Appoint The Right People For The Right Roles

One of the first things any young entrepreneur needs to keep in mind is that s/he possesses a tremendous advantage — one of a fresh start. Mind you, once you’ve scaled up and built an institution, much of that freedom will become transient. When you begin with a clean slate, you possess this huge positive, which only becomes obvious in hindsight. Youth, undeniably brings its own pluses. Your 20s and 30s are a good time to be aggressive and take risks. Any entrepreneurial journey starts with the kernel of an idea and a question around, “Can I create something of value?” With due preparation, it is worthwhile to pursue this question.

When I was first mulling over the idea of starting a merchant bank that focused on high-growth companies and capital markets, the post-liberalised environment was abuzz with entrepreneurial activity and we raised Rs 1 crore to apply for a Sebi license as it was the requirement at that time. Just as we were filing our application, the rules changed and the minimum capital requirement was raised to Rs 5 crore. This changed our business plan altogether. At that time, it felt like a disaster. But the change was a blessing in disguise because it forced us to do purely advisory work on private equity syndication, and mergers and acquisitions that eventually became our calling card in a crowded market. Setbacks will constantly happen, so be ready to take it on the chin and use them as an opportunity to re-calibrate plans.

Look for asymmetric pay offs — this applies equally to your life as well as to your business, investors, and customers. It is the framework we look at when we evaluate business — what’s the incremental cost and what’s the pay off — which has to be multi-fold. You have to have a good feel for direct, indirect and intangible costs. I have always been inclined to solutions where one can clearly see the indirect intangible costs and still have asymmetric pay offs.

Along with an idea you also need a sound strategy backed by an agile organisation. The landscape no longer changes every three to four years as it did in the early 2000s. If you’re not quick on your toes, you will miss opportunities. What has worked well for us is using a calibrated approach to expand into adjacent business areas during a slowdown, which was a counter intuitive move. The advantage of expanding in bad times is that you have room to strengthen the foundation, hire great people, and keep costs under control. For example, while we were entrenched in investment banking, we wanted to ensure growth in a business with a larger market size which led us into broking. This strategy has enabled us to quickly adapt to changes in the business environment so that we are ahead of the curve.

As with any new business, you identify a need and preferably have the first-mover advantage. Keep the aspiration and the passion for what you started alive, and work hard to achieve scale. Executing grand ideas and scaling up can be tedious and beset with setbacks in the short-term, but your aspirations can give you the energy to ensure you never get lost in the murky waters of everyday fire-fighting. Almost 90 per cent of startups fail because the founders get bored, discouraged, or move on to other things. Not because of some catastrophe. However, there is definitely a need to have a strong risk culture ingrained within the organisation. A culture that asks questions like, “Can we afford it?”, “Is it worth it”?

An important learning for me has been to appoint the right people for the right roles. It is important to hone in on the areas of the operation that you are best suited to and enjoy the most. The rest should be handed over to people who can do them well. At Edelweiss, as part of our people policy, we look for employees who are high on aspiration, but also respect teamwork and collaboration. We specifically look for team players who are committed to finding solutions and are able to integrate themselves into the organisational culture.

I am also a firm believer in getting into debates, discussions and divergent views underway before arriving at a decision. Diversity in views is the best way to simplify complexity as it helps rationalise your thoughts. At Edelweiss, we constantly gather views, pass it through a sieve and look at it from every angle and outcome.

A strong family support for any first-time entrepreneur is invaluable. After my MBA from IIM Ahmedabad, I was recruited from campus by ICICI Bank. This corporate path was an unusual deviation from the traditional family business. Even while setting up Edelweiss, my parents borrowed money against their apartment to raise seed capital for the company; my wife Vidya worked part-time as CFO. It is entirely to my family’s credit that they not only supported me in spirit, but financially as well.

You have to dream big and programme your mind for the future. As they say, if you want to run a marathon, you have to first run it in your mind. One of my greatest fears has always been for us to look back and realise that while the India Growth story was unfolding right before us, we did not capitalise on it. We are at a very interesting moment in India’s growth story and the opportunity to create value is now.