How Micromax convinced Sanjay to become Chairman

After reaching the $1-billion-revenue mark, Rahul Sharma, co-founder of Indian mobile phone brand Micromax, decided that it was time to take the next big leap. Sharma wanted to invest in getting the right people who could steer his company through to the next phase of growth. The search led him to Sanjay Kapoor, a telecom industry veteran and former CEO of Airtel. It was the first time Kapoor had met the Micromax promoter. Three months later, Kapoor has taken over as the Chairman of the company. He has also been inducted to the Micromax promoter group. Business Line met Kapoor and Sharma to know how the deal was struck.

What made you decide to let professionals run Micromax?

Rahul Sharma: Last year, we had said we would like to be at $1 billion and around December-January, we realised that we can grow much bigger. That time, we said things are moving fast and what exactly we have to do and what will it take Micromax in the next millennium. We came up with the idea that the best application we will make is the people app. And that is what most of the company do at the inflection point when moving onto a different orbit in terms of growth, just how Larry Page brought in Eric Schmidt at Google.

The first name we thought of was Sanjay’s; so, we reached out to him and discussed about the vision that we have and Sanjay had his own ideas on that and by each meeting, it became more interesting. So, he is here as the Executive Chairman of the Board to guide the company to the next level.

Sanjay, after you left Airtel, you said you wanted to be an entrepreneur. What made you join Micromax?

Sanjay Kapoor: I was pretty clear in my mind as I moved out of Airtel that I am not going to get happier doing another corporate role. I need to explore entrepreneurship as an option and in that, areas related to data excited me. As I was scouting for ideas, I figured out that there are five pillars of data – access, applications, storage, analytics and devices. And, all these five will be big because at the end of the day, data is going to happen in this country, no matter what.

While this was happening, I met Rahul and they came and said that ‘we believe you pursuing entrepreneurship and you will take a long time to scale up anything you start. We have a $1-billion platform, can we take it from here and grow it together?”

What was it that you really liked about Micromax when they offered you this role?

Sanjay: I think it’s really commendable, given the way they started and where they are and I think what is more encouraging for me is the brand that they have created. So, when I went for that meeting, I was cold, I did not know whom am I meeting. But I pleasantly surprised and my compliments to youngsters at this age to realise where to hold and where to give up. It reminded me of Sunil (Mittal) – 1998 for him to have thought to say ‘it’s time to get professionals’.

What clinched the deal for you?

Sanjay: I saw the honesty and real willingness and genuineness to do it and I think that was the first clincher. I asked them very difficult questions, which are not easy to answer, but I think they were very genuine in their replies. I did seem to be the heavy weight because of all the experience I have, but it is their dignity to respect that. The second clincher was that Micromax is at a scale – appealing to an aspirer – especially who came from big scale. The third clincher was this business is linked to data.

As part of the promoter group, will you hold an equity stake in Micromax?

Sanjay: I don’t want to get into commercials, but of course, any such marriage will have a risk- award related to it. Rewards will be equity-linked. I don’t want to share how much.

Rahul, does this mean that you will take yourself out of the operations? Not many promoters have been able to do that.

Rahul: First of all, we have to see that it’s not one individual, the company is always paramount. It’s always about the organisation and whatever is in the best interest of the organisation has to prevail.

Sanjay has come with immense wealth of experience – if you are not able to use that years of experience, then, I think the whole purpose will be defeated.

I think our roles will strongly evolve more onto the mentorship, strategy level at Board and that’s how we will be able to move forward on that.

Sanjay: I think the bigger design is to say – we understand the distinction between the ownership and management, and we are respecting that differentiation and let the best decisions be taken by people who are best suited for taking those decisions.

The issue is you are getting a professional CEO. Operationally, he is going to be the in-charge and that obviously means that what was happening till yesterday is not going to happen tomorrow. This is a complete design change and a conscious design change. Whether this will work or not, time will tell. The intent is very clear.

Does this allow promoters of Micromax to look at starting new venture?

Rahul Why not? In terms of looking at other ventures, possibilities to create more revenue streams, certainly yes. We will be working on multiple dimensions of that. This is one of the hottest sectors worldwide, and we are fortunate enough to catch the wave. So many things to do in this sector and we have a lot of opportunities.

As the new Chairman, what are your plans?

Sanjay: Too early to say. All I know at this stage is that the industry is one which has got immense buoyancy and potential. Devices are not going to look like the way they look today. They will undergo tremendous transformation.

COMMENT NOW