Talk, Don't Just Spin
We just announced Fortune India's 40 under 40, Class of 2016 (on the cover: Prukalpa Sankar and Varun Banka, the brilliant and utterly charming 20-something co-founders of Delhi-based data startup SocialCops). This was my first year as co-anchor of the list, and it was a humbling experience to deal with so much talent.
We like to believe that our list is different from some of the other lists of "young achievers" out there. For starters, we don't include inheritors. Neither do we include actors/sportspersons/artists. We stick to entrepreneurs and corporate leaders, though the list tends to be decidedly heavy on the former. It is by no means an exhaustive list, and we rely on our own reading of the zeitgeist and independent research rather than a heavy-duty jury to arrive at the final names.
This year, we doubled down on our mission of locating durable business builders. We decided to take a step back from all the hype around tech startups, and consciously steered clear of a few frothy categories whose relevance or future-readiness we could not vouch for. We cast our net wide, and included smaller startups from places like Bhubaneswar and Bellary. There’s a spurt in agribusiness firms on the list, a group that is generally ignored when talking of startups, at the expense of overheated sectors such as hyperlocal services. The result is a list that at least makes an effort at being honest and different from the usual.
Like every year, this year too we came away with a few precious, durable nuggets of business wisdom. And here is my biggest takeaway from engaging with the country's hottest under-40s - those who made the final cut as well those who didn't, over the past four months:
THE BIGGEST THREAT TO HIGH-GROWTH BUSINESSES IS NOT CASH BURN OR ABSENCE OF PROFIT. IT IS POOR COMMUNICATION.
Most companies are so busy amassing customers and raising money that communication is reduced to an afterthought. Like HR, communication is traditionally seen as hygiene, but very few companies truly treat it as a strategic imperative. Of course, all CEOs pay lip service to the idea of communication and how critical it is, but the sad fact is that most CEOs would rather outsource communication to PR agencies (many of which suffer from a one-size-fits-all mindset and are frankly terrible gatekeepers of any company's reputation), or worse, to the media (which loves the relatively easier access startups allow for compared to older corporates).
Few startup CEOs, like Deepinder Goyal of Zomato, have braved the masses and come out directly to answer questions and take part in conversations on platforms like Quora. Even fewer, like Xiaomi India head Manu Jain, who proactively called journalists to discuss the challenges after Ericsson sued Xiaomi and brought to a grinding halt its sales in India, know how to create virtue out of adversity. In many of our elite, high-growth startups, communication can get mired in bureaucracy and smokescreens. There is incessant spin, and broaching anything remotely uncomfortable is taboo.
It is sad when young companies that define themselves as the antithesis of the old corporate ethos fall into the very same bad habits that give traditional businesses a bad name. Hiring the right corporate communications leader - someone who understands that effective communication is a potent marketing tool for startups, in the ideal case, their only marketing tool - is absolutely key to stop this from happening. A corp comm leader cannot think reactively. Their job is not just to react to media requests and line up (or block) interviews. They are the first interface the company has with the rest of the world, and hence it is their job to make sure that the culture of open and free communication with which every startup begins its journey remains intact as it grows. Of course, this cannot happen without the founders' blessings.
Unfortunately, more often than not, corporate communications becomes a cloistered keeper of secrets and intrigue rather than an opener of doors. One particularly low point during our homework this year: The corporate communications head at a mighty firm kept blocking our attempt to meet a certain leader who we thought was a strong contender. He insisted that we meet another leader, and when we said we are happy to meet both and take a final decision, he got angry. He indicated that we could only meet if we promised a slot on the list, as otherwise the candidate he was proposing would lose face internally. It was utterly confounding. And this corp comm executive is a seasoned hand, having earlier worked with a very large and reputed firm.
An even bigger and wide-ranging communication problem: Most companies are maintaining a stony silence about the media circus around the idea of unprofitable growth, mass firings, downscaling, etc. They need to come forward and engage more, write blogs, be on Quora, post YouTube videos, do whatever they can to acknowledge that it is possible for some people to see these things as a problem, rather than wish them away or airbrush them with standard responses like "we are growing the market" or "we are building infrastructure" or "we are becoming more efficient and hence shedding excess staff". They may well be telling the truth, but the same responses repeated again and again like a soulless template won't change the perception that young entrepreneurs become arrogant and disconnected from the world around them the moment they taste a bit of success.
Empathy goes a long way in perception management, but it's not a quality all star entrepreneurs have. Often, they fail to realise that nothing humanises a company, especially a young one, more than talking about problems openly and proactively, and explaining what it has done to learn from them. Two communication experts/well-networked evangelists who have worked with scores of high-growth startups recently told me how disenchanted they have become with the space. One said, "Something happens to founders as their companies grow...they become obnoxious, or they become robots." The other said, "I used to love startups because they were underdogs. They are not anymore." Startups must realise that vulnerability is part of their charm. They must not lose that in their bid to grow up fast.
Meanwhile, other signs of growing up won't hurt. At another massive startup, I was recently witness to a bitter and loud fight between a young receptionist and a logistics manager in full public view - right at the lobby. I'm sure old-economy companies with decades of entrenched power politics must be seeing vicious fights all the time - but washing dirty linen in public is not something they will do or tolerate.
For now, despite the frequent attacks on floundering startups, there's bravado. A top VC told us: "We [investors and entrepreneurs] don't care if the general public gets spooked about what the media is writing about us. We don't need to explain anything to them so long as we continue to deliver products and services on time [which itself is another big problem - but more on that another day]. Those who really matter know what's going on." His reference was to the coterie of co-founders and senior management members, and the investors.
Here's the thing: My father, for all practical purposes a layperson, has stopped giving business to e-commerce companies because he thinks they are about to go bust and doesn't trust them with his money. And he doesn't hear anything from the companies themselves to make him change his mind.
Or think of the drivers working for cab aggregators, who have begun to come up with wild speculations about how the companies are able to survive after giving so much discount to the passenger and incentive to the driver. One driver in Delhi recently told me, "It is all foreign money or black money." He was convinced. And because he is not part of the "those who really matter" club, no communication to change his mind will ever reach him.
Communication limited to "those who really matter" is another of those old-corporate paradigms that should be rubbished in startups. After all, apart from the fact that they solve real problems, startups have attained celebrity status because society at large cheered for them, celebrated them as next-door success stories, and gave them a leg-up by being their customers. Any communication strategy that keeps out the aam janta, the customer (in case you thought otherwise - drivers are the primary customers of cab aggregators), or only focuses on shoving one-way ads down their throat, is bound to fail. Posturing that the opinion of those who don't control the million-dollar funding rounds doesn't matter - or that they are not bothered beyond a transaction on a website - is erroneous in the age of social media and unfettered conversations, where speculation is a national pastime. (And speculation about a business is, more often than not, negative.)
"When I was 25, I wish I could communicate better -- and not just with my company's direct stakeholders." That's Ratan Tata at a recent startup event. It's a home truth that the young and restless need to internalise from day 1 of their journey as entrepreneurs. It's never too early to do the right things. There's no single formula, but those who keep communication honest - and there are many, many exemplars of good communication in our 40 under 40 list - almost always win in the long term. It could mean slowing down a bit from the relentless pursuit of growth (a company that has learnt to do this really well is Urban Ladder: there's a story on how co-founders Ashish Goel and Rajiv Srivatsa went about it in this issue of Fortune India), but it pays.
(The views expressed in this post are completely personal and are no reflection of Fortune India's stand. Photo: Bookmarks sent to me by Mumbai-based Lightbox Ventures before Christmas last year.)