Whalesbook
The Conglomerate Conundrum
Ambitious founders at prominent Indian tech firms are learning a hard lesson: sprawling internet conglomerates are often a drag on profitability. Companies like Paytm, Ola, and FirstCry, steered by leaders juggling multiple disparate ideas, have seen their pursuit of vast empires falter. This strategy has largely failed to create sustainable value.
Lessons Unlearned
Economist Michael Porter highlighted in the 1980s and 90s that conglomerate structures hinder profitability. Historically, Indian business families like the Bajajs and Birlas successfully moved away from these models over decades. Yet, a new generation of founders seems to be repeating the same mistakes, often saddling their ventures with 'troublesome triplets'.
Investor Fallout
The ultimate price is paid by investors. Whether in private funding rounds or public markets, the dilution of focus and resources inherent in these broad strategies leads to diminished returns. The promise of diversified growth has instead resulted in significant losses for many shareholders, questioning the efficacy of this growth-at-all-costs approach.