maths people say do engineering. I did engineering because of that. Post-engineering, everybody said consulting is a good thing, you will learn a lot. So I joined Tata Group after IIT. Again, as a completebhed-chaal. Then they said, okay, after 2-3 years you should do an MBA. I did an MBA at the Indian School of Business, again completely driven bybhed-chaal.Post that, consulting happened.
Then, around 2013-2014, there was a fair bit of craze going on around private equity and venture capital, because it was an emerging area. There were not too many unicorns or large companies, but VC investments were becoming big. So I said if that’s the theme of the day then I might as well become a VC.
But IIT is not easy to get through. It can’t all just be herd mentality.
No, it’s not. I am just simplifying things. I grew up in a very small town. So for me, awareness was a big challenge. I did not know enough about the various options that you have as a student.
So while I say it wasbhed-chaal, I did not know that IIT existed till about grade 9 or 10. When I got into IIT because from the place where I came from, there was nobody who had gone to IIT before me. So there were not too many precedents for it.
Tell us about the journey of UpGrad. When did the idea take root?
A lot of people ask me why are you doing something in education? To them, my answer is that I don’t know anything else. I was consulting in the education space. I was helping a private equity firm invest in an education company, and then via Bertelsmann, was investing in the education sector.
So that was my circle of competence, and I was passionate about it. I always felt that there were certain things broken. India is perhaps the largest education industry or business or ecosystem all together across the globe.
But there are not too many great Indian companies in the education space. I was thinking why am I spending time visiting Brazil, Japan, China, Korea and looking at education companies and why can’t I do something in India?
What kind of education companies were you looking at?
Higher education, study abroad, skilling, kindergarten, schools, tech-enabled education companies. It was a whole spectrum of things. But I always used to feel that having done so much work in education, I must do something back in India.
In consulting, there’s not enough skin in the game. In investing, I thought there is some skin in the game, but then I realised it’s not enough skin in the game. And then I realised that maybe doing something of my own is the right thing.
In consulting, there’s not enough skin in the game. In investing, there is some skin in the game, but not enough.
That’s how the thought process of UpGrad came up. I had certain insights that I truly believed in, which led me to starting UpGrad.
Those insights, many times those happen because you are either passionate about a problem or you have spent enough time looking at the problem. For me, it was the latter.
A lot of folks looking to start up always feel do I need to know the subject well. You may not need to know the subject well if you are very passionate about the problem. For me, those both combined, and that was the reason why UpGrad came into existence.
Why did you choose higher education or upskilling?
I believe that at a slightly earlier age, technology can be an enabler—it can only supplement, but it cannot replace (core education). As you grow older, and you become a working adult, technology-led education can become the core education and not supplementary. There’s more need for physical engagement (in education) when you are younger. As you grow older, online becomes more relevant.
I wanted to be in the online space.
Jobs are changing very rapidly. People need to upskill. They may not have the option of going back to college or university.
Two, (in higher education or upskilling), the customer and the consumer are the same people.
(In the school space), you solve for the needs of the principal, the school owner, the parent, the class teacher, the tuition teacher, but not for the child. I felt that if the consumer and customer are different, it would be very difficult for me to build a strong product.
Also, jobs are changing very rapidly. People need to upskill, and they will not have an option to go back to college or university. This macro thematic was also interesting to me.
You thought of online education in 2015. That was still a nascent thing to build.
In the early days, we took a lot of counterintuitive calls. We said we will teach purely online. Our first program was ₹50,000-60,000, which is expensive.
In fact, our first successful program, a partner program, was ₹2 lakh. Everybody said you are stupid, you are doing everything online and you are charging so much when everything is available for free. Everybody said it’s not going to work out.
When you are coming together as co-founders, you need to build a chemistry to know each other well.
I am a firm believer that technological innovation always outpaces whatever you can think of. I believed we will have 4G, 5G because a lot of investments have already gone into the space. And it played out well. Our first product, I remember, you could watch it at different bandwidths.
Tell us about meeting Ronnie and the idea for UpGrad. How did that happen?
So, again, as I said, a series of accidents. Meeting Ronnie was also an accident. My ex-colleague was Ronnie’s neighbour. He said, now you are doing investing, why don’t you meet Ronnie, because he’s looking at doing something in the education and health spaces.
How long did it take you from that initial meeting to founding the company?
From the first meeting, second meeting, maybe a couple of months, which was a knowledge meeting to popping up the question and saying would you do something together? From that point of time, till starting UpGrad, it took about three to six months.
What are things that you need to get right for launching a startup?
Getting the co-founders, identifying who else we should work with. The business implication, the financial implication. What kind of investment will it need. What kind of product do we want to build. Which sector do we want to touch upon, etc. And when you are coming together as co-founders, you also need to build a chemistry to know each other well.
Was it easier to access capital given your background?
I would say capital is not scarce, talent is scarce. At the starting point, people look at what’s the team and what market you are choosing, and how big is the market. And are you entering the market at the right time or not.
It’s very important to have a great idea, but that idea is not going to help you raise money. It’s very important to know what your broader vision is and how you are going to execute, and what the team brings to the table.
Capital is not scarce, talent is scarce.
There is enough dry powder available today. Accessing the dry powder needs unique insight and a great team. But also, are you working on a business idea that has a very large market that one can win? Are you entering this market at the right time or not? Those questions become a lot more critical for anybody to put in money.
How did you find your product market fit?
You never meet your product market fit, you always constantly evolve your product, and you make your product better. Because there are certain chunks in the armour that you need to solve and it’s important for you to constantly question what you need to do and make your product better.
Even today, if you ask me, there’s still a product-market-fit evolution happening.
Product market fit is overrated. You have to constantly innovate. If you’re not innovating, the product market fit fades away.
This concept of product market fit is a little overrated, because you are constantly innovating. If you’re not innovating, the product market fit fades away.
That’s one of the critical things that founders need to do– never sit on the laurels of your first product market fit incident, but continue to evolve it on an ongoing basis.
Talk to us about the first pitches you made to investors.
We never raised funds externally for the first 5-6 years. We were just founder-funded. We never went out and raised capital. Our first fundraise happened during covid, when Temasek came onto our captable.
One of the questions that always used to come up was how big is the market. I used to say the market is very big. But they never understood why would people upskill? What will drive them to upskill.
But the belief that skills are changing and constantly people will have to come back and learn something was there with us.
What did you tell them?
When you are building a new market, one of the most important things that you need to have is the belief that what you are doing is right. That’s how we always progress.
For investors to relate that there is a section of society that wants this product took some time. And we stayed at it.
In the founder journey, more than your skill, talent, storytelling, just staying at it is far more important.
One important thing about the founder journey is more than your skill, more than your talent, more than your storytelling, just staying at it is far more important than any of the other skills that you have.
You just stay at it and continue doing what you are doing, because the more you believe in that idea and the product and the business, you will just stay at it. And if you stay at it, you will see the results.
Do you have a timeline in mind for an IPO?
It’s still about two years away. There’s still a fair bit of work, but that work has started, and we believe that we are a good size and scale for us to look at it seriously.
Public capital is a much better option than a private chase. Many founders are accessing public capital because our country is in a very unique spot.
But it is a lot of hard work because until you are a private company, it is different. The moment you become publicly listed, you need a lot more systems to be in place, a lot of sorts of abilities to talk to retail investors in a very meaningful manner.
What will be harder, private capital or IPOing?
India is in a very good spot right now. Among all emerging markets and all destinations of capital, India attracts perhaps one of the best capitals coming into the ecosystem. So for an entrepreneur who is ready for an IPO today, I would say an IPO is a much better option.
Public capital is a much better option than a private chase. But if you do not have everything ready for an IPO, you have private capital available. Many more founders are accessing public capital, public listing versus private capital, largely because our country is in a very unique spot.