HelpYourNGO
<p>Good evening, good afternoon, and good morning to everyone who's attending this future-ready webinar series that we started with Helpr NGO.</p>
<p>As we know, for the previous thirty years, India has gone through a significant economic reform. We've seen it; many of us who lived through the era pre-1991. What we've seen over the last few decades has been absolutely amazing, and it cannot recognize the India of pre-1991 and the India of today. But, having said that, the next twenty years will be very defining for India and for many parts of the world. The key really is, what do we need to do to make India future-ready, and what do you, as an individual, need to do to make yourself future-ready for the next couple of decades?</p>
<p>With me, my guest today is Mr. Ronnie Screwvala. Ronnie needs little introduction, but I'll quickly, you know, have a look at Ronnie. When I knew him from pre-1991, or certainly knew of him, he's always been an <strong>entrepreneur</strong>. For those who may have read the book or, you know, keep your eyes wide open to face the future effectively. Ronnie started a show business which he may not remember himself, which is called Culture Club, way ahead of its time. Then, of course, he had Uni-Lazer for the toothbrush manufacturing.</p>
<p>Then, clearly, from 1991, after reforms, he built <strong>UTV</strong>. As far as I know, he's the only media mogul in the world who has sold companies successfully, built them successfully, and sold them at great valuations and great ends, after having built them, to Bloomberg, to Disney, and to Murdoch.</p>
<p>And then, of course, over the last decade or so, he set up, along with his wife Zarina, <strong>Swades Foundation</strong> to help one million people, primarily within the Raigad district of Maharashtra, to help improve their lives across different aspects of their lives. For those of you following Ronnie recently, you know that he's now the proud owner of a unicorn, <strong>UpGrad</strong>. It has closed that sort of magical valuation and joined a couple of very unique and select companies in India to have reached the billion-dollar market cap. At the time of doing so, revenues were about $130 million, and I'm sure they'll be sort of doubling every quarter for the next couple of years. Ronnie recently wrote the book <em>Skill It, Kill It</em> on how to improve yourself and how to upgrade your, your sort of skill sets over time.</p>
<p>With that, Ronnie, can I just ask you, if you don't mind, to sort of describe yourself? What Ronnie was like, the pre-1991 Ronnie, when you were the first-time entrepreneur at that point in time, and what was the 1991 to 2020 era Ronnie? What were the characteristics that defined you then and defined you in the most recent time in history?</p>
<p>"Yeah, I think it's a, thank you, thank you for really for having me here, for this very nice introduction. To describe what you were thirty years back, or twenty-five, thirty years back, is fun in some ways. You know, I think when I look back, there was a fair amount of what I would, I came from a lower middle-class background. Therefore, when I wrote my book recently called <em>Skill It, Kill It</em>, it's basically on <strong>soft skills</strong>, because I meet students, working professionals day in and day out, and I saw that level of lack of confidence and soft skills when you come to whatever else.</p>
<p>If I try to go back thirty years, I would say I was at that stage. I personally see myself as a product of soft skills. I really wanted it badly to be a good communicator, to have self-confidence, self-conviction, and I think I worked really, really hard. Today it sounds like I'm talking ex-tempore with you, but it wasn't that easy thirty years back, you know, and I think that's mostly what I recollect, which actually represents the era, because you asked me the question, what was overall 1991? I mean, I think at that stage, people, I'd like to say, thought <strong>incrementally</strong>, not <strong>exponentially</strong>, if I had to sort of put that as one tag.</p>
<p>I think it was very difficult to do business at that time. It's much less difficult; I don't think it's completely rosy, but it's much less difficult today to do business than it was then. <strong>Entrepreneurship</strong>, I would say, had a social stigma, if I could use that word, you know. It was like, and literally at that stage, a lot of people would look you up and say, 'Hmm, so you couldn't find yourself a job anyway, now you have to go start working for yourself.' Then there was the entire social pressure of overcoming, convincing the family who were, and rightfully, nervous about where that would land for you.</p>
<p>It was also the era, I felt, where it was very <strong>intimidating</strong> to go out there and start something on your own, right? Because there were really large groups, the conglomerates, the groups who really wanted to own anything and everything, and it was a combination of whatever it was, the license raj, going whatever else to everything else. So intimidating because you never, you felt the gap, but whatever you do in life, to where other people have reached, will always be enormous. Not so right now, but at that time it was there. I think people were looking for business ideas that were more, I would say, sustenance-oriented, import replacement-oriented, a very different DNA and a different mindset.</p>
<p>So in that landscape, I think, you know, I kept my feet on the ground and it builds that kind of <strong>resilience</strong> in you that really makes you feel, after all the failures, 'What have you got to lose, and how badly do you want it?' I think those operating ones work well for me."</p>
<p>"And, you know, sort of going back to the soft skills part, you're really underselling yourself. I remember seeing you in a play called <em>Children of a Lesser God</em>. I don't know if you remember that yourself."</p>
<p>"Very, very clearly, because I had to learn for four months sign language to talk to the hearing-impaired and, you know, and speaking-impaired."</p>
<p>"That's right. I mean, if you, if you want to do a course on soft skills, that's it; just watch that play and you'll see Ronnie at his brilliant best, communicating feelings, emotions, a very, very powerful play. I don't know if you have it somewhere on video, but you should put it up on YouTube, I think."</p>
<p>"You should do that. You buy the book to get to see the video for free. <strong>Theater</strong> for me played a very big evolutionary role in my ability to be collaborative, with my ability to communicate, in my self-confidence. It just, it was an incredibly, you know, I did it as a hobby, but I don't think I'd be half where I am today if it wasn't for the hobby that I had at that time."</p>
<p>"So, you know, you spoke about <strong>import substitution</strong> and the desire not to take risks and not to be an entrepreneur in that pre-1991 era. Your own story, when you say you went with your father to London, and you happen to see that machine, you know, which was that wonderful toothbrush manufacturing machine, and you decided to buy it without even having the money to buy it, and kind of taking that on. So, you know, that was import substitution. Now, if I look at Ronnie today, there's people chasing you, there's people, you know, there's sort of capital available. That time capital was extremely scarce and you really had to find that ready market, as opposed to create market opportunity in some sense. Has that changed in, sort of, in between '91 and the year 2020? Was it an evolution in that in terms of..."</p>
<p>"There's no question about the, getting themselves, there's no question about the fact that when I started, <strong>debt</strong> was out of the question, unless you were starting a manufacturing operation and people had hard assets as collateral, and you had some seed money. I would say, today, it does seem that way that there is a lot more surplus capital, but for a lot of people, I would say, cautionary: it's, it's a really, it's, it's, it's a lot of money chasing few that really need to outperform, or people who are great storytellers, or segments that are really in high-growth mode today, may not be tomorrow.</p>
<p>So, yes, definitely, <strong>capital</strong> is much more available today. I don't think the debt situation has changed at all. I don't think, you know, banks, banks will give to conglomerates and then write off bad debts by the billions of dollars, but they won't give it to startup entrepreneurs, for some Indian reason. I think they'd have had a better chance on their bad debts if they had actually taken the younger generation who had a different level of governance, a different level of approach to business, et cetera. But on the good side, I think <strong>equity is there</strong>. I wouldn't use the word chase. You know, you have three or four very maverick investors, so they emulate the word chase. But at the end of the day, I think there is supportive capital for good execution, good ideas, good storytellers, strong vision, that's what I would say."</p>
<p>"So if I go back to the Ronnie of pre-1991, who had that phenomenal skillset of soft skills, then between 1991 and 2020, Ronnie becomes an investment banker par excellence. He does all these phenomenal deals, builds fantastic companies, becomes a successful business person. The Ronnie for the next twenty years, what skillsets are you planning to acquire for yourself to be relevant and to have leadership, as you've shown over the last few decades, for the next twenty years? How are you going to be future-ready?"</p>
<p>"You know, I think I'm going to, more than finding new traits, I want to <strong>polish some of my old ones</strong>, correct the course on some of them. One of them, I think, is <strong>focus</strong>. We underwrite, underrate focus big time, and especially today when you've got so many distractions and the and the herd mentality of opportunities are so strong, and the FOMO is so strong on almost everything that you do. So herd mentality, FOMO, opportunities, if you look at that, it's almost like you shouldn't be sleeping, you know, and and it's almost like, 'I'm going to miss out on this, and I'm going to miss out on that opportunity.'</p>
<p>So, to me, actually, <strong>less is more</strong>. Focus, staying the course, and continuing to feel, you know, how badly do I want it, because actually that really gets you past most failures, you know? I ask a lot of my team members, at the end of the day, somebody said something and he says, 'Yeah, simple things like,' he just said, 'you know, he's doing something for an international thing, and he didn't have a passport, or his passport expired.' I said, 'You know, that's an excuse to swallow, I mean, we obviously didn't want to travel that badly, or whatever.' So, just anything is small, or anything that's big. I think these are these are my, these are what I would polish, polish, polish, polish, and and get forward."</p>
<p>"Well, I'm sure Ronnie must have already started doing that before you wrote the book, right, in some sense. But, you know, again, if you are an entrepreneur today, what does it take to be a successful entrepreneur for the future? What would you advise, compared to being an entrepreneur in the historic past?"</p>
<p>"If you don't have <strong>nerves of steel</strong>, and if you can't handle <strong>failure</strong>, I'm going to, you know, everyone thinks successful entrepreneur means ability to raise capital. I think that's the last of the problem. I'm just surprised how everyone just feels, and they can give themselves, of course, it's great that somebody's willing to back you and raise some capital, but capital is really down the ladder as far as that is concerned. I think just the absolute ability to take risks, which I don't think we do that much, number one.</p>
<p>Number two, just <strong>handling failure</strong>, whichever way you look at that. Trust me, the failures that you would find in the beginning will be nothing compared to the ones as you grow and the stakes are even high. So I think it's not just about resilience. It's also, you have to be <strong>contrarian</strong> today, whether you like it or not, which means that ninety-nine out of a hundred people will tell you, 'This is not a good thing to do. No, I don't think this is going to work out.' When things don't work out, they'll come back and tell you, 'I told you so.' But that's also fine, because they can tell you that I told you so for about six times, they can't tell you for all ten times.</p>
<p>So I think that's pretty important, and something I feel very strongly about, and I do say this quite often, is look, I mean, for me, my <strong>success ratio is two out of ten</strong>. Now, people will say, 'Now, wait a minute, it should be six out of ten, otherwise how do you stay afloat?' And I, I think I, I, this is a mathematical thing for me, and I've calculated that because there are eight times that I would have failed, for the two times that I've succeeded. But when I fail, it's a <strong>$1X</strong> like whatever it was. It's a risk, whatever that may be, a bad hiring judgment, a bad business, a sector, taking an early call, late call, losing money, starting a business, whatever that may be, it's a $1X. That doesn't mean it's a small $1X, it's a $1X. But the two times that you do succeed have to be <strong>$20X</strong>. But you can't do a $20X success unless you've actually had those eight failures, because you're not enough taking the risk of pushing the envelope and thinking <strong>non-linear</strong>. I think that part of thinking is going to make that differentiation of a long-term entrepreneur versus making a deal with yourself that says, 'You know, I'll try this for a couple of years and see if I succeed.'</p>
<p>That to me is really it. If you're not ashamed of the fact that, you know, the ratio is eight is to two, but the risk has to be taken because the $2X has to be $20X, the two times you succeed."</p>
<p>"So then the math says that's a forty, and it's a minus eight, so you're plus thirty-two. I mean, literally, yeah, correct. For that $1X failure, do you give it six months, one year, two years? How long before you circuit a failure and I better do something else as an entrepreneur?"</p>
<p>"You know, I think I think you have to give things that, that, you share of time, and I don't think you can time that failure of success. Actually, <strong>staying the course</strong> has worked much better for me than actually pulling the plug. But and it's not sometimes pulling the plug. The pulling the plug could be on an idea or business; it won't be on your own. Most of the time, when you pull the plug, you pull the plug on yourself and not on the idea, not on the business, not on the enterprise, not on the hiring. I think that's the difference. You can't pull the plug on yourself ever. That's one of the basic definitions of entrepreneurship. You can pull the plug on anything else you want to do. So I think that's what I would say is the differentiator. So there's no time frame per se."</p>
<p>"So, switching to another top, another aspect of being an entrepreneur today, you know, as you mentioned correctly, pre-1991, it was not good to be an entrepreneur, no one gave you capital, people thought you were crazy. Go big, go join IIT, get a job, work for a multinational, work for a bank. Then, post '91, particularly post the '90s and early 2000s, it is great to be an entrepreneur. But there has been in Silicon Valley, in particular, and probably spilling over to India soon, that entrepreneurs are not sensitive to things like gender equality, to pay gap. There's a whole <strong>ESG framework</strong> which the world is looking at a lot more closely for every company, including startups. So at what point in time does an entrepreneur have to start worrying about the equation of ESG versus focusing on the great business idea for the, you know, for that $20X rate of return? Do they start from day one, or does it happen..."</p>
<p>"I wouldn't even say day one, and look, I'm not saying it in a facetious manner or, 'Oh, yeah, everyone would say that same answer.' Let me just try and explain that or expand that, but it has to be <strong>day zero</strong>. Because normally, when you start an organization, while you're thinking of your idea and you're thinking of your team, one of the first things you're thinking of is the <strong>culture</strong>, because that's going to propel you. That's going to outlast so many other things that you do in an organization. Therefore, defining this is part of defining that basic culture of people, because if it's, if it's about a little bit of caring and a little bit of sensitivity, and most important, with <strong>empathy</strong>, this will come with empathy. Empathy will actually get you your best team members. It will see you through a lot of failures. It will build loyalty in a team in a very, very, very different manner. So I don't think we should just look at it in that sense.</p>
<p>Now, a lot of people will say, 'Okay, fine, I understand gender equality, but, you know, climate change. I'm in technology, I mean, I'm not, I'm not manufacturing anything, I'm not exuding anything, I'm not doing anything. What do I need to do on that?' But I think it's about as basic as culture, and therefore has to be on <strong>day zero</strong>."</p>
<p>"And and, you know, within that also is the thing about the boards, right? What is the role of a board in a startup? What sort of governance and structures do you have? What sort of controls do you have on the entrepreneur? Or do you believe that the venture capital world will just allow the entrepreneur to run with the capital as far as they need to, without worrying about, you know, reporting functions, functionality of the sort of regular state, like if you're a listed company, there are all these sort of governance rules that you have to follow? If you're a startup, you don't have those rules, but do you think there'll be any change, or you think the venture capital, the venture capital investing company will be exempt from all these reporting requirements, you know, having more people on the board, having outsiders on the board, having independent board members, et cetera?"</p>
<p>"You know, there has to be some amount of <strong>chaos before there is order</strong>, you know? Otherwise, you'll have a country like Singapore, very admirable, fantastic, but, you know, it's chock-a-block, I mean, as far as I'm concerned, they're managing a COVID crisis which, to me, in South Bombay, we could have managed it in a very different way, you know, almost a year back, and no, no criticism meant here at all. But I'm just giving you that as an example. So I think, yeah, I would, I mean, so what do you, what you're questioning me, that sort, I think <strong>governance is a big word</strong>, right?</p>
<p>A long time back in manufacturing, when you were taking debts, you were dealing with institutions, there was a different level, you know? So it's intimidating on day one, 'I have an audit committee, a compensation committee, an ESOP committee, a hiring committee, a hiring committee.' That's not giving you the box to be able to operate in a particular manner, because assuming you want to hire somebody, a lot of that finally is going to be based on chemistry and gut. Now, three more board members hiring that person is not going to make sense.</p>
<p>I also believe that if the DNA of the founder culture in the organization is one of <strong>openness, transparency</strong>, and the basic things, that in itself today is governance. You know, in the listed companies, yes, there are some statutory things, because there are some obligations and fiduciary responsibilities. Fiduciary responsibilities don't have to start on day one, when you, when a, you 100% of the company, or later on, you own 80% of the company or 60%. As long as your communication and your transparency with your venture capital and later private equity investors are very thorough, but it shouldn't box you into a sandbox that does not allow you to operate at the level at which you would operate at."</p>
<p>"And, okay, moving back to capital, which we touched upon earlier, so in the last few months, we've seen a sort of <strong>implosion in China</strong> with what's happened with ed-tech and state control, and you know, in general, China saying, 'You know, we're party first, we're socialist first,' and sort of profitability comes a little later down the line. There's a change happening there. Do you think that will put more capital towards India, more abundant supply of capital and talent that starts kind of looking to India to partner, to build things out here? Is that a plus for India?"</p>
<p>"In my thirty years of work experience, somebody's problem has not really helped somebody else gain on that over a period of time. I mean, yeah, it's a little bit of a wave and it'll go up and down, but in the overall scheme of things, the people who want to invest into China want to invest in China for very different reasons. You know, the absolute leftover people who just have surplus capital that are getting 0.25 ROI and want to invest in another growth country would look at this. So I think when people come in with a strategy, it's not about reallocating funds. That can't be there.</p>
<p>I think it's not even a regulatory risk in China. It's much more a <strong>political mandate</strong> right now. All the regulation changes, it's much more about, and look, from their perspective, they feel, and a lot of that is actually focused on the <strong>younger generation</strong>, right? Because China is a single-child country, and they want to change that thing. So, if you see all the regulations, outside of, you know, maybe Jack Ma making a statement and therefore they're feeling they need to bring that to heel, is around gaming, education, everything for that minus zero to sixteen years. But actually, it's the parents who are actually feeling, 'I don't want to bring another kid into the world because it's too tough to do that, or too expensive to do that.' So that's a very different psychology of why China would do what it wants to do. That's just my personal opinion. I'm not saying that that could be the facts, but I personally have felt that people come in to invest in different entities and organizations. It's not like if e-commerce collapses today, people will go into food tech or whatever else. People wanted to take a bet, they will take a bet.</p>
<p>Also, psychologically, when you feel, 'Ah, if something so sudden can happen in such a high-growth market, you sometimes want to be a little bit more reflective, because you feel, 'Uh, okay, India, yes, but maybe, you know, could be another country with political risk, regulatory risk, X-risk,' you know, they've had retrospective regulations in the past, of course, that's been evened out right now. Foreign investment is always a big question mark. So, personally, I'm not, I'm not sure. <strong>Ripple effect, yes. Tsunami, no.</strong>"</p>
<p>"Okay, good. So, it used to be, right, as a traditional value investor, that's that's our background as Quantum and I, so we'll be asking questions later on. When I built this value investment process for India, to buying listed stocks, one of the things we did was, you know, try to identify companies, as Warren Buffett and Charlie Munger say, which have <strong>moats</strong> around them, a defense. So, if you have a big steel factory, a big cement factory, an automobile plant, it takes years for someone else to get the approval, get the license, get the product, get the distribution. That itself acts like a moat. Even in a tech-driven world, it's capital and ideas, and ideas and smart people are abundant, and capital is flowing abundance. So, what would be the moat for an UpGrad, to take an example? I mean, any of the tech companies. What stops a tech company from being wiped out by the next bigger, you know, version of what has been built? What moats do you build around the UpGrad?"</p>
<p>"So, I mean, firstly, I think, overall, when you look at moats, if <strong>capital was ever a moat, it's never a moat</strong>. It is never a moat, and I think for a people, and actually there are a few investors that have almost psychologically, brainwashed a few people that says, 'You need $200 million. No, take half a billion, because then just go out and conquer the world and do whatever you have to do.' I would say ninety-nine out of a hundred times that has not worked, and it will not work, because if capital was the solution, a lot would come in there.</p>
<p>Actually, what you do with capital is that you burn a lot of it on, in inverted commas, <strong>brand building</strong>, and brands are never built by advertising and marketing and awareness campaigns. They're built over a certain period of time. They just take their time. Yes, you can get market share, but in pursuit of market share, you'll have to figure out whether you're actually building a fundamentally strong business, when you have fundamental gross margins that will ever turn positive, et cetera. Jury's out on many of that. So I don't think it's capital.</p>
<p>For UpGrad, for example, our moat is actually quite clear: <strong>deep learning experience</strong>. Because right now, our biggest challenge is, while, you know, the COVID has put online in center stage, the bad news for us is it's almost made it sound like it's a simplistic Zoom operation, where we spent years on our technology platform and years in our learning experience. So we are differentiated as <strong>outcomes</strong>—outcomes in terms of completion, people who take an eleven-month course, pay a lot of money, and then complete it. And the outcomes, which is jobs, increments, or further movement in your career. If we get that wrong continuously, it doesn't make a difference where, whether I can raise half a billion dollars, a billion dollars, or whatever else."</p>
<p>"So, you know, stay, so, kind of staying a bit with UpGrad, $130 million, a billion dollar of market cap, plus, and you know, obviously there's a lot of growth behind this. When someone is designing a new company, a startup, do they begin, or should they begin by saying, 'I'm going to be a <strong>unicorn</strong> and work towards it,' or that unicorn sort of happens over time? The unicorn pathway happens over time. How would you recommend it?"</p>
<p>"We have, I, I, I am not the right guy to talk about unicorns. I, I don't, I don't, I don't relate to that genuinely. I think it's a <strong>means to an end</strong>. Yeah, I mean, did we go out and target it? Not at all. For first five years, we funded the business completely on our own. If we really wanted to get to be a unicorn, we'd have done a little bit of a venture capital, done a little bit of private equity, and whatever else. So this is a means to an end, and I think, you know, it's almost like saying, should an entrepreneur start a business knowing that in three years or four years he's going to exit it and create value and take some money home? You can't time it. You can't time it at all.</p>
<p>So I think your, you're, imagine what your vision will get shifted if you start looking at things like, 'I want to be a unicorn,' because then you'll start viewing your entire business vision through the eyes of people who can view you enough to invest in you to make you a unicorn, and imagine what that can do to a company's vision."</p>
<p>"So, you know, that's the thing, right? Do I, so I remember a friend of mine told me, she graduated at Stanford a couple of years ago, and I congratulated her, a friend's daughter, congratulated her for graduating at Stanford, and she said, 'Ajit Uncle, actually I'm a <strong>failure</strong>,' because it used to be that the incoming class at Stanford would look up to those who were graduating, saying, 'Wow, you struggled through four years in the undergrad, two years in the MBA, and you made it through, congratulations, and we're going to, you know, it's going to be tough for us, but that's but you're a kind of guiding light.' And now it's like the incoming class looks at the graduating class and saying, 'You guys are duffers. You had to actually finish Stanford, and, you know, you are, you're a failure because if you had succeeded, you'd have left Stanford or Harvard, or whatever, and you'd be a unicorn by now.'</p>
<p>So it's a very different mindset that seems to be there, may not be true in India, but certainly in many of the leading universities there, that you go to the university not to necessarily finish your, your studies, but to get some idea and meet other people, and then go out and get the funding and become a unicorn. That seems to be driving people out in the West. Is that, I would say, yes. Do you see that among the, you know..."</p>
<p>"Yeah, I think I would say yes, a little bit, but I think seventy-five hundred people still want to get into investment banking or get into all the sexy jobs in New York or in Silicon Valley still, right, by the end of the day. So I think it's the worst of the failures. Yes, those are the failures. No, I, I wouldn't, I'm, I'm going to take the fifth on that, I'm not going to comment on that. But but I think hunger, passion, I would say today what I'm noticing since 2015 to now is <strong>aspiration levels and ambition levels in India have soared</strong>. Have they changed? And they've soared. So I, I think of that as the cup half full. The cup half empty is then you go pursuit of unicorn, get funding. I won't raise my decision to do that, but I thin..."</p>
