Sanjeev Bikhchandani on Entrepreneurship and Corporate Governance

• Sanjeev Bikhchandani, also known as the OG of the startup world, has been doing startups for over 30 years, long before the term "startup" became cool.

• He quit his job in 1990 and started doing small consulting projects to survive, teaching, training, reporting, writing, and even working as a part-time journalist for 3-4 years.

• In 1997, after 7 years of struggling, he started a website called Naukri.com, which took job ads from 29 newspapers and rehashed them online, with no funding.

• The website got traction, and 3 years later, they raised capital and bootstrapped for 3 years, which is rare in the startup world today.

• Sanjeev emphasizes the importance of bootstrapping, as it disciplines entrepreneurs to survive and value money.

• He went public in 2006 with an IPO, which was subscribed 55 times, and the share price doubled and tripled.

• The company had money in the bank and was profitable, but the auditors and board members pushed them to use the IPO proceeds.

• Sanjeev wanted to invest in startups, but the board was hesitant, so they created a startup investing program in 2007.

• They invested in many startups, including Zomato, and even started a fund, which was initially met with skepticism by investors.

• Sanjeev shares his experience with corporate governance, which is about being honest, fair, and transparent in business practices.

• He learned that corporate governance is not just about following rules, but about being responsible to all shareholders, not just oneself.

• He shares a story about raising money from ICICI Venture in 2000 and learning about the importance of alignment of interests, that the company belongs to all shareholders, and that one cannot get rich before others do.

• Sanjeev emphasizes the importance of transparency and honesty in business, and how it builds trust with investors and stakeholders.

• He shares his experience with auditors, including Price Waterhouse, and the importance of having a big five auditor to verify financials.

• Sanjeev concludes by saying that corporate governance is about being honest, fair, and transparent, and that it's essential to internalize this concept philosophically and conduct oneself accordingly.- Naran Morti's quote, "Bad news must catch the elevator upstairs, but good news can walk up the stairs," resonates with the idea of giving bad news early and good news later, fostering trust.

• Honest management involves giving bad news openly and transparently, which builds confidence with the board and investors, preventing them from finding out through third-party sources.

• Trust is built on four principles: integrity, consistency, competence, and benevolence; absence of any one of these principles can lead to mistrust.

• Creating trust is crucial for business success, as it enables long-term relationships and investments.

• Trust is not just about investors; it's also essential for building relationships with co-founders, colleagues, shareholders, and customers.

• The ability to create trust is a core quality for a successful entrepreneur or founder.

• Trust can be broken by shortcuts, incompetence, or lack of fairness, which can lead to mistrust and negative consequences.

• Trust is built on keeping commitments, being transparent, and being fair, even when it's uncomfortable or difficult.

• Gray areas in business, such as revenue recognition, can be tests of character and require honest decision-making.

• Good governance begins and ends with the founder's mindset, prioritizing honesty and integrity.

• Surrounding oneself with capable and knowledgeable people is essential for good governance.

• Being honest and trustworthy creates long-term value, as investors are more likely to back a trustworthy entrepreneur or founder multiple times.

• The premium for corporate governance can be as high as 25% or more, especially in down markets.

• Going public without being profitable can be risky, and companies should only do so when they have a clear visibility of profitability and can handle the overhead of being a public company.

• Startups should list when they're profitable or have a clear visibility of profitability, and should only go public when their internal systems can handle the responsibilities of being a public company.

• Reputation is an entrepreneur's or founder's most valuable asset, and it's essential to protect it.

• Pricing an IPO aggressively can hurt retail shareholders and damage one's reputation.

• Protecting retail shareholders and the little guy is essential, as they are often customers and can provide long-term support to the company.

• Investor relations is not a finance job, but a sales and service job, focusing on creating a liquid market where buyers and sellers can easily transact.- Investors having faith and confidence in a company can provide a cushion during downturns, as they will be willing buyers when others want to sell.

• Studies have shown that retail investors are the longest holders, often holding and forgetting about their investments.

• DP and others met with multiple analysts and investors years before considering an IPO, building relationships and providing guidance.

• Inbound interest from investors was high due to a shortage of paper and a desire to invest in the Indian internet scene.

• Private pockets and pre-IPO investments were explored to build early relationships with startups and retain them as clients.

• Investment banks and M&A banks wanted to build relationships with startups, taking them to investor conferences to attract investors.

• Internet companies are still not well understood by the Indian market, with less than 5% of market cap attributed to them, compared to 25-27% in the US.

• In 10 years, many more profitable internet companies are expected to emerge, increasing their market cap percentage, but it will still be lower than in the US.

• India's economy is still maturing, with infrastructure still being built out, and per capita income still growing.

• Large, profitable, and listed internet companies are needed for the ecosystem to thrive.

• Principles for the startup ecosystem to follow include respecting the law, prioritizing honesty and best practices, and ensuring clean and honest business practices.