By Sanjay Govil, Apr 06, 2016
Sanjay Govil, Indo-American entrepreneur and member of Wharton Fellows Program on the caution young entrepreneurs must exercise to survive in the long run
What do you think about the current start-up boom; will it sustain for long?
The ongoing boom revolves around on one factor — creating platforms for the market that already exists. Take the case of Uber or Flipkart. They bring the buyers and sellers together and offer platforms to both. This is the business model followed by most Indian start-ups. About the possibility of a bust, I would say ‘yes,’ there is a possibility and a significant number of companies will not survive five years or probably 10 years from now.
What are the precautions that an early age entrepreneur should take?
First of all, one must be sure about the idea that one wants to manifest into reality. Entrepreneurship is a tough nut to crack. As a start up can’t access the best talent in the market, the entrepreneur should have the skills to identify the most appropriate talent that is available to start with.
One must also ensure that the control over your company is retained and with the influx of investors’ money, you shouldn’t lose control over the decision making. The plan that you had envisioned can be executed in the same way only if you keep the majority shareholding with you.
Despite going public, I still hold more than 75% of the share holding in the company (Infinite Computer Solutions) that I founded in 1999. Another important factor is to dream realistically. Even I never thought that my company (started with a capital of $1,000 in 1999) will grow this huge (with over 6,000 employees) that the mobile messaging service will be used by 130 million users. If you work hard, and plan well, success happens automatically.
What are the differences in the ecosystem that US and India offer to new enterprises?
In the US, there is active collaboration between universities, entrepreneurs, venture capitalists and the talent availability. In India, all this is available but in unstructured way. However, things are improving here with time.
What role does a university play in promoting entrepreneurship?
The Silicon Valley is supported by University of Stanford and similarly, other entrepreneurial hubs in the US are created as a result of support from universities. For instance, Boston is coming up as a hub of start-ups because of close proximity to Harvard University and MIT (Massachusetts Institute of Technology). Another emerging hub of entrepreneurs is Philadelphia, the seat of University of Pennsylvania’s Wharton School of Business. Even the unicorns such as Google and Sun Microsystems did their nascent beginnings on university campuses. As a matter of fact, the guidance of college professors play a significant role as the teachers are never driven by money but only by the success of their students. They always give the right advice.
How can an entrepreneur maintain a balance between the raising of funds from venture capitalists and still maintain control over the enterprise?
The start-ups should go slow and raise the money only when it’s needed instead of simply accepting it as someone is offering it. To ward off the excess money from the investors, the operating costs ought to be curtailed and the expectations reduced. One should ensure that whatever little is invested should be recovered and the profits are made out of them. A case in point is the huge e-commerce companies of India that are investing the investors’ money relentlessly without caring about the profitability. This might lead to serious issues later on.
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