Success gets talked about and a successful entrepreneur is held up as a role model. But there are lessons in failures too. This column will highlight the mistakes made by the entrepreneurs and the lessons they learnt from their failures.

This interview is with Mr Babu Thiagarajan, Chairman and CEO, Quscient , a BPO and IT company, and a full service higher education provider. QuScient is now entering the Indian market with fully integrated Student Information Systems for colleges and universities.

Before founding QuScient, Mr Thiagarajan, a chartered accountant, was the CEO of TranSys Technologies Inc, a successful software services provider based in Princeton, NJ and Chennai. TranSys was one of the fastest growing small companies in the US with marquee customers and strategic partners like HP and Grant Thornton. TranSys was sold to a public listed company in India. Excerpts:

What are the mistakes committed by you that stand out in your entrepreneurial journey?

When I built my first venture, I was a novice to entrepreneurship. I brought a tonne of raw energy, enthusiasm and confidence to the venture, but lacked wisdom and caution. I made a few mistakes and I learnt a lot from those in time for my second venture.

First, my partners and I, each with equal equity stakes, were far too polite to define our work roles and hierarchy within the business. Though we were working hard towards our business goals, the lack of a defined leadership structure gradually led to a misalignment and sometimes even created chaos downstream.

This taught me an important lesson: “A ship ought to have only one captain, and this should also be clearly reflected in equity stakes.” Clear alignment and assignment of risk, reward, authority and ownership are imperative for a successful venture to emerge.

Second, in the early days, when I hired people I expected their commitment levels to be as high as mine. My argument was that when I was an employee I did not work any differently. Upon reflection, I feel that those expectations from people were unrealistic. Perhaps, one way to demand such levels of commitment from your employees is to define broader ownership through stock options, so that your employees participate with more, if not equal, zeal in the wealth creation effort.

Third, I was at times indifferent to details in contracts and legal documentation. This ended up causing hardships. Though I have an innate aversion for legal documents, in recent years I have forced myself to acquire a taste for them. Lesson: “Never push the envelope”.

What should the entrepreneur focus on when building successful businesses?

Three important things that an entrepreneur should focus on to build a successful business, especially in the services industry: Build an organisation, build a market presence and focus on finance. My first venture was wildly successful in the early years; team building was effortless and customer acquisition appeared facile. Our ambition was to create a long-term brand but our complacency on the third point was a dampener. Changes in macro environment can determine an entrepreneur's exit. Raising money at an appropriate time is critical to taking the company to the next level. Financial governance and focus on profitability are equally important.

(The author is the CEO of Energeate, an advisory firm for early stage ventures and cross-border companies with offices in Chennai, Bangalore and New Jersey. He is a Charter Member of TiE Chennai.)

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