POS Framework

Salonie:Hi, and welcome back to Matrix Moments. This is Salonie. And I have with me today Avnish Bajaj, Founder &Managing Director, Matrix Partners India. Today’s episode is about making hard decisions with the POS framework.

Avnish, what is the origin of the POSframework and how do you use it for decision making?

Avnish:Thank you, Salonie. Good to be back for another Matrix Moment. I guess the listeners know by now that we alternate or mix it up with things that are more personal development and some personal reflections and stuff that goes on in our line of work. And I would say this falls in the bucket of things that are very near and dear to my heart.

And so the origin is that after selling Baazee - and we have referencedthis in the other episodes. But after selling Baazee, I did come into some money as a result of the sale. And it was a point of time in life where I had to decide how I move forward.

But before we go there, let me give you some context. Often in life we have decisions that we agonize over. We put them in the bucket of hard decisions. Jeff Bezos has talked about think about hard decisions in the framework of reversible versus irreversible decisions. And don’t spend too much time on the reversible decisions by definition. And spend a lot of time thinking through irreversible decisions. And I agree with that, but I guess I feel that at that point in time that you are deciding if it’s obvious that it’s reversible or irreversible, that’s great. I think 80-90% of the time you don’t even know which one is which.

There have been instances in my life that I look back and I took some decisions without thinking about it which entirely changed the course of my life. Which school I went to let’s say, which college I went to, which city I decided to go to. So multiple times what I thought were simple, reversible decisions ended up becoming irreversible decisions. So I don’t agonize over that too much. So I have a little bit of a different view that, yes, decisions in life are reversible and irreversible, but the irony is you don’t know which is which. And, you may well be wrong thinking about the irreversible one as the hard one.

So when one is so I don’t agonize too much. And what I try to do instead and what I did at that time which felt like an irreversible decision post the Baazee sale, I had to decide what to do. I had modest expectations of wealth creation. Those modest expectations had been exceeded by the Baazee sale. Technically, I could have decided to “retire” in my early 30s, which was a very irreversible statement from my wife that, no, that is not going to be allowed.

So then the other options were I have always been passionate about education including to the extent of wanting to be a teacher or a professor let’s say at a business school. So that would have been one option. Entrepreneurship could have been another option, meaning repeat entrepreneurship. Venture investing, I hadn’t even thought of. So, I thought about this and said, what really matters. And I remember I was in Lake Como on a holiday or not actually a holiday, it was an eBay offsite and I was walking with my wife and I was trying to think about it and that’s where this framework came.

So it was actually completely organic. And I said I have to think about the opportunity which means is there an opportunity to make money. Is there a large market opportunity? I have to think about skillset which means am I good at it, and I have to think about the shower test – the passion. Do I feel excited about doing this?

And now on a funny note, we can actually talk about each intersection and I am sure we are putting up the graphic for this. But, let’s think about working at the – obviously the goal is to work at the intersection of all three. And let’s take examples, if you are working at the intersection of passion and skillset but there is no opportunity, what would happen?

Salonie:You fall flat?

Avnish:You would be happy because you are passionate about it, but you would be poor because there is no opportunity. So you would probably happy, successful because you have the skillset for it, but you would be poor. If you picked a skill set and opportunity but you didn’t have passion, you would be rich, but you would be miserable because you are not enjoying what you are doing. And, let’s say if you have passion and opportunity but no skillset, you will just fail because you just don’t know how to do it.

So the idea is at the intersection you get all three. You get money which means you are going to be rich and you are going to be happy and you are going to be successful assuming some of those things are connected. So that’s really how I thought about it.

Then, I had been introduced to angel investing because I had money. I started getting involved in companies. I realized I did have a skill set because I had been an entrepreneur before so I would help the companies. I really enjoyed the passion. The passion test started working because I enjoyed interacting with smart founders hencefoundersfirst! again. I really enjoyed the intellectual stimulation of interacting across different businesses. And this is 2006 – 2007 when the decision was happening.

Now the Baazee sale had happened in 2004, so in between, I could see that the internet market was trying to pick up or starting to pick up. So the opportunity set started looking interesting. But if you notice, at that time we didn’t start with tech VC investing. We started with broad-based consumer investing because it was clear to me that the opportunity at that time in broad-based consumer investing would be bigger than tech VC investing. So that’s kind of how it all converged for me and kind of defined my life.

Salonie:Right. But have you made any modifications or tweaked this in any way over the years?

Avnish:So you know I have fortunately or unfortunately affected a lot of people's lives. And I know people have made radical changes and career choices based on a conversation around this framework and that’s where it started being calleda POSframework. Subsequently probably only in the last 3-4 or 5 years, did I learn that there was a Japanese framework called Ikigai. And we should put up a picture which is actually a little bit more descriptive and people can read it for themselves.

But along the way, I had children, and first son, then daughter, and in between my dad passed away. These were important life moments where one starts thinking about what is it that matters. So what I did at least for myself was to say, take this POS framework and add a fourth circle. And the fourth circle is called meaning. And if you put that and you work at the intersection of that I think it takes the true – we had discussed earlier about happiness, I don’t think being rich and successful necessarily converges with happiness. And I think if you add meaning, then all of it kind of comes together. So that’s how it evolved over a period of time.

So added meaning and then if you look at this Ikigai framework, it kind of talks about it in the same context. And to me, that’s the biggest change that I have made and given the important life moments that happened in my life. And as I moved forward, one could also make it a little bit more complicated and decide what weightage one gives other things. But, the biggest change for me has been to think of a little bit more meaning in the daily activities that I do.

And as far as venture capital is concerned, I really find the meaning quotient has gone up a lot for me because of the impact as the market is deepening. Working with these super-smart founders, I just feel that over the next decade or maybe a couple of decades as this market really evolves, one is able to play a meaningful role in it. And that’s what kind of gives me the jollies.

Salonie:Sure. Thanks Avnish.