The triple returns magic of biomass power and other l

Ms Mahua Acharya(just Google her for details) heads the strategy division of a clean energy consulting firm. While giving a guest lecture for the students of the elective Carbon Finance in Sep-11, she recounted some interesting experiences and points, which I thought was worth sharing. The advantage of industry professionals like her, is that they bring a much required practical perspective, which was evident in her talk about the economics of biomass plants.

• Investors routinely demand 20%+ IRRs and hence it is difficult to attract investments in even conventional power without subsidies and incentives. However, biomass is an exception.
• Biomass revenue streams:-It can get an assured feed in tariff, revenue from selling slurry to fertilizer plants and also CER credits. Of course, it also has an option between higher feed in traiff and CER credits, but most companies opt for the latter
• Design in the benefits: She noted that most companies are now seeking expert advice at the design stage itself to maximize their benefits
• True strategy is about building entry barriers for others. The example of biomass plants in  Bihar where they got contiguous licenses for ensuring raw material supply, was given. That barrier was needed, and they created other barriers like using hard to use rice husk fuel and areas where others would fear to step in(setting up in Bihar unlike Gujarat). That all worked in their favour.
• Ideal projects solve a pressing problem profitably. Using chicken shit(sorry..poultry litter) to  generate power is on in Haryana, with the same triple benefit. That solves pressing environmental issues of smells and land pollution, which makes farmers happy, and they should rationally be willing to supply it for free or even pay tipping fee! Still, to ensure their cooperation,farmers supplying litter get a share of the profits above threshold limit. 

Very interesting points, and if/when I consider investing in physical assets, this is certainly an option!

Kiran Sethi's talk during Ideafest at IIM Ahmedabad

Kiran Sethi may be better known as Geet Sethi's better half, but she is a renowned educationist in her own right, who also has given a TED talk on  the subject of making children believe that they can make a difference. She has leveraged her degree in design from NID(Ahmedabad)-India's premier design school-to design a school and curriculum that makes a difference. I attended the talk expecting that something new would be there, and I was not disappointed. Below are some key takeaways from the talk.

1. She walks the talk:-A 6yr old student of her(the daughter of an IIM faculty member) was also attending the talk. So Kiran spoke to her for quite some time, and then gave her the bouquet as well as her momento to play with, which touched me-that level of sensitivity for the kid's likes. 
2. The power of observation:-Its human patterns that create a problem but we never pause to observe them . So we solve the wrong problems and wonder why change never happens. Riverside is like the lab school, where the teachers see the practice after learning the theory
3. The Power of sharing:-She deplored the practice of top educational institutions not sharing their best practices(that is how knowledge is created and shared), and intends to put her own learnings on open source platforms for sharing
4. How NID helped her:-NID helped convince her that even her opinion mattered, and she also learnt that a story needed to be TOLD rather than SOLD. 
5. Do Good and do well:-This is her mantra for the school, and the focus of her curriculum. She aims at teaching empathy/excellence/engagement beyond the typical maths/science/literature. 
6. Bringing change:- We are quick to change our minds but when we persist with an idea long enough, then change happens
7. The power of student creativity-business plan for icecream:-A team of students built an entire marketing plan including pricing/promotion for a Christmas launch of an icrecream in Dec11 at Ahmedabad, which was a hit. The press release here details it(http://www.schoolriverside.com/sidenode.aspx?&sidenode=13) but what is impressive is the fact that even bschool students would have been proud of this product launch! 
8. Scaling up:-She claims that this not only works in small schools(teacher/student ratio of 7) but also bigger schools of even 50:1 ratios and all. The rationale is that best practices can be replicated. But given the dismal Indian education scene, I'm a bit sceptical on that. 
9. Education focus:-She noticed a shift in dialogue/debate shifting from ensuring access to schools; to quality; and then to retention(will they stay in school for 15yrs). Also, going by the trend of top/key jobs, if we continue focusing content rather than skills, then are we preparing children for jobs that don’t exist? Education should teach how to navigate life AND how to shape it, and influence it.
10. Diversity of models:- She acknowledges that India needs multiple diverse models ASAP, not only that of Riverside. 
11. Teachers:-She feels that teachers should also spend professional development time. Of course, IMO, that would take away the cushy perception of teaching, so that meets with resistance. Still, that is important as an idea since every other profession has it, so why not teaching

 

Anand Lunia's talk during Ideafest held at IIM Ahmedabad

Mr Anand Lunia, a seed fund MD gave a talk during the Ideafest at IIM Ahmedabad. It was highly interactive with a high level of audience participation. Some points I gleaned from the talk were

1.     His own entrepreneurial experience:- He had the computer based education quite early in India, but faced issues and later sold out in 2005 to  Sequia Capital. But after that, computer Based Education(CBE) really exploded and Educomp benefited despite having entered the market later. From that, he learnt the lesson of hanging in till the time comes.

2.      About skin in the game:-If you need VC money to start, you’ll mostly not get it. They want to see your commitment first, be it by using your own seed capital or quitting your job etc

3.      The Redbus story:-Most of us must have heard of Redbus or even booked bus tickers through it. As an initial investor in that, Anand recounted an interesting story about how the initial idea of the promoter was to help bus operators manage inventory through software, but then a TIE(The Indus Entrepreneurs) Bangalore chapter member advised them to chuck that idea and directly retail tickets via a  website. Convinced by that idea, Anand’s fund invested Rs 2.5crore initially to help get the site started, but it got off slowly, selling just 100 tickets/day for first year, before reaching its present scale of around 10,000 tickets/day today. The founder’s biggest USP is how he built and maintained relations with his vendors-the bus operators who had to look beyond travel agent(fixed quota etc). For that, he wore lungi(dressed like them), attended their functions, helped them out with ideas etc and won their trust, thereby he cracked the tough nut operators. All this is not  fancy stuff and happens at back end,  but such doers are exactly the kind of entrepreneur they want to back. And as the business model is so robust, very little marketing spend needed, just some search engine spend to attract customers to the site. To their credit, Redbus has resisted the temptation to extend beyond to hotels/pop corn until they meet their full coverage of buses, given that there is so much more to be done. Anand praises the promoter’s focus/tenacity/filter out outside noise and take his own decision.

4.      Carwale:- As an investor at that site also, Anand gave their example that the entrepreneurs even had to enroll in English speaking classes and all, but that did not deter them from starting a good site.

5.      Bschool degree as entry barrier: Speaking from personal experience, he compared the MBA degree to golden handcuffs, as one not only abandons a well paying job post graduation, but also experience the effect of seeing your peers race past in short term. Hence, his opinion was that the best thing to sell a company and then chill out in bschool for 2yrs till you decide what to do next.

6.       Selling your business idea:-Commenting on the information overload faced by a VC, he said that cold calls/direct meetings/referrals much more useful. He even said that for feedback, force your way into someone’s room for frank feedback-else it will be boilerplate .

7.      About assembling the startup team:-Very few people would want to quit jobs in established companies and blot their CVs by joining a startups. To get such people with the required passion is even more difficult. Hence, the CEO is usually all the positions whom he can’t hire, which makes it even more importance to be an allrounder, or to assemble a good team before-hand.

8.      About how MBA helped in entrepreneurship and VC:- In his first startup, he feels it actually hurt on balance because the rational thinking made him go against his eventually right hut feel. But then, he could assemble 16 people from IIML in 3mths post funding(most of whom stuck on later), so that may relationship matters. He felt that in MBA, we hardly pay attention to the basic courses like HR, accounting, law, costing, MIS etc, but that comes back to bite you when you learn something by trial and error, and then realize that you learnt it in Bschool years ago! However, those professions need gut feel and MBA is the opposite.

9.      Some General tips for Entrepreneurs:-

                           i.          After getting money, there gets an implicit pressure to produce numbers fast. Entrepreneur should be able to resist that, and be disciplined about launch etc.

                          ii.          Instead of worrying about initial valuation of first venture(which is a black box anyway), build chemistry/relationships with the decision makers, and seek funds from those whom you trust.

                         iii.          First mover advantage cannot be taken for granted. For example, carwale was the 2^nd player, when the initial portal had raised 10x money of carwale’s funding, and yet flopped.

Jagdeep Chhokar's views on Indian governance and political parties

 Prof Jagdeep made some interesting points during his 1hr talk at IIM-A during the Ideafest here, organized by two student clubs Entre and Public Policy. He made some good points, which I reproduce below to the best of my ability.

• Government size debate is really a misnomer, we should be concerned whether it governs appropriately, not about its size only. 
• Where does the democracy begin and where it ends? High command…political parties are the pillars..should they not be democratic themselves in internal functioning=>choosing candidates at party member level should be done instead of at high command level
•   Political parties are like corporate-single objective functions(profits aka winning seats). PSR and CSR..whatever it takes to win elections=>why is funding high? 
•  MM Singh has lied only once-declaring himself as Guwhati resident for RS elections
•  If you don’t care don’t crib
•  If you don’t vote, don’t think you are not participating in the electrical process..especially in South India where ballots stuffed between 3pm-4pm. At best, you can say you participate unconsciously  not that you don’t participate.
•  Fundamental duties are never pointed towards(not even right to vote)-time to make voting a fundamental duty in my opinion. 
• When asked about critical mass, he said that if no one heeds your call, you walk alone…his view on need for critical mass! 
•  Success has many fathers-so doing something breeds legitimacy
•  Ideas come but if you sit and wait for the big idea, it may not..hence do what you can in your individual capacity
•  What does it mean to be an active, informed and contributing citizen? Civics education is to be realigned from school

·       At the end of the talk, he said that politics is too important a business to be left to experts..the same is true for war as well(too important to be left to generals). That lesson is important for us.

IIM Ahmedabad not leveraging its entreprenuership potential

While speaking on angel investing, Anil Joshi of Mumbai Angels mentioned the view point. First, it seemed heresy to opine that on campus, but he elaborated his view, which my anecdotal evidence validates.  We have the CIIE(Centre for Innovation and Entrepreneurship) on campus, but it has a very low profile among students. The center reportedly(as per informed sources) adopts the pull approach(interested students approach it) rather than the push principle of publicity and creating awareness.                                                      

• CIIE-one of earliest incubation centres:It is of some use, as the few students who have used the service tell me.
• Brand:- IIMA broadband connection can be used for many things(albeit restricted by firewells) but can really help for mining data and downloading reports.
  
• Infrastructure on campus
• Knowledge:-Great library and electronic knowledge resources.
• IT:-An unlimited broadband connection. IIMA broadband connection can be used for many things(albeit restricted by firewells) but can really help for mining data and downloading reports. It would cost a lot outside.
• Student ideas:-Student projects/brainstorming could help reality check.
• Visiting faculty:-many would be happy to spend 2-3hrs over a cup of coffee. 
• Marketing research fairs:-This is held annually(Insight) and is a great chance for people to validate their hypothesis/ideas.
• Other institutes
• LD:-Also helpful
• MICA:-Could help for marketing/PR, via C2C connections and projects

All great points and valid. If all the above resources are pooled in and used, then there could be a sea change. But I think that the pull approach is helpful. Where there is a will, there is a way. If someone really wants to pursue his idea, then all the above ways could conspire together and help him

Talk by Mr.Anil Joshi of Mumbai Angels

As part of the Ideafest organized by two IIM Ahmedabad Student Clubs(Entre and Public Policy), Mr Anil Joshi came to campus today. He have a PPT based talk for 30min followed by 30min Q&A session. Some main highlights of his talk which I gathered are below

·        Pitfalls in new Ventures

o   Objective evaluation-see with rose tinted glasses!

o   No real insight-not knowing their target customers well.

o   Inadequate understanding of technical requirements-shop floor experience not well.  

o   Poor financial understanding-cash management/working capital management

o   Legal issues ignorance-especially IPR when people go global.

·        Why Product failure

o   Poor timing-someone opening SMS based venture when market dying due to data growth

o   Design-product poor design(Android phones for example-my observation)

o   Distribution-especially for

o   Unclear business-if your strategy B2C and you target B2B, it’s a mismatch

o   One customer dependence-my observation-Infosys/GE episode.

·        Financial Failure recipe

o   Undercapitalize-have cash for time before you can figure out your first customer

o   Debt too early-Inmobile($500K investment, concept of search through SMS mode-changed concept in 6months-but 3^rd idea by that time co down to last 20% and no money to execute that idea of smart phone advertising-so the guy used his personal credit card)-success story but  risky.

o   VC relations-each get 10 bplans/day and limited bandwidth-LP relations, investee companies etc. hence his advice is referrals and networking

·        Typical problems

o   Cash flow most often/crucial.

o   Leverage your own network for sales

o   Social Media solution for PR issues?

o   His view that never go for half cooked(my view is that most can go like Google) and ensure back end(customer service etc)

o   Never hesitate to seek help from others for functions(making financial projections etc). Especially must for quarterly returns under tax laws.

·        Making your business plan standout in the clutter

o   Team

o   Define your market

o   Demystify your market in non technical market

o   Market Size

o   IP involved

o   Execution Ability/Past record

o   BE realistic(example 1Cr-100Cr in2yrs is ambitious)

·      Its not banks/VCs who fund your business, it is customers. So never ignore them.

·       Opening doors not only for customers, but also vendors/marketing help..hence angel money termed as smart money can help for B2C also.

·      Business plans don’t get funded people get funded. Don't ever forget that.

·      New trends of ventures-specific verticals like education, optical, health, finance etc, gaming, e-learning, healthcare