Monday, October 01, 2007

Enlightenment by Prof. Sunil Handa

Prof. Sunil Handa(SH) from IIM-Ahmedabad visited IIM-Calcutta recently and I had an opportunity to attend one of his sessions. Considering the fact that I am myself a bit oriented to start something of my own, I liked the session. One may argue that most of the points these people (entrepreneurs) talk about are just the same .. hmm.. may be.. but there is a lot to make a difference. One good point may change your outlook drastically and something similar happened to me after this session.

On Exit options:
The session started with example of one of his student from IIM-Ahmedabad who had started a company of his own but had recently decided to sell it off!! Prof. claimed that this guy sold his soul.
As per SH, there is no exit option for an entrepreneur and he outrightly rejected the idea of selling a venture after say 5 years of establishing it. I had been fascinated by the idea of creating and selling off a business before restructuring period (I believe after some 5-6 years, processes etc. in a business need to be restructured coz by this time others also find it worthy to get into it..so selling off at this point would mean avoiding the restructuring cost and efforts, which can be further used in setting up something else, plus you get a healthy deal for current business at such a time). Although SH was of different opinion and he commented that
1.) One tends to get an emotional bonding with the current business,
2.) Rarely do people start a second venture as they get too old by the time they plan to sell off first one
3.) Even is one gets past the emotional bonding and timing factor, one tends to lose good people. You may plan to switch over your business (coz that is your business) but the employees may not be ready to take that risk and would be resistant to change.

This made me think of the establish-and-sell philosophy again, especially the third point which is most crucial as what i think. Anyways, I need to evaluate that well.

On VCs:
"So, what would you do once you sell off your venture?"
"I would start a new one" is a typical answer. How many do you think do that? Hardly anyone, SH claimed. The factors include the social pressures and the family responsibilities. Add to it reduced appetite for risk as you grow old.
"If you quit your own child(company), you will end up being only an uncle(Venture Capitalist), where you will just guide and help and wish other's children(ventures you fund) do well. Most of their(VC's) days go in praying for other's ventures to get successful"

On Diluting Equity:
"If you wish to start a business, do you need a lot of money or you may as well get it from Venture Capitalists?"
If you think you may start a business by borrowing money from VCs, you probably need to relook at the mathematics of doing so. If you succeed, you will end up paying hefty premiums and if you fail, you may still end up paying more than the Principal amount!! Then how does it make any economic sense..
Those who still might be thinking of it being useful, I suggest reading the post on session by Mahesh Murthy.

Assertiveness, Struggle, No shy factor:
"When I used to travel in Public roadways buses, I used to end up traveling most of the times standing. Then I realised this is not how it gonna work and I learnt the art of finding and making space to sit. I started asking people to shift even if there was no place and most of the times ended up getting some place to sit.- That was my first lesson into entrepreneurship" I learned to be assertive. I struggled and I was no longer shy of asking for place.
This is what is required to establish a business. If you think everything will just go right, it wont.. you need to make it right.

Impact of Contacts in Initial Phase:
Another way of getting initial success is a shortcut- to use your contacts. But as soon as you use contacts to get any favour, you lose the race. Nothing comes for free in this world!! If you ask for a favour today, you'll be asked to repay in some form or other tomorrow and it wont end there. Since you got a favour in initial days of struggle, you would feel indebted for long and you would have to make compromises at some point due to these favours/contacts/people/..

Struggle in Initial Phase:
So the alternate way is to struggle!! People, if given option, would love to skip this part but this is most important phase one goes through and this is the phase that basically lays the foundation for rest of the career.
There was a bird, which was trying to come out of the egg-shell. She was fluttering her wings and trying desperately to break the shell. A man walking beside saw this and out of his genuine concern and care, broke the egg-shell with a knife. The man was happy as he thought he had done a good job, helping the bird out of the shell. The bird, on the other hand, could never fly in her life coz her wings were just not strong enough to fly.
It is not difficult to understand why the bird could never fly!! So you decide by yourself whether you want to break the shell yourself or do you want an external support!!

Upto-date Info of Related and Unrelated streams:
It is not uncommon in people to stop reading/analysing once they get success. However, SH suggested that one should always keep the habit of reading and be knowledgeable about things related directly or indirectly or not even related to his/her business. This is helpful when one needs to adopt methodologies/techniques/benefits from outside the business. He took an example of his own venture which in no way related to plastic industry, and he could make a benefit of a few lakhs using that. I dont remember the example exactly and it would not be appropriate to quote it wrong but it was something on the lines that huge amount of excise and tax could be saved by purchasing a machinery in parts due to differential tax rates for plastic and other material.
The essence of the point was that one must keep himself up-to date on different topics, regardless of whether they are directly influencing your business or not. Who knows when they come handy!!

On Consultants:
To keep it short, I just quote his words,"Consultants are people who wont tell you anything unless asked, even if they know something is going wrong!!"
Without having any first hand knowledge of this, I think it is difficult for me to make up any perception based on this point.

On Ethics:
Everyone claims ethics in business are very important but no one spells it so clearly!! Everyone talks of setting an example in front of juniors but no one says how exactly it makes a difference. He took example of a manufacturer trying to save some tax amount by manipulating accounts and stealthily selling some of the goods. The same person ends up pursuing his employees so that the news is not leaked publicly and in case that happens..Brand Image tarnishes!!
Precisely why people do not feel proud in saying that they work in Reliance!!

Skills One must Learn at IIMs:
Leadership skills
Negotiating skills
Delegating skills

On Partnership:
Reiterating what MM said, SH also said it is better to have partners for the moral and support and better to start in smaller teams. A larger team is bound to fail. Although, he discarded that the two partners need to be good friends from college days and things like that. According to him, a better team would have people with only some understanding of each other. More understanding may result in you taking other for granted, which might not be the case always. But still, more the understanding between partners the better it is.
Idea or partner?
An idea is worth nothing unless implemented, said MM.
Unless you have a good partner, it is difficult to succeed in a venture, said SH.
Clearly both of them had an emphasis of a good partner first, someone who is equally, if not more, passionate about the venture.
Moreover, SH made a claim that no one would be working on their first idea for long, no matter how attractive it may seem to them in starting. It is only the third or fourth idea that people end up doing!

Not to forget,
Irrespective of what you may think, the partnership doesnt last forever and which sometimes may be an emotionally testing times but that is how it is!!

To end with a globe statement, you need 'Midas touch' to succeed in a business more than anything else.

"To get an extraordinary person is difficult but to make ordinary people extraordinary is simple.": Some great philosopher.

12 comments:

Aaditya Jain said...

Well written. We were also calling Prof Handa, so came across your article.

AbhiTaneja said...

Thanks for the comment.

Well to be frank, his lecture is an experience worth going through and I would recommend you not to miss out on any opportunity whatsoever to call him to your campus.

And don't forget to tell me when you come up with a post on that lecture. [:)]

Gaurav Agarwal said...

hey... can you provid esome info on how we can invite proff.. sunil handa for a workshop

Er said...

Hi..
Do you have a comprehensive profile of Mr. Sunil Handa. Please send it to talktoakb@gmail.com if possible.

Regards
Akhil Bajaj
BITS Pilani

Connected..Yet Disconnected said...

I want to be able to post this to delicious.. please provide an option

akash said...

Great post Abhi!

This post by SH reminds me a lot of a must-read book I read by Yogesh Chabria called Invest The Happionaire Way.

I picked it up to learn about investing, but found out so much more.

Am waiting for Cash The Crash now.

Pradeep said...

Nice post. Am a PGP1 student at IIMA and SH has cult status over here. A single course of his called LEM in second year gets bid for 170-180 points (out of total 200 points allotted in one term) i.e. students allot the remaining 20-30 points for 5-6 other courses!

AbhiTaneja said...

@Ananth (ConnectedYetDisconnected) : Facility to add to Delicious added. Thanks for the feedback.

@Gaurav: Mr. Handa is very much an approachable person and am sure, he would readily accept your invitation if your intentions are good.

@Er: Sorry, I do not have any written profile of Mr. Handa, although I have read a lot about him. You can browse Internet for the required info. Quite a lot information is available online.

@Akash: I havent gone through the book yet but now given your recommendation, would definitely try to grab a copy soon.

@Pradeep: Yeah I know and all I can tell you is that no matter what you think, it is definitely worth bidding all the points for his courses.

Wondergal said...

Heyy could u plzz give me Prof Sunil Handa's Email id or ph no. I need it urgently. I have met him personally twice but lost his contact info. Would be a great favour.

Praveen said...

Hi Abhi..was searchig for SH..saw ur blog and must say u write very well...i read Stay Hungry Stay Foolish(if u have not do it ASAP) since then became a great fan of SH...could not meet him yet but looking forward for it.Thinking about something of my own since long but could not move ahead of the idea stage...writing here ,coz i feel we are sailing in same boat(???)...u r few steps ahead to me....may be ur guidence can help me to cover those steps and advance further

Gautam N said...

Superb post!! Many thanks to share..

Anonymous said...

After attending Mr. Sunil Handa's average LEM lectures (that are more focused on his life story rather than lessons) and few interactions, in my opinion he is more of luck than true entrepreneur. I guess he was able to ride the entrepreneur wave due to his brother. After 2-3 interactions you will realize he becomes verbose and doesn't have a base of himself.

Nothing much to learn from him. By the way, he is not professor @ IIMA. He will hardly visit few times to discuss his so called past glorious life. I FEEL HE IS VERY LONELY INSIDE.

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