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---

Rashesh Shah did it
...

Shantanu Prakash did it
...
They
are diverse in age, in outlook and
the industries they made a mark
in
...

This book seeks to inspire young
graduates to look beyond
placements and salaries
...


The Centre for Innovation, Incubation and
Entrepreneurship (CIIE) at IIM Ahmedabad
aims at fostering innovation-driven
entrepreneurship through incubation, research
and dissemination of knowledge
...
125/-

- Rashmi Bansal

ISBN 978-81-904530-1-1

CONTENTS
- THE BELIEVERS
- THE OPPORTUNISTS
- THE ALTERNATE VISION

THE BELIEVERS
People who knew entrepreneurship was
the Chosen Path
...
And they
persevered until they made it big!

p02

THE BOOK OF JOB
Sanjeev Bikhchandani (PGP 1989), naukri
...
For close to a
decade he struggled on the sidelines but never gave up on his Big Idea
...
com became the first dotcom to IPO on an Indian stock
exchange
...
The entrepreneurial streak continued after the
MBA from IIM Ahmedabad
...


p28

THE CAT WITH NINE LIVES
Vinayak Chatterjee (PGP 1981), Feedback Ventures
Vinayak quit his job at Pond’s because he didn’t see the point of selling
soap for the rest of his life
...


p40

SOFTWARE COWBOYS
Ashank Desai (PGP 1979), Mastek
In the early ‘80s, much before IT was a buzzword, Ashank Desai set up
Mastek along with a couple of friends
...


p54

GIVER OF ALL GOOD THINGS
R Subramanian (PGP 1989), Subhiksha
He quit his job at Citibank 15 days after joining, feeling restless to do
something 'more'
...
Subramanian famously rebuffed offers from Reliance Retail
as he believes the best is 'yet to come'
...
The year denotes when the student graduated
...
They took the plunge
straight after their MBA or after working
barely a couple of years
...
His second venture Shree
Renuka Sugars is today a Rs 1000 crore company, and has changed the
lives of hundreds of sugarcane farmers
...
Yet as a young
management graduate, Chender decided to carve out his own niche
...


p88

SUCH A LONG JOURNEY
Madan Mohanka (PGP 1967), Tega Industries
In the 1970s it took Madan seven years to get government approval for a
foreign collaboration
...


p102

THE ALCHEMIST
Sunil Handa (PGP 1979), Eklavya Education Foundation/
Core Emballage
As the force behind the LEM (Laboratory in Entrepreneurial Motivation)
course at IIMA, Sunil Handa has inspired countless students to become
entrepreneurs
...


p120

YEH HAI YOUNGISTAN MERI JAAN
Vardan Kabra (PGP 2004), Fountainhead School
In 2004, Vardan Kabra turned his back on an offer by multinational P&G
to pursue his dream of starting Fountainhead School
...


CONTENTS

THE OPPORTUNISTS
These entrepreneurs did not plan to take
this path but when opportunity knocked
they seized it
...


p130

TRIPPING ALONG
Deep Kalra (PGP 1992), makemytrip
...
But with the
dotcom bust he had to invest his life savings and buy back his own
company
...
com is today India's leading travel portal
...
But it wasn't a straight path to success - there
were many bumps and detours
...
His gamble paid off and today India
Infoline is one of the country's biggest online trading platforms
...
Instead he
chose to set up a company which is today one of India's largest BPOs
...
The son of a working class Railways employee, he now
dreams of making Orchid India's first $1 billion pharma company
...
He built up a large and profitable company (Mphasis)
but recently sold out to EDS because business is about passion as well
as knowing when to let go
...
Their stories go to show that
you don't have to be 'born with it', you can
develop an entrepreneurial bent of mind at
any age
...

After a string of interesting jobs he set up one of India's first private
colleges with a foreign tie up (Wigan and Leigh) and is now pioneering
clinical research education in India
...

But Shankar and his team used that failure to get it right the second time
with 'Marketics', an analytics company which recently sold out to WNS for
an estimated $65 million
...

Her company Precious Formals, is one of the leading suppliers of prom
dresses in America
...


p254

HEALTH IS WEALTH
Cyrus Driver (PGP 2000), Calorie Care
Cyrus quit his private equity job in Singapore to launch Calorie Care,
India's first professional, calorie-counted meal delivery service
...
Or as a
platform which allows them creative
expression
...
Venkat then launched GiveIndia, to promote the culture of 'giving'
in India
...


SMALL IS BEAUTIFUL
p286

Anand Halve (PGP 1977), chlorophyll
After two decades in advertising Anand set up a brand consultancy called
chlorophyll
...
This is an alternate model of
entrepreneurship
...
The man behind the iconic Sintex water tanks believes in
constant evolution and creation of new products
...
He
pioneered the concept of microfinance in India through an organisation
called Basix which gives loans to the rural poor
...


CONTENT, PAGE DESIGN AND TYPESETTING BY
JAM Venture Publishing Pvt Ltd,
51 Gr Floor, Kaliandas Udyog Bhawan, Century Bazar, Prabhadevi,
Mumbai - 400025
...
com

COVER DESIGN
Amrit Vatsa

First published by CIIE, IIM Ahmedabad, Vastrapur, Ahmedabad, India
...


Disclaimer:
Due care and diligence has been taken while editing and printing the book
...

CIIE, IIM Ahmedabad - the Publishers, JAM Venture Publishing Pvt Ltd - the content, typesetting and
design vendors, as well as Print Vision Pvt Ltd, will be free from any liability for damages and losses of
any nature arising from or related to the content
...


ACKNOWLEDGEMENTS
This book is a labour of love supported by the Centre
for Innovation Incubation and Entrepreneurship (CIIE)
at IIM Ahmedabad and the Wadhwani Foundation
...

Laura Parkin at the Wadhwani Foundation for the
funding
...

Anjan Mukherjee, for coming up with the title for this
book and Amrit Vatsa, for conceiving the cover
...

Priyanka Sharma, for her brilliant design and Madan
Mohan for the layout
...

My husband Yatin and daughter Nivedita, for giving
me a high-five for every chapter and keeping me
going
...

I know that you will be as inspired by their stories as I
was
...


ACKNOWLEDGEMENTS

FOREWORD

It is indeed very satisfying to write the foreword for a very different
kind of book, one on entrepreneurship of alumni of IIM Ahmedabad
...
It is now
increasingly getting recognized for the innovativeness and the
entrepreneurship of its alumni
...
Written in conversational style, the
book lucidly captures how these individuals, with fire in their bellies
and stars in their eyes, overcame the odds to realize their dreams of
being their own masters as they ventured into uncharted territories,
some with little else than their beliefs in themselves
...

The book was commissioned by the Centre for Innovation,
Incubation and Entrepreneurship (CIIE), IIMA
...
On behalf of the
Institute I thank the Foundation for providing the funding support
...
This is the first attempt to document
the insights and experiences of IIMA entrepreneurs
...


Samir K Barua
Director
IIM Ahmedabad

FOREWORD

AUTHOR’S NOTE

Of all the questions we leave unanswered the one that comes back to
haunt us the most is :"What if…"
What if I'd married my college sweetheart?
What if I had the good sense not to?
What if I had been born in this job market?
What if
...
These are our hopes, dreams and
desires
...
But when that day comes we are too
old, too poor, too tired or too lazy
...
So they would
not wake up one day with regrets
...
But more importantly, they stood in front of
the mirror and saw their true selves
...

That being a corporate slave was the easy option, but not the one that felt
right
...

So they did the things others thought were foolish
...

'Stay Hungry, Stay Foolish' is what Steve Jobs advised the graduating
class of Stanford University in his commencement address to the class of
2005
...

Each story may be different but at another level they are all the same
...
Then struggled and strived for years
...

For every such story there are several who are still out there, struggling,
striving
...

And for those who look at themselves in the mirror each morning, before
they head out to sell those soaps, I hope you catch in it a glimpse
...


Rashmi Bansal
Mumbai May 2008

AUTHOR’S NOTE

01_The book of Jobjuly4edit
...
com
Sanjeev is India's most successful internet entrepreneur
...
In 2006, naukri
...


2

01_The book of Jobjuly4edit
...
He
strides into my office for the interview, makes himself
comfortable and spends the first 40 minutes giving gyaan
on how I should run my business
...
The
entrepreneur in me is taking mental notes, but the writer
exclaims, “Gosh, this guy talks a lot!” Like the Energizer
bunny he can go on and on and on
...
The guy started early and simply never ran
out of juice
...

Not when he had to take up a second job to support
the family
...

The thing is, entrepreneurship was not one of many
options for Sanjeev, it was the only one
...
com) would be a darling of the stock
markets? An industry leader with a market capitalization
of $1 billion (Rs
...
” The
reason for starting his own company was independence
...
There was the urge to create
something, do something different
...
And that's what makes it such a
fascinating story
...


3

01_The book of Jobjuly4edit
...
com

“I have spent most of my life in Delhi
...
My mother was a housewife; there
was no business person in the family
...
“At that
stage, the idea started forming in my head that, look, somewhere
along the way, I should be starting a company of my own
...
The
interesting thing is that he had got admission to IIT but did not
take it
...
Then, let me work for
two years and go to IIM Ahmedabad
...
Like most middle
class kids living in government colonies, he just took the exam
...
A trait you commonly find in entrepreneurs!
Sanjeev worked for three years and then got into IIMA
...
I took a few
courses like LEM and PPID, which are more oriented towards
entrepreneurship
...

“I was clear that I was going to be in Delhi because my parents
had a home - there was a safety net
...
I
thought I would work for while, look for an opportunity and then
branch out on my own
...
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7/19/08

2:16 PM

Page 5

THE BOOK OF JOB

There was a desire to be different but Sanjeev did not actually do
something different when he first started out
...
Along with a partner, Sanjeev set up
two companies - Indmark and Info Edge
...

But the thrill of doing one's own thing was palpable
...
There were
employees to be paid and often, a cashflow crisis on the 29th just before payday
...

Luckily, there was an ‘angel investor’: Sanjeev's wife - and
batchmate - who was working with Nestle
...

What I like is how he says this, matter-of-factly
...
I had told her that we will be living off
your salary for quite a while
...
”
The more important bit: he was cool with it
...

The thing with entrepreneurship is you can't afford to have a big
ego
...
You want to keep the dream afloat, you don't
care what the neighbours and relatives have to say about who
wears the pants in your house
...

For that one idea, that one product or service which is going to
make your company something more than a writer of reports, a
doer of projects
...

Ideas can come from anywhere
...
Or in a bus or at your dining table
...

Sitting around in the open plan HMM office Sanjeev would see
colleagues flipping through Business India, the leading business
magazine of that era
...

The eureka moment?

5

01_The book of Jobjuly4edit
...

If I was lucky, at the end of 5 years I'll
be a senior product manager, in 8
years I'll be marketing manager
...
All
this if I am really good
...
”
Even at a company like HMM - a good employer - people were
keen to track what else was out there
...
That was a valuable
insight and Sanjeev just knew it had an application somewhere
...

So there were a bunch of jobs out there and people interested in
knowing about those jobs
...
And it could somehow be monetised
...
And so it became one
of those 'file and forget' ideas
...
The ad talked about ‘Videotex’ - a
service where people would be able to access information stored
on a central server from terminals all across Delhi
...
And Sanjeev said, “Hey,
why don't we make a job database on this platform?” Info Edge
was shortlisted
...
Alas, DoT shelved the project
...

Sanjeev and his partner decide to go separate ways
...

Sanjeev was left with Info Edge
...

But life went back to the usual - reports, databases, market

6

01_The book of Jobjuly4edit
...
Standardized stuff sold at a cheap price
...

On a lower cost model, Info Edge made some money and
Sanjeev managed to get construction work done at his residence
...

So things were okay
...
Business was
growing, but slowly
...
Here, he was introduced to the
internet for the very first time
...
Just talking about it, recounting how it
happened, Sanjeev gets all animated
...
I was intrigued
...
”
“What is the World Wide Web?”
“This is the internet
...

He said “Sir, you can send and receive emails
...
But Sanjeev didn't know anyone who had an email ID,
so he didn't see the point
...
”
“On what?” Sanjeev asked
...
He opened a site called 'Yahoo!' and typed a keyword
search
...
”
By now Sanjeev's mind was ticking
...
”
He approached the reseller, “Look, I want to set up a website
...
For that you need a server and
all servers are in the US
...
”

7

01_The book of Jobjuly4edit
...

He went home and called his brother Sushil
...

I said, “Look I want to start a website on the internet
...
“Of course, we use it everyday
...
I need a server’
...
”
I said, “But I don't have any money
...
The company was
back in the red
...
By then Sanjeev had taken up a
second job at the Pioneer newspaper as consulting editor of the
career supplement
...
”
The shared server cost 25 dollars a month
...
“He didn't ask for it,
but I just thought it was fair
...
Saroja looked after operations in the start up team and
got a 9% stake
...
“I said
‘Look, I want a website’
...

Sanjeev said, “Never mind, I am sure you will be able to figure it
out somehow
...
” And thus Anil became
a founding partner of naukri
...

Meanwhile, Sanjeev had got the classifieds of recognised
newspapers from all over the country
...

He pulled out the old file with a detailed structure of the jobs
database and said, “I want you to input the jobs in your own
words in this data structure
...
Within a week there was a

8

01_The book of Jobjuly4edit
...
The database and a navigation UI was handed over to
Anil
...
And naukri
...

Now at the time many people warned Sanjeev that ‘naukri’,
‘naukar’ etc was downmarket
...
He went with his gut and stuck to the name
...
”
Entrepreneurship is about dozens of small leaps of faith like
this
...
Often, you have to take a contrarian
stand
...
And you have to have
it your way
...

“For the first six months we did not have an internet connection
...
And our promise then was 1,000 jobs minimum
on the site
...
No job older then 30 days, all jobs
taken from the newspapers
...
Most catered to the
NRI audience
...
com launched but to Sanjeev it looked like a large number
...
Because journalists
were writing for the Indian audience
...
That became a big asset
...


“As an MBA from Ahmedabad, we all
have a hunger for multinational
companies
...

But to my mind, it is false prestige
...
”

9

01_The book of Jobjuly4edit
...
I was comfortable,
leading an uncomplicated life
...
In the midst of our
interview, Sanjeev gets a call from a journalist
...
A ten minute conversation on ‘job trends’
follows
...
Karna padta
hai
...
10 cms of
editorial coverage is worth a 100 cc of paid advertising
...
Any journalist writing on jobs will call
Sanjeev
...

The other asset which worked brilliantly for naukri was its own
users
...
com’ recruiters took notice
...
For 350 rupees you could list
a job on the site
...

And thus, naukri
...
Low business, maybe
Rs 2-2
...

“Revenues increased between 8-9 times in one year
...

Suddenly, naukri was bigger than the rest of the company in
terms of revenue, although it was still not profitable
...
Sanjeev decided to shut down every
other activity - no more reports, no more databases
...
”
“I figured that perhaps this is the Big Idea
...
”
Sanjeev was right
...

The year was 1999
...
com
...
qxd

7/19/08

2:16 PM

Page 11

THE BOOK OF JOB

anywhere and anything online - subject to receipt of 10 million
dollars in venture capital funds
...

Sanjeev too started getting feelers
...

His initial reaction: “I don't need your money… We are breaking
even now
...
And I will be happy
...
After years of struggle, he could finally see the word profit
in the horizon
...
I was
comfortable, leading an uncomplicated life
...
“I figured something is
happening in here
...
”
But then, funded competition launched
...
com - just the launch - was twice as large as naukri's
annual turnover
...
When that happened,
Sanjeev realised the game had changed
...
You gotta be a five
profit
...
Without those
orbit ‘A’ to orbit ‘B’
...

“We told them, look, we have changed our minds
...
”
Info Edge got funding from ICICI Venture in April, 2000
...
A month
later, the market crashed
...
“We got the
money just before the market meltdown
...
We just put it in fixed deposit
...
”

11

01_The book of Jobjuly4edit
...

“Some of the people who joined at that time - just before VC
money and just after the VC came in - have probably contributed
more to building the company than I have,” muses Sanjeev
...
But post 2000, a lot of the credit goes to so many
others…
...
Sanjeev refers to
him as 'de facto CEO'
...
How did he manage to pull that off, I wonder?
Ah, but those were the bubble days
...
He had got an offer
from another start up
...
At the
end he said, “Yeh sab theek hai
...
”
Hitesh joined
...
The other company collapsed a few months later
...
And after the dotcom
meltdown, when people were leaving dotcoms, naukri was one of
the few which kept its eggs in the internet basket
...

When you truly believe in the fundamental value of a business, it's
not about cyclical ups and downs
...
When the market crashed the
bankers put away their jeans and brought back the ties
...

That is what naukri
...

The company had money in the bank, and spent it slowly and
strategically
...
There was 9/11
...

Of course, it was a scary period
...
But ICICI was patient
...

To their credit, ICICI did not hold back anything
...
qxd

7/19/08

2:16 PM

Page 13

THE BOOK OF JOB

came one and a half years after the first one
...

“We kept growing but of course there were tough times
...
25 lakhs a month in cash
...
That was the lowest
point - in late 2001
...
“We knew how difficult
it was to make money on the internet
...

So when this 7 crores came in, we were very careful about
how we spent it
...

But the encouraging thing here was that revenue kept climbing as
the company executed very well on sales
...

Hitesh had no sales experience - he was a commercial manager in
Levers
...
He had no
preconceived notions on 'how sales should be done'
...

The company adopted a 'common sense approach'
...
All in all, 20,000 bucks a month
...
Then, you keep on hiring more and more sales guys,
build structure and systems, open new branches and new
markets
...

Every branch kept breaking even in six months, and before they
knew it, Info Edge was a 300 person sales organization with
10-12 offices all over India
...
5 crores
...

Today, Info Edge has 1,650 people of which 1,200 are in sales
...

We knew the value of money
because we had always been
short of money
...
qxd

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2:16 PM

Page 14

STAY HUNGRY STAY FOOLISH

“When I am talking to entrepreneurs,
I always say base your business on
deep customer insights, the way
naukri was formed
...
There was already an
executive search operation
...
com (property sites),
naukrigulf (on local job trends in the Middle East), Brijj
...
com
...

As the company grew and became more and more profitable, it
became increasingly logical by 2005 to do an IPO
...
At the time it had revenues of Rs 84 crores and
profits of Rs 13 crores
...

In the year 2007-08, revenues stood at Rs 239 crores with
post-tax profits of Rs 55 crores
...

Many companies go through a phase of high growth
...
In 2002, the annual turnover was
a mere Rs 3 crores with losses of Rs 1
...

“In the year we made Rs 84 crores (2005-06), our business plan
had said we will make Rs 12 crores
...
The good bit was that whenever there
was an audit in ICICI, on who committed what and is delivering
what, we came out smelling like roses
...

As the economy once again went into a growth phase and
confidence in the internet was restored, naukri
...

But let me qualify that - by right place and right time I don't mean
he simply got ‘lucky’
...
And the genuine need gap it addressed
...
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2:16 PM

Page 15

THE BOOK OF JOB

“When I am talking to entrepreneurs, I always say base your
business on deep customer insights, the way naukri was formed
...
But it does not work
right now, perhaps it is ahead of its time
...
As the environment changes, as technology changes
you might be able to ‘join the dots’
...

Going to IT Asia was a wonderful break, but it was not something
that just 'happened'
...
He even had a strategy: avoid stalls
of large companies, visit the small ones - they're more interesting
...
And they are always open to change
...

“There was a certain pressure when you were not breaking
even… There was a certain pressure when you took the VC
money and the market melted down and you had to deliver
growth… There are more pressures when your financials become
more complex and another set of pressures when you do an IPO
...
It
wasn't easy
...
”
When you're going for that kind of growth it's all about
getting good people, aligning them to a larger goal and making
things work
...
They will demand respect
...

But ‘what if
...

“I could have quit anytime in the first 10 years, and I would have
been a failed entrepreneur
...
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Page 16

STAY HUNGRY STAY FOOLISH

wasn't chasing money
...
If you are really lucky then you
will do it in 5 years, if you are moderately lucky then you will do it
in 10 years, if you are terribly unlucky you will do it in 15 years
...
The point is to try long enough
and hard enough
...
”
If you love your work, and it gives your life meaning, then you will
have fun through the difficult times
...
You will never lose hope
...
You are
a failed entrepreneur only when you quit
...


16

01_The book of Jobjuly4edit
...
You can make your mistakes while it is cheap
to make them, when there is no competition
...
Undercommit
and overdeliver
...

If you are starting a business to make money, don't do it
...
And if your motivation is not something
beyond money, those hard times will test you
...
But if you are doing
something other than money, you will rough it through
the hard times
...
I just said this is a smart idea,
I love it! And it happened to be the right idea, at the right
place, at the right time… If you are in enough places,
enough times and long enough, you get your breaks in
some form or the other
...

Scaling up is also a lot about letting go
...
If they are truly smart and if they have their self
belief, they will create their own space and they will do
stuff that maybe you can't do
...

And do keep in mind that every choice you make impacts
the family
...

Frankly, these were the choices, the implications of
which I did not consider
...


17

02_Rock with ITjuly4edit
...
The
entrepreneurial streak continued after the MBA from IIM
Ahmedabad
...


18

02_Rock with ITjuly4edit
...
” But he knew entrepreneurship
was his calling, early in life
...

And this was in the late ‘80s,
entrepreneurship was in fashion
...
It's not like he made it
big overnight, it's actually taken close to two decades
...
”
“When I look back, every single year of my life, I thought,
was the coolest year of my life
...
Aisa kaise ho sakta hai…” But at a deeper level,
what he said seemed to ring true
...
If you see life with an 'all
is wonderful in this world' pair of lenses, that's how it is
...
The middle class
ethic of being careful and completely realistic about the
big, bad world around you
...
His company
Educomp works with 9,000 schools and six million
students across India, US and Singapore, generating
revenues of Rs 276 crores in FY ‘07-08
...

But like I said, it's the attitude with which it's been built
which is more interesting than the building itself
...
qxd

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2:21 PM

Page 20

STAY HUNGRY STAY FOOLISH

ROCK WITH IT,

ROLL WITH IT
Shantanu Prakash (PGP '88),
Educomp
Shantanu Prakash was born in Rourkela, a small town with only
one notable feature - the steel plant
...

After class 10, the family shifted to Delhi and he enrolled in DPS,
a “shiny, big city school
...
And that's when it first
became evident, ‘this guy is different
...
In
fact, I don't remember getting any presents except books
...
And probably that unlocked something in the
mind
...
”
“Secondly, when my dad retired and wanted to come and settle
down in Delhi, he found that he didn't have enough money to buy
even a DDA flat
...
”
While at SRCC, Shantanu started a company along with a friend
...
Not that he had
any particular fascination for rock music but it was a good
opportunity
...
We made a lot of money
...
And then the stock market bug bit
me
...
Till I lost all the money! And I
thought it was really cool you know - we were not going to college,
doing things which were more 'adult'
...
”

20

02_Rock with ITjuly4edit
...

“(Laughs) Honestly at that time I didn't know what this whole MBA
thing meant
...
So it was all a last minute kind of a thing
...
A contract had been signed
with Thums Up to do a series of concerts all over India
...

“Every weekend, in the first year of IIM Ahmedabad, I used to go
down to Bombay and work with my friend organising this concert
...
We got Remo to perform, it was held in a hotel
in Bombay and one time when I came back, I had this board
outside my dorm room in D-14, saying ‘Visiting Student’
...

Honestly, I didn't take it very seriously in the first year
...
I always had this bindaas outlook
...
”
And at the time salaries from campus weren't exactly
stratospheric
...

Not surprisingly, Shantanu did not go for placements at all
...
The idea was to set up
computer labs for schools
...
They only paid a monthly fee for every
student who used the lab and signed a multi-year contract
...
So there was
this whole mystery around IT
...
So we actually got off to a great start
...
”
In two years, the company did 50-60 schools and boasted a
couple of hundred employees
...

Again, huge for 1990
...

“I wanted the company to go in one direction, he wanted to go in
another
...
”

21

02_Rock with ITjuly4edit
...
If you
have capital, great
...
”

Shantanu decided to do something on his own
...
The year was 1992
...
And with a different focus
...
The first product it
launched was a ‘School Management System’, an ERP of sorts for
schools which took two years to build
...
But it
wasn't a very successful product
...

And they don't want to pay for the customisation
...
But while on campus you
appreciate none of it because you haven't gone through the grind
...
”
Besides, Educomp started its life with zero capital base
...

“Yeah, almost like that
...
”
“What about the two years that went into developing the product?”
“A few school computer lab contracts kept some cash coming in”
he says
...

Even before it was fully developed, we started going to the market
and selling the product
...

So I managed to convince a number of schools to buy it and
business started growing
...

Today if you look at the product portfolio, the company has
footprints in almost every space from KG to class 12
...
qxd

7/19/08

2:21 PM

Page 23

ROCK WITH IT, ROLL WITH IT

“But you are making it sound so easy,” I protest
...
And I
think it's more a mindset issue than anything else
...
But I didn't
seem to mind at all at that point in time
...
So every
single year of my life when I look back, I thought, that was the
coolest year of my life
...
”
“And that basically translates into being happy
...
When
you are an optimist some of the external environment stuff doesn't
really bother you
...
”
Getting into the details of how the company grew, it was slow
...

In 1998, six years after starting, Educomp’s revenues stood at Rs
3
...
Then the company started growing
...
Then it really took off and in FY
‘07-08, Educomp clocked revenues of Rs 276 crores, with net profits
of Rs 70 crores
...

Shantanu believes there are two questions which need to be
asked:
a) Is the business inherently scalable ?
b) Is the market opportunity large enough?

“Entrepreneurs are smart people,
they manage the risk-reward
equation very well
...
You can always go and start
something
...
”

23

02_Rock with ITjuly4edit
...
Secondly, the universe
of opportunity in India is phenomenal
...
There are one million schools, five million
teachers, all of that stuff
...
And Educomp can keep growing 100 per cent over the next
10 years
...
”
Additionally, the market started responding favourably to digital
content
...
As far as we were concerned, we were
passionate about it and believed this was the way to improve the
quality of education
...

To grow, you need people
...
Of course all companies
start with just a few, with the founder managing all the strategic
functions
...
But the problem
was, the high quality smart people didn't want to work with me…
So it was a lot of struggle
...

“The trick is to identify the DNA in a person, where he or she wants
to do something different, and wants to be differently incentivised
...
That’s how I was able to get
some really good people as partners
...
There are 4,000
employees at Educomp but the attrition rate is amazingly low, at
less than three per cent
...
And the company is
growing 100 per cent a year, we are now five times larger than our
nearest competitor in India in this space
...
Like all new generation
entrepreneurs, the secret sauce of stickiness lies in sharing the

24

02_Rock with ITjuly4edit
...
And the heat of growth is fuelled by a timely dose of
venture capital
...
5 million of venture capital in June 2000
...
The funding was wrapped up in two months
...
The canvas was always large
...
”
Six years later when more funds were needed for expansion,
Educomp decided to raise the money through an IPO
...
A lot of people ask us, ‘Why did you
take your company public at the small size that you had?’ Rs
...
We are very happy we took the company public
rather than take private equity money
...
Since then the company has been growing 100%
a year
...
Educomp is valued
at about one and a half billion dollars (as of May 2008)
...
So I
am certainly there, in charge, driving growth for the company
...
For example, Educomp is now
building schools
...
3,000 crores in the
next 2-3 years to set up 150 odd schools in India
...
“So again, this is the most exciting
year that we have ever had
...
The desire to see your company doing
better and better and better
...


“It's all about being an eternal, insane
optimist
...
qxd

7/19/08

2:21 PM

Page 26

STAY HUNGRY STAY FOOLISH

“Being an entrepreneur is the art
and science of creating value
...
But I think for me
personally, understanding how value is created is a very fascinating
subject
...
”
“Every single day of my life, I experience that and I go out of my
way to create those experiences that give me the challenge of
being alive, driving something, doing something meaningful
...
”
Wonderful! But have there been any sacrifices on the family front?
“I think my family said this guy is crazy
...
But business every year has
become more and more demanding of my personal time
...
And that is a much more expensive
sacrifice than money
...
Even this interview is scheduled
on a Sunday afternoon, right after lunch
...
Yes, had I been working in a
job, I would have been very conscious of leisure time, very
conscious of how much I am working
...
I had decided a long time ago that the next 10 years of my
life I am completely going to devote to building up my company
...

“But you don't see it as a sacrifice as such?” I persist
...
Maybe I am not intelligent
enough to balance or do this right, I am not proud of the fact
...
”
“I have this nice little picture, it has not happened to me
...
”
We all have to, actually
...
qxd

7/19/08

2:21 PM

Page 27

ROCK WITH IT, ROLL WITH IT

ADVICE TO YOUNG
ENTREPRENEURS
The risk-reward equation is completely in favour of the
entrepreneur
...

Recently, Educomp invested in an online tutoring
company
...

Chandan Aggarwal, Riju and Mohit
...

In a short period of two years, each of these people, if
you value their 24% stake in the company, would be
worth at least Rs
...
There is no way you
can do that if you are doing a job
...
If the average salary is
Rs
...
a
...

In 5 years, I can guarantee you, any business you do, will
earn you that
...
No matter what you do
...

How to choose what to do? I came from a background
where I did my Bachelors in Commerce from SRCC and
then my MBA - no 'skills', right? So I could have chosen
any domain, but you have to keep some of those key
principles in mind - ‘Is the opportunity big enough, are
you able to make a contribution and fundamentally
change something that generates value?’

27

03_The Cat wtih Nine Livesjuly4dit
...
Originally set
up as a market research company, over the years,
Feedback Ventures morphed into India’s leading
infrastructure advisory and engineering firm
...
qxd

7/19/08

2:30 PM

Page 29

THE CAT WITH NINE LIVES

I am late for the interview - the Feedback office in
Panchsheel Park, Delhi is difficult to find
...

Kind of like what happens in life
...
But there could be a vehicle coming at you at
full speed from right around the bend
...
Feedback Ventures
had a near death experience
...

Each time Vinayak managed to save it from extinction
and hang in there, eventually taking the company to new
heights
...

When life deals you a rough hand, it's not about how
smart you are but how many people out there believe in
you
...
To
get that second lease of life
...
qxd

7/19/08

2:30 PM

Page 30

STAY HUNGRY STAY FOOLISH

THE CAT WITH

NINE LIVES
Vinayak Chatterjee (PGP '81),
Feedback Ventures

Vinayak Chatterjee was brought up in a small town, about 40
kilometres outside Calcutta
...

“Those were good days in jute, it was owned by the Scottish, so we
had a good life - compound, swimming pool, all of that
...
So a reasonably middle class life, very small town
upbringing, only child
...

After schooling in Calcutta, Vinayak decided to go to Delhi for
higher studies
...
I am talking
about the mid '70s
...
I had some seniors, cousins from whom I had heard
of St Stephen's
...
”
The college experience widened his perspective and exposed him
to people from varied backgrounds including those from elite
schools
...
“I thrived in the open society that St Stephen's
is! Certainly a valuable three years!”
Vinayak was very clear that he wanted to do economics
...

The prevailing value system in a middle class Bengali family for a
child who does economics is to emulate Amartya Sen
...
He would have probably tried

30

03_The Cat wtih Nine Livesjuly4dit
...

But then Vinayak sat for the CAT exam, mainly because of his best
friend at Stephen's - Ajay Banga
...

So the entire gang sat for CAT with barely any preparation, and
Vinayak made it to Ahmedabad
...

Vinayak had almost rejected the IIMA option until his friends pointed
out, “You can always come back to D School
...
Take a look!”
As it turned out, Ahmedabad was good for Vinayak, although he
hated the quanti courses and didn't quite take to production
...
Not for the grades and
all that but for the quality of what I thought were puerile courses
...
He enjoyed courses such as business policy and marketing
which had a wider perspective
...
So he
followed the herd into summer training at Pond’s
...

Pond’s treated him extremely well and confirmed Vinayak as Area
Sales Manager just six months after joining
...

“Something in me revolted
...
But I
just didn't feel my job had any content
...
It meant nothing
...
”
Not that he had any clear alternative
...
Which is a start
...
It was January 1982 and Vinayak was on the
rough road to ‘finding himself’
...

“I spent one month with my parents
...
They said,
we told you to go to D School and do economics
...
what they called the ‘Maya Mrigaya’, the
golden deer of money in the corporate world
...
qxd

7/19/08

2:30 PM

Page 32

STAY HUNGRY STAY FOOLISH

“In looking back it seems, we were in
step with the turning in the economy
...
The truth is, it all just happened
...
”

So, no great pressure from parents to go back and bring in the
bucks
...
Something
respectable
...
He'd been part of the Stephen's
magazine and also editor of the IIMA mag ‘Synergy’
...
And an offer from Ashok Advani, to become the Bombay
correspondent for the recently set up Business India
...
She said, “You are 21, you can come out as a
PhD at 23-24
...
” Vinayak did just
that
...

“I remember putting my steel trunk and hold-all on the AhmedabadHowrah Express, the 48 hour journey, again back in dorm 17, got my
room
...
”
Then something interesting happened
...
And there he met Raunaq Singh, chairman of
the Apollo group
...
Prof Mote
introduced Raunaq, saying he has a company called Apollo Tyres
which is badly in debt because the government had nationalised it
...

But essentially, the chairman wanted an MBA to turn around the
company
...
“One side of my mind
wa very clear that I don't want a multinational FMCG job
...
But picking up
ideas, picking up opportunities, some being created, some coming
my way, picking, moving on
...
He joined what was known as
‘Raunaq Group’ in those days consisting of Bharat Steel Tubes,

32

03_The Cat wtih Nine Livesjuly4dit
...
The
next three years - 1982 to 1985 - were extremely challenging
...
”
“It was not just me,” Vinayak clarifies
...
”
However, at 22, Vinayak was the youngest person of the lot
...
Very different from selling more
cold cream
...

“I was flying from Delhi to Cochin every Monday, visiting the plant at
Thrissur in Kerala
...
But to cut a long story short, I actually
learnt ‘real time’ management
...
” Raunaq
Singh was the chairman of Assocham, so Vinayak's job included
writing his speeches
...
I got dhakkaoed but I learnt a lot
...
They
grounded me in practical management ki Hindustan mein business
chalaane mein kya hota hai
...
“At the age of 45, if I am damn good, I will be the
MD of Apollo Tyres
...

As it happened, Vinayak’s wife Rumjhum worked with the well
known research agency IMRB
...
Dorab Sopariwala and Titu Ahluwalia had
broken away from IMRB and started MARG in Bombay
...
But there was nothing like
MARG in Delhi
...
He was all
of 26
...
I am not a details guy
...
In

33

03_The Cat wtih Nine Livesjuly4dit
...
So I said if you have
to start a business, let's put together a group of like-minded people
who also complement each other’s strengths
...
Also his wife Rumjhum, who was a
Calcutta University psychology graduate
...

Each member of the team brought in some special skills
...
He is the
current vice chairman of Feedback Ventures
...

The team decided that starting a market research firm made sense
and put in Rs
...
At that time,
‘Feedback’ seemed a very logical name
...

The first thing the young entrepreneurs did was meet Prakash
Tandon and ask him to be their honorary chairman
...
Batchmates from IIMA had
reached managerial level
...
Market research projects started coming in
...
The market research business… but you
know in this line, events overtake you
...
Serendipity, not well chalked out
strategy
...
Will you do it?” He agreed
...
“But they saw in
us a capacity to help them build up a project in India where they did
not have management
...
Then
word spread that this group of guys from IIMA, professional ethical
chaps are available to do this kind of work
...
Narasimha Rao was the Prime Minister, India was
opening up
...
Feedback helped
set up the Coca Cola plant, General Motors plant and several other
industrial plants
...
Feedback vacated
the market research space to focus on setting up factories
...
qxd

7/19/08

2:30 PM

Page 35

THE CAT WITH NINE LIVES

“We ran the MR business for five years - from 1985 to 1990
...
It was a good business but we somehow got more excited
by the projects story
...

Soap ka colour, toothpaste ka taste - that kind of thing
...

“That has always been important to you - that what you do should
be exciting?” I ask
...
Money is a by-product
...
So if you follow that, money will follow
...
‘Find purpose and the means will follow
...
I saw that hoarding in Bombay a few years ago and said, ‘Ah,
that applies to our lives’!”
Find something you want to do, that you are passionate about and
paisa to koi na koi dega
...
Word spread and work flowed
in
...

“By a very interesting quirk of fate again, we got called by the
government of Tamil Nadu to do India's first private sector industrial
park in Chennai, which today is incidentally called Mahindra World
City
...
”
And a company of 5-10 people grew and grew until it reached its
current strength of a thousand professionals
...
But surely there must have been
some bumps on this road? Some tipping point?
“Well, one more point of inflection for us - we took the infrastructure
position in 1997
...
And he, in many senses, has been a mentor for
me, personally, as well as for the company
...
Now there is

“What management education does is
provide you a perspective
...
It's an education degree, that's all
...
qxd

7/19/08

2:30 PM

Page 36

STAY HUNGRY STAY FOOLISH

also IDFC
...
And he took a lot of interest
in Feedback, guided the company, suggested it should go for private
equity
...
And it wasn't
so fashionable back then either
...
Factory banaa rahe
the
...

But is it necessary to vacate an existing space to capture a new
one? Don't many companies somehow manage both? Well, many
do but Feedback has always just moved from one thing to the next
...
We are
putting up 5,000 kms of roads and SEZs, even hospitals
...
We
have 600 engineers and we do everything from fundamental
engineering and designing to construction, supervision and project
management
...

Consulting comes easy to MBAs, but hardcore engineering and
execution of mega projects is a whole different cup of coffee
...

He asked, “What do you do?”
I said, “We are doing infrastructure advisory
...
”
He said, “There is a Malaysian company which wants to enter India
...
The company was called HSS
Integrated
...

The question is which came first, the chicken or the egg? The
infrastructure position or the JV?
“The position came first, the JV follows
...
Of course, one has to be a little
opportunistic
...
When doing the JV, Ram and
me both said, ‘Mistake hua to dekha jaayega
...
With 5,000
kilometers of roads, bridges and industrial parks to its credit
...
qxd

7/19/08

2:30 PM

Page 37

THE CAT WITH NINE LIVES

But the company is a little low profile
...
We don't require brand equity more than that
...
”
An IPO will happen but in 2-3 years time
...
But the original promoters still hold
40% of the company
...
Increase market penetration, market
share, market size in existing lines of business
...
There was, in fact, a point
when the company almost shut down
...
We had negative cash flows
...

Vinayak boarded a flight to Mumbai, went to Deepak Parekh and
cried, “Sir, I really need some help
...

“There are people who believe in you
...

Again it sounds like ‘oh this was meant to be’ in hindsight but there
were some very tough years, around ‘98-99
...
Also the transition from advisory
to infrastructure was not taken very kindly by some of the senior
management
...
If some friends or institutional assistance had not bailed
the company out, put in money without any security or collateral,
purely on faith
...

“And that is a debt that I can never repay in my life
...
Because today if anybody calls and says, “Oh you are
successful today”, I know in my heart of hearts there were three
occasions when I have made such stupid mistakes, that I was
almost on the road
...
You realise, that
apni aukaat se you can only do so much, and you will make

37

03_The Cat wtih Nine Livesjuly4dit
...
But if you are honest to your purpose, you've never
cheated anybody and you show clear focus, commitment, there are
people in society who will go out of their way to back you
...

Of course, there were hard decisions but always a sense of fair play
...

Sab ka salary kaata
...
Each time the mistake was
a different one?
“One time it was to do with very high ramp up
...
So we took a license
to develop a 100 acre township, put a lot of time and effort behind it
and then realised that we were inadequately capitalised
...
Everybody can't do everything
...
We could
be very good knowledge providers to developers like L&T or DLF
...
Each time it was tough
...
You have learnt the
meaning of ‘taking a risk’
...
But every entrepreneur I meet scoffs
at the idea
...
15,000 capital
...
There was no
livelihood risk - jobs would always be available
...
”
“The real issues that bothered was the peer group, what your friends
and family will say if you fail
...
”
The interesting thing about Vinayak - and so many entrepreneurs is that sense of self awareness
...
I am more than my visiting card or salary slip
...
There was excessive hype and glamour about
multinationals but I just never got what's so great about selling
Dreamflower talc in rural India
...
And that applies to just about anything
...
qxd

7/19/08

2:30 PM

Page 39

THE CAT WITH NINE LIVES

ADVICE TO YOUNG
ENTREPRENEURS
My only advice is, be true to your inner voice
...
If your inner voice
says you really love the rat race and can be great in the
rat race, please do it
...
Many of my batchmates have made great
careers for themselves, built great brand equity, done
well as global managers
...
If your inner voice says, I want to
be an author, journalist, write books, please do it! I had
a colleague from St Stephen’s, Ramchandra Guha, who
did economics and became a noted historian
...

What I find is many people hear that inner voice but just
don't have the conviction to act upon it
...
You may
be successful, you may be unsuccessful, but in the
philosophical market, what is success and what is
failure? At least you will have the pleasure when you
face yourself in the mirror to say “I did what my inner
voice told me!” Koi phikr nahin hai, tu apna kaam kar!
I don't want to put a premium on entrepreneurship
...

So my only piece of advice is find purpose, means will
follow
...
Don't
worry about the fruits
...
Remember Narayana
Murthy's quote: “It has taken me 25 years to become an
overnight wonder
...
qxd

7/19/08

3:58 PM

Page 40

STAY HUNGRY STAY FOOLISH

SOFTWARE

COWBOYS
Ashank Desai (PGP '79),
Mastek
In the early ‘80s, much before IT was a buzzword, Ashank
Desai set up Mastek along with a couple of friends
...


40

04_Software Cowboysjuly4edit
...
That is the
story of Mastek
...
More than friends getting together
though, it is friends staying together for 25 years that is
intriguing
...
However Ashank, Ketan
and Sundar kept that dream alive and made it happen
...
And you
could start an IT company, but forget about owning a PC
...

But life in the Doordarshan era was kinder and gentler
...
The team was young and flexible, and
figured out a way
...
I have to ‘declare’ all
the electronic equipment I am carrying - none of which is
re-checked on the way out of the place! I may not have
managed to smuggle out anything of value to customs,
but two hours with Ashank left me feeling richer for the
experience
...
qxd

7/19/08

3:58 PM

Page 42

STAY HUNGRY STAY FOOLISH

SOFTWARE

COWBOYS
Ashank Desai (PGP '79),
Mastek
Ashank Desai came from a family where becoming a professor,
doctor or engineer was the ultimate goal
...

“When I was at IIT I thought I should ‘do something’
...
’ But
I think somewhere in IIM it got crystallised," recalls Ashank
...

There are always stories about how rock bands get formed
...
How do the founders actually come
together? Usually they are classmates, colleagues or old friends
...
The group would sit
and discuss what kind of venture they could take up after passing
out
...

The team took up a project based on ‘IT’ which at that time
was a little known concept
...

“We sent out mailers which said, ‘We want to start this business,
would you please help us?’And some of the people contacted,
such as Kishore Kher and Arun Nanda, actually responded
positively”
...
And to
top all that there was the support of IIMA professors, in particular
Prof Mohan Kaul and Nitin Patel from the IT department
...


42

04_Software Cowboysjuly4edit
...
Keeping in mind the ‘IT’ business plan, Sunder
joined HCL and Wasan went to IDM, while Ketan took up a job with
NOCIL
...
Yet somehow
they managed to keep the spark alive
...
So
the friends literally 'stayed together'
...

The flatmates spent most nights chatting away till 2 am, discussing
their business plans
...
But finally they settled on IT
because it required less investment, no manufacturing and also, it
was a field they were comfortable with
...

But did Mastek actually see the full potential of IT? The way in
which it would transform all our lives? Yes and no
...
But they did
know IT was important to companies at a strategic level; software
as a field would grow
...
That's why we
didn't call ourselves Software Technologies, or Information
Systems, but ‘Management and Software Technologies’ (Mastek,
in short)
...
By this
time Ashank was married and so he was the last to quit, six
months later
...
Mastek was born in Ghatkopar,
where Ketan had a house
...

Business started coming in through friends and contacts
...

It was a classic management problem
...
It was a product whose peak
demand was in June, July and August (cough and cold season, so

43

04_Software Cowboysjuly4edit
...
Many of them asked,
‘Do you make floppy disks’?!”

to speak)
...
There were costs
and benefits associated with each option
...
They're young and
might have a fresh approach
...
“I remember we
found it very challenging and we solved that problem very well
...
But I still feel good about it and in fact, I talk
about that example when I address new recruits
...
Luckily, Wasan was good at that
...

Like many other MBAs who take up entrepreneurship, Mastek
capitalised on the intellectual capital of its founding team to get
into the game
...

Mastek quickly moved out of Ketan's drawing room to Nariman
Point because they wanted a ‘good address’
...
The other
problem was that there was no phone in Ghatkopar, it used to take
15 years to get a connection in those days!
A jeweller friend agreed to take their calls, but he stopped when
there were one too many! Sounds like science fiction in today's
day and age but it tells you the kind of ‘true grit’ one needed to get
into business in pre-liberalised India
...
We did not have a
computer for the first five years, can you imagine that?”, grins
Ashank
...
“But it was a difficult time
...
We were not earning money
...
qxd

7/19/08

3:58 PM

Page 45

SOFTWARE COWBOYS

The partners took Rs 1-2,000 as ‘salary’, after meeting all
expenses
...
So, once in a while, the thought
of closing down and getting back to a job did come to mind
...

Mastek had, in fact, started hiring people soon after it started
operations
...

One of the important people who joined Mastek early on was
Sudhakar
...
Meanwhile one of the founders,
Wasan, moved on
...
The PC had just been launched and Mastek
was the only software company to advertise there
...
So Mastek started getting some
kind of traction in the market and somewhere, the IIM brand also
helped
...

“I came across a management book which said the average time
required to stabilise a business is 6-7 years
...
“By
stabilise I mean a sense of constant inflow happening
...
Some profit, or at least a
breakeven
...

By year six, Mastek was in Dataquest magazine's list of top
software companies in the domestic market
...
“So we said ‘Aha! We are not small now!’” The actual
turnover of the company at this point was Rs 46 lakhs
...

Where to, from here? Ashank believes there is a difference in the
trajectory followed by Mastek, compared to other software
companies
...
It introduced both financial accounting and
stock broking packages
...

Selling these packages, as well as custom made software, made
for a sound business
...
The question was, how does one
crack the overseas market?

45

04_Software Cowboysjuly4edit
...

In time some banks started giving
credit against invoices
...
Neither did it have
a family or friends network in the US
...
Some NRI cousin would say, ‘Can you
do so and so project for my company’?”
So Mastek took much longer to break into the export market
...
Ashank was the first person from Mastek to
go abroad
...
Yet
Mastek stayed true to its roots, which lay in ‘solutions’
...

So in 1989-90, the company began working on a product called
'MAMIS' - a manufacturing ERP which was unheard of at the time
...
TDICI had burnt its fingers
eight times, Mastek was the ninth company it funded
...
Mastek went public in 1992 and TDICI
made a 25x return on its investment
...
Its shares were sold at a 60 rupee
premium
...
Yet people
had faith and invested
...
The
company's approach was to build products and solutions which
were IT based, launch successfully in India and then take them to
the world market
...

What happened was that the Indian market opened up to foreign
software
...
As one of the
founder members of NASSCOM, Ashank was one of the people
who pushed for software duty to be reduced to zero percent
...
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Which was good for Indian industry as a whole but not for
domestic software companies like Mastek
...

Interestingly, in those days, there was no concept of valuation
against the future, or ‘sweat equity’
...
The arrangement
thus, was that TDICI gave a loan which was repaid against the
royalty
...

There is a point in the life of a company when it just takes off
...
By the end of that
year, the company was doing Rs 9-10 crores
...
Financially, life became
comfortable, there was no everyday struggle or problems in paying
the promoters a fair amount
...
Because ‘working capital’ is the one thing that
stresses any and every start up
...
There was no finance available from
banks for software, where there are no physical assets to pledge
...
The other
strategy was to divide the project into many micro steps so that
every delivery gets some money
...

The next phase from '95 to 2000 was one where the company
focussed on exports
...
Ashank was based in India
but running around all over the world - Singapore, UK, Germany,
Japan
...


“The IT industry is like sitting
on a tiger
...
”

47

04_Software Cowboysjuly4edit
...
Ultimately all of us do
what we do, because we like it
...

I took my first holiday 15 years
after starting Mastek!”

“So it was a good thing that we started, Narayana Murthy,
myself
...
Software exports became a larger cause
and that helped the whole industry, including Mastek
...
“That gave me some kind of feel of how the world
operates, helped us on the strategy front
...

No outside consultants were involved, it was all done by the
founding team
...

Take the appraisal system, for example
...

Mastek also built a ‘balanced score card’ system in 1991-92 to
make sure that even at the lowest level, people were connected to
the company's larger goals and mission
...

Then came the very important concept of financial discipline
...

“Remember how I was making phone calls in ‘88-89 to get money
from clients? This showed lack of discipline
...
He should automatically collect
money because he is responsible for it
...
”
The company started measuring gross margin and incentivising
people on that
...
The top
management could keep track of what was happening
...
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same time, it was not interfering unless necessary
...
The growth rate on the export side was
40-45% year on year
...

Of course, keeping one's place itself is a challenge because in IT,
technology is ever changing
...

As a solutions company, Mastek had built a lot of work in the
internet domain much before any other Indian company, including
a tool called JAAL
...

However, Ashank has no regrets
...

Of course, building websites hardly seems ‘challenging’ today - 12
year olds can do it with a variety of free tools available online
...

The point is, the bar keeps moving and you have to move with it
...

The other challenge was handling many different things
...

However, once you enter the global arena, it's a much bigger
market
...

So, there is less turbulence in what you do
...
When you are
small, you have to do 20 different things
...
”

“When you are sitting on a small
market, you have to be good at
many things
...
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Mastek was doing work across many industries upto the year
2000
...
With time there came focus but the question is who decides
what to focus on?
“There is always debate and discussion
...
Sometimes we agree to disagree
...
” Although all partners
do not enjoy the same shareholding, in the sense of what say they
have, and what they do, they operate as equals
...
The
partners had spent close to four years living together, on campus
and sharing a flat, and knew that they would be able to work
together
...

Coming to the most recent phase, post 2000 was the era of ‘focus’
...
In insurance, for example, the company has built
a package and the Gartner Group has given Mastek a ranking as
one of the promising companies in this space
...

That was how Mastek bagged the prestigious ‘London congestion
charge’ project
...

“If we had screwed up, India would have screwed up,” he says in
all seriousness
...

Of course, all this effort to focus and consolidate involved
considerable heartburn
...
Several employees felt disheartened and left
the company
...
As with all export oriented companies, growth
slowed down
...

But there was one silver lining through these clouds
...
A strong
management team was in place and CMM assessment also
happened in the year 2000
...
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“We were the first IT company in the world to get ‘People CMM’ or
PCMM
...
”
The values were articulated way back in the ‘90s
...
In time, focus got
clarified, there was a sense of stability, sense of financial discipline
came and now, there is financial muscle as well
...

Today, if you look at Mastek, 60% of its balance sheet is liquid, ie
cash
...
All the
money was self-generated
...
People do not question integrity, character, trust on
the numbers that the company publishes
...
Of course, at
every level and every size, requirements change and you do what
you need to
...
Because
there was no competition for money, our stock markets were not
so mature, our analyst community didn't know what it is
...
So we had to meet the challenge
...
It celebrated 25 years in the software business
with considerable fanfare last year
...
Y2K gave these companies a foot in the

“Ultimately when you are running a
company, you have a risk, you have a
responsibility to make it successful
...
So to that
extent, there is a difference between
an executive and the owner
...
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door of many Fortune 500 companies
...

“There is a DNA for each company
...

So that is why I say again and again, Mastek is a story still unfolding
...

“All these years, there was always a constant pressure, somebody
coming and saying, ‘Why don't you join us
...
’ But we never diluted
...
Whatever we want to do, we will do it
ourselves
...
And I don't think that was a
wrong decision
...
This is an organisation set up by IIT Bombay
which mentors and incubates young companies
...
You have
some support
...
You simply go out there and make
it happen
...
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ADVICE TO YOUNG
ENTREPRENEURS
Ashank:
You require a team which feels a trust for each other
...
Not
based on shareholding alone but respect, trust and
competence because that is self sustaining
...
Get a bit of a feel, bit of financial stability,
some savings
...
But don't wait too long
...
Small vs big vs superbig is a choice that
an entrepreneur makes himself or herself depending
upon the ambitions, values and what he likes doing
...
Don't just think about it, don't just wish for it, jump into
it and do it, if you are really serious
...
Once you get into it, go all out, never look at quitting
as an option
...
Remember that if the startup fails, it is your idea that
failed, not you
4
...
There
is very little any one individual can achieve alone
...

- Make plans but remain open to all possibilities as
events unfold in the marketplace
...
We started implementing
many practices way ahead of our size
...


53

05_Giver of All Good Thingsjuly4
...
That something is today
India's largest grocery chain - Subhiksha
...


54

05_Giver of All Good Thingsjuly4
...
His stores,
Subhiksha, are at every street corner but the man himself
is a mystery
...
The
reports are always about the 100 new Subhiksha stores
being opened
...

Which he denies, each time
...
It's a smallish space on the first floor of a
residential building, right opposite Ruia college - a
functional office, with a lot of people and activity
...

Unlike the ‘five degrees too cold for comfort’ office of any
large multinational
...
He apologises profusely for being
15 minutes late
...


55

05_Giver of All Good Thingsjuly4
...
And that
is clear not just from the act of starting an enterprise, but decisions
taken through the course of her or his life
...
The
only child of a bank officer, the expected career path for bright
young kids in the family was IIT, followed by study abroad
...
After studying at IIT Madras, he joined IIMA
...
It was
Pond’s, based in Chennai - “a nice little, small company then
...
But then, Pond’s was acquired by Unilever globally
...
He decided to join Citi Investment
Banking instead
...
“I
thought, ‘This bank will make me too comfortable, give me all sorts
of soft loans, make sure that I will be a bird in the golden cage
...
He had in fact
joined early, right after convocation in April
...
Am I in the right place? Is there anything challenging
for me to do here? Will I just be hanging around doing this work far
beneath my capabilities… forever?
Of course, most trainees rationalise, “This is life
...
The words of IIMA chairman VK
Krishnamurty at the post convocation dinner rang in his ears
...
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that? Why aren't you doing something smarter?”
And at that moment, somewhere deep inside he knew, “I will be
better off doing something on my own
...
“Rebellious
is not in the sense that I was forming a union or something like
that, but I did try different things or try to do things differently
...
Not very typical for a BTech in electronics
...
“The entire campus lives at night
...
30 pm in the first year!”
Early to bed and early to quit the rat race!
So that was the end of the Citibank phase of life
...
It was a sick unit
...

At the time he'd said, “Why don't you come and work for me?”
The offer seemed attractive now
...
RS decided to go there, meet him,
and “see if he takes me
...
’
So he said, ‘What job do you want, what salary?’
I said, ‘My salary is some 5,500 rupees, in Bombay
...
RS joined Enfield as a ‘special officer’ but
working directly with the chairman
...
There was manufacturing, marketing,
purchase and loads of people in each department
...
The company was hugely loss
making, a BIFR case
...
No
one wanted to buy an Enfield anymore
...
I learnt everything about life in business working in that
company
...
”
So, he did some financial restructuring
...


57

05_Giver of All Good Thingsjuly4
...
Operationally, it's
a very challenging business, the pain factor is
very high
...
That's what makes it so difficult
for competition to come in very easily
...
”
“I got a sense of dealing with people, handling operations, working
with institutions to raise money
...
I don't
know how good a job I did, but I learnt a lot
...
Eventually, Enfield was taken over by
Greaves Eicher
...
“I can't say
I was responsible, but I played some role
...
But by this
time he knew it was time to move on
...

Intellect and ability are important in life
...
In 1991, when RS told Mr Viswanathan he wished
to leave and start something of his own, he asked, “What do you
want to do?”
“A financial services company”, RS replied
Viswanathan asked, “What do you know about financial services?”
“Nothing,” came the reply
...

Mr V said, “How much money do you want?”
“The biggest number I could think of at that time was two and a
half crores
...
’ He said, ‘Okay,
I will give you that much over the next two years
...
I have no intention of owning this company so
whenever you can return the money, buy the shares back
...
No written agreement, just a spoken
word
...
Viswanathan gave Rs 50 lakhs to start off
...

“Basically, we were the first to do asset securitisation systems in
India
...
ICICI

58

05_Giver of All Good Thingsjuly4
...

Citibank did the third, 60 days after us
...
“The whole
concept,” RS exclaims, “was the brainchild of Viswapriya
...
”
The product became very big
...
The company had struck a pot of oil or gold or whatever
and it kept growing
...
Then, the stock market collapsed
...
No one to lend to
...
By then, there was a
professional management team, 75 people in all
...
5 crores the company had grown its net worth to Rs 80
crores
...

Each loan was for the period of the IPO, 2-3 months, so there were
many lending cycles in a year
...
And it was
still, notionally, owned by Mr Viswanathan
...
However,
Viswapriya was not affected as Mr V had no operational role
...

So, it's 1996
...

“The markets were very weak and we were not sure we wanted to
do anything else
...
Funds were getting deployed, fetching returns, yet there
was frustration
...

What a wonderful state to be in, many would think
...
” Well, here was one such golden chance!
But all that RS could think of was, “I am not well occupied
...
”
Entrepreneurship is an itch
...
Lots and lots of it! And it must be interesting, intensive and
audacious
...

But they realised it was probably too late to get into that
...
Then, they looked at retailing
...
But

59

05_Giver of All Good Thingsjuly4
...
They said maybe retail will
happen as well, let's go the retail way
...
Getting the right
people at the right time made a huge difference
...
From our point of view, it was an under
serviced market
...
Salaries were
moving up, we could sense consumption will rise
...
Unlike the Viswapriya phase, where it was
simply ‘jump in and start swimming’, a lot of study and strategic
thinking went into this second foray
...
” Based on all this research, Subhiksha went in
for a completely unique 'Indian' store
...
And to deliver value in India,
you need to do things differently from what you do in the US
...
In the developed
world, retail happens outside cities, where space is very cheap
...
And in most of
those parts of the world, people are very expensive
...

In places like India, people are much cheaper, but space inside the
city is incredibly expensive
...
You need a smaller space but
an 'overmanned' kind of format
...

So Subhiksha created a unique ‘neighbourhood’ store strategy
with the promise of best value
...
An investment of Rs 5 crores was made in the new
company
...
Because despite all that
research they had no clue about what it really took to run a

60

05_Giver of All Good Thingsjuly4
...
Luckily, neither did anyone else
...
“We deliberately decided not to hire any
body from the existing retail sector because we didn't want to be stuck
with people's dogmas about what will work and what will not work
...
It was looking like it would make tiny money
...
But the bigger
triumph was that the format was working
...

And they were coming back for more
...
That
was a fairly rapid scale up by retail standards of those days
...
“So we did our bit,” says RS and funding of Rs 15 crores
came in from ICICI Venture for a 10% stake
...
But there was
a lot of mess and confusion
...

By 2002 June, Subhiksha had 120 stores
...
The
organization and systems were not keeping pace
...
But then things
stabilized
...
”
A second distribution centre was put up in Trichy
...

“We talked to our sales team and to ICICI and said, ‘Let's go for it,
let's do a large expansion
...
”
2005 was year of gigantic growth
...
Money was raised for that
...
It was followed by phase III,
then IV and now the company is moving towards phase V
...

“1,000 are officially announced
...
We did 1,000 stores on Diwali day, 2007
...

“But you are making it sound very easy,” I protest
...

“I think the first 50 stores were more tough than the next 1,000
...
We were
learning everyday
...
But

61

05_Giver of All Good Thingsjuly4
...
I look at myself as a manager working
for the company
...
”
we were learning different things at that time
...
And manage a very large team
...
Certain aspects of
Subhiksha's business are centrally controlled, but local teams
handle a number of areas independently
...
The financial aspects are
controlled centrally
...

Regions have flexibility in deciding where they want to put stores,
how many stores they want to put up, what price they want to sell
at, what they want to sell
...

Sounds wonderful but none of it works without an incredibly
motivated and talented set of people to manage it
...
In Tamil Nadu,
it was a gradual ramp up, so the company could manage it with the
initial core team who were all very good
...

But as Subhiksha expanded, the company brought in very senior
people to run the various regions as business heads
...
”
The core operation guys think about how to leverage scale
...
But there
is no ‘corporate office’ as such
...
“We sort of run from one place to the
other, keep talking to people
...
Any day of the week you call RS, you'll find him in a
different city
...


62

05_Giver of All Good Thingsjuly4
...
“It's a fairly live affair
...

RS gives much credit to technology
...
Today you are so wired that it really doesn't matter
...

“Typically, the margin in this business is two and a half per cent
...
We are able to deliver Rs 200 crores to the consumer and
we say that what we deliver to the consumers is part of our profits
...
“So as
long as consumers save money and we make money and we don't
destroy value for ourselves, it's quite okay,” says RS, on a more
philosophical note
...
The belief that
your job is adding to more than the company’s bottomline is a
tremendous motivator for employees
...

Subramanian's story involves struggle, but not on the financing
front
...
5 crores (which in 1991 was a
lot of money!)
...
But yes, it was not like ‘From where am I
going to get my salary?’ - that was never the case
...
Here is
an opportunity
...
The idea
was never necessarily to do large things
...
”
“IPO financing started
...
But did we start Subhiksha
with the idea that we wanted to be India's largest retailer? I don't
think so
...
”
* as of May 2008

63

05_Giver of All Good Thingsjuly4
...
They gave us
very low salaries, so it made us worry very little
about taking those sort of jumps
...
It's not the same as leaving a Citibank
job of five thousand five hundred rupees
...
There was never a logic that we will
become a food retailer across the country
...

“That is when it hit us - we had picked up domain expertise in
selling food and groceries
...

So it's not a geographical market that you are an expert of, but of
a domain
...
”
And that's how it happened
...
Only there was a
vision, a keeda so to speak, to ‘think big, think scale’
...
But the scale-up phase, some
entrepreneurs feel, is just not as exciting as the process of starting
up
...
But if you had asked us 2-3 years ago, 1,000
stores would have been a shock
...
”
So, what is the magic that made it happen?
It lies in three parts, believes RS
...

“And in our case if you look at it, I think even more than the money,
the fact that retail became hot and a lot of people who would have
never joined retail became willing to join retail
...
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business is done by manpower
...
A lot of
senior management talent became available to us
...
”
Then of course, Subhiksha had a track record, a lot of positive
vibes from the market, which helped
...
It's not
as if we didn't make any mistakes, but the point is that we could
avoid some of the dumber mistakes
...
Would it be a central command model or did it make
sense to decentralise and run an unconventional kind of structure?
“If we had decided to centralise everything in Chennai and put in
place a top down structure, which is what many retailers were
trying to do, we would not have been able to get the expansion
speed required
...
”
The decentralised model, the SBU model was a winning choice
...
”
And now it's about taking this even further
...
Now what I am saying sounds a little
outlandish, but people are saying why don't you take this model to
other parts of the world? Like Africa, or Bangladesh, or Pakistan?”
So there is still that sense of thrill
...
How
far can we push ourselves?
And that's why buyout offers hold no interest
...
Or the business is not likely to be
well in future
...
So why should we sell! Tomorrow will always be
better than today
...
But that path is not 100% right
...
”

65

05_Giver of All Good Thingsjuly4
...
Enough money
available to the company for what it wants to
do, is a good thing but even there we have a
worry that too much money makes it
inefficient and lazy
...
Learning and
growing each day is the more valuable pay cheque RS earns from
his company
...
Chaos is nice
because that is what challenges you
...
”
But is ‘happiness’ wholly and solely tied to one's work? What about
life, spouse, family, relationships, relaxation
...
“I can blame it on the job
...
There are people who work at a company and
keep a 20-hour work day
...
” And RS is one of them
...
I sort of
typically get back home after 10 and leave early at 7-7
...
I work six days a week and even on the seventh I am on
phone half the day
...
”
“And if I would put this question to your wife and kids?” I ask
...
I am sure that
there will be gripes but the gripe will also be covered by
understanding…”
Will you then slow down, at some point? “I keep promising this to
my wife
...
She says I will probably find
something new to do
...
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How very true
...
But every now and then it's nice to stop and smell the
roses
...


ADVICE TO YOUNG
ENTREPRENEURS
If you want to be in a rarified space, a financial space,
then it probably makes sense to join Goldman Sachs
...

The way we look at it, there are two worlds - the real
world and the virtual world
...
The real
world is where lot of us slog to physically do work
...

Don't join a Hindustan Lever or a Coca Cola
...
I can't believe that in two years, in any other
company, I could have sat for IR negotiations or financial
restructuring negotiations
...
You need to go and challenge
yourself, you need to go and fight your way in the
market
...
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SWEET
SUCCESS
Narendra Murkumbi (PGP '94),
Shree Renuka Sugars
He shut down the first company he started after
graduating because a Rs 5 crore turnover was not “large
enough
...


68

06_Sweet Successjuly4
...
Now the
bar has been raised to ‘billionaire’
...
And I
am no exception
...

Of all the chappal wearing, not-washed-jeans-for-amonth, living, breathing, thinking, blinking inmates on that
campus, this guy is the first I know to get on the list
...

Sugar
...
Sugar
...
Certainly not a magnet for MBAs
...
An MBA who decides to
plunge into an unglamorous, old world industry like this doubly so
...

Narendra's story however is a contrarian one
...
But he saw in the
industry the potential to do things in a way no one had
before
...

It is one helluva inspiring story
...
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SWEET
SUCCESS
Narendra Murkumbi (PGP '94), Shree
Renuka Sugars
“I come from a family of traders - the family has been into trading
for many, many generations
...
Then a
family friend said: “Why don't you do an MBA?”
So Narendra gave it a try
...
The boy from Belgaum thus landed up at IIMA
...

“I always wanted to do something on my own
...
Meanwhile,
Narendra did his summer training at Sohan Silk
...

‘Placement’ was a term that had no meaning in the Narendra
version of the Oxford English dictionary
...
A family friend had once
worked with the Tatas on developing bio-pesticides
...
Now, the gentleman had retired and
wanted to 'do something' about it
...
Narendra borrowed Rs 5 lakhs from his father
as seed capital
...

And in 1994, the company started manufacturing pesticides in a
small shed
...
By 1998,
Murkumbi BioAgro had achieved a turnover of Rs 5 crores
...
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SWEET SUCCESS

margins were decent the company was making profits of close to
Rs 40 lakhs
...

“Our main problem with that business was that we couldn't scale it
up
...
Because after
four years, it was at a turnover of five crores
...
”
What prevented the scale-up? “It was a niche product
...

Because the products, while they are safe, are slower acting than
chemicals
...
Always tough
...
The idea was to tap the US market
...
Despite spending quite a bit of money, they
could not cross that hurdle
...

Narendra began scouting for other opportunities
...
“Sugar is THE large industry in my part of the country,
in Belgaum
...
And therefore, for the
first time in Maharashtra and Karnataka, after 30 years, you could
actually set up new sugar mills in the private sector
...
”
It was a new opportunity, it was a large business
...

Physical assets require money
...

So how was the money for Shree Renuka Sugars raised?
“Well, the initial project was obviously much bigger than what we
had been doing
...
The rest we borrowed
...
”
But the company was still short of capital
...

There is a culture of co-operative institutions in Maharashtra and
Karnataka
...
qxd

7/19/08

2:37 PM

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STAY HUNGRY STAY FOOLISH

“You keep thinking about how to grow the
business
...
In fact, I think
very few stories are written about the failures…
But as long as the successes are big enough,
I think things take care of themselves
...
So Shree
Renuka Sugars employed the same format in a public limited
company
...
The company bought one such factory
through a tender put out by the government of Andhra Pradesh
...
Because this was a sick factory and we
were reviving that factory
...
The
trouble was that the factory had been put up in a place where there
was no raw material, no sugarcane
...

Why take that headache? Because it was much cheaper
...
Done this way, the
total project cost was only Rs 50 crores
...

The factory was relocated, and started operations in 1997
...

“In the first three years, we processed more sugarcane than the
factory had done in its old operations in 21 years
...
”
Co-generation involves burning the sugarcane fibre that is a
byproduct of the process
...
Again, not an original idea but one
which was identified and applied where the business needed it
...

Of course, all these ideas did not just happen
...

“I visited more than 40 factories in the first two years
...


72

06_Sweet Successjuly4
...
And
putting in a co-generation plant required a lot of modifications
...

“During the initial set-up stage, I stayed for six months at the
factory
...
”
The company never made a loss, thanks to the co-generation unit
...

By the year 2000, the turnover was Rs 50 crores
...

“It was lower margin but it's a great business because it has size
...
Production fluctuates, but demand keeps growing
...

In 2002, sugar prices crashed
...
So
the company shifted focus
...
That actually increased our size of business
...
”
Others could also have done it
...
They believed that trading “is not our business
...
Stick to what you
know
...
And a period of struggle is
when that quality really comes to the fore
...
You take a lateral view - are there other
opportunities which are slightly out of your direct line of sight?
It all depends on what slot you put yourself in
...

Do I see myself more narrowly - as an agricultural manufacturer?
Then I will see peripheral opportunities in processing other kinds
of agricultural produce
...
“We do anything that is
connected to sugar
...

The next Big Idea was to build a refinery
...
qxd

7/19/08

2:37 PM

Page 74

STAY HUNGRY STAY FOOLISH

“In every business, the more you know
about the grassroots, the better
...
The beauty
of it is, you can import the raw sugar from wherever it is
competitive in the world
...
There were, therefore, massive imports between
2002-05
...
We had the capacity to refine also
...
That made
the idea of setting up a refinery all the more attractive
...
It was licensed, stagnant, run mostly by cooperatives
...
And it attracted outsiders like Narendra
...

Shree Renuka Sugars is now building a dedicated raw sugar
factory in Haldia
...
All this
raw sugar will be imported, hence the plant is built next to a port Haldia
...
We give priority to their
cane over non shareholders
...
Because this was a licensed industry, there was a
shortage of industrial capacity
...
We have increased capacity
over three times
...
”
Of course, when Shree Renuka Sugars listed at Rs 285 per share,
the farmers got their bonanza
...

The interesting thing is that while about 50% have sold all their
shares, the rest have held on
...
“Those who have sold, I think, most of the guys actually
bought more land
...

Because that's the business they understand
...
The country was going into a shortage, sugar prices
were going up
...
qxd

7/19/08

2:37 PM

Page 75

SWEET SUCCESS

operatives, we went to the management, to the board of directors,
which is essentially the local leaders
...
So we got
the first one for two years
...

Today, out of the six factories that we run, three are leased
...
”
The advantage? It is much cheaper than putting up a new plant
...
Every factory Shree Renuka took over, it managed
to turn around in no time
...
Last year, Shree Renuka ran it at
115% capacity
...
But that's the story of
Shree Renuka Sugars
...
In a
sense, she was waiting for me
...
After all, so many people
go into business with their fathers, brothers, sisters and even
wives
...
How many sons would believe
their mothers have sound business skills? And how many mothers
would have that confidence?
In this case, both sides did
...

So how did they divide responsibilities?
“Fundamentally, we have very different strengths
...
Whether it is the financial market,
export market or world market
...
And she looks after the internal administration
...
”
Mrs Murkumbi is still based in Belgaum - she visits the factories
regularly
...

“It has been a good partnership… There is obviously that amount
of trust when working with someone in the family
...
You have a lot of peers when you are
working, while entrepreneurship is essentially a very lonely
occupation
...
In the current year, Narendra believes it will

75

06_Sweet Successjuly4
...
It's not
the money that motivates but the
size of what you build, the scale
...
The second quarter figures (Jan-March
2008) indicate 95% growth in revenues, meaning he is well on
track towards achieving that
...
So that is exciting
...
I think the great part of my own satisfaction in
this business is that I created wealth not only for us, but 75
employees and 10,000 farmers directly through the stock
...
And
each of these factories, the minute they start doing well, the
economy around you visibly improves
...
”
But Narendra is barely 38 today
...
Are the challenges he faces ahead, in this
company, big enough?
“When we were 50 crores, 100 crores, the growth in this business
was limitless
...
5%
...
”
“But 3-4 years down the line, growth will slow down
...
”
Already, things are kind of stable
...
Soon, there will be a Chief Operating Officer
...
To
something new and even bigger
...
It would be very expensive
...

“I think the drive to start off something on your own, once you have
it, you will continue to have it
...
And in India, there are

76

06_Sweet Successjuly4
...
”
“I think the old philosophy that we all learnt even on the campus,
of core competence, of doing one thing world class, it no longer
holds in this country
...
And also scale up those opportunities
...

“Nothing is as formidable as the first four years - when I was in the
bio-pesticides business
...
You can't attract
talent, you can't pay high salaries
...
Then
we realised that if you want to grow across the country, people
won't even join a company that is partnership
...
”
What are the other changes that come with a label like ‘success’?
How does it feel to have enough money not just for needs but for
any conceivable want?
“I don't think my lifestyle has changed that much
...
Our own flat is not going to be ready for another year
...
I bought this office, before that we built three
factories
...

“I think there is an ambition to grow larger as a corporation, as a
business and that is a primary motivation
...
When you are the owner and CEO of a company,
most of your expenses are anyway taken care of by the company
...
”
So no ‘billionaire’ purchases - yacht, jet, Lamborghini? He laughs
...
Because they are the real billionaires
...
How we shared it with them
...
This new generation
of entrepreneurs genuinely feels socially responsible
...
” These entrepreneurs earmark their money
and professional expertise to make it happen
...
qxd

7/19/08

2:37 PM

Page 78

STAY HUNGRY STAY FOOLISH

“It is always difficult to switch off
...
Partly maybe personal style
...
”
An example - the Shree Renuka Sugars Development Foundation
...
The foundation
runs schools for the children of contract labourers who harvest the
cane
...
The net worth of the foundation is
close to 100 crores and it is run by professionals
...
“They were looking for somebody with a mix of experiences,”
he shrugs with typical modesty
...
”
These duties take up 12 days a year, but according to Narendra,
the exposure is tremendous
...
There are only old
ways of doing business
...
After all, ‘Bio-pesticides’ was a new product idea
...
Nothing pathbreaking there
...
And I think everything
that we do, everyday, is innovative
...
All my best ideas have
been done by others
...
”
“One, we have done them better than the guy who got that idea
...
If somebody did
something on a very small scale, I said, why can't it be 10 times
bigger? When somebody put in a 50 tonne refinery in India to
process raw sugar, we said, why not start at 200? When imports
started, we said, why not 1,000?”
The limits are in your own thinking
...


78

06_Sweet Successjuly4
...
You learn
many things the hard way
...
You are very very
segmented
...


79

07_At your Servicejuly4
...
Yet
as a young management graduate, Chender decided to
carve out his own niche
...


80

07_At your Servicejuly4
...
He relates
his story almost in third person, like it happened to
someone else
...
Because you can either become bitter and
cynical or just shrug and say, “This too shall pass
...
”
Zipping ahead versus merely chugging along
...
Litigation, strikes, debt,
9/11, SARS - all these and more, affected the growth and
expansion plans of Baljee's company
...

The wait was certainly worth it, I think, as I stand in the
tastefully furnished lobby of the Royal Orchid hotel
...
qxd

7/19/08

2:38 PM

Page 82

STAY HUNGRY STAY FOOLISH

82

AT YOUR
SERVICE
Chender Baljee (PGP '72),
Royal Orchid Hotels
Anyone who has ever been to Simla would have eaten at Baljee's
...

Born and brought up in Simla, Chender completed his BCom in
Delhi and then did his MBA from IIMA
...
But in
a few months it felt a little crowded
...

“I started a restaurant called ‘Fascination’ in Simla, mainly catering
to the college crowd
...
Then, in
December 1972 there was an opportunity
...

He sent Baljee a tender form for the two hotels
‘Brindavan Garden’ and the ‘Metropole’
...


- the
in but
stuck
...
The
family funded the Rs
...
‘The Stay
Longer’ hotel was refurbished and renamed ‘Harsha’
...

It was January 1973
...
The
city was home mainly to public sector undertakings - there were
very few business travellers
...

But as they say, pyaar kiya to darna kya
...
“I tried many things,” recalls Baljee
...
I also

07_At your Servicejuly4
...
” Baljee's wife
Sunita also pitched in - helping with menus and joining him when
the restaurants required putting in late nights
...
Not ‘hot’ or ‘great’
...
But by the
year 1985, there was the urge to do something more
...
” But the business could be made bigger and
better so I decided to go for an IPO
...
The
IPO, and all the expansion plans, were put into cold storage
...
And in 1987, the hotel staff went on strike
...
Facing a cash crunch,
the bakery unit was sold off at the time
...
In 1988 the lease of the ‘Harsha’
hotel expired and the only option was to buy it
...

So the situation was pretty tight from 1987 to 1990
...
In 1992, an opportunity to lease some prime land
close to Bangalore airport came up
...

This meant putting money upfront
...
Due to litigation, the deal got stuck
...
Construction could start only in 1999
...
It was to be a 3
star hotel but we decided yeh bhi kar lo, woh bhi
...
” Raising the debt - of Rs 17-18 crores - was fortunately not
difficult
...

Was there a definite business plan in place? Yes and no
...
Take something like ‘room rate’
...

And of course the market goes up, and it goes down
...
1994 to 1997, was a
relatively good time and there was surplus
...

“From ‘98 onwards, my son went to college in America, so that was
an additional expense
...
I had no
choice but to borrow, borrow and borrow more
...
qxd

7/19/08

2:38 PM

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STAY HUNGRY STAY FOOLISH

“When things are tight you
monitor every expense
...
”

Was all the borrowing ever a source of stress?
Baljee muses, “You see, basically I am an optimist so I said, chalo
- let's see
...
you can't do anything more
...
In 2001, the
Royal Orchid hotel was finally launched
...
It was a disaster
...

“We had debt to repay, and by then I had two sons studying
abroad
...
”
Still, Baljee never despaired
...

“One thing I have always believed is that whatever you do, you do
in a very honest manner
...
”
It was this impeccable track record which allowed Baljee to raise
so much funding at relatively low rates of interest
...
Business started booming and the company also got the
chance to lease another hotel on M G Road which was renamed
‘Royal Orchid Central’
...
This was
the very same hotel which had drawn Baljee from the hills of Simla
to the Deccan plateau in the first place
...

By 2004, Baljee had four hotel properties and decided it was time
to expand to other cities and establish a national presence
...

Royal Orchid signed new projects in Jaipur, Hyderabad and Pune
...

To fund this expansion Royal Orchid decided it was time to IPO
...
In 2006,

84

07_At your Servicejuly4
...
The company raised
Rs 130 crores through its maiden public offering and private
placement of equity
...
Whereas Royal Orchid Central is a brand of
lower priced, 4 star hotels
...
But everyone finds their own niche and develops their
own loyal customers,” says Baljee
...
With various projects
close to completion, that is expected to rise substantially
...
By 2009-10 more hotels of
the Bangalore size will be operational
...

Both the Baljee sons have also joined the company
...
The question of a
‘succession plan’ now looms large
...
See what happened with the Ambanis
...

As of now Arjun is handling an independent project - setting up a
budget hotel chain called ‘Peppermint’
...

Meanwhile, younger son Keshav (who worked with Lehman Bros
in New York before returning to India) looks after new projects and
sources deals
...
“Leave the main business to
be run by professionals and let them manage their own projects
...
But there's still confusion on this front - it will take some
time to become a concrete plan
...


85

07_At your Servicejuly4
...
”
For the first time since we've been speaking, Baljee smiles
...
You need to have staying
power
...
God has been very kind
...
”

86

07_At your Servicejuly4
...
I love the hotel
business - food, making menus, everything to do with the
business
...

Learn the business you want to get into for a couple of
years
...
There are
VCs, or at least angel investors
...

But if you enjoy your work, you won't feel it is an intrusion
...
qxd

7/19/08

2:39 PM

Page 88

STAY HUNGRY STAY FOOLISH

SUCH A LONG

JOURNEY
Madan Mohanka (PGP '67),
Tega Industries
In the 1970s it took Madan seven years to get
government approval for a foreign collaboration
...


88

08_Such a long Journeyjuly4
...
But it is often
as difficult - or even more difficult - to scale up and
professionalise a family run business
...

In transforming a small business dealing in electrical
installation into a multinational engineering company,
Madan Mohanka faced all the hurdles and challenges of
starting up from scratch
...
A passion, which one is driven to
pursue at any cost
...

It is no coincidence that Madan's home and office are
right next to each other, in the peaceful New Alipore area
of Kolkata
...

I marvel - how do you get a kick out of the company you
started after over 30 years? Let’s find out!

89

08_Such a long Journeyjuly4
...
In those days the institute didn't have much of a
name
...

“I had done my engineering and my family thought it was time that
I started doing something
...
“In the environment in which I was brought up,” reflects
Madan, “the only thing that mattered was the rate at which one
increased the family fortune
...
The company, Techno Electric
Pvt Ltd, was in the business of electric installation
...

For example, despite the nature of its business, Techno Electric
did not employ any qualified engineers
...

Techno Electric started undertaking the design, supply and
erection of Fuel Handling systems
...
But apart from the
money, this diversification changed the character of the company
...

* some of the information in this chapter is based on a series of cases on
Tega written by Prof V L Mote and Prof Jahar Saha

90

08_Such a long Journeyjuly4
...
He used a simple method to spot
these opportunities - scanning international trade journals related
to mining, coal, steel and power industries
...
” This was a personal
passion; other members of the family were busy managing
branches of the company in Jamshedpur and Durgapur and
showed little interest
...
Techno Electric achieved a near-monopoly
position in this business and although the market was small, the
annual sales of the company reached Rs 19 lakhs in the first year
...
5 lakhs in 1976, which was a quantum leap for
the company
...

The first was Electro Zavod (India), headed by a senior
professional from Techno Electric
...
The second - Techno Pipe
Works - was formed to take up piping projects
...
In June 1971, Madan had come across an ad
of Skega AB, Sweden in a mining journal
...

“I wrote a letter to Skega saying that I would like to visit Sweden in
the first week of July 1971 to meet the Managing Director of the
company
...
But I never received their letter
...
”
Naturally, they were surprised but a sales engineer met Madan at
the airport
...
The discussions went well and a friendship was
established
...

On his return from Sweden, Madan consulted N Guha, the Chief
Engineer (maintenance) at the National Mineral Development
Corporation (NMDC)
...
And thus began a long,
arduous and passionate pursuit
...
qxd

7/19/08

2:39 PM

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STAY HUNGRY STAY FOOLISH

“When I went into this venture of Skega I
didn't realise that this may have a repercussion
on the family
...
So I don't
know whether it was a good or a bad decision
...
”
Madan started reminding Skega through letters and cables to
send an agency agreement
...
In 1972, a representative from
Sweden came down to assess the market potential in India
...

In fact, a big change in mindset was required as three different
technologies were involved - grinding, mining and mechanical
engineering
...
And this
required a completely different attitude and very strong
professionalism
...
There seemed to be good
demand
...
Madan met Assar
Svensen, Skega's Managing Director
...
Assar was as much at home
repairing a machine on the shop floor as he was in the boardroom
of a multinational company
...
”
In fact meeting Assar resulted in more self questioning on the
business values of Madan's own company
...
The reason being that many a
time Assar noticed that the interests of the family and of the
company were in direct conflict
...
Negotiations
started but here, there was a problem
...
qxd

7/19/08

2:39 PM

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SUCH A LONG JOURNEY

payment of Rs 15 lakhs plus a minimum guaranteed royalty of Rs
35 lakh over the next five years
...
Secondly, Madan was unsure whether he
would be able to achieve enough sales to generate the minimum
royalty payment expected by Skega
...
After all,
there were other profitable lines of business in the company
...
But Madan
persisted
...

The terms DGTD offered were not acceptable to Skega
...
After all, Skega's products involved an extensive R & D effort
...
In light of this feedback, the
Government agreed to increase the royalty from 3% to 5% but
limited the lump sum fee to Rs 5 lakhs
...

Skega agreed to these terms and signed an agreement on
December 10, 1975
...

So why did Madan fight out this battle? Was there really something
so special about Skega?
“What attracted me was they never advertised how much turnover
they had
...
And the customers respected those solutions
...
There was already a steady business, profits, good
lifestyle
...
It
was more the challenge that attracted me to go to Skega
...
Yes, many
years were lost in the maze of red tape but you had to simply grin
and bear it
...
There just weren't enough

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08_Such a long Journeyjuly4
...
You will succeed
...
”
customers
...
But when manufacturing began,
orders just did not come in
...
“When we went to sell, the first question they
asked me is, “If it does well, I don't get a promotion
...
Why should I stick my neck out for you?”
Being government employees they had no incentive to improve
efficiency, the easiest thing was to maintain the status quo
...
But
Madan refused to go down that route as a matter of principle
...
Which is a
huge lesson for any entrepreneur
...

In reality, Mr SS Nadkarni, then General Manager of ICICI had
hinted that such a problem may arise
...
However, fuelled
by the optimism of youth, Madan remained gung-ho
...
”
Madan did get the required funding from ICICI but the next four
years were extremely tough
...
When he returned to work five
months later he discovered there was a significant over run in the
cost of construction
...

Then when the company started executing the few orders it had
received, it was found that the moulds it had acquired were not
suitable
...
Even after
new moulds were made, bookings were poor
...


94

08_Such a long Journeyjuly4
...
There was only one avenue - to get a contract from
the Kudremukh Iron Ore Co Ltd (KIOCL) to fabricate and
rubberline their indigenously procured equipment
...
Colleagues at Tega advised that the price
he was quoting was too low
...

However Madan went ahead and in June 1978, the company
secured the KIOCL contract
...
Tega also realised it did
not have the capacity to fabricate 800 metric tonnes within the
stipulated period
...
In fact, the company's entire capital was almost wiped out
...
“The memory of that day is still vivid in my mind
...
Noticing his low mood, his wife asked
what the matter was
...
On hearing this, she offered him her LIC policy
and her wedding jewellery
...
Salaries were
paid two days later and an uphill climb to solvency began
...

“One, if you take a new product, which has not been tried out
before, at least plan for 50% or double the investment you
envisage
...
When your project fails,
and you have no money, people treat you like a dog
...
”
(In fact when Tega eventually came out of the red, this case was
taught at ICICI training school in Bombay and they took a decision
that in future, if there is an entrepreneur with a new technology,
they will sanction 50% more money than what he asks for
...
)
“Number two, if you believe in the product, and if you believe in the
business, don't give it up
...
” When Madan went
bankrupt, he mortgaged his wife's jewellery, but did not abandon
the dream
...
My marketing manager then, an IIT and IIM

95

08_Such a long Journeyjuly4
...
Till two
years ago I heard Muthuraman saying,
anybody who became the MD of TISCO must
have very good knowledge of marketing and
operations
...
”
graduate, all rounder, he is now teaching at the University of
Pittsburgh
...
”
Everybody remained with the company throughout the difficult
period
...
”
Thirdly, Madan realised that you need a lot of patience to handle
people in the government
...
But it's a matter of experience
...
Inspite of all the difficulties it faced,
Techno Electric fulfilled its delivery commitments
...
Except Mr Nadkarni of ICICI
...
He took it up as a personal
challenge to convince all other institutions like IFCI, IDBI, to
sanction the rights issue
...
”
From then on, things improved
...
Also Skega
extended its supported
...

At the end of the day business is well and good, but relationships
are what really matter
...

Of course, it must be added, apart from the business related
problems during this period, Madan also faced another,
emotionally draining issue - the break up of the joint family
...
Their management style

96

08_Such a long Journeyjuly4
...
The entire team at Tega
was much younger than at the other group companies, yet they
were paid more
...

Madan made a difficult choice
...
The brothers separated in 1981
...
Meanwhile, Madan poured all his energies into Tega
...
Firstly, the
market in India was limited
...
And it was completely handled
by the public sector
...
When Tega supplied the material, it
would get paid in kind and not cash! For example, Hindustan
Copper, paid in ‘tonnes of copper’
...

“And that is the time when, seeing the downward trend, we took
the decision of getting into export
...
But in 1998, the
Skega collaboration ended and Tega was able to start focussing
on the world market
...
In the developed world,
most of the buyers preferred European or American suppliers
...
So for two years, Tega could not sell much
...
Give us
a chance! So I had to take a very hard decision
...
His
salary was almost equal to the salary of the entire company
...
If I don't grow, the company will remain small and die over a
period of time
...
So I would rather take a risk and die than not take
a risk and die
...
But
when he went out for exports, we found nobody asked him any
questions - how big the company is, how small the company is,
can you supply, not supply? We just started booking orders
...
qxd

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STAY HUNGRY STAY FOOLISH

“We are concerned about Chinese
competitors, but we have one advantage our product requires software and
hardware, both
...
So
we think we have a lead on them
...
They would supply material at high prices
but go there only once a year
...

In the two and a half years the Englishman spent with Tega, the
company's fortunes were transformed
...
This was phenomenal because
Tega is in a very specialised industry - it only supplies equipment
related to mining and mineral processing
...

Did Madan realise it was such a small market to begin with?
“No, I didn't realise that
...
I wanted to change from the
electrical business and Tega was a challenging assignment to
work and think about
...
Wherever the customer base was the same, the
company started making profits from day one
...
15% of the
production was thus consumed in-house, but selling the remaining
85% meant building a whole new network
...

Eventually all other companies were merged into Tega and only two
were kept alive
...
MM Aqua Technologies (in collaboration with
German company Munters) contributes Rs 40 crores while Hosch
does Rs 13-14 crores (but makes an excellent 30% profit margin)
...
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SUCH A LONG JOURNEY

“In case of Hosch, we don't run the company, it just runs by itself,”
he explains
...
In case of MM Aqua, it is a
completely different technology, but it deals with water
...
” Madan believes that the
market is expanding significantly and future prospects are bright
...
The
market has thus expanded to Rs 3,000 crores
...

The number one and number two players are both very big
...
The number two player is a billion
dollar company which does about Rs 300 crores of business from
mining equipment
...
“Every six months they
knock my door and they give me a blank cheque
...
They give me a blank cheque for two reasons
...
But we are not keen
...
“Once we become
slightly bigger
...

The interesting part is, much of the R & D which makes Tega attractive
today was actually born out of idleness
...

Speaking of people, Tega has always taken very good care of its
employees
...
In spite of
that, the labour unions closed our plant for a year
...
”
Another unique perk of being a senior manager at Tega is ‘zero
commute’
...
Right in the beginning, we made flats and sold it to people for Rs
225 per sq ft
...
”
In the final analysis, reflects Madan, Tega was a product 20 years
ahead of its time
...
“Today we bought a company in South Africa
(Beruc Equipment Pty Limited), we didn't even have to take the
permission from RBI to do so! In my first year when I went to

99

08_Such a long Journeyjuly4
...
So wherever
you travelled abroad, whether you were going to meet your
customer, or a potential partner, first thing is you looked up to him
to pay for your hotel
...
”
Today, Tega has offices in 12 countries and customers in 43
countries
...

“In fact,” beams Madan “because the rupee had become stronger,
the interest had become zero
...
In reality, the turnaround took only four months
...
And it involved risk
...
“In fact all
of my personal assets, landed property, this and that
...
”
So the theme of ‘personal sacrifice’ remains a recurring one
...
He simply did not give the family the time or attention
they rightfully deserved
...

“When my eldest son was born, it was a caesarean
...
And five o clock I had to leave
to tackle an urgent issue in Dhanbad
...
She
was shocked to know I had left on business
...
”
“My children say, my father and mother, both is my mother
because our father never gave us time in the early days
...
”
“But you still seem so passionate and excited about Tega after
close to 40 years!” I remark
...
And when we open a new branch, then I go and see the
country, the economics, see what things are
...
Maybe it's
just that this isn't work for Madan
...


100

08_Such a long Journeyjuly4
...
Be on it
...
And the
results will be good
...
Don't lose
your balance, and try to carry the team with you
...
At least 50% more to stand by
...
You have some money to
put in, to carry on and see the bright side of it
...
Multi-locations creates
problems in terms of management focus
...
In India our
manufacturing base is only 37%, whereas in all
advanced countries, the manufacturing base is 65-75%
...
Service base is only temporary
...

If you are getting into manufacturing a unique product
and if you have a passion for the product, venture
capitalists will finance it today
...
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Page 102

STAY HUNGRY STAY FOOLISH

102

THE ALCHEMIST
Sunil Handa (PGP '79),
Eklavya Education Foundation/ Core Emballage

As the force behind the LEM (Leadership and
Entrepreneurial Motivation) course at IIMA, Sunil Handa
has

inspired

countless

students

to

become

entrepreneurs
...


09_The Alchemisteditjul7
...
Not
just for me, but for all students of LEM (Laboratory in
Entrepreneurial Motivation), a course he has been taking
at IIMA since 1992
...

A part of me is worrying about being objective
...

He is so honest and open about his life
...
And in doing so, reveal a little bit more
about who you are
...
Not only in business, but at a deeply
personal level
...
But an acrimonious split with
his brother led him to question the value of leading this
completely one-track, build-your-business-at-any-cost
kind of life
...
The
school is as much of a challenge as any business and as
with any project Sunil is involved with, it hums with
energy and innovation
...
Or at
least tries to
...
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Page 104

STAY HUNGRY STAY FOOLISH

THE ALCHEMIST
Sunil Handa (PGP '79),
Eklavya Education foundation/Core Emballage

Sunil Handa's family came to Ahmedabad after partition
...

“My father is a refugee from Pakistan and when he reached
Ahmedabad, he lost both his parents
...
”
Handa Sr worked from 12 midnight till 8 am, living in a chawl next
to the mill
...
This
is how he completed his matriculation, then BSc and LLB
...
These jobs took the family all over India
...

“We always lived not in the main city but away from the main city
...
In Delhi, we lived in Gurgaon
...
So we were always in a small
place and we didn't have many friends,” Sunil recalls
...
But Sunil declares he was ‘sleeping in life’ until he
joined Hyderabad Public School in class XI
...
The best I could get in marks was
45-50%
...
”
At HPS, Sunil noticed fellow students reading story books
...
Enid Blyton, Billy Bunter, Noddy - none at all
...

“I cried and asked her, will you help me in reading?” She was quite
taken aback
...
He was mad - fourteen years of his life had been

104

09_The Alchemisteditjul7
...
And all I did in life,
I did in class 11 and 12,” he muses
...

“If you see my two years biodata, you will say, this is ten active
students put together
...
I gave up
...
But I read a lot
...
Sunil was very
thin, weighing only around 40 kgs at the time
...
“If I opened my mouth in the class and
asked a question everyone would laugh at me
...
”
As a result he was bullied, teased, ragged and hit by fellow
students
...
What should I do
...
” One Mr Tiwari, Hindi teacher and hostel warden, changed
his life
...
But within a year, he was among one of the better
speakers in the school
...
After being totally devastated by the
Americans, Japan decided to take revenge by becoming better
than America in whatever they were good at
...
And how does all of the above tie in
with entrepreneurship? Well, the sum of these experiences
toughened up Sunil Handa, made him a fighter
...
The fighter
in me, the animal in me comes out and says, ‘I will do it and show
them’
...
So a good teacher at the right
time in your life can make a frog into a prince!”
And the frog who got 45% in class X graduated from HPS as
one of the top ICSE students in India
...


09_The Alchemisteditjul7
...

If I had spent 19 months in Hindustan
Lever as a management trainee, I
would not have learnt even one per
cent of what I learnt in 19 months as
a chief executive of a sick unit
...
In the fourth year, Sunil
became acquainted with solar energy
...
Sunil and Bharat researched a
lot of literature and identified one idea called Honeycomb
Collectors which the Russians had invented in 1929 but didn't give
results
...

After two months, it turned out to be a brilliant success
...
One afternoon the whole apparatus
actually caught fire! In the next semester, in addition to studies,
they worked on the idea and wrote a paper on the findings
...
Sunil and Bharat were called to Italy to present it
...

“But we didn't have eight thousand rupees
...
He sent me a cheque of Rs 250
...

They said, you come and give a talk on your work in solar energy
to our scientists, and we will pay you some honorarium
...

In this manner they collected Rs 3,000
...
So Bharat cobbled together
another Rs 5,000 and attended the conference
...
The desire to
do something new and pathbreaking
...
And even today Sunil is

106

09_The Alchemisteditjul7
...

“If you say Windows is a breakthrough in software, then I can say
Honeycomb Collectors is breakthrough work in solar energy
...
So we left it at that
...
My idea
of management was they only use jargon, they are superficial and
fraud people
...
” Sunil
had in fact decided to dedicate his life to something in the electrical
industry called ‘Thyristors’
...
In my
fourth and fifth year, I used to worship Thyristors, I used to write
poems on Thyristors, I used to sleep and think that I am a
Thyristor
...
”
Then Sunil's father took him to Jyoti R&D, a leading company in
Baroda at that time
...
He took Sunil to a garden in Baroda called
Kamatibaugh near Baroda University
...
I used to think MBAs are superficial while real people
are engineers
...
That was a turning point in
my life
...
2,200 people wrote the CAT exam in 1977
and Sunil was 13th on the wait list for IIMA
...
“So I was famous in BITS Pilani as ‘manager in waiting’!”
Eventually he got into IIMA, but with some inferiority complex
...
”
The next guy I met said, “I am IIT Delhi, electronics topper
...
”
At the end of three days, Sunil thought he was in the wrong place
...
“One year, I will beat these fellows”,
he decided
...
There used to be seven I-Schols * in those days
...
But as always he also participated in many
extra-curricular activities
...


09_The Alchemisteditjul7
...
4,000 crore
...
e
...
It was
a complex project and and the daily report used to be one inch thick
...
V
...
”
The stipend was Rs 450 per month but it was a fantastic learning
experience
...
During those days,
summer training was true summer training
...
”
While Sunil enjoyed all the courses at IIM, ERI (Explorations in
Role and Identity) was another turning point
...
That exercise in front of the group lasted for 2-3
hours
...
I came
out of a tunnel, I saw daylight, I saw my God
...
”
“I will not blame the situation, I will not blame the weather, I will not
blame the government policy
...
I will say, this has happened I have to take action, and I have
to take responsibility
...
I am the reason for my success
or my failure, not the environment or anything else
...
He did not want a tiny role inside a large
company but a job where he would get to look after everything
...
At the time FAIR was a hot organisation to join - four
seniors and 10 batchmates from IIM A had joined as well
...
1,250 per
month (gross)
...

The concept of FAIR was to take a sick industrial unit from a bank,
put a young MBA in charge as the chief executive and turn around
the company in two years, retaining all the existing employees
...
Finally, he zeroed in on a company in Bhavnagar and told his
boss, “This is the company I want to run
...
”
But in the pre-Bhavnagar months the trainees had to earn their
salary
...
And this is a digression
of sorts but it's important
...
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Page 109

THE ALCHEMIST

109

One of the projects that came FAIR's way was from the Ford
Foundation
...
At that time, Madhubani paintings were sold by
extremely artistic women at throw away prices - Rs 200-500 per
piece
...
The Ford Foundation mandate was remove the middlemen, get the artists or producers into a
cooperative and do the marketing and selling directly
...
They organised the
women into a ‘Master Craftswoman Association of Mithila’
...
That was a wonderful
thing and it exists till today
...

Now the ladies were organised, there was an association
...
Let us go through our minds find this person”
...
”
“What would be her age?” They argued over this and finally said,
“She is between 35 and 45
...
"

“There is potential in every business
...

There, the profit is different,
developing human potential
...
”

09_The Alchemisteditjul7
...
If you are a nonMishra, it just won't do
...

So they started looking for a Mrs Mishra between 35 and 45 years
of age
...

I said, “Phansalkar, she will be a professor in some college
...
”
So we went to Darbhanga Girls College
...
”
They went to her and she was exactly what they wanted! She was
told, this is a part-time job
...
And you will
be the honorary secretary of the sanstha
...
In consultation with her, they made a board of governors of
some local, prominent people
...
I
imagine who that person is, where am I likely to find him
...
”
It may sound incredible but it has worked for Sunil time and again
...
The company had four plants and it
made stainless steel utensils, tin containers, drums and rolling
mills
...
Then, he shut
down the rolling mill and concentrated on the remaining two units
...
The old owners were eased out from the board and a new
board constituted at Sunil's behest
...
”
After 19 months, Sunil realised that this chapter of his life was
over
...

An ad was put in Mumbai Samachar and one Kediaji, who owned
other steel plants as well, bought the unit
...
On 31st December 1981 Sunil
left Bhavnagar for good
...
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Page 111

THE ALCHEMIST

111

Sunil's brother Sushil was running a management consultancy in
Ahmedabad
...
The friend didn't have the faith that this
business would run and refused the offer
...
One of the reasons
being the feeling, “Let brothers be brothers, if we get into business
together, it will affect our relationship
...
Both
became equal partners in a small company called Core
Consultancy Services
...
Along with management consulting,
the company started consulting in the area of computers
...
I should be
counted among the pioneers,” says Sunil
...

“I think when I was a consultant, I was a very good consultant
...
I never in my life believed in giving
a report
...
And every day I discussed, every week I
discussed
...
Which is how it is in life
...
Business was good
...
And consulting is an industry with a fat profit margin,
so profit was at least Rs 60 lakhs
...

Why?

“I have always felt that the way to
judge a manager is, after thirty
years, judge where his subordinates
are
...
”

09_The Alchemisteditjul7
...
There has to be a chimney with smoke
coming out of it
...
there is a chowkidar, workers
smoking beedis in a corner
...
”
Besides, the nature of the business was such that you could not
‘scale’ beyond a point
...
But how could I stretch my life?” The
solution was to build a factory, build a brand name
...
1985 saw the second
of the infamous Gujarat riots
...
Ahmedabad was closed for
a month
...
However with most establishments remaining shut,
there was no work to do
...
”
Many options were discussed but in 6-8 months they had zeroed
in on pharma
...
Sunil has always loved the
challenge of mastering something new
...

“And whatever I have done,” he says “there is always innovation
...
Today, Saurashtra
produces maximum groundnut oil of India and it is still sold in 15 kilo
tins that we used to manufacture
...

“In IV fluids, you go anywhere in India, 95% per cent of what they
are doing in the factories are things which we had started
...
If you ask them how
many times do you sterilise - they sterilise in two lots of 25 a day
...
”
Coming from someone else it might sound bombastic
...
Because
this is the way I am
...
“I remember, when I wanted to start an IV
fluid factory, I wanted to see some IV fluid factories
...

So I saw two factories stealthily
...
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Page 113

THE ALCHEMIST

113

Shardaben Hospital and the second as a ‘GIDC inspector’
...
But when others
wanted to see our factory, I showed it to so many people
...
It is generally the dirtiest area
of a pharma factory
...
And this
small act of ‘humaneness’ was to benefit the company hugely
...
Arab Otsuka, a
Japanese company based in Egypt and Core from Ahmedabad
...

“Before they came, we located a mosque and spent 20,000 rupees
to clean up the place
...
Even
in our factory, we created one room, in case they didn't want to visit
the mosque, they could do their prayers here
...
”
But the clincher was the animal house, the lady simply fell in love
with it and visited it several times during her three day stay
...

She said, “Core was the only place where all testing was done on
animals with so much of love and compassion
...

Sunil goes on to reveal the ‘secret’ of how this house of love was
created
...
Then I found
out, which rabbits should we keep? People told me, Indian rabbits
are very tough
...
”
So a manager was sent to Belgium, two male and two female
rabbits were imported through Haffkine Institute in Bombay
...
David Reuben, the best zoo keeper in India
...
That is the most
important qualification
...

He had no ‘qualifications’ but the company recruited him and made
him in charge of animal house
...
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Page 114

STAY HUNGRY STAY FOOLISH

I could have spent the whole day listening to these stories
...
How did it
start, how did it scale up? Sunil sums up the eight year journey in
a terse two minutes
...
The name was Core Laboratories Ltd
...
The total project, land and
machinery, etc was Rs 60 lakhs
...

One year later, the IV fluid factory Core Parenterals Ltd came into
being
...
5 crores of which Rs 1 crore came
from equity and the remaining was a loan from IFCI
...

“We used the money very wisely
...
We had to unload a six tonne machine
...
So we found many Indian
ways of doing it, such as make a slope and take the machine
down, gently rolling it
...
”
He adds: “We did lot on innovations in IV fluids
...
We have made
design changes in machines, which machine manufacturers have
made as standard part of their machines
...
”
There is a lot of pride but it is tinged with pain
...

The stories are a way of remembering the good parts
...
Summing up the Core
Parenterals experience he says: “We put up the factory, expanded
it
...
After that I had no interest
in doing business
...

“Yes
...
The corrugated box project
was born because of a promise made by brother Sushil
...
“My
export boys used to come back from all over the world and show me
the kind of packaging that our competitors offered and asked me
why we couldn't match up to them
...
”
When the brothers separated one of the deals was Sunil would
put up a packaging factory and supply to Core Parenterals
...
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Page 115

THE ALCHEMIST

115

never materialised
...

The factory was set up on a very large scale because the Core
Parenteral requirement was very big
...
A mineral water manufacturer could have been a client
but this was a location sensitive industry, so it did not work out
...
”
“But also because your whole heart is not in it anymore, isn't it?”
I ask
...
I go to the
factory only once a year, for Dassera pooja
...
I don't want to earn crores of rupees
...
If I sell off the company and do
nothing, it’s still okay with me
...
And it makes decent profit
...
It's in a
steady state of sorts
...
Like producing corrugated
folders, ‘furniture’ just to educate people about what the potential
in the product was
...

“It was not a happy separation
...
And at the end of it, my heart, mind, soul, rejected the
concept of making money
...
And for the first time in life, I suffered from
depression
...
What is depression! It is nonsense
...
That it's all in the mind, nowhere else
...
“For ten months, I nearly
killed my self everyday” he recalls
...

“He took me to a sadhu who did ‘sarpa pooja’, gave me three lemons
and said you keep it
...
After some time
they dried up so I threw them away
...
I put them in a handkerchief, took my car and went to Sabarmati
river, did Om Bhurbhuvaswaha thrice and threw it in the river
...
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Page 116

STAY HUNGRY STAY FOOLISH

Sunil’s wife Divya took Sunil to Vishakhapatnam
...
One
Muslim man came and tried to treat him with a magnet
...

“Those ten months were the most horrible of my life, but
I came out of it
...
Then I decided
I don't want to do this business and corporate thing
...
”
Actually, before that Sunil considered starting an old age home,
but somehow he didn't like the idea of people not looking after
their parents
...
So he
plunged into education and in characteristic style started by hiring
the right people - three young IIMA graduates *
...

“We went to seven countries and we visited more than 150
schools and colleges including Shanti Niketan, Oxford etc
...
One is a
philosophical question, yeh hai kya cheez! Many small details
...
” Eklavya school
began functioning in 1998 and today, it is the most admired (and
most sought after) school in Ahmedabad
...

“Eklavya is not a profit making company but it is very
entrepreneurial
...
*
Some of the innovations at Eklavya include ‘small classrooms’
and financial assistance for low income students to make the
school a more inclusive and diverse place
...
What is unique is that each portion has its own
personality, its own library, resources and even its own principal
...
It is a very high quality school
...
In 20-30-40 years, when these children are
older, the impact will be felt
...
He was one of the three IIMA graduates involved
at the inception stage of the project
...
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Page 117

THE ALCHEMIST

117

year on year, quarter on quarter
...
Of course, students are evaluated
but poor marks would never be the basis for asking a student to
leave
...

Eklavya is ‘stable’ and in a sense self-sustaining but it still thrives
on the energy Sunil Handa invests in it
...
“If
I don't go there, in five years time, Eklavya will become like any
other ordinary school,” he adds
...
It's very difficult
...
“Why should I bother what
happens to it after I go? It will die and some new Eklavya will
come
...
It's not as if I shouldn't bother at all, but it is not
a big deal
...

He has been taking the LEM (Laboratory in Entrepreneurial
Motivation) course on campus since 1992
...
There are
no textbooks, no exams
...

Of the 400-500 students who've taken LEM over the years, Sunil
estimates 150 have become entrepreneurs
...
”
“Luck is very important - it is 50%
...
Most
people blame the environment
...
”
And he is nakedly honest with himself when he reflects: “I am a
very good logistics manager, technical manager, factory
manager, QC manager, personnel and HR manager
...
Core
Parenterals succeeded because my brother is too good in those
areas
...
I would give my brother more than 50% credit
...
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Page 118

STAY HUNGRY STAY FOOLISH

But he could not have done it without a person like me
...
“
When I was a successful businessman, I had no family life, I had
no other life
...
I don't know when my
daughter was born, I don't know when my son was born, I don't
know when they started crawling
...
”
Everyone needs some money to be comfortable
...
You can pursue money or you can set different, higher
order goals
...

The advice Sunil gives to his LEM students today is very different
from what he used to give, to a previous generation
...
You can't get both
...
”
Trying is what it’s all about
...


118

09_The Alchemisteditjul7
...
But not any type of job
...
And you have
the mandate from the owners and the bankers to be the big boss,
take all the necessary ruthless, cruel decisions to revive it
...
They are not coming for placements but they are there
...

3) Be a vital part of a project team which is putting up a new
project
...
They are
putting up a Rs 50 crore expansion
...
So they have a small nucleus team of
5-6 people, which will slowly grow
...

You brought land for the project, then you applied for pollution
board approval
...
By the time you have finished, you
have bought a boiler, you have recruited a chowkidar, you
designed a garden, you thought of what the brand name of the
product is going to be
...
The six
man team has become 100
...
And you were there from the start
...

After 2-3 years in such a job, you can put up a factory
easily
...

You can think of more jobs on similar lines
...
But then, there is also a risk factor
involved in it because ultimately the onus lies on you
...
If you are able to do that it gives your company
an advantage of not having to recruit expensive people
...
Not all will turn out to be gold or
diamonds, but over time, you will have a handful
...


119

10_Yeh hai yungistan meri jaaneditjuly7
...
He represents a new generation of
young MBAs who are giving up seven figure salaries for
the kick of being an entrepreneur
...
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Page 121

YEH HAI YOUNGISTAN MERI JAAN

Sometimes a person acting out of conviction, pursuing a
dream, represents the spirit of an entire generation
...

When Vardan turned down a pre-placement offer from
P&G in March 2004, in order to set up a school, it made
headlines across the nation
...

Since 2004, OOPs (Opting Out of Placements) is a small
but significant trend on the IIMA campus
...
Not all the
projects are as idealistic as Vardan's but the very act of
bowing out of the rat race is one of idealism - the idea
that MBAs are meant to do more than sell soaps or
manage other people's money, and get paid handsomely
for it
...


121

10_Yeh hai yungistan meri jaaneditjuly7
...
His father works with the C K
Birla group, and it is a transferable job
...

As a child Vardan aspired to join the army
...
In his 3rd year at IIT, Vardan was the Overall Coordinator
of Techfest - the biggest technology festival in India
...

“I was quite envious of them - and at that point I decided that I too
would something on my own - that to me was far more glamorous
than a hi-fi job
...
He could not go ahead with the project because
of lack of capital and no clue about how to actually run a business
...

“During the first year I did get into the rat race for a little while - but
soon I realized what I really wanted
...
I am too lazy
to work well under a boss”, he adds with a grin
...
“It was a major
factor in keeping the motivation going - and more importantly for
showing a direction as to how actually to go about doing things
...
”
In his second year at IIMA Vardan visited Eklavya School in
Ahmedabad and realised that he too wanted to start a school
...
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YEH HAI YOUNGISTAN MERI JAAN

was time to start exploring options
...
We formed sub-teams with interests in specific
areas - education being one of them
...
Four of us visited schools across India (Jaipur,
Ahmedabad, Baroda, Surat, Mumbai, Delhi)
...
”
The team disbanded after graduating with everyone taking up jobs
except for one other person, who decided to get into a venture
other than education
...
And paying capacity is not an issue
...
“I had no
clue as to what I was doing and where I was heading
...
In the end, Vardan realised that the first step for
someone with no money has to be to start off with a preschool and
then grow into a full fledged school
...
Batchmate Ankita Diwekar was
attracted towards the school project while at IIMA and was quite
serious - but she was unsure whether leaving a job and getting
started straightaway was the answer or not
...

“But even while she was on the job she was still helping me out all
the time
...
”
Funded by Ankita and Vardan's family, as well as Sunil Handa, the
initial investment was about Rs 13 lakhs
...
The 50th child joined nine
months later and by January 2007 that number stood at 140+
...

While Ankita was fully involved in managing the preschool, in
January 2007 Vardan also started a training centre called ‘Life
Skills’ for students and working professionals
...
The plan being to set up the centre

123

10_Yeh hai yungistan meri jaaneditjuly7
...
Except
for the capital expenditure which
makes life very difficult
...
”
and get it going over the next one year after which Vardan was
clear he would head back to schooling full time
...
“What's needed is for
schools to teach Life Skills - so that kids can be independent,
thinking, empathetic, enterprising individuals
...
Still,
changing the mindsets of parents and teachers does take time
...
You need at
least 4-5 acres to set up a good school and how can one afford to
buy land at today's exorbitant rates? When Fountainhead applied
for government land in Surat in January 2005 everyone said it
would take a maximum of 18 months, but even two years on, there
was no sanction
...

So Vardan also started talking to some private players as it was a
Rs 4-5 crore project
...
”
The reason is that education is supposed to be a ‘non-profit’
activity
...
Of course
everyone knows schools do make money but it is a fact never
advertised
...
The scope for higher classes would, of
course, be more
...

Wages and salaries form 40-45% of the total cost of running a
school and even then, finding good teachers is an issue
...

But it's been a steep learning curve
...
qxd

7/19/08

2:40 PM

Page 125

YEH HAI YOUNGISTAN MERI JAAN

125

All the hard work is now bearing fruit as Fountainhead starts its
first full fledged school from June 2008
...

The preschool will also continue to function from rented premises
for the time being
...

“We are going in for the International Baccalaureate's Primary
Years Programme (the affiliation is a 3
...
”
Adds Ankita, “We are very excited with the program as we believe
it has all the right elements and emphasis as far as education is
concerned and their philosophy strongly matches ours
...
In the preschooling
segment, Fountainhead is looking to start another branch by
November 2008
...

More schools mean more teachers
...
This included self-development exercises, field trips,
educational videos and of course everything about PYP
...
“We have our fair share of crises and issues, but we are
very satisfied with what we are doing
...
That did not happen - it takes times for big dreams to
materialise
...
”
Maybe
...
That's
what gives you the courage to take the foolish decision instead of
the safe one!
And you can think all you want, but life has its own flow
...
In the midst of giving birth to Fountainhead School,
Ankita and Vardan also became proud parents
...

Says Vardan, “Sunay's arrival has changed the way we work (or

10_Yeh hai yungistan meri jaaneditjuly7
...
Ankita has a lot of stress as a result of being
a mother as well as the key person for the school
...
“We actually had a dip in quality while Ankita
was away but she was committed enough to come back and
ensure that work did not suffer
...
But work
is not everything - that's why babies come into this world
...
But security is not everything - that's
why books like this are written
...


126

10_Yeh hai yungistan meri jaaneditjuly7
...
There were no specific attempts at
creative problem solving, but when the problems did get
solved, typically that happened when the atmosphere
was conducive to out-of-the-box thinking
...

Know what you want - I take my time when it comes to
important decisions, but once made, I almost never give
up
...
g
...

In my undecided phase I happened to meet a serial
entrepreneur from IIT
...
He said if you are sure that you want
to start up then taking a job should be the least of your
concerns
...
qxd

7/12/08

12:03 PM

Page 1

THE BELIEVERS
People who knew entrepreneurship was
the Chosen Path
...
And they
persevered until they made it big!

11_Tripping Alongeditjuly7
...
com
Deep went into business the way every entrepreneur
dreams it will happen: a venture capitalist offered him
$2 million to start up
...

Makemytrip
...


130

11_Tripping Alongeditjuly7
...
You know the suave-bankerwho-travels-the-world-yet-cares-about-family type
...
Because he is shooting an ad campaign!
“Basically HP is doing this worldwide thing called
‘Achievers campaign’
...
”
“But more than a personal ego trip it's good for the
company,” he stresses
...
Secondly, we
negotiated lots of printers
...
”
“I said would you like it if we didn't have an HP printer in
some of our offices? You should at least give a discount
on others! So it worked out well… it is no fun being in a
professional shoot though
...
30 am and it went on all day
...


131

11_Tripping Alongeditjuly7
...
com
Deep Kalra is your average Delhi dude
...
My father opted
out of that long ago
...
But it was very clear from the beginning - agar
kuch banana hai to khud hi banana hai
...
He does not
sound very ambitious or driven - “Kind of tumbled into it,” is how
he describes it
...
After a year or so he
realised ‘Banking nahin karnee!’ There was the seed of a
thought - it would be fun to do something of your own
...
After three years in banking and exploring
various options in marketing (Arvind Mills and Pizza Hut among
them), Deep chose to do something ‘crazy’
...

AMF had no operations here, so the job was in essence
entrepreneurial
...
And India didn't
know ten pin bowling, at all
...
And there was a reason for it
...
Plus, the idea was
probably ahead of its time as there were no malls and multiplexes
...
qxd

7/19/08

2:50 PM

TRIPPING ALONG

Page 133

133

Deep spent four years with AMF, and “Really, really tried very
hard to make it happen
...
We were pushing
it, trying to create bowling as a sport, getting accreditations,
sending teams to the Commonwealth, trying to get it done as an
exhibition sport in the the Olympics - various things
...
”
Although Deep worked for AMF as an employee, it was
entrepreneurial for two reasons
...

Second, there was very loose support from the US office
...
The disadvantage was that there was
nothing new to learn beyond a point
...
An exciting
opportunity came up from GE Countrywide - the consumer
finance business
...
And a man
called Nitin Gupta, then President of GE Countrywide,
completely inspired him
...

We want to make a quantum leap, we want to do it differently
...

That's your charter
...
”
Around the same time Deep came across people like Ajit
Balakrishnan at rediff
...
com and
the folks behind sify
...
That's when the turning point happened
...
And
I always wanted to do my own thing
...
’”
And so, he took the plunge
...
Very
aptly - All Fools Day
...
You could
run a dotcom business with a small amount of capital
...


11_Tripping Alongeditjuly7
...
You
can either use it as a noose, or you
can use it as insurance
...


“My wife was working, so it made the decision easier
...
I am clearly a risk taker at
heart
...
”
So even as he continued with the day job at GE, the nights were
spent planning his own venture
...
It made perfect sense, given his
training and work experience
...

And heart should rule over mind when it comes to such a
decision
...
The math you can learn for
any business
...
The market size and
opportunity as a whole must make sense
...
His first child had just been born, and he thought, “Why not
a kids portal?” Thankfully, better sense prevailed and the idea
remained stillborn
...

However, Deep actually made two plans
...
“What put me off was that this is going to be a big
financial institutions play
...
ICICI Direct had proven me right
...
They have managed to do it as
entrepreneurs
...

I think this is where I truly belong
...
His wife was making travel shows like Namaste
India and Indian Holiday for a production house
...
But the main

134

11_Tripping Alongeditjuly7
...
com - a
name more suited for the Indian market
...
”
What was funny about it?
“What was funny was the amount of expectation I had from
things like video streaming
...
”
Then, the way VC money came in
...

“The first guy I met gave me the money
...
We actually closed
the deal sitting in a café in the Crossroads Mall on a paper
napkin! Hum baithe the chhote se restaurant mein, Food court
tha, shaam ka time, and he was saying ‘Chalo yaar we will give
you x million dollars and we will take so much percentage
...
After consulting a
couple of friends he agreed to give away 70% of the company
for two million dollars funding
...
When the dotcom
bubble burst, eVentures packed up from India and made a
distress sale
...
And that's when he believes he really became an
entrepreneur
...
And whatever I was not taking
as a salary, was converted into equity
...
Of course many others said ‘We can't handle this
thing yaar,’ and left
...
The irony was that now, a majority stake
was with the management, and minority was with some angel
investors
...

So even as the VC firm bailed out, they really believed in the
idea and put in their own money
...
The company shrank from 40
employees to around 20
...
We had
a running desk around all the walls and just swung our chairs to

11_Tripping Alongeditjuly7
...
In travel, where I had no
experience whatsoever, the
weird thing is that it happened”
...
Aur itni jagah mein bhi ek 14“ ka TV kone
mein laga diya tha jahan par cricket dekhte the
...
Those were the real days I think…”
“The good part,” Deep says wistfully “is that of those 20+ people,
15 are still with the company
...

“We had two and half to three months salaries to pay
...
We came that close to shutting
down
...
We were seeing the metrics, we were going
up on every one of them
...

So they decided,“We are going to fight it out boss
...
You never know what lies around the next corner
...

Talking about business, when makemytrip set out, it said, “We
will be the defining travel portal for travel to India, from India and
within India
...
Everything!
Within two to three months, it was apparent that, in the India of
2001, no one was buying online
...
Everyone was coming to the site and saying “Wow, this
is cool
...

These were the days when there was TravelGenie funded by
ICICI Venture, Net2Travel from Star TV, as well as Travelanza,
TravelMart India (Citibank funded), and so on and so forth
...
qxd

7/19/08

2:50 PM

Page 137

TRIPPING ALONG

137

The advantage makemytrip had was pure MBA style, cold, hard
number analysis
...

“The first metric that I learnt to measure in this business was the
cost of customer acquisition
...
We monitor it by the hour
...
It's amazing what you can get
...
So makemytrip
simply stopped marketing in India
...
And that saved the company
...
Because that market was a very
developed one
...
Also they had
a natural reason to come to India year after year
...
”
You didn't have to sell the idea of India itself
...

The US focus continued right up to 2005
...
But it wasn't huge - about $15
million in gross billings, $2 million in commissions or ‘revenues’
...

The same model did not work in the UK or Australia for various
reasons
...
New
domestic airlines were launched
...
Every day there were ads in the
newspapers offering fares of 99 rupees, 7 rupees and even zero
rupees! So it was the perfect time for a portal like makemytrip to
come in
...
And people could make their own decision
...

The second big trend which gave Deep a lot of courage was a
meeting with the folks at Indian Railways
...
Senior guy
...
At that point of time, they were doing 5,000 tickets per
day
...
”

11_Tripping Alongeditjuly7
...
But two out
of three is not an option!”
And he said, “Guess what? They all pay by credit card
...

However the real clincher for Deep was the fact that 65% of all
tickets bought were for non-AC trains
...
He was paying online, and thanks to Indian
Railways, they had instilled this trust in the internet buyer ki aap
ki ticket aap ko kal mil jayegee
...
com
...
It never failed! So I said, ‘This is a great
model!’ Refunds are tough and all, but these two factors
convinced me that the markets are ready
...

But that is more a statistic to take note of, not bet the company's
future on
...
Some estimate correctly, others are way off the
mark
...
and that's what was happening here
...
The buyer said, ‘Yaar, cheap deal chahiye toh net pe
jaana hai
...
”
Now the company was faced with another decision point should it launch a real quick with a rough and dirty site or be
build the coolest site in the world and take 6-9 months to
launch?
“I am glad we chose the first
...
That
made us synonymous with the term ‘online travel’
...
Even though other portals have gone crazy
advertising
...
qxd

7/19/08

2:50 PM

Page 139

TRIPPING ALONG

139

The current challenge is to make the India business profitable
...
But the growth
story has been astounding
...
That translates into $20 million in commissions or
Rs 80-90 crores
...

Within 11 months of launch, makemytrip became the highest
issuer of air tickets for any single travel agency location,
including the traditional players
...
With
hotels, makemytrip is beginning to see a breakthrough
...
Then there is the sale of holiday
packages
...

Which is why makemytrip now has an 'army' of people selling
packages over the phone
...

The thinking was - even if people don't buy from these outlets in
large numbers, when they see an offline presence, they trust the
brand name more
...

“Ahmedabad, last month, one crore in sales
...
So these are the times you kick yourself and say,
‘My God! Why didn't you do it earlier?’ You know, in hindsight
everything is 20-20 kind of vision
...
You can
never say ‘Hum toh online hai, kabhi offline nahin jaayenge
...
”
You don't define your business too narrowly
...
You start with an innovation, but then you extend
tentacles into the regular side of the business as well
...
Cash had to be
burnt to build a national brand, so investors once again came
into the picture
...
In subsequent rounds, Deep took money from three
other funds - Helion Partners, Sierra Ventures and Tiger Global
...
qxd

7/19/08

2:50 PM

Page 140

STAY HUNGRY STAY FOOLISH

“When it comes to investors, and
even when it comes to your own
people, loyalty is important but
competence matters more
...
They also help
to manage competitive pressures
...
My litmus
test is, would I take this guy on my board if he wasn't giving me
money? As an independent member? And in every case it has
been a YES
...
”
You have to be hard-headed
...

“You are hurting the business if you keep giving bigger jobs to the
original team when you know there is someone else who can do
it better
...
”
We leave the bright and buzzing makemytrip office in Gurgaon's
Udyog Vihar and head into Delhi
...
He hopes to convince them to let him sell
railway tickets through makemytrip
...
But what about the
journey as an entrepreneur? It certainly does not sound easy
...
From
20 to 750 people
...
We've had quite a roller coaster ride
...
A second round of capital of one million
was promised to us - it never came
...
”
The understanding was that if the company met certain
metrics, it would get a follow on round at a pre-agreed

140

11_Tripping Alongeditjuly7
...
However, this was never put in writing
...

“The turning point was when the rubber hits the road and you
say ‘Are you really willing to stake everything?’ I mean if you
start up, you write a business plan, you get funded
...

Fundamentally things don't change
...
”
“Then you put in your life's savings, you don't draw a salary
...
Because then you are eating into your
princely 30 odd lakhs of net worth… You are saying, ‘This better
pay off because it really took a long time to build
...
”
“It comes down to confidence, it comes down to a leap of faith
...
Especially from
your wife
...
”
Luckily Deep got that support
...
” And that was how he left ABN with
no regrets
...
I don't understand business
the way you do, but if you think it's getting better month on
month, and at some point it's going to be a good thing, then let's
just go ahead and do it and make it happen
...
The one thing she never said was,
“Listen, let's just play safe!”
But it never crossed his mind to give up?
“At one time we came very close
...
So what kept him
going?
“Once you have tasted blood, working on your own, I just didn't
want to work for anyone
...
That is why if we get a good option to sell out, maybe I'll
take it
...
Ek do saal kaam kar ke I
would be thinking of the next baby…”
However, the future Deep would much rather carve out for
his company is an IPO
...

And then, what happens? The entrepreneur usually remains the

11_Tripping Alongeditjuly7
...
Because he is the best
person to run it
...

“One of my VC friends insists that I am going to join his tribe one
day
...
The guys who turn VC, it's
not just about the money, but the thrill of being able to learn a
lot of businesses and vicariously enjoying being involved in
them
...
And he is enjoying every single moment
of it
...
qxd

7/19/08

2:50 PM

Page 143

TRIPPING ALONG

ADVICE TO YOUNG
ENTREPRENEURS
1
...
If
you don’t have personal expertise in this field, get a team
of domain experts locked-in, preferably as partners or
co-founders
...
Plan your funding very carefully – ideally raise as little
cash as possible in the pre-revenue stage as you end up
diluting too much equity
...
However, for later rounds,
never risk starving your company of cash; this has killed
many good companies!
3
...
Don’t hesitate to hire people better than
yourself in that specific area
...
Make friends at work and promote an honest and
open working atmosphere
...
People tend to give their best when they are
enjoying their work
...
Don’t focus too much on exits (especially not too early
in the game)
...
qxd

7/19/08

2:53 PM

Page 144

STAY HUNGRY STAY FOOLISH

BLOOM

AND GROW
Rashesh Shah (PGP '89),
Edelweiss Capital
In a world dominated by the likes of J P Morgan and
Merrill Lynch, Rashesh Shah set up a large and
successful homegrown investment bank in a single
decade
...


144

12_Bloom & groweditjuly7
...
” That's the term Rashesh Shah associated with
‘business’
...

But the wheel has turned full circle
...
And grubby is
the last word that comes to mind as I wait for Rashesh in
the super-cool, super-quiet office of Edelweiss Capital
...
Not the name of
the founder, not a pretentious adjective
...

Very international, very unfinancial, very understated just like Rashesh
...
Rashesh is
soft spoken, and stammers slightly
...
No interruptions or distractions
...
He makes my job easy
...


145

12_Bloom & groweditjuly7
...

Everybody in the family had always been into business and
ironically that was the reason why he decided to break the mould
...
That too a business dealing in
exercise books and stationary items
...
But
he realised that a one year course was not an ‘MBA’
...
The first time he tried very hard, but got into
one of the other IIMs
...
So he
gave it a second shot and this time, got through
...
This was the time that liberalisation was
happening
...
Infosys was, of
course, a very small company at that time but it was exciting to
see so much entrepreneurial activity
...

Rashesh realised that this new set of entrepreneurs would
need capital
...
But if we look at the
US, the investment banks and the capital markets are very
important
...
Rashesh thought it was a good idea to start an
investment bank in India focused on high growth companies
and capital markets
...


146

12_Bloom & groweditjuly7
...
“The decision to quit was relatively
easy,” he says because wife Vidya was working with ITC
Classic
...
Vidya encouraged Rashesh to take the risk “Why
don't you try it,” she said
...
He estimated it
would take 5-6 months to go into business but it took much
longer
...
So did the people
...
” But when
he offered them, and two others, appointment letters, they all
found reasons to back out
...

People want to work for what looks like a real company
...
”
The idea became Edelweiss Capital in February 1996 with one
partner on board - Venkat Ramaswamy, a colleague at ICICI
...

Every entrepreneur hopes to latch onto a trend early on
...
Edelweiss spotted a trend which was great
...

“What one had not expected was that after liberalisation, India
would go through 8-10 years of a very hard time - from 1995 to
2002
...
In 2003,
the index was at 3,000
...
”
Unfortunately or fortunately, Edelweiss came into existence just
as this down cycle started
...
The
first couple of years were very hard - the economy had slowed
down, interest rates were very high
...

By this time, Rashesh had realised that unlike what they teach
you in Bschool, life rarely goes according to plan
...
5 crores in
the fourth and Rs 2 crores in the fifth year
...
qxd

7/19/08

2:53 PM

Page 148

STAY HUNGRY STAY FOOLISH

“Very few people speak about it
but there is a clear change in the
social status
...
”
actually ended up doing 28 lakhs in the first year, 35 lakhs in
the second and 21 lakhs in the third year - which was the worst
year in its history
...
Of course, the partners paid themselves very little
for the first five years - about Rs 3 lakhs a year + a bonus
...
a
...

So we were able to keep our heads above water
...
An
opportunity of some kind which takes you places
...
“In
mid-‘98, things started moving
...
”
Thus, it happened that in the fourth year, Edelweiss did close
to one and a half crore and in the fifth, Rs 11 crore
...
Of course,
these boom years were followed by a slump in 2001
...
In what was to be
a crucial strategic decision, the company acquired a small
brokerage
...

The interesting thing is that in 2001, almost everybody was
getting out of the broking business
...
The company took a
contrarian view and went ahead, spending a fair amount of
capital on the acquisition
...
You go by your
own gut feel and put your money where your mouth is
...
qxd

7/19/08

2:53 PM

Page 149

BLOOM AND GROW

Of course, the bet took a while to pay off
...
By ‘03 this number was up to 35
...
The internet boom was over, no capital was available
and the market was down
...

So how did Edelweiss manage this period?
“See, we were well capitalized for the size that we were at that
time
...
Secondly, being a very entrepreneurial organisation, we
always kept looking for opportunities and thinking out of the
box
...
We had given
options to a lot of employees
...
Before starting, Rashesh had gone to Narayana Murthy
for advice
...
It was a very attractive offer, this extra capital
...
But one valuable advice from Murthy was: ‘Give
capital to people who add value, or to strategic partners
...
We followed that and it has
been very useful for us
...
“By now the same
investment would be 70-80x,” Rashesh adds
...
And we're not talking about a handful of
employees but 550 of the 1,100 on the rolls
...

As a result, fixed compensation at Edelweiss has been more
reasonable though the variable compensation is aggressive
...
“It's an 'owner' mindset
rather than ‘employee’ mindset
...

“We were clear that these were business cycles and each
organisation is known by how well it encounters these cycles
...


149

12_Bloom & groweditjuly7
...
But
what about 'core competency'? Is that another irrelevant
Bschool concept?
“There is something known as an intensive and extensive
approach to a thing
...

And hence, it makes sense to drop many different anchors to
keep your company in place
...
This is what you call
growth through ‘adjacent markets’
...

When they started, Nike was into shoes
...

“You go on changing only one parameter, either the product or
the client parameter and you keep on growing in the adjacent
market,” says Rashesh
...

Well, before expanding, Rashesh believes one needs to look at
3-4 things
...
But
going to the adjacent market because of that is not a good
reason
...
Of this, Edelweiss was handling business worth
Rs 5-6 crore, which was 3-4% of the market
...
So clearly, growth had to come from
elsewhere
...
The
brokerage market then was Rs 500 crore - a bigger space than
i-banking
...

Secondly, it's very important to have enough management
bandwidth or ownership bandwidth
...
qxd

7/19/08

2:53 PM

Page 151

BLOOM AND GROW

is still entrenched
...
For example, Venkat continued to run
investment banking, but somebody else started running
brokerage
...
Which means an IT software company getting
into hardware, or vice versa
...

“One of the first things that I did was, I stepped back
...
” Broking is a very
different business from investment banking
...
You
have to let each develop, create its own unique culture
...

Another strong support came in the form of Vidya Shah coming
on board
...
In the year 2000, Vidya and
Rashesh had their second child
...

This was also the time when Edelweiss was looking to scale
up
...
This
turned out to be a blessing in disguise
...
So the CEO often has to get
personally involved in these aspects, eating into crucial
management time and bandwidth
...


“When you are the CEO and
shareholder, you want to avoid
raising money because your equity
goes down
...
”

151

12_Bloom & groweditjuly7
...
There is always a
short term plan, but there are
always long term aspirations
...
But by
2003, when she was originally planning to exit, Edelweiss had
started growing at breakneck speed
...
200 became 350, and then
swelled to 600
...

“Working with Vidya was easy and hard and normally I don't
recommend that to most people because there are stresses
when your spouse is the CFO and reporting to you
...

“Secondly, the internal perception - you don't want anybody
else to have extra authority because she happens to be your
spouse
...
”
For example, Rashesh and Vidya never ate lunch together
...
But there was one area which
they were never quite able to resolve - “We did end up carrying
work home
...
However, Rashesh is clear about what is
most valuable
...
”
Rashesh is a strong believer in the ‘18 month plan’ and long
term aspirations
...

There is always a short term plan, but there are always long
term aspirations
...


152

12_Bloom & groweditjuly7
...
And this is what takes away the emotional energy
because in the short term there are setbacks
...
”
So how do you keep your energy up? This is where aspirations
come in
...
The ‘bigness’ of the dream is what keeps
you going, and yet keeps you anchored
...
It means doing a lot more of the indirect work,
spending a third of your time in hiring and people related
issues
...
It is very tiring!”
And more so because entrepreneurs are addicted to
excitement
...
“When you start off,
you are worried about how to do things
...
Then after
some time, even that is taken care of and you only try to figure
out who will do it
...
”
You sacrifice glamour and build an institution
...
The IPO was over subscribed 119 times and raised over
Rs 700 crores for further expansion Edelweiss clocked
revenues of Rs 1,088
...
76 crores in
FY07 *
...
Dogged perseverance
...

“This 24x7, 365 days a year is something that I have not seen
with many CEOs
...
You have not prioritised, you have
not institutionalised
...
Many a times there are a couple of
months in a year that are very tiring because some business is

* Edelweiss saw Profit After Tax of INR 273
...
89 cr in FY07 (growth of 149%)

153

12_Bloom & groweditjuly7
...
There is restructuring, there are long
meetings
...
The
rest of the time it is fairly okay
...
In Bombay, 10-11 hours is normal!”
Rashesh goes to the gym thrice a week and also spends many
weekends at his farmhouse in Alibaug
...

Which means on the work-life balance front, there's hope yet
for us all!

154

12_Bloom & groweditjuly7
...
If it is possible, be a little overcapitalized
...
But they don't know finance at
all
...
I think being financially savvy is a required part
of the business
...
You start off as equals, but
then one does more, one does less, one is the public face,
the other is not, and then slowly the whole thing
disintegrates
...

So there should be a ‘first among equals’, who has a
slightly higher equity share
...

Also, there shouldn't be too many partners
...
But the other three
did not join and I think that was a good thing to happen
because five people would have been difficult to manage
if the environment became hostile
...

The only other thing that I would like to add is that have
the staying power, the emotional staying power
...
I have seen a lot of businesses close up
because after a lot of hardships, at that key point (like the
third year which was the worst year), we never thought,
“Oh, is it worth it?” We just kept going on
...
I think the loss of status is what really hurts
...
qxd

7/19/08

2:57 PM

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IT'S ALL ABOUT

THE HONEY
Nirmal Jain (PGP '89),
India Infoline
Nirmal shut down his information services business in
1999 and put all his eggs in the internet basket
...


156

13_Its all about the Honeyeditjuly7
...
But how
much risk are you willing to take? This is a question
Nirmal Jain had to answer in the year 2000
...

It was only a few months after the Gujarat earthquake,
when one evening Nirmal and his partner Venkat thought
out aloud, “Even if we lose everything, we should walk out
of this and start something else or take a job
...
At least we
saved our lives!”
As it turned out, India Infoline survived and prospered
...
There are several
India Infoline offices in the same location
...
You see, at one point we used to
operate out of one small office
...
” grins Harshad
Apte, Nirmal's close associate
...
I am in the right
place but it's not the right time for an in depth interview as
Nirmal needs to attend an AGM in less than 45 minutes!
But life is about making the best of any and every
situation so without further ado, we plunge right in
...
qxd

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2:57 PM

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IT'S ALL ABOUT

THE HONEY
Nirmal Jain (PGP '89),
India Infoline
Nirmal Jain is a matter-of-fact guy
...
And yet nobody's path
in life is exactly straight and completely planned
...

He worked there for five years, 1989 to 1994
...
That
gave me a good training of trading,” he recalls
...
Around 1991,
with liberalization, the Indian financial services sector started
attracting foreign capital
...

“Having a strong academic background as well as a mindset for
financial services I thought I'll get into this
...
So instead of joining
a foreign bank or FII he joined hands with two brokers, Motilal
Oswal and Ramdev Agrawal, and set up an equity research outfit
called Inquire in March 1994
...
That something was 'Probity Research and
Services Pvt Ltd'
...
And
is also an acronym for probe in equity which was our business analysis, investment analysis
...

This made sense because these 200 companies account for about
90% of volumes and portfolio holdings
...
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IT'S ALL ABOUT THE HONEY

banks and FIIs
...
At
around the same time, a company started by two IIM seniors,
INFAC, was already doing industry research but they had left out
a few sectors like oil and gas, FMCG, IT and pharma
...

Right from 1995 (when Probity was set up) till 1999, stock
markets were not doing too well
...

“But in a way it was good also because we learnt how to manage
the bad time and go through the down cycle which probably
helped us later
...
In fact, turning point is too mild
a word for the direction Probity would take
...
A wild gamble: all or nothing
...
Someone came up with the crazy idea that if
we put up all our research free on the web, instead of 250 clients
we will have half a million clients
...
We put up all our
research free on our website
...
A call was made to give it all up
...
So money had to be raised from
friends and an angel investor
...

Despite early technical glitches the India Infoline website became
popular
...
Soon enough, the company attracted the attention of
VCs
...

Around this time the team reached one important conclusion
...
It won't be able
to generate revenues despite the hype being created in those days
about Yahoo! etc
...
The company began working on an internet
based trading model
...

In the meanwhile, they decided to buy technology off the shelf
...
qxd

7/19/08

2:57 PM

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“If you are an artist like MF Husain or a
player like Tiger Woods your individual
skills only matter, and not how good a team
player you are or how good a team you can
build
...
Do you want to be Tiger Woods, the
golfer or captain of Team India?”

In March 2000, India Infoline raised another $5 million from Intel
capital and some other investors
...
The dotcom bubble had burst
and the company found itself in a crisis
...
VCs and PEs kept saying they would give us
money but it took 16 months to get a small amount of additional
capital
...
“We had to scale back and shift
from ‘growth’ to ‘survival’ mode from 2001 to 2003-04
...

Shifted from high cost offices to low cost
...
We
had planned to get into a TV channel, a business news channel
...
”
India Infoline started focusing only on investment linked business
where the retail customer would invest and it could facilitate or
advise
...
Everything else was shut down
...
Dotcom became a stigma - nobody wanted
to work at a dotcom
...
The strategy was to keep generating some revenue and
keep going
...
Very stressful and painful
times for sure
...
2 million) from its existing investors
...
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161

months after it was needed and it was a tiny amount for a
company which had already raised $5 million and had planned to
raise $50 million
...
We had
filed for an ADR issue and we were confident we'll be able to raise
$50-60 million
...
We thought,
in the worst case scenario we'll be able to raise $15-20 million
...
The truth is most of them are happy to invest when a trend is
‘hot’ and the going is good
...

The moment it comes to taking a real risk, they have no capital to
‘venture’
...

You have no idea when the situation will change, become normal
...
You don't know when the up cycle will start
...
No, you have to struggle
and you don't know when it will end
...

In 2003-04, the company made its first profit of around
Rs 7
...
Operating leverage is high in a business driven by
the internet
...
And revenues continued to gallop
...
As this book goes to print
in May 2008, that figure has jumped to over Rs 1,000 crores*
...
But it wasn't really
that simple
...
11 times surge in
consolidated net profit over FY07 to INR 159
...
Consolidated
total income in the year jumped 2
...
59 crores

13_Its all about the Honeyeditjuly7
...
Also a core team of people,
8-10 key people
...
You have to retain them,
they are the pillars of the business
...
”
Of course a few people did quit, but many others decided to hang
on
...
We were very
transparent
...
So they could see my conviction and my
commitment
...
Even
I could have quit, with my academic background and professional
track record, a good job was not at all difficult to come by…”
But the core group could clearly see that the internet was here to
stay
...

A TV or a fridge or grocery is a ‘touch and feel’ product
...
Especially now that everything is ‘demat’
...

“We could see the success of some business models in the US,
also like E*TRADE
...
”
India Infoline had the technology, the platform, some
understanding of the business
...
”
“So we thought we'll keep fighting until we have the last penny, or
you know, the last drop of blood and see how long we can last it
out
...

That's precisely what happened if you really look back
...
Courage and enthusiasm keeps them
going in the initial years
...

What did India Infoline do right? From 15 people in 1999, the
company now employs 15,000
...
I

162

13_Its all about the Honeyeditjuly7
...
” Hence the
leap into transactions, where individual skills become irrelevant
...

“I knew I had to scale up and in that gamble even if it completely
falls flat, it's ok, but you have to take that risk
...
”
Then there is competition
...

But Nirmal believes India Infoline survived because of its
“entrepreneurial way of doing things
...

The USP of India Infoline is quality research and advice
...
“It's like a retail customer's Bloomberg
-you get stock prices, charts, information, streaming quotes
...
”
There's also more personalised service since the organisation has
grown in an entrepreneurial manner
...
Now they know another
1,500 people and the tree grows like that
...
“If you
meet with our branch managers, relationship managers, they are
much more empowered and give far better service than their
counterparts employed by our competitors
...
The mouse is always more agile than the elephant
...

The other important aspect is managing growth at different levels
...
Another size

“You always run a risk, it's a game
of probabilities
...
however good you are,
you may get out for a duck
...
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STAY HUNGRY STAY FOOLISH

is 50-100 people, then 500-1,000 people
...

Otherwise it is impossible to scale up
...
“I also have a small family
business which my father runs and I used to think here (at HLL)
the owners or bosses are in London and yet we work till 10 o'clock,
and at times past midnight
...
And what to get right when he started his own
...
“You always have to take a risk
...
Luck must be on your side and the timing has to
be right as well!”
All four factors may not come together for every entrepreneur
...

If 10 equally talented people start ventures, it's not that all 10 have
equal chances or probabilities of success
...
While Ames is
no more, Wal-Mart tops the Forbes 500
...
You have to enjoy the journey, every step of the way
...
It's not that money and wealth alone make you
happy; if you have created something which is different, good and
creates employment, that is a source of satisfaction
...


164

13_Its all about the Honeyeditjuly7
...
When you have done something on your
own for 5-6 years you can obviously do it better than
anyone else who joins you
...
But you
have to get over that, train your team and let them make
things happen
...
It's a delicate
balance
...
So you should have a mindset,
should be prepared to fail
...

As late as 2003, we were prepared to lose everything
and give up and start once again on our own
...
Many times you have
grown with certain people and become very friendly with
them
...

But you can't get emotionally attached to people and
base business decisions on that
...
That always
helps
...
If there are 3-4 people at the same level and you
try to arrive at a consensus, that is the worst of all
...


165

14_Its NevertooLateeditjuly7
...
Instead he chose to set up a
company which today is one of India's largest BPOs
...
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7/19/08

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Page 167

IT'S NEVER TOO LATE

What's the right time in life to become an entrepreneur?
Should you start fresh out of college or wait till you have
a few years of experience? And what about starting out
after a long and successful corporate career?
I meet Vikram Talwar, CEO of EXL Service, in search of
some answers
...

And logically, should have gone on to become a
consultant, or a man of leisure
...
The path of building his own company
...
He's got this
distinguished, 'man about the world' air
...
And he is slightly distant, and formal
...

Getting inside EXL Services’ Noida headquarters is an
experience
...
As
you'd expect, there is the metal detector routine
...


"Ek utha lo"
...
By hand
...
I wait in the boardroom
for Vikram a good 45 minutes
...


167

14_Its NevertooLateeditjuly7
...
He joined IIM
Ahmedabad directly after that, with no work experience
...
But in those days MBAs were unheard
of anyway in our country
...

“In terms of my family background, my father worked in the
civil services, my mother worked with the government
...
So I come from a non-entrepreneurial
background
...
”
So how come Vikram didn't go that way? He didn't find it exciting
enough and wanted to do ‘something different’
...

In the decades to follow, a corporate career has become far more
sought after than working for the government!
After graduation, Vikram was offered a job by Bank of America,
which involved going to the US
...
He took it and stayed with the Bank
for 26 years, working in 9 different countries and enjoying it
thoroughly
...
”
In 1996 Vikram quit Bank of America, and ‘did nothing’ for six

168

14_Its NevertooLateeditjuly7
...
Something many of us secretly fantasise about
...
At 48, it didn't make sense to ‘retire’
...

Having said that, Vikram went right back to the corporate world
...

E & Y wanted to get into the outsourcing space, but eventually
shelved its plans
...

“I was 51
...
Not this type of entrepreneurship
...
To take on this, I thought, was pretty
challenging
...
It was also leading edge because there were no third
party BPO services in those days
...

“Y2K was on the horizon and so the technology companies were
coming to the forefront
...
None of the companies
were listed or anything
...
No financing was
available
...
”
Financially comfortable, nothing more to ‘prove’
...
It was the creative aspect of my nature - I love to cook,
for example
...
Corporate life isn't creative - it was
more mundane, routine
...

Today EXL is a Rs 720 crore* company and ‘BPO’ is a huge
industry
...
The opportunity was there, the size of it became
apparent only along the way
...
9 million, an increase of 47
...


14_Its NevertooLateeditjuly7
...
It was the creative
aspect of my nature - I love to cook, for
example
...
Corporate life isn't
creative - it was more mundane, routine
...
Raising funding was therefore crucial
...

EXL finally got money through a gentleman called Gary Wendt, the
former chairman of GE Capital
...
But
he was also one of the few who knew the industry and wanted to
be in it
...
Not realising exactly what the future held
...
With us, there was
absolutely nothing
...
”
EXL actually started with three partners
...
And that's just one side of the ups and downs EXL faced in its
early years
...
There was a slight conflict of interest as Gary Wendt
became the Chairman and CEO of Conseco and then decided it
would be best if he bought our company and created a GECIS
type of model (GE's captive internet offshoring centre in India)
...
But soon after, Conseco ran into serious
problems - in fact it went bankrupt
...

“We really restarted the company from scratch in 2002 with no
clients
...
And they ran into
trouble, so we had no work from them
...
But no business
and only a limited amount of money
...
”
New investors were brought in but they did not put up big money
...
And somehow,
it did
...
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IT'S NEVER TOO LATE

171

To cut a long story short, EXL managed to get new clients, and in
a matter of 5 years starting January 2003, it has grown to be a
‘fairly decent sized company’
...
The company
now has close to 10,000 employees and revenues of $180 million
...

“Having said that, it's not something that happens very often
...
Luck is as important in this as
hard work
...

It is genuine risk
...
”
Meaning, no family life
...
And in
the case of EXL it was a little worse because it was a round-theclock operation
...

“You need to be able to say I am singularly committed
...
”
Again, the question arises ‘why’
...
The challenge was that you cannot fail
...
”
It was also a responsibility
...

At the end of the day, I had given my personal word to a lot of
people who had come along with me
...
You can't just walk away… And of course, there
was the desire to leave behind a legacy
...
”
So how did this turnaround actually happen?
“It's a little bit of luck and little bit of extra effort
...
People had left good jobs to come work with
us
...
”

14_Its NevertooLateeditjuly7
...
And it cannot be
money in my mind
...
And we were able to say that we can be
operational for you very quickly
...
”
In life, timing is the single most important thing
...
The first year was spent in
raising money, the second in putting up a building
...

“You really get your hands dirty
...
All of a sudden you are out there
typing your own letters
...
Some babu makes you wait for six hours…
it's a totally different ball game
...
And it's a
single motivation that makes it work
...

“It has to be an inner drive to succeed in what your objective is
...
If you want to get into
entrepreneurship to make money, I don't think you will be as
successful
...
I will quit the day I don't have any more passion for
this job
...
”
And you need an ability to share or you can never build a
company of size and scale
...
And he never owned more than
12%
...

How about an Azim Premji then, who owns 80 per cent of Wipro?
“Yes, but it was a family business much before they got into IT
...
Would I call Mukesh Ambani an
entrepreneur? The answer is absolutely no
...
Sunil Mittal is an

172

14_Its NevertooLateeditjuly7
...
That's the difference
...
But Sunil Mittal started out on the entrepreneurial path
early in life, whereas Vikram chose to do so decades later
...
But if you want to plan how to be an entrepreneur, get
some solid experience - how companies work, how people are
managed, what finance is all about
...

At EXL, as with many start ups, the three founding partners had
worked together in the past
...

“It's tricky
...
It's like a marriage at the
end of the day
...
”
“First you got to have a common objective
...
Two is, you got to
have equivalence - not saying ‘I am the boss and you work for me’,
it doesn't work
...

“Rohit is left brained - I am the opposite
...
It's that
recognition and ability to say ‘I don't know this why don't you do it’,
that's the trick
...
”
Yet, one partner is often better known or is the public face of the
company - as Vikram is with EXL
...
The point is, the
chemistry between the two partners should be perfect”
However, life is never perfect
...
But you keep moving, keep flowing along
...


"…Working with a partner requires a
huge amount of sacrifice,
understanding and tolerance
...

I mean, worse than a marriage
...
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“The toughest thing in life a human being has to do is make a
decision
...
Decision making is tough because human
nature is such that I hate to be wrong and I hate to take the blame
...
”
Vikram admits EXL is now a ‘normal corporate entity’ as with any
company of its size
...
Because the
rules are set for you, you’ve got to follow
...
”
I want to know more, but it's as difficult to penetrate the mind of
Vikram Talwar as it was to get inside the EXL premises
...
You can retire, or reinvent yourself
...
qxd

7/19/08

2:59 PM

Page 175

IT'S NEVER TOO LATE

ADVICE TO YOUNG
ENTREPRENEURS
I would say, never start straight out of college
...
How and what happens there
...
You can't get that knowledge in text books
...
Or have a trusted partner who knows all
about this
...
So don't go for that
...
Join a company
which does not pay you that much but where you have
the opportunity to learn
...
qxd

7/19/08

3:01 PM

Page 176

STAY HUNGRY STAY FOOLISH

DRUG BARON
K Raghavendra Rao (PGP '79),
Orchid Pharma
Raghavendra Rao has built up a $300 million dollar
pharma company in 13 short years
...


176

15_Drug Baroneditjul9
...
He has that kind of charisma
...
While
most entrepreneurs start small and mature into large
entities, Orchid was big from day one
...
95 crores of capital and scaling
it down was not an option
...
And then, he
raised the rest of it
...
Like colleagues of
his brother, who was a doctor at Apollo Hospital
...
And if it
means tagging along with him on the way to the airport to
hear more of this fascinating story, so be it
...
qxd

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STAY HUNGRY STAY FOOLISH

DRUG BARON
K Raghavendra Rao (PGP '79),
Orchid Pharma
K Raghavendra Rao came from a working-class background
...
“We don't
have any liquid assets or ancestral property
...
And we don't have any lands or
roots in any particular place
...
That's where he did all his schooling and college
...
Rao put in two and a half years with Kwality
and was part of the team that helped turn around the brand in
Ahmedabad, where it had not been doing too well
...
So Rao
moved on to Ashok Leyland in Chennai, the makers of buses and
trucks
...

During that period he also did his Cost Accountancy and Company
Secretaryship because there was nothing much to do after office
hours
...
So in 1986, Rao joined
the Standard Organics group in Hyderabad
...
“That is where my exposure to the
pharmaceutical business started
...
Rao joined as a project
manager, quickly became vice president (finance and projects),
and then vice president (operations)
...
I got a lot of exposure
...
qxd

7/19/08

3:01 PM

Page 179

DRUG BARON

179

team which expanded the bulk active plant near Hyderabad
...

The two and a half years he spent there were enthralling
...
More
importantly, the seed of an idea was planted in Rao's brain
...
And if I can make other companies bigger, why not
start something on my own?”
By that time, Rao was married and had a daughter
...
That
was after working for almost nine years!
“As a salaried employee in India, being able to start something of
your own is very difficult
...

They fail because of lack of economies of scale and market reach
...
”
So Rao made a conscious decision to go abroad
...
With that
intention, Rao went to Oman
...
Rao joined a group called ‘Al Buraimi’ which
wanted a financially oriented professional to take its hotel business
forward
...

“When I landed in Oman, it was a kind of rude shock for me
because there was a small 16 room hotel (three star type) and a
few pieces of land but the owner had all kinds of ambitions
...
”
But Rao decided to take this as an opportunity and try to grow the
place
...
“I was the de facto chief
executive, the director and the top person
...
From less than two million
dollars annual revenue from a 16 room hotel, we made that group
into 80 million dollars in about four years time
...
It is the first and only bulk active
plant in the entire Arab world even today
...
In this

15_Drug Baroneditjul9
...
Because I went and told
them, I am committed to this, this is my
plan and this is what I have
...
Rao also put up a
steel plant called Middle East Metal Industries and a five star hotel
...
A small scale
business was now a conglomerate
...
” From a
$2,000 p
...
salary, he was soon earning $10,000
...
Having made enough capital, he decided
it was time to return to India to start his own company
...

“Of all my experiences I chose pharma for two reasons
...
I came to know of my own potential in Standard
Organics
...
As long as people are there, medicine will be required
...
“I took a two bedroom rented flat in Madras
and started Orchid Pharmaceuticals
...
We
started as a public limited company right from day one of the
organisation
...
I have put everything
I own into the company
...
95 crores
...
The balance Rs 11
...
8 crores as loan
...

"I always believed in directly going to the top people in the
institution
...
Lot
of people say you need to lobby, and use your contacts
...
I have always met with only

180

15_Drug Baroneditjul9
...
That's what I
have done
...
8 crores as loan
...
5 crores in
cash
...
IDBI agreed
to put in another Rs 50 lakhs as capital, one of the very few and
first instances of IDBI participating in equity capital of a first
generation enterprise
...
IDBI suggested the company
should float a public issue and agreed to lead manage and
underwrite the issue
...
5 crores
...
The only option was private equity
people or venture capital
...
It took a bit of perseverance but he managed to get ANZ
Grindlays - 3i, PLC to invest Rs 50 lakhs
...

Pitching your idea to investors is something every entrepreneur is
prepared to do
...

Rao's brother, a medical doctor working in Apollo hospital
introduced him to many of his colleagues
...

It takes a really strong belief in yourself and what you're doing to
raise capital like this
...
8 crores? If
capital was hard to come by, could he not have downsized the
project?
“It is not a question of cutting the cloth to suit your size
...
We didn't create or invent any new niche there, we needed
to set up a 100 tonne antibiotic plant
...
”
MBAs who take up entrepreneurship are generally attracted to
knowledge based industries, or services
...

Rao reflects, “With due respect to the service industry and trading
and things like that, I feel that here you create something
...
It is always a fascinating experience

181

15_Drug Baroneditjul9
...
”

for me, rather than taking from X and selling it to Y or just
converting knowledge into money
...
”
By this time Rao had of course set up several projects - for
Standard Organics and Al Buraimi
...
If
anything, now there is a bit of additional responsibility when you
take money from other stakeholders
...
”
That faith was well placed, everything went as per plan
...
On 1st July 1992, the company was
incorporated
...
Exactly one year later, 24th November
1993, the project was inaugurated by former President of India, Mr
R Venkatraman
...
Commercial
production began on 1st February 1994
...

As per the prospectus issued then, the company was supposed to
complete the project by 31st March,1994
...
In fact Orchid
had two months of commercial production from 1st February to
31st March and thus managed a turnover of Rs 5 crores and a
profit of Rs 43 lakhs in its very first financial year
...

In 1994-95, the company had projected Rs 27 crores of turnover
but actually did Rs 43 crores
...
The following year's figures were even more
spectacular - Rs 192 crores, as against the projection of Rs 37
crores
...
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183

“There wasn't an enterprise in manufacturing that did a turnover of
Rs 192 crores in three years flat, starting from scratch
...
And I got a gold commendation there
also
...
”
So what was the secret of this success?
Rao says it boils down to three things
...
Rao had taken some of his colleagues at
Standard Organics with him to Oman
...

“These five are professionally qualified, experienced people in
their own functions and they used to gel as a good team
...
So that way I have been fortunate to have a technician,
a commercial person, a strategist, an engineering person, and a
finance expert - a chartered accountant
...
Whatever common expenditure was required, that was
incurred
...

The second thing was, smartness in terms of identifying the
product group or some therapeutic area that Orchid should be in
...
There are
companies that have succeeded doing a bit of many different
things
...

“I have always felt that you should take a niche segment, go
deeper and broader into that, create a nucleus and reach a critical
mass so that you become one of the low cost producers
...
You then replicate that in other therapeutic areas
...
Even if others try to replicate it
later they will be less efficient because they will be trying to catch
up with you
...
The subtle
difference between the two is that one kills the bacteria, while the
other maims the reproductive ability of the bacteria
...

But penicillin kills indiscriminately, destroying even the good
bacteria which is required by the body
...
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Then came semi-synthetic penicillins with lesser side effects, but
the spectrum they cover is also narrow, i
...
, the drug is not as
effective against a variety of diseases
...
And its spectrum is also broad which means they can
selectively kill different types of bacteria rather than a narrow range
...

“That is something which has got a bright future because it is only the
third generation of antibiotics ever invented in 75 years,” adds Rao
...
At the time, there was no
company which specialised in cephalosporin in this manner
...

And the third reason Rao offers is that Orchid was one of the first
companies born out of liberalisation with a global view
...
People used to say, ‘Oh!
India contributes only one per cent of the total requirement of the
world in pharma
...
’ Even though we are basing
ourselves in India we can conquer world markets
...

However, this was not an issue for Orchid
...
It is
made in a large quantity and cannot be eaten by or injected into
people
...
e
...
So formulation is the front end, and bulk active
or basic active is the back end
...

“It is like selling picture tubes
...
They are competing at the brand level, but the input
can be from any vendor
...
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185

bulk drug to create a formulation and sell it under their own brand
name
...
In the second year, this was expanded to 12
countries
...

Now the company has clients in 75 countries
...

Few companies grow so big, so fast
...
The initial challenge was attracting talent apart from the
core group
...
It has to be people who have experience
in this field and convincing them to join a new company was no
child's play
...

“I used to market to them my ‘five year plan’
...
But if you join me, you can contribute
in this way
...
He told them “this is your chance to
make a difference
...
If you
don't believe, see me after 2-3 years, judge what has happened
...
”
And once again, some bought his argument and joined Orchid
...
And of course, they
have an ownership stake
...
Right from the boy who brings tea to the Deputy
Managing Director
...
“So those employees who were
there at that time, 135 of them, all have shares
...
It is
the gesture that you do and your intent that speaks
...
In fact I always carried the five year
plan book with me and I would say, with or
without you, I plan to do these things
...
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“There is no point in merely saying we
are all a family
...
”

than IT companies, Orchid was the first company in India to give
ESOPS, in 1999
...
“One
reason is the rapid growth of the company and the variety of
opportunities that we give to people
...
”
Early on, Orchid invested in R & D and gave its scientists a free
hand to convert their ideas into reality
...
”
The second challenge was growing beyond the initial model, i
...
,
moving from bulk active to the active dosage form
...
To do all this, Orchid needed about
$100 million dollars
...
So I said, ‘Okay, I will make another five year plan from 2000
to 2005
...
You want to believe in it, participate in this,
and together we will execute the plan
...
’”
What Rao promised was that in four years time, Orchid would do
all four things - build up FDA approved manufacturing plants, build
dosage forms and go to regulated markets, develop R & D, and
patent its own processes
...
Schroders put in $40 million and
IFC provided $20 million and the balance $40 million was
borrowed from the banking system
...
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187

This time it was far easier raising money
...
“We were rejected then by four different
agencies yet did not take ‘no’ for an answer
...

Orchid's plans went exactly as projected
...
Profits have again doubled for the
year ending March 31 2008*
...
”
Half the company's revenue is coming from the dosage form, one
third of the revenue is coming from the US market, and the
activities and product range of the company have been
successfully diversified
...
“International
marketing of formulations is a different ball game, intellectual
property or looking at the patents situation is a totally different
story
...
They are like chalk and
cheese
...
“Only
corporate planning, philosophy, motivation and finance
departments, you could say, remained the same
...
“Because an R & D scientist will
be in his own world whereas a formulation or a sales guy for the
local market, wearing a tie and going to meet a doctor, will have an
entirely different mindset
...
”
One of the unifying factors is Rao himself
...
Rao ensures his
presence and participation in annual days and sports events
...

* Orchid achieved Rs 1,301 crores of revenues and a net profit of Rs 175
crores for the 12 month period ended March 2008
...
5
crores
...
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“The bus service to this area dropped
the workers 5 kms away
...

There was no food facility in the area,
so Orchid opened a canteen
...

“There is no point in merely saying we are all a family
...
”
For example, the very first factory Orchid put up was the 24th one
to come up in that location
...
When Rao noticed it, he decided
to buy a bus
...
And of course, workers got shares
...
“I said let us help someone become a
post graduate by attending evening classes or whatever
...
So be it
...
” Higher education of children of
employees, paternity leave, birthday gifts are all par for the course
and it is equal for all employees
...

So what lies ahead? Rao has a ‘specific plan’ to take the company
to one billion by 2011
...
“Development based on knowledge and innovation are
going to be the keys to take us from 300 million to one billion
...
The secret is that niche products always
command higher margins
...
Once we do that, others will notice and try to catch up
...
I have ‘new hills’ to climb
in the form of another 10 products that are lined up for launch in
the next four years
...


188

15_Drug Baroneditjul9
...
But does life really work out that
way? In the pharma industry, perhaps
...
In pharma, it is a patented regime - what is
happening is all documented and is in public domain
...

Of course, the same information is available to all other pharma
companies as well
...
And there is also a risk you take in terms of investing a
lot of money to make it all happen
...
”
Pharmaceutical exports need to abide by FDA regulations
...
A patient may have
an allergic reaction and even die due to a microgram of the other
drug being present
...
So
how many companies will be discerning enough to make those
kind of niche investments silos, wait for the product patent expiry
to take place, then launch a product? We have done that and we
will keep doing it
...

“We are quite leveraged, we have borrowed, we have invested, we
are waiting
...
”
And more are waiting to be climbed, ahead!
Epilogue
On Monday, March 17 2008, the stock price of Orchid Chemicals
& Pharmaceuticals Ltd fell by 39
...
05
...


The trigger was the sale of a stake held by a major institution (Bear
Stearns) liquidating its position in many companies
...
As a result, the promoters'
holding fell by 7
...

In the process, K Raghavendra Rao is estimated to have lost close

15_Drug Baroneditjul9
...
What's more, Solrex, a Ranbaxy owned
company, used this as an opportunity to snap up close to 15% of
the company by buying shares from the open market
...

Speaking on the development, Mr Malvinder Mohan Singh, CEO &
MD, Ranbaxy *, said, “Orchid is a niche player in the global
pharmaceutical industry with an impressive track record,
particularly in sterile products
...
The agreement will be
mutually beneficial and synergistic, allowing both organisations to
leverage each other's inherent strengths
...
Ranbaxy's global scale and market reach and Orchid's
state-of-the-art development and manufacturing capabilities would
expand the business of both companies
...
”
As they say, always expect the unexpected and then make the
best of whatever hand life deals
...

* Ranbaxy was acquired by Japanese pharmaceutical giant Daichi for
$ 4
...
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ADVICE TO YOUNG
ENTREPRENEURS
Choose a goal and focus on it
...
Longevity of the field is
important
...
If there's a tie,
go with intuition
...
Doing what
many others do won't take you anywhere
...

Believe in dignity of labour
...
There is no dearth of capital to back
right ideas and entrepreneurs
...
The country will remember you for that
...
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THE BANKER WHO

BLINKED
Jerry Rao (PGP '73),
Mphasis
A career Citibanker, Jaitirth (Jerry) Rao was bitten by the
entrepreneurial bug in his late 40s
...


192

16_The Banker who Blinkededitjuly9
...

Then he built a company
...

Jaitirth Rao, or Jerry as he is better known, does not mix
emotions with entrepreneurship
...
You have to do
what's best for the business and if that means selling out,
so be it
...

We meet at his Alexandra Road residence on a weekday
afternoon
...
The house is modern, comfortable
but rather spartan for someone who's done really well ifor
himself
...

Jerry is lingering over his lunch
...
Books
occupy the entire room, from floor to ceiling
...
He is now
writing a book and there are other “plans” but he will
share them when the time is right
...


193

16_The Banker who Blinkededitjuly9
...
But
one had heard vaguely about IIMs
...
And so
one applied
...
In
fact, Jaitirth Rao landed up at IIM Ahmedabad because of a
technical problem
...
“When I am 21 I will definitely write the entrance,” he
assured his dad and packed his bags for IIM
...
He went to Beirut for
training and even sent for the forms for the IAS but eventually
decided to stay on in a corporate career
...
It was a heady place in those days, it had great
ambitions
...
From a purely ‘American’
bank it was becoming more multi-cultural
...

“I came back from Beirut, worked for 2-3 years in India, then went
to the Middle East
...
”
In 1979 Jerry enrolled in the University of Chicago to do a PhD
Two years later he realised he wasn't cut out for that kind of life
and abandoned the PhD halfway
...
In 1984, good friend Rana Talwar persuaded Jerry to come
back to India and set up Citibank's retail and consumer business
...
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THE BANKER WHO BLINKED

195

entrepreneurial
...
We were writing on a blank canvas
so it was quite an interesting time
...
We introduced ATMs, for example
...
”
Nine years later Jerry moved to Europe, and then he was asked to
to head the technology development division of Citibank, kind of
like an R & D unit
...
It was felt that
someone with a business background would be better to run that
division
...
Jerry redirected a lot of R & D expenditure into the
internet
...
That's when it struck Jerry, “Why
shouldn't I be on the other side of the table?”
“Financially I was relatively secure so it wasn't a high risk kind of
thing for me
...
Also my career in Citibank was plateauing
...
And I was not excited about
pushing my way through corporate politics in New York
...
Along with a colleague, Jeroen Tas,
Jaithirth quit Citibank and started Mphasis
...

“I went to my boss and said, ‘Look, I don't want people to say that
you fired me so I want you to be the chairman on my advisory
board
...
”
He agreed, and Citibank gave Mphasis its first small business
...
People often ask
whether MBAs have any advantage in doing business? Jerry's
experience clearly shows the how the IIMA network can help
...
Byzan Systems was run by IIMA alumnus Mohan
Krishnan
...
Then, when we were looking for money, Citibank
Venture Capital was very interested in investing with us and I was
negotiating with Latika Monga, an IIMA alumnus also
...
But
the next investor who came to invest was from Barings Private

16_The Banker who Blinkededitjuly9
...
If you think about it, it could
have been much bigger if we had
started in '95
...
You
start when you get your break
...
When it came to recruitment, again there were IIMA
connections
...
”
The Citibank and University of Chicago networks also helped
...
“Braddock used to be
the President of Citicorp and he liked me very much,” muses Jerry
...
Mphasis was growing 100% quarter
to quarter
...
And Mphasis positioned itself as a
company which did internet based technology solutions for legacy
companies - an area where Jerry had been on the other side and
knew exactly what a client would want
...

“I had started internet banking, internet brokerage and I was
chairman of the internet steering committee in Citigroup
...
I had
gone to Washington DC and testified before the US Congress
about internet financial services
...
Barings had a 25% stake in
Mphasis and a 52% stake in BFL
...

Actually, it was a reverse merger
...

Mphasis changed its name to Mphasis-BFL Ltd and got listed
...
” Mphasis and BFL combined, the fiscal year
ended March 2000, had done $34 million top line and had broken
even on the bottom line
...
Almost a 100% growth and a 10% bottomline ($6
million)
...


196

16_The Banker who Blinkededitjuly9
...
Starting January 2001, as dotcoms
crashed, the business also ran into trouble
...
In
2001, when the IT business slowed down, that took off
...
33% of
its revenues come from BPO operations
...

“In 2001, among the Indian public companies in the IT space, we
would have been number 25 or 26
...
But
also, it was becoming clear that this call centre business is capital
intensive
...
“They were very bold
investors
...
But you know, nevertheless they did quite well
with their investment
...
”
Actually the company never used their money - the 10 million
dollars was simply put away
...
”
However by 2004-05 it became clear that something peculiar
was happening
...

Usually smaller companies grow faster than the bigger
companies
...
Also IBM, Accenture, all the global players
were becoming big in India
...

“We could have continued as an independent business - it was
nicely profitable
...
’ So
we initiated discussions with EDS and finally we became an EDS
subsidiary
...
Especially
these days they get plenty of private
equity money so they get fantastic
offices, this and that and that's a big
mistake
...
But you must be aware of
your inflection points
...
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“You must not lose focus on cash… If
you don't have cash, you are up
against a wall
...
”

This made sense because now Mphasis had a great marketing
engine
...
Post merger the
company once again started growing faster* than the industry
average, proving Jerry's point
...

“I think one reason why we were able to sell out is, we were not
that emotionally attached
...
for them it can
be gut wrenching
...
At the right time, the CEOs resign, retire,
sell out
...
Not in rational market related
terms but in very irrational emotional terms
...

That is what made the EDS transaction possible
...
Actually the entire story
has been related with a kind of detachment
...
Yes,
it happened to me but I can see it completely objectively
...
”
I don't see any personal anecdotes coming
...

“What do I take away from all this? I think timing is very critical
...
Whereas in the
1990s, and today of course, there is capital available for people
with ideas, people with intelligence and risk taking ability
...
Because networks
give you credibility, they give you access
...
”
“The third thing that I could say I take away from all this is you
need some luck
...
Originally
our board was against it
...
Why do you
want to do this low cost call centre work?’”

198

16_The Banker who Blinkededitjuly9
...
But it was a lucky and a good decision
...
You, the founder,
have to spend a lot of time with customers
...
You have the passion, you have the
conviction, nobody else can replicate that
...
Big companies can afford to cover their
tracks, but in small companies, you have to say, ‘We did a bad job,
sorry, here is a refund’
...
”
“Reputation is very important for attracting talent
...
Why should anybody join you! One reason why
many people joined me was that I had a very good track record at
Citibank as a manager
...
I was fair to them
...
But purely from experience Jerry believes that the
more transparent you are, the more people are willing to invest in
you
...
The
company kept very strong, very high standards
...
There were two senior co-founders
...
It's tough when you have to sit down in the same room with
a co-founder and say goodbye to him
...
”
Another lesson was that a company which is growing had to keep
improving systems and processes
...
We suffered everyday because
our systems were all cottage industry systems
...
”

16_The Banker who Blinkededitjuly9
...
They could have been
such bright fellows but they were stifled
...
”

Take a recruitment system, for example
...
Customer systems
were weak
...

And of course one has to plan to set up these systems some time
before they are actually required
...
Not too much
in advance because no small company can afford to over invest
...
“We had even taken a small loan
which we didn't use
...
We were always sure
that we would have cash
...
Because cash is what
can get you into trouble
...
The founders
used their frequent flier miles for traveling
...
The idea was - don't create
overheads you can't sustain
...
For instance, Mphasis had a small PR agency
in New York who managed to get Jerry a front page article with his
photograph in the ‘American Banker’
...
We were able to go to so many banks with that article
...
‘Ex-banker has started an IT
company’
...
I think investment in PR is very
very important
...
”
Recruiting senior people is a major problem
...
“Integrating a senior person who
doesn't know your culture and who is not part of your original
founder group, is very very difficult
...
”

200

16_The Banker who Blinkededitjuly9
...
The person will bring in his/ her own
people, bring his/ her own systems
...
Because when you are in
a growth phase, it is better to take that gamble than try and recruit
senior people
...

Do not try and get the senior sales person who is going to solve all
your problems
...
It didn't work for us
...
If you are
coming into a business where there are already existing players
and you are 10% cheaper, don't even bother
...

Mphasis also recruited some unusual talent
...
And of
course, like all new economy companies Mphasis-BFL shared a
large chunk of equity with employees -15-20%
...
“We are doing to the service
industry what Henry Ford and Frederick Taylor did to
manufacturing and we are doing it globally
...
And each of them probably created
four or five indirect jobs
...

Passion
...
The two are different words
...
Even when they do
something wrong, you are willing to overlook it
...
I did believe and I still believe in the liberating and
productivity-giving power of internet technologies
...

You call a secretary, she says, ‘Who are
you, which company, why should my
boss see you?!’ As a big corporate guy
you got so much red carpet treatment
...
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still believe in the Indian talent story
...
Some
people are
...

Moha is this kind of false attachment you feel that this is my
company, I have built it, I don't want to leave it
...
I think you have to know when it is the right
time to detach yourself and change your role
...
From leader to mentor
...
”
Even if it means ‘Mphasis’ slowly dies
...

“Well if you think about it, many great names disappear
...
Irving
Trust was a big bank
...
All those names
have gone
...
”
Currently Jerry is on the Asia Pacific Advisory Board of EDS VP a non executive role*
...

So what does it feel like to semi-retire after working 20 years and
a 7-8 year stint as entrepreneur? Is it that stage of life now where
you feel “Ah, I can now spend the next 20-30 years doing ‘whatever
I want'?”
“But why do you think I haven't been spending the last 20-30 years
doing what I want? That too was what I wanted
...
And in the last few months when I
didn't enjoy, I made my plans to quit
...
People who are
endlessly planning for their retirement are stupid
...
There is no point in planning for retirement and saying
‘When I retire, I will do something’
...
But there are many idiots out
there
...
Profits stood at Rs 255 crores
...
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ADVICE TO YOUNG
ENTREPRENEURS
Today, virtually nobody I know will work for 20 years for
any one company
...
However, I think there are
some companies, and Citi is a good example of them,
where a 4-5 year stint can be extremely helpful because
you pick up discipline, networking skills, navigational
skills, cost disciplines, audit disciplines
...

I think people who, immediately after graduation, start
their own companies tend to be naive about cash, bank
loans, negotiations, about networks
...

And in your sales pitch, the first point should be about
your weaknesses, not your strengths
...
Okay, people think - there is some
honesty, these people are speaking the truth
...
Sometimes
people are unwilling to give written references, persuade
them to give telephonic references
...
Nobody
trusts what you say in your PowerPoint
...
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ITCH BIN EIN
ENTREPRENEUR

Shivraman Dugal (PGP '76),
Institute for Clinical Research in India (ICRI)
Shivraman is someone who is always looking for the
Next Big Thing
...


204

17_Itch bin ein entrepreneureditjuly9
...
From high end
fashion to fans to computer hardware he'd seen it and
sold it all
...

In the 15 years since, Shivraman has set up a software
company, a slew of colleges and now a clinical research
institute
...

Because size and scale is not his trip
...
He would rather scale
the next uncharted peak than set up camp at any one
place and enjoy the view
...
And I can't help thinking, “It's all
about the journey, not the destination
...


205

17_Itch bin ein entrepreneureditjuly9
...
After a degree in economics
from Delhi University, he chose to do an MBA
...

“It all kind of happened by accident
...
I wanted to do
something non-military and this sounded like a good option
...
He worked for them for 7 years - 4 years
in London, 3 years in New York and a year out of Beirut, before
Beirut became a bad place to be in
...
Shivraman's job was merchandising and
marketing of topnotch brands like Louis Vuitton and Armani
...

Shivraman actually joined Mettur Beardsell from IIMA, a Chennai
based outfit which was the holding company for a large number of
multinationals which functioned in India
...
And India was a
very liberalised economy
...
”
Then Indira Gandhi passed FERA in the fag end of 1976, along
with textile control orders
...
After FERA, Mettur Beardsell
decided that it didn't wish to expand anymore
...

So what happened to employees like Shivraman? Were they
absorbed by the head office? Well, not officially
...
So they
forgot about me
...
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207

why don't you look after YSL?’ So that is how it started
...
He also did cold storage in the Middle
East (a different division within the same company)
...
But never went back
...
I thought I could have a very good lifestyle in India
...
And my father
was very unwell
...
He died a
year later
...
”
Again, no great ‘life plan’ - it was just about listening to one's heart
...
Shivraman joined a company called Intercraft
and set up what is possibly India's first modern retail chain:
Intershoppe
...
Large format outlets
with neon signs, different way of stacking goods, things like jeans
with studs
...
When I brought it in
India, that was the first time anyone had done anything like that in
this country
...
He launched 23 shops in one year and it was
a truly entrepreneurial exercise
...

“We were extremely successful in one year's time
...
He was an ex-ICS officer
...
I had to find myself a
‘respectable’ job”
...
But
Intercraft wasn't a large, well known company
...
It wasn't
considered very respectable working for a small time organisation
wherein you have a small time stake
...
So Shivraman joined
Usha International, owned by Lala Sriram, and got pa-in-law's
blessings
...

It was completely different from anything he’d done before
...
I did it in Uttar
Pradesh, then Assam, then Orissa, then Gujarat
...
And they used pay to me phenomenally
...
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“Professionals are better than entrepreneurs
for running the running business
...
When you love something, you are
blind to everything which is wrong in it”
Didn't have any complaints about that
...
If I look back, I don't remember a single great
achievement
...

There was money, there was responsibility and enough spare time
for a decent family life
...
Arjun Malhotra used to
own HCL
...
“We met purely by accident
...

So I went up and he offered me a job in HCL”
...
A recurring theme in his life: to boldly go where
few have gone before
...

The other important thing for Shivraman was making a mark,
wherever he went
...

Even in that boring stint with Usha International, he recalls one
major legacy: the coloured fan
...
Nobody had thought of a fan
other than white back then
...
” (grins)
And in his very first job, Shivraman had impacted the town of
Balakole in Andhra Pradesh
...
“Have you seen lace bedcovers? It's a whole industry and I
kickstarted it when I was working for Tutal
...
”
The doilies used to be very expensive
...
So he trained
people, brought in raw material, got someone to set up the thread
unit
...

Whenever there was an opportunity, Shivraman could simply not
sit still
...
So it was with HCL something new and exciting
...


208

17_Itch bin ein entrepreneureditjuly9
...
e
...
It was
more or less unheard of in India
...
”
It was that revolutionary a product back then!
“When I saw the first fax machine in Japan I didn't think it was real
...
I brought that fax
machine, and gave a demonstration in MTNL, in Delhi
...
” When they saw the paper
coming out of the machine they couldn't believe it
...

“You can imagine the kind of profits that we made,” he says with a
straight face
...
This was 1987
...
Everyone was selling
hardware, and HCL was the single biggest company in that
domain
...
Which was why Shivraman had been
brought in
...
I brought
in a whole set of new products from Japan
...
I did
not sack even one person
...
” HCL competed very strongly with Modi Xerox and
had almost an equal market share in those days
...
Another leap taken
by what he calls 'pure accident'
...

“My wife had an exhibition, it was on the ground floor of my house
...
My kids were very small, so that day
my job was to look after them while she went about her work”
...
But doesn't
matter, why should I discourage anybody
...

“I still remember
...
That's when it hit me
...

Carrying samples at that time was very dangerous
...
But ever

17_Itch bin ein entrepreneureditjuly9
...
to understand how an
employee thinks
...
Or your
organisation will never go anywhere
...

“I had more or less my full life's earnings in a little bag
...

I went to Japan and then Hong Kong but I couldn't sell anything
...
It was one of my most unsuccessful sales trips”
...
He didn't know what he was going to do
with the jewellery, “I thought I would have to chuck it in the sea
because you are not allowed to carry it back
...
A lady came and started helping him to put it
back in the case
...
”
Then the lady asked, “Are you going to sell this?” And that's how
Shivraman found a buyer for the entire lot, at a little over the cost
price
...
"She is still
my wife's agent in Hong Kong
...
"
Shivraman did start a company of his own but far removed from
jewellery
...
It was 1992 when he
resigned from HCL
...
But dekha jaeyega, and he went
ahead and set up Orange Technologies, which specialised in ERP
solutions
...
All four had an equal stake in the
company
...
Naval Bansal joined but 9-10 months later, got a
green card and disappeared
...

“My total PF was Rs 1,20,000 for all the years I had worked
...
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211

of that, I had put Rs 30,000 into the company
...
8 crores in 2 years time
...
He simply hired programmers
...
From one person, we
jumped to 45-50 people in about two years
...
The company was
doing very well in its niche but it was extremely exhausting
because of cashflow issues
...
We bought every computer
cash down
...
There was no such
concept of venture capital
...

The company ran on a system of advances from clients
...

“Our profit margins were crazy
...
First year we made good money,
second year we made good money
...
”
This was 1995, and the software business had still not taken off
...
“Infosys must
have been Rs 7-8 crores, we were at Rs 4
...
Infosys had a
public issue by then and it was making some money, but nothing
great
...
”
Orange too was making good money - the partners had no cause
to complain
...
And he did not know how to raise it
...

“I decided we should get into education
...
People always pay fees in advance, so no cash
flow problem!
Shivraman also realised that British education did not exist in
India
...
Secondly,
barring the IIMs, there was no decent management education
...

The idea was to set up a proper college, not a coaching institute
...
“We brought foreign education into India for the first time
...


17_Itch bin ein entrepreneureditjuly9
...
They were looking for a partner
and things fell into place, despite the fact that he had no previous
experience, investment capacity or real estate
...
Firstly we
always rented buildings
...
I
brought advertising to education”
...
They said, “Are you sure? We don't think
education is done like this”
...

But there was more to come
...

The Government of India raised questions
...

“For a change, someone was doing a decent job
...
” Shivraman laughs
...
Teaching staff received
training from their UK counterparts
...
These included
an MBA program with Herriot-Watt University, a BBA with London
School of Economics (external program) and Huddersfield
University
...

But is education profitable? It is supposed to be
‘non-profit' according to the law
...
In contrast, Wigan and
Leigh was set up as a limited company
...

In fact it did not apply for approval knowing its course and
curriculum was radical - ahead of its time
...
Courses like fashion, design, media
...
That time no one was doing it
...
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213

different, it has to add value to become truly attractive
...
And that was the reason middle class
parents decided it was ok to spend good money on the course,
even though it was not government approved
...
But
that debate we'll save for another day
...
It
had its moments of turbulence
...
There was a lot of bad press, which included Shivraman
himself being called a thief on the front page in prominent
newspapers
...

Despite the respectable size of the business, Shivraman says it
was not hugely profitable
...
The profit margin
was about 20 percent (net)
...
Soon there were hundreds of 'AICTE approved' MBA
institutes offering courses as well
...
"Earlier, we were growing at nearly 50-100 per
cent year on year
...

And so was born ICRI (Institute of Clinical Research in India)
...
He was thoroughly bored
...
That's my weakness
...
My goal
is to set up a team, set up systems, and let the team and systems
work
...
My second task is to look at
new opportunities"
...

But generally an entrepreneur sets up teams and systems, yet
stays on
...
As an entrepreneur, had I stayed on in
Wigan and Leigh after 1999, I would have done it a massive disservice
...
In 2003, he
stopped doing any work for Wigan & Leigh, except remaining on the
Board
...

Only thinking of what next to do
...


17_Itch bin ein entrepreneureditjuly9
...
All the pluses - it uses intelligence, is high on labour, low
on cost and it's virgin territory
...
Then, came the institute to train students who
could work there
...
We got the business and we realised, we
could not execute it
...
” If you can't find talent, you have to create it yourself
...

“Money is always a problem
...

But wasn't education a cash cow?
“Yes, it gave me a lot of money
...

Between 2004 and 2007, I set up four huge campuses
...

But why create campuses now and not go with the tried and tested
rental model? Because this time around it was important for
Shivraman to create excellence
...
"
Which is a common theme with most entrepreneurs
...

It’s too early to say if ICRI is that legacy but the institute is certainly
doing well for itself
...
The school which was set up to service the
requirements of a company is now more profitable than the
company itself!
Only 70-80 students are absorbed by Shivraman's own clinical
research outfit
...
As always,
Shivraman believes he has evangelised the idea of clinical
research
...
The government of India
should give me an award for it”
...
The
future prospects are bright - Shivraman expects ICRI, which is
growing 100% year on year, to reach Rs 100 crores by next year
...

Still, it's doubtful that will prevent him from moving on in search of
the Next New Thing
...


214

17_Itch bin ein entrepreneureditjuly9
...
They teach you
marketing, finance and systems but they don't teach you
the importance of HR
...
There is a method to raising money
...
You have to systematically study
who are the people out there with the cash
...

You have to be diplomatic
...
You are
putting together the team, you are co-ordinating
...

Any good entrepreneur would have good people working
for him or her or would be stuck at a low size
...
You open a shop and
say, I must know where every penny is going
...
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STAY HUNGRY STAY FOOLISH

FOR LOVE,

NOT MONEY
Shankar Maruwada (PGP '96),
Marketics
He entered entrepreneurship by accident and his first
venture folded up
...


216

18_For Love not Moneyeditjuly10
...
”
Company is born
...

New company is born out of the ashes
...

Five years later, it is bought out for $65 million
...
Few have heard
of Marketics or the work it does in the esoteric field
of analytics but Shankar Maruwada and his
partners have never aspired for fame
...
All that he talks
about, over and over and over again, is the thrill of
doing ‘great work’
...
Not in
anticipation of what it will fetch you - whether in
terms of appreciation or money
...

Things happen, without your making them happen
...

Not the takeaway I was expecting but that's the fun
part about meeting entrepreneurs
...
You
always leave the room thinking, “If this guy could do
it, why not me and you?”

217

18_For Love not Moneyeditjuly10
...
Life was
more about being a follower than a leader
...
” He did
...
IIT
was just for the brand name
...
The kind every middle class parent
charts for his kids
...
The first time, he refused to open it
...
But he didn't join
because he had already set his heart on the MBA
...
“I would have been one of the early employees
...
“Later I used to curse myself
...
There are no ‘poor choices’, sometimes
life just has other plans
...
After
summers with P&G he joined the company in the marketing
function and worked there for four years (1996-2000)
...
Got married in 1999, a
typical yuppie life so far
...
Got promoted, similar kind of job
...
”

218

18_For Love not Moneyeditjuly10
...
A batchmate
who was working with a VC came up with a business plan
...
And
Shankar quit his job, without thinking too much
...

“Yes
...

In hindsight, for a newly married guy from a strictly middle class
background, it was madness
...

But it was a time when dreams were more than enough to fill one's
stomach
...

Modeled along epinions
...
com was a community
based site with utility value
...
We had a good business plan
...
”
There were three partners - Malini, Shankar and Shailendra
Malani, the prime mover behind the venture
...
Indiaworld had just been bought out
by Satyam for Rs 500 crores
...

“At that time, I spoke to people and they said, be clear as to why
you are doing this
...
If you are
doing this, because you all just want to do something, then be
prepared for lots of ups and downs
...
Raising it was not a problem
...
com raised Rs 1 crore for marketing - building eyeballs,
traffic and of course, the website
...
It was April
2000 and the team realised that the dotcom game was up
...

And that was the first learning, “Things don't always go as per
plan
...

Malani had a technical background, he is a Computer Science
grad from BITS Pilani
...
The idea was
to set up mini sites or some kind of technology component for
companies
...

Reusing components brought down the cost significantly
...
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“Culture is a set of daily behaviours
exhibited by an organisation
...
Because an
organisation, especially in the beginning, is
nothing but the reflection of the founders
...

The product took six months to build and it was a good product but
only one company actually bought it - a leading Indian bank
...
It's another thing to actually spend money on it
...
”
Around the same time, their paths crossed that of Intercept, a
company also started by a couple of ex-P&G colleagues - Ramki
and Kimi
...
Sensing synergies, Apnaguide merged and became
part of Intercept
...

After selling two more installations of the CRM software (billing
Rs 12 lakhs) Intercept too realised that selling something like this
in India was very difficult
...
Funding was committed but then the VC backtracked
at the last minute
...
”
Clearly it wasn't a friendly parting, but breakups and shake-ups
are part of entrepreneurial life
...

The original team had, in any case, disbanded
...
Shailendra too quit due to
personal reasons and moved to the US
...
not
me
...
I just happened to be in the right
place at the right time and slogged it out, persevered
...
The time was October 2002
...
And what
was its mission?

220

18_For Love not Moneyeditjuly10
...
But it did not work out
...
”
But what was it that they decided to do differently as a company to
make it work?
Rule no 1: We will make sure that this time around we make more
money than we spend
...
We want complete operational control, to grow
the way we want to
...
We really
learnt a lot and did some great work
...
We
started with just one or two clients from the Intercept base - that's
all
...
”
Having worked with P&G, the team had the experience of using
analytics
...
And we knew that kind
of a service was not being provided by MR companies
...
One is the MR analytics where FMCG
companies are involved
...
Then you have
transaction data from credit card companies, banks, retail and
telecom
...
They said, ‘Why can't MR
companies provide analytics? Where is your counterpart model in
the US? If it doesn't work in the US, it will not work here
...
And they knew that kind of
service was not being provided by MR companies
...
We did
not say we would build models or conduct statistical analysis
...
For that you need some
insights - we will give you the insights’
...
He wanted the end product,
the pattern which emerged from the data which would help him do
his job better
...


18_For Love not Moneyeditjuly10
...
One early decision at
Marketics was that it would not sell in India
...
And if you give them top quality work,
they will pay you top quality money
...
”
“And the other thing, we wanted to create a company that will have
clients who are delighted, not just satisfied
...
And we will get rich
...

A lot of people I know have joined us for that
...
One of those many intangibles that
Marketics got right
...

“We don't care how you dress
...
Everything else -salary, leave, where you work from,
how you work, who you are, is secondary
...
80% of that was from
client referrals
...
Clients,
employees and even investors, came through referrals
...

“In the beginning, because there were few people, the core team
did everything
...
What is the value that they see in us? How do we deliver
this proposition? What are some of the levers that we can pull to
scale this up?”
But how did Marketics get these clients?
“It just happened
...
See, we are just focused on making clients happy
...
we
saw it happening
...

Marketics rocks
...

They went way beyond what I expected of them
...
And all this without asking for
extra money
...

somehow money also flows in
...


222

18_For Love not Moneyeditjuly10
...
It's not about companies
...
”
Client managers quit, went elsewhere, they gave Marketics
projects from the new company
...
Given its
strong brand name, other prospects easily gave you a hearing
...
It would offer to
do ‘low risk’ pilot projects and win client confidence
...

“It took us one year to get our business model in place
...

So it's not outsourced work, processing work
...
But restricted to data, not general
consulting based on our experience
...
It was hugely profitable, yet it barely had any competition
...
Because we didn't want to raise funding
...
”
Even today, there is some competition but not in the space
Marketics occupies
...
Crafting that model took around
two years
...
We work only with topnotch clients
- Fortune 100 companies
...
It was more like friends rather than a formal kind of
thing
...
In doing
so we will have fun and get rich”
...
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“It's a different kind of thrill when a
client says, ‘Your work has actually
saved us
...
’ The closest example I can
think of is what patients tell doctors
...
”
Some advisors became investors as well
...

The initial capital was put up by the three partners
...
The
next year, we went to 1,600 rupees
...

Fourth year, 7,000
...
”
It took around six months to break even in the initial phase
...
After
that, they started making ‘decent money’
...
And a few offered retainers for work spread over
a period of time
...
”
Speaking of which, intellectual capital was as important as
monetary capital
...

“When it's a new business model, and we ourselves don't know
what to do, do not get in experienced guys
...
And when they
are senior, you cannot argue with them on subjective things
...
And they were literally moulded to be good
at analytics
...

This young team, mostly under age 27, lives by the ‘honour
system’
...
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FOR LOVE, NOT MONEY

225

then not come to work the next day
...
Overall, it all comes together and works
...
The company
employs some 50 MBAs - mostly from IIMs
...

Vinay was based in the US, Ramki was travelling and looking after
sales while Shankar was doing some sales effort but mainly
leading delivery out of Bangalore
...
By now, Marketics employed 220 people
...

And then, WNS came into the picture
...
And
we were building on the experiences of the past which is that when
a good thing is going, just keep in mind that bad things will come
around the corner
...
As they
say, raise money when you don't need it
...

“We had got the ship here so far, with a combination of our abilities
or experiences, good or bad
...
”
“When you want to expand, there is a window of opportunity
...
And the advisors said we
can raise money but the other option is that you align with
somebody larger so that they can leverage the platform you have
built and make Marketics much bigger, much faster
...

“Somewhere along the way we realised that analytics has to be
sold as a part of larger bouquet of services
...
”

18_For Love not Moneyeditjuly10
...
We made the choice to scale up
...
but it would have taken a long time
...
That was an option of course - raise
money, get in the right people, acquire companies
...
But we were clear that we don't want
to be distracted from running the business
...
The company
had listed the previous year and was looking to move up the value
chain
...
The vibe
was positive and WNS was convinced it was a strategic fit
...
So once we gauged that they also were
comfortable, we closed the deal in March 2007
...
”
And it all makes perfect sense for both parties but you can't help
asking the question, “What if?” What if Marketics had charted an
independent course? When the company first started up, the
founders did not focus on ‘limitations’
...
$65 million was a generous offer - 15 times the company's
current profits
...

So have things changed?
“Well, yes and no
...
Which,
after you go through initial pain, is good
...
Sales have already been integrated, HR
integration is happening slowly
...
They are 17,000 people,
we are 250
...
It is high end
talent
...
”

226

18_For Love not Moneyeditjuly10
...

“We became rich
...
”
And it was not a stock swap but all cash
...
And
that was extremely fulfilling
...
With ‘get rich’ also becoming a reality, the mission had been
achieved so to speak
...
“Don't jeopardise
your company’s future by confusing what is good for you as a
person with what is good for the company
...

It was simply a decision taken in the company's best interest
...
There is a larger board
...
And we
have scaled faster, as there is a captive base of clients to pitch to
...

But the company was already growing at 100% year on year
...
Next
year, we want to grow even more
...
By then we wanted to achieve a
certain scale
...
We want to broaden the scope, not just
analytics, but whatever it is that converts data to insights
...
What brings them to
office everyday now? Are they as motivated?
“The thing is that is what we want to do
...
We feel we are just at the tip of that iceberg
...
And in some cases we have even competed with these
biggies and won
...
”
“I think the thrill changes, basic model is proven, now it is - ‘How
big can we get?’ When money is no longer the motivation, life can
be pretty good
...


18_For Love not Moneyeditjuly10
...
We were
very happy when we started Marketics as a traditional garage
kind of start up
...
”
“But like when you are growing up, college is good but then you
start work
...
It was good, but it's a
phase and it's over
...
You have to change roles
...
It may
happen, but right now the founding team is still on board
...
”
Ultimately, every organisation aims to create a ‘sense of
ownership’
...

At Marketics, all three partners had an equal shareholding
...

Shankar admits, “It's not as if we always had it smooth but the
whenever there were differences we spoke and resolved them
...
Whatever the thing is, we will
be equal in terms of ownership
...

“Ultimately it's about, can we look in the mirror and say that we
did the right thing, we got what we deserved
...
Even when we knew the deal was just
around the corner, we gave ESOPs to many more people
...
”
Fair enough and well done
...
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Page 229

FOR LOVE, NOT MONEY

ADVICE TO YOUNG
ENTREPRENEURS
It is very difficult
...
First is
passion, if you are not passionate about what you are
doing, then you are in the wrong place
...
The buck stops with you, does not go further
...
You cannot say that may be,
this or that
...
When you succeed, all your
past and failures get wiped away
...
You have to be egoistic,
and you have to be humble
...
You have
to be leading, yet you have to be supportive
...

Work experience did help in our case
...
An amazing culture,
with a lot of focus on values and ethics
...
The domain experience
was from P&G
...
But there is no one size that fits all
...

More than VCs, an entrepreneur needs an angel
...

That can come from friends, family
...
VCs should ideally come in
once you know what you want, the model is proven and
you think the best way to scale it up is to get their
investment
...


229

19_Million Dollar Seamstressedit10july
...
Her company Precious Formals is
one of the leading suppliers of prom dresses in America
...
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Page 231

MILLION DOLLAR SEAMSTRESS

It's the silver jubilee reunion of IIM Ahmedabad's class of
1983
...

Ruby Ashraf looks far too young and beautiful, to be here
...
But as you hear
the story of their life, and the company they run together,
you have to wonder, “Who's to say who's really lucky?”
How many men would let a bright and beautiful wife take
the driver's seat and enjoy the journey together as a copassenger?
Ruby Ashraf is CEO of Precious Formals, a $10 million
company in the fashion clothing business
...

Precious Formals sells prom dresses
...
It is a kind of growing up ritual, not just a dance but a
day to be remembered and treasured for years to come
...

So how did an Indian woman with no formal training in
fashion design enter this business and quickly make a
success of it? Listening to Ruby relate how she made it
happen I could only conclude, “Dil mein chaah, to niklegi
raah
...
Nor are they always necessary
...


231

19_Million Dollar Seamstressedit10july
...

Her father was with the Ministry of Defence before he resigned and
started his own business
...
He would take me there
...
He was a
consultant for many
...
But, looking back, it seems like she “got trained into
it without knowing it
...
And the ability to take tough decisions
...
As was the done thing, she studied science
and got into medical school
...
So I thought, “This is not for me…”
She quit medical school and got a bachelor’s and master’s in
science from Delhi University
...
That was my special interest
...
I was a little shy
...
But I had already
disappointed my parents by not continuing with medical school
...
”
Ruby got an admission offer and she joined
...

“First thing, they gave me a personality questionnaire
...
When you come out, you are totally groomed for the
profession you have to take up after this
...
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Page 233

233

Ruby knew she would work for about five years and then set up
her own company, like her dad
...
And she never thought it would
be in America
...

“I interviewed for two companies - BHEL and Metalbox
...
”
Then, like so many women, Ruby got married and shifted to
America
...

Initially, Ruby did not leave her job
...
In the meanwhile, he was looking
for jobs in the north, like New York
...

Ruby got admission in Rice University in Houston to study
Organisation Behaviour but her heart was set on Stanford or
Harvard
...

But destiny had other plans
...

Ruby always had the title ‘Best Dressed Girl’ of the batch
...
That hobby continued and she
wore one such dress to an Xmas party at the university (where
Javed was a professor at the time)
...

People said, “You have a real talent, you should be selling these
dresses!”
But there wasn't much information available on the industry
...

But nothing on apparel
...
She
travelled across America, visiting retail stores to understand
fashion trends, what was selling and where her own niche might be
...
I didn't know what the
fashion trends were in the West
...
”
That sounds kind of vague
...
Could this really be a serious gameplan for how
to get into business?
“Basically my whole philosophy in life is the shlok from the
Geeta - ‘Karmanyewadhika raste maa phaleshu kadachana’
...
At the end of the day, you
should feel that I have given my 120% to it
...
”

19_Million Dollar Seamstressedit10july
...

And it did bear fruit
...
She
started making dresses and immediately got orders from all the
major stores
...
Margins were high in evening wear and design
was her forte
...
And this meant learning about fashion itself from scratch
...
I came to India and first of
all learnt pattern making
...
In fact, he learnt pattern making as well
...

Why Delhi, not Texas? “Because it's all handwork, it can't be done
in America
...
” This
meant frequent trips between India and America, of course
...

As the order book grew bigger, a loan was secured from the bank
...
Too easy
...
You have to go
door-to-door, you have to do things at the grassroot level
...
I didn't do that for many years
...

“The first thing in business is, you have to sell yourself
...
They should feel that whoever you are, wherever
you are from, you really mean what you say
...
If you have sold yourself, you will
sell the product
...
Then it grew rapidly
...
Now it's ten
million plus and Precious Formals is still growing
...
The manufacturing
was shifted from India to China
...

“As a designer, I realised that I have lot of limitations working in

234

19_Million Dollar Seamstressedit10july
...
Also, the finishing is
not perfect
...
”
The Chinese are also excellent pattern makers
...

Of course when she first explored the China option, in 1991, it was
difficult
...

The nuts and bolts side of the business apart, fashion is not mere
science
...

There is a Spring and a Fall season
...
In December 2007 you
have already shipped 2008 Spring
...
Ruby modestly says
she “looks around” a lot
...

But you and me could spend hours staring at tracksuits and
trainers and still be clueless
...
Javed resigned from his job at the
university and joined the company
...

If Ruby, with her expressive eyes, throaty laughter and immaculate
taste in clothes, is the public face of Precious Formals
...

He handles IT, as well as all the company's finances and accounts
...
’ You just keep doing whatever you
are doing
...
But still one doesn't
even anticipate that so much work will be
done… you just keep doing it
...
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“We are the only company that
checks every garment before
shipping, in the US
...

It so happened that one year Precious Formals hired an expensive
photographer and he shot a catalogue in New York City
...
They thought the job Javed had done the
year before was better!
“Maybe because we don't treat it like work, we have a passion for
it
...

Ruby handles all the designing and most of the marketing
...
So Precious Formals
has a 10,000 sq ft showroom and does its ramp shows there
...
Sales managers service
these buyers
...
I am their motivational force
...
We do targets, discuss
what to do today, what we did yesterday
...
I hear them out, what the problems are
...
Some have left Ralph Lauren and
are working for Precious formals because they think the company
gives them more inputs, more opportunities
...
But people cost a lot of money in America, so
Precious Formals is relatively lean
...

The interesting thing is that though the dresses may be made in
China, there is a strong sense that the 'buck stops here'
...

“We are the only company that checks every garment before
shipping, in the United States
...
We believe there
shouldn't be even a single stain inside the lining of the garment
...
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237

You are shipping such an expensive dress after all…”
Precious Formals dresses generally retail at $400-800
...
And a more premium range called 'Posh
Precious' which sells above $600
...
But the company
developed Glam Gurlz for major stores which want to buy in bulk
...

“As a designer, I would like to design only expensive clothes
...
But as
a strategy, you have to see where the market is going
...
”
It's a delicate balance
...
And you
don't want to keep them so expensive that people get intimidated
or do not appreciate
...

Some store owners said, “Oh my God! We won't be able to sell a
dress worth $600!” You have to convince them, ‘No, no, you can!‘
A client will come, try out a dress, may buy, may not buy
...

If you sell a $600-700 dress, you have definitely made money
...
So Posh Precious makes great sense!
A package deal of three dresses was worked out
...
So they started buying a few pieces, and as they
sold, gained the confidence to order more
...
There a surge of demand from Dubai as well
...
Inside the
abaaya,” she grins
...

You start with a strategy, but you have to change it at so many
stages along the way
...

“We started with formals for older, more mature people
...
Then we shifted to boutiques, because nowadays,
people in USA don't dress up for Christmas as much as they did before
...
So we went into prom
...
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“For the prom, girls spend a lot of money - it's a very big market
...
And that too, an expensive dress
...
”
The prom foray happened in 1996 and today Precious Formals is
one of the major players in that market
...

Then, Ruby realised that this is the baby boomer era
...
Earlier, they
used to wear big, flouncy ones
...
“Last year, for example, the wife of the
Governor of Iowa bought one from us,” she beams
...
If you modify it
slightly, maybe have a chocolate brown instead of hot pink, you
can sell it to anyone
...
Now the company is also getting into separates like jackets
...
Sometimes it happens
...
Then you have to manage your cash
flow, get out of it and next year, you don't overstock
...
At one
point, everybody wants a particular style, then suddenly people
want something else!
Growth has slowed in the last 2-3 years
...

“When I started, I did not think that it will grow so big
...
Since 9/11 actually
...
For many other
companies, the sales went down
...
”
And how has it been, working with Javed? Many couples swear it
would be impossible to work a single day with their spouse
...

“Working together is the best part actually
...
It's great to work as a team
because we spend so much time at work
...
Normally we don't travel together but we go to
China together and it's very very nice
...


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19_Million Dollar Seamstressedit10july
...
As I am interviewing Ruby, Javed sits a few feet
away, patiently waiting for us to finish
...

And I am amused (and quite in awe) of how they took the decision
to actually get married
...

“We did the personality match and we thought it's a perfect
personality match… See, when you meet a person and fall in love,
that's very good
...
The intangible is the values, nature etc
...
”
So Ruby decided to ‘test’ their compatibility and Javed was game
enough to do it
...
Had I met Javed in IIMA, we would not
have clicked because our likes and dislikes are very different
...
I like to go for a run, he doesn't
...
We have been very compatible right from the
beginning… Our life is balanced
...
”
Javed didn't want any kids and Ruby was fine with it
...
Javed is very adjusting
...
Now we are
together all the time
...

“We are eating, reading, drinking our work all the time
...
”
Ruby and Javed now want to make Precious Formals a billion
dollar company
...


The prom foray happened in 1996
and today Precious Formals is
one of the major players in that
market
...


19_Million Dollar Seamstressedit10july
...
Because
they are so good together
...

Because unlike the many other entrepreneurs I interviewed for this
book, it wasn't an either/or decision
...
Which is not to say everyone can or should do it
this way
...
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ADVICE TO YOUNG
ENTREPRENEURS
You can achieve beyond your dreams, so it’s OK to
dream and make an action plan to turn it into realty
...
It depends upon how hard we kick that failure
and learn from it and take up the challenge stronger to
be successful
...
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ORDER OF THE

PHOENIX
Deepta Rangarajan (PGP '89),
IRIS
Deepta worked with American Express and CRISIL
before

starting

IRIS,

management service
...
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Tough times never last, tough people do, they say
...
That's the
feeling I get when I walk out of the office of IRIS at the
International Infotech Park in Vashi, Navi Mumbai
...
But the struggle to stay alive
as a company was something I felt at IRIS most
strongly
...

The question that comes to mind is, why? Why couldn't
IRIS raise funds after the initial cash dried up? Why did a
company with great IP, great people and great vision go
through this terrible patch? There is really no answer to
that
...
Entrepreneurship is a little bit like surfing
...
Then, you spot the next wave in
the distance and this time you ride it
...
The
adrenaline rush at the end of it is an added bonus
...
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ORDER OF THE

PHOENIX
Deepta Rangarajan (PGP '89),
IRIS
Deepta Rangarajan was born in Bangalore, the youngest of four
kids
...
Deepta travelled the
world over, before finally settling down in Delhi
...
Straight out of IIT she joined IIM
Ahmedabad
...

But she did do something offbeat on passing out - a year off to
‘explore options’
...
In that year off, Deepta
worked with an NGO, she worked for NASSCOM (which had just
been set up) and also with an investment banker
...
I
finished that one year and I was no wiser”
...
The idea of starting something happened in
1994
...
However, they got married after starting the company
...
He did his Masters in Economics from
Yale University, worked with the World Bank, and then came back
to India
...
” Swami was an Assistant Editor at Business India,
after working with The Economic Times
...
Swami spotted the opportunity that
became IRIS
...
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ORDER OF THE PHOENIX

growth
...

The idea came from Swami but it was discussed and debated for
a couple of months
...

This was the time when several job opportunities were available,
with CRISIL being a happy poaching ground for foreign institutions
entering India
...

Yet, the thought of striking out and trying to establish something on
one's own was very exciting
...
And that's
how IRIS was born
...
The team started with seed funding from some
friends involved in financial markets, who liked the idea of an
independent research and information house, and who trusted the
team's professional competence and ethics
...

And incredible as it may sound, the team of entrepreneurs started
with no ownership in the company
...

The first office of IRIS was at Nariman Point, a single room in the
office of the folks who had provided the seed funding
...
Because it is one thing to say you
will produce high quality information, research and another to sell
it
...

IRIS primarily worked on a project basis in the early days, and
Citibank and Morgan Stanley were some of their earliest
customers
...
While interested buyers conducted their own valuation they
wanted an independent valuation on whether these companies
were intrinsically sound, and what price one should bid at
...


245

20_Order of the Phoenixedit10july
...
A strong desire to want
to create something and to make that happen
...

At CRISIL and at the media houses where Swami had worked,
there was a wealth of information
...
It was hard to even compare one set of companies
with another on specific parameters
...
He was a
part of the team that set up India's first wide area network, he was
a part of a team that had brought the internet to India, and had
worked extensively in the space of web technologies
...

Whether this was sheer luck or guided by a sense of things to
come, who can say? Perhaps, both
...
In the first year itself, three of the
original founders dropped out - one died in a road accident and
two left to pursue other opportunities
...

So that left three active founders involved with the company, which
was probably just as well because the company wasn't big enough
for so many egos and ambitions
...

“It was a small company
...
So if
someone asked if we would do allied things like market research,
not necessarily our core area, we would do it to shore up our
revenues
...
The founders took salaries,
but nowhere near market levels
...


246

20_Order of the Phoenixedit10july
...

During the course of one of their meetings in Singapore, IRIS
showed Bloomberg the India databases that it had created, and
used the Mosaic browser to display the information (a browser
which was popular before Internet Explorer)
...
Bloomberg was
astounded - they had never seen anything like it
...
com
...

It was the dotcom boom and investors were looking for web based
ideas to fund
...
And so the
company received its first major funding of over Rs 20 crores from
a clutch of private individual investors from around the world
...
The funds were invested in strengthening the
operations, technology and sales teams
...

Some monies were also spent in marketing the myiris
...
com portal immediately after presenting the union
budget
...
It was a smash hit, and the portal rapidly grew in popularity
...
The company was all set to scale to the next level,
establish a national presence through the portal, and build some
proprietary products in the B2B information space
...

All of a sudden, there was a huge crisis
...

The difficult bit was that the founders of IRIS never really owned
the company
...
But the majority
stake was still with the seed investors
...
Somehow, the

20_Order of the Phoenixedit10july
...
Having said that, it is fantastic to
create wealth
...
”
company managed to pay salaries and to continue operations, but
every day was a struggle
...
Else the founders managed to find resources to keep
things going
...
You don't know whether you
are going to have cash to meet all obligations each month, or
when you are going to be liquid
...
”
Deepta was in fact in the US at the time the crisis erupted, trying
to develop the outsourced business opportunity in research and
content services
...
Several employees left, unable to deal with
the business uncertainty
...
Over
the next two and a half years IRIS went from 180 people to 20
...
As founder employees, we were aware of
the full extent of IP in this company, and we just didn't want to give
it all up”
...
“We had several term sheets, but none of
them made sense to us, since the firms offering to buy us out
looked at it as a distress sale
...
We also had several offers for us as a
team to walk out on IRIS and join other firms to help them grow
their outsourcing or web based businesses
...
Except for a moment of
self doubt when the option of ‘shutting down’ was seriously
discussed
...

There was an innate realization that there is lot of potential value

248

20_Order of the Phoenixedit10july
...
We didn't know what the solution was going to be but we
knew there had to be a solution
...
Swami personally felt very morally
obliged to all the other stakeholders
...
It is also about the rest of the
shareholders, the clients, the creditors and the employees
...
Even if we do
decide to shut down this firm, it has to be from a position of
strength, it cannot be from a position of weakness
...
It reflected their own faith in what they had created,
and what perhaps others couldn't see then
...
It was like a
second life, a new beginning
...
Maybe if you wait long enough, things
start working in your favour”
...
A couple of fresh contracts came in from
the international market as well
...

2004 was the roughest year and since then revenues have been
ramping up rapidly
...
Things are now back on track
...
And the solutions we provide are
not merely standard solutions, like providing content and building
websites
...
”
For example, the portal myiris
...
How many stories do
you think The Economic Times might be producing on a typical
business day? 90 to 100
...
Myiris has built smart tools which can pre-generate the
content
...
i
...
comparing against past data
...
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“Why so few women entrepreneurs? I think a
lot of it has to do with the fact that women
have primary responsibility for the children
and family
...
If I had kids I would
definitely re-size or re-scale the way I would
be involved with the company
...
IRIS automated the data-driven analysis six years
ago whereas Thompson Financial, the global information giant,
has done something on a much smaller scale only three years
ago, and that is getting Financial Times headlines
...
Another area is outsourced
services - providing content and research capabilities to
customers
...

XBRL or ‘Extensible Business Reporting Language’ is the new
standard for the way in which financial information is reported
...

For this project, IRIS employed an army of Chartered Accountants
to take US financial data such as SEC filings and make it XBRL
compliant
...
This makes
misreporting of data by either accident or design extremely
difficult, and adds value to each element of data wherever it is
used
...

“If there is a piece of data which is XBRL compliant, the data
carries the properties along with it
...
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ORDER OF THE PHOENIX

251

belongs to, which year it pertained to, which accounting standard
the data refers to and so on
...
IRIS became a very active
XBRL evangelist in India
...
That is important because the Indian
format of annual reports is different from the US GAAP format
...
This has been adopted by the Bombay Stock Exchange
and the National Stock Exchange in India, and effective January
1st, 2008, SEBI has mandated that the top 100 Indian companies
have to file using this application
...

IRIS has now been mandated by the Institute of Chartered
Accountants of India to create the taxonomy for the country, and
the firm is in the process of building that
...
When IRIS displayed its product at a conference of
regulators and stock exchanges, several exchanges showed
interest
...
Companies and regulators need
software to prepare XBRL compliant returns, and users need
rendering software to ‘read’ these XBRL documents
...
In time there may be more players but right
now IRIS has a headstart
...
The more you grow, the
more people you need for it
...

IRIS now has 240 people, plus another 60 working on a special
project
...
And almost completely owned by the promoters
...

Additionally, for years, IRIS has focused on India-centric content
...
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from across the world
...
“It's a
huge investment and a product bet we are making once again”,
says Deepta
...

As they say all's well that ends well on 31st March
...
If you feel stressed, you want to
compartmentalise something
...
We don't work with rules
like coming home and not talking about a particular issue
...
And individual interests and activities
...

But if you ask two people who are married, can you work together,
90 per cent will say, ‘No, we cannot!’ So what is it that makes it
possible to have this kind of very good working relationship
...
I think part of it really depends on
the couple's level of maturity”, says Deepta
...
”
Right now, the only teenager in the house is IRIS
...
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ADVICE TO YOUNG
ENTREPRENEURS
I would say a couple of things
...
It doesn't matter where you work
...

I think, for us, much of what we have done has not
followed a well scripted plot
...
You work with a broad game plan
...
You
alter
...
If you say, this is my scripted
plan, this is what I am going to do, if it doesn't end up
happening as per that script, you will be tremendously
disappointed
...
There
was nothing called XBRL when we started, and it is
becoming a huge opportunity
...


253

21_Health is wealthedit10july
...
His own battle with weight
prompted the idea of the business!

254

21_Health is wealthedit10july
...

And one piece of advice almost all the entrepreneurs of
the earlier generation had for today's dreamers is: ‘Don't
join a cushy job with a big brand name company
...

Sitting in Cyrus Driver's cramped little office in Sewri, I
can only think, that theory is wrong
...

Cyrus worked with J P Morgan in Singapore before
returning to India in 2004 to set up the unique concept of
‘Calorie Care’
...

We don't know how he will do it, but the story is important
enough even as a work in progress
...


255

21_Health is wealthedit10july
...
Everyone went the doctor-engineer
route, and so did Cyrus
...
But much before that,
as India was opening up in the 1990s
...
“I felt these are the real ‘rock stars’
and knew I wanted to do something of my own early on
...
He figured
it would be a great ‘learning ground’, and it was
...
” The work included everything
from hiring salespeople for investee companies, to looking into
finances
...
And fizzled out quickly as well
...
“And I knew
my company should be built the bootstrapped way
...
He
had a nest egg to invest and also an idea to invest in: Calorie counted
healthy meals
...
I knew there was definitely a
demand for such a service because I myself had a need for it
...
And thus was born Calorie Care
...
Recipes which were low in
calories but tasted good as well
...
It took 10 months to put together a database of 150 such
recipes across different cuisines
...


256

21_Health is wealthedit10july
...
” says Cyrus
...

The next hurdle was getting the sundry municipal licenses required to
set up a food establishment in Mumbai
...
”
Finding a location to set up his kitchen was also not easy
...
It happened to be in less-than-glamorous Sewri and
clinching the deal involved a lot of haggling and negotiations
...
Calorie Care is modelled along the lines of a flight kitchen
and at its helm was chef Kamlesh Kumar, who had worked with
Ambassador Skychef
...

Utmost care in terms of freshness and hygiene is very evident! “The
meals are even delivered in our own air conditioned vans
...
Attractive packaging, small
touches like a napkin with each meal
...
This means, when you wish to order Calorie Care, you
must first consult their dietician (in person, or on the phone)
...
I am allergic to onion and hate
green peas
...
Delivery at office
Monday-Friday, and Saturdays at home, please
...
A specially written software conveys to the
kitchen the entire list of orders daily, and how much needs to be packed
for each individual as serving sizes vary from person to person
...
Of course all this does not come cheap - a
month of Calorie Care meals would cost between Rs 3500-4500
...

“We've found success with well paid professionals pressed for time,
willing to pay for health and convenience,” says Cyrus
...
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This is certainly an achievement but also an issue
...
The company clocked
sales of approximately Rs 2 crores in its second year and some profit
- which was reinvested in the business
...
The company also runs health food
cafes at select gyms in Mumbai
...

“We had ambitious plans of launching in Delhi and Bangalore, which
we've dropped for now
...
We are finding that extremely difficult
...
However money
alone is not enough
...
Graduating from a small,
self sustaining business to a large, multi-city operation with substantial
scale is always difficult
...
8-10 years is par for the
course, and it could take even longer
...

“I am in talks with a couple of strategic partners
...
” So far the business has grown purely on word of mouth
...

“If you feel you are not growing fast enough would you fight it out on
your own, or would you take the practical path like me and look for a
partner?” he muses
...
Something I created, living on
...
And that also describes his own
career in a sense
...
“I don't take a salary from Calorie Care, whatever profit we
make is put back into the business
...

Again, this is something many entrepreneurs do to keep their dream
alive
...
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HEALTH IS WEALTH

There are many unanswered questions and answers as varied as the
Calorie Care's customised meal plans
...
Calorie Care has lessons and learnings which will
be evident - but all in due time
...
You must carefully plan how you will
be financially sustainable
...
The other option is to set up after 10-15 years
when you are an industry expert
...

It's good to be a consumer of the product you are
planning to launch, as you don't need to do endless
market research
...


259

Separatoropportunistjul10edit
...
Their stories go to show that
you don't have to be 'born with it', you can
develop an entrepreneurial bent of mind at
any age
...
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THE ART OF

GIVING
Venkat Krishnan (PGP '93),
GiveIndia

He's worked with a newspaper, a television channel and
as principal of a school
...
He is an
entrepreneur but his mission is one with a difference
...
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THE ART OF GIVING

Had Venkat Krishnan got admission in a convent school
in class 5, he may have been your regular investment
banker type today
...
It made him who he is
...
I could see that there
was a guy in my class whose father works in Dubai
...

They would eat biscuits for breakfast which is a luxury
...

And they would always buy dus paise ka shakkar aur
pacchis paise ka tel, that too when a guest comes to their
house
...

In a country where most of us are conditioned to simply
‘look the other way’ that makes Venkat a seriously
different kind of guy
...

We are meeting in the lobby of a suburban hotel
...

“The house is too small,” he mumbles
...

Venkat's nickname on campus was ‘Fraud’ which is ironic
because both in the honesty with which he speaks to me,
and the actual work he does, Venkat is one of the most
genuine people I have ever met
...


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...

“My dad used to work in Godrej, and I have had one of the best
childhoods one could possibly have
...
”
And yet, it was extraordinary in some ways
...
Even now, we
will have a black and white 1971 television lying somewhere in the
attic because he will always aspire to repair everything
...
Late
in the evenings after coming home from work, dad would be busy
tinkering with a Bush radio
...

“I think one of the best things that happened in childhood and
particularly with me (I think the youngest kid in the house always
gets the best treatment) was lots of exposure and learning right
from early in life
...

When they had to get a die or a mould made, he would take Venkat
along
...

Later, as a teen, Venkat recalls hanging out at Sakinaka, where
there are many small scale industries
...

“Another interesting thing - we used to play a lot of ‘games’ as a

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...
Late nights, over the weekends, all five
of us used to do four digits by four digits multiplication sums and
see who finished first!”
When in class four, Venkat discovered the system for multiplying
end digit by end digit numbers in one line without having to write
down steps
...

The bottomline is a spirit of curiosity and of ‘learning to think
independently’ was aroused
...

And then there was the impact of schooling
...
But
when his dad switched jobs and shifted to Andheri, he ended up
joining ‘Airport High School’ which is, by all standards, a very
average kind of school
...

When you go to convent school, you actually don't see the whole
spectrum of people
...
”
At Airport High, much of the school was from the ‘lower middle
class’, Venkat was regarded as relatively ‘well off’
...
The next day, it would be a friend who lived in a
slum
...
Nothing
shapes your future as much as the house in which you are born
...
”
“There will be exceptions
...
But those are
extreme examples
...
In fact, the trend is to protect
your kids from this knowledge by sending them to an elite
international school full of elite international kids like your own
...

By class seven, Venkat was clear there was something wrong with
the way things were and wanted to do something about it
...
George Orwell's ‘Animal Farm’ was another
book which had a huge impact
...
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“We also set up a Rotaract club in the
college, which was very very exciting
...
”

Engineering would have been a logical career choice but by class
10 Venkat was clear this wasn't the thing for him
...
I wanted to do something that
could make a difference
...
He believed that it would
help in his ultimate goal - of making a difference
...

“My father is a very pushy character
...
So le liya admission
...

And somehow I decided not to do commerce at that stage
...
You learn far more
in science
...
Ironically, he coached several
others and seven of his friends actually got through to engineering
colleges
...

“I used to play 6-7 hours of cricket everyday
...
So a typical day would be sitting on a katta, outside
the college, looking at girls, eve teasing them, smoking, and lots
of cricket and whiling away one’s time
...
Once again,
dad tried to interest him in joining a local engineering college but
by this time he had grown in conviction and learnt to say ‘No’
...
You
can get me excited about maths like this in thirty seconds
...
Of course,
he hardly ever went to college; instead excelled in extra-currics
...
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“At the the end of every term, I would go with a long sheet with day
by day details of where I had represented the college - in chess,
debating, dramatics, JAM and so on
...
I would say my
first entrepreneurial experience in a sense
...
The Rotaract club made a huge impact
in terms of transforming the environment in the college, making it
more cosmopolitan and encouraging young talent
...
It took a lot of effort to convince
our college authorities to allow something like this
...
They believed that girls wearing skirts
is not a good idea and with Rotaract all these skirt-wearing girls
would come to the college
...
He had the knack of seeing the perspective of
others, and somehow balancing it all
...

“We actually used to meet people, get them excited, get them to
college and organise a career guidance fair entirely on our own
...
”
The result was that Parle college blossomed
...

Which again goes to show that it's not important to merely get into
the ‘Best College’
...

So after all this, how did IIM happen?

“We actually used to go and
meet people, get them excited,
get them to college and
organise a career guidance fair
entirely on our own
...
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“
...
”
“That's an interesting story
...
You have not attended any statistics
classes, I am going to fail you’
...
Venkat got 20 out of 20 on
that test and the crisis was averted
...

“Firstly because it is so much about numbers and I am passionate
about maths
...
Look at the green revolution that has happened, or
the top scientific discoveries
...
But that is
actually only 25% of the job
...

Which is all statistics actually
...
Side by side he studied French and Cost Accounting
...

“So basically things came quite easily to you,” I observe
...
”
“Then that becomes difficult because you can do anything,” I add
...
I would say it makes life easy
...
”
And at some point Venkat chose to take up management, although
not for the usual reasons
...
I had to
build my life
...
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269

pharmaceuticals did not appeal
...

“I managed to get section A of IMS coaching material from one of
my seniors, free of cost
...
My CAT entrance was
terrible
...
”
“Calls came from all four IIMs
...
In those days, on
Doordarshan, in weather forecasts, they used to give decimal
temperatures of all cities
...
Tell me, what is the probability
that all eight decimals will be different
...
”
I said, ‘“Less than five per cent
...
You are through because this is the first
time anybody has given the correct answer to this question
...
On 3rd July, 1991, when he was on the IIM campus, the
MStats admission letter came
...

From six in the evening till three in the morning I was agonising
over what to do
...
But somehow the idea that the MBA degree gives you
much more access to more opportunities, financially you will be
much more well off, that in turn is empowering
...

“First 1
...
I did extremely well
...
7 or something like that
...
”
Why?
“I am not interested in doing well academically
...
You can ask anybody in my dorm
...
People used to believe
that after everyone slept, he must have been switching on his table
lamp and studying
...

As usual, Venkat did find ways to use his time constructively
...
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Learning to play the keyboard; reading in the library, whenever he
had free time
...
The
system of memorising dates and formulas, he strongly believed,
was killing human potential
...
The idea was how to leverage this degree to make a
difference
...
A summer job with Khadi
Village Industries followed
...

Soon enough he realised a similar project had been done by
IIMA's Prof Vora and it was gathering dust in their library
...
He realised that IAS was not his cup of tea
...

Venkat had opted for the entrepreneurship package - courses like
New Venture Management, PPID (Project Planning
Implementation and Development) and LEM (Laboratory in
Entrepreneurial Motivation)
...

The first IP was on the feasibility of private enterprise in education,
especially vocational education
...

By this time he was quite confident about wanting to become an
entrepreneur, at some stage in life
...

“I remember my first reflective note for the LEM class - I see myself
as an instrument or tool that is available to society
...
So I will not do something just because I like it, but
because that is the best use of my time for the society's benefit
...
If I think I will help society best by becoming a
businessman, then I will become a businessman
...
” The guiding principle was, and remains, to
restore the maximum amount of fairness to society
...


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...
He was offering a fancy salary,
but the chap said the job is to help run the aata chakki and help
him to save income tax
...

“I would have joined him, if he had been an honest guy
...

And that's something which makes a lot of sense for any MBA with
ambitions of becoming an entrepreneur
...

Eventually he settled for TOI - a day six company - as media too is
an opportunity to ‘make a difference’
...

Being EA to Mr Arun Arora, a director on the board, Venkat
interacted closely with Sameer Jain, Vineet Jain and Ashok Jain
...

Then there was a salary restructuring project where Venkat
argued that journalists should be paid better
...
Much
of which actually got implemented
...
The condition set by the Jains was that Mr Arora could not take
away more than one employee
...

“I was not keen to leave but he had already asked for me
...
My brother
and I had both taken student loans, plus dad had quit his job, tried
a business and failed at it
...
Four

“I remember my first reflective
note for the LEM class - I see
myself as an instrument or tool
that is available to society
...
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“
...
”

months salary was all it took to pay off everything
...

“Even though it was a very short six month stint, I got to work with
the promoters and build the business plan of the company
...
”
But it was time to move on to something else
...
The field of education
...

However, the idea was a residential school for the middle class
and that did not excite Venkat
...

DD was working with IBM at that time and he was excited
...
Let's offer to volunteer the
weekends
...
”
But once they got there, something happened
...

Even IIT and such places, you are so cut off from reality that you
tend to live in islands
...
You don't know what it means to live in slums
...
”
Why not instead set up a day school? What's more, there would be
a certain quota of students from the poorest of poor families
...
This was in August 1995
...
I finished work at SET on 14th January, 1996 at 7
...
At 9 o’clock I took the flight to Ahmedabad
...


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...
So we traveled all over India
...
Having conversations till three in the night on
everything from what is the best method of education, to what
should be the discipline policy of a school
...
”
The point being that whenever you look beyond business, into the
things that make a difference to the quality of our lives, we
somehow think there's no need to apply scientific thought
...
And that architect will have zero
understanding of what you mean by an educational environment
...
”
Which is why the ‘immersion’ experience was so important
...
We would read an average of three books a
week, on pedagogy, on Montessori method, and so on
...

In March 1997, the day school was ready to launch
...

“All four of us were IIM grads, right! So we had this huge thing that
the day we announce admissions, there is going to be a mile long
line of people who want to get admission to our fantastic school
...
”
A total of five people came to inquire
...
At
1 am they convened and wondered aloud, “Boss abhi karna kya
hai, it seems as if the world doesn't want us to set up the school
...

For two months after that, they did door to door sales
...

“We would knock on people's door, with a brochure in our hands
and say, ‘Good afternoon madam, we are here to talk to you about
a new school that we are setting up in your city
...
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“The good thing is, more than 70% of the people let us into their
homes
...
The fact that we were from IIM made a big difference
...
”
The goal had been to get 24 + 24 + 20 so getting 34 students, that
too with great difficulty, did not feel like an achievement
...
But
we saw through it - having each other for support was of huge
value
...
The school started and a
fascinating journey began
...
There was a great sense of
togetherness, a team of teachers who were extraordinarily
passionate
...
30 am to reach the school at 7
...
All
bound by a sense of purpose, a commitment to something larger
than themselves
...
The following year
when admissions opened, all 240 seats filled up
...
Eklavya was the ‘coolest school of Ahmedabad’
within one year of existence
...
I
have seen it in every place I have worked in
...

Integrity is a very big booster of morale
...
That drives people
extraordinarily
...

Why?
“I am a my-way-or-the-highway kind of guy
...
”
Like every time he started a new chapter in life, Venkat had no
clear plan of what next
...

During the one and a half years of traveling for the Eklavya project,
Venkat recalled meeting a lot of organisations including NGOs that

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...
Very committed, very passionate
people, yet somehow nobody had even heard of them
...

Then in 1998, Venkat spent two months in the US, traveling all
over
...
But it dawned on Venkat one fine
morning that he didn't really want to own a house
...

Soon after, Venkat noticed an ad for a round trip to New York by
Royal Jordanian Airlines, for Rs 26,000
...
I wanted to find out, what is it that
makes US as a country tick
...
”
With the remaining money Venkat bought a VUSA pass to travel to
12 cities across the US - Cincinnati, New York, Washington, New
Jersey, Burlington, Minneapolis, Philadelphia, Boston, L
...
, San
Fransisco
...

In every city he knew somebody, so he wrote them a mail saying,
“Let me stay at your place for two days
...

“I was running a school and trying to understand the American
education system
...
People care
...
You take a typical guy who goes to IIM, who comes out,
works in an investment bank or wherever
...

I think that has to change, that's not on
...
I have
seen it in every place I have worked in
...
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“In America, every school that I went
to
...
”

buys his two bit of a matchbox and pays sales tax
...
What if I
were born as a garage mechanic's son?”
On returning to India, Venkat did a lot of research
...
But what about the contribution of
ordinary citizens towards the betterment of society?
“In America, every school that I went to, every working day, there
would be mothers from middle class families, sitting in the
classroom and helping the teacher with a group of Hispanic
students who are weak or children with learning disabilities
...
”
“In a town called Burlington in Vermont, they were going to close
down one of the three high schools
...
That's the first unthinkable thing, right! If BMC wants to
close down one of its schools, I don't think they will actually
organize a consultation
...
”
“Most importantly, the affluent people in town said ‘Close down the
school nearest to ours, because we all have cars and we can
afford to send our kids there
...
And too bad if Mira Road, which is a few kilometers
away doesn't get water more than half an hour a day’!”
In the ‘Market is Everything Era’, the middle class in India has lost
that sense of purpose
...

“It is the middle class who were the authors of the freedom
struggle, not the rich, not the poor
...
”
“I cry every time when I think of 15th August when we were all
celebrating freedom and he was in the middle of a village near
Calcutta saying, ‘Now is not the time to celebrate freedom
...
What courage it takes for a guy to think like that!”

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...
”
He hastens to add, “Please have a 30 crore flat, but don't be blind
to the world outside your window
...
A growing number of Indians were beginning to
do well for themselves
...
Could we not then start
building a culture that helps give back?
And thus was born ‘GiveIndia’, an organisation dedicated to
promoting and enabling a culture of ‘giving’
...
He had
just bought a home PC and was fascinated by the power of the
internet
...
Venkat found out
that in the US ‘giving’ - in all forms - formed 1
...
The corresponding number in India
was less than 0
...
2 percent
...
This is true not only in the US, but all over
the world
...
On the other hand, there is an opportunity to give
back
...
’ That typical cynicism that we have in our system is
perhaps justified
...
And thus, help create a
culture of giving back
...
So

22_The Art of Givingeditjuly10
...
”

he wrote a two page concept note, mailed it to some people and
got a lot of interesting feedback
...

He went back to The Times of India, they were not interested
...
Shekhar loved the idea
and said, “Come and help me run the paper and use Indian Express
as a vehicle to build the idea of GiveIndia
...

Gagan Sethi, who runs an NGO in Ahmedabad called ‘Jan
Vikas’, was very encouraging and even offered to seedfund the
idea with Rs 10-12 lakhs
...
It opens doors for you like nothing
else does
...
And I think the kind of
networks you get being in the IIM system are invaluable
...
He said,
“You know, we at ICICI have been thinking of doing something
exactly like this
...
We will
give you the license to use our brand if you want it
...
The amount of support I
have got in my life is mind boggling
...
Unquestioning
support
...
Anytime we are
going through a difficult patch, they are with us”
...
”
With this support, GiveIndia formally started in April 2000, five
months after the idea was born
...
Just as you have a stock exchange which
connects companies with investors, Give connects worthy NGOs
with donors
...
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279

“I would say GiveIndia is actually one of the founding organisations
of the idea of philanthropy marketplaces globally
...
Like Global Giving in the US, there
is now one in South Africa, in the Philippines, in Columbia,
Argentina etc
...
”
The first version of GiveIndia was a simple website which listed
five organizations doing good work
...

The first eight months were a disaster
...
31 lakhs in 34 transactions
...
The site crashed, after receiving three
million hits in a single day
...

“We set up an earthquake relief fund and at that time, we were the
only online vehicle available to donate in India
...
What they don't realise is that a country like India is a
daily living disaster
...
”
So January 26, 2001 was really an aberration, not a ‘turning point’
...
However, the amount of money raised
was not the only measure of the success of the project
...
One is the amount of money we are able to channel
...
Every
individual donor chooses what he wants to do through GiveIndia,
and therefore we can't measure the impact at the end destination
...
So its own success lies in
getting more and more people engaged
...

“You must keep in mind that the amount of money we will raise will
always be insignificant
...
”
So it's more about instituting a culture of giving
...
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ownership
...
We are
paying taxes and telling the government, ‘I don't care whether you
are doing anything with this money or not, leave me alone’
...

Water starts getting bad, so we consume mineral water
...
And he's not got a closed
view about the possible solutions
...
Do not abscond from your duty as a citizen
...
Because even making the choice that I think
education is more important than health, or livelihood is more
important than education, means an individual has thought about
and acknowledged the problem!”
Every individual donor gets a report describing how their money
was used
...
For example, it takes
just Rs 180 to give a smokeless chulha!
“When I was a kid, I have seen my mom sometimes use firewood,
and I remember how much she used to cough
...
GiveIndia now certifies 120 voluntary
organizations
...
And
Venkat believes that the market will correct everything else
...
Somebody will
get 1,000 rupees a month, somebody will get five lakh rupees a
month
...
They see the value in being transparent in
their accounting
...
Today 94% of GiveIndia's
revenues come through the transaction and service charges levied

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...
Only five per cent of the expenditure is borne from the
seed grant that ICICI had initially provided
...
If my cost of fund raising is
about 20 per cent, ICICI wouldn't bother too much
...
And that's exactly what I like
...
It will not give us the space to take
things easy and set unambitious goals
...
The challenge is to not
need to use it!
In 2007-08, GiveIndia expects to channel roughly Rs 18
...
Of these, 25,000 are ‘payroll giving’
donors
...

‘Payroll Give’ was born out of the insight that people want to give,
but it is not high on their priority
...
But how? The most common method of fund
raising used by NGOs is face-to-face
...

For every 100 rupees, the cost of raising the money is 40-70%
...

“The cost of raising funds can be broken down into the cost of
establishing credibility, cost of doing the transaction, and then the
cost of servicing the relationship with the donor
...

Cost of credibility is zero
...
Once he has
signed in, by default he is on the program
...
You have straight away

In 2007-08, GiveIndia expects to
channel roughly Rs 18
...
Of these,
25,000 are ‘payroll giving’ donors
...
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brought your cost down substantially
...
”
Currently more than 20 companies including HSBC, HDFC, ICICI
bank, YES bank, Deutsche bank and many others have signed on
...
Few
new ideas are!
The initial pitches were made to friends and wellwishers
...
Eventually they built a
classic retail sales organisation driven by targets
...
One mail from the CEO and HR department is not
enough to move 10,000 people
...
It's one of the arrows in the arsenal of every
entrepreneur, unmatched by automation and corporatisation
...
GiveIndia is the official charity partner for the events in
Mumbai and Delhi with around 15,000 individuals raising funds
through this channel
...
Standard Chartered bank was sponsoring the
Mumbai Marathon and Procam was organizing the event
...
You will find it easier to push things through with
government and the media, press, everybody will be more
interested
...
”
In 2007, the Mumbai Marathon raised Rs 7 crores and the Delhi
Marathon Rs 1
...

65% of this was through individuals, as that is GiveIndia's focus
...
See, companies don't
change the nature of a country
...
So if you want to change the caring nature
of the country, you have to work with individuals
...
Instead of an individual
simply donating to charity, he or she would run for a cause
...

The best thing, exults Venkat, is that there is zero event organizing
cost, so the total fund raising cost for GiveIndia is a mere 3
...

Which is an industry benchmark!

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...
The big
challenge now is scaling up, and this requires investment
...
Our payroll program has
worked only because of technology
...
We process that and send the company a file which they
upload into their payroll processing software, whichever software
they are using
...
Then there remains
the challenge of attracting good people
...
But of course nothing
close to the corporate sector
...
They are not working with
children and receiving emotional fulfillment on a daily basis
...
”
There are many high calibre professionals willing to work part
time
...

“In many ways, what GiveIndia is today is thanks to people like
Mathan Varkey (who was Triton's Media Head) and Pushpa Singh
(Sr Mgr at Anagram) who gave up successful and lucrative careers
to work for a cause,” says Venkat
...

So what is the future looking like? Very bright!
“I think the next generation has a much greater orientation of
giving
...
So there is this
fear that something could happen, there could be a recession etc
etc
...
They
feel confident that we will be able to take care of ourselves, so let's
share a bit
...

And conversion rates in these BPOs are 70-75%!
So the culture of 'giving' does seem to be taking root
...
It's
a letter which read as follows:

Dear Stakeholders,
We are delighted to inform you GiveIndia has closed down
...
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Donors are now active, they are finding NGOs, they are engaging
with them, they are giving money directly and they don't need
GIVE INDIA
...

The existence of a GiveIndia is a reflection that people in this
country are not able to do what they should do on their own
...
I wish there wasn't
...
”
Not that such a thing will ever happen! Already Venkat is deeply
involved in a company called E-I or Education-Initiatives run by DD
and Sudhir
...

“I spend 25-30% of my time on EI
...
I
stay with my parents, so that's more than enough
...
Right now we are working on a product called ADEPTS
...
”
“We are doing it with great depth of understanding
...
Only four or five people in the world
are using those kind of tools
...
That's fascinating, commercial success is
actually not important
...
And that Venkat will eventually
move on
...
“I genuinely
believe that I am now counterproductive to the organisation
...
But, of course, it will be all about
making a difference
...
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ADVICE TO YOUNG
ENTREPRENEURS
My advice for IIMA alumni - the IIMA qualification is the
best possible ‘income insurance’ you can get in India
today
...
I've seen
this happen in my own three efforts that I've been
involved with as start ups, and with several friends I've
seen build businesses as well
...

And my advice for the world at large - Just try and
experience the joy of ‘giving’ first hand
...


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...
He believes ‘small is
beautiful’ because in the quest for size and scale you
lose out on the joy of creation
...


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...
A listed
company, with a few thousand employees and several
millions in revenues, or even in billions
...
Scaling up your company from a 12 man
operation to 1200 is certainly an achievement
...

Everyone starts small, and struggles
...
With size comes detachment
...
And an insatiable appetite to ‘grow’
...

‘Think big’ and somehow get there remains the ambition
of most entrepreneurs
...

These entrepreneurs want control over the quality of their
lives, and the quality of the business
...
Such a
business is driven by the knowledge and expertise of its
founders, and hence remains inherently unscalable
...

Anand Halve is one such entrepreneur
...
With over
two decades of advertising experience, he could have set
up a traditional agency, driven by billings and
commissions
...

Anand's story illustrates that there is no one definition of
‘entrepreneurship’
...
If that means size,
dilution of equity, outside capital and attendant
pressures, so be it
...
The
small and beautiful
...
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SMALL IS

BEAUTIFUL
Anand Halve (PGP '77),
chlorophyll

Know thyself and the rest follows, they say
...

So he dropped out of medicine and completed a graduation in
science
...

There was no burning desire to do management but Anand gave
the CAT and made it to IIMA
...
But it became exciting by itself
because of two people who influenced me greatly: Professor
Labdhi Bhandari (who had earlier worked with Levers) and
Subroto Sengupta from advertising”
...

Anand took the Lintas option
...

Anand joined the research division of Lintas and quickly fell in love
with advertising
...
He then switched to client servicing and account
management in the front line
...
Anand tried to implement it at Lintas
India but it did not quite happen
...

After short stints at agencies like Clarion and Rediffusion, Anand

288

23_Smalls is Beautifuleditjuly10
...
The year was 1988
...
Earlier Khan, along with Ajit Balakrishnan and Arun Nanda
had set up Rediffusion
...

“I saw the quality of work the relatively smaller and higher risk
taking agencies were doing
...
”
“The other interesting thing that Mohammed had said and which
stuck in my mind was that if you have pots of money, you don't
need good advertising
...

‘Washing powder Nirma’ is one such example, he says
...
That's what attracted him to join
Enterprise - Mohammed Khan essentially believed the same thing
...

You represent the left brain and Mohammed Khan represents the
right brain
...

But Anand was something of a maverick
...
Besides I had always found that if your end goal
is the same, there isn't any conflict
...
So I said, there is no reason
why it shouldn't happen here”
...
The formula went like this: If
there was a disagreement regarding the ‘What’ of the
communication, Mohammed would go by what Anand had to say
...

“For instance, should the proposition be built around durability, or
style? That would come out of understanding the customer and I
would have the last call on that decision
...
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“The buffer that we talk about is
having enough money in the bank to
pay fixed expenses for two months You
need to have it at any given point
...
Because that is a finally an intuitive call on
what is it that people will respond to”
...
In fact the line “Sunday ho ya Monday, roz khao anday”
written by Anand became part of popular folklore
...
It was a 360 degree approach to
communication which Anand would later implement in his own
company chlorophyll
...
By this time all leading agencies had
sold part of their stake to a multinational agency
...

“So there was this sense, though he didn't say it in so many words,
that I am missing the bus! We told him, selling out is not such a
good idea
...
The multinational, billings-driven agency is a different work
style altogether
...

But Mohammed took his chances and began discussions with
London based Lowe
...

When a merger happened in 1996, Enterprise Nexus
Communications came into being
...

The merger was a disaster from the word go
...
One was more laissez faire, while the other had a high

290

23_Smalls is Beautifuleditjuly10
...
When people from both sides began working
together, there was pandemonium
...

He was also used to running the agency in a fashion where there
was no need to be answerable to anybody
...

There were other, practical issues
...
The
salaries of people who had worked for Enterprise had to be raised
to match this
...

On top of that there was no new business coming in
...
In fact, Enterprise
Nexus lost one of its biggest accounts Raymonds within the first 6
months
...
“The owners have screwed up and the burden
of that has been put on somebody else,” Anand thought to himself
...

It was a lesson that would stay with him
...
The
agency actually shrank in this period
...

He was an advertising professional with two decades experience
so he explored options in advertising
...

“Lintas wanted Pratibha to get used to international norms and I
was given the job because I was familiar with Lintas system and
am a Maharashtrian
...
So it was thought they would be comfortable with me
...
Anand thought the
sensible thing to do was to position Pratibha differently
...

“The working title of my presentation to Geetanjali Kirloskar and
Prem Mehta was: ‘The Agency for the Rest of Us’
...
And my idea
was to build a second network in Pune, in Nagpur, in Jaipur, in
Kanpur, which is essentially staffed by regional language creative

23_Smalls is Beautifuleditjuly10
...
Not the smooth-talking South Bombay culture
represented by Lintas
...

“That's when I said, ‘ The time has come to get out of this circuit
...
’ This was the first time the thought came to mind: ‘Let me
become an entrepreneur’
...
We were not owned by an international network, so we had
complete freedom
...
All these were my
decisions
...
It
was great fun”
...
All the big agencies were owned by the
international networks
...

After a year shuttling between Mumbai and Pune (where Pratibha
was based), Anand decided it was time to branch out on his own
...

“You will have to say that”
...
”
A decade later, of course, there are absolutely no regrets
...
Even
as he was toying with ideas he got a call from old friend Kiran
Khalap, the CEO and CCO of advertising agency Clarion
...

Kiran was experiencing the same sense of 'this is no fun', as
Clarion had been bought over by an international company
(Bates)
...
They
would start a communications consultancy with a difference
...


292

23_Smalls is Beautifuleditjuly10
...

“For example, if a client comes out with a great throat lozenge,
maybe the best thing to do would be to just distribute it to any guy
you see at the paanwallah buying a 20s packet of cigarettes
because he is going to have a throat problem
...
So you say, let's do a television film
...

“In the agency business, the most experienced and
knowledgeable resources actually spend most of their time on
admin work
...

Managing ego conflicts and hassles
...

So you actually spend much less time in rolling up your sleeves
and doing your work
...

No wonder people actually lose the initial joy they felt working in
advertising
...

There were five people in the founding team: Anand, Kiran, an art
director (Nalesh), copywriter (Gangadharan) and an account
planner (Manjunath Hegde)
...

“My view about the communications business is that finally it
depends on human skills, and those cannot be replicated and
cloned
...
”
As Jay Chiat of Chiat Day (the agency which produced memorable
commercials for the likes of Apple and Nike) once said: “How big
can we get before we get bad!” Chiat Day had only four very large
clients
...


23_Smalls is Beautifuleditjuly10
...

Anand and Kiran had decided they would not talk to these clients
for at least 6 months
...
We launched on 15th August, Independence Day
...
Madan Bahal, a friend who owned
Adfactors, said I am going to give you great PR coverage
...

Anand and Kiran called all their past associates, co-workers,
clients etc
...
The company was
developing a new Parachute variant and soon after gave some
work on Sweekar cooking oil as well
...
Just the kind of work
chlorophyll had set out to do
...
But Rome was not built in a day; they
took both assignments
...
Although chlorophyll had a flat
structure, Marico was a hierarchy
...
And there was an
expectation that they would be available anytime, anywhere for
meetings - that's how client and agency traditionally functioned
...

The sheer operational pressure made by an advertising account
was huge
...
“We didn't want to go the
advertising path because we had seen, in a business downturn,
you are taking on the responsibility for your employees' lives
...

chlorophyll found its niche by focussing on brand and corporate
identity - a completely new and virgin territory
...
And there were
enough VCs throwing money at them
...
chlorophyll did 20
brand identities in 18 months
...
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295

chlorophyll also worked on projects stretching over a longer period
of time
...
It was also decided that at any point, the
company should have retainer business that would take care of 30
percent of costs
...

The idea was to be small but viable
...
And this was after all the partners took a salary equal to their
last paycheque prior to joining chlorophyll
...
Yet they would not pressure themselves to
take on any and every business
...
But over time clients respected
this approach, and the kind of business chlorophyll desired came
in through client recommendations and word of mouth
...
But they did not
hire the standard agency types
...

Much of this talent was drawn from colleges where Anand and
Kiran gave lectures, as well as former colleagues who had
pleasant memories of working with them
...

Attrition is not much of an issue
...

It's trendy without being wannabe, a place where thoughts and
ideas float in the air and people seem to be genuinely happy
...
You make big money by
selling companies’
...


“The name chlorophyll embodies our core
values: creativity and efficiency
...
”

23_Smalls is Beautifuleditjuly10
...
Most
agencies still report turnover in the form of gross billings, on
which they earn anything from 2 to 15%
...
So
chlorophyll is a profitable agency, but prefers to use different
yardsticks to measure that profitability
...
How productive is each
rupee of manpower?, we ask
...
Every decision is driven by the
satisfaction levels as well as lifestyle desired by the entrepreneurs
...

“I think we smile a lot more
...

Because there is no source of stress
...
”
“We use three yardsticks and we know it is very unlikely that any
project will fulfill all three
...
If it's only one, then it better be superlative on that one
dimension
...
”
So there are projects chlorophyll has done for the fun aspect
...
“For example we are
working for the Maharana of Udaipur, looking after his ‘brand’
...
But it's great fun… How many
chaps can say my client is the 76th in the line of kings of Mewar,
unbroken from 734 AD? And I was having a cup of tea with him
last week
...
“It's a textbook in communication
courses
...

Reporting to your own conscience is the highest and most
rewarding form of servitude
...
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SMALL IS BEAUTIFUL

ADVICE TO YOUNG
ENTREPRENEURS
Goals
* Follow your heart
...
(Steve Jobs and Michael Dell
are driven by different intangibles…figure out who you’d
rather be
...

Money
* Money is not an end in itself
...
without breathing, you and I can’t
live, but if you ask me what is the purpose of my life and
if I say breathing, it is such a narrow way to define it”
...
(People
give up their lives for what they love but no one will do it
for an EBIDTA
...
(You can’t
plan together, if the guys at the table are Gautam
Buddha and Genghis Khan
...
Postfacto, any act can be justified
...

The last word
* Finally, if you don’t laugh enough, your business model
is probably wrong!

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...
The man behind the
iconic Sintex water tanks believes in constant evolution
and creation of new products
...
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A SENSE OF OWNERSHIP

It is a bit of a shock when you are interviewing someone
for a book on entrepreneurship and the very first
sentence he utters is: “I'm sure you know… I don't own
this company, but in every other sense I am an
entrepreneur
...
But I am intrigued and we get on with the
interview
...

Management books often talk about being
‘entrepreneurial’ within a large company
...
Both terms sound like
terms from a Dilbert comic strip, to keep cubicle
workers happy
...
Sure, anyone from a trainee to
the CEO can feel a sense of ‘ownership’
...
As he
tells me the story of how he built this company he has all
the fire, the feeling and all the fondness of a Founder
...

In the cutthroat world of business, a rare and beautiful thing
...
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A SENSE OF
OWNERSHIP
S B Dangayach (PGP '72 ),
Sintex
S B Dangayach grew up in Rajasthan
...
The year was 1972
...
The company had fantastic
systems, it had fantastic controls - they were ahead of even
Hindustan Lever in some of those areas
...
And
Dangayach is surprised that they actually took him
...

Dangayach was a science graduate
...

He was asked: “You are not an engineer
...
” It was an audacious but true statement and
should have got him the job
...
Dangayach was
not even eighteen when he joined IIM
...

The interviewer, one Mr Chari, asked: “You are such a young boy,
how can you justify being here?”
Dangayach replied, “Youth is on my side and the fact that I have
competed with so many older people and succeeded should tell
you that I must have something in me
...
Marwaris never
work for too long with anybody
...
”
Dangayach's answer to that was: “I don't value money as much as
Marwaris do
...
”

300

24_A Sence of Owenershipedit10july
...
A trait you see in so many entrepreneurs: when
they really want something, they fight against the odds and get it!
Dangayach worked at Asian Paints for two years but he was not
very happy
...
There was
little freedom or latitude to think independently, or innovatively
...

Dangayach realised that working at such a place was not
conducive to his temperament
...

They were a textile company starting a small division in plastics
...

Bharat Vijay Mills was located around 30 kilometres away from
Ahmedabad in a moffusil town called Kalol
...
He had seen life in the
‘big’ lane and knew his future lay elsewhere
...
With an eye on the future,
the company thought of venturing into chemicals and plastics
...
For the plastics division that person was to be
Dangayach
...
Once I
proved myself, there would be no interference from the owners”
...
And
within a few months, Dangayach had built an excellent equation
with the Patels
...
And since then I have
been continuing and it has been almost thirty three years that I
have been here
...

Dangayach put in no money and owns an insignificant amount of
shares
...
And he got that
...
And that's what
happened
...
Of
course there was no great structure in the company
...
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“People know my integrity, people who
are into headhunting do not approach
me ever
...
”
an endorsement of the fact that a 22 year old can manage all the
functions - manufacturing, marketing, finance, accounts
...

And there was no interference?
“Once I convinced them that I can manage, they played only a
notional role
...
The name of the company was one day to change to ‘Sintex’
...
It was
also apt because it combined the two products of Bharat Vijay Mills
- sintering and textiles
...

Today the brand ‘Sintex’ is synonymous with plastic water tanks
...
But Sinter Plast containers
actually came into existence to make industrial articles for the
textile industry
...

But as luck would have it, the company did not succeed in
marketing card cans
...
Sintex diversified into industrial containers - for storage,
transportation, processing and material handling
...
In 1975, Sintex did a turnover
of Rs 3 lakhs
...
In 1977 they had achieved break even
...


302

24_A Sence of Owenershipedit10july
...
The shape reminded me of a
water tank
...
”
Of course, a lot of thinking went into the design and market
analysis
...

Everyone expressed the need to look beyond cement and steel
water tanks
...
At least
not at the price proposed by Sintex
...
Sintex defied conventional
thinking and went ahead
...

There were no other competitors, which was both good and bad
...
Side stepping the
obvious target group and focusing on actual end users
...
So we talked to a
few of them to get a reaction
...
They did not like the
idea of an oddly shaped black tank on top of their buildings!”
So Dangayach decided to address a different kind of user: the
government
...
Structural engineers and project
engineers were also more open to change, because of the bad
experiences that they’d had with the other tanks
...
There were issues of hygiene, contamination and
also the effect of cement tanks on the building structure
...
We never stopped to
think whether they were ugly! We simply accepted that water has to
be stored and this is the way to do it
...
Getting the initial
momentum may be an effort but then it simply takes off!
It was a difficult five-year period
...
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in the ‘educate the customer’ phase, the industrial products
business continued
...
There's a bee in his bonnet that keeps buzzing
...
We have come
up with new things every 2-3 years and there are quite a few things
that we are doing that we couldn't have imagined 10 or 15 years
ago
...
”
Dangayach believes an entrepreneur must constantly play the role
of ‘trinity’
...

Simultaneously you need something which can sustain the current
revenues and something which can be big in the future
...

Something which could be a substitute for timber and wood
...

“We succeeded in doors, we succeeded in the profiles that can go
for paneling and partition
...
It has been almost 20 years and we are still struggling
with plastic windows”
...
Dangayach hasn't lost hope yet
...

“First we positioned it as a higher end product, then we positioned
it as an energy saving window, then we positioned it as something
which can substitute aluminium
...
So far we have not succeeded
...
”
Twenty years of struggle with this product, and yet he isn't quite
ready to give up
...
With energy
conservation becoming a central issue in building design, the
plastic window is poised to take off once again
...
And
Dangayach has all those qualities
...
The next big thing,
he thinks, is prefabricated buildings
...


304

24_A Sence of Owenershipedit10july
...

We are now material agnostic and technology agnostic
...

Already
...
Prefabricated schools, prefabricated
houses, prefabricated medical centres - that is what Dangayach
believes is the future
...
What
kind of technology should be selected, what product lines, what
marketing strategies, what finance should be brought in - he is
integral to everything
...
The promoters - Mr Dinesh Patel and Mr Arun Patel - share
a very good chemistry with me
...
”
“And obviously I have got the necessary reasoning for it
...
We sit for half an hour, an hour, relevant
questions are shared and we take a decision
...
Within fifteen
minutes, we decide that this is what we want to do, fund
calculations are made and naturally, periodic meetings are held as
well
...
The first I is Initiative
...

Third is Industry, which is obviously hard
work
...
I work with total
integrity
...
”

24_A Sence of Owenershipedit10july
...
The fund, headed by Pradip Shah, zeroed
in on Sintex as they believed it would grow in value
...
At that time, the
turnover of Sintex was around Rs 170 crores
...
“The agreement mentioned ‘us’, meaning the owning
family (the Patels) and I
...

“No, I am not an owner,” he reiterates
“But you have an ownership stake
...
But, I behave like an owner
...

That is what I have been doing… Money is not very important to me
in my personal life, barring a certain level
...
”
It's the ‘open format’ of work which excites Dangayach
...

Some years ago the company changed its name from Bharat Vijay
Mills to ‘Sintex’, taking advantage of the brand name recall enjoyed
by its most famous product
...
70% of the company’s
revenues come from this division
...

“We have divided our responsibilities
...
I have autonomy in my
domain
...
And we have made
some correct moves
...
”
A typically understated statement!
Apart from the fantastic symbiotic relationship Dangayach has
sustained with his promoters (or ‘venture capitalists’ so to speak)
it's fascinating to observe how his mind works
...

With prefab, the vision is linked to the idea of affordable housing
...
Utilising a plastic former, they created the idea of
‘monolithic concrete construction’
...
It is literally casting the house
on the construction site, in one single shot, out of concrete
...
33 crores on total income of
Rs 1700
...
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A SENSE OF OWNERSHIP

An entire floor can be completed in 4-5 days
...
There is a
mandate from the government to construct 10,000 such houses in
Delhi
...
It is, Dangayach believes, the
most cost effective method of creating mass housing
...
An insight which could benefit
other entrepreneurs
...

Within government, I would say some of the engineers, some of the
key decision makers, are as efficient and open to accepting new
ideas as in the private sector
...
”
As for ideas, Dangayach admits he's had a lot of pet projects which
have not worked
...
I have been thinking
that we should be giving cost-effective, affordable, solar water
heating solutions in the country
...
I designed such a product with
the help of my team
...
”
The water tank for the heating system was made out of plastic as
well
...

The company sold 10-12,000 units a year
...
So the product was
withdrawn
...

“My idea was that if Israel can have solar water system in every
house, Turkey can have, Greece can have, Cyprus can have, why
not at least in some parts of India which have abundant sunshine
and similar temperature profile?”
You would think, to achieve all this, Sintex must have a crack R &
D set up
...

“Many a times, I am functioning as an ideation man and as a
designing person
...
I also look at the after sales service aspect
...
So there are going to
be quality issues, there are going to be service issues
...
”

307

24_A Sence of Owenershipedit10july
...
’ Any
domain it works in must have a large and relevant problem
affecting the masses
...

Of course it's also a huge business opportunity
...
Today
people buy a tank of 1000 litres for 3000 rupees
...
If that succeeds, we will
have a fantastic business model!”
Dangayach's eyes shine as he explains how it's all going to work:
“We can create a very durable, underground water storage
structure at a very reasonable cost, for a multi-storied building
...
We have already devised a special technology, we
have already validated it”
...
That is the
reason why we keep on innovating
...
On a flight, a couple of days
before our interview, Dangayach met the legendary architect B V
Doshi and got him interested in green building materials
...
And I hate to repeat it, but it's not even his own company,
technically speaking
...
Over 50% of
Sintex is now ‘owned’ by FIIs, funds and other investors
...
Correct or not! You feel that
you have probably 30-40-50 per cent stake
...

“But if I am able to take an idea, maybe take a project, which I can
nurture, which I can grow, which I can take forward, I think it's as
good as what an owner would be doing
...
I can assure
you, that on all these ideas, my work is no less than anybody who
is driven by or who is crazy about money
...


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24_A Sence of Owenershipedit10july
...
Number one
...

I do what my conscience tells me to do
...
That is what I advise
young people as well
...
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BASIC
INSTINCT
Vijay Mahajan (PGP '81),
Basix
An IIT-IIM graduate, Vijay has devoted his life to
addressing issues of inequality and social justice but
through management techniques
...


310

25_Basic Instincteditjul10
...

Lots of it
...

Money is important for what it allows you to do as a
company
...

All these entrepreneurs, whether in the business of sugar,
retailing groceries or job listings actually derive meaning
from the impact their business makes on people's lives the jobs they create, the value they deliver, the good work
they do in the communities they serve directly or
indirectly
...

Dressed in the trademark Fabindia handloom kurta he
looks every bit the social worker
...
It's just that his market is one which was
never thought to be worth addressing
...

Basix is not the biggest institution of its kind but it created
the culture of microfinance in the country
...

This is the story of what it means to stick to what you
believe in, not for months or years but as long as it takes
...
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BASIC
INSTINCT
Vijay Mahajan (PGP '81),
Basix
Vijay Mahajan was not born or brought up differently from the rest of us
...
My father was a civilian in the army, my
mother was at home
...
In fact if anything, we are a fauji family, that's where I should
have gone
...

There was no eureka moment, the process of sensitisation took
many years and many forms
...
My first encounter with poverty, rural people, the
concept of social service, happened at this school
...
During character period,
students would go to the general hospital once in a week
...

But this is hindsight
...
Vijay joined IIT Delhi after completing his
schooling
...
India went to war over Bangladesh and in 1973 there was
the Navanirman movement in Gujarat followed by Jay Prakash
Narayan’s ‘Total Revolution’
...
But there

312

25_Basic Instincteditjul10
...

“There was this view among some of us, idealistic fellows, that
technology can solve a lot of problems
...
It
was something a group of IITians did off and on, during their summer
holidays
...

He worked with the marketing department of Philips in eastern India
...

“In those days, Bihar, Orissa, Bengal, North East were quite poor
...
I was already sensitised to so many
issues, so there was this continuous inner dialogue going on”
...
But
he could not actually make the switch
...

At the same time Vijay had heard of Prof Ravi Mathai who had
stepped aside as the director of IIMA and had started the Jawaja
project
...
It will be a) career insurance, and
b) in the best case, I might work with Ravi and his colleague Prof
Ranjit Gupta and understand rural development better
...
I was more than quite sure
...
“I did a lot of projects, did my summer job
at Jawaja in south Rajasthan and essentially converted the
programme into a kind of a self learning and development to the
extent one can learn in theory”
...
What Vijay did
realise after years of volunteer work was this: the people behind
NGOs were good hearted but their organisations were not
professionally run
...

FAIR's main objective was to revive sick industries and they had a
bunch of IIMA graduates of the previous batch, involved in this effort
...

“I was there for a year and undertook many studies
...
I didn't want to be a consultant on development
...
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STAY HUNGRY STAY FOOLISH

wanted to do something on the ground”
...
The organization helped farmers
who received land from Vinoba Bhave's Bhoodan movement to make
a living
...

A lot of poor quality land was given by landlords to landless labourers
during the famous Bhoodan movement
...
But someone needs to invest in leveling
the land, arranging for irrigation and then starting cultivation with
seeds, plough and bullocks
...
And you are not doing this with one
person at a time, but a whole community with sixty, eighty, sometimes
a hundred people
...
Over a period of time they would repay
the loan and the capital would then be used to help other farmers
...

Sounds very sensible but it was not at all easy!
“When I took over the Bihar projects, all the money had already been
spent,” recalls Vijay
...
”
For example, they had put six borewells, but they had not put the
last mile of pipeline
...
95% of the investment
had been made, but with 0% result
...

Since there was no water, the farmers had no incentive to level the
land
...

“When we turned up in those villages, they were ready to hit me
...
Koi kaam bhi nahi hua aur
karza bhi hua’
...

Once you do that, the whole virtuous cycle starts
...
I managed to turn around one
village first
...
”
It was an important lesson in how to tackle the grassroots reality of
development
...


314

25_Basic Instincteditjul10
...
Along with the Mr Loganathan (founder of
ASSEFA) and Deep Joshi, who worked with the Ford Foundation,
Vijay developed the idea further
...
Several
professionals joined PRADAN, excited by this mission
...
Of the
remaining amount half was paid by the institution using our services
and half by PRADAN using a Ford Foundation grant
...
I didn't think of myself as an entrepreneur or a social
entrepreneur
...
Solving problems, no doubt for poor people
...

But Vijay quickly realised that setting up an organisation of any kind
involves the same set of basic issues - establishing credibility, getting
minimum resources, financial accountability
...

What PRADAN did beyond the actual technical assistance it
provided was evangelise the idea of young professionals contributing
to the development sector
...
From two NGOs and four professionals on its rolls,
PRADAN quickly expanded to 10 NGOs assisted by twenty five
professionals
...
There was no long
term business plan
...
For me,
there have been blockages in going
forward rather than going back
...
Basically
they bounce back
...
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STAY HUNGRY STAY FOOLISH

“I realised that if we continued to remain
dependent on grants for our own
functioning, and government loans for the
community, it's going to be a very slow
path
...
”

Of course, with growth the problem of constantly garnering resources
and building a team
...

While PRADAN was definitely an early example of ‘social
entrepreneurship’ ie an effort to tackle a longstanding social issue in
a fresh and new way, it never became financially self-sustaining
...

“The communities that PRADAN works with are too poor to pay
...
”
Suppose the state irrigation department is investing a crore in
building borewells, you need Rs 10-12 lakhs to manage and
implement it
...
25 years since its
inception, PRADAN remains a robust organization with 250
professionals working for it
...

Vijay left PRADAN on 31st Dec 1990
...

For years, Vijay had given his heart and soul to development work
...

His own life, meanwhile, was falling apart
...
While he was
mostly to be found in dusty Bihar, she was working in Delhi
...
In 1988, Savita got a fellowship to
Princeton
...
Plus, I was also very exhausted
...
I am describing it in very few sentences but it was very hard
work
...


316

25_Basic Instincteditjul10
...
While in the US, he got a chance to
think about what he had achieved so far
...
But one which
the rural and the marginalised find very hard to get from local banks
...
The work it did was no doubt good but it
was not making enough of an impact, he now felt
...
We won't be able to control anything
...
For a while he considered politics but then dismissed the idea
...
So I said, okay
...
But I remained in
the field of livelihood promotion, working for poor people
...
Vijay had already built a very good reputation in
PRADAN so getting assignments was not very difficult
...

A space where ‘nothing is happening’ is actually just what you need
to do some serious soul searching
...

PRADAN was in safe hands with Deep Joshi at the helm
...
But he kept swimming
in the seas of development, hoping to one day sight shore
...
Interestingly, they had excess deposits and were struggling to
deploy credit
...

The SEWA bank was a co-operative, run by members of the
organisation's trade union
...
And I got fascinated by that
...
With the
support of the Ford Foundation he studied Shore Bank in the US,

25_Basic Instincteditjul10
...
He
was also asked to do a study on ‘financial services for the poor’ by
the World Bank
...
They handled the technical
details while he provided the insight into the rural poor
...

On requests from many quarters the studies were shared with
numerous institutions, including RBI, NABARD and ICICI
...
With a better understanding of rural
financial institutions and the confidence that he could run such an
institution, he was now ready for the Next Big Thing
...

Savita and Vijay decided to shift from Delhi to ‘somewhere in the
south of India’
...

“It's interesting that when you make decisions, in retrospect they look
like very wild decisions
...

Savita's sister was living in Hyderabad, so was my uncle
...
”
In 1995, Vijay began writing a feasibility report to start a rural bank
...
He too
had been to Bangladesh
...
Vijay jumped at
at that chance
...
The FM is
saying, ‘Let's do a bank for the poor; you want to start a bank for the
poor
...
”
But here is where Vijay committed a bit of a faux pas
...
At that time, you needed a minimum of Rs 100
crores equity
...
And even if you have that, you
don't get a license quickly
...
In essence he wasted
6 months trying to set up a bank
...
But you will not be able to raise the money necessary for
a bank on day one
...


318

25_Basic Instincteditjul10
...
But I
seriously doubt you will be able to start a bank
...
Finally on the advice of some friends and well-wishers Vijay
decided it was time to stop talking about the project and do
something
...
Vijay bought over the equity of Rs 81,000 and took over the
company
...

“The reason why I picked these two is that an IIMA batchmate of
mine - Pramod Kulkarni - who first worked with me in PRADAN had
later started an NGO called PRERNA in Raichur
...
So I
was familiar with the area and its problems
...
That, we did not have
...
In the course of this work which
took a year, he got to know the trustees well and even shared his own
dream with them
...
”
She said, “How much do you need?”
He said,” A crore should be enough to prove the concept
...
The catch was
that in its 80 year history the trust had never given a loan - they only
gave grants
...
Because then, the
concept was not proved
...

Finally, Mr Palkhivala, Trustee and Mr Soonawalla - Tatas Sons’
Finance Director - said, “Let's give this young man a loan, although
in our mind, we should treat it as a grant
...
”
Armed with this money, Basix finally started operating in June 1996
in Raichur
...
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By now it was clear that a bank was not possible, but it was also
clear that it could not be a non-profit organisation either
...

In 1996, there was no need for either a license or minimum capital to
start an NBFC
...
Vijay's plan was to
get the Ford Foundation and the Swiss Agency for Development
Cooperation to put in ‘quasi equity’ of Rs 15 crores which would act
as the initial lending money
...
A business plan was formulated over the
next few months
...
So for the first time in his life, Vijay started doing
big spreadsheets with a lot of help from batchmate Bharti and
auditor Nagarajan
...
In January 1997, the Ford Foundation approved
a loan
...

On a trip to Indonesia, Vijay and Bharti had seen the concept of
‘Rural Private Banks’ (BPRs) which had very low start-up equity, as
little as $50,000
...

“We came back and made a presentation to RBI, and asked why
don't we have small rural banks or Local Area Banks in the private
sector? The Narasimha Rao government fell and Chidambaram
became the finance minister in 1996
...
One of their agenda
items was to double rural credit in five years
...
The
Mahajan idea of Local Area Banks (LABs) came to the Minister’s
notice
...
Basix applied
for a LAB license and received RBI’s in- principle approval
...

From an individual to a section 25 company to an NBFC to a LAB the
organisation had gone through an incredible amount of restructuring
...
We thought ki yeh fit ho gaya
...
”
All was going as per plan when a huge scam hit the world of finance
...


320

25_Basic Instincteditjul10
...
Thirdly, it prohibited
NBFCs from taking deposits
...

Vijay and his team were hit by a ton of bricks
...
“Thank you very much for helping us start
...

In June ‘97, Rs 1 crore was repaid to the Tata Trust, partly from
money which came from the Ford Foundation
...

“We had around Rs 3
...
We had operations on the ground and could quadruple
our lending
...
It
couldn't take deposits, its future was not clear
...
There was
now another 6-8 crores to lend and the venture started going from
strength to strength
...

“We were using all kinds of methodologies, self-help groups, joint
liability groups and individual lending
...
” With its unique insight into rural India built over so
many years, Basix could service this market like no other
...

Basix became the model for doing unique and innovative things and
yet breaking even
...
Basix avoided this by
operating at a higher scale from the very beginning
...
While the core business was moderately loss
making, with the additional income, it achieved a break-even
...
We thought ki
yeh fit ho gaya
...
”

321

25_Basic Instincteditjul10
...
Applauded for
working with poor people, using innovative products and channels,
and yet being sustainable
...
We got very frustrated
...
For a
lending institution, its only asset is its loan portfolio
...

In 1999, Mr Ramesh Gelli’s Global Trust Bank was the first Indian
institution who gave Basix a loan of Rs 50 lakhs
...
Vijay then went to RBI and lobbied
for the cause
...
This was approved and in fact, such lending was
classified under ‘priority sector’
...

“These same banks were sitting on our proposals for three years,
andar ghusne nahin dete the…
...
The fact is government
institutions work on directives
...
There is no incentive for them to take
unnecessary risk
...
Because if one person
at the very top accepts your idea it will be accepted all the way down
...

Now that Basix had access to capital from Indian banks, the next
issue was capital adequacy
...
So banks are already nervous, they don't want to go beyond
1:4, 1:5
...
”
Once again Vijay began the task of networking and raising capital
...
Of these, IFC, Shore Bank (US), Triodos
Bank (Netherlands) and our own ICICI and HDFC agreed to put
equity in Basix in the year 2000
...
”
As soon as that hurdle was crossed, the RBI granted the Local Area
Bank license
...

What's more the bank license was valid for only three districts
...
But because
a bank offers the advantage of ‘saving’, of collecting deposits, Vijay
decided it was worth it
...


322

25_Basic Instincteditjul10
...
A lot of effort went into undoing one entity,
establishing another and hence in that period the organisation
suffered
...
Then came the real
bombshell
...
The results came out in 2002 and they were
shocking
...
A quarter
said there was no change, and a quarter said we have had a
decline”
...
What was happening?? They went
and spoke to those who said they didn't benefit or had a decline
...

“What I found was that basically the poorer the household, the more
it suffers from risk
...
If the buffalo dies, it is
a disaster for the borrower
...
Secondly,
their productivity was so low, that they hardly had any surplus
...
And the third was, if they actually
managed a small surplus, they got the worst prices and the worst
terms in the market
...
So it did offer technical assistance and support
services but it just wasn't adequate
...
I came
close to thinking that yeh sab bekaar hai
...
Eventually we gathered our wits and crafted a new operating
strategy
...
So now we are the
country's largest micro-insurance provider
...
In addition there is livestock insurance, crop
insurance and asset insurance for equipment
...

Over 20,000 claims adding up to Rs 8 crores have already been
settled
...

“For the other two issues, we added agricultural and business
development services, including market linkages
...
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STAY HUNGRY STAY FOOLISH

work well, we offer institutional development services
...
”
Which goes to show that an idea is only as good as its on-the-ground
implementation
...
An entrepreneur has to have
the courage to look into the mirror and admit, “Yes, I made a mistake
now let's find out how to fix it!”
Cumulative lending by Basix crossed Rs 1000 crores in the year
2007 while bad debts are under 1%
...
When people join us they are
not exceptionally motivated to do development work or work with the
poor
...
But within six months to a
year, they start seeing that, ‘Oh boy! I am truly helping some people
to make their living’
...

The tensions led to a cardiac problem three years ago
...
He did slow
down a bit, but bounced back after a year
...

Addressing the same issues, issues of how our world is configured
...
I am not one of those who believes
in absolute equality, I am quite happy with relative equality
...
To me, that's just not
acceptable”
...

“I think I have been a good son, a good father, a good husband
...
It has been an issue with my wife, for my
children
...
While she herself has had a mainstream career, she has
always encouraged me to do what I want
...
As we walk out of the library, where we
held this whispered interview, he makes one final observation
...
So that makes a difference
...

Making a difference
...
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BASIC INSTINCT

ADVICE TO YOUNG
ENTREPRENEURS
The single most important quality you need to have and cultivate
further is to get up and walk every time you fall down
...
But while that deal
broke off at 10 pm on Monday night and on Tuesday morning I
was at a breakfast meeting with another prospective investor
...

Our expansion in Jharkhand state has seen many ups and
downs due to the poor law and order situation there
...

What did we do – we did not pull out
...

But the second and equally important ability one needs to
cultivate is the ability to learn – from experience, from critics,
from competitors, from failures, from summer trainees, from
mothers-in-law and from regulators! Expert knowledge is useful,
but increasingly has shorter and shorter shelf life
...
Some of this comes
from the self and some from others
...
Entrepreneurship is widely
misunderstood to be a personal trait
...
But
entrepreneurship is a social construction – it is a phenomenon
where certain behaviours get expressed in certain individuals,
due to the support of their “eco-system” – colleagues, family
members, investors, regulators, competitors and customers
...
So nurturing this
eco-system and interacting with it are extremely important
...
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Page 1

THE ALTERNATE

VISION

These individuals are using entrepreneurship to create social impact
...


ABOUT CIIE
The Centre for Innovation, Incubation and
Entrepreneurship (CIIE) at IIM Ahmedabad aims at
fostering innovation-driven entrepreneurship through
incubation, research and dissemination of knowledge
...
Since its inception, a host of organizations,
professionals, academicians and networking partners
within India and across the globe have been closely
associated with the initiatives of CIIE
...

Ongoing programs at CIIE include:
iAccelerator: A summer start-up camp for young IT
professionals, students or web-developers with
entrepreneurial ambitions
...

Anveshan is a nationwide proactive search by CIIE for
hi-tech and high impact innovators in public, private and
informal sectors
...

For more visit www
...
org
...
Its
mission is to help individuals achieve their full potential,
regardless of background
...

Wadhwani Foundation believes entrepreneurship is a
powerful tool for individuals to realise their potential
...
Entrepreneurs bring to the market new
products and services, and devise better and more
efficient ways to operate
...

Successful entrepreneurs create wealth for themselves,
their families, their communities and society
...
wadhwani-foundation
...
NEN was co-founded by five of
India's premier academic institutions: IIT Bombay, IIM
Ahmedabad, SP Jain Institute, Bombay, IBAB,
Bangalore and BITS Pilani
...

www
...
org

ABOUT WADHWANI

FOUNDATION

ABOUT THE

AUTHOR
Rashmi Bansal is a writer, entrepreneur and youth expert
...
She writes extensively on youth, careers and
entrepreneurship and hosts the popular blog :Youthcurry
...
She
mentors students and young entrepreneurs in colleges
across India
...
com

ABOUT THE AUTHOR

START UP RESOURCE
If you would like to contact any of the entrepreneurs featured in this book for
help/advice, here are their email ids
...
Sanjeev Bikhchandani, Info Edge, sbikh@naukri
...
Shantanu Prakash, Educomp, shantanu
...
com
3
...
com
4
...
com
5
...
biz
6
...
com
7
...
com
8
...
mohanka@tegaindustries
...
Sunil Handa, Eklavya Education Foundation, sunilhanda@eklavya
...
Vardan Kabra, Fountainhead School, vardan
...
org
11
...
kalra@makemytrip
...
Rashesh Shah, Edelweiss Capital, rashesh@edelcap
...
Nirmal Jain, India Infoline, nirmal@indiainfoline
...
Vikram Talwar, EXL Services, vikram
...
com
15
...
com
16
...
rao@mphasis
...
Shivraman Dugal, ICRI, srdugal@icriindia
...
Shankar Maruwada, Marketics, shankar@marketics
...
Ruby Ashraf, Precious Formals, ruby@promzstar
...
Deepta Rangarajan, IRIS, Deepta
...
net
21
...
com
22
...
org
23
...
in
24
...
co
...
Vijay Mahajan, Basix, vijay@basixindia

---