Narayana Murthy has some advice for startup founders headed for IPO

After a year marked by new-age startup IPOs and a surge of investor enthusiasm, Infosys founder NR Narayana Murthy and former HDFC CEO Aditya Puri offered a sober message to entrepreneurs: build for the long term, focus on profit, and be fair.

Also read: ‘If i can survive dinner with my in-laws…’ : Watch Rishi Sunak's viral quip at AI Impact Summit 2026

In an interview with Moneycontrol, the two business leaders were asked whether an IPO should be seen as the end goal for founders. Puri said the opportunity ahead is expanding, particularly with the rise of artificial intelligence - but only for those who stay anchored to fundamentals.

"The opportunity is phenomenal. And it's only going to increase. Both Mr Murthy and I (have) said very clearly that you have to be clear on the basics. If you're going to set up something, set it up for the long run," the former banker said. That, he argued, begins with clarity of purpose and discipline in execution.

"Which means you have to understand what your purpose is, what your culture is, what your product fit is. Focus on profitability. You can't just say top line. Those days are gone. If you don't have a bottom line, it doesn't work," he added. 

The conversation then turned to how startups present their financial performance, particularly in an era where metrics beyond net profit are often highlighted. 

Puri rejected the reliance on adjusted numbers. "That doesn't help. Who are you fooling? You either have profit...If you have unit profit, you know how many units you need to sell to be profitable. So don't play around with that. Unit profitability leads you to break even and profit," he said. "If you say EBITDA, adjusted EBITDA - you are fooling yourself. At the end, the purpose of business is to have profit, create employment, grow, and be fair."

Murthy, too, offered his views on what the founders must do if they want sustained investor trust. "I would only add one thing, and that is they should all accept deferred gratification," he said. "That is, in the short term, we will make huge sacrifices. We will control our costs. We'll make the company profitable, and that will inevitably provide very big returns in the medium and long term."

Without that mindset, he warned, confidence from investors will erode. "Unless our entrepreneurs appreciate it, understand it, the investor confidence in them will not be very high."

When asked whether such restraint is realistic in an era of founder secondaries, Puri called it entirely pragmatic, but clarified what fairness means in practice. "It's totally pragmatic. When you listen to Murthy, look at the broader thing. He's not saying everybody has to be paid the same. What he's saying is you will be paid along with your qualification and market value. He's just saying whatever you do, do it fairly. If you have to pay more because that's what the market is demanding, that's fine. But don't gratify yourself and leave the rest swimming."

He concluded with a reminder that founders are not the sole creators of enterprise value. "Be fair so that they be with you. You can't take all the benefits, because you are not creating all of it."