The ups and downs of the start-up culture

Once upon a time, Infosys was a start-up too. Over the last 37 years, the iconic IT company has gone through birth pangs, sexual harassment cases, favouritism charges and even issues concerning financial fraud.

But during the early days of Infosys, the company was known more for its high corporate governance standards it set for itself even though it didn’t have to. Its co-founder, NR Narayana Murthy, was a disciplinarian and someone who had the vision to build an institution which could outlast him. So he put in place several good practices in place right from the beginning. The co-founders adhered to them as well, which helped the company to scale newer heights.

Along with Infosys which started its innings from a small office in Koramangala in East Bangalore, there were several other IT start-ups which were set up around the same time. Except for a couple or more, the others don’t exist today. The fact that the valuation of Infosys has grown from zero to $40 billion shows that the foundation laid by the promoters has stood the test of time. But the start-ups of the millennium, with quite a few launching their operations from Koramangala just as Infosys did more than three decades ago, are a different lot. Most of them received funding without earning them. An idea which showed promise or a proof of concept and held potential was enough to get angel, PE, VC funds to line up at their doors.

It was easy money, easily spent. When Flipkart’s Binny Bansal bought a house in Bengaluru for over ₹30 crore in a locality that had Infosys co-founders Nandan Nilekani and Kris Gopalakrishnan as his neighbours, the irony couldn’t be more evident. While one concedes the fact that the business models of an IT services company and that of an e-commerce one are completely different, profitability is at the core of any venture. The money for Bansal’s ₹30-odd crore house came straight from someone else’s pocket while that of Nilekani and Gopalakrishnan’s came from the profits that Infosys was making.

Here in lies the difference. Without taking away credit from Bansal whose venture was the pioneer of e-commerce companies in the country, start-ups conceived during the millennium and later, have remained the same. While the hires in the start-ups are full of adrenaline, bubbling with innovative ideas almost on a daily basis, the emphasis is more on playing the valuation game to get more funds during the next round, while putting in place processes and systems are alien in nature.

Different ‘DNA’

Perhaps the start-ups are wired differently: A bunch of talented set of people come together to create the next big wave or disruption and part ways either because they have achieved their goal or because the entire thing has come unstuck. The mushrooming of co-working space is most probably a good indication of where start-ups are conceived, grown and in the end either merged with another one or shut down.

There is absolutely nothing wrong with the business models of start-ups because the next big innovation in any field can only come from the sheer talent that promoters bring to the table and where ideas get monetised. To tie them down with processes or by bureaucracy is as good as stifling their creativity. This is perhaps the reason why multinationals have created start-up funds or organise hackathons to tap into the raw talent entrepreneurs bring along.

Therefore, to ask the promoters to dress up their start-ups with the best HR practices when they don’t know when and from where their next round of funding will come from and whether they will exist in the next quarter, can be quite cumbersome for them unless the ventures which fund them insist on putting in place such norms.

But these funds themselves are start-ups in some ways. What they bring to a start-up are funds which are tied down to milestones. As long as they are achieved, and the valuations keep going up, matters such as harassment at workplace are the least of their concerns, though, in the normal course, they ought not to be, as ethics and morality are not only the cornerstones of any successful entity but also that of individuals.

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