Global Investors Meet: Savvy investors don't get trapped by what's hot, they believe in what's strong: Starbucks' Zev Siegl

Zev Siegl, who has built Starbucks as one of the biggest brands in the world, also noted that start-ups have to be consistent with their brand identities (Image: In Bengaluru/vidyarthibhavan/Instagram)

Intelligent and savvy investors are not get carried away by market trends, but back themes that are fundamentally strong and typically tend to last longer, according to Zev Siegl, co-founder of Starbucks, one of the world's largest coffee chains.

"As an entrepreneur, if you are going to be raising a seed round or may be a pre-seed round of investment or perhaps a little later round at Series A, it becomes important really quick to know what's hot," said Siegl, speaking at the Global Investors Meet in Bengaluru on November 4.

"Sometimes, what's hot, like for instance the metaverse, artificial intelligence (AI), investors tend to think that's really cool. But the truth is that there are lots of other kinds of companies like SaaS (software-as-a-service) that tend to be really strong themes. Business-to-consumer (B2C) platforms, really strong. They are not hot, not the greatest latest thing, and so some entrepreneurs tend to get rejected from investors because they aren't building something that's hot. But smart investors, intelligent and savvy investors don't get trapped by what's hot," said Siegl, in conversation with Accel's Prashant Prakash.

Siegl, who has built Starbucks as one of the biggest brands in the world, also noted that start-ups have to be consistent with their brand identities and should seek professional help if needed, because companies should know their target audience for the brand.

"For start-up entrepreneurs who are there here today, the best way to understand your audience is to do focus groups, because, if you think about it, you think you know what your customer wants, but you actually don't," said Siegl.

"You just take your own ideas about what you want and you try to project that onto the potential customers. I think you need to be very careful about understanding what customers want," Siegl added.

Siegl's comments on brand building and investor perception come at a time when many Indian start-ups have diversified their business models or pivoted to newer things to attract funding over the last few months amid a slowdown in global financial markets. For instance, many online learning companies like Byju's, PhysicsWallah, Unacademy among others, have added offline tuition centres to their offerings as demand for online learning has dropped after the COVID-19 pandemic lockdowns eased.

Siegl also said that start-ups should look at acquisitions as a way to grow, as acquisitions help companies to expand their metrics faster. "Acquisition is not bad at all for both — the acquiring company and the company getting acquired — it is a good thing in fact," said Siegl.

Siegl also praised Karnataka state for having a vibrant culture that nurtures entrepreneurship. "There has never been a better time than now to be an entrepreneur. And the state of Karnataka is a good place to be an entrepreneur," Siegl added.