This is what true Entrepreneurship

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Here is a story behind the success of dis out ..I am sure you all will inspire by reading this...go on ,... go on...;)

How it all began
We started with Rs.4 lakh from personal savings. Binny [Bansal, no relation to me!] and I were working, so we had saved money from previous jobs. Our initial target was to see if we could make it profitable from that amount of money, we also didn’t know how much money we would need. We were living and working in a shared apartment. We knew a few things were required to get a website up and running. Because we had a small amount of money we had no option but to go for a freely available domain name, which we got for Rs.45. Secondly we had to rent servers, started with shared hosting. Started with Rs.1,000 a month but that was shared by 500 people and so we had to soon move to an independent server, which cost us about Rs.50,000 a month. Apart from that, there were a few costs around packaging materials, computers to work on. To cut costs, we used only open source software.
The startup “staff”
For the first six months, it was just the two of us. Convincing people to join us was tough. People used to come and go back without talking to us because we had a shoddy office. We also couldn’t really choose who we would hire too. Tapas came in looking for a job, basically told us he had his own laptop, no salary and was willing to do any work.
He started handling customer support and now is doing a lot more. Now he’s grown to become product and marketing strategist. Luckily our business grew pretty fast.
In March 2008, we started to hire employees, and the next struggle was to pay them. These were operations guys, packing, office boys and customer support staff. Many times we tried online job sites, we also posted requirements online, but with low success. It was mainly through word-of-mouth.
The vendor conundrum
Vendors were only in Bengaluru at this stage. India Book Distributor was the first one we used. We started dealing with vendors with advance payment. At that time we didn’t have the cash-on-delivery option so we were getting advance payment through credit/debit card option. So we paid vendors beforehand. So that’s how we managed cash, and never required working capital. This was our strategy to mange vendor payments. This allowed us to accumulate 30 days’ worth of money. This also got us a stronghold with vendors. In six months, we managed to add 5-10 vendors. By the sixth month all of them were on credit. [We were only funded in mid-2009 by Accel.]
The first markers
Initially margins we got from the backend were low. Our first marketing spend was Rs.50,000 worth of bookmarks distributed outside a book expo. Then we attended startup forums; some were free, some cost money. We lived on personal savings and never gave ourselves a salary for the first 1.5 years. We broke even in six months and met our initial target. By now the company was generating its own cash. We launched in October 2007, by March 2008 we had broken even and moved into a small office. This was in Wilson Garden and our rent was Rs.8,000 per month. We bought some more computers and UPS. At this juncture we were incurring more costs like printer, cartridge, electricity costs.
A widening footprint
We were doubling every quarter in 2008. By end of 2008, we had covered all vendors/suppliers who would supply us books. In early 2009, we decided to start a Delhi office, as it had many more suppliers than Bengaluru. This required funds. When we went to Delhi, suppliers had already heard of us and asked when we were starting operations there!
Marketing-wise, we were growing via word-of-mouth. We tried one more bookmark initiative, which worked well too. We also gave a discount coupon at one time which worked well. Social media was still a nascent medium back then. We started showing some ads on websites, and got some revenue. Overall, our business grew fast. After 2008 we were just catching up, expanding hiring, and money was not such a problem then.
Our people puzzle
Stock options was one way to get people on board. Not everyone understood it though. So, we said we would make sure they would get experience and learn much from our organization. That attracted the right kind of people. These were people straight out of colleges, or out of jobs. The recession helped a lot. Property prices were down and many people looking for jobs. We hired good people at low salaries who understood the benefits of such an environment. Salary-wise we trying to be as close to what they were getting. Some people had experience, some did not. We wanted smart people. Then we wanted a culture fit; employees who didn’t want medical insurance and HR policies.
Unforeseen struggles
We were small buyers to the vendors, so many times they wouldn’t entertain us on priority. We used to pick up books from warehouses ourselves, pay them and go because we didn’t want our customers to suffer. Courier companies were also charging us very high rates, almost as high as retail rates. But we had to agree. But it came down fast as they saw more value in partnering. Many times we had to go drop off books at their office directly, we had to do a lot of legwork. Delayed shipments were handled too, we accepted our faults and replaced orders free of cost.
What did we do right?
We focussed on getting customers and generating revenue. Most entrepreneurs waste time before they launch a product. We launched within two months of getting the website up. Once a customer used us, we never wanted them to leave, that was our sole focus. Any successful internet startup, even outside India, generates cash through word-of-mouth and it has to work. Customers should be so delighted that they are compelled to tell others. Before funding we were focusing on expanding vendors, more customer support capacity, software and improving our website.
The mistakes we made
We did make a few mistakes. We got too involved in finding mentors and reading about what a startup requires. Every business has to have its unique story. So entrepreneurs should just focus on business development and not reading blogs, books etc. On the ground level, you need to know more than anyone. Mentors/advisors will help when you are stuck. However, understanding and running day-to-day operations is something you need to figure out for yourself. Nobody should know more than you about your venture. We built each department ourselves.
Late 2009 onwards, Binny and Sachin divided work roles among themselves as COO and CEO respectively. Flipkart today is India’s top online retailer of books with an all-India employee strength of 1,500 people with 4 warehouses and 8 logistics centers. For the last fiscal, it had revenues of Rs.20 crore.
How it began
When we started Madhumita [Halder} and I were working at Rishi Valley. Manuj [Dhariwal] lived with friends. My colleague had a bungalow which he let out to me for free. We got investment from friends and family. When we started, we had Rs.2 lakh in personal savings. We took money in batches, first one was Rs.5 lakh, when the Chattisgarh order [first order] came to start production.
The startup “staff”
We used to do everything ourselves initially. In 2009 we started working, and registered the company in 2010. Manuj and I got into it full-time and later Madhumita joined full time too. For the first six months, we did all work between us. When orders came, production was looked after by Manuj.
We had to go for training and on field visits to Chattisgarh often, which Rajat took care of and sometimes even Madhumita went. She took care of the art work as well as the board and packaging box of the games.
A friend in Rishi Valley was good with art and agreed to do it as a project on pro-bono basis. It was an exciting and new work for them. We paid them later as a project, one-time cost.
The vendor conundrum
We asked vendors for credit limit. Typically, they needed 50 percent advance and 50 percent post-production payment. We had different vendors making different parts, around four at this stage. Different vendors worked on different timelines. The first batch of products, 6,000 games for the Chattisgarh government, took 2 months to complete. When we got our final payment we paid the vendors. So, we had to keep the vendors waiting for a bit. They wanted money before starting work. One of the major vendors-the offset printer-was a contact through our mentor Saurabh Mehta. So, the contact helped. He was the man who even assembled our products before it was finally sent to customers.
That first order
Manuj went to Raipur so they hurried our advance payment. He stayed there till he got the check. Finally, we got it after 10 days since the finance department was delaying it. All the teachers at the school were very friendly with us. Since we shared a common passion for education, it helped. Most of our other orders since Chattisgarh have been possible because of this order. The total order value was Rs.19 lakh [revenues].
Bootstrapped baby steps
We moved later into our own office while looking for places where we could stay as well. Business centers were too expensive. We wanted a nice open office, where we could brainstorm, a creative space, not plain cubicles. Manuj met someone by chance in our apartment who had a place to rent in Cox Town. They wanted some interesting company to take it up because the previous company had downsized and they needed to keep remaining employees motivated. The landlord liked MadRat games and so rent it out for a nominal rent. It took us two months to register VAT etc. It seemed we couldn’t register a company based in residential premises. Our CA took it as a challenge. Finally he registered our tax number in his office. When the tax officer came, Manuj sat there with a laptop and pretended to work. All important documents were addressed to this office. Now, in Ulsoor, we have a small office as our registered office.
Our people puzzle
Our CA was first employee, but he was on a project basis. He handles legalities and taxes etc. Then we hired an office boy, so he could handle couriers, bank work, packing and such work. Manuj asked the domestic staff in our building for contacts. They got someone through referral who spoke Kannada.
We wanted an office administrator who could do the basics, including accounts, tally information, bank work. In fact, we have given him freedom to do anything else he wanted to here. The same guy has learnt Corel Draw for the last four months in addition to his regular work.
Then we needed a designer, as we wanted to rework some designs. One of the core elements of our business is design. We got two people who wrote software for us for Rs.15,000-Rs.20,000 instead of the Rs.50 lakh it would have cost us if we had bought software from the Net. We found another linguist through the Net, whom we used for a few projects.
Motivation in a strapped startup
We wrote guidelines on what kind of people we need. The person needed to be a good human being and we have attracted those people in our advisors and mentors. Intuitively we know who is a match. Policies don’t matter to us. We’ve arranged two-day picnics/trips for everyone to build team spirit. We started paying ourselves a salary from April 2010. Mentor Saurabh Mehta who met us at IIM Calcutta’s B Plan competition has helped a lot in terms of motivation. Now he has a stake in the company. Other than that he gets a very nominal consulting fee. It is important to have a mentor in the early days to guide you through, especially in the tough ones.
Growth, the bootstrapped way
Jan–April was spent in sales and marketing because schools tighten budgets during this phase. May onwards we moved to product development, That’s the time when we got different people working in different cities. These were friends and family again, homemakers, educated women who had spare time. They just promote our game at schools and we pay a commission on every conversion. They share the passion and are willing to do the job. Rajasthan and Bhopal orders were also sought through their efforts. This is much cheaper than hiring full-time staff .
Manuj is great at networking and tried all routes to bring people on board. He spoke about the company wherever he could, was proactive and kept his ears/eyes open. We were always meeting people, not knowing the outcome, but in the end there was always a benefit. Nokia came on board this way. When we met the person from Nokia, we had a very basic game for the low-cost version. But we gave demos and 3-4 months later they gave us an order for 5 lakh phones.
A verse for the bootsrappers’ Bible
If you have money, you don’t think of innovative ways. Instead you take the easy way. But when you are cash-strapped, then it helps as you think of cost-cutting measures that are innovative and effective. Bootstrapping has been a very good phase in terms of learning. Working with a team in the bootstrapping phase, trust is important. How you trust each other helps in solving problems/tackling day-to-day issues.

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