If news reports are correct, e-commerce firm Snapdeal will be sold soon to its bigger competitor, Flipkart. The beleaguered venture, founded in 2010 by Kunal Bahl and Rohit Bansal, is expected to be sold at a valuation of Rs6,400 crore. This would be a steep fall for the firm. For it would represent nearly half the amount the company has raised in total funding so far, and would be several multiples less than its peak valuation.
If the deal goes through, the two founders will reportedly be wealthier by around Rs100 crore each. They are both under 40. With this, they would join a tiny but growing rank of start-up entrepreneurs in the country who become rich regardless of whether the companies they have worked to build are successful or not.
Nobody can grudge them this wealth. They have played by the rules of the game. It’s legal. It’s contractual. Of course, there will be critics who point out that the spectacle of founders walking out of a business disaster with many tens of crores strikes a discordant and unappetizing note. It makes it worse if this happens even as employees lose jobs and vendor payments get delayed. That is often the script when big transactions happen, and companies are in a churn.
But let’s set that aside for now. Let’s just focus on our protagonists, because there are rich pickings to be had from people’s journeys to wealth. Many entrepreneurs, or a certain set of professionals everywhere, will couch the motivation to be rich as secondary. Or, even lower down the list of forces that inspire and push them. Yet, few can deny that even when it isn’t the sole currency for success, it’s an important one.
So what happens when you get there? When you make it? When you have enough money so that you don’t need to work another day? A media entrepreneur I had interviewed for my book The Wealth Wallahs, had called the post-acquisition wealth he had amassed a “life-threatening experience".
But really, what happens to people when they experience a slow build-up of wealth, or its rapid infusion into their bank accounts? First-generation entrepreneurs who exit successfully, such as the media entrepreneur, experience this most vividly.
There has, in fact, been growing research on how wealth changes people, and how the rich interact with society—whether wealth changes neural networks and causes people to behave differently from a time when they didn’t have it.
Paul Piff, an assistant professor of psychology and social behaviour at the University of California, Irvine, in the US, studies how wealth (having it or not) can affect interpersonal relationships. His correlations aren’t pleasant: On an average, having more money can make you less empathetic.
Wealth definitely gifts those who have it blind spots, as it does justifiable privileges. Success can breed delusions. We are not talking about the brash arrogance of wealth, or its conspicuous, ostentatious material display. Even when true, these are lazy and superficial caricatures of the successful and the new wealthy. As a society that has a complicated relationship with wealth, we happily nurture the condescension we have for those who are richer than us.
The delusions wealthy founders must watch out for are different. These begin if they don’t carefully evaluate the components of their success. For example, how many parts hard work, bright ideas and just plain good old luck helped in building their fortunes? What role did risk play? How did risk stack against aptitude? The badge and cult of hard work, for example, that many successful and wealthy people tend to believe in strongly is limiting, if overemphasized, as a reason for success. It underestimates other forces that lead to success.
Those who’ve sold struggling ventures to larger players, as would be the case with Snapdeal, might recognize that an exit that made them personally rich isn’t always a wholesome measure of success. Even then, such entrepreneurs will become angel investors, haloed mentors and inspiring icons for many starting out. If they haven’t figured out the mathematics of their own success, even their well-intentioned advice might be limited, at best; and misleading, at worst. And not just for others. It can have an impact on their aspirations, goals and business objectives too. Confidence can cloud judgement. Self-belief can trump caution.
In the world of start-ups, we speak of survival in terms of life and death. This is only natural. Mortality rates are so high; as is the harsh reality that most ventures stagnate and simmer on low burn for decades. Yet for those who’ve made it through, sanely surviving success and wealth is a useful lesson to learn as well.
Surviving Start-ups focuses on the stories of the people (parents, siblings, spouses and friends) who make up an entrepreneur’s world. The columnist is the spouse of a start-up entrepreneur and draws from real-life experience.