Book Notes - Stay Hungry Stay Foolish

Stay Hungry Stay Foolish
Rashmi Bansal

When I had started out my career, all such books *I am not sure to which genre they belong* were coming in from the west. Be it Jack Welch, Stephen Covey, Edward de Bono, Philip Kotler and the likes were cramming for the shelf spaces in Indian book stores - whether in a shop or on a railway platform. I could then find out two great books about Indian entrepreneurship by home grown author Gita Piramal, and it struck immediately to me that to succeed in India, one needs to study Indian businessmen and entrepreneurs. Then there were Shiv Khera, Shakuntala Devi etc. These industrious authors brought the much needed contemporary Indian writing from the days of R.M. Lala. I would rate this book by Rashmi Bansal in the same league. It has taken the enterprising Indian youth by instilling the thought that while in India; do as Indians do.

Here I bring you my notes from this perennial book:

Venkat Krishnan, GiveIndia

1. Nothing shapes your future as much as the house in which you are born.

2. When you go to convent school, you actually don't see the whole spectrum of people. It will be middle class dominated.

3. Books influenced- Communist Manifesto, George Orwell's 'Animal Farm'

4. I see myself as an instrument or tool that is available to society. And my choices should be guided by maximising the returns that i will give to the society. So i will not do something just because I like it, but because that is the best use of my time for the society's benefit.

5. Whenever you look beyond business, into the things that make a difference to the quality of our lives, we somehow think there's no need to apply scientific thought.

6. I think if there is passion in the environment, people pick it up.

7. It is the middle class who were the authors of the freedom struggle, not the rich, not the poor. Gandhi was spot on. I cry everytime I think of 15th august when all were celebrating freedom and he was in the middle of a village near Calcutta saying, 'Now is not the time to celebrate freedom. Now is the time to fight the next enemy that we have, which is religious intolerance'. What courage it takes for a guy to think like that!"

8. The poorest people give the most, as a percentage of income. This is true all over the world.

9. Why is that the tax rupee does not get used effectively? Because most of us look at taxes as a license to exist. We are paying taxes and telling the government, 'I don't care whether you are doing anything with this money or not, leave me alone'."

10. My advice to 'would be' entrepreneurs- nothing is perhaps a greater truism than the '3 year rule'- if you are able to hang in and survive for 3 years, you'll be up and able to hang in and survive for 3 years, you'll be up and running and by the fourth year, you will be better off as an entrepreneur than you'd have been in a job.
For '4 yrs+ old entrepreneurs'- I want advice FROM you on how to take yourself out of an institution and leave it better off without you than it is with you.
My advice for IIMA alumni- the IIMA qualification is the best possible 'income insurance' you can get in India today. So if at all there is anyone who can take risks with a low downside, it has to be you.

Anand Halve, Chlorophyll

1. Somebody else is going to run the agenda as long as you are not driving it.

2. Mohammed Khan of Enterprise said,"if you have pots of money, you don't need good advertising. You can just hurl enough advertising rupees at the customer, until almost in sheer panic, the customer gives up and says okay, I surrender".

3. Jay Chiat of Chiat Day (the agency which produced commercials for the likes of Apple and Nike) once said: "How big can we get before we get bad!"

4. Madan Bahal once said: 'you don't make big money by doing more work. You make big money by selling companies'.

5. Instead of per capita billing, we use 'per rupee manpower'. How productive is each rupee of manpower?, we ask.

6. Every decision is driven by the satisfaction levels as well as lifestyle desired by the entrepreneurs. It's a space they have created where they can just be, not forced to be.

7. We use three yardsticks and we know it is very unlikely that any project will fulfill all three. But let's hope for at least two in every project. If it's only one then it better be superlative on that one dimension. And the dimensions are: it must give us money, or it must give us fame, or it must give us great joy.

8. Reporting to your own conscience is the highest and most rewarding form of servitude. And you can even make a good living out of it.

9. Advice:
-follow your heart. (The brain can do many things, but only the heart can answer the meaningful questions of life)
-Think of intangibles you value first- and let them determine the tangibles. Steve Jobs and Michael Dell are driven by different intangibles... Figure out who you'd rather be.
- Don't defer your joy at a beach today, for some imagined future weekend in Acapulco- by the time that happens your diabetes may not let you enjoy the pina coladas.


- Money is not an end in itself. (Anu Aga, ex chairperson, Thermax, once said: "Profits are important but not the only thing... Without breathing, you and I can't live, but if you ask me what is the purpose of my life and if I say breathing, it is such a narrow way to define it.")
-create love and affection in your workplace. (Peope give up their lives for what they love but no one will do it for an EBITDA)

People and values
-Surround yourself with like minded people. You can't plan together, if the guys at the table are Gautam Buddha and Genghis Khan.
-Define your Do's and Don'ts before you start. Post facto, any act can be justified.
-No deal is worth losing your self-respect

The last word
-Finally, if you don't laugh enough, your busibness model is probably wrong.

SB Dangayach, Sintex

-It pays to push an idea ahead of its time if you genuinely believe it addresses a pain point with your customer.
- An entrepreneur must constantly play the role of 'trinity'. One one hand you have to realise which products are not working or declining and eventually get rid of those lines. Simultaneously you need something which can be big in the future.

Vijay Mahajan, Basix

- a space is where 'nothing is happening' is actually just what you need to do some serious soul searching.

- single most important quality you need to have and cultivate further is to get up and walk everytime you fall down.

- One has to persist in terms of operational difficulties.

- ...equally important ability one needs to cultivate is the ability to learn- from experience, critics, competitors, failures, summer trainees, mothers-in-law and from regulators. Expert knowledge is useful but increasingly has shorter shelf life. So what is permanent is the ability to understand a new situation and respond appropriately, using both learning from the past but also a fresh appreciation of the situation.

- Entrepreneurship Is widely misunderstood to be a personal trait. It is so, to some extent. But entrepreneurship is a social construction - it is a phenomenon where certain behaviors get expressed in certain individuals, due to the support of their 'eco system' - colleagues, family members, investors, regulators, competitors and customers. All of these interactions, cooked in the skull of the entrepreneur, make for the heady mix that all of you are after. So nurturing this eco-system and interacting with it are extremely important.

Deep Kalra,

Deep's story tells you that the path of entrepreneurship is a crooked one. You never know what lies around the next corner.
- Growth is a hydra headed monster with an endless appetite.
- Why take money from so many different people? Because different guys bring different things to the table. They also help to manage competitive pressures. Of course, managing so many investors is definitely a challenge in itself. Deep's investor philosophy is simple, "I have only taken in capital from guys who I think can add value to us. My litmus test is, would I take this guy on my board if he wasn't giving me money? As an independent member? We have refused money from bigger 'brands' where I don't think the partner in question would add value to my board."

Advice to Entrepreneurs

- Choose your field very carefully- there must be a 'huge' (large is not good enough) market potential. If you don't have personal expertise in this field, get a team of domain experts locked-in, preferably as partners or co-founders.
- plan your funding very carefully
- ideally raise as little cash as possible in the pre-revenue stage as you end up diluting too much equity. Try raising the first round from angel investors as it is most time-efficient and typically you will get the best terms. However, for later rounds, never risk starving your company of cash.
- it's all about people
- hire the best folks in the business. Don't hesitate to hire people better than yourself in that specific area. Colleagues who challenge and make you feel uncomfortable are your best friends and the 'yes men' are your worst enemies!
- don't focus too much on exits (especially not too early in the game). Concentrate on building a solid business, the rest will take care of itself.

Rashesh Shah, Edelweiss Capital

- I realised that when you want to hire people, having an office with a computer, fax machine and receptionist matters a lot. People want to work for what looks like a real company. They don't want to work for ideas.- when we started, we had an offer from an industrial group for a 15-20% JV. It was a very attractive offer, this extra capital. But one valuable advice from Narayana Murthy was: 'Give capital to people who add value, or to strategic partners. Don't go for capital for the sake of capital'.
- Fixed compensation at Edelweiss has been more reasonable though the variable compensation is aggressive. This helped keep costs under control. "it's an owner mindset rather than 'employee' mindset.
- "there is something known as an intensive and extensive approach to a thing. Should we go more deep into one area or should we be more broad bases? Historically, India has been a very large market, but more broad than deep," says Rashesh. And hence it makes sense to drop many different anchors to keep your company in place.There is an example of Reliance which started with petrochemicals, then got into trading yarn, fibre manufacturing, refining, exploration and now, even retail. This is what you call growth through 'adjacent markets'.
- "you go on changing only one parameter, either the product or the client parameter and you keep on growing in the adjacent market," says Rashesh. "very often you will try something and find it difficult, competition hai, and you go to the adjacent market. But going to the adjacent market because of that is not a good reason."
- when you are the CEO and shareholder, you want to avoid raising money because your equity goes down. When you wear only the CEO's hat, all you want is to grow as fast as possible.
- We always differentiate between a plan and an aspiration. There is always a short term plan, but there are always long term aspirations.- i believe that entrepreneurship is not all about assets, it is about emotinal energy as aspirations.
- As human beings, as entrepreneurs, all of us overestimate the short term and grossly underestimate the long term.
- sacrifice Glamor and build an institution. Advice to entrepreneurs- cash flow is underestimated by most people- the amount of cash flow. If its possible, be a little overcapitalized. Being financially savvy is a part of the business.
- Never have equal partners. You start off as equals, but the one does more, one does less, one is the public face, the other is not, and then slowly the whole thing disintegrates. So there should be a 'first among equals', who has a slightly higher equity share. Thats what Mr Narayanamurthy advised us.These days I advise people- two or four partners is okay, but ideally not more.- have the emotional staying power.

Nirmal Jain, India Infoline

Opportunity is about putting two and two together.
- if you are an artist like MF Hussain or a player like Tiger Woods your individual skills only matter, and not how good a team player you are or how good a team you can build. The analogy applies to business as well. Do you want to be Tiger Woods, the golfer or captain of Team India?
- you don't have to shy away from taking on the 'big boys'. The mouse is always more agile than the elephant.
- one aspect is managing growth at different levels.When compamies are 10-15 people, that is one size. Another size is 50-100 people, then 500-1000 people. At every size you haveAdvice to Entrepreneurs- entrepreneurship is risky. So you should have a mindset, should be prepared to fail. If you are not prepared to fail then this is not your cup of tea.- you should have the ability to build a team of the right people and not people you like.- whatever the number of partners, there has to be one leader. Whether it is an army or a country or a company there has to be one person, one leader in charge.

Vikram Talwar, EXL Service

In life, timing is the single most important thing.
- has to be an inner drive to succeed in what your objective is. And it cannot be money in my mind. If you want to get into entrepreneurship to make money, I don't think you will be as successful.
- need ability to share or you can never build a company of size and scale. Today Vikram owns 6% of EXL. And he never owned more than 12%. How about Azim Premji then, who owns 80% of Wipro?"yes, but it was a family business much before they got into IT. There is very big difference between rich young men going to become entrepreneurs and middle class, non-moneyed individuals becoming entrepreneurs. Would I call Mukesh Ambani an Entrepreneur? The answer is absolutely no. He is a good businessman, not an entrepreneur. Sunil Mittal is an entrepreneur. That's the difference.
- you could get into entrepreneurship on a whim or a fancy like I did. But if you want to plan how to be an entrepreneur, get some solid experience- how companies work, how people are managed, what finance is all about.
- If you do start a business, select your partner very carefully. Its tricky. Working with a partner requires a huge amount of sacrifice, understanding and tolerance. Its like a marriage at the end of tbe day. I mean, worse than a marriage. Advice to entrepreneurs- don't be an entrepreneur without very good financial knowledge. Or have a trusted partner who knows all about this.

K Raghvendra Rao, Orchid Pharma

If the capital was hard to come by, could he not have downsized the project?
- it is not a question of cutting the cloth to suit your size. Without that kind of a minimum critical mass, that project would not be viable. The cost and technology were not in favor of downsizing the project.
- MBAs who take up entrepreneurship are generally attracted to knowledge based industries, or services. Few venture into large, manufacturing projects.
- we started as public limited company right from day one of the organisation. Because I went and told them, I am committed to this, this is my pan and this is what I have.-wherever I worked, even when I held zero shares, my attitude towards the work and the project has been absolutely the same.
- I have always felt that you should take a niche segment, go deeper and broader into that, create a nucleus and reach a critical mass so that you become one of the low cost producers. And add value. You then replicate that in other therapeutic areas. So by design, yu wil limit competition. Even if others try to replicate it later they will be less efficient because they will be trying to catch up with you.
Attracting Talent- I used to market to them my 'five year plan'. In fact I always carried the five year plan book with me I would say, with or without you, I plan to do the.
- ...the price of ambition is a tremendous strain on the balance sheet.

Advice to entrepreneurs
- think either big or niche.
- there is no dearth of capital to back right ideas and entrepreneurs. Aim to create lasting value.

Jerry Rao, Mphasis

Jerry Rao does not mix emotions with entrepreneurship. Being attached to the company you create, is 'moha', he says.You have to do what's best for the business and if that means selling out, so be it.
- in America, if you look at it, people are much more cold blooded about their companies. At the right time, the CEOs resign, retire, sell out. India I think, the first generation entrepreneurs get very attached to their companies. Not in rational market related terms vut in very irrational emotional terms. the initial days you have to spend a lot of time with customers. It cannot be delegated to junior people.
- ...if you are a small company, you have to be extremely transparent and honest.
- ...research has shown that transparent companies have a lower cost of capital.
- ...plans are okay, but if you don't have the courage to make mid-course corrections and changes, particularly in highly changing environments like technology space, you will get into trouble.
-don't create overheads you can't sustain.
- I talk about passion, not emotion. They two are different words. Emotion is what you feel for your children.
- You can't postpone your whole life to the future.

Advice to Entrepreneurs
- in your sales pitch, the first point should be about your weaknesses, not your strength.

Shivraman Dugal, ICRI

Remember IIMs have weakness. They teach you marketing, finance. And systems but they don't teach you how to raise money.You open a shop and say, I must know where every penny is going.The control freak will remain a dukaandaar.

Shankar Maruwada, Marketics

Culture is set of daily behaviors exhibited by an organisation. The senior guys walk the talk, others will follow. Because an organisation, especially in the beginninh, is nothing but the reflection if the founders.We will have globally delighted clients who will benefit from us being the world's best professionals in what we do. In doing so we will have fun and get rich.When you want to expand, there is a window of opportunity. If you don't utilise that, you will get left behind. Do you want to stay happy but small or do you want to grow? These are two different paths and you have to choose one. Don't jeopardise your company's future by confusing what is good for you as a person with what is good for the company. When money is no longer the motivation, life can be pretty good. We got what we deserved. What we gave to others, they deserved. Advice more than VCs, an entrepreneur needs an angel at start up stage. VCs should ideally come in once you know what you want, the model is proven an d you think the best way to scale it up is to get their investent

Ruby Ashraf, precious formals

As an entrepreneur you don't say that 'I have to reach a particular place in 5 years' you just keep doing whatever you are doing. As a designer I woukd like to design only expensive clothes. But as a strategy you have to see where the market is going. There are customers for everything. Its a delicate balance. You dont want to make very cheap clothes, because then you have to sell too many to make money. And you dont want to keep them so expensive that people get intimidated or do not appreciate.You start with a strategy, but you have to change it at so many stages along the way. Markets change, buyers change, you have to change with it.

You can achieve beyond your dreams, so its OK to dream and make an action plan to turn it into reality.

Deepta Rangrajan, IRIS

While we are not starving, we are not tremendously greedy, we don't constantly compre our net worth with somebody else. Having said that, it is fantastic to create wealth. Because often, it is not only an endorsement of the fact that you have done well, it gives you tremendous opportunity to do other things as well.The service and consulting business is people dependent. The more you grow, the more people you need for it. Whereas once you develop products, you profit from your IP and go beyond working for specific clients and projects.You need to keep the sails open and then wait for the wind to blow.

Cyrus Driver, Calorie Care

Its good to be a consumer of the product you are planning to launch.

Sanjeev Bikhchandani,

As an MBA from IIMA, we all have a hunger for multinational companies. Because its prestigious. But to my mind, it is false prestige. You are a prisoner of your visiting card and the logo on it, a prisoner of your EMIs...We got the money just before the market meltdown. So we dint get time to spend it foolishly. We just put it in fixed deposit.The very act of becoming an entrepreneur is contrarian to 'middle class values'; study hard, get a good job, be happy with secure income and steady salary.I could have quit anytime in the first 10 years, and I would have been a failed entrepreneur. Why did I keep going? Because I wasn't chasing money. And if you choose something long enough, sooner or later you will get lucky.You see, there is no such thing as a failed entrepreneur. You are a failed entrepreneur only when you quit. Until then, you are- Simply not successful...yet.

Advice to Entrepreneurs
Be early. You can make your mistakes while it is cheap to make them, when there is no competition.Do not exaggerate your business plan. Undercommit and overdeliver.Get great people- sell them the vision, the idea and share the wealth, be generous with offering stock.If you are starting a business to make money, dont do it. Chances are that you will fail, because there will be hard times. And if your motivation is not something beyond money, those hard times will test you. You will quit and go back to your job. But if you are doing something other than money, you will rough it through. If you are in enough places, enough times and long enough, you get your breaks in some form or other. You just have to be smart enough to take them. Scaling up is also a lot about letting go. Get smart people. Keep in mind that every choice you make impacts the family.

Shantanu Prakash, EDUCOMP

You don't need any capital to start, you can start with zero capital. If you have capital, great. If you don't, it does'nt mean you can't start.When you are an optimist some of the external environment stuff does not really bother you.The trick is to identify the DNA in a person, where he or she wants to do something different, and wants to be differently incentivised. It means not just a big fat salary cheque, but things like stock options, feeling of partnership, being part of a start-up organization, fast growth, all of that. More than the monetary sacrifice, it is really the sacrifice of time when you are an entrepreneur. And that is a much more expensive sacrifice than money.

Advice to Entrepreneur

The risk reward equation is completely in favor of the entrepreneur. There is no way that you will be economically rewarded lesser for being an entrepreneur than by taking up a job.

Vinayak Chatterjee, Feedback Ventures

Money is a by-product. Business growth, turnover, bottomline is a by product of what your heart and head want you to do. So if you follow that, money will follow. Woh Gandhi waali baat hai. 'Find purpose and the means will follow.'

Advice to Entrepreneurs

What i find is many people hear that inner voice but just don't have the conviction to act upon it. Don't get too concerned about peer pressure. You may be succesfiul, you may be unsuccessful, but in the philosophical market, what is success and what is failure? At least you will have pleasure when you face yourself in the mirror to say "I did what my inner voice told me! Koi phikr nahi hai, tu apna kaam kar!I don't want to put a premium on entrepreneurship. It's not a fad or fashion to follow. Remember Narayana Murthy's quote "It has taken me 25 years to become an overnight wonder."

Ashank Desai, Mastek

The IT industry is lime sitting on a tiger. You have to keep reinventing yourself. When you are sitting on a small market, you have to be good at many things. Smallness adds to the complexity of operations.Ultimately when you are running a company, you have a risk you have a responsibility to make it successful. So the buck stops at you. So to that extent, there is a difference between an executive and and the owner.

Advice to Entrepreneurs

Everyone does not need to build a 100 crore or 1000 crore company. Small vs big vs superbig is a choice that an entrepreneur makes himself or herself depending upon the ambitions, value and what he likes doing.

R Subramanian, Subhiksha

Entrepreneurship is an itch. The only ointment that soothes it is work. Lots and lots of it. And it must be interesting, intensive and audacious. If we would have known how difficult retailing is, we would have never got into it. Operationally it is very challenging business, the pain factor is very high. That's what makes it so difficult for competition to come in very easily. Retail has two main costs- space and people. In the developed world, retail happens outside cities, where space is very cheap. Everybody has a car, so they drive down and shop. And in most of those parts of the world, people are very expensive. So what they try to do is have 'very low staff, large space' formats. In places like India, people are much cheaper, but space inside the city is incredibly expensive. And you have to locate in the city because no one will sit in a bus and spend two hours to travel outside the city and reach your store. You need a smaller space but an 'overmanned' kind of format. And to compete with the thousands of local retailers, you have to deliver the best prices and have amazing supply chain management.
The consumer saves money because Subhikhsa exists. "so as long as consumers save money and we make money and we don't destroy value for ourselves, it's quite okay."
You will sell out it the business is not doing well. Or the business is not likely to be well in future.

Advice to Entrepreneurs

The way we look at it, there are two worlds - the real world and the virtual world. The virtual world is something which the financial types operate. The real world is where lot of us slog to physically do work.

Narendra Murkumbi, Shree Renuka Sugars

Entrepreneurship is about 'jugaad'. And a period of struggle is when that quality really comes to the fore. Your core business is not making money.
In every business, the more you know about the grassroots, the better.
"I think the drive to start off something on your own, once you have it, you will continue to have it. If something is running well and smoothly, you will look for new challenges. And in India, there are so many opportunities, that I think it doesn't make sense to stick to one business."
"I think the old philosophy that we all learnt even on the campus, or core competence, of doing one thing world class, it no longer holds in this country. The more successful entrepreneurs at the moment have successfully been able to jump into new opportunities. And also scale up those opportunities." And each new business is a challenge but it will never be as tough as the very first one.
If there was a moral to the Shree Renuka story it would be summed up like this - there is no old business. There is only old ways of doing business.
"Everything that we do, everyday, is innovative. It's not that you have to dream of something that nobody has ever done. All my ideas have been done by others. We have done only two things. One, we have done better than the guy who got that idea. And second, we have scaled those ideas up."
The limits are in your own thinking. The impossible is what you believe cannot be done.

Chender Baljee, Royal Orchid Hotels

'Pyar kiya to darna kya. Business kiya to ab socho karna kya.'
"The easiest thing is to make a spreadsheet but assumptions are on paper only."
"When things are tight you monitor every expense. Only when business is doing well inefficiencies creep in."

Advice to Entrepreneurs

If you love the business you take up, you will definitely make a success of it.
Learn the business you want to get into for a couple of years. Raising money is not so difficult today. There are VCs, or at least angel investors. There is even lease financing, for example.

Madan Mohanka, Tega Industries

"If you take a new product, which has not been tried out before, at least plan for 50% or double the investment you envisage. Otherwise you will be in trouble. When your project fails, and you have no money, people treat you like a dog. And you are like a beggar asking for money and help."
"If you believe in the product, and if you believe in the business, don't give it up. Never give it up."
"You need a lot of patience to handle people in government."
"It was very difficult for us to convince them that we can supply as good a material as you are buying from Europe or America. Give us a chance! So I had to take a very hard decision. I hired and Englishman and brought him to India to look after the export market for us. His salary was almost equal to the salary of the entire company. Now there are two ways to look at it. If I don't grow, the company will remain small and die over a period of time. And if I fight and if this man does a good job, the company will fly. So I would rather take a risk and die than not take a risk and die. It was the second hard decision in my life - to bring that man. But when he went out for exports, we found nobody asked him any questions - how big the company is, how small the company is, can you supply, not supply? We just started booking orders."

Advice for Entrepreneurs

There is a lot of scope in manufacturing. In India our manufacturing base is only 37%, whereas in all advanced countries, the manufacturing base is 65-75%. If any economy has to become strong in long term, it can become only with the manufacturing base, not the service base. Service base is only temporary. This will not create long term employment and if the economy has to become strong, it has to go into manufacturing.


This book can read and re-read for its sheer simplicity of narration. There is also a dedicated site for this book. You can find some more excerpts of this book and make your own notes. If you have not read this book yet, do grab it today; from your friend, nearby bookstore or roadside vendor, libraries so to say the least.

Over the years, I have strongly believed that if some "Desi" wishes to startup his/her own business or even is enthusiast about the entrepreneurial subjects, he should have a balance of reading between the western success stories and Indian success stories. I observe that our corporate and university libraries are full of stories from the western world / developed world.

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