At a time when business failure is still considered to be a taboo in India and unlike Silicon Valley in the US which encourages risk-taking, Infosys co-founder and billionaire Nandan Nilekani said there is a need for a social fabric which delinks failure from entrepreneurs.
“You need a social fabric, which delinks failure from the person and which actually recognizes that failure is a tremendous experience, which is likely (going) to increase the probability of success next time around and that happens there (in Silicon Valley),” Nilekani told co-panellists venture capitalist Vinod Khosla and tech think-tank iSpirt co-founder Sharad Sharma, during a fireside chat at an event in Bengaluru. “Here (India) the failure, the person and institution all get entwined. And that leads to consequences,” said Nilekani, while responding to a question from Sharma about tackling the issue of social stigma associated with business failure in the country.
Nilekani’s comments come at a time when the tragic demise of Coffee Day Enterprises founder V G Siddhartha has left India’s entrepreneur community in shock. He is also a shareholder in Coffee Day Enterprises.
There are also many situations in the country where due to the shortage of equity capital, entrepreneurs end up relying on debt capital which is less forgiving when things go wrong and there are bad outcomes, lamented Sharma. He pointed out that Silicon Valley largely avoids debt capital and asked the panellists about what India should learn from this.
But Vinod Khosla, a legendary Silicon Valley investor, was of the view that more money an entrepreneur raises initially, the less likely he or she is going to succeed. “There's some beauty and elegance in very small amounts of money because it forces you to think about your problem much harder,” said Khosla. “If you get a lot of money, you start executing without enlightening the problem. So my experience (says) that less money actually makes you more creative, and is more likely to create a large breakthrough,” said Khosla.
Khosla, who co-founded Sun Microsystems in 1982 and helped incubate the idea and business plan for Juniper Networks, said a large amount of money helps the company in later stages when it is in a mode to scale-up.
Nilekani agreed with Khosla’s views and pointed out that all the innovation comes out of necessity and constraints. Nilekani, who spearheaded the country’s massive unique identification project, said the entrepreneurial successes in a country like the US, have been built on huge investments in the public infrastructure by the government. For instance, the Internet and Global Positioning System (GPS) was created by the government and later companies such as Google (Maps) and Uber benefitted from that. Nilekani said the grant provided by DARPA, an advanced-technology branch of the U.S. Department of Defense, played a key role in the creation of American autonomous cars.
“I am a firm believer that we need to invest in long term digital infrastructure, which has to be done by the government because they are the only ones who can afford it and have that kind of vision,” said Nilekani. “But they need to do it in a way that they open it for private innovations. That is the philosophy, just like in the US where the government invested in the Internet and GPS, we will invest in identity and payment infrastructure and allow innovation to happen on top of that,” he added.