move over, goldman

A 9.9 Media PublicationJanuary 2010 | Rs.150 | Volume 01 | Issue 01

AYN RANDPAGE 36

HOW I DID IT

SAM BALSARAOF MADISON WORLD

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TIPS TO GIVEA MAKEOVER TO YOUR WEBSITE

The Magazine for Growing Companies

A 9.9 Media PublicationJanuary 2010 | Rs.150 | Volume 01 | Issue 01

The boys at Avendus Capital have built an i-bank in 10 years.And just might have the last laugh.PAGE 30

MOVE OVER,GOLDMANGOLDMANGOLDMAN

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CONTENTSJanuary 2010

30The New Kings of Deal Street They may be in their thirties, but that has not stopped the founders of Avendus Capital from wanting to build a high-quality financial ser-vices company—right here in India.by pooja kothari

36Who is Ayn Rand?Her books created a whole generation of entrepre-neurs. But what was Ayn Rand really like? A new biography sheds light on the person that triggered a mil-lion ambitions. by leigh buchanan

48How I Did It Sam BalsaraHe chose the craft of adver-tising over managing men and money; started Madison with only two accounts and went on to build it into a communications power-house—all this without the backing of a foreign partneras told to pooja kothari

08Blast from the Past A round-up of stories we have done between February and November 2009 in our earlier avatar as an e-magazine. From Raman Roy, the face of the BPO industry, to William Bissell of Fabindia, Dilip Kapur of Hidesign, Kunwar Sachdev of Su-Kam and Ritu Dalmia of Diva, our pages have hosted some of the biggest stars of India’s entrepreneurial landscape. by inc. india team

40 Case Study Making Money the Milky Way Not only had Thacker Dairy lost its most important client, it had to quickly come up with a strategy to neutralise the entry of Amul in eastern India. Would importing bulk milk coolers get the company back on track? by inc. india team

on the coverFrom left: Gaurav Deepak, Ranu Vohra and Kaushal Aggarwal, founders of Avendus Capital; photographed in Mumbai by Gautam Singh

THIS EDITION OF INC. MAGAZINE is published under license from Mansueto Ventures LLC, New York, New York. Editorial items appearing on pages 15, 22, 23, 36-39, 51-53 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.

“I was anti-business. For years, I didn’t spend more than two hours on Hidesign. I almost gave it up twice.”

—Dilip Kapur

“Despite having a knack for cooking, I never treated it as anything more than a hobby. I didn’t train as a chef. I never thought I’d take it up as a profession.”

— Ritu Dalmia

a hobby. I didn’t train as a chef. I never thought I’d take it up as a profession.”

a hobby. I didn’t train as a chef. I never thought I’d take it up as a profession.”

“I behave the way I wanted

my bosses to.” —Raman Roy

JANUARY 2010 | INC.INDIA | 3

05 Letter from Manhattan06 Contributors07 Editor’s Letter

10 Behind the ScenesWhat does it take to maintain the serene surroundings of the Lotus Temple in Delhi?

13 Launch Trends in venture investing and private equity that we are likely to see in 2010 The Ticker A Skimmer’s Guide to Drive: The Surprising Truth About What Motivates Us Recycling cell phones Blogger Logic: Eric Ries on the real rewards of start-ups Four business owners on what they expect in 2010 We Asked, You Answered: attendees at the Inc. India 500 awards ceremony get candid about themselves

18 PassionsAshish Hemrajani loves to devise tactics to beat his oppo-nents—whether sailing in the waters of the Arabian Sea, or building BookMyShow.

20 On the ContraryBy Mahesh Murthy Sometimes, it is better to lose a client than win business on terms that make no sense to you.

25 The Goods Printers for small business QWERTY cellphones AVG Security Suite Watchful eyes of a camera Tips & Tricks Just for men: Macho spas Showcase: Blu-ray player

44 Start-up DiariesA look at three radical ventures and the promise of tracking their progress periodically.

44 MY SUNNY BALCONY

45 THE SHOE SPA

46 RIDEINSYNC

22 How Hard Could It Be?By Joel Spolsky Confessions of a reluctant (for the most part) micromanager.

29 GuidebookHow to give your corporate website a makeover and whose help to call for.

13 51

22

STRATEGY51 NETWORKINGIf you are still attending conferences, it’s time you knew about the unconference—the latest way to get advice.

54 ELEVATOR PITCH Can a site for bank loans get US$5 million of its own?

56 SALES & MARKETING There’s a new tool in the marketer’s arsenal. And it’s called a mobile coupon. Now, send discount offers to customers any time, any day, and at any location.

57 TECHNOLOGY Everyone who has ever worked with freelance pro-grammers and coders has a horror story to tell. Here are a few tips that will help you get the work done—smartly and on time.

53 ASK INC. We want to help you cross the hurdles that come your way as you build your business. Write to us and we will get the experts to find solutions for you.

26

CONTENTS January 2010

4 | INC.INDIA | JANUARY 2010

Message FROM Manhattan the Best OF Inc.

Jane BerentsonEditor, Inc.

Inc. magazine was launched 30 years ago on the premise that entrepreneurs are artists whose expression is business. We still like this sentiment. To come up with an idea for a business, to nurture it and to bring it to fruition is the act of someone who is not afraid to go against common wisdom or the usual practice. An entrepreneur by nature and deed likes to shake things up, change the way things are done, try something new.

We at Inc. are thrilled that our mission—to provide information and advice to the builders of growing private companies—has been deemed relevant to the entrepreneurs now building companies in India. So much of what is exciting and innovative at American companies derives from the creativity of people who have come to the US from abroad, most notably from India. There is a kinship here that we honour.

We have always believed in the power of the idea, in rooting for the product or service—and not in the size of the business. We are not afraid of taking chances when it comes to telling stories. We chronicle the journeys of interesting men and women as they go about building new businesses—and we hope our Indian edition will do the same. Maybe there are stories in India that we need to tell here in the US. And there will surely be leads on business thinking that we will pass on to you to help you give shape to your global ambitions.

I await my first copy of Inc. India as eagerly as you do. The people behind your new magazine are smart and clever and eager to foster a community spirit among growing enterprises in India. They hope to build a community of shared interests and ambition, similar to the one we have with our readers in the US. You will find this relationship profitable—and might I add, fun.

Welcome aboard, India

This Man Has Changed Business Forever (1989)An interview with Apple’s Steve Jobs, Inc.’s Entrepreneur of the Decade, on where new product ideas come from.

This Woman Has Changed Business Forever (1990)How the Body Shop’s Anita Roddick mixed business with a devotion to social causes.

Zen and the Art of the Self-Managing Company (2000)Laura and Pete Wakeman of Great Harvest Bread Co., are building a company that fosters innovation—and almost runs itself.

The Turnaround (1986)How a dying division of International Harvester became one of America’s most

competitive small companies. This article, the first of many about the open-book pioneer Jack Stack, is especially relevant today given the dire economic situation.

Confessions of an Entrepreneur’s Wife (2006)She was proud to support her husband’s dream of building a great business. However, five years is a long time to watch someone focus on his company at the expense of everything else.

The Un-Manager (1982)Before W.L. Gore & Associates became an icon in the area of innovative management practices, Inc. described how the company eschewed job descriptions and chains of authority and nevertheless became a profit machine.

JAnuARy 2010 | InC.IndIa | 5

Shreyasi Singh is an independent journalist based in New Delhi. She writes regularly for several national and international publications reporting on issues as varied as sustainability, social entrepreneurship, women and interesting societal trends. Shreyasi finds the process of writing fascinating - how some thoughts, a few conversations, an empty word document, and deft fingers can create a little slice of history. She also enjoys travelling and reading, and is working on a book of short stories.

Mexy Xavier became a photographer by accident. She loved discussing her husband’s photos with him, and one day, decided to go behind the lens

herself. That was 15 years ago. Since then, she has captured business heads and professional models alike. “I never get bored of shooting people,” says Mexy, who loves to shoot portraits, and has done

many photo features. She has worked for numerous magazines over the years. For the past

six months, she’s been a freelancer. She lives in Mumbai with her husband and daughter.

Leigh Buchanan is an editor-at-large for the Inc. magazine in the US. A former editor at Harvard Business Review and the founding editor of WebMaster magazine, she owns many management books and knows lots of people who work in companies. She writes regular columns on leadership and workplace culture, and contributes Inc.’s capsule book reviews, “A Skimmer’s Guide to the Latest Business Books.” Her ambition is never to be a boss.

CONTRIBUTORS

MANAGING DIRECTOR: DR PRAMATH RAJ SINHAPRINTER & PUBLISHER: ANURADHA DAS MATHUR

EDITORIALEDITOR: POOJA KOTHARI

ASSISTANT EDITOR: JACOB CHERIANCOPY EDITOR: PAYEL MUKHERJEE

INTERN: SUNAINA SEHGAL

DESIGNSR CREATIVE DIRECTOR: JAYAN K NARAYANAN

ART DIRECTOR: BINESH SREEDHARANASSOCIATE ART DIRECTOR: ANIL VK

MANAGER DESIGN: CHANDER SHEKHARSR VISUALISERS: PC ANOOP, SANTOSH KUSHWAHA

SR DESIGNERS: PRASANTH TR & ANIL T

PRODUCT MANAGERMAHESH RAVI

SALES & MARKETINGVICE PRESIDENT: NAVEEN CHAND SINGH

NATIONAL MANAGER (ONLINE SALES): NITIN WALIANATIONAL MANAGER (EVENTS AND SPECIAL PROJECTS):

MAHANTESH GODI

REGIONAL MANAGER (SOUTH)VINODH K (+ 91 97407 14817)

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MANAGER (KOLKATA)JAYANTA BHATTACHARYA (+91 93318 29284)

PRODUCTION & LOGISTICSSR GENERAL MANAGER (OPERATIONS)

SHIVSHANKAR M HIREMATHPRODUCTION EXECUTIVE

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Saluting the new India Inc.

We are a magazine for growing enterprises. Not the blue chips that find a mention in every pink paper; or, the start-ups that are being wooed by every other publication. We are firmly straddling the world in between – just as you, our valued readers, are.

Who is an Inc. India reader? Our experience with the e-maga-zine, coming to your mailbox since February 2009, tells us that our reader is the owner of a mid-sized business—a high-achiever who wants to scale his business to greater heights and aspires to become the corporate leader of tomorrow.

Some of our readers are building their first businesses, while others are on to their second ventures. But all of them are passion-ate about creating something out of nothing, confident of their abilities, and obsessed with their businesses. Our cover story for this issue, Avendus Capital, epitomises the never-say-die spirit that drives these entrepreneurs against all odds.

Our readers are also busy managing clients and cash flows; they barely get the time to connect with and learn from each other. And that is what gives us the confidence in our ability to guide them.

Through our pages, we will develop a community of growing, mid-sized enterprises. We will share your experiences and learnings with others; highlight your achievements to cheer you on; and most importantly, empower you with knowledge and information.

You will discover some of these ideas in our launch issue. In Behind the Scenes, we highlight the toil of smaller companies that goes into making everyday life possible. In Launch, we bring to your notice news, ideas and trends that would be of interest to you. Our Case Study details how an entrepreneur faced a business problem, and seeks the advice of experts on what could have been

done better, or more. The Guidebook is a section that you can pull out and keep for handy reference,. The Strategy pages provide the latest in marketing, technology, leadership and management.

We aspire to become a necessity to your business lives. Judge us; tell us if we are doing that job well. And help us become better. We promise not to let you down!

Happy reading!

Pooja [email protected]

We will serve a single mis-sion—to herald and show-case the next generation of corporate leaders, and help drive their businesses with insights and counsel.

EDITOR’S LETTER

Business sense Better to say no to business than accept it on terms that are not in line with your mission and values.

Biblical justice Do unto others as you

would have done to you. And behave the way you would want

your bosses to behave with you.

Ideal scenarioBuild an organisation that you would be tempted to work in as an employee.

THINGS I LEARNT IN THIS ISSUE

Pooja Kothari


BLAST FROM THE PAST

THE RICHCOLOURSOF ENTERPRISE

Many of you are already familiar with Inc. India in its shorter, online version – the monthly, e-magazine that we have been sending out since February 2009. It offered us an opportunity to prepare for the launch of the print version, and in a way, fine-tune our offering accord-ing to the tastes of our readers. Here are some nostalgic conversations from the past. We hope to initiate more such dialogues with stars of the Indian entrepre-neurial land-scape in the issues to come.

On the art of selling“I was a good sales guy, but had no understanding of technology. A lot of people fooled me. I didn’t know how to install a connection. I sim-ply knew how to get contracts from hotels. I started reading my Class IX-XI physics books once again. I made sure I learnt everything there was to know about the equipment I was selling.”

THE INNOVATOR

Kunwer SachdevSu-KamHis power of holding audiences captive at seminars is as good as his dominance over the inverter industry. He makes no bones about the fact that he has no management education or that he speaks in Hindi. Kunwer Sachdev, the founder and man-aging director of Su-Kam, is the classic hero of a rags-to-riches tale. Stumbling upon the inverter industry quite by chance, he made it possible to run air condi-tioners during incessant power-cuts and went on to build a Rs 500-crore brand. If you meet this 44-year-old entrepreneur, it is difficult to imagine that he started out selling pens at the age of 15, or that he plans to rev-olutionise toasted bread the way he did the innocuous inverter. Dilip Kapur

HidesignIn the late seventies, Dilip Kapur came back from the US to a small town near what was then called Pondicherry. As a hobby, he started making bags out of natural leather. Kapur treated it as a reflection of how he saw life: individualistic, natural, full of character, and confident. Happily for him, that hobby became a profitable business that today sells leather accessories worth nearly Rs 100 crore. Hidesign has a cult following – largely because it focuses on quality and detailing, rather than simply imitating global trends. Kapur is now gearing up to use his partnership with Louis Vuitton to convert Hidesign into a global brand, Personally, though, he is still happy designing bags—31 years after he made his first one.

Sanjeev BikhchandaniNaukri.comAt a time when the country was just discovering the Internet, Sanjeev Bikhchandani was already busy exploring ways to build an online database of job seekers and HR managers. Naukri.com was born in 1997 and online job search soon became a rage. The IIM alumnus went on to become a serial entrepreneur, subsequently launching three other successful online busi-nesses. Not surprising that Info Edge, the flagship company that he had co-founded in 1989, is today a Rs 245-crore company.

Beerud ShethSMS GupShupSince 2004, the founders of SMS GupShup had been struggling to find the right product for the mobile platform. They finally launched GupShup in 2007 as a group messaging service that allows you to build your social network on the mobile platform. Post launch, there was no money for big marketing gimmicks. The team did not even have a winning business model. However, this unique product did its own talk-ing. It got mobile users hooked. The result - in less than two years, GupShup has a user base of 15 million and some cool fund-ing in its kitty.

THE RELUCTANT HERO

THE NETWORKER

THE HEADHUNTER

On his evolution as an entrepreneur “I was anti-business. For years, I didn’t spend more than two hours on Hidesign. I didn’t know what a brand was. I didn’t even know the word till 20 years ago. I have become more of a business-man with years because the business has grown. Twice, I came close to giving up Hidesign. First time was in 1985, when it was going from becoming a hobby to a busi-ness. I hadn’t come back from America to become a busi-nessman. So I even thought of giving it up as a hobby. Then again in 2000, just before I started selling in India.”

years after he made his first one.

THE HEADHUNTER

On his Eureka moment “I found it interesting how people in the office read magazines back to front because the appointments section came at the end. Job ads were popular, and it occurred to me there may be a large, fragmented database of jobs with HR managers and headhunters that could be compiled into a valuable resource.”

THE NETWORKER

On ensuring continuous learning “The first version of our prod-uct didn’t really work. So we could either sit back and feel disappointed, or move forward. We began to focus on figuring out an interesting application for lower-end devices—and this time, it worked.”


BLAST FROM THE PAST

Ritu DalmiaDiva, The Italian Restaurant For someone who wanted to go to Wharton to learn the ropes, Ritu Dalmia walked a very short distance to her kitchen and built a successful restaurant business. Her first restaurant in Delhi was ahead of its times and failed miserably. But Dalmia simply dusted the flour off her clothes and opened another one – this time, in London. Having tasted success, she came back to India and opened an Italian restaurant. Today, Diva is one of the few successful standalone restaurants, winning the award for the “most outstanding restaurant wine lists in the world” every year from 2004-08. Dalmia’s is a fascinating journey from a vegetarian Marwari to an Italian restaurant owner, book writer and cookery-show host that she is today.

Satya Narayan RCareer LauncherIn 1995, Satya Narayan played the right shot at the right time. What began as personality develop-ment classes for IIM interviews soon turned into full preparation for MBA entrances, and later for other entrance exams. Today, his group is a household name in education, operating three play-schools, 17 schools and one business school. In 2008-09, its revenue was Rs 150 crore, serv-ing nearly 110,000 learners in 225 locations. It has partnered with the government of Rajasthan for vocational training and plans to start a university there.

Arjun WalliaWalsonsMuch to the amusement of all around him, Arjun Wallia returned from London in the mid-nineties and became a “supplier of chowkidars”. His CEO-father was the least amused of all. That was just the beginning. Wallia spent the next 12 years building Walsons into a Rs 60-crore security services company, all by himself. In 2008, his persistence paid off in the form of a partnership with Securitas, a global giant in the field. Today, as Walsons waits to become Securitas India, Wallia is the one laughing - all the way to the bank with US$20 millionin hand.

Raman RoyQuatrro BPO Solutions The world noticed Raman Roy when he founded Spectramind in 2000, when not many in India even knew what BPO stood for. He upped that feat two years later, selling his third-party outsourcing firm to Wipro for more than Rs 4 billion. By 2006, Roy finished his stint at Spectramind and was ready to be an entrepreneur again. Such was the level of trust that a few of his colleagues gave up their jobs and turned up at his house, ready for the next project. For the next eight months, no one got a salary. Yet, their faith in Roy did not waver. No wonder 60% of his senior management team at Quatrro has been working with him for the past 15 years and across different companies.

William BissellFabindia In the late nineties, William Bissell inherited a furnishings export house founded by his father more than three decades ago. He changed its focus to the domestic market, expanded the product range and made Fabindia what it is today—a 105-store retail chain with a turnover of Rs 360 crore a year. At the heart of this business, however, is the mind of an NGO—Bissell follows his father’s vision of providing employment to India’s skilled rural artisans and shows how a profitable business can be a means to a greater end.

THE BELIEVER

THE CULINARY DIVA

THE CAREER COACH

THE TEAM BUILDER

THE CRUSADER

On managing people“Today, I behave the way I wanted my bosses to behave with me. I wanted respect and dignity. I wanted to be given my own space. I wanted to be con-gratulated for my successes. And I wanted to be rapped on my knuckles for my mistakes.”

writer and cookery-show host that she is today.writer and cookery-show host that she is today.writer and cookery-show host that she is today.

THE BELIEVER

On running a business with a heart “Every act of management is also an act of communication. As long as you think about serving the com-pany, as against owning the com-pany, this style of operation would be par for the course.”

On entering the commercial kitchen“I cooked my first “proper” meal when I was 11. It was a three-course meal. My brother taught me the commercial aspect. He would give me Rs 50 for cooking breakfast for him. Despite a knack for cooking, I never treated it as anything more than a hobby. I didn’t train as a chef. I wanted to go to the Wharton School of Business and become an industrialist.”

On building scale “Can I get to a million people

in the next three years?”

On the art of customer service“One of the largest multinational call centres that we had been pitching to called in three vendors for their transport security operations for a meeting at the ungodly hour of 1.30am. We were the only ones who turned up. They made us wait a further 45 minutes outside their office, where we could see them drink coffee and do nothing. But we still waited. Then they called us in and said the contract was ours. It was their way of testing which vendor’s leadership would be available during their work hours in case of a crisis.”


The GreensDressing up the Lotus Tem-ple’s 27.5-acre campus is a monumental task, requiring plenty of manicuring. Pune-based nursery, Tukai Exotics, sends sacks of 5,000-10,000 seedlings every year. Tukai was founded in 1997 and today has nearly 60 employ-ees. Their client base includes retail nurseries, cor-porates, hotels and resorts, various government bodies, landscapists and farmhouse owners.

CleanersThe 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 main-tains 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.

BEHIND THE SCENES Companies at the Heart of Everyday Life


SecurityEven 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 manage-ment. 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.

Silicon SealingBuilt 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 Delhi-based 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 meet-ings. Founded in 2004, Falcon has 10 permanent employees and 80 freelancers, and is run by Vikram Khanna.

Lotus Temple, New Delhi

REPORTED BY JACOB CHERIAN

Every year, a few sectors catch the fancy of venture capitalists and private equity inves-tors, and receive a large chunk of their allo-cations. Either because these sectors have reached an inflection point, or some feisty entrepreneurs have demonstrated scalable and promising business models. Together, these factors strengthen the investment thesis for PE investors. Here’s a look at five sectors that investors are likely to place their bets on in 2010.

HEALTHCAREIf you are still thinking traditional pharma manufacturing, then it’s time to move on. The new-age healthcare story is being re-written by the delivery business—hospitals, specialised clinical centres, diagnostic chains and medical device companies. So far, these businesses have largely played in the commoditised and unorganised part of the value chain. Barring an Apollo Hospi-tal, and lately Fortis Healthcare and Max

LAUNCH News, Ideas & Trends in Brief

Who’s the fairest of them all?Five sectors likely to attract investors

Healthcare, there are no nationally-known private hospital enterprises worth talking about. That is going to change with private equity backing this sector in a big way. Investors know that demand for quality healthcare services is taking away a large share of the consumer’s wallet. And, they want a share of the pie that’s likely to grow. Investors are courting hospital companies in tier-II cities, or diagnostic chains which plan to build a national footprint. Trichy’s Sri Kavery Medical Care and Secunder-abad-based Pushpagiri Health Care Hospi-tals are a case in point. No wonder the sector claimed private money inflow of US$263 million across 16 deals in 2009.

FINANCIAL INCLUSIONA vast population of rural and urban India does not have access to basic banking facili-ties or to cheap credit for income-generat-ing activities. The result has been an explosion of microfinance institutions (MFIs) that aim to serve the poor. Besides

SOURCE: VCCIRCLE.COM

DATA POINT

Brighter prospects for 2010?There were fewer invesments in 2009 as compared to the year before.

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Education

Renewable Energy

Consumer

continued on the next page


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LAUNCH

Analjit Singh, chairman, Max India, calls this the Era of Focus. In his keynote at the Inc. India 500 awards, he emphasised the importance of staying focused to succeed in business. “Roger Federer does not play tennis part-

time!” he said. In December, Max India parted with 9% equity to raise US$115 mil-lion from Goldman Sachs’ PE arm. Focus clearly pays…And, so does cricket. Global Cricket Ventures, owner of all IPL T-20 and Champions League online and mobile rights, and the website cricket.com has received US$10 million in funding from Elephant Capi-tal…Tide of For-tune (Random House India) is a must-read for all entrepre-neurs and fam-ily business owners. Manubhai Madhvani chronicles the remark-able recovery of his Uganda-based busi-ness; and comments on what it takes to keep a family business together through 2nd and 3rd generations…The holiday sea-son fare hikes are here to stay with most airlines raising prices by 25%. Except, despite being cheaper, both SpiceJet and Indigo are merely 3% behind Kingfisher and Jet in a recent customer satisfaction sur-vey—that’s true value for money!…Unfortu-nately, that cannot be said for buying food; the food price index has been rising com-

pared to the year before. While the growth in GDP surprised everyone pleasantly, the rising inflation remains a concern…The last year claimed many

good men – Russi Brij (ex-CEO of Hexaware), Ranjan Das (SAP India

head), and R Ravimo-han (who built CRI-

SIL); all exemplary leaders, whose loss is not only

premature, but also leaves one shaken by the unpredictability of it all.—Inc. India

the microfinance-focused fund-ing institutions, the traditional VC and PE firms are also looking to fund MFIs in India. Hyder-abad-based SKS Microfinance led the way by securing funding from firms such as Sequoia Capital India and Sandstone Capital. There were 18 MFI deals worth US$95 million in India in 2009, signifying the high level of fund-ing activity in the space. Potential targets for investments could be a pure-play MFI, or service provid-ers such as FINO, a technology company which helps banks reach out to the poor. The attrac-tiveness of this sector also makes it prone to rising valuations, which could deter some investors.

EDUCATION In 2009, three test preparation companies raked in about US$36 million in funding. Ten years ago, they were hardly investment-worthy, being one-man shops centred around a particular locality. Today, they make good money, with some players clocking in revenues as high as Rs 150 crore. Investors are looking at these test-prep players to diversify into formal education, such as schools, colleges and even universities. Delhi-based FIITJEE raised Rs 100 crore from Matrix Partners India, mainly to expand into formal education; as did Kota-based Career Point. Having funded vocational education, skills upgradation and finishing schools, VC/PE players may now chase formal education in a big way. Besides these, technology companies serving the education sector are also a big hit. In 2009, education received US$118 million from VC/PE investments across nine deals. And this trend is likely to continue.

RENEWABLE ENERGY/CLEAN TECHNOLOGYGiven the government regulation that has gone into making this sec-tor attractive to investors, renew-able energy is likely to remain in favour with investors. The govern-ment has announced generation-based incentives for wind and solar energy projects. Grid-inter-active solar energy projects will now get a preferential tariff for 25 years, and pay zero excise duty for equipment used for these projects. Wind projects will get 50 paise per unit of electricity fed into the grid, subject to a limit. All these efforts have made this sector attractive to investors. Besides solar and wind, investors are also looking closely at small hydro-power projects. The sector raised US$216 million in 12 deals from VC/PE firms in 2009.

CONSUMEREvery investor is looking to ride on domestic consumption, as opposed to exports. In India, the consumption basket is under-served and under-exploited when compared to the world average. The demand for con-sumer goods, such as personal care products, soaps and deter-gents, and food will continue to go up, as the economy grows. Indians are still new to organised consumer services, such as beauty salons, restaurant chains, and entertainment businesses like multiplex chains. With changing demographics, the demand for such services will only grow. So a majority of pri-vate equity investors are betting on consumption-focused busi-ness opportunities. The India consumption story managed to attract US$189 million in 17 VC/PE deals in 2009. —VCCircle.com

Who’s the fairest... continued The Ticker

federer

spice jet

nately, that cannot be said for buying food; the food price index has been rising com

pared to the year before. While the growth in GDPeveryone pleasantly, the rising inflation remains a concern…The last year claimed many

good men – Russi Brij (ex-CEO of Hexaware), Ranjan Das (SAP India

head), and R Ravimohan (who built CRI

SIL); all exemplary leaders, whose loss is not only

premature, but also leaves one shaken by the unpredictability of it all.

gents, and food will continue to

Indians are still new to organised

beauty salons, restaurant chains,

-vate equity investors are betting on consumption-focused busi-

consumption story managed to attract US$189 million in 17 VC/

analjit singh


LAUNCH

In recent years, Web businesses with names such as VenJuvo and Gazelle have sprung up, offering consumers hard cash for their unwanted but still-working iPhones, BlackBerrys, and digital cameras. Now there’s a new way to recycle cell phones from San Diego–based ecoATM. Rather than mailing in used gear to an address found on the Web, sellers place the devices in a machine that looks like an ATM. The machine scans the gadget, determines damage, and assesses value. If the phone is worth a few bucks, the ATM will cough up the money—about US$50 or US$55 for a used iPhone or BlackBerry—and keep the phone.

What ecoATM won’t do is accept stolen cell phones, thanks to built-in security fea-tures. These include a webcam and a fin-gerprint scanner to keep a record of each person who trades a phone for cash.

The company plans to roll out its kiosks in shopping centers around the country in early 2010. ecoATM figures there are one billion phones worth some US$12.2 billion sitting in people’s drawers. “Just like they bring their change to Coinstar at the grocery store,” says Eric Rosser, the compa-ny’s head of marketing, “we want them to bring their old phones with them when they go shopping.” —Darren Dahl

The book: Drive: The Surprising Truth About What Motivates Us, by Daniel H. Pink; Riverhead Books; January 2010.

The big idea: Wall Street’s crash was also a crash course in the folly of motivating behavior with great gobs of cash. Instead, companies should create conditions for employees to find the joy in work itself.

Unusual suspects: Refresh-ingly, many examples derived-from obscure entrepreneurial companies, such as Meddius, a Virginia healthcare technology business where people choose their work arrangements; the only requirement is to get results.

If you read nothing else: Chap-ters Four, Five, and Six list the three requirements for intrinsic motivation.

You can skip: The book’s last third, presumably meant to be practical, feels like padding.—Leigh Buchanan

A skimmer’s

guide to the latest business

books

“One of the unfortunate side effects of all the publicity and hype surrounding start-ups is the idea that entrepreneurship is a guaranteed path to fame and riches. It isn’t. Building a start-up is incredibly hard, stressful, chaotic and—more often than not—results in failure....So why become an entrepreneur? Three reasons: change the world, make customers’ lives better and create an organisation of lasting value. If you only want to do one of these things, there are better options. But only start-ups combine all three.”

blogger logic Start-ups: Never easy but worth a shotThere are a lot of great reasons to become an entrepreneur, but don’t do it just for the money, writes author and entrepreneur Eric Ries on GigaOM (gigaom.com):

recycling Trading Old Phones for Dollars


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LAUNCHLAUNCH

Sameer KanwarJoint Managing Director Bharat Gears

Manufacturer of auto components: The resolution for 2010 is to be more realistic than optimistic. I believe that the year will be flat, so it is important to remain cautious and not get gung-ho about things the way everyone did two years ago. Most Indian companies, which went on an acquisition spree buoyed by the situation, are bleeding today. As a company, we will play it safe for the first quarter, at least until June. We plan to move slowly on capacity expansion, which, in our case, is purchase of new manufacturing equipment. I do believe that the worst is over, but I do not think that the best is yet here.

Rajiv DhingraFounder CEO WAT Consult

Consultants in social media marketing: We want to hire more people. I believe it’s a good time to recruit quality tal-ent since the market rates are still relatively low. Once the first quarter of 2010 begins, we expect to see an upswing in sal-aries. We are opening a second office shortly, which will take our seating capacity from the current 15 to 35. The fact that real estate hasn’t really picked up yet, has helped a great deal. We are also being mildly cau-tious—which is why we are planning to build capacity for five people at a time. We first build up the seating area and sanitation facilities, ensure there is a cash flow to support it, and then build it upwards from there. We are also trying to maintain a three-month cash flow back-up in the bank. If, for any reason, we lose all our clients, we can still survive for three months. That would give me enough time to bring in more business to carry on.

Dheeraj GuptaFounder Managing DirectorJumbo King

Food retailer: We are in a business of selling vada pav, which is the food of the masses in Maharashtra. So, we didn’t face a situation where customers postponed their purchasing decisions. But we did feel the effects of the downturn when we started looking for funds for our expansion plans. A year ago, we had planned to enter 10 cities simultaneously and run a big advertising campaign. But, suddenly, all funding sources seemed to have dried up. Of course, we finally did get the investment we were looking for but what should have happened in three months took a year and half. Now, on the advice of our investors, we are going to be cautious. Instead of gunning for a 100% year-on-year growth rate, we are going to stay steady at 30%. The decision to step out of Mumbai has been postponed for now.

Satya PrabhakarFounder CEOSulekha.com

An India-centric information portal: The last year taught us to focus on costs. We learnt to say “no” a lot, to account for and manage business at a gran-ular level, and to manage peo-ple’s expectations. The current plan is to manage the core busi-nesses using the same princi-ples and continue being stingy on costs, even as we invest in evolutionary vectors of growth. While we may have reduced investments in innovation and growth, we know that compa-nies cannot survive in the long run without sufficiently adapt-ing and evolving. So in 2010, we will invest in these and fuel our next-stage booster rockets completely. However, we will manage these separately from the core operations. Lastly, we will invest more in improving processes to improve the over-all culture of the organisation, which may have been ignored in the last year when the focus was on pumping up sales and reducing costs.

Beware of the optimism trapBe a hard-headed realist in 2010Even in bad times, most entrepreneurs are optimists. But the economy, which went into a tailspin over the past 18 months, has taught many to be wary. Here’s what four entrepreneurs at differ-ent stages of their company’s lives learned from the crazy times—and why they are erring on the side of caution while draw-ing up plans for this year. —Jacob Cherian and Shreya Pilani


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WE ASKED, YOU ANSWERED

Q. Name one thing about you that would surprise your employees?“Giving 100% bonus to employees”—VINEET GUPTA, Director, Parabolic Drugs

“They’d be surprised if they saw me dancing, because it hasn’t happened yet.”—ARVIND THAKUR CEO, NIIT Technologies

Q. If you never had to worry about making money, what would you do? “Go to the North Pole.” — MUKESH BHANDARI, Chairman,

Electrotherm

“Explore the unexplored areas, such as the Caribbean, or the Amazon.”— P SATYANARAYANA RAJU, Director,

Anjani Cement Karnataka

“Play a lot of golf.”— ARVIND THAKUR

“Travel the world.”—GS BHALLA, CEO, Horizon Group

“Do the same what I’m

doing...training people, working with people. Even if I don’t have money. I would still do the same thing.”— SANTHOSH BABU, Founder & Managing

Director, OD Alternatives Consultancy

Q. What do you do to relax?“Cook, sing and eat. However, sometimes, I am barred from entering the kitchen by my wife.”— RAJENDRA MIMANI, President- Business

Development, Imp Powers

“Talk to myself.”— VIJAY KUMAR SHARMA, Director,

SNE India

“Photography, reading and travelling. I travelled 2,500 kilometres along the Silk Route this year.”—MUKESH BHANDARI

“I jog and play tennis.”—P SATYANARAYANA RAJU

Q. How do you make your customers happy?“The same way I would like to be happy; by giving them TLC—Tender Loving Care;

treating them such that they feel delighted about having done business with us.”— AMIT KHEMANI , Managing Director,

Blossoms Industries

“By making myself happy”— SANTHOSH BABU

“I listen to them. And I listen to them very intently.” — RAKESH PRASAD, General Manager,

Jindal Pipes

Q. Would you ever work for someone else?“Even if you think you are working for yourself, you are in fact working for somebody else...your customers”—SANTHOSH BABU

“I would like to work for my wife. She handles the family business.”— ABHILASH RAJAN, Manager Marketing,

NESCO -Indabrator division

Q. If there was one social cause that you would work in, what would it be?“Empowerment of the girl

child. There is a lot of opportunity there from a business stand point, and besides, they are far better workers than us men.”— GS BHALLA

“Conserving energy and making the world a greener place by planting more trees.”—ARVIND THAKUR

Q. What is your worst trait?“I forget the names of the people I meet.”— VK CHATURVEDI, Managing Director,

Usher Agro

“Perhaps, I’m too impulsive”—GS BHALLA

“Ignoring everybody”—ARVIND THAKUR

“I am a perfectionist”—AMIT KHEMANI

—Deepali Goel, Jacob Cherian and Sunaina Sehgal

Entrepreneurs Uncensored Inc. India 500 attendees get up-close and personalIn December, a record number of mid-sized firms got together at The Oberoi in New Delhi for the launch of the Inc. India 500—an annual listing of fast-growing firms in the Rs 50cr to Rs 1,500cr turnover segment. In between the speeches, awards ceremony and cock-tails, we threw a slew of questions at a random sample of guests—asking them to reveal information about themselves, including, for instance, one thing that their employees don’t know about them. Here’s a selection of the best—and sometimes, witty—answers.

Together in success The audience at the Inc. India 500 event listens in rapt attention; (Top row; L to R) Mukesh Bhandari, P Satyanarayana Raju, Arvind Thakur, GS Bhalla, Rajendra Mimani, (Bottom row; L to R) Vijay Kumar Sharma, Rakesh Prasad, Amit Khemani, Vineet Gupta, VK Chaturvedi


PASSIONS Life Outside the Office

Ashish Hemrajani first got interested in yatch-ing eight years ago, while on a trip to the City of Sails, Auckland, in New Zealand. He spotted a boat named Ganga in the Bay of Islands, cap-tained by a Canadian. On an impulse, Hemrajani, who runs the popular ticketing website, Book-MyShow, offered to be a hand on the deck for the day and set sail over the cool blue waters of the Pacific. His love affair with boats continued even after he came back to Mumbai. Between October and April, when the wind is right for the sails, the 34-year-old is busy tacking and gybing his boat around the bays. He participates in about 20 races every season. “I am the tactician on the boat, doing the deck work and innovating on our strategy for the course,” says he. A pretty good way of putting his workday skills to good use too!

“Sailors turn into criminal minds on the waters. They scream

and shout, and plot how to put the opponent at a

disadvantage.”


Events Season-point-handicap races Cup races Regattas

Competitions Lightning Nationals Seabird National Championships Navy Day Regattas Opening and Closing Day Regattas England Enterprise Nationals

Training Schedule Hemrajani has no professional training in the sport. He alternates between the gym and the swimming pool to remain fit. In addition, he spends as much time as possible with his team on the waters to get the tactics right.

His Boats Lightning – an International Class of boats Seabird – a boat designed by an Englishman in the 1920s, specifically for sailing in the Mumbai harbour J24 – the most-sailed racing boats in the world Enterprise – a two-men boat with two sails

His Playground Royal Bombay Yacht Club Colaba Sailing Club Bombay Sailing Association

Passions Ashish Hemrajani

PHOTOGRAPH BY MEXY XAVIER REPORTED BY POOJA KOTHARI

2 0 | INC.INDIA | JANUARY 2010

Why You Should Let a Bad Client GoSometimes, the best way to grow is to say no to the wrong sort of business than work on terms that are not acceptable

It was a little past 3am, and I was in Los Angeles, talking to the team in Delhi, some 12 hours and 12,000 kilometres away.

It was a curious case. A new telecom operator was launching its services in India and had put our company on the shortlist for their digital advertising account—worth, they claimed, more than Rs 12 crore a year—a sum that would immediately put them among the 10 largest clients in the country.

The potential client had read our website, where we said, front dead and centre, that we were a pay-for-performance digital advertising firm, that we did not charge retainers or commissions, and that we charged only on a success basis. And having read that and met us, and having heard our thoughts on their business, they decided in their wisdom to award their business to us, pending, as they said “commercial discussions”.So the team in Delhi was in the midst of these commercial discussions when it felt that I needed to get on the call. Hence, the middle-of-the-night wake-up. “Yes, we respect your pay-for-performance model”, the client was saying, “but our tendering process says that we will work with you on a cost-plus-retainer basis. Please show us salary slips of the people who will be working on our account—and we will pay for their salaries and for some reasonable overhead on top of that, and then give you some margin on top so you can make a profit on our business.”

“But”, I tried to explain, “did you not read on our website that we are a performance firm, not an old-school retainer firm?” Yes, was the answer, post which the argument continued: “But we really would like to work with you guys, so can you please bend your rules a little here? We’ll make sure you won’t lose

money on our business—and the other finalists have already agreed to this model. In fact, they’re happy with even a 15% mark-up on their costs—we can go up to 20% if that makes you comfortable.”

My gut was clear on what to do, but I decided to ask the team what they felt. They discussed and came back, saying: “We feel glad they chose us for our thinking, but that means they should choose our model too, right? If we start with this model now, we don’t know how far we will keep compromising.” Their recommendation—even though this account alone would double the size of the business—was to decline the offer.

Which is what they did, to the surprise of the client—and I’m proud of them. One day, I told them, we will win this business—and their rivals’—and we’ll do it on our terms,

Against the tide It makes sense to refuse business than compromise on price. The lowest-priced vendor never becomes the market leader.

ON THE CONTRARY BY MAHESH MURTHY

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not on some ridiculous terms that the industry had accepted.

I remember asking the telecom client: “You are offering customers a price of XX paise a minute; will you accept it if your customers ask you for the salary break-ups of your CEO and sales executives, and offer you a flat margin on your salaries as their monthly payments to you?” There was nervous laughter at their end and some words to the effect of—well, thankfully we don’t have to do that—and anyway we can ask that from you because we are the buyers.

My learning here was clear. The best way to grow your business is to say no to the wrong sort of business.

The scene was repeated a month later. Another pitch, another client; this time in Mumbai. It was again down to us and another firm—this one a subsidiary of a

large advertising multinational. All went well, till the last question, when one of the clients asked: “So, if we stop working together, how long will you lay off before you start working with our rivals?” My reaction was, “We’re a performance firm and as such we don’t recognise conflicts; so the question doesn’t arise. But nevertheless, if you do choose to work with our rivals right after we stop working together, I guess we have the right to work with your rivals too right away.”

I thought it was a fair answer. To me, business has to be done on symmetrical terms between two parties.

But it was apparently the wrong thing to say. The client called back later, with a sprinkle of glee in his voice, saying, “Well, the

other guys agreed to a two-year moratorium on working with our rivals after they end working with us—and they also agreed that any new technology or concept they developed while working with us would belong to us forever.”

If our earlier competition had merely compromised on working practices, this one was willing to go to any length to placate the client even before work had started. Once again, I told the team—worry not, this was the right reason to lose a business.

I have been working for some 26 years now—and I can say that the lowest-priced vendor of any service has never become the market leader. The cheapest car company is never the largest. The cheapest advertising firm is never number one, and the cheapest retailer never becomes the most profitable.

And “work for hire” is a recipe for death,

especially in the services business. I would advise all of you to avoid this like a plague, unless you are a BPO. This phrase should never be in your legal agreements with clients. Make sure you build some intellectual property—and that your work and your original thinking go to line your pockets—not your clients’.

Even on the other side, the buyers of the cheapest goods and services never become the best either. So while some marketing guy is furiously patting himself on the back for getting his agency to bend over backwards—or forwards, as the case may be—he is never going to get the best talent or the best thinking at work for him—and the harm from that in the first month alone will more

than out-do the gain from the few cents saved through the year.

Yeah, right, some of you will be saying—that is always the case with sour grapes. You don’t get business, you whine. Maybe there is a little of that. Actually, I think there isn’t. In some sort of odd way, this follow-you-down-the-glory-hole behaviour sets us apart from the rest. I believe these clients know they settled for the second best. One day, if and when they are ready, they will come to us.

And till that day, there will be many more clients who will see things the way we do. And just for information of the sceptics, for these two account losses in the last two months, we have had six account gains on our terms.

What can I do, I’m sure you ask yourself, when others around you are dropping their prices and policies?

I would say a few things. One, look around you. See the brands you love and respect. The big ones. Maybe, a Titan in watches, a Starbucks in coffee, a McKinsey in consulting, or an Apple or Nokia in phones. See how much they charge. You will notice, without exception, that it is never the lowest.

Second, think of all the people who offered dirt-cheap pricing. Air Deccan, maybe. Or a Suvega in mopeds. Or even an AP government offering rice at Rs 2 a kilo. See something similar? They’ve all gone the way of dirt.

Three, now have the confidence. The firms that drop their prices and practices will eventually drop out of sight. Say this to yourself and the team.

And four, be glad, not sad, when you lose a business for these reasons. As long as you know you are offering a differentiated value, have the pride and the strength of conviction to insist on a differentiated price.

The right client will offer it to you. The wrong client won’t. But that’s okay.

They won’t be around to pay the other guy’s bills in a few years’ time.

As long as you know you are offering a differentiated value, have the pride and the strength of conviction to insist on a differentiated price. The right client will offer it to you.

Mahesh Murthy is the founder of Pinstorm and Managing Partner at Seedfund. He can be reached at [email protected] or @maheshmurthy on Twitter.

ON THE CONTRARY


When and How to MicromanageI like to hire smart, self-motivated people who require a minimum of oversight. Unfortunately, I don’t hire everyone who works for me.

On a recent visit to Austin, Ryan Carson and I got into a rental car and set off to visit, for the first time, the venue where we were hosting a conference the next day. Ryan’s event-planning com-pany, Carsonified, had teamed up with my company, Fog Creek Software, to produce a series of daylong technical conferences for software developers. Austin was the second stop on our 10-city tour, and we were expecting 200 developers to show up.

Between the pouring rain and the difficulty we had in finding the venue—which was, oddly, tucked into the back corner of a strip mall—I should have anticipated trouble. The first problems revealed themselves when we met the venue manager, and he started off by saying, “She only sent it to me yesterday.”

“She who? Sent you what?” I asked.She, we soon learned, was a member of Ryan’s staff. And

it was our detailed list of audio-visual requirements. Indeed, we probably should have gotten the list to the venue weeks in advance. “We’ve brought in an AV company to help,” the venue manager continued, “but some of that stuff on your list—you just ain’t gonna have that.”

The things we weren’t gonna have, it turned out, were pretty important. internet access for the speakers onstage. Microphones and a sound guy who could get them to work. The ability to turn on and off the lights onstage and in the theater. And, crucially, the ability to project video from the speakers’ laptops onto a screen, something that was so utterly obvious it never occurred to us that any venue wouldn’t have that capacity.

We scrambled all that afternoon to buy the gear we needed. We picked up the last thing on our list—a video cable that was long enough to run from the laptops to the projector in the back of the room—at an office-supply superstore barely an hour before our show was due to begin.

By the time the attendees arrived, we were completely frazzled. I had two speeches to deliver, which, luckily, I had memorised, so I could do them on auto-pilot while my brain worried about the crappy video, the crappy audio, the buzzing from the stage-monitor speakers, the fan noise from the amplifiers oddly placed

right next to the stage—and, 10 minutes into my speech, the outrageously loud sound of a Weedwacker outside the auditorium. Despite the substandard AV equipment, everything went smoothly enough. Still, I was unhappy.

The next morning, I met with Ryan and his staff. His company had never had anything go wrong like this, and I’m sure Ryan won’t be offended if I say that they were a little bit cocky, imagining the events business to be, I think, a tiny bit easier than it actually is.

So I wanted to go through the Five Whys exercise with Ryan and his staff. Five Whys is a problem-solving tech-nique developed by Toyota after World War II to improve its manufacturing process. The idea is to ask “Why?” five times to get to the root of any failure, so you fix the core problem instead of the symptoms.

Being Connected It’s hard enough to control the people who work for you, let alone the people who work for your key suppliers.

HOW HARD COULD IT BE? BY JOEL SPOLSKY


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One problem in Austin was that we couldn’t switch video fast enough. Why? Because we were using a cheap switch purchased at an office superstore. Why? Because we assumed the venue operators would provide a high-quality switch, which they didn’t. Why?Because the venue didn’t have our list of AV requirements. Why? Because we didn’t get it there in time. Why? Because Carsonified didn’t yet have a standard checklist of proce-dures for each conference: what to do one month before, one week before, one day before, etc. Solution: Better checklists, a sug-gestion Ryan says he’ll follow up on.

Like most entrepreneurs, Ryan and I are still learning about how to manage people and teams. And we’re both used to hiring very smart and dedicated people who will get things done to a high standard if you give them some general direction and set them free. But on this trip, we started to notice that this style of hands-off manage-ment, which works so well with our own staffs, just wasn’t working when we had out-side vendors involved.

Here’s another example. At our tech con-ferences, attendees typically bring their lap-tops, and most have cell phones with Wi-Fi access. The minute they sit down, they open their laptops and start banging on the inter-net. More often than not, the venue’s Wi-Fi connection can’t handle the load.

We know this is going to happen in advance, of course, and tell the venues that our audience is made up of really, really heavy internet users. And they say, “No problem; we have A-Number-One excellent internet! It’s going to be great!”

Guess what? Usually the system is so overloaded, nobody can get on.

After the first event, in Boston, where the internet was inadequate, Ryan apologised to me and said, “We are going to make this bet-ter!” And then he turned to one of his staff members, Greg, and said, “Make this better!” And Greg got on the phone and started try-ing to track down the person responsible for making it better.

But you know what? Getting good Wi-Fi in a room with hundreds of laptops is very, very difficult. Usually, it takes a couple of weeks of preparation, specialised equipment, and two or three dedicated technicians who

have extensive experience in this exact prob-lem. Almost nobody knows how to do it. And you can’t just yell at people who don’t know how to do something. (Well, you can, but it doesn’t work.) So I’m yelling at Ryan and Ryan is yelling at Greg and Greg is yelling at some venue manager who vaguely knows how the internet works, and the venue manager is call-ing the 800 line for the internet service pro-vider, and you know it’s not going to get fixed that way. It’s like pushing on string. You need some yanking ability, I think, with string.

In this case, to get what you want, you have to learn about access points, SSIDs, band-width, DHCP servers, IP address pools, and a hundred other technical details, and your vendor has to understand them, and you have

to make sure your vendor understands them. This entails a level of micromanagement that I was taught is a bad thing. Isn’t today’s mod-ern leader supposed to hire brilliant people, give them a little direction, and just let them go to work? Doesn’t micromanagement turn smart people into robots?

Yes, maybe. But here’s my new theory: At the top of every company, there’s at least one person who really cares and really wants the product and the customer experience to be great. That’s you, and me, and Ryan. Below that person, there are layers of people, many of whom are equally dedicated and equally talented.

But at some point as you work your way through an organisation, you find pockets of people who don’t care that much. For them, it’s a job. They just want to get through the day and don’t find it upsetting that the video switching is slow and the Wi-Fi went down and the geeks couldn’t get to their Twitters. If

you’re lucky, none of those people are employed by your company. But the minute you begin to rely on outside vendors, you expose yourself to their people, some of whom inevitably just won’t care enough or know enough or have the right skills to deliver the awesome experience you’re trying to deliver.

I care. Ryan cares. Our staffs care. The venue manager might care but doesn’t know enough. The AV people he hired? Sometimes, they officially Don’t Care, Don’t Know How to Do Their Job, and Really Just Want to Go on Break. And the minute you cross that line, from the people who care to the people who want to go home, that’s when you have to micromanage. You have to check in on people

and inspect their work and sign contracts in blood demanding that if the Wi-Fi isn’t per-fect, it’ll be free.

Now, don’t get me wrong. I’d rather never have uncaring people squatting anywhere in my org chart. But realistically I know that sometimes these people are going to find their way into my life. I won’t hire them at my company, but as we expand into conferences and events, between the theaters and cater-ers and internet providers we’ll be using, some of the key personnel will be beyond my control. And now we’re learning, I hope, how to manage these things a bit better, so that we never have to frantically buy an extension cord at eight in the morning.

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/keyword/spolsky.

HOW HARD COULD IT BE?

Isn’t today’s modern leader supposed to hire brilliant people, give them a little direction, and just let them go to work?

JANUARY 2010 | INC.INDIA | 2 3

Special Sponsored Section

Most entrepreneurs have ambitious business plans and are confident about their ability to reach greater heights. Sometimes, this optimism is not shared by potential investors,

especially upon closer examination of the business. The measures of success and stability applied by both parties just aren’t the same. One way to over-come this hurdle is to consider the investor’s per-spective. A better understanding of the investor’s perspective may bridge the gap.

We will use an example to illustrate our point. Our entrepreneur, Ashok, 40, has built a manpower services company, SVCS, over three years. He closed his record first year with a turnover of Rs 12 crore, and notched up Rs 24 crore by 2009. He is targeting a turnover of Rs 33 crore for 2010.

Like many entrepreneurs, Ashok wants to take his company public in the not too distant future. He is targeting 2012 for the IPO, by which time his company’s turnover is expected to reach Rs 71 crore on the back of growth in deployed manpower from 1,800 currently to more than 4,000.

As far as the world at large is concerned, SVCS is doing well and holds great promise. And to imag-ine that Ashok started with Rs 2 crore in equity, using a mortgage on his parent’s house and dipping into the family savings—a classic start-up story!

Ashok and his team are gearing up for expan-sion of the workforce, for which they want to raise capital. Testing the waters through an investment banker, he found out that SVCS was too small a deal for most private equity investors. Some other investors stopped short when they compared the company’s valuation expectation to its estimated 2010 earnings of Rs 1.1 crore. The investment banker’s discounted cash flow (DCF) valuation of the company stands at Rs 45 crore. Ashok’s investment in human capital and bullish projec-tions for the next five years didn’t seem persuasive enough to investors.

Naturally, Ashok feels frustrated. He reads about private equity deals in the newspapers every

other day, and wonders when his number will be called. He knows that his targets are achievable. He just needs someone to hand him that cash cushion. Investors seemed to be put off by the lack of near-term earnings and free cash flow. Who can blame them? The company is expected to be short on free cash flow till 2012, owing to its increasing working capital requirements as turnover grows.

To handle expansion, Ashok has his eyes set on a COO, who would cost Rs 1 crore per annum. How-ever, this individual wants to be assured of SVCS’s financial stability. On top of this, big business houses are planning to get into this niche, and are eyeing his talent pool—adding to Ashok’s woes.

Food for thought...Ashok needs to attract equity capital to fund sustain growth. To attract capital, Ashok needs to revisit his valuation expectations and understand the method used to value his company. The Rs 45-crore valuation has been arrived at by discounting free cash flow pro-jections from 2010 to perpetuity at a 15% discount rate. Ashok believes that his assumptions and projec-tions are reasonable: by 2017, he hopes to achieve turnover of Rs 300 crore with current gross margins unchanged; and thinks that, after that, the business will grow at 6% per year to perpetuity.

However, from the investor’s perspective, this investment opportunity is priced to perfection. Investors seldom believe in perfect outcomes. Ashok needs to re-engage with those investors that were interested in his the business but were put off by his valuation expectations of Rs 45 crore.

Negotiations will probably result in a reduced valuation where a deal may be struck. It is likely that the reduced valuation will make the investment attractive enough to allow for a respectable invest-ment return assuming a lower future valuation owing to a shortfall in the achievement of optimistic future projections.

Ashok will get the funds he needs to expand and the investor will get the return he desires, thereby finding a solution that suits both parties.

THESPECIFICSThe Upside:Turnover has grown at 40% per year to date since the first year ended March 2007

Gross margins are stable at 28%

Happy employees

Emerging brand—growing appreciation among clients for quality service

Niche services sector attractive to investors

The Stumpers:Working capital requirement as the business grows leads to negative free cash flow till FY 2012

Cash flow projections for 2010 have not budgeted for cash required to hire COO

Well-heeled competitors entering the space; targeting SVCS people and clients

IS YOUR BUSINESS REALLY WORTHWHAT YOU THINK IT IS?

Nitin Bhandari and Shiv Wallia of Mauryan Group illustrate the gap between measures of success deployed by those in need

of funds and those who hold the purse strings.

| INC.INDIA | JANUARY 2010

Your Business Toolbox THE GOODSLooking for a printer?A few tips to make the decision easier for you So your small or mid-sized business needs a new printer. That should be a relatively straight-forward decision to take. Or, is it? As anyone who has bought a printer before will tell you, there are a number of choices associated with the decision, such as colour or monochrome; inkjet or laser. For a small business, mono laser printers make sense—as long as you are sure that you won’t need to print photos or coloured documents. However, if you need to print documents in colour, then it makes sense to look at laser colour printers. Then, of course, comes the most important consideration—price. Here are a few options to make the choice easier, presented under three categories—printers under Rs 10,000, printers above Rs 10,000 and office colour printers.

A QUICK GUIDE TO PRINTERSColour laser low operating costs, but high initial purchase cost.Colour inkjet expensive to run, but offer the richest colours and quality.Mono lasers for general purpose printing of documents, web pages, forms, etc.

Mono Laser Printers: < Rs 10,000 Mono Laser Printers: > Rs 10,000 Office Colour Printers

CANON LASER SHOT LBP3300The LBP3300 is a fast and compact mono-chrome laser printer. With no moving flaps, the body is sturdier than most. Supporting duplex printing, the output is quick. It’s ideal for home and office use where bulk printing is required and for printing books. Quality: Up to 600 x 600 dpiSpeed: 21 pages per minute (ppm)

BROTHER HL 2150NThe HL 2150N can be attached to a net-work. The printer performs poorly with glossy paper but works well on plain paper. The tray is strong but not too smooth. It is ideal for bulk document printing needs. Quality: Up to 2400 x 600 dpiSpeed: 22 ppm

BROTHER HL-5240Brother is best known for making cheap, value-for-money, multi-functional devices. The design is boring, but the HL-5240 stands out for its blazing speed. It has sta-tus lights for toner, drum and paper levels, and a parallel port for those using old PCs. Quality: Up to 1200 x 1200 dpiSpeed: 30 ppm

RICOH AFICIO SP 4100NLThis high-end printer is superfast and stur-dily built. It goes into hibernation mode when not in use. and is suited for large offices and bulk text printing. Its graphics and image output are not great. Quality: Up to 1200 x 600 dpi Speed: 31 ppm

CANON LASER SHOT LBP 7750 CDNThis one has something least expected in printers—a hard drive. An exceptional per-former with a great design, it is sturdy as well. It doesn’t support A3 paper. Double-sided printing speeds are excellent and the synchronised paper flow a joy to watch. Quality: 9600 x 600 dpiSpeed: 30 ppm

EPSON B-500DNAttractive with an unconventional design, this inkjet printer is noisy, but quick. Net-work connectivity adds to its versatility. It is good for photo printing on glossy paper, as well as for text and graphics.Quality: 5760 x 1440 dpi Speed: 33 ppm

JANUARY 2010 | INC.INDIA | 2 5— Powered by www.thinkdigit.com

SECURITY CAMERA

Your friendly neighbourhood watchThe Compro VideoMate IP50W offers good protection using a network camera to remotely monitor areas. Our testing team had some issues though with automatically detecting the camera on the network using the software. The soft-ware has support for multiple cameras. The system allows for motion detection and recording as well. You can access the camera over the web on desktops as well as mobiles. Specifications: 1/4-inch colour CMOS VGA sensor, resolu-tion: 640x480, maximum frame rate: 30 fps, dimensions: 84 x 124 x 91.5 mmPrice: Rs 10,000

Mobile Warriors QWERTY business phones—very much in reach nowCell phones are not only about fancy designs and cool media playback capabilities. Most of us need one that can easily run applications, and allow us to send emails and browse the net. Given how most business-owners are on the move, doing without a cell phone that can allow access to email has become difficult. One with a QWERTY keypad is even bet-ter. You’ll be surprised to find that prices have plummeted and you can now choose from rather good business phones for less than Rs 15,000 in the market.

ANTI-VIRUS

Security made simpleIf you are a novice computer user and worried about viruses and worms, help is at hand from AVG’s new Internet Security 9 suite. It especially suits those looking for a good, feature-rich security solution for their home PCs. It is easy to install – there are no complicated menus and wizards to run through to get your network and PC security settings in place. AVG Internet Security 9 takes care of it all. Towards the end of the installa-tion procedure, the set of wiz-ards asks what kind of a system and network you’re on. At the end, you have the option of deciding how often and which components you wish to scan. The interface shows a list of all its components. A separate pane for scanning is also pres-ent. Scans can also be sched-uled to run at certain times of the day. The firewall component is effective. There are rules that can be set specific to programs. While basic settings are dis-played in the properties window for every component, a more advanced version is also avail-able. It puts some load on a sys-tem with 512MB of memory, but that will not slow it down signifi-cantly. Memory consumption is around 30 to 35MB most of the time. Updating of the virus defi-nitions and program are done automatically with little trouble. If you don’t have an Internet connection, updating can be done using update files. At Rs 1,599 for a year’s sub-scription, it is a tad expensive.

THE GOODS Products + Services

BLACKBERRY CURVE 8520Price: Rs 15,990Ease of use: It is simple to use and almost similar to Symbian phones in terms of usability.Style and design: The quality of the Curve isn’t as good as the Nokia or the Samsung. This isn’t a phone to be thrown around freely. QWERTY keyboard feels nice.Value for money: If you’ve always wanted a Blackberry, this is one of the cheapest ones to buy. As a phone, though, the E63 is superior.

NOKIA E63Price: Rs 12,699Ease of use: Those used to Symbian will find this very easy to use. There are plenty of apps and going online is simple.Style and design: The Nokia is surprisingly solid, although it lacks the metal back of the E71. The QWERTY keypad and directional buttons are sturdy, but not as good as the Blackberry.Value for money: For the price it retails at, the E63 is one of the best value-for-money phones in the market today.

SAMSUNG OMNIA PRO B7320Price: Rs 16,500Ease of use: Windows Mobile (WM) isn’t simple, especially on a phone without a touchscreen.Style and design: Screen quality and keys aren’t up to the mark. The design and feel of the phone is almost at par with the E63, and a little better than the Curve 8520.Value for money: It’s one of the cheaper WM phones with QWERTY, so if you really need it for the applications, this phone makes sense.

ANTI-VIRUS

2 6 | INC.INDIA | JANUARY 2010 — Powered by www.thinkdigit.com

Tips & Tricks Speed up browsingHere are some hot keys that will help you speed up your internet experience. We have left some of the common ones out and kept the lesser-known ones. These hot keys apply across Opera, Chrome, Firefox, Internet Explorer and Safari.

DOWNTIME

Just for menMassages and manicures are not just for women. Here are some packages targetted at male executives who want to de-stress. —Sunaina Sehgal

FROM QUICK PICK-me-ups to relaxing massages, the options are many. Try out a body mas-sage with herbal bath at Rs 1,000 or a body massage, face massage, steam and herbal bath combo at Rs 1,200 per hour.Location: DelhiPlace: Kerala Ayurvedic Healthcare

THE OBEROI SPA and fitness centre in Kolkata has a varied spa menu. Pick out the Execu-tive Classic package that com-bines the benefits of a back and head massage with 30 minutes devoted to each service, priced at Rs 4,700. Location: KolkataPlace: The Oberoi Grand

MIX MEETINGS WITH some spa treatments through the 2-day-1-night weekend package at the Ista. Choose from offerings such as aromatherapy, earth stone treatment, meditation and yoga. Rs 11,500 per person, including room and dining. Location: HyderabadPlace: The Ista Hotel

GLOBETROTTERS CAN relax here with the jetlag body mas-sage at Rs 2,700 an hour, or a four-hand massage at Rs 3,400 an hour. Or try the Only Man’s Facial at Rs 2,500 an hour. Location: MumbaiPlace: Cosmic Mandal 15

[Ctrl] + [Shift] + [T] Restore Last Closed Tab For those oops moments[Ctrl] + [+]/[-] Zoom In / Out The simplest way to enlarge the contents of a web page[Ctrl] + [0] Default zoom When things get too big or too small[ALT] + [D] Go to address bar The quickest way to move on[Ctrl] + [E] Go to search bar Once the browser fires up, it’s either search or address bar, right?[Ctrl] + [Enter] Auto complete a “.com” to an address and go Who wants to type so much anyway?[Ctrl] + [Shift] + [D] Add a bookmark So that you can come back to stuff you like[Ctrl] + [H] History See where you’ve been quickly[Ctrl] + [Tab] Cycle to next tab It’s the quickest way to navigate tabs[Ctrl] + [Shift] + [Tab] Cycle to previous tab Same as above[F11] Go full-screen because some things need a large screen

SHOWCASE

A good Blu-ray playerStaying at home on weekends could be fun with the Sony BDP-S360 Blu-ray player. It plays DVDs better than most other standalone DVD players. It’s also visually appealing with a black body, minimalist but-tons, and a LED display on the front panel. It can read data, such as MP3 and photos from CDs or DVDs, but strangely, does not support DivX technology. Output quality is great with colours not just vibrant, but real. It’s fast and easy to navigate. Those who have used the PSP, PS3 and VAIO P will find the features familiar. SpecificationsVideo DAC: 12bit / 148.5MHz; Decoders: Dolby Digital Plus, Dolby TrueHD, MP3, PCM Dimensions: 16.9 x 2.2 x 8.1 inchesPrice: Rs. 19,990

Work + Play THE GOODS

JANUARY 2010 | INC.INDIA | 2 7— Powered by www.thinkdigit.com

MANAGING DIRECTOR, YO! CHINA

Jasmine tea I was introduced to it when I first visited China three years ago. They served me Chivas Regal with cold Jasmine tea and it was fantastic. Too bad, I can’t drink that in office.

Ashish KapurAshish Kapur believes in keeping life simple. The only gadgets he uses are his laptop and Blackberry. “I am not big on gadgets,” says the man behind Yo! China, arguably India’s first Chinese fast food chain. He has a customised calendar on his desk which he probably uses to mark his travel dates. “I plan my next trip before I even come back from one,” says Kapur. Service with a smile is his motto and he lives up to it by visiting one of his restaurants at least once a week to serve customers – wearing a Yo! China name tag. He secretly dreams of being an actor. But nothing beats “a long Sunday brunch full of martinis” when it comes to making him happy. —Pooja Kothari

THE GOODS Beyond Business

Smiling faces This is an absolute must for me. I cannot bear to see glum faces around me, says the proverbial optimist.

Karaoke I love singing. My karaoke system is loaded with my favourite songs, and my family and friends are forced to sing along every week.

A house on Prithviraj Road It is a fantastic neighbourhood. I will hopefully buy the house while I am still young enough to enjoy it.

The Blackberry Curve It’s the one thing that my wife and son have sworn to break. Picked up a year and half ago from a shop in Gurgaon, it is my lifeline.

The i-Pod Nano I use it mostly while

jogging, or playing golf.

Things I CannotLive Without

...and WhatI Covet


AVENDUS CAPITAL STUNNED

THE WORLD A YEAR AGO WHEN

IT BECAME ONE OF THE TWO

INVESTMENT BANKS TO BAG THE

SATYAM MANDATE. THE OTHER WAS

GOLDMAN SACHS. NOW, ITS THREE

FOUNDERS ARE ON AN AUDACIOUS

PATH TO CREATE A TOP-NOTCH

FINANCIAL SERVICES COMPANY

OUT OF INDIA


BY POOJA KOTHARIPHOTOGRAPH BY GAUTAM SINGH IMAGING BY ANIL T

THE NEW KINGS OF DEAL STREET

but its nameplate now shines brightly on the fifth floor of one of the toniest office addresses in suburban Mumbai—the IL&FS building. It took the firm a few years to cover the short distance from Agnelo House in Khar to their more fash-ionable address in Bandra Kurla Complex. But it has used the time rather well.

Avendus has transformed from a “venture catalyst” in 1999 into a financial advisor focused on the IT sector and most recently, to an investment bank that bagged one of the biggest and most watched deals of recent times—the distress sale of Satyam Computer Services in 2009. It was appointed, along with the

Tough timesSole advisor to Indiabulls and Classteacher.com on Series A fund raising; the

former was also its first private equity transaction

Looking ahead Decides to become an investment bank with a focus on the IT/ BPO sector

Landmark dealAvendus is the sole financial advisor to Cymbal Corporation on its US$ 68 million acquisition by Patni Computers; one of the largest deals in the technology space at that time.

Brand creation Changes name to Avendus Advisors

VENDUS CAPITAL MAY HAVE

STARTED OUT FROM A BUILDING THAT HOUSES A GARAGE ON ITS GROUND FLOOR,

A DECADE OF UPS &

DOWNS

JUNE 2000 END-2000 FEBRUARY 2001 JUNE 2004 OCTOBER 2004DECEMBER 1999

blue-blooded Goldman Sachs, to find buyers to bail out the collapsing company. And it did. Satyam received a US$582 million investment from Tech Mahindra in April last year—and Avendus hit the headlines.

“Satyam was the pinnacle of what we had been trying to achieve. It gave us immense confidence to complete a transaction of that size and complexity,” says Kaushal Aggarwal, one of the three founders.

It is only fit that Avendus found its spot under the sun right in the middle of an economic downturn. It was, after all, born in the throes of another one—the dotcom bust in the early years of this decade.

Its first avatar was Coolstartups, started in 1999 by three professionals in their twenties: Ranu Vohra, Gau-rav Deepak and Aggarwal. The idea was to be “an inter-mediary which connects entrepreneurs with VCs and other business-related services”, as mentioned in a news-paper report from the time.

Those were the heady days of the dotcom boom in India. Almost everyone had an idea, and was either launching a new business, or getting funded. Vohra and Aggarwal were working for CEA, an investment bank in Mumbai, while Deepak was investing in technology companies for ICICI, a financial institution.

They ran into entrepreneurs all the time. “It made sense to start an online investment bank focused on technology start-ups,” recalls Deepak. But where was the money? The trio, belonging to middle-class families, started pitching to investors. Luckily for them, attracting the attention of venture capitalists was not difficult in those days. Before long, they had money in their bank, including from Saurabh Srivastava’s Infinity Ventures.

“They struck me as very intelligent, confident guys, who were raring to go. They were the kind of team that you paid attention to,” remembers Srivastava.

The venture showed promise. When it launched a website in mid-2000, Coolstartups was flooded with 500

Fashionable nest Moves into the swankier

surroundings of IL&FS building

Sole advisor to Indiabulls and Classteacher.com on Series A fund raising; the

former was also its first private equity transaction

A DECADE A DECADE OF UPS & OF UPS &

DOWNS DOWNS

JUNE 2000JUNE 2000DECEMBER 1999DECEMBER 1999

Humble beginningsStarts off as Coolstartupswith funding from Spain-based Harish Fabiani ofAmericorp Holdings, Infinity Ventures, an incubator, and Anil Godhwani, ex-director of America Online


applications from entrepreneurs who were looking to raise funds. These applicants were ready to part with cash and equity in return for funds raised.

Then the buoyant economy abruptly began to run out of steam. The dotcom bust was leaving wreckage in its wake—companies were shutting down, even as inves-tors were tightening their purse strings. By the end of 2000, the writing was on the wall for the founders. The market for their original idea disappeared less than a year into the business. Avendus did exactly three deals in nearly 18 months: two in 2000 and one in 2001, according to data available on its website.


“The market crashed on us in late 2000, our hypothesis was com-pletely washed off, and we had to take a conscious call on where to go from there,” recalls Deepak, who now co-heads the investment banking division.

The young entrepreneurs didn’t know what to do. They were only sure of one thing—none wanted to take up a job again. The experi-ence had given them a taste of entrepreneurship and they had taken quite a shine to it. “I had a wife and kid. But I didn’t think twice about carrying on,” says Vohra. Deepak seconds that sentiment since he too had got addicted to the “high of doing something on (his) own.”

However, the climb ahead was difficult. The money left from the first round of funding was only going to cover expenses for a few more months. The financial world was still licking its wounds. “We remapped the market—but we did that with the discipline and integ-rity it deserved,” says Deepak.

“We decided to create a successful investment bank,” he adds. Just like that. A bunch of three 20-somethings with few relationships decided one fine day that they were going to break into a market that was run like an old boys’ network. There was no precedent either. Most Indian investment banks were either partnerships with big international players, such as the Hemendra Kothari and Merrill Lynch combine of the erstwhile DSP Merrill Lynch, or divisions of big Indian banks, such as ICICI Bank.

The only thing in their favour was that each one of them had worked for an investment bank at some point in their short profes-

sional lives. “We understood the advisory business and had looked at invest-ments for companies,” says Deepak.

What they understood then of the market was simple: most transactions were done on the basis of relationships. “No one was using any knowledge or insights into the industry. We decided to provide advice from the business own-er’s perspective,” adds Vohra.

Having decided on a plan of action, realisation hit that imparting financial advice under the existing brand name CoolStartups was going to be difficult. Since “branding had to become a big identity” for them, the trio found a freelance designer to create that identity. “We knew what we wanted—a name that was cosmopolitan.” Thus, was born Avendus Advisors.

The founders did everything that came their way, including a “mandate to

New robes Changes name to Avendus Capital

Savouring victory Closes 24 deals across sectors, the highest number of transactions in any year since its inception

Tanking up Raises Rs 100

crore from Eastgate Capital

Moment of glory Co-advisor to Satyam Computers on a US$582 million strategic investment by Tech Mahindra

Fresh resolve The founding trio decides to make Avendus a full-service investment bank

Bidding adieu Avendus buys back equity from Infinity Ventures Another milestone

Starts servicing capital markets transactions

Ranu VohraManaging Director & CEO

He’s the charmer of the lot; a diplomat who always has the right words. He’s credited with building lasting relationships for Avendus. With more than 14 years of experience in finance, Vohra is also the oldest of the founding trio. An alumnus of IIT, Delhi and an MBA from FMS, he has previously worked with Hinduja Finance (now Hinduja Ventures) and CEA, a US-based investment bank. He picks up a new interest every two years; right now, he’s preparing to run a marathon. He goes running for an hour every day. “I run quite slowly,” he says. So did the tortoise.

Managing Director & CEOHe’s the charmer of the lot; a diplomat who always has the right words. He’s credited with building lasting relationships for Avendus. With more than 14 years of experience in finance, Vohra is also the oldest of the founding trio. An alumnus of IIT, Delhi and an MBA

BY 2006 APRIL 2007MAY 2005 DECEMBER 2007 FEBRUARY 2008 IN 2008 JULY 2008 APRIL 2009

Adding services Offers institutional broking

Tanking upRaises Rs 100

crore from Eastgate Capital


Vohra, despite not knowing them well.

In fact, Aggarwal doesn’t think familiar-ity makes for better relationships. “I think it’s tougher to form partnerships with very close friends,” he says.

The trio didn’t know each other well before starting out

with Avendus. Although Aggarwal and Vohra were together at IIT, Delhi, they “hardly knew each other”. Similarly, Vohra had interacted briefly with Deepak during their respective stints at investment banks, but they were mere acquaintances.

founders have shown—whether it is in the way they have built an investment bank in a decade, or the values they share, or, for that matter, the way they think about the company’s future.

“We understand each other’s strengths and weaknesses very well. And because of that understand-ing, we are able to let one person take the lead wherever that person is strong,” says the calm Vohra.

“This partnership is based on strong mutual trust,” adds Aggarwal, who got together with Deepak and

Like matrimony, business partner-ships are easier entered into than lived through. Just as living

together every day challenges a per-sonal relationship, working together under the high stress of a start-up can tear the very fabric of a partnership. Partners have been known to part ways much before businesses even see the first signs of success.

The Avendus story is all the more compelling for the unanimity that its

map the BPO market for Rs 2 lakh”. Avendus stuck to the IT vertical and provided “knowledge-based deal making in the M&A and private equity space”.

The turning point came in 2003, from where they have not looked back. The firm became profitable and its revenue started growing—increasing 10 times by 2006. It also got its first big-ticket deal in the interim. It was the sole advisor to Cymbal Corporation, a US-based IT services company, in its US$68 million acquisition by Patni Computers, an Indian software firm.

On a trip to the US in 2006, the trio faced another moment of truth. “We were back to asking: where do we go from here?” recalls Deepak. The team had to decide whether to continue being a boutique investment bank, or to transform into a full-service player to better serve the needs of its clients. A full-service investment bank, by definition, offers corporate clients a bouquet of services, including raising capital in both public and private markets, trading securities, and managing corporate mergers and acquisitions.

Around the same time, the three founders realised that despite the recogni-tion their firm was getting, it lacked high-quality investment banking talent on its rolls. “It was hampering our chance to grow,” recalls Deepak.

In hindsight, 2006 turned out to be another inflection point in the firm’s life. Not only did the firm decide to become a full-service investment bank, the founding trio also took up the challenge of recruiting talented professionals from finance. Luckily for them, a few people took an early bet on the company. One of the first professionals to join Avendus was Aashish Bhinde, an IIM-Kolkata alumnus, and now head of its European operations. Girish Nadkarni followed, and now looks after the capital markets and institutional broking services.

From a team of 30 in 2006, Avendus now employs more than 120 people. “By next year, we will have at least 13-14 people with 18-25 years of experience in the market,” says Aggarwal.

Its most recent hire is a case in point. After searching far and wide, Avendus finally hired Akiva Elias as its chief operating officer. With a resume boasting of the prestigious Wharton School and 14 years of experience at Morgan Stanley’s Infor-mation Technology division, Elias just might be the big ticket name that Avendus needs to feel confident of its ability to attract and retain high-quality talent.

Kaushal AggarwalManaging Director

All three agree that Aggarwal is the calmest of them. His face rarely betrays an emotion, and mostly sports a Zen-like peace. This quality must come in handy while devising strategies for Avendus—something that Aggarwal is said to do rather well. As co-head of investment banking and in-charge of US operations, he travels the most—nearly once a month out of India. “I read on flights. In fact, I am most relaxed on long-distance flights,” he says. Like the others, he too has spent most of his working life at Avendus. His 12 years of experience in investment banking include a two-year stint at Kotak Mahindra and a few months at CEA. An IIT-IIM alumnus, he prefers to spend time with his family after a hard day at work.

Managing DirectorAll three agree that Aggarwal is the calmest of them. His face rarely betrays an emotion, and mostly sports a Zen-like peace. This quality must come in handy while devising strategies for Avendus—something that Aggarwal is said to do rather well. As

UNITEDWE STAND



Investment Bank of the Year award by the Global M&A Network. In 2008, it even got the external validation in the form of an investment of Rs 100 crore from Eastgate Capital.

Of course, it is still struggling to shed its “boutique” tag. “We hate that word,” says Aggarwal, who is confident that once its businesses gather steam, Avendus wouldn’t be called a boutique i-bank anymore.

But what the market calls them will hardly decide their future as a company. They don’t have to struggle for revenue any more. Their existing relationships are ensuring success in new fields. For instance, five of the six IPO mandates in the capital markets practice are from clients who have previously used Avendus to raise private equity.

What they do have to worry about is how Team Avendus will fight as an army against the big names of investment banking. So far, the teams have worked with a linear set of relationships. But, as the past few months have demonstrated, they will increasingly have to work together. “We have got six IPO mandates in as many months, and all of them had people from multiple functionalities working together,” says Deepak.

The challenge ahead, as Aggarwal puts it, will be in how the “senior team gels and works together.” As happens with most firms that enter this stage of growth, the focus shifts to leadership and team work. At Avendus, first, it was about attracting the high-quality talent that would give them respectability in the market. Now, it is about

getting it to work seamlessly to deliver the goods.“It isn’t a big deal, but we haven’t done it before,” says Deepak. But, then, learn-

ing on the job shouldn’t be new to the Avendus founders. Now in their mid-to-late thirties, a majority of their working lives have been spent in building this business. Except for Vohra’s years at CEA, the founding trio has never had first-hand exposure to global best practices, or systems and processes of established companies, or the nuances of making people work together.

They haven’t had much help along the way, either. “We didn’t have a mentor from a financial services background, who understood all aspects of the market

and could have helped us early on. We have made tons of mistakes in these years,” says Aggarwal, rather candidly.

What is also new is the re-introduction of risk into the equation. After years of being comfortably placed, Avendus is try-ing its hand at competing again— and this time, the fight’s with the big boys of invest-ment banking and on their own turf. “This is typically where an organisation gets into risk again. They shouldn’t lose their core strength, while coming up wanting in the other space,” says an industry observer.

Only time can tell whether they can become the Goldman of India—and succeed in creating “a high-quality financial services company out of India,” as Vohra put it. But one thing’s clear—not every successful start-up needs a garage. Sometimes, the room above will do just as well.

Gaurav DeepakManaging Director

The most outspoken of the three, Gaurav Deepak co-heads investment banking and oversees the European operations of the firm. His 12 years in the world of finance include a stint with ICICI, where he invested in technology companies. A member of the distinctive IIT-IIM club, Deepak’s known to speak his mind—and work up the sales numbers for Avendus. He finds work relaxing. “I truly feel delighted coming to office,” he says. Work is play for this i-banker.

“We are now equipped to deliver on our full-service promise to our clients,” adds Deepak. Like an army com-mander who goes about assembling his men and weapons for the war ahead, the Avendus team has spent the last three years preparing for the big plans ahead. Now, the time has come to make true on the promise shown so far.

In the high-risk, high-reward world of investment banking, Avendus has already carved out a niche for itself. It was recently awarded the prestigious India M&A

The most outspoken of

investment banking and oversees the European operations of the firm.

What, then, has kept them together in the last decade? “We have actually grown together. We have spent our entire professional lives together,” says Deepak, who has no qualms picking up the phone and giving feedback to his co-founders.

“We know that the feedback is not biased, and it is for our good and the company’s good. So we work on that feedback,” he adds. In fact, each one of them thinks that it is the “mutual trust and respect” they have for the other that results in the great chemis-try they share.

Of course, this didn’t happen over-night. It took them “3-4 years to under-stand each other well.” And even now, they can reason and argue through

most differences of opinion. The recruits at Avendus might think the founders are always fighting, but it is simply a “healthy discussion”—a means to find the way forward through debate.

In case you think that there must be some sort of personal bonding helping the professional equation, be under no illusions. “We have families and friends outside of work as well. We do enough bonding at work,” Vohra is quick to protest.

Deepak has the last word: “Do not underestimate the importance of mutual trust and respect. If you have that, you can always solve any prob-lem.” Of course, it helps that they share a common key to success!



THE REAL AYN RAND

Ayn Rand was capitalism’s Helen of Troy: the brain that launched a thou-sand wild ambitions. A Russian Jew forced to flee her home of St. Petersburg in the wake of the Bolshevik revolu-tion, Rand immigrated to a United States erupting in skyscrapers and highways and championed a new philosophy with man at its centre and rationality, work, and self-interest as its principles. Novels like The Foun-tainhead (1943) and Atlas Shrugged (1957) set millions of feet marching to the beats of different drummers. If readers sometimes came for the volcanic sex scenes, they stayed for the titanic vision of individual achievement.

WHOIS AYN

RAND?Anne C Heller’s new biography, Ayn Rand and the World She Made (Doubleday), portrays the author as part god, part gorgon: a woman of powerful intellect and petty grievances who preached lofty individ-ualism while demanding lockstep allegiance from her followers. Inc. editor-at-large Leigh Buchanan recently visited Heller, a magazine editor and journalist who worked on the book for five years, to talk about Rand’s life.

A groundbreaking new biography has some surprising answers

She’s the favourite writer of countless entrepreneurs. Her ideas have inspired companies around the globe.

But what was the authorof Atlas Shrugged really like?


JANUARY 2010 | INC.INDIA | 3 7ILLUSTRATION BY BINESH SREEDHARAN

THE REAL AYN RAND

A Book of the Month Club survey pegged Atlas Shrugged as the second most influential book after the Bible.I think Rand has this life-changing effect on people because many read her at a tender age. It’s a time when they are trying to separate from their parents and the context of their childhood and to become somebody on their own. And her language is so uplifting—it goes swooping up into the clouds when she talks about the characters she considers heroes. The reader travels along with her.

Entrepreneurs, in particular, love Rand. They buy her books in first editions. They name companies after her characters.Rand would love what they are doing as well. I think part of her appeal is she gives people permission to do whatever they damn well want, so long as it’s idealistic in some way. Rand’s emphasis is on productive, original business. She ennobles something that might otherwise be treated as mundane. So entrepreneurs are inspired by the heroic enterprise in Atlas Shrugged. People became architects after reading The Foun-tainhead. She also teaches some very inter-esting lessons about punishing talent, that mediocre people try to drag down those who are more talented than they are.

Entrepreneurs love to talk about all the people who once called them crazy.Rand was aware that most people prefer safety to risk. In her novels and nonfiction, she celebrated entrepreneurs as the produc-tive engines and unsung heroes of 150 years of Western prosperity.

Rand wrote in a period when most people wanted safe jobs in large companies. Do you think her work ushered in, or at least presaged, the romantic idea of entrepreneurship that prevailed later in the century?In the 1950s and 1960s, she was certainly the most visible proponent of the brainpower, courage, creativity, and vision she attributed to independent businessmen, and she fiercely defended their right to the wealth they generated. She also inspired the liber-tarian movement of the 1970s—though she didn’t approve of it—which entrepreneurs often find sympathetic to their aims.

What would an Ayn Rand-style hero for post-industrial America look like? Which business or politi-cal leader comes closest?Most important, a Randian hero operates outside the realm of government subsidies and government contracts. I imagine she would have loved Bill Gates in his early years. As to politicians, she liked very few, for reasons you can guess.

As you researched her life, what most surprised you?Rand’s mission was to create an “ideal man” and a microcosmic ideal world in Atlas Shrugged. When the culmination of her life’s work was greeted with derision by the edu-cational establishment, she lost much of her energy and curiosity. In many ways, she became a very ordinary person.

Rand seemed to presage the very contemporary idea of self as brand. To what extent did she

anticipate the likes of Anthony Robbins and Oprah?She had no wish to be at the centre of an enterprise, except as it helped to spread her influence and ideas. It was her long-time protégé and lover, Nathaniel Branden, who launched her business ventures. Unlike her, he was a gifted promoter and businessman. He sold everything he could think of: repro-ductions of art and music she loved, tapes of her lectures—only he had the brilliant idea of renting the tapes instead of selling them. So people would play the tapes for groups and charge admission, then send him back the tapes plus 50% of the profits. Rand’s income from these ventures was small com-pared with sales of her books. But the tapes and music services helped keep those sales humming. And the art service sold prints of her husband’s paintings.

Certainly Rand was unusually con-scious of the commercial value of her name—her brand—and protected it fiercely from usurpers. She even had a law-yer on retainer just to pursue people who advertised a John Galt line of curtains or Roark drill bits. The curtains were a real product, by the way.

Given that Alan Greenspan was a member of her coterie and contribu-tor to her newsletter, to what extent should we hold Rand accountable for the economic meltdown?To what extent can Marx be blamed for Sta-lin’s massacres? I don’t like to blame the writ-ers and thinkers for the way the executors use their ideas. That’s silly.

It wasn’t until last year that Greenspan retracted the arguments for self-interest that

“She would have loved Bill Gates in his early years.

She was 49.disastrous marriage. So that she could


THE REAL AYN RAND

he made in the essay “The Assault on Integ-rity,” published in Rand’s newsletter The Objectivist in 1963. I find it incredible that he went 45 years without having revised that thinking. Still, the Randians liked him less over time. They think he sold out because he didn’t reinstate the gold standard.

What would Rand have thought of the fortunes being made from Facebook and similar companies?She would not like people who use such things and might not love the things themselves. But she would say if people are willing to pay for it, then you have a right to the money. Rand ide-alised the Founding Fathers and the tycoons of late 18th- and 19th-century America. The railroad builders and the steelmakers. The miners and the inventors. She admired big engineering projects. But as she got older, people seemed to get smaller. They were doing smaller things. What she would not have liked is people doing a little arbitrage, earning US$250 million, and taking that out of the productive capital of the country.

It’s interesting that Rand wrote sweeping epics full of exalted ideas about the ascendancy of man, yet she’s almost as famous for her sex scenes.I think the sex scenes are very appealing to many people. Rand would say that we have been taught that there is a mind-body split. The body’s lusts are bad, but the mind can control them. She would argue there is no mind-body split. What your soul longs for, your body longs for, too. If you are a moral person, you desire the best thing you see out there for yourself.

Are the keepers of her flame pos-sessive of her? Did you encounter any resistance or hostility?The keenest resistance came from the single heir to Rand’s property, papers, and copy-rights, a former philosophy professor and Rand disciple named Leonard Peikoff. Pei-koff remained by Rand’s side through her final illness and death in 1982. He is a strict constructionist of Randian ideas and the chief guardian of her legend, which, accord-ing to him and his circle of friends, is as the world’s best novelist and greatest philoso-pher after Aristotle.

In 1986, Peikoff ’s cousin, Nathaniel Branden’s ex-wife Barbara Branden, wrote a book that disclosed for the first time the fact that Nathaniel had been Rand’s lover as well as her acolyte, although he was 25 years her junior. Peikoff refused to believe this until some years later, when hard evi-dence turned up. He has not spoken to more than a few outsiders since then, and he would not speak with me or grant me access to her papers.

Both the Brandens were major sources for you. I’m surprised they are not retributive, given her treat-ment of them.The Brandens have been publicly attacked by generations of Randian true believers, and they had a story to tell. They met Rand as worshipful undergraduate students in 1951. In my view, Rand engineered the Brandens’ disastrous marriage so that she could safely take Nathaniel, then 24, as her lover. She was 49. She browbeat Barbara and her own hus-band, Frank O’Connor, a passive, gentle man, into agreeing to the affair and keeping it a

secret. It lasted 14 years. And when finally, at 38, Nathaniel fell in love with a 23-year-old artists’ model and Rand devotee, Rand ousted him, the model, and Barbara from her Objectivist cult and tried to sabotage his career. The Brandens, now divorced and liv-ing in L.A., argued to me that her moral abso-lutism, her appetite for admiration, and her strong cruel streak had damaged them and ruined many others’ lives.

The book addresses some other unsavoury aspects of Rand’s life.She had a habit of exaggerating her own suf-fering, and she often forgot to credit those whose ideas she borrowed and who helped her in more material ways. She humiliated her husband. She could be narcissistic, shrill, demanding, untidy, even unclean, and her use of amphetamines exacerbated her angry outbursts, unkempt periods, and paranoia. In the end, she suffered from loneliness, a sense of betrayal, and bitterness.

Rand was very similar to her char-acters in that she was unwavering in her beliefs. In what ways was she unlike them?She was not fearless. She was certainly not without a desire for recognition and adula-tion, as Roark and Galt both are. She suf-fered from depression and once said, “John Galt wouldn’t feel this. He would know how to handle this. I don’t know,” and “I would hate for him to see me like this.” Yet she also wrote, at the end of Atlas Shrugged, “I trust that no one will tell me that men such as I write about don’t exist. That this book has been written—and published—is my proof that they do.”

Rand engineered the Brandens’

She was aware that most people prefer safety to risk.”safely take Nathaniel, then 24, as her lover.


CASE STUDY

ishit Thacker’s initiation into his family business was a trial by fire. He had come back from Paris in the summer of 2004, armed with a business degree and a specialisation in agriculture. He hoped to put his education to good use at his family business, the Thacker Group of Companies (TGC). The Rs 300-crore group had started out in the sixties as a supplier of dry fruits. In 1995, the family had bought a Kolkata-based milk processing and packaging business, which they renamed as Thacker Dairy. Today, it has grown into one of the largest private

dairies of West Bengal. It accounted for about 10% of the group’s turnover. Things had been going well. In 2001, the Thackers bagged a deal from confectionary giant Britannia Industries to supply, process and package milk under the brand name of Britannia Milkman. The biscuit king, itself a new entrant in the Indian dairy market, had been looking for a trusted partner to outsource its dairy operations for the eastern zone. And TGC, which had been supplying cashew nuts for Britannia biscuits for as long as 15 years and had an established dairy infrastructure in the east, seemed a natural choice. Britannia took over the entire operation, including sales and distribution, of the dairy.

The deal fetched the Thackers rich dividends. Their milk business went from 45,000 litres per day in 2000 to 120,000 litres per day in 2003. The family even added additional processing capacity, amounting to nearly 2 lakh litres of milk a day.

N

Thacker Dairy lost its contract to supply packaged milk to Britannia.

How did it survive the loss?

PHOTOGRAPH BY BHASKAR MALLICKBY INC. INDIA TEAM


Fighting for Survival Having scripted the turnaround of his family’s dairy business, Nishit Thacker is planning to launch new products by May.

CASE STUDY

The Experts Weigh In

A FINGER IN TOO MANY PIESThe Thackers must have done a lot of right things to reach this level. However, they also made a few mistakes at the beginning. The dry fruit business is different from the milk business in the sense that dairy products cannot be stored. You have to sell milk every day. So, the Thackers could have shown some foresight—when they allowed sales to increase under Britannia, they should have planned for an eventuality in case the company deserted it one day. They should have started marketing on their own as well. Even though they were allowed to use the Britannia brand name for three months, it is too short a period to build a brand. It was smart of them not to collaborate with Amul because it would have pressed them down even more. Thackers should also have figured out the procurement and quality concerns sooner. The bulk cooling centres were put up quite late in the day. I feel the Thackers are putting their fingers in too many places. They are procuring milk, marketing it, manufacturing products; basically doing everything. I give market-ing to distributors, and animal rearing to farmers. I do manufactur-ing. They should look at Dynamix in Maharashtra, which can be a role model for small dairies like us. Sunil Bhu | PROPRIETOR | Flanders Dairy Products

CREATE A STRONG NETWORK AND BRANDThe Thackers actually did the right thing by avoiding the partnership with Amul. This way, there was no chance of history repeating itself. The plan to develop SMP is good, since it has many applications. This will give Thacker Dairy a wider reach. According to me, there are three things that Thackers can do. First, develop a strong and sustainable brand of their SMP for retail consumers. It would cer-tainly take some time to develop the brand, but there has to be a beginning. Second, create a strong and penetrative network, so that milk reaches the maximum number of consumers. In this process,they may have to work in tandem with the distributors. Fresh milk could be made available twice a day with special schemes for festivals. Third, position Thackers’ milk in the heart of Bengalis. This can be achieved by some promotional activities, such as organising a healthy child competition in association with some NGOs, or taking part in sporting events at prominent schools. These special events could be used to convey the benefits of milk.Samish Dalal | PROFESSOR | Centre for Family Managed Business, S P Jain Institute of Management & Research, Mumbai

However, things started changing towards the end of 2003. Dogged by tumbling sales numbers in the liquid milk mar-ket, Britannia decided to withdraw from the packaged milk business all over India. Even at Thacker Dairy, sales had come down to nearly 50,000 litres a day again.

By July 2004, Britannia ended its agreement with Thacker Dairy. And, at 22, Nishit was handed his first assignment—take over the reins of the business from Bri-tannia, which had been in control of operations since 2001, and hunt for a window of opportunity that would jump-start the business and help turn a profit.

If that wasn’t daunting enough, Amul, a national player in the packaged milk business, had announced its decision to enter the market. It even approached Thacker Dairy with the proposition to use the latter’s facilities for packaging milk. “We decided against it since their terms and condi-tions weren’t agreeable to us,” explains Nishit.

Things had worked out with Britannia because of the long association. It had not disrupted Thacker Dairy’s staff and distribution setup. But Amul wanted to do things its way. So not only was Thacker Dairy losing its business part-ner, it also had to contend with a new

player that was threatening to beat it at its game. “At that point, we really didn’t know what to do,” says Mihir Thacker, a recent entrant into the family business—and at 22, the youngest Thacker in the business today.

West Bengal wasn’t an easy market to begin with. “It is very price conscious. When we increased the price of milk by 50 paisa a litre, it resulted in a loss of 1/5th of our sales in one month,” adds Mihir. This happened despite the hike being universal and in accordance with government regulation.

Responding like a typical business family, the two gen-erations got down to work. “We requested Britannia to let us use their brand name for an additional three months,” recalls Nishit. And the family took over the reins again.

By November 2004, Thacker Dairy launched on its own once again—selling polypack milk under the brand name of Farm Fresh Milk in West Bengal.

Back in the seat, the family realised that traditional problems with the quality and quantity of milk had acquired bigger proportions due to increased competition. Since it did not have its own farm, Thacker Dairy bought milk from farmers in nearby regions. The poor health of the cows and the quality of fodder resulted in low yields.

Amul, on the other hand, entered with an advantage. It procured its milk from Gujarat—a state that was years ahead of Bengal in its milking practices. “Consumers could taste the difference in the two brands of milk,” admits Nishit.

Another advantage for Amul was that it already had a distribu-tion network in place for products such as butter, which allowed it to aggressively penetrate the market within three to four months of

launch. While its competitor was growing, sales at Thacker Dairy were flat-lining. The press reported sales as “dipping by around 8,000 litres per day” due to intensified competition.

The Decision Despite the challenges, the Thacker family decided to stay put in the business. “We took the time to learn. We realised we had to become professional in our practices to survive,” adds Nishit. The company decided to focus on backward integration by procuring milk directly from the farmers.

“We set up bulk milk cooling centres in the Nadia and North 24 Paraganas districts of West Bengal. Farmers from 450 villages in the belt could come and deposit milk,” recalls Mihir.

This was a first for the private dairy business in that region.


CASE STUDY

Imported from Austria at a cost of Rs 15 lakh each, these machines kept milk chilled at 4 degrees Celsius. Removing middlemen, who often altered the composition of the fresh milk, the dairy started procuring the product directly from the farmers. “Both the quality and quantity of milk increased. We required around 50,000 litres a day. We got nearly 30,000 litres more,” he says.

That gave rise to an additional set of problems. “We had to figure out what to do with this excess milk.”

The machines were already bought and set up. Supply was going up every day. The dairy resold the milk to local suppliers at a price low enough to meet its costs. But that could not go on forever.

The family decided to set up a Rs 11-crore spray drier plant to use the excess milk to make skimmed milk powder (SMP). It is a deriva-tion of milk and a highly profitable business. The product is easier to export since it lasts longer, and has multiple uses even within the country—it is used in everything from Bournvita to protein shakes and baby foods.

“We have even been offered guaranteed buyback on this product, such is its demand,” says Mihir.

The results have allowed the Thacker family to breathe easy. “We may not have grown much in terms of volume of milk, but there is no doubt in our mind about our success,” says Nishit, reeling off an impressive list of Thacker Dairy’s achievements: the first private dairy to set up bulk coolers and spray drier plant in eastern India, first to start artificial insemination of cows, and the work it has done with farmers to improve the quality of cow rearing.

Its brands, Farm Fresh milk and Cold Rush ice creams, have slowly, but steadily, become visible on retail shelves. They are now being used by leading hotels and hospitals in Kolkata.

The dairy plans to launch new products, such as paneer, flavoured sterilised milk, yellow ghee and butter by May 2010. The family has also ambitiously planned to set up its own automated dairy farm for which they have been granted 184 acres of land by the West Bengal government.

Things may have looked uncertain a few years back, but the Thackers are now firmly in the driver’s seat. They want to compete with Amul. Pretty ambitious, but Nishit thinks he can make it hap-pen sometime in the future. “We plan to capture share in every mar-ket that we have a product in.”

When friends meet for coffee, big plans and even bigger dreams often brew. And some-times, the caffeine kick may last long enough to change lives and cities. Ask 31-year-old Reena Chengappa and her band of boys, Shailesh Deshpande, Sriram Aravamudan and Athreya Chidambi. In December 2008, the four friends, all from Bangalore, nur-tured one such session to grow an idea into a business venture.

Nature lovers and spirited eco-travellers all, they founded My Sunny Balcony, a gar-den consultancy, to design dream gardens for busy, urban professionals, and create little patches of green in concrete balconies across Bangalore’s expanding high-rise suburbs.

START-UPDIARIES

Bangalore. Shop for winter blooms, create a viral marketing plan...

Delhi. Look for a bigger workshop, buy new machinery...

Hyderabad. Pull up number of users, add more destinations...

January 01-2010

Why do some ventures succeed while others fail? What makes some start-ups grow, even as others flounder? One way to find some answers is to look at a few enterprises closely over a period of time and then introspect on who got what right. We have chosen three such interesting start-ups—as much for the unique idea as for their passion and drive to succeed. We will publish monthly entries on the progress they make this year—in the hope that these will provide a glimpse of the struggle that most new ventures go through. Here’s a background on each of the chosen ones.

My Sunny Balcony: Green thumb grows into a fruitful business

The Floral Four (L to R)Shailesh Deshpande, Athreya

Chidambi, Sriram Aravamudan and Reena

Chengappa get 20-30 enquiries every week.

Shop for winter blooms,Shop for winter blooms, create a viral marketing plan... create a viral marketing plan...

Look for a bigger workshop, buy Look for a bigger workshop, buy

Pull up number of users, Pull up number of users,

January 01-2010January 01-2010

some ventures succeed while others fail? What makes some start-ups grow, even as others


Tracking three radical ideas from three cities

START-UP DIARIES

“With so much construction you see felled trees everywhere here... This was once a city of bungalows with front lawns and backyards. We wanted to bring that back, to supplant our loss. It’s a simple idea really. We have moved the front garden up the elevator to the balcony,” explains 40-year-old Deshpande, also an environmental consultant.

The idea quickly bore fruit. Within a year, My Sunny Balcony has done over 30 concept balcony and terrace gardens in themes as varied as Zen, European and traditional Indian. An impressed customer base and an effective digital viral market-ing strategy have ensured a steady stream of future projects. “This is not what we visualised. We began My Sunny Balcony as a weekend enterprise, a hobby. But, the response has surprised us. And now we mean business,” says Chengappa who quit her Infosys content design job to work full-time here. She says they broke even with the first project and are now “minimally profitable”.

Thirty-three-year old Aravamudan, a former software techie tries to decode their success. “We have been extremely lucky because we have hit the market at a time when there is a huge consciousness to go green. Our work ties in with that ethos.” He too works full-time in the business now. The other two founder members, Deshpande and Chidambi, a web designer, have kept their day jobs and pitch in part time.

And, it’s already time for reinforcements. My Sunny Balcony gets up to 20-30 enquiries a week but can manage only two or three client visits and two garden executions every week. It’s also looking out for an intern garden designer who can independently execute projects.

None of this is surprising considering how no-fuss it really is to get your dream garden without once leaving home. The team begins with a site visit to analyse a client’s needs, assess the area and under-

stand their aesthetic sensibilities. Within a day or two, a garden design, which takes into account which plants to choose, what mate-rials to source and custom made elements, is sent to the client. Fifty per cent of the project cost is taken in advance to buy raw material and the garden then typically takes a day for execution.

“We have done gardens in two days flat. All our gardens have been finished within two weeks of first meeting the customer,” says Chen-gappa. A garden from them can cost anywhere between Rs 9,000-20,000 for a small balcony and Rs 50,000-Rs 60,000 for a terrace garden.

Now, plans are afoot to launch an online store that sells modular gardens. “We want people to come to our website, see our various theme garden design tips and order bamboo fencing, pots, wrought iron parapets to install their own gardens,” says Deshpande.

A Gift-a-Garden option is also being worked out as is the vertical of annual maintenance contracts for the upkeep of gardens. They would like to expand to other cities but Aravamudan admits it’s going to be tough with their existing skill set.

All you garden lovers outside Bangalore can rest assured because the wait is unlikely to be long. With what they have achieved so far, greening rough patches is barely a challenge for this team. — Shreyasi Singh

The Shoe Spa: Shining the world,one pair at a time

It’s easy to take a shine to Tabish Ahsan and Saral Budhiraja. They are young, ambitious and have a definite spring in their step. The happy feet aren’t surprising considering Ahsan and Budhiraja run The Shoe Spa, a specialised shoe cleaning and shoe repair service they founded in July 2009.

The Shoe Spa claims to transform old shoes into a shining new pair. The process, which the young promoters guard zealously, includes several steps like conditioning, massaging and moisturising to keep your

soles soaring. Little wonder then that the company tagline reads, “We don’t just clean your shoes, we give them a spa”.

Management graduates from the Indian Institute of Planning and Management, Delhi, Ahsan and Budhiraja, were not groomed to fill these shoes. When they passed out together in April 2009, they were buffed up for lucrative corporate careers. Through campus placements, 22-year-old Ahsan bagged a job with a tourism and retail management company, while 23-year-old

Budhiraja was set to join a market research firm. But, both their employers kept defer-ring joining dates.

The idle time allowed innovative rethink. Budhiraja had been toying with the idea of setting up a shoe cleaning business and felt this was a good time to step in. “Shoes aren’t a necessity item now. They are about luxury, indulgence and making a style statement. I was sure people would pay to preserve their favourite pair.” The spa, he believes, caters to this loophole in the market. One evening, he

“It’s a simple idea, really. We have moved the front garden up the elevator to the balcony.”


START-UP DIARIES

called Ahsan, a close friend from business school, to pitch his idea. “He asked me if I would pay Rs 50 to get my sneakers cleaned. I said no way. And told him nobody else would either,” laughs Ahsan.

Budhiraja’s prodding soon converted him, and the duo began an interesting jour-ney of experimentation. They trawled through upmarket shopping streets and dingy, crowded wholesale markets in Karol Bagh to discover the best cleansing items.

Equipped with some of their find, they used their family for market research and pleaded with them to pass up their shoes. They charged Rs 50 at first but quickly hiked that to Rs 80 and then to Rs 100 as they got better.

Convinced they could give old pairs a new lease, Ahsan and Budhiraja once again turned to family, this time for seed fund, to set up a workshop in Noida. Both families were supportive despite the fact that neither of them have shoes in their genes. Ahsan’s father is in the merchant navy and Budhi-raja’s father works in real estate.

They began operations with Rs 3.5 lakh to buy equipment, get a website up, and print branded flyers and shopping bags. The first 15,000 flyers were distributed in Noida’s posh Sector 15A. “Nothing hap-pened the first two or three days. There were no calls. We were depressed, anxious and worried. But, suddenly we started get-ting customers,” says Ahsan.

Nearly two lakh flyers later and a service that has expanded to Delhi, The Shoe Spa now gets 15-20 pairs of shoes daily. In fact, in October 2009, the duo got more than 50 shoe orders in a single day.

Shoes here are divided into three catego-ries—sports, leather, suede/nubuck. A basic shoe spa is the signature treatment. Shoe moisturising, shoe waterproofing and shoe repair services are also on offer.

Customers can call them or leave a mes-sage on their website (www.theshoespa.in) to buy these services. A delivery boy brings the shoes to the workshop, which was shifted to Civil Lines in September to serve Delhi neighbourhoods better. A diagnosis is arrived at.

“We call the customer to tell them what’s needed,” Budhiraja explains. A basic shoe spa costs between Rs 150 and Rs 225. Each

add-on service is additionally priced. Ahsan and Budhiraja now employ around five people, mainly cobblers and a supervi-sor, to run the workshop. They also have two delivery boys.

Over the last six months, Ahsan and Budhiraja have put in around Rs 5 lakh into the business. But, recovery and profit maxi-misation are not a big concern for now. “We don’t charge our customers if they are not satisfied. We want to deliver the best quality.

We learn every day and we improve every day,” says Ahsan.

On the heels of that sentiment though is a quiet confidence. “The Shoe Spa is going to be a big brand if we can survive the next couple of years. We want it to be all over India. The expansion will happen,” Budhi-raja asserts.

A bigger work-shop, more new machinery and an improved online order system are the

definite goal posts for the next three months. With a belief and determination that can only come with youth, Ahsan and Budhiraja think they can manage much of this with little outside help.

They are wary of “doing PR” and want to grow as organically as possible. Although they have started talking about a bank loan recently, they haven’t worked on a business plan geared to seek organised funding. — Shreyasi Singh

Sporting Happy Feet Tabish Ahsan (L) and Saral Budhiraja hope to improve their online order system in the next three months.

RideInSync: Share a cab, choose a partner, choke the jamLast summer, when most students were preparing to leave the landscaped cam-pus of Indian School of Business (ISB), Hyderabad in pursuit of high-flying cor-porate careers, Deepesh Agarwal and Amit Gupta were getting ready to test their “cabpooling” idea on the incoming batch.

Agarwal, who majored in entrepreneurship at ISB, was not willing to accept that shared transportation as a concept had failed in India. It was just not presented correctly, he believed. The hammer hit the nail bang on. “Our shared cab service was a hit. We had 120 students sharing 60 cabs, saving Rs 36,000 and 200 litres of petrol in a single day,” he recounts. A quick market research carried out by the duo on 200 people in Delhi, Bangalore and Hyderabad, showed that the idea was worth pursu-


START-UP DIARIES

Saving the planet Deepesh Agarwal wants to spread his cab-pooling service to Delhi and Bangalore. But first he has to pull up his numbers and add more destinations within Hyderabad.

ing in terms of business. The survey found that nearly 65% of the people were willing to share a ride.

After some tweaking of the initial model, RideInSync was launched in September 2009. The service packaged the basic virtues of carpooling—dip in transport costs, congestion on the road and carbon footprints—along with the option of choosing co-passengers to and from a common destination. The entire service can be accessed through a mobile phone or laptop.

For instance, an ISB student taking a cab from the airport could send a text message to RideInSync to check whether any one else wanted to share the ride to the campus. It will match the flight and city details, and provide a list of passengers headed the same way. The student can choose a co-passenger, and a cab is arranged.

Making business out of a virtue is not easy and Agarwal knows that pretty well. But the numbers he throws up are pretty interesting. A shared ride from the airport to the city costs Rs 250 between 5am and 11pm; and Rs 300 from 11pm to 5am. A regu-lar Meru cab or Radio Taxi would typically run up a bill of Rs 550 for the same trip.

“Our survey showed us that 50% of the cabs carry single pas-sengers. Often, there are colleagues, neighbours or friends who live near each other and are going to the airport at the same time. If finding out who was heading which way was easily possible on a laptop or a mobile phone, wouldn’t these people be interested in sharing cabs to save money, and to meet up with other like-minded people?” Agarwal asks.

Currently, RideInSync offers this service on a single route—to and from Hyderabad and its twin city Secunderabad to the Rajiv Gandhi International Airport.

“I knew this service had to be launched in Hyderabad or Bangalore. Since both these airports are so far from the city centre, the service offers immediate returns to our users,” explains Agarwal.

While Bangalore and Delhi are the next expansion points, Agar-wal wants to add to his list of destinations covered within the City of the Nizams. In fact, bringing the Hyderabad railway station under his service radar is high on the priority list.

But before anything else, he knows he has to pull up the numbers on the airport pilot route. “We have 730 registered users right now, but the critical mass is around 5,000 members. This increases the probability of finding a partner to share a cab with. Currently, only 15% of the cabs booked on our platform are shared cabs because of the small user base. We also give our passengers the option to book a non-shared cab with us, if they are not able to find a partner,” he says.

Agarwal, whose partner has since moved on to a job in Mumbai, is now thinking of tying up with big companies, such as Infosys and others to get more people to warm up to the idea of “cab pooling”. “That should be a quick way to increase our strength,” adds the first-generation entrepreneur, who worked with Motorola India as an engineering manager before deciding to join ISB in 2008.

The B-school network has helped tremendously. RideInSync works out of the Wadhwani Center of Entrepreneurship Develop-

ment, ISB’s Incubation Centre, with two other full-time employees—a master’s graduate from IIIT Hyderabad and a software engineer from BITS Pilani.

So far, 80% of the Rs 5 lakh that Agar-wal had put together from personal sav-ings and borrowings from family has gone into developing the software platform. “I don’t worry about this. It cannot stop me from realising what I want. Moreover, I am not looking for immediate funding. I don’t want to sell my equity for cheap. I want to work on a stable cash flow,” he says.

Whether RideInSync will become a pin-up darling of start-ups or run out of steam in the long run may be difficult to predict, but there is one thing for sure—Agarwal and Co. will save the planet a few extra carbon footprints and noxious fumes on their way to the bank.

— Shreyasi Singh

“I don’t want to sell my equity for cheap. I want to work on a stable cash flow.”


Slow and SteadySam Balsara has always

believed in doing a job well. It might have meant fewer clients, but never a

loss of business.

HOW I DID IT

SAMBALSARA

IT ALL BEGAN WITH A DASH OF LIMEIn the business of advertising, where agility is the operative world, Sam Balsara identifies more with the tortoise than the hare. “It’s better to be a few days late and equip your-self thoroughly for your entrepreneurial journey than be in a haste to do business,” says the veteran ad-man. The strategy probably explains why Madison World, founded by Balsara in 1988, took a slower growth path with few blue-chip clients to become what it is today—a highly-diversified communications company with billings worth Rs 2,500 crore. Recently feted by a lifetime achievement award, Balsara feels he still has miles to go.

I was born in a one-horse town in Gujarat called Bulsar, now known as Valsad. I get my family name from there. My dad was a for-est contractor, but at a late stage in his life, his business got nation-alised. There weren’t many options, so he started anew. In 1959, when I was still a child, we moved to Bangalore.

It was really a bold move by my dad. He wasn’t just moving his family to a new city, he was also setting up a new business; and running a Western-style hotel was not really up his alley. But it turned out to be a great move since it opened up new opportunities for me. It also taught me not to be afraid of change.

I lived in Bangalore till I graduated with a degree in commerce from St Joseph’s College. I could not crack the IIMs, so went to study at Jam-nalal Bajaj Management Institute in Mumbai in 1970. It was here that I got interested in marketing, thanks to my professor Pran Chaudhary who taught the subject. Later, he offered me my first job at Sarabhai.

I spent 16 years of my life working for someone else. I did four jobs: two in marketing and two with ad agencies. I moved to Contract when it was just founded. The ad world was more like an old boys’ club then—an easy, semi-business and semi-formal place. I remember Bobby Kooka saying all you need to succeed in advertising is “the facil-ity of English language and the ability to down three pink gins at lunch”.

Mudra was an altogether new experience. The thought of moving from an established Contract to an upstart Mudra, which was practi-cally nonexistent in Bombay, appealed to me. I found its culture tax-ing and challenging. It had a no-nonsense approach to work. Here, I

AS TOLD TO POOJA KOTHARIPHOTOGRAPH BY MEXY XAVIER


HOW I DID IT

learnt: “Nothing is impossible, and every-thing can be achieved—and on time.” The thought of being an entrepreneur never occurred to me, not even three months before I started Madison, on March 21, 1988. It happened pretty abruptly. Yes, I did think that I was not the right person to take Mudra to its goal of being the largest agency in the country. I was neither equipped with the skills nor had the inclination to do so. Perhaps, in hindsight, the reason I wanted to run a small agency with a few large clients was to continue to remain active as a craftsman in advertising rather than a manager of men and money, which you are bound to become when you run a large agency.

I started out with two clients—Godrej and Nelco. Adi and Parmeshwar Godrej gave me the Cinthol account. The launch of Cinthol Lime in 1989 was one of the most successful launches, and took the market by storm.

The going was good for the initial years. Our billings increased seven-fold in five years. Then, in the early nineties, India opened its doors. There was so much excitement in the air and so many oppor-tunities that I changed my mind about staying small in the future. We expanded our client portfolio and worked on trans-forming Madison into a specialised agency.

In hindsight, it looks as if we had a grand plan in terms of diversification and meeting client needs through specialised units. But, frankly, there was no such master plan. We discovered client needs by either hiring spe-cialist talent, or through partnerships.

In 1998, I was hit by a double whammy.Madison lost 70% of its business because we parted with our partner, DMB&B, over a professional disagreement. I lost the Cin-thol account around the same time. It was clearly the biggest low in my life.

During those troubled days, I drew inspi-ration from my elder daughter. Her eyes cannot see and yet a smile never leaves her face. My conversations with her would

make me wonder what I was feeling so depressed about. My problems felt petty. Even today, she sends inspirational text messages to my cell phone on most days.

I also remember watching this late-night CNBC program where a Chinese said, real success can come only after real failure. I took those words to heart. Till that time, I had not faced failure. Madison got started without any major struggle—either finan-cial or with clients. This was life’s first major setback. People wrote us off and yet we rebuilt ourselves to double our strength.

While building Madison, I knew I had to build an organisation where I would be proud of working as an employee—not just as an owner. The focus has always been on doing a job well. For instance, in the first four years of Madison, we did not look beyond our few clients. Most people thought that was a stupid thing to do. I thought I shouldn’t bite more than I could chew. Even today, I tell people that the company they start must have a reputation and position in the business world that is capable of attracting them as an employee.

We have been guided by the philosophy that everything is open to change, except our value system. It was written 10-12 years ago, and we have never changed it.

Sometimes, I am amazed at being the old-est person in advertising. To have been around for 37 years, I find that I’m the only practising advertising person who has a tale to tell about Shubhash Ghoshal or Bobby Kooka, or early British companies. Today’s generation has no idea about what market-ing and advertising was in those days.

Despite my years, I have miles to go.Everyday there is a new upset in life, a new opportunity. That is the nature of the beast called advertising. I have become so used to those adrenalin highs that they are almost necessary for survival. I cannot enjoy a longish holiday anymore. A week is perfect; 10 days, maybe. Beyond that, I would miss work tremendously. My wife and I have been fortunate to visit many cit-ies but these visits have never been longer than a day or so. That suits my nature. I think the world’s also becoming like that. You want to move on.

To sweet success Balsara cuts a cake with daughter Lara (on his right) and his team,

celebrating a dream run in 2004.

“I knew I had to build an organisation where I would be proud of working as an employee – not just as an owner”


On a crisp October morning, more than 400 people have crowded into the café of a con-ference center in Burlington, Massachusetts. They are here for Innovation 2009, a confer-ence for tech start-ups sponsored by the Mass Technology Leadership Council. There are no programmes: No one knows what the ses-sions will be about or who will speak. But the topics are guaranteed to be relevant to the attendees, because they are about to come up with those subjects on the spot.

This is what’s known as an unconference, an event programmed—and sometimes arranged—by attendees. For everyone who thinks the highlight of most conferences is the coffee break, unconferences offer a kinetic alternative to keynote fatigue. Canned speeches and passive audiences are out. Instead, attendees create the sessions on the fly, and intimate groups hash over subjects of their own choosing.

NetworkingSick of canned keynote speeches? Try an unconference

Networking Welcome to the unconference, a new way of holding sessions and getting advice this page

Elevator Pitch Bank Bazaar wants to help consumers get loans cheaper and faster. Can it raise

US$5 million? page 54 Sales & Marketing Using mobile coupons to drive up sales page 56 Technology Tips to make it easier to work with freelance programmers page 57

STRATEGY

Ask Inc. India Expert opinions and insights to your questions and dilemmas page 53

A new way to talk Attendees break into intimate groups to discuss subjects of their own

choosing

JANUARY 2010 | INC.INDIA | 51PHOTO BY PHOTOS.COM

STRATEGY

fact reflected in their let’s-build-a-stage-in-the-barn-and-put-on-a-show ethos. In those cases, what typically happens is a business leader finds herself craving interaction about a particular topic and reaches out to friends and associates. She sets up a wiki to manage logistics, arranges to use the company cafeteria after work, and—presto!—an unconference is born.

Some of the larger unconferences, such as Innovation 2009, have more formal underpinnings. Still, even a large unconfer-ence is a cheap date. Because the conference space was donated and no speakers were paid, Innovation 2009 was able to charge just a few hundred dollars per attendee. Fees for traditional con-ferences can reach 10 times that amount.

No matter their ambitions, most unconferences are governed by four principles of Zen-like simplicity:

Build a Breakout To create a session at MassTLC’s unconference, all you need is a marker and some paper. These are some of the topics attendees came up with.

Unconferences have been around in one form or another since the 1980s. The format has recently gained currency as digital tools have made organising easy and face-to-face interaction has grown more desirable for its relative rarity. “Something hap-pened in Silicon Valley where people went so far in the direction of technology,” says Mitch Joel, the president of the digital mar-keting firm Twist Image. “They wanted to bring back more of a ’60s communal aspect, with people getting together in the spirit of democracy, instead of conferences organised from the top down, where everything is mapped out and marketed.” Joel, who extols unconferences in his book Six Pixels of Separation, esti-mates several hundred unconferences take place each year, chiefly in the technology and marketing industries. “But there’s not an industry I can think of where they wouldn’t work,” he says.

At Innovation 2009, attendees with ideas for sessions grab markers and scrawl their ideas on sheets of construction paper. As a harried facilitator charges around the room with a microphone, they stand and announce the subjects they want to discuss: monetising social media; eliminating non-compete agreements; not getting booted by your VCs. Some attendees—who include entrepreneurs, VCs, and technology gurus—are topic experts and want to lead ses-sions. Other people are just seeking advice. “I’m completely

unqualified to lead the session, but I’d love to get some input on creating the perfect advisory board,” Bill

Shander, CEO of Web design company Beehive Media, tells the room.

The last person has barely finished speaking before the

session leaders—about 25 per-cent of the group, which is typi-

cal—stampede out to the hall and begin taping their topics onto an

enormous paper grid tacked up on one wall. Meeting spaces around

the building are plotted along the y-axis, session times along the x. As

many as two dozen sessions run at the same time: Empty spaces will be

filled in throughout the day as fertile conversations beget ideas for new sessions. Attendees roll with the punches. If no one shows up for a session, it doesn’t happen. If too many turn up, the crowd could spontaneously decide to break into groups, or the leader could slot a second session later in the day.

As the papers go up on the wall, attendees crowd in, straining over one another’s shoulders to see what they want to sample first. “I did not come in here planning to run a session,” says Roger Matus, who sold his electronic-records company in May. “But I was talking to an investor friend I ran into in the lobby. I told him I’m doing some consulting on competitive differentiation. He said, ‘You should run a session on that.’ And I said, ‘You’re right! I should!’”Although this unconference isn’t free, many unconferences are, a


• Whenever it starts is the right time. Whenever it is over,

it is over.• The people who come are the right people.• Whatever happens is the only thing that could have happened.• If you are not learning or contributing, it is your

responsibility to find some place where you are.

That last principle, commonly referred to as “the law of two feet,” is especially important to sustaining energy and unpredict-ability. “Some session sounds like it’s going to be cool, but it turns out it’s not your thing. Move on to the next thing,” says Kaliya Hamlin, a professional unconference facilitator who imposed something approaching order on the MassTLC event. “If you’re leading a session, don’t feel people are leaving because it sucks. They’re choosing to be bumblebees and move among sessions and cross-pollinate.”

F ourteen people are milling around a Ping-Pong table on the second floor of the conference building, waiting for Scott Friend, managing director at Bain Capital. Friend is almost 10 min-

utes late for his own session, or he would be if the “whenever it starts is the right time” rule didn’t render the concept of late meaningless. His subject is selling to Fortune 500 compa-nies, and Friend, co-founder of ProfitLogic, comes armed with enough advice for a solo show. But he ends up sharing the spotlight with someone else in the room, Peter Burrows, the walrus-mustached CIO of Adidas Group.

Friend’s session was conceived in the spirit of mentorship: He wants to answer the ques-tions of others. By contrast, James Reinhart and Chris Homer, co-founders of thredUP, convened their session to seek advice. A dozen attendees sit uncomfortably in low-slung beach chairs on a patio as Reinhart explains the business model for thredUP’s online used-clothing exchange. The founders want help deciding how best to exploit the PR tempest while they have infrastructure yet to build and funding yet to raise. The session is scheduled for an hour, but after 40 minutes, everyone has had his say. The group disbands early, and the founders leave with some useful advice (take every PR opportunity offered—but be clear that you are rolling out the service in stages). Attendees wander back to the agenda wall to pick something else.

“ The content was useful and there was great energy. If they can smooth out the logistics, it could be beautiful.”

“Unconferences are a lot more engaging and receptive to net-working than normal conferences,” says Ben Rubin, co-founder and CTO of Zeo, which makes devices that help consumers track their sleep patterns. “You can shape the discussion in directions that interest you. And there are opportunities to mentor. At the average conference, I’m looking to get. Here, I can get and give at the same time.”

Still, the format doesn’t work for everyone. “It was disorgan-ised,” says Rochelle Nemrow, an independent marketing consul-tant. “I wasted a lot of time going back and forth to check the wall because we didn’t have something in our hands to tell us where a session would be. And I’m a foot and a half too short to even see the wall, so I had to wait until everyone else had gone.” That’s too bad, says Nemrow, because “the content was incredibly useful, and there was this great energy in the moment. If they can smooth out the logistics, it could be a beautiful end result.” —Leigh Buchanan

Ask Inc.IndiaTough questions Smart answersIn your entrepreneurial journey, you might encoun-ter obstacles, or come across hurdles that test your mettle. You might need to ask for information, or guidance. Every month, we will dedicate a section to your questions, and ask experts to share their ideas on how you can tackle those challenges. We already did this, in our earlier avatar as an e-magazine, when we got experts such as Anjali Bansal (partner, Spencer Stuart India), R Sankar (execu-tive director, PwC) and Harshu Ghate (managing director, ESOP Direct) to answer your questions. We hope to con-tinue that practice. Feel free to send in your questions. We will make sure they get answered by the best in the field. You can either email us at [email protected] or write to us at Editor, Inc. India, 9.9 Mediaworx, K-40, Connaught Circus, New Delhi – 110001.


Lending a Hand Arjun Shetty (left), Rati Rajkumar and Adhil Shetty want to build an end-to-end online loan delivery business


STRATEGY

Elevator PitchBank Bazaar wants to help users get loans faster and cheaper. But can it raise US$5mn of its own?

The Pitch “Consumers have a harrowing time getting a loan in India. The process is quite complicated and requires filing a number of documents. It is also time consuming because the consumer has to find out which lender is offering the best rates. It may take up anywhere from 10 days to a month to get a simple home loan. Our website, Bank Bazaar, is the world’s only market place for loans that provides real-time information on interest rates. Consumers can anonymously fill information such as the amount of loan required, and get the best rates at which it is available in three minutes flat. Even documents can be submitted online. To the banks, we offer a cost-effective model of customer acquisition.” — As told to Jacob Cherian.

The Experts Weigh In

FOUNDING TEAM:ADHIL SHETTY, ARJUN SHETTY AND RATI RAJKUMAR

LOCATION:CHENNAI

NUMBER OF EMPLOYEES:35

FOUNDED: FEBRUARY 2008

REVENUE OVER THE LAST SIX MONTHS:RS 50 LAKH

AVERAGE MONTHLY LOAN DISBURSE-MENT:RS 20 CRORE

COMMISSION EARNED:0.5%-2% OF THE LOAN AMOUNT

BENEFICIARY OF SERVICES:LOAN SEEKERS AND BANKS

FUNDING SOUGHT:US$5 MILLION

PROCEDURAL CONSTRAINTSAny business which helps a cus-tomer take a well-informed decision in financial services has great potential. Bank Bazaar offers a well-informed choice to customers and lower distribution costs to the market players, making the overall market more transparent and efficient. The loan process in India involves too many proce-dures requiring physical inter-face. This reduces the feasibility and efficiency of a pure online model, making such distributors build a complementary offline brick and mortar presence for fulfilment. An end-to-end online model is still a few years away. These limitations could render it as only a price discovery model.KVS MANIAN, Group Head,Kotak Bank

POSITIVE SCENARIOBank Bazaar appears to solve a pain point with customers over-whelmed by constantly chang-ing bank offers. They can present the customer with instant quotes and I have not seen this anywhere else. It’s also refreshing to see that here is a start-up that does not depend on advertising. Instead they work on a lead-generation model, which is great. The team has both international and Indian experience, and they appear to be very passionate and driven. A challenge for them would be if the world suf-fers another credit crunch and banks become reluctant to lend. However, the current scenario seems positive.SHANTANU SURPURE, Managing Attorney, Sand Hill Counsel

LEVERAGE ADVANTAGEThis is an innovative idea, and helps the common man who has to spend significant time and energy in shopping for the best deal. I know of other com-panies that are doing this as well, but Bank Bazaar has good traction in the market. If they continue offering innovative products, they should be able to get a good share of a potentially large market. They claim to be the only one to have a fully inte-grated, online process which allows people to do in minutes what would otherwise take hours and days. They need to leverage this early mover advantage to the hilt quickly.SAURABH SRIVASTAVA, Founder, Indian Angel Network and Chairman, Indian Venture Capital and Private Equity Association


STRATEGY

Sales and MarketingGo mobile with your discounts, grab more shoppersUsing mobile coupons to drive up sales

Marketers have long been excited about the prospect of sending ads to consumers’ cell phones, but the latter haven’t been too keen on the idea. That, however, is starting to change. Though cell phone owners still seem resistant to the idea of being pinged with random advertisements on their phones, they might not be as opposed to participating in a mobile customer-loyalty programme.

Take, for instance, the partnership between three unlikely compatriots—the Odyssey chain of bookstores, travel portal MakeMyTrip, and direct-marketing firm UCP Direct. Odyssey has a presence at the airports of Mumbai, Bangalore and New Delhi. Whenever someone books a ticket on MakeMyTrip for any of the three cities, UCP lists them as a potential Odyssey customer. Two hours before the flight takes off, UCP sends the consumer a text message with a discount coupon. The receiver has the option of using that SMS to pick up a discount on purchases made at the bookshop inside the airport.

Called a mobile coupon, or M-coupon, this is a digital take on the traditional printed discount coupons. Here’s how it works. The text message contains a unique code that entitles the customer to a special discount or offer. The consumer takes it to the vendor, where a computer reads that code, compares it to the data on the server, and validates it. Since mobile coupons work on customers who are near a store’s location, the redemption rates can be greater than those of its paper cousins.

For companies catering to the end-consumer, M-coupons can be a great way to generate customer loyalty. Kunal Bahl, chief execu-tive, MoneySaver, a promotions platform leveraging mobile tech-nology in India, says: “Coupons make for a US$8-billion industry in the US, and most of it has revolved around B2C businesses.”

A coupon-based strategy makes sense for fixed-price goods, and has scored success mostly with food retailers and restaurants. It could be used to “increase walk-ins, engage the customer directly with the product and offer

value addition to customers, both loyal and lost,” feels Suresh Narasihma, chief executive, TELiBrahma, which provides location-based mobile social networking along with promotions.

The appeal of this mobile marketing technique lies in three simple reasons. It is easy to generate since it does not have to be printed like a traditional discount coupon. It comes cheap because bulk messaging services are now available for as little as 10 paisa a SMS. And it is highly tactical—it can be sent at any time of the day, on any day of the week, or specifically, when the consumer is at a particular location.

It is not surprising that brands such as Arrow, Seventymm and The Loot have been cashing in on text-message coupons with vary-ing degrees of success. Some like Castrol have plugged into the global ad network of InMobi to run M-coupon campaigns. Says

Mobile Marketing Text messages containing discounts are easy to generate, cheap and highly tactical. They can be sent when consumers are at a particular location.


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Technology When geek language is Greek to youHow to find the best programmers

Khamir Bhatia, head of sales, South Asia, InMobi: “Twelve per cent of the visitors to the site signed up for maintenance tips, 2% of the visitors downloaded the M-coupon and 1% of the coupons were redeemed within a month of the campaign.”

Since the timing of these text-message coupons can be con-trolled, they are a great way to get business on certain days. Says Ashok Desai, owner of a chain of dry cleaning stores in the US, “Certain days are very slow for us, like when it rains or in the middle of the week.” Now, on Tuesday mornings, he sends out a promotion to the 100 people who have signed up. To get customers to register to receive the M-coupons, Desai put out fliers in each of his stores and sends direct mail to local residents, urging them to send a text message to the company’s short code to receive special offers. The result—he gets about a 10% redemption rate per coupon. The initia-tive has generated extra sales, he says. In fact, such were the results that Desai stopped paying to place coupons in local newspaper.

Although a useful tool, the M-coupon concept is still in its infancy in India. Consumers are not as aware of text-message cou-pons, resulting in “redemption rates of 10%, or less typically,” accord-ing to Raj Bhatia of UCP Direct.

Language is another inhibiting factor in the spread of M-coupons. Not many mobile mediums support regional languages in India. This makes it difficult to plan promotions for the non-English speaking population.

Also, “reliability of mobile telecom networks is another problem. You need seamless connectivity inside a mall to ensure that messages are received promptly,” adds MoneySaver’s Bahl.

The best way to ensure a higher response rate is to keep the cam-paign simple. Says Ankur Dubey, project manager – mobility, Make-MyTrip: “We avoided spamming, and kept our promotional offers simple. We offered uncomplicated terms and conditions. This guar-anteed increased effectiveness and success rate.”

The database also has to be targeted. For instance, for the cam-paign to work for MakeMyTrip, the M-coupon has to be received by the flier, who may not have booked the ticket himself.

Moreover, the receiver has to know the sender. “If credibility is low, response will also be low,” says Bhatia. Bombarding consumers with messages is definitely not the way to go. As with most things in life, balance is the key to getting the most out of M-coupons.—Sunaina Sehgal with inputs from the US edition

Sam Mohan’s attempt at building a web-site for his photography studio was almost a disaster. The 25-year-old entrepreneur from Bangalore knew the look he wanted; he just needed the coding skills to pull it off. “I was looking for someone who could understand colours, placement of typogra-phy and basic site functionality,” says Mohan. Through his circle of acquain-tances, he heard about a coder who “could pull off anything.”

Mohan soon found out what that meant. At every step, he had to take micro decisions that were supposed to be the coder’s domain. The programmer had to be hand-held every

step of the way, result-ing in loss of time.

Miles away, in Delhi, Samira Gupta had another problem when she used a free-lancer programmer for her design firm’s website. “We found him online, briefed him, and made an upfront payment of 50%. He finished the first phase of the website and sent it in. When we got back to him to make adjustments, he just disappeared,” she says.

Even after that, she tried a number of freelance programmers. “Sadly, the best way

to work with freelance coders is to call them five times a day. You have to call them con-stantly, especially because with freelancers, it’s not a 9-to-5 job. They are in another time zone altogether,” she adds.

Mohan and Gupta are not the only ones. Whether it’s building a website, developing an iPhone application, creating a widget, or

STRATEGY

Seeking the Best Use the internet to find the most competent freelancers from all over the world at highly competitive prices.


STRATEGY

customising a program for internal use, many businesses are turning to freelance programmers to get the job done cheaply. But, as evident from the examples above, it can be tough finding good help, especially if you don’t have a technical background.

Hard though it is, finding the program-ming skills is not rocket science. The most preferred route is still word-of-mouth. Try finding coders who have either worked with someone you know, or live in the same neighbourhood, city, or even country. This way, you know exactly what they are capable of delivering. The trouble with depending on word-of-mouth is that you get restricted to the experience of the people you talk to. This may just leave you settling for less than the best that your money can buy.

The process of selection has been made somewhat easier by the internet through websites, such as Rentacoder, oDesk, Guru and Elance. Just as recruiters use Naukri or Monster to hire workers, these websites can be used to find the relevant skill sets, albeit on a freelance basis. They offer directories of hundreds of thousands of programmers from all over the world. The contractors’ profiles are quite detailed; they typically include rankings and comments from former customers, work history, skill level and hourly rates.

RentACoder even displays the number of times a programmer has been involved in arbitration because of a dispute with an employer. At oDesk, users can keep a close eye on the freelancer’s work: The service cap-tures an image of a contractor’s computer screen six times an hour.

The actual value proposition of these websites lies in the ranking system used for freelancers. Users can compare prices from various vendors (programmers) who bid for the projects and then make a choice based on their past performance.

If you are considering hiring freelance developers through one of these websites, here are some tips on how to get the job done right the first time—whether or not you know a thing about programming.

Get specific with the specs

When posting a job, be as detailed as possible. You will get better work that’s more likely to come in on time and on budget. Beyond mat-

ters of clarity, the initial guidelines become critical when conflicts arise. Websites, such as oDesk and Elance, offer mediation and arbi-tration services, and the outcomes depend on goals and payment schedules that were agreed to at the project’s outset.

Set milestones

To make sure projects remain on schedule, Michele Harris, CEO of Smarti Solutions, a New York City firm that matches compa-nies with marketing agencies, likes to divide work into stages. When a freelancer reaches an agreed-upon milestone, Harris releases a portion of the total fee. Elance, in particular, makes it easy to set up this sort of payment system.

Require tests

Don’t know squat about software engineer-ing? Many of these services offer tests a free-lancer can take to demonstrate his or her programming knowledge. The scores give even non-geeks some sense of a developer’s skills. Freelancers on oDesk and Elance are typically more willing to take the exams, because these sites offer a wide variety of skill-assessment tests for free. Most other sites charge freelancers for each test.

Make them think

If you happen to know your ASP from your PHP, never underestimate the power of a few critical questions, says Andy Theimer, co-founder of Milwaukee-based Recipe-Bridge.com, a search engine for recipes. ODesk and the other online services allow you to interview prospective freelancers via a private messaging system. When screening candidates to build a version of his site for mobile phones, Theimer asked freelancers what smartphone operating systems they

thought were best and why. “It’s a basic ques-tion,” he says. “But the answer can tell you a lot about a person’s technical skills and pro-gramming philosophy.”

Communicate through the site

Try to keep all communications chan-nelled through the service provider site itself. If something goes wrong, then only communications done through the site will be legally applicable. This means that if you picked up the phone to deliver some critical piece of information, and the pro-grammer did not implement this infor-mation, it wouldn’t count when the arbitration teams investigate.

Beware the bait and switch

A top-notch developer with a sparkling resumé (and, for offshore workers, flawless English) but a price too low to believe could indicate that the work will be farmed out to a less capable junior associate. Xavier Hel-gesen, co-founder, BetterWorldBooks, a US-based company, suggests that you insist on seeing credentials of the person who will actually be doing the work.

Weigh ratings carefully

Tech job sites allow employers to review the work of freelancers they have used, typically on a five-star rating system. These ratings can be helpful, but Helgesen warns that they can be gamed. “Most people are reluctant to give less than a five-star rating,” he says. Companies use ratings as bargaining chips to get the free-lancer to lower the fee or to get extra work out of a developer who did a less than adequate job, he says. That’s why Helgesen puts more stock in a freelancer’s work history and in the actual comments left by employers.—Ryan Underwood with inputs from Jacob Cherian

“To make sure projects remain on schedule, divide the work into stages. Release a portion of the total fee when the freelancer reaches an agreed-upon milestone.”


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SCRAPBOOK Brijmohan Lall Munjal, The Hero Group

King of Indian RoadsThe fifties were a time of angst and uncertainty in India. The nation had just become independent, its economic future was unpredictable, and many Indi-ans were still trying to get over the trauma of partition. Amidst this uncer-tainty, four brothers set out to find a future for themselves, beyond their traditional family business. Dayanand, Satyanand, Brijmohan and Om Lall Munjal never looked back. And neither did The Hero Group—the business empire they built.Born in Kamalia in Pakistan, the brothers moved to Amritsar in 1944, and started sup-plying components to the local bicycle mar-ket. The partition forced the brothers to relocate to Ludhiana, from where they started supplying bicycle components to dif-ferent parts of the country. They soon earned the reputation of being the only reliable sup-plier in the business.

By 1952, the Munjals brothers changed tracks from supplying to manufacturing bicycle components. The big opportunity knocked on their doors in 1956, when they received a licence to manufacture bicycles in Ludhiana. Hero Cycles, the flagship com-pany, was thus born—rolling out 25 sturdy cycles a day.

Their next big chance came in 1984, when the group formed a joint venture with the Honda Motor Company of Japan to manufacture motorcycles—a new genera-tion of two-wheelers that would forever change the landscape dominated by the Bajaj scooters. Just as the venture was taking off, trouble struck in the form of insurgency in Punjab, the state where the brothers were based. Despite the chaos, by April 1985, they had launched the first 100cc Hero Honda motorcycle. By 1990, the group was indisputably “the largest Indian manufac-turer” of two-wheelers.

Brijmohan, the third of the Munjal brothers, is largely credited for this success. Known for his ingenuity, innovation and, more impor-tantly, for identifying opportunities, BML, as he is fondly called, is said to be the man behind the Rs 12,500-crore empire that the Munjals have built over the past 60 years.

BML took calculated risks. He sourced the bicycle components and machinery from international markets such as Ger-many, so competition couldn’t respond as

quickly. He restructured and streamlined the busi-ness. He treated his deal-ers and employees well, and ran a cost-effective, tightly-managed manu-facturing operation.

Today, the group has diversified into many other businesses, such as finance, IT and ITeS. Though active management of all group businesses is firmly in the hands of the next genera-tion of Munjals, BML still continues to lead the way.

“My father’s towering presence and the values he has inculcated in us have helped us stay together as a family and succeed as an enterprise. That, we believe, is his biggest con-tribution to the Hero group legacy,’’ says Sunil

Kant Munjal, BML’s youngest son and chair-man of Hero Corporate Service.

A believer in the gurukul system of edu-cation, BML has lived his life true to sound values. The honour of the Padma Bhushan, bestowed upon him in 2005, is probably the best reflection of that.—Inc. India

Showing the way Brijmohan Lall Munjal’s towering presence has kept the family together.


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