What makes an Entrepreneur?
Are entrepreneurs born, developed or made?
Do they have it in them or do they learn it?
And what is this magic ‘it’ that everyone is talking about?
To get a taste of a successful entrepreneurial journey, we hitched on to Rohit Bansal, a big name in e-commerce. With Kunal Bahl, Rohit co-founded Snapdeal in February 2010. Pixr8 caught up with the man himself at StartUpGrind Startathon on 26 Aug at Gurgaon.
His story has lessons for all wannabe entrepreneurs – plan for success but be prepared to fail, take the shocks in your stride, be ready to dig in deep emotionally and financially, and of course, love what you do! Here is Rohit’s story.
Early Days of Rohit
Growing up in Malout, a town of 60–70K people in Punjab district, Rohit Bansal was an average small town kid. He belonged to a business family, attended the only English Medium School in town and spent time with his Dad after school in his fertiliser shop. Some people are born into the business, some grow up in business and some have business thrust upon them. In Rohit’s case, it was all three!
Lacking in exposure, the only career options in Malout were to have your own business or work in a bank. He bucked the trend, got good marks in his Class X and went to DPS RK Puram. At DPS, Rohit rubbed shoulders with brilliant minds and this gave him belief that he too could crack the IIT JEE – which he did.
DPS also gave him the opportunity to meet Kunal Bahl, his friend and co-founder of Snapdeal. Later Kunal went to Wharton, US, while Rohit studied Computer Science at IIT Delhi – but they kept in touch. They also shared a passion for entrepreneurship.
They both graduated in 2006 and picked up work, Kunal in US and Rohit at Delhi. In 2006 end, Kunal was in India for a wedding, on the sidelines of which they got discussing again of plans to start something of their own. They rejected the standard path of taking a loan, doing MBA, working to repay it and then start an enterprise. Instead, they decided to start right away. The advantage was of having zero liabilities, young and free minds and of course, if they failed, they could always get a job.
As soon as the wedding was wrapped up, they got together and discussed some ideas. Several ideas were considered, including an internet-based review website, a movie ticketing website etc. Finally, in end 2007, they left their jobs and took the plunge.
Funnily, the starting out was the easy part, it got interesting only later. They had nothing to lose; with a good education, they were not so badly off. They had no funding, only their saving of Rs 20 Lakhs between them.
Hits and Misses
What is interesting today is that what they started in 2007 has nothing to do with what they do now. Back then, they were convinced that they had the most unique and world-class idea. After 9 months of planning and deliberations, they brought out a coupon booklet in Jun 2008. Fantasising of long queues outside their office for the booklet – it HAD to be such a BIG hit – they didn’t want to run out of booklets and printed 50K of them.
Like most start-ups, they had not really thought through the idea – How to market the product? So they used their contacts and arranged for the booklet to be showcased in cafeterias of BPOs. They showed the product to 10 or 12 K people in the first week after launch – and sold 7 copies.
Then the reality set in and the first shock hit them. The first product bombed and took all their money with it. To recover the basic cost, they sold the booklet to banks and other companies at the basic price of printing. Looking back, they realise that they should not have taken so long and launched earlier. Also, they should have talked to the prospective consumers and their target market rather than feed off positive talk from each other.
However, they continued to adapt and change – moved to mobile coupons which was an SMS-based service. As long as it was free, the growth was phenomenal. Once it became paid, the decline was even more so! Lesson learnt – that people love to use things that they can’t touch, but they don’t want to pay for it.
The next product was a throw back in time and tech – a plastic card which you could carry and use for a discount. This attained success though not much since the consumer felt sure – he had a physical thing for which he was willing to pay.
Finally, Snapdeal arrived in Feb 2010, essentially an online version of the coupon business. Owing to the internet, the accessibility and reach was much larger. Many more could discover them and they could change the business model more often.
Starting out, Rohit feels, hiring the right people is important – and difficult. One skill which you would need is being able to convince people to follow your dream. To find the first five persons – they went to every friend, every contact. And convince them. They even had to convince their parents, who accompanied the employees to see where they were working. And they had to assure them that they would pay the salaries. All your degrees are useless at this stage, since your name is not well established. You just have to sit down and convince people to work with and for you.
They would have loved to get a mentor, some advice – this could have cut down the first four years of struggle and business transitions to maybe two or one. They could have also avoided basic mistakes. But back then, there were very few entrepreneurial companies in India and so mentors were also few. Things are so much better now.
When companies are new and young, they get too attached to their business model and don’t concentrate on success. It is essential to differentiate between the two. What really matters is whether you can build a successful enterprise or not. It does not matter if one business model worked or not.
Every large company has pivoted; Google, Apple have all changed the nature of business they were into.
Pivoting is, therefore, natural, common, and even essential, because what you are good at today may become irrelevant in a decade and you would need to adapt and change. Hence don’t get fixated to the business model, but look at what users want. You are not building for yourselves. You make a product for consumers. If they don’t like your product then what good is the business, model! One should also know when to pivot. Iterate quickly; fail or succeed fast. Iterate quickly and move on. Don’t waste too much time.
Decide!!! And go for it!
There is always a choice – on one hand is a secure, cushy, comfortable, well paid and stable job. On the other is the grind of entrepreneurship. Your gut instinct should point you in the right direction. In some ways, this decision is like asking a girl out – if you over think it, you’ll never do it. If you believe in it, get going. Too many deliberations would make you hesitate. Of course it may not work – but at least you would be satisfied that you gave it a good shot.
It is essential for entrepreneurs to get initial shocks, absorb them and move ahead. It is important to realise that as an entrepreneur, your emotional state would be a sine wave.
They thought they had the most phenomenal idea in Sep 2007, which bombed. Also, they thought they were unique and quickly realised that there were two other companies doing the same thing. So massive emotional fluctuations – you realise – are a way of life, nothing else changes in the world – you learn change and adapt.
One thing what really worked for them back then was that they persevered. Stick to your idea and venture for a few years. Don’t always think my job was much better, every month as an entrepreneur; I am losing my paycheck. Such negative thoughts do not help. All your energy goes into weighing these options.
When they started, they decided that for three years they would not think of these things and give their best shot to the company. They planned to keep their expenses very low and survive and stick with it even if they have zero sales.
That commitment is necessary and it works. Stick to it for a few years and give yourself time to iterate in different business models. If you keep trying different models, by the law of averages something will work. 10 ideas can’t all fail.
Hang On – Hold On
For the first two and a half years, they bootstrapped the company. Later they had some angel finance of 100,000 USD. The tough days are when you have to keep your employees motivated, knowing you can’t pay their next month’s salary.
The most defining moment was in 2009, when they had put in all their money, all of the angel fund and the company was left with 40 or 50 K in bank – and they had to pay 4 to 5 lakhs salary the next day. It was the make or break moment for them.
They took stock – between them, they had Rs 4 – 5 lakhs in the bank. Here they had two options. They could have said let’s get back to the security of a good job. Or they could have said, having come so far and put in so much, why save these last few lakhs – let’s put that in also.
Obviously, they did the latter. They wrote personal cheques for the salary of the staff – after which they were left with only Rs 23000 between then. They then raised a round of financing and then turned the corner. But that moment was one of self-realisation – which, in a way, an entrepreneurial journey always is. That moment told them that they really wanted to do it and go all the way. Also, when your team sees that happening, their own commitment and conviction increases and they also pitch in more.
Speak to the Consumer
In 2010, they were a coupon business. But even then, every day, they used to call consumers and ask them their opinion.
After the launch of Snapdeal, all of them used to call their friends and ask them to buy coupons – and also ask why they don’t buy coupons. The answers were insightful. One of Rohit’s friends, whom he called, asked him a basic question – “Why don’t you put a landline number on your Website? It gives people the confidence that there an actual office and address behind the website”.
They did that and it made a difference – they got a lot of calls on the landline. It assured the customers that this company would not run off with their money. So feedback is important.
Not much has changed in their attitude after success. A valuation of 5 Billion, a name in the top few e-commerce companies, but it is still a lot of fun. Busy, but fun. Early on Rohit realized that life is a matter of carrot and stick. One of these would always be pushing or pulling you. Hence, it is necessary what you do. Don’t quantify life and work balance in terms of hours. Don’t carry a huge feeling that you are making a big sacrifice for someone else.
Remember, being an entrepreneur is your choice, it is important to enjoy each day and challenge. You are not doing it for anyone else, you are doing it for yourself. No one in the world asked for you to be an entrepreneur – it’s your call. Feel happy about starting a company and if it doesn’t make you happy don’t do it.
Encouraging budding Start-Ups
Rohit and Kunal plan to invest in start-ups. They usually have two criteria for making the decision to invest. They should enjoy meeting the startup and vice versa. And, they should be able to understand what the plan of the startup is. They should be able to add value to work. If these issues are ironed out, they can work with the start up.
They like to invest in new companies – it keeps them in touch with youth and avoid feeling old and dated. They want to keep learning.
Younger entrepreneurs build and operate smarter companies that are agiler, more relevant for their generation. And they are able to learn from them.
They plan to continue on the same path. They still feel excited about – feel as if they are getting started. Excited about the number of people they are working with, the opportunities that lie ahead!
In India, the market opportunity is humongous. Just retail is estimated to be 600 billion of which only 1% is online. Given the retail infrastructure, e-commerce in India is poised to be far higher than any country in the world. I even estimate it to be worth 100 billion in the next 5 – 6 yrs.
Every country defines e-commerce in a different way. Amazon was different in USA, Ali Baba in China had a different model. You can learn from both, but e-commerce in India is different. In India, e-commerce is expanding in the era of mobile phones. That significantly changes the rules of the game. One monolithic platform would not work. You need an eco system of apps and platforms to interact with customers today
And so, Rohit’s inspirational and extremely endearing story would serve as a guide for all budding entrepreneurs! Have the faith and take the plunge. Pixr8 is ready to cover all your endeavours!