Arora reiterated cybersecurity has gone from being a nice-to-have to a must-have. Going forward, customer data, privacy and the ability to apply AI against all the data and make recommendations are all going to be important.

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In a CNBC-TV18 special, Managing Editor Shereen Bhan spoke to Chairman and CEO of Palo Alto Networks Nikesh Arora in a roundtable conversation with leading digital businesses - both legacy and startups.

Addressing crucial concerns surrounding security in the new normal where businesses are all being built or having to transition to digital infrastructure, Arora along with stock market veterans Nirmal Jain of IIFL Finance and Dhiraj Relli of HDFC Securities offered his views on what businesses will adapt and to what extent survive a highly volatile and ambiguous economic environment globally.

Arora, being bullish on India, explained how geopolitics has once again proven that a strong democracy focused on excelling in the medium-to-long term will withstand short-term pressures. In that light, India continues to be the conversation around the world, he said.

Jain categorized this time as the best time for India and said India is relatively far, far better off. “The market is always like a pendulum, it can swing on optimism more on one side than the other but if you have a long-term approach then Indian equities will do well,” said Jain.

Relli called India a land of opportunities and lauded the government to be a very stable one. He, however, thinks India hasn’t been able to unleash itself despite favorable policies and demographics being favorable for a very long.

Among notable startup entrepreneurs such as Zoom Car’s Nirmal NR feel the easy money era is over and that is causing pain in the Indian startups space. However, the company remains very buoyant.

Digital adoption taking a 10x leap than what it was pre-pandemic has ensured we see complete discipline coming into the ecosystem where you're not burning money anymore, said Umang Bedi, co-founder of VerSe Innovation.

"On the other side, you're seeing infrastructure come out; 5G, adoption of people coming onto the internet every day, 60-year-olds and 70-year-olds transacting online."

Bedi finds this a pretty positive place to be in if you can really prove the product market fit, and solid unit economics and demonstrate that downstream with scale.

On the valuations of startups being skewed, Arora clarified we can all say the valuations are ridiculous, but we are all participants; the investors are participating in the valuation that they were giving companies. Entrepreneurs were participating in it by going out and raising money at that sort of ridiculous set of prices, and it's a kind of arbitrage. That doesn't take away the need of building strong robust businesses.

“I think one thing that has stood the test of time—if you build a strong, robust business; you can weather any storm that comes your way. You could be unlucky that you're building a robust business and there's no capital market to be had and you got to sell your shirt to make ends meet.” Arora said.

He says vanity valuations are gone; you've got to suck it up. And you've got to accept that you may have raised money at a lower price but you were lucky that you had more dilution that you were able to raise money.

Having done 14 acquisitions, Palo Alto Networks’ Arora believes the sellers still have indigestion. “I don't think the sellers have quite realized that the world is now different, and they're not going to see those valuations for a long time. I think the entrepreneurs who raised money at a high valuation still haven't run out of money.” Arora said.

“I still believe they have piles of money in the bank. So I think entrepreneurs aren't ready to sell at a lower valuation yet even though they kind of understand that things might be different this time hoping against hope so until that indigestion settles down on the seller's side, the buyers are gonna stick around and wait because we have a lot of time to wait,” said Arora.

Rajiv Aggarwal, CEO of Innovati Payments Solution, thinks Indian businesses are aware of the fact that digitization can bring about efficiency, but thinking about digitization used to be strictly in terms of taking a physical process and digitizing it. “You were not thinking digital first and that has started happening. With a lot of the capital being sucked out, there is a dramatic reduction in cost of acquisition for us”. The third thing which has affected the ground level is the cost of talent.

Bedi classified three big opportunities in India right now; the first one is being clear about who they're serving, the second big challenge is scale and the third big opportunity is just using artificial intelligence (AI) as a use case; deep learning, deep tech and machine learning is a massive opportunity. “It's interesting now that non-revenue generating businesses aren't valued in the same way so I think that's going to be a massive pressure test on startup valuations on the whole. It's probably the best time to build a business,” Bedi said.

Aakash Gehani, co-founder of InstaMojo, echoed Jain and Relli’s sentiment and said if you're building for the long run and if you have your basics in place, it is the decade for India to really make it big.

Reeju Datta, co-founder of Cashfree, too sees this as a very good time to build a digital economy. The building blocks are there, the regulator is thinking with the protection of consumers in mind. All we need to do is be cognizant of the potential risks of what could go wrong. And a good starting point is to look at the digital payment aggregation guidelines and the technology recommendations.

Harsimarbir Singh, co-founder of Pristyn Care, thinks this is brilliant timing for people who want to be entrepreneurs because they're seeing problems that they can’t solve. They get so excited about it that they just virtually can’t sleep. “So the cycle of the quality of entrepreneurs that will come out is drastically going to improve; the quality of people joining startups is going to improve, the decision-making matrix is not cash burn it is real business building blocks, and the people supporting venture capitalists,” said Singh.

Arora reiterated cybersecurity has gone from being a nice to have to a must-have. Going forward, customer data, privacy and the ability to apply AI against all the data and make recommendations are all going to be important.

He believes businesses have a real challenge if they are trying to maintain legacy and rewrite the book—it becomes harder because you try to make everything backward compatible.

“You can rent, compute, go write software, and you can put up a storefront in any digital mechanism and you can start getting customers, so the world is changing. The opportunity lies in rewriting the book,” Arora concluded.

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First Published:Nov 28, 2022 12:05 PM IST