Kishor Patil has dedicated his career to building a lasting company that has gone through an IPO and is now worth over a three billion dollars.
On the Dealmakers Show, Patil talked about growing his business, evolving your company for longevity, focusing on the right niches and markets, the three things to make acquisitions successful, and employee retention.
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Discipline And Evolving Your Business For Longevity
Kishor Patil was born in a small town in India. In search of better education, he moved to a bigger city. While many of his peers were pursuing careers in medicine and engineering, he chose accounting. A foundation that certainly helped with the numbers and financials of eventually running his own business.
Seeing the success of other global companies, and being ambitious, Patil found himself also aspiring to build an international business with scale.
Together with some like-minded friends, he started KPIT. Which he has now been running for three decades.
They began by focusing on finding a couple of solid clients. Strong brand names would enable them to attract strong talent, and, in turn, further build their capabilities.
As with any corporation that has survived this long, they’ve evolved their business along the way, making it through several economic cycles and disastrous times.
They began looking at different business models. Then began to hone in on services, and a few large clients that they could work with, and continue to grow with, as they grew those client’s businesses.
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Starting Small With Low-Paying Customers
That started out with customers who were paying a few hundred thousand dollars, and are now $100M clients.
After initially trying to play it broad and opening their services up to all verticals, they determined it would be more sustainable and give them a stronger value proposition to hone their focus. Even if this may have seemed counterintuitive for some.
As with many of their peers, they started off with a lot of banking clients. Which made up maybe 50% of their customers. They decided to do something different and focus on manufacturing and automotive instead.
Specifically, they saw the realm of automotive software as being ripe for disruption, and a space where they could stand out as a leader.
So, they made a huge shift in divesting 70% of their business and focusing on just the 30% that fell into this bracket. Over the past 10 years, they’ve seen that decision result in creating 10x more value, and 4x more profitability.
The Keys To Successful Acquisitions
Kishor Patil and his company have used acquisitions to grow their company successfully. Though he says, they’ve never made them purely to buy growth or metrics.
He says that there have been three keys to acquisitions being successful ventures, including overcoming the minefield of successfully being able to integrate them. These are strategy, organization, and the people.
So, an acquisition has to make sense and fit into their current and future strategy. They look for those with an opportunity to grow 3x and multiply the investment. This way, even if the integration doesn’t work out, then they should at least be able to recoup their investment.
Kishor says that you also need to find fit and alignment in organizational structure, and if things will mesh well.
A part of this is also deciding who will lead the acquired company after the acquisition. Will it be your leadership team? Or will you have the existing management team of that company continue to lead it?
KPIT now has a team of 12,000 employees. Some of them have been with the company for 15 years. A rare feat today.
A big part of being successful in this area has been transparency, according to Patil. That is being transparent with their team, admitting mistakes, and banding together through adversity.
They also identified 300 people in their company to lead their culture. Investing in them to really take ownership of the tenets of their culture, to practice them, integrate them into operations, and live them out.
They make sure everyone is aware of and focused on their mission and vision. Which, in this case, is working towards sustainability through zero emissions, and the electrification and autonomy of vehicles.
Aside from really focusing on a clear vision and mission, Kishor’s other top advice for other entrepreneurs today is to focus on developing superior profitability and liquidity. It forces you to prioritize and decide what not to do. Also it creates better capital for growth without dilution. It is not an outcome of everything else; it is something you need to have throughout the journey.
This can mean raising more money from private or public markets well before your need. As well as making the tough decisions to keep your business in good financial shape to adjust to market cycles.
Storytelling is everything which is something that Kishor Patil was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
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Listen in to the full podcast episode to find out more, including:
- Working through adversity to make your business stronger
- Taking your company public
- Investing the funds you’ve raised well