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TO S S A DE SINES I E OM UR BU ess S E AW ST YO your businid BOO ys to growems to avo a bl al 20 w th pro sales w tion r o a u r n o g y o 7 cal t le up o l a c m S o w fr Gro
When to exit your venture How fast is your company? Steps to get VC funding 6 steps to success
table of contents
GROWTH IN A NUTSHELL Strategies, plans and steps to grow your businesses. 20 WAYS TO GROW YOUR BUSINESS 30 7 BARRIERS TO YOUR STARTUP’S GROWTH… AND HOW TO GET PAST THEM 36 PARTNERING FOR GROWTH 40 WHERE TO FIND AND DEPLOY FUNDS FOR GROWTH 41 FROM LOCAL TO GLOBAL 42 SCALE UP YOUR SALES 43
OPPORTUNITIES 49 MILKING THE CASH COW Devendra Shah made the wise move of starting his milk products company in his native village. By Sumana Guha Ray 50 PLUG IN THE GAPS How two men are bridging the vast gaps in India’s education sector in innovative ways. By Pranbihanga Borpuzari 53 ON THE TRUFFLE TRAIL The market is sweetening for customized chocolatiers. By Shonali Advani 56 COME, LIVE IN MY HOUSE The door to your riches could be your own holiday home's! By Prerna Raturi 58 IT’S A BULL MARKET FOR BAER Moser Baer founder Deepak Puri crushed crises through the years, transforming his company fearlessly. By Pranbihanga Borpuzari
8 Entrepreneur + May 2010
60 BY THE POWER OF RADIO Community Radio Stations (CRSs) are empowering rural India with a voice and turning into a potent entrepreneurial activity. By Shonali Advani & Pranbihanga Borpuzari 62 FLYING HIGH The Turakhia brothers got off to a flying start when they launched a web products company way before the IT boom. By Shonali Advani 64 BAMBOO FOR BUSINESS This couple stumbled upon the entrepreneurial value of bamboo. By Ankush Chibber
WOMEN ENTREPRENEUR 44 CEMENTING TIES Vanita Chamria has built a successful venture in a man’s domain—the cement industry. By Prerna Raturi
50
49
INSIGHTS
62
Astute advice from experts and industry veterans.
21 BANKANOMICS
Business tips from Bharat Banka
22 WISE GUY
Insights from Guy Kawasaki
23 SUCCESS RECIPE Vikram Upadhyaya’s pointers for success 24 VC INSIDER Brad Feld takes you inside a VC's mind 46
64 54
25 WOMEN IN CONTROL Nandini Vaidyanathan on knowing when to call it quits. 26 SALES TALK
Sales advice from Michael Port.
28 SANU SPEAKS Perspectives from Silicon Valley
IN CONVERSATION
Face-to-face with those who matter.
46 CANAAN PARTNERS’ DEEPAK KAMRA The man who was instrumental in bringing the Silicon Valley-based VC firm into the Indian market. Entrepreneur + May 2010 9
table of contents
SUCCESS STRATEGIES How to play your cards right.
68 DOES YOUR INTRANET LOOK SEXY? By Pranbihanga Borpuzari 71 FIVE GREAT—AND NECESSARY— MARKETING MAKEOVERS By Gwen Moran
MONEY DEPARTMENT
Where to get it, how to make it, how to keep it coming in.
76 BRING BACK THE SHINE 78 THE ACCIDENTAL INVESTMENT
TECH DEPARTMENT
Cool ways that tech can help you grow.
BACKSTAGE 132
What Entrepreneurs Dream About
80 THE ALL-IN-ONE 81 APPLE AT THE CORE 82 IT’S IN THE WAY THEY USE IT 83 HOW FAST IS YOUR COMPANY? 84 PILOT FOR YOUR ROAD 86 THIS SHOW HOSTED BY YOU
PLACES
If you want to do business, do it here.
128 NETWORKING IN NOIDA
LIFESTYLE
Gears and gadgets to rev up your business.
130 JAZZ UP YOUR DRIVE 10 Entrepreneur + May 2010
REGULARS 11 ONLINE 13 RESOURCES 14 NEWS IMPACT 16 SME DOCTOR 18 STUMPSPEAK
+online [Info from cyberspace]
Guerrilla Startup: 50 Businesses You Can Start Now
ARE YOU LOOKING to take those first crucial steps toward owning your own business? Guerrilla Marketing guru Jay Conrad Levinson has the information you need. entrepreneur.com/guerrillastartup
Entrepreneur Connect Marketplace
YOU LOVE OUR social network— now use it to promote your business’s products and services for free. econnect.entrepreneur.com
from our blogs PRESIDENT BARACK OBAMA has set a goal of doubling U.S. exports over five years. To that end, he’s seeking a $2 billion raise, to $6 billion, in funds for the Export-Import Bank of the United States to lend small- to medium-sized businesses to help them sell more abroad. The U.S. Chamber of Commerce has come out in support of the plan, which it says supports its goals, including fighting the “economic isolation at home and abroad” embodied by “buy local” campaigns. Whoa up there a minute! Many a local, small business has been sustained through the downturn only on the strength of “buy local” sentiment. A lot of small businesses would probably appreciate more help finding overseas markets. But it’s unlikely that small towns across America are going to knock off their “buy local” campaigns. Many small businesses are focused entirely on their local market, so the trade initiative won’t help them. Few local restaurants will be exporting their pizza. —Carol Tice on “Obama’s $2B Plan to Boost Exports: Good for Small Biz?” Make the Daily Dose part of your morning supplement. blog.entrepreneur.com
Women Entrepreneur
CHECK OUT Entrepreneur’s sister site—by, for and about women. Here you will find articles, blogs, videos and more, all geared toward helping women entrepreneurs become successful. econnect.entrepreneur.com
Entrepreneur of 2010: Will it be you? THE UPS STORE and Entrepreneur are proud to announce Entrepreneur® magazine’s Entrepreneur of 2010 awards. We’re awarding three winners this year: one for an emerging business (less than four years in business), one for an established business owner, and one for a college entrepreneur. Candidates will be judged based on the positive effect they’ve had on their industry and their community. For more information and to enter, go to entrepreneur.com/e2010. Winners will be featured in Entrepreneur magazine and will be honored at a luncheon in Atlanta in January 2011. ©Entrepreneur April 2010 by Entrepreneur Media, Inc. All rights reserved. Photo© Neha Mithbawkar
To read more, grab the June issue of Entrepreneur Entrepreneur + May 2010 11 To Subscribe, visit www.entrepreneurindia.in
30 Entrepreneur + May 2010
IllustrationŠ Chaitanya Surpur
cover story
Turn the pages to read steps that would ensure sure-shot ways to growth
Entrepreneur + May 2010 31
cover story
For those of you who started up and weathered the teething problems and are wondering how to take the next step and grow your business beyond its current status—there are numerous possibilities, 20 of which we’ll outline here. By Shobha Mathur & Pranbihanga Borpuzari
O T S Y 7A
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This might not be your best choice for business expansion, but it’s listed first here because that’s what often comes to mind first for so many entrepreneurs considering expansion. “Physical expansion isn’t always the best growth answer without careful research, planning and number-planning,” say experts. One can check the following tips before considering another location: Make sure you’re maintaining a consistent bottom-line profit and that you’ve shown steady growth over the past few years. Look at the trends, both economic and consumer, for indications on your company’s staying power. Make sure your administrative systems and management team are extraordinary—you’ll need them to get a new location up and running. 32 Entrepreneur + May 2010
Prepare a complete business plan for a new location. Determine where and how you’ll obtain financing. (See “Got Cash?” for financing tips.) Choose your location based on what’s best for your business, not your wallet.
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Think about turning your business into a franchise or business opportunity. While most home-based businesses remain small, yours may have the potential to hit the big time through franchising, licensing or wholesale distribution. The key question to ask yourself is if your business can be converted into a business format that somebody else could operate (a franchise) or if you have a standardized product or service that someone could resell multiple times (a business opportunity). While you may think that expanding your business requires raising capital, hiring employees, buying equipment and leasing office or warehouse space, it’s often more profitable—and less risky—to license your product to a big corporation with manufacturing
capabilities and an existing sales force to do the work for you. Well, you got to be doubly sure before taking this route to grow, as it involves huge managerial issues. But this is the fastest and sure-shot way to growth. First you will need to streamline your internal systems and marketing and then select the location you want to spread your business to.
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This can be an effective, low-cost growth medium, particularly if you have a service product or branded product. You can receive upfront payments and royalties from the continued sales or use of your software, name brand etc—if it’s successful. Licensing also minimizes your risk and is
low-cost in comparison to the price of starting your own company to produce and sell your brand or product. To find a licensing partner, you should start by researching companies that provide products or services which are similar to yours. But before you set up a meeting or contact any company, you must find a competent attorney who specializes in intellectual property rights. This is perhaps the best way to minimize the risk of losing control of your service or product.
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Diversifying is an excellent growth strategy as it allows you to have multiple streams of income that can often fill seasonal voids and, of course, increase sales and profit margins. Rolling out the new lines allow you to expand the reach and thus sales. It will also broaden the target audience and increase presence in the marketplace, giving you the credibility to approach much larger retailers. Once you’ve hit on a product or service that customers really like, don’t miss the opportunity to bring out related items to diversify your product line. Not only does that give your customers a wider selection, but it also makes your products more appealing to retailers, who typically like to stock a line of products as opposed to a single item.
3OME OF THE WAYS YOU CAN DIVERSIFY ARE Sell complementary products or services Teach adult education or other types of classes Import or export your or others’ products Become a paid speaker or columnist
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Well, this is how most big corporations of the world became really big. But you should have the capacity to manage one. The advantages are many. A merger or acquisition increases your size overnight. In addition, you staff strength also grows, giving you the capacity to execute larger projects. Besides, it will also give you access to newer technologies, products and geographies overnight.
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But you don’t need to acquire another business to expand globally. You just need to prime your offering for an international market. You’ll also need foreign distributors who’ll carry an inventory of your product and resell it in their domestic markets. You can locate foreign distributors by scouring your city or state for a foreign company. Trade groups, foreign chambers of commerce, and branches of Indian chambers of commerce in foreign countries are also good places to find distributors you can work with.
Thanks to the Internet, it’s no longer necessary to open a store to reach retail customers. For marketers of specialty products like rare books, collectibles and gourmet foods, a web-based boutique lets you reach millions of shoppers around the world without paying for rent, utilities or garbage collection. And while creating websites once required a big investment and the skills of an experienced web designer or programmer, do-it-yourself websites are now available for less than Rs.1,500 a month with no technical knowledge required. Typically, the companies that
To read more, grab the June issue of Entrepreneur Entrepreneur + May 2010 33 To Subscribe, visit www.entrepreneurindia.in
cover story
"ARRIERS TO 9OUR 3TARTUPkS 'ROWTHb b!ND (OW TO 'ET 0AST 4HEM Taking your startup from your garage to public on the stock exchange is a journey fraught with obstacles. Identify and neutralize them. By Ankush Chibber
First, a figure:
According to small business experts and
industry associations, the
general consensus is that in India, three out of five small businesses fold up within the first five years of operation. When you are starting out, it is easy to live in the moment and play it by the ear when navigating your startup through choppy waters. It’s all very romantic and brave to take that route. However, it also represents a lack of foresight and pre-planning that will not help in overcoming obstacles that can derail a startup. We give you a heads-up on the 7 obstacles you are likely to face growing your business and how you can overcome them if you are not looking to be a part of the statistic which is mentioned in the first paragraph. 36 Entrepreneur + May 2010
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People make the business. No matter how spiffy your business plan is and how great a marketing strategy you have, it is ultimately the people behind the business who are going to make the difference. However, getting hold of the right people is easier said than done when starting out and in the first couple of years. As a startup, unfortunately, you don’t have the bragging rights when you go head-to-head with a multinational corporation to get the best talent. You cannot offer them the same remuneration and perks and, most importantly, in the Indian scenario, the same brand value. So how do you draw the best talent to a new, unproven and, perhaps, risky business?
9/5 (!6% 4/ 4/33 4(% %15)49 !00,% !4 4(%- Make the prospect see an upside of joining you through the equity package that you offer. Convince him of the idea and the soundness of the business and that the equity will be worth it in the long run. That’s your best pitch.
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Yes. You already knew this and you are probably sick of the words “funding� and “growth capital� by now. But this is the harsh truth, and one that needs to be looked into beyond the obvious. Most startups make one mistake when it comes to funding and that is underestimating the cash flow required in their initial years of operation. Getting that initial capital is such a feat in itself in India that most entrepreneurs lose sight of the capital they will need at a later stage to grow from A to B to C and so on. The tendency here for most entrepreneurs is to cross the bridge when they come to it. However, that approach may just backfire. Just ask the startups which went around looking for second and third rounds of funding post September 2008.
Running startups is akin to playing tennis. You may have a great fast serve and fire off a couple of aces. But try doing that all the time and you’d be out of the match before you know it. Too often, entrepreneurs get a little too excited by the small successes—the first order, a VC funds infusion, great media coverage and applause from the industry. More often that not, this results in the entrepreneur expanding his business way too quickly and much beyond the safe limits. Over enthusiasm is the bane of modern age entrepreneurs. The daring, gogetter attitude (mostly shaped in the B-schools) gives them an artificial feeling of invincibility and bravado. Such enthusiasm must be culled before it can overturn the startup’s boat.
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Though there is value in starting off with a tight budget and a limited amount of startup capital, you must ensure that you have a way to access funds when required in the first halfa-decade of operations. This could be via institutions or even a wealthy uncle. The cash must flow at all times. Or the business will run bone dry.
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Entrepreneurs are brave people. Agreed. But bravery has to be mixed healthily with foolery to be really effective. And this foolery can sometimes interrupt a startup’s growth trajectory. People who start their own companies think of themselves as visionaries. The problem sometimes is that they tend to think that since the vision is theirs, they are the best equipped to realize it. This results in them trying to control all aspects of a business, regardless of whether their core competencies lie in those aspects or not.
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An entrepreneur needs to understand the concept of delegation of responsibilities. If you have managed to fight through the first obstacle mentioned in this article and assemble a dream team, it is no good then to be at loggerheads with them on operational decisions. You need to let team members do their thing. Dominating the team will only stifle individual growth and thus company growth. Let them call the shots in the area of business they excel in and you will not be disappointed.
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If anything, the small successes should make you revisit the performances and processes that got you the successes in the first place. A deep insight into the business is then needed to figure what were the core reasons behind the successes and what shortcomings need to be addressed at the earliest. It is time for some introspection, both for you and your startup.
To read more, grab the June issue of Entrepreneur Entrepreneur + May 2010 37 To Subscribe, visit www.entrepreneurindia.in
in conversation
46 Entrepreneur + May 2010
“ There is no typical Indian entrepreneur” Deepak Kamra, General Partner, Canaan Partners, a Silicon Valleybased VC firm focused on early stage investments in India, led Canaan’s entry into the Indian market in 2001 with an investment in e4e and subsequently set up its office in 2006. By Pranbihanga Borpuzari
ENTREPRENEUR (E) : What are the differences between Indian entrepreneurs and ones in the U.S.A.? DEEPAK KAMRA (DK): At a certain level I do not think there is much difference. There has been much back and forth between Indian entrepreneurs, especially in technology. A lot of Indian entrepreneurs who have been successful in the U.S. have a connection here. They understand business and products. The level of sophistication is what matters. In India, entrepreneurs do not really understand how a venture capital works, how to go about finances, lack experience of the level we see in the U.S. We take a lot of things for granted in the U.S., like how to raise money, staffing and conserving money are aspects which are better understood by the peers in the U.S. The level of sophistication and maturity is more in the U.S.
E: This makes it easier to deal with them? DK: Yes, it does. There are certain things that we assume both sides know. If someone comes to present before us, we think they understand, for example, that market size is important. Here we do not always get that. We need a bit more sophistication in terms of how they approach a market and figure what they need.
E: What peculiarities do you see when an Indian entrepreneur approaches a VC? DK: There is no typical Indian entrepreneur. You see a fairly broad spectrum of people. You see people who have dropped out of college, recently passed out of college and also experienced and serial entrepreneurs. The average entrepreneur here does not understand venture investing advice. There needs to be an alignment on how they Photo© Shamik Banerjee
approach the business. There are differences in how they view things and how we view things. A classic case would be where an entrepreneur would want to start two-three different businesses but we may see just one area. There is a slight difference in how an entrepreneur may want to view things and how a VC would like to. The interesting thing for us is to find the right guy with whom we can align reasonably well. If we look at 100 companies, we may invest in about two or three. In many cases we may not invest in a company but continue to mentor it since we may like the individual or think it may have a potential in future. One of the difference initially, which is getting better now, is that entrepreneurs in the U.S. understand what a VC does in terms of adding value. Here, earlier entrepreneurs felt that VC is just money, more like a bank. In the U.S. it is an understanding that VCs are part owners of the company and they have a lot more at stake than giving out money. But the Indian perspective is changing, thankfully.
E: Is there apprehension on the part of Indian entrepreneurs about VCs? DK: Yes. If you have never worked with a VC you may think that this person may be looking to control your business, take your company and fire you. Trust me, the last thing we want to do is run a company. We do not have the energy or the bandwidth. The reason we invest is because we think the entrepreneur’s expertise and acumen can make the business work.
E: Why did you enter India in 2006? DK: I made an investment in India in 2001 from the U.S. In 2003, I came to India with a group of VCs on a trip and it was the rapid growth of the
To read more, grab the June issue of Entrepreneur Entrepreneur + May 2010 47 To Subscribe, visit www.entrepreneurindia.in
opportunities
House HOME TRUTHS
Come, Live In My
Letting out your holiday home is a great entrepreneurial option.
By Prerna Raturi
1
2 56 Entrepreneur + May 2010
T
he royalty in Rajasthan do it. And so does a quaint hamlet called Lata in Uttarakhand. They offer a slice of their life to friends, family and like-minded guests by having them stay in their own homes, or even rent out accommodation adjoining their property, at a price. It’s a trend that is slowly gaining ground with urban professionals, too. While all of us cherish the utopian dream of having a hideout in the hills or by the beach, some are lucky enough to actually realize it. With it, however, come issues about maintenance when you are away, and wanting to share your happiness with like-minded people. Sangeeta Singh, a media professional, built her beach house on a foothill in Goa because she always dreamt of having a place of her own there. “But I don’t get to go there more than twice a year,” she says, “And I can’t be bothered with fixing pipes and cleaning cobwebs for the week-long vacation I squeeze
from my busy schedule in Delhi.” So she rents it out to foreigners on a monthly basis, or to guests at Rs.1,000 a night. “It not only takes care of my maintenance charges but also keeps the property in top shape,” she says. Her beach house is occupied between November and February on a back-to-back basis. Apart from the critical advantage of having the place well-maintained, it is also a great way of sharing your experiences with people who are willing to pay for it. Take asset management and investment advisor Manish Chandra’s Soulitude, for instance. Tucked away in Gagar, about 30 km from Nainital, Soulitude was initially meant to be a getaway for Delhibased Chandra and his family. Offering a 180 degree view of the Kumaon Himalayas, the place even boasts of a stream gurgling nearby, which you can access only through Soulitude. What started as modest plans for a small twobedroom cottage became a lifetime project of having a holiday home that has five bedrooms, each done up with a different theme. “I also bought land next door, since it was at risk of being exploited by builders, thus impacting our privacy,” says Chandra. The old cottage on that site has been rebuilt, and Soulitude now has 11 rooms—much more than Chandra needs as his home. He is there every three weeks, with his family visiting about 8-10 times a year. For the rest of the year, he opens the doors of his home to select people. “Having a home in such remote locations is a case of ‘use it or lose it’. In order to enjoy Soulitude the way I like, it had to have excellent staff and regular maintenance,” says Chandra adding, “And what better way of ensuring this than by allowing restricted use of the property
1 & 6. Himalaica 2. Ek Chidiya 3, 4 & 5. Soulitude 4
3
by holidaymakers.” Priced between Rs.4,750Rs.8,000 a night for a room in the main house or a suite in the cottage, Chandra’s Soulitude welcomes 8-10 guests every month, who spend an average of four to seven days per trip. Two-and-a-half km off the Bhowali-Ramgarh road in the Kumaon Hills in Uttarakhand, Himalaica for Shalini Dave is part of her retirement plan. In her early 50s, Dave felt it was time to make her dream of having a Himalayan home come true. The head of Special Section of Delhibased Vasant Valley School created the villa just the way she wanted to way back in 2003. “But gradually, I realized that although we visit it twice a month, the maintenance costs were starting to pinch,” says Dave. Thus, she decided to rent out the entire villa for Rs.15,000 a day. Though she has managed to give it out only twice in the past two years, she’s spreading the word to her friends and colleagues. It was a different story for the husband-wife team of Anurag Tomer and Pallavi Srivastava. Both of them quit their high-stress jobs in the media and headed for Nathuakhan, a village 40 km away from Nainital, Uttarakhand. Ek Chidiya, their property, is set on an acre of land with a total investment of Rs.50 lakh. And the owners take pride in not having a TV set on the premises. The couple and their two sons have their separate cottage on the premises, and rent out a four-bedroom cottage throughout the year, each room costing Rs.2,490 per night. As with any other business venture comes the marketing strategy. For Soulitude’s Manish Chandra, a nomarketing strategy gives the place a classified reputation. Most people call with references of friends or people who have already stayed at Soulitude. This in itself is a great filtration
5
mechanism. Chandra not only does not have a deal with travel agents, Soulitude doesn’t feature 6 on any guide book or travel website either. The owners of Ek Chidiya—who now call travel, hospitality and orchard farming their vocations—have a listing of the place in a travel magazine, run a hands-on website, have a social networking group of the same name, and get past visitors to spread the word. Sangeeta Singh, on the other hand, doesn’t need too much advertising for her home in Goa, since the demand is always high. Also, the caretaker for the house usually brokers all the deals. While the Ek Chidiya proprietors are concentrating on running the cottage efficiently, Shalini Dave of Himalaica is already working on another project in the same area with the collaboration of friends. Soulitude’s Chandra has acquired a second property near a glacial stream and is organically growing a number of fruits and vegetables that are used in the property’s kitchen. The renovated rustic riverside home called Soulitude by the Riverside is fast becoming a hit with his friends. There is an ever-increasing army of urban people looking for getaways just like these. As Chandra sums it up, “It always amazes me how many people need introspection at places such as these to realize how important it is to follow your dreams.” So what will you do about it—book a room at such a property, or get on with making such a nest of your own?
“THE OWNERS OF EK CHIDIYA HAVE A LISTING OF THE PLACE IN A TRAVEL MAGAZINE, RUN A HANDS-ON WEBSITE, A SOCIAL NETWORKING GROUP OF THE SAME NAME, AND GET PAST VISITORS TO SPREAD THE WORD.”
To read more, grab the June issue of Entrepreneur Entrepreneur + May 2010 57 To Subscribe, visit www.entrepreneurindia.in
opportunities TAKE OFF
Flying High The Turakhia brothers are taxiing along the success runway with their web products company. By Shonali Advani
62 Entrepreneur + May 2010
IN
their final year of school, while most of their classmates were debating on further education possibilities, Divyank Turakhia and his brother Bhavin were already charting plans to found an IT company. The year was 1998, a time when the internet was still very much a nascent phenomenon in India. But the Turakhia brothers, who had already freelanced as internet consultants, were confident of the industry and co-founded Directi, a web products company. They had a three-pronged strategy to build a global internet business, sell web-related products, and to maximize the potential of any time spent developing it. “With a products-based company our processes don’t change and the product is 100 percent renewable,” says Divyank, President and Co-Founder, Directi. Today the company sells to 230 countries worldwide across two primary lines of business: web infrastructure services (under sub-brands LogicBoxes.com, ResellerClub.com, PublicDomainRegistry.com, .pw, Accreditation. com, and WebHosting.Info) and internet media: primary brand Media.net
Photo© Neha Mithbawkar
(sub-brands include Skenzo.com, BigJumbo.com, DomainAdvertising.com, MediaInvestments.com). So with personal funding of Rs.25,000 from their parents, the brothers ventured onto an entrepreneurial path with Directi during an era when BSNL monopolized the internet in India. They spotted domain name registry, web and e-mail hosting, the first three basic requirements for any SME, as a primary opportunity soon after ICAAN broke the monopoly of Network Solutions in this space. “We realized that everyone was ultimately going to get online, it was just a matter of time,” says Divyank. And indeed it was. Back then domain name registration was priced at $70. However, another company OpenSRS charged $10 a year. Finding an opportunity to break in, Directi became resellers for them. Good sales numbers soon gave it the accreditation required to become independent sellers. Soon its business Logicboxes was born, in 2001, as a software solution provider to domain registrars, ISPs, datacenters and even to web hosts. The goal was that anyone who becomes a registrar can use the software, the client here being a reseller who gives the company access to a network. Till date Directi has registered four million domain names, and has over 200 customers and has been the only consultant to register 950 registrars
worldwide. Since inception it has always followed a reseller-based model wherein it partners with companies who in turn sell to other companies. The brothers did not go the ‘customized’ route, so web designing was not an option. Instead, they developed a do-it-yourself kit to build a website. Around the same time, domain advertising was booming with an established market value of $500 million. Directi found another golden opportunity and made a foray here with its first venture in the internet media industry via the domain advertising vertical. Skenzo was born in late 2005 as an exclusive traffic monetization program. According to Divyank, the domain advertising vertical in the internet industry represents $1.2 billion of the $50 billion spent on internet advertising each year globally. At that juncture the company maximized on its sole competency, technology, and utilized the segment with three solutions in the same space— domain, domain advertising and BigJumbo.com. Over the last 12 months it has monetized 19 million names, predicting directing navigation more accurately each time. Skenzo has become one of its fastest growing businesses and has become one of the top five largest domain advertising companies worldwide. Today Skenzo is the largest company (under parent firm Media. net) in the space worldwide in terms of headcount (250+), managing an inventory of 20 billion ads. “We started late but have managed to grow faster than everyone else,” claims Divyank. The brothers are betting big on this business vertical which they hope will be a full-fledged media company like MSN and Google one day, giving people a chain of products to be online.
DIVYANK’S DATELINE AT 18: Net worth of over $1 million AT 21: More than 1,00,000 customers AT 23: Net worth of over $100 million NOW AT 28: Net worth of over $300 million (valued by private equity funds)
ONLINE SUCCESS: Divyank and Bhavin Turakhia ‘s Directi has charted a positive growth path.
“I’M AIMING FOR A NET WORTH OF OVER $1 BILLION IN THE NEXT FIVE YEARS.”
To read more, grab the June issue of Entrepreneur Entrepreneur + May 2010 63 To Subscribe, visit www.entrepreneurindia.in
start ups [Cover Story]
BUDDING
IDEAS
ME-GOVERNANCE To improve governance through mobiles and computers, a group of four young entrepreneurs from Delhi have devised a solution, Me-Governance (Mobile-Electronic Governance). Abhishek Jain, Cheistha Kochhar, Hemantika Verma and Anant Jain have come up with the model through which government expenditure is directed into a venture covering a wider ambit of provisions. While the government is the client, the customer is the public at large as well as various private firms. Me-Governance stands primarily on two pillars—mobiles and computers. One aspect involves launching a website, with a link provided through www.delhi.gov.in. This website enables citizens to vote on policies and schemes which are still at the inception stage and create pressure tactics. The second pillar is creating one common helpline, which solves
Seven talented teams sprout innovative ideas at IIT Delhi’s Entrepreneurship Summit. By Pranbihanga Borpuzari
The necessity of youngsters understanding their place in the global community is gaining importance. At Vishishth, the Business Plan Competition at the recently concluded Entrepreneurship Summit at IIT Delhi, seven teams came up with ideas ranging from serious ones like wanting to change the governance structure to wacky ones like designing an access-controlled handbag. the problem of 127 different helplines that are currently mainly redundant. The model collaborates for one common helpline, 199. Me-Governance will earn royalty of three percent of the total transactions. Whenever someone calls up the helpline, it is registered as a transaction.
SARAF SPEAKS...
GAURAV SARAF – Director, Epiphany Ventures 104 Entrepreneur + May 2010
“We are witnessing a major push by the general public to increase accountability from the government. Me-Governance has a novel approach to making the government more accountable and efficient by enabling seamless communication through the mobile and internet. Creating a business model which is independent of political will is one of the major challenges seen here. Secondly, most citizens who use such a service may have limited ability to pay. Therefore, devising a robust revenue model will be a tough task.”
NUTRALOOP
AGRO HOUSING
NutraLoop will promote and ensure 360 degree application of green practices from the production to distribution stage by
adopting Cradle-to-Cradle (C2C) philosophy. Brainchild of Aaditya Tanwar and Priyank Malik, the Bhiwani-based company will use organic seeds, natural manures, natural pesticides and clean water for crop cultivation. Environment-friendly measures will be adopted at every level of production and distribution phase. Here, every input and output will be again utilized to get the maximum benefit for the wellness of the environment. The solution is different from organic farming in that it will not strictly follow all the processes adopted in organic farming for the sake of mass production and price competitiveness but the quality of yield would be much better and superior than most contemporary farm produce. Farmers will be given a better price in comparison to buyers in local markets for their farm produce. Their input cost of cultivation like seed requirements, fertilizers, pesticides etc will be borne by NutraLoop initially, so that the farmers contracted under the scheme will not have to take debt from moneylenders or banks for production expenses.
“There has been an unprecedented push to adopt cleaner agricultural methods with the farmer community and activists alike. To that extent, this is a venture which is trying to address a subset of such initiatives. However, the approach is in between conventional and organic methods, which does not fall within a specified certification mechanism. In that sense, the ‘green’ factor of the product continues to be doubted. Also, the company will need to establish a strong credibility with consumers to be able to charge a premium.”
Photo© Md. Nasir
Agro Housing is a co-operative with a plan to collect food items which households grow in their gardens and resell them through retail shops. Based in Vadodara, this is an initiative by Parth Dinesh Patel, Nitesh Kumar and Siddharth Jhawar. The idea is to start in a developed city with a middle class population. The service will ask households to give the excess portion of their garden-grown fruits and vegetables. In turn they will accumulate points that can be encashed (each rupee of vegetable sold would mean one point). This model is unique since middle class households will profit out of what is regularly grown in their backyards. The firm has developed two schemes for their business. Under the first scheme, households give the produce grown in their kitchen gardens and the firm resells
it in the market. The households get 70 percent of the profits while the firm keeps the remainder. Under the second scheme, the firm appoints a gardener for plantation work. The firm takes 70 percent of the profits; the household gets the rest. The firm plans to sell the produce through a retail outlet; prices will be kept lower to make it attractive to customers.
“The idea of aggregating garden produce is innovative. Additionally, the incentives would also be welcomed by lower income households. That said, this is fraught with several issues due to the fragmented supply sources. Moreover, maintaining uniformity in quality, aggregating small quantities of produce from separate areas and achieving economies of scale will be quite difficult. Another key challenge for the firm will be supply chain management.”
To read more, grab the June issue of Entrepreneur Entrepreneur + May 2010 105 To Subscribe, visit www.entrepreneurindia.in
start ups EVENT ENTREPRENEUR
CROWN OF THE
COMMONWEALTH GAMES 2010 If you are in Delhi, chances are you will be struck by the sheer scale of preparations for the Commonwealth Games, which will be held in October 2010. Here, we feature an individual who is contributing to the event in a unique way—by designing the Queen’s baton. By Pranbihanga Borpuzari
FOLEY’S BATON The Commonwealth Games baton is akin to the Olympic Torch. It goes to all Commonwealth nations before reaching the Games. There, the Queen reads out the message it carries. The baton had to be designed with materials from within the country—and it had to represent the country. Foley mixed soil of different colors from different parts of India to create a pattern. For the Queen’s message, he was inspired by India’s ancient patra, which has words micro-inscribed on a leaf. The baton then combined traditional art and precision engineering.
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A
n event the size of the Commonwealth Games calls for the collective efforts of many. While the development of the necessary infrastructure has been in the limelight, there are many whose services are just as important and indispensable. From people supplying flowers to arranging transportation, an entire gamut of services will be called upon for the event. One such specialist, Michael Foley, has a unique task at hand: designing the Queen’s baton. As a kid, Foley was always creatively inclined, often making various kinds of models. In 1987, when he was in the 12th standard, he had to make a career choice—at a time when designing wasn’t really seen as a career option. “I wanted to do a specialization in design,” says Foley. “My dad got to know about the National Institute of Design (NID) and saw that it was fit for me. I wanted to become an architect, and decided to apply for a few exams. I applied for the NID exam too and got through. It seemed like a very interesting institute.” In 1994, Foley applied to Titan. He was assigned a project to design certain watches for the brand at that time; this ultimately became the final project for his course at the NID. Foley subsequently managed to move into their
international team, where he helped design the Titan collection for Europe. This exposed him to the very different, European sensibility of design. Backed by a holistic experience in design, Foley set up an industrial design consultancy in 2006. “Conversion from business in terms of value was initially not very high. So I scaled up and built a studio with a team of 26 people. Our scope of work included product design and some amount of packaging design. That gave us a balance of industrial products and identity, since packaging gives identity to a design,” says Foley. Today, Foley believes he can focus largely on industrial design. He has split the team into consulting and new product development. “We believe we can create products,
not just designs, right up to proof of concept.” This confidence, Foley says, emerges largely in his firm’s successful design of the Queen’s baton for the 2010 Commonwealth Games. So how did Foley bag this project? Early last year, a newspaper advertisement that called for design entries for the Queen’s baton caught Foley’s attention. He took a month to work out an idea and filed a bid. Eight firms were shortlisted, which were further narrowed down to four. In March 2009, Foley made the final presentation to the Commonwealth Games Committee. His concept was selected. However, Foley insists that he is not the sole person behind the baton’s design. “Instead, I would like to be known as the lead for driving this initiative of creation. A project of Photo© Aarti Koul
this scale has to have a great team for it to materialize exceptionally well. We used the assistance of Bharat Electronics Ltd. for technology development, and Titan Industries for manufacturing,” he says. Needless to say, Foley says he was pleasantly surprised when he won the bid. “It was a concept that the country had to take as a representation of itself,” he says. “It transcended our sketchbooks and our thoughts, becoming a symbol that the country would use. This is a one-of-a-kind opportunity, as we do not know when the Commonwealth Games would come to India next. With that perspective, you move into a different level of confidence. There is an enormity [to the project], but it has been very humbling.”
DESIGNS ON ROYALTY: Michael Foley, the creator of the Commonwealth Games Queen’s baton.
To read more, grab the June issueEntrepreneur of Entrepreneur + May 2010 109 To Subscribe, visit www.entrepreneurindia.in
how to [... do just about anything]
Manage Your
Inventory
At the heart of every business is efficient inventory management—it can affect your topline by 8-10 percent. By Pranbihanga Borpuzari
T
he maximum working capital of an organization is spent on inventories. “Inventory includes vendor negotiations, freight, terms of payment, price forecasting and production,” says Rajeev Karwal, Founder and CEO, Milagrow Business. “In fact, it covers almost the entire gamut of a business.” According to Karwal, an efficient organization may rotate its working capital about eight times, while an inefficient one may not rotate it even once. In the balance sheet, inefficient inventory management could lead to an extra burden of 4-5 percent on financial costs. Here’s how you can avoid this and manage your inventory well.
BUY THE RIGHT GOODS Complete your market research before you purchase stock; this will ensure that the goods you are purchasing are the ones your target market requires. “Forecast demand and what is required. Efficient inventory is a realization of continuous 114 Entrepreneur + May 2010
feedback from the markets. Moving products without gauging their demand can be fatal,” says Karwal.
BUY CORRECT QUANTITIES According to Karwal, the issue of allocating materials to different units within an organization shouldn’t take more than one day. In the case of imported goods, negotiate well so that if the quantity cannot be reduced, at least the terms of credit can be negotiated. Local vendors can supply raw material on a daily basis, while imported goods can be supplied on a monthly basis. Finished goods should not be in your factory for more than just a day, and for no longer than a week at your front-end sales warehouses. Analyze your suppliers to ensure that they are stable, well-reputed companies that you can rely on. Also examine lead times for the supply and delivery of goods to ensure that you order the goods at the right time; this will also help you accurately tell your customer the lead time for receiving their goods, in case you don’t have goods in stock. For example, if you take five days to get bristles for the toothbrush you manufacture, and take another two days to deliver it to the customer, then your lead time is at about seven days. You can, in this case, tell the customer that after he orders the goods, it will take at least seven days to reach him.
MEET YOUR MANAGERS Spend time doing inventory management have an efficient demand projection and, with this projection, have a forum where you take stock on a monthly basis. Your sales and marketing, production, purchasing and finance teams should be part of this forum.
USE TECHNOLOGY Inventory management, although necessary, can be a very time-consuming task. Minimize the time required to accurately manage your stock by using one of the following: Point-of-sale terminals automatically updating computerized inventory levels Job costing and inventory systems automatically updating all the computerized inventory levels Barcodes and barcode readers to improve the speed of inputting inventory and completing stock takes Illustration© Chaitanya Surpur
how to [… do just about anything]
Part IV
Get Venture Capital Funding You have made contact. Time to throw a pitch. By Ankush Chibber
W
hen I once asked an entrepreneur, who had raised money successfully over three rounds, what was the perfect way to make a pitch to a VC, he gave me a brutally honest answer that said a lot—it is the way that gets you the money. In short, what I am trying to say here is that no one pitch works for all and going with a patterned approach is probably not going to work here. What is going to work, however, is adaptability and a few do’s and don’ts.
YES, YOU STILL NEED POWERPOINT Or Keynote for that matter. If a VC shows interest and responds to you, you will be called in to showcase what you have to offer her/him. And there is no tool more accepted for showcasing ideas than the presentation. I hope you’ve followed the article published in the March issue and have kept it handy.
GUY KAWASAKI’S RULE OF THUMB The seasoned entrepreneur and mentor came up with a great rule that more or less defines how your presentation should go. Kawasaki talks about how 10 is the optimal number of slides in a presentation, because a normal human being cannot comprehend more than 10 concepts in a meeting. If it takes more than 10 slides to explain and present your business, you probably don’t have a business at all.
WATCH THE CLOCK Your presentation should never be longer than 20 minutes. Why? Ideally, no VC will give you a meeting slot which will last more than an hour. The 10 slides should take you no longer than two minutes each. This should leave you with 40 minutes for the rest of the deliberations on your pitch. You really want to get started talking more about your deal right there and then. The VCs who are sitting in second meetings would likely be less awed by your business than those ones who sat in on the presentation. Illustration© Chaitanya Surpur
THE MEAT IN YOUR SHEET That your presentation should cover the following bases—the problem, the solution, the business model, the product, the marketing and sales strategy etc—is well-known and previously documented. How much of what should go in those 10 slides is your call. But what you should always mention in and after your presentation, in detail, is who your customers are. If you already have some, mention them as clearly as possible. That is the juiciest part of your pie.
DO NOT DROP NAMES In the presentations and discussions later, do not name-drop the number of advisors you have or the other VCs you are talking to. Instead, talk more about your co-founders and why you guys make such a great team. It shows self-confidence in your business and not borrowed confidence from other sources.
BE AWARE. ADAPT. ADVANCE In your discussions with the VC after your presentation, you must understand that what and how you further your story will vary from person to person. So while a casual demeanor will work with one, a very respectful and serious one might work with the next. Understanding body language and modifying yours to that of the VC is important. Think of it as a date. You are courting the VC. Lack of table manners can upset the cart and not get you a second date with that VC. This is the fourth of a multi-part series.
To read more, grab the June issueEntrepreneur of Entrepreneur + May 2010 115 To Subscribe, visit www.entrepreneurindia.in
back+stage
What
Entrepreneurs
eam DrAbout‌ 1. Waking up every morning to know that competitors have shut shop 2. Being the richest in the world
3. Acquiring the largest company in the wor
ld
4. Getting exclusive tax sops 5. Concluding a multibillion dollar oversea
s listing
6. Prime Minister calling for breakfast 7. Owning an island 8. Owning a private jet 9. Maybach or a Phantom? 10. Being on the cover of Entrepreneur magazine
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IllustrationŠ Chaitanya Surpur