Probing minds of honchos who quit ... only to start afresh

Intellectual stimulation and sense of belonging behind shifting loyalties

MUMBAI: What made Rajat Jain, managing director, Walt Disney India, quit the company to take on the mantle of managing director and chief executive officer of mobile2win, an early-stage mobile value-added services venture?

It’s a combination of factors: after having spent 20 years in the corporate world, the challenge to create something, aware that a lot depended on him, as opposed to the processes and systems that took care of much in companies such as Walt Disney, SET MAX, Benckiser India and Hindustan Unilever where he had previously worked, was one such.

“In a market such as India, opportunities to participate in the scale-up of a small company of this nature are now becoming real. I’ve always had plans to attempt something like this, but was waiting for the right point in life,” he said.

The right point came when Jain had a chance meeting with Nexus India Capital, one of the investors in mobile2win, in early June 2007. By August, he was on board. Jain, however, seems to be realistic about expectations.

“While the upside potential is huge, there is a huge downside risk as well. Taking on a start-up leadership role is similar to walking the tightrope. But there is a clear opportunity of wealth creation if you reach the other side,” he said, without disclosing the stake he was given in the firm.

As Jain put it, the perks of working in a start-up are completely different from what he had been used to. “You run it like your own company and there is a sense of belonging,” he said.

Naren Gupta, one of the founders of Nexus India Capital, has another explanation for why corporate honchos join start-ups: “It gives intellectual stimulation and instant recognition to the individual if the company becomes successful,” he said. While Jain’s move is the most appropriate example of how an early-stage company has been able to lure a high-flying corporate honcho, his may not be the end of the story.

“In India, such moves are just about beginning to happen. In the US, it is commonplace,” said Niren Shah, managing director, Norwest Venture Partners, another investor in mobile2win.

As examples, he cites Google founders Larry Page and Segey Brin hiring Eric Schmidt from Novell as chairman and CEO in 2001, three years after Google’s launch. Another is Pierre Omidyar, founder and chairman of eBay, who brought in Meg Whitman from
Hasbro Inc in 1998, as president and CEO of the company.

“Hiring from the industry happens at two stages. One is at the venture capitalists’ entry level, when he feels there is a need to restructure the management team of the investee company. The other is 3-4 years down the line when the founder and the board feel there is a need to hire a top professional to scale the business,” Shah said.

Jain’s hire at mobile2win can be clubbed in the latter cate-gory.  Meanwhile, the former situation, in which the promoter and venture capitalist don’t necessarily give up management control in favour of a professionally hired CEO, but looks to hire from corporates to broaden the bandwidth of the management team, has been happening a lot.

“Attracting talent from big corporations is the biggest challenge for start-ups, but a venture capitalist/PE backing for the company is a step towards achieving that goal,” said K Srinivas, managing partner of BTS Investment Advisors, a Switzerland-based group that has been doing private equity deals in India since 1996.

Ask Jain what he would take to a start-up like mobile2win? “Order into the chaos, a professional management team, a solid network, experience in building brands and organisations, managing governance and compliance issues, driving the company with a vision, and a commitment to stay the course.” 

sanat_vallikappen@dnaindia.net