The just-complete Initial Public Offering (IPO) of Zomato, which managed to raise around Rs 9,000 crore at an astronomical valuation of Rs 66,000 crore, makes one believe that money is indeed growing on trees.
More than 150 years ago, Leo Tolstoy, one of the world’s greatest novelists and thinkers, wrote in his book,
What should we do next? He wondered: If everything of value and substance is produced in the countryside, why do villages plunge into poverty and cities plunge into wealth? This question still confuses us.
All these thoughts brought back memories of my life from the 80s. In those days I found it difficult as a farmer to make ends meet. I worked all day living out of a used military tent in a remote part of the Karnataka countryside. One day, after harvesting a crop of bananas and loading them onto my tractor well before dawn, I took them to the weekly farmers market in Hassan, the district headquarters. As I approached the main road to the market, my tractor stopped behind an enormous row of trucks and vehicles, hundreds of them, all owned by other farmers. I stepped a kilometer through thousands of fervent cultivators. They unloaded their loads of fresh green peppers and tomatoes on the road and the black runway turned red and green. The pungent fumes from the crushed pepper made it impossible to breathe. After finding out that the prices had collapsed, the farmers rose up because they could not even recover the transportation costs. Therefore, they closed the roads. About noon I finally got myself out of the fray, unable to sell my produce and I fell, took the bananas to my farm and fed them to my cattle.
The Zomato IPO event also reminded me of those days when banks repeatedly refused my application for an agricultural loan of Rs 1 lakh but after two decades a bank charged a staggering sum of Rs 500 crore on a silver platter to the lowest. The high-cost airline where the airline is publicly listed and a high-value stock. The value lies in the mind of the beholder, who, without my knowledge, was enslaved to the legendary bears and bulls that influenced the stock exchanges.
All these strange phenomena of the modern economy go back to the ancient dilemma: How do those farmers who own the land, toil and plow? We produce real things that we eat, drink, touch and feel; Produce the things that keep us nourished and warm–grains, fruits, vegetables, meat, cotton, wool, silk, etc.–live in abject poverty while the merchant who sells them or the broker who speculates is rich? The multinational giants that retail groceries and other products (Kraft Heinz, Cargill, Tyson Foods, Danone, Nestle, Unilever, Walmart, and Reliance), and that build solid steel plants, cars, buildings, bridges, ships, railroads, and hotel chains. In contrast, I wonder why they are doing all the heavy lifting but have been overshadowed by Amazon, Microsoft, TCS and Infosys in their stock market assessment. And now, the new kids on the premises – Byju’s, Zomato and Paytm – are more valuable than those who have been in business for decades. The Manipal Group, for example, operates dozens of medical and engineering colleges and hospitals. It owns hundreds of acres of prime land across cities in India and even abroad. It has huge educational complexes and wonderful laboratories, medical diagnostic equipment, and surgical theatres. Despite thousands of billions of investments and hundreds of professors, doctors, and nurses, it’s just a fraction of Byju’s.
Similarly, Taj Hotels, Oberoi Hotels and other five star hotels own the most expensive properties. They have luxurious rooms and suites, gourmet restaurants, spas and salons, and swimming pools fit for a Maharaja. But its value is less than a fraction of Zomato. And Zomato, which doesn’t produce anything and buys only food made by countless restaurants across the country, has nearly double the valuation of Jubilant FoodWorks that owns Domino’s Pizza. While others are making a profit, Zomato and new unicorns are all bleeding cash but have amazing ratings.
I met Neeraj Gupta of Meru Cabs, who was the first entrepreneur to launch wireless GPS-linked taxis in India. It revolutionized urban mobility a few years ago. Then he owned more than 3000 cars. His company now has a fleet of 9,000 cars. But Uber and Ola, who run quite a few taxis through metro stations in India, have turned their business model on its head. These are light assets companies that only operate taxis registered on their online platform. It meets customers’ needs through optimum, efficient and timely use of available resources but has strong market limits. I do not discredit these Internet companies. These are really cool concepts.
Information and data are said to be the new fuel for the modern economy. The internet makes the world go around the world and stock valuations for new age companies can spin around you in space.
But there is limited space in that stratosphere. This world and life in it cannot be confined to an imaginary cloud. You cannot eat information and not everyone can live in an internet bubble. We need food, clothing, water, housing, transportation, electricity, hospitals, as well as flowers, poetry, and art. We need education in schools and universities where there are flesh and blood teachers and where there is breeze, invigorating dialogue, debate, music, and laughter. We need restaurants, travel, and beaches with sun, sand, wine and kisses. We need brave, brave men and women who work with their own hands to provide for the world. All this makes life good.
It might not make you a billionaire, which the sterile world of the internet economy could make you, but don’t get discouraged. This real world rooted in the earth and soil I’m talking about can also create wealth. It can give you a lot of joy and meaning if you do your work with passion and commitment.
Then my thoughts turned to my wife’s 25 year old Iyengar bakery tucked away in Malizuram, Bengaluru. It is a historical restaurant that is loved and cared for by the locals. It is part of the cultural landscape. Her wealth did not rise like the shares of Internet companies. But she is happy and satisfied and loves to make bread and cake every day. She is the lady of her world.
There are countless such people across India in myriad fields – farmers, educators, doctors, writers, journalists, masons, carpenters, blacksmiths, mechanics, artists, artisans, grocers and sellers – serving their communities and providing jobs and livelihoods. and security. They make this a wonderful world. One cannot live on the Internet alone.
Captain GR Gopinath is a soldier, farmer and founder of Air Deccan