By Malini Goyal
What would you have done if you started off with a few thousands of rupees and turned them into a couple of thousand crore over roughly three decades? Ronnie Screwvala, 57, reckons it’s the time to do “something entirely new”. A smalltime cable operator in Mumbai in the early 1980s, Mr Screwvala went on to build a $1.4-billion media empire straddling movies, gaming and new media, TV content and broadcasting.
After selling his entire stake of 70% in UTV Software to Disney by 2011 for a cool Rs 2,000 crore, last month Mr Screwvala exited the company he had founded – and in the process exited the media and entertainment (M&E) sector, too. “I came into this industry with Rs 37,500. Today, I have lots of money but that’s all notional. The struggle [going forward] for me will be of a different kind. I am at a crossroads, looking at incredible opportunities,” says Mr Screwvala.
The opportunities involve parting with parts of the stash he’s sitting on in two ways – one, with a profit motive, by turning investor-mentor for start-ups; and the other with a philanthropic objective. And they promise to keep him busy – and away from the M&E world for some time to come.
A non-compete clause signed with Disney bars Mr Screwvala from starting a conflicting business. But his new calling may ensure he never returns to the business he knows best. “If I know Ronnie well, he will never come back to the media industry. The sense that I get from him is that he has totally moved on,” says Star India CEO Uday Shankar. Globally, successful entrepreneurs like Marc Andreessen, founder of Netscape, have followed non-linear paths by exiting successful ventures to turn both investor and serial entrepreneurs. Back home, Ajay Piramal is one prominent investor who is looking for avenues to park the proceeds from the sale of a pharma venture.
Elsewhere, Infosys’ NR Narayana Murthy and Wipro’s Azim Premji have set up funds to invest their personal wealth. But they both remain deeply entrenched in and committed to the businesses they co-founded or founded. Screwvala, for his part, belongs to a rarer breed that is starting all over again from scratch on a totally fresh canvas.
Entrepreneurial Dream
Sitting relaxed in his spacious fifth floor penthouse in the tony Breach Candy area of south Mumbai, Mr Screwvala is applying the finishing touches to the blueprint for his second innings. While his plans are still evolving, there are few ground rules he has set for himself. One of them: politics is a strict no-no as a career alternative. He also broadly wants to spend half his time in business and half pro bono. “I want to evangelize entrepreneurship,” declares Mr Screwvala. He wants to use 10% of his time figuring ways to build a platform to boost entrepreneurship.
“I want to do this for myself. I have to do one or two very disruptive things so that people can look at entrepreneurship more positively in India.” He is vague, he admits. But his mind is running wild doing some blue-sky thinking. His options: either become a catalyst in building an ecosystem; or help figure out new ways to make crowdfunding possible in India; or even write a book. “That’s a massive passion for me. I want to build communication tools and platform to enable that ecosystem. This could be the touchpoint to my past.”
Currently at the heart of his strategy for investing – both money and his leadership bandwidth – in start-ups is Unilazer Ventures. And here too he’s doing it his way: He won’t settle for less than 35% in a firm; unlike private equity investors, he will not have a time horizon; and he’s extremely selective about sectors, reluctant to look beyond e-commerce, health, education and agriculture.
“This [Unilazer Ventures] is for profit. Agri is so unglamourized. Nobody is looking at it. But it offers great margins,” he says. While most of his investments will be in start-ups seeded by others, Mr Screwvala plans to build at least one or two businesses ground up.
His optimism and passion notwithstanding, sections of the PE industry have their reservations about the start-up fervour in the country. “The track records of investments made by many entrepreneurs have been mixed so far,” warns Rahul Bhasin, managing partner at Baring Private Equity Partners India, adding that in India managing the external environment is a huge challenge for greenhorn entrepreneurs.
Swades and Philanthropy
By contrast, Screwvala’s other plan on the drawing board appears infinitely less risky although he will be as demanding in making every penny count. He’s set aside Rs 350 crore of his personal wealth and will raise a similar amount from others for Swades, the philanthropy arm. “India does not have a problem of resources. Government spends massive amounts of money but the impact is low. Execution is the key,” Mr Screwvala explains.
Most corporate philanthropic outfits focus on a specific issue – Bharti and Premji foundations focus on education, for example. Swades, though, has a geographic approach – for starters it plans to look at all major issues faced by Maharashtra’s villages in a 360-degree manner. “I want to create a model that is scaleable, efficient and has measurable impact – like any company,” says Mr Screwvala.
Swades is already working in 1,000 villages impacting a lakh villagers. Deval Sanghavi, cofounder, Dasra Foundation, a philanthropic organization, points out that Swades does not want to reinvent the wheel. It prefers to get the right expert partners in a range of areas like education, farming, water, health and sanitation, and turn into a catalyst.
Take for example its work with the farmers. In villages you realize men between 20 and 45 have migrated to cities and are living in terrible conditions, Screwvala says. He wants to reverse the tide and figure ways to improve incomes and standards for farmers. Swades has collaborated with Jain Irrigation to introduce drip irrigation for small farmers. A year back it began working with agricultural bank Nabard. “The best thing about Swades is that they first do a pilot on their own to demonstrate the benefits and then seek government support for farmers,” says Nanda Survase, district development manager (Raigad), Nabard.
One such villager to benefit is Jeeteshbhai, 22, who was in Mumbai since 2010 working at a retail shop on a monthly salary of Rs 5,000. Last year he returned to his village in the Raigad district. His farm is small – under three acres. But using drip irrigation, vermin compost and some smart management of crops like water melon and a few vegetables, he has earned Rs 25,000 in the past four months. He is looking at a net income of Rs 1 lakh a year – far more than what he was earning in the city.
Praveen Jain, COO, Swades says there are a few things they keep in mind before starting work in a village. “We measure everything so that we know the progress. We only look at projects that are self-sustainable in 3-5 years. And our exit is built in.” Also to ensure villagers’ commitment, nothing is offered free. Villagers need to co-contribute, even if a small amount. Take for example, the water supply to each home. Villagers co-contributed 10-15% of the cost of the project. And they also put together a small committee and a mechanism to build a corpus for regular maintenance of the pipes. Today, six gram panchayats – 20 villages and 6,000 people – are getting drinking water right inside their homes.
Understanding the Disney Exit
It’s difficult for many – including his peers in the M&E sector – to figure why Mr Screwvala chose to quit the game he was so good at. “When I sold off, they [other entrepreneurs] were shocked. Most couldn’t believe it,” he admits. But he’s convinced it’s the right reason. For a couple of reasons.
First, UTV may be well diversified within M&E, but lacks size and scale in most of them. In broadcast, for instance, the absence of a general entertainment channel (GEC) is stark. “Their presence was through niche channels where getting advertisements and franchises becomes difficult if you are not No. 1,” says Nikhil Vohra, an M&E analyst who recently founded Sixth Sense, a consumption-centric venture fund.
The second reason for exiting is the challenging and uncertain nature of the content-driven business. One, while the industry is secular in consumer demand, its heavy dependence on advertising makes its financial performance asecular. Second, the entire industry is undergoing a massive churn as technology, ubiquitous smartphones and an anytime-anywhere audience are disrupting old business models. “Competition, choice and globalization of content mean that it’s game over for a lot of M&E companies. Many will disappear and there will be consolidation. Only those who have the resources to invest in high quality content and strong brands will survive,” says Mr Shankar.
That Mr Screwvala is remarkably detached from the business he built with his blood, sweat and passion made the exit easier. “I don’t think you can expand and build scale if ownership and control is what you are obsessed with,” he says. Star India’s Mr Shankar explains that Mr Screwvala is “passionate but not emotional about his decisions”.
Disney began its association with UTV first as a customer, then as an investor, partner and, eventually, owner. After picking up a minority 14.99% stake UTV in 2006, by 2010, both partners were asking the same question: “Now what?” “A buyout seemed the most logical step,” says the founder.
The Disney Ride
In 2012 after completing the buyout of UTV, Screwvala was appointed managing director with the mandate to steer the integration of the two companies. It wasn’t a smooth ride. “There were cultural differences although value systems were similar,” says Mr Screwvala.
Like all integrations, this one too had its own share of issues. Some redundancies were inevitable. With the far bigger (in India) UTV dominating the merged entity and Mr Screwvala at the helm, it meant most key positions were helmed by UTV executives. Siddharth Roy Kapur, from the UTV stable, took over as managing director. Unsurprisingly, many Disney executives put in their papers.
Disney’s MNC culture with a thrust on structures and processes is a polar opposite of Mr Screwvala’s entrepreneurial style of functioning. His informal style – epitomized by the round-neck T-shirts he often sported at meetings and important events – was in stark contrast to the formal suit-and-tie culture of Disney.
By the fag end of his stint as Disney India MD, Mr Screwvala’s patience was running out. “He was completely stressed,” says an ex-Disney executive. For an entrepreneur who was used to taking quick decisions, working in an MNC where decisions were being taken far away in Burbank, California wasn’t proving easy. Take, for instance, a simple thing like finalizing office space – the process took an entire year. “I could see the frustration and suffocation building inside him,” adds the former Disney executive. Starting afresh is clearly proving to be liberating.
Source:The Economic Times
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Any international tie-ups in the offing?