On Entrepreneurship II - Never Take Government Investment

The fun in entrepreneurship is about dreaming, brainstorming ideas and finally setting up something and struggling through the earlier phases. As company grows, slowly and succinctly those fun times start fading away and one is forced to look at real numbers, quarter on quarter progress, worrying about your next big customer or next big product. These are still OK and good to have. Along the way you would have your early stage angel investors and employees holding stock etc.,  The angels are the best investors you will ever get. The angles investment is really risky and they generally do not mind, if we do our best and fail.

Then comes a time, when you start raising money from VC/PE, one should at all cost avoid government or government funded entities. They are the worst in decision making and commercial sense is not one of their core forte's. These days with CAG Reports / SCAM's and Anna Hazare campaigns, the decision making of even upright and professionally inclined government officials have come to a standstill, with the dual focus on saving their skin and making financial gains in their investment to ensure they have exceeded their mandate, which are sure recipe for disaster for any entrepreneur trying to raise additional funding. They are the least bothered if their investment really goes down the drain, even if it is tax payers hard earned money, for there is never any penalty for inaction and the penalty is only if one do not go by the book, which is a tough call in an equity investment.

So never go anywhere near the government when it comes to taking investment in share capital what-ever be your compulsions. The worst among them are state financial institutions. They are the least to interfere in your business and other than the occasional request for giving employment to their favorite people, but are the worst when it comes to you wanting to usher in a new investor or look for an exit. And these saviors who initially invested can become your worst nemesis when your are in a corner, because that is how our system works. For the same reasons, sometimes it makes sense to take loans from governments or public sector banks / development institutions, for then the same reasons kind of works in your favor.

Yet another year is out!!!

I normally do not write or worry about the years that are bygone, when you get visited yet again and reminded yet again that your time is running out. Is this year a special year?. Are the issues that we encountered or solved more important to receive a mention when the time makes its call on your life?. Is one running away from reality or learning new realities as time makes it relentless forward movement?. Is truth changing it's color or social structures and moral and ethical questions varying in it's true interpretations within oneself?. Is the rigor of the modern day world of black and white representation in success and failure, with an ever moving goal-post too much to digest?. Or if I were to die today, would i have been comfortable with what i have done with my life so far?. And is means more important than the end or is the end in itself the most important?. If means were more important the death question would get settled easily, while if end was more important then, it is difficult to really answer that question honestly; So does one really look back at life as lost opportunities or great experiences and experiments?. Is doing or saying or achieving or falling in love following ones heart so important to make the fear of death irrelevant; or is it a mere manifestation of the social conditioning that makes one think that these are important? Sometimes, what that is unsaid and not attempted are more important in this journey, for it defines more of ones internal and external conditioning; than what we try to do and succeed or fail.

Passion and Entrepreneurship

Is there a relationship between entrepreneurship and passion. Is an entrepreneur driven more by passion or more by the business case or an opportunity vacuum that he is trying to fulfil. It is very difficult to say. There can be two types of entrepreneurs. One who derives passion from his business case and the other who derives a business case because of his passion. Are these the same or different.?. Interesting question?. In the initial stages of an entrepreneurial venture, the passion drives the venture through the thick and thin, but as the venture matures, it is more the business case that drives the venture, and less of the passion. However entrepreneur's who were driven by passion to derive a business case, will slowly start feeling left out and lonely as the venture matures for passion is no longer the key comepetency that drives the future, but more of practical stuff, which is more data and market driven, compared to people and passion driven. If you are of this type, it might be time, you look for a transition plan for yourself and get a professional CEO!

Go Kiss the World - Subroto Bagchi - Penguin Books

A nice book to read. How young is the IT Industry, but it's growth and dominance suddenly gives the feeling that it has matured and been here for many long years; and the problems that it poses to people are numerous. Gives a good perspective of what to expect and what not, and a lot of good insight into making best of what one has, to achieve ones goals, rather than getting carried away by the boom and bust cycles and a pseudo sense of security or in-security.

On Entrepreneurship

I keep reading articles and books on the great potential India has because of the young population and the great entrepreneurial spirit of our population. More and more educated middle-class are venturing into business. This is indeed a good sign. And more and more i read of this great potential of young India, because of the large number of business leader's that this nation is churning out; (Sometimes i do wonder why the same amount of leadership and energy does not spill over into our politics), i wonder in the back of my mind; are we trumpeting too early?.

Enterpreneurship is not about a great business idea or about making money, but in most cases it is either an accident or is for making a point; is a statement on the entrepreneurial teams ability to take financial risk's to prove a point that they have the will to achieve what they set their eyes on, and are willing to go all the way to achieve that, and will learn as they go; It is in some sense the entrepreneurs courage to take the path less trodden, question conventional wisdoms, able to ignore and withstand pressures from many who will give million reason why it is not the right thing to do; In india, we still have a large deficit of this, for we are culturally a close and protected society, with all new things seen with suspicion, and following familiar paths and footsteps make everyone comfortable.
Until this cultural barrier gets broken, we are not going to see an explosion of leadership and entrepreneurial talent. Without such a large expansion in our entrepreneurial talent, growth and innovation are going to be slow in India, and without entrepreneurial innovation we still will be an economy always in catchup mode. Rarely have we heard of any technology startups that had a unique product or patent or business model, that changed the rules of the game in the world. Rarely have we heard of a new entrant in mature market, changing the rules of the game like a Wal-Mart; We still are not using the entrepreneurial energy of young India and we need enable that to make a serious difference.
The road ahead for India and entrepreneurship is about unleashing the energy of the millions of youths and impoverished in our countryside and enabling them to earn a living with respect and allowing them to unleash their creativity to make a difference to their life and the life of people around them; If we enable them to have the courage to dream and give the required support, only then can we rest assured that India's future and growth story is secure. Our focus on the ivy league entrepreneurship or pedigree entrepreneurship is a sure shot way to disaster or follow me entrepreneurship is a sure shot recipe for disaster. If college dropt out's like steve jobs or an arkansas retail shop owner can take on the entrenched players, we have many such geniuses in our country side and they are the true messiah's who will make a difference to this country.

Poverty - A state of mind

During my last visit to our office on the outskirt's in a 2nd tier city in south india, i took time to talk to the local village panchayat and the local self-help groups. Was surprised to hear that there are a huge number of needy in the different wards of the panchayat. In many cases the reasons for the problem lie with the alchoholic male members of the family, who earn and drink leaving nothing for the family, and in other cases, the only earning member being severely ill and thereby unable to earn any money. And if these families or the earning members have no work for a day, and the money does not come into the household, they go without food for that day. And all help that the local self government or even the state government can do in such cases is an emergency fund of a maximum of Rupees 500, which might not mean much to cover for the expenses. And the saddest part of all is that many people who are afflicted by Hepatitis, TB or other serious illness, will keep on ignoring the symptoms and work or male members drink to forget the symptoms, for if they do not work, they have no food for that day, untill they can no longer stand up and work, and by then it would be too late. Can we do anything about it?. Can we give these people hope for the future?. Or they are to blame for they had had their chances and let it go again and again?. Or the governments responsibility is to provide affordable health care to all, but their economic upliftment out of poverty is for theirs to mend?.

Satyam and promoter holdings

It is important that if the promoter holding goes belows a thresh-hold in family owned companies, the company management should be entrusted with professionals and not run by the promoters, for the incentive for promoters to increase shareholder value reduces as their holdings reduce, and syphoning money out or investing in other companies of promoters where there is sub-stantial holdings and fraud is the end result. This will be especially true of family owned companies with very low promoter holding in India. Expecting corporate governance to un-earth such fraud might be too much to ask of the board, especially in a country, where corruption in our social setup and mindset is norm than exception.