enterpreneurship - startup no

8/20/2019 Enterpreneurship - STARTUP No

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STARTUP

What is a Startup?

A startup is a young company that is just beginning to develop. Startups are usually small and

initially financed and operated by a handful of founders or one individual.

Why do people become Entrepreneur?

The diagram explains :



Twelve key characteristics of wildly successful entrepreneurs

!" #ollow your dream" All successful entrepreneurs have an idea they want to pursue. They see an

opportunity to solve a consumer or business need. Do you have a dream? aving a dream is the !ey.

"t#s the starting point. "t#s a seed that$ if planted$ watered$ nurtured and cultivated$ has a wonderfulchance to grow. Do you have that new product in mind? Are you ready to go? Then " say: full speed

ahead. %o for it now& Don#t wait.

$" Take the risk" 'inners understand and ta!e the measured ris!s associated with launching a

business that may include loss of money$ possible failure and health ris!s. (ven with a great product

idea that has gained traction with customers$ founders face stunning and daunting challenges.

(ntrepreneurs who are successful have ta!en significant personal ris!s to start and grow their

businesses. )rior to moving forward$ they should have considered$ weighed and evaluated each major

ris!$ and recogni*ed the potential conse+uences of their decisions.

%" &ake the sacrifice" Those who start and grow a business will give up many personal benefits to

be successful. Sacrifice will include time$ relationships and other opportunities. 'hat are you ready

and willing to relin+uish? "f you have the drive ,and support from family- you can become one of the

many winners.

'" (e persistent. %reat entrepreneurs never give up. They never stop trying. They somehow

overcome every barrier and climb over and around all obstacles. othing gets in their way to achieveutopia. This unflagging attribute is a !ey characteristic of triumphant business leaders.

)" *now your customer. Successful entrepreneurs !now the needs of their customers. They !now

everything about them. They !now what they want$ when$ where and at what price. ave you done

your homewor!? Those who constantly see! customer perspectives are setting their business up for

great achievements.

+" Sell to survive and prosper" 'inners !now how to sell their products or services. They

understand the customers# satisfaction level with the current competitive offering$ the price paid for

the product$ where it was purchased and details regarding product features$ warranties and support.

They !now how to find$ engage and close a sale from customers$ over and over again.



," Take care of your customers. %reat entrepreneurs value their customers and go out of their way

to ta!e good care of them. These alert entrepreneurs wor! long hours to win their customers# hearts

and minds and labor every hour to retain and increase their buying activities. 'ithout +uestion$ this

attitude typifies the very best entrepreneurs.

-" .ire the ri/ht employees. 'inners !now how to find$ select$ hire$ train$ motivate$ reward and

retain great employees. They thoughtfully eliminate wor!ers who don#t contribute. They elevate

those who do and assemble the best team possible.

0" 1alue your employees. They also !now how to !eep employees happy and productive. /enowned

business builders carefully watch over their employees li!e a shepherd over a beloved floc!. They are

!ind$ respectful$ encouraging and highly supportive. This uni+ue attribute is one of the powerful

characteristics of award0winning entrepreneurs.

!2" Establish a winnin/ culture" They !now that shared values$ philosophies and behaviors align

and combine to determine the future success of an enterprise. They establish a positive culture that

inspires and motivates wor!ers.

!!" 3all upon mentors" They call upon individuals with experience$ s!ills and a networ! to guide

them.

!$" 3ommunicate constantly. They regularly communicate with employees$ vendors$ investors$

suppliers and customers about what#s happening in the business.



Risk in startups and its smart mana/ement

There is an old saying that good lawyers run away from ris!$ while good businessmen run towards

ris!. (ntrepreneurs see 1no ris!2 as meaning 1no reward.2 "n reality$ all ris!s are not the same. 3any

ris!s can be managed or calculated to improve growth or provide a competitive edge$ while others$li!e s!ipping +uality chec!s to save money$ are recipes for failure.

The challenge is to avoid the bad ris!s$ while actively see!ing and managing the smart ris!s. There

are no guarantees in business$ but it pays to learn from the experiences of entrepreneurs and business

experts who have gone before you. As a long0time mentor to entrepreneurs$ here is a collection of

smart ris!s that investors loo! for in new startups:

!"#ocus on a tou/h customer problem rather than a fun technolo/y. "nvestors hate technology

solutions loo!ing for a problem$ due to the high ris! of no customers. "f the customer need is obvious

and large$ the calculated ris! is in the +uality of the solution$ the team$ and mar!eting. These are ris!s

that can be mitigated with the right resources.

$"Schedule fre4uent updates to your solution to maintain /rowth" Assuming that one can +uic!ly

recover after competitors !ill your cash cow is not a smart ris!. 4ne need a plan to regularly obsolete

its own offerings$ with continuous innovation$ before customers send a negative messages. "t#s hard

to recover from a tarnished image.

%"Plan to deliver a family of products5 rather than a one6trick pony" (ven a great initial product$

with no follow0on$ won#t !eep you ahead of competitors very long. A smarter ris! is to build a plan$

with associated greater resources$ that will put one in position to expand your product line and !eep

one step ahead of competitors.

'"7mplement a modern real business model . )roviding everything free$ and growing users to the

max for years$ is a high ris! approach re+uiring deep poc!ets. /is! is more manageable with

subscriptions and even free minimum pricing. (ven non0profits need revenue to cover their costs$

and continue to provide services. 5ind a strategic partner to accelerate growth. (veryone wants to

forge ahead all alone$ and !ill every competitor in sight. Almost always$ ris!s are more predictable

when you use competition for access to new customers$ economies of scale$ and shared resources.

5inding win0win deals is a manageable ris!$ versus a battle with one winner.



+"Use metrics to measure results of marketin/ initiatives. Too many entrepreneurs put all their

resources in one big ma!e0or0brea! effort they can#t measure$ or they count on word0of0mouth and

viral mar!eting$ which are totally unpredictable. " li!e mar!eting plans that come from both inside

and outside the box$ but have milestones and measurements.

,"Recruit the best team members and provide incentives" Trying to save money by recruiting

family members$ or hiring only interns$ is a bad ris!. %reat team members may ta!e more time to

find$ and cost you stoc! options$ but a +ualified and highly motivated team that stretches your budget

is a good calculated ris!.

-"(uild your business with minimum outside fundin/. 3ore money is not more li!ely to solve

your problems or reduce your ris!. "nvestors !now that startups with too much money fail just as

often as those with not enough. Strategically$ you need a plan to survive through organic growth$

with outside funding to effectively accelerate scaling.

0"8on9t rely on conservative forecasts to reduce risk" "nvestors don#t fund conservative forecasts$

nor wildly optimistic ones$ since both imply a lac! of commitment or homewor!. 4pportunity and

revenue projections based on deep mar!et and customer analysis are a smarter ris!. 3easurements

and business intelligence along the way also mitigate ris!.

!2"(e a leader rather than followin/ in the footsteps of another. 3any entrepreneurs thin! they

can reduce and predict ris! by emulating previous winners. 6ut stepping into a crowded space tosteal customers is more ris!y than attracting new customers loo!ing for a solution. 7ustomers li!e

leaders$ not followers.

The ris!s you want to ta!e are the ones that you planned for in your resources$ set up metrics to

measure$ and manage on an ongoing basis. All the rest are bad ris!s$ including problems you didn#t

anticipate$ competitors you didn#t !now about$ and customer expectations that you can#t meet. An

age0old measure of startup health is how much time top executives spend on containing bad ris!s$

versus proactively exploring new ris! opportunities. "f the majority of your time is in recovery mode$your whole startup is li!ely a bad ris!.



3orporate :ob 1s Startup World

4ne graduated from college$ degree in hand ,or in the mail-$ and you have a couple of job offers on

the table. 4ther than being one of the luc!y graduates in a wea! economy$ you have a choice to

ma!e. 4n one hand is a high0paying entry level position at a reputable brand in your field. 4n theother hand is a job offer from a small startup that is just !ic!ing off. 8ou9ve seen their product$

believe in their mission$ and li!e their approach$ but aren9t sure you want to ta!e on the ris! of

wor!ing at a startup. 8ou9re leaning toward that corporate job and good pay with nice benefits. The

smart choice.

4r is it?

ere are reasons why one should ta!e the plunge and enter the startup world instead.

!" ;ou<ll have more responsibility" 'or!ing at a startup probably means you9re part of a small team$

most li!ely in the single digits. 6ecause of the nature of having such a small team$ there is probably

nobody else in the company who has the same s!ill set as you$ approaches problems in the same way

you do$ or even thin!s the same way you do.

$" ;ou<ll be /iven more opportunities" most startup jobs won9t pay as well as some of the bigger

corporate and business jobs. 8ou ,or your degree- may be worth more than a startup is able to pay.

6ut wor!ing at a startup offers a different type of reward: an incentive0based system that isn9t based

on dollars$ but rather in s!ills attained and opportunities sei*ed. The experience will outweigh the pay

cut.

%" ;ou<ll be able to do a lot of different thin/s" 4ne of the biggest complaints one hear from peers

who have entered into a more0structured$ corporate position is that they are generally stuc! with their

main tas! and don9t get to branch out into other areas. 'hether it9s writing$ designing$ filling out

spreadsheets$ or any other tas!$ it9s usually a one0person0fits0one0tas! !ind of position. 'or!ing at a

startup will allow you to try on a lot of different hats$ even that weird one that you didn9t thin! you

would ever li!e$ but find out that you did.

'" ;ou will learn from true innovators" )eople who start their own business have a different mental

and professional ma!eup than those who have never gone off to create something of their own.

(ntrepreneurs are defined by seeing a problem and thin!ing of an innovative and original way of

addressing it. 6ecause of this innovative nature$ entrepreneurs are some of the best people to learn



from. They approach problems differently$ are constantly finding solutions$ and are driven to ma!e

the most out of their time and wor!.

)" ;our work will be reco/ni=ed >as will your failures. at a startup$ it9s nearly impossible not to

notice a job well done or to give credit where credit is due. "f you succeed$ the small team willrecogni*e it instantly$ and the praise and glory is yours to bas! in. Spread your arms in glory$ my

friend$ your wor! has been recogni*ed. 4n the flip side of that coin is that it9s also really easy to see

when you9ve screwed up. 5or two reasons$ this is a good thing. The first is that it9s nearly impossible

to slac! off to. 'ithin a few days$ your coasting and slac!ing will be noticed and the rest of the team

will wonder why they are wor!ing harder than they have to. That !eeps you focused and on your

game. The second reason is that because failure is easier to notice$ you9ll ma!e sure to eliminate

mista!es in order to avoid disappointing your colleagues. Stay focused$ startup employee$ and your

successes will be recogni*ed and your failures minimi*ed. And when the rest of the team says ;'e

couldn9t have done it without you$; you can be confident that they mean it.

+" ;ou<ll work in an awesome atmosphere"

<et me count the ways:

• " wear jeans to wor!. "n the summer$ " wear shorts and sandals.

• "f there isn9t at least one really good jo!e in an hour$ it9s probably a slow day.

• (veryone else who wor!s at a startup has the same drive and excitement for creation as you do.

• The startup community is a great$ close0!nit group. All around you$ people are coming up with

innovative solutions to age0old problems or ma!ing that new tool that simplifies or enhances your

life in some way. That entrepreneurial spirit is contagious$ and if you don9t feel it or catch it$ then

you9re actively avoiding it.

," ;ou<ll learn to be fru/al" 'or!ing at startup probably means that money is tight. 'hether you9ve

been showered with investor love or the founder has a really wealthy uncle$ the company will still be

thin!ing of ways to do more with less. o extravagance$ no frills$ no extraneous boo*e cruises.

"nstead$ the business development intern will learn how to design and code the blog$ the writer will

sometimes do the dishes$ and at the start you9ll find a way to fit nine people around an eight person

table. This frugality and monetary responsibility will undoubtedly bleed into your own life as well$

and you9ll end up finding new ways to find fulfillment other than burning the money you earn.

"nstead$ you9ll probably discover a joy in creating and doing$ rather than consuming. 8ou9ll find

happiness in being part of a team that is trying to ma!e other people9s lives easier$ more fun$ and



more manageable. 8our entire life will ta!e on a meaning of creation$ and you9ll be more energi*ed$

both physically and mentally$ to ta!e on new hobbies and start your own personal projects. "n the

startup world$ it9s all about creating more and consuming less.

-" ;ou<ll be instilled with the value of hard work5 ownership5 and self6sustainability" 3aybemore important than any other benefit of wor!ing at a startup is the reali*ation that hard wor!$

creative thin!ing$ and tenacity are worth a whole lot. 4nce you9ve created something of your own$

something tangible and whole$ something you can touch$ feel$ or use$ you really begin to appreciate

personal ownership. 5or those who do not actively create$ or are continuously creating for someone

else9s benefit$ it9s difficult to understand the great importance of personal ownership and the liberty

needed to pursue that ownership. 'or!ing at a startup and spreading the news of your team9s product$

a product that you helped bring into existence$ instills the value of that ownership and gives you

pride in your wor!. "t is this pride$ in your team9s hard0wor! and ability$ that teaches you the

importance of protecting those who do create innovative solutions and ta!e ris!s.

'or!ing at a startup also means that you and your small team are the only people responsible for

your success. 5or some$ that may trigger a response to go crawl into a corner and hope someone

comes and spoon0feeds them their paychec!. 5or others$ it9s the greatest motivation there is. To be cut

off from relying on others to provide for you will undoubtedly surface s!ills and a determination that

you didn9t !now you had. At a startup$ that natural wish to be self0sustainable is magnified and

multiplied$ triggering the do0or0die attitude that is often the difference between success and failure. o matter where you go after your stint at a startup$ and especially if it is to go off and create a

company on your own$ that need to be self0sustainable$ and the s!ills you pic!ed up to ma!e that

possible$ will power everything that you do.

Enou/h of School



(ntrepreneur who dropped out to do business

.ow to Startup?



Edelweiss An inspirin/ Success Story



(delweiss is one of "ndia#s leading diversified financial services %roup. (delweiss offers a large

range of products and services spanning across asset classes and consumer segments. "ts businesses

are broadly divided into 7redit including /etail 5inance and Debt 7apital 3ar!ets$ 7ommodities$

5inancial 3ar!ets$ Asset 3anagement and <ife "nsurance. The group#s research driven approach and

proven history of innovation has enabled it to foster strong relationships across corporate$

institutional and individual clients. The <ife "nsurance$ /etail 5inance including ousing 5inance$

3utual 5und and /etail 6ro!ing businesses = both online and offline formats$ have paved the way

for (delweiss to cater to the large retail client segment. (delweiss# presence now covers >@ offices

in >B cities including eight international offices with B$BBB employees catering to over BC>$@@@

clients across various businesses in retail and wholesale segments.

Rashesh Shah 6 3hairman and 3E@

/ashesh Shah$ 7hairman and 7(4 of the (delweiss %roup has over twenty years of experience in

financial services in "ndia. )rior to founding (delweiss$ he wor!ed with "7"7"$ then "ndia#s premier

industrial development ban! and today its largest private sector ban!. "n E$ encouraged by the

opportunity in the financial services sector as a result of economic reforms and liberali*ation in "ndia$

/ashesh founded (delweiss with initial e+uity capital of "/ 7r ,FSD >B@$@@@-. Since then$

(delweiss has grown into a large diversified financial services house offering 7redit$ 7apital 3ar!et$

Asset 3anagement$ ousing 5inance and "nsurance products to a wide range of "nstitutional$

7orporate and "ndividual customers. 5rom @ employees in >@@@$ (delweiss is now G$B@@ employees

strong$ with a net worth of over FSD B@@ 3n.

/ashesh#s focus on innovation and his passion for growth through expansion into relatedHadjacent

mar!ets has been a !ey differentiator for (delweiss. Fnder his leadership$ the company has

combined growth oriented entrepreneurship with a strong focus on ris!. The company#s consistent

growth can be attributed to the culture of ownership and partnership that is nurtured amongst the

employees of (delweiss. A pioneering move to reward those who built (delweiss with (S4)s has

resulted in one of the most broad0based employee0ownerships among financial services companies in

"ndia.



/ashesh has served on the 6oards of various companies and public institutions. e has in the past

served on the (xecutive 7ommittee of the ational Stoc! (xchange and has recently been appointed

as 7hairman$ 3aharashtra 7ouncil of 5"77". e also 7hairs the ational 7ouncil on 7apital

3ar!ets formed by ASS47A3. e has been nominated to the (xecutive 7ommittee of a proposed

FS 0 "ndia "nvestors 5orum. is academic +ualifications include an 36A from "ndian "nstitute of

3anagement$ Ahmedabad$ a Diploma in "nternational Trade from the "ndian "nstitute of 5oreign

Trade$ ew Delhi and a 6achelor9s Degree in Science from the Fniversity of 3umbai.

6esides writing regularly for various leading business dailies and publications in "ndia$ /ashesh#s

views on the "ndian economy and policy issues are regularly sought by leading "ndian and global

business journals. e is also a regular spea!er at various industry and economic forums.

Among the several accolades /ashesh has received$ are the I(ntrepreneur of the 8ear# award from

6ombay 3anagement Association ,>@@0>@@- and the ISpecial Award for 7ontribution to

Development of 7apital 3ar!ets in "ndia# by Jee 6usiness at the "ndia#s 6est 3ar!et Analyst

Awards$ >@.

An etract of an interview conducted by Rashmi (ansal which briefs about the startup

/ashesh Shah came from a purely commercial$ business family. (verybody in the family had always

been into business and ironically that was the reason why he decided to brea! the mould.

1/unning a business did not have the same status or mar!et value as a professional$2 he felt. That

too a business dealing in exercise boo!s and stationary items.

After graduating from K7 college with a 6Sc in statistics$ /ashesh did an ""5T course and was

wor!ing with an export company. 6ut he realised that a one year course was not an I36A#. So he sat

for the 7AT exam. The first time he tried very hard$ but got into one of the other ""3s. is heart was

set on Ahmedabad. So he gave it a second shot and this time$ got through.

/ashesh had always been !een on finance and joined "7"7" from campus. This was the time that

liberalisation was happening. /ashesh was with the 9export group9 of "7"7" which handles companies

li!e "nfosys$ 3aste!$ Fnited )hosphorus 0 high growth$ entrepreneurial companies. "nfosys was$ of



course$ a very small company at that time but it was exciting to see so much entrepreneurial activity.

6ecause until then$ big business was basically the turf of the old$ established groups.

/ashesh realised that this new set of entrepreneurs would need capital. Fp until then$ all the capital

needs of the industry came through "7"7"$ "D6" and state ban!s. 6ut if we loo! at the FS$ theinvestment ban!s and the capital mar!ets are very important. The mar!et for those services was

poised to ta!e off in "ndia. /ashesh thought it was a good idea to start an investment ban! in "ndia

focused on high growth companies and capital mar!ets. 5riends wor!ing at %oldman Sachs thought

it was a good idea as well.

This was around IG0. 1The decision to +uit was relatively easy$2 he says because wife Lidya was

wor!ing with "T7 7lassic. She then shifted to )eregrine$ which was an 37 and paid well. Lidya

encouraged /ashesh to ta!e the ris! 1'hy don9t you try it$2 she said. 1'hat is there to lose?2

And so /ashesh too! the plunge in 3ay B. e estimated it would ta!e B0E months to go into

business but it too! much longer. The phone line too! its time coming. So did the people.

'hen /ashesh announced that he was leaving to start his own company$ his head of bac! office and

secretary both came up and said$ 1'e want to go with you$ wherever you go.2 6ut when he offered

them$ and two others$ appointment letters$ they all found reasons to bac! out.

1" realised that when you want to hire people$ having an office with a computer$ fax machine and

receptionist matters a lot. )eople want to wor! for what loo!s li!e a real company. They don9t want to

wor! for ideas.2

The idea became (delweiss 7apital in 5ebruary E with one partner on board 0 Len!at

/amaswamy$ a colleague at "7"7". )ooling in their savings and some borrowing they raised /s

crore$ bought a 7ategory " license and went into business.

(very entrepreneur hopes to latch onto a trend early on. "t9s called the Ifirst mover advantage#.

(delweiss spotted a trend 0 which was great. 'hat it hadn9t rec!oned with was how long it wouldta!e for the trend to bear fruit.

1'hat one had not expected was that after liberalisation$ "ndia would go through 0@ years of a very

hard time 0 from B to >@@>. "f you remember$ in I$ the index was at $B@@. "n >@@G$ the index

was at G$@@@. Adjusted against the inflation$ the mar!et had lost almost @M of its value.2



Fnfortunately or fortunately$ (delweiss came into existence just as this down cycle started. The idea

was that the economy will grow and hence there will be a need for investment ban!ing but it it too!

several years before there was any real growth. The first couple of years were very hard 0 the

economy had slowed down$ interest rates were very high. There wasn9t enough business for

(delweiss.

6y this time$ /ashesh had realised that unli!e what they teach you in 6school$ life rarely goes

according to plan. The initial plan was to have a revenue of /s G@ la!hs in the first year$ /s B@ la!hs

in the second$ /s crore in the third$ /s .B crores in the fourth and /s > crores in the fifth year. The

company actually ended up doing > la!hs in the first year$ GB la!hs in the second and > la!hs in the

third year 0 which was the worst year in its history.

5ortunately$ they were always able to ma!e ends meet and stay Iprofitable#. 4f course$ the partners

paid themselves very little for the first five years 0 about /s G la!hs a year N a bonus. A far cry from

the /s G@ la!h p.a. earned in the last job&

16eing very enterprising$ we always made sure that we had some advisory assignments$ and we !ept

our capital costs low. So we were able to !eep our heads above water.2 Keep afloat and eventually

you manage to flag a passing vessel. An opportunity of some !ind which ta!es you places.

5or (delweiss$ this opportunity was the dotcom boom. 1"n mid0I$ things started moving. The

internet$ "T sector and private e+uity boom first started and we capitalised on that.2

Thus$ it happened that in the fourth year$ (delweiss did close to one and a half crore and in the fifth$

/s crore. 5ar more than the promoters had expected or anticipated. 4f course$ these boom years

were followed by a slump in >@@. 6ut (delweiss had li+uid capital and with all the internal accruals$

decided to go out and expand the business. "n what was to be a crucial strategic decision$ the

company ac+uired a small bro!erage. The idea was to not just be a corporate finance advisory house$

but to broadbase the business.

The interesting thing is that in >@@$ almost everybody was getting out of the bro!ing business. 6ut

(delweiss was clear that if the capital mar!et is going to be important$ then the bro!ing platform has

to be important. The company too! a contrarian view and went ahead$ spending a fair amount of

capital on the ac+uisition.



'hich goes to show that if you fundamentally believe in your business$ you aren9t guided by

Ipopular opinion#.8ou go by your own gut feel and put your money where your mouth is.

4f course$ the bet too! a while to pay off. "n >@@@$ (delweiss had just @ employees. 6y I@G this

number was up to GB. 6ut >@@> and >@@G were once again very tough years$ in "ndia and globally.The internet boom was over$ no capital was available and the mar!et was down. 5orward trading had

been banned and there was the Ketan )are!h scam as well.

So how did (delweiss manage this period?

1See$ we were well capitali*ed for the si*e that we were at that time. Some amount of capital always

helps you in the lean days. Secondly$ being a very entrepreneurial organisation$ we always !ept

loo!ing for opportunities and thin!ing out of the box. Thirdly$ our costs were very structured. 'e had

given options to a lot of employees.2

"n fact$ when (delweiss started$ it had the "nfosys model in mind. 6efore starting$ /ashesh had gone

to arayana 3urthy for advice.

1'hen we started$ we had an offer from an industrial group for a B0>@M OL. "t was a very attractive

offer$ this extra capital. After all we were ex0employees of "7"7" and our salaries had been low. 6ut

one valuable advice from 3urthy was: I%ive capital to people who add value$ or to strategic partners.

Don9t go for capital for the sa!e of capital#. 'e followed that and it has been very useful for us.2

The company did ta!e in capital in the year >@@@$ and delivered an x return to its investors in five

years. 16y now the same investment would be C@0@x$2 /ashesh adds.

Spea!ing of patience$ the people who did believe in the company and stuc! by it did well when

(delweiss went public in ovember >@@C. And we9re not tal!ing about a handful of employees but

BB@ of the $@@ on the rolls. 7lose to >BM of the company is in fact held under (S4)s. As a result$

fixed compensation at (delweiss has been more reasonable though the variable compensation is

aggressive.

This helped !eep costs under control. 1"t9s an 9owner9 mindset rather than Iemployee# mindset. So if

your +uarter is bad or year is bad$ people are still thin!ing li!e owners and that helped a lot in the

tough years$2 says /ashesh.



1'e were clear that these were business cycles and each organisation is !nown by how well it

encounters these cycles. 'e thought$ if you survived between >@@ and >@@G$ you could survive

almost anything&2

5rom 4ctober >@@G$ (delweiss started expanding once again. 6y then the company had G0 businesses 0 private e+uity$ arbitrage$ investment ban!ing$ insurance and bro!erage. 6ut what about

9core competency9? "s that another irrelevant 6school concept?

1There is something !nown as an intensive and extensive approach to a thing. Should we go more

deep into one area or should we be more broadbased? istorically$ "ndia has been a very large

mar!et$ but more broad than deep$2 says /ashesh. And hence$ it ma!es sense to drop many different

anchors to !eep your company in place.

There is the example of /eliance which started with petrochemicals$ then got into trading yarn$ fibre

manufacturing$ refining$ exploration and now$ even retail. This is what you call growth through

Iadjacent mar!ets#. /ashesh also recalls the case of i!e$ which has footwear$ apparel and

e+uipment. 'hen they started$ i!e was into shoes. Then they got into apparel for tennis$ then golf

shoes$ golf apparel and e+uipment.

18ou go on changing only one parameter$ either the product or the client parameter and you !eep on

growing in the adjacent mar!et$2 says /ashesh.

6ut does every small company have the bandwidth to juggle multiple balls? After all$ entrepreneurs

are never short on ideas$ where they often fail is properly executing those ideas.

'ell$ before expanding$ /ashesh believes one needs to loo! at G0 things. 5irstly$ have you

successfully entrenched yourself in that space? 1Lery often$ you will try something and find it

difficult$ competition hai$ and you go to the adjacent mar!et. 6ut going to the adjacent mar!et

because of that is not a good reason.2

"n the case of (delweiss$ the company started with investment ban!ing but in the year >@@@$ the si*eof that mar!et was about /s B@ crores. 4f this$ (delweiss was handling business worth /s B0E crore$

which was G0M of the mar!et.

"n investment ban!ing$ any one player getting more than a BM share is extremely rare. So clearly$

growth had to come from elsewhere. That is why the company turned to bro!erage. The bro!erage



mar!et then was /s B@@ crore 0 a bigger space than i0ban!ing. And that9s how (delweiss made every

decision about its growth 0 loo!ing at the mar!et si*e and the opportunity in that.

Secondly$ it9s very important to have enough management bandwidth or ownership bandwidth. So

when you go into I6#$ IA# is still entrenched. At (delweiss$ senior people were owners$ and so thecompany did not lose any !ey people through the expansion process. 5or example$ Len!at continued

to run investment ban!ing$ but somebody else started running bro!erage.

The third important thing is that it has to be a compatible adjacent mar!et. 'hich means an "T

software company getting into hardware$ or vice versa. ot "T branching into real estate& 6ut the real

problem is not choosing how and where to expand but the entrepreneur realising he cannot be 3r

Know0it0All.

14ne of the first things that " did was$ " stepped bac!. " decided that " will not have a centre of

gravity or bias towards any one business$ individual partners will handle that.2 6ro!ing is a very

different business from investment ban!ing. "nstitutional bro!ing and individual client bro!ing are

also very different. 8ou have to let each develop$ create its own uni+ue culture. <i!e !ids in a family

0 no one li!e the other$ but all feeling well loved.

Another strong support came in the form of Lidya Shah coming on board. "t happened li!e this. "n

the year >@@@$ Lidya and /ashesh had their second child. Lidya decided to bow out of investment

ban!ing which is client facing wor! and involves extensive traveling.

This was also the time when (delweiss was loo!ing to scale up. So /ashesh as!ed her to handle all

the bac!end wor!. This turned out to be a blessing in disguise.

"n smaller firms$ it9s hard to get a senior person handling areas li!e /$ finance and admin. So the

7(4 often has to get personally involved in these aspects$ eating into crucial management time and

bandwidth. "n that sense$ /ashesh feels$ he was very fortunate to get Lidya9s expertise$ on a part

time basis.

The idea was that she would help out for a year or two. 6ut by >@@G$ when she was originally

planning to exit$ (delweiss had started growing at brea!nec! speed. The company went from GB

people to @@ people$ then >@@. >@@ became GB@$ and then swelled to E@@. Lidya finally +uit in

August >@@C$ but continues to head the (delweiss 5oundation.



1'or!ing with Lidya was easy and hard and normally " don9t recommend that to most people

because there are stresses when your spouse is the 754 and reporting to you.2 Separating the

personal and professional roles becomes an issue.

1Secondly$ the internal perception 0 you don9t want anybody else to have extra authority because shehappens to be your spouse. Thirdly$ how do you interact with each other in the public arena? So we

ac!nowledged these issues and set certain ground rules.2

5or example$ /ashesh and Lidya never ate lunch together. They carried separate dabbas. 6ut there

was one area which they were never +uite able to resolve 0 1'e did end up carryingwor! home.2

The positive side of wor!ing together was having someone you could completely trust handling two

crucial bits of your business 0 people and capital. owever$ /ashesh is clear about what is most

valuable. 1" believe that entrepreneurship is not all about assets$ it is about emotional energy as

aspirations.2

/ashesh is a strong believer in the I month plan# and long term aspirations. 1'e always

differentiate between a plan and an aspiration.

There is always a short term plan$ but there are always long term aspirations.2 'hen (delweiss was a

tiny financial services company$ wor!ing on a /s crore business plan$ it had aspirations of someday

becoming the "ndian answer to global giant %oldman Sachs.

1'hat happens is that we as human beings$ as entrepreneurs$ all of us overestimate the short term

and grossly underestimate the long term. And this is what ta!es away the emotional energy because

in the short term there are setbac!s. The short term !eeps trying you.2

So how do you !eep your energy up? This is where aspirations come in. The dream is about more

than financial and +uantitative targets. The Ibigness# of the dream is what !eeps you going$ and yet

!eeps you anchored.

And yet$ scaling a business can be unglamorous 0 execution is !ind of boring. "t means doing a lot

more of the indirect wor!$ spending a third of your time in hiring and people related issues. 14n a

5riday afternoon$ somebody is crying$ somebody is cribbing$ somebody is not happy. "t is very

tiring&2

And more so because entrepreneurs are addicted to excitement.



Scaling up meant giving up the part of investment ban!ing /ashesh enjoyed the most$ clinching

deals. 1'hen you start off$ you are worried about how to do things. Then$ you get other people for

that$ and you worry about$ what to do. Then after some time$ even that is ta!en care of and you only

try to figure out who will do it. The more indirect it becomes$ the more unglamorous it becomes.2

8ou sacrifice glamour and build an institution. (delweiss 7apital listed on the 6ombay Stoc!

(xchange on December >$ >@@C. The ")4 was over subscribed times and raised over /s C@@

crores for further expansion (delweiss cloc!ed revenues of /s [email protected] crores in 58@ vs /s GC.CE

crores in 58@C. ow that#s what you call explosive growth&

'hen you thin! of great companies$ large companies built from scratch$ you assume they are built on

blood$ toil$ sweat and family time. Dogged perseverance. >xC effort.

1This >xC$ GEB days a year is something that " have not seen with many 7(4s. "f you do that$ it

means your organisation is wea!$ you are not scaled up. 8ou have not prioritised$ you have not

institutionalised.

1" thin! there are phases. 3any a times there are a couple of months in a year that are very tiring

because some business is having a problem. There is restructuring$ there are long meetings. So then

you end up wor!ing even on Sundays. The rest of the time it is fairly o!ay. 6ut it#s not any harder

than when " was wor!ing for "7"7". "n 6ombay$ @0 hours is normal&2

/ashesh goes to the gym thrice a wee! and also spends many wee!ends at his farmhouse in Alibaug.

e reads a lot$ loves to catch movies on 5riday nights and also ta!es two holidays a year.

'hich means on the wor!0life balance front$ there9s hope yet for us all&

Advice to youn/ entrepreneur

7ash flow is underestimated by most people 0 the amount of cash flow. "f it is possible$ be a littleovercapitali*ed. There are lot of 7(4s who are good product guys$ they are great operations guys.

6ut they don9t !now finance at all. "n times of adversities$ these are the people who suffer the most. "

thin! being financially savvy is a re+uired part of the business.



ever have e+ual partners. 8ou start off as e+uals$ but then one does more$ one does less$ one is the

public face$ the other is not$ and then slowly the whole thing disintegrates. " have witnessed it happen

in my family between my father and uncles$ and with many other partnerships as well.

So there should be a Ifirst among e+uals#$ who has a slightly higher e+uity share. That9s what 3r arayana 3urthy advised us and that9s what " advise my clients now. Also$ there shouldn9t be too

many partners. 'hen we started off$ we were supposed to be five people in the company 0 Len!at$ "

and three others. 6ut the other three did not join and " thin! that was a good thing to happen because

five people would have been difficult to manage if the environment became hostile. These days "

advise people 0 two or four partners is o!ay$ but ideally not more than four.

The only other thing that " would li!e to add is that have the staying power$ the emotional staying

power. 6usiness will not be as per what you had planned$ there are going to be hardships. " have seen

a lot of businesses close up because after a lot of hardships$ at that !ey point ,li!e the third year

which was the worst year-$ we never thought$ 14h$ is it worth it?2'e just !ept going on.

6ut if you are wor!ing at industan <ever or any such organisation$ worried about status$ worried

about the house in south 6ombay and all that$ the choice is then very tough. " thin! the loss of status

is what really hurts.

From left) Rujan Panjwani, executive director; Deepak Mittal, CEO, Edelwei !okio "ife

#nurance; Ra$e$ %$a$; %i&' (nt$on'; iman$u *aji



5irms li!e (delweiss$ ""5< oldings and 3otilal 4swal 5inancial Services morphed themselves into

full0fledged financial services firms out of the urgent need to grow. 6ut very few companies in the

capital mar!et space have managed to scale up business$2 says a research head at a 3umbai0based

financial services firm$ re+uesting anonymity. )ra!ash$ li!e other experts$ agrees that (delweiss#s

natural transition would be to become a ban!: 1That is the long0term trend in "ndia#s financial

system.2 "n the case of (delweiss$ this move is particularly inevitable since it isn#t in a niche business

li!e 7holamandalam 5inance or micro0finance firms$ for example.



4ne of (delweiss#s first 3PA deals was to help the sale of

Thiruvananthapuram0based )eninsula )olymers to Oapan#s

Terumo 7orporation in . This set the ball rolling and

(delweiss in the next two years helped companies li!e /ediff$

"ndia "nfoline ,later called ""5< oldings-$ Da!sh and

(ducomp raise capital successfully. "n the first five years of

operations$ Shah and /amaswamy too! /s >B$@@@ per month

as salary to !eep costs low. Shah fondly calls his capital mar!et

division the 1intellectual hub2 of (delweiss$ as long0standing

business relationships were built there. Till >@@0@$ the capital



mar!et business comprised E@ percent of (5S<#s business. Today$ it is down to >@ percent$ though

volumes have grown.



4ne of the strategies which (delweiss was fortunate withQfinding the right people for the right job

Qwor!ed for them in their next phase of expansion. Siby Anthony$ a director with Asset

/econstruction 7ompany ,Arcil- "ndia$ decided to join (delweiss in the group#s asset reconstruction

company ,A/7-. The A/7 is part of the asset management business$ along with private e+uity and

mutual funds. (delweiss#s asset management division has over RG.B billion worth of assets under

management.

1'hen we started$ no ban! was selling assets to A/7s. 'e thought we should get into distressed

credit: 6uying out distressed assets at deep discounts and trying to revive them$2 says Anthony$ 7(4

of (delweiss A/7 in which (5S< holds a . percent sta!e. (delweiss A/7 started with /s B

crore seed capital from (delweiss and invested in three assets: A denim textile manufacturing unit in

Ahmedabad$ a poultry unit in yderabad and a mil! processing unit in )unjab. "t exited all these

investments by September >@.

The A/7 team has grown to @ in >@ from just three in >@@. 6y December >@$ it had a total of

/s $B@@ crore as assets under management$ with cash invested by (delweiss A/7 being /s $@@

crore in over B@ companies. Arcil$ "ndia#s oldest A/7$ has AF3 estimated at /s @$@@@ crore.

And that tells a story$ a story that has won Shah plenty of appreciation$ even from among his

competitors. The chief executive of a leading financial services firm bac!ed by a large conglomerate$says$ on condition of anonymity: 1/ashesh#s model is similar to that of %oldman Sachs. e has built

businesses flan!ing his core business of capital mar!ets. " am a great admirer of his strategy.2

e isn#t flattering either.

"n >@ years$ Shah and his team of nearly E$@@@ employees have built a +uasi0ban!ing empire. e has

ensured that when the /6" opens up the sector on tap and if (delweiss gets the ban!ing licence$ it

wouldQat the leastQbe running on a flat surface. Shah is confident that "ndia is on the path to

becoming a RB0trillion economy by >@>B. 'ith about to >@ large financial institutions and ban!s$

the opportunities are plenty. 6ut this marathoner admits that the road ahead is 1challenging2$

particularly as it see!s to gain mar!et share in new businesses.



.ow to SU33EE8 in a startup



(iblio/raphy



. 5orbes "ndia 3aga*ine>. 'i!ipedia3. 1Stay ungry Stay 5oolish2 by /ashmi 6ansal

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