Initial Public Offering (IPO) has become a norm in the startup industry these days. Every startup founder tries to hit that milestone. However, N.R. Narayana Murthy, the founder of Infosys, thinks otherwise. According to him, startup founders must not see IPOs as alternative funding just because they face pressure from venture capitalists to succeed as early as possible.
In his opinion, IPOs come with a huge responsibility. Investors always expect an increase in stock price. These days, entrepreneurs face pressure from venture capitalists and early supporters to maximise their returns. But having IPO is not fun, he cautions.
He also stressed the need to conduct proper market research for maintaining a perfect equilibrium in business. He cited the example of MNCs that entered India in the mid-1990s eyeing the 200 million middle-class population. But, they failed to sustain, added Murthy.
He, then, exhorted entrepreneurs to follow the PSPD (Predictability-sustainability-profitability-derisking) model of Infosys. The model follows predictability of revenues, sustainability of a business, profitability through cost control and derisking by not being dependent on one product, market, or customer.
