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One Lesson We Can Learn from the Businesses of Spiritual Gurus

Oct 13, 2016

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Sometime back I got talking to a business school professor. He told me he was researching the lessons that we could learn from spiritual gurus who had turned entrepreneurs and were doing very well. He was planning to write a case study on it.

As we talked the professor went on to explain lessons in branding, motivation, human resources management and finance, that could be learned from spiritual gurus turned entrepreneurs.

When it came to branding he felt that the gurus were personal brand ambassadors of their products. Hence, there was a thing or two, CEOs of other firms could learn from them, by trying to become personal brand ambassadors of their products. "They should wear their brand on their shirt sleeve," said the business school professor. This was something, along the lines of the late Steve Jobs at Apple.

When it came to human resources management, the professor thought that it was amazing how these gurus could command an army of volunteers to get a lot of work done. Again, something that CEOs could pick up from, he felt. He even planned to look at their finances to figure out on how the businesses were growing at such a fast rate.

And so, our conversation went for a while. Nevertheless, at the end of it, I think there was one very important point that the professor did not make. And I think that is the only point that matters because everything else follows from it.

What does a new entrepreneur need to start a business? For one, he needs an idea-an idea around which he can build his business. Then he needs some naive optimism that makes him believe that what he is about to start, will work in the days to come.

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As Robert H Frank writes in Success and Luck-Good Luck and the Myth of Meritocracy: "Naive optimism, within limits, can be adaptive. If people had realistic estimates of the magnitude of the hassles they'd face upon starting their own businesses, few would have the courage to go forward. But having launched such ventures, people typically do everything within their power to make them succeed. Most of those who make it may thus owe their good fortune in part to naive optimism."

Hence, if people had a clear idea of how difficult it is to start a new business or knew in advance the kind of problems they are likely to face, they wouldn't take the risk of starting a new business, in most cases, and stick to doing what they already where.

Other than an idea and naive optimism, an entrepreneur also needs capital i.e. some money with which he can get his business up and running. Further, as things progress he will need working capital. The working capital will help him get over a situation where his payments from his customers are due because he has to sell on credit, but he needs to make payments to his employees, his suppliers and so on.

So the question is where do the spiritual gurus turned entrepreneurs get the initial capital to start their businesses from? The capital comes from donations made by devotees. As Somasekhar Sundaresan wrote in a column in Business Standard: "The gurus deploy funds raised from followers who are either paying for services they consume or are simply donating their savings to men (or women) they love." The question is that do these devotees donate money, so that spiritual gurus could start businesses? Furthermore, the gurus are basically crowd-sourcing funds to get a business going. The law of the land on this is very clear. As Sundaresan writes: "The law on "collective investment schemes" (defined as any collection of funds to the extent of Rs 100 crore) would deter crowd-funding for a business idea that openly says it is a business seeking money."

Further, by using money donated to them, gurus have access to capital which they need not repay. At the same they don't need to pay any interest on it as well. Hence, this means that effectively their cost of capital is zero.

What this means is that a major reason for the success of spiritual gurus turned entrepreneurs is the fact that they have access to capital which they do not have to return. And they did not have to pay any interest on it.

This is the only lesson that can be drawn from the spiritual gurus turned entrepreneurs. Everything else they have excelled at and is being offered as things that we can learn from them, has been because of this one reason. If they did not have access to the capital that they did through their followers, they wouldn't have been able to start a new business in the first place.

It's a pity that CEOs can actually learn nothing from the success of spiritual gurus turned entrepreneurs. For CEOs to have access to capital on which they do not pay any interest, they would have turn into spiritual gurus for starters. And that is not going to happen anytime soon.

Vivek Kaul is the Editor of the Diary and The Vivek Kaul Letter. Vivek is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. The latest book in the trilogy Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System was published in March 2015. The books were bestsellers on Amazon. His writing has also appeared in The Times of India, The Hindu, The Hindu Business Line, Business World, Business Today, India Today, Business Standard, Forbes India, Deccan Chronicle, The Asian Age, Mutual Fund Insight, Wealth Insight, Swarajya, Bangalore Mirror among others.

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5 Responses to "One Lesson We Can Learn from the Businesses of Spiritual Gurus"

N.H.Pandurangi

Oct 20, 2016

Other reasons for success of spiritual Gurus can be free flow of business ideas and implimentation through devotees who may be Accountants,Advocates,Engineers etc.

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Jayanth GN

Oct 13, 2016

Good points .. however it is too simplified to say that access to zero interest capital is the cause of the success of these spiritual startups .. there is also a big mass of consumers who would lap up the products offered! Perhaps these were the initial "investors" themselves!

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Kamesh Chivukula

Oct 13, 2016

Great insight Vivek about spiritual gurus and their funding...in fact the finances are totally opaque so much so that one leading guru who has a successful franchise of stores peddling his products under a brand name does not accept anything other than cash...so the tax sleuths cannot put their fingers on the actual revenue or profits...this is the state of spirituality in this country....

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Ronald Harbin

Oct 13, 2016

There is a way an entrepreneur can raise capital they do not have to repay or pay interest on, and its to start (or buy) an insurance co. Insurance premiums are paid for a service and provide capital to invest, the proceeds of which can be used for whatever the business needs, yet the premiums do not have to be repaid. Of course claims of insured customers have to be paid, so it is necessary to have actuaries who do their job well, so the premiums over time far exceed the cost of paying claims. This strategy was pioneered by Warren Buffet, whose company owns some of the best managed insurance companies in the industry.

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shubhmets

Oct 13, 2016

the conclusion that : "It's a pity that CEOs can actually learn nothing from the success of spiritual gurus turned entrepreneurs"

may not be entirely correct.

Spiritual Guru lends his name / charisma / talent to collect or convince followers to donate without any material expectation.

There is cost to it.

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