Foreign Desis on braving business in India

april 2014

the WAY I WORK

Dippak Khurana, co-founder, Vserv

india junkies

The Upside of Being Unreasonable

The Magazine for Growing Companies

Page 44

Kazem Samandari, L'OpĂŠra

India Junkies

Foreign Desis on Braving Business In India

Page 14

The magazine for growing companies

Laurent Samandari, L'OpĂŠra

Mark Kahn, Omnivore Partners

April 2014 | `150 | Volume 05 | Issue 03 A 9.9 Media Publication | inc.com Facebook.com/Inc

Special Feature

Great workplace design: are you built for productivity and collaboration?

Page 27

@inc

April 2014

A Not-So-Easy Ride

14 The Foreign Desis Club

Joshua Bornstein has braved many potholes, hard stops and roadblocks in setting up Footprint Ventures in India.

44 The Way I Work

Everything about Vserv’s Dippak Khurana suggests purposeful speed—his high impact exercise regime, cutting edge office and the steep growth of his mobile advertising exchange. as told to sonal khetarpal

contents

27 Special Feature Built with Love + Smarts

Ditch the thought that great offices are the preserve of companies such as Google and Facebook alone. Let our story guide you to workplace designs that understand what you do and keep your teams happily productive.

Shella Consultants, Mumbai INHWA Business Centre, Gurgaon Only Much Louder, Mumbai by ira swasti

Doing business in India isn’t for the weak-hearted. These foreign nationals have shown the stomach for the guts and gumption entrepreneurship requires here.

Their journeys are great stories of survival, adaptation and success in one of the world’s harshest business landscapes. ark Kahn, M Omnivore Partners Sean Blagsvedt, Babajob.com Joshua Bornstein, Footprint Ventures Kazem & Laurent Samandari, French Bakery Bharat Mitra, Organic India Rubia Braun, Metro Brava

photograph by subhojit paul

by ira swasti & shreyasi singh

This edition of Inc. magazine is published under licence from Mansueto Ventures LLC, New York, New York. Editorial items appearing on pages 4, 9-11, 37-43 were all originally published in the United States edition of Inc. magazine and are the copyright property of Mansueto Ventures, LLC, which reserves all rights. Copyright © 2009 and 2010 Mansueto Ventures, LLC. The following are trademarks of Mansueto Ventures, LLC: Inc., Inc. 500.

on the cover

Laurent Samandari, Mark Kahn and Kazem Samandari at Studio 21, New Delhi. Cover design by Sristi Maurya.

Photographs by Subhojit Paul.

April 2014 | INC. | 1

contents

April 2014

42 37

12

05 Editor’s Letter

07 Launch

Celebrations at the fifth annual Inc. India 500 Awards Ceremony Still disrupting after all these years: who says innovation is a young man’s game?

Four questions for author Warren Berger on why questions are more powerful than answers

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12 Guest Column

By Ajay Wadhwa Provisions of the new Companies Act, 2013 explained in super-simple terms. You don’t want to miss reading this!

48 Founders Forum

Why Sanjeev Chaudhury, MD, SRL Diagnostics prescribes power dressing. It cuts a sharp image for the company.

Strategy 37 managing Understanding neuroscience to unleash creativity in your company.

40 managing A micromanager’s guide to delegation.

Trust us—this is useful. Really.

42 finance Think you have the investing game figured out? Four things every smart entreprenuer should know about their personal finance.

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inc.com

Contents

Inc.com / Lead

What Motivates You: Calling or Ego?

MANAGING DIRECTOR: Dr Pramath Raj Sinha Printer & Publisher: Anuradha Das Mathur

Do you have a real vocation for what you’re doing, or are you just in business for egoistic reasons? Inc.com columnist Shelley Prevost shares a few ways to decipher what’s really driving you.

Editorial managing Editor: shreyasi singh assistant editor: Sonal Khetarpal DEsign Sr. Creative Director: Jayan K Narayanan Sr. Art Director: Anil VK Associate Art Director: Anil T Sr. Visualisers: Manav Sachdev Shigil Narayanan & Sristi Maurya Visualiser: NV Baiju Sr. Designers: Haridas Balan, Manoj Kumar VP Charu Dwivedi, Peterson PJ & Dinesh Devgan Designers: Pradeep G Nair & Vikas Sharma ONLINE & MARCOM DESIGN Associate Art Director: Shokeen Saifi Sr.Designer: Rahul Babu Web Designer: Om Prakash PHOTOGRAPHY Chief Photographer: Subhojit Paul Sr. Photographer: Jiten Gandhi Community Team SENioR Manager: Astha Nagrath Khanna Associate: Akarshan Sapra

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Sales & Marketing Vice president: NC Singh (+91 9901300772) National Manager (Print & Online) Rajesh Kandari (+91 98111 40424) National Manager (Special Projects) Arjun Sawhney (+91 95822 20507) Senior Manager (Business Development) Anshu Kumar (+91 95914 55661) Manager (Business Development) Sukhvinder Singh (+91 8802689684)

1. Ego leads to burnout.

Calling leads to fulfillment.

You know that feeling of deep satisfaction when you’re doing something you absolutely love, that’s an aspect of your calling showing itself to you.

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april 2014

2. Ego focuses on the result.

Calling focuses on the process.

Without a satisfactory result, your ego feels that all your work is pointless. A calling, however, comes from within. It can handle the stress of ambiguity.

3. Ego wants to preserve the self.

Calling wants to impact others.

A calling might begin with the expression of the self, but it moves toward the needs of others. Author Frederick Buechner says that your calling is “the place where your deep gladness meets the world’s deep need.”

Production & Logistics Sr. General manager (Operations): Shivshankar M Hiremath Manager Operations: Rakesh upadhyay Assistant Manager (Logistics): Vijay Menon Executive Logistics: Nilesh Shiravadekar Production Executive: Vilas Mhatre Logistics MP Singh, Mohd. Ansari OFFICE ADDRESS nine dot nine mediaworx Pvt Ltd A-262, Defence Colony, New Delhi–110 024 For any queries, please contact us at help@9dot9.in Published, Printed and Owned by Nine Dot Nine Mediaworx Private Limited.

Published and printed on their behalf by Anuradha Das Mathur. Published at A-262, Defence Colony, New Delhi–110 024. printed at Tara Art Printers Pvt ltd.

A-46-47, Sector-5, NOIDA (U.P.) 201301 Editor: Anuradha Das Mathur

editor’s letter

The New Indophiles…

At a friend’s party a few weekends back—with a disproportionate number of entrepreneurs in attendance—I was witness to a loud, agitated discussion about why doing business in India wasn’t worth the effort anymore.

The company builders were from vastly different industries but their angst was united—against labour departments that could be manipulated into issuing unfair notices, infrastructure costs that refused to come down even as sales plateaued or dipped, and compliance formalities that gobbled up so much management time. There was much talk about moving base to the US or Singapore where entrepreneurs were actively facilitated for, not fought against. None of what they said was a surprise, of course. But, it was hard to miss the massive personal toll and the bitter struggles that growing a business necessitates in India.

Each year, every year, global indexes state that India is one of the worst places for business. We rank 134 out of 180 countries in World Bank’s Ease of Doing Business 2013 report. The heady growth days of the 2000s had made this uphill task somehow worth it. That has vanished as well in the past two years as investor sentiment and enthusiasm for India has waned and other emerging economies such as Mexico, Turkey and Indonesia have become the season’s new flavours.

You wouldn’t think that though if you read The Foreign Desis Club, our cover story for this issue. These business builders—all foreign nationals—have chosen to pitch their entrepreneurial tents in India’s messy and rough landscape.

Be assured, these aren’t “expat” entrepreneurs dabbling in an idea while on a sabbatical, or those running back offices

staffed with low-cost labour. Armed with a love (often, complicated!) for India, and a strong belief in its opportunities, they are building unique, promising and high-growth ventures that stand out. You might have sampled some of these brands—think the classy L’Opéra bakery in Delhi or Organic India’s wholesome Tulsi tea.

The lessons they learnt en route and how they have navigated through life and work here (most of them have been in India for more than five years) is a read that you wouldn’t want to miss.

At the beginning of this year, we committed ourselves to bringing you stories that demonstrate the impact of good design on your business. Our special feature Built with Love + Smarts lays out a blueprint of ideas and case studies on workplace designs that can foster team work, productivity and show (not tell!) what your brand stands for. We truly hope it inspires.

Shreyasi Singh shreyasi.singh@9dot9.in

April 2014 | INC. | 5

News, Ideas & Trends in Brief

launch

The winning companies at the Inc. India 500 Awards & Conference 2013

500 Reasons to Celebrate the Year 2013 The fifth class of Inc. India 500 The Inc. India 500 Awards & Conference 2013 was a special event for all of us. This year we completed five years of celebrating entrepreneurial success that emerges from the dynamic, mid-size segment of corporate India. We were delighted to host several of our winning companies on March 22, 2014 at Pullman Hotel, Gurgaon.

We were fortunate to have Vinod Rai, the former Comptroller and Auditor General of India as our Guest of Honour.

He spoke extensively on the grit and determination of the mid-size companies despite the loopholes and corruption that taint the Indian corporate policy landscape.

Along with the awards ceremony was a one-day conference. It is our attempt to

inspire our community of founder-CEOs with peer learning and thoughtprovoking sessions. The presentations were themed around the key characteristics needed for entrepreneurial success. Some of the interesting sessions were by Vinay Agarwal, managing partner, PGT Partners, a TOC consulting firm on leveraging from the constraints that an organisation faces; and by Bhawani Singh Shekhawat of Erehwon Innovation Consulting on thinking differently and effectively.

Our relation with the mid-size community began in January 2010. Since then we have been privileged to discover and highlight the country’s most promising

mid-size companies. Five years hence, our research and methodology might have changed. But the goal to discover these hidden gems is a constant.

Estimates suggest these mid-size companies account for 40 per cent of exports and 45 per cent of manufacturing.

Despite their growth and their ability to create jobs and contribute significantly, many of these companies still remain unsung heroes. And, this is what makes Inc. India 500 all the more relevant now.

Given the slowing economy, we realised growth in such a volatile market was a good enough parameter. So, we focused on the growth rate of the company’s net sales in the last four financial years.

April 2014 | INC. | 7

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Guest of Honour for the fifth Inc. India 500: Vinod Rai, the former Comptroller and Auditor General of India

What we found out was fascinating—this pool of 500 companies is actually a microcosm of India’s economic climate. An important trend that came to light when the average growth rate of our Inc. India 500 companies for the last five years was compared—from 41 per cent in 2012, the average growth rate fell down to 37.55 per cent this year. This is also the lowest growth rate of all the last five years, which is in stark contrast to the robust 2010 average growth rate of 143.66 per cent.

Same trend is mirrored when the sectoral growth rate for 2012 and 2013 is compared. The share of real estate and other sectors that flourished during the high growth years has dropped.

Steel & Ferrous Metal has maintained 8 | INC. |

april 2014

its place, and the Textiles & Garment sector continues to do better. In this year’s ranking, the Textiles sector tops with a total of 59 companies.

Interestingly, almost half (43 per cent) of the Inc. India 500 fall under the Top 5 performing sectors—Textiles & Garment, Food & Beverage, Steel & Ferrous Metal, Chemicals, and IT&ITeS. These sectors also contribute 42 per cent of the total sales of the Inc. India 500 honourees.

Our this year’s fastest growing company is Kolkata-based liquor manufacturing firm, Pincon Spirit. They have a whopping CAGR of 2,204 per cent for the last three years and a 2012 revenue of `244 crore.

Incorporated in 1978, this company is

engaged in blending, bottling and distribution of Indian made foreign liquor.

What is interesting is the No. 1 company for all the last five years belonged to a different sector in each of our last five lists. As always, this year’s ranking also demonstrates the high potential and dynamism of the mid-size Indian companies. 158 companies from last year’s list are still a part of 2013 ranking. And, out of the five lists,126 companies have appeared on our list three times, 47 companies four times, and 23 companies are on all our five rankings.

The number of companies in the lowest revenue bracket (between `50 crore and `100 crore) has gone down by 20 per cent when compared to our 2012 ranking. This offers a silver lining for the mid-size segment. It means that these companies have grown bigger and moved up the revenue category to `101­­ to `150 crore. Also, the number of companies in `501 to `1,000 crore has increased by 13 per cent from last year.

The persistence and resilience of these 500 companies makes a great occasion to raise a toast to. With this, we promise to keep chronicling the success of these midsize gems in the many years to come.

launch

Want to Be More Innovative?

Ask Better Questions When so much information is readily

available to anyone online, the key to innovation is not gathering more data but rather asking more questions—the ambitious, frame-changing sort that send companies down unexpected paths of inquiry.

So argues business journalist Warren Berger, author of the new book A More Beautiful Question: The Power of Inquiry to Spark Breakthrough Ideas.

Berger supplied the answers, for a change, in a recent conversation with Inc. editorat-large Leigh Buchanan.

What makes a question “beautiful”?

A beautiful question reframes an issue and forces you to look at it in a different way. It challenges assumptions and is really ambitious. Often, these questions begin with the phrase “How might we...”

They have a magnetic quality that makes people want to answer them, to talk about them, to work on them. They make the imagination race. The Polaroid camera came out of a 3-year-old girl’s asking, “Why do we have to wait for the picture?”

That’s a beautiful question.

What questions don’t get asked early or often enough in innovation projects?

There are two kinds. First, the fundamental ones. Why are we doing this? What do people really care about? Second are the crazy questions. What if we did this backward? What if we were to subvert all the assumptions in the field and do something that sounds ridiculous?

Interesting ideas can come out of exploring impossible things. There’s a place for asking those out-there questions early on, when you are in the most open stage of thinking.

Companies generally reward people for coming up with answers. How do you motivate employees to ask questions?

It has to start with leaders asking questions themselves. That’s a difficult adjustment, because a lot of leaders are trained to think,

In A More Beautiful Question, Warren Berger cites the revelatory questions that inspired a number of successful innovations. These are a few:

maybe the whole company People look to me for ends up working on them. answers. If I start asking questions, it will shake their What if we could map the DNA of confidence. But great leaders You talk about replacing music? do ask questions, and as mission statements with Innovation: Pandora long as they are interesting questions. Why? and ambitious, people don’t I think people can rally Why can’t get freaked out. So it starts around a question more everyone accept credit cards? with the leader and flows than a statement. A Innovation: Square downward to create a question tells you we are on culture of inquiry, where a journey together: “How Why aren’t people feel they can ask might we use robotics to football players questions without make the world a better urinating more?

Innovation: Gatorade necessarily knowing the place?” A statement says answer. It drives me crazy we’ve done it already: “We when bosses say, “If you are use robotics to make the going to bring a problem to me, you’d world a better place.” The statement is a better have solutions.” Great questions little arrogant and maybe a little bit of a don’t get answered in 10 minutes. They false claim. The question declares the great may take six months. You want people to thing you want to do with your company. bring you those great questions, and It’s much more empowering.

April 2014 | INC. | 9

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45%

Still Disrupting after all these Years?

Who says innovation is a young man’s game?

The Mark Zuckerbergs of the world haven’t cornered the market on innovation.

New research suggests that middle age might be the ideal time to challenge the status quo. In fact, the average age that Nobel Prize winners and great inventors make their most notable breakthrough is 39, according to a study by Benjamin F. Jones, a professor at Kellogg School of Management.

Why are so many people trying to innovate later in life? Middle age brings confidence, experience, deeper networks, and may be even some cash savings, says Debra Kaye, author of Red Thread Thinking. Plus, new brain research shows that the prefrontal cortex, which handles judgement and reason, doesn’t fully develop until 25. And the brain continues to produce new neurons well into old age.

“If you keep using these new neurons, you can still compete with younger people,” says Kaye. Here are some innovators who hit their stride after 40. —Jennifer Alsever

Age of U.S. tech entrepreneurs at the time of founding

26% 18%

024 25 -3 4 35 -4 4 45 -5 4

41 41 41 42

Age 0

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Scientist Gertrude B. Elion Elion developed treatments for many major diseases—including cancer, malaria, and AIDS. In 1959, at 41, she received a patent on a treatment for leukemia.

She was awarded a Nobel Prize in medicine.

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6%

5%

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Scaled Composites Burt Rutan In 1984, after decades of aerospace inventions, Rutan launched the Voyager, the first plane to fly around the world without stopping, at 41. At 62, he launched the first privately funded human space flight, with the suborbital space plane SpaceShipOne. Rutan, 70, recently retired.

20

Statesman Benjamin Franklin Franklin began publishing Poor Richard’s Almanack in his 20s, but he did not invent the lightning rod until he was 41, in 1749. He signed the Declaration of Independence at 70.

30

Inventor Nikola Tesla Tesla had a hand in many disruptive inventions, including electric motors and X-rays. One big breakthrough came in 1898, when, at 42, he demonstrated the first radio-controlled boat in New York City, helping to lay the groundwork for radio transmissions.

45 45 44 45

40

Vanguard Group John Bogle After being fired from Wellington Management in 1974, Bogle, then 45, founded the Vanguard Group. Its innovative approach to fund management saved shareholders hundreds of billions in fees and disrupted the financial industry. Bogle, 84, is now retired.

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Walmart Sam Walton In 1962, after years of managing retail stores, Walton opened his first Walmart store at 44. He pioneered the big-box retail model. With his aggressive push for discounting, Walton shifted the balance of power in retailing from the manufacturer to the consumer.

46

52 52

49

50

Mary Kay Cosmetics Mary Kay Ash After a decade of watching men get promoted ahead of her, this saleswoman set out, at 45, to build Mary Kay Cosmetics in 1963. Ash brought multilevel marketing into the mainstream, tapping an underemployed army of women to sell her products.

Ford Motor Company Henry Ford Ford fiddled with automobile inventions for seven years before starting Ford Motor Company in 1903. At 45, he introduced the Model T, sparking the American auto boom. He also created the first moving assembly line.

Chef Julia Child Child didn’t hit her stride until 49, when she coauthored the 3-pound cookbook Mastering the Art of French Cooking, in 1961. Through the book and her cooking shows, Child introduced French culinary skills to the American masses.

McDonald’s Ray Kroc The McDonald’s founder worked as a piano player and a paper-cup salesman before, at 52, he set out in 1940 to build what would become the world’s largest restaurant chain. Kroc systemised operations so that a burger in any city would taste the same.

57

Playwright George Bernard Shaw Shaw wrote his first successful work at 38 and continued to write hits well into his 60s. He later won a Nobel Prize in literature and, at 82, an Oscar.

82

60

Apple Steve Jobs Though he founded Apple at 21, Jobs launched some of his most successful products later in life— including the iPod in 2001, the iPhone in 2007, and the iPad in 2010. They fundamentally changed how people consume media and use the Internet.

70

Sikorsky Aircraft Igor Sikorsky In 1942, after decades of tinkering on aviation projects, the RussianAmerican founder of Sikorsky Aircraft created the first modern massproduced helicopter, the R-4, at 52.

90

80

Novelist Toni Morrison The American writer published her first novel at 39. In 1988, at 57, she won the Pulitzer Prize for Beloved. Morrison, who has received a Nobel Prize for her work, continues to write at 82.

90

Composer Elliott Cook Carter Jr. This American, who wrote many orchestral pieces and ballets, twice won the Pulitzer Prize—in 1967, at 59, and in 1973, at 65. He also wrote more than 40 works from ages 90 to 100.

April 2014 | INC. | 11

Guest Column

BY

Ajay Wadhwa

Ajay Wadhwa is an advocate, and a senior partner at Prolegal Universal, Advocates & Advisors.

able offences. In fact, 98 sections of the new Act have already become applicable from September 12, 2013.

The new Act contains provisions on very many issues which had been unaddressed till now. Further, the penalties have been made quite strict with heavy monetary fines, and even imprisonment in certain cases. In fact, the phrase “prevention is better than cure” is more than ever relevant now. Let’s go through some of the important provisions.

Key Managerial Personnel: Under the new Act, the term “Key Managerial Personnel” has been defined to include CFO, CEO, Company Secretary and other such officers.

The KMP is now also covered under the definition of “Officer in default”. A KMP may now therefore, be liable for penalties and/or imprisonment, as the case may be, for various defaults under the new Act of 2013.

Making compliance simpler Some key provisions of the new Companies Act, 2013 explained. Miss reading this at your own peril.

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Frequency of Board Meeting: In terms of Section 173(1) of the new Act, a company shall hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than 120 days shall intervene between two consecutive meetings of the Board. This means that under the new Act, all Board Meetings will have to be properly planned so that the time interval between two Board Meetings does not exceed 120 days.

Notice of Board Meeting: In terms of Section 173(3) of the new Act, a meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means. Until now, the Board Meetings were normally being conducted without any specific time based requirement of notice, so even a few hours’ notice would be sufficient. This is now set to change under the new Act.

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Mid-size, high-growth companies, and their promoters, directors and key managerial personnel (KMP) know that legal compliance is a worthy investment for them. Not only does proper and timely legal compliance enable a promoter, director or a KMP to concentrate on growth, a compliant company is also preferred by investors, collaborators and banks. Needless to state, an excellent corporate image of a legally compliant entity is an additional bonus.

In India, the Companies Act, 1956 is one of the primary legislations applicable on companies functioning in India. The position under the current Companies Act, 1956, is quite liberal vis-à-vis various compliances, as most of the offences are compoundable in nature. However, this position is set to change very soon, as the new Companies Act, 2013, as and when notified fully, provides for prohibitive penalties and/or jail terms for certain erstwhile compound-

Resident Director: In terms of Section 149(3) of the new Act, every company shall have at least one Director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

Private companies, especially those having only two non-resident Directors, such as Indian subsidiaries of foreign companies will be most affected by this provision.

Such companies should now seriously start looking for suitable candidates to be inducted as resident director as and when this provision is notified.

Guest Column

Board meeting through video conferencing: In terms of Section 173(2) of the new Act, a Board Meeting can be held through video conferencing, however every director of a company shall attend, at least one Board Meeting in a financial year of the company, in person. Moreover, the following matters cannot be dealt with through video conferencing or by a circular resolution—approval of the annual financial statements and approval of the Board’s report.

Interested Director will not be counted for the purpose of quorum: In terms of Section 184(2) of the new Act, every director of a company who is, directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into with a related entity, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed. Further, the interested director shall not participate in such a meeting.

This provision may create problems for companies having a small Board, of say two directors. How the business, where one of the said two directors is interested (for instance, pertaining to fixation/ enhancement of salary of one of the directors), will be conducted, is a question which requires to be answered, and would require structuring of such Boards.

Rule bases Statute: The new Act of 2013 is primarily a rule based statute, where most of the sections have to be read together with the prescribed rules. Each chapter has separate rules, which are to be fully understood, for the purpose of applying them properly. Further, the rules may undergo frequent changes from time to time, so it would be imperative for the Legal Counsel of a company to keep himself abreast of these changes, in order to keep the company fully compliant from time to time.

Substantial increase in the punishments and penalties: Under the new Act of 2013, the penalties and punishment for noncompliance have been increased substantially. For instance, default made in filling of specific resolutions with ROC, where the current Act of 1956 provides for a penalty of `200 per day till the default continues, the new Act of 2013 provides penalty of not less than `5,00,000 but which may extend to `25,00,000. Further, any default made in relation to issue of duplicate share certificates, failure to pay dividend within the prescribed period etc. have now been made non-compoundable with a jail term.

This trend indicates that the intent of the legislature is to make the companies fully compliant with the provisions thereof, and deal with any act of non-compliance very harshly. Some of the said instances entailing strict penalties are detailed here under:

The new Company law contains provisions on many issues which were unaddresssed till now.

Board Meeting details will be filed to Registrar of Companies (ROC): Details of holding number of Board Meetings, total number of directors on the date of meeting and attendance of the directors in each meeting will have to be filed with ROC via annual filling documents i.e. Board Report and Annual Return.

Disclosure pertaining to associate, holding and subsidiary companies required: Even when it comes to reporting, the newly prescribed form of Annual Return requires much more detail.

Now, information on associate companies which exercise influence because they have 20 per cent or more share capital, or control business decision by way of an agreement, holding and subsidiary will also be required to be disclosed.

Secretarial standards are proposed to be made mandatory: The secretarial standards as may be issued by the Institute of Company Secretaries of India (ICSI) from time to time, are proposed to be made mandatorily applicable under the new Act of 2013. This would mean that the compliance officer of the company would now have to work extra-hard to ensure that all the secretarial standards issued by the ICSI are complied with, in letter as well as in spirit.

Alternatively, the outside counsel will have to spend additional time in understanding and applying these Secretarial Standards to keep the companies being advised by them, above board at all times, thereby increasing the cost of legal compliance.

Tampering with the minutes of the proceeding of the company: Any person, who is in default, shall be liable to imprisonment of up to two years, and fine which may be extended up to `100,000.

Offences involving fraud: The offence covered under fraud are very wide in nature including but not limited to wrongful gain, wrongful loss and misuse of any position etc. Any person, who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to 10 years, and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. There are number of provisions under the new enactment, which attract a punishment equivalent to punishment for fraud.

Punishment for false statement: Any person who makes a statement which is false in any material particular, knowing it to be false or omission to disclose a fact, knowing it to be material, in relation to any return, report, certificate, financial statement, prospectus statement, or other document required by the provisions of this Act or rules made there under, shall be liable to a punishment equivalent to punishment for fraud.

Ajay Wadhwa can be reached at ajay@prolegal.in April 2014 | INC. | 13

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India might be one of the world’s most difficult places to do business in.

But, a group of foreigners seem to scoff at that, almost saying “So What?!?”. Armed with a love and fascination for India, they are building promising, fast-growing businesses that stand out in India’s dynamic entrepreneurial vista.

Their journey of surviving and flourishing in a country that consistently ranks amongst the toughest business environments is full of great stories and seemingly counterintuitive lessons of entrepreneurship.

By Ira Swasti & Shreyasi Singh

Photographs by Subhojit Paul Design by Sristi Maurya

India has hardened me as a business person but softened me as a person. To be honest, India beats the hell out of me but I still love it.

Mark Kahn, founding partner, Omnivore Partners

ark Kahn says he’s been an Indophile

since the age of 13. Growing up amidst a bustling Indian diaspora in Houston, Texas, Kahn’s affinity for India continued to grow into his college days at the University of Pennsylvania when he first visited India, and later at Harvard Business School where he became the first firang to run the South Asian Association. In 2008, he moved to India to work with Godrej Agrovet, the agribusiness vertical of Godrej Industries. In 2010, Kahn co-founded Omnivore Partners, a venture fund to invest in food and agriculture technology companies in India. It was a dream move for Kahn as it fused his three big passions—India, agriculture and technology (possibly, in that order). Omnivore Partners has had an exciting nearly four years. Kahn and his co-founder, Jinesh Shah, have raised a first fund of `260 crore (all from India), and have invested in nine companies, including a farm machines business in Rajkot and an agri supply chain technology firm in Bangalore. His relentless travels across India has given him an understanding of the country and its agriculture that would put most Indians to shame. Doing business here though has shattered his earlier romantic illusions about India, Kahn confesses, although he can’t imagine living anywhere else now.

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My Challenges

Building a business is tough anywhere. It’s only more so in India. First, there is an incredible amount of competition, a hostile regulatory environment and massive amounts of uncertainty. It makes planning very difficult. There’s also a classic tendency in India for everything to be illegal unless specifically given permission. That’s how Bharat sarkaar likes things to be. It likes people to always be on their toes. Then, with respect to suppliers, customers and employees, contractual agreements are quite callously treated because of the lack of legal recourse. I’ve gotten so used to being hammered that it has hardened the hell out of me. Getting stuck in Delhi traffic for two hours? It’s fine. Things being screwed up the first six times? Fine.

Nobody ever saying if anything’s wrong?

Fine. People saying it’s 15 minutes when it’s 15 hours? Fine. When you’ve been here long enough and lived through these disappointments, your expectations get calibrated by experience.

But, I don’t think these things are just difficult for an immigrant like me. Everyone from the MD of Reliance to the chaiwallah is similarly affected. My big personal challenge is one of credibility. India is not used to having foreigners who understand its culture and language. Sometimes it gets frustrating that after living here for a decade, people still ask you if you’re going to be okay drinkingwater or if the food’s too spicy. I’m from Texas. We eat chillies that would kill you.

The one thing I feel I have to constantly do is to reassert my credibility every time I meet somebody new.

The India Opportunity: My love for India since when I first came here as a backpacker has become a lot less naïve. Actually, it’s almost like an abusive relationship—India beats the hell out of me and I still love it. I would be bored anywhere else.

More than anything else though, India offfers a gigantic opportunity for both profits and impact. Our fund invests in ventures in agriculture and food technology. There are nine companies in our portfolio so far—one 16 | INC. |

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Mark Kahn says people are constantly surprised that he speaks decent Hindi and loves parallel desi cinema.

in Noida, one in Rajkot, three in Bangalore, one in Vijayawada, one in Nashik, one in Guwahati and one in Salem. I am very confident that India will achieve long-term food security provided that the innovation required to realise those yields are allowed to disseminate. India has 1.2 billion mouths to feed so we’re more than okay on the demand side. On the supply side, the yields are so atrociously bad that seeing it double and triple is very forseeable.

To be honest, some things are easier in India. The Indian approach to professional life, which is to say, do your work right and outsource everything else (cooking, cleaning, driving) is something that works very well for me. I tend to work about 80 hours a week and travel 75 per cent of the time so I find this set-up personally quite effective.

Lessons learnt:

You have to be more agile and resilient because of the uncertainty. You have to be ready to pivot at a moment’s notice, thanks to unexpected policy changes.

India is the ultimate free market for talent.

People have no loyalty unless you start investing in them. It’s counter-intuitive but I’ve learnt that upfront investment in people (training, infrastructure) which is what Western management prescribes doesn’t work here. You first let your people perform and then you invest in them.

The least grateful people I’ve met here are MBAs from leading colleges. They feel entitled. A great HR strategy is to actually figure out how to access talent in second tier schools because those people are happy with the opportunities you give them.

India is still a culture of people. You cannot do a meeting on the phone here. You have to sit across a person and take darshan. Relationships with your teams aren’t transactional like it is in the US or Europe. One is invested in the life events of those around us.

I’ve seen this even in large corporates. There is a paternalism that you could say is a bad thing but it is also a very good thing.

We’ve never paid a bribe.

And we’ve never been asked to pay one.

Sean Blagsvedt, founder, Babajob.com Sean Blagsvedt came to India in 2004 to set up the Microsoft Research Lab. While working on his research on using technology for social and economic development in emerging markets, Blagsvedt came across a Duke University paper that said people can move out of poverty by diversifying their income.

Inspired by that insight, in 2007, Blagsvedt started Babajob, a web and mobile startup that connects informal sector job seekers such as cooks, drivers and security guards with the right employers. Since founding, Babajob, which has investors such as Vinod Khosla, Gray Ghosts Veture and USAID-DIV, has listed 2.3 million job positions from 1,00,000 employers and registered two million job seekers on its portal. Blagsvedt takes us through the journey of building a company that has tried to bring some method to India’s vast informal sector.

Would you say India is one of the most difficult places to do business in?

Well, I’ve never built a business anywhere else but India. Actually, whether India is a difficult place to do business in depends on what field you’re working in. In the internet mobile space, it’s not that much different from any other country. Our content isn’t regulated, we’ve never paid a bribe and we’ve never been asked to pay one. When I started out, I was sure I wanted to work in an industry where opportunities for corruption don’t exist. Also, we’ve never pursued contracts with the government where the possibility of a kickback exists. We don’t want the government to be a customer. In every country, you can take a position which helps you steer clear of odd situations.

Have you faced any unique challenges while running Babajob in India?

When we began, there wasn’t a mature ecosystem for capital. That has now completely changed with several VC funds in the tech space. More than that challenge, our biggest difficulty was illiteracy. Most of our targeted users have limited literacy; their capacity to pay for a service is also less than in other places and the availability of digital mechanisms by which they can pay for a service are limited too. But these challenges are to be expected in any developing economy.

Has it been difficult to build credibility as a foreigner while running a business?

There’s a natural skepticism when it comes to foreigners anywhere—people might think you’re not going to be around for more than a year, and they’d rather not partner with you. That is a reasonable doubt. By being here for a while now, we have demonstrated our commitment to building this business in India.

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If you have patience, there are ways of making money in this country.

Joshua Bornstein, co-founder, Footprint Ventures

oshua Bornstein

didn’t have big India plans when he came here in 2001 to work as a summer intern at Infosys, Bangalore. He thought he’d gain the twin experience of working in a technology company, and do so in an emerging economy which at that time was poised to turn a corner. The emerging economy card worked and Bornstein soon landed a job at an investment bank in Los Angeles in 2002. But, that joy was shortlived. Bornstein was miserable with the company’s hierarchical structure and in 2003 decided to come back to Infosys. His second stint at Infosys ended in 2006. But, Bornstein, a US citizen, still hasn’t bought a return ticket home. In 2007, he began an early stage venture capital fund called Footprint Ventures with two other partners from the US. Over the past seven years, Footprint has invested in companies such as Canvera, Mast Kalandar and Hector Beverages. Bornstein admits doing business in India has been far from picture-perfect. He lays out the good, the bad and the ugly for us.

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My Challenges

As a non-native investor in India, I think I enjoy the advantage of having a long-term perspective towards business that is otherwise missing here. The Indian business environment is about very near-term thinking.

I’ve seen many entrepreneurs look at their roles with a very limited lens. If someone has invested `20-30 crore in their business, then tend to think about how to maximise their returns instead of building an organisation that can scale up.

Also, there is a tremendous amount of operational friction in India because the existing infrastructure, distribution networks and payment methods that are present elsewhere need to be created from scratch. This takes up a lot of investment and time. You need extreme patience to navigate through that especially if you’re growing businesses in the domestic consumer market like we do.

A big challenge also is the unfortunate situation you will encounter by way of under the table pay-offs in a lot of businesses where you can make money in India.

This doesn’t interest me from an ethical perspective or a Foreign Corrupt Practices Act perspective. I wouldn’t want to get my hands dirty. But I find that people here don’t seem to have ethical qualms about sometimes indulging in that. There’s a lot of family money to put to use. Let’s be honest, sectors where real wealth has been created in India in the past 20 years include resources—whether it is coal or telecom spectrum—things that are in short supply and require government licenses.

The Indian Opportunity: I think there’s a huge opportunity in the two areas we invest in—the domestic consumer market in India where companies are trying to shift the system from unorganised, fragmented suppliers to an organised branded environment. That’s an unfilled niche in the market and people are beginning to look at more branded options as opposed to local options . The other area is cross border technology startups that use India as a low cost development base because you have a highly talented technical base available at a relatively low cost and sell in the overseas market. There may be some initial customers in India but the real market is outside of India because people do not value technology here. May be it’s because the cost of labour is so cheap or because technology breeds transparency.

If you could use the best of both worlds, India’s talent base and markets outside

Joshua Bornstein feels doing business in India is far from picture-perfect.

that are willing to pay for value, I think then you can make money.

Secondly, in the US, because there is far more capital than there is in India, there is far more competition as an investor. While you have less operational friction there, there are 10 guys shooting arrows in your back or trying to take you down. There is no guarantee that you’ll be the winner because technology and consumer preferences are quick to change. Because of the dearth of capital in India, if you’re able to build a brand with a unique distribution here, you have a high chance of creating profitable properties that will last for a long time.

You get a much longer gestation period in India if you’re investing in building brands.

On the other hand, it’s interesting how you can make money in the cross border technology sector in India. Because valuations are so high and money is so free flowing in the US, as an early stage investor, you may not get much in a $75 million or $100 million deal. Because these companies require so much capital, unless you’re the last investor or you have some liquidation preference or other rights, you’ll get cramped down. So the advantage that India brings on the tech side is that costs are lower due to a solid tech base, so even if a company has $75 or $100 million acquisition price, everyone in the food chain can make money because the place is so starved for capital.

Lessons learnt

Never do a deal because everyone in the industry is jumping on the bandwagon. There are 12 to 18-month waves of hot sectors such as mobile VAS, education, microfinance, e-commerce, F&B and now it’s health care. If something is in vogue, be a little skeptical because India is actually an extremely shallow market. People tend to get carried away by the 1.2 billion-market, 300-400 million middle class people.

But if you look at the numbers, say GDP per city, it’s Mumbai, Delhi, Bangalore, Hyderabad, Chennai and then it falls off the cliff. It’s easy to get seduced by the law of large numbers but this is a very value conscious country.

If you’re working in the domestic consumer market, distribution is the key to succeed. This is difficult to accomplish because your gross margins are low, thanks to being hammered on price by your customer base, and high operational costs because of the friction.

You need to have a long term horizon on your investments here. As an early stage investor, it becomes important to maintain your stake in the company from Series A to Series B to Series C if the firm does not have an outrageous valuation. You quickly get diluted otherwise.

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The Samandari-Nicolliers are the French version of a big business family. (from left to right Camille Nicollier, Fabienne Nicollier, Clement Nicollier, Christine Samandari, Pierre Nicollier, Kazem Samandari and Laurent Samandari)

There is no perfect country. If it was easy, everybody would do it.

Laurent Samandari, MD, French Bakery Kazem Samandari, Chairman, French Bakery

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hen Laurent Samandari, managing director of French Bakery, the company that runs the upmarket patisserie and boulangerie, L’Opéra, says he feels at home in India, he more than means it. Samandari, who is from France, lives in a corner bungalow in a leafy Delhi neighbourhood with his maternal grandmother, mother (Christine Samandari) and father, Kazem Samandari, also the company’s chairman. Not very far from there live Laurent’s first cousin, Pierre Nicollier (the company’s CEO), his wife Fabienne Nicollier and their three young children. Together, the Samandaris and Nicolliers are building the “family business” into a popular patisserie brand which in a little over three years has grown to nine outlets in the Delhi-NCR region.

L’Opéra is known for its macaroons, French bread and choux pastry, and kneads in monthly sales of `1-crore a month (approximate average).

This is no small task considering its high price points, and the high mortality of restaurants in Delhi’s competitive F&B space which is plagued with prohibitive real estate costs and labyrinthine license requirments. Interestingly, Laurent’s India sojourn is courtesy his older sister, Caroline Avanzo, who spent more than seven years in Delhi with her husband, a McKinsey & Co Partner who was stationed in the Gurgaon office from 2005 till late 2012. Laurent first came to India as a management student in January 2008 to put in a six-month internship stint with Usha International, the consumer durable and manufacturing company. He craved French desserts during his stay here but the pastries available at The Imperial, The Oberoi and standalone outlets such as Choko La left him unimpressed. So, Laurent set to work to make a detailed business plan for a high-quality French bakery chain in India. His father who had spent three months in India as a backpacking college student in 1967, and has worked in more than 60 countries, was very encouraging. Now, the father-son duo are in the happy throes of building a company. To borrow baking parlance—things have risen fast from their first outlet in DLF Golf Club, Gurgaon in January 2011. They have already invested nearly `12 crore into the business so far, and are working on expansion plans to take the brand to other cities outside of Delhi NCR.

Our Challenges

Kazem Samandari: Entreprenuers are driven by discovering an opportunity, understanding the challenges and difficulties, and then systematically following an objective without being discouraged and defocused. So, in the beginning itself, we decided on certain guidelines. We wanted to do things perfectly, and decided not to take shortcuts even if things got delayed or more expensive. We are not here to make a quick buck. Of course, it took us an eternity to register the company, to get the papers, get the licenses needed and the authorisations but instead of trying to complain, we tried to learn how to do it right.

In most other economies, you know you will have the basics such as power, water and suppliers that can guarantee you a standard, consistent quality of supplies. This was an enormous challenge in India. One of the first things we did while setting up our 9,000 square feet bakery facility in India was to install a water treatment system, and a power standby unit. It’s also been a big struggle to identify reliable partners to import supplies for us—you can’t imagine the nightmare, the absolute nightmare of getting a flour which is of a different gluten or moisture content. I exaggerate not that your croissants can change up to 50 per cent if you use the incorrect flour—they just won’t rise. Plus, all our raw materials are imported. Our butter and cream comes from Normandy. When they go through customs here, it is difficult to make sure that they are properly stored and handled. Such infrastructural issues are very, very difficult in India.

Another bizarre challenge that is unique not to India, but to Delhi in particular is that you can’t have commercial cars that run on anything but CNG. But, engines in CNG vehicles aren’t very strong. There are no commercially available cars that are powerful enough to have sufficient cooling for chilling the pastries when we transport products during the day to our outlets. Delivery is therefore such a challenge for us. We deliver four or five times a day. We had to find a solution to do this—so we got individual chilled transport units. They April 2014 | INC. | 2 1

The Foreign

Desis Club

cost a hell lot of money but we’re now able to deliver chilled products, and keep them at 5 degree-6 degree Celsius for up to 10 hours.

For all these challenges, we took a very pragmatic, systematic approach to go to the root cause, look for solutions, and set them right before we moved ahead. We spent nearly a year— all of 2010—to create this infrastructure before we even baked our first croissant. Other than all of this, the rest is the same as running an F&B business anywhere else—branding, service and the look-and-feel of your outlets.

The India Opportunity:

Laurent Samandari: In 2008, when I first came to India, every day in France there was a big story about the potential of business in India. I haven’t been disappointed.

With L’Opéra, we are in for the long term.

We want to build a strong brand across India and the fact that so much of my family largely lives out of here now shows our next several years will be spent building the brand in India. Every person of the family is involved in some way in running the business—my mother takes care of the customer experience aspect, Fabienne helps out with our event catering vertical. Of course, the business environment has been difficult in the past 12-18 months. But, we are not distracted by a year or two of slow growth. Yes, we feel the pinch of the general economic condition too. So, we’ve tweaked our expansion plan. Instead of organic growth in each of our outlets, we’ve opened new stores to grow at more than 15 per cent.

Personally, India has been great. I think there’s a lot in common between French and Indian culture. They are both very relationship driven. Plus, there is a so much to discover in India. If you take just food, there is so much you can sample. I’ve lived in Singapore too. It was an interesting experience but I feel more comfortable here. Obviously, infrastructure bottlenecks and little respect for punctuality are pet peeves. In fact, recently, I was travelling in Holland and I was so surprised that the train arrived at the station at exact second it was scheduled.

These things surprise me now!

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India can show the world a business model built on both ethical values and profits. bharat mitra, founder, Organic India The story of Organic India, a Lucknow-based organic and herbal agricultural products company, seems straight out of a novel or a movie.

Yoav Lev came to India in the late 1980s for a journey that had nothing to do with business. He had traveled from the United States to meet H.W.L Poonja, the spiritual teacher. The time Lev spent at Papaji’s ashram, as Poonja was fondly called by his disciples, changed his journey for life.

Along with a group of people, and encouraged by his spiritual teacher to start a busines in India, Lev, who has since changed his name to Bharat Mitra (friend of India) set up Organic India in 1997.

The idea was to establish a sustainable business model to support the livelihood of thousands of impoverished farmers by providing training and education, and opening markets for herbal products, such as tulsi.

Over the past two years, Organic India has grown to a firm with annual sales of `150 crore and 300 people. The popularity of its family of herbal products—its flagship tulsi tea, herbal supplements, spices and edible oils— which Organic India exports to more than 35 countries including USA, Canada, Germany and France has given way to what Mitra proudly says is

a sustainable, holistic business built on being both environmentally sustainable and socially responsible. All its products meet the stringest testing standards of the many European countries it exports to.

It has demonstrated that organic (the practice of growing crops without the use of chemical pesticides, herbicides and fertilisers), biodynamic farming (built on crop rotation and a planting calendar that use the cycles of the moon, the sun and the seasons to determine the best time to plant each crop), and ethical wildcrafting (the practice of harvesting plants from the wild in a sustainable manner, without depleting the population or damaging the habitat of the plants that are being harvested) can help create solid companies. Organic India is now looking at an annual revenue of `220 crore by 2015, and has continuously grown at an average 35-40 per cent over the past three years. In early 2013, William Bissell’s Fabindia invested in Organic India, and now owns nearly 40 per cent of the company. This equity partnership is helping script a new chapter of growth.

Mitra credits his company’s success to the ancient wisdom of India. But, wonders why even as consumers across the world are beginning to make buy-

If you always need to be in control, India is not for you.

photo courtesy company

rubia braun, co-founder, metro brava

ing choices based on ethical values and sustainability, India’s business community hasn’t kept pace.

“My spiritual search led me to start business in India. This country has given me so much peace but it also tests my love on a daily basis! There is no doubt that there are many, many challenges especially the bureaucracy and corruption.

But, equally, there is much to guide you if you so want to be steered. More than the challenges of business, what has dismayed me most over the past decade or so is the enthusiasm with which corporate India is embracing Western values, and ways of operation and approach that doesn’t do justice to India. It’s devastating to see how big, global companies have changed Indian society; and why we are so willing to bring to organisations interested in making a quick buck here. There was much talk about India being a global economic leader. India can play a major role only if it connected to its core value, if it respects its ancient wisdom, and learns how to integrate that with business. If India will allow globalisation and MNCs to wash over everything it should hold on to, it won’t work. India is destined to provide the world with a whole new model of doing business where there is a focus on making profits but by being value-based and ethical. We can teach the world that there is no contradiction between those two.”

Rubia Braun landed in India from Australia in 2007 to intern with a sound recording unit in Hyderabad to find that the opportunity didn’t actually exist.

Undaunted, Braun found ways to stay on in India and work in the Indian film industry, first as a spot girl and later as a film producer. By then, she was hooked and in love with the country and its potential, Braun claims. In 2009, she co-founded Metro Brava, a film production company, with her friend Kranthi Varma to make low-budget feature films.

Today, Metro Brava spans the entire gamut of the content business—distribution and exhibition of film content, social media marketing, talent matching, study tours and guest speaking. Braun shares her rules for doing business in India.

Be Prepared to Never Be Fully Prepared: India is a place full of endless adventure and opportunity as well as chaos and complications. But, it’s true that whatever you have planned, doesn’t necessarily happen that way. Once you accept that you’ll never be fully prepared for what’s coming, it gives you a sense of freedom. You will become the most adaptable version of yourself which is an incredible skill for an entrepreneur. If you’re the sort of person that needs to feel totally in control, India might not be the place for you.

An Open Mind is the Only Mind: One of the hardest lessons I had to learn while conducting business here is that your past expectations and opinions might work very nicely overseas, but mean very little in a place as charismatic as India. You need to learn that it’s not so simple as right and wrong—it’s just different. When I first came over I was very confused by the lack of progress on some of the projects I was pushing with all my heart. My local counterparts kept pointing out how hard they work but all I could see was that our deadlines were not being met. This was the difference between my Germanic expectations of meeting deadlines versus the set-process oriented Indian work ethic. I started to focus more upon the processes in place and we met deadlines!

Learn and Learn Quickly: One of the best things about being an entrepreneur in India is that it’s an environment where you can afford to make mistakes and move on. You’ll learn that you are resourceful, passionate, trustworthy and you possess a whole plethora of skills you never knew you had.

Never Compromise on Quality: One of the great things about coming from a foreign country and working in India is that people expect you to be good at what you do. For some reason, you get credibility if you happen to be from the overseas. You get branded as someone who will deliver in quality and have excellent finishing skills. This may or may not be true, but I suggest that you do whatever you can in your power to make sure that quality is one of the things that you consistently deliver. Because it’s often missing in business here, it is much appreciated.

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Built with Love Smarts Great workplace designs that help you stand out, and keep your teams productive

By Ira Swasti

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If you don’t want your employees to behave like factory robots, stop treating your offices as factory assembly lines. Everybody needs inspiration At work and You can’t get that in drab white and beige offices. Here are three thoughtfully designed workplaces that not only break everyday monotony but are designed to reflect employeeS’ needs, responsibilities and interests. So, debunk the belief that great offices are the privilege of the likes of Google and Facebook. Read ahead to see how you can build a distinctive workplace that is also productive and efficient.

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How Walls Can Bring Us Closer Company: Shella Consultants People: 21 Area: 1,750 square feet Cost: `3,428 per square feet

Shella is a Mumbai-based manpower recruiting firm with operations in India, the Middle East, Europe and the US. Its Mumbai office receives a diverse range of people looking for jobs everyday—from carpenters, plumbers to accountants, salesmen and more trained professionals. To be aligned with the company’s business verticals, Shella has two distinct teams—white collar and blue collar—to cater to this wide spectrum of job seekers and prospective recruiters. Architect Madhavi Sagane takes us through the challenge of designing a workplace that caters to the needs of both these groups without disrupting the company’s employee structure.

Sagane can be found on the curated network of interior designers, Dwll.in.

Office entrances often make the mistake of mirroring hotellike lobby receptions giving visitors ample opportunity to get lost. This could be especially intimidating for a semi-literate worker not knowing where to go next, says Sagane. So, she created a pathway entry with floor lighting (instead of on the ceiling) to give visitors a sense of direction and guide them straight into the company’s reception area.

The white laminated wall on the left reflecting the floor lights to save on energy bills is actually a full height dead storage space for Shella’s unending paper work and employee record files. The 16x8x10 space has shutters that open towards the outside.

Photographs courtesy subject

BUILT WITH LOVE + SMARTS

It’s usual to use steps for seating in public places especially while waiting for someone, chatting with a friend or watching a play in an amphitheatre. But imagine a conference room that has steps as seating.

Instead of the standard sixfeet-table and chair conference room, Sagane designed an informal arrangement of stepped platforms that could accommodate 40 people at a time without taking up a lot of space. This “room” is used to hold orientation discussions with Shella’s registered job seekers. You can see a projector and a folded pull-down white screen to hold presentations in this rather easy going environment where people can actually choose to stand or sit. Wait, there’s more.

The top-most step has a shutter that doubles up as storage space. Motivational messages, for customers and employees, are also spread across the entire office space.

The right wall of the ingenious orientation room has a world map highlighting the countries and industries where Shella helps in recruitment of manpower. Kapil Gupta, the director of the firm, had a small world map in his room to brief his clients about the company’s reach, recalls Sagane. That idea morphed into a wall map which along with the colourful visual on the wall opposite the reception desk acts as smart branding to highlight the strengths of the company. The ducts on the top have been kept exposed so as to go with the general concept of a transparent, open office. Of course, it helps that exposed ducts also save on operational costs as compared to hidden ones.

As you enter the working office, the space is divided into a white collar workstation area and a blue collar workstation area with two low height cabins in the centre segregating the two. These cabins are meant for the heads of the two groups of the workforce. This segregation of the workplace was put into place because of the two teams’ different functions and style of working. “While blue collar workers spend most of their writing, filing papers and meeting semi-skilled manual labourers, white collar employees are busy attending international calls over the phone all day,” explains Sagane. The blue collar area (as visible here) has a row of seats while the white collar area on the other side of the yellow cabins has paired seating because of shortage of space.

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Five crucial mistakes you must avoid when designing your office

1.

Not paying enough attention to light and colour: Your office should be as naturally lit as possible. Also, adding too much colour or too many bright shades at the same time can be distracting and actually hamper productivity at work. Therefore, colours should be used very selectively to enliven the space.—Vimi Rath, founder and director, Stonehenge Designs, New Delhi

2.

Ignoring the office’s brand value: It is important for workplace design to help represent and enhance your organisation’s ethos, branding, type of work, aspirations and other intangible aspects.

Most offices we come across are so similar it becomes difficult to distinguish one from the other, regardless of industry and size.

—Sneha Ostawal, principal architect, Source Architecture, Bangalore

The two centre cabins meant for the heads of the blue collar and white collar teams are partly made of glass and partly yellow solid wall.

These cabins have been designed in such a way that the glass side of each cabin faces their respective teams’ work stations while the solid yellow walls faces the other team.

Yellow was strategically used on the walls of these central cabins because the colour is associated with alertness in decision making.

These vinyl print banners on the cabin walls have proverbs the heads of departments want their customers to read when they visit the office. Some of them are in Hindi so that workers not so proficient in English can connect and feel inspired.

Shella employees may be separated when working but break areas such as this library area and the common café area are designed to bring all workers together for lunch and encourage casual conversation.

The director’s office on the left is also encased in glass walls to instill the feeling of transparency among employees i.e. from the boss’ office to the lowest rung designation—everyone’s visible in this close knit office space.

Though the design arrangement may not seem ideal in an age where workplaces are increasingly following a flat structure, this setting is a marked improvement from the company’s previous office where workers from the two departments never met under the same roof.

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BUILT WITH LOVE + SMARTS

3.

Being too “now”: Most offices end up designing for their current needs. But, a dynamic organisation, as most small and mid-size enterprises are, should factor in flexibility, and scope for expansion. Aesthetically also, it is good to balance contemporary influences with a certain timelessness. —Amritha BAllal, founding partner, SpaceMatters, New Delhi

4.

Neglecting employee work patterns: The worst mistake you could make is not communicating with employees to understand their needs and difficulties in the current workplace. Work patterns should be studied more carefully to achieve cost effective design, especially when it comes to installing services such as air conditioning and lighting. —Madhavi Sagane, independent designer, Mumbai

5.

Shying away from professional help: In Indian metros where real estate prices are high, one should use space efficiently. A lot of offices try to fit too much storage or too many people in a little area.

There are innovative ways to use spaces that a designer can help discover. In spite of that, people tend to save costs by hiring local servicemen. —ElricaD’souza, founder, Zyk Design Studio, Mumbai

— You can find works of these five designers at Dwll.in, a curated network of interior designers.

Asia Folded Into a Flexi Module

Photographs courtesy Sanjeet Wahi

Company: INHWA Business Centre owned by AIHP People: A seating capacity of 160 Area: 15,000 square feet Cost: `2,000 per square feet

The INHWA business centre is a

shared workplace catering to a range of companies such as Track My Beat, Shopical and Infoshark working together under one roof.

Based in Gurgaon, the centre has companies with Asia-Pacific clientele. INHWA’s designer Amritha Ballal was driven by a challenging objective—to ensure her design provided flexibility and diversity of choice for its various users yet did not become a generic, monotonous place. (Ballal is also registered at Dwll.in)

Given the primarily Asian clientele for the business centre, Ballal chose the traditional Japanese art of origami to create various design elements around the office. So, when one enters into the reception area (as seen in the photo), you are greeted with a backlit wall behind the reception desk donned in white steel blocks that give an impression of folded paper used to make origami art. Ballal says the wall also reminds her of the Chinese gameTangram (where small geometric elements combine to form an infinite variety of shapes when seen from different angles). This play of light, textures and shapes is sure to leave an impact on first time visitors.

In order to have separate private and public areas for the office, a meeting room was created right at the entrance so that offices on the inside are not disturbed by the flow of visitors. This meeting room is the white angular room on the right of the reception desk whose structure is inspired by fractal geometry intrinsic to Asian design. The angular walls allow for more free space in the reception area as compared to straight rectangular walls.

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BUILT WITH LOVE + SMARTS

The shell of the office is a 20 feet high floor space. To maximise efficiency, a spacious mezzanine floor was introduced. But, the distinction between the two floors is broken (as seen in the photo) in some places, mainly to allow for interactions among employees of different companies. The ability to network and forge new contacts is a key advantage of shared workplaces so the design had to cater to that need.

Again, the dominant palette of natural materials, namely stone, wood and a prioritisation of crafted elements carry forward the Asian feel.

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Gutter Credit here

Unlike many shared workspaces, this is a high-end business centre, where each company suite needs to function independently and wants complete privacy. Thus, the suits are designed as units of four and six. Some have a dedicated executive cabin along with them while others don’t. The design also had to make room for expansion when a company decides to increase the number of team members with minimal intervention. Ballal didn’t want new structures to be constructed or broken down to enable that. Therefore, these suites can be clubbed into modules of three that can be integrated into a whole by removing these glass partitions (as seen in the photo). There is also a small magazine stand created at the end of the corridor as a meeting space for casual conversation.

BUILT WITH LOVE + SMARTS

What stops business owners from “indulging” in office design?

Three interior designers debunk common myths This café area in the office which acts as the public zone for each business unit to feel a part of a larger whole and a bigger community. The café also acts as a second entry point for the office and has been designed to get good amount of natural light.

The overall design of the office is such that individual work areas are given privacy to work while common areas required an understated luxury and interactive atmosphere. Multiple entities had to share the space without intruding on each other’s space.

Thus, the reception and café placed with meeting spaces are placed at either end or the circulation cum interaction zone acts as the connecting element.

Instead of a traditional office space that is lined with a series of doors along corridors, Ballal emphasised on creating the idea of a street where people could emerge from their suits and interact. These “streets” open out into small and bigger squares and have couches to give the feeling of a lounge. It essentially acts as the public, interactive zone.

Rather than introducing artefacts that may or may not suit tastes of the varied brands working together, provisions were made with coves, niches and counters for individuals to personalise their space and reflect the diversity of occupants. In common areas such as this corridor, indoor plants are the main accessory.

1.

Not enough money: It is important for a business owner to put into perspective the cost of having an interior architect on-board. Often, the cost of a trained, seasoned architect is less than the cost of tiling or carpeting. Invest in good, ergonomic furniture, sound airconditioning, lighting and services, and then on aesthetic effects. Spending smartly on an office interior can save the owner a lot of money when it comes to maintenance and depreciation. It counts to spend where there would be maximum impact and where quality should not be sacrificed. Moreover, a space can be designed for a few thousand rupees or for several crores, depending on the needs and means of an organisation.

—Sneha Ostawal, Source Architecture

2.

3.

Not enough time: A lot of business owners shy away from design because they think it’s too time consuming. Yes, it’s true. You have to invest time. When we design, we spend a lot of time to plan properly. Many see this as unproductive. But, one needs to understand the more planned things are, the execution is faster and more accurate. —Vimi Rath, Stonehenge Designs Not enough value: Renowned American designer Charles Eames famously said ‘Whoever said pleasure wasn’t functional.’

Design is not just related to how things look, but how they work. What many business owners miss is that good design can positively reinforce brand identity for customers as well as promote interaction and innovation within the organisation, help employee retention and productivity, and introduce flexibility and fun into the workplace. Design is mostly perceived as something of an indulgence. In fact, good design is the most creative and efficient solution to real issues such as choosing good chairs over expensive wallpaper and good lighting over expensive finishes.

—Amritha Ballal, Space Matters APRIL 2014 | INC. | 3 3

Have Fun. Be Cool.

Build Cheap.

Company: Only Much Louder People: 65 Area: 5,800 square feet Cost: `1,379 per square feet

Only Much Louder is a music events and artist management company based in Mumbai, and are behind the popular properties such as the NH7 Weekender Festival and the popular show The Dewarists. The company has four divisions that cater to TV production, an online music and alternative culture magazine, an online music store and a music festivals division. Designer Ipsit Patel, founder, Patch Design Studio, takes us through the company’s new office next to the very chic Café Zoe in Lower Parel. Beyond the great vibe, the OML office is also a great lesson in cost innovation.

OML’s new office at Mathuradas Mills Compoud in Lower Parel was actually an old printing press. Patel decided to retain the industrial feel of the place to go with the music company’s brief of creating a fun, quirky environment for people whose average age is 27. Patel and his team completely scrubbed off the paint from the ceilings and the wooden trusses that frame the structure to give the place a bare and exposed look.

North light is natural light that comes from the sky rather than directly from the sun. The old factory structure had these north-light windows. Patel’s teams retained them so that employees at OML don’t need to switch on any lights during the day. This leads to significant savings on electricity bills. It is also a huge productivity booster. According to a study conducted by scientists at the University of Michigan and the Swiss Federal Institute of Technology, people who are more exposed to natural light at work are significantly more alert in the beginning of the evening and less sleepy at the end of the evening than those exposed to artificial light. Not just that, our cortisol levels (our body’s anti-stress hormones) drop when we work for long hours in artificial light.

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BUILT WITH LOVE + SMARTS

Photographs courtesy Kunal Bhatia

Because OML has five distinct teams, the office has been designed to include separate team zones for their different workplace demands.

For instance, the video editing team often spends several nights at a stretch working in the office so the edit zone has six bunk beds installed for comfort. However, each team zone is an open room with no doors. They all open into the main central corridor of the office.

Given the nature of the work—where employees have to constantly collaborate and work with one another—the big long tables in the room have been kept partition free to allow unhindered communication among team members. Just bring in your laptops, sit anywhere and start working.

The old-world style switches and sockets of the factory have also been retained and placed in the centre of the long worktable for plugging in their laptops or mobiles. Not only do these add to the aesthetics of the room, they are also easier to repair as they are not fixed into the walls.

The room partitions are made up of corrugated tin sheets (that are usually used to make roofs and ceilings, thus saving on substantial costs) and old, reclaimed glass. The frosted glass that has also been used in places on these partitions doubles up as a white board for jotting down thoughts while brainstorming.

The company culture at the OML office is non-hierarchical and to keep communication open, these partitions are not solid walls but have small windows to speak to others in adjacent rooms. The windows have been placed such that they are at a height of four feet so you’re not distracted when you’re sitting and working but can see though into the other room when you’re standing and want to interact.

The mezzanine floor on top has the pantry, the breakout space with a foosball table and small table tennis tables and the directors’ workstations. Given the flat company structure, the director’s don’t have a cabin or cubicle for themselves either.

They simply have two different work tables (one yellow and another green) supported by old cot legs. Sometimes during lunch, the OML team is known to call local chefs to cook pasta and other delicacies in the pantry, to be served hot.

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Painting the town red. Or blue, yellow and green?

Choosing the right colour for your office depends on the kind of business you run, the people you work with and the clients you expect to come visiting. Here’s a guide to choosing the right colours to create the right mood for different spaces in your office.

Blue:

The colour of the sea and the sky is known to have a calming effect on people. It is also known to create an environment of confidence, security and high mental concentration. This could be a great colour to use in spaces that require a lot of mind work and high levels of stress, say, bankers, accountants, lawyers and financial advisers.

Yellow:

This is one of the most difficult colours to work with because you have to make sure you use just the right amount in your office. It is considered an optimistic colour that uplift spirits, and therefore a great choice to use in spaces where you want to stimulate creativity among your employees. But too much of yellow can cause eye fatigue and some research studies have also shown people lose their temper more often in yellow rooms.

Having an open, interactive atmosphere at work was essential for OML employees. So a long, broad corridor has been created through the centre of the office with potted plant seating on one side. These seating areas make for a great place to relax or have informal meetings without having to go to the conference room. The plants also add freshness to the workplace. In a study undertaken in 2013, scientists from the University of Exeter found that having real plants at the workplace helps improve concentration, productivity and employee well being by as much as 47 per cent.

The other side of the corridor has slightly different zones. The workstations here are made up of ply and black laminate with a wooden border. Wooden cot legs have been used to support these tables which also add a dash of colour. As there are no demarcated workstations, when more people join the team, it’s easy to scooch in more people on the same table. The yellow patch line on the floor and the yellow-black painted columns on the side add fun elements, and makes the corridor floor look more like a street or a runway.

Green:

Green is considered to be the colour of balance. It is also known to bring freshness and can be used to open up a space to make smaller offices seem bigger. But, it works best when paired with a more stimulating colour because on its own, it can sometimes appear stagnant. That’s definitely not a good thing if you don’t want your employees to have a slumber party at work.

Red:

Red is known to induce enthusiasm, energy and action. It also has the potential to make a room look smaller. So it is best to avoid this shade for already small offices. Red is the best colour to be used in spaces where you want employees to do physical work. It is also a good colour to use in the pantry or dining areas of the office as it stimulates hunger.

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This is the mid-landing strip between the ground floor and the mezzanine floor. It is often used as a smaller meeting space to have oneon-one conversations. But remove the chairs and it also acts like the pulpit or the podium from where all-company meetings or town halls are held. From this vantage point, the entire office gathered on the ground floor and those chilling out on the mezzanine floor can be addressed at the same time. To add a fun element to this space, the design team painted the floor with a gigantic “H” referring to a helipad.

Tactics. Trends. Best Practices.

Strategy

thinkstockphotos.in

Managing Using Neuroscience to Boost Your Creativity To really unleash your company’s creativity, look to the squishy place it all begins: the chemistry in the brain.

That breakthrough idea you had that doubled sales? Your incredibly funny quip at the strategy meeting? Don’t get too full of yourself—you were probably just having a good day chemically.

Or so says Baba Shiv, a marketing professor at Stanford’s Graduate School of Business. Shiv’s research focuses on the role neural structures play in decision making and economic behaviour. He has also long been fascinated by the biological roots of creativity.

According to Shiv, creativity resides at the intersection of two primary pathways in the brain. Along one pathway, the april 2014 | INC. | 3 7

Strategy

Creative Cultures

Here’s how three companies break from routine to help promote creative thinking.

Improv Classes

Method, a San Francisco-based maker of cleaning products, offers employees training in improv acting—not to check the box on some management fad but to give them an understanding of how small performance details such as stance, breath, or mindset can help improve creative thinking. Method also attempts to shift employees’ perspectives by requiring everyone in the company to serve as the office receptionist for a day, all in an effort to keep people “weird, creative, and humble.”

Brain Breaks

The New Jersey-based startup Caktus makes the Hug, a device that keeps tabs on how much water you drink. But once a month, the company’s four Finnish co-founders set aside 24 hours to let their brains run wild.

They’ll start brainstorming over a drink (or a few) on Thursday afternoon and give themselves until Friday evening to come up with a dirty prototype—or a really good blueprint. “It’s just a way to give our brains room to breathe,” says co-founder Panu KeskiPukkila.

Hackathons

At Animoto, a New York Citybased startup that converts photos and video clips into online movies, money is on the line in a quarterly hackathon, meant to spark new ideas from the company’s 65 employees. Cash prizes of $500 are given to the winning teams in three areas: most technically challenging, most useful, and people’s choice.

A recent winner improved the service’s synchronisation of images and music, a fix that will be included in an upcoming software release.

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neurotransmitter serotonin governs well as by consumption of alcohol whether you are operating from a and caffeine. sense of calm and contentment or Serotonin levels tend to be highest in from a position of anxiety and fear. the morning, making it an optimal On the other pathway, dopamine time to schedule brainstorming moves you from boredom or apathy to sessions. To make the most out of the excitement and engagement. morning’s elevated levels of serotonin, The right neurochemical cocktail for Shiv suggests mixing carbs in favour your best creative work, according to of a high-protein breakfast. “That’s the Shiv, is a high level best brain food,” he says. of both serotonin “The proteins produced and dopamine. from it in the body are “This will produce a converted to the muchcondition in which coveted serotonin and you are calm but dopamine.” And caffeine? energised,” he says.

It acts as a “physiological How do you arouser,” says Shiv. In achieve this other words, it will Schedule blissfully creative magnify whatever morning state? For starters, emotion you’re already meetings you can reduce feeling. Translation: If stress in the office. you’re on a hot streak of Spikes in stress developing new ideas, Eat a hormones such as protein-rich have another cup of cortisol counteract coffee; if you’re anxious breakfast the creativityabout meeting your boosting effects of budget, skip it.

Walk before, Cardiovascular exercise serotonin. Plus, or during stressed-out people also enhances the meetings tend to be closed off neurological conditions to new ideas, says for creative thinking, by Shiv. Studies of releasing a peptide that Reduce baboons have helps produce serotonin. workplace shown that when If you have an afternoon stress experiencing stress, brainstorming meeting, they refuse to seek Shiv recommends first out new territory taking a 10- to 15-minute (or mates, for that brisk walk. “Or, better yet, matter). For humans, that means walk and talk,” he says. people are more likely to stick to Maintaining a variety of intellectual familiarity when they are under too interests also keeps the creative juices much pressure. flowing. Shiv says it’s important to talk Poor sleep can also have negative to people in other disciplines and read effects on creativity. Shiv says people widely outside your field to develop need up to two hours of deep, non“knowledge nodes”—bits of unrelated REM sleep each night for the brain to information that can come together to restore the proper levels of serotonin. produce an unexpected solution. “This This sort of deep sleep accounts for is how Steve Jobs operated,” Shiv says. less than 30 per cent of the average “His wide-ranging interests allowed person’s slumber, but it can be for a creative lifetime of connecting diminished by sleep interruptions as the dots.” —Ryan Underwood

Four Creativity Boosters:

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Strategy

Built for Creativity

Your office design can help kindle employee creativity. Here are three pointers from Scott Wyatt of NBBJ architects of Seattle, which has designed offices for Google, Reebok, and the Gates Foundation.

Go Natural

Employees are more creative (and less stressed) when they can look up from their work and see trees and natural light.

Even if you’re in a city, try to give everyone window views. Or at least buy your poor employees some plants.

Think Paris

The ideal office layout? A system of quiet side streets and grand boulevards like the Champs-Élysées in Paris. Employees have quiet to think, but they’re still forced to mingle with—and bounce ideas off of— their co-workers.

Raise the Roof

If you want to promote blue-sky thinking, you should increase employee headroom at the office. Studies suggest that higher ceilings in the workplace encourage abstract, conceptual thinking.

Strategy

Liam Martin can laugh now. A few years ago, he was overwhelmed by the work he faced as founder of VTA Method, a tutoring company. So he asked an assistant to handle refunds. Not a good move, as it turned out.

For example: A customer asked for $1,500 back; her child didn’t need the extra sessions. Easy enough request, right? But the assistant, instead, refunded the entire semester’s payment of $10,000.

Says Martin: “I almost had a breakdown.”

Now, he is the owner of Staff.com, an Ottawa, Ontario, temp-employee firm.

You might think he maintains a tight grip on everything, given the refund debacle.

In fact, he has gone the other way. “When you delegate tasks to others, the orders shouldn’t be easy to understand—they should be impossible to misunderstand,” he says. At Staff.com, Martin came up with a novel solution: He created a wiki that describes how to handle some 500 operational issues. “How can I lead a large company if I’m still doing credit card refunds?” he says.

Of course, tales of micromanaging entrepreneurs’ messing up and finding redemption seem to date back to the Jurassic period. But as the economy improves and the pace of business picks up, it doesn’t hurt to take a look again at how you’re spending your time—and

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how to manage it more efficiently. In other words: Relearn what you already know. As Harvard professor Linda Hill points out, understanding something intellectually and actually acting on it are two different things. Some entrepreneurs just can’t let go.

“Many company leaders won’t delegate until they’re so exhausted and burned out that they have to,” says Hill, who deals with the topic in two of her books (the most recent being 2011’s Being the Boss: The 3 Imperatives for Becoming a Great Leader).

Inc. talked with business owners who found religion and came up with ways to become better delegators—even if their first instinct was to do every last thing themselves. Their advice:

mind around the idea of shifting more duties to them,” says Alfredo Atanacio, CEO of Uassist.me, a Miami company that provides online personal assistants.

For instance, Atanacio teaches a course on entrepreneurship. At the beginning, he delegated research to an assistant. But the assistant delivered such a huge pile of potentially relevant material that it took Atanacio longer to go through it all than it would have taken him to seek out the best sources himself.

“But I liked her work ethic and her thoroughness,” he says, “and over time, I showed her how to find exactly the kinds of things I wanted and how to effectively summarise them for me. Now, this delegation saves me a ton of time.”

Be patient.

Trevor Sumner, founder of LocalVox, a New York City marketing firm, takes a close look at every one of his employees

“As you get a clearer sense of how your employees work, you get more peace of

Follow the 80 per cent rule.

thinkstockphotos.in

Managing Just Trust The power to delegate may not come easily.

But your company and employees need you tolet go.

Strategy

and assesses his or her skill level. “If you have a direct report who can do a task 80 per cent as well as you can, you need to let them do it,” says Sumner.

Take a hike.

That may be the hardest thing for you or any chief executive to do, but it’s a great way to find out who on your staff really has the chops. “Train your employees, then go on vacation,” says Vanessa Van Edwards, founder of Science of People, a Portland, Oregon-based consulting firm.

“Sometimes, we need to get away to prove that people can do it on their own.”

If you don’t have it, buy it.

Says Chuck Cohn, founder of Varsity Tutors in St. Louis: “If you realise you aren’t doing a great job managing your team, bring in a professional manager.”

Adds Clay Hebert, co-founder of WorkHacks, a personal-productivity company in New York City: “Great leaders hire amazing people and then get out of the way.” —Scott Leibs

Only 9 per cent of executives are “satisfied” with the way they spend their time. The others? They fall into four time-management categories: crisis managers, cheerleaders, online junkies, and schmoozers.

Where they go wrong “Schmoozers” spend

“Online junkies” spend

“Cheerleaders” spend

67% 17% 36% 45% spend more time on shortterm, unexpected issues compared with the “satisfied” 9-percenters.

more time with clients and customers at the expense of communicating with their colleagues.

1. Keep a diary

Jeffrey Pfeffer, a Stanford business school professor, is a big fan of keeping track of tasks in an organised way. Take notes daily. From there, you can figure out the best use of your time— and empower your best employees as well. “You may discover that you aren’t really involving other workers in decision making,” he says.

2. Have more people report to you

By increasing your so-called span of control, you can force yourself to delegate, simply because you can’t micromanage the activities of so many people.

The result? You will have more time to get your claws into the tasks that really matter.

3. Know your people (really know them)

Time Troubles

“Crisis managers” spend

The Micromanager’s Guide to Delegation

more time on email and voice mail at the expense of face-to-face communication.

more time on pep talks with staff, but 39% less time with clients.

New York City consultant John Beeson recommends assessing the skills of each team member and determining where training may be needed. (Or decide to hire someone who can do the job right away.) Also, he says: Look for things that take a lot of time but you don’t do well, and give those tasks to someone else. Then, of course, get the heck out of the way.

4. Be a good coach

Each employee is different, right? So delegate differently, and evaluate your talent much as a good coach would. One employee may excel the first day on the job. Others may need you to stay involved longer.

“Think of delegation as an investment,” says Beeson.

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Strategy

Finance 4 Money Mistakes That Entrepreneurs Must Avoid A lot of business owners think they have the investing game figured out.

But here’s some money-management advice that may save you from yourself in the long run.

You’ve heard the advice before: Diversify, make time

work for you, and embrace stocks. For most folks, those are the core pillars of any investment strategy.

For business owners, that’s true only up to a point.

You are different and need to invest accordingly.

That assumes, ahem, that you’re investing at all— and haven’t fallen for the old misconception that your company is the only investment you will ever need.

Says Jeffrey Levine of Alkon & Levine, a Newton, Massachusetts, accounting firm specialising in small business: “I want entrepreneurs to know that the odds that their company will become a huge success— enough to meet all their financial needs through retirement—are against them.

So it’s important to put something aside on a regular basis.” In other words: Build your company as if it will last forever, but invest your personal wealth as if everything will collapse tomorrow. We talked with experts such as Levine and Allan Roth, of Wealth Logic, an investment-advisory firm in Colorado Springs, Colorado, about the other mistakes business owners make.

Here are some ways not to be your own financial enemy.

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1. Be a conservative

You already believe that you aren’t like regular wage earners—and when it comes to investing, you’re not. Your salaried peers, even at the same age, are going to be more aggressive in their investments. “There is no single magic metric for entrepreneurs,” Roth says. “Adages like ‘Subtract your age from 100 and that’s the percentage of your portfolio that should be in stocks’ just don’t apply. It’s highly situational.” That said, Roth suggests that entrepreneurs who have substantial assets invested in their companies should favour more conservative options. Moshe Milevsky, author of Are You a Stock or a Bond?, says launching a company is like investing in an über-growth stock: When it comes to your portfolio, you should be a little more bond-centric as a hedge against your risky line of business.

STOCKS 90% BONDS 10%

AGGRESSIVE PORTFOLIO

HEDGING

Age aside, startup owners should lower risk and have more bonds.

BONDS 50%

STOCKS 50%

THE ENTREPRENEUR’S PORTFOLIO

*Source – Morningstar

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2. Save something, please

6 YEARS

It’s almost a cliche in the small-business community: You take every last dime in your pocket or every last dime from your friends and family and plunk it right into your business until death do you part. But as you can see from the chart (right), the return on that investment is far from a sure thing.

Simply put, sinking your every last cent into your company isn’t a good idea. In fact, treating your business as your sole investment is the ultimate “anti-diversification” strategy. Says Levine: “To me, it always makes sense to save for a rainy day...build your business and your portfolio.”

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LOOK OUT BELOW

The odds aganist a startup’s succeeding are high.In other words: Keep some of your cash out of the business.

66% 63%

60% 55%

4

50% 44%

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71% 69%

36% 25% PERCENTAGE OF BUSINESSES FAILED BY YEAR OF OPERATION

*Source – Small Business Development Center

3. Startups have their own tax privileges

Especially in the startup years, you may have tax-savings options that employees don’t. Here’s one sometimes overlooked move that has helped owners who are booking losses. Wealth Logic’s Roth suggests a Roth IRA conversion strategy. Normally, when converting from a traditional IRA to a Roth IRA (no relation), investors pay tax. But an owner suffering a loss can often make the conversion tax free—by offsetting losses from the business against income from the conversion. Bottom line: You move taxdeferred IRA funds to a tax-free Roth IRA without paying taxes, or by paying only a low marginal rate.

4. Don’t fall in love with your own expertise

“One common mistake that entrepreneurs make when investing,” says Roth, “is to invest too heavily in the industry that their business is in. They feel that because they know that sector so well, they stand a better chance of success.” Far from guaranteed. Sure, you might get lucky, and your sector could leave the S&P in the dust. But keep in mind that such outperformance can also reverse.

Remember those banks a few short years ago or tech in 2000? —Scott Leibs

RISK LEVELS

The S&P 500 was less volatile than two popular sector funds,as seen here.

S&P 500 INDEX FUND 12 TECHNOLOGY SECTOR FUNDS 16 FINANCIAL SECTOR FUNDS 17

*Source – Morningstar

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strategy

“Being unreasonable is my work mantra— how much can I stretch myself.”

The Way I Work | Dippak Khurana, Vserv.mobi

Dippak Khurana, 41, began his entrepreneurial journey in college by selling t-shirts of rock bands which made him quite popular. His business forays since then have been quite varied though—he began a poultry farm venture in Jamshedpur and then spent 17 years in new media, first helping Times of India launch its online portal and then building mobile platforms for Yahoo and Mauj Mobile. Through his corporate life, the entrepreneurial itch was a constant. So, in January 2010, he co-founded Vserv.mobi, a mobile advertising exchange, with Ashay Padwal, a former colleague. The past four years at Vserv have been exciting. Last year they served 386 billion ad requests across 200 countries, a rise of 56 per cent from their first year. Khurana believes his penchant for the unreasonable—unreasonable ambitions, unreasonable effort and unreasonable expectations have coded Vserv’s steep rise.

As told to Sonal Khetarpal | Photographs by jiten gandhi 4 4 | INC. |

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I am super paranoid about discipline. My daily schedule and my meal timings are all fixed.

Lunch is at 1.15pm and dinner at 7pm every day. Also, I get up at 6.45am and spend the first 45 minutes to get my 9-year old daughter ready for school. As she leaves, I also leave for my morning fitness regime. It is always a mix of three things—walking, running and swimming. I round that up with climbing up the stairs to my home on the 17th floor. This whole routine takes up to an hour and fifteen minutes and I am usually back by 8.45am. By that time my younger daughter has also woken up so I play with her for sometime. Mornings is the only time when I get to see my kids because when I get home at 10pm, they have already gone to bed.

After this, my day passes very quickly. Everything happens at a very fast speed, even my meals. I eat milk and cornflakes at home. The other half of my breakfast, bread and omelette, I carry with me. I eat it on my way to work to save time. Sometimes I walk the 10 minute distance to office, sometimes I drive.

On Top of His Game Discipline, detailed planning and a strong dose of ambition keeps Vserv going, says Dippak Khurana.

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strategy

“I am very rigid about deadlines. If work gets done after that, the law of diminishing returns kicks in especially if you’re a fast-growing company.”

As I reach office, the first thing I do is to categorise my work along two cuts—strategic versus operational, and urgent versus important. To me, urgent work is what matters most at a given point of time and gives results in near short term. Important work might not give results now but will be extremely critical in the coming two or three months—such as, doing the groundwork before signing a big deal so I am able to navigate through it efficiently when that happens, or talking to different people before narrowing down on the best one to hire. People generally get caught up with things that are urgent in nature and not important. It is essential to do urgent things but not at the cost of ignoring important ones. This habit helps me divide my time efficiently and put the tasks to be completed in a day in perspective.

The next thing I do is look at my calendar for the day. Even before my day starts, it is already locked with several meetings that were scheduled earlier. I usually have four to six meetings on any given day. It is also open for everyone in my team to access so they have a fair idea of what my day looks like. And, in case they want to block it for some discussion, they are free to do so.

As we have entered the fifth year of our operation, most of the internal meetings are to determine the key focus areas, discuss problems and review the work done. Whatever the meeting is for, the underlying rule we follow is that we see ourselves as a football team. Just like the game of football, each team member for every new project wears a different hat. So based on the skill set required for the project, we decide who will be the captain, vice captain or the person sitting on the bench. Just because I am the CEO of the company, doesn’t mean I will be the one taking all the final decisions. I can be the person sitting on the bench too. Really, it doesn’t matter what title or designation each of us carry. Titles are more to tell the external world what we do for the company. This non-hierarchical strategy works for us.

Due to the different accountability lines for different projects, people learn how to work with each other and start believing in one another. I follow this practise across all the teams so that even

when I am not present, everyone uses this approach and it becomes the culture of the organisation.

To promote this culture, I also have to keep myself in check. It is very easy to tell others what they should or should not do. But, I do not want to come across as the final decision maker. So, what I always do is present a problem to my team and ask them for steps required to make it happen. I never use the phrase ‘as soon as possible’. It is always ‘we’. And we collectively decide by when the particular goal should be achieved.

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4 6 | INC. |

april 2014

ut, once we decide on a goal or a timeline I am very rigid about it. If something has been committed, it should be met by the confirmed date. This is because an effort is rewarding only if it is finished in a certain period of time. If it gets done after that, the law of diminishing returns kicks in especially if you’re a fast-growing company.

The growth at Vserv has kept things exciting for us. In the past four years, we have already opened ten offices outside of India— in Singapore, London, San Francisco, Jakarta, Kuala Lumpur, Cape Town, Ho Chi Minh City, Dubai, Thailand and Philippines.

We are now targeting markets in Latin America, especially Brazil, Mexico and Argentina. It is to study these emerging markets and meet people from different associations there that I travel for around 15 days a month. Another agenda for official trips is attending conferences and events. A lot of times we exhibit at such conferences or I just attend those to be aware of the new trends. I attend around 20 conferences and exhibitions in a year.

The reason for this large number is because each of the four different entities that we cater to—telcos, app developers, publishers, and advertisers—are present at different events. To be updated in each of these spaces, it is essential to attend their respective events. It is also a good opportunity to explain to potential customers the work we are doing at Vserv.

The effort to be current with business trends especially in an ecosystem as dynamic as mobile pays rewards. Uptil 2012, we

strategy

In 2013, we had set the target to get 110 people on board before the year end.

We were a team of 70 then and needed people to fill in different functions including technology and product development. Since we wanted to become a $100 million company by December 2015, we had to start hiring to scale up fast. Getting 110 people meant a new person joins us every third day. That is a humongous task.

So, our business heads along with the human resource team decided to play multiple roles. We divided amongst ourselves the functions we would hire people for. Initially, we did get bogged down with the idea of 110 people. But, then we divided the target in smaller milestones of 15 days. And, after every two weeks we would decide the next plan. What we also committed to each other was constant communication and feedback.

When you work on a phenomenal pace and seemingly impossible goals, you can’t do it without tight coordination.

We put that coordination in place. For 40 per cent of the people, I was the first person to interview them. For key positions such as business development head, national sales manager I wanted to World Ready Vserv has seen a steep make the pitch myself. So, I would go growth. Khurana says they have through several profiles on LinkedIn opened 10 global offices in four years. everyday and schedule interview or calls with them personally. worked with mobile app developers in the emerging markets by I wanted to be very sure of the people we were hiring for helping them monetise their apps. We did that by integration of the company. We are not a large organisation where all you advertisements in the various apps through our product, need is people with the relevant skills. In a growing company AppWrapper. This way advertisers could reach out to the audisuch as ours, we need passionate people who have been ence through mobile. But last year, to enable our advertisers through the grind and are good at problem solving. I didn’t reach a more targeted audience based on demographics and spend much time on asking people about their work profiles. usage pattens we introduced another platform, AudiencePro. To My favourite question to gauge passion and problem solving do that, we partner with telcos to get privacy complaint user skill is to ask people to tell us about the three biggest information to reach the right target audience and we charge our challenges they have solved in their professional career. This advertisers a premium for this targetting, which we also share massive hiring process was tough—but, we’ve done it. We are a with the telcos. Now, telcos can also leverage the mobile advertis- 180 people company today. ing opportunity.

Meeting targets like these is exhilarating. I am a big believer Innovation and development requires speed. The high pace at in unreasonableness—how much can I stretch myself whether it which we work means there is always a huge line up of things to be is my morning exercise regime, or the targets I set at work. This done on any given day. I usually work for up to 12 hours a day and guides my personal and professional life, and ensures I always always, almost always, end up setting up larger targets for myself. set higher benchmarks for myself.

April 2014 | INC. | 47

founders forum teN Questions for Dr Sanjeev K Chaudhry

His children joke that he was born wearing a tie because he wears one every day. This is counterintuitive to today’s relaxed office wear trend. But Dr Chaudhry, MD of SRL Diagnostics, believes being formal and sharp gives his company that added power edge.

What company do you not want to start but wish someone else would?

BlackBerry. It was a company that had everything going right and is now losing its momentum.

I want it to do well.

Whom would you trade places with for a day?

travel, where would you be right now?

Would love to move 50 years ahead when health care delivery would be highly automated.

Gut instinct versus expertise: which is more important, and why?

I used to rely on expertise.

But, with experience, expertise evolves into gut. Today, gut rules.

Which TV or movie character you would like to go into business with?

I would like to collaborate with Aamir Khan for the television programme Satyamev Jayate to voice out the unethical practices in the medical fraternity in India.

What would your employees be surprised to know about you?

How closely I monitor the business without ruffling feathers.

What’s the toughest part of being in charge?

That I am accountable for the 1,00,000 diagnostic tests we perform in a day, even though I’m not involved in the physical process of performing the tests.

What’s the one skill you want to improve upon, personally?

To read between the lines and hear what is not being said. These skills are essential to be a good leader.

What’s the best part of the day?

The first two hours after I wake up at 4am. I spend this time in reflecting and thinking about what needs to be done today.

as told to Sonal Khetarpal

courtesy Subject

With the Prime Minister of India. To rectify the medical policies in the constitution.

4 8 | INC. | march 2014

What part of your job would you gladly give up?

Managing the day-today operations. But, what I would never give up is being the ethical champion of the If you company. could time

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