Yesterday, we had the pleasure of welcoming our new group of MBA interns from IIT Jodhpur and IIT Kanpur. As part of our onboarding tradition, I conduct an introductory session at the beginning of the internship and another at the end to ensure continuous learning and reflection.

‍

During our discussion, I asked each intern why they had joined us. Each responded almost similarly: "Artha invests and works with disruptive startups, and we want to be at the forefront of innovation." Each one used the word “disruptive.”

‍

Their responses highlighted the excitement about working with disruptive startups and being at the forefront of innovation. While these motivations are important, I wanted to delve deeper into the reality of what makes startups—and investments—successful.

‍

Understanding a Company as a Set of Processes

I began by explaining that a startup is essentially a company that is just getting started. It can range from a person starting a newspaper stall to a company launching rockets to the moon. More importantly, these entrepreneurs are starting companies that are defined by the processes they run. A company is a set of processes running in parallel and sometimes sequentially. Each process has a trigger to start, maintain, and end that process. Consistent monitoring, measuring, and running these processes create predictable and reliable results.

‍

The Power of Process Over Disruption

Contrary to popular belief, the companies generating the most returns for investors are seldom the most disruptive. They are often the ones who master and refine simple, repeatable processes. For example, Southwest Airlines and Indigo Airlines have achieved profitability in a notoriously tricky industry by focusing on operational excellence and incremental improvements. Similarly, DMart’s strategic cash utilization and real estate acquisitions have positioned it as a market leader, whereas Big Bazaar’s lack of a sustainable process contributed to its downfall.

‍

Investment Success Through Process Orientation

We explored the idea that successful investment is not about sporadically picking out the next big thing—a diamond in the rough. Rather, it’s about having a systematic approach that consistently identifies valuable opportunities. This approach, when followed diligently, provides a sense of security and confidence in the investment decisions, leading to sustainable success.

‍

Most investor autobiographies and my firsthand experiences have proven that the most influential investors spend 90% of their time on portfolio research, developing a deep understanding of market dynamics, and honing their selection process. The actual act of investing, the remaining 10%, is merely executing a well-researched strategy.

‍

Creating a Repeatable, Measurable Process

Every task we undertake, whether investment, portfolio management, or an exit, is measured, repeated, and refined. This process orientation ensures that we can reliably produce and scale great results. It’s a mindset that applies to investing and any business operation. The ability to create a repeatable, measurable, and improvable process is what separates successful ventures from those that fail.

‍

Every investor might hit a jackpot like OYO, Exotel, or Purplle once in a long enough investment career. However, finding multiple successful investments like Karza, Everest Fleet, LenDenClub, Agnikul, and others, each with its own story, and honing in on them to double down in future rounds is what creates “our right to win.”

‍

Conclusion

As a check-back, I asked the interns whether they still wanted to be investors or entrepreneurs after our discussion. It was heartening to see their initial excitement about disruption shifting towards a deeper understanding of the importance of finding and implementing robust processes. The lesson had not just been learned, but internalized.

‍

I challenged them not to get enamored by fancy presentations and promises to change the world. Instead, focus on the process, the repeatable actions—the boring stuff that makes the difference. Whether you’re an investor, founder, or business leader, your role in developing and adhering to a robust process is crucial. It’s not about chasing the latest trend or disruption but about consistently applying a well-thought-out strategy. The best businesses thrive on process, continuously delivering great results by refining and repeating proven methods.

‍

Welcome to the journey, where the power of process drives sustainable success. It may not sound as exciting, but the results are both exciting and repeatable! This journey is not just about financial gains, but also about personal growth, learning, and the satisfaction of building something meaningful.

‍