The Way I Work
How I Did It
Shashi Kiran Shetty
1% label, 99% hard work
on his love for his fleet
How to be an extraordinary leader PAGE 48
The race to be
He Has Got The Fortune Filter
Indiaâ€™s next Groupon
The Magazine for Growing Companies
Got The Fortune
The magazine for growing companies
Mahesh Gupta is drinking up pure profits with Kent RO Systems, his 250cr healthcare products company. He now wants every Indian to take a healthy sip. PAGE 30
July 2011 | 150 | Volume 02 | Issue 06 A 9.9 Media Publication
Deal Glee Gaurav Kachru’s sitting on some amazing numbers—1.5 million customers and daily sales of more than a crore.
38 The Groupies 30 Cover Story A Steady Trickle of Wealth
A bad bout of health at home got him thinking about pure water. Today, Mahesh Gupta runs the 250-crore Kent RO Systems, a healthcare products company. While the profits pour in, what Gupta really wants is clean drinking water for every Indian.
Everywhere you look, there’s a group buying site busy at work. Will customers join in the frenzy? This new breed of ambitious internet entrepreneurs certainly hopes so.
56 How I Did It Shashi Kiran Shetty
For him, it was love at first sight. He’s grown that fascination for ships to a 3,000-crore business. His next dock—a billion dollar turnover. by dhiman chattopadhyay
by sunaina sehgal
40 Late but lucky
Gaurav Kachru, Deals and You
41 Viral is good
Anisha Singh, Mydala
42 Sold on speed
Kunal Bahl and Rohit Bansal, SnapDeal
by shreyasi singh
44 experience is king John Kuruvilla, Taggle
48 Core Values
45 Gadget happy
How do great leaders create great company cultures? By believing in something and acting on it, as seen in the winners of the 2011 Top Small Company Workplaces awards.
Ranjith Boyanapalli, BuyThePrice
photograph by subhojit paul
by leigh buchanan
This edition of Inc. magazine is published under license from Mansueto Ventures LLC, New York, New York. Editorial items appearing on pages 11-12, 14-15, 22, 48-55 were all originally published in the United States edition of Inc. magazine and are the copyright property of Mansueto Ventures, LLC, which reserves all rights. Copyright © 2009 and 2010 Mansueto Ventures, LLC. The following are trademarks of Mansueto Ventures, LLC: Inc., Inc. 500.
on the cover
Mahesh Gupta, founder and chairman of Kent RO Systems. Photographed by Subhojit Paul. Cover design by Anil V.K. Outfit Courtesy: Canali
JULY 2011 | INC. | 1
16 14 21
05 Editor’s Letter
18 The Scuba Sutras
How a high-octane rock festival gets its groove
By Guhesh Ramanathan Keep an eye on your air supply when you go in deep—both when you’re underwater or at work.
21 The Goods
06 Behind The Scenes
India: the next Silicon Valley? The Ticker When going slow pays off The cost attack A Skimmer’s Guide to We First: How Brands and Consumers use Social Media to Build a Better World, by Simon Mainwaring The Inc. Data Bank Real wealth still lives in India’s villages
14 Get Real
By Jason Fried Small companies always try to act bigger than they are. And that’s silly. Being small is nothing to be ashamed of.
A bio-degradable ink that’s green all the way
2 | INC. | JULY 2011
Wake up and smell the coffee Nifty browser plug-ins DIY Facebook design Tech Wise, by Soham Raninga: How to make your HD TV work for you Patrick Rhone uses AwayFind Things Devita Saraf cannot live without
68 I Wish I Knew Then...
P. Sadananda Maiya, chairman, Maiyas Maiya says his instincts have always held him in good stead.
Strategy 59 hiring Contracting the gap—avoid hiring headaches 61 managing Why big-bang ideas don’t work anymore. Tim Harford’s new book, Adapt, says you’re better off taking baby steps
How to make great presentations. Find the Guidebook after Page 24.
62 Elevator pitch Blue Terra lets you watch your pocket and your health. Can their ‘affordable’ spa logic tempt investors?
64 The Way I Work
Guidebook, No. 6
Rahul Nandi on his long-running romance
28 Guest Column
By Pradeep Chopra It’s not about the hits. To be a real star on social media, you’ll need to have genuine conversations.
For Ishita Swarup, getting dirty is the fun bit about being a start-up. It’s a label she takes seriously. as told to rohini banerjee
5 things to do
3. Bring Feng Shui to Your Office
online this month
Be sure to place your fire element in a southern corner, and other tips for creating a harmonious workspace www.inc.com/ss/feng-shui-tips-forthe-home-office
1. Avoid the Seven Deadly Sins of Sales
It’s alarmingly easy to scare off a qualified sales lead. Here are some missteps to avoid.
4. Follow Us on YouTube
Subscribe to Inc.’s channel on YouTube to see interviews with smart CEOs, hear authors discuss their books, and see footage from our conferences.
2. Write a Business Plan Outline
Blogger Marla Tabaka shares her tips for using the contacts-oriented social networking site to bring in new business.
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4 | INC. | JULY 2011
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5. Sell Yourself on LinkedIn
This guide will help you get organised as you begin to put your vision to paper.
A Massive Task quest in 1998 after his children fell prey to The battle for water intensifies The slow-trickle of customers across India every summer. None jaundice. didn’t stop him then and the growing competition is unlikely to scare him off now. of us are insulated. We’ve all had Gupta has lofty goals— 1,000 crore in turnhome taps run dry and overhead over and making sure every Indian home pure drinking water. Read his story of tanks give in, as demand peaks and gets innovation on Page 30. Gupta distilled grit and determination supply falters. into his company. It’s a reflection of who he is. Entrepreneurs
It wasn’t always like this, of course. Surprisingly, India was a water abundant country till 1975, says a Global Water Initiative report. Things dipped dramatically and since 2000 we’ve been in “stress” zone. Unfortunately, availability of water isn’t our only concern. India is fast losing the quality game as well. Every day, 1,600 children die because of lack of clean water and nearly 40 million Indians Things I Learnt are affected by waterborne diseases In This Issue annually. Clearly, safe potable water Your company culture is a serious, urgent issue. won’t flow from an HR It’s also a huge area to make a difhandbook. Great ference in, says Mahesh Gupta, workplaces are a founder and chairman of Kent RO reflection of the people Systems, and our cover story this who run them time. His 250-crore company sells Till you love what you do, big success is a range of water purifiers, and piounlikely. We hear you, neered the mineral reverse osmosis Shashi Kiran Shetty (RO) purifying technology in India. Supreme, almost With the available statistics, one brash confidence is wouldn’t think that clean water infectious and effective. would be a hard sell. But it was for Bravo Kunal Bahl and Gupta, when he started out on his Rohit Bansal
have that special privilege. They can create work cultures anchored in beliefs and values they hold dear. Our feature from the US edition is about unique work cultures. There’s fitness junkie, Randy Hetrick, founder of TRX, a firm that sells exercise equipment and programmes. Working out isn’t a frill he offers his team. It’s part of a day’s work for TRX’s 132 employees. Like TRX, the other three companies featured in this story on Page 48 are winners of the Top Small Company Workplaces Award 2011. Don’t miss this one. It’s a fascinating read. If you’re a regular online shopper, this issue is for you. Intrigued by the buzz “deal” and group buying sites seem to be generating in India, we decided to meet the people locked in the race to be India’s Groupon. It’s an ambitious, high-energy bunch. Enjoy meeting them on Page 38.
Shreyasi Singh email@example.com
JULY 2011 | INC. | 5
BEHIND THE SCENES
Travel logistic How do you get 2,500 head bangers to a sleepy town in the Himalayas? Where logistical nightmares start, Alex Le Beuan steps in. His agency, Shanti Travels, founded in 2005, was responsible for getting fans and artistes safely to the Lake Resort where the event was held. The 13-crore, 80-employee firm has three offices in Delhi, Puducherry and Leh.
6 | INC. | JULY 2011
Companies at the Heart of Everyday Life
Escape—The Festival of Art and Music, Uttarakhand
20.05.11 8:30 pM
Branding No event especially ‘indie’ ones like Escape is complete without eyeball-grabbing branding. Leave all that to Barsati. The Delhi-based firm designed hip brochures, stationery, business cards, signage and a website for the event. Not happy with just that, it also re-designed Escape’s logo into its new rusty-orange and black avatar, which was quite a hit. The brains behind the logo rebirth were architect-turned-designer Reshmi Jyrwa and graphic designer Joseph Pottenkulam.
Artist management Artistes and groups like Pink Noise, Men Who Pause, Five 8, Big Bang Blues, Teddy Boy Kill, Dhruv Sanghari, Ashwin Mani Sharma and Reggae Rajahs rocked Escape. And that’s all thanks to Delhi-based Music Get Me High, India’s first artist management and booking agency. Established in 2006, this zesty firm is headed by Ritnika Nayan, who has in the past organised shows for Maroon 5 and Nickelback.
photograph by Subhojit Paul
reported by Sunaina sehgal
News, Ideas & Trends in Brief
India’s Tech Entrepreneurship Boom A leading researcher says he wouldn’t be surprised if Americans soon flocked to India to start tech businesses
Bullish on India Vivek Wadhwa says today’s entrepreneurs are more tuned in, ambitious and likely to make it work.
The “brain undrain” from the United States to India has been much talked about. Over the past decade, an estimated 100,000 highly-skilled and experienced Indians have come home—to take advantage of the booming economy, or simply be closer to families. Vivek Wadhwa, a well-known entrepreneur, academic and researcher, and part of the Labour and Work-life Programme at the Harvard Law School, says the reverse migration is giving way to thriving tech centres in India and throwing up tempting entrepreneurial opportunities. Not unlike what happened in Silicon Valley, Wadhwa points out. We get him to draw parallels for us.
Describe for us the momentum in tech entrepreneurship in India. How have you seen it evolve over the past decade or so?
With India’s IT industry in its third decade, there are now hundreds of thousands of highly skilled workers who are reaching middle age. When they were young, they respected their parents’ wishes, joined brand-name corporations and built a nest egg of savings. Now they are yearning to break out on their own and become entrepreneurs. The energy at events like NASSCOM’s Product Enclave is incredible. Five years ago, there were about 100 visitors to such events. You feel the energy in networking groups like
Startup Saturday all across the country. Indeed, according to NASSCOM estimates, in 2008, India’s software product revenues had grown from almost nothing a decade earlier to $1.64 billion. It forecasts that this will grow to $11 billion per year by 2015. Fortunately, this potential for growth has begun to draw tech workers home. America’s flawed immigration policies have also acted as a catalyst—it didn’t provide enough permanent resident visas for the hundreds of thousands in line, so wait times commonly exceeded a decade. Those who returned started bringing continued on the next page
JULY 2011 | INC. | 9
back the knowledge of western markets and Silicon Valley’s culture of sharing information, mentorship and risk-taking that was lacking in the local ecosystem. The reverse migration began in the late 1990s and accelerated dramatically in the first decade of the 2000s. My research team’s survey of 153 returnees from the US, who
maintain with the US. They find themselves uniquely positioned to exploit the economic differences between home countries and the US because of their linguistic and cultural know-how and connections with domestic institutions and businesses. Amar Goel of Komli Media, for example, keeps a foot in both countries. So does
Today’s returnee enterepreneurs are able to maintain links with the US. had started businesses in India revealed that more than 60 per cent considered economic opportunities at home important, 53 per cent were attracted by local markets, and 76 per cent were drawn home by family ties. The majority, 60 per cent, took pride in contributing to India’s economic development.
Rajeev Mantri who came back from New York to found Navam Capital. Our research found that this was the norm. Those returnees nurture their contacts and keep track of customers and markets, and changing technologies.
With this changing landscape, how have Indian entrepreneurs evolved?
India is positioned well to have its own thriving tech centres. These will compete and collaborate with Silicon Valley. I won’t be surprised if the flow of talent increases dramatically over the next decade and Americans start flocking to India to launch their start-ups just the way Indian’s have flocked to Silicon Valley. From 1995-2005, Indians started 15.5 per cent of Silicon Valley’s tech firms. Maybe we’ll see Americans launching an equal number of start-ups in India some day. —Inc. India
The first generation of startups I worked with on my trips to Delhi and Bengaluru a decade ago were feeble copies of Silicon Valley companies. They lacked knowledge of markets, experience and the depth to create sustainable tech businesses. A few of these start-ups—like Makemytrip and Indiagames—struggled through the difficulties and achieved successes, but nearly all others failed. There simply weren’t enough mentors and role models to guide the new generation of entrepreneurs. An advantage today’s returnee entrepreneurs enjoy is the links they are able to 10 | INC. | JULY 2011
How robust is this dawn at what you call “a tech entrepreneurship boom”?
Birth, growth and raising capital– start-up addicts live for these stages. Lucky few like Phanindra Sama, CEO and Co-founder of the 120-crore Pilani Soft Labs, phanindra parent company to redBus.in, gets sama to live the life more than once. Pilani Labs has now raised $6.5 million in Series-C funding led by Helion Venture, and participated in by existing investors Seedfund and Inventus, to boost market penetration... Growth is something that Indian VC firm Morpheus is mulling over. It has introduced the bagging cool ideas 3.5-crore worth Morpheus Tritiya. Once it crosses the 5-crore mark, the fund will help about 70 start-ups in the next four years...Also chasing the start-up dream is Manoj Gupta, principal at Mumbai-based Nexus Venture Partners, who plans to start his store—Craftsvilla.com— selling home décor, jewellery and bags. Gupta earlier co-founded WIT, a US-based semiconductor technology firm acquired by Chronotel...V.S.S. Mani’s Mumbai-based JustDial, an India-specific business listings site, is also eyeing expansion after it raised $10 million from Sequoia Capital Global Equities and SAP Ventures... Another player in the investment game is International Finance Corporation, an arm of World Bank Group, which is pouring $4 million into Sapphire Industrial Infrastructures, a subsidiary of Moser Baer Clean Energy, for a 5MW solar plant at Sivaganga, Tamil Nadu...While others give, Annand Sarnaaik’s Glodyne Technoserve is taking. It has acquired e-governance services firm Comat Technologies in order to expand its presence in the e-gov space.—Inc.India
photograph by Jiten Gandhi
India’s Tech Boom continued...
When slow is better
For some businesses, great customer service simply means fast with a smile.
For others—think luxury hotels, hair salons and doctors’ offices—it’s all about timeconsuming, personalised attention. The concern, of course, is that high levels of customer service can alienate those waiting in line and, eventually, depress sales. So how can customer service intensive businesses strike a balance between quality service and high profits? The answer: limit the number of customers you serve, but charge them more, advises a recent study, “The Quality-Speed Conundrum: Trade-offs in Customer-Intensive Services.” Scaling back on customers runs contrary to many entrepreneurs’ instincts. But, “for these businesses, there are no shortcuts around this need for individual attention,” says Krishnan S. Anand, a business professor at the University of Utah and co-author of the paper, published in the academic journal, Management Science. The challenge is finding the ideal balance between service and speed, write Anand and his research partners, Senthil Veeraraghavan, professor of business at the University of Pennsylvania’s Wharton School, and Fazil Paç, a PhD student at Wharton. To that end, the authors have developed a set of mathematical formulas to construct what they call a queuing framework. Here’s how the framework might work: say you run a spa or any other business that requires spending-intensive periods of time with your customers. You spend 45 minutes on each client, charging $57 per client, and you would like to increase your revenue. The first step you might consider taking is shortening each session while keeping the price constant. The researchers’ model, however, by using a series of algebraic equations that measure such factors as number of waiting customers, wait time per customer, and potential demand at varying prices, shows that you can maximise revenue by increasing each session to one hour and charging $85 a session. As an example of a business successfully navigating the quality-speed trade-off, the researchers point to concierge medicine, in which groups of doctors start practices that charge annual fees in exchange for seeing fewer patients and offering more personalised care. Though they focused largely on medical care-providers, the authors believe their work is applicable to other businesses. “Customers don’t want to wait while the person in front of them gets all the attention,” Anand says. “But we all want the same attention.”—J.J. McCorvey
The challenge is finding the balance between service and speed.
You aren’t alone Inflation is breaking many backs, both big and small. Nearly seven out of 10 (69 per cent) Indian companies are reeling from the rise in labour costs. Another 64 per cent also face rising logistics expenses, shows a recent research by Regus, the workplace solutions-provider. Regus, asked over 600 senior business decision-makers across India how inflationary pressures were affecting their business operations. Rising raw material costs (54 per cent) are a major concern as well. The survey revealed a divergence between the number of smaller and larger companies affected. Larger companies are, in fact, more severly impacted. Fifty-eight per cent experienced reduced demand for their products and services compared to 43 per cent of small companies. Madhusudan Thakur, Regional Vice President, South Asia, Regus, said, “We anticipate that increasing numbers of smaller and medium enterprises will also be affected. Smart business-leaders will now be looking at the most effective ways of managing their costbase while continuing to grow their business.” Moreover, Regus’s Business Confidence Index showed 70 per cent of Indian companies are looking to reduce spend on workplace by seeking cost-effective ways to work.” —Inc. India JULY 2011 | INC. | 11
A skimmer’s guide to the latest business books
The book: We First: How Brands and Consumers Use Social Media to Build a Better World, by Simon Mainwaring; Palgrave Macmillan. The big idea: Companies and consumers should make decisions about what and how they sell and buy with an eye toward common prosperity. Social networking provides a bazillion ways to do that. The backstory: Mainwaring, CEO of a brand consulting firm, was inspired by Bill Gates’s call at Davos in 2008 to engage in creative capitalism to harness market forces for social good. Universal donors: Mainwaring advocates a system called contributory consumption, in which every transaction generates a contribution toward improving the planet. You can’t hide: Mainwaring paints a future in which consumers know as much about companies as COOs do and allocate dollars accordingly. If you are not familiar with applications like GoodGuide, which has information on 100,000 consumer goods, or Greenopia, a listing of environmentally sound businesses, then you should be.
If you read nothing else: The last four chapters survey innovative marketing and volunteerism as well as tools such as private shopping clubs that influence companies’ practices. Rigour rating: 7 (1=Who Moved My Cheese?; 10=Good to Great). We First is based primarily on secondary sources. But it serves up so much data that you can build your own social responsibility plan without cracking another book. —Leigh Buchanan
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inc. data bank
Crunching the numbers
Portion of new entrepreneurs in the US who are immigrants:
Portion of small businesses (50 employees or fewer) with company Facebook pages In 2009:
AT&T Small Business Technology Poll
Change in the number of small-business bankruptcy filings from the fourth quarter of 2009 to the fourth quarter of 2010:
Share of small-business owners who say they will probably need to use personal assets in the next 12 months to stay in business:
Segment of small and medium-size businesses that intend to increase their online advertising budgets in 2011
Change from fourth-quarter 2008 to fourth-quarter 2009:
(up from 61% in 2009) Discover Small Business Watch
Change in the total dollar amount of commercial real estate loans of $100,000 or less:
the global workplace
Propotion of employees who say they are dissatisfied with their job:
Segment of employees who plan to stay at their job: 2008
Accenture (based on a survey of more than 3,400 employees from 29 countries, including the US)
Small Business Administration
Annual change in number of patent applications
(the largest increase since 2006)
US Patent and Trademark Office
Share of businesses that increased investment in basic sustainable business practices, such as reducing water and energy usage, in 2010
Businesses with aggressive sustainable business practices: small businesses
MIT Sloan Management Review
—Compiled by Andrew Shafer
The Perfect Model A driven entrepreneur is banking on India’s villages to create real value Ajay Chaturvedi is at once a journalist’s dream and a nightmare. He speaks passionately about
HarVa, his Gurgaon-based company, but so fast and so forcefully that you have to ask him to slow down. It’s a pace his “unique enterprise” is using well. Essentially, HarVa—Harnessing the Value of Rural India—runs outsourcing centres (BPOs) in 13 villages in Haryana, Rajasthan and Uttar Pradesh. The centres, predominantly staffed with local women, who are trained for free, do a range of data-mining and extraction and digitisation projects. Yet Chaturvedi says his is not some do-gooder social outfit. It’s a “socio-capitalistic” model—aimed both at untapping the value in rural India and giving his clients the cost-benefit advantages of lower rentals and lower attrition. Also, his centres will eventually transform into “perfect huts” where HarVa will offer medical, microfinance and organic farming helpdesks. Utopian dreams, perhaps. But Chaturvedi, a former Citibank banker and BITS Pilani and Wharton Business School alumnus, lives on confidence. HarVa recently acquired SourcePilani, a well-known rural BPO, and DRASH Services, another call centre provider.—Shreyasi Singh
Rural India is the new buzzword for growth. Is HarVa well-poised to leverage that?
People don’t really understand the value of rural India. The rural BPO story isn’t the next big idea. It won’t boom like the call centres of Gurgaon and Hyderabad. There was a 300 per cent margin difference between the US and urban India. In urban India to rural India, the margin is less. We are bringing it down by 50 per cent. But, more than margins, it’s attrition that’s killing urban BPOs. That’s where our rural centres score. We employ local villagers who are less likely to travel for jobs. Plus, our centres will help in really unlocking rural India, not just juice the idea. The trust we build in generating jobs in these villages will help us reach out with advice on education, medicine and microfinance. Rural BPO is great, but you have to focus on much more. It has to be looked at very differently. The one thing you’re doing differently is the focus on employing mostly women in your centres. How did that come about?
Well, it isn’t about women’s empower-
A Real Win-win Ajay Chaturvedi is confident he’s found the best route to India’s villages.
ment for me. They don’t need us for that. We found that women make perfect employees for HarVa. Because their families are mostly dependent on agriculture, they are a permanent, stable workforce. For most women with us, this is the first opportunity they’ve got to
work outside of their homes, and be in a job. They are grateful for that chance. They typically earn between 2,500 and 7,000, and they are proud they can support their families. All we ask for is Class VIII qualification. We then give them a two to four-month-long training in basic computer and language skills. We’ve trained 500 women so far. It was very difficult in the beginning to break social mindsets in Teekli, the village near Gurgaon where we began. However, slowly people came around. We showed their families that these were safe centres, indoor jobs. And now people ask us to get more clients, so we can absorb all the women we train. Do you hope your recent acquisitions will help bring in more clients?
Of course, we have an experienced team now. I didn’t want to invest time in learning the BPO rope. The acquisitions have helped us deepen our understanding of the industry. SourcePilani and DRASH services have working clients and the experience of client-delivery already. Those are critical advantages. Together, we have 12 clients and about 100 people across 13 centres, four of which are active. We want to maintain SourcePilani and DRASH’s individuality. Their founders, Manoj Vasudevan and Shailesh Giri, are our new head of marketing and CIO. SourcePilani (now HarVa SourcePilani) especially has a vibrant online presence and helps international clients find us. Give us a sense of how things look ahead for HarVa, in the next year or two?
We are looking at a very difficult landscape. We should have touched 500 people today but that’s not happened. There is no roadmap because there is no road. We need to drive down the capital expenditure of setting up a centre so low that each breaks even within the first few months. Our cash flow is positive. But, we are just chasing growth and building our client portfolio. JULY 2011 | INC. | 13
GET REAL BY JASON FRIED
Nearly every start-up founder exaggerates his company’s size to impress clients. (I know I did.) Such behaviour is silly and unnecessary—not to mention completely humiliating Before I co-founded my current company, 37signals, in
1999, I had a software and web design business called Spinfree. The internet was a fairly new and an exotic phenomenon back then, and it was pretty easy to drum up clients willing to pay quite well to improve their nascent websites. Within a year or so, I had a nice client list, built entirely through word-of -mouth. I was just a year out of college and making a good living. While my friends were struggling with entry-level jobs they didn’t like, I was doing exactly what I wanted to do. But Spinfree had a dirty little secret: It wasn’t really a “company”. It was just me. My headquarters consisted of a small desk a few feet from my bed in a cramped, one-bedroom apartment. I was pretty insecure about my solo status and went to great lengths to make things appear otherwise. When describing Spinfree, I always spoke in terms of we, us, the team, or our offices. I trained myself always to use the collective first person on the phone while pitching to potential clients, on Spinfree’s website, in the proposals I submitted. And because I seldom met my clients face-to-face, it was easy to keep the ruse going. Many of them probably had the impression that Spinfree was an actual company, complete with teams of professionals ensconced in cubicles, hard at work on their projects. Why the bluffing? I was young and inexperienced and felt like people would not take Spinfree seriously if they knew that it was just me. After all, what responsible businessperson would trust some young punk right out of college with a brand’s online presence? As the saying goes, no one ever got fired for hiring IBM. But it
14 | INC. | JULY 2011
seemed certain that someone could get fired for hiring me. I felt I had no choice but to act big. I remember the relief I felt when I hired my first employee, in 1998. Suddenly, there really was a we and illustration by Shigil N
an us. An enormous weight had been lifted, and I wondered how and why I had spent the past couple of years acting—and flat-out lying. A harmless little lie, maybe, but a lie nonetheless. I didn’t feel good about it. Did the deception actually win me any business? Who knows? It may have helped me get a foot in a couple of doors. But in retrospect, I find the fronting pretty embarrassing. And dumb. Because all of my clients came from word-of-mouth referrals, I was playing a game of chicken
consultants. Obviously, I understand why they’re doing it. I just wish they understood why one, it’s a bad idea, and two, it’s completely unnecessary. Fibbing about scale is only part of the problem. There’s an awful lot of resumé enhancement going on as well. Think about what’s really happening when you see, say, Hewlett-Packard on someone’s client list. Do you think the person really worked for HP? Or perhaps it was just a small job for the HP re-seller down the street?
I once met an entrepreneur who told me that Boeing was a client. It turned out the company helped a Boeing executive set up a personal blog. with a lot of potential business. Being discovered not only would have been humiliating—no one likes to get caught in a lie, however well intended—it could have harmed my reputation. When I helped launch my next business, 37signals, we decided from the outset that openness, honesty and transparency would be its core tenets. The plan was simply to be honest with customers and let the chips fall where they may. That’s exactly what we have done for more than a decade—whether it’s admitting when we mess up or making sure our prices are public, with no hidden fees. We sleep well at night knowing we have nothing to hide. I like to tell this story to young entrepreneurs when I meet them, because I see so many of them following the same pattern I did. They’re stretching the truth, acting and misrepresenting themselves in the name of winning business. It’s especially common among independent designers, programmers, copywriters and
I once met an entrepreneur who told me that Boeing was a client. I raised an eyebrow: “Really?” It turned out the company helped a Boeing executive set up a personal blog on the side. When I asked him why he felt it was worth citing Boeing as a client, he told me it would help him build trust with other potential big clients. If they knew he’d worked with Boeing, they’d be more likely to hire him. I don’t think he even understood what he was saying. Building trust via deception? That “credibility” isn’t going to take you very far. And if you get caught in your bluff, you’ve lost the client for sure. What’s more, the business culture has changed considerably since I was “running” Spinfree in the mid-1990s. There’s a lot more respect for small outfits and even solo players than ever before. Who isn’t fascinated by the story of the lone programmer creating a blockbuster iPhone app on a laptop in his kitchen? Who doesn’t admire the entrepreneur with the guts to do her own thing? Small is really where it’s at. Even the
big guys act as though they wish they were smaller. The largest corporations in the world sell themselves using terms most often used to describe entrepreneurs: agile, flexible, customer-centric. They crow about the fact that employees are rewarded for acting like entrepreneurs. And think about all the executives who fantasise about running their own shows. Does that mean they will award you the big contract? Maybe not. Even in the age of the entrepreneur, not everyone is eager to place a major project in the hands of a small shop. But clients who are impressed by scale aren’t the kind of clients you want anyway. Lots of start-up founders dream of working for a big brand, but the truth is, it’s usually pretty crummy work. Instead, find like-minded clients closer to your own size, and grow with them. I can guarantee that you’ll wind up doing more interesting, more challenging work. Another advantage to owning up to your slight stature: your customers will always know whom they are dealing with. They’ll know they’ll get the most personal service possible. A lot of people have had the experience of working with a company only to see their key contact move on to another job. The relationship is lost. That’s not possible when it’s your business. You are your business. They’ll have you from start to finish. That’s a big advantage. I wish I knew then what I know now: being small is nothing to be insecure or ashamed about. Small is great. Small is independence. Small is opportunity. Celebrate it. Don’t hide from it. Businesses always benefit from being straightforward and clear. So don’t worry about it. Don’t act. Be upfront and honest, and bask in your smallness. It’s truly to your advantage.
Jason Fried is co-founder of 37signals, a Chicago-based software firm, and co-author of the book Rework. JULY 2011 | INC. | 15
Companies on the Cutting Edge
Printing inks may create beautiful worlds on paper but can they create an equally beautiful canvas for Mother Earth? If you ask Krishna Gopal Singh, that would be an emphatic yes. After all, this chemical engineer from IIT Delhi isn’t made of the same hue as others. With his team Singh has developed EnNatura—an ink which contains only 20 per cent pigments and additives. The rest is completely biodegradable. Most inks are petroleum-based, EnNatura isn’t. Neither does it contain hydrocarbon solvents. Singh has cleverly mixed plant resin (tree gum) with vegetable oil to form a base. Patented in 2009, EnNatura is easily washed off by an alkali or water-based solution: a process that cuts costs by more than half.
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Components Vegetable oil-based resin Non-edible vegetable oil Colours and additives Awards Material Winners Award, Technology Review Under 35 Slow and steady The ink is not available for sale as a unit. Singh takes orders for large-scale industrial printing and executes them himself.
“This ink can be easily washed off with water. This is why our product is different.” —Krishna Gopal Singh, co-founder, EnNatura
photograph by Subhojit Paul
reported by sunaina sehgal
The Scuba Sutras BY Guhesh Ramanathan
Always remember your 50 bar limit
It’s easy to dive in deep when you get big projects. Just make sure you’re tanked up with oxygen
Now before you get carried away, the “bar” here doesn’t mean drinking holes. In scuba diving, a bar is a unit of pressure which refers roughly to the amount of air left in your tank. One of the first things you do when you strap on your equipment is to check the air pressure in your tank. Ideally, it should be around 200 bar, enough to give the diver an hour of breathing time underwater. The air pressure in the tank slowly keeps decreasing when you dive. A good diver by a regular check out for his air pressure on his dive gauge. He knows it’s time to get out of the water when the gauge of the scuba tank reads 50 bar. It’s the point of safety reserve. With 50 bar of air, you can only stay for 15 more minutes under water. Here’s an example of what goes wrong when you ignore the 50 bar limit when diving. The Maldives offers some of the most stunning underwater views
18 | INC. | JULY 2011
imaginable—crystal-clear turquoise blue water, amazingly rich reefs populated with schools of all kinds of fish and colourful sea-fans. It’s easy to lose yourself in this world and forget everything else. Once, we were diving off one such location. The sights were so vivid that they tempted us to stretch out the dive. When our dive master stopped us to ask about how much air we had left in our tanks, I cheerfully gave him the OK signal without even bothering to check the pressure. Some 45 minutes later, he gave us the signal to end the dive and surface slowly. I checked my gauge then. I was down to 20 bar, just illustration by Binesh Sreedharan
The Scuba Sutras
enough for about five minutes of underwater time. But, because we had been diving fairly deep, we had to do a safety stop—where you ascend to about 3 meters below the surface, and stay there for five minutes. Those were the longest five minutes of my life. I’d look at my gauge every few seconds, watch the needle drop closer to the “empty” mark. By the time four minutes were up, I was terrified. The needle touched the empty mark and it was horrifyingly difficult to take a breath. When the dive master finally gave the signal to ascend to the surface, I was off like a shot. The air I breathed on the surface was the sweetest I had ever tasted. And I vowed that I would never ever make the mistake of ignoring my 50 bar limit again. In much the same way, very often at work, we ignore the 50 bar limit. Every now and then, we come across the deal of a century. The single deal that once closed would rocket the business into another orbit. That’s what happened to SA Infotech, a software company I advised a few years ago. The company primarily built custom applications for customers, had around 30 people on its rolls and was beginning to make fairly decent profits. But, they were aggressively looking out for ways to scale up their business dramatically. They had built an application called MobiTrac, to be used by organisations for sales reporting. When a large consumer products company came out of the blue, almost to commission a mobile phonebased sales tracking system for their large and distributed sales force across the country, it seemed like the best thing to happen to SA Infotech. A regional head of sales pf the company visited SA Infotech office and his interest was obvious. SA Infotech demonstrated the product to him. His encouraging comments were a shot in the arm. He indicated he saw ‘serious potential’ in this product, as it could easily track individual sales performance, reduce reporting time by a month, bring costs down and help them track sales trends across geographies. He wanted SA to demonstrate the product as quickly as possible to their technology folks.
Within minutes of his leaving, everybody at SA Infotech was celebrating. We were euphoric. This was brilliant: with this company as a client, the sky was the limit. We did some quick calculations and realised that this single deal would triple SA Infotech’s revenues. And, those were conservative estimates. We pulled out every stop to make sure that MobiTrac was built to rugged specs. We demonstrated the application to the client’s technology team. Impressed, they then took us through their own (rudimentary pen and paper) tracking system. They came up with suggestions for improvement in MobiTrac. They added functionality specifications even beyond what was needed at the moment, but
“Our bank balance is very low, you kn ow, ” he said. “How low?” we asked, almost nonchalantly. “Well, it’s really low. We have just enough to manage 15 days of cash flow, that’s all.” In all our euphoria, we had forgotten to keep an eye out on cash flow. We had reached critical levels. For the next three months, the company really suffered— salaries weren’t paid and vendors queued up outside our office. The building owner showed up religiously to collect the rent. Our only weapon was to wave a copy of the signed MobiTrac contract and airily tell everybody, “Hey, things will be all right soon. Just be patient, will you?” Sure, finally, we did scale-up the deal to its full value. But it took us almost nine
Very often, we ignore the 50 bar limit at work for the deal of a century which once closed, will take the business to another orbit. which, if implemented, would add tremendous business value to MobiTrac. For six months, we concentrated only on MobiTrac and that single client. Every person at SA Infotech was totally focused on ensuring that the product was built to specs, meeting deadlines that were set, and finally, ready for deployment. We were so deeply involved that we had ignore the worried look on our accountant’s face. Sure enough, we got the deal. And like every large client, the terms were stiff. They would pay SA Infotech well, but the payments would be staggered as the product was deployed (and as it stabilised) across geographies. We would have to hand-hold the sales team in every geography to ensure adoption. When we had finished slapping ourselves silly on our backs, we finally stopped to look at the accountant.
months to get there. Those nine months still remind me of the longest five minutes of my life under the waves in the Maldives. Which is why, as you soar high, or dive in deep, keep an eye on your air supply. It keeps you alive.
Guhesh Ramanathan is a mentor at the entrepreneurship cells of IIM Bangalore and IIM Ahmedabad. He serves on the boards of several companies, and is an advanced certified scuba diver. JULY 2011 | INC. | 19
Your Business Toolbox
A Caffeine Kick Get high on your office coffee
Coffee: no one can live without it—especially
in an office, where work never ends. Thanks to these four coffee machines, you can kiss good bye to dipping energy and droopy eyes. The sight, smell and sound of fresh coffee brewing can wake up the dullest soul. So how about investing in a great beverage maker? Rest assured, the returns will be worth it. —Sunaina Sehgal
1. The Equity Coffee maker
While other machines require time and attention, this machine makes sure you worry about your work and not your coffee. All one needs to do is put water in the main body of the machine. The transparent water scale helps see the millilitres put in. Flip the top and bury the coffee filter with coffee powder. And then just switch it on. The brewed coffee collects in the heat resistant glass jar placed underneath. With an entire jar of coffee to yourself, one doesn’t even need to count the cups in this case. price: 1,500
courtesy company (4)
3. DeLonghi’s Icona ECO310.0B
This is a traditional pump machine that will help you to prepare a delicious espresso or cappuccino. Featuring a highperformance 15-bar pressure pump, the machine ensures quick, professional results every time. The machine can accommodate two, full-sized cappuccino cups or two espresso cups and incorporates a milk frother for the perfect creamy cappuccino! You can either use ground coffee beans or pods for a strong cup of coffee. Plus its sleek finish, makes it eye-catching. price: 20, 000
2. DeLonghi’s ICM 30
This coffee maker is like Equity’s bigger, more popular cousin. With the patented “Complete Frontal Access” feature, you can now fill the water tank and ground coffee filter easily. Simply open the door by using the handle, pour water in the channel and put grounds into the filter. A cup storage tray, right at the top, keeps coffee cups warm until used. The jug can be removed anytime including while the coffee is brewing. Once the coffee is ready, it automatically shuts-off. It can brew up to 12 cups of coffee at one go. price: 10, 000
4. ESAM 6700
This automatic espresso machine is the big daddy of the other three. It has an automatic milk frother which can prepare cappuccinon, Italian macchiatos, cafe lattes and frothed milk. Just place the milk in the milk jar, attach it to the machine and press away. The system provides four different milk buttons for maximum ease of use. With the milk containers auto clean function, one doesn’t even need to worry about manual cleaning. It has an integrated coffee grinder as well with 13 adjustable grinding settings. price: 1, 50,000
JULY 2011 | INC. | 2 1
Products + Services
Fabulous Facebook Pages Designing custom tabs on a budget Ready to take the plunge into Facebook marketing? A new breed of DIY services lets you
create custom Facebook pages for your company without breaking your marketing budget, no coding skills required. Here are three we like. —Adam Baer best for: basic pages best for: your own unique look
Your browser, supercharged Most web browsers include bare-bones tools for managing bookmarks and surfing the web. These browser plug-ins can help you get more out of your online time. —J.B. Diigo
boomerang for gmail
Boomerang, which works with Google Chrome or Mozilla Firefox, lets you compose messages in Gmail and schedule them to be sent at a specific time. You can also flag incoming messages to have them reappear later—the day before a meeting, say. cost: Free wordtracker link builder
This Mozilla Firefox plug-in helps you determine which web links could generate the most traffic to your site. After you install the plug-in and add the Link Builder icon to your browser’s toolbar, you can visit the site you want to analyse and click the icon to save the URL in your “link stash”. Then, you can log on to Link Builder to see how many domains are linking to the site. cost: $59 a month
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best for: promotions
The most affordable option in our roundup, Pagemodo is free for one custom page with unlimited fans and a Powered by Pagemodo credit. To use it, sign in to your Facebook account, go to pagemodo. com, click Get Started, and begin designing, using the service’s intuitive interface. You can choose from 18 templates, re-size and upload images, add text, change colours, and embed video. Then, click Instal to Facebook to publish the page. Pagemodo also offers accounts, starting at $6.25 a month for three pages with unlimited fans and a smaller Pagemodo credit.
This service lets you create and launch a wide variety of promotions, including group coupons and sweepstakes, from your Facebook page. After logging in to Facebook, go to northsocial.com and click on Sign Up, then Connect With Facebook. Next, select the page you want to customise from a menu. There are no design templates; instead, you upload photos and text to different areas of the page, including headers and footers, and create promotions using apps. Subscriptions start at $19.99 a month for one page with up to 1,000 fans and a North Social credit.
A good fit for companies looking for lots of design options, ShortStack offers more than 40 design templates and the ability to paste in custom code. Go to shortstacklab.com, click Start Here, and log in to your Facebook account to begin designing. You can upload your logo and images and use widgets to add features such as YouTube videos and your Twitter feed. Unlike Pagemodo and North Social, ShortStack also offers analytic tools that tell you how many people visit your page and what they click on. Free for unlimited pages with up to 100 fans total and a ShortStack credit, the service also has premium versions, starting at $9 a month for unlimited pages with a total of up to 2,500 fans and a credit.
Visit technology.inc.com to check out the new Inc. Tech website, which features the latest technology news, tips and blogs, along with advice from top tech CEOs.
Courtesy company (3)
Compatible with most brow sers, Diigo lets you bookmark web pages, highlight text, and make annotations using buttons on your browser’s toolbar. You can save the links to your library on Diigo.com and access them from any computer. cost: Free for a basic version; $20 a year and up for advanced versions
Work + Play
tech wise soham raninga
Wait before you splurge on that big-screen HD TV Figure out your feed first With falling prices and a mother lode of features being crammed into the latest big-
screen HD television sets, it’s easy to be tempted to get one for your living room. A friendly tip—as long as you don’t have technicolour expectations, you’ll be fine. You get this brand new 46-inch High
Definition (HD) TV, bring home your pride and joy and lo and behold, what do you get—washed out and pixilated pictures. Newsflash: your TV may be HD but your cable transmission is not, which is why buying an expensive TV can sometimes cause a lot of heartburn. Here’s a clearer picture. What you see at the showrooms are HD resolution clips that bowl you over with stunning detail and great sound quality, those HD clips are specialised content that accentuate the abilities of the HD TV. When you take that inferior quality and stretch it to fit your brand new 42 or 46-inch display screen, pixels is what you see. HD TVs need HD content, which is why you need to ensure that the native resolution of your HD TV (1920x1080 pixels) is fed with a similar amount of information through an HD feed. The first requisite for enjoying a HD TV, in all its glory, is to get an HD transmission which unfortunately isn’t the standard offering. It’s a premium service. You’ll need to subscribe to high definition broadcast services which come with an HD set-top box that accepts high definition signals from satellites and decodes it to feed a Digital HD signal to your TV. Without an HD quality feed, watching a regular digital DTH or cable TV on a large screen HDTV will basically give you inferior image quality to that of a 21-inch CRT TV.
It’s at best a half-solution
With the likes of TATA Sky, Dish TV, Airtel and Reliance shouting their lungs out to sell their HD DTH service, you already know that the service definitely
exists in India. But, there are only 10 to 12 channels that are really available in true HD resolution. So, actually even getting a HD DTH service will only solve about 10 per cent of your problem. Only ten out of the 120 odd channels offered by the service provider will be in HD anyway. Dish TV claims that their HD service provides all channels in HD. They might just be stretching the term “HD quality” there. What happens is that regular SD channels which aren’t recorded in HD format are “upscaled” to HD quality. There is, of course, a marginal improvement with that but it’s nowhere close to true HD quality. Don’t fall for all HD traps. Be vigilant and do your homework. I don’t mean to scare you off HD DTH for good. Getting yourself one is still worth it. And because the quality is so incredible, even watching the dozen odd channels on HD is a pure treat, and will make you feel good about the money you’ve spent. If you do buy the HD set-top box, I would strongly recommend getting one with the recording feature. Being able to record your favorite shows and movies in HD quality to view at your own leisure is truly a luxury that’s worth investing in. Also, HD channels are free of annoying commercial breaks. Yup, that’s true. You actually do get an ad-free world of pure entertainment. With more channels going down the HD highway and subscriptions becoming more affordable, many HD channels are bound to be introduced in India. So, the not-so-well HD TV set in your living room can soon justify its existence. Well, worth the wait, I say.
My favourite tool for prioritising e-mail patrick rhone, founder,
machine methods consulting st paul
My IT consulting company caters to individuals and small businesses. I like to give my full attention to clients during consultations, but I also want to keep up with urgent e-mails. AwayFind, a web app that works with my Gmail accounts, helps me do just that. On AwayFind.com or on my AwayFind iPhone app, I can type in the e-mail addresses of important contacts, then set filters so I’ll be alerted by text, push notification, or voice call if they e-mail me. For instance, I can choose to receive a push notification on my iPhone if my programmer e-mails me during a client meeting, just in case he has an important update on the account. I can also choose to get voice alerts for certain e-mails. Then, when I’m driving back to the office after meetings, I listen to audio versions of the messages using my Bluetooth headset. Another great feature: when I’m travelling, I add an AwayFind contact form to my “out of office” message. If someone needs to reach me urgently, he can fill out the short form, and I’ll get an alert. I pay $15 a month for the premium version of AwayFind, which monitors my personal and business Gmail accounts. AwayFind gives me the freedom to ignore the clutter in my inbox. —As told to J.J. McCorvey JULY 2011 | INC. | 2 3
Things I Cannot Live Without...
Visiting cards You never know who you might bump into. Crisp notes I’m still one of those who believe in the power of cash.
Lipstick Just a bit of vanity, every girl is entitled to one.
CEO, Vu Televisions
The Mobile Phone It’s not a part of me but it could nearly well be.
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Devita Saraf’s not a stranger to tags—she’s been called the “tech princess”, she’s a Mensa member, a trained Ikebana specialist, one of India Today’s nominees for the 25 Most Powerful Indian Businesswomen, a Wall Street Journal columnist, and the youngest member of FICCI’s executive committee. Here’s a gal (yes, we can call her so because she’s that young) whose interests lie in several fields: business, dance, drama and design. As the CEO of Vu Televisions, her job is to bring to the market innovative, youthful technology that strike a chord among the country’s youth. Underneath it all, there’s also a young woman who can’t do without the little pleasures of life, like a lipstick.—Rohini Banerjee
...and What I Covet An apartment in New York Overlooking the Central Park. That would make life perfect.
Everything you need to know to run your business in today’s economy
: : : : : : : : : : : A monthly guide to policies, procedures and practices
Remove booklet along dotted Line
make Great presentations A job well begun is half done, they say. It’s certainly true for business pitches. And more often than not, your PowerPoint presentation is your main weapon to impress. Creating a professional-looking, effective and unique presentation, however, can be a daunting task. Standing out is key to being heard. But since most presentations are built on popular PowerPoint templates, it’s hard to look different. Most slides mirror each other—a heading, some bulleted text points, and a few images or graphs thrown in here and there (often just to add some visual relief). But it is possible to give your presentations a pick-me-up. Haven’t we all come across presentations that make us sit up and take notice every now and then? So, what gives a slide show the winning edge? According to Abhisek Sarda, founder of PPT Salon, a presentation design start-up, ‘Original presentations are an outcome of a good aesthetic sense, understanding the principles of visual design and grasping the meaning of the content to be able to tell a story.’ Evidently, there’s a lot that goes into making an impressive presentation—from getting the content right to choosing the fonts, colour scheme, picking an appropriate background and layout. Many of us toy with these elements, uncertain of which to use to pack a punch into our slides. Read on to learn more about the ‘art’ of putting a deck together. —Charu Bahri
Vol. 02 No. 06 | inc. guidebook
Make great presentations : : : : : : : : : : : : :
Content is king Structure it well
Keep it focused: Slides are useful tools to reinforce your message. But you can’t begin creating a presentation before getting the message right. According to Nanjunda Pratap Palecanda, founder, 168interActive.com, a digital and social media organisation, “Successful presentations are crisp, to the point and delivered simply.” They must also be tailor-made for your target audience. “Consider where the audience is coming from, what they already know, and how best to put across the message to them.” Good slide shows retain the audiences’ attention by focusing on aspects they are interested in. Boil down the content to its very essentials. Some presentations are aimed at sell ing a product or skill. “Such slide shows should emphasise the value you bring to the table,” says Varadarajan Krish, co-founder and president, Investment Innovation & Research Alliance, Bengaluru. Structuring the content is crucial. Chalk out the flow by preparing an outline for each slide to decide which slide should go where—grouping similar topics together makes the most impact. Aim to tell the story logically. If it helps, use the outline or notes pane to work on your presentation outline. Ideate well: Less is more when it comes to text on a slide. According to Sarda, “A simple rule of thumb is to have only ‘one BIG idea’ per slide.” An idea is best expressed by an evocative visual; a short, interesting headline; and if required, a few keywords or bulleted short phrases, not sentences. Also, use as few numbers inc. guidebook | Vol. 02 No. 06
as, possible. “Think of each slide as a poster, not a legal notice. Slides are meant to emphasis the point you make, not serve as your cue card to read off from,” he adds. People will lose interest in your talk if you read out from slides.
elements that might distract the audience. If you have an official presentation to make, include your company logo in a corner or as a background. Most importantly, don’t cram the slides with too much information. Stay clear of the edges to ensure your slides don’t look congested. According to Rohan D’Souza, a senior officer in a regional branch of Toyota, the positioning of graphics and text on each slide depends on what it’s trying to convey. “If the trend expressed by a graph is the focal point of a slide, then you would position it dead centre, for prominence,” he explains. Still, corporate presentations usually stick to a standard format wherein images and text are placed likewise on each slide.
Boil down the content to its very essentials. Getting your message right is critical. Visuals such as graphs, photographs, and clip art strengthen presentations by helping tell the story and keeping the audiences’ interests alive. Pictures speak louder than words, especially when content is projected on a large screen. Appropriate graphics aren’t meant to decorate slides—they are visual cues that help the audience see what you are saying and get the point faster. Preferably use your own images. Else, search online sites for material that you can use without copyright issues. Avoid tables (unless absolutely necessary) since many people find it difficult to digest series of numerical data. Lay it out well: Well-designed slideshows say a lot about your professionalism. “Layouts are also a way to capture or emphasise the context of the presentation,” says Palecanda. Aim for a basic and simple layout that makes the best possible use of the available space and helps the audience focus on the key message. Also, go easy on decorative
Spice it up
Choose appropriate fonts: Typography (font) is a visual element in itself and hence, key to making a good presentation. Sarda recommends using fonts that match your subject. “I’d write poetry in a Serif font like Georgia and I’d announce a technology breakthrough using a modern San Serif font like Interstate.” Stay away from funky fonts that mimic handwriting since these are hard to read. Preferably combine no more than two appropriate fonts consistently on all the slides. Keep the title font size at 44 and sub-titles and text between 28 and 34. Also, headers may be in bold but avoid making all the text bold. Likewise, don’t type in upper case throughout as it makes the
slide hard to read. Italics work better than colour differentiation to highlight text. Play with colours: Colours are a valuable tool to enhance your presentation’s appeal. Corporate presentations tend to be formal and mostly use white or light-coloured backgrounds. “White backgrounds allow a wider colour palette for the text. However, it’s advisable to restrict to three colours for a presentation—one each for the header, body and footer,” says D’Souza. Pitches made by the advertising and event management industries are expected to have a touch of glamour. “This is achieved by opting for darker backgrounds and text fonts in more
contrasting colours.” For example, yellow or white letters appear to come forward on a slide with darker backgrounds while dark blues and deep reds recede. Also, consider that colours usually appear lighter when projected. Try to contrast text that stands out with a background that fades away. Darker backgrounds with lighter text reduce glare and tend to be easier to read than light backgrounds with dark text, especially in rooms darkened to facilitate slide shows. Use special effects: Animation is a powerful tool—it can help explain complex subjects and make a more lasting impact. Use it judiciously so it doesn’t distract or come across as gimmicky.
Media such as audio and video content also enhance presentations. Dr Suresh J., a yoga master who uses slideshows for training purposes, says, “Video clips especially explain somethings that are otherwise difficult for the presenter to convey. They make it easy to illustrate a key point and engage the audience.”
Clarify the take away message
Good presentations express a clear message . Where slides help pitch a product or service, Varadarajan describes the key take away as answering the question “What’s in it for me?” As long as the audience sees benefit, your slideshow is well received.
make great presentations: : : : : : : : : : : : :
Tips to create a good presentation
Check out these tips to create better presentations in a jiffy: Use the Master Slide option: Save time and create consistent slide shows by
using the Master Slide option (View/Master/Slide master) to set the font—its size and colour—and bullet colour, etc. for all the slides. Formatting and layout changes made to the master slide automatically reflect through out the entire presentation. Keep the file size manageable: Presentations loaded with media content
may become very large files that take long to open. Compress the media. And use PowerPoint’s in-built features like charts, graphics and shapes instead of importing these from other sources. In any case, PowerPoint’s graphs are more aesthetically appealing than say, Excel graphs. Turn off AutoCorrect layout options: PowerPoint’s automatic formatting
options help slides conform to the provided layouts. These can be big timesavers but also a tad frustrating if say, they automatically shrink text to fit textholders by changing the font size you set. Fortunately, you can disable these features via the dialogue box in the AutoCorrect options. Statistics: Use the same scale for two series of numbers on a single slide:
don’t compare thousands to billions. Also, don’t clutter slides with too many numbers. For instance, show sales data relating to domestic or international markets on different slides, especially when each segment needs a different scale. It’s also a good practice to cite sources beneath the data in a smaller sized font.
Pack in a punch Good presentations must be presented well. Here’s how: Save yourself the embarrassment of having an audience member point out a typo. Never miss out on a thorough proof read. Run through the presentation to get a sense of what the audience will see. Can you realistically read each slide in 15 seconds? If you aim to change slides every 30 to 60 seconds, keep your talk moving at a good pace. Nothing holds audiences’ attention better than a well-prepared and passionately made talk. Speak freely and confidently. Use PowerPoint’s handout print options to print up to nine slides per page. Handouts help in understanding the subject better.
Free online tool for colour palette design and matching offers a set of nearly six matching colours, www.colorblender.com
Free PowerPoint templates,
Free templates and backgrounds, http://www.free-powerpoint-templates.com/
Still more templates and backgrounds, http://www.powerpoint-
inc. guidebook | Vol. 02 No. 06
Life Outside the Office
In 2009, Rahul Nandi, founder and CEO, Tunespray, a mobile marketing company, and an expatriate friend were contemplating a befitting adieu to Kolkata while sipping Italian wine. “We should run the Kolkata marathon,” suggested the friend. In the weeks that followed, Nandi shifted to Chennai. There he kept a gruelling schedule, training for hours. Months later, he returned to the Kolkata for the marathon. “It was completely wonderful and crazy. I was chased by beggars,” laughs Nandi. However, a romance with running had begun. Now, Nandi is a member of the Chennai Runners—a group of similar souls who meet thrice a week for 15km sprints. “When I’m stressed, I think of my morning run. It’s my de-stress tool.” Memorable Runs Kolkata Marathon for the colour and chaos Washington DC Marine Corp Marathon for its execution Auroville Marathon for its sheer beauty Chennai to Mahabalipuram Ultra for its length (60km)
True to Training Thirty minutes of gym Runs every two, never consecutive, days Likes to do a half-run on Sundays Runs on his Wish List Standard Chartered Mumbai Marathon London Marathon Delhi Half Marathon
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â€œI think of where I really want to be and where I wish to go when I run.â€?
photograph by Subhojit Paul
reported by Rohini Banerjee
GUEST COLUMN BY PRADEEP CHOPRA
Facebook Bubble: From Hits to Likes
Amassing fans isn’t enough. Indian brands need to really engage with their customers on Facebook to make sure social media platforms don’t go the dotcom bust way Internet stocks have always been Wall Street’s brightest stars.
Recently, social networks have dramatically upped the excitement. Goldman Sachs valued Facebook at $50 billion by investing $500 million in it early this year. Since then, debates have raged around Facebook’s incredible valuation and that of similar companies including Twitter. The maths seems easy. Facebook has roughly 500 million users. A $50 billion valuation means every user is valued at $100. Given the rapid rise and equally steep fall of social networks such as Orkut, Myspace and Friendster, doubts around these billion dollar valuations are understandable. An internet bubble isn’t a new phenomenon after all. Remember when AOL, a dotcom darling, was valued at $150 billion post its merger with Time Warner in January 2000. Eventually, AOL turned out to be hugely overvalued. Its users moved briskly to other service providers like Hotmail and Yahoo.
Some things don’t change
Crazy valuations aren’t the only similarity between the dotcom boom of the early 2000s and today’s social media frenzy A Real Conversation Brands are though. The “hits” of those days are today’s “likes”. squandering away the opportunity to create real fans. Instead, they’re just “Hits”, a measure of the number of client requests made to adding numbers. the web server, was a term which was more misused than used during the dotcom boom. It was a weapon to attract investor Today, the race to gain money and advertisers. Similarly, “likes” (or number of fans) you have acquired your first 100,000 fans is what drives brand marketing on on a Facebook page is the metric to measure a brand’s success today. While the Facebook. Let me take these two recent examples. number of fans is an important measure for any Facebook page, it’s bound to An FMCG brand manager goes to an agency and asks, fail when used as the sole currency to calculate brand reach. “My competitor is at 300,000 fans on Facebook and I need 2 8 | INC. | JULY 2011
to beat them”. The agency owner asks, “What’s your content strategy?” The brand manager responds, “I don’t know, we’ve got three months and my promotion depends upon it”. An Indian social network observed a spike in number of new profiles being created on it one day. When they tracked the source, they discovered a Delhi-based social media marketing company had deployed over 200 of its employees to just create new Facebook profiles. Those profiles then turn into new Facebook fans which they sell to their clients. The treasure lies beyond the number of fans
Brand managers consider “like” to be the primary measure because most aren’t aware of EdgeRank, the algorithm which calculates if fans are actually engaged with the brands they like or are just irrelevant fans on Facebook. You might as well have 100,000 fans on your page but maybe not even 10 per cent get your posts on their top news feed because of various parameters such as engagement level of your fan’s friends, the time gap between your post and your fans’ activity patterns. These parameters make up EdgeRank, the secret sauce for success of a Facebook page. While it’s impossible to decrypt EdgeRank’s exact formula, real engagement by fans is the key parameter used. So, it’s possible that a page with just 10,000 engaged fans might have a much higher value than another page with 100,000 irrelevant or dormant fans. Today, there are over 10 Indian brands with more than a million fans on Facebook. Nearly 100 other brands have over 100,000 Facebook fans. Still, only a tiny few like Ching’s Secret, MTV India, Café Coffe Day, Pepsi India and the Vodafone Zoozoos, have actually got it right. Most Indian brands are yet to learn the art and science of marketing on Facebook. Take for example, Axe Angels Club page on Facebook. With more than 1.6 million fans, it’s among the top five Indian brand pages. It also has a reasonably good degree of engagement in terms of the number of “likes”, comments and feedback. However, the quality of conversations leaves much to be desired. If you
spend even a few minutes going through the comments, you’ll quickly realise that this page isn’t unlike a porn page. There is a very fine line between sensuality and pornography. Unfortunately, this page seems to have breached that line. The page owners have failed to moderate the quality of conversations. And that’s unlikely to appeal to anybody, even a supposedly “young, hip” consumer segment. In any case, I strongly doubt Axe has managed to attract, much less engage, their real target audience through this page. On the other hand, take a look at the comments on Ching’s Secret fan page. They are one of the very few Indian brands on Facebook who make the effort to con-
prices brands were paying for their ads to be shown on various portals during the dotcom era. Engagement with scale will continue to win!
Both for Facebook as the network and for brand pages, ability to continuously engage a large number of users and fans in relevant conversations, will determine their success. Otherwise, like a large number of social networks couldn’t survive against Facebook, many brand pages on Facebook will lie dormant in spite of amassing a whopping number of “likes” and fans. It isn’t unlike how dotcom survivors like Naukri.com and MakeMyTrip made it through the downturn. They focused on
Moderating comments and a commitment to keep conversations alive should be an integral part of any brand’s strategy on Facebook. verse with their users, and effectively go beyond simply posting great content. Moderating the comments and a commitment to keep the conversations alive should be an integral part of any brand’s content strategy on Facebook. Worse, brands in India haven’t even begun to understand the opportunity and functionality of Facebook advertisements. If done well, Facebook advertisements can play a vital role in scaling up a community on Facebook. Unlike Google adwords, it’s highly cost effective. Instead, they are squandering money on acquiring fans. Brands spend in a range of 5 per fan to 50 per fan to “buy” fans. The CTR (Click Through Rate) determines this price. The CTR is calculated as Number of Clicks or Impressions*100 per cent. Images used in the ads on Facebook influence the CTR most. It’s like the crazy
delivering real value to real customers rather than on generating empty “hits”. Can we hope that brands in India learn to do real Facebook marketing before it’s too late? We could otherwise be in pricking distance of another internet bubble burst.
Pradeep Chopra is the CEO of Digital Vidya (http://digitalvidya.com), India’s premier social media training company and one of the co-founders of dvBytes (http://dvbytes.com), a social media service company. He can be reached through email at firstname.lastname@example.org and on Facebook at http://facebook.com/pradeepchopra. JULY 2011 | INC. | 2 9
Mahesh Gupta likes to walk the talk when it comes to his 250cr Kent RO Systems.
3 0 | INC. | JULY 2011
A story about
pure water, innovation, a scientist
location courtesy: Hotel Radisson MBD, Noida
who wouldn’t give up & finally, a steady
trickle of wealth
BY shreyasi Singh photograph BY Subhojit Paul
JULY 2011 | INC. | 3 1
Mahesh Gupta has created a steady stream of business
from the most basic
of elements, water. Kent RO Systems, his health products company, revolutionised water purification technology by
pioneering the reverse osmosis (RO) technique in India. Today, Gupta has a 250-crore turnover pool to play with and definite 1,000 crore aspirations. But, it’s the huge challenge of bringing clean drinking water to every Indian that gets the scientist in him really excited.
“I’m not a very, very ambitious person,” is how Mahesh Gupta, founder and chairman of Kent RO Systems, begins his story about his Noida-based healthcare products company. It isn’t a claim that’s instantly believable. It certainly doesn’t sit easy on a man who plans to take his product, a revolutionary water purifying system, to every Indian home in the future. Everyone should have the right to clean water, he stresses. But that’s the scientist in him talking—the one that sensed the urgency to build a new kind of water purifier just because the ones sitting in the market didn’t seem to be doing the right kind of cleaning. The entrepreneur in him, he insists, is far less overreaching. Gupta confesses that his 12-year-old firm, which picked up a tidy revenue of over 250 crore last fiscal, could possibly have grown much faster had he gone down the private equity and venture capital route. “But I am a first generation entrepreneur. My financial risk-taking capacity is very poor. I can’t borrow money. It makes me very uncomfortable,” adds the 56-year-old. Well, it isn’t only money Gupta has problems borrowing. Even with technology, he’d much rather just have his own than “make do” with the options on offer. When his teenaged children, Varun and Surbhi, fell prey to jaundice in 1998, Gupta was forced to look for water purifiers to install at his south Delhi home. He set out to search the market. The stuff sitting on the shelves left him largely unimpressed. So Gupta, an alumnus of IIT Kanpur, decided to noodle on the technology and flesh out his own ideas. It helped that he was by then running SS Engineering, a petroleum products company, his first entrepreneurial venture after leaving his Indian Oil job.
3 2 | INC. | JULY 2011
“It’s my nature to work on new things. Also, I knew how to source components because of my company.” Five months and almost 1 lakh later, Gupta came up with a purifying system, unique because it worked on the reverse osmosis (RO) system, unlike the chemical based and ultraviolet light purifiers such as Eureka Forbes’ ubiquitous Aquaguard. The product was ahead of its time but Gupta sensed in it a nugget idea that could play into big market trends—in short, a thriving business. He was definitely barking up the right tree. In a country, where approximately 80 per cent of diseases are caused by water-borne microorganisms and an estimated 80 per cent of urban dwellers do not even purify tap water, the market for water purifiers was bound to be huge. Gupta pushed his product on the market ramp, and switched on the lights of a company that has sold nearly a million units since then and created a brisk-flowing consumer goods brand.
The Clean Brand Today, as pioneers of the mineral RO technology, Kent has captured more than 30 per cent of the water purifier market—a range somewhere between 1,000 to 2,000 crore—in India, says KPMG Advisory’s Anand Ramanathan. Yet, the maths is meaningless till you comprehend the science involved, asserts Gupta. In terms of technology, the Kent model stood out right from when it took shape in Gupta’s shop floor. Market leading purifiers then, and even now, mainly work on the ultraviolet (UV) light principle. Essentially, in these purifiers, water goes through ultraviolet light which attacks the bacteria and kills them, giving users bacteria-free water. As a concerned parent, Gupta knew this wasn’t nearly enough. With greater industrial activity, the ground water had become contaminated with impurities that dissolve in water such as arsenic, rust, pesticides and fluorides, he explains. “Take salt, for example. Or sugar. Once dissolved into water, you can’t see them. The UV light method can’t rid the water of such dissolved substances. I wanted to make a purifier that would remove these.” In fact, according to the process patent finally awarded to them in 2006, Kent models such as Grand, Ultra, Elite and Excel, actually have a robust, three-tier purification system. Water is first passed through a sediment filter, then a carbon filter and ulti-
A Steady Trickle of Wealth
Why do you think the ads have done so well? Mr Mahesh Gupta is a very intelligent man, and he has in-depth knowledge of the technology he has created and promoted. He does not depend on outside sources for the technical know-how of his products, whether it is a water, air or vegetable purifier. It’s this depth of knowledge of the products that makes him so sure of the message he wishes to offer the audience. He also has a sense of what people will connect to.
courtesy company (3)
It isn’t often that a small company has the gumption or ability to create high-impact advertising campaigns, and get big names to come on board. Kent nailed those issues when it got Hema Malini to endorse their brand in 2005. It’s been an association that’s clearly worked out, for both the company and its famous face. Malini, in fact, says the campaign defines her now. “The people I come across always say it’s great that you advise us to have pure drinking water,” she shares. We get her to tell us more.
mately UV light. The sweet spot of Gupta’s system is, however, its ability to contain the good minerals inherent in water even while flushing out the bad elements. “That’s a problem with other RO purifiers, the minerals get washed away.” Yet, Kent is not just an improved technology to clean water. It’s also a smart product, says Gupta. He’s meshed into his product design elements of common sense and practicality. Till his machines came about, most other purifiers came as under-the-counter or over-the-counter appliances like the models popular in western countries. Gupta thought these models were unsuitable for Indian kitchens where oil and spices were a major part of the cooking routine. Most Indian kitchen counters are wiped several times a day to remove the stickiness and stains caused by the extensive cooking. Gupta changed all that, installing his purifiers on walls. “It was the first RO to ever be put up on a wall,” he claims proudly. Yet, instead of winning brownie points for such innovations, Kent struggled to get the attention of customers. “Competition from
How creatively involved is Mahesh Gupta in the ad campaigns? Have there been times when you’ve been surprised with his creative inputs? During the shoot of our advertisements, the director or I, would often suggest changes in the dialogues. But Mr Gupta knows what he wants so well and his logic is so clear that he’d always manage to convince us. Despite being the chairman of the company, I find it admirable that he never misses even a single day of the shoots. In fact, he’s always there right till the end. He’s
on top of everything and knows exactly what the shoot output is going to look like. That’s unlike other company owners for whom I’ve shot ads. They hardly ever visit the sets during the making or production of an ad film. What do you enjoy most about endorsing Kent? And, how did your daughters become a part of the campaign? Water is every human’s basic need. A drop of water makes a world of difference. Purifying it is essential for the sake of hygiene and health. That’s what keeps me excited about endorsing this brand. There cannot be a bigger reason than that. Getting Esha and Ahana made sense. We’ve performed classical dance shows together on the theme of Parampara (handing down of traditions). The ad suggests a similar sentiment in which a mother advises her daughters to always have clean and pure drinking water. I thought if the girls promote good health, people from their generation will be able to connect with the product and be aware.
other companies hasn’t been as much of an issue as resistance from customers to change over to a new technology,” says R.S. Rao, general manager at Kent, and one of the company’s first employees. First of all, Kent’s purifiers were prohibitively priced at 21,500 per unit. Adjusted for inflation, that was like a little fortune in the late 1990s. To make it worse, rival Eurkea Forbes, which dominated the water purifier market, was selling its Aquaguard at around 4,000. Unless the customer was absolutely convinced, and was actually shown that the water was pure, sales wouldn’t flow in. So, Kent RO’s team of five sales executives held demonstrations in customer’s homes across upmarket neighbourhoods in Delhi. Gupta developed a special kit for the purpose—a TDS Meter to measure the total dissolved solids, and an Electrolyser to show how poor the quality of water was. Still, sales in the first few years were depressing. Sales executives would struggle to meet even the modest target of five units a month. “People told me I was mad, that I’d be out of business soon, or worse that I was cheating people,” recalls Gupta, who set JULY 2011 | INC. | 3 3
A Steady Trickle of Wealth
A New Force
up his first manufacturing unit in Noida in 2000. “But I didn’t have a social product. I couldn’t make it for less than this.” Rao honestly wonders how Gupta found the positivity to stay the course. “It had to be pure determination and conviction. He couldn’t have withstood the customer’s resistance otherwise.” It wasn’t easy, Gupta says. “I thought of winding Kent up several times in the first couple of years. My petroleum conservation business was doing very well but I’d be spending more time on Kent. Somehow, I just knew this business would do very well.”
Writing His Own Script Varun Gupta
Mahesh Gupta isn’t alone in his quest to reach the 1,000-crore mark, or making sure that every Indian has access to pure water at minimal costs. Gupta’s 28-yearold-son, Varun, recently joined him after completing his MBA from the Columbia Business School in the United States. Varun has already spent four years at Kent RO Systems, after completing his engineering from Purdue University, USA. Thrilled at having Varun back in his team, Gupta even credits him for the company’s recent growth. “He put great systems in place. We have world-class ERP solutions. We couldn’t have grown like this over the last two years if we didn’t have these business systems,” says a proud father. The son, who’s raring to go, returns the compliments. “He told me I’d done wonders in his absence,” laughs Gupta. We get Varun to tell us more. On his plans: Kent is a fast growing company. There’s lots to be done, mainly problem solving and grabbing every opportunity of growth. I’ll be spending more time on doing the latter, primarily focusing on expanding our market and increasing the penetration of our products within India.
On generation gap: Generational differences always exist and honestly it is sometimes difficult to understand each other’s viewpoint. Fortunately, we inherently share a great rapport. We might have had different opinions on small issues, but when it comes to the big picture, we mostly agree with each other.
On style differences: Because I’m young, my approach is definitely more aggressive and shortsighted. My father, on the other hand, is generally a more conservative planner and he thinks long-term. These differences are complementary. These make us a team. Other than that, we have a similar working style. We tend to think alike, which allows us to work together peacefully. This rapport is a major issue among several other father-son teams.
On what he’d really like to inherit: His dedication to work and perseverance are qualities that I would like to imbibe. It’s a power that impresses everybody, including me. He never, ever gives up, however, difficult the time or situation may be. His patience allows him to control his temper well. These are the secrets to his success and the reasons why Kent has grown so fast over the last few years. I’ve been trying to pick up these qualities for quite some time now.
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Today, Gupta’s perseverance is paying rich dividends. Kent is a 250-crore company with more than 1,600 employees, and three manufacturing units—working at full capacity—in Roorkee. Its technology has also been validated by UNESCO and certified by stringent world standards like the Water Quality Association and NSF, an international not-for-profit. It took them eight years, or until 2006, to breach the 25-crore mark. But, in the past five years the company has multiplied 10 times over. “We sold 130,000 units in 2009 and jumped to 180,000 units in 2010. We’ve been growing 40 to 50 per cent every year now,” says Gupta excitedly. This brisk pace is instantly evident. In April 2011, 23,000 Kent units were sold across their portfolio of nearly 25 products, which now includes other innovative products like ozone-based air and vegetable purifiers, water boosters and water softeners. Within a couple of months, Gupta says, his monthly sales will be leaving the 30,000-mark resolutely behind. Two reasons have scripted this growth including, Gupta admits, a little bit of finally being at the right place at the right time. According to India Water Purifier Market Outlook 2014, a report by global marketing research and consulting company TechSci Research, the Indian water purifier industry has grown exponentially at a 22 per cent CAGR in the past few years. With increasing number of people becoming conscious of the risks of drinking contaminated water, the demand for water purifiers was rising rapidly, the report said. This, in turn, has pushed up sales, especially since 2008. Right now, it almost seems like an unending opportunity environment with an estimated 80 per cent of urban dwellers having no access to water purifiers yet, says KPMG’s Anand Ramanathan. “Only about 10 per cent of urban India and less than 1 per cent of rural India has been penetrated so far,” adds Ramanathan. Gupta put Kent within touching distance of those numbers with one stroke of marketing genius. In 2005, he realised his technology might be ahead of the curve but his marketing strategy was definitely outdated, at worst, and misplaced, at best. He’d been hoping to transfer the skills he’d picked up while establishing SS Engineering, his petroleum products company, to market Kent as well. “Because my experience was in industrial product marketing, I marketed Kent RO like an industrial product,” he laughs. He didn’t want to tread the direct marketing path which had made Eureka Forbes the household name that it is today. “I always
A Steady Trickle of Wealth
look ahead, never sideways or backwards to see what the competition is doing. I don’t want to learn from their strategy.” Gupta knew that if he wanted his product to fly, he had to create a brand that consumers would trust and instantly connect with. For this he needed a star, someone who was a parent, to tout and build faith in the product. In 2005, he convinced Hema Malini, a mother of two daughters, to essay that role. She tested the product out in her Mumbai home for a few months before agreeing. Because Gupta didn’t have money to make television campaigns with Malini in the first year, they worked on a print launch, moving to the nowfamous television advertisement where the actress, wearing outfits in various shades of icy, cool blue, assures you that Kent purifiers give you the “purest water in the world”. In the following years, Malini’s daughters, Esha and Ahana, were added into this “perfect family” campaign. Gupta today spends a conservative 12 to 13 per cent of their turnover in branding. “I never liked campaigns designed by my agencies. I made my own campaigns, wrote my own scripts, told the agency to do it like this. We stick to simple statements. I am not selling chocolate. I just want to put it out there, it’s a necessity product.” “The way he branded was the second innovative thing he did. He invested in creating a brand early on and did it so successfully,” says Chetas Desai, managing director at Ambit Corporate Finance, a leading investment bank, and somebody who’s watched Kent’s growth over the past few years. Gupta also established a great distribution network, putting Kent machines at large retail outlets like Big Bazaar and white goods stores across the country. Even here, Desai adds, he stayed away from peddling aggressive discount deals and spurious offers. “He wants the consumer to buy, not the dealer to sell. He believes in creating a business proposition to see why somebody should buy his products.” Gupta waves off such praise in his characteristic, matter-offact tone. “Honestly, I don’t know how to market. I was just driven by the situation, by common sense. Nobody needs Einstein’s calculations to do these things.” PhotographS by Subhojit Paul
Cost Concern Of course, now, he hopes to piggybank on these strengths to scale up. But, it’s unlikely to be an easy ride with competition heating up. Apart from market giant Eureka Forbes, global majors such as Philips and Hindustan Unilever are also looking to increase their share of the pie. And, a bulk of consumers will enter the purifier market with the hugely economical chemical purifiers, a segment companies like Eureka Forbes and Hindustan Unilever with their brands Aquasure and Pureit—which don’t run on electricity and don’t demand continuous water supply—are tapping aggressively,
“Honestly, I don’t know
how to market. I was just driven by the situation, by common sense. Nobody needs Einstein’s calculations
for these things.”
Ramanathan says. Not surprisingly, these brands have managed a growth rate of 100 per cent per annum. Moreover, UV purifiers continue to dominate the market with nearly two-thirds of all sales. Here again, Eureka Forbes’ Aquaguard leads resolutely with a nearly 70 per cent market share. Philips’ Intelligent Water Purifier and Kent’s own UV purifier have much smaller shares. RO purifiers aren’t preferred options mainly because they’re still very expensive. A basic model at Kent, for example, costs 14,500 per unit. It isn’t a challenge Gupta shies away from discussing. “I knew when I began that I was starting with a disadvantage because I wasn’t catering to the bottom of the pyramid segment which HUL is doing. JULY 2011 | INC. | 3 5
A Steady Trickle of Wealth
They are selling millions of units,” he says. “Our biggest challenge today isn’t technology. It is to provide economical solutions. Everybody deserves clean water but they can’t all afford 14,500 machines.” And for that, he’s set himself a hard target—purifiers that cost less than 10,000. The economies of scale has continuously helped him to contain and prune his prices over the last decade. The goal of a “four digit” pricing might take another two years, by when he should be selling 500,000 units a year, the optimist believes. He’s readying up new manufacturing units in Greater Noida and Noida to hike up production. “You can’t imagine what this can grow to. People will eventually upgrade to RO machines. People begin by buying a scooter. But, they upgrade to a full transport, a car, don’t they? That’s what will happen here as well.” Yet, there are other daunting tasks ahead. Kent has received a lot of flak for indifferent customer service. KPMG’s Ramanathan warns, “The company should significantly concentrate on these issues before expanding.” Gupta says it does “pain” him to have his servicing standards questioned despite having a wide network—17 centres staffed by 150 people in just the national capital region to handle customer complaints. “Of course, it still continues to be a big challenge,” he admits. Varun Gupta, Gupta’s 28-year-old son who’s recently joined the company after an MBA from Columbia Business School, says many of these perceptions arise from what continues to be their biggest obstacle—customer education. His father concurs. People don’t realise our water filters are actually a chemical plant in a small appliance, Gupta senior says. And, despite training their distributors and dealers to prepare customers for the fact that sophisticated RO purifiers are high-maintenance, Gupta admits disappointments come in because customers have been misled in the rush to clock in a sale. “I tell our distributors that if you have 100 satisfied customers, they’ll bring you another 100. But if you have 100 unhappy customers, they will take away 1,000 potential customers from you by negative word-of-mouth.”
Thinking Big For now, what Gupta really wants to do is is filter out the “real problems”. “I feel miserable when I see a street vendor selling water to people. What’s the quality of water he’s giving? But for a person standing at a bus stop in this heat, there is not much 3 6 | INC. | JULY 2011
Mahesh Gupta insists he has only two passions beyond work—sleeping and daily meditation sessions. A faithful devotee of Sri Sri Ravi Shankar’s Art of Living, Gupta says he’s deeply influenced by the philosophy, and goes as far as to say that much of his success has come from using the lessons of pranayam. “It helps you calm the mind, to come into the present. I eat and sleep properly. I can also work hard and come up with better solutions and ideas,” he says. It was a chance discussion with one of his employees in August 1997 that introduced him to Art of Living. The employee wanted a day off to enrol into a basic pranayam course. Gupta enrolled as well. A month later, he followed that up with an advance course. Since then, the sessions and the philosophy have become integral parts of his life. He’s organised workshops for his employees in-house as well. “I can vouch for the courses. If any one takes it seriously, it does leave an impact on his performance. It takes away all negativity, clears every confusion and lets one enjoy a clear and positive life.” It’s probably the reason why Gupta has never spent a sleepless night mulling over a problem. And why he wants to work till as long as he possibly can. “I enjoy working. Why should I retire?” he asks matter-offactly. Gupta, who was an avid Bridge player for over 25 years would love to pick up this passion once more whenever he has the time. “After Kent RO, there was no time left for cards.” He’d also love to potter around the garden in his farmhouse on the outskirts of Delhi.
choice,” laments Gupta. It’s an issue that’s been constantly gnawing at him. Over the next few years, he wants his company to set up “retail kiosks” where the people can get a glass of clean, chilled water at around a rupee or so. Gupta says India used to be a country which loved its glass of water. But things have changed with clean water becoming more and more of an oxymoron. As the taps for clean water ran dry, people turned to packaged water and soft drinks. The situation, asserts Gupta, is unsustainable at the basic level, especially since it’s dramatically grown the plastic industry. “I want to overthrow the plastics industry. That’s my vision. I’m going to do this in the next 2-3 years,” he says. Little wonder then that we found Gupta’s earlier claims of “slow ambition” doubtful. If these plans aren’t a tidal wave of force, we don’t know what is.
Groupies 3 8 | INC. | JULY 2011
Love them or hate them but you can’t ignore this bunch of ambitious internet entrepreneurs as they bring us unheard of deals and incredibly low prices through their group buying platforms. Will India buy into this new shopping revolution? BY sunaina sehgal ILLUSTRATION BY Sristi Maurya That Groupon, the world’s most famous group buying site, is raking in billion dollar val-
uations isn’t surprising. The logic behind group buying is simple. Such sites give customers deals of a lifetime, often up to half the price of a fancy dress, a popular perfume and a smart gizmo. Plus, they also help merchants find new consumers and offload dated inventory. Typically, group buying sites guarantee merchants a minimum of 10 to 15 orders. The deals on offer get activated only after a minimum number of buyers sign up for a particular deal. If that quorum isn’t met, the deal dies and the money is refunded. But sceptics say such sites aren’t that much different from the gimmicky “sales festivals” that bring in footfall at physical stores, and help flush out junk. Yet, it’ll be foolhardy to wipe the buzz group buying sites, almost manically mushrooming, are generating in India. Our Indian avatars might take pride in right-sizing the Groupon model to fit an Indian body type, but they can’t deny what they most want is to look just like the USbased buying platform, and its spiffy $6 billion valuation. India seems the perfect place for wild experimentations with a huge young population, says Klaus Hommels, a wellknown early-stage venture capitalist who’s invested in companies such as Skype, Facebook and Xing. Hommels has placed his bets on the Indian market with Gaurav Kachru’s Deals and You. “The scope of e-commerce is higher here because organised retail is only 5 per cent of the market. Also, the e-retail infrastructure is growing faster than the physical retail infrastructure. E-commerce can potentially emerge as the primary channel for growth of retail.” Estimates suggest the e-commerce industry in India is worth approximately 46,000 crore. Yet, few people we spoke to were willing to be pinned down to a number in the frenzied group buying space. Alok Mittal, Canaan Partner’s managing director in India, did say though that the sector’s definitely over-projected. “Group buying companies will need to scale up fast to support all the investment they’ve got,” says Mittal, adding that otherwise a shake-out or a bust is likely. Those sentiments don’t spook everybody. Kunal Bahl, co-founder and CEO of SnapDeal, a leading group buying site in India, is eagerly awaiting the tremors, in fact. “The smalls firms will die and only the strong will survive,” he says eagerly. Bahl, like the others we feature in this special feature at group buying in India, is confident of surging ahead in the exciting game to be India’s Groupon. Turn the pages to meet this crop. JULY 2011 | INC. | 3 9
GAURAV KACHRU DEALS AND YOU
Late, but Lucky
Deals and You was a latecomer. With a good deal of smarts though, the site has quickly made quite an impact.
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“Even the customer service numbers were often down,” says Gaurav Kachru, CEO of Deals and You about the initial struggles at his group buying company. In February 2010, Kachru, then a finance whiz at GE Capital India, got together with serial internet entrepreneur and incubator Harish Bhel, to co-found Gurgaon-based Deals and You. But their efforts to get off-the-ground weren’t a breeze, to say the least. Clearly, figuring out whether the group buying model will work for India or not, and ironing out the creases in the system was a paramount issue. Worse, Kachru didn’t even have the beginner’s advantage of entering a not-so-untried but definitely untested industry. Similar companies like SnapDeal, Mydala and BuyThePrice were already there in the picture. So before they could lure other shoppers in, they went on a little shopping spree of their own. In June 2010, Deals and You acquired Wanamo Marketing, a group buying platform in Mumbai. “It was a cashless transaction and gave us a running platform. We got a six to eight week head start because we didn’t have to begin from scratch to get people on the field.” They added Ambab Infotech, a small IT company which specialised in website development, e-commerce platforms and online brand building, to their shopping cart. This deal, inked in October 2010, bolstered their technology skills. But, it didn’t change their fortunes. “We were still in the 17th or the 18th place. A lot more had to be done to stand out.” So “innovation” became a necessity, not a fancy frill for Kachru’s band of believers. In thinking out-of-the-box, Kachru felt naturally at home. His work experience across industries in GE helped him play around with different elements. His definition of “group buying” had a localised twist. “Group buying is a bastardised term. Its essence truly lies in being a marketing platform for the SMEs. We are basically demand aggregators, and mediators,” he explains. Success will come, Kachru says, not from giving the lowest deals but by giving consumers simple, efficient services. Photographs by Subhojit Paul
The “pure” Groupon model isn’t going to work in India, he asserts. “Dynamics here are different. They aren’t as straight forward as in the US.” Brainstorming over, it was after October last year that Kachru’s site began creating strong waves. His mind was churning out new fundas and tricks such as cash-on-delivery, festival micro sites and travel as a platform. But, more than anything else, Deals and You’s astounding 1.5 million members flock to the site for its simplicity and ease of use, he believes. “The customer is at the centre of everything we do,” says Kachru of his 90-employee team. Merchants and vendors are finalised after an eight-level screening by a sales team which visits the merchant’s office and evaluates the quality of the products and services. “We don’t want to be a Big Bazaar. We offer brands like BlackBerry and Samsung, and services from decent venues”. That’s sure to please the increasingly aspirational Indian shopper, and give Deals and You some retail points.
Anisha Singh’s motto to let the internet guide her business seemed bizarre. But tweets’ and ‘likes’ are doing a great job.
When the global recession hit in 2008-09, it turned the world upside down. It also got Anisha Singh to ask herself, ‘what next’. Singh was then heading Kinis Solutions, an e-learning software company for clients across United States and India. But, things were slow at work, and she couldn’t resist another bout of entrepreneurial cravings. Her scouting for the next big idea stopped at Mydala, the group buying site she founded in 2009. It might not seem like such a brainwave today but Singh pioneered the concept in India,
Anisha Singh MYDALA
edging herself a beginner’s advantage in what’s today a crowded, competitive market. Her links and networks in the US—an MBA from American University in Washington DC helped her get off to a flying start. Mydala quickly secured angel funding worth 1.1 crore from private equity veterans Ajay Relan, Jayanta Basu and two US-based investors Singh doesn’t want to name. Interestingly though she looked eastwards for business inspiration, not at Groupon, the global grand daddy of group buying. It was the way deals were being got by consumers in China that piqued her interest. The Chinese were evolving a unique offline version of group buying. She read reports that bunches of consumers, say 60 people or so, would together land up at a gadget store as a “group”, driving hard bargains on LCD televisions, latest mobile phones and other electronic items. She found out that the concept was pioneered by McCarter, a US-based company in the 1990s but had never taken off. “They couldn’t create a buzz probably because there were no social networking sites to get people together,” says 31-year-old Singh. “I realised then that such models are based on virality.” It’s a lesson she mixed into Mydala’s DNA. Even today, the portal makes sure everybody knows what’s going on. Every member can see how a deal is doing, how many people have bought it and whether it’s “hot or not”. “A user in Delhi might notice a great deal in Bengaluru solely on the basis of the numbers and is likely to pass on
the information to their friends in Bengaluru,” explains Singh. She places great trust in the collective wisdom of internet surfers. “This is the core of a group buying enterprise, to connect people.” She does confess though that growing organically and virally isn’t going to be enough now, especially in a hyper-competitive industry like this. Mydala has begun to market and advertise to capitalise on their growing presence in India. They offer services in nine cities currently and plan to extend it to 36 more. She’s also managed to put together an impressive database of 3,500 merchants from across India. This confidence to surge ahead has been given an encouraging push by the 9 crore funding Mydala raised from Sanjeev Bikhchandani’s InfoEdge in April this year. Clearly, getting people to buy into her vision is fast becoming a habit for her.
Sold on Speed Kunal Bahl and Rohit Bansal are gifted dealgetters. It’s a knack that’s taking their group buying site within snapping distance of a shopping bonanza. 4 2 | INC. | JULY 2011
At group buying site SnapDeal’s Delhi office, it feels like one is in a population statistics department as a television screen beeps with the numbers, 47, 93, 098, then quickly 47, 93, 099, and then 47, 93, 100. This figure—easily more than the total population of many small countries, tells you how many people have signed up with SnapDeal so far. The 22-inch LCD screen smack in the centre of the office displays how quickly the numbers move. In real time, the company’s Photograph by Subhojit Paul
400 employees are instantaneously updated about their growing customer base. Clearly, as far as co-founders and good buddies Kunal Bahl and Rohit Bansal are concerned, more is definitely the merrier. They had their mission pat down from the word go—to scale up fast. And speed does
seem to be their thing. “Over a cup of tea in January last year we decided to do this. Eight days after that we formerly launched the site,” says Bahl breezily, making it all sound (almost) too easy to be true. Yet, today, within 14 months they are significant market leaders in the group buying space. Their sails caught the best wind right at the beginning. Thanks to their earlier venture, MoneySaver, a mobile-based discount coupons company, suppliers came to them in droves. In fact, it was the merchants they worked with at MoneySaver who prompted them to set up SnapDeal. “One of them had recently signed up on a group buying site. He told us we should do something like that,” shares 28-yeard-old Bahl, an alumnus of the Wharton School of Business. “Actually everything was the same, only the medium changed from mobile to the internet.” SnapDeal refused to copypaste the group buying model from the US to India, and are thrilled to be “disrupters” of the template. SnapDeal didn’t want its members to wait for others to buy in before they could check out. “If I like a deal, I want to have it,” says Bahl. So, doesn’t it just become another deal site, we ask? Bahl waves off that criticism, saying he defines group as the whole lot of buyers they send to the merchant, and not just the number of people who have bought it online. In this new hybrid for SnapDeal, customers don’t
Kunal Bahl & Rohit Bansal SNAPDEAL
wait and merchants aren’t given minimum guarantees. “Nobody wants to work on minimums anyway,” explains Bansal, an IIT Delhi engineer. An established service, say a spa, is unlikely to rake in gold by ensuring a minimum guarantee of even 10-odd customers on the site. And a bootstrapped, fresh venture is thrilled to gain even a single customer. So, it isn’t about sales. Group buying platforms are essentially used to attract customers, the duo explains. “The discount is only the cost of customer acquisition,” Bansal explains, adding that e-commerce is a more efficient and effective way of reaching your customers. “Of course, we ensure merchants also make money. We figure out price points between fixed and variable costs so nobody is in loss.” Plus, they let their merchants participate in other group buying sites. Merchants are this model’s oxygen, Bahl adds. “Without them benefitting from this, the entire structure will collapse,” he confesses. To ensure they’re working with the right people, SnapDeal rigorously prescreens every merchant and even trains them weekly on things like customer feedback and best practices in service. Building bonds with customers is top priority though. On the first Saturday of every month, Bahl sends an e-mail to every transacting customer from the previous month. “I reply to all emails in 48 hours. Two weeks ago, I personally sent out 3,000 emails. It’s the best way to get feedback and ideas,” he says, adding they’ve included more travel deals after a customer suggested they should. For now, it’s a mantra that seems built for success. Plus, the speed’s bound to pick up with a recent 50 crore investment into the company by NEA IndoUS Ventures and Nexus Venture Partners. Much of this will be spent on strengthening their IT base and expanding their team to nearly 800 by the end of this year. Not patient deal hunters, the duo can barely keep themselves from thinking of the 100 crore turnover mark in just a few more months . “That’s nothing. We’ll be a 500 crore company by 2014. You just wait and watch,” say the duo. JULY 2011 | INC. | 4 3
John Kuruvilla Taggle
Experience is King
Like its name, Taggle wants to be fun and quirky. Its three co-founders are turning group buying on its head, and having a blast doing it.
The group buying industry has July 2010 marked as a landmark month, thanks to Taggle, a Bengaluru-based group buying site. The then one-month old Taggle blazed on to the shopping scene with an unprecedented deal worth 35,000. That’s big money in the group buying space where deals are mostly found on clothes, perfumes and accessories. Taggle’s audacious offer—a three-day, four-night package for two at Barefoot, an upmarket resort in
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Havelock and Port Blair—included air tickets from Jet Airways, and came at a flat 35 per cent discount on the original price of 54,000. Seventeen people snapped it up. “Such deals are what we are all about. It’s about making unusual experiences available,” claims John Kuruvilla, Taggle’s co-founder and CEO. Many believe group buying sites have a great shot in India because we are such a deal-conscious country. Photograph by S. Radhakrishna
But, Kuruvilla, with over 25 year of work experience in marketing, branding and customer relations in Lowe, Leo Burnett and the Oberoi Group, wants to extend that logic. “While everyone was playing with bottom of the pyramid deals, we strategised to start at the top,” he says about the way he and his two co-founders, Tej Arora and Ujjwal Tickoo, launched Taggle. The smart move was almost a necessity given that by June 2010 many other group buying sites were well-entrenched and it was important to get noticed quickly. Compared to a SnapDeal, Taggle is still small with around 32 people across five cities. But, what they don’t have in size, they make up in originality. Not surprising from a team helmed by Kuruvilla, the man behind the iconic Hamara Bajaj commercial. Within months of launching, Taggle, which now has a 350,000 strong member database, had tons of other, off-the-beaten-path deals for their hundred-odd customers. In September last year, they featured a scuba diving course which was quickly sold out. As was the helicopter joy ride in Bengaluru which was bought by 36 people. Taggle’s sparkled ever since it became the first group buying site to sell diamond jewellery online. Yet, this focus on the quirky and the unusual doesn’t mean Taggle, which recently received a funding of $8.75 million from Battery Ventures and Greylock Partners, is all about fluff. The founders have worked out solid, robust processes, mainly aimed at securing both the merchants and their customers. It has holograms to avoid merchant frauds, and to appeal to those consumers who aren’t comfortable making internet transactions. Taggle has introduced the “buy on phone” concept. People can simply call the customer care number and share their credit card details. They’ve also made things attractive for their merchant partners including taking a deal’s entire money upfront to ensure the customer definitely visits the merchant to avail the deal. Doing this leads to bigger profits for the merchant as opposed to asking consumers to pay up only a token amount when booking a deal, for say, a hair spa or a tattoo appointment. In any case, connecting the merchant to the consumer is the essence of group buying, explains Kuruvilla. “Deal sites offer the lowest cost of customer acquisition. That’s why merchants are here. With our model the merchants feel confident that customers will come in.” The group buying firm has also introduced a new space in the deals segment—Taggle Plus. Here, the goal is to make “considered decisions compulsive.” “Customers now have the option to buy any deal they want. Say, if they feel like eating Chinese food, and are looking for great discounts, Taggle Plus will provide this. They don’t just have to choose only from the deals available.” He’s confident this smart offering will further set them apart from the crowd. Yet the road to a frenzied shopping world isn’t neatly stacked with super deals. Since this is a sales-dominated business, getting the right talent that can think up original, quirky ways to bring customers in is a tough task. And despite the investments, budgets are always tight. Still, Kuruvilla isn’t too worried. He knows he can twist India’s shoppers into a bundle with the many tricks he’s got up his sleeve.
Gadget Happy BuyThePrice helps people grab their favourite gadgets at a steal. Their tech-savvy aim—a determined go at the 3,500 crore appliances market.
In this sea of group-buying sites, BuyThePrice is determined to be different. It operates on the simplest market economics—the more demand customers create, the more discounts they’ll enjoy. It’s what pushes prices down and gets “real” discounts to kick in. It also makes customers a valuable marketing force for the groupbuying platform. “The more customers publicise about the deal—online as well as offline—the heavier discounts they get,” reasons Ranjith Boyanapalli, CEO and co-founder of the Hyderabad-based company. The strategy is spot-on and the perfect way to leverage the viral characteristics of social media on which the entire concept of group buying thrives. “Our model’s also hassle free, in terms of the nature of the deals that we put up,” says Boyanapalli, a former Infosys employee, who co-founded the company with JULY 2011 | INC. | 4 5
Tharachand Surydevara and Jagdish Kothapalle with 20 lakh in December 2009. They’ve smartly loaded their model with a key differentiator—a focus on electronic gadgets and electrical appliances. It’s a sector dominated by the big brands like Nokia, Sony and HP. By working with these, BuyThePrice swiftly bypasses the hassles, and bad press, that come from shoddy services by small merchants, a concrete worry for other, more expansive group buying platforms. “The services sector in India has not matured enough. The quality always varies which is why we stick to brands,” explain Boyanapalli. BuyThePrice’s vendors have large service networks that are already well-established. Also, dealing with leading manufacturers cuts the challenges and costs of training merchants such as a neighbourhood beauty salon that are enthusiastically taking up the group buying platform to bring customers in. With many merchants woes negated, BuyThePrice can just focus on good, old sales. Only after dealers are evaluated stringently, of course. “We make sure products are 100 per cent original.” In any case, when you tempt customers with knock out deals on brands like BlackBerry or Nokia, the logic to buy isn’t a tough sell. There are other advantages of this clever segment approach. Since appliances and gadgets typically begin at 1000, BuyThePrice can bring in higher revenues from fewer transactions. “The average order value is also high, the redemption rate is lofty and breakage is low,” adds Boyanapalli enthusiastically. 4 6 | INC. | JULY 2011
Ranjith Boyanapalli BUY THE PRICE
At the end of May, they sold a voucher for 64,000. “Our aim is to convert such oneoff big purchases to a regular occurrence for ByThePrice.” Along with attractive discounts and real time pricing for customers to see “live” on the website, Boyanapalli has also managed a repeat customer ratio which is robust, and still rising. “Because we sell the best quality products at the best prices, we have loyal customers. They always come back.” BuyThePrice is certainly good hunting ground for the product junkie. Without one-day, two-day quickie deals
on perishable products, and seasonal or weekend deals on services crowding their website’s pages, their platform ensures a product gets the best real estate. Thanks to these nifty tweaks, BuyThePrice today has about 200 brands in its data base and the minimum order value is worth 25,000. With such a great start, the trio is bullish on becoming a $100 million company by 2014 in the bargain. Along with their customers, they’ve clearly managed quite a deal for themselves as well. Photograph by A. Prabhakar rao
Core Values 2011 Top Small Company Workplaces
Artifact: Menlo Innovations’s Viking helmet At Menlo, a software company, everyone works in pairs, and when a pair reports on its work in morning meetings, each partner holds a horn of this helmet. (See more about Menlo on page 68.) The helmet, then, is what management expert Edgar Schein calls an artifact—a visible manifestation of a company’s culture, an object the work force recognises as an expression of what it believes about itself. You’ll see more artifacts from the Top Small Company Workplaces winners in the pages that follow.
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The crucial element in well-run companies? Leaders who know what they believe in
things differently from those net have followed suit. Engineers at this unenlightened bosses who made cloud-software developer and Top Small the entrepreneur’s life hell back Company Workplaces honoree have weekly when he was working for The deadlines. Long hours are the subtext of Man. Ask a founder why he perks such as free dinners and facilities in designed his company a certain which to shower and sleep. Yet Winning way, and he’s as likely to tell you Workplaces found that Box.net has an what he was reacting against as employee approval rating of 97 per cent. what he was striving for. Employees choose to hang together after This thoughtful approach to work at company-sponsored events and culture characterises the 2011 eagerly anticipate the semiannual HackTop Small Company athon, at which they take ideas from early Workplaces. The 50 honorees stage to implementation in a single night. were selected by the not-forAnd the leadership promulgates an all-in-itprofit organisation, Winning together message with the policy that managWorkplaces, which recognises ers don’t leave before their reports, especially businesses that cultivate By Leigh Buchanan if those reports are deployed on time-sensiproductive, satisfied employees. tive projects. Box.net isn’t heaven on a stick (See “Choosing the Top Small for everyone. Which is to say, if this isn’t for Company Workplaces,” below.) you, surely you know it. But co-founders The leaders of these companies don’t view Leaders of early-stage companies don’t Aaron Levie and Dylan Smith have crafted a jobs as prizes doled out to lucky applicants. lavish a lot of time on culture. Their attenbespoke culture for competitive, hard-drivtion is turned outward, toward the custom- Rather, they figure the people they have ing, can’t-rest-until-I’ve-noodled-out-anchosen have chosen them as well, and ers, lenders and investors who will breathe answer software engineers—the kind of naturally, they want to make the place nice financial life into their ideas. Employees— talent needed to sustain the 1,000 per cent for them. So they treat workers fairly, often there are but a handful—are presumably revenue growth of the past four years. generously; respect their personal lives; content. Hey, they’re still there, aren’t they? Other honorees have exercised the provide opportunities for development; and entrepreneur’s prerogative to create compaThey’re getting paid. Anyway, isn’t the endow their jobs with meaning and fun. In excitement of a young company a kind of nies that are undistilled expressions of their culture in itself? Life on the precipice. return, those employees bestow their best own philosophies. These idiosyncratic culAdrenaline in the water coolers. ideas and efforts on the business. They pull tures often maintain an intense focus on a And so, leaders put off the heavy work of together through change and hard times. single value. And when we say intense, we erecting the scaffolding of values, policies, But the Top Small Company Workmean intense. shared beliefs, rewards, rituals and visual places aren’t just “nice” in a generic way. The The following pages profile leaders who elements that constitute culture. leaders of these companies don’t try to be all have shaped and refined their cultures with In that void, culture happens spontanethings to all people. Rather, they want to the same precision they apply to products ously: an aggregation of particular decisions create the best possible workplaces for the and marketing. This is culture building as made by particular people in particular cir- kinds of people who can help them succeed. innovation, extending beyond best praccumstances. If those people are good and That approach is de rigueur in Silicon tices to new practices or practices taken to decent (and competent), chances are, the Valley, where Google’s co-founders extremes. We hope they will inspire you to culture will be good and decent as well. famously appealed to smart young techies consider what is possible in your company. Nature and nurture combine to form an happy to log insane hours on cool projects You want your brand to be unlike any understanding of how we do things that with smart colleagues. The leaders of Box. other. Why not your culture as well? grows more solid and coherent with time. But some entrepreneurs possess clear visions of their ideal cultures from the beginChoosing the Top Small Company Workplaces ning. Every decision they make—whom to The Top Small Company Workplaces competition is sponsored by Winning Workplaces, a not-for-profit organisation based in Evanston, Illinois. Qualifying companies must be based hire, what benefits to provide, where the CEO in North America and privately held, and must have been in operation at least three years at should sit—is in pursuit of those ideals. In the end of 2010. They can have no more than 500 full-time employees. Not-for-profit fact, the opportunity to derive an entire social organisations are eligible. This year, roughly 350 companies applied, and Winning Workplaces’s staff and a panel of independent judges whittled that down to 50 winners. order from the leader’s character and experiApplicants were judged on employee engagement and development, management ence can be an incentive for starting a comeffectiveness, rewards and recognition, mission and benefits. pany in the first place. So is the urge to do Illustration by Shigil N
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Core Value: FITNESS
Walking the walk (running the run, etc.) at TRX Why fitness? TRX sells physical-fitness products and programmes, but that only begins to explain this company’s obsession with fitness. Founder Randy Hetrick spent 14 years in the Navy SEALs, an organisation he describes fondly as incredibly fit people achieving incredibly difficult missions with incredibly high esprit de corps. He has sought to build a similar culture in his company. “If you start with a group willing to achieve that level of fitness, they tend to be doers,” he says. “It goes back to the Romans: a fit soldier is a happy soldier.” Fernando Chilvarguer spotted the damp Lycra and thought he had gone to heaven. It was 2007, and Chilvarguer, an independent IT contractor at the time, was a frequent visitor at TRX, one of his clients. Sitting in meetings, he would find himself surrounded by people in cycling togs still glistening from a 25-mile spin through the Marin Headlands. “I saw people leaving a meeting, putting their running shoes on, and saying, ‘I’ll be back!’” recalls Chilvarguer. “I thought, perfect. Perfect.”
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Chilvarguer, who joined TRX three-and-a-half years ago as director of technology, is an Ironman triathlete who must spend a few hours each day biking, running, or swimming while preparing for competitions. He had chosen self-employment so he could design his schedule around rigorous workouts. Until finding TRX, he didn’t believe any company would offer him comparable freedom. “They want me to maintain this lifestyle,” says Chilvarguer. “I adapt my workday, depending on the amount of training I have to do.” In most companies, the concept of work-life balance assumes segregating things that matter to the business from things that matter to the employee. The challenge is to prevent the former from overwhelming the latter. At TRX, what matters to the business is that employees be in the best shape possible so they can deliver exceptional work performance. Business hours are almost endlessly flexible, arranged around employees’ personal fitness regimens. “One of the strong attractors and retainers in the SEAL teams was that you didn’t have to make the time to maintain fitness,” says founder and CEO Randy Hetrick. “It was built into your day. If you didn’t do it—that’s when you got the slinky-eyed stare from your supervisor. It’s like that here. If you’re going on a bike ride, you don’t sneak out the door. You prance out the door. And everyone’s like, ‘dude, have a great ride’.” Virtually all TRX employees routinely take off for extended workouts or grunt through one of four exercise classes held on-site every day. Any work missed during the day gets done in the evenings or on weekends—often after dark, when the outside world of hills and trails is less inviting. Customer service is the only position that requires normal work hours, and TRX staffs heavily there so someone is always around to cover for employees whose muscles need tending to. A quick tour of TRX is enough to have new hires tearing up their
health-club membership cards. (The company resides on the top four
courtesy company (2)
top small company workplaces
Working Out Things This is a typical day at work for TRX’s 132 employees.
floors of a six-story building near the Embarcadero. You could use the elevator, but that would be embarrassing.) Employees sit on exercise balls, except for the few who prefer to work at standing desks. The kitchens and canteens offer an assortment of energy bars and dried fruit, and heavyduty blenders for the preparation of protein shakes. A storage room holds up to 40 bicycles, and the building’s premier real estate—2,500 square feet on the top floor with the best views—is a gym. In April, TRX and its landlord began renovating the rooftop to include a training area and a three-lane track. Employees come to TRX in various states of buffness, many having fallen off the exercise wagon and eager to get back on. Julia Levine is typical. A rower and equestrienne growing up, Levine laments that, “As I got into my professional career, being active went by the wayside.” Since joining TRX as an executive assistant, she says, “I have better muscle tone. I’m agile and limber. I feel like I can do anything.” Even among so many glorious physical specimens, Levine says she never felt peer pressure to get back in shape. “I was inspired to do it,” she says. Even if there’s no overt pressure, there exists an expectation that people will walk (or run, pedal, or swim) the talk. Roughly 10 per cent of employees’ performance evaluations cover how they live the company’s values, expressed by the acronym FACEUP. That P is for physical (the other values are fun, authentic, competitive, effective, and united). At the start of each year, supervisors ask their reports to set personal athletic objectives.Those goals are not formally tracked with scorecards, the way work-related goals are. Still, employees “get evaluTRX ated on whether they accomplished San Francisco their goal,” says Hetrick. Most employFounded: 2005 ees have no problem embodying the P. 2010 Revenue: $32 million Employees: 132 Kortney Jamtaas, who joined TRX as an education co-ordinator a year ago, took a moment away from work to describe her day so far: “This morning, I ran from my apartment to here, which is about 2.5 miles. I set up my indoor bike trainer in our workout room that looks out onto the bridge. I did an hour-and-ahalf bike workout while watching the sun come up. Then I showered, ate my breakfast, and got to work before 9am. Yesterday, I swam before work, came in and then did the noon Pilates class.” Jamtaas is an Ironwoman. Her brother, who is training for an Ironman, was so envious of her working conditions that he recently came on board in sales. “Ever since I came here,” says Kortney Jamtaas, “It’s been beautiful.”
At Menlo Innovations, no one goes it alone Why teamwork? Richard Sheridan likes to talk about joy and why software development can be such a joyless occupation. Programmers sit for hours in their lonely cubicles. Companies, meanwhile, must wrangle “hero” developers—individuals who alone on staff are proficient in some crucial area and whose absence slows production to a crawl. After losing his vice president’s job at a Web development company in a downsizing, Sheridan joined with James Goebel, Robert Simms, and Thomas Meloche to launch Menlo Innovations with the goal of creating a workplace in which everyone (not just programmers) works together on everything. “Constant collaboration means we are constantly transferring knowledge to one another,” says Sheridan. “I grow my team an inch every day.” The job applicants, 22 of them, start to assemble a few minutes before 4pm. They press sheets of paper bearing their names to their chests, mug-shot style, while Carol Sheridan, Menlo Innovations’s floor manager, snaps their pictures. Everyone finds seats at one of six long tables as Richard Sheridan and James Goebel, two of Menlo’s four co-founders, semaphore for attention at the front of the room. Sheridan delivers the introductory spiel: “Welcome to extreme interviewing. We don’t ask any questions here. This is not about what’s JULY 2011 | INC. | 51
top small company workplaces
Sharing Is Caring This pod of workers at Menlo Innovations includes programmers with various roles, plus two developers from the client for whom the product is being built. Everyone, including the client developers, works in pairs.
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observers. Twenty minutes later, they will switch for a third time. “This is not about getting the right answer,” says Goebel. “The thing that you will be evaluated on is whether you bring out all the best qualities in your partner. Your job is to make the other applicant look as good as possible.” Goebel pairs off the applicants, who are vying for jobs in several functions. The most successful pairs quickly fall into a rhythm, passing their lone pencil back and forth to take turns marking the paper.
Leaning back in his chair, the facilitator scribbles notes on a form attached to a clipboard. At the 20-minute mark, Sheridan halts the proceedings. Everybody moves. If Menlo Innovations were a restaurant,
extreme interviewing would be its signature dish. The practice distils the creators’ intent. One bite, and you know whether or not you want to eat there. The company prizes collaboration above all things, because that is what
on your resumé. This is our best attempt to figure out are you a good fit for our culture.” Then Goebel lays out the process. The group will be divided into pairs, and each pair will be given an exercise typical of the kinds of work done at Menlo, a customsoftware firm whose clients include Domino’s, the University of Michigan, and Thomson Reuters. The pair will have 20 minutes to work on the exercise, while a staff member observes their interactions. At the end of 20 minutes, everyone will get new exercises, new partners, and new
top small company workplaces
employees do all day, every day. Nearly years to complete and could potentially everyone at Menlo works in pairs. Two peo- burn people out. ple share a single computer, passing the Such close and consistent collaboration mouse back and forth while brainstorming means cultural fit is beyond imperative. ideas and double-barreling problems. Pairs Menlo’s elaborate hiring process is stay together for a week. On Mondays, they designed to ensure no one comes on board all switch, like dancers in a Jane Austen unless everyone on staff is happy to have novel. Employees start fresh not only with the person. After extreme-interviewing new partners each week but also, in many sessions, which usually take place twice a cases, with new pieces of a project or a new year, staff members collectively decide project altogether. There’s which applicants to a little bit of a learning invite back. Those chosen Menlo Innovations curve with every change, spend a day at Menlo Ann Arbor, Michigan Founded: 2001 but the new person working, for pay, on real 2010 Revenue: $2.3 million brings a fresh perspective projects and partnering Employees: 26 to the proceedings. with two employees. The “Just the act of one best of that bunch return person bringing the other for three-week trials. up to speed, saying things out loud, brings out things people hadn’t noticed before,” By 6:30pm, the candidates have gone, says Sheridan. “That makes them smarter.” and Menlo’s staff members convene The variety of partners and tasks also around a long table. As they chew on keeps energy high. That’s important, tacos, Lisamarie Babik, whose title is because some of Menlo’s projects take Menlo Evangelist, projects pictures of
the candidates on a screen to remind everyone who is who. As she reads out each name, the three employees who observed that candidate’s sessions thrust their thumbs up, down or sideways. Candidates earning three thumbs-ups or three thumbs-downs require no discussion. Most, however, inspire animated debate. A couple of days later, an applicant named Laura Willming raves about the event and confesses that she has what she calls a “company crush” on Menlo. “What I found the most interesting,” she says, “was the response from the other interviewees. I was excited about Menlo, but they seemed relieved. As if they were forever free from the chains of bad treatment, sterile work relationships, and inhibiting day jobs. Is it really that bad out there? It makes me fear to venture to companies beyond this one.” Willming doesn’t have to worry. She got three thumbs-ups.
Hopkins Printing believes in the survival of the smartest Why training? James Hopkins is a humble man. When a reporter uses the word great during an interview, he gently corrects her: “Our goal would never be to offer ourselves as a great company. We try to present ourselves as a good company that is honest and hardworking.” When asked how Hopkins Printing differs from the competition, he responds, “We always assume they’re better than we are. That way, we work harder.” Hopkins’s attitude is of a piece with the company’s modest beginnings: he and his wife, Arnie, started it 36 years ago in their garage, while Hopkins worked at a plant that made tapered roller bearings. “I never went to college, and I think if you’re self-taught, you believe everybody can learn,” says Hopkins. “People always want to be better.”
Commercial printing is a waning industry, but enthusiasm is waxing on the factory floor of Hopkins Printing. The reason is a cultural reboot that pushed employee skills and ideas to the forefront of what was once a more traditional top-down company. In the past two years, most employees have been trained in an additional one to two jobs and have implemented dozens of improvements that they devised. “We work smarter and help each other work smarter every day,” says Mike VanAtta, a lead operator in the bindery and 19-year employee. At Hopkins, roughly 95 per cent of employees are trained in at least two jobs, and a large majority is versed in three. So plant workers operate gluing, shrink-wrapping, and stitching JULY 2011 | INC. | 5 3
top small company workplaces
machines, and human resources staff also handle payroll and accounting. This deep cross-training allows workers to fill in for colleagues taking vacation and move among steps of the production process as order volume dictates. It also creates more opportunities for overtime. The training is facilitated by standard work documents, a lean manufacturing tool that lays out the steps of each task in a couple of pages, so workers can absorb them quickly and refer back when necessary. At Hopkins Printing, employees write the documents, using the kinds of language and perspective familiar to colleagues who will train after them. “Often these training things are paragraph after paragraph, and you can get lost in them,” says CEO James Hopkins. “This is employees talking to employees in the language they would normally use.” When new projects come into the bindery or other parts of the plant, employees set up workflow simulations “to Hopkins Printing reduce steps, Columbus, Ohio reduce mistakes, Founded: 1975 and improve 2010 Revenue: $16.7 million Employees: 100 speed and quality,” says Roy Waterhouse, Hopkins’s president. “If we can remove 20 seconds out of a process that we’ll be doing for six months, then it’s worth it.” Employees incorporate all such tweaks into their standard work documents and revisit those documents every year to ensure they haven’t missed some opportunity to do better. They are also expected to recommend at least one new process improvement a month, for either their own jobs or—because they are cross-trained—someone else’s. The continuous learning initiative kicked off in 2009 as a reaction to a significant drop in revenue. The company returned to profitability in 2010, and as a result of cross-training, revenue per employee is up more than $10,000. That’s good news for the work force in this 100 per cent employee-owned company. “Being able to do all these different things makes people here feel valuable,” says VanAtta. “We use the adage, ‘the guy with the most tricks in his bag, wins’.” 5 4 | INC. | JULY 2011
At Namasté Solar, the CEO is just another guy with a vote Why democracy? Blake Jones is a longtime student of inequity. While working as an engineer in Nepal, he was appalled at the unfairness of that country’s caste system. In Egypt, he squirmed when colleagues chided him for wearing jeans “because it was unbefitting of my status.” When he returned to the United States to work at a global engineering firm, Jones concluded that power and status in the workplace were largely a function of access to information. Those denied information grew disengaged and often quit. In 2004, Jones, with Wes Kennedy and Ray Tuomey, laid out the founding principles for their ideal company. Namasté Solar would be flat, employee owned, transparent, and democratically managed. “One person, one vote,” says Jones. “It’s the best way to make decisions and the right way.” The deal sounded sweet. In 2008, a number of large companies and private equity firms expressed interest in buying Namasté Solar and dramatically amping its growth. It was arguably the biggest decision ever faced by the business, which designs and installs solar-electricity systems. And Namasté would make it the same way it makes all decisions: painstakingly and communally. And so began the meetings, weeks of them, including two daylong retreats. The company’s co-owners (around 40 employees at the time) debated passionately, with some urging “Sell! Sell!” and others recommending caution. To ensure every voice was heard, large conclaves dispersed into small groups, in which more-reserved workers could comfortably speak their minds. Finally, the co-owners crowded into a conference room where, by a show of hands, they rejected the offer. “We recognised our culture means everything to us,” recalls Teri Lema, Namasté’s business manager. “We decided we would rather make a go of it and stay small to preserve the way we do business.” Namasté Solar is an employee-owned cooperative in which more than 70 per cent of workers hold stock and thus can vote. That stock is priced at $5,000 a share, and each employee can buy a single share. CEO Blake Jones would have liked the price to be higher, but on this as on many issues—whether to expand the company’s service offerings, for example, or whether to open a Denver office—he found himself on the losing end of the democratic model that he and his co-founders put in place. “A 22-year-old recent college grad who is an apprentice installing solar panels on rooftops has the same vote as I have,” says Jones. “I regularly don’t get my way.”
top small company workplaces
Raise Your Voice Employee-owners can, and do, make choices the CEO, Blake Jones, thinks are not in the company’s interest.
policies can sit on the humanresources committee. Decisions affecting everyone are made in one of the company’s bimonthly Big Picture Meetings, usually so packed that people line up along the walls. There, an issue’s “driver” (the person shepherding it to resolution) presents pros and cons for as long as 45 minutes, soliciting feedback throughout. On rare occasions, decisions are made by the board, which is composed of five employees elected by their colleagues for one- or two-year terms. It was the board that voted to initiate the company’s first-ever layoffs at the beginning of the year, when changes in Colorado’s solar subsidy program suddenly altered the company’s outlook. The board also considered options like cutting everyone’s pay, “but then you take a hard look at the positions you have during times of feast that are unnecessary in times of famine and realise it’s time to cut that job role, not just pay that person less,” says Ryan Dulaney, a project manager who plans to run for a board seat in the next election. “I’m really Namasté’s evolving approach to democracy illustrates how a proud of the way we handled it.” core cultural value scales with the size of a company’s work force. Jones says he fields frequent questions from outsiders about In Namasté’s first couple of years, decisions were made by coninefficiency—specifically, whether Namasté’s elaborate decision- sensus, and everyone voted on everything. At around making apparatus cranks along too slowly. He argues that the 15 or 20 employees, Namasté switched to operating by consent. A company is, in fact, extremely efficient, because by the time a single thumbs-down would table an issue, but decision is made, employees are lined up behind employees could abstain from voting. At 35 it. “It takes our ship longer to change direction, Namasté Solar employees, the company established a supermabut once we do pick a direction, everyone is rowBoulder, Colorado jority threshold of 60 per cent, with questions ing with full fervor, and we reach full speed more Founded: 2004 attaining the magnitude of a possible sale requirquickly,” says Jones. “Even if people are in the dis2010 Revenue: $20 million Employees: 62 sent, they feel like their voice was heard.” ing assent from two-thirds of the staff. As for the constant hits to his own authority, To prevent constant votes from dragging Jones doesn’t care. “I’d rather people look at me down productivity, the company created comas a peer or a fellow business owner than a boss,” he says. “Somemittees to decide narrower questions. Membership isn’t thing I’ve heard from other CEOs is that they feel very lonely at restricted by role. An installer interested in marketing can sit the top. I don’t.” on the marketing committee. A designer concerned about HR JULY 2011 | INC. | 5 5
In Ship-shape Shashi Kiran Shetty is smartly steering his company to a billion dollar turnover by 2014-15.
Shashi Kiran Shetty Of Grit, Passion and Luck
Shashi Kiran Shetty landed in Mumbai in 1978—a young, bright-eyed teenager on the lookout for a job. His search led him to the Mumbai port where he fell in love with ships at the first sight. He worked patiently for the next four years, gleaning every aspect of the shipping business while nurturing a dream of owning his own fleet. In 1982, he started a small transportation company and eventually launched All Cargo Global Logistics. He's found gold in the high seas since. All Cargo Global Logistics is now a 3,000 crore shipping giant. as told to DHIMAN CHATTOPADHYAY photograph by JITEN GANDHI
I grew up in a joint family in Bantwal, a village that is an hour’s drive
from Mangalore. When you grow up in a large family like mine, you learn a lot of things like the value of teamwork, building relationships, interdependence and humility. Those were my earliest lessons in entrepreneurship, and pretty crucial ones.
By the time I finished college with a degree in commerce, the family
business of rice and oil mills was almost sinking. I knew I had to look for a job fast. I landed in Mumbai in 1978, hunting for work. Luckily, I got hired by this small shipping company called Intermodal Transport and Trading Systems. I knew nothing about ships but I worked hard to learn. From there, I moved on to Tata Group’s Forbes Gokak. I worked for four years in the Mumbai dockyards as an operations executive.
I believe that to truly succeed in any business, you must first love doing what you do. I had never seen a ship till I went to Mumbai’s dockyards to look for a job. When I finally saw one, I fell in love. The huge vessels carrying shipments from one place to another fascinated me. I knew this was the business for me. But, I wanted to own ships and not just work in them. I’d already begun dreaming of the day when I would have my own fleet. I used my time as an employee productively, making friends and building networks in the industry. I met everybody—captains, managers, dockyard staff and truck owners who transported the cargo. Soon, I realised that many of those involved in the operations, especially those in charge of unloading and the Less than Container Load or LCL business didn’t really understand shipping. JULY 2011 | INC. | 5 7
how i did it
I saw this as an opportunity. The cargo
business was the easiest to start with since it needed less capital and also because I’d been doing this for four years. But all I had was 25,000. I had to think of ways to get started so I asked a few truck owners I knew to give me trucks on hire. I also convinced shipping companies to pay me daily, not monthly. They took a chance on me. Finally, TransIndia Freight Services was born. We were mainly a transportation company catering to shipping liners. I invested every penny I earned to buy equipment. I also hired professionals and set up a strong financial system. I’d seen my family business suffer because no one had bothered to think about checks and balances. I wasn’t about to repeat those mistakes.
in Dubai. That diverted their attention away from India. We also set up joint ventures in Singapore, Mauritius and South Africa. It meant they had no time to focus on India, and we ran the show. In 2003, we set up our first Contained Freight Station (CFS). It was the final link in the chain and made us a complete shipping solutions firm. We knew there was no space left in the CIDCO dockyard in Mumbai, so we went to a neighbouring village seven kilometres away. It was a huge risk because we didn't know if shipping companies would agree to dock so far from the main hub. But we got the land at a mere 10 per cent of the price I’d have to pay at the CIDCO dock.
“ I'd seen my family business suffer because nobody had bothered about checks and balances. I didn't want to repeat mistakes.” By 1993, winds of liberalisation were blowing. It was the right time to move into the shipping business. All Cargo Global Logistics was launched to ship cargo overseas. I got to know of a Belgian firm, called AMI International, which was looking to expand its LCL business to Indian shores. I became their franchisee in India. This helped me recruit more people at All Cargo. We grew phenomenally over the next five years. By 1998, we had 18 offices across India. AMI had moved out by then and we were scouting for a global partner. That’s when ECU Line, another Belgian company, but a much larger one, came into the picture. I worried though that ECU would use us
to strengthen its India presence and then go on its own. So I proposed a joint office
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The first CFC was a big success. Another CFC followed. This stirred investor interest in All Cargo and in 2004, we got private equity funds. At the same time, ECU Line's Belgian promoters were looking for an exit. Flush with funds, I knew it was the right time to increase our stake in the company. The Belgians were shocked when I offered
to be a 33 per cent shareholder. They weren’t expecting this. We raised $12 million by selling 6 per cent of All Cargo shares—we had become a listed firm by then—and coupled with the PE money, we sealed the deal in 2004.
Thereafter, we insisted on running the show. I appointed a senior colleague, M.P. Bansal, as the CFO and sent him to Antwerp. My intention was to own 50 per cent of ECU by 2007. Within a year, the promoters of ECU Line, plagued with further
financial trouble, decided to offload their entire stake. We had grown substantially by then and in 2007 we bought them over for approximately 150 crore. This has been my life’s biggest high. We were the first Indian shipping company to buy a foreign shipping firm. That made us proud. It also felt good to be running a large multinational shipping company and be listed on the stock exchange. I was living my dream of having a listed, public shipping company. It gives you a certain image, builds your credibility and helps attract talent. Ironically, the acquisition also led to complications and brief setbacks. We’d initially decided to retain the promoters of ECU Line as board members to maintain continuity. But, we found out that the main promoter had started another shipping and cargo business without even informing us. We had to fight a prolonged legal battle before the dust settled. The incident shook me up. But I haven’t stopped trusting people. You can't do that just because some people let you down. There are enough good people around. What I did learn was the importance of protecting one’s interests. Luckily, we haven't looked back since. The
recession did hit us but it couldn’t cripple us. In fact, not only have we survived, we’ve also managed to increase our revenue and margins. That said, the LCL business was badly affected and the bottom line dropped by 40 per cent. The CFC business broke even. But because none of the committed projects were halted, our engineering business generated a lot of revenues. Around the same time, Blackstone pumped in around 350 crore in All Cargo. That helped us ride out the storm. My vision is to turn All Cargo into a billion-dollar company by 2014-2015. I also want to institutionalise the business so that it can be run by those who succeed me, whether they are family members or professional CEOs. Even after all these years, I still love what I do. Finally, that is what makes the difference.
Managing Tim Harford on his new book, Adapt: Why Success Always Starts With Failure page 61 Elevator Pitch Think spas and you think luxury at a steep price. Kapil Dhameja and Sanyog Jain’s Blue Terra wants to smooth away the cost wrinkles by giving customers affordable treatments. Can they raise 5 crore? page 62 The Way I Work Ishita Swarup makes it a point to switch off after 6pm. Working late isn’t fair to her employees and their families, believes this start-up junkie page 64
Hiring Contract Staffing: a new way to build your network? this page
strategy Hiring Contracting the talent gap Don’t overload your teams. Power them only when you really need to A hunt for talent isn’t a new problem for
India Inc. Talk to business owners and most would say getting bright, committed employees is very often as tough as cracking that business deal. The crunch gets worse when you need to fill for temporary positions—to get a new project up and going, readying a new pilot or even scoping out a new market. It’s an opportunity companies like StaffOnContract, which brings together individuals and firms for contractual positions are aiming to successfully chip at. “The trend is here to stay,” says Chetan Indap, CEO and co-founder of the Delhibased company. “Large companies don’t want to spend resources on training a newbie. Individuals know that freshers aren’t taken seriously in established brands unless illustration by Shigil N
JULY 2011 | INC. | 5 9
they come with three to five years of experience,” he reveals. As a trend, sub-contracting was introduced by IT firms in the 1990s when top IT names outsourced projects to smaller vendors to cope up with rising wages and attrition. The projects that were outsourced were limited to commodity skills like designing a specific or specialised software or customer service. Though IT firms pioneered the concept in India, other industries are sure to take advantage. “By 2015, India will have five million jobs, out of which 20 per cent will be contractual in nature and will be indus-
contractual staffing is a special bonus. It’s faster, smarter and cheaper to hire local talent till the company gets its processes in place, and knows how to navigate its new environment. Right now, unsurprisingly, as is expected from new trends, rules are sketchy. In fact, the very definition of “contractual staffing”, is mostly used loosely and interchangeably with temporary staffing and freelancing. Unlike temporary staffing where low level bluecollar workers are hired for a period of three months, people hired under contractual staffing may work in a company for a period of six to 12 months. Plus,
“The firm does not have to allocate resources for the interview, training and the induction of the employee into the company.” try agnostic. In 2020, the percentage will increase to 35,” says Indap whose current contractual supply side consists of 600plus SMEs and 2,000-plus independent consultants. He’s at the nascent grade of the curve but is confident the concept will be hot property in a year or two. “It’s worked very well in the West. It will change the entire face of the hiring game in India,” Indap says enthusiastically. In India, it’s a boon as companies struggle to negotiate a hot job market which has led to unreasonable salary demands and employee terms. In this scenario, it’s more prudent for an established firm to outsource their work rather than bring on somebody full-time who costs the earth. For the many international companies scouting around for deals or looking to set up base in India, 6 0 | INC. | JULY 2011
these are specialists with credentials and experience under their belt. For companies, the cost benefits are substantial, sometimes to the tune of 25 per cent. “The firm does not have to allocate resources for the interview, training and the induction of the employee into the company,” explains Indap. Costs like severance pay, provident fund and medical insurance are also saved completely. The concept isn’t limited to individual staffing though. Full project teams can be deployed at client locations at one go. Often, these are teams leased out by smaller companies. It offers them an unprecedented, networking opportunity when through agents like StaffOnContract they “rent” out their teams, and build goodwill, expertise and experience. “Smaller boutique firms can get
their hands on projects and instead of working against them, larger companies find it smart to work with them,” explains Ketan Zaveri, CEO at M-Power Human Resource. It worked out very well for Blue Chip Computer Consultants, a business consultancy and product development firm, too. Blue Chip successfully contracted its services to ABM Knowledge Ware, an information technology company providing e-Governance solutions, and killed two birds with one stone. First, it brought in much-needed revenue and added ABM’s illustrious name to its roster of partners and associates. Some others firms are beginning to see similar advantage. “We get ready made assignments. Plus we now have exposure to new clients every day,” adds Santosh Singh, managing director of Abyss & Horizon Consulting, who has placed his technical resources at several client sites. At Abyss & Horizon, profits have increased and turnover has ramped up by more than 25 per cent. Singh has also got a chance to work with marquee names such as Larsen&Toubro, CTS, Accenture and Datamatics. Of course, these examples are only a trickle right now. StaffOnContract’s Indap wants to give things a push but there is a lot that needs to be sorted out. “The adoption of such a concept in other industries is slow,” admits Indap. “There is always a hitch. It’s difficult to trust a team member who isn’t in-house. And, there are worries about quality and integrity,” admits Singh. Maya Basak, a human resource manager at Games2Win, an online gaming platform, says she definitely didn’t strike gold. Online platforms like StaffOnContract don’t yet offer much choice, she says. “We needed people on a contractual basis and posted the openings online. We got mostly irrelevant responses,” says she. Indap says companies need to get imaginative about the possibilities. They can sub-contract to not-for-profits and build some goodwill in the process. “It’s great for their image and a positive way to give back.”—Sunaina Sehgal
Managing Adapt, or perish It’s smarter to think small A Survival Guide Tim Harford says baby steps, not giant leaps forward, is the way to negotiate this increasingly complicated world.
to experiment and risk failure—this is something we find difficult, both personally and on an institutional level. Can you recall for us trigger points, inspirations to begin writing?
Grand visions, detailed plans by experts and gurus
with an infallible solution are outdated, says Tim Harford, who writes the immensely popular “The Undercover Economist” column for the Financial Times. In his new book, Adapt: Why Success Always Starts With Failure, Harford says individuals and organisations must continuously improvise rather than obsessively plan. An adaptive trial-and-error method is the only way to tackle issues in a world that has become far too unpredictable and complex for ready-made solutions, argues Harford. We spoke to him to find out how we can all learn to do this.
What is the main context for this book?
The book explores how complex problems are solved, from business innovation, climate change, the war on terror to the financial crisis. While looking at these issues and interviewing the people involved in solving them, I found the same themes emerging again and again: trial and error is a vital part of problem solving in a complex world. We need
There were many. One was chatting on a beach with, of all people, the president of Virgin Galactic. I told him I was interested in exploring how innovation prizes work—the Virgin Galactic project having emerged as a result of a famous innovation prize, the Ansari X Prize. He told me that the Spitfire— a crucial fighter aircraft during the Second World War—was also the result of an innovation prize. So I looked into it and the Spitfire became a key part of the book. On another occasion I wanted to write about a terrible industrial accident that had triggered a small financial crisis in insurance markets. My sister is a safety engineer and she was able to give me a reading list about Piper Alpha, Chernobyl, Bhopal and other industrial disasters. As I studied them—with their mixture of negligence, fraud and sheer bad luck—I came to realise that accidents in these complex, tightly-coupled systems were a very good parallel for the financial crisis. I spoke to several leading safety experts who were convinced that their insights on managing failure could have helped to prevent the financial crisis. It was a serendipitous discovery—but that’s very much in line with the message of the book. A lot of good things happen by accident. Is this book almost a warning against scale? Are size and adaptability always at odds?
Not entirely. Small organisations are very sensitive to failure so are able to change direction quickly if something is going wrong. Big organisations usually have poor communication between the front line and the top of the organisation. However, big organisations also have the resources and resilience to experiment a lot. Google is a good example of that. I argue that adaptability is difficult for everyone—from governments to individuals—but the reasons why we struggle to experiment and adapt vary depending on circumstance. Sometimes it’s a political problem, sometimes it’s a question of psychology.—Shreyasi Singh JULY 2011 | INC. | 61
Wellness and Wealth
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Gutter Credit here
Can Kapil Dhameja and Sanyog Jain cash in on the spa experience?
Photograph by subhojit paul
Elevator Pitch Blue Terra wants to offer affordable spa therapies. Can 5 crore lead it to wellness?
Kapil Dhameja and Sanyog Jain Company:
Blue Terra Launched:
March 2010 Seed Money:
Current Revenue Run Rate:
2 (running in Noida and Gurgaon) + 2 (work in progress in West Delhi) Projected revenue in March 2012:
4 crore (from existing + new outlets)
Gutter Credit here
5 crore (for centre expansion)
“India’s spa and gym market industry is worth 8,200 crore. With disposable incomes rising and increasing health awareness, the segment is expected to grow at 35 per cent annually. There is a great opportunity to establish 50 to 70 spa centres in metros and class-1 towns. Our wellness spas in Noida and Gurgaon offer ayurvedic, international and oriental therapies at affordable prices, at least 50 per cent cheaper than the ones available in 5-star hotels. We don’t necessarily pitch for the most premium address. Locality is more important than location. Our price points give us an opportunity to be a part of the customers’ regular lifestyle rather than a one-time indulgence. In three years, we can grow to 10 crore by expanding to 25 centres. Because each centre costs 50 lakh to set up, we need this funding for expansion. There are other revenue possibilities from corporate wellness programmes, airport express spas and day spas in residential areas.”—As told to Sunaina Sehgal
The Experts Weigh In Work on the Pitch
The industry opportunity seems interesting, with the possibility of high growth. Revenue margins haven’t been mentioned. The locality versus location argument is well thought out. The launch of multiple outlets and managing them can lead to operational challenges. Benefits will flow from brand recognition, but the real kicker will probably come from franchising and product ownership. On the whole, the market is promising. But services businesses require major capital investment and are dependent on trained manpower.
The spa and wellness category is quite interesting from a consumers’ standpoint. It taps into the lifestyle consumption pattern of new India. The key will be the execution of the plan. There are several local spa chains mushrooming across the cities. Blue Terra will need to differentiate from these local places. Acquiring the “right” real estate will be critical. Staff will require specialised training. And, retaining the trained staff will require savvy management skills. However, I believe that the concept has a lot of potential.
Retain trained staff
Broad-base target audience
Abishek Laxminarayan, co-CEO Indavest, Bengaluru
Suvir Sujan, partner Nexus Venture Partners, Delhi
prashanth prakash, partner Accel India, Bengaluru
The positioning chosen of being a holistic health service provider than that of an indulgence spa, is smart. Going by earlier attempts though, the sector hasn’t found favour with ventures so far. Blue Terra should explore complementary spaces such as physiotherapy, yoga and pain management to broad-base their target audience and repeat usage. Establishing credibility and executing on a clear strategy to build trust would be key. Scale would require sufficient marketing spends beyond just organic word of mouth.
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The Way I Work | Ishita Swarup, 99labels
“One is both the CEO and office peon. That’s the charm of a start-up.” Deep within Ishita Swarup there’s a bit of an adrenaline junkie hidden somewhere. It’s easy to be fooled by her fragile appearance, but she admits soon enough that the “unexplored or uncharted” attracts her almost instantly. If it feels like a challenge, she is most definitely taking the plunge. Take her obsession with Microlight aircrafts for instance. It’s not every day that people with vertigo take temporary lessons in aviation schools for a lark. Then, there was the momentary idea to take up Kathak as a profession. After all, she was trained for 14 years and more. That dropped, Cadbury came calling. Swarup, however, quickly realised that she wasn’t perhaps “too good with authority”. Bitten by the entrepreneurial bug, she decided to launch her first start-up. A sale and a sabbatical later, another business idea hit her. Together with her partner, Anchal Jain, Swarup launched 99labels, an online shopping portal that offers deep discounts on branded ware. 99labels now has representatives in Paris, New York and Mumbai. Swarup likes to spend the first hour of her day in the quite of her office den, which is why she gets to office before anyone else does. The rest of the day is all about meetings and looking for ways to make 99labels more efficient and profitable.
As told to Rohini Banerjee | Photograph by Subhojit Paul 6 4 | INC. | JULY 2011
The Label Lady Ishita Swarup is delighting shopaholics, while stiching a super cool business.
I like to beat my colleagues and employees to the office and reach
by 9.15am, and that’s the latest. The first thing I do is retreat into my office den. To use a clichéd expression, that one hour is “me time”. I organise my thoughts, check mails, do a post-mortem of the previous day and also plan things out. On a usual work day, you are constantly doing meetings and taking decisions on the fly. There is hardly any time to sit quietly and think. So, that one hour is really precious to me. That’s why I try to get up as early as possible, which is somewhere between 7.30am to 7.45am. Otherwise, early mornings are a bummer. I’ve never been a morning person. Between my sleepy self, newspapers and the rush to get ready, let’s just say breakfasts are far from happy meals. Earlier, I used to just skip the entire affair. Now, I just try to gulp down something. The morning meal may not be a feast, but at least I am regular now. And I am someone who has to eat every two hours. I appreciate people who go without eating lunch or dinner, but to put it lightly I would perish if I had to. My constitution is simply not built that way. My office is not very far from my house. I like to spend that time to catch up on calls and check e-mails. I have reached a point where I have realised that the device is not a part of me and I can simply switch it off. In my earlier stints, I was plugged in 24X7. I am much better. But even now in the mornings, gadgets, especially the BlackBerry, are simply indispensable. Once office hours begin, it’s all meetings: internal and in-office ones. At this point, work is about experimentation. Products that did well yesterday, impact our strategies for tomorrow. Let’s say over the weekend we introduce a new section, the response to which isn’t positive, not even internally. The beginning of the week then goes into solving that problem—dealing with questions like how do we do it different or better. In an online segment like ours, decisions have to be made within a day, sometimes an hour, depending upon the kind of resource we put in it. There are so many calls that have to be taken: what sort of product to launch, its logistics, delivery and packaging. 99labels is at a point when we are scaling rapidly. On one hand, that’s brilliant. On the other, there aren’t many learnings to go by. Decisions are taken collectively, and sometimes they simply land up on my plate and I take a call. That’s what the CEO, I believe, does in a start-up mode. She or he
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gets to play all the roles, bit by bit. On one hand, you are involved in taking micro-managerial decisions like the nitty-gritty of which product goes where, when and how. n the other side, you are also play-
ing the macro-managerial role, planning, strategising and looking at the year’s target. In between, you are also changing a particular brand of coffee that people don’t like at work because it tastes yucky. Then there is the macro-managerial role demanding planning, strategising and looking at the year’s target. I feel, its this fluid condition, which is the most charming aspect of a start up. Fluidity is a start-up’s charm. On any given day, one is both the CEO and office peon. I meet enough folks at senior levels, who aren’t sure if they would like to get their hands dirty. And unless you do like getting your hands dirty, start-ups aren’t for you. In a moment of crisis, I expect everyone in my team to roll up their sleeves and help pack and move to the next office. We are not large enough to have “backups” for every role. If the customer care guys decide not to turn up, I expect the rest of the team to start taking calls. In fact, I usually encourage people to take up this role as often as possible. I do it myself at times. Currently, we have close to 100 people. We are constantly adding to the teams. Our marketing team is doubling, as is the customer care section. As I see it now, there are two things that we are doing as a start-up: we are keeping pace with our growth and moving beyond that. As we expand, so do the offices. 99labels now has representatives in Paris, New York and Mumbai. We are also in the process of setting up office down south. Off late, there have been so many things happening in Delhi that I have not been able to travel as much as I would like to, or in fact, need to. The other reason I travel is because of my speaking engagements with a few start-up mentoring platforms. I encourage youngsters I meet who want to be entrepreneurs to come to my office, and see how a start-up functions. I enjoy the time I give to organisations like TiE. It’s great to be in the thick of energy and ideas people are coming up with. The idea for 99labels came along when I was taking a sabbatical. I had sold off my first start-up and was trying to figure out what to do next. That is when I met Anchal Jain, my co-founder. He’d seen sites like 99labels flourish in Europe, especially France. He was confident the idea would work here too. And why wouldn’t it? For the consumer, the lure of the proposal lay in the deep discounts on
“We are keeping pace with our growth and moving beyond that.” branded items and the ease of online shopping experience. For the brands, our platform provided a space where they could liquidate extra stocks, a clear need today. This is especially true in case of apparel, which becomes dead stock after a season or two. There are two kinds of consumers who come to sites like ours: shopaholics who shop online, offline and more, and folks like me. I wouldn’t call myself a shopaholic, but I like my clothes. Then again, I am perpetually running short of time, so online shopping makes sense. Then, there are customers in the Tier-II and III cities. Even if they have the time, they don’t have access to brands. If you were to scrape away all the fluff around 99labels, it still remains a sensible proposition. Most importantly, it appeals to a woman since its a fun thing to do. We do not have fixed time for lunches. It starts when anyone gets hungry and opens his lunch pack. People just start gathering around. Sometimes, I will go out to join them or they come into my office. We usually end up talking shop over lunch. It’s a little impossible for us to switch off in office. We are constantly on the Facebook page, or taking in calls, trying to gauge responses and putting things in order. I have been blessed with a team which is very enthusiastic about what we do. We are a like-minded bunch and our work culture is defined by this love. On Valentine’s Day last year, a young customer wanted to gift his partner flowers and a present. We don’t deliver flowers. But, this guy in my team who received the call, used his own cash to buy the roses and got them delivered along with the present. I got to know about this only after I read the customer’s positive testimonial on Facebook. I love that we have this sense of ownership. It makes office a great place to be, especially since we all spend a better part of day here. I am lucky to have this because commitment to one’s job is not something money or authority can deliver. Employees either have it or don’t. I see mistakes and risk-taking as positive aspects. It means somebody was taking an initiative. So what if it didn’t turn out well? It would the next time.
It’s work and nothing else till 6pm. In between there are coffee or chai breaks. Even here, we end up discussing work. I used to be a coffee junkie but I am trying hard to cut down. I am a high-energy person and caffeine adds to that. Even with the three cups I have now, I am bad news for people after 6pm. After that, I switch off. It’s not fair to my colleagues, employees and their families if I keep on working beyond office hours, because I drag them into the work as well.
venings are usually reserved for my daugh-
ter, and sometimes when I am feeling especially virtuous, to exercise. If there is something important to tend to, I put my daughter to sleep and then take calls between 10pm and 11.30pm. Otherwise, I use this time to unwind. Mostly, I read a book or catch the news. With my attention span, a movie is out of the question. I either get bored or distracted. But telly soaps like How I Met Your Mother are great. They are funny, short and light, just what I need after a crazy day. I take a break once every three months or, sometimes, even sooner. I either travel alone or go some place with friends and family. I most look forward to the annual 10-day holiday I take with my family. We went to Kerala, Bali and New Zealand on our past few trips; now I want a new place to explore. But, still, nothings beats going to the hills. I have lived a major part of my childhood in Bhutan. Therefore, the hills are almost a part of my being. They are my sanctuary. I also look forward to travelling because it gives me a chance to catch up on readiing. There’s nothing better than curling up with a book while on a holiday. I am a bookworm. I can’t read on a regular work day while in Delhi because my mind is so consumed. While getting ready for bed, I’m ususally thinking of the many plans I have. There’s lots I want to do with my life. I’d love to start a platform for classical Indian dancers and singers. I’ve learnt Kathak for years, and I’m passionate about the Indian arts. Perhaps one day, I’ll do something in that space. I doze off making plans like this, typically around midnight. JULY 2011 | INC. | 67
I wish I knew then...
P. Sadananda Maiya, chairman, Maiyas While his peers were playing, P. Sadananda Maiya was busy planning. After all, not every boy receives a piece of Bengaluru’s entrepreneurial history as inheritance. A member of the prestigious Maiya family that owned Mavalli Tiffin Room (MTR), a legendary restaurant, Maiya was instrumental in revolutionising his family business. Seemingly impulsive, gut-based decisions are his most useful flourish. Maiya wants to repeat some of that business magic with his new restaurant in Bengaluru. The biggest lesson I have learnt as an entrepreneur is to trust my instincts and stick by them. Looking back, two of my biggest decisions were based on pure instinct. I am glad I had the courage to take them then because both gave a distinct edge to my business. In 1999, we introduced the soft serve or softy ice cream. My team resisted the idea for several reasons but mostly because it didn’t fit in with the brand’s image. It also required large investments to set up, and if it didn’t work, we could be burning a hole in our pocket. However, I was certain that besides being a sustainable business, the softies would immensely impact the rest of our categories. I convinced my team to take the risk. Not only was it a huge success, but within a year it had contributed to 11 per cent of our turnover. It also enabled us to make a transition to being a brand that was firmly rooted in the consumers’ minds as a “complete food brand”. Eating ice creams in restaurants was considered an expensive proposition. We changed that perception by pricing our soft serve creams for as low as 5. MTR Foods made ice cream available to every Indian consumer— even van and truck drivers. It also helped us increase our knowledge of the ready food
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choice of food and that simple vegetarian fare wouldn’t work. Nevertheless, I decided to go ahead. I was convinced there was still a huge potential for authentic vegetarian Indian food if it was done well. I began the restaurant Maiyas with my son Sudarshan in 2008. We had one mission—to serve authentic, delicious, great quality food. We began small in a BTM layout with two floors. We had to move to a larger place in Jayanagar in 2009. Now, we have five floors and serve south Indian, Gujarati and north Indian fare. I’ve also started a processed foods business— Adding His Own Touch Maiya says staying true savoury snacks and sweets. to his instincts has always helped his business. We’ve automated the manufacturing process for snacks and sweets. And, since launching in Karnamarket, something we effectively leveraged to taka in late 2010, the response has been success in our new categories—ready to eat, encouraging. We plan to take these prodfrozen Indian foods and ice creams. ucts to other states. Gut ruled my decision making most But I wouldn’t have been able to do this when I decided to get back into the food twice over if I had not followed my business, after a couple of years of MTR instincts. —As told to Kavitha Srinivasa being sold to Norway’s Orkla group for $100 million. My well-wishers and friends tried to dissuade me. I wanted to open a vegetarian restaurant. They felt Indian food connoisseurs were now more global in their