Friday, July 27, 2007

Mahesh Murthy $ Prahlad Kakkar: They said it all !!! (Repost)

REPOST: Since Internet Explorer fails to show the earlier post properly, the post has been reposted here without any formatting.
Firefox users: Read here

So while I was wondering of 'Why I am doing MBA?', Mahesh Murthy & Prahlad Kakkar happen to come to the campus to deliver talks in Ascent'07, an e-cell initiative.

Mahesh Murthy:
His talk was primarily focused on why should one go for his own venture and how to go about it? Primarily an interactive session, he talked about his journey in brief and emphasized mainly on the minimal barriers to entrepreneurship and focused the discussion to promote entrepreneurship amongst students.

On Advertising
Against the widely accepted notion of advertising as a tool to benefit a business, Mahesh was straight forward in saying that all the expenses on advertisements are actually a waste of money and only companies who cannot innovate need to spend on the advertisement. His basic line of reasoning was that if the product can be differentiated from a competitors product, no expense on advertisement is required except to facilitate "Word of mouth publicity".
As for instance, he took the example of Pepsi and Coke(the two companies with max advertisement cost), he said that since these companies cannot innovate much as far as user experience etc. is concerned, they have no option left but to spend on advertisements.

On Opportunity Cost
What is the one biggest factor stopping people from becoming entrepreneurs? It is the thought when they start calculating the opportunity cost of their starting their own venture and look at the short term certain losses and long term highly uncertain(certain to the condition of survival but that is a big 'if') benefits.

On "The lesser money you have to start with, the more successful you will be"
This kind of follows from the previous point of opportunity cost plus the "greater dedication" due to lesser security. Take an example of successful businessmen and you'll find a very surprising pattern there. A large number of Generation 1 businessmen had very little money to start off with plus they had almost non-existent backup plan(Plan-B as what learned people do suggest). Not very difficult to get an example with Dhirubhai Ambani belonging to the same league. Is it a mere coincidence? Probably not.
With no backup plan comes insecurity, that brings along a greater dedication and devotion to the venture. With no backup plan and low starting amount, the feeling of "not much to lose" takes a high(Low opportunity cost)

so Mahesh was very clear while he said, "If you plan to start a venture, make sure you don't have a Plan-B. There is no need to feel secure while making a decision. Let every decision be "the" decision of your life.

On Entry Strategy
"I have an idea worth so-and-so but how do i enter the market?": This statement is one of the most useless statement under the sun.
Note that your idea is worth nothing. You need an idea to start but it is the implementation that is worth it.

On Working Years & The Expected Returns in Long Term
"You enter the industry as an employee, make handsome amount in initial years, good amounts in later years. But if you enter the industry as an employer, you make pennies during initial years, good amount afterwards and great amounts then afterwards."
(Note: Great=Good* 10 to even Good*100 or even more)
You people are all 20 odds and you have around 50 years of work-life remaining.
Take your call!!!

On Unsuccessful Ventures
So is entrepreneurship an all sweet sweet story? definitely not.
out of every 100 ventures, 4 are successful. of these 4, only 2 make newspaper headlines. So the sweet part is just 2% of the story. "But also note that no entrepreneur die of unemployment"

On Need of a Team
One of the biggest challenge in starting your own venture is that you tend to feel lonely since you are the only one involved in this work. Plus if you succeed, it is all fine but if you fail, you gonna die alone!!!
So it is generally suggested to startup a venture in team. This, apart from the above two factors, also bring in the fact that the team may bring in more capital and sharing of ideas.

On Uselessness of VCs and Consultants
"Venture Capitalists and Consultants are most useless professions." Now this was totally unexpected. You wont expect such a statement from a venture capitalist but Mahesh meant it all when he said that. He explained, One, you don't need a lot of money to start a new venture, two, even if you don't have it, try and get it from the people you know like your family, your friends, other acquaintances. Why? Simple, as if you take the money from people you know you tend to feel a liability and along with that comes tendency to make it ASAP and return it back. Having taken any external amount, the liability reduces with the fact that the fear of failure if gone.
Similarly consultants are also useless. "They do not know anything. They do not have any solutions. If they had, they would have been in the business. They just get the solutions from one company and tell it to others, most of the times just fitting a solution which does not."

On Smaller and Larger Players
Who do you fear more? smaller players or the larger players?
If your answer is larger players, then I am sorry to say but you have not understood the game at all.
The larger players are least to be bothered about as most of the times they are complacent and rest of the times bureaucratic and inefficient. But on the other hand, smaller players are striving hard either to survive or to get into the league of bigger players. In either case, they pose a major threat as they strive to grow.

On the Paradox "I will work in an i-bank for 3-4 years(make money) and quit to start my own venture"
Laugh out loud when someone echo the above statement to you again.
It is really very simple. You enter a profession and you get stuck over there, not for one but for many reasons. One, the "opportunity cost" rises exponentially with passing time. Two, you get out of touch of the current happenings and trends in the sector. Three, you hold a position of respect in your earlier profession. .....

On Involving Employees into Ownership
I believe most of the people realize its importance and Mahesh just echoed the same.

Prahlad Kakkar:
The Ad-man with the hat was no different today. His talk was supposed to be a story of his life as an entrepreneur, although most of the time he talked about cons of doing an MBA and focused on following the dream/passion/hobbies and supported it all with his own example citing reasons for him venturing into advertisements, scuba diving, cigar and restaurant business. Although i would say some of his reasons appeared to be out of place and not the actual reasons, but if for the time being and with not much background knowledge, let us assume he said it right, then it was nothing but chasing his hobbies, with no priority at all to money.

On Rational v/s Instinct and its Effects on Decision-Making:
You enter a B-School and you are told from day-1 that the world is rational. Assume rational behaviour says eco. Prof. Probability prof. tells you how to make calculations to get to a rational decision. Marketing Prof. assumes a rational market.
But this is what differentiates a manager from a creative person.
If you start evaluating your instinctive idea on rational scale, more are the chances that you end up scraping off the idea. The instinctive idea is your creative self but the rational idea likes a more treadmill task and hence the conflict is bound to happen.

On Various Advertisements
Most of the advertisements that are being created today are from MBAs and hence are more of routine ads. Most of the advertisements companies have a well defined advertisement template which defines when product name should appear and for how long, when credits should appear, what are the different techniques,... and the advertisement making gets reduced to the task of fitting in different pieces together.
He personally was very upset with the state of advertisement industry these days.
Nonetheless he showed certain great ads to make us realize what he actually meant.

On Following the Hobbies/ Importance of assion
This is something he focused really a lot on. In fact, he stressed a lot on the fact that all his ventures are actually his hobbies. Take for an example, Cigar, he said he liked it a lot and hence thought of consuming it for free so setup his own company. Scuba diving, it was very expensive and he liked it so he started his own training school to do it for free.
Though I was not very convinced with these last set of arguments but still, with no data to counter it, I would rather accept it and believe that all these ventures are actually his hobbies. Anyways, it gives me a reason to follow my dreams as well.

So Now after these sessions, the situation has gone worse. Now it is not "Why am I doing MBA?" rather it gets to "Why does anyone do MBA?", which Mahesh partly answered in his talk, "If everyone is an employer, where do we find the employee?"

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