Why the farmer will never get rich

http://articles.economictimes.indiatimes.com/2007-01-11/news/27679479_1_globalisation-farmer-countries

Imagine there's no countries. Unwittingly, John Lennon captured the essence of globalisation in this song. It's an engine to integrate markets so a farmer in a remote district of Maharashtra is almost as well off as his counterpart in US. However, the key word is imagine. Why? You'll know soon. Let's ask the farmer whether he understands globalisation or if he has heard of Joseph Stiglitz or Jagdish Bhagwati. No? But, isn't he the one the noted economists are fighting for?

Hardliner Stiglitz takes a softer path — converts his discontents (as evident from his book Globalisation and its Discontents) to a solution in Making Globalisation Work. The solution is easy to implement, but only theoretically. It's actually like the song. To start with, we need to imagine all the countries are at par — there's no first, second or third world. They discuss agreements on agriculture. Let's restrict globalisation to trade and not stretch it to terrorism. As they say, with attacks in foreign countries having no direct relation with the attackers' own country, terrorism has also globalised.

At a WTO meet, unlike the Uruguay round in Marrakesh, they agree to share their markets for agricultural good. They make trade laws, clauses, discuss the little boxes of subsidies and the intellectual property rights. Unfortunately, the green, amber and blue little boxes aren't all the same (as in the song). Because in the real world, they are used by the first world as an instrument to manipulate the quantum of subsidies.

Anyway, for our farmer, the market will no more be his village, it may now be somewhere in Europe. They pay him in euros and give the best deal available globally. Wow! That means our villages will eventually not remain poor. Therefore, being an agro-based country, India can become rich — the so-called first world. Hold on, do I smell a circular logic? Of course, our assumption was there's only one world, that is, we are already rich (or poor) — as rich (or poor) as the US.

But, what if we don't imagine? We realise the world isn't integrated and the first world nations are dictating terms to the third world. Globalisation is used to penetrate the untapped markets of the developing nations. The terms are tailor-made to suit the needs of the haves at the cost of the have-nots. So our farmer remains poor, exploited now by some European agent. India can walk out, deny, but perhaps, can never dictate terms to the developed world. What the hell, it's just a song. We may be the third world, but we can imagine.

You may say that I'm a dreamer But I'm not the only one I hope someday you'll join us And the world will be as one.

Mahul Brahma

Critical mass may come with labour pangs

Bharatiya Kamgar Sena, the workers union affiliated to the Shiv Sena, was in the news recently after its members at Big Bazar went on a flash strike to protest the termination of 120 employees. The strike not only succeeded in ensuring the reinstatement of the sacked staffers, but also brought to fore the issue of working conditions in malls and BPOs. 

In another incident, the management of Hindalco Industries declared its canteen staff, who had been with the company for over a decade, temporary workers. The union, Association of Engineering Workers, moved court. Finally in March 2008, the Supreme Court passed a judgement in their favour and asked the company to grant them permanent workers status. These are only some examples that highlight how empowered labour unions are in India. 

Entrepreneurs in the IT/ITeS segment are yet to come face-to-face with the union issue. But recently, WNS had to deal with union interference at its Nashik centre. Some IT/ITeS entrepreneurs have reservations about setting up centres in states like Kerala and West Bengal due to the strong trade union movements there, says K Ganesh, an entrepreneur who has started an e-learning company. 

In India, a trade or labour union is the primary instrument for championing the cause of the working class. Article 19c of the Constitution confers on all Indian citizens the right to form a union, as a fundamental right. A strength of seven is all that is required to form a labour union 

Mafoi Management Consultants CEO E Balaji feels that the formation of a labour union can happen on the first year of a business's operation, or it may not happen even after 40 years. "It all depends on the view of the employer towards the labourers. If he looks at his staff as partners and adheres to good HR practices, labour relationship may remain good forever." 

Usually, an entrepreneur starts his business with 10-15 close aides, and then comes the expansion. For example, he may set up a manufacturing unit and hire 200-500 people. Suddenly, he finds that he has to master the delicate art of labour management, without much help or guidance to fall back upon. If he is not careful, he might just spend his entire time dealing with them, or even risk seeing his well-laid growth plans go awry. 

For labour unions, the main grouse is with the contracts system. They feel companies enter into contracts to avoid paying workers their rightful dues. Hiring on a contract-basis is an escape route companies are taking, feel labour leaders. It is a sham and is an arrangement to avoid making workers permanent and giving wages and benefits as are applicable to permanent workmen, they feel. 

Most entrepreneurs, on the other hand, feel that the main problem lies in multiple unions, unrealistic demands from unions, or from unions affiliated to political parties. But they also agree that unions can help organisations grow better if they are internal to the company. And also if both management and unions can approach each other professionally. 


Companies need to be fair with the staff, pay well and pay on time, provide safe working conditions to minimise the possibility of formation of unions, say HR experts. "A union does not hinder the growth of a company. However, the cordial relation between the employer and the union is always helpful to achieve expected growth of the company," says LawQuest founder Poorvi Chothani. 

T Muralidharan, chairman and managing director of talent management company TMI Group, says: "Union problems are primarily a thing of the past. Today, due to abundant job opportunities, companies are doing their best to retain employees. Even unions are not being negative in the private sector. However, union issues can arise if salary levels are extremely low or when companies are employing at minimum wage levels." 

TMI has an empowered employees' committee with authority to recognise, reward and even take disciplinary action against errant employees. It has also initiated the process of inviting employee groups to take a more active role in the company's management. 

Phani N Raj, founder of eYantra, an online branding company, had a lot of doubts when he planned to set up his manufacturing unit. "I was not sure about managing and arranging the labour, the laws are draconian, and there is not much clarity on the labour laws. Each time we wanted to do some changes, there was always a doubt whether the labour will touch base with unions and will they obstruct the reforms." 

So, eYantra asked itself what is that an union provides which the company cannot and why do labours need unions after all? The company hired an expert to look into labour relations. Some of the problems it faced were absenteeism, low productivity, irregular behaviour pattern. These problems, the study found, were regular in nature. So, the expert designed a programme by isolating each problem and employee. The company then realised that only 0.5% of the entire labo .. 

eYantra also started conducting yoga classes and distributing free medicines to the workers' families, which also improved morale. As LawQuest's Ms Chothani says, "The success of any industry and the protection of workers go hand-in-hand with each other." 

http://economictimes.indiatimes.com/articleshow/3023094.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Green avenue: Business sense meets clean energy

Visitors these days to St Paul’s school in Hyderabad or Basaveswara College in Bangalore, or any of the growing number of educational institutions across southern India, notice bright rows of solar-powered lamps that have switched off hundreds of energy-guzzling tube lights that the campuses previously employed. Helping them in this transformation to cleaner and greener lighting is Shuchi Energy Ad Promotions, a Hyderabad-based start-up that has shrewdly combined the lure of solar lighting with the business opportunity in ad signages. The company puts up the lights and gets signage rights in return. Hundreds of kilometres away, just outside Pune city, Span Pumps has begun a mission. While big companies are busy bottling mineral water for the urban elite, this company has set out to provide villagers the means to get clean water. It makes deep well pumps and water purification systems. Shuchi and Span are just two examples of hundreds of innovative companies, driven by entrepreneurs who have the pulse of the nation and building businesses that usher in a cleaner environment. They have broken out of the mould of the traditional businessman who thinks of environment protection as something of a Gandhian struggle unfit for commerce and an added expenditure to be delayed as much as possible. They have seen a business opportunity in embracing cleaner technologies and helping companies harmonise their businesses with nature. Happily for India, they are also earning carbon credits, popular business assets representing the amount of carbon emissions that one has helped save. Start-up activity to exploit the potential of carbon credits and clean technology is set to explode in India, says Green Ventures India director Vinay Bharathwaj. Green Ventures India is a subsidiary of New York-based asset management firm Green Ventures International. The latter recently announced a $300 million India-focused fund aimed at renewable energy projects and supporting trading in carbon credits. Founder and CEO of Emergent Ventures India (EVI) Vinod Kala, says he realised in 2004 that there is huge business potential in environment. So, he turned the focus of his company, which used to serve software companies with financial and management incubation services, to carbon credit advisory services. It also helps implement the globally backed clean development mechanism (CDM) programme, ranging from project origination to assistance with project implementation and the monitoring and delivery of certified emission receipts (CERs) and voluntary emission receipts (VERs) in the domestic and international carbon market. It also helps companies achieve carbon neutrality, which represents the net zero emission status. In perhaps a reaffirmation of the commercial credentials of this shift, Infrastructure Development Finance Corporation invested Rs 40 crore in EVI recently. This is a rare feat, as sufficient VC support or angel investing and capital pump-ins for greener ideas, clean technologies and sustainable development concepts in India are still a far cry. Mr Kala says financial investors are increasingly looking at green technology as profit opportunity than only a morally right thing to do, but there are dozens of entrepreneurs who have found the capital expenditure involved in such projects overwhelming and funds too hesitant to invest in them.
Many investors worry not just about the capital intensive nature of the project but also what they see as the fragmentation of the market and the long spans it could take to see return on their investments. ”India is a relatively nascent market for clean technology and the entire carbon credit market,” says managing director of Canaan Partners Alok Mittal. “Though there are a lot of project deployment happening in the space, innovation on technologies by entrepreneurs is still lacking. Plus, countries like Germany are offering heavy subsidies as compared to their Indian counterparts. Therefore, we do not see a lot many VCs investing in projects, but investments are definitely feasible in product and technology companies behind clean energy and carbon credits.” His fund is yet to invest in clean technology deployment projects, but is searching for opportunities, he says. But Mr Mittal’s view on entrepreneurship in this market will increasingly become less true, if stories of innovation sprouting from across the country are any indication. So, some venture capitalists such as Green Ventures have moved ahead with investments in the sector, despite the usual regulatory apathy that a sunrise industry goes through. “There are enough opportunities for entrepreneurs within this space, but its the policy framework for the industry that is not conducive for fostering such start-ups ventures in the country,” says country director of New Ventures India Suneel Parasnis. The firm focuses on clean technology and renewable energy projects. He also complains about the lack of income tax exemption for such projects. New Ventures so far has managed to secure $13 million funding for start-ups in clean technology space. “The market drivers have just started to churn in the country and it would take at least another 3-5 years for more entrepreneurs to enter this space,” Mr Parasnis says. As a sign that clean technology-related ventures is poised to take off in the country, UTI Ventures, in 2007, invested nearly $8 million in Pesco Beam Environmental Solutions, a firm involved in waste-oil recycling and alternate energy systems, while IDFC PE invested Rs 35 crore in Ahmedabad-based Doshion, a water management company. US-based Kleiner Perkins Caufield and Byers, the VC that funded Amazon.com and Google, too, has shown its interest to actively invest in clean-technology companies in India. Among others who have shown interest in investment in this segment in India are big names like Draper Fisher Jurvetson India, Lightspeed Venture Partners, Nexus India Capital Advisors and NEA-IndoUS Venture. Like any asset, carbon credits are also traded globally. And like any asset, they have attracted traders, dealmakers and intermediaries. “We have to look beyond CDM advising to unleash the huge potential of carbon credit services,” says Ernst & Young partner Sudipta Das. This, by itself, is an entrepeneurial opportunity. The Multi Commodity Exchange of India (MCX) was among the first to sense the trading potential of carbon credits in India. Now, about 6,500 tonne of carbon credits are being traded on MCX each day. “It is for sure many carbon credit generators are showing lot of interest to participate on the exchange platform,” says managing director and CEO of MCX Joseph Massey. “The US and the EU have asked both India and China to reduce their baseline emissions, which should get implemented by 2020,” Mr Bharathwaj says. “Once that happens and the government adopts more stringent policies for curbing carbon emissions, clean technology ventures would assume greater importance in the country and as a result there would be more investment interest within the sector.”
(With Ritwik Donde)
http://economictimes.indiatimes.com/articleshow/msid-2980829,prtpage-1.cms

Serial entrepreneurs are always on to the next big idea. What keeps them ticking ?

SERIAL entrepreneurship is looking at companies like the way one would look at a product. Just the way one launches a product, builds attractive features and attributes in the product, invests in creating value, makes it appealing, prices it correctly and manages it through the product life cycle stages, one needs to follow a similar strategy with ventures. So, a serial entrepreneur while being passionate about the business and being deeply committed to the idea, does not lose sight of the fact that this needs to be nurtured and managed to create value. Else, most businesses will eventually become irrelevant or will only be moderate successes. “This scientific and clinical approach to value creation and monetisation is what you will pass on to the next generation,” says K Ganesh, founder of TutorVista, an elearning company. A serial entrepreneur has the pleasure of being able to enjoy the joys and thrills of creating something. This is like an adventurer discovering new land or climbing new peaks. Each venture brings in a new excitement and fresh success, feels a serial entrepreneur. It is like conquering new peaks and moving on to the next adventure. No matter how good the last success has been, it is done and over with. “How are you going to satisfy a curious and adventurous mind with past glories?” A serial entrepreneur is usually more adventurous from an entrepreneur who sticks with his project. Once a serial entrepreneur tastes success in one venture, the urge to try his hand at another one is very strong. “The regular entrepreneur is probably the kind of guy who is happy with his achievements from his project and gets into a comfort zone, thereby reducing his urge to experiment with something new,” says Sushil Wadhwa, founder, Platinum Incentives & Events. The biggest advantage of being a serial entrepreneur is the knowledge that he gains from the various ventures, not to mention the financial benefits that come out it. He is also more ‘hands on’ than a regular entrepreneur. Entrepreneurship is all about passion—you cannot be having two businesses where you are committed to. You can be an investor, board member or a mentor, but where you are going to be spending your total passion, entrepreneurial bandwidth, most of waking-up time as well as dreaming time has to be in just one venture, adds Ganesh. So, if you can get to do that in your current venture, then you need not sell. But, if you dream about something else all day, you should move on, say experts. Whether you sell your current business or maintain it depends on a lot of factors — what is your need for capital, whether the current business will do equally well without you spending time, what is the value you are getting if you were to sell, what do you see the future value of the business likely to be and what are the risks in continuing the current business. Sometimes, you sell because you get a deal that is hard to refuse. At other times, you sell because you don’t see a much better option giving challenges of the business and environment. When Ganesh started off his first venture in 1990 with four friends pooling in Rs 93,000 for a computer maintenance services business, he never thought he would become a serial entrepreneur. He ran it for eight years, but also realised that like product-based businesses have life cycles and one need to plan the business objectives, stages and exits right from the start. So from second venture onwards, he paid close attention to these aspects. Creating something new, being among the first few companies in a new, emerging space, proving to critics that it’s indeed a viable idea and can be profitable too, are all fundamental to the ongoing entrepreneurial drive, says Ganesh: “This drives me to keep starting new ventures.” Manish Sabharwal, founder of TeamLease, a staffing solutions provider, feels the same way. “I’m not sure I can call entrepreneurship a drug, but the addiction effects are pretty similar. I have never met an unhappy successful entrepreneur, but met many unhappy successful employees of other companies. My first venture India Life was much more pre-mediated; I think we were very lucky with TeamLease by being in the right place at the right time. So, we had planned to do another venture, but it also just happened.” Sabharwal also believes doing a second venture is much easier if we consider credibility, brand, network and access to capital. But, the most difficult and important part is getting a good team. “A key element of entrepreneurship is putting a team together and you have to kiss many frogs before your find your princess.” Platinum’s Wadhwa started honing his entrepreneurial skills for running his family business of restaurants, and being a hotel management graduate was of help. But, the family business was not a very exiting venture for him and so he decided to start something on his own, albeit on a smaller scale. After that, it was a ride of ups and downs. “But I was determined to carry on,” he says. His stint in a friend’s company exposed him to the MICE segment. Raman Roy, founder of Quatrro, refuses to differentiate between entrepreneurs and serial entrepreneurs. Though a serial entrepreneur himself, he feels that every entrepreneur is a serial entrepreneur. The biggest mistake is that people define entrepreneurs as those who own their businesses. “Entrepreneurship is all about the risk taking ability and the ability to look into the unknown. Some call it self confidence and some sheer stupidity,” says Mr Roy. To him, Bill Gates is also a serial entrepreneur. “Can you possibly say that he only started Microsoft? The launching and executing of various ideas, products, versions are all like starting new ventures.” Says Sridhar Iyengar of Bessemer Venture Partners, “In essence, all entrepreneurs are serial entrepreneurs. Some start multiple things, which succeed or fail.” Unfortunately, most serial entrepreneurs don’t think that the trend to become a serial entrepreneur is catching on as it takes up a lot of time, and needs a lot of conviction every time you start a new venture. That quality is not very commonly found, they agree. There are many instances where people try to become serial entrepreneurs, but fail, and prefer to go back to a professional career to earn their bread and butter. Entrepreneur mentors like Iyengar think in India where “failure is worse than death” people only want to deal with successful entrepreneurship, somehow belittling those entrepreneurs who tried but failed. He believes that in India we also put a premium on the “he/she stuck with it” entrepreneur, effectively thinking of those who leave for whatever reason as quitters. Every venture need to be started keeping in mind the general space and opportunities, looking at what will be needed to make a success in the field, analysing whether one can gather the critical resources required to succeed in the space and then going for it. Most serial entrepreneurs after their first venture, start off the next only after analysing at least four or five different opportunities before honing on specific one to launch. Once you keep your antennas up and ready to listen, ideas will start cropping up. The opportunities are limitless. What is the key is to quickly filter on the few that you can focus on for detailed evaluation, say experts.Ganesh looks at entrepreneurship like playing poker. You have certain cards in your hand. You can either pack (fold) or remain in play. Entrepreneurship is about deciding whether you have a strong enough hand, that is, high value cards for you to take a call and remain in play. You will never know till end of the round whether your cards were really good enough, whether somebody had even better cards but you take all probabilities into account and take a decision, he says. However, there is a downside to being a serial entrepreneur. As Ganesh puts it, “You lose hair faster, age prematurely, are seen as a crazy maverick by most people who cannot fathom why do these people subject themselves to all this again and again — that too voluntarily.” Sabharwal of TeamLease feels the biggest challenge of doing it the second time is the expectations. The first time you have nothing to lose and everything to gain so have much less baggage. The second time you have conceptions of who you are and what you have done and others have expectations of what you will do. This opening balance can be a gift and a curse, he says. But, everyone need not be a serial entrepreneur. There are people who are good at maintaining and growing businesses to greater heights day after day which can be equally challenging and even tougher. But, the key is the mindset and what makes a person tick. Future serial entrepreneurs need to do their homework first, and then start something new. It’s easy to get carried away by your own success, and other peoples, but it not necessary that each time you will find success. “So have an appetite for failures too, as they are the true stepping stones towards success,” says Wadhwa. So, with the clear road map to value creation, monetisation and exit, one can plan, grow and nurture the business and navigate the company on desired path.
http://10.101.20.24/Repository/ml.asp?Ref=RVRNLzIwMDgvMDcvMDcjQXIwMDYwMA==&Mode=HTML&Locale=english-skin-custom

Life Is A Never-Ending Game

Developing a successful business model for such companies can be a challenge, especially if you’re a rookie entrepreneur. Vishal Gondal, who founded Indiagames and still runs it after selling a majority stake to UTV, tells Mahul Brahma how his business model fashioned itself when he still didn’t know the meaning of the term with :
I was totally into games since my childhood, be it volleyball or online. I still play games all night long. I created my first game at 14, it was a Pacman clone. In 1993, I started FACT (Futura Academy of Computer Technology) at a garage in Chembur, Mumbai. I was just 16 then. There were only three computers and I taught students software programming, multimedia, etc. In 1997, I started ADVER Gaming i.e. games built around advertisements. My first project was for Pepsi. The game was programmed to shoot Coke cans with Pepsi. I used to go to companies and ask for themes for creating games. For Pepsodent, the game was designed to kill germs. I have also designed the scoring system for Femina Miss India, in which his algorithm helped calculate the scores of the contestants. Then came the Kargil war and I thought a game where you can shoot the terrorists who are trying to cross the LoC would be very appropriate. ‘I Love India’ was an instant hit. Then I realised that there’s a lot of demand for India-based games. And so in 1997 Indiagames.com, a website focused on games for India, was launched. It had games like Ravan Vadh and Dusserah. It was still a small venture with only five people until PricewaterhouseCoopers stepped in. One day in 1999 two investment bankers, I had no clue what it meant then, walked in and told me that they can provide me with venture capitalists. I had no clue what they meant, first investment bankers then venture capitalists. They explained that VCs will give me big money to expand my company and they will take stake in it. The best part was I would not have to return the money they’ll put in. Great. Now, when I look back I think had I been aware of all that I would have been able to take the plunge and reach were I stand today. Ignorance can sometimes be a bliss, you see. They asked me my business model and when they realised that was reacting to it as if they were speaking in Greek, they made one for me. PwC said they will only charge me success fees, that is, if they succeed in getting the funds, then only I will pay them. I agreed. They arranged Rs 3.5 crore from VCs and got their due. With the new money, my office expanded and I hired around 40 people. But, I was quite conservative in spending, don’t know why. After the dotcom bust, I wanted to shut online gaming and move over to mobile gaming. But, the other board members were not sure about it and wanted to go with providing services to foreign software companies. So, I had to also act as IT service provider for some time.
But, I had faith in my gaming abilities and as there were not many players in this segment then I managed to get assignments for mobile gaming from Disney, Universal, Sony Pictures and Nokia. And so came games for Lion King, Finding Nemo, Hulk and Wheels of Fortune. I always had the feeling that something more was needed to besides these, I needed a few products. I need to license a character, make a game and distribute it. But, it was very difficult to choose such a character because if it fails we will lose big time. In end 2003, Spiderman 2 was to be released and I decided to go for him. Got in touch with Marvel Comics and managed to get a worldwide licence for Spidey. The game was released in 60 countries and in 6 languages. Later I acquired licences for Bruce Lee, Jurassic Park, Buffy the Vampire slayer and Mask. Mobile game publishing increased our revenues 10-fold. I am happy that I have proved that you can do a product story in India. Now, I have a team of 300 people which include gaming programmers, graphic designers and gaming testers. Everyone in my team love gaming and that’s the common thread that binds us. When we are not creating games, we are playing one. My offices are in Mumbai, Beijing, London and Los Angeles. I also outsource some work to Eastern Europe, US and China. My dream is to give games or e-sports, as I call it, the recognition of a sport. It is never business for me, it’s just gaming. The other global players in mobile gaming are EA, GLU and GAMELOT. Besides, companies like Yahoo and Indiatimes also have mobile gaming facilities. My recent favourites are Resident Evil 4, Gears of War and WiiSports. It keeps on changing. With the growing market of pirated games it is becoming very difficult for gaming companies to maintain margins. So, I have made a pact with major gaming providers including Microsoft where I deliver a gaming package to people via broadband and charge them monthly. The companies are paid according to the usage of their games. So, when there’ll be easy and cheap availability of legal games, people won’t go for pirated products. Recently, UTV has taken over a major stake in Indiagames.com. (the stake held by Tom Online). To budding entrepreneurs, my advice is that you should have a good original idea and the capability to execute it. Have faith in your product. And always give preference to business sense than legal sense.
http://economictimes.indiatimes.com/Opinion/Todays_Features/Starting_Up/Life_is_a_never-ending_game/articleshow/2410358.cms

What's the right time to become your own boss?

Bijaei Jayaraj is happy serving his three-month notice period at MasterCard Worldwide as assistant vice-president and accounts head. Having resigned in January, he doesn’t have another job in hand and interestingly, isn’t looking for one either. After all, he is going to start up on his own. He will soon receive his last monthly pay cheque and then be freed into that uncertain stratosphere called entrepreneurship. Mr Jayaraj had been there before. This is his second attempt at being his own boss. The first one had failed. This time, he has put that lesson to good use, and is better prepared. The rush of blood he feels in his veins must be so familiar to a number of entrepreneurs, who dared to quit the safety of a regular job and plunge into entrepreneurship. While virtually everyone in corporate jobs, and even an increasing number of college students, at least vaguely dream of being entrepreneurs, not many give shape to their thoughts. The desire gets overwritten by the comfort of a salary routine. Only a fraction of such people rises above the resistance, and start planning for their own ventures seriously. For others, it is a mystery how these entrepreneurs dare to risk it all.

“Don’t ever sleep on a dream,” cautions Mr Jayaraj, who thinks his first rash dive into entrepreneurship was still more valuable than passive and idle waiting. He never let his dream wither away. He had this passion for building a business around consumer loyalty programmes and pestered a previous employer to implement his ideas. The company agreed it was a valid proposition, but stopped short of charting the new territory. Disappointed, Mr Jayaraj just quit in haste and tried it on his own. “There was no planning. I thought I would be able to arrange things, but it does not work that way. I was not able to arrange for funds,” he recalls. He realised he had tried to overreach in his enthusiasm. He returned to a job, this time with MasterCard. But in his heart, Mr Jayaraj knew it was just stopgap. He started planning his second attempt at entrepreneurship even as he worked hard at his job. He slowly sewed up the equation: business model, money, people, office space and even a web domain name. His homework complete, he resigned from a job he was performing well at and offered a promising career road map. This, in fact, holds a lesson for entrepreneurs, say experts. Successful entrepreneurs never leave their profession for wrong reasons, says VK Mathews, founder of IBS Group, who quit as general manager of Emirates to start a technology venture for the air transportation industry. “Most executives leave their jobs when they are doing pretty well. Disgruntled professionals should never become entrepreneurs.” For Mr Mathews, the preparation involved extensive research on potential customers who will be his new paymasters. “I first focused on who will pay me,” he says. “Customers have a risk, but they know that they can reap benefits” if they stick with a good businessman, he adds.
Mr Mathews had to empty his pocket for starting the venture. “Plunge is a very risky proposition. My kids were just four and five years then. I had put everything I had in this venture. But, I was determined that it won’t be a half-hearted effort, since I have seen numerous cases where people take leave and try new things just to get back to their old jobs after a while.” Mr Mathews also strongly believes that experience in the corporate world better equips an entrepreneur to manage his/her venture. Freshers may have brilliant ideas but for marketing and arranging funds, it pays to have a corporate exposure. For this reason, potential entrepreneurs must work hard at their current jobs, learn skills that might come handy in business and network intensely. Phani N Raj, founder of a brand merchandising company eYantra, was working with PwC as a consultant in the US. He had to work with lot of start-up companies and the ambition of those entrepreneurs inspired him to ditch the secure and stable job and get into rough waters. “When the decision came to change from security to insecurity plus the family pressure of dissuading from starting a venture, it became very difficult. But, the love of doing something where my contribution can be directly felt and I can make a difference to the business was too strong, so I took the plunge,” says Mr Raj. His planning period was three to five months. He met experts to ask whether the venture would make sense, what kind of challenges he might face, the possibilities of this venture failing and what kind of people and resources he would need to run it efficiently. He studied some players already in the market and made a monthly plan of expenses, first stream of revenues and tried to fix a revenue-to-expense ratio. Sahil Parikh, founder of Synage, worked for ClinicalTools — a software company in healthcare research. For him, leaving was not so hard because he was moving back to Mumbai, his hometown, and he had set up a deal with them about setting up a team and helping them develop software from India. They became his first client. “The biggest mental relief is your family’s support.” He planned his leave over six months in advance to complete the work in the company. He started Synage two months after he moved back to Mumbai. During this period he was busy settling down, looking for people, finding a business name and designing the site. For some like Tufail Khan, co-founder CarWale.com, it was a long dilemma that lasted over a year. But once he decided finally, everything happened very fast. “I resigned from Blue Star within a month of making the decision. It’s more difficult to leave job when one likes it. Internet was of great help in doing all initial research.” He also visited potential clients and discussed the ideas and possible products.
But there is no time frame within which the start-up urge takes expression. For Vivek Pawar, founder-CEO of Sankalp Semiconductor, the course ran as long as 16 years. “I used to always think I would start a company after five years, but it never worked that way as it was too long a time.” He kept on getting new challenges at Texas Instruments and didn’t have time to plan. At some point, he told himself if he did not take the plunge then, he would never be able to. He quit. “Since the vision for my new company was not clear and the entrepreneurship was an idea just based on glamour or wish list, every small or a big issue stopped (me) from taking the plunge. Once the vision was clear, there was absolutely no worry and things fell in place,” says Mr Pawar. KS Kohli, chairman of Frankfinn Aviation Services, never gave up his job as a criminal lawyer with the Supreme Court. It just took a backseat during his ventures. In 1993, he started his first company Frankfinn Medico Infoservices with Rs 40,000, that too borrowed from his friend. It was just a warm-up to his ambition of becoming a big player in the aviation industry. And he finally ventured into air-hostess training in 1997 and the company was renamed Frankfinn Aviation Services. He says: “I love being a lawyer; that’s why I never gave it up. I love being an entrepreneur and that’s why I took the plunge.” There are some entrepreneurs who say it makes sense to have a backup plan in case of failure, but others disagree. “I had assurance from Blue Star in case I ever feel like going back. But, in case of failure, I would have preferred joining a start-up,” says Mr Khan of Carwale. However, Mr Raj worked hard to formulate a backup. “The backup plan was to have some more cushion in the form of money and the worst alternative was to take up a job at a consulting company.” But, Mr Parikh feels that a backup plan puts you in a comfort zone. So, he prefers not to have one. “I decided to go with the single-minded focus and correct course, whenever necessary,” says Mr Parikh. However, the flexibility to change with market realities can be a cushion against entrepreneurship shocks.

http://economictimes.indiatimes.com/Opinion/Todays_Features/Whats_the_right_time_to_become_your_own_boss/articleshow/2924022.cms

Online presence helps build valuations and get VC funding easily

Madhav Oza entered the travel business well before the onslaught of internet, lived through the dotcom transformation of the sector and continues to enjoy a significant market share today. But he has been unable to attract venture capital investment for his company Bluestar, while wannabe travel portals, with nothing more than a website, have successfully drawn such funding. VCs have willingly fallen prey to the technology hype in what is a sound brick-and-mortar business. “They only want to make a fast buck,” Oza says ruefully. “But they fail to do so as only 10-15% make a profitable exit.” Excessive VC attention to some sectors and virtual neglect of other opportunities has led to a wide array of over-invested and under-invested segments in India, industry watchers say. Not that the fancied sectors are pouring money or the less attractive ones are devoid of profit opportunity. But the VCs’ tendency to embrace sectors, where others have succeeded, is creating a distorted scenario in entrepreneurship support across the country, they say. “It’s like a herd behaviour,” Oza complains. Even businesses considered VC friendly are hurt by this over-investment. For instance, fledgling travel businesses fashion themselves more as web portals with a predominant online model, rather than go through the pain of creating physical infrastructure and network. The logic is that the online presence helps build valuations and get VC funding easily. Oza recalls cases, where VCs funded fare discounts on travel sites out of their own pockets, and other cases where the companies folded up after the financial investors made their exit. The major victims of this beaten-track financial culture are the inventors of new products or technologies. Most of them are not business executives and lack entrepreneurship experience. All they have is the technical knowledge of their invention. Ideally, this should offer the maximum profit potential for venture capital houses, since there is value to be built from the ground up. But still, investors shy away from such ventures preferring to invest in the umpteenth search engine or yet another online exchange. VCs fail to invest in early stage start-ups, with high levels of innovation, as they are busy making late-stage investments, says Anil Gupta, a professor at the Indian Institute of Management, Ahmedabad. Even with all the buzz around innovation in many sectors, information technology and services form the VCs’ first priority. Even within services, business around outsourced contracts still get VC money, while new services are ignored, he says.
For instance, there aren’t many VC investors who understand or are interested in the farm sector, but bountiful opportunities lie there. With contract farming, farmer-corporate cooperation and newer market systems evolving, agriculture is increasingly becoming an entrepreneurial activity. Supply of seeds, herbal pesticides and nutrients are going to find robust demand in the coming years. Water purification, food processing products and no-chemical pest-control offer immense innovation possibilities.
Many entrepreneurs feel that the internet’s grip on VCs has not loosened even seven years after the dotcom meltdown. Within this segment, it is the oft-repeated themes like jobs and matrimony that get too much investment. Internet firms that deal with education, training, retail and financial services remain under-invested. Defending VCs, Rishi Navani of fund house Matrix Partners says funds prefer certain sectors considering a combination of market opportunities, management strength and return potential. The business needs to be highly scaleable for early stage funding. A great idea may really not be scaleable. But he also agrees that both VCs and start-ups are victims of herd mentality. Many VCs go by a shopping checklist to satisfy their limited partners or investment committee, taking care to do what other top VCs have also done. This is done to ensure that if something goes wrong, they wouldn’t be singled out for blame. They look for start-ups, which can expand quickly and can attract further investments in terms of next round funding or initial public offering. VCs love scale so that they can exit at the right time. Otherwise, they are not interested. The so-called “India Strategy” also plays a part in the business mix that venture funds go in for. These days, if you are doing business in India, it is mandatory to have certain sectors in your portfolio. The sectors that have caught the stock market’s fancy rank high on priority list, because companies in these businesses can be quickly packaged for an IPO. So, a real estate firm, where a big paper valuation can be built quickly and shares sold at a handsome premium, will attract VC devotion. Let innovation take a walk. On the other hand, a sector like power has no place on a VC’s mind because of its long gestation period, huge capital needs and the low potential for fancy valuations. VCs shrink away from business whose day of reckoning is far away. New Enterprise Associates, India vice-president, Ben Mathias says VCs generally look at sectors that they are comfortable with. “Most VCs with a US background have come from the tech industry and they focus on IT and ITeS. This is not because they don’t believe in the potential in other sectors such as agriculture, but because they don’t understand them sufficiently to evaluate the opportunities,” he says. Some like business mentor Sridar Iyengar feels that there is no area that is overexposed to funding. “We are growing at a good rate. We need investment in all areas. The amount of investment currently being made, which has been growing in the past few years, is still short of what is required and lags behind other countries,” he says. He says VCs would invest in a sector if they see earlier traction or opportunities. “One validation of that earlier opportunity may be one of them backing a project or company in that area. But to say the others are followers, implying that it is blindly done, is false,” he says.
Also, experience has shown that there are different paths to achieve a goal and that different teams will do it differently. “It is only natural that many teams are funded in the same space. In the end, most ideas are not wholly original. They are a better mousetrap. The game is all about execution. May the best team win,” he says. But, things may not remain the same for long and other sectors would attract interest as and when success stories start appearing, experts say. “We may be able to see some changes. Newer services for rural sector may start getting investments and also social enterprises, for which funding is almost zero, may start attracting some angels,” says Mr Gupta. A lot can be done if VCs can become a bit more imaginative and start looking at opportunities in nutraceuticals, herbals, water treatment, low-cost drugs, support for physically-challenged people, one rupee sanitary napkin for women (NIF has the technology from a Madurai-based innovator), a 15,000 wind mill by Mehtar Hussain from Assam being tested successfully in Gujarat for pumping brine solution, says Mr Gupta. There is no dearth of ideas, what is lacking is a robust mentoring, linkage with entrepreneurs and investment window. IIM-A has set up a forum for industrial interactions and an entrepreneurship club. Proposals from innovators as well as VCs are studied to help make the marriage or help both sides to reduce their transaction costs. And things are improving. Radix, a US-based company with an Indian subsidiary, has come up to take on 10 technologies with no upfront cost. It wants to explore their business development globally and then recover its costs from eventual successes. “We need many more Radixes, which provide a whole range of solutions to innovators and inventors and without any upfront costs, but exclusivity agreement for at least 120 days, which they may need to do complete evaluation,” says Mr Gupta. “If only angels and VCs were to invest in one percent of the 5 lakh technology student projects, we would have triggered 5,000 start-ups at very low cost,” he says.
http://economictimes.indiatimes.com/Opinion/Todays_Features/Online_presence_helps_build_valuations_and_get_VC_funding_easily/articleshow/2765240.cms