Vikram sat looking out of his 20th floor office window at the rain outside.
Vikram was 36, dressed casually in jeans and sneakers (for how else would his young coders relate to him), ensured Fridays ended with beer in the office, and described his life’s philosophy as “hustling”… in every “40 under 40” list he was a part of.
Vikram had a problem. A ‘good problem to have’, as his friends told him. His start-up, an aggregation platform for poodle- grooming services had done as well as possible, stopping just short of the unicorn label. Now after the series-A to C, of funding, the obvious next way was.. to raise more, and realer money, i.e. series Dee to Zee.
Vikram was terrified. In spite of his usual highly positive management lesson on Linkedin this morning, he had to admit he felt less than positive. It isn’t that he didn’t know how to take his (hippo, horse, goat, giraffe, minotaur, matador, rhinoceros? Wait, I think he meant…) almost-unicorn to any investor. After all, his pedigree (play on poodle grooming, see we are being “clever” here!) meant he knew everything there was to know in the world, about every topic, even Life, the Universe and Everything (Vikram was sure “42” was just a very low valuation), and he was networked with others that did. It wasn’t even the idea of interacting with a species besides poodles. He understood that the species (“mere humans”) existed, and was confident in the work done by his personal branding team, so as to ensure he appeared to be an upgraded version of them. It was, in the end, the perplexity of having to jump through this strange, new, or at least a higher hoop, while knowing full well in his heart that there was no better use for money… than his next business model.
Vikram decided to go follow the mythical entity that’s supposed to have all the answers about managing the people, who selected YOU to manage things for them. So he set out to find it.
It was a Him, actually. The backroom wizard of VC circles.
The Dark Angel, if you will, of the startup heavens. The taker of much-negotiated “sweat equity” in air conditioned conference-rooms.
The giver of “gyaan”, for successful rounds of VC funding, his legendary slides full of dancing cherubs. He had perfected the “art” of giving of less (equity) and taking of more (funding). The subtle game of giving of voting “right”, with enough “left”, to do as your whims “dictate”. And the coach for those who wished to score the ultimate goal – the successful IPO.
This impressive specimen was an IIT and Ivy-league MBA equipped gentleman, Mr Sudhakar Atul. He was from an Eastern State; known for ex-denizens with double first names, impressive educational credentials, and (mostly successful) attempts to overcompensate for their humble origins. His name was shortened by his nerd circle friends as Better-Atul; and his trader circle friends as Beta-Atul, and the others (who wished they were in either) as Betaul. Ironically, he was CEO of a publicly held company, listed in the stock-exchange as Banyan Tree Public Limited, or simply The Company.
So one fine evening, during the networking mixer between Angel’s, VC’s, and wannabe umm.. unicorn’s (were they just horses… without the horn… naah!), Vikram cornered Betaul over endless steins (bigger than mugs, and fashionably Oktoberfest-ish!) of imported beer, with a few shots to punctuate.
At the end of the mixer, close to midnight, Vikram utilised the highly-inebriated state of Betaul to “volunteer” the task of taking him to his penthouse. As it was not too far away, and neither of them fitting the description of “designated driver”, they chose to walk the short distance. As Vikram half guided, half carried Betaul, they started the trudge towards their destination. Seen in silhouette, it looked like … the lanky pony-tailed frame of Betaul was being carried on the sturdy well-groomed back of Vikram (revise the Vikram-Betaal motifs… ye of low opinion of our narrative excellence).
To pass the time, they decided to have their “pre-pre-pre” discussion on the way forward for Vikram’s domination of dominion of canine services, called cutely as “Hair of the Shaggy Dog”, and it’s eventual listing in NYSE.
Though Vikram worked very hard to cultivate the image of the life-of-the-party drunk, in reality, he was the quiet, thoughtful kind. Betaul, on the other hand, became slightly pugnacious. So on they walked, Vikram silently carrying a raving Betaul through the night, half listening to the questions posed to him.
Let’s just report the conversation, without the editorial voice, you all have come to expect and adore (No? Have it as you will!):
Vikram: […]
Betaul: I like all that your eloquent silences say, Vikram! So… you are the sole Founder, with more that 90% of equity. All your co-founders “dealt” with? Good! That keeps the Saverin problems at bay. I like the velvet gloves, iron first way you handled the other co-founder, nay collaborator’s claims. I think in time the media will forget the brouhaha from the few e-articles on it. But do remember to remove all positive mentions of his “contributions”.
Vikra: […]
Betau: I know there is nothing to say for you, yet! So (lighting a slim cigarette), tell me what all high-sounding positions can you create and offer to the appointee’s of the VC’s, those Ivy League and Red-Brick-Yard (trying a cute term for IIM here… bear with us!) educated one’s they will insist upon. I find the position of COO, for a more senior recruitee; and Chief of Staff, for a younger Turk works the best.
Vikr: […]
Beta: I know, I know… you don’t think that these positions are required. As the current Head of Operations (your college junior, isn’t he?) is doing a passable job of it, under your able guidance and direct instructions. And your current-squeeze “good friend” takes care of the day-to-day team liasoning and agenda matching for you. But, if you need the certificate of being a professionally managed startup, and not a dictatorship of the founder, you need to fill these positions by qualified people with credentials more verifiable than long association with you. AND, you need that “certificate” in the eyes of the investor community to keep the funds inflow to the excess of your “burn rate”.
Vik: […]
Bet: I know. You have nothing to say. But are you actually sure that you are ready to take this step. I can help, but you will definitely need to secede a lot of the control. You had a successful stint in that big consultancy firm, right? You know the various pitfalls of centralised control and undiversified risk that has been fed enough number of times to the investment community But if you need money you need money. (lights another cigarette) The important point is… what is the “give” of total & complete control you will have, for the “take” of funds to grow, and in your case (sorry I did check your past quarter numbers) continued existence. And importantly, if you don’t get the valuation uptick from the new round, your existing investors may get jumpy, and call-in the few of the rights they have.
Vi: […]
Be: No need to answer… yet! Let me tell you a story. Maybe before your time, but you must have heard of it. My father used to be quite vocal about it. As they say, a guy from Eastern India can go hungry for full 5 days, but without commenting on politics, at the max one! Wait a minute… I need to use the curbside.
V: […]
B: No need to look so squeamish. (wiping his lips) It’s better out than in. To the story, Indira Gandhi first became Prime Minister of India, after the death of her predecessor. She was perceived by some as a “puppet” and actually maligned as a “mute marionette” or something. Call it the “corporate tenure” of the would-be start-up founder. Her first term after electoral success in 1967, was marred with in-fighting and creation of factions as she pushed off the control of the old guard. Very similar to the boot-strapping stage of a start-up, sometimes in parallel to working a corporate job, or doing freelance assignments on the side. What about you Vikram, which one was it for you?
V: […]
B: Ok. If you don’t want to answer. So back to Indira. Her second term started with her accepting the opposition’s call of “Indira hatao”, with her own “Gareebi hatao” slogan. She was becoming the central idea and person of the government. She won with an overwhelming majority in 1971 and ruled with an “iron fist”. Her foresight and decision making was legendary, and won her acclaims from around the world, and even the opposition benches hailed her as “Goddess Durga”, after her masterful handling of the Bangladesh War. This is similar to the initial positive feedback for the “finally right” business models of the one-horned-horse-wannabe’s, right! When all “co-founders” sing the same song, thanks to the flush of the first round of angel investment making its way into the dry coffers. Remember yours, Vikram?
V: […]
B: Tell me some other time, OK? As you would know, if you followed politics better than the EPL play-offs, the popularity gained by winning wars wanes when the masses are hungry. In Indira’s case, unrest gave rise to unlikely heroes and the Socialist Party eventually became a force to reckon with. Attempting their hand at the usual political tactics to bring their opposition down, the Socialist Party was handed an unexpected victory when the Allahabad High Court banned her from contesting elections for the next six year citing a minor election fraud. Indira considered herself to be India, and by that logic, India was Indira. Righteously indignant, she decided neither could survive without the other and hence imposed a National Emergency on the country. This is paralleled, in a way, by the “clash of personality” that if not solved amicably, results in a single “founder” holding all the positions of power and control in a start-up. I believe you “successfully” passed this stage, eh, Vikram!
V: […]
B: No need to look sheepish buddy! There was no judgement in what I said. Just a statement of fact. Anyway, similar to what happened in your case, the intent of crushing dissent and creating allies in the public worked well for Indira. Or at least that’s what she believed. You see, when she shut down all voices that were not supportive, she shut down what those voices may have said. The echo chamber around her convinced her that she was doing well. That she was beloved, in fact, they helped her “know” that the Emergency had done its job, and India was ready to whole-heartedly accept Indira as their rightful, democratically elected and divinely-ordained leader. No hero likes to be called a villain. Neither did Indira, and seeing the international publications that had once lauded her as “a leader of the new age”, now painted her like a dictator, was more than she could bear. She also knew her opposition was scattered and posed no threat to her. The close parallel to this phase is the inflow of good VC money, and the further strengthening of the “business model”, and well adjusted and applauded “burn rate” of the same. Rings a bell, I suppose Vikram! Oh… we overshot. We were supposed to turn left before this building. Let’s retrace our steps.
V: […]
B: No need to answer yet. Yeah, that’s the building, walk with me to the lift foyer would you, the story is almost done. Everything was telling Indira that the elections are the correct way to go. It is the way of the world. So she declared elections. And she lost. This was not surprising to anybody but her. But it’s always a surprise to the one that loses power, and yet, it is not just common, but the likely result of such elections. Historically, every second dictatorship broke down during an election year, putting the odds of the attempt failing at 50%. Yet, dictatorships across the world have held elections, on average, every fifth year. What makes otherwise smart dictators like Indira fall into this trap? Did Indira have a choice in keeping all stakeholders satisfied while simultaneously retaining power? And parallely, is it possible for a founder to make everybody (shareholders, and employees) satisfied and invested, while still controlling every aspect of decision making? I guess what I am asking is, what is the true spirit of /democracy/ “shared ownership”? Does it lie with real control with all shareholders vs imagined control with actual control lying with the one in the CEO seat? Are the Board meetings and AGMs just held for formal confirmation of what the founder knows/ wants all along?
V: (having been happily silent, given the stinging remarks he was the recipient the whole way) Dude, you really are extremely learned. You should really get this written up as a case-study. Why, I would be happy to “lend” you our technical writer to do this. Having said that, I did some Wiki-Research, and based on the facts, I do believe Indira had two options. Option 1, she should have waited a little longer before her “experiment” with democracy, at least till the leading personalities who had spearheaded the dissent were broken or dead enough. In fact the next incumbent had been the erstwhile leader of Congress Party (“O”), which had merged with a few more to form Janata Party. The fact that she swept back to power after three short years, can be seen as supporting this. Option 2, she should have changed the game and installed herself as the President with heightened executive power, and let her sons fight the election game, with limitations on who could file nomination papers. At least, she could have prevented incarcerated leaders of opposition from contesting and winning crucial seats. Parallel question on founder control versus fund infusion? I would say Option 1 means the going public should be slower and in incremental stages, limiting the stake dilution of the founder. A good lawyer and some jugglery can do the trick. Option 2 is slightly trickier. May be adding “common” board seats controlled by the founder, every round of funding so that the board is stacked in his favor, or at least more than the investor + independent seats. Or contractually build in proxy voting rights, as my idol The Zuck has done. Or should I say, never take ownership, funding and control decisions in times of desperation. Ensuring negotiation from a position of strength, and a good lawyer at your side, that’s what I would write in my LinkedIn post on this topic. Hey, Betaul… wait, I needed to schedule our meeting for tomorrow.
B: (walking into the lift) Don’t worry, one of my assistants would mail you the details. (turning around and pressing the close button) Anyway, you don’t seem to actually need my advice (to the closed lift door, almost sadly) You seem to have all the answers.
Outside, Vikram looks into the shiny steel of the lift’s closed door. He looks equal parts bemused about the strange conversation he had with the most clued-in guy of the start-up ecosystem and equal parts proud of the confidence with which he delivered his hastily researched answer. He adjusted his coiffure one last time, and started his walk to the pick-up point for a quick smoke before his Uber arrived, which seemed to have taken another wrong turn. It seemed there was one last person he needed to guide tonight. Or was it already tomorrow?
Random Mythoscopy 