#23 - AUGUST 2009 by CyberMedia (I) Ltd

Vol 2 / Issue 11 / Aug 09

/Rs 30

Subscriber copy not for sale

how to use to boost your business 15,000 Cr business

opportunities from new trains What CEOs should know about social media Which is the best city to start a business? Opportunities in Geosynthetics 10 things that have gone out of business

entrepreneur of the month/

Alok Kejriwal, Games2Win investor of the month/

Varun Sahni, Director, Acumen Fund innovation/

Keeping Babies Warm and Safe

Doing Business with Taiwan

WPI vs CPI

Growth of Private Labels

Guided by Angels 92 pages including cover

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Vol 2 / Issue 11 / AUG 09

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 R Gopalakrishnan

Chairman & MD, Biocon Executive Director, Tata Sons

Philip Anderson

Professor of Entrepreneurship, INSEAD

Shyam Malhotra Editor-in-Chief Abraham Mathew President Krishna Kumar Group Editor ANALYSTS Aman Malik Aswathi Muralidharan Binesh Kutty Manu Gupta Vimarsh Bajpai

OPERATIONS Ajay Dhoundiyal Product Manager Prasanna Srivastava Product Manager VIjay Rana Design Anil John Photography

SALES & MA Jaideep Mario Gabriel Abhinav Trivedi Dayanath Levaj Jagadeesh Kingshuk Sircar

/strategy

how to use

MARKETING Associate VP West North South South South-East Asia

PRINT & CIRCULATION SERVICES Rachna Garga VP T Srirengan GM, Print Services Sudhir Arora Senior Manager Circulation 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: Mirchandani & Co., Mumbai. All rights reserved. No part of this publication may be reproduced by any means without prior written permission.

to boost your business

BANGALORE 205, 2nd Floor, # 73, Shree Complex, St.Johns Road, Tel: 43412333 CHENNAI 5B, 6th Floor, Gemini Parsn Apts, 599 Mount Road, Tel: 28221712 KOLKATA 23/54, Gariahat Road, Ground Floor, Near South City College, Tel: 65250117 MUMBAI Road No 16, D 7/1 MIDC, Andheri (East) Tel: 42082222

Downstream business

from new trains

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: 0124-4822222, Fax: 2380694

92 pages including cover

DARE.CO.IN 4

AUGUST 2009

Every year many factors including political expediency force the Union Railways Minister to announce the addition of several new trains, not all of which become operational owing primarily to economic inviability. This time around Mamata Banerjee has announced seventy new trains in the railway budget. Assuming, at least thirty of them do take off this year, and a similar number every year for the remaining term of this regime, it would translate into downstream business opportunities of a whopping Rs 15,000 crore.

DARE.CO.IN

/contents

opportunities/ Recent events and what it means for you... . 54 strategy/ Social media and online communities ..... 88

entrepreneur of the month

Alok Kejriwal CEO & Co Founder, Games2winf

Kejriwal is a serial entrepreneur and is currently the CEO and co-founder of Games2winâ&#x20AC;&#x201D;his fourth company. He talks about his entrepreneurial journey and gives us insights about the industry

policy/ The Head and Tail of WPI Vs CPI ................. 70

Paranjoy Guha Thakurta ... 22 Vijay Anand ............. 33

come

business companies

company

cost country crore customers delhi donâ&#x20AC;&#x2122;t entrepreneur entrepreneurs experience growth help high idea india indian industry investment

India-Taiwan trade grew 9% last year to touch $5.3 billion. There is also plenty of scope for tieups with Taiwanese companies entering India

event/ SMB Mentorship Forum ............................ 44 Headstart ................................................. 68

investor of the month/ Varun Sahni, Acumen Fund

He has focused on building, managing and investing in businesses for low income communities for the past twelve years. Varun is responsible for all India-related investments, operations and business development activities.

Anurag Batra ........... 77

brand

Doing Business with Taiwan

sectors/ 10 Things that Have Gone Out of Business ... 36 The Growth of Private Labels .................... 46

Rupin Jayal ............. 66

capital

blogs/ Search engine traffic ............................... 75

blogs/columns

based

going global/

look

make

management market marketing money need number people products second services start team technology think time used value venture want waste work world years

innovation/ Keeping Babies Warm and Safe

A low-cost infant warmer developed by a lady doctor from Tamil Nadu could act as a savior for infants in rural India

INSEAD/ Guided by Angels ...................................... 18

NEN / Against the Odds ...................................... 80

others / Exchange ..................................................8 Feedback ............................................... 12 AUGUST 2009 5

DARE.CO.IN

blogs/edit

Bellwethers to a revival The more interesting fact is the recent spurt in job postings for HR

any people consider the Sensex to be a bellwether of the economy and the direction in which it is headed. And in many ways the Sensex is indeed a

good indicator of shortterm economic fortunes. For example, it needed only a couple of weeks of upward movement by the Sensex for the moribund construction industry to start

and senior finance

bustling again. Not only that, even potential buyers started

positions. This seems

brokers near construction sites. And IPOs have started making

crowding into makeshift booking centers run by various

to indicate to me that companies are gearing

slowly coming to the market.

up to recruit people

recruitment has moved on to online job portals that let you

and to get / manage more funds

job markets is fairly easy.

There is another bellwether that I personally tend to track, albeit in an irregular fashion â&#x20AC;&#x201C; The job market. Given that most search through job listings, getting a sense of what is hot in the

As can only be expected, IT recruitment and Construction jobs are down. Recruitment to foreign locales is just a trickle. BPO jobs are there, but in specific areas. Those are standard . But the more interesting fact is the recent spurt in job postings for HR and senior finance positions. This seems to indicate to me that companies are gearing up to recruit people and to get / manage more funds. Given that a senior level position takes anywhere around five months or thereabouts to get filled, many companies seem to be looking at a revival of the economic situation towards end of this calendar year. Hopefully, the year will end on a more positive note than what we have lived through.

/Krishna Kumar

AUGUST 2009 7

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PREMIUM ublished: July 2009 Dr Sanjay Sharma has a concept on rural healthcare services and wanted to meet people willing to be a part of his team. He was also looking for angel investors to kick off the project.

Response: July 2009 1. Firstly I would like to thank DARE. I am a regular reader of your magazine since the third issue and have never missed any column after that. DARE has kept the entrepreneur live in me! I am interested in being a part of Dr Sanjay Sharma’s core team. Prashant Thakkar, Mumbai

exported and would like to import some handicrafts

2. This is in response to the request by Dr Sanjay Sharma in the July 2009 issue. I have been doing a lot of research on a similar subject and have created some working prototypes of the same. I would like to get in touch with him and would like to be a part of his core team, if our ideas sync. Mahaveer, Bangalore 3. I am keen on taking this discussion forward as a prospective core team member. Gaurav Dhawan 4. We are a German health fund looking to begin operations in India by December 2009. We are looking to make investments in tier 2 and 3 cities. We would like to contact Dr Sanjay Sharma. Nick Bains 5. I am a rural marketing professional in the healthcare services sector. I wish to contact Dr Sharma. R.K.Sahu 6. I want to be a part of Dr Sharma’s core team. Shankar Sharma 7. We are an IT infrastructure services company based in Chennai, and would be willing to look at partnering with Dr Sharma in this venture. Madan 8. I would like to contact Dr Sharma to know more about his project. Sharad Gupta 9. I am a custom software developer and a consultant to NCRP (National Cancer Registry Programme) of ICMR for the past nine years. I have designed and built several applications and solutions that have allowed the remotest of government cancer hospitals to record cancer incidence and transmit to the central coordinating unit. I would like to contact Dr Sharma. B.S. Girish

PREMIUM

would like to start an import-export business in the African continent. I have stayed there for

26 months and have a good knowledge of the East African region. I have products in mind that can be

and export it all over the world. I am looking for some angel funding and some expert guidance as well. Nayan Shah, Ahmedabad

am the owner of GalaKidz, a company that focuses on educating children through entertainment.

Currently, we offer various classes and organize parties for children and teenagers. Now I would like to take my business further by setting up a daycare/ preschool service. Could someone please help me with information like investment, methods/process, legal procedure, etc? Vaibhavi

was working as an HR executive for two years and have just quit. I am interested in starting a

pre-school in or around Purasaiwalkam, Chennai. It would be great if somebody could help me with the details. Aruna

e are working in the field of biogas generation from industrial wastewater for more than 12

years. We would be interested in exploring business opportunities in biogas storage in an affordable and safe manner. Ramesh Daryapurkar

Premium Exchange Requests are broadcasted via print magazine, our twitter posts, published on our website marketplace, and on one of our weekly e-newsletters. Premium Exchange Requests have an extremely nominal fee. For more details, contact Ajay Dhoundiyal at ajaydh@cybermedia.co.in or (91) 98106 90745

AUGUST 2009

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ublished: July 2009 Pranab Debnath wanted to meet individuals,

private or public limited companies who would like

has three units—creative writing, publication

and production house.

to involve with him in doing bamboo business on a large scale.

own a media firm 'WORDLOOM' in Delhi, which

The creative writing unit undertakes all kinds of script and copywriting work for all kinds of television and radio programs and advertising campaigns

Response: July 2009 I have a few queries for Pranab Debnath whose request was published in the DARE

respectively. We have major campaigns of noteworthy brands, documentaries and corporate films to our credit.

July issue.

The publication unit has released its first set of

Siddharth Gurjar

children books in a leading book chain all over India I am interested in Pranab Debnath’s bamboo business

and it also undertakes writing and designing books

and would like to contact him.

for other publications/rganizations. The production house undertakes television

P.B. Goti

production works and sound recordings. One of I am a social entrepreneur working in the North

our short film was nominated for the best Women

East part of India. I am looking for individuals who

Director's Award at the International Micro Film

can promote bamboo and cane products like blinds,

Festival at Kochi last year.

bamboo flooring, handicrafts, mats, reed cushion, etc. I would like to get in touch with Pranab Debnath. Deepak Sharma

Now we want to expand and are looking for interested organizations/companies for any kind of above mentioned work. We are also seeking investors/advertisers for the online magazine 'U &

am an independent web and graphics consultant. I bought my first DARE magazine recently from the

stalls and it was like landing on a treasure island! I left

Life' to be launched soon. The magazine would be a feature magazine and would cover interesting and amazing facts about India. Tapobrati Das Samaddar

my job a year back to venture into my own business. I have been working in various setups in the graphics and animation business for the past seven years. I am very confident about my professional as well as business skills. I want to start an all graphics and web solutions company for corporates and small businesses. But unlike most of the firms I want to

am an enthusiast of alternative energy sources and would like to use solar energy and be conservative.

I have some prototypes of solar energy applications and would like to implement this in my home town and other places. My place of interest is domestic

focus on local businesses to begin with. I have read

applications. I would like to get in touch with those

about the friends, family and fools funding, which is

who can give ideas of where and how I can get raw

unfortunately unavailable to me. Can Angel Network

materials for these applications and also what are

help me with my venture?

the daily applications that would be useful when

Ashutosh Naik, Graphics, Web & Animation Consultant

replaced by this alternative source. Praveen

AUGUST 2009 9

Exchange DARE.CO.IN

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ublished: May 2009 1. Abhay N, a manufacturing technology

professional, was looking for financial partner for his proposed venture.

am a regular reader of DARE since the first issue and I find it more useful for budding entrepreneurs. Now, I am into the art business. I have my gallery

where eminent artists contribute their arts. I have already found a buyer in London. I want to contact

2. Purshottam Rajan was looking for professional

somebody who can help get buyers from abroad.

consultant for his proposed street food venture.

Lakshmanan, Chennai

Published: June 2009 1. Balaji D. Loganthan was looking for angel investors for developing Enterprise 2.0 based college ERP Portal.

e were covered in April, 2009 issue of DARE in the story—Sun Rider in the Solar Boat.

We have launched a prototype of our product, a

2. Satish was seeking a mentor and investor for starting

solar boat, and are looking for funds to scale up

an online food ordering and delivery business

the project.

3.Pushpendra Mehta required an investment of $1

Sandith Thandasherry

million for a for an International Web 2.0 online and mobile media company.

Response: July 2009 Mumbai-based Saurabh Agarwal had written

want to start emu farming in Jaipur, Rajasthan. Can somebody please guide me with the details of

this business?

in to DARE seeking their contact details. He

Sunil

represents Kennis Consultancy, a consultancy firm engaged in Investment Banking, Corporate Advisory and Corporate Finance Services. The company has developed “Kennis Entrepreneur Assistance Section” to provide relevant services to entrepreneurs.

rganic agriculture commodity trading is a niche, fast growing and recession proof sector.

The international as well as domestic markets have been growing steadily. I started this venture (in a beta form) to test the business potential of an integrated sourcing and marketing platform for organic and

ARE

had

received

from

eco-friendly products. In the last one year, I have

mango

received enquiries worth a few crores, without any

kernels processing industry. These entrepreneurs

paid advertising. (I have only used blogging, free

were looking for someone to help them with the first

listing, etc as my marketing tool.)

entrepreneurs

many

interested

queries in

the

I am now looking for an angel investor, with

steps. Ravi S here wants to provide this: I have a mango kernel processing industry. I have designed a mango stone shredder machine.

can help me to launch a full fledged commercial operation. I am not looking for any fancy investment,

Now I have 300 tons of mango kernels, whoever is

just enough fund to execute one or two big orders

interested in this business can contact me.

after which the operation would be self sufficient. Ravi S

commitment and passion for agriculture, who

AUGUST 2009

Sharbendu Banerje

4 Asia Pacific Conference on Business Incubation

Global Recession : An Opportunity for Business Incubation? 14th AABI General Assembly Training Programme :

Marketing for Incubator Managers and their Clients

August 6-8, 2009 Hotel Residency, Coimbatore, India

Organized by :

Supported by : NSTEDB, DST, GOVT. OF INDIA

Asian Association of Business Incubation

Secretariat Asia Pacific Incubation Network PSG-Science & Technology Entrepreneurial Park (PSG-STEP) PSG College of Technology, Coimbatore 641 004,Tamilnadu, India

www.incubationasia.com

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Commercialization of underutilized

most important factor behind social

to do the same. Otherwise also, we have

fruits ARTICLE

networking is that it allows like-minded

great consulting companies in India

Its an informative article and the logic

people to interact with so many poten-

(we also provide such service through a

makes sense. A lot of fruits are under

tial customers at a single place.

team of hotel management consultants)

utilized due to the lack of available

Vinod C. Dixit

knowledge or education. I live in Aus-

to provide expert technology and operational implementation consultancy.

tralia and there is so much informa-

Flexi-timings and startups ARTICLE

tion available on the Internet and from

My observation is regarding technology

the government for the farmers so that

startups. There, "Flexi-Timings" are one

Which is the best business to be in? BLOGS

they can make an informed decision

of the benefits that could be a lucrative

I completely agree with it. I have run

and have the knowledge of different

offering for prospective employees. It

a business of furniture manufacturing

plants. My father runs a fruit farm

would be difficult for startups to of-

and I am also indulged into few trad-

where he grows a lot of different fruits

fer the kind of salaries that are being

ing (middleman) businesses. The prior

and also grafts them. During his previ-

offered by bigger firms, but there are

one is full of stress, if not managed

ous visit to Australia he was sad to see

other things that can be added to em-

properly and the middleman thing is

that the farmers here have access to a

ployee benefits that are not available

less stressful simply because the risk

sea of information and seedlings that

elsewhere. I also believe that in a start-

factor is pretty low.

are of good quality.

up, you would end up hiring all respon-

But the most important factor in any

sible people, who really share the kind

of it is your value addition in the chain

of vision you have, as it doesn’t make

and your USP. If you are clear about that

10 things CEOs should know

sense if the people you are working

then I feel each business has its own

about social media and online

with work for nine hours, as they would

advantage (whether retail, producer or

communities BLOGS

in any other company. On an odd day,

middleman). Still, in a micro perspec-

It is not only the CEOs but also the mar-

they might have to stretch themselves

tive, the article makes sense.

keting and communication represent-

up to 16 hrs if required and I would say

atives that fail to understand how to

if such individuals are denied the privi-

use social-media. It is still considered

lege of having flexi-timings, they would

You can be the next Narayana

to be a elusive campaign rather than a

definitely end up working somewhere

Murthy ARTICLE

culture or an ecosystem. Organizations

else rather than your startup.

Very encouraging and positive article.

Vinodh Rajeswaran

need a cultural shift and adaptability to

Dolly Bhasin

Shyam Unnithan

the ecosystem of social-media to start using it effectively.

Very valuable suggestions and ideas from Mr Murthy. Thanks to Murthy

How to analyze your mobile phone Samraat Kakkar

Dharmendra Arora

and DARE.

usage to save on bill amount BLOGS

Vinod

This website business is going to make How Social Networks help improve

it huge after MNP (mobile no. portabil-

10 things CEOs should know

your Business ARTICLE

ity) starts in India.

about social media and online

Social networking improves the ef-

Nimesh

ficiency and productivity of the busi-

communities BLOGS I am engaging with a large number

ness, encourages creativity, sets the

Gujarat to seek Sri Lanka's help in

of CEOs on the quest of a formula for

organization apart as an innovator

setting up resorts NEWS

corporate participation and use of so-

and addresses a gap with the capture

Worldwide Gujratis have made a mark in

cial media and communities. And I am

and management of knowledge. The

establishing hotels/motels and resorts.

coming away with a '3E' recommen-

present generation of customers is well-

Why should the Gujarat government

dation. Explore—where you want to

versed with social networking and in

seek Sri Lanka's assistance in setting up

have the dialogue, who is talking and

order to maximize business, organiza-

resorts, when it is quite possible to just

which conversation you can shape. En-

tions must utilize this opportunity. The

invite some of these NRI communities

gage—get your feet wet by joining in,

AUGUST 2009

Feedback DARE.CO.IN

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don't start trying to use your position,

tor banks to place new ATMs in semi-

Managing ATMs ARTICLE

product, or proposition to influence

urban as well as rural areas. Earlier,

ATMs and cash management are go-

an ongoing discussion. Express—get

banks use to prominently display the

ing to play an important role in the fu-

into the conversation, get your views

number of ATMs they had. But now

ture, both for the banking sector and

in and stay in the conversation.

this will not be a selling point for banks

the people. The linking of all the banks

as money can be withdrawn from any

ATMs to a central network and making

ATM.

withdrawals free, is a really big leap in

Jay Vikram Bakshi Appreciation for DARE MAG

Mitul

I am a regular reader of DARE, being

the history of ATMs. I think, RBI has set the right trend in the right direc-

an entrepreneur. The stories are clear,

Flexi-timings and startups ARTICLE

tion. Still, a lot more is there to be done

sharp and to-the-point, which is the

In such a scenario, where employee

in spreading the area network and see

core of perfect journalism! I appreci-

needs to stretch himself for even 10

that these ATMs are reachable in the

ate and understand the hardwork of

hours or more, organization can have

rural areas and in those places where

the entire 'DARE' team...and it reflects

a “Relax Timing” policy to give some

ATM numbers are few.

in the matter printed.

relaxation in the reporting time. But

Tapobrati Das Samaddar Export opportunities for SMEs ARTICLE

Murali Chakravarthy

flexi-timings give flexibility to an employee to choose his reporting time ir-

You can be the next

respective of what time he leaves.

Narayana Murthy ARTICLE

The article was inspiring and threw

People join startup for fast growth,

I think the important thing is timing.

light on various aspects covering ex-

challenge, recognition etc, but I think

That is what made Infosys or Microsoft

port-related markets.

flexi-timings will be the last option they

for that matter. And that is predomi-

will have to join or stick to a startup.

nantly luck.

Karan Garg

Nitin

Chetna Managing ATMs ARTICLE According to RBI's latest rule, the link-

Profitable Businesses with Products

Opportunities in biofuels ARTICLE

ing of the ATMs of all banks to a central

Under Re. One ARTICLE

Jatropha is said to be a wasteland crop.

network and making the withdrawals

SMS is another item for the list. There

But if we need business from it, it no

free from any ATM, may make private

are lots of companies and small busi-

longer remains a wasteland crop but

banks a little more hesitant for plac-

nesses selling SMS messages for the

will need proper care as any other crop

ing their own ATMs to expand their

price of Rs. 0.07-0.50. There are com-

requires. It might not give economic

network. The private players may be

panies who want to send out messages

yields as far as business is concerned.

reluctant to expand their ATM network

to their customers on their mobile

So we need to have some policies re-

in semi-urban region where they were

phones and they take the help of SMS

garding this rather than considering it

growing rapidly before the new ruling.

service providers for that.

as a wasteland crop.

This seems to be the task of public sec-

Ankur

Rahul

SMS: “DARE <your comments, questions or suggestions>” to 56677 Email: dare@cybermedia.co.in Website: www.dare.co.in Follow us at: http://twitter.com/daretostartup AUGUST 2009 13

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opportunity/infra

Downstream business

from new trains

AUGUST 2009

opportunity/infra

DARE.CO.IN

hat the Indian Railways is the countryâ&#x20AC;&#x2122;s lifeline, literally and metaphorically, is a fact well documented. This 160-year-old behemoth is the second largest rail network and the largest civilian employer anywhere in the world. The whole country would come to a virtual standstill if there are any disruptions like the nationwide railway strike of 1974 led by the then trade unionist and later cabinet minister George Fernandes. What is less documented, however, is how and to what extent the heavily subsidized passenger segment of the railways impacts downstream businesses, both under the direct domain of the railways and in the tourism and travel space, largely

AUGUST 2009

opportunity/infra owned and operated by the unorganized small and mid-segment players that make up to 85 percent of the total sector.

indeed for the recession-hit domestic travel and tourism industry.

The numbers and how they add up The Opportunity With little relevant available data, we at DARE decided to work out the numbers by extrapolating the data published by the Indian Railways, with some help from Rail Bhawan mandarins and experts who track the travel and tourism industry. After doing extensive research, we concluded that in the next five years, incremental additions in railway passenger traffic alone could potentially generate downstream businesses to the tune of Rs. 15,000 crore. A formidable opportunity

As per the data available with the tourism industry, about 35 percent of the total passenger load of the railways comprises of people who travel for pleasure or for pilgrimage, once or twice a year and contribute to the bulk of the spend accruing towards travel and tourism. The remaining 65 percent of the people include those that are visiting relatives and friends and day travelers mostly traveling on business; such categories of passengers contribute insignificantly to the downstream businesses. As per the ball-park figures available with the industry, a couple on vacation would travel on an average for four nights and five days in a year. On the trip, the couple would be expected to spend an average of Rs 700 a day on the room, which translates into Rs 2,800 on a single trip. Similarly, an average spend of Rs 300 a day on food, Rs 150 a day on travel within the city theyâ&#x20AC;&#x2122;re visiting and Rs 1,000 on shopping and other miscellaneous expenses for the whole trip, would bring the average total expenditure on the entire trip to Rs 5,600. which in turn comes to an average expenditure of Rs 2,800 per person on a return journey (excluding the cost of the train ticket and any other expenses accrued towards the actual train travel per se). Data available with the railways indicates that for an average rack size of 1600 passengers, every train carries about 1000 people on an average on a single journey one way. This means, that the total downstream spend for a train load of passengers taking a return journey would be in the range of Rs 28-30 lakh. If one assumes that a coach runs for the entire year, this would amount to a total annual downstream business generation of Rs 50 crore from just one train on a return journey. In practice, however, a railway passenger coach runs on an average only for 22 days in a month. Adjusting for this turnaround time and for the average business generated per train by other categories of passengers thus far discounted, it would translate into an average annual poten-

DARE.CO.IN

opportunity/infra tial business opportunity of Rs. 32-35 crore from the addition of each new train. Every year, a variety of reasons, ranging from political expediency to an arising need for capacity enhancement, force the government to announce a large number of long and short distance trains. In the Railway Budget of 20092010, the Union Railways Minister Mamata Banerjee has proposed the introduction of 70 new trains of varying frequencies and catering to the entire gamut of travelers from the upper middle class passenger to the migrant laborer. Often, not all the proposed trains take off, as many proposals, included primarily out of political compulsions,

The numbers and how they stack up Average downstream expenditure for one person on a return journey

= Rs 2,800

Average rack size: 20 coaches x 80 seats per coach

= 1600

Average number of people travelling on a single train one way

= 1000

Average expenditure for 1000 people on a two way journey

= Rs 28 lakhs

No of return journeys per train per year = 180 Downstream spends per train per year (discounting turnaround times of coaches) = 180 x 28

= 50 Cr.

Average operational days per coach

= 22 days/month

Actual annual downstream spends per train

= 35 Cr/year

For 30 trains

= Rs 1,000 Cr

For 5 years = 1000 x 15

= Rs 15,000 Cr

are not economically viable and hence have to be shelved. Assuming that at least 30 out of the 70 proposed trains do take off, it would straightaway translate into an additional annual downstream business potential of Rs 1,000-1,050 crore. The total additional potential downstream business generated would tantamount to a whopping Rs 15,000 crore.

The meaning behind the numbers What does this mean for the industry beyond mere numbers? As pointed out earlier, 85 percent of the travel and tourism industry in India is unorganized. It comprises a wide variety of business establishments ranging from the humble roadside tea stalls and dhabhas to hotels and restaurants catering to the relatively well-heeled. A majority of such establishments, as is the case with all unorganized sectors in the country, are owned and operated by the middle and the lower middle classes all over the mofussil towns and qasbas that dot the countryâ&#x20AC;&#x2122;s hinterland. It is these establishments that will stand to rake in the lionâ&#x20AC;&#x2122;s share of the moolah if only they were to make serious and sustained efforts towards upping their capacities and reaching out to their customers. D A R E AUGUST 2009 17

DARE.CO.IN

/INSEAD

Guided by Angels Networks such as Indian Angel Network equip first-time entrepreneurs best for the next stage of VC funding /Irawati Gowariker and Philip Anderson

AUGUST 2009

DARE.CO.IN

/INSEAD

he first and the fastest-growing angel investor network in India, Indian Angel Network (IAN) has tweaked the classic proverb ‘Time is Money’. Time and money to enable success seems to the conviction of this 100-member network. In an enterprise life-cycle, angels can equip first-time entrepreneurs best for the next stage of VC funding and the presence of angel investors is near ‘divine’ at the seed/idea stage. The enterprise lifecycle has four broad phases-the idea stage, prototype/product stage, scale-up stage and finally, the expansion stage. The

Angel investors create the first layer platform for VCs by investing in early stage companies and start ups.

concept stage is when the business is an idea; at best, one that is backed by a prototype. Usually, devoid of clients and products and, typically, characterised by depleted personal funds (from traditional sources such as friends and family), President of IAN, Padmaja Ruparel says, “Angel investors create the first layer platform for VCs by investing in early stage companies and start ups”. Angel investment is a common round of financing for high growth start-ups and accounts in total for almost as much money invested annually as all venture capital funds combined, but in more than 10x or more companies. In the US in the year 2007, USD 24 billion was invested by VCs in 4000 companies in the US while USD 30 billion was invested by angels in as many as 60000 companies. For first-time entrepreneurs in India too, seed funds are not easily available as VC firm’s valuation requires the en-

Angel investment is a common round of financing for high growth startups and accounts in total for almost as much money invested annually as all venture capital funds combined, but in more than 10x or more companies

— Padmaja Ruparel President of IAN

AUGUST 2009 19

DARE.CO.IN

/INSEAD

trepreneur to have a sizable income and growth potential and/or display a threat to existing players. Networks such as the IAN try to bridge the intimidating gap in funds- between funds that come from family and friends to start-ups and those that they could get from VCs-thus, enabling a smooth transition from the seed stage into the VC stage. Time and money: Illustrating this, IAN’s Ruparel explains, “On an average, an angel has about USD 50000 to invest per annum. We have about 100 members therefore the investment pool at IAN is USD 5 million”. Convinced that angel investors spearhead economic development, Ruparel mentions that, “IAN is a co-investor platform, an active network that connects entrepreneurs & investors with tangible outcomes. We started three years back and since then IAN has invested in 18 companies across diverse sectors such as robotics, healthcare, IPR, hospitality, online education, Knowledge Management and telecom” also revealing that, “In the next three years we will do about 20 investments”. Formerly known as the Band of Angels, this largest network of high net worth individuals also provides quintessential business mentoring to startups. Raman Roy, co-founder of IAN feels, “In the Indian market place, IAN fulfils a big gap that exists between mentoring and angel investing” and that, “Demonstrated capabilities together with some capital can act as a catalyst for a start up business”.

A recent example of effective mentorship is reflected in the case of two entrepreneurs, Jaspreet Singh and Ramani Kothandaraman who started Druvaa Software a year ago along with a partner Getting into the shoes of first-time entrepreneurs, Ruparel speaks about challenges that start-ups face. “For a first time entrepreneur, the funds are as important as the guidance in the right direction. In the absence of family money and advice that would be available if you came from a family of businessmen, a new entrepreneur faces many challenges. The biggest challenge would be the fear of having to give up a business idea for the lack of proper guidance; guidance to formulate his idea into a comprehensive business plan before he can approach

IAN investment has been a significant value add for Karmic in its journey as a young and upcoming start-up in multiple ways. — Nidhi Saxena CEO, Karmic Lifesciences

potential investors. That’s where mentors come in. Ask entrepreneurs who started five years ago and they’ll tell you how difficult it was to find mentors then. That has changed today”. Raman Roy places the network’s mentoring as a crucial support, “IAN came into being to mentor. We realized that people don’t get help and not many entrepreneurs have had the opportunity to work in all spheres of business”. Unlike a few years ago, most start-ups are launched by younger entrepreneurs with a great idea but limited experience. In most cases, they lack the knowledge or resources needed to set up and run a successful business. “What they need is expertise and experience of successful entrepreneurs who have been through the grind”, asserts Roy, who is also the founder of BPO firm Quatrro, recalling that, “in my father’s time, mentoring was there but mostly at the family dinner table.” A recent example of effective mentorship is reflected in the case of two entrepreneurs, Jaspreet Singh and Ramani Kothandaraman who started Druvaa Software a year ago along with a partner. Druvaa developed an enterprise-level solution for data backup and protection — one that offered up to ten times faster enterprise PC backup. Singh and Kothandaraman introduced themselves to IAN which put them in contact with mentors like Rajan Anandan, Rehanyar Khan and Saurabh Srivastava. With the help of mentors like Rajan Anandan, Rehanyar Khan and Saurabh Srivastava, the business took better shape. “Rehan helped with the business plan as well as to get the marketing and sales strategy right. It was his idea to start free product initiatives for companies with less than 25 people,” says Singh of Druvaa Software. Anandan introduced them to a number of CIOs and channel partners who they could never have approached directly. “What needs to be changed or tweaked to make it a scalable model? Is a big question,” explains Anandan. Adds Kothandaraman, “With the help of our GUIDED BY ANGELS CONTD. ON PG 61 ç

AUGUST 2009

& presents

CHENNAI, THURSDAY, AUGUST 20, 2009, VENUE: LE MERIDIAN

Even as the global economy is deep in an unprecedented economic crisis, India is one of the few countries that are still growing at a healthy pace. A significant proportion of all Indian businesses fall under the small, medium and emerging enterprises segments. Needless to say, any growth in the Indian economy will come only if these emerging enterprises businesses grow. Unfortunately, these are also the businesses that will face the brunt of the current economic crisis. Within this catch 22 situation lies a great opportunity â&#x20AC;&#x201C; that of become world class players and world-leaders of tomorrow. The EnVision series is an attempt to arm Indian emerging enterprises with the tools to become world-class players.

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INNOVATION

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Keeping Babies Warm and Safe A low-cost infant warmer developed by a lady doctor from Tamil Nadu could act as a savior for infants in rural India

/Aswathi Muralidharan

ndia’s infant mortality rate is alarmingly high at 54 per thousand births, according to the UNICEF State of the World’s Children 2009 report. For those uninitiated, infant mortality is the probability of dying between birth and one year of age, per thousand live births. Though a number of reasons are responsible for this, one of the major causes is the lack of adequate medical care in rural areas. The high cost of medical equipment also adds to the woes of those residing in rural and remote areas. Given the situation, could a

low-cost infant warmer designed by Dr Satya Jeganathan, a neonatal specialist at the Chengalpet Government Hospital in Tamil Nadu, prove to be a lifeline for many infants? An infant warmer is used mainly to warm babies soon after their birth. It is used for babies who are either unwell or are premature, i.e. born before 40 weeks of gestation. Since such babies are generally under-developed and lack energy that regulates their body temperature, they are maintained in warmers or incubators, which regulate their

What is an infant warmer? An infant warmer is used to warm new born babies, who are either unwell or are premature. Such babies are underdeveloped and lack energy to regulate their body temperature. They are maintained in warmers or incubators, which regulate their temperature at normally 36.5 to 37°C. 22

AUGUST 2009

temperature at normally 36.5 to 37˚C. Failure to do so can result in organs being damaged, or even worse, death of the newborn. Dr Satya recalls one such incident, which also turned out to be her inspiration, “I came here in the 1980s. At that time, though we had 8,000 deliveries per year, we had no warmers. So, many babies used to die of cold. Once it was raining heavily, and that night we nearly lost six newborns due to the cold. It generally takes a long time to apply to the government and get equipment sanctioned. The process was going on, so I thought why not, in the mean time, create a heating device until we get government support.” Following this, Dr Satya and her staff nurses created a simple device and gradually started modifying it. She says, “At that time, it was the need of the hour as we had lost many babies due to lack of equipment.”

How does it work? Dr Satya’s first working prototype was a radiant infant warmer. The warmer used bulbs as a heating source and had

INNOVATION a locally manufactured wooden frame. She says, “The first prototype was made using the help of local carpenters in the villages. It was [developed] between 1990 and 1999. It was a gradual process. For the electronic device, we got the help of an electronics student from Anna University. He made the temperature monitors for it. But the rest of the equipment was made by the local carpenters and electricians.” However, this infant warmer had certain issues that had to be addressed, such as safety concerns, sterilization of the unit and the light of the bulb falling directly into the eyes of the babies. At this point, she roped in Villgro, formerly known as Rural Innovation Network, for help. She says, “Because I was using the bulb as a heating device, I wanted them to test the heat emission to the baby. I wanted them to reduce the illumination of the bulb so that it does not disturb the baby’s sleep. I contacted them for these two things basically. So for one year we experimented with various prototypes and finally we have gone in for the air flow model.” Besides technical help, Villgro also provided her with a loan of Rs 8 lakh to fund her research. Rajeev Surana of Villgro who is in charge of the infant warmer project, says, “The air flow model was designed keeping in mind the drawbacks of the radiant infant warmers. In the radiant infant model, the bulbs are placed at the top, which, besides the heating, also produces a lot of light that disturbs the baby’s sleep. There was also a concern of the bulb accidentally falling on the infant. In the air flow model, on the other hand, the bulb is kept under the

DARE.CO.IN Opportunity Area* As per industry sources, each state government has a demand for 2,000 to 3,000 warmers per year adding to a demand of 50,000 units per year. This coupled with demand from the private sector such as nursing homes, gynecology centers and hospitals add up to a conservative demand of 100,000 units per year Tamil Nadu State Govt. has estimated a demand of more than1,400 warmers for the current financial year by targeting ten districts with high mortality rates Source: Villgro

baby’s bed and the heated air gradually rises and goes around the baby and keeps it warm. We are gradually developing this model and testing it.”

Features and issues involved The air flow infant warmer (AIW), which works on the air flow principle, has been made with materials readily available in the market. As the machine has been developed keeping in mind the rural needs, this factor helps to keep the cost low as well as makes replacement and servicing easier. Dr Satya says, “One of the problems with using complex medical equipment in the rural centers is that in case of a breakdown or servicing, it becomes difficult for the equipment makers to go down all the way to the rural centers to tend to the machine. However, with my model, any local electrician in the village can repair this easily.” The warmer has a castor wheelchair base with five legs and a locking mechanism, a heat chamber mounted

FACTSHEET Innovator Innovation Advantages

*Conservative estimate

Dr Sathya Jeganathan Low-cost infant warmer • Low cost • Easy maintenance • Can be repaired by local people, such as electricians and carpenters • Can be assembled at the site, therefore portable

Current Status • Provisional patent granted • Studies for approval by the ethics committee ongoing • On the lookout for entrepreneurs to market the product

on it, and a cradle on top. It has two 200 W bulbs at the base for the heating, so that even if one bulb fails the other can be used as a backup. It has an inbuilt safety mechanism, wherein the bulb is linked to the fan. The bulb and the fan work in tandem so that there is no excess heat generation in the chamber. There are two sets of controls containing the switches and regulators to switch the system on and off and also control the temperature manually. The model also has a temperature display to monitor and control the temperature. The height of the AIW can be adjusted using a lever. It can also be dismantled and assembled easily for transporting it to the rural hinterland. All medical equipment is required to undergo certain tests and present the report to the ethics committee before entering the market. The low-cost infant warmer by Dr Satya is also undergoing several studies before its market launch. Rajeev Surana says, “One of the issues identified so far is that because we are using warm air, there could be a case of evaporation of the infants’ body fluids. Currently, we are trying to establish this through our studies.” The studies are expected to be completed by the year end.

The way ahead The product has been granted a provisional patent. Dr Satya and Villgro hope to complete all the studies and file for the final patent by December this year. When asked about the price point, Rajeev says, “Initially, our aim was to not exceed the material cost by more than Rs 5000 and were targeting a final product price of Rs 10,000. But, now we are planning a price tag of somewhere around Rs 15,000. The machines normally available in the market are priced in the range of Rs 20,000 to one lakh.” The organization is now on the lookout for entrepreneurs who are willing to take the product to the masses. According to Rajeev, “We are looking for entrepreneurs who are interested in the product, have a prior knowledge of the medical equipment business, and have government conDAR E tacts too.” AUGUST 2009 23

DARE.CO.IN

blogs/opinion

Making Divestment Politically Acceptable /Paranjoy Guha Thakurta

here is a lot of talk these days about the government’s impending plans for divestment of shares in profitmaking public sector undertakings (PSUs). In fact, an important reason why stockmarket indices collapsed after the presentation of the Union Budget on July 8 was the apparent absence of a roadmap for divestment. A few days earlier, expectations had been raised when the Economic Survey suggested that the government raise a sum of “at least” Rs 25,000 crore each year by selling between 5% and 10% of its shares in selected PSUs. At one level, the government is clearly keen on divestment—–Finance Minister Pranab Mukherjee has said so in Parliament on more than one occasion. At another level, before divestment becomes acceptable to large sections of the political class, the government will first have to get its act together and change the architecture of the National Investment Fund into which the proceeds of divestment have to go. After Prime Minister Manmohan Singh made a speech at a function organized by the Standing Conference on Public Enterprises in September 2004, in which he remarked that the proceeds of divestment should be used for providing basic social goods, a note was sent by his office to the Ministry of Finance to set up the National Investment Fund (NIF). After a decision by the Cabinet Committee on Economic Affairs, the NIF was formally set up in January 2005. The government has decided that money obtained from divestment would move from the Consolidated Fund of India to the corpus of the Fund which, in turn, would

AUGUST 2009

be invested in three PSU mutual funds and only the interest earned on the investments would be used, three-quarters of it on the social sector and the balance on the PSUs themselves. Currently, the corpus of the NIF has Rs 1,814 crore. Not surprisingly, there has been quite a bit of criticism over the way in which the NIF has been structured, since it leaves relatively little money for spending. Why is divestment of shares in PSUs so controversial in India? Why did privatization get such a bad name during the Bharatiya Janata Party-led National Democratic Alliance government? To obtain answers to these questions, one has to appreciate the fact that many in India have a rather ambivalent attitude towards the public sector. The government in general, and PSUs in particular, symbolize much of the sloth and inefficiency that is frequently associated with the working of the public sector. At another level, it is also true that India would not be where it is at present had it not been for PSUs that laid a firm foundation to the country’s economy. PSUs like Bharat Heavy Electricals Limited or National Thermal Power Corporation are often compared to the best-run organizations of their kind anywhere in the world. Although the Congress and the BJP agree with each other on many economic policy issues, the two largest political parties in India are divided on the necessity of—and efficacy of—privatization of PSUs. It is a fact that many PSUs came up in the first place because private promoters had run enterprises they managed to the ground. A PSU like National Textile Corporation comprises almost entirely of mills that were once privately owned and which became sick. It is no one’s case that the public sector in India should be in the business of baking bread (Modern Bakeries), manufacturing bicycles (Cycle Corporation), assembling watches (Hindustan Machine Tools) or even, running hotels (India Tourism Development Corporation). Nor is there any disagreement about the need to improve the working of most PSUs. What unfortunately happened in India is that shares in some profitable PSUs were sold cheap, the

proceeds used to bridge the government’s deficit and worse, public monopolies were replaced by family-dominated ones. This is why privatization became a dirty word. It is often contended that privatization would enable the government to unlock resources that can be used for poverty alleviation, creating jobs, providing a safety net for the underprivileged and other such laudable objectives. Since 1992, the Indian government has earned tens of thousands of crores through divestment and privatization. This amount could have been used to build millions of houses and schools and there would still have been money left over to retire surplus employees of PSUs. That may have made privatization politically acceptable. To use an analogy used by James Callaghan, who as leader of the opposition in the United Kingdom, opposed Margaret Thatcher’s policies of privatization: the government should not sell the family silver to pay the butler. If indeed the family heirloom has to be sold, the funds should be used for the daughter’s education or to build an extension to the house and not for settling grocery bills. On the issue of valuation of shares of PSUs, the NDA government’s big goof-up was when Centaur Hotel near Mumbai’s Santa Cruz airport was picked up by one group (Batra Hospitality) and re-sold to another (Sahara) within four months at a price that was 35% higher than the original purchase price—Rs 147 crore against Rs 115 crore. The entry of private players in sectors dominated by the public sector can and does help consumers by infusing competition—witness the airlines and telecommunications sector. But, in one industry segment, the reverse took place when Reliance Industries took over the management of Indian Petrochemicals Corporation in May 2002, thereby creating a private monopoly. The Finance Minister will have to tread very carefully as he changes the rules governing investment of the proDAR E ceeds of divestment. 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.

Advertorial

Business Incubators:

Turning crisis into ﬁnancial success A

cross the globe, businesses are suffering as the Global Financial Crisis bites. Large companies are laying off staff, or not taking on as many new staff, increasing the pool of skilled unemployed people. For startups the situation is difficult to say the least. While more people may want to set up a business, because they have fewer alternative options, customers are not spending as much and it is harder to raise funds and to maintain confidence. It is not all doom and gloom though. Business incubators, specialised facilities and services especially designed to nurture growth oriented startups during their early years when they are most at risk, often thrive in these circumstances, providing invaluable support services to help startups seize the flow of opportunities that arise as a result of economic change. In the USA, where the mess all started, many incubators are being flooded by enquiries. The problem they face is how to cope with increasing client numbers in a growing market; a wonderful problem to have. As Mr Julian Webb, infoDev’s Incubator Initiative Facilitator for Asia and Incubator Consultant points out, the gestation and growth of business incubation is rooted in economic problems: “Business incubation started to grow in developed economies in the recessions of the 1980s and 1990s as a targeted response to growing unemployment and the need for economic restructuring. Governments realised that business incubators are a cost effective and sustainable way in which new companies can be supported. This resulted in significant investment by the governments concerned to develop business incubator infrastructure and business incubation services. In essence Governments invested to buy quality jobs, commercialise innovation and to generate new dynamic businesses, delivering needed goods and services. Using my home country Australia as an example, government support for incubation persisted and grew throughout the 1980s and 1990s, but dramatically declined in the economic the boom in the 2000s before the crisis. In the boom, Australia was in a fortunate position with almost full employment and where bottle necks to growth were skill and labour shortages and not a shortage of dynamic growing new companies. As we all know, times have changed and the boom is history.”

Mr Webb goes on to talk about how innovation works in economies, how recessions are in fact a source of new opportunities for those willing and brave enough to take them on and that these new entrepreneurs drive: “We all need to think of Schumpeter’s theories about innovation and in particular ‘creative destruction’, whereby as noncompetitive businesses close new innovative and competitive businesses develop. A recession is a prime time for new innovative and nimble businesses to seize the opportunities created by the closure of others and by the need for more appropriate goods and services. It should be a time of growth for business incubators, but only so long as they can secure the necessary public investment and convince governments, donors and investors that business incubation is a good public investment; an excellent and cost effective way to support new businesses.” Research into the impact of business incubators certainly shows they generate very cost effective outputs in terms of jobs, wealth and in the end tax revenue for Government. One of the most respected impact assessment study, Business Incubation Works, published by the NBIA in the USA based on research by the University of Michigan, Ohio University and the Southern Technology Council, not only shows business incubators generate growing companies, creating many new jobs, but also that “the return on public investment in tax revenues was $4.96 for every $1.00 of estimated public subsidies”. One of the realities of business incubation is that public subsidies are required to bridge a market failure, for the simple reason that new entrepreneurs cannot afford to pay for the intensive support they receive. However, in time, business incubator clients become ready to leave the environment of the incubator and ‘graduate’, establishing themselves in the business community and making way for more fledgling businesses to be incubated. At this point their business has grown and they are able to pay for the services they need. So, how can startups benefit? Business incubators provide multiple benefits. A core service is intensive business management support, training and coaching to help new entrepreneurs learn the necessary business management skills, in a very

practical and not theoretical way; and in their own business. This starts with business planning and importantly flows on to helping implement and adapt the plan and maintain competitive advantage in the harsh light of economic reality. At a personal level they help entrepreneurs maintain their confidence, enthusiasm and tempered risk taking, overcoming the fears that are a part of the process. Arguably one of the main benefits is access to other, already successful entrepreneurs willing to help new starts, along with networking with other people grappling with all the problems of a start up business. Knowing you are not alone and that others have the same challenges and make similar mistakes can be incredibly invigorating. You will find a dynamic spirit in business incubators, which is palpable and indicative of a hive of activity and enjoyment in a professional environment. New entrepreneurs benefit from the established credibility and success of the incubator and the status of its backers, and make essential networks through the business community associated with it. Incubator clients are no longer hidden away, lonely in a back room, but have a profile in a professional setting, taking big steps to realise their vision and overcome their fears, in a nurturing and supportive environment. Importantly incubators help find and secure customers, the life blood of any business, and help their clients access finance as and when it is needed. The list could go on, but for any recently started growth oriented businesses the best thing is to stop reading and to go online to the National Science and Technology Entrepreneurship Development Board (www.nstedb.com ) to find their nearest Technology Business Incubator or STEP. Go and see them, talk to their clients and make your own judgement as to how they can help you. Don’t think that the incubator will manage your business for you though. This is your responsibility, and incubator managers know well that to thrive, new enterprises can expect to struggle (within reason) while they are learning the skills essential to running a successful business. Fortunately for those in an incubator, those essential skills, knowledge and contacts are right there at your fingertips. Your new business may well be one of those for whom this is the recipe for success.

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strategy/marketing

How to use

to boost your business /Krishna Kumar

uch has been written about how social media and online communities can be leveraged to help achieve your business goals. But how exactly do you do that? This piece takes off from where our previous cover story (How Social networks help improve your business) was left. This month, we will take up the current hot social network – Twitter and see how your business can build a useful presence on Twitter and how it can leverage that presence. For this article, we assume that you have no previous experience with Twitter, but are otherwise web-savvy.

Twitter basics Before we start getting into the serious stuff, what is Twitter? Twitter is what they call a micro-blogging site. 26

AUGUST 2009

Blogging means users put up their own content as in an online dairy; micro in the sense that you are limited to 140 characters per entry. And What can you do with these 140 characters? With a little bit of ingenuity, quite a bit, as people have found out. The most celebrated example of what a business can do in Twitter is that of delloutlet, a Dell account who has sold over three million dollars worth of refurbished computer equipment from Dell over Twitter. That is on one side of the spectrum. On the other side, there are many small businesses which have used Twitter to reach out to more customers, sell more products, provide help and service and so on. Coming back, you start using Twitter by registering at Twitter.com, by clicking on the green 'Sign up now'

button on the home page and filling in the details in the sign up page. An update you post in Twitter is referred to as tweet, and all updates are public unless you post a direct message to someone, which is viewable only by the person it is meant for . This is important in business, as we will see later. You post a direct (private) message by starting your message with a “D”, followed by the screen name of the use it is meant for. In a tweet, you put an @ before the username to indicate that it is a user name. But to send a direct message to us at DARE, you start “D daretostartup” without the @ and type in the rest of your message (because daretostartup is our screen name on Twitter. There is one more thing to be done before you send a direct message. You can send a direct

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strategy/marketing message only to some one following you and vice-versa. So, before sending direct messages, you need to ensure that you follow each other. By following some one, you can not only DM (direct message) that person, but you get to see that person’s public timeline. That is, all the tweets other than DMS that that user makes will now appear on your Twitter page. Following another user is fairly easy and is as simple as clicking the follow button against their name in the find people page or under their photographs in their home page (or public timeline) which will be at http://twitter.com/ <username>. Once you have followed someone, clicking on unfollow will stop the follow. Your followers are your actual wealth on Twitter. Your followers are the ones who hear what you tweet. Their followers will hear it, if they retweet your message. So, one of your primary objectives on Twitter is to gather as large a number of followers as possible. We will discuss how to do this in a while. Like you forward an email to others in your list, you can forward someone else’s tweet to your followers by putting RT (retweet) followed by the username before the original message. For example “RT @daretostartup: Managed IT Services for SMEs: An Opportunity” means you are forwarding daretostartup’s original tweet – Managed IT Services for SMEs. The colon after the username is a good practice and is not mandatory. Actually, you will not do all of this from your page at twitter.com. You will use one or more of the many Twitter clients available to manage all of this easily.

Before you start Before you get started on Twitter, you need to have your web infrastructure in place. At the least, you need a web page that you can direct your followers to. At the web page, you should ideally have a mechanism to take orders (or at least feedback). If you have a mechanism to take orders, then you should also have a way in which they

12 Twitter rules for businesses

1 2

The best way to use twitter is never to go to twitter.com. Use one of the many clients instead.

While you have 140 characters to play with, you should leave as much free space as possible so that others can retweet your message easily.

3 4

Choose a username that makes it easy to identify your brand.

Your followers are your wealth on Twitter. They are the ones that hear what you tweet. Their followers will hear it, if they retweet your message. Talk to them. Respond to their queries and comments.

Social media has no concept of office hours and is at work round the clock. So, your social media evangelists should be able to connect from home on while on the road.

Do not Tweetflood (too many updates posted together). Do not be erratic. Remember that slow and steady wins the race.

Use tools to enhance your twittering – URL shorteners like bit.ly, picture embedding like twitpic, twitterfeed to tweet automatically when you update your website, CoTweet to schedule tweets and so on.

Following all those who follow you is NOT a good way to increase number of followers for a serious business. People will follow you for the value you are offering. Signing on to autofollow sites is an absolute no-no. Most such followers do not even know that they are following you.

Listen to what others are saying about you, your competition, your industry, your environment. Use tools like Yahoo Sideline for this.

Tweet messages that are useful, that provide them information or otherwise make life easier. Offer to help only if you really can and that too immediately.

Take all complaints (and personal information) as private direct messages. After an immediate acknowledgement. Follow the person immediately and request details in a DM. Take the case off twitter itself into your regular channels as soon as possible.

DO NOT argue or fight. This is one thing I never tire of repeating. Never ever argue or fight with a (potential) customer. You are the big bully. The other guy is the David against you, the Goliath. He will always win in the minds of the others, even if you are absolutely right and he is a crazy idiot.

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DARE.CO.IN can enter coupon codes to claim discounts. Obviously, you should have a mechanism for fulfilling those orders and for responding to the feedback, complaints, etc.

One account or many? Now that you have decided to make your business present on Twitter comes the question – how many accounts do you need? One or many? Broadly, each brand should have its separate Twitter accounts. Beyond that, the answer depends on many factors, like how many functions are you going to carry over to the service. Brand promotion may require an ID that is different from say product support. But it is ok to start out with one catchall account for a brand and then activate more as you go along and the load increases. To go back to our Dell example, they have 34 Twitter accounts active at the time of this writing! It is advisable that you register and keep user names you would want to use in the future to avoid someone else taking them over.

strategy/marketing was subsequently bought by CNN. Kingfisher Airlines uses flykingfisher, which is synonymous with their website address flykingfisher.com. TCS is followtcs, while Hindustan Times Newspaper is HTTweets and DARE is daretostartup. Once you register your account, go to the settings page and setup your account details. Here, upload your logo so that other users can easily recognize you and give the URL to your home page or a feedback page and include one line bio or introduction that identifies who you are. You can also change your home page background to show your brand colors etc. from here.

How many people? This is one question that is often not even asked when a brand sets out on a social media adventure. Any social media effort – and Twitter is just one of many in which you may have a presence- requires time and effort. Depending on the amount of effort, you need to allocate resources to it. If you

are not sure, and are just starting off, then the minimum number of people required is two, with the second being a backup for when the first person is overloaded or otherwise not available. At DARE, our social media effort is small and we have three people working on it. @Bineshkutty is the primary resource and @kkumarkg (me) is the backup. The two of us have other tasks and both of us maintain personal accounts too on Twitter, which we often use to promote @daretostartup’s tweets. And Vijay Rana our designer chips in to create new tweets, monitor what is happening, etc. Remember that social media has no concept of office hours and is at work round the clock. So, you may need your social media evangelists to be able to connect up from home on while on the road.

Twitter clients Like I said before, you would rarely if ever use the twitter.com web page to post updates or to reply to tweets. There are a variety of clients for every

What name? “What’s in a name?” wrote the Bard of Avon in that eternal love story, Romeo and Juliet, “That which we call a rose, by any other name would smell as sweet“. But if you are DELL, you would not want to be known as IBM or HP. Right? So, getting your Twitter user name to be the same or similar to your real life brand name is important. If you are creating the Twitter account for your business, then your user name should not be the the personal name of someone operating the account. You can identify the person operating the account if you want to, by including it in the bio section or in the web page that you link to from Twitter. For instance, our earlier example of delloutlet has a bio that reads “Refurbished Dell™ computers, electronics. Question/comment? Contact Stefanie Nelson at @StefanieAtDell. More Dell Twitter accounts at www. Dell.com/Twitter” CNN has a user name cnnbrk (CNN breaking news), which initially was registered by someone else and 28

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TWITTER CLIENT COMMENTS CoTweet

Web based, handles multiple users for same account and threads conversations

DestroyTwitter

Desktop client for Mac, Windows, Linux

Digsby

Windows, Mac, Linux. Does email and IM also

Seesmic Desktop

Desktop, iPhone, web. Can handle multiple accounts, shows sent messages to non – followers

TweetDeck

Windows, Mac, Linux, iPhone. Can handle multiple accounts

Twhirl

Windows, Mac.

Twim

Any java cellphone. Single account

Twitterberry

For Blackberry

Twitterfon

For iPhone. Pro version ($4.99) does multiple accounts

Twitterfox

Firefox extension that stays in a corner of the browser

Twitteriffic

Mac, iPhone

Twittergadget

Integrates into Gmail

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strategy/marketing communication device imaginable that helps you post and respond on Twitter. There is probably no single client that fits everyone’s needs. Also, depending on where you are – at your desk, on the road, at home and so on, you may need to use different clients at different times. And as you become more and more experienced on Twitter, you will graduate from a simple client like TweetDeck or Twitterfox to Seesmic Desktop or CoTweet. We will take a brief look at some of the clients that are more suited for business use.

Twitterfox Twitterfox is a lightweight extension that is installed on Firefox. It can handle multiple accounts, but can login to only one at a time. Twitterfox has three tabs – Recent, Mentions and Messages, with a text box below where you input your tweets.

Tweetdeck TweetDeck is an Adobe Air application. It handles multiple accounts and is easy to understand and use. You can define what you want to see in each of the columns and how many columns you want displayed. If multiple people are operating the same account, then there can be confusion since it does not show tweets sent to non-followers (this is true with most clients other than Seesmic Desktop and CoTweet). Tweetdeck has some interesting features, the one I like the most being “tweetshrink this update”. After you have brought down your text to 140 characters, if you click on this button, it will attempt to reduce character count further by replacing some words with accepted short forms. For example, today becomes 2day, you becomes

U and so on. Why is this important? While you have 140 characters to play with, you should leave as much free space as possible so that others can retweet your message easily. There is one big mess up likely with Tweetdeck, if you are using multiple accounts. Tweetdeck can keep all accounts active in the tweet tab. So, if you are say tweeting from your personal account and by chance the brand account is also active, the tweet will be posted from both accounts simultaneously. And this can be messy. Check which all account names are highlighted every time you tweet to avoid this.

Seesmic Desktop Seesmic Desktop, another Adobe Air application is not for everybody and

Recent shows your public timeline, Mentions shows tweets that have @<your-username> inside them and the Messages tab shows direct messages to you. Hovering over a tweet gives you icons to reply to that tweet or to mark it as a favorite. Hovering over the tweeters picture gives details from the profile including number of followers, following, location, URL and number of updates. Best use of Twitterfox is for personal accounts and as a stop gap arrangement for business tweeting. AUGUST 2009 29

DARE.CO.IN takes getting used to. The one big advantage Seesmic has over Tweetdeck is that it can show you tweets sent from all your accounts. So, if there are multiple people handling the brand’s Twitter account, You can keep track of what Tweets each other is sending in order to avoid confusion and double talk. Another god feature of Seesmic is that your searches in Twitter messages get automatically saved. While TweetDeck also has a similar feature, Seesmic is more sophisticated in this respect, saving your search as a detachable column that can be viewed separately and is automatically updated. Both in TweetDeck and Seesmic, the search function is fairly simplistic, really simple text search. Later on in this article, we will see how to do better searches in Twitter.

CoTweet

CoTweet is a web based application that has been built for businesses using Twitter. Thus it has features specifically meant for business using Twitter. Lets multiple users manage the same Twitter account (and also does multiple accounts for the same person). It is the only client that shows tweets as threaded conversation. It also lets you 30

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strategy/marketing assign specific tweets to people within your team to respond to. In default view, it shows messages – that is tweets mentioning your user name within them rather than the full time line listing. It also shows who all are logged in and managing your account at a given point in time. You can create tweets and schedule them to be sent out later, thereby letting your tweeting appear to be more evenly spaced out rather than appear in sudden spurts. CoTweet can also be configured to send you email updates of messages and assignments when you are not logged in. The bad news with CoTweet? In a world full of free Twitter clients, CoTweet is likely to go paid soon.

What to tweet? Now that you have your account on Twitter, and are ready to get cracking comes the critical question: What do you tweet about? And how exactly do you do it? As in what language, what style, what not to do and so on. Rule number one – do not tweet inane or personal stuff, like “I just fought with the boss” or “off to sleep” if you are tweeting on behalf of your brand. Your tweets should ideally lead your audience to more interaction with your brand. It could lead them to pages in your website that tells them more about it, it could be about how to use your products, about where or whom to go for service or about special offers, discounts and so on. Let us look at some examples of what other brands are doing on Twitter to get a better grip on this. The William Mills Agency studies 1163 Tweets by US banking institutions during March this year. Out of these tweets, 44.1% were in answer to queries by other Twitter users. Links to web pages were the second most common type of Tweets at 24.7%. Internal news came third with 8.1%. Others included product promotions (2.7%), Industry news (2.1%), Retweets (6.3%) and community relations (1.7%). Plain chatter accounted for 6.5% of all Tweets! The study further notes that “Tweets containing links to Web addresses typically direct followers or

readers to blog postings or internal articles by the financial institution, articles from the local or national media, product Web pages at the financial institution or photo sharing sites”. Closer home, we have a number of businesses who are already on Twitter. Here is a sampling of recent Tweets by some of the more prolific Indian businesses on Twitter. MTVindia #RockOn Mumbai auditions (Round 2) today homoeopathynow Prevent Glaucoma http://bit.ly/Yr02d KotakInc Kotak: India Update Reuters Summit-Kotak Fund says realty stocks expensive | Real ... http://bit.ly/MbIyF http://cotweet. com/channels# kothi_com 12th India Realty Expo 2009 hosted in Dubai results in 106 flats worth Rs 65.33 crore being booked PenguinIndia Out soon! The Wish Maker by Ali Sethi,story of a fatherless boy growing up in a family of outspoken women in contemp Pak http://bit.ly/V7uVq ibnlive My mission was to kill, take hostages: Kasab http://www. ibnlive.com/rd/?t=26108 Infosys InStep, Infosys’ global #internship program, celebrates its 10th anniversary. Know more about InStep: http://twurl.nl/g22qti BollySpice I am interviewing Imran Khan tomorrow. Any questions? tridenthotels @colinbaril You could call our International Toll Free numbers at http://tr.im/tOlW Our trained destination experts will guide you. followtcs Friday, 24 July to be holiday for TCS Mumbai in view of anticipated high tide/heavy rains and disruption. Enjoy the long weekend, Mumbai! As you can see, there are all sorts of messaging you can do on Twitter – helping potential clients (tridenthotels), informing employees (followtcs), giving out information (PenguinIndia, kothi_com), asking for inputs (BollySpice) celeberating achievements (Infosys) and so on.

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strategy/marketing Whom to follow? Like I said in the beginning, your followers are your true wealth on Twitter. Now comes the other side of the equation. Who do you follow in turn? Getting followers in Twitter is almost a no -brainer. Follow someone and they are most likely to follow you back. In fact, there are many on Twitter who follow a few thousand and in turn are followed by thousands, but have nary made a Tweet! So, initially you may succumb to temptation to follow everyone and their pet monkey, if only to increase your follower count. Perhaps, as an initial exercise, it is not too bad either. But as a rule of thumb, good brands tweeting have a much higher number of followers than they themselves are following. For example, our original example, delloutlet was following just 24 users, but was being followed by 922,837! Infosys follows 185 and is followed by 1,591 users while followtcs has 844 followers and in turn follows 41 Tweeple (people on Twitter). So, whom should you follow? Obviously, you need to follow someone if you are asking them to DM you, but once that conversation is over, you can remove the follow. Then there may be “thought leaders” in your industry or your own CEO (if at all s/he is on Twitter) and other top management.

Should I join an autofollow site? There are any number of sites out there that you can register at, which will automatically pair you up with users with tweet profiles similar to yours and sign them up to follow you and vice versa. Should you sign up at these sites? As a business brand, absolutely no. Most of these followers do not even know that you exist (no one can anyway follow the tweets of thousands - we will come to how to handle that in a bit). They are just building up their numbers with no other objective other than to feel nice about it. You are in the game to build your brand.

Extending Twitter Twitter by itself is an awesome tool. But let to itself, you are not utilizing its

full potential. There are a number of services that help you extend the service, mostly by embedding more information into the 140 character limit.

URLs The most popular of extensions to Twitter are URL shorteners – services that take long URLs like http://www. dare.co.in/blogs/12-rules-for-businesses-wanting-to-be-on-twitter.htm and convert them into smaller aliases

likehttp://bit.ly/1hJFWc, saving you precious characters. One of the very first URL shortening services out there was tinyurl.com. But one of the most popular with Twitter is bit.ly, because it integrates with your Twitter account and more importantly perhaps, keeps track of how many clicks have happened on the link you provided and even how many of them came from your post. Clients like TweetDeck and CoTweet integrate with URL shortening services so that you do not have to separately login to the shortening service and create the short URL.

and the URL gets automatically tweeted along with the message you add to it. You do not need a separate account at Twitpic. Your Twitter account credential is your Twitpic account credentials too.

Automatic tweets If you have a regularly updated website – like a news site or a blog, you may want to automatically tweet any updates to the site- any new posts or

pages added. You can use Twitterfeed. com to do this. You have to be a bit careful though about using Twitterfeed. It just does what it is configured for, nothing more, nothing less. So, the tweets it produces can appear to be mindless mumbo-jumbo if you are not careful about the headlines you give to your pages or about the configurations you set, particularly in the post prefix and post suffix.

Pictures Lets say you want to include a picture to your new product in your Tweet. How do you do that. One way is to upload the picture at your website or some photo sharing site like Flickr and then use a URL shortening service to shorten the URL. Alternately, you can use Twitpic. Twitpic.com lets you post pictures AUGUST 2009 31

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strategy/marketing

Surveys Twtpoll.com lets you create simple multiple choice polls and broadcast them over twitter. I have personally not used it yet, nor have I come across polls running on Twitter. But in case you do one, Twtpoll is there for you.

Videos Videos have not caught the imagination of the Tweeple like short URLs and pictures have. Still if you want to embed videos in your tweets, you can use services like twiddeo.com (has an interface similar to Twitpic) or Twitvid.io (which can even record directly from a webcam â&#x20AC;&#x201C; though what use that is for a business is debatable).

Keeping track That brings us to the conversation part. How do you keep track of what people are talking about your brand, your products, your industry or so on. Your time line shows only those whom you are following and anyone out there may be discussing you. This is where search tools come in to the picture. Search tools on Twitter are different from regulation search engines. You might have heard the recent buzz about real time search. Traditional search engines do historical searches. That is they search through content that is already there and has been indexed by them. Real time search is where search results get updated as new content gets added. Search on Twitter is real time search. Again, while Twitter gives you a basic search page, you are better off using Twitter search tools for the purpose.

Sideline Sideline is a Twitter search tool developed by Yahoo. Yo can build your own searches and save each one as a 32

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separate tab on Sideline. As long as the application is running, these searches get updated with the latest tweets that meet their criteria. You start building a new search by clicking on the + sign at the top and giving your search a name. Let's say you are in the business of selling ladies shoes and you want to be alerted about all tweets about ladies shoes. Let's call our search all shoes. An empty tab with the Name All shoes gets added to Sideline. Now click on the Add search term button on the Right. The search builder opens up. Name this search as all shoes (or anything else) and click on Advanced Search. In the Window that opens up, you can build your search condition. Since you are searching for tweets about ladies shoes, you need to search for all possible words associated with ladies shoes. So, I tell Sideline to Search for any of these words - shoe, heel, sole, pump, boot, sandal, boot, slip-

per, clog, slipon, sneaker, loafer, sandal, chukka, flat. (and so on). This will give you all tweets being made about different types of ladies shoes (if any). You can further refine this search as required for your business and needs. Finally, once you start following people, you will be exposed to all their public tweets, and soon it can become overwhelming, reading through all the random messaging and all the interesting tidbits and links being thrown at you. The best way to manage this from a business perspective is to ignore this completely and to focus only on your search results and messages addressed to you (with your user name included in the tweet) and your DMs. Just ignore your public timeline. And that is also one of the reasons why businesses keep the number of people they follow very low. Reading random tweets just DAR E kills your productivity.

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blogs/opinion

Building to Last Surrounding yourself with personnel who have varying strengths, attributes and work-styles is what makes a company prepare for the long run.

/Vijay Anand

“A Players” are supposed to be individuals with vibrant energy, clarity, a neversay-die attitude, the ability to work hard and should almost match up to the founder in passion. Most founders are on the lookout for such people. And this is where one needs to keep an eye out. A Players have nothing to do with putting together an A Team.

nyone worth their metal would tell you that the lifesource of a company, while it is starting up, is in its team. The team, mostly driven by the founder, is what makes the company good or bad at what it does. While teams are crucial, it is key to understand a few things about the kind of balance you should look for to give your company a shot at outlasting you. In my opinion, there is a certain amount of hype and romanticism around “A Players” in a company. These are supposed to be individuals with vibrant energy, clarity, a neversay-die attitude, the ability to work hard, and should almost match up to the founder in passion. Most founders are on the lookout for such people. And this is where one needs to keep an eye out. A Players have nothing to do with putting together an A Team. A Players have some serious flaws. For one, they never get along other members of the team and they relate more to the founder than with the rest of the working force, which is fine in the beginning, but could create problems as you trying to mold your team into a working force. A Players are also very aggressive. You might choose to ignore it, but more often than not, they will bully the heads of the other teams. The biggest flaw comes when the A players work in bursts of energy and not consistently, and eventually become high maintenance for the company to bear. Obviously, we are dwelling on the flaws, and there are countless other things that an A player does bring to the table. Neverthless, A players will bring these matters to your table whether you like it or not.

An A team is more complete. It doesn’t carry the mood-swings, attitude and the tendency to compete within itself. A team of rock stars is not meant to go down the way of the fading star, but be a holistic team that works together that has people who stick their heads out for one another, paces themselves to accommodate the bursts and the slow times and deliver consistently. And a crucial element of that holistic team are B Players. People who possibly aren’t that obviously brimming with energy, ideas and enthusiasm, but have the commitment and the knowledge to deliver on their tasks. Persistence and collaboration are key strategies for a B Player. That is what enables them to lay the road over paths where the A Players have walked, and enables the entire company to strengthen its foothold. Most of all, unlike A Players, B players aren’t in demand by the masses, and they also highly dislike change and will stick with you longer than most A Players would care to. The key is this: Focus on building a team that is more holistic. The wisdom in surrounding yourself with personnel who have varying strengths, attributes and work-styles is what makes a company prepare for the long run, and it is a company that deals with such diversities day in and day out that will also think outof-the-box, and say ahead of the inDAR E novation curve. Vijay Anand is an entrepreneur, who currently works in the startup space extensively. He is the head of the Incubation Centre in IIT Madras, sits on the board of a few companies and is also the founder of the Startup Community effort - Proto.in. He also has a background, having built three companies - starting quite at an early stage - and brings that experience currently to help entrepreneurs and Mentoring startups, especially as they grow to scale.

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5 sponsored shorts, 2 directors, 15 locations, shows in 25 cities, followup lead generation online, print & telephonic contacts, final invitation in form of movie tickets. 8432 contacts, 3706 confirmations 1593 attendees, 1435 validated leads

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/sectors

Ten Things that Have Gone Out of Business in Our Life Time They were at the cutting edge of convention at one time, but in front of our eyes, we have seen them go RIP one by one. DARE lists 10 things that have gone out of business in our lifetime. /Aman Malik

1. Typewriter From their invention in the 1870s till about the 1980s (and till a little later in developing countries like India), typewriters were indispensable. An American, William Austin Burt first patented the typewriter in 1829 but it never went into commercial production. Commercial success, in fact, eluded the machine until 1873, when E. Remington and Sons (the sewing machine manufacturer) sold 36

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the machine. After Remington (later Remington Rand), IBM became the leading typewriter manufacturer and introduced many innovations in the machine, the last of which was the development of the “electronic” typewriter in 1989. The very next year, IBM hived off its typewriter business and sold it to Lexmark. By this time, however, most big corporations and governments in the developed world had replaced

typewriters with word processors and personal computers. The machine that made the phrase “typewriter girl” a part of the lingo of the early 20th century office, is now virtually extinct, barring some small business establishments where it can still be seen. Sources: http://en.wikipedia. org/wiki/Typewriter, http://inventors. about.com/library/inventors/bltypewriter.htm

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/sectors

have now discontinued telex/services. Development of technologies such as fax, the personal computer (PC), the Internet, inkjet and laser printers, etc have made the device, the teleprompter, obsolete. Sources: http://en.wikipedia. org/wiki/Telegraphy#Telex, http:// en.wikipedia.org/wiki/Teleprinter, http://www.britannica.com/EBchecked/topic/586267/telex

4. Pager 2. Video cassette recorder (VCR) The development of the VCR was led by the development of video cassette recording in general, the first commercially successful video cassette recorder being the Ampex VRX-1000 (which used the two inch Quadruplex format) in 1956. Other players like Sony and Philips followed suit, with products intended for commercial use. The “VCR” format first came into vogue in 1970 when Philips introduced a home video cassette format (also supported by Grundig and Loewe) by the same name. By the late 1970s, when European and Japanese companies like JVC, Sanyo, Panasonic, Funai and Technicolor entered the fray with technologically advanced versions of the machine, the VCR became a rage in the mass market and in 1980, there were three competing technical standards—JVC’s VHS, Sony’s Betamax and the Philips’ Video 2000. This led to an inevitable format war. By the late 1990s and the beginning of this decade, digital formats, such as VCDs and DVDs have virtually eclipsed the humble VCR and manufacturers have either stopped production completely or just produce the basic versions of these machines. Source: http://en.wikipedia.org/ wiki/Videocassette_recorder

3. TELEX network and the teleprinter A global teleprinter network,(called the Telex network), which essentially used a switched routing network, based on pulse telephone dialing, was established in the 1920s, and was in vogue through most of the last century, primarily for business communica-

tions. While in the US, the service was provided by Western Union and AT&T; in India, the Department of Posts & Telegraph did the same. Dial-up systems such as Telex and TWX worked in such a way that anything typed on one appeared at the other end in real time. Telex is still used for certain specific applications by sailors, weathermen and the armed forces in some countries Almost all business applications, though, now use the Internet as the preferred means of sending information; most countries

Till the latter half of the last decade, when mobile phones became a mass market phenomenon, the pager, a short messaging device, was the pri-

mary device used for personal and mobile communication. Major manufacturers of pagers include Motorola, Ericsson and Siemens, all of whom also manufacture mobile phones. Today, however, the the pager has a limited role, primarily in the “critical messaging” segment that requires quick, personal or group messaging. Unlike many other mobile communications networks, they work best in times of emergency or disaster as they have a relatively unclogged network available. Therefore, they are still popular with emergency service personnel, paramedics, and IT support staff. In most developing countries like India, however, pagers have been phased out and replaced by mobile telephony. Sources: http://en.wikipedia. org/wiki/Pager, http://searchmobilecomputing.techtarget.com/sDefinition/ 0,,sid40_gci212739,00.html AUGUST 2009 37

DARE.CO.IN 5. Pocket watch This was the most popular type of watch right from its development in the 16th century till the first half of the 20th century. Originally, mostly owned by the aristocratic elite, the pocket watch became the common man’s timekeeper by the close of the 19th century. After the First World War, the pocket watch was replaced by the wrist watch, which until then had been considered effeminate. It was not until the 1970s and the 1980s, when three-piece suits with waist pockets were in vogue

/sectors for a few years, that pocket watches again appeared and became a fashion statement, only to fade away soon after. Although the pocket watch is no longer in popular use, men still wear them, mostly during ceremonial occasions and it has become the prized possession of antique collectors the world over. Source: http://en.wikipedia.org/ wiki/Pocket_watch

6. Floppy disk Developed in the mid-1970s by IBM, the flexible floppy disk completely changed the concept of computer storage. It came in three formats—8-inch, 5¼-inch, and 3½-inch and was popular till the late 1990s. Other popular manufacturers included Sony, BSAF, Memorex, Shugart Associates, and Burroughs Corporation. While floppy disk drives still have some limited uses, especially with obsolete computer equipment that may still be in industrial use, they have now been largely superseded by newer devices such as USB flash drives, external hard drives, CDs, DVDs, and memory cards. Sources: http://en.wikipedia. org/wiki/Floppy_disk, http://www. webopedia.com/TERM/F/floppy_disk.html, http://computer. howstuffworks.com/floppy-diskdrive.htm.

7. Letterpress printing Invented by a German goldsmith Johannes Gutenberg in the mid-15th century; in this technology, a reversed, raised surface is inked and then pressed into a sheet of paper to obtain a positive right-reading image. It was the most widely used form of printing until the 19th century, and remained in vogue for printing books till the second half of the last century. The major manufacturers included Vandercook, Chandler & Price, Kelsey, Heidelberg and Adana Printing Presses. By the 1950s and the 1960s though, offset printing—where the inked image is transferred from a plate to a rubber blanket, then onto the printing surface—became the most popular form of commercial printing. Lately, commercial letterpress has been revived in the US, UK and Canada, under the “Small Press Movement”. Source: http://en.wikipedia.org/ wiki/Letterpress_printing.

8. Black &White TV First commercial television (TV) transmission began in the US in 1941, and although color TV broadcasts had been introduced in the US in the 1950s, it was not until the following decade that color television became prominent in 38

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/sectors

were mostly imported into India, some local players like Texla and Uptron garnered a large chunk of the market for a brief while, only to fade away with the emergence of big brands like Philips, Sony, Videocon, etc in the wake of the cable revolution in the 1990s. Source: http://www.tvhistory. tv/History%20of%20TV.htm, http:// en.wikipedia.org/wiki/Television

9. Telephones with rotary dial the developed world. Admiral, Andrea, Base, Calbest, Capehart and Certified Radio Labs, were some of the earliest players in the field. The first commercially successful color TV player in the US was GE, which introduced its Porta-Color sets in the 1960s. In India though TV transmission officially took off on Sept 15, 1959, color transmission took off only in 1982, when the Asian Games, held in Delhi, were telecast live in color by Doordarshan. Whereas in the beginning, TV sets

First introduced in 1904, it became commercially available by 1919 when Bell Systems began producing it in the US. For over half a century after that, this technology was in use. During the 1970s and the 1980s, touch-tone dialing, again pioneered by Bell Telephone Laboratories, where a keypad replaced a dial, became the norm. Rotary dial is now used only in designer phones. Source: http://en.wikipedia.org/wiki/ Rotary_dial, http://www.theaesthetic. com/NewFiles/online9_phones.html

10. Color reversal film (for still image cameras) In June this year, when Eastman Kodak announced that it would retire its seventy-four-year-old flagship color reversal film brand ‘Kodachrome,’ it was actually the end of an era. The reversal film, a type of photographic film that produces a positive image on a transparent base, was first patented by the Lumière brothers in 1903 and marked in 1907 as the ‘Autochrome Lumière’ process. Over time, Eastman Kodak and Fuji became the two leading global manufacturers of the color reversal film, with their brands ‘Kodachrome’ and ‘Fuji Velvia’. In the last decade though, digital photography has progressively reduced the demand for film, and it would soon be a relic of the past. Sources: http://en.wikipedia.org/ wiki/Kodachrome, http://en. wikipedia. org/wiki/Reversal_film

Epilogue: The march of time waits for none and in its wake all things must pass. Letterpress printing, which revolutionized the way the world exchanges knowledge, lasted in its original form for nearly five centuries, and is still in commercial use. Newer technologies like pagers and videocassette recorders, however, faded way too quickly (less than two decades) and morphed into smarter variants. This happened not only because they were incremental innovations over technologies that already existed, but also because in the last century the speed at which technology has changed, has far outpaced any other time in history. And this change will only be quicker as DAR E time moves on. AUGUST 2009 39

DARE.CO.IN et us begin with your first entrepreneurial venture...

Well, it all began under a tree outside the Mahalaxmi Race Course in Mumbai. I was a 19-year-old college student, who used to go to run on the course, and was waiting for the gates to be opened for the public. I got into a conversation with this distinguished gentleman who was also waiting under the same tree. It turned out that he was a banker and he told me about what he does. When I mentioned that it sounded really exciting, he suggested that I should get into this business. One thing led to another, and I met him a lot of times after that meeting. He introduced me to this concept of getting Letters of Credit (LC) discounted, which was hot in the late eighties. To summarize, the meeting with a banker under a tree gave me enough incentive to start the LC discounting business. It ran for about six months till the Reserve Bank of India changed the rules pertaining to LC discounting. I still remember that as a 19-year-old guy, I ended up making about a lakh rupees in those six months. So, that was my first taste of entrepreneurship. In this attempt, there were a few lessons that I learned that have been permanently etched into my mind. That is, having an idea, the passion to chase it, meeting the right people, and speaking out. I have come to learn that 99% of people do not speak out themselves first; be it on an airplane, at a party, and such. Even in public conferences, one of the toughest things to do is to stand up and ask the panel a question. If you are an entrepreneur, you have to speak out!

/bio gether the Indian Idol voting platform. Then I made Rajiv Hiranandani, one of the co-founders, to run it. In 2004, I felt the opportunity to start an interactive agency, Media2Win, which I created with Krishna Kumar (KK). As an entrepreneur, the most important milestone came by in 2006. That is when Walt Disney Internet Group approached us and acquired Mobile2Win China and Norwest Venture Partners acquired Mobile2Win India. It is after this that I co-founded Games2Win with Mahesh Khambadkone. This is the business that I am running right now.

How do you go on about choosing co-founders and forming a team? I’ll tell you what worked the best for me—having worked with the person as a partner, client, supplier, or such for a while. This happened in at least two of my businesses, Contest2Win and Mobile2Win. I have used headhunters in the past to target people that I may not know; but when I meet them, it is all about the passion. I interview them asking whether they are ready to take the pain, not the money. The whole idea is to get people who want to build value to the business, and not just take back big salary cheques.

What would you say are the first steps in starting a business? There is only one first step—finding the pain. You have to identify the pain, who is feeling the pain, why is the pain being felt, and find out if there is enough pain. This exercise to me is the opportunity. Then I find the solution. If I feel

entrepreneur of the month Walk us through the different ventures you have formed so far. My first venture was Contest2Win, which happened because as a consumer I was very frustrated that promotions were not happening without problems. I thought sending postcards to participate in contests was ridiculous. I decided to create a digital platform where people could enter contests, and that was how Contest2Win came into being. I knew that asking people to pay to participate in contests would not take off. So, I got the brand owners to promote me in return of my services and kept it as a free service to the public. As my venture started appearing in the media and TV in a big way, I was approached by many venture capitalists. I chose ICICI and eVentures. Then, I got some of my really interesting clients on the board of my venture. For instance, I got Thota Ranganath from Pepsi to become CEO of Contest2Win. One of my passions is to find people who are more intelligent than me to run my business. It is after this that I was invited by Softbank China Venture Capital to China to set up the same business as Contest2Win over there on the mobile platform. Thus, we started Mobile2Win of which Ranga was the co-founder. In 2003, I got excited by the Indian mobile opportunity. So, I started Mobile2Win India. Here we got the opportunity to put to40

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that a large pain problem can have a large solution, then I start constructing a business around it and think about getting people. There is an old adage that goes, ‘You don’t create a problem for which you have already found the solution.’ This, unfortunately, is the bane of many entrepreneurs today. They try to find problems for their solutions.

What are the main challenges that you have faced in all the startups you’ve run? The biggest challenge is stamina! Abhay Havaldar, who is a VC and someone who I respect a lot, explained to me that it is called the entrepreneurial marathon. When the excitement of announcing your startup, getting the congratulatory e-mails and calls, and the publicity in the press is over, the gloom sets in. That is the drudgery of running an operation day-in and day-out, calling up customers who don’t want to see your face, facing attrition, office space rents going high etc. Getting past this ‘suicide point’, as I call it, is the most challenging part. You have to overcome this. Besides this, funding is another challenge. I would say, take it when it is available. The thing with entrepreneurs, including me, is the thought, ‘How can I give away so much

/bio

DARE.CO.IN

ALOK KEJRIWAL GAMES2WIN

Kejriwal is a serial entrepreneur and is currently the CEO and co-founder of Games2win—his fourth company. His previous ventures include Contests2Win. com—one of India’s recognized Internet brands, Mobile2win—acquired by Walt Disney in China and Norwest Ventures in India, and Media2win—one of the top three interactive agencies in India. He talks about his entrepreneurial journey and gives us insights about the industry AUGUST 2009 41

DARE.CO.IN of equity for money?’. I would say, give it away. It is not the percentage that counts; it is the value that you create. Another big challenge is managing the board and investors. Whether you like it or not, many of your investors keep changing their perception of the business, about what they want the business to be, about the exit of the business etc. That is when things begin to unwind.

What was the first taste of success for you as an entrepreneur? There are multiple instances that I would like to attribute as the first tastes of success. One was the time when ICICI Ventures got intrigued by Contest2Win and called me up asking if I am interested in VC funding. The fact that I was approached by a VC and not the other way around is the first success that I had. The other moment is when Hindustan Lever gave me my first break in Contest2Win. I would say it was another first taste of success—the fact that HLL supported my idea, especially at a time when it had no background, no marketing or advertising. The third moment that I say was my first taste of success was when the first response came in, indicating that the customer has accepted the business model. Also, when the first time that a person who I was interviewing said that he wants to join me because he believed in what I was doing.

You have done business in India, China and the United States. Please share with us any difference in the experience of doing business in each of these countries? While the world has become a single global village, there is a golden triangle formula that has worked out well for us. In terms of doing business, US and China are very fast in adapting technologies. In India, the concept of experimentation is very high. Hence the formula, ‘build in India, scale in China, and sell in the US’.

Any thoughts on how to branch a business outside India? The world today is very connected. You have business networking websites, forums, so on and so forth, where people are easily contactable. I think one should take networking through these mediums seriously. You have to be almost transparent about what you want to achieve. One of the biggest obsessions and problems of Indian entrepreneurs is ‘idea protection’. You have to realize that the most important thing is not really the idea; it is the execution of the idea. Meet venture capitalists and instead of asking them for money, ask them for contacts.

How easy or hard a decision is it to let a company you formed be acquired; what is the thought process that goes behind making that decision? My approach to this has been that a business is like a relay race. When the time comes, stretch your hand out and give the baton away. You have to realize that someone who is paying you a whole lot of money for your compa42

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/bio ny will obviously love it equally or much more than you. Frankly speaking, it has been an emotionless decision for me. For instance, what Disney has done with Mobile2Win in China was unimaginable for us. For me, it is the flowering of your brainchild, making it into a bigger and better person.

Tell us a little about the in-game ad network. How is it working out for you? It began with a situation where we realized that our games were stolen and started seeing them on a huge number of other sites. Then came something that I call the art of thinking like a Judo star. In a Judo match, you do not block the opponent with your might; instead, you use the opponent’s momentum and speed to throw him off. We said, let us put invisible ads in our games, so that when the games get stolen, the thieves don’t see the ads; and when it gets played on another website, the ads automatically start to work. Instead of fighting off piracy, we rode on it. Today, we have 200 million ad impressions a month. And because we use InvisiAds to bring traffic back to Games2Win, according to ComScore data, we have become the top 50 global sites in terms of traffic.

How big is the applications development market and where is the big money in it? With Orkut, Facebook and the rest of the social networking websites involved, there are about 500 million people on these sites. These people don’t come online just to hang out; they want to do things with their friends. So the applications market is for this population of half a billion people. According to me, that is the biggest opportunity out there, in terms of the Internet space. The big money is to charge consumers for nibbling away. The concept is that of charging a dollar to buy certain addons that will give you a one-up over the others. These are vanity purchases. Then there are feel-good spends, donation and charity spends, skill spends etc. Consumers are spending on themselves, and that is where the money in social networking is. Right now, the market is ripe in the US and Europe, because that is where they have iTunes accounts, micro-payment cards in their wallets etc.

What is the impact of the ongoing slowdown on the Internet space? Anything that is costly to make in a bad economy does not survive. While traditional media has suffered very badly, the Internet being cost-effective has been the true beneficiary. Gaming has been the free leisure activity of all the youth in the world.

So, where is the opportunity space for aspiring entrepreneurs? When broadband becomes very accessible—video applications, arm-chair or mouse-potato travel applications, elearning, e-training and, of course, gaming with a whole lot of edutainment ideas. These are the four or five core ideas DAR E that I think are going to be big in the near future.

DARE.CO.IN

event/SMB

SMB Mentorship Forum The event gave SMBs a unique platform to discuss issues and challenges thrown up by the current economic slowdown

he small and medium businesses (SMBs) are the engines of economic growth, with 13 million such units dotting the country, giving employment to over 40 million people and contributing to 40% of Indiaâ&#x20AC;&#x2122;s exports. The global economic recession that has had its ripple effect on India has badly hit SMBs, particularly those that are heavily export dependent. Yet, with Indiaâ&#x20AC;&#x2122;s growth story still intact and its consumer base continuing to grow, there is a lot that SMBs can do to grow their business. Against this backdrop, DARE organized mentorship forums in Chennai and Bangalore to look closely at the issues and challenges faced by the SMBs, and to help those running these businesses with some tips to do better. A host of issues came up for discussion in Chennai. These ranged from ways to scale your business to working on a smoother employer-employee relationship. On the question of valuations, many wondered if it was just a per-

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DARE.CO.IN

ception and if not, how could one do a flawless valuation of a company. One of the panelists at the event, Narayanan Ramaswamy, Executive Director, KPMG, said valuation takes into account projected cash flows of the company. Future cash flows are expressed in range and not as absolute numbers. The panel that also comprised Satyen Vyas, Director, Enterprise Products Sales, SMB, Dell India, felt that immediate revenue would mean higher valuation. Another topic that came up for discussion was the growth aspect of SMBs. How could small become big? The panelists felt that acquisitions and partnerships were the right way for small businesses to grow. Changing with times is as important and as the change in mindset to deal with the growing competition in every sphere of business. Being a small business doesnâ&#x20AC;&#x2122;t mean it canâ&#x20AC;&#x2122;t create potent entry barriers in their sphere of business. Localization, creating a goodwill among customers is one way of retaining hold on business. Over 110 participants from the SMB sector turned up at the event in Chennai. The Bangalore event focused on issues relating to attracting, acquiring, training and retaining workforce, marketing and sales strategies for small businesses in recessionary times, and technology solutions for a more effective functioning of business. Picking up from live experiences, the participants sought effective customer retention strategies. Ashim Bose, Co-founder, The Aktion Group, said it is not just the product or a service that one offers to the customer, it is the whole experience that one sells, and if as a business one is able to make the customer hook on to that, there is no question why one would lose customers. On hiring and retention strategies, Prashant Bhaskar, Founder, plugHR felt that every other business is a competitor when it comes to acquiring talent. He said that blaming MNCs for creating a talent deficit was not the right approach. The participants felt that merely having the right talent was not all. Putting the workforce to the best possible use was more important for retention and to keep employees motivated. On the technology front, the participants felt that SMBs needed to be more aware. While a host of technology solutions were at their disposal, SMBs are hesitant to deploy them despite the fact that it would enable them to run businesses better. DAR E

AUGUST 2009 45

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strategy/retail

The Growth of Private Labels Private labels are slowly gaining prominence at big retail stores. DARE gives you an insight into how they work /Aswathi Muralidharan

Retail Sector in India US$83.12 billion (30%)

US$152 billion (54%)

US$5.5billion (2%)

US$19.15 billion (7%)

SOURCE: E&Y Research quoted in the Marketing Whitebook 2009-10

AUGUST 2009

Photo: Shoppers Stop

US$20 billion (7%)

hey have almost all the elements of a big label—a brand name and exclusivity. Maybe they lack a few things, like a big advertising budget and a sporty price tag. But still, they are big and are here to stay. In fact, chances are that they comprise nearly 40% of your shopping bags while you shop at retail outlets like Westside, Shoppers Stop, Reliance Fresh, Big Bazaar and so on. Clueless about what we are talking? Welcome to the world of private label brands. Be it Tata’s Westside, Kishore Biyani’s Big Bazaar or RPG Group’s Spencer’s, everyone is betting big on private labels for they are fast becoming one of their major revenue spinners. So what makes you buy them, know-

DARE.CO.IN

strategy/retail ingly or unknowingly? What makes the retailers go all the way to launch and maintain these brands? What makes these brands successful despite no advertising? In this story, DARE attempts to answer some of these questions.

How big are the private labels? Private labels, often referred to as inhouse brands or store brands, are those that are owned by the retailers themselves. For example, Shoppers Stop has several in-house brands such as STOP, Kashish, LIFE, Vettorio Fratini, Elliza Donatein and Acropolis. Reliance Fresh sells grocery such as pulses, rice, tea, noodles under the Reliance Food brand and the dairy products such as its curd is sold under the Dairy Life brand. According to a FICCI-Ernst & Young 2007 report, as quoted in The Marketing Whitebook 2009-10, the retail sector in India was worth $280 billion, of which organized retail comprised 5% at $14 billion. In an ASSOCHAM-KPMG joint study, the size of the retail industry was pegged at $353 billion in 2008. It was estimated to grow to $410 billion by 2010, of which organized retail would value approximately $51 billion. According to Images Retail Report 2009, as quoted in "Indian Retail: Time to Change Lanes" by KPMG; private label brands constitute 10-12% of organized retail in India. Of this, the highest penetration of private label brands is by Trent at 90%, followed by Reliance at 80% and Pantaloons at 75%. Big retailers such as Shoppers Stop and Spencer’s have a penetration of 20% and 10% respectively. Globally, store brands constitute nearly 17% of retail sales. In fact, international retailers such as WalMart and Tesco have 40% and 50% of in-house brands in their stores.

What is a private label? A private label brand, often referred to as an in-house brand or store brand, is that which is owned by the retailers themselves. Examples Shoppers Stop: STOP, Kashish, LIFE, Vettorio Fratini, Elliza Donatein, and Acropolis Westside: Gia, 2F4U

Photo: Shoppers Stop

Store brands: An overview In India, the growth of private labels has been phenomenal and is slowly gaining more store space. Aditya Birla Retail, which operates the ‘More for You’ food and grocery chain, is reportedly pursuing strategies to increase its private label sales from the current 3% to 10-15% of total sales in the next two to three years. During the course of this

It is imperative for modern retail to develop retail equity than brands. If we have strong private brands in our store, that itself becomes a strong differentiator. – Atulit Saxena, COO, Future Brands

story, DARE visited several such retail outlets. Here is a pen picture of what we found: Store space: Nearly 40-50% of the store space was dedicated to store brands. These products shared the shelf space with other branded products. For example, in the Reliance store that we visited, its curd brand Dairy Life was placed next to the other brands, such as Amul. A number of store brands: This is especially true for apparel. Shoppers Stop has several in-house brands. For example, in the women’s wear category itself it has STOP, Kashish, Remika etc. Similarly, in the men’s wear category, it has STOP, Life, Vettorio Fratini, and so on. These products are not differentiated from the other brands in terms of store space. Price tag: These products were priced substantially lower than the other brands. For example, Reliance’s tea brand sported a price tag of Rs 118 for 500 gms, whereas Brooke Bond, which was placed just next to it, was available for Rs 132 for 490 gms. Catered to a number of categories: In these stores, the store brands were not limited to a particular category. For example in Shoppers Stop, it extended from apparel for men, women and children to crockery, kitchenware, and even furnishings. Similarly, in a Reliance store, it extended from pulses to spices, noodles and even diary products. AUGUST 2009 47

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strategy/retail

How do in-house brands work? For a retailer, there are several advantages of introducing in-house brands in their portfolio. Atulit Saxena, COO of Future Brands, explains, “Traditionally, private brands worldwide were always conceived to take on category leaders. If we are talking about soaps for instance, you might have 15-20 soaps, but as a large organized modern retail player, you might want to create your own trademark in your store, which is of the same quality, but at a price that is substantially lower.” This also becomes the differentiating factor for a retailer, as these brands are exclusively available at that retail outlet only. So a customer, for example, may want to revisit the store if they find the quality comparable to others at a more affordable price point. As these brands create an identity for the retailer, there is a lot of work that goes into the pre-launch phase. Salil Nair, customer care associate and chief operating officer, Shoppers Stop, explains, “We have a very large base of loyal members, called First Citizens. Before we launch, we give a preview to First Citizens. We collect their feedback, so that we can study their likes, their sensitivity to price, their sensitivity to colors, silhouettes etc. We even put it for re-sampling if required, and then we launch it.” These brands are then re-invented every year through consumer and competitor surveys.

Private labels are highly profitable. The profits earned from them are almost double than those from third-party brands. – Salil Nair, Customer Care Associate & COO, Shoppers Stop Ltd.

The quality of the products is also of big concern due to obvious reasons. However, these products have not been able to shrug off the tag of inferior brands. Atulit says, “Traditionally, they have been considered as cheaper alternatives to conventional brands. But over a period of time, these private labels are becoming more innovative, are adding more value to the consumers and are able to offer innovation that is similar to an established brand. From a customer’s point of view, he is getting a similar quality at a much lower price. This is especially true in the apparel space because there it is not just the price advantage that works, but also the design sensibility.” The designs are both done in-house and are

Depth of Private Labels by Retailer

outsourced as well. For example, while Shoppers Stop frequently ties up with young designers, Pantaloons believes in having its own in-house designers. According to Salil, “Private labels are highly profitable. The profits earned from them are almost double than those from the third -party brands.” This brings us to the point—the core strength of the retailers is retailing and not designing and manufacturing products. Salil confirms, “We want to remain as core retailers. Therefore, 100% of our manufacturing is outsourced. There are fairly wellestablished manufacturers who work with us. We have been working with them for the past seven to ten years.” So is there any opportunity for entrepreneurs in tying up with these players for manufacturing these products? He says, “We are open to that. The selection of a manufacturer is a stringent process. We have a huge terms and conditions’ list that all our vendors have to agree to and employ. For example, we are against child labor. We have a quality assurance team to evaluate them, the environment in which they work, their financial capability, their commitment, their ability, and their interest level; there is a huge list.” Salil Nair says, “Five years back, our private label brands were around 17.5% in terms of sales and today they are almost 22.5%—a 5% increase. So now we have started dedicating a bigger space for this. All our brands have good representation in our stores so that they have a visual impact. The treatment that our in-house brands get is equal to what other brands would get at Shoppers Stop.”

The road ahead

SOURCE: Images Retail Report 2009 quoted in KPMG’s Indian Retail: Time to Change Lanes Report

AUGUST 2009

Private labels are slowly becoming the protagonist in the big Indian retail growth story. Taking cue from the West, Indian retailers are also churning out newer ways to increase their profit margins—one such initiative is the introduction of in-house brands. With Indian customers increasingly accepting these private label brands, they would soon be major contributors to the profDAR E its of Indian retailers.

DARE.CO.IN

/going global

Doing Business with Taiwan India-Taiwan trade grew 9% last year to touch $5.3 billion. There is also plenty of scope for tieups with Taiwanese companies entering India /Aswathi Muralidharan

ilateral trade between India and Taiwan has witnessed a significant growth in the recent years opening up a slew of opportunities for Indian entrepreneurs. To begin with, Indo-Taiwanese trade reached $5.3 billion in 2008—an increase of 9.4% over the previous year. Though the trade had reportedly reached the $3 billion mark by mid-year, global recession had an adverse effect on the trade volume, thereby missing the trade target of $6 billion in 2008.

Indo-Taiwanese Trade According to a report by FICCI, Taiwan’s export from India increased from $2,542 million in 2007 to $2,338 million in 2008. On the other hand, Taiwan’s import from India increased from $2,342 million in 2007 to $3,007 million in 2007-08. The major Indian exports to Taiwan included mineral fuels and waste oils, copper, organic chemicals, iron and steel, salts, aluminum, and pearls and stones, whereas major Taiwanese exports to India included plastics, electrical machin-

India-Taiwan Trade

NOTE: Exchange rate: (1US$ = Rs.) 45.95 44.93 44.27 Values in US$ Million, Source: Ministry of Commerce, Government of India

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45.28

40.24

/going global interests in footwear, electronics etc. The presence of these companies, including Foxconn, which has one of its largest facilities here, is a major signal Executive Director of Exhibitions, of confidence in Tamil Nadu; Wintek, Fongtai are Taipei World Trade Center all situated in Tamil Nadu. The expansion of the office here was aimed at boosting the momentum When one hears about Taiwan, one thinks of of investments and increasing economic linkages large B2B exhibitions. What other business between India and Taiwan. opportunities are there in Taiwan? So far, Taiwanese manufacturers have Apart from electronics and automobiles, Taiwan’s launched a total of 69 investment projects ICT industry has achieved rapid inroads into the worth around $400 million in India, including burgeoning digital home and portable communi- Foxconn’s $110 million investment over five years cations sector. The technology and engineers are in Chennai. Other investments include leading gathered for rapid market response and delivery. Adidas shoe manufacturer Apache and Nike shoe These unique qualities have allowed Taiwanese manufacturer Feng Tai that have also set up their companies to capture 87% of the global market production plants close to Chennai. As many for wireless modems, 84% of the DSL modem may be aware, Taiwanese and Indian strengths market, and 70% of the market for personal are complementary—India is good in software, digital assistants. services, system development; Taiwan is very In wireless communications, Taiwan’s good in manufacturing and technologies. amount of total investment in constructing the WiMaX network has surpassed $680 million What is Taiwan doing to welcome foreign to rank as the second highest in the world. For investment? 2009, the Ministry of Economic Affairs (MOEA) Taiwan welcomes foreign investment, and to even expects the production value of WiMaX accommodate investors, the government has and relevant application services for Taiwan to simplified application and registration procedures. reach approximately $3.96 billion. For WiMaX Foreign investors can set up a Taiwan office as a alone, it is expected to reach $4.33 billion by wholly-owned subsidiary, joint venture, branch or the year 2012. representative office, depending on the activities Besides, Taiwan is renowned for its ability and operations intended to be carried out. in flexible manufacturing, innovation, and skill in customizing products. The combined endeavors In which areas do you see bilateral trade of the machine tools industry in Taiwan have between India and Taiwan increasing? In achieved unprecedented growth and progress in which areas do you see Taiwanese imports the development of precision, stability and relifrom India increasing? ability of machine tools—MIT (Made in Taiwan) Bilateral trade volume between the two countries that match the standards of machine tools made in 2008 has reached $5.3 billion, an increase in Japan, Germany and the USA. For years, of 9.4% over the same period last year. Taiwan Taiwan has been able to maintain double-digit exported $3.1 billion worth of goods to India growth in the production of machine tools and it comprising mineral fuels, oils, electrical machinremains the fourth largest exporting country, just ery and equipment, plastic articles and organic after Germany, Japan and Italy. chemicals, etc. Whereas Taiwan imported mineral fuel, oil, cereals, organic chemicals, iron and Taiwanese companies are reportedly setting steel from India. up an SEZ in India. Can you give us an update on it? Would Taiwanese companies be open to setting It is mainly the IT companies, shoe manufactur- up R&D centers in India? If yes, in what areas? ers and mobile-related companies that are setting Taiwan’s Institute for Information Industry (III) up SEZs in Andhra Pradesh (AP) and Tamil Nadu has been striving to make greater use of overseas (TN). It is expected that more SEZs will be set experts and expand international cooperation. In up in the near future as exchanges of business 2004, the institute hired 11 engineers from India between Taiwan and India increase. and set up its first overseas research and developTaipei World Trade Center (TWTC) has set ment center in India in 2005. up its liaison office in Chennai, in addition to III pursues these efforts because it sees a its Mumbai office, to enhance bilateral trading strong need to internationalize its operations and between the two countries and increase the address the present shortage of qualified R&D economic and cultural presence in Tamil Nadu. personnel in Taiwan. Other international cooperaThe enhanced presence is recognition of Chennai tion moves include the hiring of a number of senior as the `economic capital city’ of South India academics from the United States in late 2004. with a dynamic economy. And there are over five Along with the Indian engineers, these foreign major Taiwanese companies in Tamil Nadu with professionals are conducting R&D in the areas of

Moses Yen

DARE.CO.IN broadband and wireless networks, systems development, technology development and CMMI. However, with the new budget in place and by taking into account all the financial considerations, III has decided to close its R&D center in India last year. So far there have been no other R&D centers set up from our side here. However, there are some companies, for example, computer OEM majors such Inventec, which has expressed interest to develop partnership with Indian companies. We believe there are still vast cooperation opportunities unexplored in the IT and biotech fields between the two countries. Also, as Taiwan’s computer hardware manufacturers are known for their hardware and software and India has its solid foundation of IC design, it will be a win-win situation for Taiwanese companies to cooporate with India to build R&D centers here. Taiwan-based companies that have set up R&D centers in India include Asus, Foxconn and Wintek. How can Indian entrepreneurs benefit from the upcoming trade show? “Welcome to Taiwan in India” could be the slogan for Taitronics India. This show offers all-in-one solutions for exhibitors and buyers from the electronics, machinery and auto parts industry. It is the only trade platform in Asia that plugs you directly into the huge trade network offered by world-famous Taipei trade shows including Taipei International Electronics Show (Taitronics), Taipei International Machine Tool Show (Timtos), Taipei International Plastics & Rubber Industry Show (Taipei Plas) and Taipei International Auto Parts & Accessories Show (AMPA). In fact, Taitronics India presents each of these leading international events in a microcosm. In just one trip, you and your team will benefit from these shows that highlight the cost benefits, innovation and quality of Taiwan products. It is the perfect platform for putting all of Taiwan’s advantages to work for you in one convenient place. The show acts as the best B2B platform for local companies to explore more cooperative opportunities in the future with the many prominent Taiwan companies in diverse industries, or to strengthen existing partnerships with each other. During the show, TAITRA will organize the peripheral events such as seminars, procurement meetings, press conferences, opening ceremonies and buyers’ night to better serve our buyers. Meanwhile, to offer the ideal B2B trade platform, TAITRA and the overseas offices of the Ministry of Economic Affairs will mobilize hundreds of their offices around the world (and sign on dozens of international associations) to recruit key procurement agents and IPOs to this event. With buyers from more than 30 countries expected at this show, we anticipate it becoming the best platform for Taiwan-India trade. AUGUST 2009 51

DARE.CO.IN

/going global been estimated that currently there are more than 80 Taiwanese companies in India such as Foxconn, Adidas shoe manufacturer Apache and Nike shoe manufacturer Feng Tai, who have also set up their production plants close to Chennai. Similarly, India-Taipei Association and Taipei Economic & Cultural Center signed an agreement on promotion and protection of investment in October 2002. The Taiwan External Trade Development Council (TAITRA) has also opened two offices in India in Mumbai and Chennai to promote trade between the two countries. Such moves open up several new opportunities for Indian entrepreneurs as well. On the investment front, in 2008, foreign investment in Taiwan was the highest in the finance and insurance sector, followed by manufacturing, wholesale and retail. ICT came in seventh in terms of such investments.

Why Taiwan?

ery and organic chemicals. Though, India’s export to Taiwan and Taiwan’s export to India currently hold just a small percentage of the total trade of the respective countries, the number is expected to go up in the future due

to efforts being made by the governments of both the nations. One initiative in this direction is the setting up of special economic zones in Tamil Nadu and Andhra Pradesh to attract investments from Taiwan. It has

DARE/doing business Ease of

2009 Rank

2008 Rank

Change in Rank

India

Doing business

-3

122

Starting a business

119

108

-11

121

Dealing in construction permits

127

122

-5

136

Employing workers

159

153

-6

Registering property

-2

105

Getting credit

Protecting investors

-4

Paying taxes

100

-1

169

Trading across borders

Enforcing contracts

-1

180

Closing a business

140

Source: World Bank Doing Business 2009 Report

AUGUST 2009

Taiwan is known for its electronic products. In fact it is the world’s number one in terms of manufacturing motherboards, servers (System & Pure MB), notebook PCs, computer peripherals and so on. According to the FICCI report, it is also the world’s fourth largest integrated circuit (IC) maker and is second after the US in IC design. Besides having a significant presence in the semi-conductor space, Taiwan is also the fourteenth largest supplier of precision machinery, including in machine tools. Taiwan has several specialized industry clusters such as Taipei, which is known for its ICT, electronics and software products; Tainan for optoelectronics, yachts, textile and clothing, auto parts, shipbuilding and steel and photovoltaics; and Taichung, which is famous for its hand tools, traditional hardware, bicycles and machinery instruments. Taiwan’s research and development (R&D) spend is also significant. In fact, in 2007, Taiwan spent 2.62% of its GDP on R&D related activities, and received 6128 patents. More than 30 companies have set up 39 R&D or innovation DAR E centers in Taiwan so far.

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opportunity/news

What it means... Essar to invest in UAE co’s business

Deficient monsoon may hit economic recovery

The Essar group is in

rains were 50 percent deficient in the north-west region during the June 1-July

talks with a UAE-based

9 period.

India’s worst dry patch in decades is staring us in the face with monsoons playing havoc. According to the meteorological department, the annual monsoon

consortium of investors, The Dhabi Group, to in-

What it means?

vest in telecom business

Rural demand would slide drastically amid the ongoing slip in urban demand,

in Africa. The prelimi-

making economic recovery more painful. The prices of food items could rise

nary agreement between

sharply, making the consumers to spend less. This could be bad news for Indian

the

companies that are already reeling under the pathetic demand from overseas.

two

groups

has

been signed. What it means? With slowdown hitting

India’s swine flu cases go up

the world economy bad-

There is no stopping the swine flu menace, with fresh cases being detected on a

ly, Indian companies are

regular basis. As of July 20, the total number of infected patients in the country

looking at new markets.

stood at 308.

For long, China has had its presence in Africa,

What it means?

but with Essar’s move

The travel and tourism sector has been hit. The number of inbound tourists has

to indirectly invest in

dropped by up to 30 percent and the number of inquiries has also gone down.

that market, more In-

Outbound tourism has also been hit.

dian companies could follow suit.

21st century’s longest solar eclipse This century’s longest total solar eclipse, lasting 6 minutes, 39 seconds, occurred on July 22. The next big total eclipse in the country takes place on Jun 3, 2114. The line of totality covers a distance of over 3,000 km. So, more Indians will be in the path of totality than ever. What it means? It would spur economic activity in cities where the full eclipse is visible, with enthusiasts from far and wide traveling to these cities to look at the spectacular event. Cox & Kings, in coordination with Eclipse Chasers Athenaeum (ECA) organized a special solar solar eclipse flight for the enthusiasts. The ticket cost around Rs 80,000.

AUGUST 2009

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opportunity/news IMF revises India’s growth projections upwards

The International Monetary Fund has revised India’s growth projec-

Lupin, Matrix face anti-trust probe in EU Three pharmaceutical majors—Lupin, Matrix Laboratories and Niche Generics, are in the eye of a storm of antitrust investigations by the European Union for delaying the entry into the market of the generic version of a hypertension drug. What it means? This is a bad news for the Indian

tion upwards by 0.9 percentage points in the year 2009 and 2010. The multilateral agency attributes this to the positive impact from fiscal and monetary stimulus packages. What it means? While it falls short of government’s expectations, it is still an indication that economic recovery is in sight. It also reaffirms the positivity that the economic

stimulus

package

has infused in businesses.

pharma companies that have either entered the overseas markets or are planning to do so. The probe could dent the reputation of Indian

Harry Potter film sets worldwide box office record

firms abroad.

Harry Potter’s new film avatar Harry Potter and the Half-Blood Prince is set to make a box-office bounty by grossing $1 billion soon, having netted $400 million worldwide in the first five days of its release.

Foreign VC funds await RBI approval Around 43 foreign VC investors are awaiting the central bank’s nod to invest in Indian businesses. Ten such requests are reported to be pending since the three years. The big

What it means? This movie could compensate the losses suffered by theater owners who are recovering after a two-month dispute about the sharing of ticket revenue.

names in the list include Google Holdings, DE Shaw Composite Investments, and Sabre Abraaj Infrastructure. What it means? The economic slowdown had already made it difficult for entrepreneurs to tap funds for their startups. Eager investors kept out for the lack of approvals is bad news for entrepreneurs looking for VC funding.

AUGUST 2009 55

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opportunity/news

Indiaâ&#x20AC;&#x2122;s climbdown on CO2 emissions After much deliberation, Prime Minister Manmohan Singh finally signed a climate declaration at the Major Economies Forum (MEF) in Italy. There was a lot of hue and cry on this issue because India was till recently opposed to certain clauses in the declaration. One such was the clause on introducing a cap on global temperature, which should not exceed two degrees Celsius over pre-industrial levels by 2050. The argument of the people against the move was that Indiaâ&#x20AC;&#x2122;s per capita carbon dioxide emission at 1.2 tonnes was one of the lowest in the world as against the developed nations. What it means? Climate change is one of the greatest challenges of our time, but so is development. One of the worst fears of India by signing on the dotted lines was agreeing to the cap on global temperature, thus indirectly implying emission cuts on India. For businesses this is not good news because it might mean stringent rules and regulations as well as more taxes. In the longer run, this might also mean that the pollution control norms that existed for large enterprises might also be extended to the medium industries.

Union Budget gives more funds to education

Defence budget up 25%

The government has allocated Rs 44,528 crore

The government has decided to hike defence

for both school and higher education, a jump

spending by 25 percent in 2009-10 to $29.39

of 20 percent over the last fiscal. While school

billion as it moves to modernize weapons sys-

education gets over Rs 29,099 crore (Rs 290.99

tems and overhaul its security forces after last

billion), higher education bags Rs 15,429 crore (Rs

yearâ&#x20AC;&#x2122;s Mumbai attacks exposed major gaps.

154.29 billion). The figures include both planned

$562 million would be spent to boost border

and unplanned outlay. Last fiscal, the total budget

security and modernize its police force.

outlay for education was Rs 37,366 crore. What it means? What it means? This could open up opportunities for those

a bigger share in the defence market, this is

in the education sector, as the government

good news for many. They stand to benefit

may look for a public-private partnership

even if the government sources arms from

model to further the cause of education. It

overseas firms as according to the offset clause

would also mean downstream opportunities as

they have to source stipulated amount of arms

government institutes would have more money

from Indian companies.

in had to spend.

With Indian companies readying to garner

AUGUST 2009

DARE.CO.IN

opportunity/news Pop-star Michael Jackson dies at 50 One of the most shocking incidents of our time—

SC upholds HC’s decision on gay rights

Jackson, who moon-walked his way to fame,

The Supreme Court finally upheld the Delhi High Court

passed away on June 25, just 18 days before the

judgment on decriminalizing homosexuality. On July 2,

first planned concert of the series of 50 at London’s

the Delhi High Court had said that Section 377 of the

O2 arena.

IPC violated an individual’s rights and consensual sex between adults should be legalized. This judgment was

What it means?

a bone of contention between many gay rights activists

This news obviously implies several losses to those

and people including public figures, who openly op-

associated with the event. It had been reported that

posed the move.

the concerts would have been attended by over one million people in total. Just the first ten dates would

What it means?

have earned £50 million for the singer. Not only

No major implication on business as of now, because

this, AEG Live, the organizer of the event, now faces

gay rights have not been legalized as of yet. However,

a liability of reportedly £300 million and an empty

some restaurants, pubs and discotheques came forward

venue for the next nine months.

to propose special nights for homosexuals, adding an-

However, it also means gains for some. For be-

other dimension to their business.

ginners, a number of financial firms are eyeing Jackson estate’s 50 percent share (worth more than $500 million) of Sony/ATV Music Publishing, which holds most of the Beatles catalog. Not only this, many studios have been bidding for Michael Jackson’s video of his final rehearsals, which could again be worth several millions. Another major thing could be his remaining interest in Neverland Ranch. Then there is the never-ending list of Jackson memorabilia, such as the antiques he collected during his lifetime which could run into several millions.

Cong-Maya spat Uttar Pradesh Congress Committee Rita Bahuguna Joshi was recently arrested for allegedly making derogatory remarks against UP Chief Minister Mayawati. Joshi was booked under sections 153A (delivering inflammatory speeches) and 109 of IPC (using abusive language), besides provisions of SC/ST (Prevention of Atrocities) Act, for the speeches she delivered in connection with compensation to rape victims. This had triggered a major political uproar in the state resulting in a violent clash between the party workers. According to latest news, Joshi is now demanding the resignation of Mayawati on “moral grounds.” What this means? Politics has a direct impact on businesses. This tussle between two major political parties may lead to a loss of investors’ confidence in the state.

AUGUST 2009 57

DARE.CO.IN

opportunity/news

India-Pak joint statement dilutes India’s stand A joint statement was released after Prime Minister Manmohan Singh met his Pakistani counterpart, Yousaf Raza Gilani, on the sidelines of the NAM event in Egypt. The statement had several contentious issues especially on terrorism, such as the statement that said, “Action on terrorism should not be linked to the Composite Dialogue process and these should not be bracketed.” Some people think this move may lead India to take a soft stand on terror attacks, especially the 26/11 Mumbai terror attacks. What it means? This might turn out to be a good move, because the statement indicates opening up of dialogues. This may lead to better bilateral trade relations between the two countries, opening up avenues of business for entrepreneurs. A move in this direction by Associated Chambers of Commerce & Industry (ASSOCHAM) and its counterpart Karachi Chamber of Commerce & Industry (KCCI), which have already set up special groups to facilitate trade. According to ASSOCHAM figures, Indo-Pak trade during the last four years (2004-05, 2005-06, 2006-07 and 2007-08) showed a record growth of 74% , 39%, 97% and 19% respectively and the total volume reached $2 billion in 2008 and therefore, tremendous potential is yet to be tapped. A 2008 study by the Chamber predicts a 40-50% rise in bilateral trade.

Metro over-bridge collapses leaving six dead

Disinvestment firmly back on Centre’s agenda

Six people were killed and several in-

by Finance Minister, Pranab Mukherjee. The budget has projected

jured when an under-construction

Rs 1,120 crore receipts from disinvestment. Government has already

over-bridge of the Delhi Metro col-

cleared the disinvestment of Oil India and NHPC.

Disinvestment issue has again come up in the forefront after remarks

lapsed near Lady Shri Ram College in New Delhi. Delhi Metro chief E. Sreed-

What it means?

haran tended his resignation from the

Disinvestment provides fair opportunity to general investors to park

post owning moral responsibility of

their surplus. Also, general investors take these decisions as business-

the accident. However, his resignation

friendly and boost the confidence among them. Business related to

was later rejected by Delhi Chief Min-

issues, under-writing, and banking certainly witness increase in their

ister Sheila Dixit.

activities. Government could use receipts from such disinvestment to develop infrastructure which would help businesses.

What it means? The construction of the Delhi Metro was expected to be completed before the Commonwealth Games 2010 to be held in New Delhi. There are several other projects such as the flyovers that are pending completion. This ac-

FII inflows crosses $6 billion this year Despite the ongoing recession, foreign institutional investors (FII) inflow into the country crossed the $6 billion mark—Rs 29,940 crore this year, with over one billion dollar in July alone.

cident may lead to the introduction of stringent measures before signing on the contractors.

What this means? This could be good news for investors in the stock market. This also boosts the confidence among the people, especially given the economic slowdown.

AUGUST 2009

DARE.CO.IN

opportunity/news

India’s first indigenous nuclear-powered submarine The top-secret ‘Advanced Technology Vessel’ (ATV), a nuclearpowered submarine developed indigenously by India, has started its trial on July 26. It was launched by Prime Minister Manmohan Singh. What it means? This significantly contributes towards addition of power in the Indian arsenal and its bargaining power in the international arena. The development of such technology and vessels has linkages to the technological industry, suppliers of raw materials, etc.

Ambani brothers fight over gas

Nandan Nilekani joins the government’s unique ID project

The dispute between Anil and

Prime Minister Manmohan Singh appointed Infosys co-founder Nandan

Mukesh Ambani over the Krishna

Nilekani to head the government’s ambitious Unique ID Project. The project

Godavari (KG) gas basin issue has

aims to create a national identification database for the country’s 1.2 bil-

now evoked a sharp response from

lion citizens. Earlier, Finance Minister Pranab Mukherjee had said that the

Petroleum Minister Murli Deora,

first set of unique ID numbers would be rolled out in 12-18 months. A pro-

who said that the brothers are

vision of Rs 120 crore had been proposed for the project.

fighting over a natural resource that belongs to the government

What this means?

and the people of the country.

The Unique ID creation project could mean a host of business opportuni-

The dispute is over the terms of a

ties for entrepreneurs at different levels. Like for example, the move could

gas supply agreement that contin-

give a much needed boost to the Indian IT sector. In fact, it has been re-

ues to haunt the Reliance empire

ported that some Israeli IT firms are planning to partner with Indian ven-

since its split in 2005.

dors to jointly bid for the project.

What this means? This issue could affect India’s energy sector adversely. For starters,

BT to revert call centre jobs back to UK

this could discourage investments

BT is cutting its call centre jobs in India and would be taking some work

in the energy sector because of

back to the UK. The jobs cut would be of third-party employees and not

the negative impression it gives

of the direct employees of BT. This move has come due to the slowdown.

on production-sharing contracts.

No exact numbers regarding job cuts have been disclosed.

To outsiders, this gives an impression that large corporations op-

What it means?

erating in the public domain can

This may affect outsourcing businesses in India. Organizations that

influence policy and bend rules in

would be asked to lay off their employees would be directly affected.

their favor.

This may also point towards a gloomy situation in the outsourcing industry and is also a bad signal for the employment market.

AUGUST 2009 59

DARE.CO.IN

opportunity/news Technical snag detected in Chandrayaan

Air India in dire straits

Indian Space Research Organisation (ISRO) on July

Accumulated losses of Air India reached $1.5 billion

17 revealed that a technical snag had developed in

after the slowdown in aviation industry and fall in air

the spacecraft two months ago. The snag was related

travel. Air India(AI) being unable to pay salaries re-

to the star sensor used for orientation of the space-

sulted in a strike by AI employees for two hours. For a

craft that malfunctioned due to thermal radiations

revival of the airline, restructuring plans were asked to

from the sun. However, the ISRO chief revealed that

be made whereby it is likely to get state bailout.

95% of Chandrayaan objective has been complete.

What it means?

This may affect businesses indirectly as substantial

If the mission does not deliver the desired results,

amount of funds of the government would get chan-

then this might be a jolt to India’s scientific commu-

neled if there is a bailout. Also, orders of planes and other services and products might be reconsidered, which will affect the businesses involved accordingly.

Inflation continues to be negative Inflation, based on wholesale price index (WPI) after turning negative for the first time in 32 years for the week ending 6 June 2009 remained negative for five consecutive weeks thereafter. However, inflation based on consumer price index (CPI) continued to be positive. Inflation (WPI) was (-) 1.21% for the week

nity and industry. However, this may provide a lesson and may allow our industry and researchers to study the fault and be better placed.

BSNL’s profits erode 97% in two years BSNL posted a profit (after tax) of Rs 104 crore for the year 2008-09. Profits were Rs 11,806 crore and Rs 3,009 crore for the year 2006-07 and 2007-08 respectively. Revenue from fixed line fell by Rs 3,000 crore from last year while revenue from cellular users fell by just Rs 132 crore. However, 1.02 crore cellular users were added during 2008-09. What it means? This could point towards a fading of the business of fixed line communications. Industries associated with fixed line communications like wire suppliers may be affected if these trends continue. Such businesses might need to change and adapt accordingly to new technological changes and environment.

ending 4 July. What it means? Since CPI-based inflation is positive while WPI-based negative, this implies that intermediaries between producers and consumers are enjoying higher margins. Also, this may point towards speculation and artificial increase of prices in the final market.

Powerful blasts in Jakarta Two bombs exploded at the Ritz-Carlton and Marriott hotels in Jakarta on 17 July at 8 a.m. local time. The blast killed at least eight people and wounded more than 50. The blast occurred nine days after Indonesia’s Presidential election. What it means? The tourism industry gets deeply affected by such acts. Indian tour operators organizing tours for Indonesia may see fall in travelers. However, the effect should not be very large. Also, investors do consider such factors while making their investment decisions. DAR E

AUGUST 2009

DARE.CO.IN

/INSEAD

ç CONTD. FROM PG 20

mentors, our company achieved in 36 months what would have otherwise taken at least three years for it to get to. After Singh and Kothandaraman received mentoring cum funding support from the Indian Angel Network, they were able to refine their business plan and make it work. Recapping IAN’s support, President of IAN Ruparel notes, “IAN helps to evaluate first-time entrepreneurs’ business plans and helps them structure and validate their business ideas. The vetting of propositions and review of business model and strategy is done by the investor members themselves”. A sustainable support provided, Ruparel reiterates, “IAN hand holds investees right through the investment process and offers help if needed even post investment”. The IAN model: Typically, a group of individuals who are members of the network pool their resources and invest in a startup, creating enormous value for all stakeholders. “All our deals are based on pooled funds and shared deal flows”,explains Ruparel, “and the network of angel investors looks at investing USD 100,000 to about USD 1 million, exiting over a 3 to 5 year period through an IPO, M&A or strategic sale. The Network may consider investments over a million dollars but is likely to do so through syndication”.

IAN member Sunil Kalra agrees that, “As an investor, IAN brings immense value by giving me an option to look and evaluate business plans from across sectors and hedge my risks along with co-investors”. Undeterred by global recession, IAN has had no perceptible change in the deal flows. In the past six months,

Undeterred by global recession, IAN has had no perceptible change in the deal flows. In the past six months, this network of angel investors has completed three deals, one of them being that of Kwench Library solutions in which a few IAN members have invested

this network of angel investors has completed three deals, one of them being that of Kwench Library solutions in which a few IAN members have invested. Kwench’s value proposition is that it will enable companies to provide their employees access to thousands of book titles - with no capital expenditure, no administrative effort and no physical space. Mitesh Damania, co-founder of Kwench speaks about IAN’s investment, “It is smart money for Kwench. It is an investment that comes with a wealth of experience, huge potential for building our client base and most importantly, brings valuable guidance as we build this nascent venture. Working with IAN has helped us access the “distilled” wisdom of our investors who are themselves successful entrepreneurs. Factoring in their rich external perspective, we have been able to crystallise our thoughts better”. Adding to that, Nidhi Saxena, CEO, Karmic Lifesciences details out a 4prong benefit gained through her interaction with IAN, “IAN investment has been a significant value add for Karmic in its journey as a young and upcoming start-up in multiple ways. First and foremost, the nurturing and mentoring provided by the angels, most of whom are successful entrepreneurs and visionaries themselves with AUGUST 2009 61

DARE.CO.IN

grass root level wisdom and out of the box ideas to share. Second is the tremendous IAN network-be it industry contacts, investor contacts or media contacts. Third is the whole model of staged funding that gives us enough capital to survive and grow while avoiding the pitfalls of overcapitalisation. And finally the arm’s length approach which lets us have continued operational flexibility and the much-needed breathing space as an entrepreneur”. CEO of this oncology-focused Contract Research Organization (CRO) that offers end-to-end clinical expertise to global and domestic pharmaceutical companies, Saxena sums up by adding that, “For us, IAN has been a valuable partner and we believe our engagement with them increases our chances of success manifold”. Experience of investee companies such as Druvaa Software, Kwench and 62

AUGUST 2009

/INSEAD

Karmic Lifesciences brings out IAN’s value proposition clearly. IAN addresses common pain points of most first time entrepreneurs by providing the first tranche of money for their entrepreneurial journeys to take shape, and to grow these ventures for VC investment. Added to this, their first level of professional money is from people who have operationally been very successful. In Ruparel’s words, “These angel members are signing a cheque and this is no selfless act of giving. This, in turn, is invaluable to new entrepreneurs particularly during the vetting process when they get direct, constructive feedback and suggestions from domain leaders that are investing in their start ups”. Angel investor Sunil Kalra’s views further reiterate the success of IAN. Kalra avers, “IAN is a unique proposition which, unlike other funding networks,

IAN came into being to mentor. We realized that people don’t get help and not many entrepreneurs have had the opportunity to work in all spheres of business. — Raman Roy Co-founder, IAN

provides extensive mentoring and handholding in business operations”. IAN’s investment parameters: IAN members look for businesses that have high barriers to entry and considerable growth potential. The quality of the team that possesses multiple skills is a differentiator and rated higher than their business idea. And finally, entrepreneurs who can provide evidence of the validation of their concept and particularly those who have begun to engage with the market have a stronger proposition. Needless to mention, IAN members are likely to invest in business ideas where they have the ability to add value, given that this network

DARE.CO.IN

/INSEAD It is smart money for Kwench. It is an investment that comes with a wealth of experience, huge potential for building our client base and most importantly, brings valuable guidance as we build this nascent venture. — Mitesh Damania Co-founder, Kwench seeks to add value not only through financial investments but by providing strategic direction. Future of angel investing: Sharing a recent experience with IAN’s business idea campaign, Ruparel says, “When IAN organised an idea campaign, our

guesstimate was that we would be approached by 5000 ideas. We were astounded to have 12000 business plans presented to us in a period of just 32 days! I am convinced that in the next 5 years we should see many more angel groups in the country and an exponen-

tial growth in the number of entrepreneurs in the country. Angel investing would be a well established alternate asset class in investment portfolios and hopefully the government will formulate policies to encourage investments in young start-ups, which are, as such, excellent employment generators. Angels invest in innovative companies and going by the way IAN’s membership has grown across the globe, India promises to be the next innovation destination”. Given IAN president Ruparel’s experience with angel investments, the entrepreneurial ecosystem in India is expected to witness exciting times ahead. DAR E 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. Philip Anderson is INSEAD Alumni Fund Professor of Entrepreneurship, Director, Rudolf and Valeria Maag International Centre for Entrepreneurship and Director, 3i Venturelab

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Design is emotion. Finish is feelings. /Rupin Jayal

onsider the new Maruti Ritz. Ostensibly it has been designed for a slightly more practical and “settled” audience than its older sibling—the Maruti Swift. Yet, it has a quirky touch that recognizes the youthful character of even its more practical buyers. This is a separate pod for its rev counter perched upon the top of the dashboard. Why has this little touch been added to a model that seeks to appeal to a more “sober” audience? Does it really make a difference? Why the dashboard and not somewhere else? Maruti has become increasingly innovative and adventurous when it comes to automobile design. It took a big risk when it launched the Maruti Swift. The car was not the most spacious. The all-important back seat felt a bit claustrophobic with the small rear windows. It didn’t have the most practical boot. Yet what it did have was a lot of “attitude”—a bit like a modern interpretation of the classic Mini. The difference was made with numerous little touches. The way the roof apparently “sat” on top of the car with the pillars that supported it blacked out, the curvature of the rear hatch and the chunky rear lights, the flared wheel arches and the mischievous “face” of the car with its curving headlights and an almost dome-shaped bonnet.

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The net effect was a car that looked sprightly, full of energy, crouched to take off, yet very confidently planted on the road. It was the closest thing to a “hot” hatchback in India. In the entire description above there is no mention of BHP, engine configuration, mileage, interior dimensions etc. In fact, the first response to the car is usually entirely visually driven. This is not a niche car. It has been one of the hottest selling models for Maruti. Is it the most practical? Not really. Does it have competition? In terms of category it certainly does, but in terms of pure visual appeal, not really. So, coming back to the Ritz and its unusual pod. What the Swift did was to underline the power of imaginative design. A lesson Maruti has taken well as its latest cars show. When it did launch a fairly plain and “practical” car, the Zen Estilo, it met with scant success (ironically the little box had advertising that claimed it was a contrast from other econo-box hatchbacks!). So even a so-called “practical” alternative to the Swift has small touches that give it a distinctive character because in a country with an average age approaching just 26 years, no one wants to feel “average” and a car is no longer viewed in purely practical terms. So while “The Ritz is designed to reach out to those who want practicality and comfort, the Swift to the younger and sportier of heart” (Autocar July 2009), it still presents an imaginative “face” to its driver. And that is why it is a masterstroke to put the quirk right there in front of the driver’s face while keeping the rest of the car quite practical. It is also inter-

esting that the maximum external design elements have been reserved for the rear of the car—a view that most will see when stuck behind it in one of our ubiquitous traffic jams. The crucial lesson here is two-fold. First, people in India are becoming increasingly more attracted to imaginative design. This is not a niche trend, but a mainstream one. If you have doubts just look at what has happened to the “mass” 100cc commuter motorcycle market. Even the highest selling Hero Honda Splendour keeps being refreshed and was a design leap forward when it was first launched. The softer, more flowing lines contrasting well with its more angular, supposedly, “muscular” competition. And these smoothly-flowing lines mirrored the legendary smoothness of the bike itself. When you have a piece of plastic or metal to turn into a product you can make it dull and straightforward or you can shape it imaginatively and probably create far greater attraction. Just witness the impact of the Tata Nano—which despite being the world’s cheapest car does not look it. Interestingly, “Among the three variants of the Nano car, the base version accounted for 20% of the bookings, followed by the CX variant at 30% and the remaining 50% for the top-end LX variant.” (ET 16/7/09). So the car looks good enough for people to opt for the top-of-the-line options and not the cheapest one. Clearly, the imaginative design has helped to bestow greater attractiveness to the car. In other categories as well, the looks of the product make a big difference to its perceived value. And that is not surprising for two reasons:

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/blog The first is that our emotional responses play a far greater role in the choices that we make than we accept. In fact, it is well-known that the rational mind presents choices, but the emotional mind finally decides which one we will go for. In a world of increasing product performance parity, the heart often becomes the engine for differentiation. Hence, choosing between TV, washing machine, motorcycle, car, credit card, hotel, school and sometimes even hospital brands boils down to emotional factors such as trust, status, enjoyment, pride etc, rather than rational factors such as performance and capability. Often rational factors are used to justify what are essentially emotional decisions. “The latest findings in neurobiology appear to show that consumers are overwhelmingly motivated by sensory-emotive responses to advertising and products. Consider the following statistics: • About 95% of thought is not fully conscious • Over 50% of the brain is devoted to processing visuals • Emotional responses to anything new in the marketplace typically happen within three seconds, which is 3000 times faster than our conscious, rational response (10 Rules for Marketing To The Senses, Dan Hill Sensory Logic Inc., Admap Magazine June 2004, Issue 451) The second is that our responses are often driven by our senses and not just sense and rationality. “Most semioticians will tell you straight away that the branch is the Western world’s increasingly visual culture, in which everything is reduced to appearances, in which we have raised entire generations who are visually extremely literate, can see straight through advertising and can concentrate on video games for hours on end, but cannot finish a book, in which first impressions matter more than ever, in which elections are won and lost on techno-

savvy and telegenic appeal, in which your photo travels more than you do, in which your very existence, in the end, is a matter of how you were seen.” (Futurology through Semiotics, Dr Rachel Lawes, Lawes Consulting, Market Research Society Annual Conference, 2009). “While branding elements clearly have a key role to play in building and sustaining intensity, at the heart of the majority of these relationships sat an intensified product experience, often described in polysensory terms. Touch, smell, taste, feel, appearance, sound, great design—these are the modalities that frequently drive a great brand relationship, either separately or in powerful combinations. Above all, these consumers were focused on the product experience first, the brand relationship second. Apple revolutionised its image in personal computers some years ago by bringing colour and radical design to its iMac series. (Get Real: The Return of the Product Greet Sterenberg, Research International’s Qualitatif, Malcolm Baker, B/R/S Group Market Leader, Issue 30, Autumn 2005) If you think this only applies to luxury, high-precision or high-tech products, think about what the Maglite is to the humble electric torch, what a Zippo is to a cigarette lighter or what Gillette has done with a simple razor blade. Clearly what has been viewed as “superficial” in the past is no longer so. Apple does not just make computers, phones and MP3 players that work well, but also that look and feel good. The decision to choose an Apple product is more often than not at least equally driven by quasi-emotional reasons such as aesthetics and styling as by rational ones such as product specifications; ignoring these results in poorer return. Part of the reason that the Tata Indica has to be sold at less than a premium is because once you sit inside it, the fit and finish is appalling. Bits of plastic do not

meet other bits, fasteners are clumsily placed and exposed screws give the feeling that the car is literally screwed together. Take a look at the Mahindra Xylo and the Toyota Innova. When you sit inside the Xylo, the absence of detail attention to fit and finish is glaring. When you look at it from the outside the strange styling is striking and not necessarily in a positive way—the word “oddball” comes to mind. The Toyota may have fewer features and be far more expensive, but the difference in quality is apparent. So the Mahindra Xylo has to be priced extremely keenly to fight against the Toyota Innova. The Xylo has a multitude of bells and whistles in its topof-the-line version and yet is priced at approximately Rs 1.5 lakh less than the mid-level model of the Toyota Innova. It is easy to claim that it is purely because of the Toyota brand. If that was the case then the entry in the premium car market of a completly unknown brand, Skoda, should have never met with much success. So it has to be more than just “brand”—in any case a brand is the distillation of many experiences of which aesthetics forms an important one. Superficial is not superficial any more. People make decisions based on their senses and not just on features, pricing etc. Attention to detail can most often deliver superior value, greater attraction and eventually, more powerful loyalty and conviction. The next time there is a bit of plastic that does not quite fit, or a napkin with a patch or a badly printed form or manual, remember someone is looking closely at you and judging your product or service by just such details. The next time you are designing anything, think about the little moments of imagination that you can inject even in the most practical products or services and find the “Ritz opportunity." Often that is the most powerful secret for success. DAR E The author is Director-Strategic Planning at M&C Saatchi.

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/event

Headstart

Topic of the Month: The July edition of the Headstart Startup Saturday was a four-city event held in Delhi, Bangalore, Mumbai and Hyderabad

he second Saturday of July witnessed the coming together of budding entrepreneurs in Delhi, Mumbai, Hyderabad and Bangalore. While in Mumbai finance was the flavor of the month, in Bangalore it was the Lightning Pitches that stole the show. Mumbai’s preoccupation with finance was apparent from the very first showcase. The first Startup Showcase was PayMate, an innovative mobile payment platform. Ajay Adiseshann, founder and managing director of PayMate, explained that the basic motivation to offer a product or service was to ‘kill someone’s pain’. He said that the initial market research he did before starting up was to ask his friends and relatives about the viability of mobile phones as a payment platform. The collective answer was, “yes,” and there he had his big idea. Another great insight he shared was about getting the first buy in. As a payment platform, he had to deal with banks, some of them over a hundred years old. The mantra he followed was to believe in your product, and you will manage to get a buy in. 68 SEPTEMBER AUGUST 2009 68 2009

After Ajay, Sanjeev Tamhane, an industry veteran with 25 years of varied experience across different sectors, spoke about opportunities in the finance sector. He gave the audience an overview of the different avenues

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Finance

available for an aspiring entrepreneur in this vertical. The last startup of the evening was Rupee Talk. This portal aims to advise and facilitate Indian consumers in matters relating to personal finance.

The Bangalore edition of the event was an equally exciting one. It showcased six startups in a session called Lightning Pitches—a platform for promising startups to showcase their products and services to the startup community. While Nandini spoke passionately about connecting people through her Marrygold Matrimonial Services, Nagesh, a risk management consultant running Indigo Stripes, queried the audience to suggest ways to approach target customers. On one hand, there was LetsOlla campaigning for ‘increasingly cashless transactions’ through their barter platform, while on the other, ‘Rang De’ quietly compelled people to encourage honest livelihood by lending their money to microcredit. The next in line was Nataraj, a senior gentleman, passionate about his selfcustomizing ERP product. Rounding up the set of six was Brains N Skills, an HR service provider, keen to help startups and SMBs with their human resource needs. The Hyderabad Startup Saturday was a networking meet, with rich interactions among fellow entrepreneurs. DAR E AUGUST 2009 SEPTEMBER 2009 69 69

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policy/economy

The Head and Tail of Wholesale Price Index vs Consumer Price Index /Manu Gupta

hanges and movement in prices influence buying and selling decisions, and thus the economic scenario. Hence the government, businesses, producers and consumers keep a constant check on prices. However, given the large number of items that are sold and purchased every day, it is difficult to keep track of all of them. That is where price indices come in. They give a sense of the overall direction and trend in prices. These indices are available for different sectors and for different groups of people. There are indices based on prices in different markets or at different points of sales. Of the many indices, two are of critical importance. The first is the Wholesale Price Index (WPI), which is based on the price prevailing in the wholesale markets or the price at which bulk transactions are made. The other is the Consumer Price Index (CPI), which is based on the final prices of goods at the retail level. Both these indices are the weighted averages of prices of a specified set of goods and services. The WPI is compiled and published by Office of the Economic Advisor on a weekly basis while the CPI is compiled and published by the Labour Bureau on a monthly basis in India. The CPI is published for rural, agricultural and industrial workers.

The use of price indices These indices are used for various purposes, including for forecasting in businesses, used by organizations and institutions for their analysis, and by the RBI and the government of India to 70

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frame monetary and fiscal policy, etc. The WPI is used to measure inflation in India because of the non-availability of appropriate CPI. It is used to deflate national income to calculate real output in the economy. Also exchange rates are often adjusted on the basis of WPI. For example, (hypothetical since India has flexible exchange rate) suppose the WPI index in India rises by certain points (inflation). In order to maintain the purchasing power of the rupee vis-a-vis other currencies, the rupee is depreciated. This would keep the price of Indian goods same in terms of foreign currency, in spite of the inflation in India. The cost of projects, price of supply of goods based on future contracts are often subject to change with these indices. As these indices change, cost and supply prices are changed accordingly. For example, an increase in the WPI may lead to increase in contract price of goods. This role of indices will increase substantially in the future as economy matures and as new markets develop for contractual trading. Also, often the wages and salaries are indexed to inflation.

Problems with WPI However, although the WPI is used in India for various purposes, there are flaws in it. For many commodities like cars, wholesale markets may not exist. Also with increased competition, prices based on costs, and the reduced role of government in trading of goods and services, it is difficult to obtain prices and price data from private producers. The WPI doesnâ&#x20AC;&#x2122;t take the price of serv-

ices into consideration, which now accounts for 60 percent of the GDP. Also, it is too general and cannot be used for specific purposes. For example, if an individual wants to know the trends in office stationery products, then WPI may not capture the correct or complete picture. Some commodities may have higher weights during a particular period and may not be consumed during other. For example, woolen textiles are part of the consumption basket only for four months in a city like Delhi. So a constant revision of weights is required in this regard. Another problem is that the share of expenditure of commodities may change overtime. For instance, the expenditure on computers, which were seldomly available before 1990s but now have a significant share in the expenditure of an urban Indian. So the weights of these indices need to be changed over time.

WPI and CPI in India Inflation in India, measured by WPI, reached 12.9% on August 2, 2008 but fell sharply to 0.3% in March 2009 and negative in June 2009. The reason for such high volatility was the primarily fluctuation in international commodity prices. However, unlike WPI-based inflation, CPI-based inflation remained high. It did increase with the WPI but did not come down proportionately when wholesale prices fell. This indicates that intermediaries between consumers and wholesalers or retailers or both have not passed on the low-cost benefits to the customers and so have enjoyed increasing margins.

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policy/economy

that an asset holder may not be able to purchase the same quantity of goods in the next period if price rise in asset is proportionately less than the rise in these indices by selling that asset. So investment in assets must be made keeping this in mind. An absolute increase in the price of the asset does not definitely mean that the asset holder has gained in Difference is due to high prices of real terms. food articles and Also movements or changlarger margins of es in these indices affect the intermediaries futures market. High inflation rate and increasing trend may point towards higher price in future and hence higher prices of futures contracts. Large movements or fluctuations in these indices often open up the opportubecause of the expectation of lower nity for arbitrage, which is making interest rates in the future. Certain ex- profit due to price differences in two pectations are formed based on the ef- markets (here different markets refer fects on overall economy due to move- to future and spot market). If trends are analyzed (in graph ments in these indices. For example, high inflation rates create a gloomy also) then it would be clear that large sentiment about the economy and margins or the gap between the rate of people generally tend to defer invest- increase of WPI and CPI could not be ments in that case. Also, consumers maintained for a long period of time tend to defer their heavy expenditures because of the existence of competiduring inflation due to expectancy of tion in most of the markets. Trends fall in prices. For instance, housing indicate that a fall in WPI inflation is expenditure. However, other day-to- often followed by a fall in CPI inflation. day expenditures like grocery, energy, So if the current situation is assessed, etc are generally not affected due to then it can be the case that retailers or intermediaries would see a squeeze in changes in these indices. It should be noted that falling infla- their margins as the inflation gap betion never means that prices are fall- tween the WPI and the CPI will eventuing. Only negative inflation or a fall ally get reduced. Also, CPI inflation has in these indices imply that prices are already started coming down. At the falling. Falling inflation (positive) or same time an increasing gap between decreasing rate of increase in these in- the WPI and the CPI inflation may atdices only imply that prices are rising tract interference by the government at a slower pace. So falling inflation for in some form of regulations or required consumer does not mean that he/she policy changes to check such trends. So these indices at times may be inhas to pay a lower price in the future. These indices also give insights consistent, may not guarantee fulfillwhether holding an asset is justifiable ment of requirements of an individual or not. For example, if an asset price rise and analysis based on these might not is less than the inflation in the econo- be complete or correct. However, these my, then this may point out towards indices provide useful tools for analyerosion of purchasing power of the as- sis and some conclusions could be DAR E set holder. In other words this means drawn based on these.

Movement in Price indices

SOURCE: RBI, Office of Economic Advisor and Labour Bureau

The graph clearly shows that for most of the time, the rate of growth of the CPI is more than the rate of growth of the WPI, except when there are steep rises in the WPI during 2006 and 2008. This may be due to the inability of retailers or intermediaries to pass on the increasing cost to the consumers so quickly. This may also point out towards the existence of competition in the markets.

Businesses Strategies and Price Indices These indices help businesses and can prove to be an effective analytical tool for them. These trends affect the economic policies and monetary policies of the government and RBI respectively. High inflation rates are often followed by tight monetary policies. In India, the WPI is related to interest rates as inflation is measured on the basis of the WPI. High inflation rates may point towards increasing interest rates. However, other factors also come into play while determining interest rates but inflation is a major one. These indices play a role in affecting sentiments. Low inflation rates may lead to a sentiment where investments financed through loans are deferred

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funding/strategy Varun Sahni has focused on building, managing and investing in businesses for low income communities for the past twelve years. As Director, India Operations, Acumen Fund, Varun is responsible for all India-related investments, operations and business development activities. Additionally, as part of the portfolio management team, Varun is jointly responsible for the global portfolio of Acumen Fund. Acumen Fund is a nonprofit global venture fund. Its investment focus is on delivering affordable, critical goods and services—like health, water, housing and energy—through innovative, marketoriented approaches. Acumen Fund’s work in India focuses on supporting enterprises that are providing access to affordable, essential healthcare services, safe water and clean energy to the rural and urban poor. DARE speaks to Varun Sahni about the fund, the company and his role in Acumen Fund.

Varun Sahni Director, Acumen Fund 72

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funding/strategy

cumen Fund is a “non-profit” venture fund. Why non-profit? How is it different from an NGO? Acumen Fund’s primary aim has been to see how patient capital can be used to invest in enterprises that provide goodwill services for low-income communities. Traditionally, if one looks at issues of economic growth or development or poverty, there have been two forms of capital. One has been the not-for-profit, pure philanthropy, where one gives grants and there are no returns. On the other end of the spectrum, there is commercial capital, where the return expectations are typically above 20% IRR. For the last seven years, Acumen has been building a kind of a hybrid model where we are seeing that in order to address issues of poverty, we believe that whether it is the profit sector or the not-for-profit sector or the government sector, there is no one solution. So we have looked at a hybrid model, where we said that we will increase philanthropy, and by doing so, our appetite for risk is far higher than that of a commercial fund. With this capital, we don’t want to give grants. We want to invest in sustainable enterprises that have a social impact. So for us, social impact is more important than the financial return. We want to see how each of our investments, over a period of five to seven years, can directly impact a million people. Over that time-frame, if we receive our capital back

tors outside India who would be more than happy to provide working capital loans to social entrepreneurs in India. But unfortunately, RBI regulations don’t allow money to come in. So we have started a trust. We accept donations into the trust and use those donations for offering low-cost working capital loans. How much money have you invested and in how many companies? We invest across healthcare, energy, water, housing and agriculture sectors. Most of our investments (around 50%) are in the healthcare space, and then in clean energy and water. We have given out about Rs 100 crore in the last two-and-a-half years in 12 companies. We will be giving out about Rs 30-40 crore a year, may be up to Rs 50 crore a year. That is the kind of appetite we have. These are all early-stage ventures. So the average deal size is usually Rs 4-8 crore. It’s not as if everyone gets Rs 4 crore in one go. Recapitalization keeps happening from time to time. Do you have a dedicated India fund or are you investing from a global fund? We are investing from a global fund. We are thinking about an India fund right now.

investor of the month and make a small return, like a 6% return or so, we see that as proof of the model. Since our inception, out of about $80 million, we have invested about $40 million, half of that in India in the last three years. But I would say that 95% of all the companies we have invested in would not have had access to any form of commercial capital. In traditional philanthropy, you give grants and it is gone. While over here, there is a lot of emphasis on matrix. Now the donor is giving money to us because they want to see how a new market is created and social impact is created, plus if the capital comes back to Acumen, it is reinvested again. In many ways, for a donor there is a multiplier effect for their own capital. Who are the donors here that are putting their money into this fund? There are over a 100 individuals and institutions that have invested in Acumen globally. In India, we have started a trust to raise donations for it. We offer both equity and debt funds. Equity is pretty straightforward—you get it from the US into India. But a lot of these enterprises are too small to be able to afford an 18% interest rate from a bank in India who lends capital. Working capital for these enterprises is a big issue. These are mostly product and services kind of businesses. There are a number of inves-

What is the minimum ticket size of the investments that you make? We started investments even at a crore, up to Rs 10 crore. We have some investments that are Rs 20 crore. It varies. You talked of a 6% return. Isn’t it too low for a VCtype investment? We are interested in the social impact. If these companies give a greater return, we will be more than happy but I think it is going to take time. I don’t actually see a 2025% return in a three-year time horizon. That is why we are saying it is patient capital. The return expectation is over a five-year, seven-year or sometimes a ten-year time frame. That is why we have raised the funds through philanthropy. If it was purely commercial, investors would not want that. Investors would essentially want 15-20% return, but then investors would not be interested in social impact either. Once you withdraw from these businesses, do you think these businesses will be able to run on their own without your help? A number of these businesses, even before five to seven years, are getting other funding rounds. In those funding rounds, other investors are coming on board. If you look AUGUST 2009 73

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funding/strategy

We want to invest in sustainable enterprises that have social impact. So for us, a social impact is more important than the financial return. We want to see how each of our investments, over a period of five to seven years, can directly impact a million people. at the trajectory of a company’s growth, right from idea to early-stage to maturity and growth and scale, I think in the space we are in, there will be different forms of capital coming in. Initially you may see this patient capital coming in, which is philanthropy converted into equity. It is not cheap capital. We are not doing anyone any favors. But it is patient capital because we want to see the impact. After a period of time, there would be quasi-commercial capital coming in. You will see investors coming in who would want 10% return, and eventually as these businesses scale, one would see commercial capital coming in. Once commercial capital comes in, Acumen would have done its job because that’s when businesses are highly scalable. You must be getting so many proposals seeking investments. How do you measure which businesses would have social impact? Last year, we got 150 plans that wanted investments. What Acumen looks at is who the entrepreneurs are—the persons, their background, their capability to execute. Then we want to understand the team, and its business model. In the business model, we look at everything, from commercial, financial, operational, legal, to the social impact. Once we have met them, we put a lot of emphasis on the matrix. So on a quarterly basis, we get financial, operational and social matrix. On the social front, what we look at is both the output and the outcome of our investments. Four years ago, we also started thinking about how to get more and more young people interested in the social entrepreneurship space. So we wanted to build a bench of entrepreneurs and that’s when we started the Acumen Fund Fellows Program. It’s a one-year fellowship and every year we get about 600-700 applications. For these positions, the individuals spend two months with us in New York and then they spend nine months actually working on a problem with the investee company. 74

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What is the best way to approach you if one were to seek funds for business? One can send an e-mail to Acumen Fund. There are so many different ways. A lot of times, we as investors need to create investment opportunities. Very rarely do we get an entrepreneur coming to us and we say ‘wow! This guy is credible and let’s invest in him’. Most of the times we are putting pieces together to create opportunities. Is the slowdown affecting your portfolio companies? Liquidity was clearly an issue several months ago. I think now there is more liquidity coming into the market and investors are again looking at the space. Some of our investments that had retail-facing operations were clearly hit. For example, look at the way real estate prices have gone up in the last two years. Prior to the slowdown, that was what really impacted us. But otherwise, across the portfolio, a lot of these companies are growing at anywhere between 20-30% annually. We are seeing significant growth as well. What kind of involvement do you have with your investee companies? We look at helping recruit key functions, mentoring CEOs. We are very hands-on as investors. Have most of the businesses where you have put in money been started by people who want to do it but don’t have a good understanding of running the business, or they are very business savvy, and all they need is money? Most of the businesses that we have put capital into have been started off by promoters or a group of promoters or institutions that know what they are talking about. They understand how capital functions, they have a sense of challenges in their businesses; they know what they want to address. They are very passionate about addressing those social DAR E issues and looking for profitability.

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Secrets SEO experts will not tell you about search engine trafďŹ c Posted by: Krishna Kumar in websites, Twitter, traffic, Social Media, SEO, search engine, keywords, emailer, digg on Jul 16, 2009 alk to any SEO expert and they will inundate you with talk on how getting the right set of keywords is the most import thing in driving search engine traffic to your site. There are atleast three other factors that have a larger say in determining your website traffic.

1. Frequency of updates This is the most important one, more important than any keyword based strategy. Search engines tend to degrade the ranks of content that is older, while moving up fresher content. So, if you want a lot of search engine traffic on your site, then you need to ensure that the content on your site is frequently updated; preferably many times a day. There is some empirical evidence that if the updates appear on the home page, then they are likely to drive more search engine traffic than if they appear in some inside page. Possibly, search engines give more weightage to content that is on the front page than to that on the inside. 2. A wide range of keywords Most SEO experts work with a narrow set of keywords. The problem with working with a narrow set of keywords is that you loose out on what I call potential peripheral (PP) traffic. PP traffic is traffic that has a peripheral interest in your website and what it has to offer, but is not even aware of its existence. With most websites, actual traffic is just a minuscule percentage of the PP traffic. Lets say your website is all about music and your SEO experts have done a great job of optimising it for keywords in the music domain. Now, there are those with a great interest in painting, and also a passing interest in music. Given their abiding interest in painting, they are likely to search using painting related keywords and completely miss your site. How do you get them to your site? Obviously, you need to have content (and keywords) that link music and painting. It is not for nothing that sites like wikipedia that are rich with a huge range of keywords rank high in search engine results. 3. Too much of search engine traffic is not a good thing At first sight, this statement may sound strange and untrue, but it is not. The traffic that comes to your site can broadly be classified into five sources: a. Direct traffic : those who are familiar with your site and come directly by typing in a URL in their browser

DARE.CO.IN b. Search engine traffic: Those who find your site as a result of a search c. Social media traffic : those who are led to your pages by links in Twitter, Digg and so on d. Emailer traffic: Those who clicked on links in your emailers e. Referred traffic: Those who click on links to your site at other sites You need to have a good balance of traffic from these various sources. If anything, it should be slightly skewed towards direct traffic. Else, what it means is that your returning traffic is very low; that those who come to you because they know you is very low. In that case, you will have to keep on spending time and energy to keep traffic going at current levels, instead of devoting those resources to build new audiences. In short you need to devote as much, if not more resources to building direct traffic as you do to build search engine traffic.

Who has lost and who might gain in tourism sector Posted by: Manu Gupta in yatra.com, World Travel and Tourism Council, Medical Tourism, makemytrip.com, Indian Railways, Euromonitor International, educational-tourism, eco-tourism, A/H1N1 infection (swine flu) on Jul 29, 2009 ccording to World Travel and Tourism Council, India's travel and tourism industry will be around USD 100 billion in 2008. And the rough estimates suggest that it will be USD 275 billion industry by 2018. However in the last one year, large sections of the tourism industry has been hit badly. Major factors that affected the industry are global economic slowdown, increase in terror activities and instances of influenzas like A/H1N1 infection (swine flu). This has contributed significantly towards the fall in number of tourists and hence overall revenue of the tourism industry. Impact has been more severe on foreign tourists. And the most important concern is that revival of the industry does not seems to be around and industry is experiencing large fall in advance bookings. Technology on the other hand has affected significantly the businesses and business-models of tour operators and agents or the middle-men in tourism industry. Availability of online information, tickets and hotels booking have impacted these tour operators in a big way and especially those engaged in ticketing and hotel-booking. Particularly, small agents and operators those who could not afford to set up their online portals or/and do marketing for themselves are the hardest hit. Earlier tourists use to approach these middle-men but now a tourist has the mechanism to contact or reach the service provider directly. With the availability of the information on internet, booking sites, online payment facilities etc, tourists do not very often visit or take the help of tour operators and agents. However technological advancements have created opportunities like of online ticketing and bookings sites. Some of the sites in such

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DARE.CO.IN domain are makemytrip.com, yatra.com and so on. But Indian Railways ticket being available online have impacted tour operators/ agents directly. There has been no replacement for it as tickets are directly offered by railways. However there are many new opportunities that are coming up in tourism sector. It is just that some section of tourism has got hit. A country like India has huge potential in this sector. Opportunities like Eco-tourism, Educational-tourism, Medical-tourism that are fairly untapped till date can be very lucrative. Estimates suggest that value of medical tourism would be around USD 2 billion by 2012 in India. Furthermore development of tourists spots which is high on agenda would attract larger number of both domestic and foreign tourists. Also rising income will lead to more Indians visiting abroad. Euromonitor International estimated that outgoing international tourism expenditure from India will be around USD 21 million by 2011. So it might be the case that some businesses in tourism sector have suffered due to global factors and technological development especially in the field of IT. But still new opportunities are there. In entering these new sphere like eco, medical, educational-tourism, existing players in tourism certainly has the advantage. Know-how of the industry could be used effectively by such small players and potential could be tapped. At the same time fair gains could be appropriated by new entrants too.

Is stock market driven by fundamentals or sentiments Posted by: Manu Gupta in Reliance Power, NSE, markets, IPO, BSE on Jul 27, 2009 oth fundamentals and sentiments play a crucial role in determining stock/share prices. Sentiments definitely affect share prices in the short run. For example bullish sentiment during 2006-07 in the Indian stock market, had its impact almost on share price of every company. Indexes of Bombay Stock Exchange and National Stock Exchange went up by almost 130% between June 2006 and December 2007. Some part of those gains could be explained in terms of improved fundamentals, but definitely sentiments played the part too. Also, large intra-day movements in recent time and large swings within short period of time could not be explained by fundamentals. Often speculative transactions are held responsible for these trends but speculation in itself is seldomly based on fundamentals changes. Also, if we believe that price changes are determined purely by fundamental changes, then this would lead us to commit two major errors. First, we have to believe that fundamentals are that quick to change thereby affecting prices but that is unlikely the case. And other, we have to assume that there is complete flow of information about fundamentals which is also often not the case.

AUGUST 2009

In the long run stock/share prices are primarily based on fundamentals. Stock/share prices tends to reflect real worth of a company in the long run. But it should be noted that such prices may never be there that reflects real worth of a company. It is only the case that share prices move in such a way in the long run that they try to reflect approximate value of the company. But then why the sentiments should be of importance to a long term investor? The reason is sentiments in short run actually affect the fundamentals of the companies in the long run. For example, Reliance Power (RPL) and other several companies were able to get their Initial Public Offers (IPOs) when the market was flushed with bullish sentiments. That bullish sentiments was used by companies like RPL that have been able to get huge capital. Without that bullish sentiment, it would have been very difficult for RPL to raise that much capital at that price. However, this huge capital will certainly impact the performance of the company in the future. So it shows that how a short run sentiment affects the long run working of the company. So to sum up, share price of a company is determined by the working and future scope of a company. But sentiments and expectations do affect the price in the short run. These sentiments can affect in someway the company in the long run and thereby its future share prices.

Which Indian city is the best to start a business in? Hereâ&#x20AC;&#x2122;s the latest report Posted by: Binesh Kutty in World Bank, Startups, Report, India, IFC, entrepreneurship, Doing Business in India, Cities on Jul 02, 2009 his is a quick post of the â&#x20AC;&#x2DC;Doing Business in India 2009â&#x20AC;&#x2122; report released by International Finance Corporation and the World Bank on June 30, 2009. According to the report, here are the Indian cities that are good for starting up as per the following categories:

Easiest to start and operate a business: Ludhiana, Hyderabad, and Bhubaneshwar Fastest to start a business: Mumbai and Noida (30 days), and Kochi (41 days) Least expensive to start a business: Patna That said, Bhubaneshwar, Hyderabad, and Kochi are front runners when it comes to resolving a commercial dispute, with a timeline of two years maximum. As in the case of Mumbai, it takes four years. Point of concern is that as compared with economies worldwide, Indian cities have to lot to do to kickup in terms of ease of closing a business and paying taxes. You can download the complete report by http://bit.ly/or4zb. D A R E

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blogs/opinion

Entrepreneurship Pangs

/Anurag Batra

rowth pains are an integral part of human life. The baby grows into a man or a woman, and this growth is accompanied with some pain—physical and emotional. As an entrepreneur grows along with his initiative or organization, he and his organization face the attention of jealous competition, non-performing disgruntled employees or business associates, media mischief-mongers and unsuccessful or not-so-successful wannabes. So what does an entrepreneur do when his initiative or he are under attack by malicious and anonymous entities? With blogs and social media, anonymous, malicious posts with no real substance (in many cases), but malicious intent and jealous opinions, have been manifesting themselves. How does an entrepreneur deal with all this? How does he segregate the criticism of his venture with a criticism of himself? Should he totally ignore it and focus on further building his initiative? Yes, of course. Most of the times it is difficult to segregate the entrepreneur from his initiative, they are both intertwined. An entrepreneur builds his entity by immersing his complete being into the enterprise and so an attack on the enterprise is an attack on the entrepreneur, and vice-versa. However,

there is little one can do about it, and so while it is important to take the necessary steps to curtail such remarks and send out the signal that the entrepreneur will not take this “lying down,” from a personal perspective, it is best to ignore such remarks. The thing is, an entrepreneur realizes that no decision goes down well with everyone, and so it is impossible to keep everyone happy. Also, there are times when an entrepreneur has to take decisions that are unpopular, but necessary—and the criticism is just part of the package. Criticism is a sign of success and importance, and part and parcel of the entire entrepreneurial package (as they say, “nobody kicks a dead dog”). An acid test that the entrepreneur can perform is to ask himself would he have taken the same decision had he known that the criticism was coming? In most cases, the answer would have been a “yes”, and so it would not matter in any case. In short, ups and downs and overjealous association is a part of the entrepreneurship journey. To be an entrepreneur is to take some calculated risks, and it is statistically impossible to get no detrimental outcome from all business risks. In the last few months, I have personally experienced this and moved forward from all the attention and my submission (as wiser men tell me) is that it is a natural corollary to success. I am reminded of Ralph Waldo Emerson’s quote, “Whatever you do, you need courage. Whatever course you decide upon, there is always someone to tell you that you are wrong. There are always difficulties arising that tempt you to believe your critics are right. The best way to handle these critics is to “answer them with silence and indifference. It works better; I assure you, than anger and argument.” Having said that, entrepreneurs are sensitive human beings, perceptive and seeking acceptance for what

they do and hence, it not easy to be indifferent even if you know it is a hallow criticism coming from or inspired by competition. The best way is to continue to create success and silence your critics. They say that if you have no critics you are likely to have no success. As a very successful female anchor in the news broadcast business once told me, when I confronted her with the question of how she handles all the negative publicity she gets and the not-so-kind posts in the blogosphere, that she initially used to get upset and affected, but has now come to accept this as an occupational hazard. Criticism is the price you pay for success and for being famous. My advice to entrepreneurs is to march on, do your thing, and create successes and enterprises. As Mark Twain once said, “It is the will of God that we must have critics and missionaries and congressmen and humorists and we must bear the burden.” I must also say here that I admire politicians, and we as entrepreneurs must learn and take inspiration from them on how despite scathing criticism, they go on doing their thankless job and serve this nation. A final quote that springs to mind is sales guru Og Mandino’s thoughts on the subject—“Always reward your long hours of labor and toll in the very best way, surrounded by your family. Nurture their lover carefully, remembering that your children need models not critics and your own progress will hasten when you constantly strive to present your best side to your children. And even if you have failed at all else in the eyes of the world, if you have a lovDAR E ing family, you are a success.” 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 founder and editor-in-chief of exchange4media group which includes exchange4media.com.

AUGUST 2009 77

Exchange DARE.CO.IN

Submit exchange requests at: website: www.dare.co.in OR

• partners • mentoring • funding • guidance • advice • ideas...

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e are a newly formed travel services provider with a special focus on innovative tours. We

ublished: July 2009

PREMIUM

Vikram Singh has a business in the men’s garment

are developing various theme based tours such as tea

section called ‘Temperature Zero’, and was planning

tours, wine tours, wellness tours, etc and would like to

to expand business by distributing franchises across

associate with service providers in these respective

India. He is also interested in contacting investors.

domains. Interested parties may get in touch. More innovative ideas are welcome too.

Response: July 2009 1. I am interested in taking a franchise of

Siddharth Gurjar, Milestone Travel Consultants

Temperature Zero and would like to contact Vikram Singh.

Mohd. Parvez

represent an Internet startup in the online space based on a unique gaming/auction model. We

were one of the finalists (among the 254 shortlisted

2. I would like to contact Vikram Singh of Temperature

entries) in the ET - Power of Ideas contest and are

Zero. Aparna Kapoor

launching the pilot for our site in about ten days. We are looking for an angel investor to fund the scaling up of business. Harpreet Singh, Alive E-Trade

ublished: July 2009 Gaurav Mozar of Mozak, a design consultancy

firm, was looking for strategic tie-ups with associates/

am a regular reader of your magazine and

business heads for business leads.

believe that DARE always supports upcoming Response: July 2009

entrepreneurs! I am a BITS-Pilani, Goa Campus (2005-09)

I wish to contact Gaurav Mozar of Mozak

graduate. I have always been passionate about food

Design Consultancy, whose request was

and running my own business. I am starting my food

published in the July issue. Kamlesh Patel, Chennai

venture in Gurgaon-Delhi-NCR (declining an offer from Symantec). As a first-time entrepreneur, I am facing various issues and will continue to encounter such issues as I grow. As of now, I am facing an uphill task of finding a good team. I have done all the

Society. My NGO works for improving the

groundwork in the last few weeks and need atleast

livelihood of rural poor by helping them set up small

one more member who is equally passionate for food

businesses. Currently though we have over 5,000

and a career in this field. I have planned to launch the

application asking for help, we do not have enough

venture in the next two-to-three weeks. I am looking

fund to initiate the projects. I am looking for people

for people interested in the venture.

who can fund the projects. Sumit Agarwal

PREMIUM

am a manager with Pragati Ek Kadam Welfare

Sushil Garhwal, Bhopal

AUGUST 2009

Exchange DARE.CO.IN

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ublished: June 2009 1. Pushpendra Mehta has formulated a business

plan for an international Web 2.0 online and mobile media company, and was looking for potential investors.

have always wanted to start my own school along with my elder sister who has been the principal of

a reputed school in Mumbai till a few months back and another elder sister who is currently working as a teacher in a reputed school. We three are very keen on

2. Ashutosh Aggarwal works for a US-based firm that is interested in funding projects in the renewable energy, waste management, water management and

taking a franchise of a good pre-school in Mumbai. Please advise. Deepak

CDM sectors. 3. Bharati of Olive Touch, a health food supply and service company, is planning to expand operations and is looking for investors. 4. Manas Das wants to start his venture in the supply chain and distribution sector, and was looking for an investor/mentor.

e have a play school/pre school concept with day-wise curriculum. We are looking

for a channel partner to promote franchiser/ franchisee module. Those with 300-400 sqft office space or ready to start play school at Chennai, Bangalore, Mumbai, Delhi can become our

Response: July 2009 I read the June issue of DARE and found it to

channel partner. Kumar, IQ Kids

be an interesting material for entrepreneurs like me. I happened to go through several requests placed in the ‘Exchange section,’ and would like to contact the above mentioned people. Santosh Nair

am a chartered accountant by profession. I want to start a BPO/KPO in my city. Can anybody help me

get the required information? Can anybody mentor me for this project? I have a good idea which nobody

would like to have a list of suppliers of waste tyre

has yet implemented relating to the CA profession.

pyrolosis equipment. Can anyone help me?

Please advise.

Avinash Kulkarni

Rajesh Jakhotya, Malegaon

SMS: “DARE <your comments, questions or suggestions>” to 56677 Email: dare@cybermedia.co.in Website: www.dare.co.in Follow us at: http://twitter.com/daretostartup AUGUST 2009 79

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Against the Odds Starting an E-Cell is like starting a company, with all the initial hiccups. See how four NEN E-Leaders, campus entrepreneurs in their everyday lives, tackle the challenges

ost entrepreneurial journeys face beginner’s block. Even India’s most celebrated entrepreneurial success, Infosys Technologies, had starting trouble, as many of us know. Three decades ago when Infosys was formed by N R Narayana Murthy and his team of seven, they had just $250 of launch capital, had to wait a year for a telephone line to be installed and had to make 15 visits to the Department of Electronics to receive permission simply to own a computer. It was the team’s hours of toil, hands-on effort and attention to the smallest details—including polite thank you notes—that helped them overcome these challenges. The National Entrepreneurship Network brings similar challenges to the more than 3500 NEN E-Leaders every day. NEN E-Leaders found, manage and build the entrepreneurship clubs, or E-Cells, at NEN member institutes. Over the past six years, the NEN ELeaders have helped grow the number of student members in campus entrepreneurship clubs from about 200 to more than 70,000, within NEN alone. By organizing year-long campaigns and activities, these E-Leaders and their E-Cells have infused an entrepreneurial energy never witnessed in campuses before. Their task is not easy. Setting up an E-Cell is tough work, almost like starting a company—unglamorous, detailoriented, day-to-day grind—but it is this passion, commitment, and perseverance of the NEN E Leaders that can make an E-Cell flourish.

AUGUST 2009

Jishnu Debnath, E-Leader, Symbiosis Institute of Computer Science and Research, Pune SICSR formed its SICSR-NEN E-Cell in January 2007, and first-year student

Jishnu Debnath

Jishnu, though not aware or interested in entrepreneurship, signed up in June 2007. Till December 2007, the only event held by the E-Cell was a seminar on Dabbawallas. Jishnu wanted the SICSR-NEN E-Cell to do more. Some of his classmates wanted to start their own businesses but didn’t know how; the workshops seemed interesting and exercises looked like a lot of fun. So from January 2008 onwards, Jishnu took on the role of NEN E -Leader. “We started with a Rs 50 exercise where students were given a seed fund, and the challenge was to generate profits. It was a hit. We followed it up with a film festival, entrepreneurship talks and seminars on entrepreneurship. It was a lot of hard work, but we were motivated and it was fun,” recalls Jishnu. When Jishnu graduated in November 2008, the SICSR-NEN E-Cell was the busiest club in campus with its membership increasing from 25 students to almost 150 in a year, and it was organizing video conferences with other institutes to bring them into the NEN community. Jishnu’s own popularity soared along with that of the E-Cell. “Students started imagining me as

DARE.CO.IN something of an expert—someone who could guide them, connect them to the right people, and give lot of advice. Though I am out of college now, I still get phone calls from students everyday,” he shares.

Saket, NEN E-Leader, Singhad College of Engineering, Pune

filled. However, in NEN E-Week 2008, the scene was dramatically different. “The entire campus went wild. Volunteers were ready to help at the drop of an SMS. A regular event would attract 40-50 people; participation in big ones used to run into hundreds. We had to create more roles in the SCE-NEN E-Cell to accommodate all the interested students. NEN E-Week 2009 was even bigger,” Saket recalls. Saket’s journey was not easy, but it was his conviction that egged him on. “I have seen students look lost at the end of engineering, as there is no one to guide them. But when an entrepreneur comes our way to lead by example, and makes us believe in ourselves and in our ideas, it is inspiring. There were days we kept pushing alone and did enormous amount of work by ourselves, but it was this thought that made it all feel worthwhile,” Saket says. Saket hopes to start his own venture in the little-known field of mechatronics someday.

Anup Agrawal, NEN E-Leader, ICFAI Business School, Hyderabad

Saket Saket, a mechanical engineering student of Singhad College of Engineering in Pune was asked to become the first official student member of the SCE-NEN E-Cell in late-2006, because he was the only regular attendee. He took on the role with gusto, built a team of three and launched class-toclass campaigns to attract students to SCE-NEN E-Cell. Initially, during NEN Entrepreneurship Week 2007 (a week-long nationwide movement organized by NEN and NEN member institutes to celebrate the spirit of entrepreneurship), he had to struggle to get halls

When Anup Agrawal suggested forming an E-Cell on campus, soon after he joined the MBA course in ICFAI Business School in 2007, everyone brushed the idea away. The college admin didn’t seem keen. With a back-toback academic calendar and dreams of high paying job placements, his batchmates did not support it either. However, Anup believed in the value that a hands-on experience in an ECell would bring. For a year, Anup struggled on, holding long meetings with the administrators and students. After seven months of convincing, a professor of entrepreneurship in IBS relented and agreed to help him in forming the E-Cell. Anup also managed to identify a small group of interested students. The E-Cell was finally formed in July 2008, with only nine members. The E Cell’s first event—an entrepreneurship talk—was attended by less than 50 students. Anup had expected atleast 1,000 students to attend. The

Anup Agrawal poor turnout only strengthened his resolve to get the numbers in. With active guidance from NEN, Anup and his team gave the E-Cell a brand identity, and named it Macon (which means ‘to build’ in French; and an introspective ‘Who am I’ in Hindi). The E-Cell members promoted the Macon logo in every classroom, sent SMSes to students, organized recruitment drives and held one-on-one discussions with students. Anup and his team’s effort led to Macon becoming the most active of the 25 clubs in campus, and when Anup handed over the baton to his juniors in 2009, the E -Cell had received 200 applications for membership. “It was very difficult, but today I have a sense of fulfillment of leaving something valuable behind,” says Anup, who is currently working on a DAR E business plan of his own. More articles on www.nenonline.org. Content provided by NEN AUGUST 2009 81

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Opportunities in Geosynthetics Posted by: Vimarsh Bajpai in infrastructure, geosynthetics, geogrids, geo-textiles, FICCI, construction on Jul 23, 2009 ndustry chamber FICCI recently organized a conference on opportunities and challenges in geosynthetics, which refer to a range of polymeric products that find application in construction of buildings, roads, waterways etc. The conference was aimed at focusing on the advantage of "promoting the usage of geotextiles in building infrastructure." According to one definition, "geosynthetics are man-made polymer-based materials that facilitate cost-effective building, environmental, transportation and other construction projects." Those in use in the transportation industry are geotextiles, geogrids, geomembranes, erosion control blankets and mats, geosynthetic clay liners, geocomposite drainage materials, and geonets. Global demand for geosynthetics is projected to increase 5.3% annually to 4.7 billion square meters in 2013, according to the recent report of the Freedonia Group, the US-based market research firm. "Countries such as China, India and Russia that are building largescale infrastructure developments and face evolving environmental protection regulations and building construction codes are expected to post the strongest gains through the forecast period," the firm says. With the infrastructure sector high on the agenda of the government, this sector offers a host of opportunities. According to the Maharashtra government, the current market size for geo-textiles, a part of geosynthetics, is estimated at Rs 225 crore, with imports accounting for 50%. The market for geo-textiles is expected to grow in excess of 20% over the coming years, it says.

Commonwealth Games: Big opportunities in the ofﬁng Posted by: Vimarsh Bajpai in opportunities, DDA, DDA, Commonwealth Games on Jul 21, 2009 re you in the business of supplying uniforms or plan to do so? Here is an opportunity brought about by the proposed Commonwealth Games to be held next year. Would you want to try and become the ticketing agency for the Games? Your chance is now. According to some estimates, the ticketing revenue could be somewhere to the tune of Rs 100 crore.

In October 2010, over 8,000 athletes from 71 countries, participating in 24 sports disciplines, will gather in Delhi, which will host the biggest multi-sporting celebration in India. To deliver the Games, the Organising Committee Commonwealth Games 2010 Delhi (OC CWG Delhi 2010) has been formed, which will have a team of over a 1,000 professionals over the next two years, supported by over 20,000 volunteers at the time of the Games. Another big opportunity is that for the recruitment industry. Many of the big headhunters are willing to close as many vacancies as possible to make those extra bucks. On the infrastructure front, the Games have already unleashed big opportunities. According to the Games’ website, a state-of-theart Games Village is being developed along the east bank of the River Yamuna by the Delhi Development Authority (DDA), and a Commonwealth Games delivery partner. It says, that “to be created at a cost of US$ 230.7 million (including the Residential Zone), the Games Village is spread over an area of 63.5 hectare (158.4 acre). It has 14 blocks, 34 towers and 1,168 air-conditioned flats to comfortably accommodate 8,000 athletes and team officials. There will be a number of apartment types ranging from two to five bedroom units, each with ensuite facilities, with only two occupants per room is the highest ratio of facilities provided for any Games."

Intrapreneurship: Entrepreneurship within an organization Posted by: Vimarsh Bajpai in intrapreneurship, HCL Technologies, Gifford Pinchot, entrepreneurship on Jul 21, 2009 n entrepreneur friend recently wrote a mail giving a “story idea." He talked of the importance of entrepreneurship within an organization, referred to in management parlance as intrapreneurship. He said the concept, although present in text books, is practically not applied in many organizations. Although this might sound like a cliche, if strongly preached, the concept is really a boon, he wrote. “In my opinion, intrapreneuring can be very important when it comes to building organizations that last, really last, especially in our country where most organizations are pillared by family members only and eventually die,” he wrote.

The term ‘intrapreneur’ was coined by management consultant Gifford Pinchot back in 1978. He later dealt at length on the subject in his bestselling book, "Intrapreneuring: Why You Don’t Have to Leave

The body that is organizing the prestigious Games had opened

the Corporation to Become an Entrepreneur. Pinchot elaborated on the

the tendering process looking for an event management company

importance of freedom to think and act within a corporation." He also

back in 2007. But with the slow progress in terms of preparation, all

showed how companies could stay on the leading edge by fostering

is not lost for you. The agency has advertised on its website that it is

intrapreneurship at all levels of corporate hierarchy.

looking for law firms. Many such opportunities are likely to open up in the near future. 82

AUGUST 2009

Intrapreneurship, as a culture, is now developing in companies in India. Many of the senior management people function as heads of

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DARE.CO.IN

respective business units, and almost run them independently. Letting

(NSIC) has been made the nodal agency for implementation of this

employees air freely, even their wildest thoughts, are turning shop floors

scheme through empanelled agencies.

into fertile grounds for innovation. At the same time, giving intrapreneurs a free hand in running business units equals to quenching their desire of having their own startups.

Some of the well-known rating agencies are CRISIL, Dun & Bradstreet (D&B), FITCH, ICRA, ONICRA and SMERA. The ratings are divided into four broad categories, namely, A

Take, for instance, HCL Technologies that runs various programs

(AAA to A)—highest to adequate safety, B (BBB to B)—moderate

to foster intrapreneurship. The company’s Talent Transformation and

to inadequate safety, C—substantial risk and D—default. The sub-

Intrapreneurship Development, the training wing, has initiated a

categories in each of these broad categories take care of the deviations

number of organizationally-strategic programs that help employees

present in a specific category.

at every level to get opportunities to discover and explore the

A company with a good profit margin, asset turnover and leverage

intrepreneur within them. It has an IGen and Value Creation Portal

will be easily rated in the A segment, provided it has a good credit

where Employees are encouraged to come forward with implementable

history and clean accounting practices. Such a company would be seen

ideas that would add value to the engagements that they are working

by potential investors as good and reliable. Good profit margins and

for. Its Eagles Program is aimed at grooming high performance

turnover with a somewhat irregular credit history usually fetches a B

managers, who would be the torchbearers of intrapreneurship in

rating. It will face slightly higher rates of interest for debt, or in the most

the organization.

extreme cases, refusal from a few credit lenders. A C rating poses a

DARE’s story on intrapreneurship focuses on the ongoing quest to develop entrepreneurs within organizations.

substantial risk to a lender. The worst happens to those rated D. DARE's story on credit ratings deals at length with this important parameter of business.

The need for a good credit rating Posted by: Vimarsh Bajpai in SMERA, ONICRA, National Small Industries Corporation, Icra, FITCH, Dun & Bradstreet, Crisil, credit rating on Jul 22, 2009 uring my interaction with some of the promoters of SMEs in the Bangalore region, I noticed the anxiety that was palpable due to the ongoing slowdown. While some insisted that reducing manpower was the instant solution that they had resorted to, many had refrained from doing so while scouting for more funds to stay afloat.

Selling non-core assets in tough times Posted by: Vimarsh Bajpai in survival strategies, non-core assets, DLF on Jul 16, 2009

the SMEs would be able to pay back debt on time. Yes. There is. A

LF, the country’s top real-estate developer is on a selling spree. On the block are not new homes or commercial properties, but its non-core assets that include hotel plots and the wind energy business. Having already raised Rs 1,000 crore, the new target for DLF is to garner somewhere around Rs 1,900 crore. Reeling under a heavy debt to the tune of Rs 14,000 crore, DLF’s sale of its non-core assets could give the company some comfort to repay its creditors. It is believed that the sale of DLF’s wind power business could fetch Rs 900 crore, while land sales could garner Rs 1,000 crore.

good credit rating. While there is awareness about the need for a good

These are unprecedented times of anxiety for the corporate

credit rating among SMEs, many are yet in the dark and refrain from

world. Selling non-core assets is one of the many ways of surviving

approaching a rating company to get one.

the downturn.

With banks and financial institutions keeping their wallets close to their chest, small and medium enterprises are facing a tough time raising funds. I wondered if there was something that could certify that

Benefits of credit ratings are many. While an assessment by a

While you may feel emotionally strongly about that piece of land or a

rating agency brings in an impartial opinion on the capabilities and

locked facility that you own, it could now come to your rescue when your

credit-worthiness of SMEs, it can also help them avail loans at

business is almost shutting down. Such un-utilized or under-utilized

reduced interest rates. Many banks insist on a high rating before

assets could be in the form of machinery or equipment too. Selling them

agreeing to lend. A good rating can also help attract customers, more

off to save your business could be one of the options to bring in some

so in the overseas market. As the rating agencies look closely at the

desperately-needed cash. However, during the current slowdown, you

operations of a company, it can help generate an objective report on

may fail to get a high value of those assets.

the operations and other aspects.

Other ways of staying afloat include getting your loan restructured,

The Union Government has formulated a scheme on credit rating

renegotiating contracts, or moving to a cheaper location. DARE’s

for SMEs in consultation with Indian Bank's Association (IBA) and

story on 12 alternatives to closing down your business talks of

some rating agencies of repute. National Small Industries Corporation

survival strategies.

DAR E

AUGUST 2009 83

Organizations DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

Abraaj Infrastructure. ................................................. 62

Foxconn ..................................................................... 37

National Textile Corporation....................................... 46

Acumen Fund ............................................................ 20

Fuji ............................................................................. 39

National Thermal Power Corporation ........................ 46

Adana Printing Presses ............................................. 19

Funai.......................................................................... 37

NHPC ........................................................................ 46

Adidas........................................................................ 20

Future Brands ............................................................ 39

Niche Generics .......................................................... 46

Aditya Birla Retail ...................................................... 61

Games2Win ............................................................... 37

Nike ........................................................................... 52

AEG Live ................................................................... 20

GE ............................................................................. 38

Norwest Venture Partners.......................................... 52

Air India ..................................................................... 24

Google Holdings ........................................................ 36

Office of the Economic Advisor ................................. 52

Ampex VRX-1000 ...................................................... 24

Grundig ...................................................................... 37

Oil India .................................................................... 50

Anna University ......................................................... 24

Heidelberg ................................................................. 38

Orkut .......................................................................... 52

Apache ...................................................................... 24

Hindustan Lever......................................................... 36

Panasonic .................................................................. 52

ASSOCHAM .............................................................. 24

Hindustan Machine Tools........................................... 37

PayMate..................................................................... 51

Associated Chambers of Commerce & Industry ...... 24

Hindustan Times ....................................................... 39

PenguinIndia .............................................................. 55

AT&T .......................................................................... 24

IBM ............................................................................ 38

Pepsi .......................................................................... 57

Base .......................................................................... 24

IBNLive ...................................................................... 37

Philips ........................................................................ 60

Batra Hospitality ........................................................ 24

ICFAI Business School .............................................. 37

Bell Systems .............................................................. 24

ICICI .......................................................................... 36

Bell Telephone Laboratories ...................................... 24

India Tourism Development Corporation ................... 37

Bharat Heavy Electricals Limited ............................... 24

Indian Angel Network ................................................ 38

Big Bazaar ................................................................. 23

Indian Petrochemicals Corporation ........................... 37

Brains N Skills ........................................................... 22

Indian Railways.......................................................... 37

BSAF ......................................................................... 23

Indian Space Research Organisation ........................ 37

BSNL ......................................................................... 23

Indigo Stripes............................................................. 39

Burroughs Corporation .............................................. 28

Infosys Technologies ................................................. 39

Calbest ...................................................................... 26

International Monetary Fund ..................................... 37

Capehart.................................................................... 28

JVC ............................................................................ 40

Centaur Hotel ........................................................... 30

Karachi Chamber of Commerce & Industry .............. 40

Certified Radio Labs .................................................. 30

Karmic Lifesciences................................................... 40

Chandler & Price ....................................................... 28

Kelsey ........................................................................ 42

Chengalpet Government Hospital ............................. 30

Kingfisher Airlines ...................................................... 40

CNN ........................................................................... 30

Kotak ......................................................................... 42

Contest2Win.com ...................................................... 30

KPMG ........................................................................ 40

Contract Research Organization .............................. 28

Kwench Library .......................................................... 40

Symbiosis Institute of Computer Science

Cox & Kings ............................................................... 26

Labour Bureau ........................................................... 40

and Research ............................................................ 69

Cycle Corporation ...................................................... 32

LetsOlla ..................................................................... 42

Taipei World Trade Center ......................................... 69

DARE ......................................................................... 16

Lexmark ..................................................................... 40

TCS ........................................................................... 69

DE Shaw Composite Investments ............................. 37

LinkedIn ..................................................................... 40

Technicolor ................................................................ 68

Dell ............................................................................ 38

Loewe ........................................................................ 40

Texla .......................................................................... 69

Dell India.................................................................... 37

LumiĂ¨re...................................................................... 45

The Aktion Group ...................................................... 69

Department of Posts & Telegraph .............................. 39

Lupin .......................................................................... 45

The Dhabi Group ....................................................... 70

Druvaa Software ........................................................ 39

Macon ........................................................................ 45

The National Entrepreneurship Network ................... 70

E. Remington and Sons ............................................. 39

Marrygold Matrimonial Services ................................ 45

Twitter ........................................................................ 81

Eastman Kodak ......................................................... 38

Matrix Laboratories .................................................... 47

Uptron ........................................................................ 80

Ericsson ..................................................................... 38

Memorex.................................................................... 47

Vandercook................................................................ 81

Ernst & Young ............................................................ 39

Mobile2Win China ..................................................... 46

Videocon.................................................................... 81

Essar ......................................................................... 39

Mobile2Win India ....................................................... 47

Villgro......................................................................... 80

eVentures .................................................................. 39

Modern Bakeries ....................................................... 47

Walt Disney Internet Group ....................................... 80

Facebook ................................................................... 38

More for You ............................................................... 48

Western Union ........................................................... 89

Feng Tai ..................................................................... 37

Motorola..................................................................... 47

Westside .................................................................... 88

FICCI ......................................................................... 36

MTVindia ................................................................... 47

Yahoo......................................................................... 89

AUGUST 2009

plugHR....................................................................... 58 Quatrro ...................................................................... 60 Rang De .................................................................... 54 Reliance Fresh........................................................... 55 Reliance Industries .................................................... 54 Remington Rand........................................................ 55 Rupee Talk ................................................................. 60 Rural Innovation Network .......................................... 59 Sahara ....................................................................... 55 Sanyo ........................................................................ 58 Shoppers Stop ........................................................... 55 Shugart Associates ................................................... 55 Siemens..................................................................... 58 Singhad College of Engineering ................................ 55 Softbank China Venture Capital................................. 58 Sony .......................................................................... 57 Sony/ATV Music Publishing ....................................... 54 Spencerâ&#x20AC;&#x2122;s ................................................................... 69

People DARE.CO.IN

covered in this issue, in alphabetic order; first appearance

Abhay Havaldar ................................. 40

Narayanan Ramaswamy.................... 45

Ajay Adiseshann ................................ 68

Nidhi Saxena ..................................... 61

Alok Kejriwal ...................................... 41

Og Mandino ....................................... 77

Anup Agrawal .................................... 81

Padmaja Ruparel ............................... 19

Ashim Bose ....................................... 45 Atulit Saxena ..................................... 48 E. Sreedharan.................................... 58 George Fernandez ............................ 16

Pranab Mukherjee ............................ 24 Prashant Bhaskar .............................. 45 Rajan Anandan .................................. 20 Rajeev Surana ................................... 23

DARE is not an acronym. It represents the daring spirit of the entrepreneur.

Jai Vikram Bakshi .............................. 88 Rajiv Hiranandani .............................. 40 James Callaghan ............................... 24 Ralph Waldo Emerson ....................... 77 Jaspreet Singh................................... 20 Raman Roy........................................ 20 Jishnu Debnath.................................. 80 Ramani Kothandaraman .................... 20 Johannes Gutenberg ......................... 38 Rehanyar Khan.................................. 20 Krishna Kumar (KK)........................... 40 Rita Bahuguna Joshi ......................... 57

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.

Mahesh Khambadkone...................... 40 Salil Nair ............................................ 48 Mamata Banerjee .............................. 17 Sanjeev Tamhane .............................. 68 Manmohan Singh .............................. 24

The entrepreneur dares to do things. (S)he dares to do things differently

Satya Jeganathan.............................. 22 Margaret Thatcher ............................. 24 Satyen Vyas....................................... 45 Mark Twain......................................... 77 Mayawati............................................ 57 Michael Jackson ................................ 57 Mitesh Damania................................. 61

Saurabh Srivastava ........................... 20 Sheila Dixit......................................... 58 Sunil Kalra ......................................... 61

Moses Yen ......................................... 51

Thota Ranganath ............................... 40

Mukesh Ambani ................................. 59

Varun Sahni ....................................... 72

Murli Deora ........................................ 59

William Austin Burt ............................ 36

N R Narayana Murthy ........................ 80

Yousaf Raza Gilani ............................ 58

SMS â&#x20AC;&#x153;DARE <your comments, questions or suggestions>â&#x20AC;? to

56677 dare@cybermedia.co.in AUGUST 2009 85

DARE.CO.IN

strategy/marketing

This is a companion piece to last month’s cover story “How Social Networks Can Help your Business” and is prompted by Jai Vikram Bakshi’s question on LinkedIn /Krishna Kumar

Social media efforts need people, money and time, like with anything else It is not one more task for that intern in marketing. If you want to use social media or online communities as leverages for your business, then be ready to invest resources into it. And the most important resource you need to invest in is people dedicated to the task.

Listen Social media is about conversations. And many conversations at the same time. So, like at any noisy party, start by listening. Understand what they are talking about before you get in. Carefully choose the conversations you want to join, which are the ones you want to ignore and which to start.

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Most still don’t get it Most businesses out there still do not understand what social media is or what it can do for them. So, you need not be afraid that you will make a mess of it. On the other hand, you do not have too many examples that you can follow or copy. And the rules are all unwritten and changing. So get in with your eyes open, knowing that you are going to make mistakes before you succeed.

Dialogue, not monologue Social media is about conversations, right? And a successful conversation cannot be a monologue. It has to be a dialogue with both parties contributing. There are businesses whose sole activity in Twitter is to automatically broadcast URLs of new additions at their Website using tools like Twitter Feed. It does not work in the long run.

About 99% of what is out there is not relevant. Find the relevant one percent Social networks tend to generate a lot of noise. A huge amount of it, in fact. Almost every other question in LinkedIn is irrelevant to a professional network. According to Twittergrader.com’s State of the Twittersphere Report, 55% of Twitter users have never tweeted. And if you look at the 45% who do tweet, most of it is inane stuff like - “I am awake” or “I am going to sleep”. You need to navigate through all this to find the one percent that is relevant to you. For this you need to use tools like Yahoo Sideline and Retweerank.com.

Revolutions are best driven from the top; else they will be bloody If you are looking at revolutionizing your business using social media, then be sure that someone who understands the media and equally importantly, has the requisite powers and clearances within the organization is driving it. Else, the whole effort may just blow up in your face.

There is no single magic wand community If you believe that there is a single community that is the answer to all your needs, then you are mistaken. Your customers, both current and potential, are active on many social networks, not just one. For this simple reason, if nothing else, you need to be active on multiple communities, but as part of one continuous and cross-linked effort.

Do not put all your eggs in the social media basket If someone tells you that social media is the answer to all your problems, take a reality check. Roughly four percent of India’s billion plus population has an Internet connection. Just about 600 thousand are on Twitter. Traditional channels still count, and count quite a lot.

It is more of PR than of marketing. It is more of marketing than of sales Social networks are not meant for direct sales. While Dell has been talking about doing US$ three millions of sales on Twitter, not many realize that most of it is indirect and soft sales and through discount offers, and that a lot of the tweets were about other things including resolving the problems that customers were facing. Direct sales are mostly frowned upon on social Websites. They are more about helping and good PR and thus indirectly driving sales rather than hard sell.

Don’t argue against the individual, even if you are right Soon enough, along with genuine issues, you will also come across the perpetual heckler or the constant cribber—individuals who hold a grudge or just want to be the ‘David’ taking on the ‘Goliath’ that is your business. Do not argue with the individual. You cannot win. Goliath never won against David. Attempt to rewrite that story only at DAR E grave peril to your business. AUGUST 2009 89

DARE.CO.IN

/exit

Please visit www.dare.co.in to read articles published in these previous issues of DARE For fresh subscriptions or renewals of the magazine, please visit http://www.dare.co.in/subscribe/ 90

AUGUST 2009

RNI No.DELENG/2007/22197. Posting Date: 5th & 6th of every month. Posted at Lodi Road HPO.

DL(S)-17/3314/2008-09-2010