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april 2014 volume 5 issue 8 `100

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also inside

EDITORS NOTE

www.entrepreneurindia.in

David vs Goliath
IT IS ONE OF THOSE FABLES that we have all read or
heard about one time or the other. The one where the young
Israelite David faces up to the giant Philistine Goliath and
fells him with a sling and a stone. While there are no indications that this fable has any real roots, the lessons from it
have long been imbibed across society in everything from
sports to war to business. Malcom Gladwell is one of those
who has recognized these lessons in the spectrum of business and written extensively about them, explaining how
big companies often fail to recognize the advantages an
underdog has when faced with a rival who has strength,
size, and a bank account to match. And this is why these
upstarts can best Goliaths.
Merrill J Fernando is one of these Davids, who took
on the biggest of companies in building Dilmah, the Sri
Lankan tea brand that is now a household name in countries as distinct as Egypt, Poland and New Zealand.
Fernando built his company out of the colonial domination of the global tea trade, growing it in the face of multinationals, who saw his brand as one that could disturb their
hegemonic control of the tea trade. His story is the perfect
example of how a South Asian brand, and a family run at
that, can be grown into a global business using the best
traditions and practices of the regions cultures. We are
therefore proud to have had the chance to talk to 83-year
old Fernando and feature him in Entrepreneurs April issue.
This feature is rich in advice, as along with Fernandos
story, we have a brilliant interaction with Harvard
academic Noam Wasserman, who has written extensively
about those early decisions that young entrepreneurs have
to get right in the search for long term success. In combination with that, do read our short piece on how to split equity
in a startupit is one of those early decisions Wasserman
talks about.
I must also recommend on two very relevant and timely
pieces that we have for you this month. The first is on

Indias mobile gaming industry, a space with a lot of young


players but not much standout success. Whats going on?
We try to find out.
The second piece is on the new gold rushwearable
technologies. We have come a long way in a very short time
from when Nike first launched a fitness tracker. We now
have a new launch almost every month from a marquee
company and even Indian companies, like that of Vishal
Gondals GOQii, have boarded that boat. But will wearable
technologies be able to make the long run to success? We
try to find the answers.
We also continue our collaboration with Sequoia Capital
on our special series on Middle India, this time diving deep
into healthcare and the way the players here will have
to evolve to keep pace with a fast-changing consumer.
Staying with healthcare, we meet Meena and Krishnan
Ganesh, who are now taking their fifth crack at running a
venture with Portea Medical, a startup which operates in
the growing home healthcare space.
I would also urge you to read about our special package on all that it takes to be a leader in todays brutal and
competitive environment. The protagonists of this package maybe not be from Indian shores, but their advice definitely has a place in our cubicles.
Lastly and importantly, would you please do me a solid
and read the very important piece on how one should react
to someone asking for a favor?
Did I get that right? Never mind.
Happy reading!

Ankush Chibber
Executive Editor
ankush.chibber@network18publishing.com
Intelligent Entrepreneur April 2014 3

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4 Intelligent Entrepreneur April 2014

CONTENTS
INSIGHTS

www.entrepreneurindia.in

COVER STORY

SOCIAL ENTREPRENEUR

14 Why Leading Means


Listening
Richard Branson believes
that listening is the key to
good leadership

32 Miles for More


Akanksha Hazari has brought the fundamentals of
the loyalty programs model into the social entrepreneurship space

16 The Ever-Expanding
State

R Jagannathan talks about


what the Indian government does wrong

18 The Idea of India

Manish Sabharwal stresses


on the need to understand
history to interpret the
future better

19 Building Businesses
Based on Data

By Ashna Ambre

34 Breaking Through

IN FOCUS

Sri Lankan tea entrepreneur Merrill J Fernandos


shares how he built the Dilmah brand in the face of
fierce competition from multinationals
By Ankush Chibber

IN CONVERSATION

Sandeep Singhal lists a


few things that you should
consider before building
businesses based on data

20 Disaster Management for Entrepreneurs

40 Waiting on the Boom


The mobile gaming industry is booming in terms of activity,
but will it translate into big business?

Alok Kejriwal explains why


it is important to be prepared for any eventuality

By Avanish Tiwary

44 Take Five

22 Life Cycle of an
Enterprise

Bharat Banka mentions


the challenges an organization faces even when its
a success

23 How Delighted are


Your Customers?

Ravi Kiran says that marketing techniques hold the


key to delighted customers

24 Its the Blank Cheque


that Works
Anurag Batra believes in
giving managers the
blank cheque

A well-known Indian entrepreneur duo is ready to take a


crack at the home healthcare market
By Shonali Advani

26 Founding with friends and family is like playing


with fire
Noam Wasserman, Associate Professor of Business Administration at Harvard Business School, talks about why a
roadmap for ones self is as important for the entrepreneur
as it is for the startup

48 Will Wearables Win?


A number of Indian startups have entered the wearable
technology space, but investors are looking to play the wait
and watch game
By Shruti Chakraborty

By Shruti Chakraborty

50 The Un-Office

WOMAN ENTREPRENEUR

The workplace is changing and how. Read about some of


the new workplace trends
By Lana Bortolot

SPECIAL FEATURE

25 What Makes a Team?


Nandini Vaidyanathan lists
four elements that have
to come together to make
it up

91 Like Playing a Game

Nandini Mansinghka asks


entrepreneurs to approach
business like a game

101 The Art of Alignment

Harshada Sawant
draws parallels between
yoga and entrepreneurship

30 Fit and Working

Upasna Kamineni is doing her bit with Apollo Life to get the
Indian workforce fit
By Shonali Advani

6 Intelligent Entrepreneur April 2014

52 Value Lessons
What can good leadership really mean for a company?
By Rob Reuteman

CONTENTS

TECH
DEPARTMENT

www.entrepreneurindia.in

58 The Enemy Within

MONEY

Is there someone in your organization who is indulging in


empire building? Learn how to deal with that individual

87 Q&A

By Joe Robinson

64 You Win Some, You Lose Some

What determines the value of your company when you put


the venture on the block?
By Joe Worth

We take a look at whether success or failure breeds stronger, more resilient entrepreneurs

88 The Company Man

By Jason Ankeny

By Sam Hogg

STRATEGY

Whats the deal with corporate venture capital?

STARTUPS

68 Do Me a Solid
The Esquire guy has some advice on doing favors
By Ross McCammon

83 Double Agent

The new 13.4 inch HP


Spectre's 13t x2 hybrid
laptop and tablet comes at
a killer price

INNOVATORS INC.

By John Patrick Pullen

92 Light it Up!

Bengaluru-based xSi Semiconductors is innovating to provide cost-effective solutions to the LED lighting market

HOW TO
102 Sell on Facebook

By Shruti Chakraborty

You may not need a website to sell online

94 Whats Your Score?

By Ann Handley

104 Divide Equity


among Founders
Do not make an emotional
decision while doing so
By Ashna Ambre

106 Ace Pitch Competitions

70 Stop the Tuk-Tuk

Ahmedabad-based Evomo has designed a novel rural utility


vehicle that could help with transportation in areas where
people rely on age-old modes

By Ashna Ambre

By Ashna Ambre

If you have more things at home than you can store, Store
More may be able to help

GETTING THERE

By Avanish Tiwary

72 Mapping
Success

98 Ghar Ka Khaana

MapmyIndia operates in a sector where


it meets competitors like Google.
The company has
continued to be a
formidable rival
By Avanish Tiwary
It could help you get your
venture off the ground

RankJunction helps you to get real time training and practice and give exams online

SPECIAL REPORT

By Michelle Goodman

96 Storage Mall

An e-tiffin box service started in Mumbai is making life


easier for many in the city
By Ashna Ambre

BEYOND THE BOARDROOM


110 Have a Game
Plan

Kinetc Motors Sulajja


Firodia-Motwani tells
us how besides work,
it is fitness that keeps
her going
By Sulekha Nair

109 Make your Website


Really Work for you

SPEND IT

You dont necessarily need


to update it every day

112 Taste of
Karaikudi

By Mikal E. Belicove

Taj Chennais iconic


Raintree restaurant
retains the glory of the
old while also blending
in with the new

COVER CREDITS
74 The New Paradigm
A demanding new customer is driving change in Indias
growing healthcare market
By Team Sequoia Capital

COVER DESIGN
Arko Provo Mukherjee
PHOTOGRAPH
Source: Dilmah

81 The Way of the Lion City


India can learn a lot from Singapore on skilling or upskilling the youth
By Ashna Ambre

8 Intelligent Entrepreneur April 2014

By Sulekha Nair

REGULARS
10 FEEDBACK
11 RESOURCES
12 ASK ENTREPRENEUR
84 WORK LITE
114 BACKSTAGE

FEEDBACK

www.entrepreneurindia.in

True EntrepreneurshipDoes it Exist?


The first and foremost fear factor for a novice inentrepreneurship is the loss of money. It
reminds me of the story of a famous Hollywood movie Other peoples money (1991), which
portrays the story of a greedy person who wishes to take over a prominent business either
through the investment of other people or through crooked means. People similarly find
their solace when their venture is being funded by others. Even now this trait is referred
to as the OPM. Hence, the real trait of an entrepreneur viz., risk-taking is negated totally.
Unless budding entrepreneurs realize the true value of venture capital and angel investors,
quality entrepreneurship will remain a far-fetched dream for our youth. Disruptors and
great innovators will be few and far between in India with such an attitude.
M.Vignesh, via email

Making India Proud

TELL US ABOUT IT

Our facebook fans, twitter


followers and discussion
groups are buzzing about
what matters to entrepreneurs most. Come join
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Network 18 Media &
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Vithal Bank,
Mogul Lane, Matunga-West,
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E-mail: editor@entrepreneurindia.in

The list of companies in the


cover story of the March
issue, which talks about
disruptive ideas, was good
particularly because the
companies were from different sectors. In your previous
cover story, I had noticed
that other than one company,
all others were technology
businesses. There are a lot
of companies in India that
are using technology and
disrupting various sectors
everyday. These could make
India very proud on a global
level soon. Indias entrepreneurs work in circumstances
that are much tougher than
anywhere else in the world
and I am very proud that
some have overcome big
hurdles to get noticed.
-Dhruv Bhasin, via email

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Letters may be edited for
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10 Intelligent Entrepreneur April 2014

Woman Power
I think having a dedicated
section for women entrepreneurs is an inspiration
for many women who either
want to startup or quit their
ventures after starting up.
I have started reading the
magazine only recently and I

take a lot of inspiration from


the women featured there.
The story in the December
issue about Sumitra Senapaty
and her women only travel
club was great because I feel
not enough women work
in the travel and tourism
industry. There are other
stories about young women
in that section that I have
read. Including the one about
Whitenife. The founder has
started her own venture at
the age of 23, which gives
immense encouragement to
people like me who are in
their early 20s.
-Ankita Maneck, via email

Fashionista
I am a complete fashion buff
and a fashion design student.
My dream is to open my own
business and really grow it to
the level that Anita Dongre
has done. From being just a
boutique designer, she has
grown it to a fashion business
that is distinct from many
other fashion brands in India.
My mother is a big fan of her
designs as well. The story on
the apparel industry in the
March issue is something

that has given me hope for


my own business. Its great
to know the attention my
sector is receiving. Earlier,
only people who had a lot
of money used to buy fancy
designer garments. But that
has changed and people like
me are so excited to see that.
- Preksha Singh, via web

Starting Anew
I am a first year BBM student.
During the classes, our
professors would recommend
Entrepreneur magazine. I
like the startup section as it
has featured some ventures
that give me good ideas. I
like the businesses that use
technology for the betterment of society. My plan is to
get together with my friend
and start a business like that.
I liked the story on Karma
Recycling a lot. But I have
one request from you all:
I am spending 100 rupees
from my pocket money to
buy this magazine but I get to
read only about four or five
startups. I read many stories
online. Wish I could do the
same here.
- Rutu Desai, via web

RESOURCES

www.entrepreneurindia.in

TiECon Pune 2014

10TH MARKETING CONCLAVE

THE SECOND TIECON PUNE CONFERENCE AIMS

to bring together entrepreneurs, investors


and business leaders and have a discussion of
ideas on developing a sustainable entrepreneurial infrastructure within Pune. The event
will see various speakers including Rajiv Bajaj,
MD, Bajaj Auto; Aditya Kulkarni, Co-Founder
& Chief Production, Little Eye Labs (acquired
by Facebook); and Mukund Mohan, Director,
Date: April 12, 2014
Venue: Westin, Pune
Time: 9 am6 pm
Contact: www.tieconpune.org

Microsoft Ventures. Shortlisted start-ups who


have already registered for the event will get an
opportunity to pitch their venture to a panel of
investors comprising of angel investors and VC
funds interested in early stage investing .

Sankalp Unconvention Summit 2014

THE EVENT AIMS TO DRIVE AN outcome-oriented

engagement to shape the global discourse


on inclusive development, exploring impact
through business and capital and have an
enterprise-based development approach. This
year, the summit plans to offer new initiatives.
It will talk on Business Action by Corporations.
It plans to engage with key actors such as
governments, academia and civil society who
play an important role. It will also focus on the

need for an effective ecosystem. The highlights


of this years Summit includes workshops for
enterprises on April 9; sessions on the impact
investing/SME ecosystem in Sub-Saharan
Africa and South East Asia; pitches by promising social enterprises from India, Africa and
around the world; and interactive sessions
for partnerships between inclusive businesses and social enterprise. The speakers
include Rangan Varadan, Co-Founder & CEO,
MicroGraam; Jeff Koinange, Journalist and
talk show host, Kenya Television Network; Paul
Breloff, Managing Director, Accion Venture Lab
and many others.
Date: April 9-11, 2014
Venue: Hotel Renaissance, Mumbai
Contact: www.sankalpforum.com/sus2014/
registration-venue

NASSCOM GIC Conclave 2014


WITH THE THEME OF ONWARD AND BEYOND-

delivering excellence, the 4th edition of Global


In-House Centres Conclave aims to provide
a platform for the GICs to network, share
thought leadership on the theme and collectively find solutions to the emerging strategic
challenges. The day-long conference on April
16 will also serve as a learning platform to
share best practices, address challenges being
faced by the sector, highlight success stories
Date: April 15-16, 2014
Venue: Hyatt Regency, Pune
Contact: www.nasscom.in/gic

and discuss new business models. The other


key themes include substantiating business
impact by GICs, developing the leadership and
talent agenda for GICs, enabling a global operating platform, cost competitiveness strategies.
Some of the speakers who will be present at
the event include Abhijit Bhaduri,Wipro; Arijit
Sarkar, Google; Arindam Banerrji, Deutsche
Bank Group; Chris Rogers, HSBC Software
Development (India) Pvt. Ltd.

The 10th Marketing


Conclave which is organized by the Internet and
Mobile Association of
India focuses on the idea
of how digital marketing
is becoming the tool for
every marketer and that
the focus is completely on
the consumer now. Since
the bridge between online
and offline consumers is
decreasing and people
are logging on the web
through various mediums, more brands are
joining in to make their
presence felt online. With
customers shorter attention span and increasing
competition, the event
aims to find out the solutions to various questions
that brands are asking
themselves like, how to
make an impact?, how to
reach out to consumers?
and how to grab attention? Prominent people
from various brands
will be speaking at the
event including Aditya
Save, Digital Marketing
& Media, Marico; Andrew
Campbell, Chief Brand
& Marketing Officer,
Reliance Industries;
Anjana Ghosh, Director,
Business Development
& Human Resource,
Bisleri International;
Rajan Anandan,Managing
Director,Google India
and more.
Date: May 9, 2014
Venue: Hyatt Regency,Andheri
East, Mumbai
Contact: www.iamai.in/
events/10thMarketingConclave/
venue.htm

Intelligent Entrepreneur April 2014 11

Great Design

needs to be applauded
Categories
Best InnovatIve
space savIng DesIgn

(Innovative design of small spaces)

Best cost effectIve DesIgn


(Innovative solutions to save cost)

Best InDIa MoDern DesIgn

Design is an attitude.
Its no longer about
having a life its
all about leading a lifestyle

(India-centric traditional
design in a modern form)

Best restoratIon

(Sensitive rejuvenation of period spaces)

Best green DesIgn

(Environment-conscious design)

outstanDIng aMBIence
(Stunning interiors of private residences)

Best proDuct DesIgn

(Innovative design in furniture,


lighting, accessories and textiles)

On ground venue partner :

Awarding brilliance in design

coming soon

ASK ENTREPRENEUR

Content Owners are


Excessively Possessive
Running a business is not a cakewalk. At every stage, one can be inundated with
problems ranging from regulatory to operational, taxation to HR. If you have any
queries on running a business in India, write in to us at
editor@entrepreneurindia.in and our experts will answer your queries
Q. I want to develop a mobile app that will stream TV channels
live. Do I need to acquire a broadcasting licence from different
networks? What are the formalities with regards to government permission to stream channels? I also plan to stream
movies. What is the procedure to get rights for the same?
- Bhaveek Desai

A. Please be careful about anything that has content and


distribution dimensions to it. Content owners are excessively
possessive and their terms can kill a small business. Similarly,
content distribution, especially on mobile devices has a strong
bandwidth and compression issues linked to it. Many companies like Vuclip and Apalya are already into content aggregation and distribution on different platforms. Think of what
you want to do as a business, not as a mobile app. Whose problem will you solve? Who will pay you? Why? I would strongly
urge you to meet as many broadcast executives as you can to
understand content rights related issues.
Answer by: Ravi Kiran, Co-Founder, Friends of Ambition

Q. We are a private limited company and authorized distributors for multinational companies and others dealing in
engineering consumables. Its a 20 year-old business with
a turnover of `95 million per annum. Since we are in trading business, our gross margins are around 10 percent to 13
percent and net profit after tax falls between two to three
percent. How do I raise extra capital to increase my business?
Cash credit limits are not being increased by banks since they
relate it with paid stock in hand and expect a healthy bottom
line. In spite of a good product line and customer base, I am
not able to increase my business to the target goal of `200`250 million. Are there any mentors who can help entrepreneurs with our kind of business? Please guide me.
- Deepak M Naik
12 Intelligent Entrepreneur April 2014

A. Due to low profit margins, the options for raising capital


are limited. Having said that, here are some areas you need to
monitor for raising funds from your internal operations:
1.W hat is your operating cash cycle? Operating cash cycle
means the number of days your firms cash is blocked in
inventory and other current assets before your firm receives
monies from the clients. You need to find out what is your
existing operating cash cycle and find out ways to reduce
it. This will help in increasing your top-line by rotating the
same funds available with you efficiently
2.A nother option to explore is if you can get clients to pay you
earlier than usual by offering cash discounts
3.Please ascertain how much your profit number will increase
as your top-line increases. There are fixed costs and variable
costs to service your revenues. As your revenue increases,
your fixed cost cannot grow in the same proportion and
therefore your profit should increase. Please find out if there
are any cost slippages in your operations. An increased
profit number also helps in funding your working capital
needs. Depending on the relationship with your bankers, if
you are able to show how your profit number increases due
to increase in sales, market potential etc, they may help in
the initial funding depending on the collaterals you provide
The options you have for raising capital after you streamline
your operations:
1.Since you have a good client base, invoice factoring can
be one option you can explore with your bankers. Invoice
factoring allows you to collect your monies immediately
from your clients
2.A nother option you can explore is taking money from
friends and family, which could be either debt or equity
depending on the returns
Answer by: Sanjay Barkataki, Co-Founder, Friends of Ambition

www.entrepreneurindia.in

Q. My wife has a homemade chocolate business in Surat for


the last five years. She is the proprietor, has a current account
and a food licence. She operates from a shop in a mall and
pays professional tax. I left my job two years ago to join her
business and everything right now is in her name. Now we
both want to take the business online as a separate entity. I
want to open a company in my name, open a current account,
create a website and start online sale of home-made chocolates. This new company (my proprietorship) will buy chocolates from my wife's company and deliver it to the customer.
Kindly guide me about the following:
1) Since I will be buying from another company which has a
food licence, will I need a separate food licence as well?
2) Since I will be supplying to customers across India, will I
require a VAT number before I begin?
3) What other formalities should I complete before starting
the business?
- Sanjoy Roy

A. In our opinion, since you are carrying out a trading activity, a food licence is not required. However, you must ensure
that you have obtained at least the following:
1. VAT registration
2. PAN and TAN (if TDS is to be deducted)
3. Professional tax registration
4. Local Shops and Establishments licence
Answer by: Sachin Mulgaonkar, Co-Founder, Elraa
Business Solutions

Q. We are into reclamation and regeneration of used lubricating oil and transformer oil of various companies. Our
basic work is to lift used lubricating/transformer oil (that is
derived from various machines of various companies), bring
it to our factory, re-refine it and make it equivalent to new
oil without adding any extra new properties to the oil. This
is called job work. We take the used lubricating/transformer
oil, re-process that through the heat treatment method and
return the re-refined oil to the customer. For this, we charge
a fee which is nominal. Will this kind of work attract service
tax? If yes, please provide government notification for it.
- Adarsh Bhatter

A. Service tax is leviable on any service unless it is mentioned


in the negative list or exempted vide Mega Exemption notification. Section 66D of the Finance Act, 1994 provides
the Negative list comprising of services not chargeable to
service tax.
Clause (f) of Section 66D mentions any process amounting to manufacture or production of goods as not chargeable
to service tax.
The Act explains the term process amounting to manufacture or production of goods as a process on which duties of
excise are leviable under section 3 of the Central Excise Act,

1944 or any process amounting to manufacture of alcoholic


liquors for human consumption, opium, Indian hemp and
other narcotic drugs and narcotics on which duties of excise
are leviable under any State Act for the time being in force.
Section 3 of the Central Excise Act, 1944 states that the
following duties are applicable to the manufacturer:
(a) A duty of excise to be called the Central Value Added
Tax (CENVAT) on all excisable goods (excluding goods
produced or manufactured in special economic zones) which
are produced or manufactured in India as, and at the rates,
set forth in the First Schedule to the Central Excise Tariff
Act, 1985
(b) A special duty of excise, in addition to the duty of excise
specified above, on excisable goods excluding goods produced
or manufactured in special economic zones specified in the
Second Schedule to the Central Excise Tariff Act, 1985 which
are produced or manufactured in India, as, and at the rates,
set forth in the said Second Schedule
The Central Excise Act, 1944 defines excisable goods as
goods specified in the First Schedule and the Second Schedule
to the Central Excise Tariff Act, 1985 as being subject to a duty
of excise and includes salt; hence it means that Service tax
shall not be applicable to any process of production or manufacture of excisable goods which is leviable to Excise duty.
Further Service tax Notification no. 25/2012 exempts the
service of carrying out an intermediate production process as
job work in relation to any goods on which appropriate duty
is payable by the principal manufacturer.
CENVAT Credit Rules, 2004 defines job work as processing or working upon of raw material or semi-finished goods
supplied to the job worker, so as to complete a part or
whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for
the above process and the expression job worker shall be
construed accordingly.
If goods produced are excisable under Tariff Schedule I
or II of the Central Excise Tariff Act, 1985, then there is no
liability of service tax on the job workers.
Further, the work carried out by the job workers can be
outside the purview of service tax if their activities fall within
the ambit of intermediate production process as job work as
explained above.
Keeping the above in mind, we are of the opinion that your
kind of activity would attract service tax.
Answer by: Sachin Mulgaonkar, Co-Founder, Elraa
Business Solutions
Disclaimer: All answers have been provided on best efforts basis,
without any prejudice and based on limited information provided
by the readers. Neither the organizations involved [Network 18,
Entrepreneur and Friends of Ambition] nor their employees, allies,
and associates take any responsibilitylegal, financial or otherwisearising out of application of advice given herein
Intelligent Entrepreneur April 2014 13

INSIGHTS

www.entrepreneurindia.in

BRANSON SPEAK
RICHARD BRANSON
Founder of the Virgin Group

Why Leading Means


Listening
The key to being a successful leader
ITS OFTEN EASY TO SPOT
an inexperienced leader. If you
see someone raising his voice at
employees, stuttering nervously in
front of a group or avoiding admitting when hes wrong, thats a
person who is just starting out.
If you want to stand out as a
leader, a good place to begin is by
listening. Any organizations best
assets are its people. If you are
ready to help the team achieve
its goals, you can start gathering information on how to move
things along just by paying attention to what employees are saying.
This skill will help you throughout
your career. Leaders who are great
listeners are often terrific at uncovering and putting in place strategies
and plans that have a big impact.
Virgins successes have allowed
my colleagues and me to devote a
lot of our time and energy to helping others.

Leaders who
are great
listeners are
often terrific
at uncovering
and putting in
place strategies and plans
that have a big
impact.

USING SOCIAL MEDIA


There is never enough time or
money to help everyone who
needs it, so we use our background in business and leadership to try to reach out to as many
people as we can by multiplying
our forces! We supply practical
advice through discussions and
speeches, offer courses at Branson
Centres for Entrepreneurship
in Johannesburg, South Africa,
and Montego Bay, Jamaica; and
provide access to a network of
mentors through our foundation
Virgin Unite.
We rely heavily on social media

14 Intelligent Entrepreneur April 2014

to get our message out, and recently


I took part in a GoogleHangout
arranged by Virgin StartUp with a
group of young entrepreneurs who
were launching their businesses
with assistance from the Start-Up
Loans Company, an initiative
funded by the British government. All of them were looking
for insights to help them kick-start
their companies, trying to find
cost-effective solutions that make
their meager resources go far.
THE PERSONAL TOUCH
Adam Jones, one of the co-owners
of CrossFit Witham, a minimalist gym in the city of Lincoln,
explained that what sets his fledgling business apart is its friendly
atmosphere. His gym only offers
free weightsno treadmills or
weight machinesand no heating
in winter. Everyone is expected
to pitch in, and they work out
together. This has fostered a close
community among the members,
and Adam wanted to know how to
keep that personal touch when his
business expands to new sites and
as membership increases.
I explained that we, at Virgin,
often worry about the same things
as our startups become established. In every case, maintaining
the staffs connections with the
customers and each other helps to
preserve that unique energy.
I suggested to Adam that he
delegate more decisions to his
team, so that they can run the first
club and maintain and grow those
relationships. In the meantime, his

job should be mostly to look for and


set up the second site. His companys potential for growth hinges on
his ability to let go.
CUSTOMER KNOWS BEST
Tom Travers and Sophie Frost,
the Co-Founders of Yucoco, have
a different challenge as they try
to build their brand in the confectionery market. Yucoco helps
customers to design and create
personalized chocolate bars using
an array of toppings and chocolate options, with delicious results.
Their challenge is to break through
in a market where enormous
advertising budgets are the norm.
Tom and Sophie just launched
their startup in January, and they
asked me for advice on how to
tell potential customers about
their chocolates and brand. I
explained that customers are an
artisan confectioners best advocatesword-of-mouth
marketing will be the most effective way
to spread the news. Knowing this,
they should look to social media to
promote their new flavors.
After 40 years in business, I
really enjoy helping young entrepreneurs to get started, and
conversations like these sometimes provide me with new
insights as well. This is a true force
multiplier, in that we help each
other. Through discussion and
listening, you can stumble on solutions that no one else has thought
ofsolutions that will help you
to create your unique foundation
for success.

INSIGHTS

NEW THINK
R JAGANNATHAN

Editor-in-Chief, Web & Publishing, Network18

The Ever-Expanding State

The Indian state is doing everything it should not and faring


badly at what it should

The global
financial
crisis demonstrated the
dangers when
the states
regulations
are weak
or policing
indifferent.

ONE OF THE MOST IMPORTANT


issues bobbing up to the surface
in market economy countries
almost all countries now accept
the importance of marketsis
the role of the state. Once upon a
time, the answers would be purely
ideological. If you are a capitalist
country, you would say the role of
the state should be minimal. If you
are a socialist or communist one,
you would say the role of the state
is paramount.
However, over the last two
decades, we have seen a sea
change in attitudes towards
government and capitalism. After
the initial burst of triumphalism
following the fall of the Berlin
Wall in the late 1980s, when
every one and his aunt embraced
the idea of markets and a smallish role for the state, nobody now
takes a pure ideological view.
Our certainties were shattered by
the post-Lehman global financial
crisis which brought down growth
with a thud and, for a while,
looked likely to destroy all faith in
capitalism.
The belief that capitalists
should be left to their own devices
has died a quick death after the
world saw the economic destruction wrought by rapacious banks
and financial wizards who
earned fat bonuses and endangered their institutions by taking
on excessive risks. Several new
books have now been written

16 Intelligent Entrepreneur April 2014

about saving capitalism, including one co-authored by current


RBI Governor Raghuram Rajan
(Saving Capitalism from the
Capitalists), and another by
Joseph Stiglitz (The Ideological
Crisis of Western Capitalism).
Everyone now accepts that
the state can no longer be wished
away or downsized even in capitalism. If Karl Marx made the
outrageous assumption that in
the final stages of communism,
the state would wither away, free
market economists were equally
wrong in assuming that if only
the state would retreat, capitalism will deliver all. At the very
least, capitalism needs stout policing. The global financial crisis
demonstrated the dangers when
the states regulations are weak or
policing indifferent.
RIGHT ROLE OF THE STATE
The big debate everywhere is on
what the right role of the state
should be, and what should be the
limitations placed on its expansion so that we get the best of both
worlds: a vibrant market, and a
society that is not loaded in favour
of the rich.
There are, of course, no short
answers beyond motherhood
statements. But these motherhood
statements are important, nevertheless, and they establish the
principles on which states should
decide their roles.

Just as the core principle of


communism is from each according to his ability, to each according
to his need, the central principles
determining the role of the state
in a market economy should be
a sum of the following: the state
should do what private parties and
individuals cannot do; it should
not do what others can do better;
where possible it should be an
enabler rather than a player itself;
and, most important, it should not
overextend itself, for it is not the
job of the state to solve all human
problems in existence.
Even if we accept these broad
principles, it will not be easy deciding what a state should do, for the
answers would vary depending on
a countrys stage of development.
For example, is providing food
subsidies the job of the state or
should the state focus on creating
growth so that people are able to
feed themselves? Should the state
set up a number of educational
and health institutions or should it
play a more recessed role?
We, therefore, need to sharpen
our definition so that we have
greater clarity. Ajay Shah of
the National Institute of Public
Finance and Policy suggests one
approach. He says that the state
should prioritize the provision of
public goods over private goods.
A public good means something whose provision to anyone
will not reduce someone elses

www.entrepreneurindia.in

ability to enjoy it. A robust external defence capability is a public


good. It protects both you and
meand not just one of us. A
healthy internal policing mechanism protects both you and me
from criminals. So does a good
legal system. A strong currency
protects the value of everybodys
moneynot just the money of
the rich.

TAXING OTHERS
In contrast, a private good is
something where consumption by one will mean denial to
another. If I give you free food
because you are poor, someone
else cannot consume the same
item. Moreover, the tax resources
spent on providing free or subsidized food to you will have come
from taxing someone else.
If we accept this principle, it
would mean the first job of the
state should be to provide the most
important public goodswhich is
the basic reason for its existence.
Private goodsincluding subsidies for food or fuel or fertilizer
come much, much later.
However, the meaning of
public good can change as a country gets richer, and has more tax
resources to play around with.
Currently private goods like good
education or good healthcare
can become public goods given
to everyone.
Put another way, public goods

are universal goodsand how


much of state investment must
be made universally available
depends on what stage of development you are in.
LET THE BEST MAN DO
THE JOB
Another principle of value in
deciding the role of the state is
efficiency: who can do the job
best. Outsourcing defence or
policing to private parties may not
be a good idea anytime, but does
the state need to be making steel,
producing coal, or running the
railways, banks or bus services?
Again the answer cannot be in
black or white. The state would
be right to get into these activities if no one else is willing or able
to do it. It can withdraw from it if
private parties are ready for the
challenge. This is the state India
is in now, where private parties
can easily produce coal and steel
and run airlines and railway
servicesbut these remain inefficiently run by the state.
The time is ripe for the Indian
government to withdraw from
these monopolies in stages.
The third aspect is enablement
and supervision. If we accept the
reality that the state need not get
into everything, it does not follow
that it must do nothing.
For example, private parties
may be able to set up profitable
schools, but the critical question

is whether these schools serve


only a few or the multitudes? And
even if it is the latter, are these
schools providing good value or
just providing a place to send the
kids from home? States have to
thus create the right incentives
and environment for good schooling. They have to enable good
education.
CREATING A MORAL HAZARD
Similarly for jobs. Should the
state try and create jobs itself
(even useless jobs like NREGA), or
create the right conditions where
the private sector can create jobs
in plenty? Surely, it should be the
latter. When the state directly
creates jobs, it also creates a
moral hazard: it can never dismiss
them even when these jobs are
irrelevant to the economy. Since
a state is supposed to be an ideal
employer, no employee can ever
be dismissed for anything other
than very bad behavior.
The Indian reality is that the
state has been extending its ambit
to private goods (free food, cheap
fuel, free what-have-yous) and
reduced its capability to provide
public goods (law and order,
good defence, and an efficient
legal system). Right now we need
to roll back some of the contours
of the mai-baap state. An everexpanding state will inevitably
lead to failure in providing essential functions.

The Indian
reality is that
the state has
been extending its ambit
to private
goods (free
food, cheap
fuel, free
what-haveyous) and
reduced its
capability to
provide public
goods (law
and order,
good defence,
and an efficient legal
system).

Intelligent Entrepreneur April 2014 17

INSIGHTS

LOOKING BACK
MANISH SABHARWAL
Chairman, Teamlease Services

The Idea of India

Elections are an apt time to brush up on books


about Indias history

One of the
most helpful ways to
think about
the future
is a better
understanding of the past
because societies are path
dependent.

ELECTIONS ARE A WONDERFUL time to feel good about India.


There were three areas of policy
entrepreneurship
identified
during Indias Independence
nation building, social justice and
poverty reduction. While we have
made progress in all three, there
is little doubt that India has defied
the odds (too poor, too diverse
and too big at birth) by becoming
and staying a democracy. It was a
pioneering effort to give everybody the right to vote.
India and Pakistan, born on
the same night, have had different destinies for many reasons but
one surely is that 30 lakh Indians
win an election. History matters
and Indias current micro and
macro political structuresincluding the emergence of the Aam
Aadmi Partyhave deep roots in
the chronology, personalities,
and narratives of Indias independence struggle. But our work was
hardly done in 1947. The clearly
clueless New Delhi correspondent of The Times of London wrote
a series on Indias Disintegrating
Democracy in 1967 where he
predicted that Indians were voting
in the fourthand surelylast
general election.
BOOKS THAT COUNT
One of the most helpful ways to
think about the future is a better
understanding of the past because
societies are path dependent.
While a good bookshelf about
India is endlessand my word

18 Intelligent Entrepreneur April 2014

limit forces me to leave out the


wonderful world of fictionI pick
two buckets of Indias independence struggle and post-independence commentary for a possible
decade of reading.
The broad books about Indias
independence struggle include
The Proudest Day by Read and
Fisher (a wonderful chronology
with great stories about the journey of the Raj), The Integration
of Indian States by V P Menon (a
wonderful description by Sardar
Patels secretary of state of how
560 of the 562 Maharajas were
convinced to join India voluntarily), Indian Summer by Alex von
Tunzelmann (the last few years of
the struggle in detail), Liberty or
Death by Patrick French (how the
British were distracted between
the two world wars and thought
little about India) and Freedom
at Midnight by Larry Collins and
Dominique Lapierre (a great read
but somewhat biased in that their
major source was Mountbatten).
As a plaque outside the US
Library of Congress says, the
history of the world is the biography of great men. And the
independence movement is best
understood by reading the biographies of Gandhi (many in
additional to himself), Nehru
(by Sarvepalli Gopal or Shashi
Tharoor), Patel (by Rajmohan
Gandhi), Gokhale (by B R Nanda),
Maulana Azad (by himself), Bose
(by Elliot Vallenstein), Jinnah (by
Stanley Wolpert), Bhagat Singh

(by Jatinder Sanyal), and the


Indian Civil Service (The Ruling
Caste by David Gilmour).
OTHER PERSPECTIVES
Post-independence period reading is less about biographies and
more about perspectives. India
after Gandhi by Ramachandra
Guha captures the joys and challenges of nurturing a democratic
thought world. The Idea of India by
Sunil Khilnani gives deep historical and contemporary context to
Indias journey. Imagining India
by Nandan Nilekani focuses on
solutions and the way forward.
India, The Emerging Giant by
Arvind Panagariya is wonderful
economic history that should be
read by anybody thinking about
reforms. The Indian Constitution
by Madhav Khosla is small jewel;
a quick 165 pages that focuses
on its features, aspirations and
controversies. India Unbound by
Gurcharan Das captures the overdue optimism of the economic
unshackling. And, Battles Half
Won by Ashutosh Varshney is an
important read at the intersection
of economics and politics.
Of course any book list about
India, like India itself, will always
be incomplete.
As India heads to electionsto
paraphrase an American historianthe difference between our
ideals and our reality is not a lie
but a disappointment. And it is a
disappointment only because it is
form of hope.

www.entrepreneurindia.in

VC CONNECT

SANDEEP SINGHAL
Co-Founder and Managing Director, Nexus Venture Partners

Building Businesses
Based on Data

Points to consider before making such a move


LAST MONTH I GOT A CALL
from a former colleague who had
seen our investment in Indix and
wanted to understand our thesis
behind the investment. Indix is
building the worlds largest catalog of product information, and
a product intelligence platform
residing on the data that provides
insights to its customers including
brand and category managers.
I then spoke to a company
that takes public information
about cropping patterns, weather
data and helps large farmers and
other stakeholders in the agriculture supply chain improve their
returns. Our portfolio company
Unmetric takes social feeds and
provides competitive analysis
to our customers. As a fund, we
have come across many companies both in the US and India that
are mining data ranging from
large public databases to internal
customer and marketing records
and performing predictive analytics to give business guidance to the
user. This space is growing fast. As
an entrepreneur, if you are looking
at this space, here are some basic
things to consider.

could solve. Having a good idea


of the target business problem
will allow you to be more efficient
in defining the data sources that
you need. The process will have to
be iterativesometimes you may
discover that although the business problem is large, there is no
easy way to access the data to solve
it (although that is becoming less
and less likely) and you may need
to refine the problem based on
data availability.
Once you have defined the
problem you are solving, you
need to plan access to the various data sources and also determine whether you will need to do
any primary data generation. As
I mentioned earlier, some of the
data may be from public sources
like government bodies, academia
or online scraping, some may be in
paid forms like Nielsen or Twitter
feeds, and some may come from
your customer records. You need
to create a data model for all this
information so that you can aggregate it in the right manner and
ensure that it can be analyzed and
visualized to generate the most
valuable insights for your clients.

PICKING THE RIGHT IDEA


The first and foremost is to narrow
down the problem you will solve
and make sure that it is a big
enough issue for customers to pay
you a meaningful amount. There is
a lot of data floating around, and it
is easy to look at building company
data first and then try and get to
a business problem that the data

THE CUSTOMER EXPERIENCE


You also need to start thinking of the user experience. How
will users interface with all the
complex data so that they can focus
on insights rather than having to
worry about the complexities of
your data model?
We have seen many companies
that get so enmeshed in the data

itself that they forget that the real


value lies at the user end. In my
view, having one less data source
but having a more compelling
user experience that gets them
an 80 percent accurate answer is
more valuable than trying to add
that data to get to 100 percent.
Other than very precise requirements in clinical care or legal
cases, most business or consumer
decisions are made with approximate knowhow. Google or Bing
arent 100 percent accurate and
Amazon is unlikely to give you
the best price and selection all the
time, but consumers are happy
making choices based on their
analyses/results. So finding a
balance between the user experience and the data model becomes
the second iterative process.
Building a team for such
a business is not easyyou
need data scientists who are a
scarce commodity and much in
demand nowadays. You need
domain experts who understand the customer problem and
can guide product development,
and you need UI/UX and data
visualization experts who can
take complex data and analyses and make them appear intuitive to the end user. This is apart
from the task of software developers who have to build the
product and handle the rest of the
business functions.
So keep that in mind as you
embark on building a data-based
business and plan your hiring and
fund raising accordingly.

Having a good
idea of the
target business problem
will allow you
to be more
efficient in
defining the
data sources
that you need.

Intelligent Entrepreneur April 2014 19

INSIGHTS

THINKING & DOING


ALOK KEJRIWAL

Digital entrepreneur, blogs at www.therodinhoods.com

Disaster Management
for Entrepreneurs

Why it is important to be prepared for every eventuality


DISASTERS HOVER OVER entrepreneurs like bees hover over
honey. I doubt there is a single
entrepreneur on earth who has
not encountered a business disaster. The question is: How do they
manage? I am inspired to present
this to you along with a few case
studies and test your preparedness for business disasters.

The consumer
is always
right. Nobody,
including God,
comes before
the consumer.

CHANGING ICONIC FORMULA


April 23 is a special day for me.
That is the day my older daughter
was born. But April 23, 1985, was
the launch of a New Coke by the
Coca-Cola Company.
The need to launch a new
flavor of Coke was driven by the
declining share of the company
in the US market. While Coke had
a 60 percent market share after
World War II, by 1983 that share
had declined to just 24 percent,
driven mainly by the incessant
competition thrown up by the
new, fresh, sweet tasting challenger called Pepsi.
Roberto Goizueta, the CEO
of Coca-Cola at that time, was
obsessed with improving his
companys market share and made
it clear that he would do anything
that was required, including
changing the flavor of Coke to
improve business.
After lot of research, R&D,
consumer tests and surveys, a
New Coke was launched.
Now, before you read on,
put on your entrepreneur topi.
Think of what you have just read;

20 Intelligent Entrepreneur April 2014

imagine the state of the mind of


the CEO and his responsibilities to
improve the fortunes of an iconic
brand like Coke.
Also, consider that as humans,
we are always taught sermons
such as change is a constant and
if you don't change, youre dead.
This was a possible motivation to
change an old, pre-World war
flavored drink.
DISASTROUS RESULTS
Once you have collected your
thoughts, read on:
The New Coke after its launch
was a complete disaster. It was and
is probably the greatest corporate
disaster ever. Consider some of the
events that occurred:
O
 ver 400,000 calls and protests
were received by the Coca-Cola
Company criticizing the change
(this was before the era of the
Internet; today, the volume of
protests would have brought the
world wide web down)
C
 oke hired psychiatrists to
listen to the calls. They reported
that the calls from consumers
describing the pain they felt
with the change in the flavor
resembled the pain that people
shared when describing the
death of their family members!
A
 letter was addressed to the
Chief Dodo of the company
(imagine you being called that
by your own consumer)
F
 idel Castro (yeah!), a long-time
Coke drinker, protested about
the change from Cuba. (If you

are weak in history, you should


know Castro was a sworn
enemy of the US).
To cap it all, a passionate Coke
drinker filed a class action suit
against the company for the
change. Now, can you imagine
getting sued by your consumer for
making your own product?
In a couple of months, Coke
hurriedly reverted to the old
flavor and that was probably the
best thing that could ever happen
to the company. Its market share
more than rebounded and many
new drinkers who had switched
to Pepsi began gulping Coke.
So dramatic was the increase in
market share that some conspiracy theorists said that Coke had
planned this all along, just to win
back its sales.
LESSONS IN BIZ DISASTERS
Now why did I feature a business
disaster from 1985 for readers,
many of who were not even born
at that time? Simply because, this
case teaches some classic lessons
in business disasters for entrepreneurs and defines the rules of
handling them:
D
 isasters happen to everyone.
Be it the mighty Coke or be it
you, the struggling cloud security startup
T
 he consumer is always right.
There are no two ways bout that.
Nobody, including God, comes
before the consumer. This is a
lesson to entrepreneurs to cast
aside their gut and insight

www.entrepreneurindia.in

when the consumer tells


them otherwise
T
 here is no place for ego in such
matters. That commodity has
zero supply. Entrepreneurs or
CEOs have to become chicken
and get ready to scurry around
to rescue themselves and their
companies or get beheaded
FLAPS, BUT DOES NOT FLY
I am assuming you have played
the highly irritating, obnoxious
and impossible mobile game
called Flappy Bird. If you havent,
that is too bad. The game isnt
available anymore.
Flappy Bird, although shortlived, made history for being the
best example of a small entrepreneur committing public hara-kiri.
It was first released as yet another
game by a Vietnamese gaming
entrepreneur on the Apple iTunes
store in May 2013. In early 2014,
the game suddenly became
extremely popular and was the
number one free game on the
iTunes store.
Now, as a gaming entrepreneur (with one game that also
ranked #1), let me tell you that
reaching that position is impossible. Its only a combination
of luck, circumstances and an
unseen hand that propels you to
that slot.
It was rumored that the Flappy
Bird game was earning US$
50,000 a day (`30+lakhs) and
the world was going nuts playing
it. At home, my daughters were
huge fans of the game and I was

being preached lessons such as,


Dad, this is the kind of game you
should be making. Flappy Bird
was the Bollywood version of ultimate success.
A
small-time
entrepreneur with a simple idea strikes
a big hit, earns global attention and millions of dollars.
What more could you ask for?
Everyone I knew wanted to
be him. Then all of a sudden, the
entrepreneur announced that he
would be pulling the game down
from the app stores.
When I heard this, I laughed
out loud and thought this was
just another PR stunt to get more
downloads. But on February
10, the game was indeed pulled
down. The entrepreneur quoted
vague reasons such as, guilt
for making a very addictive game
and being very frustrated with
threats received from irritated
players. The real reason why he
pulled the game down remains
unknown; although I suspect
that it was because of intellectual
property infringements of many
games whose elements the entrepreneur had used to create this
one classic game.
In this extreme case, unbelievable success became a business
disaster for the entrepreneur!
LESSONS I LEARNT FROM
THIS CASE
When overnight success happens,
be prepared to handle public fury
just as you would be prepared
when you or your company have

done something disastrous. Be


open, transparent, public and
honest in your position. Say
sorry or get lost a million times
if required.
The Vietnamese entrepreneur did none of these things.
He kept his reasons for pulling
out vague and confused even his
die-hard fans.
When you become very
successful, all the graves you have
previously filled get dug out and
examined. So, be prepared for
intense public scrutiny.
Some of the local examples of
business disasters we have seen
include how Vijay Mallya handled
the grounding of his pet project
Kingfisher Airways; the belligerent manner in which Subrata Roy
treated government authorities
that led to his arrest.
I would also urge you to read
up the recent cases of the BP Oil
disaster and how Netflix tripped
badly when it failed to read its
consumers sentiments.
In each of these cases, play
the role of the entrepreneur and
test how you would have reacted
and the lessons you learnt from
these cases.
Business disasters test entrepreneurs like examinations test
students. To pass is easy, but to
come out on top requires hard
work, perseverance and most
importantly presence of mind.
As an entrepreneur, it is your
job to be prepared, and prepared
for the worst even after you get
ranked number one.

When you
become very
successful, all
the graves you
have previously filled get
dug out and
examined. So
be prepared
for intense
public scrutiny.

CONNECT WITH GROWTH


www.entrepreneurindia.in

Join the Community

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Intelligent Entrepreneur April 2014 21

INSIGHTS

BANKANOMICS
BHARAT BANKA

Founding CEO of a leading Private Equity firm

Life Cycle of an Enterprise

The challenges are many when an organization is a success

The job and


function of
capital for an
enterprise is
akin to the
trinity of Gods
like Brahma
(creator or
provider),
Vishnu
(preserver
or user) and
Mahesh
(destroyer or
disruptor).

IN RECENT TIMES, THERE HAS


been enormous amount of noise
about one of Indias leading bellwether IT companies and the
re-induction of the former founder
at the helm, as well as the induction of a new team including a
family member.
Also fuelling the fire are the
simultaneous and very publicly
noticeable changes in the senior
management.
The views of several activist
shareholder forums, investors,
analysts, et al varied widely on
righteousness, governance, etc.,
at the time of the change.
There have also been rapid
swings in views several months
later. We will leave the debate on
governance issues of a specific
company to the impacted stakeholders (as the jury is still out).
However, it provides an interesting mirror to the lifecycle of
an enterprise and the rationale
for development during its
various stages.
THE TRANSITION PERIOD
Once a startup achieves some scale
and becomes larger (and complex)
on multiple dimensions like revenue streams, geographical presence, diversity of workforce and
shareholders, the challenges
assume a different proportion.
This transition is painful but the
faster it is mastered, the better it is
for the future of the organization.
Arguably, there are three
dimensions to such an evolved

22 Intelligent Entrepreneur April 2014

and scaled-up enterprise:


(a)Capital allocation: Where the
provider of capital and its users
should be segregated
(b)Role allocation: The roles of
multiple founders and also
key employees should be
defined dispassionately
(c)Transition management: The
transition to a structured, organized and process-driven enterprise from a relatively open
structure should be dealt in a
sensitive but decisive manner
GODS AND ENTREPRENEURS
The job and functions of capital for
an enterprise are akin to the trinity of Gods like Brahma (creator
or provider), Vishnu (preserver or
user) and Mahesh (destroyer or
disruptor) who are known to rule
the three phases of the lifecycle of
the universe.
The role of Brahma probably
comes closest to that of an owner(s)
and or co-founder, Vishnu to that
of a senior-most manager or a CEO
and the role of Mahesh to that of
an owner-controlled strategist at
the center of an enterprise.
As owners, they have distinct
functions carved out for the longterm future of the organization,
i.e. they can and should take a
long-term view for sustenance and
future dynamics.
The owner(s), if also a core
shareholder(s), usually will also
think in terms of the next-generation of the enterprise while leaving the market-related task of

working on the quarterly functions to their managers.


They also have a huge commitment to build and enhance
valueshareholder and enterpriseas they have the largest
skin in the game, be it in terms of
financial stake in the enterprise or
its reputation.
A scaled-up organization under
the supervision of the owner that
focuses on systems, processes
and transparency allows latitude
to Vishnu (the CEO) to focus on
building a personal rapport with
the employees.
This is a role the owner(s)
would have played out in the
initial stages. This will also
allow the CEO to operate the business and generate returns for
sustenance and for preservation
of the enterprise.
Pinpointing the role of a
destroyer on the lines of Mahesh
is harsh. I believe it is better for us
to see the role as more of a disruptor when talking in the context of
a growing enterprise.
The disruptor is the one who
comes up with thoughts that are
capable of challenging the current
business model. He can also radically challenge the way the business is managed or say if new ideas
are to be added.
This helps an organization to
remain contemporary and also be
able to constantly reinvent itself
in order to be future-ready and
not to be caught off-guard with
sudden changes.

www.entrepreneurindia.in

GROWTH MANTRA
RAVI KIRAN

Co-founder and Managing partner, Friends of Ambition,


the business growth platform for Middle India

How Delighted
are Your Customers?

Your marketing techniques hold the key to it


MARKETING, IF YOU ask executives in some of the most wellknown companies in the world,
is coming back full circle. The
commoditization of the many
categories is so complete, the
customers are so attention-challenged, flirtatious and demanding
that marketing has no choice but
to give up its old ways and get back
to simplicity.
Simplicity of marketing is in
its original definitionto understand customers needs and to
figure out a way of using the organizations resources to service those
needs, profitably.
Over the last few decades, this
simplicity seems to have been lost
somewhere. Many companies,
particularly small and mid-sized
ones equate marketing and selling
and use marketing and sales as a
single phrase.
Large companies, on the other
hand, have developed fat marketing departments, fat budgets,
figured out a way of hiring fat ad
agencies and have started equating marketing and advertising.
With this, the result is that many
disciplines such as digital marketing, social media marketing,
search engine marketing, event
marketing fall under nothing
more than advertising.
Budgets keep growing year
after year, yet brand managers
complain that the effectiveness
of marketing is coming down. Its
almost as if marketing as a discipline has created a world of its
ownoutside the world where

customers live. Customers, meanwhile, are getting tired of traditional marketing tricks. Result:
large, arrogant companies are
shouting even louder and wasting
more money.
IF YOU ARE A MID-SIZED
COMPANY IN YOUR GROWTH
STAGE, WHAT DO YOU DO?
Fortunately, there is hope. Avoid
doing the one thing big companies dothrow truckloads of
money at every problem. Also,
avoid using the excuse many small
companies useWe will do
marketing when we become big,
for now, lets just sell.
Now think, if marketing starts
and ends with your customer,
how delighted is your customer
with you? Big companies do one
thing that you shouldmeasure
customer delight.
MEASURE THE RIGHT THING
One
advicedont
mistake
loyalty for delight. Loyalty is a
very complex issue and arguably,
delighted customers can become
loyal under some conditions but
today we are not talking about
loyalty. Delight is very difficult
to achieve.
Thinking of hiring a couple
of seats in a call center, dumping
your customer database on young,
untrained, rented executives so
that they can handle customer
issues? Be careful. Chances are
your customers will be very
unhappy soon and your database will land up with another

company who will sell it for a few


thousand rupees.
Plan to hire a couple of people
in-house and train them to talk
to customers like they are any
other human being? Call-center
fatigued customers will love you.
Do you have a few pages of
cover-your-hindquarters conditions in microscopic size in your
customer contract and mention it
*conditions apply like big companies do?
Customers hate what they
cant readeven if you pretty
much force them to sign on your
dotted line.
Think about explaining a
couple of really critical points in
plain English, even at the cost of
losing a customer. Better to lose
a customer who never was yours
than con a customer into becoming yours temporarily.
Customers dont like to lose
what they paid for; it may be legal,
but it doesnt matter.
Do you want to charge customers 21 percent interest for delayed
payments but wont give anything
if your product sucks or your delivery gets delayed? Thats cheating
and it does not create delight.
Did anyone ever tell you that
keeping a customer delighted is
several times more productive,
efficient and profitable than chasing new customers?
The key question isdo you
have a customer delight plan in
place and do you have someone in
your company whose job depends
on it?

Customers,
meanwhile,
are getting
tired of
traditional
marketing
tricks. They
are avoiding company
and brand
messages
wherever
they can and
are turning
a deaf ear to
it where they
cant.

Intelligent Entrepreneur April 2014 23

INSIGHTS

INFECTIOUSLY ENTREPRENEURIAL
ANURAG BATRA

Media entrepreneur; Founder and Editor-in-Chief, Exchange4Media Group, which includes


exchange4media.com, Co-Founder, Governance Now and promoter, BusinessWorld

Its the Blank


Cheque that Works

Here is a carte blanche recipe aimed at success


I WAS AT AN EVENT WHERE THE
former President of Kraft Foods,
Sanjay Khosla, was talking about
focuskarna kya hai (KKH)
and how he made a company grow
(and also managed a successful
merger of $27 billion).
Sanjay propounded the concept
of a blank cheque. I loved it and I
have been following it in my enterprise. I thought I must share it with
you as it really is a wonder mantra
to follow as an entrepreneur.
Most of us entrepreneurs,
whose businesses grow and
expand, need to empower our
managers and senior leadership
team and the blank cheque is what
it takes.

Nothing
works like
self-motivation and
a sense of
empowerment.

EMPOWERING PEOPLE
What is a blank cheque? Why a
blank cheque? Who will give it
to whom? How do you fill in the
value in a blank cheque?
A blank cheque is a metaphor
for turning managers into entrepreneurs. In organizations, you
tell a manager that he or she has a
blank cheque and should fill it in,
take as much money as they want,
and deploy it in activities and
initiatives of their choice.
Of course, the organization needs to have money in the
bank and there will be checks
and balances. However, what
you are doing here is giving real
power and authority along with
responsibility and accountability to your manager. The hope
is that he will be free to deploy

24 Intelligent Entrepreneur April 2014

resources in initiatives that


are likely to work and thus, eventually become a risk taker.
Wish we entrepreneurs had
investors who would give us
blank cheques! We would have
then really taken that villa in Los
Angeles or that yacht in the South
of France.
I am kidding, of course. I want to
point out that there are two things
at play here: one is the inherent
trust in the individual and his or
her capability. The second is the
development of a true risktaking spirit, which could lead to
building of pioneering products
and companies.
What if the blank cheque leads
to failure? We still have to support
the manager or entrepreneur for
eventually he or she will make the
cheque work. Failure will spur the
manager or entrepreneur to have a
fierce determination to come back
with success.
Just like what Ralph Marston,
author of The Daily Motivator has
said, You've done it before and
you can do it now. See the positive
possibilities. Redirect the substantial energy of your frustration and
turn it into positive, effective,
unstoppable determination.
MAKING IT WORK
Does a blank cheque approach
work in a startup that is bootstrapped? According to me, a
blank cheque is a state of mind. I
point to the Stephen Covey principle of doing the right thing in the

right manner for the right reason.


It will work in any organization. Its not about the money or
the quantum of money but about
a sense of ownership and responsibility. It is akin to being the head
of a family who has to take the
right decisions keeping the best
interests of everyone in the family
in mind. Nothing works like selfmotivation and a sense of empowerment. Of course, the right checks
and balances have to be there.
MARGIN FOR ERRORS
Entrepreneurs, as the pursuers of
risk, have to be rewarded and not
penalized for the few mistakes that
are made during their journey. In
my view, the concept and philosophy of a blank cheque has been
in play in India where PE and VC
firms have been giving the proverbial blank cheque to e-commerce
entrepreneurs, for example. They
know or at the very least, they
hope that the entrepreneurs and
the managers will make it work
for them.
Our political leaders similarly
must also empower bureaucrats
and managers in the government. Its never about the money,
but about the feeling a person
gets when he knows that one can
create ones own destiny and the
future for others too. I would like
to conclude by quoting Donald
Trump, Money was never a big
motivation for me, except as a way
to keep score. The real excitement
is playing the game.

www.entrepreneurindia.in

WOMEN IN CONTROL
NANDINI VAIDYANATHAN

Teaches entrepreneurship, mentors entrepreneurs (www.carmaconnect.in)


and has authored the bestseller Entrepedia

What Makes a Team?

Four elements have to come together to make it up


POST THE DOTCOM BUST, THE
buzz word in VC circles is team.
Most VCs will tell you that they
make investment decisions based
on the strength and credibility of
teams and not just ideas alone.
In fact, there are many who go so
far as to say that a good team can
build a great business even around
a mediocre idea and conversely,
even a brilliant idea may be killed
by a mediocre team. What do we
mean when we say team? To my
mind, there are four distinctive
elements of a team. They are:
FOUNDERS: These are the guys
who came up with the idea; got
together and pooled emotional,
intellectual, capital resources;
created a legal entity and declared
ownership; and finally took the
idea to market.
HIRED TEAM: These are the
people that are hired for the various functionsproduct development, marketing, accounts,
customer discovery and acquisition, treasury, and the like.
OUTSOURCED
PARTNERS:
These are typically third party
service providers, your web developer, digital media agency, statutory auditor, contracts lawyer,
branding and advertising agency,
channel partners, and the like.
You have to enter into clear agreements with them that outline
scope, tenancy and terms.

ADVISORY BOARD: Lets start


with two basic questionsWhat
is an advisory board and, what do
the members bring to the table?
An advisory board consists of
people from different walks of life.
They bring credibility, network
and knowledge to the table. When
I say credible, it does not mean
that they should be Page 3 people
or that their names should ring
a bell. What I mean is that their
resume should be robust in terms
of their longitude of service, diversity of portfolios and steepness of
their learning curve.
Network is, as the name
suggests, their primary, secondary and tertiary connections.
Primary connections typically
are those where the people they
know have worked with them as
bosses, peers or subordinates.
Secondary connections are that
even though they have not worked
togetherthey are all part of the
same milieu, both professional
and social. So, it could be someone
who is a fellow CII member or a
golfing partner at the gymkhana.
Tertiary connections are those
where one may not know someone directly, but knows someone
who has him as his primary or
secondary connection. A network
is the most critical gift an advisory board member can give to a
company irrespective of the stage
of maturity it is infor the ability
to open doors with a phone call or
a mail is the most prized gift.

The premium on knowledge of


the advisory board member is an
obvious one. It is not just domain
knowledge but perspective and
bandwidth that Im talking about
here. By virtue of his past experience, the member can connect
seemingly unconnected dots and
avert a crisis for the company or
even spot an opportunity.
It is always good to have people
from diverse backgrounds on the
advisory board. An e-commerce
company will benefit from having
a technology guru, an organization-building expert, a marketing
whiz kid, a retail pioneer, a corporate governance specialist, and
finance professional. A good size
for an advisory board is six-10. It is
not necessary to be a big branded
company to attract a good board.
A startup which has been in the
market for 12-18 months, can
use its own network to bring on
board some members. A mentor,
an alumnus, or someone you met
at a TiE event can all be leveraged.
Members who are attracted to
the company come on board not
because they expect remuneration
but because they want to be part of
the exciting story that they believe
the entrepreneur will script. In
many of my mentee companies
and mine included, the advisory
board has neither expected nor
been remunerated for their role. It
is up to the entrepreneur to decide
on the compensation model, fee,
equity or plain excitement.

It is not
necessary
to be a big
branded
company to
attract a good
board.

Intelligent Entrepreneur April 2014 25

IN CONVERSATION

NOAM WASSERMAN
Associate Professor of Business Administration, Harvard Business School

Founding with friends


and family is like playing
with fire

Noam Wasserman is Associate Professor of Business Administration at Harvard Business School.


At the school and as author of the book The Founder's Dilemmas, Wasserman is well known for his
research on the early decisions founders take, which can make or break their startup. In a long chat
with Shruti Chakraborty, Wasserman holds forth on all that is wrong about taking gut decisions
and why a roadmap for ones self is as important for the entrepreneur as a roadmap for the startup

Q: In your book, The Founders


Dilemmas, you have written about the
doubts that entrepreneurs face in the
early stages of their business. Can you
give us a background about how you
researched for this subject and what
have you looked at?
A: The origins of my book came from my
own entrepreneurial experiences. I had
started a business before coming back to
school. I had studied business and engineering and had essentially tapped them
to be able to start up a practice even
afterwards. I also worked at a venture
capital firm and it was then that I realized that the things I had experienced
were actually much more widespread.
I am talking about all of the decisions
that I had to make and all the dynamics
I was seeing amongst founding teams. I
saw them grapple with many issues and
eventually, as I went over with team after
team, I noticed that there was actually
some pattern to this.
I realized that we knew nothing or
very little about these issues and how
they affect startups. That is what made
me try and understand all of this.
What really helped shape my book
26 Intelligent Entrepreneur April 2014

was my own entrepreneurial experience,


observing other teams as a part of my
venture capital experience and my
time in academia.
I collected data from 16,000 founders
in the US and I looked at two industries
where high potential startups were coming fromhigh-tech and life sciences. I
tried to understand what the founders
backgrounds are, how teams came
together, how they made early decisions
about how to split equity, how
they structured the decision-making
process etc.
And then I also looked at what stages
founders were leaving the team, how it
affected the rest of the team, etc. So, the
book looks at what good decisions and
bad decisions founders have made and
how future founders can make better
decisions than they actually do.
Q: Your research for the book was done
only in the US. But do you think the
results you found apply to entrepreneurs
around the world?
A: Well, the data so far has been coming
only from companies in the US. The next
stage for me is to branch out into four

more countries with a similar survey


so that I can make comparisons on the
results. The four countries will be UK,
India, China and Israel. I will try to
understand the differences. But then the
decisions I have researched and written
upon are pretty universal.
Any founder in any country is going to
have to understand when to bring in cofounders, who they should be and how to
split equity between them.
Q: Apart from the decision-making
process, did you, in your research, also
encounter instances of dilemmas faced
by entrepreneurs?
A: The big picture that the results point
at can be summarized by one of my
favorite quotes by (Apple Co-Founder)
Steve Jobs: Follow your heart, but check
it with your head.
Essentially, what I have been finding
is that founders too often make heartdriven decisions following their gut and
intuition and those decisions tend to be
perilous for the company.
For instance, the decision to set up a
company with your friends or with your
family accounts for 50 percent of my data

www.entrepreneurindia.in

Q: Founding with family is a common


pattern found in India. And there are
some successful companies that have
grown out of a group of friends including
companies like Apple. What have you
found to the contrary?
A: See, at most times, founders look at
other companies that were founded
with friends and family and think that
this is the rule. But data shows that even
companies like Apple, which is very
misunderstood, are not how they seem.
At Apple, Steve Jobs got to be both
rich and the king. But Steve Jobs was
never king of Apple for the first 20 years.
He was never CEO in the early years.
He was even fired. We look at all these
role models that founders are trying to
follow, but the data shows that they are

the outliers or the exceptions. There


are times when you may have to choose
between being rich or being king, and
those situations become harder when
your co-founders are friends and family.
Q: So, if you had to list out the three
basic errors founders make early on,
what would they be?
A: The first pitfall is only making
gut-level decisions; essentially going
with your heart without checking with

Founders often make


heart driven decisions
following their gut and
intuition and those decisions tend to be perilous
for the company.

your head. You will be missing two key


roadmaps, the roadmap for your venture
and the roadmap for yourself.
These two help you understand what
the venture will need, how the industry
will change and also what your own key
strengths are and where your weaknesses lie.
Making gut-level decisions without
keeping these two roadmaps in mind
will come back to haunt you.
If you are blindly following your gut,
there are a few mistakes you could be
making like founding with friends and
family. Have you thought about how
you will be splitting the equity? You are
likely to want to avoid the high tension
negotiation on who is going to have what
role and therefore what stake in the
startup. You are going to probably then
just go ahead and split it equally and
rush through the discussion.
There are all sorts of uncertainties
JOSHUA NAVALKAR

set; that is the most common decision


that people make, but it also makes them
the least stable kind of founding teams.

Intelligent Entrepreneur April 2014 27

IN CONVERSATION

JOSHUA NAVALKAR

that you could be discounting early on.


You are going to get some rude awakenings later on when you find that one of
the co-founders is not going to be as committed to the venture as was planned,
and another one doesnt have the skills
as the company starts scaling, etc.
The teams that have a roadmap for the
venture, a roadmap for themselves, and
are not blindly following their gut, are
the ones who will succeed.
Q: While looking at the background of
entrepreneurs, how important did you
find their education background was to
their success? Also, how relevant are
MBA degrees for someone looking to be
an entrepreneur?
A: What do entrepreneurial teams need
to succeed? They need someone to build
and someone to sell. If you can have a
techie understand the selling aspect
and the business person understands
the technology, then you have some real
magic happening.
I am, therefore, a big believer in
getting the technology person to
understand business aspects and vice
versa. The team members can then relate
to each other far better.
What I have seen is that students can
build a good foundation by going and
understanding what have we learnt
about the best practices or the mistakes
that others have made at school.
MBAs can help students get that foundation. Once they have gotten that, they
can go out into the world and learn about
all the things that a business education
cant teach them. But their progress can
be accelerated by teaching them during
their business school education about the

From easy-to-implement growth


strategies to insights from leading
entrepreneurs, its all there in our website.
So just log on to www.entrepreneurindia.
in to find out all the ways and means to
grow your business the way youve always
wanted.
28 Intelligent Entrepreneur April 2014

things that other people have learnt the


hard way.
Q: A common dilemma for founders is
also whether or not they should raise
funding early on in their business. In
what circumstances is raising funding
early, good or bad?
A: This is something that is very specific
to a particular startup or industry. If
the startup is going to be very capital
intensive early on you are going to
make no progress, like a life sciences
startup that has to invest heavily in
research and labs. Relying on your
money here will lead you to grow very
slowly and you will miss out on a whole
bunch of opportunities.
If it is a lighter kind of business,
then it is much more conceivable that
you grow in the early stages without
raising outside money. This is one of the
ways in which startups have changed
dramatically in the last decade or two,
something that would require a lot more
money earlier but can nowadays be
done with a lot lesser money.
But if there is an industry that is
fast moving, a bootstrapping startup
may miss out on an opportunity by not
moving fast. Founders also need to
understand what role they want to play
within the startup. If someone wants
to remain king on the throne for a long
time, then the bootstrapping approach
makes sense. Once you bring in others
on your board of directors, they will
have a say in whether you get to remain
the CEO. You can continue to be the
visionary and build your startup slowly.
It takes knowledge of yourself and your
goals to make that decision correctly.

WOMAN ENTREPRENEUR

Fit and

Working
Upasna Kamineni is doing her bit to get the Indian
workforce fitter
SHONALI ADVANI

s a child and then as a teen,


Upasna Kamineni did not pay
much heed to matters of good
health. A foodie to the core,
Kamineni was woken up from this slumber by a kinesiologist in the UK, where
she was studying for a business degree.
He was the one who pushed her to come
face-to-face with a realitythat she
was grossly unfit and that the long-term
impact of neglecting her health would
lead to many diseases in the future.
One of the three daughters of Prathap
C Reddy, the Founder of Apollo Hospitals,
Kamineni has translated that truth into
a new approach for herself and others
through Apollo Life, a sister concern of
the healthcare behemoth.
Launched as a commercial venture
in 2005-06, Apollo Lifes first steps were
slow and measured. It started with a
corporate wellness magazine and has
since evolved into a holistic enterprise
with a 360-degree approach to health and
wellness. The firm today offers services
for other corporates, a chain of wellness
centers, a dedicated healthcare information portal, another health-centric magazine, and health assessment services at
Apollos hospitals.
Kamineni works on two titles in the
magazine space. The first is a topic-centric
quarterly magazine sold on the stands for
`100, proceeds from which go to Save a
Child Heart Foundation, a community
30 Intelligent Entrepreneur April 2014

initiative under Apollo Hospitals. The


second is Apollolife.com, an online magazine, which works as an informative tool
for individuals and also lets them book
doctor appointments online, get an insurance policy, etc.However, Kamineni,
Executive Director at Apollo Hospitals,
says that the magazines are not revenuegenerating tools but a channel to market
the brand.

THE BURDEN OF INCOME


LOSS DUE TO AILMENTS
ACROSS INDIA

HIGH
Source: NSS

MODERATE

LOW

The corporate route


For Apollo Life, the real money spinner
is the corporate wellness vertical, where
it curates wellness programs for about
120 large enterprises. Started about six
years back, the company now has some
big names like Google, Microsoft, and
Cognizant among others adopting these
programs. This vertical contributes to
about 75 percent of top line at the firm,
revenues for which stood at `55 crore
in 2013.
At the basic level, the company offers
an online health assessment test which
has been developed by medical professionals. The test evaluates and comprises
of medical history, lifestyle, fitness and
exercise, diet and nutrition, stress and
psychology, and dependency management. Corporate employees undertake
scans and Apollo Life provides them with

www.entrepreneurindia.in

HARSHA VADLAMANI

sleep management. Everything works


on a yearly contract and is tailor-made
to what a corporate needs and is priced
accordingly. Kamineni is quite bullish
on the corporate vertical, pointing out
that working populations awareness on
health has evolved to such an extent that
they want to make lifestyle changes.

Retail play

HEALTH FIRST: Upasna Kamineni

a personalized wellness prescription,


with a detailed current and overall health
status report.
Programs are customized for organizations with options of ancillary services
such as group or individual counseling, tele-counseling or even specialized programs that can be created when
required like The Quit Tobacco and
Smoking program, and The Alcohol
Dependency Management program.
We can analyze your workforce and tell
you what the major problem is or specific
areas that can be targeted. For example,
if you have more women, you will have
more women-related problems. Programs
can then be customized accordingly...a
mammography program, for instance,
says Kamineni.

The annual cost to the


US in lost productivity
due to absenteeism tied
to poor health ranges
from $160 million among
agricultural workers to
$24.2 billion among
professionals
Source: Gallup.com

For corporates, Apollo Life also


provides management of health facilities
with services like canteen assessments,
gym management, stress checks, and

When we started, maybe only one


percent of people were really aware about
health issues, Kamineni says, adding
that issues like weight and obesity are
being recognized as major health problems by people in the cities now.
Apart from the institutional vertical, the young healthcare entrepreneur
has also expanded the companys scope
to target the individual with five wellness centers spread across Hyderabad,
Chennai and Vishakhapatnam. Here too,
the services are expansive and all-encompassing. I dont let you come in unless
you have a blood check. I refuse people
who are unfit because they can collapse.
We monitor everything they docheck
body fat, how the body works, and what
needs to be changed, she explains.
Apart from gymnasiums, the centers
also has a swimming pool, sporting activities, add-on services for physical assessment, a laboratory for tests, an in-house
counselor to understand individual
goals and a nutritionist to design a diet.
Membership packages cost anywhere
between `30,000 to `1 lakh per annum
and it currently has 5,000 members
across centers.
Thirty-five year old Gautam Kumar,
Vice-President, SVM Bowling and
Gaming, has been using the wellness
center since end of last year. The add-on
services and activities offered are good. If
youre bored, you have an option of trying
something new, Kumar says.
We are looking at different ways to
open wellness centers. There will be one
at an airport soon, Kamineni says. Also
in the works is a multi-services resort
in Lavasa by early 2015, says Kamineni,
which will work as a wellness retreat. In
30-days, Ill change your lifestyle and send
you back. It is a retreat where people can
transform themselves.
Intelligent Entrepreneur April 2014 31

SOCIAL ENTREPRENEUR

Miles for More


Akanksha Hazari uses the fundamentals of the loyalty game
to solve Indias basic problems
ASHNA AMBRE

ur wager is that if we were


to say loyalty program, the
first couple of phrases in your
head would have the words
air miles and upgrades. To Akanksha
Hazari however, air miles and upgrades
represent a very narrow opportunity that
people tap with the function of loyalty.
Thirty-year-old Hazari has used the
model of loyalty programs in a much
broader spectrum as the CEO and Founder
of m.Paani, a social venture that designs
and implements mobile-based loyalty
programs for underserved communities.
Explaining the premise of m.Paani,
Hazari says that the firm designs and implements mobile-based loyalty programs,
where users are awarded loyalty points
based on their spending on good used for
daily use. These loyalty points, which can
be shared with family members as well,
can be redeemed for rewards in areas
such as education, healthcare, safe water
and energy.
How Hazari got to found and run
m.Paani is both circuitous and methodical. After graduating from Princeton
University in 2005 with a degree in
Politics and Near Eastern Studies, Hazari
first worked as a project manager with
the Aspen Institute, US and developed
economic initiatives for the Middle East.
It was during my experience in the
Middle East that I realized how business
had an immense capacity to bring social
change, she says. What, however, drove
her to leave employment and work on her
own for social change was her love for
business and a stint learning the ropes
with global consulting major Booz & Co
as a consultant on clean tech mergers and
32 Intelligent Entrepreneur April 2014

investments. In 2009, Hazari volunteered


to be a consultant with TechnoServe, a
multinational non-profit, to design environmentally sustainable interventions
across sectors aimed at increasing livelihood opportunities in India. It was
then that I saw the India I had never
seen before. Urban India is not India,
says Hazari.

Bringing it all together


In this stint, Hazari saw first-hand how
rapidly and deeply mobile telephony was
spreading across Indias rural vastness.

HOW INDIAS TELEPHONE


SUBSCRIBERS STACK UP

38.14%

58.50%

0.75%

2.62%

Rural
Wireless

Rural
Wireline

Urban
Wireless

Urban
Wireline

Source: TRAI

She saw how villages with no access to


healthcare, sanitation and education had
mobile connectivity.
What she also saw was that where
the country had failed in providing basic
amenities, companies have succeeded
in providing services and goods. All
major FMCG players had their products being used in homes in the remotest
parts of India, validating the fact that the
private sector had built a sustainable
model of delivery.
Connecting the dots, Hazari decided to
link mobile telephony with this distribution network that the larger private sector
had and started working on m.Paani in
2010, where she first looked at targeting
the water crisis.
But before she set up fully, Hazari
decided to take one last stab at developing
her business skills by getting a business
degree at the University of Cambridge.
While at Cambridge, Hazari and her
team entered m.Paani for the Hult Prize,
funded by Swedish billionaire Bertil Hult
and supported by the Hult International
Business School, which is awarded to
budding young social entrepreneurs
emerging from the worlds universities.
In 2011, Hazari and her team won the $1
million Hult Prize for m.Paani.
From there, m.Paani took its business
to Africa, before turning to India. Starting
with a seed capital of $500,000, m.Paani
launched formally in 2013 with a pilot
project in Mumbai, though it is looking at
rolling out its rural pilot in Maharashtra
by the end of this year. Within Mumbai,
the startup is targeting two BoP
communities that jointly cater to around
2,450 households.

JOSHUA NAVALKAR

www.entrepreneurindia.in

CHANGE BY LOYALTY: Akanksha Hazari

Mumbai calling
Explaining the model further, Hazari says
that their service is free to the users, who
have to register with m.Paani. After that,
every time they purchase certain products from certain partner kirana store or
recharge their phones, they receive loyalty
points. Once the points reach a particular
limit, they can be redeemed, as is the case
with most loyalty programs. We have
partnered with multiple stores and a large
Indian telecom services provider for this
service. We are also in talks with large
FMCG players at this point, says Hazari.
The company has also partnered with
Pratham (an NGO working to provide
education to underprivileged children in
India) for the provision of education benefits in exchange for loyalty points. In addition to this, the firm also offers in-house
programs such as mobile-based English

speaking classes. Eventually, Hazari is


looking at providing services in areas such
as nutrition, education, health, mobility,
energy and financial services.
Pooja Warier, Co-Founder with UnLtd
India, a Mumbai-based investee and incubator in social businesses, says that these
partnerships are critical for m.Paani (in
which it has invested) as the success of
any loyalty program depends only on the
benefits that it provides its users.
If we fail to create value, we wont
have adequate users. Also, the nature
of value has to be different for different
users, says Warier, revealing that the
company has put in place a database that
will track the spending behavior of the
1,000 plus users to understand and create
the best possible programs.
Talking of the challenges that came
her way, Hazari states that getting

funding in the initial stages was tough.


She also explains that the business
model depends on partnerships with big
private companies, which take way too
long to materialize.
As a firm, m.Paani receives its revenues
from the partner organization that buys
the loyalty programs from it.
Then again, in the case of FMCG goods,
there is a lot of competition due to presence of homogeneous goods. In such a
scenario, a loyalty program for the end
user works perfectly as a marketing channel for the company to attract and keep
customers, she points out.
Pointing to the future for herself and
her team of seven, Hazari says that there
is a long way to go.
We are targeting to have at least
10,000 subscribers in Mumbai by end of
2014, says Hazari.
Intelligent Entrepreneur April 2014 33

COVER STORY

34 Intelligent Entrepreneur April 2014

www.entrepreneurindia.in

Intelligent Entrepreneur April 2014 35

COVER STORY

Merrill Fernando
(centre) with
Malik Fernando
(left) and Dilhan
Fernando. While
Malik takes care
of operations,
supply chain,
joint ventures and
the group's new
hospitality and
leisure business,
Dilhan works on
the marketing of
the Dilmah Tea
brand across the
100 countries it is
now present in
36 Intelligent Entrepreneur April 2014

www.entrepreneurindia.in

Intelligent Entrepreneur April 2014 37

COVER STORY

1930
Dilmah Founder
Merrill J Fernando (MJF)is
born in Negombo

1946
Ceylon Tea
Centre opens in
Londons Regent
Street

1948
Ceylon gains
independence
1954

38 Intelligent Entrepreneur April 2014

1954
1955
MJF starts work MJF returns to
at AF Jones
Colombo

1958
MJF buys AF
Jones with two
partners

1972
Ceylon becomes
a Republic and
changes name to
Sri Lanka

1982
MJF establishes
Ceylon Tea Services Ltd

1985
MJF is asked
to supply prepacked teas to
Russia

www.entrepreneurindia.in

1988
Dilmah Tea
launched in
Australia

1994
Dilmah establishes state-ofthe-art tea packaging facility in
Colombo

2000
MJF Group
acquires 70%
share in Forbes
& Walker

2001
MJF Plantations
purchases a
controlling interest in Kahawatte
Plantations

2002
MJF Charitable
Foundation is
officially inaugurated

2003
First Dilmah
Global Partner
Conference in
Colombo

2004
December 26th
Tsunami hits
south coast of
Sri Lanka

2007
Launch of the
Dilmah Exceptional range of
teas

2012
Dilmah embarks
on a partnership
with Shangri-La
Hotels worldwide

Intelligent Entrepreneur April 2014 39

IN FOCUS

Boom
Waiting on the

Indias mobile gaming industry is showing more activity than ever


before. But is that going to translate into big business?
AVANISH TIWARY

he console is dead. Long live the


smartphone. No, we didnt say
this but everyone with a gram
of stake in the gaming industry
is. There is an understanding that unless
console makers do something radical,
they will slowly wither away under the
onslaught of mobile gaming, as smartphones become smarter and faster.
The rising popularity of Android and
iOS-based games coupled with the proliferation of smartphones has slowly moved
the casual gaming segment towards
mobile gaming, indicates Karthik Reddy,
Co-Founder and Managing Partner at
40 Intelligent Entrepreneur April 2014

Blume Ventures. There will always be


console playersnobody doubts that
but if you see the sale of consoles over
the last year, they have dropped dramatically. The console has its own challenges, and the mobile segment will get
its market share due to that, says Reddy.
Reddy and Blume Ventures dont
just preach that thought but are practising it as well. In 2012, Blume
invested an undisclosed amount in two
gaming companies: Pune-based mobile
games developer Rolocule Games and
Bangalore-based HashCube, a cross platform social gaming startup.

According to some estimates, India is


already a ripe market for mobile gaming
companies, with about 50 percent of the
casual gaming pie being accounted for by
mobile gamers. Given that smartphone
users in India are expected to grow to
382 million by 2016, as per a report from
Avendus Capital, one would not be wrong
to think that the industry is at the brink
of explosive growth
Why are then Indian mobile gaming
firms struggling to rack up revenues?
Even though there is an audience and
there is money in the form of VC interest,
there is very little in the way of revenue

www.entrepreneurindia.in

being generated by many young companies in this space, according to those


with a stake in it. To be blunt, India has
had almost no declared money-spinners
in the mobile gaming space. To be even
more blunt, there has been no Candy
Crush or Temple Run from a country of
1.3 billion.

The west rules this arena

market is yet to mature in that there is


not a sizeable hard core gaming segment
to sell to and even source talent from.
Many new gaming startups, according
to Sureka, are just barely making ends
meet. We dont have a culture of creating the right type of gamescompared
to other markets such as North America.
We only started taking gaming seriously
in the last five to ten years, says B Hari,
Partner at Indian Angel Network (IAN),
which has invested `5 crore in Mumbaibased online gaming firm Gamiana
Digital and HashCube. Vishal Golia, 36,
Co-Founder at Gamiana, who has lived
in the US for around seven years, says
that gaming has matured to the level
of motion pictures in western society,
in that gaming companies advertize on
television and have launch premieres.
Golia says that eventually the gaming
market in India, spearheaded by mobile
gaming, will become more mature.
Gaming will become intense, mainly
because of cheaper smartphones and
JOSHUA NAVALKAR

The same platforms i.e. App Store


and Google Play, which democratized the casual gaming space by
making it a level playing field with
the console makers have now proved to
be a challenge for gaming firms from
different geographies.
The competition gets intense on iOS
and Android stores as there are millions
of games listed. When you are selling
in the international market, you are
competing with everyone and you have
to win on all the fronts. The bar becomes
much higher, says Reddy.
What Reddy is not saying but you can

infer is that Indian companies simply


have to be better than they already
are. In the global game, their products are still probably a little inferior
compared to companies from matured
gaming industries.
Mohit Sureka, Founder at Mumbaibased gaming company Spiel Studios,
explains that to come into the top 10
games in India, you probably need a
few thousands of downloads, while to
get into the top 50 list globally, you need
more than 10,000 downloads in a day.
When you have to compete with
international players, there is no point
making localized games, says Sureka.
Founded in 2009, Spiel Studios has an
office in New York too, and Sureka says
that he has always focused on not just
making games for the Indian audience
but also a global one. It has made three
iOS games Propel Man, Slumber Man
and Galaxy Run.
Many voices in the Indian gaming
industry, including Sureka, say that the

FOR GLOBAL AUDIENCES: Mohit Sureka???


Intelligent Entrepreneur April 2014 41

IN FOCUS

local companies like Micromax, Lava.


According to Blumes Reddy, the advent
of social media and the integration of
it into mobile gaming has meant that a
larger portion of the casual gaming audience now comes from platforms such
as Facebook.
Already, Golia says, the momentum
is with mobile gaming if you see that
games form the largest chunk of app
downloads in India as compared to other
apps, like utilities, media, etc. However,
this momentum is not translating into
serious revenues.
The problem in India is that people
download free games, but very few buy
the paid ones, says Sureka, who says
that from day one, the industry has
depended on the audiences in the US
and UK, which is much bigger and far
more mature than in India.
Currently, most gaming startups are
still placing their bets on games you
would pay to download. According to
most forward-thinking voices in the
market, including investors, this is a bad
model that people have already moved

GAME ON?
According to Avendus Capital,
Mobile games and applications
in India are expected to be a
`2,700-CRORE market by
2016 , driven by strong smartphone growth and expanding

3G USER BASE

According to
PricewaterhouseCoopers (PwC),
Global Entertainment and Media
Outlook 20102014, the Indian
gaming market is now worth

$100 MILLION

42 Intelligent Entrepreneur April 2014

www.entrepreneurindia.in

INDIA YET TO TAKE OFF: Karthik Reddy

on from in the west. Going forward,


there are going to be very few paid
games coming out of India because their
success rate is very lowits in single
digit percentage, says Golia.

Freemium or corporate?
The new preferred method is to offer
games for free and then earn revenue
through in-app sales i.e. the freemium
model. In actual working, this refers to
when users pay to unlock the next stage,
get special powers, or activate new characters, etc.
Some of the gaming companies who
have already moved to the freemium
model are reporting that they are now
earning a huge chunk of revenue through
in-app sales and the conversion rate on
an average is three to six percent.
Slumber Man and Propel Man, the twofreemium games from Spiel Studios, have
a conversion rate of five to eight percent.
This means that of all its free users, this
percentage group ends up paying for
in-app purchases.
Temple Run [one of the most popular
mobile games of all time] gets 6-7 percent
of conversion for its in-app sales, says
Golia, adding that strategy games are
more prone to garnering in-app sales
due to their addictive nature.
Advertising and sponsorship by
brands are the other popular ways
that gaming startups are looking at for
generating revenues. Alok Kejriwal, who

launched Games2Win, a mobile and


desktop-based casual gaming company
in 2007, says that advertising revenue is
the hottest for them after in-app sales,
paid downloads and sponsorships.
However, investors say that for advertising to make sense, the number of
users of mobile games have to be seriously active.
In 2010, Spiel Studios partnered
with Maruti Suzuki for a mobile game
Sealink, where people could drive any
vehicle on Bandra-Worli Sea link. The
auto maker had their own cars in the
game of course, i.e. people could drive
a Swift, Grant Vitara, etc.
Blumes Reddy says, its very early
days for the gaming industry in India and
the companies operating in this sector
are still trying to discover themselves.
At ground level nothing has actually
taken off, everyone is waiting for something to happen. I would love to see more
of Indiagames and games2win alumni
come and start new gaming houses,
he says.
Reddy says that Indias mobile
gaming industry is taking a little more
time due to various circumstances and
it will take two to three years to derive
the true potential of the industry.
Unfortunately, we havent reached
the point where we know for a fact
that this is either a losing proposition
or a winning onethe discovery is
still on.

www.entrepreneurindia.in

WILL
WEARABLES
WIN?

Google, Sony, and Samsung have already made a


splash in the wearables market, and Indian companies have eagerly followed. But are wearables the
new netbooks?
SHRUTI CHAKRABORTY

et us just recap what has been


happening in the wearables
market in the mad period that
2013-14 has been. Kicking off
with launches of fitness trackers from
the likes of Nike and Fitbit the year
before, we have had subsequent launches
from Samsung, Sony and many other
smaller companies.
Samsung is now readying smartwatches that run Tizen, a Linux-based
OS, while Google has announced Android

Wear, a version of Android for smartwatches. Motorola, now a Lenovo brand,


has also announced that it will launch a
smartwatch come summer 2014.
In short, it seems much like the
netbook craze of 2008 and the tablet
pandemic of 2011, both of which unraveled to be embarrassing technology fads
(the tablet fared a tad better) spurred on
by panicking marketing managers.
But can wearable technology succeed
where others have failed?

Go Gondal
Serial entrepreneur Vishal Gondal does
believe so. In February this year, GOQii,
a company founded by Gondal came out
of stealth mode with a fitness tracker of
its own. The company, which is directly
competing with Fitbit, Nikes FuelBand
and Jawbone UP, is one of the early local
movers and has received global attention
for its product.
Gondal says that he will launch the
GOQii (pronounced Go-Kee) this month
Intelligent Entrepreneur April 2014 47

IN FOCUS

GLOBAL ATTENTION: Vishal Gondal

and that his aims are global. The first step


will be a beta launch in India.
Gondal says that with GOQii, he is
disrupting the market. We are not selling
you a wristband. We are a health services
company. You pay for the services we
provide and you get the wristband for
free, he says, explaining its model.
The service, Gondal talks about, is the
provision of a dedicated coach to keep
one motivated and to help make sense of
the data that is collected by the device.
With GOQii, a user gets to stay in touch
with the coach through a messenger or
through voice and video calls.
Gondal has also added a doing social
good aspect to GOQii, with the concept
of Karma Points. A user can collect
Karma Points relative to the distance he
walks or runs when using GOQii. Thanks
to partnerships with philanthropic organizations, GOQii will enable the users
Karma Points to be converted into donations to charities.
Gondal is not alone in the Indian
effort in the wearable tech space.
Another startup is Bengaluru-based
2mpower Health Management Services.
The company launched its own fitness
tracker, GetActive, in early 2013. Having
sold 10,000 units in India through corporate tie-ups and retail sales, the company
is now aiming to go global. The difference
between the two companies is that unlike
GOQii, 2mpower provides the service
through partnerships, says Mohammed
48 Intelligent Entrepreneur April 2014

H Naseem, Founder of 2mpower. He says


that the firm is looking at growing five
times this year and will look at markets
like the Middle East, South East Asia, and
New Zealand amongst others. These
markets are a lot lesser crowded than
the US and European markets, he says.

Why local?
Is there merit in what these firms
are trying to achieve locally or globally? Reports point to a future where
India can be a major market for wearable technology.
Earlier this year, global management consulting company Accenture
released a study conducted in six countries (Australia, Canada, India, South
Africa, and the UK), which found that
consumers in India were most interested

THE REALIST: Sasha Mirchandani

MORE GROWTH:
Mohammed H
Naseem

in buying fitness monitors, smartwatches


and internet-enabled eyeglasses.
India is clearly a major growth market
for consumer electronics, said Mattias
Lewren, Global Managing Director of
Accentures Electronics and High-Tech
industry group in a statement. Craving
more personalized digital experiences,
the countrys consumers rank among the
worlds most willing to pay for and use
consumer electronics devicesincluding
wearable technologies. But little or no
data is available so far on how many
people in India actually use wearable
technology devices. And reports have
been wrong before.
Sasha Mirchandani, Founder and
Managing Director at Kae Capital, is one
of the skeptics. When I can buy a Fitbit
or a FuelBand in India, why would I look
at buying a product by an Indian wearable tech startup? This question is not
just relevant for users in India but also
for global users of wearable technology.
Nishant Verman, Associate at Canaan
Partners, says that young companies
in the space will be competing with
organizations like Google and Apple,
so its important for them to find their
differentiator and leverage it to its
full potential. Competing with large
companies is not necessarily a bad thing.

www.entrepreneurindia.in

allows users to control smart devices


without the use of touch. The firm raised
$202,547 through crowdfunding platform Indiegogo recently and will start
selling the product this year. According
to Rohildev N, Founder and CEO at
RHLvision, the firm will look to focus
on the US as its primary market.

Money and making

FOCUS ON US: Rohildev N

In a sector like wearable technologies,


large companies will use some of their
brand dollars, which will help in educating customers about the technology,
something that young companies cant
afford to spend on.
Naseem of 2mpower agrees to
Vermans analysis, having faced the
problem last year when he started selling GetActive.
We were educating everyone about
the product from customers to investors
and building communities of users from
scratch, he says.

The low-hanging fruit


A Transparency Market Research Report
found that among all the wearable technology end-use segments in 2012, the
healthcare and medical segment held the
largest revenue share followed by fitness
and wellness.
These segments accounted for about
35.1 percent of the overall wearable technology market in 2012, primarily due to
an aging population and an increase in
diabetic population, the report said.
In 2018, however, the infotainment
segment is expected to surpass the
fitness and wellness segment driven
by robust growth of smartwatches
and smartglasses.
Verman of Canaan says that it makes
to be in healthcare for now, but even there
price points are mostly too high to build
a scalable business by focusing only on

India. While GOQii is pricing its service


at `5,999 for a six-month membership, an
annual membership will cost `9,999. One
can buy a GetActive device for `3,999.
In India, the market is at a very early
stage. While we are bullish in the longterm, but we are waiting and watching
for now, Verman adds, echoing a popular
opinion amongst investors and entrepreneurs, including Gondal.
Anil Joshi, former President of
Mumbai Angels, says that healthcare
is a low hanging fruit in the wearable
technologies market and that once the
space takes off in India, we will see more
innovations and companies in areas like
productivity enhancement, for instance.
Companies like Cochin-based
RHLvision, which has designed Fin, a
wearable Bluetooth-enabled ring that

The global wearable technology market stood at


$750 million in 2012 and
is expected to reach $5.8
billion in 2018. North
America is expected to
maintain its lead position
at 43 percent of the global
wearable technology revenue share in 2018
Source: Transparency Research

While there is reason to cheer that these


companies are finally breaking the
notion of Indias ecosystem being one of
service companies only, the on-ground
realities are far from pleasant for these
pioneering few.
In the manufacturing itself, Rohildev
says that there have been limitations in
getting good resources and availability
of components. With the contacts we
have developed, we are able to import
them from other countries. But there is
a long wait for packages to get delivered
amongst other issues.
2mpower too relies on manufacturers
in China and Taiwan. While the company
has designed its fitness tracker in-house,
it could not have made the product in
India. Manufacturing is a challenge here
till you dont have scale. We will look at
shifting some manufacturing to India
once we achieve that, Naseem explains.
All companies in this space also have
larger requirements of capital than their
counterparts in the services sector and
this has been a major challenge.
GOQii has notable names amongst its
list of investors, which includes Bollywood
actor Madhuri Dixit, cardiovascular and
thoracic surgeon Dr Shriram Nene, Amit
Singhal of Google, Kanwaljit Bombra of
Dell, amongst others. However, unlike
GOQii, both 2mpower and RHLvision
had to struggle with raising funds in the
early stage.
This is because, burnt by past experiences, investors too mostly seem to
be playing the wait and watch game
for now.
The sector is getting cluttered
already, Mirchandani says, adding,
that while there is a huge opportunity,
whether young companies will be able
to build global businesses is something
only time will tell.
Intelligent Entrepreneur April 2014 49

IN FOCUS

Take Five
Indias most well known serial entrepreneur duo is ready to take a crack at
the burgeoning home healthcare market
SHONALI ADVANI

fter four successful ventures


and exits, serial entrepreneurs Krishnan Ganesh and
Meena Ganesh are at it again.
This time, they are placing their bets on
the healthcare sector.
Almost a year after selling their
last venture TutorVista to Pearson
Education for $213 million (in
February 2013), the two have forayed
into home healthcare services with
Portea Medical.
Originally founded by Zachary Jones
and Karan Aneja in 2012, Portea Medical
was acquired by the husband-wife duo
in September 2013 in an all equity deal
through their venture HealthVista,
which was set up in July that year, and
operated in the same space.
Porteas founders were testing the
B2B model with a pilot in six hospitals
in New Delhi at the time the couple was
introduced to them through the venture
capital firm Accel Partners.
For Jones, now Senior Vice President
at Portea Medical, selling the company
was the best decision they could have
taken. We realized that this space was
fast becoming a big money play and
Ganesh has a lot of experience raising
significant amounts of capital, scaling
companies, and exiting. The idea was
that we could collectively build something bigger than either party could
build on their own, he says.
44 Intelligent Entrepreneur April 2014

Big money
So what is the big money play Jones
is talking about? Well, according to
investors and sector experts, the unorganized home healthcare services
market in India is pegged at a market
value of $2-$4 billion and slated to
grow exponentially.
The major growth driver for this space
is the large Indian population, thats
aging fast. By 2025, one in every five
Indians will be a senior citizen, affirms
Udaya Maiya, Medical Director, Portea
Medical and well-known oncologist.
This trend coupled with longer
mortality thanks to early disease
detection and therefore longer years of
disease management, and a shift from
communicable to lifestyle diseases are
pointing to a time where home healthcare will become a norm.
Already, about 50 percent of spending on in-patient beds is for lifestyle
diseases, Maiya tells us.
For Ganesh and Meena, apart from
the obvious opportunity, was the desire
to not startup in a space inundated with
large players, and yet solve a large
problem using technology to disrupt
the status-quo.
If you start something new youll get
a long rope as there are no metrics for
comparison, says Ganesh, Chairman at
Portea Medical. If you create a market
leader, the valuation and upside is

disproportionate to the business model


because there is a market category leadership. The ability to attract people also
counts. With TutorVista, we got the valuation we did because we were market
category leaders and not because
of revenues.
In parallel, for Ganesh and Meena,
an acquisition meant getting a head
start of about eight-twelve months in
nascent territory. We could cut short
our learning curve by a year and go fast
into market, says Ganesh.

In warp speed
Its been a speedy ride since then as the
startup has grown in manpower and
business. Today, Portea handles 3,000
visits a month and has an employee
base of over 500, up from 50 when
HealthVista acquired it.
In December 2013, the duo secured
venture funding of $8 million from Accel
and Ventureast with the latter leading
the round with $4 million. Meena and
Ganesh had also invested `1 crore of
their own to startup.
Mahendran Balachandran, Partner
at Accel Partners, says that the funds
will help Portea strengthen their offerings as they accelerate expansion across
India in the coming months and invest in
advanced diagnostic and remote monitoring technology to support clinicians
to deliver a range of in-home healthcare

www.entrepreneurindia.in

HEALTHY AT HOME: Krishnan and


Meena Ganesh

care, post-operative care, and primary


careall of which can be availed on a
per transaction or subscription basis,
depending on the need and stage of the
illness. A doctor visit costs `700, and a
nurse visit `350. The annual elder care
plan (managed care) is priced at `9,999
that includes general health check at the
start, a doctor visit every month, a nurse
visit every fortnight to measure vitals,
lipid profile, ECG, sugar, etc.
Nursing attendants accompany
patients on hospital visits as and when
needed, and can be arranged for at
`15,000 a month for 12 hours a day and
physiotherapy costs `400 per session.
Seventy percent of hospital visits
post-operation or for other ailments is
not required. It can be done at home,
says Ganesh.

BMAXIMAGE

Model in place

services. The proprietary technology


platform and stringent training and
quality control systemsthe backbone of services, will take up most
funding,says Balachandran, who is
also a board member at Portea.
Currently, the segment has a handful
of players at the regional or local level
nursing bureaus providing bedside
assistance or nursing attendants. On

the higher end, there are outfits like


Health Care at Home by Dabur in
National Capital Region (NCR) and
Chandigarh and India Home Healthcare
in Chennai. While the former works
on a B2B model with hospitals and
doctors, the latter primarily provides
nursing attendants.
Portea meanwhile offers four types
of services: Geriatric care, chronic

Presently, Portea's medical staff


comprises of nurses, nursing attendants, doctors, general physicians and
physiotherapists. Patient data is fed in
to the back end system and medical staff
is updated of scheduled visits through
their smartphones.
Model wise, we are not a marketplace. Marketplace does not work for
highly involved transactions. There is
a lot of training, trust and credibility
involved here, Ganesh states.
On the B2B side, it works with hospitals and insurance companies to provide
the same continuum of care to patients.
This also ensures that Portea works in
collaboration with doctors and hospitals and not as competitorsone of
the reasons why it does not have any
specialists on board.
Insurance companies want to
reduce total claims and prevent recurring visits to hospitals. Hospitals on the
other hand are trying to get a return
on equity. Their entire profitability is
based on two metricsaverage revenue
per operating bed, and average length
of stay, says Ganesh.
In the B2B model, either the insurance company pays Portea or the
payment comes via a tripartite agreement between the hospital, insurance
company and them.
Intelligent Entrepreneur April 2014 45

IN FOCUS

Reducing the average length of stay


for hospitals and medical costs for individuals and insurance companies would
be the major driver of home healthcare in India, adds Venkatadri Bobba,
General Partner at VenturEast.

Cracking the care question


Portea currently operates in 12 cities
and aims to reach 50 in two years.
Ganesh says he plans to raise another
$40 million for expansion. Scaling
rapidly at a national level will come with
its own road bumps and consistency in
quality and delivery are key parameters
for success.
Moreover healthcare, as Accels
Balachandran elaborates, is a long term
play that needs patience, capital, strong
execution capability and the ability
to leverage technology in all aspects of
the business.
Speaking of impending challenges
for Portea team, Maiya says that
one of the biggest challenges in this

www.entrepreneurindia.in

INDIAS HEALTH
PROFILE
Total population (2012)

1,240,000,000

Gross national income per


capita (PPP international $,
2012) 3,910
Life expectancy at birth m/f
(years, 2011) 64/67
Probability of dying under five
(per 1 000 live births, 2012) 56
Probability of dying between
15 and 60 years m/f (per 1 000
population, 2011) 247/159
Total expenditure on health
per capita (Intl $, 2011) 141
Total expenditure on health as
% of GDP (2011) 3.9
Source: WHO

business is in ensuring adequate oversight of healthcare delivery model,


since it is outside the confines of a
medical facility.
The bottom-line in this business
is peopleadequately supported by
robust systems, processes and technology to capture, consolidate and present
information, so appropriate action can
be taken on an ongoing basis, he says.
Bullish on Porteas ability to demonstrate as they scale, VentureEasts
Bobba says that they must focus on
positive patient outcomes, unparalleled customer service and having the
right process and systems in place as
they scale.
However they fine tune the model
and overcome challenges that will come
up as they expand, Ganesh is clear that
the momentum is with them in tapping
this giant opportunityand that he will
lead to the business to a successful exit
at some point, which should be through
a public offering. Healthcare is huge.

CONNECt
WIth
GROWth
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46 Intelligent Entrepreneur April 2014

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Entrepreneur4in

IN
SPECIAL
FOCUSFEATURE

The Un-Office

New workplace trends include movable walls, outdoor spaces and sometimes no office at all
LANA BORTOLOT

f your office still has a fax machine


or projector, stop reading right now,
because you wont like what youre
about to hear: Your office, like your
equipment, is probably obsolete.
I think the whole definition of what
an office is needs to be rethought, says
Frank Mruk, associate dean for the
School of Architecture and Design at
the New York Institute of Technology in
Manhattan. The office may be ready for
extinctionits just a place to meet. We
dont need computers anymore; we can
work anyplace, at any time.
Indeed. For graphic designer Jill
Bluming, the idea of an office is more
remote than the global clients she works
with via Skype, Google Docs and Dropbox.
Her eight-person creative boutique, The
Creative Type is completely virtual with
on-demand copywriters, designers and
illustrators working from wherever they
have a connection. We are driven not by
structure but by flexibility, she says.
Bluming utilizes a web-based reservation service when she needs a conference
50 Intelligent Entrepreneur April 2014

room for client meetings, paying by the


hour. The only reason Id get an office is
to use a conference room, she says. But
[without it] we have such low overheads,
we can be much more competitive in
our business.
People not ready to throw the office
over, find alternatives in workspaces
that are shared with not only their own
colleagues but depending on the setup,
other like-minded entrepreneurs or
industry peers. Such is the case for New
York architect Martin Kapell who once
worked in a 120-person firm. When he
formed his own studio, he turned to
WeWork, a scalable shared workspace.
His initial consideration was affordability, but now he sees other benefits.
Im 63 and working in a space where
the average age seems to be under 30, and
its good for me, he says. We meet new
peopleit feels like were all working in
the same office. In a way, I dont feel that
different from anyone else here.
And thats just what WeWork strives
for, according to chief experience officer

Noah Brodsky, who says the company


took a lesson from social media. Like
Facebook users who share their life
with other peoplethat has spilled over
into the workspace, he points out. The
company has 16 buildings in six cities,
with plans to expand this year.
WeWork taps into a cooperative
approach among people and even industries. Says Elizabeth Danze, associate
dean for undergraduate studies at The
University of Texas at Austins School of
Architecture, I think theres more collaboration than ever and more recognition
of interdisciplinary work the ability to
work in teams around a table or screen is
important and wont go away.
To that end, she says, architects spend
more time creating spaces where people
can interactand thats not always
indoors. Outdoor green space at the office,
whether a rooftop respite or an employee
community garden, is an amenity that
gives employees breathing room and
creates a holistic, feel-good experience.
Its trying to address the whole person in

www.entrepreneurindia.in

the officeaddressing their whole lives,


Danze says. A variation of that concept is
at work in Chicago, where architect Foster
Dale is readapting a former car dealership for a small company. The office will
include an exercise room, a shower and
bike storage. The plan also calls for a
floor-to-ceiling movable glass wall that
allows employees to work al fresco as
weather permits. Here, the indoor room
shares the outdoor experience, and the
transition from outside to inside isnt so
formal anymore, Dale says.
Other offices are designed with flexibility in mind, enabling employees to
move about from personal workspace to
testing room to collaborative meeting
areas. But breaking down barriers doesnt
suit all. The Physical Environment of the
Office: Contemporary and Emerging
Issues, a study co-authored by Matthew C.

Davis of the University of Leeds in the UK,


suggests that the open office can impede
productivity, with employees attention
and creativity declining and their stress
levels rising.
Some people can move from portal
to portal and be productive, but thats a
skill, says Seattle architect Jonathan
Rader, noting that his job as a designer
involves cultural problem-solving as
much as solving for space. I try to pull
out from a company some of their cultural
thingswork habits, what they like and
dont likebecause that will determine
how well they will work in the new space.
While some firms want to keep traditional layouts for privacy and prestige, othersparticularly tech and
media companieschoose open floor
plans (with some phone booths for
privacy). Rader looks for ways to create

environments for clients with hybrid


needs, such as a law firm representing
startups which opted for an open space
that resembles the offices of its clients.
There are lots of ways to solve the problem and not to be too dogmatic, he
says. That flexibility is also behind the
philosophy of Portland, Oregon-based
HeartWork, which makes a colorful
line of modern office furniture. Clients
want to use furniture in different ways,
with different spaces, says founder and
designer Karen John.
No one wants to go to an anonymous
gray office anymore. They want design to
reflect their culture.
Entrepreneur Inc. All rights reserved
LANA BORTOLOT covers real estate, arts, culture
and wine for The Wall Street Journal

THINGS THAT HELP


For the Virtual Office
Graphic designer Jill Bluming tucks the light-as-a-laptop CanoScan
LiDE 700F scanner into her work bag for ad hoc meetings with clients
or her virtual staff. She uses it for everything from scanning objects,
items, sketches, textures, documents, color palettes and samples to
communicate projects to the team.
For the co-shared office
Soul Electronics SL300 Elite Hi-Definition Noise Canceling
Headphones deliver clear, high-quality sound. Compatible with smartphones and other devices (with an iPhone-ready three-button remote),
the headphones come in six colors.

For the collaborative office


Equipped with an ergonomic handle, Steelcases Verb whiteboards
make visual communications portable. It works as a marker board,
magnetic board and display surface and attaches to an easel so ideas
can be presented and organized in a group setting.
For the indoor/outdoor office
Whither thou goest, so does your water, tea or coffee in Aquaovos
Therm-O Terras double-walled glass water bottle. Sustainably
made and BPA- and lead-free, it keeps beverages hot or cold for
nomadic workers.
For the flexible office
HeartWorks multipurpose cargo cabinets serve as partitions when
needed, wheel out of the way for collaborative meetings and provide
secure laptop lockup at the end of the day.
Intelligent Entrepreneur April 2014 51

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SPECIAL FEATURE

52 Intelligent Entrepreneur April 2014

Value
Lessons
Just how much is good leadership worth?
ROB REUTEMAN

FLYING HIGH : Gordon Bethune


Intelligent Entrepreneur April 2014 53

SPECIAL FEATURE

Gordon Bethune had inherited a mess. When he took the job of CEO of
Continental Airlines in 1994, he was making the decision to commandeer a company that was losing nearly $55 million per month.
The fifth-largest US airline had way too many planes flying unprofitable routes.
Its on-time performance consistently ranked last among the top 10 airlines, costing an average of $6 million per month in added expenses for misconnected
bags, hotels, overtime and lost revenue due to canceled flights. Continental
also ranked dead last in service, customer complaints and mishandled baggage.
It was on the verge of declaring bankruptcy for the third time in 10 years
By most accounts, Bethune engineered
one of the most dramatic corporate turnarounds in history, largely by unlocking the value of Continentals 45,000
employees, whose input had been
shunned by what he referred to as cloistered management.
Poor operations were and are the
result of poor morale in work force and
management, Bethune says. I had to
get people focused on the single goal of
getting the airline functioning on time.
I had to get employees to believe what
I said. After two bankruptcies, it was
like dealing with abused children
they simply dont believe you, he adds.
To them, I was just another guy in an
Italian suit.
Bethunes predecessor, Robert R.
Ferguson III, reportedly had been
forced out after three and a half years
at the helm. Bloomberg Businessweek
articles around that time referred
to him as a blunt and often prickly
CEO, who seemed aloof to the rank
and file and was known to publicly
humiliate managers.
Bethune was pretty much the opposite. A one-time Navy aircraft maintenance officer, he had come up through
the ranks of the industry and enjoyed
constant interaction with Continental
employees. You cant treat your employees like serfs, he says. You have to value
them. I know if I piss off a mechanic,
hes gonna take twice as long to fix
54 Intelligent Entrepreneur April 2014

something. Thats Human Nature 101.


If employees are hostile, theyll go out of
their way to screw you.
He started offering bonus money to
every Continental employee for each
month the airline showed on-time
performance in the top five of the 10
airlines measured by the Department of
Transportation. He also began a profitsharing planonce there were profits to
be shared.
By 1995, Continental ranked first in on
time performance among major airlines.
Posting its first profit in 10 years, the

company earned record income for 11


straight quarters, upping its share price
from $3.25 to more than $50. High rankings in customer and employee satisfaction followed.
I started giving everyone extra
money and made their lives better,
Bethune recalls. We could afford it
because wed been paying even more
money for disaffected employees. We
got the managers, the customers and
the employees in the same boateveryone wins, or no one does, he adds. Its
like football. Before each play, theres a

WE CAN DO IT : Bethune (circled) with employees of Continental Airlines in 1994

huddle. Who do they let in the huddle?


Everybody on the team, not just the big
shots in the backfield. Because everybody needs to know the plan, and thats
how we operated the company.
Bethune retired in 2004, but his style
and substance have made him a legend
in the airline industry. They also make
him a poster boy for the notion that good
leadership has a demonstrable effect on
a companys bottom line.

Leadership quantified
Can it be proved that good leadership
increases profit? Over more than 30
years, Gallup has conducted research
involving more than 17 million employees on the degree to which they are
emotionally committed to their companys goals. Among the findings:
Engaged employees are more productive, more profitable and more
customer-focused
Actively disengaged employees erode
an organizations bottom line, to the
tune of more than $300 billion annually in the US alone
Companies

that actively engage
employees in their operations have 3.9
times the EPS growth rate, compared
with organizations in the same industry with lower engagement
Ive done plenty of research on the
different ways organizations are run,
and how you engage people in contributing to their success, says Bill Pasmore,
senior vice president at the Center for
Creative Leadership. Ive found that
leaders who make choices to operate in
a more participatory waywho operate on principles of high engagement,
versus bureaucracies that treat people as
if they were cogs in a machinesee a 30
percent improvement in performance.
In
their
2009
report,
How
Extraordinary Leaders Double Profits,
Jack Zenger, Joe Folkman and Scott K.
Edinger cite a study they conducted for
a Fortune 500 commercial bank. After
a lengthy assessment, they divided the
banks leaders into the best 10 percent
and the worst 10 percent, finding that:
More than 50 percent of employees
who thought about quitting reported

to leaders in the bottom 10 percent.


Slightly more than 15 percent who
thought about quitting reported to the
top 10 percent
The worst leaders departments experienced average annual net losses of $1.2
million, while those of the best leaders
netted profit of nearly $4.5 million
About 37 percent of employees led
by the bottom 10 percent said they
were satisfied with their pay. Nearly
60 percent who said they were satisfied with their pay were led by the top
10 percent

a psychologist, Fortune 500 executive coach and author of the 2013 book
Bankable Leadership: Happy People,
Bottom-Line Results, and the Power to
Deliver Both.
Good leaders create prosperity, and
its not defined just by money, but by the
emotional health of their employees.
Good leaders treat employees as humans
and appreciate them by creating an environment people want to be in, Eurich
says. Good leadership creates happy
employees, who create happy customers
and, ultimately, happy shareholders.

The happier employees werent necessarily being paid more by leaders in the
top 10 percent. Zenger, Folkman and
Edinger write: They are in reality often
living proof of the old saying, You cant
pay me enough to work for that person.
Good leadership has an undeniable
business value, confirms Tasha Eurich,

The right (and wrong) style

You cant treat your


employees like serfs.
You have to
value them.
gordon bethune

What style of leadership is best for engagement? Robert Hogan, a psychologist and
global authority on leadership and organizational effectiveness, surveyed more
than 1,000 employees about the personalities of their best and worst bosses. He
found that manager personality is a valuable predictor of employee engagement
Managers who tended to be calm, business-focused, organized and willing to
listen were three times as likely to have
highly engaged work groups compared
to managers described as manipulative, arrogant, distractible and overly
attention-seeking.
Arrogant bosses tend to blame their
Intelligent Entrepreneur April 2014 55

SPECIAL FEATURE

mistakes on others, overestimate their


competence and lack a sense of team
loyalty, Hogan writes in his study.
Manipulative managers often ignore
commitments, bend the rules and disregard others concerns. These tendencies
undermine manager-employee trust and
can damage engagement.
In Bankable Leadership, Eurich
outlines two archetypes, one at each end
of the spectrum, both equally ineffective. First, theres the cool parent, who
focuses on the teams happiness at all
costs. They dont set expectations, give
honest feedback or make tough decisions, she says. It might feel pleasant at
first, but as soon as you need tough-buttrue-feedback, he or she would freeze
like a deer in headlights.
Then theres the trail of dead bodies
type of boss. This leader requires grueling hours, is never satisfied and withholds recognition, Eurich says.
Leaders of this type may help you up
your game initially, she explains, but
in the long term, they drive results so
aggressively that you suffer both physically from overwork and mentally from
a lack of appreciation. The bankable
leader is able to move to the middle,
Eurich contends, understanding and
caring for team members while setting
aggressive performance targets. Think
of the best manager youve ever had,
she says. He or she might have been a
walking contradiction. They provide
recognition and push for continuous
achievement. They help you succeed and
accept responsibility for your successes
and failures.
But beware of any one-size-fits-all
approach, says Barbara Kellerman, a
lecturer in public leadership at Harvard
Universitys John F. Kennedy School of
Government. The solutions for effective leadership at a 20-person plumbing
supply company will be wildly different than those for a multibillion-dollar
tech company.
Kellerman, who has written more
than 15 books on leadership, also
throws cold water on the notion that
any corporate knight in shining armor
is likely to save the day. The longer Im
in the fieldthe leadership industry
56 Intelligent Entrepreneur April 2014

RATING THE LEADERS


STEVE JOBS

Co-founder and former CEO of Apple

I believe his brilliance offset the obvious defects he had as a leader.


We lost him too soon, but he was not able to create happy employees,
and I believe he eventually would have failed for that. I dont even think
its a matter of if, but when, says Tasha Eurich, executive coach and
author of Bankable Leadership.
FRANK LORENZO

Head of Continental Airlines, Eastern Airlines, Frontier Airlines and People


Express between the 1980s and 1990. Infamous for Union-busting tactics.

Frank Lorenzo made lots of money, but he would have made three
times more if hed shared some with his employees, says former
Continental CEO Gordon Bethune.
DARWIN SMITH

CEO of Kimberly-Clark paper products from 1971 to 1991

He famously spent his first few months on the job asking questions
and soaking up the culture. He took them from trouble to being the
Number 1 consumer paper-product company, says Eurich.
ALAN MULALLY

CEO of Ford Motor Company, former CEO of Boeing Commercial Airplanes

He does employee engagement better than any sitting CEO I know


of. A great example of a good leader using culture as a tool. His One
Ford Plan is a textbook example of how to get a large company to work
together as one team, says Eurich.
JACK WELCH

CEO of GE between 1981 and 2001. During his tenure, the companys value
rose 4,000 percent. Infamous for a mandate to fire the bottom-ranked 10
percent of employees annually.

An amazing self-marketer whose management style was asinine,


says Eurich. Adds Bill Pasmore, senior vice president at the Center for
Creative Leadership, His notion of firing the bottom 10 percent each
year was a bad idea. It makes no sense as an across-the-board dictum.
LEE IACOCCA

CEO of Chrysler from 1979 to 1992

Classic example of a ruthless leader who did well. He was charismatic


but swept up in his celebrity status as an exalted leader, says executive coach Ray Williams. He was the central figure in his organization,
but great leaders are able to engage others and build them up so the
organization can succeed after theyre gone. He did not do that,
says Eurich.

ENHANCE LEADERSHIP
SKILLS
> Encourage employees to disagree
with you
Companies get into trouble when everyone is
afraid to speak truth to power. If all you hear
is how great youre doing, that should be a
danger sign, says executive coach
Ray Williams.
> Dont micromanage
Empower the people below you, then leave
them alone. A good part of leadership is
stepping back, says Bill Pasmore, senior
vice president at the Center for Creative
Leadership. A good leader leads from front
and back.
> When people err, dont destroy them
But make sure they learn whatever lessons
there are to be learned from their mistakes.
> Show compassion
Develop strong interpersonal relationships
at work, so employees have some meaning
attached to the work they are doing,
says Williams.
> Vow to be constantly learning and curious
Pasmore advises taking risks and asking
yourself, What is it that I dont know that I
should know? How do I learn it and test it out
in situations that are not necessarily safe?
> Know yourself
Just like you cant start a weight-loss
program without getting on a scale, you must
begin your journey by learning the truth about
yourself, says executive coach Tasha Eurich.
Were often the worst evaluators of our
behavior. Adds Pasmore, One of the biggest
problems I see is a real lack of self-awareness.
Executives often arent aware of who they are
as people and the impact they have on others.
> Be laser-focused
Stick to one goal at a time. Leaders often
choose too many development goals. Give
yourself the greatest chance for victory by
developing one thing at a time, says Eurich.
It is far better to make progress in one area
than to make little or none in five.
> Get rid of poor managers
Of the 60 top executives at Continental, I
probably replaced 40 who were not team players, says retired airline CEO Gordon Bethune.
Dont tolerate factionalism, backstabbing or
prima donnas. Everyone wins, or no one wins.
> Practice leadership skills daily
The amount of deliberate practice you
choose will be proportionate to your improvement, Eurich says. Its like learning a violin
concerto. You have to learn the concepts, then
you practice every day to create
beautiful music.

I call itthe less Im persuaded to


talk about a leader as some saintly,
amazing person, she says. Its
perfectly idiotic.
Executive coach Ray Williams,
a columnist for Psychology Today,
contends that our image of a good
business leader has become dysfunctional. He even goes so far as to say
theres an increase in psychopaths in
the business leadership class. If you
take away the violent tendencies that
are the most disturbing hallmark of
the psychopath, I find many of the
other symptoms in the boardroom
today, he says. The extreme narcissism, the charm, the aggressiveness, the lack of conscience. These
are seen as valued traits in a leader
today.
The need to be in the limelight, for
celebrity status, to take credit for the
work of others, to blame others when
things go wrongthese personality traits are typical of psychopaths,
Williams adds.
When companies recruit leaders,
they tend to value highly people who
are ruthless, who can make tough
decisionsthat sometimes can be
hurtful to thousands of people
and not lose any sleep over it, says
Williams.
Pasmore takes a similar stance.
Poor leaders develop a culture of
arrogance and protection. They
think they can do no wrong, and they
hire yes men who think the way they
do. They believe they were hired
because they had all the answers, he
says. That belief causes most of the
problems we see in organizational
performance.

New metrics
Williams thinks one executive hiring
trend may trump the bad behavior
so evident in the corner officethe
slow, steady emergence of women in
the executive suite. You rarely find
a psycho whos a female, he points
out.
The more we balance the
scale and have feminine leaders, the better off well be. Female

decision-makers, Williams says,


tend to be more collaborators and
peacemakers. I think in modern
times we need more leaders like
that, instead of the win/lose, cutthroat approach of annihilating
the competition.
He cites consulting group
Catalysts groundbreaking 2004
report , The Bottom Line: Connecting
Corporate Performance and Gender
Diversity. It concluded that businesses with the most gender diversity at the top had, on an average,
35 percent better return on equity
and 34 percent better total return
to shareholders than those with the
least gender diversity at the top.
Clearly, those in leadership positions at public companies face
enormous, often insurmountable
pressure to show quarterly improvement. Yet some leadership experts
bemoan what Williams calls short
term-ism, and all the important
factors it ignores.
Harvards Kellerman believes
business leaders should be judged by
measures other than market performance. Is the company socially
aware? Does it pollute? Is it riddled
with greed? Does it take care of its
employees? Kellerman asks. Its
reasonable to invoke those measures
when evaluating leaders.
Theres a much bigger definition
of good leadership that we discount.
Snap judgments are getting shorter
all the time, Williams contends.
There was a time when companies could have long-range plans.
It should be fair to ask of a leader
what kind of impact his or her
company has on the welfare of
the community.
Great financial results need not
be at odds with making a significant
contribution to the community and
the environment, he says.
Entrepreneur Inc.
All rights reserved
ROB REUTEMAN teaches business journalism at Colorado State University
Intelligent Entrepreneur April 2014 57

SPECIAL FEATURE

58 Intelligent Entrepreneur April 2014

The
Enemy
Within
What every leader needs to know to take down
the takeover artists
JOE ROBINSON

rincipalities are great for


stamp collectors. They are
less appealing when they exist
inside your company, thanks to
the manager or staffer who has built his
or her own private Luxembourg.
Its a phenomenon known in the
management trade as empire building:
an urge to create fiefdoms with pumpedup staffs and budgets that match the
inflated ego of the perpetratorand
it can sabotage your team, bottom line
and worse.
It can kill the company, says Mark
Faust, a growth and turnaround specialist at Cincinnati-based Echelon, author
of Growth or Bust! Youre lucky if its just
reducing the potential of the company
by 20 or 30 percent, but it could be a lot
more. It is one of the greatest constraining factors on US business.
Empire builders dont care about that.
Their goal is to increase their personal
power and stature by amassing departments, information and head count.

Intelligent Entrepreneur April 2014 59

SPECIAL FEATURE

They measure their worth by the heft


and gleam of their domain. Its a little
like the peacock strutting his technicolor
tail for the females, says Art Markman, a
psychologist at the University of Texas,
Austin who runs the Human Dimensions
of Organizations program. In this case,
its not a mating signal, but a power signal
to the organization that youre somebody
to be reckoned with, he says.
Thirty years ago an empire builder
might have been applauded for chutzpah. But times have changed. In recent
years there has been growing scrutiny on
the dangers of empire building; management experts have come to see it as a
hidden toxin at the root of many business
dysfunctions, leading to excess spending,
anemic growth and turf wars.
In todays lean landscape, there is
little tolerance for rogue hoarders and
bloat. Further, leadership philosophies
are evolving from the rigid commandand-control structure to a collaborative
model. Power-hungry alphas are seen
as undermining the collective good and
hindering employee engagement.
Tron Jordheim, chief marketing
officer for Columbia, Missouri-based
StorageMart, sees empire building as a
tendency of new, status-seeking middle
managers who want to create organizations around them. The danger is that
you pump up expenses too high and too
soon, he says. Payroll and administrative costs start rising, but you dont see
the revenues. Worthwhile projects get
scuttled this way.

Follow the bickering


Empire builders are skillful manipulators
who build up their holdings over time
maneuvering for a project here, adding
budget there. It can happen to anyone,
says Robert Quinn, faculty director of
the Center for Positive Organizations at
the University of Michigans Ross School
of Business. Usually, theyre very technically competent at something, and the
person takes advantage of that. It creates
friction in he organization, but because
of the power base, its felt that no one can
touch the person. Its too big to fail, the
personnel version. A classic case is the IT
chief, keeper of the sacred code, or a sales
60 Intelligent Entrepreneur April 2014

honcho who is so good at what he does


that no one dares challenge him. Empire
builders are not hard to find: Just follow
the bottlenecks and the bickering.
Secret agendas, diverted resources,
walling off one part of the company from
anotherempire building can smother
performance and destroy rapport and
trust. In addition to territoriality, the
behavior breeds resentment and disengagement, fueling interpersonal conflict
and division. Companies are human
networks, Quinn says. Everyone suffers
when theres no longer a sense of teamwork or organization.
Its on this cultural level where the
rot of empire building really takes hold,

souring relationships and creating internal rivalries that take time and energy
away from the battle against the real
competitors in the market.
Empire building is the enemy within,
says Dana Ardi, founder of New Yorkbased Corporate Anthropology Advisors
and author of The Fall of the Alphas.
Theyre not operating for the greater
good. She argues that the behavior is out
of step in the social era of collaboration
and connection. We want a competitive
spirit, but we dont want people competing against each other. You want to be
in a culture that rewards collaborative
behavior and the overarching goals of
the company.

YOUR BRAIN ON POWER


Power corrupts, and we know exactly what it corrupts:
empathy. The narcissistic mind keen on building fiefdoms has trouble seeing the effect of its actions on
others. When at the University of Kent, researcher
Ana Guinote found that powerful people tend to ignore
peripheral data and dont process information about the
less powerful folks around them. Their tunnel vision
stays locked on the actions that will win the praise,
status or glory they crave. Minions become invisible.
Theres evidence that power actually changes the way
the brain sees others. A 2013 study by researchers at
the University of Toronto and Wilfrid Laurier University
in Waterloo, Canada, tracked how the brains motor
resonance system, which mimics the actions of others
through what are known as mirror neurons and helps us
relate, responded in high-power and low-power individuals. The high-power individuals had less motor simulation, reduced interpersonal sensitivity and decreased
processing of social input.
As a result, the powerful have
decreased recognition of others
concerns, allowing them to throw their
weight around without qualm. That
gives empire builders the control they
need to reduce the fearsinsecurity,
imperfection, loss of statusthat fuel
their pursuit of external validation.
But its more than aversion that
motivates empire builders; the brains
motivation and reward systems are
also intricately involved.
The leading reward mechanism
is the neurotransmitter dopamine, a
chemical released when we experience
pleasurable activities or anticipate
something new or novel. Dopamine
connects with receptors in the striatum
to help commit a person to an action
and sets off a reaction that can lead

Research on human motivation over


the past couple of decades has shown
that the command-and control model
of leadership is flawed. As University of
Rochester psychology professor Edward
L Deci has detailed in Why We Do What
We Do and a host of landmark studies,
monetary incentives and rigid control
dont drive employees. To get the best
out of your team, you have to allow them
to participate and be more autonomous,
and you have to make sure they understand how they are contributing to the
companys mission.
Empire building is the antithesis of
that. The question isnt how much can

to feelings of satisfaction or accomplishment. Empire


builders get their dopamine hits through activities
that pump up ego. Its a never-ending chase for the next
external fix more staffers, bigger budgetall of which
is highly ephemeral. The bumps to the striatum and ego
fade, since theyre based on the gaze of others, and when
they do, the fear returnsfeelings of worthlessness,
inferiority, expendability. Those emotions lead directly
to the primitive limbic system of the brain, where fearquashing goals such as power and status initiate impulsive actions without conscious direction. Leaders have
to find ways to break through the mind lock and the
knee-jerk rationales. The person really believes theyre
doing the right thing for the right reason, says Annette
Simmons, author of Territorial Games. They have to hear
the specific implications that empire-building behavior
has on the company and those around them. J.R.

I achieve; its what can I contribute,


says Rick Wartzman, executive director
of the Drucker Institute in Claremont,
California. Thats one of the hallmarks
of a leader. Whats the mission of the
company? Your objective should be in line
with the objective of the company.

The Territorial Urge


The drive to extend domain and, thus,
status has been playing out for millennia in the sweepstakes for survival of the
fittest. The more territory and resources,
the more power. Those who can dominate
gain further access to additional valuable resources. But this competition is no

longer about physical survival; rather, its


about social and psychological survival.
Today we fight over the survival tools
of information, relationships, status
or visibility. Thats what people need
to succeed, says Annette Simmons,
founder of Shreveport, Lousiana-based
Group Process Consulting and author of
Territorial Games. In fact, Simmons says,
empire building is simply another term
for protecting territory.
They both come from the same primitive place in our brains, the emotional
hub of the ancient limbic system. That
means empire-building stratagems like
keeping an employee from working on
Intelligent Entrepreneur April 2014 61

someone elses project so they can work


on yours fall into the reflex category. The
typical empire builder is oblivious to what
he or she is doing.
Some empire builders are responding
to the signals the organization is sending
as to what constitutes power in the organization. Others are driven by contingent
self-esteem, a belief that self-worth comes
from external markers such as money,
recognition, size of office/ budget/staff.
Its a futile game; external approval cant
make a person happy, because its based
on what others think. Further, its fickle,
and it can put a person on a hedonic
treadmill where they can never catch up
with the next set of wants.
If they get the corner office, now they
need the suite, Markman says. They
have five people working under them,
now they need 10. That isnt going to end.
The prime mover for most empire
builders, it turns out, is the opposite of
what they want to project:weakness.
As with the braggart, behind the brash
behavior is anxiety and a low self-esteem
that has to be padded constantly. If youre
not telling them how great they are,
theyre in an anxious state that theyre
not great, Markman adds. All of this is a
way of trying to keep the anxiety at bay. I
must be important; Ive got a huge staff.
When personal worth is based on the
external domain, theres a constant fear
that someones going to take it all away.
When you start seeing behaviors that
reflect someone needing to control everythinga lack of integrity, backstabbing,
information hoarding, empire building for the sake of empire buildingit
is often a reflection of someone feeling
threatened, says Nicole Lipkin, a business psychologist in Philadelphia and
author of What Keeps Leaders Up at Night.
The real or imagined threat is often a
perceived threat to ones self-esteem or
sense of self.
That sense of self needs more strokes
if it is part of a narcissistic personality,
which fuels the empire-building psychology. Unhealthy narcissists are in it for
the glory and praise; they need a steady
stream of both to feel powerful. Because
their self-construct is weak, they detest
criticism and cant stand for anyone
62 Intelligent Entrepreneur April 2014

else to get credit for anything good that


happenswhich makes them extremely
hard to work for and sows dissension in
the ranks. They lack a crucial ingredient
of leadership: empathy. They can turn on
anyone at any time, stretch the truth, hide
bad data, duplicate staff without a whiff
of concern about the effect on budget and
rationalize it all as necessary for getting
the job done.
No wonder colleagues break out the
champagne when these self-obsessed
roadblocks are relieved of their duties.
Quinn of the Ross School of Business
recalls when an empire builder at a
company where he workedan executive secretary who used her access and
institutional knowledge to build her fiefdomwas fired. Her last day, as she
walked down the hallway, heads popped
out to watch her, and after she left everyone sang, The wicked witch is dead.

Reining in imperial designs


Its not only power and insecurity that
cause imperial behavior. Organizations
can enable it, too, by signaling that

Empire builders
lack a crucial ingredient of leadership:
empathy

amassing resources is the route to


respect and power. Empires rise within
companies because either the organization is not clear on what its objectives are, or you have people who are
not fit for leadership, says the Drucker
Institutes Wartzman.
The solution lies in communicating
the goals of the organization clearly and
calling out offenders. Take the time to ask
questions and listen to staff for problems
and conflicts. Whats standing in the way
of the mission and performance?

Identify the black hole where


resources and engagement are vanishing, then confront the person responsible
with the evidence: outsized staff, perks,
ballooning turf, conflict with others. The
response will usually be, Im just doing
my job. The truth is the person is not
doing their job, Quinn says. Part of
the job is embracing the common good.
When Im destroying that, Im not doing
my job. It has enormous dollar implications. When your team breaks down, and
the climate becomes toxic, youre losing
things that impact the bottom line.
The empire builder has to understand that his or her behavior is a detriment to the company, which means bad
job performancesomething that can
wake up the insecure very quickly. The
key point, Wartzman says: You need to
be focused on creating value for customers, not yourself. Its backwards.
Jordheim of StorageMart has had the
empire conversation with various managers over the years. He tries to dig out the
reasons behind the behavior. Do you
really need this person, or are you just
having fun building out? he asks someone whos beefing up their staff. When he
thinks the person is power-tripping, hell
say, Youre building too much. You have
to pull back.
Performance reviews are a good place
to make the case that being a leader
requires the effective use of resources,
not the Imelda Marcos school of warehousing. Another approach is to show
why its in the persons long-term interest
to rein in the potentate behavior.
Markman suggests taking a trip
forward in time with the empire builder
and having the person review their life
from the point of view of their retirement
years. What most people want, he says,
is to feel like they were respected, that
they moved their organization forward,
that they innovated. There are very few
people who look back on their career and
say that what [they] wanted was to have a
very big office.
Entrepreneur Inc. All rights reserved
JOE ROBINSON is author of Work to Live and
The Email Overload Survival Kit

SPECIAL FEATURE

You
Win
Some,
You
Lose
Some
Success or failure: Which breeds stronger, more
resilient entrepreneurs?
JASON ANKENY
64 Intelligent Entrepreneur April 2014

FAILURE IS GREAT: Cass Phillips

Intelligent Entrepreneur April 2014 65

SPECIAL FEATURE

hampions arent born, theyre


madeor so the saying goes.
But each champion is made in
a different way, and there is
no blueprint for business success: Some
entrepreneurs burst out of the gate and
never look back; others stumble badly,
learn from their mistakes and make the
most out of their second chances.
Formative success breeds sustained
success, contends Ian H Robertson, a
professor of psychology at Trinity College
Dublin and founding director of the
schools Institute of Neuroscience.

can be forged from the crucible of failure, argues Cass Phillipps, the founder
and global producer behind FailCon.
Inaugurated in 2009 in San Francisco,
FailCon is a series of conferences spotlighting entrepreneurial failures and
how those negative experiences can
shape wiser, more thoughtful business
leaders, giving them the critical insights
and assets necessary to build startups
that thrive.
Entrepreneur Inc pitted Robertson
and Phillipps head-to-head to identify whether success or failure

in Ian H. Robertsons book of that


name. When Tyson returned to the
ring in 1995 after a three-year incarceration, larger-than-life promoter
Don King set up a comeback bout
against journeyman Peter McNeeley,
a so-called tomato can the rusty,
out-of-shape Iron Mike could beat
with the proverbial hand tied behind
his back. The fight lasted just 89
seconds before McNeeleys corner
conceded defeat. From there, Tyson
demolished challengers Buster Mathis
Jr. and Frank Bruno, regaining his
SUCCESS BREEDS SUCCESS:
Ian H Robertson

In his book The Winner Effect: The


Neuroscience of Success and Failure,
Robertson explores the science behind
how success impacts brain chemistry and makes humans and other creatures smarter, more self-possessed and
more aggressive, setting the stage for
even greater accomplishments to follow.
On the other hand, eventual success
66 Intelligent Entrepreneur April 2014

is the optimal launching


subsequent achievement.

pad

Success leads you


Former heavyweight boxing champion
Mike Tyson may seem like an unlikely
model for entrepreneurial success,
but his comeback from prison exemplifies the winner effect, as detailed

for

heavyweight belt in March 1996. The


winner effect is a phenomenon that
occurs across species, whereby if someone wins a contest against a weaker
opponent, theyre more likely to win a
subsequent contest against a tougher
opponent, Robertson explains. Tyson
wouldnt have reclaimed the championship if he hadnt fought the tomato

cans. When you are faced with a challenge against someone, your testosterone levels go up. The higher they
go up, the more likely you are to win.
If you win compared to losing, your
testosterone levels shoot up as well.
The experience of winning increases
the number of receiving stations for
testosterone in the critical parts of the
brain associated with aggression and
motivation. The next time theyre in a
contest, the surge of testosterone has
a much bigger effect on them, because
there are more receiving stations in
the brain.

A state of mind
Success breeds success across all walks of
life, Robertson states, noting that entrepreneurs who hit pay dirt early on are
likely to experience even greater professional triumphs as their careers unfold.
The main ingredient of success is
having success, Robertson states, citing
sociologist Robert Mertons theory of
the Matthew effect, which in essence
contends that the rich get richer and the
poor get poorer.
The other critical element of success
is self-confidence, Robertson believes.
[Facebooks] Mark Zuckerberg knew
he was very bright. He didnt need other
peoples approval. He got satisfaction
from being smart, he says. You can
generate success experiences for yourself purely internally, and generate
the biological benefits of that in your
brain. Success and power can make you
smarter, because testosterone increases
dopamine, which affects the front part of
the brains functioning. Success can make
you smarter, and more able to think of
new ideas.
Anyone can experience success,
Robertson asserts. Its all simply a state
of mind. If you fake the external trappings of power and success, you can trick
your brain into believing you are successful, and you will trigger the dopamine
and testosterone that make you feel more
confident, Robertson says.
If you go out there, shoulders squared
and arms swinging, saying, Im an entrepreneurIm going to make it, youll
make it easier to have your next creative

idea or see yourself through the next


setback. The most successful people are
great engineers of their own brains,
he adds.

Failure breeds better things


Cass Phillipps startup was tanking.
Just six months after she and her partners launched social media aggregator
Trogger, it was clear the company was
irrevocably doomednot that Phillipps
was ready to admit it, at least publicly.
We made all the mistakes that every
first-time entrepreneur tends to make,
she recalls. But I was still telling everybody that my startup was awesome.
In the absence of a forum where she
could openly discuss Troggers demise,
Phillipps created her own, establishing
FailCon in 2009.
Each FailCon event in the US and
abroad brings together technology entrepreneurs, software developers, product
designers and investors to explore startup
setbacks and how the lessons learned
prime the pump for future success.
Failure teaches self-confidence and

The most successful


people are great
engineers of their
own brains.
Ian H Robertson
Professor of Psychology, Trinity College,
Dublin

tenacity, Phillipps says. There are people


who fail and take it very, very personally,
and that makes it hard to recover from it.
They are at risk of forever being fearful of
taking new risks. Thats what FailCon is
trying to change. We tell people, Dont
take this so personally. Failures actually
really great.
Startup failure is essentially an
MBA from the school of hard knocks,
Phillipps believes.
People that use failure to become
more successful are people that see their
failure as a learning experience and
recognize, Hey, I got through that, and
that was the worst of the worst. Why not

start again? Some people look at failure


and say, I cant go through that again.
Others say, I failed, and Im still alive.
What worse could happen? Lets take
another risk and see.
But failure isnt just about building
emotional resilience; its also about teaching practical lessons.
Phillipps says that while many entrepreneurs attempt to build sexy, customerfacing startups during their first go-round,
their rebound efforts are typically far
less flashy and much more no-nonsense,
targeting verticals like financial analysis
or elderly care.
Theyre not worried about impressing their friends, she notes. Theyre
worried about building a good product.
Failure is about gaining muchneeded perspective.
The people who bounce back make
sure theyre home for dinner every night
with their wife or husband. They go
to their yoga class every single morning. They make time each year to travel
abroad, Phillipps says. For a lot of firsttime founders, their company is everything to them, and its how they define
their success as a human being. The
people who bounce back are able to realize, I can be a great entrepreneur and not
make my startup every single aspect of
my life. I can find balance.
So dont think of it as failure, Phillipps
says. Think of it as the foundation of
something far bigger and better.
Having something fail teaches you to
question the decisions youre making, be
more open to alternative options and be
more aware of what consequences you
might have, so that down the road, you
wont have those consequences again,
Phillipps maintains.
Failureemotionally and philosophicallygives successful entrepreneurs
a drive and sense of self-confidence that
they otherwise wouldnt have. Shit can
really hit the fan, and they will be able
to get through it, because theyve done
it before.
Entrepreneur Inc. All rights reserved
Jason Ankeny is Chicago-based writer and
executive editor of Fiercemobile content
Intelligent Entrepreneur April 2014 67

SUCCESS STRATEGY

Do Me a Solid
The Esquire guy has some thoughts on favors
ROSS McCAMMON

hether or not you do the


favor isnt the important
thing. Whats important is
how you say yes or no. And
how you should say yes or no is: moralistically. You run the risk of seeming uptight
and condescending and a little preachy,
but moralistic you must be. It doesnt
matter how big it is, but every request
for a favor comes bundled with implicit
points. Such as:
You have power where I do not.
I will repay this favor at a later date.
I have faith in you.
You are The Man or The Woman.
Also, pleeeeeease?
There are so many unspoken issues
that the process can feel smarmy. So
when youre asked for a favor, its important to get a few things out on the table,
to take the request head-on, speak what
is usually unspoken, shine a little light on
the quid pro quo of it all. You could say,
Sure, of course, but then all youre doing
is acceding. Which is a wasted opportunity. Note the differences between these
two answers:
Option 1: Sure.
Option 2: Sure, Dave. Youve been a
good friend to my business over the years.

Im happy to do this. I know youd do the


same for me.
What youve done with the second
option is definitively answer the question, exhibit magnanimity, tack enthusiasm on to agreement and de-smarmify
the implicit promise of reciprocation
by simply acknowledging it out in the
open, transforming a favors unspoken
IOU to YDOMAIJWTTTOTNHMBTRI
(You Dont Owe Me Anything I Just Want
to Take This Opportunity to Note How
Mutually Beneficial This Relationship Is).
Youve also established that youre
thoughtful about the promises you
makethat when it involves your business, youre not going to agree to just
anything. Youve effected another kind
of transformation, as well: Youve transformed a request that seems personal into
something professional.
Its more respectable to say no if you
highlight that its not about the person
youre declining, but rather that youre
trying to maintain your commitment to
another set of people, says Adam Grant,
Professor of Management at the Wharton
School of the University of Pennsylvania
and author of Give and Take: Why Helping
Others Drives Our Success.

KEY TECHNICAL MATTERS


W hen presented with a request
for a favor, ask yourself: Will this
be good for my business?
I f the answer is no, do not do the
favor
B ut explain why youre not doing
the favor
T hen suffer through the inevitable awkwardness that results
from your refusal
A favor requested by a professional superior is not, in fact, a

68 Intelligent Entrepreneur April 2014

favor. It is a demand
A request for free products is not
a favor. It is a request for free
products
T he rate of favor requests you
field will increase proportionally along with your business
success
T he rate of disappointing people
will, too
T he best way to say yes to a
favor is: Of course! followed
by a much less enthusiastic

justification for saying yes. Its a


buzzkill, but its important
Favors requested over the
phone are to be considered
more thoughtfully than those
requested over e-mail
Favors requested over e-mail are
to be considered more thoughtfully than those requested over
Twitter
Favors requested via congressional subpoena are to be looked
over by a lawyer

www.entrepreneurindia.in

The beauty of this approach is that


youre not the one doing or not doing
the favor. Your company is doing or not
doing the favor. Youve made clear that
if the favor is not right for the company,
then the favor wont get done.

Various characters
Grant divides the parties into three types:
1. Takers will do a favor when they
think they can get a larger one back or
when they are trying to impress someone
powerful or influential.
2. Matchers believe its important to
trade favors evenly, so their favors come
to either reciprocate one given in the past
or to earn an equal one in the future.
3. Givers do favors, for the most part
without strings attached and are willing to offer them usually to people they
dont feel they owe anything to.
Its always bewildering when you
come across a taker. What are these
people thinking? Theyre conspicuous. And theyre annoying. The way to
deal with a taker is the same way you
deal with any favor: You acknowledge
the request, say yes or no (depending
on whats good for your company) and
explain the reasons youre saying yes or
no. Easy.

way to do favors for everyone without


expecting anything in return, they end
up sacrificing their time and energy and
resources for others.

Undermine that last point


But givers tend to finish first, too. Grant
concludes that givers who act selflessly
are asking for trouble, yet givers who
act with clear conditionsI am going
to be clear about who I help, how I help
and when I helpbecome more energized, rather than distracted.When
people follow this setting of boundaries
around the who, the how and the when,
givers end up outperforming matchers
and takers, Grant says.
Favors are opportunitiesto do good
(even when you say no), to build relationships (even when you say no) and
to remind those in your professional
universe what kind of business you run
(even when you say no). And the kind
of business you run is one that requires
a payment for this kind of service: not
money not some unspoken IOU, not even
a cup of coffee, but respect.
Entrepreneur Inc. All rights reserved
ROSS McCAMMON is an Articles Editor at
Esquire Magazine

Saying 'No' from time to time


The primary reason to say no to a request
is, of course, that saying yes just doesnt
feel right. Youd be compromising your
principles or your companys mission, or
youre just not able to provide the kind
of help the requester is looking for. But
theres another reason to say no. In his
research, Grant uncovered that givers
tend to finish last: By going out of their

SHOULD YOU DO THAT FAVOR?


ALWAYS
Can you recommend a good
graphic designer?
A few minutes of your time?
Hold this door for me?
Mind if I visit your operation?
May I pick your brain? (Asked by
someone you know.)

SOMETIMES
Can you write me a letter of
recommendation?
A meal?
Hold this sack of money for me?
Mind if I look around a little?
May I pick your brain? (Asked by
someone you dont know.)

NEVER
Just say I worked for you once,
and I was great. Cool?
A meal-length amount of time,
without the meal?
Hold this gun for me?
Mind if I look around a little without you accompanying me?
May I pick your brain? (Asked by
someone you dont know who is
holding a thin metallic rod.)

Intelligent Entrepreneur April 2014 69

INNOVATORS INC

STOP THE

TUK-TUK!
Evomo looks to give rural India its own utility vehicle
ASHNA AMBRE

student of mechanical and


automation engineering at the
University of Delhi, Abhinav
Das says that he spent most of
his days dreaming about motorsports
and fast cars and not studies. He tells
us gleefully how taken he is by Formula
One racing and how happy he was to see
India get its own F1 track and Grand Prix
back in 2011.
Right after he graduated, Das went to
work on research and development in the
space at Gurgaon-based International
Center for Automotive Technology, with
an eventual aim to make it to a large
automotive design company.
During that time, as part of an excursion, Das visited Bulandshahr, a village
50 kms away from the countrys capital.
The visit made him realize the shallowness of his own dreams, he says, and that
there is more to life than the career he
was heading towards.
Rural India is so poorly connected
when it comes to transport and roads.
Most villagers use locally made motor
vehicles as a means of low cost transportation. For example, do you know
that carpenters make these vehicles
where they fit a diesel engine on a cart?
says Das.
These are called jugaad vehicles, informs Das, adding that even
though other technology such as mobile
70 Intelligent Entrepreneur April 2014

telephony has penetrated to the remotest parts of India, transportation is still


stuck in the Dark Ages.

A safer option
Das tells us that it is not very well known
that these jugaad vehicles are banned
in most states of India, due to a lack of
safety parameters and load carriage
issues. The economic and social costs of
the accidents are enormous. India loses
three percent of its GDP to road crashes
every year. I wanted to create a solution
to this problem, says Das.

Roads carry almost 90


percent of the countrys
passenger traffic and 65
percent of its freight
Source: UN Research paper

It was in 2009 that Das set out to


solve this problem with his own invention, the Rural Utility Vehicle (RUV),
under his startup Evomo. He began
with preliminary research, focussing
on the pain points of rural local transportation. Institutionally, Das and his
team opted for incubation at National
Institute of Designs Business Incubator
at Ahmedabad in 2010.

In 2012, the company won the Power


of Ideas challenge and secured `10
lakh in funding from IIM Ahmedabads
Centre for Innovation Incubation &
Entrepreneurship (CIIE), where the
faculty also saw what problems Das was
trying to solve with the RUV.
There is a clear lack of wellconnected roadways. It is important to
create access for communities so that
they can avail themselves of healthcare,
education and other welfare facilities,
says Shashank Rastogi, COO at the CIIE.

Multi-utility vehicle
The end result of that process is now
there to see in a prototype of the RUV
that Das and his team have built. The
RUV, according to Das, uses technology
(patent awaited) somewhat similar to
that used in sports cars. He explains that
in a sports car, the chassis is tasked with
holding all the components together
while driving, and transferring vertical
and lateral loads caused by accelerations
through the suspension to the wheels.
In case of the RUV, the chassis is made
of medium-sized, strong steel pipes. The
principle is that further the mass is away
from the neutral axis the more rigid it
will be, he says, adding that the RUV
has a space frame chassis which has the
best strength to weight ratio.
According to Das, the vehicle requires

minimal investment and the entire


process is easy and flexible. There is no
investment required on the mounting
brackets as everything is mounted on
the chassis. The capital investment can
be one-twentieth as required for traditional chassis, while still meeting all the
regulatory norms for safety.
The RUV is fitted with a 600cc singlecylinder engine. In case of loads, the RUV
can carry up to 2.5 tonnes. According
to Das, the RUV weighs half of what a
jugaad vehicle weighs and it can also be
used for multiple purposes. He claims
that the RUV is also more fuel efficient,
can carry 18 persons, and has numerous safety features. It also costs lesser,
causes very low levels of pollution, and
also more importantly, is legal.

Das says that an RUV can easily be


modified into a load carrier, school bus
or an ambulance, each of which can
solve a rural pain point.
Seventy-five percent of pre-natal
deaths can be avoided with better medical transport facilities. Also, 50 million
girls, who drop out of school so that
they can walk up to 40 kms a day to
fetch water, can be sent back to school,
says Das.

At the melas
In addition to this, people can easily
get loans from financial institutions for
buying an RUV. For jugaad vehicles, on
the other hand, villagers are left to the
mercy of unorganized money lenders
who charge very high interest rates.

Das tells us that the RUV can be manufactured in small factories (he is in talks
with many) across the country at a fraction of the capital required by a conventional automotive setup.
The RUV cost `1.8 lakh and Evomo is
looking at innovative methods to reach
out to its target market this year.
We are looking at promoting the
product through melas and haats in
villages by creation of micro dealerships
across small towns and focus on word of
mouth promotion through opinion leaders, says Vipul Patel, Mentor to Evomo
and Business analyst with CIIE.
Launching in June, Das says that he
plans on selling 120 units of the RUV this
year. Going forward however, based on
the uptake, Evomo will up production.

CUTTING EDGE: Abhinav Das


Intelligent Entrepreneur April 2014 71

NIKHIL H. PATEL

www.entrepreneurindia.in

GETTING THERE

n 1994, the only map you could get


to navigate your city or the vastness that is India was a `15 foldable piece, which you could buy at
the nearest stationery store of a book
depot. It seems unbelievable that in
those times there was a person who had
put a wager on us one day using digital
maps on small, hand-held devices.
That person was Rakesh Verma, the
62-year-old Founder and Managing
Director at MapmyIndia, a Delhi-based
home-grown technology firm that is
a provider of digital maps, directions,
search and GPS navigation and tracking devices. It was two decades ago,
but Verma remembers vividly how farfetched was the idea that we all would be
able to use digital maps one day as easily
as making a phone call.
Even though the very concept of a digital map was known to only a privileged
few back then, Verma firmly believed
that digital maps would be crucial in
the time to come for both businesses
and individuals.
We knew that developing digital
maps for a country the size of India will
not take less than ten years. We understood the challenge but since we really
liked the space so much, we said we will
go for it, he says.

The 10-year wait


Entering the digital map business was
something that Verma attributes to his
own fascination and awe of them. The
idea of digital maps on a computer and
the things one could do with them was
pretty interesting, he says.
For most of its early years, MapmyIndia
worked with other businesses in navigating India, as there was no consumer
market for mapping technologies, and it
needed a steady cash flow to sustain its
data collation effort.
From 1994 to 2004, while collating
data, MapmyIndia worked with more
than 500 enterprises providing them
location-based business solutions. We
started providing map-based services
to enterprises in sectors such as FMCG,
telecom and auto, says Verma.
Here, the firm helped, for example,
FMCG and telecom brands trace and
72 Intelligent Entrepreneur April 2014

MAPPING

SUCCESS
MapmyIndia has remained a formidable rival to giants
like Google in Indias geospatial services game
Avanish Tiwary
locate remote markets for their products. But its main play was within the
auto sector, where it partnered with
auto makers to pre-fit cars with their selfmanufactured GPS navigation devices.
Still a part of their core offering, these
navigation devices come pre-loaded
with maps of cities and towns across
India and provide turn-by-turn voice
instructions. Auto brands such as Jaguar,
Maruti Suzuki, Mitsubishi, Mahindra &
Mahindra, etc. have all partnered with
MapmyIndia to provide navigation
devices with in cars, according to Verma.

Game on
After accumulating enough geographical data, MapmyIndia launched its digital

Geospatial Services
multipier effect on the
Indian economy
Multiple
of 25

75
3

Annual
revenues of
India's geospatial
service industry
($ billion)
Source: BCG analysis

Annual
Indian costs
saved by geospatial services
($ billion)

map portal for end-users in 2004 following it up with the launch of its mobile app
in 2007. Since then, it has been launching several location-based services.
Today, MapmyIndia offers products and
services across the spectrum. Chief on
NAVIGATION MADE EASY: Rakesh Verma

www.entrepreneurindia.in

the hardware side are the portable navigation GPS devices and the in-dash GPS
navigation systems for cars. According
to Verma, MapmyIndia generates
significant revenue through the sale of
its personal navigation devices, which
range from `8,000 to `20,000.
Of its other consumer-facing products, Verma lists out the apps, which are
free and have no monetization associated with them. Explaining the zerocost model in apps, Verma says that as a
company, it was important for them to
have products for every need. And B2C
models in this space have traditionally
been free, he says.
Also, Verma points out, the firms
customer-facing products are a channel
for them to reach enterprises. If people
say that we are doing good work, enterprises are bound to listen to them. After
six months of the launch of our Locate
app, iBall offered us to integrate the app

in their handsets with a simple touch


button access, he says. Verma calls this
a B2B2C model and says that it generates
50 percent of its revenues from it.
The company also currently works
with both private and public sector
enterprises, offering custom solutions
to the former and GIS solutions to the
latter. Verma says, about 40 percent
of their revenues are raked in through
their enterprises. In addition, another
10 percent is generated from the
consumer business.
Set up with a seed amount of just `1
lakh, MapmyIndia is currently backed
by Qualcomm Ventures, Kleiner Perkins
Caufield & Byers (KPCB), Sherpalo
Ventures, Nexus Venture Partners and
Zenrin Co. Ltd. Suvir Sujan, Co-Founder
and Managing Director, Nexus Venture
Partners, says its difficult to create a
map-based service in India as it requires
huge manpower and capital.

It is a very difficult business to


execute. It needs consistent updating of
the data of roads, points of interest, etc.
And in a fast developing economy like
India, the infrastructural changes are
tremendous, Sujan says.
As capital intensive the industry
is, what helps MapmyIndia is that the
sector is booming. A report by Boston
Consulting Group, commissioned by
Google, said that geospatial services
generate revenue of $3 billion and
employ nearly 135,000 people in India,
making the space attractive enough for
new rivals like WoNoBo to sprout up.

Future mapped

AMIT KUMAR

THE DISRUPTOR: Rajul Garg

WoNoBo has been incubated with


a $35 million investment over the
last few years by BSE-listed Genesys
Internationala Mumbai-based geospatial solutions company that was founded
over two decades ago by brothers Sol and
Sajid Malik.
WoNoBo collected geographical data
for the last two years, and launched its
own 3D digital maps of 54 cities in the
country in 2013. These 3D maps are
made by digitally stitching thousands
of photos together.
Unlike MapmyIndia, this comparatively new entrant in this sector monetizes its offering through advertisements
and business listings on the maps, and it
already has 4.5 million listed businesses.
Mohit Sureka, Founder at WoNoBo,
says that India is slowly getting hooked
to map-based assistance. We have not
been a society that traditionally uses
maps. But with technology, we will see
more and more use of maps."
Even though MapmyIndia doesnt
monetize through business listings,
it has more than 15 million Points of
Interest (POI) across more than 60 categories like hospitals, hotels, restaurants,
etc., on its maps.
Jain says that going forward, we are
bound to see innovations such as navigation-based route planning, people
location and local advertising. With a
year-on-year growth of 800 percent,
Verma is also convinced that maps would
be used for much more than locating the
closest restaurant or ATM.
Intelligent Entrepreneur April 2014 73

SPECIAL REPORT

THE NEW PARADIGM


A demanding new customer is driving change in Indian healthcare
TEAM SEQUOIA CAPITAL

ndia has the second largest healthcare market in the world, where the
healthcare needs of over a billion
people are currently being catered
to by a vast ecosystem of doctors, nurses,
hospitals, pharmacies and labs. But
access to healthcare continues to remain
a significant issue and a topic of debate.
The magnitude of the need can be gauged
by some of the following statistics: India
ranks second in diabetic occurence (75
million), has one of the largest chronic
kidney disease (CKD) population (10
million) and one of the largest cataract patient population (14 million) in
the world. While our private healthcare
system is reasonably well developed,
much more needs to be done to be able to
extend high quality healthcare to people
across the country at affordable prices
and to plug the gap left by an inadequate
public healthcare system.
The active participation of the public
and the private sector as payers and
providers respectively has propelled the
healthcare industry to a massive $75
billion industry in 2012. It continues to
grow at a healthy rate of 16 percent annually [Figure 1], with healthcare delivery
accounting for 71 percent of the market,
pharmaceuticals accounting 13 percent
and devices, insurance and diagnostic
labs accounting for 9 percent, 4 percent
and 3 percent respectively [Figure 2].
While these are impressive figures,
the need for care and the resultant
market opportunity it represents is
much larger. India continues to be
one of the most under-penetrated
healthcare markets amongst developing nations and lags behind on spend
as well as outcomes.
Total healthcare expenditure in India
74 Intelligent Entrepreneur April 2014

accounted for 4 percent of the GDP in


2012, which compares unfavorably with
most other comparable countries [Figure
3]. The low contribution of healthcare to
FIG. 1: INDIAN HEALTHCARE
MARKET SIZE (IN $BN)

80%
70%
60%

CAGR 16%

50%
40%
30%

75

20%
10%
0

50
41

2008

2010

2012

GDP is a reflection of the significant challenges the industry faces inadequate


infrastructure [Figure 4], manpower
shortage [Figure 5] and poor performance on healthcare indicators.
It may take a while before we achieve
respectability on these metrics, but we
have seen strong winds of change in the
last 10 years. These changes have taken
the form of distinct trendssome more
conspicuous and some less sowhich
we believe will shape the market of the
future. These trends are powered by
entrepreneurship in the private sector
with strong support from government
programs as payers who plug the affordability gap in the market, particularly
in the financially weaker segments of
the economy. We have already started
seeing the benefits of this in the form of
improved health metrics.
Take the case of maternal mortality rate390 deaths per lakh births
in 2000 came down to 200 deaths
in 2010. Diseases such as polio have
been totally eradicated; infant mortality has come down from 64 per lakh

FIG. 2: SEGMENTAL BREAK-UP (2012)

Medical
Insurance 4%
Medical
Equipments 9%

Pharma 13%

Diagnostics
3%

Delivery 71%

www.entrepreneurindia.in

births in 2000 to 49 in 2010. Although


these statistics are far from perfect, the
trends are positive and augur well for
the future. More importantly, there are
pockets emerging within the industry where Indian providers are as
good as or better than global peers in
healthcare outcomes.

Private players play a


dominant role
Private hospitals account for 70 percent
of the beds added in the last 15 years,
increasing their contribution from 49
percent in 2000 to 64 percent in 2010.
The investment drive by the private
sector, led by chains like Apollo and
Fortis, has partially reduced the burden
on the government setting up of infrastructure and has also raised the bar on
the quality of care. The rapid growth of
private companies has given a significant
stimulus to the healthcare ecosystem
by attracting more foreign and Indian
private capital and resulting in recruitment, development and retention of
better quality talent.

Government from provider


to payer
One of the biggest problems afflicting
Indian healthcare is the lack of affordability, especially in lower income
groups. Indias health insurance penetration is one of the lowest in the developing world (25 percent, including social
insurance schemes) and is comparable to
the developed market levels of the 1960s.
Although private insurance penetration
is growing very fast, its reach is limited
to the urban middle-class and above.
The most needy sections of society
rural and urban poorare still largely
outside the network of private insurance.
In the last five years, the central and
state governments have both stepped in
to extend the benefits of insurance to
the urban and rural poor through social
insurance schemes such as Rashtriya
Swasthya Bima Yojna (RSBY), Rajiv
Aarogyasri (Andhra Pradesh government) and Yeshaswini (Karnataka
government). These schemes have had
tremendous positive impact and have
expanded the beneficiary network

role undertaken by the Indian government is complimentary to the provider


role private companies have adopted and
will ensure that access and affordability
are both addressed to improve quality of
healthcare in the country.

FIG, 3: HEALTHCARE
SPEND AS A % GDP

80%

15%

Burgeoning middle class paying


out of pocket for healthcare
10%
18
5%

9
5

4
0

India China Brazil

USA

FIG. 4: BED DENSITY IN INDIA (PER


'000 POPULATION)
WHO guideline 3.5
Globla average 2.6

0.8

0.7
0.34
0.36
2002
Public

0.49
0.41
2005

1.4
0.82
0.47
2010

Private

FIG. 5: DOCTORS/NURSES IN INDIA


(PER '000 POPULATION)

1.9
1.7
2000

2010

(RSBY covers 38mn families, Rajiv


Aarogyasri covers 25 million plus families) in a relatively short period of time.
The government, by articulating the goal of universal coverage in
the Twelfth Five Year Plan, has indicated its desire to play a pivotal role in
improving affordability. In countries
that have undergone successful healthcare transformations like Brazil, South
Korea and Thailand, governments have
historically played the role of a primary
payer over primary provider. There is
hence reason to believe that this new

Middle class in India (with household


income `0.9-10 lakh per annum) is a fast
growing part of the economy and constitutes 54 percent of the population today
up from 28 percent in 2002. This income
group has much better access to healthcare facilities and spends more on healthcare on a per capita basis. The rapid
expansion of this demographic segment
would translate into better national
health outcomes and better performance
on health indices. The share of out-ofpocket (paid directly by the patient)
expenses towards healthcare is one of the
highest in India. [Figure 6]. This makes
the end consumer, the patient, the most
powerful stakeholder in the healthcare
delivery ecosystem.

Huge urban-rural healthcare


inequity
The Indian healthcare industry is paradoxical in nature. While we have cities
such as Mumbai, Delhi and Chennai with
world-class healthcare facilities, we also
have towns and villages deprived of the
most rudimentary primary healthcare.
The difference in quality, access and
affordability of healthcare between rural
and urban India is stark. Urban India
conforms to the WHO guidelines on bed
density but rural India is disturbingly
behind. These statistics are even more
alarming in the light of fact that rural
India accounts for 70 percent of communicable diseases and 50-70 percent of
non-communicable diseases (NCD) in
India. We see this malady as a massive
opportunity for entrepreneurs interested
in creating affordable, rural-focused
healthcare platforms of scale.

Increasing prevalence of lifestyle diseases


Indias disease profile has changed very
rapidly in the last 15-20 years. With
Intelligent Entrepreneur April 2014 75

SPECIAL REPORT

FIG 6:

PRIVATE EXPENDITURE AS
% TOTAL HEALTHCARE

OUT-OF-POCKET EXPENDITURE
AS % TOTAL HEALTHCARE

69%

59%

35%

44%

54%

11%

31%

54%
0%

20%

40%

60%

increasing urbanization and higher


disposable incomes, the incidence of
lifestyle diseases has increased manifold. It is estimated that lifestyle diseases
account for 50 percent of the spending
on in-patient beds. Like we mentioned
before, India is already the diabetes capital of the world and has one of the largest bases of CKD patients in the world.
Moreover, the awareness about these
diseases is low and a large part of India
still remains undiagnosed (75 percent in
case of diabetes). Some of these trends
also create a unique healthcare market
opportunity in India that is very different
from many developed markets.

Changing face of healthcare


India has the largest number of patients
in the world who pay out-of-pocket for
their medical expenditure. This phenomenon has led to the emergence of the
healthcare consumer who expects to
be treated like a consumer and not just a
patient. The consumer today expects the
same improvements they see from other
services businesses like banks or movie
halls, in healthcare as well. No longer are
they happy with the public infrastructure available to them or the old norms of
endless waiting times and brusque treatment by hospitals or doctors.
While Indian healthcare consumers
expect quality, they continue to remain
76 Intelligent Entrepreneur April 2014

80%

0%

20%

40%

60%

80%

value-conscious. Consumers expect


infrastructure to be world-class, with neat
and preferably air-conditioned hospitals
equipped with the best available technology. They actively shop for healthcare providers that provide them the
best service along with great outcomes at
competitive prices. It is common practice
today to research hospitals and doctors
online or through friends and family to
assess the quality of treatment, service
and price offered.

Emergence of branded healthcare


and waning influence of doctors
Healthcare consumers are increasingly attracted towards branded private
hospitals. Branded healthcare providers, or corporate hospitals as they are
often referred to, have better facilities, more marketing muscle to reach
consumers and better ability to attract
high quality medical and non-medical staff. This allows them to service
customers well, incorporate their feedback and provide higher quality helping
them build trust with the consumer
over time.
With more and more people being
displaced from their original towns and
cities to find work opportunities elsewhere, they stop having the luxury of
their local family doctor and chose
instead to go to branded hospitals.

The high expectations from the healthcare consumers and the rise of branded
hospitals have also led to a gradual shift in
the consumers attitude towards doctors.
Doctors, as brands themselves, were
the driving force for several years and
many of them were looked upon as demigods. However, more recently, corporate
brands are beginning to play the role of
building credibility with the consumer.
As their undisputed influence wanes,
doctors increasingly have to behave like
service providers and consider not just
the treatment required for the patient but
also how happy they are as customers.
Doctors today have to spend more time
in the consulting room explaining the
diagnosis and the treatment to the patient.
It is fairly common for patients to ask the
doctor for his cell phone number as they
expect a much higher degree of personalized attention. We now see doctors
more willing to pay for featured listings
on Justdial, and more open to adopting
software like Practo, which enables their
patients to easily book appointments with
them online.
Another area that is rapidly getting
organized and consolidated with
branded players is diagnostics. The
consumerization trends are evident in
this market and the shift to branded players has happened at an accelerated pace
over the last 10 years.
Traditionally, patients did their
testing at the neighborhood local
diagnostic center recommended by
their doctor. Today, while credibility
and trust remain the core value propositions of a diagnostic center, it is critical
to provide good access and great experience to build a loyal base of customers.
This trend has led to customers choosing their own diagnostic center, often
picking a branded corporate chain over a
local mom-and-pop center.
In NCR, Dr. Lal Pathlabs has become
a household name. In Mumbai, Suburban
Diagnostics has been carefully crafting a
consumer-focused diagnostics services
business and has invested heavily in the
latest technology for testing to match
consumer expectation of quality, accuracy and turn-around time. In addition, their excellent customer service

www.entrepreneurindia.in

sample collection from homes, providing comprehensive services under one


roof, maintaining electronic records and
emailing or home-delivering reports
has been a key differentiator for their
rapid growth. We ensure that every
interaction with the customer is monitored, measured and improved to ensure
a high quality customer experience right
from when a customer calls to make
an appointment until they get their
report, says Dr. Sanjay Arora, Founder
at Suburban Diagnostics.

Move towards single specialties


The initial wave of private investments into healthcare came in tertiary
multi-specialty hospitals. Over the last
decade, India has seen the emergence
of single specialty chains across subspecialties. These new models thrive
on their ability to craft a custom solution for a particular need, backed by
specialized infrastructure and medical
experts, together providing much higher
focus and better quality care to a more
discerning consumer.
Such models of ambulatory care are
particularly suitable for specialties not
requiring inter-disciplinary care and
allow for capital efficient delivery models
to emerge, providing a strong alternate
for in-hospital settings at multi-specialty
hospitals. Investors, both domestic and
foreign, see this as an attractive opportunity and have backed several companies aspiring to create single-specialty
brands in healthcare delivery.
Ophthalmology was one of the early
specialties to move away from the hospitals and single doctor practices into
single specialty chains. As a cataract
or a laser eye correction surgery does
not require in-patient treatment, eye
care could easily move outside the hospital environment.
Vasan Eye Hospitals took the lead in
defining ambulatory healthcare in India
and is today the largest eye care chain
in the world. They have rapidly grown
to over 171 centers and today see over 5
million patients annually.
Another specialty that has shirked
the confines of the traditional hospital
is mother and childcare. For tertiary

The D Word

Indias large diabetes management space has been sweetly tapped by


Diabetacare

reshly-minted Diabetacare is a chain


of diabetes management clinics,
which has 4,000 patients registered
across its three centers in Bengaluru. But
this number represents a minor fraction of
the opportunity that its founder Dr. Sanjiv
Agarwal has spotted given that there are
over 65 million diabetics in India.
This number is expected to grow to
100 million by 2020. Patients with diabetes are hospitalized twice as often as
those who do not have this disease, and
they are likely to stay in the hospital 30
percent longer, says Agarwal, Founder
and CEO at DiabetaCare.
Launched in August 2013, the startup
healthcare provider claims to bridge the
gap in the current diabetes management
space in a manner that is efficient, effective, affordable and available to patients
round the clock.
The company works on a hub and
spoke model, based on a partnership
approach with existing diabetes physicians. It augments their services by
providing them with trained diabetes
specialist nurses, foot care specialists
and nutritionists.
By providing trained people working
in governed processes with state-of-theart centralized technology, we are able
to control or the capital cost and provide
cost-effective and affordable service to all
sections of society, the CEO says.
Three unique technology plays make
this happen. First, Diabetasenseits
proprietary in-a-box hardware tool
to screen eyes, heart, kidney and foot
diseases. Then there is DxNETit is a
proprietary comprehensive diabetes electronic medical record system used by its
trained onsite staff.
The final play is dCare Smart, a remote
monitoring system, by which one can
monitor patients remotely and control
blood glucose levels and delay or prevent
diabetes related complications.
Nine doctors, 25 diabetes specialist
nurses, five foot care specialist, 15 diabetes specialist nutritionists make up the

current workforce at Diabetacare. All


our recruited staff undergo UK certified
Post Graduate Certificate Programme in
Diabetes, Agarwal says.
The firm has also played on pricing to
scale and reach a larger target audience.
For example, overall remote monitoring service costs `250 per month, which
is a small cost compared to even one of
the complication of diabetes. To acquire
customers it has a three-pronged strategy: a physician partnership with those
who already have an existing relationship
with diabetics, the Diabetacare Expert
Education programits specific focused
diabetes patient education and awareness
initiative, and specific focused Screening
events helping not only the company to
identify patients with diabetes but also
pick up significant newly diagnosed
diabetes patients.
By April this year, Diabetacare will be
opening its fourth center in Bengaluru.
Going ahead, the CEO says, their first goal
is to reach to 100 DiabetaCare sites within
next few years.
Shonali Advani
Intelligent Entrepreneur April 2014 77

SPECIAL REPORT

Go [ing] local
Glocal has brought affordable and quality healthcare to small-town West
Bengal. But it does not want to stop there

local Healthcare Systems was


launched in July 2010 to bring
affordable healthcare to the
masses. It has five secondary care hospitals in different towns of West Bengal with
a total of 248 beds and has generated revenues of `6.05 crore in FY13.
The founder, Dr. Syed Sabahat Azim,
says, Seventy percent of Indians have no
access to quality healthcare even though
they spend significantly, he says. This
suggests that people residing in medically underserved India have the purchasing power but are plagued by the lack of
healthcare services.
To reduce the cost of healthcare delivery in rural and semi-urban India, Glocal
focused on two areashealthcare infrastructure, and healthcare technology.
Technology, Azim knew, would deliver
quality care at much lower costs without
the presence of doctors and Glocal has

invested significantly in it. Its in-house


technology division has developed a
Hospital Management Information System
(HMIS) that includes key tools to integrate various aspects of hospital operations ranging from patient registration to
appointment scheduling and discharge
procedures. Clinicians also utilize an internally developed Clinical Decision Support
System that helps with diagnosis, selection
of medication considering potential drug
interactions, etc.
This system, used in conjunction
with patients' Electronic Health Records
[through HMIS], improves quality of diagnosis, patient outcomes and reduces cost
of healthcare delivery, says Azim, CEO at
Glocal. Each Glocal facility is a complete
multi-specialty hospital designed to cater
to the primary and secondary health needs
of a family, says Azim. Glocal, he adds,
has adopted a bottom-up approach, with

hospitals and nursing homes, obstetrics


provides high volumes and bed utilization but this is not one of their highvalue specialties. Hence, the level of
importance provided to the doctors and
attention to patients are lower than for
high value specialties like cardiology.
Specialized mother and child facilities,
like Cloudnine in Bangalore, are emerging to provide the mix of individualized
attention and right infrastructure that
would create a cheerful and high quality
environment for new parents.
We are able to provide worldclass quality of healthcare with zero
mortality of mothers and 99.72 percent
survival rate of babies, which hitherto
was thought to be impossible in India,
in an environment that does not look or
smell like a hospital, says. Dr. Kishore
Kumar, Chairman and Managing
Director, Cloudnine. During pregnancy,
the center offers yoga classes, pre-natal
classes for breastfeeding and baby care.
Once they arrive at the center for the

delivery, the mothers have well-trained


nurses to provide the right medical care
and a customer care executive checking
in with them to ensure that they have a
delightful experience.
With the quality of medical infrastructure available, specialized mother and
child centers will be able to attract the
best doctors in the space who will be able
to give their patients a high quality experience. The doctors will also feel much
more valued in such a specialty-focused
setting than in a tertiary hospital where
gynecology and obstetrics are just some of
many specialties.

78 Intelligent Entrepreneur April 2014

The rural opportunity


While the trends discussed above indicate significant entrepreneurial activity
and private participation in healthcare
delivery, most of this has eluded rural
India. It is easy to see why. Urban consumers have higher disposable incomes
and it is easy for companies to operate
and manage delivery centers in urban

which they have been able to optimize the


hospital infrastructure design by eliminating dead spaces and streamlining patient
flow within the hospital. Not only has this
resulted in a highly optimized and cost
effective design, but also in smoother flow
of traffic requiring fewer waiting areas.

locations. This is bad news for a large part


of Middle India, which is geographically
spread across hundreds of towns across
the country. In fact, the current state of
rural and semi-urban healthcare leaves a
lot to be desired in terms of quality and
pure availability.
There are typically three challenges
associated with delivery of healthcare in
non-urban locations. First, the viability
of the business model involving provision of high quality healthcare infrastructure in rural areas. The cost of building
out delivery infrastructure (ex-real estate
cost) is not substantially different from
urban areas. Pricing in these areas is
usually lower in order to address a larger
part of the market. Lower pricing with
no significant difference in costs makes
traditional healthcare models in these
areas unattractive.
The second and very important issue is
the availability of talent in these locations.
Historically, it has been difficult to attract
good quality talent to work in rural areas

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All Glocal hospitals have achieved operational breakeven. It is now in the process
of expanding to five new states with plans
of building 50 hospitalseach equipped
with 100 beds, of which 20 are devoted to
critical care services. Each hospital will
be built from scratch, at a total cost of `8
crore, including, land, building, and hospital equipment, Azim mentions.
On the technology front, Glocal has
identified devices, equipment and services
that are absolutely essential to deliver
quality healthcare, thereby eliminating
expensive ones. The business model has
been tweaked for its next phase of growth,
with each of these 50 hospitals structured as a Limited Liability Partnership,
with Glocal owning 65 percent equity, and
community doctors owning the remaining
35 percent. This allows us to leverage the
network and in-depth market understanding possessed by our partners in the local
community and mitigates any adversarial
perceptions that a large corporate chain
may invite in the course of rapid growth,
addss Azim.
Shonali Advani

as many of these places lack good social


and lifestyle infrastructure like schools,
entertainment and shopping options.
The third challenge, usually less appreciated, is the difficulty of building trust
in rural markets both from customers
and the local healthcare ecosystem that
is usually dominated by quacks masquerading as healthcare experts without
formal training.
One company that is taking the
challenge of providing high quality healthcare to rural areas is Glocal
Healthcarea young organization being
built on a disruptive model of healthcare
delivery with very low capex per bed
and high use of innovative technologies
to solve the problems of running a large
network of rural hospitals.
Dr. Syed Sabahat Azim is not your
regular doctor entrepreneur. He was in
the Indian Administrative Service and
later ran a private enterprise focused on
rural areas before turning an entrepreneur to solve the challenge of improving

access to high quality healthcare across


the country. Do not assume that you can
win in rural markets by lowering quality of care and charging a lower price,
warns Azim. He knew rural aspirations
were no different from urban areas and
what people wanted was affordable
healthcare that is high quality and not
cheaper healthcare. He designed the
Glocal model to do just thatbring high
quality care that people aspire for at price
points that makes it accessible.
The key aspects of the Glocal model
are the extensive innovation in concept
and design to keep the capex per bed at
less than `10 lakhs, significant investments in skill building, dependence on
technology to reduce the requirement of
high quality medical staff at the point of
care, working with the existing ecosystem and educating and embracing them
to become a part of the solution.
A big bottleneck to improved access
to healthcare in India (not just in rural
India) is the increasing shortage of
trained manpower.
Most people assume that doctors are
the scarce resource but our experience of
watching a few of our portfolio companies in this space indicates that doctors
with specialties are easier to attract and
retain than nurses and general practitioners. There is a crying need today to
build the human supply chain to fuel the
growth of the healthcare industry.
Companies like Vasan could not have
built their 170+ eye clinics but for the
significant efforts they have put in to
create a talent pool of optometrists and
nurses through the Vasan Academy that
offers academic programs including
B.Sc, Diploma and DNB in Optometry.
While business model innovation and
developing a better human capital supply
chain will significantly improve access
to healthcare in rural areas, the biggest
enabler of improved access is likely to
be technology innovation in healthcare.
We see encouraging activity in this space
with several companies working on lower
cost equipment options across imaging
equipment, robotic surgery and ECG.
Allengers, Forus Health and Perfint are
examples of Indian companies who have
made considerable progress in making

healthcare equipment affordable.


We also see companies like Jiva
Ayurveda and DoctorSpring working on
solutions including tele-radiology, telepathology and remote consultation in
their endeavor to give rural India access
to urban healthcare infrastructure. In the
not so distant future, do not be surprised
if your ultrasound and endoscopy images
are being read remotely.
The benefits of decoupling experts
(read doctors and specialist medical
staff) from the point of care (hospitals)
cannot be overstated and this is likely to
be one of the biggest levers to improve
access to healthcare for Middle India.

Future of healthcare delivery


The consumer will undoubtedly shape
the future and evolution of the healthcare landscape in India. As the country gets more urbanized and population
gets more mobile, consumers will place
their trust in organized branded healthcare players instead of the local doctor.
Powered by their increasing ability to pay
for better quality care and support from
insurance companies, the consumer will
pick the highest quality care available
within their reachboth geographically and financially. Healthcare companies will have to think hard about how
to service this consumers increasing
demand for better quality, higher transparency and higher accountability.
Future consumers are going to come
in after having done more research,
which will reduce the information asymmetry that exists today, and they will
push for more equal conversations to
find the right solutions for their healthcare issues. Today, we even see consumers using apps on the Google Playstore
that allow self-diagnosis and check
drug interactions, before following the
doctors advice.
Consumers will increasingly become
more aware of how to manage their
health proactively and this will lead to
more preventive and voluntary checks
and active management of their health.
This opens interesting new opportunities
for entrepreneurs to empower people to
manage their health betterwhether
it is point of care or at-home testing or
Intelligent Entrepreneur April 2014 79

SPECIAL REPORT

www.entrepreneurindia.in

Early Care
Cloudnine offers a specialty setting for mothers-to-be
and newborns at the right price

engaluru-headquartered Cloudnine is a chain of maternity and childcare hospitals launched in 2007 by


Kishore Kumar. It has grown to a six-hospital venture
now across Bengaluru and Chennai, boasting of a 99.72
percent infant survival rate.
Kumar, a neonatologist by qualification, came back to India
after a 16-year tenure in UK, Australia, Asia and North America
and saw an opportunity to provide high quality medical care
for expecting mothers and newborns. He also understood the
need to develop specialized care centers for this segment.
Cloudnine services today cover maternity, high-risk maternity,
neonatology, newborn intensive care, pediatrics, gynecology

connected devices that allow people


to track their health closely. Already,
devices like the Jawbone UP and Fitbit
are becoming a part of peoples lifestyles
allowing them to actively monitor their
physical activity, sleep and manage their
eating habits.
The explosion of smartphones in the
country will bring significant opportunities in mobile health and interesting new
models of reaching the consumer.
As these devices gain prominence,
richer, better quality data will get mined,
leading to better solutions for healthcare issues and more personalized
healthcare. We think companies have
barely scratched the surface here as far
as the opportunity is concerned and a
80 Intelligent Entrepreneur April 2014

and fertility in a specialty focused setting, something tertiary


hospitals do not do because of their high bed utilization. Our
fundamental principal is that maternity is wellness, not illness.
Having a child is a very important moment in any couples life and
this moment needs to be celebrated, not spent in a typical hospital, surrounded by sick patients, says Kumar, Chairman and
Managing Director at Cloudnine.
It works on the concept of comprehensive packages that start
at at ` 55,000. When an expecting couple comes to Cloudnine,
they can expect all-round caremedical care, parent education
and best practices, support workshops, fun celebrations and
more. For quality and differentiated care, Cloudnine depends
hugely on technology. This starts right from fertility treatment, where we use advanced methods for improved results. We
use advanced tools such as 4D scans for pre-natal screening to
achieve the best health outcomes for the baby, Kumar shares.
The neonatal unit has advanced equipment and incubation technology and its newborn screening and congenital heart disease
screening initiatives are also key elements in achieving better
health outcomes.
Such deep level of care requires quality medical staff to build
credibility of the brand both as an employer and healthcare
provider. Cloudnine, Kumar shares, also has fellowship programs
for doctors and nurses, which have been widely accepted.
On customer acquisition, Kumar says that they benefit from
word-of-mouth referrals, and also spread awareness through
campaigns. And this has translated to impressive revenues in
excess of `125 crore.
It has recently got investor backing from Matrix Partners
and Sequoia Capital, which will now be used for expansion.
Cloudnine is looking at 10 new centers over the next two years,
with centers in Pune and Mumbai slated to be operational by the
end of this year.
Shonali Advani

tremendous amount of potential still


remains to be tapped.
An interesting example of personalized healthcare delivery was launched
recently is the managed care system for
diabetes from Diabetacare.
Using a connected glucometer, a
smartphone app and a central monitoring
team, Dr. Sanjiv Agarwal has designed
an elegant solution for managing diabetesa chronic disease that needs active
monitoring.
Increasingly, such solutions, which
involve the use of technology to actively
track and manage diseases, will become
a more cost-efficient way to deliver
healthcare and make it accessible to a
larger number of people taking away the

geographical constraints. From hospitals


being the predominant healthcare delivery model, consumers will slowly move
to home-based and self-managed healthcare models that have the potential to
disrupt how we think about healthcare
access and affordability.
We are certainly sanguine about the
opportunities the healthcare market has
in store for entrepreneurs.
More importantly, we are convinced
that the next decade belongs to the Indian
consumer who will tremendously benefit
from the innovations in the market.
Disclaimer: Sequoia Capital is an investor in
Cloudnine, Glocal, Vasan, Suburban Diagnostics,
JustDial and Practo

The Way of the Lion City


India has a target of skilling or upskilling 500 million people 2022. It can learn a lot from
Singapore about how to achieve it
ASHNA AMBRE

ne will be stating the obvious by saying that the modern


strain of entrepreneurship in
India is on a rapid rise. People
are willing to take risks even as the funding market has matured with more VCs
and angels than ever before.
For Singapore, a much more modern
economy, the situation was very different
for a very long time.
Until a few years ago, people were quite
scared to take risks of the entrepreneurial kind. Multinationals and banks have
been hiring talent and paying them handsome salaries. The economy was doing
well and it made people averse to risk.
Singapore owns no natural resources. It is
not a prime exporter of any product.Hence
its people are its only resources, says
Lily Chan, CEO at NUS Enterprise, a
division of the National University of
Singapore (NUS).
Chan tells us that the government has
taken cognizance of it and has ensured
that it creates forward and backward linkages for human resource development,
even as it plays an important role in raising interest levels in entrepreneurship.
Suresh Shankar, Founder of Crayon
Data, endorses this effort. His company
aims to simplify and make Big Data
meaningful and contextual. In his last
avatar, Shankar built and sold his enterprise analytics startup RedPill Analytics
to IBM in 2009.
He set up Crayon Data in 2010, and
recently raised `7.3 crore from Jungle
Ventures and Springs Seeds Capital, both
of which are Singapore-based investors.
There is a lot of support that the government provides in terms of regulations
and policies. There is a proper regime,
which is followed, due to which there
80 Intelligent Entrepreneur April 2014

AT WORK: NUS Enterprise Incubator (NEI) (top); NEI Desk area

is accountability and responsibility,


says Shankar. Crayon Data operates out
of the NUS Enterprise Incubator (NEI)

that is funded and set up as a part of NUS


Entrepreneurship Centre, a division of
NUS Enterprise.

to a report in The Hindu, The institute,


which is being set up on the directions
of the Prime Minister of India, will work
with Singapores ITEES.
ITEES stands for ITE Education
Services, a wholly-owned subsidiary of
Institute of Technical Education (ITE),
Singapore, which was set up in January
2003 with the objective of sharing ITEs
expertise in Technical and Vocational
Education and Training.
ITE is Singapores peak vocational
training institute which offers courses in
tourism, hospitality, healthcare, automobile manufacturing, construction, IT and
IT-enabled services, BPO, biotechnology,
nursing, business studies, beauty, retail
and merchandising.
According to the institute, it trains
around 28,000 full-time students and
19,000 adult learners. We are looking at
creating a skilled workforce for the economy. Most students are those who drop
out of their regular course of study. We
aim to provide the students with the best
infrastructure for their training, says
Suresh Natarajan, Deputy Principal of
Development at ITE.

Singapore Sports School

University calling
NUS Enterprises goal is to support
Singapores transformation into a knowledge-based
and
innovation-driven
economy, while at the same time infusing an entrepreneurial spirit into the
local community.
To this end, NUS Enterprise was
established as a University-level cluster to provide an enterprise dimension
to teaching and research involving the
universitys students, staff and alumni.
This it does through the three-pronged
approach of experiential education,
industry engagement and partnerships
and entrepreneurship support.
According to former students, the
university has provided a lot of support
to its current students and alumni in their
entrepreneurial efforts.
I graduated from NUS, started my
first company which was a mobile applications startup, ran it for two years and shut
it down. NUS had funded my company
then and despite having failed, it funded
my current company as well, says
Sourabh Sharma, Co-Founder at Milaap,
which is a social enterprise that provides

a platform for provision of need-based


loans. Singapore Management University
(SMU), a private university of the country, is also doing the same. The goals and
plans that the institution has are similar
to that of any government institution.
We are a relatively young institution.
We encourage entrepreneurship and
have an incubator as well. We connect
our students to the National Innovation
Council to ensure that the ideas get
adequate funding and mentorship, says
Srinivas K Reddy, Director at the Centre
for Marketing Excellence, Lee Kong Chain
School of Business, SMU.

Training Tales
India is reaching out to Singapore as well.
By some estimates, India has only six
percent vocationally trained people as
against 70 percent to 94 percent in countries like Japan, Korea, Germany and
New Zealand.
In 2012, the Delhi government signed
a Memorandum of Understanding with
the Singapore government for the setting
up of a world class skill centre. According

To 2015
Going forward, Singapore is going
to keep plugging away at making the
city-state a hub of high class innovation
and entrepreneurship.
Part of this effort is the Science,
Technology and Enterprise Plan 2015
(STEP 2015), where the government has
sanctioned funds worth SG$16.1 billion.
The objective of STEP 2015 is to invest
in the sciences for future innovation and
support for technology commercialization. The governments Agency for Science,
Technology and Research (A*Star), has
been and will continue to spearhead
this effort. The agency has supported over
30 active startups since 2006 and has
helped raise funds over SG$25 million
since 2011. The agency has declared that
it aims to create a pool of talent at preuniversity, undergraduate and postgraduate level by providing scholarships and
awards. Going forward, the agency said
that there will be increased emphasis on
making economic impact and fostering
commercialization of the R&D.
Intelligent Entrepreneur April 2014 81

TECH DEPARTMENT

www.entrepreneurindia.in

DOUBLE AGENT
The value-based laptop/tablet workhorse has arrived
JOHN PATRICK PULLEN

A HYBRID LAPTOP AND TABLET,


the 13.4-inch HP Spectre 13t x2
comes with a brilliant 1920 x 1080
pixel, LED-backlit touchscreen. As
a tablet, the large screen functions
well for meetings on the fly or even
impromptu Skype sessions, thanks
to its HD webcam and stereo microphones. Inside are a 128 GB solid-state
drive and 4 GB of memory running
Microsofts Windows 8.1 and a battery
with seven and a half hours of juice.
Re-attach the tablet to the full-size
backlit keyboard with trackpad, and
it transforms into a laptop with a
12-hour battery life. The penalty for
this jujitsu-like functionality is hefty:
At 4.39 pounds, the laptop is almost a
pound and a half heavier than popular ultrabooks. The tablet alone weighs
in at 2.18 pounds more than twice the
Apple iPad Air and almost a pound
heavier than the Google Nexus 10. But

neither of those devices can land on a


desktop and transform into a workstation which makes the Spectre a worthy
introduction to Windows 8.1s flexibilityat a killer price, to boot.
Entrepreneur Inc. All rights reserved
JOHN PATRICK PULLEN writes on travel and
technology
Intelligent Entrepreneur April 2014 83

WORK LITE

Not 2.0

Smells like entrepreneurship. Somewhat


SCRIPT BY ANKUSH CHIBBER ART BY CHAITANYA DINESH SURPUR

Holy
Moly Arvind! I never
knew that you had become
an entrepreneur. Thats
good news!

Thanks
yaar!

But What
made you suddenly turn
entrepreneur?

It was
something inspiring that
my last boss said.

Which is?

Pack up
your cubicle and dont
come back on Monday.

84 Intelligent Entrepreneur September 2013

OI...dont worry
if he said no, he
is probably just
baiting you into
negotiating more.

Sohave you
looked around
for funding your
business?

He did not say


no. He said.
pffffffttttt!

Yeah, I went
to an angel
investor. No luck.

haha! Damn...Well
maybe he thought you were
lacking on professional
experience?

Bullshit.

Remember.
An amateur
built Noahs Ark and
professionals built
the Titanic.

I am proud
of you bro!

The end
Intelligent Entrepreneur September 2013 85

MONEY

Q & A
What determines the
value of my company
when I go to sell?
JOE WORTH

ike with real estate, there is


no set formula for figuring out
the value of a private business.
Whats important is that you, the
business owner, use the same method
to value your company as a prospective
buyer will, even if you dont plan on selling for the next 10 years.
Why? Lets say youve been using
whats called a synergy market value to
plan your exit and/or retirement. In this
case, youre assuming your business will
bring about cost efficiencies to the buyer
86 Intelligent Entrepreneur April 2014

while returning a higher value. However,


interested buyers tend to base their offers
on the financial market value of the business, which is invariably lower. The result
is that you might not be able to sell as early
as you want to fund your desired lifestyle
after retirement.
To avoid this mistake, I suggest using
the common EBITDA method (earnings before interest, taxes, depreciation
and amortization) to get an approximation of your companys value. Its especially useful for identifying the factors

that influence value and tracking their


changes over time. Essentially, this
involves calculating your EBITDA, adjusting for items appropriate to prospective
buyers and multiplying by an industryspecific figure (more on this in a minute).
EBITDA can be calculated directly
from your profit-and-loss statement. Start
with your net profit after taxes, then add
back in interest expenses, income taxes,
depreciation expenses and amortization expenses to the total. Amortization
expense refers to the gradual write-off of

www.entrepreneurindia.in

the expenses of acquiring other companies. The adjustment part of the process
can be confusing and contentious, as it
covers a wide range of issues: personal
expenses that youve run through the business, tax-avoidance actions, discretionary compensation and expenses, family
members compensation and nonrecurring expenses. In other words, its the
gray area where the personal sometimes
overlaps with business. The important
point to remember is that many of these
actions are under your control and can
be cleaned up. Start by clearly separating
your business from personal expenses; for
example, stop using the company to pay
for your car or golf-club membership.
Back
to
those
multipliers.
Manufacturing and capital-intensive
industries usually have lower multiples,
while software companies generally
enjoy much higher ones. Where a given
business falls within the industry range
varies by factors such as the strength of
the product, age of the business (younger
ones may be less valuable but have more
room to grow than established companies, thus earning a higher multiple) and
the stability and predictability of revenue and profits. To find yours, I urge you
to seek out a business broker, CPA, M&A
attorney or a CFO in your industry.
The last factor to consider is whether
youre in a sellers or buyers market. In
the near future, a large number of Baby
Boomer business owners will cash out,
creating a strong buyers market. And
now that you know how your business is
going to be valued, take action to increase
its worth. Extricate yourself from timesucking micromanagement and focus on
growing and strengthening your business
through increased sales and diversification, efficiencies and the development of
a strong brand.
If that sounds like what anyone
running a successful business should be
doing already, youre right. And thats
why those people should have no trouble
finding buyers when its time to sell.
Entrepreneur Inc. All rights reserved

The Company Man


Whats the deal with corporate venture capital?

SAM HOGG

n case you hadnt noticed, funding by venture capital firms has


declined significantly in the last
few years. But investments by big
companies such as Google, GE, Intel,
SAP and IBM have picked up the slack.
In fact, the National Venture Capital
Association reports that 2013 was a
banner year for corporate venture capital, with companies participating in
nearly 20 percent of the deals and 10
percent of the dollars invested. What
does this mean for startups? Besides
cash, the upside of corporate capital is
immediate validation of your idea by
the marketplace as well as access to
talent, facilities and distribution from
the company. However, for most entrepreneurs I meet, the thought of partnering up with an enterprise-level company
is scary business. Theres a fear of not
aligning with the goals of a global
corporation, losing control, etc. If you
have an opportunity to consider investment from a company, heres what you
need to know.

Understand the mechanism


In my experience, corporate venture
groups fall on either the financial side
of the house (treasury, pension, foundation) or the strategic side (mergers
and acquisitions, research, business
development).
If the financial side is driving investments, typically the company acts like
a traditional VC firm working toward
earning a healthy return on its investmentand staying out of your business. However, these types of deals are
driven by the strategic side, meaning the

corporation wants to bolster its development pipeline with the latest and greatest innovations it can find.

Fight for free agency

If you are dealing with the strategic side,


take measures to protect yourself in the
negotiations. Do what you can to keep
the corporate suits off your board and
away from sensitive intellectual property. Even if access to the companys
distribution network is a big draw, be
very selective in locking up distribution
rights to specific markets or regions;
for example, perhaps the company will
hold exclusive rights to sell your product
to the government, but you can still sell
it to consumers.
Fortunately, in an effort to attract
quality deals, corporations have had
to play relatively nice with startups in
these matters.

Weigh risk vs reward


If you find your free-agency fight to
be fruitless, run the numbers to see
if the investment will be worth it. If
early corporate participation limits
your upside potential by 50 percent but
doubles the odds of you getting to that
liquidity event, that is a break-even
transaction for the founding team.
Also, think hard about how happy you
and your team would be if, over the next
five years or so, your company morphed
from autonomous startup to just
another corporate division. Are you the
type who would trade financial security
for that scenario? Perhaps not. But for
certain startups, corporate partners can
be wildly beneficial.

Intelligent Entrepreneur April 2014 87

SpiceBox will make sure you dont


miss your moms cooking away
from home PG 98

AMIT KUMAR

EAT
OUT
NOT!

STARTUPS: INSIGHTS

www.entrepreneurindia.in

CAPITAL HILL

NANDINI MANSINGHKA
Founder-Idyabooster; seed and angel stage investor

Like Playing a Game

Build your business in the same way as you would play your
favorite game
I AM A SELF-CONFESSED
gaming addict and can play strategy and card games on my phone
for hours together.
As I think through how I should
move to the next level in my
current favorite game, I find that
there is a lot in common between
how we move from one level to a
complex one in a game and how
we build our new ventures.
YOU CANT START AT LEVEL 24!
As any avid gamer will agree,
we all have to start from level
one when we first start playing
any game.
While building businesses,
I have, however, come across
several promoters who want to
start building a `100 crore business in the first few years itself. A
gaming strategy requires you to
learn the rules of the game in the
first few simple levels before more
complexity is thrown in.
In a new venture context too,
as a founder you will be required
to first put the building blocks in
place: the basic structure of what
business you want to do, building a business plan, arranging for
funding before you move ahead to
more complex pieces of scaling up.
YOU BECOME MORE ADEPT AS
YOU PLAY
Ask any gamer what makes them
advance from one level to the
other. The answer: Practice!
In building a business too, you

will have to continue to solve the


little and big operational problems on a daily basis so that you
become more adept at understanding key success factors for
your business.
SOMETIMES, MOVING TO A
NEW LEVEL REQUIRES A
TOTALLY NEW APPROACH
As in any game, if one strategy
were not working, you would need
to deploy an alternate method to
cross the level. The more complex
the game, more different should
be the approaches you have
to try.
In building a business too,
the founder needs to continuously rethink his or her strategy,
be ready to pivot or seek external
help as and when needed.
MOST GAMES REQUIRE IN-APP
PURCHASES AFTER THE FIRST
FEW LEVELS
When you are building your new
venture, you will reach this point
can be where you require an infusion of large amounts of funds to
continue or build out the business. Most of the time this would
mean investment in technology,
team and marketing. You need to
be aware that you will require to
invest more money at a later stage
to grow.
More importantly, take the
initial time to figure out if you are
enjoying building the business
before you take the full plunge.

GAMING CONSUMES YOU,


MAKE SURE YOU ENJOY
PLAYING!
As with any game, the process of
building a business will become
a part of you and demand many
hours of your time if you intend
to become a professional. Attempt
to put in your time and energy
into the business only if you enjoy
the process of building a business
over a long period of time. Else
you will continue to remain at
novice levels!
HOW DOES THIS WORK WHEN
YOU ARE FUND RAISING FOR
YOUR VENTURE?
K
 now that external investors
are looking to invest in founders
who have managed to demonstrate their ability to move up
complex levels, both in terms of
commitment and skill
E
 xternal funding should be
sought after you are convinced
that you understand how
exactly you are going to play
the game. Investors have
become increasingly wary of
promoters who are not able to
answer queries on deployment
of money and their strategy to
create value for them
Next time you grapple with level
24 on your game, do give some
thought to how these learnings
can be applied to building your
venture as several basic principles remain identical in these two
widely diverse fields!

In building
a business,
a founder
needs to
continuously
rethink his or
her strategy,
be ready to
pivot or seek
external help
as and when
needed.

Intelligent Entrepreneur April 2014 91

STARTUPS

WHATS YOUR

SCORE?

Real time online training and examinations find their place in


Indias education space
ASHNA AMBRE

ot only has technology


simplified our lives, but it
has levelled the playing field
too. For example, nothing is
undemocratic anymore if youre appearing for competitive examinations, as
long as you have an access to the world
wide web.
Rank Junction, a Nagpur-based
startup, founded by 39 year-old Sameer
Gautam, and Rashmi Gautam, 36 has
made online examinations available to
over 1.5 lakh students.
T here are about one and
a
ha l f
c rore
st udent s
who
take online competitive exams every
year. Online exams are a fairly new
concept in India. So we thought it
would be a good business opportunity
to explore, says Gautam, CEO and
Co-Founder, RankJunction.

A set structure
The site provides tests for competitive
examinations in the fields of medicine,
law, and engineering both, at the graduate and post-graduate level.
Registration is free. The current
model offers two options: Live Test and
Practice Test. The former is pre-scheduled and has to be taken in a defined
time frame. Some of the tests are free
while students need to subscribe to
others. Multiple users can take the same
test together and get a rank along with
a detailed performance report.
94 Intelligent Entrepreneur April 2014

Practice tests, on the other hand, can


be taken at anytime. Some are available free and others are on subscription.
Ranks are not allotted in these kind of
tests as students take the test at different times, but everyone gets a detailed
performance report at the end.
Subscription charges vary depending on the course duration and the
number of tests a student takes. This
would cost anywhere between `500 to
`6,500, says Gautam.
When a student subscribes to any
package, he or she has an access to both
kinds of tests.
The concept of live tests helps testing concepts, timings and also gives
out a detailed analysis of the performance which helps in analyzing errors,
says Arunabh Mishra, a RankJunction
subscriber who took the national mock
tests for Pre-Medical Test, which are
priced at `1,500 with a validity of
24 months.
The tests dont take time to load
on to the system and the questions are
quite similar to the ones given in the
actual examination, adds Mishra.

CRACKING THE CODE:

Sameer Gautam(left) and


Rashmi Gautam

JOSHUA NAVALKAR

www.entrepreneurindia.in

A function of fraternity

ERA OF COMPETITION

`5,000 CRORE
ESTIMATED SIZE OF INDIAN
COMPETITIVE MARKET

1.5 LAKH

TOTAL STUDENTS APPEARING


FOR EXAMS

$109.8
BILLION

ESTIMATED SIZE OF INDIAN


EDUCATION SECTOR IN FY 15
($71.2BN FY 12)
Source: Education Sector in India: Strategic Review
(Budget 2013-14).

The back-end system requires internet speed of 128 kbps or more. Authors
of test papers are from the medical,
engineering and legal fraternity with
most of them working as professors
at prominent Indian universities or
running coaching classes themselves.
The startup pays them a commission
based on the number of question papers
they set. Today, students from 1,200
cities across the country subscribe to
these tests.
The two-pronged business model
has a B2B vertical too, which targets
coaching centers that lack equipment or
resources to create an online testing and
ranking platform. In this case, coaching centers sign up for programs with
RankJunction and pay for a subscription package of their choice.
Since volumes and variety are large,
charges vary. All the students attending
classes then have access to these tests
for free.
Vikas Khanna, a Professor of chemistry for IIT-JEE preparation lauds this
decision as it gives the startup a large
user base.
They have roped in coaching classes
which automatically widens this entire
base. Students get to appear for tests
designed by a variety of professors,
hence there is exposure to different
styles of questions, says Khanna.
I think that the access and ease
with which we are able to work with
students is phenomenal, says Narayan
R Sharma, Director, Sharda Classes, a
coaching class institute in Nagpur.
We have signed up with the company
for various programs and not only do
we have more students joining our
classes but we are providing value to
each one, adds Sharma. A big plus point
that is likely to guarantee scale is the backend technology of the
platform that can work
with internet speed as
low as 10 to 12 kbps.
We did not invest much
in our technology. Our
in-house technolog y
team develops and makes

We did not invest


much in our technology.
Our in-house technology team develops and
makes constant amendments to the platform.
Sameer Gautam

CEO and Co-Founder, RankJunction

constant amendments to the platform,


says Gautam.
Last year, in March 2013, it
raised funding from Indian Angel
Network (IAN).
The company has been performing well, says Ravi Kiran, Co-Founder
and Managing Partner at Friends of
Ambition, a business growth platform
for Middle India.
It focuses on a niche segment of
competitive exams and not test preparations, which was appealing and got
us investing into the firm. The company
is addressing a gap and has made itself
available to the remotest regions of
India, says Kiran, who is also an investing member at IAN.

Making progress
The company is expecting revenues to
touch `1crore for FY14. The founders,
with their team of 26, have a target of
bringing 1000 coaching classes under
their umbrella by FY15. Alongside, they
are targeting to achieve a turnover of
`200 crore and a platform for 60 type
of examinations in the next five years.
Currently, subscriptions from
students and coaching institutes are
the only source of revenue but we are
looking at earning through advertisements and online coaching classes,
states Gautam.
The investment from IAN, he adds,
will be used to strengthen product
development going forward.
They plan to scale up business by
launching more paid tests, bringing
more coaching classes on the portal,
creating alternate distribution channels and adding new courses.
Intelligent Entrepreneur April 2014 95

STARTUPS

n the first week of January, the


Indian Angel Network (IAN)
announced its first investment
of 2014 along with Lip-Bu Tan,
Chairman of Walden International in
a Bengaluru-based products company,
xSi Semiconductors.
The Bengaluru-based company is a
maker of developed analog and mixed
signal power management Integrated
Circuit (IC) products and is currently
focusing on the LED lighting market.
Fort y four year-old Rajesh
Swaminathan, Founder and CEO, xSi
Semiconductors says that the company,
which was founded in 2012, is in a prerevenue phase and is hoping to start selling to customers by end of 2014.

LIGHT IT UP!
A Bengaluru-based startup innovates to provide cost
effective solutions to the LED lighting market
SHRUTI CHAKRABORTY
BMAXIMAGE

Brain building
To simplify the jargon behind his business, Swaminathan says, LED lights
have brains behind them as compared
to incandescent lights. What we build is
that brain, he says.
LED lighting, more energy efficient
than incandescent lights, is a rapidly
growing market. The focus of the
company is both on backlighting for
mobiles, laptops and other electronic
devices as well as general lighting for
households and indoor use.
Global business consulting firm, Frost
& Sullivans assessment of the Indian
lighting market finds that the overall
LED Lighting market in India earned
revenues of over $142.8 million (`877.5
crore) in 2012 and estimates it to reach to

We will focus on the


Indian market definitely, but primarily, we
will be looking at the
global market. Once the
Indian market is mature
enough, we will increase
our focus here.
Rajesh Swaminathan

Founder and CEO, xSi Semiconductors

92 Intelligent Entrepreneur April 2014

LET THERE BE AFFORDABLE LIGHT: Rajesh Swaminathan (below), Hrishikesh Bhagwat (left),

Krishnadas Bhagwat
about $1.2 billion (`7,374 crore) in 2018.
Since xSi hasnt started contributing
to that number yet, Swaminathan has not
experienced at xSi, the next major challenges that startups in the industry face.
The risks in building a semiconductor product company are daunting. The
foremost challenge that these companies, especially product companies,
face is that of raising capital, says PVG
Menon, President, Indian Electronic
and Semiconductor Association. That

was one challenge xSi Semiconductors


overcame early this year.
The gestation period of a product
company is long and this is even more
so in case of startups in our space,
says Swaminathan.
The second major challenge is of
customer acquisition and retention,
says Menon. A fabless semiconductor
product company must explore global
market opportunities from day one,
he adds. Fabless means manufacturing

www.entrepreneurindia.in

or fabrication of the device, which is


outsourced to a specialized manufacturer called a semiconductor foundry.
The fabless business strategy allows a
company to focus its time and resources
on the design of innovative integrated
circuits while avoiding the high cost of
building, operating, and upgrading a
manufacturing facility. This model is
also followed by xSi Semiconductors.
Swaminathan is planning things exactly

be used for different applications. The


programmable architecture allows us
to target different sub-markets within
the lighting market, he says adding
this includes the replacement market,
color lighting market and next generation smart lighting market. This was
done earlier using pure-play technologies, which would take a long time. Our
technology allows for a five fold improve-

LED LIGHTING IN INDIA


Expected increase in the use of
LED lighting

7%

2008
93%
Conventional lighting

LED lighting

75%

2020

25%

as Menon has suggested. We will focus


on the Indian market definitely, but
primarily, we will be looking at the
global market. Once the Indian market
is mature enough, we will increase our
focus here, he says.

The right architecture


The differentiator for xSi, according
to Swaminathan, is that it has developed a highly programmable architecture that will allow the technology to

Source: Electric Lamp and Component Manufacturers


Association of India (ELCOMA)

ment in terms of time to market. The


cost is also brought down significantly,
he highlights.
While there are other solutions
that allow equipment manufacturers to do what xSis technology
does, Swaminathan claims they are
more expensive and not versatile

enough. The startup will be targeting original equipment manufacturers


(OEMs) or other branded manufacturers as customers.

The right experience


Talking about innovation in the semiconductors industry in India, Menon
says, Today quite a bit of innovation
happens out of Indiathe tragedy is that
the bulk of it happens at the Global India
Development Centers [GIDC] of various
MNC chip companies. While this innovation primarily benefits the parent organizations or the MNCs filing of patents
happens in their home country. The
development centres which are based in
India play a great role in exposing our
young talent to global best practices and
global markets, as well as latest technologies and tools.
This, he feels, provides the
nucleus for Indian technology talent
to bootstrap an indigenous fabless
semiconductor product industry within
the country.
Prior to setting up xSi Semiconductors,
Swaminathan, who studied at the
University of South Florida, was working at global semiconductor companies like NXP Semiconductorsamong
others. Hrishikesh Bhagwat, 36, System
Architect and Krishnadas Bhagwat, 44,
Analog Architect, both Co-Founders
at xSi Semiconductors, have similar
work experience.
What sets us apart is that we have
domain expertise as a company since
we need people with understanding of
bothanalog and digital technology,
says Swaminathan.
He says the company has been lucky
with having mentors on board as they
have had a lot of assistance and people
have always been ready to help. Now on
the business side, Hemant Kanakia of
IAN and on the board of xSi helps with
a number of things, Swaminathan says.
On what works for xSi and what led
IAN to invest in the company, Kanakia
says, xSi founders have an in-depth
knowledge of the space and collective
experience of semiconductor expertise
in the fields of product, design, device,
process and operations.
Intelligent Entrepreneur April 2014 93

STARTUPS

STORAGE MALL
Have a lot of stuff and no place to store?
Worry not, here is a startup that specializes in storing household goods for you
AVANISH TIWARY

n 2010, Amit Wilson, Pooja Kothari


and Nitin Dhawan, all in their
thirties, co-founded Star Records
Management, a service to store
and keep official files and documents
of corporate companies, law firms
etc. In the initial days, customers who
stored their files with Star Records,
also requested if they could store their
personal belongings. In the name of
service, the company allowed them to
store their personal stuff for free.
When we realized that the freebie service were going off the chart,
we decided to monetize it, says Amit
Wilson, Co-Founder, Store More.
Noida-based company Store More
launched in 2011, offering services to
stock personal belongings, household
stuff, and plenty of memorabilia at its
storage facility.
People send us all sorts of stuff to
keep. Right from old cassettes, CDs,
books, to seasonal clothes and other
personal belongings. We have a 100
year-old piano with us since the client
could not take it overseas, says Pooja
Kothari, Co-Founder, Store More.
Even though they realized that they
could start a new business out of storing personal belongings, Kothari says,
till January 2013, they had not thought
of a way to grow it. We did not have
any special sales team in place, nor was
there any specific initiative taken.

A cluttered biz
For storing their belongings, clients are
charged according to the type of service
they choose. If the item to be stored
can be packed in boxes, the company
96 Intelligent Entrepreneur April 2014

charges `100 a month for five boxes and


`800 a month for 50 boxes. Things that
do not fit in our boxes are charged `99
a month, says Kothari. Depending on
the volume, size, the minimum storage
time is decided. It can be even stored
for a day if its huge in size.
Started with a seed capital of `30
lakh and a 3,500 square feet warehouse,
the company, from simply storing files
and documents, branched into a B2C
model storing everythingexcept files.

People send us all


sorts of stuff to keep.
Right from old cassettes,
CDs, books, to seasonal
clothes and other
personal belongings.
We have a 100 year old
piano kept with us since
the client could not take
it overseas.
Pooja Kothari

Co-Founder, Store More

They eventually shifted to two 10,000


square feet warehouses in Noida and
Manesar. Currently, the company does
not offer its services in any other city
except Delhi-National Capital Region.
However, it plans to move to Mumbai
in April 2014.
According to Wilson, Indians primarily utilize storage facilities in emergency situations like moving to a new

house or renovation and the like. The


concept of clutter-free living is still not
vert common in India. Clients come to
us only through triggers like a marriage
in the house, overseas transfers, or
renovation, says Wilson.
From storing household goods,
furniture, to personal stuff, Store
More manages inventory for corporate
companies and is targeting e-commerce
companies as well. Now we get inventory management demands from
companies who have seasonal business,
such as umbrella makers, says Kothari.
Elcon India, an automotive component maker has been using Store More
to store their inventory of automotive
parts for the past three years. Whenever
there is a need to get the components,
Store More delivers it to them for a
transportation charge.
We also keep our documents
related to the components with them.
Sometimes, they go out of their way
and deliver our stuff even late night,
says Sanjiv Thakur, Sales Director Asia
at Elcon India.
The company does not charge
anything for the first pick up and drop
of boxes, however, after that it bills
`99 per box for delivery. For non-box
items, a small van will charge `99 per
item provided a total of `500 can be
billed and in case of a bigger van, a bill
of `1,500 is mandatory. While picking
up clients goods from their house or
office, the Store More team wraps up
the items to protect it against dust or
pests. In some cases, it also scans photographs, albums or property papers to
keep them safe.

www.entrepreneurindia.in

AMIT KUMAR

THE DOCUMENT
MANAGEMENT MARKET
US ANNUAL GROWTH
2008-2013
REVENUE

1.9%

$5 Billion

Source: A September 2013 report by IBISWorlds


Document Management Services market research.

Storage doors

KEEPING IT SAFE: Pooja Kothari (left) and Nitin Dhawan

Amid corridors in their 10,000 feet


warehouse in Noida, Kothari walks
us through the racks closely kept on
either side of the walls. She proudly
shows us the security system. Every
aisle has CCTV cameras and at every
six feet, we have a fire prevention
device, says Kothari. Instead of
sprinkling water, the fire prevention
device emits yellow sulfur, which cuts
the oxygen supply.
Without giving any numbers, Wilson
says the file records business is bigger
than Store More. It is also because Store
More came much later and we started
growing it only from 2013, he says.
In India companies such as Nestle,
Punjab and Sind Bank, Tata Motors,
among others keep their financial and
official documents in Store Mores warehouse and the company has a total of 150
clients across its businesses.
Vinit Chordia, Co-Founder, Records
Guru, a Chennai-based company that
stores digital and physical documents
says, as they [Store More] are not
specialists in storing files and maintaining documents, it is important that they
use third party storage facilities.
He says the main challenge is to set
upan efficient system and process for
storage and retrieval of files. The rest
is a piece of cake.
In 2012, Gaurav Burman from the
Burman family who owns fast moving
consumer goods major Dabur, invested
an undisclosed amount of money in the
company and became a co-promoter.
Kothari says, He is brimming with ideas
all the time, which he keeps throwing
at us. We are working on art and wine
storage currently, which was his idea.
Intelligent Entrepreneur April 2014 97

STARTUPS

Ghar Ka Khaana
With this e-tiffin service, Mumbai is now closer to home for
its urban migrants
ASHNA AMBRE

alking about business, revenue models and interaction


with promoters spurred 27
year-old Gurmeet Kochhar, a
former investment banker, to start out
on his own in the food service sector.
A postgraduate in Economics, he had
spent six years with financial companies like Edelweiss Capital and Standard
Chartered Bank.
Today, Kochhar is doing something
that is not even remotely close to his
earlier profession. He runs an e-tiffin
box service, SpiceBox, which he started
in 2011 in Mumbai.
The idea for a business in the food
service sector came from observing
the need among his colleagues at his
former workplace. I found that there
was a demand for home-cooked food.
I wanted to create something that
was need-based, convenient, give it a
value-add and make it functional on an
online platform.
The need for home-cooked food,
says Kocchar is increasing with many

CHOW DOWN
IN 2013, THE INDIAN UNORGANIZED
FOOD SERVICES MARKET HELD
70 PERCENT SHARE WHILE THE
REMAINING 30 PERCENT WAS HELD
BY THE ORGANISED PLAYERS
WITH THE EXPECTED GROWTH IN
THE ORGANIZED SECTOR, THE UNORGANIZED MARKET IS EXPECTED TO
GO DOWN TO 61 PERCENT BY 2018
Source: India Food Services Report 2013

98 Intelligent Entrepreneur April 2014

young professionals working in cities


away from their families. They have
the option of either eating out at
restaurants or getting food delivered to
their homes.
The idea was to plug this gap by
providing home-cooked food that can
be ordered online, says Kochhar, who
started with a seed capital of `10 lakh
from his savings.
Tiffin service is a big business option
in urban areas where the market is huge
and the potential for growth is large,
says Savan Godiawala, Senior Advisor
with Deloitte India.

Paradox of choice
Kochhar has made ordering food home
easier with his website www.spicebox.
in where a customer can opt for a vegetarian or non-vegetarian meal, book it
for a stipulated time and then make the
payment. The meal delivery begins from
a Monday of any week after the payment
is made.
We give our customers a choice of

choosing only between a vegetarian or


non-vegetarian meal. I feel that when
more options are given like a preferred
meal plan, etc, it becomes quite difficult for customers to make a choice,
says Kochhar.
Mumbai is not my hometown. I
shifted here for work and ordering from
a food dabba service is quite common
here, says Tanmay Mehta, a customer.
The whole process of calling up tiffin
services and enquiring about the menu,
charges and delivery is cumbersome.
This is where Spice Box has created an
edge for itself.
Mehta, happy with the food, says the
menu is simple and yet not monotonous
as the menu is not repeated for a month.
In mid-2013, the startup introduced
another meal plan wherein customers
can get both vegetarian and non-vegetarian food on alternate days.
There are mini-meals too offered for

JOSHUA NAVALKAR

www.entrepreneurindia.in

DABBA TIME: Gurmeet Kochchar

each of these categories, which is a meal


without rice. Meal plans cost between
`70 and `80 per meal while mini meals
costs between `65 and `75. The tiffin
service is exclusive of the delivery
charges, which is an additional `400
per month.
We dont expect customers to place
orders without trying the food. We
also provide trial meals for two or four
weeks, mentions Kochhar. Spice Box
has almost 1000 customers and 60
percent of them subscribe to the alternate meal plan.

Variety is the key


SpiceBox is now exploring new products, services and sampling beyond
what it has offered till date.
It currently has a cross-promotional
exercise called Friday Surprise. In
this value-added service, a customer
is surprised with a cuisine outside the

regular meal menu every Friday at no


extra cost. For the Friday Surprise menu,
either specialized chefs are brought on
board for a day or meals are sourced
from local restaurants. This also helps
newly launched restaurants to advertise
and create visibility for their food.
The company has tried sampling
programs featuring branded products
from local caterers and restaurants in
its meal boxes. So if a new bakery has
opened up, it can send samples of its
cupcakes by partnering with SpiceBox,
where a consumer will be provided with
the cupcake as part of the meal at no
extra cost, with details of the bakery.
The company is also associated
with the initiative Share My Dabba. If
a customer plans to skip their lunch for
a day, they can share it with underprivileged children on the streets.
All they have to do is send a message
on the given number on the midnight of

the previous day and the food is given to


the volunteer of the initiative.

Mobile connect
Godiawala says that with rising disposable incomes, there will be greater
demand for services such as SpiceBox.
People in India today are accepting the
online transaction culture. There is no
reason for an online platform for tiffin
service not to see traction, he sayss.
Kochhar is currently working on
SpiceBox Easy Ordering mobile application, which is slated to be operational
by September this year.
The application will help subscribers order, make payments and make
changes to their meal plan through
their smartphones. Alongside, SpiceBox
will soon open dinner and breakfast
subscription services and also venture
to new cities such as Delhi, Bengaluru
and Chennai in phases by 2015.
Intelligent Entrepreneur April 2014 99

STARTUPS: INSIGHTS

www.entrepreneurindia.in

THE FIREWALK
HARSHADA SAWANT

Associate Editor-CNBC Awaaz; Host and Producer-Awaaz Entrepreneur

The Art of Alignment

You will find many similarities when you draw


parallels between yoga and entrepreneurship
I KEEP READING VARIOUS
updates on meditation. In fact,
I remember having a discussion
with an acquaintance on the kriya
he does on a daily basis.
Had I been a part of this conversation a couple of years back, I
perhaps would have been an idle
listener, not relating to it, or even
thinking of giving it a try.
But a five minute conversation on the subject made sense
after I took up yoga about 18
months back.
I have been regular at it and as
a matter of fact, I look forward to
all my sessions.
AN INNER CONNECT
All this stretching, challenging
yourself, and doing something
totally unthought-of, unknowingly connects you to yourself in a manner you had never
imagined before.
While trying the sirshasana
(headstand) in one my classes, it
came to me that isnt the art of yoga,
very similar to entrepreneurship?
To begin with, just as Om is
the universal sound for all those
who are into yoga and learning about their spiritual side, an
idea is the universal sound for
those who want to startup. Once
you get immersed in the universe
with your idea, only then do the
creative juices flow to help you
execute it.
LIVING IN THE PRESENT
Yoga, they say, takes you into the

present momentthe only place


where life truly exists.
As profound as it may sound, it
is true that yoga helps you concentrate on where you are now. And
once you are totally in connect
with your present, you will
know exactly how and where to
head from there.
Very similar to what management gurus suggest young entrepreneurs to do. Focus first on how
your business is shaping up today
to be able to define a path for it in
the future.
An entrepreneurs biggest
asset is the ability to continuously
keep trying.
And I say this from personal
experience that yoga teaches you
the same. Persistence does pay.
The more you practice, the more
you push yourself to achieve
that daily goal, it leads you
towards success.
IT IS CONTINUOUS LEARNING
Another important trait that
is essential to practising yoga
and running a business is continuous learning.
So many businesses are
running today because promoters of the companies are always
eager to learn more. Be it in terms
of technology that will help their
business grow, or newer ways of
working that makes them understand their work force better.
As long as you are open to being
a student all your life, youll grow
in every aspect.

Another common aspect is the


fact that you have to push yourself out of your comfort zone
each time.
For me, yoga was a challenge at
first. I have always preferred playing a sport.
You can make me play a game
or run behind a ball but to get me
into a room to follow someones
instructions asking me to breathe
in and outI wasnt sure if Id be
able to handle it.
However, 18 months down the
line, Ive overcome the challenge.
I try and push out of my comfort
zone in each class. I am willing
to try something new, even if it is
at a slower pace. I am patient and
ready to strive through it.
Many of us prefer to play it
safe when it comes to work and
very few follow the treacherous
path. Those who do, get far
quickly. That is another trait of
successful entrepreneurs.
And its not only while starting upthat is just the tip of the
iceberg. They do it on a daily
basiswhile planning to scale,
bagging the next big client, hiring
an outsider, etc.
ALIGNING BODY AND SOUL
The biggest learning I got from
yoga is that it is an art of aligning
your body and soul.
The same way as entrepreneurship is an alignment of your big
idea, your freedom to pursue it, and
the fulfillment that you achieve in
the process.

An entrepreneurs
biggest asset
is the ability
to continuously keep
trying. And I
say this from
personal
experience
that yoga
teaches you
the same.

Intelligent Entrepreneur April 2014 101

HOW TO

Sell on

Does your online retail company really need a website?


ANN HANDLEY

CHAITANYA DINESH SURPUR

t used to be that if you wanted to take your


business online, you bought a domain name,
hired a developer and thenafter much
testing and many iterations launched
a website.
T hat no longer needs to be the case.
Increasingly, entrepreneurs are turning to social
media platformsin particular, Facebook as
an easy, quick and inexpensive way to launch
an online presence.
Since theres no geek gene required, a business can create a functional Facebook page with
little or no web-development cost.
So do you really need a stand-alone website?
Or will a page on Facebookwith its 1.19 billion
monthly active users, ease of social selling and
targeted marketing tools that allow you to build
momentum and communitysuffice?
Ordinarily, I would argue against building
your business on rented land (that is, a platform that you dont own and control).

102 Intelligent Entrepreneur April 2014

But I am starting to rethink that position. Nine months ago, Corey OLoughlin (a
colleague of mine at MarketingProfs) and
Nina Vitalino launched their Facebook store
Prep Obsessed.
They are on track to record sales of $500,000
this year, with a healthy profit margin. Their
startup represents a new business model that
was all but unthinkable a few years ago: an
online company without its own website.
It is indeed possible to run a business solely
on Facebook. But there are ways to do it right.
Tap into existing communities of poten-

tial buyers

Prep Obsesseds founders connected w ith


Facebook communities of preppy women before
launching their business.
It seemed more natural to develop a
communit y where our customers already
were, ver sus forc i ng t hem out of a n

www.entrepreneurindia.in

env ironment t hey were com for table in,


OLoughlin says.
Target by niche, not by numbers
With the enormous amount of demographic
and behavioral information it has on its users,
Facebook makes it relatively easy to target
customers according to very specific interests.
The key to success is being clear on who your
potential customers are.
This is where a lot of companies fall apart
on Facebook, because they focus on growing the
number of likes vs. building an audience thats
more likely to purchase, OLoughlin explains.
Prep Obsessed targets a relatively narrow user
profile: US women between the ages of 20 and 50
who have expressed interest in specific brands
(Tory Burch, Lilly Pulitzer) and categories (including fashion and home
and garden). The company also
goes after those users friends.

An authoritative online tone is also important.


A company needs to present itself as a knowledgeable curator and resource for the items in
which it specializes. We never ask what our
customers want us to offer them, OLoughlin
says. Instead, they are confident that we know
what they want because theyre confident we
love the same things.

Pick the right vendor partner


For its social commerce function, Prep Obsessed
uses a vendor called Soldsie, which enables
comment-sellingthat is, allowing users to
make a purchase by commenting sold under
the image of a product. The benefit of such
a system is that consumers arent forced to
leave Facebook to complete a transaction.
(The tool also supports commerce
on Instagram.)
Prep Obsessed plans to
launch a website this spring,
but Facebook w il l remain
Remember that it still
its key platform for selling.
costs money
OLoughlin says she doesnt
FAST FACT
Facebook isnt a free network
fret about the risk of building
Over 70% of US retailit s only a free platform. That
a business on a platform she
ers say social media
means you will need a marketdoesnt control. To me it seems
is the tech trend with
ing budget.
like Facebook is only looking to
the maximum impact
Prep Obsessed spends $40
expand e-commerce; I have no
on their business
per day on Facebook ads, nearly
reason to believe they will be
Source: 2013 Retail Industry
$15,000 annually. T hat may
pulling the rug out from under
Outlook Survey, KPMG
seem like a lot, OLoughlin
us anytime soon.
admits, but it has paid off: In
So why have a website at all?
nine months, the strategy has
Owning an online presence is
netted the f ledgling company 33,000 fans.
always wise; successful companies will eventuAnd its a highly engaged audience. (Facebook
ally need to create communities in more than
measures engagement with its People Talking
one place online. OLoughlin, for one, believes
About This metric. Prep Obsesseds is a relaher company s communit y will support the
tively high 10 percent.)
new presence.
Our fans have loyalty to usnot Facebook,
Content is key
she says. People feel really connected to
Prep Obsesseds growth rate of 600 to 700 fans a
us,because we are real people on Facebook. We
day isnt due solely to advertising. Two-thirds of
are two friends running a business. Theres somefans come organically via awareness generated
thing about Facebook that feels more personal,
by content posted on the company pagemostly
less like a business. Thats helped us.
quotes and images that OLoughlin describes as
rallying cries that unite the audience.
Entrepreneur Inc. All rights reserved
One recent posting, She who leaves a trail
of glitter is never forgotten, netted more than
ANN HANDLEY is co-author of Content Rules and Chief Content
Officer of MarketingProfs
50 shares.
Intelligent Entrepreneur April 2014 103

HOW TO

Divide Equity
among Founders
Dump those emotionsthere is a systematic way of distributing equity

CHAITANYA DINESH SURPUR

ASHNA AMBRE

ne of the most important decisions that


all startup founders have to take early
on is to determine how to allocate equity
among themselves. There are many
different ways to approach equity compensation
and it is important to note that one-size does not
fit all. What we have seen in most cases is that
co-founders end up splitting equity equally among
themselves. This works at the beginning when value

104 Intelligent Entrepreneur April 2014

generation is almost zero. In the long run, this is


the worst option to choose and can result in failure
due to an obvious inequity problem. Let us explain.
Formal talk
In many startup cases, co-founders are usually
best friends, room-mates, classmates or relatives,
who start the entire ideation and execution process
in a very informal way. Hence, the discussion on

www.entrepreneurindia.in

profit sharing and division of equity tends to get


of the equity will have growth issues as the founder
formalized at a later stage. This must be avoided.
will be worried about having control after investors
Compensation discussion must happen upfront
come in at some point. He would fear that without
with the co-founder(s) before the work begins
holding a super majority of the equity, he will be
and should be put in writing. The founders should
reduced to a minority shareholder after investors
be very clear about the equity ownership sharing
come on board.
ratios and percentages from the very beginning.
There is also a problem of lack of commitment
One of the biggest mistakes that founders make is
that arises from this mismatched allocation. Here,
to casually discuss equity ownership and defer the
the micro-founders, who hold very small amounts of
formal agreement until the business
equity, realize after a couple of rounds
is started. A formal agreement avoids
of dilution that their holdings are of
disputes and confusion at a later
no particular value. This leads to
stage. There have been countless
lack of commitment due to lack
occasions when a business has
of incentives.
failed only because of disputes
As we mentioned earlier, splitFAST FACT
between founding members over
ting equity equally, also known
equity and profits sharing.
as commune allocation, is probEvan Williams, who
ably the worst way to structure a
provided the bulk of
Do the math
company in the long run. Because
the capital to Twitter
Founders receive equity for what
in time, certain founders will
in its early days,
they bring to the table. Typically,
and very rarely is this wrong,
received a 70 percent
most founders contribute by either
contribute more to the success of
share, with Jack
bringing in the seed capital, the
the startup.
Dorsey, who many say
idea or the skills to execute the
These founders will soon realcame up with the origidea, and in recent times, technolize either that theyre not being
inal idea, getting 20
ogy or the skills for a particular
adequately compensated for
percent and Biz Stone
technology. Some bring experitheir contributions and their risk
just three percent.
ence, their network or domain
or that others are being overSource: Hatching Twitter: A True
knowledge. In a few cases, some
compensated for theirs. So they
Story of Money, Power, Friendship
and Betrayal by Nick Bilton
would bring patents. However,
move on or dont contribute all of
at least in the Indian scenario,
their efforts, leaving the startup
there is very little in the way of a
to limp or fall.
fixed institutional mechanism to
translate these attributes into equity ownership.
Vesting, employee share
L Frank Demmler, an Associate Teaching
The last thing founders and investors would want
Professor of Entrepreneurship at the Donald H.
is for someone to hold a lot of equity and no longer
Jones Center for Entrepreneurship at Carnegie
to be contributing to the success of the company. No
Mellon University Tepper School of Business has
matter how the equity is divided, the shares should
devised an interesting method to divide equity
be subject to vesting restrictions i.e. until the shares
the Founders Pie Calculator. Demmlers calculaare vested, the founder does not fully own them.
tor divides the decision-making process into five
This is important because it prevents a co-founder
separate elementsidea, business plan prepafrom leaving early, remaining the owner of a huge
ration, domain expertise, commitment and risk,
part of the company awhile.
and responsibilities. The calculator then asks the
On another note, co-founders should not and
founders to come up with a weight for each of
cannot leave the early-stage employee out in the
these five elements and then assign a value to each
cold. Remember, he had probably risked a lot too
founder on a scale of zero to ten. This weight is then
to work with your small startup. So it is a good idea
multiplied with the founders score to come up with
to leave a part of equity for them.
the weighted score from which the distribution of
Founders must leave between 10 to 20 percent
equity can easily be determined.
in the pie for employees. If funds are raised at some
time and employee equity provisions are already in
Avoid lopsided and commune allocation
place, the co-founders would not have to further
A business where one founder owns 90 to 95 percent
dilute their own shares to make room for them.
Intelligent Entrepreneur April 2014 105

HOW TO

Ace Pitch Competitions


If you get it right, then you can get your company off the ground
MICHELLE GOODMAN

CHAITANYA DINESH SURPUR

or Ash Kumra, winning a pitch competi Hook them early


tion yielded much more than the $30,000
You really need to be able to convey what you do
in cash and professional services he
in the first 30 to 60 seconds, says Sanjay Parekh,
received. Contests offer instant valifounder of Startup Riot, a competition in Atlanta
dation, Kumra says. That tells an investhat gives contestants three minutes to pitch and
tor or a sponsor that this business isnt going
in 2013 awarded $10,000 in cash and 13 hours of
to disappear.
investor meetings.
In 2010 Kumra won in the Irvine
Get your founding story out of the way
Entrepreneur Forum, a pitch
quickly. Then share impressive
contest held by the Chamber of
sales figures, household-name
Commerce in Irvine, California.
customers and industry leaders
The win helped him launch
you have secured as angels or
DesiYou, a digital video distribadvisors, Kumra suggests.
FAST FACT
utor of Indian entertainment.
Also, he adds, mention how
Where to look for a
Since then, he has been recogyour business will use the
challenge
nized by the White House
winningswhether its to rent an
iStart.org
as a young entrepreneur
office, increase inventory or hire
to watch.
an engineer.
BizPlan
He co-founded DreamItAlive.
Competitions.com
com, an online personal growth
Keep it simple
Business schools
community with more than
Focus your pitch on two things:
and incubators
50,000 members and sponidentifying the problem your
Chambers of
sors such as Microsoft and HR
company solves, and how you
commerce
provider, TriNet.
solve it, says Los Angeles trep
Economic developPitch slams arent just about
Vanessa Ting, who won $1,000 in
ment organizations
cash and credibility, says Kumra,
a competition sponsored by Sams
Entrepreneurship
who now chairs the Southern
Club last year. Make sure to quanorganizations
California non-profit Tech
tify your market for judges who
The websites of
Coast Venture Network, which
may not be familiar with your
corporations that
runs an annual $25,000 pitch
industry, she addsfor example,
champion small
contest. Win or lose, entering a
by saying, 160 million people in
businesses
contest is a clever way to meet
the US use smartphones. Ditch
investors and industry bigwigs
the flashy props and snoozy slides,
with whom you couldnt rub
Kumra says, but by all means,
elbows otherwise.
demo your product.
To ensure that your pitch soars, youll need
to research the judges ahead of time, prac Inspire confidence
tice incessantly and incorporate feedback
Explain why you and your product are qualified to
from colleagues.
fulfill this market need. Is it proprietary technolBut there are some other tips, too. Treps
ogy? Your unique background? asks Ting, founder
whove won or run pitch competitions offer a few
of Buyerly, a website that connects product manusuggestions.
facturers with retail buyers.
Try them out to make your pitch effective.
Her secret sauce? Her MBA and her experience

106 Intelligent Entrepreneur April 2014

www.entrepreneurindia.in

as a buyer for Target. To hammer home the point, she offers


judges an anecdote about a client who was having trouble
breaking into Wal-Mart and Target but succeeded after using
her services.
None of this is license to lie. Judges have finely tuned BS
meters, Kumra notes. If you dont know the answer, say so and
offer to follow-up later.

the impression that they arent going to listen to my advice


anyway, Parekh says. Kunal Sarda, who last year was offered
a $250,000 investment offer on TVs Shark Tank, agrees.
Its all about the team, says the New Yorkbased Co-Founder
of Verbalize-It, an on-demand translation platform for travelers and businesses. If the judges flat out dont like you and your
partners, your pitch is sunk.

Turn up the charm


While judges love to see confidence, they bristle at arrogance.
Contestants who become combative when challenged by the
judging panel arent doing themselves any favors and give

Entrepreneur Inc. All rights reserved


MICHELLE GOODMAN is a freelance journalist and author of
The Anti 9-to-5 Guide
Intelligent Entrepreneur April 2014 107

HOW TO

www.entrepreneurindia.in

Make Your Website


Really Work for You
There is no need to update your site daily

MIKAL E BELICOVE

ow best can you boost your search engine


ranking? Its true that a steady stream of
new posts and content can attract links
from other websites and boost your search
engine optimization but lets be honest: For many
businesses, maybe even the majority of them, daily
updates just dont make senseespecially if fewer
than 50 people a month are visiting the site. We
asked Vanessa Fox, author of Marketing in the Age
of Google, to tell us more.
List your business on free search engines
Lack of updates wont necessarily hurt your companys online exposure. But what you must do is list
your business on the free search engine maps products and fill out your profile completely, so when
customers do search for you online, they can find
you. Go to Bing Places for Business, Google Places
for Business and Yahoo Local online, then follow
the directions. While youre at it, check your business listing on review sites such as Yelp and address
any complaints immediately, because these profile
pages often rank well in search engines for business names.

CHAITANYA DINESH SURPUR

Information that is a must


At a minimum, make sure your address,
phone number and hours are prominently displayed. Otherwise, you can
update the site when youre having a
sale or get new merchandise, but you
dont have to.
Tactics that benefit
Make a list of questions your customers might have or problems they may
be trying to solveissues that your
business can address. From that list,
you can create an editorial calendar.
You dont need to update your site
everyday but posts based on a questions-driven calendar (monthly is
fine; weekly is better) give you greater

FAST FACT
Yahoo! Finance
(75 million visitors
per month), MSN
MoneyCentral (70
million visitors), CNN
Money (60 million
visitors), are ranked
as the top five popular
business websites in
the world
Source: eBiz MBA Ranking Guide.

opportunities for visibility. For


instance, if you own a hardware
store and you blog about housepainting tips, then those potential customers using Google to
find out about DIY painting may
see your page and visit it. But
dont create content just for the
sake of having new content. Its
useful content that absolutely
leads to more customers. You
can ask your customers to help
you figure out the difference.
Entrepreneur Inc. All rights
reserved
MIKAL E BELICOVE is co-author of
Content Rules
Intelligent Entrepreneur April 2014 109

BEYOND THE BOARDROOM

Have a Game Plan


Apart from a fierce passion for her business, it is the love for sports and fitness that keeps
Sulajja Firodia-Motwani going
SULEKHA NAIR

typical weekday morning


in Pune for Sulajja FirodiaMotwani involves all if not
some of these things: coordinating work at office over the phone,
instructing her household staff, sipping
green tea and still tending to her own
tasks as the Joint Managing Director
of Kinetic Motors.
Today, she is also answering our
questions, while making it apparent
that she cannot wait to finish it all,
run out to her car and reach her office
at 9:30 am like every other employee
at Kinetic.
Avowed fitness lover, Motwanis
tells us that her me-time really starts
when she hits the gym and or does
yoga. I like working out as it the best
stress buster. My one hour at the gym
or yoga is probably the best hour of my
day, she says.
To those who dont know her personally, here is an insightMotwani is a
fitness geek who has tried out all kinds
of exercises to extend her physical and
mental horizons.
An unabashed love for fitness caught
her early as a school girl. Back then,
vigorous games like basketball, volleyball and dot ball were the main outlets
for her can-never-keep-still energy
levels. She tells us that she also tried
her hand at gymnastics but that sojourn
ended when she ended up breaking an
arm not once, but twice.
Individual sports like badminton
were next, where she was exceptionally good, winning at the sub junior,
state-level and even at the national
level. And yet, Motwani feels that it
110 Intelligent Entrepreneur April 2014

wasnt enough. I was good at it, she


admits, but not excellent, as I started
late at the age of 12 instead of nine.
However, she is proud of her national
level experience for it made her many
friends pursuing the sport.

too, which incidentally, she does once


a week. And it has stood her well in
marathons. I have run half marathons
and it is an unbelievably joyous feeling
to have done it repeatedly.

Up and about abroad

On the topic of fitness, Motwani says


that fitness is all about flexibility,
endurance and mental strength.
That comes not just from sports or
physical activities but also from following a good balanced diet. I am lucky I
have a fast metabolism. But I challenge
myself on the fitness front five days a
week, she says.
For your own sake you need to
address your nutrition and fitness
levels. When you dont care about your
weight, it reflects on your attitude to
life, she adds.
All this of course if one can love it
the way Motwani has since she was 12
years of age and continues to pound
the floor with the same enthusiasm at
43 and a half.
Motwani adds that a trend that has
always disturbed her is the one about
losing weight overnight. That is too
radical, she feels. I shed off the 25
kgs I put on when I was pregnant over
a five-year period.
Talking of motherhood, Motwani
lets slip that it is something that she
values more than her business or her
love for fitnessso much so that the
career-oriented Motwani wanted to
call it a day at the workplace.
I love being a mom. I am willing
to do anything to spend time with my
son, she says.

Motwanis successful stint at sports did


not, however, push back her ambition
to be connected with the family business. I was a merit rank student. I was
serious about academics just as I was
about sports. However, I never thought
of sports as a career.
But sports worked for her as a
second-generation entrepreneur, she
says, adding, Any game works on
simple fundamental rulesyou reap
what you sow. I dont like to lose and
that helped immensely in instilling
values not just in sports but also in life.
With corporate goals on her career
horizon, Motwani did what most nextgen scions of business families do. She
went to the US for a business degree.
I went to an excellent university
[Carnegie Mellon]. Over there, I had
the opportunity of discovering adventure sports with all my friends.
Roller blading, skiing, scuba diving
and mountain bikingshe tried them
all, says Motwani, pointing to the
mountain bike parked at her house.
It requires a different skill altogether
to ski downhill or swim underwater. I
enjoyed it.
Since then, Motwani has always
found time for sports in her busy life.
Motwanis love for the outdoors has
also extended to long-distance running

Get fit

When you dont care


about your weight,
it reflects on your
attitude to life.
Sulajja Firodia-Motwani

Joint Managing Director,


Kinetic Motors

KULDEEP CHAUDHARY

www.entrepreneurindia.in

Intelligent Entrepreneur April 2014 111

SPEND IT

TASTE OF
KARAIKUDI
Taj-Connemaras iconic Chettinad restaurant
retains its old glory while marching forward
SULEKHA NAIR

year after it shut down for


renovations, the Raintree, a
Chettinad specialty restaurant at the Vivanta by
Taj-Connemara in Chennai recently
reopened with a spunky, contemporary
look. An al fresco diner in its previous
avatar, Raintree has now morphed to
include a new indoor restaurant, ambience, tableware, menu, and a change
in service, too.
For those who might be unaware,
Taj Hotels, Resorts and Palaces
divided its hotel properties into
distinct segments some time back.
The Vivanta brand is different from
other segments in the chain in that
it covers luxury hotels with a slightly
modern outlook.

Remembering the Chettiars

The 160 year-old Taj-Connemara was


the first 5-star hotel to offer Chettinad
cuisine exclusively as a part of its
112 Intelligent Entrepreneur April 2014

culinary offerings when it opened the


Raintree 25 years ago. It was the brainchild of Camellia Panjabi, the legendary former managing director of the
hotel chain. Chandrassekaran VK,
Executive Chef at Raintree, recalls
stories of those times about how Panjabi
sent forth people to source recipes and
also, Chettinad cooks from old Chettiar
homes before the launch.
Chettinad is a region in the Sivaganga
district of Tamil Nadu. The community that resided here once, called
the Chettiars, had some distinct attributes. For one, they were an immensely
wealthy community of traders whose
diet was strictly vegetarian.
But as they moved to other countries
for business, they were unable to stick to
their vegetarian diet and the cuisine was
then altered to include chicken, meat,
game meat, etc.
Today, Chettinad cuisines calling
card is the Chicken Chettinad, which

you are likely to encounter quite often


in Tamil Nadu. However, there is more
to the cuisine than this popular dish, as
the chefs at Raintree want to remind us.
Raintree gets its name from an
ancient rain tree in the garden at the
rear end of the hotel, where the restaurant was opened 25 years ago. The old
tree has since died and a new sprawling
one takes its place facing the doorway.
The entrance to the restaurant sets
the tone for what to expect from the
traditional, South Indian cuisine served
there. As one walks towards the restaurant, there are stone columns (15th
century, no less) with temple figures
placed strategically on the pathway.
Alcoves in the garden allow for
privacy for the diners. For lunch, the
place looks remarkably bright with
sunshine splashing everywhere. By
night, little lamps on the tables exude
a softer look. Food is served here and in
the indoor restaurant.

www.entrepreneurindia.in

In the evening, a lively aachi counter,


with a grandmotherly figure (maami or
aachi), in keeping with the matriarchs
of Chettinad homes, sits on a raised
platform making savories and snacks,
which are scooped hot off the pan to
be served to the diners.
Chettinad cuisine is hot and full
of flavorful spices but the spice levels
here are acceptable, which explains the
restaurants popularity with Indians
from other regions as well. Samrat Datta,
General Manager at the Raintree, says
that the frequent diner group in the mid
30-50s age group has widened to include
the early 30s in the last couple of years,
though it is still predominantly Indian.

Food Coma

Raintree aims to recreate the experience of eating at a true Chettinad


home. Anyone who walks in at Raintree
is welcomed with a fragrant malli poo
or jasmine garland in true Tamil tradition. Just as a diner would be offered
water to wash his hands before a meal
in a Chettinad home, at the Raintree,
the steward comes with a large jug filled
with lukewarm water and a basin.
Dinner is a la carte. However, a platter of applams and assorted vadams are
placed on every table as one sits down.
And then a steward comes manoeuvring a chest high trolley. Perched on its
sides are an array of chutneys and pickles for the platter and for all the food
that follows.
Some of the kulir panangal or drinks
are unusual. We tried the vasantha neer
(tender coconut water, with a dash of
honey, lime and mint), which elevated
the humdrum coconut water to a higher
plane. The jasmine martini, we are
told, is the most popular cocktail at the
Raintreecomplete with a jasmine
floating on it. Personally, we did not like
the overpowering smell of the jasmine. It
does take some getting used to.
Chettinad soups are called saaru and
are of thin consistency. Served strained,
most of them have a medicinal effect
with ingredients such as pepper, cumin
seeds, ginger, garlic and chilli cooked
with either chicken, mutton or vegetables on a slow fire.
We had the delicious nandu (crab)
saaruhot and fulsome. The murungakai (drumstick) saaru tasted like a

VANNAKAM
1. Interiors of the indoor restaurant
2. Al fresco dining area
3. Lunch on banana leaves

hot rasam, without the vegetables. The


other really popular saaru here is kozhi
saaru, (chicken cooked with spices
and strained).
Main course has to be relished with
idlis, appams, parottas, idiappams or
rice. We had the kozhi varutha curry,
which is chicken cooked in spicy coconut
masala, and kozhi milagai , a dry chicken
preparation in black pepper.
The keerai masial (spinach) is light
and the kathirikai (brinjal) peratal
ground Chettinad masala wrapped in

brinjal and then tossedis an apt match


for it. The karuvepila pundu kozhambu
(curry leaves and garlic curry) can be
had as a sauce by itself. There is also an
array of podis (chutney powders) with
liberal dose of ghee poured on it that can
be had with the rice. Do not forget to
try the pachadi, especially the sundakai
venkayam ma inchi (mango ginger). You
could be forgiven for polishing it off and
asking for more. The paal paniyaram,
which is a fried savory that is soaked in
flavoured milk and kavaranarisi halwa
(black wild rice) could only be nibbled
upon as we were too full by then.
The prices are quite reasonable considering that it is a restaurant in 5-star
territory. A thing to note here is that the
lunch menu changes daily and is served
on banana leaves. A vegetarian version
costs `800, while a non-vegetarian one
costs ` 900, excluding the taxes. An a la
carte dinner menu for a full course costs
`1000 for a vegetarian and `1200 for a
non-vegetarian meal.
Intelligent Entrepreneur April 2014 113

BACKSTAGE

www.entrepreneurindia.in

BRANDING LESSON #482:

THE POWER OF COLOR


No branding tool is more powerful than color. It can transform a logo into an emotional
experience by instantly stimulating desire, instilling trust and connecting your company
to the customers soul. Also, its pretty. After consulting with psychologists, designers,
decorators, the guy at the paint store and our aunt down in Florida, weve created a guide
to the virtues conveyed by 20 colors frequently used in company logos
ROSS McCAMMON
CORAL Sensitive, empathetic, faithful, friendly, compassionate
BRIGHT GREEN Lush, fresh, vital, verdant
DARK GREEN Uh lusher, fresher, vitaler, verdanter
GOLDEN YELLOW Positive, cheery, happy, fun, warm, sunny
DEEP ORANGE Stimulating, trustworthy, energetic
REALLY DEEP ORANGE Stimulating, trustworthy, energetic, nacho cheese
DORITO? Oh, why not
BRIGHT RED Carefree, sexy, passionate, stimulating, dangerous, violent, bloody,
ouch, one moment youre being carefree and sexy and thenanybody got a Band-Aid?

BLUE Serene, peaceful


SKY BLUE Calm, cool, placid, dreamy
BRIGHT BLUE Sleepy, tranquil, Im just going to rest my eyes for a minute
MIDNIGHT BLUE [Zzzzz]
COFFEE? Espresso if you have it
GRAY In need of some deep orange or a little green. What is this, a funeral?
GROSS Yeah, gross
EGGPLANT Tasteless. Unless you bread it and fry it. Then again, what doesnt taste
better breaded and fried?

FUCHSIA Hot, wild, probably not the best choice for your logo
FUCHSIA AND ORANGE POLKA-DOT KIND OF THING Just awful. Make it stop
BLACK Black is an absence of all colors. Which is unfortunate. (On the bright side,
this means it cannot convey anything that fuchsia does.)

PURE WHITE Perfect!


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114 Intelligent Entrepreneur April 2014

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