Posts Tagged ‘Business’
India Inc. loses again: Jet Airways vs Employees
On 15th Oct, Jet Airways took a decision to retrench about 1900 employees (800 had already been asked to leave with another 1100 on the line). Obviously the decision was not personal and was taken to help the company battle the profitability and sustenance woes.
With all the media hype and popular delusions about the upcoming recession and job losses, the entire world went into a frenzy. From news channels to blogs to twitter to phone calls to SMSes, everyone had opinions. Opinions on how to save jobs to finding new ones to saving money in case you are retrenched by your company.
Employees obviously protested, spoke to political parties, Mr. Thackery even asked Jet to reconsider and company was held to ransom by MNS, CITU, Aviation Industry Employees Union and I dont know who all for this retrenchment.
I expected the company to stay confident and justify the move. Surprisingly, they did not. Infact, Jet Airways gave up and called back all the sacked employees. People touted this as the victory of morality, common mans’ win, employees rights and other such things. I beg to differ. In my humble opinion, India Inc lost again. A company was yet again held to ransom and was made to take a decision that does not do any shareholder any good. If I was a Jet Airways shareholder, I would have asked them how could they roll back retrenchment. How could they not work towards enhancing the shareholder value? How could they take decisions that were not in favor of the business.
Naresh Goel said that he was unaware of the decision. Makes me wonder what kind of management runs the company that forgets to update the Chairman about such a big decision. And was Mr. Goel deaf and dumb to have not heard all the news reports and noises? Mr. Goel clearly separated himself from the top management of the company and put the entire blame on them.
Obviously sacked employees would cry. There would be heart burns. Political parties would go any length to get free publicity and aligning themselves with causes. Politicians would have opinions. However, capitalist need to be firm and confident. A business owner needs to show confidence in the decisions made by him and his company. I find it absolutely ridiculous to first let go these many employees and then blame everything on the top management. I should ideally be writing this post criticizing media and politicians but with one move, Mr. Goel has lost all respect what-so-ever I had for him.
With the recent controversy around Tata and its Nano project, this comes as yet another rude shock to the business fraternity. We are clearly sending out signals that conducting business in India is getting more and more difficult. I do not want to pump in hard work and time and effort to create a company and then see it being forced to take decisions that are irrational and populist in nature. As an entrepreneur, I am skeptic. And I am scared to even think about creating businesses.
I ask why. India asks Why.
Originally written for Mutiny.in. Posted here.
Why choose entrepreneurship
I wrote this for my Alumni Magazine – Footprints. A lot of things might be out of context for few people but the essence would hold true. I would love to have feedback on this. Please do write in if you feel strongly about something.
Why choose entrepreneurship
How do you define entrepreneurship? For me, an entrepreneur is a person who takes some initiative, hoping to change things around him (and in process change things for himself). An entrepreneur is a person who has a risk appetite. An entrepreneur is someone who does not mind venturing into the unknown territory (and in process feed his insatiable hunger). And finally an entrepreneur is someone who wants to stand out, and values his thought and independence of actions (more than straddling with the mediocrity in routine tasks).
With this broad a definition, every around us could be an entrepreneur. From a vegetable seller to a professor to doctor to a home-tutor to a student to a parent to a toddler to an oldie, everyone is an entrepreneur. From a time when you were a kid, you took initiative by trying to walk. When you went to the school for the first time, you showed exemplary courage (some kids do cry when they first goto school). When you first drove that vehicle, you knew that you might get hurt but still wanted to do it. When you decided to take CAT and choose a business school, you were experimenting with your career (lets be honest, we dint do MBA because we always felt like becoming managers – we did because there were no other options or everyone else around us was doing it).
So why is it that when it comes to real life businesses, we loose this innate initiative taking ability and the spirit just fizzles out? Why do we get comfortable in work and seek solace in regular jobs and we don’t want to take risks? Is it because of our traditional outlook of having a secure government job that we keep on till retirement? Or is it because everyone around us seems satisfied and happy with their jobs and we simply want to live life like them? Content and happy. What else could it be?
Lets change track and for the sake of simplicity and clarity I will talk about three phases of life (“inspired” from the movie Pursuit of Happyness). These are
- The Rats in Blindfold Race
- Sundials in Shades
- Round Pegs in Square Holes
Flashback to end of 2005 and beginning of 2006. The entire campus was abuzz with placement talks. Everyone was making their personal placement strategies in their secret hideouts. Some people were working alone. Some worked in pairs. Some found comfort in groups. You could spot flurry of activity outside library, computer center and rooms of academic toppers. Suddenly, new friendships were being forged. All enmities were forgotten. All broken walls were mended. All gaps were bridged. Everyone wanted to be friends with placement committee guys. Everyone wanted to master the art of cracking interviews and getting placed on that magic Slot 0 on Day 0.
Some people decided to revise whatever they had studied in 4 semesters so far (read as going over the notes made by the likes of Mansi, Supreeta, Manushree that have been painstakingly photocopied during these last 4 semesters, some people decided to study hard henceforth (this essentially meant mugging Kotler. Again), some people decided to start reading newspaper (and finally avail the facilities at the library), some people decided to polish their GD and PI skills (this essentially meant doing nothing at all), some people were oblivious to placement were busy partying and playing CS (these people were amongst the lower rungs of the CGPA ladder and were assured of Day 3 placement).
All of us were sure of one thing and one thing only. We wanted a placement with a prestigious company on a package of not less than 7 lakhs (this was the ACTUAL average salary when my batch was passing out). And that is all that mattered at that point in time. There were people who were very clear in their minds and thoughts about what kind of jobs they wanted and where did they see themselves in five years. They had all answers to all the questions that an interviewer could have had. Even the clueless ones wanted to make their careers in big corporations, rising to the top of ladder. All of us wanted to work hard for rest of our lives. For someone else. For peanuts. Doing the same thing for rest of our lives. Boring. Mundane. Regular. And still worse, trying to justify that whatever we are doing is fun.
There is nothing wrong with doing what the entire world is doing. After all we have interesting jobs that pay well, that makes families and friends proud, that elevates social status, that puts career on a fast-track path to that corner office on top floor, that gives a security of a pension post retirement. It’s a perfectly understandable that one chases dreams like second and third homes in suburbs, cars and membership to executive clubs. After all life is supposed to be enjoyed to the fullest. Work hard and party harder should be the mantra to live life by. We were doing what everyone was doing. We were like Rats in Blindfold Race running because everyone else is running and never for a single instant thinking why the race.
And this is where the problem is. We get so comfortable in our cocoons that we can’t imagine a life outside that. We become so comfortable doing our jobs that we simply don’t want to challenge the status quo. We become so myopic with our visions that we cant see what can be done. We become pragmatic and logical and hence we refute things even before we try.
Imagine if everyone in world became like that. There would be no new innovations and businesses, no Internet, no communication equipment, no electric bulb, no wheel, no fire, no evolution and no us. We would be in sleeping in caves or hanging from trees if the few daring ones dint venture out.
It was an entrepreneur who first decided to step out in the dark and for some reason decided to rub two dried wooden sticks against each other to discover fire. It was his curiosity that drove him to use two sticks. It was an entrepreneur who thought that a round object might be easier to move. He worked hard on making it round. It was an entrepreneur who first wondered why is that apples fall on the ground and not rise to the sky. It was use of common sense coupled with clarity of thought. It was an entrepreneur trying to solve a problem who invented the telephone and the Internet. It was an entrepreneur who thought a PC on everyone’s desk could make lives much more simple and better. It was vision and a belief in that vision.
We, proud mandevians have all that it takes – curiosity, hard-working attitude, bag full of common sense, vision, conviction and finally problem solving skills. In fact we label ourselves as change masters. And thus wondering why is that we have very few entrepreneurs amongst us? What is stopping us? Arent we being what Benjamin Franklin called Sundials in Shade?
More I think about it, more I realize that it’s because of two things. Foremost is the avoidance of risk and second is pure laziness.
Most of the ones reading this would have reached a stage where they would be married, possibly with a kid, a home loan to pay off, a very stable routine job where we would be yelling on our subordinates and would be on receiving end of our bosses whims. Life would be really rosy. No major worries on any front and everything going on as planned. Probably we guys look at entrepreneurship as something that would shake things up. Make things unpredictable. Add a lot of unnecessary work, effort and emotions in life. And other such factors. And since we are MBAs, we will do a cost-benefit analysis. The analysis would prove that leaving a comfortable job is not required at all. And thus many interesting minds remain hidden in the layers of hierarchy.
Coming to the end and, a very famous advertisement from Apple Computers sums it very well. It says
“Here’s to the crazy ones.
The misfits.
The rebels.
The troublemakers.
The round pegs in the square holes.
The ones who see things differently.
They’re not fond of rules.
And they have no respect for the status quo.
You can quote them, disagree with them, glorify or vilify them.
About the only thing you can’t do is ignore them.
Because they change things.
They push the human race forward.
And while some see them as the crazy ones,
We see genius.
Because the people who are crazy enough to think
they can change the world,
Are the ones who do.”
And as this ad says, its about a choice between mediocrity and expertise, a regular guy and an exceptional talent, working for someone else and working for yourself. We need to choose. We need to choose life. We need to choose sides. Which side would you choose?
Saurabh Garg is from batch of 2006. He is an aspiring entrepreneur working on couple of ideas around computer gaming and communities. He updates his thoughts at http://saurabhgarg.com/thoughts when he is not thinking of ways to take over the world.
Call Taxi India
This is a post on Radio Taxi business in India. I am using Meru just as an example to understand the economics of business. There are simple back of an envelop calculations and hope someone gives me a better insight on this business. The numbers look too tempting to be real.
I was traveling with Meru yesterday (27th July 2008) and I happened to strike a conversation with the driver. During our conversation, he gave me following stats
- No of Meru taxis on Mumbai roads: 800
- No of taxis by EOY in Mumbai: 1300
- Average occupancy: 100% in peak-hours and 80%+ in non-peak hours
- Peak Hours: 7AM to 10AM and 6PM to 10PM. He said that its impossible to get a Meru Cab in peak hours. This vindicates the business model and demand in the market for these call cabs.
- Average Fare: Rs. 15 per KM. Compare this with regular taxis in Mumbai. A regular taxi is Rs. 13 per KM and a premium of Rs. 2 is not very steep considering the convenience and comfort of a call cab.
With these numbers the business sure makes a lot of sense. Only deterrents I can think of are:
- High fixed cost of acquiring taxis. Not a huge problem. They can take long term loans from banks or PE players. They can also acquire more cabs by using the part-ownership model (where each driver pools in some money to own the taxi and Meru is just a brand name).
- Setup of call center. Obviously each taxi needs to have a GPS device and a two-way radio. There has to be a way to connect the cab with the nearest available free taxi. And since this is a pure service offering, call center is very important.
- Capped Potential: The earnings is directly proportional to number of taxis on the road. The scope of innovating on income stream is really low. At max you can use your taxi as an advertising medium.
- Traffic rules and regulations: Registration with transport authorities in India is a very cumbersome and long process. Although this is a one-time stumbling block, companies would have to divert a lot of attention there initially.
- What else? Am I missing something here?
Business Sense
- I would want to what percentage of bookings is done for immediate travel and what percentage is booked at least 2 hours in advance. If the pre-planned travel is very high, then these companies can better utilize their capacities and go for some kind of planning.
- I would also want to know what percentage of bookings is for large corporates (say institutional). Because moment Meru gets institutional bookings, they can again manage the fleet better and can be assured of certain minimum number of bookings.
Future
- Is their a merit in getting into contracts with airlines, hotels,
coporate parks etc to manage their taxi services? Again its of those
things where you convert huge one time capex for companies into on-demand opex. - What innovations are possible so as to maximize the utilization of fleet and make more money from the same number of taxis? Would a thing like car-pooling work with radio taxis? Say junta going from Andheri to Town everyday can pool a Meru.
- What else? Please send in your suggestions.
From the Meru website, I could get following details
- After Mumbai, Meru is now available in Hyderabad, Bangalore and Delhi. As I said earlier also, the business potential is vindicated by simple calculations.
- India Value Fund has already invested in Meru. Although I am no fortune teller, but I can easily foresee a handsome return on the investment. And I can’t understand why the Penguin effect is absent in this industry. If I had money, I would have loved to get into this business. Obviously at the right time and right price.
Other Radio Taxi Players in India
If anyone can help me connect to someone with Meru or any other radio cab owners/managers, please drop a line. I will keep on updating this post on my wiki at s4ur4bh.pbwiki.com.
More links
Image Credits: Andertho via Flickr
Disclaimer: I am assuming that the occupancy rates given by that driver are correct and the taxi service would have similar occupancy numbers in other cities
Aviation Industry and OTA in India
In India, we have a couple of famous full service carriers (Jet Airways, Kingfisher Airlines) and a plethora of no frills or low cost operators (Spicejet, Air Deccan, Go Air, Indigo). And all of these players have been in troubled waters for quite some time now.
The industry has been reeling with rising fuel costs, rising manpower costs, airport charges, taxes, consumer awareness and complaints, regulatory hurdles etc. In fact because of all these, none of the operators in India is making money. We have already seen the mergers and buyout games begin.
Of all operators, the low cost carriers are the worst hit. Especially the smaller ones. Simply because they were anyways operating on low margins and revenues from value added services were absent. And since they are not big, they cant extract efficiencies of scale by sharing ground staff and airport or negotiating prices from their vendors etc.
Then there is another industry that has mushroomed in last few years. The online ticketing industry. We have so many players now in the OTA market that even keeping a count is really difficult. So how do these companies make money? They get certain amount of brokerage (if I can take the liberties of using that term) for every ticket they sell. The number varies from operator to operator and airline to airline but its in the range of 1% to 3%. Then they make money by offering hotel bookings, weekend getaways, travel packages etc. But they still make most of their money from commission from airlines on tickets sold. With rising prices, airlines are now pushing these OTAs to the wall and cutting their margins as well. Does this signify slow and eventual death of OTAs? I don’t know and I can’t predict but next few months would be very interesting.
Apart from OTA, the newly privatized airports in the country are also facing the heat. They have pumped in so much money to create huge “world-class” structures that its not even funny. Their sources of revenues are fees from the airlines and other services like parking, restaurants, advertising etc. With drop in number of travelers, revenue from all these value added things would come down. How would these sustain? Traditional economics says that a toll gate owner or a broker would always make money as long as the number of passengers (or transactions) is high. In the long run, airports shouldn’t loose money but again you never know. Its hard to predict.
Coming back to airlines and their problems, they acted like a typical producer in a producer driven economy. They hiked prices of their tickets. So much so that these prices are now comparable to full service operators. A lot of people look at this as a very good move. They argue that with higher fares, the revenues would also increase. I beg to differ.
Lets divert from the debate and try to see a traveler in action. A traveler can choose a low cost carrier, lug all his bags with him, sit in really cramped seats with his legs folded, pay for every thing he uses in the plane (except for the loo – and paid loo can be a good idea :D) and come out of the travel feeling harrowed and hassled. This traveler could alternatively pick a full service carrier, have a valet help him with bags, relax with enough leg room on the aircraft, have a choice of three course meal on the aircraft, pampered by the staff of the airline and get to his destination feeling good about his travel.
Again back to the debate, in my opinion if fares for no frills carriers are comparable to full service carriers, any rational person would opt for service and comfort levels offered by full service operators. And with limited choices, fare hike by low cost operators mean more business for full service operators.
And this is not all. As flying gets out of the reach of the common man, more and more travel would happen for business reasons (leisure and casual air travel would reduce substantially) and these fliers would choose full service operators. This would translate into lesser capacity utilization for low cost operators. And empty seats means more losses for low cost operators.
What about full service carriers? With this hike, they might get better occupancy rates but how can they survive the spiraling costs and dwindling margins?
And for how long can these airlines operate on losses? What about the investors? Air Sahara (acquired by Jet Airways) and Air Deccan (merged with Kingfisher) have already succumbed to their losses and growth costs. Are there more in pipeline? What is in it for existing players?
Airline operators have never ever made money anywhere in the world. Will it be different in India? Can there be solutions? Can they come up with more creative ways of making money (like charging for check-in luggage)?
Whats your take?
Good Bye Bill Gates
William Henry Gates 3, better known as Bill Gates is retiring from active duty at Microsoft today. This marks an end of an era. An era where a seemingly new line of business was created by Bill Gates and Microsoft. An era that symbolized new generation entrepreneurs taking over the world of business. An era that gave hope to millions of small time businessesmen, dreamers that its actually right to dream and chase them. An era when two young men can produce something that can rule the world some day. An era that envisioned a computer on every desktop. An era that changed the way we work and think. An era that made sure the world is on a rapid path to development.
For me, a computer is probably the most important invention after light bulb and telephone. It made tedious tasks lot easier, faster and fun. This is where Bill Gates played an important role. Gates made sure that a computer is accessible by even an ordinary man. He was the first person to have created an operating system that makes a computer easy to use as a personal tool. And rest as they say, is history.
From a humble beginning, Microsoft went on to become a huge giant in software space. They have an entire suite of productivity and office products. Its fantastic that a company commands a valuation of more than USD 250 bn and most of their revenues come from something that is non-tangible. Compare this with other businesses where at major chunk of valuation comes from tangible and fixed assets. For me, Microsoft is truly the first company that created an empire just on the pillars of information and productivity.
Obviously Bill Gates couldn’t have worked forever at Microsoft and he had to go at some point in time. What’s good about them is that he is leaving at a time when businesses are doing fairly well, obviously there are lots of challenges. Then they have been planning a succession for almost 2 years.
Now that Bill Gates is gone, what happens to Microsoft? I think they already see the company in uints like software, services, gaming and Internet. If at all I was at Microsoft, I would look it as a company that enables people to be more productive (Windows, Office), enables people to connect (FB, Internet, MSN), enables people to entertain themselves (xBox and gaming division) and enables companies to work better (developer applications, programming languages etc.). Moment you start thinking on these lines, there is so much more than your company can be rather than just another software company. You suddenly are playing on a different level altogether.
For a lot of people Bill Gates stands for control, closed-systems, authority and monopoly. Everyone is free to have opinions and if I could defend Mr. Gates, I will use only one line. That Bill Gates is trying to run a business. Everything that he has done was to make sure that his business grows. For me, Bill Gates stands for Entrepreneurship, Business Acumen, Vision, Execution and a Great Mind. Would love to pick his brain some day.
Bill, you will be missed.
Image Credits: Flickr
Business Idea: Branded Entertainment
Cast Away is an awesome movie. You see it and you come back with two things. One, Tom Hanks survives the lonely island. And Two, he is a FedEx employee and he delivers that Wilson ball in the end.
Then there is a book called How Starbucks saved my life. You read the book and you again remember two things. One is making tough decisions. And two how Starbucks helped a guy discover what he wanted in life.
Both these, the movie and the book are awesome pieces of entertainment. People have seen these, talked about these and recommended these to their friends. On a standalone basis both of them are pieces of art. And most probably, both were original productions created by individuals without any influence by the company they talk about. And this is where the idea comes. What if both of them were sponsored and paid by the company they talk about?
I have been thinking about a company that creates these branded entertainment products for money. Obviously there are limitations and issues but none that stops the company from flourishing. Please note that this is very different from product placements in media. This is creating the product first and then inserting the brand.
Business Need: Advertising as we know it, would be dead very soon. People would start filtering advertisements automatically and recommendations from influences would start loosing meaning. then what? The solution lies in creating media around brand. Think of The Truman Show done at a smaller scale.
Possible Entertainment Options: This could be a very very long list. Starting with movies, television shows, radio shows to print media (newspaper, magazines, books, travelogues etc.) to interactive media (Internet, blogs, websites), others (computer games, hotspots, retail). The list is long.
Problem Areas: There are quite a few. Biggest one is obsolescence. Once an entertainment outlet is used for a brand, it becomes difficult to innovate and use the same medium for another brand. Then there are other petty issues like it being very expensive for brands. We are talking about professional book writers, movie makers, gaming companies working on the brand. We can explore cheaper options like blogs and websites but how many consumers of a brand like say Rin, be on Internet? They would be on TV for sure.
A lot more thought needs to go in place. I have about 4 more pages of random thoughts and comments. If anyone is interesting in talking more about it, please let me know and I shall share those docs.
Any opinions? thoughts?
The New New Thing 
