A Deadly Brew: VG Siddhartha’s Sad Demise

The business world today is different. It’s full of challenges. It’s ambiguous. It’s complex. It’s quite unpredictable. Its players are after speed, have thus become highly vulnerable to distress, particularly financial distress. Such were the thoughts that swarmed the mind hearing the tragic demise of the Café Coffee Day (CCD) founder VG Siddhartha (VGS).

Siddhartha, a bright and young entrepreneur, established a novel chain of affordable hangouts for the Indian youths of 21st century under the brand name CCD. Created employment for the rural youth by training them to be fit enough to work in a service industry where greeting an irate visitor with a smile makes all the difference. Built a Desi brand of his own, selling a finely brewed coffee, which caught the attention of the urban middle-class. Everything looked hunky-dory, till his work-life balance tilted to the fatal extreme!

The business world is shaken by the apparent suicide of VGS. A letter said to have been written by him to the firm’s board and employees stating that he “gave up”, blaming tax authorities for “harassment” and decisions that created a liquidity crunch and also about the pressure exerted by a person from a private equity firm to buy back their stake has indeed inflamed the business world’s anger towards the government and its tax rides that are often alleged to be tainted by a political element.

This letter raises two vital issues. First one: the interface between the government and the taxpayer. There is, perhaps, an urgent need for refinement in the current approach. Our ancient thinkers strongly advocated a kind of taxation whose implementation is not felt by the people. A King is ordained to take into account the ‘Yoga Kshema’ of the taxpayers while levying taxes. It is said that while collecting taxes, a king must act like a ‘gardener’, and not like a ‘charcoal maker’. Let us hope that our tax-system will practice this sane advice. 

The second issue that VG’s letter raises is: the dysfunctional corporate debt market in the country. It subtly points out that VG, who had successfully built the CCD brand, would have had no difficulty in raising money and running the business alright in a functional debt market duly backed by an efficient legal framework. As against this, today our banking system being overburdened by distressed assets has become risk-averse. Even NBFCs that are passing through liquidity crunch after the IL&FS crisis are of no avail. Thus, credit to businesses has evaporated. On the demand side, businesses, with investments drying up and employment becoming scarce, are facing a knock-out effect on their revenues. Simply put, economy itself is in a serious trouble. Cumulatively, all this made jittery investors put more pressure on businesses that are already in trouble to pay back their investments. But the pity is, all over the western capital markets, PE investors are known for providing risk-capital for startups but it seems to be different in India. Now the question is: Whom to blame? And, what to blame for?

The only answer for this toxic conundrum is perhaps what Anand Mahindra, Mahindra Group Chairman tweeted: “Entrepreneurs must not allow business failure to destroy their self-esteem as it will be the end of entrepreneurship.” What a profound statement! 

That said, let us first try to understand what entrepreneurship means. Simply put, it is an activity of setting up a business taking on unusual financial risks in the hope of profit. There are three important words in this, viz., ‘risk’, ‘hope’ and ‘profit’ and they command our further indulgence. First, the all-important one: Risk. It means “to dare”. Which is why,  it is more a ‘choice’ than a ‘fate’. In other words, it is a chosen one by the entrepreneur. In statistical terms, it is the degree of variability of possible outcome of a particular event. In financial parlance, risk is always associated with loss that is expected to be incurred due to the happening or non-happening of a certain event or events. It thus becomes an uncertainty with a known probability. And importantly, remember, it is chosen by the entrepreneur. But then the question is: Why? Because, he has a ‘hope’—hope of handling it. Hope of manipulating it, morphing it, managing it in his favor.

Thus comes the next important word for the entrepreneur: ‘Hope’. It is the vital spark of life, the sole driving force behind mankind’s dreaming, planning, execution and his very existence. “Everything that is done in the world is done by hope”, said Martin Luther King. But unfortunately, hope too is exhaustible. And that is where an entrepreneur needs to regain hope by “hoping for the moment”. Else, there is a danger of one getting dumped in needless gloom. So, what an entrepreneur needs to cultivate is self-esteem. And he should do it all the time.

That’s where the word ‘grit’ steps in. It is observed that most of the successful entrepreneurs are found to possess enormous ‘grit’. Grit is made up of persistence, passion, and resilience. It is the passion for the chosen enterprise that enables an entrepreneur to stomach all the rejection and still do something better than what has already been done for sustaining the enterprise. The gritty lot will never give up until they achieve their goals.  Even if they are knocked down, they bounce back and try in a different way to keep going.  

After all, an entrepreneur’s journey is always through an uncharted territory. So, nothing is obvious for him; every move is a new step which he himself has to draft. For, there are no ‘a prioris’. He has to strike out on his own. In short, it is the perseverance that yields the much-desired profit. And it is the profit that sustains the enterprise. Challenges do arise, but they should not overwhelm the entrepreneur, instead he/she should innovate newer ways to overcome them. As Song (2011) defined, entrepreneurship is an enterpriser’s will to create a new business through management innovation by showing his/her challenging spirit. And in all this, as Dubet (1994) said, a logic of personal ethics flow as an undercurrent. 

That is entrepreneurship! And as Anand Mahindra’s tweet says, no entrepreneur should allow his/her business’s systemic risk kill their entrepreneurial spirit.