When the founders of TaxiForSure merged their venture with competitor Ola in a $200 million deal earlier this month, it was a decision driven by values and not merely valuation.
Their competitor in the taxi aggregator space, US-based Uber, had also made a fabulous offer, but this would have led to layoffs. What made TaxiForSure choose Ola, in a deal that created waves in the segment, was the need to ensure that its team of 2,000 employees retain their jobs, co-founder G. Raghunandan said.
Job losses would have been huge had TaxiForSure opted for Uber, given that the latter’s global headcount was less than half, at 845. Ola on the other hand, agreed to not only retain the workforce, but also to a few other suggestions about payment of a two-month bonus and the acceleration of an ESOP (Employees Stock Ownership Plan).
“Ideas are not permanent, people are,” Mr.Raghunandan said on Friday at the TiE-ISB Connect event in the city, while highlighting how the priorities of entrepreneurs remain significant even at the time of exiting the business. Speaking on When to scale? When to sell? he said it was important for start-ups to build a team that had trust in the promoters.
Similarly, it was important for start-up promoters to speak about their idea, build the culture of the company and when investors bring funds, concentrate on the accompanying terms and conditions.
The benchmark for start-ups, he said, should not be ventures that have succeeded, but those that could change the canvas ahead. Whether the promoters want to scale or sell, their approach should be to develop a company that will be relevant and continue even after their exit.
