Page 1

publication a

Vol 2 / Issue 10 / July 08

/Rs 30

Who will be the next manufacturing superpower? Complete this story and win a Blackberry Bold Market or Startups: Where to invest? Radio cabs: Challenges en route Outsourcing your marketing and sales Innovative Hiring Strategies The market for second-hand goods How to get more search engine trafďŹ c BPO: Looking beyond a US recession

unique idea of the month/

Earthy Goods innovation/

Medsphere InstaRad Backpacker Co. Unescorted tours Broadstar AeroCam columns/ People as brand ambassadors Xxxx xx xxxx xxxxxx xxxx Political instability and economic growth Xx xxxxx xxxxx xxxxx The entrepreneur asxxx a futurist


Vol 2 / Issue 10 / JULY 08

BOARD OF ADVISORS C K Prahalad

University of Michigan

N R Narayanamurthy

Chief Mentor, Infosys

Kanwal Rekhi

Chairman, TiE

Romesh Wadhwani Chairman & President, Wadhwani Foundation Gururaj ‘Desh’ Deshpande

Chairman, Sycamore Networks

Saurabh Srivastava Chairman, Indian Venture Capital Association Kiran Mazumdar Shaw R Gopalakrishnan

Chairman & MD, Biocon Executive Director, Tata Sons

Philip Anderson

Professor of Entrepreneurship, INSEAD

Shyam Malhotra Editor-in-Chief Krishna Kumar Group Editor ANALYSTS Arunjana Das Binesh Kutty Chhavi Tyagi Shilpi Kumar Sreejiraj Eluvangal Vimarsh Bajpai OPERATIONS Ajay Dhoundiyal Product Manager VIjay Rana Design Anil John Photography SALES & MA Jaideep Mario Gabriel Imran Ali Chandan Sengupta Dayanath Levaj Jagadeesh Nivedita Dwarkanath Naveen Barsainya

MARKETING Associate VP West West North South South South South-East Asia

PRINT & CIRCULATION SERVICES NC George Associate VP T Srirengan GM, Print Services Sudhir Arora Circulation Services Manager Pooja Bharadwaj Assistant Manager, Reader Service Sarita Shridhar Assistant Manager, Reader Service Printed and published by Pradeep Gupta. Owner, CyberMedia (India) Ltd. Printed at International Print-O-Pack Limited, B-204-206, Okhla Industrial Area, Phase 1, New Delhi-20 and Rajhans Enterprises, 134, 4th Main, Industrial Town, Rajajinagar, Bangalore-10. Published from D-74, Panchsheel Enclave, New Delhi-17. Editor: Krishna Kumar. Distributors in India: Mirchandani & Co, Mumbai. All rights reserved. No part of this publication may be reproduced by any means without prior written permission.

/cover story

22

Who will be the next manufacturing superpower? Manufacturing excellence has always moved from geography to geography. Starting with England and Europe during the Industrial

Revolution, the center of manufacturing excellence moved to the United States and through Japan has now reached China. Where will it move next, and more importantly what will it be like?

BANGALORE 205, 2nd Floor, # 73, Shree Complex, St.Johns Road, Tel: 41238238 CHENNAI 5B, 6th Floor, Gemini Parsn Apts, 599 Mount Road, Tel: 28221712 KOLKATA 307, 3rd Floor, Ballygunj A.C. Market, 46/31/1 Gariahat Road Tel: 65250117

Market or Startups: Where to invest?

66

MUMBAI Road No 16, D 7/1 MIDC, Andheri (East) Tel: 28387241 DELHI D-74 Panchsheel Enclave Tel: 41751234 PUNE D/4 Sukhwani Park North Main Road, Koregaon Tel: 64004065 SECUNDERABAD #5,6 1st Floor, Srinath Commercial Complex, SD Road. Tel: 27841970 SINGAPORE 1, North Bridge Road, # 14-03 High Street Center Tel: +65-63369142 CORPORATE OFFICE Cyber House, B-35, Sec 32, Gurgaon, NCR Delhi-122001. Tel: 0124-4031234, Fax: 2380694.

100 pages including cover

DARE.CO.IN 2

JULY 2008

Startups comprise the newest asset class in the portfolio of an investor. How does it fare vis-à-vis the stock market?


DARE.CO.IN

/contents opportunity/ New-age publishing ................................. 34 The business of music bands ................... 74

59 unique idea of the month

28

opportunity/

strategy/

Tree-house resorts

Search engine trafďŹ c to your articles ....... 38 Outsourcing marketing and sales dept .... 42

Mixing business with development

Innovative hiring strategies ..................... 54

Earthy Goods provides marketing, branding and distribution services and other business skills to rural agri-based industries

sector analysis/ The market for second-hand goods ...... 62

With an average spending of Rs 7000 per room, tourists are turning up in huge numbers to places like Kerala to indulge in this mystical experience

This business exists since generations. Here is a glimpse of some of the upcoming sectors and evolving trends

blogs/columns Anurag Batra ........... 91 Paranjoy Guha Thakurta ... 52

sequel/ Radio cabs: Challenges en route .......... 14 As this business gains momentum, there are several challenges that have emerged. After our earlier opportunity article of this business, this is a follow-up piece to ďŹ nd out how the business is shaping up

Rupin Jayal ............. 32 opportunity/

80

E-waste

coming soon

With technology sales booming and e-waste piling up, recycling this waste is on its way to attract more people to this business

DARE.CO.IN interactive business models,

wiki proďŹ les, business

graph of the day, idea

pic of

the day, sector spotlight, blogs, news, discussion fora, keyword

innovation/

50

News .................................................... 12

mentoring, market trends, newsletters, live chat,

opinion polls,

leads, slideshows,

professional guidance,

search, on demand,

archives, event calendar, research, directories, faqs

Exchange .............................................. 06 Feedback .............................................. 10

, rss feeds, contacts,

based alerts

webinars,

others /

An ubercool business of unescorted travels

innovation / Winds of Change ................................... 27 Radiology on the move .......................... 40

NEN /

A Giant Step in Entrepreneurship Education .. 84 JULY 2008 3


www.dare.co.in


DARE.CO.IN

blogs/edit

Finding passion I believe that it is the passion you bring to the enterprise at hand that is often the differentiator between success and failure

O

ne of the most frequent questions I get asked is what is the most essential ingredient to entrepreneurial success.

Is it the idea? Is it the team? The prior experience

of the founders? Is it the money or the timing? Or it just plain luck? I believe that none of these is the most critical ingredient. Other things being equal, I believe that it is the passion you bring to the enterprise at hand that is often the differentiator between success and failure. When the going is good, passion may not matter. But when the chips are down, when the funds flow is drying up, when the markets are looking bleak; when you are not sure where your next order will come from, or if at all it will come; that is when the passion you have becomes the only thing standing between you and failure. How do you find passion? Management consultants and psychologists make fortunes writing books and doing seminars on how to find and maintain passion in various aspects of life. Obviously, it is too complex a topic to cover in one short piece (nor do not want to drive them all out of business!). But whatever be the method, it is important that you be passionate in what you are doing or find an enterprise that you can be passionate about. That could be the key to your success.

/Krishna Kumar

JULY 2008 5


Exchange DARE.CO.IN

• partners • mentoring • funding • guidance • advice • ideas...

Email: dare@cybermedia.co.in or SMS: "DARE <your msg>" to 56677

Published: June 2008 Zankar Educational CDs offer of 55% margin + 4% VAT to the franchisees (By reader: Vikas Mone) Response: June 2008 I had a telephonic chat with Mr Raghavraj Pillai, who had shown interest in the offer. We had a very good talk for about 20 minutes. However, we cannot proceed further because the educational CDs that we are producing are based on the Maharashtra state board curriculum, which cannot work for Karnataka. Anyway, I met a nice person through your venture for which I will always be thankful to you.

, with a 25We are a non-voice BPO startup re. We are nine seat capacity, located at Coimbato t for a genuine months old, and are on the lookou with work and consultant, who can provide us ady have had help us bring in revenue. We alre sultants. As of bad experiences with a few con if required. We now, we can scale up to 100 seats, se contact us. request interested parties to plea Sattish L SunSpark Solutions

Vikas Mone Zankar Educational CDs

an upcoming We, Delta Business Group, are harashtra, well business group in south Ma lthcare, and diversified in automobiles, hea The articles on entrepreneurship in DARE are very useful for people like me. Thank you for your wonderful articles. I want to start an export-import business. However, I need some guidance in understanding whether it is worthwhile to get into this business. I do not know what products offer good scope for export, what are the markets, etc. Milind Donde, Nasik

Published: May 2008 Mukul Gupta had written in inviting suggestions for doing something with his 200 acres of farmland. Response: June 2008 I want to get in touch with Mukul Gupta, so that I can give him suggestions on his farmlandsrelated query. Nimish 6

JULY 2008

lifestyle. an exclusive We have launched ‘CONFIDO’ will and excellent brand in menswear, with a strong keting. quality, supported by vigorous mar s opportunity We are offering a unique busines and dynamic of ‘Master Franchisee’ for young business with entrepreneurs to start their own small office (can small capital of Rs 1 to 2 lacs and a business place). be operated from home or other Highlights: y), high profits Low Investment (Rs 1 to 2 lacs onl d, no working (Rs 3 to 10 lacs), no shop require work, excellent capital required, no logistic per reporting communication skills and pro required. guidance, We offer proper training and software and other support. tact us. Interested entrepreneurs can con Arvind Tolye DCR Limited, Kolhapur


Exchange DARE.CO.IN

• partners • mentoring • funding • guidance • advice • ideas...

Email: dare@cybermedia.co.in or SMS: "DARE <your msg>" to 56677

I need mentoring from someon e who has experience in IT, as well as in retail business development, so that when I pre sent my idea, he should understand it technically. My idea being at the grass roots level, he should show me the path about additional things to be considered (SWOT analysis). I would be grateful if he cou ld provide assistance by providing referen ces of others having experience, in case of dou bts. Business plans need foresight, and the me ntor should at least have an idea on the busine ss plan after the explanation. A few of my project ideas are as follows: 1. Build a social website that will help the users to build their family-tree that will help them to connect with family members and share family-related events and media . 2. Build an egg food brand, as there is no big player in this market. 3. Open a club in my hometown that has multiple services to offer. Hiren Patel

Published: June 2008 Ashutosh Agarwal was looking for an opportunity to do an internship in and around Bangalore or Nashik. Sanjay Sharma was looking for a mentor to guide him for the right execution of his business plan for a business on the Internet. Response: June 2008 Thank you very much for posting my letter in your new Exchange section (June 2008). That’s a nice thing you have conceptualized and I am sure it will help many. I was wondering if Ashutosh Agrawal could help us market our service from home. It will help him understand what you have called BTL marketing and will also help him earn a bit as we pay remuneration on a commission basis, based on orders generated. I could also have a chat with Sanjay Sharma and share my knowledge on the way of doing things on the Internet. Would be happy to help them in any way.

I am a post-graduate in econom ics and have nine years of work experience in the field of economic research, journalism and equity. It is through my present job as a rese arch editor for a financial brokerage house tha t I came across DARE. In fact, it was few issues of DARE that really ignited the hope of real izing our dream project by getting some right dire ction for our entrepreneurial venture. We are a group of five working females, are toying with an idea of setting up a business venture abroad (we have sho rt-listed a few countries). However, we lack the nitty-gritty’s of a startup in foreign shores. We are looking for appropriate guidance and enthus iastic venture capitalists keen in funding our end eavor. Urvashi Ved

Leonard Fernandes CinnamonTeal Print and Publishing Services

I am the promoter of a textile testing equipment and belting manufacturing company in Faridabad. Right now our turnover is around Rs 2 crore and I wish to scale up the operations to reach at least a double-digit crore turnover. To achieve this, I am looking for guidance from a mentor and angel investor to meet capital requirements. Amitabh Ghosh Innovative Engitech

JULY 2008

7


Feedback DARE.CO.IN

I came across your magazine in June.

ning a profit-making company. It was

This refers to “Thank your lucky

I appreciate the commendable job you

very exciting, but I was not able to make

stars: But at what cost?” (DARE June

have done in introducing a magazine

few things clear to myself.

2008). Subsidies of any kind, for any rea-

so relevant for today’s budding entre-

For that purpose I would like to re-

son, are in fact a burden on economic

preneurs. All the articles, as well as the

quest you to send me a detail spread-

conditions of any country. But reserva-

exchange section, are simply awesome.

sheet with all the steps and formulae.

tion of any kind, for any reason, is more

I am interested in getting all the previous issues of DARE.

Looking forward to your kind help

harmful for the economic growth of the country. By subsidies and reserva-

and support.

Tanuj Mendiratta Frontline Multitech

Piyush Dinesh Shah

tion, both, a country becomes weaker, but politicians cannot understand eco-

This is with reference to the radio

nomic principles! To ease the burden

An article on ‘Motels’ (DARE May

cabs’ article carried in the October

of an increase in oil prices to common

2008) caught my attention. I am really

2007 issue of DARE. Please find below

men, all taxes on it must be abolished!

interested in establishing and running

the details of the information that we

motels on NH4. Though I found few

require for the industry study:

figures in the article unrealistic like set-

a. Methodology followed for determin-

ting up cost of cabin etc, I would appreciate it if you could help me get more detailed information for this project. Arvind Tolye DCR Limited, Kolhapur Firstly, I would like to thank you for

ing the feasibility of radio taxis b. Backup details justifying market

Thanks for the chat the other day. It helped. For your information, I am not

c. Radio taxis volume forecast or any

now. Need to stay focused on my long-

other forecast related to the same

term objective. Some of the stuff you

Would be really kind of you if you

said helped in thinking clearly.

could help me with the data. Varun Rikhi

ative articles on venture capital.

Ernst and Young

Also, like always, the May 2008 issue was very good and informative. I ap-

DARE: We have run a sequel on the ra-

preciate your efforts in putting all the

dio cab story in this issue. This is for all

data together.

the readers, who over the past nine is-

ture capital infusion required for run-

Hi KK,

taking the entrepreneurial plunge right

study

publishing such wonderful and inform-

I went through your article on ven-

Mahesh Kapasi

sues, have been writing in for more details and updates.

[Name of the reader withheld on request]

SMS “DARE <your comments, questions or suggestions>” to 56677 or Drop us an email: dare@cybermedia.co.in

SMS “DARE <your comments, questions or suggestions>” to

56677 or Email us at dare@cybermedia.co.in 10

JULY 2008


news NEWS DARE.CO.IN

/news

Fashion industry to garner Rs 750 Cr by 2012

The Indian fashion design industry is expected to

touch Rs 750 crore by 2012, from the present estimated

news

level of less than Rs 290 crore, and create additional employment opportunities for over 50,000 skilled pro-

fessionals like fashion designers, merchandisers etc., according to industry chamber Assocham. The key reasons attributed for the projected growth comprise heavy investment in the industry by Indian companies, readily available designer wear in shopping malls, consumer shifting focus towards designer wear and exposure to western media. In an analysis done by Assocham on “Indian Fash-

ion Industry”, it has further revealed that the industry accounts for barely 0.3% of the international industry’s net worth. Currently, the global designer wear market is worth about Rs 1,80,000 crore and is growing at 10-10.5% every year.

India, China to be global sourcing hub for retail sector

NEWS India will follow China as the top destination for

souring for the retail sector in the coming years, says a

PricewaterhouseCoopers survey. While China remains the number one destination for global souring for

83% of respondents, India follows with 58%. The other countries that found mention include Cananda, Chile,

Italy and Mexico among others, according to the survey titled ‘Global Sourcing: Shifting Strategies’. Indian companies have raised over Rs 1 trillion through issue of corporate bonds on private placement basis in 2007-08, on the back of mobilizations by banks and FIs, according to Prime, a capital market data provider. This is a 23% jump over the figures of the previous fiscal.

India to get lion’s share of foreign investment

NEWS India is likely to witness the largest growth in its

share of foreign investments, even as big investments

would flow into the manufacturing sector, according to a recent report by KPMG.

The report stressed that investments would shift

from the US, Japan, the UAE and Singapore to Brazil, Russia, China and India (BRIC). The study is based on the survey of investment strategists in around 300 big MNCs in 15 countries.

12

JULY 2008


DARE.CO.IN

sequel/transport

Radio cabs: Challenges en route As this business gains momentum, there are several challenges that have emerged. After our earlier opportunity article on this business, this is a follow-up piece to find out how the business is shaping up /Binesh Kutty

T

his sequel is long due. We had done an opportunity article on radio cabs called Drive into Rs 7,210 Crore in October 2007. It has been nine issues since, and there is still an incessant splurge of queries regarding this business. These queries are flying in from all directions; contemplating entrepreneurs, industry researchers and analysts, existing transport players, customers, etc. So, here is what DARE did. We consolidated all the generated responses; spoke to various radio cab companies, their chauffeurs,

and regular customers. Thereafter, we looked at how the business is shaping up and how the companies are dealing with issues and challenges faced in this growing phase of business. Let us begin with growth and expansion that has happened since October 2007.

Business expansion The increase in the number of radio cabs on the roads is a fact that is hard to miss by anyone. The companies operating the radio cab services had planned

DARE/fleet size Radio cab service

Delhi

Mumbai

Delhi Cab Easycabs Forsche Megacab Meru

500 550 (CS) 300* 200

(CS) (CS) 20 (CS) 500

Number of cabs in fleet Bangalore Hyderabad Kolkata (CS) 400 (CS) – 500

(CS): commencing service soon * Oct 2007 figure. Current numbers not available

14

JULY 2008

100 (CS) 350 (CS) – –

200 (CS) – – – –

Chandigarh

Goa

– 50 – – –

– – (CS) – –

for increase in the fleet size when we last spoke to them, and it has happened to quite an extent (See Table). Easycabs, for instance, saw a substantial percentage increase, in both, fleet size and geographical expansion. Back then it was operating in Delhi and Chandigarh, and now it has expanded its operations to Bangalore, Hyderabad, and Mumbai. When it comes to the number of customers serviced too, there has been a significant rise. Easycabs used to cater to 2,000-odd customers per day, and now has 5,000 customers in Delhi alone. Additionally, it has about 2,000 customers using their cabs in Hyderabad and Bangalore put together.


DARE.CO.IN

sequel/transport Similar growth has happened with Meru, the fleet of V-Link Taxis. Meru had launched its services in Mumbai in April 2007 with a fleet of 50 cabs. Since then, it has upped its fleet size and geographical presence very quickly and significantly at that. Even Delhi Cabs, which is the fleet run by Orix Auto Infrastructure Services (OAIS) India, has a beefed up presence now in Delhi, and has got the license to operate in other cities. In the number game (cabs in fleet), almost all the players have expanded services to a large extent in the past one year. Revathi Roy of Forsche, the cab service exclusive for women, has had its share of expansion too. But this is not purely on the lines of increase in the fleet size. She has been facing a lot of challenges in scaling up, but that has not deterred her from expanding in her line of business. In a strategic alliance with Orix, she phased out their old cars, and got new ones. Also soon enough, OAIS fleet will have a special segment within the fleet which will continue the women-only service, under the name Delhi Cab Forshe, Hyderabad Cab Forshe, and so on. Apart from this, she has begun training academies in the cities of Mumbai, Delhi, and Hyderabad, under the umbrella of the newly formed venture between Forsche and OAIS, called Forshe Travels & Logistics. The academy is purely for the induction and training of women chauffeurs for the fleet of Forshe. The first batch of 56 women chauffeurs is already out. Opening training academies is another initiative that some companies have taken. V-Link Taxis, which is the parent company operating Meru, had introduced a drivers’ training program in November 2007 in association with the Road Transport Office (RTO). Emphasizing more on the scope of such training academies, Neeraj Gupta, Managing Director of V-Link Taxis had stated in a press release, “With the increase in privatized transport services, it is imperative that all commercial drivers receive the necessary training in road safety and customer service in order to provide passengers with the

best possible quality of transportation, as well as to minimize the number of accidents on roads. In addition to this, knowledge of the city, key areas and buildings is also vital to a commercial driver to perform effectively.” Typically the chauffeurs undergo a week-long training of six to eight hours per day, and have to pay up a fee that is in the range of Rs 4,000 to 6,000. The challenge here is to get enrolled in the program, as it actually means compromising on six business days, while having to shell out the fee.

Advertising scenario Radio cabs as a medium for advertising always had the potential. In terms of advertising space, the advertiser has options to display his ads on the doors of the cab, on the translate, which is on top of the car, the headrests inside the cab, on the seat covers, etc. Of course, the companies operating radio cabs have to seek NOC from the regional traffic police office and permissions from the state transport authorities. Typically, advertising on radio cabs is a package deal that consists of display on a certain number of cabs for six months, on one or all of the mentioned ad spaces. If one were to put an average to the charges, it would come to somewhere around Rs 7,000 to 10,000 per cab per month. As for value proposition, Meru collates the daily run (number of trips and kilometers), and provides its clients with monthly reports that speaks of the number of impressions each cab carrying the advertisement is providing. As mentioned in one of the reports on agencyfaqs, Neeraj Gupta of V-Link Taxis explains how the impression data is worked out, “For the cabs in Mumbai, there are around 500 impressions per kilometer. That comes to one lakh impressions per day per cab and approximately 90 lakh impressions per quarter.” At the outset of radio cab services, it was largely only mobile phone manufacturers and mobile service providers that showed interest in advertising. Talking about the changing scenario, Rajiv K Vij from Easycabs says, “With the growing popularity of radio cab

RAJIV K VIJ

CEO, Carzonrent (Easycabs)

Our fleet size has increased from 350 to around 1,400 cabs and we are now operational in Hyderabad and Bangalore, besides Delhi. Easycabs catered to 2,000-odd customers per day back then, and now has 7,000 customers. services, and the scope of visibility that companies can benefit from, the profile of interested parties in advertising on the cabs has increased.” This is quite believable as it is not hard to notice that we now see advertising on radio cabs from a variety of industries such as retail, oil and petroleum, real estate, FM

DARE/TAKE AWAY

This article is a sequel to the opportunity story carried in DARE Oct ’07. Drop a mail at dare@cybermedia.co.in to get the PDF of the original story. JULY 2008

15


DARE.CO.IN radio, television channels, FMCG products, insurance, tourism, etc. Then there are companies such as OAIS, which has eight lines of businesses, which includes running Delhi Cabs, and has the sustenance capacity to do without advertising on its cabs. Neeraj Kumar, MD and CEO of Orix Auto Infrastructure Services (OAIS) explains, “We believe our cabs are iconic. For instance, in Delhi we call ourselves Delhi Cab; in Hyderabad we will call ourselves Hyderabad Cab, and so on. We have got heritage stickers of the city around the cars, which we do not want to compromise on. We can do without the shortcut ways of earning income.”

Challenges and their workarounds Moving on further let us talk about the variety of operational and policy-related challenges that radio cab companies had to face in this span of time.

Acceptance by the customers First and foremost comes the challenge of customer orientation and education.

NEERAJ GUPTA

MD, V-Link Taxis (Meru)

(about the launch of the Meru Training Academy)

It is imperative that all commercial drivers receive the necessary training in road safety and customer service. This will help provide passengers with the best possible quality of transportation as well as minimize the number of accidents on roads. 18

JULY 2008

sequel/transport

/

It is taking its own sweet DARE issues faced time for the average InSafety & operational: dian to realize that an Chauffeurs giving out personal numbers to customers air-conditioned, new Overcharging unsuspecting customers upon technical failure car with a trained chaufCabs being sublet to other drivers by the licensed chauffeur feur is not beyond his affordability. Winning the Technology related: confidence of the massLong queues for telephonic booking es, middle class and Tracking failure in blind spots upwards, to avail this Device failure due to summer heat service is happening, alPolicy related: beit slowly. “Besides this, there are some compaNo fresh permits being issued in some cities, like Mumbai nies who are not playing Hypothecating permits under metered taxi scheme expensive the game right. There Human resource: are certain parameters Backfiring salary model for some operators that radio cabs operProcuring more human resources to meet increasing fleet size ate on across the world, which include not letting out the cabs on flat rates, having driver from Meru gave us his perspecthe right technology, etc. Compromis- tive. “I quit Easycabs because Meru ofing on these leads to many problems, fered a good salary package. Besides, such as safety and security issues, fleec- I faced some problems there where I ing problems, etc. This is further giving had to pay upfront to be in the fleet, birth to skepticism in the masses, slow- which I could not afford,” he said. “But ing down customer acceptance and is this salary system has also given rise not healthy for the industry,” informs to chauffeurs simply logging in to the system from home, and not really inNeeraj Kumar of OAIS. terested in taking any bookings. But effective from June 1, 2008, Meru has Workforce related Procuring of human resources is one introduced a minimum collection of of the problems that the existing play- Rs 600 per day clause, to operate in the ers face. For Revathi Roy of Forsche, fleet. This should take care of the diswho operates a women-only cab fleet interest of lethargic chauffeurs.” Neeraj Kumar of OAIS, however, driven by women, getting new chauffeurs is an inevitable challenge that differs on the salary model backfirshe faces. However, the training acad- ing issue. He says, “It is really how the emy set up in alliance with OAIS, is company manages the fleet and the somewhat taking care of this. Neeraj human resource that matters. At OAIS, Kumar of OAIS adds, “In the busi- we have enough incentives for the ness of radio cabs, we need to pro- chauffeurs, from time to time, to encure chauffeurs with the right kind of sure that they remain with us. We are attitude and grooming. This is very not facing any attrition problem.” Easycabs operates on a sort of franimportant because they are going to represent your image in the market. chising model, where the company However, the modules that we have for provides the cab, the technology, and our chauffeurs at the training academy customer acquisition. The maintewill ensure that we will train drivers to nance of the cab, fuel, and other expenses are taken care of by the chaufbe Orix chauffeurs.” In some cases, companies have feurs themselves. The chauffeurs are gone ahead with trying out the salary supposed to remit a fixed sum every model for hiring the chauffeurs. This month to the company. “On an averbackfired for some because then the age, the daily collection of each cab is chauffeurs did not show much interest in excess of Rs 2,000. Out of this, the in going out there on the roads, as they net income of the chauffeur is about had a decent salary to fall back on. A Rs 700 per day, which is more than


DARE.CO.IN

sequel/transport REVATHI ROY Forshe

For me the biggest challenge has been getting chauffeurs for my fleet. By setting up the training academy, this problem is dealt with to a certain extent. We have our first batch of 56 women chauffeurs ready already. Rs 20,000 per month for the chauffeur,” informs Rajiv Vij.

Operational obstacles When it comes to the operations of the chauffeurs, there is a large set of issues at hand. For instance, the practice of chauffeurs giving out their personal numbers to the customers brings about a concern about the safety factor in the long run. “As far as the safety and security is concerned, this is the same chauffeur who has undergone training, police verification, etc done by Easycabs. And the cab is the same cab that has the tracking system, meter, etc, and as soon as a customer begins his travel, the cab is under tracking mode. One has to admire the entrepreneurial spirit of the chauffeurs in trying to procure a customer base in the localities that they prefer operating in,” Vij adds, “We had, in fact, talked to some customers who were given personal numbers, and are finding was that by and large people prefer having to store/remember the call center number than to keep adding the numbers of the chauffeurs.” So, considering that the situation is in control, Easycabs is not really concerned about this problem. Whereas

Neeraj Kumar of OAIS has a different input to give on this issue altogether, “We have technology that works. Given that fact, no such problems are faced by us. Our chauffeurs can only run on bookings allocated by the call center.” he says. There have been cases of overcharging due to faulty meters in some cabs, which was brought to our notice. Fleecing happens when a cab’s meter is running on night-fare rates during day time, and an unsuspecting customer pays up what appears on the meter. This is only to realize later that they paid Rs 19 per kilometer instead of Rs 15. Rajiv Vij of Easycabs talks about how they ensure that such overcharging does not happen in their fleet. “All the meters are calibrated, certified, and sealed by the weights and measures department. Every cab has to report at one of our quality control locations in a 24 hours cycle.” All the radio cabs companies urge the customer though to pay only the fare that is valid (usually Rs 15 per kilometer during daytime, and Rs 19 per kilometer night fare). So, if a customer travels 20 kilometers at three pm, he should pay 15 x 20 = Rs 300, and not a paisa more. The cab companies, through their call center do their part by speaking out the charges applicable to each and every customer who books through the call center. Additionally, there are guidelines stuck in the cabs for the customer to know what is right. In fact, Easycabs has mentioned in its stickers that if the identity of the chauffeur does not match with the identity plate in the cab, the travel of the passenger will be free. Vij does urge the customers to inform the call center, even if it’s after paying up the sum, so that actions can be taken against the primary licensed chauffeur of the cab (which is actually chucking him out of the fleet) and the money to be refunded to the customer. Another problem that was noticed in this growth phase is drivers calling up the call center executives directly to ask them for pickups. For this the companies have made it mandatory that no cellphone is allowed to be carried

DARE/customer guidelines

Customers should check the green circled area to ensure correct fare type; 1 means day-fare, 2 is night-fare. fare is calculated as kilometers run (yellow circle) multiplied by the rate per km, which depends on fare type. Companies are taking proactive measures like implementing guideline stickers, driver identification, etc in the cabs. inside the call centers. The call center number on which the customer calls is an incoming calls number.

Technical difficulties Let us move forward to the technology and equipment that is used. There were lots of queries as to how much the equipment costs. Typically, a radio cab has three devices inside i.e. mobile data terminal, digital meter, and thermal meter. These three put together cost about Rs 40,000-45,000 per cab. As for the backend, it varies depending on whether the technology is bought from places such as Singapore, London, etc or if it is tailor-made by some technology company here in India. As the business grows, there are technological issues that have shown up and the companies are dealing with them as they come. The problem of long queues to book a cab, which in a way depicts the level of customer interest, is painful to live with in the long run. The companies in their capacities are trying to overcome this problem. Also, another issue faced is that, at times, the tracking system fails in certain areas that are blind spots, and for this the JULY 2008

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sequel/transport Some companies are not playing the game right. There are certain parameters that radio cabs operate across the world, which means not letting out the cabs on flat rates, having the right technology, etc. Compromising on these leads to many problems such as safety and security issues, fleecing problems, etc NEERAJ KUMAR

MD & CEO, Orix Auto Infrastructure Services (Delhi Cab)

companies are working in conjunction with mobile service providers such as Airtel to overcome this problem. There was a problem that had come to the notice of some cab companies, where the meters had stopped functioning due to summer heat. To sort this out, Easycabs worked with the digital meter manufacturing company, and also looked at other meter manufacturers, to bring the situation under control.

Policy problems Each state in the country is said to be in the process of drafting its own policy for registration of radio cabs. Rajiv Vij of Easycabs explains, “Fundamentally, radio cabs come under the parameters of metered taxis in every city. As per the Motor Vehicles Act, the right to draft this policy rests with the state transport authorities.” But as of now, these policies are yet to be drafted for many cities. Small entrepreneurs who ventured into the radio cabs business, in cities like Mumbai, are facing problems in operating their business due to policyrelated problems coupled with lack of financial backing up. One such entrepreneur, under the condition of anonymity informs, “Only if you hypothecate under the black-and-yellow taxi permit, you can operate as a radio cab service under the fleet taxi scheme. The required permit is not affordable for entrepreneurs like me. It is as high as more than Rs 1 lac per license.” 20

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As a result, these small players are exploring possibilities in doing business under the rent-a-car scheme, which has a completely different commercial model. The resultant fare falls in different grids that work under a kilometer and hours used basis. There is a flag-off rate of Rs 200, and every subsequent kilometer is Rs 15. So while the government talks about the need to improve the quality of public transport in the country, the existing policy is not commercially viable to facilitate new entrepreneurs to operate radio cabs. This, of course, is not the case in all the cities across the country. But the need to have a proper policy drafted for radio cabs is something that cannot be overlooked. Will it happen anytime soon? We can’t say, it is the government’s call, which entrepreneurs should check before getting into this line of business.

Funds availability Funding too can pose as a challenge to small players. Established players like OAIS, V-Link Taxis, and Easycabs have funding coming in from parent organizations, bank loans, raising debts, or VC funding. With this industry booming and rapidly growing, small players can face problems in procuring permits (as mentioned in the policy problems bit), licensing fee, increasing the fleet size to meet the demand etc.

What the future holds… Talking about the future, all the cur-

rent players admit that there is enough room for thousands of radio cabs to be rolled out. Revathi Roy of Forsche, for instance, talked about the existing metered taxis in all the cities. These red-and-yellow taxis exist in millions, and radio cabs are still in a very nascent stage. Neeraj Kumar of OAIS gave us his insight on how the industry will shape up in the near future. “Suddenly everyone is finding this to be a lucrative business, and there is enough space for all-India players. However, what will make the radio cab industry is the future existence of three to four major national level players. At least in the top ten cities in the country, there will be huge scope for radio cabs catering to the middle-class and upper middleclass strata. In, say, about 18 months from now, we will see consolidation happening, where marginal players will be taken over, because sustenance is very crucial to have.” The radio cab industry is still in the making, and there is scope for a huge business potential in this line of business and the businesses supporting it. These are some challenges, issues, and problems that the existing companies are facing, and we are sure that there will be many more such issues to surface, which can’t be foreseen. But then, entrepreneurship is about taking risks; but at the same time, it is crucial to know the market DAR E before making that leap.


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/cover story

Who will be the next manufacturing superpower? What will drive the next manufacturing cycle? Manufacturing excellence has always moved from geography to geography. Starting with England and Europe during the Industrial Revolution, the center of manufacturing excellence moved to the United States and through Japan has now reached China. Where will it move next, and more importantly what will it be like? /Krishna Kumar

Complete this cover story: Who do you think it will be? This analysis is not complete. It cannot be complete till you add your thoughts to it. I have laid out a structure and a line of thought. Now, I invite you to complete this piece by adding your predictions. online at www.dare.co.in or by email to dare@cybermedia.co.in. Who will it be? What will be the drivers? What will be the theme? The two best analyses will win a Blackberry Bold each and all selected analyses will be printed in DARE along with photographs of the authors. 22

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/cover story

T

he manufacturing base of the world has not stayed constant at one place. It has moved across continents. More importantly, the drivers of each of the great manufacturing cycles have been different. Is there a pattern somewhere that can give us a hint of the answer? For great fortunes can be made from knowing the answers! This piece looks at the drivers of the four great manufacturing cycles we have been through and tries to identify what the drivers for the fifth one could be. However, I do not complete the story. I leave it open for you to predict what exactly will be the driver and who the next manufacturing superpower will be. Do share your analysis with us at dare@cybermedia.co.in or online at www.dare.co.in. The two best analyses will win a Blackberry Bold each and all selected analyses will be printed in DARE along with photographs of

wards the end of the eighteenth century, this lasted almost a century, tapering off in the middle of the nineteenth century. The second had its origins in the second half of the nineteenth century, in what is known as the Second Industrial Revolution in England itself. But the early twentieth century was when it reached its peak with the United States of America becoming the manufacturing superpower of the world. This era lasted for slightly more than two generations. The third cycle moved eastwards on the map and saw the ascendancy of Japan as the manufacturing center for the world. The ‘Made in Japan’ label became more rampant and finally more acceptable as a mark of quality than the ‘Made in USA’ label. Two specific product lines, consumer electronics and automobiles, were at the visible forefront of the Japanese era. The Japanese era stretched

The big theme Like there was a country closely identified with each of them, each of these phases was also driven by a great theme—an umbrella under which the achievements of the particular era mostly fell. The First Industrial Revolution was mostly about mechanization. The American phase was about mass production and the assembly line. It was also the era of inventions. The Japanese era was personified by the electronics revolution, particularly of personal electronics. The Chinese phase is about cheap production scaled to a level never seen before. What could be the theme of the next phase of manufacturing? It could, for example, be personalization on a mass scale. That is, mass production would still exist, but each item would be produced to meet the personal needs and tastes of the specific end-user; custom production

England

USA

Japan

China

Steam engine

Petrol engine Electricity

Electronics

Cheap goods Massive scale

the authors. Remember to leave your correct email address. If you look back at history, four very clear manufacturing peaks can be identified, each with its own geographical base and identifying characteristics. Further, one can also identify some clear drivers, or rather change in drivers that helped shift the manufacturing base of the world. Some of these patterns are for real and some are the stuff that conspiracy theories are made of.

The four great manufacturing phases The first manufacturing cycle was, of course, the First Industrial Revolution that started in Europe, or more specifically England. Starting to-

slightly longer than a generation (30 years) starting in the second half of the twentieth century, or more specifically, around the seventies. We are living through the fourth cycle right now, and nobody needs to be told that the manufacturing center of the universe today is in China. The Chinese era started towards the end of the twentieth century, with the Encyclopedia Britannica noting that “The pace of industrialization quickened and diversified after 1990.” If you noticed, each new cycle has been shorter than the previous one and it is only fair to expect that our generation will see the next cycle in action long before we are ready to call it quits.

? ?

scaled up, if you will. Production lines would still roll out a few thousand cars, but each car would have what the buyer specifically ordered—the exact seat height and contours, the exact shade, custom fittings and maybe even a slightly differently contoured body. The iPhone that I order will have the contours that will make it fit exactly in my hands and my hands only, and will have the outer finish that I like and will be my favorite shade of blue. It may even have the 5-megapixel camera that I want, rather than a standard issue 2-megapixel one! Is such a level of personalization going to be possible? As we will see further on, in this story, why not? The first steps have already been taken. JULY 2008

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Poster boys for the revolution Each of these eras has had their fair share of inventions and blockbuster products. But looking back, there is one product that stands out from amongst the rest as the poster boy of that period; one product that personifies the essence of that period, that generation and that nation. For the First Industrial Revolution, the poster boy was clearly the steam engine. The steam engine was what made the industrial revolution possible; it was what powered the industrial growth during that period. Nothing captures the essence of the American era than the Ford Model T. The model T was the first car that was produced using assembly line methods unlike its predecessors that were handcrafted individually. And assembly line production was pretty much at the core of the success of the American Era. For the Japanese era, nothing stands out as much as Sony’s walkman. Compactness, dependable electronics, high levels of workmanship, and ruggedness, all were as much a hallmark of the walkman as they were of the Japanese era of manufacturing greatness. There is no single product yet, that stands out as symbolic of Chinese manufacturing. Or perhaps, there is nothing as all-pervasive as the cheap brand imitations that symbolize the scale and cheapness of the Chinese era.

The poster boy of the personalized era The personalization I talked about in my example, would in an earlier era need extensive personal attention and expensive hand tooling. But no longer! It is possible with the progression of current technologies to achieve personalization on a large scale. 3D printing, where printers print out objects layer-by-layer is not exactly new. 3D printing made its appearance as a way for creating rapid prototypes; but its potential to be disruptive to today’s manufacturing processes is what should be of concern to us. RepRap (replicating rapid prototype www.reprap.org) is one attempt in this 24

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An object (above) printed by the Zcorp Spectrum Z510 3D printer. Right now, printers like this are used for prototyping. The RepRap Darwin(below) can reproduce 60% of itself. These could, in future, lead to full-fledged production units.


DARE.CO.IN

/cover story direction worth watching. To quote from the website, “RepRap achieved self-replication at 14:00 hours UTC on 29 May 2008 at Bath University in the UK.” The current version, called Darwin “can make 60% of its parts, not counting nuts and bolts; the other parts are designed to be cheaply available everywhere”; and the next one is expected to be able to reproduce its electric circuitry and later versions, the chips and so on… Z Corporation (www.zcorp.com) is one among many who produce 3D printers and scanners that can do rapid prototyping. The Spectrum Z510 can print in color at two to four layers per minute to deliver equipment of dimensions 107 cm x 79 cm x 127 cm and weighing upto 204 kg! It is conceivable that the personalization in manufacturing is delivered entirely through such machines or that there is a two-stage process, with common parts and base structures being centrally manufactured, and the personalization being done in distributed satellite setups. In either case, an innovation like the RepRap or the Z

Two for conspiracy theorists There is no dearth of conspiracy theories for anything under the Sun. So, let’s add two bits to the effort! Island, mainland, island.. Just look at any world map. The First Industrial Revolution was in England, an island. The second was in America, in the mainland. The third was in Japan, an island and the fourth was in China again mainland. So, the fifth phase should be in an island, which will be…. It takes a war… The first phase was in England. The US went to war with England (American War of Independence from 1775-1783) and the center of manufacturing excellence moved to the US. Japan went to war with the US (World War 2, 1939-1945) and the manufacturing base moved to Japan. The Sino-Japanese war is said to be the largest war in Asia in the twentieth century (Wikipedia). In fact the Second World War started in Asia with the second SinoJapanese war (1937-1945). And China becomes the manufacturing superpower. Will the pattern hold good as we move forward? Printer could well be the poster boy of the manufacturing age to come; powering it, much like the steam engine did in the First Industrial Revolution.

Powering a manufacturing superpower Talking of powering a manufacturing revolution, in the literal sense it-

self, each era has seen a change in the source of the power that fuelled it. The First Industrial Revolution was powered by coal and the steam generated by burning it. Machines ran using steam, steam powered trains and ships transported raw material and finished goods.

Shifting centers of economic activity Source: Global trends in energy, Ivo J. H. Bozon, Warren J. Campbell, and Mats Lindstrand, The McKinsey Quarterly The world is undergoing a massive realignment of economic activity, whose outlines are clearly visible in the changes occurring in the energy and materials sectors. Growth in demand for energy and basic materials (such as steel and copper) is moving from developed countries to developing ones, predominantly in Asia. Demand for oil in China and India, for example, will nearly double from 2003 to 2020, to 15.4 million barrels a day. Asia’s oil consumption will approach that of the United States—the world’s largest consumer—by the end of that period. On the supply side, Asia’s strong demand environment for energy and basic materials, coupled with its low labor costs, means that the region will increasingly become a global producer of aluminum, chemicals, paper, and steel. China, for instance, is adding steelmaking capacity so rapidly that its production will rise from 5 percent of the worldwide total in 1995 to more than 30 percent by 2015. In the process, it will become a leading exporter. Over the next decade, resources (gas, minerals, steel, and pulp and paper, among others) will generally be developed and produced farther away from the points of consumption than ever before; Brazilian fiber, for instance, will be converted into paper products in China. In natural gas, the amount of indigenous production consumed within countries will continue to decline, replaced by cross-border flows delivered by long-distance pipelines and by ships carrying liquefied natural gas (LNG). Oil production too will increasingly switch to regions that are more and more remote (and often geopolitically unstable) as developed countries with dwindling reserves seek new supplies. Important macroeconomic shifts are also occurring within regions. States in the Middle East are expanding their reach beyond oil, into new industries such as chemicals and metals. Dubai, for example, has emerged as a leading producer of aluminum, as a result of access to cheap energy (notably natural gas) and a proximity to markets in Asia and Europe. Qatar, in addition to being a major LNG player, is converting its cheap gas directly into high-quality diesel fuel and hopes to become a world leader in the emerging gas-toliquids industry by 2010. JULY 2008

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/cover story

World Cement production 1,400,000 1,200,000 1,000,000 800,000 600,000

2006

2007 est.

Another interesting fact about manufacturing greatness is that huge construction efforts run parallel to manufacturing growth. This is not just about factories, but also basic infrastructure, particularly transportation infrastructure. We saw that in England, we saw that in the US, we saw that in Japan and China is currently going through it. As can be seen from the graph here, China currently far outpaces the rest of the world in cement production and consumption, a good indicator of the relative scales of construction effort.

So, if we apply this pattern, then the next manufacturing biggie is likely to be from a developing or underdeveloped nation with a fairly young population.

The “me” generation and status quo

Br az il Ch in a Eg yp Fr t an Ge ce rm an y In In dia do ne sia Ira n It a Re ly pu bl Ja pa ic of n Ko re M a ex ic o Sa Rus ud si iA a ra bi a Sp a Th in ai la nd Tu rk ey US Ot V A h e ie t r c na ou m nt r ie s

Much has been written about the Will whoever it is that becomes the next manufacturing base to the world 400,000 emergence of a also have to ramp up their cement production? “me” generation in 200,000 various countries; the children of 0 achievers, who born into comparative luxury do not have to struggle or to innovate in order to achieve. SOURCE: U.S. Geological Survey, Mineral Commodity Summaries, January 2008 If you look at The American revolution was pow- that is adventurous and young that history, it is not the “me” generation ered by petroleum and hydel power. becomes one. Like the report Glo- that has achieved greatness. Will the The Japanese and the Chinese eras bal Aging: The Challenge of the New emergence of a “me centric” generation also had similar power sources. But Millennium (CSIS and Watson Wy- the world over mean that the cycling of as each new day dawns with the att Worldwide, 1999) notes, “In 1950, manufacturing greatness is over and it prospect of international fuel prices seven of the world’s most populous will either continue as is, with China hitting new highs, the prospect of nations were developed countries. By being the manufacturing hub of the the fifth manufacturing revolution be- 2050, only one developed country will world for the foreseeable future? Or will ing fuelled by a new power source is remain on that list: the United States. the emergence of this more self focused As the developed world’s population generation mean that there will no very real. Nuclear power, for long a potential (and ultimately its economic output) more be a single geography that can lay game changer, has now sort of receded shrinks as a share of the world total, claim to being the epicenter of manufacturing activities? Will this emergence into the background as a viable game other great powers will arise.” At the height of the Industrial Revo- coupled with increasing population changer. Biofuels were thought of as prospective, but the recent food crisis lution, England was the overlord of densities mean that manufacturing be has raised uncomfortable questions much of the known world. The US was evenly distributed across the globe? about the social affordability of bio- the hotbed of invention and became fuels, particularly corn-based ethanol. a superpower during its heydays as So, who will it be? Fuel cells and solar energy are two oth- a manufacturing giant. Japan, on My analysis ends here and I await your the other hand, lost its manufacturing take on which country will be the next er prospects that bear watching. One of these could well fuel the next glory as its population aged. China is manufacturing superpower. What will manufacturing revolution. Or are there expected to have 400 million elders power the next era of manufacturing dark horses out there that are waiting by 2040. greatness? Which product will be the The richer nations, and in fact much icon, the poster boy of the next manuto emerge? I would like to read your take at www.dare.co.in or by email at of the world, have ageing populations. facturing cycle? And what will be the For example, according to a research big theme? dare@cybermedia.co.in. note prepared by the Parliament of Like I said at the very beginning, Australia, “The ageing of Australia’s there is great fortune to be made from For the young and adventurous Another interesting facet of becoming population is a well known phenome- getting the answers right. And to start a manufacturing great is that it is not non. It has been particularly apparent with, there is the small question of DAR E those two Blackberry Bolds. for the meek or the old. It is a nation since the 1960s.” 26

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INNOVATION

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Winds of Change With an innovative wind system—the AeroCam, a team of entrepreneurs is rewriting the rules of “green” businesses /Vimarsh Bajpai

I

f you thought windmills are meant to dot only the rural landscape and require huge swathes of land to accommodate turbines, think again. Amidst the entire ruckus emanating from sky-rocketing energy prices, a small team of entrepreneurs huddled in the US is bringing about a silent “green” revolution, with an innovative wind system called AeroCam. Reading into the fine print of the rulebook on aerodynamics and turbine physics, Broadstar, a company founded by Stephen Else and Tom Stephens in 2004, has designed AeroCam turbine systems that can be installed at any location, irregardless of space. So much so, that this wind system can be set up even in urban areas with high population density and in college and corporate campuses. The AeroCam, now patented for commercial use, looks radically different from the usual propeller designs because of its parallel rotor blades. The company claims that it can also be transported, installed and maintained at low costs. Broadstar’s research and development efforts are now bearing fruits. The promoters are in talks with two Fortune 100 companies to sell their products.

The innovation While a conventional wind turbine has a vertical axis, the AeroCam has a horizontal axis that supports multiple blades. This design makes it possible to “automatically and interactively adjust the pitch or angle of attack of the aerodynamic blades as the turbine rotates, thereby optimizing its performance for much the same reasons a bird changes the shape of its wing in flight.”

AeroCam: Features and benefits Features • Blade pitch angle controlled through 360 degree rotation • Self-regulating speed control • Long service life • Low vibration • Low noise pollution while vibrating • Extreme survivability Benefits • 20% more power than conventional blade designs • Can be deployed where large turbines cannot • Slow rotation speed • Highly economical

The AeroCam’s small size and short height helps it capture and harness wind energy at the surface level. Broadstar has designed four types of AeroCams, each generating a different amount of power. The AeroCam I can generate 10 KW at 30 miles per hour (mph) wind speed; the AeroCam II, III and IV can generate 100 KW, 250 KW and 500 KW per hour respectively at 30 mph. On the price front, the company claims to have broken through the $1/ watt cost barrier. It delivers a 250 KW DAR E system for $250,000. JULY 2008

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opportunity/hospitality

Mainstreaming tree-house resorts With an average spending of Rs 7000 per room, tourists are turning up in huge numbers to places like Kerala to indulge in this mystical experience of tree-houses /Shilpi Kumar

M

So, what are tree-houses? Well, you might remember seeing these tiny little abodes on the top of tree trunks for children to play in, in a lot of Hollywood movies. Now take this concept one step ahead, and picture your own tree-house resort, located in the midst

oney does not grow on trees. Most of us have grown up hearing and believing this age-old adage. But take one look at the business opportunity that lies in running tree-house resorts and you might just change your mind!

of a tropical forest, where tourists can come and experience the thrill of being on top of the world! And the thrill just doesnâ&#x20AC;&#x2122;t end here. Enjoying a breathtaking view, waking up to the sound of chirping birds, watching the sunrise from

DARE/view Sector: Hospitality Big idea: Setting up tree-house resorts Initial investment: Rs 15 lacs approximately (not including land) Running Costs: Roof renovation, staff, food facilities

Photo Photo courtesy: courtesy: Carmelia Carmelia Haven Haven Resort Resort

Various players in Kerala: Green Magic Tree House Resort (Vythiri), Carmelia Haven Resort (Idukki), Tranquil Tree House Resort (Wynad), B-six Holiday Resort (Munnar)

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Tree-house resorts should be in hilly places, as it is very uncomfortable to stay in a tree-house where the weather gets extremely hot and humid. The trees should be strong, so they can support the weight of the tree-house and should be at a minimum height of 15 feet. Also, the resort should be in a place, where there is no disturbance, and tourists can get peace of mind. â&#x20AC;&#x201D; Accommodation Manager,

Carmelia Haven Resort


DARE.CO.IN

opportunity/hospitality

Lush green surroundings In India, tree-houses were mostly built by the tribal community in Kerala, from a long time ago, to protect them from the wildlife. Obviously, with their

light structures, made out of twigs and a makeshift roof, they weren’t as posh as the tree-house resorts now. But modern tree-house resorts have been inspired by them to a large extent. We got in touch with two treehouse resorts in Kerala to tell us more about the business. Located on 55 acres of deep thick plantations of Vandanmedu village, Carmelia Haven is a resort with 26 assortments of rooms that have a tribal theme to them. Their two tree-houses, which are referred to as Erumadam, are built on cardamom plantations.

How much do they make? CARMELIA RESORT Deluxe tree-house: Rs 6000 + 15% tax (including breakfast) Standard tree-house: Rs 5000 + 15% tax Rooms per tree-house: One Average stay per visit: Two days Visitors profile: 60% foreigners, 40% NRI, Indians Occupancy: 325 days a year, 4550% during rainy season

Similarly, the Green Magic Tree House Resort is situated in the beautiful village of Vythiri of the Wynad district. Wynad is famous for its perennial rain forests and its coffee, tea, cardamom, as well as pepper plantations. Built on 500 acres of forest property, Green Magic Tree House Resort consists of two treehouses, with two double rooms each and is at a height of 90 feet. Why are such resorts only found in Kerala? Says Sherine Kareem, Managing Director of the Green Magic Tree House Resort, “Most tourists come to India not for a luxury stay, but for an adventurous Photo courtesy: Green Magic Tree House Resort

so nearby and being just so close to nature, are just a few reasons why many a tourists definitely do not want to miss living out this unforgettable experience. Want to know more about this business? Well, read on to get a feel of what the world would look like a 100 feet above the ground.

GREEN MAGIC TREE HOUSE FIGURE Average rooms per tree-house: Two Rent: US$ 220, all three meals inclusive Average stay per visit: Two

days Average visitors per week: Three Occupancy: 25% during rainy season

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DARE.CO.IN one. They are so bored of city life and its modernity that they want to spend a few days in total isolation, where they can get in touch with nature. Kerala with its tropical rain forests and around three to four months of monsoon is one of the greenest places in India, which is why it becomes a hot destination for setting up such tree-houses.” Technically speaking, tree-house resorts can be set up in any location, and on any tree. But according to Sherine, “Ideally, tree-houses should be set in a forest area, with a lot of trees and greenery. Tourists want to live in a tree-house because of the view it has to offer, and to watch the sunrise, which is why the tree-house should be at a great height. Also, the forests give the tourists the opportunity to explore various adventurous trails, where they can see a myriad of plants, birds, animals and insects.” The Carmelia Haven Resort manager [name withheld on request] adds on, “Tree-house resorts should be in hilly places, since it is very uncomfortable to stay in a tree-house, where the weather gets extremely hot and humid. The trees should be strong, so they can support the weight of the tree-house and should be at a minimum height of 15 feet. Also, the resort should be in a place where there is no disturbance, and tourists can get peace of mind.”

opportunity/hospitality want tree-houses to be just a part of the various other ranges of rooms that the resort would offer. Carmelia Haven Resort, for example, also lets out cavehouses, circular cottages, deluxe cottages and suite rooms, apart from their two tree-houses. It is more profitable to do this, as the resort manager puts it, “The cat likes to stay on the tree top whereas the mouse prefers the caves, which is why it’s wise to have a variety. Most of the Indian guests that come are scared of heights and not as adventurous as foreigners and therefore prefer staying in regular cottages and cave-rooms.” Even the Green Magic Tree House Resort is a sister concern of Jungle Park Resorts, that also offer independent villa-rooms, row-house cottages, as well as jungle-cottages to the tourists. When it comes to the construction of the tree-houses, there are no better people than the natives to do so. The tribal community is involved with the construction and maintenance of such resorts, as they are skilled enough to climb trees. “You have to invest a lot in labor, as it is a risky business. Building these tree-houses is like performing ac-

Eco-friendly investment The first step to setting up your own tree-house resort is to get it registered with the government. According to the Land Utilization Act, if you want to convert any plantation area into a resort, you need to get permission from the collector of the district. Only a reasonable percentage of the plantation area is usually granted for the resort construction and that too has to be used in the most eco-friendly way. “The procedure is not too complicated. You just need to give in an application to the collector for sanctioning. It can take as little as three to four months, depending on how much you are willing to push for it,” says Sherine. The next step is to decide whether you want to build a resort that exclusively has tree-houses, or whether you 30

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You have to invest a lot in labor, as it is a risky business. Building these tree-houses is like performing acrobatics— something that these natives are well equipped to do. We also appoint people who make and decorate houseboats, to design the interiors of the tree-house. — Sherine Kareem

Managing Director, Green Magic Tree House Resort

robatics—something that these natives are well equipped to do,” says Sherine. The natives also manage to give these tree-houses a very primitive look, which can be very appealing. Ecofriendly material such as bamboo, coir, hay and straws go into the making of the tree-house. Indigenous techniques are also used. To get up to the treehouse, for example, a unique kind of elevator trolley is made, which is pulled up manually. A water-bag is used as a counter weight, which assists in pulling the trolley up. Tree-houses can also be accessed via a roped bridge or ladder. But don’t get fooled by the primitive exterior. The interiors are extremely luxurious, and well-equipped with modern facilities such as electricity, telephones, television and running water and flushing western-style attached bathrooms, all at a height! Each room is fully furnished, with bamboo beds, colorful bed sheets, blankets, carpets and a verandah. Should you hire an interior designer for this? Not necessarily! The natives can come in handy there as well. “For our interiors, we appointed people who make and decorate house-boats,” says Sherine. How much would all this cost? “We have to invest on interior designing, roof construction, flooring, bathrooms, furniture, carpets etc. Technical help is also required for welding purposes, as well as for the support and stability of the tree-house. Around 12 years ago, when we constructed the Green Magic Tree House, the initial cost was about Rs 10 to 15 lacs.” The manager at Car-


DARE.CO.IN

opportunity/hospitality melia Haven Resort gives us a more updated figure, in reference to the oneyear-old tree-house in their resort. “Just the construction of the tree-house, without the roof, furnishings, bathroom fittings and interior designing, could cost you up to Rs 5 lacs.” Coming to the running costs, most money will have to be spent on roof renovation. As the roof is thatched, it becomes black during rains, and therefore needs to be reconstructed after every monsoon season. As the main attraction of the treehouse lies in being in touch with nature, it should be ensured that your tree-house resort is as eco-friendly as possible. Try using soft lighting such as lanterns and kerosene lamps, instead of conventional electricity. Also, minimize the use of generators and plastics to avoid environmental pollution. “Everything in our resort, including the bed and other furniture, is made out of biodegradable material. Only the television and the bathrooms fittings are artificial,” says the Carmelia Haven Resort manager.

Value-added services Like any other resort, add-on services are a must for an all encompassing experience, a good restaurant that serves ethnic food for instance. Treehouse resorts in Kerala, for example, often serve traditional food on banana leaves, to offer a complete finger-licking experience. Carmelia Haven Resort even goes as far as offering demonstration cooking classes. Laundry services, travel assistance and transportation services are also a must have. Depending on the resort location, one could also offer local sight-seeing, back-water cruises, city tours, wildlife sanctuary tours, rejuvenation and ayurvedic programs, adventurous safaris, fishing and trekking, etc.

Thrill-seeking tourists So, what kind of guests should you be expecting at your resort? “As the rent is high (around Rs 6000+15% tax per room), they are mostly from a higher income group. 60% of the guests are foreigners, the remaining are nation-

Dense forest areas in India Andaman and Nicobar Islands, Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Tamil Nadu, Tripura, Uttaranchal, West Bengal, Western Ghats

als and non-resident Indians,” says the Carmelia Haven Resort manager. Guests come from the likes of Russia, Germany, Switzerland etc and according to Sherine, “Nowadays more and more Indians, especially from Kolkata are getting intrigued with the idea.” A lot of marketing is done through word-of-mouth, but it is also essential to tie-up with travel agents and tour operators. “Most reservations are done online through these operators. There are around 2000 tour operators in the country with a small number of treehouses, so we are always full,” says the Carmelia Haven Resort manager. Sherine adds, “While a lot of marketing should be done in the country, there should be focus on doing it abroad as well, as a lot of guests come from Europe, especially Germany. We have tie-ups with a lot of foreign and Indian tour operators that recommend our resort and regularly send us guests.”

Much in demand When asked how much of room occupancy they get in a year, we got some fascinating figures. According to Carmelia Haven Resort, they get around 325 days of occupancy in a year. Out of this at least 25% of the guests are repeated customers. “The tree-house is allotted on a first-come-first-serve basis, so we have loads of customers who stay in a different room and wait for the tree-house to be vacant. There

are people who even come to stay for an hour and pay the entire fare!” Between September and May is the peak season for this business. Once the monsoon hits there is only 25% occupancy, according to Green Magic Resort. “Although we get a lot of enquiries, we discourage tourists to come here during the rains, because of the leeches and cold winds. Still, there are some tourists, especially from UAE and Israel, who come here just to see the rain and insist on staying in the tree-house,” says Sherine.

Dealing with competition Besides upgrading the interiors and maintaining the resort, especially the roof every year, the biggest challenge comes in dealing with competitors and standing apart. “The trend is slowly catching on, especially in Wynad, with several such tree-house resorts coming up,” Sherine says. To deal with this, every tree-house resort has their own USP to offer to the tourists. So, while Carmelia Haven Resort boasts of their one room per tree-house policy, where the guests can get complete privacy, Green Magic Tree House Resort is proud of the fact that their tree-house is at a height of 90 feet, in comparison to others that are hardly 15 feet, and resemble a doublestoried building. So, thought of what your USP DAR E would be? JULY 2008

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/blog

People as brand ambassadors Your people are your brand. Their passion and belief or lack of it, defines what your company stands for

/Rupin Jayal

A

CEO enters the HR department and asks the HR director “How’s your team getting to grips with our new brand positioning?” The HR director responds confidently that there’s “no problem” and that “every piece of paper emanating from HR has the new logo on it.” (Marketing for services—The brand inside, James Brooke, Maritz, AdMap 2002) You launch a new brand. Months have gone into planning for it meticulously. Research, positioning, architecture, core brand identity, the intrinsic and extrinsic values that the brand stands for, the list is endless—every possible aspect has been taken care of to ensure that the launch will be successful. A few weeks into the high decibel launch, someone from your company is at a party and a friend comes up to him and asks for the “real” story of this wondrous new brand. He looks appropriately knowledgeable, shrugs and says, “Oh it is just a product that wasn’t doing so well. They’ve put it into new packaging and are now trying to revive it.” It does not matter whether this particular person is from marketing or not, he may be from finance or HR or any other function. To his friend he is

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a real authority, an insider. Now when this friend recounts the same message, he will be speaking with equal authority and the damage will widen. For a large, well-established company it might not impact the new brand seriously. For a startup, a brand with a smaller market footprint or one entering a highly competitive market, it could have serious repercussions. The same applies to multi-crore corporate advertising, particularly in service-driven businesses. If a company that spends large sums in advertising, has people who look at customers as though they are singularly responsible for their bad day, will be wasting its investment in advertising and worse, stand to lose credibility. Having to conduct a series of calisthenics to catch a waiter’s eye in an upmarket restaurant, an airhostess who does not bother when she sees a soiled table cloth, a sales person who says “Oh I am from sales” and turns away when a customer in a small town approaches him with a problem, a bank that keeps promising to send its “customer relationship manager” to meet you and of course no one turns up—examples abound. All of us have had some such experience and it has colored our impression of the brand and of the company behind it. And these interactions and the impressions they create can render a multi-crore advertising campaign meaningless. Now reading what has been written above, one can easily say, “Ah! But if the people had been trained better...” But it requires much more than training or logos appropriately placed by a zealous HR department or even those buzz-word filled internal “initiatives” that most companies undertake from time to time. The first thing that is really required is for the company to have a distinct,

simply articulated brand “passion." The use of words such as “vision”, “mission”, etc have been deliberately avoided because they are often platitudinous, ubiquitous and therefore, meaningless. Companies that have a core brand “passion” (articulated or not) tend to align everything around that. As a result, from the hiring process to training to work itself, no one is in any doubt about why they are working for that particular brand. Nike is said to have some employees who have tattooed themselves with the “swoosh”. Oakley insists that its employees have an actual ability and passion for a particular sport (not just an interest). One car brand in India understood the true value of “infecting” all its employees with the passion for the new brand. In this case its introductory model had a less than enthusiastic reception in the marketplace. The new one was a complete change from its predecessor, not just in terms of the vehicle itself, but from the core of what this vehicle represented. Everyone in the company needed to believe in this new car and what it stood for because each one of them could affect someone on the “outside”, thereby affecting the new brand’s prospects. The company even went so far as to place advertisements in newspapers primarily aimed at its immediate employees and key stakeholders, rather than at its potential customers. Using a core thought that went beyond mere visions and missions, it went for the heart and sought to create belief. Every employee, thus, became an advocate and a believer and that spirit permeated through to other key stakeholders, like the dealer network. This spirit resulted in the new brand being considered as one of the most successful launches of its time.


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/blog Could this have happened without imbuing the entire internal stakeholder universe with passion, spirit and belief? Unlikely. And this becomes even more important for a company that is starting up or entering the marketplace for the first time. What does the company actually stand for, beyond clichés like “delivering customer delight, while maximizing stakeholder value”? What passion drives the company and how well does everyone understand it and believe in it. How hard is it for any employee, regardless of function, to articulate it to an outsider with the same passion that they use when talking about personal beliefs they hold dear? Why did the original founders get into this business anyway? Was it because it was just a lucrative opportunity or was it because they passionately believed in what they were doing and believed that it was distinctly different from the multitude of other promises? Nike, Harley Davidson, Porsche, Oakley, Snapple, Apple, Tatas, Amul, have all had visionary leaders who were followed by teams of people with a visceral belief in the core values and passion of their respective brands. Even the monolithic Microsoft has been able to engender the same passion and belief in its teams by keeping them compact and infusing a relentless will to win. “Internal communication” sounds very small and insignificant when seen against the towering monoliths of brand and marketing communication, corporate positioning, identity and profile and all the

other, very important, things that drive a company. Yet in an economy that is now dominated by the service sector, where the first requirement for a service brand is for people to able to effectively communicate and interact with other people, it is possibly the biggest word of all. You do not have a tangible product to fall back upon. You cannot get away with “Oh! But the products are so exciting that you are willing to put up with the inconveniences.” Your people are your brand. Their passion and belief or lack of it, defines what your company stands for. And in today’s highly competitive market environment, with increasing technological parity and with more knowledgeable and demanding people to be addressed, most products require bolstering with a responsive service support. Those people who interact with all the company’s so-called stakeholders, define the company through millions of “moments of truth." And they are not just your marketing frontline or your “customer relationship managers.” They are every nurse and accountant in a hospital, the security guards in the parking lot of a posh hotel, the guy who drives your car off like a rally driver when you give it for servicing, the accounts department dealing with your suppliers everyday, the tens, hundreds and maybe thousands of people

Training should ideally be for skill upgradation or for creating new skills and capabilities

who are directly employed by your company and who, to the world outside, speak for your company. And just like people all around them, they have their own opinions and beliefs, they have their own cynicisms and problems, they have their own convictions and criticisms. How well do they really understand, can articulate, believe in and most importantly, hold dear what the company actually stands for? Training should ideally be for skill upgradation or for creating new skills and capabilities. If the first thing you think of is “Oh well, we can train them”, then you are likely to merely get awareness, not conviction or passion. Because this belief and conviction cannot come from training or wonderful annual HR initiatives (with no offence meant to the HR function). It has to come from: 1. Having a distinctly articulated, in non-jargonized language, core belief and passion of your company— what makes it/will make it great? 2. How well are people, entering the company at every level, aware of, understand and are attracted to and therefore believe in this core brand passion? 3. Where did they come to learn of this? The company’s website? Through word-of-mouth? Through interacting with someone working for this brand? The wider the spectrum of sources for belief, the deeper the perception of and belief in the core brand passion and the greater the success of your company in actualizing its core values and beliefs. 4. How are the company’s policies and principles aligned to make the core passion come to life—how can every member of the company, regardless of function, actually “feel” this passion? 5. How does this passion translate to the world outside, so it too begins to feel a sense of belief and pride in associating with a brand (and the company behind it) that has such a simple, but deeply meaningful pasDAR E sion to drive it? The Author is Director-Strategic Planning at M&C Saatchi. JULY 2008

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opportunity/publishing

New-age publishing A host of opportunities beckon entrepreneurs in the publishing space, which has moved beyond the realm of printed books

I

f a book is a man’s friend, then Badri Seshadri, K Satyanarayan and R Ananthkumar make plenty of new friends every day. The trio founded New Horizon Media, a Chennai-based publishing house, in February 2004. In the last four years, they have churned out over 700 books in three languages (Tamil, Malayalam and English), and release 30 new titles every month. Not just printed books, the company also publishes e-books and audio-books. “In 2004, our aim was to merely learn the book publishing business in Tamil. If it looked interesting and profitable, we were planning to jump in. We learnt quite a bit,” says Seshadri. Move to the west of the country and you meet Leonard Fernandes and his wife Queenie in Goa, who co-founded CinnamonTeal Print and Publishing, a print-on-demand and editorial services provider. The couple entrepreneurs moved back to India in 2006, after

BHUPESH TRIVEDI

CEO, Chronosphere, a custom publishing firm

We have grown 100% in the last one year in terms of revenues, customer base as well as employees. 34

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/Vimarsh Bajpai

spending seven years in the US. They initially started an online bookstore, but were soon flooded with requests from authors seeking to get their works published. “Initially we recommended them to publishers, but the economics of publishing doesn’t afford everybody to be published. So we started our print-on-demand service in August 2007,” says Fernandes. They began with five titles a month. Now, CinnamonTeal publishes 50 titles a week. Both New Horizon and CinnamonTeal reflect the modern face of the Indian publishing business, driven by entrepreneurial spirit. Not just printed books, with technology carving new imprints on our reading habits that have changed with hectic lifestyles, the future also looks bright for the growth of audio books and ebooks that can be loaded on to your laptop and iPods. In this article, DARE looks at some of the opportunities that beckon entrepreneurs in the publish-

DARE/take your pick 1.

Printed books

2.

Custom/Contract publishing

3.

Audio books

4.

E-books

5.

Print-on-demand

DARE/new kids on the block Audio books: These are narratives of books or documents, recorded by voice-over artistes. These are available on CDs, cassettes or in MP3 format. Audio books in the children, non-fiction, and management category are gaining popularity. Apart from Karadi Tales, which is the pioneer in audio books in the country, and New Horizon Media, there are not very many dedicated audio book publishers around. Many audio books are imported and sport a price tag of anything above Rs 300. E-books: These are books available in electronic formats (most popular being pdf) and can be read on a computer, an e-book reader such as Amazon’s Kindle or a mobile device that supports Microsoft Reader, Adobe Acrobat, or Palm format. A volunteer effort, started in 1971, aimed at digitizing books in the US came to be called Project Gutenberg. Today, there are over 25,000 free books in the Project Gutenberg Online Book Catalog. In total, however, over 100,000 titles are available at Project Gutenberg Partners, Affiliates and Resources. Print-on-demand: In this process of publishing, a document is printed only when someone orders a copy. Thus , commission of the publisher depends on the demand for the book/document. As offset publishers assess the cost of printing, marketing etc before agreeing to publish a work, many authors are turned down by them. Many of those approach PoD publishers, who print only limited copies. Custom/Contract publishing: As the name suggests, this form of publishing is done exclusively for a targeted reader, and is aimed at delivering a clear marketing message. As cost and clutter of advertising is going up, most companies prefer to reach out to their end-customers through magazines, pamphlets, newsletters etc and thus give contracts to publishers for tailor-made documents. While the print-on-demand concept has more to do with the volumes of the print, custom publishing is more about design, number of pages and size of the document.


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opportunity/publishing ing space and talks to the people who have “been there, done that.”

Audio books These are narrations of the printed material distributed through audio cassettes and CDs. They are also available in digital formats such as MP3, and are downloadable on computers. Our busy schedules and match-box living is sure to drive the audio books market further. According to industry sources, audio books constitute just around 1% of the books in Indian stores. One of the reasons could be the price, as most books carry the tag of Rs 300 and above and are imported. Sensing the huge opportunity in the audio books space, some entrepreneurs have made quick foray into the sector. One of them is Vishwanath Parsuram, who started Karadi Tales in 1996. The first title of Karadi Tales featured Naseeruddin Shah as Karadi, the bear. New Horizons Media too, has published a little over 60 audio books in Tamil and 4 audio books in English. So what does it take to start a audio book publishing business? “Depending on the creative and production

values one chooses, the investment per title can vary from Rs 1 lac to Rs 10 lacs. A definitive creative edge is priceless, so the value of the product cannot be gauged by the investment alone,” says Parsuram. The cost of the first CD depends on the length of the book, which includes voice-over costs and studio rental time. “However, once you master a CD, cost of production per CD is the same irrespective of the duration. This is a major advantage in case of audio books vis-à-vis printed books,” says Seshadri. The price of Tamil audio books from the stable of New Horizon Media is higher than that of the printed books, while in the case English books, the audio and printed versions cost the same. As the business of audio books is all about good voice, getting the right narrator with the suitable voice is the biggest challenge of coming out with audio books. Famous film and theater personalities such as Naseeruddin Shah, Gulzar and Usha Uthup have narrated for Karadi Tales’ audio and video books. The company has also turned former President APJ Abdul Kalam’s autobiography into a musical audio-book.

DARE/the publishing market Printed books: There are no “official” figures available, but it is believed that the size of the printed books market in India is around Rs 7,000 crore. “But this is the only number that has been talked about over the last three years,” says Badri Sheshadri of New Horizon Media. English is supposed to be over 40% of this market, with all the other languages covering the rest, he says, and adds that this includes text books and educational books. Leonard Fernandes of CinnamonTeal says the book industry is assumed to increase at an annual rate of 12%. Audio books: As the market for audio books is still in a nascent stage, even the players in the business are not ready to peg a figure, but they are unanimous about the tremendous growth potential of this segment. As of now, they constitute a mere 1% of the books in Indian stores. Custom/Contract publishing: One of the major players in the business, Chronosphere, pegs the size of the custom publishing market at Rs 1,200 crore. However, the company’s CEO, Bhupesh Trivedi, hastens to add that the figures are “grossly underexploited/explored.” He says, “The current annual growth rate in terms of business generated by different companies in this space would be about 35%.” Print-on-demand: It is difficult to gauge the size of PoD at this stage, but believing that any book that can undergo offset printing can also be “published” on demand, the number is quite high. Add to this, PhD thesis, school text books, poetry, songs etc and opportunities are galore. E-books: Again, it is a new segment for Indian readers, but surely holds a lot of promise in view of increasing Internet penetration, changing lifestyles and the launch of compatible mobile devices. One of the world’s leading publishers is believed to have reported that its e-book sales in the first four months of 2008 surpassed the company’s total e-book sales for all of last year. The statement, however, could not be confirmed independently.

TERRIE L BALMER

Founder & Editor, Club Lighthouse Publishing

While the e-book industry is still considered relatively new, in just over a decade, the demand for e-books has been steadily growing particularly amongst the younger generation. Custom publishing This is a fast growing segment of the publishing business, and offers tremendous opportunities on the back of companies wanting to cut cost by outsourcing their publishing needs. According to the US-based Custom Publishing Council, “Custom publishing marries the marketing ambitions of a company with the information needs of its target audience. This occurs through the delivery of editorial content, via print, Internet, and other media, so intrinsically valuable that it moves the recipient’s behavior in a desired direction.” Chronosphere, a Mumbai-based custom publishing firm, which has several international customers in its kitty, claims to have grown 100% in the last one year in terms of revenues, customer-base and employees. Although it started in 2002, Chronosphere still prides itself with the startup tag, primarily because its major business initiatives rolled out in the last two years. “The idea of custom publishing stems from the fact that media proliferation, media segmentation and rising media costs are pushing advertisers to look at more cost-effective media to reach JULY 2008

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opportunity/publishing

Vishwanath Parsuram Co-founder, Karadi Tales

How big is the market for audio books in India and abroad? There are virtually no other serious Indian players in the audio book business. So KTC is the one defining the genre and expanding the market. Anybody who buys a book is a potential customer for an audio book, so the potential is quite huge. What is the business model of audio book publishing? We conceive different series based on specific parameters such as age, subject focus, etc. We use both, in-house and select writing talent from outside to develop our scripts. Illustrations and music also follow a similar process. We work with well-known celebrities for narration. The primary channel of sale is retail. There is also substantial business from corporate and institutional bulk buying.

What are the resources needed to start a audio book publishing business? This is not a monetarily capital intensive business for generating the product itself. However, the creative capital required is huge and difficult to find. Depending on the creative and production values one chooses, the investment per title can vary from Rs 1 lac to Rs 10 lacs. A definitive creative edge is priceless, so the value of the product cannot be gauged by the investment alone. What is the value of Mickey Mouse? What is the value of Karadi? The affection that these brands inspire through their storytelling can be monetized for a long time and in a variety of ways. out to their target audience,” says Bhupesh Trivedi, CEO, Chronosphere. He believes that with the increase in the competition of advertisers and booming economic growth, more and more companies would have to use custom publishing solutions to get their message across. The business model for custom publishing is quite simple. You need to build a well-researched database, and then approach customers. As customers have varied requirements, it is very important to clearly understand their marketing needs, based on which you make the proposal to negotiate. “The tricky issue is getting manpower for content, design and sales,” says Trivedi.

Printed books If you thought that our declining reading habits mean that doomsday is near for printed publishing, you may be wrong. If fact, this sector has now caught the fancy of private equity players, with Beacon India, most recently, putting money into the startup venture New Horizon Media. It is believed that new funding would help New Horizon bolster its sales and distribution network in Tamil Nadu and Kerala for its vernacular titles, and also across the 36

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country for its English language books. The company availed its first round of external funding from Emergic Venture Capital in 2006. “The business model is simple,” says Seshadri. “The retailer/distribution sales channel is given a trade discount on the MRP of the book. In the English book industry, it is in the range of 50-60%,” he adds. The authors are paid on a royalty basis. The cost of producing the copies of any title includes the cost of print, paper and binding (PPB). This varies depending on the quality of paper used etc. “After that comes your overheads and the profit margins,” he adds. “Every publisher looks at the basic economics of the whole project. They do something called offset printing, which allows you to have a very small cost-per-copy. It also stipulates that

What is driving the growth of the print-ondemand service? Authors approach publishing houses either through their literary agents or personally send in their manuscripts. The publisher then whets these. Every publisher looks at the basic economics of the whole project. They do something called offset printing, which allows you to have a very small cost per copy. It also stipulates that you have to have at least a 1,000 copy run. Now if you have printed 1,000 copies, you have to sell those 1,000 copies. So there is the cost of the copy, cost of marketing, cost of warehousing etc. If your book is not Leonard Fernandes worth all this cost, you are rejected. Publishing Co-founder, CinnamonTeal statistics are that one in ten are accepted. Now what happens to those authors who have been rejected? Print-on-demand is exactly the reverse. We print only on demand. Technically, you print only after the book is ordered. It is kind of the Dell model with negative inventory, wherein you are paying first and getting the product later. So there are no 1000 copies to worry about. It could be one or 100. The breakeven point is around 200. Five hundred are too expensive in print-on-demand than in offset. What is the general profile of your customers? It is a very diverse profile. A typical customer is an author who wants to see his/her name on a book. My customers are those who have written memoirs, short stories, poems etc and want to get it printed. Now PhD students are also coming to us wanting to get their thesis in a book format. Sixty percent of the work comes from Indian customers and the rest from overseas. What are some of the challenges that you face? We have grown from printing five titles a month to 50 titles a week. Connecting to our customers is very important. Here is an author who has put all his emotions in a book he wants to get printed, that book means a lot to this person. So we try to connect with our customers. There are also the challenges of growing too fast. We don’t want to lose that personal touch. Talent and manpower challenges are many. People approach us for proofing, translation etc. We have now built a base of around 100 service providers. The business requires a lot of liasioning and real-time monitoring.


DARE.CO.IN

opportunity/publishing you have to have at least a 1,000 copy run,” says Fernandes.

E-books These are books available in electronic formats (most popular being pdf ) and can be downloaded on a computer or mobile device that supports Microsoft Reader, Adobe Acrobat, or Palm format. ‘E-books’ is the latest buzzword in publishing. Made popular by Amazon Kindle and Sony Reader, more and more readers overseas are turning to online books as it saves them the trouble of carrying hard-bounds. However, India is yet to see the launch of these products. But this segment holds big promise for entrepreneurs, thanks to the growing reach of the Internet. There are several companies in India who are also in the business of publishing e-books for overseas clients. New Horizon Media has already created PDF versions of all its printed books, but is yet to bring it to the market. The firm is pinning its hope on the launch of e-book reading devices in India. Canada-based e-book publishing firm Club Lighthouse Publishing (CLP) started in the last quarter of 2006, with only eight books by way of inventory and had been written by the firm’s founder Terrie L Balmer under the name of T L Davison. Balmer started the business with a seed capital of around $5,000. “That was because I had already constructed the website myself, so that took a great chunk out of my startup cost,” she says. The average amount of books published since that time has been 20 per year. However, this year, Balmer hopes the figure would double. Science fiction, erotica, mystery and romance tend to be the top sellers, she adds. Balmer believes that while the ebook industry is still considered relatively new, the demand for e-books has been steadily growing particularly amongst the younger generation. “However, I sincerely believe that as environmental consciousness becomes more ingrained in the general population and they realise that we can’t keep decimating the world’s for-

What were the initial challenges that you faced? (a) Building a professional organization with qualified staff was the first problem. We found editors from weekly magazines and worked with them so they could adapt to editing books. (b) Sales were quite difficult. The Tamil book space is highly unorganized. We had to struggle to get qualified sales people. We had to hire them from other places and train them. (c) The book shops were not growing in number. Sales in the existing shops were also flat. We had to think differently to increase the sales. We started looking at books as FMCG products, and had to build a complete distribution mechanism with stockists, distributors etc, and also build Badri Sheshadri more display space through departmental Co-founder and MD, New Horizon Media stores, restaurants, textile shops, kirana shops etc. (d) Trade discount and credit period were a complete mess. We had to introduce methods by which we could get our monies promptly. This took a lot of effort and we had to forsake some business, as the retailers didn’t like our methods. But as we were producing high-quality, fast-selling titles, we succeeded in establishing ourselves.

What is the business model of printed book publishing? The retailer/distribution sales channel is given a trade discount on the MRP of the book. In the English book industry, it is in the range of 50-60%. In Tamil, the maximum will be 35%. The authors are paid on a royalty basis. In the English industry, in general, it could go from 5%, 7.5% to 10% or in some cases as much as 12.5%. It varies from company to company and author to author. The royalty percentages on overseas sales or translations may vary. The royalty maybe on the net receivables or the gross MRP. For us, we pay 10% royalty on the gross MRP on every title across all our languages. When translations are involved, we pay 5-7.5% royalty. Then, you have the print, paper, binding (PPB) cost, the cost of producing the copies of a title. Depending upon the print run, quality of the paper used, paperback or hardbound, this cost varies. After that come your overheads and the profit margins. In our case, we build multiple imprints for each language focusing on a specific subject. In Tamil, we have an imprint for general books covering literature, biographies, self-improvement, business and finance, politics and current affairs. Once the imprint is decided, then the titles that fit into that imprint are worked out, and then we start identifying potential authors who can write on those subjects. Most of our non-fiction books (more than 80%) are commissioned. We work with the authors and give them the outline, including the rough page count and the level of vocabulary. Once we get the manuscripts, we edit them and incorporate them into our publishing program. The sales team picks up from the production and builds sales volumes by promotion across various outlets. A title that sells more than 3000 copies per year, starts generating decent profits. ests for paper and other products, the general outlook will change,” she adds.

Print-on-demand Print-on-demand publishers publish only when someone orders a copy. In the US, print-on-demand is a pretty popular concept. In India, many people are now approaching print-ondemand service providers to get their name in print. On an average, PoD publishers charge anywhere between Rs 5,000

and Rs 15,000 for printing 50 copies of a paperback with around 50 pages. Some PoD publishers also provide value-added services such as ghost writing, editing, proof-reading, translation etc. Thus the business requires a lot liaisoning with editors, etc. You don’t have to own a printing press to be in the business. CinnamonTeal has tiedup with printing presses in Delhi and Bangalore. They also have a network of some 100 people who do the editing DAR E and proof-reading part. JULY 2008

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strategy/IT

How to get more search engine traffic to your articles The Internet gives you access to a worldwide audience; if only they can find you. Discover how to increase search engine traffic to your pages—on Websites, blogs and forums—by understanding and writing about what people are searching for /Krishna Kumar

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ecently I was involved in an exercise to identify a new content management system (CMS) for a Web-based business. As part of that, I investigated search engine rankings, what drives search-based traffic to Websites and, more importantly, why content fails to get good search traffic. This piece is a direct outcome of that effort. To improve search-based traffic to your Website or blog or forum, you need to work at two levels—at the server level, in the structure, makeup and design of your content management system, and at the article level, in the way an individual piece is written. Both are equally important. This is written from the writer’s perspective: How to write articles or pieces that can attract good search engine traffic. This is not about search engine optimization (SEO), which is a specialized profession in itself. I am talking about what the writer needs to do to improve search engine traffic to her or his pieces. On the Net, traffic comes from three sources. The first lot is fans of the particular site or the author, those who know your site or even you by name and come in directly. The second are those who come to your piece following links to it from other sites. And the third are those who are directed to the particular piece by search engines. For a decent site, traffic from a search engine should be at least a third to a half, if not more, of all traffic. Search engine traffic does not come to a site as a whole, or only to its home page. It comes to specific pages within 38

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the site. Collectively, all such pages drive the site traffic up. It is up to the individual articles (and not the site as a whole) to draw search engine traffic. So, it is important that every piece at a site be able to draw its share of traffic from the search engines. In the days of the printed word, getting the reader to pick up the piece was not your job as the writer. That was for the media buyer in case of an ad or for the circulation department in the case of magazines and newspapers. In today’s search engine centric world, that power vests with you, the writer. Good search engine rankings and search traffic is as much a function of how the site is structured and managed as it is of how the individual articles are written. In fact, there is only so much that administrator-level tricks can do. More power lies in the hands of the individual authors.

How search engines send traffic to your page To write articles that get better search traffic, we need to understand how traffic comes from search engines in the first place.

The process starts when someone, like you or me, types in a search phrase into a search engine like Google or Yahoo. The engine looks into its database of pages to see which ones have that word or phrase in them. The engine then displays these articles in a particular order. It is important to get your article up front in response to relevant searches and also to get it displayed higher up, to increase clickthroughs. Google decides the order in which to display results using a score called PageRank. According to googleguide. com, “Google considers over a hundred factors in computing a PageRank and determining which documents are most relevant to a query, including the popularity of the page, the position, and size of the search terms within the page, and the proximity of the search terms to one another on the page… Google gives more priority to pages that have search terms near each other and in the same order as the query.” This is the key to higher search engine traffic to your article. Simply put, the keywords that people are searching for have to be there in your piece for it to show up in the

What are people searching for? According to wordtracker.com, on the night of his historic nomination by the Democratic Party as their candidate for the US presidential elections, there were 3,391 queries in search engines for Barak Obama. On the same day, Paris Hilton got 69,633 searches. iPhone generated 27,087 searches, while “food crisis” got just 442. “Porn” got a whopping 1,153,044 searches, while God was searched for just 67,811 times! Obviously, people may not be doing what you think they are! And they are not going to be searching for what is important to you, but for what is important to them.


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strategy/IT results. The more of the keywords you have, the more frequently you have them and the earlier in the article you have them, the better your chance for showing up early in the search results. Here, it is important to note that if you fake it, that is, if you use keywords that are not relevant to the piece or stuff your piece just with keywords, search engines can penalize (blacklist) not just the article, but the entire site. And getting out of a search engine blacklist is time- and resource-consuming and often frustrating.

What phrases should you use? How do you choose what phrases to use? Before you write even a word of the article, stop, and ask yourselves a few critical questions. First, who do you want to read your piece (here think function, not designation or role)?

What all designations are they likely to go by (if you are writing about a professional issue)? If they are searching on the subject you are writing about, what words will come to their mind? What words or phrases are they likely to type into the search box? Write down these words and phrases on a fresh clean page. What other topics are closely related to your topic? Add them to your list. Which famous people are or can be associated with your topic? Add them to your list. Which current hot news item has potential links to your topic? Add them to your list. Now these last two, famous people and hot news item may be a bit difficult, if you are writing about say a new technology development, but it is worth a try.

Search trends help your business

We should not miss the wealth of information that you can gain for your business by looking at search data. Let us for example, look at the trends for the keywords venture capital, PE, private equity, and VC for India for the last twelve months. OK. PE has been the most searched word. That was easy. Now look at the bar graphs that give the relative volumes of search from different states and cities. If you are in the equity funding business, the areas that you should focus on are clearly visible here. And hey, did you know that so many people from Mahape (a suburb of Navi Mumbai) were recently searching for these terms? Are you missing out something there?

Your challenge is to incorporate all that is scribbled on your sheet of paper in your article. The rest of this piece introduces you to the methodologies and tools for achieving this.

Is your topic popular enough? Not all topics are equally popular. While Paris Hilton and iPhone will draw huge search traffic, not all of us are fortunate (or unfortunate, depending on your point of view) to be writing about them all the time. But within our domains, we can help our own cause by choosing or associating with topics that are more popular. Take, for example, a business that advises on IT strategy that is writing on its webpage or blog. According to wordtracker.com, “IT strategy” and the top 100 related keywords for example, gets daily search traffic of 206 searches, while “business strategy” and its associated top 100 keywords yield 1,296 searches per day. “Marketing strategy” is even better placed with 3,154 searches per day. “CIO strategy,” on the other hand, fared miserably with just two searches (the exact phrase used, seemed to indicate a job search) per day. So, if you are writing for key IT decision makers, from a search traffic point of view, (if not from an actual business point of view) it makes ample sense to correlate what you are writing to marketing and business challenges and strategies, and not just limit yourselves to the terms CIO strategy or IT strategy. In this example, using just “CIO strategy” in your piece can be plain disastrous from a search traffic perspective. So, how do you navigate these troubled waters? What about a piece on supporting the use of the iPhone as part of the IT strategy, to provide a sharper edge to the marketing strategy and the overall business strategies? Or if you do not want to stretch that far, what about one on the disruptive influence of devices like the iPhone on traditional IT strategies? Would this approach bring irrelevant search traffic? Let me ask a counter question: would the traffic be any JULY 2008

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strategy/IT

more irrelevant than the one person who came searching for a job through the term CIO strategy?

When do people search? Search is seasonal. What is hot today will be forgotten tomorrow, and new terms and phrases will keep search engines busy as new people, new movies, new games, new products and new scandals make it to the top of the collective consciousness. Take, for example, my earlier example of the iPhone, which was launched in June 2007. This graph shows the trend for iPhone as a search keyword in Google. What is interesting

Search for a particular phrase could come from the most unexpected of sources. In this example, topping the search for Shah Rukh Khan in Google is Pakistan and Morocco, and not India.

Search is cyclical and can be driven by hype, anticipation, new releases, or scandal among other things. For example, search for iPhone peaked a full six months before its launch. is that the absolute peak in searches was six months before the launch of the product! Let’s look at another keyword, Shah Rukh Khan. This graph, again from Google trends shows the trend for this keyword over the years. Search for SRK’s name peaked in 2005 and declined through the first half of 2007 and seems to be picking up again (a combination of Om Shanti OM and the IPL in which he is the owner of the Kolkata Knight Riders?). Now, what should be more interesting for us in this case are the bar graphs in the lower half, which tells us where the searches are coming from. Searching for SRK is maximum in Pakistan, followed by Morocco! India comes in third. And other countries searching for King Khan include Malaysia, UAE, Peru, Indonesia, South Africa 40

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and Singapore in that order. This brings us to an important point. If your piece is going to be on the Net, then you are no longer writing for a local audience. You are writing for a global audience. In fact, the bulk of your audience is likely to be global, rather than local. If someone is searching for King Khan, what other search keywords are they likely to use? Two that come immediately to mind are King Khan and SRK. Let us see which of these search terms are more popular. Google trends helps us find the answer for Google, and are we not in for a surprise? Even as searches for the term “Shah Rukh

Search keywords for the same topic can change over time. Here we are seeing searches for SRK pickup and overtake searches for Shah Rukh Khan which are declining. Your articles need to include popular terms that people are likely to search your topic for.


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strategy/IT Khan” were declining, those for SRK were on the rise, and today, they far exceed searches for “Shah Rukh Khan.” So, if you are writing about the King Khan, you would be missing a lot of traffic if you do not use lots of both “SRK” and “Shah Rukh Khan” with a sprinkling of King Khans within your piece.

23,009 related keywords, and some of these, like Hubble Telescope, Meade telescope, telescope mirrors, telescope mount, telescope optics, refracting telescope and radio telescope get significant traffic. Obviously, these are top candidates for inclusion in your pages.

Why your heading is the most important

Whom do I quote?

The heading is what you should concentrate on the most. Remember that the search engine looks at the position of the searched term in the document in calculating which document to display first. And nothing can be better than getting the search phrase into the title itself. In the print world, you can craft elegant, but oblique prose that your reader could not only understand but also savor. In the search engine centric world, you have to use words that a potential reader is likely to search for. So, if you are writing about, say, landscape irrigation, then writing “Grass thou be green” as the header or title is the first step to losing (and I repeat losing) search engine traffic!

Related keywords People do not always search for the word that you have in mind; they search for what they have in mind. They could use a number of variants, and permutations and combinations. That means that you need to have a good mix of these in your piece if it is to show up in these searches. Now,

Associated keyword tools like keyworddiscovery.com can tell you which other words and phrases related to your topic can increase your traffic.

how do you find out what people are searching for? Tools that show up related keywords give you the answer. There are many keyword tools available, and a quick run through some of them will give you a sense of what related words and phrases to use in your piece, to drive search traffic on that topic your way. Let’s, for example, assume that you are in the business of selling hobby telescopes. It is, but natural, that all your pages have the word telescope in them. What other related keywords are people searching for? According to keyworddiscovery.com, there are

Some keyword tools Search traffic: http://www.seotoolset.com/cgi-bin/checktraffic.cgi - estimate of daily search for a keyword Associated keyword suggestion tool: http://www.keyworddiscovery.com/search.html - suggests related keywords and their search volumes Associated keyword suggestion tool: http://freekeywords.wordtracker.com/ - gives 100 associated keywords in the free version. Top search terms by industry: http://www.keyworddiscovery.com/directory/Top.html Keyword trend comparison: http://www.google.com/trends - search trends over time and geography Keyword analysis: http://tools.seobook.com/keyword-tools/seobook/ - analyze keyword potential across search engines

One way of bringing authority to your piece is to quote an authority. Unfortunately, there is no definition of who is one. And the easy way around is to quote a “spokesperson” of a leading business, who at times turns out to be a local sales or PR manager. This is particularly true when you are writing about IT. Now, it is unlikely that too many people around the world are searching for the PR manager by name. If you can’t get access to a potentially searched name, remember that many of them have blogs. Marc Andreessen has one. Lawrence Lessig has one, and so does James Gosling. There are a lot of cool blogs with heavy traffic at Microsoft and many other tech companies. Why not quote from a heavyweight blog?

Captions Captions for tables and pictures are another place where you can write keyword-rich sentences. Many writers omit to write captions or at best write very generic ones. In a search engine centric world, this should be treated as a crime of the highest order, next only to writing irrelevant headings.

Roman, Latin and obscure heroes Starting your piece with an obscure example is great for a business school case study, but does not work in a search engine centric world. What are the chances that anyone is searching for your obscure hero in a search engine? The same holds true for the usage of Latin, Roman or Sanskrit words. A piece full of “better methods to superimpose the Orbicularis Orbis” may get you a few medical students, but nowhere near the traffic that would come if you had written in plain English DAR E about how to kiss better. JULY 2008

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opportunity/marketing

Outsourcing your marketing and sales dept A few agencies offer outsourced marketing services for small companies and startups, but low awareness is still a hurdle

/Sreejiraj Eluvangal

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hen 32-year-old Dasharatham Bitla quit his job at Oracle and decided to start a software product company of his own last year, he did the usual thing. He got a team of engineers and started work on the product—a piece of software meant to make life easier for bus operators. “We started marketing and sales in August or September last year,” Bitla, who runs his firm from a modest second-floor office in southern Bangalore says. “But after about six months, it was plain that I could not meet the requirements of the running around involved in actual sales,” remembers the engineer. 42

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For Dasharatham, Dash to friends, it was an awakening, into the ‘other side’ of business. “A lot of people from technical backgrounds, who start companies, don’t realize how tough it is to market and sell the product, no matter how good it is,” he says, “I realized it only later.” Dash’s realization, of the importance of ‘selling’, also came with an awareness of how unprepared his initial plans were for the new world. “It was difficult to suddenly make space for a big marketing or sales team in the original plan,” he says. “A good marketing or sales person comes at a high price.”

Like Dash there are many others, who face the initial hiccup of having a knowledgeable sales and marketing team to push a new product, by a new company, in front of the buyers. Catering to often spread-out and niche-buying audiences with established buyer-seller relationships, many young companies find it difficult to make inroads into these established links. Unlike bigger corporations that require and can support multi-member, full-fledged marketing and sales teams, small companies and startups often require marketing help in spurts and starts. Many, for example, require extensive help during the ini-


DARE.CO.IN tial phase, followed by a lull in the next few months. Vinod and Pramod Harith recently said good-byes to their established careers in Wipro and MeritTrac respectively. After a year of preparation, the brothers started what they call “the outsourced CMO” (chief marketing officer) firm Axis, in May. “In India, the concept of an outsourced CFO is well accepted,” says Pramod, the former head of marketing at the assessment and recruitment company MeritTrac, “but people are not aware that they can outsource the functions of the CMO as well.” While the concept may sound obvious, the market is yet to gain traction. While bigger companies routinely outsource entire marketing campaigns to third parties, there are only a handful of service providers who operate at rates affordable to small companies. Entrepreneurs like Bitla point to the scarcity of such outsourced sales and marketing service providers, but those who operate in this sphere point to the lack of acceptance of the concept, especially by smaller Indian companies. They say that while entrepreneurs have no hiccups in accepting that finance is “too complicated a subject” to be handled by themselves and is better outsourced, when it comes to marketing, many over-estimate their own competence. “Most entrepreneurs underestimate marketing,” says Rashmi Vallabhajosyula, a Bangalore-based marketing consultant for SMEs and startups, “They don’t spend too much time thinking about it before they start, because they think marketing and sales are obvious, intuitive. It’s about ads and press releases,” says the eleven-year marketing veteran.

Not enough suppliers… Rajesh Kishanpuria, owner of the Kolkata-based direct marketing and event management firm Ideazfirst has first-hand experience of the supplycrunch. “I used to work with Emami as a brand manager five years ago. We wanted to do a promotion for a painrelief product at the Sealdah railway 44

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opportunity/marketing station. The idea was to demonstrate it in front of the coolies. But sadly, no matter how well we instructed the agencies, it could not be done. Finally, we had to approach a big agency and it was done perfectly. But it cost us ten times compared to the mid-level agencies we were initially using.” Out of the frustration of Kishanpuria—the brand manager, was born Kishanpuria—the entrepreneur. “I realized that small agencies were behaving like manpower agencies. They will provide people and it was upto the company to utilize them and execute the project. Maximum they will do A, if you tell them to do A, but won’t think of B or C, if A fails.” Today, he is at the helm of one of the agencies that handle such work, at rates even SMEs can afford. Depending on what the client wants, Kishanpuria can provide anything from the company’s annual marketing plan to just a single event or road show to promote a product. Unlike many others, he also provides direct marketing services, such as contests, seminars and shopfloor promotions, to reach out to the consumer directly.

…and not enough demand! However, the problem flips over when you talk to the marketers. For them, it is not lack of willingness to offer more than just branding advice, but more the lack of demand and acceptance on the part of smaller companies to such outsourcing ideas. “Most startups are cocooned and self-engrossed with their product,” says Manas Arvind of Emaginous Creative Solutions that provides a range of market research, marketing, branding and on-the-ground production services to companies. Though equally well-suited to small or startup companies, especially in the IT or technical sectors, most of Arvind’s services are utilized by bigger clients. He points out that the market has yet to see significant demand from the lower end. “Traditionally, the Indian IT and innovation space has stayed away from marketing. They don’t think out-of-the-box when it comes to marketing their products,” he says.

With the SME and startup market yet to achieve volumes, Manas points out that it will be difficult for companies like his to offer an end-to-end marketing and sales solution affordable to this segment. “We look forward to working with startups and can see a huge opportunity here. If we get this kind of engagement, we will be able to get into the niche area where we always wanted to be. However, based on the demand for such services today, I don’t think it’s viable. For example, we have sales-force based models of direct marketing, costing, say, around Rs 400 per agent, per day. This is basically for direct selling to consumers. But, if you are talking about a specialized b2b company, with a specialized product such as enterprise software, then you need more experienced people as your sales agents, unlike for selling credit cards or home loans. Based on current demand, it’s not viable in today’s market,” he points out. Yet, there are a few who have ventured broadly in this direction, even though it required them to know the client’s product as well as it were their own. Rashmi of Altius Consulting is one. “Our engagement can be very flexible. So, it can be a one-off project for a product launch, or it can be a longterm marketing consultant model. If it’s a b2b company that has only a handful of potential clients, we can even go along for sales pitches,” she says. KJ Singh, founder of Delhi-based Evolve Brands, is another marketer who offers a broad range of solutions, “from strategy to operations.” Like most service providers, Singh too has a retainer-based model. “If all you want is a tele-caller, that will be just around Rs 15,000 per month,” Singh says, “But if you want a specialized marketing consultant, it can be as high as Rs 50,000 per month, for four to six days every month.” Like most consultants, Singh can also provide people who make personal calls to potential customers on behalf of the clients, but, like the others, shies away from taking responsibility for sales itself. “I can create the demand. The last leg is for DAR E the customer,” he points out.


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/overview

Entrepreneurial Opportunities in a Knowledge Economy Knowledge-driven entrepreneurship is the new buzz-word and will take India further up on its growth path /Arya Kumar

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ndia is an emerging market in the world today. Its middle class population exceeds the populations of USA and the European Union, and provides a lucrative free-market opportunity. The development of the world economy reveals that the 19th century belonged to Europe, the 20th century to America and the 21st century is likely to be Asia’s. Goldman Sach has rightly commented that economics of knowledge would be India’s greatest strength and, if exploited properly, would lead India to be one of the world’s three biggest economies by 2050. 46

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India has a network of quality technical institutions across the length and breadth of the country. Indian engineers, scientists, managers and skilled personnel are among the most competitive in the world. A large force of its knowledge workers has shown its intellectual brilliance in economic ingenuity even in the Silicon Valley. The Indian economy, with its inherent strength in terms of knowledge, backed by a huge market opportunity, can play a leading role in the global markets. The critical input that would play a pivotal role in taking the Indian

economy to greater heights would be the entrepreneurial mindset of its human resources.

Liberalization and entrepreneurial opportunities The process of liberalization that was initiated in 1991 has given a big boost to the Indian economy. This is evident from the economy achieving an economic growth rate of 5.6% during the Ninth Five Year Plan (1997-2002) and approximately 7.5% during the Tenth Five Year Plan, as against a growth rate between 2.8% and 5.5% during the first


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/overview seven Five Year Plans. The Eleventh Five Year Plan envisages a growth rate of 10%. The after-effects of liberalization are also evident from the fact that India gained a 0.60% share in world exports during 1995-1999, as against a share of around 0.45% in the eighties. One of the major contributory factors to accelerate the growth of the Indian economy is the emergence of a new generation of entrepreneurs who have released bottled energies, and created new confidence and a feeling that ‘we can do it’. This has given rise to some leading new-generation entrepreneurs, who have created miracles in various fields, particularly in the information technology and knowledge industry. The liberalization process has given rise to abundant opportunities. These opportunities would require an entrepreneurial spirit and entrepreneurial mindset among the youth in India.

What is entrepreneurship? Entrepreneurship revolves around innovation and it should not mean inhibition or imitation. It encompasses innovation that gives rise to an idea having potential economic value to prospective customers. It, therefore, requires the founding of an economic organization to pool resources to give a shape to the idea, so as to earn profit under conditions of risk and uncertainty. The concept of entrepreneurship has undergone change over the years— from emphasis on “profits from bearing uncertainty and risk” (Knight, 1921) to “creation of new organization” (Gartner, 1985) to “the pursuit of opportunity without regard to resources currently controlled, but constrained by the founders’ previous choices and industry-related experience” (Hart, Stevenson, and Dial, 1995). According to Stevenson, the characteristics that make entrepreneurs thrive are resource mobility, reinvestment in the community, joy in the success of others, and valuing change. Resource mobility is evident in product markets, where, “anyone who doesn’t believe they’re competing against everyone else in the world is crazy.”

Knowledge-driven entrepreneurship The management practices that will take enterprises further into the new millennium will be knowledge based. The system will be collaborative, and not competitive or even cooperative. Intellectual property and its impact will play a critical role in breeding entrepreneurship. Organizations will be flattered with self-managing knowledge workers contributing to the growth of business entities. The emphasis will be on team effort to solve problems or undertake projects. Cross-boundary learning and knowledge flow will be dominant. The Indian economy has a major strength in ‘knowledge-driven entrepreneurship’, as it has the third largest pool of scientific and technical manpower. It is this human asset that will play a critical role in the promotion of entrepreneurship in the coming years, provided educational systems play their role in bringing in a change in the mindset of the youth. This will also require making the industry patent-literate, so as to derive full benefit by duly protecting knowledge. As such, future wars would be fought in the knowledge markets. For the Indian economy, education and healthcare will provide the extra edge and play a significant role in the global markets and derive inbuilt advantage, as far as economic growth and development are concerned. The size of emerging market opportunities in the IT software industry alone is expected to touch US$ 50 billion (Rs 230,000 crore) in the year 2009. To respond to this challenge, India’s pool of software professionals has to increase from the present level of Rs eight lacs to Rs 21 lacs in 2009.

Competitive edge secrets— 21st Century The twenty-first century has great challenges as well as opportunities for corporate entities, provided they are able to build a competitive edge in a global context. This requires core competence in the minimization of cost for globally-accepted, quality products and services at a opportune

time, with appropriate speed and an innovative culture to keep coming out with new solutions to existing and emerging problems. This basically requires a strategic thrust, by translating knowledge into technology to achieve better and improved results. Some of these areas are technology innovation, technology lifecycle planning, developing technological capabilities, managing design, development and commercialization cycle, and linking product and process innovation.

Values of successful Indians in IT industry Indian industrialists, that too first generation entrepreneurs, dominate the entrepreneurial zeal in India and the Silicon Valley. To name a few—Sabeer Bhatia, Prakash Bhalerao, KB Chandrashekar, Deepak Chopra, Desh Deshpande, Vinod Khosla, Narayan Murthy and Azim Premji. There is a common thread that binds the great achievements of many IT entrepreneurs and is worth understanding. Some of these are—they are all from leading and prestigious institutions, are highly principled, active and aggressive listeners, very clear about goals and priorities, great net workers, committed and hard workers, and are all voracious readers. Above all they have a philosophy of business geared towards quality and excellence. It is these qualities, coupled with being innovative in their field of operation that has taken them to greater heights and made their dreams come true. Broadly, it has been found that success comes to organizations wherein encouragement is given by the top management to values, new ideas, speed, openness, fairness and, above all, where best corporate governance practices are established. It has been rightly said that the three keys to high achievement are, "clarity, clarity, clarity," in goals and “passion, passion, passion” in execution. Success in life is largely determined by how clear we are about what it is that DAR E we really, really want. The author is Chief, Entrepreneurship Development and IPR Unit, BITS, Pilani. JULY 2008

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Radiology on the move manage all the centers and reporting doctors using the rule-based engine. Based on the rules and hierarchies, images are published from remote centers using a DICOM compliant upload utility to the central server. They are then routed to the specific reporting center or doctor. With InstaRad, radiology images can be viewed and analyzed on a laptop using a browser over a data card connection, without any loss of fidelity.

Can you give a brief overview of your solution?

T

imely and accurate diagnosis of a disease can often be the difference between life and death. For a series of critical illnesses, radiology, which includes X-ray, CT scan, ultrasound, MRI and other technologies, is one of the key tools of diagnosis. The availability of competent radiologists is, however, not universal. And without that, the diagnosis is incomplete. Sending scans from these machines to radiologists or referring doctors in another place is usually next to impossible, because these are heavy files that can’t be transferred over the Internet easily. And if you try and compress them using traditional compression tools, there is loss of data, which could hamper correct diagnosis. This is where Medsphere, a Bangalore-based startup claims to have made a breakthrough with its product InstaRad. We spoke to Sanjeev, MD of Medsphere about InstaRad.

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What is the idea behind Medsphere? Where did it originate? The idea behind the company Medsphere is to provide patient care at places and under conditions where doctors with the required expertise are physically not available. The idea originated at one of the international conferences in USA, but took shape in Bangalore. Our first product is InstaRad. There is a standalone version and an enterprise version. InstaRad is a pointto-multipoint image distribution solution, which allows radiologists or referring physicians to view medical images from anywhere, anytime. Doctors can connect from anywhere using Internet data cards on a laptop or a broadband connection. Multiple doctors can connect simultaneously and discuss the case in real time. InstaRad Enterprise has a central server, where images are pushed from all the centers. The administrator can

The solution is a streaming engine, which enables transfer of radiology images and data over the Internet and works even in situations where bandwidth is not adequate and speeds are as low as 20-30 kbps. This enables doctors to connect with their respective CT/MR machines (in the hospitals/diagnostic centers) and access the studies of patients who have been scanned and are waiting for the doctor to analyze them. Alternately, images can be made available instantly over the Internet to specialists who are far away from the location. It typically takes them two to five minutes to see the images they are interested in and send the report back to the center.

Anything in your background that lead to software for medical systems, particularly radiology? I have an honors degree in science from the Delhi University, a bachelors in engineering from Indian Institute of Science, Bangalore and an MBA from the Faculty of Management Studies, Delhi University.


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Radiology images can be viewed and analyzed on a laptop using a browser over a data card connection, without any loss of fidelity. ity. — Sanjeev, MD I started my career with Siemens in medical systems, where I got exposed to the radiology part of medicine and later moved on to GE Medical Systems. Between the two of them I spent over 20 years and during this period got tremendous international exposure, being based in Germany and Singapore and also traveling extensively across the world, including the USA. During one of my GE assignments, I was responsible for the business of GE healthcare IT.

What were the big challenges that you faced in creating the solution? Like they say, nothing is easy. This wasn’t either. Having said that, the big challenge actually came after creating the solution in convincing first ourselves and then the world that we had a good product of international standards, which is reliable and makes no compromise on the high standards required for diagnostics. To put it in other words, testing and validating it was a challenge.

Who are the key team members and what has their contribution been? Two people from IIT Kanpur, with prior experience with Yahoo, were and are the key contributors. Tapesh Aggarwal is the CTO out of Bangalore. Nishant Mittal is the director of R&D and is based out of the US.

Who was your first customer? How did you win them? There were actually two doctor friends with whom I had discussed this right at the conception stage. And they were excited about it. They actually contributed to the development of the product and were also the first two customers.

Did you have to get a number of international certifications? How difficult and time-consuming was the process, particularly for a small organization? During my professional career, I had been personally involved in ISO and CMMi level 5 certifications. I had also

undergone training in HIPAA and had a 6 Sigma green belt certificate. Also, sensitivity to processes and quality was always there. All this made the task of getting certifications, not easy, but definitely less difficult. Also, we did take help from some international agencies of repute to put our applications together. The process took about four to five months. The certification process made us aware of some of our shortcomings, which we fixed during this process and that was indeed useful.

What are your objectives and what challenges do you see in achieving them in the near future? We have got more than 70 customers and over 100 installations in India and a couple of them each in Singapore, Malaysia and Afghanistan. Now with international certifications done, we are gearing ourselves for the US and other international markets. This will have its own challenges in terms of visDAR E ibility and acceptability. JULY 2008

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An ubercool business of unescorted travels

There is a world of difference between traveling with a herd of tourists, and globetrotting in its truest sense. The latter sounds much more adventurous, doesn’t it? That is exactly what this business of arranging ‘unescorted’ travel is all about

/Binesh Kutty

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ogesh Shah and his spouse Suchna Hegde-Shah, of The Backpacker Co, can never forget how they scored their first customer. When Pooja Bakshi showed up at their home-office, our adventurous couple got ecstatic all right. Little did they know the level of convincing that they would have to do to score the first payload! Like most Indian parents, Pooja’s parents too were completely against the very thought of their daughter heading to Europe—alone and unescorted. “We had to go to Pooja’s house to convince her parents that it is safe, and that they should let her go,” recalls Yogi. “When she came back, she was very happy, had a new level of confidence, her parents felt proud, and emotions soared high,” he adds.

Genesis of the idea The founders happen to be avid travelers and used to take off on their own, every time they got a chance (and had the money). “We never liked going on day-1, day-2 kind of ‘herded’ trips. We found our own way and planned our own itinerary to go places around the world,” reminisces Shah. “Due to our vast exposure, a lot of our friends and acquaintances would look up to us for advice. We just simply went out of our way to sort their trip out,” he says. This is when the couple saw that there was a huge opportunity in the making that should be taken full advantage of. Besides their own passion to travel and to advise people, they were also aware of rising disposable incomes, and growth in the outbound travel sector. This is what brought about the founding of The Backpacker Co. The Backpacker Co is an independent travel company, specializing in ‘unescorted’ backpacking trips. It differs from a regular travel agency in many ways. One can have an extremely flexible holiday planned with The Backpacker Co. Unlike packaged tours, where there is a fixed time-table (get up at seven, twenty minutes at the Louver…) and limited food-menu, the Shahs plan the trip according to the budget, timeline, and interests of the client. Keeping these factors in mind, they custom-package the client’s tour in the most economical way—where they could stay in youth hostels, bed and breakfast, doing their own cooking at kitchenettes, etc. While they also sometiimes go to the extent of arranging the ticketing, forex, et al; it is okay with them if the client says that they themselves would like to do some of these tasks. In a gist, what these globetrotters do is use their knowledge and experience to make their client’s trips worth every penny. “We make arrangements for our clients to become a part of local festivals that happen abroad. For instance, we have some people headed to Spain in the month of July. This is when the famous ‘Pam50

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plona Bull Run’ happens at the festival of San Fermin. We have ensured that these people will be there to have an experience of a lifetime,” says Yogi Shah. Cooking holiday in Tuscany (Italy), single-malt trip at the breweries in Scotland, vineyard trips in Champagne—they do it all.

Yogi’s experience and contacts gained whilst working in his family business helped. And as they already had been advising friends and acquaintances, they had a fair idea of what the market was like. Besides this, they got their friends and family to spread the word.

Actual implementation

Strengths

Now, the concept might have sounded interesting, but the start was not a bed of roses. “There were people who would think we were a ‘bag’ packing company and used to enquire if we supplied bags!” exclaims Shah. “Then there were quite a few people who were apprehensive of how trustworthy we were and if our systems were up to the mark as we were newbies.” Customer orientation with regards to making them understand that they specialized in ‘unescorted’ travel was another starting challenge. “Making people understand that they would not get Indian food (a la ‘Rome ma ras and paris ma puri’) everywhere, was a challenge in itself,” says Shah. “However, we had the passion and conviction that there was a certain segment who wanted to travel independently and just needed someone to help them plan their trips, give them suggestions, tell them where they could sample the local food etc.” Suchna used to fly as a cabin attendant with Singapore Airlines, and Yogesh was running a family logistics business. However, the passion to start their own venture made funding a huge issue. Approaching banks did not help, as the couple did not have any collateral to offer. “We approached many VCs, who at that time did not see beyond anything that did not have the letters ‘IT’ in it”, recalls Shah. They put all their savings as seed capital and started the company. To save on costs, the initial operations took place from their home, and meetings used to happen at coffee shops. Their efforts did not go unnoticed, and they gathered some faith money from friends and family, which saw them through the initial years. When it came to registration and other paperwork,

The Backpacker Co is the first backpacker-centric company in India, and hence has the first-mover advantage. Firsthand experience of having traveled all over the world and the knowledge that comes with time is one other strength of the company. Besides this, they have some eminent partners across the globe, with whom the company has signed exclusive contracts for India. Also, the training passed on to the team is an asset in this very personalized business format.

Founders: Yogesh Shah and Suchna-Hegde Shah Company: The Backpacker Co Since: 2000 (informally), 2004 (incorporated) Big idea: Customized, low-cost ‘unescorted’ backpacking trips Charges: Depends on man-hours and resources put in Client footfalls: Initially 5 enquiries/week; now 70-80 enquires/week Conversion ratio: 50-55% Client profile: 18-35 years of age, singles and couples, high disposable income Staff strength: 25 full-time employees, 35 case-to-case external consultants

Weaknesses The concept of ‘backpacking’ per se is still in its infancy, and there are still some misconceptions about this kind of travel. Spreading awareness and orientation among travelers is something that will take time and money for marketing. And then, there is the perennial problem many startups face—funds. There is a lack of people who want to back a business that has little or no data to fall back on.

Opportunities Ask of the offshoot businesses that can emerge from this venture, and Yogi replies, “We have a plan to open travel stores across the country, retailing all travel-specific goods (be it backpacks, Swiss knives, travel guides etc). As travel is growing at an year-on-year rate of 20%, we see a huge opportunity for such stores.” Now that sounds capital intensive. Yogi adds, “We have approached a couple of angel investors and early stage venture capital companies and have received a positive response from them.”

Threats As the entire travel market is in a huge

growth phase, what is happening is category expansion and not competition. That is what Yogi believes, and he adds, “There is much for all to share. The problem, however, we see is from the global oil scenario as that will directly impact airfares, and the biggest chunk of a travel budget goes into buying the ticket.” Talking about the future, travel is set to get more specialized and companies will have to constantly evolve, and offer the right products, keeping up with the times.

What the future holds… The company has a focused five-year plan to have a pan-India presence and cater to potential backpacking clients in the UAE, Sri Lanka and Singapore. As of now, the company is only focusing on outbound tours, but by next summer they do plan to hit the domestic scene, where they will take people to home-stays in coffee plantations, etc. Besides this, they plan to run specialty travel stores across India where the traveler will get everything from a backpack to a travel pillow to a counseling session with a travel expert. “We also see ourselves very active in the eco-conservation area and giving back to the society,” says Yogi. “We are looking to be the leaders in the ‘experience’ DAR E travel field.” JULY 2008

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/blogs

Political instability and economic growth /Paranjoy Guha Thakurta

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ndia is going through a period of not just political uncertainty, but economic instability as well. But are the two connected? Prime Minister Manmohan Singh made a prestige issue of clinching the nuclear agreement with the US in the teeth of opposition from the Left, at the risk of shortening the term of his government. At the same time, inflation, as measured by the official wholesale price index, had exceeded 11% after a gap of thirteen years, interest rates were hardening, and oil prices the world over had touched record highs. Politics and economics are often sought to be separated. But the two disciplines are intimately interlinked. Yes, politics intrudes into every household, in power relations between spouses and among siblings. So does economics, by determining what individuals eat and how they live. To those who argue that bad politics constrains economic reforms, one of Prime Minister Singh’s favorite remarks is that there is no difference between good economics and good politics. To return to the questions formulated earlier: Is there a connection between the country going through political turmoil and economic upheaval? Or is it just a coincidence? While it is true that political stability is invariably welcomed by industrialists, it is also correct that political uncertainty is not necessarily accompanied by a slowing down of economic growth. India is by no means unique among democratic nations in having coalition governments. This country has borrowed and adapted from the United Kingdom a form of democracy often called ‘first-past-the-post, winner-takes-all,’ which has its own set of advantages and disadvantages. In France, which has a system of proportional representation, and in Germany, which has a combination of proportional representation and constituency or seat-based direct elections, coalition governments have been more a rule than an exception after the conclusion of the Second World War in 1945. In both these countries, coalition governments have not usually brought about political instability. For instance, there is in Germany a legal provision that an incumbent government cannot be voted out of power without simultaneously voting in an alternative government in between general elections. In recent years, for obvious reasons, many have suggested that India could adopt a similar system to avoid frequent elections that are expensive to conduct. Those opposed to this suggestion have argued that even if political instability results in frequent elections hav52

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ing to be conducted, this is a ‘small price’ to pay to ensure the existence of a vibrant and dynamic democratic polity. These arguments and counter-arguments came to the fore in discussions on Indian politics for the simple reason that between May 1996 and October 1999, the country for the first time witnessed three general elections in quick succession. If the experience of countries like Germany and France shows that coalitions and instability do not necessarily go together, Japan and Italy are proof of the fact that even unstable coalition governments do not automatically result in declining economic progress. Japan has had a series of coalition governments since 1976, when the Liberal Democratic Party lost its monopoly on power for the first time after the Second World War. That certainly did not prevent Japan from marching swiftly ahead of most of the world to become arguably the strongest economy in the world after the US, till the slowdown of the 1990s robbed it of some of the sheen. The Italian experience is even more remarkable. In the 50 years since the World War ended, Italy had an equal number of governments. Thus, governments in Italy lasted on average barely a year. Yet, Italy today is among the most industrialized countries in the world. This, if nothing else, should make us wary about drawing any facile conclusions about the effects of political instability on the economy. In India, the country’s gross domestic product grew by more than 7% a year, two years in a row, for the first time during a period of considerable political instability: GDP went up by 7.3% in 1995-96 and by 8% in 1996-97. Between April 2005 and March 2008, for the first time in the more than the six-decade-long history of independent India, the country’s GDP grew by an average of over 9% each year, three years in succession. The structure of the country’s polity was as stable or as unstable as it is at present, the difference being that the next general elections are scheduled to take place on or before April 2009. The months before any election comprise a period of political acrimony. The situation is no different this time round. The final point that needs to be made relates to economic growth itself. An economy can grow fast but the fruits of this growth can be unevenly distributed and benefit only a small section of the population. Economic growth has to be inclusive if it is to yield political dividends. Jobless growth is politically disastrous. This is what the BJP realized after its ‘India Shining’ slogan had little or no positive impact on the electorate and may even have backfired on the party. This is the dilemma before the UPA government at present. It is wary of crowing about its economic achievements at a time when double-digit inflation has eaten into the incomes of the poor who (unlike the rich) go out to vote in large numbers. D A R E The author is an educator, an economic analyst and a journalist with over 30 years of experience in various media—print, radio, television, Internet and documentary cinema.


How can you be part of this phenomenal growth story? To answer this & a lot more, TiE Delhi is pleased to bring to you, the Annual TiE Retail Summit, 2008. The ďŹ fth edition of this Summit will feature some of the most prominent and exciting brands in the Retail Industry & will enable delegates to understand and get relevant insights on the issues, challenges & more importantly the opportunity to be part of the Retail Space.  Keynote sessions by prominent industry leaders  Hot new Retail Stories  In-depth workshops on different aspects of Retail Industry from operations, logistics, property, IT to retail ďŹ nancing  Mentoring clinic - Opportunity for entrepreneurs to be mentored by senior industry leaders in the retail space  Guru Sessions â&#x20AC;&#x201C; Guru sessions by successful entrepreneurs & investors capturing their insights  Networking with prominent delegates & professionals

Driven by changing lifestyles, strong income growth and favorable demographic patterns, Indian retail is expanding at a rapid pace. Alongside, Indian cities are witnessing a paradigm shift from traditional forms of retailing into a modern organized sector. So whether its Wal Mart entering the Indian Retail space or the Government allowing 100 per cent foreign direct investment (FDI) in cash and carry through the automatic route and 51 per cent in single brand, its all happening in India.


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strategy/hiring

Innovative Hiring Strategies Companies are reworking their recruitment strategies to win the talent war. Social networking websites such as LinkedIn are only new ammunition to claim victory /Vimarsh Bajpai

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ou definitely put hoardings across busy junctions of a city to promote your products and services. Would you do the same when it comes to hiring key talent from the market? Probably not. But when Tesco, the British retail giant, set up its service support arm in Bangalore in 2004, it spent a huge chunk of its recruitment budget on hoardings. It was important for the firm to build its employer brand. This was because a majority of its prospective recruits, had either never heard of Tesco, or had no shopping experience at any of its stores across 13 countries. “We put hoardings in the corridor where IT folks travel, and Bangalore having slow moving traffic, you can’t even escape it,” says Sudeesh Venkatesh, Head, HR, Tesco HSC. The company not only altered the medium but also the message. Some of

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Tesco HSC’s IT recruitment campaigns showed potatoes and carrots, while the underline message was that “you use technology to keep food fresh.” The move by Tesco HSC is just an example of how companies are working on innovative ideas with the ultimate goal of attracting the best minds. Talent crisis is not just restricted to the hiring part alone. Training and retention also pose big challenges. Given the demand-supply gap in the market, firms devise multi-prong strategies to beat competition. This includes campus recruitments, internal job postings, employee-referrals, availing the services of placement consultants, participating in job fairs and advertising in newspapers and job portals. The trend, however, is now moving towards leveraging the benefits of online social networking. Many companies are now bringing in global talent on board,

Chartbusters • Employee referrals • Internal job postings • Social networking on websites such as LinkedIn • Job portals such as www.naukri.com • Employee branding • Campus recruitments • Placement consultants • Hiring teams instead of an individual • Targeting public-sector employees, ex-servicemen • Hiring housewives, senior citizens, fresh school pass-outs for part-time work • Partnering with educational and training institutes • Job fairs • Pre-placement offers (PPOs)


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strategy/hiring Ravi Shankar Global Head, Talent Management Group, HCL Technologies

HOW ARE THEY HIRING? HCL Technologies Internal recruitment: The IT major relies heavily on this model, which also saves huge cost for the company, at the same time ensuring that the talent pool remains intact. Campus hiring: Many of the business unit heads and senior people at HCL have been picked from the campuses of some of the best engineering, management and non-management colleges across the globe. Employee referrals: HCL finds this to be a “reliable channel” to reach out to its potential employees.

HCL is pioneer in the usage of Web 2.0 in its recruitment process and 5-7% of its total recruiting is done through this. with the clear intention of meeting their client requirements in specific geographies. Also, welcoming ex-employees back into the fold in no more an exception.

The Shift The hiring scenario has witnessed dramatic changes in the past decade with companies facing increasing talent

Sangram Tambe

Social networking sites: At least 5-7% of its total recruiting is done through websites such as LinkedIn. This primarily includes much of senior-level hiring, and makes it easier for the hiring managers to target candidates with niche skills or for roles based in alien geographies.

Tata Motors Employee referrals: The automotive giant seeks involvement of its current work force to attract key talent. Online recruitment process: Tata Motors holds selection tests to recruit its graduate and post-graduate trainees. Applicants can take the test from any location. Internal job postings: The automotive arm is also part of the Tata Group’s internal job postings service, and harps on employee movement across companies. Employer branding: The company sponsors scholarships at the prestigious Indian School of Business. Other sources: Jobsites, placement consultants, collaboration with industrial training institutes etc.

Vice President, Human Resources, Tata Motors

Tesco HSC Job portals: The contribution of job portals to the company’s recruitment mix has grown from 2% in 2004 to around 12% at present. Campus recruitment: The company hires from various colleges across the country. Tier-II cities and local talent: It reaches out to candidates in some of the small cities. The screening work has been outsourced to a service provider, who does the initial testing of candidates before lining them up for interview. Hiring for retention: The firm highlights a host of “employee benefits” on its website to attract talent with the clear idea to retain them.

Restricting our hiring strategy to traditional methods or channels will not suffice. As Tata Motors works towards becoming an international player, we are using a multitude of options.

crunch. This is also because new sectors such as retail have come on the horizon. While the number of people joining the workforce is a plenty, “employable” brains are in short supply. Employees are now calling the shots, with companies ready to offer benevolent “benefits” packages that promise superb “work-life balance.” “In the

past decade, we have witnessed the transition from being an employers’ market to that of an employee,” says Monisha Advani, Managing Director, Randstad India. The IT-ITES sector, considered to be the most lucrative from an employee’s point of view, has bore the biggest brunt of this transition. Such is the JULY 2008

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DARE.CO.IN Manav Gupta and Ravi Pratap Founders, TooStep

Sensing the opportunity in the Web 2.0 hiring space, two entrepreneurs — Manav Gupta and Ravi Pratap — have launched TooStep, a social networking platform that helps employers and job seekers through its specialized professional communities. How would you define Web 2.0 hiring? What are the advantages and disadvantages, if any, of such hiring technique? Web 2.0 hiring is all about using the power of social websites to reach out to right candidates, interact with them and hire them. While Web 1.0 hiring helped active candidates find jobs through job boards or job listings on company websites, Web 2.0 helps semi-active and passive candidates find jobs through referrals from or interactions with their social graph. So, the main advantage of Web 2.0 hiring is that it helps companies reach out to those semi-active and passive candidates. How is Toostep helping corporations find the right talent? TooStep connects employers with valuable audiences through its specialized professional communities website focused primarily on knowledge exchange (http://www.toostep.com) and the business card application on Orkut (http://www.orkut.co.in/AppInfo.aspx?appId= 370657255860). Jobs are posted within a specialized community and then get referred by its members to specific persons that fit the job requirements. To provide incentives to members to refer, organizations attach a referral reward to a job. We have 16 clients right now that include some of the leading IT services, IT product companies and global banks. How is TooStep different/similar from LinkedIn or other Web 2.0 platforms? LinkedIn is all about using your existing network to find jobs, sales leads or VCs etc. TooStep is a platform to interact and exchange knowledge with other professionals from a similar background as yours. Professionals come together in various niche professional communities and ideate, debate, discuss and share answers with each other on different professional topics. Through these interactions the users build new professional relationships and strengthen existing ones. What is your revenue model? How big is your team and what kind of growth are you looking at? Our revenues come from successful closure of jobs posted by our corporate clients. We charge them a certain percentage of the placed candidates CTC as placement fee. We share part of the placement fee with the referrer who referred the job to the selected candidate. We started clocking revenue within two months of launch and our revenues have been steadily growing since then. We are a 12-people-team right now. We are headquartered in UK with a subsidiary in Bangalore. We are funded by some top angels and seed funds from Europe and India. movement that a separate IT recruitment industry has taken shape. “It has become an ultra-competitive market, with soaring employee turnover and widening demand-supply gap. This has made the industry to be very aggressive and innovative,” says Ravi Shankar, Global Head, Talent Management Group, HCL Technologies.

What’s In, What’s Out In view of the challenges on the manpower front, most companies have reworked their hiring strategies. Rajesh A R, Vice President (Temporary Staffing) 56

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at TeamLease Services says the importance given to referrals has grown multifold in the last few years. “More than 50% of placements at TeamLease are done though referrals. We believe that this trend would further firm up with the advent of various social networking sites,” he adds. Take the case of Tata Motors. The automotive giant has adopted some new methods of hiring, while retaining traditional ones. It runs an employee referral program. “Through this, we encourage the involvement and participation of our current work

strategy/hiring

Websites like LinkedIn are extremely popular. However, replacing brick and mortar in the hiring process is still a challenge.

— Monisha Advani

Managing Director, Randstad India

force for recruiting the right talent,” says Sangram Tambe, Vice President, Human Resources, Tata Motors. It also uses an online recruitment system, internal job posting service and various employer-branding initiatives. "Job fairs, online talent auctions and talent referral programs, job sites, walk-in tours of employer campuses are just some of the popular means to bring home the best," says Advani. "Apart from this, unorthodox means of canvassing candidates and talent through street profiling is also gaining momentum, given the industry’s appetite for more to manage," she adds. Private sector firms are also poaching heavily into public sector companies and the armed forces. "Newspaper advertisements were given preference five years back. A few years back, the platform shifted to web portals for increasing ROI. Now blogging seems to be the buzz word," says Rajesh. The rules of the hiring game differ significantly in the case of mass- and class-hiring. Mass-hiring strategies work best for junior profiles, where the skill-set required does not vary much, while class-hiring is done for mid- and senior-level profiles. "For class-hiring, organizations engage executive search firms and some authenticated internal references," says Sampath Shetty, Vice President (Permanent Staffing) at TeamLease Services. Rajesh believes there has been a significant shift from the “carpet bombing” approach (mass approach) to niche hiring (class approach). "Lot of recruitment companies are segmenting candidates based on behavioral patterns, demographics, etc., rather


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strategy/hiring Sudheesh Venkatesh Head, HR, Tesco HSC

Some interesting job postings from startups on LinkedIn n Senior software engineer—startup—innovative

Join our internet startup and work on our patent-pending technology. We are a talented and innovative group of seven looking for #8. Don’t bother applying if you don’t live and breathe technology. n Unusual opportunity—state education officers at iDiscoveri

This role is very hands-on, entrepreneurial and will give you a lot of opportunity to paint your picture! iDiscoveri offers enormous opportunities to learn, make a difference, be recognized and rewarded.

Websites such as LinkedIn and TooStep are reaching out to passive job seekers, who are comfortable in their present position and do not visit job portals. The use of social networking websites for hiring is here to stay, and is picking up very fast. than just on skill sets to address the recruitment needs," he adds.

Social Networking There has been a significant shift in online recruiting, with the first wave seeing the emergence of job portals such as naukri.com. While job portals continue to play a major role in the recruitment process, the second wave (Web 2.0) has been unleashed by social networking websites such as LinkedIn, Orkut, Facebook etc. “When we started in 2004, the contribution of portals to our recruitment mix was 2%. Now close to 12% of our hiring is being done through job portals,” says Venkatesh. This is also a very cost-effective hiring method. Some of the new websites that are reaping the benefits of networking are TooStep, Yellojobs and Reffster. While job portals succeeded in reaching out to active job seekers, companies were still finding it difficult to attract those who are comfortable in their present roles, and do not care to put up their resumes on jobsites. “Web 2.0 hiring is all about using the power

n Entrepreneur, new internet business at Naspers The business leaders we are seeking to appoint have high energy levels, entrepreneurial drive, extensive knowledge of the Internet and digital world, coupled with sound business acumen. n Co-founder and key person at a self-improvement promotion company

I am looking for an ethically ambitious, smart and energetic team player with strong sales management background, preferably in consumer services. n Startup opportunity for iPhone developers

This is a great opportunity for programmers with entrepreneurial spirits. As a partner you will be offered company shares (equity in the company) or some sort of combination of equity and milestone payments. We have all options open at this time. of the social web to reach out to the right candidates, interact with them and hire them,” says Manav Gupta, Co-founder, TooStep. The firm is leveraging the social networking capabilities of the Web to place candidates for 16 companies who are its clients. The growth of social networking sites has been swift. For instance, LinkedIn had more than 19 million registered users as of February 2008, across 150 industries. “These sites, especially the business-oriented social networking sites, provide instant credibility to a professional’s profile, with the referrals and recommendations of the person, thus aiding recruiters

We are witnessing an unprecedented increase in lateral hiring in the private sector from the public sector, the armed forces, as well as experienced people looking for second careers.

— Sampath Shetty Vice President (Permanent Staffing), TeamLease

in captivating their mindshare. Thus, today many job seekers and recruiters in India are making use of such sites to identify the right and potential candidates, including international talent, at minimal cost,” says Shankar. "For recruiters", Shankar says, "social networking sites come to the rescue when one is looking out for candidates having niche skills or for roles based in alien geographies." He cites an example, “For instance, if an IT services firm wants to hire a regional head for its media and entertainment business based in Boston, it won’t find much value in uploading this position on job sites, and that’s where networking sites come into play when one is looking for candidates for roles based in far-off places.” Social networking sites can be used by recruitment agencies, as people who are not very active job seekers can be contacted and offered job proposals. The best part about Web 2.0 hiring is that it gives job seekers the chance to scan firms and vice versa. Most companies highlight on their websites the kind of work environment and benefits they provide. For startups, social networking websites now provide fertile ground for hiring and more and more entrepreneurs are logging DAR E on to it. JULY 2008

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Mixing business with development Delhi-based Earthy Goods provides marketing, branding and distribution services and other business skills to rural agri-based industries /Sreejiraj Eluvangal

H

ow many of us have wanted to mix social commitments with commercial success, yet were daunted by the enormity of the task and beat a hasty retreat? Social commitments don’t make good business, certainly not for a startup, say the elders. For some, however, business is the way to meet social goals. “Social good—providing jobs and improving the local economy—is one of the intended consequences, but our primary aim is to make our partner businesses strong,” says Reshma Anand, CEO of Earthy Goods & Serv-

ices Pvt Ltd. The company imparts business skills to rural, agri-based units and helps them brand, market and distribute their products across the country. It is part of the Chennai-based ICICI Foundation’s efforts to increase livelihoods of low-income households by getting them to engage with the market. “There are a large number of smalland mid-sized entrepreneurs in remote areas, facing similar challenges. The number of buyers of their products restricts the scale of their operations, which in turn restricts the income they

can generate,” the 33-year-old alumna of IIM-Bangalore points out. “If we do our work well and support our partners and they become healthy companies, this will create employment and benefit the local economy.” Started a year ago, Earthy Goods provides modern business skills, marketing and distribution services to traditional Indian agri-based industries, preparing them for financial investment. It started operations in August last year with around 12 manufacturing partners. “Most of them have doubled their revenues since we start-

“Social good— providing jobs and improving the local economy—is one of the intended consequences, but our primary aim is to make our partner businesses strong.” — RESHMA ANAND, CEO OF EARTHY GOODS & SERVICES PVT LTD

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ed working with them,” Reshma, a former innovation manager with HLL, adds proudly. At the core of Earthy Goods’ business philosophy lies the belief that traditional businesses in villages can carve out their own niche in today’s hyper competitive market. “Our partners should play on a level playing field. On the one hand, they must understand that the market will not pay for any inefficiencies at the backend. At the same time, they should enjoy the same quality of marketing inputs that any large producer would,” she explains. Rural units often face bottlenecks such as unreliable power supply and poor roads. However, Reshma points out that for farm-based products, the units can make up for the downside by being close to the source of their raw materials. In addition, Reshma points out, such units have the advantage of having direct links with farmers and understanding local tastes and preferences better. It is therefore not surprising that the partners of Earthy Goods are small, rural, farm-produce-based units that

Earthy Goods team visiting a unit at Bhuira in Himachal Pradesh manufacture everyday products such as jams, preserves, honey and cosmetics. Most of the existing partners have an annual turnover in the range of Rs 25 to 100 lacs. “Often, the first two months with a partner are purely about turning around that business and making the products marketable,” Reshma points out. “The starting point is to see what is required to compete in the mainstream market and enable the com-

pany to deliver it in a sustained way. We identify where the big leakages are in their business model. They could be in procurement, production, technology, quality of inputs, external vendors or capacity.” Besides playing management consultant, Earthy Goods also brings in practical benefits, such as improving the branding strategy and more efficient logistics. If the rural units already have brands, the goods are marketed

Earthy Goods team visiting a unit at Bhuira in Himachal Pradesh 60

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/unique idea of the month “If we do our work well and support our partners and they become healthy companies, this will create employment and benefit the local economy.” under the same brand. If not, Earthy Goods develops a shared identity. The company has set up a network of distributors, currently in the three north Indian states of Punjab, Uttaranchal and Himachal Pradesh, besides the National Capital Region. The entire logistical and distribution network is operated by Earthy Goods, including despatching the product from the units to etching distribution and marketing deals. The company is setting up its own warehouses, with one already operational in Delhi and is expanding to Haryana and Rajasthan. It also sells its products through the Future Group, the owner of the Big Bazaar chain. Over time, Reshma expects the Earthy Goods label to be a guarantee— not just for the product, but also of the producer. “We spend a lot of time on the ground conducting site visits. We ensure that all the legal formalities are complied with, all the labor and quality practices are adhered to. All the

products are tested through approved labs,” she points out. Earthy Goods, however, is more than a marketing and distribution company. Once the partners become stable and can profitably scale up, Earthy Goods also brings in investment into the company. “Investment is very much part of the overall goals of the engagement,” Reshma points out. Earthy Goods is part of the Chennai based ICICI Foundation’s efforts to increase the incomes of economically backward households in a sustainable manner. But the exact business model of Earthy Goods owes a lot to the experiences and expertise of its CEO. Though her first job after passing out of the IIM was with Hindustan Unilever, after six years, she decided to go back to her original love of developmental economics. “At Levers, I worked extensively in rural markets and I realized that I wanted to do something a little more hands-on.”

Having decided to quit, Reshma explored her options for four months. Having met many organizations, she finally joined the Delhi-based NGO Development Alternatives that explored possibilities of combining good business with good social objectives. “One of the key things was that there are ways to combine good business and good development,” she points out. Three years on, she met Dr Nachiket, ex-deputy managing director of ICICI Bank. “He was looking at what could be done to create a large scale impact in the rural area across a large number of products, to educate a large number of producers... I got involved, traveled for three months and met entrepreneurs, NGOs, government, self-help groups and farmer cooperatives. Soon, I realized that each set of organization is only addressing a part of the problem.” Having realized that the challenges faced by small producers in the rural areas across the country were very similar, Reshma set upon the task of addressing the same. “It was challenging to get the right people. We don’t want to dilute the fact that this is a business or let them feel that joining us is a sacrifice. We pay standard salaries, plus the upside as and when it happens,” she points out. After less than a year of operations, the Earthy Goods team has grown to 15 people. For the future, Earthy Goods wants to have a nationwide footprint. “We would like to show that you can do good and do good business at the same time.,” says Reshma, who expects the firm to take four or five years to hit the DAR E Rs 100 crore revenue mark.

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/sector analysis

The market for second-hand goods This business exists since generations. Here is a glimpse of some of the upcoming sectors and evolving trends /Shilpi Kumar

O

ne man’s trash, another man’s treasure? Well, it definitely holds true for the secondhand goods market. The markets in Jama Masjid, Chandni Chowk, Nai Sarak and Darya Ganj are incessantly popular for their second-hand goods, and these are just a few in one city. Be it mobile phones, books, automobiles or even clothes, the pre-owned goods industry, although unorganized to a large extent, is here to stay. DARE explores the current scenario of some second-hand goods segments.

Automobiles Cars make up a huge chunk of the second-hand automobile business. Be it economical ones such as Maruti or Tata or luxurious ones like Mercedes or BMW, it is a second-hand car that many first-time buyers (and many who want a second car) go for. This is perhaps because of the depreciation factor attached with automobiles, coupled with newer makes being rolled

out at an affordable rate. Says Vijay Mishra, a second-hand car dealer, “It is mostly the middle class that goes for second-hand cars. But nowadays, there are a lot of formalities involved with [new] car financing, which is why a lot of consumers are choosing pre-owned cars over a fresh purchase. If you look at places like Delhi, Chandigarh, Jaipur, Punjab, Haryana and Bangalore, around 65% of the population prefers buying second-hand cars.” Vijay gets around 20 queries in a month, mostly enquiring about Hyundai Santro and Honda. Maruti WagonR, Swift and Alto are also in great demand. When asked how much he makes per deal, Vijay replies, “If I have already made a payment for the car, I go for a minimum profit of 10%. However, if I have a car on a consignment basis, then I only ask for commission, in which case I am very flexible. There have been times when I only made Rs 500 on a deal, and then there have

Want to open a second-hand store? Choose between the following models: Consignment stores: Obtain used goods from clients and sell them for a percentage of the profits. This model is less risky, as you can fill your store with goods, without paying until sold. Resale shops: Buy used items first and then resell them. This model requires a heavy initial investment, but earns higher profits in the long run, as the profit doesn’t have to be shared. been other times when I have made as much as Rs. 50,000.” Mohit Dubey, CEO of Carwale.com, a consumer portal in the automotive space, also comments on the secondhand car industry in India. “Worldwide, the ratio of new cars to old cars is one to four. In India, however, it is still at one to one; with majority of the sales coming from the small car

65% of the people in Delhi, Chandigarh, Jaipur, Punjab, Haryana and Bangalore go for pre-owned cars. The two-wheeler market, however, is shrinking due to several old for new exchange offers combined with a number of finance options and low interest rates on new vehicles. 62

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/sector analysis market. The second-hand car market in India sees about 40,000 listings online every month, spanned across 15 cities, but we definitely have the potential to sell more used cars.” Even international car players are looking for potential buyers in the country’s used car market. Yet, despite the tremendous scope, the second-hand car dealing segment is facing a lot of hurdles. “When people set out to buy a used car, they are wary about its condition. They hardly have any details about the history of the car, and therefore lack confidence in buying it,” says Mohit, addressing one such hurdle. This information symmetry was also discussed in George Akerlof ’s “The Market for Lemons: Quality Uncertainty and the Market Mechanism.” Giving the example of the used car market as a primary example, Akerlof pointed out the problem of quality uncertainty because there are good used cars and defective used cars, i.e. lemons. As buyers of the car cannot determine whether the car is of good quality or a lemon, they only quote

Mohit Dubey CEO, Carwale.com

Worldwide the ratio of new cars to old cars is one to four, whereas in India, it is still one to one, with majority of the sales coming from the small car market. The second-hand car market in India sees about 40,000 listings online every month, spanning across 15 cities, but we definitely have the potential to sell more used cars.

Possible goods for secondhand business Antiques and collectibles Automobiles Books Baby equipment CDs and DVDs Cellular phones Computers Furniture House wares Garden equipment Musical instruments Sporting goods Tools Toys Clothing a price of a car of an average quality. This eventually results in the owner not placing his car in the used car market, which further results in the withdrawal of good cars and the flooding of low-quality cars in the market, enabling the buyers to quote an even lower price. It is about time that car transactions become simpler and transparent and the consumer gets the opportunity to buy a used car in a much more interactive fashion. So, how are some of the businesses dealing with this information asymmetry? Well, Carwale. com has developed a used car price guide, much along the lines of Kelley Blue Book of USA, which tells you how much you should pay if you are selling/buying a car, depending on the car’s year of make, model, version and mileage. “The used car price guide has served more than two million valuations in the past one and half years and looks at approximately 8000 valuations every day now,” says Mohit. Carwale.com also has tie-ups with leading car manufacturers like Maruti, Hyundai, GM, Tata Motors, Mahindra, Mitsubishi, Ford, Toyota and Skoda, as well as finance companies and banks like ICICI, Tata Finance and Deutsche bank, to facilitate the process of buying and selling second-hand cars. “It is this easy accessibility that brings around 25,000 second-hand car enquirers to the portal every month, out of which 40% actually go on to buy a car,” claims Mohit.

The unorganized second-hand car market is facing yet another setback. Apart from competition from other second-hand car dealers and the two-wheeler industry, car companies themselves have started dealing in second-hand cars, which is posing quite a threat. This organized sector, which includes players such as Maruti True Value, Hyundai Advantage, Ford Assured, Mahindra Automart India and Honda Auto Terrace, now accounts for around 20% of the business. For the second-hand car market, an interesting twist is in the making—the much awaited launch of Tata Nano. According to industry experts, the sales of old models of Hyundai Santro, Fiat, Tata Indica, and especially Maruti 800 will be the most affected ones. For instance, the price of a pre-owned Maruti 800 is expected to decline by 30 to 35%. However, Mohit disagrees, “The Nano will have an affect on the overall car market size, but I don’t think it will affect the second-hand car market directly. Apart from people with a limited budget that will go for this car, consumers would probably purchase a Nano to have an extra car apart from their primary car.” Vijay also backs him by saying, “Everyone will be able to afford a Nano, but the status symbol associated with more expensive cars will always stay, so consumers won’t stop buying them [other second-hand cars].” Moving on to the second-hand twowheeler market, the industry has definitely seen better days. The number of dealers of second-hand two-wheelers has been shrinking over the last decade. Just like in the case of used cars, two-wheeler companies such as Hero Honda, TVS, Bajaj and Yamaha now have their own old-for-new exchange offers, resulting in loss of business for these dealers. A number of finance options that go as high as 80%, combined with low interest rates, easily available to consumers wanting to buy a new bike, make it a good bargain. Students who cannot afford a new bike and people who want really expensive bikes (above Rs. 70, 000) are hitting the second-hand two wheeler market nowaJULY 2008

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DARE.CO.IN days and constitute a major chunk of their clientele. Perhaps a market to look out for in the coming years is that of threewheelers. Research shows that this segment is increasing at a rate of 20% (2006-2007), and therefore generating growth not only for new sales, but also for the second-hand market. Tamil Nadu, Kerala, Andhra Pradesh, Karnataka, Gujarat, Maharashtra and Delhi, are said to constitute about 90% of the overall market for passenger threewheelers, so they can possibly be lucrative regions to start this business. Another industry that is flourishing, and could possibly contribute to the second-hand goods market is of auto components, spare parts and accessories. In 2006-2007, the auto components sector garnered sales worth US$ 15 billion, including exports worth US$ 2.9 billion. India’s car accessories market is worth over Rs 10 billion, growing at a rate of 20% annually and is expected to hit a whopping Rs 20 billion by 2010. A flourishing domestic auto industry, rising number of aftersales and service centers and contract manufacturing, are all factors driving this growth.

Books Here is one sector that is only expected to bloom with time. Be it text books, guides, or just novels for leisure reading, second-hand books are in great demand, especially amongst youngsters. Talking about study textbooks first, we hit the market of Kamla Nagar in Delhi University, to talk to some of the popular bookstore owners. Sachin Rastogi of Book Land tells us, “60% of our customers in a day are secondhand book buyers. Books are getting extremely expensive, and for students living with limited budgets, they can be hard to afford. Students can save up to 30% of the cost, if they buy second-hand books. Also, some students like to buy second-hand books, especially because they are loaded with valuable notes.” Swaran Singh Tulsi of International Book House SS addresses some of the 64

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Textbooks, guides or novels an average price slash of 50% is what attracts customers towards buying second-hand books.

challenges in the business. “Although it is a good business, especially during the beginning and end of the year, changes in syllabus and editions happen with around 10 to 15% of the books ever year. This results in major loss for us. Also, the quality of books suffers, when dealing with second-hands. A lot of times, students tear pages from within a book, after which the book is completely useless for us.” Moving on to leisure reading, owner of Second Hand Books India, an online store for second-hand books, Sharad Churamani tells us, “The market for second-hand books is already huge, but in the next few years, I see it getting more organized.” Sharad has tied up with various libraries in the US and UK, from where he sources these old books. He claims to get around 70 customers that register on to his website every day, enquiring about secondhand novels. How much discount do his customers get? “A minimum of 40% is slashed off, but it can even go as high as 80% with some offbeat novels.” “Readers are primarily looking for novels from their favorite authors, at affordable prices. The quality of the books is hardly a hindrance. Sydney Sheldon, Geoffrey Archer and Mills & Boons are the most popular buys. Even the classics sell well,” says Sharad. Through his website, Sharad has made contacts with a lot of schools and shops especially in

the North East, to whom he provides second-hand books in bulk.

Cellular Phones Consumers, especially in the metros, are buying new phones almost every few months to keep up with latest trends. So, what happens to their old phones? They usually get sold off to mobile phone vendors at a lower price, eventually benefiting the second-hand market. Consumers from the low-income groups that aspire to own such gizmos, but cannot afford a brand new buy, are mostly the ones who go for second-hand mobile phones. Most first-time phone owners these days are directly going for cell phones instead


DARE.CO.IN

/sector analysis of landlines, thanks to their low cost and mobility, which is also helping the second-hand market to flourish. We talked to the owner of Laxmi Telecom(name withheld on request), a mobile phone and service dealer, to give us a clearer picture of the industry. According to him, “There is a lot of demand for second-hand mobile phones especially amongst the labor class as they are available at one-third of the original price. An average budget for these consumers for a phone doesn’t exceed Rs 1500. For Rs 2000, you can get a new phone these days.” So, what kind of phones do they go for? Even though consumers ask for phones with camera and video recording, handsets, memory cards and/or FM radio, price is still the biggest determiner in choosing a handset. Nokia is the most preferred brand, as it is easier and cheaper to get these phones repaired from anywhere. The supply of used cell phones is not meeting the demand, however. “Usually phones that have been damaged or defected are hitting the market these days for reselling. This means good business for cell phone repairing dealers, who can just replace the defected parts with new ones before reselling, and therefore giving warranty to the customers. Other dealers, however, do not prefer dealing in secondhand cell phones, especially if they are without a bill and charger, since the phone can be defected or even stolen,” says the Laxmi Telecom owner. Coins, stamps, notes, art and Bollywood memorabilia are the most popular pre-owned purchases on eBay-India

Computers Just like in the case of cellular phones, the used PCs business in India is getting popular, mainly amongst consumers with low budgets. Consumers in the metros keep upgrading their PCs and selling their old ones in the second-hand market. This is good news for people living in rural areas, who do not have enough money to invest in a new computer. Many educational institutes, home users, offices and businesses, in the B, C and D markets are major customers of used PCs. According to the ‘Thriving Secondary PC Market Puts Old PCs to Good Use’ report by Gartner (2005), for every two new computers that are shipped to US, Japan and Europe, one secondary market PC is shipped back to developing countries like India and China. The used PC market is growing rapidly and is expected to double to 110 million units by 2009. Santokh Behl of Simtron Computers tells us, “Around 20 to 30% of consumers prefer second-hand computers for home and in a month I get around 15 second-hand computer buyers. Major customers are families with children around five to ten years of age, who require it for training purposes. Once the child learns how to use a computer they opt for a new one.” According to him, an average budget for a consumer buying a second-hand PC is between Rs 8,000 to Rs 12,000. Compaq and HCL are the largest selling brands. When asked where

Deepa Thomas Senior Manager (Pop Culture), eBay India

Approximately 20% of all listings are second-hand products, especially in the Hobbies and Collectibles category. he sources the computers from, he says, “Corporate organizations usually upgrade their computers every year and sell the old ones to dealers like us for a small margin. We service these computers, replace some of the defected parts, and then sell it to the customers.” Where does Santokh see this industry in the next few years? “The secondary PC market is facing immense competition from falling primary PC prices, which can pose as quite a threat,” he says.

Others Deepa Thomas, Senior Manager (Pop Culture) of eBay India gives us their perspective on second-hand purchases. “On any given day, there are around 100,000 listings on our site. Approximately 20% of all listings are secondhand products, especially in the Hobbies and Collectibles category. These include coins, stamps, notes, art and Bollywood memorabilia.” So, what are the best practices for a second-hand goods seller to procure a good bargain? “Besides creating an attractive listing, with quality pictures and descriptive information, it is also important that the seller shares the history of the item with prospective DAR E buyers,” says Deepa. JULY 2008

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strategy/investment

Market or Startups: Where to invest? Startups comprise the newest asset class in the portfolio of an investor. How does it fare vis-àvis the stock market?

/Arunjana Das

A

startup is many things. The newest role that it is playing is that of an asset class. So, where does it figure today in the portfolio of an investor? It is not necessary that the investor should possess the skill to digest the balance sheet of a startup or even the competence of judging market performance over a period of time, as there are people who earn their living doing just that. We are talking about someone who possesses a corpus of, say, Rs 5-10 crore. What does such a person do with it? One option is, of course, to splurge it in one day, like Nita Ambani once claimed she could do. The other option would be to hit Dalal Street. Stock is a ubiquitous presence in almost every investor’s portfolio today. An addition to the generic investment vehicles is the startup. There are two main reasons behind this. Firstly, the global market meltdown has tak-

Even if one startup out of ten does you proud, the success of that one will far compensate for the failure of the nine others

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strategy/investment en a toll on both stocks and spirits. Secondly, the new wave of entrepreneurship has spawned several startups with decent balance sheets and success rates. The best part of the deal is that the stinky winds of a choppy market do not affect a good startup. Hence, the investor today sees a startup as a separate investment vehicle altogether.

Why startups? A seasoned angel investor has a very potent reason to invest in a startup. Joe Fernandes, the CEO of Total Environment and an angel investor, recently added startup investment to his portfolio. His primary reason for venturing into this new asset class was the personal angle attached to it. “I am relatively new in the field, but have several years of entrepreneurial experience. I wanted to be a part of other entrepreneurial setups and help them grow.” Investing in the stock market is a pure-return experience. Investing in startups is like sowing oats, wild or otherwise! “Even if one out of ten does you proud, the success of that one will far compensate for the failure of the nine others,” says Saurabh Srivastava of Indian Angel Network (IAN). Fernandes is amongst the growing populace of investors who are excited by the proposition of creating new life in the form of companies. Most of them choose to mentor the startups that they invest in. As they have been entrepreneurs themselves at some point in their lives, the investee startups get a good degree of rearing. Even without taking the personal angle into account though, startup investing proves to be a good option on the returns front.

Asset allocation Keeping other asset classes aside, let’s zero in on that ubiquitous entity in your portfolio—stocks. As a stock investor, you can choose to be a value or a growth investor. You can invest in large-cap or small-cap firms if market cap is what appeals to you. If you choose to spread your tentacles and take advantage of markets globally, then you can head towards foreign or

emerging markets. You have probably been doing all these things for a long time. Now, consider being part of an entity that perhaps a few years later may grow to become the next Infosys. You don’t need to be a promoter yourself to achieve that. Either become an angel investor or invest in an angel fund. If you are new in the business of angel investing, you can start off by investing in angel funds that invest in early-stage startups in India and abroad. Out of your Rs 10 crore corpus, if your stock to startup ratio is, say, 60:40, you’ll be investing Rs 6 crore in the stock market and Rs 4 crore in startups. This ratio and the corresponding trade-off, if any, will be different for different investors depending on their risk-return appetite. “I keep some amount of money aside for the stock market and some for angel investment. There is rarely competition between the two”, says Sanjay Bhasin, an angel investor with the Indian Angel Network and the Head of GSM and WCDMA in Nokia Networks, Finland. Let’s presume that your stock market return on average is 10% per annum under steady market conditions, while that from a startup is around 7%, assuming the investee startup has started showing positive cash flow. The average return from this portfolio (stock + startup) after a period of say, two years will be around 17.6%. Your actual returns may, however, be far from this number, either on the higher or lower side, depending on the state of the market and the general state of the economy. These two factors will affect your stock market returns, which might even plunge below zero and be negative during market troughs. In such a case, the other 40% of your investment will still earn you positive returns, provided you have been judicious enough in choosing the startup. In this way, a startup investment acts as a cushion and provides you some immunity against market inclemency. This, of course, does not mean that startup investment provides you sure returns. Murphy and his law can strike

Joe Fernandes Angel investor

Investing in the stock market is a pure return experience. I invest in a startup because it gives me a personal thrill of creating something new in addition to earning good returns. any time. However judicious you have been about choosing the right startup to invest in, things can still go wrong. The worst case scenario would be investing in a bad startup during a market downturn. The hole in your portfolio will be black and suck in all your dough!

Ratio play Like Bhasin, there are others who see stocks and startups as two independent asset classes, with there being no tradeoff between the two. These investors

Pravin Gandhi Angel Investor

Angel investing will always be green in the country, irrespective of the performance of the stock market. JULY 2008

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DARE.CO.IN Sanjay Bhasin Angel Investor

Investing in the stock market is all about financial returns. When you are an angel investor while you are looking for a return, you have an emotional attachment to the business and the team. When you invest in the market, you are not emotionally behind any of the companies. If they don’t return suitably, you mercilessly switch to another asset. might decide to devote only a certain amount of their assets into startup investing, irrespective of the size of their corpus or the returns. There are others

Saurav Srivastava Angel investor

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strategy/investment who believe in adjusting their portfolio over a period of time depending on the corresponding returns. In both the cases, the risk-return appetite of the investor has to be charted out first. On the face of it, rather than going for random asset-allocation, it might seem wiser to go for the latter option. There is, however, no reason why one approach should be better than the other. Chaos Theory still applies and an equation derived after several complex iterations might just be equal to a random selection in this case as well!

Identifying a ‘good’ startup Parenting a new entity does excite you, but only when the expected returns are good. If the success rate of startups in India were to be 10% (that is, only one out of ten startups would succeed), you should be able to identify that one startup while it’s still a toddler! Here, we’ll borrow a few lessons from angel investors. There are certain common indicators that help you gauge that, such as the nature of the idea, scalability of the business model, available or potential markets, projected earnings (cash flow), related risk, etc. Adequate analysis of the idea and the revenue model of the startup will take care of the first three. The last two are the much-favored variables in the risk-return analysis. Although the actual analysis is more complex, you can do a few basic calculations that will give you a fair idea of the actual figures. Let’s assume you are eyeing a startup XYZ in the education sector. The value of current assets is Rs 5 crore and long-term liabilities are worth Rs 2 crore. Hence, net working capital is Rs 3 crore. They are looking for an investment of, say, Rs 20 crore, out of which Rs 10 crore will be used in the very outset for product manufacturing. The projected cash flows for five years are, say, Rs 3 crore in the first two years and five, seven and eight in the last three years. The Internal Rate of Return (IRR) in this case would be 34%. The net present value of the startup is over Rs 15 crores. After cash infusion, the valuation will rise to Rs 35 crore.

Let’s assume you invest Rs 5 crore into XYZ, thereby owning equity over 14%. If the projected valuation in five years’ time is, say, Rs 50 crore, the cumulative return over five years on your invested capital would be over 40%. Your expected return from XYZ will depend on several other quantitative and qualitative factors, one of the most important being the degree of risk. Your expected rate of return is affected by two significant risk variables—industry beta and risk premium. Industry Beta, in this case, will be the beta generally associated with the education sector in the country. Both the quantities are dependent on industryperformance and, to some extent, on the performance of the market.

Pincushioning the portfolio Activist investors like Warren Buffet see market troughs as huge investment opportunities. That’s because Buffet has enough capital cushion for a possible higher failure rate and enough skill to rear that one investee company out of ten that is slated to make it big. Angels in India follow a somewhat similar approach while investing. Almost all angel investors we spoke to confessed that they have allocated some percentage of their portfolio to investing in startups, out of which another percentage is for cushioning. Imagine a pincushion that has enough fluff and spunk to withstand the pin-pricks of failed startups. The pin-cushion, in this case, is the corpus of the investor. Srivastava, a veteran angel minces no words when he says, “Always be prepared to lose some amount of money in the beginning. But when you’ve got a winner in your hands, the amount of returns and the degree of satisfaction that you get out of that one success makes it all worthwhile.” Hence, investing in a startup might not be all that different from stock investment. Just like in the stock market, you should invest in a startup only if you have enough capital to lose, without it affecting your portfolio much; that is, you’ve got to take risks. Caution and precaution are necessary. Don’t sow the oats generously. DAR E Sow them intelligently!


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ABCs of Entrepreneurship Awareness about entrepreneurship courses is low, but that has not stopped many top institutions from launching them /Chhavi Tyagi

E

ven while Mitesh Thakker was doing his MBA from SP Jain Institute of Management and Research, his heart was not into joining the corporate bandwagon. Instead, he wanted to set up a dotcom in true entrepreneurial style. “I always wanted to start my own business. I was so keen on doing it that I did not even participate in the campus placements.” says Mitesh, founder and director of NetPrice Services, a firm that helps large brands in checking the performance of their advertising spend. However, his company NetPrice is not his first venture. “My first company, which I started around 1999-

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2000, did not survive the bubble burst and soon I started having second thoughts. I started feeling that if I had taken those placements, my salary would have been much more than the total revenues of my company,” he says about his tryst with entrepreneurship. Mitesh soon found himself a job, but he still yearned to be his own master. “There was this idea of NetPrice Services in my mind, but I was full of doubts due to the past failure,” he remembers. It was then, in August 2006, that he received a mail from his alma mater, informing him about a new program

for those who wanted to start their own businesses. The program, not surprisingly, was called Start Your Own Business. “I wanted answers to questions like, should I work on my idea, or am I good with my present employer? What returns will it give? From the brochure, it looked like I would get my answers. The course would not only whet my ideas, but also provide some coaching on what to do at every milestone,” shares Mitesh. There are many people today who, like Mitesh, have a vision or an idea to launch their own businesses. However, unlike Mitesh, they may not have


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campus/startup to burn their fingers the first time, as there are a quite a few courses on entrepreneurship being offered now.

The courses Besides SP Jain Institute, many of India’s top institutions offer entrepreneurial courses today (see box). Some examples are IIM-A, IIM-B and Entrepreneurship Development Institute of India (EDI). Most of these programs require the candidate to have basic graduation, though in some, non-graduates can also apply. Sometimes, passion and commitment are all that the institutes look for when evaluating prospective students. “Entrepreneurship is kind of a holistic subject, it’s a portfolio of knowledge,” says Prof K Kumar, who teaches entrepreneurship-related courses at IIM Bangalore. “It offers two components—one is the business component and the other one is the entrepreneurship component. The business component acts as a safety net for those students who might not feel like starting their own ventures immediately, and the entrepreneurship component is the inspirational net that is going to instill passion and skills. So, if you are an entrepreneur who comes from an accounting background, you’ll proba-

NEN’s membership table Oct ’03

Mar ’05

Mar ’06

Mar ’07

May ’08

5

16

45

178

373

*Targets: Mar ’09 – 450 institutes Current total student body: ~350,000 Students actively engaged in entrepreneurship programs (March ‘08): 55,000 bly spend more time in understanding human resources and marketing and if you are coming from a marketing background, you’ll spend more time understanding finance and the business of managing money. You have to pick and choose from the portfolio that is offered to you.” In some cases, like that of the family managed business (FMB) programs, there are additional criteria like the applicant should have a role in a family business and should have spent some time understanding it. Thanks to the low-level of awareness about such courses, many institutes don’t feel the need for an entrance test either.

Still early years Entrepreneurship education in India is in its early stages. It has just grabbed a toehold in the country, and though gradually the number of institutes in-

troducing entrepreneurship programs is increasing, the awareness is quite low. Most of the participants in these courses are either the alumni of these institutes or got to know of them by word-of-mouth. Even those who turn up for many of these courses, especially the more popular family business programs, are not the usual entrepreneurs. As Suresh Rao, a professor at SP Jain, points out, “There are two kinds of people who join this program. One is the next generation of traditional business families that want to start new businesses and not stick to their traditional businesses. But then, they are very cocooned. By and large they are not entrepreneurialminded and are not even entrepreneurs at that stage. They are conditioned and influenced by their elders. The second class is comprised of those who have no business background.”

Entrepreneurship courses Institution

Courses offered

Duration

Fee (in rupees)

Incubation Facilities

SP Jain Institute of Management and Research

Start Your Business

17 weekends 16 days continuous

50,000 60,000

Yes

SP Jain Institute of Management and Research

Family Managed Business (FMB)

2 years (1week each month)

4,50,000 +15,000

Yes

IIM Ahmedabad/Centre for Innovation, Incubation, Entrepreneurship

iAccelerator and some very short programs like Anveshan, Solar Innovation Program, Cleantech Ventures Program and many other workshops

Varies

Varies

Yes

IIM Bangalore/NSRCEL for Entrepreneurs and Family Businesses

Management Program

I year (4 semesters) (3-4 sessions in each semester)

2,50,000

Yes

Entrepreneurship Development Institute of India

Programs on entrepreneurship like SMEs, micro enterprises, social entrepreneurship and a few PG diploma programs

Varies

Varies

No

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A myriad of reasons “An MBA would require me to take two years away from my business. Plus it would teach me probably a hundred things out of which I wouldn’t need 80 for my business. An MBA teaches you how to be a manager and not how to be an entrepreneur.” Abhishek Gutgutia, Student, IIM B “Spending two years doing an MBA would be too much and that is primarily the reason why most people who intend to start a business do not do an MBA.” Arpit Agrawal, Student, IIM-B “I don’t have the luxury to do a full time MBA. I liked the way it was structured; you didn’t have to go the class for about 10 days every four months. So wherever you are, you can just login and post your answers and keep up-to-date.” Usha P Raikar, Technology Director, Bangalore Softsell Ltd (attended family business course at IIM-B) “The SYB course is different, it is a pre-requisite before you start chasing your idea. You get to know what could be possible pitfalls on your journey, do you have the right talent to take it forward, and what would you need to make this idea a reality and scale it up.” Mitesh Thakker, Founder and Director, NetPrice Services Pvt Ltd (attended Start Your Own Business at SP Jain) Entrepreneurial education in India is in stark contrast to the West, where entrepreneurial courses are well established. “In countries like US, entrepreneurship education has been part of regular academics for about the past 20 years. It’s very well established in biz schools, engineering colleges, arts and science colleges. This is not the case in India,” says Laura Parkin, executive director of National Entrepreneurship Network (NEN), an organization that promotes entrepreneur values in the country. “In India, there has been a single course offering in the university system focusing more on self-employment than on innovation-based entrepreneurship,” she says. However, Parkin can feel a change in the atmosphere. “During the last five years, we have been able to see a great hunger for this kind of education among the young people,” she says, pointing out that NEN has around 3.5 lac student members spread over 373 institutes.

The long and short The biggest draw for such courses seems to be their flexible schedules. Most of these programs are not like regular business programs, but are designed in such a way that the partici72

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pants can manage, both, their ventures and their education at the same time. “I didn’t have time for a full-time MBA,” says Usha P Raikar, technology director for a software firm based in Bangalore, who attended the family business course at IIM-B. “I didn’t have the luxury to do a full-time MBA. I liked the way it was structured; you

An entrepreneurship program offers two components—one is the business component and the other one is the entrepreneurship component. The business component acts as a safety net for those students who might not feel like starting their own ventures immediately, and the entrepreneurship component is the inspirational net that is going to instill passion and skills in a student to be a successful entrepreneur.

— K Kumar Professor, IIM Bangalore

didn’t have to go the class for about 10 days every four months. So wherever you are, you can just login and post your answers and keep up-to-date,” she explains her reasons. So, are courses shrunk versions of MBAs, meant only for time-constrained entrepreneurs? Do they offer as many employment opportunities to their students outside of starting their own businesses? Arpit Agarwal, a member of the entrepreneur-cell at IIT Bombay, feels that there is a lot of overlap between an MBA and an entrepreneurship course. “An MBA already knows that these are the basics and these are how they are structured. This course will not teach anything more than that,” he points out. “This is for non-MBAs like engineers who want to start up and are clueless as to how to go about it. In fact, some of the professors in IITs are clueless about what to do in a startup situation—how to manage human resources, for example. So, anyone who hasn’t done these types of courses as part of his MBA would be benefited by these courses.” Laura Parkin of NEN does not see entrepreneurship courses as miniMBAs. She looks at them as an enabler, beyond the standard MBA, to help students meet challenges within today’s top corporations. “When you look at companies today they are actively promoting entrepreneurship internally. Entrepreneurship education prepares everybody who wants to be a leader to be a better leader. We have to shake the notion or demystify, debunk the fact that if you have taken an entrepreneurship course, you can immediately start a company. On our campuses, we actively encourage young people not to start companies immediately, because they should get some work experience before that.” NEN in fact, helps students find entrepreneurial jobs such as business planners. Entrepreneurship education has just entered the country. But it will go a long way in helping India churn out “job-generators” instead of “jobseekers” as former president APJ DAR E Kalam puts it.


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event/TiE

Hard selling dreams to investors The TiE event, ‘Start Small, Finish Big’, brought together entrepreneurs and investors to unravel the mystery of seed funding. It also pondered on marketing, technology and HR issues

“Y

ou should believe in your dream when you approach the investor,” said Dhruv Shringi, Co-founder, Yatra.com, a wellknown travel portal. Shringi was part of a panel discussion on financial aspects of entrepreneurship, moderated by Sudhir Sethi of IDG Ventures, at a TiE event held on May 30 in New Delhi. The event titled ‘Start Small, Finish Big’ was co-hosted by Sun Microsystems, as part of its StartUp Essentials Program. Shringi stressed that when his team approached investors, they tried to convince them that they were the right people to back and that the business they wanted to set up made financial sense to the investors. Making the pitch to investors is one of the most crucial steps towards securing seed capital, and no entrepreneur can afford to avoid it. It is at this stage that the financier cross-questions the startup team to judge if the plan holds promise for the future. Shringi and his team made multiple pitches to investors, only to find that each meeting made their thought process clearer. Based on their discussions, they kept fine-tuning their business plan. While most investors were convinced about the capabilities of Shringi’s team, some of them questioned their understanding of the Indian market. This was because the founding members of Yatra had spent long years abroad. What worked in their favor was that the promoters had been in the business of online travel during their stints in Europe. Thus in the end, three investors agreed to fund their business. Sudhir Sethi of IDG Ventures quipped, “Do stick to your business plan once you get the funding.” The other member on the panel was Sasha

/Vimarsh Bajpai

There are three things we look at—team, a large market opportunity and a

simple and clear exit.

— Sasha Mirchandani Senior Investment Director, Blue Run Ventures

Mirchandani of Blue Run Ventures. On a query raised by a member of the audience regarding what the investors look for, Mirchandani said “It is very simple. There are three things we look at—team, a large market opportunity and a simple and clear exit.” He said if these three things come out clearly to an investor, he would not mind putting his money into the venture. If not, the investor would want to suggest some changes in the team, and discuss and debate further. Exit is very important in the case of VC funding. “We are very patient investors. We can wait for five or seven years, but that much is the timeline we have. We cannot wait for nine to ten years. Therefore, entrepreneurs should understand logically how a clear exit happens,” said Mirchandani.

It is important for entrepreneurs to understand that venture is about risk and

equity holding.

— Sudhir Sethi Founder and CMD, IDG Ventures India

Dwelling on the jargons of term sheet when it comes to negotiating with investors, Sethi said that liquidation preference is a given in the case of VC deals. He added that it varies with the amount of capital, the stage of the firm and the risk perceived with regard to the business. “I would strongly advice you to get a lawyer to help understand the term sheet,” said Mirchandani, who recently founded Mumbai Angels. VC funding is not just about money, but also the references and contacts that investors bring in as value-adds. “We at IDG Ventures, after eight investments, collectively spent one-third of our time in customer introduction to our investee companies,” said Sethi. Shringi agreed that investors bring a lot of credibility to a business venture. The session on HR was moderated by Gita Dang, Founder Director, Talent Advisory Services. The discussion focused on issues related to finding the right co-founder and the classical mistakes of hiring. The discussion on technology focused on virtualization, standards compliance and security, while that on marketing revolved around the importance of understanding customers and time to market, changing with market change and keeping your ideas secure. Sanjay Sharma of Sun Microsystems highlighted the benefits of Sun Startup Essential Program for entrepreneurs. The program makes available Sun’s hardware at deeply discounted prices for startups. The end of the event saw five startups showcase their businesses. A mentoring session was also held for the DAR E benefit of entrepreneurs. JULY 2008

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The business of music bands The Rolling Stones have grossed over US$ 1.5 billion till date. Why don’t we have an Indian Rolling Stones? With talent a plenty in the country, all we need is a professional approach to make it happen

/Arunjana Das

C

hris Powell, the former drummer of Euphoria, an Indian music band, founded Bandish in 2005. Their debut album and subsequent music videos made merry for weeks in the likes of MTV World Chart Express, B4U Music Charts and Channel V Top 20. All inveterate musicians, the Bandish guys possess one trump card that they play extremely well— music. “Believe in your music and leave the rest to heaven” is Powell’s motto. But is mere good music going to fetch you the greenbacks? The Rolling Stones, a British music band, have grossed over US$ 1.5 billion till date—the highest by any music band, according to the Fortune magazine. In 1994, they managed to make $121.4 million in a single year. Eleven years later, it is still raining money for them! From their “Bigger Bang” worldwide tour that started in 2005, they earned US$ 437 million (Rs 1,748 crore), and became the highest earners of their kind in the history of music. The Rolling Stones are followed by bands such as U2, Eagles and Springsteen’s E band and even one-person shows such as Madonna, Michael Jackson, Elvis Presley, Celine Dion and Elton John, in being the top-earners in the field.

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In olden days, a court jester earned lots; a court musician, even more. In the present day, the court is a concert, the audience king and the musician, a music band. The reward, if not half a kingdom, could be well over the GDP of Eritrea. India has seen the rise of many music bands in the last decade. Those bands that have been around for over the last five years are Pentagram, Orange Street, Advaita, Parikrama, Indian Ocean, Them Clones, Strings, Euphoria and a few more. Bands such as Silk Route, who were very popular during the 1990s, did a slow retreat over the years. Some others didn’t even take more than a couple of years to absolutely vanish from the scene. In a country of music lovers and headbangers, it’s rather a surprise. What kills a band is usually not the lack of talent, but a deficit of business sense. Talent is the necessary input for starting a music band, but business foresight is the key to running it. Just like in any other business, if the model is not financially viable, it will die a rather fast death. This has happened to many small-time, albeit talented, bands in the country. But, of course, it makes a difference if you have a Dan

Marketing channels for a music band startup 1. Performing in nightclubs and pubs 2. Participating in fests and competitions 3. Online presence 4. Advertising on air 5. Corporate shows 6. Self-sponsored concerts Sandhu in it; a venture capitalist who also happens to be an avid rocker!

Band and Business It’s not just the rolling that has spared the Rolling Stones any moss. Headed by 65-year-old Mick Jagger, a graduate of the London School of Economics, the Rolling Stones work like a giant multinational organization. They write balance sheets, pay taxes and employ a host of accountants, bankers and lawyers! Why don’t we have an Indian Rolling Stones? The answer lies in the common origin of most bands in the country—the school or college campus. A common love for music, voice of the nightingale, expertise over at least one


opportunity/entertainment music instrument and the chemistry to mix all of them up; that is roughly how it starts. As long as it’s for garage pleasure, things sail smoothly. The moment the need for commercialization is felt, glitches start. Reasons of discord could range from ownership rights of songs, to division of the money earned.

The Legal Side You should treat your music like a private company despite the fact that you don’t need to register with the Registrar of Companies, (atleast not yet!), but you do need to get the name of your band registered with the Trademark Office. This is the first legal milestone, done to avoid legal disputes later over possible duplication of names. The second is the distribution of ownership and rights over songs and their sales. This needs to be put on paper from the very beginning. A partnership agreement between the band members detailing the division of ownership and shareholding rights to songs, brand name and equipment, profits and expenses, resolution of disputes, etc. has to be made.

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The biggest challenge is making a place for yourself under the sun. Money is always a constraint. Hence, cost-effective ways of brand marketing are needed.

— Sandeep Khaund, Verve

To cover your band expenses and pool the income in, it’s advisable to create a common bank account. Once your band starts generating income, you’ll also be required to pay taxes. You can seek help from a chartered accountant to determine the tax slabs and filing of returns etc. Choosing the right manager is very important. This should be done by getting into a management agreement that covers issues such as the duration of representation, amount of commission, terms of termination, etc. Striking deals with record companies requires adequate legal knowledge,

What challenges did you face while starting up? As mentioned, I used to play in many bands in Delhi. Lucky for us, I already had the experience of the good and bad points in bands. I implicated the same from the beginning and that made us fare much better than the others around that time. How did you frame your business model? We got paid Rs 500 for the first show. We took the band up, step-by-step. Our first show was on September 15th 1991 and by Parikrama the time we had reached our Subir Malik first ever outstation show (18th March 1992), we had raised the price to Rs 18,000 (36 times up in a few months). That time it was impossible to get any good instruments, so we saved money from shows and sent people to Singapore periodically to get instruments etc, so we could sound the best. How would you define a successful band? Very simply, a band that commands a good price and gets shows on its own, instead of the need to sell them to clients. What would your advice be to the startup music bands of the country? Know your goals, keep egos out of the practice rooms, work hard and have loads of beer!

which is where an attorney who shops for record labels and negotiates a good deal for you comes in handy. If you plan to play in nightclubs or hotels to start with, a performance agreement comes into play covering payment issues. An artwork agreement for those providing artwork to your copy releases and memorabilia is required to cover issues such as the kind of artwork to be used, payment for the same, etc. A compulsory license agreement is required to define copyright issues over ownership of songs written by nonband musicians and the permission to cover the same by the band. When you team up with an independent record label for recording your music, you need to enter into an independent record label agreement, detailing ownership rights, payment issues, etc. A distribution agreement is for the distributors of your record labels covering issues such as areas of distribution, payment, length of contract, etc. In addition to the above, equipment insurance, property and liability insurance also need to be obtained.

Brand Building Look for ‘Naagin the Lady Cobra’ on YouTube. It is a cheeky rock adaptation of a well-known Hindi song from the 1956 movie ‘Naagin,’ performed by Decibel, an Indian rock band. Uploaded to share with a couple of friends last year, the wide appreciation the video received took the band by surprise. With 1,000 hits in a month, 12,000 in 10 months and almost a lakh till date, it turned out to be an excellent marketing strategy for the band. Decibel have been regular performers in rock shows around the country, especially Blitzkrieg—the IIT Delhi rock festival, Launch Pad 2007 organized by Channel V and The Great Indian Rock Show. Such events have been literally the launch pads for many other upcoming music bands of the country. Superfuzz, the winning band at Launch Pad 2007, got the ticket to perform at the Hard Rock Café, New York. Superfuzz got immense exposure from the event, as did the runners up, Bhayanak Maut. The latter have been JULY 2008

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opportunity/entertainment

David Hooper Kathode Ray Music

David is an American author and music promoter. He started Kathode Ray Music, a music marketing company, while still in college and has promoted and marketed bands such as No Doubt, Blue Oyster Cult, Mercy Playground, Lightning Seeds, etc. What are the common challenges faced by startup music bands? Just like any other business, the biggest challenge facing most bands and musicians is lack of a focused plan. The people putting the group together have a good idea, or a basic thought on what they want to do, but no real nuts and bolts on how they’re going to go about it. Most bands are tossed around like a ship with no course. They see something that looks interesting and go in that direction, only to switch directions a moment later when something else comes along. More focus is needed. Bands would have better luck starting with a destination first and working backwards. What are some of the cost-effective brand building exercises that a startup music band can do? One of the easiest things bands (and other musicians) can do these days is to get a solid online presence, which will allow them to connect with their fans in a relatively inexpensive way. Also, all musicians would benefit by some kind of live, in-person event. This is easy to do and really builds a strong relationship with people. What legal issues should a startup band consider? I wouldn’t seek an attorney out right away, but I would establish some kind of “band agreement” just to make sure everybody is on the same page and going in the same direction. What happens to the band name if something goes wrong? Who owns the publishing? Get that stuff clear now, so it doesn’t become a big deal when something big happens. regulars at Blitzkrieg, Saarang—the IIT Chennai fest and NLS Strawberry Fields Bangalore. There are several things that Bhayanak Maut have done right, which explains why they have been around for over five years now! As they found that the existing bands have named themselves in “corny or atrociously Indian” fashion, they named themselves Bhayanak Maut— “Terrible Death”—in a rather spoofy fashion. The name granted them instant attention. To sustain this, they have been producing quality self-compositions over the years. Doing gigs at nightclubs and participating in competitions are the usual ways of securing loyal followers. The newest buzz in town is the Pubrockfest 2008, sponsored by Motorola and Kingfisher. A nationwide event, it will feature major bands playing in all four corners of the country. Sanjay from Turquoise Cottage (TC), a pub in Delhi, says, “Pubrockfest 2008 is a melting pot of bands all across the country. We are expecting some 200-250 people in our outlet in Gurgaon for the 15th June gig.” Café Chinese and Thai in JMD Plaza, 76

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(TC’s outlet in Gurgaon) is a popular haunt among musical folks in town. TC has a tie-up with Rock Street Journal (RSJ), a monthly magazine on rock music that covers upcoming bands in India and South Asia. RSJ has been organizing many events across diverse genres in the country starting from the Great Indian Rock Show (GIR), Rocktoberfest, Pubrockfest, Brotherhood of Rock to The Jazz Utsav, Beyond the Blues and the Concert for Tibet. Figuring in RSJ, hence, is a sure-fire ticket to the Turquoise Cottages of the country. Buying airtime in music channels is another way of reaching out to a huge audience. An ad 15-20 seconds long could cost you anything from Rs 2,500 to Rs 3,000 on MTV. Supposing the ad is aired 10 times every day for 10 days, your advertising cost on air comes to over a couple of lakhs. Compared to this, self-sponsored shows cost you roughly the same, but if not covered well by media could reach an audience painfully smaller than in the previous case. Popular music instrument outlets, such as Furtados in Mumbai, also of-

fer visibility to new bands. Along with offline visibility, a web presence is indispensable for a startup. Space on social networking sites such as MySpace, Facebook, etc. helps them connect to a bigger audience. Visibility is as significant a factor as audibility. Uploading cheeky teasers is just one part of it. A mid-stage band startup can opt for artwork and memorabilia for greater visibility. The personality of the band has to be well-defined for the audience to be able to distinguish it from the rest. You can easily tell apart a Dream Theatre from a Metallica, Nightwish or Maiden. These are all rock-metal bands, but with distinct personalities of their own, which makes them different from others in their own genre.

Finances In India, most of the early revenues earned are from concerts, fests or shows. Whereas places like Turquoise Cottage and Hard Rock Café (HRC) are excellent platforms for showcasing your company (read band) and gaining popularity, cash obtained from such shows is not much. A corporate show, on the other hand, not only fetches you immense popularity, but dough worth Rs 50,000 to a few lakhs per show. Big corporate giants, in almost every sector, keep looking for upcoming music bands to perform during their product launches and exhibitions. Launching a music album, comprising say six songs, on an average would

Finances Production: Music album comprising six songs:

Rs 1.5 lacs to Rs 2 lacs Distribution: Record labels: 15%

total sales

to 30% of

Manager’s commission: 25% to 30% of the sales percentage that the band gets Revenues: Corporate shows and concerts:

Rs 50,000 to Rs 2 lacs per show Sales of CDs and DVDs: Varies Sale of artwork and memorabilia Varies


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opportunity/entertainment cost you around Rs 1.5 lacs to Rs 2 lacs. For clinching a good record label, your initial expenses, including recording and marketing, could be between Rs 5-8 lacs. The manager’s commission is around 25% to 30% of the sale percentage that the band gets. With sufficient brand equity, deals with advertising agencies and movie houses for producing music for commercial ads and movies can also be clinched. In this sphere, Them Clones have done pretty well, composing music for bike ads and even for the acclaimed movie Hazaron Khwaishen Aisi. The popular song “Bandeh” from the much controversial movie Black Friday was composed by another band, Indian Ocean.

Challenges “I have been in the business of music for the last 18 years, and it’s only now that I have seen the light of day. Passion and persistence are indispensable to earning fame in this field”, says Powell of Bandish. According to Powell, one of the major reasons why bands die out, in spite of having played some excellent music, is because their music is too genre-ized. The target group, hence, gets smaller, and hence the market, which is very niche in itself. Antariksh, the rock-fusion band from IIT Delhi did pretty well during the first year with performances in rock shows and the India Habitat Center, but has now dispersed. Sumit Singh, the former guitarist of the band, cites the reason to be logistical, in that the members are now employed at different corners of the world, which makes meeting up hard. Sumit is now pursuing a solo career and jams with his old mates when he meets them. Out of every 10 bands formed in the country, only one manages to stay on for more than a couple of years. Hence, one of the biggest challenges is, obviously, sticking together! The reason can again be cited to the roots of these bands. Most of them are started as college bands, performing in rock fests and nightclubs. Music is yet not a mainstream activity for most

What are the problems currently faced by startup music bands in the country? When I started Bandish, the very first problem I faced was finding the right people for the band. You need people who are likeminded. We wanted to make mass music, with loyalty to no particular genre. We wanted to simply make music for people to listen to, and we did just that. We released our debut album titled “Kaise Kahoon” in June 2006. It was released and marketed by Times Music, with two Music videos—Goonj and Tum Hi Chris Powell Tum. The third music video was shot on Bandish the title song “Kaise Kahoon” by CNN-IBN. However, getting the music out to the market was a huge challenge. For startup music bands, shopping for a good music label is a huge task. Good marketing can make a product not only heard, but also seen. You need good music labels to really understand and believe in your music for having them market and promote you. Hence, your challenges start right from the composition of good music to getting out to your audience. What do you think are the reasons behind the frequent disappearance of good bands in the country? There is immense talent on the scene. However, there is a dearth of music bands that have been around for a long time. One reason behind it could be that the Indian music bands are too genre-ized. If they are playing Jazz, they play only Jazz. If they are playing rock, they play only rock. I don’t know how good or bad that is, but as far as Bandish is concerned, we see ourselves as entertainers. If there are 14,000 people in my concert hankering for say, fusion music, I won’t do rock for the 10 people present in the crowd. The very fact that we play a wide variety of good music enables us to reach out to a bigger audience, rather than keeping us confined to a niche market. What is your motto of success in this industry? Believe in your product, ‘cause if you don’t, no one else will. If you possess the passion towards music, then make your music your vision. Setbacks will always be there. I knew the kind of challenges that I might face in the industry, monetary, legal, and many other kinds, and I was prepared mentally to handle them all. Fame might come early or late. Whatever be the case, the key is to not give up. If music is your dream, then pursue it until you get it. of them. With college over, the band quickly disperses owing to the members choosing to pursue their jobs or higher studies elsewhere. A number of bands have cited the lack of sufficient funds as a major reason behind failure. It’s actually not the insufficiency of funds that kills them, it’s the lack of a focused approach towards searching for funding sources and managing well what amount of funds they have. If the funds are parked up on Mount Sinai, you have to play Moses. Sandeep Khaund, a musical lad from Assam, started Verve (name changed)

a couple of years back with two friends. Their first song, “Hey Ram” became immensely popular all over the country and gained a loyal fan base. They have been performing at concerts and shows at the likes of the Hyundai Motor Show. When asked about challenges in starting up a music band in the country, Sandeep says, “The biggest challenge is making a place for yourself under the sun. Money is always a constraint. Hence, costeffective ways of brand marketing are needed.” Perhaps, a “Naag the King Cobra” is DAR E the answer! JULY 2008

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issues/recession

Looking beyond a US recession A recession in the US economy may shakeout smaller, generic service providers from India’s services export sector /Sreejiraj Eluvangal

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Though at first look a slowdown or recession in the US, which accounts for 61% of India's IT and BPO exports, may seem very negative for the health of the industry, the cloud is not without its silver lining

ndia exported around US$ 25 billion (Rs 1,050 crore) worth of software and services to the US last year, about 61% of its total exports in this segment. Now, as the US economy braces for a slowdown or even a recession through 2009, the impact can be painful for certain classes of outsourced service providers. While specialized and niche offerings, in the BPO, KPO and IT outsourcing fields, may continue to do well, the recession may force out some of the smaller, non-specialized players. “Personally I feel that this is going to be recession and not a temporary slowdown,” says Kulindra Srivastava, VP at ExpertServ Solutions, a Gurgaon-based provider of credit check, verification and activation services of mobile subscribers for the US market. With all the revenues of the three-year-old, 300strong firm coming from the US market, Kulindra keeps a sharp eye on the world’s largest economy. Kulindra, who sees the going tough for the US economy for the next two to three years, accepts that the slowdown in consumer spend-


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issues/recession ing during the last one year has left its impact on the growth of his business in Gurgaon. “Definitely, the slowdown is evident in new acquisitions of customers,” he points out, adding that ExpertServ, concerned with back-office processing work, rather than active customer acquisition or conversion, has been less affected than many others. He points to two segments within the outsourced services industries that will find the going tougher than others—startups and telemarketers. “The overall scenario, as understood by me, is that the BPO’s that are into performance-based processes will be affected to a very large extent. In fact, many of them have already shut down. The younger players will have a difficult time in the current scenario,” he says. Rajiv Mathur, CEO of Opus ABS, a 30-employee, outsourced service provider to small and medium communication service providers, agrees. “The biggest impact will be on those companies that are engaged in marketing,” he says. “When the economy is contracting, people may not enter into new deals, and these companies then get impacted because they get paid by their performance,” he adds. A combination of factors such as the US slowdown and a strong dollar, clubbed with increasing consolidation, has seen many smaller companies and entrepreneurs shut shop, observes Sam Chopra, president of the Business Process Industry Association of India (BPIAI). “We have approached the government through various forums to make them recognize and understand the complexity of the situation,” he says. “Due to non-timely actions, a cash cow may well get slaughtered,” he adds.

However, not everybody is that pessimistic. Tim Bond has had a ringside view of the voice BPO market. He is the managing director of Launch Offshore, which helps BPO firms to hire speakers of different languages from across the globe, and has one hand on the pulse of the voice services market. He believes despite heavy pressure on US corporations to cut costs, the work coming to India will continue to do so. “The voice market used to be outbound [telemarketing], but that has changed now. It is now customer service,” he says. “US companies have customers who need to be serviced. If they go from India to Sri Lanka, they won’t get services any cheaper. So, the downturn will not mean that companies will layoff people in India. Existing deals will not be cut back, but there may be some pricing pressure,” Bond adds. Besides customer service, there are other niche areas that face very little impact from a mild US recession. One of them is legal outsourcing. Kunoor Chopra, president and CEO of LawScribe Inc, which employs around 125 legal and technical experts at its Gurgaon office to help US law firms deal with their workflow says, “Companies may not have as much money as before, but they still have litigation needs.” She expects the industry and her firm to keep growing at a rate of 60100% in the coming two to three years. Kunoor points out that unlike telemarketing or customer service, the oldest branches of the Indian BPO industry; emerging and niche outsourcing services like legal and supply-chain management are in their early stages and offer both growth and entrepreneurship opportunities. “We market

ourselves as an efficiency tool, and recession or not, companies need to be efficient. We help US law firms carry out legal processing work for a fraction of what it would cost them to do it locally,” points out the California-based Chopra, herself a lawyer from the US. She, however, hurries to add that even the niche financial services BPOs, such as outsourced investment research providers and more mainstream BPOs such as customer support will feel the pinch. “If you are in the mainstream BPO market, the dollar fluctuations and pricing pressures can completely wipe out your profits. So, there is a risk to the financial sector BPOs and low margin players,” she adds. Though at first look, a slowdown or recession in the US, which accounts for 61% of India’s IT and BPO exports, may seem very negative for the health of the industry, the cloud is not without its silver lining. While the winding down of economic activity will negatively impact service providers who depend too much on US corporate expansionary, marketing or investment activities; the cost pressures may also encourage new US companies to look at outsourcing for the first time. Kulindra of ExpertServ points out that a tougher economy may put some US companies out of business and end in loss of revenue for Indian firms that service them, but can also have beneficial impact. “ If the client is not able to survive this slowdown, we may have a situation where the client goes bankrupt and we lose a chunk of business,” he says. “Other than that perspective, the outsourcing option will be seen as a major tool of reducing cost and being able to keep on running the business,” he adds. DAR E


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opportunity/e-waste

Not your typical e-commerce opportunity With technology sales booming and e-waste piling up, recycling this waste is on its way to attract more people to this business /Chhavi Tyagi

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ske andar bahut paisa hai. Ye sone ke pahad jaisa hai.” (It has lots of money. It’s like a mountain of gold). This is how Syed Hussain, an e-waste recycler in Bangalore, describes his business. Considering the business he deals in is “high volume, with good returns”, this does not seem like an exaggeration. We are talking about one of the biggest “crisis” India is facing—electronic waste, better known as ‘e-waste’. A recent study done on e-waste in India, by GTZ (German Technical Cooperation Agency) and MAIT (a body representing India’s IT hardware, training and R&D sectors) pegs the total e-waste of the country in 2007 at an astounding 3.3 lac tons. This number is expected to touch 4.7 lac tons by 2011. The study done takes into account PCs, TVs and mobile handsets in India. However, TVs, PCs and mobiles are only a small

Street estimates for recycle value (rupee figures)

PC Mobilephone TV

1800 175 1200

part of the entire e-waste spectrum; there are many other equipments that come under this category (see box).

E-waste defined As there is no formal definition in the country as to what all comes under electronic waste, the directive by EU is generally taken as a reference point while assessing the situation in India. EU defines e-waste as, “Electrical or electronic equipment that is waste including all components, sub-assemblies and consumables, which are part of the product at the time of discarding.” “Waste” is defined as “any substance or object the holder disposes of or is required to dispose of pursuant to the provisions of national law in force.” EU relies on “national law” to define waste. However, in developing countries like India, which have more lax environmental legislation, this may not always apply. Therefore, while in EU countries e-waste recycling is governed by strict laws, in India, people like Hussain look at it more as a recycling opportunity. “The way I would define recycling is, take a goat and separate the meat, bones and skin from it. Skin would go to a shoemaker to be used in making shoes and chappals, bones

and meat would go to their respective needs. This is how I see recycling.” Satish Sinha, Associate Director of Toxics Link, an NGO that has been working on the issues of toxics and waste, agrees with Hussain about the

Categories of electrical and electronic equipment covered by EU Directive on e-waste 1. Large household appliances (ACs, refrigerators) 2. Small household appliances (vacuum-cleaners, toasters, watches) 3. IT and telecommunications equipment (PCs, printers, phones) 4. Consumer equipment (TVs, cameras) 5. Lighting equipment (different kinds of lamps) 6. Electrical and electronic tools (drills, saws, sewing machines) 7. Toys, leisure and sports equipment (video games, game consoles) 8. Medical devices (cardiology equipment) 9. Monitoring and control instruments (smoke detectors, heating regulators) 10. Automatic dispensers


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opportunity/e-waste standalone prospects of the recycling business. “Electronic waste is a bouquet of many electrical and electronic products and some of these products have high-intrinsic material value. Computers, especially, have very high material value and if recycled properly, 95-98% of the materials can be recovered and put back in the process of material flow. The business is stated to be profitable, and both the formal and informal sectors are profiting from such trade,” he says. Syed Hussain, who started ASH Recyclers in 2001 still signs his name with a thumbprint, owns a Honda car and two apartments in Bangalore. Little wonder then that Hussain compares the mounds of e-waste lying in his yard to a ‘mountain of gold’.

Not a wasteful opportunity The size of the opportunity could well be imagined when one considers two factors—3.3 lac tons of e-waste in India and three authorized recyclers present in the country. As it is, this figure only includes PCs, TVs and mobiles. “Even a tube light gives not less than Rs 20 to Rs 25 recyclable worth," Hussain cites an example of how profitable these other e-wastes are. “People are not aware of the worth of metals present in these things.” So, if this business is so highly profitable, why is it that there are only three formal recyclers in the country? Why, when the volumes are so high, a significant part of it is lying unused? The answer lies in the lack of awareness and proper legislation in India. However, there is increasing pressure on the government to frame strong policies in this regard. Many expect the government to come out with

stronger legislation that will benefit recyclers by stipulating certain types of electronic items to be disposed off only through organized e-waste disposal firms, and forcing corporations to provide facilities such as collection centers for recyclers. Perhaps, it is not a coincidence that plans for a 12,000-ton private sector e-waste-recycling plant in Haridwar, the biggest of its kind in India, was announced only last month. The plant, to be completed in four to five months, will involve an investment of Rs 25 crore. “The electrical and electronic equipment waste industry is among the largest and fastest growing industries in the world,” says MR Deshpande National Project Coordinator of e-Waste Initiative, a joint effort by the Indian, German and Swiss governments to promote awareness and safe handling of e-waste. Deshpande traces the e-waste opportunity to tremendous growth of the Indian IT industry during the last decade. “Early product obsolescence, resulting from continuous innovation, has been resulting in electronic waste turning into the fastest growing waste stream. As such, recycling is attracting the attention of many.” Not only are Indian players looking at entering the Indian e-waste industry, but there are companies from outside who are also looking for joint ventures here. For example, ASH Recyclers are in talks with a foreign company to set up a joint venture.

Challenges The opportunity of recycling e-waste is as big as the e-waste generated. However, thanks to the absence of strict legislation, proper collection infrastructure and the inefficiencies of the informal

Waste Electrical and Electronic Equipment (WEEE) Generation: Top Ten Cities City Mumbai Delhi Bangalore Chennai Kolkata Ahmedabad Hyderabad Pune Surat Nagpur

WEEE (Tons)

11017 9730 4648 4132 4025 3287 2833 2584 1836 1768

Source: IRG Systems South Asia Pvt. Ltd.

recycling sector, the full potential of this industry is yet to be realized. No collection centers The biggest complaint of the recycling industry is that there is no proper mechanism for collecting e-waste in the country. P Parthasarathy, founder of E-Parisara, has invested around Rs 2.5 crore into e-waste recycling plans in Bangalore, and is eager to draw the line between private enterprise and public responsibility. “Collecting waste is not the recyclers’ responsibility. When the money is with the municipality, then it is the municipality’s responsibility to take care of the waste—collection, transportation and disposal, all of it—as the taxpayers’ money is with it. As a recycler I am not in a position to go around the city and collect computers and tube lights. It is not possible,” he says. However, not all private recyclers are waiting for the government to set up a suitable collection mechanism. Hussain has taken the responsibility of collecting e-waste for his recycling plant in his own hands and has put ewaste bins in many residential locali-


DARE.CO.IN ties. He asks residents of the localities to throw their e-waste in those bins. This action, on his part, has solved two problems for him—getting the required volume to do his business and educating the layman about e-waste. “At the end of every week, I go and collect this waste and come out with cars full of different kinds of e-wastes. Someone puts a laptop there, some put cables, desktops, tube lights, etc. I get more waste from these households than the e-waste I get from corporations,” says Hussain, who uses his own cars for transporting this e-waste. He now plans to hire more cars for transportation of the waste and expand his collection base. Lack of awareness These collection centers, say industry insiders, would be of no use if people aren’t properly educated about the problem of e-waste. The awareness on e-waste is so low in the country that most of the people haven’t even heard of the term. Compare this with the increasing penetration of technology in our lives and you get a good picture of how much of e-waste must just be lying around. The total PCs sold in India in 2007 reached a figure of 6.5 million—a jump of 20% over the previous year, according to IDC. The growth in mobile phone sales was even steeper at 74%—touching 2.45 crore units in the quarter ended September 2007, according to Gartner. Whatever the numbers may be, for on-the-ground people, they make little sense as a substantial amount of this waste does not reach the recyclers and the plants have to work much below their capacity. “These statistics are very true. But all this doesn’t come into the

opportunity/e-waste e-waste channels. You Waste Scenario go and ask the common man, he says he doesn’t E-waste generated No. of formal recyclers (in percentage) in operation know what e-waste is and if they don’t know, 35 1 Western India they don’t know how to South India 30 2 dispose it off,” agrees North India 21 None Parthasarathy. “The me- East India 14 None dia is still just projecting Source: MAIT and GTZ the problem and NGOs are just doing studies on it. We are of- from developed countries forms a very fering ourselves as solution providers. significant part of the e-waste in India. But where is the awareness?” The same report from MAIT and GTZ Parthasarathy built E-Parisara with puts the figure of e-waste illegally iman initial investment of Rs 1 crore, but ported in the country at an additional due to lack of awareness the plant dai- 50,000 metric tons. ly gets only two tons of e-waste on an Industry insiders hold the system average basis. Though Parthasarathy responsible for most of the problems has added one and a half crore more plaguing the e-waste recycling industo his initial investment, he admits it is try of India. The lax rules are indirectly working much below its capacity. leading to proliferation of cheaper, but more dangerous forms of informal reHighly fragmented cycling industries, they point out. As per the study by MAIT and GTZ, 95% “As regards legislation, at present of the recycling—segregation, disman- there is no law specifically applicable tling, etc. —happens in the informal to e-waste in India. However, draft sector, based in urban slums. It also guidelines for e-waste management says that though north India happens have been recently issued by Central to be the leading processing center of Pollution Control Board [CPCB] of Ine-waste in the country, there are no dia,” says Deshpande. “Though existformal recyclers in the north and the ing enactments like Hazardous Waste east of India (see box). This clearly im- Management Rules, Water [Prevention plies that it’s the informal sector of the & Control of Pollution] Act, 1974 and e-waste industry that is reaping in all Air [Prevention & Control of Pollution] the profits of the trade. Not only that, Act, 1981 etc are also applicable to ethe informal recyclers, say experts, are waste recycling units.” polluting the environment by using As our lives become more and more unsound methods of extracting pre- technology driven, the volumes of ecious metals from waste. waste have only one direction to move in—upwards. With both the industry No proper legislation in place and the government working on setThough India has just three formal re- ting up the regulatory and infrastruccycling units, informal recylers abound ture framework to deal with the surge, in this trade. Apart from the problem prospects for the recycling industry DAR E of informal recyclers, illegal import can only get better.

DAR E


25 years of

our focused

VISION To expand globally in the knowledge domain through quality media products and services


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A Giant Step in Entrepreneurship Education 20 faculty members complete the rigorous NEN’s EEC module to become India’s first qualified entrepreneurship educators.

“T

he entrepreneurial mystique? It’s not magic, it’s not mysterious, and it has nothing to do with genes. It’s a discipline. And, like any discipline, it can be learnt.” Management Guru Peter Drucker’s famous words may reflect only part of the truth—for it takes both discipline and passion to make entrepreneurship work—but this aspect of ‘discipline’ has been largely ignored in the Indian context. Until recent years, entre-

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preneurship in India was considered a trait—something one was born with, or had the passion for, to be taken up only if you were cash-rich, lucky, brave or perhaps foolish. Hardly anyone considered it a ‘subject’, something that could be taught and enhanced through training and education. Very few Indian universities had courses in entrepreneurship, and even these courses were dependent on boring, voluminous books for information.

What is EEC? EEC is a faculty development course that provides a rigorous foundation in entrepreneurship content and innovative participant-centered learning methods, to help build a world-class entrepreneurship faculty in India. This 5-module course spread across a year includes entrepreneurship concepts and content, participant-centered teaching methods like case method, simulations, projects, outside-classroom activities and tools for developing programs on campus.


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In March, 2006, National Entrepreneurship Network (NEN) turned change-maker with its unique Entrepreneurs Educators Course (EEC), designed to build a pool of world-class entrepreneurship faculty in India. The EEC was developed and taught by leading faculty from around India and the world, in partnership with Stanford University’s Technology Ventures program, and IIM-Bangalore. Faculty from Stanford University, Columbia University, London Business School, Scottish Institute of Enterprise, Babsons College and Thammasat University in Bangkok were enrolled for EEC. Today, more than 250 faculty members from universities across the country have signed up for EEC. But back in 2006, only 20 teachers chose to take the road never traveled. In June 2008, these 20 pioneers have become the first-ever faculty members in India to be officially certified as qualified entrepreneurship educators. And it didn’t come easily. They started entrepreneurship cells for students; introduced new courses on entrepreneurship; and organized over a thousand entrepreneurship-related events in their campuses. Most importantly, they fostered the spirit of entrepreneurship among the youth. At first glance, these professors may seem unlikely revolutionaries. Some

are experts in marketing and finance management; a few teach human resource management and engineering; one is a hard-core researcher in life sciences! Only two of them have had past brushes with entrepreneurship. According to them, it was the countless experiential experiences they shared at the EEC modules that made the difference. Radha Iyer, Senior Lecturer, K J Somaiya Institute of Management Studies and Research gives her thumbs-up to the content and the teaching methods, which resulted in her “everlasting love affair with entrepreneurship." “Being on the other side of the classroom has never been so much fun. The international faculty’s teaching methods were of global standards—innovative, participant-centric and very doable,” she explains. “The methods were so handson that I would implement them in class the very next day,” adds Dr S N Soundara Rajan, Dean, Management Studies, Rajalakshmi Engineering College, Chennai. Their batchmate, Dr Gayatri Saberwal, couldn’t agree more. She should know. Dr Saberwal, faculty scientist at the Institute of Bioinformatics and Applied Biotechnology, Bangalore, had “zero exposure to the world of business” when she joined the course. “I imagined the course to be very tough.

I didn’t know the jargon. But despite the gamut of information, the materials were condensed into bite-sized forms, and this made the subject interesting,” says Dr Saberwal, who is now an expert in analyzing business plans. “NEN didn’t just show me the moon, but also gave me a ladder to reach there,” she adds. Even for seasoned entrepreneur Atul N Bharat, EEC was an eye-opener. Shares Bharat, who runs his 11-yearold corporate training and recruitment company, along with heading corporate affairs and training at IPS Academy, Indore: “I was always driven by instincts while running my company. The EEC made me realize the diverse elements that build a successful business venture. I have now not only matured as a teacher, but a businessman as well.” Meanwhile, Prof Vasanti Venugopal, faculty, Commerce Department, Mount Carmel College enjoys the buzz EEC’s fun exercises have created in campus. Cross-disciplinary in nature, the concept of entrepreneurship has excited students from all backgrounds, from commerce, mathematics to sanskrit. “When we started the E-Cell in 2006, 120 students signed up. This month, the number rose to 1,000,” she says. Prof Narendra Joshi, Assistant Professor, Fr C Rodrigues College of Engineering has also noticed a growing interest in entrepreneurship even among new students. “EEC has helped us make the optional course on entrepreneurship so attractive that the number of students enrolled has risen from 10 to 200 in two years,” he says. “It has helped me become an effective mentor for young students who want to become entrepreneurs,” adds Sumit Roy, Senior Subject Matter Expert in Seed Infotech Ltd. Dr Arya Kumar, professor at Birla Institute of Technology and Science, Pilani, has the last word. “Teaching is an exercise in entrepreneurship itself. There is a lot of room for creativity, innovation and change. That is my biggest learning from EEC,” he says. D A R E Content provided by NEN JULY 2008

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/straight talk

Criticism:

Ignore it? Ban it? Or fight it?

R Balakrishnan (Balki) National Creative Director Lowe India

C

riticism and scathing reviews never worry me. I really don’t care what anybody thinks, because I feel the only thing you can do in life is to do what you believe is right, what turns you on and what makes you tick. If that doesn’t make other people sing with you, their bad luck, because I am singing. So it’s their problem, not mine. I think the starting point of real creativity is not to do it for anybody else. Especially in a field like advertising, which has got a disease of learning to understand the consumer. That’s the biggest lie in advertising. You can’t even understand your mother, how will you understand a customer? So you always write for yourself, and if people like it, good!

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/straight talk

Advertising has a lot to do with luck. There are fantastic people who have these fantastic ideas, but if their ideas are not liked by others, they become bad advertising people. If they like it, they become good. So I have been lucky in the sense that people often like what I like.

Tina Seelig Executive Director Stanford Technology Ventures Program “Nothing should be criticized in a creative exercise.” omeone recently told me that allowing criticism in brainstorming sessions will encourage people to look at alternative options. I don’t agree; I would never do that. Nothing should be criticized in a creative exercise. Brainstorming is an interesting way to explore an idea. It costs nothing to write them down on paper. In fact, the brainstorming should focus on how to make a bad idea into a good idea, because even in a bad idea, you can find a lot of good. For example, I often conduct brainstorming sessions in corporate workshops where I ask the participants to come up with the unlikeliest of customers for their products and get them to think of ways to convert them into perfect customers. These sessions go a long way in making people strategize creatively.

S

Raman Roy Chief Executive Officer Quatrro BPO Solutions

W

hen I set up my first call center, there were a lot of people saying it will not work. They said that the lag of voice between the US and India was so large that Indian call centers will never succeed. I took up the challenge. I made an international call to an American friend who was also our potential customer. I said, “Hey Joe, I happen to be in town. Can we grab a meal together?” He said, “Ya, I’m free to meet you. What time?” and we went on talking for two minutes. At the end of the conversation, I said, “So, Joe, you believe I am in town?” He was puzzled. I told him I am calling from India. I said, “Joe, you said this will never work. But now you believed that I was making a local call and we could meet for dinner.” He paused, and then said, “You’ve proved your point. Okay, we’ll give you fifty people worth of business and let’s see where it goes.” This is how we got our first customer.

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blogs/opinion

The Entrepreneur as a Futurist Envisioning the future has brought about success to many; should you train to become one such entrepreneur? /Anurag Batra

I

sn’t that an obvious one for an entrepreneur? Are we replacing the word visionary by a new word/ term “futurist”? Isn’t my column supposed to give you real insights and honest stories about entrepreneurship and how to be an entrepreneur than enrich your vocabulary with a play on words? This question of how one can be an entrepreneur and what are the attributes of an entrepreneur, was again put to me at my business school’s annual orientation for the fresh batch, and made me think of an honest answer and a framework on being an entrepreneur. Let me tell you where I first encountered the word futurist and embraced it. I met an Iranian American entrepreneur in the communication business about six years back, who lends his insights to entrepreneurs for them to be able to leverage them. He helps them visualize the future. I wouldn’t say he is a consultant, as I feel a consultant is a person who when asked what time it is, looks at your watch, tells you the time and takes your watch away. I am sure you are feeling the dissonance as you would have know the consultant as a person who likes to con and insult people and hence, the term consultant. Coming back to the future as

that’s where all of us belong, who is a futurist and what is his connection to entrepreneurship? To put it simply, a futurist is a person who is thinking about tomorrow, who can visualize it and deliver today by taking you to the future. The entrepreneur is a quintessential futurist as the entrepreneur has to think ahead, visualize and get his team to also visualize the future. I know all the Hindu scriptures and all spiritual gurus say that live in the present and enjoy and savor it. Why am I talking to you to start looking at what is going to happen? If you look at all entrepreneurs, whether it is Sabeer Bhatia of Hotmail or Naresh Goyal of Jet or Subhash Chandra of Zee or Kishore Biyani of Future Group, all of them have in some way been futurists. They have envisioned the needs of consumers, their lifestyle and the market for certain kinds of goods and services in the hedonistic economy that we live in. If futurists make good, successful (read very high market capitalization) entrepreneurs, then how does one train to be a futurist? Is there an Indian Institute of Futurists? Of course not. The only way to do it is to observe other entrepreneurs and develop your sixth sense, the art of betting big on the future. As an entrepreneur you are always trying to stay ahead of everyone and innovate. Entrepreneurship is akin to leadership, you have to anticipate the pulse of the society and the socio-economic trends that will create opportunities, and spot them ahead of everyone else and create a business out of it. It is as enigmatic as the charm of Marilyn Monroe. Being a futurist is not about being a gambler, who is sometimes able to

bet successfully on a horse. Being a futurist is not about being able to crack some statistical numbers and extrapolating demand. Being a futuristic is about being perceptive about what lies ahead. It’s about making the unknown your friend and companion. Being a futurist is sometimes akin to just being commonsensical, though it’s not easy as most times “Common sense is the most uncommon thing.” Let me also say that being a futurist and an entrepreneur is also not something for which you need to be a gold medalist from a topnotch school or study books on entrepreneurship or strategy, but it’s about beginning to incorporate future and how it will impact the macro and micro world in our decision making. A futurist is a person who paints a beautiful painting about the lady he wants to meet, but hasn’t yet met. The futurist creates the future on the canvas and to be a successful entrepreneur the portrait of the lady you create should actually be the lady you meet in life. A futurist makes a difference to the world around him and is compassionate about his family, society, nation and the world. A futurist is a leader with a sense of where he or she is going to lead his and his fellow team member’s destiny. A futurist knows his/her legacy and tries to script it. Are you ready to be a futurist? This article is dedicated to the futurist, entrepreneur and human being extraordinaire, DAR E Vahid Mehrinfar. Anurag Batra is real life, first generation entrepreneur who is Much Below Average (MBA) from the prestigious Management Development Institute, MDI. When he is not busy writing such columns, he can be reached at anuragbatrayo@gmail.com. Anurag is the co founder and editor-in-chief of exchange4media group which includes exchange4media.com. JULY 2008

91


Organizations DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

Advaita............................................... 74

E-Parisara.......................................... 81 Eritrea ................................................ 74

K. J. Somaiya Institute of Management Studies and Research .... 85

Quatrro BPO Solutions ...................... 88

Amazon ............................................. 34 Antariksh............................................ 77

Euphoria ............................................ 74

Karadi Tales ....................................... 34

Randstad India .................................. 55

Evolve Brands.................................... 44

Kingfisher........................................... 76

Registrar of Companies ..................... 75

ASH Recyclers .................................. 81

ExpertServ Solutions ......................... 78

Kolkata Knight Riders ........................ 40

Rock Street Journal (RSJ) ................. 76

B4U Music ......................................... 74

Facebook ........................................... 57

Launch Offshore ................................ 79

Rocktoberfest..................................... 76

Babsons College ............................... 85

Fiat..................................................... 63

Launch Pad 2007 .............................. 75

Rolling Stones ................................... 74

Bajaj................................................... 63

Ford ................................................... 24

LawScribe .......................................... 79

Saarang ............................................. 76

Laxmi Telecom ................................... 65

Scottish Institute of Enterprise........... 85

Lightning Seeds ................................. 76

Second Hand Books India ................. 64

LinkedIn ............................................. 54

Seed Infotech Ltd .............................. 85

London Business School ................... 85

SEOBook ........................................... 41

London School of Economics ............ 74

Silk Route .......................................... 74

Lowe India ......................................... 86

Simtron Computers............................ 65

Mahindra............................................ 63

Skoda ................................................ 63

Maiden ............................................... 76

Sony .................................................. 24

MAIT .................................................. 80 Maruti................................................. 62

SP Jain Institute of Management and Research .................................... 70

Maruti Alto ......................................... 62

Springsteen ....................................... 74

Medsphere......................................... 48 Megacab ........................................... 14

Stanford Technology Ventures Program .............................. 88

Mercedes ........................................... 62

Stanford University ............................ 85

Mercy Playground .............................. 76

Strings ............................................... 74

MeritTrac ............................................ 44

Sun Microsystems ............................. 73

Meru ................................................. 14

Superfuzz .......................................... 75

Metallica ............................................ 76

Talent Advisory Services ................... 73

Microsoft ............................................ 33

Tata Finance ...................................... 63

Mills & Boons ..................................... 64

Tata Motors ........................................ 55

Mitsubishi........................................... 63

TeamLease ........................................ 56

Moses ................................................ 77

Terrible Death .................................... 76

Motorola............................................. 76

Tesco HSC......................................... 55

Mount Sinai........................................ 77

Thammasat University in Bangkok .... 85

MTV ................................................... 74

The Backpacker Co ........................... 51

MySpace............................................ 76

The Great Indian Rock Show ............ 75

Apple ................................................. 33

Bandeh .............................................. 77 Bandish.............................................. 74

Forsche ............................................. 14 Forshe Travels & Logistics ................ 15

Beacon India...................................... 36

Fortune .............................................. 74

Beyond the Blues .............................. 76 Bhayanak Maut .................................. 75

Fr C Rodrigues College of Engineering ................................... 85

Big Bazaar ......................................... 61

Furtados ............................................ 76

Birla Institute of Technology and Science ....................................... 85

Future Group ..................................... 61

BITS Pilani ......................................... 47

Gartner .............................................. 65 GE ..................................................... 49

Rajalakshmi Engineering College...... 85

Black Friday ....................................... 77

GM ..................................................... 63

Blitzkrieg ............................................ 75

Goldman Sachs ................................. 46

Blue Oyster Cult ................................ 76

Goonj ................................................. 77

BMW .................................................. 62

Green Magic Tree House Resort ....... 29

Book Land ......................................... 64 Broadstar ........................................... 27

GTZ (the German Technical Cooperation Agency) ......................... 80

Brotherhood of Rock.......................... 76

Hard Rock Café, New York ................ 75

B-six Holiday Resort .......................... 28

Harley Davidson ................................ 33

Business Process Industry Association of India ........................... 79

Hazaron Khwaishen Aisi.................... 77

Café Chinese and Thai ...................... 76

Hero Honda ....................................... 63

Carmelia Haven ................................. 29

Hey Ram............................................ 77

Carwale.com...................................... 62

HIPAA ................................................ 49

Carzonrent India ............................... 14

HLL .................................................... 60

Channel V .......................................... 74

Honda ................................................ 62

Chronosphere .................................... 35

Hotmail .............................................. 91

CinnamonTeal.................................... 35

Hubble ............................................... 41

Naspers ............................................. 57

The Jazz Utsav .................................. 76

Club Lighthouse Publishing ............... 35

Hyundai ............................................. 77

National Entrepreneurship Network... 72

Them Clones ..................................... 74

CNN-IBN............................................ 77

ICICI .................................................. 63

Naukri.com ........................................ 54

Times Music ...................................... 77

Columbia University........................... 85

IDC .................................................... 82

NetPrice Services .............................. 70

Toxics Link ......................................... 80

HP-Compaq ....................................... 65

Ideazfirst ............................................ 44

New Horizon Media ........................... 34

Toyota ................................................ 63

Concert for Tibet ................................ 76

iDiscoveri ........................................... 57

Nightwish ........................................... 76

Trademark Office ............................... 75

Custom Publishing Council................ 35

IIM-Bangalore .................................... 59

Nike ................................................... 33

Tranquil Tree House Resort ............... 28

Decibel............................................... 75

IIT Chennai ........................................ 76

NLS Strawberry Fields Bangalore ..... 76

Trellian Software ................................ 41

Delhi Cab .......................................... 14

IIT Delhi ............................................. 75

No Doubt ........................................... 76

Tum Hi Tum ........................................ 77

Delhi University.................................. 48

Indian Habitat Center......................... 77

Nokia ................................................. 65

Turquoise Cottage ............................. 76

Deutsche bank................................... 63

Indian Institute of Science, Bangalore .......................................... 48

Opus ABS .......................................... 79

TVS.................................................... 63

Dream Theatre................................... 76

Oracle ................................................ 42

U2 ...................................................... 74

E band ............................................... 74

Indian Ocean ..................................... 74

Orange Street .................................... 74

V-Link Taxis ....................................... 15

Eagles................................................ 74

Indian Premier League ...................... 40

Orix Auto Infrastructure Services ..... 15

Wipro ................................................. 44

Earthy Goods..................................... 59

Institute of Bioin ................................. 85

Orkut .................................................. 57

Wordtracker ....................................... 38

Easycabs .......................................... 14

International Book House SS ............ 64

Parikrama .......................................... 74

Yahoo................................................. 38

eBay India.......................................... 65

IPS Academy ..................................... 85

Pentagram ......................................... 74

Yamaha.............................................. 63

Emaginous Creative Solutions .......... 44

Jet Airways ........................................ 91

Porsche.............................................. 33

Yatra.com ........................................... 73

Emergic Venture Capital .................... 36

JMD Plaza ......................................... 76

Pubrockfest 2008 ............................... 76

YouTube ............................................. 75

92 JULY 2008

HCL Technologies.............................. 55


People DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

APJ Abdul Kalam............................... 35

P Parthasarathy ................................. 81

Arya Kumar........................................ 85

Paris Hilton ........................................ 38

Atul N Bharat ..................................... 85

Peter Drucker’s .................................. 84

Azim Premji ....................................... 47

Pooja Bakshi ...................................... 50

Barak Obama .................................... 38

Prakash Bhalerao .............................. 47

Bhupesh Trivedi ................................. 35

Pramod Harith ................................... 44

Bruce Clay ......................................... 41

R Ananthkumar.................................. 34

Celine Dion ........................................ 74

R Balakrishnan .................................. 86

Chris Powell ....................................... 74

Radha Iyer ......................................... 85

Dan Sandhu....................................... 74

Rajesh A R ........................................ 56

Dasharatham Bitla ............................. 42

Rajesh Kishanpuria ........................... 44

Deepa Thomas .................................. 65

Rajiv K Vij ......................................... 15

Deepak Chopra ................................. 47

Rajiv Mathur ...................................... 79

Desh Deshpande ............................... 47

Raman Roy........................................ 88

Dhruv Shringi..................................... 73

Rashmi Vallabhajosyula..................... 44

Elton John.......................................... 74

Ravi Shankar ..................................... 56

Elvis Presley ...................................... 74 Geoffrey Archer ................................. 64 George Akerlof .................................. 63 Gita Dang .......................................... 73 Gulzar ................................................ 35 James Gosling ................................... 41 K Kumar............................................. 71 K Satyanarayan ................................. 34 KB Chandrashekar ............................ 47 Kishore Biyani.................................... 91 KJ Singh ............................................ 44 Kulindra Srivastava ............................ 78 Kunoor Chopra .................................. 79 Laura Parkin ...................................... 72 Lawrence Lessig................................ 41 Leonard Fernandes ........................... 35 Madonna............................................ 74 Manas Arvind .................................... 44 Manmohan Singh .............................. 52 Marc Andreessen .............................. 41 Marilyn Monroe .................................. 91 Michael Jackson ................................ 74

DARE is not an acronym. It represents the daring spirit of the entrepreneur.

Reshma Anand .................................. 59 Revathi Roy ...................................... 15 Sabeer Bhatia .................................... 47 Sachin Rastogi .................................. 64 Sam Chopra ...................................... 79 Sanjay Sharma .................................. 73 Santokh Behl ..................................... 65 Sasha Mirchandani ............................ 73 Satish Sinha ...................................... 80 Shah Rukh Khan ............................... 40 Sharad Churamani ............................ 64

The red color for the R of DARE represents the fire in the belly of the entrepreneur. You could think of the D representing the face, A representing the chest, R representing the belly and E representing the feet of the human body. Hence the red R.

Sherine Kareem................................. 29 Stephen Else ..................................... 27 Subhash Chandra.............................. 91 Suchna-Hegde Shah ......................... 51

The entrepreneur dares to do things. (S)he dares to do things differently

Sudeesh Venkatesh ........................... 54 Sumit Roy .......................................... 85 Sumit Singh ....................................... 77 Swaran Singh Tulsi ............................ 64 Sydney Sheldon ................................ 64 Syed Hussain .................................... 80

Mick Jagger ....................................... 74

Tapesh Aggarwal ............................... 49

Mitesh Thakker .................................. 70

Terrie L Balmer .................................. 35

Mohit Dubey ...................................... 62

Tim Bond ........................................... 79

Monisha Advani ................................. 55

Tina Seelig......................................... 88

Narendra Joshi .................................. 85

Tom Stephens.................................... 27

Naresh Goyal ..................................... 91

Usha P Raikar ................................... 72

Naseeruddin Shah ............................. 35

Usha Uthup........................................ 35

Neeraj Gupta .................................... 15

Vahid Mehrinfar ................................. 91

Neeraj Kumar .................................... 18

Vijay Mishra ....................................... 62

Nishant Mittal ..................................... 49

Vinod Khosla ..................................... 47

Nita Ambani ....................................... 66

Warren Buffet..................................... 68

NR Narayan Murthy ........................... 47

Yogesh Shah ..................................... 51

SMS “DARE <your comments, questions or suggestions>” to

56677 dare@cybermedia.co.in JULY 2008

93


DARE.CO.IN

Mango kernel extracts for being beautiful! Sure, it is just one of the ingredients used in beauty products industry. However, the plethora of products that thrive on mango kernel oil and butter extraction makes it a business worth exploration /Shilpi Kumar

Botanical name: Mangifera indica Geographic origin: India Method of farming: Pure, natural and authentic Method of extraction: 100% pure cold-pressed Part of plant: Kernel Extract potential: 8%-15% per kernel Good substitute for cocoa and shea butter Suitable for all skin types Used in toiletry, cosmetics, spa and the pharmaceutical industry 94

JULY 2008


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L

et’s disclose some intriguing figures first. The current size of India’s cosmetic and toiletries market is approximately US$ 950 million. The skincare market is about US$ 180 million, and the hair-care market comes to about US$ 200 million. The herbal cosmetics segment is estimated at US$ 100 million. According to news reports, a beauty salon like Lakme attracts about six lac footfalls per annum, in its chain of 93 salons across 37 cities. These are just some of the segments in which the potential for mango kernel extracts lies. We are talking about the mango seed that contains oil so rich in nutrients, that it is becoming an ideal beauty ingredient. So, while an average person is sitting and relishing this fruit, there are entrepreneurs who can actually make money out of the kernels they dispose off on a daily basis!

Mango-licious Mango kernel extracts are hidden treasures! Because the kernel, when cold pressed, renders mango kernel butter, not oil. This butter itself is highly prized and could pose as a good substitute

DARE/scope COSMETIC PRODUCTS THAT USE MANGO EXTRACTS Baby creams Bar soaps Bath and shower gel Body butters Body lotions Body scrubs Cuticle cream Fragrance oils Hair conditioners Lip balm Lipsticks Liquid hand wash Mango bath fizzy Massage creams Massage oils Shaving cream Sun-care lotions… and more

for cocoa or shea butter. Being an excellent source of essential fatty acids, rich in minerals and vitamins, mango kernel butter exhibits beneficial moisturizing properties for skin lotions and lubricants. It is solid at room temperature, smells sweet and nutty in its pure form and has a smooth creamy color. So, how is mango kernel oil produced then? Simply put, semi-solid mango kernel oil is obtained during the refining of mango kernel butter. This soft-yellow-colored oil is said to have a stronger odor than the butter, and has a melting point of around 2327° C, meaning that it effectively melts when it comes in contact with skin.

Awaken your senses Be it for aromatherapy or for creamy body wraps and facials, mango kernel butter and oil are being used increasingly in various luxurious beauty products and treatments. The powerful antioxidant and exfoliating properties of these extracts, makes them perfect for all skin types, leaving the skin soft, hydrated and youthful. This makes it an exceptional ingredient for making soap and other toiletries, cosmetics and pharmaceuticals. Upto 3% to 12% of mango kernel oil is generally used in the manufacturing of mango-based lotions, creams, balms, soaps and hair conditioners. Besides being an ingredient in the aforementioned products, the oil can also be used in its pure form. The pure form is typically tossed into bathing water, the aroma of which awakens all the senses, while the oil works its magic to rejuvenate the body. These extracts even have natural healing properties a la high oxidation, healing and regeneration. Dermatologists recommend mango kernel oil to protect against ultraviolet radiation, to clear blemishes and wrinkles, and to treat skin disorders like eczema. Besides this, it effectively treats dry skin, skin allergies, skin peeling and prevents stretch marks.

A fruitful investment India is one of the largest mango producing countries with a reported ex-

DARE/similar extracts SIMILAR EXTRACTS WORTH EXPLORING Aloe Vera butter Apricot kernel oil Avocado oil Cocoa butter Cranberry seed oil Emu oil Grape seed oil Kokum butter Macadamia butter Neem oil Sal butter Shea butter port of 79,061 metric tons of fresh mangoes in the year 2006-2007, accounting for Rs 14,194 lacs (Source: Agricultural and Processed Food Products Export Development Authority). The domestic consumption supercedes these export figures manifold. Now, if we keep the export of mango as a fresh fruit aside, the other main mango products that we export are mango pulp, mango pickles and chutneys. Clearly, the residue of these industries, the kernel in particular is not being utilized to its full commercial potential. An average mango kernel contains about 8% to 15% extract potential (butter and oil). This seed, which is usually discarded, can be used in cosmetics and beauty products. The seed inside peach is already being processed for oil in the cosmetics industry. When the seed of peach, which is much smaller than mango kernels and therefore yields much less oil is being commercially exploited, then why not mango kernel? Some say that this is possibly because of lack of knowledge, skill and technology that is required in its extraction. Some believe that collecting all these millions of disposed kernels is a Herculean task. However, what is overlooked is the price premium that mango kernel extracts hold in the cosmetic, wellness, and beauty industries. So, is there a business opportunity in producing these extracts? Well, dig in DAR E to find out. JULY 2008

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#10 - JULY 2008  

unique idea of the month / columns / innovation / People as brand ambassadors Political instability and economic growth The entrepreneur as...

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