Almost every successful business, no matter what its size is today, was once a start-up. With the passage of time, this self-evident truth can be easily forgotten. It is in that spirit that we should remember and celebrate the life of Jamsetji Nusserwanji Tata, the founder of the $130 billion (revenue) Tata Group with a combined market capitalisation of its 29 listed companies at over $300 billion or around 300 unicorns! At the end of 2022, there were around 85 unicorns (start-ups with more than $1 billion in valuation) and only a handful that are profitable. So, what can today’s start-ups or more precisely start-up founders learn from the extraordinary life of JN Tata, one of India’s original start-up founders?
Tata’s early years as a businessman, what he invested in and how he pursued his big ideas can be very instructive for today’s start-up entrepreneurs. His homework was always thorough; he took risks and yet was very pragmatic; he formed the best team no matter where he found them; and perhaps most importantly he understood the value of India’s economic independence decades before the country won its political independence.
Not an ideal start…but he kept going
Today the name Tata conjures up images of massive steel, power and automobile plants, and even ultra-modern businesses like software and communication that proudly bears the founder’s name. However, Tata’s foray into the world of business started with textiles and banking, with very mixed results. While cotton business boomed in India during the American civil war (1861-65), its end spelled doom for a small bank that Tata was heading. Not an ideal start for a man who would one day be called the “Father of Indian Industry”. Despite the initial set back, he believed in the potential of Indian textile (and perhaps more so in himself) and continued to invest in the business. He bought a bankrupt oil mill in Chinchpokli (in South Mumbai), converted it into a cotton mill and sold it for a neat profit two years later, thus writing one of India’s first successful turnaround stories. He spent the next few years travelling in the UK and understanding the textile business better and went on to set up his first greenfield venture Empress Mills. Even then he did something that went against the prevailing wisdom and set up his venture in Nagpur instead of the more popular destination Bombay because of the former’s proximity to cotton-growing areas, easy access to a railway junction, and plentiful supplies of water and fuel. In short, he had done his homework and picked common business sense over what was then considered a “natural” choice.
A pioneer with big appetite for risk
Textiles was a matured business even back then, hence came with very little downside. However, what he did next was in fact was fraught with risks. He decided to take on the might of the British Raj by setting up a steel plant in India. There were no known iron ore mines in India nor did the country have the technology to build a steel plant which was not only capital intensive but also had a long gestation period.
And then, in 1882, when he was 43 years old, he came across a German geologist’s report on good quality iron ore deposits in Chanda District (now Chandrapur) not very far from his base in Nagpur. It would take another three decades before the first steel ingot rolled out of Tata Steel’s Sakchi (renamed Jamshedpur) plant. As R M Lala writes in “The Creation of Wealth” that chronicles the Tata Group, JN Tata spent 17 years maintaining a scrap book of reports on minerals available in India. “A steady flame burnt in his heart before (the) blast furnaces were to be lit in Jamshedpur,” Lala wrote.
Even then JN Tata knew that venturing into steel business which had no precedence in India will not be easy. His Chanda plans had to be dropped because despite having promising ore deposit, it did not have coal, another key ingredient for making iron/steel. He urged American geologist C M Weld, who was then leading the team (with Tata’s son Dorab) that was scouting for natural resources to stay on and keep looking for alternative locations that has iron ore, coal and fluxes in abundance. That was 1903, four years before Sakchi (Jamshedpur) was discovered. JN Tata passed away a year later. Weld would later recall that “Jamsetji was inspired by something far greater than the desire to merely amass a fortune.”
Today, Tata Steel holds a distinguished position in the list of iconic global institutions that have positively impacted people’s lives – a true manifestation of Tata’s inspiring vision and unmatchable legacy.
India was his big picture
The mosaic JN Tata was putting together in his mind had a few more pieces, apart from textiles and steel, to finish. He wanted to give his motherland a world-class institution to teach science, her first hydroelectric power plant and a hotel that can be counted among the best in the world. Sadly, the hotel (Taj Mahal Palace) that was opened in December 1903 was the only one he lived to see.
His passion for world-class science education that birthed the Indian Institute of Science (IISc) in Bengaluru was endorsed by none less than Swami Vivekananda who in 1899 said, “I am not aware if any project at once so opportune and so far reaching in its beneficent effects has ever been mooted in India.” It would take another 12 years before IISc started in Bangalore in 1911.
JN Tata’s life has a lot more to teach than a big appetite for risk laced with pragmatism and the doggedness he showed when pursuing his goals. He was a builder. He sowed the ideas for institutions that went on to build a nation. His big picture was India’s immense potential, and he instinctively knew what was needed to realise it. That was a rare quality in a businessman then and remains a rare quality even today.