Paige Parker recently interviewed Anil Thadani, the chairman and founder of Symphony Asia, on her “Pass the Power” podcast. He talked about his career path, which included founding one of Asia’s first private equity firms as well as co-founding the Aman Resorts. Some notes are below (these are paraphrased and for personal reference only, any mistakes in transcription are my own).

His early years – he grew up in Delhi, but went to boarding school at the age of 10. His father was an economist, assumed he would study economics or business. Applied to the IITs just to prove his father wrong. Applied to IIT Delhi and IIT Madras, ended up getting into both. His father advised him to go to the south because the north and south of India are almost like two different countries, so spending a few years in the south would allow him to understand the entire country and also prepare him if he later planned to go abroad. Very useful advice and served him in good stead.

Going abroad – in the 1970s, the #1 school in chemical engineering was UW-Madison. So he applied there and got in. Slightly overdid the engineering education, but it was the only way you could leave India. The whole idea was you would become an engineer and come back, so the talent pool would grow. After finishing his degree, the only job offer he had was as a research engineer with Standard Oil. After a couple of years as an engineer, realized he didn’t really like the work and quit. Shortly after, he ran into Richard Holton who was the dean of the Berkeley business school, ended up convincing him to do an MBA. The point is nothing in his life was really planned – he never wanted to be an engineer, couldn’t get out of India unless he did a masters, had no plan of doing an MBA etc. But he thinks you can never not learn from an education. An engineering education taught him a certain discipline, how to deal with data etc. 

Acquiring the Pizza Hut franchise – he first met Bill Heinecke, the founder of the Minor Group, in the early 1980s. He had obtained the franchise for Thailand, which they invested in. As part of that, they also started Pizza Hut in China. Served the first pizza in China in the mid-1980s. Didn’t work out very well and sold that. Also bought the franchise for Indonesia in early 1997. Shortly after, the Rupiah went from 2000 to 16000 against the dollar. 55 outlets, 5 got burned down, ended up with 50. Held on and in the ensuing 2-3 years, the business grew at 77% annually. They were finally able to sell it for just under US$50m, ~3x what they paid. The advantage was they didn’t buy the business with any leverage, they had paid all cash for it. Had also just raised the fund in 1995, so they 8 years to go. If you don’t believe in what you are doing, you shouldn’t be doing it. Whether you will be successful or not is a different matter and depends also on your ability to take risks, to treat failure more as an educational experience etc. If you decide to do something though, it’s all about execution. Most of the time, if you have patience and time, inflation covers up your mistakes. So patience is a virtue.

Building an effective team in private equity – you need a mix of risk takers (to go out there and find, generate ideas) and somebody to hold them back, make sure the downside is covered etc. Risk taking is an inherent part of doing business, but you never want to bet the farm. Take as much risk as you can knowing, if things go wrong, you will still live to fight another day. Betting the farm also means different things in your 20s and 30s vs. when you are 70. Your risk profile changes over time. When you are young, you also have plenty of time to make it up.

Investing in Asia – the region went through a period of colonization, which held back a lot of countries. In the 1980s, by the time he got into business, it was part of history. It was very clear there was one inescapable long term trend in Asia, which was rising disposable incomes. Combined with this inherent cultural emphasis on education, making sure your children did better than you did, strong work ethic etc. Made for an incredible investing environment. That was one of the reasons he eventually gave up his banking job to focus on investing. Travelling in his banking job gave him a great sense of what was going on in the region. Private equity didn’t exist as an industry in Asia in those days. He just set up a company and started to invest. One of the early deals they did turned out nicely, following which Merrill Lynch (who helped them on the deal) approached him and asked if he would be interested in managing a fund. With the benefit of hindsight, he’s not sure that was the best decision. They all did very well but if they had remained true to the original business they had started, growth would have been slower, but they may have been more like the Berkshire Hathaway of Asia. But they gave that up for the greed of management fees and carry that you get from a fund structure. In 2004, he and his team stopped doing funds and went back to the original model.

His outlook for leisure and hospitality – he thinks people will start taking vacations immediately when they can. So much pent-up demand. But business travel will probably take a permanent hit, although how much he can’t say. Looking at himself as a typical business traveler – he would take say 10 business trips to Bangkok a year. Today, he won’t do most of those trips. He will only go for an extended period of time or if he has a series of meetings. So the same airline selling him 10 tickets a year is now maybe selling him 2-3 tickets a year.

Starting the Aman Resorts – co-founded with his friend Adrian Zecha. They were in Phuket together and, after lunch, went for a walk on the beach and hiked up the side of a coconut plantation. When they climbed up and stood there, they were overcome with the same sense of well being, thought what a great spot. Adrian suggested they buy some land and build a couple of villas for themselves. But they realized if they just built the villas, who would take care of it. So Adrian said why don’t they build a small hotel, not to be in the hotel business, but then the hotel staff could also take care of the villas. That’s how it started – there was never any business plan for Aman. In 30 years, they never spent a dollar on advertising. All word of mouth and editorial publicity. Broke a lot of the rules. Never hired a manager from a hotel background. Managers were hired for their personality. Only guidance to them was treat the property like your home and that the people coming here are guests at your home. No rules for guests. They never called it a hotel business, it was a lifestyle business. People who came didn’t say let’s go to Phuket and then compare 5 hotels to decide where to stay, they said let’s go to Amanpuri – that was the difference. Because of Aman’s success, a lot of people have emulated the model. There are lots of good individual hotels, but not as a collection under one brand. Also difficult for the large hotel companies to do this successfully because the culture is not there. They have never had a standard operating manual. 

New frontiers – Vietnam looks interesting. They are also active again in India after 15 years. Sold most of their portfolio in 2004, which in hindsight turned out to be the right thing to do. Looking at traditional businesses that are adopting new technologies to do things better. Done 2-3 interesting investments in this area. 1 is a jewelry company, using 3D printing for the manufacturing process, online sales, just in time inventory etc. Another company makes feminine hygiene products. If he was 30 years old today, he would still be here in Asia and probably based in Singapore. In the 1980s, he would say HK. Today, Singapore has a lot going for it.