4. Ashok Korwarashok@yourgrowthcatalyst.com Independent management consultant based in Pune Professor at IIM-A, 1990-2000 Strategic Advisor to Chairman of Polaris Software, 2000 – 2007 Division VP at EDS, Dallas Ph.D. – UCLA B. Tech, IIT Bombay
5. Anand Deshpandeanand@persistent.co.in Founder, Chairman and Managing DirectorPersistent Systems Limited. Persistent is a 4800 person; Rs. 600 Crore NSE/BSE listed Company. Techie background B. Tech IIT Kharagpur, MS, Ph.D. Indiana Universtityall in Computer Science (Databases) http://www.linkedin.com/in/ananddeshpande
6. Believe in nothing, no matter where you read it, or who said it, no matter if I said it, unless it agrees with your own reason and your own common sense. Gautam Buddha
7. Growing a business is a matter of choice. Before deciding to grow, be sure you know why you’re doing it.
8. What is Rs. 50 Crores? When you visualize, you materialize!
9. Rs. 50 Crores Rs. 50,00,00,000 Rs. 500,000,000 Rs. 500 Million Rs. 5 x 108
11. Infosys started in 1981Rs. 5 Crore in 1990-91 and Rs. 50 Crore in 1994-95. Polaris started in 1990Rs. 50 Crores in 1998-99 Persistent started in 1990 Rs. 10 Crores in 1999-00 and Rs. 50 Crores in 2002-03
12. From Rs. 10 Crores to Rs. 50 Crores:How fast will you get there? 50 10 time
22. Mental blinders we put on ourselves ... But also the most common dominant constraint.. Policy Constraints ...
23. Policies as Constraints.. .. I will hire only people from IIT ? .. every project must earn 40% margin? .. I can trust only Indians in the field? .. I can’t pay more than.. …CEO must see every customer communication …people must be kept busy all the time..
24. Identifying Constraints.. Depends on the business model.. Use common-sense, it does not take statistical analysis! Thought experiment: if throughput goes up by an order of magnitude (10x) where will my system break down first? If I strengthen x-function, will throughput go up?
33. To Grow.. Vertical positioning is always better than horizontal Except in very early stage – technology enthusiasts.
34. Case Study Company Documentum. $2 million revenue for 3 years in a row Document management technology Potential: all people in all companies who manage complex documents
35. What did Documentum do? Focus on pharma companies, management of regulatory affairs. Applications to be submitted to over 100 regulatory bodies around the world! Takes one year to submit an application! (not to get it approved, to submit it!) Documents come from clinical studies, written reports, mails, databases…
36. With whose support? Technology departments? No – content to work with existing vendors Function head and his bosses
37. In one year.. Demonstrated that problem could be solved Signed up 30 leading pharma companies’ regulatory affairs departments Revenue to $8 million $25 million the next year
41. “Simplified” Pencil Sharpener Open window (A) and fly kite (B). String (C) lifts small door (D) allowing moths (E) to escape and eat red flannel shirt (F). As weight of shirt becomes less, shoe (G) steps on switch (H) which heats electric iron (I) and burns hole in pants (J). Smoke (K) enters hole in tree (L), smoking out opossum (M) which jumps into basket (N), pulling rope (O) and lifting cage (P), allowing woodpecker (Q) to chew wood from pencil (R), exposing lead. Emergency knife (S) is always handy in case opossum or the woodpecker gets sick and can't work.
43. What business are we in? What are our competitive strengths and limitations? Do we have or can we develop a true market niche? What do we want to become in the long term? What is our strategy for competing effectively in our chosen markets and for achieving our long-term missions? What are the critical factors that will makes us successful or unsuccessful in achieving this long-term mission? What goals shall we set to improve our competitive effectiveness and organizational capabilities in each of these critical success areas?
44. Your 30 second pitch Framing: the market segment’s pain - : e.g. for BPOs who cant handle the complexity Framing: the product/service - : e.g. like leading workflow products But optimized for.. And I have the complete product/service
45. Your 30 second pitch Serving the same need as.. (in some other industry) Like.. Established Competitor, only better because.. Competitors are extremely useful for FRAMING!
52. What do you really need? You need a smalland ahungryteam that wants to go for it! 52
53. How you think is more important than what you know. Pick teammates for what they will do, not for what they have already done. 53
54. 54 The mountain does not give a damn about your resume. Without hunger, both skill and experience will remain in the base camp. There is nothing more dangerous than a moderate mountain. Only an ultimate mountain can forge an ultimate team. The only guidebook to your mountain is the one you will write. The best plan is the one that works.
55. Employee Stock Options are useful mechanisms as an incentive for attracting and retaining employees.
56. Vesting Plan 40% 30% 20% 10% ESOP Plan Basics Shares and Options Grant Price Exercise Price Gain Vesting Plan Cashless exercise Buy back – gain ESOP Trust 4 years
69. Do you really need the money? How do you plan to use it? Can you borrow from your customers?
70. VCs can be good for your business but understand their investment philosophy andmotivation
71. Beyond money.Be clear and upfront about what you are expecting from the VCs Attend Board Meetings Provide References – Business Personnel Help make understand industry best practices Freedom to operate No compete
72. Understand the Veto Rights VCs will Demand Board composition Change in management Changes in key resources Operational items – CAPEX / loans M&A Diversification Dividend above a certain level Appointment of Auditors – both statutory and internal
76. Exit is important. VC Funds have a time-frame. IPO Buy back Sale to third party with right of first refusal with Promoters Set criteria for exit and a formulae for valuation
Claw back / Anti Dilution Clauses – If company receives subsequent funding at lesser valuation, VC gets additional shares without making any additional payment to keep his valuation impactDrag Along / Tag Along Rights – VC can drag Promoter or Tag along with Promoter on share related transactions. First need to ensure VC’s transfer is completed at the same valuation, before Promoter can take up his.Restriction on Transfer - Lock – in of shares by Promoters as against free transferability by VC any time – this is inequitable clause.