Enlightenment by Prof. Sunil Handa

Prof. Sunil Handa(SH) from IIM-Ahmedabad visited IIM-Calcutta recently and I had an opportunity to attend one of his sessions. Considering the fact that I am myself a bit oriented to start something of my own, I liked the session. One may argue that most of the points these people (entrepreneurs) talk about are just the same .. hmm.. may be.. but there is a lot to make a difference. One good point may change your outlook drastically and something similar happened to me after this session.

On Exit options:
The session started with example of one of his student from IIM-Ahmedabad who had started a company of his own but had recently decided to sell it off!! Prof. claimed that this guy sold his soul.
As per SH, there is no exit option for an entrepreneur and he outrightly rejected the idea of selling a venture after say 5 years of establishing it. I had been fascinated by the idea of creating and selling off a business before restructuring period (I believe after some 5-6 years, processes etc. in a business need to be restructured coz by this time others also find it worthy to get into it..so selling off at this point would mean avoiding the restructuring cost and efforts, which can be further used in setting up something else, plus you get a healthy deal for current business at such a time). Although SH was of different opinion and he commented that
1.) One tends to get an emotional bonding with the current business,
2.) Rarely do people start a second venture as they get too old by the time they plan to sell off first one
3.) Even is one gets past the emotional bonding and timing factor, one tends to lose good people. You may plan to switch over your business (coz that is your business) but the employees may not be ready to take that risk and would be resistant to change.

This made me think of the establish-and-sell philosophy again, especially the third point which is most crucial as what i think. Anyways, I need to evaluate that well.

On VCs:
“So, what would you do once you sell off your venture?”
“I would start a new one” is a typical answer. How many do you think do that? Hardly anyone, SH claimed. The factors include the social pressures and the family responsibilities. Add to it reduced appetite for risk as you grow old.
“If you quit your own child(company), you will end up being only an uncle(Venture Capitalist), where you will just guide and help and wish other’s children(ventures you fund) do well. Most of their(VC’s) days go in praying for other’s ventures to get successful”

On Diluting Equity:
“If you wish to start a business, do you need a lot of money or you may as well get it from Venture Capitalists?”
If you think you may start a business by borrowing money from VCs, you probably need to relook at the mathematics of doing so. If you succeed, you will end up paying hefty premiums and if you fail, you may still end up paying more than the Principal amount!! Then how does it make any economic sense..
Those who still might be thinking of it being useful, I suggest reading the post on session by Mahesh Murthy.

Assertiveness, Struggle, No shy factor:
“When I used to travel in Public roadways buses, I used to end up traveling most of the times standing. Then I realised this is not how it gonna work and I learnt the art of finding and making space to sit. I started asking people to shift even if there was no place and most of the times ended up getting some place to sit.- That was my first lesson into entrepreneurship” I learned to be assertive. I struggled and I was no longer shy of asking for place.
This is what is required to establish a business. If you think everything will just go right, it wont.. you need to make it right.

Impact of Contacts in Initial Phase:
Another way of getting initial success is a shortcut- to use your contacts. But as soon as you use contacts to get any favour, you lose the race. Nothing comes for free in this world!! If you ask for a favour today, you’ll be asked to repay in some form or other tomorrow and it wont end there. Since you got a favour in initial days of struggle, you would feel indebted for long and you would have to make compromises at some point due to these favours/contacts/people/..

Struggle in Initial Phase:
So the alternate way is to struggle!! People, if given option, would love to skip this part but this is most important phase one goes through and this is the phase that basically lays the foundation for rest of the career.
There was a bird, which was trying to come out of the egg-shell. She was fluttering her wings and trying desperately to break the shell. A man walking beside saw this and out of his genuine concern and care, broke the egg-shell with a knife. The man was happy as he thought he had done a good job, helping the bird out of the shell. The bird, on the other hand, could never fly in her life coz her wings were just not strong enough to fly.
It is not difficult to understand why the bird could never fly!! So you decide by yourself whether you want to break the shell yourself or do you want an external support!!

Upto-date Info of Related and Unrelated streams:
It is not uncommon in people to stop reading/analysing once they get success. However, SH suggested that one should always keep the habit of reading and be knowledgeable about things related directly or indirectly or not even related to his/her business. This is helpful when one needs to adopt methodologies/techniques/benefits from outside the business. He took an example of his own venture which in no way related to plastic industry, and he could make a benefit of a few lakhs using that. I dont remember the example exactly and it would not be appropriate to quote it wrong but it was something on the lines that huge amount of excise and tax could be saved by purchasing a machinery in parts due to differential tax rates for plastic and other material.
The essence of the point was that one must keep himself up-to date on different topics, regardless of whether they are directly influencing your business or not. Who knows when they come handy!!

On Consultants:
To keep it short, I just quote his words,”Consultants are people who wont tell you anything unless asked, even if they know something is going wrong!!”
Without having any first hand knowledge of this, I think it is difficult for me to make up any perception based on this point.

On Ethics:
Everyone claims ethics in business are very important but no one spells it so clearly!! Everyone talks of setting an example in front of juniors but no one says how exactly it makes a difference. He took example of a manufacturer trying to save some tax amount by manipulating accounts and stealthily selling some of the goods. The same person ends up pursuing his employees so that the news is not leaked publicly and in case that happens..Brand Image tarnishes!!
Precisely why people do not feel proud in saying that they work in Reliance!!

Skills One must Learn at IIMs:
Leadership skills
Negotiating skills
Delegating skills

On Partnership:
Reiterating what MM said, SH also said it is better to have partners for the moral and support and better to start in smaller teams. A larger team is bound to fail. Although, he discarded that the two partners need to be good friends from college days and things like that. According to him, a better team would have people with only some understanding of each other. More understanding may result in you taking other for granted, which might not be the case always. But still, more the understanding between partners the better it is.
Idea or partner?
An idea is worth nothing unless implemented, said MM.
Unless you have a good partner, it is difficult to succeed in a venture, said SH.
Clearly both of them had an emphasis of a good partner first, someone who is equally, if not more, passionate about the venture.
Moreover, SH made a claim that no one would be working on their first idea for long, no matter how attractive it may seem to them in starting. It is only the third or fourth idea that people end up doing!

Not to forget,
Irrespective of what you may think, the partnership doesnt last forever and which sometimes may be an emotionally testing times but that is how it is!!

To end with a globe statement, you need ‘Midas touch‘ to succeed in a business more than anything else.

“To get an extraordinary person is difficult but to make ordinary people extraordinary is simple.“: Some great philosopher.

~Direct feed from Abhi’s world.
~~For more interesting posts, visit http://abhitaneja.blogspot.com

Thank you

Losing and Gaining motivation

Another session on entrepreneurship and another time I lose motivation to do the ‘zombie thing’ (as Sunil Handa puts it). I started hating “the zombie” jobs as soon as I came to the campus but the hate grew stronger when I attended Mahesh Murthy’s talk. Today it just grew more stronger.

With the declining motivation to these, the motivation to set out on my own strengthens a lot.
Lets see what future has in store for me.

A detailed analysis from Sunil Handa’s talk to follow soon.

~Direct feed from Abhi’s world.
~~For more interesting posts, visit http://abhitaneja.blogspot.com

Thank you

Mahesh Murthy $ Prahlad Kakkar: They said it all !!! (Repost)

REPOST: Since Internet Explorer fails to show the earlier post properly, the post has been reposted here without any formatting.
Firefox users: Read here

So while I was wondering of ‘Why I am doing MBA?’, Mahesh Murthy & Prahlad Kakkar happen to come to the campus to deliver talks in Ascent’07, an e-cell initiative.

Mahesh Murthy:
His talk was primarily focused on why should one go for his own venture and how to go about it? Primarily an interactive session, he talked about his journey in brief and emphasized mainly on the minimal barriers to entrepreneurship and focused the discussion to promote entrepreneurship amongst students.

On Advertising
Against the widely accepted notion of advertising as a tool to benefit a business, Mahesh was straight forward in saying that all the expenses on advertisements are actually a waste of money and only companies who cannot innovate need to spend on the advertisement. His basic line of reasoning was that if the product can be differentiated from a competitors product, no expense on advertisement is required except to facilitate “Word of mouth publicity”.
As for instance, he took the example of Pepsi and Coke(the two companies with max advertisement cost), he said that since these companies cannot innovate much as far as user experience etc. is concerned, they have no option left but to spend on advertisements.

On Opportunity Cost
What is the one biggest factor stopping people from becoming entrepreneurs? It is the thought when they start calculating the opportunity cost of their starting their own venture and look at the short term certain losses and long term highly uncertain(certain to the condition of survival but that is a big ‘if’) benefits.

On “The lesser money you have to start with, the more successful you will be”
This kind of follows from the previous point of opportunity cost plus the “greater dedication” due to lesser security. Take an example of successful businessmen and you’ll find a very surprising pattern there. A large number of Generation 1 businessmen had very little money to start off with plus they had almost non-existent backup plan(Plan-B as what learned people do suggest). Not very difficult to get an example with Dhirubhai Ambani belonging to the same league. Is it a mere coincidence? Probably not.
With no backup plan comes insecurity, that brings along a greater dedication and devotion to the venture. With no backup plan and low starting amount, the feeling of “not much to lose” takes a high(Low opportunity cost)

so Mahesh was very clear while he said, “If you plan to start a venture, make sure you don’t have a Plan-B. There is no need to feel secure while making a decision. Let every decision be “the” decision of your life.

On Entry Strategy
“I have an idea worth so-and-so but how do i enter the market?”: This statement is one of the most useless statement under the sun.
Note that your idea is worth nothing. You need an idea to start but it is the implementation that is worth it.

On Working Years & The Expected Returns in Long Term
“You enter the industry as an employee, make handsome amount in initial years, good amounts in later years. But if you enter the industry as an employer, you make pennies during initial years, good amount afterwards and great amounts then afterwards.”
(Note: Great=Good* 10 to even Good*100 or even more)
You people are all 20 odds and you have around 50 years of work-life remaining.
Take your call!!!

On Unsuccessful Ventures
So is entrepreneurship an all sweet sweet story? definitely not.
out of every 100 ventures, 4 are successful. of these 4, only 2 make newspaper headlines. So the sweet part is just 2% of the story. “But also note that no entrepreneur die of unemployment”

On Need of a Team
One of the biggest challenge in starting your own venture is that you tend to feel lonely since you are the only one involved in this work. Plus if you succeed, it is all fine but if you fail, you gonna die alone!!!
So it is generally suggested to startup a venture in team. This, apart from the above two factors, also bring in the fact that the team may bring in more capital and sharing of ideas.

On Uselessness of VCs and Consultants
“Venture Capitalists and Consultants are most useless professions.” Now this was totally unexpected. You wont expect such a statement from a venture capitalist but Mahesh meant it all when he said that. He explained, One, you don’t need a lot of money to start a new venture, two, even if you don’t have it, try and get it from the people you know like your family, your friends, other acquaintances. Why? Simple, as if you take the money from people you know you tend to feel a liability and along with that comes tendency to make it ASAP and return it back. Having taken any external amount, the liability reduces with the fact that the fear of failure if gone.
Similarly consultants are also useless. “They do not know anything. They do not have any solutions. If they had, they would have been in the business. They just get the solutions from one company and tell it to others, most of the times just fitting a solution which does not.”

On Smaller and Larger Players
Who do you fear more? smaller players or the larger players?
If your answer is larger players, then I am sorry to say but you have not understood the game at all.
The larger players are least to be bothered about as most of the times they are complacent and rest of the times bureaucratic and inefficient. But on the other hand, smaller players are striving hard either to survive or to get into the league of bigger players. In either case, they pose a major threat as they strive to grow.

On the Paradox “I will work in an i-bank for 3-4 years(make money) and quit to start my own venture”
Laugh out loud when someone echo the above statement to you again.
It is really very simple. You enter a profession and you get stuck over there, not for one but for many reasons. One, the “opportunity cost” rises exponentially with passing time. Two, you get out of touch of the current happenings and trends in the sector. Three, you hold a position of respect in your earlier profession. …..

On Involving Employees into Ownership
I believe most of the people realize its importance and Mahesh just echoed the same.

Prahlad Kakkar:
The Ad-man with the hat was no different today. His talk was supposed to be a story of his life as an entrepreneur, although most of the time he talked about cons of doing an MBA and focused on following the dream/passion/hobbies and supported it all with his own example citing reasons for him venturing into advertisements, scuba diving, cigar and restaurant business. Although i would say some of his reasons appeared to be out of place and not the actual reasons, but if for the time being and with not much background knowledge, let us assume he said it right, then it was nothing but chasing his hobbies, with no priority at all to money.

On Rational v/s Instinct and its Effects on Decision-Making:
You enter a B-School and you are told from day-1 that the world is rational. Assume rational behaviour says eco. Prof. Probability prof. tells you how to make calculations to get to a rational decision. Marketing Prof. assumes a rational market.
But this is what differentiates a manager from a creative person.
If you start evaluating your instinctive idea on rational scale, more are the chances that you end up scraping off the idea. The instinctive idea is your creative self but the rational idea likes a more treadmill task and hence the conflict is bound to happen.

On Various Advertisements
Most of the advertisements that are being created today are from MBAs and hence are more of routine ads. Most of the advertisements companies have a well defined advertisement template which defines when product name should appear and for how long, when credits should appear, what are the different techniques,… and the advertisement making gets reduced to the task of fitting in different pieces together.
He personally was very upset with the state of advertisement industry these days.
Nonetheless he showed certain great ads to make us realize what he actually meant.

On Following the Hobbies/ Importance of assion
This is something he focused really a lot on. In fact, he stressed a lot on the fact that all his ventures are actually his hobbies. Take for an example, Cigar, he said he liked it a lot and hence thought of consuming it for free so setup his own company. Scuba diving, it was very expensive and he liked it so he started his own training school to do it for free.
Though I was not very convinced with these last set of arguments but still, with no data to counter it, I would rather accept it and believe that all these ventures are actually his hobbies. Anyways, it gives me a reason to follow my dreams as well.

So Now after these sessions, the situation has gone worse. Now it is not “Why am I doing MBA?” rather it gets to “Why does anyone do MBA?”, which Mahesh partly answered in his talk, “If everyone is an employer, where do we find the employee?”

~Direct feed from Abhi’s world.
~~For more interesting posts, visit http://abhitaneja.blogspot.com

Thank you

Mahesh Murthy $ Prahlad Kakkar: They said it all !!!

IE Users..Read here

So while I was wondering of ‘Why I am doing MBA?’, Mahesh Murthy & Prahlad Kakkar happen to come to the campus to deliver talks in Ascent’07, an e-cell initiative.

Mahesh Murthy:
His talk was primarily focused on why should one go for his own venture and how to go about it? Primarily an interactive session, he talked about his journey in brief and emphasized mainly on the minimal barriers to entrepreneurship and focused the discussion to promote entrepreneurship amongst students.

On Advertising
Against the widely accepted notion of advertising as a tool to benefit a business, Mahesh was straight forward in saying that all the expenses on advertisements are actually a waste of money and only companies who cannot innovate need to spend on the advertisement. His basic line of reasoning was that if the product can be differentiated from a competitors product, no expense on advertisement is required except to facilitate “Word of mouth publicity”.
As for instance, he took the example of Pepsi and Coke(the two companies with max advertisement cost), he said that since these companies cannot innovate much as far as user experience etc. is concerned, they have no option left but to spend on advertisements.

On Opportunity Cost
What is the one biggest factor stopping people from becoming entrepreneurs? It is the thought when they start calculating the opportunity cost of their starting their own venture and look at the short term certain losses and long term highly uncertain(certain to the condition of survival but that is a big ‘if’) benefits.

On “The lesser money you have to start with, the more successful you will be”
This kind of follows from the previous point of opportunity cost plus the “greater dedication” due to lesser security. Take an example of successful businessmen and you’ll find a very surprising pattern there. A large number of Generation 1 businessmen had very little money to start off with plus they had almost non-existent backup plan(Plan-B as what learned people do suggest). Not very difficult to get an example with Dhirubhai Ambani belonging to the same league. Is it a mere coincidence? Probably not.
With no backup plan comes insecurity, that brings along a greater dedication and devotion to the venture. With no backup plan and low starting amount, the feeling of “not much to lose” takes a high(Low opportunity cost)

so Mahesh was very clear while he said, “If you plan to start a venture, make sure you don’t have a Plan-B. There is no need to feel secure while making a decision. Let every decision be “the” decision of your life.

On Entry Strategy
“I have an idea worth so-and-so but how do i enter the market?”: This statement is one of the most useless statement under the sun.
Note that your idea is worth nothing. You need an idea to start but it is the implementation that is worth it.

On Working Years & The Expected Returns in Long Term
“You enter the industry as an employee, make handsome amount in initial years, good amounts in later years. But if you enter the industry as an employer, you make pennies during initial years, good amount afterwards and great amounts then afterwards.”
(Note: Great=Good* 10 to even Good*100 or even more)
You people are all 20 odds and you have around 50 years of work-life remaining.
Take your call!!!

On Unsuccessful Ventures
So is entrepreneurship an all sweet sweet story? definitely not.
out of every 100 ventures, 4 are successful. of these 4, only 2 make newspaper headlines. So the sweet part is just 2% of the story. “But also note that no entrepreneur die of unemployment”

On Need of a Team
One of the biggest challenge in starting your own venture is that you tend to feel lonely since you are the only one involved in this work. Plus if you succeed, it is all fine but if you fail, you gonna die alone!!!
So it is generally suggested to startup a venture in team. This, apart from the above two factors, also bring in the fact that the team may bring in more capital and sharing of ideas.

On Uselessness of VCs and Consultants
“Venture Capitalists and Consultants are most useless professions.” Now this was totally unexpected. You wont expect such a statement from a venture capitalist but Mahesh meant it all when he said that. He explained, One, you don’t need a lot of money to start a new venture, two, even if you don’t have it, try and get it from the people you know like your family, your friends, other acquaintances. Why? Simple, as if you take the money from people you know you tend to feel a liability and along with that comes tendency to make it ASAP and return it back. Having taken any external amount, the liability reduces with the fact that the fear of failure if gone.
Similarly consultants are also useless. “They do not know anything. They do not have any solutions. If they had, they would have been in the business. They just get the solutions from one company and tell it to others, most of the times just fitting a solution which does not.”

On Smaller and Larger Players
Who do you fear more? smaller players or the larger players?
If your answer is larger players, then I am sorry to say but you have not understood the game at all.
The larger players are least to be bothered about as most of the times they are complacent and rest of the times bureaucratic and inefficient. But on the other hand, smaller players are striving hard either to survive or to get into the league of bigger players. In either case, they pose a major threat as they strive to grow.

On the Paradox “I will work in an i-bank for 3-4 years(make money) and quit to start my own venture”
Laugh out loud when someone echo the above statement to you again.
It is really very simple. You enter a profession and you get stuck over there, not for one but for many reasons. One, the “opportunity cost” rises exponentially with passing time. Two, you get out of touch of the current happenings and trends in the sector. Three, you hold a position of respect in your earlier profession. …..

On Involving Employees into Ownership
I believe most of the people realize its importance and Mahesh just echoed the same.

Prahlad Kakkar:(See also: TOI except the best ad part )
The Ad-man with the hat was no different today. His talk was supposed to be a story of his life as an entrepreneur, although most of the time he talked about cons of doing an MBA and focused on following the dream/passion/hobbies and supported it all with his own example citing reasons for him venturing into advertisements, scuba diving, cigar and restaurant business. Although i would say some of his reasons appeared to be out of place and not the actual reasons, but if for the time being and with not much background knowledge, let us assume he said it right, then it was nothing but chasing his hobbies, with no priority at all to money.

On Rational v/s Instinct and its Effects on Decision-Making:
You enter a B-School and you are told from day-1 that the world is rational. Assume rational behaviour says eco. Prof. Probability prof. tells you how to make calculations to get to a rational decision. Marketing Prof. assumes a rational market.
But this is what differentiates a manager from a creative person.
If you start evaluating your instinctive idea on rational scale, more are the chances that you end up scraping off the idea. The instinctive idea is your creative self but the rational idea likes a more treadmill task and hence the conflict is bound to happen.

On Various Advertisements
Most of the advertisements that are being created today are from MBAs and hence are more of routine ads. Most of the advertisements companies have a well defined advertisement template which defines when product name should appear and for how long, when credits should appear, what are the different techniques,… and the advertisement making gets reduced to the task of fitting in different pieces together.
He personally was very upset with the state of advertisement industry these days.
Nonetheless he showed certain great ads to make us realize what he actually meant.

On Following the Hobbies/ Importance of assion
This is something he focused really a lot on. In fact, he stressed a lot on the fact that all his ventures are actually his hobbies. Take for an example, Cigar, he said he liked it a lot and hence thought of consuming it for free so setup his own company. Scuba diving, it was very expensive and he liked it so he started his own training school to do it for free.
Though I was not very convinced with these last set of arguments but still, with no data to counter it, I would rather accept it and believe that all these ventures are actually his hobbies. Anyways, it gives me a reason to follow my dreams as well.

So Now after these sessions, the situation has gone worse. Now it is not “Why am I doing MBA?” rather it gets to “Why does anyone do MBA?”, which Mahesh partly answered in his talk, “If everyone is an employer, where do we find the employee?”

~Direct feed from Abhi’s world.
~~For more interesting posts, visit http://abhitaneja.blogspot.com

Thank you