JA Chowdary President - TiE - Hyd, YS Rajasekhar Reddy - Chief Minister Andhra Pradesh, M Rammohan Rao - Dean ISB, david Hopper - US Consulate General Chennai.

Sculpting Ideas Building Businesses was the promise of TiE-ISB Connect 2006. This note gives the main takeaways from this grand one of a kind event which brought investors and aspiring entrepreneurs together. 

300 Business Plans, 20 Shortlisted for the Venture Capital panel, 40 Elevator Pitches, and more than 400 people attending the TiE-ISB Connect 2006. The event had 9 tracks on topics ranging from IT-ITES services to Semiconductors and New Media and Bio-Pharma.   Here are some key takeaways: 

Entrepreneurs and what makes them special

Ramalinga Raju, Chairman, Satyam Computer Services, while addressing entrepreneurs said "You entrepreneurs are making a choice, a choice that you are willing to fail. A choice of hard work, dedication and giving up a lot of things. Later you will find success but the process takes time." However one is not born an entrepreneur, "Entrepreneurship is an acquired trait. It arises out of inquisitiveness - asking if they can do something better than what exists. Ramalinga Raju continues "Leadership is about significant value creation using little resources. Today even structures within large organizations are tending towards entrepreneurship."

Ashutosh Garg (Guardian Life) adds that "As an entrepreneur you really learn what "The Buck stops on my desk means" since you need to pay the bills at the end of the month.

Lessons for Entrepreneurs:

Murphy's Law was quoted by not one but two entrepreneurs, Ashutosh Garg (Guardian Life) and Sanjeev Kumar (Portal Player) "If anything can go wrong it will." and you had it reflected everywhere in the entrepreneurs journey "In order to get a VC to fund you, you must first have proved yourself." There are several such lessons which are similar to Murphy's Law.

Sanjeev Kumar sums up very aptly what a lot of entrepreneurs had to share:-

1.       It always takes longer

2.       It always costs more

3.       We need leaders not managers

4.       Perseverance Pays.

5.       In good times prepare for the bad times.

6.       Communication is the key.

VP Harris (WITCO) "If money is the main driver; do not get into it." Because there will be very difficult times and what will keep you going is your passion in the business and not the money. "Let your training, processes, research and theories and all that you learn not inhibit you from going after your passion. For instance who would have thought that people will ride Mountain Bikes in Mumbai or people who have never been on a Basket Ball court will wear Basket Ball shoes.

Opportunities - how do you size it up?

When talking about business ideas,  Sateesh Andra (Covenor TiE-ISB Connect) asks "Do you dream about the same thing every day or a different thing every day?" If an idea sticks in your mind persistently for a long time you are on to something." If you are dreaming of different thing every day you know that you have not got it yet. He added that sometimes you cannot validate a new idea with just customer feedback; that is when the pertinent question ‘How passionate are you about your dream?' comes through.

When looking at opportunities you might often wonder whether a large company will not do the same thing. Vani Kola (NEA Indo US and founder RightWorks) is of the view, "Large companies like anyone else can only focus on the top 5-10 priorities so look at something not on their radar or too small for them to focus on."

Speaking on Internet businesses, Ajit Balakrishnan (Rediff) says "The Long tail is what the Internet is about, the era of the big hit is over."  Your regular main line stores cannot cater to the niche market, yet because of the Internet it is possible to reach out to people looking for niche products. Surprisingly Sarath Naru (Ventureast APIDC) spoke of how they were looking at the Long Tail in the retail business by investing in Primus, a discounted Branded apparel chain which operates from small stores in neighborhood areas. Ajit however cautioned that if there are no network effects (Users getting other users to participate) then it is not a true Internet business but merely a website for a business.

Srini Raju (i-Labs group), however has a different take on the opportunities he is looking at funding. "Bottom up solutions for the Bottom of the pyramid solutions." is a favorite theme of his. "Because Top down solutions will not work, due to high salaries and cost structures. When you look at entrepreneurs with a bottom up (grass roots) solution you will find they may not know how to speak in English or make business plans but they have business acumen, they are not even looking for VCs because they feel VCs will not fund them or are not aware of these things." But Srini Raju believes in the value they bring and he is keenly looking for them.

Jacob Kurian (ICG Fund) says "Ask yourself the question, ‘Why should consumers come back?' It is easy to get people to walk into your store once but what happens next is what you need to watch out for."

Dr K Ramachandran, (Professor- ISB)  says the best way to predict if a startup will make it or not is to evaluate the idea on two dimensions  Discontent and Criticality.  Giving the example of  Good Night (Mosquito Coil) he demonstrated how this idea dealt with High Discontent  (the existing solution was applying a cream on the body not very pleasing) and High Criticality (Peaceful sleep). The chance of success is then high.

How important is the Business plan? Is one question which kept popping up from the audience in many sessions. This statement best sums up what experienced entrepreneurs had to say- "The fact is that rarely do business plans pan out in reality however it is very important to the investor because it shows the "clarity of thinking that you as an entrepreneur have for the business." is what Vani Kola  feels while admitting that she too is an "Instinct & Gut Feel" kind of person.

Dr. V Chandrasekar (Executive Director of the Wadhwani Centre for Entrepreneurship Development at the ISB ) took a session on "Discovery Driven Planning" an approach which recognises that planning for a new venture involves envisioning the unknown.

On Funding and Venture Capitalists (VCs)?-

"Get your idea to a point where it can show some acceptance from the market. Most of the time you do not need money to test an idea, you can get to the kernel of an idea by not spending much" says Vani Kola.

Satish Andra acknowledges the key role of VCs when he says that Though VCs are often like Sheep most Brand Name Companies coming from Silicon Valley could not have happened without VCs. Because the time to market for these ideas is so short: one needed the funds and network that these VCs could provide. Not every business can grow incrementally over the years. Satish Adds, "Be Selective when pitching to VCs, record and analyze their feedback; there could be a lot of learning there."

"Emails to VCs do not work, you need to do a better job of reaching out to them. It is you that they are betting their money on so find a good way to get to them. Remember you are only 6 degrees separated from everyone on this Planet." Vani Kola her self went to more than 40 VCs before getting her funding.

According to Srini Raju (i-Labs group), "India has become the flavor of the season; everyone has at least some portion of their money invested in India.  One reason could be that the investment opportunities in the valley are coming down."  Talking on valuations and shares, "People who invested in 2000 in the best companies in India are still under water even though the companies performed very well. They invested at high valuations: so why blame the companies? Recently one Bangalore company had a bidding organized to get investments; this has not happened in this space before and I think this could well be the starting of bad news."

Ganesh Rengaswamy (Greylock Partners) opined "Capital is now a commodity"  today it is always about the team. Sameer Sood from Google shared that Google too was on the look out for acquiring teams of good technology people.

Jacob Kurian (ICG Fund) advised that when selecting VCs; make your choices carefully do not get intimidated by a VC and get into an interview situation. You need to get as much information about the VC as well.

Elaborating on how VCs look at investments, Raj Gullamudi (Bluestream Ventures)-  "As VCs we are in the exit business." Keep this in mind when talking to VCs.

On the Entrepreneurial Ecosystem:-

No doubt the TiE-ISB connect is one event that will do a lot in building the eco-system for entrepreneurship in India. Speaking about this Dr. V. Chandrasekar, Co-convenor, TiE-ISB connect said that it "Takes a long time to build an eco-system we are only in the 2nd year....we need all your support."

No doubt TiE-ISB connect is a big milestone in creating this ecosystem in the country.

Sandeep Murthy of Sherpalo Ventures said that a network of seed capital investors is surely emerging, though till date investments were available only for those companies which already had done a fair amount of work without any VC money.

Ramalinga Raju, Chairman, Satyam Computer Services,  "Times are changing and today is a much better time to be an entrepreneur, in my early days as an entrepreneur, I spent more time in Financial Institutions than with customers and the shop floor. Today it is a lot different and an entrepreneur can spend time where he is really needed (with the customer). Funds are there but they are finding it very difficult to see an opportunity from their point of view in terms of people and ideas."

Taking India Forward

Speaking at a very interesting panel on this topic,  Rajeev Gowda (IIM-B) said, "Today there is a realization that you need not be a "Lakshmiputra" to make a billion dollar company. Can we take this idea to the masses? We need to get over the dependency mind set. Glad to note that today students dream not of a job but getting into entrepreneurship."

Jayaprakash  Narayanan (Loksatta), taking a dig said "Politicians are by definition entrepreneurs." All this while the people's entrepreneurial energies were shackled , we as a nation have not built the capabilities in the people. 80% of the population are excluded from this process of wealth creation. The state needs to make sure the best become politicians, this can only be done when you decrease the barrier to entry to get into politics. Today a ball park estimate is that one needs to spend Rs.20-30 million to get elected to an assembly. How does one change the incentives? How does one change the priorities? Unfortunately in our country we take the finest into the Bureaucracy and in 10 years make them into Monkeys. One cannot have first world people with 3rd world politics and the economy cannot be insulated from politics. Political parties know what is wrong but there are no incentives for them to change. Often the blame is put on the people (People deserve the government they elect) but people are not to blame, they are honest. For instance an experiment was done by Readers Digest where money in open envelops were dropped all over the place with a return address. 85% of the envelops in India were returned. Values are like water and it requires a container in the form of good institutions to hold it. The purpose of Government is to make it easy for us to do good and difficult to do evil."

The above is just a fleeting glimpse of the enormous learning and thought exchange that took place at TiE-ISB Connect  2006.   Dr. Y S Rajasekhar Reddy, Chief Minister Andhra Pradesh hit the right note by quoting Michael Angelo "The greater danger is not in setting our sights too high and  missing the mark but setting it too low and achieving the mark." To my mind setting the benchmark high is the biggest value that TiE-ISB Connect 2006 provided. In the next few issues of Businessgyan; we will be bringing detailed reports on some of the sessions of the TiE-ISB Connect 2006. Watch this space.  

Issue BG67 Oct06

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