The Mocha Man

MARCH 2010

How I Did It CHETAN MAINI ofPAGE Reva 50

THE MOCHA MAN

The Magazine for Growing Companies

WHENTO SAY

“SHUT UP”

PAGE 22

THE MOCHA MAN

THE WAY I WORK

ARVIND RAO of OnMobile PAGE 64

wants to brew Rs100 cr in revenue. His formula for fun might just do that.

The MAGAZINE for GROWING COMPANIES

March 2010 | Rs.150 | Volume 01 | Issue 02 A 9.9 Media Publication

Riyaaz Amlani runs restaurants, but sells experiences

Rounding up bright ideas from employees PAGE 62

A9 9.9 9 Media Publication

March 2010

CONTENTS

30 Brewing a Revolution 36 Lessons from a Blue-Collared millionaire

Nick Sarillo set out to build a company unlike any other.

Now, Nick’s Pizza & Pub is a model for anyone who seeks high profits, low turnover and very happy customers.

64 I Wish I Knew Then...

Rajesh Rao built India’s first game-design company and became a poster child for his generation of entrepreneurs. Along the way, he learnt many things.

48 How I Did It Chetan Maini

He built a motorised toy car when he was 10 years old.

From there, it was a short ride to being the man who built India’s first electric car.

Riyaaz Amlani has built 29 restaurants that offer unique experiences to his clients. Now, he has to balance his creativity with the demands of scale. Can he work his magic and still grow to Rs 100 crore? by pooja kothari

as told to shreyasi singh

as told to jacob cherian

by bo burlingham

40 Case Study Old Robes, New Designs

A Surat-based textile business has global ambitions, but is held hostage by ancient practices. Could an ERP system help it meet those goals? by jacob cherian

THIS EDITION OF INC. MAGAZINE is published under license from Mansueto Ventures LLC, New York, New York. Editorial items appearing on pages 13,14,15,28-29,36-41,56 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

Riyaaz Amlani, founder of Impresario Entertainment & Hospitality; photographed by Vijay Kutty at the Smokehouse Grill restaurant in Delhi.

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CONTENTS

March 2010

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51

13 26

06 Contributors 07 Editor’s Letter

08 Behind the Scenes

Medical gas pipelines, scrubbing stations, sterile operation theatres—at Max Hospital, a lot goes into maintaining the superior standards of service.

13 Launch

It’s tough getting people to change. But authors Chip and Dan Heath have a few tricks The Ticker A Skimmer’s Guide to Fascinate: Your 7 Triggers to Persuasion and Captivation Is coconut water the new health-drink fad?

Blogger Logic: Jeffrey Zeldman on promoting your wares rather than yourself How Indian businesses are leveraging social networking websites to build communities

18 Passions

Vineeta Singh thinks start-ups are like marathons. The treasure’s at the end of a long run.

No wonder she’s addicted to both.

20 On the Contrary

By Mahesh Murthy You can’t stop employees from walking out. But there are ways to make sure you get to keep the good ones.

25 The Goods

Netbooks to suit every pocket and requirement Noise-cancellation headphones Software that helps you organise life better Sturdy and smart strolleys for your next trip Shopping tips for the airport Showcase: Carry the Mahatma in your pocket

48 Start-up Diaries

An update on the three ventures we promised to track; one’s done up its office, another’s increased its prices—all that, and more.

28 How Hard Could It Be?

By Joel Spolsky Have you ever invited employees to a meeting just so they wouldn’t feel left out? If so, you may be an overcommunicator.

29 Guidebook

How to hire your employees wisely; and which experts to call for help.

STRATEGY 51 SALES & MARKETING Research from McKinsey & Company, India that shows word-of-mouth recommendations can do more to help you close a deal than any dealer incentives.

53 TECHNOLOGY Imagine if 30 employees were to use the processing power of a single computer. That’s what nComputing can do, says CEO Young Song.

54 ELEVATOR PITCH Can US$250,000 script the success of Indee TV? 56 TECHNOLOGY A virtual suggestion box can help you squeeze more bright ideas out of your employees.

57 SALES & MARKETING How would you market a hot-air balloon ride? Four experts weight in.

58 The Way I Work

OnMobile’s Arvind Rao is obsessed about making an impact on his clients’ profits.

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EDITOR’S LETTER

Entrepreneurial Obsessions My first affair with entrepreneurship lasted a little less than a year. After working for nine years for others, I was possessed by the idea of starting something on my own.

So when a friend from college mentioned his venture, I offered to join his partner and him. This was in mid-2008. It was a service business in human resources. In hind-sight, we couldn’t have picked a worse time to start out. The economic downturn hit India by August and our service found no takers.

We tweaked and tuned, but within a few months, the writing was pretty much on the wall. I’ve often wondered why we didn’t make it. Was it a lack of staying power; or did we not research the idea enough when we began. Perhaps, it THINGS I LEARNT IN THIS ISSUE was our naïve conviction in Rely on your gut, but our ideas that did us in; the back it up with idea seemed so obviously research. good and useful—all mothers Too much think their babies are communication is a beautiful, right?—how could big problem, leading anyone not take it up? But to loss of efficiency, then, without that naiveté, Delegation is ugly children would never get necessary to get ahead. enough love. So, we live and we learn—and yearn for Your family can motivate you to hang entrepreneurial nirvana. in there when the The Start-up Diaries going gets tough, and remind me of those days. I’m it usually will. sure RideInSync’s Deepesh Coaching in the Agarwal can’t understand moment works more why people don’t see the value than performance in his cab-pool service. reviews.

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Deepesh, if it is any consolation, sometimes people just don’t know a good thing when they see it—and once they start using it, they can’t do without it. Read what Rajesh Rao has to say about his initial days—he thought gaming being a ‘hot’ sector was reason enough to start a business in it; and met enquiries about ROI with sheer annoyance. Entrepreneurs become obsessed with their babies, I guess.

As Riyaaz Amlani is obsessed about offering a unique experience through his restaurants. Our cover story is about his fascinating journey; he started out trying to fill an obvious gap with a coffee shop that wasn’t a replica of Starbucks. Lest anyone think it was a fluke, he proved himself over and over again, with different formats in different cities. After eight years of proof of concept, he’s now getting ready to scale up—gearing up for a battle of another kind.

On a separate note, it’s been a fantastic two months. We have received cartloads of congratulatory messages on the launch issue. We couldn’t have asked for a better start; thank you, readers, for being so kind to us. Keep up the flow of feedback. To be relevant to you, we need to know what’s going on in your lives and what is it that you need to excel in your businesses. So keep telling us.

Happy reading!

Pooja Kothari pooja.kothari@9dot9.in

MANAGING DIRECTOR: DR PRAMATH RAJ SINHA PRINTER & PUBLISHER: ANURADHA DAS MATHUR EDITORIAL EDITOR: POOJA KOTHARI ASSISTANT EDITOR: JACOB CHERIAN COPY EDITOR: PAYEL MUKHERJEE INTERN: SUNAINA SEHGAL DESIGN SR CREATIVE DIRECTOR: JAYAN K NARAYANAN ART DIRECTOR: BINESH SREEDHARAN ASSOCIATE ART DIRECTOR: ANIL VK MANAGER DESIGN: CHANDER SHEKHAR SR VISUALISERS: PC ANOOP, SANTOSH KUSHWAHA SR DESIGNERS: PRASANTH TR & ANIL T PHOTOGRAPHER: SUBHOJIT PAUL PRODUCT MANAGER MAHESH RAVI

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Date: March 2010

PRINTED, EDITED AND PUBLISHED BY ANURADHA DAS MATHUR 9.9 MEDIAWORX PVT LTD K-40, CONNAUGHT CIRCUS NEW DELHI -110 001 INDIA

Sd/Signature Of Publisher

CONTRIBUTOR

Bo Burlingham joined Inc. magazine as a senior editor in 1983. Six months later, he became the executive editor. Since 1990, he has been an editor-at-large for a number of reasons, including his desire to write more.

He has written two books, one of which, The Great Game of Business, has sold more than 300,000 copies. In the past, he has also freelanced for publications, such as Esquire, Harper’s, Boston Magazine, and Mother Jones. He has been married for 35 years to his wife, Lisa, and lives, well, at large.

MAIL

Getting off to a good start

I must say that the magazine comes across as a publication that is immaculately designed, with ideas that are well articulated, setting it apart in more ways than one from its competitors. Its easy-toread style ensures that the reader does not lose interest after a few minutes, as is usually the case! Please accept my heartiest felicitations on this new product.

—RAJESH SRIVASTAVA, Chairman & Managing Director, Rabo Equity Advisors

Via Facebook

Priceworthy?

It (the magazine) has come out damn well.

I think the issue is great - although Rs 150 looks a little high :-) Wish you great days ahead! pv sahad

Founder, VCCircle.com

Rock On The first issue rocks! Very refreshing in story selection, style and presentation.

Wonderful job by your team. Hope to see more good work from your banner.

TIPS TO GIVE A MAKEOVER TO YOUR WEBSITE

BEHIND THE SCENES

HOW I DID IT

SAM BALSARA OF MADISON WORLD

Lotus Temple, New Delhi

Companies at the Heart of Everyday Life

PAGE 48

Built in 1986, the Temple’s walls are made of Greek marble that is said to be sourced from the same mine that supplied to the Acropolis.

Over the years, the stone started showing signs of ageing. So the management called in Delhibased Falcon International. It took 11 men a year and a half to line the joints between the marble plates with 25 kms of silicon sealant.

The team invented its own sign language to continue working silently through prayer meetings. Founded in 2004, Falcon has 10 permanent employees and 80 freelancers, and is run by Vikram Khanna.

The pristine white walls of the temple, modelled in the shape of lotus petals, and the surrounding ponds add to its allure, but are a cleaner’s nightmare. CSMS, founded in 1982 with two employees, provides the manpower for this cleaning operation. A group of 25 personnel works under the supervision of an internal team to spruce up the campus. The vendor also maintains a housing facility on the premises and runs the kitchens. The Delhi-based supplier, which employs 1,300 personnel, clocks Rs 8 crore in revenue.

The Magazine for Growing Companies

MOVE OVER,

GOLDMAN The boys The MAGAZINE for GROWING COMPANIES

deepak chembath

PAGE 36

Cleaners

Editor, Inc. magazine

No disappointment Nice one :-). Just read the Mahesh Murthy article. As always, he didn’t disappoint.

AYN RAND

Silicon Sealing

MOVE OVER, GOLDMAN

jane berentson

JANUARY 2010

High praise, indeed You have captured the essence of Inc. in a way that thrills all of us. Great job.

at Avendus Capital have built an i-bank in 10 years.

The Greens Dressing up the Lotus Temple’s 27.5-acre campus is a monumental task, requiring plenty of manicuring. Punebased nursery, Tukai Exotics, sends sacks of 5,000-10,000 seedlings every year. Tukai was founded in 1997 and today has nearly 60 employees. Their client base includes retail nurseries, corporates, hotels and resorts, various government bodies, landscapists and farmhouse owners.

And just might have the last laugh.

PAGE 30

January 2010 | Rs.150 | Volume 01 | Issue 01

A 9.9 Media Publication

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Security Even a temple needs security. There are 30 guards standing at the gates and along the fences. They are provided by Diamond Security and trained in-house by the temple’s management. Founded in 1996, the security company has more than 1,000 personnel on its rolls, and draws Rs 4 crore in revenue. Its 150 clients include corporate houses, government bodies, farmhouses and residential colonies. Over the years, the company has expanded its range of offerings from just security personnel to include maintenance and delivery personnel.

REPORTED BY JACOB CHERIAN

INC.INDIA | JANUARY 2010

Inspiring accounts I just got the launch issue of your new magazine. I went through the magazine, and I must say, it is a great read. It is really inspiring to read the accounts of various entrepreneurs across India, and see how they sketched their success stories. Wish you all the success.

Congratulations I saw your magazine. It was fresh and impressive. Kudos for the good work. sunil jain

Senior Associate, Mape Advisory Group

Many congrats on the Inc launch; great content and feel!

nimish arora

manish sabharwal

Director, Aarone Group

Chairman, Team Lease

jay vikram bakshi

President, Digiqom Solutions

The magazine is looking fantastic. ester martinez

Founder & Editor-in-Chief, www.peoplematters.in

ATTA BOY!

At the outset, please accept my hearty congratulations for pulling out a wonderful and inspiring story on the Avendus boys in your January, 2010 issue. Such tenacity among the three boys, I am sure it will be the most tempting and inspiring story one could read in the recent times. May God bless your magazine and the three boys with a glorious career.

My congratulations to you and your team for the idea and quality of the first issue. I am keenly looking forward to receiving the subsequent issues. bk jhawar

Chairman, Usha Martin

—R BALAJEE, Chief Operating Officer, Auro Mira Energy Company

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BEHIND THE SCENES

Companies at the Heart of Everyday Life

X-ray view boxes An operation theatre (OT) is the lifeline of a hospital. It takes the expertise of surgeons, as well as the readiness of equipment, to save lives. Many times, during surgery, doctors need X-ray view boxes to refer to, or study the diagnostic needs of a patient. Made of a plastic frame, which lowers power consumption and offers greater durability, these boxes offer clear images needed for correct diagnosis. These LED and LCD viewing boxes are made by Delhi based Unique X-ray. Established in 1991, it has 25 employees and a team dedicated to R&D aimed at improving this medical equipment. Run by Vijay Kumar and his three partners, this Rs 230 crore company supplies these boxes to many hospitals in and around Delhi, and even exports them.

Scrub stations To encourage a bacteria- and germ-free environment, hospitals use scrub stations fitted with sensors that allow doctors to activate the water supply without touching the tap. The in-built thermostatic mixture and temperature sensors provide constant hot and cold water for use.

These sensory scrub stations are provided by Creative Engineers and Medical Systems.

Started by Sunil Dutta in 2008, the firm manufactures and assembles censor-operated scrub stations. The Noida-based company makes about Rs 45 crore in revenue and has 20 employees. Its expertise has been called upon by healthcare providers such as Indraprastha Apollo hospital and Metro Multispeciality hospital in Noida.

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Max Super Speciality Hospital, Saket, New Delhi

Anti-bacterial walls Many a battle for survival are fought inside the pristine premises of an OT. The walls of this prefabricated operation theatre by PES Installations are made of stainless steel. The entire room is coated with an anti-bacterial paint. The ventilation ceiling helps prevent post-operative infection by enabling bacteria-free air circulation. Established in 1995, PES is managed by RP Chadha, and specialises in modular OTs, infant care product range, automatic doors and access control systems, to name a few. The Delhi-based company has lent its expertise to many hospitals in India, including the All India Institute of Medical Sciences—the country’s top medical institution.

Medical gas pipeline Anyone who’s ever been inside a hospital will recall coming across a maze of pipes running through the corridors and inside rooms. These pipes carry medical gases such as oxygen, nitrous oxide, nitrogen, carbon dioxide and medical air throughout the hospital. Pipelines are linked to a medical gas plant located in the basement. Alcon Meditech supplies these medical gases to Max. Founded in 1998, the firm deals in integration and customised assembly of medical gas plants, lays medical pipelines, and even provides “operators” for the plant. Guided by Naveen Sehgal, the Rs 300-crore company has 50 employees, and has serviced hospitals such as Medanta Medicity in Gurgaon, Nepalgunj Medical College in Nepal and Syhlet hospital in Bangladesh.

PHOTOGRAPH BY VIJAY KUTTY

REPORTED BY SUNAINA SEHGAL

News, Ideas & Trends in Brief

LAUNCH

How to Get People to Change Authors Chip and Dan Heath on change management.

PHOTO BY PHOTOS.COM

Forget PowerPoint. If you want to influ-

ence employee or customer behaviour, charts and data typically won’t cut it, say Chip and Dan Heath, authors of the 2007 bestseller Made to Stick and the new Switch: How to Change Things When Change Is Hard. In their recent attempt, the brothers explore ways to manage big changes in life and in business. “Change is hard, because we’re schizophrenic,” says Chip, a professor of organisational behaviour at Stanford’s Graduate School of Business. (Dan is a senior fellow at Duke University’s Fuqua School of Business.) In researching their new book, the Heaths consulted experts on subjects as diverse as how to diet and how to change society. “Time and again, we found the same principles coming up, whether it was individual change or organisational change or societal change,” says Chip. Those principles, he says, involve appealing to both our rational and emotional sides. Inc. senior editor Bobbie Gossage recently spoke with Chip Heath about the book’s findings.

What mistakes do leaders make in trying to change their organisations?

One of the main mistakes is when leaders come up with a new vision but never translate that broad analytical vision into something people on the frontlines can actually execute. I was talking to an entrepreneur who wanted his employees to have a “mindset of customer service.” But if you’re an employee, when you hear that, all you hear is buzzword, buzzword, buzzword, jargon, jargon, jargon.

What if you are dealing with some really stubborn people who don’t like change?

You can try to find the feeling that’s going to make them empathise with customers.

For instance, Microsoft had some very stubborn programmers who thought they were writing brilliant software. But six out of 10 customers Microsoft surveyed couldn’t figure out how to use the new feature. When they told the programmers this, their response was, “Where did you

find six dumb people?” Microsoft brought the programmers into a usability-testing lab and put them behind a two-way mirror.

When the programmers watched a real customer struggle with the software they designed, the programmers immediately started thinking about ways of changing it.

Don’t try to argue with a stubborn employee. That appeals to the dark side of the analytical parts of ourselves.

What do you mean by the dark side?

Our analytical capacity is wonderful, but we face too many choices. If you give customers in a grocery store an assortment of 24 jams to sample, they’re actually less likely to buy any of the jams than if there are only six jams. Very often we paralyse our analytical side by offering it too much to analyse.

The same thing happens if you give your employees too many things to think about—like having a “mindset of customer service.” As an employee, there are 45 things I could do that might improve cuscontinued on the next page

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LAUNCH

How to get people... continued

tomer service, and I don’t have time to do all of those things, so I end up doing none of them.

What about using carrots and sticks?

If you’re offering bonuses or hiring and firing a lot of people so that you can find the few special people who can execute your vision—those are expensive, time-consuming strategies. Very often, by making small changes in the environment, we lead people in the right direction without that expense.

So you should change the environment, not the employee?

One of the most basic mistakes that psychologists have documented is that we tend to blame people and their personalities for problems and ignore situations. One of my students, a director at Nike, thought of herself as a very open manager. She had an open-door policy, but when she asked for feedback, she learned that her staff thought she was a bad communicator.

After talking with her team, she realised the problem was the way her desk was set up. When an employee came in and sat across from her, her computer was right in the middle. She got distracted when emails showed up. After she rearranged her office so she would have to turn her chair away from the computer when an employee came in, she immediately got positive feedback. By fixing that environment, she fixed the problem.

You mention in the book that peer pressure is also a powerful motivator.

Social influence is strong. If a 12

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third of your employees aren’t filling out their expense reports on time, what they may not know is that two-thirds of your employees are. Sometimes just understanding that a crowd of people is moving in a direction makes people uncomfortable enough to change. One of my favourite studies in the book is about a group of researchers who went into hotels that have those “Please reuse your towels” signs.

They changed one of the signs to say, “Most people in this hotel reuse their towels at least once during their stay.” Immediately, towel reuse rates went up 25%, and laundry bills went down.

Does a bad economic climate affect people’s ability to change?

We commonly think that fear is a good motivator, but fear works for only a short time. And this recession has gone on for a couple of years in some parts of the country. So when we try to motivate people, we need to find feelings of hope and optimism.

How do you do that?

There’s a technique we talk about in the book: looking for the bright spots. When you face a change situation, you’re often demoralised and depressed.

Instead of focusing on what isn’t working, you need to shift people over to thinking: What have we done in the past that has been successful for us?

It’s easy to get demoralised when you lose and you lose and you lose. But when you think about the last time you won and how you can do those kinds of things more often, that gives people a sense of hope and optimism that will motivate their behaviour.

—Bobbie Gossage

The Ticker Entrepreneurs have a reason to smile. Angels, VCs, and PEs are back! The venerable SBI turned angel with its Smile scheme, offering interest-free seed capital up to Rs 10 lakh to medium and sheth small-scale enterprises. Beerud Sheth’s SMSGupshup raised US$12 million from Globespan, Charles River and Helion.

VCs Bessemer and Helion invested Rs 50 crore in NetAmbit. Lok Capital acquired a 26% stake in Rural Shores, an HDFCbacked village BPO. Sequoia earlier invested in Via and Equitas. PE investments are reported to have doubled to US$386 million in January— Temasek invested Rs 100 crore in Shobha Developers and Integreon got capital to fuel growth US$50 million from Actis…

What’s with India? YouTube recently started a Bollywood channel for free online viewing of full-length movies and now, Wikipedia.org plans to launch its Indian edition Wikipedia. in…Home-grown Pinstorm became the only brand management firm in the world to be awarded the “the Red Herring Global Top 100”—given to companies who show a combination of technological innovativeness and business success. Previous awardees include Google, Yahoo, YouTube mahesh murthy and Skype—take a bow, Mahesh Murthy!...While PayPal has pay suspended personal payments to and from India, m-commerce continues to make inroads. Nokia has collaborated with Yes Bank to launch Nokia Money, powered by Obopay, in India. It allows merchants and users to check their balance, manage expenses, payments and pay utility bills.

Bharti launched AirTel App Central with over 1,250 apps across diverse categories.

Books on the mobile, anyone?

LAUNCH

Going totally bananas over coconut water?

beverages

A skimmer’s guide to the latest business books The book: Fascinate: Your 7 Triggers to Persuasion and Captivation, by Sally Hogshead; Harper Business; February 2010.

First came vitamin-enhanced water, then

açai juice. Is coconut water the next big health-drink fad? Michael Kirban and Ira Liran sure hope so. The pair, friends from college, got the idea to sell coconut water after they learned about the drink from two young Brazilian women they met at a bar in New York City in 2003. (Liran eventually married one of them.) Today, Kirban and Liran’s company, Vita Coco, controls nearly 70 percent of the US$30 million— and growing—US market for coconut water.

Not long ago, coconut water was all but unheard of in the US. Now, Vita Coco has some stiff competition. Zico, a Hermosa

Beach, California, company launched in 2004, counts Coca-Cola as a backer. And Pepsi recently acquired Brazilian coconutwater maker Amacoco.

One retailer Kirban and Liran approached early on declared Vita Coco tasted like “sock water.” But today, 12,000 retail locations, including many Whole Foods and Safeway outlets, sell the electrolyte-rich drink, which is promoted as a sort of natural Gatorade.

Vita Coco’s revenue climbed from US$8 million in 2008 to more than US$20 million in 2009. “People really get hooked on this stuff,” says Kirban.

—Josh Spiro

Promote the hell out of your product—not yourself blogger logic

PHOTO BY PHOTOS.COM

No entrepreneur can succeed without getting the word out, writes Web designer and blogger Jeffrey Zeldman at zeldman.com. But that’s a lot different from being a loudmouthed self-promoter.

“There is a difference between being arrogant about yourself as a person and being confident that your work has some value. The first is unattractive, the second is healthy and natural. Some people respond to the one as if it were the other. Don’t confuse them.

Marketing is not bragging, and touting one’s wares is not evil. The baker in the medieval town square must holler ‘fresh rolls’ if he hopes to feed the townfolk.”

The big idea: As media cacophony threatens to out-din a Metallica concert, it is no longer enough to impress customers. Now marketers must strive to fascinate people beyond the bounds of rationality. So, companies must activate such mental triggers as lust, mystique, power, trust, and vice.

The backstory: Hogshead, a marketing innovation consultant and ad-agency entrepreneur, has worked with such companies as Target, Nike, and Harry Winston jewelers.

If you read nothing else: Each trigger gets its own chapter. The mystique trigger is at work at an LA restaurant in which the garlic crab is prepared in a “secret kitchen” accessible only to members of the founding family.

The alarm trigger is behind the shopping networks’ constant updates about dwindling inventories of matching hanger sets.

Fascination formulas: In Part III, Hogshead uses clever graphics to demonstrate popular brands’ use of triggers.

FedEx is heavy on trust, light on vice; W Hotels is the opposite.

Rigor rating: 7 (1=Who Moved My Cheese?; 10=Good to Great).

Hogshead relies in roughly equal measure on personal interviews, secondary sources, and experience working with companies. A survey of more than 1,000 people commissioned for the book provides statistical ballast.

—Leigh Buchanan MARCH 2010

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LAUNCH

Building a fan base Run polls, get feedback

Mohit Gupta Chief Marketing Officer MakeMyTrip

Murugavel Janakiraman CEO and Founder Consim Info

GS Bhalla Founder Horizon Group

Rajat Tuli Co-founder Happily Unmarried

We were one of the early adopters of social media two years ago. We feel it is a great medium to get visibility for our brand. India, as a market, has reacted phenomenally well to being participative in social media. Being a new medium, we had to experiment till we reached a sweet spot. It’s an excellent listening medium, which keeps us connected with our customer. We think this requires a great degree of involvement, therefore, we have not outsourced it to any agency and have built a special team. We have also realised that social media works differently from generic news pages, or intentoriented websites, such as Google. Our platform, Offisial Atyachaar, has seen huge success with 25,000 fans. It’s growing organically every day, which is a proof of how well this platform is working for us.

We run a matrimonial service online, called Bharat Matrimony. About two months ago, we integrated our website with Twitter. Our website provides static information—users post details of their education, family background, profession, etc.

But there is no way to talk about a person’s day-to-day activities, or their nature and personality. But Twitter allows us to add reality to our profiles.

A member of www.BharatMatrimony.com can get a Twitter ID. This allows the user to get tweets of the interested person/ party, who is also a member of the website. The updates, which are a part of the profile, highlight the person’s real nature. For instance, is a user going to a party or the temple?

The logic is to convert static profile information into dynamic information. We have also created matrimony applications on Facebook a year ago; and have advertised on both FB and Orkut.

We first used social networking websites when we launched Cocoberry, a chain serving frozen yoghurt. Our Facebook page had 300-500 fans for the first two months. Today, we have more than 25,000 fans.

We have received direct feedback from our customers— suggestions on how to improve, and which flavours and toppings are better. We put up polls and make our announcements through our FB page. It’s a great tool to gather information on customers—we know that twothirds of our fans are women, for instance. Once, we got a complaint that a particular flavour had gone bad. Within an hour, we had replaced the stock in that particular outlet.

It’s a great way to stay in touch with customers and get a feel of what they want—even though it can mislead once in a while, as happened when vanilla sold the most, while another flavour topped the online polls.

As a company, we don’t believe in hard marketing. We started out by word-to-mouth. And since last year, we have been using Facebook to create communities and generate active reviews from customers. I don’t think social media sites can be used for pure commercial purpose. We display our products on FB and invite reviews. Many a times, this also solicits sales inquiries. There is an active relationship with our fans and customers. We have 300 members on our FB group and 1,300 fans for our page. One problem we have faced is that when we promote an event, many claim to attend it, but few actually do.

We organise the ‘Music in the Hills’ event twice in a year. We get 200-300 posts from people saying they will attend it, but only 25-30 show up. Also, hardcore advertising and social media advertising are phasing out. FB- and Twitter-like social applications may come up on the mobile.

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IMAGING BY SANTOSH KUSHWAHA

Twitter may not be doing much for Shashi Tharoor, but that has not discouraged mid-sized companies from betting on social media. While some are running campaigns to build awareness about their brands, others are getting feedback.

Almost every B2C business realises the importance of being online, even though there are no financial rewards to be reaped any time soon. —Inc. India

PASSIONS

Life Outside the Office

It was as a student of business administration at the prestigious IIM-A four years ago that Vineeta Singh got a taste of the “runner’s high”. The feeling of euphoria at the end of the finishing line was addictive, so much so that she ran everyday despite her gruelling study schedule. A classmate suggested they run a marathon; so, Singh, along with five other friends, started pounding the pavements from 2am to 5am daily—when traffic was thinnest. She has, of course, covered a long distance since then. Despite running two businesses—Qverify, a human capital management firm, and Quetzal, an education company—she finds the time to take on those 42 kilometres and 195 metres, at least twice a year. Singh has run the Mumbai Marathon thrice, finishing at the 32nd position in the women’s category in January this year. Having honed the skills of competing with the finest minds in India, this marathoner is no stranger to challenges—be it on the track or in the trade.

Best Time Half marathon: 1 hour, 59 minutes Full marathon: 4 hours, 54 minutes Training Gear Sony Ericsson MP3 player Reebok running shoes Colourful Adidas socks Training Schedule Runs 4-5 times a week Covers longer distance on Sundays at IIT or Marine Drive Up to 40 km a week before a marathon

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First Marathon Ran 3-4 days a week for 20 weeks Followed a set of guidelines called the Standard Chartered Training Programme Inside the Head On her daily run, she thinks about her work and plans her day During marathons, she watches people go by, while listening to music

Vineeta Singh

Marathon running

“A salaried job is a short distance run that allows you to rest in between. A start-up is a long run, where the treasure is at the end of the distance.”

PHOTOGRAPH BY MEXY XAVIER

REPORTED BY JACOB CHERIAN

ON THE CONTRARY BY MAHESH MURTHY

Slowing the Revolving Door

You cannot stop your hires from walking out. But at least make sure you get to keep the best ones. calendar—or, click my inbox that has started displaying the subject line “resignation” much too often for my liking.

It happens every year—with a brief exception of last year when it wasn’t resignations that were happening, but lay-offs. Valentine’s Day announces itself in India with the first flush of bright-eyed young ones penning those three wonderful words to their supervisors and HR managers that Engelbert Humperdinck never meant this way: “Please release me”.

Start-ups often come to me with a somewhat bedraggled expression—and yet, I can’t say much, because I’m just as bedraggled about it.

And I understand from friends in larger firms that they’re not immune to this seasonal affliction either. But they’re probably wiser than me— sooner or later, they set about to poach from others what has been poached from them.

What causes this high attrition? Many places claim they witness only 10% attrition—but that’s as much a feat of statistical jugglery as banks asserting they have low non-performing assets. While one party frantically disburses fresh loans to debtors, dated April 1, so that dues of the previous financial year can be paid off, the other classifies much of the attrition as involuntary to make sure their publicly-released numbers are well-below gasp-inducing limits.

But what is the reason behind this revolving-door nature of most recruits these days? For starters, the times Safe strategy Try to hire people who are motivated by learning, and have changed. In my Dad’s generation, it was a matter of what you do, who will move on even to make sure they learn with you. The pride to say “I worked with the organisation for 24 years.” grab just a few extra dollars. good ones like to learn and value it.

Nowadays, few people care enough, recruiters included, Let’s start with the second lot. In if you stick around a place for more than 24 months. some ways, the group reminds me of The sectors worst hit are the niche, narrow ones. the IT services movement, or the IIT + When I started Pinstorm six years ago, it was with the gut-level belief that digital IIM + Foreign Bank movement. Encouraged by parents to marketing would explode in the years ahead. Only, I didn’t think that if the market study and get to a good place and earn a decent buck, they exploded, my firm would be the first one to get raided by the ones that followed. simply go about their task—maximising returns for the But it’s okay. You learn through the exits and “flat-50%-higher-offers” that there time and effort spent. If their supposed “market value” was are things that will make people stay with you. And that there are people, no matter X, they’d be dammed if they were going to accept 0.99X.

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PHOTO BY PHOTOS.COM

How do I know it’s February already? I can take a quick look at the

ON THE CONTRARY

I do understand this point of view, and in cases where people are straight-jacketed by such thinking, the best thing is to let go. In fact, let them go right away. Try not to make them serve out their notice period since they most likely won’t put their minds to work as they wait. If that’s not a reason enough, they will never tire of telling others how much more they are getting outside of you; and it’s best to inflict these people on wherever they are going, as soon as possible!

And believe me, no matter how much money you are willing to shell out—and as a start-up you can never pay the highest—there will always be more money outside.

Are there any solutions to this?

Not really. This is one long, never-ending fight that practically every start-up has to face.

But there are a few ideas that can help you.

what they did to make themselves stand out among their crowd, when they were younger.

Ask yourself, “would I be impressed, if I was in that crowd?”

Second, make it clear at the hiring stage itself that you don’t pay the most. This is the first big filter. Sure, it will snip the number of people interested in applying for a job at your firm, but it will also shrink your attrition rate.

Third, say very clearly that people will learn with you. See if this makes a difference.

If it doesn’t, let them go. The good ones have a huge thirst to learn—and will pay, through a reduced salary, to learn with you.

But, four, make sure that they do learn with you. Have a training person on staff and teach something every week, if possible; every month, if not. The good ones like to learn and will value it.

We withheld payments when a firm hired one of our people. I am territorial about my good people.

I think you should be, too.

First, try not to hire the mercenaries described above. Try to concentrate on the first lot we talked about. This is harder done than said. There is no sure-fire test to find out, at an interview stage, who is a passionate person and who is a price-player. Every good price-player has learnt the art of feigning passion at the pre-hiring phase. They know what they need to say to the HR, and how to say it—and that gets mistaken for work-related commitment.

Yes, there are some indicators. Try finding out whether the person has any passion beyond work, whether the passion lights up a shine in his eyes. Ask yourself the Google HR question—can you spend three hours next to them on a flight and not feel bored? Ask them why they like something and then challenge them on it, irrationally, to see how they defend their answers. Take the interview off the preplanned course—a nice way, for instance, is to ask them to interview you instead. Find out

Fifth, make coming to work fun. This has to be a sincere effort as people can smell an artificial atmosphere from a mile away. This will count for a lot when they get together with their peers and trade stories. They will be proud of throwing around details about “how cool the workplace is” and stir up envy of friends. This is something that counts a huge amount.

Six, give people stock and co-ownership in the firm. And work to make that stock valuable.

There’s more to this and we’ll probably talk of it later. There are, however, a few things that you can do in the environment outside you.

One, make sure that you have no-poaching agreements with your vendors and clients.

These are two key sets of people your employees will tend to move on to. Your clients will respect this easier than vendors will. Punish the vendors who don’t. In one egregious case, we simply withheld business payments

because they had hired one of our people.

Their HR finally got a jolt when their own finance team yelled at them. I’m sorry, if it sounds cruel, but poachers won’t stop till it hurts them, and I’m territorial about my good people. I think you should be, too.

Two, make sure that you have strict clauses that do not allow ex-staff to contact your current staff to offer them a job after they leave.

This ranges from restricting their access to your working premises to penalising them with lost ESOPs and even lawsuits.

Three, actually carry out the threat. There was this firm, which pulled away one of our guys and he, in turn, took away two more people. Their CEO’s response was, “Look, I respect you and I have a standing offer of 30% higher to any Pinstormer, eyes closed. So I’m sorry, but I need people to grow and you train them well.” We took them to court. At least the poaching stopped. And the word spread.

Four, hire laterally within the company.

Change people’s role in the organisation.

Relocate them. Promote them. Give them teams to manage and then clients to manage; or vice versa. Make their lives exciting. Move them laterally.

Five, realise that if you’re any good, you will be seen as “good training grounds”. Today’s marketing and advertising firms are filled with ex-Ogilvy people. And Ogilvy still prospers. We don’t pay much at Pinstorm to freshers—and they pay 50% less than us! The better your reputation, the less you have to pay at the beginning. Only loser firms, who have nothing else going for them, have to pay top dollar to get people. Don’t play the salary escalation game. Just keep hiring.

Six, be clever with your HR firms. Hire all the key ones in your vertical, who would otherwise poach from you, and give each a mandate for one person, especially one that is really hard to find. As long as they’re working for you, they can’t poach from you.

Seven, realise that all of this is ultimately futile. There will always be a revolving door.

You can’t shut it—the most you can do is to slow down the speed at which it spins. And most of the time, that is all it takes.

Mahesh Murthy is the founder of Pinstorm and Managing Partner at Seedfund. He can be reached at mahesh.murthy@gmail.com or @maheshmurthy on Twitter.

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INNOVATION

Companies on the Cutting Edge

Snap, Drill, Mend, Flex

A fractured bone sometimes needs more than a cast to set it right, especially if the femur (thigh bone), or the hip-thigh joint have been affected. Doctors use a ‘nail’ to hold the pieces of the bone together, until it heals. This nail has to be flexible enough to ensure that patients, especially growing children, do not end up with unequal limbs. Till a few years ago, patients didn’t have a choice other than a Swiss-made titanium elastic nail. But Dr Navin N Thakkar, an orthopaedic surgeon from Pragna Hospital in Ahmedabad, was not happy with this option—especially because of its steep cost. He took it upon himself to find alternatives. Luckily for him, it didn’t take him long to create the Flexinail. Now, he, along with surgeons from other hospitals, uses this nail during bone-setting procedures. Although he has filed a patent for his invention, by his own admission, he hasn’t done enough to commercialise it.

The finer details Made of stainless steel, the Flexinail is thrice as flexible as its titanium competitor, and retains the strength of steel. Doctors need to make a single cut in the bone for this nail, as compared to two required for the titanium nail. The icing on the cake is that it costs a tenth of its Swiss competitor.

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Flexinail

Innovative Implants Technologies

“When I first presented the nail at a meeting of local orthopaedic surgeons, many raised doubts. But a few surgeons thought it was unique enough to be tried; and they were happy with the results.”

—Dr Navin N Thakkar, Founder, Innovative Implants Technologies

PHOTOGRAPH BY ALPESH DHOLAKIA

REPORTED BY JACOB CHERIAN

HOW HARD COULD IT BE? BY JOEL SPOLSKY

A Little Less Conversation

Many managers worry that they don’t communicate enough. But at most growing companies, the problem is that people communicate too much FIGURE B

FIGURE A

Cross-functional or Dysfunctional?

On every project, one person should be in charge of the flow of communication. You want the decision-making process to look like Figure A—not Figure B.

When was the last time you scheduled a meeting and invited eight people

instead of the three people who really needed to be there simply because you didn’t want anyone to feel left out?

When was the last time you sent a company-wide e-mail that said something like, “Hey, attention coffee drinkers: If you finish the pot, make another!” even though there is actually only one person who violates this rule (and she’s your co-founder)?

When was the last time you got into a long discussion over the colour palette for the new brochure with a programmer, who has nothing to do with the brochure but sure knows that he doesn’t like orange?

These are symptoms of a common illness: too much communication.

Now, we all know that communication is very important, and that many organisational problems are caused by a failure to communicate. Most people try to solve this problem by increasing the amount of communication: cc’ing everybody on an e-mail, having long meetings and inviting the whole staff, and asking for everyone’s two cents before implementing a decision.

But communications costs add up faster than you think, especially on larger teams. What used to work with three people in a garage, all talking to one another about everything, just doesn’t work when your head count reaches 10 or 20

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people. Everybody who doesn’t need to be in that meeting is killing productivity. Everybody who doesn’t need to read that e-mail is distracted by it. At some point, overcommunicating just isn’t efficient.

It’s a particularly insidious problem for fast-growing start-ups. When you’re really small and you’re just starting out, you don’t have that many people, so keeping everyone in the loop on everything doesn’t really take that much time. But as you get bigger, the number of people who might potentially get involved in any particular discussion increases, and the amount of stuff you’re doing as a company increases, and the amount of time you can waste overcommunicating becomes a serious problem.

As companies expand, the people within them start to specialise. At such a point, some managers will conclude that they have a “keep everyone on the same page” problem. But often what they actually have is a “stop people from meddling when there are already

HOW HARD COULD IT BE?

enough smart people working on something” problem.

It’s not that Bob in Accounting doesn’t have anything useful to say about the photography for the new advertising campaign. Yes, Bob has a master’s in fine arts. Yes, Bob is an amateur photographer.

And maybe he even has better taste than do the people in marketing. Still, Bob shouldn’t be telling the marketing manager what to do, because it’s just not efficient. In fact, it’s highly inefficient.

The cost of overcommunication within organisations was fleshed out by Fred Brooks in his 1975 book, The Mythical ManMonth. Brooks helped run the OS/360 project at IBM, building a giant operating system for the company’s mainframes. In those days, computers were large, roomsize, water-cooled machines, sometimes with a massive 256,000 bytes of main memory. OS/360 was probably the largest software project ever attempted to that point. And it was monumentally late.

Every time some aspect of the project fell behind schedule, IBM assigned a few more people to the task. And what Brooks noticed, which still surprises people, is that this didn’t work. His observation came to be known as Brooks’ Law: Adding people to a late project tends to make it run later still.

Read that sentence again, because it’s not intuitive. Brooks discovered that adding people to a project will put it further behind schedule.

How can that be? Well, when you add a new person to a team, that person needs to communicate and coordinate with all the other people on the team. This doesn’t sound like a big deal, but it is. The new kid doesn’t know what’s going on, so somebody else on the team—somebody who just last week was doing productive work—has to stop his or her work and show this newbie the ropes.

The bigger the team, the worse it gets.

When you have a team of one person, you have no communication requirements.

None.

Add a second person, and now you have a single connection: Adam and Mary have to talk to each other once in a while.

Now add a third person, say, Srinivas,

As the boss, you need to design ways to reduce communications paths. and suddenly we’ve gone from one connection to three, since Srinivas has to talk to Adam and Mary.

Add a fourth person. I’m running out of names here to help me out—OK: Britney. If we add her, and she needs to coordinate with all of them, you get six connections.

For the mathematically inclined, the formula is that if you have n people on your team, there are (n2-n)/2 connections. This chart illustrates how this becomes a problem: People 1 2 3 4 5 6 7 8 9 10

Connections 0 1 3 6 10 15 21 28 36 45

As you can see, the communications costs start to rise pretty rapidly until, on large teams, all anyone ever has time to do is to coordinate with everyone else—and no one gets any work done. In 2006, Moishe Lettvin, a former programmer at Microsoft, wrote a blog post describing the year he spent coordinating the list of items that would be featured on one menu in Windows Vista—the menu you use to turn off your computer. (See moishelettvin.blogspot.com/2006/11/windows-shutdown-crapfest.html.) Lettvin figured that 43 people all had a voice in designing this one menu. Forty-three! By Brooks’s formula, that means managing 903 connections. Lettvin says he spent so much time on coordination tasks that, in 12 months, he produced fewer than 200 lines of code.

As the boss, you need to design ways to reduce communications paths.

Eliminate company-wide mailing lists—

or at least charge US$1.50 to post to them.

Stop having large meetings. You need a culture in which people don’t get uptight because they weren’t included in a meeting, which means you need a culture that rewards people for doing their jobs and frowns on meddling in other people’s work.

And on every project, assign one person to make sure that communication happens—but on ly t he r ig ht communication. Otherwise the team will just start having long meetings with everyone there and, frankly, people will socialise, and bloviate, and speechify, and argue about things they don’t really care about just to hear their own voices.

I think this is probably one of those cases in which the old, 1950s style of management accidentally got something right. In those General Motors–style companies, they at least had an idea for how information needed to move up and down neat, regimented org charts, which showed a modicum of recognition that the right answer is not that every single person in the organisation needs to pay attention to everything.

When you started your company, you probably did a great job of communicating.

Everybody told one another everything.

And your customers loved it, because when they called in to ask about their purchase order, everybody knew where it was. But as you get bigger, you can’t keep telling everybody about every purchase order, so you have to invent specific communications systems so that exactly the right people find out and nobody else. Not because it’s confidential. Because it’s a waste of time.

Joel Spolsky is the co-founder and CEO of Fog Creek Software and the host of the popular blog Joel on Software. For an archive of his columns, go to www.inc.com/author/joel-spolsky.

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Your Business Toolbox

THE GOODS

A netbook for every purpose Here’s our take on the hottest buys Netbooks are more like cell phones these days. Nearly everybody has one, and those who want to buy one have no dearth of choice.

With their 10-inch displays and lighter weight, netbooks are being preferred by travellers who wish to be connected at all times. A netbook is lighter than nearly all notebooks and much cheaper; also very convenient for most people, including business owners, who want the internet with a bit of documents and spreadsheets thrown in. Of course, the hardware found in netbooks isn’t as diverse as in their faster, bulkier cousins—the notebooks. But many agree that keypad and screen size aside, there are very few differences. The small screen may turn off some users. Multimedia is also a problem on a netbook, given its weak hardware. So games, HD movies and multitasking is simply too much of a strain for this lean hardware. Therefore, think of the netbook as a trade-off of sorts. It’s good at what it’s supposed to do—and playing a game like Crysis isn’t included in that!

MSI U130 This is a pretty machine—loaded with a webcam, Bluetooth and card reader. It performs better than the rest in terms of processing speed and performance. Its 6-cell (optional) battery provides more than five and a half hours of life—even while running video. Surprisingly, it comes bundled with the Windows 7 Starter Edition. Its price is expected to fall in the next five months.

Cost: Rs 23,000

ASUS EEE PC 1201HA It is larger than a typical netbook, with a screen size of 12.1 inches. Despite its large size, it sports curves and edges that make it look rather attractive. This netbook too features Windows 7 Starter Edition.

Although the 1.33 GHz Atom Z520 processor is tiny, the 2GB RAM allows it to boot up quickly—and makes surfing a snappy experience.

Cost Rs 23,990

BENQ JOYBOOK LITE U121 ECO This is the most expensive netbook in our list, but unfortunately, does not offer much substance. It is a looker, no doubt, and comes loaded with surprisingly good speakers. But given its price, it isn’t the best of the lot. Its battery life is 4 hours and 17 minutes. Its processing speed isn’t top of the line, and makes it at par with the ASUS 1201HA. Cost Rs 33,000

ACER 532H-2BB The 532H is a worthy purchase for someone looking for a compact, yet presentable, option. It wins our Best Buy Award for its overall mix of features, performance and pricing. It has a solid build and its keyboard is actually easy to use—thanks to the larger surface area under the finger pad.

Cost: Rs 19,200

HCL MILEAP MH06 While the look and build of this one is good, the aged hardware makes you want to seriously consider its competitor—the Acer 532H-2Bb—which comes at nearly the same cost. It features the N270 Atom processor, and the battery life stands at a little over two and a half hours.

Cost Rs 19,990

OLIVE ZIPBOOK X107H This is the only netbook that comes with an internal modem. It allows the user to connect to the TATA Photon+ Internet service for wireless Internet access. For any other service, you need a USB stick. The Atom N270 processor and 1GB RAM lets the Windows XP Home edition run quite well.

Cost Rs 23,999

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THE GOODS

Products + Services

Lobe Lounges Headphones that lock the world out and keep your peace in After the hustle and bustle of the work environment, everyone hopes for a quiet get-

away to relax and clear the mind. However, most business-owners don’t have the luxury to run away to the country side or the open sea every weekend. We have lined up three noise-cancellation headphones that can give you that seclusion anywhere—from a cab to the cabin.

SOFTWARE

Organise your business and personal lives Most business owners wish there were more than 24 hours in a day. They are forever scurrying around to finish all that needs to be done—sometimes forgetting important things in the process. In comes ToDoList, a free software from AbstractSpoon Software (www.abstractspoon.com) to help them organise their lives better. A great tool to use at work, this software comes loaded with useful features. Firstly, tasks are kept in groups such as projects.

Deadlines and priority can be set for each of these tasks; users can also time the task to know how much of it is completed. Tasks can even be assigned to other members of the team. Once the plans have been plotted out in detail, users can print the generated task list.

ToDoList creates a detailed stepby-step list of tasks for team members to follow. One small hitch—it does not sync with Google Calendar and Tasks, but it allows users to import as well as mail task-lists and sync with many other programs, including Microsoft Outlook. At just around a megabyte in size, it’s small and also portable, so users can carry it on a flash drive—thereby, saving them the need to install a bulky PIM suite.

And if that’s not enough, there are plug-ins that can be downloaded to add new features to the program. —Rossi Fernandes

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PHILIPS SHN9500 NOISE CANCELLATION HEADPHONE

This pair comes with a set of adapters that allow you to use it across different ports. It has a slick carrycase and a metal gleam to its body. It is sturdily built, with a long cable that gives it a fair amount of mobility.

Its bass quality, though, is not all that great. The leather-like lining, although comfortable, requires ventilation after one of those long sessions of listening. It is powered by a single AAA battery.

Cost: Rs 5,999

BOSE QUIETCOMFORT 15 ACOUSTIC NOISE CANCELLING HEADPHONES

This one’s for the music aficionado. It has microphones on both the inside and outside of the ear cup to squeeze out noise. The proprietary cushioning around the ears further cuts down noise and comes with an around-ear design. It also has a carrying case and is powered by a single AAA battery. It is on the pricey side, but hey, we are talking business class here.

Cost: Rs 16,700

SONY MDR-NC7 NOISE CANCELLING HEADPHONES

Packed in a black felt pouch, these headphones also come with an oldfashioned, dual-pronged airline adapter. The highs and mids are excellent, but like most headphones, they aren’t too good in the bass department. So you would want to pick these according to your music preference. The noise cancellation is average.

The headphones fold inwards, making it quite compact to carry around.

Cost: Rs 4,990

PROTECTED IN YOUR POCKET

Kingston Data Traveller 200 64GB The Kingston DataTraveler 200 USB Flash drive is ideal for storing and transferring digital images, presentations, and much more. It features password protection via Password Traveller software, which allows you to create and access a password-protected, secure area of the drive called a “Privacy Zone”. The password protection facility helps safeguard data and requires no admin rights, making it a terrific solution for the home or office. It is enhanced for Windows ReadyBoost.

Price: Rs 9,999 Services: Five-year warranty and 24/7 technical support Capacities available: 32GB, 64GB and 128GB

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THE GOODS

Work + Play

Business Travel Strolley bags with attitude Travelling light is usually a challenge, even if you are used to being on the move all the time. On top of that, most airlines have become rather strict about the amount of baggage that can be flown. Business travellers, therefore, need sturdy, elegant, yet light luggage.

Affordable, yet economical, is the new travelling mantra. – Sunaina Sehgal.

BUYING TIPS

Airport Shopping

DA MILANO

This leather strolley bag comes in various matt colours. It has front zips to accommodate last minute packing. The foldable brass handle helps carry luggage with ease.

PRICE: Rs 16,995 SIZE: 2.1 ft height and 1.20 ft width WEIGHT: 3.4 kg SERVICES: Lifetime warranty

SAMSONITE

The Cosmolite enjoys the coveted title of size zero. It is two kilograms lighter than any other average luggage.

Made out of polypropylene, it is light and impact-resistant.

PRICE: Rs 11,900 SIZE: 33cm height and 55cm width WEIGHT: 2.22 kg

SHOWCASE

Mont Blanc’s Mahatma Gandhi Limited Edition 3000 If Mahatma Gandhi’s weapon was humility, yours can be this pen. Mont Blanc’s Mahatma Gandhi Limited Edition 3000 seems to have captured his iconic personality. The lacquered surface features fine cotton texture, reflecting his simple nature. The 925 sterling silver mountings on cap and cone are shaped to resemble a thread on a spindle. The hand-crafted 18K solid gold, rhodium-plated nib of this Limited Edition, which is crowned by the ivory-colour Mont Blanc emblem, shows the finely engraved image of Mahatma Gandhi on his path towards Indian independence.

Availability: Only 3,000 worldwide Fountain Pen: Rs 1,67,500 Roller Ball Pen: Rs 1,47,400

HIDESIGN

Made out of natural leather, the Almo has an organised interior with many slips and pockets. Spacious and sturdy, it has a telescoping handle system for easy manoeuvrability.

PRICE: Rs 10,245 SIZE: 31 X 52 X 17cms WEIGHT: Unavailable

Last minute shopping is usually nerve-wracking, especially if you have to buy a gift for a client. The options are even more limited if you decide to make the purchase at the airport.

Here is a look at some retail outlets selling gifts, such as neckties, scarves and journals at major domestic airports in India. —Sunaina Sehgal DELHI AIRPORT: After its makeover, the airport offers many options for corporate gifting.

Even if you decide to give Haldiram’s sweets and chocolates a miss, you can always browse through the combined FabIndia-Satya Paul store for neckties and wallets, or Odyssey for pens and books.

HYDERABAD AIRPORT: True to its reputation, the swanky airport’s also a shopper’s delight.

Your imagination can soar high here: on offer are a speedulator (a calculator with tyres), an ocean liner/ super Connie aircraft paperweight, a grand prix/ motorbike magnetic paper clip holder, and pens, among others. There’s Hidesign for safer gifting options, and Shopper’s Stop for a last-minute gift for the wife.

MUMBAI AIRPORT: Coach has ready gift solutions in the form of accessories, such as art embossed journals, transatlantic agenda, zipped portfolios and much more.

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THE GOODS

Beyond Business

Things I Cannot Live Without Wii Console I am completely addicted to it. I have to play at least five or six games of tennis either in the morning or evening, every day.

Black& Decker machines and Highlander Coffee I have three of these coffee machines. The beans are ground every third day at the Philips coffee house in Fort.

Argyle Socks Give me any set of clothes, I will give you the perfect Argyle socks to go with them. I wore them when I met my wife for the first time.

When I first raised funds, my VC joked that “if you can pull those off, you can very well build a company”.

Linksys Wi-fi routers There’s a router in almost every room in my house, so I am always online. I have an iTouch, a Mac, and a Blackberry, and they all talk to each other. Inshallah, I’ll have an iPad soon.

FOUNDER, CONTESTS2WIN

Alok Kejriwal

Paan I have two Calcutta sada paan from the paan-walla near Chopsticks on Marine Drive— one after the other, post-dinner.

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Alok Kejriwal is materialistic—and unabashedly so. He calls himself a digital entrepreneur and has the lifestyle to match it. He has every gadget that he could possibly need, for work and for recreation. The three businesses he runs are Contests2win, Media2win and Games2win. He says that he builds companies to sell, as he did in the past when he sold the China arm of Mobile2win to Walt Disney, and the Indian arm to Norwest Venture Partners. Given his hectic lifestyle, he makes sure that he takes time out to connect with the inner self. “I have to practise Sudarshan Kriya, a 55-minute breathing technique, every morning,” says Kejriwal.

Having learnt it at an Art of Living meet 10 years ago, he has since used it as a source of inspiration. —Jacob Cherian

...and What I Covet Porsche Panamara I drive past the showroom every day and I see that car blink at me.

It screams out to me, saying, “I want you!”

I N W G E R A B

REVOLUTION He may run restaurants, but what Riyaaz Amlani ultimately sells is a heady concoction of experiences—and fairly successfully, too. Now, he wants to pursue an ambitious target of growing the top line to Rs 100 crore by next year. Will his recipe work in the future as well?

BY POOJA KOTHARI PHOTOGRAPH BY VIJAY KUTTY

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Striving for a better fit Riyaaz Amlani thinks that a series of small betrayals have forced him to become more corporate in his dealings with those around him.

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IO N E G B A T M SUIT N I D ,S AORCE O

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AT THE SEA E L T MS IT L .”

A I S F AR That’s Riyaaz Amlani protesting about having to rein in his free spirit and becoming more “corporate”.

We are meeting on a rainy February evening at Smoke House Grill, his fine dining restaurant in a residential suburb of Delhi. He has just got off the plane and come straight to the interview.

He’s built 29 restaurants in the last eight years—Mocha being the most visible of the various brands under the umbrella of Impresario Entertainment & Hospitality. Amlani is at the inflection point that inevitably follows an entrepreneur’s initial success (read: infusion of private capital) and requires him to put systems and processes in place, and get more organised. It’s a phase that many growing companies pass through while metamorphosing from a mom-and-pop store to a corporate biggie, a period where the term “scale” keeps popping up more than any other in the business lexicon.

And, that is where Amlani is still trying to strike out the right balance. “I am not opposed to scale”, you hear him say, “I just don’t want to do that cookie-cutter”. During the course of the evening, there is a generous sprinkling of similar statements— “We did not want to do a cut-paste job of a coffee shop, which was essentially an American coffee shop, suited to Indian tastes, and inspired by Italy.”

Or, “I don’t want to take a brand and have 2,000 outlets.”

Odd as the logic may sound, this philosophy has been the secret of Amlani’s success. And successful, he undoubtedly has been. In the eight years since he started the first Mocha outlet in Churchgate 32

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in the heart of Mumbai, Amlani has grown his top line to Rs 40 crore and expanded his operations across the country. He has experimented with formats such as fine dining, which he started in 2005, all-day cafes and delis, and a special-catering division. He also runs the iconic Prithvi Theatre cafe in Mumbai.

“The first Mocha was a real joy. I also like what he did with the Salt Water Grill on Marine Drive and now with the Arthouse café in Delhi,” says AD Singh, who runs restaurants under the Olive brand.

Through each of his ventures, Amlani has let his creativity run free. His restaurants have never been just about the food they serve.

They are as much about unique concepts as about catering to the changing moods of his clientele. “He’s done different things with his restaurants; he ran the backpackers’ club, held short screenings; I like the way his interests and passions reflect in his restaurants,” adds Singh.

Amlani has sought newer ways to “reach out to the many moods” of his clients—one day, chic and elegant, another day, social and well-lit, and yet another evening, sweet and romantic— instead of replicating his chain of coffee shops, cafes and delis

BREWING A REVOLUTION

across cities in India. Even when he gave in to the franchisee route at that time. No two pieces of its furniture were identical. If for Mocha, he ensured that no two restaurants look alike or offer customers liked an ashtray or chair, they paid for it and took it the same experience. home. Amlani’s takeaway from the original Ethiopian idea of But through it all, Amlani never looked to duplicate the success. punching sheesha and coffee was a cool hit. Such was the He never had a formula. “I go by my gut. I can sense immediately popularity of the concept that Amlani & Co drew sales of Rs 6 what a property wants to be, or what vibe will work best,” he says. Of lakh a month out of a 500-square-foot space, and scaled up to course, his gut ditched him a few times. First, when he started three stores within the first year of operation.

Mocha in Goa in 2002 and the shop had to be shuttered within six Again, instinct kicked in. “We knew we had a profitable model,” months of operation when he, and his co-founders, felt the assets says he. So the trio signed up another property, this time in the cool could be better utilised in another location. Then, again in 2003, suburb of Bandra, where their prospective clients preferred to hang when Amlani thought he could serve fresh donuts through The out. With no money left to furnish the space, they simply brought Donut Company. Instead of starting 600 such outlets, as he had stuff straight from home. The strategy worked wonders in a design thought, Amlani had to take the call that “it was too much effort for sense, lending the restaurant a unique unconventional look. too little gain”. He says: “We would have made Rs 3 lakh a month at In the process, they built a cool brand that resonated with Gen maximum. It didn’t make sense to create a management team and Y. There are now 19 such outlets (including franchisees), offering infrastructure for this kind of return.” their patrons a “30-minute vacation” right in the middle of a hectic “I don’t worry about restaurants shutting down. It’s part of the city life. With the wild popularity of Mocha, it wasn’t long before learning,” he says, matter-of-factly. hookah-serving copycats had mushroomed. Amlani knew he had He still believes in going by his instincts. “My gut has served me to act fast and so he set about reinventing the brand through well so far,” adds the 35-year-old, who took the call to start a restauMojo—with its ‘70s theme and album covers for décor. rant with two other friends when he got sick of his job as the CEO “It’s important to reinvent. Otherwise, someone will do what of Pritish Nandy Communications—based purely on one evening. you are doing and do it better. It keeps you interested in the game,” The story goes that Amlani, and co-founders, Varun Sahni and he says, confessing to the need for a Eureka moment every day.

Kiran Salaskar, were in Panchgani, sitting around drinking coffee Amlani also knows that to create a product that is a uniquely and smoking sheesha, when one of them commented that they different concept, experimentation is necessary. “Be it sand or pebcould become millionaires if they bottled and sold that evening. bles, or rustic-looking plates, it is my job to find out what uplifts a The idea got them on a high, without a drop of liquor. And the feel- person, or makes them connect with a pleasant memory,” he says. ing stuck on with Amlani well into the future. Months later, when It is this search for the wacky and out-of the-ordinary that has he bolted his job, those were the friends he sought out to build his led him to look at sources such as the Muruggan Idli House in pool of Rs 15 lakh.

Chennai, which turns around 2,000 people a day in a 100-seater What started out as a lark had turned into a business idea and restaurant, or try to copy the hospitality of the paratha guys outside Amlani backed it with research—an approach that he has followed the IIT, who “won’t serve the second paratha till you finish the first, through the years. Since the other two founders were otherwise occupied, the project became Amlani’s baby, and he dived headlong into the quest for the perfect coffee.

“I found out that the coffee shop had its origins in Ethiopia with the Quahveh Khanneh—literally the back of people’s homes— where people gathered over hot coffee and sheesha. These were an important part of the social fabric of that culture. So we decided to take our inspiration from that.”

This was at the beginning of the decade, when Mumbaikars did not have many entertainment options other than movies and five-star restaurants. “We knew we were going against the convention. No one thought that a place serving coffee alone— and no liquor—would survive,” he recalls.

Mocha not only survived, it found its sweet spot, becoming a “cool place” to hang —Kunal Rakshit around. It was also like no other restaurant Vice President, Beacon India Private Equity Fund

“We looked at many players in the restaurant space. We found that Riyaaz not only had a scalable model in Mocha, he was a dynamic entrepreneur, hungry for growth. That seemed like an excellent combination.”

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BREWING A REVOLUTION

so that you can eat it hot”. In the same breath, he can reel off as much information about styles of masters like Adrian Zecha, the founder of Aman Resorts, a chain of luxury hotels, and Andy Warhol, the famous American painter and filmmaker.

To reflect on the bank of ideas he builds in the normal course of life, Amlani takes off 4-5 days twice a year. “I come across something that inspires me, and then research it more,” he says. The brand extension, Mocha Mojo, came from one such retreat.

His management philosophy is almost an extension of his creative thinking. As Brainard Colaco, corporate executive chef, Impresario, who has been with the company since 2001, says: “Riyaaz does not treat us as employees; we are grey cells.” The fact

Retracing His Steps Riyaaz Amlani’s association with the food business is so strong that not many know about his first business venture. After working as a salesman at a Colaba shoe store, while still at school, he borrowed Rs 4 lakh from his grandmother and started his first business in 1991— selling shoes.

He used the capital to buy a shop—the size of an ATM, which is what it is today—furbish it and stock it. Shoe Wagon, selling “shoes that take you places”, was one amongmany selling the same commodity. “My logic was simple. Everyone around me was selling poor quality shoes. If I could sell high-quality shoes in an air-conditioned ambience, I could not fail,” says he.

So he stocked up on good quality shoes and waited for customers. “But no one came into my shop—not even to see what I was selling.”

Amlani would still turn up at the store every day after college. One fine day, he couldn’t afford the electricity bill any longer; so he threw open his door. And then, people walked in to check out shoes that weren’t confined within the ‘chic’ cool climes of glassy

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interiors. That’s where he learnt his first lesson—“the AC and glass door intimated people”. Also, what worked in Colaba didn’t work in Sion.

Amlani spent five years of his life doing this; and learnt some tough lessons.

If people didn’t bother to notice the shoes displayed on shelves, the moment he put them in bins and announced a sale, a crowd would emerge to check out the stuff. He also learnt the art of letting go of some low-hanging fruit. Customers who bought hawai chappals knew that a Bata pair sold for Rs 42.95 paise. So, Amlani would push back the price a little more at Rs 38. By letting go of his margin, he managed to create the perception of value in the mind of his customer. “People could compare apples. But the perception of lower price that it created was extended to everything in our shop,” he adds.

The guy was also an enterprising business owner, learning through osmosis and adapting on the fly. When he saw the newly-launched Dock Martins, he promptly picked up the design and used it on industrial shoes, later selling them to high-

that most of his core team members have been with him for most part of the journey is a testimony to that fact. (One of his co-founders, Sahni, left two years ago when he moved to another city, but that was an “amicable” parting.)

“I get a lot of freedom in the way I work. At my earlier places of work, I had to do things in a certain manner. Here, I can do things the way I want to do,” says Colaco, on phone from Bangalore, where he was visiting the Coffee Board—his idea.

While most restaurateurs seek to better operations or financial expertise, Amlani’s trying to put together a team of creative people in place, who can work full-time on research. “Restaurants need creative copy writers or art directors or designers,” he says. There is no precedent for this. These jobs are usually outsourced to an architect or an outside design team. But, of course, Amlani thrives on the end stores in South Mumunexpected. bai. “I got them to change Of course, growing up in the the sole, put a nicer insole, corporate culture has thrown and turned it into a fashion up its own share of problems. accessory,” he recalls.

If everyone was doing However, the priceconscious Mumbaikar everything earlier, they now finally got to him. “One day, have to get used to an I was haggling with a lady organisation with job for about 15 minutes for descriptions and processes and Rs 3. That’s when I realised systems. Most old-timers feel I couldn’t do this for the rest of my life,” says he. the pinch of a layer of people Luckily for him, Shoe between them and Amlani.

Wagon had done well And he likes it even less. “It is enough to free him up of most painful when you are not his familial duties. It able to scale up people who bought him his ticket to USA—and a management have brought you to where you degree in entertainment at are now; and take them to the University of California, Los next level,” he adds.

Angeles.

A similar sentiment is Amlani “flipped burgechoed by Colaco: “We meet ers, waited at tables, served as a barman—playup 2-3 times a month, ing almost every role in a compared to every day earlier. restaurant to pay for We could sit across and talk tuition.” about anything; now, we have When he came back to our spaces. Riyaaz thinks India in 1998, he started entertainment consulting about finances and growing with a friend. Together, the company; we take care of they set up The Bowling Co the nitty-gritty of individual in Parel, the Jammin’ businesses.” There’s, however, gaming centre at Crossno resentment in his voice. roads and Hakone gokarting in Powai.

Anyone who has found From here on, it was a success as a start-up and grown matter of a few months— it in to an enterprise can relate and a job—to finally disto this stage of a company’s life. cover his true calling. The There is no doubt it is painful. taste of success has been addictive ever since.

But hopefully, the gains from it

BREWING A REVOLUTION

spend 10% on what o t t e g I like ly n e n p o t s d s o i i t n I s g “ CEO s e re h T i ol t . in, p ics, and so tuff o m d d a , : Riyaaz Amlani to ison o n .” lia

more than make up for the pains.

Amlani, too, is changing. Not only does he have to get used to working with an investor, he has to learn some hard lessons everyday. “You start a company with the intention of doing right and then a series of small betrayals make you a corporate,” he says, citing the example of putting an HR policy after his first manager went off to another restaurant and set up the same menu.

“Although it was never my intention, I have to be a little more cut-and-dried,” he adds.

His investors have disciplined him a lot.

“They keep me on the straight and narrow, and make me meet targets,” he says, admitting, in the same breath, that he’s missed those almost every quarter, “not by a lot”, though.

The past few months have not been easy on business either.

With the economic downturn in full swing, business from corporates took a hit. Moreover, rising food prices cut into margins, since Amlani did not pass on the price rise to his patrons.

Despite the challenges, his investors are sure of his ability to reach the targets. Says Kunal Rakshit, vice president, BCP Advisors: “Doubling the top line is not a big deal. He’s already done that last year. We have invested significantly in people to get ready for growth.” There’s a new leader for the fine-dining division. By April, a COO for the Mocha chain is likely to be in place.

Mocha is the flagship brand that the firm’s banking on for growth. “It is easily scalable up to 100 stores,” adds Rakshit.

Instead of the multiple formats in the bouquet, Amlani will focus his energies on fine dining and all-day dining cafes, in addition to the coffee shops. The plan is to have four Smoke House Grills and six Smoke House delis operational by the end of 2011.

Amlani needs a cash injection of up to Rs 400 crore to fund the expansion. He also has to think of ways to reach the uphill target of Rs 100 crore—as envisioned by the board, and Beacon India Private Equity Fund (now called BCP Advisors), who funded Impresario two years ago.

While Ernst & Young has been appointed to manage the process, and the first few management meetings have already happened, Amlani’s learning that all investors want “to hear is scale”.

And that’s where he gets back to his mantra of evolution. “A PE guy will tell you to take the same format and copy it multiple times, but to me, every restaurant has to have a different flavour. Each Mocha should progress in a different direction. Each café and deli should progress in its offering,” he says.

Much as he would like to fight off the formula approach that comes as part of scaling up process, Amlani just might have to fit into that suit to get to his target of Rs 100 crore.

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CASE STUDY

A fabric business in Surat dreams of tapping global markets.

Can ERP catapult it to that level?

S

BY JACOB CHERIAN PHOTOGRAPH BY GAURANG JOSHI

urat is one of the better known cities of Gujarat—the most industrial state of India.

Better known for its supremacy in the diamond polishing business, it boasts of an equally good track record in textile manufacturing. It produces nearly 900 crore metres of fabric every year, and is the second largest in the world in synthetic fabric manufacturing.

Among the hundreds of players who fuel the success of the eighth largest city in the country is Akash Dyeing and Printing Mills, which sells its products under the brand Narayan. It manufactures a variety of fabric for women’s garments, and sells it in bulk to companies all over India. By normal measures, the family-owned business run by Akash Khetan was doing just fine. It had been started by his father in 1994 and had been doing profitable business for years. So when Khetan wanted to change the way business was being done, it wasn’t surprising that most people not only pushed back, they protested the change.

The distaste for change was understandable. The business had been running in an old-fashioned way

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Plug in or drop out It took him a while, but Akash Khetan successfully implemented ERP to make his family business more efficient and profitable. In the process, he also grew out of just being the boss’ son.

CASE STUDY

Experts Weigh In

by the Old Guard—a few workers acted like satraps with no systems and processes in place. There were silos within the small business. The fabrication process, an important TOO MUCH FOR TOO SMALL A PROBLEM step in production, was in the hands of a few employees, This looks like a small textile company. It’s not vertically integrated, who alone knew the exact ingredients to produce each in other words, it is not an end-to-end manufacturer—starting from the production of cotton to making the fabric to stitching the garfabric, and the end-to-end process for making that. Every ment. Therefore, ERP implementation does not make much sense product had a head, called a master. Nothing happened for its operations. Surely, there’s a lot streamlining that will happen without the master’s approval. because of this ERP system. However, for a company of this size, an Khetan, who had returned from the UK in 2003 armed Excel package would have sufficed. There have been a lot of with a degree in business administration, knew things had to improvements in Excel over the version we use with our Windows PC. They should have considered ERP only after reaching ten times change if they ever had to reach out to the global market. A their current size. At this scale, for ERP to be really effective, they year’s stint as a marketing executive at Debenhams, a leading should aim to get everyone in their value chain to implement ERP. UK retailer, had made him realise the importance of IT. Here When they are sitting to negotiate with their suppliers, they should data was available at the click of a button. Customer suggest the idea as it would be beneficial for both of them. The problem is that ERP won’t solve information asymmetry. Which requirements, or changes suggested, could be quickly fed into means that, let’s say, if you have a product in your inventory, then the system, which were then relayed to the manufacturer. how does another company know that you have it? ERP is not like All this was a far cry from his business, where the warean antibiotic for a virus. Also, there is scope for human error and house had to be called to know even the basic information theft. You don’t know if there are actually hundred units in the wareabout inventory. No one had a clue of who the most profithouse; there may just be ten. It all depends on what information is entered into the system, unless everything is RFID tagged. able client or the most cost-effective supplier was. Accounts Prof N Viswanadham | EXECUTIVE DIRECTOR | Global Logistics and were maintained on paper and decisions were based on Manufacturing Strategies, Indian School of Business, Hyderabad instincts rather than on hard data.

“I suddenly could see what an IT system could do to an A SMART MOVE THAT WILL BUILD BETTER REPUTATION industry as starved of skilled labour as ours is. We wanted The concerned company, Narayan, has brought in a system that is to become the global leader in manufacturing of synthetic required for any company that wishes to expand its horizons in this day and age. An ERP system is needed to improve work flow and fabrics for women’s wear and for that to happen an enterbring in better productivity. This will help them organise their operaprise resource planning (ERP) tool was critical. It was the tions better. And we all know that companies, which are well organonly way to streamline the information flow and drive ised, build a name for themselves in a short period of time. This, in efficiencies in the business,” recalls Khetan. turn, helps them get and retain more business than competitors. An To make the switch from a drab-to-fab system, he idenexample of this is TCS; it has been bagging huge software projects from the government and big international companies operating in tified the basic problems. “I saw three main issues—lack of India, keeping companies like Wipro and Infosys at bay. The reputacommunication; lack of transparency in books of accounts, tion built by them over the years has helped them to retain and and role ambiguity among employees,” says the 27-yearbring in more prestigious clients. Reputation is the key word here, old, who is currently completing his Masters at the Centre and it looks like Narayan is well on its way to developing a reputation for being a more organised player in its industry with the use of for Family Managed Business, SP Jain Institute of ManageERP. More immediate benefits that they will see is the ability to ment and Research in Mumbai. track orders better, starting from acceptance to the fulfilment stage.

The biggest battle, however, was convincing the Old This system will also provide the management with information that Guard. Khetan knew he would have to fight hard to get will facilitate business learning, thereby making better, faster deciothers to migrate to this new way of thinking. “First of all, sions and in turn, building common vision among the employees.

Also, I recommend that the approach of the higher management I had to convince my father, then the masters and then the should be a balance of produce and people-oriented leadership. rest of the employees. This was a tough job,” remembers Sumit Saigal | CO-FOUNDER | Gateway Sourcing Khetan, who had to struggle to grow out of being just the “boss’ son”. Employees discounted his suggestions as newfangled ideas from “angrezisthan”. He encountered resistance from about 20% of his total staff of around 750 and two even resigned in protest.

Even though his father gave his blessings to the change, Khetan Khetan knew he could not lose the masters. “Their role was central knew he had to get the buy-in from the top management, if he to the functioning of the business and they were always in short wanted everyone to fall in line. The problem was that the manage- supply. We couldn’t fire them even if they threatened to quit over a ment viewed the ERP implementation as a cost and not as an invest- salary raise. So, we worked hard to get the masters to understand that ment. Then there were the masters, who clung on to their secrets, lest this was just implementation of a system that would generate reports. they became redundant. They viewed the change as nothing but an No one was going to get sacked. Once they were convinced, the rest unnecessary management whim. followed,” he adds.

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CASE STUDY

The Decision The entire process took about a year and half, during which Khetan worked with an IT vendor from Surat. A meeting was called for all employees, where the vendor explained the implementation process and the benefits that would emerge from deploying such a system.

Khetan’s tenacity paid off. The ERP system was implemented at a cost of Rs 4 lakh. By July 2005, reports were flowing in, covering production planning, inventory, marketing and sales, and finance departments. “We started getting reports on inventory turnover, which helped us understand which client and business unit to focus on. That, in turn, helped strengthen our decision-making power and speed,” says he. With improved forecasting of demand, inventory came down from 120 days to 60 days. “When clients called to check on the stock of a certain fabric, we had a ready answer. This also contributed to our clients’ margins and inventory.”

The steady flow of information has also helped Khetan steer his business in a more profitable direction. “I can now figure out how much of my working capital is stuck in a client. We moved away from

some large-volume clients, who didn’t pay on time, to smaller clients who paid faster,” explains Khetan.

Small initiatives, such as alerts that indicate when a payment is due for more than 90 days, helped the business become more efficient. The working capital requirements of Akash Dyeing and Printing Mills went down by 25%, helping them save at least 20% in interest paid to a bank for the capital.

“It took me a year to earn the respect of the team. Even better, my father accepted my contribution to the organisation,” says a pleased Khetan. He will have more reasons to feel happy once his website goes live and business from overseas garment manufacturers starts trickling in. The business has grown to Rs 50 crore and now supplies more than 70 varieties of fabric.

Khetan and his father have a deadline for their global ambitions—while 2020 might be a decade away, their goals don’t seem that distant any more.

FUTURE BRANDS | SPECIAL SERIES ON BRANDING

TRUE BRANDS: FINDING MEANING IN EMERGING INDIA

M

ore often than not, the word brand is accompanied by visions of mega-promotional budgets, celebrity endorsements and high-decibel media presence. This mental model of creating a brand tends to make brands a preserve of large multinational corporations who have the deep pockets to fund such initiatives. This view of brands suggests that brands are a by product of big budget marketing inputs that can lure the consumer into choosing one product over many other and sometimes a means to get the consumers to spend more on a product than they have previously.

THE GROWING DEMAND FOR BRANDS

Today, this notion of branding needs to be questioned, especially in the Indian context, which has seen an unprecedented growth in consumption as well as entrepreneurship.

As new sections of our population enter the consumption fold the demand for brands have grown well beyond the realms of what we have seen in the past. The much talked about mobile phone category is a perfect example of this phenomenon. What used to be a 3-horse race (in the early years of mobile telephone) between Nokia, Motorola and Sony Ericsson is crowded with handset marketers that range from the high-end Apple iPhone, the familiar LG, Samsung’s and into a whole host of previously unknown names who offer feature-heavy products at much more affordable prices. But here again, there are very few examples of genuine new brands being created. It is rapidly turning into a crowded commodity space where they are fighting with advertising spends to earn consumer preference.

The importance of nurturing brands as assets is a point that has been made with a lot of compelling evidence as to how they can propel organizations to new heights and create respectability amongst consumers and industry alike.

However, most of these arguments are unable to clearly |

INC.INDIA | MARCH 2010

articulate what a brand really is and gets limited to marketing techniques.

Before we plunge headlong into the seemingly arduous task of creating brands, it is important that we ask ourselves as to what brands really are. Brands are more than mere marketing tools; they are ideas around which organizations get built. One of the most powerful expressions of this truth about brands is manifested in none other than Google, which is arguably the most powerful brand that has captured the imagination of businesses and consumers alike in the last decade or so.

GOOGLE TO DO ONE THING REALLY, REALLY WELL

Interestingly, Google is not one of those brands that have been built on the back of mega advertising bucks. It was the desire of the founders of Google to create what they felt would be the “The perfect search engine, that would understand exactly what you mean and give back exactly what you want.” A lot has been said about Google business model, where its search engine and many other subsequent products were made available for free to the consumer. However, what made it a brand in the first place was their emphasis on providing the best user experience, through a potent combination of speed and accurate search results. At a time when most internet companies were trying to devise ways to get users to spend more time on their sites, Google was probably the only ones who decided their goal was to get people to leave their homepage as quickly as possible.

Today, Google has been able to leverage their learning from the challenge of creating the most perfect search engine as well as the belief of millions of users to create a vast portfolio that includes Youtube, Orkut, Gmail and Chrome to name just a few.

The success of Google extends well beyond its product. It has over the years become an organization, or perhaps an

PHOTO BY PHOTOS.COM

SPECIAL SERIES ON BRANDING | FUTURE BRANDS

been flooded with Fabindia type offerings. By 2008, Fabindia had around 80 stores in India and abroad selling handloom, crafts and organic foods. What makes this an iconic brand is that unlike many other enterprises which tend to dilute their offerings once success comes their way, Fabindia seems to have strengthened its resolve to continue being a platform for Indian artisans - the very premise that has got them where they are today. In 2008, the company announced that about 20000 weavers from backward communities would be made shareholders in its various subsidiary companies.

Through all this the brand has maintained its commitment to an excellent product, often encouraged its designs to be copied without trying to restrain others and stayed A Powerful Idea Brands are more than mere marketing tools; they are ideas around which committed to its purpose of organizations get built. You have only to look at Google to know how true this is. creating a platform for Indian craft. The Fabindia kurta is now a legend in urban India’s college campuses and the brand is a case study in some of the institution that takes pride in its people and its ability to view best business schools in the world. All this without any great things as a beginning of something new rather than significant advertising spends. a culmination of its efforts. Its greatest advertisement has been its ability to create unexpected benchmarks that BRANDS ARE BUILT ON MEANING deliver real tangible value to users around the world. The There is a truth about brands that emerges sharply from power of the brand becomes evident if we take a step back these stories and that is brands are really a means of makand examine how important these two magic words have ing meaning. To be a brand in its true sense we need to focus become in our lives today. “Google it.” on the meaning we deliver. In the Google story the meaning resides in accuracy and speed of search. In Fabindia’s case, FABINDIA the brand creates meaning by elevating Indian craft to a level FIND A CAUSE, THE BRAND WILL FOLLOW where we feel a sense of pride and ownership.

Another band that comes to mind when talking about creatOnce we have identified the area where we see the ing a strong organizational culture and a feeling of owneropportunity to deliver this meaning all elements of the orgaship across constituencies is Fabindia. Yet again an nization needs to align itself to that goal and continuously example of a brand that relied on its on excellence and craft strive to deliver it in as many ways possible. Branding, in than advertising spends to gain acceptance as one of the that sense is a continuous process of driving that meaning most respected brands originating in India that has and finding newer avenues to deliver it to its constituencies. expanded its boundaries beyond its traditional textile and Brands, when viewed from this perspective are much handloom products into furniture, lighting, stationery and more than marketing tools; it has the power to become the personal care products. Fabindia began as an initiative that life-force of organizations; the very engine that drives them showcased Indian handloom and textile in the international to greater heights of success. market. Over time Fabindia became a platform for Indian Emerging India, as stated earlier has innumerable artisans and weavers to give expression to their craft. opportunities for brand creation. There is a whole generaAt a time when traditional handloom brands like Khadi tion of consumers whose needs are quite different from the were being subject to commoditizing pressures Fabindia traditional users of products and services. The mobile phone was able to create a small but powerful following and the is an excellent example of this phenomenon. It is important defining Fabindia product became the “Fabindia kurta”. to acknowledge these emerging needs and to find ways to Fabindia elevated Indian handloom from being consigned create new meaning in their lives. What it requires is coninto a shabby corner and represented it with a vibrant sistency and a sharply focused approach, not deep pockets. sophistication. The stores carried a hallmark of chic ethnicFuturebrands partners entrepreneurs to build robust busiity and while the products were priced to retain an element nesses by building strong brands. They can be reached at of exclusivity were never really beyond reach. Imitation is buildbrands@futurebrands.co.in the best form of flattery and the Indian market has since

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LESSONS FROM A

Blue-Collar

Millionaire

When NICK SARILLO launched his business, he had one goal: to create a company unlike any he had seen. Fourteen years later, Nick’s Pizza & Pub is a model for anyone who wants to keep profits high, turnover low, and customers very, very happy

BY BO BURLINGHAM

t’s Takeout Tuesday at Nick’s Pizza & Pub, and the air is thick with the smells of hot pizza crust, peppers, onions, and cheese. Eighteen young men and women—most of them high school age—form an assembly line between a row of worktables and a long bank of pizza ovens. The kids laugh and shout, even as they focus intently on their tasks.

Nick Sarillo, 47, stands halfway down the assembly line, holding a giant wooden pizza board.

As the company’s founder and CEO, he doesn’t usually work the pizza line anymore. But he is happy to lend a hand when he can, and the kitchen crew needs all the help it can get on Tuesdays, thanks to a programme Sarillo launched in March 2009 in response to the recession. A sign in the lobby explains the logic behind the policy: 44

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Kane County unemployment 6.3% vs. 11.1% Sept. 2008-Sept. 2009 ½ Price Monday and Takeout Tuesday are here to stay until the unemployment lines go away.

That is, customers pay half price for pizza in the dining room on Mondays and half price for carryout on Tuesdays. The effect has been to turn the two slowest days of the week into the two busiest. Indeed, the programme proved so popular that it initially overwhelmed the kitchens. “Our promise is to have pizzas ready in 15 minutes with no mistakes,” says Sarillo. “We had so many orders that the time got up to 25 minutes. Guests were getting upset. It was OK if I was here to orchestrate,

New Recipe “Everyone who had a business told me, ‘No one cares like an owner,’ ” says Nick Sarillo (L). “They said, ‘Watch out. People are going to steal.’ I set out to prove them wrong.”

but it got pretty bad if I wasn’t.”

So what did he do? “I built a system to replace me,” Sarillo says. “I put together a checklist of things that had to be done by 4 pm, so we could handle the volume. It took about four weeks until it could work without me. Now we’re nailing it.”

There are, according to the trade magazine Pizza Today, 70,000 to 75,000 pizza establishments in the United States. Nearly every town has at least one, and—except for arguing over which makes the finest slices— people seldom pay them much notice, let alone think of them as a potential source of business and management wisdom.

And then there’s Nick’s Pizza & Pub. Its two restaurants in the northwest suburbs of Chicago have attracted visitors from far and wide who have heard about Sarillo’s approach to management and the effect it has had on employees. The numbers tell the tale.

In an industry in which annual employee turnover of 200% is considered normal, Sar-

illo’s restaurants lose and replace just 20% of their staff members every year. Net operating profit in the industry averages 6.6%; Sarillo’s runs about 14% and has gone as high as 18%.

Meanwhile, the 14-year-old company does more volume on a per-unit basis (an average of US$3.5 million over the past three years) than nearly all independent pizza restaurants. And customers, it seems, adore the service: On three occasions, waitresses have received tips of US$1,000.

Sarillo grew up around pizza. His father, Nick Sr., owned a restaurant called Village Pizza in Carpentersville, Illinois, which he started when his son was in the eighth grade.

When Sarillo opened his first restaurant, in Crystal Lake, in 1995 (the other opened in nearby Elgin in 2005), he patterned it after his father’s, right down to the pizza recipe. In one key respect, however, he was determined to make it different. That difference—and the secret of the company’s success—can be summed up in one word: culture.

Sarillo has built his company’s culture by using a form of management best characterised as “trust and track.” It involves educating employees about what it takes for the company to be successful, then trusting them to act accordingly. The alternative is command and control, wherein success is the boss’s responsibility and employees do what the boss says. Think of the Navy SEALs versus the National Guard. Both approaches can work, but they produce very different cultures. If done right, moreover, trust and track can allow a company to be nimble, flexible, and productive enough to perform at the highest level through good economies and bad.

Sarillo is the first to admit that he is an unlikely spokesman for the benefits of a strong company culture. When he launched Nick’s, he had never heard of company culture. A former construction worker, he got into the business, he says, because he had three young children and there was no restaurant in the area at which families could get MARCH 2010

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LESSONS FROM A BLUE-COLLAR MILLIONAIRE

together, kids could play, and parents could relax and have fun. He didn’t have a management philosophy—at least not one he could articulate. He did believe, however, that he had a choice about how the business would be run. “Everyone I knew who’d had a business told me, ‘No one cares like an owner. No one works as hard as an owner’,” Sarillo says.

“They said, ‘Watch out. People are going to steal.’ I set out to prove them wrong. I wanted a place where everyone worked hard and cared a lot; where people enjoyed coming to work, felt good afterward, and weren’t motivated to steal. If I couldn’t have that kind of business, I didn’t want to have a business.”

In the end, he built the kind of business he wanted by developing a unique management system. Not only is it strikingly effective, but it’s a stark illustration of the notion that good ideas can spring from the most humble of sources. If you look closely, you can identify 10 key ingredients of Sarillo’s recipe for building a company culture that delivers.

1. Feel your community’s pain; share its joy

Half-Price Mondays and Takeout Tuesdays are symbols of Nick’s ongoing commitment to the communities in which it operates. So was a decision in August 2008 to surprise the guests one Thursday evening by picking up the check, in recognition of the tough times many were facing. “It cost us US$20,000,” says Sarillo’s partner, Christopher Adams, “but it created tremendous buzz.”

It also reinforced the company’s reputation as a community bulwark—a reputation it has been assiduously building since Day One. The restaurants host fundraisers almost every week, with the company contributing 15% of the gross profit generated by the event.

In addition, Nick’s sponsors two or three large benefits a year, many of them for families facing high medical bills because of a health crisis.

For the benefits, the company 46

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donates 100% of its gross profit for the day, and servers often kick in their tips. “I have never known them to turn away anyone with a legitimate charitable purpose,” says Crystal Lake Mayor Aaron Shepley.

All of this has an ancillary benefit for the business. “It reminds our team members how incredibly different we are from any other place they know,” says Adams.

2. Hire only A+ players

Forty-one per cent of the company’s 182 employees are ages 16 to 18, almost all of them still in high school. The others include a large number of mothers, college students, and people whose main job is somewhere else. Such employees do not typically make for a stable work force. Yet people who work at Nick’s seem to find the culture irresistible. “When I come here, I really don’t feel like I’m coming to work,” says server Aubrey Judson, 25. “My boyfriend doesn’t understand it. I just like to be here.” She works only on weekends, she adds, as she has a full-time job at an online advertising agency during the week.

Her job as a server was very likely the more difficult of the two to land. Just one of every 12 applicants to Nick’s gets hired. “I was really surprised by the process,” she says.

“You get interviewed twice, and you take a personality test.”

The explicit goal of the process is to hire only the best of the best: A+ players, in the language of the company. People who inquire about a job receive a handout detailing the company’s purpose and values. They are advised not to waste their time applying unless, after perusing the sheet, they think Nick’s sounds like a place they would like to work. If they decide to move forward, they first have a talk with a manager. Nearly all of them are then invited to an interview. Twenty per cent of those are invited to a second interview. Two managers are in each interview, and one sits in on both. In other words, candidates need four yes votes from three managers to receive an offer. Those who aren’t selected get a thank-you note and a voucher for a free pizza.

Along the way, the applicants are scrutinised and tested. There is a lot of role playing, not to mention the occasional off-the-wall question. “They asked me, ‘What are you doing to improve yourself physically, mentally, or spiritually?’ ” says Scott Jewitt, who had been a manager at Bennigan’s, Lone Star Steakhouse, Boston Market, Panera Bread, and CiCi’s Pizza before joining Nick’s in the fall of 2008 and now is an operating partner. “I was speechless for a moment. It was so different from any interview experience I’d been through. And I’m not an amateur.” Ninetysix per cent of those hired stay at least a year.

3. Learn, grow, compensate

Getting hired at Nick’s is a ticket—not just to a job, but to the company’s training programme, which is elaborate, rigorous, and ongoing. It begins with a two-day orientation, which includes more role playing and discussion of the company’s purpose, values, and culture. That’s followed by 101, a fourhour stint in the kitchen, where everybody goes through a basic pizza-making course.

The new hires then separate into work groups and move on to 201, in which they are trained and certified in specific jobs. A pizza maker, for example, may take two to four weeks to reach the level of proficiency required for certification, after which she can make pizzas on her own. When she gets certified in two other jobs—say, salads and sandwiches—her wage goes from US$8.25 to US$9 per hour. After certification in six positions, it increases to US$9.50 an hour, and she gets a red hat. (Up to then, she has been wearing a tan hat.) Certification in nine positions earns her a black hat and a raise to US$11 an hour.

It’s her choice, however, whether she goes for any certifications beyond 201. She can stay at one certification as long as she likes.

Then again, she might want to go on to 301 and become a trainer, which offers a variety of benefits, including eligibility for profit sharing and preference in scheduling. To qualify, she must achieve mastery in her certifications—that is, a top rating on a oneto-five scale—and read the book Mastery: The Keys to Success and Long-Term

LESSONS FROM A BLUE-COLLAR MILLIONAIRE

It’s showtime! The staff at Nick’s Pizza & Pub prepares for a busy Saturday night.

Sarillo’s turnover rate is just 20% a year—compared with 200% for most casual restaurants.

Fulfillment, by George Leonard. She then takes a three-day course on communication and leadership. At the end of the course, she receives a Leadership 301 Passport with a checklist of 30 specific behaviours she is required to model or recognise someone else modeling. She has five weeks to complete the passport, which involves observing and describing two such incidents for each behaviour and getting a member of the leadership team to sign off on it. Finally, she takes a train-the-trainer course. On completion, she becomes a trainer.

4. Systems are for building trust

This is not the sort of training curriculum you expect to find in a company doing just over US$7 million a year in sales. Then again, the same could be said about all of Nick’s systems—from hiring to inventory management to the handling of workplace conflict.

Pretty much everything that happens in the business has been thought through, defined, and taught, right down to the best method

for greeting a customer.

Take the process of opening and closing the kitchen. In a typical restaurant, a supervisor is responsible for both, has a long checklist of things to be done, and tells everyone what to do. At Nick’s, by contrast, the whole kitchen crew is responsible. To help people keep track of what needs to happen, there is a laminated “ops card” for each task involved. Each ops card is red at the top and green at the bottom and has its own slot in a converted timecard holder. In the morning, when staff members come in, the ops cards are in the slots with the red end showing. Whenever a task is completed, someone turns over the corresponding ops card so the green end is showing. By closing time, all the cards are showing green. It’s then the manager’s job to make sure they are all red again before people arrive the next morning.

The system is an important mechanism for creating a trust-and-track culture and for breaking the habits of command and con-

trol. “Managers trained in command and control think it’s their responsibility to tell people what to do,” Sarillo says. “They like having that power. It gives them their sense of self-worth. But when you manage that way, people see it, and they start waiting for you to tell them what to do. You wind up with too much on your plate, and things fall through the cracks. It’s not efficient or effective. We want all the team members to feel responsible for the company’s success.”

Some people would no doubt find such a regime unbearable, but Nick’s employees appear to thrive under it, especially the high school students. “Parents tell me, ‘I don’t know what you did to my kid, but whatever it is, keep doing it,” says Sarillo.

What Sarillo has done, on one level, is simply to treat high school students—and everyone else—like intelligent, responsible, and, above all, trustworthy human beings.

“All of our systems are geared toward creating a culture of trust,” says Sarillo. “A lot of MARCH 2010

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people would say trust is intangible. We’ve made it tangible by putting these systems in.

They allow you to see whether the trust is there and whether the way people behave is promoting or undermining trust.”

have hired that behaviour? If yes, you can recognise it. If no, you can coach it. But either way, you should do it in the moment.”

5. Coach in the moment, not after the fact

Sarillo says he first got the urge to expand to new locations in 2002, but he wasn’t confident in his ability to do it without outside help. So he brought in an accountant and then a couple of consultants. “They all talked about control, control, control,” Sarillo says.

“I felt like I was on Mars. What I was doing was obviously working, but I didn’t know anyone else who ran a business this way. I mean, I’m an ordinary guy.

If I can do it, anybody can.” Then he met a consultant named Rudy Miick.

“He asked all the right questions,” says Sarillo.

He decided to hire Miick, who didn’t come cheap. Sarillo estimates that, in 2003 and 2004, he spent US$200,000 preparing to expand, 80% of which went to pay for Miick’s services. That’s a lot of money for a business doing just over US$3 million a year in sales.

But Miick played a key role in helping the restaurants streamline their management systems, which helped reduce employee turnover from 185% to 20%. Given a cost of US$1,500 to recruit, interview, and train a new employee, the drop in turnover alone saved almost US$250,000 a year.

To be sure, just about every company has systems of one sort or another. A common one is the annual performance review, which almost all management experts would say is essential for giving employees the feedback they need. But Sarillo doesn’t believe in performance reviews. Rather, managers and employees are trained to coach in the moment, providing feedback immediately.

There are actually three forms of feedback at Nick’s. The first is called a feedback loop and applies mainly to new employees. At the end of a shift, a trainer will ask, “What is one thing you did well, and—if you could replay the tape—what is one thing you would do to enhance your performance?”

It’s a two-way conversation, hence a loop.

The second form is called performance feedback and, again, usually comes at the end of a shift.

After observing someone’s performance, the manager or trainer will mention one thing the person did well and one thing he or she should try to improve.

The third form is direct feedback and happens in the moment. Suppose, for example, that Sarillo observes a host with her head down as a guest walks by. “With a smile on my face and in a nice way, I’d say, ‘Eyes up, Rhonda. Remember, five steps with every guest.’ “ He is referring to another mechanism: Smile and greet a customer whenever you come within five steps of one.

As for deciding when to provide feedback, managers are taught that everything is an interview.

“We do a lot of role playing in our job interviews,” Sarillo says.

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6. A consultant can be more helpful than you think

7. Turn negatives into positives by making talk safe

Sarillo uses a system called safe space, which allows employees and managers to have difficult conversations by following certain well-defined rules. One rule, for example, is that statements must be based on data, not feelings or speculation. Another rule is to identify “the moose in the room”—that is, something many people are aware of but no one is talking about — the goal being to nip gossip and rumors in the bud.

Adams, for one, feels that safe space is “the most important way we create trust in the organisation.”

One team member recently used safe space to question

Sarillo about a sarcastic remark he had made.

Sarillo had intended it to be good-natured joshing, but it came across as pointed criticism. “I said, ‘Holy cow! I didn’t realise it,’ and I apologised,” Sarillo says. “It reminded me that sarcasm can be lethal when you’re the boss. I have my share of imperfections, and I love it when team members call me out on them. It’s not a threat if you have a culture based on trust. In fact, it proves that the trust is there.”

8. “Why” is more important than “what” or “how”

Sarillo likes to say he doesn’t tell people what to do. Instead, he prefers to explain the situation and let them choose. Of course, giving people choices rather than orders requires trusting them to do the right thing.

But it works the other way as well: They have to trust you enough to believe your explanation of the situation. That means making sure they understand why they are being asked to do whatever it is you want them to do.

Explaining the “why” is particularly important, Sarillo says, for young employees.

“Today’s teens are as strong and as good as any previous generation of workers, but you need to share the ‘why’ with them. The days of ‘do what I tell you’ are gone. You simply won’t be successful.”

That can present a challenge for managers accustomed to giving orders, as Sarillo discovered the hard way. In 2005, he and Adams set a goal of having five restaurants by the end of 2010. To achieve it, they realised they would need experienced general managers to run the restaurants they had. The three people they wound up hiring came out of established restaurant chains. On the surface, the managers embraced the company’s purpose and values, as well as the systems that support them. Eventually, however, Sarillo decided he had to let all of them go. One tip-off was their inability to control costs.

As usual, the devil was in the details. Each Nick’s Pizza & Pub has a just-in-time purchasing system, whereby food and beverage usage is tracked daily and orders are placed two or three times a week. A physical inven-

LESSONS FROM A BLUE-COLLAR MILLIONAIRE

tory is done once a week and then matched against the prior week’s count, minus usage, plus purchases, to make sure the costs are under control. The goal is to keep beverage costs at about 22% of revenue and food costs at 20%.

But week after week, the costs ran too high, and physical inventory counts didn’t jibe with usage and purchases. When Sarillo finally investigated the problem, he traced it to the managers’ inability to let go of their old habits. “Their idea of leadership was telling people what to do,” he says. “They had someone else put in the numbers, and when the numbers came out wrong, they didn’t dig deeper to discover why. Because they didn’t know the ‘why,’ they couldn’t share it with the team members. When you know the ‘why,’ it’s really easy to figure out what to do, but sharing that kind of information wasn’t how they’d been trained to manage.”

In the end, Sarillo turned over the responsibility for tracking costs at the Elgin restaurant to a 24-year-old woman named Jenny Petersen, who had begun working at Nick’s when she was 16. She solved the problems in four weeks. She could do it, she says, because she cared about the ‘why.’ “I think it’s a matter of personal drive and ambition,” Petersen says. “You need the drive to ask questions and do the research. If our inventory numbers are off, there’s got to be a reason. I like finding out what it is.”

9. “Trust” without “track” is an invitation to trouble

In retrospect, Sarillo acknowledges that hiring those managers was one of his biggest mistakes in recent years. It became a big mistake, however, because he wasn’t paying attention. For two years, he was totally focused on laying the groundwork for a new Nick’s in Chicago, which was supposed to open in mid-2008. Only after that plan fell through did he turn his attention back to the existing restaurants. The company was in serious trouble, mainly because he had

Pizza Academy Sarillo schools his employees—most of whom are high school age—at his Crystal Lake, Illinois, restaurant.

invested so much time, energy, and money—about US$300,000—in the Chicago project, but also because of slumping sales and out-of-control costs at Elgin and Crystal Lake.

From a distance, he attributed the problems to economic factors over which the company had no control. But as he looked more closely, he realised there was more to it. The cost-control issues were symptomatic of something deeper. The general managers weren’t supporting the systems, and so the company’s culture was beginning to change.

And yet Sarillo had to admit that the problems were ultimately his responsibility.

Looking back, he says, “The big lesson is accountability. Results are results. You have to be real about how people are doing. I wasn’t holding those managers accountable for their results and their behaviour because I wasn’t keeping close enough track of what they were doing.”

10. Beware of growing before you—and the company—are ready

Sarillo didn’t keep track in part because he was mesmerised by growth. He had decided to expand into Chicago, in the belief that a Nick’s there would provide visibility the company could never get in Crystal Lake and Elgin.

He was eventually forced to cancel the Chicago project, however, when he lost his bank financing in mid-2008. The turn of events appeared at first to be a disaster for the

company. It turned out, however, to be a blessing. “Because we were not able to do Chicago, we wound up doing something more important: fixing the culture in Elgin and Crystal Lake,” says Sarillo. “If we’d opened in Chicago, I wouldn’t have had so many financial problems, but I would have had much, much bigger cultural problems. By the time I found out about them, it might have been too late.”

In the process, he learned an important lesson about the type of management he will need in the future. “I’ve decided there are two ways to get the right person to run one of our restaurants,” he says. “One, you can get a new manager like Jenny Petersen, who hasn’t already developed bad habits somewhere else. Or, two, you can get a manager with experience in the industry who’s completely fed up with the corporate way of doing things and thinking, I really need a change.” That’s the story with Scott Jewitt, the operating partner at Crystal Lake.

So is Sarillo still committed to opening other Nick’s Pizza & Pubs? “Oh, yes, I feel more inspired to grow than ever,” he says.

“People really do want to have a meaningful place to work, and that is one thing I know how to do well. So how could I not want to keep doing it for more and more people? I mean, what could be a more fulfilling life?”

Bo Burlingham is an Inc. editor-at-large.

Copyright © 2010 Mansueto Ventures LLC. All rights reserved.

Inc.com, 7 World Trade Center, New York, NY 10007-2195.

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Very Verte Maini has just set up a new plant in Bangalore, and is preparing to floor the production pedal

HOW I DID IT

CHETAN MAINI GIVING WHEELS TO THE GREEN CAUSE

Chetan Maini is one of those rare people who get to live their dreams. As a young boy growing up in Bangalore, cars defined his world. At 39, Maini is setting automotive benchmarks for the world to follow.

He has transported his spiffy electric car, Reva, from green-street to mainstream.

With 3,000 cars on streets across the world, this builtin-India hatchback has the largest deployed fleet of electric cars anywhere. Maini’s recent collaboration with General Motors could catapult India into becoming the global hub for the green car movement—and him into being its undisputed leader.

AS TOLD TO SHREYASI SINGH PHOTOGRAPH BY GIREESH GV

I was always putting things together. It was something I loved doing.

Maybe the practice of taking things apart helped. My parents tell me even today that when I was very young, I broke everything, and when I got older, I fixed everything.

My love for motors began early. I started out by making remote-controlled cars and planes. In my teens, I was building motorised gocarts. Since specialised components were hard to come by in India, I would ask my dad’s friends to buy spare parts when they travelled abroad. By 11, my bedroom was too small for my hobby. I remember spending my weekends and holidays looking for electronic parts and designing motor mechanisms. School science fairs were a big deal for me. I did a lot in them.

My favorite car is still the one that I built when I was 10. It would hit

the wall and come back, reversing electronically. I enjoyed building that one.

Every boy loves his cars. But, my parents really nurtured that inter-

est. They were helpful and resourceful. My father ran a small electronics company then. When I wanted to build a radio in class four, he sent over one of his employees, an electrical engineer, to help me with it. In class six, I learnt how to model planes with the help of my uncle, a navigation instructor with an airlines company, and one of his students who was an aero modeler. The family network fuelled me.

The Lamborghini Countach is something I grew up dreaming about.

I drive two Reva cars now, and enjoy all cars, but I have always had a soft spot for the Countach.

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HOW I DID IT

I studied mechanical engineering at

the University of Michigan, where I was a member of the solar car team. We won the GM Sun Race in USA in 1990. It was here that the idea of a cost-effective electric vehicle, for city driving, first struck me.

“Nothing can stop you if you believe in your idea. I faced a lot of skepticism initially. People would test drive our car for fun.”

Dr Lon Bell, a friend’s father and a technologist, was my early mentor. After win-

ning the GM Sun Race, my solar-car buddies and I had started talking about a company in the electric vehicle space. Dr Bell loved the idea and started Amerigon Electric Vehicles (AEV) in California in 1991. I worked with him before joining Stanford University for a masters degree in mechanical engineering. After I graduated, I went back to work for him full time. Over the years that I stayed there, I helped develop and design electric and hybrid vehicles.

In 1994, I started work on Reva as a joint

venture between the Maini Group, founded by my father, and AEV. The first car rolled out in 2001. A lot happened in the interim. While I was in the US, in 1997, California did not mandate the regulation that would have made sure that 2% of all vehicles sold in the state would have to be zero-emission vehicles. The decision spelt doom for the electric vehicle space. I was sure that the Reva would not happen now.

But my family would not let me give up.

They pushed me to go ahead with the plans.

Things, however, were not that simple anymore. I could not be just a technologist. I had to chase financial organisations for money and had to become an entrepreneur.

Reva was a big emotional and financial commitment for us.

Our first assembly plant was clean and green. The design was a challenge since

everything had to be low on investment, yet flexible. We used the “rolling chassis” model instead of the conventional fixed assembly line. Wheels were fixed on to the chassis, which moved from station to station for assembly.

Innovation drives me and research is at the core of everything we do. Reva’s first seven years were focused on development.

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Full steam ahead Called the Reva NXR, the new model got a great response at the Frankfurt Motor Show in 2009.

We have more than 10 patents in battery and energy management systems. Reva is a ground-up electric vehicle, not a converted hybrid like other cars in the market. Our new model, the Reva NXR, is built on next generation lithium-ion batteries.

In the last five years, there has been a lot of change. Consumers, governments and

automotive players have changed—not just in India, but worldwide. Now, people talk about auto emissions, city pollution and climate change. There are concerns about rising fuel costs and fuel shortage. International summits are abuzz with talks and discussions on fuel-efficient technology, hybrid and electric vehicles.

It’s actually London that set the ball rolling. Reva went on sale in Britain in 2004 as

the G-Wiz. There are over a thousand cars on London roads. The city has set a fine example. Electric vehicles, even tax exemptions, and free parking and charging facilities for car owners. On and off-the-street charging stations have been introduced across the city. Our London story has encouraged other manufacturers. There are now more than 50 EV brands under development across the world.

The Frankfurt Motor Show 2009 was a big high. We were the only Indian com-

pany participating there, and showcasing new technology. We launched two new models, a four-seater family car, Reva NXR, and a two-seater sports car, Reva

NXG. We got a great response from the customers and the media.

I am excited about all this. Our business model now goes beyond just being electric vehicle manufacturers. We are licensing our technology and have partnered with GM India to bring out a battery-powered version of their Chevrolet Spark. GM shares our passion for reducing carbon emissions. Also, it has the expertise and ability to develop platforms.

I want to press the accelerator now. Our new plant in Bangalore has a capacity of 30,000 vehicles. It should be ready by the year-end. I want it to be an industry benchmark. It follows the Indian Green Building Council guidelines and our “born green” philosophy. We should reach plant capacity in the next three years. I also want to set up overseas auto-making ventures.

I believe nothing can stop you if you believe in your idea. I faced a lot of skepti-

cism when I started. People did not take us seriously, and would test drive the car for fun. Then things began changing. In 2006, I received an investment of US$20 million from Draper Fisher Jurveston and Global Environment Fund to grow Reva globally.

Thankfully, I never wanted to do anything else even when things weren’t going well. I don’t stay disheartened for long, a couple of hours at most. A good night’s sleep and I am determined to go at things again.

START-UP

DIARIES Tracking three radical ideas from three cities

March 01-2010 Bangalore. Newly-done up office, 10 more gardens to deliver...

Delhi. Increased the prices, eyeing southern suburbs next...

Hyderabad. Numbers looking up, find a solution for corporates to run car pools and cab services...

It’s a tough life for start-ups. Business is hard to come by, money even harder; there are more critics

than believers, and peers are always eager to dismiss them. And yet, the brave-hearts who found them pursue their not-so-ordinary ideas with single-minded determination and a burning passion. They are not really bothered about any of these challenges—at least most of the time. Last issue, we had sought out three founders from three different cities, who had launched their dream companies.

Here’s how the cool fellows have been faring on start-up-land.

Delhi: The Shoe Spa The background

The update Shoe Spa gave itself some much-needed space, expanding its workshop in Civil Lines, a suburb of Delhi, by more than 600 square feet.

It now has the luxury of three rooms. Two new machines for reconditioning, cleaning and re-colouring have also been commissioned.

But, the young promoters aren’t satisfied. “We want to shift to an industrial area. This is important from the business respectability quotient. It’s good for the image,” explains Budhiraja, who adds they are waiting to reach critical mass before withdrawing capital.

Last month also saw an upgrade of their “test run” prices. The duo attributes the hike, a leap of nearly 70%-80%, to the use of premium ingredients. The real reason, however, is a steady stream of customers. Shoe Spa gets around 20-24 articles (shoes, belts, wallets) for “treatment” every day now, up from 15-20 at the end of last year.

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Ambitious plans The duo at Shoe Spa have expanded their workshop, but won’t be satisfied till they move to an industrial area.

PHOTO BY SUBHOJIT PAUL

Two management graduates, Saral Budhiraja and Tabish Ahsan, bag jobs on campus and await their turn in the corporate world. Their employers keep deferring dates, leading them to differ in thinking.

With the concept of a shoe spa having carved permanent real estate in his mind, 23-year-old Budhiraja decides to experiment with the idea along with close friend Ahsan (22). Shoe Spa, their shot at turning old and dirty soles into shiny pairs, starts walking. Nearly two lakh flyers later, the service is starting to get its due attention. Last October, the young turks got more than 50 shoe orders in a single day.

START-UP DIARIES

“Shoe Spa is finally making a buzz. We also get a good chunk of clients through referrals and word-of-mouth,” says Budhiraja.

The partners have also fine-tuned their marketing, working on one neighbourhood at a time. Flyers continue to dominate their minimalist marketing campaign. Over January and February, a little over 10,000 flyers were dispersed in two separate blitzes. The focus zone was limited to Civil Lines, where the Shoe Spa workshop stands. Next month, the target moves to South Delhi colonies like Lajpat Nagar and South Extension.

The business model has also been tweaked to improve profit margins. A small delivery charge now gets tagged on for every article

that makes the trip to the workshop, but need not, or cannot, be treated. Free delivery is offered for all items that do undergo treatment or repair.

What next The next month offers a mixed bag. While a rehaul of the website and improvement of the online order system needs to be urgently tackled, a new business vertical is also in the works. Interesting B2B deals are being discussed with “a couple of people”, say Ahsan and Budhiraja.

“We’ll hopefully have something great to update soon,” the duo assert confidently. The world is sure taking a shine to Shoe Spa.

Hyderabad: RideInSync The background

It all started with a debate at ISB, Hyderabad, on how carpooling had failed to impress Indian masses. Deepesh Agarwal and Amit Gupta, of the 2008-09 batch, were convinced that the concept could have worked only had it been presented correctly. So instead of seeking high-profile jobs, the duo decided to test their theory. A quick survey across three metros showed 65% of the people were willing to share a ride. RideInSync was launched in 2009 from ISB’s Incubation Centre. It packed the concept of carpooling with the option of choosing your co-passengers to and from a common destination. The USP–the entire service was accessible through a mobile or laptop. Currently, the service is functional on a single route–to and from Hyderabad and its twin city Secunderabad to the Rajiv Gandhi International Airport. With 730 registered users, the main challenge for Agarwal, whose partner has since moved on to a job in Mumbai, will be to crank up the numbers.

The update RideInSync might not have had a rough ride this month, but it’s been no smooth sailing either. “Given the volatile nature of a start-up, the goals keep changing,” says the 31-yearold entrepreneur, rather matter-of-factly.

Though there is a long distance to cover to reach the critical milestone of 5,000 subscribers, the service has witnessed a humble

rise in numbers—its registered user community has gone up to 810. Route expansion is another top-priority task. But, Agarwal concedes this will take some more time, despite the dozens of requests that pour in for expansion beyond the airport route, especially to the city’s three railway stations.

The first-generation entrepreneur is currently focussing all his energy towards devising an integrated carpooling solution.

“Most corporates we approached liked the RideInSync idea. And, they have promised us support. But, they want us to come up

grated solution. Many companies we have approached are waiting and watching. They all want someone else to try it out first.” The tie-up plan with the corporate world, thus, remains both an area of challenge and immense opportunity. Even now, despite no official association, Infosys employees are the biggest users of the RideInSync service.

What next Finding talented and passionate people ready to invest hours of work for unglamorous start-up salaries remains a hitch. Though

“No one wants to be a guinea pig for the integrated solution.

They all want someone else to try it out first.” with an integrated transport solution on which they can run both carpool for employees and cab-planning for the company. We are working towards a cost-effective transport solution with pooling built in,” explains Agarwal. He is cautious about setting ambitious sales targets for the coming month, or even the month after. “No one wants to be a guinea pig for the inte-

he recently managed to hire a computer science graduate from the elite Indian Institute of Information Technology, talent is always a shortage for start-ups, feels Agarwal. “We want the best of employees but don’t have enough money to pay them. So, our radar always keeps screening for that crazy lot who put work before money and are inspired about being part of change,” he laughs.

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START-UP DIARIES

Bangalore: My Sunny Balcony The background

If apartments cannot come down to the gardens, let the gardens travel up the apartments. That was the logic used by four friends—forever ruing the fact that Bangalore was losing its beautiful green spaces—to start My Sunny Balcony (MSB). A garden consultancy, this startup designs dream gardens for busy professionals and creates little patches of green in balconies across Bangalore’s growing concrete landscape. More than a year and 30 unique gardens on, this green team has created enough buzz to keep its business going.

The update With things moving real quickly, the MSB team decided they needed to take a hard look at where business was headed. The team spent the first few weeks of the year taking a good look at their numbers, and rethinking their plans and strategies. The four also decided it was time to get them into a space that could be called office.

Nothing fancy—just an innovative renovation of their small warehouse in Sadashiv Painting the world green The foursome at My Sunny Balcony Nagar with “living” walls that they hope have created ‘living walls’ in their newly-renovated warehouse, will talk to clients who walk in. Besides the in the hope that they will ‘talk’ to clients who walk in. flora and fauna, the office has also helped nurture efficiency. “Our turnarounds are much faster. It’s easier to bounce off ideas with everyone together. I am a big fan of tele-commuting, especially ready to dig into some revenue. And they do have a lot in line with in crowded cities like ours, but I have to say we find our office time almost 10 gardens to deliver. Finishing up those is top priority for highly productive,” says Sriram Aravamudan, one of the co-found- March. Unlike most start-ups, theirs is a problem of plenty. The main ers. Reena Chengappa, the other full-time founder-member in the challenge here is to upgrade the infrastructure in order to tackle the business, agrees wholeheartedly. demands of a vibrant fan following. In fact, a large part of the last With office geography defined, the team has also taken on more two months was spent responding to the huge backlog of emails and people. The two “extra hands on the deck”—one a former airline inquiries that had stacked up. “If we even manage to tackle oneground staff, and another an ex-content analyst with a big multina- fourth of the inquiries we have got, we are good. We don’t see too tional, who were only too happy to join the green army—are expected many setbacks in that sense,” the team says. to ease the load on Chengappa and Aravamudan, and enable them Also, with more people on board, the team will be able to devote to take on more clients. attention to proposed verticals like annual maintenance contracts for upkeep of gardens. In short, this green corridor is sure to remain What next sunny for quite some time.

Temporary investments and calculations out of the way, MSB is now —By Shreyasi Singh 56

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Sales & Marketing McKinsey research that shows how to get consumers to choose your product page 57 Technology Desktop virtualisation to cuts costs page 59 Elevator Pitch Can US$250,000 script Indee TV’s success? page 60 Technology Tools for rounding up employee ideas page 62 Sales & Marketing How would you sell a hot-air balloon ride? page 63 The Way I Work Arvind Rao, co-founder of OnMobile,

Ask Inc. India

Send your queries at inc.india@9dot9.in We’ll get you answers from experts...

is paranoid about competition and obsessed with influencing his clients’ profits page 64

STRATEGY Sales & Marketing Want to be the chosen one?

Get customers to recommend your service

In the spotlight A company should focus on being part of the initial set of choices, rather than trying to enter the race in the next stage of decision-making.

ILLUSTRATION BY PHOTOS.COM

Most Indian businesses have become used to

the challenges of increasing globalisation and rising competition. But dealing with better informed and highly-demanding customers is a relatively new problem for them.

Increased competition has ensured that customers are spoilt for choice. Therefore, firms have to customise products and services, and use the right messages in marketing.

As mobile connectivity and access to the internet go up, there is an explosion of touch points. More and more people are discussing experiences, lending a new meaning to word-of -mouth recommendations. This is forcing companies to think of new ways to attract and retain customers.

It is no longer enough to understand customer needs; companies have to influence decision-making as well. They must adapt quickly to the evolving decision process, and determine ways to attract new customers, as well as extract more business from existing ones.

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STRATEGY

The Decision Process Traditionally, companies have viewed consumer purchase decisions as a linear process of elimination. Once a customer identified a need, s/he short-listed a few brands or companies that were likely to meet those needs. What followed then was a battle among all the companies or brands under consideration to put their best foot forward and make their case. Finally, a process of elimination—based on an assessment of the product or service features and, of course, the price—led to the selection of one of the competitors.

McKinsey research has shown that this process of decision-making is changing.

The decision journey has become more circular, with four key battlegrounds or customer touch points: initial consideration active evaluation closure post-purchase experience It is important for companies to understand the importance of these battlegrounds and the dynamics at play, if they want to target the customer or decision-maker and ensure success in all the relevant decision touch points.

What has also changed is how companies need to engage with customers along this journey. Given the wealth of information available today, customers prefer to “pull” the necessary information through external trusted sources, such as word-of-mouth or the internet.

Consequently, reliance on company or vendor “pushed” messages is decreasing, requiring a more holistic and sophisticated customer-acquisition approach.

Winning the Sale There are five key insights to consider while winning and retaining customers.

Companies or vendors enter and exit throughout the journey: The original funnel-based linear elimination process does not work anymore. Companies can make an appearance in the active evaluation stage, even if they were not a part of the initial consideration set. This often differs 58

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by industry; for example, in the European automotive industry, on average, while customers may consider 3.8 brands during the initial stage, they look at another 2.2 when they are evaluating the different options.

However, in computer purchases, while there are 1.7 brands in the initial stage, only 1 gets added during evaluation.

sion makers are relying much more on customer-driven marketing tools to make decisions. Word-of-mouth, internet and offline or print reviews account for the top influential touch points in the customer decision journey. A large industrial products company understood the importance of positive awareness and word-of-mouth, and used an effective online viral video campaign to build positive buzz around how its products helped improve lives and protect people. The videos were hosted online and influential bloggers were targeted. In a survey conducted after the launch, 93% of the viewers claimed to have learnt something new and 76% of them said they would talk to friends about the company, while over 80% viewed it as a company that was a leader in R&D and one that cared about people.

Being part of the initial consideration set is crucial: While companies may enter the race during active evaluation, they do so at a significantly higher cost. Further, the probability of final purchase for those in the initial consideration set is 2-3 times higher. Given that customers limit the number of companies they consider in the initial consideration set, it makes sense to focus on being part of the initial set than trying to enter the race in the next stage. Take the example of traditional US automobile manufacturers versus ToyACTIVE EVALUATION ota. Traditionally, Information Gathering | Shopping Toyota focused on its brand strength and INITIAL product quality to MOMENT OF CONSIDERATION Loyalty PURCHASE Loop ensure inclusion in the SET initial consideration, while the US auto POST-PURCHASE EXPERIENCE makers used sales incentives and indealer programmes to win in the active Customer experience still matters: evaluation and moment-of-purchase Experiential touch points still significantly phases. The result was overwhelmingly in influence closure. Ultimately, the purchase favour of Toyota. Its superior product decision is based on the customer’s experiexperience generated such a strong positive ence and a view of whether the product or word-of-mouth that even disproportionate service meets a specific need. To deliver on dealer incentives from the US automakers this expectation, some large PC manufaccould not overcome the customer loyalty turers have created online communities to that Toyota enjoyed. Clearly, in the autospot new product ideas, help customers motive, as in other industries, both positive choose the right product and connect deeper with the brand. They also offer a word-of-mouth (superior product experirich set of online business services, includences), and negative word of mouth (proding support, planning and reporting. uct recalls), directly impact customer brand consideration.

Active recommendations: Loyalty is Greater reliance on independent critical, but companies should aim to sources such as word-of-mouth: ensure that customers actively recommend Scepticism around company or vendor their product to others. Recommendations promises, and the availability of, and access are key, especially for smaller companies to, alternate information means that deciwith less established brand names. A posi-

The Decision Journey

STRATEGY

tive recommendation from existing users can help a vendor be a part of the initial consideration set. More importantly, it can help in closing the sale. A negative recommendation is likely to eliminate the company from the consideration set, and if it spreads further, it can end up with catastrophic consequences, such as being eliminated from the market altogether.

Making It Happen As companies adopt more a customerdriven marketing approach—using tools such as customer recommendations—they need to manage different elements in the sales and marketing cycle, all the way from product or service development to advertising messaging and targeting. Aligning the organisation to understand the needs

and decision-making process of the customer is critical, so that the right messages can be provided in the right place, at the right time, which coupled with the right execution at critical points along the decision journey, will help customers make the right choices.

—By Laxman Narasimhan and Pankaj Sahni, McKinsey & Company, India

Technology 30 heads to one chip Desktop virtualisation can cut your cost of computing By virtualising desktops NComputing’s vSpace desktop virtuali-

sation package allows multiple users to access the processing power of one computer, thereby saving on hardware, electricity and maintenance costs. Recently, its co-founder and president, Young Song, was in India—his company’s second-largest market, with 200,000 ‘seats’. Inc. India’s Jacob Cherian caught up with him to check out Song’s proposition that businesses need just a 4GB RAM and a regular processor to allow 30 people to have a comfortable experience. Read on and judge for yourself how much sense desktop virtualisation makes for your business.

How can NComputing help mid-sized businesses?

We believe that our product can help SMEs cut costs dramatically, since they won’t have to spend money on buying processors unnecessarily. They just need to invest in monitors, keyboards and mice. This becomes one terminal once you connect it to our product. Therefore, you save immensely on the processor cost, which is usually the most expensive component. We find that there is too much processing power that is lying idle when there is a processor on every computer.

You talk in terms of ‘seats’. What’s a seat?

Our product allows up to 30 computers to be linked together with Ethernet. Each computer is not actually a computer, but what we like to call, a ‘dumb terminal’ or ‘seat’. It’s just a set of monitor, keyboard and mouse that connects to our unit, which in turn is connected to the central computer. All these 30 computers are using the processing power of basically one computer. The trouble with using one processor per computer is that you end up wasting the processing power when the computer is not in use. We find that some departments don’t require as much processing power as the others.

Which departments, in a company, can adopt your offering?

Soju Surprise NComputing’s Knowledge workers, such as Young Song has an offering that video producers and graphic could help you seriously cut costs artists, still require a dedicated smart terminal. Our solution makes sense for task-workers, such as accounts departments and warehouse managers. It also makes sense for roles that are largely browser-centric. We cannot cover the whole PC market, but we definitely want to convert the task-workers to our solution.

Isn’t the netbook a competitor to your solution?

Initially, we thought the same. Eventually, we realised that it is a complementary market. Even though we help cut costs dramatically, our product is limited by mobility. So the netbook is a cheaper alternative for task-workers who are in the field, while our solution is more cost-effective for indoor use.

How does the licensing of software affect your model?

In the past, there was some ambiguity in this regard. However, Microsoft and NComputing have now signed an alliance, where each user has to have a licensed copy. For educational institutions, Microsoft has aggressively priced its academic licence.

What about Linux?

We support Linux as well. In fact, our client-schools in Macedonia and Brazil are running entirely on Linux. There is no licensing issue there. We are basically hardware enablers, therefore, the choice of operating system is left to the client.

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Rooting for a hit Sharan Reddy (R) and Vignesh Ganesan feel their service can save money and effort for film festivals.

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PHOTOGRAPH BY GIREESH GV

STRATEGY

FOUNDERS:

Sharan Reddy (29) and Vignesh Ganesan (28)

Elevator Pitch Indee.tv hopes to make film festivals a simpler affair. Can US$250,000 script their success?

LOCATION:

San Francisco, USA / Chennai, India EMPLOYEES:

Three (including founders) FOUNDED:

2008

REVENUE MODEL:

10% of the total film submission fees collected by the festival 2009 REVENUE:

The Pitch “We provide an online, easy-to-use and secure system for sub-

mission and pre-screening of films during festivals. An average film festival receives 1,000 submissions, mostly on DVD. Multiple copies are sent to judges, who have to return these along with their feedback. The process of ranking, report generation and film selection requires even more effort.

Our system allows filmmakers to submit their work online; judges can access HD quality prints, and organisers can access reports and detailed analytics in real time. By using our service, film festivals can save between US$10,000 and US$100,000. Given that there are more than 3,000 film festivals globally, we see a large opportunity.” — As told to Jacob Cherian.

Nil

REVENUE PROJECTIONS:

2010: $50K 2011: $275K 2012: $3M 2013: $5M 2014: $7M

CUSTOMERS:

National Film Festival of Talented Youth, the largest youth film festival in the US FUNDING SOUGHT:

US$250,000

The Experts Weigh In EXPAND THE USER BASE

CULTURAL CONSTRAINTS

TWEAK THE SERVICE

This is a good starting point since they have found a niche to cater to. However, this market is quite small. So they will eventually have to expand their offerings. Their service is basically a workflow that allows HD video.

They have to see where else can it be applied. Peripherally, medical videos have the same problem. I am not recommending a diversification into such a different field, but they will have to start looking for other opportunities. There are two things that they have to deal with—convince people to try the service; and deal with competition, which may not be another start-up, but someone who can serve the same need in a different way.

The physicality of the current system can be inconvenient; therefore, this service makes sense. But if this means films will be judged on a computer screen, then it is a terrible idea.

No self-respecting festival will allow that to happen. Perhaps, this system can be used to filter the submitted films. Ninety-nine per cent of all submissions are filtered to make the final cut.

There are a lot of films being made for the small screen, such as documentaries and short films. This system will work for such a festival. Also, it is not clear how economically feasible their model is. Then there is the issue of IP. No one would want to give away their film.

The value proposition looks hard to sustain; there aren’t any strong differentiators. Another service provider could offer the same proposition, perhaps, at a lower price. For instance, Eventival.com is another vendor that offers film festival planning and project management, in addition to online film submissions.

YouTube has recently partnered with the Sundance Film Festival as well. I am not convinced this is a wealth creation business.

They could try providing more capabilities, such as enabling filmmakers of all types to speedily upload from wherever, in any format, on any device, and get instant feedback from interested communities.

ALOK MITTAL, General Partner, Canaan Partners

NEVILLE TULI, Founding Partner, Osians

SANJAY ANANDARAM, Founding Partner, JumpStartUp MARCH 2010

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Technology Pipe up, people!

Rounding up staff ideas for new ideas—ways to cut costs, increase revenue, and improve products and services. Often the most cost-effective source of ideas is right in front of you. “More companies are turning first to their employees to tap into those free ideas lying around in their heads,” says Jeffrey Phillips of OVO, an innovation consulting firm in North Carolina. But what do you do when employees are too shy to speak up?

That’s the predicament in which Mike Hall found himself. Hall, the CEO of Borrego Solar Systems, a California company that installs solar power systems, says many of his employees, especially the engineers, are introverted and reluctant to come forward with ideas. “Other people just didn’t see it as part of their jobs to Eureka Moment Using technology to track speak up,” says Hall. and rank ideas submitted by employees can ensure that every idea gets a fair shake.

Last year, Hall decided to organise an ideas. These programmes look and function internal contest he called the innovation like a cross between Facebook and Digg. challenge. All 50 of Borrego’s employees With Brightidea’s software, for example, each were encouraged to submit ideas about improving the business. employee has a profile that displays his or her ideas, the number of After everyone had a chance to review the submissions hosted on times he or she has commented on the ideas of others, and the company’s intranet, employees used SurveyMonkey, a free whether co-workers felt the ideas and comments were good ones. online survey tool, to vote for their favourite idea. The prize for the The program uses this information to tabulate scores for each winner: US$500 in cash. employee and then ranks the top idea generators. The rankings are The competition drew only a handful of suggestions, but nearly intended to create a spirit of competition that encourages particiall of Borrego’s employees participated in the voting process, pation. “Recognition from their peers is a powerful motivator for which encouraged Hall to stick with it. He now holds the competi- many people,” says Murat Philippe, a consultant with HR Solutions quarterly and receives more than a dozen submissions per tions, a workplace consulting firm in Chicago. contest. Several of the winning ideas have already been put into No matter which system you use, you had better be prepared to place, such as using software to help the sales and engineering turn employees’ ideas into action. “There’s nothing worse for the teams collaborate. Once employees began to see their suggestions morale than when employees feel like their ideas went nowhere,” being put into action, says Hall, participation increased. “We knew says Larry Bennett, a professor of entrepreneurship at the Whitwe had people who might be shy about submitting ideas,” he says. man School of Management at Syracuse University. Companies “We gave them a forum that encourages everyone to share.” need to develop a process to bring those ideas to life. At Borrego, With a standard suggestion box, employee ideas sent to maneach idea that Hall wants to use gets assigned to an executive sponagement often seem to disappear into a black hole. Using technolsor. Employees can track the progress on the company’s intranet. ogy to track and rank each submission can help ensure that every But Hall makes it clear to employees that the winning idea idea gets a fair shake. In the past few years, several companies, won’t always be the first one implemented. “We’ve been able to including Imaginatik, Spigit and Brightidea, have launched appligenerate a lot of great ideas by tapping everyone’s brains,” he says. cations designed for collecting, discussing and ranking employee —Darren Dahl

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PHOTO BY PHOTOS.COM

Business owners are always on the hunt

STRATEGY

Sales & Marketing Hot-air balloon service Can it soar into the business landscape?

Offering a hot-air balloon safaris in Rajasthan, Sky Waltz takes riders high up into the Jaipur sky, above the ramparts of the historic Amer fort. E-Factor, the company which runs this service, also offers services in Ranthambore and Udaipur—and sometimes, in Manesar, on the outskirts of Delhi. At a cost of Rs 9,000 per head, consumers can book this service through a variety of channels: travel agents, online bookings, website of Rajasthan Tourism, concierges in select hotels in the state, or at the Amer fort. Foreign tourists have to shell out more for the experience. Larger groups get cheaper rates. The company, which got its operator’s licence in 2008, owns six balloons. Samit Garg, its founder, admits it is yet to make money. With an initial investment of Rs 8 crore, it has already found some wind beneath its wings. Not happy with 300 passengers a month, Sky Waltz is gunning for a thousand users a month by end of the year. But how should it find those consumers? We asked four entrepreneurs to weigh in. — Jacob Cherian

How would you sell that?

PITCH NO. 3: Enhance the experience for couples Alwin Agnel, founder of Pagalguy. com, one of India’s largest online communities for B-school aspirants.

They should work on enhancing the experience. What if they offered breakfast over Ranthambore? It becomes like a private jet. Compared to individuals, couples would buy this service because it’s so unique—and would talk about the experience for years to their friends and family, which will serve as word-of-mouth marketing.

PHOTO BY PHOTOS.COM

PITCH NO. 1: Try a photo exhibition Girish Bobby Talwar, co-founder of Only Much Louder, a company managing non-Bollywood musicians and their events.

Sky Waltz should leverage the pretty locations they have chosen for their service. Say, a photo exhibition—think 10X10 foot images placed at key locations. The pictures should show things that can only be seen from these balloons. This will give viewers a sense of scale and create a media buzz. They should focus on NRIs and foreign tourists. So they should have a presence in airline magazines and international press. They could also donate a part of their earnings towards maintaining that particular location, like the Ranthambore sanctuary or a fort at Jaipur. This too, will create buzz and generate goodwill.

PITCH NO. 2: Package it as a gift Bonito Chhabria, owner and founder of car interiors company DC Trends, a company spun off from DC Design.

He should not put so much effort in travel agents. Make it a lifestyle gift.

A ride up in the sky would be a great gift for such occasions. People are buying helicopter rides, which cost over Rs 40,000. The balloons can be used as a marketing tool as well, if parked in a hightraffic area.

Taking Flight Could a photo exhibition click?

PITCH NO. 4: Film and on-ground Aditya Kilachand, co-founder, Tetsuma, a Japanese restaurant and the nightclub Privé in Mumbai.

Special occasions, like Valentine’s Day or Mother’s Day, can be packaged around this experience. The service can also be advertised through networking sites, the Jaipur Festival, advertisements of Rajasthan Tourism, and better still, through placement in films and other visual promotions.

FEEDBACK ON THE FEEDBACK: The photo exhibition idea is brilliant. It won’t catapult sales, but it will create buzz. We already give part of our proceedings to Ranthambore. We were featured in two airline magazines a year ago, but people have forgotten that. There were a few takers for our Romancing the Sky package—with champagne and breakfast—at Rs 45,000. Travel agents generate 65% of our business and therefore, our focus on them is justified. We give a discount to anyone asking for bulk seats, like we did for Tupperware, Google and GM. Our real challenge is to create a market because not many people know of hot-air ballooning.

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Speak up Arvind Rao encourages a culture of debate among his employees.

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THE WAY I WORK | Arvind Rao, OnMobile

“I love going in front of the customer, presenting what we have and closing a deal.”

For a person who has redefined the telecom value-added services sector, Arvind Rao sure is a strange fit. He dislikes checking mails on smartphones, gets irritated with people who fiddle with their Blackberrys at meetings and switches off his cell at night. “The day you start the day by answering emails on your phone, you are lost,” believes this IIT alumnus, who along with Chandramouli Janakiraman, has built a Rs 400-crore company in less than a decade. OnMobile went public within four years of its inception and has grown at nearly 50% year-on-year since then. It has also created at least a hundred millionaires from among its staff of 1,200 through its unique stock options programme. Rao likes to do things differently.

He is opposed to traditional office hierarchy, where people pull rank to get work done, and believes everyone has to prove his worth everyday. On any given day, you might find him in a pair of jeans and t-shirt, encouraging employees to argue an idea out or urging them to “move the needle” and make an impact on the client’s profits.

AS TOLD TO JACOB CHERIAN | PHOTOGRAPH BY MEXY XAVIER

I’m constantly told that I’m the worst-dressed person in the world, to which my usual retort

is: “The way you dress has little impact on your performance.” I typically wear a combination of cargo pants and shirt, or a t-shirt, to work. I remember once closing a deal in jeans and a t-shirt. The guy seemed distracted the whole time. Just before he signed the contract, he looked up and asked confusedly: “One of you is the CEO. Who is it?” My colleagues were MARCH 2010

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dressed in suits, while I was in casuals. Yet, I was talking the most. I firmly believe the way I dress has no impact on my business. The fact remains that our deal closure rate is more than 95%. And all our customers have given us repeat business.

I live in a rented apartment that opens out to the sea. My bedroom has huge French windows and faces the east. At night, I switch off my laptop and phone, and leave the windows wide open. When the sun peeks over the horizon, I snap awake. If sunlight doesn’t wake me up, my golden retriever does. Oscar always knows when it’s time for his morning walk. I don’t use an alarm clock. That’s a discipline that my grandfather, an IAS officer and a Sanskrit scholar, inculcated in me as a child.

After my walk, I have my first cup of coffee. I like the beans freshly crushed in a French-press machine — I have got three of them in the office as well. My breakfast consists of oatmeal and fruit, and a cup of cold coffee. Then I get started on my mails. Usually, I respond to those marked “urgent”. I go through my emails in detail only once I get to work.

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y office at Nariman Point is a short ride from home—usually in my 7-series BMW. It has a sea view on two sides. Five of us sit in this office, mostly, people who interact with the financial community, or look after the books.

About 30 kms north, in Andheri, sit another 80 people who manage the portal and act as a support structure for our team in Paris. There are more developers in Bangalore and Delhi.

I usually talk to my top management everyday. I don’t like checking emails on my handset. I’m an email junkie all right, but definitely not a Blackberry person. I strongly believe that the day you start answering emails on your phone, you are lost. It is the last bastion of privacy. I see people fiddling with their phones during meetings and it annoys me. It’s a way of disrespecting the people you are with. I did break my rule once when I used someone’s phone to check my mail on vacation. I don’t think people need to be plugged to their mail boxes constantly, even at the start-up level. If it’s really that important, people will call you.

In my order of priority customers come first, then investors and shareholders, and then, employees. I believe these people are the live action and I owe them all something. After them, come prospective customers, potential employees, analysts and journalists. The real challenge is to decide what needs attention first. In fact, prioritising products and markets is crucial. Any idea for a new product is discussed for its merit, the size of the opportunity and time required to take it to market. Once launched, a product has to touch a million users in three months. If it doesn’t, we scrap it and move on. We like 66

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“If an attendee three meetings in

not to attend

to make sure that we do our homework well. People often come up with an idea and get swayed by whims. Not us. My gut tells me how much homework is enough and if we are ready to execute. Then we just go all out.

Hierarchy has no place in our office. Our top management knows they cannot pull rank. No debate here ever ends on the basis of someone’s rank. People have to stand their ground and talk it through. We all need to prove ourselves every day. At the same time, I believe that senior people deserve respect because of their experience. Just as junior colleagues have the right to defend their ideas.

But once a decision has been taken by a senior, everyone should toe the line.

I encourage a culture of debate. There is something that you can learn from employees at every rung of the organisation. I learnt this at McKinsey. In the US, people are not afraid to argue an idea out.

But that usually does not happen in India. People hold back, even if they have a good idea. To prevent that from happening, if an attendee does not speak up at three meetings in a row, I ask them not to attend the next one.

My productivity increases on long-haul flights. My brain gets charged up and starts shooting ideas. I always exit these flights with a large sheet of paper where I have jotted down fleeting ideas. With the team, I am most productive during our brainstorming sessions.

In the earlier days of OnMobile, the meetings were largely about planning new products. Increasingly, we are talking about addressing new markets. Should we get into the Internet space? Should we push into China yet? Should we be a brand and drop white-labelling?

I have not dealt with internal policy in years. I don’t like it, maybe because I’m not good at it. My role largely involves customer relationships, negotiations, managing the finances, and working with bankers. I love to get out and face the customer, presenting what we have and closing a deal. With new-age products like ours, this cannot be done over the phone or video-conferencing or through a representative. In a digital company, you are doing things that have not been done before. The client needs to see you, meet you and trust you to deliver on it.

I am paranoid about competition. So, we constantly find ways to serve our clients better. For example, one of our telecom clients faced

THE WAY I WORK

does not speak up at a row, I ask them

the next one”

a huge churn in users—only 50 out of 100 people who bought into our service renewed it. So we put in an algorithm to understand their reasons for dropping out. We learnt how to retain users, and reduced the number of drop-outs without even informing the client about it.

We thought of it as micro-tweaking our product. However, we brought it up when it was time to renew the contract. It gave us greater bargaining power.

My stint with McKinsey helped shape the philosophy I adopt at work. It is an expensive consultancy—and deservedly so. Its premium is justified because it ensures a significant impact on client profits. If you will move your client’s profits by only 1-2%, then don’t bother. You have to be able to move it by 10-20%. I call this “moving the needle”. I tell my colleagues every day that if they cannot make a significant enough impact on the people they meet and work with, they shouldn’t bother.

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n a personal level, someone who has had a significant impact on my life is my late wife—she even wrote the essay that got me into Wharton. We were friends from a young age, and got married when we were 23. She passed away four years ago. Suddenly the responsibility at a personal level was clearly a lot less. And before I knew it, I was spending long hours at work. Now, I have started to keep a check on that and block out entire days to go sailing. On my 50th birthday, which was shortly after we went public, I gifted myself a Jeanneau 54 DS—a yacht now docked at the Mumbai harbour. It revives my memories of college days at Madison. I sail for at least eight days in a month.

That is a large part of my personal life. I don’t have any children of my own, but I am very fond of a colleague’s five-year-old son. He is one of my favourite people in the world and is on my speed dial.

In fact, I also store miniature cars in my office for him.

As a child, I lived in a joint family with my parents, so I have plenty

Moving the needle Rao believes that his services need to make a significant impact on his client’s profits.

of cousins and nephews and nieces who I am close to. I have even opened an education fund for the young members of the family. It is for those who get through top institutes in their chosen field, be it music or engineering. The fund ensures they get that education, even if their parents cannot afford it. In a way, the fund is there to encourage their ambition and drive them towards those top institutes.

I strongly believe in justice, both internal and external. We have a reward system consisting of variable pay and stock options for our employees. For some of our senior people here, the value of stock options is more than 20x of everything that they have earned in the past four or five years. A while ago, I got a call from one of our earliest employees, a developer, who is now 27. He had just bought himself a BMW and called to express his gratitude. Another employee bought her first house before she hit 30. A deserving employee needs to be rewarded appropriately.

As a company, I want to be treated in the same way. We often come across clients who demand an unreasonable price or, exclusive rights. This makes me sad. Not angry, but sad. That’s because I take pride in what we do; if we deliver a high-value product, we want to be paid accordingly. This is when I politely say “sorry” and walk away.

I remember a customer who chose to go with one our competitors, after being turned down by us. A year later, they sought us out again.

These instances make me feel glad that we held our ground.

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I WISH I KNEW THEN...

Rajesh Rao, founder, Dhruva Interactive

Back in 1997, when he set up India’s first game-design company, little did Rajesh Rao know that he would emerge as a poster child for a new generation of entrepreneurs—who would compete and collaborate with the best in the world. But then, he did not know many things, such as keeping an eye on the quicksand of mediocrity, channelling his own enthusiasm, giving research its due respect, or adjusting his metrics of success to the measurements of others.

When I started my gaming company, I had no doubt that I was entering a “hot” sector. There was plenty of quantitative research to back that up. But no qualitative inputs. As a result, when we met potential clients, we would hear things such as, “You folks in India do not have the sensibilities to design video games, because gaming is not a big part of your culture”. Now, that was not the kind of stuff you could find in any analyst’s report.

But I was 25, and itching to follow my convictions. I had no work experience; and was young, hot-headed, naïve and extremely focussed on being successful. It’s only when the years pass by that you realise that things do not quite pan out the way you had visualised them.

In 2005, someone happened to ask me, “Hey Rajesh, your company is now eight years old, but your business is still under a million dollars a year. Aren’t you just becoming another mediocre entrepreneur?” That really shook me up.

If I could travel back in time, I would probably put more meat behind my conviction. If someone asked me why I believed in my idea, I would say more than just “because it’s a hot sector to be in”. Back then, I got annoyed by questions on our ROI and scope of growth. When you are passionate about something, you tend to be blind to some

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important as well; they help you achieve the longterm milestones.

I wish I had shared my excitement with employees. The experience makes you feel more excited as an entrepreneur. The more democratised your team is, the better. In the early years, I had this veto-like power. I know now that the lesser you use it, the better.

I realise now that execution is not as much fun as planning. I should have spaced out my energy accordingly. I would invest a lot of energy into planning, but while executing those plans, I would struggle to get through. Some of Time travel Rajesh Rao wishes he had delegated sooner and democratised his team more. the tasks can be so mundane that you run the risk of losing that spirit. So, it’s obvious questions, including the possibility important to let your enthusiasm thrive. that you might be wrong.

I recently hired an assistant; I wish I had I soon realised that bankers and investors hired him earlier. Given how this small didn’t share my enthusiasm. I had to learn to change has made me so productive, I wish I evaluate myself with their metrics—and not had learnt the art of delegation, at the termy own. From a business standpoint, we tiary or second level, a bit sooner. Of course, should have stuck with multimedia longer, looking back now, all this seems so obvibefore taking the plunge into gaming. ous.—As told to Jacob Cherian.

As you climb up the business ladder, you realise that it is not enough to have longterm goals. Short- and mid-term goals are