Vol V Iss II1 enspace

FRO

M T

HE

ED

ITO

R’S

DES

K

Its pronounced On-space, not En-space as it is written. English can be quite deceptive.

Deception, as a tool, has also been used in the corporate world for various reasons. This issue’s cover story is nothing but one of the greatest deceptions, carefully planned and brilliantly executed, by the tobacco industry. From an entrepreneurial perspective, this actually shows that out-of-the-box marketing and tactful PR strategies can have a huge impact on your customers and you don’t always need explicit advertisements to do your job.

Entrepreneurship is the last thing you might expect in Asia’s Largest Slum, Dharavi. On the contrary, we have stories of people like Mr. Kadam whose tannery exports leather belts to WAL-MART among many other rags-to-riches stories. The spirit of entrepreneurship is alive and thriving with extreme poverty and no state regulation forcing them to convert day-to-day activities into a business.

Apart from that, we also caught up with Kashyap Dalal, founder of inkfruit.com, and an IIT-B alumnus who chose the entrepreneurial path. His company – Inkfruit.com, gives upcoming designers a chance to showcase their designs and has been quite successful for the past few years.

We also tried to remove a lot of myths and misconceptions regarding stock market. The million dollar web page narrated the story of how a student desperate to pay his college fees went on to become a millionaire.

With E-Summit coming up on 6th February, you will have the opportunity to talk to big corporates and network with people having similar interests. This will be a once in a lifetime opportunity for you to listen to their experiences and learn from their mistakes. Hope to see you there!

The Editor

IN T

HIS

ISSU

EIn Conversation with Kashyap Dalal P3 A talk with an IIT-B Alumnus over why he chose to refuse all the “job” offers and took the entrepreneurial path.

Pixels in Business P5 He started the website to pay the tuition fees of his college. At the end, he did that and was a millionaire too.

Smoke and Mirrors P6 Marketing Strategies and product placement: Cigarette manufacturers used every trick in the book to promote cigarettes.

In Business: A talk with V C Karthic P10 An interview with the entrepreneur about his company and the difficulties he faced while starting-up.

Dharavi: Capitalism at its best and worst P11 Watch how entrepreneurs bloom at the last place you might imagine them to.

Demystifying the stock market P13 Myths and misconceptions- Stock Market unveiled.

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EnSpace(E): How did the idea of Ink Fruit grow in your mind? Kashyap Dalal(KD): Ink Fruit started with the thought of creating a brand in the creative merchandise space. The vision was that the product range should be very creative and present consumers with amazing designs, diversity and innovative products. When we started working on this, we realized that the vision was just not achievable by having the conventional model – of having an in house team of artists working on creations. Any team of artists, however great they may be, would definitely get repetitive and not be able to build the kind of diversity and design variation that was needed to keep the collection alive!

It’s here when the idea to make the concept crowd sourced came to us. We decided to pool in the creativity of the people – thousands of artists out there who could showcase their portfolios at our site and

help us create the most innovative and diverse portfolio of products ever. That’s broadly what Ink Fruit is all about – people helping us create crazy stuff for people!

E: Were you inspired a lot by “Atlas

shrugged” aesthetically speaking? KD: I really don’t know about that. I read “Atlas Shrugged” as a student at IIT, in my second year from what I recall. It is a book that surely leaves its mark and some of its ideas did influence me then. However starting a company and growing it to scale is a sum total of many passions and skills put together. It’s difficult to put down what “Atlas Shrugged” inspired me on.

E: What made you choose entrepreneur-ship over many other lucrative offers you

might have got after passing out of IIM? KD: This would sound weird to many of you – but while at IIT, this thought came to my mind. The ultimate challenge is either setting up a successful enterprise or cracking something substantial in pure research. I was not interested in other career options. I don’t want to suggest that I hate other career paths and look down upon them. But personally I was driven by this thought – I felt a thrill in creating something new – either on the business front or on the research front. So it was during my stay at IIT where I decided that I wanted to start-up at some point in time. My decision to go to an IIM and do my B-School and opting for HLL, which offers the best sales experience, were somewhere driven by the thought of starting up at some later stage in life.

E: What were the initial difficulties you faced when starting Ink Fruit? How did you overcome them? KD: One was getting a team – mainly other partners who would want to grow this business. Luckily here I met Navneet, a friend and batchmate, who was also looking at doing something exciting and we’ve been working together on this ever since.

Second was getting some seed capital to start things moving. We initially had to scrape up some funds ourselves to launch the initial website, products etc. after which some seniors from IIT pitched in and later on we got a more organized round of funding from prominent angel investors.

Taking the path less travelled:

By Vishesh Parnerkar

After passing out of IIM-L and with an IIT-B degree in his resume, Kashyap Dalal chose to reject all the “job” offers and make it big as an entrepreneur. He co-founded Inkfruit.com during December 2007, and currently holds the position of CEO in his company.

Most of the high points of my stay at IIT – I won’t be able to share here, which makes me feel I did have a

good time for sure.

in conversation with Kashyap Dalal

Then there was finding a vendor, finding the initial customers, scaling up operations, managing quality issues and so on. Starting a company is a series of problems to solve – especially in our kind of business, where it’s more a business innovation and branded product sales. It has all the functions from production, operations, logistics, quality control, sales, marketing, customer care and so on. Each function had its own challenge and finance was always a challenge overlaying everything else.

E: How difficult is it to garner capital for a startup? KD: It’s mixed actually. Once you get it, it seems too easy. But when you are looking for it, it seems too tough. What most investors want is to see action and stubbornness from the founder which shows that somehow in some way they will pull it off.

E: What makes Ink Fruit different from other ventures in the same field? KD: Ink Fruit is different primarily because of its user community. We have a lot of participation happening from some truly amazing artists. This ensures strong engagement on the site and amazing designs for customers to choose from. This core is strengthened further by our exten-sive retail tie-ups. Ink Fruit now supplies

to Lifestyle, Central, Planet M, Hypercity, Brand Factory, Mega mart and many other retail chains.

E: Now that Ink Fruit is successful, How do you see Ink Fruit 5 years from now? KD: 5 years from now, we see Ink Fruit as a household name – where every person in the age bracket of 15 to 40 would surely know about Ink Fruit and its model. I see Ink Fruit being present across all major retail formats, with prominent visibility and display. I also see Ink Fruit offering products across merchandise groups – apparel, bags, accessories, footwear, home

décor and possibly others.Most importantly, Ink Fruit would be known for being the largest design democ-racy in the world, attracting the best artists

and creating distinguished products.

E: How was your life at IIT-B? What is your opinion of entrepreneurship in India, especially in the IITs? KD: I entered IIT as a studious boy leaving home for the first time. I was in Hostel-3 during my first year and then moved to Hostel-6 for the remaining 3 years. My stay has been memorable. I’ve made some of my best friends at IIT and had a great time. Most of the high points of my stay at IIT – I won’t be able to share here, which makes me feel I did have a good time for sure.

Entrepreneurship in IITs and in India… hmm... It’s difficult to make any generic observations. If we look at it by sector, internet businesses are easiest to enter into by entrepreneurs. Real product related businesses are much more difficult as there is always a minimum scale needed to take off. Similarly, service businesses (say IT

development) are comparatively easier to get into as the revenue model is project based whereas product businesses (say some software) are more difficult.

The good thing is that day by day, the infrastructure available for entrepreneurs is improving. SINE & E-Cell at IITB, TIE, NEN etc. are organizations which keep having networking events and seminars for budding entrepreneurs and existing entrepreneurs.

To those of you who want to start up, the first step should be to find out what exactly

you want to do. My sense is that business ideas on campus are difficult to come by. You really need some work experience to hit upon feasible business ideas. However,

technology innovations or internet innova-tions are possible on campus itself. In either case – the first thing you need is an idea you are passionate about.

Once you have this idea, I think you should go straight to some person who has had startup experience. Anyone who has been an entrepreneur will be able to speed up things for you – guiding you with frank feedback on the feasibility of the idea, punching holes in it and then suggesting next steps – perhaps even helping out with seed funding.

E: How do you think the activities conducted by E-Cell like E-Garage can help the budding entrepreneurs? KD: I think the biggest benefit E-garage can offer is to let budding entrepreneurs interact with people who’ve done it and experienced the challenges of starting up. Leave the rest up to the person who wants to startup. My experience is that people who want to startup and are serious about it, will get what they want once connected to the right people.

E: Any ideas on how to make the environment more conducive towards entrepreneurship? KD: The main interventions needed are from the government’s side. Tax relax-ations and initial funding will surely help startups. Company registration and operational paperwork needs to be easier. These are normal things that exist in other countries – measured as the cost of doing business in the country and where India fares badly.

At your end, the best thing to do is to have a forum where budding entrepreneurs can get in touch with entrepreneurs who have gone through the initial setup phase. The best thing to focus on is to minimize the learning curve as much as possible.

Starting a company is a series of problems to solve – especially in our kind of business, where it’s more a

business innovation and branded product sales.

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Vishesh Parnerkar is a third year Civil Engineering student.

By Raja Vinay Chandra

Around the same time the ‘the’ was dropped from thefacebook.com, there was another clean and neat idea that popped into a young entrepreneur’s head. Literally the million dollar idea. Nothing more, nothing less - www.milliondollarhomepage.com was launched on 26th August, 2005, borne out of a 20 minutes brainstorming session by then 21 yr Old Alex Tew, as he was looking for ways to pay his tuition fees for a university he had secured admission into.

The concept was simple, a masterpiece of pure advertising. The homepage consisted of a million pixels (small dots that make up your screen) arranged in a 1000x1000 pixel grid. And the idea was to sell these pixels a dollar each as advertising space and make your million dollars. The minimum purchase was a 100 pixel block, costing $100, big enough for the advertiser to carry a small image or a logo and display a small message if hover your cursor over image. The pixels would hyperlink to the adver-tiser’s site. The site was intended to run for five years, but if runs forever, people who bought those pixels would own a piece of internet history.

Pixel Sales and Marketing

The first sale, three days after the launch, was made by a friend of Tew’s who bought the first 400 pixels (a 20x20 block) for his online music website. At the end of two weeks, 4,700 pixels were sold mostly to Tew’s family and friends. With $1000 dollars now in his pocket, Tew sent out a press release that was picked up by BBC. It acted as a catalyst to the already strong word of mouth campaign and the snow-balling had started. The Million Dollar Homepage was featured in articles on BBC online, The Daily Telegraph and a bunch or so of other websites. The website began to receive worldwide coverage in the United States (Alex is Brit, the Dollar trick worked) and featured in newspapers in Germany, New Zealand and even China. Soon, the website was an internet sensation and as on 17th October, the site had received 100, 000 unique visitors. By new year’s eve, the site reported that it was receiving 25,000 unique hits every hour and had an Alexa Rank of 127. 999,000 of the 1,000,000 pixels had already been sold.

On January 1st, 2006 Tew decided to

auction the last 1000 pixels on ebay instead of launching a second million dollar homepage, thus preserving “the integrity and degree of exclusivity intrinsic to the million-pixel concept”. As a matter of fact, 2milliondollarhomepage.com, another one of those mimic spin-offs has hardly any pixels filled. After a ten day auction involving a lot of hoax bids and retracted bidders, the final 10 blocks were picked up for $38,100 by a site called Milliondollarweightloss.com.

After costs, taxes and a donation to a charity, Tew’s net income was around $650,000 -- $700,000 from total sales of $1, 037, 100 in five months. With that much in his pocket, Alex now paid off his univer-sity fee, purchased a Toyota Mini, went on a Tokyo trip, and finally bought a pair of expensive socks—pixelled design of course. Tew had taken a celebrity status and in words of The Wall Street Journal “had painted an interesting picture of online entrepreneurship”.

The million dollar homepage worked the way it did because of its novelty and freshness. The publicity made use of viral marketing and Alex’s enchanted story of an ‘honest’ boy trying to make money to pay off his university fees and buy ‘a pair of socks’ caught the media’s attention. None of the other spin-offs made any money. Advertiser’s were largely unhappy even with Tew’s own version 2.0 Pixelloto (where pixels were sold at $2 each, and another million was given away to a random guy who clicked on one of the ads).

What Next?

After dropping out of the university in less than a year, rejecting a truckload of job offers, and a series of entrepreneurial flops on the web – Tew came back to what made him a millionaire and launched onemillionpeople.com(check it out) around October this year. Well, lets wait and watch.

Raja Vinay Chandra is a second year Engi-neering Physics student.

Not just another million dollar idea, It was the Million Dollar idea.

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How do you sell a product which has been scientifically proven to kill people? In 1952, Cigarette manufacturers were faced with this grave question when Reader’s Digest came out with its ground-breaking article “Cancer by the Carton” detailing the dangers of smoking. Similar reports began appearing in other periodicals, and the smoking public began to take notice. The news was out – “Cigarettes cause cancer”. Companies were in a fix, and cigarette sales declined for the first time in 20 years.

Let’s look at history of cigarette smoking. By the early 20th century, with the growth in cigarette smoking, articles addressing the health effects of smoking began to appear in scientific and medical journals. In 1930, researchers in Cologne, Germany, made a statistical correlation between cancer and smoking. Eight years later, Dr. Raymond Pearl of Johns Hopkins University reported that smokers do not live as long as non-smokers. By 1944, the American Cancer Society began to warn about possible ill effects of smoking, although it admitted that “no definite evidence exists” linking smoking and lung cancer.

A statistical correlation between smoking and cancer had been demonstrated; but no causal relationship had been shown. More importantly, the general public knew little of the growing body of statistics.

After the Reader’s Digest article came out and public demanded an official state-ment, the US tobacco industry retaliated by giving out an advertisement titled “A frank

statement to cigarette smokers” containing statements like “We believe the products we make are not injurious to health” and “We always have and always will cooper-ate closely with those whose task it is to safeguard public health”. In 1964, it was officially announced that smoking causes cancer and laws were passed making it

compulsory for cigarette manufacturers to carry a health warning on all cigarette packs.

Since then, Cigarette companies have been coming out with innovative marketing techniques to lure the public into smoking. Here is a look at some of cigarette manufac-turer’s marketing stunts over the last half century to mislead the public.

In the 50’s manufacturers started adding filter tips to their cigarettes to remove tar and nicotine. “Light” cigarettes started being introduced. This is a heads up for people who smoke light cigarettes – the US government’s National Cancer Institute says that these cigarettes are not healthier than regular cigarettes.

Lorillard, USA’s oldest cigarette manufac-turing company, in 1952 held a press confer-

ence where they released their Kent brand of cigarettes which had a “micronite” filter. This filter apparently “offered the greatest health protection in cigarette history”. Its secret being – asbestos! RJ Reynolds released a range of cigarettes in 1988 known as “Premier” which were purported to be smoke free.

Tobacco companies have often made payments to movie stars for using cigarettes in movies. It is a documented fact that Sylvester Stallone had been paid a total of $500,000 to use Brown and Williamson cigarettes in many of his movies. The movie Superman II was littered with Marlboro

By Darsh Maheshwari

There is a scene in the movie where Superman throws a truck which had “Marlboro” written on its

side, across a street. The truck was produced only for the movie and does not exist in real life.

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The CigaretteCigarettes are the single-most traded item on the planet, with approximately 1 trillion being sold from country to country each year. At a global take of more than $400 billion, it’s one of the world’s largest industries.

In 1970, President Nixon signed the law that placed warning labels on cigarettes and banned television advertisements for cigarettes. The last date that ciga-rette ads were permitted on TV was extended by a day, from December 31, 1970 to January 1, 1971 to allow the television networks one last cash windfall from cigarette advertising in the New Year’s Day football games.

Smoking is a well known irritant to the human body caus-ing many lives threatening disease but it is a costly pleasure as well. Cigarette smoking costs about $400 billion each year.

Contrary to popular social belief, it is NOT illegal to smoke tobacco products at any age. Parents are within the law to allow minors to smoke, and minors are within the law to smoke tobacco products freely. However, the SALE of tobacco products is highly regulated with legal legislation.

Three men who appeared in Marlboro advertisements - Wayne McLaren, David McLean and Dick Hammer - all died of lung cancer, thus earning Marlboro cigarettes, specifically Marlboro Reds, the nickname “Cowboy killers”

Sugar approximates to roughly 20% of a ciga-rette, and many diabetics are unaware of this secret sugar intake. Also, the effect of burning sugar is unknown.

Most people who

smoke, begin smok-ing before they are 25 years

old. Worldwide observations sug-gest that people are stating to smoke at a

much younger age. World Health Organization studies reveal that the majority of smokers in affluent

countries; begin in their teens.

The American brands Marlboro, Kool, Camel and Kent own roughly 70% of the global cigarette market.

In India taxes on cigarettes are based on length, so if tax is higher for 36 mm cigarettes, companies sell 35 mm to save on tax.

Innovative Advertising Strategy :In the 1920’s, the makers of Lucky Strike Cigarettes wanted to appeal to women who were watching their weight by using the slogan “Reach for a Lucky instead of a Sweet”.

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the story of

Tobacco production in thousands of metric tonnes

In the 1600s, several countries outlawed tobacco use. In Turkey during that period, tobacco users could be tortured or killed. In China, a person caught with tobacco might be beheaded. In Russia, tobacco users who were caught a second time were killed.

In 1952, Reader’s Digest ran the ground-breaking article which described the dangers of smoking,

detailed the risks of Lung Cancer and heart diseases, which led to similar reports in other magazines. The fallout from the Reader’s Digest article resulted in the first decline in cigarette sales in more than 20 years.

Big Tobacco responded by releasing an adver-tisement into more

than 400 newspapers

titled “A Frank state-ment to cigarette smokers”

that was carefully worded to coun-teract early published studies indicating

cigarettes cause disease, and to lull the public into belief that the tobacco industry was doing some-

thing about the problem. It was later merged into Tobacco Inc. and was dissolved in 1998 as a part of Tobacco Masters Settlement Agreement.

By 1954, the major U.S. tobacco companies had formed the Tobacco Industry Research Council to counter the growing health concerns. With counsel from TIRC, tobacco companies began mass-marketing filtered cigarettes and low-tar formulations that promised a “healthier” smoke. The public responded, and soon sales were booming again.

In the 1950s, manufacturers began adding filter tips to

cigarettes to remove some of the tar and nicotine as they were smoked. But it was

disputed whether they actually had any effect, and it was more thought of a marketing strategy to increase cigarette sales.

A nationwide ban on smoking at the workplace and in restaurants, hotels, pubs, public transport (buses, trains and metros), airports and railway stations, educational institu-tions, cafes, theatres and other public places came into effect from 2 October 2008.

Advertising is banned in any form so a new company is at a serious disadvantage in the form of not able to market itself, so in the beginning the growth will be very low as it has to depend on only word of mouth customer growth. However the silver lining is that it does not have to spend on adver-tisement.

According to the World Health Organization, approximately 25% of cigarettes sold around the world are smuggled.

The Roller Coaster Ride of the Tobacco Industry

Vol V Iss II 8enspace

Contributed by Ayush Agarwal of MEMS Department and Rahul Chhawchharia of Chemical Engg. Department.

product placements. In fifty years of comic book appearances, Lois Lane had never smoked, but in the movie she frequently lit up. For a payment of $42,000 Phillip Morris purchased 22 exposures of the Marlboro logo in the movie. There is a scene in the movie where Superman throws a truck which had “Marlboro” written on its side, across a street. The truck was produced only for the movie and does not exist in real life.

Cigarettes have always had patronage from big brands – there used to exist Harley Davidson cigarettes, Harrods (the London department store) cigarettes, and till 2000 Benson and Hedge’s cigarettes used to have the British royal family’s seal of approval.

Tactics Of The Tobacco Industry In India

India is a potential target for tobacco giants because of its billion strong population and the high number of non-smokers. ITC (a big recruiter from our campus, who were till recently known as the Indian Tobacco Company) currently has 65% of the Indian market share. Before being banned in 2003, tobacco advertising contributed Rs. 300-400 crore to the Indian advertising industry. They used various media to push their products by sponsoring major sports and cultural events. Wills were the sponsor of the Indian cricket team for many years and also the chief sponsor of the 1996 cricket world cup. Now that direct tobacco advertising has been banned, the tobacco industry is increasingly investing in and advertising in non-cigarette products by the same brand name. Bravery awards, movie awards have been conducted by several tobacco companies, indirectly increasing the profile of their product. Godfrey Phillips are the manufacturers of Red & White and Four Square cigarettes.

To grow even bigger, big tobacco has modified its product packaging to suit the

unique nature of its Indian customers. An example of this is Godfrey Phillip’s intro-duction of a smaller cigarette in the form of the Marlboro Gold Advance compact, which costs ` 3.50 and is shorter than the ` 5.00 regular Gold Advance.

There is no denying that the story of the tobacco industry has featured some of the most elaborate public-image makeovers and marketing campaigns in the history of business. They continue to do that till today, though laws regarding advertisement and smoking in films have become more strict. On a different note, Entrepreneurs can learn a lot from these tactics, consid-ering that these strategies have become textbook examples and have been studied extensively. Every industry has its unique problems and business has to adapt to the changing industry landscape. Considering all the multiple problems that the tobacco industry faces, in the light of changing consumer preferences as well as strict rules and regulations that are unfavorable to the growth prospects of cigarette companies, they still continue to use different tricks to mislead the public.

The students of IIT-Bombay were given a unique opportunity to pitch their business ideas and get valuable feedback from experienced entrepreneurs and professors of IIT-B. Pitch It!, a business idea pitching competition conducted by E-Cell, IIT-B saw a healthy participation from the institute and a lot of interesting ideas were pitched with the judges and mentors dissecting each one of them to look for loopholes.The participants have been each allotted a mentor from their sector of interest and are now working to refine their idea.

Lets look at what some of the participants have to say about Pitch it!

Darsh Maheshwari is a third year MEMS student.

“The assurance that I had an idea that was worth trying is a huge thing, and that is what I got from Pitch it! . I was not aware what my next step should be and Pitch it! helped me get the direction and also the confidence to move ahead. It made me aware of some challenges that would be on my way”. - Nitika Kariwala,

M.Phil student, HSS Department.

“Pitch It! has given us an opportunity to give platform to our ideas, and valuable suggestions from panel members have given us an insight as to how we can convert our ideas into a real world business”. – Pawan Kumar,

M.Sc. student, Department of Biosciences and Bioengineering.

“Getting feedback on my business model has raised my confidence. “Don’t wait to start-up your venture”, has been suggested. I also received some suggestions regarding the scale of business which will help me go big”. – Milind Nayan,

M.Phil student, HSS Department.

“Mentors told me that the first step should be building my prototype, things will become clear from there on”. – Ankur Shah,

M.Tech student, Energy Science and Engineering Department. “The pitch was pretty decent. I wanted to validate my idea. I got the feedback I wanted and gained some insights that I didn’t have earlier”. – Manav Kataria,

M.Tech student, Electrical Engineering Department.

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E: Tell us about your startup “Buzzworks” and what it offers?VCK: The software company that I hold is Buzzworks. I was its founder. It offers two products. One of them is call-centre technology for call-centres and now we’ve built a nano version of a call centre for grocers, chemists etc.

We offer only business to business solutions. We are slightly different from other compa-nies in the sense that we offer a complete technology solution and the other factor that differentiates us is that we don’t sell any of these. Just as software is offered as a service, the entire personality platform is offered by us. Right from desktop to the server, every-thing in between is offered as a service by our company.

E: Tell us a little about your interactions with entrepreneurs and IITians.VCK: I am one of the key organizers for Proto. Of course, I am not part of the committee anymore but I also teach business to school children and am part of a TIME initiative called BizWorld. We go to schools and do a 8 session learning program for kids on how to run a business.

I have a lot of friends who passed out of IIT. There are two fundamental reasons people get into IIT. One is to follow an academic profession, which is a very noble thought and the other is to get your M.Tech and MBA and join a company for a fat salary. Both of these are risk-free approaches to your life and hence, as far away from entrepreneurship as you can be.

E: Are you saying that not many IITians are into entrepreneurship?VCK: Not exactly, but I think a lot more IITians should become entrepreneurs because IITs have the best students in the country. This kind of a talent should not be wasted by working for somebody else. That talent should be used to create more jobs, create more employees and create an impact on our economy.

E: You know that even after ending up with “fat salaries”, a lot of them actually end up starting their own company.VCK: Yeah. More or less, but not as many as I’d like to see.

E: What’s so cool about being an entrepreneur?VCK: As an entrepreneur, you tax-liability is lower [chuckles]. As an employee, you are taxed before expenses and as an entrepre-neur, you are taxed after expenses. Another exciting thing about entrepreneurship is the fact that you can scale beyond yourself. At a job, you can only perform to the best

of your ability. But as an entrepreneur, if you start your own business, you can scale to the sum total of ability of your team members. You can have a bigger impact on the world. How many people do you know who changed the world while working in a regular 9 to 5 job?

E: What are the major upcoming oppor-tunities in the market? What are sectors that are generally shunned?VCK: To be honest with you, I don’t follow any trend. But I think the current trend is infrastructure and education but that does not say that opportunities are decreasing anywhere else but it depends on the inter-ests of the person. Every sector needs entrepreneurs; infact sectors which are shunned need more entrepreneurs than the others. For shunned sectors, I’d say, tradi-tional engineering has taken a backseat in the last few years. Entrepreneurship is required everywhere. It’s obviously great to get into sectors that are hot, makes funding easier but that doesn’t mean that you should not look at other sectors.

E: Why don’t you tell us about your first start-up?VCK: My first start-up was Events, when I was 24 years old. It happened because I used to work in Times of India. I worked in a job for four years in TOI and I also did a lot of work in organizing events. It was a natural progression. I knew that I could do events. I knew that I had the skill set. I worked in a company that did these and thankfully, it had a big portfolio of events, including Femina Miss India, Filmfare awards. I had that talent to operate my company.

E: What were the difficulties you faced while starting up? What was your first major breakthrough?VCK: Lots of difficulties - raising cash, finding clients, finding employees. These are the typical things that every start-up has to go through.

Not exactly a breakthrough but I’ll tell you this. My first client was Microsoft. I went to their office and said, “I am a one man team but I have done what I’ve done and I need business”. It might be difficult for them to believe me but they gave me an oppor-tunity. It was not a big business but it was business. But my first client was Microsoft, second client was ITC. So it’s just a question of going out there and knocking on doors and figuring out if somebody could give you business. [Chuckles] It’s easy when your first client is Microsoft.

In Business: A talk with V C Karthic

By Raja Vinay Chandra

Mr. Karthic is the director of Buzzworks and has been involved with many startups in the past. He has been an entrepreneur, investor and a motivational speaker.

“A lot more IITians should become entrepreneurs because IITs have the best students in the

country. This kind of a talent should not be wasted by working for somebody else.”

Raja Vinay Chandra is a second year Engineering Physics student.

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The late Robert McNamara, while visiting India as the President of the World Bank in the ‘70s, was supposed to have broken down when he saw the shear expanse of the shanties of Dharavi from his airplane window, realizing how enormous the problem of poverty was. Dharavi even today is one of the world’s largest slums, a tragedy in urban planning and development. To put things into perspective, imagine squeezing 1 million people into our IIT campus, putting every 4 of them in a Hostel-4 sized ‘single’ room and having 0.25 million such rooms spread horizontally across the campus, with 200 souls sharing 1 public toilet, and now remove the ‘luxuries’ of clean drink-ing water, power supply and closed drains; now that’s a first approximation to how bad conditions are in Dharavi.

But there is another side to the story as well. In Dharavi, the basic need for survival has pushed people into extreme entrepreneur-ship. Few people know that Dharavi is Mumbai’s single biggest producer of goods

(ever since all the mills in Mumbai closed down), churning goods worth an estimated $600 million, a lot of which is exported to markets world over. The Centre for Environ-mental Planning and Technology, Ahmed-abad estimated that there were around 5000 businesses in Dharavi and around 15,000 single-shanty factories. That’s right factories, everything from recycling plants to found-

ries that make belt buckles to whole leather factories which export belts worldwide.

Let’s first look at how this has come about. In the first lectures of HS 101: Economics, the professors had taught about capital-ism and the like and in fine print they had mentioned that pure laissez-faire capitalism

existed perhaps only during the 18th and 19th centuries in Europe and in the US, a time when capitalism flourished without any state control, albeit with several negative consequences, the East India Company’s domination of India being a good example. HS 101 and Samuelson should add one more place to that list; Dharavi. It is an ideal example of the result of the combination of government apathy, lack of state controls, human enterprising ability and laissez-faire capitalism. There is absolutely no state control. Shanties come up and down on pure economic basis, a buyer and a seller agrees upon a price, old fashioned Chandni Chowk style. All businesses and land deals are technically illegal; but legality bears no meaning here. To better understand the implications of laissez faire capitalism, let us analyze the consequences. In Dharavi everything has a price attached to it, even the most basic of things that you and I take for granted is charged for. The Guardian reported that a

$500 million of goods without power, water or toilets

Capitali$m at its Best and Worst -

By Kishor Govind Nayar

All businesses and land deals are technically

illegal; but legality bears no meaning here.

Vol V Iss II 12enspace

kilolitre of clean drinking water in Dharavi can cost as high as around Rs 50 as opposed to around Rs 4 that we pay for it, with reportedly the market price of medicines in Dharavi being sometimes 10 times the actual cost. Those who have an electric-ity connection also sell power to their less endowed neighbours at Rs 100 per appliance used(with a Rs 500 safety deposit). Even the usage of the bathrooms and latrines is also charged with families reportedly having to buy monthly passes to avail of the facilities. Now can you get anymore ‘entrepreneurial’?

The good side of the entrepreneurial spirit is also evident. Stories abound of how people come to Dharavi as children, grew up in the chawls, slogged it out, started their own businesses, made money, bought apartments in upmarket Mumbai and left Dharavi forever. Dharavi is indeed an economic engine with recycling plants, leather, metal-working and pottery being the biggest revenue generators. Along many of the small alleys, whole informal assem-bly lines are present, waste plastic materi-als are grounded and broken down in one shanty; the next shanty melts the plastic into pellets; and some other shanty with an injection moulding machine transforms

the pellets into something useful. In small dark and damp shanties, animal hides are tanned, processed and converted into bags, wallets, fake Gucci’s , Piel’s, Hartmann’s and Traveller’s, and then exported halfway around the world.

The Economist reported of a Mr Kadam whose Peela Bangla tannery is supposed to be one of the oldest in Dharavi, exports annually 25,000 leather belts to WAL-MART and of 21 year old Mr Bhaskar Chaudhary

who at the age of 16 started his single shanty factory where he makes back-pockets of jeans. Bigger Jeans manufacturers find it cheaper to outsource this sort of work to guys like Chaudhary and in 5 years his business has grown by around three times. Such stories of rags to riches abound in

Dharavi and it’s no wonder that Dharavi has also become a business case study at the Harvard Business School.

The good and the bad sides of this kind of a ruthless laissez-faire capitalism are fairly evident. The lack of state control is causing immense pain to the people because of the fact that ‘entrepreneurs’ are taking advantage of the lack of basic facilities which ideally the government should have provided. But at the same time the positives are also pretty evident as without control measures and any bureaucratic bottlenecks, many have reaped rich rewards, too. Dharavi in many ways epitomizes the debate between the Keynes-ian and Austrian schools of thoughts on how markets should work. Should the govern-ment intervene or should there be some restrictions? Whatever the answer to the question, Dharavi is indeed an ideal mascot of the highly competent and dynamic Indian private entrepreneur.

It is because of this inquisitiveness, yearning for freedom, and enterprising nature of the ‘aam aadmi’ that India is growing at 8-9%. Even when they don’t have access to water, power or even toilets, the people of Dharavi are still working hard, taking risks, making decisions and moving forward. That’s 500 million dollars worth of goods without power, water and toilets. Imagine what these serial entrepreneurs could have achieved if they had access to these basic amenities.Imagine where India could reach if the government also got its act straight.

Stories abound of how people come to Dharavi as children, grew up in the chawls, slogged it out, started

their own businesses, made money, bought apartments in upmarket Mumbai and left Dharavi forever.

Kishor Govind Nayar is a third year Mechanical Engineering student.

Vol V Iss II13 enspace

What is the one word that comes to your mind when think about finance and business, Stock Market ain’t it? But inspite of the fact that the word “Stock Market” is thrust upon us the very minute we pick up a newspaper, we hardly read the related articles simply because we don’t exactly know what stock market is. Let’s try and understand the basics of the stock market in a very informal manner avoiding the corporate dossier as far as possible and then explore some myths about it too.

What are ‘Stocks’ ?

Stocks represent ownership in a company. Companies sell them to raise money for expansion. The two main forms of stocks are: Common and Preferred.

Common:When you own common stock in a company, you become a shareholder of that company. For every share owned, you are

given one vote (a “proxy”) to exercise in the election of the company’s board of directors during the annual meeting.If the company fails, you lose your investment since common stock owners are the very last to be paid. As a share-holder you are entitled to a share of the company’s profits based on the number of shares owned. Profit distribution occurs through dividends (When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend) or through a rise in the stock price.

Preferred:Preferred stock is more expensive than common stock since it offers more security. A Preferred shareholder is usually guar-anteed a dividend for the duration of

ownership. In the event of failure, preferred shareholders will be paid before common shareholders, but behind debt holders (banks, etc.). Voting rights may be stronger than those of common shareholders. How are the stock prices determined and how are they affected ?

The stock price is arrived based on the future earnings potential of the company. Based on the company’s books, there is the actual book value and the based on the future profits you have the market price. The future earning takes in to account macroeconomic indicators as well as micro economic indicators. In short, it is based on supply and demand. Higher demand relative to supply = higher stock prices. Some investors establish the value by their sentiments and attitudes towards the stock and their expectations. Others do extensive research delving into various company statistics. The most important factor influ-encing a stock’s value is its earnings per share. It matters what it was in the past and how fast it is and will be increasing in the future.

Three Terms we should know:

A Bull market occurs when the economy is going great - lots of jobs and investor confi-dence is high.

A Bear market occurs when the economy is down - high unemployment with a decline in investor confidence.

Pigs are high risk investors looking for whopping short-term profits. They usually invest in hot tips without due diligence, are emotional, greedy, and generally get slaughtered.

How do you enter a stock market?

Generally Brokers are the intermediates between us and the markets. You can ideally go directly to an exchange and trade but in the real world it is not that easy and hence you will need to go to a broker who

Demystifying the stock marketMyths and misconceptions- Stock Market unveiled

By Harpreet Arora

Vol V Iss II 14enspace

has a seat at the exchange and he will in turn execute orders on your behalf. Online brokers are discount brokers - then there are discount brokers who are online and you can directly input your orders over there. These brokers have small fees versus the hefty fees of the full service brokers. Full service brokers will give you advice which discount brokers will not.

Some common myths about the stock markets:

Myth 1: “Investing in stocks is just like gambling.”

This reasoning causes many people to shy away from the stock market. While there are risk takers in all aspects of life, stock market investing actually offers the oppor-tunity for long term, potential wealth for the average investor. Anyone who has the discipline and the time to learn the basics of stock investing may find that it is a lucrative way to amass wealth over time.

Gambling, on the contrary, is a zero-sum game. It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the

overall wealth of an economy. As companies compete, they increase productivity and develop products that can make our lives better. Don’t confuse investing and creating wealth with gambling’s zero-sum game. Myth 2:“The stock market is an exclusive club in which only brokers and rich people make money.”

Many market advisors claim to be able to call the markets’ every turn. The fact is that almost every study done on this topic has proven that these claims are false. Most market prognosticators are notoriously inaccurate; furthermore, the advent of the internet has made the market much more open to the public than ever before. All the data and research tools previously available only to brokerages are now there for indi-viduals to use. Myth 3: “Stocks that go up must come down.”

The laws of physics do not apply in the stock market. There is no gravitational force that pulls stocks back to even. Stock price is a reflection of how well the company is being managed. A well-run company should continue to see rising stock values. Occa-sionally, a stock may correct, experiencing a decrease of 10 percent. These are tempo-rary phenomena, and can indicate a healthy market. Myth 4: “Having just a little knowledge, because it is better than none, is enough to invest in the stock market.”

Knowing something is generally better than nothing, but it is crucial in the stock market that individual investors have a

clear understanding of what they are doing with their money. It’s those investors who really do their homework that succeed.Don’t fret, if you don’t have the time to fully understand what to do with your money, then having an advisor is not a bad thing. The cost of investing in something that you do not fully understand far outweighs the cost of using an investment advisor.

Harpreet Arora is a second year Energy Science and Engineering student.

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