Venture Capital puzzles, solved step by step

Roughly 35,000 to 50,000 trucks a day, call it 40,000. From the goods: about 3 crore people, each accounting for some 10 kg of goods leaving the region daily, gives 3 lakh tonnes; at 12 tonnes a truck that is 25,000 loaded trucks, or about 35,714 once empty departures are added. From the trucks: about 4 lakh trucks serving NCR, each leaving once every 8 days, gives 50,000. Two routes within 1.4x of each other make the range defensible.

Why build the number twice?

A carpenter measures twice before cutting, not because the first measurement was careless but because a second, separate measurement catches the slip the first one hid. An estimate built from one chain of assumptions can be precise and still out by ten times; a second route built from different assumptions is the only check you can run in the room. Here the first route starts from what has to move, goods, and the second from what moves it, trucks. They share no inputs, so their agreement means something.

Walk route A slowly. Assume about 3 crore people in NCR. Outbound freight is the manufactured goods from the industrial belts plus wholesale trade re-sent to the rest of north India; assume 10 kg per resident a day, so 3 lakh tonnes. A loaded truck averages perhaps 12 tonnes across small and large vehicles, giving 25,000 loaded departures. Trucks that came in loaded often leave empty; if 30% of departures are empty, total departures are 25,000 divided by 0.7, about 35,714. Route B: assume 4 lakh intercity trucks, from NCR and outside, serve the region, and an average round trip takes 8 days, so 50,000 leave each day.

How would you check it outside the room?

The best check is a third, measured source: GST e-way bills, which are generated for goods moved above a value threshold and are published at state level, and toll plaza counts of goods vehicles on the main exits from NCR. Each has its own bias; e-way bills miss low-value loads and toll counts mix through traffic with NCR departures, so use them to test the range rather than replace it. A morning spent with brokers at a transport hub would test the 30% empty share and the 8-day trip, the two inputs most likely to be wrong.

Then say what the number is for. Trucks leaving a day is not the market; the marketplace earns on loads it matches. At 40,000 departures a day, if a third are booked through brokers and the platform takes a fee per load, the next step is the fee times the brokered loads. The truck count is the base everything else multiplies, which is why it deserves two routes.

About Rs 24,000 crore a year on these assumptions, and supply, not demand, sets the ceiling. Take 60 crore phones in use on a 4-year cycle: 15 crore retire each year. If 40% are resold and half of those are refurbished, 3 crore units reach the refurbished channel at about Rs 8,000 each. Every input is an assumption to check against market data.

Why start from the phones people retire rather than the people who want one?

A second-hand bookshop can only sell the books people give up. However many students want cheap textbooks, the shop's shelves fill at the rate books are released. A refurbished market is a used-goods market, so its volume is capped by the flow of retired devices before anyone asks about demand. Size the flow first, then check demand only to see whether it is large enough to absorb that flow.

How do you build and defend each step?

Say every number is an assumption and give the reason for its size. Installed base over replacement cycle gives the retiring flow: 60 crore over 4 years is 15 crore phones a year. Of those, many stay in a drawer or pass to a parent, so assume 40% are sold or traded in, 6 crore. Some go straight to a buyer as they are; assume half pass through a grading, repair and warranty channel, 3 crore units. At an average Rs 8,000, that is Rs 24,000 crore.

How do you show that supply rather than demand caps it?

Run a quick demand check. If about 18 crore phones are bought each year, new and used, and a quarter of buyers would take a refurbished phone at a fair price, demand is about 4.5 crore units, more than the 3 crore supply. When demand exceeds supply, the market is the supply, so the replacement cycle is the lever to test. A 3-year cycle lifts the flow to 20 crore retired phones and the market to Rs 32,000 crore, a bigger swing than any plausible change in price. That also tells an investor where the business is won: in sourcing devices, not in finding buyers.