V G Siddhartha: Invaluable Asset Lost To Valuations?
Authored by Pranhsu Sikka, CEO and Founder, The Pivotals
Today, we mourn the loss of an entrepreneur who brought the blend of coffee to a predominantly tea-drinking nation. Everyone who knew him, worked with him or spoke to him is full of interesting anecdotes on social media about how VG Siddhartha inspired hundreds, employed thousands, and basically put Indian coffee on the global map, long before Starbucks arrived on our shores.
But many other tweets amongst those countless condolences made me sit up and ponder about the paradox of new-age fundamentals of valuations for ventures in India. While VG Siddhartha, in what was apparently his last letter to the company’s Board, wrote that he had ‘failed as an entrepreneur’, it would be fair to say that he became the victim of a process that seems glossy from outside!
All new age businesses seem to be chasing valuations and funds-raising without apprehending the baggage of control, compliances, scrutiny and expectations that come along with that million dollar round!
Why do entrepreneurs dive right at the prospect of a high valuation? Apart from staying ahead of competition, one reason why entrepreneurs seem to be going straight for the money is because of the irresistible deals. According to media reports, startups in India have raised a record $3.9 billion from venture capitalists in the six months ended 30th June!
It’s not bad to have too much cash for your business, but when you get all that money too soon and too fast, it usually steals time from learning, failing, adjusting and building a viable business model. Moreover, once you take money from angels, VCs or other lenders, you will begin to feel your obligations overwhelmingly. Each stake that you buy or sell comes with a bunch of other compulsions.
But it’s not just about valuation pressures that drive most businesses to doom. India is a notoriously difficult place to do business, despite having vast economic potential. The cost of starting a business is astronomical, and the procedures involved can be daunting without ever-evolving local knowledge.
The demise of CCD’s founder will undoubtedly start another debate in some circles – are these first signs of an economy moving towards distress? At least some recent data tends to suggest so. Take this for instance – Hindustan Unilever that was comfortably sailing with double-digit growth not too long ago, has now reported a volume growth of only seven per cent in the last quarter, a fall from 11 per cent in the April-June quarter of 2018. The automobile industry has been hit, too. According to an ET report, five lakh passenger vehicles and 30 lakh two-wheelers remain unsold, plants are being forced to shut down in line with sputtering sales that have hit an 8-year low. Even Maruti, India’s largest automobile manufacturer, has been forced to downsize. Its share prices have plummeted 26 per cent (year to date) in the past year.
While a lot of external and internal factors remain out of an entrepreneur’s control, certain new-age measures could play a big role in keeping businesses (and more importantly the entrepreneurs) going.
How about getting business counsellors on board?
A business counselor will not only analyze your data and pinpoint problems, but also recommend potential solutions, while keeping entrepreneurs aware of the reality of running a business in their current context and keeping them grounded. Afterall, entrepreneurial development is a complex process and one cannot solely rely on funding to remain in the game.
Problems or issues encountered by entrepreneurs are complex and multidimensional, often requiring customized solutions. Many entrepreneurs tend to have professional pressures customized with personal problems which add to their woes. A business counsellor can help them stay afloat during turbulent times and ultimately save them from untimely drowning.
While these thoughts will find resonance amongst some quarters over coming days, one can’t help but mourn the loss of a man who became synonymous with coffee enterprise in India.
About the Author
Pranhsu Sikka is the CEO and Founder of The Pivotals, India's first Business Worries Outsourcing firm with expertise in stakeholder engagement. He has been a strategic communication consultant with over a decade of experience. Pranshu's forte is in being a strategic planner with experience of managing multiple projects and campaigns spread across geographies and time zones. His ability to understand business objectives, map out relevant target audience and plan strategic communication campaigns for various clients have made him a much sought after business consulting strategist in the industry.