Transcript
Speaker: Entrepreneurship is the art of staying alive long enough to get lucky. I met a unicorn founder lately who said that my strategy is to raise more money than you my competitor. I'm not sure that's a strategy, right? Why not look at becoming a VC in your third stint? Over the last two decades, Manish Sabarwal has been on a mission to place lakhs of Indians into better, higher-paying jobs. He founded Team Lease in 2000, growing it into a staffing giant with annual revenues touching almost Rs 12,000 crore. And now he has turned his focus towards driving policy reforms. On this episode of the Founder Thesis podcast, Akshay asks him, what is stopping India from creating enough jobs and how do we fix it?
Speaker: Why didn't DeepSea come out of India when India exports more software? I don't think Chinese work harder than us. I don't think the Chinese are smarter than us. People say that China's lack of democracy is the reason why it grew so fast. Let us not give ourselves the democracy alibi. It was it.
Speaker: Manish, welcome to the Founder Thesis podcast. um You know, I have to admit, I'm a fanboy. must have heard, I'm sure, almost all the podcasts that you have come until date, and you were like a dream guest for me. i It's a bit surreal that I'm getting to interview you. I never thought I would reach here.
Speaker: ah So ah I'm pretty stoked at that. um One of the reasons why i ah but why you are like such a dream guest for me is because I am a failed it's our entrepreneur.
Speaker: And therefore, when I ah meet founders who have made it big in HR, I'm always curious to understand ah their take on the industry. and of course, we will also get into the book you wrote on DBG. and Those are some of the things, but ah I want to start at a more ah fundamental level of what made Manish Sabarwal Manish Sabarwal.
Speaker: ah you I know you're a Kashmiri boy. ah Where did you study? Where was the bulk of your education done? ah I'm just wondering where that... That fire to do entrepreneurship, to do so much, where did that come from? I mean, school was a combination of Washington. man My dad was in the embassy in Kashmir and Burnhall where he was J&K Carter. And then obviously I went to boarding school in Mayo, which is where I sort of developed my love of reading, love of writing, love of other things. And then I went to SRCC, Sriram College, Delhi for my BCom, which is probably the world's most useless degree.
Speaker: In some sense, so I don't recommend a business undergrad for anybody. And then I worked for four five years and then went to Wharton. I think those four five years of work experience were important because I got a wonderful job. um You know, when you graduate in India from a bachelor's degree, it's always complicated because, you know, the Wait, business goals won't let you in without WorkX and nobody will give you WorkX without an MBA.
Speaker: But I got a wonderful job as executive assistant to the chairman of a group um in Hyderabad called Nagarjuna who later spun off to start Pena Anupendra Rao. And you know as as a child of civil servants, I had been told you need money to start a company. And suddenly I saw Indra and he was doing it with other people's money, which I thought was a wonderful um form of technology.
Speaker: But um you know having a small job in a big company or a big job in a small company, I'm quite clear, a big job in a small company lets you learn more. It's much a better experience when you're younger.
Speaker: And I don't think manufacturing and services or multinational or Indian should be the criteria. It should just be a growth company, right? Because when companies are growing and you have a big job in a small company, you'd get the compounding of learning. So I think um my role models were all civil servants and academics around me were growing up. So it didn't come from that. But really my five years of work, between my bachelor's and master's, is where it became clear to me that, um king of a small kingdom is still king you can start a company with other people's money and um you you really um I haven't met any unhappy successful entrepreneurs I've met many unhappy successful employees of other companies so the key word there is successful but obviously um i i think it was my work in between bachelors and masters which made it possible which year did you do your MBA how old were you then
Speaker: I was 94 to so 24. I finished college 20, and when I 20, and then... but i finished college in twenty and ran drink tea and then So when you came back to India, and that's also something I'm curious about that, did you want to come back to India or did you want to work abroad only? Well, no, I came straight back. I actually went, having incorporated India Life, I spent this, ah India Life was my final project in 16 out of my 24 classes. in' between my first and second year, I came in the summer to work on the India Life business plan. So I just went to the US for learning. I didn't really... view it as a pathway to the US labor market or a pathway to the US entrepreneurial opportunities. I think um for me living in India was an important part of the definition of a good life from the beginning.
Speaker: but And what was the India Life thesis? I mean, I feel real life was originally a life insurance company. It was meant to be because life insurance was a government monopoly. It was looking like it would be opened up.
Speaker: But that morphed to being a pension management company. And then that morphed to being a pension administration and a payroll processing and HR outsourcing company. I mean, I get many calls from people running large companies saying I'm getting bored out of my mind, but I don't have the perfect idea.
Speaker: I think that's a misunderstanding of the entrepreneurial process. Most people I know didn't implement what they started out to implement. So I think that it's clear to me that entrepreneurship is like science. It's hypothesis test and you can't prove anything right. You have to prove it wrong, right? and So I think India Life in some sense was that. We started off with incorporating a life insurance company, it went to pension management, and then I met the CFO of Siemens, who was our first client, who said, love me, love my dog, you want the sexy part, take the crap away, which is the pension administration, not the pension. And we realized that there were many companies who needed that accounting, record keeping, and stuff like that.
Speaker: So we took that over and then that led us to buy Hewitt Asia-Pacific business and Temasix, which was the Singapore government's HR outsourcing business called Embrace. That gave us an Asian footprint and then finally we put the two together and then Hewitt bought us, which is now all do it.
Speaker: And then I lived in Singapore for two years as a condition of a buyout. But Ashok, who was my co-founder in India Life, they didn't insist on a lock-in. So um he got started with Team Lease. And as soon as my sentence in Singapore ended, I came back. And, you know, king of small, kingdom is still king. Once you work for yourself, it's kind of hard. um Anybody can say no. Nobody can say yes in a big company.
Speaker: So I think obviously the instinct to preserve is different from the instinct to create. And we have become large and teamly. So we recognize that you can't scale without learning those lessons.
Speaker: So ah India Life was a bootstrap venture? India Life was no. Actually, I, a finance professor from Lazar Private Equity, came to give a lecture at Wharton. I convinced him to give me $2 million. dollars I think that was a mistake because I gave him 50% of the company, but I was comparing it to zero.
Speaker: and yeah so you know it didn't really matter but giving away half the company is probably why we had to sell the company a few years earlier than me and Ashok would have wanted Ashok was my roommate in Sriram college he went to IIM Bangalore we did done India Life together we've done team lease together but India Life we actually took money when we were a piece of paper which was a mistake which is why for the first seven years and team lease we didn't take money Okay, amazing. ah So what was the, ah like, why did you feel that you needed to build team lease?
Speaker: And why not just continue being a part of Hewitt or like, you know, did you identify a structural gap in the market? No, I mean, we had to sell India Live to Hewitt because um they had a drag along right and Lazar Private Equity got a good offer. But from my perspective, I think it was clear that I didn't want to work for A.O.N. Hewitt. I didn't want to live in Singapore. You know, Singapore is, you get cabin people. There's no such thing as a domestic flight.
Speaker: All flights are international. So beyond the point, it's it's there's more to life than lifestyle, as you at least I realized that early. I think also you know the gifts and wounds of a civil service upbringing, while the wounds sometimes can be risk aversion. But there's a wonderful gift that you um realize early in life that you don't live in an economy, you live in a society.
Speaker: And frugality is also an important gift. So I think the reality that we had to sell India life and we still had another venture. See, I think after India life, where there was a sweet spot when you're in your early 30s, when you're um we had the credibility of having sold the company, but we were still young enough to think about the next 20-30 years, right? One of life's tragedies is when you have energy, you don't have credibility.
Speaker: And when you have credibility, you don't have energy. So we were sort of lucky. we In retrospect, we were obviously unhappy with selling in India life. But I think in retrospect,
Speaker: That was a great thing because Team Lease turned out to be, an as an entrepreneur, there are two kinds of companies. You can start a baby in a dwarf. Both are small, but the baby is going to grow. The dwarf is going to stay there. The difference between baby dwarf is not more money, right? It's not more food. We actually raised more in the first round of wind India Life than we raised in the first round of team days.
Speaker: So I think the reality is that we um got lucky with that venture um selling, giving us credibility and giving us exposure to the HR space. So all our clients of India Life especially the early ones, Intel, Siemens and others who said, well, you've sold your company, but our problem is now staffing. Why don't you do something in that? So I don't think Team Lease was ah an idea that we caught. It was an idea that we were given by our giants. Besides the ah fact that babies and dwarfs are not distinguished by funding, what what makes them different? like How do you, before you actually jump into it, decide...
Speaker: Oh, absolutely. There's a huge difference between babies and dwarves in balance, in balancing your poetry and prose, right? So you campaign in poetry, but you govern in prose, right? In the an old political saying, it's true for how you build your own company. You campaign in poetry. You sort of write your business plans in poetry. You do your IP roadshows in poetry, but you actually have to execute them in prose. So You have to balance that because too much poetry and no prose, you do nothing. And too much prose and no poetry, you do nothing great.
Speaker: So i think the first balance is poetry and prose. The second balance is the next quarter and quarter century. When you're younger, 10-year plan becomes 10-1-year plans.
Speaker: And I think that was the birth defect in India life. But in Team Lease, we were always clear we were putting India to work. Our ambition was to be India's largest private employer. So we had a 10-year plan or even a 20-year plan. So I think balancing the the the next quarter and quarter century is ah is a sort of key difference between um this.
Speaker: I think the other one is just recognizing the difference between brains and brawn, right? I mean, um I met a unicorn founder lately who said that my strategy is to raise more money than your my competitor.
Speaker: I'm not sure that's a strategy, right? I mean, innovation is defined as... more not more cooks in the kitchen but a different recipe right so I think I would i would think that um you know Rommel Field Marshal Rommel was an army general he used to say sweat saves blood blood saves lives but brain saves both you know And when you're younger, you think sweat and blood wins battles, but it's actually, you know. So I think the difference between baby and a dwarf is your sort of um proportion between sweat and blood, which you think matters more, or brains, which actually is the only thing that matters in the long run, you know, because brains attract the sweat and blood.
Speaker: So I think the quarter-quarter century balance, the balance between poetry and prose, the balance between brains and bronze, I mean, there are many other things we can talk about, but those would be almost the same things that I saw when I wrote the book about Indian Pharma and D.B.G., you know, and his company is substantially larger in terms of one than mine.
Speaker: you know There is this ah horse versus jockey debate or um in the VC world, like ah looking at time versus looking at the founder. um So from what I understand, these are traits of the founder or the founding team per se, not of the market which you choose to go after. Does that not differentiate? No, I mean, I think obviously if you pick a a market which is not adverse, I mean, 100% of zero is zero, right? 100% of 10 is 10. So I think um I would treat large adverse market as hygiene. That is obviously the difference in New Zealand, often.
Speaker: But, um you know, i hate Karl Marx, but the only quote of his which I have come to respect as I have got older is, you know, we make our own luck, but not in the circumstances of our choosing. Right? I mean, as we think about luck versus skill, you know, i know lots of lucky people who are completely unskilled. They should not deserve their success.
Speaker: I know lots of skilled people who are very unlucky. They just never seem to catch a break, right? So as I get older, you shift from luck and skill to choices, right? As Dumbledore is Harry Potter and Chamber of Secrets. It is our choices more than our abilities that reveal what we really are.
Speaker: So I would think that the choices of which markets you play in it, the the cognitive diversity you have in your team is what decides poetry and prose, right? I mean, Ashok and me are opposite personalities. He's an introvert. I'm an extrovert.
Speaker: He's good at operations. I'm good at sales. He is good at therapy sessions with cribbing employees. I make them cry. He's ugly. I'm good looking. I could go on. But um our board member said something very interesting. He said, if only Ashok had been around, the company would be much smaller, maybe a hundredth of what it was. And if only Manish had been around, the company wouldn't have survived.
Speaker: And I think we both agree, right? The instinct to preserve needs to be balanced with the instinct to create and vice versa. So I think the cognitive diversity is really a choice you make in your team because the team you build is the company you build, right?
Speaker: So that the markets you play in are also choices. Balancing the next quarter and quarter a century is also a choice, right, in some sense. So the thinking versus doing, I think um in some sense, this addressable market becomes how much thinking and how much doing.
Speaker: You know, my dad was in the police and he used to always carry around a plaque from his office he had gotten made in Kashmiri Walnutwood. I remember it distinctly. You know, any army that has too much of a gap between its thinkers and doers will have its fighting done by fools and its thinking done by cowards.
Speaker: So I think you want your fighting done by brave people, but they should also be thinking. And you want your thinking done not by fools, but they should also be brave people who know how to get. So I think this choices is a better framework than luck or skill or just addressable market or just horse or just jockey, because choices is a bundle of...
Speaker: and you do I think probably success may explain more than failure. I know the first lines of Anna Karanina and Leo Tolstoy are, every happy family is alike, but every unhappy family is sad in its own way. Actually, I think it's the reverse for entrepreneurs. Every bad company is very similar, but every successful firm company is unique in its own way.
Speaker: You were the one with the instinct to create or Ashok? Yes, Ashoka has a preservation, he's more operations, he's much more um stable than I am. He's never met an acquisition he wants to make, I've never met an acquisition I don't want to make. is so so So I think it's it it it is neither is better or worse than the other, it's just different.
Speaker: So what what were those bundle of choices which came to you ah as a product of your instinct to create? And, you know, those choices obviously led to Teamly's becoming as big as it is today. So I want understand why is Teamly so big, whereas 100 other similar staffing businesses are not?
Speaker: mean, just the bets we took early, you know, the bets on the team, the bets on investing in technology, the bets on investing in the brand. You know, people said, oh, you went to Wharton to be a labor contractor. I said, no, this is um in India. There are enough kids, but there's a shortage of employers. So whoever controls employers will be connect, control the pathway for skills, for many ah for HR tech, for many other things.
Speaker: But I would just say the upfront investments, we had learned from India Life that you can't ah build a factory on cash flow, right? You have to make the hire the senior people early. You have to invest in technology. You have to invest in brand early and then go out rather than India Life where we sort of Because it was our first venture and we were inexperienced, we didn't make those investments. So I think um we had more human capital, we had more social capital, but more importantly, we had more experience in our second venture.
Speaker: And ah how much of the growth was inorganic through acquisitions? Like you said, ah almost nothing. till We didn't make any almost. an a Yeah, it was all sales teams. We had large sales teams. After we went IPO, then we caught into our um digital staffing business by acquiring two, three companies. But for the first 16 years, there was no acquisition.
Speaker: What does that mean, digital staffing? um I mean, the IT staffing. Ah, okay. Got it. Hmm. So we didn't do IT at all for till 2017, 16. How old were you when you started at Team Leads? 30. 32. Yeah, 32.
Speaker: and And how old were you when the IPO happened? um That would be 36. Well, 46. Okay. Okay. So that decade and a half was entirely devoted to Team Leads. That was like your 100% focus.
Speaker: Yes, yes, that was that was that was the focus, that was land, that was... And it was just, I think, you when me and Ashok's old team leads, we said we wanted our next company, Soul India Life, we always said we want our next company to be three things. We want it to be fun, profitable and good for India, right?
Speaker: um I had worked for an oil refinery before going to Wharton. That was, you know, it was profitable. It was good for India. It wasn't really fun. Ashok's family has had a cola franchise. You know, that's fun and it's profitable. It's not really good for India. At least my dentist doesn't think so. And I agree fully. day So I think that, you know, in Team Lease we found something that really was putting India to work. We were hiring somebody every five minutes for the last 20 years. And we were clearly having fun because we had to solve a problem that people thought was a mystery rather than a puzzle. It was actually just a puzzle.
Speaker: It wasn't a mystery where you couldn't sort of solve it. So it wasn't a problem like cancer or climate change, right? There's a matching problem, which is connecting demand to supply. There was a mismatch problem, which is repairing supply for demand. And there was a pipeline problem, which is preparing supply for demand.
Speaker: And over the years, our business plans sort of morphed to include all those three. ah The HR space is ah not known for large exits. Team Lease is an exception, of course, and maybe Naucry.com. But other than that, there haven't been large successful outcomes in India. Is that a feature of India or is that a feature of the industry?
Speaker: I mean, I think babies versus dwarfs exist all over the world, right? I can think of many industries which have more dwarfs. I'm not sure the population of dwarfs, I mean, maybe the population of dwarfs is a little higher in HR because it can be a personality business. It's a lifestyle business, right? You can do a search firm sitting at home. You can do one mandate and sort of say, well, I've made enough money and now I'll take it off. So,
Speaker: I think building institutions is a choice again, right? You may choose to have a lifestyle business or an income replacement business, let's call it, where instead of having a job, you get the money.
Speaker: And HR sometimes is conducive to that. Now, it's sort of like what the Bhagavad Gita says, right? What stands between our greatest goals and us are not obstacles, but clearer paths to lesser goals. Right. So sometimes in h r you have clearer paths to lesser goals. But we were quite clear that we were doing this um as ah rebound from an earlier venture, which had only grown to 50, 75 crores. And we wanted our next company to be very large.
Speaker: And we wanted it to be institutional. We didn't want it to be a family business. Our kids were not going to come and work here. So I think we had given ourselves the permission and the ambition and and sort of it was our ambition and destiny to create a big company.
Speaker: ah I'll tell you where I'm coming from. ah you know And maybe I'm biased when I say this, that i've I also probably had a mission. I spent a decade building in the HR space before I finally shut it down. um um My venture was a search so its business, ah but I thought that, okay, we we can pivot, we can do like a services as software, what today a lot of... AI enabled workflows are making it possible, things like that. I tried to raise funds. ah Most people were unwilling to really invest money in the space and so on and so forth. um
Speaker: I'm just trying to figure out what I lacked and I don't want to turn this into a therapy session. But ah that was the reason behind my questions to you that, you know, in terms of what makes a business really break out. But globally, search firms have not made good, you know, Egon, there were three search firms, Conferi and a few others who went public and they didn't make good public companies because the annuity business, you know, public markets value annuity businesses more than they value consulting businesses, right? And they started valuing search firms as your revenues are too lumpy. In a staffing business, your revenue, once you sign up a client, it becomes an annuity business. So I think it's the... Difference in the nature of how investors perceive um consulting slash search businesses and staffing businesses, that could be one explanation.
Speaker: um The institutionalization is obviously up to you as an entrepreneur, right? I know many unhappy, ah very happy entrepreneurs with 10 crore, 20 crore companies. I just realized it's the same amount of work to manage a 100 crore company, a 10 crore company and a 10,000 crore company.
Speaker: Actually, sometimes when you run a 10 crore company, you're working harder than the people who are running a 10,000 crore company and have more sort of heartache and risk because you don't have and all this on you. So I just decided that, look, if you were going if you're jumping from the 50th floor, you might as well jump from the 100th floor, right? The outcome is going to be the same and you will have more time.
Speaker: and So it's just, it's clear that, you know, entrepreneurship is the art of staying alive long enough to get lucky. So how do you stay alive long enough? How do you get lucky? ah ah There are choices you make which improve your luck, right? i Just like I think serendipity intelligence is a form of intelligence, right? the more you Richard Wiseman is a psychologist at University of London. He says the more you smile, the more you improve your luck, right?
Speaker: I think the more diverse networks you have, the more chances you have are running into ideas, right? you Otherwise, you get stuck into your cognitive ah thought world where you hang MBAs hang out with MBAs, doctors hang out with our doctors. I'm not sure that is the recipe for sort of creating the... The people who sort of create babies at which become large are ones who have large surface areas to their mind. They have large networks.
Speaker: They have um ah thinking about institutionalization, which is a little different than an income replacement business. but what does What are like the symptoms of thinking about institutionalization? like How would that influence your day-to-day decision-making?
Speaker: Well, when you see a project, you you think of a person. You don't think of doing it yourself. I think delegation is, is the if you're if you're busy all the time, either you don't know how to delegate or you don't have a team.
Speaker: So um I think beyond the point, you have to recognize that every year, see, every year we were running the biggest company that we had ever run for the last 25 years. Still, we handed over to Suparna, who obviously had run Titan before this and run a larger business, our successor as MD, whom we've handed over to about six months ago. So my sense is that um you have to keep asking. I mean, the most dangerous lies are the lies we tell ourselves, right? And so if you're always busy, is it because you don't delegate, because you don't have a team, or is it genuinely because the business is sort of dragging you down?
Speaker: So I think over time, institutionalization does require you to keep morphing your role every three years or two years or five years, whatever you decide. In fact, in fact every time the revenues of the company double, you probably have to rethink your role and your bandwidth and your team.
Speaker: Because what brought you to a certain stage doesn't take you to the next. What was the way in which DBG increased his surface area for luck? you've You've written a book made in India about the Lupin story. and I mean, he was a school teacher. There was no way. He was a forced entrepreneur. He was fired from Bitspilari.
Speaker: I mean, his father was a teacher, his grandfather was a teacher, his aunt was a teacher, his uncle was a teacher, and therefore he went to become a school teacher. Then he became a college lecturer. Then he became a university professor. But he took the Indian Air Force exam um and when he was at Bitspilani and when he got back to campus, they said, well, you can't take an exam without our permission.
Speaker: He said, I don't need anybody's permission to serve the nation. They said, well, actually, you do look at your contract and you should resign or we'll fire you. He said, well, I'm not resigning. So they fired him. but i recently met the bits vlani director i said we should endow a chair for flying right because it's clear that he would not have taken that train to bombay and and created that company which um is um the world's largest maker of tv medicines is worth more than 10 billion dollars and is sells in 200 countries um so i think for dbg just that act of you know in right the first three words of the book in retrospect even when i look at
Speaker: all other entrepreneurial careers, the first three words of this book are Veerbho Giva Sundara, which is the brave shall inherit the earth. And I think bravery is the most valuable of all virtues because it makes other virtues more valuable. Most importantly, it can't be faked.
Speaker: And most importantly, bravery represents optimism, right? Because it's an endeavor of profound optimism to be an entrepreneur. or You believe that you're going to change the world. And so I think that um the way his brave choice is setting up an FDA plan 10 years before he sold a single rupee from it, backing off his daughter to the U.S. saying, I don't know what you're going to do in the U.S., but U.S. is the world's largest farmer market. You've got to be there. And that was in the depths of his financial crisis. now There's a lost decade for Lupin from 1993 to 2003 when he had you know diversified into a few businesses. He had to write them off. His stock market price crashed 99%. That's very high. but um So I think a bunch of brave choices he made in people, in in factories, in ambition for global markets...
Speaker: um And then after the crisis, in just focus on both domestic markets. you know Unlike software, which is 90% exports, pharma is 50% India and 50% exports. And so the domestic market investments that they made in the sales force have paid off quite substantially. The research investments that allowed them to launch very quickly and the legal expertise that they built.
Speaker: So as with most company specific decisions, in retrospect, they seem obvious. But when you're making them, they're brave because they're, you know, you want to guarantee you buy a toaster.
Speaker: And there are no guarantees when you're an entrepreneur, but you still have to make those decisions. So bravery is one. You also mentioned one of the things for Team Lees as the institutionalization mindset.
Speaker: ah Was that something which ah also worked for DBG? Oh, absolutely. I think his balance of sort of risk-taking and patience, his balance of teamwork and individuality, right? I remember him multiple times telling me also, you want to go fast, go alone, but you want to go far, go together, right? It's an old Rajasthani proverb.
Speaker: And I think that would that to him was ah really fundamental to how he viewed the world. When he thought of a task, he thought of a person who could do it for who needed to be brought in. He didn't think of doing it himself.
Speaker: I mean, i would i would I think that it was almost abdication in the later years of his life. But in in as I get older, I see the genius in abdication to to to a trusted person, right? Because it increases your bandwidth to look up rather than look down, to look through the windshield rather than look in the rearview mirror. I mean, to to not confuse activity with progress because there's a lot of work which needs to be done with your hands and legs.
Speaker: But I think the cognitive work is the most important part for an entrepreneur. So you have to, over time, so everybody starts to do their hands and legs work. I think it's what Elliot Kipchoge, he was the first marathoner to have run a marathon in less than two hours. He says you run the first half of the marathon on your legs and the second half on your mind.
Speaker: And I think that's part of the job description morphing for every entrepreneur that happens to. Why isn't India known for novel drugs? Like essentially India manufactures drugs, but it doesn't invent drugs.
Speaker: I mean, why didn't DeepSea come out of India when India exports more software than Saudi Arabia did oil? Or why has China become one third of the world's new drugs when India makes 50% of the world's drugs, right?
Speaker: Americans ate 400 billion pills last year, 200 billion of them were made in India. So I think this is a broader question of why has our university system, government and private sector not worked together in ways that create new knowledge rather than exploit existing spaces.
Speaker: Some of it is just at $3,000 per capita income, you will focus on exploitation rather than exploration. But I do think it's ah it's a commentary on on our on our university system, you know, Johns Hopkins, Harvard, MIT, which were given freedom and lots of government funding. Even this year, Harvard will get $90,000 per student per year from the government.
Speaker: I did not know that before Trump started his band Wajabarat with bashing up Harvard ah because our Harvard's average tuition will be less than that, right? But that money doesn't go to students. In fact, when I mentioned this to the Harvard president, he said that's not fair to use the drum near students because most of that money from the government goes for research.
Speaker: But I said, well, you're at university, so you're unit at Porto Mance and Studios. So I think that the partnership ah between the private sector, innovation comes from a partnership between the three people, between the government, private sector and non-profits.
Speaker: Unfortunately, in India, all three have birth defects. The government has an execution deficit, the private sector has a trust deficit, and non-profits have a scale deficit, right? And everybody looks down on each other. Everybody thinks in the government thinks private sector is all chore. Everybody in private sector thinks everybody in the government is corrupt, and non-profits look down at everybody because their sanctimoniousness is beyond necessary. But I think because of that dated tug-of-war metaphor, which the 1955 Awadhi Resolution on the 1956 second five-year plan created, right, that was when you said that we would nationalize banks, we would handicap capital markets, we would least create the license charge.
Speaker: And entrepreneurs are viewed with suspicion, right? And I think so so you never allowed that partnership to develop rather than the tug of war metaphor, it should have been a swim lane metaphor or a dance metaphor, right? wherever you I don't think when I ask for deregulation and talk about regulatory cholesterol, I'm not asking for an invisible state or a zero state. Otherwise, Fort Valley in Afghanistan or Waziristan in Pakistan would be hotbeds of entrepreneurial activity. There is no state, right? So I think... We recognize different fitrets of all three people and um different instincts and different roles. So I think innovation has not happened because all three of us have not worked together in ways that we should have.
Speaker: Are you a capitalist at heart? I think so. i think as I think so. I believe that um fiscal and monetary policy has been oversold.
Speaker: You know, government spending has gone up 108 times since 1990, but per capita income has only gone up eight times. So I don't think ah if fiscal deficits could make countries rich, then why would countries bother being poor?
Speaker: And monetary policy is clearly oversold. After a few years on the RBI board, I haven't decided whether the monetary policy is a placebo or a painkiller or a steroid. It's definitely not a medicine.
Speaker: So what is what creates mass prosperity? right Why did we create the world's largest democracy, which is a harder project in a country like India, on the infertile soil of the world's most hierarchical society?
Speaker: Why didn't we create the world's largest economy when it creates the world's largest democracy? And I think that was a distrust of entrepreneurs. And I think we should stop doing puja of 1991 because 35 years 1991, China and India have a five times difference in per capita income when we had the same in 1995.
Speaker: So I think the biggest difference between that happened in China was their relationship with investors and employers. You know, they attracted the world to set up factories. they They renegotiated their relationship with entrepreneurship, whether it was foreign entrepreneurship, domestic entrepreneurship, large company entrepreneurship.
Speaker: And that's why they have moved 350 million people from farm to non-farm employment since 1978. While the most embarrassing number about India is that 45% of our labor force still works on
Speaker: So I'm a capitalist, um though I believe that well-regulated markets. So I would say I'm a more market solutions person. i don't think I think capitalism may be the wrong word from the bipolar days of communism versus capitalism. A modern state is a welfare state. I completely acknowledge that.
Speaker: But you must finance your welfare not by debt, but by taxes, which come from entrepreneurship. So here's what I'm wondering. ah you know You had your first stint as India Live, second stint as Team Lease, and now you're in your third stint, which is, ah I'm not sure what's the right title. Maybe i would say Thought Leader, though that might not fully encapsulate it, but you're very deeply involved in public policy as well. ah Why not look at becoming a VC in your third stint and really investing in the next generation of entrepreneurs?
Speaker: I think my everybody has a, you know, I often ask champion ah coaches in sports, right? What matters more in creating a champion, fitrat, talim or riyaz, right? Fitrat is your instinct.
Speaker: Talim is your education and your your your sort of training and riyaz is your hard work, right? In some sense. And I think my fitrat is not investing. it' it is more Shifting from actor to producer isn't as easy as people think. right Our instincts to run things is um is different from production. But I did discover in my 25 years of running Team Lease with Ashok that my fitrat was working on and big ideas and creating systemic change. You know, labor laws, apprentices, you know, many regulatory cholesterol, decriminalization, deregulation are things that I recognize were binding constraints for India 25 years ago. And now they are seeming to be ideas whose time has come, I think at least in some sense. So I think my my i the systems change that India needs is is this renegotiation of India's relationship with entrepreneurs and entrepreneurship.
Speaker: You know, the regulatory cholesterol holding us back. I think finance, infrastructure and skills have shifted from being a dagger in heart to a thaw in the flesh. The real dagger in the heart is regulatory cholesterol, know, the 67,000 filings, the 6,700 ways go to jail, 26,000 ways to go to jail.
Speaker: So I think that is what is a battery worth fighting. Obviously, education is a really important part. And that's why I'm one of the co-founders at Ashoka. I'm co-founder of NEEF. which is an IB school in Bangalore. I've taken over my parents.
Speaker: I have 12,000 kids in Kanpur. So I've got three horses in education. I'm now working with Nandan on, you know, river but we're revamping and re-energizing a think tank called NCAR because I think... So India's intellectual infrastructure needs to be redone, right? So one think tank, one publishing venture, one university and three schools...
Speaker: are obviously the human capital filters that I'm working on. But outside that, I'm working on policy because I've just thought that being an investor for me was not playing to my fitrat, playing to my strength, or even playing to what I enjoy.
Speaker: How does working on the intellectual infrastructure move the needle for India as a country? Oh, because but Buddha said Atman Deepa Bhava, right? Be your own light. I mean, as Trump is showing us, he's you know now banned frontier models from being shared with foreign citizens. I think that finally, there was an era of globalization where we felt that borders didn't matter.
Speaker: i think they won't matter as much as Trump thinks they will. But I do think he has reminded the world that borders can be weaponized and some kind of some things you need to be careful about. So I think the notion that you know we have to get 15, 20, 30 universities in the top 100. mean, Tsinghua University, which was university Mao practically destroyed 1978, today students and I mean, we're proud of what we've done at Ashoka, but it's only students.
Speaker: It will be among the top 100 universities in the world, but we need 25 more universities like Ashoka, which are philanthropically funded because a great university is low fees and high costs.
Speaker: It's low fees because you want student diversity and it's high cost because you want to pay your faculty well. So I think that's a hard bridge to manage, right? So I think um intellectual infrastructure, human capital is finally the only renewable energy a country has. And it is finally the only sustainable competitive advantage a country has.
Speaker: How optimistic are you about India being comparable to China, youre not being a like a side note in ah this being China's century, but this also being India's century?
Speaker: I don't think Chinese work harder than us. I don't think the Chinese are smarter than us. I just think that if I was to teach a development economics class, it would be the five things Deng Xiaoping said. You know, I don't care if a cat is black or white, if it catches mice, I will cross the river by feeling the stones. i will open Some places will grow rich before others.
Speaker: If you open the door, some flies will come in. And hide your strength and bide your time. right So I think Deng Xiaoping is probably the most valuable individual because he has moved so many people from farm to non-farm or from poverty to at least some kind of mass prosperity.
Speaker: i don't I think it was a bunch of, we made some wonderful democratic choices which have paid up spectacularly for somebody born and brought up in Kashmir. India, 3 million people win an election and 22 million people stand for an election. So India and Pakistan have had very different destinies. But um we made some crappy economic choices, right? I mean, to nationalize banks, to nationalize... I mean, they bought in Air India for two and a half crores. They put in, you know, three lakh crores in the last 10 years of owning the company. So, I mean, it's just... And and on even in G7 or G20 meetings in Delhi, they never made anybody stay at Ashoka Hotel, Ashoka Hotel, which is one of India's 27 acres in the middle of town.
Speaker: So they don't want to use their own hotel. So I think that um economic choices were but crappy. We can easily compete with the Chinese. um We just need, I don't think we need Purnaswaraj, but I think we need the Madhya mark between a state that is facilitative and developmental rather than controlling. And maybe that is just very equivalent to civil service reform, right? it's not the And that's not the 6,000. See, they are ruling, they are not governing, right? And that's why we have so much regulatory pull-ups. So I think um we need a mass, the steel frame has become a steel cage now.
Speaker: And in if you unleash India's entrepreneurs, then I think we can compete with China or even. You know, people say that ah China's lack of democracy is the reason why it grew so fast and that it can ah decide that it wants to be the largest EV manufacturer in the world. And it goes ahead and 10 years later, it is the largest EV manufacturer in the world.
Speaker: Nothing stopped India from doing that. you know It is leadership. The democracy alibi was valid for the first 20, 30, 40 years of India's existence because we were an unnatural nation and improbable democracy. But we have digested the fixed costs of democracy. So let us not give ourselves the democracy alibi. It was a leadership problem. They they had leaders who took the long view and um created a fertile habitat for foreign entrepreneurs.
Speaker: You know, Apple and Tesla basically taught China how to make things. And um so we we could have done the same thing. We are doing that with Apple now. 25% of the world's iPhones are made in India.
Speaker: But value-add has gone from 2.5% to 15%. But in China, it's 40%, right? And the China factory of refugees are not moving because India is not yet a fertile habitat for entrepreneurship. MNCs are also entrepreneurship. So I think India's unfinished transformation is our relationship with entrepreneurs and entrepreneurship.
Speaker: But, ah I mean, post-91, there was... ah No barrier for entrepreneurs as such, right? a Be it foreign or... Oh, there's a huge permission license, Raj. The NOCs. See, the acts and rules are one thing. There are 21 other administrative instruments, guidelines, circular notification, office order, f FAQ, press release. A compliance head would get sacked if they only looked at the act.
Speaker: You know, the government reads from left to right, which is acts and rules. But we read from right to left, which is compliance, circular notification guidelines. So I don't think the administrative state has been dismantled. I mean, in Team Lease, we have 180 guys in regulatory affairs whose only job is to take care of the regulatory cholesterol. Now, big companies can afford that.
Speaker: But everybody loves MSMEs, but they're not willing to do the um hard work that will make the daily life of MSMEs. You know, we have to shift from the bird's eye view of entrepreneurship.
Speaker: to the worm's eye view of and daily life of entrepreneurs. It's very hard in the daily life of entrepreneurs just because of, and because of just the philosophy of how the law is written, how it is, in the the transmission losses between how the law is written, interpreted, practiced, and enforced because of these administrative instruments, right? So Stalin's head of secret police, Labio Berendt, used to say, show me the person, I'll show you the crime.
Speaker: Indian bureaucrats say, show me the person, I'll show you the route. And essentially, so that's that is why the daily life of entrepreneurs. I don't i dont i think 1991 was very important, but it was incomplete.
Speaker: Okay, it's a slightly sensitive question. I don't know if you'd like to answer it, but what's your net worth today? um it's It's much more than, it's my ancestors' wildest dreams.
Speaker: Let's just say that. It's quite substantial. it is um It is much more than I will need, much more than my kids will need, which is why we have a systemic plan to sort of give most of it away.
Speaker: So that's what I wanted to have follow up with. Like, what do you plan to do with this? So I'm assuming like it's a three-digit or a four-digit crores? all these All these, all the five things, right? Yeah, all these five things. The the school, the the schools, the partly to Ashoka, partly to NCAER, partly to NEER, partly to Kanpur Education Society, partly to New India Foundation. So I chose to do philanthropy in which I am directly involved.
Speaker: And ah what do you, like, what's your dream for India in, let's say, 2050? I think, biding mass prosperity to mass democracy. We missed our twist with destiny, right? I memorized Pandit Nehru's twist with destiny speech when I was a child, but there are 200 million people in India will never read the newspaper that they deliver or sit in the car that they clean or send their kids to the school that they help build, right? But this isn't a problem like cancer or climate change.
Speaker: It's a plumbing problem. And um I think we can fix that plumbing quite easily. So I think that the five transitions, farm to non-farm, rural to urban, subsistence self-employment to decent wage employment, informal to formal, and school to work,
Speaker: are unfinished transitions of India that need to be completed. And I think all of them depend on renegotiating our relationship with entrepreneurs and entrepreneurship.
Speaker: What makes you so, um like, you know, putting country before self, what really caught that spirit in you? Was it the the the civil servant?
Speaker: I mean, I think opening balance, yeah, I was born on the 10th floor. My parents were civil servants. They spoke English. I went to English schools. I was, you know, in in in team leads, I have realized the two most important decisions a child in India makes are to choose your parents wisely and your PIN code wisely. i always chose I obviously chose both of them wisely and so did my wife, Kavita. She was born, DBT's daughter. So I think ah the reality is that both of us um you know were born with an abundance.
Speaker: If you have abundance, then ingratitude can lead to abundance being reinforced. right that um You know, there was so much luck in what we did, um being in the right place at the right time. to know We made some choices. We take credit for that. We should get credit for that.
Speaker: But um in another time, i mean, Team Lease started 25 years so before it was, wouldn't have been what it was. And 25 years later today, if you start Team Lease, it's already commoditized the business. And there many competitors, which would be hard to catch up with Team Lease right now. right So i think um I think just the recognition that there was skill in what we did, but there was a lot of luck and you know we have an obligation, if not um and a right to sort of give back to it and bend in gratitude of the success.
Speaker: Do you believe in like say, Mark Zuckerberg is a great founder versus Mark Zuckerberg is a product of having born in the US at a time when the internet was blowing up?
Speaker: Sure, but there were 10 other companies at that point, like Lupin, right? There were 26,500 pharma companies started after the Patents Act of 1970, but were only 10 of them worth more than $10 million, right? So clearly just being in the right place at the right time is not good enough, right? I mean, if that was um enough, then everybody would be successful. So Back to Karl Marx. We make our own luck, but not in the circumstances of our choosing, but we do make our own luck.
Speaker: That's a great place to end our conversation. Thank you so much for your time, Manish. It was a real pleasure. Take care.
