Entrepreneur 16/09/08

8/14/2019 Entrepreneur 16/09/08

http://slidepdf.com/reader/full/entrepreneur-160908 1/6

Bootstrappers are entrepreneurs determined to

make a business pay for itself. The freedom from

relying on capital invested by VCs is a great motiva-

tor, if one knows how to acquire it from the right

sources. Their secret weapon, is being nimble and

cutting through the bureaucracy to grow faster.Most are entrepreneurs, who have a drive to learn

and better themselves in all fields related to their

start-up. They use unconventional means to raise

funds for their business,

without spreading out

their arms. A small initial

size helps them to focus by

realizing that they have

little to lose, and they are

quick to catch on trends

and exploit them. But, how do they do all of this

and survive the bloody battles on the tilted corpo-

rate battlefield? In this series of articles we delve

into some of the nuances of this seemingly esoteric

method of raising money.

Part 1: What you’ve got and they’ve lost

It starts with identifying what a bootstraper does-

n’t necessarily have as compared to his huge com-

petition: Distribution, Access to Capital, Brand Eq-

uity, Customer Relationships and Great Employees.

Each of these facets, one might say, hinges on the

amount of capital available to the company to en-

able its sustenance and growth while maintaining its

firm hold over the market. So, if you are a boot-

strapper, can you go toe to toe with the big names

on their turf? No; the secret lies in waging the warin areas where you are more adept. For example,

imagine yourself as a shoe manufacturer trying to

sell your new line at retail outlets. You’d be clob-

14 Sep, 2008

T

h e E n t r e p

r e n e u r

E

N

T

R

E

P

R

E

N

E

U

R

S

H

I P

C

E

L

L ,

I I T

K

H

A

R

A

G

P

U

R

bered by the current brands and be out of business

while they won’t be losing a moment’s sleep. Success-

ful bootstrappers know that just because they can

make a product doesn’t

mean they should. Instead,

they are well aware of thetraits they need to have and

the advantage they have

over the major market play-

ers. Some of these advan-

tages are : A mindset of

‘We’ve got nothing to lose’, being happy with the

small fish, direct presidential input , Rapid R&D, being

the underdogs, low overhead costs and controlling the

time of deliveries.

We will elucidate on these points in the next issues,

but let us close on an example much closer to home. I

am sure there are many who remember id software’s

‘Castle Wolfenstein’. Following the huge success of

their game, the 4 developers decided to take on the

major players with a unique strategy. They developed

another path breaking game called ‘Doom’ and gave it

away… for free! Millions of people downloaded the

game off their servers and id had captured a huge pool

of trusting customers. They launched a bigger version

of the game with more levels and gameplay and made

it available at a price. It was a huge success! Without

having to go through the game retailers, or spend

more than 50 cents on marketing they had used an

unusual strategy which helped them cut out the mid-

dlemen and avoided losing capital as ‘commission’ yet

firmly carve a niche in the gaming industry.

Next Issue: Part 2: Why big ideas can kill you and

what is the bootstrapper’s business model.

It's easy to make a buck. It's a lot tougher to make a difference

- Tom Brokaw

Financial Bootstrapping: Smartly funding your start-up

Vision India 2020

This is the first article of the series Vision 2020 by Sramana Mitra describing which she says, “This is a new series in which I invite readers to take a journey with me into the

future through the minds of multiple entrepreneurs, who by addressing the opportunities I see

today, will perhaps shape the future of India.

But in this series, we will close our eyes, and exist in this future, and BE each entrepreneur”.

Enjoy!

Sneak Peek

• MIT India – Vision 2020 - Page 2

• Carbon Trading - Page 3

• Editorial - Page 5

12 years ago, in 2008, it was clear that the labour

arbitrage based IT services industry that had made

India a player in the global technology market, was

facing a threat. The key issue was supply-demand

equilibrium. India’s engineering education system

simply could not keep up with the demand for talent.

Engineering schools below the top tier (IIT, IISC and a

few others) were struggling due to lack of faculty.

Anyone who knew any engineering had multiple mul-

tinational companies dangling job offers in front of

their nose. Why would they go teach in a small engi-

neering college in a small town?

Continued on page 2...

www.ecell.iitkgp.ernet.in

8/14/2019 Entrepreneur 16/09/08


Continued from page 1...

Against that backdrop, we started a for-profit, private com-

pany to train engineers in India. At the time, Susan Hock-

field was the President of Massachusetts Institute of Tech-

nology (MIT). MIT had also taken a leadership role in the

Open Course Ware (OCW) movement, systematically put-

ting every lecture by the institute’s faculty online, freely

accessible from anywhere in the world. We convinced Dr.

Hockfield to take equity in the company on behalf of MIT,

and let us do the project under the MIT India brand, exten-

sively leveraging OCW content. We could, however, only

grant certificates, not MIT degrees.

When we launched MIT India in 2010, we were handsomely

financed by contracts from Intel, Infosys, Cadence, Auto-

desk, Tata Motors and IBM, and hardly raised any outside

financing until much later, when we were ready to scale. In

addition, companies like Cadence and Autodesk donated

CAD tools which our engineering students could learn with.

Our model was simple. We worked directly with major

corporations interested in hiring trained engineers. Our

customers, thus, were the companies, not the students or

parents.

To the youth of India, however, we brought a different

value proposition. We carefully recruited a set of high po-

tential students with High School Education only, but who

were not going onto great colleges or universities. These

students, upon acceptance into the MIT India program,

were already guaranteed a job at the sponsor company forwhich we were training them. They participated in a rigor-

ous curriculum focused on the engineering discipline of the

sponsor’s choice. For example, Tata Motors, had us train

Mechanical Engineers, while Intel had us train chip design-

ers.

We had 6 centers in our first year of 500 students each,

aligned with one of our sponsors. They were geographically

dispersed, and most certainly not in Bangalore, which was

already bursting in its seams. IBM’s center was in Kolkata,

Tata Motors’ was in Thane, Cadence and Autodesk were inKanpur, Infosys in Indore, and Intel in Kharagpur.

We solved the faculty issue by recruiting a group of tal-

ented engineers who were passionate about teaching,

and offered them market salary that they would normally

get working for MNCs. And our faculty followed MIT sylla-

bus, OCW content, problem sets, exams, etc. As batches

of students finished our 2-year intensive program, we

renewed our contracts with the sponsors, recruited new

sponsors, and opened up new centers all over India.

These contracts were extremely lucrative for us, and al-

lowed us to finance great infrastructure, afford and at-

tract faculty, and address the engineering education crisis

that India would have otherwise faced, had we tried to

work within the government-approved channels.

We made a few key strategic choices that made it possible

for us to build the $6 Billion a year company that we have

today with 1200 MIT India centers, each teaching 2

batches of 500 students. Each year, we train a total of

600,000 engineers.First, we framed the engineering education problem as a

problem of the Corporations who need to recruit talent

and asked that they pay for a quality solution. They did.

Second, we did not allow compensation to be a deterrent

for hiring talented faculty. We paid them handsomely,

such that they did not feel they were making a career

sacrifice by teaching. This enabled those with passion for

teaching to choose an academic career.

Third, we chose to do this under the MIT brand umbrella,

gaining instant credibility among the sponsors, the facultyand the students.

With that, we created one of the most powerful engineer-

ing workforces in the world.

Vision India 2020: MIT India

Thoughts lead on to purposes; purposes go forth in action; actions form habits; habits decide character; and character

fixes our destiny - Tyron Edwards

THE ENTREPRENEURPage 2

The author is a well known Silicon Valley entrepreneur

who has founded 3 companies, is a strategy consultant for

over 70 companies, including SAP and Cadence among

others, and the content from her popular strategy blog at

www.sramanamitra.com is syndicated by Yahoo! Finance,

Indian Daily, etc. She also writes a weekly column forForbes.

©Sramana Mitra

www.ecell.iitkgp.ernet.in

8/14/2019 Entrepreneur 16/09/08


“Clean money for dirty air” - that’s the premise of an

emerging trade in carbon credits. In simply words, it signi-

fies the trade of polluting gases which is gaining increasing

impetus in India with heightened emphasis being put on

reducing greenhouse gas emissions in the environment.

So what exactly is carbon credit?

The concept of carbon credit, is that

of incentivising the industrial units

which pollute less, and disincentivis-

ing those that pollute more. A cen-

tral authority, fixes a limit to the

amount of a pollutant that can be

emitted into the environment. This

permit or credit or allowances, gives

licenses to emit a fixed amount of

pollutant into the environment.

Now, if a company say SRF, emits

only eight units of greenhouse gases

out of the 10 units allotted to

it, then SRF will have two units of

emission as 'credit outstanding' in its 'pollution' account.

On the other hand, if a company say MRF, emits 14 units

instead of the 12 units allotted to it, then MRF will have

two units of 'debit balance' in its 'pollution' account. Insuch a case, SRF will be able to transfer its two 'credit bal-

ance' to the two 'debit balance' account of MRF. So, both

the companies’ pollution account will be matched, and the

environment too is able to digest a certain scientifically

fixed amount of pollutants. This transfer, from SRF to MRF

will be for some monetary consideration, and hence it is

referred to as carbon trading.

The value of the carbon trading market was around $30

billion in 2006 as per estimates of the International Emis-

sions Trading Association. Almost all industrialized coun-

tries, are huge buyers of carbon credit, and all develop-

ing countries where industrialization has not reached its

peak, are supplier of carbon credit. Japan is the largest

buyer of carbon credit, while India and Brazil are amongst

the largest suppliers of carbon credit. .

With Indian economic growth based mainly on energy

from fossil fuels such as coal, there is considerable poten-

tial for reducing greenhouse gases,

and for CDM projects. Most of the

beneficiaries of the carbon trading,

are those companies that are in-

vesting in windmills, Biodiesel, and

Biogas. Actually, by investing in

such an alternative, non-polluting

source of energy, these companies

will earn carbon credit in the form

of CER’s (Certified Emissions Re-

ductions), equivalent to the

amount of environmental pollution

they have prevented. These CER’s

could be sold by Indian companies,

to companies, say in Japan, at mar-

ket prevailing rate of CER’s, and thus make profit.

The Institute for Global Environmental Strategies, esti-

mates the potential for CDM projects in India to be about300 million tonnes of CO2 equivalent, which includes 90

million tonnes from renewable energy sources alone.

Listed Indian companies are already reaping sizeable prof-

its through CER deals.

Carbon trading has brought a huge opportunity for In-

dian companies. Companies can earn CER’s by adopting

energy saving and environment protection methods, and

in turn can earn huge incomes by selling them. Its how

cleverly these companies make use of this opportunity,

that could give them a boost in their businesses.

Carbon Trading : A bright future

Time is like money, the less we have of it to spare the further we make it go - Josh Billings


1) In 1997, ______________ was formed and founded

by a trio of entertainment players, director and pro-

ducer Steven Spielberg, music executive David Geffen,

and former Disney studio chairman Jeffrey Katzenberg.

Who’s the big fish???

You’ll find a series of biz-questions in the next few

pages. The answer of each of these questions connects

to a central theme, which is a personality. Guess the

big connection. Lets see how biz savvy you are!

Answers can be found on the last page.

8/14/2019 Entrepreneur 16/09/08


Excerpts from the interview:

TE: First of all, congratulations on the funding.

What helped you ideate and come up with your novel bio-

reactor?VIDA (their team) : Well, as such there were four

people involved in this project - Prabash Choudhary, Sumit

Jaiswal, Pawan Kumar and myself. Three of us were work-

ing in a biotech company for our summer internship, and as

a side project were given the task of building a bioreactor.

After coming back we realized that the bioreactor had

great potential, and when ‘Envision’ came along, we de-

cided to pursue it. After many modifications and with help

from our mentor Prof. S. Dey [Dept. Of Biotechnology], we

completed the project and submitted it, coming second in

the competition.

TE: So, how was the feeling when you heard that

your TePP proposal had been approved?

VIDA: It feels great. We really hadn't thought aboutthe proposal being approved, after such a long time since

the competition. But yes, it does feel good. We along with

Prof. Dey mentoring us, will get back to the project now.

TE: What are the advantages that your product has

over other competitors?

VIDA: As such there are two widely used plant bio-

reactors, RITA and Growtek. Both these bioreactors have

their own pros and cons, and are expensive. RITA, which is

widely used in developed countries, costs around Rs. 3,500

for a single unit, while Growtek, developed by Prof. S Dey

here at the Dept. of Biotechnology, costs about Rs. 280 per

unit. Our bioreactor, on the other hand, will cost only

about Rs. 35 per unit, making it much more affordable con-sidering that research in this area is very expensive. What

we did, was to make a product that was not only signifi-

cantly cheaper but combined both of their functionalities.

TE: So filing and acquiring the patent must be your

top priority now?

VIDA: It most definitely is, especially after the

recent developments. I am already in touch with the law-

yer.

TE: What are your future plans?

VIDA: We will first get a prototype ready and

check out whether it satisfies the data we have collected. Development of plant bioreactors can be a little compli-

cated, and we need to get test data first. It takes a signifi-

cant amount of time, since we need to grow plants to test

the reactors. We will think about recruiting some 2nd

and

3rd

years to help us out as well.

TE: So, was your ultimate aim while making the

product, a profit making business model or a viable alter-

native for research which is inexpensive?

VIDA: The product is definitely aimed at research

although it can generate profits as well.

Yes, we will target developing countries with this

product. This being a good alternative to the expensive

reactors used now.

TE: And how would you sum up the contribution

of Envision and E-Cell?

VIDA: It is definitely different. A lot of people have

ideas to improve products, which may not qualify as B-plans or technical plans, but are definitely marketable

products. Even something like an improvement in mobile

phone cover design could figure in that list. What Envision

has successfully managed to do, is cater to this segment

of people.

TE: Well, congratulations again and thanks for

sharing your experience with us.

For more details about Envision, visit

www.ecell.iitkgp.ernet.in/envision

INR 5 lac for runners-up Envision’07

The successful person makes a habit of doing what the failing person doesn’t do - Thomas Edison


An interview with Rachit Agarwal and Prabhash Choudhary,

Team VIDA, who were runners up in Envision ’07 during E-

summit. Envision is a product design and prototyping con-

test conducted by the Entrepreneurship Cell. TePP has ap-

proved an initial funding of Rs. 5 lacs for their product’s

testing phase .


2) The structure itself was designed by Frank Gehry. Exhib-

its include Bing Crosby, The Kingsmen, Sir Mix-a-

Lot ,Nirvana and Pearl Jam (Seattle, Washington). Also in-

cluded are some less famous artists like Queensrÿche and

bands far more obscure, such as The Pudz. What are we

talking about?

8/14/2019 Entrepreneur 16/09/08


Young minds of IITKGP got a valuable opportunity on

8th September 2008, during a guest lecture organized by

Entrepreneurship Cell, to interact with Prof. G Surender

Reddy. He has vast experience in teaching management

and has himself trained many entrepreneurs in the past.

Prof Reddy started off on a spiritual level, comparing

the numerous dimensions of God to that of a business

model. What followed in the next 90 minutes, was a

brainstorming session that dwelt deep into understanding

the science of success.

Defining management as ‘converting resources into

results’, he stressed upon students coming up with his/

her own innovative definitions. In management, synthesis

is as important as analysis in delivering results. Following

this ideology, he spent ample time in elaborating on both

analysis, as well as gathering of resources and putting

them together to enhance performance.

Providing insights into efficient ways of going about a

venture, he spoke about the concept of optimizing profit

rather than maximizing it, as also the virtue of 7 R’s re-

quired by any successful entrepreneur. Reading, writing,

arithmetic (the standard 3 R’s), computer, IPR, clairvoy-

ance, and VIBGYOR (i.e, ability to dream and hope), con-

Nobody talks of entrepreneurship as survival, but that's exactly what it is and what nurtures creative thinking

- Anita Roddick


The internet landscape in India has been heating up over

the last 4-5 years. While a lot of venture capital money

has been chasing deals lately, there are very few quality

startups in the horizon. Sectors like matrimony, travel and

social networking have seen the emergence of a quite a

few strong contenders but there are a lot of niches still

open to be exploited.

City Guides and Blogs

Chaos reigns supreme in Indian metros. With exponen-

tially increasing population and unorganized growth in

Indian cities, navigation has never been more difficult.Enter players like Justdial, OnYoMo and Burrp. While On-

YoMo is still very young, Justdial has already spread to

200+ cities. This is an emerging trend and I suspect this

sector has a lot of potential for niche offerings like Burrp.

Sales Leads

Lets look at the business of generating sales leads. Now in

US a lot of niche players like InfoUSA, Hoovers, One-

Source, InsideView and D&B operate in this segment.

D&B has been in India since 1995 but I could not find any

other major player in this field. This segment surely looks

ripe to be picked up right away.

Education

All of us are aware of the poor standards of education

ailing the plethora of ill equipped engineering schools in

India. The rapid penetration of internet in India today,

presents unprecedented opportunities for providing

enabling technologies to improve standards of education

at a very low cost. Solutions can be as simple as organiz-

ing the best information available in a easily navigable

structure or they can be as complex as designing of the

next Google for educational sector.

Indian market is filled with opportunities galore. All that Ihave mentioned above should be considered as a small

sample of the tremendous possibilities. All it takes to

succeed is a will to undertake risk and a keen eye to

identify opportunities.

-Amritayan Nayak

Editorial

The entrepreneur invites readers articles on any

topic related to business and entrepreneurship.

Feedbacks on the current issue are also welcome.

Our e-mail – [email protected]

stitute the 7 R’s. Also, good communication skills are

necessary for an entrepreneur to succeed. He defined

the ABC of communication as accuracy, brevity and clar-

ity.

An entrepreneur cannot operate mired with a common

man’s desire for social needs, self esteem, material, and

money needs. He points out ‘self actualization level’, as

the right platform to start ones venture. On a humorous

note he adds, KGP has provided us with two great plat-

forms—the education at IIT and the longest railway plat-

form! An IIT degree is worth Rs. 10 crore in the eyes of a

venture capitalist, he says, and adds that we have a most

promising entrepreneurial future ahead.

Ending on a positive

note, he quotes,

“B++” - Be doubly

positive, i.e, be an

incorrigible opti-

mist. His one-

liner success

mantra for bud-

ding entrepre-

neurs is “be sure,

be fair, be there!”

Professor Talk : G Surender Reddy


3) ______ used to sell a set-

top Digital Video Recorder (DVR),

called the UltimateTV, which allowed

users to record up to 35 hours of

television programming from a direct

-to-home satellite television pro-

vider DirecTV.

8/14/2019 Entrepreneur 16/09/08


The interesting thing is how one guy, through living out his own fantasies, is living out the fantasies of so many other

people - Hugh Hefner


Entrepreneurship Cell, IIT Kharagpur is a student body which has been started

under the vision and guidance of the Sponsored Research and Industrial Consul-

tancy (SRIC) of IIT Kharagpur. In an institution of students with the potential of becoming tomorrow’s leaders in innovation for the country, it is essential to

groom these young individuals while they have the time and resources to be-

come capable of handling the pressures, responsibilities and risks associated

with entrepreneurship. The basic aim of E-Cell is to provide students with the

resources and guidance to be able to be job-makers for the future through effec-

tive innovation and sound fundamentals. The primary activities of E-Cell are

1. Organising workshops and lectures periodically for students to create aware-

ness about entrepreneurship.

2. Function as a guide for students with creative ideas which can be transformed

into successful companies.

3. Provide mentorship through individuals for students launching their start-ups.

About Us

Budding entrepreneurs of IIT Kharagpur got a rare opportu-

nity to interact with a venture capitalist in person at the

leadership lecture by Mr. Jishnu Bhattacharjee , vice presi-

dent ,Nexus India Capital ( ECE, IIT khargpur, 2000)

organized by the Entrepreneurship Cell ,IIT Kharagpur on

the 5th

of September , 2008.

“It feels great to be back at the campus . So much has

changed over the last eight years”, was how Mr. Jishnu

started out. He then went on to explain what exactly Nexus

India Capital is looking for in new businesses which they

would like to fund. ”We are looking for growing companiesin their early stages, driven by innovation in technology or

business model”, he said. With over 320 million USD capital

under management, Nexus India Capital has already in-

vested in 14 startups, in areas ranging from internet to

solar energy.

Providing the students a glimpse of the parameters on

which a venture capitalist judges the potential of a busi-

ness, Mr. Jishnu said that it is the market size, technology

used ,scalability, core team competency, and the presence

or absence of regulatory hurdles, which determine how

good your idea really is.

A novel concept which he highlighted was the 80/20rule, in which an entrepreneur identifies 20% of the areas

in the business that matter to him the most, and then

allocates 80% of his resources towards achieving high

performance in those areas. He also pointed out the im-

portant role a VC plays in shaping the future of a startup.”

From taking governing decisions to auditing to hiring peo-

ple for your company, a VC’s influence spreads across

diverse spheres.” He joked that, in America an entrepre-

neur’s partnership with a VC, outlasts the average married

life of eight years.

Emphasizing the need for Kharagpur graduates to take

up entrepreneurship with full gusto, he said, “now is thebest time to be your own boss.” Whether it be mobiles,

internet commerce, clean technology, or organic farming,

the opportunities to be exploited are galore. He also wel-

comed the news that, there have been two startups from

the campus in the last two years, and displayed a keen

interest in supporting any innovative, technology driven

idea that may originate in the campus in the future.

Jishnu concluded with a question that left the entire

audience with something to ponder on. “I see tonnes of

business plans coming up form IIT Bombay, Delhi and

Madras. But why not Kharagpur? What is holding us

back?” Now, this is a question that we all need to find an

answer to.

Jishnu Bhattacharjee, VP - Nexus India capital in IITKGP

A n s w e r s t o ‘ W h o ’ s t h e b i g f i s h ? ? ? ’ :

1 . D r e a m W o r k s A n i m a t i o n S K G

2 . E x p e r i e n c e M u s i c p r o j e c t C o n n e c t : P a u l A l l e n h a s / h a d m a j o r s h a r e h o l d i n g i n a l l o f

3 . M i c r o s o f t t h e s e c o m p a n i e s

Documents

Entrepreneur 16/09/08