Nithin Kamath, founder and CEO of Zerodha, in a recent interview, shed light on the governance lapses prevalent in some startups, attributing them to the overhyped potential of the Indian market. Kamath emphasised the importance of setting realistic expectations when building businesses and cautioned against misleading investors.

Speaking at Moneycontrol's Startup Conclave on July 7, Kamath voiced concerns about the consequences of overselling during fundraising activities, stating that it can compel founders to continually perpetuate a narrative that aligns with inflated expectations. Under pressure to meet these unrealistic projections, some founders may persist in promoting a story that fails to materialise as intended.

"If you oversell while raising funds, then you're forced to kind of keep selling the story which matches up to the expectations. And, sometimes some founders under pressure, might want to continue saying the story without actually the story being played out," said Kamath.

Acknowledging the influence he holds as a successful entrepreneur, Kamath expressed his responsibility to address this issue and encourage entrepreneurs to adopt a more grounded approach. He revealed having encountered founders who appeared oblivious to the reality of their business's performance, refusing to accept the disconnect between expectations and actual outcomes.

Kamath attributed this tendency to the inherent ego and reluctance to admit mistakes among seasoned entrepreneurs. "All of us have egos, especially senior entrepreneurs. It's very hard to accept defeat or, to say, that maybe I was wrong. I think that's one of the reasons I went out and said what I said," Kamath added.

First Published:Jul 7, 2023 1:05 PM IST