Thursday, September 25, 2008
Monday, September 22, 2008
Sunday, September 21, 2008
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The Cereal King-Kellogg
Saturday, September 20, 2008
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Monday, September 15, 2008
Friday, September 12, 2008
Thursday, September 4, 2008
They might as well have been singing this song for professional investors who invest seed capital in businesses that are now ready to bloom. But to bloom, these businesses need more capital and these investors are not excited about it as they do not want to get diluted and lose control. They also don’t want professional investors into the business as it dilutes their stakes. This affects the business models and many times companies with good business models simply fold up.
RK Reddy, when he moved out of Fractal Analytics blamed the fallout on this phenomenon. “It is happening everywhere in India. Getting funding for new ventures for young businessmen is not easy in this country. It is not like the US where even venture capitalist help you in your funding requirements before you are even a graduate. India in this respect still has a long way to go,” he says. Mr Reddy is the co-founder of Fractal Analytics who moved out to start on his own along with another partner due to the difference with the investor in Fractal Analytics.
When Mr Reddy passed out of IIM-A, he and his friends thought getting professional investors to invest in their ideas will be easy. They were from the same batch of IIM-A and had enough work experience to get seed capital. But that was easier said than done. He and his friends had a tough time talking to investors and then finally ended up with a professional investor who invested the initial seed capital to start Fractal Analytics. No venture capital or institutional investor was interested in putting the seed capital.
Another services firm founded by a group of professionalsturned-entrepreneurs thought they had solved their one of the most pressing problems when they finally found a business group willing to fund their start-up. But like any relationship that goes through different phases, this one hit a rough patch a couple of years into its existence. On one hand the entrepreneurs had everything they asked for — investors who were on the board but did not interfere in the daily functioning and the strategic decisions were taken by the management team. “This is one of the biggest nightmare for an entrepreneur. But we were very lucky in this,” recollects one of the founder-promoters.
However, on the other hand, a passive investor was not the ideal recipe for growth. As the entrepreneurs soon found out as they grew bigger. Now they needed more management bandwidth and from professionals who could bring in more than money to the table.
The choice was a difficult one. Either the founders or the investors had to dilute their stake and make a compromise. Expectedly, the investors were unwilling to dilute their holdings. At this stage, the company could’ve gone the Fractal way with the founding team and the investors going different ways, and one of the members of the founding team chose to do exactly that. Frustrated by the slow pace of growth when its peers where growing much faster through acquisitions, one of the members moved out.
A solution was reached a year and many months later when the investors finally agreed to sell part of their stake and the company was able to get in an investor who would take the firm to the next level. “Had we done this earlier, we could’ve probably grown much faster. But sometimes you simply have no choice but to be patient. Indian culture is different from the American culture,” says one of the founders who stayed on.
Venture capital firms face these problems on a regular basis where they see a clear conflict between the promoter and the investor. These firms though invest in companies at the seed capital levels, they do it only if that sector is in vogue. In many cases these firms do not want to take a contrarian view and prefer to go with the trend. “Many venture capital firms will not have issues investing into a firm that is into social networking but will not invest into a business that is based on knowledge or hard skills,” says an entrepreneur who has moved out of a firm to join the competitor.
VCs on the other hand do not like to be tagged based on trends or any other parameters. Each and every venture capital firm operates differently and works in terms of domain expertise. If they do not understand the business they simply want to avoid the investment. In general they prefer businesses that are already on a growth path than be the seed investor.
“Individual investors work well when it comes to seed capital or absolute start-ups. Their requirements and expectations are different.
But when the company is on a growth path, institutional investors work better for the firm. These new investors are in a better position to help and guide the firm as compared to individual investors,” says Alok Mittal of Cannan partners, a firm that provides venture capital. When there is a VC there is a healthy board process which is absent in the case of an individual professional investor. Getting the VC funding at initial levels or seed levels is not easy in a country like India. Good business models will suffer in the hands of individual investors and this may kill entrepreneurship in India. Though VCs are saying that they are looking at good business models which require seed capital, these firms are more interested in how fast a company can be taken public and latch on to market capitalisations while the trend is hot.
Like Mr Reddy says: “Before I start something on my own, I will first look at the quality of investor. Everything else comes later.”
The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".
Wednesday, September 3, 2008
During its seven-year-old history, Cross-Tab had enough brushes with fate to turn into a failed dotcom venture or a small outfit operating from one of the bylanes in Mumbai. But, Cross-Tab successfully negotiated both these challenges to scale up and re-invent itself as a market research outsourcing (MRO) provider. Today, the firm founded by three entrepreneurs — Kedar Sohoni, Ruchika Gupta and Praveen Gupta — operates from one of the spiffy new buildings which have sprung overnight in Malad, the BPO hot spot of the city.
“The entry barriers in this business are not high. But to grow and scale up — that is a high barrier,” says Mr Sohoni, about the firm’s journey from a start-up that wanted to leverage the internet for market research to a domestic market research agency to its current avatar as one of the leading third party MRO players in the country.
From around 10 people in the first few years to 200 people in two centres at Mumbai and Bangalore, the company has come a long way.
Not only have the entrepreneurs made this business transformation, but they have also worked with two sets of investors in the process. The initial investor, ICICI Venture, sold its stake to the Mittal group in 2003 and the new investment in some ways also catalysed the growth of the company in terms of getting another board-level person who could provide strategic inputs to the firm. Kedar, Ruchika and Praveen were IIM and BITS, Pilani graduates with experience in marketing and research, while Ashwin Mittal, who joined the board as one of directors representing the Mittal group, was a former strategy consultant from Cap Gemini in the US.
“The turning point for the company came in 2002-03. Till then, the firm was into market research for domestic firms,” says Ashwin, who after a year of being with the company as an investor was inspired enough to join it full time in 2004. The story goes like this: One day, when Cross-Tab was making a presentation to one of its clients, a senior executive in the audience from the client’s multinational parent was so impressed that he asked Cross-Tab to also work for them.
Around the same time, the company also became a member of the European Society for Opinion and Marketing Research and started getting a lot of enquiries for doing outsourced market research. The bulk of the work in outsourced market research involves processing information obtained from market research surveys, analysing it and generating reports. Conservatively, the opportunity in this space is estimated to be a quarter or $5 billion of the $25-billion global market research pie. Cross-Tab has already successfully made this transition.
It has also gone a step ahead in doing end-to-end work for corporates that comprises the full spectrum, from designing the survey and managing it to processing the end-results. “For global surveys, we also have tie-ups with partners in other countries,” explains Ashwin.
The challenges it now faces are those that come with scaling the business up to the next level — creating process and systems and also positioning itself in the global market for high-margin business opportunities. At this stage, the company does not have many of the resources that a larger organisation would have — such as a CFO or a human resources head. It also does not have a sales team, which is important if wants to address the corporate market directly. Its board also currently consists only the founders and three directors from the Mittal group.
Some of the initial steps in this direction are just being taken. A few months ago, the company recruited a global CEO with about 13 years of experience from no less a company than Microsoft. It also appointed Simon Chadwick, former CEO of market research company NOP World and who has worked extensively with the WPP Group, as a strategic advisor.
It now plans to set up a global advisory board that will guide the firm, and also give it contacts and credibility. But the journey ahead will not be simple. For one, the firm will have to compete with other MRO players in India (all the top players are estimated to be growing at about 80% annually) as well as global market research agencies, in some cases. Also, a few leading global market research firms have set up captives in the country enabling to compete on price points with Indian players.
But the untapped market opportunity is huge and growing. And Cross-Tab’s entrepreneurs have shown the stomach to emerge successful from tough situations, and the ambition to thing big when the opportunity presents itself.
About Cross Tab: An Overview
Cross-Tab provides offshore outsourcing and paneling services in the market research & analytics domain to global clients in North America, Europe and Asia-Pacific. They are also a full service market research agency in India, specializing in online research.
Cross-Tab's offshore outsourcing services for market research and data analytics processes help clients to reduce costs, improve productivity and gain access to the latest tools and technologies. This is done with short turnaround time, high quality and accurate service delivery from their service centers in India.
Cross-Tab is an online survey company having proprietary B2C and B2B online panels in India. Global online research companies and corporates are using Cross-Tab’s panels to reach online target respondents in India. Cross-Tab is presently developing online panels in other Asia Pacific countries to provide global online research companies with a better reach to the online population in the region.
Cross-Tab pioneered online market research in India, and is a leading online survey company in the country. Cross-Tab’s full service market research solutions are empowering clients, with the ability to make better decisions with speed, efficiency and cost effectiveness. Cross-Tab's research products and services enable clients to improve marketing strategies, develop competitive intelligence, increase customer retention and find out for themselves, what respondents have to say.
Cross-Tab integrates multiple research methodologies, so businesses have a bird's-eye-view of the complete customer experience. Cross-Tab is today working closely with many leading businesses and agencies across North America, Europe and Asia Pacific.
Their name Cross-Tab is derived from the term ‘CROSS-TABulation', an oft-used market research tool that examines responses to one question, relative to responses to one or more other questions.
Professional Memberships & Affiliations
Cross-Tab is a member of key industry bodies and adheres to their standard code(s) of conduct. We are members of:
ESOMAR (European Society for Opinion and Marketing Research)
CASRO (The Council of American Survey Research Organizations)
AMA (American Marketing Association)
MRSI (Market Research Society of India)
Philosophy and Vision
Their vision is to provide our clients with market research, data collection and data analysis solutions through an open and transparent relationship, aimed at achieving common goals and establishing long-lasting co-operations.
Cross-Tab's strategy is to understand the needs of the client and help them identify the best solutions, in the perspective of an optimal cost-benefit ratio. Towards this, we offer a high technology infrastructure with cutting edge tools, strategic inputs and resources that can help you redefine and reposition yourself and make bold growth in a competitive environment.
N Shivapriya is the cheif editor in the Economic Times, Mumbai and the article appeared in one of their successful columns called "Starship Enterprise.
I am a 45-year-old businessman from Gujarat. Currently, I have a trading business operational out of Mumbai and Gujarat. However, it is not performing as well as I had hoped it would. Moreover, my worries have multiplied as I have had a string of unsuccessful business ventures before starting this business. This has started affecting my decision making. I am worried that I might fail in this business as well, as I did in my previous experiences. How do I deal with this phase in my entrepreneurial venture? Please advise.
INDIA today is a country abounding with opportunities and optimism. The 9% GDP growth rate of the past few years, coupled with rising incomes and progressive liberalisation, has inspired a wave of first generation entrepreneurs to the fore. Newage entrepreneurs, both small and big, are making a foray into diverse sectors and pioneering new opportunities and potential.
You can be an entrepreneur and achieve your dreams regardless of where you are right now. Do make sure you have a vision, a well researched plan in place and stay positive? It also helps to take a long view as you may have to take a step back to survive for the next day.
I often tell people that, we cannot let the fear of stumbling make us give up walking and moving ahead. I have not studied management nor do I follow B-School jargons. I believe in taking risks, pursuing challenges and innovating at every step. I largely rely on my gut instinct which is backed by exhaustive reading and discussions.
CAUSE AND EFFECT:
In a business the two most important activities are cost optimisation and increasing profit/income. It is critical to study the market, the opportunities to differentiate your product in the market and provide the consumer more reasons to acquire it than ignore it. To identify what you are doing wrong, you have to come clear on your own strengths, weaknesses and objectives. Specify your goals and the course of action you believe will lead to it. You refer to your trading business spread between Mumbai and Gujarat. You need to understand your business space, your competitors and above all your target consumer. Think for yourself. Disengage yourself from what everyone in your industry is doing or saying. Do your own research exhaustively on your market, competition and the product.
Unlock innovation. Start by taking a long, hard look at rules and behaviours inside your organisation that might be scuttling innovation in the first place. Don’t hesitate to challenge outlined assumptions. Do not restrict innovation only to the business product, work on your processes, structure, business model and even the market. Ask questions like “What if we do this differently?” or “ What if we target a different consumer base?” During the course, you can identify processes that will enable you to inch closer to your objective. Look for innovation from diverse and multiple sources. Innovation can stem from employees, partners, suppliers and also consumers, make sure that you are not ignoring any of them.
I was born in a remote village in Karnataka where my father was a school teacher. I studied in a Kannada medium school till class 7 .After graduating from the National Defence Academy I fought in the 1971 Bangladesh war and later served in the Indian Army for eight years. I knew I had to leave my sheltered army life and explore new opportunities but I hadn’t figured out what I wanted to do. I took premature retirement in 1978 and with Rs 6,000 in my pocket left for my village with plans to till my ancestral land. That decision turned out to be the turning point of my life. As luck would have it, a dam built on River Hemavathy had submerged our lands in exchange for which the government allotted us 40 acres of barren land which no one in my family wanted, due to its inaccessibility. I decided to live on the land and give it a try.
With loans from family and friends I started with agriculture which proved to be a constant struggle leading to perpetual debt. I learnt about sericulture and decided to move away from the traditional techniques and adopt modern sericulture practices which are cost effective, environmentally safe and sustainable in the long run. Finally, the gamble paid off, I made profits and was able to pay off my debts. The eco friendly technique of silk farming also earned me the Rolex International Award in 1996.
While there is no recipe for success, you should keep in mind that sometimes innovation is first met with hardship. Many times there is a lot of push back. It is important to remember why you started the business in the first place. If the dream inspires you keep on fighting, if not, it is better to change course. Most importantly, learn to assimilate failure. No failure or disappointment is a closed chapter. It is an invaluable opportunity to rectify errors, and move forward.
While planning is important for progress and success. It is execution which becomes the undoing of great plans and strategies. It is critical to motivate your team to identify with your vision and help them pursue and achieve their potential. A good thumb rule is ‘Ready, Fire, Aim.’