Travails of returns - Part 8

Continuing the series on starting business in India. So far, (covered) the business model, initial team, functions, values, the first investors, how to handle mistakes culturally and the support system to get you there.

Now is the question of legacy.

How long will you build the company for? For short term, till IPO, till a lifetime or a legacy that outgrows you. A choice that in which one is always tempted to say the long extreme but not very sure inside. Deep inside one makes a choice from any of these (and then there is a 5^th).

Building to sell – Lots of tech, consumer, pharma products, R&D companies. You know you are in it for, likely, fame and money. And maybe that fame and money is a steppingstone to something much larger, later. Hence, you build for others and your choices dictate that.  These companies may get immersed with time but are essential cogs of the corporate wheel for they become vehicles of innovation and market entries.

Building for family – Many of the mom and pop, SME businesses of India, the so-called “Lala Companies”. Managed for cash flow, to augment family wealth. Decisions taken are mostly with a P&L mindset, and not an investment one. Businesses that have relatively less professionals all the time and get passed through generations till one link breaks out.

Building to professionalism – It used to be the norm around a decade back, especially for business houses. You build it the professional way for value creation of shareholders. You may or may not see the fierce culture, passion and innovation that you see in new age companies, though. These companies typically are IPO bound within a timeframe. Most of the decisions here are bound by norms, regulations and corporate governance.

Building for a lifetime – I would say these are the start-ups and new age companies of today. They start because they love what they do and get people who are similar minded. Most decisions are taken by first principles as the whole organization is on a learning path in most dimensions. Legacy beyond a lifetime is tough to envisage as most do not think beyond their own lives, though some do as the company ages.

Building for 300 years – A phrase I picked up from Masa San (SoftBank, In pic, India visit, last week). Very few companies the world over, none in India, have lasted that long. Hence, it requires you to bet big, think long future and not be phased by recency. A whole different level.

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Also Read – Travails of returns – 7th part