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India’s top unicorn founders share their experience of building large businesses


India today houses the world’s third-largest startup ecosystem with 36 firms being valued at over $1 billion making them so-called Unicorns. In the year 2020 alone, the country minted over 9 such new Unicorns, despite the disruption to businesses and the economy caused by the dreaded Covid-19 pandemic.

In a session moderated by Sanjeev Bikhchandani, founder of Infoedge, at Prarambh, an event organised by the Startup India initiative, Nikhil Kamath, founder and CEO of Zerodha, Hari Menon, co-founder and CEO of BigBasket, Sridhar Vembu, founder and CEO of Zoho Corporation and Ritesh Agarwal, founder and CEO of Oyo, shared their experiences of building large businesses.

They also took a jab at predicting if India could achieve its goal of having over 100 Unicorns by 2025, and what it would take in terms of government support, regulation changes and ecosystem building.

Right off the bat, it was clear that the founders of the four large startups didn’t think much of the Unicorn tag, arguing that building a business on achieving valuation goals wasn’t the right way forward. Instead, the focus needs to be on building sustainable businesses that solve real needs and the valuations will follow.

“It didn’t actually make much of a difference to us. Valuation is something we as a company, as a group, as co-founders always found to be very mystical. We never really wanted to optimise the business based on valuations, and we were extremely clear on this,” said Menon in response to a question on how it felt when BigBasket became a unicorn.

As for Vembu’s response to how one can build a large and valuable company, he said that apart from the fact that Zoho was built at the right time, in the right segment and when the conditions were right, a lot of the company’s success came from serving the underserved. His second teaching was that entrepreneurs need to be fearless.

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“You need to be fearless, because you are facing giants and much bigger companies than you. I say what’s the worst that could happen? You go back to getting a job. I apply a warfare analogy, where the worst thing that can happen in war is you get killed, but in business war you still live. So it’s actually easier,” Vembu added.

As for the impact of the pandemic itself on these large Unicorn business, three out of the four panelists said that they had ended 2020 as far larger enterprises than when they got into the year. The exception was Oyo, which being in the hospitality business saw 66% of its revenues being eroded due to the pandemic.

But while it was a testing for Oyo’s 27-year old founder Ritesh Agarwal, he said the recovery of the business has been fast globally and that the learning from this time will make the organisation stronger. Oyo’s domestic revenues “was down to nothing” in the initial months of the coronavirus-induced lockdown which crippled the travel and hospitality industry in India. “Hotels were all shut down and revenues went down to almost nothing in India,” said Agarwal, adding that the company had to realign its strategies to the latest trends in order to stay afloat.

On the contrary, Zerodha’s business saw almost no disruption and only upside. Zerodha says it has doubled its user base from 2 million users in 2019 to four million today, taking advantage of the markets which crashed and then recovered strongly, which has resulted in many investors making a lot of money.

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“We were lucky in the sense that a lot of businesses were impacted but it benefited us significantly. A lot of people who were fence sitters and always thought of investing, jumped in during the lockdown,” said Kamath. “Greed is an enabler of virality.”

On what India needs to do to help more companies become as large as their own, Hari said there needs to be some kind of rationalisation of permits to run a business or expand it into new states. Kamath said that the good work of SEBI and constructs such as Aadhaar and KYC have helped it build its business and similar innovations and lesser regulations will continue to help others grow.

For Vembu, government intervention was only required in setting up the rails for innovation. “Broadband is good. I know the work the government is doing in bringing broadband to villages,” he said, adding that it was up to the private sector to grow the industry. For Agarwal, who has had to constantly prove that entrepreneurship was a way of life to his family, the recognition of startups by the government he said was extremely important, giving many more people the confidence to startup.

As for the key takeaways of the conversation summarised by Bikhchandani, who himself built a profitable venture and took it public, he said that entrepreneurs shouldn’t chase valuations, rather they need to solve real problems and if they did so high valuations would follow. On the aspect of how to build a highly valuable company, he said there was no single formula, given that there were two unicorn companies – Zoho and Zerodha – that hadn’t raised a single rupee of external capital, but were able to compete with the best-funded startups.

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