In real estate, it’s all about location, location, location… For a startup it’s all about people, people, people. Of course, for startups there are about 3.2 million other things to manage such as the idea, go-to-market strategy, margins, marketing, etc… However, without the right team in place all of those other things don’t mean sh**.
If people are the most important resource then recruiting is paramount and yet it’s also one of the most frustrating tasks for a startup in India because of the cultural issues. Recently, one of the companies that I’m advising was recruiting a junior technology person, he went through several rounds of interviews and we finally agreed to hire him. When he showed on his agreed start date, he starts to ask questions on why he should join a startup vs. working for a big information technology (IT) company. The type of questions he was asking were fine but the timing was wrong because those are the type of questions you want to ask BEFORE accepting an offer.
The sad truth is that for all the talk about Indian venture capital, startups, entrepreneurship, new economy, etc… There are some cultural biases that are just too tough to overcome. I’m sure the candidate got some “advice” over the weekend from his relatives and that was the end of it. I explained the pros and cons of working for a startup vs. a large company but I’m 110% sure he wasn’t listening because the decision was not in his hands – the decision was with the family elders. For many families its about the marketability of their children for getting married. It’s easy for a family to say their son/daughter works for Infosys, Volkswagen or Reliance but a tough sell when their child is working for ValiGo Technology Private Limited.
Of course, this not only happens to employees but also affects companies. If you are trying to strike a business development deal and have an opportunity to work with the biggest name you might jump at it, but usually when you look at the terms and conditions it’s not so great. When I came to India in 2004, I was looking to meet with commodity brokers that had the largest geographic reach. That came down to Refco, which at the time was the largest commodity broker in the world and Man Financial which was #2 globally.
During my meetings I kept on hearing about a new emerging broker/dealer that had several offices in Nariman Point and an office at the iconic Express Towers. I didn’t really followup with those guys because I had a chance to work with either #1 or #2 in the commodity space. (Also, in the back of my mind I kept on thinking that this emerging company’s name is a flower.) We finally partnered with #1 Refco and we launched our fund in August 2005. I landed into India on October 1, 2005 and by October 10th Refco had filed for bankrupty.
So what was the name of that small emerging broker everyone was mentioning back in late 2004…Edelweiss Capital. The name is very fitting because the edelweiss flower grows in rocky conditions which pretty much describes the working conditions in India, although not a household name it’s a powerhouse in the industry. It has grown from being a broker into a massive financial services firm with 1000’s of employees all over India. Once again, No Name Startup vs. Big Brand Company.