Case-1

The case of Sanjeev Bikhchandani
PGP ’89-IIMA, naukri.com

• Read the case carefully
• Identify key points in the case
• Note down the turning points in the case
• Identify the qualities of an entrepreneur through the case
• Identify the key events that happened with the entrepreneur and ways and means those issues were addressed

Sanjeev Bikhchandani is a man with a lot of energy. He strides into my office for the interview, makes himself comfortable and spends the first 40 minutes giving gyaan on how I should run my business.

Whatever he says makes perfect sense. The entrepreneur in me is taking mental notes, but the writer exclaims, “Gosh, this guy talks a lot!” Like the Energizer bunny he can go on and on and on. And that’s actually an apt metaphor for India’s most successful internet entrepreneur. The guy started early and simply never ran out of juice. Not when he couldn’t pay himself a salary for six years. Not when he had to take up a second job to support the family. Not when he got funded but the whole dotcom dream went bust.

The thing is, entrepreneurship was not one of many options for Sanjeev, it was the only one. But did Sanjeev imagine that one day his company Info Edge (commonly known as naukri.com) would be a darling of the stock markets? An industry leader with a market capitalization of $1 billion (Rs.300 crores) at its peak, and an absolutely scorching pace of growth? The answer, Sanjeev honestly admits, is “Not really:’ The reason for starting his own company was independence. You are your own boss – doing your own thing, setting your own priorities. There was the urge to create something, do something different. Success came along the way, but even through the days he ran a tiny business out of the servant’s quarter, Sanjeev was happy. And that’s what makes it such a fascinating story.

“I have spent most of my life in Delhi. My father was in the government, he was a doctor. My mother was a housewife; there was no business person in the family,” Nothing out of the ordinary and yet Sanjeev, at age 12 had more or less decided which direction his career would take. “At that stage, the idea started forming in my head that, look, somewhere along the way, I should be starting a company of my own.

Sanjeev went on to study economics at St Stephen’s college. The interesting thing is that he had got admission to IIT but did not take it. “I thought it was a five year course whereas BA was a three year course, so let me study economics instead. Then, let me work for two years and go to IIM Ahmedabad.”

The truth is, he wasn’t inspired by engineering. Like most middle class kids living in government colonies, he just took the exam. But unlike others he had a mind of his own and the careless confidence to buck the trend. A trait you commonly find in entrepreneurs! Sanjeev worked for three years and then got into IIMA. “While on campus, there was a group of us who would talk about entrepreneurship, think entrepreneurship. I took a few courses like LEM (laboratory in Entrepreneurial Motivation) and PPID, which are more oriented towards entrepreneurship.”

The plan was to work for a year or two and then start a company. “I was clear that I was going to be in Delhi because my parents had a home – there was a safety net. I didn’t have any capital. I thought I would work for while, look for an opportunity and then branch out on my own.”

There was a desire to be different but Sanjeev did not actually do something different when he first started out. Except for the act of leaving a fairly comfortable job marketing Horlicks at HMM (now known as GlaxoSmithKline). Along with a partner, Sanjeev set up two companies – Indmark and Info Edge. The first specialized in pharmaceutical trademarks and the second produced salary surveys and reports.

But the thrill of doing one’s own thing was palpable. The company started life in the servant’s quarter of his father’s house, at a modest rent of 800 rupees per month. There were employees to be paid and often, a cash flow crisis on the 29th just before payday. Sanjeev’s own pay cheque came from teaching at a couple of business schools over the weekend. Luckily, there was an ‘angel investor’: Sanjeev’s wife – and batch mate – who was working with Nestle. That’s how they managed to run the house.

What I like is how he says this, matter-of-factly. “I had told Surabhi, even before we got married that I would soon quit and become an entrepreneur. I had told her that we will be living off your salary for quite a while. She was cool with it. The more important bit: he was cool with it. Not all men are. The thing with entrepreneurship is you can’t afford to have a big ego. You want to stay in business, you do every bit of business that comes along. You want to keep the dream afloat, you don’t care what the neighbors’ and relatives have to say about who wears the pants in your house.

And all the while you keep searching. For that one idea, that one product or service which is going to make your company something more than a writer of reports, a doer of projects. That one idea which makes you a brand. Ideas can come from anywhere. You could be sitting in a tub and have a eureka moment. Or in a bus or at your dining table. And so it was with the idea of a  job database. Sitting around in the open plan HMM office Sanjeev would see colleagues flipping through Business India, the leading business magazine of that era. In those days the back of the magazine carried 35 to 40 pages of appointment ads and Sanjeev noticed that everyone read the magazine back to front. The eureka moment?
“Everyone likes to be in the know on jobs. Even at a company like HMM – a good employer – people were keen to track what else was out there. You may not be looking FOR a job but you would look at a job. That was a valuable insight and Sanjeev just knew it had an application somewhere.

To top it all, every week headhunters would call and offer jobs that weren’t ever advertised. So there were a bunch of jobs out there and people interested in knowing about those jobs. If somebody were to aggregate this database and keep it current and live, you would have a product which solved a problem. And it could somehow be monetised. Except there was no way to compile such a database and make it accessible easily and cheaply to users. And so it became one of those ‘file and forget’ ideas. Until one fine morning an advertisement issued by Department of Telecom appeared in the paper. The ad talked about ‘Videotex’ – a service where people would be able to access information stored on a central server from terminals all across Delhi. The ad invited private players to create and maintain these databases, on a revenue share basis. And Sanjeev said, “Hey, why don’t we make a job database on thi platform?” Info Edge was shortlisted. A detailed project report with screens, navigation and UI was submitted. Alas, DoT shelved the project.

The year is 1993 and there are other things to worry about. Sanjeev and his partner decide to go separate ways. Each partner kept one company, and half the employees and assets. Sanjeev was left with Info Edge. And the ‘job database’ idea came with it. But life went back to the usual – reports, databases, market studies. Standardized stuff sold at a cheap price. Info Edge back to the servant’s quarters from the office in south Delhi it had inhabited for a brief while. On a lower cost model, Info Edge made some money and Sanjeev managed to get construction work done at his residence. Once again the company shifted – this time into the second floor his own house. So things were okay. Not too good, not too bad. Business was growing, but slowly. And then Sanjeev visited an exhibition at Pragati Maidan called ‘IT Asia’. Here, he was introduced to the internet for the very first time. It was a defining moment. Just talking about it, recounting how it happened, Sanjeev gets all animated.
“I saw a stall titled WWW. I was intrigued, I said, “What is this?”
He said, “Sir, this is World Wide Web:’ “What is the World Wide Web?”
“This is the internet.”
‘What is the internet?” I had never heard of it. He said “Sir, you can send and receive emails.”
The stall was a reseller of VSNL internet accounts and mainly interested in selling an email id bundled with an internet connection. But Sanjeev didn’t know anyone who had an email ID, so he didn’t see the point. Whom would he communicate with?

Then, the guy added, “Sir, with the internet you can access a lot of information.”On what?”  Sanjeev asked. And the reseller gave a demo, on a rudimentary B & W monitor, on an interface which looked similar to DOS. He opened a site called ‘Yahoo!’ and typed a keyword search. “Like this, sir, you can go and search for any information.” By now Sanjeev’s mind was ticking. He said, “Hey, that old idea that you shelved! This may be the medium for that. He approached the reseller, “Look, I want to set up a website. How do I do it?” He said “Sorry sir, I can’t help you. For that you need a server and all servers are in the US. Sanjeev said “Fine, thank you:’

But a thought had been set into motion – a way would be found. He went home and called his brother Sushil. Seven years his senior, an IIMA grad and a professor at UCLA. I said, “Look I want to start a website on the internet. Have you heard of the internet?” He started laughing. “Of course, we use it every day.”I said, ‘Okay, but it has come to India now, and I want to start a website but all servers are in the US. I need a server’. My brother said, “Yeah, sure. I said, “But I don’t have any money.

It was October ’96 and the recession had hit. The company was back in the red. With one kid in the family and another on the way, Surabhi had also taken a break. By then Sanjeev had taken up a second job at the Pioneer newspaper as consulting editor of the career supplement. When he explained the predicament, bhai said, “Don’t worry, I will pay for your server until you are able to do it. The shared server cost 25 dollars a month. In return, Sanjeev gave his brother a 5% share in the company. “He didn’t ask for it, but I just thought it was fair. Sanjeev then invited VN Saroja (PGP 1990) from IIMA on board. Saroja looked after operations in the startup team and got a 9% stake. Now Sanjeev went to Anil Lall, a friend who was a very good programmer and worked from home on freelance projects. “I said ‘Look, I want a website’. Anil said he knew nothing about the internet. Sanjeev said, “Never mind, I am sure you will be able to figure it out somehow. In a week Anil called and said, “I can do it.” And thus Anil became a founding partner of naukri.com with a stake of 7%.

Meanwhile, Sanjeev had got the classifieds of recognized newspapers from all over the country. He went to two data entry operators in the company sitting idle because business was low (remember, there was a recession!). He pulled out the old file with a detailed structure of the jobs database and said, “I want you to input the jobs in your own words in this data structure. In three days, they had 1,000 jobs. Within a week there was a server. The database and a navigation UI was handed over to Anil. Within a week, a website was ready. And naukri.com was up and running by late March ’97.

Now at the time many people warned Sanjeev that ‘naukri’, ‘naukar’ etc was down market. But something told him it was distinctive, unique. He went with his gut and stuck to the name. Today, it’s one of our greatest assets. Entrepreneurship is about dozens of small leaps of faith like this. Taken every day. Often, you have to take a contrarian stand. You can’t say why but this feels right. And you have to have it your way.

The very act of becoming an entrepreneur is contrarian to ‘middle class values’; study hard, get a  good job, be happy with secure income and steady salary. For the first six months we did not have an internet connection. We would go to Anil Lall’s house with two floppies and he would upload the site. And our promise then was 1,000 jobs minimum on the site. Live and current. No job older than 30 days, all jobs taken from the newspapers.

Soon enough the site started getting traffic because it was one-of the few sites targeting Indians living in India. Most catered to the NRI audience. There were only 14,000 internet accounts in the country when naukri.com launched but to Sanjeev it looked like a large number. Then naukri began to get press coverage. Because journalists were writing for the Indian audience. And when they wanted to quote, they would invariably quote naukri, because there was no one else. That became a big asset. The site got a great deal of press coverage in the first two years without even trying.

Not that he is trying too hard, even now. In the midst of our interview, Sanjeev gets a call from a journalist. He rolls his eyes and excuses himself. A ten minute conversation on ‘job trends’ follows. Sanjeev handles a lot of this stuff even now. Karna padta hai. Free publicity is the oxygen of any business. 10 cms of editorial coverage is worth a 100 cc of paid advertising. The secret is that you – and your company – should be the ‘go to’ person for that industry. Any journalist writing on jobs will call Sanjeev. And he will be available. The other asset which worked brilliantly for naukri was its own users. When folks began sending out covering letters referring to ‘Your ad on naukri.com’ recruiters took notice. Yeh kaun si nayi cheez hai? Within six months of launch, a direct mail letter was sent out to 3,000 HR managers and recruiters. For 350 rupees you could list a job on the site. For 6,000 rupees you could get annual subscription which gave you unlimited listings through the year.

And thus, naukri.com began to get business. Low business, maybe Rs 2-2.5 lakhs, but in year two, more direct mails were sent out. Revenues increased between 8-9 times in one year. I had not seen any of our products respond like that! exults Sanjeev. Suddenly, naukri was bigger than the rest of the company in terms of revenue, although it was still not profitable. Then, it broke even at Rs 18 lakhs a year. Sanjeev decided to shut down every other activity – no more reports, no more databases. “I put all people, all resources to naukri, and said: ‘This is the future’. I figured that perhaps this is the Big Idea. India is a large country, large working population, internationally growing. Sanjeev was right. The world was soon caught up in a frenzy called the ‘dotcom boom’,

The year was 1999. Investment bankers were throwing off their ties and setting up somethingsomething.com. Armed with four page business plans, they promised world domination of anyone, anywhere and anything online – subject to receipt of 10 million dollars in venture capital funds. And some of them actually got it. Sanjeev too started getting feelers. “We would like to invest in your company;’ they said. His initial reaction: “I don’t need your money … We are breaking even now. Next year, we will continue to grow, bring in Rs 50-60 lakhs and make a profit. And I will be happy. The truth was he was happy as a small company, operating  from home. After years of struggle, he could finally see the word profit in the horizon. I didn’t want to sign complex agreements, have somebody breathing down my neck and be under pressure for growth. I was comfortable, leading an uncomplicated life.

Around that time, he came across international magazines talking about dotcoms, Yahoo! IPO, valuations. “I figured something is happening in here. But I said I don’t want the money anyway, no matter what the valuation. But then, funded competition launched. The advertising budget of jobsahead.com – just the launch – was twice as large as naukri’s annual turnover. They had deep pockets. When that happened, Sanjeev realised the game had changed.

“You can’t be a boot strapped small company – 50 lakh turnover, five lakh profit. You got to be a five crore company with 50 lakh profit. To migrate from this orbit to that orbit, you need funding because there will be losses in the interim. Without those investments, you can’t migrate from orbit ‘A’ to orbit ‘B’. A quick call was made to the investment bankers. We told them, look, we have changed our minds. They said, fantastic, great! Why don’t you write a business plan? We quickly put together our business plan, which now looks very embarrassing. Info Edge got funding from IGIGI Venture in April, 2000. The company, with a Rs 36 lakhs turnover received a Rs 45 crore valuation (which in those bubble days seemed modest). A month later, the market crashed.

“We also got lucky in many ways,” muses Sanjeev. We got the money just before the market meltdown. So, we didn’t get time to spend it foolishly. We just put it in fixed deposit. And through the meltdown, we spent the money on technology, products, people, offices, sales team, getting new clients, trying to cut the losses. This is when the importance of building good teams kicked in. “Some of the people who joined at that time – just before VC money and just after the VC came in – have probably contributed more to building the company than I have,” muses Sanjeev.

“I may have been the founder, led the bootstrap years from 1990 to 2000. But post 2000, a lot of the credit goes to so many others …. ” One such person is Hitesh Oberoi, the COO. Sanjeev refers to him as ‘de facto CEO’. An IIM Bangalore graduate, Hitesh was working in Delhi in Hindustan Lever and joined naukri in the pre-VC phase. How did he manage to pull that off, I wonder? Ah, but those were the bubble days. Everyone and their uncle wanted to work for a dotcom!

Hitesh actually came to Sanjeev for advice. He had got an offer from another start up. Sanjeev talked to him for about 2-3 hours about life in a dotcom, what to look at, what is the offer like. At the end he said, “Yeh sab theek hai. But why don’t you join us instead? You will be happier here because we will give you less money and salary but we will give you more stock. Hitesh joined. He got a lot more stock (and ain’t he happy about that today!). The other company collapsed a few months later. Post VC funding, of course, Info Edge was able to hire more people, as there was money in the bank. And after the dotcom meltdown, when people were leaving dotcoms,  naukri was one of the few which kept its eggs in the internet basket. It kept the faith, kept recruiting.

When you truly believe in the fundamental value of a business, it’s not about cyclical ups and downs. People need to eat, they need to bathe, they need to get jobs. When the market crashed the bankers put away their jeans and brought back the ties. But the entrepreneur simply rolls up his sleeve and works twice as hard. That is what naukri.com focused on: building a solid business. The company had money in the bank, and spent it slowly and strategically. There was a dotcom meltdown, and IT meltdown, general economic recession. There was 9/11. But right through that period, naukri kept growing.

Of course, it was a scary period. All around, dotcoms were shutting down, VCs were pulling the plug. But ICICI was patient. The money came in tranches and incredibly enough, it was riot linked to performance. To their credit, ICICI did not hold back anything. The last tranche came one and a half years after the first one. But there was no renegotiation of the valuation. We kept growing but of course there were tough times. There was a point when we were losing Rs. 25 lakhs a month in cash. And we had about 18 months of money left. That was the lowest point – in late 2001.
This mindset of frugality helped Info Edge. “We knew how difficult it was to make money on the internet. We knew the value of money because we had always been short of money. So when this 7 crores came in, we were very careful about how we spent it. Now generally, you invest, costs climb and revenues climb later. But the encouraging thing here was that revenue kept climbing as the company executed very well on sales. And this, Sanjeev says, happened largely because of Hitesh. Hitesh had no sales experience – he was a commercial manager in Levers. But this was probably a good thing. He had no preconceived notions on ‘how sales should be done’. No cobwebs.

The company adopted a ‘common sense approach’. A salesperson costs the company 10,000 rupees salary plus a mobile phone plus conveyance plus office space and use of the computer. All in all, 20,000 bucks a month. So if this salesman can recover Rs 25,000 a month, he is contributing. Then, you keep on hiring more and more sales guys, build structure and systems, open new branches and new markets. And that’s what Info Edge did.

Every branch kept breaking even in six months, and before they knew it, Info Edge was a 300 person sales organization with 10-12 offices all over India. There were two years of losses and then the company broke even at Rs 9.5 crores. Along the way, Info Edge moved into a larger, swankier office in Noida, opened several branches, invested in technology platforms and people. Today, Info Edge has 1,650 people of which 1 ,200 are in sales.

Post break even, the company diversified. There was already an executive search operation. The company added Jeevansathi (matrimony site), 99acres and allcheckdeals.com (property sites), naukrigulf (on local job trends in the Middle East), Brijj.com which is a social networking site  and most recently, asknaukri and education portal shiksha.com. There are multiple lines of business but naukri is still the flagship brand, the one people have heard of the most. As the company grew and became more and more profitable, it became increasingly logical by 2005 to do an IPO. In November 2006, Info Edge became the first pure Indian dotcom to conduct a successful IPO. At the time it had revenues of Rs 84 crores and profits of Rs 13 crores.

A year after its IPO, Info Edge is still growing at a crazy pace. In the year 2007-08, revenues stood at Rs 239 crores with post-tax profits of Rs 55 crores. The company’s current market capitalisation is $630 million* (over Rs 2,500 crores). Many companies go through a phase of high growth. But the Info Edge story is way beyond that. In 2002, the annual turnover was a mere Rs 3 crores with losses of Rs 1.1 crores.

“In the year we made Rs 84 crores (2005-06), our business plan had said we will make Rs 12 crores. So we had massively underestimated our growth. The good bit was that whenever there was an audit in ICICI, on who committed what and is delivering what, we came out smelling like roses.” Of course, it’s also about being in the right place at the right time. As the economy once again went into a growth phase and confidence in the internet was restored, naukri.com took strong advantage of the opportunity.

But let me qualify that – by right place and right time I don’t mean he simply got ‘lucky’. There was a fundamental belief in the product. And the genuine need gap it addressed. When I am talking to entrepreneurs, I always say base your business on deep customer insights, the way naukri was formed.”

Let’s say you have such an idea or insight. But it does not work right now, perhaps it is ahead of its time … Keep it, at the back of your mind. As the environment changes, as technology changes you might be able to ‘join the dots’. To connect different pieces of the puzzle and bring your concept to life. Going to IT Asia was a wonderful break, but it was not something that just ‘happened’. Sanjeev went to the expo every year, just to look around, get new ideas. He even had a strategy: avoid stalls of large companies, visit the small ones – they’re more interesting. Seek, and ye shall find!

Entrepreneurs are seekers. And they are always open to change. There are different kind of pressures operating at each stage- you evolve, and learn to cope with them. “There was a certain pressure when you were not breaking even … There was a certain pressure when you took the VC money and the market melted down and you had to deliver growth … There are more pressures when your financials become more complex and another set of pressures when you do an IPO.”

For Sanjeev, and most other entrepreneurs in the scale-up phase, the key personal transformation area was learning to delegate. It wasn’t easy. “I had to learn to understand that it is not my company alone, anymore.” When you’re going for that kind of growth it’s all about getting good  people, aligning them to a larger goal and making things work. When you have smart people, they will demand their space. They will demand respect. You have to empower them and get out the way.

But ‘what if.’ What if Sanjeev hadn’t got funding at the right time? What if the dotcom industry had remained in the doldrums? What if he was still trying to figure out how to connect those dots? How long does one hang in there? 5 years, 8 years, 10 years … At what point would the entrepreneur throw in the towel? Decide to give up? “Never,” says Sanjeev. I could have quit anytime in the first 10 years, and I would have been a failed entrepreneur. Why did I keep going? Because I wasn’t chasing money. And if you chase something long enough, sooner or later you will get lucky. If you are really lucky then you will do it in 5 years, if you are moderately lucky then you will do it in 10 years, if you are terribly unlucky you will do it in 15 years:’

“But if we had missed this bus, I would have continued working at what I was doing and maybe I would have succeeded at something else 5-6 years hence. The point is to try long enough and hard enough. I think persistence is a quality that you have to have, to be a successful entrepreneur. If you love your work, and it gives your life meaning, then you will have fun through the difficult times. You will find it in your heart to keep going. You will never lose hope. You see, there is no such thing as a failed entrepreneur. You are a failed entrepreneur only when you quit. Until then, you are simply not successful. .. yet.

Case-2

The case of Sweet Success by Narendra Murukumbi
PGP ’94-IIMA, Shree Renuka Sugars

• Read the case carefully
• Identify key points in the case
• Note down the turning points in the case
• Identify the qualities of an entrepreneur through the case
• Identify the key events that happened with the entrepreneur and ways and means those issues were addressed

“I come from a family of traders – the family has been into trading for many generations. I did my electronics engineering and I was all set to take over my father’s trading business. Then a family friend said: ‘Why don’t you do an MBA?”

So Narendra gave it a try. And got through the CAT at the first attempt. The boy from Belgaum thus landed up at IIMA. But his priorities were clear and different from the very beginning. I always wanted to do something on my own. What he would do crystallised in the second year. Meanwhile, Narendra did his summer training at Sohan Silk. An owner run, first generation company which, at the time, was India’s largest silk exporter. ‘Placement’ was a term that had no meaning in the Narendra version of the Oxford English dictionary.

By his second year in the MBA program, Narendra zeroed in on what he would do after graduating. A family friend had once worked with the Tatas on developing bio-pesticides. The project never got commercialised. Now, the gentleman had retired and wanted to ‘do something’ about it. So the young man and the old man joined hands and set up ‘Murkumbi BioAgro’. Narendra borrowed Rs 51akhs from his father as seed capital. Another Rs 25 lakhs was raised through loans. And in 1994, the company started manufacturing pesticides in a small shed.

Over the next four years, the company built up a national network – 80 sales people, spread across eight states of India. By 1998, Murkumbi BioAgro had achieved a turnover of Rs 5 crores. The margins were decent the company was making profits of close to Rs 40 lakhs. A happy situation, wouldn’t you think? Not for Narendra. “Our main problem with that business was that we couldn’t scale it up. We were frustrated with the size of the business. Because after four years, it was at a turnover of five crores. You could not call it a large company.

What prevented the scale-up? “It was a niche product. Bio-pesticides are not very favourably looked at by farmers. Because the products, while they are safe, are slower acting than chemicals. It’s ‘concept selling’. Always tough. One of the attractions of bio-pesticides was the huge potential overseas. The idea was to tap the US market. But eventually, Narendra realised that the registration norms in the US were a huge entry barrier. Despite spending quite a bit of money, they could not cross that hurdle.

So, key managers continued to run the bio-pesticide business. Narendra began scouting for other opportunities. Now sugar may seem a strange choice but for him it was a fairly natural one. “Sugar is the large industry in my part of the country, in Belgaum. Also, in 1998, it got decontrolled. And therefore, for the first time in Maharashtra and Karnataka, after 30 years, you could actually set up new sugar mills in the private sector. Otherwise, it had been reserved for co-operatives. It was a new opportunity, it was a large business. Enough to excite a young man for whom small was not beautiful. Manufacturing is a business which requires physical assets. Physical assets require money. Lots of money. So how was the money for Shree Renuka Sugars raised?

‘Well, the initial project was obviously much bigger than what we had been doing. We essentially diverted the capital from the existing business. The rest we borrowed. We borrowed against our existing business, we borrowed on our personal account, we borrowed from relatives. But the company was still short of capital. So Narendra thought out of the box-he sold shares to the farmers. There is a culture of co-operative institutions in Maharashtra and Karnataka. Farmers are used to contributing capital for societies – milk societies, sugar co-operatives, cotton co-operatives. So Shree Renuka Sugars employed the same format in a public limited company.

The second interesting thing Shree Renuka Sugars did was to identify old factories. The company bought one such factory through a tender put out by the government of Andhra Pradesh. “Our project cost came down and secondly, we got a soft loan from the government of India. Because this was a sick factory and we were reviving that factory. The factory was shifted and VRS offered to 500 odd workers. The trouble was that the factory had been put up in a place where there was no raw material, no sugarcane. So it had to be shifted to Belgaum district.

Why take that headache? Because it was much cheaper. A brand new factory would have cost Rs 100 crores. Done this way, the total project cost was only Rs 50 crores. Of this, equity capital was Rs 12 crores. The factory was relocated, and started operations in 1997. Results were encouraging, and evident immediately. “In the first three years, we processed more sugarcane than the factory had done in its old operations in 21 years. Then we invested in co generation, so we were producing power as well.

Co-generation involves burning the sugarcane fibre that is a byproduct of the process. The power is distributed by laying lines to the nearest electricity station. Again, not an original idea but one which was identified and applied where the business needed it. Because sugar alone did not make the project economically viable at the time. Of course, all these ideas did not just happen. A lot of time and energy was spent on learning the business.

“I visited more than 40 factories in the first two years. And I hired the best consultants in the country to do the technical designing. Because we were shifting the factory and also expanding it. And putting in a co-generation plant required a lot of modifications. But Narendra did not leave it all to the technical consultant. “During the initial set-up stage, I stayed for six months at the factory. So even today, I know a lot about the mechanics of manufacturing sugar and manufacturing power and all that the company never made a loss, thanks to the co-generation unit. But for the first three years, it did not make any great profits either. By the year 2000, the turnover was Rs 50 crores. The profits? Rs 2 crores.

“It was lower margin but it’s a great business because it has size. Sugar is a staple – it’s a product that does not have a cyclicity of demand. Production fluctuates, but demand keeps growing. And yet, like any industry, it goes through its ups and downs. In 2002, sugar prices crashed. Things became really difficult. So the company shifted focus. I took to doing a lot of exports trading and all that, in order to survive. That actually increased our size of business. In a year when the whole industry was in losses, we remained profitable because we made money trading sugar overseas. Others could also have done it. But they saw themselves as manufacturers. They believed that trading “is not our business.” This rigid definition of what you will do, and what you won’t is sometimes referred to as ‘core competence’. Stick to what you know.

But entrepreneurship is about jugaad. And a period of struggle is when that quality really comes to the fore. Your core business is not making money. You take a lateral view – are there other opportunities which are slightly out of your direct line of sight? It all depends on what slot you put yourself in. Do I see myself as a manufacturer? In that case, I will get into other kinds of manufacturing but not trading. Do I see myself more narrowly – as an agricultural manufacturer? Then I will see peripheral opportunities in processing other kinds of agricultural produce.

Narendra took a 360 degree view of sugar. ‘We do anything that is connected to sugar.” So he saw any and every opportunity connected with that. The next Big Idea was to build a refinery. Sugar refining takes low quality raw sugar and processes that into edible sugar. The beauty of it is, you can import the raw sugar from wherever it is competitive in the world. After sugar prices plunged, the amount of sugar cultivated in India itself went down. There were, therefore, massive imports between 2002-05. In fact, India became the largest importer of sugar in the world. We  had the capacity to refine also. So, the government opened up import of raw sugar and made it duty free. That made the idea of setting up a refinery all the more attractive.

The interesting thing is that sugar was a business that had not changed for 40 years. It was licensed, stagnant, run mostly by co-operatives. But like every other sector of the economy it did open up, bit by bit. And it attracted outsiders like Narendra. People who saw its potential with fresh eyes and new energy. Shree Renuka Sugars is now building a dedicated raw sugar factory in Haldia. There is no sugarcane in West Bengal so this refinery will take only raw sugar and refine it to white sugar. All this raw sugar will be imported, hence the plant is built next to a port Haldia. And what of the farmers who subscribed to the initial equity? “They supplied cane to our first factory. We give priority to their cane over non shareholders. At that time, this was a big attraction for the farmer. Because this was a licensed industry, there was a shortage of industrial capacity.”But that is a very small benefit now. We have increased capacity over three times. In fact, we now have six factories. Of course, when Shree Renuka Sugars listed at Rs 285 per share, the farmers got their bonanza. They had bought shares for just 10 rupees. The interesting thing is that while about 50% have sold all their shares, the rest have held on. They are happy with the 20% annual dividend. “Those who have sold, I think, most of the guys actually bought more land. They have, in fact, become bigger farmers. Because that’s the business they understand.”

“The other innovation that we did was, we couldn’t build new plants fast enough. The country was going into a shortage, sugar prices were going up. So what we did was, there were some sick co- operatives, we went to the management, to the board of directors, which is essentially the local leaders. And we said, we would lease those factories and run them on management contract. So we got the first one for two years. In 2004, we did another one for six years. Today, out of the six factories that we run, three are leased. We are running them, but we don’t own the assets.”

The advantage? It is much cheaper than putting up a new plant. And faster also. Every factory Shree Renuka took over, it managed to turn around in no time. The first factory for example was running at 50% per cent of capacity. Last year, Shree Renuka ran it at 115% capacity. Speaking of innovation, the idea of a young man going into business with his mother is a unique one. But that’s the story of Shree Renuka Sugars. “I think both of us were looking at doing something together. In a sense, she was waiting for me. I don’t know why it isn’t more common. After all, so many people go into business with their fathers, brothers, sisters and even wives. But somehow it is unusual. How many sons would believe their mothers have sound business skills? And how many mothers would have that confidence?

In this case, both sides did. From helping her husband with the trading business, 61 year old  Vidya Murkumbi became an equal partner. So how did they divide responsibilities? “Fundamentally, we have very different strengths. I am better on finance, the external interface. Whether it is the financial market, export market or world market. She has a very deep strength dealing with farmers, with local people, local administration, local government. And she looks after the internal administration. I am not a good details person:’

Mrs Murkumbi is still based in Belgaum – she visits the factories regularly. Narendra is now based in Mumbai and heads South once a month. “It has been a good partnership … There is obviously that amount of trust when working with someone in the family. And it is always better to have company. You have a lot of peers when you are working, while entrepreneurship is essentially a very lonely occupation.

Shree Renuka Sugars crossed a turnover of Rs 1,000 crores in September 2007. In the current year, Narendra believes it will achieve Rs 2,000 crores. The second quarter figures (Jan-March 2008) indicate 95% growth in revenues, meaning he is well on track towards achieving that. So what keeps him going as an entrepreneur?

“Well, firstly, it is a very large business in scale. So that is exciting. Secondly, it is very fulfilling that you are directly creating value on agricultural turnover. I think the great part of my own satisfaction in this business is that I created wealth not only for us, but 75 employees and 10,000 farmers directly through the stock. “I have built three new factories, at three new locations. And each of these factories, the minute they start doing well, the economy around you visibly improves. That gives great satisfaction. But Narendra is barely 38 today. Another 20-30 years of working life ahead of him. Are the challenges he faces ahead, in this company, big enough? ‘When we were 50 crores, 100 crores, the growth in this business was limitless. Even today, at 1,000 crores, we have a market share of only 2.5%. The way in which we are growing, we are outperforming the rest of the industry at the moment.

“But 3-4 years down the line, growth will slow down. I never thought I would say this, but now I think that even this business has certain limitations. Already, things are kind of stable. More and more senior people have been inducted. Soon, there will be a Chief Operating Officer. Once revenues touch Rs 7,000-8,000 crores (it’s just a matter of when, not if!) you can be sure Narendra will have moved on. To something new and even bigger.

“You see, beyond that level, the incremental market share would be very tough to get. It would be very expensive. Energies would need to be redirected somewhere else. “I think the drive to start off something on your own, once you have it, you will continue to have it. If something is  running well and smoothly, you will look for new challenges. And in India, there are so many new opportunities, that I think it doesn’t make sense to stick to one business.

“I think the old philosophy that we all learnt even on the campus, of core competence, of doing one thing world class, it no longer holds in this country. The more successful entrepreneurs at the moment have successfully been able to jump into new opportunities. And also scale up those opportunities. And each new business is a challenge but it will never be as tough as the very first one. “Nothing is as formidable as the first four years – when I was in the bio pesticides business. Running a small business, you have to do a lot of running around yourself, it’s very hard. You can’t attract talent, you can’t pay high salaries.”

“For example, when we started, we were a partnership firm. Then we realised that if you want to grow across the country, people won’t even join a company that is partnership. So we changed it to a private limited company. What are the other changes that come with a label like ‘success’? How does it feel to have enough money not just for needs but for any conceivable want?

“I don’t think my lifestyle has changed that much. I am still in a rented flat. Our own flat is not going to be ready for another year. And I bought that last. I bought this office, before that we built three factories. In terms of priorities, ‘personal’ things have always been last. “I think there is an ambition to grow larger as a corporation, as a business and that is a primary motivation. Personal wealth doesn’t really matter. When you are the owner and CEO of a company, most of your expenses are anyway taken care of by the company. Car, travel, holiday once a year, all your medical expenses. So no ‘billionaire’ purchases – yacht, jet, Lamborghini? He laughs. “You know when the Business world guys first approached me I talked about the Ambanis. Because they are the real billionaires. If you write about me, then it has to be about how we created this wealth with the help of the farmers. How we shared it with them.

And it’s not just for reasons of ‘public image’. This new generation of entrepreneurs genuinely feels socially responsible. In a way that extends beyond the idea that ”we are providing employment, and that is uplifting people. These entrepreneurs earmark their money and professional expertise to make it happen. An example – the Shree Renuka Sugars Development Foundation. 5% of the company’s stock is in this non-profit trust. The foundation runs schools for the children of contract labourers who harvest the cane. It is now starting health centres and building a hospital in the factory, among other things. The net worth of the foundation is close to 100 crores and it is run by professionals.

For the last two years, Narendra has also been on the board of ICICI Bank. ”They were looking for somebody with a mix of experiences, he shrugs with typical modesty. “I think they found a combination of both entrepreneur and agriculture background in me.

These duties take up 12 days a year, but according to Narendra, the exposure is tremendous. If there was a moral to the Shree Renuka story it would be summed up like this – there is no old business. There are only old ways of doing business.

The first business that Narendra ventured into might be termed as pioneering. After all, ‘Biopesticides’ was a new product idea. But the business was run in a traditional way. Nothing path breaking there.

”Then I entered this very old style business. And I think everything that we do, everyday, is innovative. It’s not that you have to dream of something that nobody has ever done. All my best ideas have been done by others. We have done only two things.”

“One, we have done them better than the guy who got that idea. And second, we have scaled those ideas up. If somebody did something on a very small scale, I said, why can’t it be 10 times bigger? When somebody put in a 50 tonne refinery in India to process raw sugar, we said, why not start at 200? When imports started, we said, why not 1,000?”

The limits are in your own thinking. The impossible is what you believe cannot be done.

Case-3

The case of Deep Kalra
PGP ’92-IIMA, makemytrip.com

• Read the case carefully
• Identify key points in the case
• Note down the turning points in the case
• Identify the qualities of an entrepreneur through the case
• Identify the key events that happened with the entrepreneur and ways and means those issues were addressed

Deep Kalra is your average Delhi dude. “My grandfather had a business of dry fruits in Chandni Chowk but there was never any question of joining it. My father opted out of that long ago. Deep grew up in a typical private sector home; very comfortable. But it was very clear from the beginning – agar kuch banana hai to khud hi banana hai. BA from St Stephen’s college, and then an MBA from IIM Ahmedabad. He does not sound very ambitious or driven – “Kind of tumbled into it,” is how he describes it.

Out of campus, Deep joined ABN Amro. After a year or so he realised ‘Banking nahin karnee! There was the seed of a thought – it would be fun to do something of your own. But it remained a thought. After three years in banking and exploring various options in marketing (Arvind Mills and Pizza Hut among them), Deep chose to do something ‘crazy’. He joined AMF Bowling, which pioneered the concept of bowling alleys in India. AMF had no operations here, so the job was in essence entrepreneurial. “India knew billiards, India didn’t know pool. And India didn’t know ten pin bowling, at all. The more I studied it, I said, ‘It’s a no-brainer, it’s got to do well here!’ AMF did set up a couple of hundred bowling alleys but bowling never quite became the “storm of the moment” that Deep wanted it to be. And there was a reason for it. The cost of real estate in India (even in 1995!) was just too high. Plus, the idea was probably ahead of its time as there were no malls and multiplexes.

Deep spent four years with AMF, and “Really, really tried very hard to make it happen. We had three offices, a small team out here. We were pushing it, trying to create bowling as a sport, getting accreditations, sending teams to the Commonwealth, trying to get it done as an exhibition sport in the Olympics – various things. We also did a lot of tournaments for school kids. Although Deep worked for AMF as an employee, it was entrepreneurial for two reasons. The fixed salary component was low, it was based around bonuses and how much equipment you sold. Second, there was very loose support from the US office. Apart from equipment support and service support, you pretty much did your own thing. The disadvantage was that there was nothing new to learn beyond a point. So Deep began exploring options once again, and decided it was time to go back and work for a big company. An exciting opportunity came up from GE Countrywide – the consumer finance business. Although it was back to financial services, the job was to look at new avenues for distribution. And a man called Nitin Gupta, then President of GE Countrywide, completely inspired him.

Nitin said, “Everyone has been selling consumer finance in the same old way, through the dealerships and DSA network. We want to make a quantum leap; we want to do it differently. The internet is happening, various new things are happening. That’s your charter. You have to revolutionise the way we sell consumer finance. Around the same time Deep came across people like Ajit Balakrishnan at rediff.com, Sanjeev Bikhchandani at naukri.com and the folks behind sify.com. That’s when the turning point happened.

“I realised internet is going to change our life fundamentally. And I always wanted to do my own thing. I was 30 years old and said to myself, ‘Abhi nahin kiya to kabhi nahin karenge. And so, he took the plunge. Completing his notice period on 31st March 2000, Deep set up shop on the 1st of April. Very aptly – All Fools Day. Because entrepreneurs are fools in the eyes of the world, aren’t they? The years 1999-2000 were a great time for startups. You could run a dotcom business with a small amount of capital. And even that could be raised fairly easily from VCs.

“My wife was working, so it made the decision easier. Ironically by the time I set it up, she had stopped working, we had our first baby, a lot of things had changed. I am clearly a risk taker at heart. I won’t gamble too much in cards, but I just had an inner confidence that things are never going to get so bad that you won’t have a job even if this thing does not work out. So even as he continued with the day job at GE, the nights were spent planning his own venture. Two models came to mind – one was online stock broking. It made perfect sense, given his training and work experience. But Deep’s heart was in travel and that’s what he ultimately chose to do – an online travel portal.

And heart should rule over mind when it comes to such a decision. Because that’s the only way you’ll put not just your body but your soul into what you do. The math you can learn for any business. Of course it can’t be purely love. The market size and opportunity as a whole must make sense. Deep recalls a third idea. His first child had just been born, and he thought, “Why not a kids portal?” Thankfully, better sense prevailed and the idea remained stillborn.  Online travel made better business sense 50% of all e-commerce in the US was around travel.

However, Deep actually made two plans. One was for online stock broking. “What put me off was that this is going to be a big financial institutions play. It will always be their thing and I will be the minor partner. ICICI Direct had proven me right. IndiaBulls has proven me wrong. They have managed to do it as entrepreneurs. But no regrets – travel has been much more fun. I think this is where I truly belong.

Besides being an avid traveler, Deep had another connection with the industry. His wife was making travel shows like Namaste India and Indian Holiday for a production house. So travel it was.
The venture started out as ‘India Ahoy’ – a site which is still used to attract high leisure travelers from overseas. But the main brand and site were later rechristened makemytrip.com – a name more suited for the Indian market. I look back at my first business plan and it always makes me laugh. What was funny about it? What was funny was the amount of expectation I had fro  things like video streaming. I thought that eventually people might even pay to watch videos on travel, which today sounds quite bizarre! The numbers worked out in some strange way … but where the revenues came from were quite different.”

Then, the way VC money came in. That was also quite amazing. “The first guy I met gave me the money. He was Neeraj Bhargava, Managing Partner of e Ventures. We actually closed the deal sitting in a cafe in the Crossroads Mall on a paper napkin! Hum baithe the chhote se restaurant mein, Food court tha, shaam ka time, and he was saying ‘Chalo yaar we will give you x million dollars and we will take so much percentage. And Deep rues how ill informed he was. After consulting a couple of friends he agreed to give away 70% of the company for two million dollars funding.

Luckily, he got a second chance to get it back. When the dotcom bubble burst, e-Ventures packed up from India and made a distress sale. Deep bought out his own company with his life savings. And that’s when he believes he really became an entrepreneur.

“The belief in the business was so strong that I went on, without drawing a salary, for 18 months. And whatever I was not taking as a salary, was converted into equity. I also encouraged two senior colleagues to do the same and they were elevated to co-founder status. Of course many others said ‘We can’t handle this thing yaar, and left. This was June 2001. The irony was that now, a majority stake was with the management, and minority was with some angel investors. Some of these angels were individuals in e-Ventures. So even as the VC firm bailed out, they really believed in the idea and put in their own money.

Salary payments became difficult. The company shrank from 40 employees to around 20. We moved from a smart 3,000 sq ft office in Okhla into the mezzanine of the same building which was 1,000 sq ft. We had a running desk around all the walls and just swung our chairs to huddle now and again. Aur itni jagah mein bhi ek 14” ka TV kone mein laga diya tha jahan par cricket dekhte the. So it was a lot of fun. Those were the real days I think …

“The good part,” Deep says wistfully “is that of those 20+ people, 15 are still with the company. Two of the senior folks (both VPs) became co-founders because of the sacrifices they made at that time.

“We had two and half to three months salaries to pay. Bills to take care of and no more money. We came that close to shutting down. And I told these guys, we can pack up, everyone can get their dues and go back to your comfortable jobs, or we can make a fight of it. We were seeing the metrics, we were going up on everyone of them. And improving”. So they decided, “We are going to fight it out boss.”

Deep’s story tells you that the path of entrepreneurship is a crooked one. You never know what lies around the next corner. But the brave keep hope in their hearts, believe in what they cannot yet see – and keep going. Talking about business, when makemytrip set out, it said, “We will be the defining travel portal for travel to India, from India and within India. So it was domestic travel, outbound travel, Indians going overseas, NRIs coming to India, foreigners coming to India. Everything!

Within two to three months, it was apparent that, in the India of 2001, no one was buying online. Lots of lookers, very few bookers. Everyone was coming to the site and saying “Wow, this is cool” But that was it. These were the days when there was TravelGenie funded by ICICI Venture, Net2Travei from Star TV, as well as Travelanza, TravelMart India (Citibank funded), and so on and so forth.

The advantage makemytrip had was pure MBA style, cold, hard number analysis. The company realised where traffic was coming from, who was buying, who was not. The first metric that I learnt to measure in this business was the cost of customer acquisition. And we now do it as a crazy science. We monitor it by the hour. Our web analytics, the real core of MIS, is the DSS of this business, ie, the Decision Support System. It’s amazing what you can get.

It became clear that ‘India focus’ was pointless. So makemytrip simply stopped marketing in India. All energies were focused on US based NRIs. And that saved the company. This strategy saved us through 9/11, it saved us through SARS, it saved us through the attack on Parliament, it saved us through the dotcom bust… Because that market was a very developed one. NRIs were used to buying online. Also they had a natural reason to come to India year after year. Kids were being born, marriages were happening, so on and so forth. You didn’t have to sell the idea of India itself. Just the convenience of booking online, at good prices.

The US focus continued right up to 2005. Makemytrip became a nice, robust and profitable business. But it wasn’t huge – about $15 million in gross billings, $2 million in commissions or ‘revenues’. Trouble was, this market was not tremendously scalable. The same model did not work in the UK or Australia for various reasons. The question was, now what?

Then, fundamentally two or three things changed in India. New domestic airlines were launched. Complete and utter chaos ensued in the market. Every day there were ads in the newspapers offering fares of 99 rupees, 7 rupees and even zero rupees! So it was the perfect time for a portal like makemytrip to come in. With the help of technology, the site gave all the choices at one go. And people could make their own decision.

Power shifted from the travel agent to the customer. The second big trend which gave Deep a lot of courage was a meeting with the folks at Indian Railways. “I sat with Amitabh Pandey who is actually an alumni from St Stephens. Senior guy. And he candidly shared with me their numbers. At that point of time; they were doing 5,000 tickets per day.

I said, “Wow! That’s impressive. And he said, “Guess what? They all pay by credit card. So people had started paying on the net, and using their cards was not a big concern. However the real clincher for Deep was the fact that 65% of all tickets bought were for non-AC trains. So the common man was buying online. He was paying online, and thanks to Indian Railways, they had instilled this trust in the internet buyer ki aap ki ticket aap ko kal mil jayegee.

“We actually made several test transactions on irctc.com. In each of those ten cases, meri ticket mujhe agle din gyara baje se pehle pohonchee. It never failed! So I said, ‘This is a great model’ Refunds are tough and all, but these two factors convinced me that the markets are ready. Of course there were also some numbers put out by NASSCOM which said the internet user base would soon be 30 million. But that is more a statistic to take note of, not bet the company’s future on.

Ultimately many think tanks churn out reports, with all kinds of projections. Some estimate correctly, others are way off the mark. However real change can be sensed when people start behaving differently … and that’s what was happening here. Air Deccan did a lot for us … They managed to bring the cheap ticket buyer to the net by screaming and giving these crazy prices. The buyer said, ‘Yaar, cheap deal chahiye toh net pe jaana hai.’ So makemytrip did not have to do that evangelisation.”

Now the company was faced with another decision point should it launch a real quick with a rough and dirty site or be build the coolest site in the world and take 6-9 months to launch? I am glad we chose the first. Because we launched in September 2005, when nobody else was in the market. That made us synonymous with the term ‘online travel’. And we still occupy that space. Even though other portals have gone crazy advertising.”

The current challenge is to make the India business profitable. Deep expects that to happen in the current fiscal. But the growth story has been astounding. By March 2008, makemytrip achieved $250 million in sales, ie, approximately Rs 1,000 crores. That translates into $20 million in commissions or Rs 80-90 crores. 70% of the business is now from India, with close to 10,000 tickets being sold online each day.

Within 11 months of launch, makemytrip became the highest issuer of air tickets for any single travel agency location, including the traditional players. The big challenge now is to sell other products online. With hotels, makemytrip is beginning to see a breakthrough. Still, a big change of habit is required. Then there is the sale of holiday packages. Mostly people collect information online but purchase offline, from a real human being.

Which is why makemytrip now has an ‘army’ of people selling packages over the phone. The company has set up 20 ‘travel stores’ across the country to be able to sell holiday packages to the various regional markets. The thinking was – even if people don’t buy from these outlets in large numbers, when they see an offline presence, they trust the brand name more. But surprisingly, sales have been excellent offline as well.

“Ahmedabad, last month, one crore in sales. Out of nowhere! They are six months old! Bangalore is going to cross one crore next month. So these are the times you kick yourself and say, ‘My God! Why didn’t you do it earlier?’ You know, in hindsight everything is 20-20 kind of vision. But you have to learn. You can never say ‘Hum toh online hai, kabhi offline nahin jaayenge.’ That’s bul/shit! Dhandaa kama hai hamein.”

You don’t define your business too narrowly. Travel means travel means travel – on land, on sea, on air, offline, online, under the line, whatever. You start with an innovation, but then you extend tentacles into the regular side of the business as well. Growth is a hydra headed monster with an endless appetite!

Of course all this growth did not just happen. Cash had to be burnt to build a national brand, so investors once again came into the picture. Soft Bank Asia Infrastructure Fund was the first to invest. In subsequent rounds, Deep took money from three other funds – Helion Partners, Sierra Ventures and Tiger Global.

But why take money from so many different people? Because different guys bring different things to the table. They also help to manage competitive pressures. Of course, managing so many investors is definitely a challenge in itself. Deep’s investor philosophy is simple, “I have only taken in capital from guys who I think can add value to us. My litmus test is, would I take this guy on my board if he wasn’t giving me money? As an independent member? And in every case it has been a YES. We have refused money from bigger ‘brands’ where I don’t think the partner in question would add value to my board.”

You have to be hard-headed. When it comes to investors, and even when it comes to your own people, loyalty is important but competence matters more. You are hurting the business if you keep giving bigger jobs to the original team when you know there is someone else who can do it better. As fresh blood comes in it is only natural that some of the older folks who don’t scale up their skills get left behind.
We leave the bright and buzzing makemytrip office in Gurgaon’s Udyog Vihar and head into Delhi. Deep has a meeting with IRCTC officials. He hopes to convince them to let him sell railway tickets through makemytrip. As they say, “Try, try and try until they give in!”

By now I’ve learnt a lot about the business. But what about the journey as an entrepreneur? It certainly does not sound easy. From downsizing the business to then massively scaling it. From 20 to 750 people. You are right. We’ve had quite a roller coaster ride. It was well funded when it started. A second round of capital of one million was promised to us – it never came. I still like Neeraj because he was honest enough to tell us, ‘Deep, I frankly can’t do anything, as they (the Limited Partners) are wrapping up the India fund’.”

The understanding was that if the company met certain metrics, it would get a follow on round at a pre-agreed valuation. However, this was never put in writing. “Rather naive:’ he now admits. The turning point was when the rubber hits the road and you say ‘Are you really willing to stake everything?’ I mean if you start up, you write a business plan, you get funded. Yes, you take a modest salary but you never go salaryless. Fundamentally things don’t change. My whole thing was I don’t want to impact the quality of life for my family.”

“Then you put in your life’s savings, you don’t draw a salary. Tab, bahut jack lagti hai. Because then you are eating into your princely 30 odd lakhs of net worth … You are saying, ‘This better payoff because it really took a long time to build.’ So I think that’s the moment of reckoning clearly.”

“It comes down to confidence, it comes down to a leap of faith. And, you know I am not sayingthis to sound politically correct but I think you really need support from home. Especially from your wife. Because you can’t be doing this 24 by 7, including working all-nighters if she’s unhappy about it.”

Luckily Deep got that support. His wife always said, “You have got to do what you love.” And that was how he left ABN with no regrets. During the makemytrip crisis she said, “You have put in so much, you are seeing promise in it. I don’t understand business the way you do, but if you think it’s getting better month on month, and at some point it’s going to be a good thing, then let’s just go ahead and do it and make it happen.” She even offered to go back to working fulltime. The one thing she never said was, “Listen, let’s just play safe!”

But it never crossed his mind to give up? “At one time we came very close … ” he admits. So what kept him going?

“Once you have tasted blood, working on your own, I just didn’t want to work for anyone. For me that would be the hardest thing to do. That is why if we get a good option to sell out, maybe I’ll take it. But that will be time to exit. Ek do saal kaam kar ke I would be thinking of the next baby … ”

However, the future Deep would much rather carve out for his company is an IPO. To provide liquidity to all stakeholders, make the company even bigger and most importantly, to remain in control. And then, what happens? The entrepreneur usually remains the single largest shareholder, although small in terms of percentage, and stays at the top to run it. Because he is the best person to run it. Or he moves on to a less hands-on, more evangelist-chairman kind of role.

“One of my VC friends insists that I am going to join his tribe one day … which is an interesting option. The guys who turn VC, it’s not just about the money, but the thrill of being able to learn a lot of businesses and vicariously enjoying being involved in them.”

At the end of the day, Deep knows he was lucky to get a second life as an entrepreneur. And he is enjoying every single moment of it.

Case-4

How a techie gave up a cushy business in San Jose & offered distressed farmers a new lease of life in Mandya

By Sowmya Aji,
Read more at:
http://economictimes.indiatimes.com/articleshow/49519836.cms?from=mdr&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

• Read the case carefully
• Identify key points in the case
• Note down the turning points in the case
• Identify the qualities of an entrepreneur through the case
• Identify the key events that happened with the entrepreneur and ways and means those issues were addressed

The story begins with a 37-year-old software developer who decided to give back to what he came from. In 13 months, this decision has rippled and changed the lives of 300 farmers in his home district of Mandya in Karnataka, through a rural cooperative and an enterprise that will generate annual turnover of at least Rs 36 crore for them.

The green Mandya district has seen the highest number of farmer suicides in Karnataka this year, mainly due to debt. With his arrival, the local boy’s farmer-friends see a glimmer of hope, a means to better their lives and pull the district’s agriculture sector out of the morass it is in. They want to propagate his ideas, scale up his model and spread the goodies to the whole region.

Meet Madhuchandan SC, “Madhuanna” to the Mandya farmers. Till August 2014, he was living up the American .. dream, a life of comfort and ease with his wife and daughter in San Jose, California. He travelled the world, worked with various companies and became the cofounder of a company in San Jose. He had the world at his feet, as the product he designed for this company has become the leader in the field.

At that point in time, MC — as he signs himself — was on a high. “A very big IT company had junked their own product and replaced it with the one I developed,” he recalled to ET Magazine.

With the high came the anti-climax. “I felt I had already done all that I wanted to in the software field. What more was left? Be chief executive of yet another company? That was not fun, anymore.”

Epiphany struck on the morning of August 1, 2014. MC told his wife, Archana, his classmate from their engineering college in Mandya: “I want to go back to Mandya and live the life of an organic farmer. Do you want to go live that life only after we are old, or can we do it when we still have some energy left?”

Return to Roots

Archana and their daughter, 11-year-old Aditi, thought about it for the whole day. Aditi’s school year was to begin in 15 days. By evening, Archana and Aditi gave MC a ‘yes’ for the move. And just like that he snapped all links: booked tickets to leave for Bengaluru, within 10 days, on August 10; paid thousands of dollars against the pending mortgage for his house and SUV; left behind or gave away all that he owned and returned to his roots.

“I was always crazy about farming. Now I wanted to live that dream in a small farmhouse on our land in our village,” he said. When he came back, though, the son of a former University o Agricultural Sciences vice – chancellor (S Chikkadevaiah) found that everything was not as simple as he had planned. He nosed around in Mandya, realised that farmers were distressed — despite owning irrigated land — and that there was no marketing mechanism for organic or even for the district’s major crops of sugarcane and paddy.

That set aside his immediate plans of a small farmhouse near his village Sunaganahalli in Mandya. He settled his daughter and wife in Bengaluru and determinedly began working on a solution to the situation in Mandya — an out-of-government one. He activated the strong roots and ground-level network that he has in Mandya, which was represented by his late maternal uncle SD Jayaram, a minister in the Janata Dal government in Karnataka in the late ’90s.

Then came a year of hard work, endless conceptualising, brainstorming with friends, reaching out to farmers. The germ of an idea surfaced: that there was a big market for organic products in Bengaluru, just two hours away. Several farmers, influenced by zero budget natural farming pioneer Subhash Palekar’s workshops in the region, were already practising it.

All that was necessary was an intermediary to supply the product to the consumer. MC didn’t let any grass grow under his feet. A friend in Mandya suggested he consult Narayana A, a professor at the Azim Premji University in Bengaluru, a London School of Economics alumnus. Narayana suggested that a cooperative society to source and market organic farm products would be the best business model.

Set the Ball Rolling

Rustling up the rural cooperative was not hard. MC had the eager support of progressive farmer Venkatesh from Panakanahalli in Mandya. Panakanahalli had witnessed a suicide by a 35-year- old farmer, Mahesh, on June 30, and was also visited by Congress vice-president Rahul Gandhi on October 9. Venkatesh, nicknamed “Sakkare” (sugar) Venkatesh, has been growing sugarcane the organic way from over a decade. He is aware of all the ground level problems and his solution is: “We need to go organic, use natural methods to retain fertility of our soil, generate useful byproducts and ensure that it goes to the right market,” he told ET Magazine.

Venkatesh and MC teamed up to put together the Mandya Organic Farmers Cooperative Society comprising progressive farmers, ayurvedic doctors and agriculture scientists. The youngest member is 22-year-old Sachin from Maddur taluk, and the oldest is 62-year-old Doddalingaiah, both equally enthusiastic on the subject. Simultaneously, MC got four friends from Mandya, all leading lights in the IT sector, to pool together Rs 1 crore in a company, Organic Mandya, which took on the job of planning how to reach the 22 products grown in the district to customers.

With the bubbling enthusiasm of a 10-yearold, MC translated the dream into action by setting up an integrated organic zone at Budanur, Mandya, on the Bengaluru-Mysuru state highway. This is the second-most passenger-heavy highway in India after Pune-Mumbai — MC did a study — and the location was ideal to generate a lot of eyeballs.

The zone has a supermarket, with a farm growing organic sugarcane, vegetables, coconut, pulses and oilseeds planned right next to it. There is a restaurant selling only organic food, shops selling organic juice, a one-stop-shop for terrace gardening. There is even equipment set up to churn out fresh oil: the shopkeeper puts groundnut or sunflower seeds into it and the customer gets fresh oil instantly. Opened on October 1, this integrated zone has generated a turnover of over Rs 12 lakh so far.

“It is all about design and packaging,” MC pointed out. He applied his corporate knowledge to the farm marketing field. “If you call jaggery as just that, it won’t sell. We worked on promoting joni bella, a liquid form of jaggery. This is a stage just before the jaggery solidifies. We figured out how to preserve it in this form and sell it as a new product. It has high calcium and iron content, tastes better than honey and can be used in any dish.” The unique product, priced at Rs 65 for 250 grams, has sold like hot cakes, with customers coming back for more.

More in the Making

MC also set up a Facebook page for the company and a mail order catalogue in May, with an initial base of 1,000 customers, prior to opening the supermarket. He sent out mails to his friends, offering 32 organic items including organic rice, pulses, millets, a healthy malt drink, sea salt, sweets and joni bella, as a monthly dinasi (grocery) package for Rs 3,000. The response has been overwhelming. “All I need to do is get 10,000 families on this platform and we will generate Rs 36 crore a year, more than enough to support a taluk of farmers,” MC contended. “We will do it,” he added, with careless confidence.

The farmers’ cooperative has set off the ground work to fulfil the orders that are pouring in. They  bid for and won the rights to operate an organic jaggery farm at the state government’s VC farm in Mandya to make the jaggery byproducts. This farm is buying sugarcane from organic farmers at an unheard-of Rs 3,501 per tonne, about twice the amount they get from the state’s sugarcane factories and not paid anywhere in India. “My fellow directors at the cooperative asked me how we can pay this much and still work it out. But the market is there, we are earning that money with profit and just passing on some of it to the farmers. We are showing practically that it can be done,” MC said.

MC’s work and ideation, however, have just begun. He is building bigger dreams from this platform. He has set up another company, Just Power, to figure out how to generate solar power and how to water the fields from pumps that don’t use electricity. “We can do it with power generated from flowing water; we don’t have to invent, there are existing models. We just have to apply them,” he said.

At the farm level, he has worked out a project for agri-tourism and agri-fitness, aimed at the software crowd that has never seen or been on a farm. “We have tied up with three corporate teams already for agri-tourism. Software firms take their employees to spend the day at resorts as a break and money is set aside for this. Instead, we want them to come to our organic farms, eat farm-fresh food, breathe clean air and see how and where their food comes from,” MC said. This, he pointed out, automatically created a community and a future market for the farmers’ organic produce.

MC took his own tremendous enjoyment in the experience of sowing paddy in his fields and gave it a package form. “People spend huge amounts on fitness, to build muscles, to gain better balance or to just de-stress. All of that is possible with just digging holes in the field or harvesting the crop. You feel a oneness with the land which is more enervating than any exercise in any gym. I have also calculated the number of calories that can be burnt this way. We will offer this experience to our friends in the IT sector.” Naturally, his farmer friends are smiling all the way to the bank and are riding, blissfully, on the Organic Mandya theme: “Don’t eat anything that your grandmother wouldn’t recognise as food.”