Many times in the past I have mentioned that I am not a director in any company. I am happy about that position. One important learning from a long investing career is that we get carried away by a successful person. For eg I have met successful businessmen who are hero “worshipped” in their organisations and families In fact it is almost like “they can’t be wrong because they have been right in the past”. So when a trader becomes an industrialist he does not reset his brain.

Trading is not as complicated as running a hospital, hotel or a manufacturing company. If you are a small company you can recruit from known friends and relatives. However if you are a big manufacturing company you need to have a great HR team.

When you are small you end up doing all the work – from cleaning the floor to the Chairman’s role. However, as you grow bigger you need professionals in many places. When you are small you attract low talent, you need to go to friends and relatives for money, you operate from a small office.

When you grow bigger you need to get rid of your friends who were handling ‘accounts’. You can’t suddenly make him “Vice-President Finance”. Nobody will join you if this person is around. I have seen such companies. In order to get rid of a guy in sales he was made “Vice-President Strategy” – another stupid move. Suddenly the organisation had some over paid, undeserving senior executives with no fixed responsibility. Imagine being on the board of such a company.

Similarly when you need say Rs. 4 crores – and you have exhausted your money, your spouses’ money,  etc. you go and get money from friends and relatives. It should be very clear that you will get this from say 20 friends – Rs. 20L each. This amount should be such that even if it were to go to zero you should not lose a friend. Even more important when you are successful you should be able to get rid of the “investor” at a fair price – at the price at which the PE investor is coming in. This is not easy.

People who have been with you as an employee and unable to tackle the new needs have to go. Sacking a 52 year old cousin because he can’t match the pace is not easy. It is damn damn tough. Professionally and Socially you will have to tackle this.

Asking an investor who has invested Rs. 20L to take Rs. 40L and leave after 4 years is not easy. Especially when he knows that Softbank is paying Rs. 100L for the same stuff. Yes you may have to do some more jugaad, but remember you will be told “you are stabbing me when you do not need me”. Will you take all that?

What would I do as an independent director? turn a blind eye saying “this is a private matter”. Not sure.

Then at some stage you need to tell the ‘successful’ man that he is WRONG. He is wrong in not paying the TDS on time. He is wrong in letting his friend abuse his young female assistant. How will you handle the “MeToo” cases in the company? Especially the ones that you know but do not come to the Board as a complaint?

tough calls. Either be on the Board and answer them or sit out.

Being careful or lazy? Seriously I do not know.