The Startup Gunslinger

<p>Mohandas Pai, the hot shot ex-chief financial officer of Infosys, minces no words. After taking over as chairman of the board at Manipal Global Education Services, he has dedicated a majority of his time to startups commenting on their current affairs and has become a self-confessed constitutional liberal fundamentalist. He believes that Article 29 and 30, which protect the interests of the minority, have been wrongly used by the political class to divide the country’s majority. He says that the political class should instead focus on providing 300 million jobs and adds that if India does not wake up to skilling individuals or providing them jobs then “we are sitting on a gunpowder keg, which can explode any time and destroy the social structure of this country.”<br><br>Somewhere in the depths of his outspoken demeanour, he has also been, like other Infosyians, vociferous about setting up an ecosystem for startups to list in India and also raise money with reduced tax structures. Indian companies today are constrained by regulation and are “behind the curve”, since the wealthy are scared to invest because of tax implications, when it comes to global capital. He is also part of a government committee on road transport that aims to use technology to improve services for businesses and citizen. He has also set up a Rs 600 crore startup fund along with Ranjan Pai, the chairman of the Manipal Group, and has invested in a dozen odd startups.<br><br>Mohandas Pai has an opinion on everything and constructs his argument pertinently. “The Competition Commission of India should look at the way discounting is done in e-commerce companies. Gross merchandise value is not a good measure to determine the success of these businesses,” says Pai in an interview with <em>BW|Businessworld</em>. He adds that such a measurement is a “fraud”.<br><br>However, being the capitalist that he is, he adds that this business is here to stay. He agrees that these Indian companies must realise that being dependent on foreign funding can ultimately result in them shutting down if there is another business that can raise an equal amount of money and start discounting. “The consumer will always move to where there is more discounting,” he says. And this has already happened with Amazon announcing a $5 billion war chest to take on Indian startups Flipkart and Snapdeal. Pai believes that if Indian sellers are asked to sell at discounts then there is no one other than the consumer benefiting. Take away discounts and one would know how this industry really functions. That said Indian startups need patient long-term capital from within the country to help them succeed. “I see startups providing three million jobs in a decade and creating a value of $500 billion,” says Pai. However, for this to happen, the government should give startups support in terms of infrastructure, finance and information from the policy level, for this to become a long-term play. He says that India has plenty of problems to solve internally and startups can intervene with technology and services. India needs disruption in supply chain, health, education, financial inclusion and skill development. The reality, however, is that 60 per cent of startups will perish and the remaining 40 per cent will become global innovators. The smartphone has changed the game in favour of consumption and will eventually become a source of information for all kinds of services. “Today, there is obscene valuations following not so great ideas. It is absurd to see why only those who can raise large money survive. It looks very oligopolistic,” says Pai. India is dependent on a clutch of foreign private equity funds for the growth of its startup economy. He also discusses issues such as data sovereignty, where the data of Indian consumers is sitting on the servers of global corporations. “What is the Indian government doing in terms of this snooping that is happening in the West? The Prime Minister’s Twitter handle’s data is sitting somewhere else. We still have the mental moorings of being a colony.”&nbsp; He also takes a dig at net neutrality and suggests that it should be in favour of consumers and not companies that use free data and accumulate consumer traffic, through the telco networks. He says that Telcos behaving like “bullies” is not going to solve the purpose. These days, however, he is on the lookout for companies in the internet of things (IoT) industry. If Indian manufacturing can embrace IoT, then production lines can be automated, which will hasten the Make in India initiative. However, the conundrum is that with automation fewer people will be employed. So the opportunity is in building talent in services such as analytics, retail, supply chain and transportation. He warns that extreme poverty and lack of jobs will lead to the growth of evangelism (monotheism), which eventually will kill liberal education and scientific thought processes. No wonder India is a land of opportunity and a land of extremes.<br>“Let us not light the powder keg or at least cut the fuse.”<br><br><em>—&nbsp; Vishal Krishna</em><br><br>(This story was published in BW | Businessworld Issue Dated 24-08-2015)</p>