Saturday, March 5, 2011

Lessons to be learnt from ‘perfect entrepreneurs' – Part II

The second and concluding part of the excerpts from the speech of Mr Subroto Bagchi, Vice-Chairman and Gardener, MindTree Ltd.

Understanding the 70:30 principle

The sixth great entrepreneur is Dr Devi Shetty. He saw opportunity at the bottom of the pyramid. People think you can build a great business if you sell a Mercedes or start a five-star hotel. Nothing can be farthest from the truth. The economic power is shifting to the poor because they may be individually poor but collectively they are rich. So Dr Devi Shetty started his hospital. He drew inspiration from Dr Govindappa Venkataswamy who started the Arvind Eye Hospital.

The hospital model was that 30 per cent of the paying customers took care of the 70 per cent of free customers. This number is huge because last year 2.4 million people were seen and 3 lakh people operated upon; 70 per cent operations were free. The same principle applies in Narayana Hridalaya. If you are a child below three, irrespective of your country of origin, you are operated free. In addition, Dr Shetty got the Karnataka Government to start an insurance scheme called Yeshaswini whereby every farmer in the State can get insurance for Rs 5 a month. You can get an open heart surgery done if you have a heart condition. In the US, it costs you Rs 40 lakh. In India a few lakhs. Here, it is for Rs 5 a month. It happens because of the principle of the bottom of the pyramid. When millions of farmers pay Rs 5 a month that pays for the cost of the surgery. Dr Shetty understood the principle of the 70:30.


The seventh is of feelings. Nobody understands that better than Mr Harish Hande who founded Selco. It is a social enterprise, a profitable company. Mr Harish got his Ph.D from Boston University. When he was doing PhD, a chance visit to South America made him realise that there's a connection between poverty and darkness. Poor people do not have electrical connections. Forty per cent of Indians do not have connection to a grid, not electricity, but to a grid. They remain poor because they cannot do business in the dark. He came back and decided his whole life should be devoted to bringing solar energy.

To really understand what it is to live in darkness, he felt he must go to a country where he does not understand the language and must stay with villagers to see through their actions and not words what it is like to live in darkness. He went to Sri Lanka and realised that what they needed most was solar energy not for cooking or lighting but to keep the elephants at bay because every evening the elephants would come and devastate the villages.

He came back to India and has made this his life-long desire. He creates solar solutions for vegetable vendors, cobblers and small farmers in the remotest parts. His principle is nobody should buy his solutions with their revenues or profits but should buy it in such a way that it extends their business so that additional business is for the price of the solar solution. If you are a vegetable vendor, don't take away from your savings. Mr Harish brings the solutions and if you sell for eight hours instead of six, the additional two hours of business will pay for the solutions. If we have a future Nobel prize winner, it's Mr Harish for you. His starting point was not capital, nor was it was technological brilliance, but feeling. It was for people who lived in darkness.

Love and competence

The next thing to be a successful entrepreneur is you need to find the love and intersect that with competence and find your own path. Ms Anita Shah, who started Hibiscus, was a homemaker till her 40s. Her passion was gardening. She started attending trade shows when she was in the US. There she started Hibiscus. She found that lot of people would go to trade shows and buy ceramic urns. On her own, she went to source the ceramic pots in Thailand and Indonesia. She established contacts and made friends with local suppliers. Today, she is the most important destination for people who love gardening and other gardening artefacts. Because she loved something she went the extra mile and because the path was not available to her, she went to find her own path.

Customer service

Two other entrepreneurs, I chanced across – Printo, a place for doing photocopying, for putting photos on mugs and Tee-shirts. It is also a good quality place for documentation and spiral binding. Here I was talking to the sales person that I need so many copies and he said it would cost Rs 18,000. Since I was doing this for a school, I asked for a better deal. Who is your owner? I asked. He said it was started by two people. One is a lady called Ms Lalana Zaveri. He gave me the number and I had no hope that this number would get picked up. But she did and I explained to her in two minutes what I was looking for. She said if I could send that material by mail, she would call me back. At 10 she called up and said this is the best deal we can do for you. At 11 in the night she has given me a solution that works.


The 10th idea is not finding a lot of currency in the world today. And that is integrity. Mr Azim Premji's father started an oil business in Maharashtra in 1947. Mr Premji was forced to come back to India. After the oil mill business was stabilised, he felt he must get into an engineering business where the input-output ratio is better and went into the software business. The rest is history.

At this time he needed to get out of Maharashtra as he did not want to have all the eggs in the same basket. He started an oil plant near Tumkur in Karnataka. The plant was all set to go into production, but the electricity authorities would not give the connection unless he parted with some money.

He would not give money and it became a tug of war. The plant was losing money every day as the capacity was not being utilised, the people were hired and there was no production as Mr Premji would not pay a single paise. This went on for one full year. Then one day out of sheer disgust the electricity guys said that this fellow will not pay any money, they came and connected the electricity.

The people who take bribes see if you are willing to give bribes and people who take bribes test out like beggars at the intersection. I'm deliberately making the comparison. They will not waste time if you don't seem like one who will give money. Bribe takers are highly optimised. Rather than waste time, they will take the next victim. This was a game of nerves. And Mr Premji was willing to play it. When we don't walk the path of integrity we think we should have a special red carpet welcome.

Actually you will get a welcome on a bed of thorns. But when you take two steps on the bed of thorns, a whole new world will open up before you. The same Mr Premji in a day and age that criticised the government was also given the Padma Vibhushan award. People like Mr Narayana Murthy and Mr Premji actually tell you even in this corrupt society if you stand by your own principles, the same people will also stand up and respect you.

It takes vision, displacement, self confidence, you need to find your passion, and your passion will not find success, you have to find other ways by which your passion can bloom into success, capacity to postpone gratification, look into the future, connect the dots, the future does not come in stereophonic sound, but in low whispers and only some people can hear the whispers of the future.

The whole world is changing and the man who can do business with the poor can be a rich man, but for that you must have feelings. Mr Premji says being good in business is not for charity. It makes good business sense if you are good because good people will work for you, good customers seek you out in a world where good people are becoming scarce.

(This article was published in the Business Line print edition dated February 28, 2011)

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