Eclub, a Bangalore-based forum for entrepreneurs, convened a "US Business Cell" meeting yesterday to discuss issues pertaining to starting operations in the US and the challenges faced. Shivaji Sengupta of Techbooks, Falls Church, VA provided an overview and moderated the meeting. About a dozen members representing a cross-section of entrepreneurial activity attended the special meeting convened by Shivaji who was visiting Bangalore for a few days. The meeting was held at the premises of Axcend Automation (www.axcend.com), a solutions provider for industrial automation and manufacturing.
The lively discussion touched on topics of interest to the entrepreneurs present: incorporation and the various forms of incorporation in the US; branch office vs subsidiary and their legal implications; taxation issues resulting from e-commerce; legal issues pertaining to ownership and foreign residency; partner selection do's and don'ts; efficacy of having advisory boards; communication and cultural differences; etc. It was proposed to convert future meetings on the subject into a special interest group (SIG) that would hold periodic meetings, aggregate knowledge, and appoint pointpersons to help with questions on specific subjects requiring expertise.
Thursday, July 06, 2006
Wednesday, July 05, 2006
Vaatsalya: Going Against the Grain
C.K. Prahalad, management guru and professor at the University of Michigan School of Business at Ann Arbor, has been telling anyone who cares to listen about the "fortune at the bottom of the pyramid". While his ideas have gained wide publicity, there's little evidence that business folk have embraced his ideas and re-crafted strategy at their companies. Indeed, Big Business has been somewhat skeptical and have pursued business as usual.
That, of course, doesn't negate the perspective. There's the example of Grameen Phone in Bangladesh and the several ventures spawned as a result that utilizes a form of group insurance based on "self help groups". This business model is slowly spreading around the world, including in the United States. In India, the Aravind Eye Hospital in Madurai in the far south, has pioneered a concept of business based on the mass market comprising the poor that has been written about as a Harvard Business School case by Prof. Kasturi Rangan. Aravind grew from a 20-bed eyecare center to an organization with five hospitals and 2,000 beds where 70% of patients are treated free. Yet, the hospital is debt free and very profitable.
Is there a story here? In India, healthcare providers have largely been government hospitals characterized by poor service, inadequate infrastructure, and appalling conditions. In recent years, the private sector has moved in aggressively and invested in large, "super specialty", hospitals in urban areas. These often entail large investments and overtly target the upper middle class and the very affluent. That leaves the middle and lower middle class with nowhere else to go; and the poor in the rural areas are left high and dry. A potential market, one might conclude, for any enterprising entrepreneur.
Vaatsalya is a new venture that has stepped into the breach. It is an angel-funded, four-hospital chain with about 20 beds each on the western seaboard of Karnataka state. It has a unique business model. Taking a leaf from the hospitality sector where the big brands such as Sheraton, Hyatt, and Hilton often only manage properties across the world in return for royalty and a share of revenues, Vaatsalya focuses on primary care in rural areas, partnering with small, dedicated physician groups who provide quality services while the company takes care of hospital administration and partnerships with insurance companies and tertiary hospitals.
Ashwin Naik, co-founder and CEO, is a physician who returned from the US with a question in his mind: was it possible to go against the grain and concentrate on primary care - when all private sector hospital groups with deep pockets were shunning this for tertiary care facilities - and yet make a profit? It's too soon to tell, but he has his priorities set out. First, he wants to articulate his vision and sign up a network of physicians who are committed to providing quality care; second, he would like Vaatsalya to be a branded hospital of choice for rural people in the areas served by it; third, to implement a robust infrastructure suited to the geography, including information technology that may not be cutting-edge for now, but does the job; four, to create overlapping sets of alliances with insurance companies utilizing the concept of group insurance, referral centers, and tertiary hospitals for advanced care; and, finally, to engage with providers of services and products and explore co-branding with a view to lower costs and give them a platform to extend their market.
Vaatsalya hopes to grow to about 15 hospitals by the end of next year, concentrating on rural and semi-rural areas and keeping its small-size format for better administration. This is one idea that's worth watching out for as its success has the scope to revolutionize rural health delivery.
That, of course, doesn't negate the perspective. There's the example of Grameen Phone in Bangladesh and the several ventures spawned as a result that utilizes a form of group insurance based on "self help groups". This business model is slowly spreading around the world, including in the United States. In India, the Aravind Eye Hospital in Madurai in the far south, has pioneered a concept of business based on the mass market comprising the poor that has been written about as a Harvard Business School case by Prof. Kasturi Rangan. Aravind grew from a 20-bed eyecare center to an organization with five hospitals and 2,000 beds where 70% of patients are treated free. Yet, the hospital is debt free and very profitable.
Is there a story here? In India, healthcare providers have largely been government hospitals characterized by poor service, inadequate infrastructure, and appalling conditions. In recent years, the private sector has moved in aggressively and invested in large, "super specialty", hospitals in urban areas. These often entail large investments and overtly target the upper middle class and the very affluent. That leaves the middle and lower middle class with nowhere else to go; and the poor in the rural areas are left high and dry. A potential market, one might conclude, for any enterprising entrepreneur.
Vaatsalya is a new venture that has stepped into the breach. It is an angel-funded, four-hospital chain with about 20 beds each on the western seaboard of Karnataka state. It has a unique business model. Taking a leaf from the hospitality sector where the big brands such as Sheraton, Hyatt, and Hilton often only manage properties across the world in return for royalty and a share of revenues, Vaatsalya focuses on primary care in rural areas, partnering with small, dedicated physician groups who provide quality services while the company takes care of hospital administration and partnerships with insurance companies and tertiary hospitals.
Ashwin Naik, co-founder and CEO, is a physician who returned from the US with a question in his mind: was it possible to go against the grain and concentrate on primary care - when all private sector hospital groups with deep pockets were shunning this for tertiary care facilities - and yet make a profit? It's too soon to tell, but he has his priorities set out. First, he wants to articulate his vision and sign up a network of physicians who are committed to providing quality care; second, he would like Vaatsalya to be a branded hospital of choice for rural people in the areas served by it; third, to implement a robust infrastructure suited to the geography, including information technology that may not be cutting-edge for now, but does the job; four, to create overlapping sets of alliances with insurance companies utilizing the concept of group insurance, referral centers, and tertiary hospitals for advanced care; and, finally, to engage with providers of services and products and explore co-branding with a view to lower costs and give them a platform to extend their market.
Vaatsalya hopes to grow to about 15 hospitals by the end of next year, concentrating on rural and semi-rural areas and keeping its small-size format for better administration. This is one idea that's worth watching out for as its success has the scope to revolutionize rural health delivery.
Tuesday, July 04, 2006
Retail ventures on a shoestring: An impossible dream?
The lead story today in the business daily I subscribe to is about Reliance Industries' retail venture, Reliance Retail. One of India's largest listed conglomerate companies that is synonymous with petroleum refining, manufacture of polyester fiber, and mobile telecommunications is now venturing into alien territory: organized retail.
True to style, Relaince Retail will dream and invest big - Rs 250 billion to be exact (approximately USD 5.5 billion) to open a mix of convenience, supermarket, and hypermarket stores, 1,500 in all nationwide. Impressive as it is, it goes to direct attention to the voracious needs of a retail venture, for everything from establishing an efficient supply chain, to investment in technology, and contract with suppliers of perishable, non-perishable, and durable goods.
Tall order? Consider the complexity: One, land is expensive in metropolitan India and so are lease rentals for decent space; two, supplies on the one hand has to contend with numerous fragmented producers where contracts are novel, supplies of uneven quality and pricing variable across the country while on the other hand has to deal with superior pricing power of organized manufacturers; three, technological infrastructure demands are huge, often represent a moving target, and takes time; and, finally, a newly developing sector - organized retail - concomitantly requires patience in building brand equity.
Where is the opportunity for a small entrepreneur in all this? No wonder there is little venture capital chasing entrepreneurs, however brilliant their ideas. The smart money, often from private equity, is on supersize retail from the biggies. Wall-Mart is'nt here in India (as yet), but the next big thing from India's giants is already here. Yet, it would be a mistake for entrepreneurs to write off the opportunity. Successful ventures, after all, is all about creativity in finding niche opportunities and executing to perfection.
In the US, Trader Joe's is a good example. Founded by Joe Coulombo in the 1960s (it had an earlier avatar in the late '50s) in California, TJ's as it is popularly known, is a wacky, nautical-themed, privately-held specialty grocery store that is tiny in comparison to its more cookie cutter peers. Here, the staff wear Hawaiian shirts as uniform, while the store stocks private-label and brand products from obscure producers around the world. It sells gourmet food, organic food, extremely low-priced imported wine, lots of nutraceuticals, and a choice of fresh bread and other stuff from carefully chosen local bakeries. The store has over 200 stores nationwide and is doing nicely, thank you.
What's the secret? A touch of goofiness, very low price, exotic choice that changes constantly, and a fan following that ensures stickiness. The most important, however, is its pickiness in choosing locations - there is great deliberation; and all its stores are present only in upscale white-collar urban or suburban neighborhoods with household incomes averaging USD 75,000. In the process, they have tipped the market in their favor by focusing on niche, restricting the number of stores, letting word-of-mouth do its magic, and giving superior value to its customers. And you thought upscale meant high price? Believe me, the wealthy want it cheap, too.
It does not take 200 stores to duplicate this magic, for retail is considered simply transactional. For the big boys, that is mantra while for the minnow, it can spell huge success. Subhiksha, a no-frills discount retail store in south India, is an example of one concept that has done well and may well be gobbled up by big money, but who cares? Surely not the entrepreneur.
If you have more examples or wish to share your thoughts on this do write in.
True to style, Relaince Retail will dream and invest big - Rs 250 billion to be exact (approximately USD 5.5 billion) to open a mix of convenience, supermarket, and hypermarket stores, 1,500 in all nationwide. Impressive as it is, it goes to direct attention to the voracious needs of a retail venture, for everything from establishing an efficient supply chain, to investment in technology, and contract with suppliers of perishable, non-perishable, and durable goods.
Tall order? Consider the complexity: One, land is expensive in metropolitan India and so are lease rentals for decent space; two, supplies on the one hand has to contend with numerous fragmented producers where contracts are novel, supplies of uneven quality and pricing variable across the country while on the other hand has to deal with superior pricing power of organized manufacturers; three, technological infrastructure demands are huge, often represent a moving target, and takes time; and, finally, a newly developing sector - organized retail - concomitantly requires patience in building brand equity.
Where is the opportunity for a small entrepreneur in all this? No wonder there is little venture capital chasing entrepreneurs, however brilliant their ideas. The smart money, often from private equity, is on supersize retail from the biggies. Wall-Mart is'nt here in India (as yet), but the next big thing from India's giants is already here. Yet, it would be a mistake for entrepreneurs to write off the opportunity. Successful ventures, after all, is all about creativity in finding niche opportunities and executing to perfection.
In the US, Trader Joe's is a good example. Founded by Joe Coulombo in the 1960s (it had an earlier avatar in the late '50s) in California, TJ's as it is popularly known, is a wacky, nautical-themed, privately-held specialty grocery store that is tiny in comparison to its more cookie cutter peers. Here, the staff wear Hawaiian shirts as uniform, while the store stocks private-label and brand products from obscure producers around the world. It sells gourmet food, organic food, extremely low-priced imported wine, lots of nutraceuticals, and a choice of fresh bread and other stuff from carefully chosen local bakeries. The store has over 200 stores nationwide and is doing nicely, thank you.
What's the secret? A touch of goofiness, very low price, exotic choice that changes constantly, and a fan following that ensures stickiness. The most important, however, is its pickiness in choosing locations - there is great deliberation; and all its stores are present only in upscale white-collar urban or suburban neighborhoods with household incomes averaging USD 75,000. In the process, they have tipped the market in their favor by focusing on niche, restricting the number of stores, letting word-of-mouth do its magic, and giving superior value to its customers. And you thought upscale meant high price? Believe me, the wealthy want it cheap, too.
It does not take 200 stores to duplicate this magic, for retail is considered simply transactional. For the big boys, that is mantra while for the minnow, it can spell huge success. Subhiksha, a no-frills discount retail store in south India, is an example of one concept that has done well and may well be gobbled up by big money, but who cares? Surely not the entrepreneur.
If you have more examples or wish to share your thoughts on this do write in.
Sunday, July 02, 2006
The In-Verse Blog
Them most people just watch the world turn,
Just a tiny few that can make the world churn.
Amongst them the bloggers that watch and learn,
Then thrash out the issues from stem to stern.
Pick up any topic and google it now,
You’ll see them bloggers, their heads bowed down.
Cutting and chopping in the kitchen of ideas,
Sometimes crude, but often bold and curious.
Little by little, there’s worldwide credibility,
Making a difference with amazing ability.
A thousand sharp minds analyzing every item,
Thrust and parry, you love em or you hate em.
Of course, there’s garbage and excess heat,
Muddled up steam that aint good enough to read.
But as the ocean of blogs keeps on its churn,
Them smart bloggers gonna make the world turn.
sri jagannathan
------------------------------------------------------------------------
Just a tiny few that can make the world churn.
Amongst them the bloggers that watch and learn,
Then thrash out the issues from stem to stern.
Pick up any topic and google it now,
You’ll see them bloggers, their heads bowed down.
Cutting and chopping in the kitchen of ideas,
Sometimes crude, but often bold and curious.
Little by little, there’s worldwide credibility,
Making a difference with amazing ability.
A thousand sharp minds analyzing every item,
Thrust and parry, you love em or you hate em.
Of course, there’s garbage and excess heat,
Muddled up steam that aint good enough to read.
But as the ocean of blogs keeps on its churn,
Them smart bloggers gonna make the world turn.
sri jagannathan
------------------------------------------------------------------------
Modern entrepreneuralism in India
As a blog published from Bangalore, it would be remiss not to mention the significance of today's date in history. On July 2, 1981, seven first generation techno-entrepreneurs came together to found Infosys, a company that has since become a bellwether of Indian enterprise, particularly in the sphere of technology.
Infosys, in a strange - if wierd - manner that is the hallmark of coincidences in history, paralleled the founding of Microsoft in distant Bellevue, Washington in the United States, a company it would closely partner with many years later. For the record, Microsoft was actually first founded in Albuquerque, New Mexico, in 1975 but later moved, and re-incorporated, on January 25, 1981 in Washington state. Infosys, in a similar fashion, was founded in the city of Pune in western India, and later moved to Bangalore.
Infosys' place in history is perhaps that it heralded the arrival of the "professional" entrepreneur, one who did not owe his or her venture to a legacy family business. In a society where the middle class was attuned to view businesses with suspicion and disdain, it marked a significant turning point in value systems as it related to business. The company arguably has been responsible for the onset of entrepreneurship in a fundamentally differentiating way in the country: in the role of professionals as risk-takers; in engaging in activity that was not inherently mercantilist and trading oriented as with traditional businesses run by business communities; in articulating and setting standards for ethical behavior, corporate governance, and social responsibility; in creating and fostering a professional environment that benchmarked against global peers; in recruiting and rewearding employees that tied individual growth to corporate success; and instituting the idea of global scale, global branding, and global success.
Today, 25 years on, Infosys belongs to a category of Tier 1 providers of technology services of Indian origin that are increasingly recognized globally and whose fundamental business models - of far-shore and near-shore delivery - have been responsible for a paradigm shift in how value is defined and delivered to customers. Infosys was neither the first nor is it alone in this now, joined as it is in a competitive offshoring market by companies big and small. Its future success is no longer assured as in years past. It now faces increasing compettive pressures from large, deep-pocketed MNCs such as IBM, HP, Accenture, and EDS; from its peers in India such as TCS, Wipro, and Satyam; and from below with mid-size companies such as MindTree and Patni snapping at its heels. Yet, one cannot deny the legacy of a company whose founding and performance has altered perceptions, expectations, and entrepreneurial opportunities.
Infosys, in a strange - if wierd - manner that is the hallmark of coincidences in history, paralleled the founding of Microsoft in distant Bellevue, Washington in the United States, a company it would closely partner with many years later. For the record, Microsoft was actually first founded in Albuquerque, New Mexico, in 1975 but later moved, and re-incorporated, on January 25, 1981 in Washington state. Infosys, in a similar fashion, was founded in the city of Pune in western India, and later moved to Bangalore.
Infosys' place in history is perhaps that it heralded the arrival of the "professional" entrepreneur, one who did not owe his or her venture to a legacy family business. In a society where the middle class was attuned to view businesses with suspicion and disdain, it marked a significant turning point in value systems as it related to business. The company arguably has been responsible for the onset of entrepreneurship in a fundamentally differentiating way in the country: in the role of professionals as risk-takers; in engaging in activity that was not inherently mercantilist and trading oriented as with traditional businesses run by business communities; in articulating and setting standards for ethical behavior, corporate governance, and social responsibility; in creating and fostering a professional environment that benchmarked against global peers; in recruiting and rewearding employees that tied individual growth to corporate success; and instituting the idea of global scale, global branding, and global success.
Today, 25 years on, Infosys belongs to a category of Tier 1 providers of technology services of Indian origin that are increasingly recognized globally and whose fundamental business models - of far-shore and near-shore delivery - have been responsible for a paradigm shift in how value is defined and delivered to customers. Infosys was neither the first nor is it alone in this now, joined as it is in a competitive offshoring market by companies big and small. Its future success is no longer assured as in years past. It now faces increasing compettive pressures from large, deep-pocketed MNCs such as IBM, HP, Accenture, and EDS; from its peers in India such as TCS, Wipro, and Satyam; and from below with mid-size companies such as MindTree and Patni snapping at its heels. Yet, one cannot deny the legacy of a company whose founding and performance has altered perceptions, expectations, and entrepreneurial opportunities.
Saturday, July 01, 2006
A Sempiternal Blog?
Today's Word of the Day at the Merriam-Webster Online website is "sempiternal", from the Late Latin meaning "of never-ending duration" or, more simply, eternal. The latter word is used more in everyday speech though the former has a nice ring to it. As a blogger just starting out, both the nice ring and expectations of never-ending loquaciousness is mildly exciting.
Fear not, this blog will adhere to a few rules: to be brief, concise, and useful. CubbonPark will gradually attempt at assembling news and insights from a variety of sources - and geographies - that would seek to inform all entrepreneurs, budding and otherwise, of happenings in their world. The blog's specific purpose would be to focus on the ecosystem that underpins successful entrepreneurship, to encourage enquiry, validate business models against those that have succeeded elsewhere, and to provide a forum for networking worldwide.
Why CubbonPark? Simple - this blog is published from Bangalore in India and Cubbon Park is one of the defining landmarks of the city. I wanted to choose a name that epitomizes the city I live in, and this was as good as any.
Cubbon Park, for those not in the know, is about 300 acres of greenery, a colonial-era "green lung" in the center of the city that was created in 1864 by Lord Cubbon, then viceroy of India. At its northern end, it also accomodates the imposing Legislature of Karnataka state, of which Bangalore is the capital, and the High Court directly opposite. While the Legislature was built of dressed white granite in the 1950s, the Gothic High Court was built of brick and stone in "pompeian" red in 1867. Nearby are the state central library, also Gothic and red in color, the Ottawa Chatter museum, the Cheshire Dyer memorial hall, and the Century Club.
Today, Bangalore is known for something more than Cubbon Park: as arguably the center of a "flattening world" espoused by Thomas Friedman of the New York Times; as the hub of the knowledge industry in India; as the original "home" of white collar offshoring (whence the slang term "bangalored"); and, more to the point, as the epicenter of entrepreneurial energy in its modern forms in India. Verily, the city has mapped itself to, and draws inspiration from, Silicon Valley in the US. The Bay Area mindset is well recognized - nay, aped - here, as also the drive to create an ecosystem that duplicates and rivals it.
This blog, then, will document the efforts of the many to create individual successes and the evolving image of a complex economy that fosters, modulates, and energizes development of new business models, new technologies, fresh perspectives, creativity. In all this, Bangalore will not be the focus of attention, but simply a base to explore entrepreneurial activity wherever they might occur so as to diffuse ideas and learning.
Your comments are welcome. Please feel free to write in and share your perspectives.
Happy reading!
----------------
Credits:
VirtualBangalore: Bangalore on the Net (www.virtualbangalore.com)
Fear not, this blog will adhere to a few rules: to be brief, concise, and useful. CubbonPark will gradually attempt at assembling news and insights from a variety of sources - and geographies - that would seek to inform all entrepreneurs, budding and otherwise, of happenings in their world. The blog's specific purpose would be to focus on the ecosystem that underpins successful entrepreneurship, to encourage enquiry, validate business models against those that have succeeded elsewhere, and to provide a forum for networking worldwide.
Why CubbonPark? Simple - this blog is published from Bangalore in India and Cubbon Park is one of the defining landmarks of the city. I wanted to choose a name that epitomizes the city I live in, and this was as good as any.
Cubbon Park, for those not in the know, is about 300 acres of greenery, a colonial-era "green lung" in the center of the city that was created in 1864 by Lord Cubbon, then viceroy of India. At its northern end, it also accomodates the imposing Legislature of Karnataka state, of which Bangalore is the capital, and the High Court directly opposite. While the Legislature was built of dressed white granite in the 1950s, the Gothic High Court was built of brick and stone in "pompeian" red in 1867. Nearby are the state central library, also Gothic and red in color, the Ottawa Chatter museum, the Cheshire Dyer memorial hall, and the Century Club.
Today, Bangalore is known for something more than Cubbon Park: as arguably the center of a "flattening world" espoused by Thomas Friedman of the New York Times; as the hub of the knowledge industry in India; as the original "home" of white collar offshoring (whence the slang term "bangalored"); and, more to the point, as the epicenter of entrepreneurial energy in its modern forms in India. Verily, the city has mapped itself to, and draws inspiration from, Silicon Valley in the US. The Bay Area mindset is well recognized - nay, aped - here, as also the drive to create an ecosystem that duplicates and rivals it.
This blog, then, will document the efforts of the many to create individual successes and the evolving image of a complex economy that fosters, modulates, and energizes development of new business models, new technologies, fresh perspectives, creativity. In all this, Bangalore will not be the focus of attention, but simply a base to explore entrepreneurial activity wherever they might occur so as to diffuse ideas and learning.
Your comments are welcome. Please feel free to write in and share your perspectives.
Happy reading!
----------------
Credits:
VirtualBangalore: Bangalore on the Net (www.virtualbangalore.com)
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