“Failure is the stepping stone to success!”
“Failure is a part of life!”
For long, entrepreneurial success stories have been spun around these clichés. I can’t comprehend stories that glorify failure. I believe once having stepped out, entrepreneurs play to win, to beat the odds. They dream of creating a business or institution that will outlive their own mortality. I am not saying failure won’t happen, but if entrepreneurs condition themselves that it’s okay to fail, they are inadvertently increasing the probability of failing. Whether the chips are up or down, you have to be an eternal optimist…
In some sense, every entrepreneur has a trip in life, so do I. My career began with Citibank, where I spent a decade from 1990 to 2000. At Citi, it was all about discovering retail banking through dust and grime…it was the foundation stone that set me up later in my life. I was running the auto loan business, when I got a call from Shikha Sharma, the-then MD of ICICI Personal Financial Services (PFS). ICICI was then a domestic financial institution (DFI) which under the leadership of KV Kamath was diversifying into retail in 1999, led by Shikha. I declined her offer initially. But six months later, in November 1999, I again got a call, and met her at the Delhi Airport when she came to speak at a conference. This time around I decided to make the switch.
ICICI was a start-up in retail with few employees, and I thought I could build the retail business ground up, and the possibility of writing your own rules, greatly excited me. I wasn’t nervous though my seniors at Citi felt leaving a multinational bank was not a great idea – not to deny that I was also getting a rather generous stock option package!
Meeting KV Kamath was an enriching episode as I found him almost regal in approach, and large-hearted in his comments as he spoke positively about the future of consumer finance in the country. He asked me how I plan to take on Citi where I was coming from. I told him, “That’s not a problem, I am raring to go and can build a large consumer finance business”. Maybe, it struck a chord with him, I don’t know.
But my boss at Citi was not giving up easily. He holed me up one night till 3 AM at the Taj Palace Hotel explaining how an MNC bank, given the possibility of a global career, was better than ICICI! He even advised me, genuinely though, that if ICICI were to shut down retail in a year or so, I’ll have to come back to Citi. And that I would have to pay a career price for returning just like in the Indian Airlines case, where the pilots had to come back at lower perks than before! But I thought I’m only 32, I’ll deal with whatever comes my way...
March 6, 2000 I was on-board ICICI which then had a loan book of around 300 crore. It was a great phase as I went about building the team as the auto, commercial vehicles and personal credit businesses took off. Just four months into my joining, Shikha took over as the MD of ICICI Prudential, and I became the MD of ICICI PFS. Though I don’t know whether it was planned that way…she had essentially hired her successor and moved on to life insurance. Over the next few years, I replicated the core concept of retail lending learnt at Citi, at ICICI. By 2002, post-merger of the DFI with the subsidiary bank, I was head of all retail assets and liabilities of the new entity. It was an inflection point for me…now I had a much bigger landscape and retail banking, with thousands of branches became highly successful in the country. In October 2006 I joined the board of ICICI Bank and felt really good that I had achieved so much within six years of joining the group…I still hold that ICICI is the greatest place ever to work.
The earliest memory of dreaming to be on my own manifested sometime in 2005…we were to have an offsite meeting in Shimla and our flight from Delhi to Chandigarh was cancelled due to inclement weather. We took a train to Chandigarh and then drove to Shimla. In the car that late evening, my friend and colleague Vishakha Mulye saw me flipping a book on retail banking and said that I should write my own book instead, considering the success we were having in retail banking. I assume she said it in jest. I laughed and said I have bigger plans, “I’ll make my own bank.”
Many years later, the opportunity arose in early 2010. The economy was fast recouping from the crisis of 2008 and GDP growth rate touched 9% plus in a particular quarter. Economists were again talking about India’s potential to become a $10 trillion economy and all that. The optimism around the country’s prospects and the helicopter view of the economy gave me the feeling that I can pull off venturing on my own.
My idea was to create an institution which would lend exclusively to small enterprises and lower and middle class consumers, as I could not think of any value-add that I could bring to large corporates, which were anyway being served by big banks. But I was not sure how to begin my journey. I initially thought of proposing to a private equity firm to back me with 1,000 crore and offer me 10% sweat equity. There was no such deal on hand…it was just a fantasy in my head that such deals were possible. I chose the benchmark of 1,000 crore networth because I felt anything below that would be too small to be relevant…a smaller stake in a larger firm was better than a big stake in a small firm. But my personal worth was not enough to start a company of that size.
While such a thought was crossing my head, I bumped into Kishore Biyani on a flight to Hyderabad and we got talking. He told me about his group finance company Future Capital Holdings(FCH), whose co-promoter had recently parted, and was headless for a year now. After a brief talk, he popped the question whether I would take over the leadership there. I said I want an ownership stake and can’t take a job anywhere after being at an institution. He said you are the owner, I am only an investor! It was a rather quick talk but he lived up to this theme till the end. We agreed on a 10% equity sweat stake.
FCH had a networth of 690 crore and was largely into wholesale lending with subsidiaries in forex, broking, asset management and a subsidiary NBFC. The stock price had come off from a steep 10X book value in January 2008 at the time of listing (rose to 1,100 after IPO at 765), and was quoting at around 1.1x (around 100) in wake of the global crisis. I also thought this was a fair valuation, as I would have fetched the same valuation if I had started a new NBFC from scratch. Senior ICICI colleagues to whom I spoke of my idea of leaving ICICI for this opportunity told me that many corporate restructurings were going on in the group and there was a possibility that FCH could be on the block. I thanked them for the input but told them if I stepped out and re-position this as a retail NBFC, I could raise 300 crore equity from the market or a PE investor and ramp up the networth to 1,000 crore as a first step.
But the decision to cross over to a new path is an exceptionally difficult one. I had another 20 odd years ahead of me in a board position of a large group by my estimate, as I had become the CEO of ICICI Prudential Life Insurance. The fear of losing it all and becoming irrelevant, losing one’s voice, or becoming nobody is the biggest fear to surmount when you leave a successful organisation. To put the move in perspective, I was moving away from a retail book of over 130,000 crore and getting associated with a 94 crore retail book! I said to myself if I pull this off, it will be the biggest of my lifetime.
Also I believe that it takes less than a year for your personal and professional brand equity to vanish once you leave an organisation. How long will the people I meet say “he built the retail banking business at ICICI Bank”? Not very long. They will shake hands but their next question will be “So, what are you doing now?” I feel that is the challenge a professional donning the role of an entrepreneur and starting small again, faces – that once you are off the circuit, it doesn’t matter where you came from, what you built, what you achieved, or what post you held. It’s soon history. No one has time for you, Yeh Hai Mumbai Meri Jaan.
But it was a choice I had to make. I thought it’s going to happen now or never. I also knew that before the winds in my sails go off, I had to latch on to something – an equity backing for my venture. I had already thought through and practiced my line: “Financing the underserved, with benefit of technology”. I had experience and age on my side – it was a great combo. If you are in the late ’50s, I’m not sure you will have the zeal to go through all the uncertainties and troubles, plus the issue of being a senior but having to start small. You are used to people milling around you, you don’t want to go back to running around seeking appointments! Also, you have to go down the curve, before you can pull it off, that is, if you do. Also, going down the curve at that age can dampen your ego.
When I broke the news to my father, he didn’t quite understand what I was trying to do. “First you were with a large foreign bank, then with a large private bank, and now you are saying you’ll take a stake in a small company.” I think he didn’t quite understand the context of what I was doing. But I found encouragement in my wife, who better understood my predicament.
In 2010, I was on board FCH. But the script was far from perfect.