Lessons to learn from the BharatPe saga

Ashneer Grover

The entire BharatPe saga has unravelled pretty quickly with several twists, claims, and counter claims. Without reading much into public posturing, demeanour of individual or allegations, let us see what we can learn from the episode.

Looked at objectively, the situation resembles a typical thali meal — with different tastes and ingredients: sweet, spicy, solid, liquid, carbs, proteins, fat…all magically produce a satisfying outcome.

In BharatPe we have, a very successful founder with great track record, stellar board members, marquee investors who have been responsible for many great companies being built in India, a company that scaled in a tough competitive market despite being a late entrant, with huge market acceptance, and high unicorn valuation. But the outcome, put together seems to be poor.

Like the thali meal, individually, each dish is very good, but in BharatPe’s case, when mixed together the outcome is not positive; rather it is destroying value for everyone — founder, management, investors, employees, and customers.

It’s a team of good people, but put together they do not make a good team.

Without doubt investors take a risk and invest substantial capital, and the founders are battling against all odds every day, committed in their own ways to the company.

However, there is a subtle difference. For the investors, it is a portfolio approach — some companies will give a return on their investment, while others are written off. The founder(s), on the other hand, are in it 24X7.

This way, while the pig becomes a part of the breakfast by sacrificing itself, the chicken’s contribution is the eggs, and it goes on with life. Investors and the board need to recognise what the founders do to build the business.

When something large and valuable is built in a short time, it is but natural to have conflicts. When there are multiple parties, while all of them are aligned in value creation, their outlook, definition, time horizon, and expectations are very different. That is not necessarily bad. It results in healthy debate, balancing view points, and, potentially, a better outcome.

Founders play a crucial role in the early stages of a startup; at that stage, a startup is nothing but the founders’ vision and execution. As the company grows, not all founders scale with the company; what makes a founder great (taking something from zero to one) might not work for a larger, slower-growing company.

Once the founders decide to take external funding, they should be clear that they are not the only ones running the company. Often, this is the hard part for founders as their ego and dreams are tied to their startup; founders should go in with open eyes.

Ultimately the board has the primary responsibility to ensure that the startup is managed in the right way, and that the interests of all parties are balanced.

The board might not be perfect; after all, it is made up of humans with their own biases, blind spots, and prejudices. Former British Prime Minister Winston Churchill once said: “democracy is the worst form of government – except for all the others that have been tried.”

Similarly, the current method of managing a VC-funded company with a board with its fiduciaries duties is the best available solution — not the ideal solution.

In the BharatPe case, given the stature and reputation of the board members and investors, the company is in good hands.

Ashneer Grover has done incredible work in building BharatPe. It is sheer hard work, and extremely tough to replicate the achievement.

While he might be right in his arguments, he should realise that BharatPe is a board-run company, and, for better or worse, the final decisions rest with that board. To cast aspersions or second guess the board would be incorrect. Grover, and the other founders, have no choice but to work with the board, and try to mutually create something of lasting value.

In today’s world, trial by social media is very common. Anyone in the public eye has to manage perceptions by their behaviour. Entrepreneurs and founders are no less than film stars for the attention and following they receive. They are also role models for youngsters. Unfortunately, most of Grover’s comments seem to be made out of spite and immaturity, and do not help his cause. Founders should hold themselves to a much higher standard, especially those in the public eye. His current behaviour casts a shadow on his stellar contribution to BharatPe, and his success in building a great business.

The board has stayed away from public pronouncements, and rightly so. The leaks to the media have not helped the company, and has resulted in some blame game. One of the learnings for the company and the board is how to avoid a trial by media, how to maintain confidentiality of proceedings, how to act decisively, and quickly. The delay in action seems to have created more confusion, and bad blood among the parties involved.

Hopefully, all the parties involved will sit together and resolve this without further acrimony. The current course of events is destroying value for everyone. There is huge potential and value in the company to be unlocked. Grover has shown he is capable of creating value, scaling, and building large companies. We are sure there is lot more to come from him. Despite the current conflict, everyone can turn out to be winner with mature handling of the situation.