November 19, 2007

Startup Communication - by Sanjay Anandaram

An irate customer sends an email to a startup company “….am disgusted with the quality of your service. I was referred to your company by my friend and I’ve just had the most unhappy time ……” The customer support department does not forward the mail (& others like it) to the executive leadership.

Response to the board of directors from a CEO of a VC backed startup “…we’re doing fine. I’m confident we’ll hit and perhaps even exceed this month’s targets…..” Of course, the board didn’t know that the two top customers of the startup were pulling out of contracts with the startup. The CEO knew but was scared to tell the board.

Board member writes a letter to the CEO of the company “….you seem to be stressed out lately. Why don’t you get more senior executive help around you to help reduce the pressure?” The CEO replies “…Thanks for your concern. Am doing fine actually. Am wondering if you had any other objective in suggesting that I surround myself with senior executive help?” The CEO was wondering whether the board was considering replacing him.

There’s great unhappiness & confusion in the company. 4 of the 10 call centre agents have been asked to go due to non-performance in the last 2 months. They do not know the reasons for their firing. They do not know what is the performance expected of them & consequently what constituted “non-performance”!

CEO to Board: “I really do not know what you want. A long term goal for the company or a short term plan on achieving break-even in the next 6 months. I am confused!”

The above scenarios are not fictional. They are all actual instances taken from different startups. There are of course many more cases involving communication between peers and across levels and layers. But these cases illustrate the critical importance of communication. Especially in the chaotic and ever changing environment of a startup. Communication that’s timely, appropriate, clear and direct. As in most cases, the culture of open & honest communication starts from the top. If the Board of Directors does not set clear expectations from the CEO, if the CEO does not share important company information with the Board and employees, if the functional heads do not share news with the executive leadership, it is quite easy to visualize the rapid collapse of such a company. A company that hides from itself, one that is afraid of confronting the reality of the situation and one that takes refuge in lies and half-truths cannot be expected to generate trust and goodwill among all stakeholders.

The first step in creating a culture of open, frank, free and candid communication is to encourage people (including employees, customers and partners) to speak out. And to not punish people who have views that are not sugar coated. To have clear and frequent meetings where people can voice opinions, suggestions, criticisms, arguments and the like. And to respond to these concerns and views of employees, customers, partners, and investors. . If there’s bad news, share it with the stakeholders. Don’t hide or gloss over it. Ask for help and suggestions rather than pretend that you have all the answers. If you are lost, stop and ask for directions. People value open and honest communication. Companies around the world and across different industries have had to deal with severe and expensive consequences resulting from no or poor communication. They’ve had to deal with terrible loss of image, product recalls, fall in stock price, and public firing of senior executives just because everyone pretended that a problem didn’t exist and that the problem would go away if ignored long enough.

Well, in today’s day and age, you cannot hide all your problems from all the concerned people for all time. Isn’t it therefore better to have the “people” on your side when things go wrong as they inevitably will?

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.

November 04, 2007

Entrepreneurial Self Esteem - by Sanjay Anandaram

Social anthropologists have determined that the impact of a dominant culture on a constrained (either self-imposed or externally imposed or a combination) culture is such that over time the dominant culture so subsumes the other culture leaving it as a poor carbon copy version of itself. Indian culture too has been constrained and inhibited for several generations for reasons of history and bad policy. In the India of the 21st century, there’s rapidly growing self-esteem and great opportunity ahead- critical ingredients for original thinking and innovation.

One of the most critical attributes of an entrepreneur’s personality is self-esteem. The desire to achieve, the ambition, confidence, and drive all flow from this core personality trait. People with a manic desire to prove to themselves and to the world that they “can do it” are the ones who can weather storms, deal with crises and plug away at making their aspirations come alive. All great entrepreneurs are people with high self-esteem. They have found redemption through their world-class achievements. So strong is this need for redemption that they go into overdrive to make their own road to their own destiny and are unafraid of experimentation. They are not followers but learn quickly from others to create their own unique spaces. Cavin Kare (shampoo satchets), Nirma (low cost detergent), T-Series (remixes), and Air Deccan are some examples of entrepreneurial energy being unleashed by the desire to create a new product/market category where none existed. If these entrepreneurs had remained inhibited or just imitated others, they wouldn’t have achieved what they did.

On the other hand, people with self-esteem not as high want to seek approval and acceptance by being part of the general crowd. They want to belong to “success” and seek self-affirmation by adorning the trinkets and superficialities of “success”. They adopt the model, mannerisms, language, practices, and so on of the successful. In short, they copy. They imitate. They don’t innovate.

A couple of seemingly trivial examples from Indian media that betray this constrained mindset: Indian news channels keep referring to the Mumbai blasts of July 11th 2006 as the “7-11” blasts as if by emulating the usage of the American “9-11” (where the calendar month precedes the day), the news somehow becomes of international quality. Never mind the shoddy reporting and lack of attention to facts! A popular business paper recently wrote about how south Mumbai “zip codes” had a higher per square foot cost. Zip-code is an American term whereas we use the term “pin code”. Nothing wrong with “zip code” as a term but what’s wrong a “pin-code”? As if usage of the term “zip code” suddenly renders the news with a different halo. Never mind that a large majority wouldn’t know what a “zip code” means! Never mind the facts in the story!

Contrast this with say, American football which has dramatically innovated the traditional English game of rugby and made it all their own. So much so that they’re now exporting their version of “football” around the world.

But the way of the entrepreneur with high self-esteem is not blind copying of superficial issues but innovation around core issues of business models, customer insight, product creation, delivery and support.

I recently heard Kishore Biyani of Pantaloon say in effect: “We don’t believe that global retail models will work in India. We don’t think B-school case studies from the west will work in India. We believe that the Indian retail consumer & market is unique and therefore focused tailored solutions are the way forward in India. There’s no blueprint to learn from so we want to be the ones to create one. We want to learn by doing. We keep our eyes and ears open, listen and watch customers in our stores, and move quickly to execute. We are quick to adapt as new insights come in.” A classic case of a high class entrepreneurial self-esteem and confidence driving everything else.

India today offers unprecedented opportunities for entrepreneurs to grab with both hands. In almost cases, there are no ready made blue-prints and formulae. These have to be created as the journey is made. And those with self-confidence and self-esteem will be the ones who’ll win in the end.

Let me end with this apocryphal tale:

American tourist to the bell-boy in a London hotel: “I hope you have fast elevators in this hotel”. Bell-boy: “Yes sir, the lifts are quite fast”. American tourist: “They are called elevators not lifts. Y’know, they were invented in America”. Bell-boy: “But the language was invented here!”


What do you think?

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Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.
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November 02, 2007

The Onsite catering opportunity

The Outlook Business edition dated September 20th, 2007 had a coverage on the emerging Onsite catering opportunity and the experience of those already in the game. Some excerpts:

Says Vohra (Gurpreet Vohra, CEO of Tulip Caterers): "I serve 20,000 meals a day and the cost of each varies between Rs. 25 and Rs. 50. It is very important to check the price and quality of the raw materials each day. This business is all about high volumes and low margins.


Says Asitava Sen, Senior Vice President at Technopak Advisors, a global management consulting firm: "Onsite catering has now become an attractive business proposition. The draws are captive customers, young employees in the payroll, scope for up-gradation of traditional canteen facilities and better economies of scale."


Says Sunil Nayak, Radhakrishna Hospitality Services: "It makes sense to invest in onsite business. We make an initial investment of between Rs. 60 Lakh to Rs. 1 Crore and serve a meal for Rs. 50-Rs. 75. We have recovered the initial investment costs in under 18 months." The onsite model works better for caterers in contrast to its offshore variant where high cost of logistics becomes a hampering factor. Storage of freshly cooked food is also a deterrent. Usually in a catering contract, water, electricity and garbage clearance are taken care of by the company. The meal is subsidised.


Reveals Manit Gokhale, Proprietor of Lambodar Caterers, a Mumbai-based company that serves companies like VSNL, Crompton Greaves and Goldman Sachs: "This business works on high volume. Let's say, if I serve 5000 meals at a site on a day and the average cost is Rs. 50 then I get Rs. 2,50,000. However, if I do 100 meals, the investment costs in manpower and food is not recovered. So, in the first case, one can earn 15-20% margin."


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.