ENTREPRENEUR SPECIAL...Buddy Business

Buddy Business

   IF YOU counted companies in the country formed in the past few years on the basis of the co-founders’ friendship dating back to their college or even school days, it could easily outnumber the amount of runs the legendary West Indian openers Greenidge and Haynes scored in tandem. Such entrepreneurial bonds also seem to have a higher rate of success. Ask Ranu Vohra who teamed up with his IIT Delhi hostel mate Kaushal Aggarwal, and another colleague-turned-friend Gaurav Deepak, to found the investment banking hotshop Avendus. “The know-each-other factor is so extremely important in such ventures. If you are friends, you intuitively know what the other person’s strengths are,” he says.
   One of India’s best known software firms, Infosys, too was born out of the friendship between NR Narayana Murthy and his four other colleagues working at Patni Computer Systems, way back in 1981. The rest is well-chronicled history.
   IIM-Ahmedabad classmates Sunil Nikhar and Nandlal Bhatkar have been friends for nearly two decades now. But when they decided to start a derivatives risk management and analytics firm Pyxis, they thoroughly analysed what each would bring to the table. “We were convinced about the idea but had to convince each other of the roles we would play in the venture,” says Nikhar, who is designated president of the Pune based venture (friend Bhatkar is CEO).
   All friends-turned-business-partners agree that defining roles is the key in making such a venture succeed. Even though friends may have equal equity share, that doesn’t mean every decision made should have equal input. Every person has his own strengths and weaknesses and these need to be identified, and job roles need to be created accordingly.

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   VOHRA recounts an incident when the newly formed Avendus was helping Indiabulls raise money in 2000. “We knew that Gaurav, who is very aggressive sales person, was best suited for the job, which required making a strong pitch. He took the lead role for that deal and we were able to pull it off,” says Vohra.
   According to Patricia Greene, provost, Babsons College, and an expert on entrepreneurship, the chances of an enterprise set up by a group of close friends has a greater chance of survival and success compared to companies started by an individual entrepreneur because of the diversity of ideas and leadership skills that each of them bring to the table. She says that the magic number is somewhere between three and six. “Three to six people coming together ensures that you have a significantly diverse skills at your disposal, and at the same time not too many voices pulling the company in different directions,” she says.
   Her suggestion is that before launching their business, friends should sit down and discuss everything threadbare — where they want the business to go in the long and short term, how much money they expect everyone to put in, how much time everyone should be spending — without the emotion of friendship clouding their vision. She adds that in the US, even venture funds and angel investors look favourably on businesses promoted by a group of friends rather than a single promoter.
   “Everybody being on the same page from the beginning helps avoid unnecessary arguments,” says Alok Mittal, the co-founder of Jobsahead.com , which was sold to Monster.com, and who now heads the private equity firm Canaan Partners in India.
   But it’s not always that friends define their respective roles and put them to use in their start-ups. Whizlabs, an Elearning content provider, which helps candidates preparing for IT assessment exams conducted by IT majors like Microsoft, Novell and Sun, was started by three IIT Delhi classmates. “Having won several business plan awards we were absolutely convinced of our idea but didn’t know who would do exactly what, when the company was formed. As close friends who had fought our battles together, we had a good chemistry and grew in our roles, and we often interchanged our roles,” says Kapil Nakra, who currently heads marketing for Whizlabs.
   If you are going into business with your friends, don’t plan on being friends indefinitely. “I have a strong operational background and Bhatkar has great domain expertise. Moreover, we give space to each other in the decision making process,” says Pyxis’ Nikhar. “We completely alienate business from our friendship,” says Vohra.
   When friends become business partners it is also important for their families to get along well for the partnership to last longer. “Although spouses can know only so much about our business, we make a conscious effort to spend more time with all our families together. In fact this year we plan to go on a vacation as well,” adds Vohra.
   Everyone has different work habits. There is no easy way to fix this, everyone just needs to understand that people tick in different ways. “There are lot of occasions when we have to fight our way out. We even scream at each other. Constant communication is imperative,” he says. Learning to deal with conflict is key to making any partnership work —especially if you have been roommates or classmates in addition to being co-founders, like Nikhar and Bhatkar. “It’s a lot like making a marriage work. There’s a lot of give-and-take and patience that has to go into it,” says Nikhar.

(TR Vivek CD 061206)