FEBRUARY 2011 INC. INDIA TURNS ONE
The Magazine for Growing Companies
The magazine for growing companies
February 2011 | 150 | Volume 02 | Issue 01 A 9.9 Media Publication
The Many Firsts
Some leading business owners share the many firsts en route their entrepreneurial journeys.
Soaring Ambitions Uppal has had a dream run in the first year. But contentment isn’t her style.
42 My First Public Project NANDAN NILEKANI UID Authority of India
46 My First Decade in Business ARVIND RAO OnMobile Global
50 My First Sale
SANJAY KAMLANI Pangea3
54 My First Billion in Turnover
KISHORE BIYANI Future Group
58 My First Decade...
SANJEEV BIKHCHANDANI Info Edge Services
62 My First IPO
DEEP KALRA MakeMyTrip
My First Year in Business
Three young entrepreneurs share the thrills and turbulences of their debut year. 66 Pearl Uppal
Fashion And You
68 Rajat Dhariwal MadRat Games
70 Mrigank Tripathi Voicetap
A Visual Odyssey
72 My First Product 74 My First Solar Power Plant 75 My First Indulgence 76 My First Office 77 My First Logo
What Happens When...
...a business owner uses a service provider for the first time. Read on to find out more. 78 Scouting for the Perfect Hire? 80 Looking to Sell the Company? 82 Getting the Brand to Speak for You?
THIS PAGE PHOTOGRAPH BY SUBHOJIT PAUL
The next decade holds great promise for India’s entrepreneurs. We ask three experts to crystal gaze. 84 Ashok Jhunjhunwala IIT Madras THIS EDITION OF INC. MAGAZINE is published under licence from Mansueto Ventures LLC, New York. Editorial items appearing on pages 13-15, 25, 29-30, 34-35, were all originally published in the United States edition of Inc. magazine and are the copyright property of Mansueto Ventures, LLC, which reserves all rights. Copyright © 2009 and 2010 Mansueto Ventures, LLC. The following are trademarks of Mansueto Ventures, LLC: Inc., Inc. 500.
86 Pradeep Chopra on the cover
Design by Jayan K. Narayanan
88 Alok Mittal
Canaan Partners FEBRUARY 2011
04 Letter from the US 06 Editor’s Letter 07 Mail
08 Behind the Scenes
18 Earn Your Spurs
The companies whose efforts make Wonder la a delightful experience for Bengaluru.
India speaks her mind on the essence of entrepreneurship The Ticker The Inc. Data Bank A Skimmer’s Guide to The Price of Everything: Solving the Mystery of Why We Pay What We Do, by Eduardo Porter
14 Get Real
By Jason Fried Sometimes, you have to figure out—fast—how to turn a crisis into an opportunity.
INC. | FEBRUARY 2011
Vinay Kumar loves racing his thoroughbreds.
By Jessie Paul Why marketing has to get a new avatar this year.
A simple device that lends speech to the disabled.
23 The Goods
Make your phone cleverer with these Android apps Google’s Translate gets better A primer on Android phones Printers that save space Latest auto-technologies for a safe drive Things that Vishal Chandra cannot live without
How to survive the first year in business. Find the Guidebook following page 40
92 I Wish I Knew...
Anand Deshpande shares lessons learnt while building Persistent Systems.
STRATEGY 29 TECHNOLOGY How to rebrand a company online without losing Google traffic 31 ASK THE EXPERT Srikant Sastri of VivaKi tells businesses how they can leverage social media 32 ELEVATOR PITCH YellowLeg sells travel books. Can the website find its way to Rs 50 lakh? 34 FINANCE Bill Draper offers advice on what it takes to succeed as an entrepreneur
36 THE WAY I WORK When he’s not tracking the best aromas in town, Deepinder Goyal, founder, Zomato, is busy earning calories over lunch with colleagues at his swanky new office.
LETTER FROM THE US
MANAGING DIRECTOR: DR PRAMATH RAJ SINHA PRINTER & PUBLISHER: ANURADHA DAS MATHUR
Congratulations, Team India! I’ve never been to India, which is something I hope to remedy one day.
In the meantime, I spend quality time with Inc. India. Each month, I look forward to the day the magazine arrives in my office mailbox. As editor of the US edition, it’s fun to see all the clever ways my Indian counterpart, Pooja Kothari, has waved her editorial wand over the magazine I edit and— presto—turned our American product into something perfect for the Indian market. We have a guy on the cover wearing blue jeans and a T-shirt; the readers of Inc. India see a guy dressed in traditional south Indian attire. We find the companies “behind the scenes” at a Wendy’s hamburger drive-in in the state of Maryland, your edition shows companies “behind the scenes” at Le Marche Supermarket in Delhi. But note: These differences are superficial. The story of entrepreneurship supercedes national boundaries and manner of dress; it is the expression of a certain kind of person—the one who is unable to work for someone else, has dreams of making a mark, wants to do things his or her way, has much more energy than everyone else you know, is willing to work really really hard, year after year, while staying focused. The founder of Inc. magazine, an entrepreneur himself, once said that entrepreneurs are artists whose medium is business. This is true in the US, and it’s true in India. Inc. India is celebrating its one-year anniversary. Congratulations to Pooja and her team for bringing us a year of fascinating stories about India’s current movers and shakers and the people who will help determine your nation’s future. It’s exciting for me to be able to glimpse the future with you. Best wishes,
Jane Berentson Editor, Inc. magazine, US
INC. | FEBRUARY 2011
EDITORIAL MANAGING EDITOR: POOJA KOTHARI ASSISTANT FEATURES EDITOR: ROHINI BANERJEE CONSULTANT FEATURES EDITOR: PAYEL MUKHERJEE FEATURE WRITER: SUNAINA SEHGAL CO-ORDINATOR: AKHIL BERY DESIGN SR CREATIVE DIRECTOR: JAYAN K NARAYANAN ART DIRECTOR: BINESH SREEDHARAN ASSOCIATE ART DIRECTOR: ANIL VK SR VISUALISER: PC ANOOP SR DESIGNERS: PRASANTH TR, ANIL T, JOFFY JOSE ANOOP VERMA, NV BAIJU & CHANDER DANGE DESIGNERS: SRISTI MAURYA & CHARU DWIVEDI CHIEF PHOTOGRAPHER: SUBHOJIT PAUL PHOTOGRAPHER: JITEN GANDHI COMMUNITY TEAM PRODUCT MANAGER: MAHESH RAVI SENIOR MANAGER: SHREYA PILANI ASSOCIATE: DEEPIKA SHARMA SALES & MARKETING VICE PRESIDENT: NAVEEN CHAND SINGH NATIONAL MANAGER (EVENTS AND SPECIAL PROJECTS): MAHANTESH GODI REGIONAL MANAGER (SOUTH & WEST) VINODH K (+ 91 97407 14817) NATIONAL SALES MANAGER (INC. INDIA) PRANAV SARAN (+ 91 98117 77113) MANAGER (KOLKATA) JAYANTA BHATTACHARYA (+91 93318 29284) PRODUCTION & LOGISTICS SR GENERAL MANAGER (OPERATIONS) SHIVSHANKAR M HIREMATH PRODUCTION EXECUTIVE VILAS MHATRE LOGISTICS MP SINGH, MOHD. ANSARI
OFFICE ADDRESS 9.9 MEDIAWORX PVT LTD A-262, DEFENCE COLONY, NEW DELHI–110 024 FOR ANY QUERIES, PLEASE CONTACT US AT HELP@9DOT9.IN PUBLISHED, PRINTED AND OWNED BY NINE DOT NINE MEDIAWORX PRIVATE LIMITED. PUBLISHED AND PRINTED ON THEIR BEHALF BY ANURADHA DAS MATHUR. PUBLISHED AT A-262, DEFENCE COLONY, NEW DELHI–110 024 EDITOR: ANURADHA DAS MATHUR PRINTED AT SILVER POINT PRESS PVT LTD, PLOT NO. D-107, TTC INDUSTRIAL AREA, SHIRVANE, NERUL, NAVI MUMBAI – 400706
We’re One Already! That’s how I felt during our edit meeting in December, when we discussed the current issue.
It seems just like yesterday that three of us—from edit, business and design departments—went to the Manhattan offices of our parent Inc. magazine to prepare for the launch. Like the businesses we cover, we had our share of challenges in getting the product off the ground. When we did finally close the first issue in January last year, our printer refused to put ink to our work. We had overlooked one approval among the numerous ones that we needed to get our product on the newsstands. I’m sure there are many of you out there who would be familiar with this situation. The product is ready to go to market, and then, something happens. And everyone sits and twiddles their thumbs, waiting for a solution to the problem. Well, there’s a reason why we enjoy writing these stories so much. We live the same life as THINGS I LEARNT most of our audience—we IN THIS ISSUE understand bootstrapping our Humility flourishes way to survival; we’ve lived even with billions. through the frustration of conYou have only to look vincing others to see the value at Nandan Nilekani. we do in our offering; and we’ve Colleagues and partaken the pleasure of the first friends can help you achieve big few successes, those letters that successes. Point seem to prove we’re doing sometaken, Arvind Rao. thing right with this product! Let success seed To make the anniversary your ambition. issue special, we decided to work Uppal’s had a dream on the theme of Firsts—the debut. But, she can’t many things founders experisit still. 6
INC. | FEBRUARY 2011
ence for the first time as they build their businesses, in many cases from scratch. You’ll find many firsts starting Page 43, including Nandan Nilekani’s account of his first public project. Although we don’t usually feature owners of multi-billion dollar businesses in the magazine; we made an exception in this case—after all, it’s not every day that the Prime Minister invites an entrepreneur, even a hugely successful one, to spearhead one of the most ambitious projects of the country. And, Nilekani didn’t disappoint. I am sure you’ll enjoy reading his piece on Page 44. Deep Kalra’s admission that he went and bought the cheapest business suit at Marks & Spencer’s just before hitting the road shows for his IPO makes his story even more appealing. Read it on Page 64. I sincerely hope you enjoy the issue. We’ve worked hard to make it interesting. And, as you take your businesses to even greater heights in the coming years, keep us in mind. We want to know more about your struggles, and we hope to share your successes— with others in our community through our pages.
Pooja Kothari firstname.lastname@example.org
A guide to the best and brightest
Inc. India focuses on the most vibrant part of India’s economy, the small and medium entrepreneurs—the self-made men and women who have powered India’s 9 per cent growth. I read it because I want to know what the best and brightest in India’s economy are working on, thinking about and building. —WILLIAM BISSELL, Managing Director, Fabindia Overseas, Delhi
Laksheeta Govil and Abhinav Mehra LOCATION:
Elevator Pitch Fizzy Goblet sells hand-painted shoes. Will investors give it the green signal?
1,500 to 3,500
5 lakh (since July)
250 (since July) SALES PROJECTION FOR SIX MONTHS:
PROJECTED REVENUE FOR SIX MONTHS:
The Pitch “In the world of shoes, there’s a huge gap between Bata and Jimmy Choos. We fill that space by offering customised, yet affordable, shoes. Our business model is simple: once we get an order, we buy plain shoes from vendors, and get them painted by our in-house team. Our young customers can either use their own designs, or pick one from our portfolio. Since people have to book in advance, we don’t need to maintain inventory. Also, our costs are low since we only have a team of painters on our rolls. Most of our marketing is through exhibitions, or online. All this has allowed us to be cash positive from the beginning. Our steadily growing social media following reinforces our faith in what we are trying to achieve. We hope to start a designer store-cum-studio soon.”—As told to Sunaina Sehgal
The Experts Weigh In
Income from online orders and exhibitions held at college fetes and fashion shows; and, from sales made through shoe stores. IN THE NEWS:
Fizzy Goblet is one of the three finalists in UTV’s The Pitch.
A Colourful Play Laksheeta Govil and Abhinav Mehra want to start a designer storecum-studio.
INC. | JANUARY 2011
World-class magazine I have been regularly reading Inc. since I read your third issue. The focus on growing companies, quality of content, style of presentation and international packaging makes your magazine world-class. Unlike most business magazines in India that are outdated, boring and all about numbers, Inc. presents inspiring stories of people who start, build companies and their respective journeys. Wish Inc. the very best.
MD, IndoUS Venture Partners, Bengaluru
CEO, HummingBird Suites, Bengaluru
AN ARTICULATED AND THOUGHTFUL VIEWPOINT
Inc. is truly inspirational—each issue delivers a fresh, insightful and researched perspective. In this day and age of shoddy and largely negative journalism, Inc. shines through both in terms of content and layout. As an entrepreneur, visual designer and avid follower of positive change in India, I cannot commend you enough on delivering an articulated and thoughtful viewpoint in a beautifully designed package. Congratulations to the editorial team for pulling together so many diverse components to create a thoroughly enjoyable read every month.
GUTTER CREDIT HERE
A new perspective Reading business magazines has been a part of my learning and growing process from a young engineer to a business leader and now a venture capitalist. When I moved to India in 2006, I lost this habit, but that is until Inc. magazine’s Indian edition came out. Now I read Inc. regularly. It captures the people and their aspirations, the opportunities and inspiration to be charged up. I am glad Inc. is here. I like discovering young people, who are attempting new ventures; and, the magazine offers that. In the past year, there are so many stories I have loved reading. I have always advised any couples who came to me to never work together, but your article in May made me question my perspective. I also like the series that explored how to do good and give back. This has to be the answer for India. We need greater social and corporate responsibility, now more so than ever. I look forward to 2011 and many more interesting stories to learn from. Good luck and my best to the team at Inc.
INCREASE THE PORTFOLIO
MAKE THE BRAND VISIBLE
Constant innovation on new ideas should be the key focus of their brand. Extending their customisation, say, to women shoes could add variety and expand their user base to a more premium and fashion conscious segment. Tie-ups with big designer labels would help build brand credibility. Online is a great place to bootstrap their distribution. But, they need to experiment ways to keep their inventory low and idea customisations intact while leveraging other distribution mechanisms. The Pitch should a focus a fair bit on the team’s ability to further build differentiators to justify their pricing model.
Fizzy Goblet faces competition from many small players. Individual shoe makers offer customised shoes depending on material and design at a price range of 500 to 7,000. Increase the variety of shoes and custom designs. This will help to expand the customer protfolio. Say, those from mountaineering groups, schools and corporate houses. This will also help Fizzy Goblet to keep adept with new fashion trends and competition from freelancers and boutiques by offering a one stop solution for customizable shoes. Increasing the portfolio of designs should help in expansion and increasing market size.
I like the premise of the idea. Immerse your target audience with your brand; interact with them. This will spread the word around to their friends and college mates. Create a proper e-commerce platform on top of your social networking sites. Have feedback options to collect their ideas. You can even create a creative and cool shoe lover community. Maybe even create auctions for art shoes online. Be innovative and a trail blazer in marketing ideas to stand out further. Be in the new and publicise your brand. Get a cool, well-known artist to do a limited edition.Your brand is all about ideas. Think outside of the (shoe) box.
PRAKESH PRASHANTH, partner, Accel Partners, Bangalore, India
PADMAJA RUPAREL, vice president, Indian Angel Network, Delhi, India
SHEIKHA MATTAR-JACOB, founder, Masala Tee, New Delhi
PHOTOGRAPH BY JITEN GANDHI
Flaming the entrepreneurial fire Inc. brings to everyone’s notice that not only is the entrepreneurial spirit burning in India; it is slowly reaching an inferno. Inc. showcases the creativity and risk-taking ability of the Indian people and the ability of the few to convert their dreams into something of substance. This ability to translate a dinner table idea into a flourishing success will surely act as a catalyst to convert the few into many. May it continue to flame the entrepreneurial fire in India. terniza berry
Vice President, Commercial Banking, HSBC, Mumbai
A peppy read My team and I have enjoyed the cover stories and the struggle of entrepreneurs about how they have built businesses over time. The exciting pieces on technology and marketing, in addition to the big stories, make the magazine a peppy read—just what the entrepreneur community needs. vineet jawa
Founder and Director, Gaboli, Delhi
—AMRITA DASGUPTA, Principal, Studio Code, Delhi
BEHIND THE SCENES Housekeeping With hundreds of visitors every day, keeping the place clean is no joke. The task is made tougher by the presence of restaurants, discotheques and so on. Thatâ€™s where Uma Enterprises lends a hand. The firm provide housekeeping services, and deploys personnel trained in technology, inventory management, and more. Set up in 1971 by M.L. Deshpande, the 18 crore-firm employs 3,000 employees.
Water rides Sixteen of the 53 water and land rides at Wonder la are sourced from abroad. The rest, are made by Thane-based Arihant Industrial Corporation. Founded in 1985, the firmâ€™s headed by Viren, Atul and Rajen Shah. The 65 crore-company also exports rides to countries such as UK, UAE, and France. It has more than 300 employees.
INC. | FEBRUARY 2011
Companies at the Heart of Everyday Life
Wonder la Amusement Park, Bengaluru
07.10.11 4:45 PM
Food court All the adrenalin rush from the rides leaves visitors hungry. Wonder la has just the answer for the hungry mob. Spread out over 82 acres, its five eating joints serve piping hot and fresh food. Visitors can enjoy hearty meals, from assorted biryanis to French fries and pizzas dished out by Raju Caterers. Founded by Raju Yadav in the 1980s, the firm runs the Wave and Fountain restaurants at Wonder la. It employs 58 people and provides services to Indiranagar Club and Karnataka State Cricket Association.
Water treatment chemicals Wonder la is the only amusement park in India where the water used in all its wave pools and rides is purified through reverse osmosis treatment technology. About 30-crore litres of water gets recycled every year. The chemicals for treating the water are provided by a local firm, Sri Devi Chemicals. Founded by Prem Singh in 1978, the 1-crore company employs 20 people and provides services to all major hotels and clubs in Karnataka.
PHOTOGRAPH BY S. RADHAKRISHNA
REPORTED BY SUNAINA SEHGAL
News, Ideas & Trends in Brief
And, an entrepreneur is… Fascinating, energetic, brave, among other things The world is waiting with bated breath for India to reveal its true potential in the decade ahead. Many believe that entrepreneurship—of the chosen variety, where the educated professional opts to be an entrepreneur instead of following the safer path of a job—will be key in allowing India to reach that potential. Social observers even think that some of the country’s longstanding problems will be solved by this breed of doers, as they find profit in doing good. We at Inc. India decided to capture what entrepreneurship means to Indians from different walks of life. Here’s what some of them had to say.
JUDGE Swami Vivekananda had said that “It is better to wear out than rust out”. To me, an entrepreneur is such a person; someone who has the energy and attitude to innovate, and who knows his mind. In our country, we need more such people. Justice Ashok Kumar Ganguly Honourable Judge, Supreme Court of India
ARCHITECT When I think of an entrepreneur, I think of someone who works for himself. He doesn’t provide professional services; he’s someone who’s started a shop, or a factory on a small scale. He’s someone who’s opted out of the routine of a job, and prefers the independence of working for himself. That freedom comes with a price. When one works for oneself, one has to do many different things—from looking for clients to doing accounts to supervising staff; whereas, in a job, one’s responsibility is usu-
The Caped Crusader Many Indians are banking on ‘superhero’ entrepreneurs to make the country rich and solve her problems.
ally restricted to one aspect of the business. While it can be exciting to be an entrepreneur, it can be quite frustrating as well. Raoul Juneja Principal Architect, Place Design
MUSICIAN He (or she) is a brave soul. Entrepreneurship basically gives you the freedom to be. To do your own thing, follow your own path and shape your destiny. It’s about being creative in the business of business. And that is a tricky proposition, because to do something different is always a challenge, especially in our country. I believe that being a musician is also a tricky business. But, I would not do anything else. I kind of imagine that an entrepreneur feels the same way about his business, however small it may be. Ritoban Das Drummer, Cassini’s Division, an alternative rock band.
GRADUATE Entrepreneurship is starting your own business venture, or simply, self-employment. It brings words such as excitement, energy, innovation and creativity to mind. It’s not just me; even many of my friends dream of a company of their own. A company they can run the way they want to; and put their heart and soul in its growth. An entrepreneur not only needs to understand the present market scenario, but should also be able to anticipate the future. It reminds me of the 26-year-old billionaire, Mark Zuckerberg, better known as the “Face behind Facebook”. His work has been able to touch a part of everybody’s life; some are using his website to catch up with old friends, others to make new ones; and, still others to promote their businesses. But, all are a part of it. Seher Khanna BSc (Physics), University of Delhi continued on the next page
And, an entrepreneur is... continued
HOMEMAKER An entrepreneur is anyone who takes an initiative and does something innovative in the line of business. It takes courage to take the plunge. I kind of lost sleep, for a bit, when my husband left his cushy job after 10 years to do something on his own with his friends. I believe that he succeeded in doing something different, too, and that too in a country like Nigeria where the work culture and ethics were very different from India. Five years later, he’s back into the corporate structure. But, the gap in between taught him more than all his cumulative years of service—at least that’s what he tells me. And on my part, I could see that he was happier when he was doing his own thing and being his own boss. Today, I have the feeling that he is waiting for the ‘right time’ to take the plunge again. Bishnupriya Banerjee Homemaker
LECTURER Entrepreneurship means an innovative use of resources and technology, for all-inclusive growth, both of the individual and the nation. Well, it can turn out to be a positive step. Intentions, or rather the motives, are an important determinant in entrepreneurship. If the business happens to be environment-friendly, or employs special people, then it also teaches bigger companies that one can be society friendly and profit friendly at the same time. Anita Tagore Assistant Professor, Kalindi College, University of Delhi
INC. | FEBRUARY 2011
PUBLISHING EXECUTIVE I don’t think entrepreneurship is something which people take up as a last option anymore. I have recently seen so many interesting ventures, which people have taken up solely because they wanted to create some space for the new and different ideas that might not fit into the conventional model of the market. For example, Kunzum, Haathi Chaap, Yodakin or Queer-Ink. Shweta Tewari Assistant Co-ordinator, Poster Women Project, Zubaan
TV JOURNALIST An entrepreneur always manages to cross boundaries, to go beyond genres. They have a will to experiment, to innovate. It’s a spirit that I try and imbibe even in my job as a television journalist and writer. Writing is an enterprise for me. Within the rules of journalism and grammar, I attempt to expand on style. Sanjay Kumar Producer, ARD TV
B-SCHOOL STUDENT Entrepreneurship is about creating value and enabling human potential. It is the road less travelled. And, so many people are considered fools when they go in. In my family especially, it is almost a taboo. But, I am very fascinated by it. India is ripe for entrepreneurship. There is so much untapped potential in a highgrowth market like ours. I am going to a business school to hone my entrepreneurial skills before I take the jump. Vivek Singh Joining University of California, Los Angeles, for an MBA
The Ticker What is common between budget hotels and affordable homes? Well, Patu Keswani, founder of Lemon Tree Hotels, for one. After establishing the successful chain of moderkeswani ately-priced hotels, Keswani has joined hands with private equity giant, Warburg Pincus, for a $100-million joint venture project, based out of Gurgaon, called (what else?) Lemon Tree Residences. Houses will carry a tag of 30 to 75 lakh...While Keswani is thinking of moving, resort vacation company Sterling is looking for moolah, some 100 crore to be exact, to complete its projects. Even as it seeks capital, Hyderabad-based Aizant Drug Research Solutions, an integrated drug development solutions provider, managed to raise $5 right dose of capital million from Zephyr Peacock India, a midmarket private equity firm...Godrej’s Nature Basket is seeking both capital ( 15 crore) and space to expand its presence beyond 11 outlets to the southern Indian markets and take the number to 25. First stop? Bengaluru... In this season of “hunts”, the bargain hunter should be happy! Groupon, an e-commerce website for “bargain scouters”, is coming to India after acquiring SoSasta, another e-commerce site operating in 11 Indian ganesh cities. British media group Pearson acquired TutorVista, an education-cumconsumer internet services firm, founded by K. Ganesh and wife Meena. Pearson picked up 59 per cent stake for $127 million. It now owns a total 76 per cent of the Bengaluru firm. —Inc. India
inc. data bank BUSINESS SENTIMENT
Portion of smallbusiness owners who regarded cash flow as their greatest concern in September 2010, down from 60% in September 2009
Crunching the numbers PERSONAL FINANCE Average amount US parents spend to raise a child to 18, excluding college tuition:
The book: The Price of Everything: Solving the Mystery of Why We Pay What We Do, by Eduardo Porter; Portfolio.
The big idea: How we assign value—to the things we buy, to the way we spend time, even to the principles we hold dear— affects every decision we make.
BUREAU OF LABOR STATISTICS
US DEPARTMENT OF AGRICULTURE
PROFITS VS WAGES
Net domestic profits earned by US corporations since the fourth quarter of 2008:
Estimated annual revenue California would receive if it legalised marijuana and levied a $50-per-ounce tax:
Average amount a gift-card holder spends beyond the card’s value:
$609 billion Net change since then in the amount these companies spent on wages and benefits:
BUREAU OF LABOR STATISTICS
THE WORKPLACE The No. 1 complaint about office working conditions:
Temperature INTERNATIONAL FACILITY MANAGEMENT ASSOCIATION
CALIFORNIA STATE BOARD OF EQUALIZATION
Share of retail gift cards never redeemed:
FIRST DATA; MERCATOR ADVISORY GROUP
Portion of newly hired employees who achieve “unequivocal success” within 18 months of hire LEADERSHIP IQ
SMALL-BUSINESS PROFITS State with strongest growth in small-business profits in 2010:
State with largest decline in small-business profits in 2010:
A skimmer’s guide to the latest business books
$5,525 The amount of additional pay a typical 6-foot employee earns compared with a 5-foot-5-inch co-worker
—Compiled by John Kador
The backstory: The Price of Everything is global in scope and reportorial in approach. That is not surprising. Porter serves on the editorial board of The New York Times and has worked as a journalist in four continents. Voter’s guide: The book smartly lays out the economic underpinnings of many of today’s most troubling issues: health care, climate change, immigration. Think global, price local: Given the differences in values from country to country, it is surprising global companies don’t send in teams of sociologists before entering markets. Fortunately, writes Porter, the more two countries trade, the closer their values become. If you read nothing else: Businesses will eye consumers eagerly and consumers will eye businesses warily after reading The Price of Everything, which explains some of the psychology that influences buying. (The money you will save on toner cartridges when you learn how printer companies spike sales of ink will more than offset the cost of the book.) Rigour rating: 9 (1=Who Moved My Cheese?; 10=Good to Great). Porter read what sounds like a lot of really dull reports to make this engaging book possible. —Leigh Buchanan FEBRUARY 2011
GET REAL BY JASON FRIED
How to Ride a Storm
When one of our products malfunctioned, thousands of stranded customers erupted in fury. Yet we came out of the crisis more credible than ever. Here’s what we did
One of 37signals’s key products is Campfire, a real-time chat tool for small businesses. For about a week in mid-December, Campfire, which users access via the web, kept bouncing on- and offline. This was the first major problem we have had with Campfire since it launched in 2006. For a product that needs to be as reliable as the dial tone on your phone, things couldn’t have been worse. Thousands of companies rely on Campfire. At 37signals, we use Campfire to run our business. Because we have employees in a dozen cities around the world, Campfire is our lifeline. It’s how we communicate with one another in real time. Campfire is where we make decisions, share designs, debate ideas, broadcast company-wide announcements, and keep up to date on what everyone’s working on. Campfire went down for highly technical reasons, so I won’t go into detail about it. Essentially, three problems emerged at the same time, a combination of hardware and software failures that caused a lot of people a lot of problems. In some cases, we’d be down for only a minute or two. In others, outages would last as long as 45 minutes. For nearly a week, it was impossible to be sure if Campfire would work. Downtime disgusts us. It’s embarrassing. Knowing that our mistakes are disrupting thousands of people’s lives weighs heavily on us. No one is happy around here when our customers aren’t happy. 14
INC. | FEBRUARY 2011
And believe me, they let us know when they’re not happy. They flood our inbox with complaints. They broadcast their exasperation on Twitter. Here’s a little bit of what we heard when Campfire crashed: “I wish @37signals could sort their sh*t out, causing me a lot of grief lately.” “Come on guys. Killing my business over here...” “Up until a week ago, I’d suggest @37signals’ Campfire to anyone. Now, I’m telling everyone I know to avoid it.” People were upset, and they were right to be. When we mess up, we deserve to be the punching bag. Of course, all companies experience episodes like this. How they handle the situation is what counts. I’m not talking about fixing the problem—you have
It was a really lousy week.
to fix it; that’s a given. I’m talking about how you communicate with your customers, how you accept responsibility, and how you make things right. That’s what people remember. I’ve been a customer of companies that don’t know how to respond to a crisis. These outfits don’t own up to the problem. They hedge, they tiptoe, they get their PR departments to issue abstract non-apology apologies. Here’s one of the worst: “We apologise for any inconvenience we may have caused.” If ever there was a non-apology apology, this is it. And just about every company uses it. I Googled the phrase We apologise for any inconvenience. It came up 41 million times. Let’s break this statement down. We apologise… Come on—when you really mean it, you say, “I’m sorry.” You don’t say, “I apologise.” If you spill hot coffee on someone, you say, “I am so, so sorry.” “I apologise” is renting the problem. “I’m sorry” is owning it. Now, to the second part of the non-apology: …for any inconvenience we may have caused. What a cop-out. For any? How about for all of it? May have caused? Don’t say maybe—say yes. Own it. We’re very careful about how we explain downtime and other glitches. We don’t beat around the bush. We don’t try to hedge. We don’t pass the blame to a vendor or another party. When our customers are affected, it’s on us. And we’ve discovered that the more honest we are, the better our customers feel. They just want to know what’s going on and what happened. They want to be informed. Wouldn’t anyone? You don’t win any prizes for confusing people— especially during a crisis. The clearer and more honest you can be, the better off you’ll be. It’s hard to admit mistakes, but you really don’t have a choice. So here’s what we did when Campfire went down. First, we posted regular updates on the status page of our company’s website. We let people know we were working on the problem. As we figured things out, we shared the results. And if we still didn’t understand something, we admitted as
We responded to every complaint and took the blame every time—even when people went overboard and launched into personal attacks. much. That’s OK with us. What isn’t OK is leaving people in the dark. Everyone’s afraid of the dark when their data are involved. We also took to Twitter. My business partner David Heinemeier Hansson responded to more than 100 tweets from customers. “We’re battling demons on all fronts and losing. It’s pathetic, I know,” David tweeted to one customer. “We’re spending the goodwill we’ve built from years of reliable service like it’s going out of style.” “So sorry for the disruption,” he wrote to another. “You can only say duh! so many times before people just think you’re annoying. We’re way past that,” he wrote. We responded to every complaint and took the blame every time—even when people went overboard and launched into personal attacks. There was no fighting back, no attempt to save face. We messed up, we knew it, and we let every customer know that we knew it. And our customers responded with enormous goodwill. “37signals has been giving a free lesson in customer service and honesty the past few weeks,” one customer tweeted. “Way to go on being awesome and communicative to your customers,” said another. Such expressions of support were really heartwarming—and evidence of how honesty, openness, and personal attention to a difficult situation can turn the darkest moment into one of the brightest. We decided to give every Campfire customer a free month of service. We were down for only a few hours, total, but the downtime was spread out over multiple days. Besides, we didn’t earn our customers’ trust in December, so we didn’t earn their money, either. We have thou-
sands of paying Campfire customers, so this wasn’t a cheap or easy decision. But it was the right thing to do. Finally, once we figured out what went wrong and took steps to make sure it wouldn’t happen again, we wrote a full post on our product blog detailing exactly what had happened. We started with a general overview that could be understood by everyone. Being in the software business doesn’t give you license to speak in code. Yes, some of our customers are technically gifted. But most of them aren’t, so speaking in tech jargon can cause even more confusion. That said, we also delved into the technical details for those who care about those kinds of things. And we added a link to the announcement inside Campfire, so all our customers would see it. You can read the product blog post at productblog. 37signals.com/products/2010/12/campfireoutage-explanation-and-servicecredits.html. We learned a lot during that awful week. People don’t judge you on the basis of your mistakes—they judge you on the manner in which you own up to them. In my experience, most companies do a terrible job of taking blame. They lob press releases. Or they apologise for the inconvenience. Resist that temptation and say you’re sorry like you’re apologising to a friend. Be good—and your customers will be good right back to you.
Jason Fried is co-founder of 37signals, a Chicagobased software firm, and co-author of the book Rework, which was published last March. FEBRUARY 2011
Life Outside the Office
The Price Of a thoroughbred can vary between 2 lakh to 1 crore Maintenance charges of about 15,000 a month for stables provided by the race course, trainer, food and medicines
INC. | FEBRUARY 2011
Races Won The Akkasaheb Maharaj Trophy at Pune in 2008. Won the first and second positions The Ruttomsey MemorialÂ multimillionÂ race on the Indian Derby Day at Mumbai in 2010
At an age when children are fascinated by rocking horses, Vinay Kumar saw a real one, thanks to his father and grandfather, both fans of horse racing. He took up riding as a sport at school. Later, fate took him all across the world where equestrian dreams chased him. It isn’t surprising then that the third-generation Kumar has taken the family fascination further. The co-founder and chairman of Delhi-based petroleum conservation consultancy, Neo Petcon, is the proud owner of 30 of these elegant creatures. His thrill is spotting the winners. Though office work often takes priority over his passion for horse racing, Kumar has no qualms admitting, “It’s like when your child wins a prize in an annual day function, or comes first in school.” With his studs winning “100 races in five years”, Kumar’s surely a proud papa!
“I have not invested in horses as a business. They are a hobby.”
PHOTOGRAPH BY SUBHOJIT PAUL
REPORTED BY POOJA KOTHARI
EARN YOUR SPURS BY JESSIE PAUL
The New Avatar of Marketing
Social networking sites have changed customer behaviour for good. Can companies harness this open attitude for business benefits? Yes, I understand. You have a whole bunch of priorities before the financial year ends, and what with the madness of New Year and inflation, marketing budgets have been cut. Worse, little (if any) management bandwidth is available for anything that isn’t directly linked to demand generation. I know; I’ve been there. In the past, it may not have been good, but it would have certainly been OK. So what’s different now? Last year marked the entry of tools such as LinkedIn, Facebook, and Twitter that started changing the way people communicated with each other. It was also the year when the use of the Web declined, even as internet usage through applications went up. (http://www.wired.com/magazine/2010/08/ff_ webrip/all/1) And, all of this became relevant to India—there were more than 17 million Facebook users and 8 million LinkedIn users at the end of 2010. Small, of course, in percentage terms, but huge as a potential market and as an early-adopter, highinfluence community. With the launch of 3G and inexpensive smart phones, the adoption is bound to accelerate exponentially, both of international social networking sites as well as home-grown ones. I buy what my friend tells me to
Soon, this statement will also be true of the buying behaviour of rational buyers, not just of peer-approval seeking teenagers. You’re probably a bit sceptical about how a bunch (well, OK, millions) of people posting pictures online is going to make a difference to your business. Well, actually, it is a bit deeper than that. When I wanted to find someone to build the Paul Writer website, I went to Twitter to find the best way to create a low-cost community site. Not only did I get some great technical advice, I also found my vendor there. And, I got my site 18
INC. | FEBRUARY 2011
up and running in under a month. I recently used this model to get advice on the best domain-buying agency as well. I use Facebook to figure out more personal stuff like where to shop or eat. ILLUSTRATION BY PC ANOOP
EARN YOUR SPURS
And it isn’t just relevant for individuals. A hospitality industry player runs a Twitter handle that is not very active. But it commented on one of my posts just when I was looking for a place to stay in Chennai. Well, it got my business, as did Mysore “insider tour” @royalmysorewalks. It is now easier than ever before to connect with friends, acquaintances and longlost classmates. True, it may be across different sites; for instance, Facebook for friends and classmates, and LinkedIn for business acquaintances, but you will nonetheless be soon ensconced in a loving cocoon, where it takes just one message to reach out to hundreds of well-wishers. You can use the network for your own search, as well as ensure that you are centred in an active crowd of well-wishers. This is a great way to build your brand inexpensively. It is also soon going to be the only way. As 3G comes in, you can count on people to check online with their friends before any serious (or even unserious) purchase. And if you aren’t there, well, you’ll just lose the customer.
handle customer complaints, and generally, I’ve had far better luck getting service through these channels than through the old-fashioned IVRs. For companies, too, this asynchronous channel should make life easier, more so, if it is linked to their sales system. True, today, there aren’t enough net-savvy users out there to make it a huge problem, but I know that I won’t be buying white goods in future without checking out their Twitter service levels in India. You can be a step ahead by starting now. Oh, I am not endorsing Twitter—but something a lot like it, perhaps SMSGupshup, will certainly rule in the years to come.
We can either whine about this lack of privacy, or we can turn it to our benefit. The first wave of businesses that capitalised on this lack of interest in privacy was those like Facebook, Flick’r and LinkedIn. They provided platforms that allowed people to expose themselves. The next wave of companies that will succeed are those which will be able to harness this open attitude for business benefits. For example, if a company created an account for every buyer on a feedback portal and updated details of service calls, it could show that a very small percentage of clients had a negative experience. Every digital activity leaves a record—the
Nothing is secret anymore. You cannot do things that count on A not knowing about B.
If the company says so, it must be true
While over 50 per cent of people globally trust what their friends and relatives say (Nielsen 2010 Global Trust Survey), around 30 per cent of folks are willing to trust what a company says on social media (emarketer. com). The belief is that there is an automatic truth filter applied to anything online, as the crowds vet information thoroughly. Take the case of a client who markets ERP software for hotels. Its first blog (unpromoted) on a solution that was increasingly relevant to hotels—security—generated two sales inquiries asking for more information. What this trend does, though, is put pressure on companies to provide insightful content. Given that I am relying on my friends to tell me what’s important, it becomes doubly important that you create stuff that they want to share with me. If I can’t find you online, I cannot buy from you
I was very disappointed to find that @ whirlpoolindia and @samsungindia are not active on Twitter. It’s a great way to
The truth is out there, whether ready or not!
A client’s biggest pain point was that it had an unfairly negative listing on www.complaintsboard.com. It needed to kick-start its online strategy to deal with the fallout of that. The problem with online posts is that there is no easy way to ensure their authenticity. I can complain about a product without any proof of actual consumption. That’s the downside, and that’s where having a loyal network of supporters who can come to your rescue is so important. But what about the truth? The digital world gives employees and customers unlimited opportunities to share information. Your prices, salaries, customer data— everything can be out in the public. WikiLeaks shocked governments, but corporates will shortly face the same issue— nothing is secret any more. This will cause a change in behaviour—you can’t do things that count on A not knowing about B, whether it’s differential pricing, salary, or product usage.
trick is to utilise that in a non-invasive way. Read this piece in The Economist (http:// www.economist.com/node/16910031) to know how Airtel has used call behaviour to identify “influencers”. Some of the characteristics include making calls late at night and getting quicker call-backs. That’s clever! What can you do to ensure this year’s different?
I think the first thing to do is to ensure that you, personally, are active in the new digital media. Create a profile on LinkedIn, YouTube, Facebook, Twitter, Slideshare.net, SMSGupShup and maintain them for at least 60 days. At the end of that, you decide whether you want to continue or not. Happy and prosperous 2011!
Jessie Paul is the CEO of Paul Writer, a firm that also hosts India’s largest community of B2B marketers at paulwriter.com. She is the author of No Money Marketing . FEBRUARY 2011
Companies on the Cutting Edge
Lending a Voice
Sometimes, physical disability takes away a person’s power to communicate. Attempts to do so often lead to incomprehension and, finally, frustration. To lend a voice to the “voiceless”, Invention Labs has come up with an electronic device, called Avaz. It helps the disabled, especially those suffering from Cerebral Palsy, speak their mind. A sensor recognises gestures and body movements; and offers sentences as options on the screen. If the person has difficulty reading, pictures can communicate the message. Once the option on the screen is selected, the message is converted to speech and spoken aloud. The efforts of its founder, Ajit Narayanan, have been recognised by the government by way of the “National Award for the Empowerment of Persons with Disabilities”. Components A body movement sensor An electronic system with touchscreen display
Fact File Launch: March 2009 Price: 30,000 Units sold: 50
A special software application
“I have only just started. I want to make it cheaper, and include regional languages.” Ajit Narayanan, founder, Invention Labs
INC. | FEBRUARY 2011
PHOTOGRAPH BY AAHANA MAHTANI
REPORTED BY SUNAINA SEHGAL
Your Business Toolbox
The Right Tools for Your Smart Phone Android apps that make work a pleasure Google’s Android operating system has become omnipresent. Chances are that even if you haven’t yet bought a tablet
PC with the latest Android operating system, you would probably have the OS on your smart phone. No matter which version of Andriod (1.5 and above) you have in your device, you should download the following must-have business applications, if you haven’t already.—Anoop Chugh
REMEMBER THE MILK
The name may sound insane, but make no mistake, this app is quite the thing for your schedule. For starters, it allows one to carry tasks everywhere—from picking the milk while out jogging to returning library books, or even reminding one to carry the tux for the post-office party. In short, it sees tasks around your GPS location, adds and completes tasks on-the-go, organises upcoming tasks, and syncs it all seamlessly. Try it free for 15 days, get addicted and then shell out $25 per year.
Imagine having a Skype phonebook on your phone and getting all your Skype calls routed to it—and, what’s better still, without any cost. Skype’s Google Android application is exceptional. You can check your address book (or, combine it with your existing phone’s contacts), voice-mail and missed calls. This solution is significantly better than using Google Voice, since Skype offers a higher number of call features. You can simply shut down your Skype account (on PC) and control the flow of phone calls. It’s free for calls within the country.
Being at the helm of a growing business means always needing space in the virtual world— no matter where you may be. Well, your wish is being fulfilled by Dropbox—an application that allows a user to upload spreadsheets, presentations, photos and business proposals, directly from an Android phone. It allows access to files from anywhere and at any time. No need to moan about inability to access data because there’s no computer around miles. And, it’s absolutely free for under 2GB usage. Carry all the data you’d need in your pocket.
Forget about logging on to a bank account to pay bills. Just use the Android to do that. With PayPal’s new application, a user can access a miniversion of a PayPal account and make payments right in the middle of, say, a yoga class? It’s safe as well, since every payment is confirmed by a PIN or password. You need not worry about what happens if you lose your phone. The good news: the app is free. The not-sogood news: making multi-digit payments over a tiny keypad could be tad risky: an extra zero could bankrupt you.
This popular app can track your daily expenses anywhere and anytime. Especially on those business trips, when you need a quick and handy way to write down your expenses. It can track your income sources and daily expenses, and prepare monthly balance sheets. Just to make sure that an undercover-tax man is not peeking into your financial status, you can set a password to prevent unauthorised usage. It supports 26 currencies, making it easy to use even during international travel. And, the best part is that it’s error-free and self-calculative.
If you want to play the geek god, this one’s just for you. It ensures that you don’t miss a meeting, just because you cannot physically be there. You can e-mail Power Point or Keynote presentations to your MightyMeeting account and access them anywhere from your Android device. Or, you can start or join online meetings directly from your phone. Moreover, your virtual self can present slides from the phone to a room full of people, albeit with the help of a phone with TV-out. Your team will surely remember that the boss is always around.
Products + Services
Do I need an Android? Phones that will win you over
Google updates Translate Google has updated the Translate application for Android phones with something akin to real-time translation—called Conversation Mode. Other changes were also made to the user interface, with usability enhancements. The Conversation Mode for Google Translate attempts to work as you’d expect an interpreter to, by translating what has been spoken in near realtime. While for now the languages supported are English and Spanish, you can expect Google to offer wider support soon. It is only available for devices with Android 2.1 or above, and is found free in the Android Market. The Conversation Mode allows two users to speak directly into a phone, one at a time, and have conversations translated both in text and spoken form. So far, the consensus is that the service certainly has scope for improvement, but, that it is a great step forward in the right direction. Usability features such as Bluetooth support (for both output and input) etc., would also be great additions, as well as of course, more languages. Google Translate application can instantly translate between over 50 languages even on your Android smartphones. Simply type in your phrase and Google’s algorithm will translate it into English, Spanish, French, Chinese or more! —A.C.
INC. | FEBRUARY 2011
SONY ERICSSON XPERIA X10 MINI PRO
This device is meant for those who want a compact touchscreen, but with QWERTY hardware. Though this isn’t the Gen-Y, it still makes sense for new users to test waters with it. It combines a good price with great features—a 2.55-inch QVGA (320x240 pixels) touchscreen, a 600MHz processor and a 5-megapixel camera. price: 13,000 android: 2.1 SAMSUNG GALAXY S
Samsung Galaxy S is as close as one can get to an iPhone. If you were waiting for an excuse to shift to Android, this is it. With its high-end features, including super AMOLED screen, HD video playback/recording, Android 2.1, 16GB memory, 5mp camera et al, there are just too many reasons to choose the Galaxy S over any other Android phone. price: 27,700 android: 2.2 (Froyo) HTC DESIRE
The Desire is the pinnacle of current-generation, hand-held technology with features like Android 2.2, 8MP colour camera, auto focus and dual LED flash, 720p HD video recording, though its mediocre battery life can distract you. There are better upcoming devices; however, if you demand the best hardware in the sleekest package, then Desire should be on the top of your list. price: 27,500 android: 2.2 (Froyo)
COMPACT COLOUR PRINTER
Printers for small spaces Dell has come out with the world’s smallest single-function A4 colour laser-class printer. The Dell 1250C delivers LED printing technology with good print quality, low energy consumption, and simple maintenance, as compared to conventional laser printers. It performs efficiently at speeds of up to 12 pages per minute mono, and 10 pages per minute colour, and can reliably produce high-quality prints at a maximum monthly cycle of 30,000 pages. Given its lower costs, both initially and operationally, it could be a great option for smaller organisations. —A.C. Price: 17,000
COURTESY COMPANY (4)
Even if you are a proud member of the ‘anti-Android association’, by virtue of being an Apple aficionado or a Blackberry fanatic, it’s time you checked out Android. We list three best phones from 2010 that will give you a perfect reason to start your Google affair. The section isn’t sponsored by Eric Schmidt. —A.C.
Work + Play
For the road less taken! Have a safe journey
An entrepreneur’s nightmare? Winter fog and flight delays. For shorter distances, driving
often ends up being the safer option for business travellers. Here are five technologies that help new-age business people to travel by road. Have a safe journey! —A.C. RUN-FLAT
Developed by BMW, this technology makes punctured tyres a thing of the past. No more changing tyres by the side of a road. If a run-flat tyre loses pressure, its strengthened sidewalls allow you to continue to a service station, at a maximum speed of 80km per hour. In certain cars (including the Z4 roadster), the run-flats can be driven upto 250kmph, even after a puncture. It makes the spare tyre obsolete, reduces weight and frees up boot space. Found in all BMW four-wheelers. NIGHT VISION
Sometimes, a day trip continues well past sundown. That’s where Night Vision fixed in Bimmers can help drivers get past poor lighting. This optional system reveals objects up to 300 metres, thanks to an infrared camera that transmits images to the control display. Intelligent algorithms look specifically for pedestrians, highlighted in yellow on the LCD screen. This is where the Matrix meets James Bond. Found in BMW 7 Series, X5 and Z4. CITY SAFETY
The technology developed by Volvo has made the driver almost redundant. Imagine a car that applies brakes on its own, since you were busy texting, or sleeping. At speeds up to 30km per hour, this laser-based technology can sense if a vehicle (6m to 8m) ahead is standing still, or moving slower. If City Safety senses an impending collision, the brakes are pre-charged to act faster on your response. If you don’t brake, it automatically does so and switches off the throttle to help avoid or mitigate a collision. Time for drivers to retire! Found in Volvo XC60. ANTI-SKID SYSTEMS
The anti-skid takes the “adventure” out of driving. The system helps prevent fishtails, spinouts and rollovers, as you apply emergency brakes. At the system’s core, sensors register the car’s direction and roll rate and compares this with steering wheel movements and the actual wheel rotation. The system is able to detect a potential skid and helps counteract this by reducing the engine’s power output, or braking on one or more wheels. If you love rash driving—avoid cars with tags that say EPS, traction control or DSTC. Found in Mercedes-Benz, Volvo and BMW.
COURTESY COMPANY (5)
Using this is like buying life insurance, against the ugliest of accidents. Depending on the driving situation and vehicle equipment, the system can initiate measures for passenger protection when it detects dangers. These include reversible belt tensioning or automatic closing of side windows or even optional tilting sunroof. The all-important information is provided by sensors of various systems (read brake assist that can register critical driving situations). At the end, you walk out safe like Bruce Willis did in The Unbreakable. Found in Mercedes-Benz (GL-Class).
My favourite tool for making presentations maureen carroll co-founder, lime designs san francisco
My consulting company helps businesses and educational institutions develop problemsolving techniques related to the design process. I've never been a fan of traditional slide presentations, because they encourage linear thinking. When I first saw Prezi in action a year ago, I was blown away by its ability to facilitate new ways of thinking. My partner and I have been using it ever since. Prezi is a web-based tool that lets you map out a presentation, including text, graphics, and embedded PDF files and videos, in a single large layout. Instead of clicking through slides during a presentation, you zoom in on relevant information in the layout, then zoom out. Prezi is especially helpful during Q&A sessions, since it lets me quickly zero in on a relevant talking point rather than plod through 20 slides. Prezis are created and stored online, so I can share them with clients by sending a link via e-mail. I also hold realtime presentations with clients online. I like the fact that I can download the presentations to my desktop as well, so I always have them on hand. We pay $59 a year for our Prezi account, which lets us create unlimited presentations and store up to 500MB of data online. Unlike the free version, it does not require us to make presentations public on Prezi's site.—As told to J.J. McCorvey
Things I Cannot Live Without... A black gel pen I always carry one around; it writes well even on paper napkins at coffee shops.
My Samsung Galaxy S I love its Swype functionality, which allows me to type fast. My mocha I consume a lot of it, and try it with different flavours to spice things up.
CO-FOUNDER, VIRTUALWIRE TECHNOLOGIES
My Swiss watch I bought this from my first earnings—an internship in Switzerland in 2002.
INC. | FEBRUARY 2011
He believes in a wireless world—that’s what made him start VirtualWire Technologies in 2003, with help from IIT Delhi. And, that’s what makes him work out of coffee shops around town: he hates working out of an “office-office”. Vishal Chandra, co-founder of VirtualWire that makes wireless products, would rather lug his MacBook Air to whichever cafe he chooses to spend his day in. Thanks to his Samsung Galaxy, he never misses out on a single mail, or technology news, or even his favourite e-book. At home, he loves watching movies on his Blue-Ray. His library has a special place for Sci-fi movies, though his favourite flick is Lord of the Rings. “Ever since I saw the movie, I’ve been itching to visit New Zealand.” —Anoop Chugh
...and What I Covet Driving across New Zealand A 15-day drive from the tip of South Island all the way up to North Island.
Technology Changing domain names without losing search traffic this page Ask the Expert Srikant Sastri of VivaKi tells how mid-sized businesses can use social media page 31 Elevator Pitch YellowLeg sells books to discerning travellers. Will investors like the plot enough to write a 50 lakh cheque? page 32
The Way I Work When heâ€™s not chasing the best aromas around town, Deepinder Goyal is busy earning calories over lunch with his colleagues at his swanky new office
Inside the mind of a VC: Bill Draper on what investors want page 34
Technology The name swap Rebranding on the Internet
For many years, Seth Newman had one big regret. In
1997, Newman, president of Action Envelope, a $12 million envelope retailer based in Lindenhurst, New York, passed up a chance to buy the domain name Envelopes. com for $10,000. At the time, the price was more than the small company wanted to spendâ€”and Newman was happy with his website, ActionEnvelope.com. Years later, Newman was kicking himself. He spent several years negotiating with the owners of Envelopes. com before finally buying the site last January at 40 times the original price. Newman was excited about the purchase, but buying FEBRUARY 2011
the ideal domain name was hardly a magic bullet. As Newman soon discovered, rebranding in the age of Google is not as simple as it was when his father founded Action Envelope, in 1971. It’s all about search—specifically, Google search. Google’s search algorithm takes into account 200 variables, most of which are kept secret to prevent companies from manipulating the search results. That leaves a world of unknown triggers that can have catastrophic effects on a company’s ranking during a domain name change, say experts in search-engine optimisation, or SEO. “Unfortunately, there’s always some loss that you can do nothing about,” says Will Critchlow, founder of Distilled, an SEO consulting firm based in Seattle and London. “The hope is you’ll come back over time, but if your business relies on
envelopes. Still, Newman believed the Envelopes.com domain name would make his company the definitive destination for envelopes online. “The name Envelopes.com has instant credibility and market leadership,” he says. The only problem was that Envelopes.com wasn’t on Google’s radar. Afraid of losing some 38,000 monthly page views that come from Google searches, Newman consulted his Web developer, Alex Schmelkin, president of Alexander Interactive, a New York City– based firm. Schmelkin was against doing a 301 redirect. “We’ve done those with a lot of other brands, but so much of Action’s business came from search results,” he says. “We had to take a more conservative strategy.” Schmelkin decided to keep Action-
“Sometimes it takes Google a little while to figure out how best to process, index, and rank a page.” search traffic, it’s one of the bigger decisions you’d ever make.” When it comes to domain name changes, Google recommends using a 301 redirect, a bit of code that tells Web browsers that a webpage has permanently moved to a new location. But some companies have experienced a drop in search traffic after such a move. Newman, who runs Action Envelope with his mother, Sharon, had already spent about $500,000 developing the company’s website and making sure it was search-engine friendly. For years, ActionEnvelope.com has been the first result when someone searches for envelopes on Google. The site also ranks on the first page of results for several longer search terms, including peel and seal 30
INC. | FEBRUARY 2011
Envelope.com as is and spent nearly five months building an entirely new site for Envelopes.com, with plans to merge the two later. Envelopes.com uses the same customer logins and e-commerce platform as ActionEnvelope.com, but Schmelkin changed the product names and added new content. (Sites with duplicate content tend to rank lower in Google search results, he says.) When Envelopes.com officially launched, in September, the company sent e-mails to clients announcing the news. It also contacted websites and bloggers, requesting that they link to the new site. Since then, search traffic to ActionEnvelope.com has remained constant, while the number of visitors to Envelopes.com has steadily increased.
Things didn’t go as smoothly for Evo, an $18 million Seattle-based company that last year changed its web address from Evogear.com to Evo.com. The company, which started as a retailer of ski equipment, had been selling more than just gear, including apparel and shoes. “Evo.com is a more elastic name that lets us evolve the mix of categories we offer,” says CEO Atsuko Tamura. Evo bought the new domain and did a 301 redirect last August. Each page on Evogear.com—the Contact Us page, for example—had to forward to the corresponding page on Evo.com. But something went wrong. After the move, search traffic dropped nearly 40 percent. In Google results for crucial keywords like K2 skis, a line Evo sells, the company fell from Page 1 to Page 35. And sales were down $200,000 in two weeks. While Tamura’s Web team scrambled to find and correct possible problems in the site’s code, other employees quickly called vendors, asking them to link to Evo. com to boost the site’s Google rankings. By November, Evo’s search traffic and sales had recovered. When done correctly, a 301 redirect shouldn’t cause any drop in traffic, says Matt Cutts, a Google software engineer. He says instead of moving its entire website at once, Evo would have been better off moving the site very slowly, starting with the least-trafficked areas of its website. Changing something like the structure of a site during a move can also cause problems. “If someone changes to a new template, that can affect the rankings,” says Cutts. “Sometimes it takes Google a little while to figure out how best to process, index, and rank a page.” Newman, for one, is OK with going slowly—he’s still running both ActionEnvelope.com and Envelopes.com. But sales are up 23 percent, and he hopes to merge the two sites soon. “I have no doubt that Envelopes.com will be No. 1,” he says. “It’s just a matter of when.”
Ask the Expert Tough questions Smart answers
What are the various options available in digital media? We have not really used this medium, but we see value in it going forward. Please suggest options, costs and metrics are available.
Pages), or the internet, or sites, such as Facebook, or Twitter, and so on? Measuring the cost effectiveness of different media may : not be the best way to go about the media selection proA cess. It depends on how the metric of ‘cost effectiveness’ is arrived
at. If it means just a computation of reach vs. cost, then print may be cost effective. But if the same metric is derived using multiple factors, including the engagement levels with the brand and the level of involvement coupled with the time, the internet would trump all other media forms. Different internet media channels can work differently based on the product/service category. A search engine ad for airline tickets may receive a better response compared to an ad for a pressure cooker exchange offer. It is a complex combination of the offering, communication and the media channel(s) used to advertise that can yield best results. Brands need to invest wisely in building a proper social media strategy on a long-term basis and this cannot be independent of the core business needs/values.
How effective, time consuming : Q and safe is advertising on social media, such as Facebook, or Twitter?
Having evolved over the past decade, there are enormous advertising options in digital media today. More advertisers speak about unique cost per million views (CPM), unique clicks and even web GRP as well as unique reach. An emerging option is video banners, which can be used for research, and even for feedback and interactions. Social networks are being used as a great platform to make it viral (like the case of Blackberry boys, for example). There are many publishers, who are presently monetising their web spaces by showcasing video ads that are highly interactive—they allow viewers to rate them, give feedback and also add a contest element (like in the Zoo Zoo complete-thestory contest). Metrics on costs depend on CPM as well as cost per click (CPC), and also the publishers chosen. But an average CPM starts from 80 and, depending on options, could go up to even 800. Same in the case of CPC ranging from 5 onwards to even 30. Also, there are components of CPL (cost per lead) used by banks, CPR (cost per response) in case of Facebook comments and even CPA (cost per acquisition) which works for eBay. These might depend on their business volumes and objectives. In addition to display and search, social media is being actively used by brands to engage with consumers.
motional platform with talk ability. It can be a magnificent tool for building ongoing awareness and affinity, but it’s also an open forum, where every individual who chooses to interact with the brand has an equal opportunity to advocate it or tear it apart. It needs to be handled intelligently, for if it is not handled with insight and diligence, it can spiral into a worldwide fiasco. Numerous brands have successfully used social media to create a positive customer experience by interacting at a very personal level. This whole exercise is time consuming, but like all long-term investments, it can reap good returns. Safety in the social space is a mirage, which brands should avoid. Moderation is possible to some extent, but is not well accepted by the online population. However, there are ways of handling malicious posts, and direct, unbiased opinion keeps the organisation/brand close to its audience. In fact, this can give the brand first-hand feedback on something negative very early, giving it sufficient notice to rectify situations before things go out of hand, and act quickly on such instances to increase admiration and likeness.
Which is the most cost effective media for advertising these days? Is it through the print media (Yellow
Srikant Sastri is the India chairperson for VivaKi, an enabling community created by Publicis Groupe to bring together the combined strength of its media and digital entities, namely Digitas, Starcom MediaVest Group and ZenithOptimedia. He can be reached at email@example.com
The efficacy of social media can only be measured in the : long term; it’s a function of how the brand chooses to A interact with its various stake-holders. It’s a combination of a pro-
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GUTTER CREDIT HERE
Final Destination Ashish and Ashwini Gupta buy books back from their customers at half the price.
PHOTOGRAPH BY S. RADHAKRISHNA
Elevator Pitch Yellowleg sells travel books online. Will it become an investor’s destination? FOUNDERS:
Ashish Gupta and Ashwini Gupta FOUNDED IN:
SEED MONEY INVESTED:
REVENUE (PAST SIX MONTHS):
25,000 per month
PROJECTED REVENUE (NEXT SIX MONTHS):
Sells travel books, and buys them back from clients in lieu of credit notes. FUNDING SOUGHT:
GUTTER CREDIT HERE
50 lakh for marketing and scaling up
The Pitch “Our product is for the independent traveller. Our tagline ‘A
Discerning Traveller’s Bookstore’ says it all. We provide travel books on unexplored destinations, for the not-so-clichéd explorer. Not only do we sell books online, we buy the books back from our customers at half the price. The concept may be ahead of its time, but it has the potential to be a winner. According to a 2009 study conducted by the World Tourism Organisation and the European Travel Commission, there are at least 2 million highincome tourists in India alone, who travel for leisure and prefer to do so independently. Further, this number is projected to grow at a minimum of 12 per cent annually. Right now, there isn’t any major Indian brand that is identified with the independent traveller.”—As told to Sunaina Sehgal
The Experts Weigh In REVAMP THE BUSINESS MODEL
It is not clear why the founders are restricting themselves only to travel books. It is a niche segment, which makes it difficult to build traffic along with revenue. Any business needs a million or more visitors to become a recognisable brand online; only then can it attract ad revenue. Second point is logistics: delivering, returning and buying back used books will require infrastructure, which will be a challenge. Maybe, the firm can restrict the delivery of books to only a few. Maintaining an inventory for books will be another challenge. The firm has to figure out why a customer will not go to a neighbourhood store. PRAVIN GANDHI, Partner, Seedfund, Mumbai
PROVE ITS ABILITY TO SCALE UP
Yellowleg.com is dealing with an extremely niche segment. It will be difficult to scale up to a level that justifies a venture capital investment. Books have a low average selling price in India; and, used books are even cheaper than a new book. Hence, the average selling price will need to be low to make the pricing competitive. Moreover, within books, “travel” is a niche category. That makes it even more difficult to build a large business, especially on used travel books. But, it would be interesting to see how it incorporates other travel-related services. SUVIR SUJAN, Co-founder, Nexus Venture Partners, Mumbai
Their business model is exciting and provides a unique solution to the “curious traveller”. But, the firm is targeting a niche segment. In terms of the pitch, it needs to put faith in its product—especially, if they wish to sell Yellowleg.com off sometime later! The founders wouldn’t wish to point out anything but the positive aspect of their business model. Founders’ profiles are also important in a niche service such as this, so, a few words on a website would be perfect. It seems Yellowleg has not reached a “good number” yet and should try to increase the number of registered users, and then raise funds. SAURABH MEHTA, Vice President, Indavest Ventures, Bengaluru
Finance Inside the mind of an investor Lessons from Bill Draper
People Watcher Venture capitalist Bill Draper cares more about the entrepreneur than the idea.
What was it like launching a VC firm at a time when most people didn’t even know what venture capital was?
Actually, people in the East did know about venture capital through the Whitney family in New York and American Research and Development in Boston. But no one out here had heard the term. In 1962, when my partner, [Franklin] “Pitch” Johnson, and I started our first company, Draper & Johnson, we got no action. We would sit around waiting for the phone to ring. It didn’t, so we drove out into the fruit orchards—remember, it wasn’t Silicon Valley back then. We’d look for companies with names that sounded like they might have something to do with technology or at least like they weren’t warehouses for prunes. When we saw a promising sign, we’d knock on the door and ask the receptionist, “Is the president in?” A man would come out—usually our age, early 30s. And he’d ask, “What do you do?” We’d say, “We’re in the venture capital business. We buy a minority interest in a private company and help it grow.” Then we’d ask, “What do you do?” And he’d talk about his business—they loved to talk about their businesses. We had a lot of fun and wasted 34
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The Draper family is to Silicon Valley venture capital what the Gallos are to California wine. The three-generation dynasty began in 1959, when William H. Draper Jr., a retired U.S. Army general, created Draper, Gaither & Anderson— the first VC firm west of the Mississippi. The family’s youngest investor is the general’s grandson, Tim Draper, co-founder of the prominent early-stage investment firm Draper Fisher Jurvetson. Connecting those two formidable players is William H. (Bill) Draper III, the general’s son and Tim’s father. Bill Draper helped shape the modern VC industry, most notably at Sutter Hill Ventures and at Draper Richards, where he is a general partner. He has invested in companies such as Skype, Hotmail, and OpenTable. In January, Palgrave Macmillan will publish his memoir, The Startup Game: Inside the Partnership Between Venture Capitalists and Entrepreneurs. Editor-at-large Leigh Buchanan talked with Draper, 82, about the VC industry and what it takes to succeed as an entrepreneur—no matter where your money comes from.
a lot of hours that way. But once in a while, we got someone interested in expansion who hit our hot button. Then, as the banking community in San Francisco learned about us, we became the go-to guys for small, growing companies that might one day have a public offering. With which entrepreneurs have you had the best working relationships?
One of the most passionate and energetic entrepreneurs I know is Jonathan Bush, whom I met in New Hampshire when he was 18 years old and out campaigning for his uncle, George H.W. Bush. Jonathan was everywhere—knocking on doors, working phone banks, driving around on a truck with a megaphone. He really inspired people. Later, he connected with me when he wanted to start Athenahealth, which offers billing, electronic records, and other services for medical providers. We supported him, and I also got the Rockefellers to invest, as well as my son’s firm. Athenahealth became a fine, rapidly growing company and had a very successful IPO a few years ago, in which we got back 10 times our investment. I also became close to Dave Bossen,
founder of Measurex, which made computer controls for the paper industry. Dave is that rare entrepreneur who is equally competent starting a company from dead scratch as he is running it all the way up to the New York Stock Exchange and beyond. [Honeywell acquired Measurex in 1997.] Draper & Johnson was the first firm you started. What did that experience teach you about entrepreneurship?
First, that you need other people. Starting with the money. I had $25,000 and a $20,000 mortgage on a $40,000 house. I needed $75,000 and a partner with another $75,000, because the SBIC [Small Business Investment Company—a private-public partnership] would leverage that money three to one. So I teamed up with Pitch. And luckily, I had a father and Pitch had a father-in-law who loaned us what we needed. Second, you need to pick a good partner. It’s like picking a great wife: If you get that right, everything else is easier. And if you cooperate well inside the house, you’re more likely to cooperate well outside the house.
Third, you need to find a niche. When we started, we were the only ones out there talking to companies in the orchards of Santa Clara and Sunnyvale. I remember a saying from a pass receiver in football: “Throw the ball where I ain’t.” Well, we went where others ain’t and ended up doing very well. Finally, I learned that being friendly and open comes back to help you. The people that have the hardest time in business are often brilliant but rub others the wrong way. People really wanted to do business with Pitch and me because we were good guys. You prefer to visit entrepreneurs in their workplaces before they come to your office. What are you looking for?
Mostly, it’s a matter of trying to relax the entrepreneur and observe his relationships with his team and employees on their home turf. I’ve seen an entrepreneur get into an argument with one of his vice presidents right in front of me. It made my skin crawl. I also look for orderliness and allocation of space. At one company, where the founder was a scientist, I expected most of the premises would be a lab. But the founder’s office took up about two-thirds of the square footage. The lab itself was very small. It made a bad impression. Then there’s always the chance I’ll run into a guy in the bathroom and we’ll start chatting and he’ll say, “Have you heard about the lawsuit?” What are the most common mistakes made by entrepreneurs?
People make lots of mistakes. They overestimate market size and underestimate how long things will take. But what happens most often is that entrepreneurs underestimate the importance of what they don’t know. They know their competition as it is today, and they know that their own product is going to be significantly better. But they don’t know what’s going on in the backroom of their competition. You can’t discount the possibility that the other guy is getting ready to replace the Model T with the Model A.
When evaluating companies, do you pay more attention to the idea or the leader?
What emerging technologies strike you as most exciting?
The leader. Even if the product is wrong, a great, visionary leader will come up with another idea. During a presentation, I keep my eye on the top person, looking at how he interacts with his team, if he understands his audience, if he is the least bit unsure, or if he lacks information he should have had. Most of all, I am looking for judgment. Why did he make certain choices in life? For example, I’m not in favour of serial entrepreneurs. If they’ve changed jobs every two years, I’m suspicious, even if they did a good job running things. I also pay a lot of attention to where they went to college, because it shows whether they took their education seriously. If they went to a top college: good. If they were top of their class at a second-tier college: terrific. It means they worked really hard. I have not had very good luck with PhD’s. But I have had excellent luck with PhD candidates who left early
Stem-cell research is one. Last week, I went over to the Gladstone Institutes, and they were talking about how you could take skin cells, put them into the heart, and get those cells to start beating. They showed us a small section of a heart where these cells were all beating together. It was amazing. Also, quantum computers, which will eventually outperform all other computers. Since you started in the VC industry, what has changed?
What’s gotten worse from the VC’s standpoint is that the business is less profitable, and the process is a lot more formal. I miss the days before we had the term term sheet, when I would just write stuff down on a piece of paper and hand it to the entrepreneur. From the entrepreneur’s perspective, working with a venture firm is more bureaucratic. In most cases, there isn’t as
“People make lots of mistakes. They overestimate market size and underestimate how long things will take.” because they wanted to start their companies without waiting the seven years for a degree. Maybe someone with the patience to wait that long is not going to be a very good entrepreneur. Another thing I do, by the way, is call references and then ask the references, “Who else should I talk to?” Often the reference has been set up in advance and is a good friend of the entrepreneur. And sometimes he will know something negative about the entrepreneur that he doesn’t want to personally disclose. So when I ask that reference for another reference, he can steer me to someone who will tell me what he thinks I ought to know, without worrying that he has betrayed the entrepreneur. It’s a good strategy for hiring situations as well.
much personal connection between the entrepreneur and the partner. On the other hand, the entrepreneur has many more options. If I say no, now he just goes down the street and talks to three or four others. Your new book is called The Startup Game. Do you think start-ups are a game for the entrepreneur as well as for the VC?
Sure, it’s a game. But ask entrepreneurs, and they’ll tell you, they’re having a lot more fun than the VCs. So have you ever been tempted to chuck it all and go work for one of these companies full time?
THE WAY I WORK | Deepinder Goyal, founder, Zomato
“I only believe in earning calories and not burning them.” You can take food away from a Punjabi, but you cannot take a Punjabi away from food. That rings true of Deepinder Goyal, founder of Zomato, who was born and brought up in Punjab. Armed with a Master’s degree in technology from Indian Institute of Technology, Delhi, Goyal should have been happy punching the clock as a consultant with Bain & Company, a prestigious consultancy. But the job, with all the trappings of a cushy career, could not satisfy his appetite. As this foodie searched for the perfect choice, he found it right in the middle of his company’s canteen. Always intrigued by the who-gets-it-first race for the free-delivery menu cards at lunch time, he decided to save everyone the trouble of queuing up by putting everything online. That’s how the idea of Foodiebay.com was born. The company was launched by Goyal, his Bain colleague, Pankaj Chaddah and an IIT student, Gunjan Patidar, three years ago. It has since been rebranded as Zomato.com and has also managed to attract external capital. Goyal might be taking his business to different parts of the country, but he is still doing what he does best—tracking, and training his team to track, the best aromas in town. He is happy hanging around his new office in Gurgaon, discussing food menus over lunch and doing the least bit of travel. When not thinking of innovative ideas and better strategies for Zomato, he loves using his scrumy.com notes to delegate tasks to his team.
AS TOLD TO ANOOP CHUGH | PHOTOGRAPHS BY SUBHOJIT PAUL 36
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Mulling Over Munch Deepinder Goyal loves discussing food menus over lunch with his colleagues.
“I spend more time with Sony Vaio than with my wife, but she is fine with that.” As a co-founder of a three-year-old, and relatively flourishing, online food portal, many would imagine that my day is spent dashing across town, meeting managers and investors, or chasing customers and clients. But, I hardly do that. The way I work is more an aberration than an inspiration. But, that’s just how it is. I believe in working smart, and not necessarily hard. I usually get up by 10.30 in the morning, even on weekdays. I am not much of a believer in fitness. I only believe in earning calories and not burning them. Once the morning chores are out of my way and I’m done with breakfast, I head straight for office. Fortunately, my office is very close to my home. I usually get to work by half past eleven. We’ve recently acquired our office space. Before this, we worked out of our respective homes. I kind of like hanging around the place now, contemplating the next step, the next innovative idea, the next strategy. The only physical movement that I make at work, though, is when I press the keys of my BlackBerry to respond to e-mails. My mornings are usually spent discussing the overall strategy with the team, including issues like content acquisition, legal issues, competitor benchmarking, marketing, growth and sustainability. We are constantly trying to innovate—that’s the only way to keep the brand alive. It’s like no matter how much you hate or love Apple products, you cannot ignore them. Either way, you have to be in the limelight; more so, if you exist in the virtual world. In the last three years since we started this venture, I have played every conceivable role possible at Zomato, earlier known as Foodiebay. Be it designing the first landing page of the website, collecting menu cards from hotels and restaurants in and around Delhi; scanning, rating and uploading those; marketing the portal at almost no-cost; and of course, getting hold of advertisers. On many days, I’m also playing agony uncle to the team. When not thinking about the big ideas, I try to make the lives of my employees more efficient (read hell!). Recently, I discovered
this new tool called scrumy.com. It is essentially a glorified version of sticky notes, and relatively unknown. It has a companywide dashboard with hundreds of sticky notes with different colours for different people. Each sticky note is basically a task for someone to do. Anyone can add a task for me to do and vice versa. We also divide tasks by departments—so our sales, marketing and tech teams have separate sticky note dashboards. To maintain transparency between different functions, every dashboard is free for anyone to see and add tasks to. This keeps everyone at Zomato on their toes. If anyone gets sloppy at work, it’s up there for everyone to see. It’s amazing how this tool has got everyone working more efficiently than before. Most of our time goes into mulling over what to eat and from where to eat—essentially the question we help others solve through our portal. We also make it a point to have lunch together every day. On Fridays, nobody gets lunch from home. We order pizzas to check everyone’s appetite. A healthy appetite for food is a must for anyone who wants to work here. You have to be passionate not just about eating; but also about knowing good food, and more importantly, zeroing down on the place where it can be found.
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raining team members is an important element of my day. We don’t have a big team in any department, since we are only 28 of us in all nevertheless, a lot of effort goes into preparing the data collection and sales teams before they set out into the field. For example, we get a lot of traffic on our website from expatriates, so it makes sense for upmarket hotel eateries to publish their menus with us. However, it can be real hard to convince these high-end hotel chains to come on board, not merely as an advertiser, but as a participant. We spent a lot of time and effort strategising, convincing, aggressively selling and data crunching to get various restaurants on a single platform. Expansion is also something that constantly plays on my mind. The thing with a start-up is that no matter how much you have
grown in the last year, you can always do better than that. We had the maximum number of votes from our employees. Fortustarted in the National Capital Region and now we are in six cities. nately, our users are accepting it well, too. We can grow multi-fold from here. We are very proud to be associated with our investors. A part of Apart from this fast growth, nothing much has changed in my my job now is to make sure that our investors stay tuned into the life as a founder. I still don’t travel much, despite the fact that we innovations at Zomato. I send e-mails on a weekly basis to keep have grown beyond Delhi now. Last year, I had only one business them updated about what’s cooking in our company. visit to my credit. One would think that’s insane for a business Success at work also depends a lot on the dynamics on the owner who’s seeking more business from new centres. But I believe home front. Your family members have to support you in your travel is not the nature of our business. endeavours. Fortunately for me, it was only my wife who needed to When I was in Mumbai last year looking for business, it sudbe convinced about Foodiebay. In fact, she remains quite kicked denly struck me that it made more sense to hire a person locally; about the venture and also contributes whenever she can. In fact, she would have a better understanding of the city’s taste buds and popular eateries , and would be better equipped to handle the job. So, we decided to delegate the local operations to experts in that particular city. For example, we are currently setting up an office in Chennai, and we want the head of operations there to know the city like a true Madrasi does. Only then will the idea get executed in the right manner. Another reason for minimum travel is to keep a tight watch over costs. As a start-up, you just cannot afford to spend that extra dime. Till we moved into our new office in Gurgaon, we worked out of our homes. The only cost I had to worry about was that of human resource. There would be one person in each city to get us the data; a centralised team, based out of the NCR, would process that data and another team would pitch the idea to advertisers. The business model couldn’t have been skimpier. Now that we have received some Food is Fun Deepinder Goyal discusses menus with his colleagues almost every day over lunch at his Gurgaon office. funding from Info Edge, the parent company of Naukri.com, we are moving from size zero to size one company. In the last six months (since the funding), our expenses have shot up but once back home, I spend more time with my Sony Vaio than with that is largely because of the new cafe-like office in Gurgaon, a her, but she is almost always fine with that. bigger workforce and multi-city operations. But thankfully, the A bit of a geek at heart, I like being surrounded by technology, revenue figures have kept pace. Earlier, we would touch 2 lakh even at home. If I am not exploring the World Wide Web, then I to 3 lakh per month in revenue. In the past few months, the will be watching a movie on my home theatre. The thing about figure has soared to 8 lakh per month. And now, with our geeks is that they aren’t the most voracious of readers. ramped-up capacity, I am confident of hitting a target of 40 The only piece of literature I have read, and read again, is the lakh per month. commencement speech delivered by Steve Jobs at Stanford UniverIn fact, growth is the reason behind rebranding the comsity. His words were so inspiring that you cannot but just believe in pany, and moving on to Zomato. We realised that if we had to him when he says, “You can’t connect the dots looking forward; embrace growth, we could not restrict ourselves only to food. you can only connect them looking backwards. So you have to The idea is to diversify into other food-related avenues like trust that the dots will somehow connect in your future. You have nightlife, pubs and events. For this, we had to look beyond to trust in something—your gut, destiny, life, karma, whatever”. Foodiebay. It wasn’t easy to get consensus on a new brand name, I hope that when I look back five years from now, the dots I am so we did it in the most democratic way possible. Zomato got connecting now will make a lot more sense. 40
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Everything you need to know to run your business in today’s economy
: : : : : : : : : : : A MONTHLY GUIDE TO POLICIES, PROCEDURES AND PRACTICES
REMOVE BOOKLET ALONG DOTTED LINE
SURVIVE THE FIRST YEAR Launching a start-up is undoubtedly exciting. But the going for new firms is riddled with challenges—so much so that surveys show that one out of three start-ups shuts shop before celebrating its first anniversary. That makes successful start-ups and their founders’ experiences all the more valuable. Some businesses manage to get past that crucial first-year milestone by adopting innovative measures. For instance, recollects Chandrakanth B.N., founder and managing director, Theorem India, the internet connection was down on the day he was hosting his first potential overseas client, who’d flown in from the USA especially to review Theorem’s service set up.“Dodgy internet connections and insufficient bandwidth were a pain, but we somehow made ad hoc arrangements and managed to save the day,” he adds. Of course, for many others, there are worse nightmares, such as starting up in a year when the economy takes a turn for the worse, not just locally, but internationally, as it did in 2008. Businesses that were started in the beginning of that year had no clue that corporate spending would dry up suddenly by the middle of the year, or that a full-blown recession was on its way. Says P&B Media’s Manoj Gupta, whose outdoor advertising and promotion firm was in its third year of operation that year, and yet suffered as his private sector clients cut back on their advertising outlay: “Being flexible and keeping our mind open to new opportunities can improve the odds of survival.” That’s not all, of course. Read on to learn more from those who’ve been there and come up trumps.—By Charu Bahri VOL. 02 NO. 01 | INC. GUIDEBOOK
SURVIVE THE FIRST YEAR IN BUSINESS : : : : : : : : : : : : :
SURVIVAL OF THE FITTEST 1
Prepare to don many hats: P&B Media’s Gupta had worked for close to a decade as the head in the field of outdoor advertising before starting his own firm. It wasn’t that he hadn’t felt the entrepreneurial urge during that time. It’s just that Gupta held back till he was confident that he had gained a sound understanding of the industry, and developed allround skills in that field. “I could keep tabs on every facet of the business, and hold it all together. That made me believe that I could make it work,” he says. Entrepreneurs must have the knack of being on top of everything, be it marketing or finance or human resources, even if their qualifications are related to the core activities of the business. They not only need to be prepared to don many hats, but also to switch hats in the blink of an eye.
uncomfortable position to meet your household expenses. Then, figure out how much you can borrow from your family and friends. “Funds from family and friends can be had on much easier re-payment
Get a mentor; you will need a shoulder to cry on when the going gets tough.
Create a detailed budget: Most businesses hardly see any cash in their first year. That’s why Tejas Murarka, founder director, Legends Overseas, a gifting and promotional company, thinks it’s a good idea to “estimate every expense that you’re likely to incur to get your business off the ground and to support it over the first year.” This should include your working capital needs. Also, keep in mind that startups find it difficult to get credit, as suppliers are wary of their ability to repay. Once you’ve drawn up the estimate, consider how much money you can invest into the business from your savings without putting yourself into an INC. GUIDEBOOK
VOL. 02 NO. 01
terms, therefore, if you have access to them, look no further,” adds Murarka. Build a team: Yes, we know you’d like to do as much yourself as possible, so that costs are reduced. However, there’s no denying the need to bring the right people onboard, since no individual can possess every skill needed to run a business. “Recruit talented people who believe in what you’re doing,” advises Chandrakanth. Most start-ups can’t pay the best salaries, or offer job security. Yet, they need employees to work long hours, and often, pitch in on weekends. Since not many talented people are likely to be attracted by these terms, Chandrakanth suggests, looking for people who find “working alongside a founder of a business exciting”. Infusing a sense of belonging in employees also helps build trust and loyalty. So, take genuine interest in the team and their affairs, help them grow as individuals and professionals, and bond with your employees outside the office.
Keep your costs low: Start-ups need to stretch every rupee as far as it can go. To this end, says Dr Anil Gupta, professor, IIM, Ahmedabad, and executive vice chair, National Innovation Foundation: “Though every business would like to own the infrastructure it needs, that’s not the right way of using limited funds.” You could try using industry associations, research and development institutions and other tool rooms to avail their facilities at concessional terms. Further, if you deal in products, keep your stocks low. That will ensure that you don’t tie up precious cash in stocks, and allow you to respond to changing customer preferences by buying what’s in. “In three years, we’ve grown our product basket from four to 15 categories. But even now, we keep our stocks low, as we did in our first year. Our inventories are limited to the most popular items in our basket,” shares Murarka. Get the word out: The first year of a start-up centres round acquiring its first few customers, who could then be used as reference points. Since advertising is expensive, Murarka suggests making the most of networking. “We attended conferences, seminars, trade shows, and actively participated on online business networking sites, such as Business Networking International (BNI) and Ryze,” he adds. Meeting new people helps generate more leads. But, it’s equally important to follow up with new contacts as that brightens your chances of closing a
sale. “Out of sight is out of mind for a client,” cautions Murarka. So, touch base with potential clients regularly, no matter how small you expect their order to be. “We used to meet potential customers every week, typically for a month. One time, we followed up with a client for three months, only because we were frustrated about our slow sales. The effort paid off when the client placed an order for three times the quantity that we’d quoted for,” he recollects. Focus on service: “Service is an important differentiating factor,” says Murarka. That’s more so if you’re entering a densely populated and highly competitive space. “We knew that there
are thousands out there like us, but we still pressed forward because we were sure that we could offer better services.” Gupta, too, suggests focusing on touch points to build a good rapport with your clients.. “By doing so, you’re in a better position to understand your clients’ difficulties and put across your own challenges. Businesses that take their clients along with them are longdistance runners,” he adds. 3
A common factor to most successful entrepreneurial ventures is the support of the family and friends of the founder. If you don’t have the backing of your family, Dr Gupta suggests you identify a counsellor or mentor
because “every start-up sees a little suffering, and you’ll need a shoulder to cry on when the going gets tough.” There are other forms of support available, such as students. “Technology start-ups could outsource some of their R&D to students and thereby reduce costs. Distributing the work would ensure that the intellectual property stays protected. Resource sites like www.techpedia.in designed by SRISTI offer students’ details,” says Dr Gupta. The chances of a start-up surviving to celebrate its first anniversary may be slim, but you’re more likely to succeed if you share your responsibilities. That way, you’ll also have people around to share your successes with.
SURVIVE THE FIRST YEAR IN BUSINESS : : : : : : : : : : : : :
Start-ups try hard to attract investors to infuse the business with much needed funds. Therefore, it helps to understand the mind-set of angel investors. Veteran investor Saurabh Srivastava explains what they look for. People: Angels evaluate the people behind the start-up—both the founder and the team. Essentially, they work on the belief that an A-class team can pull off even a B-class idea, and that a B-class team would make a hash of the best ideas. A strong team with the essential business skills will clearly win. Clarity & uniqueness: Angels like to back start-ups that are clear about their product or service, their intended market, and the prevailing competition. They should be able to demonstrate what’s special about their offering. Still, start-ups operating in a huge market find it easier to raise funds—the high un-met demand reduces the risk for an investor. Validation of the idea: Angels are happy to invest in an idea, as long as it is validated by the founder by investing some time and a little money to show his personal belief in its feasibility. It’s not like it has to be making money to attract more money. Packaging: This is an aspect Srivastava emphasises, because “Indians tend to focus more on substance than on form”. Start-ups need to overcome this cultural pre-occupation by focusing and investing as much on packaging and presentation—that helps create buzz about a product. Startups with strong sales and marketing teams attract more investors.
KNOW WHAT IT TAKES Success stems from being passionate about what you do and believing in yourself. According to Chandrakanth, “Successful entrepreneurs are creative, whacky, and free-willed, and think out-ofthe-box. Yet, they possess unwavering discipline and keep their eye firmly on the goal.” Owning your own business sounds romantic, but it helps to be realistic about what it takes. So: If you’re inspired by the thought of working better hours, know that you’ll need to put in long hours. If you’d like to be your own boss, ask yourself how disciplined you are. If you’d like to improve your finances, are you patient to wait to earn good money? If your current job leaves you unfulfilled, are you prepared to face physical and emotional demands? If you’d like to take your own decisions, know that you’ll often have to do so under pressure.
Institutional Assistance to MSMEs, http://hubpages.com/ hub/A-Guide-on-Starting-MSME-inIndia-Part-IX
Everything you wanted to know about starting up, http://www.
businesslink.gov.uk/bdotg/action/ layer?lang=en&r.i=1074402023&r. l1=1073858805&r.l2=1073859137&r. l3=1074401788&r.s=m&r. t=RESOURCES&topicId=1073858805
Connect with technology students, www.techpedia.in
VOL. 02 NO. 01
It was just a year ago that the Indian edition of the iconic Inc. magazine was published. EVERY ANNIVERSARY IS SPECIAL. YET, FEW EVENTS RIVAL THE FIRST ANNIVERSARY. THERE IS GENUINE JOY OF HAVING DISCOVERED NEW THINGS AND SURVIVED THE ODDS—AND, HOPE FOR THE JOURNEY AHEAD. So, we celebrate turning one by asking some of India’s most popular entrepreneurs to relive their many firsts with us.
UID proves that Nilekaniâ€™s skills can work as well in public service, as they did at Infosys.
INC. | FEBRUARY 2011
MY FIRST PUBLIC PROJECT
MY FIRST PUBLIC PROJECT NANDAN NILEKANI Chairman, UID Authority of India
“I have to prove myself all over again.”
Having worked at Infosys for 30 years, Nandan Nilekani could have comfortably spent the rest of his working life at the company he co-founded. But being a true entrepreneur, he chose to embrace the challenge of building an organisation a second time. Only this time, the start-up is one of the most ambitious projects of the Indian government and aims to provide every Indian a unique identification number. The entrepreneur-turned-cabinet minister shares his experience of his first innings in public service. AS TOLD TO POOJA KOTHARI | CARICATURE BY JOFFY JOSE I STEPPED DOWN as the CEO of Infosys in 2007 and for the next two years, I served as a co-chairman of the company. I spent that time focusing on customers and strategic relationships, and also writing my book Imagining India. Then, out of the blue, in June 2009, I was
invited by Dr Manmohan Singh to take charge as the chairman of the Unique Identification Authority of India, with the rank of a cabinet minister. I could have continued working at Infosys
for another five years, since our retirement age is 60. But when this offer came along—
and that, too, from the Prime Minister—I thought it was a truly exceptional opportunity to serve the public. I discussed this opportunity with my col-
leagues at Infosys. We had been together for 30 years as co-founders, so I couldn’t leave without their blessings. It’s only after I got FEBRUARY 2011
MY FIRST PUBLIC PROJECT
the green signal from them that I accepted the offer. I had held an interest in public service for long. Even while at Infosys, I had served as an advisor on various government projects, such as the National Knowledge Commission, and the Bangalore Agenda Task Force. Those experiences had exposed me to the workings of the government and built my appetite. They had also made me realise that from the outside, I could provide counsel, give advice, and serve on committees. But, to make a substantial impact, I had to be on the job full time. This role was giving me the opportunity to do exactly that. I thought of myself as a serial entrepre-
neur, except in my case, my next step was taking me from the private sector to public service. Of course, I realised that the many variables in this project added great risk to my chances of success. And, it’s not often possible to do a second act.
At some level, I felt the urge to prove
myself all over again. It’s like I had been in one game and at the top of it, and now, I was in a different game, and needed to prove that I could do it again.
This project was a huge change for me. It
required me to step out of my comfort zone. Among its many implications, the obvious one was the shift from the private sector to the government. Everything changed—the milieu, culture, work processes and so on. Secondly, I had to move from Bengaluru to Delhi. I was born in that city and had been living there for the past 20 years. I was comfortably ensconced there.
The third big change was that I was going
from a renowned 100,000-employeestrong company to a start-up. The UIDAI didn’t exist then, except as a decision of the government. I was its first employee. From operating with all systems and secretaries in place—where I could shoot out one e-mail and get things done—I was moving to a set up where I was the only one. It was a whole new break on multiple levels. 44
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Nilekan i at the am was sur prised o spent bu unt of time il consensu ding s various s among takehold ers.
Since I was dealing with a different setup, I knew I needed to have certain things in place. So I set a few conditions—that I would have the flexibility to hire the core team, that this would be an important project of the government, would undergo frequent reviews, and so on. I wanted the full support of the PM on this project. I formally took charge in July 2009. I spent
the first few weeks understanding the nuts and bolts of governance—how secretaries are appointed; budgets get made, and so on. I spoke to my friends in the government to get up to speed on that. Without that understanding, I would have got lost in this set-up. Working for the government turned out to
be easier than I thought. I found that if you have a clearly articulated purpose, your motives are transparent, and you are relentlessly focused on getting something done, you can make it happen. To me, that was great news.
What surprised me was the amount of time I had to spend on building consensus. We did that even at Infosys; however, there are many more stakeholders in a public project. In a company, you can move ahead if you can convince the board and your colleagues. Here, I had to convince state governments, other departments, the public, media, critics, and so on. The scale changed from a group of people to the entire nation. An entire year got spent in that process. We were rolling out the technology platform anyway in the first 12 to 18 months. So I used that time to evangelise the vision of what we were going to do and create a consensus around that.
While I had felt many highs at Infosys— from going global to listing at the Nasdaq and selling Brand India 25 years ago—the highs in the public space are different. I have the opportunity to deliver high-quality solutions ahead of time, and make an impact. To me, that’s a great feeling. This project has also made me confident that my skills are portable. My set of capabilities had worked in the private sector. However, I didn’t know how much they could work in this world. It feels great to be able to parlay those skills in public service as well. Of course, there have been some lows as
well; for instance, when I had to face resistance, which was more due to territorial issues than anything personal. Fortunately, my personality is such that I tend to bounce back from anything.
We have a five-year term. So, I have another three years in which I want a couple of applications on top of the UID system—financial inclusion, telecom, mobile banking, and so on. We would like to see this number being used to give every Indian a mobile number and a bank account. I like to sink my teeth into large meaty transformational things. I enjoy working on them for a dedicated period of time, so that things actually happen. Right now, I have a clear agenda in mind. I have to use my knowledge of process, technology, and transformation, and my position to bring as many positive changes as possible, so India can live up to its potential. It doesn’t matter where I will be at the end of these five years.
BUSINESS OWNERS ON THE MANY FIRSTS EN ROUTE TO SUCCESS My First Client
Harshvardhan Kheemani and Varun Todi Oye Happy Bengaluru Plans surprises
My First Faux Pas
Pallav Nadhani FusionCharts Kolkata Makes animated and interactive charts for web applications Since I had not worked for a company before starting out on my own, building my first team was my first experience of hiring. We built a 10-member team. And, boy, was I elated. Within two months though, things didn’t look good. We were clocking in 100 hours plus a week. One of the hires wasn’t able to take this load. He was putting in merely 60 hours a week. The rest of the team thought this was simply insufficient. Things went on like that for three months before I finally decided to ask him to leave. Unfortunately, it was the first of January. I made another big mistake. It never occurred to me to have a word with him to get to know his side of the story. I didn’t take the time to figure out if he shared our vision. I just assumed he did which was unfair. Fusion Charts was my baby. At that time, I looked at things as black or white, never grey. I fired him on professional grounds but because I did so on January 1, it became personal.
Our first surprise happened even before we had decided to organise surprises for a living! A friend casually mentioned that her boyfriend was coming to town and she wanted to surprise him at the airport! The Marwari that I am, I zeroed in on the business opportunity. We told her to leave it to us. On June 19, 2009, she went to get her boyfriend at the airport. As they drove home, they were met by somebody carrying a huge postcard with a welcome message. They stopped the car, and the boyfriend was adorned by a garland of flowers and a gift. They resumed the journey, only to find another person carrying a different poster and gift for him. A couple of more such stops followed till they got home. More gifts, surprises and of course, smiles, were waiting there. Since then, we have organised more than 350 surprises—at airports, homes, restaurants, shops, streets, movies and offices. We are used to shrieks of happiness, over-whelming tears, or shocked moments of silence. But, nothing matches the look of joy on our first client’s face.
My Mark Zuckerberg Moment Yusuf Motiwala TringMe Bengaluru A web-based voice telephony platform
In 2006, I worked for Texas Instruments in Bengaluru, and had to travel overseas quite often. I’d tell my parents to stay in touch on Skype. But, my father who could barely manage to send e-mails wouldn’t know how to install Skype on a PC. He would wonder, “Why can’t we call you directly from the browser?” His common-person question set me thinking. It was a valid point. And, I thought there must be so many people like him who want to use technology without getting into its intricacies. I had also felt frustrated about having to find computers installed with Skype to make calls. Why couldn’t every computer with internet and a browser do this? Over the next six months, I explored existing voice communication mechanisms, spoke to people in the industry, and realised that there was a need for a platform that simplified voice communication technology—both for end-users and for developers desiring to build voice-enabled websites. TringMe began to take shape in my mind, and inspired, I quit my job. Today, our voice technology offerings have 5 million users. continued on page 49 FEBRUARY 2011
MY FIRST DECADE IN BUSINESS ARVIND RAO Co-founder and CEO, OnMobile Global
“The time has come to re-invent the company.” Arvind Rao left a successful corporate career for the uncertainties of an entrepreneurial opportunity. A decade later, he’s at the helm of one of the world’s largest data and value added services companies, touching more than 88 million lives across 43 countries every month. With a top line of $100 million, the CEO of OnMobile has surely arrived. And yet, he feels, this is only the beginning of the journey. AS TOLD TO DHIMAN CHATTOPADHYAY | CARICATURE BY ANIL T
WE HAVE JUST completed a decade in business and are looking forward to becoming a billion-dollar company. And yet, 10 years ago, we were just a bunch of enthusiastic guys with big dreams and big ideas. We could achieve the success we did because of a few turning points in that first decade—they didn’t just shape the future of 46
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OnMobile, but also transformed us into the seasoned entrepreneurs that we are today. THE BIRTH With a business management degree from
Wharton, I was settled in the US. My job would often take me to California to meet founders of start-ups. On one such trip in
2000, I met Mouli Raman, who was looking for a CEO to start a new business for Infosys, OnScan. A few meetings later, I realised that my business sense fit perfectly with his team’s superior engineering skills. So, I joined them to midwife the birth of OnScan in California. As co-founder and CEO, my first job was very clear: look for VC funds.
Arvind Raoâ€™s OnMobile is looking forward to becoming a billiondollar company soon.
MY FIRST DECADE IN BUSINESS
THE CRISIS Those were the rosy days of the dotcom
boom and we were all gung-ho about the project. We had christened our products— OnVox, OnLocpot, OnStock and so on— and were armed with a set of presentations. There was one problem. No one was ready to put money into a venture, where a bunch of smart guys were talking big, but had no real product to show. Things soon came to a crunch. The $15 mil-
lion we had raised got over, even as we were building up our product base. By early 2002, we were down to our last million. I remember the day we sat in our large office, eerily empty, except for the founders. Someone asked whether we should pack up and look for jobs. There was silence for a while. And then came the answer—“Is that even a choice?” The decision had been made. We would all give it one more shot.
about our products. He got me to talk directly to O’Sullivan, who invited me to meet him the same week. We didn’t even have a business plan! So I
bought some time, urged Mouli to come up with a variant of OnVox that would work with an Australian accent. I am still amazed at how quickly Mouli and his team came up with that variant. Needless to say, we bagged the deal and the next few years saw us signing several deals with global firms across 26 countries.
I think personal relations, your credibility and your network can really make things work for you. Das, who had given us a break at Hutch, later joined Maxis Malaysia; his praise helped us bag a deal with that firm. As word spread, mobile operators from Turkey, Brazil, France and even UK lined up to strike deals with us.
OnMobile w en in the econom t public downturn of ic 2008, yet its IPO did not suffer.
global player, so we needed to go public. If we hadn’t, would Telefonica (of Brazil) have tied up a seven-year, 13-country deal with us? I think not. We also needed a liquidity vehicle for our investors, and a way to monetise the stock options we had given to our employees earlier. However, we landed up choosing the wrong time to go public. Just as we had run into the dotcom bust soon after our launch, our IPO coincided with the sub-prime crisis. Each day brought some gloomy news about the Indian markets. We got lucky in the end, being one of the last public listings before the meltdown.
A GLOBAL GIANT Although the year before was important
for us, it was 2009 that turned out to be a watershed year for us—combining rapid growth with global recognition. Vodafone invited us to do business with it globally that year. As the word spread, Telefonica got in touch, wanting to launch our 25 products across Latin American countries and then in Europe. Every month, we are entering new markets in new countries. These are very exciting times for us. THE NEXT DECADE As entrepreneurs, our dream has come
Right then, we had just one client—Hutch in Mumbai, led by Asim Ghosh and Sandip Das then. They gave us the opportunity to launch our first product, OnVox, for the Mumbai circle. The entire team came back to India for the launch. Hutch agreed to extend the product for all its territories across India. The rest, as they say, is history.
STRATEGIC ACQUISITIONS I am not a fan of mergers and acquisitions.
Yet, we acquired two French firms, Vox Mobili and Telisma, in 2007 and 2008. We did that because they complemented our needs, were available at attractive prices and came with relatively small teams. Finally, they gave us a firm footing in Europe.
We decided to go global in 2004. Again,
Nothing gave me more satisfaction than
luck played a role in our success. Airtel, one of our big clients, had just signed a deal with Singtel. One day, I got a call from its then CEO, Manoj Kohli, who mentioned that Paul O’Sullivan, CEO of Optus Australia (a Singtel company), was keen to talk 48
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the time we filed for a public listing in 2008. We had been profitable since 2003, so we could have done it earlier. But by 2007, we realised that we needed to send out a strong signal to customers that we were here to stay. Also, we were becoming a
true. Yet, in many other ways, the journey is just beginning. It is as if we were running a 100-metre race. And just as we were nearing the finishing line, the race turned out to be a marathon. That second spurt of creative energy is desperately required.
I feel the time has come to take a fresh look
at our entire business, and re-invent the company. I do not think doing more of the same will work. We are by far the biggest player in this space, both in India and globally. But we need to move with the times.
I am personally going through a process of
rediscovery. I want to look at the next 10 years, pretending that OnMobile does not exist! If we didn’t have this company and yet someone showed us what the future would look like, what would we be doing then? That is the question I am trying to answer.
The many firsts... continued
My First Major Customer Crisis
BVR Mohan Reddy Infotech Enterprises Hyderabad Provides engineering solutions In July 2009, the International Herald Tribune published a story that Kafeel Ahmed, a suspect in the Glasgow International Airport attack, worked as an engineer at Infotech Enterprises and might have had access to the design secrets of top aircraft makers, such as Boeing and Airbus. The article named five of our top 10 customers. This posed a serious challenge for us in terms of customer confidence. Ahmed had worked with us in the Bengaluru office between December 2005 and July 2006. He spent most of that time on projects from Pratt & Whitney, one of the largest aircraft engine manufacturers in the world. His supervisor said Ahmed was sincere at work. His co-workers described him as an introvert, who had few friends at work. So, we constituted a crisis management team to take all stakeholders into confidence, and communicate facts without any sugar coating. We authorised one person to communicate with media, and carefully chose that person to make sure he/she will be able to withstand the pressure of the situation, and stick to the brief. More importantly, the team was asked to investigate if any customer material in our possession was compromised to Ahmed. Further, it had to check if we had followed processes for background checks while recruiting him, and if all systems were compliant to ensuring no data leakage happened during the period. We also made sure that, unlike a Tony Hayward during the recent BP oil spill in the Gulf of Mexico, our senior management was actively involved in managing the situation. Thankfully, our investigation concluded that we had followed all processes in Ahmed’s selection and nothing untoward had happened during his employment with us. Our customer had investigated and found to its satisfaction that none of its data had been misused by him. That was a big sigh of relief.
My First Business Crisis
Ashok Soota MindTree Bengaluru An information technology firm MindTree was born during the dotcom boom, as an internet solutions firm. We were one, when we were hit by the dotcom bust. More than 50 per cent of our revenues were from dotcom firms. Even during the crisis, we found things for which we were grateful—the fact that we were not larger. Large players just couldn’t find alternate revenue to sustain even marginal growth. We were grateful that we had decided to launch our R&D services business, which augmented revenues. We were grateful for the response of our middle management, who volunteered to take compensation cuts. We learnt a few lessons: dotcoms floated by large organisations were the ones that didn’t pay. The VCfunded or self-funded start-ups met commitments. Very early in the crisis, we decided that we had to prepare for the future and began to develop capabilities and laid the foundation for five years of 59 per cent compounded growth when markets revived in 2002. Looking back, the crisis was the best thing to happen.
My First Inspiration
Ajay Chaturvedi HarVa Gurgaon A rural venture setting up women-only BPOs Reading Art of War by Sun Tzu at University of Pennsylvania changed my life. Achievement requires detachment—the Gita says that, as does Jack Welch. Initially, I didn’t understand how one could be passionate about achieving something, but not get attached. Later I understood the critical difference is the difference between intent and desire. Having worked with IBM, Citi and Global Vantedge, setting up a rural business was not a natural progression. But, after that class, disconnecting emotionally helped me see where I could go, as compared to where social conditioning was leading me. Our quality of life is determined by what we breathe, eat and drink, and not how much we pay for each. I think value begins with farms. Now, with HarVa, I am hoping to establish a socio-capitalistic model that delivers true value. continued on page
Kamlani and Perla drafted themselves a textbook perfect entrepreneurial exit.
INC. | FEBRUARY 2011
MY FIRST SALE SANJAY KAMLANI Co-CEO, Pangea3
“We exceeded investor expectations.”
Co-founded by lawyer duo, Sanjay Kamlani and David Perla, Pangea3 hit the international headlines when it merged with Thomson Reuters in November 2010. The $100 million acquisition made much news, not least for being one of the most profitable exits for its investors—Sequoia Capital and GlenRock Group, which between them, owned half of the LPO firm. Kamlani shares his brief notes. AS TOLD TO SHREYASI SINGH | CARICATURE BY PC ANOOP
We co-founded Pangea3 in 2004. My partner, David Perla, and I went to law school together at University of Pennsylvania and have been best buddies since. Before we set up our firm, David worked for Monster.com, while I was with OfficeTiger, a multinational that offers professional support services.
Our first office was in New York since the company is registered there. A year later, we began operations in India setting up shop at Nariman Point in Mumbai. We hired 15 people and raised $1.5 million from GlenRock Group. By the time the year ended, we were a 35-employee-strong firm.
Fortunately, we have managed to grow
100 per cent year on year, every year. In 2006, we raised another $4 million from GlenRock. Subsequently, we moved into a plush 6,000-square-feet office in Mumbai. By the end of 2007, we had grown to 180 employees. We also got Sequoia Capital to pump in $7 million into the company that FEBRUARY 2011
MY FIRST SALE
year. The Black Book of Outsourcing ranked us the number one legal process outsourcing (LPO) company in 2007. By 2010, we had become the world standard for the LPO industry. More than a
hundred Fortune 1000 corporations were our clients. We had a global delivery team of 650 people across offices in New York, Mumbai, Noida and other locations.
It would have been exciting to continue
on this growth path. But, every quarter, when we spoke to employees, it was more of the same—we were telling them how we had met all our targets; how we had added clients, offices and people. To really ensure we stayed number one, we needed to do something strategic. We couldn’t just keep improving our performance.
With Thomson Reuters Legal, things just
seemed to click. In fact, their vision statement was identical to ours. What could be more perfect than that? There is no redundancy in our coming together. It is a perfect alignment between the technology, tools and database of Thomson Reuters, and the talent pool of Pangea3.
Though we were the industry leaders even prior to the acquisition, I think in many categories, the competition was actually quite close. With this, Pangea3 has zoomed far ahead in the race. The whole experience has been exciting.
Perhaps, the best part about the deal was that everyone involved—from clients to investors to employees—was happy. We exceeded investor expectations. Our
Kamlan i, Tony Ab with Perla and ena (R) of Thomson post the L R euters Legal, P acquisit O firm’s ion.
We first met Thomson Reuters in 2006 to pitch our services. It came on board as a client that year. Around the same time, we had taken 100 Westlaw licences—an unprecedented move. It made Thomson Reuters sit up and take notice of us. Their senior management team began keeping a close watch on us, and by 2010, conversations about acquisition became serious. However, Thomson Reuters wasn’t the only one interested. Over the past couple of years, there were several suitors, some more serious than others. But, none of them came across as the right-fit—either from the cultural point of view, or valuation point of view.
INC. | FEBRUARY 2011
employees were happy to be part of a global Fortune 500 company. And, our clients were thrilled that we would be able to give them value-added services. As an entrepreneur, that felt great. After
having started something from the ground up, having made promises to clients, shareholders, employees and then emerging from the other side with everybody on the ship enthusiastic and happy, is wonderful.
Before the press announced the acquisition, we held a video-conferencing session across all our locations. I was in the Mumbai office as the head of Thomson Reuters Legal addressed the entire team of Pan-
gea3. We wanted our employees to understand how this was going to benefit them, not feel left out. After the meeting ended, we switched on the music and celebrated for four hours straight. Of course, as entrepreneurs, we went
through several rounds of internal debate. We questioned whether this was the right time, or even the right thing to do for the company? Would it be better for Pangea3 to continue being run by entrepreneurs? And so on.
We always shared the same views and
aspirations. There was never any sort of discomfort between the two of us, and that is very important. It’s rare for two people to enter a business as best friends, work as best friends and continue to be best friends.
For now, much remains the same really. There is no staff revamp. The brand name stays put as well. We’ll probably add a line that says it’s a Thomson Reuters company. Though we continue to lead Pangea3, there is obviously a big change in the equation— we are no more the owners. What’s interesting now is to be able to turbo-charge the growth of an entity that is already an industry leader. Our current focus is on a smooth transition. The biggest challenge is integrating the workforce. We need to have our key people interact with the team at Thomson Reuters, and knit a framework so that all of us blend together seamlessly without impacting growth. Pangea3 had seen fabulous growth, year after year. In the first year of integration, we hope to keep that pace. Thereafter, we are looking at exponential growth. It’s been terrific to see how we have significantly impacted the lives of a number of people. Some of our employees joined us in 2006 at salaries of 3 lakh to 4 lakh per annum, but with stock options. For some of them, the exit proceeds have been as high as 50 lakh.
The many firsts... continued
My First Business Trip
My First Liquidity iquidity Crunch
Ravi Venugopal Bonsai group of companies Chennai Offers HR software-as-a-service and open source-based solutionss
Kumud Sharma Superseva Bengaluru Offers corporate and personal assistance services Two years ago, I decided to expand Superseva to 10 cities. Our financials were strong; cash flow was positive, so I assumed it would see us through. But we ended up running short of about 2 lakh every month for day-to-day expenses.
It was ironic that I had turned down a few venture capitalists just the previous year. They had offered to invest 4 crore, which I refused because I had no use for that much money. Moreover, I wasn’t willing to give up a major chunk of the company. So, we put together a business plan, and I pitched it to our parent company. Predictably, a flood of queries followed. My accountant would often complain that he felt “like a beggar” as we sat and drafted our responses. Finally, our business plan got the management’s nod.
My first business trip after setting up the Bonsai group was to America in 2004. My business partner and I had established a recruitment process outsourcing (RPO) outfit, and I needed to travel overseas to pitch the idea to potential clients. We put a lot of thought into the presentation I’d make because so much was at stake—we were one of the early providers of RPO services. The visit was a success in terms of immediate returns, as we bagged the contracts we sought. But more than that, it was successful because of the ideas I gleaned. For instance, the people I interacted with spoke about the need for low-priced software to help manage the hiring process. I stored the suggestion in my mind as something to do later. This idea never left me, and was incubated during the recession, and helped realign our offering and strategy to the postrecession needs. It was the seed for RoosterHR brand, a comprehensive HR software-as-a-service company that designs applications to help small and medium businesses streamline their talent management process. My first business trip taught me to listen attentively to clients and never lose focus of the long-term. Every idea is a potential opportunity in the making. It could be the seed for a new venture that will sustain you in the long run. So, never disregard ideas because they’re not suited to the short-term.
My First Acquisition
Girish Batra NetAmbit Noida Sells financial services products through call centres We had been toying with the idea of building our presence on the internet, and had decided to do so in-house. Then, about four months ago, our investor got a lead from Seedfund, which had invested in a portal called Rupeetalk.com. Standalone websites selling financial products were finding it difficult to make money. Therefore, there seemed an obvious synergy in partnering with them. We started evaluating two companies, of which RupeeTalk was the more costconscious one. The other company was burning more cash than we thought right. I had never worked on an acquisition before. I didn’t realise that the discussions and negotiations were making the 10-odd employees of Rupeetalk anxious about their future. So, the moment we froze the deal in December 2010, our HR head held one-on-one interactions with all the Rupeetalk people. I’m happy to say we’ve managed to retain all of them. Personally, I meet the key people once in 15 days, and continuously stay in touch with Satkam, the founder. If I were to do this again, I’d say I will hope for faster execution. continued on page
Biyaniâ€™s willingness to take decisions and stick by them helped him grow fast.
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MY FIRST BILLION IN TURNOVER KISHORE BIYANI CEO, Future Group
“I pulled this off because I did not go to a B-school.” Kishore Biyani has changed the face of modern retail in India by introducing consumers to hypermarkets and destination malls. When he debuted in Kolkata in 1997 with his retail store, Pantaloons, many laughed at the 36-year-old entrepreneur with a contrarian view. Today, Biyani is the one laughing, as his Future Group rakes in billions in revenue and holds sway over 3 million square feet of retail space. If there is a piece of advice this commerce graduate readily hands out to entrepreneurs and B-school students, it’s the need to understand the nuts and bolts of one’s industry and have the conviction to go ahead. AS TOLD TO DHIMAN CHATTOPADHYAY | CARICATURE BY JOFFY JOSE I SOMETIMES feel we were operating like a runaway train back in the mid-nineties. We never planned much, nor did we lay down any structured growth process. We just went along with our gut feeling and confidence to try new things, and start new businesses. We dared and we believed in
ourselves. I feel that analysing things and looking at the entire process in a structured, theoretical manner is not my forte. In a way, I probably pulled this off because I did not go to a business school. I remember the first time we really sat
down and prepared a business plan was sometime in the late nineties. Our projections indicated that we would touch the 1,000-crore figure in revenue in three to four years. We hit that target much before the deadline. So much for business plan forecasts! FEBRUARY 2011
MY FIRST BILLION IN TURNOVER
Back in the mid-nineties, we were dabbling in the retail space, organising garment exhibitions and debating whether to launch our own store. We decided in favour of making a foray into the organised retail space and The Pantaloon Store was conceived. It kicked off in Gariahat in south Kolkata and did great business. Such was the buzz created by Pantaloons in Kolkata that even today it continues to rake in more money than its more popular sibling, Big Bazaar. But that’s only in Kolkata.
iyani Kishore B g the in (L) receiv al on ti a rn Inte e th of R etailer ward A 7 0 0 2 r Yea k. in New Yor
Across India, the first big leap happened
when we inaugurated the Big Bazaar mega stores in 2001. Given the response, we quickly decided to take the concept of hypermarket to every corner of India. And that has been one of our best decisions ever—it gave, and continues to give, the company amazing returns on investment.
When young entrepreneurs ask me about
businesses they could get into, I give them one advice: never get into an industry where you lack knowledge of the product and the market. We entered the retail and fashion industry because we had enough knowledge about the world of fashion.
Wherever we have stepped outside of our core competency, we have always taken the joint venture route, be it the food industry (Blue Foods), the fitness industry (Talwalkars), the insurance industry (Future Generali) or any other sector. A joint venture gives you the opportunity to understand the market and then go it alone. We opened Big Bazaar because we understood what people wanted in terms of affordable clothing, household products, consumer durables and daily necessities. Elsewhere, it has always been strategic alliances. We have managed to touch not just the billion-dollar mark, but five billion dollars in revenue in a relatively small span of time. Such dizzying ascent was possible because we have consciously restrained ourselves from getting into too many sectors and businesses at the same time. Our entries into businesses have always been well spaced out. Today, I am proud to say, the
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the troduced Biyani in permarkets f hy concept o India through to ar. Big Baza
Future Group is a “Consumption Cosmos”, which influences and fuels consumption. Overall, the real reason for our success was
probably the timing. We were lucky to have arrived at a time when the Indian consumer was beginning to evolve. Five years into the economic liberalisation, the markets were beginning to open up, people were making more money and their tastes were undergoing a massive transformation. Our job of making those first billion dollars in turnover was made easier by the prevailing economic environment in the country.
Having said that, I strongly feel that all of
us should experience at least one downturn. Every business has a cycle and we had not faced a trough till the economy cratered in 2008-09. It taught us many valuable lessons, chief among them was that we are all vulnerable and we can all fail at times. It was a much-needed awakening, a great lesson for many of us. I do not think we have gone wrong on our strategy or thoughts. Yes, there have been times, when I have felt that we could have done things a bit differently. But that’s only human. For instance, in 2005-06, we devel-
oped more than 25 new concepts for the group. I think some of these ideas could have been avoided, especially since some of them turned out to be duds. Fundamentally, our approach to business has always helped us get into the right businesses at the right time. We call ourselves the “Future Group” because we seldom analyse the past, preferring to look at the future instead. Scenario planning instead of case studies has been our mantra. I have also been lucky to have been associ-
ated with some great people. They have not just shared my vision, but also helped the company’s meteoric rise over the past 14 years. To be successful in business, you have to keep building a team around you. They have to believe in your beliefs and your dreams, and you have to believe in theirs.
I am always talking about the future. In the next decade, for example, I see us becoming a $20-billion company. That’s my vision. To those who want to know the secret of my success, I say: be willing to take decisions and stick by them. Be a contrarian thinker, and finally, believe in yourself!
My First Blog
The many firsts... continued
Gaurav Sharma Twtbuck Hyderabad Advertising and monetising platform for Twitter At 15, I started developing a community messenger and web portal on the lines of Yahoo! for my neighbourhood. Though the website didn’t work, I stayed interested in the internet. I began Gaufire, a technology blog which shared ethical hacking tips. To bring more traffic to my blog, I learnt about search engine optimisation, social bookmarking and social media optimisation. Social media was still undiscovered. Gaufire started getting positive feedback, huge subscriptions and was making a few hundred dollars a month. I decided to start an admission consulting blog which became a hit. It has helped more than 14,000 students and parents. With these two blogs, I became well known in the blogging world. It gave me the confidence to try out newer things. I founded the Chandigarh Blogger Alliance for bloggers in Chandigarh, Punjab and Himachal Pradesh. I held workshops on blogging for students. Companies started approaching me to cover their brands in my blogs. The power of social media influence hit me then. Twtbuck is based on that. Now, I don’t blog much, but those blogs helped me discover my calling.
My Mark Zuckerberg Moment
Pramoud Rao Zicom Electronic Security Systems Kolkata Provides electronic security equipment
I was going out for dinner with my family on a weekend in April 1995. Just as we entered the restaurant, we realised we had left our keys inside the house. We were locked out. It was past 9pm by the time I started looking for a locksmith. With great difficulty, I found one and coaxed him to help us. We had installed a lock that came with computerised keys (with small metal holes on them). But, the locksmith managed to open our lock easily on the third try using a bunch of keys he had brought along. I was delighted, but shocked. I wanted to know how he had managed to open the door in less than 30 seconds! He told me about the suburb in Mumbai where anyone could find master-keys for all new locks being sold—and at a small price. That was shocking. I realised there was a huge need and immense potential for the electronic security business in India. That is the definitive moment when I began my journey to make people “Feel Safe”.
My First Media Coverage Sudip Dutta Aporv Bengaluru Fair price e-commerce portal for unique Indian crafts
Our first appearance in media is clearly etched in my mind. For a start up, approaching the media isn’t easy. Yet, we did that to garner support for our model which used virtual retailing practices to sell ancient art forms. Predictably, our first round of media connects led to nothing. But, then, in June 2010, we were introduced to a reporter from DNA. I spent an hour on that interview, and was mostly apprehensive. There were some interesting questions—and lots of conversation. Six days later, Aporv debuted on the second page of the main edition, in a half-page feature titled “Marriage of Crafts and Social Responsibility”. We were thrilled. It was the perfect headline, followed by a beautiful write-up. The feature helped tremendously. Not only did it get us the attention of readers but also that of several other publications. Since then, we have been fortunate to have received great media attention. We are thankful. It has helped us increase our reach in India and abroad. continued on page
Bikhchandani taught at a B-school in the first few years to earn some money.
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MY FIRST DECADE AS AN ENTREPRENEUR SANJEEV BIKHCHANDANI Founder, Info Edge Services
“Going back to a job would have meant I had failed.” He’s the classic dotcom poster boy. At a time when most Indians were clueless about the World Wide Web, Sanjeev Bikhchandani had already put together an online job postings portal, targeting the domestic market. His site turned out to be an industry game-changer and Info Edge Services shot to fame as one of the most successful internet businesses of the country. Not many know that this IIM Ahmedabad graduate struggled for nearly seven years, before he launched Naukri.com in 1997. AS TOLD TO POOJA KOTHARI | CARICATURE BY JOFFY JOSE
I COME FROM A FAMILY where everyone has been a working professional. Yet, I knew from a very young age that I was going to run my own business. I had been working with GlaxoSmithKline for almost two years when I quit my
job. I was 27 years old, and all I had was five years of work experience, an MBA from the Indian Institute of Management, Ahmedabad and a fuzzy goal to start something of my own. Luckily for me, my family didn’t have any
issues with that. For weeks, I had been going to office with the intention of putting in my papers, but had difficulty doing so. Yet, I knew that I didn’t want to spend the rest of my life chasing a one-foot longer car, or an address a few kms away from where I lived. So, one night, I finally went to my boss’ FEBRUARY 2011
MY FIRST DECADE AS AN ENTREPRENUER
house and told him that I was moving out— not to join another company, but to be on my own. Later on, he became my first client. I had been married for six months then.
My wife, Surabhi, my batchmate from IIMA, was working. We were living at my parents’ house. So I knew we would manage.
A friend and I started two companies—Info Edge and Indmark. When I was at IIMA, I had landed a job before the placement season. So, I escorted companies around the campus during placements. I saw companies fight over students. That’s when it struck me that a survey of the salaries being offered to fresh MBA talent would really sell. My partner had another idea. He had worked with his uncle, a trademarks attorney. In those days, trademarks were usually searched at the registry in Mumbai, which kept manual records of all applications. The entire process was time consuming and unreliable. My partner knew that pharma companies were the largest users of this search. So, we decided to upload all the information on pharma trademarks, and offer computerised searches. My partner went to Mumbai, and hired 20
college students to do the job. We used the money from salary surveys to fund this entire exercise. Three weeks later, we had uploaded all the information on a computer. I wrote the software myself, looking at examples from my IIMA textbooks. Neither my partner, nor I took a penny
out of the company in the first three years. I was really afraid initially. The biggest fear was admitting that I had failed. And going back to a job would only have confirmed that. That’s what kept me going.
I also began teaching at IMT, Ghaziabad, on weekends. I did that till 1998, and, really enjoyed it. If I had not been an entrepreneur, I am sure I would have been a professor somewhere. In 1993, my partner and I went separate ways. He kept the trademarks company
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and I kept the salary survey business; we divided the assets and employees. I moved my office back into the servant quarters of my parents’ house and started life over.
Many of them didn’t advertise their vacancies. I offered to do so at 350 a listing. And, we began to get some money.
In our early years, we had made a pitch to
earned a revenue of 2.5 lakh. By the next year, that figure jumped to 18 lakh. That’s when we stopped doing everything else and started focussing only on Naukri.
the Department of Telecom to create a database of jobs. We had worked on it for a year and mapped out the entire process of putting together the information. That project, though, had been cancelled.
Then in 1996, I stumbled upon the internet
at a fair in Pragati Maidan. Someone at a stall, labelled WWW, introduced me to it. I saw the Yahoo website, on which we searched “India”, and asked him how I could start a site like that. He told me I would need a server connection and that all servers were in America. My brother lived there, so I asked him to buy me server space. I got a friend, an independent software
programmer, to help me build the website and put it on the net. By April 1997, we had launched Naukri.com. For the first six months, we couldn’t access our own website because we had no internet connection.
We got traffic even though we were simply culling job information from newspapers and posting it on the site. When people applied for the jobs, our website was mentioned as a reference. That’s when HR departments of various companies started taking interest in what we were doing.
Bikhc h shop in andani set u quar t the ser vant p ers of hi home i n Delh s parents’ i.
In our first year of operation, Naukri
By then, my wife had stopped working,
and our second child had arrived. Naukri was sucking up all the money. So, I had to take up another job. Chandan Mitra, the editor of Pioneer, asked me to work on a marketing supplement. I did that for four years to keep the fires burning at home. By mid-1999, we started getting calls from
people who wanted to invest in our company. We were completely surprised—who calls to give you money? That’s when I began researching, and came across “dotcom evaluations” in the US. I even went to meet some of these NRI investors, who were ready to pump in as much as a million dollars. But once I heard their math, I realised I couldn’t let those guys anywhere near the company. I had taken 10 years to reach that stage. And, they wanted to list us on the Nasdaq the next summer.
However, in 2000, a competitor launched
its operations with an ad campaign that cost twice our annual turnover. We thought we had lost the battle even before it had begun. We changed our minds about raising money, and got 7 crore from ICICI Venture.
From there on, Naukri gained a momen-
tum of its own. But there’s no denying the struggle of the first decade. For six years, the company couldn’t pay me a salary. The first seven years were spent drifting, but we learned to live with uncertainty and ambiguity, and still keep our cool.
Since I am not a great planner, I have no idea what the next decade will look like. I just know that we want to be the dominant internet company of India—and that we will still chase good ideas.
My First Innovation The many firsts... continued
My First Business Class Ticket Suchin Gupta Mindmill Software Noida Software development/ BPO operations I first travelled business class in 1999, as the founder of Mindmill Software. I was going to the US to meet potential clients. But, that wasn’t my first visit to
Harinder Singh Cheema Boilers Chandigarh Makes steam boilers and other energy-saving devices After working for more than a decade, I quit my job with Thermax in 1988. One day, while travelling from Kashipur to Chandigarh, I noticed brick kilns dotting the distance—one every half a kilometre—emitting black fumes. I discussed my observation with an acquaintance, who guided me to an enterprising brick-kiln owner—Mr Singh—who was struggling with brick moulders when I first met him. So, when I began discussing brick kilns and the associated fumes with him, he suggested that I do something on brick moulding instead. I did. I made a prototype that automatically moulded clay bricks and delivered them on a stainless steel platform, using my gratuity money on the project. For a newspaper ad, I approached Dainik Jagran, carrying the last stack of 20 notes left with me on that trip. The editor asked for an advertisement of 12,000 in lieu of an article mentioning the invention. I gave him everything I had in my pocket, and wrote out a cheque for the leftover amount, without having any balance in my account. But that article changed my life. From the next day, several newspapers had my photograph with the invented machine. That was the foundation that allowed us to build the company to our current level.
My First Acquisition
Pawan K. Ruia The Ruia Group Kolkata Indian business conglomerate
the US. I had, in fact, returned to India in 1993, with a Master’s degree in computers and four years with Oracle. I faced an uphill journey from Day-I of launching Mindmill. I worked roundthe-clock. Despite that, sometimes, we couldn’t meet the client’s expectation. But I kept course—placating clients, redoing the work, and chasing delayed payments. I gave my company everything I had, depriving myself of luxuries. My wife also had to make do without the gifts a newly-wed expects. After six years, things finally fell into place. I had a team of committed staff, who stuck to schedules. Clients entered into longterm contracts. That’s when I felt that it was payback time. So I accepted a special gift from my baby—the company I had built painstakingly. And, I bought a business class ticket to the States (Concorde ticket for the return journey). I felt on top-of-the-world during the flight.
Friday, August 29, 2003 is a red-letter day. Despite all opposition, we acquired Jessop & Co. As the government handed over 72 per cent stake of the firm to the Ruia Group, it became a career-defining moment. Jessop had a history of losses, amounting to 372 crore. Arun Shourie, the then minister for disinvestment made me accept the challenge. He noted that despite two government financial packages, the company was losing around 45 crore annually. He called it “a prime case” for change in management. But, before I could set my best management principles, I had to fight through legal wrangles. We put our heart into financial restructuring. And, the losses were soon wiped off. Its net worth became positive in December 2005. Five months after, we declared a dividend for the first time in 23 years. During the takeover of Dunlop, and international acquisitions that followed, the Jessop case has remained our inspiration. continued on page
MakeMyTrip’s stock price surged after listing, but for Kalra, the flight wasn’t about getting to a pot of gold.
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MY FIRST IPO DEEP KALRA Founder & CEO, MakeMyTrip
“Life is lived Quarter Se Quarter Tak now.” Deep Kalra is used to selling exciting journeys through his travel portal MakeMyTrip. But nothing can compare with the ride his company undertook as it listed on the Nasdaq. Its stock price soared by a whopping 89 per cent on the second day itself, making it the best listing in 13 years. Now valued at nearly a billion dollars, Kalra’s journey has been nothing less than an entrepreneurial fairytale. AS TOLD TO SHREYASI SINGH | CARICATURE BY JOFFY JOSE THERE IS just one big change now—life is lived Quarter Se Quarter Tak. Other than that, everything is the same. We live in the same house, and drive the same cars. Right after we listed, a journalist asked me if I felt euphoric. More than anything else, I was simply relieved. After leading a band of young—actually, not so
young anymore—men and women to the “promised land” for years, I was relieved to reach the ultimate goal. Of course, it was a great moment. But it wasn’t like a celebration. It wasn’t like winning the World Cup, or cracking an exam when you thought you weren’t going to. It was a deeper kind of joy, a sense of peace.
In office, the process of filing for the IPO was named Project Karma. It was the perfect coinage. We really felt like this was our karma. From the day when we first set our auditors to work to the day of the listing in August, it was an intense six-and-a-half months of very, very hard work. Our CFO co-ordinated the entire exercise. We assemFEBRUARY 2011
MY FIRST IPO
bled a crack team for Karma, largely guys from mergers and acquisitions, and the legal department. We got American consultants and a legal agency as well. A process like this tests a company. It
needed an incredible level of compliance, but finally, it tightened the company. First, we had to get an exhaustive financial document that had been audited and vetted. We followed the International Financial Reporting Standards (IFRS) model, so everything needed to be re-cast because our accounts are done according to Indian laws. Then, we prepared a red herring prospectus.
As a CEO, I didn’t have much to do here. It was mostly the CFO, who worked up a sweat with all the hard work. I have the best CFO possible. We make a good team.
should list in India or abroad. We realised that the appetite for an internet-based business would be much more in the US. Our performance has validated that thinking. We raised $70 million from the five million shares we offered. Yes, my friends were upset because they couldn’t buy the shares. In a way, I am glad we didn’t list in India. If they had bought the stock, and it had gone downhill, they’d have been more upset. We were very keen to time our IPO to a profit quarter. And, we did that. We also made an operating profit in the fiscal before, which helped allay investor fears. If we had gone for a listing earlier, we would have faced more questioning on that front. So, it is critical that the IPO is well-timed.
Kalra with the Karma team Project af ter the listing, reli eved that he could deliver on his ‘promised la nd’ pitch
The good thing is we managed to beat every timeline. People told us it would take up to 18 months to do this. We did it in one third of that time. People now tell us we should beat up our bankers. We should have priced the stock better than the $14 we went with. In hindsight, yes, we could have played up the price since it surged 90 per cent the next day. But, these things are really a function of demand and supply. I am very happy with our bankers. We sat on every decision together. I’ll gladly work with them again. Though it now seems an obvious choice, we had debated endlessly on whether we
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Now that we have braved the road, we want to use the capital raised for acquisitions. We are looking to acquire a travel technology company or a regional player. We should be making some announcements soon. There are some deals. But, you know what they say. A deal is like a marriage; till it’s done, it’s not done. Nobody tells you how gruelling a road
show can be. Those 10 days can sap the life out of anybody. My CFO and I had 9-10 back-to-back hourly meetings every day. In between, we would eat a working lunch. We were constantly selling the company to potential investors. It wasn’t intellectually exacting, but it was very enervating.
I didn’t even have a business suit then. So, I
went to buy one before hitting the road show. I bought the cheapest one available at Marks & Spencer’s. I was worried that my CFO would pick the same suit. So, I sent him a text message from the store to let him know which one I had purchased.
The personal wealth estimates are truly embarrassing. It will be sad if people start taking me more seriously because of this. These are all very fickle things. Valuations go up and down. A lot of it is really about being at the right place at the right time. That’s how I see it. Yes, you can be assured about some things. But, after a week’s break, the high is over and you are itching to go back to work. The one thing I have finally managed to do is take my extended family out for a nice vacation. It wasn’t that we couldn’t do it before, but it was a nice way to celebrate. Undoubtedly, it’s been most gratifying to see how some of our employees have benefitted. My investors used to think I was crazy. At one point, we were less than 300 people in the company and 150 of them had stock options. But, that has been very important to me. People, who give your company their blood, sweat and toil, must be a part of the ultimate joy. That’s what I value the most about being an entrepreneur. It’s up to you to build that culture. Great companies are not made by a couple of people. I am a huge believer in building smart teams, hiring people better than you. Only an entrepreneur can do that, a manager cannot. If he hires somebody better, his job is threatened. For me, it was never about the pot of the gold at the end of the rainbow. I tell everybody all the time. Don’t start a company for the wrong reasons. It’s about the long haul. Enjoy the journey, the whole ride. It is sheer madness at times. We have gone through some very difficult times. We had to question whether we were on the right track. But, there is nothing more rewarding than doing your own thing and succeeding at it.
The many firsts... continued
My First Liquidity Crunch
Santosh Naik and A. Shyamsunder Disha Direct Mumbai A real-estate firm that offers residential properties and developed plots. The recession hit the Indian economy in October 2008; and for a year from then, things were really bad. The real estate industry suffered heavily. Sales were sluggish, finance was hard to come by, and cash flow remained insufficient. We faced similar problems at Disha. Not only did we have zero sales, our existing customers did not pay up on time. The nonavailability of finance from financial institutions and investors made things even more difficult. But we understood the gravity of the situation at an early stage and prepared a strategy. We had two major costs—advertising and manpower; and, we decided to generate revenue from them. We did not reduce any manpower, but used the time to train them. We cut down our advertising cost by almost 90 per cent, and spent the rest on innovative branding and promotional activities. We started in-store advertising, and put up stalls at Shopper’s Stop outlets. To increase sales, we launched a low budget project costing 3 lakh. That worked—we sold almost 400 units in three months, generating revenue of 12 crore. In a few cases, we even gave our customers discounts on accelerated payment. These moves improved our cash flow, and helped us overcome the recession.
My First Business Crisis
Satya Prabhakar Sulekha.com Chennai A website enabling users to buy or sell things We started in 2001 in the throes of the dotcom bust. Our biggest challenge was making money, since advertising spending had dwindled. We were an Indian media site targeting US-based NRIs. So, we faced the challenge of trying to get mainstream US brands interested in running campaigns on our website. However, the US advertisers just didn’t see the value of running a small number of impressions on an ethnic media site. We struggled. After some thought, we realised that the mainstream US advertisers had a problem of their own: they were seen as “outsiders” by Indians, who didn’t think the US advertisers were “sensitive” to their sentiments. So, we spent time devising customised campaigns for these big brands. One of them, a Bollywood quiz for Western Union, was a hit!
My First Business Partner artner
Kunal Bahl and Rohit Bansal Jasper Infotech Delhi Offers marketing solutions to businesses Rohit, my buddy, became my first business partner. We went to the same high school. We had similar interests—and starting a business was one. While Rohit got himself an engineering degree from IIT Delhi, I went to Wharton business school in the US. When we finally decided to start a business, we pondered over many ideas, from an event-and-movie ticket portal to a one-stop-shop consumers’ review site. This exercise allowed us to align our working and thinking styles. It was important for us to separate our personal relationship from the professional one. The equation changes when friends become business partners. You land up talking about work even during dinners and lunches. At the same time, being close helps in figuring out an amicable solution to a situation. Rohit and I have made a pact that we won’t lose our ability to laugh and have a good time together, no matter what highs and lows we face in our journey. FEBRUARY 2011
MY FIRST YEAR IN BUSINESS STORIES OF DEBUT JOURNEYS
CLICK FOR PRÊT Fashion And You is one going on 10. But, Pearl Uppal, its spunky, driven co-founder and CEO, is much too busy to celebrate. She would rather spend her time thinking up outof-the-box solutions, as her e-commerce portal blazes ahead to become the hottest rage for all seasons. BY SHREYASI SINGH | PHOTOGRAPHS BY SUBHOJIT PAUL NTITLEMENT isn’t a word often used to describe first-time entrepreneurs. But, it seems custom-made for Pearl Uppal, co-founder and chief executive, Fashion And You (FAY), an e-commerce platform that sells high-fashion clothes, watches, accessories, bed linen and fragrances. “The numbers don’t excite me,” says Uppal when asked about her “ballpark” monthly turnover of 6 crore. “These are just developmental milestones. We have the potential to be a 500 crore company. We’ll begin talking numbers when we reach 200 or 300 crore,” says the 35-yearold entrepreneur. Her seemingly overarching ambitions haven’t been pulled out of some fanciful
FASHION AND YOU
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hat; tangible, concrete numbers have fashioned this appetite. In an economy where e-commerce beyond travel bookings or job search services remains mostly unviable, Uppal has demonstrated that her entrepreneurial designs might alter the way India shops. “We want to revolutionise retail here,” she announces. Co-founded by Uppal, and funded and incubated by serial entrepreneur Harish Bahl, FAY launched retail operations in January 2010. It cleverly positioned itself as an exclusive, by-invitation-only shopping club, where members brought in more members, much like the way Facebook began. “We wanted it to grow like that, to be the digital avatar of a physical club where like-minded people get together,” explains Uppal.
Today, Fashion And You has over one million members, and adds an almost logic-defying two lakh members every month, still mostly through word-ofmouth. Five people join the site every minute. It has also raised $8 million in funding from Sequoia Capital within 10 months of launch—which is no small feat. Dozens of brands, such as Hugo Boss, Aigner, Tiffany’s, Salvatore Ferragamo, DKNY, Hidesign and Carlton, have tied up with FAY, which promises up to 80 per cent markdowns on price tags. But sceptics abounded when Uppal left her fast-track career as a sales director at Yahoo! (India) to venture out on her own. Many felt that selling high-fashion clothing, possibly the most touch-and-feel of retail experiences, was slippery ground.
FOUNDER NAME: Pearl Uppal AGE: 35 QUALIFICATIONS: Bachelor of Engineering, Delhi College of Engineering; MBA, IIT Delhi AWARDS: Global Superstar Award at Yahoo! (She was the first in Asia, first in a sales role in five years, and only one among 20 awardees globally) LOCATION: Gurgaon NUMBER OF EMPLOYEES: 200, expected to increase to 350 by the end of 2011 FUNDING:
Start-up investment by Harish Bahl’s Smile Interactive and some private European investors. In November 2010, raised $8 million from Sequoia Capital BREAK-EVEN PERIOD: By the end of 2011 BEST PART OF BEING AN ENTREPRENEUR: Building something brick-by-brick WORST PART OF BEING AN ENTREPRENEUR: The non-attachment of a job. Could switch off phone at least on holidays. Now, it’s a 24X7 cycle. My heart bleeds for everything.
01 They suggested she begin with selling books, or flowers. However, Uppal, an internet industry veteran with successful stints at Yahoo! and Rediff, was sure that the opportunity existed. “People on the supply side, talented designers, luxury brands and high-street outlets, all needed platforms to access consumers they weren’t able to reach,” she explains. The demand was latent, too. “You need to provide an engaging experience. It’s about enabling access, compelling prices and ease of shopping.” So, at FAY, purchases made are home-delivered.
“It’s about enabling access, compelling prices and ease of shopping,” says Uppal, who left a fast-track career in sales to start out on her own. FEBRUARY 2011
MY FIRST YEAR IN BUSINESS
Multiple payment options, including cash on delivery, are offered to make shopping easier. Today, 40 per cent of the website’s sales come from outside the main metro markets. Building a truly all-India business has been a big high. “I am an army officer’s daughter. The India map is special to me,” she says passionately. Any which way you look, it’s been an unusually blessed first year. “We were prepared for a five to six month pilot. But we did business on day one. Within 35 days, we knew we were going beyond script.” Unique marketing is at the heart of this success. FAY hasn’t spent a rupee on traditional advertising, Uppal claims. “Connect and share was the big thing right from the beginning. The company has evolved around that.”
Its Facebook page has more than 610,000 fans, and is ranked one of the top 15 Facebook pages in India. “Facebook is where the company lives for the people. Every person, every department in this company thinks consciously if what they are doing is translating on our social page or not,” says Uppal. To ensure it isn’t anything like a catalogue company, FAY resets its entire merchandise every day. Seven hundred plus new items are up for sale every day. “Our business model is such that you want to come in every day. And, the price needs to be attractive enough for such impulse buying,” says Uppal, confessing that she also shops 15 to 20 times a month on the website. Of course, challenges are aplenty. “It’s a very easy model to set up, but difficult to
scale up,” says Uppal. In its second year of operations, supply chain management and logistics are the company’s top priorities. “There is no B2C supply chain. Our courier partners are our backbone. But, these aren’t developed enough.” Even as she frets that this is an ecosystem issue that can’t be wished away in a year, Uppal says that a large chunk of the funds raised will go into supply chain. “In the first year, we didn’t have investments to take control of this. But now, we aren’t going to wait for others. We are going to lead innovation in managing the supply chain.” Not believing her would be fool-hardy. Hers is clearly a style that’s unlikely to go off-season.
A DESI TOY STORY Not too many startups sell 6,000 units of their product the first time around. Rarer still is for the order to come along before they even set up! But that’s the story of MadRat Games, designers of India’s first ever Hindi board game. BY SUNAINA SEHGAL PHOTOGRAPHS BY S. RADHAKRISHNA
INC. | FEBRUARY 2011
URIOSITY may have killed the cat, but for Rajat Dhariwal, Madhumita Halder and Manuj Dhariwal—the founders of MadRat Games—it simply led to a new business. “Our journey started long ago over a simple game of Scrabble. Strangely, the English game was available in almost all other languages—French, Spanish and even Arabic—but not in Hindi,” says 27-year old Rajat Dhariwal, co-founder, MadRat Games. It was during his teaching stint at the prestigious Rishi Valley School in south India that Dhariwal (a graduate of IIT Bombay and the Carnegie Mellon University in the US) and his wife, Halder (also an IIT Bombay alumnus), first started developing and designing a word game of their own. He had earlier designed board games for his younger brother Manuj’s college projects, and that experience came in handy. Together, the trio began unscrambling the Scrabble puzzle, but along the way, discovered the challenges matras posed, making it difficult to re-create the game in the Indian language. Instead of letting that get them down, they simply decided to create another game they called Aksharit, which now is India’s first-ever Hindi board game. And it’s hard to imagine that the company started operations just a year ago, in January 2010 to be precise. MadRat Games sure is having its share of the cheese and eating it too! In
MY FIRST YEAR IN BUSINESS
But things were not as effortless as they sound. “Registering the company was a big headache. We had to wait six months for Encouraged by the that to happen,” he recalls. Another obstacle success of their first product, Aksharit, was chasing after overdue payments. “The the trio’s designed Chhattisgarh government had placed an and brought out order for 6,000 units in November 2009, another game, My which were delivered two months later. But Toy Factor. we got paid only in July last year,” adds Dhariwal, who had some rigorous following up to do for that. Six months into the business and the “MadRats” found that they were, “Bogged down by mundane issues like tracking the courier, following up with clients, placing orders with manufacturers and other day-to-day operations. We hardly got time to focus on designing new games,” recalls Dhariwal. So they hired Sachin, their first employee. He now looks after the daily operational work, such as dispatching orders, taking orders, and to an extent designing, among other activities. Free of routine tasks, and encouraged by the success of Aksharit, the trio’s designed and brought out another game, My Toy Factory. This game teaches children to make toys out of anything—scrap, tissue paper, straws—around them. But unlike Aksharit, the team plans to sell the new game in six of the major Big Bazaar outlets in India for a month to gauge its popularity. Besides this, they’ve also made Aksharit available in eight major Indian languages, just one year, the company has set up a cosy office in Bengaluru, including Gujarati, Kannada, and Telugu. Its mobile-app version hired six employees, and chalked up revenues of 50 lakh—not a has also been pre-bundled by Nokia on its touchphones, and is bad start considering that they had first set up shop in a warehouse. available on the Ovi Store free of cost for six months. Currently, “A friend, who was in the printing business, lent us a vacant the development of a PC version with Intel is underway. warehouse in Bengaluru free of cost. The games were assembled, With more than 10,000 Aksharit sets sold to both private and packaged and dispatched from there,” says Dhariwal, who as Head government schools across the country, MadRat Games has generRat, leads business development. ated quite a buzz. “Many venture capitalists and angel investors
MY FIRST YEAR IN BUSINESS
have contacted us!” says Dhariwal, who is expecting the company’s first angel Company funding to come through soon. Dashboard The trio’s little assembly-cum-designMADRAT shop has also moved into a cosy little GAMES place in Saint Thomas Town in Bengaluru. The fully furnished French-style stone construct with a huge terrace was exactly what the team was looking for. “The office space came with computers; that saved us the cost of investing in hardware, which is essential for our work,” says Dhariwal. Today, the team works with a host of freelance designers who share their vision of making MadRat Games one of India’s premier
FOUNDERS NAMES: Rajat Dhariwal (27 years), BTech, IIT Bombay; MS, Carnegie Mellon University | Madhumita Halder (28 years), BTech, IIT Bombay | Manuj Dhariwal (25 years), BDesign, IIT Guwahati LOCATION: Bengaluru LATEST TURNOVER: 50 lakh as on December 31, 2010 NUMBER OF EMPLOYEES: 12 FUNDING: 25 lakh BREAK-EVEN PERIOD: 2 years BIGGEST EXPENSE: Product development BEST PART OF BEING AN ENTREPRENEUR: Creating something out of nothing, and being able to do what we are passionate about all the time WORST PART OF BEING AN ENTREPRENEUR: Uncertainty.
game-designing companies. And with about 20 prestigious clients such as the Bharati Vidyapeeth and a number of not-for-profits, this may soon be a reality.
OF MAVERICKS AND RACES Entrepreneurship is like being on a dragon boat race team. And the first year is like jumping from one sinking ship to another, but eventually you find stable ground, says Mrigank Tripathi, CEO, Voicetap. BY ANOOP CHUGH | PHOTOGRAPHS BY SUBHOJIT PAUL HE BEST IDEAS often hit you in the most elementary of situations. A few years ago, Mrigank Tripathi’s niece was lamenting over the fact that she couldn’t find someone talk to about the various college options in front of her. That’s when he began wondering about the need for a service that would connect people with experts on a particular topic—offering easy access to muchneeded information. And that’s how the concept of Voicetap evolved—allowing anyone to seek advice directly from an expert on a particular topic, whether it’s health, finance, education or career, without knowing the person, or their phone numbers. And so Voicetap was launched in 2009, a start-up in the value-added services
INC. | FEBRUARY 2011
(VAS) space that provides innovative solutions to telecom operators and enterprises across the world to help them generate more revenue. With more than 600 million mobile subscribers in India alone, the irony of the situation hasn’t been lost on Tripathi either. He likens his first year in business to the “dragon boat races” held every year in Switzerland. “You’re in shorts and a t-shirt, on a boat with 10 others, and you race against nine teams, over a freezing and fogged-out lake, fighting cold, sleet, occasional snow and water splashes with a single focus in mind—winning. And that depends on team work, talent and the hard work put in. You win, you get a sore body and a tonne of exhilaration; you don’t, you still get a sore body,” he laughs.
Jumping onto the entrepreneurship bandwagon wasn’t the most obvious choice, and Tripathi was chastised by friends and family for wasting a management degree from INSEAD and throwing away a lucrative consulting career—and, that too, with a toddler and a baby to provide for. “To them, it seemed a huge risk. But I knew that it was then, or never,” says Tripathi, whose wife seconded his decision. “She didn’t want me to get back to ‘corporate work’ and so took up a home-based job to keep the home fires burning. Her belief in me outweighed my own,” he adds. Obviously, it wasn’t a smooth start as the genre was completely untried and untested, and a lot of trial and error was involved. “That meant locking myself in the study, making cold calls to clients, and
MY FIRST YEAR IN BUSINESS
Tripathi has survived the first year with his nine-member team, six of whom he hired without seeing their resumes. They are scripting a quick ramp-up.
03 trying to figure it out,” he recalls. Finally, he zeroed in on a direct-to-consumer model, where a person could send an SMS to connect to a relevant expert. The next big challenge was finding team members. “Referred by a close friend from INSEAD, Devanshu Pandey (who’s since moved on to Conde Nast) was the first person to join as head of technology. Then came Vivek Khandelwal, who’s currently a student at IIT Bombay,” says Tripathi. But every person he hired didn’t turn out to be a Devanshu, or a Company Vivek. That’s when Dashboard he realised the two VOICETAP basic rules of hiring for a start-up—the resume and creden-
tials don’t matter, and every start-up needs mavericks, whom he met soon enough. “Sandip, one of the key people behind the telecom platform we built, walked in for an ‘interview’ in shorts and a T-shirt. He thought someone was playing a joke on him. We discussed the concept and he agreed to show us a working prototype in 15 days, when companies were saying three months and more. And he delivered the FOUNDER NAME: Mrigank Tripathi AGE: 34 years QUALIFICATIONS: MBA, INSEAD LOCATION: Noida NUMBER OF EMPLOYEES: Nine FUNDING: 80 lakh BREAK-EVEN PERIOD: 1 year BIGGEST EXPENSE: Salaries BEST PART OF BEING AN ENTREPRENEUR: The journey itself WORST PART: The uncertainty of
cash flows and its impact on the organisation.
prototype in 12 days flat. Today, we are nine people, and I haven’t even seen the resumes of six,” he states. The big break came when Voicetap raised an angel round from a Singaporebased consortium and started developing the product. The vision at the time was to deploy the solution on a telecom operator and allow people to connect to each other in a manner similar to a “relevance-based exchange”. Tripathi quickly realised his DNA was much more “corporate-and operator-focused” than consumer-focused. Talking about surviving the first year, he says, “For a start-up to succeed, you need to jump from one sinking ship to another till you find a stable platform.” Today, Voicetap has found some stability in the form of two lucrative engagements with innovative operators (one Indian, one international), multiple international and national awards, a product, a team, and well-known enterprise clients in the finance and education field in India. On top of that, it’s breaking even in revenue terms. With operator engagements scheduled to go live shortly, and given the nature of the deals, Tripathi expects things to start ramping up quickly. Voicetap has survived and Tripathi believes he has the team and the pieces of the puzzle to ensure that Voicetap gets up there. And if history is a benchmark, now is when the real struggle starts. FEBRUARY 2011
A VISUAL ODYSSEY Here’s a pictorial walk through some other firsts that a business founder experiences in his journey—from designing the first product, doing up the first office, or creating the company’s first logo. BY SUNAINA SEHGAL AND SHREYASI SINGH
MY FIRST PRODUCT HIMANSHU DOGRA | Play Clan
Imagining India PLAY CLAN CELEBRATES life in India. My collections reflect the energy and
vibrant colours—red, orange and yellow—of India. We are inspired by the people of modern India, and the interesting coexistence of the young with the old. Our first collection—Delhi Street Maps—reflected this. I remember exploring the streets of Connaught Place to discover small details we could bring to life. So many quaint buildings, streets, ancient monuments, and unique grocery shops, or favourite ice cream vendors are never included in maps. We decided to incor-
Get carried away with this spacious tote bag.
INC. | FEBRUARY 2011
PHOTOGRAPHS BY SUBHOJIT PAUL
The 100-odd page notebook will give you reason to write home about.
Map your dreams by sleeping on these colourful cotton cushions.
Let India come alive as you enjoy an evening peg. These greeting cards will definitely put you on the map!
porate these easily ignored, but quirky details in our collection. The maps reflected the colourful energy of Delhi, which we all love. We drew the maps over lamps, wall art, tote bags, coasters, notebooks, magnets and many other things. We got an amazing response and decided to extend the map collection to Purani Dilli, Nai Dilli and Mehrauli. Today, our designs are much better. Our graphics are far superior than the first collection. But, many of the pieces from the map collection are still my favourite. FEBRUARY 2011
A VISUAL ODYSSEY
MY FIRST SOLAR POWER PLANT INDERPREET WADHWA | Azure Power
Lighting up Lives
I SET UP MY FIRST PLANT at Awan in Punjab because I wanted to do something for my state. It also helped that the regulatory atmosphere and natural conditions required for a solar power plant were better in Punjab than other states. In December 2009, the first Azure power plant was inaugurated. And we havenâ€™t looked back since. Today, we have $100-million worth of solar power projects coming up in states such as Gujarat and Rajasthan.
The 2 MW power plant is spread across 12 acres, and lights up 32 villages in and around Punjab.
INC. | FEBRUARY 2011
A VISUAL ODYSSEY
George stores coffee beans in the fridge and only grinds the amount he needs. This keeps their flavour intact.
MY FIRST INDULGENCE AT WORK CHRIS GEORGE | EBS Worldwide
Addicted to Caffeine
DRINKING COFFEE IS a habit carried over from my college life in the US. Tea was for Englishmen; coffee was for the students who worked hard and partied harder. I used to guzzle up to seven cups a day, until I decided to get it under control. Now, I have only two cups a day. I have the first cup as soon as I walk into the PHOTOGRAPHS BY JITEN GANDHI
office. It’s a ritual that comforts me, and peps me up for the day ahead. I cannot have anything but “pure coffee”, which means no instant coffee. My favourites are Jamaican Blue Mountain and Arabica coffee beans, which I buy every two months. Occassionaly, I add hazelnut or vanilla flavours to my coffee. FEBRUARY 2011
A VISUAL ODYSSEY
MY FIRST OFFICE KARAN VIR ARORA | Vimanika Comics
Small, but Beautiful
OURS IS A CREATIVE OFFICE. Artists feel at home here. We
Arora is moving to a bigger office soon, but hopes to retain the intimacy of this one.
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painted the walls yellow, and had wooden flooring fitted. I feel the warmth every time I walk in. I only wish it was in a nicer location with more greenery around. At 350 square feet, this is a tiny office. But then, large spaces can be intimidating—and, make you feel like you have done enough. I have posters of Moksha, my first title, and of The Sixth as well. But the piece de resistance is my comics collection—Marvel and Frank Miller—along with graphic novels and mythological books. I’d love to have a big library in my next office. PHOTOGRAPHS BY JITEN GANDHI
A VISUAL ODYSSEY
MY FIRST LOGO PHANINDRA SAMA | redBus.in
Riding on Red THE IDEA WAS TO CONVEY passion, energy and youth through our logo. During those days, I was reading the autobiography of Richard Branson, founder, Virgin Atlantic. So, his logo served as an inspiration for ours. I was clear that the logo should use our complete name, redBus.in, so peopeo
I was highly influenced by the story of Richard Branson. We decided our logo should look like the Virgin logo with ‘r’ looking like ‘v’ and a slanting underline to indicate enthusiasm.
The shade of red should be commonly available, so that printing becomes easier and cheaper.
ple could remember us, including the fact that we used “.in” and not “.com”. And, it should use a mascot—something like a bus. A friend’s friend, Angeline Pradhan, who ran The Other Design Studio, gave us options within a week. I liked the samples she did on her own (below). The logo should have the complete name of our brand, redBus.in and not some short form,
The font used to write redBus should also be commonly available.
We chose this because the
letter ‘r’ was not clearly visible. We thought this will make people curious, and help them remember us.
When Mayank joined us, he got the logo changed within a month. It took us 10 days to get it right. This is what it looks like now.
WHAT HAPPENS WHEN... As businesses grow, entrepreneurs find themselves facing new challenges— hiring professionals, developing a brand identity, or even raising funds externally. In each of these, there’s a great amount of learning that comes from experience. We get three service providers to share their memories of entrepreneurs, who used their services for the first time.
Scouting for the Perfect Hire? ET ME AN AKHIL GUPTA.” That’s what a business owner says nine times out of ten, when asked about Mr Right—err, the ideal CFO. Gupta, the CFO of Airtel, has long been considered the “gold standard” among Indian finance professionals. He has seen the company through several ups and downs, including international acquisitions and spectrum allocations. He is believed to be a close confidant of Sunil Mittal, the founder of Bharti group. Well, try telling them how unrealistic an expectation that is—and you will know what executive search firms have to do to earn a living. Typically, the first searches that are
given out by a promoter are for the heads of finance and human resources, sometimes, technology. The CEO’s position comes right at the end, unless there’s a private equity firm involved. In those cases, the positions required to be filled are typically those of CEO and CFO. Unrealistic expectations is but one of the many issues that arises when small businesses, especially those run by firstgeneration entrepreneurs, decide to work with an external consultant to hire senior professionals. Other issues include clarity of thought, motives and the driving force behind the decision to get someone on board. “We try to understand what’s triggered the thought? Is the promoter convinced it’s the right time? Or, is the board, or private
equity firm driving that decision,” explains Sanjiv Sachar, partner, Egon Zehnder India. He should know. Nearly 35 per cent of his firm’s assignments come from such businesses. Sometimes, promoters look for a professional leader because it’s what others around them are doing. “We’ve even known of people looking to add a ‘heavyweight’ to the team just before a public offering,” says Sachar. At times, even if the promoter himself is keen on hiring professionals, he’s not thought through the process. Often, owners only make statements such as this: “We need to bring in a new CEO because that’s the only way we can grow.” They do not explain what role they have carved out for
“We didn’t have a mentor from the financial services background, who understood all aspects of the market, and could have helped us early on. We have made tonnes of mistakes in these years.”
— Kaushal Aggarwal, Managing Director, Avendus Capital
INC. | FEBRUARY 2011
TIPS FOR THE FIRST-TIME USER BE PREPARED to devote time and attention to the exercise. And, no, 15 minutes is not what it takes to hire someone to fill in your big shoes. Interviews will especially need quality time—by that, we mean, cell phones on the silent mode, all fires at work left to be solved by others, and zero signs of impatience. THINK CLEARLY about whether you want someone to replace you, or complement you. Then fill the position accordingly in the organisation chart, and study the impact of that new position in terms of reporting and deliverables. Remember, you cannot have a parallel court running in the same organisation.
The Right Fit Don’t hunt for a clone. Devote time and attention to identify the ideal candidate for your big shoes.
this person, nor do they have clear answers about the hire’s responsibilities. “That’s when we doubt whether he’s even serious about the mandate,” adds Sachar. Other favourites are: “You know what a CEO should be. You hire them all the time.” That’s when Sachar and his team know that they need to lay down the ground rules of engagement. “We tell them upfront what is possible and what isn’t,” adds he. Unlike searches given out by multinational firms, where the rules of the game
are clear, hiring professionals for promoter-run businesses requires time and patience. The service provider usually establishes its understanding of the search business, and that it knows what it would take for professionals to be successful in an entrepreneurial environment. Then, the search firm has to work with the promoter to simply define what the deliverables are going to be from the hire. Simple questions, such as “how will you
BE CLEAR why you want the professional. Is it for the experience, the global mind set, his exposure to processes and systems at world-class companies, and so on. The new hire will have to become your change agent, and therefore, should match the skills needed to bring the change you are thinking about.
measure that the hire turned out to be good?” or, “how will the organisation change once this position gets added to the org chart?” can lead the promoter in the right direction. Sometimes, simply making the posthire reality obvious to entrepreneurs can bring their intentions to fore. “We name a position and tell the promoter that this person will hereafter report to the new hire. Those reactions are very important since bringing people from outside will change working relationships, and the environment,” explains Sachar.
“I go by my gut. I can sense immediately what a property wants to be, or what vibe will work best. I only get to spend 10 per cent on what I like to do. The rest is spent doing CEO stuff.”
— Riyaaz Amlani, Co-founder, Impresario Hospitality
WHAT HAPPENS WHEN...
At other times, such interactions involve playing out scenarios and asking the entrepreneur who will take a call in such situations makes the writing clear for all those involved. “It lets us understand whether he simply needs a COO, or is truly willing to give up control to a professional CEO?” Even the amount of time and the process of search itself can surprise a first time user. “We tell them our expectations from the company, the information over and above the job description that we’ll need, and then, we coach them and drive them on how they will interview people.” Most firms, such as Egon, usually pre-
fer to sit through the interviews to provide feedback on the client’s interviewing skills. If an entrepreneur’s taking business calls for a majority of the interview, then that’s a clear indicator that she wasn’t being attentive. For most professionals placed in a promoter-run company, Sachar’s firm extends its support for almost a year after joining. “We have a face-to face discussion within a month of joining, and then telephonic updates at three-month intervals,” he explains. This is to ensure “successful integration” between the two parties. And, as with most of these situations, money’s always a consideration. The chair-
man of a private bank once said his ideal CEO candidate is Guneet Chadha, who’s the CEO of Deutsche Bank in India. Upon being gently told that a Chadha would not be interested in joining him, the gentleman said, “Kitna banata hai. I can give him a blank ‘cheque’.” “I am yet to see a mandate that we couldn’t close because the entrepreneur couldn’t afford to pay the sum being demanded,” adds Sachar. As with their businesses, entrepreneurs don’t believe in any half measures even when it comes to wooing. —Pooja Kothari
Looking to Sell the Company, Anyone? D
O YOU HAVE A BOTTLE OF WHISKEY?” That’s what a promoter once asked his investment banker at two in the morning. The duo was out on road shows, which are an essential part of the process of listing a company on a
stock exchange. And that was no joke. It seems a drink is the least that a promoter can expect from the guy he’s hired to make himself rich. “Road shows are the fun part. I’ve even gone sightseeing in Hong Kong once when we were meeting international investors for a travel company,” says Ranu Vohra, managing director, Avendus
Capital, which offers investment banking among its bouquet of services to corporates. It goes without saying, though, that this relationship isn’t all about fun and games. There’s serious money at stake here. And, that makes people more prone to playing games than otherwise in a relationship. Typically, it’s mid-sized and large companies that look to raise money,
“When we approached people to give us their shops to start collection centres, they would refuse... They feared their grandchildren will be fighting to get my grandchildren out of their premises.”
— Dr Arvind Lal, Chairman, Dr Lal’s Path Labs
INC. | FEBRUARY 2011
WHAT HAPPENS WHEN....
either through an outright sale, or by listing at a stock exchange. In both cases, most companies have an investment bank to advise them and take care of formalities. “I’ve always felt that in the first meeting, the company needs to make a sale to the I-banker. After all, that person has to go and sell the company, so he better believe in its story,” adds Vohra. According to him, there are three things that his colleagues look for in that first meeting. How serious is the promoter about his intention to raise money? Second, what’s the valuation in his mind? And, last, is his company marketable or not? “We also try to figure out whether the person’s simply fishing, or is serious about raising money,” adds Vohra. A simple way to judge that is to ask a lot of questions—and of all sorts. The most common ones include checking whether he’s been approached by someone with the intention of investing in his company, or acquiring it. And, how well does the promoter think is his business likely to do in the future? It’s almost like playing a strategy mind game. “The best part is when the promoter thinks his company is worth x, and we think
TIPS FOR THE FIRST-TIME USER THE BANKER expects you to know what’s happening in your company and in your industry. The worst thing you can do at the meeting is call someone else for the last quarter numbers. Instead of worrying about the valuation, make sure you get your own report card right.
DON’T START dropping names of other bankers at the meeting. That’s a clear give away that you are fishing—and not serious about a deal. Any good banker wants to run with a committed partner. So at least pretend to be.
its value is actually a fourth of that,” adds Vohra. Keeping a straight face then is the least of the banker’s problem. “If you tell them their business is not worth the value they think it is, they won’t ever come back. So we gently prod them on how have they arrived at that number? What is their perception of future growth? And so on,” explains Vohra. Sometimes, it also requires challenging the assumptions made by the promoter—something as simple as proving to them that if the opportunity is as large as they are claiming it to be, why do they expect the business to grow at the rate that any normal business would. A first meeting is also about detailing the process of sale or IPO, and identifying the kind of risks an owner faces through the process. For instance, something as outside of control as the macroeconomic environment could affect the fate of the IPO. “We touch upon issues that force the person to think hard,” adds Vohra. That’s also a way to assess how much the promoter has thought through risk management. Often times, business owners tend to be cagey about numbers. They talk about other deals that have happened
A Tall Task Raising money requires you to be aware of what’s happening—in your company, and within the industry.
“We can’t fight on Fridays because the weekend gets spoiled. Nor on Monday because then the week goes badly. With a small window to fight, I guess, we are safe...But there are times when we want to strangle each other.”
—Suchna Shah, Co-founder, The Backpacker Co.
WHAT HAPPENS WHEN...
in their sector, and ask for the banker’s opinion on those valuations. A pointless exercise, it does nothing for the actual conversation. “I once went to a meeting that ended in five minutes flat. The person didn’t want to answer any of my questions, so I came out after having a cup of tea,” recalls Vohra. Bankers have been known to play mediators between family members. Remember ICICI Bank’s K.V. Kamath mediating a truce between the Ambani brothers a few years ago. Well, when it comes to selling a business, each member has a mind of his or her own. And, trying to get them to agree to anything is a feat in itself. It’s common for bankers to control tempers at such meetings
instead of talking about selling the company. “It’s challenging to get involved with family-run businesses, where members have different thoughts on what needs to be achieved,” admits Vohra. Hospitality, though, is commonly extended to the members of the banking fraternity. Most family-owned businesses entertain and pamper bankers with a meal either in their office canteen, or at a five star hotel. After all, a business owner takes years to build his company, and now expects the banker to sell it in a span of six months. So finding a way to the salesman’s heart through his stomach would be a surefire recipe for success. —Pooja Kothari
Getting your Brand to Speak for You? IVE US A NICE, bright sign that people will notice when they walk by.” Hearing variations of this is part of everyday work for Itu Chaudhuri, a Delhi-based brand and communications design consultant. His agency, ICD India, helps a wide range of small businesses and entrepreneur-run companies put their best foot forward. Talking brands, he confesses, is a tough job, especially with those just starting out, like so many of his clients. “Their goal is just attention. Their foremost priority is visibility. It’s about sales and survival.” Few people think about design as a tool that guides the business. The singular focus is on its visual aspect, Chaudhuri explains.
But, brand identity transcends the visual. “It is just one part of what the brand conveys. Branding is about interpreting the experience people have of you.” It flows not just from the service or product on offer, but also from where and what an entrepreneur envisions the company to be. It must be a cohesive whole. Making entrepreneurs enlarge this vision means going in deep. “You need to go into level three, or four,” says Chaudhuri, borrowing a terminology from cult movie Inception. This process has been uncomfortable ground for many entrepreneurs he has worked with. More often than not, there is great tentativeness during the process, says he. In start-ups, especially, there is no proof of concept or evidence to rely on. “But, in
learning to ask the questions, we elicit by force an answer that is distinctive. It has to go beyond saying we want to ensure quality and timely delivery.” A brand, he adds, is about discovering the point of difference. In any case, effective branding is a challenge even for the biggest multinationals. Sujata Keshavan, who runs Ray+Keshavan, a leading Bengaluru-based firm, says the real problem with the smaller companies is that they underestimate the power of design to alter their fortune. Every collateral and brand point (such as web, product, packaging, brochures, stall design, and retail presence) involves design. “People buy into design,” says Keshavan. She recalls the experience of working with Himalaya, the Ayurveda drugs com-
“I am happier being an entrepreneur than I would have been in any other state of being...But, become one only if you enjoy driving fast. You will either get hurt, or leave everyone behind.”
—Sourabh Jain, Founder, ngpay
INC. | FEBRUARY 2011
WHAT HAPPENS WHEN...
TIPS FOR THE FIRST-TIME USER DON’T THINK of brand identity as a post-business activity. It is a simultaneous process. Many mistakenly believe that defining brands is an activity only a certain size and scale need to be worried about. In fact, it’s critical that your brand is differentiated early on.
way to grab g is much more than a Not Just Noise Brandin wisely to make a real impact. se attention. Use the exerci
pany. “Ten years ago, they came to us because they wanted to take their products to new markets.” Focus group, markets tests and product samplings had shown the product was liked. But, it needed a modern identity that would be attractive to consumers. Keshavan’s team first created a mother brand for the company, Himalaya. It also designed product packaging and communication. “Today, they sell in over a hundred countries.” Unfortunately, few entrepreneurs are educated on this transformative power of design, she says. In India, unlike in the U.S., most companies begin with merely a logo rustled up by a graphic designer, putting off branding for when they think they’ll need it, at a different size, scale and volume. “You can’t do that,” she cautions. “If you spend on it later, you’ll end up spending more.” That’s par for the course really. “So many say, I know what you are saying, but I’ll come back to it,” corroborates Chaudhuri. “It’s like religion, isn’t it? You come to it when you have had some bad experi-
ences,” he philosophises. When Exper, a fast-growing corporate training company founded by seven professionals, came to ICD for a re-design, it was because they weren’t able to attract the kind of bigticket projects from marquee clients they were seeking. “Now, their worry is whether they can execute the numerous projects they are getting.” Still, there is much scepticism whether the effort, time, money, and managerial bandwidth is worth it. Sure, brands are indefinable, intangible beings. But, the branding exercise need not be. Success of a well-thought out branding campaign can be measured, says Keshavan, provided you know the problem you want to tackle. She gives the example of Bank of Baroda. Her firm was called in to rebrand the public sector bank and make it more appealing to younger customers. “Within months, they had younger customers. It was easy to measure.” Entrepreneurs should use some of the inherent advantages they bring to the
SET CLEAR objectives before undertaking a branding exercise. The success of branding can often be immediately tangible and measurable. You need to know what you want to achieve. USE THE BRANDING activity to take a deep, hard look at your business, where it stands, where you want it to go, and how you want to do it. Think forward about the business you will be, not the business you are.
design table, she advises. They aren’t saddled with the complex back and forth which approvals pass through in the more structured multinationals. Ownership is more definite. “In the larger companies, nobody can say they took the decision,” claims Keshavan. Also, there is the space to be more radical, more instinctive. “They don’t always need research reports or data to back every decision.” But, the flipside are the personal quirks. “So many times, our designs are vetted by astrologers,” she rues. “Some great designs haven’t seen the light of day because they were scrapped on superstitions,” she exclaims. —Shreyasi Singh
“Within five years, I want to do something else. I once read somewhere that an entrepreneur has about 40 years of working life. You should do at least three different things.”
— Yashovardhan Saboo, Chairman, KDDL
BY ASHOK JHUNJHUNWALA | IIT MADRAS
The Maturing of Technology Entrepreneurship in India
The eco-system is ready; start-ups will thrive For years, India has been considered an IT powerhouse in the world. However, one question propped up frequently: where are the “Google” and “Apple” of India? It isn’t that India has not come up with high-quality products since its liberalisation in the nineties. The auto sector is a great example. The Tata Nano is one of the most cost-effective cars produced anywhere in the world. In the pharmaceutical sector, we have recently come up with several products that have made a mark in the world. The same is also beginning to happen in the IT sector, where companies like TCS, Infosys, Polaris, iFlex, and 3i-Infotech have come up with interesting products. Yet, these developments have come from India Shining India’s robust economic growth will give rise to tech innovations.
“If you are looking to build a business that you can pass on to your children’s children’s children, then India is the place for it. I am financially and emotionally connected to India.”
— Ema Trinidad, Founder, S2 Spa
INC. | FEBRUARY 2011
companies which were already successful. They are unlike the start-ups in the US, where young first-generation entrepreneurs, leveraging the eco-system of high-quality universities, angel investors and venture capitalists, have created companies like Microsoft, Intel and Google. Compared to them, successful first-generation entrepreneurs in India mostly built companies either in, or fuelled by, the services sector. So, while questions about the existence of Indian products continued to be raised, slowly and steadily, over the last decade, an eco-system, similar to that in Silicon Valley and Route 128 in the USA, has been emerging in India. Over the past few years, the Department of Science and Technology has helped set-up scores of incubators in universities; though still in their infancy, they are learning and evolving fast. At the same time, a number of successful professionals and businessmen have become angel-investors; organisations like
funds, like Venture-East TeNeT fund, and Indian Angels Network, which have been providing seed capital and first round funding. Even numerous government departments have launched a number of schemes to provide seed funds for product development for start-ups. Recently, there’s been an emergence of some larger venture funds focused on startups (though, most of the venture funds still look for late-stage investment and function more like growth capital funds). On top of that, there are conferences like Proto.in and business plan and start-up competitions in different parts of the country. A large number of youngsters in and around universities have been hooked to entrepreneurship. The eco-system is ready The outlook of this eco-system is similar to that in the USA. The free spirit and huge amount of energy are already there. There are also some early signs of success. The number of people who do see entrepreneurship as a way of life has vastly increased. A city like Chennai, for example, sees roughly about 600 new tech start-ups every six months; Bengaluru sees about 700. In the coming decade, this will become a force to reckon with. One will see all types of start-ups and all kinds of products. The difference from the past may be that they will first look at succeeding in the Indian market, before going world-wide. The success of IT companies had taught us the reverse lesson. In the past, start-ups
In the coming decade, start-ups will first look at succeeding in the Indian market before going world-wide. The Indus Entrepreneurs (TiE) have emerged in most cities, acting as mentors to start-ups. Also, organisations like National Entrepreneurship Network (NEN) are today active in more than 300 campuses across the country. While not everybody becomes an entrepreneur right after graduating, these are students who are aware and equipped to start. Further, there are now several small
were often told to “build a global company,” which was a euphemism for focusing on and winning in the West (as there was no sizeable Indian market). With the recent global economic crisis, where the domestic Indian market emerged not only robust but also growing very rapidly, the correction was done. Now the start-ups are correctly pushed to focus on the local market, where they can not only afford to fail and learn with low penalty, but where they can build a successful revenue stream that could fund their “go to the world” drive later-on. The local focus is also of importance because funding for start-ups continues to be an issue. Companies focus on the local market to figure out a way to make revenues early on, without spending money on travel. The constraint to rapid growth is the lack of adequate skilled workforce and talent to build up these businesses as they scale up. Anyone from a bakery to an IT company to a product firm requires product managers and quality talent. Perhaps India should open up our processes for talent from other countries to these opportunities. There is a lot of hard work that still needs to be done. But then entrepreneurship is any way about hard work. One has to get going; we have to learn to fail many times and accept failures. Success will follow. A new kind of entrepreneurship The coming decade will also see another interesting phenomenon in entrepreneurship, peculiar to India. The robust economic growth that India has achieved over the past two decades has had lots of positives, including the confidence it has given to its youngsters to venture into new ideas and opportunities. It has made a significant difference to the incomes of Indian households
“I honestly feel I would have failed as an entrepreneur if I had to start from scratch. To be successful as an entpreneur, you need passion as much as perseverance. There is no success without failure.”
—Adi Godrej, Chairman, Godrej Industries
and the lives of its people. However, the growth has been skewed with urban India gaining far more rapidly than rural India. So, how can rural India grow at the same pace as urban? There is no postindustrial-revolution precedent for this— anywhere in the world. But India has no other option; 700 million people living in India have to become a part of this eco-
nomic growth. They cannot be asked to wait. It has to innovate to find an answer. The challenge itself becomes an opportunity for a new kind of entrepreneurship, giving rise to start-ups that’ll focus on rural India. They will build ventures that create livelihoods, bring education, generate and distribute power (using renewable resources), enhance farm productivity,
arrest waste, improve supply chains and bring financial services to rural India. Organisations like RTBI and Acumen Fund are already working to create entrepreneurs focused on such tasks. The early results are indeed very promising. However, one has to figure out the challenges of scaling up. In the coming few years, India has no option but to accelerate such efforts.
BY PRADEEP CHOPRA | DIGITAL VIDYA
Indian Businesses in 20:20
The next decade belongs to T20 players
A Brisk Pace Indian businesses are poised to scale up furiously in the next decade.
I love examples and analogies. To me, there isn’t a better and more interesting analogy than Indian business and cricket. Just the way cricket has evolved from the Test Match format to the current, more glamorous T20 one, so has Indian business.
Older business groups, such as Tatas and Ambanis, are the Test Match equivalent of Indian business; while companies such as Airtel and MakeMyTrip surely resemble the One Day players. Though Indian businesses are yet to see the 20:20 players, such as the Facebooks of the world, companies like One97 and iYogi, who have shown extraordinary growth in a short period of time, could be solid contenders. I strongly believe that the true 20:20 champions will emerge in this decade. This shift in the Indian business scenario will be marked by the following characteristics:
“The customer is god for me. Even now, I stand at the door to welcome them. Most don’t even know that I am the owner. They often pass on a 10 or a 20 note as tip.”
— Jayaram Banan, Founder, Sagar Ratna
INC. | FEBRUARY 2011
Proportional increase in speed and risk: Like in 20:20 cricket,
the speed and risk of opportunities associated with businesses will grow proportionally. For instance, the speed at which Facebook flourished matched the speed at which Orkut died. New age businesses will see a similar fate in India. Some of the verticals, which are prone to such steep rise and fall, include group buying and social gaming. It’s important that one doesn’t just ride the wave on time, but also adapts to the changes required to stay on top. Playing defense will no longer suffice. In the next couple of years, the internet population is expected to reach its true inflexion point in India. Now is the time to get onto the internet bandwagon to capitalise on opportunities, which will be available then.
More power to the Gods: In spite of all the turbulence mentioned above, a majority of real wealth creators in Indian businesses will still be those who possess the leadership qualities of businesspeople, such as Narayana Murthy. When it comes to cricket, I can’t think of a better example than Sachin Tendulkar, who has always let his bat do the talking.
The customer’s role will shift from being an influencer to being the real decision maker.
Emergence of new players: The way 20:20 cricket has
given birth to new teams and players, such as Deccan Chargers and Yusuf Pathan, this era of businesses in India will create an explosion of new opportunities. Choices about education and career are no more constrained by survival, which used to be a common thread for a majority of youth in the previous decade. This will give rise to an abundance of ‘choice entrepreneurship’ (versus forced entrepreneurship) in this decade, resulting in the emergence of new business models led by new and young business leaders.
Creation of new records: When Yuvraj Singh hit six sixes in a sin-
gle over in a T20 match, he set a new record in international cricket. The business parallel to that is Mark Zuckerberg’s achievement of a billion dollar valuation in a short span of time. Indian businesses will surely see many new records being made in the coming decade. Unlike Indian cricket, the economy is yet to get close to the top of the league. So, getting into the top 10 will still be a milestone to celebrate in the coming decade.
Many more Rajus and Modis: Sponsorships in cricket are equiva-
lent to funding in businesses. More money will only accelerate the breadth and depth of corporate scams in a fashion similar to the rise and fall of Lalit Modi in cricket. Satyam’s fraud, led by its previous chairman Ramalinga Raju, was just a trailer of the world of scandals and scams that we are entering into. The sensitivity and opportunity to create and execute good corporate governance has already multiplied, and will surely play a critical role in creating true wealth for stakeholders in this new era.
Greater globalisation: The
way IPL has given birth to global teams in international cricket, Indian businesses will see a shift in creating truly global organisations. We’ve already seen Indian companies acquiring their global counterparts. This phenomenon will only gain momentum in future. Managing change vs control: Gone are the days of controlling a
business; it’s about managing change. Venture capitalism is on the rise, and is only going to accelerate the need for giving up control. Similarly, the penetration of social media is changing the equation from controlling a brand to managing it. M.S. Dhoni is a great example of taking India to its current peak through his management style.
Consumer will really be the King: We will see more and more
businesses adapting the ”By the People, For the People” principle. The customer’s role will shift from being an influencer to being the real decision maker. The birth of 20:20 cricket format was meant to reward its viewers by offering better entertainment value.
The real test: With few exceptions, in the long run, the real wealth
creators will still be the ones who are going to apply the fundamentals of business right and adapt to the latest. The role of business mentors will continue to gain importance the way Achrekars and Kirstens have contributed to the growth of players like Tendulkar and teams like India in international cricket. Similarly, industry bodies and organisations, such as Nasscom and TiE, will need to play the role of catalysts the way BCCI has led to the growth of Indian cricket on the international circuit. I look forward to seeing how the Indian economy unfolds in this decade. I hope and expect to see many of my predictions fail for the better.
“It’s the satisfaction of having made a difference that keeps me going in the face of challenges. There are so many rural youths, who can now earn a decent living near their homes.”
— Saloni Malhotra, Founder, DesiCrew
BY ALOK MITTAL | CANAAN PARTNERS
Venture Capital in India
Will come of age—look at multiple sectors beyond tech; geographically more wide spread
Cashing In For the right businesses, venture capital will not be a tough hunt.
“There was a fresh spark of entrepreneurship in India a couple of years ago. The global emergence of the internet revolution and widespread passion among entrepreneurs led to thousands of businesses taking seed. Unfortunately, today we stand among ruins, with most of those businesses and those funds reporting failure. There is no
venture capital left around, and it is hard to imagine that it will make any real come back in the next decade.” This obituary of venture capital in India was written in 2001. Most decennial predictions tend to carry the downside risk of over projecting the future. This one carried the upside
risk of non-participation. Ten years later, there has not just been a revival of venture capital, but even early successes of the model, which is encouraging more and more investors to head eastwards in search of gold. As we look towards the next 10 years, therefore, it is important to derive the potential of venture capital by looking at what the economy at large, and entrepreneurship in particular, will deliver in realising India’s potential. Venture capital will be driven by, and will contribute to, that larger picture. Even as we look forward to a decade that will more than double India’s economy, it is likely to represent an incremental and not a seminal shift in the life of an average Indian. However, in several specific areas, we will see developments that are nothing short of revolutionary—along
“It’s easy to build a brand, but difficult to sustain it. The biggest thing is not to become number one, but to stay there for 10 years and still have no one around you.”
— Dr Mukesh Batra, Founder, Dr Batra’s
INC. | FEBRUARY 2011
similar lines as seen in telecom over the past decade. Some of these areas of disruption will be sectoral, such as education, technology and healthcare. Others will be based on consumption driven by a dramatic expansion in discretionary incomes. The basis for most of these changes will be entrepreneurship. Let us consider some examples. One of the greatest strengths of India is the demographic dividend—in order to realise this advantage, we will need to train hundreds of millions of our people to take up productive occupations. India’s developmental indicators, including those around education and healthcare, continue to lag behind most other countries—and, they certainly do not match up to the aspirations that we carry as a nation. Access to financial services remains constrained—with direct impact on resultant growth. In each of the cases above, and many others, the only available blueprints are those with heavy involvement of private enterprise. As policymakers define our approach to solving these issues, they are interweaving the role that entrepreneurs are expected to play—be it in terms of training organisations, or providing education at all levels and increasing healthcare delivery capacity, or in building end-user services on platforms like Aadhar. Given the long history of entrepreneurial activity in India, it is only to be expected that it will continue to be the key driver for the future we have set our eyes on. India is a bottom-up country, and economic growth in India will be no different. Venture capital will play an increasingly important role as entrepreneurship drives the new India. Majority of start-ups in India are led by first generation entrepreneurs, who lack alternate sources of financing. While bootstrapping is an option and will always remain so, the premium on time, which capital helps to crunch, increases in a high-growth environment— it is already visible that entrepreneurs prefer to accelerate the growth of their businesses through infusion of capital, even if that means sharing the rewards and control. They are also getting more sophisticated about understanding and manag-
ing expectations of external investors, and about differentiating amongst various kinds of capital providers. The demand for capital that above initiatives entail, will be matched by increasing comfort of global investors towards India. Partly as an effect of global rebalancing, whereby it will become less and less attractive to continue high exposures to developed markets, and partly due to increasing capacity of emerging markets like India to productively deploy capital, the relative migration of investment capital is a given. Coupled by domestic savings and investments, one can expect a decade that has adequate availability of capital to fuel India’s growth. The virtuous cycle of investors seeing returns in the Indian market, and hence increasing their commitment to India, has already been set in motion. Earlier in broader private equity, and of late in venture capital, there are increasing proof points of the model working in line with investor expectations—as such proof points multiply, more and more investors will commit to these asset classes. As we look ahead to a future where there is abundant availability of risk capital, there is a need to ensure that policies are supportive of these underlying forces. The regulatory framework around private equity and venture capital still remains fragile and fragmented—the same must be streamlined on a priority basis to ensure that investors get comfort of regulatory certainty around investing in India. India will also have to take more ownership of forming domestic pools of risk capital—the current norms almost actively discourage the same. An interesting case in point here is Israel, where the 1993 Yozma initiatives single-handedly led to the formation of a vibrant venture capital industry. There is also a need to plug market failures in the capital food chain, especially in early-stage incubation and angel financing.
Both through public initiatives, and by providing incentives to private investors, these elements of the ecosystem can be plugged, and will have a many-fold leverage in enabling large scale entrepreneurship. I also expect venture capital to evolve somewhat differently in India than it has in other parts of the world. It is already evident that venture capital will successfully address multiple sectors beyond just technology, which may continue to remain the single largest sector. In high-growth economies, venture style returns can be made
Venture capital will be more geographically widespread in India, than concentrated in pockets like in Silicon Valley or Israel. through growth and not just through disruption—India will emerge as a prime example of the same. Similarly, venture capital is likely to be more geographically widespread in India, than concentrated in pockets like in Silicon Valley or Israel. This will be driven by the heterogeneity of opportunities across India, as well as relatively wide spread of entrepreneurial activity across many markets. Finally, most developmental agencies globally are realising the role of for-profit enterprises in enabling development—this will lead to continuous expansion of social venture capital activity, almost acting as an improvisation on the philanthropic model of the west, providing more sustainability in the process. The time has come for India to capture its destiny, and while there might be hiccups here and there, the next decade will mark significant strides towards that goal. The linkages of India’s growth and development with entrepreneurship, and of thriving entrepreneurship with availability of risk capital are undeniable. The next decade should mark coming of age of venture capital in India, in a uniquely Indian manner. FEBRUARY 2011
BEHIND THE SCENE Anil V.K.: Will the godfather approve?
Birender: I am the Lord of the Beans!
Subhojit Paul: Look! I actually shot a woman this time.
INC. | FEBRUARY 2011
Jayan Narayanan: I am the design don
Deepika Sharma: Do I have enough confirmations?
Shreya Pilani: Let’s take the event to the moon and back?
Anuradha D. Mathur: India is a great story for Inc.
Pramath R. Sinha: That’s a double space there, I can see it!
PHOTOGRAPHS BY SUBHOJIT PAUL | IMAGING BY SUNEESH K
It takes the effort of many to make this magazine an enjoyable read. Of
course, we have it somewhat easier since we’ve inherited a great product— both in terms of content and design—from our parent Inc. magazine in the US. Yet, there’s no discounting the contribution of the people below. There are still others, who work out of 9.9 Media’s other offices, who could not be here for the shoot. Their contribution is no less significant. Jiten Gandhi, Pranav Saran, N.C. Singh, Shivshankar Hiremath, Payel Mukherjee, Charu Bahri, Anoop Chugh, Binesh Sreedharan, Anil T., Nitish Sharma, P.C. Anoop, Joffy Jose, and John Khiangte—we missed you at the shoot! Jitender Bhadana: Yet another FTP download! Shreyasi Singh: Great, that’s my next story
Rohini Banerjee: I am the comma queen
Akhil Bery: Someone innovate, and fast, deadline’s here...
Pooja Kothari: Increase my budget, now!
Sunaina Sehgal: The price of learning is late nights, man
Mahesh Ravi: Someone tell her I’m the brand manager...
I WISH I KNEW THEN...
Dr Anand Deshpande, founder, Persistent Systems He returned to India from the US long before it became fashionable to do so. He dreamt of being ‘his own man’, little knowing that it would need lots of persistence. From fighting for office space, to coming to the realisation that relationships come first even in business, the founder, chairman and MD of Persistent Systems shares the lessons he learnt while building his business.
I completed my doctorate in computer science and engineering from Indiana University in 1989. Soon afterwards, I joined Hewlett-Packard Laboratories in California and stayed there for 17 months. Then, I decide to head back to India—not a popular option in those days. I remember people smirking when I discussed my future plans with them, including my decision to set up my own company. In 1990, the Department of Electronics was setting up a Software Technology Park (STP) in Pune to simplify import and export processes for the software industry. It seemed the right time to act. The government allocated land to 13 companies in March of that year. Though Persistent Systems was not established as an entity, we were promised space upon incorporation under an extension of the scheme. In May, after all the paperwork was done, we waited for our share of land. But nothing happened for nearly six months. None of the companies in the STP started operations, nor was additional space acquired. Despite our orders to start building, we had to wait till March 1991 to get the space. Frustrated, I wrote a letter to the then secretary of the DOE. I griped over the hypocrisy of the government: on the one hand, it
INC. | FEBRUARY 2011
on its way. We had prepared a proposal for the bank and applied for a loan. In mid-1991, all loan applications were placed on hold, so it took us nearly six months to get the amount sanctioned. I remember visiting the manager every day in the hope that it would help expedite my application. I wasn’t willing to bribe anyone, no matter how long I had to wait for the money. Soon, however, things started looking up and seemed on track for the decade that followed, until recently, when the recession hit. Most of our startup clients were on the verge of A Wise Move Anand Deshpande learnt to be a closure. I visited the CEO of human being first, and a businessman later. each company to reassure them of our willingness to work with them. We re-negotiated our contracts and wanted us to return to India and help build payment terms. Some managed to survive, its economy, while on the other, it was drag- while those who didn’t continued to be good ging its feet in implementing its own scheme. friends and helped us find new customers. Within two days, our letter was acknowlI learnt that building relationships with edged and we were asked to share our details. clients is more important than selling one’s In a couple of days, we got the keys to our product. Relationships go a long way, prodoffice—a 300 sq. ft unit. Interestingly, we ucts don’t. Be a human being first and a busiwere the first to occupy the premises. But, nessman later.—As told to Sunaina Sehgal more importantly, being frank and open with the government helped us start. I learnt that it’s important to demand one’s rights. Just as I crossed one hurdle, another was