BusinessLine@25

‘Entrepreneurs must focus on large sectors and big pain points’

Sangeetha Chengappa | Updated on January 27, 2019

Serial entrepreneur K Ganesh is very bullish about the start-up sector for the next 5-10 years

His first entrepreneurial stint in 1990 was a personal choice, his second stint in 2000 was quite accidental. After that, he was well and truly hooked to the highs and lows of entrepreneurship. In a free-wheeling conversation with BusinessLine, serial entrepreneur and Partner, GrowthStory, K Ganesh says all the stars are aligned for many more start-ups to take off, and India will see the rise of sci-fi-like start-ups in the next 5-10 years.

At what point in your life did you decide to become an entrepreneur?

I joined HCL after graduating from IIM-C in 1985 when it was a small hardware company, despite receiving campus offers from HUL and Citibank, which were much bigger companies. It was a deliberate choice because, before I got into IIM-C, I had worked for a year with Tata Motors, Jamshedpur, after graduating from the Delhi College of Engineering, where the entry-level job was for an engineer. I did not like working there and decided I would join a smaller company.

At HCL, Shiv Nadar interviewed me and signed my appointment letter. At 25, I became the youngest Regional Manager in HCL, handling the largest region in the country. It wasn’t even the largest computer company at the time; the pecking order then was DCM Data Products, ECIL, HCL and Wipro.

However, HCL was a very entrepreneurial company with no systems and processes in place and we were given a lot of freedom and there was a lot of trust in us. I could take independent decisions despite being 25. When those decisions worked out and led to successes, it gave me immense confidence to venture out on my own.

What sparked the idea for your first hardware maintenance start-up, IT&T, in 1990?

At HCL, we sold computers to corporates. Those days, computers were not 100 per cent standardised. Every company we sold to had 4-5 different brands of computers and 3-4 brands of printers. Even a small company like HCL had 4-5 different brands, and whenever we had problems with each of those brands, we called them separately.

Invariably, if the printer wasn’t working, the vendor would say it is a computer-related problem and if the computer wasn’t working, the vendor would say it is a printer-related problem. If the problem happened to be in the cabling, none of the vendors would own it.

That’s how the idea for IT&T germinated. We came up with a single telephone number that corporates could call to for their maintenance needs, including for computers, printers and UPSs, from all over the country. For this, they had to pay us a yearly fee.

This solved a huge pain point for the IT manager who reports to the CEO, because he only needed one number to call and one person to connect to. We sold IT&T to iGate in 2003.

Would you encourage students with great ideas to drop out of college to become entrepreneurs?

I think dropping out of college is a bad idea. Today, even though the average age of entrepreneurs is coming down, I would strongly urge people to finish their basic graduation — if not post graduation — and then jump into entrepreneurship. Because, one needs a certain level of maturity, knowledge and exposure that comes with a graduate degree.

This does not mean that a college drop-out cannot become a successful entrepreneur. Just because there are a few examples of stellar successes by college drop-outs, it is not necessarily the only way, or the right way, to do it.

My counsel to youngsters is: finish your basic degree, let the idea germinate. If someone else takes up and implements the idea, it doesn’t mean there are no other ideas. The world has many problems that require solutions, and there are millions of companies to create and millions of dollars of valuation to gain.

Therefore, spending the next three years to finish your graduation will not take all these opportunities away.

How would you characterise your journey as an entrepreneur?

I have transitioned from a serial entrepreneur to a parallel entrepreneur. When I started my first venture in 1990, the concept of first-generation entrepreneurs, angel investors, VCs (venture capitalists), mentors, exits, etc, did not exist. There was no entrepreneurial ecosystem, as it was a Licence Raj — unless you had money, you couldn’t get a licence, without which you couldn’t start a business.

Entrepreneurial success was not based on investors, valuation, growth and market share; it was based on cashflow. At the end of the month, if you had enough money to handle expenses, pay salaries to your employees and take home some yourself, you were deemed successful. If not, you were a failure.

Cashflow was king. This was both good and bad. Good because life was really simple, and since we were bootstrapped, we were not answerable to anybody. Bad because the situation then was not optimal for building great companies.

After founding and exiting four ventures — IT&T, CustomerAsset, Marketics and TutorVista — my wife Meena and I started GrowthStory, a venture builder platform in 2011, which has promoted start-ups such as Portea Medical, BigBasket, HomeLane, BlueStone, FreshMenu and Housejoy.

In total, GrowthStory has promoted 14 ideas, and with this I have transitioned into parallel entrepreneurship — we are the promoters of start-ups, the idea is ours, we come up with a business plan, and my house is the first registered office. Then, we look for co-founders to run and execute the idea.

In the case of BigBasket, we knew that we need a team that understands groceries — and not e-commerce — very deeply. After we get the co-founders on board, we start the process of fund raising, while continuing to be responsible for strategy, marketing, technology oversight, digital marketing and actively working with the co-founders.

Why do you say your second venture was accidental?

When I was CEO of Wipro BT (Wipro/Bharti British Telecom), my wife Meena, and Ajay Row, my junior in IIM-C, were working on a business plan for a start-up, when dot-coms were the rage and people said the need for email support globally will skyrocket.

The plan was to set up an email customer support start-up that primarily targeted dot-com companies. I was roped in to help them flesh out their business plan in a start-up where Meena and Ajay were originally supposed to be co-founders. We sat up all night till 4 am in my house to finalise the plan.

One day, a VC from Mumbai showed interest in investing in the venture. Meena and Ajay asked me to join them to meet the VC. We went to Bombay and presented for the first time to a VC, who liked the plan but asked us who the CEO is. Both Meena and Ajay looked at me and spontaneously said I was the CEO because I was a CEO; whereas, neither of them had stints as CEOs before.

By the time we reached Bangalore, the VC had sent us the term sheet committing $3.3 million for 53 per cent of the company from e.ventures, a fund promoted by two of the biggest names in the business — SoftBank and Rupert Murdoch. That’s how CustomerAsset was born, one of the first BPO companies from India, which we later sold to ICICI. After this, entrepreneurship became a habit.

Is there a secret formula you have mastered to come up with winning start-up ideas?

Even today, we don’t have a formula for starting a venture, but there are some rules we follow. If there is a large pain point we can solve, or a big opportunity we can address, the chances of a start-up succeeding increases multi-fold.

The logic is simple. A start-up is very hard work, and the probability of success is very small. Less than 5 per cent of start-ups actually succeed big, less than 10 per cent stay alive and more than 85 per cent fail. Now, in gambling, those are very poor odds. The only way to compensate for poor odds is by ensuring that you take on a big gamble.

What I mean is, if there is a one-in-a-million chances of winning, you don’t want to go for a lottery that will give you ₹1,000 if you win. You want to go for one that will give you $100 million if you win, because the chances are very small. That is why one needs to solve for a big pain point or address a large opportunity.

Take BigBasket, BlueStone or Portea for example. Everyone needs groceries, jewellery and medical help, and they will pay for it. Food, clothing, housing, education, healthcare, entertainment are six large core sectors that everyone in India needs. In the food space, we have promoted FreshMenu, BigBasket, Growfit; in healthcare, we have promoted Portea.

Unlike Snapchat, Twitter and Facebook which are brilliant ideas, our ideas are boring and non-glamorous. However, in India, these ideas work, because people pay only when the pain point is large. Therefore, if you can solve these large pain points, you can monetise your boring idea.

Nobody expects a free doctor, free food or a free tutor. Indians pay for ‘must- haves’ and not for ‘good-to-have’ solutions. If I tell you how to increase your life expectancy or how to avoid diabetes, you will not pay me even ₹1. But if you have a toothache, you will pay me to get rid of it. Therefore, entrepreneurs must focus on large sectors and big pain points.

What do the next five years hold for entrepreneurs of consumer internet firms?

I am very bullish about the next 5-10 years. The Indian start-up entrepreneurial story is at a very unique chapter now. All the ducks are neatly aligned in a row, like never before. We will see big transformative start-ups that are magical, unbelievable, almost like science fiction because of some tectonic shifts that have happened in the last two years.

For instance, demonetisation forced people to adopt digital payments like never before with autowallahs, paanwallahs and dhabawallahs using Paytm. Reliance Jio and its other private competitors have made data bandwidth in India the cheapest in the world. People who have no toilets or TVs at home have mobile phones, and are consuming mobile internet. We are talking about 300 million people getting access to hours of mobile data, with which they are constantly engaged.

India Stack, UPI, BHIM, payment wallets, etc, have made it possible to reach people in remote corners of the country, opening up big opportunities for B2C and B2B start-ups to build valuable companies across sectors. This includes agriculture, where small-ticket crop insurance can be sold to farmers to cover harvest season by sending him a mobile payment link.

There is huge potential in vernacular video alone where songs and movies for ₹5/10/20 can be sold. Large businesses can be built using smartphones, internet and data, catering to the next 300 million, completely underserved rural population — be it content, entertainment, vernacular, education, healthcare or agriculture.

Government as a user and purchaser is another huge opportunity, as it is a large buyer.

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Published on January 27, 2019
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