Infosys Co-founder N R Narayana Murthy on Thursday said that venture capitalists who propounded the theory that only the top-line Start-ups are important and not the bottom line looks like a ponzi scheme. Speaking at a fireside chat at the Nasscom Technology and Leadership Forum 2023, Murthy also blamed the venture capitalist community for inculcating a culture among entrepreneurs to chase growth at all costs.
N R Narayana Murthy’s comment came in response to a question from Snapdeal founder Kunal Bahl on how young organisations can scale up fast while keeping an eye on culture and values.
“I would hold venture capitalists responsible who propounded the theory that only the top-line is important and not the bottom-line. I think that is completely wrong. In many ways it looks like a ponzi scheme. Investors say they are in series B, then go to series C, and sell shares to others at a profit, but it is the series Z fellow who is left with a tin box. Hence, I am not a critique of the younger people but of the older people, who have to be open and honest in saying things as it is,” said Murthy.
He said that the venture capitalists who fund start-ups as well as their boards of advisors and directors must advise them to tolerate delayed gratification and to understand that short- to medium-term sacrifice would result in long-term gains that are significantly greater.
"That is indeed the story of Infosys," he said, adding that all Infosys founders traveled economy class till the firm reached a billion dollars in revenue.
Murthy's remarks against venture capitalists come at a time when the Indian startup sector is experiencing a funding winter, which has caused businesses to place more emphasis on profitability than just growth.
Talking about freshers' hiring and industry situation, Murthy shared that in 2001 when the industry was impacted due to the dotcom bust, Infosys onboarded 1,500 freshers, even as the senior executives and board took salary cuts.
“What I can say is what we did… we had given offers to 1,500 freshers and the think tank in the company sat and decided to take the largest salary cut for the internal board of directors, then the next salary cut for the next level, executive VP etc. Then we onboard everyone of the 1,500 fresher. I am glad to say that we are the only company which did it,” he shared.
His remarks come at a time when many IT companies have put off hiring freshers, have avoided campus recruiting, and many have also attempted to lower the salary of the fresher candidate.
The retired chairman of Infosys also talked about the latest AI bot ChatGPT. He said, “In 1977-78 there was a thing called Programme generators. Everybody said that youngsters would lose jobs, but it didn’t happen… Human mind is the most flexible and can adapt very well.”