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The ‘co-founders’ are leaving the building

The Nutgraf is a 10-min newsletter sent at 10 AM IST every Saturday. It connects the dots and synthesizes one big event in business, technology and finance that happened over the week in India. In a way you’ll never forget.

This is a paid newsletter that’s available exclusively to The Ken’s premium subscribers.

Just 10 mins long Synthesis not analysis Sometimes memes

26 Nov, 2022

Why Indian companies love to elevate executives to co-founders

Read this edition online
A paid 🔒 weekly emailer that explains fundamental shifts in business, technology and finance that happened over the last seven days in India. In a way you’ll never forget. Someone sent you this? Sign up here
 

So, Zomato was in the news last week. 

 

Across news outlets, the headlines were remarkably similar.

This wasn’t the first time Zomato lost one of its co-founders.

 

The same thing happened last year, in September. 

 

And, well, have a look at the headlines again.

But if you thought this was the first time that Zomato lost one of its co-founders, you’d be wrong. 

 

For that, you’d have to go back another three years—to March 2018.

At this point, you’re probably wondering if the reason why Zomato’s co-founders are leaving has something to do with the financial health of the company. Or something to do with a vesting schedule. Or maybe it's something more salacious, like its work culture or a bitter personality conflict.

 

So you’re hoping that I’ll explain it all in today’s edition, connecting the dots, weaving a story, across Zomato’s past, present, and future. You’re likely expecting a breakdown with hand-drawn charts and diagrams, focusing on the futile economics of food-delivery.

 

Nope. Not today. 

 

In fact, today’s edition isn’t about Zomato at all.  

 

The reason I won’t be doing that is because you’re missing something really important. 

 

Zomato lost three co-founders. 

 

And only one of them was actually a co-founder.

 

Let’s dive in.

Who is a "co-founder", really?
Photo by Shannon Rowies on Unsplash

Today’s edition isn’t about Zomato, but it’s our starting point. 

 

Of the three “co-founders” who left Zomato, only Pankaj Chaddah, who left in 2018 can be described as an actual co-founder—at least in the way that most of us understand the term. Gaurav Gupta and Mohit Gupta were both “elevated” as co-founders in 2019 and 2021 respectively, nearly a decade after Zomato was officially founded. And within two years of their tenures, they were gone.

 
Luckily Zomato has no shortage of co-founders in its company. There’s Akriti Chopra, another executive who became co-founder last year. And Gunjan Patidar, their Chief Technology Officer who’s also listed as a co-founder (despite my best google searches, I couldn’t figure out when this happened). Earlier this year, it elevated an executive as co-founder of Blinkit (which Zomato owns) to replace one of Blinkit’s co-founders who left last year. At this point, I’m starting to suspect there’s someone at Zomato’s corporate governance team whose full-time job is to periodically update the document that keeps track of who is their co-founder right now, in which company.
 

Sometime in the future, as Zomato churns through its current co-founders, it’ll be replaced by other co-founders. And the rest of us will watch this startup version of the Ship of Theseus play out and write long newsletters about whether Zomato is still Zomato.

 

However, like I said, this isn’t about Zomato. 

 

And that’s because they aren’t the only company that’s suddenly transformed executives to co-founders. 

 

The list is much longer than you’d expect. Here are some of the big names on it: Swiggy. Rebel Foods. Homelane. Housejoy. Dailyhunt. Medlife. Licious. Practo. Ezetap. 

 

So why is this happening?

 

And more interestingly, just because you make someone a co-founder, do they actually become a co-founder? 

 

Honestly, if you ask me, this is very black and white. Either you are a co-founder. Or you aren’t. That term has a specific meaning with a clear definition. You can’t suddenly “make” someone into a co-founder anymore than you can make a cat into a watermelon. It’s not the same thing at all. 

 

Now, one argument I’ve heard from some people is that the term is not to be taken literally, but figuratively. Sure, maybe these “co-founders” didn’t actually sit together and “create” the company from nothing by signing a document or opening a current bank account. But so what? They worked as hard as any of them and “created” the company. They did what a co-founder would have done. They sacrificed as much as a co-founder would. 

 

Of course, this is like saying that if your cat is green and just lies around doing nothing all day in your refrigerator, well, maybe it could be a watermelon. 

 

But actually, if you really examine it, these people may have a point. 

 

Take as an example, the story of Deep Kalra and MakeMyTrip. 

 

MakeMyTrip, which is an online travel booking website, was founded in 2000—much earlier than we’d expect. According to a story I found online, here’s an account of its early days.

Within two to three months, it was apparent that, in the India of 2001, no one was buying online. Lots of lookers, very few bookers. Everyone was coming to the site and saying “Wow, this is cool”. But that was it.
 
In June 2001, the irony was that now, a majority stake was with the management, and minority was with some angel investors. Some of these angels were individuals in eVentures. So even as the VC firm bailed out, they really believed in the idea and put in their own money.
 
Salary payments became difficult. The company shrank from 40 employees to around 20.
 
The belief in the business was so strong that he went on, without drawing a salary, for 18 months. And whatever he was not taking as a salary, was converted into equity. He also encouraged two senior colleagues to do the same and they were elevated to cofounder status. Of course many others said 'We can't handle this thing,’ and left.
Deep Kalra, Profile, Wisdomjobs
Am I going to argue that these people who believed in MakeMyTrip, stuck on, and didn’t take a salary for months weren’t co-founders? Maybe.
 

Then, there’s the online health platform Medlife. 

 

In 2020, a full five years after it was founded, it appointed Ananth Narayanan as the company’s CEO and co-founder. It even put him on the board of directors. At this time, Medlife was present in 4,000 cities and had a revenue run-rate of Rs 1,000 crore annually. When Narayanan joined the company, he even invested an undisclosed amount into it. In just over a year, he successfully merged the company with Pharmeasy, making the combined entity the largest e-health company in India. You’d be hard pressed to find someone who achieved more in as little time as he did. 

 

Am I going to argue that Ananth Narayanan technically wasn’t the co-founder of Medlife? 

 

Of course I am.

 

The other argument I’ve heard is that being a co-founder isn’t a designation. It’s a mindset. And when companies notice executives who have that mindset, what’s wrong with recognising them for it? It’s the ultimate form of reward. You may not have started the company, but you embody the co-founder mindset, and that makes you a co-founder. 

 

This is all very good, but there’s one interesting complication. 

 

Yesterday, I googled the phrase ‘elevated to co-founder’. 

 

There are close to 14,000 search results. 

 

I didn’t go through all of them, but I clicked through the first dozen pages, skimming through the instances of companies that had rewarded executives with the co-founder title over the years, ostensibly because they displayed the co-founder mindset.  

 

And one, inescapable fact stood out. 

 

I couldn’t find a single company in Silicon Valley that had done this. 

 

Not one startup. Not a mid-sized company. Nothing. 

 

Not one instance of rewarding executives with a co-founder title. 

 

As far as I can tell, this unique, incredible phenomenon happens in exactly one country. 

 

India. 

 

Maybe executives all over the world are slackers, and only Indian leaders truly demonstrate a co-founder mindset. Or maybe, every other company globally refuses to recognise the co-founder mindset of their high-performing executives, who’ve spent decades and decades building the firm. Maybe people like Tim Cook, Sheryl Sandberg and Sundar Pichai go to bed at night dreaming of the day they’ll become co-founders of Apple, Meta and Google.

 

Or maybe, companies in India reward executives by making them co-founders, because successful co-founders matter more to the rest of us than successful executives.

 

If we look around, there’s some evidence for this. Most people reading this newsletter can tell you who the founders of Flipkart were, but not its current CEO. Go through the list of India’s most valuable unicorns, and see if you can name at least one member from its C-suite, outside the CEO and co-founder. Six of the seven people on the panel of Shark Tank India are founders. On the other hand, go to the Shark Tank US website, and everyone there is described as people who created wealth for themselves. The word “founder” doesn’t appear once in any of their official bios, even though they created companies from scratch to make that money.

 

Faced with this temptation, you can see why Indian companies and startups throw the co-founder tag to executives, either for reward, recognition, or retention. It’s because it’s something worth fighting for. In India, being a co-founder is the ultimate currency of success and status, because that’s what we accept. 

 

To its credit, there are Indian companies that have chosen not to play this game. For instance, take Paytm*, one of the few prominent companies that’s been created and led by one founder—Vijay Sekhar Sharma. 

 

Paytm has always had exactly one founder, because it had been founded by exactly one person. Paytm has created several businesses, and it has rewarded its executives by elevating them to positions that mean something, like “Managing Director and CEO”.  You don’t need to throw a co-founder title if you want to recognise and reward a founder mindset.

 

In the West, the context of a “co-founder” assumes significance mostly for historical accuracy. The most famous example of this battle is, of course, Facebook, where Mark Zuckerberg was taken to court to set the record straight by co-founders of the company.

 

There’s a more extreme instance of this which isn’t as famous, but is worth sharing here simply because it involves someone who’s been in the news extensively.

Tesla Motors and co-founder Martin Eberhard announced an agreement over who can claim to be a founder of the company on Monday.
 
Eberhard filed suit against the luxury electric vehicle maker in June, alleging that current CEO Elon Musk sought to "rewrite history" about Eberhard's role after Eberhard was ousted from the CEO position. Eberhard was seeking damages because comments from Tesla executives had harmed his reputation.
 
On Monday, a Tesla representative said that Eberhard and other principals in the dispute have come to an agreement. The company did not reveal any details of the resolution, except to say that there are now five, rather than two, agreed-upon "founders" of Tesla.
Tesla Motors founders: Now there are five, CNET
In the US, executives fight to decide who were actually the co-founders. It’s what happened back then.
 

In India, executives fight to become co-founders. It’s something you get now as a reward. 

 

And maybe the people who get it see it as something that applies just… for now. 

 

I imagine that if you make the co-founder title into a designation that anyone can get today, it obscures what it really took to be founders and co-founders in the past. Sure, there’s probably a thing called a co-founder mindset that dozens of executives in companies like Zomato may possess, and they deserve to be recognised and rewarded for that. But maybe there’s a difference between what it takes to start a company, and what it takes to build one. Perhaps a part of being a co-founder exists completely in the past, and can never truly be earned. 

 

I’m sure the executives at Zomato and Paytm worked as hard as anyone else, and sacrificed a lot, and truly felt like they owned their companies. But despite all this, they still fall slightly short of what people like Deepinder Goyal and Vijay Sekhar Sharma have, and what keeps them going. 

 

Maybe signing those papers to open that current account matters more than we think it does.

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Regards,
Praveen Gopal Krishnan
 
*Paytm founder Vijay Shekhar Sharma is an investor in The Ken
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