Founders’ excesses are turning public opinion against many startups

If there is one thing that is common to the founders of an earlier generation of startups like Infosys, Wipro, Mindtree and Happiest Minds, it is a deep sense of conservatism and a commitment to wear their wealth lightly. (Illustration by Suneesh K.)

Their big bulge investors may be undeterred, but to the laity, the excesses of some of the start-up founders in India are beginning to jar. Which is why when PayTM founder Vijay Shekhar Sharma was recently arrested and charged over a driving violation, the general reaction seemed to be, he had it coming, rather than the more rational question about why a person would be arrested for what seemed like a minor road incident in which no one was injured nor any major damage caused.

Many of India’s entrepreneurs are doing themselves a disservice by flashing their wealth and their attitude blatantly. Controversial shark tank judge and co-founder of BharatPe, Ashneer Grover, has been in the news for all the wrong reasons, sparring with his company’s board that sought his ouster on the heels of a no-holds barred invective-laden joust with a bank executive (Grover has said this was fabricated). Another co-founder of an edtech startup claims he needs a suite at the city's most expensive hotel to be able to think.

No wonder that a once-benevolent world is turning against them, leading to rumors, often unfounded, about their over-the-top lifestyles. Grover, it is said, possesses a multi-crore dining table, a charge that sounded bizarre even before he denied it on Twitter.

Sure, entrepreneurs like Sharma and Grover can claim that the money they spend belongs to them, which gives them the right to do what they wish. That’s only partially true since in the strictest sense, they haven’t really earned the money (since both their companies can be classified by what Value Research’s Dhirendra Kumar memorably terms as CTHNMAPAPNS, which stands for 'company that has never made a profit and probably never shall').

Used to spending lavishly to acquire customers, often without any concern about whether the cost of acquisition was anywhere near the potential realizations, it is no surprise that many startup founders think little of spending lavishly on themselves as well. After all, when you are worth a billion dollars, what’s a Rs 70 crore apartment or two? And in the current environment, there is no price to be paid for professional failure.

In 2014, PepperTap, an online grocery went into business, selling products discounted by 50-60 percent. Barely two later, having run through some $50 million of venture capital, it downed its shutters after laying off 150 staffers. Its co-founder Navneet Singh now runs GramFactory, a B2B version of the earlier idea, with a million dollars of seed capital from angel investors. Of course, there’s nothing wrong with serial entrepreneuring. Indeed, failure is a great teacher and quite likely GramFactory will go on to be a big success. But for the wannabe entrepreneurs, what are the lessons here?

Not surprisingly, young entrepreneurs, fresh out of the IITs and IIMs, courted and schmoozed by investors, have little time for old-fashioned virtues of humility and frugality. The strange part is they have role models to look up to right in their backyard. If there is one thing that is common to the founders of an earlier generation of startups like Infosys, Wipro, Mindtree and Happiest Minds, it is a deep sense of conservatism and a commitment to wear their wealth lightly. Stories abound about how N.R. Narayana Murthy and Sudha Murthy do their household chores. Nothing about Nandan Nilekani ever suggests a billionaire lifestyle. Another newly-minted billionaire Ashok Soota hasn’t changed in the last 30 years. Others like Kris Gopalakrishnan, Subroto Bagchi and K.K. Natarajan, men from the same stable of IT entrepreneurs who made billions for their shareholders, have shown over the years how to make better use of their money than just buying a flashy set of wheels.

Azim Premji, once one of India’s richest people before he gave most of his wealth away, has always maintained that the wealth he makes is held in trusteeship and it should not be used as ownership. For his people, many of whom became millionaires through their stock options in Wipro, he had a simple lesson: in a society that is as deeply divided along haves and have nots, and one in which a bulk of the population is poor, flashing your money isn’t a great idea.

Today’s high-profile entrepreneurs who constantly strive to be in the public eye, are a part of our society. And unfortunately till such time as their companies are sustainably profitable, the behaviour of their founders will be one of the metrics used to judge them.