December 04, 2010

What to Hire and Pay For? - Article by Sanjay Anandaram

The CEO had been in conversation with several potential senior hires for his startup. At least 3 recruitment firms were on the job for him. Somehow the “right” candidate hadn’t yet crossed his radar. He was getting, quite naturally, frustrated. If a candidate had the right experience, he didn’t have the right attitude. If another had the right attitude, then the competency was deemed inadequate. If both attitude and competency seemed right, compensation became a stumbling block!

Most companies, and especially, startups have an immensely challenging time finding the right talent. India has a large number of people, but a small number of appropriately qualified people. “Qualified” not by way of being able to brandish a degree, but in terms of having the right mix of experience, competencies, skills and attitude. Given that the India growth story is just unfolding across multiple sectors of the economy, it is natural that a critical mass of trained and experienced manpower has yet to emerge. The pitiable state of the education system no doubt significantly contributes to this issue. So what’s a startup to do?

First, one must recognize that finding the right candidate is going to be tough. So what are the compromises to be made? What are the absolutely non-negotiable characteristics and attributes, eg. integrity and character, a proven record of building and leading teams, a minimum number of years of experience.

Second, look outside the narrow boundaries of your industry. Are there more mature industries and sectors which have qualified candidates? Which other sectors require similar management capabilities to yours? For example, a transaction intensive credit card business could throw up very good operations executives while the hospitality industry could present good candidates for the customer service functions. It is important therefore not get straitjacketed into thinking only in terms of the “ideal” candidate, since that is a mythical creature.

Third, invest in training and skill development. It is far cheaper (and not just monetarily) to continuously invest in upgrading the capabilities of the team. Regular in-house training programmes (eg stressing aspects of the company’s origins, industry trends, competition, culture, values), customized programmes eg team building, interviewing skills, process improvements, time management and general programmes such as branding.

It is not for nothing that the old adage “hire for attitude, train for skills” holds true. Attitude in this context means being adaptable, open to learning, taking feedback, ability to handle ambiguity, diligent, honest, team player, willing and able to get his hands dirty, and so on. These attributes take a long time to inculcate as they’re a function of one’s genes and the environment. Very few companies and certainly not a startup can spend the time, effort and money required to effect changes in an individual’s attitude. It is far more effective to hire a person with the desired attitude and then train for skills and competencies.

Fourth, compensation can be sticky. Should one pay very high salaries for the rare talent?

The unfortunate answer is that it depends. Paying one individual a disproportionately high compensation can negatively impact the startup’s hitherto low cost culture as well as the mindset of the other team members (“Are we not good enough?”). On the other hand, without the right talent, the startup could take a longer time to grow. Managing investor pressures and market expectations of growth in such situations can be hard. In my view, paying high compensation to attract and retain top talent in a startup isn’t appropriate. Philosophically speaking, people start or join a startup not to retire on their salary incomes. The sheer thrill, freedom and joy of company creation and building to address a market opportunity with a bunch of like-minded team members is a major reason for the startup’s existence. The (serious) money making occurs when the company actually fulfils its dreams when value is created via the appreciation in the stock price of the company. If the startup fails, the journey would’ve been the reward and the experience invaluable. Great entrepreneurs never do it for the money, that’s just a very attractive by-product of the fulfillment of their aspiration to make a difference.

The (arguably?) most iconic entrepreneur behind the most iconic company today, Apple’s Steve Jobs put it best when he said “I was worth over $1m when I was 23, over $10m when I was 24 and over $100m when I was 25 and it wasn’t that important because I never did it for the money” “…. Being the richest man in the cemetery doesn’t matter to me … Going to bed at night saying we’ve done something wonderful…
that’s what matters to me.”

So, what will you hire and pay for?

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 The views expressed here are his own.

November 16, 2010

Unfair advantages in raising VC funding

Jason Baptist has an post listing the reasons why some entrepreneurs find it "surprisingly" easy to raise VC funding.
There are often fundraising announcements that bewilder entrepreneurs or even plant the seed that “Oh, they raised a ton of money just like that, holy shit, I can too!” Sadly, this is often not the case as there are a good list of reasons why they raised money. These reasons are beyond the usual Brilliant team in a huge market with a killer product. These reasons also apply primarily to the angel round to initial Series A round. If made public, the valuations may also be fairly high.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. Click Here to learn about Venture Intelligence products that help entrepreneurs reach out effectively to the investing community.

October 21, 2010

"Madam, Are you Pregnant?" - Article by Alok Kejriwal

(Reproduced from Alok's blog at

Act 1 – Scene 1

We had established a 30 odd headcount office in Shanghai in early 2001 and were steadily ramping up our operations as Mobile2win, China. Contests2win and Softbank were the original investors and we were operating under strict Mainland China’s government’s guidelines.

As the paperwork increased, we began looking around to hire secretarial staff. As soon as we had spread the word, we intriguingly began receiving resumes of many women – all in their twenties, married and well settled. One afternoon, one of our rather talkative and assertive Sales Head took me in confidence and revealed something quite chilling – He said that all those women who had applied were actually pregnant and were applying for jobs, that they could lock into and then claim maternity benefits as per the dictated statutory guidelines. This was a standard ploy of gaining ‘free employment’ and we should be avoid falling into such traps.

Act 1 – Scene 2

Simultaneously, I was pavement pounding the streets & meeting clients in frozen China. I had a strange situation on my hands. Across Shanghai, Beijing and Guangzhou, large Chinese local Brands dominated the marketing scene and were big budget spenders. Sure, the Fortune 500 brands were around, but the Chinese brands made quick spend decisions on Internet marketing and were lucrative customers.

The only problem was that all these Chinese brand managers expected ‘gifts’ to be left behind for them. It was not money but surely enough a bribe in exchange for business. My local Chinese team members who accompanied me told me, ‘Sir, this is the way business is done in China’.

Both the cases above presented ethical dilemmas to me. They forced me to walk the tight rope of being ‘righteous’ vs. ‘practical’, ‘academic’ vs. ‘practical’ and most importantly a ‘rigid businessman’ vs. a ‘practical one’.

Was I supposed to ask the ladies who came for the interviews indirect questions leading to figuring out if they were indeed pregnant? Pretend that we needed men secretaries’ because they might be required to work the night shift?

In my meetings with the local Chinese firms, was I supposed to carry gifts bought in China and pretend they were from India and just hand them over as a token of friendship?

This blog post examines the challenges of ethics and principles in entrepreneurial and start up life.

Don’t become a cheat if someone cheats you.

Very recently, in one of the group Companies, my COO and I had vocally assured a newly recruited Business Development executive (21 years old, 15k monthly salary) that she would be compensated for the value of ‘barter’ deals that she bought into the company.

Just after a few television spots in return for a couple of web pages, she produced a commission statement of Rs 81,000 for just the first month!! I first thought she was confused but quickly understood she had the mind of a cheat.

All she had done was reproduced the top ‘rack rate’ (stated nominal value) of the media of the TV spots we had received as barter (Rs. 40 lacs), without considering that the value we had provided in exchange to the channel was actually only Rs 1 lac . This rack rate is the typical exorbitant rate you see at the back of a hotel room door (for statutory purposes) – despite you having paid less than half for it. I logically tried to explain to her that Companies exchange the ‘true’ value of goods in the end – so despite the printed rate of the media value being 40 lacs, since we had provided the channel value of just Rs 1 lac, the TV spots we had received were also worth 1 lac since that inventory was unsold by the channel! Simply explained, if I gave you a ball point pen and took another one in return from you, the real value exchanged was Rs. 10(actual value of buying the ball point pen). Sure, as a kid (or better as cheats), I can pretend that my ball point is worth Rs 400 by putting a sticker on it but I was still exchanging it with you for Rs 10! (And hence I am not a kid –just a fraudster).

She insisted that she be compensated on this ‘notional’ value of 40 lacs- given the commitment made to her.

We paid her without any more discussion and surely ‘relieved’ her of her post also.

The lesson here is that we DID not stoop down to cheating even though we were cheated upon. There was no written agreement we had with her for this payment and could have easily refused to pay but we did not.

Why did we pay her?

Because these situations test the principles and the moral fiber of a Company. There is no other way of ‘testing’ where you stand on ethics without such real situations!

In the evening, I chuckled and thought of the 80k paid as fees for an expensive GMAT test of Integrity – whose results thankfully were instantaneous and on which we had received a perfect score!

Being practical.

A couple of years ago, a labor inspector arrived in our office to check our provident fund records. To his utter disappointment, he found that everything was perfect and hence there was no scope for a bribe.

He still insisted on a ‘gift’. When we refused, he did the unthinkable – he sat down on the visitor’s sofa and refused to move. Not just the first day but 3 days in a row!

On the 4th day, tired of having an ugly, smelly owl in our pristine office, we paid him some cash and bid him a happy departure.

I found it practical to bend my ethics a bit in return for the sake of sanity and the healthy atmosphere of the office!

Taking a bullet

A few months ago, one of my ex co-founders ‘informally’ partnered with c2w (contests2win) to launch some niche vertical sports sites.

He came from a real world economy and had lost touch with the digital media world for over 5 years. He spent months in our office learning the ropes, getting lots of art and programming development work done and just leveraging the entire resources made available to him.

A few weeks before launch, this partner took me in a conference room and declared that he had new ‘views’ on the partnership %’s that were earlier agreed upon and that he was not happy to stick to the original commitment.

We had this meeting at 12:58 pm. I told him that I would think about it and revert. At 1:01 pm, I wrote a mail to him saying that there was a fracture in our business thinking and hence the deal would not be possible.

He offered to buy out what we had made in terms of the product, but we took a call and swallowed a Rs 25-lacs hit (actual cost of time and money) rather than selling out on our ethics and principles.

In this case, we made the gun & the bullet and trained the shooter – only to have him shoot us in the face.

The satisfaction was going home with the headline that we don’t SELL principles, but only our services. And they cannot be bartered!

Act 1 – closing scene.

So how did we deal with the China situation?

I did not heed my China Sales head’s warning and continued with our interviews. Amongst the 3 ladies short-listed, we finally selected a simple, homely (and possibly pregnant) lady.

9 months later, there was no baby.

I later found out that the Sales Head was trying to place a couple of his cousin brothers in the Company and hence had fabricated the entire story!

As far as the Chinese brands went, we did not work for them. Instead we focused on the Fortune 500 brands and won strong business from them – leading to Siemens investing into the Company in 2003 and the Walt Disney Company buying out Mobile2win China in 2006. Neither Siemens nor Disney would have touched us if we had started bribing our way into business.

Mao said – behind every great fortune, there is a great crime.

Rodinhood says – Inside every great entrepreneur throbs an ethical heart.

October 18, 2010

"Entrepreneurial Dharma Sankata" - By Sanjay Anandaram

In the backdrop of the umpteen scandals that’re making news nowadays and when it appears that integrity, principles and ethical behaviour are but quaint niceties from a bygone era, this tale of an entrepreneur’s dilemma is worth telling and discussing because it offers hope especially to us in India.

After completing a hard day’s work, our entrepreneur boarded an evening train at Hyderabad en route to Pune. As is the case, the Travelling Ticket Examiner (TTE) showed up sometime later that evening in the compartment. Our entrepreneur handed over this e-ticket and upon being asked for his ID, handed over a photocopy of his driving license. He wasn’t carrying the original. The photocopy wasn’t acceptable and the original was demanded. Our entrepreneur pleaded with the TTE to accept the photocopy but the TTE was unmoved. There were a few others traveling without tickets. The TTE summoned our entrepreneur and the ticket less travelers to the pantry car to discuss their case. In the confines of the pantry car, the ticket less travelers, being more worldly wise than our entrepreneur, essentially bribed the TTE a few hundred rupees each and, in exchange, received a stern warning and berths in the compartment for the night.

Our entrepreneur unfortunately had principles which precluded him from paying a bribe. Instead he offered to pay the fine which turned out to be twice the Hyderabad-Bangalore fare. Not having this large amount in cash on his person, our entrepreneur offered to withdraw the money from an ATM, if available, and pay the fine at the next station. The TTE wasn’t impressed and, after abusing our entrepreneur for not carrying enough cash, essentially kicked out our entrepreneur from the train. It was after 10pm at night and our entrepreneur was at a remote station with his bag in hand. Using the map application on his phone, he figured out he was perhaps a few hours outside of Gulbarga town in North-East Karnataka. There was no sign of any train at that time of the night.

Our entrepreneur then trudged to the main road, hailed a passing vehicle and hitched a ride to Gulbarga town. He then subsequently made his way back to his home in Bangalore. He narrated his tale to his family and friends who were amused and angry with his behaviour. The responses went along the lines “Why didn’t you just pay the bribe?”, “What was the need to be heroic?” “We’ve all paid bribes, so what’s the big deal?” Don’t you know that’s the way things happen here?”

I asked the entrepreneur why he didn’t pay the bribe. He replied that he had never paid a bribe in his life to anyone. When I asked whether he considered filing a complaint against the TTE, he said he had considered it but his family was totally against it. They recalled the deadly fate that befell crusaders like Manjunath Shanmugam and made our entrepreneur promise he wouldn’t pursue anything so foolish.

“I’ve never bribed anyone. I’ve believed that it is possible to build an honest and ethical company. Today, I’m asking myself whether it is indeed possible to build an honest company in India. Are there any large companies that are clean?” Our entrepreneur then made discreet enquiries amongst friends in the finance and purchase departments of a much admired, very well known internationally renowned Indian company and learnt the dirty secret. The companies themselves were legally clean but employed “service providers” and “consultants” who were paid by cheque against proper bills but who in turn ensured that the wheels of our system were kept adequately and appropriately lubricated.

Dharma Sankata (loosely translated into “difficulty of being righteous”) refers to the ethical and moral dilemma faced by humans and is very context dependent. Our entrepreneur’s dharma sankata was evident and his principles and beliefs were severely shaken by the experience.

Would he compromise, shed his beliefs and become pragmatic like most of us? Or, would he continue to retain his convictions? Would he be able to build his startup ethically and honestly into the company that he aspired to build or would he be forced to compromise? Time will tell.

But, what would we have done in his place? The answer will determine the kind of India we’ll leave for the next generation.

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 The views expressed here are his own.

September 14, 2010

"Go take a Jump!"

Alok Kejriwal has a colorful post exhorting entrepreneurs to have the courage to say ‘Jump’ to anything/anyone that that puts them in a corner in their entrepreneurial journey.

Employees, Colleagues, Clients and Co-Partners.
All of them have individual aspirations. They partner with you since their vision and yours is the same. However, things change and that’s when you have to be unyielding in your conviction as well as in your beliefs.

In each appraisal cycle, we face challenges, when our co-workers expect larger than affordable salaries. You have to have the courage to take the risk of losing them rather than ruining your business. Most of the times when you recommend your colleagues to quit and move on, they stay back.

Clients always test the limit to which you will bend, negotiate and yield and will pretend to not be interested in your proposal. But when when you really walk away, trust me, they will come back running.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. Request free samples of Venture Intelligence newsletters and reports.

September 10, 2010

Sales for Startups - 10 Useful Tips

Vikram of Tenmiles has a nice post on the topic. Extracts (emphasis mine):
6. Do your best to stay within the window of opportunity
From the time a customer expresses his/her interest in your product (either via the web or by signing up for a free trial), you can rest assured of swinging a deal in your favor IF you’re able to make a convincing pitch within the critical window of opportunity.

By visiting your website and signing up for a trial, your customer has clearly indicated he/she is interested in your product. The next and crucial step is to sustain the customer’s interest level, before it begins to waiver. This typically happens when customer’s are evaluating multiple products or are just unable to see how your product responds to their needs. The difficult part here is establishing how long the window of opportunity is open for, so do your best to seal the customer’s interest right from the beginning.

...8. Always remember to follow through
Responses to expressions of interest from your customers (especially sales queries initiated via the web) shouldn’t just include the information they’re asking for and a quotation of what you’re offering. Delivering an impressive sales pitch is just half the process. The other half is the manner in which you respond, by asking the right questions relating to the need for the product and thereby leading the customer to enter into a series of communications that lead to a definitive sale.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. Request free samples of Venture Intelligence newsletters and reports.

September 07, 2010

"From Feature to Company" - Article by Sanjay Anandaram

First published in Financial Express. Reproduced with the author's permission.

Some time ago, I met with a young entrepreneurial team that had started an e-commerce company. They seemed very excited and gung-ho with the prospects of their company. But there didn’t seem to be any differentiation in their product offering vis-à-vis the many others who too, according to me, were dispensing similar, if not, identical e-commerce services. I therefore asked about their differentiation. I was told that they had not just an online service but also a physical, telephone enabled and mobile versions of their service.

The conversation reminded me of my days as a computer salesman in the mid 1980s. In those early days, vendors and customers were both equally knowledgeable or ignorant (depending on how you look at it!) and the IT revolution was yet to take off. Personal computer sales would take place based on features – kind of monitor, size of the monitor, kind of keyboard, number of keys on the keyboard, how much memory was offered as standard and so on. And price. Clearly, price per feature was therefore, quite understandably, the norm!

It was much later in the early 1990s that I realized that features don’t make a product. Features can be copied easily, products less so. Being responsible for business of personal computers in an overseas territory presented me with the opportunity to look at how international class products were offered. The entire ergonomics, design, look and feel mattered. The quality and kind of packaging, the design that permitted ease of unpacking and installation, the user-friendly documentation, the pre-bundled software (different ones for the home and for the office), the prominently displayed toll-free customer support numbers, the simple processes for returning the product if a customer were unhappy, the easy to understand product identification codes, the pricing information, the newsletters that talked of impending new product releases etc. I realized the role and importance of product management and marketing. The needs of various customer segments have to be factored into the design and development. The right pricing has to be arrived at after considering and even anticipating the competition. How would the product be sold, delivered, installed and supported? Remember, there was no on-line those days and computers had to be bought from stores or the company distributor delivered them to your office. Providing for as pleasant a customer experience as possible from the purchase to unpacking (“the joy of unpacking a brand new computer in front of the family should be understood” is what I learnt) to installation and use.

A subsequent learning was that a product doesn’t make a business. To be a business, one had to have a slew of products, a road map. There needed to be sales people, customer support, designers and developers. Finance, operations and logistics; Marketing and advertising; Hiring and training; Process and policy. Inventory and risk management. Forecasting and channel management. Building a business that was growing year-on-year and was profitable was not quite the same thing as putting features together on a brochure or in producing a product.

Today I know that a feature doesn’t make a product. A product doesn’t make a business; And most importantly, a business doesn’t make a company. A company is a means of organizing a business. It has a board of directors who are answerable to shareholders. The CEO is answerable to the board while the management team is answerable to the CEO. The scale of ambition and operations require detailed, sophisticated and prudent financial and risk management, planning, monitoring and measurement systems. Hiring, training, retaining, growing talent is a priority. This requires a structure that enables the creation and execution of strategy via processes, policies and procedures. Decision making is therefore different. Multiple sources of financing need to be understood with regard to their long term ramifications to the organization. Determining new avenues of growth for the company as a whole while managing a portfolio of several businesses, each with several products, can be rather far more complex an activity than many of us are ready to admit and or are keen to handle.

It is therefore important as entrepreneurs to understand and appreciate the orders of complexities involved as one traverses the trajectory from creating features to building a company. It is through this appreciation that one can then decide on the changes required to be brought within oneself and around if the journey towards a company is to be made. Again, this is not a right or wrong, good or bad matter or for any of us to be judgmental about. It is quite simply an issue for the entrepreneur to determine for himself. After all, it is the entrepreneur’s journey at the end of the day.

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 The views expressed here are his own.

August 20, 2010

"Can Capital be a Curse?" - Article by Sanjay Anandaram

This article originally appeared in the Financial Express. Reproduced with the author's permission.

The CEO naturally looked downcast as he pondered the imminent shutting down of his company which had a well known brand and enjoyed a reputation as a maker of high quality, well designed products. The management team seemed energetic and enthusiastic. Yet why had things had come to such a pass?

“I think we had too much easy money,” said the CEO. I asked him to explain what he meant. “When we started the company, the team, the concept, the business model and the market opportunity were all very attractive to investors who, flush with capital from freshly raised funds, were eager to make investments. Given this interest, we raised funds at a very attractive valuation in less than 45 days and without having to answer too many questions. We believed we were unstoppable. We set up a great office in a not inexpensive part of town, created a very informal and casual culture with flexi-times, set up excellent infrastructure to enhance productivity and hired the best. It seemed like we were the darlings of the media as well. Our launch event was very well attended and our products were exceedingly well received – everyone appreciated the quality, the innovative design, the choices, the colours and our commitment to society. You see, we’d also promised to donate a certain percentage of our sales to the under-privileged. Soon we signed up distributors to sell our products as well.”

Then what happened?

“Well, the market started slowing down and we didn’t see it soon enough. We kept insisting that the market had yet to fully appreciate our products, business model and goals. That the market would soon learn to value high quality, top designs and the choices that were on offer. However, to keep sales ticking, we were forced to drop prices. To still keep making money with our cost structure, we convinced ourselves that we had to have higher volumes of sales. To achieve this, we had to go national – more distributors and retailers, more warehouses, more sales and support people, more procurement and manufacturing, more marketing, more investment in IT systems and the like. And of course, all this required more funds. We had no problem in raising this additional financing with no real questions being asked, yet again. Our story was so attractive! Board meetings were casual and friendly without too many questions being asked. I was essentially given a free hand.”

“But we hit a wall over the next 18 months. Actually, several walls. Our receivables position was becoming alarming as distributors and retailers were facing a credit crunch, our procurement costs were still very high, logistics and warehousing costs were not reducing, attrition in sales was increasing, only some designs were selling while we had a huge inventory of unsold designs, export orders had got rejected on account of damages in transit and some big retailers were very keen to renegotiate sales commissions and payment terms. Our board was getting concerned since we were also running low on cash. Existing investors provided additional funds, this time as a loan to be converted into equity when we raised more money later. This time they asked more questions and ensured that the loan had certain covenants attached. Unfortunately, this money too proved too little as we were unable to successfully negotiate the changed market circumstances. Investors were very upset and refused to provide any more capital. They were realizing how quickly the money had gone down the chute – they hadn’t bothered asking too many questions or trying to understand the costs, product, business model and pricing issues. We too were busy trying to build great products, designs and brand without worrying about fundamentals. There was too much money that came our way too easily. We didn’t have to work hard to justify our business plan. There was therefore no discipline and rigour. Investors were carried away as well with the team and plan and the promise.”

Easy come, easy go is an old saying. If something’s not been really earned but been almost handed over as an entitlement or a gift, its value tends to get undermined over time, sometimes very rapidly as in the above example. There are enough examples all around of all types of businesses that have lost their way because they came into too much money without being questioned and without having to really work hard in a disciplined and focused manner.

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 The views expressed here are his own.

August 02, 2010

Cleantech Investors Set Sight on Solar, Water Related Cos.

Catalyzed by new government policies favouring Solar Energy and multiple demand-driven opportunities for water-related companies, Private Equity & Venture Capital firms are focusing keenly on these Cleantech sectors, reveals a new report from research firm Venture Intelligence.

Private Equity and Venture Capital surveyed recently by Venture Intelligence, a leading research firm focused on Private Equity and M&A deal activity, selected chose Water & Wastewater Engineering, Energy Efficiency, Waste Management & Recycling, Energy Infrastructure, Pollution Control and Cleantech in Manufacturing/Industrial Environments as among their favourite sectors within the industry. The survey results are published in the in the newly released report from Venture Intelligence titled “Private Equity Pulse on Cleantech”.

In addition, expert articles by both PE/VC investors and advisory firms in the report, point to rising investor interest in solar energy. Citing how the accelerated depreciation incentive has helped India to become one of the top players in wind energy, Parag Sharma of KPMG says the new government policies relating to Solar Energy are set revitalize that sector. “The large solar capacity addition plans by centre and state governments ensure that there is a lot to play for and for a lot of players,” he writes. Rama Bethmangalkar and Siddhartha Das of VC firm Ventureast point out that, with technology rapidly bringing down the cost, there are already many applications - be it powering remote villages, cell phone towers, or street lighting - where solar already is the least expensive source of power. Kalpana Jain and Sandeep Negi of Deloitte highlight how with the launch of the National Solar Mission, provides an investment and revenue generating opportunity of over US$ 40 billion across the solar value chain from polysilicon manufacturing to generation.

The article by Shivani Bhasin, CEO of PE firm India Alternatives, points out how, from a private equity perspective, Cleantech presents both “good news and bad news”. The “good news” is that the market is huge and growing fast. The installed generation capacity from renewable energy has increased over ten-fold during the last decade and will continue to grow steadily, leading to an investment requirement of US$20 Billion over the next few years. The “bad news” is that certain aspects of Cleantech are still reliant on government subsidies and the gestation period for Cleantech projects may be longer than the average holding period of private equity funds.

The Aloe Private Equity article on the waste management and recycling opportunity points out how, as nearly 10 million Indians subscribe to a new mobile phone line every month, the amount of waste batteries will become tremendous. A battery is made of very valuable materials, and new techniques are emerging to recover the maximum proportion possible. The article also says that it is important to integrate and capitalize on existing systems while building the waste management models of the future. One should not see the informal sector as a direct competitor to a formal sector in its infancy, but rather as the basis on which to start a comprehensive scheme, able to access a very wide market more rapidly.

Writing on the carbon credits opportunity, Ritesh Banglani of VC firm IDG Ventures India points out how while India’s role in the carbon market is currently very small compared to the size of its economy and its power industry, its registered carbon credits is expected to grow to 33% by 2012, by when it is also expected to be the world’s fastest growing CER supplier. In addition to the global carbon trade, a large domestic market is expected to come up in the next 5 years with the introduction of two new domestic cap-and-trade programs. Banglani feels there are several significant opportunities for Indian services companies in every part of the carbon value chain - from Carbon Advisory to IT Services for the segment.

In his interview in the report, Sagar Gubbi of Ecoforge Advisors says the sectors within Cleantech that are likely to generate the most interest among investors include Renewable Energy generation projects, particularly grid-connected Small Hydro, Wind, Biomass and to a smaller extent Waste-to-Energy and Solar PV projects. He points out that the opportunities for start-ups is more in providing services that feed into renewable energy generation, off-grid renewable energy and in the green lighting sectors.

In her article, Charandeep Kaur of Trilegal points out the key regulatory changes that private equity investors in the solar sector should watch out for. She also highlights how the newly introduced Renewable Energy Certificates (RECs) mechanism would be changing the economics of renewable energy projects.

For the convenience of entrepreneurs, the report provides a listing of investors and advisory firms with a special focus on Cleantech.

The report can be downloaded from

About Venture Intelligence

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July 29, 2010

"Embracing Technology" - Article by Sanjay Anandaram

A German-Croatian friend narrated this incident earlier this morning. On a recent trip to India and upon checking into his hotel (a grand and most well known Indian hotel around the world), he tweeted “checked in and am now at the restaurant waiting for my chicken biryani.” A few hours later, he got a message from the hotel not only enquiring about his experience with the chicken biryani but also informing him (via a message on Facebook) about the various restaurants at the hotel, the chefs and their particular specialities. Needless to say, he was completely floored. The hotel was tracking the responses and explicit experiences of its guests, almost in real time, and making serious efforts to reach out to its guests making the most of new technologies. And this hotel is part of a century plus old staid corporate group.

Contrast this with another experience. Some years ago, I had a series of horrible experiences (including being let into a room late at night that was already occupied by another guest!) at a top hotel in India. I was tired and frustrated at the lack of customer orientation at the hotel. Being in a hurry, I had no recourse but to fill up a customer experience card and drop it off. About 3 months later, I received a letter of apology from the hotel. Needless to say, I haven’t patronized the hotel since. But I’ve talked about my experience in detail with several people since.

I’m now writing about his experience as I’m about my own. Several people will read this and wonder about the hotel and its customer orientation. The cost of delivering such the message is close to zero when compared with the goodwill and positive image value it generates. And it is far more effective than any of the traditional modes of customer outreach. Word of mouth publicity and marketing is now possible thanks to the availability and smart usage of technology. More and more companies (and indeed individuals) are attempting to understand and use these so-called social media technologies. And remember, bad news travels faster than good news!

Contrast the above scenario with another involving several senior officials I met recently. Their business cards were either devoid of any email address or, where there was one, showed a generic email id such as generalmanager@.......... In some cases, the officials had displayed their “gmail” or “hotmail” email accounts on official organization issued business cards. Apart from demonstrating that the organization in question wasn’t aware or conscious of the need to use technology as vehicle for marketing and for interaction with customers and partners.

Some years ago, a top venture capitalist was doing the due diligence on a company that was seeking to raise funds for its growth plans. The office was impressive, the market opportunity was large and growing and the people seemed knowledgeable and sincere. Yet this top venture capitalist did not invest. The reason: he noticed that the company still used type-writers and inter-office memos to communicate. According to him, this betrayed a particular mindset and management style that wasn’t conducive to building a next generation global mindset! One can debate the merits and demerits of the decision, but the fact remains that this company wasn’t able to grow at all in the years since.

Technology enables transparency, better access to data and therefore governance and decision making. Young companies today don’t need to spend truckloads of cash on building infrastructure, sales, marketing and customer support. They can use widely available and generally free technologies to build out their offerings, identify and reach out to customers, market their products and services and render effective customer support. Suddenly, the world opens up as a market and as a supplier. The message therefore for companies and entrepreneurs is to embrace these technologies before their competitors do!

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 The views expressed here are his own.

"The Early Stage Mindset" - Article by Sanjay Anandaram

Originally published in the WSJ Blog. Reproduced with author's permission.

Early stage venture capital investing in India appears to be the flavour of season. There are funds being set up from $5m to $30m in size. Some are proposed to be set up by angel investors, some by former executives and investment bankers while others by successful entrepreneurs. Some are likely to be supported by government linked institutions, some by international investors and high net worth individuals. I recently had occasion to meet with some fund managers of these proposed funds. Clearly, they had done their homework: on the state of the Indian private equity and VC market, the various participants had been mapped out, the state of the Indian economy, the performance of existing venture backed companies, the valuations, the exit opportunities, the pluses and minuses of existing funds had all been analysed and the inevitable gaps/spaces/blue oceans (choose your favourite jargon!) had been identified. And they apparently conclusively pointed to early stage investment opportunities in India – the holy grail or the akshaya patra, if you will.

All the presentations however sounded similar if not identical. They all talked about how attractive the opportunity was and how money could be multiplied. They all would source deals by networking and by associating with the same set of organizations and institutions, by having business plan competitions; they all anticipated “adding value” as a differentiating feature – high powered advisory panel, incubation centres, connections with various corporations and the like.

But there was one thing missing. An understanding of the early stage entrepreneur’s situation. In my over 10 years of active involvement with the early stage sector in India, here’are some of my learnings:

1. It is a relationship, not a financing, business. Building relationships and trust with the entrepreneurs and the management team is crucial.
2. Spending a lot of time with the team is therefore a pre-requisite.
3. Emotions and egos will play a big role in decision making. Be prepared to getting involved in personal matters of the team as well. Learn to empathise with the (1st time?) entrepreneur.
4. Negotiations can re-start after a contract is signed!
5. Appreciation of the role of an investor and of many of the “standard investor clauses” is low. Invest time and effort to explain the role and terms of engagement.
6. Patience is important. Helping think through various strategies and sometimes even participating in the implementation. Companies will take 7 to 10 years to mature and create value. Pumping more money isn’t going to accelerate growth.
7. Company building mindset as opposed to a financial engineering mindset
8. Hiring isn’t easy – helping find talent and advisor and mentors is a great “value-add’. Compensation discussions involving stocks can be another effort.
9. Ready made deals and ready made talent aren’t available. Therefore, finding good deals requires being in the line of “people flow” not banker /consultant led “deal flows”. Travel all over to meet people from various sectors and in all kinds of businesses.
10. Very direct and blunt communication can be construed as being rude and unnecessarily aggressive.
11. There are no proven models. Try everything and stick with what works. That’s the strategy!
12. There’re no pure digital businesses. Be prepared for strong offline activity.
13. There’re opportunities in deploying technology to drive “faster, cheaper, better” solutions. Appreciate that business model innovation, as opposed to technology innovation, will be the theme.
14. Because something’s worked in the US or elsewhere doesn’t mean it will work in India!

None of this is of course very unique to India. It is what the top VC funds in the US used to be known for the early days (when fund sizes were in the low to mid double digit millions). These kinds of early stage funds are making a big comeback in the US; Given the opportunity/gaps/blue oceans (!), it is time the same mindset that helped create great companies there was applied by early stage investors to opportunities in India as well.

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 The views expressed here are his own.

July 12, 2010

Where's The Customer? - Article by Sanjay Anandaram

This article appeared originally in The Financial Express July 2010 Issue. Reproduced with permission from the author.

The long and detailed presentations were going well. The young CEO was passionately outlining the company’s plans to the board. The rest of the management team was also present and there were several interjections and contributions by them on their functional areas and areas of expertise: Process improvements, employee training and retention, product design, engineering, customer support were earnestly discussed. Terms like efficiency, productivity and growth rates were thrown around. Everything seemed to be going as well as possible till someone asked “All this is fine, but where’s the customer in all of this?” None of the presentations talked of how the customer would be better served by the elaborate discussions on processes and systems.

All too often, companies become obsessed with themselves and become inward looking. Are the planned processes, systems and procedures going to help deliver faster, cheaper, better service and products to customers or are they designed only to help the company manage its internal issues? Does the engineering team just build “cool” and technologically advanced products or do they build less advanced products with features that customers actually care about, value and use? Is the customer service team organized to deliver the best customer service or is it organized keeping the company’s structure and people (& internal politics?!) in mind? Customers don’t buy technology, they buy solutions. They don’t care about the company’s customer service promises or policies, they want the best (and cheapest) experience when they email or call the company with a problem. Is the company seeing the world from a customer’s view point and then devising solutions to deal with real pain points? Such “moments of truth” are what determine the company’s customer centricity.

A fast food company devised an elaborate supply chain and delivery system in order to prepare and deliver food to its customers in the shortest possible time. They also invested in a state of the art customer interaction system that ensured that customers were kept waiting for a minimum period and that repeat customers were recognized by personalized greetings and offers. Yet the company struggled to gain customers. Because all their elaborate planning didn’t take into account that the taste of the food was what mattered the most and therefore had to really appeal to customers. Customers weren’t willing to trade food quality of food for quicker delivery and swifter customer service. Therefore, understanding what customers value and how much of it they value is crucial.

So where does a company go to find out and understand what customers really want? Fortunately, in today’s day and age, it is a lot easier what with various social media and tools available. While observing implicit and explicit behaviours on the internet is invaluable, it is important that everyone in the company meet customers and partners. Does the company have a system that forces everyone, especially those at the top, to travel and interact with customers? Is there a system for customer opinions and feedback to be collected, collated, analysed and acted upon? Sales people are usually in the forefront of customer interaction and their experiences and learnings can be very useful. Does the company, therefore, have a system for interacting with sales people and understanding what customers are really saying about its products and services? Does the company have a way to observe how users buy, interact with and use its products and services? This observation can be very useful to the company in designing products and services. Does, for example, the company have a “customer voices” channel (web, phone, email) to allow customers to suggest new features and improvements to the company’s existing offerings? A startup I know well has recently started this channel in order to “listen and learn” from its customers.

As can be seen, while it is easy to make grand proclamations of being a customer-centric organization, it is all too easy to reduce the customer to an after-thought, if not totally ignore him/her, by excessively focusing inwards. In this regard, it is useful to remember this saying by Mohandas Karamchand Gandhi:

A customer is the most important visitor on our premises, he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.

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 The views expressed here are his own.

July 05, 2010

Catalysing Strategic Entrepreneurship - Article by Sanjay Anandaram

This article appeared originally in The Wall Street Journal May 2010 Issue. Reproduced with permission from the author.

A recent news report ( indicates that the Government is keen on allowing 74% Foreign Direct Investment (FDI) in defence production to enable technology transfer and the bringing in of funds. Let us take a look at some data. India’s defence budget for 2010-11 is over $30billion; India is currently the 2nd largest arms importer (2005-09) behind China. However, according to the SIPRI report, China is well on its way to becoming self-reliant and saw its imports decline to $0.6billion in 2009 from $3.5billion in 2005. During the same period, India increased its defence imports from $1.04billion to $2.1billion. India’s defence imports are currently estimated to be over $8billion. The role of the Indian entrepreneur, thus far, in catering to this huge market is less than negligible. Isn’t there therefore a terrific case for catalyzing entrepreneurship and providing opportunities to homegrown entrepreneurs in this strategic sector? Does the proposed FDI policy take this issue into consideration or will powerful lobbies favouring defence imports not allow local entrepreneurs and locally developed technology to flourish?

A recent article by Gen Shankar Roychowdhury, former Member of Parliament and Chief of Army Staff ( on the development of the indigenous Arjun Main Battle Tank (MBT) fortunately offers a ray of hope. Quote “However, the sunny side is that the development processes has already stimulated growth in small but very high technology manufacturing agencies even if production lines for prototype models have been quite limited. These agencies are of course capital intensive, but have mainly come up in the medium and small scale private sector which is surely encouraging’ He also makes a case for involving the private sector in improving quality and project execution capabilities.

The situation in telecom is tragic as well. There’s only one, yes just one, Indian telecom equipment “startup” company that designs (owns intellectual property), develops, manufactures, sells and supports active equipment that sits in a telecom network. That company, Tejas Networks, started by 1st generation entrepreneurs is about 10 years old and is about $150m in size. Contrast this to the $24 billion market for telecom equipment that is supplied, directly or indirectly, by foreign players including Chinese companies like Huawei and ZTE which do over $3billion in sales from India alone. The current concerns about security of Indian networks should hopefully nudge policy making in the right direction.

The government can and should be a huge catalyst for the creation of industries that require large capital outlays, have long gestation periods and need highly trained and qualified manpower required to create very valuable intellectual property, manufacturing and project management expertise. Sectors like defence, space, and telecom also provide great opportunities for the government to create appropriate funding mechanisms, regulatory frameworks and business models that enable Indian entrepreneurs to set up great businesses. It is high time that the government realizes that one doesn’t become a superpower by just having 8+% growth rates and by being a market for others, especially in strategic areas. Ownership of of key assets – intellectual property, markets, financial and socio-cultural – and deployment of those assets around the world is crucial. Else, there’s a real danger that India will remain not just an aspiring superpower but also a perspiring one as it struggles anxiously to make it!

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 The views expressed here are his own.

Entrepreneurial Self-Conviction - Article by Sanjay Anandaram

This article appeared originally in The Wall Street Journal. Reproduced with permission from the author.

There’s an exercise I sometimes ask students, especially those in business school, to do. On a blank piece of paper, the size of a business card, I ask each of them to first write their name and then their “dream title” in their “dream company” that they’d like to see themselves in. Being business school students, it is no surprise that “Chairman,” “Managing Partner” and “CEO” is the typical dream title they’ve ascribed to themselves in their dream companies, usually the globally most well recognized companies from the worlds of consulting, investment banking and investments. This exercise is usually completed in under a minute.

They’re then each asked to turn the paper around and again, write their name on it. This time however, there is no “dream company”. They simply have to give themselves a title, one that describes them to another person. Now this suddenly takes time to complete! It becomes very hard to describe one self without using the crutches of a well known name and a well regarded title. There’s emotional satisfaction and comfort in being circumscribed by the warm glow of the “known” company and the “respected” title and without the crutch provided by these, it becomes complicated if not very tough to describe one self.

And this is not peculiar to these students. We go through life pretty much as tourists – a few pictures here and there taken at the most recognized landmarks during a few quick trips to places millions have already visited, eating and drinking and shopping at the very places millions already have been to. And then returning and discussing the journey with others who’ve done exactly the same! We rarely take trips that are different (note, different does not mean expensive) in terms of the places visited, mode of travel, place of stay, food and drink tasted, sights and experiences savoured and so on. The trips are generally predictable because of the very understandable reasons of safety, comfort, cleanliness, familiarity and so on.

Most of us can perhaps identify with these situations. It is not something to get judgmental over, of right and wrong or good and bad. It is the way most of us think and behave. It is hard to walk away or give up the trappings – as the world sees it- of success. It is hard to have to face the world as an unknown without any ego-friendly products around, not even a fancy business card! Since so much of our sense of who WE are, what WE want is actually derived from our perception of our socio-economic standing. We don’t stop to ask questions of ourselves. It requires the courage of conviction to stay on the journey when phone calls aren’t returned, when meetings take longer to fix, when no one has time for you. It requires enormous self-awareness, confidence and humility while still being conscious of the “opportunity cost” of not pursuing everyone else’s dream. It requires someone who’s while soaking in experiences and learning, adapting is still driven to making their own unique road. Yet there are such people. They’re the types who are willing to forego fancy titles, salaries and comfort for the chance to travel a road less traveled, to experience a journey that’s unique and singular, for putting THEIR names on THEIR cards and describing themselves as “CEO- My Life/My Company”. THEY are the entrepreneurs!

Perhaps Gandhi said it best, of course in another context altogether but which demonstrates the mindset required when he said: "I do not want my house to be walled in on all sides and my windows to be stuffed. I want the cultures of all the lands to be blown about my house as freely as possible. But I refuse to be blown off my feet by any. I refuse to live in other people's houses as an interloper, a beggar or a slave”.

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 The views expressed here are his own.

June 25, 2010

Hemu Ramaiah – Story of an Indian Retail Pioneer

At Venture Intelligence, we recently had a great experience interviewing Hemu Ramaiah, founder of the Landmark bookstore chain (in which the Tatas acquired a majority stake in 2005). For me, the interview (which is part our Entrepreneur Podcast series "Entrevista") served as a confirmation that a customer facing role is the best start to an entrepreneurial career.

Other key takeaways from the podcast:

* “Make Your Own Mistakes”
o Trust Your Gut (based on your understanding of customer needs)
o “Don’t let Accountants take over your business”
o Examples: Deciding to get software designed by a start-up firm (which made the effort to understand her requirements better), deciding not to charge extra for courier delivery for Internet orders, deciding to buy (rather than rent) space for the stores, etc.

* Importance of Growing the Market vs. worrying overly about competition

o Amazing story of how she decides overnight to start supplying books to her competitors (in order to boost volumes for the import orders)

* Choice between Private Equity and Strategic Investors

* Planning the Personal Exit

o Because “business is a treadmill” and “life shouldn’t pass you by”
o Basing the decision on an age cut-off (rather than some target corpus)

* Converting Problems into Opportunities
o When she learns that her daughter’s schoolmate has never visited a bookshop, Hemu decides to turn the problem (of parents not exposing their children to books), by “taking the bookstore to the school”.

You can download the full podcast (and find links to other other interesting Entrepreneur podcasts) from the Entrevista blog at

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. Click Here to find out more about Venture Intelligence products for Entrepreneurs.

March 31, 2010

Entrepreneurship in Middle India: Article by Sanjay Anandaram

This article appeared originally in Businessworld. Reproduced with permission from the author.

A conversation I had late last year with a leading investment banker was telling as it testified to the rise of entrepreneurs from middle India –the India that lives in Tier 2 and Tier 3 towns inhabited by close to 70% of middle class India. He said, “We’re seeing an increasing number of deals outside the metros and we believe growth will come from those places. We’re therefore looking to hire people who can speak local languages fluently, have relationships in smaller towns, aren’t averse to traveling by train and bus and staying in non-5 star hotels!’ He was making an important point – wearing branded suits, speaking in clipped accents and doing business in the lobbies and coffee shops of 5-star hotels in metro India wasn’t where all the action was going to be!

India’s secular growth trajectory is being propelled more by domestic consumption than by anything else. In turn, domestic consumption is increasingly and rapidly being driven by middle India. Thanks to media exposure, telecom penetration, growing linkages with larger urban centres, rising incomes and enhanced distribution and penetration by consumer product companies, aspiration levels of this India are at an all time high. Growth opportunities abound across all sectors of the consumer economy – from personal grooming to retail to financial services to healthcare to consumer goods to education to…….the list is long. Not surprisingly, with the increased opportunities and awareness, interest in entrepreneurship is rising fast and by choice.

Representatives of this new middle India share some very interesting attributes as multiple studies have shown. For example, according to studies by Euro RSCG in 2005 and 2007, these include the following: confident and assertive, tend to be more socially aware, are proud of being Indian, unafraid of trying the unknown and belief in the family as the cornerstone of existence. Entrepreneurs emerging from these towns are also imbued with these attributes.

It is said that entrepreneurship cannot be taught but can be learnt. Role models are important in this regard. With increasing awareness of entrepreneurship, engineering and business colleges in many non-metro towns have entrepreneurship courses and get exposed to top class entrepreneurs through the efforts of industry associations and groups like TiE that has, for example, newly opened centres in towns like Hubli, Ahmedabad, Pune, Patna, Kochi and Nagpur.

While the hunger, awareness and aspiration levels are on par with those anywhere else, entrepreneurs from small towns face challenges as well:

1. Business skills: required to build professional well governed and large scale businesses. The need to think big, to implement processes and systems, have a team in place and a disciplined and focused growth plan.
2. Access to capital: this continues to be an issue. Traditional venture capitalists have no way of identifying and even conducting due diligence on these investment opportunities while these entrepreneurs aren’t familiar with venture capital and how to reach this class of investors. There are no angel funds available, raising money from banks has its challenges and friends, family and the community can only provide so much capital – not enough to build a large scalable business.
3. Networking: building relationships with customers, investors, advisors and mentors, investment bankers, partners, learning and sharing experiences through events and blogs for example, are harder to do. Many of the entrepreneurs aren’t very internet savvy either and aren’t aware of how to leverage social media tools.

Clearly, with the all around energy of a growing India pushing for change, these challenges can be easily dealt with as they inevitably will be and soon.

In Golders Green crematorium, Hoop Lane London there’s a statue overlooking the gardens. The statue is of a legendary Indian entrepreneur, born in 1894, and whose name is still among the most venerable in Indian business today. This entrepreneur left a small town in Rajasthan and traveled first to Mumbai and then to Kolkata, the great urban centres of the time to make his fortune. He established businesses in jute, sugar, autos, tea, textiles, cement, chemicals, rayon and steel tubes.

In tomorrow’s India, a GD Birla, will not have to travel from a Pilani to Mumbai and Kolkata to realize his entrepreneurial dreams. A Pilani, a Palanpur, a Patna or a Pune would be a good enough base from where to launch a global empire. The dreams, the will, the capabilities and aspirations exist. All that these places need is for resources -financial and non-financial- to become available. The good news? It will happen sooner than you or I can imagine.

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 The views expressed here are his own.

The Importance of Selling- Article by Sanjay Anandaram

Article appeared originally in Financial Express. Reproduced with permission from the author.

A Professor from an international business school writes a book. The book is published by a highly regarded publisher. The book has examples from the US, Europe and India. Then gets the book written about by giving interviews to bloggers, journalists from well known international publications and the like. Naturally, lecture tours are the next step. Local industry associations are then contacted (subtly and not so subtly) to invite him for talking about the book. Soon the India chapters of these industry associations too are asked to invite him for talks. As a gesture of goodwill, he says he will waive his usual speaking fees but he’d be glad to have the publishers bring in copies of the book that people could buy, perhaps at a discount. Helpfully, he explains that the book has sold tens of thousands in India already since it has many Indian examples. And he’d be glad to sign the books, at no charge presumably. It wouldn’t be a surprise if before long the good Professor is on a lecture tour of India talking to us about Indian companies.

Now lets us look at another example.

A Professor from a well known Indian business school writes a book. He self-publishes the book and then almost shyly informs his friends and acquaintances about the book. The book doesn’t have any exciting stories or examples. It has weighty recommendations for public policy. Unsurprisingly, the book is unheard and unnoticed. The Professor too doesn’t seem particularly motivated to aggressively push the book and himself.

Two examples that demonstrate two different ways of doing things. This is not a judgmental issue – about good or bad or a right or wrong. It is the way things are and, in my view, the lessons that need to be learned from these.

Indians in general tend to be inhibited (not understated) about their achievements and capabilities. In the corporate world, this shows up in laconic responses to questions. In lackluster product literature and web-sites, nondescript product and service demonstrations. The general mindset appears to be – build it and people will buy. It appears that we don’t think it “nice” to be seen to be talking about oneself, our company and its products and services. Almost a socio-cultural issue. But if we don’t start talking about who we are, others will! And before long, who we are gets defined by others! After all, if we don’t talk about who and what our capabilities are, how can we expect others to know of them? Why should someone else spend the time and effort to learn about us?

The importance of “selling” one’s side of the story is critical. The CEO has to “sell” the vision of the company to employees, customers, partners, vendors, government and investors. But we have to be very careful about this whole “selling” business as it conjures up images of fast and smooth talking salesmen with dubious integrity. Some aspects worth keeping in mind about selling:

1. listening to the customer, understanding the product / service, understanding what the company stands for and communicating it clearly and simply
2. building relationships with various constituents. Getting to know people and their motivations. Using relationships in a mutually beneficial manner without crossing limits of integrity
3. being persuasive, hard working and diligent to satisfy the customer. Being honest enough to inform the customer when there’s no solution or when there’s been a mistake.
4. being able to spot an inch-wide opening to drive a truck through!

Naturally, this requires great articulation, presentation and inter-personal abilities. And like everything else, these are learned through experience, practice and the desire to engage with the market. It is through this engagement that we learn about the market, customers and competitors; our offerings therefore get refined and better in response.

Winston Churchill once said this about a fellow parliamentarian, “He’s a very modest man. With much to be modest about!” Well, the next time we are modest about our ourselves, our company, its products and services, when we have every reason to be proud about, think about this! Yet, remember there’s a thin line between honestly and confidently talking about one’s capabilities and disagreeable cocky arrogance.

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 The views expressed here are his own.

March 08, 2010

"Confirmation Bias" - Article by Sanjay Anandaram

The CEO of the startup was conducting due diligence on a potential acquisition target. The Board (including him) had prepared a list of questions they wanted detailed responses to. These answers would then need to be cross-verified by the appropriate experts, lawyers and accountants. The founders of the potential acquisition target were known to the CEO for several years and they had done business together as well. The CEO believed that the acquisition would benefit his company and desperately wanted to make the acquisition happen as he believed it would double the size of his company, enhance offerings and customers and of course, provide some bragging rights since an acquisition tends to (at least initially) be an ego-booster. As the diligence process began, it started becoming apparent that the financial position of the target company wasn’t as healthy as had been conveyed or imagined. In addition, the customer base and sales pipeline too didn’t look as attractive. The Board started having second thoughts on the deal. The CEO aggressively pushed for the acquisition, so much so that he started rationalizing the deficiencies and gaps thrown up by the diligence. He also downplayed “bad news” (eg loss of a customer) or kept the information only with him. The Board wanted the CEO to look for other targets and options as well but having invested so much time and energy (emotional and otherwise) in trying to make this acquisition happen, the CEO wasn’t in a mood to listen.

The VC and the entrepreneur knew each other from over 10 years back. They had high regard and respect for each other’s capabilities. They had worked together at the same firm for over 7 years. Over the past 10 years, they had kept in touch socially. Both were well known professionals and who occasionally sounded each other out. Now the entrepreneur was raising money for his startup and the first VC he called was his former colleague. The VC wanted to do the deal as the team was high profile and the proposition though risky looked attractive. He was excited since this would be a proprietary deal without any other VC being aware of the opportunity. It would be a coup. He was very eager to close the deal at the earliest; the entrepreneur too, given his public standing, wanted to get the deal done quickly. Both had already laid out the PR release and the inevitable press conference that would follow the announcement of this high profile deal. The VC pushed the deal through his partnership, convincing them that there wasn’t any reason to do a detailed diligence as the team was well known to him, the proposition was attractive and that the terms of investment were attractive.

The acquisition, in the first instance, didn’t take place since the Board couldn’t reach a consensus. As more details of the target emerged, it started becoming apparent that there wasn’t much business sense in an acquisition; in fact, there would be a serious financial hit that the acquiring startup would have to take. The CEO who was adamant about consummating the deal and the Board had an acrimonious relationship thereafter, one which took a long time to heal. In the second instance, the high profile deal quickly soured as the VC’s friend just wasn’t cut out to be the CEO of a startup. There was a huge mismatch in expectations and styles of working. The high profile startup blew up leaving bruised egos all over.

Why do such things happen?

It was important for the acquiring CEO and the VC to remain dispassionate and detached so that they could take decisions in the best interests of their respective firms. However, they allowed their biases and preconceptions to overwhelm their usual decision making process. In fact, in such cases it is not unusual at all for a person to actively seek out information that reinforces these biases and preconceptions (eg by selectively recalling anecdotes) and ignore or overlook alternative view points. This is “confirmation bias”.

Companies too suffer from this bias. They believe their own PR and marketing hype and ignore dissonant customers and negative market feedback till it is too late. They don’t hear the little boy who shouts about the lack of clothes on the emperor!

All of us are guilty of this bias. But what’re we doing about it?

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 The views expressed here are his own.

February 22, 2010

"Partnering - Big or Small?" - Article by Sanjay Anandaram

The startup was in a tizzy. One of its largest partners who sourced the startup’s products, bundled them with other offerings and sold them to customers had decided to make the products itself. The partner was much larger than the startup, had more money and reach. About 10% of the startup’s revenues came from this large partner, albeit at a lower margin than if the startup sold products directly. On the other hand, it did not have to incur additional sales and marketing costs. For the partner, the revenues from the startup were a tiny fraction of its current revenues but the market opportunity was large and fast growing. It was quite possible that the startup would be in direct competition with its partner before long. The startup was therefore understandably nervous – should it continue to supply the partner or should it stop supplying products? Should it aggressively cultivate other comparably large partners while continuing to do business with this partner?

All too often in business such situations arise. There’s nothing good or bad, right or wrong about these. It is just the way things happen. Startups are no exception. Many years ago, Ray Noorda the legendary founder of Novell had popularized the word “co-petition” implying that in business co-operation and competition could go hand in hand. Indeed, there are umpteen examples in automobiles, consumer goods and technology. But there are some fundamental points worth keeping in mind:

1. Co-opetition works among equals or comparable sized and capable companies. In cases where there’s a mismatch, the smaller company needs to have very unique and defensible capabilities – intellectual property or an exclusive license of some kind.
2. Where co-opetition works, the competing arms of the business are kept separate from the co-operating arms either through separate structures – legal or otherwise. Contracts are tightly negotiated.

This gives rise to an interesting dilemma. Should a small company partner with another small company or with a much larger company? The question to ask is what is this partnership with another small company really worth? Remember, two poor people don’t equal one rich guy! On the other hand, partnerships with a large number of small companies, each of which does small business but in the aggregate have an appreciable turnover, could be fruitful. But forging and maintaining these relationships is very tough since each small company is itself struggling with its own issues of growth, finances and people.

No doubt, partnering with a much larger company takes a lot of time and effort but once done, can be a source of profitable revenues for the smaller company. Again as in all partnerships, this too takes an enormous amount of nurturing to flower. Being dependent on just one large partner for business is fraught with its own risks as the loss of this partner can seriously damage the prospects of the startup. So it is prudent to have at least 2 large partners (ideally who compete with each other in the market) so they keep each other in check even if the startup cannot. This is of course, easier said than done (is there anything that’s done easier than saying it?!) but is a critical approach to pursue for a startup. Sometimes, a larger partner might want exclusivity, in which case depending on the situation and negotiation capabilities and leverage at the startup’s end, it is worth considering limits to the exclusivity – geography, time, products, non-competing channels etc.

As with most things in life, one doesn’t get anything without “asking” (to oneself or to another or both) for it. It is therefore important that startups consider asking themselves at all stages what it is they really want from the partnership. Is it just a stepping stone to many more partnerships? It is just an opportunistic measure to enter a market and secure some quick revenues? Is it a partnership that needs to be nurtured for the long term value and impact? The answer of course depends. Depends on the unique situation for each startup.

So what should the startup do?

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 The views expressed here are his own.

February 18, 2010

Profile of iMetrex Co-founder Rajeev Mecheri

Subroto Bagchi has published an interview with Rajeev Mecheri, Co-founder of building security technology firm iMetrex, in Forbes India magazine.

In time, they became the go-to organisation for every high-rise in town that required compliance with safety, security and energy management norms. In 2007, Siemens noticed their work. And Siemens also noticed that their building solution software was comparable and in some ways, actually ahead of what Siemens offered. It wanted to buy them out but with a condition: The brothers came with the business. Rajeev came on board as the managing director of Siemens’ Building Technology business for an agreed period of five years. This year, the business having fully integrated, Rajeev has decided to move on and brother Anand has stayed on as the chief marketing officer of the Building Technology business, located out of Switzerland. The acquisition is valued at a whopping $100 million. If you have not heard about it, it is because in Chennai, folks do not crow about such things. I wanted to know about the experience of selling his enterprise.

...“What did you learn from being part of Siemens?”
“I learnt about the power of a brand; the power of size. Only when you are large, you have the leverage, the negotiating power. Today, even as I leave, we have inked a deal to deploy a physical and logical security system involving 105,000 cards to be deployed across the world for Infosys. At iMetrex, all by ourselves, we would not have even bid for the business because we had no capacity to deploy such a solution across the world. On the flip side, in a large entity, you lose out on relationships. Employees tend to think of customers as quotations, invoices and account receivable and not as people with needs. Customer needs and not numbers are the end game and that requires empathy ahead of size.”

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at

February 08, 2010

"People Growth in Startups" - Article by Sanjay Anandaram

The following was narrated to me over the weekend by a Professor of Finance and a former finance industry executive with experience in well known multinationals.

Upon asking his supervisor about his not being promoted even after performing well at his job and being recognized for it as well, he was told that he was asking the wrong question! His supervisor told him “You’re asking the wrong question! You should ask – what should I do to get promoted?” Quite naturally, this confused the finance executive and now Professor all the more. Upon enquiring, he was told by his supervisor that he was undoubtedly very good at his job but hadn’t demonstrated leadership by developing a competent second rung of leadership. “You should make yourself redundant by growing out of your job to be promoted” was the message from the supervisor; else, upon promotion, who would do the executive’s job at least as well as it was being done?!

The executive took the message to heart. In the next 2 years, he was promoted over 4 times!

Is the same promotion philosophy applicable in a startup as well? I believe it is.

A group of energetic, passionate and talented people come together to create a startup to realize their dreams. In the early days of the startup, when there’s ambiguity and amorphousness about the company’s structure, roles and responsibilities, it is understandable when the founders and early team members do everything and anything possible to get the job done right, on time. After a while, as the startup grows, a more formal structure comes into being. Roles, responsibilities, authority and reporting relationships come into being. More formal functions get created eg, finance, vendor management, engineering, product marketing, sales, marketing, human resources, IT and so on. Each of these departments needs dedicated attention within the overall canvas of the company’s charter. Each of these functions in turn grows in complexity commensurate with the company’s growth - sub-departments get formed (eg marketing might get sub-divided into functions such as product marketing, product management, online marketing, brand management, channel marketing, alliances and partnerships and so on); in addition, operations might get further sub-divided into geography, sector and function focused structures.

Each of these functions will need to be “owned” by a competent and capable teams. The initial founding team will need to create space for talent to come in and flower. This requires an honest appraisal of the capabilities of the team. Insecurity and egos can come in the way of allowing this to happen. Can the person single handedly responsible, in the early days of the startup, for generating sales of say, Rs 1 crore be made responsible for creating and managing say, Rs 50 crore in sales, an all India sales team dealing with multiple sales channels funneling multiple products and catering to different classes of customers?

In 1969, Dr Laurence J Peter and Raymond Hull wrote in their book The Peter Principle that "In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence." The humorously written book goes on to state that sooner or later employees are promoted to a position at which they are no longer competent (their "level of incompetence"), and there they remain, being unable to earn further promotions.

One way that organizations attempt to avoid this effect is to refrain from promoting a worker until he shows the skills and work habits needed to succeed at the next higher job. Employees should therefore not be promoted for their efforts but given pay raises. Training is to be imparted to employees to make them suitable for position. In India, it is hard to find experienced and affordable top class talent for startups and so training of existing employees is more important. The onus, unfortunately, therefore is on leadership to discover those individuals with poor managerial capabilities before they’re promoted! It is also important to keep in mind that many technical people may be very valuable for their skills but poor managers, and so allowing a good technical person to acquire pay and status reserved for management requires the creation of a parallel career path.

So, lets work hard to make our selves redundant in our current roles!

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 The views expressed here are his own