Failure has more value than success

It’s a good thing to be high on the valuation, even if it’s not so high on the number. That is probably the more important parameter. Hyderabad that way has had a strong entrepreneurial streak in it; the quality of entrepreneurship is a slightly different thing, it may not be as mature as it is in other markets because many people don’t understand all the ingredients that make up entrepreneurship. It’s not just about having great ideas. There’s also the question of whether you’re able to present it well, whether you’re able to convince people, to get money, to market it, manage a team, motivate people to join you — and that’s important because you’re asking someone to forego a viable career option to join you.

Most people at the age of 20 or 22, don’t have all of these attributes. These are things which come with maturity. The ecosystem has to be supportive of that all as well; there have to be enough angels (investors), mentors, and successful entrepreneurs who are willing to guide. So as the market matures, it will get better. The good thing is that there are people from the state who have succeeded in Silicon Valley, B.V. Jagadish, for example. By connecting with such people, these lessons can be learnt at low cost before you’ve lost money.

A startup by definition is a risky venture. The way the whole ecosystem works is that those who take the risks earlier, get the rewarded the most because they have taken the risk when it is highest. Risk and reward move in lockstep. If somebody wants to come in at a second stage, he’s rewarded, but not as much as someone at the first stage, and so on. One of the lessons that even funders have learnt is that you should not crowd out the entrepreneur into equity too early, because then he has no stake in the company. And you should also not reduce it to a point where he becomes a manager in the funder’s company. Till the stage when the startup has actually stabilised, it will be risky. Anybody who joins Indian companies like Snapdeal or Ola now, there not much of a risk, because even if that company were to go, it will still land up being bought over by somebody, it won’t completely disappear.

At a macro point of view, then I think the jobs that are being created are quite stable because the jobs within the whole ecosystem is continuously growing. One may shut down, but there are 10 others coming up to take its place. And that experience today is valued a lot. In fact, the joke today is that failure is valued more than success. It may be a bit of an exaggeration, but if somebody has on his CV that he had a startup and failed, it’s still seen as a plus point. Company’s think that this chap knows what works and doesn’t work… that he’s done something.

When we had organised a program at Silicon Valley recently with the Prime Minister, most of the startups there were in the social sector — healthcare, agriculture, energy. But that was also because we made a conscious choice to take entrepreneurs in that space. Of course, many of them also choose sectors (with better financial stability) because investors want that too. Funders want money — they’re not doing this for charity. But even in social sectors, there is money. It may not be at the same scale or the complexities of the product may also be more, but it’s there. When you look at the use of disruptive technology, every shortage and inefficiency that exists in the system is a business opportunity. That’s the nature of the game. If there’s a lack of healthcare facilities, if there’s huge amounts of agricultural wastage… it’s all an opportunity. How you apply them and put together technology and your domain, how you understand that domain — that is where the actual entrepreneurship comes in.

The whole economy really snowballed after the IT revolution, and it captured the imagination of the whole country, especially youngsters and the tech guys. It’s also that only now that people are realising that you don’t have to be a tech wizard to do this. You can hire a tech wiz, and if you have a good idea you can use technology to translate that idea into a product. This particular revolution is important because for the first time in history on man and the country, you have the ability to reach single person in the country, if you have something unique that’s really useful. And the moment you’re able to offer something that is of great value and helps people save a lot of money, time or both, people will jump onto it. How else can you explain a company like PayTM getting two million customers in less than two years? They haven’t spent crores on advertising (even if you do, you can’t get that number at that rate). You can reach the customer directly, you can reach them quick and you can scale up at an incredible pace — that’s the thing that excites people.