(UPDATED 2018) Good Investments: Vinod Gupta Proves Sustainable Strategies are Working
We all wish investing were as easy as placing a sum of money into the hands of an agency, and sitting back as they turn around that investment quickly, and for a sizeable profit. In essence, novice investors hope to receive the benefits of investing their hard earned money, entrusting the people responsible for their hopeful growth. As with all matters of reward, there is undoubtedly risk associated from all aspects.
Though most people believe that investing may be most volatile for investors, the sentiment reigns even more true for buyout firms, and banks investing in assets to accumulate profits. While the personal investor may risk losing portions of personally gained funds, banks operate on the same principle, only with huge amounts of funds. In the case of buyout firms, the risk is perhaps steepest, as they aim to turn a profit on a project that has been deemed unprofitable. Thus, with these risks at the forefront, it is safe to say that professionals involved within this sector must not only rely on their instincts, but also be exceptionally well educated, cunning, and often forward-thinking in high-pressure situations.
It is an understatement to say that the US market is changing. Within the last few decades, our economy has bore witness to complete collapse, various bubbles bursting, slow and painful rebuilding periods, burgeoning debts never seen before, and general corporate change. However, the humming social climate is also changing continuously, affecting ways in which individuals think about investing their money, the security of investments, and the increasing need for alternative methods of generating valid income.
What does this growing change in thought mean for the realm of investing? It means that companies founded on good, logical, and long-term values that support a higher standard of living are becoming an investor’s dream. Additionally, it also means that potential investors are looking to the individuals who run their investment companies as inspiration, and for confidence in moving forward with their investments. In essence, more and more people are looking to invest their money with companies who share their core values, beliefs, and spirit of helping others.
Doing better things, and engaging in positive practices, especially for the community, is proving to be the ace in the hole for private equity firms across the globe. While cunning business practices, and “the bottom line” continue to be important aspects of the cutthroat business world, philosophical concerns are now deemed equally as important. Not only is the amount of profit generated by a company vastly important, but the manner in which that income was generated is just as crucial. The common good still exists, even in the world of investing, and people are now fighting for it more than ever. As a result, big businesses, and the investment markets are taking notice.
Vinod Gupta, the current manager at Everest Group, had a vision from a very young age. Not only did he strive to be personally successful, but he aimed to parlay this success into the communal good for his family, neighborhood, and community. Investing is not always about providing the most money to the most profitable companies, or those already well in existence. A large portion of investing lies in determining the most effective long-term impacts that a contribution will make.
Vinod Gupta believed in this doctrine, and worked very hard for many years. The fruit of this labor? A single $100 investment that turned into a $680M company! Not only was this financial success huge personally, but combined with his generosity, Vinod Gupta has provided thousands of others with educational, business, and financial opportunities that they would not have otherwise. He remains a fantastic example of an entrepreneur who has successfully created a vastly profitable company, but who has understood the importance of giving back to the community on a personal, and professional scale.
Why Invest in Companies for the Common Good?
More and more people are paying attention to where their food comes from, how the animals are raised before they are butchered, what potentially harmful additives are placed in food, environmental concerns and habits, how employees are treated, how they help the community, and a range of other factors. This general enlightenment of the masses has resulted in businesses needing to take responsibility for their practices, and engage in a more communal and holistic practice. Whereas businessmen of years prior have gotten away with gluttonous greed, seedy business practices, and even seedier interpersonal relationships, the successful businessmen of late are much more sensitive to the ways in which their behavior, as well as the direction of their company, directly impacts their success, as well as the general success of the company.
As more people drive their decisions based on these existential factors, companies are aware of their own need to follow suit. Business owners are also recognizing the damaging effects of not maintaining involvement within their local communities, and partaking in helping to care for the communities that allow them to thrive. As disgraced CEO’s offer cold apologies on the air, the general public vies to do away with their outdated practices, and the stronghold that corporate greed has enjoyed on the masses for so many years. Companies that are found to partake in unsavory business practices, or are focusing solely on monetary gain, are increasingly being shunned by consumers.
If this trend continues, the companies that do the most for everyone are going to be the biggest, and most profitable, even though larger portions of their profits will involve bettering their local communities. While it may seem counterintuitive to spend additional funds on areas that are not directly impacted by the business, or are not used by a business, this notion of a “conscious business” proves to not only be personally gratifying, but also lucrative, and encouraging long-term success.
Companies Changing the Entire Investment Market
Blackstone Group LP– This company has a team dedicated to providing their portfolio companies with the ability to save energy wherever they can. The team is led by a sustainability officer, who works with huge companies, like Hilton Worldwide Withholdings Inc. The ultimate goal for this officer is to effectively educate portfolio companies about the impact of energy usage, saving money, and leaving less of a carbon footprint simply by controlling room temperatures, turning off lights, and reducing water usage with modern plumbing, and green products. Blackstone has reported saving over 15% on energy costs within their entire portfolio. Annually, this amounts to a tremendous amount of savings.
Environmental Defense Fund– This nonprofit is working day and night with portfolio companies to reduce their impact on the environment. Their focus is on operational changes, like paper usage, waste, and energy usage.
Cinven Ltd.– This company has a system it has implemented that requires the businesses that the parent company controls to create reports every quarter about employees’ statuses, like work-related injuries or illnesses, diversity, inclusion, and time off. They do this to ensure that every employee that is directly or indirectly employed by Cinven Ltd. is being treated with respect, dignity, and being paid a fair wage.
The above are just a few of the companies that are adapting to the evolving business market that aims to create positive community benefits.
Private equity funds are a seriously complicated entity that usually requires an advanced degree to understand. To make things simple, however, these buyout companies, and private equity firms, are always looking for long-term investment. Public companies are ones featured heavily in the press, with headlines like “CEO gives himself a $15M bonus while laying off 2,000 employees”. Those companies are the ones who scramble to find any way, no matter who it hurts, to provide profits every quarter. For long-term investors, the short-term problems do not occur, so the long-term solutions that help, rather than hurt, are finding more solid ground.
In a 10-year fund cycle, the physical money saved from having employees switch off lights, the return on the investment on energy usage from buying modernized appliances throughout a hotel chain, or seeing a government tax break because you decided to go green with your waste, is much easier to see, as opposed to a public company that reports every quarter. The future is where investors are looking. The future is not now, it is not three months from now, not in business terms. Nothing happens in three months in business. The future is still far away, but this idea is circulating wildly. As a result of these changing spheres of thought, the future looks bright, more innovative, and impactful, especially when considering long-term success.
How Vinod Gupta Champions Rags to Riches and Smart Investing
Vinod Gupta is a wildly successful businessman and entrepreneur, who was born on America’s Independence Day in 1946 near New Delhi, India. He grew up in a tiny village that did not have modern amenities, like running water, electricity, TV, modern infrastructure, or transportation. Gupta got through high school in general education within his village, but he then ventured out with the help of his family, and attended college. After enjoying his studies extensively, Gupta received a B.Tech. degree from I.I.T., Kharagpur, India.
The story became a tale of the American Dream when Vinod received a graduate assistantship, along with his admission to the University of Nebraska at Lincoln. He went on to receive an engineering degree, and a Master’s Degree in Business Administration. Upon graduating with this advanced degree, he entered the workforce within the scope of Marketing Research Analysis for a well-established mobile home company. Upon the request of his boss, he was asked to compile an extensive list of mobile home dealers within the nation. Recognizing that this list was non-existent, he set forth to compile the list himself, essentially creating the first effectively categorized database.
With this project completed, he discovered a niche that had no competition. Recognizing the need for this product, he founded American Business Lists, which created lists compiled from databases, and the Yellow Pages, all around the United States. This was well before the internet, in 1972, and served as the first means of specialized data systems. From inception, his initial list received great acumen, and he immediately took pre-orders from various mobile home vendors across the nation. Essentially, this yielded in a profitable company from its’ inception, and encouraged Gupta to forge ahead with his plans of entrepreneurship.
Vinod Gupta invested every cent back into his own business. He adapted with the changing times, added industries to his list services, and was completely engaged within the community in which he operated. He employed various people from all backgrounds, and scaled his company accordingly, recognizing the need to maintain an appropriate work force. In 2002, Vinod Gupta’s company, InfoUSA (formerly American Business Information), made $302 million in sales, all from that fateful initial $100 investment back in 1972. The company was sold several years later for $680 million.
The key facts, and ideas, to take away from Mr. Gupta’s life are that he invested in a company that was essentially providing needed services for other companies. The sheer existence of his product aided other already functioning companies to pursue their goals in a more streamlined, effective, and competitive manner. During his life, he has invested millions into his home village in India, and at the University of Nebraska. He invested back into education. Vinod Gupta is a genuine person, with a good heart. He worked hard and invested into himself, his business, and the people that worked with him to grow his business.
Update: Vinod Gupta’s Extensive Charitable Contributions
While the list of Mr. Gupta’s many contributions remains lengthy, his profound interest in propelling the field of women’s education maintains top priority. Throughout his early life, Vinod’s father instilled the importance of education within the young man, and the ways in which a good education can open doors for a fruitful future. Recognizing these words as being true, Gupta’s mission has been to provide the same exceptional educational opportunities to disenfranchised, and less fortunate individuals. Growing up in India, he has also bore witness to the less-than-stellar opportunities for young women to receive education, and the limited importance, attention, and resources that were available for young women, who were historically not provided with opportunities to foster careers.
Thus, Gupta’s lifelong mission to bridge the gap for underserved communities of individuals began with the young ladies of his former village in India, where he has provided funds to safely and effectively transport girls to school. This act of aide has allowed girls to physically arrive at school each day, and has made education accessible, feasible, and more importantly, a priority for the young ladies within the village, who previously may have had to make large sacrifices in order to physically be able to get to the village’s girls school.
In addition to providing transportation for these girls, Gupta’s contributions have also allowed for the building of the school, textbooks, and all objects utilized in order to allow the students to thrive. In India, where gender inequality is prevalent within the workforce, this contribution is a large tilt in modernity, allowing girls of a very young age to become excited about the prospect of learning, and encouraging girls to yearn to complete higher education.
In that realm, Gupta’s contribution to women’s education spans the realm of higher education. Wanting to give back to the community of his hometown of Rampur Maniharan, Gupta donated $1 million to the development of the Ram Rati Gupta Polytechnic. Established in 2000, the women’s polytechnic school has enabled many women to earn postgraduate degrees in as little as 2 years, allowing women to enter the workforce in a much larger capacity. The creation of a technology driven institution focused on driving the success of independent women in India, the Polytechnic has offered areas of study within the fields of textile design, computer applications, information technology, and web design.
These impressive contributions have undoubtedly changed the lives of thousands of young women throughout India. However, the biggest impact is the cultural shift that has been started as a result of these contributions to female education and empowerment. Perhaps even more powerful than an army of well-educated female professionals in a country known for gender disparity, is the promise of a different future for the daughters, granddaughters, and future generations of trailblazers. In that regard, Gupta’s contributions are truly priceless, and affect individuals for all future generations.
This forward-thinking nature is not only profound throughout his contributions to others, but is also parlayed in his daily business practices. The ability to recognize long-term effects of decisions, much like in his philanthropic endeavors, is an essential part of the success of Everest Group. By anticipating the changing social climate, Gupta is able to successfully engage clients in conscious business practices, and to act as an example for his clients, potential investors, and those watching his continued rise.