10 Entrepreneurial Lessons We Can Learn From The Death of CCD Founder

Ever since the news of CCD founder VG Siddhartha committing suicide broke out, the entrepreneur world is in shock. He was the role model of many entrepreneurs like me because of his humble nature, calm demeanor, down to earth attitude and persistence towards building a globally renowned Indian brand.

This is what keeps most entrepreneurs from getting sucked by multinational high paying jobs abroad to running their own show in India. In fact, even the consumers were seen deeply regretted and more concerned about the event. For them, visiting a Cafe Coffee Day was like an everyday affair.

I seriously doubt if any other Indian consumer brand would have attracted so much attention than what CCD did.

A Little Background

VG Siddhartha, a Chikkamagaluru based businessman founded Cafe Coffee Day Global limited in 1993. Back then, the company used to grow coffee in their own estates spreading over 20,000 acres. Soon after, CCD went on to become the largest producer of arabica beans in Asia, selling coffee to countries like the US, Europe, and Japan.

Although the company started its first coffee outlet in 1996 in Benguluru, it successfully launched as many as 1000 outlets across the country by 2011. What most of us don’t know is that VG Siddhartha was recognized as “The Entrepreneur of the Year” for 2002–03 by “The Economic Times” and the “NextGen Entrepreneur” by Forbes India in 2011.

The trouble seemed to have started for Coffee Day Enterprises in FY09 when it reported a loss of Rs 7.72 crore for the financial which surged to INR 150.75 Cr by FY16. Having served as the age-old bedrock to a billion-dollar coffee chain and with such eminent business distinctions in his name, no one could question VG Siddhartha’s highly adept and masterful entrepreneurial side.

People might have said he failed as an entrepreneur had he lived today, but not now when he made the submission himself before taking his life. To me, it’s more than just a demise of an entrepreneur, it’s a failure of human approach to life. However much we talk, one thing is certain that we have too many questions but too little answers.

Come new day, the world would continue to exist and we would continue to business, but at the moment, we must focus on his inexplicable yet incomparable legacy.

And perhaps this is where, we have learning for all.

Leaders Come In Many Colors

Although the outward personality of every leader can be different, those who succeed have many things in common:

• They have a vision and drive to it with persistence
• They hire right people and leave them free to perform, like VG Siddhartha said “I’m not a very smart guy. I just employ smart people.”
• Although they strive to stay on the right side of the law, but their go-getter attitude seldom gets them into crossing the line specially when the law is not very well defined VG Siddhartha once mentioned “I am a businessman. I pay my taxes. I do my bit for society. I have no time to be drawn into controversies not of my making,” Siddhartha says.
• When they fall they have a natural tendency to stand up and get to speed, in this case probably the pressure from external factors was so much that he finally succumbed to it.

Entrepreneurs need to identify their core strengths as a leader and need to onboard partners who have complementary strengths to cover up for their weakness.

So if you think you are emotionally susceptible to take the extreme step you need to have an inner circle you can confide in. I am sure VG Siddhartha would have had one, but it’s hard to believe that no one had a clue until the D day.

Go Slow And Steady

I like to give an example to explain this. What if VG Siddhartha had followed the footsteps of people like Vijay Mallaya and fled the country without repaying the company debt? The same people who are now praising him for his integrity, would have cursed and hurled shoes at him. Isn’t it?

Although the situation is different but there is definitely something in the system that needs to be set right when big businesses start struggling.

These are troubling times for entrepreneurs. They start thinking of either fleeing the country or committing suicide. Interestingly, this is when their assets outweigh their debts.

Vijay Mallaya was quick to comment on the event as he tried to get some empathy for his actions.

He may not entirely be wrong in his comments but I think these have come rather late when the damage is done.

What we learn from all this is to go slow and steady. When you see the topline (revenue) rise and bottomline (profit) fall, cut cost and make it green.

Bootstrapping Best, Equity Next, Run Away From Debt

I might sound a little conservative here but I have seen businesses making fortunes sticking to bootstrapping over the years. It makes sense to use your own cash and savings to start your venture at least during the angel funding stages till it turns bright.

Even when your business turns profitable, prefer to continue bootstrapping. Reinvest the amount that you earn rather than procuring outside funds. Your investment may look small but you stay secure.

Only in cases where you see an immense opportunity for growth, opt for equity investment rather than debt.

Even with equity investments preference should be as below –

1. Equity partner who adds some strategic value to company’s growth
2. VC’s and PE firms
3. HNIs and non professional VCs

Don’t Expect Government Support, Stay On The Right Side Of The Law

The taxpayer rate in India is poor. So to expect government to back your personal undertaking is unreasonable. A similar demand was made by technology startups in India ahead of General Budget this year but nothing came out. Air India goes into losses, it’s still flying while Jet Airways is grounded. In telecom sector, BSNL posts a cumulative EBIT loss of Rs 82,000 crore (FY09 to FY18) but is still afloat while all private players struggle.

So dear entrepreneurs while your tax money will be used to cover losses of public companies, don’t expect it to come to your rescue.

Always keep on the right side of the law and pay your taxes.

Don’t Aspire To Be A Ratan Tata Or Shiv Nadar

 No, you’ve read it wrong. Don’t catch my words. You have every right to be ambitious and create another Flipkart.

The point I am trying to make here is that it is important to stay in business than to make yourself the biggest brand in the world.

Thinking of multiplication and expansion is fine but not where you run the risk of being completely eliminated from the game.

Avoid Stress To Overpower You

 This is probably the most neglected part with most entrepreneurs.

When they start a business, they keep themselves engaged to take their business to profitable levels.

When they reach that point, they start thinking of stabilizing it.

Then comes a point when expansion starts to take over their mind. In a nutshell, it is a vicious cycle that never seems to have an end. It constantly keeps you going.

Little do we realize that during all this, stress starts creeping in. Even when it’s a small failure, it appears exponentially big, simply because of the big-dollar value attached to it.

Philanthropy Should Start Early In Business

This is perhaps the easiest of mantras to improve your chances of being funded, especially if you’re a startup. Veteran investors pay a lot of emphasis on how a particular product or an idea would address social causes before shelling out money.

It’s a different story than the same startups fail to recall their objectives in the wake of business success down the line. Philanthropy should start at an early stage. Start spending on the welfare of others as soon as you have enough in your wallet. Not only it will generate more business opportunities but also pave the way for brand security.

It’s simple. When you help others, people remember you. So when bad times hit you, you stand a greater chance of being supported.

Spend More Time Deep Down

This is one thing that entrepreneurs hardly follow. When they reach business heights, they hardly spend time with entry-level employees. I can understand that sitting with people of the same stature gets you more solutions and business ideas but you hardly get tips on undercurrents. Isn’t it?

Spend time with employees at entry-level. They would teach you how to take a proxy leave from work 🙂

To Save Your Ship, Throw Expenses Overboard

When you sense things are slipping away and your profits get <10%, it’s cost cutting time. It’s a strict NO to cover losses with funding (debt or equity), the only way is to reduce expenses and set it right.

Covering losses with funding is a trap that needs to be avoided at every cost, here entrepreneurs (being highly optimistic) hope for profits someday but eventually they get doomed with ever piling up of debt and interest.

Finally, If It Stinks, Sink It

Remember, you were the same person who made $$$ from the same initiative. So what if it is in doldrums today? Don’t try to find answers. Only the richest worry of falling. Rag pickers don’t have to worry about not being able to find it one day.

Instead of sitting in the dark, you should be proud of what you did once. Let it go, sink it if it stinks and limit your losses, it’s essential to live now to fly another day! Though we may not realize but life often gives us a second chance.

Final Words 

 I cannot think of an incident in the recent past that got so much attention and coverage both by businesses and consumers alike.  The least we can do is to take lessons from it before forgetting.

Today, VG Siddhartha is no more with us but “a lot will continue to happen over coffee” even in the times to come.

RIP!