Dhanya: This was yet another interview where I grabbed Rohan’s chance to meet the ”Real Leader.” Mr Ganesh had insightful answers to all the questions I asked, and it was an honor to interview him. On behalf of the Real Leaders project, I would like to thank Jayadev Gopalakrishnan (@Jayadev_g) who suggested we interview Mr Ganesh. Thanks Jayadev!
About Ganesh Krishnan
Ganesh Krishnan, a serial entrepreneur with four successful ventures, is the Founder and CEO of TutorVista and CEO of SMARTHINKING. He has been featured in several media, including The Economist, Fortune, Wall Street Journal, New York Times and BBC World. Krishnan is a post-graduate from the Indian Institute of Management, and has a degree in Mechanical Engineering from Delhi University. TutorVista is the top ranking paid tutoring service for students K-12 and into college. The Company has grown rapidly with over 5 million online sessions. SMARTHINKING a higher education tutoring provider, serves nearly 500 post-secondary institutions, including four-year schools, community colleges and for-profit institutions. Pearson, owner of the Financial Times and book publisher Penguin, has got a substantial stake in TutorVista.
Dhanya: It would be great to understand how the TutorVista journey began.
Ganesh: TutorVista grew when we were looking at business models. 1990-2000 was the decade in which IT services from India for the global market established themselves – tech companies like TCS, Wipro, Cognizant, Infosys and all of those gained momentum. In the decade of 2000, the idea of BPO and call centers started from India for service in the global market. That’s when we realized that there were hardly any companies that were consumer brands from India, for the US market. Essentially, there was no B to C Company as all the call centers and IT services companies were B to B companies.
Our desire was to start the first consumer company from India for the US market. That’s part of the thought process behind creating this brand using Indian resources. We were obviously able to compliment this idea with a business model that marries Internet technology and global teaching resources to make personalized tutoring, affordable for the masses in the US.
Dhanya: I saw that you have a long history of founding successful companies. What would you say are some of the milestones that have stood out, or what have been the biggest lessons from findings these four and many more companies?
Ganesh: One key lesson has been that to succeed in business, to scale business, and to create value, it is far easier to focus on a blue ocean or open white space rather than trying to go after established markets. What it means is that if you can identify a business model for something that has not been done before, there are far higher chances of success than trying to repeat a business model by doing something better. Making marginal improvements on existing model or even trying to execute better on existing model is a lot tougher than trying to enter blue ocean business model where competitors do not exist.
Normally when an entrepreneur looks at a business model he would find that the current incumbents are not executing well, and that the entrepreneur can execute better. However when you start executing, even if you don’t make the same mistakes as existing businesses, you’ll end up making new mistakes. And that’s why lesson number one is to go for uncontested open spaces.
Lesson number two is to try to solve a big problem or address a large untapped opportunity, because when the size of the market is large, it gives you a white canvas to play in. If you’re going after niche and small markets, unless you become a dominant player with a large market share, it becomes very difficult to create success. A new disruptive business model in open spaces, going after a large market rather than a niche market, and ensuring that you don’t run short of capital by raising money in advance – those are three key lessons that have helped me well in the four businesses. Because if you run out of capital, the game is over even before you begin.
Dhanya: What are your thoughts about the trends in entrepreneurship in India? What do you see as the future there?
Ganesh: The entrepreneurship ecosystem is very vibrant and there’s a lot of opportunity. I’m from Bangalore and entrepreneurship is hot here. In fact, Bangalore was the only one from India to be featured in the top ten start-up friendly cities list in a recent survey. Of course, Singapore is very much ahead of Bangalore.
You have a very active body, you have a lot of Indian administrators, a lot of entrepreneurs who are both from India and the Silicon Valley. These are people who came back and are centered in Bangalore as mentors and icebreakers. Finally, I think there’s a lot of the key population for which technology companies here are willing to strike out, and experiment with. All these are on the positive side.
On the negative side, I think the challenge is to get capital funding. The angel investing system was very popular in 2011 and 2012, and these years saw a lot of companies getting angel investors. However, there are a lot of companies, which are in the danger of being orphaned after angel funding, which is a concern. The second concern is creating a scalable business and monetizing to exits either through strategic M&A or IPO – which has not happened yet. That’s one of the factors that has contributed to the crunch of series A funding.
I would really like to see more stellar exits and monetization in the ecosystem to give confidence to the whole pipeline of Angel and Series A investors. Otherwise it’s a great time to be an entrepreneur in India, especially in cities like Bangalore with a lot of things going for the entrepreneur.
Dhanya: I know that TutorVista uses internet as a huge component of the business model. What do you think about companies that use the internet in the running of their businesses? Do you see a lot of future there? All over the world you see businesses – some which are built entirely on the internet – and some of those which use it as a component like TutorVista.
Ganesh: In India, the challenge is quite unique – unlike Singapore, New Zealand, or Australia, which have an extremely large population and hence a large market for consumer products and services. The challenge is that this population is widely distributed across India, most of them in tier two, tier three cities where the infrastructure is quite poor. When the market is large, the ability for any company to be able to profitably reach those consumers is quite difficult.
These two factors make technology, internet, and e-commerce business extremely attractive. I think more than countries that have smaller populations concentrated over one region (places like Singapore), a country like India has a phenomenal opportunity for internet to be used as a medium. And that is what we are seeing. We are talking about a large portion of population, a population which definitely needs different ways to be served. Having said that, the internet syndication in India is very low but it is increasing because of smartphones and mobile phones and the future growth potential in the next 5-10 years is humongous.
On the other hand, services like online bookings have shown that people are using the internet in more ways. People are tending to use the internet as a method to access brick and mortar services like train or plane reservation systems. I think that shows huge potential. In terms of the future, I see India as a great market not for something like Facebook monetization or for location based services, but more as a medium for delivery. For buying books, music, video, groceries, or even buying fashion goods, I think there’s great opportunity.
Secondly, from an entrepreneur point of view, the fact that we can build businesses using the internet as a medium is a great leveler. Today, two guys out of college can build a business and compete with Tatas and Birlas of the world who have twenty, thirty, and forty years of legacy retail business.
The internet is an opportunity for a start-up entrepreneurs to come in and dissect the model as you have seen in the cases of Big Basket, Blue Stone, or Flipkart. It creates a great opportunity from both the consumer and the entrepreneur point-of-view.
Dhanya: I see that you and your wife have started the initiative for angel investing through growth story. What is the shift from your CEO point-of-view of running a business to VC?
Ganesh: Growthstory.in is a platform for entrepreneurship; it is not angel investing. We bring in the strategy and we are promoters for the business. The difference being that we play an active role on the board, or as part of the strategy. We also take it to series A and series B funding. We don’t exit the business like angel investors. We are promoters of the business. That’s the growthstory.in platform.
The idea again is that we look for smart, talented, passionate, and young entrepreneurs with whom we would like to partner in Growthstory.in and create businesses along with them. For us it obviously means to be in areas that we understand, can contribute, and believe in. I’d prefer this more than the angel format where I can afford to put money in a renewable company about which I don’t know much or don’t have experience in. Also it means that all the businesses are all Bangalore based within a couple of kilometers from where we operate so that we are able to spend time. That might change going forward, but essentially the common character of success has been in choosing areas that we understand, can add value in and are specifically located nearby.
Dhanya: What was your investment mantra? I saw there’s Book adda, jewelry, there’s travel, there’s groceries across all different platforms. What do you look for in an idea?
Ganesh: There are two parts to the answer. One is that it needs to be something that we can add value to, understand, and contribute. The other part is that we are trying to go after large opportunities, which solve problems pertinent to India. Take bigbasket.com for example – an online grocery venture. In India, in the metros, people just don’t have the time; the traffic is horrendous – there’s no glory in trying to go shop in a market or grocery after working hard throughout the day- there is no pleasure in it and parking is a problem.
How do we make life simple for these people? For 80% of planned purchases, can we take the tedium from them? That’s the problem we are trying to solve. Every household goes through this. Every household needs milk, bread, eggs, rice, vegetables, and meat; it’s this process we are trying to make easier.
It’s similar with Blue Stone. Where does an Indian woman between the ages of 20-45 get a choice of designs from the comfort of her home and have the choice to be able to see 2000 different designs and pick from them? No retail jewelry store can afford to stock so much jewelry and be able to sell it profitably. The real estate costs in India are even higher than in Singapore or Manhattan. Because of the real estate costs in India, you can never have a large store with 2000 SKUs to be able to be displayed.
Primarily, using technology and internet to address large problems is our key principle. Some of these problems are very specific to India and Indian challenges of infrastructure. In Blue Stone, we get customers from a hundred different locations in India, from different cities, and small towns. Even in tier three or tier four towns, all the consumers have access to the same thing that a person in Bangalore, Bombay, and Delhi has through bluestone.com and Internet. Those are the common answers – the use of technology and Internet to solve large problems in India.
Dhanya: What would be some of the productivity hacks that you use for your day? What sort of ideas do you use to make your day more efficient?
Ganesh: I get up very early. The morning time gives me the ability to be able to do my odd jobs. Also, I play tennis every day 6-7:30 so that helps my metabolism, makes me more productive, and sets me up for the day. Whenever I’m in town, I do that. Other than that, my day is pretty much planned in advance with meetings. I’m not a party animal, I don’t socialize, so I get to sleep by 10 and get up by 5. I get a lot of time at work using videoconference, Skype, Internet and email. For productivity, I try to work consciously by scheduling everything in advance.
Thank you Mr Ganesh, for taking time to talk to us. We understand the importance of recognizing unexplored ideas and figuring out a plan to fit it to the location. We do hope to see much more of exciting start-ups in the country.
Real Leaders Team