Former CEO of Infogain
Mudit: The social systems may not allow that kind of security, right? I mean, in terms of so much change happening. And more than that, I’d say, you know, AI could potentially replace a significant number of jobs, right? That’s what they say, about 80%. So, how can you add value in this world, right?
Answer: That’s a broader Mudit. How can you add value? I think one of the most critical things you mentioned is not to confuse entrepreneurship with simply getting rich. It’s essential to consider other preparations, such as maintaining cash flows. Should you prepare your family for possible challenges? In reality, things don’t always go as planned. So, what’s a reasonable approach if things don’t immediately take off? To illustrate this, let me provide an example. This discussion is based in San Francisco, where entrepreneurship and startups are thriving. Surprisingly, the average age of entrepreneurs in this area is 45, which contradicts the common belief that young college dropouts create billion-dollar companies. Many entrepreneurs in this region start their businesses later in life.
In my personal experience, I had a conversation with my wife, and we decided to invest two years of our savings into one business endeavor. We understood the potential risk, but we believed in the opportunity. So, I would encourage you to explore your options and consider the upside. If you can at least double your family’s income each year, the potential reward outweighs the risks. Of course, there’s the possibility of failure, but the experience and knowledge gained are invaluable. I can cite examples of friends who started their businesses right after college and, years later, have achieved remarkable success. So, taking calculated risks and pursuing your entrepreneurial dreams can be very rewarding.
Mudit: It’s often mentioned that more than 80% to 85% of startups fail within a few years. What do you think is the reason for this?
Answer: We’re primarily discussing the Silicon Valley perspective rather than India’s. In the United States, many startups aim to create groundbreaking solutions and are willing to take substantial risks. It’s not seen as a failure if a startup doesn’t succeed, and there’s no stigma attached to it. People in the Valley are known to embrace failure as a stepping stone to success. In fact, you’ll meet many entrepreneurs who talk about their previous ventures that didn’t work out before they finally found success. This culture of resilience and adaptability is ingrained in the ecosystem.
In contrast, in India, there’s a perception that if a company is associated with a “big name” and it fails, it reflects poorly on the individual. This fear of failure often limits entrepreneurial risk-taking. Startups in India tend to be more conservative, and they often prioritize existing business models over innovative, unproven ideas.
Mudit: When you merged and started investing in a smaller company, and then proceeded to acquire a larger company, how does that process work? Is it primarily about injecting capital?
Answer: To clarify, it wasn’t solely my capital that facilitated these acquisitions. I engaged a significant private equity firm, Chris Capital, one of the largest in India, in my pursuits. I was personally involved in the process of acquiring smaller businesses and integrating them into our larger vision. I used not only my own resources but also leveraged investments from friends, family, and other financial resources to facilitate these acquisitions.
Let’s consider an example from my journey. I acquired a small business and relocated its operations to Singapore. The focus was on expanding the business’s footprint in the United States. I initially invested my own money and leveraged additional funding from a private equity partner. Subsequently, I acquired a larger company, further strengthening our position in the industry. The valuation of the company increased significantly over time.
So, in essence, it’s a combination of strategic acquisitions, financial investments, and a clear vision for growth.
Mudit: Please share your journey of scaling a company from a $90 million valuation to nearly a billion dollars. What strategies did you employ at different stages of this growth?
Answer: The journey from a $90 million company to a valuation of nearly a billion dollars involved various phases. It began with a clear vision of what we wanted to achieve. The initial phase focused on establishing a strong foundation. We honed our management team, worked on customer relationships, and instilled a culture of professionalism. It’s crucial to set the stage for rapid growth.
After building a strong foundation, we pursued strategic acquisitions to add essential capabilities to our portfolio. We were selective and acquired small companies based on their capabilities, not just revenue. This approach allowed us to integrate key strengths into our operations.
As we continued to grow, we fostered better relationships with customers. The value we brought to our clients increased, and our engagement with them expanded. The larger our customer base, the more we could leverage our capabilities and scale our operations.
We focused on key markets, especially in the United States. Concentrating our efforts in specific regions enabled us to deepen our presence and make a more significant impact.
It’s essential to continually upgrade your team, develop strong partnerships, and enhance your marketing efforts. As you grow, you become more attractive to talent, partners, and the external ecosystem.
By the time you reach a billion-dollar valuation, your aim should be to achieve a level of excellence in the areas where you operate. Keep your focus on customer needs, continue learning, and adapt to evolving market dynamics.