Much like revenues, net profits are also important and the present mode of series after series of fundraising is similar to a Ponzi scheme, according to Infosys founder NR Narayana Murthy.
“I would hold the venture capitalists who propounded the theory that what is important is only the topline and not bottom line. I think that is completely wrong. In some way, in many cases, this is also a Ponzi scheme,” Murthy said in a fire-side chat with Snapdeal founder Kunal Bahl at the Nasscom Technology and Leadership Forum 2023.
A company raises Series B funding and then Series C, and the investor sells it to another for a profit. When the company reaches Series Z, the investor is just left with a “tin box”, Murthy, co-founder of Infosys, said, alluding to fundraising at higher valuations.
“I am not a critique of the younger people, but I am a critique of the older people who have to be open and honest in saying things as it is,” he added.
Later speaking to reporters, Murthy said the expected global recession and slowdown in deals globally would be good for Indian companies.
“I am not worried about the trough that may come as most Indian companies, particularly Indian software firms, are growing pretty well,” he said, adding Indian companies provide “better value for money”.
Talking about talent acquisition, he said that a firm needs competence to flourish as “companies cannot grow with zombies”.
Murthy also reiterated his earlier stance on work from home, and stated he was dead against it. “Office is for work and home is for family,” said.
On the current retrenchment and delay in onboarding freshers, Murthy declined to comment, but said during the dot.com burst in 2001, Infosys had honoured all offers it had made. This was the time when board members took large cuts, he added.