BUSINESS OPPORTUNITIES IN GUJARAT
DECEMBER 2011 VOLUME 3 ISSUE 4 Rs 100
THE FUNDING SPECIAL
We Tell You Who And Where To Get It From.
6 FUND RAISING MISTAKES TO AVOID FIND YOUR COMPANY’S VALUE
5 LEGAL ERRORS TO STAY AWAY FROM ARE YOU VC-ELIGIBLE? APPROACH NON-BANK LENDERS FOR VENTURE DEBT GO GLOBAL WITH YOUR CAPITAL NEEDS ALSO INSIDE
FLOW AND GROW: The Story of Indus League RULING REALTY: Sushil Ansal and the Business of Building
table of contents 20
THE FUNDING SPECIAL
INSIGHTS 18 INVESTMENT IN REAL ESTATE
Ranjeet S. Mudholkar on investing in a stable, income producing and appreciating investment proposition—real estate.
19 WORDS IN ENTREPRENEURSHIP
Nandini Vaidyanathan on entrepreneurs using all the fancy words with panache and the disconnect they have with mentors.
20 COMMON STARTUP MISTAKES
32 CASH IN
Got an idea that will rock the world? The perfect business pitch and plan? Here's a look a look at the different stages of a business, the money required for each stage and the funding options available in the market. By Sunita Mishra
37 GOING TO THE GOVERNMENT
Richard Branson on how to avoid the most common mistakes that entrepreneurs make when starting.
21 CRISIS COUNSELING
Christopher Hann on how to maintain your client’s trust when managing crisis
A look at the range of grants that the government offers to entrepreneurs in India. By Sunita Mishra
42 VENTURE DEBTS
Read on to know about the man who made Sulabh his mission 41 years ago and stands tall today as the messiah of the scavenger community in India. By Sunita Mishra
Today’s topsy-turvy capital market is changing the rules of company ﬁnancing. Faced with more market uncertainty and less capital, entrepreneurs are turning to nontraditional lenders for venture debt. By David Worrell
22 TOUCH OF SUCCESS
43 FIND YOURSELF A WORLD OF INVESTORS
Need a VC with a certain je ne sais quoi? An international ﬁrm may ﬁt the bill. By Gail Dutton
44 DEADLY LEGAL MISTAKES
When raising early-stage investment capital, avoid these errors that could lead to the death of your company.
46 BIGGEST MISTAKES IN RAISING STARTUP CAPITAL Avoid these traps to increase your chances of securing funding and keeping investors happy. By Brad Sugars 48 PURSUING VENTURE CAPITAL
Know if you are a good candidate for institutional VC funding.
50 WHAT’S MY COMPANY WORTH
The art and science behind early-stage company valuation.
6 Intelligent Entrepreneur December 2011
OFFBEAT 28 COME BACK, PLEASE Vijay Mallya discontinuing Kingﬁsher Red has different meanings for people. It means fading away of the country’s ﬁrst low-cost airline for some. By Prerna Raturi
SUCCESS STRATEGIES 52 BEYOND THE BUBBLE (TEA) Learn how Pham and other entrepreneurs made a go of Fat Straws Bubble Tea’s Terry Pham, launched during a recession. By Rich Karpinski
SUCCESS INC 62 IN A LEAGUE OF HER OWN As Co-founder and CEO of Indus League Clothing, Rachna Aggarwal has built an umbrella of apparel brands, each with a distinct style and place in the industry. By Shonali Advani 68 RULING THE REALTY SECTOR
Even after building millions of houses in the country over four decades, there is no stopping Sushil Kumar Ansal when it comes to the expansion of his construction business. By Sunita Mishra
71 HOME IN ON SUCCESS Know more about affordable housing, an emerging segment in the housing sector in India. By Team Entrepreneur 68
MONEY DEPARTMENT 81 BETTER BILLING
Know the changes you need to make to your invoice to get paid faster. By Gwen Moran
STATE FOCUS 82 WESTSIDE STORY
Gujarat has become the epicenter of economic activity in the country. Besides labor harmony, infrastructure development, socio-economic reforms and an investorfriendly climate, it is the entrepreneurial nature of the people which has gone a long way in making the Gujarat story a successful one. By Pranbihanga Borpuzari
86 CORRIDOR OF GROWTH As the country’s most ambitious mega infrastructure project worth Rs.4.05 lakh crore—the Delhi-Mumbai industrial corridor— gathers steam, Entrepreneur does a ground-level reality check to know how it will help boost trade. By Pranbihanga Borpuzari 92 THE TRICK IS IN THE IMPLEMENTATION Here’s a look at how Gujarat leads the country in ensuring industrial policies are executed properly. By Dinesh Awasthi
December 2011 Intelligent Entrepreneur 7
table of contents 95 "THE NEED OF THE HOUR IS TO
CREATE INTEGRATED CITIES" Amitabh Kant, CEO and MD of the nodal agency which is handling the Delhi-Mumbai industrial corridor, tells Entrepreneur what to expect from the mega project. By Pranbihanga Borpuzari
100 IDEAS FOR A SMARTER GRID Harit Soni’s Ecolibrium energy, a smart grid company, has developed technologies which solve the problems plaguing India’s power sector at a very affordable price. By Pranbihanga Borpuzari
102 A POWERFUL PROJECT
Omkar Jani, Principal Research Scientist, Gujarat Energy Research and Management Institute (GERMI), intends to have rooftop installations in Gandhinagar to generate 5mw of power. By Pranbihanga Borpuzari
128 PERSIAN PARADISE If you’re looking for an exotic Middle-Eastern atmosphere on a cool night, Persian Terrace at Sheraton Bengaluru offers the perfect setting. By Shonali Advani
In 2009, Gujarat welcomed the Nano project which transformed the sleepy town of Sanand into a bustling industrial center. By Pranbihanga Borpuzari
START UPS 118 LEARNING FROM MISTAKES Anurag Jain, who until recently was Global VP, Dell Services, became an entrepreneur at the age of 22 and after starting two companies early in his life is now in a hurry to establish three more. By Pranbihanga Borpuzari 120 APPETITE FOR PROFIT Sagar Daryani and Binod K. Homagai have given a brand to momos in Kolkata, and successfully at that. By Prerna Raturi 124 TECH THAT
TECH DEPARTMENT 112 ICONIC?
Knolskape’s simulated products are a unique mix of theater and technology, thanks to its founder Rajiv Jayaraman. By Shonali Advani
Know more about Acer’s Iconia a501, a device still in the works, which has some things to iron out even as others are amazing. By Ankush Chibber
8 Intelligent Entrepreneur December 2011
Arogya Spa and Fitness Centre at the Hyatt Regency Pune helps you unwind and destress with its therapies. By Sriya Ray Chaudhuri
133 MEDITERRANEAN ODYSSEY Opa’s carefully planned menu features authentic ingredients which tickle the taste buds. By Sriya Ray Chaudhuri
114 TEXTBOOK LANDING
Learn how to create a landing page for your business that turns visitors into leads instead of sending them toward the back button. By Ann Handley
130 GET PAMPERED
ARKO PROVO MUKHERJEE
10 FEEDBACK 11 RESOURCES 12 SME DOCTOR 16 STUMP SPEAK 134 BACKSTAGE
resources [Info that’s handy]
TIE CELEBRATES THE ENTREPRENEUR TRIP
iE Bangalore is holding the flagship conference of ‘TiE Entrepreneurial Summit 2011’ (TES 2011) on December 15 and December 16, 2011, at Hotel Lalit Ashok, Bangalore. This is the largest conference in the Asia region and will have all stellar names in various domains share their experience in entrepreneurship. The conference— Celebrating the Entrepreneur Trip— will highlight all aspects of an entrepreneur’s journey, raise visibility, broaden awareness about entrepreneurship, engage with entrepreneurs in all sectors and strengthen the connection between entrepreneurs and the stakeholders in the eco-system. The conference will have seven keynotes, five tracks, 40 sessions and over 100 speakers in healthcare, education, agriculture, social media and advertising, mobile business, clean
technologies, web economy and financial services. The conference holds relevance for aspiring entrepreneurs, start-ups, emerging and growing enterprises as well as all the stakeholders, including angel investors, venture firms, investment banks, mentors, entrepreneur support networks, service providers and consultants. The delegate registration is open and can be accessed at www. tes2011.com. At TES2011 partnership opportunities exist for providing several services to the conference as well as participate in the marketplace, available at the conference. Date: December 15 & December 16, 2011 Venue: Hotel Lalit Ashok, Bangalore Contact: Gayathri Sharma (+91 80 4147 4567 / 69) Website: www.tes2011.com
IIT GLOBAL ENTREPRENEURSHIP SUMMIT
he annual flagship event of the Entrepreneurship Cell IIT Kharagpur— Global Entrepreneurship Summit—is scheduled from January13 to January 15, 2012. This is one of the biggest entrepreneurial platforms for academicians, new-age entrepreneurs, eminent business personalities, venture capitalists and students to gather at one place, share their entrepreneurial endeavours and experiences and pledge to take entrepreneurship in India to greater scales. Global Entrepreneurship Summit plays host to India’s only Global Conference on Entrepreneurship. The 2012 edition of GES will witness guest lectures by various eminent personalities of the likes of Sunita Ramnathkar (Founder FEM Pharma Care) and Nikhil Soman (VP Reliance Big Entertainment). Workshops, focused on building the entrepreneurial acumen of participants are also in the pipeline. An industry talk by Samresh Shah of Cap Gemini is one such. Entrepreneurship Cell IIT Kharagpur aims to provide a platform where promotion of entrepreneurship could be discussed with
a global perspective. This video conferencing session will serve as a conclave for discussion of opportunities and programs aimed towards promoting entrepreneurship in various universities across the world. The conference will be followed by a discussion amongst the Entrepreneurship Cells in India about the Indian scenario and how it is best to go about promoting entrepreneurship in their campuses. A few of the participants in GEC will include Shailendra Vyakarnam, Director, Center for Entrepreneurial Learning, Cambridge University, Wendy Cukier, Ryerson University, and Minet Schindehutte, Associate Professor of Entrepreneurship, Whitman School of Management, Syracuse University. The finals of the Global business plan competitions—Empresario and Envision—will be part of the Global Entrepreneurship Summit. Date: January13-January15, 2012 Venue: IIT Kharagpur Contact: Pranita Padalwar (+91 9564250322) Website: www.ecell-iitkgp.org
R.A. Podar College of Commerce & Economics is introducing the ﬁnance extravaganza Moneta, a national-level festival dedicated to ﬁnance, from December 7 to December 10, 2011. The festival aims at spreading awareness about ﬁnance and encouraging students to indulge in regular savings and smart investments. Moneta 2011 will comprise competitions, workshops and seminars. Competitions will be based on various aspects like M&As, CFO challenge, mutual funds, etc. Its ﬂagship event—Bullring, a mock stock market with over 100 trading terminals with real trading softwares—will be the main attraction. Apart from these are online quizzes, games and discussions. A one-of-its-kind event, Moneta is the largest of its genre, encompassing all aspects of the money world. It has one of the highest prize money by any college event—a whopping Rs.3.50 lakh. So come lay your hands on it. Think, invest and win. Moneta 2011 is a blend of fun, facts, learning and glamour. Date: December 7December 10, 2011 Venue: Mumbai Contact: 919920948994 Website: www.podarmoneta.com
December 2011 of Intelligent Entrepreneur 11 To read more, grab the December issue Entrepreneur To Subscribe, visit www.entrepreneurindia.in
TOUCH OF Take the name Sulabh and the ﬁrst thing that comes to your mind are the public convenience toilets found all over India. But there is much more to the man who made Sulabh his mission 41 years ago. Today, Bindeshwar Pathak stands tall as the messiah of the scavenger community in India. By Sunita Mishra
BETTIAH, BIHAR, 1968 A man observes a small boy being chased by an angry bull. He joins the crowed which is running to save the boy’s life. Suddenly, someone from the crow=d shouts, “Hey, it’s a boy from the scavenger community.” This casts a spell on the crowd. People turn their back towards the boy and leave him quietly. The man, unmoved by the caste cry, manages to send the violent animal away. He rushes the bruised boy to hospital, where he is declared dead. That was the day the man in question took a vow to do something for the ‘untouchables.’ Bindeshwar Pathak, 68, the founder of Sulabh International Social Service Organization, has a come a long way since.
CUT TO THE PRESENT Today, Sulabh International, a Rs.300-crore organization with 15 percent of it being profits, is responsible for the construction of 1,136,446 individual household toilets in India since its inception. It has also constructed 7,356 toilets for schools across the country. Sulabh International employs 60,000 people, of which 35,000 are paid workers while the rest are volunteers. This non-profitable organization is also the world’s biggest sanitation provider.
HOW IT ALL BEGAN Born into an affluent Maithilya Brahmin family in a village of Vaishali district of Bihar in 1943, Pathak had nothing much to worry about as a child. However, the fortunes of his father, Dr Ramakant Pathak, fell in the year 1955 and worries to bring back the lost glory haunted the teenager. When he completed his graduation in sociology from Patna University in 1964, Pathak just had a vague idea that he wanted to become a professor and lead a respectable life, with no other particular ambition. With his marriage in 1965, responsibilities 22 Intelligent Entrepreneur December 2011
doubled and Pathak had to do some small jobs to earn a living. He also tried his hands at his father’s family business selling ayurvedic medicines. In 1969, with a turn of events, Pathak once again landed in Patna to join the Gandhi Centenary Celebration Committee as an English-Hindi and Hindi-English translator. For four months, he worked without pay. Later, with his seniors impressed with this “bright” boy’s work, Pathak started getting a salary of Rs.200. He was later transferred to the restoration of human rights’ cell. This sub-committee was formed with an objective of providing decent living to the scavenger caste—a community in India that manually cleans human faeces. Before Independence, they were called the untouchables. He job there was to come up with an alternate sanitary system in the country that would help the community do away with the manual cleaning of human waste. Things worked like they do—slowly—before Pathak witnessed two accidents that changed his life, forever.
LIFE-CHANGING INCIDENTS During his job with the committee, Pathak had decided to live in a scavengers’ colony in Bettiah to have a better understanding of the people he has to work with and work for. He witnessed a scene where a new bride was being forced by her in-laws to clean a toilet. Despite her bitter sobs, the family was determined to make her do it. Pathak intervened, but to no avail. The incident shook him but the worst was yet to be seen—an ‘untouchable’ boy’s ruthless killing by a bull. Pathak’s mind was made up that day to run a mission to free the untouchables from this society-made bane.
OBJECTIONS ON THE HOMEFRONT Back home, his decision was not taken in good stead. “As a young boy I was forced by my grandmother to
SUCCESS MAN ON A MISSION NAME Bindeshwar Pathak BACKGROUND Born in 1943 in village in RampurBaghel, district Vaishali, Bihar EDUCATION MA (Sociology 1980), MA (English 1986), Ph.D. (1985), D.Litt. (1994) STRENGTH “My positive attitude has always paid its dividends. I do not harp too much on the miniscule.” WEAKNESS “When it’s between the head and the heart, I always go by the latter. That has been my biggest weakness as well as my strength.” AWARDS AND RECOGNITIONS Padma Bhushan, Energy Globe A Award, Indira Gandhi Priyadarshini Award for Environment, A Stockholm Water Prize. INTERESTS Reading, writing prose and poetry, watching football ADVICE TO ENTREPRENEURS “To be on top, you will have to decide your priorities first. One’s love for work and family cannot go hand in hand.”
December 2011 Intelligent Entrepreneur 23 To read more, grab the December issue of Entrepreneur To Subscribe, visit www.entrepreneurindia.in
Photos© Sulabh International Social Service Organisation
CASH IN Got an idea that will rock the world? The perfect business pitch and plan? But a business doesnâ€™t take off without the most important factor: money. Sunita Mishra takes a look at the different stages of a business, the money required for each stage and the funding options available in the market. 32 Intelligent Entrepreneur ď‚„ December 2011
HE DIFFERENT STAGES OF ANY BUSINESS, ACCORDING TO EXPERTS, HAVE CORRESPONDING FUNDING OPTIONS, WHICH HAVE BEEN DESCRIBED BELOW IN DETAILS.
1. THE BEGINNING A. SEED FUND
B. ANGEL FUND
The beginning is always the toughest. As a fresher or maybe a college passout, one does not have many, or let’s say any, funding options available. At this stage, one has to begin with a bright business idea and understanding of the market for the service or product one wants to foray into. Groundwork done, an entrepreneur has to begin with his own savings and debts from his own family and friends. Normally, one would need between Rs.5 lakh to Rs.25 lakh to start a venture. However, with this ‘personal’ amount, a business can go very far. “With the seed money ranging from Rs.5 lakh to Rs.25 lakh, an entrepreneur can go on for just four to five months,” says Ravindra Krishnappa, Founder Partner, Vertexperts. “In India, there is a huge gap between the early stage and angel funding. And, a lot needs to be done to bridge that gap,” he points out. Explaining the time different growth stages take, Krishnappa says, “A company takes between 18 months to two years at the seed and angel funding stage. In another two to five years, they normally reach a stage that requires venture capital funding. In the next five to seven years, a company would need private equity funds. In another seven to 10 years, a company is generally ready to go public by initial public offering (IPO). There may be earlier mergers and acquisition exits too.”
After the initial setup of a venture, an entrepreneur gets into a dire need of not just funds but also expert hand-holding to stand up in the market. Here comes the role of what we know as angel investors. Angel investors not only provide fund for your business but also assist it to survive in the market that is full of cut-throat competition. However, that depends on your capacity to convince an angel investor about the relevance of your business plan. Ideas that look innovative to an entrepreneur might not attract an experienced angel investor’s reasonings. “In the early stage, you might just have been wasting your own savings. Angels investing, on the other hand, is the formalization of a business idea. These are the people who have the ability to judge the relevance of your business plan. They fund you only if they see a chance for your venture to grow in future,” opines Saurabh Srivastava, Chairman, CA Technologies and Co-founder, Indian Angel Network (IAN). Angel funding, an equity-based transaction, may vary from Rs.10 lakh to Rs.3 crore-Rs.5 crore. In India, IAN and Bombay Angel Network are the two major players in this type of funding. Apart from them, one can find millions of individual angel investors. Before funding you, an angel investor looks at: è Whether you clearly understand the business you are doing. è How big is the market for your product? è What is the kind of competition in the market?
December 2011 of Intelligent Entrepreneur 33 To read more, grab the December issue Entrepreneur To Subscribe, visit www.entrepreneurindia.in
success inc IN A
LEAGUE OF HER OWN As Co-founder and CEO of Indus League Clothing, Rachna Aggarwal has built an umbrella of apparel brands, each with a distinct style and place in the industry. By Shonali Advani
achna Aggarwal’s day starts at 6 am, when she has to get her daughters ready for school. In true super-mom style, she manages to pack them off by 7 am, post which she heads to the gym. From then on, it’s a race for time. Catch up on e-mails, check the previous night’s sales numbers and finally office by 8:45 am where she squeezes in an hour for herself before her cubicle is an open-door for her employees to walk in and out of as another day for business starts. “As of now I’m happy where I am. The day I wake up feeling that I don’t want to go to work, I’ll have to figure out where to head off to,” she laughs. FIRST STITCHES Kolkata-bred, this Loreto House alumnus finished her B.Sc Economics from St. Xavier’s College in 1990, and took her pedigree up a notch when she sought B-School admission in IIM Ahmedabad, never to look back. She has been associated with the apparel and retail industry from the time there was no real industry in this sector. Her career began in 1992, when she joined Coats Viyella Plc (now Madura Coats) as a management trainee in the garment division, moving on to become brand manager for Van Heusen. A seven-year stint in the apparel major brought her a gamut of opportunities and experience vis-a-vis launching and building brands. “I was involved with the launch of Allen Solly that introduced the concept of Friday dressing, chinos and light garments in India. It was the first store where clothes were not sold in boxes,” she recalls. By the time
62 Intelligent Entrepreneur December 2011
she reached her last year at Madura Coats, Aggarwal had gone on to handle marketing services, including loyalty programs and other processes. DESIGNING INDUS LEAGUE While a lot of this planning was going on at Madura Garments Aggarwal, along with some others (Sriram Srinivasan, Fazle A. Naqvi, Arun Srideshmukh, Kanchan K. Pant, Uday Kumar and Vineet Nair), came together to start a clothing company of their own and interestingly Indus League became the first firm, out of the IT sector, to be set up with venture capital funding. The idea was to launch clothing with an international appeal and the opportunity was to fill the gap in the market with smart casuals. “People had already moved from tailormade clothes in their minds to readymade clothes,” says Aggarwal. This period also coincided with motherhood in Aggarwal’s life, so when Indus League started she took on more back-end roles, involving less travel. This meant back-end and IT systems, networks, supply-chain logistics, production planning and purchase. BIRTH OF TWO BRANDS Indus League started with Indigo Nation and Scullers as their first set of brands, both for men only to begin with when it hit the market in August-September 1999. While the latter, inspired from the sport of sculling, was patterned as smart, trendy casuals, clothes for work or leisure (but not denims) focussing on chinos and washed clothes, the former was branded formal
MOVER & SHAKER INVESTMENT:
Draper International: Rs.4.5 crore and Dalmia: Rs.2.5 crore approx 2nd round: ICICI Ventures, Rs.13 crore approx Future Group stake: 95 percent FINANCIALS: Total company net sales 2010’11: Rs.300 crore; retail sales: Rs.350 crore
Target net sales 2011-’12: Rs.400 crore; Retail sales: Rs.500 crore NO. OF EMPLOYEES: Front-end: 1,500
Back-end: 175 Warehouse: 500-600 contract labor Factory: 500 contract labor
December 2011 Intelligent Entrepreneur 63 To read more, grab the December issue of Entrepreneur To Subscribe, visit www.entrepreneurindia.in
SANAND THE NEW INDUSTRIAL HUB In 2009, Gujarat welcomed the Nano Project which transformed the sleepy town of Sanand into a bustling industrial center. By Pranbihanga Borpuzari
106 Intelligent Entrepreneur ď‚„ December 2011
made headlines in every newspaper, news channel and news portal in India. Tata had decided to shift the entire Nano project from Singur in West Bengal to Sanand in Gujarat. For Pradha Devi, the horror stories of how farmers and land owners have been evicted and cheated of their lands in West Bengal suddenly became a true story. “Few days after the deal, government officials came to me for my land. I was certain they would force me out from the land and was ready to put up a fight. They, however, offered to buy my land for about Rs.1,200 per square meter and I had abso absolutely no reason to decline. My land produced very little and it was too good a deal to refuse,” says Devi. She, along with almost everyone from the village of Bol, sold their lands immediately and could not thank their luck enough for the fortunes they got.
REALTY CHECK In the early 1900s, a village by the name of Kalimati saw the birth of a steel ingot plant. This was one of the first planned industrial cities of India, which soon came to be known as Tata Nagar and finally Jamshedpur. It is rare that a single company can unilaterally change the fortunes of a place; doing it twice is even rarer. Tata has managed to do just this with Sanand and no one seems to be complaining.
Photos © Dileep Prakash
WINDS OF CHANGE While Sanand was always meant to be an industrial area and a satellite town of Ahmedabad, nothing much had happened over the years and it was below everyone’s radar. Today, however, things are very different. Two years after Tata Motors set shop, Sanand is the most promising auto cluster in the country. With major automotive players like Ford and Peugeot setting up plants in the district and even auto ancillaries like Bosch setting up facilities, Sanand has never had it so good. Sanand is located around 24 km from Ahmedabad on the Ahmedabad-Viramgam highway. The city is included under the Ahmedabad Urban Development Authority (AUDA) jurisdictional area, which is responsible for planning and development in the area. Development, however, was something which was not the highest priority in region. Bhisnu Rana, who has been living in the area for the past 25 years, says the district was always talked about as being an industrial town but nothing much happened. “There were some industries in the area earlier; smaller in size but most of them have closed down and the remaining have done moderately well,” he says. Change has been ushered in by the Tata Motors plant. State buses to the area sport “Nano, Pride of Gujarat” banners and everyone around
December 2011 Intelligent Entrepreneur 107 To read more, grab the December issue of Entrepreneur To Subscribe, visit www.entrepreneurindia.in
start ups TAKE TWO
LEARNING FROM MISTAKES
Anurag Jain, who until recently was Global VP, Dell Services, became an entrepreneur at the age of 22 and after starting two companies early in his life is now in a hurry to establish three more. By Pranbihanga Borpuzari
118 Intelligent Entrepreneur ď‚„ December 2011
PhotoÂŠ Dileep Prakash
resh out of BITS Pilani and armed with a degree in electrical engineering, Anurag Jain set up his first company in 1992. Jain went on to create a company which dealt with e-mails. “We were one of the first companies in the country which dealt with the e-mail systems. During those days, e-mail was not available on the Internet and there were separate companies, which dealt in e-mails. I set up Data Excel and went all out convincing people that e-mail was the next big thing and that they should buy it. We did not become that successful because at that point of time, fax had just come to India. People preferred the brilliant new thing called fax over e-mail. We ended up selling e-mails to only two people,” says Jain. Dumping his company, Jain joined the Michigan University to do an MBA degree in 1993. During his stay in Michigan, Jain worked on a business plan, which talked of jobs related to mid- level services moving to India. Internet had taken off but there was nothing called BPO at that point of time. ‘Tele-working’ is how Jain named it then. Discouraged by his friends, who termed his idea crazy, Jain joined Gemini consulting and worked across the U.K. and India. Deciding against jobs in 1997, Jain once again went on to start two companies. Unhappy with his decision, Jain’s father reluctantly gave him Rs.2 lakh to start his healthcare outsourcing venture. Vision Healthsource was set up in 1997 to deliver end-to-end process outsourcing services to U.S. healthcare providers. “The company was started in Chennai with three people and a computer with no bandwidth or furniture. Later when we shifted to Bengaluru as we expanded to six people, bandwidth became a real issue.” Under a pact with a Bengaluru-based firm, Jain used their cafeteria to run his company. The firm gave Jain four desks and four computers apart from an assurance to invest in his company if it worked well. “We operated in that hot and noisy cafeteria. We went technically bankrupt about 17 times, but managed to continue with a belief to make it happen somehow,” says Jain. In August 2003, Perot Systems acquired Vision when it was about a Rs.14-crore company. “In the meantime, I also set up a company called Brigade, which was the first e-mail outsourcing company. Brigade took off with about Rs.700 crore funding from four venture capitalists with the dotcom boom. The company took off well and we hired about 3,000 employees. However, in 18 months Brigade came down with a crash. At that time, I had decided that VCs were not smart people and I had decided never to raise venture capital again, which turned out to be a wrong decision. Later on, I taught a course in Michigan that said: Should you or should you not raise money. In one company, I
had raised Rs.700 crore, a wrong model, and in the other one, I had raised nothing, another wrong model,” says Jain. While he stuck to Vision Healthsource under Perot, in 2009 Dell approached Perot to acquire the business and Jain soon found himself managing a fifth of Dell’s businesses. Smart, articulate and a thorough salesman at heart, Jain worked at Dell till May 2011, after which he left the company. Jain has as of now launched three companies, two of them functional while one is in the process. The first company, Lauras Edutech, was launched a couple of years ago that essentially deals with vocational training. “Today Lauras has its presence in about 30 locations. Last year, it trained about 8,000 people. It now has a capacity to train 30,000 people and it should train 25,000 people this year. The firm has a JV with NSDC,” says Jain. M.V. Subbiah, Chairman, NSDC, first met Jain at a board meeting in 2008. “Jain had helped me a lot in setting up the organization. It was a difficult task but his process- oriented skills in the IT area, his experience and recruitment and selection of the team made things easier,” says Subbiah. According to Subbiah, it is very important and critical for the country to have skilled people. “It is a big challenge (having skilled workforce), but at the same time provides tremendous opportunities. We need to train 50 crore people in the next 22 years and it is a huge oppor opportunity. For the best ones in this industry, it makes a big difference to contribute to the country,” says Subbiah. Jain’s second company is looking at housing business. In partnership with Bill Gross of WorldHaus, Jain is planning a project to provide affordable rural housing. His company is targeting constructing a Rs.70,000house for rural India. When functional, Jain would be in direct competition with Ratan Tata’s plans of low-cost housing in the country. The third company that Jain is working on is about bringing tele-medicine in rural India. Jain says he does not mind investing more money in any company, say in Lauras Edutech, but the fundamental economics of a company must always be preserved. “One should get the luxury into a company only when one acquires the profits and revenue to deserve that,” he says. “I also believe that only experienced people need not be the CEO of a company. One needs to be smart enough to lead a firm. In my opinion, a CEO can be molded out of a passionate and interested employee,” says Jain. According to him, irrespective of their sizes, the underlying problems of companies are the same. The only difference is the degree of the problem. “Once you learn how to scale across this spectrum, it can be useful,” he says.
December 2011 Intelligent Entrepreneur 119 To read more, grab the December issue of Entrepreneur To Subscribe, visit www.entrepreneurindia.in
APPETITE SNACK ATTACK
Sagar Daryani and Binod K. Homagai have given a brand to momos in Kolkata, and successfully at that. By Prerna Raturi
hen Sagar J. Daryani mentions that his day starts early at 6 am, which is when he goes for early morning “marketing”, he isn’t talking about some unique marketing tool for his chain of Wow! Momo outlets, which, as the name suggests, sell one of Kolkata’s most preferred snacks— momos. He actually means “shopping” for the Wow! Momo kitchen; “marketing” being a term used by most Kolkatans essentially for vegetable and meat shopping for meals. At the IPL matches in 2010 at Eden Gardens, they sold 1,000 plates per stall (they had three) in 20 minutes flat. “We were the only ones who were selling hot food around there,” smiles Daryani. The trick that they used involved lowinvestment and was very simple. They merely got the food packed in thermocol boxes to keep it fresh and hot. Sagar and his friend and business partner Binod Kumar Homagai, both 24 years old, keep the rest of the business model equally simple and almost predictable. What is not predictable, however, is the way their business has grown. Started in 2008 with an initial investment of Rs.20,000, which Daryani borrowed from his
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father, the company is now clocking a turnover of Rs.1.6 crore. Wow! Momo currently has 11 outlets in Kolkata and is looking at clocking a turnover of Rs.8 crore by the end of this financial year, by taking the concept to cities such as Bengaluru, Kochi and Chennai. “It’s nothing but total commitment to our work, which we love,” says Daryani when asked about the eye-rolling numbers. He’s the more communicative of the two and takes care of the finances, marketing—the real kind—looking for ways to expand the business. Homagai, the quieter one, is passionate about the operations part of the business. Both friends go back to their college days, when they studied commerce in St Xavier’s, Kolkata, together. “We would study together and realized that we wanted to start our own venture together,” says Daryani. A management degree was not an option, he says, since mathematics was not their strong point. But what made them zero-in on a snack like momos? To start a venture, Daryani says, they considered three basic needs of mankind—ie. roti, kapda and makaan. “Kapda didn’t make sense since my father was already in that business (he
SERVING HOT: Sagar Daryani and Binod Kumar Homagai
owns a menswear brand called Aladin, available in Kolkata and suburbs).” Makaan was out of question, too, considering the scale of investment required in the real estate business. The one left was roti—that one human need that practically makes the world go round. Momos happened by chance, however. Both Daryani and Homagai initially wanted to start a confectionery in Mumbai, their logic being Photo© Saibal Das
that the city still doesn’t have something like Kolkata’s “Cakes” or “Kookie Jar”. They tried talking to these brands about branching out in Mumbai, but nothing panned out. Then one day, suddenly, a cook from Homagai’s home town Nepal came to Kolkata for his wife’s treatment. “He may not be very educated, but he makes the most amazing momos. He was looking for work, and we, for
December 2011 Intelligent Entrepreneur 121 To read more, grab the December issue of Entrepreneur To Subscribe, visit www.entrepreneurindia.in
start ups NEW ACTS
TECH THA THAT Knolskape’s simulated products are a unique mix of theater and technology, thanks to its founder Rajiv Jayaraman. By Shonali Advani
is chosen path wasn’t very unique: A computer science graduate from BITS Pilani, Masters from a university in Alabama and then a plum job at Oracle in 2001, despite being the last recruit due to the dotcom bust that put a freeze on hiring. All this changed when Rajiv Jayaraman got drawn to the creative arts, theater and filmmaking, which got him on stage over weekends. This was the stepping stone to what his life was meant to be. “At Oracle, I did analytical work and my week weekends were spent on crazy creative stuff; so I thought of inte integrating the two,” says Jayaraman, Founder, Knolskape. It was still a thought and so he pursued an MBA from INSEAD in the meantime. The urge to start something on his own was constant, and so Jayaraman transferred from its campus in France to Singapore as it seemed a friendlier place to start a venture. “I liked the idea of autonomy, freedom of getting things done and the feel feeling of being alive,” he recalls. “I started thinking along the lines of digital media.” His university had adopted simu simulations to teach organizational behavior and this form of learning impressed Jayaraman. Almost like an epiph epiphany, he knew where he was headed, skipped sitting for placements and instead spent that time in the library working on his venture. “Simulations were a good inte integration of technology and theatre, it was story telling, albeit with a virtual story line,” he points out. Knolskape was incorporated in July 2008 in Singapore, incubated in the INSEAD campus sans seed money, but with a rented place to work. “Though 2008 was not the best time to start a company I told myself if the idea is good, it should do well,” he says. “INSEAD gave me the right environ environment and I had access to professors who I could bounce ideas off,” he adds. The first year was spent developing products for INSEAD covering each management domain, bootstrapping and working with mainly interns. By the end of year one, the firm moved to its own office space and had other B-schools as clients. “I use a customized software tool that Knolskape developed and they did a great job on it,” says Balagopal Vissa, Associate Professor of Entrepreneurship at INSEAD. By 2009, Jayaraman incorporated his firm in India too with
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Photo© Shrikanth S.Y
one employee in Chennai and for two years they worked between especially with software as a service catching up, simulations are countries. However, it was soon apparent that this style of working an innovation. “There’s a transformation happening, where they was going to be difficult and the entrepreneur decided to centralize want to see the return on training programs,” he says. The chalthe firm’s base in Bengaluru in January 2011. lenge lies in building awareness on the benefits of using interac“After moving we’ve had lot of successes here,” states Jayaraman. tive training methods like simulations. The tech entrepreneur has Additionally, India was an attractive market because of the rapid overcome this only by demonstrating the numerous advantages transformation from book learning to applied learning. According of Knolskape’s products, through direct sales calls with potential to the entrepreneur, demographics show that over 50 percent of clients. “Biggest challenge has been that people treated it as a game, India is less than 30 years. “Also 5 lakh MBAs graduate from India feeling it doesn’t fit in a corporate environment, but once I gave a each year and 15-20 lakh managers and students are trained a year free demonstration they began to see value,” quips Jayaraman. without simulations,” he claims. Knolskape offers end-to-end prodMeritTrac, India-based skills assessment and testing services ucts largely for IT firms, not just those catering to a few functional company for the past 10 years, recently partnered with Knolskape areas, but simulations relevant to skills as they were looking for innovative sets, like consulting that has been its key companies to create simulation-based differentiator in comparison to other assessments. “We firmly believe that players in the segment. “All our products simulations and gaming is likely to be SIMULATED WORLD are online, so there are no maintenance a serious new way of assessing people,” Launch date: 1981 hassles for clients,” he adds. says Rajeev Menon, GM, Innovations Broadly, the startup’s simulations and New Product Development, Initial investment: can be categorized into two types. First, MeritTrac. “What is needed for assessS$1 (in Singapore, number crunching ones covering areas ments is to provide more intuitive and half-day paper work) like pricing decisions, market research multi dimensional data for selected Revenue 2010-’11: data and the like and then experiential candidates so that they can fit into a Rs.2.5 crore simulations which places participants profile more accurately,” adds Menon. in a virtual environment. These events Knolskape now goes to the market Revenue target 2011-’12: can be strategic or operational in nature together with them as partners to bring Rs.5 crore and participants have to take decisions efficient, realistic performance-based B-school clients/partnerships: accordingly. The storyline is dynamic and assessments that can work in India. Kellog, S.P.Jain Dubai & Mumbai, evolves based on actions a person takes. “The platform Knolskape provides is INSEAD, Singapore Polytechnic, “All our simulations are event-driven quite dynamic but we are yet to see it IIFT Delhi and you can change them according to being tested on large volume concurNo. of corporate clients: specific training and assessment needs,” rent testing as also incorporating more 5 mentions Jayaraman. Plus, its simulaamounts of human-based interactions tions have been developed based on real within the platform,” points Menon. No. of employees: world data, meaning those tracked from Jayaraman’s already got a sense of his 15 companies and industries where data company’s future growth and is beginPrice charged per person: is readily available. “We continuously ning to look at Knolskape as a platform Rs.500-Rs.2,500, when used in update data so it’s fresh and evolving,” he where people can develop simulations corporate training says. Knolskape offers products off the with its framework and tools, also a shelf and is in the process of customizing means to grow the simulation market. some as corporate entities are looking for “We want to be the Facebook of the simulations rooted in India. “Most simusimulation world,” he says. Simply lations that exist were made in the ’70s and ’80s with roots in west- put, Knolskape seeks to consolidate its products and place them ern economy,” he highlights. in a broader umbrella, where a client signs on and has a series of At corporate organizations, simulations are used for training simulations to choose from. This would also naturally require the programs while at B-schools they are replacing case studies. “I startup to diversify its portfolio to different verticals. come up with design elements and story while our designers transPresently, he’s keen on catering to the hospitality sector, known form it into game, where learning is embedded,” states Jayaraman. for its high churn rate. Jayaraman’s team is in the process of underCurrently lecture-based learning at B-schools is one-dimensional standing the course material at such institutes to develop a simulawhereas simulation based teaching provides for plenty of learning, tion for hotel chains. Other expansion plans include foraying into given that it is interactive. “Students feel connected unlike with the academic computing market, which includes creation of digilectures where the ‘what if’ possibilities are missing,” he points. The tal assets for universities, plus package all products into corporate opportunity at the corporate level has been no less for Jayaraman, training seminars, which means entering the services side. December 2011 Intelligent Entrepreneur 125 To read more, grab the December issue of Entrepreneur To Subscribe, visit www.entrepreneurindia.in
Choose which answers apply and add up the assigned points to ﬁnd out. By Ross McCammon
WHICH TYPE OF BUSINESS THINKING DO YOU SUBSCRIBE TO? Vertical, in which one may reach a conclusion by a valid series of steps. (-5) Lateral, in which conclusions are reached in a “roundabout” way, such as through brainstorming (+10) No idea what you’re talking about (0) SAY YOU’RE LOOKING FOR SOMETHING UNDERNEATH THE GROUND. DO YOU: Dig a hole and keep digging (-5) Dig a hole, then dig another hole and then another hole (+10) FINISH THIS QUOTE BY ALBERT EINSTEIN: “IMAGINATION IS MORE IMPORTANT THAN…” Knowledge (+5) Doing inventory(+10)
ARE YOU CURRENTLY WEARING SOMETHING THAT COULD BE DESCRIBED AS “FESTIVE”? Yes (-5) No (+5) WHICH WORD BEST DESCRIBES YOUR MIND? Enchanted (+5) Beautiful (+10) Other (-5) SAY YOU CAME UPON A SAND CASTLE ON A DESERTED BEACH, YOU WOULD: Admire it (+5) Kick it (-20)
WHEN YOU LOOK OUT OVER A VAST EXPANSE, YOU THINK: Hell of an expanse (0) Blank slate (+5) What if, instead of this vast expanse, there were nothing, not even the expanse-just nothing! And within that nothing was everything!.. you know? (+10) WHAT’S YOUR FAVORITE COLOR? Blue (0) HOW MANY HOURS A WEEK DO YOU SPEND EXPLORING YOUR INNER SELF VIA “ABORIGINAL DREAM TIME”? 0 hours (0) You too?! (-10) IN WHICH CATEGORY ARE YOU MOST CREATIVE? Sales (0) Marketing (0) Accounting (-20)
DO YOU EVER REFER TO A ROOM AS A SPACE? Yes (+5) No (0)
THE MOST APT METAPHOR FOR THE HUMAN MIND IS: A room with the door wide open (+10) …. With the door slightly ajar (+8) …. With the door shut (-5) ….. Please don’t leave me here (-10)
YOUR CO-WORKER STEVE IS AT HIS DESK STARING AT THE CEILING. YOU THINK: Idiot (-10) Oh what worlds he must be exploring (+10)
HOW MANY TATTOOS DO YOU HAVE? 0 (0) 1(+2) 2(+4) 3(+6) 4 or more (+8)
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IS ONE OF THEM BARBED WIRE ON YOUR BICEP? Yes (-20) No (0) USE THIS SPACE TO DRAW THE FIRST THING THAT COMES TO MIND.
DID YOU DRAW A FLOWER, A SUN OR A SAILBOAT? Yes (-20) No (0) WHAT DO YOU THINK ABOUT YOUR DRAWING? What the hell? (+5)
DO YOU REFER TO YOUR OFFICE NOT AS AN OFFICE BUT AS “THE PLACE YOU GO TO DO GREAT THINGS”? Yes (+5) No (+10) Ugh (+20) WHEN YOU DO YOUR PERFORMANCE ART, DO YOU EVER INCORPORATE LIVE BIRDS? Yes (+5) No (0)
KEY 50 points or more: You’re probably in the middle of sculpting something 25-49 points: You should take the lead when rebranding your company1-24 points: You should mostly delegate or hire out the rebranding of your company. Less than 1 point: Some little kid probably spent hours building that sand castle. Hours.
Entrepreneur December 11 issue on Funding, Also special focus on state special Gujarat