STARTUP

What is a Startup?
A startup is a young company that is just beginning to develop. Startups are usually small and
initially financed and operated by a handful of founders or one individual.
Why do people become Entrepreneur?
The diagram explains :

Twelve key characteristics of wildly successful entrepreneurs:

1. Follow your dream. All successful entrepreneurs have an idea they want to pursue. They see an
opportunity to solve a consumer or business need. Do you have a dream? Having a dream is the key.
Its the starting point. Its a seed that, if planted, watered, nurtured and cultivated, has a wonderful
chance to grow. Do you have that new product in mind? Are you ready to go? Then I say: full speed
ahead. Go for it now! Dont wait.
2. Take the risk. Winners understand and take the measured risks associated with launching a
business that may include loss of money, possible failure and health risks. Even with a great product
idea that has gained traction with customers, founders face stunning and daunting challenges.
Entrepreneurs who are successful have taken significant personal risks to start and grow their
businesses. Prior to moving forward, they should have considered, weighed and evaluated each major
risk, and recognized the potential consequences of their decisions.
3. Make the sacrifice. Those who start and grow a business will give up many personal benefits to
be successful. Sacrifice will include time, relationships and other opportunities. What are you ready
and willing to relinquish? If you have the drive (and support from family) you can become one of the
many winners.
4. Be persistent. Great entrepreneurs never give up. They never stop trying. They somehow
overcome every barrier and climb over and around all obstacles. Nothing gets in their way to achieve
utopia. This unflagging attribute is a key characteristic of triumphant business leaders.
5. Know your customer. Successful entrepreneurs know the needs of their customers. They know
everything about them. They know what they want, when, where and at what price. Have you done
your homework? Those who constantly seek customer perspectives are setting their business up for
great achievements.
6. Sell to survive and prosper. Winners know how to sell their products or services. They
understand the customers satisfaction level with the current competitive offering, the price paid for
the product, where it was purchased and details regarding product features, warranties and support.
They know how to find, engage and close a sale from customers, over and over again.

7. Take care of your customers. Great entrepreneurs value their customers and go out of their way
to take good care of them. These alert entrepreneurs work long hours to win their customers hearts
and minds and labor every hour to retain and increase their buying activities. Without question, this
attitude typifies the very best entrepreneurs.
8. Hire the right employees. Winners know how to find, select, hire, train, motivate, reward and
retain great employees. They thoughtfully eliminate workers who dont contribute. They elevate
those who do and assemble the best team possible.
9. Value your employees. They also know how to keep employees happy and productive. Renowned
business builders carefully watch over their employees like a shepherd over a beloved flock. They are
kind, respectful, encouraging and highly supportive. This unique attribute is one of the powerful
characteristics of award-winning entrepreneurs.
10. Establish a winning culture. They know that shared values, philosophies and behaviors align
and combine to determine the future success of an enterprise. They establish a positive culture that
inspires and motivates workers.
11. Call upon mentors. They call upon individuals with experience, skills and a network to guide
them.
12. Communicate constantly. They regularly communicate with employees, vendors, investors,
suppliers and customers about whats happening in the business.

Risk in startups and its smart management

There is an old saying that good lawyers run away from risk, while good businessmen run towards
risk. Entrepreneurs see no risk as meaning no reward. In reality, all risks are not the same. Many
risks can be managed or calculated to improve growth or provide a competitive edge, while others,
like skipping quality checks to save money, are recipes for failure.
The challenge is to avoid the bad risks, while actively seeking and managing the smart risks. There
are no guarantees in business, but it pays to learn from the experiences of entrepreneurs and business
experts who have gone before you. As a long-time mentor to entrepreneurs, here is a collection of
smart risks that investors look for in new startups:
1.Focus on a tough customer problem rather than a fun technology. Investors hate technology
solutions looking for a problem, due to the high risk of no customers. If the customer need is obvious
and large, the calculated risk is in the quality of the solution, the team, and marketing. These are risks
that can be mitigated with the right resources.
2.Schedule frequent updates to your solution to maintain growth. Assuming that one can quickly
recover after competitors kill your cash cow is not a smart risk. One need a plan to regularly obsolete
its own offerings, with continuous innovation, before customers send a negative messages. Its hard
to recover from a tarnished image.
3.Plan to deliver a family of products, rather than a one-trick pony. Even a great initial product,
with no follow-on, wont keep you ahead of competitors very long. A smarter risk is to build a plan,
with associated greater resources, that will put one in position to expand your product line and keep
one step ahead of competitors.
4.Implement a modern real business model. Providing everything free, and growing users to the
max for years, is a high risk approach requiring deep pockets. Risk is more manageable with
subscriptions and even free minimum pricing. Even non-profits need revenue to cover their costs,
and continue to provide services. Find a strategic partner to accelerate growth. Everyone wants to
forge ahead all alone, and kill every competitor in sight. Almost always, risks are more predictable
when you use competition for access to new customers, economies of scale, and shared resources.
Finding win-win deals is a manageable risk, versus a battle with one winner.

6.Use metrics to measure results of marketing initiatives. Too many entrepreneurs put all their
resources in one big make-or-break effort they cant measure, or they count on word-of-mouth and
viral marketing, which are totally unpredictable. I like marketing plans that come from both inside
and outside the box, but have milestones and measurements.
7.Recruit the best team members and provide incentives. Trying to save money by recruiting
family members, or hiring only interns, is a bad risk. Great team members may take more time to
find, and cost you stock options, but a qualified and highly motivated team that stretches your budget
is a good calculated risk.
8.Build your business with minimum outside funding. More money is not more likely to solve
your problems or reduce your risk. Investors know that startups with too much money fail just as
often as those with not enough. Strategically, you need a plan to survive through organic growth,
with outside funding to effectively accelerate scaling.
9.Dont rely on conservative forecasts to reduce risk. Investors dont fund conservative forecasts,
nor wildly optimistic ones, since both imply a lack of commitment or homework. Opportunity and
revenue projections based on deep market and customer analysis are a smarter risk. Measurements
and business intelligence along the way also mitigate risk.
10.Be a leader rather than following in the footsteps of another. Many entrepreneurs think they
can reduce and predict risk by emulating previous winners. But stepping into a crowded space to
steal customers is more risky than attracting new customers looking for a solution. Customers like
leaders, not followers.
The risks you want to take are the ones that you planned for in your resources, set up metrics to
measure, and manage on an ongoing basis. All the rest are bad risks, including problems you didnt
anticipate, competitors you didnt know about, and customer expectations that you cant meet. An
age-old measure of startup health is how much time top executives spend on containing bad risks,
versus proactively exploring new risk opportunities. If the majority of your time is in recovery mode,
your whole startup is likely a bad risk.

Corporate Job Vs Startup World

One graduated from college, degree in hand (or in the mail), and you have a couple of job offers on
the table. Other than being one of the lucky graduates in a weak economy, you have a choice to
make. On one hand is a high-paying entry level position at a reputable brand in your field. On the
other hand is a job offer from a small startup that is just kicking off. You've seen their product,
believe in their mission, and like their approach, but aren't sure you want to take on the risk of
working at a startup. You're leaning toward that corporate job and good pay with nice benefits. The
smart choice.
Or is it?
Here are 8 reasons why one should take the plunge and enter the startup world instead.
1. You'll have more responsibility. Working at a startup probably means you're part of a small team,
most likely in the single digits. Because of the nature of having such a small team, there is probably
nobody else in the company who has the same skill set as you, approaches problems in the same way
you do, or even thinks the same way you do.
2. You'll be given more opportunities. most startup jobs won't pay as well as some of the bigger
corporate and business jobs. You (or your degree) may be worth more than a startup is able to pay.
But working at a startup offers a different type of reward: an incentive-based system that isn't based
on dollars, but rather in skills attained and opportunities seized. The experience will outweigh the pay
cut.
3. You'll be able to do a lot of different things. One of the biggest complaints one hear from peers
who have entered into a more-structured, corporate position is that they are generally stuck with their
main task and don't get to branch out into other areas. Whether it's writing, designing, filling out
spreadsheets, or any other task, it's usually a one-person-fits-one-task kind of position. Working at a
startup will allow you to try on a lot of different hats, even that weird one that you didn't think you
would ever like, but find out that you did.
4. You will learn from true innovators. People who start their own business have a different mental
and professional makeup than those who have never gone off to create something of their own.
Entrepreneurs are defined by seeing a problem and thinking of an innovative and original way of
addressing it. Because of this innovative nature, entrepreneurs are some of the best people to learn

from. They approach problems differently, are constantly finding solutions, and are driven to make
the most out of their time and work.
5. Your work will be recognized (as will your failures). at a startup, it's nearly impossible not to
notice a job well done or to give credit where credit is due. If you succeed, the small team will
recognize it instantly, and the praise and glory is yours to bask in. Spread your arms in glory, my
friend, your work has been recognized. On the flip side of that coin is that it's also really easy to see
when you've screwed up. For two reasons, this is a good thing. The first is that it's nearly impossible
to slack off to. Within a few days, your coasting and slacking will be noticed and the rest of the team
will wonder why they are working harder than they have to. That keeps you focused and on your
game. The second reason is that because failure is easier to notice, you'll make sure to eliminate
mistakes in order to avoid disappointing your colleagues. Stay focused, startup employee, and your
successes will be recognized and your failures minimized. And when the rest of the team says "We
couldn't have done it without you," you can be confident that they mean it.
6. You'll work in an awesome atmosphere.
Let me count the ways:

I wear jeans to work. In the summer, I wear shorts and sandals.

If there isn't at least one really good joke in an hour, it's probably a slow day.
Everyone else who works at a startup has the same drive and excitement for creation as you do.
The startup community is a great, close-knit group. All around you, people are coming up with
innovative solutions to age-old problems or making that new tool that simplifies or enhances your
life in some way. That entrepreneurial spirit is contagious, and if you don't feel it or catch it, then
you're actively avoiding it.
7. You'll learn to be frugal. Working at startup probably means that money is tight. Whether you've
been showered with investor love or the founder has a really wealthy uncle, the company will still be
thinking of ways to do more with less. No extravagance, no frills, no extraneous booze cruises.
Instead, the business development intern will learn how to design and code the blog, the writer will
sometimes do the dishes, and at the start you'll find a way to fit nine people around an eight person
table. This frugality and monetary responsibility will undoubtedly bleed into your own life as well,
and you'll end up finding new ways to find fulfillment other than burning the money you earn.
Instead, you'll probably discover a joy in creating and doing, rather than consuming. You'll find
happiness in being part of a team that is trying to make other people's lives easier, more fun, and

more manageable. Your entire life will take on a meaning of creation, and you'll be more energized,
both physically and mentally, to take on new hobbies and start your own personal projects. In the
startup world, it's all about creating more and consuming less.
8. You'll be instilled with the value of hard work, ownership, and self-sustainability. Maybe
more important than any other benefit of working at a startup is the realization that hard work,
creative thinking, and tenacity are worth a whole lot. Once you've created something of your own,
something tangible and whole, something you can touch, feel, or use, you really begin to appreciate
personal ownership. For those who do not actively create, or are continuously creating for someone
else's benefit, it's difficult to understand the great importance of personal ownership and the liberty
needed to pursue that ownership. Working at a startup and spreading the news of your team's product,
a product that you helped bring into existence, instills the value of that ownership and gives you
pride in your work. It is this pride, in your team's hard-work and ability, that teaches you the
importance of protecting those who do create innovative solutions and take risks.
Working at a startup also means that you and your small team are the only people responsible for
your success. For some, that may trigger a response to go crawl into a corner and hope someone
comes and spoon-feeds them their paycheck. For others, it's the greatest motivation there is. To be cut
off from relying on others to provide for you will undoubtedly surface skills and a determination that
you didn't know you had. At a startup, that natural wish to be self-sustainable is magnified and
multiplied, triggering the do-or-die attitude that is often the difference between success and failure.
No matter where you go after your stint at a startup, and especially if it is to go off and create a
company on your own, that need to be self-sustainable, and the skills you picked up to make that
possible, will power everything that you do.

Enough of School

Entrepreneur who dropped out to do business

How to Startup?

Edelweiss : An inspiring Success Story

Edelweiss is one of Indias leading diversified financial services Group. Edelweiss offers a large
range of products and services spanning across asset classes and consumer segments. Its businesses
are broadly divided into Credit including Retail Finance and Debt Capital Markets, Commodities,
Financial Markets, Asset Management and Life Insurance. The groups research driven approach and
proven history of innovation has enabled it to foster strong relationships across corporate,
institutional and individual clients. The Life Insurance, Retail Finance including Housing Finance,
Mutual Fund and Retail Broking businesses both online and offline formats, have paved the way
for Edelweiss to cater to the large retail client segment. Edelweiss presence now covers 240 offices
in 125 cities including eight international offices with 5,555 employees catering to over 572,000
clients across various businesses in retail and wholesale segments.

Rashesh Shah - Chairman and CEO

Rashesh Shah, Chairman and CEO of the Edelweiss Group has over twenty years of experience in
financial services in India. Prior to founding Edelweiss, he worked with ICICI, then Indias premier
industrial development bank and today its largest private sector bank. In 1996, encouraged by the
opportunity in the financial services sector as a result of economic reforms and liberalization in India,
Rashesh founded Edelweiss with initial equity capital of INR 1 Cr (USD 250,000). Since then,
Edelweiss has grown into a large diversified financial services house offering Credit, Capital Market,
Asset Management, Housing Finance and Insurance products to a wide range of Institutional,
Corporate and Individual customers. From 10 employees in 2000, Edelweiss is now 3,500 employees
strong, with a net worth of over USD 500 Mn.
Rasheshs focus on innovation and his passion for growth through expansion into related/adjacent
markets has been a key differentiator for Edelweiss. Under his leadership, the company has
combined growth oriented entrepreneurship with a strong focus on risk. The companys consistent
growth can be attributed to the culture of ownership and partnership that is nurtured amongst the
employees of Edelweiss. A pioneering move to reward those who built Edelweiss with ESOPs has
resulted in one of the most broad-based employee-ownerships among financial services companies in
India.

Rashesh has served on the Boards of various companies and public institutions. He has in the past
served on the Executive Committee of the National Stock Exchange and has recently been appointed
as Chairman, Maharashtra Council of FICCI. He also Chairs the National Council on Capital
Markets formed by ASSOCHAM. He has been nominated to the Executive Committee of a proposed
US - India Investors Forum. His academic qualifications include an MBA from Indian Institute of
Management, Ahmedabad, a Diploma in International Trade from the Indian Institute of Foreign
Trade, New Delhi and a Bachelor's Degree in Science from the University of Mumbai.
Besides writing regularly for various leading business dailies and publications in India, Rasheshs
views on the Indian economy and policy issues are regularly sought by leading Indian and global
business journals. He is also a regular speaker at various industry and economic forums.
Among the several accolades Rashesh has received, are the Entrepreneur of the Year award from
Bombay Management Association (2008-2009) and the Special Award for Contribution to
Development of Capital Markets in India by Zee Business at the Indias Best Market Analyst
Awards, 2011.

An extract of an interview conducted by Rashmi Bansal which briefs about the startup
Rashesh Shah came from a purely commercial, business family. Everybody in the family had always
been into business and ironically that was the reason why he decided to break the mould.
Running a business did not have the same status or market value as a professional, he felt. That
too a business dealing in exercise books and stationary items.
After graduating from KC college with a BSc in statistics, Rashesh did an IIFT course and was
working with an export company. But he realised that a one year course was not an MBA. So he sat
for the CAT exam. The first time he tried very hard, but got into one of the other IIMs. His heart was
set on Ahmedabad. So he gave it a second shot and this time, got through.
Rashesh had always been keen on finance and joined ICICI from campus. This was the time that
liberalisation was happening. Rashesh was with the 'export group' of ICICI which handles companies
like Infosys, Mastek, United Phosphorus - high growth, entrepreneurial companies. Infosys was, of

course, a very small company at that time but it was exciting to see so much entrepreneurial activity.
Because until then, big business was basically the turf of the old, established groups.
Rashesh realised that this new set of entrepreneurs would need capital. Up until then, all the capital
needs of the industry came through ICICI, IDBI and state banks. But if we look at the US, the
investment banks and the capital markets are very important. The market for those services was
poised to take off in India. Rashesh thought it was a good idea to start an investment bank in India
focused on high growth companies and capital markets. Friends working at Goldman Sachs thought
it was a good idea as well.
This was around 93-94. The decision to quit was relatively easy, he says because wife Vidya was
working with ITC Classic. She then shifted to Peregrine, which was an MNC and paid well. Vidya
encouraged Rashesh to take the risk Why don't you try it, she said. What is there to lose?
And so Rashesh took the plunge in May 1995. He estimated it would take 5-6 months to go into
business but it took much longer. The phone line took its time coming. So did the people.
When Rashesh announced that he was leaving to start his own company, his head of back office and
secretary both came up and said, We want to go with you, wherever you go. But when he offered
them, and two others, appointment letters, they all found reasons to back out.
I realised that when you want to hire people, having an office with a computer, fax machine and
receptionist matters a lot. People want to work for what looks like a real company. They don't want to
work for ideas.
The idea became Edelweiss Capital in February 1996 with one partner on board - Venkat
Ramaswamy, a colleague at ICICI. Pooling in their savings and some borrowing they raised Rs 1
crore, bought a Category I license and went into business.
Every entrepreneur hopes to latch onto a trend early on. It's called the first mover advantage.
Edelweiss spotted a trend - which was great. What it hadn't reckoned with was how long it would
take for the trend to bear fruit.
What one had not expected was that after liberalisation, India would go through 8-10 years of a very
hard time - from 1995 to 2002. If you remember, in 94, the index was at 4,500. In 2003, the index
was at 3,000. Adjusted against the inflation, the market had lost almost 80% of its value.

Unfortunately or fortunately, Edelweiss came into existence just as this down cycle started. The idea
was that the economy will grow and hence there will be a need for investment banking but it it took
several years before there was any real growth. The first couple of years were very hard - the
economy had slowed down, interest rates were very high. There wasn't enough business for
Edelweiss.
By this time, Rashesh had realised that unlike what they teach you in Bschool, life rarely goes
according to plan. The initial plan was to have a revenue of Rs 30 lakhs in the first year, Rs 50 lakhs
in the second, Rs 1 crore in the third, Rs 1.5 crores in the fourth and Rs 2 crores in the fifth year. The
company actually ended up doing 28 lakhs in the first year, 35 lakhs in the second and 21 lakhs in the
third year - which was the worst year in its history.
Fortunately, they were always able to make ends meet and stay profitable. Of course, the partners
paid themselves very little for the first five years - about Rs 3 lakhs a year + a bonus. A far cry from
the Rs 30 lakh p.a. earned in the last job!
Being very enterprising, we always made sure that we had some advisory assignments, and we kept
our capital costs low. So we were able to keep our heads above water. Keep afloat and eventually
you manage to flag a passing vessel. An opportunity of some kind which takes you places.
For Edelweiss, this opportunity was the dotcom boom. In mid-98, things started moving. The
internet, IT sector and private equity boom first started and we capitalised on that.
Thus, it happened that in the fourth year, Edelweiss did close to one and a half crore and in the fifth,
Rs 11 crore. Far more than the promoters had expected or anticipated. Of course, these boom years
were followed by a slump in 2001. But Edelweiss had liquid capital and with all the internal accruals,
decided to go out and expand the business. In what was to be a crucial strategic decision, the
company acquired a small brokerage. The idea was to not just be a corporate finance advisory house,
but to broadbase the business.
The interesting thing is that in 2001, almost everybody was getting out of the broking business. But
Edelweiss was clear that if the capital market is going to be important, then the broking platform has
to be important. The company took a contrarian view and went ahead, spending a fair amount of
capital on the acquisition.

Which goes to show that if you fundamentally believe in your business, you aren't guided by
popular opinion.You go by your own gut feel and put your money where your mouth is.
Of course, the bet took a while to pay off. In 2000, Edelweiss had just 10 employees. By 03 this
number was up to 35. But 2002 and 2003 were once again very tough years, in India and globally.
The internet boom was over, no capital was available and the market was down. Forward trading had
been banned and there was the Ketan Parekh scam as well.
So how did Edelweiss manage this period?
See, we were well capitalized for the size that we were at that time. Some amount of capital always
helps you in the lean days. Secondly, being a very entrepreneurial organisation, we always kept
looking for opportunities and thinking out of the box. Thirdly, our costs were very structured. We had
given options to a lot of employees.
In fact, when Edelweiss started, it had the Infosys model in mind. Before starting, Rashesh had gone
to Narayana Murthy for advice.
When we started, we had an offer from an industrial group for a 15-20% JV. It was a very attractive
offer, this extra capital. After all we were ex-employees of ICICI and our salaries had been low. But
one valuable advice from Murthy was: Give capital to people who add value, or to strategic partners.
Don't go for capital for the sake of capital. We followed that and it has been very useful for us.
The company did take in capital in the year 2000, and delivered an 8x return to its investors in five
years. By now the same investment would be 70-80x, Rashesh adds.
Speaking of patience, the people who did believe in the company and stuck by it did well when
Edelweiss went public in November 2007. And we're not talking about a handful of employees but
550 of the 1,100 on the rolls. Close to 25% of the company is in fact held under ESOPs. As a result,
fixed compensation at Edelweiss has been more reasonable though the variable compensation is
aggressive.
This helped keep costs under control. It's an 'owner' mindset rather than employee mindset. So if
your quarter is bad or year is bad, people are still thinking like owners and that helped a lot in the
tough years, says Rashesh.

We were clear that these were business cycles and each organisation is known by how well it
encounters these cycles. We thought, if you survived between 2001 and 2003, you could survive
almost anything!
From October 2003, Edelweiss started expanding once again. By then the company had 3-4
businesses - private equity, arbitrage, investment banking, insurance and brokerage. But what about
'core competency'? Is that another irrelevant Bschool concept?
There is something known as an intensive and extensive approach to a thing. Should we go more
deep into one area or should we be more broadbased? Historically, India has been a very large
market, but more broad than deep, says Rashesh. And hence, it makes sense to drop many different
anchors to keep your company in place.
There is the example of Reliance which started with petrochemicals, then got into trading yarn, fibre
manufacturing, refining, exploration and now, even retail. This is what you call growth through
adjacent markets. Rashesh also recalls the case of Nike, which has footwear, apparel and
equipment. When they started, Nike was into shoes. Then they got into apparel for tennis, then golf
shoes, golf apparel and equipment.
You go on changing only one parameter, either the product or the client parameter and you keep on
growing in the adjacent market, says Rashesh.
But does every small company have the bandwidth to juggle multiple balls? After all, entrepreneurs
are never short on ideas, where they often fail is properly executing those ideas.
Well, before expanding, Rashesh believes one needs to look at 3-4 things. Firstly, have you
successfully entrenched yourself in that space? Very often, you will try something and find it
difficult, competition hai, and you go to the adjacent market. But going to the adjacent market
because of that is not a good reason.
In the case of Edelweiss, the company started with investment banking but in the year 2000, the size
of that market was about Rs 150 crores. Of this, Edelweiss was handling business worth Rs 5-6 crore,
which was 3-4% of the market.
In investment banking, any one player getting more than a 5% share is extremely rare. So clearly,
growth had to come from elsewhere. That is why the company turned to brokerage. The brokerage

market then was Rs 500 crore - a bigger space than i-banking. And that's how Edelweiss made every
decision about its growth - looking at the market size and the opportunity in that.
Secondly, it's very important to have enough management bandwidth or ownership bandwidth. So
when you go into B, A is still entrenched. At Edelweiss, senior people were owners, and so the
company did not lose any key people through the expansion process. For example, Venkat continued
to run investment banking, but somebody else started running brokerage.
The third important thing is that it has to be a compatible adjacent market. Which means an IT
software company getting into hardware, or vice versa. Not IT branching into real estate! But the real
problem is not choosing how and where to expand but the entrepreneur realising he cannot be Mr
Know-it-All.
One of the first things that I did was, I stepped back. I decided that I will not have a centre of
gravity or bias towards any one business, individual partners will handle that. Broking is a very
different business from investment banking. Institutional broking and individual client broking are
also very different. You have to let each develop, create its own unique culture. Like kids in a family
- no one like the other, but all feeling well loved.
Another strong support came in the form of Vidya Shah coming on board. It happened like this. In
the year 2000, Vidya and Rashesh had their second child. Vidya decided to bow out of investment
banking which is client facing work and involves extensive traveling.
This was also the time when Edelweiss was looking to scale up. So Rashesh asked her to handle all
the backend work. This turned out to be a blessing in disguise.
In smaller firms, it's hard to get a senior person handling areas like HR, finance and admin. So the
CEO often has to get personally involved in these aspects, eating into crucial management time and
bandwidth. In that sense, Rashesh feels, he was very fortunate to get Vidya's expertise, on a part
time basis.
The idea was that she would help out for a year or two. But by 2003, when she was originally
planning to exit, Edelweiss had started growing at breakneck speed. The company went from 35
people to 100 people, then 200. 200 became 350, and then swelled to 600. Vidya finally quit in
August 2007, but continues to head the Edelweiss Foundation.

Working with Vidya was easy and hard and normally I don't recommend that to most people
because there are stresses when your spouse is the CFO and reporting to you. Separating the
personal and professional roles becomes an issue.
Secondly, the internal perception - you don't want anybody else to have extra authority because she
happens to be your spouse. Thirdly, how do you interact with each other in the public arena? So we
acknowledged these issues and set certain ground rules.
For example, Rashesh and Vidya never ate lunch together. They carried separate dabbas. But there
was one area which they were never quite able to resolve - We did end up carryingwork home.
The positive side of working together was having someone you could completely trust handling two
crucial bits of your business - people and capital. However, Rashesh is clear about what is most
valuable. I believe that entrepreneurship is not all about assets, it is about emotional energy as
aspirations.
Rashesh is a strong believer in the 18 month plan and long term aspirations. We always
differentiate between a plan and an aspiration.
There is always a short term plan, but there are always long term aspirations. When Edelweiss was a
tiny financial services company, working on a Rs 1 crore business plan, it had aspirations of someday
becoming the Indian answer to global giant Goldman Sachs.
What happens is that we as human beings, as entrepreneurs, all of us overestimate the short term
and grossly underestimate the long term. And this is what takes away the emotional energy because
in the short term there are setbacks. The short term keeps trying you.
So how do you keep your energy up? This is where aspirations come in. The dream is about more
than financial and quantitative targets. The bigness of the dream is what keeps you going, and yet
keeps you anchored.
And yet, scaling a business can be unglamorous - execution is kind of boring. It means doing a lot
more of the indirect work, spending a third of your time in hiring and people related issues. On a
Friday afternoon, somebody is crying, somebody is cribbing, somebody is not happy. It is very
tiring!
And more so because entrepreneurs are addicted to excitement.

Scaling up meant giving up the part of investment banking Rashesh enjoyed the most, clinching
deals. When you start off, you are worried about how to do things. Then, you get other people for
that, and you worry about, what to do. Then after some time, even that is taken care of and you only
try to figure out who will do it. The more indirect it becomes, the more unglamorous it becomes.
You sacrifice glamour and build an institution. Edelweiss Capital listed on the Bombay Stock
Exchange on December 12, 2007. The IPO was over subscribed 119 times and raised over Rs 700
crores for further expansion Edelweiss clocked revenues of Rs 1,088.86 crores in FY08 vs Rs 371.76
crores in FY07. Now thats what you call explosive growth!
When you think of great companies, large companies built from scratch, you assume they are built on
blood, toil, sweat and family time. Dogged perseverance. 24x7 effort.
This 24x7, 365 days a year is something that I have not seen with many CEOs. If you do that, it
means your organisation is weak, you are not scaled up. You have not prioritised, you have not
institutionalised.
I think there are phases. Many a times there are a couple of months in a year that are very tiring
because some business is having a problem. There is restructuring, there are long meetings. So then
you end up working even on Sundays. The rest of the time it is fairly okay. But its not any harder
than when I was working for ICICI. In Bombay, 10-11 hours is normal!
Rashesh goes to the gym thrice a week and also spends many weekends at his farmhouse in Alibaug.
He reads a lot, loves to catch movies on Friday nights and also takes two holidays a year.
Which means on the work-life balance front, there's hope yet for us all!

Advice to young entrepreneur

Cash flow is underestimated by most people - the amount of cash flow. If it is possible, be a little
overcapitalized. There are lot of CEOs who are good product guys, they are great operations guys.
But they don't know finance at all. In times of adversities, these are the people who suffer the most. I
think being financially savvy is a required part of the business.

Never have equal partners. You start off as equals, but then one does more, one does less, one is the
public face, the other is not, and then slowly the whole thing disintegrates. I have witnessed it happen
in my family between my father and uncles, and with many other partnerships as well.
So there should be a first among equals, who has a slightly higher equity share. That's what Mr
Narayana Murthy advised us and that's what I advise my clients now. Also, there shouldn't be too
many partners. When we started off, we were supposed to be five people in the company - Venkat, I
and three others. But the other three did not join and I think that was a good thing to happen because
five people would have been difficult to manage if the environment became hostile. These days I
advise people - two or four partners is okay, but ideally not more than four.
The only other thing that I would like to add is that have the staying power, the emotional staying
power. Business will not be as per what you had planned, there are going to be hardships. I have seen
a lot of businesses close up because after a lot of hardships, at that key point (like the third year
which was the worst year), we never thought, Oh, is it worth it?We just kept going on.
But if you are working at Hindustan Lever or any such organisation, worried about status, worried
about the house in south Bombay and all that, the choice is then very tough. I think the loss of status
is what really hurts.

From left) Rujan Panjwani, executive director; Deepak Mittal, CEO, Edelweiss Tokio Life
Insurance; Rashesh Shah; Siby Anthony; Himanshu Kaji

Firms like Edelweiss, IIFL Holdings and Motilal Oswal Financial Services morphed themselves into
full-fledged financial services firms out of the urgent need to grow. But very few companies in the
capital market space have managed to scale up business, says a research head at a Mumbai-based
financial services firm, requesting anonymity. Prakash, like other experts, agrees that Edelweisss
natural transition would be to become a bank: That is the long-term trend in Indias financial
system. In the case of Edelweiss, this move is particularly inevitable since it isnt in a niche business
like Cholamandalam Finance or micro-finance firms, for example.

One of Edelweisss first M&A deals was to help the sale of

Thiruvananthapuram-based Peninsula Polymers to Japans
Terumo Corporation in 1999. This set the ball rolling and
Edelweiss in the next two years helped companies like Rediff,
India Infoline (later called IIFL Holdings), Daksh and
Educomp raise capital successfully. In the first five years of
operations, Shah and Ramaswamy took Rs 25,000 per month
as salary to keep costs low. Shah fondly calls his capital market
division the intellectual hub of Edelweiss, as long-standing
business relationships were built there. Till 2008-09, the capital

market business comprised 60 percent of EFSLs business. Today, it is down to 20 percent, though
volumes have grown.

One of the strategies which Edelweiss was fortunate withfinding the right people for the right job
worked for them in their next phase of expansion. Siby Anthony, a director with Asset
Reconstruction Company (Arcil) India, decided to join Edelweiss in the groups asset reconstruction
company (ARC). The ARC is part of the asset management business, along with private equity and
mutual funds. Edelweisss asset management division has over $3.5 billion worth of assets under
management.

When we started, no bank was selling assets to ARCs. We thought we should get into distressed
credit: Buying out distressed assets at deep discounts and trying to revive them, says Anthony, CEO
of Edelweiss ARC in which EFSL holds a 49.9 percent stake. Edelweiss ARC started with Rs 45
crore seed capital from Edelweiss and invested in three assets: A denim textile manufacturing unit in
Ahmedabad, a poultry unit in Hyderabad and a milk processing unit in Punjab. It exited all these
investments by September 2014.
The ARC team has grown to 40 in 2014 from just three in 2008. By December 2014, it had a total of
Rs 18,500 crore as assets under management, with cash invested by Edelweiss ARC being Rs 1,400
crore in over 450 companies. Arcil, Indias oldest ARC, has AUM estimated at Rs 10,000 crore.
And that tells a story, a story that has won Shah plenty of appreciation, even from among his
competitors. The chief executive of a leading financial services firm backed by a large conglomerate,
says, on condition of anonymity: Rasheshs model is similar to that of Goldman Sachs. He has built
businesses flanking his core business of capital markets. I am a great admirer of his strategy.
He isnt flattering either.
In 20 years, Shah and his team of nearly 6,000 employees have built a quasi-banking empire. He has
ensured that when the RBI opens up the sector on tap and if Edelweiss gets the banking licence, it
wouldat the leastbe running on a flat surface. Shah is confident that India is on the path to
becoming a $5-trillion economy by 2025. With about 18 to 20 large financial institutions and banks,
the opportunities are plenty. But this marathoner admits that the road ahead is challenging,
particularly as it seeks to gain market share in new businesses.

How to SUCCEED in a startup

Bibliography:

1. Forbes India Magazine

2. Wikipedia
3. Stay Hungry Stay Foolish by Rashmi Bansal