0:01 Bro, I studied from a private college. It was a terrible college and we were associated with the Pune University BAR and that's why the market gap is that we need founder of masters union. I thought what a crazy idea. I came to gather that your object is to be one of the top 10 business schools. Why not? It will happen sooner than you think. I know it. Harvard gave us a model. Upupen gave us a model that spawned thousands of other universities across the world. But I think it's time for us to bring a new model and that's what I'm trying to do. You know at Masters Union they're trying to train all of you guys business by getting you to do business and that's really how you learn business. So your goal is cultivating business acumen and not getting your students to build
0:47 companies right after college. 20% of my students should not even consider placements. What are you doing so deliberately to increase this percentage? What I do is very interesting. Okay. My question to you is how many of these 1 cr graduates get a job that pays at least 40,000 rupees a month or almost 5 lakh rupees a year 75,000 no India requires 120 more universities 1 1200 more 1200 more universities to become a $30 trillion economy my impact is not going to come from mast's union my impact is going to come from the [Music]
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2:19 ODO turns your entire customer data into real-time insights which helps you make the decisions that drive growth. So whether you're starting a side hustle or aiming to build the next big thing, ODO CRM is the tool that will help you stay organized and grow. And the best part is the first application is completely free for life. So what are you waiting for guys? Go and click the link in the description and get started with ODO today. Hi brother, how are you? I'm doing well. Thank you so much for having me, bro. I'm so excited to talk to you, and I'll tell you why. Um, I have seen what you've built, but not a lot of people have seen what you've built. What people don't recognize about you, and I'm sure they'll recognize this in 10 years, I can give this to everybody in writing that one day people will recognize Masters Union as a revolution in the Indian education system. And the
3:06 reason why I admire your work so much is because I keep saying this very often, I am a result of a failed education system or And you know we both believe this that business and entrepreneurship is one of the best way to empower somebody because it turns them into leaders who then create jobs who then push the fabric of the Indian civilization further and eventually they go on to become the greatest contributors to the Indian economy as free birds not as um confined individuals. Um and I think it's an audacious vision to to find a way there right to not really beat them but to at least present an alternative to them
3:53 from India right most importantly that's a humble way of saying it master pratam wants to beat them okay you know we learn so much from them we are here because of them I am a product of one of those top 10 institutions right I was very very lucky that I got to go to University of Pennsylvania which is an Ivy League school at that time it was ranked two or three Right. And so I am a product of that system. So I can't really say I want to beat it, but I want to learn from it and I want to evolve it. Everything evolves. But I think our education system has not evolved as much as it should have. Our classrooms look essentially the same as they did hundreds 200 years ago, you know. Yeah. And today uh the the agenda that I have for the podcast is pretty clear like I'm somebody who wants to build a business school and I'm going to consider this as a master class from a person who's done it to try and understand a what are the
4:40 opportunities that exist in the market and I remember when we were sitting and chatting at masters union you told me that India requires 120 more universities 1200 more 1200 more sorry 1200 more universities to become a $30 trillion economy so we have this vision trillion economy but we do not have the machinery to be able to get to that 30 trillion. Yeah. The infrastructure required to get to that which also talks about a very big opportunity and this is something that I admire a lot about you. Um and you are very giving in terms of saying that you know what bro you should go and build another university which is quite interesting and that's not something that a lot of founders say. So today I want to decode all of this in such a way we try and understand what exactly are the biggest opportunities that lie in the education space so that out of this podcast if there is if there
5:26 is only a dozen of people who go out there get inspired and try to tap into that opportunity one of them may become successful that could be me as well that would be a great thing so that's the agenda for this podcast if that's clear shall we get let's get started okay Pratam let's talk about your background first um from a family that has been into business for two generations, right? And you're the third generation. Third generation. Yeah. The risky one. Third generation. Third generation entrepreneur. But I have seen a lot of large businesses. I can name them right now which are in the news who are failing. I can't take names but people understand what I'm talking about. So a it's not very it's not very easy to be a third generation entrepreneur and to carry the weight of your parents
6:11 responsibilities. It's easier than being a first generation entrepreneur. I would say that but it has its own set of challenges generation entrepreneur. But I'll tell you why I think it's more difficult. Okay, a you have money that's fine but the other thing that I have seen a lot of people face in fact I was at the gym about a week ago and I saw a guy who was a second generation entrepreneur and he was struggling bro when I asked him bro why the hell are you struggling? like you've got all the money in the world. He told me one thing and that is so
7:19 So first I want to talk about your family. Tell me where did your grandfather start? I know it's a fascinating story. So go as deep as possible. All right. Sounds good. My grandfather actually moved from Mulan to India to a place called Jalander in Punjab. Mulan was in Pakistan. In Pakistan. Right. So during partition or just before partition he moved to India. He essentially attached himself with the local battalion the local army unit that was stationed in Jalander cantonement at the time and he essentially became for lack of a better word a chaiwala for that battalion. So every battalion used to have people who would serve them food, serve them tea, serve them biscuits. He became that person, right? And that's where his journey started. Uh it was essentially a freelance gig if
8:04 you know what I mean, right? He wasn't employed, but he was just helping the army. And that freelance gig sort of grew a little bit larger. He was able to set up a small retail store for the army for that unit. Again, serving a little bit more now than just biscuits and tea. Uh eventually he realized that the real margin is in the sweets. Okay. Why in Mitai? Because the thing is when you're selling a parli, you're buying it at a certain price and you're selling it at cost plus, right? You're making a 10% 5% margin. But when you're selling sweets, you're actually making them at home yourself. So your gross margin on that becomes much higher. Right. So he realized that the highest margin in all of the products he was selling were sweets. Right. This is walk me through this margin so that people understand the value addition power. Sure. So I mean he would literally just buy milk,
8:50 sugar, ghee, um all of the raw materials that go into mitai, make that mai at home with his wife and kids and the next morning go to the store and sell it. Right? The margin on that will always be more than if you ever were to purchase let's say a parliy packet and then sell it tomorrow at a slightly higher price. Hence the gross margin the business economics were much better. Right. From 5% to I would say close to 30 to 40%. No it could even be 70 80%. Oh wow. Right. Uh depending on the kind of product that it is that you're selling and also depending on the cost of the raw material which keeps changing. Right. Uh so he basically then decided or he graduated to building his own sweet shop right he's like let me forget about parli and let me forget about coke
9:37 camper whatever products were coming at that time and let me just focus on my own products that I make at home with my recipes with my wife with my kids right and uh in one of those workshops is where my dad was actually born right with the entire family making sweets rolling laddus flattening the buries um and and I have some pictures from that time I'll send them to Uh but that's how he built a small mitai dukan called lovely sweets. The reason he called it lovely is also very interesting actually he called it lovely because that was perhaps the only English word or an English adjective that he knew. Okay. Right. The rest of the sweet shops at that time if you you know go back in that time were all gassar or hiram or you know one of those
10:23 more traditional sounding Indian names. He wanted to be ahead of his time. Aspirational. Aspirational. And so he named it lovely. And and that sweet shop became a hot favorite of the people living in the 5 mile radius. Right. That area was called Jalander Cantonement. By the way, I still live there in that same house. That shop that my grandfather started still exists and we still go there almost every day to go for some mosas in the morning and rasala in the evening. you know uh next time you come to Jalanda I'm going to take you there 100%. U and you know one shop led to another shop, one brand led to another brand. Uh and eventually his business grew, right? He was able to start a much larger store which again runs to this day. It's
11:09 almost a one lakh square foot store, right? It's a one lakh square foot candyland, right? It's beautiful. Um he built it with his own two hands. My father and his two elder brothers, they all worked there as they were growing up. Um and that's where I think entrepreneurship was sort of instilled in our family, right? Uh I remember even as I was growing up and and you know my dad used to uh be in that sweet shop uh I used to sit on the counter counting money right giving change to people and I started learning I think business at that age right at least starting to understand the concept of profit and mafa and all of that. Um so that's the story of my grandfather. uh he passed away just around the time when I was about to go to high school and so I didn't get a lot of time to speak to him
11:55 deeply about his business and about his life but all the stories that I'm told by my parents uh he was an awesome man honestly like as a refugee to start from scratch right right from Stelling Chai to building a what I would call like at least a mitai conglomerate at least in that region a local conglomerate if I can um and that gave wings to my dad uh to the rest of my family to me. Um, and that's why I'm stand sitting here with you today. It's very easy for you to say that, you know, that's how he built it. Now, I want to go slightly deeper because I know that there are more stories to that man, right? Because there are so many sweet stop there are so many sweet shops out there. Pratam, not all of those sweet shops become as big as lovely sweets. So, can you please take me a little deeper and talk to me about three or four attributes of your
12:42 grandfather that turned him into who he was? Because going from selling chai biscuit then to sweets and then turning that into a mitai conglomerate mitai conglomerate conglomerate. Yeah, that was tough for me too. And this is something that gets and I'll tell you why am I asking this question because right now I know for a fact that not a lot of parents can teach people how to do business because they don't come from a business background. But the one thing that they can inculcate are the values that get passed on from one generation to the other that make the next generation more successful. So and your father is incredibly successful. So talk to me about what are those four or five values that your grandfather has passed down the generation which makes you guys such
13:28 incredible entrepreneurs. I think the first thing is strategy, right? And this is a story my dad tells me about one of the early strategies that my granddad deployed to bring in more customers into the store. So what he would do is he would sell samosas in the morning at a huge loss loss. At a loss if the samosa costed him let's say one rupee he would sell it for 50 pesa. What that would do is that would bring the customers inside the store. And if people get inside the store and they look at the mitai and they smell the aroma automatically, right? And because of that people people would come in to buy the samosa, but they would buy maybe three four other products which probably
14:15 were at a 50 60 70% gross margin. Wow. So on the cart level, he made a profit. And loss leader strategy. Correct. There you go. Right. So he deployed that without having an MBA very early on and that really became the reason that that first store became successful. It always would have a line outside. Wow. Which is so interesting. I'll give you another strategy that he deployed. If you remember even today when you go out into the market and you look at a sweet shop, it will always have u no doors, right? The sweets will literally be kept on the street, right? And all the dust etc is all going onto those laddus. We have all seen that and that exists till today. At that time in the 60s when he was building the store he decided to build it as a closed store
15:03 right with proper doors right with proper at that time perhaps fans inside to make sure that the product remains clean and away from the dust. Now it's a very small thing but even till today mitai wallas make that mistake of keeping their mitai out in the open on the street. Yeah. So that's so strategy is something you know thinking beyond his own time is something that was very interesting about him. I think one very core value that he instilled in my dad passed down to me is frugality always do more with less right. So if you have to let's say create a counter for your sweet shop right rather than buying it from the market go to the carpenter yourself and actually construct it in front of you right so just pay for the basic wood etc make it right there and buy it rather than paying some retailer
15:48 who's taking a commission and then the distributor is taking a commission all of that um I think frugality is something that has been at the core and been a very important reason for our success I think the third thing is taking your team along, right? So the people whom my granddad worked with in the 60s, you wouldn't believe they still work with us today, right? He has taken care of them beyond work, right? He's involved in their families. They are involved in our families. We go to their children's weddings and birthdays and they come to our weddings and birthdays. So taking the team along really creates this this almost family-like attitude in the team, right? So everyone is ready to give their 100%. I remember when my granddad passed away, right? There were less family
16:34 members. There were more people that he used to work with. His employees had come and they were at the front and center. They were the ones carrying the ais. They were the ones leading the charge, right? And and I think that really changes the culture of the organization at the end of the day especially for an education institution or even a mitigan which is a service business. Uh people is what matters. True. True. So you're saying strategy, frugality and team and team taking the team together like really making them part of the business making them feel like part of the business and no amount of esops can do that right it's the smaller things you do for your team and for their family most importantly that talk to me about these smaller things pratam because I know for a fact that if somebody's treated like family because in business there is a slight conflict
17:20 of interest you can either build a family or you can build a sports team or you can build a sports team and then treat them like family but But if you do the opposite, then it's going to be a problem. If you treat people like family and then you remove and add people on the basis of merit, it becomes a problem. But if you only have people on the basis of merit and they're doing insanely well and then you build that family connection, it makes a huge difference, right? Talk to me about how do you do the small things to make sure that your team stays together and how do you do the hard things when things go south? Yeah. No, I think merit is important, right? But I think merit can also be created. So like for example, I'll give you the story of my dad and one of his team members. He was not performing very well, right? He was a CXO but not performing very well. Now as
18:05 per the going corporate theory, uh he should be given feedback once or twice. If he doesn't respond then he should be asked to leave. Essentially that's what most corporates would do. I think the culture in our system is that give them one chance, sit with them, give them another chance, train them, still not learning, send them for an executive MBA program, invest in them, right? And really speak to them, not at the corporate level, but at an emotional level. Say, "Bai, I want to work with you. You have been a very important part of this journey, but you're not growing as fast as the organization is." Right? So, you need to change these five things about yourself. And if you do it then I'll take you along otherwise I'll have to leave you behind. Right? If you have a conversation like
18:55 this, I think if you have a conversation at that level which maybe many MBAs also do not teach, right, or recommend I think something very beautiful can be created, right? And it's a very interesting assimilation, if I can use that word, of a sports team, a family and a meritocratic corporate system can all come together. Why does it have to be one or the other? Why can't it be all three together? At the end of the day, you know, if someone is connected to you emotionally, that will add more value to your organization than someone who's not connected to you emotionally but is very good at his job or her job, right? Longevity is also super important. You can be you like for example, I have some team members who have been with me for 2, three, four years now. If I don't treat them like family and if I don't
19:40 build that sports team also after three four years if someone offers them a better salary they will go right uh but them staying with me compounds what they can do for me over a period of time right so the value of compounding is a lot more than at times the value of someone's merit in that moment does that make sense that makes a lot of sense now I want you to give out a message to these people who are being treated like family within in the organization because you know I've seen I've spoken to a few people again at the gym only somehow happen to I happen to have these conversations at the gym where people say you know what um and this is something that is largely coming because of the IT culture what happens is
20:30 that growing very very fast you're riding the wave right but the thing with compounding is that for the first three years it doesn't show up. It's only after the fourth year or the fifth year, after 10 years in fact, you see you you start to see it and then after 10 years the compounding is evident enough for you to witness it, peel it and then showcase it to other people in your society as well. But what I find very strange about this generation particularly is that we are a hop skip and jump generation. We want to ride a boat and considering there are so many startups out there. A lot of these startups will tomorrow go on to become legendary companies and they're going to grow very very fast as compared to the companies that their fathers worked at. How would you ask a young executive to look at that company
21:16 and assess this compounding and check if this organization is going to compound or not? If yes, I will stay with persistence. If not, then I can hop, skip and jump. Just look at the seniors who are working in the organization. People you're reporting into their job, their bosses, their bosses, the CEO himself and see how long they have been working with that organization. If if there's a culture of longlasting relationships with that organization where people stay for a long period of time, 5 years, 10 years, 15 years, then you can feel comfortable with the fact that this organization invests in people and doesn't use people transactionally, right? So just look at go to LinkedIn, right, of that organization. see what the average tenure of people is. If it's 1, two years and there's huge turnover, then that organization still has some distance to cover in terms of building
22:03 their culture. But if people have been there for 10, 15, 20 years, then I think you can take comfort in that. However, if the organization is only 5 years old, if the organization is only 2 years old, it's a startup, it doesn't have any history, then I think you have to really look into the eyes of the promoter, the founder, the CEO, the leadership team, and try to really read their eyes to see whether this person will invest in me or not, right? Whether this person only needs me for what I can provide him today or whether this person looks at me as an asset that he can keep investing in and growing and eventually that person only will reap the benefits of the compounding right and and there has to be some amount of gut feeling that you'll have to go with right there is no science to it people can fake
22:48 these things also but I think if you can just look into the eyes and even ask this question in the interview that hey um Ganesh like will you invest in me what will you do to make sure that I grow with you? Ask these kind of questions in the interview and see whether the founder is stumped or whether he has a plan for you. You'll have your answer. Now talk to me about it from the founders's perspective because as a founder when I look at people there are some people that I know for sure that these are the people who are going to stick with me for the next 5 years and these are the people with whom I can build very large businesses if not very large highly impactful businesses. But then there are some people who are underdogs who don't seem like they're going to do something really really extraordinary. And over the years I realized that you know these are insane people who can go on to do
23:35 something extraordinary. But as a founder how how quickly can I identify this? And I'll also tell you why am I asking you this question. That is because your grandfather has done it. Your father has done it and I've seen you do it with your team. So how do you pick your battles? because there will always be someone in the organization and this is something that we don't want it to be but there will always be some people in the organization 50% of the organization that I would consider who are here to hop skip and jump only but it's only that 10% who are people who could be consistent compounders so how do you identify these consistent compounders in your team I have a slightly different answer to this question my Hindi teacher in my school used to say this
24:22 and this is what I believe about teams as well. I think if someone's joined your company, they've not joined that company to leave that company, right? They've joined it maybe to hop, skip and jump. But if they are able to build a good career there, then they will not hop, skip, and jump, right? So people are coming in with good intention. They're joining you with good intention, right? They have the potential also because you saw something in them. Now it's up to the founder that what you do with that kachimiti. If someone is leaving in one two three years and not staying long then founder has to look into the company's culture and look within himself to see right and whether he's doing enough to invest in people or not whether his temper is maybe pushing people away whether you know the policies are not good enough whether the
25:08 company is just not growing right generally I don't think that you can find a fault with a team member I think the fault will always lie in the person who has the role which is the founder which is the leader right so as founders and as leaders we have to make sure that we are doing enough for the team we are investing in them we're giving the right culture that they stay for long and if you make that culture people will stay 5 10 15 20 30 years I mean look at tatas look at beras right like 30 40 year people have been working right and and that's only when compounding kicks in after 10 years so founders also by the way you know it happened with me also someone is not performing for 6 months I've and paying this guy, he's not performing, he's not growing. You get frustrated, you start screaming at him, you start shouting at them. I have
25:54 done this. I still do this. But that's a recipe for disaster. I think you have to sit back, understand where that person is coming from. Why is he or she not able to perform and then find that fix with them, counsel them and then grow with them. You will not be able to solve 10 on 10 times, but at least I think your success rate will increase. people will stay longer. Compounding will kick in. Your business will experience a lot of growth because of that compounding. Right? So even if you have to have patience for six, eight months and let somebody grow through those six 8 months, have that patience. Don't be in a hurry to just throw somebody out because two quarters they were not able to perform. Got it. But do you think this also applies to large companies like TCS where the job is boring? there is no compounding and there is no
26:40 opportunity for everybody to compound with the company because there is no compounding growth as well. I think a lot of times people stay in a company not because they find the work very interesting but sometimes they stay there because they find the people very interesting or the boss very inspiring or the mission very inspiring right so sometimes it's not about what you're doing 9 to5 you are only in a job from 9 to5 right let's call a corporate job 9 to5 there is still 16 more hours in the day and they're also dictating your decisions right so let's say the job is very boring you're sitting in front of a computer doing the same again and again and again and again. But let's say it pays you really well. There's a reason for you to stay, right? The job is really bad, but the founder and the mission of the founder is so inspiring that you're ready to go through that
27:25 grind. You'll stay for that reason, right? So there are a lot of reasons beyond just the quality of work that people stay TC. So right like I think you know TCS, Infosys, HCL, uh there's very high turnover there, right? I understand that that's also the nature of the job. However, if you were to talk to the founder, the CEO of TCS, they will tell you, boss, we don't like this turnover. You know, give us ideas on how we can improve the working conditions, how we can improve the incentives, how we can improve the culture of the organization that this reduces. Even they would love for that to be the case. Um, I think in TCS for example, I've been to their campuses. They have the most beautiful campuses. I went to Cognizant's office in Chennai. I don't know if you've been there, right? It's like I mean beyond
28:12 the office it's it's it's amazing. They have like amazing dining rooms and uh sporting infrastructure and like trees and gardens and all of that and I would love to just spend time there for that reason. Um you also have to understand one more thing right this what is my best alternative what is my batner there at the end of the day right if I as an as a team member feel that okay TCS is giving me this ladder it's giving me this culture and I'm enjoying this they're taking care of my family they're giving me insurance um you know when when my mother was not well my boss actually came in uh and and helped me through it gave me a shoulder to cry on all of that I think people will stay so you're saying it's the key is leadership it's leadership ship culture. I think all of those things sometimes matter even more than the quality of work,
28:59 right? Like I mean people at TCS and people at Google like their work is not all that different. They are both sitting in front of a computer. They're both coding away on problems, right? But it's the culture that is different, right? It is the way the organization is investing in you that is different. And that is the reason people are staying longer at Google and perhaps not so long at TCS. Most people think Google is all fancy work while it is not. you you'll have to be there only only what two or three lakh people would have worked in Google so they have the right to say that I haven't I don't know if you have ever I've seen I have friends who work at Google and they tell me that yeah it's just like a normal job like you see a lot of fancy stuff on YouTube but that's reserved only for a certain category of people otherwise even in fact they also have to do boring work we also have to do boring work but it's that 10 20% that gets very very exciting
29:46 wonderful I have understood a few things I would just like to summarize this section quickly that is your grandfather your grandfather father had a very humble beginning where he went from Mulan to Punjab and he became a chaiwalla and from chivalala um he also went on to sell biscuits and when he sold both of them he realized that I'm just a trader over here but I could make a lot more money if I could if I could use value addition to sell sweets that is because the cost difference between getting raw material for sweets and selling them at the cost price sorry getting raw material for sweets and then selling them in the market results into much higher gross margins as compared to just selling chai and parli and the margins as you mentioned go from anywhere between from 5 to 10% while selling chai and biscuits all the way up
30:31 to 70 80% in some cases for sweets and then you spoke about the name lovely sweets the lovely word which today's sounds pretty strange but back then it was used because back then all the other businesses had names like gasita and haldi ram and great names by the way he decided to keep lovely because he saw that lovely was the only English word that he knew and he also felt like because it's an English word people would find it aspirational and you and then you spoke about the loss leader strategy that he deployed to sell samosas at a loss eventually to make money with sweets and then when we spoke about your grandfather's greatest attributes which turned him into such a wonderful and successful entrepreneur you mentioned three attributes strategy frugality and team when it comes to strategy like loss leader strategy he
31:18 would think ahead of the curve to understand how can I do better to build better systems, better strategies to grow my business. Eventually, he became successful. And this is something, by the way, not a lot of people think. Um, I see a lot of these sweet shops, they function exactly the way other sweet shops function. They function exactly the way other sweet shops function. They have a standard SOP and they're happy wherever they are. Nothing wrong with that. But that also says that if a lovely sweets could go from a refugee to becoming a very successful entrepreneur so can every other sweet shop especially in Mumbai. Then you spoke about frugality. An example of that would be instead of going to the market and getting the furniture he would just go to the carpenter sit down with them make the furniture himself and then get it because of which he can save
32:04 cost eventually resulting into same output but at less cost. And then you spoke about team where you mentioned that if somebody's not performing well first of all build a sports team and treat them like a family and if they're not performing well talk to them train them educate them talk to them emotionally to understand what exactly is the problem because talk to them as a human being talk to them as not as a resource you know not as a resource so that and so that people understand that you really want to invest in them and after you've given them all the chances in the world then you can let them go if they don't perform beyond that because that's how businesses can evolve and then you spoke about the three attributes that can turn a work environment into a healthy work environment even if the job is boring which is great leadership great culture and a mission statement that can inspire
32:50 other people absolutely does that sum up our first segment that's amazing thank you great let's move on to the second segment and here's where I want to talk to you about your audacious vision of masters union I must tell you that dreaming big is a very very big deal And I'm saying this because every now and then I get asked what what do I want to do 5 years down the line, 10 years down the line. Um, and I often have dreams that are quite calculative and they're not so big that they scare me. But then when I saw you in fact Shashank told me this that top 10 business school which is a
33:36 very big deal man. So I first want to understand what exactly is this insane driving force within you the purpose as to why are you doing what are you doing? You know currently there are two reasons right one is the fact that India is home to 1.5 billion people right from the world however we have absolutely no universities absolutely no universities in the top 10 top 50 and by some measure even the top 100 right ranks across the world the top 10 ranks are still belonging to your Harvard Wharton Stanford Yale Stern Sloan right those same top 10 top 20 top have been ruling the education world for the longest time. India has not made its presence
34:23 felt and I really feel that I owe it to India right and India deserves a top 10 position a top 20 position in the education rankings why can't we be right next to Harvard Wart and Stanford that's really the main driving force that I have at least to build masters union right um and you know India deserves to be in the top 10 because most of the professors in the US not most many are actually Indians themselves right they are products of India so why not an Indian university also in the top 10 and I'll tell you why this is important because we don't have universities in top 10 top 20 a lot of our brightest right who graduate from IITs etc they actually end up going abroad right and we lose them forever right because when they go for their MBA abroad or MS
35:09 abroad to an MIT or a Stanford these are India's best they eventually end up finding jobs there get green cards there and continue to live there of course they send money back and that's great for India but what would have been the case had they just stayed in India had India had its own top 10 ranked institution that they could have actually honed their skills there as well right so I really feel that from the perspective of keeping our talent in India we need to have a top 10 top 20 institution from India does that make sense that makes a lot of sense but tell me something what exactly is preventing the existing universities from becoming the best they have the infrastructure they have all the money in the world and yet they're not becoming the best I so in India if you see most of our top universities that have all the money are
35:55 all public right they're run by the government they're run by the bureaucracy they're run by the system right and not by a private individual or private individuals or by a private board as soon as you have a university that's run by a private board you see something like Bits Pilani coming up and really growing uh you see like something like Manipal coming up and really growing right so if you have more universities that are run privately outside of the government system they have their own funding they have their own policies they have their own board of governors and they don't have to wait for approvals from the bureaucracy right so in IIT today if you want to build a lab right you first have to make a proposal that will go to the department the department will send it to the central team the central team will send it to the board the board will send it to the central IT council then central IT council will send it to the education
36:41 ministry the education ministry will send it to the cabinet the cabinet will then approve it then if it's a larger one then you'll have to wait for the budget to come in and then the budget will get passed past you know how much time it may take just to get the budget passed for a lab 1 year 2 years 3 years 4 years a long period of time but when you have a private body right and I'm not saying for-profit I'm saying a private body a private trust running an institution something like a bitsani or a manipal dare I say mast's union I think things will become a lot easier for these innovations to come in if you look at the US the top 10 let's count Harvard private MIT private Stanford private university of Pennsylvania private Dartmouth private right they're all privately run there's a reason for that in fact the highest ranked governmentr run university in the US is probably ranked 21st which is
37:27 University of California Berkeley right so the top 20 are all private so in India we need more private universities to come in have the right intent right be run completely not for profofit and then you'll start seeing some Indian universities starting to get into the top 10 top 20 right so the biggest reason is most of our universities are run by the And just by nature of the government, it takes time for budgets to get passed, for innovations to be delivered. Bro, I studied from a private college. It was a terrible college. Teachers were incompetent. They couldn't teach properly. Textbooks were outdated and we were associated with the Pune University. Yeah. You were affiliated college university.
38:17 Why? Because they had to follow certain norms of the university. In fact, I also spoke to a school in Delhi and they also said that I'm KPI match 75% attendance college again I'll have to confirm. But you need a PhD. PhD in India is useless. Most people know that only a handful of PhDs are somebody who actually end up doing
39:02 something really crazy. PhD is just a stamp in India. PhD is just a bloody stamp and there also there is so much politics that your guide may steal your idea. Yeah, we have all heard those stories. And publish it and your hard work goes to the drain. Sometimes you could be a brilliant student of PhD and your guide may not approve it simply because that person does not like you. In this kind of a system if you're producing PhDs and then we're putting these PhDs as professors in these private colleges who are then affiliated to the university, it becomes a messed up system. Um so my question is now this is still fine. Now I know the reason behind why private universities why private um colleges working under universities do not function properly. That's because of the university norms. Because the university norms, the syllabus is decided by the university.
39:48 The structure, the system, the policies are all decided by the university. The college is just a physical location where those services are delivered. Correct. The college promoters have absolutely no autonomy. Yeah. And then we come to private colleges who are not affiliated to a university. These are in deemed unities. These are called state private universities or deemed universities. Deemed universities which are very few. They're only 400 in India. 400 to 500. These 400 universities do not produce the best talent in the world. But why is that? Is that because they optimize for profit? Because profit is still fine. Like I was just looking at the AIAS is 30 to 50%. They should be able to produce great talent, right? Why don't they produce great talent? So the thing is that it starts with a few things. Number one, availability of
40:35 professors. You know how many Indians complete their PhD every year? No idea, bro. Just throw a guess. 10,000. It's a little bit more. It's around 20 25,000 right of them who are actually doing it with proper research with proper intent probably 20% of that 3 4,000 right you know how many students are there in Indian colleges enrolled at any one point in time um I would speak for engineering somewhere around 10 to 13 lakhs that's every year so that times four would be 40 45 lakhs but engineering is only 10% of the Indian students right so the total number of students enrolled in all colleges in India and all universities in India is approximately 4 crores 4 crores 40 million 40 million it's 44 million I think almost now the data hasn't come in
41:20 for this year now 20,000 or 30,000 new PhDs coming into the market for 4 cr people the total number of PhDs in India let's say you count that you know 20,000 people have graduated for the last 40 years that's what 8 lakh that's 8 lakh PhDs that means 8 lakh PhDs are teaching four cr students four cr students what's the ratio there the ratio is almost 1 is to 5 50 is it a lot more doesn't make any sense 1 is to 50 yeah 1 is to 50 1 is to 50 so when the student toteer ratio is only 1 is to 50 right what can you expect from the education system every teacher to every student that that to every teacher to every student and some of these teachers will not be good yeah competent or incompetent doesn't matter and we're assuming that all the teachers are still teaching right there are lots of assumptions there and we are assuming
42:07 that they're teaching every term every semester that's also probably not true right they're probably teaching just once in a year so because of that I We don't have at the top enough teachers only to teach the kind of scale of students that we have in India. So that's problem number one. Right? Even if I as a college promoter have the right intent, I want to teach when I go into the market to get faculty, it is incredibly hard. That's number one. Number two, when I do get the faculty, the faculty is also product of a somewhat flawed system, right? And they're going to teach in the same way that they were taught, right? And the current UGC, AICT, Knack, NIRF. These are all bodies that govern universities today. There are almost if you can count almost 18 different bodies that have
42:54 created policies that dictate how how a university will function. Why the hell do we have these boards? I mean over a period of time, India has had what 70 75 years of independence and over this period of time every government with the right intent has come in with some new policies, right? and have it to to get those policies enforced. They've created new agencies and new bodies, right? Bro, I'll tell you what. These are all revenue streams. I'll tell you why. I've seen this practically, okay? And will confirm this. RT mission and vision of college mission or vision and I was the student who was a
43:40 rebel right so they would say you know what you can take a leave sit at home get out of the college but just don't stay here when the knack team comes in So I think you know there is this understanding in the Indian population and it may be right also that colleges make a lot of money right and These promoters are only enriching themselves. And I'll tell you from the other side of the table that all colleges in India, all universities in
44:27 India have to be not for-p profofit and they're audited almost as much as a public company is. Okay. Right. There is so much auditing that happens from all of these bodies that it's very hard for someone to steal money to steal students money. Right? Uh you know I think some movies or some instances or obviously students maybe have their reasons to believe that I'm sure. Yeah, that used to happen, right? The concept of donation today is very small and in very few colleges and that also is going very very fast, right? So for example, uh earlier if you needed an MBBS seat, you can easily donate your way into getting a seat, right? And there was so much corruption. But since this neat exam has come in, all of that has really reduced quite a bit quite
45:14 it's not fully gone, right? maybe 5 10 15% is still there but it's going very very fast and you know there's a very interesting story even that at Harvard and Watton and at all of these large universities in the US some of this gapla has happened yeah yeah there is a Netflix documentary on this by the way where some rich parents were able to get their kids into Harvard and Stanford through the sports teams route right so India but I think it's blown out of proportion a little bit all universities colleges are audited ed very very strictly and they're all technically not for profofits. Got it. So you're saying that the three reasons why this entire system is broken is because of lack of teachers. Lack of teachers. Um this university affiliation which brings in
45:59 norms that do not dictate the quality of education but what is being taught and all the unnecessary specifications which which kind of paralyze the the and the which kind of paralyze the trustees or the management I would say. uh which prevents them from giving out great education and thirdly like you mentioned there is so much of auditing that happens about the smallest of things that it becomes quite difficult for them to focus on the real stuff which is great education. Great. Now tell me amidst all of this you are building a college. So first let's talk about the opportunity in the education space and then let's talk about masters union as a business because I know for a fact that education is still easier to give but then quality education with profit is something that's very difficult and you've over the period of time built a sustainable economic engine which is
46:45 tapping onto this huge opportunity of education in India and you're revenue positive um and you are and you're able to make a profit out of it which is great which means that you can then reinvest that capital further and turn this into a large organization which gives out world-class education very very quickly which can then rank into hopefully a top 10 that's the so I'm trying to understand the economic engine that you're building through the lens of a capitalist and I want to start with the market opportunity let's start with the market opportunity of education in India um to be more specific the higher education space business education space yeah go let's start so first of all I'll start by saying that if you're looking to build a public company if you're looking to become a billionaire right
47:32 and if you want to earn a lot of money and buy a jet education is not the right space for you acha okay it's not going to happen right because you have to run your institution as a not forprofit okay so that's at the base of the argument that if you want to become a billionaire I think there are many other industries that you should target in education you will not be able to become a billionaire you can't go public right that's number one however you can definitely create a longlasting evergreen green timeless institution that will survive centuries okay and self-sustaining completely now your question is what is the opportunity right in India people have no problem paying for an expensive educational program if that program gives the right outcomes right and if that program has
48:18 the right quality okay and that is a huge opportunity for people so if you can create a good institution Even if you were to charge 10 lakhs, 20 lakhs, 30 lakhs, 40 lakhs in fees and you're able to give commensurate value, you will be successful, right? Because India is an aspiring society. People want better than what they have today. People want growth and education is the only way to deliver that growth to people. Right? So people are ready to pay if you're able to give commensurate service. It is like saying that if you go to Agra and if there's a hotel there that is charging even 10 lakh rupees a night there will be takers for it because Agra is able to give that commensurate value to the people right or that hotel is able to give that commensurate value just to put it into numbers in terms of the return on investment if somebody puts in four lakh
49:04 rupees into engineering they can literally graduate with a 4 lakh LPA package which gives them sustainably 4 lakh rupees every single year similarly when it comes to business school you invest 30 lakh rupees the reason why it sounds very lucrative is because you can actually graduate with a 20 30 lakh rupee package. So you invest 30 lakh once and you keep getting 30 lakh again and again. So the equation becomes very lucrative for somebody to invest which is you know exactly. So it's like buying a house like you can't afford the house today but you can keep paying off your mortgage with the earnings over a period of time. So similarly with an education program with an MBA program for example you don't mind paying 30 lakhs by taking a loan because you know right that you'll be able to pay off that loan with the rent you receive from the job that you do over a period of time. However I will say one thing here that we should
49:49 not look at education in just this ROI format. Okay. Right. Going to an institution adds a lot more value to you as an individual than just the job that it gets you at the end of the four years. I think that is very important to understand. Like for example, I met some of my best friends for life in college. There is no value to that, right? I became from a boy to a man in college. There is no value to that. There's no price to that. There's no price to that. Sorry. There's a lot of value to that. It's priceless, right? Um I in fact found my godfather in a swimming pool in my college. Right. Who's that godfather? Uh his name is Peter Blair. He's a professor at Harvard who I became friends with. He was a PhD student when I was in undergrad and he's from Bahamas
50:35 and we just happened to be on the same end of the swimming pool at one time and we started a conversation about cricket about West Indies versus India and that conversation became a lifelong friendship and today you know I don't take any major decision in my life without talking to him and consulting with him right very priceless so you know college and those four years or those two years of MBA add a lot more value than just that job that it gets you a lot of people that start their companies while in college, right? And I mean, imagine the ROI if Mark Zuckerberg goes to calculate it, right? Like, okay, I gave Harvard $100,000 and now I've made what? 1 trillion, right? There's no there's so sometimes you can't value it like that, but for most people, I understand that's how they think. So, let's go with that.
51:21 Got it. So, the first point of opportunity is that it's a high ticket business which results into very high outcome. not so with the with with not a lot of difficulty you put four lakh rupees in for engineering it's not very difficult to get you a four lakh LPA job so that's the first opportunity which is high ticket high outcome resulting into high revenue high revenues now at with any like any other business at small scale you will not make any aida you will not make any margin but as you start hitting 1,000 2,000 10,000 40,000 students that's when you'll start making some surplus which you can then start investing in more capital, more research equipment, more buildings, more sports infrastructure, etc., etc., right? And that's how the flywheel starts to run, that's how the business starts to sort of run by itself, right? Once you hit a
52:08 certain amount of scale, so you'll see colleges in India that have achieved some scale, let's say a manipal, let's say a VIT, let's say an SRM, let's say an amity, right? We've heard all of these names. um they have achieved some scale of tens of thousands of students and they've reached a stage where every year they are able to plow back that profit into building new campuses and serving the nation even more and more and more. Got it. So it's a flywheel. It's a it's a flywheel driven by scale, right? Which compounds which compounds like anything, right? What would you define as a healthy scale? Like for a school I would say thousand students is a good skill where the flywheel can actually start for a college. What do you think is a good scale? because I'm I'm thinking about it from the lens of an entrepreneur who today wants to start a college. For example, if I'm thinking about starting a business school, what
52:54 kind of scale should I aim to achieve in the next 5 years for the flywheel to get started? You know, u there's a very crude way of looking at this and I'll be a little capitalist about this. If you're trying to build a gradea institution, if you're trying to build an institution for the most aspirational of class, right? If you're trying to compete with Harvard, Watton, Stanford, if you want to build the top 10, you cannot build it at a very large scale. Right? I don't think I can run masters union. If masters union had more than a thousand students, I think I will fail miserably at my quest. Right? So if you're looking to build a grade institution, a thousand kids is also stretching it. like one of India's top business schools or I think all of India's top business schools I am Ahmedabad, Bangalore, Kolkata ISB are all sub 1,000 because they know that as
53:40 soon as they cross 1,000 or more or beyond they will not be able to deliver the quality that they per batch total total total okay right because that's the amount of faculty you'll be able to get that's the amount of services you'll be able to give them etc etc however if you're trying to educate the masses right if your fee structure is low around four five lakh Right? And you're trying to educate the masses and you're not really going after the top 10 ranks, right? And a little bit more modest in your aspiration, then you can go up to 10,000 students also. But with 10,000 students to get into top 10 will be tough. It will take you a long period of time. It is achievable definitely, but it will take you a very long time. Right? Harvard business school which is
54:26 the number one business school till today has less than a thousand kids in every batch. in every batch. In every batch. So in total they have maybe 2,000 students. Got it. Most other schools and that's probably the largest business school. Most other schools are smaller than that. However, if you look at now let's say and I'm sorry that I'm using the word grade B but I just mean more universities that target masses like Ohio State in the US or let's say like a um Amit or VIT in India that is targeting slightly a larger crowd there 10,000 20,000 30,000 and if you are building good processes systems SOPs software then you can even push to 40 45,000 the largest university in India in one campus would probably have 40 45,000 students perfect Right? So flywheel is very difficult to build
55:12 but once you build it compounds for grade A college you should not go beyond 1,000. So the aim should be th000 which is significantly less but it's good considering the fact that it is at least insight and then if you want to build let's say a tier 2 college then you can aim for a scale of about 45. Tier 2 is not bad. Let's not use tier 2 in a negative sense. You know whenever we say tier 2 we say it's not tier one right but you also need tier 2 colleges because India as a country needs colleges that can also educate the masses right and so they are tier two not by design but by compulsion and even tier three or tier four and there's a space and market for tier one for tier two for tier three tier four and tier four is not necessarily bad as compared to tier one but most of them are bad bro you know they're solving a different problem look at India where solving a
55:58 problem look at India look at where we are today If I can't if I can't afford a 30 lakh rupee tier 1 MBA, right? So does that mean that I don't even go for an MBA? If you go for an MBA and then you stay unemployed without any skill sets then I think that is wrong. Definitely I think that needs to be improved but still at least I should get the opportunity low ticket problem lowity problem low ticket lowquality high promises problem and most of them are low ticket low quality high promises. So if you do a if you're doing a wrong promise right that is obviously fraud right I will use the word fraud for it if you're promising the world and not delivering then that's fraud right that let's keep that aside for a second and we'll address that but if you're coming the right intent right and if you are promising what you're
56:44 delivering then even tier 4 is adding a lot of value right it's not the best education it's not the highest quality education but by paying four lakhs am I at least able to enter the job market right I'm not going to become Bill Gates tomorrow I'm not going to be able to build a large company that's okay but at least can I raise my family yes right and there is space for that perfect now let's talk about the market and you mentioned this stat while I was speaking to you while doing the research for masters union that is x number of people graduate and here's the package that they get so there's a huge gap in the market so talk to me about that gap with updated numbers you know so the numbers have not changed much since then yeah yeah yeah probably much worse now because AI etc is really eating up a lot the jobs at the top. So in India we have
57:30 as we mentioned earlier around 4 crore students who are enrolled in college. Okay. Right. And so you can assume that 1 cr are graduating every year. Take give or take. Right? 1 cr are graduating every year. Now out of these 1 cr who are graduating every year, how many are engineers? You mentioned 10 11 lakhs. Uh another 10 11 lakhs are doing BCOM, BBA, right? Another 10 11 lakhs are doing law plus design plus all the long tails. And almost 70 lakh people are doing BA and BSc. Correct. BA and BSE. Now which of these programs, which of these courses can really get you a job? You have to ask yourself that question. I think only engineering from what I maybe only engineering, maybe at some level some BBA, BCOM programs, right? SRCC, Dell University, etc., etc. Now my question
58:17 to you right and I think I'd asked you this two years ago also is how many of these 1 cr graduates get a job that pays at least 40,000 rupees a month or almost 5 lakh rupees a year 75,000 no this was the number last time you No it was 12,000 it was 12,000 it was 12,000 that's it just 12,000 people get a job that pays more than 5 lakh rupees now I I'll give you some anecdotal data as well. If you look at the top colleges in India at the undergraduate level that are teaching BBA, BCOM, it's SRCC comes to mind. Hindu college, Hans Raj, St. Stephens, they teach economics, uh Loyola in Chennai, uh St. Xavier's in Bombay, St. Xavier's in Kolkata, right? These are the colleges that come to
59:03 mind. Christ College, right? Most of these colleges if you take all the students not just the students who get placed but all the students and come up with the average package barring maybe two or three colleges in Delhi none of these colleges will have an average salary more than 5 lakh rupees and these are the top ones in India I'm talking about BBACOM right now in engineering it's different if you go to IITs and if you go to computer science departments or electrical engineering departments or sometimes IT departments there you'll find great salaries that 1 cr 2 cr package google picking up and you know all of those things uh but if you go to slightly less aspirational programs there you will not find the kind of salaries again right now is this because of the lack of availability of jobs or is it because of the over supply of students or is it because these students
59:49 are not competent great question so first of all this is the data okay I'll give you another very interesting data this I've been trying to find I have approximations from various different um
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