Most family businesses don’t last beyond the grandchildren because:
· The business is so small that it may not be worth the time to the grandchildren
· The business is so big that the grandchildren find that their time is better spent living with a silver spoon
· The business is in the middle and often at the mercy of changing trends, shifting economies or smarter competitors.
When the child of a unicorn entrepreneur builds another unicorn, it is highly unusual. When the silver spoon leads to gold, and the child starts to match, and potentially exceed, the parent’s accomplishments and makes his/her own imprint on history, it is truly noteworthy.
Mukesh Ambani, the son of legendary Indian entrepreneur Dhirubhai Ambani and the founder of Jio Platforms, one of India’s fastest growing companies that combines a number of business models, including those of Comcast, Apple, and Amazon, is one such second-gen unicorn.
Dhirubhai Ambani started his career as a lowly clerk in Aden. Due to changing prices in the value of silver, Dhirubhai spotted opportunity in the value of the Yemeni rial, which was made of silver. The value of the silver in the rial was more than the value of the rial. He is said to have melted the coins and sold them as silver ingots for a sizable profit. This was the start of the Ambani empire. Soon Dhirubhai expanded into textiles, oil and gas, telecommunications, and a myriad of other industries to become the greatest entrepreneur of independent India.
Mukesh, his oldest son, took over half of the empire upon his father’s death. And from this immense base, he has built one of the largest companies in the world under the Reliance umbrella. The newest unicorn in a sea of Ambani unicorns is Jio Platforms, which is challenging Walmart and Amazon in India, and expected to do the same in the rest of the world.
Here are the lessons from Mukesh Ambani for entrepreneurs, and especially for family entrepreneurs who want to build unicorns.
Enter an emerging trend. While Mukesh did not inherit the family telecom business, he entered it when he and his brother renegotiated their original agreement to stay out of each other’s businesses. By doing so, Mukesh was able to enter the wireless telecom business with his huge investments in cables and towers – before anyone had built impregnable gates around the industry.
Imitate and improve for your opportunity. Mukesh Ambani imitated the opportunity and acquired the technology to enter the industry. The industry had already been developed elsewhere. But he improved the industry in India by investing in the latest technology that was missing.
Then dominate the emerging trend with strategic innovations. In September 2016, India had about 28 million smartphone users. From a startup in 2016, Mukesh’s Jio Platforms has grown to $ 9 billion in revenues and about 400 million subscribers in 2020. With his new platform, Mukesh is dominating smart phones and online telecommunications with the oldest assault strategy – more capital, better service, more benefits, and more affordability.
Finance for control. To make the service more affordable, Jio has waged a price war with a deep war chest. This has left the carcasses of his competitors who were happy to coast with old technology and fat profits. Mukesh used his flagship companies to borrow the funds to build Jio Platforms. This was a massive gamble. It was the same strategy used by his father to build his first textile factory near Ahmedabad. And Mukesh never lost control of his empire to the financiers.
Launch for take-off. With his strategy of making smart phones and online services available to the mass of Indians, Mukesh has changed the nature of the game. As the first Indian-owned company to dominate the field in competition with Amazon and Walmart, Mukesh has laid down the gauntlet. It remains to be seen whether he can beat them. Given India’s memory of foreign domination, he stands a good chance of success. His prospects are attracting investments from the likes of Facebook and Google, and Ambani is aligning with other global giants to make sure he has a better army.
Talent is not allocated equally via the same family tree. Both Mukesh and his brother come from the same family tree. Mukesh got his father’s talent, and Anil his father’s money, which he seems to have lost. So why did Mukesh get “it,” and Anil did not.
Business journalists also need to understand the difference between ventures before Aha and after Aha. Before Aha, entrepreneurs go hat in hand to investors seeking capital because the venture is a dream. After Aha, investors go to the entrepreneurs and ask to invest because the potential is evident from the performance. This distinction is important because entrepreneurs stay in control after Aha.
In this case, the investors asked that they be allowed to invest because they could see Ambani’s accomplishments. When that happens, entrepreneurs are in the catbird’s seat. A company that grows from startup to more than $ 9 billion in 3 years and captures 400 million subscribers is not a dream. It is an amazing reality. Ambani is in charge – not the investors. Journalists should know the difference between the dream of a startup and the proof after Aha.
MY TAKE: Some apples fall far from the tree. Others don’t. To build a unicorn, entrepreneurs need to master emerging industries. To build a family-business unicorn, entrepreneurs need to leave the shelter of the harbor and venture out into the uncharted waters of an emerging trend. Not many second-gen heirs know how to do this. Not many second-gen heirs want to do this. Not many second-gen heirs have the guts to do this. But if they are to keep the family unicorn alive for succeeding generations, they may have no choice.