Entreprenuership as we do it!!

A few months back when I was visiting a friend in IIT Bombay he was getting eloquent about his plans to start a company, list it in the stock market, liquidate it and make a killing in the process. He was twenty at that time. I remember the time when I was twenty I was still trying to figure out why was it that I had taken it up as my life’s ambition to get into CET for Engineering, and having done that trying to figure out what next. Entrepreneurship was probably the farthest thing in my mind. The friend of mine was a marwadi whose family had business interests throughout the country. At twenty he was already making more money from his part time ventures than I did then after an engineering degree and an M.B.A. What struck me was that while children in Kerala are guided towards engineering colleges, these guys were guided towards ways and means to make a better living. Or in other words our destination was a means to a still farther destination.

For them education was a certain social necessity rather than an end in itself. In Kerala we were told to think of nothing beyond getting this degree. Things apparently would fall in place by itself after that. Risk taking was and still is not a forte for the mallu populace. This becomes very obvious if we look at the number of companies owned by malayalis which are listed in the National/Bombay Stock exchange.

When you travel through Surat or Ahmedabad you are met with large hoarding which exhort people to start their own businesses. The government has come out with several schemes for starting small and medium businesses. Frankly it’s not just the Gujarat government that has such schemes, but the central government as well as various state governments have schemes. In Gods own country they just contributes to the crores that go into undisbursed funds and gets lapsed every year.

Growing up in Trivandrum I was exposed to a population which was in many ways homogenous in their financial stature. Trivandrum is not a business town. The average family had at least one stream of revenue attached to the state or central government. And hence more or less every family was the same. Those families which had two earning members perhaps a little better off. The elite in the city were the doctors or gulf returnees. I remember a time when I traveled 8 kms (which at that time meant from one end of the city to the other end) to see a Mercedes S class. And this wasn’t long back mind you; circa 2002 I would say. It was only after I was plucked out of the social cocoon of malluland that I realized that Pillai doctor wasn’t after all the richest man in the world.

And the scene wasn’t that different in other parts of the state. But true Cochin was one of the first places in India to get Mercedes and BMW showrooms but that’s more down to the fact that mallus like to show off to the farthest extend that their means allow them to. Hence practically everybody who owned anything about 10 acres of rubber plantation a few years back (when the price of rubber was at a record high) was in a position to buy a Mercedes, and I guess most of them did. To make a case in point Narayana Murthy with his millions still rode a Fiat to his office at that time, Azim Premji still flies economy class while I remember the limousine which plied the roads of Trivandrum (How on earth did it ever get through Uloor junction god alone knows). No kidding, twenty foot limousine in Trivandrum. Well mallus let’s just say like to have their gold chains without the shirts on while the marwadi would rather sleep in his banyan on a mattress stuffed with five hundred rupee notes.

If you switch on the vernacular channels you get a fair idea of the business scene of the state by looking at the ads. I would say that 80% of the ads that you see in Malayalam channels are either related to property or to Jewellery (and recently ayurvedic creams and oils which cure everything from arthritis to zits) . And these are I guess the richest groups in the state. The nouveau-riche constituted by the property developers and the traditionally rich jewellery owners. Both these groups have inherent ties to the western shores of the Arabian sea. The few exceptions from this that we have heard for long are I guess the V Guard and the Manorama families. And the hoardings that line the national highway 47 are of jewellery stores, marble and granite shops, hawai chappals, banks or parallel colleges. And maybe we are infact taking a page out of the marwadi tales of success. The money lending business is starting to thrive (no doubt with the strings behind it pulled from the same Arabian shores) like never before with all those NBFCs sprouting up at every junction.

For decades we have been told that wealth is bad. Anybody who dared to create money for himself was assumed to have done so by crook rather than legal means. Wealth it was said wasn’t a social asset. It was for the individual and hence frowned upon.

Over the years mindsets have changed but mentalities haven’t. You can’t just switch over from a mentality that nurtured conservation and mediocrity to competitiveness and business pragmatism.

The mindset has been shaped by several factors not just political. Cultural factors played its role. How many mallu films of the sixties and seventies had themes of factory lockouts, evil rich man turning poor and so on (ahh these were the happy endings of the times). The financial climate had a hand. I’ve heard several times that to be a borrower is a worse sin that probably adultery. And frankly the foundation of any business is borrowed capital in whatever forms.

For decades to come, mallu parents will encourage their children to take up engineering without caring to see 1) if that is where the child’s interests lie or 2) if that’s exactly going to guarantee a safe future for the child; For decades to come mallus will measure success in life in acres of rubber (Things might change faster than that if the ASEAN FTA is implemented as it is); For decades to come mallus will think that an IIT is something slightly different from the ITI that the neighbor’s kid Shankaran went to get his diploma (Somebody once told me of a story when an erstwhile Kerala CM declined an offer from the Central Government to set up an IIT in Kerala saying that we have more than enough ITIs and ITCs in the state to fulfill the need for technical education).

I hope someday the state would stop giving its excuse about the lack of land as a reason for lack of significant enterprise and wake up to the reality that it’s the lack of will that’s the sole impediment. In fact I’m surprised when somebody defined the factors of production (land, labour and capital) they forgot to take into account the primary factor which is “human will”. Well economists never liked anything that can’t be quantified right. How the hell do you measure the power of human will.

But if you broaden your approach and look at it carefully the question is not just about entrepreneurship. It’s about wealth creation and that too over a period of time spanning at least two or three generations or in other words ‘sustained wealth creation’. And the failure is not really just a mallu phenomenon. There’s an inherent problem with the traditional family owned businesses that seems to be the default organization of Indian businesses. The problem of transition. The big family names that you heared in the eighties have gave way to new ones. And this is going to continue. The current crisis in THE HINDU group is a case in point. I feel it’s got something to do with our history where wealth alone is power. Narayana Murthy’s quote that the greatest power about wealth is in giving it away. Any takers??