Old-economy lessons that can detoxify hypergrowth start-ups

Pilloried on social media after reports emerged of the toxic work culture in his companies, with tales of his impossible deadlines, terrifying temper tantrums and outlandish punishments for ‘lapses’ – he reportedly made an executive run three laps around the sprawling Ola Electric campus for not leaving an entryway open – an unrepentant Aggarwal said in an interview: “Passions and emotions run high and we are not on an easy journey,” adding, “But I don’t want to choose an easier journey for myself or for Ola. My anger, my frustration — that’s me as a whole.”

Of course, passions and emotions are what differentiate plodders from stars. And it is difficult to argue with either Aggarwal’s success, or his gumption to go big or go home. His first venture, ride aggregator platform Ola, is valued at $7.3 billion in its last fund-raise and is one of the few Indian B-to-C companies to have ventured outside India.

The second, electric scooter manufacturing arm Ola Electric, is valued at $5 billion. And Aggarwal is already rolling out vehicles from what will eventually be the world’s largest electric two-wheeler manufacturing plant – a hyper-factory straight out of Elon Musk’s playbook, a figure he has often been compared to as much for his innovation skills and hunger for growth as his unpredictable behaviour.

Aggarwal, of course, is not the only start-up founder who thinks this way. Bombay Shaving Company founder Shantanu Deshpande found himself in social media crosshairs after a LinkedIn post exhorting freshers to not do “random rona dhona” about work-life balance and put in 18-hour workdays instead. Healthtech unicorn Pristyn Care’s cofounder Harsimarbir Singh’s post about “interview hacks” – which included ringing candidates at 8 am to check if they were early risers, scheduling interviews at 11 pm to see if they could take long working hours, and asking outstation candidates to turn up the next day to see if they could “hustle” also created a storm.

What these reveal are certain unstated assumptions about what it takes to make a business – and a start-up is a business like any other – a success, ranging from unreasonable work hours to impossible deadlines; a culture where “burn rate” applies as much to human as financial capital and one where terms like “work-life balance” or “gender equity” are considered irrelevant. Primarily, they boil down to one thing: a culture where the need for growth trumps all others, and one where a toxic work culture is normalised to a great degree.

India is not unique in this. China’s techies rallied a couple of years ago against the so-called ‘996’ work culture (working from 9 in the morning to 9 at night, six days a week), endorsed by people like Alibaba founder Jack Ma, who said, “To be able to work 996 is a huge bliss. If you want to join Alibaba, you need to be prepared to work 12 hours a day. Otherwise, why even bother joining?”

But what actually differentiates true high-performance companies from the rest is culture. Strategy, innovation and putting in the hours can get you the growth acceleration perhaps, but if you keep burning out your talent, you soon run out of ideas and momentum. If one looks at true high-performance companies – those which have delivered both high growth and high returns for all stakeholders; promoters, investors, employees and customers – over sustained periods of time, running into multiple generations in many cases, the one thing they have in common is a great work culture.

Of course, cultural context does matter here; a ‘normal’ work culture in Japan is significantly different from one in India. But there is no shortage of examples at home. From Tata to Godrej and from TVS to State Bank of India, these groups have survived, thrived and grown over a century or more. They – and even relatively new-age compatriots and global success stories such as an Infosys or a Wipro – all enjoy a great reputation for work culture. And they simply could not have survived this long, let alone diversify and keep pace with global peers, without fostering a culture of innovation and achievement – minus the toxicity.

McKinsey’s research across more than 1,000 companies identified four key reasons why culture matters to companies. One, culture correlates with performance. Those with top quartile cultures (as measured by McKinsey’s Organizational Health Index) posted a return to shareholders 60 percent higher than median companies and 200 percent higher than those in the bottom quartile.

Two, culture is inherently difficult to copy. The ultimate competitive advantage, they found, is a healthy culture that adapts automatically to changing conditions to find new ways to succeed. Three, conversely, unhealthy cultures do not respond well to change. And last but not least, they found that over time, unhealthy cultures lead to underperformance, or worse, failure.

These are the crucial old-economy lessons that start-up CEOs need to internalise.