The Indian economy went through some dramatic twists and turns during 2019 and while pouring over this journey one couldn’t escape considering the challenges faced by our entrepreneurs and how they had changed to face up to them. These behaviour patterns were unseen thus far, more so given the current scenario faced by the start-up environment.
And, what’s this pattern? It is the rapid exit rate that co-founders have hit in recent times, especially in the Indian start-up firmament as against the long vigil that most of the old guard seem to have set up, some of them even returning to take charge after voluntarily giving up once. And the question that this patterns spits forth is: Are modern entrepreneurs sporty and adventurous or just volatile and more than a tad indecisive?
An article published in the Mint reported on the alarming rate of co-founders exiting at an early stage itself with Urban Ladder’s Rajiv Srivatsa being the latest to reveal (via a tweet) that he was stepping down from an active leadership role at the online furniture mart from this month. A day later, Smruti Parida, co-founder and chief technology officer of NestAway, said in a LinkedIn post that his journey at the company has come to an end. A few months ago, another NestAway co-founder, Deepak Dhar, decided to leave the company to set up a FinTech start-up.
There are multiple reasons which are often put forth for such exits. Sanjay Bhatia, Co-Founder and CEO, Freightwalla, said in an email response to CXOToday, “The enterprise ecosystem is evolving at a rapid pace. The founders and co-founders may start a company to pursue a joint vision, but the vision evolves naturally as the companies mature. The evolution of companies makes it obvious that some co-founders may not share the views about the companies’ goals and objectives. Co-founders are also in high demand because their work experience is valued not only by other start-ups but also mature, traditional companies. At some point, a disgruntled co-founder’s opportunity costs rack up, making them search for greener pastures.”
In another email response received from Lokendra Ranawat, Founder & CEO, WoodenStreet, ascribes the trend to the fact that there doesn’t seem to be a standard for co-founders exiting. Many factors can influence this outcome, such as: Good valuation and maturity, prompting a profitable exit; investors and co-founders failing to achieve a single goal; lack of confidence and inability to keep the gears running; and the company’s inability to stay sustainable in the long run.
Deeper Scrutiny of Modern Entrepreneurs
Be it about the above mentioned co-founders or about Flipkart’s Bansals or FreeCharge’s Kunal Shah or Ibibo’s Ashish Kashyap, the common trait here is that none of them see themselves spending their lifetime at their start-ups.
While making an exit from Ibibo after running it successfully for ten years, Kashyap was quoted by the Economic Times, as saying that he exited Ibibo post its 100% acquisition. He went on to add that founders like prefer to drive and control what they built and once the company got acquired, the asset has shifted to another pair of hands and thus made it the ideal to exit and build something.
Another article published by Economic Times suggested that a key factor behind the exit was financial security. Most start-ups are founded by IIT-IIM graduates from middle-class families who have never seen such wealth. Getting $10 million is big money and once they reach that level, they choose to exit and park the funds aside to ensure their family’s financial security.
The new trend, especially among young entrepreneurs is to create value by taking their start-ups to awesome heights in 10-15 years and then sit back and enjoy life.
Saurabh Kochhar, founder and CEO of Meddo, an end-to-end medical services provider, says “After a while, you can’t resist the urge. You can only garden and potter about so long.” This means that entrepreneurial bug doesn’t leave the entrepreneurs and they are bitten again to bounce back or experiment with something new again.
We can also consider the exits in a way that modern entrepreneurs move on to new ventures or business ideas the moment they find them more profitable and trendy.
Traditional Versus Modern
So how do the modern breed of Indian entrepreneurs stack up with the old guard? The ones like Mukesh Ambani, Ratan Tata or Narayana Murthy? Ankur Pahwa, National Leader of eCommerce and Consumer Internet at EY India told Economic Times recently that for the Indian entrepreneurs, exit was not in the DNA during the earlier era.
Does that mean the old guard were run-of-the-mill who did not want anything new in life and were happy spending it with just one business idea that they started? Or do we call the modern breed adventurous who kept experimenting and adding new ideas and thoughts to their life?
Well, instead of drawing a dividing line, it might be better if we perceived the old as a lesson for the new. To a large extent, modern entrepreneurs are indecisive and lack perseverance and patience to stand by their ideas through thick and thin. The moment there is a discord or financial blockage or boredom, they choose to veer off and plan another venture or simply move on to another option.
They do not hang on there and face to the problems, stand by the others or try to resolve issues that they may have in terms of a clash of ideas. The old guard preferred to stay put and found ways and means to circumvent each and every challenge that life threw their way.
As for someone like Mukesh Ambani, he has proved that even the old guard can remain young at heart and invest in every new concept that the modern world throws at them.