INDIAN START-UPS SHOULD TAKE A FEW GREY HEADS ON BOARD, WHO CAN HELP THEM BREAK OUT OF THE PACK OF THE PACK

STARTUPS ARE in vogue, again. If Bay Area had its Facebook and Zynga, Benguluru has its Flipkart and InMobi. Not a day passes by without some new funding being announced and the promise of yet another hot start-up that is going to transform the landscape. Exciting times definitely for the new graduates coming into the job market! They have better, and more interesting, options where they can get to work on cool technology and game-changing ideas. They can even start off on their own from Day 1 with support from the in-campus incubators, if they are in the iits, bits or the iims. For other colleges there is NEN (National Entrepreneurship Network) whose only goal is to foster entrepreneurship among students.

But at some point of time, the start-ups need to grow up. As they succeed, they will reach a stage where their key challenge will become one of execution. They will need to execute well on a variety of fronts, so they can leverage the lead they have established in the market, scale quickly, and put enough distance between them and their competition. To do this, they will need to bring on-board experienced, and therefore older, folk who can help them scale; who can speed up execution because they have done it before; and who can mentor, train and build a larger team of youngsters. Google had its Eric Schmidt in 2001 when it had no revenue, just an interesting service that had growing number of users. Facebook brought in Sheryl Sandberg as its COO in its fourth year of operations. And these are not the only senior hires. There is the CFO, the VP(HR), the Sales Head and other functional experts who came on board these companies around the same time.

Most of them have a stellar bio-data and have done much bigger things than where these companies were when they joined in. In fact, Sheryl Sandberg talks about this eloquently in her recent Harvard Commencement speech. She says, when she got the Google offer in 2001 (Yes, she joined Google right around the time Eric Schmidt came on board), she looked at it and realised that a) she had no team to manage, and b) she would be ‘General Manager’ of a non-existent, zero-revenue business! But she still took the job, because she believed that she was getting a seat on board of a rocket ship!

Now cut to India. A couple of years back, one of my VC friends put me on to the founder of his portfolio company which, he told me, was growing really fast and therefore needed a strong operations head…and this was a business where operations were a critical part of the company. I went to meet the two founders to figure out what they wanted to do. No surprise — they felt they needed to hire a senior manager — an engineer with 8-10 years experience, they said. A little digging, and I found out that they were getting excellent traction with customers, and had an opportunity to scale and grab a leadership position in the market, if only they are able to execute well. The people they had now, was a young team of 15 agents managing end-to-end transactions. All the more reason, I felt, to bring in an experienced leader who can think long term, and will hire a second level of management to be able to scale quickly. But their fear of hiring a senior person for the role was so high, that the conversation didn’t go anywhere. The company has grown since, but nowhere near the exponential growth that successful start-ups need, to have to break out of the pack. I knew what the deal breaking concerns were here, for I had seen it repeating ‘n’ number of times, with companies at a similar stage of growth here in India. The first and foremost concern is culture-fit — here is a company full of 20-year-olds, and anybody at coo level would be in the late 30’s to early 40’s, a generation apart. How would he fit? Will he think like them? Or would he push them to think like him and thereby kill the start up culture?

Then there is the fear of hiring wrong — if they did hire, then he would be coming in at three or four times the average compensation levels in the company. What if he does not perform? The founders will lose credibility in the eyes of their young team, and it would be a great setback for the ‘employee morale’. Then, there is the money itself — why should we spend so much, when today we can manage with half the budget and half the person — can’t the COO hiring wait for a year or two? Working with many start-ups closely, I have also uncovered another unsaid fear. Why would a high-flying executive, with great credentials and a secure job, join them for a riskier and less-paying role? It may happen in the Bay Area, but here in Bangalore?

On the flip side, there are people like my friends Sunil and Ravi. Sunil has spent over 20 years running the supply chain operations of a large retail chain. He has just quit the job, and is now at a crossroads. Should he go back to a similar role with yet another large retailer? He feels e-commerce looks exciting, and would be the way retail would go in the future. So, his gut tells him that it is the right time to jump into it, even if it means a smaller role or lesser money. But then, how does he make the shift? His network and his friends are all in the old world. Even if he writes directly, what should he ask for? The companies look so small that he would perhaps only fit the CEO role!

Ravi, on the other hand, has been among the lucky few who did get the opportunity to run a start-up, hired by the founders through the friends and family route. His experience, however, has been mixed. While he enjoyed the challenges of building and scaling the company through really tough times, he was bitter about the unwillingness of the founder to let go. As he put it, the accountability was all his while the strategic calls were the founder’s prerogative. Did he want to take yet another chance? Yes, he was clear that he wanted to do it again, but with a few caveats. And,no prizes for guessing what those were! But again, he was not sure how to find the right venture this time around, in the noise and din that is surrounding start-ups today. There are so many such ‘high flying executives’ I meet, who would give an arm and leg to work for an exciting start up but are totally clueless about what to expect and how to go about finding the right one! Should they demand the CEO’s role? Or, at least, a COO designation? Should they insist on a 25 percent hike in compensation, a risk premium for joining in at early stage? Why should they report to founders who are half their age?? What was the team size going to be? And should they insist on a severance package?

And we have the quintessential logjam, with a wide gulf separating both parties. The result is that, while start-ups need the best talent, our brightest are cooling their heels in large established MNCs. The right model that would, perhaps, work for both sides would be a hybrid model where the senior executive comes on-board first on a 6-12 months contract gets comfortable with the team and, then takes a call on committing to a long-term role.

This might also allay the concerns and fears of the entrepreneurs, as they would start appreciating the tremendous value and the multiplier effect that such folks bring to the company. Yes, this would require senior professionals to take a big risk. But then they can always go back to where they came from, if things don’t work out. Isn’t it worth it if there is even a small chance that you can be in Sheryl Sandberg’s shoes??