4 Lessons From an Entrepreneur Who Became a Self-Made Billionaire Before Turning 40
Recently I had the pleasure of spending time with self-made billionaire Bhavin Turakhia. Bhavin is 39 years old, he was born in India to middle-class parents and has built and sold two companies for more than $1 billion.
He and his brother Divyank launched their first tech venture, Directi, with a $375 loan from their father in 1998. They sold four of their web presence companies -- BigRock, LogicBoxes, ResellerClub, and Webhosting.info -- to Nasdaq-listed web-hosting firm Endurance International Group, for $160 million in 2014. The brothers' next venture was an adtech business called Media.net that sold for $900 million less than seven years after its launch.
What sets Turakhia apart from most technology entrepreneurs operating at this scale is that he has never raised external funding. Bhavin is a massive advocate of bootstrapping a business unless it is absolutely essential to seek investment. He says, "When you truly believe in the value of what you are creating, diluting the equity is the most expensive way to grow."
His passion for building technology companies runs deep. Despite having made more money than most entrepreneurs dream of, he has thrown himself into three more technology ventures that he’s personally involved in the day-to-day.
He’s developing Flock, a collaboration app that allows teams to coordinate their work and boasts over 500,000 users. He’s the Co-Founder of Zeta which offers software solutions for employee tax benefits, automated cafeterias and employee gifting, and has over 1.8 million users. His 3rd venture is called Radix, currently the world's third largest domain registry. Radix owns and operates generic top-level domain extensions like .store, .tech, .online, .website, .site and many others.
Bhavin shared with me his four core business beliefs that have led to such remarkable success across multiple industries and geographies.
Lesson 1: Value creation over valuation
Rather than focusing on how much the company is worth to investors, Bhavin believes founders must intensely focus on the value they provide to their customers.
Rather than fussing over metrics that don’t truly matter like eyeballs, traffic and employee headcount, he recommends focusing on net-promoter-score (NPS), customer satisfaction and profit.
His background of bootstrapping so many ventures gives him a natural tendency to ensure that each business is making customers happy enough that they want to pay for the product.
He warns that if entrepreneurs focus on valuation, they will optimize everything towards that goal and may miss the potential for true value creation. And that is ultimately what determines the likelihood of realizing a profit or an exit. “Valuation is a side-effect, not a goal,” he says.
Lesson 2: Creativity over cash
Companies that have massive investment early on tend to throw money at problems rather than searching for creative solutions. The world of entrepreneurship rewards genuine innovation that is finely tuned to solve a problem.
With too much money, you end up overpaying for customer acquisition rather than finding the guerilla marketing approach that gives you an edge. You can hire an agency to conduct market research at arm’s length, rather than getting face to face with your customers and spotting subtle insights the agency would miss.
A cash buffer can actually prevent entrepreneurs from tuning into the real issues of the market. “Adversity causes innovation," says Bhavin. "If a business is too well funded, there’s always a temptation to throw money at problems rather than digging deep for an innovative solution.”
Lesson 3: Quality of people over quantity of people
The next issue is closely linked to having too much investment too soon. It brings the temptation to expand the team rapidly so that the company appears to be big and successful rather than keeping a small, elite team that can be more nimble and proactive.
Quantity doesn’t substitute for quality. You can find 100 average athletes and put them onto a sporting team but you’re no closer to winning a gold medal, Bhavin believes.
Every new hire adds complexity to your culture. Each person brings with them baggage and experience. If you hire average people, they dilute the focus of the rock stars. Companies that do not have deep pockets should recruit just a few brilliant people and they will probably have an edge over the 100-person company that expanded their team too quickly.
Lesson 4: Staying focused
“Success is directly proportional to the level of focus you can put into solving a problem,” says Bhavin. Investors who are not in control of the running of the company need to diversify their risk across many companies, but entrepreneurs need to choose a big problem and focus all their energy into solving it better than anyone else can.
“One of the biggest things that kill startups is defocusing,” Bhavin explains. Startup companies attempt too many things too soon and fail to be brilliant at any of them. A small company simply cannot be exceptional at ecommerce and payments and social networking and logistics. Entrepreneurs must carefully choose the problem they are best placed to solve and run deep into the habit-hole to solve it.
As a boy, Bhavin remembers his father telling him and his brother almost every day, “You can do anything you set your mind to.'' That sense of belief has certainly come to full fruition and Bhavin is generous in sharing that message with as many entrepreneurs as possible.