Inc. India, April 2011 - Wealth Over the Counter

APRIL 2011

Plan your company’s European excursion with care

PAGE 57

HOW I DID IT

WEALTH OVER THE COUNTER

The Magazine for Growing Companies

& JAMBOREE PAGE 52

Khemlani has made a clean sweep of the facade access business

Take a peek into the minds of great entrepreneurs

PAGE 42

PAGE 34

Wealth

Over the Counter

The MAGAZINE for GROWING COMPANIES

Guardian Lifecare has 230 stores and 170 crore in revenue. But, Ashutosh Garg’s health fix has just begun. PAGE 26

April 2011 | 150 | Volume 02 | Issue 03 A 9.9 Media Publication

VINEET GUPTA PARABOLIC DRUG S

“The question has changed from will Guardian survive, to how big it can be?”

—Ashutosh Garg

April 2011

CONTENTS

Pirate of the Random World He is young, hip and hates exercise—read how Jatin Varma keeps a check on his young staff.

26 The Perfect Prescription

In just seven years, Ashutosh Garg has built Guardian Lifecare into a 170 crore pharmacy retail chain. His next shot at health will come from adding 100 stores every year.

46 How I Got Good at Making Money Or, what I learned from 20 years of selling shoes, computers, weaponry, books, and software. by jason fried

by shreyasi singh

52 How I Did It Vineet Gupta

A serial entrepreneur, Vineet Gupta gave up studying at Yale to start a small manufacturing unit. He now owns and manages several companies, including the 650 crore Parabolic Drugs, and Jamboree, a leading test preparation centre.

42 Access, Uninterrupted

With the help of ropes, cradles and trolleys that travel up tall, glass buildings, Ashok Khemlani has created a 60 crore facade access business. by shreyasi singh

by pooja kothari

34 How Great Entrepreneurs Think

Here’s the short version: they like action. The long version involves a number of insights gleaned from a fascinating study of highly-accomplished company builders.

PHOTOGRAPH BY SUBHOJIT PAUL

by leigh buchanan

THIS EDITION OF INC. MAGAZINE is published under license from Mansueto Ventures LLC, New York, New York. Editorial items appearing on pages 11-12, 23, 34-40, 46-51, and 62-63 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

Ashutosh Garg, founder of Guardian Lifecare, a pharmacy retail chain. Photographed by Subhojit Paul in Gurgaon.

Cover design by PC Anoop.

APRIL 2011 | INC. | 1

CONTENTS

April 2011 57

06 16

21

05 Editor’s Letter

06 Behind the Scenes Companies that keep India’s busiest and third-largest museum in mint condition.

09 Launch

Integrating design with manufacturing for profits A research initiative T he Ticker The Inc. Data Bank A Skimmer’s Guide to Brainsteering: A Better Approach to Breakthrough Ideas, by Kevin P. Coyne H ow the University of Utah surpassed MIT Research Corner: A gullibility index for financial bubbles?

14 Passions

Abishek Laxminarayan has scored many a points on and off the court with his tennis swings.

16 Earn Your Spurs Jessie Paul Make sure your brands go beyond just saying hello.

2 | INC. | APRIL 2011

18 Innovation

An eco-friendly energy cake made from industrial waste.

68 Legacy

Anant Pai, 1929-2011 A storyteller who weaved colour into young lives with Amar Chitra Katha.

21 The Goods

Notebooks that are easy on your pocket Keep Keylogger at bay Sturdy portable drives Anti-virus software: Titanium Maximum Security 2011 A battle of gaming consoles An entry level SLR camera for your travels T eresa Mayer uses Evernote Things Sheetal Thakur cannot live without

Guidebook, No. 3

How to design your office.

Find the Guidebook following page 24.

STRATEGY 57 GOING GLOBAL A European Excursion—how Indian companies should prepare for the journey 59 SALES & MARKETING Selling reminders to those who forget 60 ELEVATOR PITCH It sells mini-meals in boxes. Can Ashish Sondhi raise 30 crore to take Indian In a Box all over the country?

62 SALES & MARKETING How to create a killer e-mail newsletter

64 The Way I Work

Jatin Varma didn’t know much about the media industry. But, with a team of young college graduates, he’s got a cracking storyboard for Twenty Onwards Media. When not answering every mail in his inbox, he enjoys thinking up irreverent jibes with his team. as told to sunaina sehgal

MAIL Rajyasree Sen

Cooking up a storm of bytes

PAGE 64

How

RAMES GROVERH bui lt the CMS gro up PAGE 54

Augment the reality of your brand

Get clear about your company’s future

PAGE 57

PAGE 40

The MAGAZINE for GROWING COMPANIES

—AKASH SINGHVI, Mindspright Consultants, Mumbai

UNITED BY AMBITION

I happened to read Inc. for the first time today while I was travelling. I must say, it was different, refreshing and crisp. I must congratulate you, though I picked it up quite late (issue 12). Keep up the good work. All the best.

MARCH 2011

Crisp and refreshing

THE WAY I WORK

UNITED BY

AMBITION

UDAY CHALLU and VISHAL DHAR have built iYogi into a Rs-250 crore tech support business in four years.

Now, they’re chasing billion-dollar dreams. PAGE 32 March 2011 | 150 | Volume 02 | Issue 02 A 9.9 Media Publication

Couldn’t put it down I was ready to start off on a trip when I received Inc. India’s special February issue. As I was going away on an extended trip, I really didn’t have the time to read through a magazine. But, I could not resist opening the first few pages. Before I knew it, I was through to the last page. This is a great magazine with simple and inspiring stories. I have been reading the past few issues. Frankly, in the first few issues, the cover looked more like an ad journal. But the content is engaging.

Help us learn more Hearty congratulations to you and your team for having successfully completed a year. I’ve been enjoying the informative stories of success that can be found in your magazine. May I suggest you also include a section of disaster stories, for all of us to learn and understand which mistakes to avoid.

DESIGN SR CREATIVE DIRECTOR: JAYAN K NARAYANAN ART DIRECTOR: BINESH SREEDHARAN ASSOCIATE ART DIRECTOR: ANIL VK SR VISUALISER: PC ANOOP SR DESIGNERS: PRASANTH TR, ANIL T, JOFFY JOSE ANOOP VERMA, NV BAIJU, VINOD SHINDE & CHANDER DANGE DESIGNERS: SRISTI MAURYA, SUNEESH K SHIGIL N & CHARU DWIVEDI CHIEF PHOTOGRAPHER: SUBHOJIT PAUL PHOTOGRAPHER: JITEN GANDHI

To submit a letter, or alert us to an error, write to us at inc.india@9dot9.in Letters may be edited for space and style. Submission constitutes permission to use.

COMMUNITY TEAM PRODUCT MANAGER: MAHESH RAVI SENIOR MANAGER: SHREYA PILANI ASSOCIATE: DEEPIKA SHARMA

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

SALES & MARKETING VICE PRESIDENT: NAVEEN CHAND SINGH NATIONAL MANAGER (EVENTS AND SPECIAL PROJECTS): MAHANTESH GODI REGIONAL MANAGER (SOUTH & WEST) VINODH K (+ 91 97407 14817) NATIONAL SALES MANAGER (INC. INDIA) PRANAV SARAN (+ 91 98117 77113) MANAGER (KOLKATA) JAYANTA BHATTACHARYA (+91 93318 29284) PRODUCTION & LOGISTICS SR GENERAL MANAGER (OPERATIONS) SHIVSHANKAR M HIREMATH PRODUCTION EXECUTIVE VILAS MHATRE LOGISTICS MP SINGH, MOHD. ANSARI

4 | INC. | APRIL 2011

Curry-Nation Brand Conversations, Mumbai

On e-mail

Managing Director, Nazara Technologies, Mumbai

EDITORIAL MANAGING EDITOR: SHREYASI SINGH CONSULTANT FEATURES EDITOR: PAYEL MUKHERJEE ASSISTANT FEATURES EDITOR: ROHINI BANERJEE FEATURE WRITER: SUNAINA SEHGAL CO-ORDINATOR: AKHIL BERY

nagessh pannaswami

ashwin shah

vikash mittersain

MANAGING DIRECTOR: DR PRAMATH RAJ SINHA PRINTER & PUBLISHER: ANURADHA DAS MATHUR

For those who dare It gives a deeper understanding of new and interesting ventures, and ideas that people are implementing. Daring to do is a big achievement; your magazine showcases these individuals beautifully.

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 SILVER POINT PRESS PVT LTD., A-403, TTC IND. AREA, NEAR ANTHONY MOTORS, MAHAPE, NAVI MUMBAI-400701, DISTRICT THANE EDITOR: ANURADHA DAS MATHUR

EDITOR’S LETTER

Down New Roads Growing up, entrepreneurship wasn’t a word I heard very often, if at all. In my family,

we were raised to become bureaucrats, doctors, lawyers, bankers, and only over the last decade or so, corporate warriors. Business was most definitely a taboo word. And, even becoming a journalist, like I did, was an unusual career choice.

But, like many of the entrepreneurs we feature in this magazine tell us often­—what you don’t inherit, you value more. For them, the thrill lies in creating new roadmaps, where discoveries are stumbled upon, not pencilled in years in advance.

Thanks to my entrepreneur-husband, I am today fortunate to live such a life, as well.

It’s a sentiment, I know, Vera Garg, wife of Ashutosh Garg, who we feature on our cover this time, will agree with. Along with most others, she didn’t think it was THINGS I LEARNT wise of Garg to leave his highly sucIN THIS ISSUE cessful corporate career to open, of Don’t take no for an all things, a “chemist” store in Gurganswer. aon in 2003. That outing has grown Ashok Khemlani into Guardian Lifecare, a 230-outlet didn’t till he got a bank guarantee. pharmacy, health and wellness retail chain. And, Vera says she now An idea might not always be everything. “tells everybody I meet” to become Execution is crucial. an entrepreneur.

There’s no one right Garg found his “calling” when he way of doing was 46 years old. Will he also envy, anything, especially like I do, Vineet Gupta’s clarity of managing vision? It isn’t often that a young employees. Point Indian Institute of Technology (IIT) taken, Jatin Varma.

graduate gives up admission to the prestigious Yale University, and buys an ailing styrofoam plant instead. Since then, he’s built multiples businesses both in manufacturing and services.

Read his fascinating account on Page 52.

As “entre-philes”, a term I borrow from my senior colleague, Anuradha, we marvel at how entrepreneurs create what they do. On Page 34, get a glimpse inside the minds of some great entrepreneurs in our special feature from the US edition.

I sincerely hope you enjoy this issue. It’s a special one for me, and your comments, feedback and suggestions will make it more so. Do write in.

Shreyasi Singh shreyasi.singh@9dot9.in

APRIL 2011 | INC. | 5

BEHIND THE SCENES

Companies at the Heart of Everyday Life

Exhibits Aurangzeb’s sword and Noor Jehan’s dagger are some of the 430,000 deadly, or simply eyepopping Indian, oriental or western curios that find their place in Salar Jung Museum. Many are showcased in glass exhibits made by Kitply Industries. Founded in 1982 by P.K. Goenka, Kitply employs a staff of 10,000 and more, and has 30 sales offices. It is spread across a network of more than1,000 dealers in the Middle East, Bangladesh, Pakistan and Nepal.

Security systems Salar Jung Museum is bit of a guards’ nightmare– last year around 11 lakh visitors came through its doors, making it India’s busiest. Keeping its lines in order and visitors in place is Pune-based Honeywell Automation which has installed the museum’s security and fire alarm systems. The 900 core company was founded by Anant Maheshwar in 1988, and has 2,500 employees.

6 | INC. | APRIL 2011

Salar Jung Museum, Hyderabad

03.03.11 12:45 PM

Cooling solutions Besides kacchi biryani, spices and colourful bangles, the City of Pearls is known for its strong Deccan sun.

Visitors beat the heat by taking refuge in the confines of Salar Jung’s centrally air-conditioned halls, thanks to Blue Star, a cooling company founded in 1943 by Mohan T. Advani. There are few banks, offices, restaurants and factories in India that would not have used their air conditioners and water coolers. The company is today valued at a cool 2,500 crore.

Restoration services Located on the Musi river, Salar Jung was founded in 1951. It has three main buildings—Central, Eastern (Mir Laiq Ali Khan Bhavan) and Western Blocks (Mir Turab Ali Khan Bhavan). Of the 38 galleries in the museum, 14 were refurbished by Nawab Kasim Ali Khan Associates. Besides modernising the auditorium and galleries, the 6-employee company, established in 1976 by Kasim Ali Khan, has also

worked on the overall look of the building.

PHOTOGRAPH BY ARSHANAPALLY PRABHAKAR RAO

REPORTED BY SUNAINA SEHGAL & DEEPIKA SHARMA

AD

News, Ideas & Trends in Brief

LAUNCH FOCUS

A green initiative

A Truly Long Life Let Dell help reduce your e-waste

Innovate or Lose Out (From left to right) Kumar Kandaswami, Balaji Sahu, N.D. Wagh and Rafiq Somani at the panel discussion.

Integrating Design with Manufacturing for Profits Session draws product honchos It was quite the picnic in Pune with loads of “PLM talk” thrown in. For those uninitiated, PLM stands for Product Lifecycle Management. It is a software or tool that helps manage a product’s life cycle–since its conception, design and manufacture, to its service and introduction to the market.

At a recent Pune event, designers, engifirm to make its mark in the global marneers, manufacturing firms and business ket. He based his talk on a recent survey decision makers from local industries, conducted by Deloitte. Kandaswami got together for an interactive session on focused on macro-level areas that, he felt, the need for “efficient design” and the Indian manufacturers needed to focus on impact of designing in a very competitive to improve their shares. global market.

Rafiq Somani, area vice president and Experts who lent their support to the country manager of PTC, spoke on the event included, Kumar Kandaswami, myriad product development pressures senior director, Deloitte Touche Tohmastu that senior managers and executives face (India). He delivered his presentation on in the Indian manufacturing sector. In the need for innovation in the Indian India, especially, manufacturing leaders manufacturing sector and how it helps a continued on the next page

Computer manufacturer Dell has launched a first-of-its-kind initiative for recycling laptop batteries in India. Consumers can now recycle old lithium ion laptop batteries and reduce e-waste.

The Dell Free Laptop Battery Recycling Programme is free for consumers. It began as a twomonth pilot starting February 11, in Mumbai, Delhi and Chennai, and will extend to other parts of the country.

When consumers return their non-working lithium ion batteries from the Dell range of computers for recycling, Dell will offer a discount of 500 on the purchase of a replacement laptop battery.

Dell was the first company to provide consumers with free and convenient recycling worldwide and began offering the service in India in 2006.

The company’s policy is to offer consumers free recycling for any Dell branded product at anytime, and free recycling of other branded products with the purchase of a new Dell product.

Last year, the computer maker had launched its “Dell Go Green Challenge” that invited consumers to share ideas and innovations on green technology through photographs or videos online. Head to the nearest Dell outlet. And do your bit to prevent e-waste from entering landfills.

—Inc. India

APRIL 2011 | INC. | 9

LAUNCH

The Ticker

Integrating Design with Manufacturing...

need to spend most of their time in “chaos” management; leaving them little time to think of innovations in terms of product and process development.

Rafiq went on to elaborate how product lifecycle management helps companies collect data from different quarters (people in and out of the company) through communication and collaboration, and configures them to create a single centralised source as a reference for product development. With examples from several internationally known firms, he pointed out the importance and

Focusing on the growing need for “proper product designing” in the shortest time, and process innovation by including customer needs assessment, Balaji said: “Competition can be avoided by cleverly integrating design and manufacturing. This is a key tool. To not only rake in profit, but to make a break through. With this marriage of innovation and manufacturing, difficulties in implementing cost, quality and productivity become simpler.”

“Understanding requirements; a component’s design performance parameters, manufacturing constraints and variations of short and long term manufacturing chains, firms can innovate to surprise the customers. An understanding of the process is required. It may be engineered through innovation for better cost, quality and productivity.

Wise Words Rafiq Somani would rather Also, internal manufachave people innovate, than negotiate. turing standards can be need for strong technologies and developed for both design and process point of view. But, this tools, as a back end process to capture data and store them— standard must be updated time and build the next version of a to time,” he added. Wagh emphaproduct with higher quality, and sised on the need of interacting in a safer and economic way. with customers to get an idea He also stressed on the need of the products that are to capture the customers’ (or end finding demand in the users’) thoughts and involve market. IT applications them in product development— ease the design prothe process popularly called cesses and help colco-creation of products. lect, classify, analyse The discussions got really and incorporate data animated when panelists began while designing. This fielding questions from the audi- helps substantially in ence. Besides Rafiq and Kumar, bringing out the right prodN.D. Wagh, vice president, Kiruct, and one that wins the loskar Brothers, and Balaji Sahu, market.—P.K. Chatterjee head of manufacturing at Gabriel India, also shared their experiences.

10 | INC. | APRIL 2011

rao

School’s started folks!

India’s largest listed education firm, Educomp Solutions, founded by Shantanu Prakash, has launched the India Educaprakash tion Fund, with 50 crore from its kitty. It’s first investment has gone to Beacon Learning, a management and services provider for HEIs...

Health is wealth, so believes Amrutanjan Healthcare that picked up Fruitnik, a beverage owned by Siva Soft Drink, for 26.2 crore...

From the body to the soul, USbased dating site Ignighter, has raised $3 million in Series A funding from a group a fruitful acquistion of high-profile investors, including Indian angels Rajan Anandan, Sasha Mirchandani, and Sunjay Guleria, CEO of Exclusively.in. Founded in 2008, Ignighter was compelled to focus on India as its traffic from the country grew exponentially. With two million subscribers and growing, Ignighter will use the funds to set up a centre here...On more concrete matters, Baring Private Equity Partners India, is reportedly ready to invest 475 crore in Delhi-based Oriental Structural Engineers, which specialises in constructing runways and highways…Down south, Probe Equity Research, an investment research and analytics firm, raised early-stage funding from Accel Ventures...To celebrate its tenth year, Arvind Rao’s OnMobile Global, recently announced a one for one bonus issue of equity shares to all its shareholders. It’s their way of saying thank you.—Inc. India

LAUNCH

inc. data bank

Crunching the numbers

WORKING WOMEN

A skimmer’s guide to the latest business books

GLOBAL ENTREPRENEURS

Number of bureaucratic procedures required to establish a business:

The book: Brainsteering: A Better Approach to Breakthrough Ideas,

by Kevin P. Coyne and Shawn T. Coyne; HarperBusiness.

6

The big idea: Ask and ye shall conceive. Idea generation structured around questions that send the mind down unfamiliar paths is far more fruitful than out-of-the-box free-for-alls.

In China (Shanghai):

14

THE WORLD BANK

BUSINESS COSTS

OFFICE LIFE

The average annual cost per employee of complying with federal regulations:

Portion of American workplaces that provide coffee to employees:

$7,755

Large businesses (more than 500 employees) Increase since 2000 in the number of management positions in US companies held by women US GOVERNMENT ACCOUNTABILITY OFFICE

$10,585 Small businesses (fewer than 20 employees)

SMALL BUSINESS ADMINISTRATION

33%

Portion of workers who describe the coffee as:

54% TOLERABLE

30% GREAT

6% OTHER

10% TERRIBLE

TAXES

Number of audits conducted by the IRS on individual company owners in 2008:

Average additional taxes collected per audited return:

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

EMPLOYMENT

BRAUN RESEARCH: REUTERS

GROWTH INDUSTRY

Increase in small-business hires in November 2010 compared with a year earlier:

5.1%

2001

Increase in average paycheck for that period:

0.6% SUREPAYROLL

2010

Approximate increase in the number of distilleries nation wide from 2001 to 2010:

750%

DISTILLED SPIRITS COUNCIL OF THE UNITED STATES

—Compiled by John Kador

The backstory: The brothers Coyne are former McKinseyites who run their own boutique consulting firm, The Coyne Partnership. They have spent more than a decade refining their approach to idea creation for clients.

If you read nothing else: The chapter on developing effective questions analyses queries that produce good answers.

Such questions identify customer problems and reveal approaches that don’t fall under standard operating procedures.

The chapter on balancing creativity and analysis walks readers through a remarkably detailed and illuminating exe­ gesis of a new-business idea— a service that refuels cars while they sit in a parking lot all day.

Ask and ye shall receive: Those uninspired to develop their questions can loot from the 101 examples in the appendix. For example: How would our product change if it were tailored for every customer? Or: Who is our single most successful salesperson, and what does he or she say about our product that is different from what an average salesperson says?

Rigor rating: 8 (1=Who Moved My Cheese?; 10=Good to Great).

Though they don’t always name their subjects, the Coynes draw on more than 130 company examples. —Leigh Buchanan APRIL 2011 | INC. | 11

ANTHONY VERDE

In the United States (New York City):

LAUNCH

The University of Utah launched more start-ups based on faculty research in 2009 than any other single university, according to the most recent survey from the Association of University Technology Managers. Utah, thanks to its sixyear-old Technology Venture Development programme, bested even MIT, the survey’s reigning champion. Utah started 19 businesses, including a wastewatermanagement company and a pharmaceutical company working Business Creator University of Utah’s Jack Brittain on HIV and AIDS drugs. And, it did all this with only a quarter of MIT’s $1.4 billion budget. Inc. reporter Issie Lapowsky spoke with the programme’s head, Jack Brittain, about the path to success.

How has the university changed its approach to commercialising technology?

Universities are often so focused on getting reimbursements that they try to get money way too early. We quit worrying about reimbursements and looked at the long-term view. Our university now views returns as creating businesses in our communities that employ our graduates. Of the 111 companies we’ve spun off in the past five years, 90 of them are based in Utah. And their survival rate is remarkably high.

What do you offer your start-ups to help them become sustainable businesses?

We fund legal expenses, accounting and finance services, websites and working space. That costs us about $500,000 a year. What really matters, though, is product development. Our average expenditure is only around $1,200 per prototype, but we’ve seen that a small investment in people who have expertise can make a big difference.

What plans do you have for the programme?

We’re in the process of offering our services to small regional universities, which have interesting things going on but don’t have the capacity to bring them to market. We can handle that for them for free. We want to help inventive people in all of higher education be part of the innovation economy.

How do you get students involved?

Students are in every piece of this. We have a big health-sciences centre, so we produce a lot of medical devices. One of our most successful companies, Catheter Connections, makes an infection-control device for catheters. Bio-engineering students worked on the product development. Students wrote the business plan. Our venture fund, also all students, created a document to shop around to investors, who now share ownership. We call this total mission integration, and we’re evangelical about it.

12 | INC. | APRIL 2011

Controlling bubbles

The study: “Bubbles, Gullibility, and Other Challenges for Economics, Psychology, Sociology, and Information Sciences,” by Andrew Odlyzko, the School of Mathematics at the University of Minnesota, published on FirstMonday.org.

The thesis: Even the most savvy business leaders succumb to speculative frenzy. But warning signs are sometimes present. Therefore, building a “gullibility index” could help investors and policy-makers identify irrational behaviour.

The method: Odlyzko analyses financial bubbles, including the most recent real estate frenzy and the resulting financial crisis. He gives tech bubbles especially close scrutiny, quantifying, for example, the extent to which telecom companies in the late 1990s overestimated demand for internet capacity.

Intriguing point: Bubbles have a positive side: they foster excitement and contribute to progress. For example, many of the survivors of the dot-com bust, such as Google, Amazon, and eBay, are today’s Web traffic and e-commerce leaders.

The takeaway: A gullibility index can be constructed by quantifying indicators such as investor expectations of annual returns of 20 per cent or higher. Odlyzko plans to use social networking sites as he works to establish a gul­libility index within the next few years.—J.J. McCorvey

COURTESY SUBJECT

Move Over MIT Utah has a new tech powerhouse

RESEARCH CORNER

LAUNCH

Cashing Their Tees Off A burst of growth, splashed with colour They might let their customers dictate designs, but, Navneet Rai and Kashyap Dalal, co-founders of Inkfruit, an e-commerce tee shirt store that uses crowd sourcing to build its catalogue, have perfected their own blueprint for growth. The young entrepreneurs, both alumni of IIT Bombay, recently raised a reported $3 million from SAIF Partners, an early stage venture capital firm. Earlier, Inkfruit had got angel investments from Seedfund partners Anand Lunia and Mahesh Murthy. Now, Rai and Dalal are inking in wild plans to increase their 100,000 plus customers, and become India’s defining graphic tee shirt company.

How do you plan to use these funds?

RAI: We will mainly use the money for product

expansion—help artists take their creativity beyond tee shirts to umbrellas and laptop bags. We’ll also spend on a state-of-the-art user interface. Touch and feel is very important for a company like ours. Buying clothes is different from buying railway or movie tickets. You need to let your customers experience your brand online, so they trust you enough to buy.

Technology should help us get over trust deficit.

DALAL: Participation is the core to our business. We need to play good hosts to people visiting us, to invest in customer experience. Our IT infrastructure needs to be robust, appealing and intuitive. That is our biggest concern right now. It is our top priority for this year. We are hunting for great talent in this space.

When you are not worried about cash, is it easier to be truly creative? Do you want to go all out now?

DALAL: Inkfruit is not just about being wildly creative. We want

to give people a wide range of designs to choose from. We want to capture every person’s frame of mind, every style, every aesthetic. We don’t want to be niche players, or to work in a certain zone. We attract all kinds of designs and artists from the crazy to the normal. The point is to let our customers decide.

Will you expand your physical presence after this infusion of capital?

RAI: We are not saying no to offline availabilities to reach the

customer. We are present in 350 multiple brand outlets in 18 states of the country, and are also tying up with B2B customers.

E-commerce is one channel to reach the customer, and even here we are attracting bulk buyers. We had gone offline because we had seen it helped us break the trust. If people had seen our stuff PHOTOGRAPH BY JITEN GANDHI

The Smiles Pile Up With tee shirts under their belt, Dalal (right) and Rai are now looking for other canvasses.

in big shops, they found it easier to make a purchase on our website. Still, the main focus remains on e-commerce, offline growth will come from more business in the stores we are present in, not by adding stores.

You began the company on a lark. Did you see yourselves reaching here? Personally, how does it feel to have raised venture capital (VC) funding?

DALAL: When we began, it was more about having fun. We

wanted to enjoy the ride. As things have moved on, the passion now is to take the company to places. The enjoyment comes more out of increasing the scope of Inkfruit.

RAI: It’s been a very fulfilling and rewarding journey up to here.

These events are milestones for us. They help on many levels.

When you see your parents, telling neighbours and relatives that our boys are doing well, it feels great. It’s normal for most parents to discourage entrepreneurship. They are anxious because they fear things might not work. Something like this helps build faith.

—Shreyasi Singh APRIL 2011 | INC. | 13

PASSIONS

Life Outside the Office

Abishek Laxminaryan’s relationship with tennis began innocuously enough. He started playing when he was just five, because he wanted to be cool, like his elder brother. But, the backhands and aces scored a match point for life.

Laxminarayan, founder and co-CEO of venture capital firm Indavest, coached under C.G. Krishna Bhupathi, tennis ace Mahesh Bhupathi’s father. His regular playmate growing up was Rohan Bopanna, one of India’s top rankers today.

Ranked in the Top 300 in the world in the juniors, Laxminarayan was good enough to turn pro, but academics eventually won out in his choice of career. Tennis helped here, too. “I got into Cornell University because of the credits I earned playing.”

He also met his business partner, Greg Artz, on-court at Cornell. Their partnership scores equally well off the court too. Laxminarayan makes sure he swings in 10 hours of play every month, and his favourite opponent is former coach Bhupathi Senior.

Professionally Speaking Expert coaching can cost from anything 30,000 to a lakh Favourite Players Roger Federer Rohan Bopanna His Match Points Participated in multiple tournaments in Japan, Philippines, Brunei, Bangladesh and Sri Lanka as a junior player More recently, reached the semi-finals of the Father and Son Championship at Indiranagar Club in Bengaluru with his father

14 | INC. | APRIL 2011

Abishek Laxminarayan

Lawn Tennis

“This is a dummy pq. real pq is tk. This is a dummy pq, real pq is tk tk tk tk.”

—This is a pq attribute

“Tennis is a tough game. You lose often. It teaches you to take losses in your stride, but also never to give up.”

PHOTOGRAPH BY S. RADHAKRISHNA

REPORTED BY SUNAINA SEHGAL

EARN YOUR SPURS BY JESSIE PAUL

What do you say after you say hello?

Marketers continue to rely on old tricks that stop at saying hello. Learn how to make friends for life.

I was at the India vs England World Cup match in Bengaluru, and was, as always, awed by the money that goes into these things. Every brand that could afford it had hopped on to the bandwagon, burning tonnes of money to “connect” with you, dear consumer. Ever more innovative ways are now used to sell every inch of televisable ground with branding on the grass, the stadium (with changing videos screens to further optimise the usage) and the Castrol “worm” and Yahoo!’s sound meter.

But, the focus of almost all media was just to say “hello”, not to continue the conversation.

Many did try a multimedia approach, but with no interaction. For example, Reebok promoted its Zigtech shoes on the screen and on the ground, and flew a blimp shaped like a shoe. A blimp? Really, Reebok?

The first advertising blimp was used in 1912 (by Swiss chocolatier Suchard, for those interested) and I was rather surprised that it’s still a supporting media for a brand as high-tech and youth-oriented as Reebok. What surprised me even more was that when I went to the refreshment area there was no demo booth to try on the shoe—surely a loss of opportunity to address a 45,000-strong stadium crowd.

For a country where everyone seems to have a mobile phone growing out of their ears (and, especially for a match that had Reliance as a key sponsor) the absence of mobile advertising was jarring. Here are some ideas I thought they could have tried—Reebok could have asked attendees to sign up to receive promo codes during the match with the possibility of winning a small freebie. Also, if this promo code was taken to a showroom within three days, they would get a dis-

16 | INC. | APRIL 2011

count on purchase. They could have then enticed people to stay subscribed for further promo codes. The objective should be to create a virtual Reebok community that embraces every Reebok customer in India.

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EARN YOUR SPURS

Also, what about the game itself? How about some audience interaction? For example, how about having the audience vote through SMS or online what the next stroke should be? That gets shown on the screen. If the player actually plays what the audience wants, he gets, say, double the runs. Just imagine—the population of India determining the play! (Cricket fans, please don’t burn the magazine, this is just an idea.)

In the tech world, disruptive technologies—mobile, social, cloud, analytics, game theory, and video and unified communications—are getting a lot of mindshare, according to Ray Wang of Constellation Research.

Of these, mobile, social, analytics, game theory and videos are exciting to marketers because they allow them to have a conversation with customers and potential buyers unobtrusively and at the right time, which is called the “moment of truth”. (For example, being hungry and bored at midnight in a hotel is a moment of truth - that’s why hotels have premium priced mini-bars.)

So, let’s assume you want to drive a conversation beyond just the hello. Think about what you would do in the real world.

1. Understand a little bit about the person: demographics, culture, quirks. You would do this either by studying him visually or asking around, or both.

2. After you have said hello, you would chat about a few simple things like the weather, a person’s education or maybe, where they work.

3. If you are the organised type, you would then file this away into your address book.

4. A “nice to meet you” note would go out, and if both of you are on Facebook or LinkedIn you’d request to connect.

5. The next time you’re doing something you think this person maybe interested in, you’re likely to ping him.

6. When you have a big social occasion (say a wedding) you would send out an invitation. If you really want them to attend, a personal visit maybe necessary.

Sounds simple? Well, using technology, brands can pretty much replicate this process. For example, let’s assume you’re a sports shoe company. You can ask your

customers to provide a little information when they’re in the shop buying stuff. This doesn’t need to be personally identifiable, but you will get a good idea about the general demographics of your target audience.

Then when you sponsor a big sports event, you could ask attendees to wear your brand of shoe and announce an SMS draw for the shoe you are launching, or for limited edition shoe-laces. (You could also tie up with a sports-drink fellow sponsor to offer a free drink to those spotted in your shoes, thereby benefiting both of you.)

Now that you have permission to contact them, you can ask them to sign up as fans on your social media presence. Those

these solutions do is apply technology to automate the process of insights and allow you to direct resources where it would be most fertile.

To my knowledge a few folks in India have started doing some bits of this, though I am not aware of any compnay that deploys it fully. One mobile operator used social media to understand which locations would be more susceptible to conversion once Mobile Number Portability (MNP) came in. An FMCG company used social media to understand the food habits of its customers and to get a direct insight into the stock situation at their local outlets. I used Facebook and Twitter

It’s cheaper to sell to existing, loyal customers than to new ones—this is what Social CRM does. sites allow you to monitor their conversations and step in immediately if something requires your attention. You can also apply analytics on that data to understand problem spots and identify areas for potential innovation. If you and your “fans” have enabled some form of geo-location tracking you could ping them every time they are near your retail shop and offer them a spot incentive to step in.

Over time, you would ensure that they never look at another brand because you are taking such good care of them.

India is a country with a lot of pent-up demand. So it is very possible to meet sales targets by addressing a fresh audience every time. And therefore, after-sales service falls by the wayside. Hoping that poor service won’t catch up with you is a short-term strategy. In the long run, it is cheaper to sell to existing, loyal customers than to new ones—which is what Social CRM, described above does. Generally speaking, we also have a huge shortage of talent—given the rising demand. What

to provide my publisher real-time stock status of my book, No Money Marketing, at retail outlets.

There’s another reason to do this—if you don’t have listening and insight distillation mechanisms in place, you may be missing out on important conversations and thoughts your customers are sharing among themselves. What customers hear from other customers will always be more credible than anything a brand says. And with SMS and high-speed access, it’s very simple today to receive a feedback from friends or watch a review video on the go.

For all the millions spent on cricket advertising, the morning after, not one of those brands has moved me closer to a purchase. A question of hello, goodbye?

Jessie Paul is the CEO of Paul Writer, a firm that also hosts India’s largest community of B2B marketers at paulwriter.com. She is the author of No Money Marketing .

APRIL 2011 | INC. | 17

INNOVATION

Companies on the Cutting Edge

Waste to energy

India produces around 5 million tonnes of pig iron waste every year.

Environmental scientist Dr A.K. Singh has dug out good news from this sludge—a way to recycle it by combining it with clay and agrowaste (read: husk). The result— URJA Cakes. Recognised by the DST-Lockheed Martin India Innovation Growth Programme, each cake burns up to four hours with temperatures reaching nearly 700 degree Celsius and saves 40 per cent energy. These also emit 237 per cent less carbon dioxide than wood. In two years, Singh has sold more than one lakh cakes.

As a matter of fact Each 400 gram disc costs 5 Cakes weigh from 400 grams (domestic use) to 2 kilograms (industrial use) Perforations help the cakes burn faster 35 per cent cheaper than the available subsidised LPG cylinder Mixed with 20 per cent clay; these ignite faster than ordinary fuel

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URJA Cakes

Growithus

“This is a win-win situation for social, economic and environmental verticals.”

— Dr A.K. Singh, founder and CEO, Growithus Consulting and Marketing

PHOTOGRAPH BY SUBHOJIT PAUL

REPORTED BY SUNAINA SEHGAL & AKHIL BERY

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Your Business Toolbox

THE GOODS Go Mobile on a Budget Best new notebooks in the market Notebooks have moved beyond

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basic functionalities, and can easily give three year old desktops a run for their money. The new products are enriched with strong processing power, graphics hardware, lots of RAM, storage space, good looks, and best of all, attractive pricing.

Here’s what four recent launches priced under 40,000 can do for you.—Inc. India

ASUS X52J

ASUS P52F

ACER ASPIRE 4820T

ACER 5742G

The X52J is an attractive notebook with a bright red lid and appealing graphics. The ASUS logo is embossed in steel—a smart touch. The Radeon HD 6370 graphics and Core i3 processor ensures it’s no slouch, and the large, flat keys get high points in the usability department. The keys also have great tactile feedback which enhances usability. Biometrics login is supported via facial recognition, and the trackpad incorporates basic gesturebased controls. The trackpad lacks precision though. price: 38,799

The ASUS P52F is 15.6 inches, and has a much faster processor than its marginally costlier sibling. But, it makes do with integrated (Intel) graphics.

ASUS upped the RAM by 1 GB to 4 GB, which makes sense because integrated graphics will utilise main system memory, leaving less memory for OS and application use. With a matte, black finish, this is a great corporate notebook, also because of its hard drive protection. The cushioning built into the notebook protects the drive from sharp impacts. price: 37,999

Acer Aspire 4820T edges even the best notebooks thanks to its superior battery performance.

It scores with its very handy battery and optimized power consumption, both of which ensure a whopping 427 minutes of backup even while playing back a .VOB file—that’s a shade over seven hours. Many of you will find the smart grey colour in tone with your business meeting dress code. But, this is strictly for those on the go. It has limited graphics power, so you won’t be able to use it for your gaming needs. price: 35,999

At 2.6 kilograms, and with a display size of 15.6 inches, the Acer 5742G is definitely not the sort of machine you’ll want to tote around a lot. The 5742G is well built and looks rather suave—the floating keypad works well. The trackpad when you want to pinch zoom isn’t as accurate as desired. But, a dedicated graphic solution—a GeForce GT 540M is a big addon. It has a good CPU, strong GPU and 3 GB of RAM, with 500 GB of storage. Its HDMI feature means that you can hook it up to your HDTV as well. price: 38,990 APRIL 2011 | INC. | 2 1

THE GOODS

Products + Services

The Power of Portable Drives Carry your world along with these sturdy drives Your laptops have your life stored in them—important presentations, documents, and valuable memories in photographs and videos. To transfer these easily, or to have them on the go with you, check these portable drives out.—Inc. India IOMEGA EGO ITB USB 3.0 DRIVE

Keylogger is a programme that is capable of tracking and transmitting the keys struck on the keyboard of any computer system. It can record instant messages, e-mails and any information you type at any time on your keyboard. The files can be saved to a specific location or e-mailed to another person. The software also traces e-mail addresses used and all website URLs visited by you. The tool runs in invisible mode and is protected by the hacker through a password!

One can hardly tell its dreadful existence. Even if it is detected, the password does not allow the user to uninstall it.

If such a programme were to infect your system, then the hacker will be able to get access to passwords of every account you log into (think your bank and credit card accounts).

Remove a Keylogger from your system by running a good antispyware programme. You can also go in for a comprehensive online scan.

If you have a Windows-based system, then Windows Live OneCare (http://onecare.live.com) is a good option. It’s a free service, but it’s only available if you are using a genuine Windows operating system.

2 2 | INC. | APRIL 2011

A-DATA NH-03

This gives exceptional performance with fast data transfer speeds, up to 120MB/s. It also includes a 256-bit AES encryption software that will keep personal data safe. It has a thermal vent design which effectively dissipates heat although its glossy finish may heat things up. At 5,600 for 1TB, it makes for a great value for money data storage solution. It wins our vote for build quality, performance and attractive pricing. But, it would’ve been nice to have more features.

SQUEAKY CLEAN

An anti-virus software guarantees maximum protection The highest level offering from Trend Micro, the Titanium Maximum Security 2011 is certainly user-friendly. One can install it in just a few clicks. It has another advantage—it uses cloud security technology and real time antivirus to defend the hardware immediately. This means one does not have to wait for updates. Priced at 1,200 for a single user, the suite is not very copious though in terms of features—it lacks a USB vaccine and firewall. But, a 10 GB online backup is a good addition. min requirements os: Windows 7/ Vista / XP cpu: 450 MHz + ram: 256 MB +

PHOTOGRAPHS COURTESY COMPANY

Stay safe by keeping this deadly hacking programme at a distance

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Backward compatible, this drive has a super-speed USB 3.0 interface that allows you to write speeds of around 90 MB/s and read speeds of 92MB/s. This is a good three-time jump of 28 MB/s write and 27 MB/s read speeds obtained on USB 2.0 ports. Competitively priced at 6,999, the easy to carry, eGo, weighs 02.3kg, and has dimensions of 131 x 93 x 26 mm. It’s sleek and black, and looks well built. No wonder it boasts about being the market leader in external hard drive solutions!

Work + Play

THE GOODS

Face-off Clever games for couch potatoes A hard day at work may have been your excuse to skip the gym and head home for some

quality time with the telly. But, with the new generation of motion gaming, there’s no dearth of action even as a couch potato. Check out these consoles.—Inc. India

FIRST PERSON

How I use Evernote to stay organised

teresa meyer owner, stage a star, cincinnati

NINTENDO WII

Nintendo revolutionised the gaming scene in 2006 with a technology that, till then, existed only in sci-fi movies— motion sensors. Their first attempt didn’t offer the best control, an issue that Nintendo overcame with MotionPlus (2009). Now the new Wii consoles come packed with Wii Sports, Wii Sports Resort and the ability to create Mii characters. Wireless motion controls are now possible with the Wii Remote Plus controller. Amateurs will point, swing and slice. If we could ask for more, it would be to give the graphics a fresh lease of life. price: 14,990 (Starting price, with console)

MICROSOFT KINECT

Microsoft went a step ahead and launched motion sensor gaming’s next step—full-body gaming. There are no controls to work here. Kinect responds to how you move.

So, if you want to kick, then kick. As you play, Kinect creates a digital skeleton of your avatar based on depth data.

So, sensors process the movement and translate it into game play. Simply put, the game is about all of you— arms, legs, knees and hips.

To get into the game, you’ll need to get off the couch.

Caution: With limited games on offer, hardcore gamers will not be very impressed. price: 9,990 (Without the Xbox)

SONY PLAYSTATION MOVE

Sony has introduced its India pricing for Move, its latest version. The good news—it is incredibly priced. A combination of the PS 3 system, the PS Eye camera and the PS Move motion control, Move’s motion gaming technology is housed in the pairing of the motion controller and eye camera. The sphere at the end of the motion controller allows the eye camera to pinpoint movement and position which is translated into game play. Non-gamers will find it easy to play even if they’ve never played before.

With great graphics and sound quality, regular gamers will relish it, too. price: 1,899

SHOWCASE

PHOTOGRAPHS COURTESY COMPANY

Canon Powershot G12 While on holiday, it’s always nice to have an entry-level SLR that offers great image quality, and helps you capture memories. Canon’s latest offering–G12–is perfect for amateur photographers, who want a lot of manual controls and a smaller, lighter body. It offers good performance for every day shooting. At base ISO does a decent job. Like all Canon cameras, the G12 also produces life-like colours with minimal manual intervention.

The result looks natural to the eye, instead of being artificially boosted. sensor: 10-megapixel, CCD iso range: 80-3200 aperture range: f2.8-f4.5 zoom: 28-140 (5x) weight: 401 grams

My company helps people stage their homes for sale. It’s hard to keep track of all details. So, last year, I did a Google search for small business organising and a web-based tool called Evernote came up. I’ve been using it ever since.

After setting up a free account, you can type notes, clip out webpages, and upload files or photos and assign them to different Evernote “notebooks.” I create a notebook for each of my clients, label it with the property name, and assign searchable tags to it. Then, I fill it with proposals, contracts, bills, and information such as home security codes. I have a variety of notebooks, including one filled with web clippings of light fixtures.

Evernote integrates with a number of programmes and devices. Its Microsoft Outlook plug-in, for example, lets me send client e-mails directly to their notebooks. I can also scan a document or image on my portable Doxie scanner and save it directly to Evernote. My online account syncs with my Evernote iPhone app, so I can pull up information when I’m visiting clients.

I recently upgraded to Evernote’s premium version, which costs $5 a month. Now, I can store up to 1GB of data and allow my assistants to add and edit notebook contents.

—As told to J.J. McCorvey APRIL 2011 | INC. | 2 3

THE GOODS

Beyond Business

Things I Cannot Live Without...

Exercise junkie I run every evening for an hour. I’ll only exercise indoors if it’s raining.

Staple feast I have to eat rice, dal and yoghurt for one meal every day.

Not without melody I can’t drive without my music system’s remote in my hand.

FOUNDER, FREEDOM2BE

Sheetal Thakur

Trigger-happy My Canon SLR travels with me everywhere.

I love photographing nature.

2 4 | INC. | APRIL 2011

Left to her, Sheetal Thakur, the founder of Freedom2BE, a tour company exclusively for women, would dump her camera and laptop in her five-year-old car, and make a home in the Himalayas. A nature buff, she says her car was the “best thing to have happened to her.”

The icy-blue Maruti has travelled with her everywhere, even up to Lahaul Spiti. Thakur is now readying it for a Himalayan car rally.

Having grown up playing sports like cricket and volleyball, she now gets her outdoors kick from exploring hidden trails in the Sahyadri range around Pune, where she recently shifted to after 15 years in Delhi.

She’ll need the stamina going ahead, as she plans a wide range of off-the-grid tours for women travellers.—Shreyasi Singh

...and What I Covet A new set of wheels I’d love to have a Honda CRV. It gives you great command.

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2 6 | INC. | APRIL 2011

THE PERFECT PRESCRIPTION ASHUTOSH GARG has mastered achievement.

Not satisfied with being just a corporate hot shot, he used his formidable managerial skills to create a robust 230 store pharmacy retail chain. He now wants to boost Guardian Lifecare to a top line of 300 crore and 500 stores over the next two years.

BY SHREYASI SINGH | PHOTOGRAPHS BY SUBHOJIT PAUL

APRIL 2011 | INC. | 2 7

“I didn’t know if I’d be able to fly economy again.

I hadn’t done it for so long,” says Ashutosh Garg, founder and CEO of Guardian Lifecare, about his start-up days. “It was the biggest adjustment I had to make.” Few people can pull off a statement like that without sounding overbearingly arrogant.

But, it’s easy to see Garg is just being honest.

2 8 | INC. | APRIL 2011

Over 25 years of an extremely successful career with blue-chips like ITC Limited and Hughes Network Systems, Garg had become used to the trappings of a top executive’s life­—platinum frequent flyer cards and suite upgrades at the world’s best hotels were privileges he took for granted.

But, after he quit corporate life in 2003, and founded Guardian, a retail chain of pharmacy, health and wellness stores, Garg had to give up more than just enviable travel comforts. Disbelief, ridicule and mild amusement accompanied him as friends and former colleagues wondered why somebody like him would want to become a “chemist wallah.” “There was I, at the age of 46, risking my life savings and my professional reputation,” says Garg, with his trademark honesty.

It didn’t help that his first pharmacy—a 250 sq ft corner shop tucked inside Galleria market in Gurgaon—was minutes away from his residence, and neighbours often spotted him “sweeping the floor and fiddling with bottles on the shelves”. “For the first three months, I ran it myself.

I stood behind the counter, opened the lock in the morning, shut it at night,” he recalls, adding he’ll never forget his

THE PERFECT PRESCRIPTION

first sale of 30. “It was a lady. She bought a strip of Crocin from us.”

The slumming-it-out has certainly been worth it. In less than eight years, Garg has grown Guardian into one of India’s fastestgrowing pharmacy chains with a network of 230-plus stores across 26 cities and seven states, 7.5 million customers annually, and a top line that recently crossed 170 crore.

Up ahead are ambitious plans—of adding up to 200 stores in the next two years, and becoming an 300-crore company by April 2013. “That should be a good time for us to go public,” he says.

Splitting the pill open Garg has clearly perfected the art of reinvention, moving from hotels to financial

services to space satellites in his working life. So, it isn’t surprising that he has nurtured Guardian to such good health.

But, for somebody who cut his managerial teeth at ITC’s famous hotel divisions, and set up the conglomerate’s first international subsidiary in Singapore—becoming its youngest managing director at just 35 years—the somewhat unglamorous, small-

A WIFE’S DIAGNOSIS:

My ThinkerActor H

e’s moody, irritable and lost in thought as he mindlessly surfs the television most evenings. Still, Vera Garg says she’s never known her husband of 28 years to be happier, or to work harder. “There is a level of contentment. Entrepreneurship has been a calling.”

A senior history teacher at Delhi’s American Embassy School, Garg admits she wasn’t immediately supportive of his decision to leave their corporate life in 2003. It was a year of big changes with their teenage sons, Varun and Ashwin, leaving India to study abroad. “I couldn’t handle so much happening at the same time. I told him you do what you have always done, and I’ll do what I have always done, and we’ll deal with the boys leaving.”

It was also a time when their personal expenses were the highest because of the children’s tuition fees and living expenses. But, financial difficulty wasn’t a real worry; his corporate stints had ensured sufficient savings. Her concerns were more personal, including having to digest the idea that her husband would be doing “business”. “I was very anxious. What would I tell our family, that he had become a businessman?”

A product of the 1960s and 1970s, her Nehruvian upbringing and armed forces background made her somewhat wary of profitmaking. “I was always mildly embarrassed about his business class travel and those things as well,” she says with endearing, genuine warmth.

“But, mostly, I didn’t know whether he would be happy. It’s easy

to get used to top jobs and the power associated with them.” Her comfort zone has since stretched, but she is glad he braved the entrepreneurial road. “For so long, I thought life began and ended with ITC. Now, a whole new world has opened up.”

For her husband, that’s a world without bosses and one where he can go on holidays without asking for leave. “He gloats about that. My boys and I have our ‘bosses’, he’s his own boss.”

She recalls some early thrills. The brand’s flagship store at Galleria is less than a kilometre from their house, and in the beginning, the day’s sales would be delivered home in cash every evening, generally in the middle of dinner. “It became this whole institution. Even our domestic staff got involved. They’d be excited about a good day, or wonder why sales had suddenly dipped,” she laughs.

That the store’s turnover has exponentially grown from its 5,000 first day sale, to more than 2 lakh daily doesn’t surprise her. “Ashutosh is a go-getter. He can make a go of anything. He is a thinker and actor like Napoleon or Mao. He thinks, and he acts.

Most people manage only one,” she says admiringly.

His recent debut as an author demonstrates that perfectly, she adds. “I went to Bangkok for a conference, and he told me he’d begun writing a book. The next time we spoke, he’d written 10,000 words. By the time I got back he’d written 100,000 words. In twothree months, he had the whole thing finished.” She laughs, “I have been thinking about writing a book on history for years. He just went ahead and did it.”

APRIL 2011 | INC. | 2 9

GARG’S

Dose of Milestones

Born on September 30, 1956, Garg has been blessed with an extraordinary career, starting from his stint as a management trainee at the age of 22, after an MBA from Jamnalal Bajaj Institute of Management Studies, Mumbai, to his current role as the founder and CEO of Guardian Lifecare.

Led ITC’s internationalisation efforts from Singapore. At 35, became the managing director of ITC Global Holdings; the youngest MD of any ITC group company

Left ITC in December 1995 after 17 years

Joined ITC Limited in April 1979. At 26, became the youngest divisional executive committee member

In 1995, recognised as ‘Global Leader for Tomorrow’ by World Economic Forum

In 1996, he was appointed CEO of Agrani to build two geo-stationary satellites

Started Guardian Lifecare in August 2003

In January 2011, Guardian crosses 20,000 customers a day

3 0 | INC. | APRIL 2011

Closed March 2005 with 7 crore in turnover; crossed 100 crore turnover by March 2010

ticket game of selling medicines seems to be an unlikely business to be hooked on to.

When Garg quit Hughes Network Systems on April 1, 2003—mainly, because, he and his wife, Vera, didn’t want to leave India to take up a new role at the company’s US headquarters—there was no super business plan ready to be put into action. “I just wanted to be my own boss. Overtime, I had honed a set of skills building businesses. Nothing special really, just people management and common sense,” he says modestly.

A few months before putting in his papers, he had pitched in with some money to help a cardiologist friend set up a small hospital in Gurgaon called Umkal. It was here that the brisk turnover and daily cash flow of the pharmacy trade had caught his eye.

“I found out pharmacies in India handled revenues in excess of 95,000 crore. And, it was highly fragmented.” A firm believer in what he calls global conventional wisdom, Garg knew organised retail in pharmacy was an idea whose time had come in India.

“Some of the biggest retail players in the world are pharmacy chains,” he reasons, pointing to giants like CVS, Boots, and Walgreens.

There is, of course, no doubting that diagnosis. A Technopak Advisors report says pharmacies are a $6 billion market in India, with 800,000 plus chemist stores across the country. Fortified with this knowledge, Garg set to work, scouting for locations, tying up with stockists and putting together the beginnings of a brand. He split his savings, keeping aside “drop-dead” money for his family, and taking out an 5 crore chunk to build the business.

Having built global operations, Garg knew there had to be something in his service that would clinch the deal. Right from the very first store in Gurgaon, which notched up sales upwards of 5,000 daily from the word go, he took care to differentiate his brand from others, moving away from the clutter and chaos of the normal chemist shop to a neatly arranged, welllit and cheerful space that promised to take away the gloom of buying medicines.

Another critical differentiator of his stores was an in-store pharmacist and a 100 per cent reliability guarantee. “That assurance really helped the brand. A qualified pharmacist is still our biggest USP,” says Gautam Gupta, vice president, marketing.

Within the first year, Garg expanded to stores in gated communities like South City and Laburnum, also in Gurgaon. He experimented vigorously with different formats and locations over the next couple of years, opening up two stores inside Crossroads, a supermarket, inside IBM Daksh, a BPO, and even at fuel stations. The result was a healthy 7 crore turnover by March 2005.

THE PERFECT PRESCRIPTION

“My property agency tells me I have become a sniffer dog,” laughs Tariq Ali, who has led Guardian’s expansion into the above locations for nearly five years now. But this has been a hard-earned talent. “We have closed nearly 30 stores,” Garg confesses.

Location wasn’t the only challenge he met with. Like most retailers, setting up a working supply chain was, and continues to be, an acutely painful area. Each store is stocked with 7,000-plus active store keeping units, or SKUs, and managing that movement is an almost unending anxiety.

In fact, these challenges forced them to roll back Aushadhi, their foray into rural and semi urban centres. “We couldn’t service these stores, as their distance from our distribution centres was quite far,” says Garg.

Closures are expensive because store expansion is a money-guzzler. Each store takes at least 10 months to break even, and costs approximately 25 lakh to set up.

Garg tossed more money into the pot, taking his own investment, put together with help from friends, family and angel investors to 12 crore. By the end of 2006, his retail network had spread to 40 pharmacies. In March 2007, Guardian closed its books with 40 crore in turnover.

Still, the road ahead seemed uncertain.

Between 2004 and 2006, a number of retail biggies like Subhiksha, Spencer’s and Reliance Wellness were bullish about their foray into the pharmacy space. Reliance Wellness wanted to launch 1,000-plus stores. People were sceptical about Guardian’s ability to survive the onslaught.

“There were rumours I was broke, that I couldn’t pay my distributors. I’d hear that I’d run away,” recalls Garg bemusedly. The story, however, turned the other way. Reliance Wellness and Subhiksha shut down, and Spencer pharmacies never really got off the ground.

The head of retail operations at Guardian, Himanshu Goel, who has also worked with Apollo Pharmacy, Medicine Shoppe and Reliance Wellness, isn’t surprised that Garg succeeded where big money went down the pit. “The pharmacy business model is such that it can be run well by entrepreneurs. The business is capital intensive and one needs to be aware of the

MANAGER, ENTREPRENEUR AND AUTHOR:

A Unique Trinity T

he Buck Stops Here: My Journey from Manager to Entrepreneur, Garg’s debut novel, provides an almost do-it-yourself account of building a business in India. He hopes his book encourages ‘closet, budding entrepreneurs’ to take the plunge. Garg is a brutally honest author, sharing failures, frustrations and successes with equal ease. Here, he gives younger entrepreneurs his three key tips: TIME IT RIGHT: The mid-thirties is a good time to begin an entrepreneurial innings. Till then, it’s valuable to work in a big company, to build networks, understand processes and benefit from a council of colleagues. I had to accelerate fast because I began late.

NEVER SHORT-CHANGE YOURSELF: As a manager, I thought the buck stopped with me. But, the buck really stops with the person who needs to pay salaries at the end of each month. I didn’t take a salary for the first three years but nobody, not even your investors, will appreciate those sacrifices.

DEFINE YOUR ROLE: It’s important to separate management from ownership.

I first think of myself as the CEO, then the founder.

minute operational details. Active involvement is required.”

Along with other players like Apollo Healthcare and Religare, Guardian has, in fact, added to the pie for organised retail in pharmaceuticals. But even then the number, 2,000 stores all put together, is a miniscule three per cent of total medicine sales, says Nitin Bidikar, associate director of markets, at KPMG. “It’s a really nascent market,” adds Bidikar.

But, the opportunities lie in the tremendous possibilities. The pharmacy retail market grew around 18 per cent per annum over the past few years. “Out of this, the organised retail pharmacy market has been growing at an average of 25 per cent. And over the next 10 years, it is expected to grow 35 to 40 per cent,” says Bidikar.

A steady growth Although Garg is proud of the fact that his chain has “never had a quarter that was less

than the previous one”, Guardian began hitting real developmental milestones only after 2007. Two crucial events acted as catalysts to this growth. Garg opened the brand’s first hospital pharmacy in Banaras Hindu University, which has today flourished into a massive 7,000-sq-feet store with 16 check-out counters that serve more than 2,000 customers every day.

In 2008, Guardian also raised 60 crore from Samara Capital, a private equity firm to fund expansion. This was a critical inflection point and “crossing the hump” helped evolve a new prescription for the future. “Since then, the question in people’s minds has changed from will Guardian survive, to how fast it will grow, or how big it can be?”

The mission is to now hit the big road and become a brand as successful as Boots, the giant UK-based wellness chain.

Such lofty ambitions might sound overtly aspirational, but Garg is charged up.

Over the last two years, he has toiled APRIL 2011 | INC. | 3 1

THE PERFECT PRESCRIPTION

harder, and smarter, to get closer there.

The hospital pharmacy business has been a real booster shot. Guardian today runs 47 hospital stores, including a spanking new pharmacy at Naresh Trehan’s Medanta Medicity in Gurgaon. Upto 55 per cent of the company’s turnover and bottom line comes from hospital outlets.

“That’s been a smart move. It guarantees them both volume and a captive customer base,” says Purnendu Kumar, vice president, retail and consumer goods, Technopak Advisors.

For retail customers, Guardian innovated with various loyalty schemes like an advantage card that entitled customers to discounts, free medical camps and features like a prescription reminder order, where an in-store pharmacist calls them to order their regular medicines in advance.

In July, last year, the advantage card was christened XtraValu Card, and now has over 350,000 members.

“Over half our business comes from loyalty cards,” says Goel. “Every other pharmacy chain treats the patient as a customer. We treat customers as a patient first,” he adds. Guardian claims their customer satisfaction ratings surpass 70 per cent. There are no independent verifications to back that number. But, if an owner sets the culture, Garg gets full marks for responsiveness. Even on weekends, all e-mails and phone calls (including mine) are replied to within minutes.

The “sticking factor” to his brand also comes from the fact that Guardian pharmacies double up as wellness stores. Deals with GNC, American’s largest selling nutritional supplements brand, and Yves Rocher, a French cosmetics brand—solely retailed through Guardian stores in India—have helped as much to drive up footfall, as has the extensive range of products offered under the Guardian label.

As of now, Guardian offers more than 200 products, which have recently been rebranded into six categories—Xtra Value, Xtra Slim, Xtra Protect, Xtra Vital, Xtra Care and Xtra Muscle. The company intends to introduce 50 new products every year under its private label, which takes up most of Garg’s time now.

3 2 | INC. | APRIL 2011

BEYOND WORK:

A Balanced Diet I

t’s easy to see that Garg’s centre of wellness flows from his home. He delights in showing off his tastefully done residence in Gurgaon, even as he almost compulsively straightens picture frames, and moves objects around for perfect symmetry. His art and curio collection have been built over years of travel in Africa, South East Asia and Europe. And, yet there is more to this quirky collector than his rare art treasures, which include a 10-headed Indonesian sculpture of Ravan and a 200-year-old brass plaque from Russia.

Today, he owns both a piece of history and the universe. Some 14 years ago, he bought 1,100 hectares on the moon where he has Bob Hope and Jimmy Carter as neighbours. His family thought he was nothing but stupid to waste money, but for Garg, it was a fun thing to buy. “I like buying stuff that is different, it isn’t about assets that appreciate,” he explains as he shows us the framed lunar deed which hangs in his book-lined study. He also has a piece of the Berlin Wall—a brick and some bits of wire.

When not impulse shopping, Garg enjoys mentoring young entrepreneurs as a charter member of The Indus Entrepreneurs (TiE). Since 1994, he has been an active member of the Young Presidents’ Organization, a global network of business leaders.

He also sits on the board of the not-for-profit The Global Alliance for Vaccines and Immunizations (GAVI), the only Asian to do so. Garg has pledged 20 days a year to GAVI, for board meetings in Geneva, and visiting immunisation clinics in countries like Vietnam and Rwanda. “Last year, we spent an hour with Silverback gorillas in Kigali, Rwanda. They came and touched my trousers. It was incredible,” he says excitedly.

On any examination, this is a healthy and rich working life, but Garg isn’t satisfied yet.

“Every year, my work life balance becomes better,” he admits. “But, there’s so much more I want to do.” High on his list of priorities are playing the flute again, hitting the golf greens more often and writing another book.

“There is another story inside of me.”

THE PERFECT PRESCRIPTION

“Every new product goes to market only after my sign off.”

“Our label helps foster loyalty and increase our margins,” adds Gupta, vice president, marketing. “No other organised pharmacy chain has such a well-developed range of its own products.”

That might well be the fact, says KPMG’s Bidikar. “But, there is no competition among organised players right now. The real challenge is still the local pharmacy, which has built personal relationships with its customers. They can also pass on discounts because they do not have to make huge business investments.”

Garg agrees, adding it’s precisely those reasons which make the private label such a compelling need. Some 9-10 per cent of Guardian’s total turnover comes from private label sales right now. Guardian wants to take that number to around 15 per cent by March 2012, which will shore up the bottom line equally.

“When we started, pharmacy was a margin business of 16 per cent. We are around 30 per cent, but want to take it to 35 per cent, which will mostly come from the private label,” explains Garg. Most organised retail chains work with a 25 per cent margin, he adds.

Over the next two years, his retail stores will give him an EBITDA margin of 10 per cent, claims Garg confidently.

For accelerating the expansion plan, Garg knows he has to travel the franchisee route, a model which had bombed three years ago. Nearly half of the stores planned for the next year are based on this plan. As of now, Guardian has only 10 franchises, all in the national capital region. “We just weren’t ready to support them then,” Garg quickly pitches in before he can be asked why the franchisee model flopped.

“We have been getting a lot of queries about starting franchisee units. We are an

about his company’s next growth spurt— testing the processes and systems that are currently being established. To reach this goal, Garg is aware he needs best-of-thebreed talent like Goel and Gupta, who come with years of experience in firms such as Reckitt & Benckiser and ITC. But, the wins in this leg of the journey are slow and arduous. “People are uncomfortable when you try and put systems. You have to keep at it till they see results coming from small interventions,” explains Gupta.

Moreover, crippling attrition upwards of 7 per cent ails all of Indian retail, says Sonia Sarihan, who heads the company’s human resource function. Guardian, with its 1,000-plus employees, isn’t insulated from that churn, though Sarihan bravely claims they are stable.

Training and acquisition of talent has been a gnawing concern too. “Hiring is ongoing. We have interviews every day,” Sarihan says. Most of the hiring is focussed on attracting pharmacology students and trained pharmacists to retain that unique edge.

Unfortunately, attrition isn’t limited to the lower rungs. In February this year, the chief operating officer, Sumeet Khanna, suddenly resigned.

Khanna had been with the company for more than four and a half years, and his resignation was painful, Garg admits.

“On the positive side, I was amazed at our resilience. He left within days. In spite of such a major change, the management didn’t bat an eyelid. We have just carried on,” says he.

It’s this positivity that his colleagues try and absorb as part of their daily intake. As Gupta puts it, “We are firefighting every day. It’s like being in the trenches, dying new deaths and living new lives but he (Garg) keeps saying, you can’t give up, just go on.”

Whether or not Guardian maintains its robust growth is another matter, but that spirit is certainly the best dose of nutrition a company can hope for.

“There were rumours I was broke, I’d hear that I had run away.”

The path to wellness Garg says he regularly tells his people that it takes rare talent to mess up a pharmacy.. “Customers won’t leave you if they are happy, they are not looking for variety like when they are eating out, or shopping for clothes.” Still, the chain faces long odds as it races up the path to 500 stores.

“We’ve got this far on brute strength,” explains Garg. In late 2010, he closed a second tranche of 40 crore from Samara Capital. Another round is scheduled sometime in the next 12 months. He wants to open roughly 100 new stores every year, for the next four years. Plus, the company has zero debt, and profitability is on the rise.

attractive proposition. Our brand, products and supplies are in place,” says Ali, who manages all such relationships. Ideally, Garg would like the franchisees to take Guardian beyond its current north India focus, and capitalise on their growing presence in centres like Mumbai, Bengaluru, Pune and Chennai.

Technopak’s Kumar, however, advises caution there. “Being a primarily north Indian player has helped them manage supply chain and logistics issues.”

In any case, all these plans depend on what Garg knows is the “most painful” part

APRIL 2011 | INC. | 3 3

“I’ve never done consumer marketing, so I don’t really know. I think probably...

An ongoing study of company builders gets to the heart of matters: The most successful entrepreneurs move quickly, adjust frequently, and, above all, trust themselves.

Does that sound like you?

By Leigh Buchanan ILLUSTRATIONS BY SHIGIL N

3 4 | INC. | APRIL 2011

I would…I wouldn’t do all this, actually.

I’d just go sell it.

I don’t believe in market research.” hat distinguishes great entrepreneurs? Discussions of entrepreneurial psychology typically focus on creativity, tolerance for risk, and the desire for achievement—enviable traits, which, unfortunately, are not very teachable. So Saras Sarasvathy, a professor at University of Virginia’s Darden School of Business, set out to determine how expert entrepreneurs think, with the goal of transferring that knowledge to aspiring founders. While still a graduate student at Carnegie Mellon, Sarasvathy—with the guidance of her thesis supervisor, Nobel laureate Herbert Simon—embarked on an audacious project: to eavesdrop on the thinking of the country’s most successful entrepreneurs, as they grappled with business problems.

She required that her subjects have at least 15 years of entrepreneurial experience, have started multiple companies—both successes and failures—and have taken at least one company public. Sarasvathy identified 245 US entrepreneurs who met her criteria, and 45 of them agreed to participate. (Responses from 27 appeared in her conclusions; the rest were reserved for subsequent studies. Thirty more helped shape the questionnaire.)

Revenue at the subjects’ companies—all run by the founders at that time—ranged from $200 million to $6.5 billion, in industries as diverse as toys and railroads.

Sarasvathy personally met with all of her subjects, including such luminaries as Dennis Bakke, founder of energy giant AES; Earl Bakken of Medtronic; and T.J. Rodgers of Cypress Semiconductor. She presented each with a case study about a hypothetical startup and 10 decisions that the founder of such a company would have to make in building the venture. Then she switched on a tape recorder and let the entrepreneur talk through the problems for two hours. Sarasvathy later collaborated with Stuart Read, of the IMD business school in Switzerland, to conduct the same experiment with professional manag-

ers at large corporations—the likes of Nestlé, Philip Morris, and Shell.

She and her colleagues are now extending their research to novice entrepreneurs and both novice and experienced professional investors. Sarasvathy concluded that master entrepreneurs rely on what she calls effectual reasoning. Brilliant improvisers, the entrepreneurs don’t start out with concrete goals. Instead, they constantly assess how to use their personal strengths and whatever resources they have at hand to develop goals on the fly, while creatively reacting to contingencies. By contrast, corporate executives—those in the study group were also enormously successful in their chosen field—use causal reasoning.

They set a goal and diligently seek the best ways to achieve it. Early indications suggest the rookie company founders are spread all across the effectual-to-causal scale. But those who grew up around family businesses will more likely swing effectual, while those with MBA’s display a causal bent. Not surprisingly, angels and seasoned VCs think much more like expert APRIL 2011 | INC. | 3 5

HOW GREAT ENTREPRENEURS THINK

“I always live by the motto of ‘Ready, fire, aim.’

I think if you spend too much time doing ‘Ready, aim, aim, aim,’

entrepreneurs than do novice investors.

The following is a summary of some of the study’s conclusions, illustrated with excerpts from the interviews. Understanding the entrepreneurs’ comments requires familiarity with what they were evaluating.

The case study and questions are too long to reproduce here.

But briefly: Subjects were asked to imagine themselves as the founder of a start-up that had developed a computer game simulating the experience of launching a company. The game and ancillary materials were described as tools for teaching entrepreneurship. Subjects responded to questions about potential customers, competitors, pricing, marketing strategies, growth opportunities, and related issues.

(The full case study and questions can be found at www.inc.com/leadership.)

Quotes have been edited for length, though we wish we had room to run them in their entirety. Sarasvathy remained almost silent throughout, forcing the founders to answer their own questions and externalise their thinking in the process. The transcripts, riddled with “ums” and “ers,” doublings-back on assumptions, and references to personal rules of thumb, read like verbal MRIs of the entrepreneurial brain in action.

DO THE DOABLE, THEN PUSH IT

Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: at their 3 6 | INC. | APRIL 2011

best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest. Corporate leaders, by contrast, decide they are going to make Swedish meatballs. They then proceed to shop, measure, mix, and cook Swedish meatballs in the most efficient, cost-effective manner possible.

That is not to say entrepreneurs don’t have goals, only that those goals are broad and—like luggage—may shift during flight.

Rather than meticulously segment customers according to potential return, they itch to get to market as quickly and cheaply as possible, a principle Sarasvathy calls affordable loss. Repeatedly, the entrepreneurs in her study expressed impatience with anything that smacked of extensive planning, particularly traditional market research.

(Inc.’s own research backs this up. One survey of Inc. 500 CEOs found that 60 per cent had not written business plans before launching their companies. Just 12 per cent had done market research.)

When asked what kind of market research they would conduct for their hypothetical start-up, most of Sarasvathy’s subjects responded with variations on the following: “OK, I need to know which of their various groups of students, trainees, and individuals would be most interested so I can target the audience a little bit more. What other

information...I’ve never done consumer marketing, so I don’t really know. I think probably...I think mostly I’d just try to...I would...I wouldn’t do all this, actually. I’d just go sell it. I don’t believe in market research. Somebody once told me the only thing you need is a customer.

Instead of asking all the questions, I’d try and make some sales. I’d learn a lot, you know: which people, what were the obstacles, what were the questions, which prices work better.

Even before I started production. So my market research would actually be hands-on actual selling.”

Here’s another:

“Ultimately, the best test of any product is to go to your target market and pretend like it’s a real business. You’ll find out soon enough if it is or not. You have to take some risks. You can sit and analyse these different markets forever and ever and ever, and you’d get all these wonderful answers, and they still may be wrong. The problem with the businessman type is they spend a lot of time with all their great wisdom and all their spreadsheets and all their Harvard Business Review people, and they’d either become convinced that there’s no market at all or that they have the market nailed. And they’d go out there big time, with a lot of expensive advertising and upfront

HOW GREAT ENTREPRENEURS THINK

you’re never going to see all the good things that would happen if you actually started doing it.”

costs, because they’re gonna overwhelm the market, and the business would go under.”

The corporate executives were much more likely to want a quantitative analysis of market size:

“If I had a budget, I could ask a specialist in the field of education to go through data and give me ideas of how many universities, how many media, how many large companies I will have to contact to have an idea of the work that has to be done.”

Sarasvathy explains that entrepreneurs’ aversion to market research is symptomatic of a larger lesson they have learned: They do not believe in prediction of any kind. “If you give them data that has to do with the future, they just dismiss it,” she says. “They don’t believe the future is predictable…or they don’t want to be in a space that is very predictable.” That attitude is a bit like Voltaire’s assertion that the perfect is the enemy of the good. In this case, the careful forecast is the enemy of the fortuitous surprise: “I always live by the motto of ‘Ready, fire, aim.’ I think if you spend too much time doing ‘Ready, aim, aim,

aim,’ you’re never going to see all the good things that would happen if you actually started doing it. I think business plans are interesting, but they have no real meaning, because you can’t put in all the positive things that will occur...If you know intrinsically that this is possible, you just have to find out how to make it possible, which you can’t do ahead of time.”

That said, Sarasvathy points out that her entrepreneurs did adopt more formal research and planning practices over time. Their ability to do so—to become causal as well as effectual thinkers— helped this enduring group grow with their companies.

WOO PARTNERS FIRST

Entrepreneurs’ preference for doing the doable and taking it from there is manifest in their approach to partnerships. While corporate executives know exactly where they are going and follow a prescribed path to get there, entrepreneurs allow whomever they encounter on the journey—suppliers, advisers, customers—to shape their businesses.

“I would literally target...key companies who I would call flagship: do a frontal lobotomy on them. There are probably a dozen of those I would pick. Some entrepreneurial operations that would probably be smaller but have a global presence where I’m dealing with the challenges of international sales...Building rapport with partners, with joint-venture colleagues as well as with ultimate users....The challenge then is really to pick your partners and package yourself early on before you have to put a lot of capital out.”

Chief among those influential partners are first customers. The entrepreneurs anticipated customer help on product design, sales, and identifying suppliers.

Some even saw their first customer as their best investor.

“People chase investors, but your best investor is your first real customer. And your customers are also your best salesmen.”

Sarasvathy says expert entrepreneurs have learned the hard way that “having even one real customer on board with you is better than knowing in a hands-off way 10 things about a thousand customers.” Merely gathering information from a large number of potential customers, she says, “increases all the different things you could do but doesn’t tell you what you should do.” Toward that end, many of her subjects described their preference for an almost anthropological approach to customer interaction: observing APRIL 2011 | INC. | 3 7

HOW GREAT ENTREPRENEURS THINK

a few customers as they work or actually working alongside them.

“You can’t go out and survey customers and say, ‘OK, what kinda car do you really want?’ I believe very much in living it. If you’re gonna write a book about stevedores, go work as a stevedore for a period of time. My company was going to design and sell products for physical therapy, so I worked in rehab medicine for two years.”

Corporate executives, by contrast, generally envisioned more traditional vendor-customer interactions, such as focus groups.

“I would like to get from them...by meeting with them or getting their

input on what they think of the limitation of existing programmes....just kind of sit and listen to them telling me...what new features they’d like.

And I’d just listen to them talk, talk, talk and then be thinking and develop something between what they want and what’s possible technically.”

Sarasvathy says executives rely less on firsthand insights, because they can afford to place bets on multiple segments and product versions. “Entrepreneurs don’t have that luxury,” she says.

SWEAT COMPETITORS LATER

The study’s corporate subjects focused intently on potential competitors, as eager

The Effectual Entrepreneur in Action Bruce Flohr is one of Saras Sarasvathy’s original CEO subjects. He recognises in his story many of the traits her research identified. Certainly his company followed the opportunistic trajectory of a business run on effectual principles. Flohr, a brakeman turned executive at Southern Pacific, started San Antonio–based RailTex in 1977, renting hopper cars to quarry owners, who needed to transport crushed rock to construction sites. By the time the company went public in 1993, it was a leading operator of short-line railroads. Flohr talks here about conducting business without a playbook.

3 8 | INC. | APRIL 2011

for information about other vendors as about customers. “The corporate guys are like hunter-gatherers,” says Sarasvathy.

“They are hired to win market share, so they concentrate fiercely on who is in the marketplace. The first thing they do is map out the lay of the land.”

“What information do I want about my competition?…I want to see what kinds of resources they have. Do they have computer programmers? Do they have educational experts? Do they have teachers and trainers who can roll out this product? Do they have a support structure in place? Geographically, where are they situated?

Have they got one centre or lots of

We didn’t need to look hard at the competition when we started out, because there wasn’t any, except for trucks.

Some companies were financing leases on railcars. But we were renting them, and no one else had ever done that.

So competition wasn’t a problem.

We did do market research, because we needed the validation of “experts” to raise money. But personally, I didn’t need it. I knew this was a good idea. In those first years, we made a lot of decisions because we knew they were good ideas. We once had 80 railcars coming off of a rental agreement, and Arthur Andersen, our auditor, was very uncomfortable that they weren’t going to be generating revenue.

I thought there was an opportunity for our cars to be used in Alaska, hauling crushed rock from Wasilla to Anchorage. I was somewhat familiar with the state, because I had been in the Army there. We did not have a single customer or signed agreement. But I believed that if we got the cars up there, the shippers would see the benefit. So we sent all 80 cars to Alaska, and a railroad ended up renting them.

In 1981 and ’82, interest rates got up to 21 per cent, and most of the construction industry died. At that point we said, Do we want to look at doing something different, because we didn’t have enough cash flow to make our debt payments. We had a lot of industry expertise within the company, so we decided to try consulting. We would help small railroads solve their management problems. That move turned out to be lucky, because we found that a lot of these lines were very badly run. We thought we could do better. So when the San Diego and Arizona Eastern Railway

HOW GREAT ENTREPRENEURS THINK

centres? Are they doing this just in English, or do they have different languages? I’d be wanting to look at the finances of these companies....I’d probably be looking at their track record to see what kind of approach they take to marketing and advertising so I know what to expect. I might look and see what people they hire, see if I can hire away someone who might have experience.”

“Your competition is a secondary factor.

“Your competition is a secondary factor. I think you are putting the cart before the horse...Analyse whether you think you can be successful or not, before you start to worry about the competitors.”

And:

“At one time in our company, I ordered our people not to think about competitors. Just do your job. Think only of your work. Now that isn’t entirely possible.

Now, in fact, competitive information is very valuable. But I wanted to be sure that we didn’t worry about competitors.

And to that end, I gave the annual plan to every employee. And they said, ‘Well,

By the time entrepreneurs start seeking investment, of course, they should be as far inside competitors’ heads as they can get. But the study subjects generally expressed little concern about the competition at launch.

Analyse whether you think you can be successful or not

came up for bid, we bought it. We made it profitable—partly by using refurbished engines.

We ultimately ended up acquiring 32 lines in the US, Mexico, and Canada. By 1987, our railcar leasing business and our railroad operation business were about equal. Our CFO came to me one day and said, “Bruce, I think we should sell off our railroad lease fleet.”

My first reaction was, “Gosh, are we going to throw out the baby with the bath water?” But after a 10-15 minute discussion, that just made a lot of sense. We didn’t do research on whether we could get the full asking price we wanted. We didn’t test the market to see who might be the buyers or whether there would be a lot more opportunities to buy railroads going forward.

Since I sold RailTex, I’ve been investing in start-ups. I wish I’d known this stuff about effectual and causal when I started. I wouldn’t have made my first three investments. The founders of those companies are all causal thinkers. Only one of them is doing really well— up to $15.5 million from $4 million in 2009. I’ve been working closely with that founder to try to make him more effectual. For example, he was going to institute a bonus plan for key managers, and he wanted to bring in a consultant to put together a point system for allocating the money. I said, “No, no, no, no, no. Do what we did at RailTex. Have the top people write their own performance evaluations talking about their successes and what initiatives they plan to work on in the next year. You won’t get anything extraordinary if you have people performing to a checklist.”

When I talk to entrepreneur classes, I like to use examples to explain the difference between effectual and causal thinkers.

Genghis Khan was causal. Christopher Columbus was effectual.

—As told to Leigh Buchanan

before you worry about the competitors.”

APRIL 2011 | INC. | 3 9

HOW GREAT ENTREPRENEURS THINK

aren’t you afraid your competitors are gonna get this information and get an advantage?’ I said, ‘It’s much riskier to not have your employees know what you need to do than it is to run the risk of competitors finding out. Cause they’ll find out somehow anyway. But if one of your employees doesn’t know why they’re doing their job, then you’re really losing out.’ ”

Entrepreneurs fret less about competitors, Sarasvathy explains, because they see themselves not in the thick of a market but on the fringe of one, or as creating a new market entirely. “They are like farmers, planting a seed and nurturing it,” she says.

“What they care about is their own little patch of ground.”

DON’T LIMIT YOURSELF

Corporate managers believe that to the extent they can predict the future, they can control it. Entrepreneurs believe that to the extent they can control the future, they don’t need to predict it. That may sound like monumental hubris, but Sarasvathy sees it differently, as an expression of entrepreneurs’ confidence in their ability to recognise, respond to, and reshape opportunities as they develop. Entrepreneurs thrive on contingency. The best ones improvise their way to an outcome that in retrospect feels ordained. So, though many corporate managers in Sarasvathy’s study wanted more information about the product and market landscape, some entrepreneurs pushed back on the small amount of information provided as being too limiting.

For example, the description of the product as a computer game for entrepreneurship:

“I would cast it not as a product but as a family of products, which might perform a broader function like helping people make career decisions. I always look for broad market opportunities.”

And:

“I wanna use this product as a platform to attract other products literally to build a market-share play. I see this as a missionary product, an 4 0 | INC. | APRIL 2011

I wanna use this product as a platform to attract other

products literally to build a market-share play. I see this as an entrée into some of the best users and buyers. entrée into some of the best users and buyers.”

The most fascinating part of the study relates to the product’s potential.

Asked about growth opportunities, the corporate managers mostly restricted their comments to the game as described: “It depends on how it’s marketed. I’m a little bit skeptical....I’m not certain entrepreneurs would go for that.

Maybe they think they already know everything. But in terms of simulations for business schools or in further education, they seem to be very popular.

And entrepreneurship degrees seem to be very popular as well. So, yeah, it could well be a lot of growth.”

Here is where the entrepreneurs really let loose. Starting with the same information as one another and as the executives, they collectively spun out opportunities in 18 markets—not only academic institutions, but also venture capital firms, consultancies, government agencies, and the military. As much as the ability to concoct new products, it is this tendency to riff off whatever ideas or materials are handy that defines entrepreneurs as a creative breed.

Reading the transcripts, you can almost hear the enthusiasm mounting in their voices as the possibilities unfold: “This company could make a few people rich, but I don’t think it could ever be huge...You might have a successful second product about how to succeed

and get promoted within a large company....That would give you a market of everybody with aspirations at IBM, AT&T, Exxon, etc....You could make another product for students. How do I graduate in the top 10 per cent of my class at Stanford or Harvard or Yale?...A lot about how to be a good student is teachable. Now you’ve got a product you can sell to every student in the country. Next there is negotiation.

You could practice being a good negotiator. There’s not a salesman in the United States who wouldn’t buy one of those. Then you could genericise the thing to any situation which requires some sort of technical knowledge. Or learning situations within companies where you are trying to get people to understand that company’s methods or objectives. So maybe I’m gonna change my opinion about the growth potential. It’s easy to see how within an hour you could name 10 products that would each address huge markets, like all employees in Fortune 500 companies, who are rich enough to pay $100 for it. It could be a hit on the scale of the Lotus spreadsheet. You can see a several-hundred-million-dollar company coming from it.”

You might also glean from the preceding that entrepreneurs are eternal optimists. But you don’t need an academic study to tell you that.

Leigh Buchanan is an editor-at-large for Inc.

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ACCESS, Uninterrupted

Ashok Khemlani can get to places others wouldn’t even know about.

It’s helped him build a 60 crore facade access solution and maintenance company.

BY SHREYASI SINGH PHOTOGRAPH BY JITEN GANDHI

“I had agreed to do it, but didn’t know how I was going to deliver,” recalls Ashok Khemlani, founder and managing director of Clean India Group, about the contract that changed his life.

It was 1993 and his year-old company, Cradle Runways, had been pre-qualified for providing facade access system—essentially, equipment like suspended platforms, cradles, gondolas and davits—for Bengaluru’s first IT Park, a joint project by the Tatas, and the governments of Karnataka and Singapore.

“The order value was 1.25 crore, the largest budget on such a system till then. The previous 4 2 | INC. | APRIL 2011

Not High Enough Khemlani doesn’t have thousand crore dreams; his thrill comes from climbing up.

APRIL 2011 | INC. | 4 3

ACCESS, UNINTERRUPTED

year, we had done only about 10-15 lakh,” he says, still surprised that his then fledgling company had even landed the big-ticket deal.

But that was fate. An evaluator from Tata had taken a bet on Khemlani’s incurable can-do spirit, and his company was the only Indian entity to pre-qualify. The letter of intent gave him six months to deliver, tagging along a critical condition for bagging the contract— furnish a 25 lakh bank guarantee.

Till then a one-man team, Khemlani quickly hired a senior engineer, and “burnt faxes” between Mumbai, and Cradle Runways International, his UK-based collaborators to finalise designs. That settled, he moved on to tackle the most difficult task yet—securing a bank guarantee. He landed up at the Turner Road branch of Union Bank of India, where he had recently opened an account, and wouldn’t budge till he was given a meeting with the regional manager.

“I got five minutes with him. I told him I’d make 30 lakh from this contract but couldn’t give the bank more than 50,000 as guarantee. They wanted a quarter of the total value, and I retorted saying, I needed the guarantees tomorrow,” he remembers.

“I was so confident that this project would work that I told them they could take everything I owned if it didn’t. The manager suddenly picks up the phone, calls his office, and says, ‘give this man the guarantee’,” chuckles Khemlani, knowing how unusual a story this is in a country where winning credit from the bank can be a daunting task for small businesses.

His audacious jumpstart has brought home dizzying ascent.

Today, Clean India Group, headquartered in Mumbai, is one of India’s largest facade access manufacturing, solutions and maintenance firm, with a turnover exceeding 60 crore in 2010.

Its three companies—Cradle Runways, Techno Clean and TSP Access Rental—provide a complete range of engineering equipment and solutions like trolleys, cradles and jibs, and with 16 offices across India, it is also a leading player in facade cleaning in India.

“We are the Spiderman rope cleaners of India,” laughs Khemlani, as he borrows the nickname many use for them. Clean India has 1,100-plus employees on its rolls, and has serviced more than 900 buildings till date.

In fact, there are very few iconic buildings in Delhi and Mumbai that Clean India hasn’t worked on. In October 2010, they commissioned a two-and-half kilometre single-track cleaning system at the swanky Terminal 3 in Delhi’s Indira Gandhi International Airport.

At 18 crore, this was their biggest contract ever, and the two unique tracks installed are the longest in India. They have also supplied various systems to the new Hyderabad and Bengaluru airports, and a clutch of definitive high rises in Mumbai like the 250-metre high Lodha Bellisimo, the Oberoi Westin and the Orchid Woods. At the Hyderabad Airport, they delivered a first-of-its kind travelling ladder system for cleaning the ATC Tower there. Khemlani proudly claims they have grabbed an 80 per cent market share in facade access.

It’s a fact builders grudgingly accept. Rachna Amin, senior asso-

ciate at Hafeez Contractor’s office in Mumbai explains, “As the industry grows, more players should be available. We’d like that.

But, where are the options? In Mumbai, certainly, one can’t look beyond Clean India.” That’s no small feat for a company born out of a conversation with a friend.

Reaching up, slowly

An engineer from College of Engineering, Pune, Khemlani had settled into the middle management level, working with companies like OTIS and Bharat Bijlee through the seventies and eighties. As the decade approached its end, Khemlani felt his growth getting

“The government asked why we needed a joint venture for cleaning.

Anybody can do it, they told us.”

4 4 | INC. | APRIL 2011

slower. He also dreamt of making enough money to send both his children to study abroad. This would certainly not come off a job, he knew. “A company can take care of your medical insurance, your work life balance, your pension but they can’t look after your growth.

For that, I had to do something of my own.”

The emotion lingered and finally he chucked his job at Bharat Bijlee in 1988. What followed were four years that seem straight out of some movie script. Khemlani split his savings into two, giving his wife 30,000, and spending the rest to buy a computer. A trading business that required little capital cost seemed the right way to begin.

Equipped with his savvy salesman skills, he set to work. Avoiding popular centres like Dubai and Russia, he cleverly attacked the poorly-serviced East European markets. “Nobody wanted to go there. They were scared of the biting cold and the language problem.

But, business calls for all kinds of sacrifices.” Khemlani soon had transformed these hostilities into a roaring trading business—selling bulk quantities of pens, jackets, leather goods, generic drugs and “whatever else they wanted”. Soon, he was spending up to half a year in Yugoslavia. “I minted money,” he confesses, adding he saved up to 20 lakh in those three years.

But, his cost arbitrage game started losing its fizz as the Chinese began giving sourcing agents the option of smaller quantities. By the end of 1991, his volumes were crashing. Around the same time, an architect friend from Khemlani’s days at OTIS went to Europe to learn how to build curtain walls, the term used for glass cladding on buildings.

He told Khemlani about a UK firm which designed, manufactured and installed access machines to maintain these glass facades, and also led him to his first client, a building in Andheri, Mumbai.

ACCESS, UNINTERRUPTED

Inner Access

Khemlani moved swiftly. “That building became my first client. I was sitting in Budapest, buying from the UK and selling here, over many faxes.” He Both of Khemlani’s children, his 36-year-old son, Tarun, and 32-year-old sold his first access system, a manual platform, for daughter, Suhag, work at Clean India. Suhag started as a 20-year-old, shadowing her father everywhere. Tarun, a chemical engineer from the 8 lakh, netting one lakh as profit.

University of Texas, joined later, in 2002, after spending more than a It was enough to make Khemlani aware of the decade in the US. Together, the brother-sister duo are looking at doubling vast potential of the yet unborn industry. He realised the company’s turnover in the next year. Here, they tell us what happens demand for such glassy exterior walls would only flare behind the scenes, in the boardroom, and at home. up with the Indian economy opening up.

What do you think is your father’s biggest strength?

And yet, moving fast wasn’t much of a luxury TARUN: He is able to sense way ahead of the curve. We decided to go into a in an industry which did not even exist. Khemlani restructuring programme even before the downturn because he sensed worked his architect contacts from his OTIS days, the real estate industry was in danger. In 2008, when everybody was firing introducing products to them and educating them people, we didn’t lay off a single person. We also got into cleaning before about solutions available. He inked a distributor anybody else. It’s the same with rental access. We began in 2005 when nobody was even thinking about it. I’d love to have his intuition. deal with Cradle Runways, a UK-based company, agreeing to part manufacture installation compoWhat’s his management style? Is he more the sink-and-swim type, or has he nents here. For over a year till the Bengaluru IT mentored you closely? project came about, his pickings were poor. “Each TARUN: He allows you to make a few mistakes and take risks. But, he’s building is an expression of an architect’s creativsomebody with so much of experience, it’d be foolish not to take advantage of that. It’s a great balance. ity. An engineering product customised to each SUHAG: Even at his age, he has more energy than my brother and I put building is a tough job.” together. He has given us the freedom to make the big mistakes. He hasn’t By the mid 1990s, the skies were becoming easier gone for a sales meeting with us for years. to reach. In 1994, Cradle Runways entered Delhi to service an intricate slanting glass facade at Capital How difficult is it for so many members of a family to work together?

SUHAG: We have arguments. We don’t always sit in a board meeting and Court, a building in south Delhi. Khemlani claims coming out of there happy with each other. He’s not always right and neithey are the first to enter every major Indian city. ther are we. I think we are more stubborn than he likes us to be. Eventually, Capital Court not only got him a foothold in it really helps that all of us are in it. There’s just so much to do, none of us the capital, it also took him towards his next expancan do it alone. Also, we are very professional at work. I won’t go into his sion—manual facade cleaning. In 1998, Suhag, his office during work hours to talk about a personal issue. We’ll wait for that to happen at home.

20-year-old daughter, flew to the UK to sign a pact with the OCS Group. Registering the joint venture entity was tough in India. “The government asked why we needed a joint venture for cleaning. Anybody can do it, they’d tell us,” Khemlani tells us.

His insights proved right. Within two years, the new entity, To retain their competitive edge, Clean India has changed their Techno Clean, had grown to 800 cleaners. Cut to the present, it operations strategy, moving to manufacture upwards of 60 per cent operates from 16 locations in India, benefitting from a local net- of their systems, especially the intricate engineering solutions, at their work that, Khemlani maintains, the big firms—like Cox from Aus- factory in Khopoli. They also export components to 15 countries, and tralia, and Tractel from Luxembourg—who are entering India will are now targeting turnkey contracts in Sri Lanka and Kenya.

Khemlani is also bullish about his new venture, an access rental find impossible to establish.

Amin agrees, “We used Tractel for a big project, and Cox for the company for the construction industry. Their agreement with RapIL&FS building in Bandra, but the after-sales was so pathetic we ids, a Dubai-based company, will enable them to bring in 100 floorbased, reach-height machines. “Just this business is worth 100 had to rope Clean India in for follow up.” crore in three years,” says Khemlani. “Upgrading and adding to his A clearer view repertoire of solutions is critical for staying ahead,” explains Amin.

Backed by strong growth in the last two years—owing to the spur “The demand is there and so is the opportunity to grow.” in demand for high-rise residential projects in Mumbai—Clean Ask him if he has a thousand-crore dream, and he answers, India is now reaching higher. “We have done several 50-storey “This is a niche market which doesn’t support that appetite.” He is buildings. But, Mumbai will keep going taller, and we should be also content to grow the company on internal accruals, preferring capable of delivering made-in-India solutions,” says Khemlani, to keep the private equity and market listing talk, to when they rake who has handed over the day-to-day running of the company to his in a turnover of 150 crore—a goal set to be achieved in the next children, Tarun and Suhag. Every time, they add 50 metres to their three years. “Bottom lines don’t excite me. I am happy if I can start capabilities, it’s truly a new high, he adds. something new which grows by inches and gets to a height.”

APRIL 2011 | INC. | 4 5

Moneymaker-in-chief Jason Fried relaxes at the Chicago headquarters of his software company, 37signals.

What I learned from selling shoes, computers, tennis rackets, weaponry, radar detectors, books, conferences and software

or

HOW I

GOT

Good MAKING at

MONEY

By Jason Fried

Photograph by Justin Stephens

HOW I GOT GOOD AT MAKING MONEY

1 Shoes, Tennis Rackets, and More Shoes

Understanding the buyer is the key to being a strong seller

A few years ago, I decided I wanted to learn to play the drums.

I’ve always loved the drums. Whenever I listen to music, I hear the drums first. I can listen to a great jazz drummer like Art Blakey for hours at end. I’d give up almost anything to be as good as Glenn Kotche of Wilco.

The path to learning the drums is pretty clear. You sign up for some lessons, you get some pads, you get some sticks, you learn some drills, and you practice. And you keep practising. Every surface—your desk, your leg, your steering wheel—becomes a drum.

You get better over time, but you never really stop practising.

This is how we learn most things. Whether you want to be a writer or a musician or a painter or a baker or an accountant, the way to get there is fairly clear. Not everyone’s going to be as good as he or she would like to be, but at least you know where to start.

Lessons, classes, books, internships, workshops… All of these things are accessible to most people who want them.

One of the interesting things about picking up the drums was that I realised it had been sometime since I had actually tried to learn something new. We spend most of our childhoods learning new things. But as you get older, the frequency with which you develop new talents slows down. Sometimes, it stops completely.

That said, when I first started playing, I was bad. I sounded like someone was tripping over a drum set and knocking it on the floor.

When you suck so badly at something new, it’s comforting to know there are other things that you actually are good at. And being bad at drums reminded me of what I have gotten pretty good at: making money.

Today, I run 37signals, a software and design firm that I cofounded in 1999. Sales have grown at double-digit rates every year for the past decade; so have profits. (Like many private companies, we don’t disclose revenue.) How did I learn how to do this? I have a degree in finance, but I don’t remember taking any classes that even remotely taught me how to make money. I’ve read plenty of business books. Same thing—lots of talk about money, but not much about how to actually make the stuff.

One thing I do know is that making money is not the same as starting a business. For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money.

You can be the most creative software designer in the world.

But if you don’t know how to make money, you’re never going to have much of a business or a whole lot of autonomy.

This is not about getting rich (though there’s certainly nothing wrong with that). Instead, for me, making money is about freedom. When you owe people money, they own you—or, at least, they own your schedule.

As long as you remain profitable, the timeline is yours to create.

It took me a long time to figure out how to make money. Here’s how the lessons unfolded.

4 8 | INC. | APRIL 2011

I

t started when I was about 14. In Illinois, that’s when you can start working (with your parents’ permission).

So I went with my dad to get a worker’s permit and got a summer job at the local grocery store. I don’t remember learning much there. But a year later, at my next summer job, the lessons flowed.

I was working at Shelby’s Pro Shop, a golf and tennis retailer in Deerfield, where I grew up. I sold shoes and tennis rackets.

I didn’t play tennis, but I learnt how to be a very good tennis-shoe and tennis-racket salesperson. That’s because I made the discovery that people’s reasons for buying things often don’t match up with the company’s reason for selling them.

Manufacturers used to dispatch reps to the pro shop to educate us on their latest and greatest technologies. They’d tell us about the new ethylene vinyl acetate midsoles that made shoes more comfortable; the Goodyear-brand rubber outsoles that made the shoes more durable; the new variation of Nike Air that was miles ahead of the competition.

They thought they were arming us with facts that would impress the customers. But, it turned out, none of that stuff mattered. In fact, it had a negative effect. When you describe things in terms people don’t understand, they tend not to trust you as much. Trust is important. You can bluff your way into money, but for only so long.

Once I stopped slinging the technical terms, I realised that when customers shop for shoes, they do three things. They consider the look and style. They try them on to see if they’re comfortable. And they consider the price. Endorsements by famous athletes help a lot, too. But the technology, the features, the special-testing labs—I can’t remember a single customer who cared. I sold a boatload of shoes and tennis rackets that summer.

Understanding what people really want to know—and how that differs from what you want

to tell them—is a fundamental tenet of sales. And you can’t get good at making money unless you get good at selling.

I learnt this as a teenage shoe salesman, and it still drives how I operate.

To be sure, this is hardly a unique insight. But judging by the number of companies and products that totally miss the mark, day after day, it’s a lesson that needs to be learnt again and again.

2 The Middleman Years

In which I sell electronics, knives, and throwing stars—and learn that it’s all about passion

A

fter a couple more summers at the pro shop, I decided to start my own business. It hadn’t taken long to notice that retail was pretty simple: the store bought stuff from distributors, marked it up, and sold it at a profit. Why couldn’t I do that, too? It turned out, I could. I got a reseller’s licence from the state of Illinois. This allowed me to buy stuff cheaply from distributors. This is where I learnt my second key lesson: sell only things you’d want to buy for yourself.

I originally got the re-seller’s licence so I could buy stereo equipment, computer equipment, a cordless phone and a radar detector. (My rusted-out Datsun 510 was held together by bungee cords and duct tape, but I still liked to drive fast.) I soon realised that if I wanted these things, my friends probably did, too. I could sell them stuff below what they’d pay in the store and still make a profit.

So I picked some prices that seemed reasonable, pitched my peers, and the orders came in. I didn’t sell a lot, but picking up an extra $100 here and there is a big deal when you’re a teenager.

I began offering more items. Somehow I got hold of some military-supply and sporting-goods catalogues. I cut out the pictures of the stuff that looked cool—butterfly knives, throwing stars, pocketknives, and some other things I’d prefer not to mention—and created my own catalogue, which I photocopied and gave to my friends. The stuff, as they say, sold itself.

I didn’t have a credit card—remember, I was in high school at the time. So I ordered the items COD, cash on delivery. I’d learn when UPS would be coming and feign illness so I could stay home from school. The delivery guy rang the doorbell, I gave him the cash, and he handed over the boxes. I don’t know if they do COD anymore, but man, was it exciting back then. No one got rich—and I don’t think anyone was injured—but it was a great education. And the lesson stuck.

3 That’ll Be $20, Please

How and why to charge real money for real products

A

round my senior year of high school, I started getting interested in computers.

I also liked music. My collection of tapes and CDs was growing, and I wanted a better way to keep track of what I had and what I’d loaned out to friends.

This was before the World Wide Web. So, I tossed one of those junk mail AOL CDs in the computer, installed the programme, and convinced my parents it was worth the monthly fee. (“It’ll help me research and study!” I argued.) I started searching for tools to help organise a music collection. There were a tonne of them. Most were made with software called FileMaker Pro, a programme that makes it easy to create simple databases without really knowing how to programme. FileMaker also lets you design your own interface, so you can make things look any way you’d like.

Most of the music-organisation programmes were free and lousy—ugly, hard to use, loaded with unnecessary features.

I decided to figure out how to make my own. I got FileMaker Pro (I paid for it with the stash I’d saved up selling stuff to my friends) and started messing around. After a few months, I had solved the problems I had with organising my music. I knew what music I had, where it was, whom I had loaned it to, how much I paid for it. The solution was elegant and easy to use. I called it Audiofile.

Most of the music-collection products on AOL’s file section were freeware.

APRIL 2011 | INC. | 49

HOW I GOT GOOD AT MAKING MONEY

Download them, install and you don’t owe the author a dime. There were a few shareware options (you pay if you use them, but it’s mostly an honour system), but most were free.

I’d already learnt that I really enjoyed making money. And I thought that Audiofile was good. And even then, I thought that if something was good, then it was worth paying for.

So before making it available to other AOL users, I added a limit in the programme—people could file 25 CDs for free; after that, it would cost $20 to unlock Audiofile and remove the limit.

I remember my first customer. One day my parents gave me an envelope. It came from Germany and had those airmail stripes at the top. I opened it up, found a screenshot of Audiofile printed on a piece of paper—and a crisp $20 bill. More envelopes rolled in. Over the next few years, Audiofile probably generated $50,000—not bad for a kid in college in the early ’90s.

The lesson: People are happy to pay for things that work well.

Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love.

This lesson is at the core of 37signals. There are plenty of free project management tools. There are plenty of free contact managers and customer relationship management tools. There are plenty of free chat tools and organisation tools. There are plenty of free conferences and workshops. Free is everywhere. But we charge for our products. And our customers are happy to pay for them.

There’s another lesson in here: Charging for something makes you want to make it better. I’ve found this to be really important. It’s a great lesson if you want to learn how to make money.

After all, paying for something is one of the most intimate things that can occur between two people. One person is offering something for sale, and the other person is spending hardearned cash to buy it.

Both have worked hard to be able to offer the other something he or she wants. That’s trust—and, dare I say, intimacy. For customers, paying for something sets a high expectation.

When you put a price on something, you get really honest feedback from customers. When entrepreneurs ask me how to get customers to tell us what they really think, I respond with two words: Charge them. They’ll tell you what they think, demand excellence, and take the product seriously in a way they never would if they were just using it for free.

As an entrepreneur, you should welcome that pressure. You should want to be forced to be good at what you do.

Jason Fried writes Inc.’s Get Real column. For a full archive of the column, go to www.inc.com/column/get-real. To view a live chat with Fried, visit www.inc.com/ author/jason-fried.

5 0 | INC. | APRIL 2011

4 Model Madness

There are different pathways to the same dollar

D

on’t just charge. Try as many different pricing models as you can.

That’s a great way to get better at making money.

Before I launched 37signals, I worked as a freelance web designer. I charged clients by the hour. I work quickly. But I soon realised that charging hourly penalises efficiency. If I can finish something in an hour that might take someone else three or four hours, why should I be penalised?

So, when we launched 37signals in 1999, we charged clients by the project.

It worked great. But as the projects started getting bigger and costing a lot more, I noticed that clients became more reticent about signing on. Big numbers and long-time frames make people nervous. More money and more time mean more risk, and risk is something all companies would prefer to avoid.

I thought about the problem and decided to try something new. Instead of doing long, expensive projects, we’d do short, affordable ones. Instead of billing $50,000 for a 15-page website re-design that would take three months, we’d charge $3,500 per page and offer to complete the page in a week. If you want another page, it’s another $3,500 and another week. We called it 37express.

It took off. It took the risk out. It let companies try us out before committing to something big. And it was a lot more fun for us—fewer meetings, less stress and fewer decisions to be made. Just a quick one-week project for a fixed price. If you want more, we’ll sell you another.

We no longer design websites, so we don’t offer 37express anymore. But it was a fantastic way to make money. Remove the fear, and people will be more willing to pay you. People don’t like uncertainty—especially when they have to pay for it. A week and a fixed price is certain.

HOW I GOT GOOD AT MAKING MONEY

We’ve continued to experiment with pricing models. It’s been a great way to get a 360-degree view of how customers think about their money and our products. Our apps, for example, are available as monthly subscriptions for $24 to $249 per month. We’ve sold our book Getting Real as an instant download for $19 and as a paperback for $25. We’ve sold tickets to our eight-hour workshops for up to $1,000. Listings on our job board are $400 for 30 days. We sell listings on Sortfolio, a service we built to help small businesses find Web designers, for $99 per month.

We’ve even sold promotional T-shirts, for $19, when just about everyone else in the business gives them away. People wear shirts they paid $19 for. People turn free T-shirts into rags. Rags don’t promote anyone.

5 It’s Never Too Soon to Be Hungry

The true value of bootstrapping

I

began learning these things when I was 14. And I’m glad I did, because the habits entrepreneurs develop early in their careers go a long way toward determining their success.

I’ve borrowed money to start a business only once. My parents gave me $5,000 to buy my first computer when I went to college. I’m embarrassed to admit I never paid them back, but that’s only because I knew they’d never accept the money. One day, I’ll figure out how to make that happen.

But that’s it. Everything else has been bootstrapped—even though dozens of venture capitalists and private equity firms have offered us lots of money. Instead, my customers have always been my investors. My goal has always been to be profitable on Day One. I can’t say enough about bootstrapping. Whether you’re starting your first business or your next one, my advice is to bootstrap it. Bootstrapping forces you to think about making money on Day One. There’s a fundamental difference between a bootstrapped business and a funded business. It’s all about which side of the money you’re on. From Day One, a bootstrapped business has no choice but to make money. There’s no cushion in the bank and not much in the pockets.

It’s make money or go home. To a bootstrapped business, money is air.

On the other hand, from Day One, a funded business is all about spending money. There’s a pile in the bank, and it’s not there to collect interest. Your investors want you to hire, invest, and buy. There’s less—and in some cases, no—pressure to make money. While that sounds comforting, I think it ultimately hurts. It replaces the hustle, the scrap, the fight, with a false comfort of “we can worry about that later.”

Anyone can spend money. Making it is the hard part, and being forced to do it early is one of the best ways to get better at it later.

6 Try, Try, Again

A word about practicing

L

ike I said at the outset, it’s all about practice. Whether you’re playing drums or building a business, you’re going to be pretty bad at something the first time you try it. The second time isn’t much better.

Over time, and after a lot of practice, you begin to get there.

So here’s a great way to practice making money: buy and sell the same thing over and over on Craigslist or eBay. Seriously.

Go buy something on Craigslist or eBay. Find something that’s a bit of a commodity, so you know there’s always plenty of supply and demand. An iPod is a good test. Buy it, and then immediately resell it. Then buy it again. Each time, try selling it for more than you paid for it. See how far you can push it.

See how much profit you can make off 10 transactions.

Start tweaking the headline. Then start fiddling with the product description. Vary the photographs. Take some pictures of the thing for sale; use other photos with other items, or people, in them. Shoot really highquality shots, and also post crappy ones from your cell-phone camera. Try every variation you can think of.

I love doing this, because there’s no real risk involved. If you already have a business, you don’t need to dream up a new product line or rock the boat with crazy experiments. If you don’t have a business, it’s a perfect way to work on your chops.

Jason Fried is co-founder of 37signals, a Chicagobased software firm, and co-author of the book Rework, which was published last March.

APRIL 2011 | INC. | 51

HOW I DID IT

VINEET GUPTA

A LESSON IN SERIAL ENTREPRENEURSHIP People go to the Indian Institute of Technology (IIT) to become engineers. However, I got my first taste of entrepreneurship while at IIT, Delhi.

Since I had no real interest in engineering, I started working with AIESEC—eventually becoming the local committee president for IIT, Delhi. That was a highly entrepreneurial stint. Most student organisations are supervised by teachers. But AIESEC is a body of students run by students. It was almost like running a small company—and it sparked my interest in entrepreneurship; so much so that I decided not to go to Yale.

That was a tough decision to make. I am one of three boys, and both my brothers were already studying in the US then. Yet, I chose to be an entrepreneur—and, that too, in 1991, when the very concept was ruled by brick and mortar. Setting up a factory was the most obvious option.

Things were very different then. I neither had the capital, nor a big idea. After evaluating many options, I found a sick plant in Ballabhgarh near Faridabad. It was a decent-sized plant that manufactured styrofoam, and would cost me 9 lakh. I raised that amount from my father and another partner, who put in 3 lakh.

I wasn’t scared of taking on a new business. Actually, I was quite confident from day one. It was probably my experiences from college that gave me this confidence.

5 2 | INC. | APRIL 2011

In two decades as an entrepreneur, Vineet Gupta has built multiple businesses in manufacturing and services. His second venture, the 650 crore Parabolic Drugs, has been his most successful. It listed on the stock exchange last June.

However, nothing excites him as much as education. With 19 centres, Jamboree, his test preparation centre for examinations such as SAT and GMAT, is one of the country’s leading coaching businesses.

AS TOLD TO POOJA KOTHARI PHOTOGRAPH BY SUBHOJIT PAUL

A Builder at Heart Vineet Gupta loves the thrill that comes from creating new businesses.

HOW I DID IT

Despite the difficulties we faced, from labour issues to inspections, we turned that plant around in 13 months. My professional qualifications eased things up for me, and people were willing to give me a break. Within the next few years, we got all large corporates, which were using Styrofoam for packaging, on board as clients.

We also moved our plant closer to Delhi.

My brother, Pranav, came back to India in 1995, after doing an MBA and working with Ford Motor Company. He decided to start a garments business with a family friend.

However, on the first day itself, they realised that they couldn’t really work together. That’s when he and I decided to work together. It was a spontaneous decision. We decided to co-own every business we did, no matter what it was. We never discussed money. That decision still stands. We have equal ownership across all our businesses—packaging, real estate, education, pharma, and so on.

important to know when to move on and explore other avenues.

For two years before we closed it, the plant was making losses. Despite having the largest Styrofoam capacity in the country, and knowing the business very well, we simply couldn’t turn things around. It was a very painful decision—even some of my family members weren’t in favour of it. Yet, I took the decision to sell off our plant.

That business still exists though. It’s run by our partner and does about 5 crore in turnover a year. It’s quite tempting to close down the existing plant, and use the land to build commercial offices there.

Once Pranav and I started working together, we realised that we could do more than one business. So, in 1997, we started looking for fresh opportunities, and began evaluating projects that would

“I wasn’t scared of taking on a new business. People go to IIT to study engineering; I picked up entrepreneurship there.”

So, Pranav joined me in the packaging plant, and we worked together for two years. By 1999, we built a huge plant for this business in Greater Noida, where all big businesses like LG and Samsung were located. With that kind of capacity, we became the second-largest poly producer in India, producing 1,400 tonnes a year.

In 2005, we sold off the Greater Noida plant. The profit margins were quite low in this business; and, large companies kept squeezing us further. I realised that growth would be limited.

That experience taught me an important lesson—as an entrepreneur, I could do my best, and yet, not get the results I expect. It’s

5 4 | INC. | APRIL 2011

give us the maximum return on our investment. A year later, we settled on pharmaceuticals because the Punjab government was offering good incentives to businesspeople. Our due diligence showed it was a sensible business to get into.

Pranav relocated to Panchkula and started the first plant of Parabolic Drugs at Dera Bassi. At that time, our other brother used to run an IT company in the US, called Parabolic Technologies. We used the same name, thinking that eventually, we might need to create a single identity. However, that wasn’t to be. My brother sold the company later.

We didn’t have the 2.6 crore required to set up the pharma manufacturing busi-

ness. We took on half of that in debt, and borrowed the rest from family and friends.

We brought in five partners, who are still on our board. Some of them have invested in our other ventures as well.

I was highly involved in Parabolic initially.

The first three years were tough. Manufacturing bulk drugs is highly capital intensive, and our pockets weren’t deep enough.

The business made losses, and by 2001, we had wiped out our capital. We had absolutely no idea what to do with the business.

We were in such a crisis that we were willing to give the business away for free as long as the buyer took the debt on. We didn’t want to be paid anything.

Chandigarh was a hub for pharma then.

We got in touch with Ranbaxy and Max; and started doing contract manufacturing work for them. We didn’t have to buy any material on our own. We converted the raw material they gave us into the final drug. That helped turn things around— and, really made us learn the ropes of the pharma industry. Our clients audited our plants, and rejected our material. They made us implement changes in our production processes, and improve efficiencies. They taught us what right yields meant. We realised that we had been losing money on that—and had really low yields by industry standards. We were not monitoring the reactions properly.

We were also hiring the wrong people.

Because we had started small, with four workers, we were apprehensive of hiring high-salaried people. However, the business needed a high-quality person. Back then, we didn’t think like that, and didn’t want to pay as much. We came out of that, and started hiring better people.

Twelve years later, we’ve built it into a 650-crore business with four plants and more than a thousand employees. We have one of the biggest research and development facilities in north India. Last June, Parabolic went public and raised 200 crore. Since then, a lot of my time’s spent interacting with investors. I feel it’s our

HOW I DID IT

“Speed and execution are critical to success in business. Ideas don’t excite me as much.”

Sold on Education Vineet Gupta is motivated by making a difference to student lives. His next milestone is to start a university in Punjab or Haryana.

moral obligation to keep the investors updated with the progress we’re making.

I went through many lows while building these two businesses. Thankfully, I have always had my brother for counsel. In critical decisions, entrepreneurs are usually alone, but I never felt that.

Both of us think alike. We’ve never been driven by personal wealth. Problems occur when you start thinking only about individual benefit.

My brother and I take decisions in seconds; people wonder how we do that. We go a lot by raw instinct, even for important issues.

Speed and execution are critical to success in business. Ideas don’t excite me as much.

We’ve sailed through the downturns together. Not just Pranav and I, but even my partner, Bansal, from my first venture, who later invested in our pharma business as well. We’ve been partners for 19 years.

Then, in the last decade, came the next

phase of my journey. My wife, Akrita,

had started Jamboree, centres that prepared students for foreign education and examinations, out of a garage in her parents’ house in 1993. She was running two centres in Delhi for nearly a decade, when she started feeling burnt out. In 2005, she decided to give up that business.

I had to increase my involvement to keep

things running. I liked the fact that our work was making a real difference to the lives of our students.

I had to figure out how to keep the brand alive without my wife, around whom it had been built. I managed to scale up the business. Jamboree is one of the largest coaching businesses (for exams students need to take for education abroad) in India with 17 centres across the country, including one in Dubai. We are opening two more shortly, and are also planning to take our courses online.

We’ve grown with partners and franchisees in this business. We have five franchise centres and two in partnership. It made sense to take on a partner while entering a

new country like Dubai, where people didn’t know us. They’ve helped us in hiring locally and fire fighting on a day-to-day basis. It’s been a good decision.

Jamboree’s a profitable business. I am satisfied with how it’s growing. It allows us to add two to four centres a year, but I don’t have plans to scale it up hugely. We’ve explored other coaching courses but I’m not sure if we can replicate the “wow” factor there. Till I am sure we can, I don’t want to enter new fields.

In my two decades as an entrepreneur, I’ve worked in both the manufacturing and services industries. People are the backbone of a service business. At Jamboree, I’ve had to build the team, train them right, and standardise delivery at all our centres. We’ve got more than a hundred people in this business.

Even after all this time, I’m still learning. Each of my ventures has given me a thrill especially when the results have been directly proportional to the effort put in. As an entrepreneur, you have no choice but to work hard. But, it’s not necessary the hard work will translate into success. You start believing in destiny along the way.

You also realise how important it is to go through downturns. They really humble you, and give you a reality check, just in case you start thinking you made things happen.

My stint with Jamboree has helped me see

my future lies in higher education. I am motivated by the thought of making a difference. One of the milestones I’ve set is starting a university in the north—in either Punjab, or Haryana.

I am already a founder and donor of Ashoka University, a not-for-profit venture that recently announced scholarships under the Young India Fellowships brand. I feel I can create easier access to high-quality education.

Today, Indians head to the US for quality education. There’s no reason why we cannot reverse this in the next two decades.

APRIL 2011 | INC. | 5 5

AD

Going Global Europe might be a great destination for Indian businesses. But, make sure you pack your bags with care. page 57 Sales & Marketing Reminders wants to make sure you don’t forget. But, do people need it to do so? page 59 Elevator Pitch Indian In a Box has a 30 crore appetite. Will investors be tempted to dig in for a bite? page 60 The Way I Work Jatin Varma has a lot on his plate but he still finds time to answer each fan mail. The insomniac wouldn’t want it any other way. page 64

Sales & Marketing Pick up tricks to help you create a killer e-mail newsletter page 62

STRATEGY Going Global A European Excursion Work hard on your company’s itinerary Rajesh Karki was surprised to hear a German

business owner tell him that Indian companies have come a long way. “Twenty-five years ago, my father would say they didn’t do well in productservice, delivery and technology. But, the ones today are improving fast.”

This insight suggests an important breakthrough in mindset and attitude—that the typically conservative European market is open to new faces. “It’ll help Indian firms infiltrate the European market,” explains Karki, who owns and heads a research and advisory firm, and helps mid-sized Indian firms design international entry strategies.

Several Indian mid-sized companies are keenly looking at Europe as an important geography for expansion. There is a unique combination of factors at play. Since the global financial crisis, many European firms, either sick or under debt, have been acquired by Indian names. Think Corus and the likes of it. Certainly, there are good deals available, and with the cost of wages, and capital cost incurred by companies on a steep rise ILLUSTRATION BY PC ANOOP

APRIL 2011 | INC. | 5 7

STRATEGY

in India, Europe isn’t nearly as expensive as it once was. Also, some European countries are taking advantage of this interest.

Austria, for example, altered its direct investment protocol. “Indian enterprises are logically driven to go there,” says Karki.

While many take to sub-contracting, distribution arrangements, technology transfers, overseas acquisitions as possible routes, a European getaway isn’t for the faint hearted. The services sector, led by software development, pharmaceuticals and business processing outsourcing has done well in Europe, but manufacturing and hospitality industries, still find it tough to ease into the continent. Creating a powerful “India-owned” brand is definitely many miles away.

Indofil Industries, a 850 crore agrochemicals manufacturer, used the globalisation zeal of the early 1990s to expand its international operations. Its goal was to become a leading exporter. It established itself in other Asian markets like Indonesia, Malaysia, and also in Africa and the Middle East. In Europe, though, it got caught in a maze of rules. To register its products with the European Union, Indofil needed to submit safety reports on toxicological, ecological, environmental and public safety.

“Compliance in Europe is stringent, time taking and costly. We hired European lawyers to walk us through the requirements,” says R.K. Malhotra, chief executive officer and president of Indofil.

Adapting to European standards, especially on health and safety food guidelines, labour, environment and residue laws, needs careful consideration, warns Narendra Rane, vice president of international operations at Indofil. Also, the European Union (EU) might be a harmonious trading block, but each member country has its own interpretation of acts and regulations. “Indian enterprises may also feel a subtle discrimination against foreign companies,” adds Karki. It’s definitely an interesting scenario for those who enjoy a challenge.

Indofil’s woes were further compounded by the nature of their business.

Regulators asked them to furnish a study on their generic products. Because generic companies were prohibited from repeat5 8 | INC. | APRIL 2011

Destination Planning CONS: The Red Flag

EU is fragmented in nature; business owners need to negotiate among different countries and rules Understanding labour laws and Europe’s famed 35-hour week is a challenge Mindsets are closed in nature; easier to access after US success Indian firms haven’t been able to go beyond being suppliers; no ‘Indiaowned’ brand names

PROS: The Green Flag

Huge market; even slim growth can lead to large pies Good deals can be spotted, especially in manufacturing and distribution companies Good exercise for company to rise up and meet European standards Outlooks slowly changing

ing existing studies, Indofil had to generate results by undergoing all non-animal tests, and buying animal data tests by paying original data holders.

“For players like us, these costs were incurred with a complete uncertainty on payback,” explains Malhotra, adding that they finally managed to set up in Europe after “hard negotiations”. Appointing European consultants in technical fields helped, adds Rane. “They established correct systems and procedures. Our quality has improved drastically.”

Others, too, have encountered challenges with their European forays. Many have had to take smart detours to survive.

Matrix Clothing, a Gurgaon-based textile company, supplies zip fasteners to brands such as H&M and Marks & Spencer under their brand name, Texcom. In 2008, it moved its operations to Turkey to be closer to their clients, and benefit from a more mature logistics and supply chain ecosystem. “But, the wages hit us. They are about four times higher than India. Also, rules are mind-boggling. We had to make sure the zippers were lead free, and only natural dye fabrics was used,” says Gautam Nair, Matrix’s managing director.

To help cultural integration, Texcom

brought on a local Turkish partner to head European operations. “He understood the people better, and could articulate our demands,” Nair explains, adding their Turkish technicians were also invited to India to help evolve a uniform work culture and standardised ethics and quality codes between the two geographies.

Today, Matrix is an 250-crore company, and Texcom, their zip fastener brand, tripled its business after setting up in Turkey, which has helped them retain the “EU tag”—without getting knotted up in the restrictive rules.

Karki endorses Matrix’s thinking–of taking baby steps into Europe. “EU is fragmented on the basis of economic wellbeing. North Europe is more economically well off. Typically, companies wanting to enter Germany have had to infiltrate Spain first, and then expand resources to Germany.”

Going through the US is the safest option. An American green signal can be a useful thing to pack as you head to Europe. Almost all Indian software companies (Infosys and Patni Computer Systems) tried their luck in Europe only after establishing themselves as big brands in the United States.

Like the Tata Group, others have taken over European companies and retained the brand names to gain acceptability.

Bharat Forge, a leading manufacturer of machine components, acquired a German company called CDP. Under the CDP Bharat Forge banner, it began supplying automotive components to brands such as Audi and Mercedes. Companies are fine with giving up the opportunity to create an India brand, and sticking to the safe supplier route when in Europe. For example, wind power company Suzlon acquired Denmark-based Vestas, enabling it to establish supply channels and alliances.

But, again could not position itself as an “Indian” company.

Despite the challenges, Indofil’s Rane advises companies to stay the course, adding the European economy is altering itself.

“Our manufacturing and food production companies can today enjoy great opportunities in Europe.”—Sunaina Sehgal

STRATEGY

Sales & Marketing A forget-it-not reminder service Does it have recall value?

Samuel Sundar Singh forgot to book a cooking-gas cylinder for his house, despite his wife’s repeated reminders. That’s when he realised others might need help remembering their many errands too. In December 2009, he founded Reminders, a company that would keep track of your to-dos and “remind” you in time. Priced at 180 for 30 reminders in a month, the Chennai-based firm ensures you don’t forget doctor appointments, interviews, and important birthdays and wedding anniversaries. They send you multiple reminders, through SMSes, e-mails and phone calls.

Singh has already put 30 lakhs in the business, and has 850 customers across Bellary and Chennai. He’s been able to recover only 1/6th of his investment, and knows he needs to push subscriptions to 1000 per month “to survive.”

But, with his Facebook page failing to create enough ripples, how can Singh reach out?—Sunaina Sehgal

How would you sell that?

PITCH NO. 1: SMS Advertising Bindu Rathore, co-founder of Web Total Marketing, a marketing consultancy There are already so many free reminder services available—on mobile phones, computers or online.

I don’t think anybody will want to pay for this. But, if Samuel wants to persist, he needs to change his business model. He should provide free reminder services to his subscribers, and should help facilitate deliveries of flowers, cards and chocolates for reminders like anniversaries and birthdays. For every order booked from his side, he can ask vendors for a revenue share, maybe 15 to 20 per cent. He can also tie up with similar vendors for SMS advertising. His reminder SMSes can carry an advertisement of his vendor’s brand.

PITCH NO. 2: Define your target Akram Quraishi, co-founder of RapidFeeds, RSS feed management service There are many free desktop, web and mobile application that do this really well. I think his target market are people who are not very tech savvy and don’t own high end mobile gadgets, and aren’t on Facebook or Twitter. He needs to somehow get a list of individuals who often pay their bills late. Getting this list might not be easy but it’ll help him reach people who’ll appreciate this service. Google AdWords is a very good option as a marketing tool, as is advertising on online bill payment sites.

Saved by the Bell Will Reminders’ customers bother to slot it in, or will they just hit snooze?

PITCH NO. 5: Offer free trials Azaz Motiwala, founder of IKON Marketing Consultants, a marketing firm.

Singh should focus more on offline rather than online marketing. All online communities are computer and internet savvy. They have many free options such as desktop application and e-mail reminder services. Hence, they won’t prefer such paid services. Singh should focus on busy and self-dependent professionals, businessmen and individuals who don’t spend much time online. He can directly cater to professionals like doctors and advocates to offer them appointment reminder services for their clients. Also, offering free trials of his service, or trials at a nominal cost might be a good promotion strategy to attract customers.

PITCH NO. 3: Demonstrate value Karthikeyan Vijayakumar, CEO of Twenty19, a college student opportunities website The key challenge for Reminders is to convince people of their value in the age of Google calendars and inbuilt phone reminders. They must demonstrate value. For example, they could partner with travel portals and offer trip reminder services to travellers. Once customers see value here, they will stay with the company for other reminders too. They can also partner with event management companies, conference organizers and hospitals to remind participants about an event or appointment. Tying up with time-critical events or activity will help to reach out.

PITCH NO. 4: Get B2B clients Ranjith Boyanapalli, CEO of buytheprice.com, an online shopping site Considering the stage of the company and the limited marketing budget, the best way to market would be to piggy back on existing large players like event organisers, ticketing website and wedding planners. Cater to B2B clients, who have a need to remind their subscribers as it’ll help them increase recurring revenues and ensure prompt payment by customers.

Recovery agencies and other monthly subscription based service models are good fits.

APRIL 2011 | INC. | 5 9

Food for Thought

6 0 | INC. | APRIL 2011

GUTTER CREDIT HERE

Will Sondhi be able to whet VC’s appetites?

PHOTOGRAPH BY YUSUF KHAN

STRATEGY

Elevator Pitch Indian In a Box wants mouthfuls of growth.

Can its huge appetite tempt investors?

FOUNDER:

Ashish Sondhi FOUNDED IN:

2008

LOCATION:

Pune

EMPLOYEES:

49

REVENUE (2010):

1.4 crore

The Pitch “The Indian fast-food industry is growing at 40 per cent,

annually, and the hunger for fast-food in two-tier towns is worth billions.

My quick service plate-less restaurant, Indian In a Box, which serves Indian and Chinese food, aims to bank on this dual opportunity. I have three outlets in Pune but I plan to open nearly a 100 dine-in and takeaway counters, in metros and two-tier cities like Gwalior over the next three years. I want Indian In a Box to be situated every 5kms. Beyond serving good food, my experience as a chef in the UK taught me you need systems to make this business work. We want to leverage technology to grow—our web based ERP and CRM billing software keeps us a step ahead, and helps us know our customers.”—As told to Sunaina Sehgal

PROJECTED REVENUE (2011):

3 crore

FOOD:

Chinese and North Indian SEED MONEY INVESTED:

95 lakh

FUNDING SOUGHT:

GUTTER CREDIT HERE

30 crore (to be used for infrastructure, rentals, satellite kitchens and delivery bikes)

The Experts Weigh In LOOK CLOSELY AT THE NUMBERS

ENSURE QUALITY IS MAINTAINED

GET A CRACK TEAM IN PLACE

There are many loopholes. First, are the 2011 projected sales only for existing stores, or do they include revenue from future outlets? His current average of under 4 lakh-a-store per month doesn’t justify return on investment. Each restaurant should do a minimum of 2.5 times of investment in sales annually for a 15 per cent operational profit. If it takes 30 lakh to open a new restaurant, annual sales should be 75 lakh. The owner hasn’t shown how he intends to reach that.

Questions like the consumption pattern in small towns, number of satellite kitchens he intends to set up and advertising budgets have not been answered.

Overall, I think it’s quite smart to focus on tier-two and tierthree markets. The demand is growing, and the cost of doing business is far more reasonable in these places as well. I definitely think there will be strong demand for Indian In a Box across these cities, but the key to growth is to maintain quality across a large base of restaurants (no easy task!) and to keep real estate costs as a manageable percentage of revenue. It will also be interesting to see whether India In a Box remains a company-owned model or eventually evolves into a hybrid of company-owned and franchise model.

I like the entrepreneur’s ambition and the milestones he’s set for himself. With growth around 25 per cent, there is a definite market opportunity in this segment, However, there are well-established food chains, both Indian and foreign, eyeing the same opportunity. Ashish needs to articulate more clearly how he’ll distinguish his offering.

Can he successfully translate his experiences in the UK and Pune to meet the evolving palates of Indian consumers in other regions? Besides technology, he’ll also need a crack team with expertise in retail sales and marketing, operations and supply chain to execute his vision properly.

AHIT PATEL, Owner, Mr Chow’s, Mumbai

RAVI ADUSUMALLI, Managing Partner, SAIF Partners, Delhi

AJAY LAVAKARE, Member, Indian Angel Network, Delhi APRIL 2011 | INC. | 61

STRATEGY

Sales and Marketing Dear customer...

Creating a killer e-mail newsletter As a marketing tool, the e-mail newsletter might seem archaic compared with new media such as Twitter and Foursquare. Yet e-mail remains one of the most effective means of building relationships with customers and driving sales. “Most people look at everything in their inbox, even if it’s just the subject line,” says Stefan Tornquist, the US research director of Econsultancy, a London firm that specialises in online marketing research.

“That’s not true of a Twitter feed.” In fact, e-mail newsletters have experienced a recent boom, with companies such as Thrillist and Groupon profiting largely on the strength of their mailing lists. Here’s how to make an e-mail newsletter work.

A Big Deal For maximum emphasis, highlight a single offer at the top of the e-mail.

In this recent newsletter, ToeSox, a Carlsbad, California, firm that makes specialty socks, played up its 2011 calendars.

Breathing Room Leave white space around each element, which helps readability.

Image Problem Use a mix of text and photos.

Keep in mind that many people read e-mails with images turned off.

Make a compelling offer

People need a good reason to add one more e-mail to overflowing inboxes. That makes the sign-up form almost as important as the newsletter itself. (Adding an e-mail address to your list without the owner’s permission is a no-no.) Clearly state what benefits subscribers can expect, such as exclusive discounts or insider industry tips. Just make sure the incentive to sign up is closely tied to your business. “You shouldn’t raffle off an iPad, because the people who sign up will probably only care about the iPad, not your company,” says Gail Goodman, CEO of Constant Contact, a Waltham, Massachusetts–based company that makes e-mail marketing software.

Send often—but not too often

No business owner wants to gain a reputation as a spammer. But if you communicate too infrequently, customers may become less likely to remember your brand and less receptive to your sales 6 2 | INC. | APRIL 2011

All a-Twitter Use newsletters to drive traffic to company blogs and social media sites.

pitches. “A lot of companies make the mistake of not being in front of customers all year long, but then in November and December, they’ll start e-mailing every day,” says Janine Popick, the CEO of VerticalResponse, a San Francisco-based company that provides online tools for running direct mail marketing campaigns. For most, sending newsletters once or twice a month is optimal, she says.

That rule of thumb has worked well for The Girl & the Fig, which operates three restaurants and a catering business in California. The company publishes a monthly newsletter called Figbits, which typically includes recipes and information about upcoming events. The newsletter helped CEO Sondra Bernstein

garner hundreds of preorders for her first cookbook as well as about 300 downloads of the company’s new iPhone app in two days.

Choose a clean design

Be sure to include enough white space so each element of your newsletter is easy to find, says Tornquist. Another design tip: if you include images in your newsletter, bear in mind that many people read e-mail with graphics turned off. If your e-mail consists of large graphics, readers will see blank space. “I’ve seen e-mails in which the first thing you see is the ‘unsubscribe’ message, which isn’t good,” Popick says. “Make sure there’s a mix of text and images.”

STRATEGY

Get personal

To cater to subscribers’ interests, you will need to know more about them than their e-mail addresses. But take it one step at a time. If the newsletter sign-up form includes too many questions, visitors will be less likely to subscribe. Instead, send new subscribers a quick note a few days after they sign up. Mark Hurst, the founder of Creative Good, a New York City consulting firm, sends new subscribers an e-mail that asks about their careers and interests.

Goodman recommends surveying the entire subscriber list once a year to get feedback on the content.

If readers have divergent interests, divvy your mailing list into segments and send targeted variations of the newsletter to each group. Some companies also use customer data, such as recently viewed or purchased items, to create custom e-mail marketing missives.

For instance, after a customer books a trip on Kayak, a travel site based in Norwalk, Connecticut, the company e-mails a roundup of deals on hotels, car rentals, and other services in the destination city.

Encourage conversation

In addition to surveys, offer subscribers regular opportunities to interact. One way to do that is by including quick polls in newsletters. Susan Danziger, the founder and CEO of DailyLit, a site that sends users serialised versions of books by e-mail, regularly includes polls in her company’s newsletter, which has some 350,000 subscribers.

In the December newsletter, Danziger asked subscribers to submit New Year’s literary resolutions—books they had always wanted to read—and linked to a forum on her website in which readers could post their answers. She also included links to some of DailyLit’s classic titles, including War and Peace and Anna Karenina.

Make the subject line count

Without an attention-grabbing subject line, subscribers may not open your e-mail. Choose a specific, succinct phrase

Though the ultimate goal of an e-mail newsletter is to boost sales, be careful that your missives don’t become a relentless bombardment of pitches. that highlights the most crucial information in the newsletter. More subscribers will open an e-mail titled 20 Percent Off Spring Styles than one called March Newsletter.

posts, with links to the full content. Some e-mail marketing services, including Constant Contact, offer tools that let subscribers share the newsletter with their Facebook and Twitter followers.

Don’t oversell

Keep tweaking

Though the ultimate goal of an e-mail newsletter is to boost sales, be careful that your missives don’t become a relentless bombardment of pitches.

The best newsletters provide expert information that benefits readers.

A fashion boutique, for instance, could publish a seasonal style guide; an enterprise software company could offer productivity tips for the office.

One rich source of inspiration, says Goodman, is the questions customers regularly ask sales and customer service representatives.

“A great way to do a newsletter is a question-and-answer format,” she says.

“It invites dialogue.”

Business-to-­business companies, says Popick, can often draw newsletter ideas from the guides and white papers they send to clients and prospects. Of course, newsletter subscribers love deals and discounts, but don’t cram a lot of promotions into one newsletter, says Tornquist, or the deals might get lost in the shuffle. For maximum impact, focus on a single offer and highlight it at the top of the page, so that subscribers see it as soon as they open the e-mail.

Open rates and clicks are the primary metrics used to determine a newsletter’s effectiveness. The open rate, the percentage of recipients who view the body of an e-mail, primarily gauges the quality of the subject line, says Goodman.

The links clicked within the body of the e-mail are a direct indicator of what content subscribers find most compelling.

Target numbers vary by company.

“I’ve seen small wineries with open rates north of 40 or 50 per cent, and larger retailers at 12 to 15 per cent,” Popick says.

“It’s really all over the board.”

After establishing a baseline, many companies conduct A or B tests, in which portions of the mailing list receive slight variations of a newsletter, to see which version is most effective.

IDES, a Laramie, Wyoming–based company that provides information about plastics to engineering and manufacturing companies, regularly tests the subject lines and content of its newsletter, which is sent twice a month to 340,000 subscribers. In November, IDES tested two versions of a newsletter promoting the company’s new search tool.

Half of its subscribers saw an imagebased ad with a blue button inviting them to click for more information. The others saw a text ad with a basic link. The text ad received 33 per cent more clicks. Thanks to the tests, marketing manager Nathan Potter discovered that many recipients were blocking images in their e-mails.

“We’ve learnt to keep things pretty simple,” he says.—April Joyner

Tie in blogs and social media

If you already publish a blog, there is no need to create even more content for your newsletter.

“Having a separate newsletter, a separate blog—it’s almost overkill,” Popick says.

In fact, a newsletter is a great way to drive traffic to your blog and your social media content. Publish excerpts of your blog

APRIL 2011 | INC. | 6 3

STRATEGY

THE WAY I WORK | Jatin Varma, Twenty Onwards Media

“My team can wear what they like, and swear at each other, and sometimes even at me.”

Jatin Varma’s professional style is as unique as his birthmark—a black spot on his right eye that makes him look like a pirate. While the 27-year-old does not plunder the seas, he sure does come up with cunning ways to get his team of college graduates, still grappling with the ways of office life, to ideate. Little wonder then that the corridors of Twenty Onwards Media, Varma’s four-year-old media house, is full of energy. It is, after all, filled with 20 somethings who walk around in casual clothes and swear liberally. Varma doesn’t mind the goofing around as long as his employees are punctual. That doesn’t happen, much to his dismay—he has a team of habitual offenders. On a typical day, you’ll find him writing e-mails to his Random (magazine) fans, shouting at his crew for trooping in late, and then asking them to make up for it by coming up with brilliant one-liners.

AS TOLD TO SUNAINA SEHGAL | PHOTOGRAPH BY SUBHOJIT PAUL

6 4 | INC. | APRIL 2011

Random Success Jatin Varma believes in learning from his past mistakes—and having fun at work.

STRATEGY

My alarm clock goes off sharp at eight every morning. I hear it,

popular show called LoveNet will also be aired soon. The show exposes naughty little secrets of a young couple who are dating online. Since shoots for these go on till late, it’s pretty hard to be in office on time. Besides that, though, there really is no other excuse for not being punctual.

B

turn off the snooze button and go right back to sleep. That’s usually because I work late into the night and because I am an insomniac. I cannot seem to fall asleep before 3am. Luckily for me, I have company. My wife works in an international bank and she is usually up working late into the night also. Her clients operate in different time zones.

Once I am awake, I like to pep myself up with a hot cup of coffee or chai. I do not bother exercising—just that word tires me—or eating muesli with curd, the very thought of which churns my stomach. I am not a health freak and I am damn proud of that. Recently, however, I have started eating fruits to stay healthy. The idea was not mine, as you can guess. I got married a few months ago. Before I tied the knot I used to live with my parents and younger brother in south Delhi. I still live in the same neighbourhood, only a couple of blocks away. It’s basically the same life—only that instead of my parents, I report to my wife.

As soon as I am done with breakfast—usually something between eggs and paranthas—I head to office. The commute to Naraina Vihar, in west Delhi, takes 30 minutes. I love listening to music in my car. It helps me relax and prepare for work. My pick is either Indian classical music or the latest Bollywood chartbusters. I also try to catch the Matchless Music Hour which airs on AIR Rainbow FM at 9am. I try to make the most of this drive. I know the day ahead will be crazy, so I savour every bit of this me-time.

I am, invariably, the first person to reach office. My secretary— also the guard—makes it on time. The minute I enter, the first thing I do is to ask the guard to call up every one in my staff and make sure they get to work on time.

Officially, our working hours are from 10am to 6pm but no one quite shows up before 11.30am. No one leaves at 6pm either. I guess this is how the media industry works, and we are no exceptions. My four-year-old “idea house” does almost everything—from writing jingles for ads to making corporate films to producing shows. These days we are producing a new show on Channel V called Date My Folks. The show requires someone to go out with their prospective date’s parents before their actual date. The second season of another

more like an office with people trooping in. I, of course, make it a point to let them know that I am an unhappy boss. If a person comes in later than 12pm, I ensure that he or she gets paid half a day’s salary. I can be merciless in such things.

I don’t care if somebody has worked till 10pm or late into the night. If anybody is late for three consecutive days, they are marked absent. The irony is that despite all of this, the story doesn’t change much.

The next thing I focus on is my inbox. I am always connected to work through my BlackBerry, so opening my mailbox is not a ritual. My inbox generally consists of updates from heads of productions, events of the day, the basic to-do list, media requests, resumes of people who want to be a part of the organisation, and e-mails from fans. Sometime in February, we had organised India’s first-ever comic convention—Comic Con—in New Delhi. The event ran for two days at Dilli Haat and attracted 17,000 visitors. People just loved it. I got around 300 e-mails from my fans.

They were super kicked about the convention; and so was I, about the response. I made sure that I personally e-mailed each one of them back. My hands were quivering at the end of the hundredth e-mail but I would not have allowed anyone else to respond to those mails for me. That is the way I work. I like to be involved in everything. I like doing things myself.

When I started out, things were not like this. I did not have a background in the media industry, and that did not help. I decided to hire a few people who knew the ropes of production—writing— and learnt from them. I may have been their “boss”, but I was also a diligent learner. There is nothing that beats hands-on experience. I am always open to learning—be it from colleagues or from past experiences.

My first stint in the media industry was when I was 22. After graduating in economics from the University of Washington, Seattle, I came back to India and started my first publication—a magazine called Traffic. As the name suggests, it was a mishmash of everything under the sky. Right from politics to humour to social issues; we explored it all.

Unfortunately, we didn’t find any takers.

Nothing can describe the anxiety I felt in those days, not only because we had to stop production in less than six months, but also

“I ask the guard to call up and make sure that every one reaches work on time.”

6 6 | INC. | APRIL 2011

y 11.30am, the office begins to look

STRATEGY

“At this moment, however, there is just one aim—increasing my clientele.”

L

because the livelihoods of 10 people depended on it. But I did not give up and we started all over. The second time round, it was not all that bad. One of the main reasons for Traffic not working was my inability to figure out the distribution, marketing and target group of the magazine. To avoid falling into the same trap again, I hired people who knew the nuts and bolts of the media industry. That decision has paid off, and things are going better than ever.

From an initial investment of 5 lakh, Twenty Onwards Media has grown to a 4-crore company in four-odd years. We have also bagged some major deals from UTV Bindaas and Channel V. So, I figure we are headed down the right path this time.

I still struggle with a few things. I feel HR is the most complex function in any organisation.

It’s very difficult to handle people and their attitudes. Things are tougher for me, because I have so much young blood in my office. I work only with interns and fresh-out-of-college kids. The great thing is that they are full of energy, spunk and fresh ideas, but the difficult part is trying to tame them. This is why I’ve made sure our office culture is very informal and cool. My team can wear what they like, and say what they feel. They can swear at each other, and sometimes even at me. In our office, the banter is such that people are always on the lookout, for the next best comeback or quip. I might be strict about punctuality and honesty but I always encourage my colleagues to be themselves, speak their mind and come up with suggestions.

None of this is easy to manage, of course. You have to be really careful when you handle young kids. Many graduates are shy and reserved, and we need to work hard to break the ice. I have an interesting way to do that. Each person who has been at the receiving end of my morning ire is asked to come up with a smarter retort than the one I came up with.

This not only helps build comfort, but also leads to some amazing ideas.

These retorts often make their way into our dialogues and jingles.

I am also stingy with money. I make sure we constantly focus on the economics. Like any other entrepreneur, I like to cut costs.

Believe it or not, I haven’t taken even a month’s salary home. I just use my wife’s money. unch lasts for an hour or so, after which begins

my real work—creating my brand’s properties. I may produce TV shows for channels or write jingles, but at the end of the day I need to create enough properties and assets that are mine.

Recently, I published a graphic novel—The Itch That You Can’t Scratch—under Pop Culture Publication. We have a deal where we own the artwork and the writer owns the copyright to the text. This is our way of owning a property, and at the same time making the sure the writer or the artist also has a stake in it. Of course, royalties to the author— Sumit Kumar—is an added advantage, and this model should help us partner with others.

Like Pop Culture Publication, we publish the magazine, Random, an Indian take on the famous Mad. In future, I plan to launch my line of merchandise—from T-shirts to mugs with smart and funny one-liners. At this moment, however, there is just one aim—increasing my clientele.

I usually try to wind up between 7 and 8pm. I make it a point to get home and spend some time with my wife; we have dinner together. For me, a good day should always end with a good meal. I don’t care if it’s vegetarian or non-vegetarian as long as it’s sumptuous.

After dinner, I settle down on my couch with whichever graphic novel I have been able to get my hands on. I read to unwind. Right now, I am reading the entire World Comics India collection. There will be days when I will be lying awake thinking about things in my company, its mission and future. Sometime around 2.30am, the thoughts become fuzzy and I drift off to sleep.

APRIL 2011 | INC. | 67

LEGACY

Anant Pai, 1929– 2011

The Storyteller

‘I sat opposite to him. He looked at me with a smile, and broke into a Sanskrit shloka, recalls Reena Puri, editor of the children’s comic book, Amar Chitra Katha, about a meeting with her boss, Anant Pai. ‘I knew then I must have made an editorial mistake.’

That was vintage Anant Pai. Creator of the Tinkle and Amar Chitra Katha comics, Uncle Pai, as he was popularly known, lived his life through stories. Pai used them as a tool to express emotions, saying often that proverbs, anecdotes, myths and legends were great vehicles for learning. When people went wrong, he’d pull a story out of his treasure bag that would act as a lesson.

But this storyteller’s life was no fairy tale.

Born and brought up in Kakala, a small village in Karnataka, Pai lost his parents when he was just two. His maternal uncle brought him up. But, they shared an uneasy relationship. Pai took solace in writing—penning down his thoughts and emotions of a lessthan-perfect childhood. By the time he was 12 years old, Pai had written two short books in his mother tongue, Kannada.

His stories gave him strength, and helped ease the loneliness by being a constant companion. “The Banyan Tree (Thapovanam) story was his favourite. In this story, a tiny seed grows into a huge tree.

Uncle Pai had great faith in this fable. He believed everybody was capable of accomplishing anything,” adds Puri.

Little wonder then that when he was denied admission into Bombay University because he didn’t know English, he put the rejection to good use, and learnt not one, but eight languages. He’d encourage small efforts by everybody, especially children, equally.

Every month, Pai received about 10,000

6 8 | INC. | APRIL 2011

A Real-life Comic Book Hero Helping children develop moral and social values through fables and tales was what Pai lived for.

letters from children across India. He’d not only reply to each letter personally, he’d ask his editorial team to seriously pursue the smallest ideas in those letters. He loved the joy that came from weaving those suggestions into a bigger story. It also helped Tinkle form close bonds with children.

Pai was a perfectionist. Tinkle’s freelance illustrator Abhijeet Kini recalls, “My style and drawings were more graphical in nature—with complex styles and colour.

That wasn’t Tinkle’s requirement. They required a more child-friendly, simpler look. He’d keep sending me back copies till I got it right,” says Kini, who first met Uncle Pai as a 15-year-old.

Pai measured success differently. For him, it was about his young readers getting

hooked to the tales he weaved. Beyond that, his needs were limited and simple— like his storyboards and drawings.

“He did not like anything ostentatious,” says Lalita Anant Pai, his wife. They had recently celebrated their 60th wedding anniversary. “So simple were his needs that it did not matter to him whether his ideas made money or not. As long as it helped children to inculcate good values, he thought that he was the richest man alive.”

She fondly recalls the past. “I would notice something on the street, spin it into a story and we both would take turns to add to the story line.”—Sunaina Sehgal