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Why top executives are turning entrepreneurs
Anjuli Bhargava in New Delhi | January 19, 2008
What makes a 42-year-old, slightly balding, well-settled senior executive in a steady, cushy job in a multinational set-up, rock the boat?
Someone with two kids going to one of the best schools in the city, a wife who hosts great parties and a career trajectory aimed straight for the top echelons of the company, if not the very top. Ambition? Money? Boredom? Opportunity? An urge to prove you can make it on your own? A burning desire to tell your boss to go, take a walk? Or as many of Roy K Cherian's friends first asked when they heard he'd taken the plunge: "Is it just his hair he's losing or maybe a part of his brain too?"
Roy says his wife Rani was "slightly scared" (yet brave enough to be supportive) when he decided to quit his new job with the United Breweries [Get Quote] group in Bangalore.
Prior to that, Cherian -- a product of IIM Ahmedabad -- had spent close to 13 years with Nestle [Get Quote] and Ulka Advertising. Why then did he take what his friends and family think is an "outrageous" step? Cherian (he says his hair loss is genetic) says none of the above alone, or all of the above together, motivated him to throw in the towel.
"I wanted a sense of independence. The thrill of building an organisation and seeing the tangible results of one's hard work excited me."
His point -- left unsaid -- is that, in the corporate sector, you don't always work for results. Almost everyone Business Standard spoke to felt that those in the corporate sector often work not for results but for their bosses. That can prove frustrating, especially when you're stopped from doing something you know is the right thing for the business. That's when some bravehearts jump ship.
Cherian and his partner, 39-year-old Anunay Gupta, set up Marketelligent five months ago, an analytics company based out of Bangalore. At least two parties have already endorsed their faith in what many think is a bizarre move -- IIM Bangalore, which is allowing the start-up to incubate out of its campus, and their first client Zelcom, a US-based consulting company.
Gupta, the analytics whiz, says he "felt the urge to do something unique and build something of value from scratch". It helped that he was able to find the right partners to start the venture and leverage his experience and expertise in the business analytics space, an opportunity that, in India, is heating up and is at a stage similar to the software industry 10-15 years back.
Marketelligent is not VC backed; several friends and acquaintances have invested small and large sums, which the duo is quite nervous spending. Nor are Cherian and Gupta alone.
The entrepreneurial bug seems to have caught a large number of people -- almost surely each one of us can think of at least a couple of friends or acquaintances who've taken the mid-career plunge.
What's interesting is that in many cases, those opting out of the corporate rat-race had no apparent reason to do so. They had whizzing careers, most were already earning salaries that could feed a small village for a month, had one -- if not two -- real-estate properties in their name, and were comfortable in the corporate set-up. In all cases, money didn't appear to be the motivator but a by-product.
Still, throwing caution to the winds mid-career appears to be the flavour of the season.
In a move that surprised many, 43-year-old Pramath Sinha, former CEO of the ABP Group and ex-partner at McKinsey, on "the ninth day of the ninth month" last year, set up 9.9 Media-Worx, a diversified media business.
Sinha had worked 14 years in the corporate sector, at the very top of the pyramid, and had "never imagined I'd be an entrepreneur".
He grew up in a fairly conservative environment where his father always said that "business is not for us". Members of the family who'd ventured into business had been "spectacular failures".
Then why did Sinha go against the family grain? One of his reasons, he says, is that the timing was correct. "India is opportunity-rich at the moment. So, if you have a new idea or have some insights on how to take forward an old one, this is a good time to do it."
Also, setting up a new company -- unlike in the old days -- is easy. "Getting a company started today is smooth and can be done like clockwork," he explains, something that often deterred prospective entrepreneurs in the old era of licences and red tape.
But above all, Sinha's experience with the Indian School of Business (he set it up and was its first dean) set the stage for where he finds himself today.
"Initially, after the ISB experience, I thanked god that I hadn't become an entrepreneur -- the sleepless nights [on account of] 9/11, students not getting jobs, not enough companies coming to campus, and the onus of this great dream that had been built�" he recalls.
"In consulting, in contrast, you are an advisor and the buck never really stops with you. When I got back to McKinsey, I realised that all the excitement had gone out of my life," he says.
Instead of "playing the game and being on the field", he felt like a "commentator". "As ISB started to do well, Sinha began to get credit for what he'd been instrumental in creating. He realised that the urge to create -- once it bites you -- probably never leaves you, and 9.9 is living proof of it.
Rajat Goel, the 42-year-old founder, CEO and managing director of Eye-Q, a super-speciality chain of eye-care hospitals, quit his position as director (surgical business) of Bausch and Lomb after 16 years, in March 2007.
After being identified as a "high potential" manager in 2006 in a leadership course at Oxford and Rochester, and having been nominated as the best regional head within his firm for three consecutive years, he began to wonder, "What next?"
For 16 years, Goel had been doing the same thing, he says, but the clincher was something else. At Bausch and Lomb, his colleagues and he had, for 10 years, been promising an eye-care revolution in India. A visit to Rewari showed him the hollowness of that claim.
"No instruments, pathetic care -- I found you couldn't offer even a chair to the patient, let alone high quality care. Ten years of talking and we hadn't made even a slight impact 70 km outside Delhi."
He says this really upset him. Rewari (he studied there for seven years and it is "where my roots are") was where he set up his first state-of-the-art eye hospital. Contributions from seven of his IIM colleagues in terms of their domain expertise and resources helped him start with six hospitals in the first year, which will be taken to upto 100 across India in due course.
When he first mentioned his plan (of setting up three-four quality hospitals), his friend -- a former CFO of Patni Computers -- laughed aloud. He said with the kind of scale he had in mind, he wouldn't get anywhere. It was then that Goel and his partner started to think big.
One thing Goel says he was ready for was a loss of status; he talked to everyone who mattered in his life before he went ahead. "It was a bit like an arranged marriage. All my relations -- my sister's husband, my wife's brother, my father, my wife -- met my partner before backing me," he adds.
He even discussed the move with his kids. "Carrying your entire eco-system with you," he argues, "can make or break what you do."
Goel's life has changed in more ways than one, some good and some bad. He used to take eight flights a week in his old job; over the last year he's taken three. He used to work 12 hours; now he works 17.
"Life has been extremely tough -- but good. Most of the assumptions we started with were turned on their heads. There have been many moments of crisis. It's been a great journey and an experience -- and everyone is looking at me with new respect," he says. Now, people tell him he's done what they want to do too but haven't been able to.
That new, earned respect is perhaps what's motivating Sinha, Gupta and Cherian to step into an entrepreneur's risky, challenging and not-so-steady shoes. They will now be in control of their own destinies - and will have no one to blame or to credit whether they flounder or flourish.
Masters of their own destiny?
Running your own business is a constant learning process, a few corporate honchos-turned-entrepreneurs.
Rakesh Seth, 49, quit the corporate world after 16 years with Nestle and three years with Pepsi, when he was 40.
In November 1998, the government started the Freephone service (instead of the caller paying, payment was made by the called). That gave him the idea of setting up Finedge India, a call centre and brand activation company, in February 1999.
Seth says the move from the corporate world to the world of business allowed him to strike a better work-life balance. "You can do things on your own terms. I follow a system but I follow a system on my own terms."
In contrast, in the company, you do many things because "it doesn't look nice". For instance, executives often stay till their boss leaves -- even if they have no work -- because it doesn't look nice. "In a large MNC, it's all about impressions and how you manage your bosses. In business, it's all about reality. And success depends on how you manage your clients and employees," he adds.
"If one needs to be at work at 7 am, one will -- no matter what anyone thinks. And if you feel like an occasional round of golf before office, well you can."
Rahul Chadha, who quit the corporate sector five years ago after putting in 11 years -- his last job was with consulting firm A T Kearney -- to start CRS Health, a chain of drugstores, says that "being your own boss" was a primary driver but not as important as the opportunity to "take a concept to the market quickly".
The going, however, hasn't been a bed of roses. "People can be a challenge. People, as in the powers that be; people, as in the demanding Indian consumer; people like those one interacts with in civil dealings...even attracting the right people is a challenge," he explains.
But, unlike what many believe -- according to Chadha, there is no going back. "Once bitten by the entrepreneurial bug, it's difficult to imagine getting back to a job," he adds.
That's a lesson that needs to be kept in mind -- while it may appear easy to return to the corporate sector in the unlikely event that your business fails, especially in today's high-growth scenario, it is easier said than done. Once you've tasted blood, few can deal with the placid environment the corporate sector offers.
In this transition from having a boss to being your own, the biggest pitfall, many feel, is the quality of your peers and colleagues.
As an entrepreneur, you are mostly giving "learning" and shape to the organisation whereas as a salaried manager you are moulded by the organisation and colleagues.
"Getting good people to join you is a challenge; unless you go the VC way and start big, you will not work with the kind of minds you were used to," feels Seth.
He chose to bootstrap his operations with his own funds (his company did a turnover of Rs 28 crore last year) and not to go the VC way because then the "VC drives you like he owns you" and also because he feels that "tension and risk" depend on the pace at which you want to grow. (It's interesting that all the three examples in our cover story on page 1 have no VC funding as yet -- though 9.9 Mediaworx could be the first to go that way.)
Seth points out that in the initial stages, small things like the type of office, managing your own travel bookings and so on -- stuff handled by big administration departments typically -- can get to you, but one gets used to it.
For instance, Seth has an administration department of four, but the quality of people he has is not what he was accustomed to. The other issue is that the buck stops with you. "I was running a 1,700-agents call centre for Hutch. In spite of all the administrative staff, if the toilets were dirty there, I could get a call. In Nestle, I'd be doing the shouting," he explains.
Forget the shouting, you may even find yourself eating humble pie. According to Rajat Goel, CEO and managing director of Eye-Q, which was set up last year, "You have to be prepared to swallow your pride and stand outside your erstwhile subordinates' room for two hours to get business." And mind you, you may not even like the guy.
Running a business requires you to be a bit of a "reasonable master-of-all-trades". "You need some skills in every area -- legal, marketing, finance, administration..." says Seth, so it helps to have worked in the corporate sector for a while before taking the plunge. It also helps you empathise better with your client, and he with you.
"I found clients want to help you out because they can understand your language. They prefer dealing with you rather than a hard-core businessman," he says. Since Seth also knows the inner workings of a large company, it helps him frame his proposals in a way that the boss and the boss's boss will approve it.
One of the major benefits of being an entrepreneur is that while as a salaried manager you are "selling your skills and time" and the organisation is benefitting from your value addition, as an entrepreneur you pay the salaries but keep the value addition each employee creates.
In the process, you create an organisation which will work for you when you are unable to, or choose not to work! Call it the benefits of a calculated risk...