Secret Diary Of An Entrepreneur

"The best part of entrepreneurship is the ability to pursue what you want to"

Secret Diary of Ravi Jaipuria - Part 2

Photograph by Vishal Koul

I always knew the restaurant business will do well in India, but we were more than lucky Yum! Brands ended up in our lap. It was thoughtful of Sandeep to have offered me the franchise. He was handling Pepsi Restaurants then. They had just opened a couple of restaurants and were looking for people… I remember Sandeep said it casually, “Why don’t you give it a shot?” I jumped at the chance, but the debates at home, my goodness! Bauji was dead-against getting into a business that served non-veg.

Defying Bauji was tough – he was always my sounding board. There was no need for a mentor, friend or guide, Bauji was there for everything. Whether I felt troubled or needed advice, he was the one I turned to. But the arguments we had over the restaurant business! I couldn’t understand why he was thinking the way he was – business is different from personal choice. We were all vegetarians…I still don’t eat meat. But we can’t stop others from eating it! So many restaurants serve non-veg food…if we did not take up the opportunity, somebody else would. But his argument was: is this the only way to make money? I just could not see his logic. He could not see mine. I was in no mood to relent or let go of a business opportunity that came on a platter. He was disgusted…

I knew there was no way he would visit any of the restaurants but I was hoping he would at least greet the Yum! chairman when he came home for dinner. He simply refused to come out of his room. In fact, whenever he came across anyone at Pepsi, Bauji would tell them, “Please sell this business for Ravi and give away the money to charity.” 

That was the one thing I did that Bauji didn’t want – he was never happy about it. Should I have backed off? I still don’t know…but it will always be a chip on my shoulder. 

He lived his life by his principles. He had the conviction to refuse an offer from Hilton to buy out our house and turn it into a hotel. Hilton would have paid any price – Prithviraj Road was some location. But Bauji said, “I am ok with it, provided it is a vegetarian hotel.” Hilton wasn’t amused, obviously. 

Living a life based on principles is tough, but it makes you more disciplined…

It’s amazing, even though he was not in agreement with what I did, he didn’t stop supporting me. Except in the restaurant business, he was there for everything, his sheer presence was comforting. But for him, I wouldn’t be where I am…

I wasn’t disciplined, I was in a hurry. Everything has its time, I realise that now…We were ahead of time with so many businesses – there were, of course, businesses whose complexity I grossly underestimated. 

We approached Starbucks more than 10 years ago. They said they were not ready for India, but perhaps, they thought India was not ready for them. So, we signed up Costa Coffee, we wanted to pursue the coffee business...we were too early. The café business is gathering momentum in India only now. Starbucks has finally made its entry. Still, the market isn’t ripe. Few stores are making money. It beats me – how can you charge the same price for coffee as anywhere else in the world when your real estate cost is way high? How can you pay the rent for someone who wants to sit in your store and sip a cup of coffee for an hour? I had been to one of my stores – it was packed. When I got back to the office and saw the P&L, it was still negative! How do you make money then? Maybe it will change if more people pick up coffee and leave, drink coffee as you walk, rather than sit in the store… or if they paid more for the coffee…it’ll happen, albeit slowly. 

It was good fortune we did not go berserk with Costa – to drag on loss-making stores. Even better, we shut the stores that didn’t work. I was cautious with Yum! too, initially. Thankfully, there were no disagreements – we had put up just eight restaurants in the first seven years. Why would we not expand if the business was great and throwing cash? Things looked great in 2014, it wasn’t the same in 2004. We already had more than 100 stores two years ago, buying 30 stores of Pizza Hut from Yum!, we had the runway to add at least a 100 more. The count is up to 280 within a couple of years…it simply made sense…

Disney could have been equally big – but what a disaster it turned out to be. Phew! everyone was selling stuff cheaper…. it’s such a great brand, we were so bullish when we signed up, but how could we have competed in a market where there was no exclusivity and cheap imports were the order? Roshini was understanding, she assured us but I guess there was no way to fix it…

Partnerships don’t always work well – and it may just be no one’s fault. When CK and I decided to bring in Creambell back in 2003, it made perfect sense. It probably did not make sense to remain as mere supplier to Levers but we did that for five years because the deal was lucrative. There is a difference between being a franchise and a mere supplier. But we had no option when the Lamba and Ghai family sold off Kwality to Levers.     

Perhaps, I could have taken charge of Creambell earlier. Maybe, we could have turned around the business much earlier. There’s no point thinking of all that now. Ice cream is not an easy business – it is a highly competitive market. It requires great focus and a tight leash – CK didn’t want to continue, glad I could buy him out. 

It’s a lesson I am not going to forget. It’s one thing to have a long-term vision but you need to have a pulse of the market to know what to do when. Daily MIS really works… especially, since I can’t be there supervising every single business on a daily basis. But before that, you’ve to be sure where to place your bets. 

People ask why I sold my stake in the AB InBev joint venture. I was talking to them for nearly a year, I didn’t feel that it was a great idea to continue. I don’t know how I was able to emotionally detach myself and take that call. Budweiser was great…we built it from scratch here, made it the largest selling premium brand. But I couldn’t grow all the businesses, could I? I have limited cash flow. 

I can’t forget the trip to the soccer World Cup in Rio – Carlos Brito was clear they wanted to grow aggressively. I can’t blame them for wanting to grow fast. But we couldn’t have coped since our ambitions didn’t quite match. I didn’t want to commit the capital required nor did I want to dilute the stake below 51%. I could have tightened all our businesses, matched up or stayed on and fought them. Neither was a great option. There was no point being wedded if we were not going to walk hand in hand.

There was a better opportunity knocking at the door anyway. Buying out other Pepsi bottlers was certainly a better proposition… it allowed us to consolidate our main business. It ended as a win-win for all. I got the money and bought the six bottlers, and they were happy to break free.

Would I have made a choice like this some 20 years ago? Most certainly not. My energy levels were far higher, I wanted to do different things. I may not have let go of one business to consolidate another business. But now I don’t want to run around building new things, it is time to consolidate. Already, most businesses are growing at a pace that I can’t handle. Its best Varun decides where he wants to go…

I would like it if Varun takes chances because this is the time he can afford to…He has a great platform, even if he commits a few mistakes, it wouldn’t hurt that much…

The best part of being an entrepreneur is to be able to pursue what you want to. You need to have the conviction though to take the call. The ability to decide fast, put your conviction on the line...that’s what the entrepreneurial edge really is – that’s what differentiates you from multinational companies or conglomerates. I always gave myself that chance, took on new challenges. The trick is to test businesses with small doses of capital…that’s what has always held us in good stead. It didn’t matter if we lost a couple of crore here and there, as long as it did not upset the applecart. 

I am glad about Varun – he is running the Nike and Apple stores by himself and is excited to scale up. If he picks up our core business quickly over the next couple of years, I can probably take a backseat and let him run the business. 

What will I do then? I simply don’t know…I’ve grown up in a business family, have business in my blood, I can’t ever relax the conventional way. I am relaxed only when I am at work – when I am faced with new challenges. I would grow much older, much faster, if I don’t have something to challenge me!

This is the second of a two-part series. You can read the first part here.