Stay Hungry Stay Foolish_4 pptx

121 YEH HAI YOUNGISTAN MERI JAAN Sometimes a person acting out of conviction, pursuing a dream, represents the spirit of an entire generation. Vardan Kabra is one such person. When Vardan turned down a pre-placement offer from P&G in March 2004, in order to set up a school, it made headlines across the nation. It was the irreverence of chucking the job coupled with the idealism of the project itself which captured the imagination. Since 2004, OOPs (Opting Out of Placements) is a small but significant trend on the IIMA campus. In 2008, the figure reached double digits, with 11 students opting out in order to set up entrepreneurial ventures. Not all the projects are as idealistic as Vardan's but the very act of bowing out of the rat race is one of idealism - the idea that MBAs are meant to do more than sell soaps or manage other people's money, and get paid handsomely for it. Vardan and Ankita Kabra's story reminds every one of you out there who did opt for a placement - there is more to life than the pursuit of yuppieness. 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2:40 PM Page 121 122 STAY HUNGRY STAY FOOLISH Vardan led a nomadic life as a child. His father works with the C K Birla group, and it is a transferable job. This meant living in 10 different places (including Nigeria), studying in nine schools and making friends with people from all over India. As a child Vardan aspired to join the army. But later he went the JEE way, and joined IIT Bombay where he did both his BTech and MTech. In his 3rd year at IIT, Vardan was the Overall Coordinator of Techfest - the biggest technology festival in India. Around this time (1999-2000), three seniors at IIT started what was probably the first dotcom of India. “I was quite envious of them - and at that point I decided that I too would something on my own - that to me was far more glamorous than a hi-fi job.” In fact right after IIT, Vardan tried to start something called a ‘Detonation Spray Coating’ unit (being a metallurgical & material science engineer). He could not go ahead with the project because of lack of capital and no clue about how to actually run a business. So he decided to do an MBA and joined IIMA. “During the first year I did get into the rat race for a little while - but soon I realized what I really wanted. The two month internship at P&G in Mumbai made me sure that a job is not for me. I am too lazy to work well under a boss”, he adds with a grin. In the second year, Vardan took LEM (Laboratory in Entrepreneurial Motivation taken by Sunil Handa). “It was a major factor in keeping the motivation going - and more importantly for showing a direction as to how actually to go about doing things. External factors who tried to dissuade included my parents, relatives, some friends (not too many though as most knew me quite well not to argue with me).” In his second year at IIMA Vardan visited Eklavya School in Ahmedabad and realised that he too wanted to start a school. It YEH HAI YOUNGISTAN Vardan Kabra (PGP 2004), Fountainhead School MERI JAAN 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2:40 PM Page 122 123 YEH HAI YOUNGISTAN MERI JAAN was time to start exploring options. “We formed a team of 11 people with interest in entrepreneurship - then we started working on various ideas. We formed sub-teams with interests in specific areas - education being one of them. Then our team started working on schools. Four of us visited schools across India (Jaipur, Ahmedabad, Baroda, Surat, Mumbai, Delhi). The idea was to get some good points from all the places and understand what's missing.” The team disbanded after graduating with everyone taking up jobs except for one other person, who decided to get into a venture other than education. Vardan shifted to Surat, a city which lacks good schools but where there is growing demand for quality education. And paying capacity is not an issue. However the first six months were a major low period. “I had no clue as to what I was doing and where I was heading.” In this period he briefly considered setting up a bookshop but then dropped the idea. In the end, Vardan realised that the first step for someone with no money has to be to start off with a preschool and then grow into a full fledged school. Take the baby steps and you will eventually learn how to run the full marathon! Luckily he was not ‘alone’. Batchmate Ankita Diwekar was attracted towards the school project while at IIMA and was quite serious - but she was unsure whether leaving a job and getting started straightaway was the answer or not. So she took up a placement with P&G. “But even while she was on the job she was still helping me out all the time. She visited Surat 2-3 times and then once we knew that we were getting married, Fountainhead Preschool also took off and she joined full-time two months before marriage.” Funded by Ankita and Vardan's family, as well as Sunil Handa, the initial investment was about Rs 13 lakhs. Fountainhead Preschool started with six kids in April 2005. The 50th child joined nine months later and by January 2007 that number stood at 140+. Even as enrolments were growing (purely on word of mouth) Fountainhead was also becoming known as a 'brand' of high quality meaningful education in Surat. While Ankita was fully involved in managing the preschool, in January 2007 Vardan also started a training centre called ‘Life Skills’ for students and working professionals. Life Skills imparts short-term, job-oriented courses and was set up in partnership with two local businessman. The plan being to set up the centre 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2:40 PM Page 123 124 STAY HUNGRY STAY FOOLISH and get it going over the next one year after which Vardan was clear he would head back to schooling full time. But the concept has relevance even there. “What's needed is for schools to teach Life Skills - so that kids can be independent, thinking, empathetic, enterprising individuals.” “People are starting to recognise that marks alone do not mean education and nor do they mean success in life,” says Vardan. Still, changing the mindsets of parents and teachers does take time. The other major hurdle Fountainhead faced was land.You need at least 4-5 acres to set up a good school and how can one afford to buy land at today's exorbitant rates? When Fountainhead applied for government land in Surat in January 2005 everyone said it would take a maximum of 18 months, but even two years on, there was no sanction. Plus, there was no clarity on the concessions being offered over the market rate. So Vardan also started talking to some private players as it was a Rs 4-5 crore project. “Getting funds for land and infrastructure has been our biggest hurdle.” The reason is that education is supposed to be a ‘non-profit’ activity. Hence, you can't attract money in the way you would for a regular company - by making a sensible business plan. Of course everyone knows schools do make money but it is a fact never advertised. Even as a preschool Fountainhead was able to charge annual fees of Rs 21,600 (all inclusive).The scope for higher classes would, of course, be more. “At the same time, 8-9 kids at the preschool have been subsidised; children of maids, clerks & workers kids are paying Rs 100-200 per month,” he adds. Wages and salaries form 40-45% of the total cost of running a school and even then, finding good teachers is an issue. Eklavya School has provided non-financial support such as curriculum design, teacher training, processes, legal help and so on, making life a little easier. But it's been a steep learning curve. Education, as a business model is feasible, no doubt about it. Except for the capital expenditure which makes life very difficult. For a preschool there's no problem. 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2:40 PM Page 124 125 YEH HAI YOUNGISTAN MERI JAAN All the hard work is now bearing fruit as Fountainhead starts its first full fledged school from June 2008. In partnership with a local businessman, the school is coming up on a 10 acre campus and will admit approximately 200 students from nursery up to class 5. The preschool will also continue to function from rented premises for the time being. “The infrastructure is of very high quality,” says Vardan with pride. “We are going in for the International Baccalaureate's Primary Years Programme (the affiliation is a 3.5 year process which started six months ago).” Adds Ankita, “We are very excited with the program as we believe it has all the right elements and emphasis as far as education is concerned and their philosophy strongly matches ours.” The aim is to make this a model school in the next 4-5 years and then expand rapidly in the schooling segment. In the preschooling segment, Fountainhead is looking to start another branch by November 2008. If the experiment goes well then the stage will be set to expand into more full-fledged schools. More schools mean more teachers. Fountainhead's total staff will cross 75 this year and to keep them up-to-date the school arranged for a 9 week training program through the summer vacation. This included self-development exercises, field trips, educational videos and of course everything about PYP. It has taken four years but the vision of a school is now a concrete reality. “We have our fair share of crises and issues, but we are very satisfied with what we are doing. Of course there's so much yet to be done!” On a reflective note, Vardan adds, “Because I got media coverage at the very beginning, I thought that my dreams would come true immediately. That did not happen - it takes times for big dreams to materialise. So basically more down to the earth thinking would have been better.” Maybe. But you have to start with your head in the clouds. That's what gives you the courage to take the foolish decision instead of the safe one! And you can think all you want, but life has its own flow. And you just go with it. In the midst of giving birth to Fountainhead School, Ankita and Vardan also became proud parents. Baby Sunay was not really planned and his arrival changed life in many ways. Says Vardan, “Sunay's arrival has changed the way we work (or 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2:40 PM Page 125 126 STAY HUNGRY STAY FOOLISH rather how Ankita works - I am being more of a typical father than I thought I would be ). Ankita has a lot of stress as a result of being a mother as well as the key person for the school.” For example, Ankita was working till the second last day before delivery and she returned to working for 5-6 hours just 40 days after her delivery. “We actually had a dip in quality while Ankita was away but she was committed enough to come back and ensure that work did not suffer.” There is really no ‘correct time’ to have a baby, because there is always something more to achieve as far as work goes. But work is not everything - that's why babies come into this world. And there is no ‘correct time’ to start a company, because there is always some risk involved. But security is not everything - that's why books like this are written. To drive that point home. 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2:40 PM Page 126 Getting the direction is probably a matter of time, and working hard - when you keep working you realize what makes more sense. There were no specific attempts at creative problem solving, but when the problems did get solved, typically that happened when the atmosphere was conducive to out-of-the-box thinking. So yes, some attempt at creative thinking would be useful. Know what you want - I take my time when it comes to important decisions, but once made, I almost never give up. I do take the opinion of other people, but when the decision affects me directly, then I alone make the decision (e.g. deciding not to take up a job was against the wishes of almost everyone around). In my undecided phase I happened to meet a serial entrepreneur from IIT. I told him I wanted to start off on my own but was not sure whether I should take up a job or not as backup. He said if you are sure that you want to start up then taking a job should be the least of your concerns. Start off, that's it! That's when I realised that there's only one way of jumping off the cliff - you just have to jump off it! ADVICE TO YOUNG ENTREPRENEURS 127 YEH HAI YOUNGISTAN MERI JAAN 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2:40 PM Page 127 THE BELIEVERS People who knew entrepreneurship was the Chosen Path. They took the plunge straight after their MBA or after working barely a couple of years. And they persevered until they made it big! Separator Final July10.qxd 7/12/08 12:03 PM Page 1 130 STAY HUNGRY STAY FOOLISH TRIPPING Deep went into business the way every entrepreneur dreams it will happen: a venture capitalist offered him $2 million to start up. But with the dotcom bust he had to invest his life savings and buy back his own company. Makemytrip.com is today India's leading travel portal. Deep Kalra (PGP '92), makemytrip.com ALONG 11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 130 131 TRIPPING ALONG Deep Kalra is the kind of chap advertising agencies pick to star in airline commercials.You know the suave-banker- who-travels-the-world-yet-cares-about-family type. I am not surprised then, when he calls to postpone our interview. Because he is shooting an ad campaign! “Basically HP is doing this worldwide thing called ‘Achievers campaign’. So I said “Okay, that's interesting, it's a good brand.” “But more than a personal ego trip it's good for the company,” he stresses. “There is a stream of stories coming out of a printer, and we have shots on that with lots of branding. Secondly, we negotiated lots of printers. They offered us four, finally we got 20.” “I said would you like it if we didn't have an HP printer in some of our offices? You should at least give a discount on others! So it worked out well… it is no fun being in a professional shoot though. We started at some unearthly 7.30 am and it went on all day.” When the thrill of every small saving equals the achievement of every big milestone, you know you have on your hands, a true blue entrepreneur. 11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 131 [...]... most importantly, to remain in control And then, what happens? The entrepreneur usually remains the 11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 142 STAY HUNGRY STAY FOOLISH single largest shareholder, although small in terms of percentage, and stays at the top to run it Because he is the best person to run it Or he moves on to a less hands-on, more evangelist-chairman kind of role “One of my VC... great time for startups You could run a dotcom business with a small amount of capital And even that could be raised fairly easily from VCs 11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 134 STAY HUNGRY STAY FOOLISH “The MBA is a wonderful degree You can either use it as a noose, or you can use it as insurance I would always tend to use it as insurance” “My wife was working, so it made the decision... Okhla into the mezzanine of the same building which was 1,000 sq ft We had a running desk around all the walls and just swung our chairs to 11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 136 STAY HUNGRY STAY FOOLISH “You expect people to give you capital for 20 pages of a business plan and confidence that you will be able to pull it off In travel, where I had no experience whatsoever, the weird... And he candidly shared with me their numbers At that point of time, they were doing 5,000 tickets per day I said, “Wow! That's impressive.” 11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 138 STAY HUNGRY STAY FOOLISH “My motto for my team is borrowed from Jeff Bezos - work hard, have fun, create history But two out of three is not an option!” And he said, “Guess what? They all pay by credit card.”... was the first to invest In subsequent rounds, Deep took money from three other funds - Helion Partners, Sierra Ventures and Tiger Global 11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 140 STAY HUNGRY STAY FOOLISH “When it comes to investors, and even when it comes to your own people, loyalty is important but competence matters more.” But why take money from so many different people? Because different...11_Tripping Alongeditjuly7.qxd 7/19/08 2:50 PM Page 132 STAY HUNGRY STAY FOOLISH TRIPPING ALONG Deep Kalra (PGP '92), makemytrip.com Deep Kalra is your average Delhi dude “My grandfather had a business of dry fruits in Chandni Chowk but there was never any question... focus too much on exits (especially not too early in the game) Concentrate on building a solid business, the rest will take care of itself! 143 12_Bloom & groweditjuly7.qxd 7/19/08 2:53 PM Page 144 STAY HUNGRY STAY FOOLISH BLOOM AND GROW Rashesh Shah (PGP '89), Edelweiss Capital In a world dominated by the likes of J P Morgan and Merrill Lynch, Rashesh Shah set up a large and successful homegrown investment... as requested, for the interview No interruptions or distractions He makes me feel important He makes my job easy That's what leaders do 145 12_Bloom & groweditjuly7.qxd 7/19/08 2:53 PM Page 146 STAY HUNGRY STAY FOOLISH BLOOM AND GROW Rashesh Shah (PGP '89), Edelweiss Capital Rashesh Shah came from a purely commercial, business family Everybody in the family had always been into business and ironically... first year, Rs 50 lakhs in the second, Rs 1 crore in the third, Rs 1.5 crores in the fourth and Rs 2 crores in the fifth year The company 147 12_Bloom & groweditjuly7.qxd 7/19/08 2:53 PM Page 148 STAY HUNGRY STAY FOOLISH “Very few people speak about it but there is a clear change in the social status Entrepreneurship is messy compared to what things would be if you were working for an MNC bank.” actually... thought, if you survived between 2001 and 2003, you could survive almost anything!” From October 2003, Edelweiss started expanding once again 149 12_Bloom & groweditjuly7.qxd 7/19/08 2:53 PM Page 150 STAY HUNGRY STAY FOOLISH By then the company had 3-4 businesses - private equity, arbitrage, investment banking, insurance and brokerage But what about 'core competency'? Is that another irrelevant Bschool concept? . being to set up the centre 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2 :40 PM Page 123 1 24 STAY HUNGRY STAY FOOLISH and get it going over the next one year after which Vardan was clear he. pursuit of yuppieness. 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2 :40 PM Page 121 122 STAY HUNGRY STAY FOOLISH Vardan led a nomadic life as a child. His father works with the C K Birla. changed the way we work (or 10_Yeh hai yungistan meri jaaneditjuly7.qxd 7/19/08 2 :40 PM Page 125 126 STAY HUNGRY STAY FOOLISH rather how Ankita works - I am being more of a typical father than I thought