Free Basics versus Free Internet

The divide between propagandist of for and against net-neutrality debate is getting louder. Facebooks’ Free Basics is the lone corporate warrior along with ISPs, who is pushing ahead with its agenda of discriminatory pricing regime for the Internet in India.

Two things make Internet fancied around the world. It is a platform that existed since the 1970s but was consigned to only research institutes, to collaborate. With the advent of World Wide Web (www) the power of connecting each other evolved and more and more people started connecting to it. It is a platform that became powerful as it was able to connect any and everybody from one continent to another seamlessly without any barriers. In true sense, the world became one market for sourcing of information and collaboration. Secondly, as it was evolving and its power growing, thankfully, no country or its government controlled it, the reason enough people trusted Internet to be non-partisan.

Internet has grown in its acceptance from 16 million (0.4% of world population) in December 1995, to 3366 million (46.4% of world population) in December 2015. This growth is faster especially in the last two years, even on the high base. In India, the number of Internet users has increased from 5 million in 2000 to 243 million users in 2014, covering about 19% of India’s population and this growth rate is much higher in India than world’s average.

With the introduction of Free Basics by Facebook and zero rating by Airtel, the real intention does not seem to give access, but mere profit. While profit may not be a bad word, at the cost of the platform’s existence of non-partisan one platform-one world, should be a definite no. The arguments of increasing the access to people in India who can’t afford the Internet, is a lame excuse. If this argument, for argument’s sake is accepted, what will it create is not a WWW view of Freebasics or Non-FreeBasics view, but probably more than 300 views of Internet worldwide, divided by the ISPs through their “programme”. The corporate may successfully be able to divide it even further based on the “view” that they would like to perpetuate. In this scenario of shrinking slices of available “programme members”, any view from any continent would not only be distorted, but also biased. And that is detrimental to the platform itself.

Facebook cited TRAI’s 1999 tariff order to justify that non-discrimination requirement reaches only discrimination between subscribers of the same class and argues “Thus that prohibition would not appear to reach zero rating or sponsored data programmes, since all subscribers pay the same price (zero) are subject to the same terms, for the same class of service,”. This justification is not valid, as it would kill the competition theory, if one with muscle power can sustain the initial period of “Investment”, to flourish when all the competitors have been vanquished.

Internet is oxygen to the digital world, and any dissection in the name of flavored oxygen should be resisted, however tempting it may be. It is better to remove the pollution from this oxygen, together, and facilitate its greater flow to larger masses in its purest form.

Get top talent in a Start-up. Here is how.

Person with an idea, entrepreneurial zeal, passion and perseverance can commence with a new venture, with or without some like-minded friends. This initial team will take the venture only a distance, beyond which a team at the CXO level is needed, complementing the skills of the founders. Most ventures, till they become celebrated ones, struggle to attract the top talent, creating a vicious circle of top talent makes the venture celebrated or vice-versa.

To understand how to attract top talent at CXO level, it is important to understand what turns them down. One of the largest studies undertaken ever, by the Gallup organization, surveying over a million employees and over 80000 managers, finds relationship with the boss being the primary reason for dissatisfaction and leaving. “People leave Managers not companies” is the key message by its authors Marcus Buckingham and Curt Coffman. Other studies reveal reasons in that order, include unchallenged and boring work, financial opportunities elsewhere, not felt to be contributing to organization’s business goals, without autonomy and independence, without clear strategic direction, unfit in the organization culture with the level of politics, nepotism and policies.

This does not mean anyone fit for a big organization is fitter for a startup. Those with lack of risk taking ability will not join the startup. People without passion to create or help solve a problem will most likely stay away.

People, who are willing to join the startup, will primarily join if they distinctly see the career path in the organization in comparison to an established company. Risk may be higher and calculated, but it needs to show the prospects what it would do to their career if venture hits high. Offering equity on milestone achievement is the most resorted to. Ventures keep a fixed allocation of equity to be offered to employees partaking risks for growth.

Financial stake is not the most important factor. Career progression out of achievement of fulfilling venture’s goals, recognition in the start-up eco-system and naturally, increased market value of the person, all contributes to fan the individual’s inert feelings in making it happen. Such an environment can possibly happen only when it is transparent, plans are big and challenging, owned-up, and are given with freedom to execute. Failure is only a lesson for course correction and not for finger pointing.

To me, here are the top reasons why top talent will join a start-up

1. Founders to have clear and big vision - Vision of the founders is an important energizer, background and intention of the founders as exhibited in the assessment discussions, is often a deal maker or breaker, as both sides assess the other. Big responsibilities offered to CXO candidates are a big attraction for them to consider the position. 
2.  Transparency between founders and CXO candidates - A heart-to-heart talk is extremely important between founders and the candidate. Both sides must be frank in admitting the constraints and document them. Founders will be skeptical to take candidates, who color themselves more aligned or are referenced by the investors. 
3.  Open and intuitive organization culture – Exciting and intuitive work environment, open-door policy, lean organization structure, transparency and equality in information reach, promotion of entrepreneurial instincts, tolerance to failure, incentivizing to learn, fun at work are some traits that make conducive work environment like in Google and IDEO. 
4. Financial stability in a short run – Funded with promotor or angel money, the venture should be able to sustain for a year. This assurance is important to candidates who will need time before proving themselves worth running it. 
5. Flexibility, flexibility and flexibility – Rarely business plans work the way they were conceptualized in the beginning. Flexibility of the founders to adapt to changing situations, flexibility of the senior team in changing course and flexibility of investors to back the venture come the changes, is the key. 
6. Low ego – People from corporates, many times come with huge ego. Work at a start-up may not be conducive in massaging this high ego, either of the founders or of candidates. Humility is the key in making the work and relationship successful. 
7. Don’t pay the peanuts – Most motivated and self-initiated individuals value money not among the top 3 reasons to join a company. Though, they do not want to negotiate every now and then and must feel to be satisfied with the package they have joined at. Good talent knows its value and must get it, to deliver without distractions.

Communication of existence of such an environment to attract the right candidates is still a task, which “The best job in the world” campaign in a popular competition by Tourism Queensland, promoting Great Barrier Reef, attracted many able candidates inexpensively. 

Payment Banks - Opportunities for start-ups

My younger daughter when she was 3 years old, used to ask, what we do in a bank. I did not want to complicate things for her and answered “we put money and we get money”. This could not be more appropriate for the current set of 11 payment banks which RBI has given permission to setup. These banks can not lend and hence “we get money and we give back money” can’t be true.

New striped down payment banks have a big impact not only on the financial and technology fraternity, but also on the Indians in the remotest places, resulting in three things. One, it will help financial inclusion of the unbanked. Secondly, it will spur into greater percentage of cashless economy, and the third, banking transaction costs will reduce across the board. Payment banks are unlikely to open the branch network on a scale as “full” banks do. They are not even obliged to. Lean organization structure, technology enabled banking - mobile or net banking, specialist and limited services on offer, partnering as banking agents, will enable them to reduce the transaction costs. It is big impact for the current set of banks as many transactions and low capital cost accounts are likely to shift to payment banks. When the impact of payment banks on people is such immense, will it have opportunities for new ventures? There are many and we will discuss the same here.

First, let us evaluate the scope of opportunity for SME. Conventional banks have only been able to reach 30,000 out of 5.94 lakhs villages; resulting in almost 50% Indians without a bank account. Unbanked rural folks will find it convenient to pay using mobile. Mobile phone will become paperless cheque and ATM. Urban Indians will shift due to convenience, speed and captivating deals on mobile transactions.

Payment technologies have proved hugely popular in other developing countries. In Kenya, the most cited success story, Vodafone’s M-Pesa is used by two in three of adults to store money, make purchases and transfer funds to friends and relatives. One study found that in rural Kenyan households that adopted M-PESA, incomes increased by 5-30%, due to time saved in avoiding regular banking and savings on transactions costs.

This opens up opportunities for many start-ups. Payment banks will have to depend upon “local” entrepreneurs for reaching wide and deep. These entrepreneurs will have more accessibility to last-mile customer and hence the trust, a key ingredient. These entrepreneurs on non-exclusive basis, like in telecom tower business, can create business catering to multiple pay-banks / banks and source products and services including cash dispensing. This is cost effective and win-win model.

Faster adaptation of banking by vast majority of unbanked population will depend on correct and effective consumer education. More than 24 languages, regional biases, dialect, and cultural differences make education of masses a complex task. New ventures can be opened in content creation and local delivery of such content effectively. A friend of mine, who runs a NGO, publishes a “newspaper” with huge amount of local news and pastes them on the milk-van for people to read free wherever this van goes. His income comes from advertisement that consumer non-durable and durable product companies gives to reach this deep. Innovative solutions like this will come more when people at grass-root are involved. This also will help gain trust.

Can the money be sent from Airtel network to non-Airtel network without both collaborating? Here, aggregators come into play that is not among the banks. These new ventures will build plug-ins with each service provider and offer a platform that is ready-to-offer services, like payment gateway aggregators in today’s world, drastically reducing the go-to-market time and cost, while standardizing the platform.

Think of grocery store accepting mobile payment instead of card, as it would entail him to lower service charges (transaction deduction rate – TDR) than 2% he forgo in case of cards. How about electricity and other utilities accepting mobile payments? Purchase a magazine on the traffic light? Purchase goods and pay while talking over phone without the need to disclose the bank account or debit card details? How about lending small amount to a friend /relative in need at a distinct location without the availability of any bank or the ATM? Soon, many apps will be made by ventures on mobile cash management, setting-triggers for regular payments, usage spent limits by spend category, dashboard for predictive spends in future months, suggestions on avenues to spend basis available cash, on-the-fly proximity and spend based restaurant search among many innovations that ventures can think of. Many technology companies will bring innovation; build their application and tie-up with banks to facilitate transactions for each use case, just the same way value added services (VAS) like astrologer, cricket scores, news updates etc. happens on mobile today.

All these services will fail if trust is breached on the safety of money kept in mobile wallet or linked bank account. How to secure if mobile is lost or mobile number changed without opting for mobile number portability? Start-ups with specialization on security of m-cash transaction and reconciliation services will see the day soon.

It is an opportune time for start-ups to prepare and grab the pie, advent of payment banks opportunity throws before them. Size of the market is at least 10 times bigger than the credit card market size.

Ashish Jain

Insane valuation of Start-ups

India is witnessing immense activity in the start-up eco-system. Buzz is no longer confined to Bangalore or amongst the college pass-outs. Many professionals – men and women, fresh graduates, US returned NRIs, and domain experts are joining hands with fellow colleagues and launching their own venture – giving them freedom of expression and sense of fulfillment.

Each of these ventures needs funding, at angel, seed, growth or late stage. Three important questions come to any entrepreneur mind. One, which is the optimum stage any venture should seek funding at?  Two, what is the ideal valuation and third, what percentage of equity can be offloaded to investors?

This subject as much important as it is, has been written as exhaustively and widely. Still right answer eludes everyone. It is akin to a price at which you sold your shares invested in a listed company and still feels you sold it cheaply. There is no right price. However, I will share some established and informal models doing the round.

Key factors for consideration in valuation of unlisted companies are

1.   Idea – demand, scalability, IP protection, entry barriers to competition

2.   Team – education, experience, complimentary skills, values, maturity, vision and passion

3.   Product stage – idea, development, pilot, traction, launch, growth

4.   Finance stage – own money, family & friends, individual angel, established angel, seed fund, growth fund, late stage

5.   Sales figures, if available (for sales multiple)

6.   Debt in the venture

Some of the established methods include discounted cash-flow (DCF) model, cost-to-recreate model, and market-multiple-model. However, market-multiple model works when sales or comparative data is available from another company.

One friend of mine, who quit his plum job and jumped into setting up a new venture in healthcare, has an interesting and simple valuation method to tell. He pegged the valuation at Rs 6 crore, considering 2 Cr for his IIM-A educational background, 1 Cr for having set up his company, 1 Cr for putting in his 15% investment into the venture, 1 Cr for having developed the product (yet to launch) and 1 Cr for initiating contractual agreement with some 20 partner-vendors in South Delhi. Basis this, he has roped in 8-10 investors, giving less than 10% equity to them collectively.

Nathan Beckford, founder of Venture Archtypes and Mahesh Murthy, who funded 50 plus startup, offered stage-of-development as a proxy to the kind of investment a venture can command, and thereby arriving at the valuation and then applying any adjustments. Here is what they have to say, simplistically speaking.

Stage	Investors	Funding Amount	Equity Offered	“Post” Valuation
Concept / Business Plan	Self or Friends and Family	Rs   5 to 25 Lakhs	1% to 10%	Rs 50 to 200 Lakhs
Technology Developed	Angels, Seed VC like Blume, Venture Nursery, Mumbai Angels, IAN, Kae etc	Rs 20 to 300 Lakhs	10% to 20%	Rs 2 to 15 Cr
Launch / Early Consumer Traction	Seed VC, Series A VC like Seedfund etc	Rs 2 to 25 Cr	25% to 33%	Rs 8 to 75 Cr
Scaling and Adoptation (Cash flow negative)	Series A, B, C VC like Nexus, Sequoia etc	Rs 5 to 50 Cr	25% to 40%	Rs 20 to 200 Cr
Rapid Mass Expansion (Cash flow positive)	Late Stage funds like Matrix etc	Rs 50 to 200 Cr	25% to 40%	Rs 200 to 800 Cr

Another interesting model of valuation variation has been exhibited by https://angel.co/valuations in which difference in valuation has nothing to do with many of the venture stages discussed above. It has data basis college (Stanford, Berkeley, Harvard, Mumbai university etc), incubator reputation, past employers of founding members, location (Silicon valley, Bangalore, Mumbai, New York City, Western Europe etc) and markets these startup cater to (Big data, hardware, mobile commerce etc).

These methods do not matter in the later stages of funding. Simple calculation goes, how much money is needed by the venture, for equity that it is willing to offer. For example, if $ 600 million is needed in stage X and equity that venture is willing to offer is 2%, valuation becomes $30 billion. All the earlier investors should be notionally making money at this price. 

Clearly start-up valuation is an art, not a science. Grey area lies in the valuation of the non-tangibles. Individual perception and hype both contributes, to help inflate the valuation, to exit on a “high”.

Some of the Indian e-commerce companies are valued very high. Housing.com currently valued at Rs 1500 Cr, Quickr at $1 billion (Rs 6000 Cr), Paytm at $1.5 billion (Rs 9000 Cr), Snapdeal at $ 2 billion (Rs 12000 Cr), Ola at $ 2.5 billion (Rs 15000 Cr), Flipkart at $15.5 billion (Rs 93000 Cr) are such examples. Would they sustain the kind of valuation even after listing? In a perspective, Indian Oil Corporation (IOC) is valued at Rs 94000 Cr currently and except for top 20 Sensex companies, all other companies would have valuation lesser than Flipkart.  Makemytrip.com, once the bell-whether of Indian e-commerce bandwagon is no longer cynosure of investor eyes. It reached to a valuation of $ 800 million just after listing and is currently valued at $ 450 million.

Will this insane valuation of Indian startups sustain, is a big question mark. Big foreign money is entering India and chasing only the chosen few, considering them “safe”, and increasing their valuation unrealistically. There are many ventures that have huge potential but are still lurking in limbo, in the absence of visibility. It is better to make a correction, diversifying and going beyond celebrated few, to value appropriately, instead of bringing the whole eco-system down with bad examples.

Ashish Jain

Published in Financial Express on 28^th August 2015

http://epaper.financialexpress.com/574095/Indian-Express/28-August-2015#page/11/2

Should a start-up undertake paid branding?

A shaving cream company, say Newbee, commenced its premier product. Soon it started facing hardships in already overcrowded market. Market leaders were MNC with deep pockets and distribution penetration, backed by inducing advertisement on TV and print. MNCs have comfortably built an impregnable brand in the mind of individual males. Newbee analyzed to its happiness that MNCs have not made huge impact in saloons and therefore started focus only there. Soon it had its distribution chain. Volume increased and variable cost started decreasing. With cost leadership, Newbee found new lease of life and invested in production enhancement. Soon it could reduce its cost further down, enticing even the MNCs to get contract manufacturing from it. Newbee had the scale, quality products, and knowledge of variable quality for its customers. It was world’s largest producer of shaving cream. However, it still had one problem. Its margins were low.

Now, with high revenue and disposable profits, it thought of undertaking brand building and started advertising. It also increased the prices of its product to offset marketing costs. Did it succeed?

Yes, it did and the balance lies in the balance in pricing of its own product versus the competitor, even when both are resorting to brand building. It is, in fact, advantageous to NewBee that they are able to keep prices low, with same level of margins as competitor, due to lower costs. Here in this illustrative story, Newbee has been able to wipe off its competitor from manufacturing.

Branding is a costly preposition. Still, many start-ups these days undertake brand building very early, as they get hot money very soon in the cycle and investors are in great hurry to create that hype to increase the valuation, enabling them to exit with huge positive returns. Ideal period of this cycle of investment-hype-customer acquisition-growth-exit is 3 to 5 years. In this case, should a startup undertake paid branding? If yes, what stage should it undertake it?

Consider the cases of amazon, makemytrip, flipkart, yatra, via, redbus amongst many others, who built their product, refined it well over time and then undertook paid branding. While housing.com, ola, quickr, olx are some examples which jumped to market with huge marketing budgets from an early stage. All the former have painstakingly built their product, distribution, logistics and focused on self-sustainability to create revenue first. They approached the investors for growth-stage funding and therefore pressure was diluted for big bang marketing. While later companies got the seed /early stage funding and had the compulsion to generate market valuations quickly.

It is no brainer that market valuation is more hype than reality, now or in dot-com era. Profit is not the leading criterion like in case of amazon or flipkart. It is potential to generate business in the future that leads all the way. It reminds stories of the era, when most companies going for IPO, would build a healthy order book, possibly from friendly companies, and go bust soon after the subscription, swindling many small time investors who would have no means to know what happened. When branding is to target increased valuation and not sustenance, one must be wary.

In the case of Newbee, it resorted to paid branding once it attained substantial competitive advantage, else the chances of return over investment reduces exponentially.

Share your comments, criticism, counter-views to me (Ashish Jain), at india.ashishjain@gmail.com.

Profreneur – a way out of Pink slips

IT industry in India seems to have seen its peak. Sluggish American and European economies leave shrinking discretionary spend, compelling changing ways to do more for less. Recent trend show higher adaptation of productized solutions against green field development projects of the past. Domain and technology consulting is expected from the vendors as part of solutions approach unlike resource approach Indian services were sourced earlier. Offshoring is also moving to near shore and onshore with advent of patriotism over capitalism.

The impact is loss of IT jobs also in India. Nobody ever heard TCS, largest Indian IT Company, to fire its employees in hoard ever and raised an eyebrow when it announced to shed about 30000 people or about 10% of its workforce. Other organizations are also “Juniorizing” – a term used to replace their experienced employee to make way for relatively younger one to man the same roles. How should an outgoing professional having spent 15 or 20 years of his /her career, now consider this vacuum, given industry has very little appetite for absorption.

Thinking positively, if I could, let me assure you of immense number of opportunities that lies even in this dark stage of your career. You may see a ray of hope in professional entrepreneurship, or Profreneur.

Based on the majority of roles that are sourced from India, professionals losing their jobs in IT have technology, delivery or people management skills. Without sales or marketing skills, many such professionals fear to tread the path of entrepreneurship. The fear is not unfounded but it is possible to circumvent it. Can you look for businesses where pull factor is built-in by design (customers come to you themselves) rather you creating a push strategy, which may be hard. I will discuss some of such possibilities, out of many, just to instigate that such possibilities are many and worth exploring.

First is taking a franchise of an established brand. Brand brings you customer, brand owner helps you co-establish your business during the initial period, during which you get to know the business intricacies. With the experience and technology your forte, improvements can be made. However, this will get you limited success in business and scaling beyond will need selling skills.

In the internet era, establishing an e-shop in the flipkart.com, amazon.in or snapdeal.com marketplaces is the second option. It is extremely easy to set up such a “shop” if you have the compelling products. Such products can be sourced from specialist markets such as brassware from Moradabad, gems from Jaipur, woolen and sports goods from Jalandhar, Spices from south India, or ethnic products from Rajasthan or Gujarat etc. for consumption outside India. As entry barrier in these products is low, so you will find many competing products to fight against. It will require lot of common sense and sales zeal to research competition, reduce costs, efficient operations and right price, to keep afloat. Establishing family / friend contacts abroad will be a definite plus on realization of money on large orders.

Business to consumer (B2C) may not be everyone’s cup of tea. It is when you have a concept to sell in consultative mode to your customers in a defined market, even non sales oriented people have been seen to be doing fairly well in the B2B segment. Some solutions lie in emerging needs in India - security, infrastructure, education and energy. It really does not distinguish between digital or brick-and-mortar preposition, so long as you have the perseverance and passion to push it through for nearly a year as cycle time to convert into order is longer.

As we are talking of people in the technology domain, an e-commerce based business venture is definitely on the table as possibility. One need to think passionately, plan big, execute small and think as if to sell it after 3 to 5 years. Success chances are increased when you move around in the VC circle and be part of entrepreneur eco-system fully.

One may argue, it is easier said than done. Well, who said working in a job is easy after all! Give it a fresh and unbiased thought, discuss with many friends whose opinion matter to you and if you so wish, can write to me at india.ashishjain@gmail.com to help distill the options you are considering.

All the best for taking the best advantage at this turn in your career.

Ashish Jain

India.ashishjain@gmail.com

Elements of Branding - Practical Tips

How do you sum up any institution, person, place or organization? How can even elevator pitch be shortened to describe something? How uniformly message be understood by most? It is branding. 


These questions highlights the associativity of perception and not necessarily the attributes of products / services that entities are in the business. So, it is easy to infer that brands manifests the perception among the masses. Pepsi is not necessarily a drink for the youth, but perceived to be for the young (remember Youngistaan), as they are the largest customer base for them. Why anyone builds a brand and how to build it? 


When a brand is built and seen positively, it becomes very easy, less costly and quite faster to sell products / services for that entity. Even brand can be monitized. Not everyone is able to create a favourable brand and it is definately not in short time. To quote a scenerio, why is it so easy for selectors to choose an IIM candidate over any other, giving benefit of doubt to IIM candidate even if Interview has not gone all that good. It is pre-conceived notion in the mind of Indian recruiters that IIM candidates selected after intense CAT process are bound to be cream-la-cream. Go to France and recruit an IIMer over a non-IIMer and chances are both on the equal footing till the other candidate happens to be from INSEAD, when he will get a edge over IIMer as this institute is French and perceived to be top-rug. Harvard and Stanford are universal brand with positive communication about them that has reached universally. Besides getting real value, it helps to back the brand in at least two other ways - play safe to justify yourself to others and it hides any selection shortcoming one may have! 


Changing the human behavior into buying habits and starting to associate best to oneself, is a slow and consistent process with each step involving two things - positive baby step and omni-directional positive communication. To build a brand, it has to be strategically thought, executed in parts and communicated in full (in geography where executed using media and buzz, buzz being more important). 


Ashish Jain

Life, by design

Japan's Fukushima is unfortunate in bearing the wrath of man-made disaster, made by design.


Increasing human need for continued energy is making us think for ways which are risky and fatal to the very existance for which we desire energy. Some lives are sacrificied for the sake of others need. But is it not what everyone does in order to exist? It may be right but not correct.


Stuart Brand argues, “Air pollution from burning coal is estimated to cause 30,000 deaths a year from lung disease in the United States and 350,000 in China. A one gigawatt coal plant burns three million tonnes of fuel a year and produces seven million tonnes of carbon dioxide, all of which immediately goes into everyone's atomosphere. Using nuclear reactor to generate one gigawatt a year requires only about 20 tonnes of nuclear fuel, but with zero carbon dioxide”. Is it better to have nuclear reactors for energy in view of less number of deaths caused in comparison to conventional fossil fuel? Not necessarily. 


Oil resources are depleting, nuclear energy is frought with avoidable risk and with coal causing slow and steady deaths, what are the alternatives?


Solar energy in India is untapped. India is densely populated and has high solar insolation, an ideal combination for using solar power. With about 300 clear, sunny days a year, India's theoretical solar power reception, on only its land area, is 600 trillion Watt per year. Assuming the efficiency of PV modules as low as 10%, this would still be thousand times greater than the domestic electricity demand projected for 2015. Currently, the amount of solar energy produced in India is less than 1% of the total energy produced. High cost of solar power notwithstanding, it has decreased four fold in a decade and is at GBP 125-180/MWh in comparison to coal at GBP 100-155/MWh (2010 Matt MacDonald Estimates). High usage and therefore high consumption volume of solar photovoltaic cells will reduce the per MWh cost of solar energy further, making it attractive energy option. Solar energy is not only green, saving carbon credit costs and helps in fulfilling Kyoto obligations, but also averts any man-made disasters. Distribution losses can be contained by grid-based and non-grid based power network that are possible only using solar power. 


India is uniquely placed in harnessing solar energy unlike many developed countries in the cold region. Our energy sources can well be different too. Energy sufficiency will make superpowers of tomorrow and India can catch that advantage as it did in IT, by design.


Ashish Jain

How to be a successful Entrepreneur?

I have had successful entrepreneurial stint. Here are few practical insights based on my first hand experience.


Planning is always considered essential but often ignored in the height of either bread-and-butter or urgency of issues at hand. These are inevitable, but planning is not to be ignored. An entrepreneurial venture needs to focus in that order 1) Product / Solution offering 2) Sales 3) Operations and People 4) Finance and 5) Marketing.  

First and foremost mistake is to get embroiled into daily OPERATIONS. Once in a while is fine. Keeping knowledge of operations and not budgeting for an operations guy are two different things. This is the most important factor to fail. Non-availability of his time or he getting tired in daily operations would leave nobody to drive the bigger agenda - business generation.

A) Clearly Defined Horizon - A startup never has the time and enough resources to dilute the attention. Most smaller companies start with an idea or commence with presence in one product or industry and after the consolidation, moves either for horizontal or vertical scaling. Most Indian IT companies when they started, started with one product - body shopping. I know of a friend who started and established a credible product company in travel industry with marquee customers. He knew the industry and Industry him. By virtue of his domain and industry knowledge, his products used to sell by word of mouth with advertisement budget of less than 2% of net profit (and not even turnover).

B) Connected Organization

    B1. Ecosystem helps - Outsourcing is not just for big clients. It can happen when you are just starting too. Create and have knowledge of an eco-system with specialists that can be tapped at will with in-built extra time and price margins. Upfront investment in hiring and keep worrying to provide work to specialist employee is a big headache saved.

    B2. Networked Organization - Many time, customers judge you indirectly as they may not like to judge directly. An enterprise's Microsoft Gold Partnership, Oracle's premium partner, HP-Mercury's premium level etc. sends a message to customer that the organization is trusted by industry's credible names and they can take it easy in their own evaluations and start trusting. All these partnerships also keeps you in top-of-the-mind recall of partner and may get the inquiries generated at them. A friend of mine in Sacromento, California, USA left a highly paid job at Microsoft to commence a startup. He knew the product BizTalk from Microsoft well and knew what it did not have. He made complementary add-ons and largely concentrated his communication to Microsoft, by direct interactions. In 18 months time, he was able to sell his small company ( $2m revenue) at 34 times premium to Microsoft itself. In generating this $2m revenue, 60% of the inquiries used to come from Microsoft only. Connect with trade association is also very useful.

C) Astute Financial Management

    C1. Keep Cost Low - Startups in garages or room at hostel is still a good idea. Customers that we tend to acquire initially usually do not come (B2B space) to entrepreneur office and grand office may not be needed during the trial phase.

    C2. Right Price - Selling products at very high price will deflect customers and selling it cheap will erode the capital for further growth. Pricing has to be right. Networked organization also exposes one to know what is expectated and how competition behaves.

    C3. Cash is King - One single most important reason for startup to fail is to struggle over working capital to pay for operating expenses. If one has planned for a one year of expenses and ensured their availability, promoter can focus on selling and/or making the products, away from every day finance related distractions. Most college graduates have better chance of stiking gold as there is no perennial sword of meeting expenses. Bill gates, Steve Jobs, Karsanbhai Patel are few examples.

But to sum it up, two more things that are important. One, keep publise organization with "I exist" phenomenon. Keep spreading the word about your existence to be in top-of-mind recall, through low cost but positive messages. Second, use mentor services. Mentor could be another friend's organization with whom you can share your issues and discuss openly on reciprocal basis or an individual who can be unbiased. Mentor is different from co-partner and brings in fresh perspective from outside without mired in the daily problems.

Ashish Jain 

Education - Enabling India as World’s Back-Office

India’s education market is on a high growth trajectory and so are the employment opportunities. With more and more players entering this lucrative field, the job market dynamics are fast-changing.

India is fast emerging as back-office of the world, having caught on the service bus leaving China to play the manufacturing handle. Service economies around the world have been able to command better premium and face less pricing pressure unless it is totally skewed and overtaken by another country. India has that advantage and it has the correct basics in place. Be part of this sunrise industry.

According to the 2009 Global Education Digest published by UNESCO’s Institute for Statistics, since 2000 an additional 51.7 million new tertiary students have enrolled around the world and 2.8 million students currently study outside their home country. Gross Enrolment Ratio (GER) in US and Europe is 70%, it is 11% in South and West Asia and 6% in Africa. It shows immense potential in developing countries and especially in India with huge and growing population. Out of 1.1 billion Indian people, 672 (60%) million people are in the working age group of 15 to 64 years. This is highest in the world. India will see sharp decline in the dependency ratio over the next 30 years. Govt. has planned budget of 6% of GDP for education in the aggregate planning. Ministry of education has cut a task for itself to l Facilitate 3 times increase in enrolment in
higher education (14 million to 40 million by 2020) l 150-160 million youth base who opt for Vocational Education l In India, 14 world class (Infrastructure and faculty) universities are being setup with coverage including innovation, IP and public-IP.

Right to primary free and compulsory education act is already operative, facilitating government support to education in remote areas. Central government alone will not be able to do much. It will have to be supplemented with State governments and private sector. These are years of IT revolution that is unfolding in India for education.. Here is a quick bite on the opportunities.

Opportunities

• National Acedemic Depository Bill 2010 will facilitate electronic database of academic awards and it will be mandatory on academic institutions to lodge all degree, diploma and mark sheets there 
• Scheme by central government for setting up model Degree College in 374 educationally backward districts where GER for higher education is less than national GER. Under which assistance is provided upto Rs. 2.67 crore with maximum of one-third share, increasing to 50% (Rs. 4 crore) under special category states
• Under Central government funded scheme “National Mission on Education through ICT”, setting up VPN and broadband with 1Gbps connectivity is provided for institutions of higher learning and centers of excellence 
• Right of Children to Free and Compulsory Education Act 2009 opens up opportunities for entrepreneurs to provide systems for admission, attendance and completion of elementary education in schools that conform to specified norms and standards 
• 100,000 students from India go to USA either because of better facilities there or due to better brand. Sooner or later these universities are likely to come to India and opportunity exist to collaborate with them to provide them digital content, pedagogy tools, psychological research inputs to Indian conditions, facilities or others
• Education as a means in spreading the message and catalyzing for corrective action for global warming and climate change 
• Concept of cross border education through e-learning, open educational resources and mobile technologies 

Government intentions augur well so far. Kapil Sibal has been on record recently to have put important  legislature in place. Bills under parliament approval are

• Mandatory accreditation of all higher educational institutions
• Regulate the entry and operation of foreign educational institutions in India
• Establishment of National Education Finance Corporation, a special purpose bank which will finance the banks and universities directly for the education loan to the students

Central government is working in close association with banks to revolutionize the education funding, an important element in the whole eco-system. It is offering to facilitate education loans at 4% interest rates with
methods than are likely to revolutionize the sector (See separate bar for full information). Taste this:

• Banks to get re-finance from NEFC, a special purpose bank setup with budgetary provisions
• Loan applications to be forwarded from the institute to the banks
• Co-branding degree / diplomas with Bank and Institute to make it obligatory on employers to inform bank while employing the students
• Banks will have lien on the salary from employers and thus repayment of loans 
• Students get higher education without lack of funds at reduced interest rates to come in the mainstream

Sector is getting too attractive and inviting many small to big players alike. EduComp is revolutionizing the classes of tomorrow, tutoring is going virtual and studies teacher-less. Competition is bound to grow and so are the challenges. Some imminent challenges are:

• New methods to respond to emerging societal demands
• Diversify and enhance revenue streams
• Improve and demonstrate quality
• Control costs
• Compete with new providers at the global level
• Capitalize on the emerging technologies

God favors who decides his own fate. Make calculated risks and if at all one needs to plunge in this sector, time is now.

Ashish Jain