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 sanjay@jumpstartup.net. 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 sanjay@jumpstartup.net. 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 sanjay@jumpstartup.net. 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 (http://bit.ly/cjChhM) 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 (http://bit.ly/blDIix) 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 sanjay@jumpstartup.net. 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 sanjay@jumpstartup.net. The views expressed here are his own.