|BUSINESS WIZARDS: K. Ganesh and his wife, and (below) Atul Jalan
When K. Ganesh, founder and chief executive officer of the Bengaluru-based online tutorial firm Tutor Vista, shaved his hair at his clubs salon two months ago, the 49-year-old was fulfilling a pledge — not to any deity, but to his team. He had promised them that he would shave his head if a target he had set for funding for his five-year-old company was achieved.
It was. In January, global education and publishing firm Pearson picked up a 76 per cent stake in Tutor Vista for a rumoured $139 million (Rs 625 crore).
Such a spot-on prediction perhaps comes from practice. This is the fourth firm Ganesh has set up, grown and sold. But he and wife Meena, 47, arent ready to sit back and relax with all the millions they have earned. I plan to start five more companies, says Ganesh.
The Ganeshs are among a small band of serial entrepreneurs — people who start companies one after the other, selling them to a larger player, usually for megabucks, if they are successful. And if the company is not, they dust themselves off and start again.
But 39-year-old four-time entrepreneur Atul Jalan doesnt like the label serial entrepreneur. It makes me sound like a hit-and-run person, complains the managing director and CEO of the Bengaluru-based business analytics firm Manthan Systems. Many people, he says, start a business with an exit plan in mind. For me, every venture is a romance.
Serial entrepreneurship isnt new to India. Regular business people start a business, move on to another and then another all the time, says M.J. Aravind, partner at venture capital firm Artiman Ventures, which has repeat entrepreneurs accounting for 60 per cent of its portfolio. Agrees A. Suryanarayanan, partner at Headstart Ventures, which mentors and funds early-stage start-ups, Serial entrepreneurship is a way of life for 60 per cent of entrepreneurs in India. Its in their blood. The 54-year-old has three companies under his belt.
What makes entrepreneurs like Ganesh, Jalan and himself different, he says, is they either develop better and more efficient ways of doing business or offer a radically new product or service, generating huge value in the process. He calls them serial, innovative, disruptive entrepreneurs.
Serial entrepreneurs emerged in India only in the mid-1990s as the business environment began to change. Earlier, banks and other financial institutions were sceptical of first-time entrepreneurs or those who had a failed venture on their résumés. The coming of venture capital firms, risk takers who bet their money on good ideas, changed the approach to funding start-ups.
Also, entrepreneurs who couldnt grow their ventures beyond a certain point had no option but to shut shop or remain small, notes Prakash Gurbaxani, CEO and managing director of QVC Realty, a Bengaluru-based real estate development firm, his second venture. The emergence of a secondary market for businesses — other firms willing to buy firms — is relatively recent. Right now we are seeing second ventures by entrepreneurs. In another five years, we will see more people into their third or fourth ventures, says Prashant Prakash, partner at Accel Ventures, who started and sold two ventures.
Most of what Aravind calls accidental entrepreneurs are first-generation entrepreneurs from middle-class families, whose ultimate ambition was perhaps to work for a blue-chip Indian firm or a multinational company (MNC). Ganesh was working at HCL, Suryanarayanan at Recon, a Bengaluru-based pharmaceuticals company (after stints at Union Carbide and pharmaceutical major Nicholas), and Raman Roy, chairman and managing director of Gurgaon-based Quatrro BPO Solutions, his second outsourcing venture, at GECIS.
All three had entrepreneurial roles in these firms. Roy had set up business process outsourcing (BPO) operations first for American Express and then for GE. Suryanarayanan had worked, for all practical purposes, like the promoter of Recon. As head of the northern region of HCL, Ganesh had full freedom to take almost all decisions himself. So I thought why not take decisions for myself, he says.
Some had business in their genes. Jalan was under tremendous pressure to join his familys small textiles business in Calcutta. But, with a fierce sense of independence, he dropped out of a computer science course in college to start his own software security solutions venture in 1991. Gurbaxanis Nagpur-based family owns a construction business. He went abroad to study and then worked there and in India before venturing into business. I was the only one in the family who worked for someone, he says.
Most professionals-turned-entrepreneurs arent willing to keep trying their luck repeatedly, notes Aravind who himself is one (he co-founded the BPO firm Daksh in 1999). The Indian middle class cannot talk casually about failure. So if their first venture hasnt done well, they are hiding somewhere. If it does, they dont want to take a risk again. Thats why this lot is different.
Is the money worth the repeated risks? Its not about the money, is the chorus. Most of these entrepreneurs have made enough money to live an easy life. Theres a posh bungalow, farmhouse tucked away somewhere, a BMW or Mercedes in some garage, children have been sent to foreign universities. Sure, we are not here for social service, says Roy, but the main driver is not money, its something else.
Sometimes, it is ambition. If Ganesh wants to start five more companies, Jalan wants to be either a grand success or a grand failure. Mediocre success is not for me. Otherwise I would have continued with my first venture, he says. According to Roy, most serial entrepreneurs are loony. The more loony they are the better it is. Ganesh gets a thrill from starting something from scratch. Once you start, its like an addiction; you dont want to give it up, he says.
The process, serial entrepreneurs admit, is emotionally taxing. In order to reach heaven, you have to go through hell, says Captain G.R. Gopinath, who quit the Army to foray into agriculture, moved into a motorcycle dealership, a helicopter service, a low-cost airline and now a logistics company. The lessons learnt in one venture dont prepare them for the problems in a new venture.
Then why go through hell repeatedly? When chairman of the Unique Identification Authority of India and one of the co-founders of Infosys, Nandan Nilekani, once asked Ganesh a similar question, he shot back, Because I dont do it as well as you. Some people, Ganesh explains, are good at planting seeds and nurturing them into saplings. Others are good at taking saplings and growing them into a plant or a tree. The skills required, the challenges and the excitement are different in each case.
The decision to sell isnt easy. Gopinath found it difficult to give up control of Deccan Airways to Kingfisher Airlines in 2008. But he decided to put the company and the shareholders before his pride. Often, venture capitalists force an exit when they have earned a good return on their investment. Thats what happened with Jalans third venture, Netkraft, an outsourced software development firm. Suryanarayanan sold his first business Medybiz to Reliance-ADAG (Anil Dhirubhai Ambani Group) to clear his debts and fund his third venture — Lifeken, a chain of pharmaceutical stores.
The ups and downs of their entrepreneurial journey bring about a personality change sometimes. Jalan is a god-fearing person now, a huge leap of faith for someone who used to be a card-carrying member of the Communist Party of India (Marxist) as a youth in Calcutta. He quit after being issued a show cause notice for having joined an Ayn Rand fan club. Suryanarayanan hasnt begun doing the rounds of temples, but admits to having become spiritual and philosophical. An entrepreneur has to go through a torrid time; you learn who your real friends are. Ganesh has learnt to deal with uncertainty and feel comfortable with ambiguity.
The journey itself is the salvation, says Gopinath. The rare breed of serial entrepreneurs couldnt agree more.