Young, college drop-outs, casual, competitive, and reasonably arrogant. A new breed of CEOs is set to rule the technology sector
Lhendup G Bhutia | 06 Aug, 2015
From within the office, one hears a monotonous, almost drill-like noise of several keyboards clacking away at a vigorous pace, interspersed with moments of raucous laughter. I peep in to notice several young men, many of them dressed in shorts and seated atop tables, participating noisily in an animated conversation. I am at the first floor office of an interesting start- up in Andheri, several minutes ahead of schedule. Called Truebil, this virtual marketplace company has entered the disorganised and dodgy space for used cars. But the company does everything, sending automobile engineers to meticulously jot down every detail and provide an objective valuation of the car to taking care of the tasks of paperwork, loan and insurance. Started in March this year, it operates in Mumbai and Delhi, and has already raised $500,000, and, we are told, is in the process of securing another round of funding: about $7-10 million.
I am still waiting for the CEO, Suraj Kalwani, at the office reception, when a young man comes to inquire about me. I had seen him a few minutes earlier, when he had appeared at the doorstep dressed in a T-shirt and rolled up denims and carrying with him an umbrella, having just disembarked from an autorickshaw. Shaking his hand, which he demurely offers, I explain to him the purpose of my visit.
“Yes, yes,” is all he says by way of reply.
“You don’t understand,” I explain to him again. “I am here to meet the CEO.”
“But,” the young man in the red-and-white striped T-shirt replies, clasping my hands even harder. “I am the CEO.”
If one argues that the centrality of religion in our lives has come to be replaced by commerce, that the latter now provides the same sense of higher meaning and purpose, then our high priest is now the man at the top of the organisational chart: the chief executive officer. All-powerful and inspirational, he is mostly a middle-aged man with greying hair, or occasionally a woman, always attired in a business suit, arms crossed and shoulders square, gazing at us from newspaper photographs and offering quotable aphorisms on success. These are powerful people, we are told, who bear the weight of organisations and live in the crosshairs of demanding investors and impatient customers, and who with their singular vision and ideas make or break billion dollar companies.
This stereotype has considerably changed in the West, where several youngsters barely out of college have begun to run some of the most dynamic tech businesses. Peter Thiel, the superstar venture capitalist who has been an early investor in companies like Facebook, LinkedIn and Yelp, is believed to have even issued a blanket rule—never invest in a company whose CEO wears a suit. But in India, this has never been the case. CEOs often come from the families that own the business, and even those with no familial links with the enterprise have steadily ascended a corporate hierarchy, spending decades in various departments and verticals until deemed fit to take over as top bosses.
But now as the internet and mobile app industry in the country witnesses a boom, a rather different breed of CEOs is emerging. Incredibly young, many of them barely out of college, these are CEOs who dress casually and are scornful of grandiose management rhetoric. Some of them are shy, and many exceptionally combative. They’d much rather sit in front of a computer all day than attend a business meeting. The ‘kid in the hoodie’ CEO is gradually becoming the gold standard for startup leadership in India as well.
Ritesh Agarwal, the 21-year-old founder and CEO of Oyo Rooms, a virtual marketplace of branded budget hotels in the country, has the unkempt appearance of someone who pulls in several nights in the office. Tall and wiry, with just the early beginnings of a beard, he keeps a dishevelled look. In the span of just two years, Oyo Rooms has gone from just a single B&B (bed and breakfast) property in Gurgaon on its online platform to around 13,000 budget hotel rooms across 80 cities. According to him, they now get around 400,000 bookings per month. He has raised $125 million this year alone, the latest sum of $100 million (almost Rs 640 crore) invested by the Japanese telecom and internet major SoftBank, which was announced a few days ago. That makes the 21-year- old drop-out the head of a company with investments worth almost Rs 800 crore. SoftBank’s investment in Oyo Rooms is its fourth in India, after having invested in other well-known startups like Snapdeal, Ola and Housing.com
Agarwal’s story is quite incredible. Born in Bissam Cuttack in Odisha’s Rayagada district, his was one of the few houses in a village that owned a computer. He developed an interest in it, according to him, in his early childhood around the age of eight and gradually became passionate about software coding. He moved to Kota to prepare for the IIT entrance exam—a big deal, he says, because hardly anyone from his village even travelled to Bhubaneswar for studies. But as he attended coaching classes, he realised these tutorials were not interesting enough. So he dropped out and travelled to Delhi, which he was anyway frequenting to attend conferences on startups, and began to live in a barsati.
He went broke several times during this period, even having to sleep on the stairs leading to his barsati because he had not coughed up the rent on time. When he was still around 17 years old, he had scraped some money together to found a portal named Oravel, an Indian version of the popular US-based online rental website Airbnb. He spent around three months in around 100 B&B (bed and breakfast) properties, sometimes convincing the owners to let him stay for free, and on other occasions paying for the accommodation, to better understand the nuances of the market. But the idea didn’t quite take off. “The problem,” he explains, “was of standardisation. You had no control over the hotel and the service it provided.”
When he was 19, Agarwal faced a turning point. He became the first Indian to become a Thiel Fellow, having won a well-known fellowship started by venture capitalist Peter Thiel for students across the globe under the age of 20 who have dropped out of college. The two-year-long fellowship provides those selected with $100,000, as well as guidance and other resources to establish a startup. Agarwal used the money to improve upon the idea of Oravel, where any B&B place could be listed. This time, budget hotels wanting to list its rooms on the website had to brand themselves Oyo Rooms. Agarwal and his team would check these properties to ensure standardisation of experience for guests.
But Agarwal is not alone in this sector. As with e-commerce and taxi aggregator sites, where astronomical sums have gone into several companies and the competition among them is fierce, India is also witnessing a brand war in the virtual budget hotel market. Investors have pumped over $165 million across five deals into this space so far this year. Apart from Oyo Rooms, Stayzilla raised $20 million this year, Treebo secured $6 million, while ZO Rooms also raised an undisclosed sum.
But the rivalry often gets ugly. Agarwal has taken ZO Rooms to court over allegations of data and software theft. According to Agarwal, he can tolerate competition but not unethical practices. But an individual aware of the details of this case says that the types of software used for such portals are open secrets. “ZO Rooms was trying to raise a fresh round of funding when the case was filed. I suspect it was more to hurt their funding prospects,” he says, on the condition of anonymity. Earlier this year, during the launch of Oyo Rooms’ app at the India Habitat Centre in Delhi, ZO Rooms ambushed the event by planting several standees and posters both within and outside the premises, deriding the company’s app.
“The potential of the online budget hotel market place is huge,” says Yogendra Vasupal, CEO and co-founder of Stayzilla. “A few years ago, who would have thought most bookings of flights and even buses, at least in certain sectors, would happen online. In a few years, it will be the same with the hotel industry.”
Vasupal is a drop-out too. Based in Chennai, he quit college in the final year of his computer engineering degree, irked by the college’s decision to drop a subject, Theory of Computation, because it was deemed too difficult to teach. “I was principled like that, at least then,” he says and laughs. But Vasupal was already working by then. The son of a college professor and a doctor, Vasupal was pulling in long nights and earning a fair amount of money building websites and other online applications for companies abroad. He formed Inasra Technologies along with two others in 2005. When he would meet investors, he would call himself ‘the best computer engineer in India who hasn’t graduated’. In 2010, he renamed his company Stayzilla.
Unlike Oyo Rooms, which lists budget places to stay that adopt the ‘Oyo’ label as properties, Stayzilla is a regular aggregator. Its website lists over 32,000 accommodation units across 4,500 towns in the country, from home stays in distant places like Kargil and Ladakh to hotels in metros. “The challenge is not really in how disorganised this sector is,” Vasupal says, “But in the lack of supply.” To meet this issue, for the last 45 days, Vasupal has been holding conferences across the country, encouraging people to open up their homes to guests, somewhat like an Airnnb model. This has apparently already resulted in around 1,800 home stays opening up.
Till last year, Vasupal was also the company’s only computer engineer, fixing glitches and working on the portal’s code. Today, the company has a staff of around 500 working in its Chennai and Bangalore offices, with plans to open offices in Mumbai, Delhi and Kolkata.
According to a 2014 global study by advisory firm Zinnov, the average age of CEOs who founded companies after 2000 is 36, three years less than CEOs who founded companies before 2000. The study also found that the average age of non-founder CEOs has fallen by four years after 2000, from 56 years to 52. How does all this impact business? How does the enthusiasm—or perhaps impetuosity—of youth, coupled with a young leader’s ambition, affect a company and its internal culture?
Mahesh Bhave, a visiting professor at IIM- Kozhikode who specialises in entrepreneurship and renewable energy and sustainability, declares himself glad to see the new wave of entrepreneurship in the country. “Yes, they are very young. And some of them appear quite brash. But unlike, say, CEOs of more traditional companies, who are extremely dependent on the Government and its policies, these new companies are relatively free of that. Their complete focus is on their companies. They are only interested in identifying a pain point. And then spending all their waking hours trying to figure out the best possible method to deal with that pain point,” he adds, claiming many of them approach their businesses less like a traditional business would and more like a mathematical concept of problem-solving.
According to Santhosh Babu, founder of the Organisation Development Alternatives Consultants and one of India’s top executive coaches, several large Indian companies are patriarchal and feudal in nature, where the CEOs are often those whose families own a large stake in the company. “We can’t generalise and say these [young CEOs of start-ups] are all impetuous or incapable of handling success. In fact, many of them are quite sharp. Investors are not fools to put such large amounts of money into these companies,” he says. “These young boys are CEOs because they are the founders of these companies. What needs to be seen, however, is how well they are able to push their companies forward.”
In June this year, Rahul Yadav, the former CEO of Housing.com, apparently had an extended conversation with God. He put the interaction up on his Facebook page:
‘Me (Rahul Yadav): Dude, I’m bored. Design an interesting game.
God: Cool. Solve Real Estate. It’s theoretically unsolved globally. And what’s a game without some challenge! Do it in India where my calculations say, it’s virtually impossible to solve!
Me: Not interesting enough.
God: Hmm. What’s a challenge without some resistance. Every hero needs a few villains. I’ll throw in a couple of big investors who will do everything in their power to block your way.
Me: Still not interesting enough.
God: Oh right! A Batman will need its Joker! Well, actually Joker is very smart. I can’t cook up something like him again. So I’ll give you the Joker of India – Times Group (the group runs MagicBricks, a competitor to Housing, and had a long running feud with Yadav). They are not as smart but they take their alias very seriously.
Me: Not interesting enough.
God: Sorry dude! You know it’s hard designing games for you. Go play for now while I cook up some more game levels to make it more interesting.
Me: Make doubly sure you don’t disappoint again! I’ll be back soon.
[And the game continues]’
Yadav attracts contrasting opinions. To some, he is a maverick genius, someone who dropped out of IIT-Bombay’s computer science degree, perhaps the most coveted education degree in the country, in its final year, because he didn’t find the course interesting, and went out to build, from his college dorm along with other co-founders, one of the most exciting companies in modern India. To others, he is a temperamental, brash and tactless individual. During his stint at Housing.com, he gave away all his shares to the firm’s employees, briefly resigned calling the company’s investors fools, took on media vehicles and rebuked competitors before finally being thrown out of the company. He once shared a picture of Deepinder Goyal, Zomato’s founder and CEO, another hot startup, and called him a restaurant menu scanner, berating him, he clarified later, for doing no innovation but just scanning restaurant menus.
Yadav did not respond to queries for an interview, but in an interview with another magazine, he answered most queries half-asleep under a blanket. A former employee of Housing.com claims Yadav is a genius who inspired his employees to perform beyond their potential, but perhaps he took on too much and approached a kind of burnout. “He’s not like you and me,” the employee says, “He doesn’t care about anyone’s but his own opinion.”
But it is not just Yadav. Last year, when a company tried to poach someone working for Zomato, the employee replied saying that he was not interested, and then cited what Goyal had once said: “You can hold a career fair at Zomato. We would be very happy to part with anyone who wants to join (the name of the company).” When I ask Goyal about this in an email interview, he responds, ‘We try hard to make sure than Zomato is one of the most open places to work at. I’m open about what I think and feel and am a very straightforward person and always make my point clear. Even if it may sound blunt, I think is extremely important to be honest…’
Goyal has in a very short period created one of the country’s most exciting startups. Started along with a friend in 2008, based on the simple idea of providing scanned menus to customers, along with the restaurants’ contact numbers, Zomato is now one of the country’s largest online restaurant discovery services. For a company whose employees initially worked from their homes, Zomato is now said to be getting over 80 million monthly visitors, and has in excess of one million restaurant listings across 500 cities in 22 nations. It has now moved on to table reservations, in-app payments at restaurants and food ordering. Since last year, the company has been on an international expansion spree. It has acquired several companies, including Urbanspoon for $52 million, a deal which was one of the largest purchases of a US-based consumer internet company by an Indian startup.
Born in a distant town close to Bathinda in Punjab, Goyals’ parents were teachers in a school, but their son wasn’t particularly sharp. He failed twice in Classes VI and XI, but eventually got through IIT- Delhi. “When I wrote the exam, I had nothing to lose, but I knew the choice was between nothing or something,” he says, “So I gave it my best and ended up clearing the exam at the first attempt…”
For almost one-and-a-half years while he was working at Bain & Co, Goyal, along with co-founder Pankaj Chaddah, collected, scanned and uploaded menu cards on weekends. “Both Pankaj and I have done everything from collecting data, running quality checks to pulling all nighters to ensure a product or a city launch… Back then, and even now, I plug in wherever I’m required. I spent a lot of my time looking into things across the board, be it HR, hiring, marketing, content, tech, product, operations, or even the stickers for our BTL marketing. I think having a bird’s-eye view allows one not to get too stuck in the granular aspects. I get involved in decisions across the board, multiple times a day. It helps me see how each piece fits into the puzzle.”
Like several other startups, Zomato is also non- hierarchical in its structure. There are no cabins or fixed desks, and everyone, irrespective of designation, sits somewhere along with the rest of the team. There is a gym, a non-stop supply of food and beverages, and every few weeks, a party for all employees. “Our open and transparent work culture and the fast-paced environment are huge incentives for people to stay with us. We work hard to maintain open channels of communication, and have an open-door policy—so one can reach out to anyone within the organisation, including the founders, with ease,” says Goyal.
Another food ordering app, TinyOwl has been on a rapid growth trajectory. Just two years old, the company run by a 25-year-old youth from a village near Pilani raised $15 million in its second round of funding earlier this year. The son of a banker and a housewife and a former student of IIT-Bombay, Harshvardhan Mandad established TinyOwl along with four other founders. While brainstorming business ideas in their apartment—the five founders lived together, although one has now moved out into another flat—they realised that the most interesting business to get into would be what was their biggest bother in life: ordering food. “There was a clear pain point. And there was a very doable solution,” Mandad says.
Mandad pooled in his savings from his previous job, the e-commerce division of FutureBazaar, had his father take a loan for him, while two other founders began to take tuitions for IIT students. Their market research for the business took them from studying in minute detail successful food delivery outlets like Domino’s to a job taken briefly by one of them as a McDonald’s call centre executive. Currently, TinyOwl does around 3,000 orders per day and delivers food from restaurants in Mumbai, where it started, and Bangalore, Pune, Hyderabad, and Delhi NCR.
Mandad is working on several features, from minimising the number of finger taps needed to place an order via the app to developing an in- app closed pre-paid wallet where customers can load money and pay directly for meals. In time, he expects TinyOwl to become a highly personal food assistant of sorts, which will be able to understand customer needs and consumption patterns, and accordingly make suggestions and place orders.