Bharti Group’s Sunil Bharti Mittal on Lessons of Entrepreneurship and Leadership

When Sunil Bharti Mittal started in business more than 30 years ago in Ludhiana in Northern India, he borrowed $1,500 to make bicycle crankshafts. Today, he heads the $5 billion Bharti Group, whose flagship company, Bharti Airtel, is India’s largest mobile phone operator. Forbes magazine, which estimates Mittal’s net worth at some $11 billion, ranks him among Asia’s self-made billionaires. Mittal spoke with India Knowledge@Wharton at the U.S.-India Business Council’s 33rd annual meeting in Washington, D.C., about the leadership and entrepreneurial lessons he has learned during his career. Among them: When faced with a choice between perfection and speed, choose speed; perfection will follow.

An edited transcript of the conversation appears below:

Knowledge@Wharton: You started in business in 1976 at age 18, with $1,500 that you borrowed from your father. I believe your first business was making bicycle crankshafts. Could you tell us about your earliest entrepreneurial experiences and what you learned from them?

Mittal: I was raised in Ludhiana, a very industrious town, where almost everybody is an entrepreneur of some kind. It is the bedrock of small-scale industry, the principal industries being cycles or cycle parts, hosiery, or yarn to make knitwear, and light engineering items. Coming out of college with a small amount of capital, one could only do what was allowed in the ecosystem there. I decided to manufacture bicycle parts, in particular crankshafts. It was a hot forging unit that I put up, and that’s where I cut my teeth on business.

Knowledge@Wharton:  You moved to Bombay in 1980. At that time, your business plans were a little more ambitious. Could you tell us a little bit more about your business ventures at that time?

Mittal:   I realized that one could probably make some modest success out of what I started to do in bicycle parts, but there was a limitation. At the end of the day, the manufacturers of bicycles decided how much — at what price you could supply to them. And just making shafts wouldn’t have made you a player of any size or scale.

So, it was very clear that I had to get out of Ludhiana into a much bigger place, Delhi or Mumbai — Bombay at that time. And I spent about two, three years in Bombay importing a variety of products — steel, brass, zinc, zip fasteners, plastics — and eventually bought India’s first portable generator. And that was the first turning point in my career.

Knowledge@Wharton:  Was that the venture with Suzuki?

Mittal:  Yes, that venture was with Suzuki. That’s how I got in touch with the Japanese, spent two to three years with them, learning their techniques and practices. I internationalized my concepts, learned the art of diplomacy in international trade. I would say that was the period which gave me opportunities, on the one hand, to make some significantly higher amounts of money than I could have done in cycle trade. More importantly, it gave me independence and experience in marketing, brands, international trade. That held me in good stead later on.

Knowledge@Wharton:  What were the main lessons you learned at that point in your career?

Mittal:  I think, two or three things. I realized very early on that you need to tie up with some large entities — much, much larger than yourself. From there on, we set up a string of partnerships, and they were all with very large companies, multi-billion dollar corporations: Suzuki, AT&T, Siemens, Lucky Gold Star (now LG). Suzuki Motor Company was there, of course. We also partnered with British Telecom and Telecom Italia.

So, that is the course I followed: Tie up with large companies. It’s easy to say, but large companies intuitively don’t ally with small companies or entrepreneurs. So, one had to persuade these large companies, assure them that they needed to be in the Indian market. We also had to convince them that we had a high governance structure despite being a small company, and give them the comfort to join hands with us to exploit and come into the Indian market together.

Knowledge@Wharton:  How did you enter the phone business?

Mittal:  That, I would say, was happenstance. In fact, you could call it an accident, because the government banned the import of generators. One fine day, there was no business. All the business that I had developed was gone. My beat was Japan, Korea, Taiwan. I went back into those areas looking for a new product. And one of the theories that I’d built around my entrepreneurship was to do things that have not been done before. Because if you are competing with the big boys in areas where they are strong, there’s no chance for you to succeed. My quest to look for the next big breakthrough product — which also didn’t need too much capital — was met in Taiwan at a trade fair when I saw push-button telephones. I brought India’s first telephone set replacing the rotary phone.

That became a huge success, and my romance with telecom started thereafter. So, it went onto cordless phones, answering machines, fax machines, and then India’s first mobile phone.

Knowledge@Wharton:  India in those days was such a highly regulated market, and an especially challenging environment for somebody who wanted to be innovative. How did you navigate your way around those currents?

Mittal:  Tough, but as an entrepreneur you get trained on everything. You understand import policy, you know how customs work, you know excise laws. You practically learn to do everything yourself. You hit roadblocks, you have difficulties. I had to open my own LLC, take my own consignment, taking the material on trucks myself to the market.

An entrepreneur gets a huge amount of experience. Then, you also know how to deal and move into the system. And the good news is that my excellence in the entrepreneurial area truly started happening alongside the breaking down of these barriers. The more the barriers dropped, the more we surged. So, 1992, in that sense, was the turning point, when the Narasimha Rao government along with now Prime Minister Manmohan Singh — then finance minister — decided to open up, [and] about 10 to 20 of us young entrepreneurs really moved in. Each one of us has created a fantastic business out of that.

Knowledge@Wharton:  In concrete terms, how did the business environment change so that it allowed this entrepreneurial surge to happen?

Mittal:  Take the case of telephone manufacturing. The government completely regulated what you could import, what you could not import, how much you could manufacture. I got my first industry license to make cordless telephones; it had a limit of Rs. 2 crores of sales. I mean, it’s ridiculous when you go back — half a million dollars today. You could not manufacture more than two crores of sales. Now, if you see that number, what does it mean? Sub-scale operations, [a] small, tiny factory, and you don’t manufacture telecom products like that. It’s not a small-scale factory that you can put up. Suddenly, one day, the government said, “No licenses required.” From controlling what you could do [snaps fingers] it was gone in one day. That, to my mind, was the first time the entrepreneurial energies were released into a more constructive arena of marketing, branding, doing the right things.

Knowledge@Wharton:  In just about 10 years, you have built Bharti into India’s largest mobile phone operator. How did that come about? What are some of the main lessons you learned from your experience that could be helpful to other entrepreneurs?

Mittal:  I think, very clearly, we could have never claimed that we had more capital or better technologies, because everybody was buying the same technologies; GSM is a set standard. We couldn’t claim that we had massive brand or distinguishing strength in the market. The only thing that we needed on our side was speed, and we used that to great effect.

We were in the market ahead of competition. We brought new products on the market ahead of competition. We rolled out our networks. We begged, borrowed, stole, put things out. And while they were never near perfect, they were first. And that gave us, to my mind, a lot of advantage.

Our theory was: If you’re caught between speed and perfection, always choose speed, and perfection will follow. You never wait for perfect positioning, because in business you don’t have the time; especially if you’re small, you can’t do it.

And the large companies took their own time. They were months behind us, and that made us pick up a market niche for ourselves, which in turn made us big.

Knowledge@Wharton:  How did you position yourself against your competitors? Was your strategy based entirely on speed, or did you also have other tactics?

Mittal:  No. I think one thing was that we were very, very passionate about our business. This was the only business we were doing. Other competitors had other businesses and this was one of the new businesses they were starting. Speed, new products into the market, close to the customer, knowing what the customer wants — I think we lived that whole space ourselves, day in and day out. And that made all the difference.

Knowledge@Wharton:  How do you see Bharti’s future in the mobile industry? I know you tried recently to merge with MTN in South Africa, but that merger didn’t work out. What were your strategic goals for that merger, and what else might you be considering for the future?

Mittal:  We believe that while India is not done in so far as rolling out networks, the process is done. We’ll keep on adding two and half or three million customers a month until we get to a point where India has seven or eight million customers, management teams are in place, brand is very strong, distribution is in place, the company has no debt.

So, India is done. Now, what does the senior management team do? You have to create new opportunities of growth. And they lie in other emerging markets — therefore Africa, the Middle East. And we have today a business model which is the best business model in the world — the lowest costs with the highest quality.

And I think that model is ready to go out. So, we would like — whenever we get an opportunity like MTN — to seriously attempt to put some assets together.

Knowledge@Wharton:  Would you look for partners in other parts of the world?

Mittal:  Well, we keep on getting shown opportunities around the globe, and we remain open.

Knowledge@Wharton:  Let’s turn now to the retail industry, where you have a partnership with Wal-Mart. Help me understand how you evaluated the retail opportunity and what your thought process was in making the decisions you did.

Mittal:  We wanted to do something more in India. As we grow telecom outside of India, I think there are opportunities in India. And one of them, we felt, was in the area of retail. India’s retail needs to get organized, and it will one day. It may take its own time, and everything in India does take time, but we will organize the retail to a point where $400 billion will come through organized retail stores.

We had opportunities to tie up with Carrefour, Tesco and Wal-Mart. And in fact, we were almost in the signing stages with Tesco when the Wal-Mart meetings started to happen and we liked the store model, we liked the same low-cost delivery mechanism, the values of Sam Walton. So, I would say that we are very, very pleased to venture into this area.

It has its own issues. Like telecom, this has resistances built in. There are barriers, there are issues. And we enjoy properly dealing with these issues.

Knowledge@Wharton:  Speed was the hallmark of you experience in the mobile industry, but of course the retail market is very, very different. How do you deal with those challenges?

Mittal:  It’s frustrating. I must confess that it’s going much slower than what we originally thought. Speed is still what we like, but this is now a large company. We have a tie up with a large company. They believe that you need to tie up a lot of loose ends before you launch yourself.

The first three stores that have opened up with the assistance of Wal-Mart demonstrate that planning does make a difference. So, we are spending a lot of time planning; it’s not wasted time. The supply chain is being built. The first distribution center has come up. The three stores are having in-fill rates of 95%. And they’re having sales per square foot of 30% to 40% higher than the other top two or three operators in the country.

So, the start is good. It is surely slow. But, I think you’ll start seeing some action fairly soon.

Knowledge@Wharton:  Are any political changes needed to make that happen?

Mittal:  FDI must be allowed. We would rather have Wal-Mart right in there with equity rather than providing franchise support from the outside. So, we would like FDI to open up.

Knowledge@Wharton:  You have been quoted as saying that India needs a “football revolution.” How exactly would that come about?

Mittal:  It’s a shame, and it in some sense saddens my heart that a country like India does not have any representation in world soccer. It’s a sport which is watched by the largest amount of people in the world — we’re talking about hundreds of millions of people, topping over a billion people who watch soccer.

Knowledge@Wharton:  Did you play soccer growing up?

Mittal:  No, we played everything else that kids in middle-class families do. I won’t say football was my main sport, but it is for one of my sons. Both my sons play. My nephews play. And my son plays fairly competitive football. I enjoy watching it with them.

It’s also, to my mind, a sport which can create a revolution of sorts in a country like India, very soon. One ball, one open field, a few kids, and it starts off. There are no expensive kits or equipment required to support this game.

And I also believe that India had a football base earlier on. In 1950, they were in the World Cup. They could not play because they didn’t have shoes. They refused to wear shoes and they couldn’t play. That was the last time India reached that point.

I see no harm in giving it one serious shot — of carrying an Indian team into a 20-year team. I personally believe we can do it. Ten years is good time for us to plan.

Knowledge@Wharton:  Cricket has received quite a shot in the arm with the formation of the Indian Professional League. Is that in the cards for football?

Mittal:  Yes, India is a cricketing nation. It’s a cricket-mad nation. I think we need an alternative sport. We need something else to offset cricket. Will football have its own premier league? It will, certainly. In fact, the IPL (Indian Premier League) is a copy of the English Premier League. And that’s the fundamental basis of football.

And yes, we will see something along those lines. It’ll take a long time for people to switch from cricket to football, but younger people are watching a lot of international soccer. There is going to be the European Cup in Austria a few days from now. And you can see already some fever building up in India. The timing is right.

Knowledge@Wharton:  In all the years that you have been an entrepreneur, what is the single biggest leadership challenge that you have faced? How did you deal with it and what did you learn from it?

Mittal:  It’s hard to put down, in a single event, what would be the hardest decision. But, I would say bidding for a mobile license — against all odds — in 1992, when I was a rank outsider. I think the total sales were about $5 million in all, and going and bidding for a mobile license was tough.

But, we persevered, we went into it against the might of the biggest of the biggest in the country and in the world. And we ended up getting a license. More importantly, not only a license — we rolled out India’s first network and have now become India’s largest.

So, that starting point of having, in a sense, defied the logic of, “This is only for the big boys. You need deep pockets. Don’t even look at this.” That defiance of the conventional wisdom, to my mind, was very important — and being determined to challenge that thought that you can’t do it as a young entrepreneur.

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