An exciting evening with Kanwal Rekhi

A few people (yours truly included) who braved the inclement and stormy weather got instant fruit of their karma by being with the legendary entrepreneur and investor, Kanwal Rekhi.  This event was organized this evening (31st Oct 2012)  jointly by TiE Chennai and Madras Management Association.

If I did take notes continously, I would have enough content to fill a series of posts as Kanwal kept sharing pearls of wisdom from his rich experience and exposure.  But since I made only a few jottings, your exposure is limited to just those.  If you are inspired to know more, you can visit MMA website for a video recording.

Well’ let’s get into real action now!! Now for a disclaimer, the points were Kanwal’s but the elaboration is from my understanding.  Any errors or discrepancies to my account.

1.  Don’t worry about the Valuation.  It is better to have a smaller size of a larger pie than the full share of a pie that isn’t worth much!!

2.  A corollary to 1: Don’t fret about control of your enterprise.

3. I (Kanwal Rekhi) am quite amused when someone asks me to sign a NDA (Non Disclosure Agreement) even before I hear his pitch or idea.  It is quite possible that there are 10 people who are already working on a similar idea.  Idea, per se is not important but it acquires significance when the person takes the idea to the next level with passion and is able to execute it.

4.  It is quite difficult to create an ecosystem like Stanford in India.  Here there are too many restrictions such as how much an academic can earn from consulting (I would prefer a cap on the time he/she spends outside of his/her teaching) whereas in Stanford it’s very common for a professor to leave to pursue a stint in business and come back if it doesn’t work out!!

5. I am amused at the mention of ‘Social Entrepreneur’.  Am I an anti-social entrepreneur?  Redbus, one of our investees, has created 500 jobs.  Is that entrepreneur, an anti-social entrepreneur?  Entrepreneurship is by definition Social because it creates wealth, adds jobs, pays taxes and delivers a solution that makes an existing job better.  The tag ‘Social’ is a legacy of our pseudo-Socialist baggage.

6.  In the US, there was a provision where an investment in a start-up of a specific size would benefit from a tax-free status, to encourage such investments.  When I made a profit from an investment of this nature, I would roll it to another similar investment and thus enjoyed this benefit for many years.  This could happen only in the US because they understand the value of investments into start-ups.

7. Entrepreneurs ought to be a salesperson on a 24×7 basis.  First he must sell himself the idea of being on his own to quit his job.  Next, he must sell the benefits of entrepreneurship to his family members so that they would support him.  He then sells the business idea to attract co-founders, employees, investors and prospects.  And he sells himself every time there is a doubt of the future

8.  I invest on the person and not on the technology or the marketplace.  I have my own filters to figure out whether the person is worth investing.  I have a few sessions with the person and if I am feeling drained at the end of each meeting, I would not invest in his venture no matter how attractive it sounds because he would drain the energy of his employees and the customers.

9.  I also look for the language of the person especially when it comes to past failures of his.  I would go ahead only if he takes responsibility for the failure and has got the learning.  If he blames others like his employees, investors or customers, then it is strictly a No Go.

10.  An Angel Investor who gives just the money is most likely to lose it as I did in some occasions.  But when he combines his time with his money and becomes a mentor to the investee, his contribution to the venture multiplies and so does the chance of success.

11.  Early stage entrepreneurs need to survive first and must direct all their energies towards survival before they can even think of thriving.

There were many more pearls like this but these were the ones that I caught and wrote.

I also asked him a question during the Q&A session about the predominance of numbers during interactions with Investors rather than qualitative aspects of the business.  He said that it was his style to invest in the person but that need not be the way that others operate.  If the investors are looking at numbers, then the entrepreneur must sell the numbers that they want to hear.  Moderator Arun Natarajan responded that investees can also perform due diligence to select the kind of investors they want to work with.

I also had the opportunity to ask him on a one-one the need to balance passion with hard-nosed business sense and Kanwal mentioned that once the entrepreneur knows the destination he wants to reach then there are many routes available.  Once the journey starts, it is upto the person to see whether he is going closer to the destination or away and accordingly take a call to continue or leave.  He suggested that it is imperative to have milestones and constantly validate progress or the lack of it against those milestones.

I understand that 220 people registered for the event but many missed out possibly due to the bad weather.  I only wish they made it and enjoyed the angel treat from Kanwal Rekhi.

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2 Comments

  1. November 1, 2012 at 4:01 am

    […] I had clear views about this relationship, it wasn’t until yesterday at a TiE event with Kanwal Rekhi when I responded to a specific query from Rajan Srikanth of SmartKapital, that I felt must express […]

  2. November 2, 2012 at 4:29 pm

    […] my previous post, I had shared some of the insights that Kanwal Rekhi had shared with the audience in response to […]


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