The Consolidators

Which is tougher-to start a business or to grow it? ile obvious answer is to set up a business, especially when the stakes are against you. And that is why most of the stories of corporate triumphs have been about the founders, and they deserve to be feted. For instance, look at the story of Dilip Shanghvi, the founder of Sun Pharmaceuticals. He started manufacturing drugs in 1982, with an investment of Rs 10,000. Today, Dilip is only second to Mukesh Ambani on the Forbes India Rich List. In 2016, Forbes India said he was worth $16.9 billion.

At the same time, does it mean it is easy to be a second-generation entrepreneur? After all, one is born with a silver spoon. But the answer would be a resounding 'heck, nor from each of the seven entrepreneurs profiled an the book. Yes, they might be born with a silver spoon, but they had to make sure they didn't lose it.

Take a look at the career of one of the seven-Vilcas Oberoi. He was a teenager when his father, Ranvir Oberoi, sold off the family's trading business to venture into real estate full-time. Ranvir was eager to turn his passion for real estate into a successful business.

When you look at first-generation entrepreneurs, they have more hunger and desire than we, the second generation, have. They in a way have a cross to carry [as they have Munded a company] ... We have to find our own cross. That's a big difference,' says Vikas.

But the business transition that his father had initiated didn't turn out to be successful. By the time Vikas got about constructing his first project, before he turned nineteen, Oberoi Constructions was burdened by debt, and delayed projects had harmed its reputation.

Fortunately, irrespective of the fate of the business, Vikas found his cross. As a teenager, he was intrigued by the stories his father would narrate about real estate deals or about a particular design of a fountain. Even as he finished his school and joined a college in Mumbai, Vikas got more and more involved in the family business. It was his first project, which he completed before its schedule, that steadied Oberoi Constructions and put it on a path to recovery.

Vikas is one of the few successes among second-generation entrepreneurs. Not many find their cross. Most get caught between managing their inheritance and their zeal to prove themselves; they set up businesses that fail to make an impact. The rot sets in and by the time the third generation steps in, the business collapses.

One of the most high-profile business families that has seen its fortune vanish is the Sungrace-Mafadal family. The fall began in the second generation when 'a series of wrong judgements, tactical mistakes and the inability to ride out a textile recession led to the downfall of a once-prosperous dutch of companies:'

The third generation's tenure has been underlined by litigations. Many of the family's companies are in red and its remaining jewels have got too many claimants.

Few family businesses survive beyond the third generation. The Forbes magazine makes a startling statement. 'Less than one-third of family businesses survive the transition from first to second generation ownership. Another 50 per cent don't survive the transition from second to third generation.'

Internationally, some of the most famous families have lost control of their businesses, including the Barings family whose bank collapsed in 1995, and the Cadbury family which saw its ownership diluting over the years until Kraft took over the reins in 2010.

Is it because only a few from the following generations have a passion to grow the business? Vikas thinks so. 'A common theme between the people who are successful is that they have a passion. I think we need to End our motivation and our motivation lies in our passion in what we do. And if you are passionate about what you are doing, then you end up being successful,' adds the chairman and managing director of Oberoi Realty (rechristened from Oberoi Constructions).

'Oberoi Realty is the second most valued real estate company in India. He is the least leveraged real estate developer that I know of,' says Deepalc Parelch, chairman of Housing Development Finance Corporation, country's leading housing finance company.

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