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Vol IV Iss III

Grameen Bank Blog it, Digg it, Tweet it Register your Company Tête-à-têtewith Shaheen Mistry Overcoming the fear of Failure

Q&A with Ajit Balakrishnan, Founder,

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From The Editor’s Desk Sky is the limit, literally. While browsing through the Economic Times one day, I stumbled upon this piece which spoke about Jaideep Sinh Parmar. His father and grandfather used to play for the Ranji Trophy. A serious thumb injury at the age of 9, however, ruined his chances of ever playing professionally. But the passion for sports still remained. He went on to establish Beyond Boundaries, a sports tourism firm. This firm recently organized a cricket match at a height of 11,333 ft in the Bernese Alps in Switzerland. It was a six-a-side match between Indian cricketing legends and an All Stars Team. It was the first ‘cricket on snow’ match in history. It was a defining moment for Parmar. This story highlights the simple fact that we shouldn’t let setbacks hold us back. In fact, every problem brings with it a new opportunity in disguise. As John F Kennedy very aptly said, “The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger - but recognize the opportunity.” The shortest path might have a roadblock, but there will always be a longer path that will take you to your destination. The key is to remain focused and follow your passion!

In this issue, we talk of things like how to get a company registered, how to cut down on marketing costs by using social media networks, stuff which budding entrepreneurs might find useful. The interview with Shaheen Mistry is an attempt to gain an insight into the world of social enterprise and the experience that one gains by being a part of such a venture. By talking to Ajit Balakrishnan, we have tried to construct a picture of what the IT and e commerce scene in India is right now, and how it is going to change over the years. This is just a sneak peek into what the issue has in store. Read it to find out more. Hope you like it! Ritika Goyal Editor


Case Study

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G rameen Bank No Collateral, No Legal Instrument, No Group-Guarantee or Joint Liability

The Grameen Bank is a microfinance organization and community development bank started in Bangladesh that makes small loans (known as microcredit or grameencredit) to the impoverished without requiring collateral. The system of this bank is based on the idea that the poor have skills that are under-utilized. A group-based credit approach is applied which utilizes the peer-pressure within the group to ensure the borrowers follow through and use caution in conducting their financial affairs with strict discipline, ensuring repayment eventually and allowing the borrowers to develop good credit standing. The bank also accepts deposits, provides other services, and runs several development-oriented businesses including fabric, telephone and energy companies. At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable. Grameen Bank Project was born in the village of Jobra, Bangladesh, in 1976. As of July, 2009, it has 7.93 million borrowers, 97 percent of whom are

How is Grameen Bank different? Grameen Bank methodology is almost the reverse of the conventional banking methodology. Conventional banking is based on the principle that “the more you have, the more you can get”. In other words, if you have little or nothing, you get nothing. As a result, more than half the population of the world is deprived of the financial services of the conventional banks. Conventional banking is based on collateral, Grameen system is collateral- free. GB does not require any collateral against its micro-loans. Since the bank does not wish to take any borrower to the court of law in case of non-repayment, it does not require the borrowers to sign any legal instrument.

component of the total expenditure

Tk 1305.00 million (US$ 18.99 million) in 2008. Ever since Grameen (28 per cent). GB made a profit of

Bank came into being, it has made profits every year except in 1983, 1991, and 1992. GB has declared 30% cash dividend for the year 2008. This is the highest cash dividend declared by any bank in Bangladesh in 2008. The bank has also created a Dividend Equalization Fund to ensure distribution of dividends without much fluctuation in successive years. Receiving of dividends each year greatly inspires shareholders, 96% of whom are borrowers.

(US$ 7.34 billion) has been repaid. Current amount of outstanding loans

Helping the Beggars (Bottom of pyramid) Begging is the last resort for survival for a poor person. Among the beggars there are disabled, blind, and retarded people, as well as old people with ill health. GB has taken up a special programme, called Struggling Members Programme, to reach out to the beggars.

stands at TK 51.02 billion (US$ 738.84

About 111,645 beggars have already

million). During the past 12 months (from

joined the programme. Total amount

Impact of the loans Total amount of by GB, since

loan disbursed inception, is

Tk 465.29 billion (US$ 8.26 billion). Out of this, Tk 414.27 billion

Tk. 136.56 Tk. 72.98 billion (US$ 1060.42 million. Of that amount, Tk. 102.26 million). Monthly average loan million has already been paid off. August’08 to July’09) GB disbursed

disbursement over the past 12 months

Tk 6.08 billion (US$ 88.37 million). Projected disbursement for


year 2009 is Tk 75.00 billion (US$ 1091 million), i.e. monthly disbursement of Tk 6.25 billion (US$ 90.92 million). End of the year outstanding loan is projected

Tk. 55.00 billion (US$ 800 million). to be at

Revenues, Expenditure & Dividends Total revenue generated by Grameen

Bank in 2008 was Tk 12.00 billion 2,558 branches, GB (US$ 174.61 million). Total provides services in 84,573 villages. expenditure was Tk 10.69 billion It is owned by the poor borrowers of the (US$ 155.62 million). Interest bank who are mostly women. It works exclusively for them. Borrowers of payment on deposits of Tk 5.46 Grameen Bank at present own 95 per billion (US$ 79.41 million) was largest component of expenditure cent of the total equity of the bank. the (51 per cent). Expenditure on salary,

disbursed stands at

Basic features of the programme are: • Existing rules of GB do not apply to beggar members; they make up their own rules. • All loans are interest-free. Loans can be for very long term, to make repayment installments very small. For example, for a loan to buy a quilt or a mosquito-net, or an umbrella, many borrowers are paying •

women. With

Remaining 5 per cent is owned by the government.

allowances, and pension benefits amounted to Tk 2.96 billion (US$ 43.00 million), which was the second largest

Tk 2.00 (3.4 cents

US) per week.

Beggar members are covered under life insurance & loan insurance programmes without paying any cost. Groups and centers are encouraged to become patrons of the beggar members. Continued on Page 4



social enterprise is a profitmaking business set up to tackle a social or environmental need. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social or environmental purpose is central to what they do. One such organisation is the Grameen Bank which was awarded the Nobel Peace Prize in 2006 for its “efforts to create economic and social development from below.”

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log it, S

ocial media is the new buzzword for most modern marketing strategies and with a reason. If you are starting up a new company that primarily goes from business to consumer, without a big budget in marketing or PR, your best chance for getting your message across will be via social media. There is no other low-cost promotional method out there that will easily give you large numbers of visitors, some of whom may come back to your website again and again. If you are selling products/ services or just publishing content for ad revenue, social media marketing is a potent method that will make your site profitable over time. Most start-ups or major corporations which adopt social media tools to market and engage their customers in Southeast Asia, are essentially in the IT, fast moving consumer goods (FMCG - for example, mobile phones, computers and gadgets) or online media space.

In fact those who ignore the efficacy of social media usually fall into three categories; the ones who don’t know much or anything about social media, the ones who are interested but don’t know how to use it and those who don’t believe in the value that a social media strategy can bring to any site or business. In case you belong to any of these, please read on: In this era of social media, you get to choose from a host of options available. However as the number of social networks grows (more startups) and shrinks (economic downsizing), we must be smarter about which ones we join and which ones we ignore. These social networks can be broadly classified into 5 categories. I am listing a few must-haves from each category: Blogs - Blogger/Wordpress The first thing to do is to start a corporate blog to talk about your product/ service. There are many reasons why you should have a corporate blog but you must always remember the main objective. The essential rule is not to promote your product too much, rather focus on the people within the company, or you or your team’s thoughts about the industry in general. If sooner or later, your blog becomes popular amongst those who are in the industry, then it will add to your credibility a lot. It gives a lot of word-of-mouth publicity too.


Tips & Tricks

, Social Networks - Facebook/Linkedin/ Ning If you are unable to build a platform to get a community, make use of the power of social networks to spread your message. If you want to have a small social network for specific purposes, create a simple one via Ning. If you want to share via social bookmarking tools, create a Facebook group to organize your customers, or better, create a Facebook Page to illustrate the profile of your company, engage your customers, share links on content and also do social advertising within Facebook. The same principle can be applied to Linkedin.

Micro-Blogging - Twitter/Plurk The streaming of information about the latest product from your start-up can be facilitated in real time through the help of micro-blogging, text-based messages with a maximum of 140 characters. Twitter is the new Facebook. It’s currently the most popular way of spreading information. However, do not always send out tweets that concern the company. One advice given by social media experts is that you stem your thoughts as a specialist of the industry and at times, provide tweets regarding the industry as a whole. Rich Media Content Sharing - Flickr/ YouTube Sometimes, if you want to provide screenshots or do a video documentation of your product or service, a good way is to use the distribution channels via rich media content sharing sites. As a start-up, since you have relatively low amount of funds it may be a good idea to make use of the bandwidth of Flickr and YouTube and then utilize the power of social networking tools to share across platforms through your friends, family and fans.

Aggregators - Digg If the founders within your company get a feature in a notable blog, an immediate strategy is to submit it to Digg. If you want to popularize one of your blog posts, audio podcasts or video with the assistance of viral marketing, the best strategy is to use Digg or other aggregators that will broadcast your message quickly. The key of using an aggregator is that you have an interesting story to tell. The best way to work with this is to keep trying different ways to send out ideas about the products/services of your company. The only essential principle for adopting social media is the strategic objective i.e. why are you using these social media tools for your start-up? It can vary from company to company. If you are not sure which one to use, do not tap into them until you figure out exactly what you want to do with them. By joining a social network, you are setting “conversational” expectations. People will expect you to have a decent level of participation on each one. If you fail to update your profiles or build content or network with other users, then it’s a waste for you. So each tool should be specifically tapped to focus on one specific objective, for example :

Just a word of caution, managing your social network profiles will become increasingly tedious, unless you take the proper steps to only join ones that will further your personal brand. Thus, you can effectively reach out to your target customers, leave a good first impression, build a brand, all at little or no cost with the help of social media. All you need is creativity, an imagination and yes, the mundane but extremely important virtue: regularity! Compiled by Sahil Patwa, 3rd year student, Mechanical Engineering Department.


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Q&A with Shaheen Mistry Shaheen Mistry is the CEO of Teach For India and the founder of the Akanksha foundation. Both organizations are dedicated towards providing quality education for children living in slums. She was on campus recently for the Ideaz launch. Tanushree talked to her at length about social entrepreneurship and how different it actually is from conventional entrepreneurship. Excerpts from the talk:

How would you define social entrepreneurship for the youth? It is a form of entrepreneurship with totally different results. Social entrepreneurs see ‘positive social impact’ as their profit. To define, a social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to create a venture to make social change. Whereas a conventional entrepreneur typically measures performance in profit and return, a social entrepreneur assesses success in terms of the impact s/he has on society as well as in profit and return. Social entrepreneurs in the 21st century, will redefine entrepreneurship as we know it, due to their progressive business models. In today’s world, when the youth is mostly driven towards making huge monetary gains and leading luxurious lives, how do you think they’d be attracted towards social entrepreneurship? Now, social work and things of this sort are very, very personal. The drive for such endeavors has to come from within oneself. One of the reasons that youth today are turning towards social entrepreneurship is because they aren’t really satisfied with what life’s giving them in terms of only monetary/materialistic profits. They want to make their mark in the world & change the one they’re living in for the good.

Agreed, that it is a tradeoff when you talk in terms of the money you get and all, but then, while pursuing social entrepreneurship, the skills that you develop, even the hardships that you face and the risks that you take, go a long way in building your overall entrepreneurial personality. Essentially, the exposure that you get through such endeavors is a wonderful incentive for the young. What are the qualities/resources that are required to undertake such socially motivated ventures? Well, the two most essential things are: a lucid, undeterred vision and a plan for achieving the same. The former is what would drive you throughout your journey. By plan, I mean, the overview of how the aim can be achieved, the nittygritties can be dealt with and fixed in time, but the general framework has to be properly in place. After getting done with this, a number of problems would crop up, just like in any other entrepreneurial venture. What is required in this case, however, is a much higher emphasis on the ‘vision’ than on the ‘resources’. Generally the problem is, enthusiasts get blurred in their actual motive by engrossing themselves too much into the hassles of getting resources! The footnote is, resources would keep coming if you stick to your ideals and work as best as you can towards your goal. Seeing your enthusiasm, resources in any form would gravitate towards you. So basically, yes, there will be challenges, but surmountable ones, for sure! ‘Teach for India’ & ‘Akanksha’ are fast revolutionizing the youth outlook towards socially active ventures. Comment. Both of these organizations work to bring about educational equity. We take in the best & brightest minds in India who have a vision and the zeal to change the educational structure. We take in the youth, because we hold the belief that to bring about this change that we’re aiming at, we need minds with strong idealisms, energy & of course bright ideas! They have the

will & desire and we provide them a compatible platform! As discussed with Tanushree Prasad, 2nd year student, Chemical Engineering Department.

‘Teach for India’ is now accepting applications for recruitment into the team. The last date for submission of applications : 11th October, 2009. For further details, visit:

Continued from Page 2

Objective of the programme is to provide financial services to the beggars to help them find a dignified livelihood, send their children to school and graduate into becoming regular Grameen Bank members. The man behind – Professor Muhammad Yunus In 1976, Muhammad Yunus, a Professor at University of Chittagong, launched a research project to examine the possibility of designing a credit delivery system to provide banking services targeted to the rural poor. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. The organization and its founder, Muhammad Yunus, were jointly awarded the Nobel Peace Prize in 2006; the organization’s Low-cost Housing Programme won a World Habitat Award in 1998. Professor Muhammad Yunus, the founder of Grameen Bank reasoned that if financial resources can be made available to the poor people on terms and conditions that are appropriate and reasonable, “these millions of small people with their millions of small pursuits can add up to create the biggest development wonder.” Compiled by Gaurav Parashar, 4th year student, Computer Science & Engineering Department.


You essentially gave up a comfortable life in the US to run a school for Indian children living in the shantytowns here. What motivated you to do this? I don’t really consider what I am doing as ‘giving up’ anything. I was 18 when I walked into a slum in Mumbai and it was then, that my story of growing into a social entrepreneur began. I had a strong realization of how important it was to have a more equitable world. There are so many setbacks faced by socially and economically deprived classes here in India. And the work I do is certainly not any form of ‘sacrifice’. The skills you develop, the experience you gain, the opportunities you get are too big an incentive!

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In Conversation with AJIT BALAKRISHNAN We talked to him on topics ranging from, to future of e-commerce in India, to changing media strategies. Excerpts from the telephonic interview: You have experienced both the worlds - the old economy (while at the agency Rediffusion) and the new economy ( When do you think the Internet will become an integral part of the media and marketing plan of companies? Internet media today is only 2% to 10% of media spend while it is 10%-40% of reach across countries This kind of lag of Spend to Reach is normal in the evolution of a new medium and we have seen it historically when TV and Radio came about. This gap is usually bridged in a decade or so. In 1976, I had thought of making a TV commercial. We told one of our clients that there is a new medium called TV and we would like to create a 30-second commercial. There was no notion of a commercial then. People ran static slides on TV screens and in cinema. But TV in India took off eight years later, after 1982. The Asian Games proved to be the trigger. Four years later satellite TV was allowed in. From then TV never looked back. What I am saying is every medium develops like that. The same will happen with the net. In the Indian internet space a few players are taking away a disproportionate share of the revenue. When do you think this will change and when will revenue convert into profit for the players in the net space? Winners-take-most is normal for ad revenue. In fact, if you look at any category in India, the No 1 and No 2 take a disproportionate share of the revenue. For example, in the daily newspaper market in Delhi, the Hindustan Times was the dominant player. Now they get only 80 per cent of the profits, because they are splitting it with Times of India. Normally, the No 1 player will always take the bulk of the share; the No 2 will take 25 per cent, and the third player will typically hover around breakeven. The others are destined to lose.

As for converting revenue into profit in the net space, the answer is to build a supporting subscription revenue by delivering a really useful service. Today there are hundreds of newspapers and magazines in our country. But a large number of them are loss-making propositions. Do you think emergence of online media like Rediff is a key factor in this? Those newspapers that are ‘vanity’ businesses, that is, those owners who run them for returns such as promoting a cause, social prestige in the community and so on will keep going even if there are losses. The ones which are real businesses have a decision to make. I personally hope they will all survive and prosper because newspapers are key social actors. You came up with a “No ads on the homepage” policy in your latest revamp. Why was it done and how did it affect Rediff’s revenue? Our thinking is ‘be good to users and more users will come and the monetization will take care of itself’. Thus, we did away with ads on the homepage. Revenue coming from online companies shrunk by half but offline advertisers continued to grow and we believe this trend would continue. What are the factors that have hindered the growth of e-commerce in India? E-commerce in India is held back by poor broadband and credit card penetration. Government has to act with policy initiatives to fix this.

Continued on Page 8


Ajit Balakrishnan is the founder, Chairman and Managing Director of Rediff. com. He is also a director of Rediffusion Dentsu Young & Rubicam Private Limited, one of India’s largest ad agencies. Mr. Balakrishnan is also Chairman of the Board of Governors of IIMC.


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Let’s Make it The Ministry of Corporate Affairs (MCA), through the ‘Administration of the Companies Act, 1956’ sets down rules and regulations for the registration of a company: Steps for Registering a Company in India The approval of the name by the Registrar of Companies (ROC) in the State/ Union Territory in which the company will maintain its registered office, sohuld be obtained. There should not be an existing company by the same name. Further, the last words in the name are required to be “Private Ltd.” in the case of a Private Company and “Limited” in the case of a Public Company. Once a name is approved, it is valid for a period of six months, within which time Memorandum of Association (MoA) and Articles of Association together with miscellaneous documents are required to be filed. • The MoA is designed to communicate to the public the state of affairs of the company and its purpose of being and operating. This aids various stakeholders of the company (creditors, suppliers, shareholders, etc.) to evaluate the extent of their risk and also possibilities of the company to overcome them at a future date. • The Articles of Association of a company typically cover the issuing of shares (also called stock), the different voting and dividend rights attached to different classes of share, restrictions on the transfer of shares, the rules of board meetings and shareholder meetings, and other similar issues. The ROC will give the certificate of incorporation after the required documents are presented along with the required registration fee, (Annexure A) which is scaled according to the share capital of the company, which will be stated in its Memorandum of Association.

Minimum number of Directors and shareholders: 1. For incorporating a Private Limited Company a minimum of two directors are required and minimum two shareholders. 2. For incorporating a Public Limited Company a minimum of three directors are required and minimum seven subscribers.

Set up alerts on Google after your trademark is registered, for your name and any similar names or products, to keep tabs on competition and any possible trademark infringement.

A private company can commence business on receipt of its certificate of incorporation. The Companies Act specifies the information to be contained in the prospectus which has to be filed with the ROC before it can be issued to the public. The ROC issues a certificate of incorporation which is a legal document relating to the formation of a company or corporation. A certificate of incorporation by the ROC is conclusive evidence of the formation of a company.

Permanent Account Number (PAN) The PAN is a ten-digit alphanumeric number, issued in the form of a laminated card, by an Assessing Officer of the Income Tax Department.

How do you start a small business and patent your name? “Patent” isn’t the right word. A patent protects a new invention or a new way of doing something. The actual process for registering names is called either a trademark or a service mark. If you have a product to sell, you’ll need a trademark. If you are a provider of some kind of service, then you’ll need a service mark. Choose the name you’d like to trademark. Make your name memorable and easy to remember, and easy to spell, but not a common word. You can do a preliminary search yourself to determine if your name is already in use, by doing a Google search for similar names and if you’re planning on creating a website associated with this name, search the “Who Is” database of registered domain names. Finding a trademark attorney is the next step. An excellent resource is to contact your state bar association. They can provide a wealth of information. Determine your class of service next. There are 45 classes of service, which determine where the trademark falls. For example, class 14 refers to jewellery; class 18 refers to leather goods...

After registration of the company the most important thing comes up in the form of PAN and TAN which are as follows:

It is mandatory to quote PAN on return of income, all correspondence with any income tax authority and challans for any payments due to Income Tax Department. All existing taxpayers or persons who are required to furnish a return of income, even on behalf of others, must obtain PAN. Some such persons are Individuals, Companies, Partnership Firms, HUFs, Trusts or Representative assesses. Can you have more than one PAN? Obtaining or possessing more than one PAN is against the law. Getting the new PAN card Application for PAN should be made in prescribed form (Form 49A) and submitted in any of the I-T PAN Service Centres set up and managed by The Unit Trust of India Investor Services Limited (UTI-ISL ). Tax Deduction Account Number (TAN) TAN is a unique 10 digit alphanumeric code allotted by the Income Tax Department to all those persons who are responsible for collecting/deducting tax at the source of income. It is mandatory to quote TAN on all TDS (Tax Deduction at Source) returns (including e-TDS return) or any TDS payment challan. In order to get TAN, you are required to submit an application form, which is available at any of the Tax Information Network Facilitation Centres (TIN-FCs) managed by the National Securities Depository Ltd (NSDL). Compiled by Abhinav Agrawal, 2nd year student, Electrical Engineering Dept, Larunika Gaur, 2nd year student, Chemical Engineering Dept and Swati Agrawal, 2nd year student, Aeronautical Engineering Dept.



ou have a good idea, you have got your team, you have a sound plan with everything worked out to the last detail, you are ready to take the biz world by storm! Ok, but before you do anything else, you need to register your company, Here’s how…

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Campus Buzz

Entrepreneurship@Campus Ideaz,

the pan-IIT Business Idea Challenge, organized by The Entrepreneurship Cell, IIT Bombay is the search for “The most innovative IITian”. Ideaz, in its fifth year since inception, has fast become a rage among aspiring student entrepreneurs. With close to 400 teams registering for Ideaz from 11 IITs, Ideaz this year too, has seen massive response from the students. Ideaz, is a two stage process which helps budding entrepreneurs progress from an Idea to the Business Plan. The result of the first stage has been recently declared with 10 teams shortlisted for stage 2. The teams would be given intensive mentoring before the grand finale, to be held on 10th October. Highlights • • • •

6 Workshops in four IITs across India 10 teams shortlisted among 400+ teams 3 teams in top 10 from IITB 6 UG teams in top 10

Shortlisted teams include four teams from IIT Bombay out of which two are UG teams. Anish Nahar, team leader of one of the shortlisted UG team from IIT Bombay says “3rd or 4th year is an ideal time for students to put their technical expertise to use by thinking of a tech business idea, and practical knowledge gained through labs and projects helps“. Anish is a 3rd year student of the Electrical Engineering Department. Ideaz, is not only a competition, it also provides a strong support system for the aspiring student entrepreneurs. For this reason, Ideaz had a series of workshops across India at several IITs. Also, for the first time, online mentoring was given to all participants in Stage-1.

According to Saurabh Agarwal, director of Kennis Consultancy Pvt. Ltd., online mentoring partner of Ideaz, “The online interaction with the teams was a good experience. Some of the teams showed great promise and with round two of the mentoring we really saw a drastic improvement in the ideas.” The firm has also shown an interest in funding two of the ideas. The Entrepreneurship Cell, IIT Bombay launched the initiative The Entrepreneurship Garage in collaboration with SJMSOM and SINE. The vision behind the initiative is to bring those people who are motivated and enthusiastic about starting up, from all over the institute on a common platform. This will promote quality discussions among like minded people who have an inclination towards entrepreneurship. The activities of the initiative take place through two modes, first the Garage meet-ups wherein people come and discuss on a pre-decided agenda, with other entrepreneurs and corporate persons, specially invited for the same cause. The second mode is the online mode which supports the sessions and gives the members an opportunity to interact with each other, brainstorm and decide the agenda of the next meeting. The people whom we are targeting are management students, entrepreneurs, tech enthusiasts and research students. If you would like to be a part of The Entrepreneurship Garage, feel free to contact us at


Eureka! 2009 ,the flagship Business Plan competi-

tion of The Entrepreneurship Cell, IIT Bombay, kicked off on the 1st of Sept. A high profile panel discussion on ‘India’s next wave of Young Entrepreneurs‘ marked the launch of Eureka!. The panelists had a discussion about India’s entrepreneurship scenario in the coming years and the role of students and the youth in it. Eureka!, now in its 11th edition, is the largest B-Plan Competition in Asia as far as participation and prize money is concerned. The competition sees participants from different strata like IITs, B-schools, other technological institutes, medical schools and even working professionals from various companies and witnesses a number of international entries as well. Highlights & Incentives • • •

• • •

Total Prize money worth Rs. 21 lakhs Angel funding and incubation opportunities Opportunity to represent India at the Intel-UC Berkeley Innovation Challenge, California, USA. The teams will be fully sponsored by Intel. Advanced mentoring for the finalist teams. More than 38 Successful startups in the past 10 years through Eureka! More than 2000 participants last year

Eureka! through the years has become the preferred path for budding entrepreneurs who are in search of a launch pad into the corporate world. It lives up to its tagline ‘Road to enterprise’ because although it is a competition, it is actually a journey with a successful business venture as the destination. It has a unique Mentoring Process, which helps the participants make their business plans foolproof. The winners of Eureka! are provided with opportunities for venture capital funding and incubation in addition to the prizes. For the first time ever, Eureka! is going to conduct workshops in major cities, across India. The workshops are being conducted to help the participants refine their business plans and to help them to present different aspects of a B-plan in a coherent summary which is required for participating in Eureka! In the past years, entries from IITs have done very well in the competition. Last year an IIT Bombay team secured 3rd place in the competition. To participate in Eureka!, log on to

www.eureka. and just fill a form with the summary of your B-Plan. Entry submissions are open till 9th October 2009.


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utsourcing ATMs is in

This has opened up a sea of opportunities for companies which can tie up with smaller banks to take care of the banks’ ATM operations. It is a win-win situation for both parties as this also allows the bank to cut costs without compromising on expansion plans. The cost for setting up an ATM varies from place to place. With an approximate fixed cost of Rs 6 lakhs, and add to that, recurring costs of manpower, cash management and security, outsourcing ATM operations saves a lot of precious capital. This will allow smaller and also foreign banks with a weak network to concentrate capital on services such as branch expansion, a factor more important in their case to compete with established banking giants. Dhanalakshmi Bank has signed the first ever end – to – end outsourcing deal, with AGS Wincor Nixdorf .Wincor Nixdorf is a German Corporation that provides retail and retail banking hardware, software and services.The bank has saved approximately 10% of its capital (Rs 40 crore). With this deal, Dhanalakshmi Bank plans to open 380 ATMs in the next four months to add to its 72 existing ones. Another important aspect of this deal is that the bank won’t pay above a certain threshold of transactions, therefore more the number of cardholders using their ATMs, less will be the average cost per transaction. A great opportunity for banks to cut costs, but this is an even bigger opportunity for investors to exploit this relatively unheard of concept of ATM outsourcing in its infancy and create an industry out of it in a market which is just resurging and many companies looking to cut costs.

How does this third party system work? In an agreement between banks and third party companies, banks only have to select the ATM site and pay the company for each transaction. The latter will pay for building and maintaining the ATMs. The services associated with operating an ATM are deployment, cash replenishment, maintenance, monitoring and armored car support. The third party companies, in turn, charge banks either a monthly fee or a fee per transaction; this fee won’t be charged above certain number of transactions. Besides owning the site and the ATM, they can also sign deals with other banks and establish interconnectivity with them, thereby increasing their profits and reducing their cost. The bank provides its brand name to the ATM site, which makes marketing it a great way to make money, for the third party company, in addition to what the bank is already paying. There is a lot of promise in advertising opportunities and partnerships with retail and entertainment establishments. Making the outlet a movie ticket vending machine is an idea, among many, that has been used in the past. The India Switch Company, an independent payment systems provider, is seeking to tap into this outsourcing opportunity by establishing 1,500 ATMs over the next three years for the recently formed ‘CashTree’ ATM networking sharing alliance of five public sector banks -- Bank of India, Union Bank of India, Indian Bank, United Bank of India and Syndicate Bank. It plans to issue customers with ATM-cum-debit cards. To popularize the network, it will offer customers in addition to other services, life insurance of Rs 50,000. In North America and Europe, ATM outsourcing is fairly common among banks with most banks contracting third party companies. Their operations are not only limited to cash dispensing but they are increasingly finding opportunities in the retail and telecommunications sector. They provide other value added services to customers such as insurance, internet, as well as services in partnership with other companies.

SBI has decided to outsource 500 ATMs as a pilot project adding to its huge network of 14,000 ATMs. ICICI, SBI’s private sector rival is also planning to outsource its ATMs, as it probably cannot match the former with its current number of limited branches. Looking at these developments, one can say that this service holds great promise in India. There is a lot of money to be made, but only time will tell whether this idea can pull off the same success in India as it has in the past in other countries. Compiled by Shrayank Gupta, 2nd year student, Chemical Engineering Department Continued from Page 5

Growth of e commerce is hindered by the high prices of Internet connections, that is, dial-up and broadband. The other issue is the payment system. The number of Indians possessing credit cards is very low. Of the 10 million net users, only 20 per cent have credit cards. About 70 per cent of the 10 million users in India are in the age group of 17-30. Whereas, in the United States, the average age of the person on the net is 40 years. Problem is credit card companies here do not give credit cards to young people in India. I believe that e-commerce is one of the great promises that hasn’t showed up yet and has a long way to go in India. What has been the impact of the US meltdown on Rediff? How are you coping with the current recessionary business climate? The business we are in goes through techtonic change every five years or so and true to pattern we are in the middle of one right now. The current change is characterized by a move from PC to Mobile (mode of access), from text to video (form of presentation), from ads to subscription (revenue), from passive media consumption to active ( user generated media) and from personal to social. And all this is going on while there is a recession. But I think these are the challenges that make for an interesting life, don’t you think? As told to Ritika Goyal, 3rd year student, Electrical Engineering Department.


Before April 1, 2009, if you had to use the ATM of any bank with whom you don’t have any banking relationship, you ended up paying fees. It meant you had to find the closest ATM belonging to your bank to withdraw cash and make balance enquiries. So RBI introduced a directive to the banks to allow free use of ATM machines irrespective of which bank a customer had accounts with. It was indeed an innovative decision taken by the RBI.

Vol IV Iss III


AGONY ENT to the rescue!

I’ m a 1 s t y e a r s t u d e n t o f G G d e p a r t m ent. My p r o b l e m i s r e g a r d i n g t h e C S 1 0 1 c o u r s e . I have a very aw es ome t e x t b o o k , w h i c h n o b o d y e l s e does . But my r o o m i e a t t e n d s a l l t h e l e c t u r e s , w h i c h nobody e lse does . I f I t ak e h i s n o t e s, I ’m s u r e I c a n cr ack the En d s ems . B u t t h e n I ’l l h a v e t o g i v e h i m m y text bo ok. W h at if I g ive h i m m y t e x t b o o k a n d h e does n’t give m e h i s n ot es ? W h a t d o y o u t h i n k I s h o ul d do? - Ra m G op al Dear RG, What you face right now, is known in economic circles as the Prisoner’s Dilemma. It is a very famous problem in game theory, which is phrased thus: Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal. If one testifies for the prosecution (against the other) and the other remains silent (cooperates with the other), the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act? The easy way out for both is to remain silent, which in your situation, amounts to sharing your resources to ace the exam together. But there is always a question mark over the actions of the other guy. If you want to look out only for your own interests, it would perhaps be better for you not to share your book. If you look at the truth table below, you’ll see that for any of Prisoner B’s actions, Prisoner A is always better off betraying rather than remaining silent. Prisoner B Stays Silent

Prisoner B Betrays

Prisoner A Stays Silent

Each serves 6 months

Prisoner A goes free Prisoner B: 10 years

Prisoner A Betrays

Prisoner A: 10 years Prisoner B goes free

Each serves 5 years

In the market, this situation is seen when manufacturers do not price their goods as high as they might have, because of fear of being undercut by their rivals. In the case that both price their goods high enough, both stand to make greater profit. But if one decides to play it dirty, and prices his product cheaper, he may take away all of his rivals’ customers. This fear of betrayal is what keeps both from maximising their gain. In most cases you’ll find both the prisoners betraying each other. Both secretly hope that the other remains silent, so that he can go scot free. And so each betrays. As far as your problem is concerned, I guess it would be best if you both find it in you to trust the other enough. But if you have the slightest doubt, I’d advise you to keep your cards to yourself. As Muhammad Ali said “He who is not courageous enough to take risks will accomplish nothing in life. “


Know It All


I s tar ted a new hub on DC + + a few months ago w i th my hos tel w i ngi es . It’s called ‘AC/ DC”. It has been near l y s i x months since we started the hub but no one has joined it yet! Wher e di d w e go w r ong? Pl ease help. - H ubSnub 101 Dear HS101, The network effect model best explains the cause for your dilemma. Network effects The phenomenon whereby a device becomes more valuable as more people use it, thereby encouraging ever-increasing numbers of adapters. The value of a hub is determined by its hub user base. In your case, your hub has very few users currently and in turn, very few uploaded files. As a consequence, the users have very limited choice of files for download. The hubs that are more popular like ‘Boom’ and ‘White Meadow’ have a large user base and hence a greater number of uploaded files which attracts potential users. In a nutshell

Critical mass Network effects become significant after a certain subscription percentage has been achieved, called the critical mass. As the value of the good is determined by the user base, this implies that after a certain number of people have subscribed to the service, additional people will subscribe to the service due to positive ‘utility: price’ ratio. How to attract users prior to reaching critical mass? One way is to rely on extrinsic motivation, such as a payment or an incentive or a request for friends to sign up. Try to publicise your hub through Jeemail status messages and other such means. Remember what a famous item girl once said- ‘No publicity is bad publicity.’ P.S.-The name of your hub could also have something to do with your problem. Compiled by Gouri Nawathe, 2nd year student, Electrical Engineering Department and Mukund Madhav, 2nd year student, Physics Department

Lighter Side

Vol IV Iss III

Overcoming the of

The Tagline Contest Suggest a suitable tagline for these shoes with an inbuilt music player!

By Sramana Mitra Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies, writes a weekly column for Forbes and the business blog Sramana Mitra on Strategy.

When I was younger, I had an enormous fear of failure. I was quite used to winning, and was very bad at losing. Since then, while I’ve been successful in many ways, I’ve also failed at various attempts. My attempt at building a product company out of India in 1997 succeeded somewhat, but the company did not become a revolutionary brand of the order that I aspired for, nor did it achieve any significant scale. Somewhere along the way though, I developed the wisdom to take things in stride, embrace failure, learn from it, and rise above it. When I look back on my journey to trace the development of that wisdom, I see one over-riding theme. Very early in life, I developed a personal philosophy. An unlikely juxtaposition of ideas culled from various systems of thought – from the Upanishads and Vedanta, from Hindu scriptures, Ayn Rand’s Atlas Shrugged and The Fountainhead, and certain Buddhist ideas of Nothingness. The Hindu system of thought has a powerful core concept: Tat Tvam Asi, I Am He. Instead of worshipping an external God, the Hindus believe that God is inside. A powerful way of thinking, since if the ultimate perfection lies inside you, and all you need to do is realize your own potential, then much of your fundamental self-doubt vanishes. At least at an existential level, the individual is complete within.

Ayn Rand offers a similarly individualistic perspective, although from a radically different point of view. Rand’s heroes and heroines move mountains. Although reared in a Communist and Collectivist Russian background, Rand celebrates individual achievement, and believes in one man’s ability to make a difference. Many entrepreneurs I know have been influenced by Rand’s writings, and have drawn inspiration especially from the character of Hank Rearden in Atlas Shrugged, who fights on against all odds with tremendous resilience. Similar self-confidence echoes in The Fountainhead’s architect hero, Howard Roark, whose resilience and personal integrity propels him toward a vision of architecture condemned by his contemporaries for its bold originality and threatening innovation. Yes, conviction and faith are incredibly important components of a sustainable personal philosophy, but where does it come from? How do you develop it? This is a question you must ask yourself. I can offer pointers on what to study, but how your own psyche will respond to the stimulus – I cannot tell. This is a spiritual, experiential journey, and you have to go it alone. I will, however, share three more components from my own bag of wisdom: laughter, compassion, and Nothingness. When the individualistic ideology overwhelms, when your head swells with self-aggrandizement, think of yourself in respect to the Himalayas. Or the Pacific Ocean. Or the Universe. We are nothing. We are insignificant. We are a single speck of dust in the continuum of time. So why be afraid of failure?

Submit your answers to


before the 20th of October. The most catchy tagline will win a prize! The





tagline contest is Srikar Kanuri. Congratulations! Mail us at to collect your prize.

Feedback All suggestions/comments/feedback regarding this issue of ENspace are welcome! Also if there is something useful about any aspect of entrepreneurship that you would like to share with us and the other readers, please mail us at

General Information For more on entrepreneurship, log on to Also, we are thinking of introducing a column for “Classifieds” from the next issue. So, if you are looking for a team member for your start up, please mail us at with the details.

Editorial Team Editor - Ritika Goyal Layout - Mustafa Saifee Execution Panel Abhinav Agrawal, Arpit Agrawal, Gaurav Parashar, Gouri Nawathe, Ishan Srivastava, Larunika Gaur, Mukund Madhav, Nidhi Shanbag, Raj Doshi, Sahil Patwa, Shrayank Gupta, Smeet Bhatt, Swati Agrawal, Tanushree Prasad


n January 2009, in the midst of raging financial crisis and a deep global recession, I hosted an online entrepreneurship forum for laid-off engineers who were considering a switch to entrepreneurship. About 145 questions were submitted, from which, we synthesized some of the most commonly asked. Among those was one that I would like to answer here: How do you overcome the fear of failure?


14 Street Smart Advice for Entrepreneurs While Starting Up

The following is an excerpt from a presentation by Lars-Henrik Friis Molin (LHFM) in Stockholm on 13th August, ‘09. LHFM is a Swedish serial entrepreneur and venture capitalist having 25 portfolio companies. 1. Always be Client Focused to Create Higher Barriers to Entry

Most companies start thinking about this only in their growing stage. It is most important to sustain clients when starting up. Having said that, this is one thing that remains constant no matter which stage your company is in.

2. Think Different

You will face fierce competition from firms who offer similar solutions. The key is to not do different things, but to do things differently. Innovate in your process to cut costs and improve quality.

3. Don’t be Afraid

Since you are a start-up, even if you goof up, in most cases the person you are pitching your idea to, is not going to remember you. On the other hand, if you do a very good job, he is going to remember you, which is good.

4. Start Selling Sooner or Later

Selling is not only a revenue generating activity, it is the most important product/service development exercise.

5.Be Frugal, Keep your Costs Down

Try and implement strategies that do not increase your costs. If you can tie up with someone else for office space or if you can make do with working out of your own home, it is a great advantage when you start-up. Not to mention the fact that you mitigate a lot of financial risk in the process.

“Hire for attitude, and train for skill” “When in doubt, don’t hire” Initially everyone feels that the best of the best wouldn’t want to join a start-up. While it is true, you can look out for people with potential, whose talent is as yet unrecognized. As has been said by investors the world over, ‘The most important thing we look for in a venture is a team, everything else comes secondary.’

7. Ensure Vision, Mission and Values

Revisit your aims and goals as a start-up and compare them with your game plans and missions. Clearly formulate the goal and the path ahead.

8. Piggyback for Credibility

While Growing

6. Only Hire Top Talent

The only thing that is lacking in a start-up is credibility. Once a company gains that, everything else falls into place. Initially, don’t be hesitant to piggyback on others for credibility. It is worth more than you think.

9. Always be Fast and Efficient

While Enhancing

If you could do it in 10 months, there are always Chinese, Japanese and Indians who can do it in 7 months. Keep pace with your clients’ need. Push your limits, move out of your comfort zone.

10. Look at the Dynamics First, Structure Later

Things should be rolling and gaining momentum. But have a clear view of financials, key performance indicators, processes, training and leadership.

11. Interact with Prospects and Clients

Before taking the next step, ask clients if they want you to take the next step.....ask prospects if they value the next step. Always keep your clients in the loop, make them feel as though they are an integral part of your decision making process.

12. Keep Marketing Up, but Marketing Costs Down

You can use the Internet and its wide outreach to directly target your customer base through blogs, social networking sites etc.

13. Funding

Opt for funding that is strategically most optimal for your type of start up. Sometimes you might be in a situation where you don’t need funding at all or its is readily available by raising debt, but if Sequoia or Blackstone are ready to give you some, take it because with them they bring along associations and sister companies which can be invaluable to your business.

14. When Exiting, Choose the Right Financial Partner

You don’t want your baby to be raised by a terrorist, even if he pays you a lot. Compiled by Harsh Shah, 4th year student, MEMS Department

EnSpace Vol IV Issue III  

The Entrepreneurship Magazine brought to you by ECell IIT Bombay Cover Story : Q&A with Ajit Balakrishnan

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