Most family businesses don’t last longer than grandchildren because:
· The business is so small that the grandchildren may not find it worth the time
So big is the business that the grandchildren are finding that their time is better spent with a silver spoon
· Business is in the middle and is often exposed to changing trends, changing economies, or smarter competitors.
If the child of a unicorn entrepreneur builds another unicorn, it is highly unusual. When the silver spoon leads to gold, and the child begins to match and possibly surpass the achievements of the parents, and the story itself shapes, it is truly remarkable.
Mukesh Ambani, son of legendary Indian entrepreneur Dhirubhai Ambani and founder of Jio Platforms, one of India’s fastest growing companies that combines a range of business models including those of Comcast, Apple and Amazon, is one such second generation unicorn.
Dhirubhai Ambani started his career as an employee in Aden. With the changing silver prices, Dhirubhai saw an opportunity for the value of the Yemeni material, which was made of silver. The value of the silver in the rial was greater than the value of the rial. He is said to have melted the coins and sold them as silver bars at a considerable profit. This was the beginning of the Ambani Empire. Soon Dhirubhai expanded into textiles, oil and gas, telecommunications and a host of other industries to become the largest entrepreneur in independent India.
Mukesh, his eldest son, took over half of the empire after his father’s death. And from this immense base, he built one of the largest companies in the world under the umbrella of Reliance. The newest unicorn in a sea of Ambani unicorns is Jio Platforms, which challenges Walmart and Amazon in India and is expected to do the same in the rest of the world.
Here are the lessons of Mukesh Ambani for entrepreneurs, and especially family business owners who want to build unicorns.
Enter an emerging trend. Though Mukesh had not inherited the family’s telecommunications company, he joined the company when he and his brother renegotiated their original agreement to stay out of each other’s deals. This enabled Mukesh to get into the wireless telecommunications business with his huge investments in cables and towers – before anyone had built impregnable gates in the industry.
Imitate and improve for your opportunity. Mukesh Ambani mimicked 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 around 28 million smartphone users. Since launching in 2016, Mukesh’s Jio Platforms has grown to $ 9 billion in revenue and around 400 million subscribers in 2020. With its new platform, Mukesh dominates smartphones and online telecommunications with the oldest attack strategy – more capital, better service, more benefits and more affordability.
Finance for control. To make the service more affordable, Jio fought a price war with a deep war chest. This left the carcasses of its competitors who were happy to idle with old technology and fat profits. Mukesh used its flagship companies to borrow the funds to build Jio platforms. This was a massive gamble. It was the same strategy his father used to set up his first textile factory near Ahmedabad. And Mukesh never lost control of his empire to the financiers.
Start to start. With his strategy of making smartphones and online services available to the mass of Indians, Mukesh changed the way the game was played. 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 if he can beat her. Given India’s memory of foreign rule, he has a good chance of success. His prospect is attracting investment from Facebook and Google, and Ambani is joining other global giants to ensure he has a better army.
Talents are not allocated evenly across the same family tree. Both Mukesh and his brother come from the same family tree. Mukesh got his father’s talent and Anil got his father’s money, which he seems to have lost. Why did Mukesh get “it” and Anil not?
Business journalists also need to understand the difference between things to do before and after Aha. Before Aha, entrepreneurs shake hands with investors looking for capital because the company is a dream. After aha, investors go to entrepreneurs and ask for investments, as the potential comes from the performance. This distinction is important because after aha, entrepreneurs stay in control.
In this case, investors asked to invest because they could see Ambani’s accomplishments. In this case, entrepreneurs sit in the kitty’s seat. A company that grows from startup to over $ 9 billion in three years and has 400 million subscribers is no dream. It’s an amazing reality. Ambani is responsible – not the investors. Journalists should know the difference between dreaming a startup and proving aha.
MY TAKE: Some apples fall far from the tree. Others don’t. To build a unicorn, entrepreneurs must master emerging industries. To build a unicorn for a family business, entrepreneurs must step outside the shelter of port and venture into the uncharted waters of an emerging trend. Not many second generation heirs know how to do this. Not many second generation heirs want to do this. Not many second generation heirs have the courage to do so. But if they want to keep the family’s unicorn alive for generations to come, they may not have a choice.