What do Ashish Khazanchi, Manish Bhatt and Emmanuel Upputuru have in common, besides their creative capabilities? Well, when they decided to quit their respective cushy network agency jobs and launch their own creative shops, they found financial solace in the same person. A crisply dressed, middle-aged gentleman with salt-and-pepper hair, a firm handshake and a resounding laugh: Vivek Suchanti, chairman and managing director, Concept Communication.
Since the investments are made through Concept Communication, all these shops, the staff strength of which ranges from a dozen to 70, are subsidiaries of the mother company. The finance function of all the aforementioned agencies is centralised and managed through Concept Communication.
Suchanti, who famously takes no less than majority stake while investing, took to the intangible when quizzed on the same, "Let's leave it at this - I take significant stake... so that my voice is heard." And his voice is heard all right.
Interestingly, Suchanti began investing in creative start-ups just four years back and it began with Eleven Brandworks. "I met with Prateek (Bhardwaj, co-founder of the agency and former McCann hand) after he had decided to start his own shop and we thought, 'Let's do it'," he shares, likening his first investment to "an experiment."
Soon, word spread and other creative entrepreneurs began approaching. Within a matter of just four years, Suchanti has invested in six agencies. It started with 'Let's do it' and then quickly went from 'Let's do one more' to 'Why shouldn't we do one more?' to 'Let's do one at least every year'. Over a short duration, it became a model, one with intriguing roots.
"When we started doing this it was extremely need-based. It wasn't part of a design. There was no overall game plan. It filled a need gap at the Concept Group level. I started investing in creative startups primarily because I could not get creative talent on board at Concept Communication," he says. Given Concept's skew towards public sector clients and IPO communication, it has always been extremely difficult to attract talent from multinational agencies. "Why would someone leave a networked agency like O&M and join an agency like Concept?" he asks with candour.
So, from the perspective of Concept Communication, picking up stake in creative-strong hot-shops was the agency's calling for growth. Earlier, even if there was a creative business that Suchanti managed to get his hands on, he didn't have the creative talent within Concept to handle it. "Today, I do," he says with confidence, "Whether it is housed in Concept or whether it is housed in a subsidiary... ultimately, it's within the fold".
This makes it easier to understand why, when Suchanti looks in the mirror, he sees a traditional, 'old hand' advertising guy, instead of an aggressive financial investor. "I am not a private equity guy or some sort of finance wizard," he shrugs. Come to think of it, he is surprisingly genial for someone who's called the 'Moolah Man' of the Indian ad-media industry.
Vivek Suchanti did part of his schooling in Kolkata and most of it in Mumbai, where he attended GD Somani School and graduated in commerce from Sydenham College. He started assisting his father, Nirmal Suchanti, at work, during his college days. Nirmal, along with his two brothers ran Pressman Advertising in Kolkata, before moving to Mumbai in 1978. Founded in the 1960s, the agency specialised in handling communication for IPOs. Its clients included names like Reliance and Tata.
Then, in 1988, 10 years after he came to Mumbai, Nirmal bought Concept Communication, from Mahesh and Shobha Doctor. The Doctors started Concept in the 1960s. The father-son duo then started steering Concept in the same direction as Pressman Advertising and, by 1991, the agency was the largest one in its field.
Since then, because of the cyclical nature of the IPO communication industry, the agency went through its share of ups and downs. From 1990 through 1995, Concept did extremely well. Then there was a low phase and things picked up again in 2003. Then again there was a lull around 2009. Now, it's on its way up again. Key accounts that Concept currently handles include State Bank of India, MTDC, NABARD and Delhi Government, among others.
Besides advertising, the other pillars of the Concept Group include Concept PR and an in-house media arm headed by Manoj Malkani. Suchanti's mantra regarding expansion of his PR agency is 'Buy (based on specialty), then consolidate.'
This brings us to Suchanti's level of involvement in his agencies. Well, it varies depending on the life stage of the agency. "Today my involvement in Scarecrow would be negligible. In the initial days, naturally it was higher. Ultimately, it all depends on how much involvement my partners need," he explains. Suchanti devotes a day a month to each of his agencies, during which time he looks into "strategy, finance and problem solving."
"They don't come to me for every decision, but, wherever there is a matter of finance, structuring or growth plans, I am involved," he says, before answering in the affirmative when asked whether he aids his partners get a foot in the door when it comes to pitches. "Yes, but only when I'm asked to," he smiles, "It happens when I have a relationship at the client level. That's when I step in. Otherwise, I'm not adding any value. They are all better advertising people than me."
Sure, he's no Piyush Pandey and can't make accounts move by swinging by during a pitch, but that doesn't stop his partners from requesting his presence at client meetings. "There is a huge concern on part of clients regarding the stability of a new agency. So yes, in the initial days of some of my agencies, I may have been a part of pitches, but just as a face; to give a sense of 'Yeh peechey baitha hai, chinta matt karo,'" he says. In jest, his friend and founder of production house Old School Films, Shiven Surendranath (someone who influenced his decision to start investing in the first place), calls him an "insurance policy".
Voice of reason
As the South Asia head of a creative network says, "Creative entrepreneurs with poached clients in their kitty don't need financial backing; they're good to go from Day One. Players like Vivek (Suchanti) come into the picture when the founders don't have that kind of client relationship to ride on and need to start pitching right from the outset." Every system has its share of skeptics. The founder of a Mumbai-based creative startup frowns, "You don't need much raw material to start a creative agency. Only those with lack of belief in themselves and a poor risk appetite go to investors."
Does Suchanti give his agencies advice regarding fees? Well, he is pretty much the voice of reason. "Most of the time I tell them 'Take what they are paying you and be happy!'" he laughs, "Every creative guy puts his own value at a high pedestal. Negotiating is fine, but it's important to close the deal." His rationale for such advice is simple: To have a three-year plan, one has to first ensure one exists for three months! He calls this 'financial engineering'. "I try to get them to look at numbers and think with those numbers. I push them to take calculated risks," he adds, insisting he practices what he preaches. "I am not a cowboy who goes out and invests in everything. Calculations keep taking place in my head," he says.
Speaking of risk, how does someone like Suchanti - who has at least two to three proposals from start-ups lying on his desk at any given point in time - decide which creative entrepreneurs to partner and which to reject? After all, investing in an agency is entirely about people; it is not like putting up a factory that can be sold at a later date. Counter-intuitively, neither a personal relationship with the founder nor work-related credentials are on Suchanti's checklist. Referring to the current bunch of entrepreneurs he supports, he says, "You won't believe this but I have not known any of them prior to starting ventures with them." He judges by reputation. Integrity and ethics are the two things he looks for. "I am a very simple man. I believe good human beings will never cheat you. They have to be good human beings before being great talent," he declares.
Interestingly though, the age of the entrepreneurs plays a role in his decision. They need to be mature enough to have gone through certain life stages but at least a decade away from hanging up their boots. "Most of our partners are between 40-45 years," he says, giving us reason to call this ideal age bracket the 'Goldilocks Zone' - it has to be 'just right'.
However, once he has invested in a communications firm, he has just one criterion to stay invested: growth. And he is mindful of the risk his partners are taking too. "I am only risking my money but they are risking their entire careers. They leave their jobs and start shop. It is not easy to get back into the game," he says empathically.
When Suchanti invests in an agency what worries him the most? Playing financier is a lot like sitting in the backseat of a car; one can't do much even if it drives off a cliff. "What worries me most is - what will happen if the driver and navigator fight!" he says. The navigator, in his extension to the metaphor, is the other co-founder. "Since I'm in the backseat, I will always get along with everyone but it's the partners I worry about," he admits.
Selling his stake and monetising is not an agenda today but does he have an exit plan in place? "I think it will be difficult for somebody to look at all the multiple pieces and say 'I want it all'. Some might be interested in the media part of the business, some in the creative part and others in the PR part," he says about Concept's arms. Does that leave acquisition by an MNC network the most likely option before Suchanti walks into the sunset? "Don't assume that we will not get a network agency on board," he says.
Well, here's hoping his exit will be accompanied by the entry of others like him. India's angel investment system, and not just in the communications industry, is a poorly developed one. There exist people who want to invest and those in need of funding. Often, they just don't have a way of finding each other. Hopefully, Suchanti's success story will encourage more people to back new ventures, at least in the communications space.
A Note From the Editor
We definitely owe Vivek Suchanti one. At afaqs! we were looking for a light, happy cover story to start the new year with and our collective gaze fell on this low-profile owner of Concept Communications. In the past four years, his company has taken a majority stake in half a dozen ad agencies, most of them creative outfits. It is rare to see such systematic investment in the advertising start-up space.
In the larger scheme of things, creative start-ups require little funding. Most of it is in terms of working capital. The main items of expense are salaries, rent and overheads. Funding of Rs. 1-2 crore is generally adequate since clients typically pay a monthly fee.
Agency start-ups get funded in one of three ways. One, the entrepreneurs have supportive friends and family. Two, a local associate or businessman takes a stake. Three, a creative hotshot quits his high-paying job at an agency and starts off on his own only when he has an account or two under his belt to ensure that his basic expenses will be met.
The third has traditionally been the most common way of getting off the ground. That is why the traditionalists are critical of creative teams that need an outside investor such as Suchanti.
While start-ups in the advertising business are common because of the low barriers to entry, most of them remain small. Few get past the benchmark of Rs. 5 crore in annual turnover and most are much smaller. Will the ability to access funds help some of Suchanti's investments reach size? Ad professionals are skeptical because ultimately it comes down to the talent and hunger of the entrepreneur. In its absence, money is no substitute. Still, it will be interesting to see the effect of financial discipline on these firms.
Already Suchanti has developed a reputation as a good guy with cash jingling in his pocket. So, would-be entrepreneurs know at least one door they should knock on. If Suchanti's success record looks good, it may encourage other high-net-worth individuals in advertising and allied businesses to put their money where the entrepreneur's mouth is.