Why does Indigo Airlines make a 550 Crores Net Profit this year and Kingfisher expect to lose over 1000 crores in the same year?
What creates the GAP of 1500 CRORES (300 million US$)? between 2 companies when they both fly airplanes in India and in the same financial year?
Is it the difference between running low cost, low budget airlines vs. full service luxury services with everything loaded? Or for the many zillions of reasons that immediately start coming to your mind?
NOPE.
Funnily, this is not about the the BUSINESS MODEL of Airlines.
I believe its the fundamental difference on WHO PEOPLE ARE when they begin to build something
Royal Gardener John Rose and King Charles II – Hendrick Danckerts
Fundamentally, I believe that:
– Kings (Vijay Mallya) operate kingdoms – a la Business empires. They have many companies to take care of, multiple business interests and varied profit and loss centers. A business here, a venture there is of little significance.
– Gardeners (Rahul Bhatia of Indigo) have ONE Garden to manage. That’s their life for them. Its all or nothing. Their entire life and its work is concentrated on that one business or garden.
– Kings have Kings Men (managers) to do things. And we all know the quality of ownership that arises when you give external people control. (no matter how senior and responsible and fundamentally sound they may be). I have met several managers and senior resources of Kingfisher and I always shuddered to think of what they cost vs their responsibilities and authority to make decisions. And remember they are very expensive because they are replicating the King who is busy elsewhere.
– Gardeners I am sure you realize pull out the weeds themselves and water their own plants. They are one man armies because they have to START from scratch. They cannot employ fellow gardeners to work in a barren land.
– Kings are LAVISH. Look at the way Kingfisher built its brand. The pens, the liveries, the service was ROYAL. Kings know nothing less – and why should they? Kings rarely know what anything COSTS…
– Gardeners are MISERLY. They live on meagre’ness’. They grow things with their hands and with whispers and love from their hearts. They UNDERSTAND THAT MORE IS BAD – coz if you water a plant more than it deserves – it dies.
– Kings have treasuries that fund them. They don’t have to bother about anything but taxing people. In the case of Vijay Mallya – his other businesses are nothing but overflowing treasuries. So all it takes is dipping your hands into a chest of Gold and throwing the coins into buying what you want.
– Gardeners live on their PRODUCE. Imagine a Gardener getting compensated for a dead garden. Gardeners like Rahul Bhatia have to sow flowers to sell and then feed themselves.
The comparisons can go on and on.
I think I have made my point.
By happy to start as a Gardener. Coz that’s a blessing in disguise.
*****
Interesting related read – I seem to be falling in love with Indigo Airlines
Disclosure – I am fond of Vijay Mallya. He has been special for me coz
his Signature Brand featured me as a Brand Ambassador in 2003. I owe him.
amiteshanand
Great Analogy.. Liked It.. And, so King (Vijay Mallya) decided to move out of “Low-Cost” model and shut down Kingfisher Red and will have ONE LESS garden to manage 🙂
Vijay Shetty
Most entrepreneurs (established and aspiring) would agree and some might not…
Wonderful analysis Aloke…!!!
Amit Aggarwal
In short,Alok is a King….His co-founder manages his gaming company and King Alok spends most of his time on robinhoods and facebook …But rest of us are gardeners manage our small online and offline businesses and once in a while drop into this page to admire what King Alok is upto.Am i right?
kinnari thacker dave
Hey…after a long time i have a dis-connect. Mukesh Ambani has a lot of businesses to look at [though he started as a gardener] & same with Tata. Seems it has more do with culture, what is done at a drawing board…the list is long. Both the airlines have marginal cost difference [leaving out the lease that Kingfisher pays to Indian Airlines to share its terminal]. Guess the bottom line is more do with the marketing spends.
Also, “Indians are price sensitive” … had the price been marginally higher then low cost carriers, it would have worked. But a substantial difference is too much he was asking for a two hour flight anywhere in the country.
Alok Rodinhood Kejriwal
how i wish you were right 🙂
spend a day at 2win and see who does what :-)))
Alok Rodinhood Kejriwal
Kinnari – Look at Reliance Fresh – its in no way competitive with anything out there.
Anil Ambani started every conceivable business in Media – including Gaming – see where it went.
Your own founder team – GK etc were acquired by Norwest and see where Mobile2win went…
kinnari thacker dave
With Reliance i vouch for Mukesh & not the younger one….and to write off reliance’s retail venture is a little to early. Both of us know Mobile2win is a long un-written story 🙂 We can discuss this over coffee sometime 😉 [though i had spent less then 6 months there…i could spot the cracks too early]
Prashant Choudhari
Alok, while I appreciate your perspective, I guess the point of external managers vis-a-vis promoters is incorrect. Look around and you would see 100’s of examples where managers have created empires out of nothing while promoters have taken a back seat.
Srikanth
Great analogy, let’s take it a step further:
But there’s still hope – you can write reams and reams about the Tatas as counterpoint.