Entrepreneurs in India

Stephen DeAngelis

May 5, 2009

India is an intriguing land rich in history and culture. It is also a land that is home to deep-rooted poverty and cutting-edge IT corporations. India is also home to some of the world’s most interesting entrepreneurs. India’s National Entrepreneurship Network (NEN), which promotes the spirit of enterprise on India’s campuses, and the Tata group, an Indian conglomerate, sponsored a competition to find the country’s “hottest” start-up [“A suitable business,” The Economist, 18 December 2009]. Among the companies that made the shortlist of 30 enterprises is Sammaan (which means dignity), an organization that helped modernize the lowly rickshaw business. Sammaan did not win the competition, but being a finalist did bring the organization global attention. According to the NEN site:

“Sammaan’s idea is to systematize the working of all Rickshaw pullers by bringing them under one roof and to modernize the cycle rickshaw pulling sector (which contributes 30% in urban transport) with small but innovative changes. This not only makes it easier for the rickshaw pullers to drive and increase their income through Outdoor Advertising, but Value Added service such as sale of Mineral water, Juices, Mobile recharge, courier collection, Bills collections also makes it more comfortable and enjoyable ride for the commuter.”

Irfam Alam, the young entrepreneur behind Sammaan, was inspired to start the organization when he found himself wanting a drink and he wondered if his rickshaw driver had some water he could buy. It occurred to Alam that rickshaw drivers could probably increase their revenues by offering products to their riders, selling advertising space on their vehicles, and perhaps even serve as couriers since they were already going from place-to-place carrying passengers. His idea turned into a profitable business. Sammaan’s logistic capabilities, however, pale in comparison to a unique food distribution system found in India [“The cult of the dabbawala,” The Economist, 10 July 2008]. Anyone who has ever watched a documentary about India has undoubtedly seen the stacked tin food containers being delivered by dabbawalas. The containers look like a super-sized version of the mess kits used by Boy Scouts. The Economist writes:

“As the warrior king who defeated the Mughals and founded the Maratha empire of Western India in the 17th century, Shivaji Bhosle is remembered as a tactical genius as well as a benevolent ruler. The direct descendants of his Malva-caste soldiers are also developing a reputation for organisational excellence. Using an elaborate system of colour-coded boxes to convey over 170,000 meals to their destinations each day, the 5,000-strong dabbawala collective has built up an extraordinary reputation for the speed and accuracy of its deliveries. Word of their legendary efficiency and almost flawless logistics is now spreading through the rarefied world of management consulting. Impressed by the dabbawalas’ ‘six-sigma’ certified error rate—reportedly on the order of one mistake per 6m deliveries—management gurus and bosses are queuing up to find out how they do it. The system the dabbawalas have developed over the years revolves around strong teamwork and strict time-management. At 9am every morning, home-made meals are picked up in special boxes, which are loaded onto trolleys and pushed to a railway station. They then make their way by train to an unloading station. The boxes are rearranged so that those going to similar destinations, indicated by a system of coloured lettering, end up on the same trolley. The meals are then delivered—99.9999% of the time, to the right address.”

Although the system is low tech, it is highly evolved. As a result, the system has drawn the attention of researchers from such distinguished institutions as Harvard Business School and Carnegie Mellon University. Researchers marvel that such an effective system could be devised and implemented based on “human and social ingenuity” while eschewing modern technologies that are generally touted for their ability to create efficiencies. Large companies are also paying attention. Tata, Coca-Cola and Daimler have all invited dabbawalas to speaker to their managers. The article indicates that the dabbawalas are even considering starting a consulting business to train businesses on their methods. The article concludes:

“The dabbawalas, who all receive the same pay, are also seen as paragons of ‘bottom up’ social entrepreneurship. C.K. Prahalad, a professor at the University of Michigan’s Ross School of Business, says they show how a home-grown business can help lift workers at the ‘bottom of the pyramid’ out of poverty. They also contradict the stereotype of developing-world labourers as low-wage economic victims.”

Returning to the original article about Indian entrepreneurs, The Economist notes that “more than 75% of the nominees are, like Mr Alam, first-generation entrepreneurs who do not hail from business families.” Unlike the dabbawalas, however, “two-thirds of the final 30 have masters degrees. In short, they have plenty of options. Their enthusiasm for entrepreneurship represents a growing willingness on the part of highly educated Indians to turn their backs on careers in brand-name companies and strike out on their own.” The dabbawalas are more closely related to traditional Indian entrepreneurs like “the Marwari baniyas, who have made money wherever they go, trusting each other and bargaining hard with everyone else.” The new breed of entrepreneurs is more high tech. “Its members are inspired by figures like N.R. Narayana Murthy and Nandan Nilekani, two of the founders of Infosys in 1981.”

According the NEN site, the eventual five winners of Tata NEN competetion were:

Rajesh Varrier (activecube solutions) — “Activecubes employs analytics to help firms globally to harness the power of information to understand their customers much better, understand the impact of their strategies, product performance etc. Business’s globally have been collating data about their markets, products, customers for a number of years. Today they are hosts to huge databases of information which reveal a lot about what works for them, what does not and what could happen in the future. Activecubes employs the power of analytics to help companies pull ahead of their competition. Business of analytics is about ensuring right data is available at right time and analysis of this data to gain intelligent insights leading to informed decisions. This requires understanding of business, modeling and technology capability.”

Vamsi Krishna (Lakshya) — “Lakshya is a dream child of four young IIT graduates, conceptualized with an aim to revolutionize the way learning is perceived and teaching is delivered. We believe that with a proper thought process given to teaching pedagogy, ‘Learning can be made Interesting’ and hence effective. We had initially started up in the very tangible segment of IIT-JEE, AIEEE and Medical Entrance Examinations Training (11th and 12th science standards) and have catered to over 2200 students in the last two years. This year we have ventured into 9th and 10th standard classroom training programs – ‘Junior Wing’. We wish to further expand in pre-10th standard segment next year. Lakshya operates from its main center in Patiala, Punjab and three schools in the region around with which it is under tie-ups under the brand name ‘i-Class’. Our goal is to operate and sustain in K1-K12 education training segment. Our business proposition is our twin focus strategy: 1. Teaching Pedagogy -> Instruction methodology based on ‘teacher + digital content based modules’. Classroom instruction by the teacher is structured and aided with these modules, which help us maintain highest quality standards across multiple delivery channels, yet at the same time giving room for creativity of teachers. 2. Teacher Training -> Our teachers are trained on these modules. This process ensures uniformity and quality of classroom delivery and eventually helps us scale faster.”

Amith Agarwal (Star AgriWarehouseing & Collateral Management) — “StarAgri is an end-to-end solution provider in Warehousing, Procurement, Collateral Management of Agri-Commodities. It’s a group company of StarAgri, setup with a vision of empowering rural India. Have established a agri commodities testing and certification body under brand name STARLABS which is one of the prominent agri lab chains in North India and very soon scaling up to pan India basis. Services: StarAgri has a vision to streamline the moves throughout the Agriculture Industry by offering an innovative approach to following areas initially: Procurement servicesagri commodities services which includes direct Marketing yards to eliminate the middleman to give maximum returns to farmers for their produce; handling and transportation of commodities; professional and field Warehousing services; priority sector finance services for farmers , traders and processors; collateral management services for bankers and corporates; quality testing and certification services; Warehouse Receipt Finance; On-line Agriculture Informative Services; Value added services : Sale of agri inputs (Fertilizers, seeds and pesticides); insurance services (Life and general insurance); online equity and commodity trading services; and, money transfer services. StarAgri will bring harmony among industry and farmers with its initiatives based on extensive research and analysis to offer: channel for agri input and output; end-to-end retailing of services like finance, insurance etc. for mutual benefit of industry and farmers; and ensuring efficiency of Commodities Management. The company was initially started by paid up capital of 5 lacs rupees in 2006 then it was raised up to 50 lacs rupees in 2007-08.since company is scaling up the marketing yard strategy and procurement yards addition capital inflow is being added and paid up capital as on 30 aug 2008 is 500 lacs rupees.company is looking for additional funds for vc or other institutions for scaling up the business line.”

Pavan Kumar Vijah (takeovercode.com) — “The company is into the business of rendering legal, financial & management consultancy. The company’s management aims at providing solutions to different corporates through Information Technology. Information Technology is widely used in the company in generating legal reports, search, registrations etc. www.takeovercode.com solves the intricacies of Takeover Regulations present in India. It’s a one-in-all development of providing techno -legal service, where information is just a click away. The services are provided considering the 80:20 theory of management which provides spending more time on strategy drafting (80%) rather than compliance drafting (20%). The function on website are innovative in their own sense and promises to provide the solution on law on simplified basis.”

Jay Gupta (The Loot) — “The LOOT is a multi-brand discount store, offering customers a wide range of products with discounts ranging between 25% -60% – throughout the year. The store retails about 100 brands brands like Kappa, Bossini, Adidas, Nike, CAT, ID, Spykar, Lilliput, Giny & Jony, Disney, Ruff Kids, Lee Youth, W, Sepia, AND, Welspun, Puma, Reebok, Van Huesen, Allen Solly, Arrow, Lee, Lee Cooper, Wrangler, Pepe Jeans, Parx, Park Avenue, Blackberrys, Thomas Scott, Red Tape etc and international brands like Mercedes.The LOOT’s strength as a retailer lies in proper procurement & an excellent supply chain management. This helps in getting better pricing from the manufacturer and thereafter passing the benefit on to the consumer. The LOOT currently offers the right mix of men’s and women’s semi-formal, formal, casuals, sports category of garments, footwear & accessories, kids wear etc.”

The Economist reports that over 500 companies were nominated last year for the Tata NEN competition. The kind of entrepreneurial spirit represented by companies nominated for recognition is what will keep India on a positive course toward sustainable development. Like China, India still has enormous challenges that it must overcome, but it will undoubtedly continue to climb the economic pyramid as long as entrepreneurship is recognized and encouraged.