Page 1

JUNE 2011

Sundeep Holani is happy to miss calls PAGE 64

ARJUN MALHOTRA

IS MORE THAN JUST HEADSTRONG PAGE 40 He’s sitting easy after selling out for 2400 crore

TOONPUR’S SUPERHERO

The Magazine for Growing Companies

Toonpur’s Superhero He had 4000 comics as a boy. Not surprisingly, Tapaas Chakravarti has created a super fun, 218 crore animation business with DQ Entertainment.

PAGE 30

The MAGAZINE for GROWING COMPANIES

HOWARD

SCHULTZ on his struggle

to reinvent Starbucks PAGE 44

June 2011 | 150 | Volume 02 | Issue 05 A 9.9 Media Publication


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June 2011

A Strong Wicket Headstrong’s Arjun Malhotra has a well trained gaze on growth.

CONTENTS

30 Comic Dreams

Tapaas Chakravarti’s inked his business adventures with the colours of his childhood. A comics addict, he today runs the 218-crore DQ Entertainment, a leading animation firm in Hyderabad. by shreyasi singh

40 Why I Bought and Sold Headstrong

The thrill of taking big decisions has always kept things interesting for Arjun Malhotra. It’s also landed his company a fantastic 2,400 crore deal. as told to sunaina sehgal

44 Howard Schultz Gets a Second Shot

Righting the ship has been every bit as challenging as launching it, says the man who built Starbucks. by bobbie gossage

52 How I Did It R. Sarabeswar

He defied his dad’s wishes and frequently changed jobs. None of that has come in the way of building CCCL, a 2,000-plus crore construction firm.

THIS PAGE PHOTOGRAPH: SUBHOJIT PAUL

as told to sunaina sehgal

48 Start-up Diaries

on the cover

Tapaas Chakravarti, Chairman and CEO, DQ Entertainment. Photograph by Arshanapally Prabhakar Rao in Hyderabad. Cover design by Binesh Sreedharan. THIS EDITION OF INC. MAGAZINE is published under license from Mansueto Ventures LLC, New York, New York. Editorial items appearing on pages 13, 14-15, 18-19, 44-46, 55-58 were all originally published in the United States edition of Inc. mwagazine 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.

Two buddies are trying to crack a business around their favourite drink—coconut water. Plus, an update on Dial-a-Book. It’s got pace, but the phone’s still not ringing off the hook. meenakshi kumar and shreyasi singh

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CONTENTS

June 2011 16

55 18

21

05 Editor’s Letter

06 Behind the Scenes Companies that help a busy food court be the perfect place for hungry shoppers

09 Launch

Flexi work hours isn’t a fancy frill anymore T  he Ticker W  omen who lead businesses set the record straight R  esearch Corner: Happiness is a worker close to home Q&A: Vamoose’s cool travel deals are surely a steal The Inc. Data Bank A  Skimmer’s Guide to Little Bets: How Breakthrough Ideas Emerge From Small Discoveries, by Peter Sims 

14 Get Real

By Jason Fried The paperwork was killing me. So, why couldn’t I bite the bullet and hire an assistant?

16 Passions

Yoga keeps Manu Agarwal stress-free and successful.

18 Balancing Acts

By Meg Cadoux Hirshberg Entrepreneurs think they’re always in control—until illness strikes.

21 The Goods

Office bags that speak your lingo: style and substance Bluetooth headsets that add clarity to your conversations A  new tracking device M  avenlink helps collaborate with staff A gym towel with a twist Get ‘appy’ with your BlackBerry Things Sanjeev Kumar Bijli cannot live without

Guidebook, No. 5

How to be an eco-friendly traveller. Find the Guidebook following page 24.

26 Innovation

An easy-to-use device to diagnose anaemia

28 Earn Your Spurs

By Jessie Paul Create an ecosystem of microfavours when you network.

68 I Wish I Knew Then...

O.P. Gupta, founder, Ashiana Builders Over the years, Om Prakash Gupta has learnt to keep things simple.

STRATEGY 55 MANAGING The co-founders of Tripping frequently consult their advisory board: a group of students and recent grads. 57 SALES & MARKETING Sometimes enthusiastically, sometimes reluctantly, companies are greening their packaging material. 59 MANAGING Departing staff make perfect sleuths. Use exit interviews to find out where you’re going wrong. 61 SALES & MARKETING Can Purna Organic’s terrace farming grow itself to new heights? 62 ELEVATOR PITCH PhokatCopy gives students reams of study notes for free. Will 1 crore help to scale up their efforts?

64 The Way I Work

Channelplay’s Sundeep Holani never thinks he’s wrong, and he’s probably right. as told to rohini banerjee

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MAIL APRIL 2011

An insightful cover story

MANAGING DIRECTOR: DR PRAMATH RAJ SINHA PRINTER & PUBLISHER: ANURADHA DAS MATHUR EDITORIAL MANAGING EDITOR: SHREYASI SINGH CONSULTANT FEATURES EDITOR: PAYEL MUKHERJEE ASSISTANT FEATURES EDITOR: ROHINI BANERJEE 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, VINOD SHINDE & CHANDER DANGE DESIGNERS: SRISTI MAURYA, SUNEESH K SHIGIL N & CHARU DWIVEDI CHIEF PHOTOGRAPHER: SUBHOJIT PAUL PHOTOGRAPHER: JITEN GANDHI

It’s great that you do stories of the not so educated, yet successful entrepreneurs as well. That is a very important aspect of India’s economic growth journey. Respect for hands-on experience and hard work is what the younger readers must imbibe from such stories. Some suggestions—a sectoral snapshot of unconventional sectors would make interesting reading. You do cover such stories but a consolidated bird’s eye view from you could set a lot of minds thinking.

COMMUNITY TEAM PRODUCT MANAGER: MAHESH RAVI ASSISTANT PRODUCT MANAGER: RAJAT GUPTA ASSOCIATE: DEEPIKA SHARMA

VINEET GUPTA

The Magazine for Growing Companies

PARABOLIC DRUG & JAMBOREE S PAGE 52

Khemlani has made a clean sweep of the facade access business

Take a peek into the minds of great entrepreneurs

PAGE 42

PAGE 34

Wealth

“The question has changed from will Guardian survive, to how big it can be?” —Ashutosh Garg

Over the Counter Guardian Lifecare has 230 stores and 170 crore in revenue. But, Ashutosh Garg’s health fix has just begun. PAGE 26

The MAGAZINE for GROWING COMPANIES

It’s got something for everybody Everything in your magazine is put together in a manner that is like a ‘one size fits all’ concept. There is something in it for all categories of entrepreneurs and readers. The out-of-the box content, the layout and the diverse segments covered can sometimes be overwhelming. But, they ignite the fire in the belly. I go through the ‘Strategy’ pages several times because one can identify with the issues covered and relate to it in so many ways.

PAGE 57

HOW I DID IT

WEALTH OVER THE COUNTER

I was introduced to Inc. four months back. I find it very interesting. The articles are well-researched. I most enjoyed Jessie Paul’s column in the April issue. The cover story on Ashutosh Garg was also insightful. The Goods section is very well compiled. Kudos to the team and look forward to many more good issues.—NIKITA SETH, Assistant Manager, KPMG, Gurgaon

Plan your company’s European excursion with care

April 2011 | 150 | Volume 02 | Issue 03 A 9.9 Media Publication

More information on venture capital linkages in India would also be informative. Keep up the brilliant work. It’s very satiating for the readers. kiron chopra

Managing Director, Chopra Retec Rubber Products, Lucknow

To submit a letter, or alert us to an error, write to us at inc.india@9dot9.in Letters may be edited for space and style. Submission constitutes permission to use.

OFFICE ADDRESS NINE DOT NINE MEDIAWORX PVT LTD A-262, DEFENCE COLONY, NEW DELHI–110 024 FOR ANY QUERIES, PLEASE CONTACT US AT HELP@9DOT9.IN

SALES & MARKETING 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)

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 PRINTED AT SILVER POINT PRESS PVT LTD., A-403, TTC IND. AREA, NEAR ANTHONY MOTORS, MAHAPE, NAVI MUMBAI-400701, DISTRICT THANE EDITOR: ANURADHA DAS MATHUR

PRODUCTION & LOGISTICS SR GENERAL MANAGER (OPERATIONS) SHIVSHANKAR M HIREMATH PRODUCTION EXECUTIVE VILAS MHATRE LOGISTICS MP SINGH, MOHD. ANSARI

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EDITOR’S LETTER

Making Tough Decisions design team excited as you can see from our Raising venture capital is a huge cover page. It’s not often we can put Bagheera milestone for every entrepreneur. and Balloo on the cover. Turn to Page 30 for s fascinating tale of tough decisions. Every founder I’ve met speaks about Tapaas’ Similar gutsy thinking has always shaped it as a double-edged sword though. Arjun Malhotra’s decisions as well. He’s recently made a big one—selling Headstrong, It strikes me how the reactions are a leading technology solutions firm to Genpact India for a neat 2,400 crore. But, always the same. what the 63-year-old is really looking forward to is seeing where

Once the initial euphoria of having somebody else believe in your vision dies down, realisation sets in that it’s probably time to let go. It’s a dilemma Tapaas Chakravarti, who we feature on our cover, has lived through. He founded DQ Entertainment, an animation firm in the late 1990s. As a player in an industry that didn’t even exist, Tapaas had no hope of getting loans or credit. So between 2003 and 2005, he brought in five investors to keep his venture funded. Today, after 13 years and two public listings—on the London and Bombay Stock THINGS I LEARNT Exchange—Tapaas owns only IN THIS ISSUE about18 per cent of his 218 crore You can make a firm. “It wasn’t about me. I wanted to thriving business out of make a world-class animation studio your childhood dreams. in India.” It helped that he’d picked You don’t have to be physically attached to up tricks of such smart give-andyour BlackBerry to be take early on, trading rare comics as successful. Tell us a school boy to muster up a 4,000 more, Sundeep Holani. strong collection. Today, DQE’s A passion beyond work animated television series have can change your life, reached over 30 million viewers in and your business. Point 160 countries. He certainly got our taken, Manu Agarwal.

this move leads him—will he retire or is he up for another start-up journey? You’ll find his story on Page 40. This penchant for excitement and ability to bite into big changes makes entrepreneurs special, and companies that they run, iconic. Few personify that more than Howard Schultz, founder of Starbucks, who’s back at the helm of his company— brewing in much-needed “entrepreneurial soul”. We have an interview with him from our US edition on Page 44. From this issue, we’ve introduced a new personal technology column, “Tech Wise” on Page 23. Soham Raninga is a gadget addict and a prolific tech journalist. He’ll write for us each month. Tell us how you liked his piece. As always, we look forward to hearing from you.

Shreyasi Singh shreyasi.singh@9dot9.in

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BEHIND THE SCENES

Companies at the Heart of Everyday Life

Restaurants Food courts at most malls offer a confusing choice of alternatives for both leisurely shoppers and those in a hurry. Here, Café Brown Sugar scores. Known for its tangy treats, the brainchild of founder Puneet Gangwani has been in business since 1999. A stand-out presence in markets across Delhi, including Greater Kailash and Defence Colony, it can hook you with its healthy options. The 100-employee firm also offers outdoor catering services.

Housekeeping Founded in 2000 by marine engineer Chander Dutta, and ably supported by his creative better half, Kavita Dutta, Service Masters provides facility management and floor care to clients ranging from MNCs and banks to showrooms, cinemas and food courts. With an annual turnover of 6-7 crore, the company claims it hasn’t lost any of its original customers—bragging rights in the highly volatile facility business. Service Masters also provides specialist care for floors, restoration services and management of facilities for their customers.

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Food Court, DLF Promenade, New Delhi

13.05.11 4:21 PM

Uniforms “Functionality” is the byword that founderowner of Fabrics Creation, Dr Rajesh Grover, swears by. His 24-year-old firm designs and develops uniforms for corporate clients, and ensures each one is customised as per the demands of the employees’ daily grind. Grover claims he never designs anything he’d not wear himself. With a turnover of 60-70 lakh, the 20-employee company also specialises in unique woven-into-the-fabric logos.

PHOTOGRAPH BY SUBHOJIT PAUL

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News, Ideas & Trends in Brief

PHOTO BY PHOTOS.COM

A Perk No More Flexible working conditions are a norm, says a global survey There’s great news for both employees and companies. Flexible working practices have mainstreamed across the world with 81 per cent of firms globally offering these options—allowing employees a level of choice about when and where they work. The latest survey by Regus, a leading provider of workplace situations, which interviewed over 17,000 senior business people in 80 countries, was conducted to find out if real benefits actually do flow from a flexi work environment. The verdict is quite clear. Sixty per cent of businesses interviewed believe that flexible working practices—related to office hours or location—are more cost efficient than fixed arrangements, contribute positively to business performance and improve motivation and productivity. They also help companies retain employees and access a wider pool of talent. Essentially, flexible working is defined

LAUNCH

No Time Table, No Cry Flexible working options help firms capture benefits like increased work efficiency.

as allowing employees to choose when and where they work. The employee must fulfill the tasks assigned, but in the location, and at the time, of their choice. This is usually made possible by specifying deadlines but not particular working hours, or by providing freedom on where the work is done—typically, closer to the employee but not necessarily the employer’s office space. Flexible working goes by many names including tele-working, hotdesking, or agile working. Most companies first introduced flexible working options to capture a variety of benefits—improving the working life for employees by fitting work into their increasingly complex lives and family structures, while also improving work efficiency and effectiveness. Regus suggests the seemingly mass adoption of flexible work arrangements is a natural effect of the novel, challenging

circumstances global businesses have been facing. Many economies are only regaining their footing after a heavy fall while others in high-growth economies are scaling previously unimaginable heights. Nevertheless, businesses the world over are determined to be prudent to avoid the pitfalls of unnecessary overheads. In developed economies, there is a need to contain costs to return to full profit. And, in emerging economies, rapid growth must be grasped without incurring escalating and uncontrolled costs. The cost advantage is immediate and undeniable in this case. Office space for a single employee costs companies roughly between $4,000 and $11,000 per annum. Blooming economies like ours and China’s are at the lower end of this range while Japan is the most expensive. In Western economies office space cost per employee is around continued on the next page

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The Ticker

A Perk No More continued...

The general perception is that Indian employers haven’t woken up to the benefits of flexi work schedules, and that the corporate work culture here encourages facetime, and hours spent in office is a measure of productivity and commitment. Interestingly, this study found that 70 per cent of Indian and Australian businesses are particularly appreciative of the benefits of the flexi culture. Choked peak hour traffic and

May, it seems, has been about agreements. Sanjiv Bikhchandani, founder of InfoEdge, is set to invest 10 crore in Policybazaar.com, a financial products bikhchandani comparison site...Zipping ahead, travel management solutions provider Concur has decided to buy a $40-million minority stake in Mumbai-based Cleartrip. com…Another Mumbai-based company ANI Technologies,

A quick look at some other key findings from the study: 1. Though 59 per cent of 4. Nearly six in 10 (59 per businesses allow some level of flexibility to workers regardless of their seniority, age or service record, 40 per cent declare that only senior staff are sufficiently trusted— a disadvantage for young families and junior talent.

2. In India, 57 per cent of firms said they would only allow senior staff to benefit from flexible working practices.

3. Over one-fifth of busi-

nesses globally (21 per cent) believe that flexible working practices are an asset to them in periods of sudden growth as they allow rapid scalability.

of two tonnes of carbon emissions each year. That’s a vast amount of energy that is also varyingly expensive across the globe. In spite of different energy costs across the globe no business wants to pay heating and lighting costs for unused space. But, most importantly 41 per cent of businesses globally believe that a staff which can avail flexible work options is more productive than fixed nine-to-five personnel. There can’t be a more compelling reason to go the flexi-route.

cent) Indian firms believe that flexible working schedules costs less than fixed office schedules.

5. Seventy-nine per cent of

businesses in the US regard flexible working as more family-friendly, than fixed office working.

6. Sixty-two per cent of American firms are likely to allow employees some flexibility regardless of seniority compared to the global average (59 per cent).

7. Thirty-three per cent of

UK firms said flexible working arrangements motivated staff positively.

long distances are likely to have impacted the response of Indian businesses. Lengthy, exhausting commutes negatively impact staff mood, health and productivity. Nearly 90 per cent of commuters here complained of traffic and overcrowding compared to the 82 per cent global average.—Inc. India.

talwar

running a taxi service firm Olacabs.com, has raised its first round of funding from angel investors Anupam Mittal and Rehan Yar Khan, primarily to add some 900-odd taxis to its fleet…More all bottled up funding news. Nexus Venture Partners has given 9 crore to Greywater Technologies, which offers packaged products for water and waste water treatment.… Intellecap, an advisory firm, is also doing its bit to boost growth in social entrepreneurship, by launching Impact Investor Network (I-cube N), a platform for high-net-worth corporate individuals and houses keen on investing in enterprises...Off-the-bat news, Noida-based BPO EXL Service Holdings, founded by Rohit Kapoor and Vikram Talwar, has acquired Outsource Partners International, a finance outsourcing service provider, for $91 million. —Inc.India

PPHOTOGRAPH BY SUBHOJIT PAUL

$7,000 although differences within a single country can be enormous with space in London, for example, reaching $19,000. Smart flexible options allow businesses to reduce office space by as much as 30 per cent, and the cost savings are evident. These cost advantages have a positive environmental impact too. Reports indicate that workspace for each employee in a services industry business generates the equivalent

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RESEARCH CORNER

No place like home

The study: The Social Attachment to Place by Michael S. Dahl, Aalborg University; and Olav Sorenson, Yale School of Management; published in the journal Social Forces.

No Gender Stereotyping, Please (From top left) Jessie Paul, Prema Sagar (seated), Neetu Bhatia, Meena Kapoor and Geetu Verma.

ILLUSTRATION BY PC ANOOP

I’m Every Woman A networking event for ‘business women’ sets the record straight Apparently if women-owned businesses were a country, it would have the fifthlargest GDP in the world. Women entrepreneurs mulled over this, and more, over cocktails and munchies at a networking event held by Dell in association with The Indus Entrepreneurs (TiE). The New Delhi event gave leaders of women-owned businesses the opportunity to exchange notes and best practices, and discuss the unique challenges of running high-growth businesses through crisis and boom times. Interestingly, most participants and all the speakers preferred not to focus entirely on women­—their stand: man or woman, it’s tough being a business owner. Prema Sagar, founder of Genesis BursonMarsteller, reminisced about building one of India’s finest PR firms. “The challenges remain the same for men and women, be it raising capital in the early years or attracting and keeping a motivated talent base.”

Other speakers, including Jessie Paul, founder of Paul Writer, a marketing firm, and Geetu Verma, executive director of Innovation, Pepsico International, bounced off ideas for business networking. Paul advised working out an ecosystem of “micro-favours” and using social media to create a support base. Verma admitted that “pre-wiring” and networking could receive easier green signals on important events. “If you aren’t good at this, hire somebody who is,” suggested Verma. Discussions also centered on how technology drove business management, growth and leadership. Neetu Bhatia, founder and CEO of Kyazoonga, the online ticket booking company, focused on this. For Dell, this event was a curtain raiser of sorts for the Second Dell Women’s Entrepreneur Network, which will be held at Rio De Janeiro in Brazil early June. —Shreyasi Singh

The finding: Proximity to family and friends is a more important factor than wages when people consider a new job. Employers need to offer significant pay hikes to persuade prospective hires to give up social attachments. The methodology: The researchers analysed employment trends in Denmark, because of the country’s unusually rich database of labour statistics and its mobility patterns, which are similar to those in the US. They found that blue-collar workers who moved more than 40 miles from hometowns usually commanded substantial pay increases. The takeaway: Entrepreneurs need to be mindful that location will bear on the talent and skills of hires. This is an especially important consideration, as a company expands and requires workers with different types of expertise. Caveat: the data was collected prior to the recession, in a fullemployment environment. What’s next: The authors’ latest research shows that entrepreneurs who locate businesses where they have strong ties perform best, because they are able to tap their communities for employees and funding. —J.J.M. JUNE 2011  |  INC. |  11

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Growing India’s Wanderlust Tempting travel deals are just a click away

The heat is on. We are not talking about the rising mercury but this season’s hottest discounts, up for grabs at Vamoose.in—the country’s first group travel portal. Vamoose offers holiday packages at discounted prices. And when they say discount, they mean it. Some deals get you up to a 50 per cent slash. A venture started by leading travel firm, Travel Mart India, Vamoose has lined up a bevy of attractive domestic and international tours. But, as a group buying portal, you’ll need a minimum number of people to activate a package before it can be bought. It might seem a hitch. But, it’s only because a group of people buy a deal that those unimaginable prices are possible. Manoj Gursahani, the venture’s founder and CEO, is sure of success. Launched in February, the portal already gets more than 1,000 hits a day and has nearly 30,000 registered members. Its packages to Indonesia, Thailand and Singapore are a hit among “price sensitive” Indians.—Sunaina Sehgal What is the vision behind Vamoose?

It is India’s first portal that offers vacation packages to groups of people at a time. Vamoose offers international and national deals at competitive prices. So far, we offer trips to Kerala and Himachal in India, as well as deals to travel to Thailand and Mauritius. The deals are heavily discounted, sometimes even up to 50 per cent. Can you take us through the process? How does a user avail the packages?

The user signs up for free. He or she pays for a desired package online. But the paid-for deal is not immediately activated. It “tips” or gets active only when a minimum number of vouchers are sold. The members have to act in a limited time bracket. If a certain number of people, say 10 of them, buy the deal, it gets

Cool Proposition Gursahani’s deals are up for grabs for the prudent traveller.

activated. If the deal fails to attract buyers, it is not made available to the customer and the money is refunded. What is your revenue model?

Every day, Vamoose sends out a newsletter to its registered users detailing the new deals. Members get about a week to purchase vouchers. The deals are valid for six to nine months. The idea is simple. Consumers get all the price benefits of a bulk purchase as they buy as a group, but retain the flexibility of travelling at their convenience, anytime within the validity period. On every transaction we earn about five to seven per cent. The concept has worked internationally. Will it be successful in India?

The response has been very positive. Indians are price sensitive. We are crazy about

value deals and discounts. Indians jump at any opportunity to travel the world at a reasonable price. Actually, they already have that option with Vamoose. Right from the day we launched, we have been selling 25 to 30 packages a day. What are the main challenges of this model?

The one hiccup we face is trying to convince the hospitality community. They seem to be wary of the concept. But we have demonstrated to them that we aren’t only an e-commerce partner but also an extension of their marketing team. We help market their properties by clubbing them with our deals. Our newsletters are attractively detailed. We vividly describe the location and special features of hotels we offer in the tours, including information on a property’s heritage, history and its owners.

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Crunching the numbers

LABOUR COSTS

WORK-LIFE BALANCE

Average hourly compensation costs (wages, benefits, payroll taxes) for manufacturing workers, out of 34 surveyed countries:

Share of small-business owners who say they would rather have more time than more money:

1. NORWAY

$53.89

30%

14. USA

$33.53 34. PHILIPPINES

$1.50

WAKEFIELD RESEARCH/BROTHER INTERNATIONAL

BUREAU OF LABOUR STATISTICS

THE ECONOMY

Jobs Job creation in the United States in 2010:

Wages Average pay for employees (salaried and hourly): HIGHEST RATE:

Massachusetts

$25.34/hour MOST JOBS ADDED:

Texas

235,700 LOWEST RATE: MOST JOBS LOST:

South Dakota

$16.02/hour

New Jersey

17,000 BUREAU OF LABOUR STATISTICS,

START-UPS

Amount of venture capitalist investments in 2010, nearly 20 per cent more than in 2009: MARKETING

Portion of consumers who have “unliked” a company on Facebook because of excessive postings:

NATIONAL VENTURE CAPITAL ASSOCIATION

63%

CUSTOMER SERVICE

Share of consumers who have unsubscribed to a company’s e-mail list because of excessive e-mail:

Share of small-business owners who consider the ability to respond quickly to customerservice issues the biggest benefit of running a small business:

EXACTTARGET

WAKEFIELD RESEARCH/BROTHER INTERNATIONAL

54%

—Compiled by Andrew Shafer

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84%

A skimmer’s guide to the latest business books The book: Little Bets: How Breakthrough Ideas Emerge From Small Discoveries by Peter Sims; Free Press. The big idea: Most innovation is the product of discovery, not inspiration. Entrepreneurs, artists and similar creative types get out and about, seek insights from all around, test and tweak, and then test and tweak again. The backstory: As a former VC and collaborator with the Stanford Institute of Design, Sims knows his way around disruptive ideas. The incredibles: Sims does a Nemo-esque deep dive into Pixar, at which he seems to have camped out. He describes how the company inched into animation through shorts created to promote its hardware. Pixar teams spend time with their subjects, scuba diving in preparation for Finding Nemo and hitting Route 66 before Cars. If you read nothing else: In the chapter “Learning a Little From a Lot,” Sims celebrates restless curiosity with a charming profile of Tim Russert, a friend of the author’s parents who listened to everybody and was as interested in the observations of children as of distinguished adults. The chapter also reports on a fascinating study about what makes people lucky. (The lucky are open to interacting with all kinds of people and build lasting attachments to many of them.) Rigor rating: 8 (1=Who Moved My Cheese?; 10=Good to Great). Sims draws on a rich mix of secondary and primary sources, including interviews with Frank Gehry, stand-up comedians and top military brass.—Leigh Buchanan

ANTHONY VERDE

inc. data bank

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GET REAL BY JASON FRIED

The Art of the Handoff

Between the piles of paperwork and long lists of administrative chores, I was buried. For the first time in 11 years, I needed an assistant. But was I really ready to let go? My desk used to have a very large pile of envelopes stacked in the corner. It included notices from various agencies in the states in which our employees live, pitches from would-be business partners, personal correspondence, and too many other things to list. Under the desk was a box, which contained all of the stuff that had been crowded off my desk. At times, there have been multiple boxes. I didn’t ignore the stacks and boxes. But I didn’t exactly deal with them, either. Well, I always took the first action: I opened the letters and took care of the urgent stuff, such as paying the bills. But the bulk of these papers required some measure of detailed follow-up or further thought or action. And that’s generally where I dropped the ball. Sometimes, I would stare at that stack of envelopes or the boxes under my desk. I wouldn’t actually do anything about them; I would simply stare and think that they were symbolic of just how overwhelming the administrative side of my business had become. It wasn’t just paperwork. It was phone calls: getting back to the landlord about some issue with the parking garage, contacting our payroll provider to settle some tax issues, searching out new health care plan options, making sure people who helped us out got thank-you notes. The list went on and on. 37signals, the Chicago software firm I co-founded, has been growing fast, but the administrative responsibilities have seemed to grow even faster. I’ve always shared these responsibilities with my partner, David Heinemeier Hansson. Though we both take pride in being efficient and getting stuff done, we found ourselves being distracted from focusing on our products because so

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much time was being sucked away doing—or stressing about—administrative work. We needed help. It was time for us to find an executive assistant. It sounds duh-obvious, but this was kind of a big deal for us. In the 11 years we’ve been in business, 37signals has never hired someone who didn’t directly affect our products. We hire designers, programmers, system administrators, customer service people, data analysts—employees who have a direct impact on how our products look and work. But we haven’t much bothered with administrators or managers. What’s more, delegating isn’t easy for me. Even though the paperwork and other chores were piling up, I still had a hard time letting go. I have a feeling I’m ILLUSTRATION BY PC ANOOP

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GET REAL

not alone in this. It’s tough for the person who started the business to begin to let go. For more than a decade, I’ve been involved in every decision at this company, from which hosting company to use to what brand of paper towel goes in the kitchen. When you’re that used to having every decision run through you, it can be a bit unnerving to surrender control. I understand that it’s silly to believe that every small decision needs to run through you. But it’s such a primal instinct when your business is your baby.

“researched and recommended local floral arrangers for weekly flowers for the office.” This way, whoever was applying would know exactly the kind of work he or she would be expected to do. (You can read the job posting at 37signals.com/svn/posts/2544were-looking-for-an-office-manager-executive-assistant). We posted the ad on our company blog, Signal vs. Noise, thinking that the unusual approach would help narrow the field of potential candidates. It didn’t quite work out like that. Instead, we were bombarded

I understand that it’s silly to believe that every small decision needs to run through you. But it’s such a primal instinct when your business is your baby. So we set out to find an assistant: someone to assist me, David, and anyone else at the company who needed help with administrative tasks. Since we’d never hired for this kind of position, I went online and reviewed a bunch of assistant and office manager job postings. But the listings didn’t really do much for me. This is a problem with job listings in general: They don’t seem to describe an actual day’s work. They’re heavy on skills but not actions. We decided to go in a different direction to locate our new assistant. Instead of a boring list of skills—this software, that many years of experience, “team player,” etc.—we wrote a list of 26 things that this person would have done in a week had he or she been working here. The list included things such as “booked two hotel rooms and two flights for out-oftowners”; “packed up and shipped out about five copies of Rework to various people”; “coordinated with Abt Electronics to schedule installation of four flat-panel TVs”; and

by hundreds of applications. We were a bit overwhelmed by the response. We sorted through them and began to interview a few folks who seemed most promising. We realised pretty quickly that either we left something out of the ad or this was an especially hard position to hire for—at least according to the way we usually hire people at 37signals. In the past, we’ve always looked for people who are in it for the long haul, people who are truly interested in developing and growing with the company. Though we’ve hired a bunch of new employees recently, most of our crew has been with us for years. We interviewed some really good people. The problem: most of the best candidates saw the job as a stepping stone. They wanted to start out as an assistant and end up somewhere else. That’s completely fair, of course, but it didn’t do us much good. We needed an assistant who wanted to be an assistant—someone who actually enjoyed sweating the details at a small but growing

company, someone who would excel and grow, but not grow out of the job itself. Usually, we fill job openings pretty quickly. But in this case, we wound up interviewing dozens of candidates over several months. And then, finally, we found Andrea LaRowe. She’d been doing a similar job at a non-profit organisation here in Chicago, so she was perfectly qualified. She also emphasised how much she actually enjoys her work. She started on February 28. I have to admit that in the week or two before Andrea started, I was nervous. I looked at the pile and the box and wondered if I really would be able to let go. But my worries were unwarranted. Once I was able to get a few things off my plate, it became easier and easier to let go of nearly all the administrative chores. And it didn’t take long for Andrea to have a big impact. Suddenly, everything is taken care of. There are no lingering issues with a question about our 401(k) or health care plan. Our catered events come off without a hitch. Travel arrangements have been spot on. Research projects have been researched. Applications and forms have been filled out and submitted. You know how you can tell when you’ve made a good decision? If you feel like you waited too long to make it, then it’s a good decision. That’s how we feel now. We should have done this a long time ago. And here’s the real bonus: David and I have clearer minds. We know the administrative details are taken care of. We’ve refocused on the work, the ideas, and the important decisions that need to be made about our products. And my desk, finally, is clean.

Jason Fried is co-founder of 37signals, a Chicago-based software firm, and co-author of the book Rework. JUNE 2011  |  INC. |  15

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PASSIONS

Life Outside the Office

In 2008 Manu Agarwal had an epiphany—he was afraid of relationships. His fear stemmed from a childhood incident. Agarwal’s buddy changed cities and snapped all ties. Agarwal blamed himself. He was 10. The boy steeled himself to believe that a way to never getting hurt was to not invest emotionally in people. So, the founder of the online home shopping site, Naaptol, distanced himself from his father, family and work colleagues. Then Oneness University, a spiritual school based out of a Chennai suburb, happened. “My wife insisted that I enrol,” says the 40-year-old. Deeksha, a course comprising yoga and meditation sessions helped Agarwal identify emotions that were “holding him back” and reap more than emotional benefits. “It’s helped me manage Naaptol better. There’s little conflict in my office, politics is almost non-existent, goals are better defined and ideas are welcomed.” Naaptol earns about 1.5 crore per day. It has 1,000 employees and does 5,000 transactions in a day. But, the best part isn’t productivity at work. “I am close to my dad now,” says Agarwal.

“With this, I feel I can take the firm to a billion dollars.” 16   |  INC. |  JUNE 2011

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Manu Agarwal

Favourite asanas

Course content

A Tibetan asana called the “Fountain of Youth” and Surya Namaskaar

Completed several seven-day yoga courses at Oneness University Enrolled in Landmark Education’s selfexpression and leadership programme Practices Indian and Tibetan yoga thrice a week

PHOTOGRAPH BY JITEN GANDHI

PASSION.indd 17

Yoga and Meditation

Must reads Freedom by Osho The Divine Love by Yoganand Paramhansa Power of Now by Eckhart Tolle

REPORTED BY SUNAINA SEHGAL

5/23/2011 10:38:20 AM


BALANCING ACTS BY MEG CADOUX HIRSHBERG

Sick Days

My mother always says there are problems, and then there are troubles. Problems are hard, but most can be solved. Troubles take you down. Sometimes they take you out. Gary and I began the millennium flush with troubles. In 2001, I learnt I had advanced breast cancer. Six months of “the killing cure” ensued: surgery, chemo, and radiation. Just as I was finishing my treatment, Gary’s two brothers entered the hospital. The twins were born with a rare form of muscular dystrophy. By the time they reached age 39, their heart muscles had become irreparably damaged. I made it through fine. Gary’s brothers both died, in early 2002. As he was coping with my illness and his brothers’ deaths, Gary was in the midst of protracted negotiations with Groupe Danone to sell part of our business. Stonyfield Yogurt relied on Gary’s energy and ideas to move forward, and the Danone deal required his unwavering concentration. But running back and forth to hospitals scrambled Gary’s schedule and diminished his focus. His mind ricocheted between high-level problem solving and existential dread. A loved one’s serious illness can absorb an entrepreneur’s energy and concentration for months or years. Those who back-burner their businesses for that long risk losing them, even as medical bills mount. And, of course, entrepreneurs are as vulnerable to disease as anyone else. I recently read an

online article in which company owners listed characteristics essential to success. Good health was right up there: many described themselves as people who “refuse to get sick”. Illness equates to weakness, which is antithetical to the entrepreneur’s self-image. He starts off defiant, but the disease wears him down. The body gives the spirit only so much autonomy. Illness is the rudest awakening to the dream of entrepreneurial control. All those mechanisms meant to balance family and the business collapse. Priorities are reshuffled when instinct (must care for self or loved one!) rams into expediency (must preserve paramount financial and psychological investment!). The fear of losing everything is compounded by the fear of losing everything. When it comes to being bad patients, doctors have nothing on entrepreneurs, who believe they can heal themselves the way they do everything else: by force of will. The business owner simply reframes her condition as another set of numbers to beat or an unex-

PHOTO BY PHOTOS.COM

Entrepreneurs strive to control their lives and fortunes—until illness strikes, and everything flies out the window

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BALANCING ACTS

pected downturn that requires an aggressive response. Krissi Barr, founder of Cincinnatibased Barr Corporate Success, took this approach to coping with early-stage breast cancer. “I am quarterbacking my treatment the way I would a project at work,” Krissi told me. Her company, a strategic planning consultancy, is growing; her calendar is full. But Krissi is her shop. When she’s not working, there’s no revenue. So she found an oncologist who let her schedule chemo

cancer’s return. Yet she understands that what threatens her husband’s life also gives that life meaning. The stress intensifies when leaders keep their conditions secret. “Sue” runs a company with her husband, “Jay,” who suffers from debilitating depression. Sue doesn’t feel she can level with their employees. But sometimes Jay’s affliction is so obvious, she assumes everyone must know. When Jay descends into his private hell, Sue covers for him—doing his work, making excuses for

pol, California. When his 13-year-old son, Kai, was rushed to the hospital with a lifethreatening strep infection, Drake and his wife, Nioma, planted themselves at the boy’s bedside. Kai went into septic shock and was hospitalised for a year. (He is well now and back to being a normal teenager.) Fortuitously, Drake had recently hired a successor CEO. Instead of the year long transition he had anticipated, he made a clean break with day-to-day operations, not returning to the office for seven months. (He is now chief visionary officer and chairman of the board.) “I’m right up there with other entrepreneurs in terms of being a control freak,” Drake told me. “With Kai’s illness, everything was out of my hands. It was an exercise in letting go.” Such priority-reordering exercises often continue long after the entrepreneur or loved one has healed. After recovering from a severe staph infection that way laid him for months, Tim Barrett, COO of Barrett Distribution, in Franklin, Massachusetts, devoted more time to his three young children. “A gravestone near my parents’ has the guy’s company name and logo on it,” he said. “That’s the last thing in the world I’d want to be remembered for.” If illness has an upside, it is the opportunity to remember our true values. In February, a deadly earthquake struck Christchurch, New Zealand, where Gary was giving a speech. Even before I heard the news on television, he had phoned to let me know he was OK. (His hotel was destroyed. His clothes and money went with it.) So, a close call. And a reminder that fate can take it all away at any time. All we can do is keep building. Our businesses, we hope. Our lives, absolutely.

If illness has an upside, it is the opportunity to remember our true values. around client meetings and speaking engagements. When Krissi’s oncologist told her to cut back, she did—on volunteer commitments, not on her business. Krissi’s husband, Dan, accepts his wife’s decisions. “It’s good for her to stay determined,” he says. But other families argue that illness nullifies all prior agreements over how much the entrepreneur will work. The husband who grudgingly accepted his wife’s long hours now agonises that they threaten her health. Yet if he insists she put her dreams on hold, will he crush her spirit and breed resentment? If he begs her to step away from their sole hope for financial security, does he court greater calamity? Jerry Gonzalez, founder of the food company Maria Elena’s Authentic Latino, in Valencia, California, was found to have Stage 4 colon cancer in 2007. Convinced he must stick with the start-up or lose it, he continued taking sales meetings and dragging himself to the office. He is now free of cancer but fears its return. “I feel as though I’m in a race,” says Jerry. “I need to get my family on sound financial footing.” Karen Gonzalez, Jerry’s wife, feels differently. “My thought is, Are we wasting time?” she says. “Should we give up everything— have a slower pace of life away from LA and spend quality time together?” Karen worries that stress and long hours will precipitate the

his absences, and reviewing all his decisions. Even when Jay is well, she buffers bad news, fearful lest some small setback trigger months of incapacitation. Sue’s and Jay’s desire to hide his condition means they have few confidants and little support. Of course, the person with whom Sue would naturally share the heaviest burdens—in business and in life—is lost to her. The entrepreneur’s confidence that he can beat his illness doesn’t extend to the illness of a loved one. Sickness in others often rattles company founders, who fare poorly when there’s nothing they can do. Although Gary would have preferred a lighter load during our year of woe, the 12-hour workdays at least offered refuge from his sense of helplessness. Others take advantage of the flexibility afforded by ownership to modify how they work. One founder I spoke to lost his wife to cancer when his daughter was eight. A single parent of a child with an autoimmune disorder, he reduced his work hours and travel to shepherd her care. With his daughter stable, he remains focused on her well-being. “My business would have grown more had it not been for her illness,” he says. “But I make enough to pay the bills.” Sometimes, cutting back is not enough. Drake Sadler is co-founder of the tea company Traditional Medicinals, in Sebasto-

Meg Cadoux Hirshberg (mhirshberg@inc.com) writes a regular column about the impact of entrepreneurial businesses on families. She is married to Gary Hirshberg, president and CEO of Stonyfield Yogurt. JUNE 2011  |  INC. |  19

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Your Business Toolbox

THE GOODS

Your Cosmos in a Case Office bags with style and substance Need to stuff that well-thumbed diary or a last minute-sandwich into your laptop case and still go easy on that shoulder? Here’s a look at office bags that aesthetically combine space, sense and sensibility for those forever on the go. ­ —Preeti Singh

COURTESY COMPANY (4)

TARGUS 15.6” HUGHES™ LAPTOP CASE

Designed to fit laptops with upto 15.6” screens, Targus’s “integrated laptop protection system” provides additional shock absorption for your daily jostle. It’s water-resistant and has a stain-guard coating. The soft-grip leather handles gently mould to your hand, even as accessories remain scuff-free with its scratch-resistant accessory pockets. The padded shoulder strap is both adjustable and removable. This is a delightful mix of sophisticated style and day-to-day functionality. price: 4,695 IMAGING BY SHIGIL N

THE GOODS.indd 21

SAMSONITE COTAN, 14.1” LAPTOP BAG

The rather sleek and lightweight laptop bag from the premium luggage-maker spells out style and reliability. High on the aesthetic quotient, it comes with standard features such as a convenient organisation pocket in the front, a padded laptop compartment, a smart sleeve with hidden zip pocket and a carrying strap with a leather shoulder pad. It is available in black. The Cotan range is easy on the eye, but packs no punch as far as special features go. price: 5,199

SAMSONITE QUADRION PRO, MEDIUM LAPTOP BAG

Tired of emptying out the contents of your laptop bag at security checkpoints? Samsonite’s Quadrion Pro allows business travellers to breeze past security checks without removing the laptop from its case. Only if you pack nothing above or below the laptop compartment other than the notebook, the bag can be unfolded and laid out flat on the x-ray belt. Well, it loses its magic if you’re the kind to use it as a mini-suitcase. Also available in “cobblestone” for those tired of black. price: 6,949

CASE LOGIC AQUILA-11” SMALL FORMAT MESSENGER

For those who find it easier to whiz around town with a Netbook, Case Logic’s Aquila11” Small Format Messenger is the perfect option. With a zippered expansion one can either stuff the bag or keep it slim. Its Quick Stuff pocket and the mesh-zippered space under the flap shape-shifts to fit junk. It comes with a security strap that snugly wraps around the leg of a café table or public transit seating. It’s PVC free and comes with a 25-year warranty to boot. price: 5,758 JUNE 2011  |  INC. |  2 1

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THE GOODS

Products + Services

FIRST PERSON

Crystal Clear Voice A quick brush up on Bluetooth headsets Scheduling long calls with colleagues, clients and investors is the best way to make the most of long commutes. All you need is a Bluetooth headset that lets you talk and drive—without the traffic cops hailing you down, or your ears burning up.—www.thinkdigit.com

PLANTRONICS M100

Most Bluetooth headsets suffer from either lack of call clarity, or they’re uncomfortable. Plantronics M100 offers a huge improvement on both fronts. Call clarity is good. It’s also comfortable during prolonged use, weighing just 9grams and measuring 8mm. The M100 comes with three differently-sized gel ear-tips—a necessity for those who have trouble with standard sizes. There are other advantages, including a multi-point for connecting two phones simultaneously. Its charcoal gray exterior looks professional and sophisticated. A rather steep price, though. price: 4,199

How I use Mavenlink to collaborate with staff paul gladen, founder, muzeview, missoula, montana

I run a market research firm with a virtual office. My two partners and I employ 20 people around the country. Until recently, we collaborated using only Google Docs and Google Calendar. In January, we began using Mavenlink, a more sophisticated online tool. To create a workspace on Mavenlink, I click a button to start a new project and give it a name, budget, and finish date. Then, I can invite employees, contractors, and clients to join the workspace via e-mail. We can chat in a real-time message feed and upload documents directly from Google Docs. We can also create and assign tasks, which appear in one list, and update the status of each one. Due dates sync with Google Calendar. Each morning, my partners and I have a conference call to review the status of projects on Mavenlink. On my account homepage, I can view timelines and changes made to workspaces and peruse a list of tasks assigned to me. During the day, I receive e-mail updates when someone adds a message to a workspace feed. If I reply by e-mail, my message appears in the feed. We pay $39 a month for our account, which allows me to create unlimited projects with unlimited collaborators. It also includes 20GB of file storage. —As told to J.J. McCorvey

JABRA WAVE

The Wave is a good handset for those looking for something that may be used with two phones. It’s rugged and looks nice, though we’d have liked it to be slightly slimmer and lighter. Still, it does everything that it claims to be capable of. With a wooden partition, it needs to be around four or five feet away from your handset to perform reasonably well. Voice tones and volume levels are pretty good too. It’s capable of pairing up with eight devices in total. As long as you have a clear line of sight, Wave performs well up to a distance of 9 feet with a bit of distortion creeping in beyond that. price: 3,899

LOST AND FOUND

Ready to tap your inner private investigator? A real-life version of the tracking devices seen on detective shows, the Garmin GTU 10 lets you keep tabs on prized possessions. The waterproof GPS transmitter, roughly the size of a cigarette lighter, weighs 1.7 ounces and comes with a case, a carabiner ring and an adhesive strip for attaching it to objects—say, a briefcase or a dog collar. After registering the GTU on My.Garmin.com, you can create up to 10 “virtual fences” of any size, within the continental US. If the device enters or leaves one of those areas, Garmin alerts you by e-mail or text. You can also go online to see the gadget’s most recent location and the past 10 points tracked. cost: $200 for the device, and one year of standard tracking, then $50 a year.—Adam Baer

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Work + Play

THE GOODS

tech wise soham raninga

Five must-have apps for your BlackBerry Free, and positively fun! We know many of you BlackBerry users believe that only “Droids” and “iPhonics” get to

An antimicrobial gym towel

have fun. However, have faith—BlackBerry users have their own special access to the wonderful world of apps as well. Here’s our list of the best available. Warning: install them at your own risk. And, don’t blame us if you get addicted.

GOOGLE MAPS VERSION 4.5

BlackBerry’s default navigation app isn’t great and most likely you’ve never even bothered to check it out. But, Google Maps is free, fast and accurate. You can search for directions, map routes and select medium of travel (foot or car). It helps locate restaurants, fuel stops, malls and similar destinations. One can set the application to remember regular routes or mark a particular destination for future reference. One will need to activate internet connectivity on the BlackBerry to enjoy this free service. It’s totally worth it. FOURSQUARE

With Foursquare one can check into restaurants, malls and popular destinations. The location-based app offers a cooler way to explore a city and notify friends about places that have been visited. One can link the Foursquare account to Twitter or Facebook to build a “friends’ list”, which, of course, depends on the number of your friends using Foursquare. The app awards users with points on every check-in. One can earn badges such as newbie, adventurer, explorer and super-user depending on how frequently one visits venues. The most useful feature is its tips option. You can read “tips” left by friends or leave tips for them. Imagine receiving tips on what dishes to try out or more importantly what not to in a new restaurant. OPERA MINI

That BlackBerry’s default browser sucks is no secret. Thankfully, one doesn’t have to live with it anymore. The Opera Mini is an award-winning browser especially made for smartphone platforms. It is noticeably

faster in performance and comes with a desktop-like user interface with similar features and settings. The finely-tweaked data compression used by the Mini also helps cut down data usage and reduces long, browsing bills. It supports all the latest features such as tabbed browsing and pinch-to-zoom for touch screen BlackBerry devices. This is so great—it should be made a part of the default app kit. UBER SOCIAL

Formerly known as “Uber Twitter”, an excellent Twitter client for smart phones, Uber Social has actually got a lot better. It is the smoothest way to tweet and operate your account via the BlackBerry. It supports images, videos and adds a nifty feature of allowing one to post directly to the Facebook page also. One can see live Twitter updates without waiting to check for them. Bottomline, if you are a “twitterati” download Uber Social now. DATABACKUP

No points for guessing what this one does. DataBackup gives its users a behind-thescene look at the crucial business of backing data up. There’s nothing fancy here, no cloud integration, syncing or re-syncing— just plain, old-school backup the way it should be. The app backs up personal data onto an SD card, and one can have a physical copy too. Agreed, it’s not the most glamorous app but we are talking of a BlackBerry here. You probably can’t afford to lose your data. These apps can be downloaded from BlackBerry’s app world or simply Google them. Remember, they’re all free. So, get to it.

The “aha” moment: Thomas Davis was working out at a Pittsburgh YMCA one afternoon in 2009 when he noticed his fellow gym-goers moving their sweaty towels from one machine to the next. Davis, a former consumer products consultant at Pfizer, thought there might be demand for a more hygienic gym towel. R&D: Davis shared his idea with a buddy, Pittsburgh Steelers Hall of Famer Franco Harris, who agreed to be his partner. They learned most antimicrobial towels on the market were treated with chemicals, so they researched natural options and came across studies about the bacteria-resistant properties of silver. They tested fabrics and decided on bamboo, which was softer and more odour resistant than cotton or nylon. Next, they found manufacturers in South Carolina to make the towels and apply nanosilver particles to them. Friends who tested the first batch of towels gave them a thumbs-up. Hitting the market: Pittsburghbased SilverSport has sold 50,000 Silver Towels, for $20 to $35 each, since their debut in Dick’s Sporting Goods stores nationwide in November. SilverSport has also unveiled several products, including an anti-microbial yoga mat. —Lindsay Silberman JUNE 2011  |  INC. |  2 3

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THE GOODS

Beyond Business

Things I Cannot Live Without... Smart wheels I love to take long drives in my Mercedes-Benz

Always prepared Credit cards are a must have in emergencies

Song-happy Music helps me breathe

JOINT MD, PVR CINEMAS

Sanjeev Kumar Bijli PVR’s joint managing director Sanjeev

Not without my phone The BlackBerry ensures I am always in touch with my office

Kumar Bijli is quite the conflicted soul. He loves to travel and his work takes him across the globe. But, he also prefers to be in the thick of things even when he isn’t in office. In this predicament, it’s the BlackBerry Curve to the rescue. Needless to say, Bijli dotes on his Curve, his “tellies” (yes, more than one) and his DVD player. But, it’s his iPod which keeps him “sane”. Whether he’s listening to Bruno Mars or watching Desperate Housewives— Bijli relaxes when he’s surrounded by gadgets. But, it’s the drive back home in his MercedesBenz at the end of a work day that really helps him unwind.—Sunaina Sehgal

...and What I Covet An apartment in London This city’s vibe makes it the coolest place on the planet

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EARN YOUR SPURS BY JESSIE PAUL

Micro-favours: the currency of social networking It’s not about large financial benefits but small exchanges which lead to happy bonding I’m sure this has happened to

you. You accept someone’s invitation on LinkedIn and the very next e-mail you get says “buy something from me”. It just reinforces the perception that social networking is something only desperate salespeople do. Yes, there are some boors out there, but with increasing penetration of social media, they are a shrinking percentage. I recently spoke at a TiE-Dell Women’s Entrepreneur Network event in Delhi. It was surprising how very few people “confessed” to networking. There was also the question of whether face to face is equal to online. Possibly this is because networking has a sleazy, quid pro quo ring to it. But, that’s only because it is being done wrong. So let me attempt to reposition this art—let’s call it the “microfavours ecosystem”. You are genuExtend Yourself Ask not inely in the network to help people without expecting anything go one step further and add some what your network can do for you, but what you can in return. We are not talking big, financial benefits kind of help, micro-socialising you will be a very do for it. but just small sharing of knowledge or influence kind of help. popular person. By micro-socialising, Examples of micro-favours in a business context are—forI really just mean doing those normal, warding a resume to your company HR, answering questions on your industry, polite things—congratulations on a job/baby/marriage, mentoring a job-seeker, or suggesting the best hotel in your town. Now, if you birthday wishes and so on.

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5/20/2011 1:13:53 PM


EARN YOUR SPURS

Doesn’t sound like hard work, does it? But the skeptic in you is still saying, fine, it isn’t much work but why do it? Because when you go out and fill the world with favours with no demand for returns, you will find an enormous amount of good karma flying back at you. No, this isn’t new-age mumbo jumbo. Generally speaking, people want to (a) help nice people and (b) help those who’ve helped them. If you enter the micro-favours ecosystem you’ll qualify for both of these. Unconsciously many people have created these micro-favour ecosystems. The ecosystems are composed for most part with classmates, neighbours, colleagues and relatives. What formal networking events and online tools do is allow you to enlarge this group to include friends-offriends and even strangers who interest you. These tools also facilitate easy exchange of these micro-favours and enable you to stay in touch with a large network without too much effort. At the networking event organised by TiE and Dell, I was surprised that so many participants, mostly women entrepreneurs, were squeamish about expanding their network. But, good acquaintances are like diamonds—to find a good one you’ll have to sift through a hundred. The ties within a professional network are tenuous. So, your probability of catching the attention of one is similar to average direct marketing response rates—2 per cent. Do the math—if you have only 100 connections, there are only 2 people available when you need them. If you have 1,000, then you have 20 sleeping acquaintances that might rouse themselves to aid you. Which is better? I’d like to draw a clear line of distinction between friends and acquaintances. Friends are people with whom you’ve shared experiences. And research suggests that most people cannot manage more than 150 friends, and of those only five to 10 are likely to be close. Acquaintances are people you know, but only in a narrow context—perhaps you have met them at an event, or you have kids the same age, or you have partnered on a project. If you’re reading Inc., you’re probably

an entrepreneur. What can you expect by investing in your acquaintances? Each network is personal, and what you get depends on what you put in—this is no golden goose. My network has been kind enough to help me with everything from speakers for events, to travel times between destinations, hotel bookings, media coverage and business referrals. If any of you are reading this, you know who you are, and a special thank you goes out to you. But the benefits go beyond the tangible. Since shifting from a corporate environment to a small start up, one of the big changes I dealt with was the absence of a large network of colleagues to socialise

tion, resist the temptation to sell them something or seek a favour. First do something for them. I have mixed feelings about Facebook. The site itself encourages you to invite only people you know to connect with you. And it is perceived, generally, to be more of a place for friends to hang out. But, as it gets more popular, I find the tight definition of “friends” is no longer applicable. Facebook has also added features which make it possible for you to connect with acquaintances and share business information. If you’re a Facebook user already, then perhaps you should go ahead and take the plunge of inviting your acquaintances too.

Good acquaintances are like diamonds—to find a good one you’ll have to sift through a hundred. with during office hours at the coffee shop or water-cooler. My online network stepped in to fill that void by providing me with companionship when I needed it. A large network also means that you can tap into the expertise of many—an entrepreneur deals with many variables, and often cannot share his concerns with others in the organisation. Your acquaintances can help you with good advice and mentoring. So how does one go about developing a robust network? Begin connecting with all the people you already know. LinkedIn is a good place to start building your professional network, and once you enter the details of your career and academic qualifications, it’ll helpfully point you to people you are likely to know. Blast invites to all of them. Thereafter, invite folks you don’t know, but would like to. Become a member of a few relevant groups and engage in discussions. Once your friends and acquaintances have accepted your invita-

Twitter is my favourite because it allows an instantaneous connect. Agreed, the links are tenuous, but among the social tools this is the one that has the highest potential to convert acquaintances to friends. As for me, there are around 7,000 people I am connected to—across platforms— who are friends, future friends or acquaintances. In their own way, each of them has made my world a better, warmer, kinder place. So, happy bonding.

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 . JUNE 2011  |  INC. |  2 9

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Some Business Magic Tapaas Chakravarti is collecting awards, profits and clients—and having a blast doing it.

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Growing up, he lived within the pages of his treasured comic books—making friends with superheroes and battling demons. But,Tapaas Chakravarti, Chairman and CEO, DQ Entertainment (DQE), wasn’t content living vicariously. He’s animated his childhood fantasies into a blockbuster entrepreneurial tale. With 218 crore in turnover, DQE is today one of India’s best known animation firms, and an Emmy award-winning venture. BY SHREYASI SINGH PHOTOGRAPHS BY A. PRABHAKAR RAO IMAGING BY BINESH SREEDHARAN IMAGES COURTESY DQ ENTERTAINMENT

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ooking back, life is almost like doing one big jigsaw puzzle. For Tapaas Chakravarti, a crucial piece on the puzzle board was what we all love— insanely fun comic books. Superheroes ruled his mind, creating a world where anything seemed possible. His parents were convinced nothing good could come out of this crazed obsession, and hoped it was a phase their son would outgrow. But, Chakravarti hoarded comics even as a management graduate at the Benares Hindu University, eagerly waiting for train journeys home to raid book kiosks at railway stations. “My parents used to get very upset. You’ll even starve to buy a comic, they’d always tell me,” laughs Chakravarti, who at one point had a collection of more than 4,000 comics. Fortunately, the wild stories and zany ideas he grew up on didn’t drive him to penury. Chakravarti has in fact weaved those early indulgences into a cracker of a business saga, not unlike the exciting action comics he most loved. DQ Entertainment International (DQE), the animation and entertainment company he founded in 1998 is a leading production

house today that has worked with media giants such as The Disney Group, BBC Worldwide, Discovery Kids, Cartoon Network, Sony Pictures Entertainment and the Turner Group. DQE’s 3,500-plus team—the largest in the animation business the world over— has brought to life classical, iconic characters such as Mickey Mouse, Lassie, Iron

Man, Casper, Peter Pan, Mowgli, Charlie Chaplin, and dozens more across a range of formats—2D and 3D television series, home entertainment DVDs and more recently, stereoscopic big-budget movies. For the financial year ending March 2011, Hyderabad-based DQE clocked a turnover of 218 crore and pocketed a profit of 35 crore. Since it began 13 years ago, its

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productions have reached an astounding 30 million viewers in 160 countries. The good news is that this wild joyride isn’t likely to end anytime soon. “We are gunning for thousand crores in the next three to four years. That’s positively, definitely a real goal,” claims the avid toon lover. The beginning He might have had cartoons racing through his veins. But, Chakravarti didn’t have a single packed cell of business in his genes. The son of an Indian Railways officer, Chakravarti grew up in towns across Uttar Pradesh like Gorakhpur, Bareilley, Lucknow and Varanasi. His father wanted him to be an IAS officer. But, from his first case study at the Faculty of Management Studies, BHU, Chakravarti clearly knew he wanted to be an entrepreneur. “Nobody took me seriously. We were all middle class boys. People wanted to become government servants and join banks. Only I wanted to be a businessman.” With little access to capital and reluctant parents, there was no question of jumping headlong into business. Instead, Chakravarti storyboarded his career with a happy ending in mind—to build his own company. “I carefully chose the four companies I worked for, making sure that my role demanded putting management processes in place, creating new markets or building new businesses,” he recalls. He grew rapidly in his corporate career, working for companies like STPI, Coats (India) and Usha Fans through the 1980s. Along with his wife, he also saved, almost manically. He wanted to be ready when the time came. “I knew it will come in handy. Venture capital and private equity did not exist then.” And the time did finally come. In 1991, he began Data Quest Management and Communications with two other partners. Data Quest offered a range of services— market research, advisory on setting up factories and helping entrepreneurs raise funds. The company did well. But, within a few years, Chakravarti knew it was time to move on. A consulting firm wasn’t massively scalable and his heart lay in “doing something with entertainment.” Also, he

had by then managed to put together a decent seed fund for his “real” entrepreneurial adventure. His frequent travels to the United States for consulting assignments made him a witness to the animation boom in the country. Even in the US, dedicated cartoon networks for children sprung up only in the 1990s. Chakravarti’s friends in California—home to the most famous animation studios—told him that companies like Disney did outsource animation work to Philippines, China and Korea but weren’t happy with the quality they got. Chakravarti seized that insight and used “every contact possible” to meet people in production and animation companies in Hollywood. “These were informal meetings, mostly over coffee.

But, I gained a great insider’s view.” By the close of the nineties, he was confident there was a viable demand gap that needed to be filled, especially with an explosion of television and cinema viewing worldwide. The buzz around “digital” was also gaining ground. Plus, fed as he’d always been on a staple diet of cartoons, this seemed to him a case of perfect casting. “It felt like it was there for me, both personally and from a pure business point of view.” Entertainment, he knew, would survive even during recessions. “Viewership actually goes up during downturns,” Chakravarti explains. Fleshing it out Not that this journey was paved with fun and games. Animation was an alien

Toon Gyaan Since Chakravarti’s world teemed with car-

toons, he’s culled valuable life lessons and even management spiel from his comic strips. Here’s what his most-loved characters have taught him.

Iron Man (Marvel Comics)

I have read the entire series. He’s actually a regular guy who creates an armoured suit that gives him all those powers. Amongst all the superheroes, Iron Man stands out. He doesn’t inherently have supernatural powers. His power is vested in the technical prowess he’s created. That’s so realistic. He’s also incredibly humane.

Mowgli (The Jungle Book)

He’s the quintessential nice guy. He lives in the jungle against all odds. He’s brave and funny, but he’s also soft on the inside. Mowgli has all the traits that a perfect human being should have. He makes mistakes but he makes amends quickly. He’s a fantastic team player. And, he’s always helpful. He’ll even help an enemy out, like he does with Sherkhan. That’s the biggest management lesson here—you can’t succeed in an organisation without being a team player. It’s not enough to be a genius. You need to work with others. Mowgli demonstrates that beautifully. JUNE 2011  |  INC. |  3 3

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Lights, Camera, Awards! Over the last decade, DQE has amassed a fleet of prestigious recognitions. As early as in 2005, it was ranked among Asia’s Top 100 Private Companies by Red Herring. They have continued the winning run since, grabbing the Pulcinella Award at Cartoons on the Bay thrice, the Accolade Film Award, the UK Broadcast Award, the Gold Panda Awards in Sichuan, the BAF Asia Awards, the NZ Screen Awards and the London Manga Festival award. But, the one that takes pride of place in Chakravarti’s redwalled office is the Emmy Award—the Oscars equivalent for television—they won for Tutenstein in 2007. “When we were building the business, winning an Emmy was always a milestone we needed to reach,” says Chakravarti. DQE has 15 Emmy nominations to its credit. But, Chakravarti went to the ceremony for the first time in 2007. “We were nominated in five categories that year. The law of averages said we’d win.” They didn’t make the cut in the first four categories. And, when Tutenstein was called out as the winner in the Best On a Starry Trail Winning an Emmy Award was Animated the first milestone. Chakravarti’s not going to Programme rest till he gets his hands on the Oscars category, Chakravarti and his team almost missed the moment. “The presenter, a comedian, got the pronunciation totally wrong. We got up only when he repeated himself,” he recalls bemusedly. Co-produced with Porchlight, an American studio for Discovery Kids, Tutenstein is an animated series, based on Egyptian folklore and history. The entire series was produced at DQE’s Hyderabad office. Chakravarti’s got his starry eyes fixed stratospherically higher now. “Our next aim is very clear. We have to go after the big awards. The Oscars must come,” he asserts.

industry in India. “Bankers only thought of R.K. Narayan when we spoke of cartoons,” he recalls bemusedly. He pooled in his life savings with co-founder Rusy Brij, then vice chairman of Hexaware Technologies, to rustle up a 2-crore seed fund to begin with. Before they could even pitch for work, they needed talented workers who could create such work. And so, DQE began with opening the DQ School of Visual Arts, an animation school in Hyderabad, to train fine arts students on special effects and animation. He tells us excitedly, “That’s how Walt Disney began, too, in 1925 with a training school.” It took them nearly two years to get their first gig—a service project for a television series called Hoze Houndz, for Family Channel, a Canadian television broadcaster. Other pure outsourcing service projects like Benjamin Bear, Potatoes & Dragons and Jet Grooves followed. But, it was in December 2003 that things really changed with Mickey Mouse Club House for The Disney Group, a huge feather in the company’s cap, and a critical turning point. DQE was till then living absolutely “hand-to-mouth”, says Chakarvarti, adding that he didnt’ take a penny home the first three years. The project was special for Disney, too, because it was the first time Mickey went 3D. Today, they are in the middle of the fourth season of Mickey Mouse Club House, says Sumedha Saraogi, senior vicepresident of global business development and branding at DQE. With Mickey in their kitty, they quickly loaded their inventory with other loved characters such as Barbie, Casper and Todd’s World which went on to recieve five Emmy nominations for DQE. “We have consciously stuck to classic, iconic properties, and adapted them to suit the tastes of the 21st century audience,” adds Saragoi, elaborating on the strategy that’s today made DQE one of the top 15 production houses in the world, according to Screen Digest Belgium, a leading media-focused research and consulting firm. But merely executing his clients’ visions was never going to be

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enough for Chakravarti, both as a cartoon fanatic and an astute businessman. The service projects were simply a tool to forge relationships with all the big players—Disney, Niceklodeon, Cartoon Network and Dreamworks—and build production and management capabilities. “We knew we couldn’t scale till we got into co-production,” says he, knowing he was much like the minor-yet-talented Ranji player honing his skills before wielding the bat for Team India. A recent KPMG FICCI Report, Indian Media and Entertainment Industry 2010, clearly defines the pecking order of business models in animation. Pure outsourcing is a high volume, low value game. Co-production—partnering with overseas production houses—is the next major step up. Chakravarti had figured this out much earlier, even though several industry observers advised him to remain focused on “just executing” service projects. A keen observer, Chakravarti knew from the experience of other companies in India, Korea and Malaysia, that his company couldn’t survive, let alone scale, if they didn’t up the ante. To animate those plans, DQE needed big funds to be pumped into the system. And money did come, but not without Chakravarti massively diluting his stake. Between 2003 and 2005, the company raised $8 million from a group of five different investors, including International Finance Corporation, IL&FS Investment Managers, India Value Fund and TDA Capital Partners. Chakravarti, who today owns only about 18 per cent of the

A Successful Strip DQE has smartly concentrated on classical, iconic properties that never go out of style.

DQE Group, has no regrets. “I wasn’t selfish. The company was like a growing child. We just had to feed it. We couldn’t take away the milk bottle.” It isn’t dissimilar to how he built his whopping 4,000-strong comics collection as a young boy. “I’d trade one rare comic for 10 regular ones. You have to exchange to multiply.” The strategy worked in business too. Co-productions with a host of European companies like France’s Method Animation (in which DQE now holds a 20 per cent stake), TFI International and 2DF Enterprises changed the game for them. In December 2007, DQ Entertainment listed on the London Stock Exchange, giving his early investors returns upwards of 5X in four years. It also firmly put the spotlight on the company—

production studios, broadcasters and investors were impressed that an Indian studio was behind iconic characters like Lassie, Little Prince, Casper and Iron Man. “By 2008-09, we were 2,500 people. That is unheard of in animation anywhere in the world. Even Disney’s feature film division has not more than 800 people,” claims Chakravarti proudly. Their animation schools—five across Mumbai, Kolkata and Hyderabad now— have been crucial for feeding this growth. The DQ School of Visual Arts has trained 4,000 students on animation and special effects in these years. When animation suddenly became a hot sector to watch out for in the middle of 2000, this steady stream of fresh talent—trained for free— insulated DQ from the churn. “Yes, a lot of poaching was happening at that time,” says Hatim Adenwala, senior vice president, human resources. “But, we haven’t seen attrition at all in the middle and senior management. And we managed entry level attrition very well because of our schools,” he adds. Today, DQE claims there is a queue of seven to eight thousand people looking for a job with them, at any given time. “Because of the quality and quantity of work we do, we are in a talent monopoly situation. The next company in our space is 300-people-strong,” explains Chakravarti. That’s not bad for an industry valued at 10 billion in India and growing at around 10 per cent, according to the FICCI KPMG report. Chasing starry dreams Still, DQE’s dream run has only just begun, claims Adenwala, who has spent a decade in the company and watched it leap from pure service projects to coproduction and now to creating their own intellectual property. In 2008, Chakravarti set up the IP and New Media division to make that JUNE 2011  |  INC. |  3 5

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final escalation up the value chain. Having your own intellectual property revs up growth by enabling 360-degree monetisation and worldwide rights across platforms—broadcast, licensing and merchandising. Their first home-grown IP, a 3D TV series based on Rudyard Kipling’s The Jungle Book, has been sold in 160 countries. The first 13 episodes, broadcast on TF1 in France, BBC in the UK, ABC in Australia, TVO Kids in Canada and Disney Channel across Asia have pulled in high viewership. And, the second season is already in production. “We didn’t expect broadcasters to come back to us so quickly for a second season. It was great news for us,” confesses Rouhini Jaswal, vice president of the IP division. Inside DQE’s leafy, vaastu-compliant corporate office in Banjara Hills, there’s tangible excitement at having recreated Mowgli, Sherkhan and Bagheera—much loved characters from The Jungle Book. “I’ve been waiting to do this for 10 years, to really create,” Chakravarti tells us excitedly. An artist since childhood, he’s a good sketcher and painter. Today, he spends nearly half of his time—a punishing work regime of 12 to 14 hours a day, six days a week—with the IP division. With his animation directors, he’s putting in place a strong pipeline of IPs such as Peter Pan, 5 & IT, Wind in the Willows, Balkand, Ravan, Omkar and The Mysteries & Feluda. “I am the person with the greatest international exposure in this company. I have to download that,” explains he, adding that much of his research is done watching “every possible” animation movie with his 20-year-old daughter. Certainly, Rouhini Jaswal is thrilled to corner a lion’s share of her boss’ time. “It’s easy to see his heart lies here,” she says, adding that he’s absolutely hands on with every creative aspect—lighting, texture, expressions. “We wonder if he ever sleeps actually. Nobody can figure out how he gets so much time,” marvels Jaswal. Chakravarti actually directed the first six episodes of The Jungle Book, withdrawing only after he was convinced others had caught his imagination. “He understands an

A Wild Journey to Sherkhan’s Roar For The Junge Book, DQE’s designers scouted real locations in Madhya

Pradesh—where Rudyard Kipling based the book. “The temple ruins, where the animals drink water are all taken from actual locations,” says Rouhini Jaswal, vice president, IP and new media division. From those photographs, sketches began to appear. Eventually, it took DQE nine months to finalise all the characters. “The challenge lies in freezing your creative process. This is such a subjective, iterative process,” says Vishal Dudeja, president, production operations at DQE.

1

The creative process of making a character is very intensive. It begins with studying in minute detail your subject—in Sherkhan’s case, the whiskers, the stripes, the claws.

2

DQE made sure the series’ appeal was global. It’s nice to be unique but an effort was made not to let overt “Indianisms” creep in.

“Tapaas would act how Sherkhan should walk, how his shoulder muscles should move when he walks. He did that for each character,” says Jaswal.

4

3

“Somebody once used an earlier version of a model. Tapaas immediately spotted it. We insisted it was the right one but he was sure it was off. He was right,” recalls Dudeja.

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artist’s language, can communicate with them perfectly. He doesn’t stop at saying something is not looking good. He’ll tell you to tweak an eyebrow or curve the mouth.” Left to Chakravarti, he’d split his role into two, farming out the CEO’s position to somebody else so he can focus only on the creative. “That’s my aim for the next three years. It’s what our future depends on.” He’s hoping that will also finally give him the chance to take a “proper” holiday with his family—something he hasn’t managed to do in nearly ten years. DQE’s team credits the success of The Jungle Book series to this passion and ability to view things through an eye-onthe-future filter. “We haven’t had broadcasters request any changes to the characters from The Jungle Book. Our version of the series is more edgy, more today. And, people love it. Tapaas has his finger on the pulse,” says Manoj Mishra, who as senior vice president of sales and licensing is leading the company’s merchandising efforts. They have already inked several deals for back-to-school products, novelisation, outdoor products, party supplies and toys with companies like Hachette and School Pack in countries like France, Israel, Germany and the UK. “Merchandising helps you build a brand in perpetuity. But, it can only be done if the characters are well conceived,” Mishra adds. DQE is also geared to take its IPs to the big screen. The company will release three 3D feature films—to be produced with a global budget of $25-30 million each—starting next year. The Jungle Book is up first. The New Adventures of Peter Pan and The Phoenix and the Flying Carpet will follow there on. It’s these movies that Chakravarti knows will take him closer to that 1,000-crore frontier. He’s certainly timed the move to a compelling global trend. According to the FICCI-KPMG Report cited earlier, animation was the most successful genre at the global box office last year. Toy Story 3 and Alice in Wonderland—one animated and the other partly animated—set cash registers ringing. In fact, six among the top 10 box office hits worldwide in 2010 were animated films.

Mega Vision DQE is looking to release one 3D feature film each year for the next three years. Their recent co-production, The Prodigies, is being released by Warner Bros. globally.

Also, while animation productions accounted for only seven per cent of the films released in 2010, they gave way to 45 per cent of the ticket sales. Add to this, the demand for 3D content and Chakravarti is looking at a magic potion for growth. In China, USA and Europe, cinemas have upgraded to tap into the popularity of 3D movies likes James Cameron’s Avatar. Three of the US’s largest multiplex chains are outfitting 14,000 screens for digital projects, says Chakravarti. There are also 19 3D films scheduled for release, he adds, indicating a huge opportunity that can be panned for gold. “We will produce our movies at around $30 million. A typical animation feature in the US costs around $180-200 million. And our films should gross up to eight times more,” says the optimistic entrepreneur. They’ve already begun to get good practice of how the big screen works with The Prodigies, a full 3D stereoscopic animated feature film similar in technology to

Avatar. Co-produced by DQE, Onyx Films and Fidélité Films, The Prodigies, a Warner Bros release, will hit global screens on June 8. It premiered at the Cannes Film Festival last month and Chakravarti walked down the famous red carpet for the event. “We feel we have arrived with this,” says Saraogi. “Our skill sets have matured. enough to go theatrical. It’s a totally different ball game,” she adds excitedly. Having blockbuster dreams doesn’t however insulate you from the niggling pressures of cash flow and working capital. After their first listing in London in December 2007, DQE went in for a public issue on the Bombay Stock Exchange in March 2010. It helped them raise 154 crore, much of which has been spent in expanding infrastructure and developing a 50,000-square-foot office in a special economic zone in Hyderabad. But, Chakravarti confesses liquidity crunches still give him sleepless nights. “With Europe and American going JUNE 2011  |  INC. |  3 7

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A Glimpse Into the Boardroom As Director

of TDA Capital, one of the initial investors in DQE, Girish Kulkarni has been on the company’s board for Girish Kulkarni nearly eight Director, TDA Capital years now. It’s given him a vantage view of Chakravarti’s evolution as an entrepreneur. He recalls his early impressions. “When we invested, this was a 30-employee company with almost negligible profits. But, Tapaas is a magnetic personality. And, we were impressed that he’d been able to convince players like Disney, Discovery and Nickelodeon. That couldn’t have been easy,” says Kulkarni. So, his firm, TDA Capital invested nearly $4 million in DQE between 2003 and 2005. Since

through slowdown, we have a lot of outstanding payments,” he says. Also, an expansion of their IP business means a lot more capital will be locked in. Unlike revenue from pure service projects, you might own the worldwide rights for your intellectual property. “But, the revenue is very upstream. You can only monetise after you’ve spent your budget in developing the content,” explains Saraogi. Which is why, plans are in place to raise funds later this year, primarily to augment their feature films and IP creation. However, Chakravarti rules out going to the stock market before “proving himself.” Although DQE’s IPO was oversubscribed 87 times on listing, its stock price has plummeted to 60, almost half of its

then, Kulkarni says it’s been great to see Chakravarti actually bring all their plans to fruition. “We were worried only about one thing—could they scale up to a few thousand employees,” he admits. At that time, there were other players in the animation industry in India who were much larger. Today, DQE leads by a wide margin. “They have been constantly visionary. It isn’t like they are doing IP creation now. It was something that was decided on and thought about for years.” The growth ahead is even more promising, he asserts. “If only one or two of their big ideas work out, they can quadruple turnover in a few years,” he adds. Here, he zeroes in on Chakravarti’s main strenghts, and necessary improvement areas. 1.Must Continue Doing: A key thing about DQE is that their senior

management hasn’t changed at all in the last decade. People believe in Tapaas and understand the value the company is creating. His ability to empower and retain people is something other entrepreneurs can learn from. Frankly, I don’t know how he does it. It’s not like he pays outrageous salaries. Also, Tapaas’s way with people isn’t limited to his employees. He has long-standing relationships with his clients and distributors as well. That’s a fantastic ability—to generate this spirit of partnership. 2.Can Do More Of: As a shareholder, I only focus on one thing now—can they bring about controlled growth with good cash flow management. They didn’t do this very well earlier. But, they have improved a lot. I’ve seen them evolve hugely on financial prudence.

“I wasn’t selfish. The company was like a growing child. We just had to feed it.”

inaugural price of 135. Saraogi, who along with 700 other employees own Tapaas Chakravarti stocks in the company, says the dip doesn’t worry her at all. “We know what we are doing, where we are going,” she says nonchalantly. On his part, Chakravarti admits he’s given up trying to figure out how the stock market works, especially because the company has maintained its growth pace and done well over the last year. “We are waiting for our hockey-stick curve. I know it’ll happen and I was brutally honest during the road show. Don’t expect miracles from a mid-sized company like ours,” he says sternly. Many of us might disagree with him. After all, an entrepreneur has traits common to a comic book superhero—near super human skill sets that can tame forces not altogether in his control and achieve nothing less than a miracle. Certainly, Chakravarti is perfectly capable of doing just that.

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A Sweet Dilemma Will Arjun Malhotra start-up again or will he actually retire this time around?

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WHY I BOUGHT AND SOLD HEADSTRONG Arjun Malhotra didn’t sell for bags of money, or for the thrill of having a giant like Genpact acquire Headstrong. For him, it’s about taking a decision and seeing where it leads him. AS TOLD TO SUNAINA SEHGAL PHOTOGRAPH BY SUBHOJIT PAUL I am someone who takes up a project only if it excites me. Else, I don’t bother. This was why I started TechSpan, a systems integration and consulting firm, in 1998. It was a very different venture from Hindustan Computers Limited (HCL) which I co-founded with Shiv Nadar and others in 1975. Had HCL continued to be a private firm, I would’ve still been there—taking risks and following my gut. That’s what an entrepreneur does. However, since public money was pooled into HCL, we had to tread carefully—especially, when the world wide web entered the picture. Every decision was slept over and ideas were double checked. It made sense from the company’s point of view but it didn’t work for me. When I founded HCL, my idea was to build a company, to have economic and intellectual freedom, and to do what one wanted to do. JUNE 2011  |  INC. |  41

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So, after 23 years with HCL, I left. Pretty much around the same time, Goldman Sachs got in touch with me. They wanted to invest in the Indian services sector and were looking for someone who could do industry due diligence. As their consultant, my job was to find them a firm worth investing in. Soon, it became clear that they wanted a squeaky clean company—with smooth processes, efficient structures and no skeletons in the boardroom, so to speak. That was frankly an impossible prospect. I suggested we start a company and keep it squeaky clean. Goldman Sachs agreed. And I went out looking for people who could work with the firm. I knew of a few people who had left HCL and started on their own in Virginia, I contacted them and asked them to come up with a business plan. The two investing parties—Goldman Sachs and Walden International—along with the other founders felt I’d do a good job of running the company. In 1998, Sandeep Sahai, Aloke Paskar, Puneet Pushkarna, Nicki Mehra, Harsh Lohit, Bonnie Singh, Curt Terwilliger—a network of friends, really—and I founded TechSpan. We origi-

I knew merely surviving wouldn’t be enough.

We had to use the slowdown to our advantage.

nally focused exclusively on consulting with extra emphasis on “value addition”. But, our plans didn’t work out. One, attracting the right people, who could go up the value chain, was difficult. We did not have a brand in the US. How could we attract, say, a partner from Accenture to join us? Also, there was an immense pull from the market to go into e-commerce. We steered ourselves that way and it was a good direction for us. Our first year’s revenue of $15 million quickly grew to $67 million in 2000. In early 2001, the internet bubble burst. Luckily for us, we had sufficient reserves and managed the crisis. It also helped that we were an Indian firm used to working with resource constraints. We kept our costs under control and stayed cash neutral through out the slowdown. Nine months into the recession, I knew merely surviving wouldn’t be enough. We had to use the slowdown to our advantage. If there was ever an opportunity to make TechSpan stand out, it was now. It was also better than doing nothing but waiting for the recession to be over. In early 2002, we initiated a somewhat strange programme called “Asset Light” in New York. As really talented people were

being laid off from top-tier investment banks, we were inviting them to join us. However, we could afford only those who were the best. We made potential employees attend a pre-sales call. If they converted the client or business for us, TechSpan recruited them. Through this time—from pre-sales calls to bagging business—the candidates weren’t on our payrolls. This worked out brilliantly. People got jobs. We brought in great talent which helped us build our domain expertise in capital markets and differentiated us from others. Meanwhile, interesting things were happening in India too. Dresdner Kleinwort Wasserstein (DrKW), an European investment bank, decided to close down their Asian offices. They had a very powerful development group in Bengaluru, WebTek, which had become an expert in how investment banks worked. We jumped at the opportunity to get people with that expertise. We did a soft acquisition of WebTek in September 2002—took over their rental lease when it expired, gave people continuity in salary, and bought over the equipment. We spent half-a-million dollars on this, pretty much emptying half our bank account. However, this was critical to our growth. It gave us a domain command of investment banking and made us unique, even when we were pitted against an Accenture and IBM. We were no longer speaking to the IT guys on the client side. We were talking to business heads, giving them important, IT-based solutions to solve business problems. This was a critical differentiator. By March 2003, we were cash positive. However, we needed investments to expand. Again, exciting things were in store for us. Around that time, we were in talks with Headstrong, a USbased business consulting firm that provided IT services and consulting for segments such as asset management, derivatives, wealth management and prime brokerage. They wanted us to set-up a back-end office for them on a build, operate and transfer (BOT) basis. Because this would be mission critical for them, they wanted to own 10 per cent of TechSpan, essentially to have control over the project. Since BOT was a huge opportunity, we agreed. We wanted to have a cross holding in Headstrong as well. When we began working on the integration, we realised Headstrong wasn’t in such great shape. Their private equity investors were even thinking of throwing in the towel. I spoke to Headstrong to see if they’d let us roll in with an investment. It made sense for Headstrong to let us come in and they saw that quickly. We merged through a combination of cash and stock. We got $60 million and they got a new business plan. They were double our size but we led the deal and ended up running the combined company. It was an interesting reverse merger. We took on Headstrong’s brand name since they were known in the US where most of our clients were. The merger happened in October 2003. It really was the next logical step for us, and the easiest way to come into cash. It changed our level of operation also. Headstrong had a very strong

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WHY I BOUGHT AND SOLD HEADSTRONG

TechSpan to Headstrong: A tale of twists and turns 1970

Malhotra joined Delhi Clothes Mills as a senior management trainee.

March 1998

Left HCL and worked as a consultant for Goldman Sachs.

1999-2000

TechSpan entered the e-Commerce industry and earned $67 million in one year.

September 2002

1975

Co-founded Hindustan Computers Limited (HCL) with Shiv Nadar, Subhash Arora, Yogesh Vaidya, Ajai Chowdhry and DS Puri.

1998

TechSpan was founded with a focus on three verticals—telecom, financial, and ERP. Funded by Goldman Sachs.

Early 2002

Launched a programme called Asset Light to recruit topnotch talent on Wall Street.

Acquired WebTek, a Bengaluru-based development company with expertise in investment banks.

October 2003

Merged with Headstrong in a cash-stock swap merger worth $60 million. Retained the Headstrong brand name.

January 2004

Arjun Malhotra is appointed as the Chairman and CEO.

2008

At 60 years, Malhotra steps down as CEO but continues to be the Chairman of the Board. Sandeep Sahai takes over as the CEO.

2005

Touched revenue of $56 million, up from $26 million in 2004.

2010

Headstrong brings in $217 million in revenue.

2011

Genpact India, a process and technology management firm, buys Headstrong for $550 million.

consulting background. We got a fully loaded consulting base and were able to take that, add people and make it a vertical focus. Post the merger, the original plan was that I’d be the Chairman of Headstrong, re-locate to India, and take care of the delivery from either Noida or Manila (Philippines) office. I wanted to make the delivery processes seamless. The way I saw it then was that I’d spend a few years to get the transition and delivery sorted, and then become a redundant member on the board. In fact, I wanted to retire after the merger, the second time I thought of doing so. Retirement was on my mind after I’d left HCL as well. But, in January 2004, the board called to say that the then CEO wasn’t up to the task of running Headstrong. He’d been hired essentially to downsize the team. In fact, at the office, if anybody spent time alone in his office, more often than not, they’d come out with a pink slip in their hand. The board didn’t want this atmosphere to continue, especially with a growth merger. They asked me to take over. I was given two options—either to take up the role for three months till they found somebody else, or commit to a two-year tenure. I remember vividly that I was stuck in a snowstorm when I got that call. I didn’t think it’d be good for the company to change the top management team so often. So, I decided to run it for two years, at least. It was tougher than I’d thought. It took us time to integrate culturally. Even with the transition though, we managed to bring in some much-needed revenue. The company grew from $26 million revenue in 2004 to $56 million in 2005. We’ve grown consistently since then. In 2010, we brought in $217 million in revenue. Even though we were doing well, a buy-out was always on the cards. The only way a financial services firm can grow is through mergers and acquisitions. Also, no matter how well a company does, it sooner or later reaches an inflection point. Our private equity firm Welsh, Carson, Anderson & Stowe (WCAS), has supported us for 11 years now, and did not want to exit. By 2007, we had reached a point where we needed more funds to grow a lot quicker. With the global recession after 2008, landing a good deal wasn’t likely. Still, over these years, we’ve had discussions on being acquired. Things didn’t fall into place till now. With Pramod Bhasin at the helm, Genpact India, a leader in business process and technology management, seemed the right move forward. In May 2011, Genpact acquired us for $550 million. With this growth acquisition, Genpact gets access to important domain and technical know-how in the capital markets and is better placed to expand its operations in the US. Genpact already has Wachovia, Wells Fargo and GE Capital as clients. Now, they gain our marquee clients—Morgan Stanley and Goldman Sachs. Genpact has now turned into a full-fledged financial IT services provider. Actually, we’ve worked out a double bubble—both companies benefit from this deal. Headstrong’s CEO Sandeep Sahai and his management team will lead Genpact’s capital markets industry vertical. He took over in 2008 when I turned 60. As for me, I hope that I actually get to retire this time around. No one believes that I will though. Who knows, maybe another start-up before I hang up my boots? JUNE 2011  |  INC. |  4 3

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Howard Schultz, on Getting a Second Shot

The man who built Starbucks talks about his struggle to reinvent his company

Howard Schultz took a small Seattle coffee store and turned it into a global business with more than $10 billion in annual sales. Yet one of his greatest accomplishments, says the Starbucks CEO, was making it through the past few years. In his new book, Onward: How Starbucks Fought for Its Life Without Losing Its Soul, Schultz chronicles his return to the helm of Starbucks during one of the most tumultuous times in the company’s 40-year history. After stepping down as CEO of Starbucks in 2000, Schultz, who remained chairman of the company, found it increasingly difficult to sit on the sidelines. “In letting go of the CEO post, I had essentially agreed to trust in the decisions of others, even when my heart suggested those decisions were not wise,” he writes. “Like a parent standing back and watching his children make their own choices, the entrepreneur-as-chairman role had its unique emotional challenges.” In 2007, Schultz dashed off a now-famous memo to the management team criticising the state of the company’s stores. A year later, Schultz was back in charge and working to restore quality control, going so far as to close all 7,100 US stores for one evening to retrain employees. But as the slumping economy drove consumers to cut back on $4 lattes, he was forced to lay off thousands of employees and shutter some 600 stores. Schultz, 57, spoke with Inc. senior editor Bobbie Gossage about what it is like running Starbucks the second time around and how he got the company back on track.

You write that taking on the challenges of a troubled company was completely new territory for you. How was that experience different from running the company the first time?

There’s an energy and excitement when you’re building a company. You have so much tail wind. You’re planting new seeds. But it’s also scary, because there’s no safety net. I really enjoyed that experience. At an early age, my mother gave me this feeling that anything is possible, and I believe that. If you look at where I came from and where we are today, my story is like a Hollywood movie. I was able to achieve the American dream. It’s not that it was easier or harder the first time I ran the company, but I would say that the feeling that goes with building something—especially when you get some success—it’s a wonderful carpet ride. It’s different when you’re trying to turn something around, especially something that you built, at a time when so many constituents—the media, Wall Street, competitors, ex-employees—are all saying that Starbucks’s best days are behind it, and that Schultz is never going to be able to bring it

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going to spend money on? The customer today is very well informed. In addition to price and convenience, there’s something else they are influenced by, and that’s what the company stands for: how it treats its employees and its customers. We’ve found that consumers are willing to walk another block and potentially spend a little bit more for companies whose values they truly trust. How do you maintain quality as a company grows and grows?

There are 17,000 Starbucks stores in 54 countries, serving 60 million people a week. We employ 200,000 people. So I can make the case—and I have for years— that the most important discipline at Starbucks is human resources. I mean, Howard Schultz can’t manage what I just described for you sitting in Seattle, Washington. I can’t manage every store. I’m not going to pour Back in Charge one shot of espresso today. When he returned, Schultz had Every enterprise has a to contend with quality-control lapses and plummeting sales. memory. And that memory is back. It’s not that they underestimated me, but they imprinted with a history and a way underestimated the power of our culture and values of doing business. As leaders, we and the resiliency of the brand and our people. have to make sure that we’re attracting the right people and that In many ways, it’s much more rewarding to be here today, hav- the values of the company are being upheld. When you see ing made it through the past few years, than it was building the something that isn’t right, you have to make sure that you’re not company. It was difficult, because during the financial crisis, there a bystander. I’ve said for years that the most important aspect of were no navigational tools. No one had experienced anything like our company is the culture. And people laugh at that, but that’s the truth. Whether it’s a small or a large company, this. You couldn’t really talk to anyone or read something. You transformation can’t take place with only one person saying, had to make big decisions based on things you believed in your “I’m going to transform this enterprise.” heart were the right things to do.

COURTESY COMPANY

What did you learn about this new environment?

There’s been a real sea change in consumer behaviour. And those companies that are consumer based must appeal to the consumer in a different way today than they did two or three years ago. And it’s not all based on value. Cutting prices or putting things on sale is not sustainable business strategy. The other side of it is that you can’t cut enough costs to save your way to prosperity. I think the question is, What is your relevancy to the new life of this consumer, who is more discriminating about what they’re

You grew up in a family without health insurance. During the recession, though, there was pressure on you to trim health insurance for part-time employees.

Yes. I got a call from an institutional public shareholder, whom I’ve known for many years. The conversation went something like, “I’m assuming you’re going to cut back on health care.” And I said, “Why would you assume that?” He said, “Well, because you’ve never had more licence. No one is going to hold you accountable.” And I said, almost instinctively, “There’s no way JUNE 2011  |  INC. |  4 5

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HOWARD SCHULTZ

You write in the book about moments that looked bleak for your company. What would you say was your darkest hour?

“I learnt there wasn’t going to be one silver bullet that was going to save us.”

significantly lower our cost of customer acquisition and could be a creative way to engage emotionally with our customers. We’ve invested heavily in that. We also started a website, mystarbucksidea.com. We said, “Tell us what will bring you back to Starbucks; tell us what will engage you with our company.” Not surprisingly, the No. 1 suggestion was that we create a loyalty programme. More than a million people are now carrying the Starbucks gold card and getting significant rewards. You write in the book that you were also on a mission to find the next Frappuccino. You thought you had found it.

Yes, the Sorbetto. It didn’t work. There were many lessons that the company and I learnt. And I Yes, We Have No Espresso For the first time since it opened in 1971, Starbucks closed all think one of the most humbling its 7100 US-stores for intensive staff retraining in 2008. It was the evening before we lessons was that the problems we were going to announce store were dealing with were not closures and layoffs. That night, I had asked for a list of all the peo- created by one decision or the financial crisis alone. There were ple who were going to be laid off. I wanted to go through every multiple problems that led to the issues we were facing. I learnt name. I knew that there were lives at stake, and families. And there wasn’t going to be one silver bullet that was going to save when I had to get up in front of the whole company the next us. There had to be a comprehensive transformation, from the morning—that was the most emotional, most difficult moment in bottom up. Even if Sorbetto had worked, it wouldn’t have solved my 30 years at Starbucks. The way I tried to describe it at the time all of our problems. was that these were decisions we had to make to preserve the One idea that did transform the company was Via, our instant future. But we didn’t have a choice. coffee. Via not only reinvented the coffee category, but it reminded our people of the entrepreneurial DNA of the comWhen you consider Apple and Dell and other pany. It was 20 years in the making, primarily because we could businesses, there seems to be a trend that when not replicate the taste of Starbucks coffee in an instant. Here’s a company is struggling, the solution is to bring another example where the world thought we were crazy—and back the founder. Why do you think that is? that I was desperate. And in the end, Via in its first year did over I think founders come back perhaps because they no longer recog- $180 million in sales. nise the company they built. In my case, if an outsider would have come in, I suspect the easiest and most predictable thing he or she You had people inside the company who fought this, too. would have done is cut things to the bone. That would have Yes, people came to my office and said, “In all due respect, I destroyed the company. I had the benefit of knowing what buttons think you’re crazy. It’s a bad idea.” But sometimes, you’ve got to and levers to push and pull. I also knew that just going back in believe what you believe. I’m not always right, but in this case, time and embracing the status quo of the past would not produce we were right. I think great companies have the curiosity to success. That’s what people thought I would do. I had to restore the see around the corner about what’s possible and the courage company’s heritage but, at the same time, push for reinvention. to execute. All small and large companies have to push for reinvention and self-renewal. Consumers are rethinking What were some new strategies? what they’re buying and how they’re buying it. Business plans We recognised that social digital media was not only decades in the making have to be rethought and re-examined, changing consumer behaviour but, if done properly, could because they will not be relevant in the future.

COURTESY COMPANY

that we’re going to cut that benefit at Starbucks.” The fabric of the company— going back to the early days—is linked to that benefit. I would just not turn my back on that. I basically said to the shareholder, and not in an arrogant way, “You have to evaluate whether or not you want to be a shareholder, because I’m not cutting it.” And I think great companies and great leaders have to be willing to stand up for the things they believe in. And these things are really important. We’re not perfect. We make mistakes all the time. But that was sacred ground for me.

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AD

AD INC.indd 4

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START-UP

DIARIES Tracking radical ideas from different cities

June 01-2011 Gurgaon. Two childhood friends get together to build a business around their favourite drink—coconut water. Will others find it equally refreshing? Delhi. Five months on, they have more customers, suppliers and more media attention. Still, Dial-a-Book wouldn’t say it’s been all fun and games.

Savinay Jain and Mayank Sethia have taken their love for nariyal pani to a 60 lakh venture in just a year. They are now trying every trick up their marketing sleeve to get more customers addicted to the wonder drink and breeze into the crore-plus turnover heap.

Gurgaon: Nuts Over Coconut It was nutty affair right from the start. Savinay Jain and Mayank Sethia loved coconut—tender flesh, refreshing water, et al. They wouldn’t mind driving five to six kilometres to have their thirst quenched. Soon, however, they began to wonder—if the coconut was so full of health benefits, shouldn’t it be more easily available? Besides, wouldn’t it be just wonderful to enjoy it chilled? They started thinking of ways to get the coconut closer to more “coco-fanatics” like themselves. A year later, sitting in their Gurgaon office which doubles up as their storehouse, childhood buddies Jain and Sethia are proud of what they’ve achieved in their short journey with Coco Loco so far. Basically, the company serves chilled, fresh coconut water from a mobile machine. But, the beginning of their entrepreneurial debut wasn’t as lightly refreshing. When Jain, 27 and Sethia, 25, began discussions on the possibility of doing something on their own—with coconuts—they had regular jobs and had never worked on their own. While Jain was a research analyst with McKinsey, Sethia was a marketing professional with Yakult India. Coming from business families—both families are in the marble trade—entrepreneurship was in their blood. The buddies knew that at some point they would be running their own companies. So, they began toying with the idea of building a business serving rejuvenating and healthy nariyal pani. The only glitch: they knew nothing about coconuts. But, they were confident they could crack that nut. So after work, it was off to meet roadside vendors, learning about the different types of drupe (yes, the coconut is not really a nut, but a drupe)—learning which types was known for its flesh or cream, which for its water. “We had no idea how to differentiate between a good fruit and a bad one. Also, we didn’t know where to buy them from,” says Jain. Their internet searches on the idea got them to a page dedi-

cated to a machine in Brazil which chilled coconut and served it fresh without mixing ice or adding any ingredients. It was their eureka moment. They loved the idea—of not having to “adulterate” the coconut with any add-ons—and began work on making the machine in India. Jain quit his job as he didn’t think he was “learning anything new in any case”. But, Sethia didn’t want to take a risk and held on. Both were kicked with their new project. Their families had no idea what they were up to. They began work on building a similar machine right here in India. It wasn’t tough to duplicate the Brazilian design. And, once it tested successfully, the duo realised they could actually do this. In Brazil, the machine was used on beaches or at large gatherings but in India they knew it had to be used differently. Malls were a natural choice as they wanted to reach the educated customers who’d appreciate the “health and hygiene” aspects of their business. Sethia’s experience in devising strategies to reach consumers with Yakult, the Japanese yoghurt drink, came in handy here. Convinced about their target audience, they decided to look for space. “We went to the MGF Metropolitan Mall in Gurgaon and approached the authorities. They were more than keen to give us some space,” remembers Sethia, adding, “Once we got the clearance, I called up Savinay and told him we must begin immediately.” “He called me up on a Saturday and said let’s start tomorrow,” laughs Jain. “Of course, we weren’t really sure how to do this. We just went ahead and took a shot,” he adds. Coco Loco launched on April 11, 2010. A chilled glass of coconut water, priced at 30, was a complete sell out—200 glasses were sold within a couple of hours. It was as they say a dream launch. Their colourful yellow and green mobile carts loaded with coconuts grabbed eyeballs. In the first few weeks, the duo manned

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START-UP DIARIES

A Cool Sip of Profit Jain (right) and Sethia are sure the goodness of coconut will bring them health and wealth.

PHOTOGRAPH BY SUBHOJIT PAUL

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START-UP DIARIES

it themselves. Also, the machine, an improvisation of the original Brazilian, works on a simple formula. It has a chamber with steel coils surrounded with ice. A fresh coconut is opened and inverted into the air-tight chamber. As the water passes through the steel coils, it gets chilled indirectly without coming into contact with ice. “People could see for themselves that there was nothing mixed in the water,” says Mayank. For the young entrepreneurs, the really steep learning curve was in sourcing the coconuts. Initially, they started with Delhi’s Azadpur Sabzi Mandi. “That’s the place to get coconuts, we were told. Savinay and I’d be there at 4am, sit on the trucks and haggle with sellers,” recalls Sethia. As they soon discovered, this was a huge headache. The big traders couldn’t care less about two young novices looking for some coconuts. “We were total misfits,” says Jain. So, they began hunting again. Their search for better options took them to West Bengal, Orissa and Gujarat. More than a year later, the buddies are pros at sourcing the best drupes. They proudly claim they could teach many vendors a thing or two about the coconut which now they chiefly source from Gujarat. In fact, the competencies they have built here has prompted another viable business—in coconut trading. Even with Coco Loco things have moved briskly. In the first

Update

year itself, they’ve breached a turnover of 60 lakh. That pace of growth is incredible for a venture that began with 5 lakh in seed capital, put together with their savings and loans by encouraging family members. Nearly half of the first year sales— 30 lakh— happened in just two months, March and April. In their second year, they want to double both capacity and top line. “Our target is to get to between 1-2 crore.” They also want to take the number of machines they have to 50, up from the 25 today. Fifteen of those are located across the national capital region (NCR). “Besides NCR, we are also present in Z Square Mall in Kanpur. Recently, we began operations in Udaipur’s first mall and want to expand to other cities as well,” says Sethia. But, for the nut addicts—Jain swears by the fresh drink and prefers to have it straight from the kernel—it’s become a mission to promote the coconut for its health benefits as well. They have talked to schools and hospitals to let them sell from their premises. “We want people to realise its goodness. It’s a great refreshing drink that does wonders for the body,” says Jain. It isn’t surprising these young entrepreneurs have found coconuts such an easy sell. When you love something this much, there’s absolutely nothing nutty about drinking up some profits from it.—Meenakshi Kumar

On how the earlier entrepreneurs are faring on start-up land, as they build their dream firms.

Delhi: Call Waiting Five months after we first profiled them, Dial-a-Book has grown—steadily and slowly. The number of monthly orders has inched up to roughly 800, a 10 per cent hike. Their repeat customer ratio is growing robustly. Still, the change that’s most evident is really in Mayank Dhingra, who co-founded the book order service with his younger brother Tarang in late 2009. Dhingra weighs his words carefully, is reluctant to reveal “strategy”, and generally seems a little battle-hardened. “The competition is stiff,” he admits matter-of-factly. As a small fish in a fast-growing pond of e-commerce and home delivery book services, Dhingra confesses that keeping cards close to his heart is a prudent move. “When we began in 2009, few people offered cash

on delivery. Several have introduced the service today. Innovations, small or big, will be copied. And the credit will go to the big guys with more visibility.” Dhingra doesn’t tell us names but admits copycat businesses have sprung up in Bengaluru and elsewhere. Also, building a community using the phone as the primary vehicle isn’t a cakewalk. Their service might make ordering books as easy as getting a pizza home delivered (without the hassles of online payment gateways), but unlike the web, the phone isn’t viral. “It’s not like you search for a number and it leads you somewhere else. People can’t really bump into your service,” explains Dhingra, adding that he had a sharp learning curve on this

one. “I came from a web background so this learning has been huge.” Of course, the duo is disappointed with the pace at which they are adding customers. “We could do better. We are great at keeping customers. Now, our focus is on reaching out to more people.” Yet, getting the word out “without spending any money” is a challenge. Theirs is a frugal operation that’s sustained itself on the 50,000 seed fund they began with, and the “minimal” profits they now net. The founders say it’s critical for them to maintain liquidity and to ensure positive cash flows without compromising on the rate of growth and quality of service. They will continue to focus on leveraging the internet and social media to create

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START-UP DIARIES

awareness. Their Facebook page is abuzz with activity—contests and “meet the author” events that they organise have been very successful. Dhingra insists that for him it isn’t about just adding numbers but promoting a book-reading culture. “We are offering a platform for avid readers to connect.” He’s confident that lessons learnt will be useful in growing their customers as well. They have a slew of innovative ideas for future campaigns including live chats with authors and other ideas which they’d “rather not talk about now”. Also planned is a revamp of the website. Alongside, Dial-a-Book has invested time, effort and money, in a range of offline outreach events including a stall at the “Comic Convention” held in Delhi in February, and events at schools and colleges across Delhi. Plans are in place to ramp up such activities in the next few months. Encouragingly, there’s great news on the supply side. Dial-a-Book has tied up with some “big time”publishers. In fact, they claim to have a great command over the comics and graphic novels market, thanks to deals with players like Vimanika and Random. “We now are at a stage where we are almost adding a couple of small to medium publishers every week,” says Dhingra happily. They are also working with distributors in the engineering and medical books category, and the media attention their company has received over the past few months has led to inquiries by booksellers from other cities, including a retailer from Bhagalpur, Bihar, who they recently met and “formalised stuff” with. Clearly, this is a crucial vertical for volume. “Partnerships

Turning a New Chapter Mayank Dhingra cherishes the joy of building a bibliophile’s community. But, what he’d really love right now is for his phone to ring off the hook.

are a great way for start-ups to expand.” They have also managed to increase their credit accounts with suppliers—which eases the procurement process and helps in cash flow. All of this has given them great encouragement. “We understand the book trade better and share firmer relationships with our vendors.” But, Dhingra knows this isn’t a time to give himself a pat on the back. He has an ambitious bucket list for the next few months—a more vibrant, effective online presence, a six-digit customer base, reaching more cities with their cash on delivery

facility, and on building a bibliophile’s community. They’re already scoping out more courier providers to expand their geographical reach, and are in the process of hiring somebody full-time to work on the community aspect. That’s a lot to achieve but Dhingra is raring to go. “In a start-up, momentum is everything. You have to grab opportunities.” Hopefully, a new chapter of growth is in the middle of being written for Dial-a-Book.—Shreyasi Singh JUNE 2011  |  INC. |  51

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HOW I DID IT

RAMASWAMY SARABESWAR THE PROBLEM SOLVER I grew up in a small village called Mayinanadury in Thanjavur district, the rice bowl of Tamil Nadu. My father taught in the village school while my mother looked after the family. I was the eldest of three sons. The emphasis in our family was on getting a good education and subsequently a government job. If that didn’t work out, my father hoped I'd become a school teacher like him. It was the safest bet, he’d always say. My father could be very headstrong and difficult. I’ve worked hard not to imbibe those qualities from him. He wouldn't stretch our bedtime by even a few minutes. When he said 9pm, that was sacrosanct. We hated that. Today, I thank those values. They helped me become who I am. I’ve learnt to value integrity and time from him. My maternal uncle was also another big influence. He was a

contractor who made several buildings in Thanjavur district. When I was around 12, I spent a summer vacation at his place. Seeing him at work everyday—surrounded by cement, metal, grime and sheer hard work—exposed me to a different world. This was something I'd like to do, I thought to myself. I spent many other vacations with him after that. I owe him for introducing me to the industry.

Growing up, R. Sarabeswar always knew what he wanted—to be a contractor like his maternal uncle. Such was his passion that even steady promotions couldn’t keep him satisfied. At 33, he set out to build a construction company, teaming up with colleagues from L&T, his first employers to found Consolidated Construction Consortium Limited (CCCL). In less than 15 years, he’s grown it to an 2,000 crore plus firm, known for its incredible appetite for complicated projects. AS TOLD TO SUNAINA SEHGAL IMAGING BY ANIL T.

There were other reasons I wanted to be more than just a sala-

ried employee. I’d see my father slog it out as a government

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Standing Tall While others shied away from constructing complex projects, Sarabeswar found them exciting.

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teacher. He didn’t earn much. My uncle had employees to get the job done. He also had more free time and made much more money. The choice was pretty clear. I had to be a contractor. Only, I didn’t tell my father about my plans. After school, I told him I wanted to study

civil engineering. He was happy, but made it clear I could opt for the subject only if I got through the Regional Engineering College about 100 kilometres from our home. Else, I would have to do a BA, BCom or BSc, in any subject of his choice in a local college.

Luckily, I got accepted into the Regional Engineering College at Thiruchirapalli. The college back then had only 40 seats for electronic communications—the most popular subject. I qualified for it, but chose civil engineering as my major.

I joined there as a construction superintendent. The money was good, and I could finally begin my savings. Four years later, I moved back to India to

work with the SPIC Group. Soon, I left the company and moved to Brunei. Around this time, it struck me that I wasn't clearly thinking about my future. I was just shuttling from one country to another, from one job to a next one. In 1996, I decided to come home to India

again. I applied to L&T but they refused to take me back. I then thought it was about time I started out on my own. I reached out to three friends of mine—ex-colleagues from L&T—and together we pooled in 26 lakh to found Consolidated Construction Consortium in 1997. We had expertise in different aspects of running a business.

“ I vowed to make my company so successful that all big bankers would knock on our doors to give us money.” College was fun and I did well. My marks were good enough for admission into a foreign university but my father didn't want me to leave India. So I went to the Indian Institute of Science for higher studies. I also got married around the same time. There wasn't enough money to support my family and my studies, so I went to work. I got a job with Larsen and Toubro (L&T). I requested them to allow me to work and study simultaneously but they refused. I took up the job for a salary of 600. Over the years, the pay increased but it was just enough to make ends meet. My colleagues told me of a construction

company in the Middle East that was doing very well. I did some research and decided to work in Saudi Arabia’s Sobhakshi Group.

They handled the designing, site-related work, and accounting, while I did marketing. Together, we made a great team. The tough part was getting the clients and convincing my father. For three months, we were without any work. Then suddenly, we bagged a 14 lakh project. It gave us a great head start. In 1998, we got an order from Infosys. It was a difficult project and many contractors had shied away from the job because it had a unique curvi-linear structure. We took it up as a challenge and completed the project on time. From there on, we began doing projects which not many dared to take up. It quickly established us as a company to watch out for. We demonstrated our capability and determination. I also

cherish the fact that we could showcase the engineering skills of Indians. There were many obstacles too. We were bound by the limit of funds sanctioned to small construction companies. Most banks refused to increase that limit. In a way, that lit the fuse in me. I vowed to make CCCL so successful that all big bankers would knock on our doors to give us money. The only way to do this was to differentiate ourselves from the rest. We competed for the most complicated jobs. We started splitting the problem into different aspects and devised strategies to solve it. This helped us tremendously. In 1999, we got the opportunity to build the Vijay Laxmi Mandalam, a special structure for the Art of Living Foundation. That really set the ball rolling. We have always focused on making the

most of existing trends in the market. In the initial years, we concentrated on factories, institutional buildings and IT offices. When the recession hit, we turned to airports. The Airport Authority of India asked us to build an extension arm for the Trichy Airport. It was our first big government project.

We have executed many other landmark projects like Hyderabad's CII-Sohrabji Godrej Green Business Centre, Asia's first and the world's third platinum-rated green building, and the Adyar over-bridge terminal at Chennai Airport. Today, we are an 2,000-crore firm. We have built power plants, airports and metro rail stations. Simplicity has been the key to our success.

We give simple solutions to complex demands and designs. The same logic applies at our work place. CCCL employees have the freedom to call or walk into my office anytime.

I've never taken a decision solely on my gut. I work on facts as well. As a result today, we have branches in Muscat, Sharjah, Dubai and several other countries. Still, even now, whenever I cross a building we've made, there is a rush of pride. That is a priceless feeling.

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Sales & Marketing How To Green Up Your Packaging. page 55 Managing At Tripping, a travel start-up, board members look a lot like interns. page 57 Managing Use exit interviews to get insights into your company. It can take you to the epicentre of attrition. page 60 Elevator Pitch Can 1 crore help PhokatCopy print a new leaf of success? page 62 The Way I Work Sundeep Holani has let go of operational duties and often doesn’t even answer phone calls. It’s something his clients are still getting used to. page 64

Sales & Marketing

Selling the concept of organic farming on open terraces. page 59

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COURTESY COMPANY

Sales & Marketing Not so easy being green Switchıng to eco-packaging can be tricky Sometimes it’s OK to litter. After unwrapping the soap bar produced by Pangea Organics, a Boulder, Colorado-based maker of skin care products, customers are supposed to plant the packet in the ground. In a few weeks, the biodegradable cartons—made of recycled newspaper and a sprinkling of seeds—begin to sprout flowers or herbs. It’s a nifty trick, but before creating Pangea’s soapboxes in 2006, the company’s packaging supplier had never tried such a thing. “They went into it kicking and screaming,” says Joshua Onysko, founder and CEO of Pangea. However, customers, who now spend $4 million a year on Pangea’s line of organic cleansers and moisturisers, were enthusiastic. Within a year of the introduction of the plantable packages, sales had nearly quadrupled. Onysko partially credits the packaging for the increase. Though Pangea was something of a pioneer, these days many more companies

New Growth Pangea Organics sells soap in compostable cartons that sprout sweet basil.

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are introducing packages to appeal to eco-conscious consumers. Other businesses are being pushed into environmentally friendly packaging alternatives by large retailers such as Walmart and Target, which have recently put pressure on suppliers to focus on sustainability. But making the switch to greener packaging can be challenging.

issue. He found that corn-based plastic would reduce greenhouse gas emissions, but it wasn’t clear whether producing the material would consume any less water than making polystyrene. “It was never a slam dunk,” says Nancy Hirshberg, Stonyfield’s vice president (and sister-in-law of Inc. columnist Meg Cadoux Hirshberg), who heads the com-

able manufacturer can prove challenging. Gora Ganguli, president and CEO of VitaSound Audio, a $1 million company in Hamilton, Ontario, ran into problems when creating green packaging materials for a line of high-end earbuds. Ganguli wanted to use a cardboard-like plantbased fiber that is compostable. The material, it turns out, is also tricky to work with.

For starters, though there are several new options—such as biodegradable packing peanuts and plant-based plastics—whether these really reduce a product’s environmental impact is sometimes murky. “A lot of these materials are so new that there isn’t good data,” says Victor Bell, president of Environmental Packaging International, a Jamestown, Rhode Island-based consultancy that specialises in green packaging. Entrepreneurs need to find out how the material was made and what kind of energy is being used to ship it, he says. “Companies sometimes just pick one thing and focus on it,” says Bell. “Is it recyclable? From a renewable source? Biodegradable? You need to look at all those things.” Often, companies end up hiring an outside firm to answer those questions. The Sustainable Packaging Coalition, a non-profit organisation, licences software for $2,000 that analyses a package’s environmental impact. But even after such a study, the right decision may not be crystal clear. Stonyfield Farm, a $360 million organic yogurt company based in Londonderry, New Hampshire, hired an expert when debating whether to switch some of its yogurt cups from a petroleum-based polystyrene to a nontoxic plastic made from corn. The company paid Roland Geyer, a professor of industrial ecology at the University of California, Santa Barbara, to study the

Vegging Out Stonyfield Farm switched some of its yogurt cups to corn-based plastic.

Recycling Wars Earthbound Farm must compete with Chinese textile makers for the high-grade recycled plastic it uses to package its salads.

pany’s environmental initiatives. Still, the improvements in greenhouse gas emissions and toxicity persuaded her to change the packaging to corn-based plastic for Stonyfield’s multipack yogurt containers. Once a company decides to switch to green packaging materials, finding a reli-

The first packaging manufacturer VitaSound hired couldn’t make it work. The boxes lacked clean seams and looked sloppy. By the time Ganguli found another supplier—Be Green Packaging of Santa Barbara, California—the product launch date had slipped several months. Ganguli says he learnt the hard way that it’s important to ask a lot of questions. Companies must also cope with the fact that green packaging materials are often more expensive than other options. And if customers aren’t willing to shell out more for a product with eco-friendly packaging, the difference usually ends up coming out of the company’s bottom line. That was a worry for Jennifer Lewis, founder of Petit Four Legs, a Seattle-based maker of high-end pet treats. To make her product stand out in boutiques, she wanted to switch from regular cellophane bags to compostable cellophane packaging. But the move would raise packaging costs by 30 percent. Before the change, she wanted to make sure customers would support it. Lewis, a graduate of Northwestern’s Kellogg School of Management, contacted a marketing professor there and got MBA students to help with the market research. The students surveyed 2,500 consumers and found that people would be willing to pay 12 per cent more for an environmentally-friendly package when buying natural pet snacks. That persuaded Lewis to make the switch, but so far, the company

COURTESY COMPANY (2)

“Companies sometimes just pick one thing and focus on it. Is it recyclable? From a renewable source? Biodegradable? You need to look at all those things.”

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has been eating the extra cost. Lewis says she is hesitant to raise prices until consumer spending picks up. What’s driving prices even higher is that some recycled materials are in short supply. That has been an issue for Charlie Sweat, CEO of Earthbound Farm, an organic produce grower in San Juan Bautista, California, with 1,250 employees and $450 million in annual revenue. Since the company switched to recycled plastic for its prepackaged salads in 2008, it has had difficulty sourcing enough of the material. The type of recycled plastic Earthbound Farm uses—which is made from consumer products like water bottles—is in high demand, because it’s used

in textile manufacturing in China. Sweat must also pay a consulting firm to test the recycled material for traces of low-quality industrial plastic, which could taint food. “We’ve seen some recycled plastic that isn’t what it claims to be,” he says. Increasingly, companies are dealing with these added costs by finding ways to reduce the amount of packaging used. At Stonyfield, Hirshberg worked with her manufacturer to make the yogurt cups thinner. That helped offset the added cost of using corn-based plastic and helped the company avoid raising prices for consumers. At Method, a San Francisco maker of home cleaning products, the process of reducing packaging starts with product

design. Last year, the company launched a highly concentrated laundry detergent, a small bottle of which can wash 25 loads of clothes. The container, which is partially composed of recycled plastic, is smaller than a soda can. Adam Lowry, one of Method’s founders, says the company will continue to look for ways to reduce packaging, but he expects that companies will soon have more—and better—green packaging options. “We are only at the beginning of the cycle of innovation in eco-friendly packaging,” he says. As packaging makers continue to innovate, the decision to switch to green materials may prove easier for more entrepreneurs. —Amy Barrett

COURTESY COMPANY

Managing The kids are all right Building a board of young advisers Before launching a new marketing campaign, Jen O’Neal first ran the idea by her board. O’Neal is CEO of Tripping, a San Francisco–based internet start-up that connects world travellers with local hosts, who offer sightseeing tips, conversation, and sometimes, a free place to crash. To promote the site in Barcelona, O’Neal was considering hosting evening events on college campuses. Board member Jacopo Bordin shot down the idea. After class, he said, young Europeans aren’t hanging out on campus—they are relaxing at wine bars and outdoor cafés. Bordin should know. A 23-yearold student at the Student Teachers Tripping co-founders Academy of Art Jen O’Neal and Nate University, San Weisiger (front) lean on Francisco, he grew young people for marketing advice. up in Italy. Bordin JUNE 2011  |  INC. |  5 7

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sits on Tripping’s social media board, a 10-person team of twenty-somethings, who advise O’Neal on marketing to students, the site’s primary users. O’Neal and her co-founder, Nate Weisiger, came up with the idea for the advisory board last year after hiring an intern to manage the company’s blog, Twitter feed, and other social media efforts. Some 200 young people applied for the position. After making her choice, O’Neal sat down to toss out the rest of the applications, many of which included enthusiastic stories about travel and studying abroad. “I didn’t want to delete the e-mails,” she says. “I hated the idea of releasing all these people and not coming into contact with them again.” At the time, Tripping had just three employees and didn’t have the resources to hire any more. But O’Neal and Weisiger thought the young people would make great advisers. To determine which candidates had the most creativity and enthusiasm—and ability to get the word out about Tripping—the cofounders decided to hold a contest. They went through the intern applications and challenged the 40 most promising candidates to vie for spots on the board. The contenders had three weeks to generate as much online buzz as possible about Tripping. About half of the people O’Neal contacted took her up on the challenge.

came from people who barely had any work experience.” Birnbaum, for instance, came up with a feature called video validation, which helps travellers vet potential hosts in other cities. Since its founding, Tripping has encouraged users to rate and review hosts, but O’Neal wanted to add another level of verification for young travelers who would be meeting up with strangers or staying in their homes. Birnbaum suggested that Tripping interview hosts remotely using Skype; Tripping would ask them to show their passports and proof of address during the video calls and would keep a record of the information. O’Neal loved the idea and had Birnbaum head up the project. Not only has the video validation feature been popular

“Some of the best ideas came from people who barely had any work experience.”

T

he contenders used various tatics to get the word out about the company. Because Tripping markets itself as a place to get insider travel tips from locals, Katy Birnbaum, then a San Francisco State University senior, made an online video of the 1am swarm of people lining up for fresh doughnuts at Bob’s Donut & Pastry, a popular hangout for college students. Lauren Nicholl, a graduate of the University of California, Davis, contacted popular travel bloggers and raved about Tripping. She also took to Twitter, posting information about Tripping as well as links to travel articles and famous quotes about travel. Whenever O’Neal updated the company’s blog, the young people would flood it with comments. The CEO was impressed by the group’s eagerness. “You could see this rivalry,” she says. “They were trying to edge each other out. We didn’t think people would work that hard to get a seat on this new board we just invented.” In the end, O’Neal chose 10 of the applicants for the board—Birnbaum and Nicholl made the cut. The board members don’t have daily responsibilities. They primarily act as brand ambassadors and offer the co-founders opinions, advice and ideas. “It feels completely different than an internship,” says Bordin. “You feel more involved, more rewarded.” Already, the board members have contributed many new ideas. “They have grown up with technology in ways I didn’t,” says O’Neal, who is 31. “Some of the best ideas

with Tripping users, says O’Neal, but conducting Skype chats with hosts also provides valuable customer feedback that the company has used to improve the site. Board members aren’t paid, but they receive training from Tripping’s co-founders. Weisiger teaches board members how to write web code and create Facebook ads. O’Neal helps them with job hunting, polishing their resumés, and conducting mock interviews and introduces them to other entrepreneurs in Silicon Valley. Each board member determines his or her level of involvement. Bianca Cloutier, a recent Dartmouth graduate, already had a full-time job at a non-profit in New York City, but she joined Tripping’s board because she wanted to get experience at a tech company and learn more about business development. Jeff Manheimer, Tripping’s vice president of business development, invited her to tag along when he went to meetings on the East Coast. She watched him create promotional partnerships with groups like university studyabroad programmes. Working nights and weekends, Cloutier eventually signed up six new partners, including the alumni network of AmeriCorps, a student volunteer organisation with more than 600,000 alums. “This was perfect for me,” says Cloutier. “The flexibility was great.” The social media board has also become a useful recruiting tool for Tripping. Since creating it, O’Neal has hired four board members as full-time employees. And she plans to keep adding members to the social media board as the company grows. “It’s so easy to see who is passionate,” says O’Neal. “Some of them really shined.” —Jennifer Alsever

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Sales & Marketing Organic farming for your terrace Can word of mouth grow this business? After two decades in the IT industry, Mallesh Tigali was ready for change. Newspaper reports on crop failure and farmer suicides prompted him to dig deeper into the issue. He came up with organic farming as the solution—both as a business idea for himself, and a way to attack malpractices in the vegetable and fruit supply chain. Tigali invested 10 lakh to start Purna Organics with a single aim—to help city slickers grow organic produce on their empty terraces, using drip irrigation, companion planting, neem sprays and bio-fertilisers for the highest yields. Four years on, his 15-member team has four schools, a few corporations and over 130 individuals as clients. Tigali has pitched organic terrace farming as a fun, early school environmental activity to schools and a novel team-bonding exercise to corporations. But, he needs more institutional clients to really grow. Here’s some nurturing marketing advice.—Charu Bahri

How would you sell that?

PITCH NO. 3: Focus on communities Suma Krishnaswamy, President, Cambium Biotechnologies, dealing with plant tissue culture, herbs and plant extracts Purna Organics should tap into markets in one area of the city and focus on gated residential colonies. Taking on clients dotted across the city (Bengaluru) could prove a logistical nightmare because of heavy traffic and not offer gainful returns. The “plants business” is not as easy as it may sound—clients take time to be convinced about the benefits and need a lot of hand-holding. That’s why growth also depends on having a competent team in place. Otherwise, the owner would spread himself too thin.

PITCH NO. 1: Position it well Sunitha Ravi, human resource consultant, Bengaluru By helping corporate employees appreciate nature, Purna Organics has the potential to catch up as a novel concept. Organic farming has become an integral part of corporate social responsibility the world over. Organisations have used it to improve their public image. Purna should advocate employee benefits from this experience—considerable reduction in stress levels, better fitness, team bonding through understanding and appreciating cross cultural nuances at work, and appreciating the real value of natural resources. Companies benefit, too, by helping employees enjoy work. It can be a win-win situation. PITCH NO. 2: Take it to schools Aditi S. Mathur, www.geniekids.com, Bengaluru Schools would have to see the benefit in organic terrace farming before they adopt it. When it comes to children, it’s not about “what” activity is proposed but “how” it is done that matters. Children will gain from a hands-on experience with both soil and toil, rather than giving them just gyaan. Still, most schools resist anything new. Also, schools are running multiple activities. So, the concept needs to be put forward in a way that already overloaded schools don’t see it as an additional burden.

A Burst of Growth Will Purna Organic’s terrace farming spell green for Tigali?

FEEDBACK ON THE FEEDBACK Some of the suggestions concur with the way we’ve been thinking about our business as well, hence reinforces our belief in what we are doing. For instance, in schools we are making sure that we focus on how the children are introduced to the subject. We don’t want to reduce the engagement to just any outdoor activity. We want the students to actually get involved in farming and connect with the plants at their own level. We realise that there is huge scope to involve more corporations. Making the right connections is one of our greatest challenges.

PITCH NO. 4: Reach out to firms Praveen Rao, Lead, direct marketing, Bertelsmann Marketing Services The idea is original and the pilot makes sense. Involving companies and the public is the right way to go. It could also reach out to firms in the food processing, consumer goods, agricultural products, chemicals and services domain, asking them to take on this programme as a CSR initiative. Reputed agricultural universities could also be asked to lend support by driving similar pilots in their institute and monitor the programme for any deviations. JUNE 2011  |  INC. |  5 9

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Recently the management of a financial services firm was zapped by its killer attrition rate. Too many wickets had fallen over a single month—where was the firm’s management going wrong? Fortunately, there was the data from the exit interviews. The information culled out spoke louder than any griping employee. It revealed that the firm’s first three months’ target was too high. No one had managed to achieve them. Result: employees felt de-motivated and eventually called it quits. The firm kicked into action and re-structured its expectations, performance metrics and goal posts. The attrition rate was stemmed, almost immediately. “Exit interviews are a management tool. They help identify reasons why people leave an organisation,” says Shalini Gupta, director, Talent Mappers Consulting India, an human resources (HR) consulting firm. “But, the useful-

ness of the interviews depends on how fairly they are conducted,” adds Chanchal Singh, senior HR manager of a leading financial services company. Exit interviews work provided that the conversation carried out is exploratory and insightful. And, employers should keep in mind factors to gain from the exercise. “Exit interviews give companies the great opportunity to learn how to improve working conditions,” adds Gupta. Sadhna P., an assistant HR manager in the Sopra Group, recently wrote on a business networking site, “Each exit interview we conduct is documented the very next day. Key points are discussed by the management team. And, if need be, an action plan is decided.” When employees are reluctant to really speak out, it is the HR department’s responsibility to break the ice. “They need to be assured that the information will not

be misused,” suggests Singh. The venue of the “interrogation” often sets the stage. In pure corporate structures, it is preferable to conduct exit interviews in the centre of the work area, basically a familiar environment. This puts the interviewee at ease and doesn’t make them feel that they are at HR’s receiving end. It’s important to pick the right interviewer. Himanshu Vijay, a food and beverage associate with the Taj Group of Hotels in Chandigarh, recalls why his exit interview was such a breeze. “The HR executive was a young guy, too, and a work buddy. We had an informal discussion and I could be honest about my reasons to quit and plans going ahead.” Not everybody agrees that the “hanging out” approach works. “Interview should be conducted by a person who is a few grades senior in designation or age,” believes Kishor Bhalerao, senior vice presi-

PHOTO BY PHOTOS.COM

Managing Soon to be ex-employees Exit interviews help understand why

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dent of HR at Persistent Systems, a Punebased IT solutions provider. True that a “senior” might inhibit a candidate’s frankness. But, Bhalerao believes this obstacle can be overcome by asking open-ended questions and doing a lot of listening. There is the danger that the process becomes subjective so a standard template, which can be customised, should be put in place. Basically, an exit interview should be transformed into a reverse-appraisal of the company, opines P. Sanchet, a technical specialist at Persistent Systems. He recommends putting a 10-point or 20-point survey as a mandatory procedure to get relevant inputs. In fact, Persistent Systems has been able to leverage feedback effectively. “We found that employees were leaving to be nearer to their hometowns. Suddenly Puducherry, Gurgaon and Noida were the hotter places to work in, instead of a Bengaluru or a Chennai,” reveals Bhalerao. Ideally, a firm’s in-house HR department should carry out the interviews. But, larger multinationals and corporates rely

Convert the loss

Putting it well

Can’t keep that employee? At least, keep your cool. Avoid these faux pas during an interview. Don’t be overly sensitive on hearing the negatives. Don’t take an employee’s feedback to be the ultimate truth. Don’t lose objectivity. Don’t treat this as a mere “formality”. Don’t let line managers or direct bosses conduct inter views. Hire outside consultants, if need be.

on external consultant. In smaller companies they are conducted by either the founder or a senior manager. Gupta and Singh believe only seasoned HR professionals can really capture feedback. Getting the data isn’t enough. Companies should analyse findings to identify “real” issues. “Action plans should be based on the commonality of the interviews,” advises Bhalerao. You can’t strike of a certain policy just because it didn’t

What should an “ideal” exit-interview questionnaire contain? Should it be open-ended, or closed? And answers, should they be subjective or objective? Here are a few must-haves: Name the top three things you liked and disliked about the firm. What growth opportunities did the organisation provide you with? How did the establishment support you? Will you be willing to come back to the organisation again?

work for a few people. Analyse issues holistically—and objectively. “An exit interview shouldn’t only be about identifying the negatives,” says Raviraj Rajesh, head for HR at Cyber Media—a Gurgaonbased media house. Good feedback helps in establishing benchmarks. “Many of those who left us told us it was a great learning experience and that the bosses were friendly. They helped us strengthen our positives.”—Sunaina Sehgal

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Printing Success

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GUTTER CREDIT HERE

Can Narang work his idea into the perfect business copy?

PHOTOGRAPH BY SUBHOJIT PAUL

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FOUNDER:

Harsh Narang COMPANY:

PhokatCopy Student Advertising LAUNCHED:

July 2009

LOCATION:

Delhi

EMPLOYEES:

10

BUSINESS MODEL:

Free photocopies for students, subsidised by advertising revenues on the back of every page SEED MONEY INVESTED:

5 lakh

REVENUE IN 2010:

10-15 lakh

Elevator Pitch PhokatCopy lures students by giving them free study notes. Will investors be tempted to put in 1 crore? The Pitch“We provide companies a direct, cost-effective platform to target

the youth. There aren’t enough youth-focused avenues right now. We target the student market around large universities and campuses by providing low-cost photocopying services to them. We subsidise the cost by the revenues we make with the advertisements printed on the rear of every A4 sheet used. We offer several wins—advertisers get high-visibility, plus their brand earns loyalty and goodwill by subsidising student costs. We already have agreements with over 40 colleges and are in talks with institutes in cities such as Mumbai, Manipal, Pune and Ahmedabad. We aim to collaborate with about 150-200 colleges across India in the next three years. We are raising money to build a sales force to do this and are looking at annual projected revenues of 2 crore within two years.”­ —As told to Sunaina Sehgal

The Experts Weigh In

FUNDING SOUGHT:

1 crore (to expand across colleges and build a sales force) ADVERTISERS:

GUTTER CREDIT HERE

Apple, Vodafone, and Nirulas among others

It’s a catchy idea. They’ve also created a decent amount of buzz already which is a good sign. What differentiates them is that they can provide location and college-based targeting capability to brands. However, the addressable market for their product may not be large enough. Even if they become a leader in their domain, revenues will be around 50-100 crore per annum. There are alternative ways to reach out to the youth—such as coffee shops and youth magazines. How do they plan to beat that?

Their idea is the “need of the hour”. In Japan and the USA “free copying” was a hit. But, the present business model has a low-entry barrier. It needs to strengthen differentiators (by adding VAS enabled with technology, etc). Education is a major thrust area for the government. PhokatCopy’s model can be a great tool for building private-public partnerships to achieve this objective. Harsh should also bring in industry experts in various capacities— either as advisors or mentors or board members.

ADD MORE DIFFERENTIATION

CREATE A SUSTAINABLE VENTURE

SAMEER GUGLANI, co-founder The Morpheus, Chandigarh

VIKRAM KANT UPADHYAYA, member Indian Angel Network, Delhi

VIJAY SHUKLA, founder Setu Ventures, Gurgaon

THINK THROUGH CAREFULLY

A win-win business model but the founding team will face challenges around low-entry barrier and seasonality of business. Measurement metrics for advertisers is critical. Do this by incorporating suitable technology or by adding a third party audit. There will be a seasonal variation in business volume. So, design the structure accordingly. Improve margins by capturing detailed student profile at the time of transaction. This will help to better relationships with student and improve margins.

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Retail Therapist Channelplay’s Sundeep Holani knows the importance of being earnest.

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THE WAY I WORK | Sundeep Holani, Channelplay

“I don’t get criticised often. I’m rarely wrong.” Sundeep Holani, co-founder of Channelplay, confesses that he and his two friends from IIM Calcutta could barely manage their pocket money. So, when the trio began thinking of ideas for their own venture, they wanted to keep things simple. They weren’t looking to raise funds and didn’t have money to invest in technology platforms. In 2006, they conceived of Channelplay, a retail marketing firm which offered clients tools to garner greater market visibility mainly with visual merchandising, sales force outsourcing and experiential marketing services. It might not seem the “sexiest” idea but the 31-year-old entrepreneur says he knew opportunities in a highly-fickle retail sector were aplenty. Plus, the venture could be cash flow positive right from the beginning. Today, Channelplay has a footprint in 300 Indian cities and clients like Coca-Cola, Dell and Nokia. Holani admits there are several players in retail marketing today and says his five-year-old company must be credited with “revolutionising” the industry. This confidence sits easy on him. And when not trapped in meetings, you can catch Holani drinking aromatic herbal tea, skimming through the New York Times or meticulously planning out his next day’s to-do list. But, the one thing he never misses out on—the two hours he’s set aside for “thinking” every evening.

AS TOLD TO ROHINI BANERJEE | PHOTOGRAPH BY SUBHOJIT PAUL

Even six months back, the first thing I would be itching to do after waking up was to switch on my cell phone and check my e-mails on the laptop. All of that has changed though. I sleep for almost seven hours now, get up and read the New York Times, chat with my family and then get ready for office. I don’t check my e-mails until I get to office. JUNE 2011  |  INC. |  6 5

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T

This is just sheer luxury. Its like feeling content right at the start of the day. It speaks of the changes I’ve been able to achieve, like letting go of certain responsibilities and focusing on the ones that are really important. I am quite indisciplined about breakfast. I try to eat at home at least thrice a week. It is usually very simple, either muesli with milk or milk-shake or lemon rice, which my Mom makes. I love having masala chai. That and a cup of herbal tea are my staple drinks in office. When I am not involved in preoffice telephone conferences, I try to reach office by nine. It is roughly a 20-minute drive to my new office. If the traffic is light enough to not need my full concentration, then I’ll listen to music. My phone is my jukebox, loaded with Bob Dylan, Pink Floyd, Leonard Cohen, Mark Knopfler and Nick Drake albums. I listen to Eminem on rare occasions. The minute I enter office, I try to clear away all meetings. I plan my day meticulously. There are two hours dedicated just to “thinking”. I now have an executive assistant who I hired after I found myself missing important follow-ups and review meetings. Now, my assistant does that balancing. She has been assigned two tasks—to manage my calendar and define 40 core and 60 follow-up meetings that I have to attend every month. When I started Channelplay, with two of my batch-mates from IIM Calcutta, it was an exceedingly operational affair. Whatever that needed to be done, the three of us had to have a hand in it. Today, there are two of us and my partner really has a more consultative role. Also, Channelplay has grown exponentially. Now, we have hired senior personnel to take care of operational responsibilities. I do more of the planning, thinking and strategising bit—basically whatever it takes to keep the company’s wheels turning. I try and keep myself away from what seems like work—checking e-mails and talking to clients or every member of the firm—to think. Strangely, not many people view the latter as work. Interestingly, it was less difficult for me to let go of operational duties than it was for my clients to accept that change. Our business services, including visual merchandising, sales force outsourcing, training and experiential marketing, were developed by the three of us. Right from the time we started, in 2006, it would be me explaining our business to the clients and making presentations on behalf of the company. I had a role in starting

most of our engagements. When I withdrew from immediate interactions, our clients were naturally perturbed. They were worried that things might not move fast since they were not interacting with the top guy. oday, we are more organised than we’ve ever been. We have a team of 10 key senior people, vertical heads who report directly to me. We are at the peak of our game now. Channelplay now has more than 3,000 employees, offers services to more than 10 clients, including Coke, Nokia, Dell and Intel, across five verticals. I know it’s the right time for me to assume new responsibilities. But that’s easier said, than done. Nowadays, my job is answering crucial questions like what is that one value that I can add to the people who report to me, how do I make their performance measurable, or, how does one measure an objective, or for that matter a performance. I believe that once I am able to pinpoint a workable KRA, half my task is done. We tried to be one of the “flexitime” offices. It didn’t work out. Office work depends on more than a singular staff. Even if one gets his work done on time, despite coming in late, I don’t think that means they deserve brownie points. Because by coming in late, he delays other jobs that depend on his input. A portion of Channelplay’s activities is concentrated in Tier-II and III cities. I used to cover these circuits earlier, almost living out of suitcases. Once I travelled from Delhi to Jaipur, Ajmer, Jodhpur, Bikaner, Udaipur and finally to Kota, all within a month. These days I limit my travel to our other offices in Mumbai and Bengaluru. I meet clients and talk to managers there. I believe managers play a crucial role in a company like ours. Their training is crucial. We still do not have structured training programmes. I just try and stay involved in what my managers do. I try to guide them towards a “style” of working which I think is ethical, structured and objective. A lot of people in our sector manage by incidents— if a particular circumstance has happened in the past and has been dealt in a particular way, that’s how the problem will be treated in the future. I feel a better way is to handle through objectives. See what needs to be done before the need arises, instead of trying to fix a problem when it arises. My office calendar is disrupted only by client calls. Otherwise, there is little time for anything else, including lunch. I eat whenever I am free, any time around noon. I usually get lunch

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packed from home since I am not a fan of cold grub. When I am not carrying lunch, I order. I have a weakness for the street “chow” served at a local kiosk. I consider myself a foodie, but on weekdays, there is hardly any time for lunch. It is straight off to meetings after lunch, many of which usually go up to six. That’s when I need my fix of herbal tea. I usually drink around four cups a day. After six it is “me time”. I summarise the day, plan out what needs to be tackled immediately, and decide upon the next day’s priority list. Phone calls at this time really irritate me. I am trying to develop a habit of not picking up calls every time the phone rings. I wish I could be inaccessible at times. Personally, I send messages to people who I wish to talk to. It’s my way of telling

self-critical and constantly assess myself. If someone else has a quality I don’t, I try my best to imbibe it.

O

ne of the reasons I turned to entrepreneur-

ship is because the jobs I did became boring. It is this interest in others and their qualities that keep me focused on what I do. Ever since I’ve become an entrepreneur I’ve never felt bored, sleepy or lazy. Since then, I’ve never myself that nagging question either—what did I do today? I have realised that I am quite passionate about what I do, which does not mean that I don’t procrastinate. However, once I begin a task, I go full steam ahead!

“Since I’ve become an entrepreneur, I’ve never been bored, sleepy or felt lazy.” others that I respect their time. I expect others to do the same. I am trying to work out a situation in which I entertain phone calls every two hours for a half-an-hour slot. As I grow as an entrepreneur, I try to be a more pro-active company owner. I am trying to move out of the feedback loops. Nowadays, feedback flows from the clients to my juniors. Previously, I would be the first to receive it. As an employer, I like to work with confident individuals who believe that the buck stops with them. My advice to my team usually is to think of themselves as CEOs of their verticals. If I receive any escalations regarding a team from the clients, I see that team leader in a poor light. We do have a hierarchical structure in office but I encourage my team to speak their mind. It doesn’t happen often though because I am the boss. I don’t get criticised often. In any case, I am rarely wrong, professionally. I’m also deeply

I leave office by nine. I plan to start swimming soon after work. I am fond of outdoor activities of any kind, be it swimming, skiing, rappelling, trekking or hiking. I went on my fifth adventure holiday in the Garhwals recently. But, it’s only now that I can take time off. I took my first holiday in four years, three months ago. When I get back home, I like to play around with my gadgets. I am a gadget freak. I own an Android, Blackberry, Playstation 1 and 2, a Galaxy Tab and an iPad. The last one I use the most since I am fond of reading. Usually, I will choose between a Woodehouse, or Joseph Heller or a Marquez. I do read biographies once in a while, but I am not really into them. At the end of the day, it’s usually The NYT and me. I read that paper whenever I have time—in the car, in the lift or even while I am grabbing my lunch. I usually doze off while reading whatever is left in the paper. JUNE 2011  |  INC. |  67

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I WISH I KNEW THEN...

O.P. Gupta, Chairman, Ashiana Housing At 33, Om Prakash Gupta understood how too many cooks can spoil the broth. His first real estate venture—Ashiana Engineers—had seven co-founders. So, besides many egos clashing, not much else got done. When Gupta moved on and built his second venture, Ashiana Housing, he swore to keep things simple. Goals and targets were defined, and had to be met. Today Ashiana Housing is a 120-plus-crore firm, and was ranked by Forbes magazine as one of “Asia’s 200 Best Under A Billion” company. Though my father was an entrepreneur, I did not learn how to “run” a company from him. But, he taught me the importance of honesty and hard work. Those are essentials for any business. That helped a lot when I started my first real estate venture in 1979, Ashiana Engineers. I co-founded it with six friends. Let’s just say having seven co-founders was reason enough for the firm’s birth and well as its demise. Together we were able to pool in 70,000. It gave us some momentum. Within months, it was obvious this wouldn’t work. We couldn’t ever reach a decision. There were too many viewpoints, too much ambiguity and a lot of clashing egos. Eventually, we decided to go our separate ways. Though our dream was short lived, I learnt a key lesson—keep things simple. I made that a core part of Ashiana Housing. Here, individual roles were well-defined. Each person knew their goals and what was expected of them. The company was structurally sound but we had a huge challenge to overcome. We were trying to sell flats in 1985-86 in a place like Jamshedpur. The concept was absolutely new for them. We tried every trick in the book—from hoardings to door-to-door sale. It was hectic, tiring and time consum-

dilapidated and dirty. This was not good for our clients and our brand. Understanding this need was a great lesson. We immediately started Vatika Marketing Limited— a new facility management company—to take care of the flats we developed. A well maintained product says a lot about your brand. As our brand and market grew, we were often tempted to take up projects in different segments—top end or lower income brackets. We decided to stay focused in the middle income group and chose to develop untapped markets. Today Ashiana Housing Keeping It Really Simple Gupta believes in the basics—hard work, perseverance and honesty. is synonymous with quality middle-income group residential projects. So many ing, but it worked. Companies like IOC and people have become first-time home ownBPCL noticed us and our 80-odd flats got ers with our projects. And it’s worked sold in 12 to 18 months. Here, I learnt that beautifully for us. Many might consider patience and effective marketing go hand- multi-tasking to be a great trait But, In in-hand. Also, advertising needs to be kept business, it’s better to be a king of one simple. The idea is to reach out to people, trade, than be the Jack of many. —As told to Sunaina Sehgal not intimidate or confuse them. Selling isn’t enough. Though our flats were sold out, we found out that maintaining them was an issue. Within a few months, the units would begin to look

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Toonpur's Superhero  

Inc. india (Volume 02, issue 05)

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