ENTR 510 Week 5 Midterm Paper Case Study Ajay Bam
Download For your Midterm paper, you will review the case of Ajay Bam. This case contains a manageable amount of material but presents the opportunity to consolidate the material covered to date in the course. Entrepreneurial Attributes: Consider Ajay’s background and experience. Create a comprehensive list of attributes that you think Ajay possesses. Which three are the most important; why do you think so? How did these attributes help him succeed? Business Plan Outline: The case includes an executive summary; using the model on page 258, create a brief 10slide PowerPoint presentation about his new venture. Bootstrapping: Why did Ajay pursue the bootstrapping method of getting his company off the ground; please describe at least six examples of his efforts in terms of financing, services, and people. Opportunity and Market Assessment: How did Ajay and Walter find this opportunity? How big is the market, do consumers and merchants have a need for the product, what does Ajay have to do to answer these questions? (Instructor Note: Ajay needs to gather initial sector market data and customer feedback to gauge attractiveness.) Funding and Team: Would you invest? What does Ajay have to do to get funding sources interested? Paper Length: Four to five pages—PowerPoint—Max 10 slides including cover.
CASE: Ajay Bam
With the quiet click of the meeting room door, Ajay Bam was left with one fewer person on his team. It was the spring of 2002, and Walter Stock—Ajay’s friend and partner—had finally succumbed to the pressures of time and money. Troy Chen, the other founding partner, had exited two months earlier.
Ajay dialed new-venture attorney John Hession to vent his frustrations. Maybe at 27 he was just too young and inexperienced, right? Of course, he had understood that it was not going to be easy to start up a wireless payment and loyalty solution in the United States, but did it have to be this draining, this fraught with rejection and naysayers? Sure, he had assembled a top-flight board of seasoned advisors, but what good was that if he was unable to keep his team together or get any traction with investors? Broke and exhausted, Ajay confessed that, even though he had worked for two years to earn an MBA degree in Entrepreneurship, he was giving a lot of thought to a six-figure job that was still waiting for him with Lehman Brothers in New York.
As Ajay clicked off his cell phone, he was suddenly struck by the fact that the attorney had said almost nothing. He swallowed hard as he realized why; he had been talking like a quitter—maybe not worth the free advice and networking support that the skilled lawyer had been providing for months. And what about all the other professionals who had given Ajay so much of their time and encouragement over the past two years—including a major venturecapital investor that he now considered his mentor? Was he willing to make a similar call to them as well? This is just
too hard, too lean.
Ajay rubbed his tired eyes and looked out at the cold April rain. What had he missed? What else could he try? Should he keep at it, or cut his losses now and attempt something else at a later time after he had rebuilt his personal savings a bit?
In addition to his precarious financial situation and his state of exhaustion, Ajay was certain of at least one other thing: if he didn’t start up a mobile payments and loyalty enterprise soon, someone else would.
Ajay Bam
Ajay Bam grew up in Pune, India, just north of Bombay. His father, a textile manufacturer, and his mother, a greenhouse business proprietor, had raised their children to be independent, critical thinkers. Looking back, Ajay said that, although he wasn’t always in agreement with their choices, he could see they had been pushing him in the right direction:
I am so grateful to my parents. I remember when I went to prep school, I hated it… I didn’t realize at the time what my parents were doing, but they did the best thing. I have seen a lot of amazing things, and I am cosmopolitan because I am very world traveled. It puts a lot of things in perspective…. You know who you are, where you have come from, and what you have.
By his early twenties, Ajay had earned an undergraduate degree in computer engineering and a master’s degree in software engineering. He then landed a job as a technology analyst for Lehman Brothers in the World Trade Center complex in New York City. He was young, single, successful, and growing restless: The pay was great. Everything was fantastic, but it gets to a point where the money doesn’t matter anymore. You know you are good and you know you are going to make a good living…. In the back of my mind I always knew I wanted to go for my MBA… so after getting two years of full-time experience I decided to apply to a number of schools…. Babson, being number one in Entrepreneurship, was my first choice.
Babson College
Ajay left Wall Street and in the fall of 1999 began a two-year program at Babson College. He immediately applied for and was accepted into a new offering at the school: the Entrepreneurship Intensity Track (EIT) program. EIT was “a compressed and highly focused entrepreneurial curriculum designed to provide students with the necessary skills to take a business idea through the critical stages of exploration, investigation, and refinement.” Ajay was thrilled with the opportunity to meet the many successful entrepreneurs who were participating in the program as well as to work with a diverse, talented group of instructors and students. He recalled that the learning experience was quite different from his more bookish engineering studies:
To me getting an MBA was 50% networking, 20% classes, and 30% doing what I wanted to do. It was not about what your professors did for you; it was about your level of participation.
Following his second semester, Ajay signed up for a four-month international management internship. Eager to travel again and test his proficiency with at least one of several languages he had learned academically, Ajay chose a
startup in Munich, Germany. Ajay enjoyed working for the COO, who agreed to let him sit in on board meetings:
The great challenge for me was that the meetings were in technical German. It was hard to understand every word. So I would come out of these meetings and ask, “What just happened? I got bits and pieces but could you put the story together for me?” I think they liked it because they thought it was very challenging of me to be sitting in and trying to understand what was going on.
The COO encouraged his soft-spoken, hard-working intern to take three-day travel weekends. Ajay grew particularly fond of Western Europe, and it was there that he began to see cell phones in a new light:
As I traveled around, I noticed that people had very fancy phones—sometimes several; like one for a party, one for the office, one for home… I still had my phone from the States and it was just a clunky old black box… I just hated it… I decided that mobile applications were going to be the next big thing in the United States. When I came back from Germany, I decided that this was the space I wanted to work in. Vayusa
In the fall of 2000, Ajay and fellow MBA Walter Stock were meeting at Starbucks to brainstorm consumer applications for mobile technology. When the discussion gravitated toward the hassle of coffee cards, the pair spied their opportunity. Ajay explained:
I carry a lot of loyalty cards. I have four coffee cards in my wallet. To be honest, it is a pain carrying all these cards; I don’t have them when I need them, I lose my rewards, it’s a pain to sign up, and it’s a pain if you lose them. And for merchants, the struggle is getting their card into your wallet. Walter and I started thinking about building a mobile coffee card that would allow you to track your coffees on your cell phone and let you know that you have, say, 11 coffees on your card. Then you wouldn’t need to carry all these loyalty cards. Over the next few weeks, Ajay’s EIT sessions helped to shape the business model, and they began to gain an understanding of the challenges that merchants were facing. The new venture would develop a technology platform that would enable customers to carry out payments and participate in loyalty programs using any type of cell phone. The partners viewed the loyalty component as key, since vendors large and small were discovering that loyaltymarketing programs developed from actual customer behavior—a discipline known as customer relationship management, or CRM—could produce stunning returns on investment. Ajay explained how the transaction would work:
As a first-time [user] you have to sign up your mobile phone and credit card into the Vayusa portal. Once you do the sign-up process, you walk into a participating store—say, Blockbuster—and they ask you how you would like to pay: Visa card, Visa phone, or cash. Our vision is to be the Visa phone. There is a pre-programmed [toll free] number on your phone that will ask you for the… unique tonal [point of sale ID displayed by that merchant]. Say it’s 100. Press 100. Simultaneously, the Blockbuster guy enters $4.99, and on his tonal he says, “Visa mobile.” When you authorize the payment, [the system] automatically reads your [online] coupons and lets you know whatever the best one is. Then you enter your pin number to complete the transaction. Afterward you get a text receipt on your cell phone and an e-mail receipt sent to your e-mail address. Then we automatically update your loyalty rewards with Blockbuster. Again, you don’t need to carry [a vendor] card in your
wallet. You don’t even need to carry credit cards. The company name, Vayusa—Sanskrit for “rhythm in the air”—was chosen to evoke the effortless mobile transactions they were hoping to foster (see Exhibit 6.1).
Ajay and Walter had no illusions about the odds against two young MBAs (with no industry experience) developing a complex technology enterprise that would likely require a significant infusion of venture capital, in addition to corporate alliances and partnerships. Ajay set out immediately to understand the payments industry and, at the same time, build a top-tier board of advisors.