Storyboard18 | As BharatPe faces heat, a look at how brands could tackle founder-led controversies

In India and abroad, unscrupulous and unethical behaviour and sometimes just the sheer lack of judgement on the part of company founders and top executives have directly affected the perception of company brands.

An alleged abusive phone call with a bank employee put BharatPe founder Ashneer Grover in the midst of a controversy around misuse of power. But that’s not all. His alleged bad conduct has thrown the fintech startup brand in the eye of the storm too.

The controversy surrounding Grover also put the spotlight back on troubling issues such as toxic work culture and employees leaving in droves, at the three-year-old company which quickly rose to become one of India’s biggest fintech firms.

In fact, Grover had even stepped back from day-to-day operations, giving charge of daily affairs to Suhail Sameer, who became CEO in August 2021. Around that time Grover was also in the news for his LinkedIn post which said that BharatPe will offer new employees in tech and product, BMW bikes, latest top-end gadgets and “cri(work)cation” in Dubai for the ICC T20 World Cup.

On a side note, quite frankly, the last thing one should give to people inclined to leave is a super fast super-bike.

While stakeholders debated Grover’s alleged misconduct during a phone call with a bank employee, people also called for a boycott of the BharatPe app, with #UninstallBharatPe trending for a while on social media.

But the real damage to the company and brand could be deeper and not immediately apparent.

Impact on brands 

A founder’s personal brand is not disconnected from the company brand.

Not just in India but the world over, unscrupulous and unethical behaviour and sometimes just the sheer lack of judgement on the part of company founders and top executives have directly affected the perception of company brands.

“Brands are an extension of what's important to the founder or even his personality. So everything that damages a founder's personal reputation will likely affect the brand too,” says Vani Gupta Dandia, founder at marketing agency CherryPeachPlum Growth Partners.

Making a celebrity out of a business owner is a sharp double-edged sword.

Remember when Jeff Bezos thanked Amazon customers and employees for paying for his brief space trip? Or the umpteen times when Elon Musk was under the scanner either for smoking weed on camera or for simply tweeting out how Tesla's stock prices were too high? Every time famous founders and top executives of companies found themselves in personal controversies their brands suffered.

Reputation risks

A 2016 report by Harvard Business Review says while most companies take an active approach in responding to allegations of misconduct, the impact of misbehaviour on corporate reputation is significant and long-lasting.

According to  N. Chandramouli, CEO at consumer analytics and brand insights agency TRA Research, the leadership team is the reflection of a brand’s values and beliefs and each and every member of the team should consider the brand as an extension of their personal public image. “The shadow of one's lack of judgement always falls on their brand,” he says.

Vani Gupta Dandia, who has worked with large MNC brands like PepsiCo, Unilever and Reckitt Benckiser before going the entrepreneurial way, agrees with Chandramouli.

She says, “As business owners or founders we have the responsibility of maintaining a squeaky clean reputation - because founders are closely linked to what the brand is. In most cases brands are an extension of what's important to the founder or even his personality. So everything that damages a founder's personal reputation will likely affect the brand too.”

Beyond social media outrage and backlash

Do such personal controversies, especially at newer companies, also impact investor relations in the long run? According to Girish Shivani, executive director and fund manager at YourNest Venture Capital, these incidents might not have direct impact on their funding or investor relation but it leaves a bad aftertaste and can be the deal-breaker for future negotiations.

“At the end of the day, any adverse news or reaction can actually put the brand on the back foot and can impact long-term brand salience as well. Therefore, it is very important to be careful when a founder or a CEO or anyone from the leadership team of a company speaks on a platform where they cannot control how the media gets disseminated,” he says.

A Tweet & Some Weed: Examples of when and how founders fall

Travis Kalanick’s ride out: A reputation for ruthlessness and bro-like demeanour, swearing at an Uber driver, toxic company work culture, scandals about sexual harassment in the workplace, the departure of senior executives -all led to the founder’s downfall and eventual exit from Uber. During an interview with GQ in 2014, Kalanick even joked about a service for women on demand, which he nicknamed "Boob-er".

Elon Musk's problematic tweeting: Several controversies spawned by his lack of social media self-control and brash comments. From smoking weed in a media appearance to stunning Wall Street when he tweeted that he had funding secured to take Tesla private. Musk even threatened to launch a website to rate journalists' credibility.

Jeff Bezos' thoughtless thank-you note: Amazon’s founder faced backlash after he thanked his company employees and customers for paying for his brief flight to space. Not a smart move given the intense criticism Amazon has been facing for dangerous working conditions, treatment of employees, low wages, union busting, abusing market power, and paying zero federal taxes in 2018. Naturally, he was blasted by people and politicians.

John Schnatter's burnt pie: Papa John’s founder resigned in 2018 as chairman of the board after admitting and apologising for using the N-word during a conference call. Shares of the pizza chain surged after the decision — recovering all of the $96.2 million in market value the company lost after Schnatter’s comments were reported by Forbes.

Vishal Garg’s mass firing on Zoom: “If you’re on this call, you are part of the unlucky group that is being laid off,” said Garg, the founder and CEO of Better.com in a Zoom call with his employees. The Indian American entrepreneur fired 900 people on the call. The decision put him, his leadership style, and personal dealings under the scanner and after facing major global backlash, Garg was sent on a long leave.

Another shark that tanked: When Peyush Bansal said ‘CA se durr raho’ on national television. In a recent episode on Shark Tank India, a business reality TV show, Lenskart cofounder made a comment about chartered accountants and warned people to stay away from them. People were offended and though Bansal later said the comment was just a joke, netizens trolled Lenskart and ‘Say No To Lenskart’ trended for days. BharatPe's Ashneer Grover also features in the same show as a shark.