Leap of Faith

Feb 22, 2010 | Coverage in The Financial Express


Leap of faith
Chanpreet Khurana
Posted online: Feb 14, 2010 at 0005 hrs
Recruiters are still a bit skittish, but this year’s MBA passouts are hoping to tide over the challenges of a competitive job market. With business schools across the country set to roll out final placement sessions over the next few weeks, thousands of graduating MBAs are keeping their fingers crossed. The Indian Institute of Management, Ahmedabad (IIM-A), launched its placement season on Saturday, and IIM Bangalore and IIM Calcutta are planning to follow suit in the first week of March.

The placement process, the number and quality of job offers, the highest remuneration and the best global offer will occupy column inches over the next couple of months. But if history is any guide, there will be a small but gritty group of students who will want to launch their own ventures.

One such, Chaitanya Jha, 23, is brimming with enthusiasm. Jha is one of the 17 students in a batch of 326 at the Management Development Institute (MDI), Gurgaon, who have opted out of placements this year. Jha says he began experimenting with Chocomishthan, which manufactures and sells customised, handmade chocolates, after his first year at
MDI. “The bug (to become an entrepreneur) was always there and the experience of the past one year has given me confidence,” he explains. But working with childhood friends was also a pull, he adds.

Is Jha making the right move by plunging into entrepreneurship right after B-school? Entrepreneurs with an MBA qualification—in short, people who have already been there and done that—have a mixed bag of advice for these wannabe businessmen.

Now or later?

Tarun Matta, a 2003-batch alumnus of IIM-Indore and founder of IIMjobs.com, thinks it may be a tad risky for a fresh business school graduate to launch a venture. “It’s probably not the right time to start a company. Most people who graduate from a business school have a limited work experience of one or two years, or maybe three at the most for the IIMs,” he says.

When Matta graduated from IIM-Indore, he was sure he would one day start his own company. “It was just a romantic thought at the time. I wasn’t sure what it was going to be or when and how I would do it,” Matta reveals, adding, “My first step was to do a self-analysis— what skills I had and what skills I needed to acquire to start out on my own.”

And he did just that by working for around six years, mostly with start-ups, to gain confidence and build a nest egg for himself before he took the plunge. His last stint was with RockeTalk, a mobile-based social entertainment company. But Matta is not all pessimistic. “This is not to say a start-up launched by a fresh graduate will never work,” Matta admits in response to a hint about successful projects launched by entrepreneurs such as Vardan Kabra, the creator of Fountainhead School, Surat. But there are others like Matta who would caution against harbouring romantic notions about entrepreneurship.

Rajjat Gulati, a 28-year-old IIM-A alumnus, is one. “Starting a venture of your own doesn’t necessarily make you the boss. Your bank owns you, your customers own you.” Here is his story: Three years back, Gulati quit his job with a leading lubricants maker in Mumbai and came to Delhi with just the desire to start a venture of his own. He interned with a restaurant chain, reviewing concepts, working in the kitchen, interfacing with customers and even buried himself in some marketing consulting work before he and his business partner and IIM-A batchmate Nikesh Aggarwal finally launched their own cafe, F5-Refresh, in October last year. But Gulati still moonlights at an MBA coaching institute as a math instructor.

The hardships of entrepreneurship notwithstanding, Gulati says he does not plan to go back to a job. He emphasises that when one decides to go down one’s own way, one shouldn’t worry about a Plan B. Fountainhead School’s Kabra would agree with that statement. Also an alumnus of IIM-A, Kabra says he doesn’t regret his decision to turn down the job offer
made to him by Procter & Gamble in 2004 after his summer internship with the consumer products company.

“The initial six-seven months after IIM were hard. While at IIM, a group of 10-11 of us would discuss ideas for a start-up. The idea to set up a school began there,” Kabra explains. With an initial capital of Rs 13-14 lakh, contributed by family and batchmate Ankita Diwekar, now his wife, he first set up a preschool. “Only six students showed up at the school on Day 1. By the end of the first year, we had 50 children enrolled,” he says.

And how did he convince parents to send their children to Fountainhead School? “We put up a hoarding, sent out pamphlets and conducted workshops with parents to communicate our philosophy and what we were trying to do. Initially, few parents who came for the workshops enrolled their children at the preschool. But it gained momentum as word spread and people saw we were delivering on what we were saying,” he says. From a class of six preschoolers in 2005, Kabra’s school has now grown to a combined strength of around 700 students. The senior school has 43 faculty members for 450 children, and the student-teacher ratio at the preschool is also a healthy 12:1.

Fuel: ambition and contacts

Despite conflicting views on whether a fresh graduate has the right attributes to start a company straightaway, there is a common thread in Kabra’s and Matta’s entrepreneurial stories. Both depended on personal experience and that of people around them to develop their business ideas. Kabra says the idea of a school that would focus on learning rather than grading students appealed to him because he felt that the schools he attended had been unable to unlock his own full potential.

Similarly, Matta first thought of launching a job portal that listed openings specifically for MBAs from top business schools when his own experience and that of his friends and acquaintances pointed to a lacuna in the space. When his friends, also B-school graduates, complained of diffused searches on bigger job portals or having to rely on unstructured panels for job openings, Matta saw a clear business opportunity. “I knew there was a market for a dedicated job portal for business school graduates, and the niche helped us make inroads into what is a difficult market to penetrate otherwise.”

He started IIMjobs with his own savings, and says the company is already making money. “Last year we grew by 700%,” he says, and goes on to add that a disappointing B-school placement season and a low base the previous year helped his company to post this growth rate. His advice to aspiring entrepreneurs: “Don’t focus on raising the money first, focus
on the problem that you are trying to solve and for whom.”

Laura A Parkin, Executive Director, National Entrepreneurship Network (NEN), agrees. “Go out to find your customers even before you develop a project or a product. Find out how much they would be willing to pay for it,” she says. Not surprisingly, Parkin has in the past launched four companies and is a former venture capitalist.

While Gulati and Kabra may have managed early breakthroughs, it wasn’t easy. In Gulati’s case, he met a former schoolmate in the foods and beverages industry who helped him get an internship. And Kabra says he had a lot of support from his wife and Sunil Handa, a professor at IIM-A.

Calling it quits

Another management graduate, Yash Vardhan Chamria, from the Indian School of Business (ISB), Hyderabad, recounts his stressful experience as an entrepreneur. In 2005, he had already made up his mind to launch an airfreight exchange business. He worked for a year at pharmaceutical firm Nicholas Piramal after ISB, and in February 2007 launched CargoX. He took the help of his cousin brother and the two pooled in around Rs 5 lakh to get the project off the ground.

“The initial months were very exciting. In our first month we already had clients with typical transaction size of Rs 50,000-Rs 1 lakh. We made 2% on each transaction. But operational difficulties started creeping in. For instance, a client in Mumbai wanted us to fly over from Kolkata to handle his business and we just weren’t making enough money to justify that kind of expense,” he says.

Chamria even approached venture capitalists for funding so he could scale up and tap the markets in Delhi and Mumbai. Two new partners, Laxman Mandayam and Amarnath Kalekalan, joined the firm at a later stage. The trio then developed a new programme to offer online services in not just airfreight exchange but also road transport. Chamria says a deal with a leading venture capitalist fell through at an advanced stage because of issues regarding equity share.

“The venture was barely making money. We could just meet the expenses. It was a stressful period for the family,” says Chamria. After devoting three years to it, he pulled out of the venture and is now working as assistant vice-president of special projects at a leading infrastructure finance company.

In hindsight, Chamria thinks he may have entered the business too soon. “The partners did not have industry experience. I was a finance person and the other two partners were from a technology background. It was just an innovative idea,” says Chamria. “For funding, venture capitalists ask for a proven business model.” But Chamria points out that CargoX,
which is now being managed by Kalekalan, “has clients and a lot of potential”. Chamria discusses a growing trend of corporate houses incubating new businesses and adds that if he launches yet another venture, it will be under the aegis of a corporate organisation.

Says Parkin, who comes across many aspiring entrepreneurs, “Young people need to balance two seemingly contradictory qualities. They need to be passionate about their business idea and at the same time be open to abandoning it. Entrepreneurship is a process, and failure is a part of the learning.” The key, she explains, is to keep a
close watch on what customers want and be prepared to tweak the business idea to suit that requirement.


She says that while the “power to create something out of nothing” is a great driving force, blind enthusiasm is not enough to succeed. “It will take longer than you think it will,” she cautions. “You’ve got to love what you do. An entrepreneurial venture defines you in a way that a job does not,” advises Parkin.

Financial Express : Leap of faith http://www.financialexpress.com/printer/news/579394/