Heirs of some of India's biggest tycoons are not joining the family businesses yet. They prefer to first chart their own entrepreneurial path
When Ananya Birla came of age three years ago, she had the choice of joining a $40 billion group that does business in sectors ranging from mining and telecom to financial services. Ananya, 21, is the daughter of billionaire Kumar Mangalam Birla, chairman of the Aditya Birla Group, one of India's largest conglomerates. Instead, she started a microfinance firm named Svatantra.In 2012, Kavin Mittal was faced with a similar choice. His father is Sunil Bharti Mittal, chairman of Bharti Airtel, India's largest telecom operator. But he launched messaging app called Hike that has attracted investments from the likes of investment company Tiger Global and Japan's Softbank Corp.
Entrepreneurial spirit? Yes. Lots. Also, youthful zest.
If one were to chronicle the history of Indian business houses, it would be filled with examples of scions following their fathers to the family business. That is changing.
Young scions of business groups are raring to build businesses by themselves. They have the brains and DNA. Only 3.5% of all next generation members globally want to take over their parents' firm directly after college graduation; 4.9% plan to do so five yea rs l ater, according to a study `Coming home or breaking free' published by EY in 2014.
“The next generation has new ideas and they are pushing and expanding frontiers,“ says Ashish Iyer, global leader, strategy practice, senior pa r tner, Boston Consulting Group, India.
Examples are many.
Parth Jindal was only 23 years old when he rushed JSW into the world of football and Olympics in 2012. Last year, Parth, son of steel magnate Sajjan Jindal, founded a venture capital fund of `100 crore to invest in tech startups. Parth wants to diversify his father's commodity business -to shield it from the wild fluctuations of the market.
Rishabh Mariwala had two choices as an apprentice. His dad Harsh Mariwala's `29,000 crore consumer goods company Marico or his mother's, Archana Mariwala, startup called Soap Opera N More that sells premium handmade soaps. He joined the latter.
Some years ago, pharma industrialist Ajay Piramal's son Anand toyed with rural healthcare and tele-medicine. He is now blazing a trail in real estate.
Indian family business houses, some dating back to the 18th century, grew rapidly post liberalisation in the early 1990s, expanding to newer geographies and ventures. The Indian business scene has transformed incredibly since then.
India is witnessing an unprecedented startup boom. Startups have ended the dominance of conglomerates in many sectors. Young giants like Flipkart command valuations many times greater than generation old businesses. Scores of graduates at premier engineering and business schools prefer startups to big brands, choosing the experience of building ground-up over a fat pay packet.
Business heirs have the same urge.
“I like to get my hands dirty, I like to build things. I want to make my own mistakes, build my own team and see my ideas come to light,“ Ananya Birla told ET. “Aditya Birla group will also allow me to do it but it will be more limited than a startup environment.“
“The biggest difference in India right now versus 15 years back is opportunities have grown manifold in every field. That is opening up the minds of the younger generation,“ says Pranav Sayta, partner, family business services leader at global consultancy EY.“What brings success today is different from what brought success earlier.“
It could mean the new Indian industry will resemble the old US tech industry where teen stars like Steve Jobs founded Apple in his parents' garage at 21 and Facebook cofounder Mark Zuckerberg started the company while still in undergrad college. Not surprisingly, several of the Indian business heirs have been exposed to the west thanks to Ivy League education.
Vimal Bhandari, CEO, Indostar Capital Finance, says the majority of the next generation members in family business are motivated by a deep desire to pursue their own dreams and create businesses from the scratch, leading to multiple opportunities for learning and showcasing their business building skills. “These experiences equip them with substantial skills to effectively navigate the fortunes of a large conglomerate at a later stage.“
Parth Jindal believes the next generation of wealth in India is not going to be created by brick and mortar business. “It is going to be very i nter net depend ent,“ Parth told ET in an interview last September.
These scions of course have the luxury of falling back on their family busi nesses should things go wrong. But they should be credited with seizing opportunities and proving their worth.
“Taking on a status-quo in business may not be enough to satisfy this entrepreneurial spirit. Young leaders also want to answer the existential question -what is my contribution?“ says Nishchae Suri, Head of People and Change Advisory, KPMG in India.
Rishabh Mariwala says the entrepreneurship bug runs in the family. “I work with minimum resources, make my decisions and learn from my mistakes just like any true entrepreneur.“
The huge scale of family businesses is also a deterrent, according to consultants. The young guns love fast decision making. The many layers of corporate structures are a big turnoff.
Tightening corporate governance standards could also be fuelling the trend. Data show more than two-thirds of listed companies on Bombay Stock Exchange are family run. But more professionals are expected to take senior positions in these companies over the next decade due to tighter corporate governance standards and the scrutiny of proxy advisory firms.
ISB professor Kavil Ramachandran, who specialises in family businesses, says it's an interesting phase now.“Earlier children just joined the family business... families decided the fate of children's career. But today families realise that you cannot run the business with only family members.“
Fathers too don't want it any other way.“I am not old. I am going to run the group for 20-30 years. Parth is not going to get anything. He has to chalk out his own path,“ Sajjan Jindal told ET recently.
Source Economics times
Entrepreneurial spirit? Yes. Lots. Also, youthful zest.
If one were to chronicle the history of Indian business houses, it would be filled with examples of scions following their fathers to the family business. That is changing.
Young scions of business groups are raring to build businesses by themselves. They have the brains and DNA. Only 3.5% of all next generation members globally want to take over their parents' firm directly after college graduation; 4.9% plan to do so five yea rs l ater, according to a study `Coming home or breaking free' published by EY in 2014.
“The next generation has new ideas and they are pushing and expanding frontiers,“ says Ashish Iyer, global leader, strategy practice, senior pa r tner, Boston Consulting Group, India.
Examples are many.
Parth Jindal was only 23 years old when he rushed JSW into the world of football and Olympics in 2012. Last year, Parth, son of steel magnate Sajjan Jindal, founded a venture capital fund of `100 crore to invest in tech startups. Parth wants to diversify his father's commodity business -to shield it from the wild fluctuations of the market.
Rishabh Mariwala had two choices as an apprentice. His dad Harsh Mariwala's `29,000 crore consumer goods company Marico or his mother's, Archana Mariwala, startup called Soap Opera N More that sells premium handmade soaps. He joined the latter.
Some years ago, pharma industrialist Ajay Piramal's son Anand toyed with rural healthcare and tele-medicine. He is now blazing a trail in real estate.
Indian family business houses, some dating back to the 18th century, grew rapidly post liberalisation in the early 1990s, expanding to newer geographies and ventures. The Indian business scene has transformed incredibly since then.
India is witnessing an unprecedented startup boom. Startups have ended the dominance of conglomerates in many sectors. Young giants like Flipkart command valuations many times greater than generation old businesses. Scores of graduates at premier engineering and business schools prefer startups to big brands, choosing the experience of building ground-up over a fat pay packet.
Business heirs have the same urge.
“I like to get my hands dirty, I like to build things. I want to make my own mistakes, build my own team and see my ideas come to light,“ Ananya Birla told ET. “Aditya Birla group will also allow me to do it but it will be more limited than a startup environment.“
“The biggest difference in India right now versus 15 years back is opportunities have grown manifold in every field. That is opening up the minds of the younger generation,“ says Pranav Sayta, partner, family business services leader at global consultancy EY.“What brings success today is different from what brought success earlier.“
It could mean the new Indian industry will resemble the old US tech industry where teen stars like Steve Jobs founded Apple in his parents' garage at 21 and Facebook cofounder Mark Zuckerberg started the company while still in undergrad college. Not surprisingly, several of the Indian business heirs have been exposed to the west thanks to Ivy League education.
Vimal Bhandari, CEO, Indostar Capital Finance, says the majority of the next generation members in family business are motivated by a deep desire to pursue their own dreams and create businesses from the scratch, leading to multiple opportunities for learning and showcasing their business building skills. “These experiences equip them with substantial skills to effectively navigate the fortunes of a large conglomerate at a later stage.“
Parth Jindal believes the next generation of wealth in India is not going to be created by brick and mortar business. “It is going to be very i nter net depend ent,“ Parth told ET in an interview last September.
These scions of course have the luxury of falling back on their family busi nesses should things go wrong. But they should be credited with seizing opportunities and proving their worth.
“Taking on a status-quo in business may not be enough to satisfy this entrepreneurial spirit. Young leaders also want to answer the existential question -what is my contribution?“ says Nishchae Suri, Head of People and Change Advisory, KPMG in India.
Rishabh Mariwala says the entrepreneurship bug runs in the family. “I work with minimum resources, make my decisions and learn from my mistakes just like any true entrepreneur.“
The huge scale of family businesses is also a deterrent, according to consultants. The young guns love fast decision making. The many layers of corporate structures are a big turnoff.
Tightening corporate governance standards could also be fuelling the trend. Data show more than two-thirds of listed companies on Bombay Stock Exchange are family run. But more professionals are expected to take senior positions in these companies over the next decade due to tighter corporate governance standards and the scrutiny of proxy advisory firms.
ISB professor Kavil Ramachandran, who specialises in family businesses, says it's an interesting phase now.“Earlier children just joined the family business... families decided the fate of children's career. But today families realise that you cannot run the business with only family members.“
Fathers too don't want it any other way.“I am not old. I am going to run the group for 20-30 years. Parth is not going to get anything. He has to chalk out his own path,“ Sajjan Jindal told ET recently.
Source Economics times
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