Zerodha founder Nikhil Kamath in a recent podcast has said that most promoters he has spoken to regret taking their companies public. In the latest episode of his podcast, WTF, which was centred around gaming industry in India, Kamath asked gaming platform Nazara Technologies founder Nitish Mittersain if he regretted the decision too. Nazara had listed in the stock market in March 2021 and Kamath is one of the biggest investors in the firm.
Kamath said: “I am an investor in Nitesh’s company. 5% investor. And we meet often and like I’m going to bug all of you [other guests in the podcast] today, I bug him a lot because I want to understand this domain a bit more. Today is rooted from that same curiosity because so many people are telling me that gaming is this next big thing. The young today are spending so much more time on gaming than traditional forms of entertainment, so I have a lot of curiosity around it . But most people who I have asked in person, not on camera, if they regret listing and becoming a public company say they do. Nine out of ten.”
Nazara founder, however, said that he wasn’t one of them. Instead, he highlighted a set of positives that had come out of listing his company. “From our case, I really thought two things, having run this business for a really long time. Two decades. At a time when gaming didn’t exist in India. I really felt at that point of time that one by going public as India’s first gaming company we could really plant a flag that India is opening up,” Mittersain said.
He added: “I think in the last 3-5 years as Nazara went public our brand visibility and company’s credibility significantly increased…partners like Sean [Krafton India CEO Sean Hyunil Sohn] and Krafton and global players like that when they’re coming into India and wanting to partner, I think, today Nazara is clearly one company that they’re very happy to talk to and partner.”
Nazara Technologies CEO also touched on the distancing from venture capitalists as a company goes public. “I was a VC [venture capitalist] backed company for many years and there are a lot of commitments, SHA (shareholder’s agreement) terms, preferences that you give to the investors. In my case I was very lucky. I had WestBridge Capital which you would know in Bangalore, Sandep Singhal, who invested in me from 2015 all the way till 2018-2019. Of course Rakesh ji (Rakesh Jhunjhunwala) invested in 2018,” he said.
“As an entrepreneur you know that there are a lot of terms you have signed on which you don’t necessarily like. Again, I want to clarify with me my relation with WestBridge or Sandeep Singhal was fantastic. They were always very patient and never in 15 years we picked up the agreement and looked at it, but psychologically once you go public all these rights fall away because everybody has equal rights and I’m as answerable to one single shareholder having one single share as I am to you. It’s kind of an empowering feeling. I think honestly I’m enjoying it.”
Beyond the advantages of listing, he also mentioned that that going public comes with a few challenges. “It is has its own challenges for example quarterly pressures, every quarter results. I think the compliances take care of themselves after a point. The hygiene happens that’s not so much of an issue but it’s also how you approach it. Like I have tried in the last three years as a listed company and that’s what I’ve been sharing with a lot of entrepreneurs who list, it’s not easy to walk the talk but you have to do the right thing, what you genuinely believe is right versus trying to deliver the next quarter’s result. Even if sometimes that is a short-term pain. Second is you have to try to be as transparent and disclose as much as you want so if a shareholder wants to call you and ask what you had for breakfast this morning you should be ready to say.”
