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The Entrepreneur's Guide to Growth and Wealth - ContraMinds Timeless Wisdom Edition 2 with Shyam Sekhar (Ep03) · ContraMinds Podcast - Unlocking Personal Growth and Professional Excellence

• 0:05
  SPEAKER_01: Hello everyone.
• 0:06
  SPEAKER_01: Welcome to another edition of the Timeless Wisdom episode of the Contra Minds podcast.
• 0:13
  SPEAKER_01: In this episode, I'm revisiting my conversation with Sham Shekhar, founder and CIO of iThought PMS.
• 0:22
  SPEAKER_01: Sham has over 15 years of experience in investment management and is also an angel investor.
• 0:29
  SPEAKER_01: His keen eye for identifying potential startup ideas, promising founders, and backing them with patient capital is something that I found different from many investors that I've met and interacted.
• 0:43
  SPEAKER_01: His views about capital, evaluation, and entrepreneurship are all grounded in reality, which is something that I find as a rarity in many investors I meet.
• 0:54
  SPEAKER_01: In the third and final part of the episode, he discusses how beyond capital and markets lies a deeper game.
• 1:02
  SPEAKER_01: Gratification, self-awareness, values and purpose.
• 1:08
  SPEAKER_01: This episode ties together how entrepreneurs and founders evolve, define wealth, and stay grounded in their own philosophy.
• 1:17
  SPEAKER_01: Let's dive in and listen to Sham and his thoughts in the Timeless Wisdom episode.
• 1:45
  SPEAKER_02: So I think we are in a very transitionary stage right now in this country where you know there's an old guard of business owner operators who were lifelong companymen and then they went and they ventured on their own.
• 2:00
  SPEAKER_02: And now we have an entirely new swath of young people who want to either go work in venture or they uh come right out of college and they start building companies.
• 2:10
  SPEAKER_02: So my question is you know, how does the previous generation view capital differently from the current generation?
• 2:16
  SPEAKER_00: I think it has to do only with our worldview of what is gratification.
• 2:25
  SPEAKER_00: I think that that would decide what should be your expectation out of a business.
• 2:34
  SPEAKER_00: There are people who don't like to do the same thing for 20, 30, 40 years.
• 2:40
  SPEAKER_00: They build something with great passion over 5 to 7, 10 years, and then when they feel that they have got the gratification they wanted out of the process of building something, then they decide to move on and they give a mature or relatively stable business to somebody else who can grow it and handle the maturity phase of that business.
• 3:08
  SPEAKER_00: Whereas, if somebody wants to just sit back and enjoy the fruits of his creating something, then he may be interested in running a stable mature business also for 5 to 10 years later, longer.
• 3:25
  SPEAKER_00: It depends upon what is your gratification.
• 3:27
  SPEAKER_00: Is your gratification building businesses?
• 3:31
  SPEAKER_00: Is your gratification just merely owning businesses or is your gratification about getting value out of selling a business?
• 3:41
  SPEAKER_00: There are different ways in which you view gratification.
• 3:44
  SPEAKER_00: In some instances, it could be a mix of all these things.
• 3:46
  SPEAKER_00: So we will have to see what is the dominant expectation of the founder or the entrepreneur.
• 3:52
  SPEAKER_00: Once he is clear, then he has to work towards what he wants.
• 3:56
  SPEAKER_00: It's as simple as that.
• 3:58
  SPEAKER_00: There is no one view, it's about what you are comfortable with.
• 4:04
  SPEAKER_00: But one thing very very important is if your worldview of gratification is one thing, I see no merit in your trying to do something extremely far away from that view.
• 4:14
  SPEAKER_00: Try to be closer to what is your worldview of gratification, because only then you will do what you are naturally capable of doing well.
• 4:24
  SPEAKER_00: Otherwise, you will be in a zone which you are not comfortable with.
• 4:28
  SPEAKER_00: I will give you an example.
• 4:29
  SPEAKER_00: There are people who are very good at organically building businesses.
• 4:33
  SPEAKER_00: Okay, these guys are like the tortoise in the proverbial hair and tortured space.
• 4:38
  SPEAKER_00: Now, if a torter suddenly says that I am going to behave like a hammer and I am going to impress all the venture capitalists and try to tell them how I can do things very, very fast, he is going to be a little bit out of his depth doing something which is naturally not his footing.
• 4:58
  SPEAKER_00: So that is something one should be very, very capable of avoiding.
• 5:03
  SPEAKER_00: That is something you should be conscious of not doing.
• 5:05
  SPEAKER_00: So I think that once you are clear about what you are good at and you are sure that what you are good at sits well with what you want to do.
• 5:15
  SPEAKER_00: The business should also allow you to do that.
• 5:18
  SPEAKER_00: I may be good at something, but I may be the right man in the wrong business.
• 5:23
  SPEAKER_00: Once you avoid that, then you will be moving towards your idea of gratification in a way in which you can realize it, you will know it.
• 5:35
  SPEAKER_00: Doing that unnaturally or against your nature is not going to lead you to a good place, you are not going to get your gratification, and the people whom you take along in this journey are also not good fellow travelers to have on it.
• 5:55
  SPEAKER_00: So that is something in which nobody will be happy.
• 6:00
  SPEAKER_00: So this decision should come to the entrepreneur.
• 6:04
  SPEAKER_00: He must either be wise enough to understand this or he should surround himself with reasonable wisdom to give him this thought process.
• 6:13
  SPEAKER_02: So it's so you're saying that it's got everything to do with self-awareness, and and it's also about understanding one's own competence because if you are not self-aware and if you are not competent, uh it doesn't matter how much capital you have, it might most of the time end up going in flames.
• 6:30
  SPEAKER_00: That's correct.
• 6:31
  SPEAKER_00: Um, there have been instances where people have raised a lot of money by doing something which is against their nature, and then come under pressure in delivering it, and then lost out the control of what they try to create, and then seeing the same venture do well in the hands of somebody else.
• 6:57
  SPEAKER_00: Now, where was the fault line?
• 6:59
  SPEAKER_00: The fault line was in how you set about going to accomplish what you wanted.
• 7:05
  SPEAKER_00: That's all.
• 7:06
  SPEAKER_02: I think I think this is really interesting because uh uh if I I read this book a very long time ago called The Road to Character by David Brooks, and uh there is one sentence, it's like a giant book with like you know, vignettes of a lot of famous people, but only one sentence in that book I think I carry with me to this day, which is his definition of the word humility.
• 7:28
  SPEAKER_02: And he says that you know when most people think of the word humble or humility, they think of people who give their team their credit, who give everybody else credit, etc.
• 7:37
  SPEAKER_02: But he says humility is accurate self-awareness.
• 7:41
  SPEAKER_02: So, in a certain sense, the best founders are very, very humble in that sense because they know themselves, they know their capability, they know where they succeeded and where they failed, which allows them to be more intelligent with capital.
• 7:53
  SPEAKER_02: Is that is that assessment correct?
• 7:55
  SPEAKER_00: It's very true.
• 7:55
  SPEAKER_00: You see who are the most successful entrepreneurs in our country, whether people who inherited family businesses like an Azim FMG, who then created something out of it which is of such enormous size, or a Sri Bembu, Aranar Mutti.
• 8:09
  SPEAKER_00: You see, there are so many people, and you will see a running trait uh along many of these uh high achievers.
• 8:16
  SPEAKER_00: Even you see people who have built uh social uh entrepreneurship uh ventures, um cooperatives.
• 8:23
  SPEAKER_00: You see Korean, you see uh Ashanta, you see so many people who have built so many institutions.
• 8:29
  SPEAKER_00: The institutional uh imperative is well understood by them, and when they understand that, there is a lot of their personality and character that contributes to that uh evolution, it's there for all to see.
• 8:45
  SPEAKER_01: That's that's that's really that's really a great uh insight, and I think it's so true, Sham.
• 8:51
  SPEAKER_01: I think uh not many people really uh are so self-aware about what their strengths and weaknesses are, and therefore what they need to do.
• 8:59
  SPEAKER_01: I think it's a very it's a very nice way you put it.
• 9:06
  SPEAKER_02: So on a parallel track, uh Sham, I want to ask you a very basic question which I don't think is even taught in our schools, which is there are many things which are not taught in our schools, but from the tone of the conversation and the cont and the types of uh ideas you are tackling.
• 9:23
  SPEAKER_02: My question would be what is the difference between money and wealth, in your opinion?
• 9:28
  SPEAKER_00: See, money is something you need, it's something which is always demanding a purpose.
• 9:36
  SPEAKER_00: If you get money, you have to run your house, you may need to buy a car, you may need to educate your children, you may need to take care of your parents, you may need to buy a house.
• 9:46
  SPEAKER_00: Uh, when that money rises to a level at which all these needs are met, and you're still making more money than you needed or you imagined or you expected to, you are slowly entering the domain of wealth.
• 10:01
  SPEAKER_00: The challenge before every purpose is that when the purpose is fulfilled, what do you do next?
• 10:12
  SPEAKER_00: So I think that money also has that challenge.
• 10:16
  SPEAKER_00: And when it increases and it becomes wealth and more wealth, and then when it becomes uh something well above what you expected to generate, you need to keep on purposing it.
• 10:32
  SPEAKER_00: You need to find purposes for wealth, but for money there is always purpose.
• 10:40
  SPEAKER_00: When money becomes wealth, the problem of purpose starts for all of us.
• 10:47
  SPEAKER_00: As long as money is just meeting purposes, which is the majority of our Indian households, they don't have a problem.
• 10:55
  SPEAKER_00: It's only people for whom it becomes too much that this problem of finding purpose begins.
• 11:03
  SPEAKER_00: And I think that as money grows, uh, it's important for us to learn how to purpose our money.
• 11:11
  SPEAKER_00: I see a lot of super wealthy people think that they will purpose it later.
• 11:17
  SPEAKER_00: I mean, when you enter your 60s or 70s, you can't postpone it.
• 11:22
  SPEAKER_00: Everybody, as I said, is not lucky enough to be Buffett or Munger to sit at 93 and 98 and still be, you know, having the luxury of time.
• 11:31
  SPEAKER_00: So, this purposing should be constant, in my opinion.
• 11:34
  SPEAKER_00: Indians should constantly purpose wealth, whether it's for your children, whether it's for charity, whether it is for investment, whether it is for asset classes.
• 11:45
  SPEAKER_00: You have to keep on purposing.
• 11:50
  SPEAKER_00: Then money, when it becomes wealth, tends to be handled in a much better way, and when it becomes more and more, that handling demonstrates the required maturity, otherwise, it's going to be wealth again becoming money.
• 12:07
  SPEAKER_00: That should not happen.
• 12:12
  SPEAKER_02: Just as a follow-up to that, Sham, one question I have is uh founders come in with a certain understanding or a lack of understanding of capital and finance when they run their first company, and they come in with a completely different set of ideas, beliefs, processes, and protocols that they really want instituted the second time they go and build this build their venture.
• 12:38
  SPEAKER_02: So, can you talk a little bit about what kind of a transition that a founder makes from being a complete novice in terms of understanding the financial side of their business to when they become an experienced operator and they become very, very savvy?
• 12:51
  SPEAKER_02: What is that journey like?
• 12:53
  SPEAKER_00: I think it's the same as an investor.
• 12:56
  SPEAKER_00: Like you make an early investment, your early investments teach you what not to do.
• 13:01
  SPEAKER_00: There are clear takeaways and lessons.
• 13:04
  SPEAKER_00: So, an entrepreneur has far more lessons than an investor actually, because he would have made mistakes on multiple fronts and he would have faced situations which he never anticipated.
• 13:17
  SPEAKER_00: He will take all these learnings into his next effort or his next innings, and uh it's quite natural that he will not go to places where he will meet the same problems again.
• 13:35
  SPEAKER_00: It's quite natural.
• 13:37
  SPEAKER_00: Like an investor matures with every cycle of investing, an entrepreneur will mature with every entrepreneurial innings, it's it's good, it's healthy.
• 13:49
  SPEAKER_00: In fact, every entrepreneur who has sold a business or done something and moved on to the next thing, whether the first thing was successful or failure, it doesn't matter.
• 13:59
  SPEAKER_00: When you move to the next one, I think it's very important to take your learnings into that initiative.
• 14:06
  SPEAKER_00: I have seen entrepreneurs who have sold SMEs or stop doing a business and move on to another business in which they have done better in the next business and tend to the third business.
• 14:19
  SPEAKER_00: None of the businesses failed, huh?
• 14:21
  SPEAKER_00: They feel that one business has run its shelf life and from now it's going to become commoditized.
• 14:26
  SPEAKER_00: So I'll move on from this to another innings.
• 14:29
  SPEAKER_00: Do that well till it becomes commoditized, and then move to the third one, right?
• 14:34
  SPEAKER_00: And when you see the third one, if you see how they manage their business process, how they manage capital, how they manage surpluses in the business, how they managed investments in the business for growth, you can see a remarkable transition.
• 14:50
  SPEAKER_00: Even when you converse with the entrepreneur, you will clearly see how they learn from every venture and how they made it to a better place.
• 15:00
  SPEAKER_00: And whether the venture failed or succeeded, the learnings kept them going to a better place all the time.
• 15:06
  SPEAKER_00: I think that's very, very critical.
• 15:09
  SPEAKER_00: That's the true blue spirit of entrepreneurship.
• 15:13
  SPEAKER_02: ContraMinds is a podcast dedicated to decoding people, minds, strategy, and culture.
• 15:19
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• 15:27
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• 15:30
  SPEAKER_02: And if you are interested in revisiting past episodes or taking a look at our show notes from this episode, please visit us at www.contraminds.com.
• 15:40
  SPEAKER_02: And now back to the show.
• 15:46
  SPEAKER_01: My question, uh Sham, in this discussion, as we did a lot of research of your own philosophies of investing and how you looked at uh I think you to me every time you came across like a almost like a contra fund investor, right?
• 16:04
  SPEAKER_01: So therefore uh you really looked at the the contra trends that happen in the market.
• 16:11
  SPEAKER_01: That seemed to be the way you looked at it.
• 16:13
  SPEAKER_01: And uh so you actually made a statement which is which caught my attention that said staying rich with gains is not easy.
• 16:23
  SPEAKER_01: Okay.
• 16:24
  SPEAKER_01: Uh so especially when you know an entrepreneur you know sells his exits with his capital, he gets a lot of money, uh then managing the gains is not easy.
• 16:37
  SPEAKER_01: So typically what mistakes happen and what should they avoid?
• 16:45
  SPEAKER_00: Firstly, when somebody sells a business, then the whole world knows how much money they've made.
• 16:54
  SPEAKER_00: What's the kind of wealth they come into?
• 16:56
  SPEAKER_00: As long as you're running the business, no one is going to know.
• 17:00
  SPEAKER_00: Maybe they will do their own math, but you know, selling has a certain very clear signal to people that not only the money is there, it's available with this person.
• 17:14
  SPEAKER_00: Generally, when people come in to a lot of money, there are going to be a number of opportunities that are going to chase them, and not all of these opportunities should they are not meant for them because opportunities always chase capital.
• 17:39
  SPEAKER_00: So when somebody comes into a lot of money, opportunities are going to chase you.
• 17:44
  SPEAKER_00: I have noticed that very successful entrepreneurs after selling their company have taken that money and become very ordinary investors in other companies.
• 17:59
  SPEAKER_00: They have not had the skill to make investments successful, whereas they were very skilled in running an enterprise successfully.
• 18:11
  SPEAKER_00: I think an entrepreneur who comes into a lot of money must understand this difference, and he must purpose his wealth in such a way that his wealth must not be wrongly invested or wrongly allocated simply because he did not purpose it well.
• 18:34
  SPEAKER_00: This is what happens with most of the people who come into a lot of money.
• 18:37
  SPEAKER_00: They think they have a lot of money and then they have the luxury of doing what they want with it.
• 18:44
  SPEAKER_00: Within five to ten years, they realize that money was not actually a lot and they had not purposed it correctly.
• 18:52
  SPEAKER_00: So, again and again, this purposing of wealth is very, very critical, especially when you are going to take out your lifetime wealth from an enterprise, and you need to be very, very careful about what you're going to do with it.
• 19:10
  SPEAKER_00: That's the real test.
• 19:12
  SPEAKER_00: Making that wealth in enterprise is actually easier part because you are doing the same thing with focus, you're not going to do 20 things when you run a company, you're running that company with utmost focus and effort, and it's it's actually a very narrow ecosystem that you've made into a success.
• 19:33
  SPEAKER_00: But in the broad wide world, I think that the challenges suddenly spike, and entrepreneurs who sell businesses have always struggled under these challenges because too many things come at them, and many of the decisions they make turn out to be very, very ordinary.
• 19:56
  SPEAKER_00: So saying that I built a startup, I made a lot of money, even let's say you made 30-40% in your startup, XARR, and you sold is not a license for you to get the same result out of other entrepreneurs.
• 20:13
  SPEAKER_00: It's not a birthright, it's not a given, it's a totally different game, and I think one should understand that.
• 20:23
  SPEAKER_01: So, so therefore, how would you suggest they allocate this whatever uh you know pie that they get?
• 20:29
  SPEAKER_01: Uh, you know, when you say you purpose the wealth, uh, you would say allocate a certain pie for investments, certain pie for uh you know managing their uh you know life needs.
• 20:41
  SPEAKER_01: So, therefore, there must be some uh you know top three, four priorities on how will you share this pie, right?
• 20:47
  SPEAKER_01: So it's important for them to think through this, right?
• 20:49
  SPEAKER_00: The first thing is how you want to live the rest of your life, you provide for that because you have earned it.
• 20:56
  SPEAKER_00: I mean, after so many years of hard work, you have created value in a business and you have monetized it, money is with you, so you decide how you want to live.
• 21:06
  SPEAKER_00: Your primary duty is to that quality of life which you want to give yourself.
• 21:11
  SPEAKER_00: The next thing is what is it that you want to give for those who are going to be carrying your legacy forward, your children, your family.
• 21:21
  SPEAKER_00: What are you going to give them?
• 21:22
  SPEAKER_00: That's the second thing.
• 21:23
  SPEAKER_00: And how are you going to give it to them in a way in which they are going to be able to carry it forward?
• 21:27
  SPEAKER_00: That's that secondary is something that you have to think because if you just say I'm giving it and it's their headache, if they don't handle it well, that problem is going to come back to you in your lifetime.
• 21:39
  SPEAKER_00: So it's very, very important that you handle not just what you want to have for your life with a certain foresight, you also bring a lot of forethought into how your legatees are going to handle your legacy wealth that you are going to give them.
• 22:00
  SPEAKER_00: So that's very important.
• 22:02
  SPEAKER_00: That's the second part.
• 22:03
  SPEAKER_00: The third part is something where you are going to keep yourself busy because this is a problem.
• 22:10
  SPEAKER_00: People want to keep themselves busy.
• 22:12
  SPEAKER_00: So some amount of capital is allocated to keeping yourself busy.
• 22:16
  SPEAKER_00: I've seen some people get busy with philanthropy.
• 22:20
  SPEAKER_00: So they allocate a section of capital for that, and that keeps them busy so they don't get back into business.
• 22:26
  SPEAKER_00: Broadly, this is a very successful lot of people.
• 22:30
  SPEAKER_00: I've seen I've seen very few people who have failed there.
• 22:34
  SPEAKER_00: Most of the people have created impact.
• 22:36
  SPEAKER_00: But where people want to get back into business and you know help other entrepreneurs.
• 22:41
  SPEAKER_00: I think you need a structure, you need a way of doing it, you need to do it with more discipline than what you brought to your entrepreneurial links.
• 22:53
  SPEAKER_00: And you should be finite about how much capital you are going to allocate towards that.
• 22:59
  SPEAKER_00: Only then you would be able to carry that forward successfully.
• 23:06
  SPEAKER_01: Brilliant.
• 23:07
  SPEAKER_00: Brilliant Sham.
• 23:12
  SPEAKER_01: Sham, I'm going to uh you know slightly move into some of your you know personal life skills that we read about.
• 23:22
  SPEAKER_01: And uh so you actually uh you know uh talked about uh in your early stages of your working life where you went and built a company, you said uh for you you are an independent thinker with values and beliefs, which uh you know uh so what what does that mean to you and how important is it in your in what you have built in the way you have built your organization, the way you have built your work ethic.
• 23:52
  SPEAKER_01: How important is it and what are the learnings that you got out of that?
• 23:58
  SPEAKER_00: There are two areas from where I learned.
• 24:03
  SPEAKER_00: The first is I come from business family which comes from the legacy era of licensing and stuff like that.
• 24:12
  SPEAKER_00: So the thought process of the previous generations are oriented towards an era of scarcity and how you thrive in that era.
• 24:22
  SPEAKER_00: Then I started working alongside people who wanted to get rich quick in the investment world.
• 24:34
  SPEAKER_00: I have seen that other side also.
• 24:36
  SPEAKER_00: In both cases, I felt that the compromises which you need to do did not suit my personality, and I was convinced by somebody who mentored me without actually telling me that, that if you do what suits you, you are comfortable doing that for a very long time, and you will be able to find some niches where you are very good in delivering success.
• 25:15
  SPEAKER_00: So the whole approach was okay, I'm not going to get into places where people are trying to run too fast, or people are trying to do too many things to get their needs fulfilled, and there should not be a need to do things which don't agree with you.
• 25:40
  SPEAKER_00: So if I have to avoid all this and do something, then I should be independent and I should do uh something which I enjoy doing and I find it agreeable, and it delivers to me.
• 25:53
  SPEAKER_00: That is how this whole thing of doing something on my own happened, otherwise, I would have always been clipped on to some other person or some other company or entity or stuff like that.
• 26:07
  SPEAKER_00: And after I had done it for a reasonable period of time for myself, I got offers from people whom I know very well socially to do it for them.
• 26:17
  SPEAKER_00: And after I had done it reasonably well for a long time, then I thought that what is the purpose of whatever I have learned if I cannot institutionalize it, and that is how this whole transition has happened.
• 26:35
  SPEAKER_00: There's no grand strategy, it's just uh doing what suits you and trying to do more of it, and as you get more opportunity, trying to do even more of it.
• 26:48
  SPEAKER_00: So if opportunity comes my way, I will do more.
• 26:50
  SPEAKER_00: If I don't get, I will just accept it.
• 26:52
  SPEAKER_00: Great.
• 26:53
  SPEAKER_00: There is no goal-driven that I want to get so much of uh revenue, so much of profit, and nothing like that.
• 27:00
  SPEAKER_00: So it's just organic and it has grown over time because there are no pressures and there are no conditions, and you operate in a way in which you are able to comfortably do it.
• 27:09
  SPEAKER_00: That is what I have done.
• 27:14
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• 27:16
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• 27:23
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