Setting Sail

[00:00:00] A low sailor can weather storm but a captain with a skilled crew will conquer the oceans. It is time to assemble your dream team, finding the individuals who will share your vision and bring diverse talent to the table.

[00:00:34] We'll navigate the treasure's water of funding, exploring bootstrapping, investor relationship and financial management. And to ensure smooth sailing, we'll chart a code through a maze of legal and regulatory consideration keeping your ship safe and compliant. This is a very critical moment for entrepreneurs. Am I right? Absolutely.

[00:00:59] In fact this is the best time to become an entrepreneur. The whole world is moving toward entrepreneurship. India is witnessing the highest rate of employees converting to entrepreneurs. So this is definitely a very exciting period for all of us in this world. Why is the reason?

[00:01:17] I mean, you have a full time job because we know our family is the first thing. They will be happy about that. I have a 9 to 5 job. You know? Then suddenly now it's totally changed because before in my generation at least I

[00:01:30] believed that was a dream to have a 9 to 5 job. Now it's changed. Why is it there? Because the needs and wants of people have multiplied. The advancements that's happening, lots of people cannot sustain that within the revenues that they generate of an employment.

[00:01:48] So now people want to get more creative. They want to play larger roles rather than playing a very restricted role. So they want the freedom of their actions, the freedom of their decisions, the freedom of their thoughts, the freedom of implementing their passions.

[00:02:02] So highest number of entrepreneurship are happening now where an employee is converting into an entrepreneur and an entrepreneur is converting into serial entrepreneur. Serial entrepreneur means doing more than one business at the same time. So these are all very exciting and interesting times.

[00:02:18] So you don't feel also because maybe it's first generation, okay? We are talking about the different generation who's for at least I believe they're brave. And second, also business creating business or being entrepreneur it's much easier. And families they accept more.

[00:02:36] Is it all that's not involved also in this? Well you'll be surprised to know this. More than 85% of the millionaires and billionaires in this world are first generation entrepreneurs. It's only 15 to 20% of the existing entrepreneurs which are entrepreneurs because of the legacy that they come from.

[00:02:54] So these are very good statistics which really motivate people to take the journey of being an entrepreneur. Freedom of your time and freedom of your decisions is priceless and people have realized this and that's why it's on the upswing.

[00:03:10] What advice do we have for building a strong team culture especially for remote or geographically disparate things? Well the success of any enterprise or any entrepreneur, a lot depends on the team that he carries along with him.

[00:03:24] Like for example every movie like the A Lister film star hits sometimes and flops a lot of times purely because of the change in the teams. And entrepreneur also needs to map his journey with the right set of people along with him.

[00:03:41] Now we give a lot of importance to marrying the right person. The same level of diligence is required to get the right team alongside with you. You are going to be a cumulative effect of everybody's efforts on the success that you're going to be achieving.

[00:03:56] So your success is directly proportionate to the quality of people that you have shortlisted and being with you. It's not only shortlisting people and bringing them on board as your team. You need to recruit the right type of people, you need to train them in the right way,

[00:04:12] you need to retain them with the right motivation and you need to keep retraining them for becoming more productive. So all these elements the entrepreneur needs to be doing it in the right proportion at regular intervals and with a great degree of consistency and persistence.

[00:04:29] So if you do this, it will be fantastic. You really become a great growth story. It's like a cricket team. You cannot have just Sachin Tendulkar in the team and win the match. You need to have a great batsman. You need to have a great bowler.

[00:04:43] You need to have a great wicketkeeper. You need to have a great fielder. You need to have all-rounders with you as a successful team. Now I love to keep telling my people with whom I work, with my associates, business associates, business partners that we need to acquire people.

[00:04:58] We need to acquire talent. Acquisition of business is easy if you have acquired and set together a right team. So collaborating or hiring them or giving them partnerships, whatever way you can do it

[00:05:11] but always have the best type of people with you and the right set of people with you. It's similar to being in films or in a cricket team or even in politics. Now as an entrepreneur, you might play the leadership role

[00:05:26] but your other set of people in your team needs to be the one which you can depend on and become the backbone of the business, the empire that you are intending to build. Take Mukesh Ambani for an example.

[00:05:39] He has a robust team of people with him in his inner circle, the top management. Take any other enterprise for that matter, the Tata Industries or Tata Group of companies. They are all headed with very competent CEOs who report to the main leader

[00:05:54] and collectively they are creating more success, more growth and more expansion for the organization. So we really need to be mindful of the quality and type of people that we have with us in our teams.

[00:06:06] The formulas can be different. It can be employees, it can be partners, it can be employee partner, it can be stakeholders, employees with whom you have got a commitment of giving them ease of equity of the company based on the performance that they give to the enterprise

[00:06:24] for growth that's going to be created for the business. So all these elements put together are going to give you a very good team which will ensure that they are successful with your leadership.

[00:06:37] I need two advice from you. First about marriage advice, later I will ask you after the show. The second is every time I come to your office, I see one of your friends and mostly they are not from India. And I believe you guys sometimes

[00:06:56] being friends for 20, 15 years. So how you learn that because being a friend with someone who is different culture, different beliefs, it's not easy and I believe you didn't grow up also outside India, you grew up here all your life.

[00:07:11] Tell me the secrets of that. Again like I said entrepreneurship is all about man management and I love to say that relationship is the strongest ship. It can never sink unless you commit a blend out.

[00:07:22] So you really need to keep investing in relationships and how can you invest in relationships by sacrificing your expectations, by conceding to the expectations of the other side. And if you do that you are going to be very successful.

[00:07:37] Now relationships should not be restricted to a geographic territory. I am blessed to be traveled to almost more than 75% of planet earth and I am very happy to say that in every city that I travel to, in every country that I go to

[00:07:53] I have got soul relationship, soul connected relationships, soul to soul relationships. Like I could stand up to them whenever they need me and they will stand up to me whenever I need them. So that kind of bonding and relationship plays a very critical role.

[00:08:09] Not only limited and restricted to business but even to your personal life. So I am a people's person. Every entrepreneur should make an attempt to become a people's person. When you are with people, when you believe in relationship building, automatically you are building

[00:08:25] an ecosystem which will boost your business growth. Recommendations, testimonials. That testimonial can be about your product or your service or your company or you as a personality. Not necessary that every friend of yours is your customer

[00:08:41] but it is very much possible that your friend has become a testimonial of you as a person to a person who can become the biggest customer that you might acquire or achieve in the short run

[00:08:53] or in the long run. So you do not know where the opportunity will flow from. Every relationship is critically important. Let me give you an example. I wanted to become a member of CII, Confederation of Indian Industries.

[00:09:08] Now you need three references to become a member in that particular organization. It is an organization of all businessmen, entrepreneurs and businessmen and business corporates and all of that stuff. So I was not getting the process on how to get this done.

[00:09:23] The office boy in my office was the office boy in the office of the chairman of CII in the previous job. When he heard me talking about my requirement to somebody else on the phone he volunteered to connect me to the chairman and it became so easy.

[00:09:39] So you do not know who can be helpful to you and to what extent. So I have a relationship with a friend of mine who used to sell me chairs. I bought the first set of chairs from him for my computer education business

[00:09:53] and those chairs were costing only 115 rupees per chair. Since then till today and forever the chairs will always come from him. Around 12 years back he connected me with another customer of his with whom we did a multi-million dollar business.

[00:10:13] So whom you are a customer to can also give you customers in the business that you do. So it's a fantastic way of nurturing relationships and I always love to understand that people will forget what you paid them when you get a product or service

[00:10:29] but people will never forget how you treat them, how you behave with them the amount of importance that you give to them and the kind of relationship that you nurture. All relationships should be nurtured for a very timeless period.

[00:10:43] Without an intent or an intention it should be a part of your nature. You cannot act to be a good man. You have to be a good man because people can see through if you are not a good man and just trying to act on it.

[00:10:55] So if you can make this as a part of your nature it will be fantastic. The question is about the mindset. How you think what is your attitude towards a fellow human being? Ultimately it is your attitude and your gratitude which will define your altitude

[00:11:12] which will define your growth. My question is not related to next one. Did you see all these when you were teenage? Oh yes, I have been blessed to be working since the age of 13. I have been blessed because of my economically challenging background but emotionally rich background.

[00:11:36] I could understand the importance of every human being in my life not only my parents, my brothers and my wife and my children but every person with whom I have crossed paths whether I am riding in an Uber in an international country

[00:11:52] or whether I am on a flight to a domestic destination, it does not matter. The man next to me I will always strike a relationship and I will learn from him. I was blessed to be a door-to-door salesman during my college days right from 1990 to 1993.

[00:12:10] I was door-to-door selling clothes, cosmetics, perfumes, pile, chapels, multiple products. So I met so many people. There are people when I rang the doorbell they opened up not only the doors but they opened up their hearts and welcomed me.

[00:12:26] There are people who banged the door on my face and also abused me but any amount of doors being closed on my face did not alter my enthusiasm during the next bell. Now what did it give me?

[00:12:41] It not only gave me money to do my education in college it gave me the learning of human psychology. I saw people buying from me even when they didn't have a need. I saw people welcoming me even if I was disturbing them during their sleeping time.

[00:12:56] So human relationship is very delicate and very important for me like for all of us, like for you and everybody watching this particular podcast but I very cautiously, carefully and mindfully nurture every relationship

[00:13:13] that I have, nurture every bond that I have with every human being that I need. And I also believe in a very powerful statement giving is the best way of living. People can see through if you give only when you have an ulterior motive

[00:13:31] those kind of relationships won't last long but if you keep giving without an expectation of receiving from him or her it will come in such multiple that it becomes a part of your success journey as an entrepreneur.

[00:13:45] Recommendations, testimonials and what people talk when you are not in the room matter a lot in this world. Decisions get turned when people come to know about you as a person another personality. Decisions get turned.

[00:14:01] It can turn to the negative or it can turn to a super positive as well. So I give a lot of value to relationship and as an entrepreneur you definitely need to be a very good relationship manager.

[00:14:14] So of course you've been rejected so many times as an entrepreneur but how you control your emotion after rejection? Well you feel low, you feel very dissatisfied but you have to look forward to life. Being hopeful in life gives you the best confidence. It dejects you.

[00:14:35] There is nobody who will not get rejected if they are refused or rejected or somebody bangs the door on their face. There is nobody. I will not lie. It dejects me also. But how fast can you come back?

[00:14:48] I can come back in a few seconds because I have seen the door banging on my face so many times when I was a salesman. So it cannot deter me and it made me shameless because I was doing the right thing.

[00:14:59] Why should I feel ashamed of ringing anybody's doorbell? I am looking for an opportunity to earn revenue and that person might be looking for an opportunity where somebody comes to his doorstep and serves him for the need that he has. So it's matching of both the requirements together.

[00:15:13] Just that I need to keep ringing a lot of doorbells so that some of them match the requirements that I have. So I have to come back. It's like they say that falling down is not a sin but not getting up is.

[00:15:30] So if you want to achieve success no matter how many times you fall down, how fast you can bounce back and come back with the same quantum of enthusiasm will define the quantum of growth that you will achieve

[00:15:43] in the nature of you doing the business that you want to do. How can entrepreneurs navigate the challenge of bootstrapping and secure alternative funding source without compromising their vision or control?

[00:15:57] So like I say finance and funding plays a very critical role in the establishment and in the growth of any business model. If you're a new startup or if you're an entrepreneur who has just started business,

[00:16:11] I will recommend to be bootstrapped to as much time as you can sustain and grow. If you're an employee and wanting to become an entrepreneur, I would say that make sure that your first round of funding comes from your potential customer base itself

[00:16:28] so that you can be financially independent rather than taking loans. Of course most of the people start by taking loans from friends and relatives and those people take risk because of the relationship that you might be having with the people that give you the money.

[00:16:44] But you need to be bootstrapped as far as possible and you need to raise money only if it is desperately required. Otherwise you should not raise money. Customer's money is the sweetest money for any business and when you need money, you will need money for growth obviously.

[00:17:02] You will need money for sustainance, survival and growth. At that point of time take money from somebody who can become a strategic investor in you. A strategic investor will not only give you money but he will also build multiple opportunities for you to grow faster.

[00:17:19] He will start taking care of you because your success is his success and your profitability improvement is improvement of valuation for the investment that he's done. So try to have strategic investors in business. You will be a more successful or a better successful entrepreneur rather than struggling.

[00:17:38] Raising only money is not a guarantee to succeed. Eight out of all funded companies fail because they spend more than what was supposed to be spent. Expenditure and the proportion of the expenditure for the requirement needs to be balanced at all times.

[00:17:57] If you lose that balance, so I've got a friend of mine who got funded to the tune of 740 crores in the first year of business operations. It was a tech company, tech startup in the housing sector, in the real estate sector.

[00:18:12] And they closed down in the year that they got funded. 740 crores. When I met him after a couple of years, I asked him what went wrong and he answered only in one line. We got funded.

[00:18:26] When you get funded, the chances of you making wrong decisions are much higher. But when you're struggling or when you're trying to make your ends meet, you are taking all the right decisions in the right proportions.

[00:18:43] A strategic investor will give you the money but he will ensure that the deployment happens in the right way and for the right reasons.

[00:18:52] Plus, he will ensure that a bare minimum quantum of business keeps coming to you so that you can make the desired profits that he's envisioning by investing in your business. So strategic investment is great. Take investments as late as possible.

[00:19:08] Take investments at the highest possible valuation. Compromise on your valuation if the strategic investor can make a difference to your business. Growth and the speed of growth. Please compromise. There is a new methodology of hiring people today.

[00:19:27] Now suppose if I want to hire a big man, suppose I want to hire a Ratan Tata. So I can't hire a Ratan Tata. He'll... I don't know what salary he'll ask for. He'll ask for a salary which will be a thousand times more than your business turnover.

[00:19:41] How do you still engage him by giving him a small equity in your company at whatever price that he feels right and bring him on your cap table?

[00:19:52] Once you have a personality like a Ratan Tata on your cap table, the valuation of your company multiplies irrespective of the current revenue that you are doing. That's point number one. Point number two, when a personality, a big personality is a part of your equity structure,

[00:20:09] you start attracting the right kind of people who will want to invest in your company. Now the valuation of your enterprise changes. When you want money, the valuation is different. When people want to invest money in your company on their own, the valuation is different.

[00:20:27] So try to be in the second situation. It's all a proper strategic move on which name is there on the cap table of your company. That makes the whole difference. So do not take money when not required. Do not take money only from investors,

[00:20:46] but try to always identify the right match for your enterprise as a strategic investor. If you can have it as a part of your business plan, you'll be able to do that.

[00:20:58] Let me share you an example. I know of a young couple who went and sat outside Ratan Tata's house for couple of days and sent a short note that we have achieved this. We have taken a special permission from the central government

[00:21:14] in the business that we are doing, which was very unique. And we will want you to be an investor in our company after visiting the house couple of times, after waiting outside for multiple number of hours. One day Ratan Tata called up the girl and asked her,

[00:21:34] do you have time to have a cup of tea with me tomorrow morning at 10 o'clock? Just see the question that he asked. And next day they met, rest is history.

[00:21:45] Today this company is valued at a thousand crores. It is just five years old and the entrepreneurs are below 33 years of age. So this is what you mean by a strategic investor.

[00:21:56] And when Ratan Tata came on their cap table, the other investments just started flowing on its own. So that is the importance of fundraising, when, how, where, from whom and how much.

[00:22:10] These are the questions that you need to ask and you need to plan it well in advance. So this reminds me of the childhood when father would not give us the money for one month

[00:22:21] and he gives us daily base and he says for you to understand the value of money. If I give you one then you know you won't understand it. So as a venture investor, I believe in a concept called drip funding.

[00:22:37] So suppose if I have committed 15 lakhs, 15 crores to an entrepreneur, I will commit that 15 crores but I will say that I will invest this over a period of 30 months on an installment of 50 lakh rupees a month against the list of milestones that you need to achieve.

[00:22:56] So multiple things happen. One is I monitor that the money is not going to be lost because of wrong decisions taken by the entrepreneur. Second is the entrepreneur is on his toes because he needs to match the milestones and achieve them.

[00:23:11] Thirdly, it justifies my further investment in the company on the basis of the performance that that entrepreneur has done. And fourthly, the entrepreneur is mindful of what he is supposed to be doing when these kinds of investments are coming in. He can't take liberal lavish decisions.

[00:23:30] He needs to take decisions in the proportions of the need that his business has for the growth that he wants to achieve. So it's a very interesting formula that I set up so that I don't learn a very expensive tuition of how to lose money.

[00:23:47] At the same time, the entrepreneur should not be loaded with money in one go where he starts taking wrong decisions because then you are the cause for him to take the wrong decisions and drown the business that he has established.

[00:24:02] What key legal and regulatory considerations should entrepreneurs prioritize early on depending on their industry and locations? There are five types of stakeholders, a minimum of five types of stakeholders in every business.

[00:24:18] One is your employees, one is your stakeholders that is investors, one is your vendors and one is your customers. Now these are four but the most important stakeholder in every business in every country and every city is the government.

[00:24:34] And you begin with the government. Before you could generate the first rupee or revenue or the first dollar in business, you need to ensure that you have the right approvals, the right licenses and the right permissions to start the business that you want to start.

[00:24:51] In law there is a very interesting saying which says that a mistake by mistake is also not a mistake. It will be attracting some punishment so you need to be extremely careful.

[00:25:02] Whether it is your tax authorities, whether it is your municipal authorities, whether it is your development authorities, the nature of your business will define the amount of approvals and permissions that you need. I am in the food processing business, there are so many agencies involved.

[00:25:19] I am into the real estate industry so I have to take approvals from the government authorities, the Mahareira which is the regulatory body, I have to take permissions from the municipal corporation. If I am in the MMRDA region, I have to take approval from the MMRDA region.

[00:25:33] If I am in the collector's region, I have to take permission from the collector's region. If I am operating a restaurant as a business, there are so many other agencies connected to taking licenses before I start doing the restaurant business.

[00:25:44] Now if you commit a flaw in that your penalties and your punishment can be so severe that you might lose your entire business model by itself. So you cannot take the risk of risking the future of so many people associated with you.

[00:25:59] As a leader of the business, as an entrepreneur, you need to be absolutely mindful that all the compliances and all the regulations of all the regulatory authorities are in place.

[00:26:11] As an entrepreneur, you might not have the knowledge to have all the compliances in place, how to get them. You might not have that expertise, but for everything you have got professionals.

[00:26:24] You have got company secretaries, you have got lawyers, you have got chartered accountants, you have got licensing agencies.

[00:26:30] Everybody is available. You need to choose the best people and ensure that you are protected from all sides of your business from the regulatory point of view, from the government point of view. So the government is the most important stakeholder of your business.

[00:26:49] Interesting, I remember because one thing here about Sante, Sante has many other branches outside India as well. And when you want to do such a business for example restaurant business outside the country, you have to consider the culture, the government and the people taste are totally different.

[00:27:11] How you do that? So we map the culture of that particular country. We want to open up a Sante in Dubai. Now Dubai has got their own sets of rules and regulations in terms of health, hygiene, permissions, approvals, fire compliances.

[00:27:26] Fire plays a very critical role in a restaurant. So you really need to have the right installations done and clarified or cleared by the fire department of that particular city or that particular country.

[00:27:38] So today Sante is in five cities of India but we want to, we have eight Sante's in five cities of India. But now we want to venture into multiple other countries. In Dubai the regulatory authority has got different set of restrictions.

[00:27:51] In the United States like we want to also operate in United States. In United States there are different set of regulations which are all important. In every city in every country the compliances change in the difference of the weight that different people have.

[00:28:06] For example employment in Dubai, the employment rules in Dubai are much much much different than the employment rules in Europe, in UK or in United States of America.

[00:28:18] So you really need to study them well because that one wrong information or lack of information might create such a setback that you might have to wind up that activity and come back to your home country

[00:28:30] or wind up that activity and look out at some other activity to be done incurring tremendous amount of loss of time efforts and money. So regulations are very important to be understood. The do's and the don'ts need to be absolutely clear.

[00:28:45] So when I say an entrepreneur needs to study the business model in a maximum period of 90 days from the day he wants to start that particular business. Also the element which comes into that deep study is the rules regulations and the regulatory requirements.

[00:29:02] You cannot commit a mistake even by mistake. You are an entrepreneur you are not a small child anymore so nobody is going to forgive a mistake that you might commit especially the government.

[00:29:11] Now this is done purely with the interest of your customer, with the interest of your consumer. Today when I become an entrepreneur my customer is at the mercy of the decisions that I have taken. The compliances if not done right might harm my customer and my consumer.

[00:29:29] The same amount of protection comes to me when I become a customer to some other enterprise which has got all the compliances in place. If they don't have all the compliances in place and if something goes wrong then as a customer I would suffer.

[00:29:42] So compliances is good for every business enterprise and do not take any shortcuts. If you take a shortcut you will not be there in the long term.

[00:29:51] So that's my advice to entrepreneurs wherever I meet them, whenever I meet them and whenever I interact with people on the regulatory topic. Thank you sir. Music