DARE - Because Entrepreneurs Do

While a lot has been written and debated on the factors that go into making a business successful, we had the opportunity to be a part of an interaction with the master practitioner – Kanwal Rekhi to help us decipher this universal phenomenon and get clear insights which will go a long way in helping businesses be a success. Here are some of the interesting questions that were asked by entrepreneurs, which were answered by him

Kanwal Rekhi, a serial Entrepreneur, Angel Investor & Venture Capitalist is the Managing Partner at Inventus Capital, an early stage VC fund. He has invested in over 60 start-ups including Exodus Communications, Apptivity, Zietnet, PlaceWare, HealthAtoA NexTag Ambit Design, Versata,Instantis and Sierra-Atlantic. Rekhi is also the founding member of TiE.

What is the formula to succeed in your business?
There is no set formula for success of a business. There is a huge element of luck involved. You can do everything right, and still not succeed. Because at the end of the day there are several external factors that affect the success of something. Entrepreneurs should spend a lot of time thinking about the things that they have probably missed out doing.

Even if yours is a fast growing company, with a growth rate of 100 per cent year on year; you as an individual have to grow faster than your business to stay ahead of the game. Else the business will overtake you, and you will be in trouble faster than you think.

As an entrepreneur, you have to go out of your office frequently and connect with your customers. Not to sell, but to talk to them. Your customers are not just there to buy stuff from you; they are also people who can build your future. You need to seek genuine feedback from them, even when your company has grown really big.

The biggest reason for failure of a business is when the competition is underestimated. In every dynamic marketplace, there has to be competition. If you have seen an opportunity, somebody else has seen it too. You should always know that there are entrepreneurs out there who are smarter than you, who are more hard working than you are.

You have mentioned that the entrepreneur has to grow twice or thrice as an individual, compared to the rate at which the business is growing. Does this growth happen along with the business growth, or are there phases in which this happens?
When you have three to five people working for the company, you can manage them and communicate with them easily. When the company grows further and has 15-20 people, it becomes difficult for you to manage them all. This is when you start needing a layer of managers under you, and you have to grow to manage people through other people. This point onwards, you need to figure out ways to make sure that everyone is on the right page; bad news is communicated to you as it happens rather than getting to know about it later, and so on.

You need to understand the difference between a manager and an entrepreneur. A manager, by definition, is a manager of assets – be it capital, inventory, customers, human resources, etc. His job is to make sure that the operations are streamlined, and improve the efficiency by, let us say 5 percent year on year. Managers are streamliners who are incremental in their approach. Entrepreneurs, on the other hand, are innovators and disruptors. Entrepreneurs are not happy with this 5 percent increment, they need 10x instead.

Should the approach be in the lines of: we grow, we introspect, we consolidate, and then we grow again?
I would say this approach would not work. It is something like this: you need to change the tyres of the car when it is running in full speed. There is no time for slowing down. You need somebody to tell you what needs to be done not only for today but also for tomorrow. You need a CEO, whose job is to make sure that the mission is well defined – what is it that you are doing, what is it that you are not doing. His job is to make sure that the right people have been hired and have been given all the resources to get the job done.

How should we keep the key people, who work for us, motivated?
That is what we entrepreneurs do. Even when hiring, you need to hire the best of the people out there. You need to have the convincing power to get a person working for the IBMs of the world to quit that job and work for you instead. One of the attractions for this is sharing of the gains of the business, and the power to execute a lot more responsibilities than he could in the bigger companies. If you are unwilling to share these things, it will be difficult to get as well retain people for your company.

Entrepreneurs are leaders who inspire people. Entrepreneurs need to have the drive and confidence that is contagious. You need to project that everything that has gone good is a job well done by them, and everything that has gone wrong is a fault of yours.

As entrepreneurs, we are more reactive to circumstances than being proactive. How to get ourselves to change from this way of thinking?
There is no running away from being reactive. I would say that an entrepreneurial venture is like driving a high performance car on a mountainous road. You drag to bend on the curves; else you may fall off the cliff. But you do need to keep an eye out for what could be possibly coming next. As entrepreneurs, you need to anticipate what you need to be doing tomorrow. You need to paint scenarios in your head. I don’t think that you should worry about being more reactive than proactive. But you need to spend enough time for looking down the road, and looking at the surroundings around you.

How do you define success and failure: is a million dollar profit a benchmark for success? What level of loss can be called a failure?
This is different for different entrepreneurs. Some people are very happy with ten million dollar company, others are happy at thirty, and some are happy at a billion dollars. It is you who defines success. But there is a market out there, and soon you will find out that either you have to go up or you have to go down. While the definition of success is yours, the market always decides what actually happens to you.

As for failure, if a business fails, it does not mean that you have failed as an individual. Businesses tend to fail for a variety of reasons which are out of your control. The things that you can manage and control, you must do them well. Another measure to gauge failure is as simple as this: if the market is growing 50 per cent year on year, and your company is growing at the rate of 20 per cent. You must, at minimum, grow at the rate at which the market is growing.
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This event was organized by TiE Delhi, and was hosted by eProcBayâ„¢ - The Operations Management Service for Indian SMEs.

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