#14 - NOVEMBER 2008 by CyberMedia (I) Ltd

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Vol 2 / Issue 02 / Nov 08

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25 TIPS TO MANAGE 11 SEGMENTS WORST THROUGH AFFECTED BY THE 11 SEGMENTS LEAST SLOWDOWN THE AFFECTED BY A SLOWDOWN CAN YOU REVIVE SLOWDOWN THE CIRCUS? SASHA MIRCHANDANI-BLUERUN VENTURES NEERAJ KANWAR ON HIS ENTREPRENEURIAL JOURNEY AT APOLLO TYRES

& BHARATI JACOB-SEEDFUND, ON CURRENT INVESTMENT TRENDS HOW TO REDUCE YOUR HOME LOAN BURDEN Airlines: Time to change the model? Unsure markets: What to do now? iPhone, Android and the mobile platform The foreign-returned entrepreneur A double marriage made in heaven Doing business in Australia

innovation of the month/

A foot operated water pump case study of the month/

Cynapse: How to move from SW services to products? columns/ The entrepreneurial journey Inequality is good How to zig when others zag Converting a threat into an opportunity 100 pages including cover

9977897071. Delhi: Solar LED Solutions - 9810978220. Karnataka: 9342035216. Mumbai: Ambe Trading Co. - 9322271411. Orissa: Ansh Resources Pvt. Ltd. - (0771) 6461066, 9977897071. Tamil Nadu: Naga Sathi Agencies - (0421) 2246056. Thane: Indo Enterprises - 9323448976. Gujarat: Naga Sathi Agencies - 9601259838

Distributors : Chattisgarh: Ansh Resources Pvt. Ltd. - (0771) 6461066,

Vol 2 / Issue 02 / NOV 08

BOARD OF ADVISORS C K Prahalad

University of Michigan

N R Narayanamurthy

Chief Mentor, Infosys

Kanwal Rekhi

Chairman, TiE

Romesh Wadhwani Chairman & President, Wadhwani Foundation Gururaj ‘Desh’ Deshpande

Chairman, Sycamore Networks

Saurabh Srivastava Chairman, Indian Venture Capital Association Kiran Mazumdar Shaw

Chairman & MD, Biocon

R Gopalakrishnan

Executive Director, Tata Sons

Philip Anderson

Professor of Entrepreneurship, INSEAD

Shyam Malhotra Editor-in-Chief Krishna Kumar Group Editor ANALYSTS Aswathi Muralidharan Binesh Kutty Mohita Nagpal Sreejiraj Eluvangal Vimarsh Bajpai OPERATIONS Ajay Dhoundiyal Product Manager VIjay Rana Design Anil John Photography SALES & MA Jaideep Mario Gabriel Imran Ali Dayanath Levaj Jagadeesh Kingshuk Sircar

MARKETING Associate VP West West South South South-East Asia

PRINT & CIRCULATION SERVICES NC George Associate VP T Srirengan GM, Print Services Sudhir Arora Circulation Services Manager Pooja Bharadwaj Assistant Manager, Subscriptions Sarita Shridhar Assistant Manager, Reader Service Printed and published by Pradeep Gupta. Owner, CyberMedia (India) Ltd. Printed at International Print-O-Pack Limited, B-204-206, Okhla Industrial Area, Phase 1, New Delhi-20 Published from D-74, Panchsheel Enclave, New Delhi-17. Editor: Krishna Kumar. Distributors in India: Living Media India Limited, Mumbai. All rights reserved. No part of this publication may be reproduced by any means without prior written permission. BANGALORE 205, 2nd Floor, # 73, Shree Complex, St.Johns Road, Tel: 41238238

/cover story

25 tips to manage through the slowdown

CHENNAI 5B, 6th Floor, Gemini Parsn Apts, 599 Mount Road, Tel: 28221712

KOLKATA 307, 3rd Floor, Ballygunj A.C. Market, 46/31/1 Gariahat Road Tel: 65250117 MUMBAI Road No 16, D 7/1 MIDC, Andheri (East) Tel: 28387241 DELHI D-74 Panchsheel Enclave Tel: 41751234 PUNE D/4 Sukhwani Park North Main Road, Koregaon Tel: 64004065 SECUNDERABAD #5,6 1st Floor, Srinath Commercial Complex, SD Road. Tel: 27841970 SINGAPORE 1, North Bridge Road, # 14-03 High Street Center Tel: +65-63369142 CORPORATE OFFICE Cyber House, B-35, Sec 32, Gurgaon, NCR Delhi-122001. Tel: 0124-4031234, Fax: 2380694.

100 pages including cover

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NOVEMBER 2008

Can you revive Indian Circus and make it a better business?

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/contents

slowdown/ How to reduce your home loan burden ...... 69 Unsure markets: What to do now? ............ 80 Airlines: Time to change the model? ........ 89 11 segments worst affected by the slowdown .. 92

entrepreneur of the month

Neeraj Kanwar, Apollo Tyres He shares about his journey as a third-generation entrepreneur at Apollo Tyres, a US$ 1 billion company, and also gives our readers insights about the industry.

blogs/columns Philip Anderson ........ 16 Rupin Jayal ............. 56

11 segments least affected by a slowdown ..... 94

global opportunities/

Doing Business in Australia The country offers great opportunities for Indian entrepreneurs to invest in diverse sectors

DARE blogs/ Chandrayaan-1: India’s moon mission: What does it mean for businesses? .............67 How to make your presentations lively and interactive? ...........................................67 What makes a writer great? What makes a written piece great? ..................................68 Solar-electric rickshaws anyone? .................88 Kashmir Pashmina = Indian Geographical Indication = Opportunities? .........................88

Anurag Batra ........... 63

investors of the month/

Paranjoy Guha Thakurta ... 76

Sasha Mirchandani, Blue Run Ventures

audio book

and Bharti Jacob,

books brand

business cabs chauffeurs come companies

company cost crore customer customers delhi entrepreneurs ﬂeet good goods hand

house india industry

just like make manufacturing market number passion people

publishing radio resort says search

second services share start time trafﬁc tree used value want world year years

innovation/ A Foot Operated, Cheap Water Pump

Seedfund

This light, portable, plastic pump is helping small and marginal farmers buck lack of power

opportunity/

iPhone, Android and the Mobile Platform ...... 52

INSEAD/

Cynapse - How to move from software services to products?............................. 28 A double marriage made in heaven ......... 84

event /

TiEcon Delhi 2008 .................................. 32

others /

Exchange ............................................... 08 Feedback ............................................... 14 NOVEMBER 2008 5

www.dare.co.in

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blogs/edit

Innovation is the way out The good times and the not so good ones are getting closer together. We might as well take this in our stride and our business planning. Innovation is the name of the game.

ow fast have times changed? Was it not just the other day that everyone was predicting that the Sensex would cross 25k? Was it not

just the other day that valuations were shooting through the roof and there were not enough startups for VCs to court? How fast have times changed? When was the last slowdown? Just seven years back? And how fast has this one come upon us? And from an Indian perspective, the worst â&#x20AC;&#x201C; the domino effect of what has happened in the west may not yet have impacted us. December and March may be when we see the full impact of what has happened. Look around and you can see that business cycles are becoming shorter and shorter. Product lifecycles were alredy getting shorter. The good times and the not so good ones are getting closer together. We might as well take this in our stride and our business planning. Innovation is the name of the game. Constant innovation to keep abreast if not ahead of the fast changing business cycles.

/Krishna Kumar

NOVEMBER 2008 7

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I want to start a briquette fuel producing plant and wish to know the total project cost. I also want to - briquette fuel production

know other details such as the manufacturing process, suppliers of machineries, usage of briquette fuel,

- timber waste utilization - GUIDANCE REQUIRED

who all will be the consumers, and what is its price in the market. I am into the timber industry and want to make use of timber waste. Please guide. — Vijay Rangani, Chennai

I am interested in starting a fast food joint. I have the manpower, material and skills required to - fast food joint

initiate the project but am unable to get a prime spot for the venture. Anybody who wishes to join me is

- unable to get a prime spot - PARTNERSHIP INVITATION

more than welcome. Please contact me ASAP. — Feroz Shaikh

I have been fascinated by the developments in the mobile and telecom sector. I want to start a - mobile content &

business in mobile content and application development arena. I would like to know about the sources from

applications development - GUIDANCE REQUIRED

which I can get the technology or know-how to start this venture. I am aware of the companies like mauj. com, IMImobile which are in the market. Please help me so that I can start a business and venture into the area of my interest as soon as possible. — M. Mohin Doulatana, Hyderabad

I got the opportunity of reading DARE and thought I should put forth my problem and invite for - 2 wheelers service station

solution. I was running a service centre (S.K.Bajaj dealership) for two wheelers in Navi Mumbai. I am an

- lack of technicalities - SOLUTIONS INVITED

accountant by profession and lack technical knowledge of two wheelers. This project was given to me. I was the only lady entrepreneur running a service center in Navi Mumbai. The project failed miserably even after putting a strenuous effort for 2 years. My method of working is meticulous. There are no outstanding payments from customers and no payments due to suppliers. My books are audited. Returns are ﬁled. I would like someone to assist me in this. Please help. — Shanti

NOVEMBER 2008

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I am currently running a small business venture by the name of Taarruni Design Solutions (www. - online selling space

taarruni.com). I am a very ambitious and enthusiastic entrepreneur. I thought that I need to come out

- innovative concept - SEEKING FUNDS

with a service which will help people to earn money by some activities which they do as their hobby. (My concept is money saved is money earned.) Hence, I came out with a concept for a web portal by the name www.indiamybrand.com, wherein I give options to people to upload the photographs and create an album of their own. We are also keeping those ﬁles for sale on our site for a very small amount. The money earned can be shared between the seller and indiamybrand. We are also introducing a new concept called comparative buying. Now, we will have one or the other sale provided by various retailers, 365 days of the year. I want to bring the data of the sale on Indiamybrand and allow people to do comparison for the product themselves. The best example would be a branded shirt. If you go to a showroom of that particular brand, you may buy the same by paying the MRP. If you go to retailers like Mega Mart or Brand Factory, you might end up saving up to 50% on what you would have spent on buying. This will bring in a healthy competition between the vendors and a great option for the common man to source the best product at a lower price. I am also planning to add advertisements released in newspaper on day-to-day basis, so that the reference of ads can be made easy and to increase the life of the ad from a day to a month. I feel this concept is very innovative and it works. I look forward to your feedback on the concept and help to source some angel to fund this. I am sure by funding this project; the angel will not be disappointed. — Vasanth G Yaji

I have been reading your magazine since its launch a year ago, and my enthusiasm for DARE is still as - online education space

strong as ever. I’m Arjun, an entrepreneur based in Bangalore. I need your help in forming my base team

- forming the base team - INVITE TO JOIN TEAM

with my next venture. I am looking for people to join me, to take this forward. The venture is based on the internet, and will be built around the education sector. Therefore I am ideally looking for people who are MBA from a

NOVEMBER 2008

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university in India or abroad. Even if you are professor at a university or a student currently doing an MBA, I would like to hear from you. Anyone with a passion for entrepreneurship and a keenness to grow should apply. — Arjun

I am a graduate and want to start a plant producing rose water. I want to know the process of - rose water production

extracting rose water, the type of rose required for extracting rose water and the contact of the buyers who

- no technical know-hows - GUIDANCE SOUGHT

will purchase my rose water guaranteed. I also want to know the present cost price of the entire project, the production cost of rose water per kg and the price that I will get. — Shubhanan Vidwans

I am a very small entrepreneur engaged in paddy processing and rice-husk briquetting business. I am - ppt silica or sodium

looking for setting up a very small unit based on extraction of either ppt silica or sodium silicate from rice

silicate from rice husk - GUIDANCE SOUGHT

husk that is available abundantly in our area. What is the minimum size of such industry that can be viable both technically and ﬁnancially? — Ajay Kumar

- established marketing network inviting sellers - 30 mins circuit training gym - importing raw cotton and exporting grey cloth

NOVEMBER 2008

I have a marketing network in West Bengal catering to almost all retail outlets through hundreds of FMCG distributors. Anyone interested in selling? — Via SMS I want to setup a 30 minutes circuit training GYM that will have hydraulic based gym equipments that are 100% safe and effective. — Via SMS I am interested in importing raw cotton and exporting grey cloth in particular. Do I have any scope, I will be grateful if you could contact me. — Via SMS

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Couples as Entrepreneurs The most right decision on marriage front is to have a spouse from the same business / profession (now-a-days women are entrepreneurs too) or likeminded than best of martial harmony is possible-as like-minded people get together for life long relations. When the spouse belongs to the same business / profession, he/she understands well the problems of the business / profession and can well appreciate the same. Otherwise most of the time, there are more complains than love in a married life of a couple, if they are from two different business / professions or one is only housewife-without business / professional background. Mahesh Kapasi Alternative therapy products based on cow urine Good Story, however no contact address, no e-mail id of promoters to share views, to know the results of previous treatments, their experience and problems to start the similar business? Gourigari Rameswarareddy DARE: For all those who have been mailing us for the clinic address, contact details, patient testimonies, etc please visit http://www.cowurine.com The problems in starting similar business would mostly revolve around identifying a treatment, getting it certiﬁed, gaining acceptance from the medical fraternity, winning the conﬁdence

of the ailing, etc. But then again, all these hurdles were tackled by Dr Jain.

LEDs will light up your future! Thanks for “Enlightening” budding entrepreneurs. Just to inform readers of this article that I have just started my venture into Solar LED street lights and energy efﬁciency solutions and it has picked up really well in the short span of 4 months. We are also doing R&D for further enhancing efﬁciency of LED lights and Solar Panels that will further reduce the cost by approximately 8-12%. Our future plans are to get directly into Solar PV Power Plants with our patented technology to reduce its cost by 8% than current cost. Gaurav Shah

How to get Angel funding for a startup Angel funding looks like a boon to start ups who actually have a tough time in collecting funds for the business. I have an idea which is at a basic level and I am still in the process of conceptualizing it further. I want to approach Angel Investors for help related to the investments and also suggestions. My basic worry is that will the business plan which I am going to share will not be disclosed to any one else which can lead to plagiarism. No offense towards any one but a bit worried. Nick

The Business of Body Art Tattoos have become a craze in India today. In every city you are going to ﬁnd tattoo artist at home or in studio. Everyone wants the best, something different or meaningful It’s like childhood portrait to me that I don’t want to tear. I love my tattoo. Make sure you too get the best. There should be at least 3 to 4 tattoo artists, so that you get quality time. The decision is yours. Arun Alva

Online Movie Rental Business Good Story. It is good to have an awareness articles on business as such. Online Movie Rental industry contributes to the media and entertainment industry in a big way. The current size of the industry stands at around Rs 1200 crore, where more than 50% of the DVD rental business is contributed by the rental business. Pallavi Deshmukh Juice bars chain: the coming of age I am trying to start a chain of fresh juice on thelas/carts as well as small shop. I need your assistance and if possible kindly provide me some kind of case study or business plan so that I can clear my confusions and start the business in right prospective. Rahul Srivastava

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blogs/INSEAD

How to zig when others zag Entrepreneurs can often become trapped by their own definition of customer, business model and value proposition

/Philip Anderson

NOVEMBER 2008

classic Harvard Business Review article nearly ﬁfty years old challenged executives to ask themselves, “What business am I really in?” The author’s point is that if you are a railroad, you are in the transportation business, and if you deﬁne yourself as being in the railroad business, you will overlook competition from alternative sources of transportation such as trucks. In a similar way, entrepreneurs can often become trapped by their own definition of who is my customer, what is my business model, and what is my value proposition. Creative thinking starts by questioning the assumptions we take for granted about what we are doing. Only when we re-frame a problem in a fundamentally new way can we think in genuinely innovative ways about how to position an entrepreneurial venture for growth. A creative approach to a venture starts with the question, “Who is my customer?” Often, you have to separate three economic roles: who uses what you sell, who makes the decision whether or not to buy it from you, and whose budget the payments come from. For example Bright Horizons redefined the business model for child care centers in the United States by focusing on corporations that wanted child care facilities on their premises as an employee benefit. While employee-parents may be the users, Bright Horizons’ real customers are the executives who decide that child care will boost their employees’ productivity and loyalty.

The next question is “What is my business model?” which essentially boils down to “Who incurs what costs?” and “Who pays whom?” Often, costs can be off-loaded to your customers themselves (as in the case of customer self-service or word-of-mouth advertising) or to third parties (e.g. a store that provides your business free space because you drive traffic to their location). Similarly, only your imagination limits the ways in which you can get paid by third parties who want to reach your customers and who see you as a distribution channel. The final question, and the most important of all, is “What is my value proposition?” Given your point of view on who your customer is, think creatively about what experience he or she is looking for. For example, an old but true saying is that customers don’t want drills, they want holes. They don’t buy drills because they want to own one; they buy drills in order to make holes. What you can sell them is a better hole, for example one that is always straight, or a hole that is always the right depth regardless of the operator’s skill level, or a hole that refills itself if you decide that you put it in the wrong place. A close friend of mine who is a serial entrepreneur recently shared with me a story that brings home what it means to think creatively about your value proposition. Virginia Cha was born in Hong Kong, raised in Thailand (where her father worked in the textile industry), and educated in the United States. After a long career in IT with Unisys, she was attracted to Singapore to lead a government seed fund for technology

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blogs/INSEAD companies springing out of university and research institute technology. One venture capital fund agreed to ﬁnance a company she was nurturing, but only if Cha herself became CEO, so she took charge of the venture and led it to a successful trade sale. Cha then moved to China, spent several years turning around a number of businesses, then in 2003 struck out on her own as a Shanghai-based entrepreneur. Cha began as a master franchisee for the US-based “Slim and Tone” fitness club chain, one of the pioneers of fitness clubs targeted specifically at women. She built and ran several Slim and Tone centers in Shanghai while growing a consulting company, a firm in the “smart home” sector, and a science park development. In late 2005, however, her top priority— quite unexpectedly—became turning around a venture in which she had a minority stake. A year earlier, the manager of one of her fitness clubs asked her blessing to start his own venture. As someone who wanted to nurture the entrepreneurial spirit, Cha not only agreed, but extended him a loan to start his own fitness club, which was not a competitor because it was in a different part of Shanghai and was targeted at both men and women. As a passive partner with a 15% stake, she was surprised when her partner told her in November, 2005 that he wanted to shut down the club, leave its debts unpaid, and strand more than 1200 customers who had prepaid for a year’s membership. Cha’s strong ethical sense made her recoil at the prospect of bailing out in this manner, so she agreed to release her partner from all liabilities in return for turning over his stake in the club. Digging into the situation, she realized that it was dire indeed. Costs were high because Shanghai rentals keep escalating and aerobics instructors were relatively expensive by Chinese standards. Six other clubs were located within two kilometers, and at the end of each month, each club heavily discounted to attract members and generate cash for expenses.

The club was located in a residential district of Shanghai near a university, so students represented a significant part of the population. It was situated on the third floor of an anonymous residential block, with no signage or entrance designed to attract passersby. Customers had to walk by an unfinished lobby and ascend three flights of dirty, unattractive stairway to enter the 1000-square-foot facility, some of whose rooms did not even have floors because money had run out before renovations were complete. The easiest thing to do would have been to inject cash into the business and fix up the facility. However, because cost-cutting was so rampant,

“

The way to zig while others zag and ﬁnd an innovative niche suitable for a growth venture is to focus like a laser on what value is for your clients, as opposed to clinging to the way you once deﬁned the business at an earlier stage in your thinking

”

Cha believed she could never earn back such an investment. Instead, she cast about for creative ways to reposition the club so she could charge a premium while keeping the costs of renovating and upgrading the club to a minimum. Cha’s mental breakthrough came from realizing that as long as she defined the facility as a “fitness club,” she was putting artificial boundaries around the value proposition. Instead, she focused on what experience her clients would value, casting aside the notion that its value had to focus on fitness. What would residents of this neighborhood truly value, she asked? In China, some students have far more disposable income than their

elders because the one-child policy has left them with four doting grandparents. Cha repositioned the club as a one-stop destination that provided fitness and leisure activities in a clean, vibrant and fun environment. She renamed the club “Raging Hollywood” to give it an exciting, foreign sound and put a “walk of fame” outside the entrance. In the lobby, each month featured a rotating exhibit whose theme was tied to a famous movie, such as Lord of the Rings or Star Wars. The lobby was painted to look like a theater entrance, and the stairway up to the third floor was decorated with light strings to give members the feeling they were entering a darkened movie palace. One-time use vouchers were made up to look like movie tickets. The best room was converted into “Oscar’s Studio,” offering students a place to chat, surf the Internet, learn English, taste wine, play pool—activities that had nothing to do with fitness but which turned the club into a general-purpose leisure destination. The number of aerobics classes was drastically slimmed, but in their place new offerings such as salsa dancing featuring foreign instructors were added to give the club a sense of glamour, fun, and international intrigue. Raging Hollywood swiftly added members and turned profitable, allowing Cha eventually to sell it to an entrepreneur who had his own chain of fitness clubs. The key lesson from this turnaround is: once you know who your customers are, focus on the kinds of experiences they find compelling. Don’t be constrained by the existing identity of your business—it isn’t a “fitness club,” it is a delivery vehicle for services your customers value and are willing to pay for. The way to zig while others zag and find an innovative niche suitable for a growth venture is to focus like a laser on what value is for your clients, as opposed to clinging to the way you once defined the business at an earlier stage in your thinking. DAR E INSEAD Alumni Fund Professor of Entrepreneurship, Director, Rudolf and Valeria Maag International Center for Entrepreneurship and Director, 3i Venturelab NOVEMBER 2008 17

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/global opportunities

Doing business in Australia The country offers great opportunities for Indian entrepreneurs to invest in diverse sectors

/Vimarsh Bajpai

he Barossa Valley is a prominent wineproducing region of Australia. Earlier this year, Chateau Indage, India’s leading wine maker, acquired Australian winery VineCrest located in the region. Chateau had been eying Australia’s lucrative wine businesses for quite some time, having earlier lapped up Thachi Wines and Loxton Winery. The strategic moves by the Indian

wine maker were aimed at expanding its portfolio of brands, and Australia proved to be a lucrative location. Chateau is among a host of Indian companies that have invested in Australia in a big way, either through acquisitions or through greenﬁeld projects. Burrup Fertilizers, part of India’s Oswal Group, set up a A$ 700 million liquid ammonia

DARE/key sectors

NOVEMBER 2008

Information technology

Agri-business

Biotechnology

Clean energy

Financial services

Wineries

Minerals

Education

Tourism

DARE.CO.IN

/global opportunities plant on the Burrup Peninsula in Western Australia in 2003. The plant is one of the world’s largest ammonia production facilities with 6% of the total world output of tradable ammonia. Among other companies, Gujarat NRE owns coking coal mines in Australia, while Hindalco has stakes in copper mines. In the last one year Rolta India, Bhush-

an Steel & Strips, Reliance Industries and Essar have invested in the country. Well-known Indian IT companies such as Satyam Computers, TCS and Wipro already have ofﬁces in Australia. India and Australia are exploring the possibility of a Free Trade Agreement, for which the feasibiliy study is already on.

Why Australia? According to the World Bank’s Doing Business Report 2009, Australia’s rank has improved on the overall parameter of doing business. It takes two days and two procedures to start a business in that country. “The major investment in dollar value, and probably also in number of projects

NOVEMBER 2008 19

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/global opportunities In view of the current global ﬁnancial turmoil, should Indian entrepreneurs wanting to invest in Australia be worried? If I look at the comparison of economies and how they would be affected by the current economic crisis, I think Australia is the least affected because of the fundamentals of the economy there. That does not say that Australia is unaffected. The share market has dropped along with other markets. There the banking system is not exposed to the same degree with the sub-prime and therefore major banks still maintain AA ratings. The government acted quite quickly to guarantee deposits. Australia is a net exporter and India is a net importer. A lot of what we have is what India needs. For the bigger guys, opportunities in Australia have enhanced. [For] everyone who is cash-rich at the moment, there are some good things to be had in Australia. We will not go into recession as forecast by global economists.

What sectors do you think would be attractive to Indian entrepreneurs? If I look at the Indian economy, it is predominantly driven by the services sector. There is a degree of expertise already in India in services but it’s domestic expertise. There is a great opportunity to invest in international services. In the health and medical fields, Australia Peter Linford is quite advanced, but sometimes quite short in Senior Trade Commissioner – South Asia, Australian Trade Commission funds to develop as commercially. Investment into that in Australia would develop product and service delivery. Then there is the IT sector. India has done wonderful things in IT already. There is some very rich R&D concept and product development in Australia that would benefit to link up with Indian commercialization power. Tourism too. Here is a real opportunity that comes out of the economic downturn, apart from the fact that people will have less money; they still want to go somewhere. We will see more tourists. So investments into the tourism sector in Australia will see rewards coming from that. Sports is another area. India should invest some of the expertise that Australia has in sports medicine, sports management, sports performance, logistics, and bring in more money. What are the R&D facilities in Australia? There are tax benefits for R&D. Most of our universities have R&D facilities attached at their campuses. Depending on the sector where the R&D is happening, there are tax refunds of up to 100% of the R&D investment amount. Something in biotech, for example,

"OPPORTUNITIES IN AUSTRALIA HAVE ENHANCED. [FOR] EVERYONE WHO IS CASH-RICH AT THE MOMENT, THERE ARE SOME GOOD THINGS TO BE HAD THERE" 20

NOVEMBER 2008

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/global opportunities INDO-AUSTRALIA TRADE

is a 100% tax rebate. So if a company like Tata or Reliance invested into that type of campus, they get a 150% tax rebate on that expense. Different states in Australia have different incentives for investments. They can be from taxation point of view or they can be contribution in cost development of projects. How do you think a Free Trade Agreement could help both countries? The feasibility study will be completed by the end of this year. The negotiations will start in the New Year. One of the things that is very pleasing is the genuine positive intent on both sides. For the most part we see benefits for both countries in a number of sectors. Some sectors will still be difficult. But through an FTA, if we can gain some degree of access into the agriculture sector, it would be a big positive. If an Indian company decides to set up a greenfield project in Australia. How long does it take? It is very easy to start a business in Australia. I think once the research and due diligence has been done, a business can be set up in 48 hours in Australia. Getting bank accounts, telephone lines, real estate promises, accommodation for staff, getting kids into school – this is quite easy. When we measure the value of an investment into Australia, we measure it on job creation. So, if an Indian company buys an existing company in Australia that employs a 100 people and tomorrow it employs a 100 people, there is no net gain for us. It is just a transfer of ownership. If someone starts a company from zero and employs a 100 people, that is wonderful. If they buy an existing concern and increase it to 150 people, it is very good. So, these type of projects, we are very keen to support across all sectors.

Note: All ﬁgures in US$ Million Source: Ministry of Commerce, Government of India

DARE/doing business Ease of….

2009 Rank

2008 Rank

Change in Rank

Doing Business

Starting a Business

-2

Dealing in Construction Permits

-4

Employing Workers

Registering Property

-5

Getting Credit

Protecting Investors

-4

Paying Taxes

-3

Trading Across Borders

-11

Enforcing Contracts

-1

Closing a Business

Source: World Bank Doing Business 2009 Report

has been in resources. IT, education, tourism and now are starting to see financial management business as well. We are seeing some Indian companies buying wineries in Australia,” says Peter Linford, Senior Trade Commissioner – South Asia, Australian Trade Commission. The country’s highly-skilled and multilingual workforce is a big plus for Indian companies wanting to set

up shop there. The Australian government’s Benchmark Report 2008 states that the country “has an open, competitive and resilient economy which has enjoyed almost two decades of uninterrupted growth.” No wonder foreign direct investment has grown sharply. Over the last ﬁve years to June 2007, the FDI in Australia increased by 155% to US$ 279 billion, according to Australian Bureau of Statistics. D A R E NOVEMBER 2008 21

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strategy/HR

Outsourcing Your HR Department Outsourcing your HR department can be an effective strategy, but only if you know when and what to outsource /Mohita Nagpal

HR Service Providers • Xansa • Accenture • Hewitt • TeamLease • Metis • Ma Foi

uman resource is considered to be a source of competitive advantage for organizations, especially in the knowledge sector. There have been continuous debates whether HR departments act as mere administrative departments in organizations and do little in terms of actual value-addition for employees. Entrepreneurs are increasingly opting for outsourced HR services and asking experts to manage their employees, while they concentrate more on their core competencies. The reason behind is lack of time, resources, or expertise. Most successful outsourcing alliances offer cost savings, standardization of processes, and efﬁcient service. Typically, HR outsourcing has been associ-

NOVEMBER 2008

ated with recruitment. However, that is not the case anymore. Outsourcing operational, administrative, and strategic functions is also gaining momentum.

Different HR functions that can be outsourced One can outsource various HR functions depending upon the expertise required. Recruitment is unarguably the most common functions outsourced. However, it is functions like payroll, leave tracking, record keeping, etc. that are routine in nature and can be easily farmed out. Recruitment: Once you are a big organization, outsourcing recruiting makes a lot of sense. The organization will always have the ﬁnal say in

the selection of the candidate, but the screening of resumes, and initial selections can be completely outsourced. Then there are also entrepreneurs who believe that recruitment should never be outsourced to an external party as they cannot fully understand the culture of your organization and will fully understand your requirements. Administration: This includes maintenance of employee master payrolls, tracking of leaves, any kind of employee redressal and grievances, entry and exit process, paying provident fund and life insurance, and so on. These are people- and effort-intensive activities that can be mastered over a period of time. This is the reason why it makes sense to outsource it to a service provider. According to media reports, Unilever has outsourced their administrative HR functions to Accenture. Strategy: This includes setting up a performance management system,

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strategy/HR

continuity. If one day one person does not come in, they have a back up who comes in. All in all, your HR functions work very smoothly.”

building an employee handbook, and undertaking activities that offer value addition for employees.

How do I benefit? The biggest advantage of having an outsourced HR department is that you can concentrate on your core business activities and let the experts manage the HR functions. These service providers are specialists who bring in fresh perspectives, competent policies, and tried and tested process to manage employees. This saves a lot of time and effort of the management. This also helps in the management and standardization of HR processes. Apart from expertise, you also get access to the latest technology without having to make costly investments. If you are a small organization, you might not have the back-end infrastructure, management bandwidth, and real estate to hold huge training sessions. On the other hand, if you are a big organization then outsourcing the HR department completely can be a cost-effective strategy. According to Dhruv Agarwala, cofounder, iTrust and a user of HR outsourced services, “Today hiring an HR executive is a difficult job. It is an expensive resource to get somebody who understand recruiting, HR administration, who can set up performance management system and build an employee handbook with the same ease. You can’t get all these benefits through one person. So you have to recruit three to four persons to get benefits of all these activities.” This is where outsourcing firms come into play. Rather than hiring three or four people, if you

What shall I look out for?

There are two types of companies that go for outsourced HR services. One is very small ones, when they don’t want to have an independent HR team. They will outsource operations. Then over the years they go through a phase where they do it all in-house. Then again once they reach a certain size [when] they find it cost effective to outsource. — Gita Dang Founder, Talent Advisor Services outsource it, you basically benefit from the know-how of an HR outsourcing firm who have done the same work several times before. It is not hard for them to write a basic employee handbook for you or set up a basic performance management system. Dhruv further adds, “HR outsourcing firms manage the transition. You get seamless service. Accretion is easy; if one person leaves there is

There are a number of considerations that one should look at before deciding upon a service provider. Here are a few tips: References: The information that these service providers deal with is sensitive and confidential in nature. People have entire employee master and performance management systems with their HR outsourcing firms. There is always an insecurity of important information spilling out. According to Dhruv, “The way you reward people could be a source of competitive advantage. You don’t want that to walk through the door with outsourced organizations. It’s important to hire a reliable firm through references. People who have already used a HR outsourcing firm are the best way to hire.” Experience in your domain: It is always better to hire a firm that has some experience in your domain. That way they understand your requirements better. However, again, there is a flip side to it. You should not go for a firm that has your immediate competitor as a client. There could be a conflict, because if the competitor is larger than you, then they would be more important for your HR outsourcing firm. Similar size: It is also very important to select firms that are similar to your size. HR firms measure their performance by the number of people they can place in your organization because that is how they get paid. So, if they are

Is your website getting bogged down in large search engines? Is your time being wasted in searching through pages and pages of useless information? Do you want your search to be simplified? Do you wish your website to get more visibility?

WWW.PIXELWORTH.COM Search...............Refined Log ON........................................................................and ON............................................................................and ON

NOVEMBER 2008 25

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strategy/HR This sort of thing is manageable when you are 10 or 15 people. However, while outsourcing you have to keep costs in mind. If you get a decent person who has the wherewithal to handle all this, do that. That is what Dhruv did: “The ﬁrst person who came on board was doing recruiting and some basic admin. As we grew bigger, we realized the need for a separate person for recruiting, admin, and other activities. We could not get the person on board so we decided to go for outsourcing.”

working with a large company where they can place 10 people, they earn 10 times the revenue compared to the one person they will place in a small organization. In that sense, the attention span small companies get is very limited. This is the reason why it is so important to work with ﬁrms of your size. If you are a small organization, work with a ﬁrm that has 15 decent clients and they will give you a lot of attention

Second thoughts Though there are not many serious concerns, there is definitely a flip side to hiring an outside agency. Service providers are always considered outsiders; they never fully integrate with your organization. Then there is also the difficulty of managing them as compared to your own employees. Another disadvantage of outsourcing is the threat to security and confidentiality. When you are outsourcing functions like payroll or other confidential information, you must be very careful in deciding which process to outsource and to which service provider. There could also be a possible loss of flexibility in reacting to changing business conditions. Sharing cost savings may additionally create some confusion.

Startups: Does it work for them? This is a debatable issue. It depends a lot on how important HR is for your growth. Some startups have successfully outsourced their HR departments, while others have a different take to it. As Dhruv says, “We realized outsourcing right in the beginning is not a good idea because you are building a culture and DNA in your organization. I would recommend founders themselves should recruit in the initial phase. Once you are less, around eight to 10 people, the administrative hassles are very limited. Maintaining leave and payroll for up to 10 people is not hard, you don’t have to pay payroll unless you are 20 people. With 10 people closely sitting in an ofﬁce, you can work on employee grievances and welfare. Being a small organization, there is no large entry or exit process either.” 26

NOVEMBER 2008

HR admin is a hygiene process. It has to be done. Since it is execution oriented, you can easily outsource it. Compensation, recruiting, and performance management systems have strategic impacts, which after a point does not make sense to outsource — Dhruv Agarwala Co-founder, iTrust However, according to Gita Dang, Talent Advisor Services, “There are two types of companies that go for outsourced HR services. One is very small when they don’t want to have an independent HR team. It is operational HR, particularly payroll, etc., that they will be outsourced by them. Strategic HR is normally always retained. Then over the years they go through a phase where they do it all in-house. Then again once they reach a certain size, they ﬁnd it cost-effective to outsource it.”

When to outsource? Once you reach the 40-employee mark, you will realize that admin hassles have grown. That is the time to think of outsourcing. The idea is to handle all the activities till you can; you will automatically know when you can’t manage. There will be a sign when you will realize that you are paying people more because there is no track of leaves, or payrolls are getting delayed.

What functions to outsource? You have to keep weighting your outsourcing decisions. It is all about mental makeup, making the distinction of what you can and cannot do. Dhruv cites an example from his experience: “I make the distinction on a strategic and non-strategic basis. Anything that relies on efﬁciency and good execution I think shall be outsourced. Exit checklists and leave tracking are simple things. They can be outsourced. Because service providers after a point get [far more] efﬁcient in their work than what you can ever do in your organization. Our job is not to do HR, it is their job; they naturally do it well.” He further adds, “What motivates your people is of strategic importance. My performance management systems are so effective, I don’t want to lose that competitive edge by outsourcing.”

What are the cost implications? It is not absolute money, but cost benefits. To have a single person effectively do performance management, effective admin, and effective recruiting is hard. So with outsourced firms what happens is that the firm’s knowledge comes in; they bring the knowhow themselves. Thus, you have all the benefits rolled into one. For 40 to 50 people, they will place one person in your organization on a full-time basis and probably a manager on a parttime basis (one or two days week) to oversee things. The manager is the one who brings all the know-how, while the full-time person is responsible for DAR E daily activities.

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case/INSEAD

Cynapse: how to move from software services to products? /Philip Anderson

hat is a viable business model for an Indian software company that wants to sell products instead of services? Since he was 19 years old in 1999, Apurva Roy Choudhury had been wrestling with this problem, and by late 2007, he was forced to look for a new answer. Getting contract programming assignments had always been easy, but developing a killer application that could be supported by charging end users had proven much tougher. Choudhury’s ten-year entrepreneurial journey exempliﬁed the challenges and opportunities faced by Indian software companies as they try to make a living by selling products instead of programming services, and he wondered how

an upgraded version of his firm’s flagship collaborative application could finally move beyond building specific applications for specific customers. Born in Jamshedpur in 1979, Choudhury grew up in Mumbai as a mechanically gifted boy who wasn’t especially good at school. “I have always been more visual, better at building and inventing stuff; academics is not my cup of tea,” he reveals. In his fourth standard, Choudhury’s father offered to buy his son a computer if he fared well in examinations, so for once, the boy learned everything by heart, fell in love with computers, and taught himself how to use them. Enrolling in a technology institute at the age of 17, Choudhury built his

ﬁrst website and gained a reputation as a hacker. He stopped out of school for a year to build websites for clients, then learned how to build internet and extranet applications. During the dotcom boom, he took on a large project to build an online movie ticketing service. Once that was running, Choudhury started a company called Cynapse consisting of the key talent who had worked on the ticketing project. “We hadn’t thought about how to make money, we were just thinking about how to make great technology,” Choudhury recalls. He rented a residence that his father had purchased near the family home, and used his savings to furnish it as an ofﬁce and buy computers.

We realized that our business is building enterprise software, and that is a hard sector to penetrate because there are some huge gorillas out there. Selling software is not about owning the intellectual property. It is about owning a successful product built around continuous innovation. The only way we can compete with giants is to create an ecosystem of individuals and businesses that depend on our product to do their business — APURVA ROY CHOUDHURY

NOVEMBER 2008

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case/INSEAD The core programming team thought of themselves as a research organization, “positioned between an open source geek company and a corporate software company,” Choudhury says. “We started with no idea how to get revenue. The first year, we made every mistake we could have by doing a little bit of everything—shareware, web sites, vertical applications, you name it. It was difficult for us to find a focus that would position Cynapse.” What motivated the team and glued it together was a shared commitment to inventing new products with which they could identify. Like many topnotch programmers, they wanted to build something that would be widely used and would excite the admiration of their professional peers. Choudhury explains: We have never counted success monetarily. Money has always been the last thing—what drives us is popularity, fame, the limelight and the joy of creation. Our intention was to invent whole products, something you can use without depending on another system, not modules or processes. We want to write applications for end users meant to benefit mankind. We identify with the kind of products

Microsoft does, end user productivity applications like Office, Outlook, or Internet Explorer. We’re not from a financial or manufacturing background, so we won’t write financial or ERP software. The partners agreed from the start to bootstrap Cynapse itself instead of seeking outside investment. Choudhury clarifies: We had a lot of offers from venture capitalists and smaller investors, but we wanted to own the company ourselves and fund it through organic growth. In the Indian environment, the investor who puts in 100 rupees today wants 150 rupees the next month. Research work is not appreciated. However, the gestation period for end user applications is very long; competition is high; and cracking the market is difficult. Selling applications and making money requires a business plan, which takes a lot of time. So we had to find a way to make money in order to fuel our product development. Cynapse set up one R&D team to build products while a separate team built solutions to earn the cash needed to sustain product development. “That really slowed us down, and at times even broke our morale when we had

difﬁculty sustaining ourselves via solutions,” Choudhury says. “We would get money and say ‘Let’s do a product.’ Then we ran out of money, and said ‘We must do a solution now.’ We shifted people back and forth, and while we easily kept ourselves from starving, we weren’t getting ourselves out of the solutions rat race. The Cynapse team always viewed building custom solutions as a means to an end, not an end in itself. The goal was to create great products for large numbers of end users. Although solutions ﬁnanced product development, Choudhury believed that in many ways, building solutions undermined Cynapse’s product development capability. He explains: We got into an expensive cycle: we train people to build high-end solutions, and after six months, they have enough expertise that a contract programming company such as Wipro will pay them six times as much. I lose expensive resources because key engineers constantly have to train new people. Solutions also require follow-ups with clients; if we keep doing solutions, I’ll have to hire enough people for a whole new company. The development processes are different: in solu-

Says Choudhury, "Open source lets companies trust new products, because even if we go out of business, they can take a product forward if they believe in it." NOVEMBER 2008 29

DARE.CO.IN tions, you spend more time on documenting and on formal test cycles, not on using the newest technologies. Even the technical mindset is different. On the product side, you come up with a concept, build a marketing plan around it, and ﬁnd the best technical architecture to use. On the solution side, you don’t invent; you execute the speciﬁcation that you are given. What brought solutions and products together to some extent was Cynapse’s commitment to building its own frameworks. Cynapse programs were all created using Microsoft’s .NET framework, an environment for writing programs that can interoperate with one another over the Internet, on any piece of hardware and any operating system that implements .NET protocols. The .NET Framework consists of a number of component programs and an environment within which they run. A Cynapse framework is a large software component that acts like an engine underpinning a variety of products or solutions.

A photograph of Team Cynapse 30

NOVEMBER 2008

case/INSEAD At one time, Choudhury thought that his company could create products by “shrink-wrapping” speciﬁc solutions developed for clients on top of a Cynapse framework. Building the gold trading application on top of a mobile applications framework persuaded him otherwise. He comments somewhat ruefully:

“

I do not believe there is a software product market in India; we only want to look at global product markets. India is focused on selling manpower and solutions, not innovative products. Indians don’t pay for packaged software. They think it’s free—they don’t believe in buying it. Hardly anyone buys a licensed copy of Windows, for example.

”

The client got very excited and saved a lot of money. He’s still using the application, but we haven’t been paid 40% of our fee. We’re not very comfortable with the Indian way of business, where you need a recovery team to get your money, and I can’t afford to keep ﬂying to Delhi to collect. That disheartened us, so we thought we’d make this solution a shrink-wrapped product for the bullion industry and other jewelers. However, whenever we build vertically focused applications, we have to understand the industry completely, which is not something we do very well. We built something technically very advanced, but it’s not necessarily the best package in that particular line of business. Choudhury also thought Cynapse should steer clear of “productizing” solutions because he saw no future in selling products engineered for the Indian market. He explains: An application based on a solution we built for a vertical market would have to be speciﬁc to India, e.g. built around the Indian accounting system. I do not believe there is a software product market in India; we only want to look at global product markets. India is focused on selling manpower and solutions, not innovative products. Indians don’t pay for packaged software. They think it’s free—they don’t believe in buying it. Hardly anyone buys a licensed copy of Windows, for example. 3.5 years after Cynapse’s founding, Choudhury felt trapped. Cynapse had built four frameworks and 14 original products, but did not have the marketing resources to push any of the products commercially. He felt the company was at risk of being trapped in an endless cycle of solutions development that would not lead to the innovative end-user applications everyone wanted to build, and would undermine Cynapse’s capability to create innovative products. By what path, he wondered, could Cynapse become a company that made its living by selling products?

case/INSEAD Cynapse had for some time offered a few free products to end users via its website; see exhibit 2 for a listing. In October, 2004, it launched its most ambitious product to date: SyncNotes (http://www.syncnotes.com). SyncNotes exploited a Cynapse framework that facilitates synchronizing data across a wide variety of platforms. Says Choudhury: We created this for fun, to use internally in the office when someone wanted to send snippets of information to another colleague. Small snippets of information are things you always lose—you’ll keep a large document or a music file, but you write down little things like the serial number of a laptop or a customer support ticket number, and then you can’t find them. Originally, it was a standard note-taking application, but it pushed your notes onto an Internet server, so any note you take anywhere is always available to you everywhere. If you are using another person’s PC, you can log onto the SyncNotes.com site and check your notes via a Web browser. If you created a shopping list and are at the mall, you can check your notes via any mobile device. You can retrieve and update your entire archive of notes on the go, wherever you are. SyncNotes was provided free to end users who created an account via the Website and downloaded the client software to a computer running Microsoft Windows or Microsoft’s PocketPC operating system for personal digital assistants. Via a small toolbar (which could float on top of all windows or be hidden, according to the user’s preference), users could enter notes, delete them, or retrieve them from an archive Version 1.0 of SyncNotes was kept fast and simple to build buzz for the product. Within 20 days of launch, 2000 active users downloaded the application, attracted purely through word of mouth. Version 2.0, introduced in 2005, introduced a plug-in architecture that opened up revenuegenerating possibilities. Either Cynapse or third parties to create plug-in

“

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We realized that doing consumer software is very expensive because you don’t monetize the business the ﬁrst three years. Our goal was to be a product company, not a media company, so we didn’t want to adopt an advertising-supported business model. We realized we had to transition back to doing enterprise business, because we have customers there and know how to serve them

”

modules that would enhance the basic notes functionality. Some plug-ins were developed to be sold as premium add-ons, either on a one-time fee or a subscription basis. Cynapse spent a year funding itself via custom solutions for enterprises while trying to build a consumer business on the back on Syncnotes. Eventually, Choudhury says, “We realized that doing consumer software is very expensive because you don’t monetize the business the ﬁrst three years. We had lots of Syncnotes users, but no one paid. Our goal was to be a product company, not a media company, so we didn’t want to adopt an advertising-supported business model. We realized we had to transition back to doing enterprise business, because we have customers there and know how to serve them.” Cynapse therefore attempted to build an enterprise business using the software as a service model. It introduced a hosted product called Amieo that made it easy to build online communities for clients in short periods of time. Customers paid Cynapse to host all their collaborative online forums. By 2006, Ameio had evolved and was renamed cyn.in, positioned as a collaborative knowledge-sharing platform. A hosted service, cyn.in allowed workers to collaborate on any type of document. A company paid Cynapse per user per month to host a document repository within its own

domain at cyn.in that any of its employees could share. Although cyn.in could scale to support thousands of employees, it was targeted primarily at small and medium sized businesses that wanted to use a secure, hosted Web 2.0 infrastructure to manage collaboration among members of a work team. Cyn.in organized data as a “bliki,” a combination of a blog and a wiki. Like a wiki, people could write and add to information collaboratively. Like a blog, all contributions were added in chronological order, newest on top. Says Choudhury, “Recent content interests people more. If you go to a Wiki, you have to dig into it. A wiki page is a static map, not one that bubbles up like a blog.” Those who knew Cynapse well could see the Syncnotes influence in the product, as users added to their shared bliki spaces in the form of a note. By late 2007, Cynapse was at a crossroads. Cyn.in generated a good deal of visibility for the company and had attracted a steadily growing base of users. However, revenues from cyn.in were not growing fast enough to support the programming team. The primary problem seemed to be the software-as-a-service model. Clients liked the functionality of Cynapse’s collaborative workspaces, but were reluctant to trust important data to someone else’s hosted server. For many enterprises, if vital information was going to be created and shared on a collaborative platform, that information had to reside on servers they owned behind their own firewalls. Version 2.0 of cyn.in was in development, expected to be ready by mid-2008. It was designed to be a much more robust enterprise collaboration platform that would allow cyn. in’s users to author rich documents instead of collaborating by adding notes to a shared space. But what should the business model be? Cynapse was still funding itself by using its frameworks to build custom systems for specific clients. Could it ever escape that heritage and become a pure software product company, PG 62 Choudhury wondered? NOVEMBER 2008 31

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/event

TiEcon Delhi 2008 Entrepreneurship Comes of Age T

iEcon Delhi, the eighth annual flagship event of The Indus Entrepreneurs (TiE) saw an impressive lineup of speakers and participants over the three days, starting October 22. The event with the theme -- Entrepreneurship Comes of Age – witnessed a host of parallel sessions on mentoring, networking, company showcase and deal flow meetings besides the regular discussions on a number of issues concerning entrepreneurs. Covering the entire gamut of the entrepreneurial ecosystem, the sector-specific panel discussions were held on mobile and telecom, retail, media and entertain-

Tarun Khanna, Professor, Harvard Business School and Pradeep Gupta, CMD, CyberMedia and President, TiE Delhi

From L-R: Saurabh Srivastava, Chairman Emeritus, TiE Delhi; Sir Richard Stagg (British High Commissioner); Gita Dang and Mahendra Swarup (TiECon Co-chairs) 32

NOVEMBER 2008

/event

From L-R: Rajan Mehta, Live Media; Rajesh Sawhney, Reliance Entertainment; Bobby Bedi, Kaleidoscope Entertainment

From L-R: P S Saminathan, Pyramid Samira Theatres; Akhil Awasthi, Baring Private Equity Partners; Vivek Agarwal, Liqvid

From L-R: Ashish Kapur, Yo! China; Dr Arvind Lal, Lal Path Labs; Arvind Singhal, Technopak Advisors; Rupa Purushothaman, Future Group; Jagdish Khattar, Carnations Auto

DARE.CO.IN ment, sports and fitness, infrastructure, healthcare among others. Among the eminent speakers were Sir Richard Hass, British High Commissioner to India; Kiran Karnik, former president, NASSCOM; Tarun Khanna, Professor, Harvard Business School; Greg Chappell, head coach, Cricket Australia Centre of Excellence; Jagdish Khattar, former MD, Maruti; Ganesh Natarajan, CEO, Zensar. The speakers were unanimous is asking entrepreneurs to stay focused on their business and not get swayed by the winds of change taking place in the global financial environment. Day 1 saw discussions on assessment of investment with both investors from the Indian Angel Network and its investee companies sharing their experiences. The hallmark of the day was a freewheeling talk on valuations and exit options available to entrepreneurs. Players from the private equity and venture capital space discussed threadbare the financial nittygritty of investments in startups. Day 2 marked a timely debate on ‘entrepreneurship in challenging times’ with thought leaders posting their ideas on how to march ahead despite the global financial crisis. There were on the retail and education sectors, media and entertainment, mobile and telecom and green buildings. A lively discussion on grassroots innovation and entrepreneurship focused our social obligations and how small efforts can bring about a positive change in the lives of the people at the bottom of the pyramid. The day culminated on a sporty note with Greg Chappell sharing his experience as a sportsperson and drew parallel between sportsmanship and entrepreneurship. Day 3 was a big day for all those interested in opportunities in IT-ITES, real estate, infrastructure, healthcare and wellness, and the amazing prowess of the Internet today. The highlights of the day were a discussion on women entrepreneurship and guru sessions. D A R E NOVEMBER 2008 33

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INNOVATION

A FOOT OPERATED, CHEAP WATER PUMP 34

NOVEMBER 2008

INNOVATION QUICK POINTS Foot operated. Weighs 12 kgs and is easily portable By simple stepping action, it can pump up to 5,000 liters of water from a depth of up to 7 meters and to a height of up to 15 meters Pump's piston cylinder and manifold assembly is made in reinforced plastic Zero operating cost Costs Rs 2,500 A light, portable, plastic pump that can be operated with a foot is helping small and marginal farmers buck lack of power. What it needs is support from the government and NGOs so that it can reach more beneﬁciaries /Vimarsh Bajpai

hen rains lashed parts of Nasik district of Maharashtra recently, Naren Bhinge played the Good Samaritan. He swung into action distributing 20 plastic trea-

DARE.CO.IN dle pumps to people battling power failure and water-logging in their houses. But then these pumps are no ordinary machines. Bhinge designed them himself. Bhinge has been in the business of manufacturing and exporting micro-irrigation kits for a long time, but it was four years ago that he discovered that many of the treadle pumps that were being manufactured in India were made of metal, which made them heavy and difficult to operate. So he decided to try out plastic as an alternative to metal. His trick did wonders. Not only did the pumps become lighter, it also got easier to operate. The pump, named Ecoflow, weighs just 12 kgs such that even a child can carry it to any place and by simple stepping action can pump up to 5000 liters of water from a depth of up to 7 meters to a height of up to 15 meters. The pump's piston cylinder and manifold assembly is made up of reinforced plastic that makes it very smooth to operate and also gives a very long operating life. The pump has a metal frame structure to support the thermoplastic cylinder-piston manifold block assembly in the firm position. The use of special micro-irrigation kits for vegetable and horticulture plants further ensures the best yield with minimum water. There are various options available in plot sizes and plant types. The hollow steel powder coated frame structure is designed in such

a manner that the plastic molded assembly doesn’t require to be bolted or ﬁxed. It is secured perfectly in place protected from mechanical strains. According to Bhinge, a man weighing 60 kg can get suction up to 15 feet and delivery up to 45 feet. One can easily transfer water 2000- 5000 liters per hour depending upon the suction and delivery height. There are some accessories that have been speciﬁcally designed for the pump. This includes the delivery pipe, suction pipe, foot valve, and minisprinkler systems.

The Business Bhinge’s big day came in 2005 when the then President A P J Abdul Kalam visited a farm site in Maharashtra where the pumps supplied by Bhinge were being used. Bhinge, however, could not be present at the site but won accolades for his innovation. “Already, thousand of kits and Ecoflow pumps are in use with excellent response from the users all over the world to the extent that in some cases the same farmers directly came to buy these from us,” says Bhinge. He sells the pumps, each priced at Rs 2,500, through his dealership network. He also exports to some countries in Africa, where his innovative technique helps hundreds of farmers. “I sell at a very small margin. My motive is not big profit but the benefit of the small and marginal farmer,” DAR E he says.

SMS “DARE <your comments, questions or suggestions>” to

56677 or

Email us at dare@cybermedia.co.in NOVEMBER 2008 35

DARE.CO.IN

cover story/slowdown

tips to manage through the slowdown

/Krishna Kumar

he Sensex is down to half of what it was six months back. The world’s top investment banks no longer exist, and the US and European governments are rolling out the mother of all financial rescue packages. So, how are you affected? Unless you are in the export or BPO businesses, the slowdown may not yet have manifested in loss of business. What will first become obvious is delayed payments and delays in signing new deals. As I write this, the full impact of the financial meltdown is yet to reveal itself, particularly in India. Is it just a a slowdown? Is it a recession? Is the worst over, or will there be further shocks? All these questions are still up in the air. Clearly, we have not seen the end of this. We will have to wait for the next cycle or two of corporate results to assess the full extent of the situation. Meanwhile, how does one tide over these uncertain times? We have put together a list of things to do and to keep a close watch on. Reducing costs is, of course, the most obvious — so much so that it does not merit a mention as a separate item. The question is, where does one reduce costs and how does one go about it? This is what we shall answer in some detail in the following pages.

1. Reassess your business plan The ﬁrst thing to do is to completely reassess your businesses plan to ﬁgure out where and by how much you 36

NOVEMBER 2008

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cover story/slowdown will be impacted. Figure out which input costs have gone up and by how much. Which are the target markets in turmoil? How are your key clients affected? By how much will their order position be affected? Even if you have just ﬁnished wrapping up your half-yearly budgets, recast them if you expect dramatic changes. It is absolutely imperative that you understand the extent of impact the current scenario is going to have on your business.

2. Become cash flow and cash positive With banks freezing working capital loans and lines of credit, it important to manage your cash flow tightly. For this, you first need to have a clear assessment of your potential cash flows. If there are negatives in the monthly cash flow, how do you make it positive? Is there any money you can collect a little faster to improve cash flow during bad months? Which payments can you defer or delay? Which are the clients you need to watch closely in order to ensure that there are no nasty surprises by the month end? Add potential investors turning coy to banks freezing credit, and you can be out in the deep end if you are a startup or are bleeding. Therefore, an added question is, how fast can you turn cash positive? Do all that you can to turn positive as fast as you can. Here I am talking about operational income and expenses, and not profits, which take into consideration things like depreciation.

3. Manage key clients Most businesses follow the 80/20 rule when it comes to their clients. Eighty percent of your revenues will come from 20 percent of your clients. Identify this 20 percent. How healthy are they now? Reassess their ability to pay on time. Take them into conﬁdence. Can you help them a bit more in these troubled times without hurting yourselves? Is there some way your business can help them reduce costs and reach markets faster? Can you ﬁnd a new use for their products or services? In short, do everything you can to not only re-

tain them, but also increase business from them, as getting a new big client is not going to be as easy. On the other hand, ensure that you are amongst the ﬁrst to know if they are in trouble.

4. Identify expenditure that can be deferred Identify all non productive and longgestation-period expenditure, and see which can be deferred. Non-productive expenditure start with small ones like redecorating the office. Capital investments include purchase of new offices or land, setting up new factories, plant and machinery, and so on. Decisions on which capital expenditure is to be deferred will flow from a revised business plan. Another set of capital expenditure that can be deferred is the purchase of computers , which we discuss separately.

5. Convert capital expenditure to monthly payouts: Lease There are capital items that cannot be deferred as expenditure that is critical to the continuation of business. Can you convert at least some of the new capital expenditure into a monthly payout by going the lease route? Almost everything from plant and machinery to office space to computers to cars and software can be leased today. Using the lease route does away with the need for lumpsum payouts and to that extent reduces the drain on your cash flows, as well as the need to organize new loans. There are organizations that will help you lease anything and everything, and there are those that specialize in specific items. General purpose leasing firms tend to look only at providing the cash flow for your equipment, while the specialists also take care of maintaining and managing equipment. To give a casual example, India Leasing will organize the finances for purchasing, say, printers and cars, which you have to separately own and maintain, while Black Magic Toners will lease manage and maintain printers, while Leaseplan will do the same with cars. Have you considered a sale and leaseback option for assets you al-

ready own, where you sell these assets to a leasing company and then lease it back yourselves? This will release some cash for short-term needs.

6. Barter This is something that most businesses do not consider. There is a healthy ecosystem out there for bartering goods and services. You can offer an exchange for goods and services you produce for those you need, including advertisement space. Thus, when you cut down your advertising budget, you can still get advertising space by offering to barter. Net4barter and Tradex are organisations that will organize a barter for you for a fee. Craigslist, LinkedIn, and other social networking sites are also good places to get barters going.

7. Collect smarter There is something that one tends to forget in the hurry. With payment schedules being stretched, you will obviously put a lot of focus behind overdue payments. But what about advances? What about collecting some of the dues before they actually become payable? One of the techniques that I saw being used during the dotcom slowdown was to offer discounts for payments made in advance and for collections done before due date. Such discount offers made to selected clients or even on selective deals could help in managing during critical cash ﬂow situations.

8. Leverage the Web and mobile One of the ﬁrst items you will cut (or defer, if that is the term you prefer) from your budgets will be advertising expenditure. When the total available budget is reduced, you should also take a fresh look at your media mix. And you should take a long hard look at Web-based advertising options. You may already be doing clickthrough advertising on Websites. Have you considered leveraging social networks for recruiting employees as well as customers? Have you looked at blogs? What about setting up employNOVEMBER 2008 37

DARE.CO.IN ee blogs to improve customer touch points (and reduce costs for reaching out to the customer)? SMS in bulk can be very cheap. Have you considered that as a response mechanism in place of printed letters and phone calls? Have a new deal to advertise? What about using SMS and email to get the word out? Somewhere inside your organization there is a treasure trove of email IDs and cellphone numbers. They are there in visiting card holders, in customer feedback forms, in registration and warranty cards, in emails and printed letters that customers send you, in your investor database, and so on. If you have not done it yet, now is a good time to get all of them organized and put to use.

9. Renegotiate contracts If you already service and input contracts in place, take a good look at all of them and see whether there is scope for a renegotiation on rates. Can you do with a lower level of service on service contracts? If deployment of manpower is included in these contracts (like manning point-of-sale positions) can you do with fewer people? If sales is down, obviously you can. What about your courier and other delivery mechanisms? Maybe you can do with a slightly longer delivery window. Can increasing the delivery window from, say, three days all-India to ﬁve get you a lower rate? Managed service contracts and annual maintenance contracts are another set that should be up for closer scrutiny. Can the service windows be relaxed to reduce costs? And while at it, be prepared to renegotiate contracts others have signed with you. Now that you know about it, be prepared beforehand, at least for key clients, with what you can offer and, whereever possible, try and ensure that you do not end up with nasty surprises like the cancellation of a critical order.

10. Can mergers make your business stronger? Typically we tend to consider a merger as one of our last options. The prob38

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cover story/slowdown lem with this approach is that, ﬁrstly, we will be negotiating with our backs to the wall, and, more importantly, at a point when the valuation will be at its lowest. So, without being emotional or superstitious about it, it is important that we do not keep this option for the last minute. Basic questions to have an answer in hand include: Who are the possible suitors? What are they likely to be looking for? How all can a merger improve your business ? Can a part of the business be merged/sold? What level of control of ops are you willing to accede? What about establishing a few initial contacts with the prospects if you do not already have them?

11. Reduce travel and overnight stay Travel has just become way more costlier, and airports have moved far away from the city in at least two cities, Hyderabad and Bangalore. What this means is that you are going to be spending more time and money on travel and overnight stay. All the more reason why in tough times such as these you should look at saving on both time and money. Three tools come to mind immediately that help achieve this objective. Audio conferencing, Web conferencing, and video conferencing. Actually, all three are variations of the same theme – remote conferencing. All telecom service providers have phone bridge services that multiple people can join in at the same time and hold a conference. One person has to setup the conference and others dial into a given number to join the call. Here at DARE, we have tried voice bridges for both national and international voice conferences. Our experience is that this works best for groups of under 10 people if all are expected to be talking. If, however, only one person is going to be talking at any given time, the number of callers logged in can be really large without any problems. Web conferencing as offered by Webex, among others, lets you share your desktop with other participants. This is useful if you have to run a presentation or you have to demonstrate a

software application. Web conferencing applications also support text chat. Typically, you combine a Web conference with an audio bridge for best results. Video conferencing is capital intensive to set up afresh, but there are third party networks like the one run by Reliance. The only problem is that you have to move to their Webworld to conduct the video conference. One of the limitations of video conferencing is that it is not easy to interconnect different systems. Which means you cannot easily dial out to clients’ video conferencing system from yours and have a conference. Therefore, if your travel is mostly for client meetings, then video conferencing may not be a cheaper alternative. And while on the topic of travel and stay, what about sharing rooms? Sabsebolo is a recently launched free conference service by Yogesh Pate and Sabeer Bhatia. It enables as many as 10 parties to listen to or participate in a conference call you make – for free. Besides this free service, they also provide paid plans and business plans and fax to email service. — Binesh Kutty at the DARE blogs

12. Reduce printing and posting costs If your business involves printing and posting a large volume of bills every month, consider emailing them as PDF. This saves you printer costs, paper costs, electricity and postage costs, not to speak of manpower and time costs. Many banks and telecom service providers today offer both printed and electronic versions of their bills to customers; but may small businesses and single entrepreneur initiatives have gone a step further and completely done away with paper bills. No reason why you should not join them. And while at it, add a line at the bottom to each PDF bill to show your concern for the environment with a message like: “Save the environment; please do not print multiple copies of this bill unless it is absolutely essential .” On the subject of printing, have you considered reducing the quality of paper that you use for your marketing

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cover story/slowdown literature and for bill printing? A small reduction in the quality of paper used – a reduction in grammage or a shift from art paper to normal paper will result in substantial savings while having no effect on your business’ image.

More tips here for saving paper • Think twice before printing any document • Instead of copiers, use digital scanners to keep your records digital • Reuse paper printed on one side

Discussion at the DARE Blogs - How to save paper at work? — Binesh Kutty I keep seeing paper being wasted away to glory all around. No one really bothers about the cost or environmental effects every time the print button is used. While Going Green seems to be a favorite thing among the corporates today, there are so many small steps that one can take. For instance, it has been more than 2 years since I have been using this printing software called FinePrint. This software lets me set FinePrint (a virtual printer) as my default printer. Every time I fire that print button, it enables me to print it in 1-up (one page on one page), 2-up (two pages on one page), 4-up (four pages on one page), and so on. Sure the text size is reduced to make it fit; but in my experience, even a 4-up print is readable enough, as most of the prints I use is for mere reference purpose. — Ashish In Windows, go to the Printers section of Control Panel, open any printer settings, then goto “Printing Preferences” section, there select your option for “Pages Per Sheet”. Simple I think. It works like a charm. — R Ramkumar Another way to save paper is to preserve paper that is printed only on one side and then print any documents that you will use just for reference on the second side. We’ve been doing this for years at our offices. The onesided sheets also serve as scribbling pads to make reminders, take small notes, etc. — Rajesha

• Automate many office needs into Web portals like payslips, attendance sheets, booking meeting rooms, e-news letters, etc. Another point we have already touched upon is whether you really have to use that costly courier? Can a cheaper local courier work out? If you have to absolutely deliver printed material, what about sending electronic documents to your local offices for printing and local delivery instead of printing and couriering from a central office? Savings in courier costs could be significant. What about documents for internal customers: your employees? Why not save some paper there by putting them up on an intranet? Don’t have one? You can create one for free on Ning. And here is something that most organizations do anyway – recycle ink cartridges.

13. Implement open source software There is a saying that when times get tough, open source gets going. Why? The logic is simple: IT budgets are amongst the first to get cut and at the same time the pressure from software companies (who have their own huge targets) to license software goes up. The way out? Open source. How usable is open source? A majority of the Websites in the world run on Apache, an open source software. Tomcat and Jboss are widely used application servers. The DARE Website is implemented on Joomla, another open source software. The emailing system for the Website runs on yet another open source software – PHP List. We use another open source software LimeSurvey . This article is written using OpenOffice.org, an open source office suite. Some of my article concepts are developed using Freemind and open source mind mapper. Some of

my basic graphics work is done using Paint.Net. We run our network asset management on SpiceWorks, and use many other open source tools for network monitoring and management. If you are considering this approach, then there are a few things that you must keep in mind. Open source does not necessarily mean free. There are implementation and maintenance costs that you will have to pay. And many open source software have paid versions that are more feature rich or offer assured support. The biggest cost differential comes in the perseat licensing fee. Most paid software operate on such a basis. Most open source application software do not either charge a license fee or charge a low fee. That is where your savings actually come from.

14. Reduce telephone costs Communication costs are never insigniﬁcant for any business. If you have a lot of international calling to do, have you checked out Skype phones or services like World Phone that give you cheaper international telephony? For calls within the country, did you know that you get better rates with closed user groups?

15. Give up unused infrastructure that you had put in place for future growth When real estate prices were zooming out of control, many businesses made what they thought at that time was a wise decision by investing in office space for future needs. Now that the global economy is slowing down, these empty or partly occupied office spaces are likely to become a burden on your cash flow. Have you considered giving up unused space ? Or if you own the space, how about trying to rent it out if there are takers?

16. Reduce power consumption Another obvious one. Shut down machinery, lifts, servers, PCs, and lights when you do not need them. Do you really need those ﬂoodlights you installed to illuminate the facade of your new ofﬁce building? Do not leave NOVEMBER 2008 39

DARE.CO.IN generators running even after power has come back. (For more tips on this topic, refer to the article on how to save electricity in the May 2008 issue of DARE)

17. Recruit management trainees How about management trainees as replacement for attrition in the short run? There are any number of smart young people in our college campuses who are hungry for real world experience. Most of them will put their heart and soul into a summer internship or management traineeship, and the expenditure on them is much less than a full-time employee. Recruit a few from the nearest campus and, who knows, you may want them back as full-time employees.

18. Upgrade older computers instead of buying new ones An average organization uses a PC for about three years. By this time not only are two new generations of computers are out, but the user is complaining that the machine is outdated. You can get at least one more year of useful life from these machines by increasing – usually doubling – the RAM in the machine and reinstalling the operating system and applications after formating the hard disk. In a worst case scenario, put in a newer, more spacious hard disk also. The cost of doubling the RAM will be under Rs. 2000 and and a new hard disk is about Rs. 3000. Even if you do both, it will be way cheaper than the cost of a new PC at about Rs. 25,000.

19. Push your product out faster If you are working on a new product, can you get it out on the market a bit faster so that money can start coming in? This is particularly true for software startups. The world is ready to accept a beta product and with today’s architectures, you can keep on adding new features to your offering even as the core product is in use.

20. Shift to a cheaper ofﬁce Another no-brainer, especially for startups. You took up that impressive 40

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cover story/slowdown office expecting venture funding to flow in fast and furious, but times have changed and you are not sure whether the VC who was chasing you is all that interested any more. What about giving up the office in the sprawling commercial center and moving to a cheaper location? Maybe even an incubator, or a home office setup if you are small enough? For larger organizations, can you reallocate work spaces so that some space is freed up that can be shutdown to reduce operating costs, or, in the case of rented property, returned?

21. Stop unnecessary newspapers You may think that this is a stupid one. But do a quick count – how many copies of the same newspaper comes to your office? At the end of the day, how many of them remain unread? At about Rs. 100 per month per copy, how much is the total expenditure per month?

22. Give up non-core add-ons Are there non-core operations or products that are a drain on your cash ﬂows? Old and non-productive product lines that you are keeping running for sentimental reasons? These are hard times and you may need to take some hard decisions – should they be shut down or sell off?

24. Settle lawsuits and litigations If you have been in business for some time, it is highly likely that you have a few ongoing litigations and disputes, most likely over unpaid bills. Particularly in cases where you have to be paid, does it make more sense to settle for part payments than drag the litigation forward? Remember that a bird (or cash) in hand is worth two in the bush.

25. Share costs with your competition Does this sound preposterous? Well then consider this: Airbus and Boeing have collaborated on joint market and feasibility studies, and once the studies were over went their separate ways in product development. Closer home, Candico used to manufacture Polo for Nestle even while its Minto was competing in the market with Polo. More recently, telecom companies in the country have decided to share infrastructure like towers even as they compete in the market place. And Jet Airways and Kingfisher have announced plans for sharing ground facilities, frequent flier plans, and even do code share (fly the other airlines’ passengers). Can you collaborate with your competition for some shared resources like market research or logistics services and the like?

23. Re- innovate your product

What not to do.

The ﬁrst point in this article was to redo your business plan. Remember that others are doing the same thing. This means that some of their needs will change. That is, their need for your products may change. Maybe your clients can no longer afford your offering. Maybe they just changed their manufacturing process and your product does not ﬁt in the way it used to. For example, maybe they have decided not to print bills any more, and so they do not need courier services. It is important that you keep your eyes and ears open for such changes in the environment, and re-innovate your offerings to meet emerging opportunities and challenges.

Many who advise on cost savings, start off by asking you to invest heavily upfront. For example, buy LCD monitors for all your computers so that you can save power. Invest in costly video conferencing systems so that you can save on travel costs. Install motion sensors so that lights switch off to save power. My advice is – don’t; unless the immediate savings are greater than the upfront costs, and in most cases they are not. Wherever upfront capital costs are involved, savings accrue over time, and when cash ﬂows are tight is not the time to make capital investments for long-term savings. DAR E

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an you begin by telling us about your journey at Apollo?

Back in 1995, when I joined Apollo, my grandfather Raunaq Singh was the Chairman and my father OS Kanwar was the Vice-Chairman and Managing Director. Since I am an engineer by qualification, I had to undergo a lot of training at the shop and plant floor. Subsequently, I went for training on how tyres were being sold in the market. I did not have any of the head office responsibilities for quite some time. In fact, I started with handling one of our smaller district offices in Piragarhi (Delhi). I was constantly on the roads; meeting the consumers, understanding their needs, taking their feedback, understanding how we were with our after-sales services, etc. It was really a hardcore understanding of the business. I remember an experience when we were launching a two-wheeler scooter tyre and I was out there on the road putting stepnee (spare tyre) covers on the scooters. In 1997, I entered the head office and immediately started integrating marketing with manufacturing and technology. There was a huge gap between these departments, so I built a bridge of communication and transparency between them. I started a department called Strategic Planning and Coordination, the primary objective of which was to bridge the gap of understanding what the customers required and what we could give them. In this way, we saw a lot of improvement in what we produced for the customers. Slowly I moved up the ladder and went into manufacturing. I started looking after the three plants (two in Kerala

entrepreneur of the month and one in Baroda) we had in 1998. I had to bring in a sense of globalization, global benchmarking, and global scale production at these plants. Our Baroda plant then was at 70-80 tons per day capacity, and the Kerala plants were sitting at 110 tons per day capacity. Today the economy of scales is up to 200 tons per day in any given plant in the world. Our Baroda plant is running at 420-450 tons per day and Cochin is at 310 tons per day. So these plants saw a manifold increase in output, which gives me a sense of achievement. Around 2000, we brought in passenger radials. We were pretty late in tapping this segment, as our competition had already entered it long back. At that point, 50% of the Indian cars were on radials. I brought in a new expansion by starting the state of the art passenger radial plant in Baroda. We came up with a new scheme called B2K (Battle 2000) which shook up the tyre industry by bringing in radials at the price of crossply tyres, which was really affordable for the customers. The customer understood the value we were giving—better fuel efﬁciency and mileage. Then we saw a change in the OEMs buying tyres. When Maruti went radial, the entire country went radial. Today, 99% of the country’s cars are on radials. We were at number ﬁve in the marketplace then; today we are clearly at number two. We have seen growth at the 42

NOVEMBER 2008

/bio rate of 25-30% since 2000. Now, I aim at taking us to number one in the passenger radials market by 2009. The move from being a very commercial tyre (trucks, tractors, etc) oriented company in the ‘90s to catering to the new and upcoming customer segment (passenger cars); and thus making Apollo a more ‘all aspects of tyres’ company is one of the key changes I brought in. Apart from this, a sea-change was brought about in after-sales servicing. I remember in the late ‘90s, a service claim took about 4-8 days. Today, we have brought that down to 1.5 days, and there are times when we have done it in couple of hours. I believe when you want to create a new wave, you have to start it from the ground level—you have to change yourself, and get the whole organization to think the way you are thinking. The customers beneﬁted by the changes, and we also beneﬁted as we got repeat customers coming in. I would say hats-off to the organization and to its people who are very open to change. Change in small or big ways comes in every six months at Apollo. For example, we have just launched XT-100K, which is a truck tyre that will run for 100,000 kilometers, as compared to the average 60,000 kilometers. With this tyre, we are offering a tyre as good as a radial in the cross-ply segment. The catalyst for all this has always been my father and our Chairman.

We have noticed that many non-ﬁrst generation entrepreneurs work as management trainees at different organizations before joining their own company formally. What is your reason for the same? The idea was to get an experience outside of what I have grown up with. It was for getting a different ﬂavor of how

NEERAJ KANWAR APOLLO TYRES LTD

Founded by his grandfather Raunaq Singh, further established by his father OS Kanwar, Neeraj RS Kanwar is now holding the reigns of this US$ 1 billion company. He talks to DARE about his journey as a third-generation entrepreneur and shares insights about the industry. the professional world runs—an eye-opener and conﬁdence-gaining exercise before joining the company. Besides this, before I joined Apollo in 1995, I started a company called Apollo Global Capital, which I ran for two years. This non-banking ﬁnance company (NBFC) was pushed to me by my father. In those days (1993) NBFCs was really considered a big business. I understood aspects of money and dealing with people. It had nothing to do with our tyre business. I lost good money in that business, which made me understand the value of money and people.

/bio

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NOVEMBER 2008 43

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/bio

Tyres are not generally seen as a glamorous industry. Did you really want to do tyres all your life or did you want to do something else? The tyre industry becomes glamorous when you are on the highway, and you are cruising at 110 kilometers per hour. What one does not realize is what goes into giving you complete control at those speeds, which in my opinion makes this business glamorous. A normal customer just looks at it as black, round, and un-sexy; but a tyre is a highly engineered product. The number one tyre company in the world, Michelin spends close to one billion euros in just the research and development of this product. After all, it is about the safety of the customer. When you look at highways abroad, the vehicles are running at speeds above 100 miles per hour. We test our tyres in a test track owned by DaimlerChrysler in Papenburg (Germany). Here our tyres are tested at various conditions. We are talking about testing this product to the extreme speeds, weather, and road conditions. We are the ﬁrst Indian company to launch winter-tyres (for Europe), and these tyres have been tested in snow, ice, etc.

Your father, Mr Onkar Kanwar, places the board of directors and management at a very high level as a factor of the company’s success. In your opinion, what makes that magical board and how do you rope in the right people for this job? The mantra at Apollo has always been transparency and empowerment. My father plays a very important role in the organization. He gives a good macro overview of where he wants the company to be. As I mentioned in the beginning, he is the main catalyst for bringing about changes. We are the people who have to implement those changes, and we also sometimes question those changes. I have a good set of people around me. They are my strategic thinkers. How we manage ourselves in this environment of dynamic change is by having open dialogue and transparent communication with each member of the management. My core team is empowered to take decisions on its own. This is not only at the senior level, but even down the line. We have a cross-functional team culture, there is a culture of go-and-get-it-done, rather than endless meetings. I believe that the DNA of Apollo is transparency and empowerment.

MANTRA/

PASSION AND FUN AT WORK HAS BEEN MY SUCCESS MANTRA IN THE ORGANIZATION. THE HUMAN TOUCH IS VERY IMPORTANT IN THE INDIAN CONTEXT. I LIKE TO SEE A SMILE ON PEOPLE’S FACES. IF I DO NOT SEE SMILES, THERE IS SOMETHING WRONG IN THE ORGANIZATION. It really gives a kick in itself. Having said that, I do not feel it is an unglamorous industry. I always wanted to join this industry, and I think it is very sexy. Besides this, I make sure that my calendars are extremely sexy too (grins).

It is said that Apollo aims to hit US $2 billion turnover by 2010; how are you ensuring that this aim will be achieved? In April 2008, we were at $1.2 billion. Our vision is clear: $2 billion by 2010. This is going to be met with organic and inorganic growth. In terms of organic growth, we are on an expansion mode throughout the company. We are expanding in Baroda, both in passenger radial (by 50% more than our current capacity) and a new product line—for the road tyres for, say, mining vehicles, etc. Then we are getting into a green-ﬁeld project in Chennai, where we are setting up our largest passenger radials outﬁt with truck radials also. Out there we are looking at 20,000 tyres capacity for passenger radials, and 1,500-2,000 truck radials. Our South African plants are expanding by 30-40%. Besides this, we are always in the market looking at opportunities for inorganic growth. We are looking at opportunities in the tyre space around the globe, mergers and acquisitions, etc. 44

NOVEMBER 2008

Today Apollo is organized in three profit centers—India, South Africa, and International. Then we have corporate functions, like HR, accounts, finance, purchasing, etc. But within India and South Africa they have their own functions, and they are supposed to run it, and supposed to bring in profitability and growth in the business. That is how we really manage the entire organization.

Apollo has equity participation by a state government; and you have government nominees on the board. What are the challenges and beneﬁts of such a situation? Apollo had given share holding to Kerala since its inception (in 1976), but it was a very small portion, less than 2%. Because of the history with them, they have about two nominees on the board. We respect them, take corrective guidance from them, and I think they play a very important role in our growth.

The automobile industry is very cyclical. As an input provider to the automobile industry, how do you manage this cyclical nature? About 20% of our production is dependant upon the Indian automotive sector. Of course, nearly 60% of our turnover

/bio

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comes from the Indian market. Besides this, we tend to have various territories apart from this. For instance, today we export to the Middle East, Asia Paciﬁc, Africa and South America. These are the different channels of distribution by which we de-risk our marketing strategy. When the domestic market cycle is weak, our export arm picks up the goods.

Your biggest revenue earner must be sales to automobile manufacturers. How do you manage these relationships? How do you nurture them? How closely do you work with them? How are you personally involved? In the commercial segment, we have been supplying to Tata, Ashok Leyland, Eicher, etc for a long time now. We have a really good relationship going with them. Other than normal supplies going to them, we also have had strategic joint R&D programs running with them for their new vehicles. In the passenger segment, we supply to almost all the Indian OEMs and some of the biggest global OEMs like General Motors, Skoda, Ford, etc. We launched a Vehicle Dynamics Workshop in Pune last year, which was a great success and well-appreciated. For this, we had brought in engineers from some universities in Germany. We showcased how a tyre and vehicle operate together on the road. Besides this, we are in touch with our OEMs to stay abreast with the new innovations that we can bring about in the product, in terms of safety, cost, and customer satisfaction. As for maintaining these relationships, it is really systemdriven. Yes, on an annual basis I do have a look at the OEMs, participate in various forums with the OEMs, and more. Recently, we have been invited by Volkswagen in Germany for their IZB conference, where we are showcasing Apollo for the ﬁrst time.

What will be the impact of the current ﬁnancial turmoil on Apollo and the automotive ecosystem? As far as Apollo is concerned, I must say we are well-poised as a company. We had seen a downturn coming in the industry in the beginning of the year. So, corrective measures were taken back then. To cite an example, to bring down manufacturing cost is an ongoing process, but in the beginning of the year we came out with some major breakthrough projects in manufacturing. We are pushing the people in the plants with these projects, whereby we want to see an increase in productivity from the same equipment and manpower in upwards of 30-40% increases. When my productivity goes up, obviously my manufacturing costs come down. We had launched Six Sigma two years ago, which is an ongoing process again, and which has given benefits of about 20-25 crore in the last year. When oils and natural rubbers go up (which has happened in the past six months), it directly hits the tyre prices. Hence, we had to come up with various solutions for handling the issue of raw material by reengineering our products, which our technology team has done very well in. We have reduced the weight of our tyres, raw material costs, etc.

A noticeable trend would be the Internet. In Europe, there are a couple of big companies who started selling tyres through the Internet—a more B2C platform. We ourselves are looking to be in this space, and I am giving a big cue to the readers of DARE, the aspiring entrepreneurs, that it is an opportunity that will do really big in the country in the future. NOVEMBER 2008 45

DARE.CO.IN If you were to see Apollo in Q1, we have actually grown. That has really come due to our strong presence in the after market. We deal with 4,500 dealers in the country today, whom we nurture as much as we nurture our customers. We have 140 ofﬁces in the marketplace, with over 500 employees on the ﬁelds. Our message to them is that for us customer is God, so you have to be there for him. The market has shrunk but Apollo is not willing to shrink. We have smaller growth coming in, but it is there. As for the ecosystem, I think there is a downturn in the automotive sector. We have seen the production of commercial and passenger vehicles coming down. And that hits not only Apollo, but the entire tyre industry. It is a challenging time for everyone. But I think Apollo as a company has lived up to the challenge rather than succumbing to it.

Does the CSR initiative of Apollo benefit the bottom-line in anyway? As a citizen of India, it really means a lot for us to be able to give back something to our country. About five years ago, we started the journey of HIV awareness. Our customer is our God. He brings a lot to our revenue and profitability. A segment of our customer (commercial truck drivers) is also part of the main set of HIV carriers, illiterate and less educated population. This customer needs to be aware of the dangers, preventive measures, and such. Therefore, we set up an education program, besides six clinics in various regions. Apollo is educating them as well as bringing about sponsors in these communities, who then educate people further. Also, we have tied up with ILO to bring in AIDS awareness internally. By this move we are educating our 10,000 plus employees about these diseases. Other than HIV-AIDS awareness, we are also doing a lot for the environment. Today as we all know, global warming and going green is a big thing. We in our own way have been doing a lot in the plants for looking at substitute fuels, tying up with various organizations (such as World Bank), and more, to become an environment-friendly company. Besides these two initiatives, we are working with the War Wounded Foundation, which is supporting the soldiers handicapped in various wars in the past. We have close to 50 dealerships with them across the country. We feel glad to be able to help these soldiers who at the age of 18-21 got handicapped in wars and ended up at home doing nothing, by providing a source of livelihood.

What are the noticeable trends in the tyre industry? How can aspiring entrepreneurs make good business in this industry? A noticeable trend would be the Internet. In Europe, there are a couple of big companies who started selling tyres through the Internet—a more B2C platform. Even in India, the customer today does not have time to go to a tyre market. It is a fact that the tyre market is not a ‘glamorous’ place to be at, and is usually found in the outskirts of the city. It is a day’s work gone when a customer is looking for a tyre and 46

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/bio getting it changed. A B2C model is going to come up soon in India. We ourselves are looking to be in this space, and I am giving a big cue to the readers of DARE, the aspiring entrepreneurs, that it is an opportunity that will do really big in the country in the future.

How much personal time do you get and what do you do in it? The culture of Apollo has been that you need to ﬁnd valuable time with your family. It is a very critical component for us, wherein work and family life has to be in balance. From the time of my father, it has always been encouraged to go for small vacations. We want our employees to go out with their families and come back with a fresh mind and greater productivity. I also tend to take breaks. But I think it is in my blood to be involved with work even when I am out there. As a kid, you have seen your father always on the phone (laughs). I remember when I was in Thailand to celebrate the New Year with my family in 2002, and I had come back here on the 30th of December, due to some emergency. So, yes, even when I am out there, I am on my Blackberry and Internet. But there are times when I switch it off to maintain the balance.

What was the legacy that was passed on to you by your predecessor? What is the legacy you want to pass on to the next generation? All that I have spoken about in this interview is the legacy passed on by my father. What I am today is due to the learning I have had from him, which is really—the value of time, money, and people. Till date, he keeps telling us is that change is constant, time is money, and if we do not change with time, there are sharks out there that are waiting to take us over. We blink, and competition will get to us. So there is no time to blink. That is really the legacy passed on to me, and which I will pass on to the next generation.

What is your success mantra? Passion and fun at work has been my success mantra in the organization. I believe that there is this relationship with my colleagues and employees that yes, work is work, but at the end of the day there is also this friendly environment that has to be there. The human touch is very important in the Indian context. To cite an example, here in our organization you will see that I like to see a smile on people’s faces. If I do not see smiles, there is something wrong in the organization. I remember when we took over operations in South Africa (Dunlop), the big thing that was missing there was the human touch and bonding of employees, which I think in the past couple of years we have been able to inculcate. I launched the program Apollo One Family four years ago, which is a family bonding program to spend time with each other, go on vacations together, and more. We have had an integration program in which 50 employees from South Africa were brought down to India and were looked after, had dinners at homes of Indian employees, etc. I think that fun has to be there to be successful. D A R E

TES 2008: Welcome to the Era of Inclusive Entrepreneurship Come December 16, Bangalore will play host to a gathering of global entrepreneurs in what is slated to be the largest event of its kind in Asia. Organised by the global networking group, The Indus Entrepreneurs, the Tie Entrepreneurial Summit 2008 (TES) will be spread across three days and will host a total of 50 sessions that will showcase the power of inclusive entrepreneurship. Themed around the concept of inclusive Entrepreneurship, TES 2008 will provide a comprehensive perspective of all aspects of entrepreneurship and creates a unique platform for entrepreneurs and aspiring entrepreneurs from across industry segments to bond and share ideas, experience and business objectives. The summit has gathered support and participation from many other entrepreneurship organisations and industry bodies. Delegates and speakers from more than fifteen countries and 50 TiE Chapters across the globe have committed to attend this milestone summit. Infosys chief executive officer S. Gopalakrishnan who was the chief guest at the formal launch of the event noted that if there is one city in India which offers a complete network for entrepreneurship development, it is Bangalore. It is the presence of such an ecosystem, that industry leaders believe makes this southern city the ideal venue for an event that aims to bring together a veritable who's who of the world of entrepreneurship. The lead speakers at the various panels include a galaxy of entrepreneurs, venture capitalists, policy makers, academicians and thought leaders from across industry groups. In keeping with the theme of looking beyond IT, TES 2008 will focus on retail, real estate, hospitality, healthcare, education, aerospace, manufacturing, fashion, social entrepreneurship, clean technology, mobile and financial services. The lead speakers at the various panels include a galaxy of entrepreneurs, venture capitalists, policy makers, academicians and thought leaders from across industry groups. In keeping with the theme of looking beyond IT, TES 2008 will focus on retail, real estate, hospitality, healthcare, education, aerospace, manufacturing, fashion, social entrepreneurship, clean technology, mobile and financial services. Nandan Nilekani, Vice chairman, Infosys Technologies will chair a special panel, while thought leaders such as Dr C K Prahalad from the Ross School of Business, Dr Carl Schramm from the Kauffmann Foundation will share their perspective on the power of entrepreneurship in shaping emerging economies. Taking forward the inclusive theme, successful entrepreneurs such as Dr Vijay Mallya

of the UB Group as well as Kiran Mazumdar Shaw, who heads the country's largest biotechnology company, Biocon Ltd will share their perspectives on the perils and the thrills of successful entrepreneurship. Dr. R K Pachauri, Director General TERI, will address the gathering and speak about one of today’s hottest topics, Clean Technology. However what is expected to anchor the event as a premier venue for aspiring entrepreneurs is the opportunity it will provide for networking with the very best. Overseas investors, policy makers, government leaders will be amongst the participants at the event that is pegged as a meeting point for all those keen to become a part of an ecosystem that is a necessary factor in fostering entrepreneurship across different industry sectors. The multiple sessions will allow various stakeholders such as professionals, industry leaders and investors to interact and build relationships. TIE Bangalore the host chapter is also keen to showcase the event as a platform where new ideas can be generated to develop home, rural and urban industries, as well as the small and medium enterprise sector. TES 2008 with its wide ranging attendance from leading corporate organisations is also expected to be a discussion ground for methods to foster a culture of intrapreneurship within established organisations. In short, the event is being fashioned as a landmark event that will set the agenda for entrepreneurship in times of economic turbulence, by highlighting the power of new business creation and the impact that such activity has in powering growth within economies. The overarching theme of the three day event will be on strengthening the multiple strands that form part of the entrepreneurial ecosystem. This concept is undeniably unique, in that it offers a local, national, and global platform designed to connect entrepreneurs, policy makers, the investment community, academia and governmental agencies, all of whom are an integral part of the world of entrepreneurship.

TES 2008 Quick Facts: Dates: December 16-18, 2008 Place: Bangalore Venue: Hotel Grand Ashok For more information on TES 2008, and to register for the conference, please visit the summit web site www.tiesummit.org or www.tieworld.org

Media Partner

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Can You Revive Indian Circus and Make it a Better Business? Once a traditional heritage of India, the charm of Indian circuses is slowly waning. Meanwhile, in Canada, we have in Cirque Du Soliel an example of how circus can become a contemporary art form as well as a ﬂourishing business /Aswathi Muralidharan Story One: Wintuk

Story Two: CRISS ANGEL Believe

Jamie is a bright young boy who lives in an imaginary city where winter has brought intense cold but no snow. He falls head over heels for a girl who spends her time taunting him with silly games. One day the girl is kidnapped by ice giants. Jamie embarks on a journey to an imaginary place in the north called Wintuk to free the young girl and bring the snow back to where it belongs.

Criss Angel is a surreal, enigmatic Victorian noble. He is on a path of ‘imaginative exploration,’ which reveals the inventive mind of Criss as he hovers between the land of the living and a surreal world. If you think these stories are straight out of Hollywood potboilers, then think again. They are circus acts. They are recent productions of Cirque Du Soleil, a

NOVEMBER 2008

$600 million company that virtually reinvented circus as we know it! Cirque combines unbelievable stunts with the latest technology, and the audience does not think twice before spending on tickets priced from $40 to $150. Cut away to Indian circus. And what comes to mind? A smelly old tent? A few moth-eaten animals? Poorly dressed clowns and acrobats performing under a dirty tent?

Photo courtesy: Cirque Du Soliel

/sector analysis

DARE.CO.IN

/sector analysis

Obviously, it is time to reinvent and rejuvenate Indian circus. And if you were to be interested in this revival, then there is no better point to start than study the success of Cirque Du Soleil.

What is Cirque de Soleil? In the early eighties, a band of 20 street performers roamed the streets of BaieSaint-Paul near Quebec City in Canada, walking on stilts, juggling, dancing, breathing ﬁre, and playing music. They performed under the name of BaieSaint-Paul Stiltwalkers, a street theatre group, which included Guy Laliberté who went on to become the founder of

Cirque. This troupe created the La Club des Talons Hauts (The High Heels Club) and organized a cultural event for street performers, La Fete Foraine de BaieSaint-Paul, for three consecutive years from 1982. The event attracted plenty of attention for the group. It was then that Guy Laliberté, Gilles Stecroix, and others started thinking of creating a circus that would travel the around the world. In 1984, when Quebec City was celebrating the 450th anniversary of Canada’s discovery, Guy proposed a show called the Cirque du Soleil (Circus of the Sun), which was accepted by the organizers. Thus, Cirque was formed! Laliberté became co-founder and president along with his partner Daniel Gauthier. Cirque, which began its operations with 73 employees, now has around 4000 people including about 1000 artistes working for it. The rest are involved in various areas like art, direction, production, stage settings, lightings and special effects, music, trainers, IT, and marketing. It has performed before 80 million spectators in 200 cities across ﬁve continents, and by the end of 2008 plans to have 17 different shows performing around the world. From the start, the company has been renowned for coming up with innovative acts that were different from what people saw in traditional circuses. The shows presented by Cirque are based on a central theme bringing together different circus arts, theatre, and ballet from around the world, and avoids the use of animals. In an email to DARE, Tania Orméjuste of Cirque Du Soleil shared how a typical Cirque show is created: “The creative process for a new Cirque du Soleil show takes two to three years depending on whether it is a touring show or a resident show. Resident shows take longer because we are not only designing the show, but also designing the performance space (the theatre). We ﬁrst select the principal members of the creative team starting with the director of creation, the stage director (who usually writes the show) and the production manager. This team will develop a preliminary idea for the show with Guy Laliberté and Gilles Ste-

Cirque du Soleil Revenue: US$ 600 million Founder: Guy Laliberté Employees: 4000, including approx. 1000 artistes IT expenditure – CA$ 130 million over 10 years (CA$ 1 = Rs. 41 at current prices) Croix (now Senior Vice-President of the Creative Content Division). Then others will be brought into the project: set designer, costume designer, composer, choreographer, lighting, sound, audiovisual, puppets and other designers depending on the nature of the production. The casting department is involved at a very early stage because they will offer two services: they identify talent (acrobatic and artistic) from around the world and they also collect ideas and images from around the world. This helps the stage director and other designers to ﬂesh out the concept of their show. “At each step of the way, there is considerable brainstorming involved: the creators meet and toss around many ideas, with the stage director taking the lead, and then they go their own ways to develop their individual designs and bring them back to the creative table. There is constant feedback ﬂowing between the stage director and the director of creation (who NOVEMBER 2008 49

DARE.CO.IN

Photo courtesy: Cirque Du Soliel

/sector analysis

The way forward Traditional Circus Performers Artistes trained within the circus camps

Artistes trained at circus schools

Acts

Animal acts, trapeze, cowns

Storytelling using acrobatic skills and high-tech sets

Production

Series of distinct acts; slapstick humour

Theatrical act with very high production values - a central narrative using magniﬁcent sets, drama, props, lively music, and advanced lighting and stage settings

Music & Lighting

Live band; ﬂoodlights

Audience

High-end equipment, recorded sound effects with live accompaniment; advanced computercontrolled lighting effects B & C cities and small towns Metros

coordinates all of the creative efforts in association with services such as casting and training) with all of the other designers. The ﬁnal concept of a show will have evolved immensely from its original embryonic idea. Generally, the artistes who are selected to perform in a new show will be brought to the Montreal Studio about eight to nine months before the scheduled première of the show for rehearsals. “There is no recipe for our success, really. One thing has not changed throughout the 24 years of our short history, and that is the intention of touching the audience and expressing emotions with our shows. We want to make the public remember a song, an act, or a character from our shows because it meant something to them. Our shows have a strong evocative power and that could be why they are successful worldwide. The storyline is not obvious; we 50

Contemporary Circus

NOVEMBER 2008

do not wish to impose it on the public. We want them to take away their own interpretation of what they see. The result is a show which everyone can relate to, no matter where people are from.” Cirque Du Soleil has had a major role to play in promoting what is known as cirque nouveau or contemporary circus. Cirque nouveau is a performing art form developed in the later 20th century in which a story or a theme is conveyed through traditional circus arts. This kind of circus does not involve animal acts. Human performers narrate the story with the help of live music, props, and magnificent sets. In India, too, contemporary dance forms — a mix of several dance forms including martial arts, yoga, etc. — are slowly attaining popularity and increasingly finding a niche of their own. According to Daksha Seth, one of the cult figures in the Indian contemporary

dance arena, “The level of artistic skill has to be so unbelievable that the audience is stunned by the performance.” Like we said, if you were to set out to revive Indian circus, there are two key components that you would have to work on. The first is the need for constant innovation. According to Daksha, “You have to keep on inventing because otherwise you would become stagnant.” The idea is to unite art with entertainment. Cirque Du Soleil claims to “actually always try to find a new challenge in every show. We do not want to make the same type of productions twice; we seek to break new ground with every production.” In 2005, Cirque’s project, KA, combined martial arts, acrobatics, puppetry, interactive video projections and pyrotechnics to tell the story of twins — a boy and a girl — who embark on an adventurous journey to fulfill their destinies. The second is the need for good training schools. In the words of Sanjana Kapur of Prithvi Theater, “You need training centres and exchange programs with circuses abroad.In Germany and France, there are circus schools of the highest quality. There are choreographers working with acrobats to create the most magical pieces of theatre.” Performers hired by Cirque Du Soleil undergo training at its Creation Studio in Montreal. All artistes are given artistic and acrobatic training, including acting, movement and percussion workshops. The performers are supervised by trainers in dance, theatre, singing, and acrobatics from across the world. Besides the trainers, the studios also employ physiotherapists and fitness specialists. Investments are required not just in productions and artistes. For example, in 2006, Cirque announced an agreement with CGI Group to outsource its IT needs for ten years. The contract was valued at CA$ 130 million. In 2005, it is said that Cirque spent US$ 165 million to build a theater for KA at the MGM Grand. In 2008 itself, it is claimed that Cirque’s costume workshop will churn out nearly 25,000 pieces using 50 km of fabric and produce nearly 3000 pairs DAR E of shoes!

DARE.CO.IN

opportunity/telecom

iPhone, Android and the Mobile Platform Worldwide the iPhone has proved the viability of an easy-to-use mobile applications market. But will the cheaper Android bring the experience to India? /Sreejiraj Eluvangal

Photo courtesy: HTC

ajeev Prasad is hardly a techie. Employed as a financial analyst in a Bangalore firm, his iPhone nevertheless has a few interesting applications on it. “This one’s for my son, when I want him to surrender the remote control to me at home,” he says, demonstrating a freely downloaded paint-with-your-finger application on his phone. Utilitarian considerations aside, iPhone users like Rajeev who download applications from the iPhone App Store are warming the hearts of developers. Many users have phones that allow downloaded applications to be installed on them. However, most users, except for those that use iPhones, don’t bother. “It is the delivery mechanism,” says Vibhore Goyal, CTO to a few start-

Google Android on HTC’s phone 52

NOVEMBER 2008

DARE.CO.IN

opportunity/telecom ups and a Microsoft veteran. Vibhore and his friends, while at IIT Bombay, had tried to design a Linux-based operating system for cell phones four years ago. He is currently working on bringing one of his projects, direct hiring service, Cocubes, onto the mobile platform. “The crucial question for a developer is, how to reach out to the end consumer,” he says. “That is what is different about iPhone applications. It’s already there on the phone, at their ﬁngertips. So, people can just click on an icon and browse through the different applications and if they like something, download and install it with another click,” he points out. Under the traditional model – for example, of installing an instant messaging application on a Nokia phone – one would have to know the application provider’s website, go there using the phone-browser, download and install it. If your phone does not have Internet connection, that means downloading the application to your PC and then using some other software to install the application on your phone through a cable. “The problem with this model is that the adoption rates drop dramatically,” says Amit Doshi of Mumbai-based Webodrome Arise Technologies, a company that

provides consulting and development services for the mobile and Web platforms, and other solutions to operators, product companies, etc. The iPhone model also gives developers a lot of wriggle room, adds Vibhore: “If you just want to test out an idea you have, this one gives you an easy access to the market. Write a basic application and publish it on the store. If people like [and] many people download it, I can work more on it. With two to three million people coming to browse the App Store everyday, some will deﬁnitely give it a try. I don’t need to worry about hosting, uptimes etc.” The second factor favoring the iPhone model has been the relative simplicity of the development and testing process. Currently, applications can be developed that talk directly to the phone’s OS, like Symbian, Linux, OS X, Windows, etc., or through middleware like Java. However, even within a single OS like Symbian, used by Nokia and Sony Ericsson phones, there are three to four different versions, and testing and modiﬁcations have to be done on each. To get over the fragmentation of the market, Java was developed. However, its success in easing the pains of mobile application development is also mixed. Java is present on most mid- to high-end phones, and, theoretically, all these phones should be able to run Java applications out of the box. “However, the way Java is implemented on the handsets varies from manufacturer to manufacturer and model to model,” says Navin Thangiah, director for market development

The Android is so open that not just Google, but anyone can come up with an appstore; with payments and all that taken care of. Google has [promised] 55 handsets on

Photo courtesy: Apple

Android by next year. — Amit Doshi Webodrome Arise Technologies at Bangalore-based mChek, one of India’s most prominent mobile application developers. “Even though the promise was to write once and run anywhere, in practice, we have to make sure that the application works in each handset – the keys match, the screensizes are properly resolved, etc. That means checking your application on hundreds of handsets and modifying it to run on each of them if needed.” The need to tailor programs for each handset is not just a developer hassle. For consumers trying to install a program, it means selecting the right version for the phone from a big list of models. “We have completely stopped

Apple iPhone 3G NOVEMBER 2008 53

DARE.CO.IN ple’s tight control over the store is another reason for concern. Under the terms of usage, developers of iPhone applications are not supposed to duplicate (read compete with) ‘ofﬁcial’ applications released by Apple, like the iTunes music management suite. The iPhone also allows only one third-party application to run at a time, making things like instant messaging impractical. In addition, any application on the App Store has to be approved by Apple. Besides, it is not possible to install applications on an iPhone from any other source. In addition to all this, Apple keeps 30% of the revenues from the applications on the iPhone. “There is concern among some that Apple can hold you to ransom, there’s some fear of being completely shut out,” says Navin of mChek. Yet, for all the misgivings, Navin believes that the pros outweigh the — Vibhore Goyal cons. “In the software CTO to a few startups product business, timeto-market is everything,” he adds, “If you have to developing Java applications for this conduct tests with 100 different handset models and modify to suit all of reason,” says Amit. them before launching your product, it takes too much time. With the iPhone, Not all Good News It is therefore perhaps not that sur- you don’t have to worry about that. In prising that within three days of the addition, you are getting a market of launch of the App Store in July this 10 million consumers at one go, with year, iPhone users downloaded nearly no investment in delivery channels or 10 million applications. In the ﬁrst two billing. For all this, 30% is a steal.” months, the number climbed to 100 million. The number of applications Android – Best of Both Worlds? climbed from 800 to 3,000 during the It is at this juncture that Google and same time period. its Open Handset Alliance have anHowever, not everything about the nounced the release of the Android App Store is developer-friendly, es- operating system for phones. At a pecially for India. Apart from the low glance, it seems to combine the best of iPhone penetration in the country, Ap- both worlds – no portability issues and

The crucial question for a

developer is, how to reach out to the end consumer.

That is what is different about iPhone applications. It’s

already there on the phone, at their ﬁngertips.

NOVEMBER 2008

“

opportunity/telecom

Within three days of the launch of the App Store. iPhone users downloaded nearly 10 million applications.

”

no gatekeepers into the applications world. In addition, Google is also giving out $10 million to developers for the Android platform. “The Android is so open that not just Google, but anyone can come up with an app-store; with payments and all that taken care of,” says Amit of Webodrome Arise. The key, he agrees, will be adoption rates. “Google has [promised] 55 handsets on Android by next year.” he adds. Another advantage for Android is that unlike for the iPhone, application development is similar to Java, with the coding language being almost the same. Also, unlike for the iPhone, developers do not have to work on a Mac platform. Perhaps none is more qualiﬁed to speculate about the future of mobile applications than Shig Sando, the former managing director for global imode business at the Japanese mobile operator NTT DoCoMo Inc. DoCoMo is recognized as one of the pioneers in bringing applications to the mobile platform. “The issue is, can Android become popular without J2ME?” he asks. Coming from a market where phone models are chosen and retailed by the operator, unlike in India, Shig points to the aspect of operator-friendliness for the OS. In such markets, he points, Android has to be prove its attractiveness to the operator before it gets a chance with the consumer. “More importantly, how and why are telecom operators going to introduce it into their market? If a large brand seriously drives the Android with good reason, competing against Apple, etc., then it would be a start to DAR E the race,” he points out.

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DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR 'DARE <comments, questions, suggestions'> and send to D DARE (SMS DARE DARE DAREType DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE DARE (SMS Instruction: Instruction: Type 'DARE <comments, questions, suggestions'> andDARE send itit to 56677) 56677) 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DAR ARE D ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE D DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAREE DAR ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR ARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DARE DAR

Website:

www.dare.co.in Email:

dare@cybermedia.co.in SMS:

56677

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/blog

Inequality is good It is important to understand the habits, the needs, and the elements that would induce your customers to start using your brand regularly rather than just see it as an occasional treat “The worst form of inequality is to try to make unequal things equal.” — Aristotle (384 BC – 322 BC), Greek writer, philosopher

/Rupin Jayal

NOVEMBER 2008

nd to this I would add that the worst form of inequality in marketing is to treat all your customers equally. Because they are not really equal. The most obvious fact is that every person who buys your brand does not spend the same amount of money. Some buy at full price; some buy only when there are discounts available. Some people feel delighted at the price that you charge; others grudge paying it. The price and the response of people to it is a very signiﬁcant differentiator between different types of customers. Thus, should those willing to pay full price and be the ﬁrst movers (particularly in the case of fashion and technology brands) for your brand be the most desirable and the most sought after customers? The answer is, it depends on why they choose your brand. If it is just because you happen to be the ‘latest’ then clearly they are not choosing you for your inherent brand values, but because you will best satisfy their need to appear as trendsetters – for now. If another brand comes along with an even more attractive proposition, they will shift with delight. This is particularly so in technology brands. Suddenly, the iPhone becomes the latest phone to have, and other brands that ruled so far begin to lose customers. People graduating from hatchback cars more often than not change to a different brand when

moving into saloon cars – a prime reason why many predominantly hatchback automobile brands find it difficult to break into saloon cars, particularly beyond the economy saloon end of the market. When they do, the car has to be loaded with features that preferred brands manage to do without, raising costs and possibly reducing margins. So sometimes the early adopter is not the most worthwhile prospect on which to build your brand long term. This is a problem that many restaurants face. They become the ‘flavor of the month’ for a while, but fade away as the next one opens and flock to it instead. However, some manage to build a regular clientèle. What do they do? Is it just good luck? Or is it the fact that they cater to a different kind of customer and design their offering to suit their tastes? While the former might be true in some cases, it usually is a rather expensive gamble. Thus, it makes sense to focus on the latter. To do this, it becomes important to understand their habits, what are they seeking, what would induce them to start using your brand regularly rather than just see it as an occasional treat. And equally important is the need to stay current, to decide what to retain, and what to change as you evolve with your customer. Given the way the economic environment can change dramatically, it is also important for the brand to be sensitive to the pulse of their key

DARE.CO.IN

/blog customers and what they are seeking – is it reassurance, assistance or is it liberation (‘Sensitive Brands,’ www.dare.co.in/columns/rupinjayal/sensitive-brands.htm)? Doing this ensures that your customer believes she or he is getting good value for the price they pay, and over time this builds their sense of conviction about your brand. But is it only about price? What about categories where price is a level playing ﬁeld, monitored by intense competition? When faced by a shelf full of brands clamoring for attention, how does the customer choose? This brings us to the crucial need of understanding why those who choose you regularly do so. And how much of this choice is based on habit, economic considerations, or because of distribution-related forces, versus how much is due to an active choice made for your brand is something that needs careful evaluation. In many categories loyalty is not based on active choice, but on passive factors, with the role of choice being reduced to just a transaction. This is where the issue of attitudinal versus behavioral loyalty comes in. Any robust brand that remains strong over time and the vicissitudes of economic cycles has to have a core base of people who prefer it not because it is the nearest available, the cheapest, or has the maximum features, but because they believe in the core values of the brand. These are people who deserve to be treated differently and better. This might seem obvious, but, for example, how many mobile companies do you know that actually offer rewards to customers for their loyalty? Occasionally if a customer opts for a particular service, fees may be waived, but that is usually only when some additional service is being added. And it isn’t about ﬁnancial incentives alone. It actually needs a regular track of customers’ purchase patterns and

a follow-up to understand why they have chosen this particular brand. It means much more than loyalty programs, which more often than not are rewards for behavioral loyalty. While that is important, what is needed is to identify the active advocates of the brand and treat them on a different level from people who occasionally choose the brand or choose the brand for passive reasons. Luxury brands tend to do this fairly well by identifying regular customers and creating events for them. Some of these events (such as branded golf tournaments) become powerful brand properties in them-

“

In India, the focus and energy is often entirely devoted to getting new customers. Some of it might be diverted to socalled ‘loyal’ customers. Very rarely do brands consciously deliver a highly differentiated experience for those who not only buy it, but actually actively believe in it and even advocate it

”

selves. But here again it is important to understand the different kinds of profiles of ‘advocate customers.’ If a person is a long-time credit card customer, instead of just wishing them on their birthday, they could be given a free special holiday designed with their interests in mind, or gift vouchers for the kind of brands they seem to purchase regularly, or a special customized gift like a monogrammed iPod Shuffle. Given the value that these customers deliver, it makes sense to track them separately, and create rewards and recognition that is tailor-made to suit their profile.

Similarly, rather than just giving a loyalty bonus, a test drive invitation, or a free service camp, automobile brands could create a special club for customers who not only buy their brand, but also actively advocate it to others. They could be given privileges such as fast-track service or car accessory upgrades, particularly when the car has been owned for a period of time and the ‘new’ excitement has worn off. Inequality actually is a very big inducement to brand choice, preference, loyalty, and, most importantly, advocacy. Seeing how well regular longterm advocate customers – or ‘brand lovers’ – are treated, says a lot about a brand and how it views its customers. In a market like India’s, the focus and energy is often entirely devoted to getting new customers. Some of it might be diverted to so-called ‘loyal’ customers. Very rarely do brands consciously deliver a highly differentiated experience for those who not only buy it, but actually actively believe in it and even advocate it. This goes beyond regular loyalty programs and member-get-member schemes. What a highly differentiated experience would need to do is ﬁrst spend time identifying and understanding the real ‘heartland’ of the brand, that is, the people who believe in it, and are not swayed by price or other external circumstances. The next step would be to create a carefully customized and differentiated experience for these very precious customers so as to deepen conviction and reinforce the mind space the brand occupies for these people. A brand’s heartland deserves to be treated equally well. It needs to be differentiated from the ‘rest’ and needs to be singled out for recognition. Otherwise advocacy can turn into adversity for the brand, as former advocates become its most bitter and, worse, most knowledgeable and hence credDAR E ible, critics. The Author is Director-Strategic Planning at M&C Saatchi. NOVEMBER 2008 57

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funding/strategy

ow is VC investment in India getting affected because of the US financial turmoil? I think a lot of money will go towards growth capital, which will be advantageous to us. This is because we are early-stage investors and will remain true to our form. We will continue to invest in early-stage opportunities. There will be more opportunities with the market going forward. We are long-term investors and look at five-seven year windows. It is true that there is a lot of panic around the world. But my guess is that things will settle down once the governments, not only in the US but around the world, put their acts together. Once that settles down, we will have much more to say and understand. Right now, people are just holding back, saying ‘let’s conserve costs, manpower and let’s be low-key right now, and let’s see how things go’. In one week if you have five big financial institutions collapsing, it is not a normal time. There are some tough times ahead.

Sasha Mirchandani Senior Investment Director with BRV India

NOVEMBER 2008

Sasha Mirchandani helps portfolio companies build low-cost operations in India to improve capital efﬁciencies and to leverage BlueRun Ventures’ global platform to help Indian companies to expand globally. Mirchandani also founded Mumbai Angels. This is the ﬁrst time that a group of angels has come together to invest in seed stage companies in Mumbai. Some of the companies they have invested in are mKhoj, Madhouse and Netelixer. He completed Business Administration from the University of Virginia and an MMDP program from IIM, Ahmedabad. He is a past president of the Mumbai chapter of the D A R E Young Entrepreneurs Organization.

DARE.CO.IN

funding/strategy With the recent developments in the ﬁnancial space, a lot of entrepreneurs are worried as to whether they will be able to raise enough funds. What should entrepreneurs do now? They should focus on their business. If they think their business requires capital, they should go and raise it and not worry about valuations. I think in the last year or two, this market has been grossly overvalued. An intelligent entrepreneur would realize this, and that he/she should go with the best investor, and valuation is of the least concern at this stage. Just get the deal done if you find an investor of good value. Don’t dither too much on valuations. I would advice entrepreneurs to focus on the business, cut costs and keep an eagle-eye on global developments. At the end of the day, focus on the macro-economics of your own business. Has BlueRun reworked on its strategy in view of the changes taking place in the global markets? We will stick to our knitting and do what we are good at. What is your investment strategy for India? Our investment strategy for India is the same as that we have

our rule is that we put $2-8 million initially, and then up to about $15 million in the life of a company. What kind of returns do you expect from your investments? We look for a minimum 10x return. This means that if we put in $5 million, we want $50 million back. What support, other than money, do your investee companies get from BlueRun? There are a plenty of ways in which we can help a company. We help in strategy, business development, and getting key personnel into the company. When someone knows that a fund like BlueRun is behind the early-stage company, and we want to go after senior management, you get listened to. That helps tremendously. BlueRun can help take the company global. We can help the company raise capital from other VCs too. Our investee companies also come back to us for more funds. Have you invested in or are planning to invest in companies that are likely to beneﬁt from 3G and WiMax services? Which sectors are you bullish on and why? We are looking at it actively. We haven’t really made up our

investor of the month globally. We look for early-stage technology companies; we look for opportunities that have global potential in the value chain. We are active investors in all our companies. How does BlueRun evaluate a startup? How much money do you put in any business? We look at three things. Firstly, the management team, which is the most important and gets the highest priority. Secondly, we look at large opportunities, which depends on the market. Thirdly, we look at a clear exit: ﬁve-seven years. When we say large opportunities we mean that the company should reach a certain size, good enough for us to exit. We don’t have to have an investment where the company has to go out of India. The Indian market is big enough. But it should grow to a certain size to be able to go public in the Indian market. As for the amount of money that we put in:

mind about a particular company. It’s a big space and we understand it, and we will actively look for companies in this space. There are four sectors we are bullish on: clean technology, telecom, mobile VAS, enterprise opportunities. There are plenty more and we are also looking at media and entertainment too. We will deﬁnitely invest in mobile VAS companies. There are some interesting companies that we are currently evaluating. We can see that these companies have created business models that are now proﬁtable. We are quite excited about this sector. If an entrepreneur gives you a business plan today, how long will it take for you to analyze and take a final decision? One to six months, depending on the opportunity. DAR E

NOVEMBER 2008 59

DARE.CO.IN

strategy/IT

How Social Networks Can Help Your Business Social networks are increasingly being used for business by organizations big and small. Some of the possibilities are fairly standard, like recruitment, while others are innovating on what can be done. /Mohita Nagpal

“H

ow do you retain employees in an industry that usually has horrible turnover?” This is a question posted by the director of recruitment for a call center on LinkedIn, a professional networking Website. Within 24 hours of this question being posted, it had been answered by 41 others from the field of staffing and recruiting! Every day, entrepreneurs (and others) are using social networking Websites to find an answer to a problem, increase their visibility, find new business contacts, track competition, search for potential employees, schedule meetings, and what not. Most popular amongst these networking sites is possibly LinkedIn, which has 25 million members worldwide, including a million from India. Then there is Ryze and Brijj, which are also fairly popular. Even Orkut and Facebook are not just limited to casual or personal networking anymore. As Namit Nangia, CEO, lifeMojo, says, “We realized there are not many Indians in health sector on these professional networks. So we started exploring Orkut and Facebook, and that helped us get in touch with dietitians and nutritionists in India. We also did a couple of surveys amongst our friends and found vendors for a few fitness products.” Typically, you have to sign up on these Websites in order to create an online identity. Your profile includes information relating to current job, previous positions held, recommendations, and general interests. Some Websites also let you publish blogs or join community discussion groups.

NOVEMBER 2008

The next step is to invite friends and colleagues to be a part of your network. A network is made up of people and links between them. The idea is to provide a platform where people can ﬁnd and contact others whom they want to reach through people they already

Popular Networking Websites • LinkedIn • Facebook • Twitter • Ryze • Brijj • Orkut • Friendster • Tribe • Spoke • ZeroDegrees • Connexion know. Referrals and introductions by mutual friends is all that one needs to make a new contact. That provides certain credibility to the whole dialog. There are a lot of ways people use these social networks. Hiring managers look for employees, job seekers need recruiters, entrepreneurs look for investors and recognize people with similar business interests.

Recruitment

LinkedIn helps look up a professional before you meet him/her. Many times I have looked up CEO’s [and] VC’s before I met them. It has almost become an online resume for people. — Sahil Parikh, CEO, Synage Software

This is one of the most common uses of social networking sites. These Websites have millions of users from virtually every industry and profession. This helps a great deal in tapping suitable employees. It features their online resumes, designations, and recommendations from colleagues. The recommendations reduce the time required for reference checks. Waqar, CEO of SutraHR, an HR consultancy firm, cites an example from his experience. “As an HR firm, networking websites help to tap the passive employee, someone who is not actively looking for a job. If I am looking for a COO, I will go to the Website and search a few profiles. And I will get four to five people to tap. This has really helped in senior level hiring, as you don’t get their contacts and resume on usual job search engines. We once did a COO

DARE.CO.IN

strategy/IT

like software development, outsourcing, and Web development.

level hiring that happened through LinkedIn. That really speaks volumes about the kind of potential it has.”

Seeking advice and opinion Reference checks Social networks are increasingly being used to check references of prospective employees. Their activities on the network help provide a good pen picture about them.

Networking This is a no-brainer. After all, they are called social networks. “These websites are great for networking. Every day more and more business professionals are using social networking and social news sites to build relationships, meet new people, and even market themselves,” says Ankit Maheshwari, CEO, Instablogs Network. For those who say “business is all about contacts,” nothing could be a bigger boon than these Websites. They help build a circle of connections and have them in all one place. So if tomorrow you need to get in touch with someone or need an introduction to someone who is related to your connection, it can be easily done using LinkedIn. In other words, getting to know people whom your connections know. Moreover, Ankit further says, “It also helps in scheduling meetings with people before hand when attending a conference or an expo. Whenever I am attending some expo or conference I post the dates on these sites, so that if anyone wants to meet me, he or she can ping me and we can ﬁx a time for the meeting. I have also used LinkedIn to ﬁnd many existing business partners with whom we are doing business today.”

Exploring business opportunities When it comes to acquiring new clients, using these Websites can come pretty handy. Businesses usually spend a lot of time and effort in getting the leads of potential customers. Moreover, one can rarely get their personal contacts by calling their companies. However, as a member of these Websites, one will just have to introduce oneself and send them a mail. If the

Whenever I am attending some expo or conference, I post the dates on these sites, so that if anyone wants to meet me, he or she can ping me and we can fix a time for the meeting. I have also used LinkedIn to find many existing business partners with whom we are doing business today. — Ankit Maheshwari, CEO, Instablogs Network other person is interested, s/he will get back to you. The whole approach is pretty straightforward. It also helps to know what one’s connections are talking about and the trends they are following. Sahil Parikh, CEO, Synage Software, says, “I market my service DeskAway for someone who is looking for a project collaboration tool. You have to be there if someone is looking for your product/service and grab the opportunity.” Ryze has a number of networks dedicated exclusively to seeking and providing business opportunities in specific areas

Looking at relocating? What are the laws of the land? What are the cultural mores you should be aware of? What can be a better place than your social network to ﬁnd out? LinkedIn Answers encourage people to ask questions, which can be answered by anyone. As Sahil adds, “LinkedIn Answers is amazing. This truly helps save time in ﬁnding and researching things online. You can be sure of posting a question at night and having it answered when you wake up in the morning.”

Product beta testing and soft launch A social network is a good place to seek inputs on products that are about to be launched. One could go a step forward and get some of the members to test out the product or to ﬁll in surveys. LinkedIn was one of the ﬁrst places where a prelaunch announcement was made about this magazine, and from where inputs were sought on what it should cover.

Seeking investments Are you on the lookout for startup investments into your idea? Even while you do the regular rounds of VC funds, it would be worth your while to pass the word around on your favorite social networks. A contact of a contact of a contact may just happen to work with an investment ﬁrm, or may be an investor herself.

Collaboration Social networks are being deployed inside organizations as a tool for team building and collaboration.

The ﬁne print Like all good things, social networks too need to be consumed in moderation. The person who answers your question may not know anything about it, or, as it very often happens, completely misunderstand it. It is also possible that the people who respond to your requests for feedback and beta testing are not DAR E part of your target audience. NOVEMBER 2008 61

DARE.CO.IN PG 31

Cynapse in 2008: the rest of the story Choudhury and his team brieﬂy considered whether Syncnotes or even cyn.in could generate enough advertising revenues to grow the business, but swiftly rejected the idea. “Our goal has always been to build a product company, and advertising-based businesses are media companies,” he comments. “We would have to understand the advertising space much better in order to depend on revenues from it. An indirect model where we rely on someone else’s engine for revenues didn’t seem right—we expect people to pay for the innovations we build.” Consequently, cyn.in version 2.0 was introduced in mid-2008 as an open-source product. This evolution was meant to ease client concerns about entrusting vital information to a proprietary hosted service. Customers could try out the free “community edition” to get used to the product. They could then buy a small business edition if they needed limited support for a deﬁned number of users, and an enterprise edition if they needed in-depth, around-the-clock technical support and live updates. Cynapse also made it easier for enterprise customers to adopt cyn.in by creating a version that could be in-

case/INSEAD stalled behind the client’s firewall on the client’s hardware. This “software appliance” still could be maintained and updated remotely by Cynapse, but reassured clients who wanted all their data to reside on their systems. Choudhury amplifies, “We used the softwareas-service model so we could be sure of supporting our customers. The appliance has the same reliability.” The open source model allowed Cynapse to find customers in unusual places. Choudhury explains, “Usability is key, because we are a small company that sells globally over the Internet. We are getting good traction from places we did not expect. We didn’t target Colombia and Argentina, but we got traction over there and now have a partner we acquired though a customer. There are some government rules over there that make open source appealing.” Choudhury believes that selling support instead of software—the classic open-source business model pioneered by companies such as Red Hat—is what it takes for a small group of Indian engineers to compete for larger customers. He muses, “We realized that our business is building enterprise software, and that is a hard sector to penetrate because there are some huge gorillas out there. Selling software is not about owning the intellectual property. It is

A screenshot of Cyn.in — a collaborative knowledge-sharing platform 62

NOVEMBER 2008

about owning a successful product built around continuous innovation. The only way we can compete with giants is to create an ecosystem of individuals and businesses that depend on our product to do their business. Open source lets companies trust new products, because even if we go out of business, they can take a product forward if they believe in it.” Choudhury also hopes that the open source model allows Cyn.in to acquire users more rapidly. He comments, “Version 1 taught us that charging per user is the wrong way for us to sell software. Most business that adopted it only bought licenses for people who really needed it. They don’t expand the platform so users can collaborate with others for whom they don’t want to buy licenses.” Version 2 is priced per server if the customer wants to buy the appliance, or according to the amount of space needed if the customer prefers to buy the software as a service hosted by Cynapse. Choudhury also made the decision to stop consulting altogether. “Work that comes to India is manpower-intensive, and Mumbai is the most expensive place in India to be,” he says. “Recruitment costs are rising, and we don’t see how the consulting business can be a global business for us. We have always refused projects above what we needed to sustain ourselves, and now we are going to put our full efforts into supporting our cyn. in customers.” Will open source work for Cynapse? Only time will tell. However, the evolution of this company illustrates many of the challenges that Indian software ﬁrms face as they try to migrate from a heritage of charging for services into world-class software product providers. Cynapse’s competitive advantage—and India’s—lies in its brainpower. Since open source software provides an easier way for companies outside India to take risks they might otherwise pass up, it may prove to be the right vehicle for the country’s talented software engineers to build products DAR E for enterprise customers.

DARE.CO.IN

blogs/opinion

Entrepreneurial Journey – Navigating Through the Means and Ends Debate

/Anurag Batra

ntrepreneurs do not like debates; however, they do like action. They like activity and creation. Entrepreneurs dare to do, they personify strategy in action. Being an entrepreneur, as you would have ﬁgured reading my columns, is a journey within. Entrepreneurship is a way to explore your own boundaries and to realize your own potential through the creation of an enterprise. We as human beings have endlessly debated the question about means and ends. Do the means justify an end? Wouldn’t it be interesting to apply this to the gamut of entrepreneurship and to entrepreneurs. You may even ask if this debate is relevant any more. I am not sure, but it is something I think about. I am reminded of a saying that was shared with me sometime back: “You should look at your successes from the prism of what you had to sacriﬁce in order to achieve what you set out for.” As an entrepreneur, more importantly, I believe one must look at what one does from a very personal viewpoint, and from one’s own value system and set of shared values with other entrepreneurs and society. Entrepreneurs must do the right things in the right manner for the right reason, and then the desired right output of creating an enterprise and shareholder value will be met.

The questions an entrepreneur needs to deal with are: what is the means that he or she employs, and what is the end he or she is seeking? On a very simplistic level, the means an entrepreneur applies includes risk taking, ability to manage the environment, and the very important ability to execute the idea or dream. And the end is creating a shareholder value and jobs, and ultimately wealth for him- or herself. Whether this is selﬁsh wealth as in sampati or selﬂess wealth as in sampada is another debate. When a choice is made, the question is often asked: “Was it the right decision?” For thousands of years humans have struggled with the idea of the morality of their actions. This has resulted in a multitude of belief systems regarding the nature of their actions. In the system of Utilitarianism, the ends justify the means, and actions are judged on results, not on intentions or motives. On the other hand, the antithesis of the Utilitarian ideal is Immanuel Kant, for whom the end results were not important in determining whether an action was just. Motive was everything to him, and he had very strict views on how to judge the morality of an action. These days Utilitarianism is a more accepted way of life. Its basic philosophy, the idea of the greatest good for the greatest number, is one of the basic building blocks of the democratic system. If a person lives on the principles of Utilitarianism, they disregard the motives involved in an action. Utilitarians try to separate action from the actor, and look at the bigger picture over the individual. Followers of Kant (among others) disagree with this approach, and claim that in this system minorities and individuals are often overlooked. Kant argues that any action cannot be moral unless its motives are moral.

In media, a domain where I operate, the ends and means debate takes centre-stage. Are sting operations justiﬁed to expose corrupt politicians and their maldeeds? In my view, yes. Entrepreneurs have to manage the environment and... you know what I mean. From the early 1960s to late 1980s, the Indian entrepreneur’s ability to stay ahead was synonymous with his or her ability to manage the external environment, read bureaucrats and politicians. However, the business and political environment has changed, and this is no longer a prerequisite, let alone a differentiator. Entrepreneurs of today are faced with a new set of challenges that are more to do with how much they care for the environment. Are they sensitive to the cause of corporate social responsibility and, very importantly, are they making a difference to the lives of their team in a positive manner? Their dilemma is about how much is good enough; where does one draw the line? To adapt compassion in their corporate decisions is something that they struggle with. Is this a good time to add Compassion Quotient of an entrepreneur to his or her balance sheet? Entrepreneurs want to be remembered as great visionaries and create a legacy, but they must know what will make them great. As Will Rogers would say: “It’s great to be great, but it’s greater to DAR E be human.” Anurag Batra is real life, ﬁrst generation entrepreneur who is Much Below Average (MBA) from the prestigious Management Development Institute, MDI. When he is not busy writing such columns, he can be reached at anuragbatrayo@gmail.com. Anurag is the co founder and editor-in-chief of exchange4media group which includes exchange4media.com. NOVEMBER 2008 63

DARE.CO.IN

hat is your background? It’s not often that you find women in the VC world. I have what you can call varied experience. I have worked in marketing, HR and investment banking. I have worked in consumer-focused roles; I also have [played] some selling-focus [roles]. In investment banking, I was in sales and business development. I enjoy being with startups and entrepreneurs. I knew the founders of Infinity. So, one day [in 1999], they were talking about setting up a fund. Their desire to have an office in Bangalore and my desire to work in this sector matched. I thought I could help create the Infinity brand in the South. What are the essential skills of a VC? There are two-three legs on which

funding/strategy some of the execution challenges some of them face compared to if you are coming from a large company. But it also depends on the attitude of the person—do you want to come down to the level of the startup and understand its issues. In 2000, I was very bookish in my concepts about what an entrepreneur does, but over the years, I empathize a lot more. Now I am a lot more sensitive to the issues of a startup. An important aspect of being a successful VC is the ability to build relationships. You joined Inﬁnity in late 1999. Soon, there was the dot-com bubble burst. Is it all sounding familiar now? We all made mistakes. One learnt a lot of lessons [from the dotcom burst]. However, the reasons behind the dot-

investor of the month VCs operate. One is the ability to raise funds from investors—the ability to convince people with money that ‘hey, give me money, I will invest in startups’. That’s a big challenge. The second is the ability to get a proprietary deal, deals others don’t see. You want to get the best deals in the market, which means you have to create a strong branding, know where and which sectors startups are in. You have to create a wide network of people; people you know from your business school, from your under-grad, your neighbors, neighbors’ neighbors, your ex-colleagues. How important is entrepreneurial experience as a pre-qualiﬁcation for being a VC? If it’s an entrepreneur who has become a VC, you tend to have greater entrepreneurial empathy, you understand 64

NOVEMBER 2008

com bubble and today’s troubles are different. The 2000 bubble was more restricted in some sense to Internet and technology. This time it’s going to be wider in terms of the number of sectors affected because of the involvement of the banking system. However, I don’t think you can compare the two. What has burst today is more than a bubble. Bubbles burst and you can rebound quickly. It’s more than a bubble that is bursting today. The fundamentals of banking system are being questioned, like how much of regulation should be there. My only concern is how it impacts India, but I don’t think it will be as bad, since the banks here are better regulated than elsewhere. But there are other sectors with huge exposure to the US. A lot of the mortgage banking business came here and a lot of that will go now. Another fact is that banking and ﬁnancial sector will

DARE.CO.IN

funding/strategy

Bharati Jacob

Managing Partner, Seedfund She is one of the few women in the Indian VC world. DARE catches up with Seedfund’s Bharati Jacob in a free-wheeling interview on being a VC, the current economic turmoil and its impact on the Indian entrepreneurial ecosystem. Seedfund is India’s biggest seed-stage fund, with around two-thirds of its ﬁrst, Rs 70 crore fund already committed to ten companies. Before Seedfund, Jacob was associated with Inﬁnity Venture Fund which invested in companies like Indiagames, Indiabulls and agencyfaqs. NOVEMBER 2008 65

DARE.CO.IN not spend as much on technology as they used to, for many quarters. The financial sector has been among the early adopters of technology. So offshoring and outsourcing will get affected. The size of the business will go down and some of the jobs will also go away. Would you say that wannabe entrepreneurs should shelve their plans for starting out for some time, till the mess is sorted out? Not at all. If you search the Internet today, you will find a lot of voices, many from Silicon Valley, saying ‘guys, get down to basic expenses, re-evaluate your business plans.’ But these warnings are focused on the US market, which is heading for a recession. But India is still a growth market. The GDP growth rate may come down marginally, but it’s still growing. What we have is a strong internal demand. Yes, an entrepreneur cannot ignore the macro-economic situation. The question of how depends on the sector he is in. For example, if he’s in financial services, he may need to re-look at his numbers. People are going to be risk averse. If he was banking on selling 1000 loans, he may not be able to sell as much. However, at the end of it, I don’t think anybody should shelve or postpone their plans. If you want to be an entrepreneur, be one. Business cycles will come and go, the ups and downs will come and go, and that’s part of life. Sure, it’s going to be tougher, but why should you shelve your plans. Just rework them. If I were going to get ten million dollars, fine, I might get just four million. On the basis of ten, I had expected expenses to be six million, now it’s four, so the expenses have to come down. Preserve cash. Any startup should have a strong value proposition. It should be strong enough to survive good times and bad times. If it doesn’t survive, then prob66

NOVEMBER 2008

funding/strategy ably it’s not a strong value proposition. It’s like you are starting out for a meeting. Whether it’s raining or sunny or it’s snowing, you will still go. It’s just that you will take a different gear with you. Rain or snow is not going to stop you. In fact, this is a good time to start a company. It gives you more breathing space, everybody’s not expecting huge returns. It just gives you that much more breathing space and time to ﬁgure out your business model better. What are the lessons from your own experiences that you try to convey to your investees? At Seedfund, Praveen, Mahesh and I are from the 2000 era. We started investing in that era. So, we have incorporated the lessons from that bubble burst into Seedfund. For example, all our companies must achieve breakeven. So, if we commit to invest a million, the company must break-even within that period. We know we can bring in that million, but we don’t know what will happen tomorrow. It was the learning of 2000, when suddenly the market dried up and there were no funds, even if the business model was very good. So we always say, conserve your cash, figure out your business model before you scale, before you expand. If you have raised a crore, you had better figure out how dependent your business is on extra funds. If it is, you had better raise more cash right now, because you don’t have control over the macro environment. Some business plans look very straightforward, because you have done a cut-and-paste from a US model. But often it doesn’t work, because there are institutional challenges in India. So you need to test it out in a smaller market and see how it works before you expand. Ideally, you should have that much money, to test out the fundamental business model that you have. In 2000, everybody as-

sumed that tomorrow, there will be more capital available. How vulnerable are some of today’s Internet and telecom-based companies to the US downturn? A lot of such Indian companies are domestic-demand driven and often, in India-focused models, you don’t have pure online models. For example, redBus and Carwale [both invested by Seedfund] are not exclusively Internet. Net is an enabler in their case. They are smarter about funding now; they realize that macro-economic conditions are something they don’t control and funds availability is dependent on macro-economic factors. Even among VCs, we are more mature and we advise them to achieve cash-ﬂow break-even within the funding they have. Today, if there’s no funding, many companies may not be able to expand, but at least, they won’t have to shut shop. Also, if, for example, new car sales drop, someone like carwale.com may have to look at second sales or two-wheelers. Where does early stage fund money originate from and what has been the impact of the downturn on the sources? We raise funds from India and overseas, both institutions and individuals—pension funds, endowments, fund of funds, trusts, family ofﬁces, individuals. Everybody has an allocation for different asset classes. As such, the allocations may not dry up entirely, but they may reduce in proportion to the overall size. Right now, we haven’t seen any impact. As far as we are concerned, we are in constant touch with our investors. They are committed to remaining with us. When are you launching your next fund? We have plans to raise Seedfund II, but we have not announced any DAR E dates yet.

/http://www.dare.co.in/blogs.htm from the

DARE.CO.IN

Chandrayaan-1: India’s moon mission: What does it mean for businesses?

than ever before, it is worth remembering that careful planning and

Posted by: Krishna Kumar in transportation, technology, strategy,

How to make your presentations lively and interactive?

stories, research, news, india, idea, environment, designing s I write this, ﬁngers are crossed for India’s ﬁrst ever lunar

mission to take off, the countdown for blast off will start in a

coordination and a steady sense of purpose is needed to help you scale up and to take you far, like to the moon and even beyond.

Posted by: Binesh Kutty in strategy, software, information, idea

few hours. hile you think you are making a very interesting presentation,

and that all mission objectives are met. God forbid, even if it were

to turn out otherwise, I wouldn’t be too upset, because in a way,

We have all seen this happen, haven’t we? The key is to make the

the objectives of the mission would have been mostly achieved

presentation lively and interactive.

Like all Indians, I too hope that the launch is a perfect one

by blastoff.

there are people in the room who looked bored to death!

I came across this interesting product called YawnBuster, a

Enough and more has been written about what this means

product from Pune based Harbinger Group, looks promising enough

for science and what downstream opportunities can arise

to work that magic for you. This is apt for most of us who just do not

for businesses.

have the time to think of innovative ways to make that happen, and

For me, Chandrayaan has a completely different meaning also.

more so do not really want to have a hard time trying ﬁgure out how

Launching a lunar mission is like any other major product launch.

to make those ways work on the PowerPoint slides. I tried it and

You have done something similar before, (a series of rockets and satellites in this case ), but have never attempted something of quite this - what is the word? SCALE. That one simple word explains it all - scale. Chandrayaan is about scale in all dimensions.

found it kind of neat. For starters, you need to register at their website, after which you are sent a mail with the download details of YawnBuster (7 days evaluation) setup. Installation is a breeze. Then, all you need to do is ﬁre up PowerPoint and start preparing the presentation. After couple

The space craft - PSLV-C11 is a scaled up version of the original

of slides, or say 10 minutes of presentation, throw in a YawnBuster.

PSLV, a scaling that did not happen over night, but in stages, launch

How? There is a new option in PowerPoint menu toolbar. Click on

after launch.

it to add a YawnBuster activity, which includes - Show of Hands,

The distance the launch vehicle will travel is a massive scale up. The technology may be same or similar, but the capabilities required to command and control the lunar orbiter once it reaches the moon is another massive scale up from controlling satellites in low earth orbit.

Bingo, Point of View, etc. Customizing these activities is child’s play, literally. I must say, I was smiling myself after preparing a dummy presentation with YawnBusters in it. That’s about the software, which I recommend you to try out. Of course, there are other ways to keep a presentation lively. My boss, for instance, keeps the text on slides to the absolute minimal

Building the organisation required for this and planning and

(at times, it’s a series of single words or a series of pictures). He

executing the project to this scale is of course the biggest scale

at times shows off some interesting software in his presentation

up of all.

(Stellarium, Woopra, etc). The trick lies in blending such things

Business normally does not have the discipline of the scientist, who is perfectly willing to wait generations to get results, and so we end up in messes like we are in today.

seamlessly into the presentations. Similarly, our Director, in a day-long workshop, included videoclips from Lagaan, Chak De India, etc for the participants to

As we stare at shorter and shorter cycles for everything from

understand teamwork, sales pitch, motivation, conﬂict resolution, etc.

stock markets to product life cycles to boom and bust cycles, as we

I must say, that was the ﬁrst workshop where I saw the participants

rush to get the next product and its later versions out to market faster

ever so eagerly involving themselves in the presentations. NOVEMBER 2008 67

/http://www.dare.co.in/blogs.htm from the

DARE.CO.IN Related blog: checklist for a good presentation Please leave a comment with your tips & tricks to keep a presentation lively and interative.

If you look at these immortal example, there are some common threads. 1. All of them talk to the reader’s heart and not to their brains, like business and technology writers are wont to.

What makes a writer great ? what makes a written piece great?

2. All of them use simple, understandable language (though it

Posted by: Krishna Kumar in strategy, stories, passion,

3. All of them point to a higher quality or a higher value that we

is debatable whether Sanskrit has simple constructs) to build wonderful verbal pictures. would like to achieve, but is normally not present.

opportunity, news, information, india, idea, goals, general

4. The writer is more often than not, part of the transformation that

oday is Vijaya Dashami, the day of the year when thousands of

s/he seeks to bring about.

little children in my home state write their ﬁrst letters and start

their trek into the world of knowledge and the written word. Many of them will undoubtedly go on to become great writers. May their works have the power to move humanity.

I once attended a talk by Scott Adams of Dilbert fame, where he was explaining the makeup of a typical three panel Dilbert strip. In the ﬁrst panel, capture a current trend and start a story. In the second panel, develop it and in the third, provide the anticlimax!

What makes a piece of writing great? What is it that gives a piece the power to move people? Some thoughts based on a few examples.

Readers are like Lord Krishna who tells Melpattur Narayana Bhattatiri, (the Sanskrit scholar who snubbed Poontanam the Malayalam writer because he did not write in Sanskrit)

The Ramayana by Valmiki is arguably the most important literary

“Malayalam, Keliyer ina Melpattur inte vibhakiyekaliha

work in Indian culture. The epic details the victory of good over evil

Poonthaanathin bhakiyanenikishtam (Way more than the famous

and what an ideal man (adarsh purush) should be.

Melpathur’s grammatical (language) abilities, it is Poonthanam’s

The most quoted verse in the Bible, John 3:16. “For God so loved

devotion that I like).

the world that he gave his one and only Son, that whoever believes

So, if you want to write stuff that will excite people and will change

in him shall not perish but have eternal life”, talks simultaneously

the world, remember that a good way to start is to keep it simple and

about God’s love, the ultimate sacriﬁce and absolute hope, all in the

(preferably) keep it short, like a Dilbert strip!

same, easy to understand sentence. The ﬁrst ever verse in Sanskrit, again by Valmiki, “Ma nishada pratishtaam ...” was born out of the sudden and extreme grief of

How to save paper at work?

seeing one of a pair of birds engaged in the act of love, killed by a

Posted by: Binesh Kutty in waste, strategy, startup, savings, IT,

hunter’s arrow.

idea, how-to, cost

Shakespeare has penned many immortal verses, the most touching and the most dramatic (perhaps) being Marc Antony’s

keep seeing paper being wasted away to glory all around. No one really bothers about the cost or environmental effects every time

“Friends, Romans, countrymen, lend me your ears” oration at the

the print button is used. While Going Green seems to be a favorite

burial of the murdered Julius Caesar. Note the repeated usage

thing among the corporates today, there are so many small steps

of “for Brutus is an honourable man” to drive home the exact

that one can take.

opposite meaning.

For instance, it has been more than 2 years since I have

Pico Iyer’s proﬁle of the unknown rebel in the Time magazine,

been using this printing software called FinePrint (view demo).

particularly the ﬁrst few paragraphs draws a vivid word picture of

This software lets me set FinePrint (a virtual printer) as my

an unknown who had the guts to take on an advancing column of

default printer. Every time I fire that print button, it enables me

armoured tanks with nothing more than his body placed in their path.

to print it in 1-up (one page on one page), 2-up (two pages on

Kalidasa’s Abhijnanashakuntalam and Meghadutam are around

one page), 4-up (four pages on one page), and so on. Sure the

that immortal theme - love and the hardships in its way. 68

NOVEMBER 2008

text size is reduced to make it fit; but in my experience, even a

/http://www.dare.co.in/blogs.htm from the 4-up print is readable enough, as most of the prints I use is for mere reference purpose.

DARE.CO.IN About two years back, I joined the ranks of the many who took a home loan. Back then, the ﬂoating loan rate was 7.5%, and interest

I recommend entrepreneurs to give FinePrint a try, and if you like

rates being equal, my key concern was to ﬁnd a bank that processed

it (I am sure you will), perhaps get it installed on every workstation in

the application really fast -- you see, the real estate price boom had

your ofﬁce. The saving in terms of cost might seem minuscule, but it

started, and I did not want the seller walking out of the deal. So, it

is a saving nevertheless - and your contribution to the environment.

was with the country’s leading private bank that I signed on.

At 7.5 % and 20 years, I would have to pay back 1.84 times what

• How to save electrcity in your ofﬁce

I had borrowed. For example, a loan of rupees 50 Lakh repaid in 240

• 15 services to bring your IT costs down

months, would mean a total payback of 91.9 L

• Get a green ofﬁce

Many interest rate hikes later, I got a nasty shock when a letter

• Opportunities in waste paper recycling (this article is carried

landed from the bank informed me that my loan repayment now

in the October print issue of DARE. Online version will be

stretched to 41.5 years at a much higher EMI! I immediately shot

online in September)

of a mail to the bank asking for a clariﬁcation. Some followups later

PS: There are many other software out there to save paper, monitor

(somehow, questions on the home loan are never responded to

printing, etc.

immediately), all I got was an amortisation statement, listing out month by month payments for yes, 41.5 years! And when I sat down and added all that up, the amount due had

How to reduce your home loan burden

me in a deep shock. I now owed the bank 5.06 times of what I had

Posted by: Krishna Kumar in strategy, opportunity, news, loans,

borrowed. To use our example, someone borrowing 50 Lakhs now

india, funding, Fees, environment, entrepreneurship

had to pay back 2.53 crores!

re you one of those who took a home loan some time back.

Are you shocked by the increasing interest rates? Want to

reduce your home loan burden? The common advice is to prepay a part of the loan amount. But what if you do not have a lumpsum amount to prepay? You can still reduce your total repayment burden signiﬁcantly by adjusting your EMI slightly upwards. There are two factors to your home loan repayment, the EMI -- the amount you pay back every month-- and the total amount to be paid back, which is EMI times the repayment period. Normally, we focus only on the EMI and forget the total payback. Once you

What in the blazes was happnning? Luckily, a clue was there in the amortisation statement. Like I said earlier, every EMI has two components principal repayment and interest. What I noticed was that suddenly the principal component had dropped from a few thousands each month to a few hundreds! Why?Even as I kept on asking this question again and again, I walked in to one of the banks home loan sevice centres with a simple question -- How much do I have to pay as EMI to bring my loan back to the original 240 months? It turns out that I need to increase my EMI by a few thousand rupees a month.

have taken the loan, as interest rates change, both the EMI and

And what does it do to the total amount I will end up paying

the term (number of months) change. And like I found out recently,

the bank? - It is now almost half of what they had sent me the

minor changes in EMI can bring about REALLY HUGE changes to

amortisation schedule for!! To use our 50 L loan example, what had

the total amount you pay the bank. Speciﬁcally, increasing the EMI

balooned up to 2.53 crores is now down to 1.33.8 crores!

by a couple of thousands can bring your total payback down by tens of lakhs, if not crores!

Simply put, if you can extend yourselves a bit more and increase your EMI, your total payout to the bank will reduce dramatically.

This is because every EMI has two components, principal

PS: But why did they reduce the principal portion of the EMI so

repayment and Interest. In the initial years, the principal component

drastically? Many followups later, I ﬁnally got a call from their call

is very small, but even a small change in this can make a huge

centre. Seems that they got soem feedback asking for the EMI to be

overall impact.

reduced! And they did that by reducing the principal component!! I

To understand how this works, lets start at the beginning.

do not remember anyone asking me for feedback. Nor

PG 78

NOVEMBER 2008 69

DARE.CO.IN

tips/startups

A look at the NRI entrepreneur who goes abroad to study and work, but ﬁnds a place for his homeland in his entrepreneurial dreams /Sreejiraj Eluvangal

t is an ever-increasing tribe – the ‘foreign-returned’ entrepreneur. Every year, many Indians whose studies or work had taken them away from their homeland return in the avatar of an entrepreneur. DARE ﬁnds out what makes them come back, what the challenges have been, and how they try to overcome them.

The India Specialist The biggest reason for the ‘brain gain’ is the high level of economic activity in the country over the last decade. Many NRIs have found that their roots in the subcontinent landed them in a unique position in a world full of companies trying to get their foot in India. “I am known as an Indian. The word ‘Indian’ is a permanent adjective for me here,” says Vikram Upadhyay, who has spent the last 11 years in Japan, after landing there to do master’s in computer science at the Tokyo University. 72

NOVEMBER 2008

Having started off his career in software, Vikram is today associated with seven Indo-Japanese ventures, either as an investor or an advisor. He also plays an active role in various entrepreneurial forums such as TiE and the Indian Angel Network. “When I came to Japan 11 years ago, my feeling was ‘I am here to learn something and someday I will pack my bags and go back’. Eventually, as I joined a company here and started getting success in my career, I got another feeling. I felt I could now contribute to India as well,” he says. Besides investing in young Indian startups, Vikram is actively engaged in bringing Japanese companies to India, either in an executive role or as an advisor. “The India angle is always there in whatever I do now,” he says, “If, for example, someone comes and says, I want you to ﬁx a broken bank in Iceland, I will say no, even if I had the ex-

pertise and there was a lot of money in it. There has to be an Indian angle.” Vikram’s sentiments are echoed by 42-year-old Sashi Reddi. Having gone to the US for further studies after getting B.Tech. from IIT Delhi, Sashi soon established EZPower Systems in the US in 1994, targeting the still early Internet market. He opened a development center in Delhi, hoping to tap the intellectual skill of India, but had to wind it up two years later as he could not ﬁnd the requisite talent. He shipped everything back to the US. Yet, “in the three companies that I started after that, there was an India angle,” he says. “What makes me stand out is that [I am] someone who has spent most of his student life in India and 20 years in the US, and I am able to bridge these two markets,” he adds.

No cakewalk That said, starting and operating com-

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tips/startups panies in India is no cakewalk for NRI entrepreneurs, as shown by the bitter experience of Sashi Reddi. For Raju Venkatraman, joint MD and COO of BPO firm Firstsource, the India fixation was evident from his first job, at EDS. “In 1988, I was trying to get EDS to come to India. I knew there was a shortage of skills in the US, but it did not work out as the government was not ready to give what EDS wanted,” he remembers. The ambition was fulfilled after Raju left EDS and started Vetri Systems, a US-based consulting and technology company in 1991. “In 1992, one of our publishing clients, LexisNexis, was having pricing issues with their operations in Vietnam. I felt that India could deliver the quality and had the basic infrastructure. We decided that the cost advantage was too good to be missed. In a way, it was a very high-risk venture for us. The customer did not give us the money to start India operations. If we had failed, I would have been wiped out,” he recounts. “So I told them to visit India and keep their minds open.” Not everything went as planned, but things eventually worked out. “We landed for the first time in Bombay and I was very proud that I was able to get back something [to India]... However, the minute we landed, one of the bags of our guests went missing. At restaurants, they would constantly say, ‘no spice, no spice’, but thankfully, the business came through,” he says of the early days. “Even after starting up, there were many problems. Uptime was an issue’ we used to know every single line-man!” he adds. However, the bigger challenge in the early 1990s, as Sashi found out, was in finding people with the right skills. In Raju’s words, “People in India at that time did not have the same concept of a customer. Here, people were happy standing in a line to get something. There were cultural issues with the management team. They tended to have an industrial relationship with the employees. It was a union mindset.” Raju’s words ring true for the others too, like Chandigarh-based entre-

preneurs Puneet Vatsayan and his better half Anupama Arya. The couple founded the specialty research ﬁrm Mobera Systems in their hometown in 2003 after returning from the Silicon Valley to be with Puneet’s ailing mother. The couple had never worked in India and started their ambitious ‘Bell Labs for hire’ with four employees, in a garage. “The most striking thing was that people were not proud of the work they were doing. Their parents would come and see them working and complain ‘mera kuka garage kam karda’. In the Valley, nobody would give a damn where you sit down. These people were doing work that people in the Valley would die to do and the salaries were almost as good. To us, it seemed that in India, who you worked for was more important than what work you did,” Puneet rues. Another challenge for the couple was understanding employee behavior. “Here, till the age of 22, everyone treats you as a kidt’s only when you are in your ﬁrst job that people start treating you as an adult. As a result, the sense of responsibility was missing in young people. It was considered okay to say something and do something else. We soon discovered that all our employees here knew everyone else’s salaries. In the US, this would never have happened. There was also a huge sense of divide between the employer and the employee. Besides all this, people also tended not to respect time, making the execution process longer than it would be in the US,” Puneet recalls. Another big difference in the professional atmosphere between India and a market like the US is was the level of innovation. Sashi, who tried to get his software products developed out of Delhi for his maiden venture says his Indian team of 1994 was a failure at understanding the ‘product culture’. “What we are very good at it is services,” he says, “We excel at building

My logic was simple – the whole world is coming here. There is an acute shortage of leadership. If we can provide that leadership here, we can build a world-class company — Raju Venkatraman something if someone will come to us, give us all the specs, and tell us to build it. But we still have problems competing in the product space because in that market, there is no one to come and give you all the specs.” “The reason our Delhi venture did not work was because we were, and still are to some extent, poor at anticipating the market, coming up with features, understanding what the consumer wants, and delivering it. We tried for two years, then gave up,” he says. NOVEMBER 2008 73

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tips/startups

The Lessons Interestingly, each of these entrepreneurs seem to have discovered a way around the problems they encountered. Perhaps the most interesting method of learning was the one adopted by Puneet and Anupama. “We decided to ﬁnd out what really motivated our employees. So we went on a Bharat darshan,” he says. “Me and Anu hung out at different cities like Mumbai, Hyderabad, Chennai, and Gurgaon for two months, observing.”

The reason our Delhi venture did not work was because we were, and still are to some extent, poor at anticipating the market, coming up with features, understanding what the consumer wants, and delivering it. — Sashi Reddi 74

NOVEMBER 2008

Another strategy was to set an example. “We decided that we will build our company with a certain degree of values. We demonstrated that there are values: this is how we talk and this is how is walk. We routinely invited people who had left Mobera to come back and share their experiences with our employees. It works better when our employees hear of what they have and don’t have at Mobera from their peers. I don’t give ‘gyan’, because they think ‘he’s the owner, he will say that only’. Like in the Valley, we try to treat them as adults.” Sashi, who came back to India in 2001, five years after shutting down his Delhi experiment, decided to stick to services, launching AppLabs, a specialist software testing company. Two and a half years later, he was ready to give the product business another try in India. “We started FXlabs, a PC and console game company, from Hyderabad. This time, I flew down a very experienced CEO of a gaming company from Seattle, and had him stay back in Hyderabad for two years. The US team trained our team here and it worked,” he says, adding, “It would have worked in 1994 too, but it would have been difficult to find people from the US willing to spend months and years in India.”

If someone comes and says, I want you to ﬁx a broken bank in Iceland, I will say no, even if I had the expertise and there was a lot of money in it. There has to be an Indian angle — Vikram Upadhyay

And So it Goes On... Interestingly, while the entrepreneurs are aware of the benefits of the ‘brain gain’ into the country, they rarely cite it as the primary motivation. “In 2002, I moved back permanently to India,” says Raju of Firstsource. “My logic was simple – the whole world is coming here. There is an acute shortage of leadership. If we can provide that leadership here, we can build a world-class company. The sectors are all opening up, there’s growth everywhere and it’s all up for grabs.”

Sashi, who shifted to India six months ago, says, “After having lived in the US for 15 years, the move has not really made much of a difference to my lifestyle. Psychologically, it’s just a change in your permanent address.” He dismisses the idea of the patriotic NRI entrepreneur. “I don’t believe in doing anything for the sake of altruism or a social reason. AppLabs created 1500 jobs in Hyderabad. For me, that is good enough. I think creating jobs is the biggest service you can do for society, and that cannot be done as DAR E a charity.”

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/blogs

Converting a threat into an opportunity Hopefully, we will be able to learn lessons from other countries and not repeat the mistakes they made

I /Paranjoy Guha Thakurta

NOVEMBER 2008

n the Chinese language, the word ‘crisis’ is written using two Mandarin characters – one meaning ‘threat’, the other ‘opportunity’. The more one attempts to understand the impact and implications of the current ﬁnancial tsunami sweeping across the world, the more one is thankful that India will, to some extent, be protected from the worst ravages of what is arguably the biggest-ever crisis that has confronted international capitalism. If the troika of Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Deputy Chairman of the Planning Commission Montek Singh Ahlulwalia had had their way, the Indian economy would have at present been far more vulnerable to the vicissitudes of the international economic crisis than it is at present. Why? If the liberalizers would have had their way, the following changes may have taken place in the functioning of the country’s ﬁnancial sector. • Parliamentary approval would have been obtained to raise the cap on foreign direct investment in Indian insurance companies from 26 percent at present to 49 percent • A new regulator for pension funds would have been created to break the monopoly of the Employees’ Provident Fund Organization • More pension funds would have been invested in stock markets • The Union Government’s equity holding in public sector banks would have come down below 50 percent; and • The cap on the voting rights of foreign investors in Indian banks, which is currently 10 percent irrespective of the size of their shareholding, would have been lifted

If all these moves had fructified and if the country had moved closer towards full convertibility of its currency on the capital account, India’s financial system would have been more intimately integrated with the rest of the world, and the US in particular. This would have intensified the impact of the world financial crisis on the country. So, we in India are a bit better off. But in the globalized economic environment we live in, we are not insulated.

If the troika of Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Deputy Chairman of the Planning Commission Montek Singh Ahlulwalia had had their way, the Indian economy would have at present been far more vulnerable to the vicissitudes of the international economic crisis than it is at present.

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/blogs Foreign institutional investors have run away with their funds resulting in the exchange rate of the rupee crashing from under Rs 40 to one US dollar in June 2007 to almost Rs 50 for a dollar in the third week of October. The sensitive index of the stock exchange at Mumbai took nearly two years to go up from 10,000 to nearly 21,000 in earlyJanuary; it took barely nine months for the Sensex to plummet below the psychological barrier on October 17. Given all the gloom and doom, is there reason for optimism? India was supposed to have a mixed economy, one that assimilated the best elements of both capitalism and socialism—at least that is what our ﬁrst Prime Minister Jawaharlal Nehru wanted. More than six decades later, many Indians believe we took the worst of both worlds. How then can the world’s largest democracy show the way to the rest of the world?

Currently coexisting in India is a wide range of political and economic systems including different forms of feudalism, capitalism and socialism. It is often argued that private capitalist enterprise in the country was, until the 1990s, constrained by excessive bureaucratic controls. Simultaneously, the government was unable to provide basic health-care and elementary education to the bulk of the people in the manner socialist countries (from the former Soviet Union to Vietnam and Cuba) were able to. The one generalization, it is said, that can be made about India is that no generalization can be made about this subcontinent of over a billion people. The most commonly used cliché about India is that this is a country of crazy contrasts. We, as the world’s second most populous nation-state, are very rich and very poor, extremely educated and extremely ignorant. The

fact that India has remained undivided is significant since this is arguably the world’s most heterogeneous, and at the same time deeply divided, country—a nation that categorizes its peoples not only along traditional lines of class, race, region, religion and language but also (uniquely superimposed on the other divisions) on the basis of an ancient and oppressive caste system. A report prepared in April 2004 by US financial services bigwig Goldman Sachs observed: “India is often characterized as a country of contradictions. This idea is exemplified by the popular phrase that India accounts for close to a third of the world’s software engineers and a quarter of the world’s undernourished.” The last mentioned proportion is reportedly now closer to one-third, if recent reports of United Nations organizations are to be believed. We in India drew a spurious differentiation between the ‘public’ and the ‘private’ sectors. Thus, public sector undertakings were ‘public’ only in name and often served as the personal fiefdoms of politicians and bureaucrats in power. The state thus became the ‘private’ property of the privileged few who wielded authority. At the same time, private corporate groups prospered, thanks to a generous infusion of funds from government-owned banks and financial institutions while promoter groups and families would invest barely six percent or eight percent of the total equity capital of companies whose managements were controlled by them. Not surprisingly, the losses of the public sector got translated into the profits of the private sector. It is easy to be pessimistic and believe that the status quo would, by and large, continue. Yet there is still hope that future generations in India may still be able to learn lessons from other countries and their economic systems and not repeat mistakes made by others. With the ongoing economic crisis, more and more countries are realizing the virtues of a DAR E balanced approach. The author is an educator, an economic analyst and a journalist with over 30 years of experience in various media—print, radio, television, Internet and documentary cinema. NOVEMBER 2008 77

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DARE.CO.IN PG 69

had I ever asked for my EMI to be reduced. Obviously,

it helped the bank to unilaterally reduce the EMI!

leave my family behind and rush either to an acting school or to a theatre group or to Mumbai in search of a role. I should not be

While on the call, I also got a rough formula for calculating the

afraid of spending a couple of nights on a railway platform, going

principal part of the EMI. If your outstanding loan amount at the

hungry sometimes, and wait endlessly in front of studio gates in

point of calculation is, say 30 L and the interest rate is 12.5%, then

the hope of grabbing the attention of a snobbish ﬁlm director. I

the annual interest is roughly Rs. 3.75 L. Divide this by 12 and the

should not fear working with a theatre group, which pays meagerly

monthly interest works out to Rs. 31,250. So, your EMI cannot be

enough to make me forget about expensive clothing brands and

lesser than this amount. Now, if you are willing to set your EMI to

world-class gadgets.

Rs. 35,000, then the principal repayed every month will be roughly

Do I have the guts to do this? I don’t think so. This means, that

Rs. 3750. Set it to 36,000 and you pay back Rs.4,750 of the principal

all I have is a WANT, a DESIRE to act, given that everything comes

with every EMI thereby reduce the interest bearing amount that

to me on a platter. I have no ‘passion’ for acting; if I were afraid of

much faster.

the difﬁculties it would bring my way. This also implies, that while my

PPS.

What has this post got to do in a blog about

heart says I should act, my mind warns me against the troubles I

entrepreneurship? Well, I guess entrepreneurs also take home

would invite if I were to tread this path. So, it is just a hobby! Let me

loans and that they will be interested in ﬁnding out how to structure

not betray myself by calling it my passion.

their loans for the better.

There is no place for fear when you are passionate about getting something. If you were passionately in love in someone, you would

Are you ‘passionate’ about your startup?

transcend the social boundaries of religion, caste and status to be

Posted by: Vimarsh Bajpai in startup, passion, entrepreneurship

Some examples of passion that pass my mind:

with the person you love. You would revolt against everyone who stands in the way. That’s passion. 1. Our freedom ﬁghters were passionate about independence.

assion is more than just a desire. It is the intense enthusiasm

that drives one to attain the desirable.

My Group Editor greeted our team to an interesting exercise some time back, posing a presumably easy question. “What is each one of you passionate about?” On the face it, the question was a cakewalk but then it took us some time to fathom that it was not a lollypop after all. The query

They left behind their families, comforts, careers, and everything they possessed to go all out to ﬁght the colonial rulers. Besides the known names, there were hundreds of thousands of other faceless Indians, who gave up everything to passionately work for our freedom. 2. A P J Abdul Kalam passionately defeated poverty and difﬁculties to attain the highest post in democratic India.

had a hidden connotation, linked indirectly to our work, something I

3. Dhirubhai Ambani was passionate about his dream – Reliance

would dwell upon in one of my future blogs. At this stage, however, I

– and carved a path out of nothing, only to give us the ﬁrst taste

would restrict myself to discussing passion – a word we use several

of shareholding in a company.

times while talking vaguely about a person, an activity, a cause, a

4. Nelson Mandela was passionate about ending apartheid and

hobby, a desire, a mission, a goal etc. Yet, it took me sometime to

getting freedom for South Africa, having spent 27 years behind

enlist my passions, that day. I wonder why?

bars.

If we go by the dictionary meaning of the word, ‘passion’ means

There are numerous such examples of people who have shown

a very strong emotion or an intense enthusiasm for something.

exemplary passion, backed by courage, to achieve their dreams,

When you are passionate about something, you go out of your way

their goals, the people they loved … If you have more names that

to achieve it. You leave no stone unturned to carve a path out of a

come to your mind, please add to this.

difﬁcult terrain to get what you want.

Passion goes beyond the realms of desires and wants. Thus,

Take an example: If I say, I have the passion for acting. Then,

I believe shopping, food, movies, music are only things that we

ideally, in the absence of a godfather, I should chuck my job,

want. By this standard, how many of us are really passionate about

NOVEMBER 2008

/http://www.dare.co.in/blogs.htm from the

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someone or something? Aren’t we leading passionless lives today?

seriously consider entrepreneurship as a career prospect for their

Our body and mind has become the vehicle to achieve our wants

children? How many teachers pitch the question to their students

and desires. Only a lucky few are passionate about someone or

and prod them to think of having their own business some day? At a roundtable organized by TiE Kolkata recently, a member of

something. You are welcome to share your stories of passion for

the panel wanted entrepreneurship to be made part of the school curricula. To this, another member guessed that the CBSE board

your startup.

had already introduced it at the Intermediate level. I doubt if making

Entrepreneurship in school curricula?

entrepreneurship a subject will be of any help. This would only make

Posted by: Vimarsh Bajpai in opportunity, information, idea

be to make this an obvious choice for our young generation and not

students mug up the books for scoring pass marks. Our goal should

t school my teachers always asked their students to become

make them run away from it.

doctors, engineers, civil servants but never entrepreneurs.

I think, following activities at schools would make it interesting:

In fact, the word ‘entrepreneurship’ was never a part of their

1. Their should be Start-up Clubs where students should be asked

lexicon. However, I had heard a thoughtful teacher scold a

to think of a business they might want to start. They should be

student one day: “If you do not study today, you will have no other

asked to do some research to ﬁnd out what it takes to get into a

option but to open a retail shop when you grow up.” Thank God!

business of their choice.

If not intentionally, at least accidentally, the teacher was kindly suggesting that entrepreneurship was the last resort of the poor

2. Field trips to factory shop ﬂoors would give students some idea as to how things work on the ground.

student. I don’t know what became of that student but if Goddess

3. Our schools would be doing a big favor to all of us by ignoring

Saraswati blessed the words of the teacher that day, he must be

bureaucrats and politicians when it comes to selecting chief

out there following into the footsteps of Big Bazaar’s Kishore Biyani

guests for their annual day functions. Instead, they should

or Subhiksha’s R Subramanian.

warmly welcome entrepreneurs to inspire the younger lot.

Have things changed now? To ﬁnd out, I shot the question to

4. If Lalu Prasad Yadav could be part of the curriculum, why not

a small group of school-going children (12-14 year age bracket)

Narayana Murthy or Kiran Mazumdar Shaw or G R Gopinath?

but more or less the same answers boomeranged. They all want

Let the students know how they made it big without muscle or

to become engineers and doctors with a few exceptions who want

money power.

to become models, actors and journalists. Why not entrepreneurs?

5. Organizing symposia and debates on entrepreneurship would

They pleaded ignorance to the word itself. But when I simpliﬁed it

also do good.

and asked how about “starting your own business”, their was some

Share your thoughts:

nodding but a lot of uncertainty.

1. Do you think entrepreneurship should be made part of the school

Unfortunately, entrepreneurship seems to be a dreaded word, a kind of a taboo that neither parents nor teachers want to discuss with

EVENTS

their children. It would be interesting to ﬁnd out how many families

curricula? 2. How best can schools and parents contribute to promote entrepreneurship?

25,000

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Strained? Do you want to consider a merger with another player

Unsure markets: what should an entrepreneur do now?

at this point?

Posted by: Krishna Kumar in opportunity, news, loans, IPO,

Speak the language of your customer

investment, innovation, india, idea, general, funding, environment,

Posted by: Vimarsh Bajpai in strategy, entrepreneurship,

entrepreneurship

customer care, customer, consumer

t does not take a Nobel prize winner to point out that times

are bad. The recovery that was promised to happen by Diwali is now

t is difﬁcult to win a customer but very easy to lose him. All you have to do is talk jargon and he will be turned off “There has been a viral attack on my laptop. My anti-virus is not

been pushed to next March or beyond. And no one is sure about

able to remove it. Also, I cannot run a DVD on it.” This was what I told

that either. The natural question is - what should you do?

the customer care executive of a top computer ﬁrm over the phone.

The answer varies, depending on the stage of your enterprise.

Since the warranty period is still alive, all I wanted to know was the

If you were just about to start up, check all other elements of your

address of the nearest service center where I could get it rectiﬁed.

schedule, including funding and market projections for changes.

After successfully ﬁnding my way through the complex automated

This will tell you whether you should delay your move. If you are

system, I had ﬁnally reached the executive and asked him to speed

considering, for example, to enter the recruitment business, that

things up.

market has just shrunk signiﬁcantly.

“I will be more than happy to help you Sir, in whatever way

About to launch your product or service? Re-evaluate the market sentiment and adjust your launch plan and projections.

possible,” a polite voice told me. That was impressive. But soon he showed his true colors. “But ﬁrst I will have to generate a Case ID.”

Looking for funding? Get ready to settle for reduced - possibly

Hello! Have I called a hospital? “But before that I will need some

dramatically reduced - valuations, and the wait for getting your

information,” he said. It was ok till he asked me the serial number and

hands on the cheque possibly just got longer.

the model number. But soon it became a Q&A session on technology.

Input costs have gone up signiﬁcantly. Worst case - check

“Is the optical disc of your DVD drive not functioning,” I was quizzed.

whether it has gone up signiﬁcantly enough to change your business

I hope I had heard him right. I said I had no idea. The next one was

model itself? Can your market bear a price increase? How can you

tougher. “Do you have a rebootable DVD. Have you tried to run it on

reduce costs?

your laptop” he asked. I again said I did not know what he was talking

Are there new markets you can tap? A lower cost alternative input that you can use?

about. From then on, whatever he said was French to my ears. And then suddenly, the toll-free call got disconnected.

IPO’s should wait.

I tried again and faced the similar plight. A barrage of questions was shot at me to check my technological know-how. I ﬁnally ran

acquisitions, even abroad. Valuations have really gone down

out of patience. “Why don’t you understand that all your customers

the drain.

are not tech-savvy? Many of them would never have

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strategy/essentials

THE BUSINESS OF IDEAS AND INVENTIONS H

PUBLICATIONS

ere is a company that is open to ideas, literally! Intellectual Ventures (IV), founded by Nathan Myhrvold and Edward Jung in the year 2000, is focused on creating, acquiring and licensing inventions in a variety of technology areas. The USbased company commercializes inventions through licensing, spin-offs, joint ventures and industry partnerships. IV made a formal entry into India earlier this month. The company’s regional headquarters in Singapore will

Intellectual Ventures works in collaboration with inventors right from the idea stage, ﬁles thousands of patent applications a year and licenses inventions in over 30 technology areas.

keep an oversight on operations in India, Japan, China and South Korea. The India ofﬁce is located in Bangalore. With Asia high on its agenda, IV plans to work in close coordination with the scientiﬁc community in the continent, helping them with the necessary resources to boost the invention ecosystem. On the sidelines of the launch event, Myhrvold told DARE: “If you have no way to commercialize an idea, why be serious about it. It’s just like saying, ‘hey,

/Vimarsh Bajpai get my car and we go three blocks and run out of gas’. Why do it? There is no reason to get a patent if you have no way to market that patent. It is a dead end.” According to Jung, “Despite the growing number of leading scientists, researchers, technologists and other inventors in Asia, many of these innovators lacked access to the appropriate resources required to bring their ideas to a larger global audience. I am struck by the gap between Asia’s collective, innovative talent and the lack of re-

1.4 Million

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strategy/essentials Prior to launching Intellectual Ventures, Myhrvold spent 14 years at Microsoft helping the software giant find Microsoft Research and several other technology groups that were responsible for some of the most successful products that came out of its stable. He has been a postdoctoral fellow in the department of applied mathematics and theoretical physics at Cambridge University, having worked with Professor Stephen Hawking on research in cosmology, quantum field theory in curved space time and quantum theories of gravitation. Myhrvold has 18 patents to his credit with over 100 awaiting approval. How are ideas filtered at IV? How many reach the product and market stage? Each idea has a technical, business and legal review to ascertain a market fit. The focus is on technology analysis. Patents are very risky investments and the number of patents that are valuable are a fraction of the entire patent universe. Intellectual Ventures hopes to get better results due to its patent expertise and experience. Isn’t it true that many ideas die a slow death because of lack of incentives? Is IV making the process of thinking a lucrative proposition? Yes. Invention is a neglected area even in the United States. We pay inventors an upfront fee for each idea we select and then bear all the costs to patent and market the idea. That will allow inventors to focus on building a portfolio of ideas without any financial risk.

How will Indian researchers and entrepreneurs benefit from IV’s entry into India and vice-versa? Indian inventors do not patent due to the lack of any incentives. A patent is looked as a waste of time and money. Nathan Myhrvold Since IV can monetize Indian ideas all over the world, it Founder & CEO, Intellectual Ventures (IV) can create a market for Indian ideas. IV will be able to solve some of the pressing problems that companies face all over the world using the intellectual horsepower of Indian inventors. Different ideas require different ecosystems to nurture them. How is the diversity of ideas handled at IV? IV has experts in a diverse set of areas. However, we restrict our focus to areas where we can monetize inventions. Those areas are broadly IT, biotech, materials and energy. We do not invest in some areas, such as pharmaceutical, which are not a good fit for our model. How much money does IV plan to invest in India in the next five years? IV will spend $100 million a year in Asia. India will get a share of that.

TELEVISION

sources for Asia’s greatest inventors. IV is working to ﬁll this gap with our Asia invention initiative.”

NOVEMBER 2008

In India, IV plans to work with select individual inventors, local universities, research institutes and venture compa-

8 Million

nies. Nanotechnology, biotechnology, green-tech, and software are among the DAR E areas of interest for IV in India.

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Handshakes, Eyeballs Readers & Viewers Empowering the Knowledge Nation

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copreneurship/INSEAD

In this article, we understand what makes ‘copreneurship’ tick, as three entrepreneurial couples in diverse industries—medicine, entertainment and IT—share the success of their joint ventures not just from nine to ﬁve, but round the clock

A double marriage made in heaven

/Irawati Gowariker

NOVEMBER 2008

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copreneurship/INSEAD

uring the final stages of the making of Bollywood’s magnum opus Jodhaa Akbar, Executive Producer, Sunita Gowariker, had to spend a whole day away from work to attend a parent-teacher meeting at her son Vishwang’s school. This did not ruffle the stiff timelines of her film production company—you see, Sunita’s business partner is also her life partner. Maker of the legendary film Lagaan, Ashutosh Gowariker willingly took on additional film-production priorities to relieve his spouse. Ashutosh Gowariker Productions Pvt. Ltd. (AGPPL) one of the industry’s top film production companies, is a fine example of the burgeoning phenomenon of “copreneurs” (couple entrepreneurs) in India. Successful husband-wife ventures are indeed about two ‘marriages’ being made in heaven. In this article, we understand what makes ‘copreneurship’ tick, as three entrepreneurial couples in diverse industries—medicine, entertainment and IT—share the success of their joint ventures not just from nine to five, but round the clock. Amongst these, the oldest ‘copreneurial’ venture, Nethradhama Eye Hospital, started by Dr Sri Ganesh and his anaesthesiologist wife Dr Suman Shree is an inspiring story of successful teamwork laced with mutual respect, trust and, of course, love. After post-graduation, Dr Ganesh did his fellowship in the US. Despite his brilliant academic record, he did not land a great job in India and then, as a young parent, he recalls, “We were at crossroads—whether to work in the US or to start my own practice in India. My sister and brother-in-law are doctors settled in the US, who urged us then to relocate to the US. Both Suman and I somehow felt that we needed to stay back and provide quality care to our people.” It was this conviction that propelled them to overcome their initial hurdles and set up a small consultancy in a single room. Slowly but surely, goodwill and appreciation from patients helped their practice grow and Dr Ganesh acknowledges his spouse’s equal

contribution, “Suman supported me in my endeavors and though she was initially associated with NIMHANS hospital in neuro-anesthesia, she would assist me in the operation theater and provide anesthesia support whenever required.” Anchored by their common vision, the modest one-room consultation grew over time into a state-ofthe-art super-specialty eye hospital with branches in Bangalore and Mangalore. Having witnessed her husband at work in the operation theater while overseeing the anesthetic procedure, Dr. Suman Shree gives credit to her husband’s genius. To quote her, “My husband’s technical expertise, coupled with his presence of mind, has grown our practice.” This doctor duo later started Shraddha Eye Care Trust, a 100-bed nonproﬁt, charitable trust to provide eye care to the underprivileged. In the past three years, this trust, which conducts rural eye camps has performed over 8500 free cataract surgeries. Looking back closely at their 14-year journey from a tiny practice, this gifted eye surgeon’s heartfelt verdict is “Working together to help the world see better is something both Suman and I enjoy and it has strengthened our personal bond even further.” Helping the world see better might not be the only kind of motivation for couples to start ventures together. Getting to have a meal together was one of the incentives for the Shahs to work together to start Skelta, a software product company. Having lived in the US since the early ‘80s, both had worked extensively at the companies there. Sanjay’s supposed six-month stint to India extended itself with his family moving bag and baggage to India in 1997. “Before Sanjay agreed to join me to take over the reins of Skelta (erstwhile NetGalactica), we worked at ofﬁces that were very close by. Despite this, we would never get to do lunch together. Brainstorming for ideas with Sanjay, be it when we built our house in the US or when I was running a videostore chain, had been a lot of fun. So the thought of working with him seemed like a very exciting prospect,” Kalpa

Shah, co-founder of NetGalactica and head of Skelta’s HR, Marketing, User Interface divisions stated. Having grown from a two member startup to a 120member strong company, Kalpa was convinced that her husband’s 19 years of management and product development expertise would give them the necessary push to grow the business in enterprise-wide business process management workflow software solutions. While personal integrity is the other big plus of starting a venture together, the Shahs are aware that Skelta, a product of their entrepreneurial passions, can call forth differences of opinions. “We agree to disagree without losing business focus” says Sanjay Shah, CEO, Skelta “and though we might be vociferous when we are at home, we try hard to maintain a professional exterior while at management meetings.” Mutual respect in the other’s capabilities helps in conflict-handling. Sanjay recalls, “There was a time when Kalpa took steps to allay some attrition issues. It, then, seemed financially impractical but it was her call as the HR head and, in hindsight, I admit it was an effective strategy.” Kalpa, in turn, reiterates the respect in her better half by adding, “If we in the management team meetings cannot come to a consensus, Sanjay is clearly the person we look up to for resolving differences and his decision then is final. We try to make sure our differing view points don’t jeopardize our relationship as our personal relationship is indeed the cornerstone of Skelta.” Trust in each other’s abilities too plays a pivotal part in the triumph of ‘copreneurships’. Actor-turned-director Ashutosh says, “I had noticed my wife’s talent at handling my purse. Film production would mean handling just another purse… a much larger purse though! So 13 years into our marriage, while mulling over the idea of getting into film production, which would give me few more liberties as a director, Sunita’s “Yes” gave birth to AGPPL.” Having majored in psychology, Sunita’s people-handling capabilities came very handy when she took on film production. Her go-getter attiNOVEMBER 2008 85

DARE.CO.IN tude almost goes unnoticed when she modestly accepts, “As I had never done any production work, I knew I had to quickly learn and excel at it. Producing a film largely depends on your skills to negotiate and your ability to deal with people. The first film we produced was Swades, a co-production with UTV Motion Pictures Plc, which was keen to associate with Ashutosh after ‘Lagaan’. Today I can’t imagine doing anything else.” She confesses, “I am more conservative by nature and like to do things that are set and secure. So when Ashu suggested my moving into production, my knee-jerk reaction was, Oh God! How are we going to do this?! In hindsight, I think I had the confidence within me, otherwise I would not have taken it up as there is a huge amount of money involved and the risk is too high.” How did this famed duo wade through the diverse challenges of film production, impossible deadlines, media attention, medical contingencies (Ashutosh having suffered a serious back injury) and domestic imperatives before the thumping success of the mega production Jodhaa Akbar? Sunita gives due credit to the complementary nature of their roles, adding, “We have clear functional demarcations for the benefit of our employees and stakeholders. As both of us work towards the same goal, it makes things simpler. We have a simple division of labor—Ashu takes care of everything creative and I oversee commercial and administrative undertakings. That is what each one of us does best.” At Nethradhama Eye Hospital, vulnerable to medical crises, avoiding duplication of efforts between the two partners is critical. Dr Suman looks after the day to day activities of the hospital, quality management and patient satisfaction, while her eye-surgeon husband is involved in clinical work, teaching, research and overall policy decision-making. Dr Suman’s knowledge of quality management systems helps her put processes in place and delegate responsibilities to staff. “We have a well-defined organizational chart (Organogram) and line 86

NOVEMBER 2008

copreneurship/INSEAD of command and reporting system. We have SOPs (standard operating protocols) and job proﬁles for all staff in the organization, right from the CMD to housekeeping staff. We also have various committees for grievance redressal, appraisals, etc.” Dr. Suman assures. At Skelta too, each of Sanjay Shah’s management team members are accountable for a function or a business, including his spouse Kalpa, who is responsible for HR, marketing and user interface functions. With ‘copreneurial’ ventures scaling up, the contribution of each partner is likely to evolve too. Partners need to

“

Some commonalities: In role hierarchy, one partner takes on the business-critical role while the other plays a more visionary/creative role. ‘Wedded’ to each other in more ways than one, many business-critical decisions of all these three ‘copreneurship’ ventures are often taken in places away from the ofﬁce.

”

be able to appreciate the additional responsibilities that his or her partner has, to make their business blossom. “As Dr Ganesh’s practice grew,” Dr. Suman says, “he, for the ﬁrst ten years of practice, concentrated on building a sound, quality-focused ophthalmic practice. I complemented his efforts by ensuring that safe anesthetic techniques and rigorous precautions were implemented in the operation theatre. I would interact with surgery patients by allaying their fears during their pre-anesthetic evaluation. My administrative responsibilities have increased over the last three years as we have expanded to bigger premises and implemented both ISO 9001:2000 and NABH (National Accreditation Board for Hospitals and Health Care Providers) Quality Management Systems. I

have become the critical link between doctors and administration staff and to update my administrative skills, I have recently enrolled myself for a post-graduation in hospital administration.” Having started postgraduate courses (DNB) in ophthalmology and post-doctoral fellowship programs, Dr Ganesh has taken on additional responsibility too. He notes, “I am now involved with teaching my post-graduates and fellows and am a trainer for many of the multinational companies. I also train and certify other doctors for specific procedures,” he avers. As the dynamic BPM solutions company Skelta started growing, roles and responsibilities of the core team had to be revisited. When the company ramped up its employee strength to meet increasing customer demand, Kalpa organised an offsite for the management team to undertake a visioning exercise. A ‘dream slate’ had each team member jotting down his/her ambition for Skelta so that a common vision could be created. The new vision was shared with core team members first before it was communicated to all employees. Aligned to their new strategies for growth, roles and responsibilities of this management team were then tweaked. Roles have evolved at the film-production company, AGPPL and Ashutosh lightly remarks, “While my ‘limited’ brain limits itself to creativity, Sunita’s contribution has evolved. She helps in strategising and marketing and often lends some brilliant creative inputs to the script.” Interestingly, some common patterns seem to emerge in the three couples we interviewed. In role hierarchy, one partner takes on the business-critical role while the other plays a more visionary/creative role. Kalpa Shah heads the HR function for her IT company, an industry where people are the most valuable resource. Having spent three months doing night duty to salvage issues faced by the remote sales team, Kalpa feels her better half Sanjay is better suited to “steering Skelta towards strategic growth.” Donning many hats comes naturally to Jodhaa Akbar’s executive producer

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copreneurship/INSEAD Sunita Gowariker. “We complement each other. Ashu wears a producer’s hat when we are in the final stages of locking budget and I definitely give my opinion once I hear the script.” ‘Wedded’ to each other in more ways than one, many business-critical decisions of all these three ‘copreneurship’ ventures are often taken in places away from the office. What follows naturally is the need for transparency between the management and its employees. Communication of decisions taken by partners has to be conveyed to the rest of the team, however small or multi-layered. ‘Copreneurial’ partners tend to take decisions informally and special care needs to be taken to ensure that staff and managers don’t feel neglected. “At Skelta”, CEO Sanjay says, “leave alone major decisions, if Kalpa and I were to even discuss doable ideas informally at home or outside office, we make it a point to set the context if we ever allude to it at the management meetings.” With a large team of doctors, surgeons and 150-odd employees, Dr Ganesh seconds the need for transparency by saying, “Suman and I try to take most major decisions jointly. More often than not, I take decisions related to equipment purchase but usually covey it to Suman. There are other areas including staff training, improvement in systems and ambience where she takes decisions. If there is any ambiguity or differences, we clear those first with each other before announcing them to the staff.” In an age where work-life balance is the buzzword in the corporate world, such ‘copreneurship’ ventures are unique because both entrepreneurs have decided to work and live with the same person. “It’s early years of the business for us,” says Sunita, “and so we tend to talk shop quite often.” Work and life are not two separate entities for Ashutosh and the fuzzy boundaries that divide them come with their own set of advantages, when he says, “The imaginary line between work and home life does not exist. Lots of time we discuss domestic matters in office and vice versa. This way we are not bound by any rules helping us arrive

at timely decisions on both fronts. Work-life balance could be a problem if we didn’t both love work equally.” Skelta’s 24x7 environment leaves Kalpa and Sanjay Shah in a similar situation. Sanjay says, “We believe in work-life balance. But it is quite difﬁcult for us to strike it being in the IT industry, working across geographies with differing time-zones. All the same, we get some respite when we socialise with common friends. I am an active member of the YEO ( Young Entrepreneurs Organisation) and getting to discuss business and personal issues with like-minded members of

“

Their rule-book says: Respect and love each other for sure. Be the better half so that you can make a great team. Trust each other’s capabilities. Keep work at work and try not to let it spill into your family life. Listen to each other and don’t discard suggestions and ideas even if you don’t implement them.

”

YEO’s forum helps me look at the bigger picture called life.” Dr Ganesh tries hard to have a routine that lends him some time with his kids, “We have three children and they also need quality time. My wife usually ﬁnishes work by 5 pm and returns home to spend time with the kids. After I ﬁnish my clinical work by 5 pm, I address other administrative issues and return home a little later. We generally have dinner with the kids around 7 pm and catch up on the day’s happenings. Both of us try to avoid talking about work when we are with the kids and we avoid carrying work home. We take our annual vacations with the kids and they have great memories of these.” Time with Suman? I travel abroad frequently for conferences to demonstrate surgery or

give lectures and when Suman is able to come along, we get some personal time together.” Despite this conscious effort to strike a balance, Dr. Ganesh agrees that, “Discussing work at home is inevitable especially when there are major changes or new projects.” Given her profession, Dr Suman has a better opportunity to strike a work-life balance after deciding to work full-time with Nethradhama as opposed to another large hospital, “By having our own setup, I am able to manage my three kids and work without stress. Normally, an anaesthetist’s time is dictated entirely by emergency surgeries at hospitals. At Nethradhama, I have streamlined the timings of surgeries that require general anaesthesia to mornings. This is a winwin as having an in-house anaesthetist is a great advantage to the surgeon.” Juggling her mom-producer-wife roles with ﬁnesse, Sunita attributes her success to her support system at home, “I have the two most wonderful children who understand why sometimes both their parents need to be away. Also the family support system from my in-laws helps a lot.” The three ‘copreneurial’ ventures keep a simple rule-book to meet each other’s personal and business needs and make a success of their joint ventures. Respect and love each other for sure. Be the better half so that you can make a great team. Trust each other’s capabilities. Keep work at work and try not to let it spill into your family life. Listen to each other and don’t discard suggestions and ideas even if you don’t implement them. When asked if they would have managed their venture differently if they were on their own, each of the six entrepreneurs’ response was reassuringly similar “I would not have it any other way” was the gist of the reactions. In a society dominated by arranged marriages, adjusting to each other as business partners perhaps comes naturally, explaining the up-and-coming trend of DAR E ‘copreneurships’. With her rich media background, Irawati Gowariker has led strategic communications for the IT arm of HSBC and ANZ in India. Irawati now ‘dares’ to go beyond large multinationals to tell the story of some Indian entrepreneurs. NOVEMBER 2008 87

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DARE.CO.IN PG 80

even heard of the terms you are using. How can they

of this decision is that the 50,000 plus people associated with

reply to you,” I roared. While I kept pleading for the service center

Pashmina trade can reap the beneﬁt of this patent. These weavers,

contact details, all I was getting was a thorough interrogation. My

artisans, etc make an annual sale of Kashmiri Shawl of over Rs

mobile number, my alternate number, my address and what not. I

550 crore, which now holds the potential to increase manifold. Then

started to feel sorry for myself even as my heart went out for a 70-

again, we have stole and scarves too made from the ﬁne wool of

year-old uncle of mine who is planning to buy a laptop soon. What

Pashmina goat.

will happen to him if he faces some trouble with his machine and rings up these people? At last, I emerged victorious with a Case ID, without which the service center would not have accepted my laptop for rectiﬁcation. “This is only valid for one week Sir. Thanks for calling. Have a nice day,” he said banging the phone.

Darjeeling Tea is one among the many GIs that India has; and DARE has already talked about an ideaviz. Dreaming Big for Darjeeling. With exclusivity of Pashmina in our hand, it is perhaps the right time for Indian entrepreneurs to spin some magic... Of course, there are many other GIs that belongs to India:

Solar-electric rickshaws anyone?

• Pochampally Ikat - Andhra Pradesh;

Posted by: Binesh Kutty in transportation, solar-energy,

• Kotpad Handloom fabric - Koraput, Orissa;

opportunity, manufacturing, innovation, environment

• Kota Doria - Kota, Rajasthan;

• Chanderi saree - Guna, Madhya Pradesh;

he Council of Scientiﬁc and Industrial Research (CSIR) ofﬁcially

• Kancheepuram silk - Tamil Nadu;

launched its designed, developed, and prototyped ‘Soleckshaw’

• Bhavani Jamakkalam - Erode, Tamil Nadu;

yesterday. The basic version called ‘Soleckshaw Mark-I’ is a motor-

• Mysore Agarbathi - Mysore, Karnataka;

assisted cum pedal-driven rickshaw, that can seat two passengers

• Aranmula Kannadi - Kerala;

at a time, with a payload of 200 kgs & a top speed of 15 km/hour.

• Salem fabric - Tamil Nadu;

The Council is currently looking for coming up with innovative business model with NGOs, banks, environment-loving corporates and manufacturing organizations to make the rickshaw available to the drivers at the cost of an ordinary rickshaw. They have plans to roll out advanced versions of the Sloeckshaw, christened Mark-II and Mark-III already, during the much awaited 2010 Commonwealth Games. The Union Minister of Science & Technology and Earth Sciences,

• Solapur terry towel - Maharashtra; • Mysore silk - Karnataka; • Kullu shawl - Himachal Pradesh; • Madurai Sungudi - Tamil Nadu; • Kangra tea - Himachal Pradesh; • Coorg Orange - Karnataka;

Shri Kapil Sibal and the Chief Minister of Delhi, Smt. Sheila Dikshit

• Mysore betel leaf - Karnataka;

launched the “Soleckshaw” solar operated cycle rickshaw, in Delhi

• Nanjanagud banana - Karnataka;

on October 02, 2008

• Mysore sandalwood oil - Karnataka; • Mysore sandal soap - Karnataka;

Kashmir Pashmina = Indian Geographical Indication = Opportunities?

• Bidriware - Karnataka; • Channapatna toys & dolls - Karnataka; • Coimbatore wet grinder - Tamil Nadu;

Posted by: Binesh Kutty in opportunity, india, idea, geographical

• Mysore rosewood inlay - Karnataka;

indication, country

• Kasuti embroidery - Karnataka;

ust last week Kashmir Pashmina was given a Geographical

• Mysore traditional paintings - Karnataka;

Indication (GI) status. This took its time to happen, there were

• Orissa Ikat - Orissa.

lots of debates, but the GI is ﬁnally conferred. The long and short 88

NOVEMBER 2008

GI list source: Department of Commerce, Government of India

/http://www.dare.co.in/blogs.htm from the

Platform for aesthetically pleasing and eco-friendly products? Posted by: Binesh Kutty in waste-management, waste, streetbusiness, idea, exhibitions, eco-friendliness, designing, country

DARE.CO.IN If the cost of one of the primary operating inputs have gone up more than four fold with no immediate prospects of a signiﬁcant fall back, while unit revenues have come down (because of falling average price per seat), then seriously, it is time to take a hard long look at the basic business model itself. Incidentally, Qantas is not the only one making proﬁts. Boeing’s

t is amazing the way people out there are innovating to be

commercial airplane division saw an increase in operating proﬁts

environment friendly. One such effort is that of Michelle Brand’s

from 9.6% to 10.7 % to touch $3584 millions. during 2007.

Stunning Plastic Bottle Chandelier. Apparently, Michelle is

Proﬁtability of airports also seem to be on the rise as a casual

passionate about sustainable waste management, and it is this

Google search reveals. Manchester Airport group of UK, for example,

passion that has led her to design such beautiful pieces of art.

saw a 19.4% rise in proﬁts in 2008, touching 96.5 million pounds.

Is there a platform for showcasing such ideas? HauteGREEN

One would assume that airline caterers, transportation

features a curated collection of sustainable designs for the

contractors and other service providers are also making proﬁts. If

contemporary home at events such as the International

that is indeed the case, then it would seem that the industry itself is

Contemporary Furniture fair. Now that is what is happening abroad.

loosing majorly, while all anciliaries are doing well.

Can something similar be done in India? We have aplenty streetentrepreneurs who do their share of eco-friendly designing Examples: Magic from waste, Dailydump, Earthentree.

That is why I am asking the hard question: is it time for the airline industry to take a second look at their business model? And recast it from scratch to account for changed realities?

The question here is, can we provide them with the opportunity to showcase their work (glamorously at that)?

Innovative Gifting Ideas: An interesting Airlines in trouble: Is it time to change business! Posted by: Aswathi Muralidharan in opportunity, information, the business model? idea, general, entrepreneurship Posted by: Krishna Kumar in research, news, general, enterprise

hey say you do not need an occasion to show that you care, and

5 billions of losses this year. That is what IATA estimates airlines

around the world will loose this year. The number do not look

rapidly with players coming up with ideas that are not only trendy

any better next year either, with lossses estimated to touch $4.1

but extremely innovative!

what is better than gifting! The business of gifting is expanding

billions. And these are not the only worrying numbers for the airline

Recently, I accidentally hit upon a site, Any Surprise Any Place

industry. As ticket prices inch upwards, occupancy rates are moving

(ASAP), and was simply amazed by what their idea (or rather

in the opposite direction.

ideas) of gifting was all about. The ideas, right from creating a

It is not as if the entire industry is down in the dumps. Qantas

bean bag for “your loved one” in their favorite color with loads

from Australia for example, announced record proﬁts of $1408

of goodies inside, to receiving your friend at the airport by

millions for the year ended June 30! Airlines in the Asia - Paciﬁc

organizing a real music band, left me awestruck. Ruchi Chopra,

region are expected to do well, though the story in India is

the brain behind this venture, customizes nearly everything from

completely different.

soap bars to candle holders, rugs, travel kits, even coffee table

One of the biggest reasons for the reducing bottom lines is

books…Their USP? Personalizing and detailing to make special

the rise in oil prices. In inflation adjusted terms, crude oil prices

occasions memorable. Though the price of several services are

have moved within the $20- $40 range from 1985 to 2002.

not reveled on the site, the ideas made me wish that I was at the

Subsequently, there has been a constant upward swing, to cross

receiving end! And I am sure so would be others, making this a

$110 this year.

good business opportunity. NOVEMBER 2008 89

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DARE.CO.IN I came across another site, Happily Unmarried, selling knickknacks ranging from stirrers in the form of hands, aptly named arm candy (Rs.100), to denim ties, named tie-con-do (Rs 200). My personal favorite was a doormat stating “Egos and Shoes outside” (Rs 300)! Their popularity is evident from the fact that within 6 years of existence, it is already 47 stores strong with a pan India

domestic markets, witnessed an upward trend of steel prices since the beginning of this year. The steps taken by the Government to stabilize steel prices in the country are as follows: • DEPB on steel products withdrawn w.e.f. 27.3.08 • Import Duty on all non-alloy steel, Zinc, ferro-alloys and

presence in 16 cities. Their USP is their attitude! They welcome

metcoke revised to ‘Nil’ from 5%, w.e.f. 29.4.08 CVED on

investment by saying, “Make us an offer we can’t refuse. For us funds are a constant need to fuel the growth. Can you show us the money!”

TMT bars and rounds modiﬁed to’Nil’ from 14% • Export Duty @ 15% imposed on 10.5.08 on Pig Iron, Sponge Iron, Scrap, Ingots and all categories of non-alloy semi ﬁnished steel still continues

Stars and their Dolls: A Proﬁtable Business? Posted by: Aswathi Muralidharan in opportunity, idea

• Export Duty @ 10% was imposed on long products such as bars, wire rods, angles etc., on 10.5.08. This was later revised to 15% w.e.f. 13.6.08 • Ad-valorem export duty of 15% imposed on iron ore of all categories and grades

ecently Angelina Jolie fetched £2,000 for Noel Cruz. Confused?

Well I am talking about an “extremely accurate” hand painted ﬁgurine of the actress, which was bought by a private bidder on eBay recently! Noel Cruz, a famous celebrity doll maker, has

This information was given by the Minister of State for Steel Shri Jitin Prasada in a written reply in the Rajya Sabha on October 17, 2008. Please feel free to share with us the usefulness of these steps.

immortalized several unforgettable characters from Vivien Leigh as “Scarlett” in Gone with the Wind, to Tobey Maguire as Peter Parker in Spiderman, Nicole Kidman as Mrs. Coulter, Jhonny Depp as Captain Jack Sparrow....the list is long. According to reports, Noel Cruz moved on to celebrity dollmaking when he was looking for a new ﬁgurine to add to his wife’s collection. He generally collects ordinary doll, removes the factory paint, and paints on a new face. Considering the huge fan base of celebrities in India, can something on similar lines be attempted in India?

Paper business Posted by: Vimarsh Bajpai in paper, opportunities, ideas, entrepreneurship, eco-friendliness

he last page of a World Bank report I was sifting through carried the following ‘green’ message:

“The World Bank is committed to preserving endangered forests and natural resources. The Ofﬁce of the Publisher has chosen to print the report on recycled paper with 30 percent postconsumer ﬁber in accordance with the recommended standards for paper

Ministry of Steel takes steps to contain steel price Posted by: Binesh Kutty in updates, manufacturing, infrastructure, government, country

usage set by the Green Press Initiative, a non-proﬁt program supporting publishers in using ﬁber that is not sourced from endangered forests.” With this initiative, the Bank had helped save: • 9 trees; • 6 million Btu of total energy; • 963 lb. of CO2 equivalent greenhouse gases; • 3,158 gal. of waste water ;

• 523 lb. of solid waste

administrative measures time-to-time to stabilize steel prices in the

the October 2008 issue DARE.

his one should be helpful for all our readers whose businesses involves steel. Ministry of Steel, India, takes ﬁscal and

NOVEMBER 2008

A story on business opportunities around paper has appeared in DAR E

DARE.CO.IN

/slowdown

11 industry segments most affected by the current ďŹ nancial downturn

/Krishna Kumar

ho will be the most impacted by the current downturn? My take.

BPO/outsourcing services. The Indian BPO industry is heavily leveraged on the US banking sector. Some of them even focus exclusively on investment banks. With the banks down and some of them even out, the BPO segment is right on top of the list of industry segments affected. DiversiďŹ ed BPOs and those with no exposure to banks, if there are any, may not feel the pinch as horribly. With credit card defaults expected to balloon, the worse is not yet over for this industry.

Software export. Just behind BPO in their exposure to US banks in particular, and the US economy in general, is the Indian software export industry. While the top five may get way with some reshuffling and reorientation, it is those lower down the value/ brand value chain that will feel the real pinch.

3. Private banks. I really hope that

Photo courtesy: Boeing

no Indian bank shares the fate of the already fallen. But in terms of sheer market valuation, private banks have taken a drumming, while public sector (PSU) banks have gotten off comparatively easily. If the current situation continues, one wonders where their market capitalization will plunge to. A complete drying up of the loan market, combined with very high inter-bank 92

NOVEMBER 2008

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/slowdown and call money rates, if they persist, will impact some balance sheets signiﬁcantly in the coming quarter. Also expect some investments/deposits to move from private sector banks to nationalized/PSU banks.

Photo courtesy: Micronet

Financial intermediaries. Investment banking is an ugly word; stock markets are on a deep dive; private equity and PIPE (private investment in public equity) deal talks are going nowhere. Where will ﬁnancial consultants, boutique investment banks, stock brokers and various deal makers run to? They just have nowhere to go, at least for the time being.

Real estate. The real estate slowdown had started long before the ﬁnancial markets collapsed (it is another matter that prices did not come down if you were in the market to buy). With interest rates for the sector remaining at astronomical levels, things look really bad. Even for projects

feet. The lack of money in the buyer’s pockets means that more and more deals will have to be put out to get foot falls into the stores. The only silver lining may be that the price of real estate,

Media. Advertising is what sustains media. With advertising budgets slashed, media can expect signiﬁcant cuts in income.

Computer hardware and solutions. Next in the line for cuts in spending, after advertising is IT spends. Hardware and software upgrades will be deferred as will the new implementations. Service contracts will be renegotiated downwards.

10. Airlines and tourism. A rather strange combination—the ﬁrst one already in the doldrums and the second in the midst of a boom. The impact on both will be complementary. When personal expenses get deferred, ﬁrst in the list is holidays and eating out. Must-do travel gets downgraded from air to train or road. When corporates tighten their belt, again, air travel and outstation accommodation get trimmed. So, not the best of times for both industries.

11. Low end luxury goods. This will that are complete and ready to move in, takers may be few as those who have to make their ﬁnal payments may have all their money burnt in the stock markets!

Organized retail. Organized retail was, as it is, struggling to ﬁnd its

one of the highest input costs for the sector may come down, albeit at the cost of the real estate sector.

Advertising. This one is a nobrainer. When things go bad, one of the ﬁrst things that get cut is the advertisement budget.

come as a result of the great Indian middle class tightening their belts. So, those who were looking at stretching and buying their ﬁrst entry-level luxury car will fall back to a midsized choice. The low hanging fruit or entry level luxury businesses will be the DAR E most affected. NOVEMBER 2008 93

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/slowdown

11 industry segments that will do well even in the current ďŹ nancial downturn /Krishna Kumar

re there any industry segments that can beneďŹ t from or even withstand the impact of the slowdown? Of course, there are. Every coin as another side. Here is my list. This one also has 11 segments, because there is more than just a silver lining for every dark cloud.

Education. Education is seen in India as a long-term investment by parents on behalf of future generations and there is a huge gap, with demand far outstripping supply. Expect this segment to sail through, largely unscathed. If anything, I would expect more and more western educational institutions to turn their focus to India and China, given the global scenario.

2. Health-care. Similar to education, there is not enough supply to meet demand at all levels of society. Further, as markets turn bad, expect some of those affected to need psychological help!

3. Basic food material. Including milk and primary milk derivatives. Another no-brainer. I have added primary milk derivatives, particularly yogurt and ghee because many households in the metro cities no longer make their own yogurt and ghee.

4. Railways. With plane ticket prices hovering just above the reach of those traveling for private needs and with no indication of any downward movement, expect trains to run packed and 94

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queues at railway booking counters to get longer and longer.

Government/PSU institutions. With conďŹ dence in the private sector badly shaken, more and more people are likely to turn towards government institutions, particularly banks, in the quest for stability.

Telecom. Particularly mobile telecom. With cheap cellphones and cheaper call rates, the sector has become so entwined in our everyday life that telecom has almost become a primary need. On the corporate front, Internet bandwidth price going down has long since been part of the deal.

High-end luxury products. For someone worth billions, even if their paper wealth has been eroded by a few millions, they are not going to buy a mid-sized car! Nor are they going to be pressured to replace Armani and Gucci with Blackberry.

8. Open source software and softwareas-a-service (SaaS). When IT expenditure faces the axe, even more organizations will look at open source software in order to get business systems going at reduced costs. SaaS will also gain favor, as it not only converts a capital expenditure to a revenue expenditure, but also, it converts a one time large payment into equated monthly or quarterly payouts.

M&A consultants. With businesses hurting, they are going to be more open to being bought out or to look more favorably at mergers. This will keep M&A consultants busy.

10.

Businesses around faith and God. In troubled times, people tend to ďŹ nd solace in God and in religion. Expect businesses like production of religious texts and religious materials to do well.

11. Online advertising. With advertising budgets tightening, expect even more of whatever is left to move online, where the cost per contact is much smaller and response monitoring is DAR E much better. NOVEMBER 2008 95

Organizations DARE.CO.IN

covered in this issue, in alphabetic order; ﬁrst appearance

Accenture .................................................................. 24

Goldman Sachs ......................................................... 77

Openofﬁce ................................................................. 39

agencyfaqs ................................................................ 65

Google ....................................................................... 54

Orkut .......................................................................... 60

AGPPL....................................................................... 85

Gucci ......................................................................... 95

Oswal Group .............................................................. 18

Airbus ........................................................................ 40

Gujarat NRE .............................................................. 19

Paint.net .................................................................... 39

Any Surprise Any Place ............................................. 89

Happily Unmarried ..................................................... 90

PHP list ...................................................................... 39

Apache ...................................................................... 39

Harvard University ..................................................... 16

Polo............................................................................ 40

Apollo Tyres ............................................................... 42

HauteGREEN ............................................................ 89

Prithvi Theater ........................................................... 50

Apollo Global Capital ................................................. 42

Hewitt......................................................................... 24

Qantas ....................................................................... 89

AppLabs .................................................................... 74

Hindalco..................................................................... 19

Raging Hollywood...................................................... 17

Apple ......................................................................... 54

IATA ........................................................................... 89

redBus ....................................................................... 66

Aristotle...................................................................... 56

IIM, Ahmedabad ........................................................ 58

Reliance Industries .................................................... 19

Armani ....................................................................... 95

IIT Delhi ..................................................................... 72

Rolta India ................................................................. 19

Ashok Leyland ........................................................... 45

Indiabulls ................................................................... 65

Ryze .......................................................................... 60

Ashutosh Gowariker Productions .............................. 85

Indiagames ................................................................ 65

Satyam Computers .................................................... 19

Baie-Saint-Paul Stiltwalkers....................................... 49

Indian Angel Network ................................................ 72

Seedfund ................................................................... 65

Bhushan Steel & Strips.............................................. 19

Inﬁnity Venture Fund .................................................. 65

Shraddha Eye Care Trust .......................................... 85

Black Magic ............................................................... 37

Instablogs Network .................................................... 61

Skelta......................................................................... 85

Blackberry.................................................................. 95

Intellectual Ventures .................................................. 81

Skoda ........................................................................ 45

BlueRun Venture........................................................ 58

iTrust .......................................................................... 24

Slim and Tone ............................................................ 17

Boeing ....................................................................... 40

Jboss ......................................................................... 39

Sony Ericsson............................................................ 53

Bright Horizons .......................................................... 16

Jet airways ................................................................. 40

Spoke ........................................................................ 60

Brijj............................................................................. 60

Kingﬁsher................................................................... 40

SutraHR ..................................................................... 60

Burrup Fertilizers ....................................................... 18

LexisNexis ................................................................. 73

Synage Software ....................................................... 60

Cambridge University ................................................ 82

lifeMojo ...................................................................... 60

Talent Advisor Services ............................................. 24

Candico ..................................................................... 40

LimeSurvey................................................................ 39

Tata Motors ................................................................ 45

Carwale ..................................................................... 66

LinkedIn ..................................................................... 37

TCS ........................................................................... 19

CGI Group ................................................................. 50

Loxton Winery ............................................................ 18

Team Lease ............................................................... 24

Chateau Indage ......................................................... 18

Ma Foi........................................................................ 24

Thachi Wines ............................................................. 18

Cirque Du Soleil......................................................... 48

Madhouse .................................................................. 58

TiE ............................................................................. 72

Connexion ................................................................. 60

Manchester Airport group .......................................... 89

Tokyo University......................................................... 72

Council of Scientiﬁc and Industrial Research ............ 88

Maruti Udyog ............................................................. 42

Tomcat ....................................................................... 39

Craiglist...................................................................... 37

mChek ....................................................................... 53

Tradex are .................................................................. 37

Cynapse .................................................................... 30

Metis .......................................................................... 24

Tribe ........................................................................... 60

Dailydump.................................................................. 89

MGM Grand ............................................................... 50

Twitter ........................................................................ 60

DaimlerChrysler......................................................... 44

Michelin ..................................................................... 44

Unisys ........................................................................ 16

Department of Commerce, Government of India....... 88

Microsoft .................................................................... 53

United Nations ........................................................... 77

Dunlop ....................................................................... 46

Ministry of Steel, India ............................................... 90

University of Virginia .................................................. 58

Earthentree................................................................ 89

Minto .......................................................................... 40

UTV Motion Pictures.................................................. 86

EDS ........................................................................... 73

mKhoj ........................................................................ 58

Vetri Systems............................................................. 73

Eicher ........................................................................ 45

Mobera Systems........................................................ 73

VineCrest ................................................................... 18

Employees’ Provident Fund Organization.................. 76

National Accreditation Board for Hospitals and Health

Vishwang’s school ..................................................... 85

Essar ......................................................................... 19

Care Providers........................................................... 86

Volkswagen................................................................ 45

EZPower Systems ..................................................... 72

Nestle ........................................................................ 40

Waqar ........................................................................ 60

Facebook ................................................................... 60

Net4barter ................................................................. 37

War Wounded Foundation ......................................... 46

Firstsource ................................................................. 73

Netelixer .................................................................... 58

Webodrome Arise Technologies ................................ 53

Ford ........................................................................... 45

NetGalactica .............................................................. 85

Wipro ......................................................................... 19

Freemind.................................................................... 39

Nethradhama Eye Hospital........................................ 85

World Bank ................................................................ 19

Friendster .................................................................. 60

NIMHANS hospital..................................................... 85

Xansa ........................................................................ 24

FXlabs ....................................................................... 74

Nokia ......................................................................... 53

Young Entrepreneurs Organization ........................... 58

General Motors .......................................................... 45

NTT DoCoMo Inc....................................................... 54

ZeroDegrees.............................................................. 60

NOVEMBER 2008

People DARE.CO.IN

covered in this issue, in alphabetic order; ﬁrst appearance

Amit Doshi ......................................... 53

Nathan Myhrvold ............................... 81

Angelina Jolie .................................... 90

Navin Thangiah.................................. 53

Ankit Maheshwari .............................. 61

Neeraj Kanwar ................................... 42

Anupama Arya ................................... 73

Nicole Kidman ................................... 90

APJ Abdul Kalam............................... 35

Noel Cruz........................................... 90

Apurva Roy Choudhury ..................... 30

OS Kanwar ........................................ 42

Aristotle.............................................. 56

P. Chidambaram ................................ 76

Ashutosh Gowariker .......................... 85

Peter Parker ....................................... 90

Bharti Jacob ...................................... 65

Puneet Vatsayan ................................ 73

Captain Jack Sparrow........................ 90

Rajeev Prasad ................................... 52

Daksha Seth ...................................... 50

Raju Venkatraman ............................. 73

Daniel Gauthier.................................. 49

Raunaq Singh .................................... 42

Dhruv Agarwala ................................. 24

Ruchi Chopra..................................... 89

Edward Jung...................................... 81

Sahil Parikh ....................................... 60

Gilles Stecroix.................................... 49

Sanjay Shah ...................................... 85

Gita Dang .......................................... 24

Sanjna Kapur ..................................... 50

Guy Laliberté ..................................... 49

Sasha Mirchandani ............................ 58

Jawaharlal Nehru............................... 77

Sashi Reddi ....................................... 72

Jhonny Depp ..................................... 90

Sheila Dikshit ..................................... 88

Jitin Prasada ...................................... 90

Sri Ganesh......................................... 85

Kalpa Shah ........................................ 85

Stephen Hawking .............................. 82

Kapil Sibal.......................................... 88

Suman Shree..................................... 85

Kiran Datar ........................................ 73

Sunita Gowariker ............................... 85

Manmohan Singh .............................. 76

Tania Orméjuste ................................ 49

Michelle Brand ................................... 89

Tobey Maguire ................................... 90

Montek Singh Ahlulwalia ................... 76

Vibhore Goyal .................................... 52

Namit Nangia ..................................... 60

Vikram Upadhyay .............................. 72

Naren Bhinge..................................... 35

Vivien Leigh ....................................... 90

DARE is not an acronym. It represents the daring spirit of the entrepreneur. The red color for the R of DARE represents the ﬁre in the belly of the entrepreneur. You could think of the D representing the face, A representing the chest, R representing the belly and E representing the feet of the human body. Hence the red R. The entrepreneur dares to do things. (S)he dares to do things differently

SMS “DARE <your comments, questions or suggestions>” to

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RNI No.DELENG/2007/22197. Posting Date: 5th & 6th of every month. Posted at Lodi Road HPO.

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