When dhanda is manda, bring in the entrepreneurs!

06 Sep,2013


By Moinak Mitra


In 2001, a 21-year-old spotted an opportunity in the US when he saw F&B franchisees losing out on consumers who got disgruntled after receiving excessive fizz in their fountain sodas.


Upon showing the value of potential losses and seeing the helpless reaction of the franchisees, he created a fizz breaker to resolve the anomaly. “It seemed like a tough task as it dealt with food and I needed to understand FDA restrictions and compliance,” he says.


That prompted him to spend time on learning about technologies that would be non-intrusive, compact, easy to use, “and something that could snap on and snap off to the fountain Pepsi and fountain Coke machines, plus obviously be accurate (especially with translucent fluids like Sprite)”.


To top it all, he also tried to put a barrier to entry for future competitors by making it wireless (to beep into the franchise manager’s beeper). Not being an engineer, he got friends with industrial engineering backgrounds to join him.


“I needed to make sure the people who were joining me have the same level of passion and so I spent time convincing them, joining me on customer visits, and walking through the concepts,” says the fizz-breaker-turned-India’s newest poster boy of the skies Mittu Chandilya, whom Air Asia promoter Tony Fernandes handpicked to run the low cost airlines’ India ops as CEO.


For sure, Mr Chandilya’s courage and determination at a young age stood him in good stead as his career panned out. Prior to the top job with Air Asia India, it took him to head APAC for Ingersoll Rand and even a consulting function for search firm Egon Zehnder, based out of Singapore. In his current role, though, Mr Chandilya has to wear many hats, which obviously come in handy with the DNA of an entrepreneur already in place.


According to research carried out by the London office of the Hay Group, the competencies required for successful entrepreneurs are different from those of CEOs. “It is either the environment or the situation the company is faced with,” says Gaurav Lahiri, MD, Hay Group India, who believes that entrepreneurial CEOs can either be good in a start-up or turnaround mould.


While he emphasizes that good entrepreneurs are driven, ambitious, risk-takers and have a bias for action since their very survival depends on it, they are not necessarily very good at coaching, team-building and talent development since “they get their natural energy by fulfilling their own goals”.


So why is India Inc. hiring a clutch of entrepreneurs as its CEOs? Mr Chandilya is not alone in a galaxy of shopkeepers-turned-ship runners. From Avinash Vashistha of Accenture India, Kavindra Mishra of Pepe and Pradeep Mukerjee of Mercer to Tiger Ramesh of CSS Corp and family businessman turned novelist Ashwin Sanghi – they all have had their share of running their own enterprise at one point or the other.


And though a few like Mr Sanghi continue to do so even today, they’ve dabbled in things far different than what they are doing now. Perhaps, the bleak macro-economic map has something to do with it. Or, maybe, companies in startup mode, like Air Asia, feel the need for zeal even more in trying times such as these.


Colleagues are clients

For Accenture, it was a relationship that started back in the mid-2000s. Through the 90s, Avinash Vashistha worked in senior leadership roles for the then $30-billion Canadian telecom giant Nortel.


At a time when Indian companies were learning to do outsourcing, Nortel was their biggest client and he had the experience of working with all the big Indian IT companies.


In 1996, Mr Vashistha was an expat in India and was poised to return to the US when he realised the booming potential of the market. So he decided to start Neo IT, a company that would work with clients globally in business and technology. In 2006, Mr Vashistha’s company got into education and investment, which resulted in a name change to Tholons.


In his entrepreneurial capacity, Mr Vashistha had worked with Accenture, and so it was in 2011 that the global giant offered him a position to head India and even bought the consulting part of his business.


“It took me 6 months to decide,” says Mr Vashistha, admitting that the degree of freedom in his venture was more and the impact of that was huge across the organization. Neo IT and Tholons taught him diverse roles and connected him with Fortune 50 CEOs, CFOs and CIOs. “That connection with CXOs and the boardrooms of clients was an amazing experience,” he says.


Mr Vashistha claims he knew all the verticals and the service provider landscape well since it was his venture. So working with an MNC like Accenture was not an issue as he had interacted in depth with the global top talent pool.


“You should consider people inside the organization as clients, set aside your ego and look at the challenges that your peers and seniors face. It’s a solution-based approach since you have to feel convinced about what you’re doing. If you’re a leader, you can’t feel like a manager.”


Roaring through serial ventures

Like Mr Vashistha, another former Nortel leader Tiger Ramesh, dabbled in a variety of ventures before signing up with CSS Corp in 2011. But unlike Mr Vashistha, he ended up buying a part of the company along with the Switzerland-based Partners Group PE fund


Rich Dividends

In the last year of the millennium, Mr Ramesh was heading India ops for Nortel, which he terms as a “typical oldboy’s club”, as they got in someone else in his shoes.


At that juncture, he teamed up with four others and started IT infrastructure management company, Bangalore Labs. But the unfolding tech crash fuelled by the telecom bubble bunged a spanner in the risk-taking appetite of customers, more so when it came to working with a startup. “We had to drop the second round of funding and sold it to a strategic buyer,” he says.


The idea was not to get bogged down by such failure. Instead, Mr Ramesh drew up a ‘what-not-to-do’ list, which read like a breeze for any management tyro. If there were scribbles of how to keep a team motivated in a downturn by communicating more often with the employees, it also laid importance in having a budget that can dynamically alter the cost structure of a company, or for that matter, how to structure an investment with a VC, where most first-time entrepreneurs go with blinkers on.


Armed with new learning, Mr Ramesh dove into Quintant, his next IT venture, along with Phaneesh Murthy, which soon after, got acquired by iGate. So while Mr Phaneesh became iGate CEO, Mr Ramesh was made President. Things kept rolling along as Ramesh gave vent to his true passion -wildlife -when he set up a chain of resorts in Karnataka called Cicada.


“It was a great adrenaline shot with three-and-ahalf years of going into the forest every single week…It was fun but painful because for the first time, I had to work with multiple government agencies and NGOs since it was about the environment, and saw how red tape and bureaucracy stall things,” says Mr Ramesh, describing his passion venture before he sold it off to Coffee Day Resort Holdings, owners of Café Coffee Day, who’ve rebranded Cicada as Serai.


Mr Ramesh didn’t stop there. He went on to help a friend set up an LED lighting business for corporate offices. It was called Clean Ray and was designed, patented and marketed in India, with a customer roll worth boasting of Microsoft, IBM, Qualcomm, Wipro, Infosys. Since Wipro had a Rs 400-crore lighting business, it ended up buying Clean Ray.


In 2011, Mr Ramesh signed up with the Goldman Sachs and SAIF Partners-promoted company, CSS Corp. “I wanted to see if I could be a different kind of leader for this company with all the learning I had as an entrepreneur over the last 11 years. I came with no plans, only instincts. What do you do when you get lost in a forest? You see if those instincts can make an impact in a corporate job,” he says.


Mr Ramesh’s instincts served him well. When he joined CSS, the company had a net loss, a few million dollars in debt and low-single digit EBITDA. After seven quarters, it is debt-free, has $30 million cash in the bank and a high double-digit EBITDA. His entrepreneurial streak struck back as he sought help from the Swiss PE fund Partners Group and bought out the company for $270 million.


Through his tenure at CSS, Mr Ramesh took a magnifying glass to spot inefficiencies in the company. For instance, he looked at the delivery utilization and observed that almost 25% of the delivery folks were non-billable. So he converted 10% of them to billable entities and that proved to be a major source for profits.


Again, he exited at least $15 million worth of business which were non-profitable owing to shrinking margins. “As an entrepreneur, it helped me to take such decisions quickly, which I wouldn’t have been able to do as a professional.”


Cracking the people code

Though Pradeep Mukerjee, the newly-appointed Country Head and CEO of Mercer too had his own venture to bank on after quitting Citi in 2007, which he served in various capacities for nearly two decades.


That’s when he set up Confluence Coaching and Consulting, which dealt with organizational effectiveness, leadership development and coaching and working with organizations to define HR strategies.


Mr Mukerjee believes all three helped in honing his career as a CEO. Apart from that, “entrepreneurship taught me to deal with uncertainties and exposed me to different people across verticals”. His venture gave Mr Mukerjee a deep insight into people business that was denied to him in a functional capacity as head of South Asia operations at Citi. It gave him the confidence to apply for the top job at Mercer India.


Cloth maketh the man

Away from the bean-counting and headcounting world of suits, Kavindra Mishra has taken charge of Pepe jeans in India as its CEO this July. But he does bring with him a strong entrepreneurial bug. When working as a commercial director for Benetton, he and his colleagues thought of launching a website that would offer affordable clothing as most products in that sphere could not penetrate Tier II and Tier III markets. Backed by SAIF Partners, they co-founded Zovi.com.


“In 2011, we were working out of a Costa Coffee outlet in Gurgaon where we used to sit from 10 am to 1 pm to figure out how our day would pan out,” Mr Mishra recalls. For the remainder of the day, they would either make cold calls or go to vendors they knew from their Benetton days and more often than not, got better pricing than most of the MNC brands owing to their personal credibility.


Mr Mishra donned many hats in the process. In fabric, normal offline supply chain takes nine months from order to production. Mishra & Co. reduced it to three months. Apart from the manufacturing process, he also learnt of a new way of connecting to consumers on an online platform.


“The moment you go online, you get to know within two hours whether your product will succeed or fail,” says Mr Mishra, who would at a time, place 50-odd pieces on the website to gauge their efficacy in the market in two hours flat.


All that paid rich dividends for the 38-year-old Pepe boss. Today, when he speaks to his team at Pepe, he can talk about social media with his marketing head, for instance. In his words, entrepreneurship takes away the fear of the unknown. He says he is lucky to be in Pepe since the company gives him similar autonomy as his venture: “I believe it will be very difficult for me (to survive) in structured organizations.”


Author veda

Talking of structured environments, Ashwin Sanghi, novelist and director of the Sanghi Group of companies, could have toed his family business line after returning from the US with an MBA at 23. But he chose the dotcom route, albeit in the auto sector, the core competence of the Mumbai-based Sanghi empire.


In 1997-98, he set up Indiacar.com, to facilitate buying and selling of new and used cars. At the time of launch, it was the only website worth a dekko in the auto space, with 360-degree surround views of car interiors and exteriors.


Though the venture went bust in 3-4 years, Mr Sanghi considers it his “most spectacular failure”. Like Tiger Ramesh, Mr Sanghi too drew up a what-not-to-do list after the debacle. “Though it is very easy to do valuations, eyeballs and brand prominence surveys, you should never allow any of them to influence the balancesheet,” was one of them. He began to value things like consistency and conscience over shortterm gains.


“Today, I’ve realized the value of being conservative. It enables you to become more long-term in your approach,” says the 44-year-old. “Somewhere along the way, you have to understand the difference between the balance sheet of your business and the balance sheet of your life.”


Pie in the sky

Despite his failed attempt at entrepreneurship, Ashwin Sanghi painstakingly learnt from his mistakes, drew up a list and applied what-not-to-dos in his current role. After all, it takes loads of passion to take the plunge as an entrepreneur. Air Asia’s Mittu Chandilya says, “It set a street fighter mentality of never quitting and seeing possibilities when it might seem like there were none.”


It helped the 33-year-old Mr Chandilya to understand how to bootstrap his business. After all, he had no funding till he won a national grant and even so, it was very easy to blow through the funding. “Learning how to make your one dollar go as far as possible was key.”


In a slowdown, entrepreneur-turned-CEOs are finding new meaning and relevance perhaps because they are “constant evangelists” of their products and by the dint of their risk-taking abilities, have a self-driven purpose to creatively alter any situation. It all boils down to commitment, a valuable commodity when the chips are down.


Source:The Economic Times

Copyright © 2013, Bennett, Coleman & Co. Ltd. All Rights Reserved

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