These brothers believe Mukesh Ambani's Jio won't face existential threat

Tata veteran R Gopalakrishnan and his brother R Narayanan recently debated on what really differentiates a fledgling from established firms.

After a career spanning nearly five decades, it’s no surprise that Tata veteran R Gopalakrishnan’s name often features in the speakers’ list of conferences on management and leadership.

This time round, Gopalakrishnan shared the stage with his younger brother R Narayanan, former president of TiE Chennai, at a Bombay Management Association conference in Mumbai.


The two faced off on the startups versus grown ups aka established companies.

According to Narayanan, “... the spectacular returns that they [startups] promise, whether they deliver or not, attracts more than mere interest. It attracts awe.”

The valuation game
Valuations have always been a hotly debated subject in the startup space. With no measure of the concept of value, no public markets and no benchmarks, there is some scepticism about the valuations attributed to startups, according to Gopalakrishnan.

Raising a point about cashing out, he said, “When I have a child in my house, I don’t raise him to cash out. I raise him to be dirghayush [to live long]. When we celebrate cashing out, are we missing out on some human touch in the startup industry?”

To this, his brother responded that he wasn’t speaking about cashing out yet.

About valuations, Narayanan said, “Beauty is in the eyes of the beholder. There is somebody who is willing to pay that money. They have their reasons. We don’t agree with the valuations. But as long as someone is agreeing with that valuation or recognising it in some form, it’s met the goal. It’s not necessarily an end goal.”

He added that not many startups start off thinking about valuation. But as they go along, they tend to realise that they could get to a billion dollars and they must do something different. “We are at a very primitive stage, as far as the startup ecosystem is concerned. In 10 years, we will see more than 100 unicorns coming out of India,” he said.


What qualifies as a startup
“Would you call a startup?” Narayanan asked his brother, who responded in the affirmative.

“I would agree with you that it is a startup. But it lacks some of the features that a startup has. One of those is that a startup usually puts its neck on the block. Believe me you run a little bit faster when your neck is on the block,” Narayanan said.

But Gopalakrishnan disagreed with the opinion. “That neck [Jio] itself is worth several billion, not one billion. When an industrialist bets on a major new diversification, wouldn’t you say that’s putting your neck on the block? I would disagree.”

Narayanan, however, explained that compared to a fledgling company that faces existential threats at every turn, the Mukesh Ambani-led company’s future was secure.

“Neck on the block is an existential threat. Will I exist or not? And a startup does exactly that. I don’t think Mukesh Ambani has put his neck on the block where there will be an existential threat to Jio”.

Pace of decision making
Another point of distinction between the two is agility which startups possess. Narayanan provided an interesting view on the subject — and within it, a word of caution.

“As an entrepreneur, you need to be an all-rounder because the buck stops with you. In a larger organisation, you have resources available in some form or the other where you get reference points and can draw upon certain advice,” he said.

As a startup founder, one tends to become the last point of reference, often at a very young age. This leads one to believe that the organisation cannot function without them.

“And you become faster and faster with your decision making. You begin to think that you can take decisions faster than large companies. I am not saying that is true. You begin to think that. And you expect that same speed of decision making from your colleagues,” Narayanan said.

And his behaviour could be detrimental to team building. “Because the moment you [the founder] believes that your team doesn’t take decisions at high speed, you convey that with your body language. That isolates you even further. That ends up with arrogance,” Narayanan said.