I’d sell my house, wife’s jewellery to build this brand: Coffee Day’s VG Siddhartha

Two decades haven’t diluted the passion of Coffee Day’s proprietor, who believes it is important to be paranoid to survive in the business.

CCD owner VG Siddhartha has bought around 4 per cent stake in South India-based Lakshmi Vilas Bank for Rs 65 crore.
VG Siddhartha, proprietor of Coffee Day, which owns the cafe chain Cafe Coffee Day, opened his first retail store 19 years ago. But he still considers his company a startup, and he, too, is a part of a close-knit group of businessmen. A prominent member of this bunch is Sachin Bansal of Flipkart.

"I meet him often for coffee in their office," Siddhartha tells ETPanache in Mumbai as the company gears up to launch its IPO next week. "Except, he always gives me my own coffee." In this interview, Siddhartha speaks of the im portance of paranoia in keep ing complacency at bay, and how he is still passionate about the bean business.

Why do you still consider yourself a startup?

I won't take names, but there is one international brand which went public in 1993. Today it is a $85 billion company. We are only 1,550 stores and around 31,000 vending machines and 12,000 corporates. So there is a lot of potential to grow. Therefore, I always say that we are a startup.

You have said that you are intrigued by stories of startups in Menlo Park, California, and Silicon Valley. Which are these stories?

Eight years ago, I was having dinner with Sequoia venture capitalist Michael Moritz. He told me that in 1992, five people went to him and asked for $5 million to start a technology business. Everybody told him to not give money, IBM will lay it (the new company) away. That company became Cisco. In 1999, three people went to him, asking for $5 million. Again, everyone said do not give money, Microsoft will lay it away. Yet, he gave $5 million. That company became Google.

I use these stories as inspiration. If someone is big today, it doesn't mean there cannot be anyone bigger after 10 years. Similarly, even we don't need to be small after five years. Always dream big, use common sense, control costs and do your best.

When Starbucks was planning to come to India, did it give you sleepless nights?

If any big foreign brand comes to India, if you are not paranoid, that means either you are wrong or you are going to fail. You might have heard Andrew Grove's statement "Only the paranoid survive." I think that is a good thing that we get really paranoid. Now, very honestly, when people come and say that they will open 500-700 stores, we do get worried.

And they will do it, 5-10 years down the line, but then, we will also do it. With this population, one coffee brand is not enough for the world. I'd sell anything, including my house and my wife's jewellery, to build this brand.

Who are your role models in business?

I read a lot. Reading a biography or someone's story will definitely inspire you. I just finished Elon Musk's biography. When he came from South Africa to the US to work, his first job was cleaning a boiler at $18 an hour. And now, we know that man has created Tesla and SpaceX. But my first role models are (Azim) Premji and Nandan (Nilekani).

When you returned to Bengaluru from Mumbai (after a stint at JM Financial), you were not satisfied by the goals of your family for the coffee business. What made you realise the inadequacy of the goals?

There is a German coffee chain called Tchibo. They were my coffee buyers in 1994. I met the founder's grandson then, and he told me that his grandfather started this brand in Hamburg in a 10X10 store in 1948, only selling coffee powder. Their investment was some $100 then, but when I met him in 1994, the company was worth millions of dollars, grossing about 200,000 tonnes of coffee. That's when I realised we too could do more with our business.

What was your lowest point in this entrepreneurial journey?

2013. I am a born optimist. But in 2013, every time you put on the news, you saw some scam taking place. Foreign investors were going out. Pessimism got to me. Today, if you ask me can we have 10,000 stores in the next 10 years, I'll say yes. In 2013, I would have answered in the negative.

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