August 29, 2016
Monday is a day I love to hate; But the one that went by was an exception, thanks to a fun breakfast tete-a-tete, for Altacit Global’s newsletter, with R. Narayanan at the Verandah at Madras Club in Chennai.
A walk down the memory lane
R. Narayanan, the current President of TiE Chennai and Angel Investor at The Chennai Angels, has donned many different hats through his professional career. An alumnus of IIM-Calcutta, Narayanan is passionate about mentoring and guiding entrepreneurs through the critical early phase of their journeys. Here, he distils for us some subtle, yet very interesting lessons he’s learnt over the years.
Naru, as he is popularly called, is a central part of Chennai’s now burgeoning entrepreneurship ecosystem. Prior to turning entrepreneur, he spent a few years at Coca Cola India, Nestle and Rediffusion Advertising. After his professional stint, he started a company called Gum India, which held over 60% market share in its time. (For those of us who grew up in the 90s, we’ve heard of ‘Big Fun’ bubble gum and its cricket trump cards; that was a product of Gum India). The company had its own set of challenges, and Naru then setup a processed food company called Indian Food fermentations, that franchised the brand to deliver ‘masala dosa’ to customers through an automatic dispensing machine. Over 250 franchises had been setup in Mumbai, but this business too had its share of problems, as Naru admits openly.
Over the next few years, Naru became a Director at 20:20 Media, a leading PR firm that was eventually sold to Public is Group’s MSL. Currently, Naru runs Nett 10 Digital, a marketing consulting firm, in addition to making investments as an angel investor, both personally and through The Chennai Angels network. He’s an active mentor and advisor to several of his portfolio companies.
Naru, who has invested in over 18 startups so far, is extremely passionate about mentoring early-stage entrepreneurs. Usually, he starts his day by visiting or analysing an investee company. Currently, the one that is demanding his attention is TicketGoose.com, a bus ticketing company. Naru also helps connect his entrepreneurs with other investors and/or professionals who can benefit from each other.
On how he identifies companies to invest in, Naru says intuition is one of the key factors: “If I like the project idea and the presentation, I do some reference checks and go ahead,” he says.
During our breakfast chat, he culls out for us some subtle lessons he’s learnt over the years and observations of India’s startup ecosystem that are crucial to understand.
Naru believes that, ideally, money should chase ideas but, in today’s startup ecosystem in India, it’s the reverse. He brings in an example from what is now called the “food-tech” sector. He asks, what is technology all about when it comes to food? “This is delivery of food, right” questions Naru.
He believes that eating out a meal is very expensive in India and one pays for the ambience. “We are talking about getting that delivered home. People might do it occasionally and I don’t think there is a big market there,” says he. But by increasing the investment in these food-tech companies, the impression given to a young entrepreneur is that this is a potentially successful business opportunity. So with a minor differentiation, several people wanted to enter the food-tech sector (it has probably come down now). “This is what I call ‘idea chasing money’,” says Naru, referring to how emerging entrepreneurs are pursuing ideas, simply because they think venture money is available there.
In Naru’s first entrepreneurial venture (Gum India), he realized, early on, the importance of building scale and building an organization.
As an entrepreneur, there are some jobs that you’ve to take care of personally, while for others you delegate, but you review progress. “As an entrepreneur, if you don’t have a process to supervise people, the job will never get done,” he says. The other crucial element he learnt also revolves around ensuring high quality service delivery and measuring this regularly.
Naru also admits that he had to close down the company and that “was a nightmare” in India, and he’s hoping that the law changes to make this process much easier.
Naru believes that most entrepreneurs focus on their strengths, do well in certain aspects of their business, but ignore several critical aspects.
He says, “It is important to learn each and every aspect that makes your business. As an entrepreneur you are answerable across the table and it is important to realize that and take action.”
Once you become an entrepreneur, one of the first things you learn is that you are separated from your professional past. “When you are a senior professional in a known company, for a period of time, people approach you, talk to you because of your association with a brand. But the day you step out and become an entrepreneur, some people may stop reaching out. For an entrepreneur, it is important to accept this and move on. “The day I stepped out of Nestle and started making bubble gums, people stopped looking at me,” he says, tongue-in-cheek.
With the benefit of hindsight, Naru admits that he was too much of an optimist and that probably hurt some of his businesses. “Always plan adequately for what will and can happen if things don’t go as per plan,” he says.
Of course, the outcome of an action is not always in your control. Markets can change, and there are many factors beyond one’s control. But, as an entrepreneur, I’d say, plan your actions but also realize that no amount of planning can guarantee an outcome.
Those who don’t have the stomach for tumultuous changes daily should never enter the entrepreneurial world. “If you are prepared for a roller coaster ride –the heights of elation and depths of depression – on a daily basis, then there is nothing like entrepreneurship. If you enjoy courting disaster, this is for you,” he says with a laugh.
Popular opinion is that in today’s digital world, it is a winner takes all market.
However, Naru thinks otherwise. He believes that the rule of three applies. That is, three companies will hold about, say, 70 per cent of the market, and they will co-exist. The competition will ensure quality of service and especially for a market like India, this is crucial.
Also, Naru emphasises on the importance of traditional media as part of the marketing mix. “The value and value chain of advertising over the digital medium is being captured by the googles and the facebooks of this world. It is highly transactional. However, the money spent is not giving long-term brand value and therefore, it is important to have a mix of traditional media and digital media to be able to move forward,” he says.
In typical Naru style, he says, “There is a written law and then, there is the unwritten law. Sometimes, people are blissfully ignoring the written law, and in cases of unwritten laws – say, sexual harassment, which are just getting written – people are breaking it without even being aware.” Having said that, it is crucial for entrepreneurs to think through all aspects – written and unwritten – and have a legal plan.
Another observation is that, in the early stage, Contracts are often not legalised and people are arriving at agreements over a few e-mails. I would even say, most early-stage entrepreneurs don’t have much idea of how law is practiced in this country. It is crucial to understand and importantly, interpret the law clearly, and entrepreneurs must pay attention to the finer details of any contract.
RECOGNITION FOR ALTACIT GLOBAL: Awards Received’
We’re excited to announce to that Altacit Global, has won the following awards/recognitions recently:
We have published the below two books as resources for companies, professionals and students:
IP Acquisition in India, LexisNexis
Intellectual Property Risk Management, LexisNexis