‘Focus on creating value; valuation will follow’

At 36, Bhavin Turakhia, founder-Chairman and CEO of Directi, is faced with an unusual problem, one that most start-up founders would kill to have.

He hasn’t yet figured out what to do with the $1.2 billion cash reserves that he and his brother Divyank Turakhia have built together.

Directi comprises a group of tech businesses spanning web presence, cloud services, online advertising, messaging and payments.

With a track record of making a success of 11 of the 12 Directi portfolio companies with no external debts or investments and creating an enterprise value of $1.4 billion dollars with revenues of over $250 million, the man with the Midas touch shares his success formula with BusinessLine. Excerpts:

With 11 successful companies, you must have arrived at a ‘success formula’; what is it?

First, there is a credo that I and everyone in my company live by – our moral obligation to make an impact in the world that is directly proportionate to our potential.

Second, to create a successful business – focus on creating value, not valuation. The one thing that I see going wrong with the Indian start-up ecosystem is that they are focused on creating valuation.

Valuation is a side effect; it happens because you created value and built the right product that people want. But if the focus is on creating valuation, you will throw a lot of money in discounts and cash-backs to try and win customers in order to get valuation, which is not a sustainable business model.

Third, hire the best talent and focus constantly on improving the quality of talent that you induct. We set the bar so high, that I can guarantee that less than 1 per cent of talent from any of the existing start-ups or tech companies can pass it.

You have built up a cash reserve of over $1 billion by selling off one of your companies, Media.net this year. What do you plan to do with it?

I really want to figure out what to do with it, I have no plans right now. Eventually it will go into spaces that we are passionate about like education and healthcare. Now, we are investing very small chunks ($20-25 million) of our $1.2 billion cash reserve into our own companies but, the largest chunk is still lying around in multiple banks and wealth management companies, giving us low single digit returns.

Are you considering investing in innovative Indian start-ups?

I would love to do that but I never have any time to look into it. In the last four years, I have started four companies – Radix, Flock, Ringo and Zeta – all of which have just become profitable, except Zeta, which is the most recent.

Actually, I have taken on much more than I can handle with crazy schedules that don’t allow me to get enough sleep. I have taken 11 flights in the last 7 days and this schedule will go on for the next 12 months.

How do you come up with so many successful ideas, when others struggle to come up with one good idea that works?

I think the key is to get easily frustrated when you see some problem.

If I see paper-based stuff which can be digitised, I get frustrated, similarly I get frustrated about why salaried people can’t save taxes when there are so many perquisites and allowances in the Income Tax laws that allows them to do so.

If I see something that irritates me enough to do something about it, and if it is in a big enough space, I just go ahead with it. Examples are, Flock and Zeta, my most recent companies in the messaging and payments spaces respectively and they are big spaces because the world needs messaging and payments.

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