Mindtree Ltd executive chairman and co-founderSubroto Bagchi set up his first company in 1985 in Kolkata when he was 30 years old. The company, Project 21 Ltd an information technology (IT) consulting firm, folded up after three years, forcing Bagchi to seek a job in India’s then-nascent IT industry with Wipro Ltd. Years later, in 1999, just before the dot-com bust, Bagchi and nine others, including then Wipro president Ashok Soota, founded Mindtree. In an interview, Bagchi talks about his learnings from the failed start-up and elaborates on the emotional trauma when Soota quit the computer services company. Edited excerpts:
When I started my first company Project 21, I was 30 years old. The issues were related to social backwardness.
What has happened is while the stigma (of being an entrepreneur) has gone, if you want to start a business, there are many hindrances. Today, social stigma is replaced by spermicidal social behaviour that preys on new and small businesses.
All of them (the venture capitalists and other investors) want you to have a great business plan, they want a marquee customer, they want the product to be ready, and the patents to be filed.
In India, we don’t want to engineer success, we want to inherit success. We still don’t understand what it takes to build. So, on one hand you have banks, venture capitalists, but the most crucial part for a start-up is the period when it’s born to the time that you are ready to scale. This interim period when you are testing an idea is very difficult because you still need an office, a customer and other resources, and the money does not back it then. We all know that corruption is high. The moment somebody opens a shop, that guy becomes easy prey. If you are opening a restaurant, the food inspector will come, cop will come and the first thing he will do is put up a ‘no parking’ sign in front of your shop. There is a quid pro quo there to remove that sign.
The young entrepreneurs are innocent, they want to succeed, put all their energy to create something good. If half of your time is focused on managing the petty intruders, how will you do it?
It’s distressing because here’s a country that could take on the world with its immense intellectual capital and even that social stigma is gone. Entrepreneurship requires freedom of the mind.
In many ways things have changed from the time I built the first start-up and in many ways, we still have made it much more difficult.
I think it was a failure because the business folded up and I realized that it could not go any further and came back to join the industry, joined Wipro. There are many lessons learnt from that.
The first lesson was in terms of what makes a start-up fail usually is not market opportunity. Businesses don’t fail because of lack of opportunity; start-ups usually fail in their first year because the founders part ways.
Another critical lesson I learnt from my first start-up was the issue of undercapitalization. It came to a stage where we couldn’t fund growth. An undercapitalized start-up is a very difficult situation.
It can lead to a lot of heartburn; you suddenly realize that the business is not competing with market forces, but with its founders itself.
Even before you start, you need to have a threadbare conversation with fellow founders on what price will you pay, how long do we stick together, what do we really want.
So when Mindtree took shape, we applied these learnings. We took a good one year to reach a common vision and values. We actually pooled our resources, drove down to Vizag from Bangalore and holed ourselves in a hotel for seven days. I don’t know why we chose Vizag—entrepreneurs are crazy people... We drove in two cars, took 24 hours to reach there. We spent a lot of time asking who we are, what we want from life, etc. We took it very seriously, wrote everything down.
First of all, there is never a good time to say goodbye to a good man. The rational way of looking at it is 13 years is a long time. Even under the Indian Penal Code, lifetime (sentence) is 14 years. And I have told you earlier that most start-ups fail in their first year when the founders separate, so in that sense the 13 years we’re together is a long time. And independent of the vision of the founders, a company has its own destiny and it will play itself.
If you take a long view of time, and look at year 2020 when you will look back, you’ll say it’s a good thing that happened because when a certain amount of churn happens, a company comes back in touch with what’s really important. When that happens, it also means making way for the new, it’s able to look ahead and think by shedding the past.
But having said all that, I would say there’s no good time to say goodbye to a good man. In that moment, it hurts a lot, it’s difficult. Emotions get mixed up. The problem with professional organization like ours is different from those family-owned. You can’t suddenly split up like the Reliance group did between the two brothers. We couldn’t split Mindtree up between father and sons. It brings its own complexities, which makes parting difficult.
The No. 1 job of an entrepreneur is to keep the faith during difficult times. You can’t have a cynical entrepreneur.
It’s a distressing statistic as to how many of them come out of large companies to start on their own. You become numb in big companies.
When Infosys’s first round of stock options happened, people speculated about the new millionaires and what will they do next. You know what happened—people took vacations, bought expensive watches, bought a second house, a second car, nobody started a company.
In order to be an entrepreneur, you have to burn your past, have to kiss your corporate success goodbye and be OK with living the life of a stray dog. If you look at highly successful corporate executives, they are like pedigree dogs—well groomed, well fed and with a collar around their neck. Who will walk them and at what time is predetermined by management.
When you start a company, you are like a mongrel—not sure about the next meal, life revolves around ducking the municipal dog-catchers, fighting with other street dogs. But when you are an entrepreneur, you know like a street dog that you can get up next morning and go anywhere you want to.