SUCCESS STORY: Seventymm

From small town Dharwad in Karnataka to Silicon Valley, California, Raghav Kher's journey has been an exciting one.

Kher is now back in India with his latest venture, Seventymm, an online movie rental company that promises to deliver the movie you want to watch at your doorstep, from more than 10,000 titles from Hollywood, Bollywood and seven regional language films.

Kher, founder and chief executive officer, Seventymm, says: "Consumer is the king here and people have money in their pockets. Besides, DVD prices have crashed to below Rs 3,000. So I thought about a product, which people could use throughout the year. India has supply of 900 movies a year. There is a lot of content here. I also looked at how people watch movies and I found the market completely fragmented -- each store carries only 200-500 titles."

Kher talks about his experience as a professional in Microsoft and his transition to an entrepreneur and how he plans to make his latest venture a grand success in an interview with Manu A B, at the TiE-ISB Connect 2006 in Hyderabad recently.

Tell us all about you latest venture, Seventymm.

Seventymm is India's first online DVD rental service operating in Delhi and Bangalore. We intend to make watching movies a hassle-free experience. All you need to do is log in to the site, register and specify your office or home address, where you want the DVDs to be delivered and it will be done in 24 hours.

How did you get the idea to start this venture?

I came to India in March 2005 on a vacation. After a month I got bored and I wanted to do something new in India. The booming entertainment industry was an eye opener. I was amazed to see that PVR Cinemas charged Rs 500 for a gold class ticket. I grew up in a small town called Dharwad where we had to pay just Rs 2.50 to see a movie!

Here families are ready to spend even Rs 1,000 for a film! It's a completely different India from the one that I grew up in. Consumer is the king here and people have money in their pockets. Besides, DVD prices have crashed to below Rs 3000. So I thought about a product, which people could use throughout the year.

India has supply of 900 movies a year. There is a lot of content here. I also looked at how people watch movies and I found the market completely fragmented -- each store carries only 200-500 titles.

When was the company formed and how easy was it to get funding?

The company was founded in August 2005 and we launched the service in March this year in Bangalore. We received $2 million from DFJ in November last year. We received another round of funding of $7 million with Matrix Partners recently. Today, we have raised a total $10 million.

How do you plan to offset competition from other players?

If you want to rent a movie on Friday you have to drive to the nearest outlet. Suppose you want Spiderman, it is not available and the local shop gives you Batman. You may get it cheap but when you take it home you find it is not clear and realise it is a pirated copy.

So consumer expectations are not satisfied. Home delivery in India has taken off unlike food delivery business which has become big business in India. Convenience is what people looking at along with the choice of content and variety of languages. You can also check how others have rated the film on the site and refer it to friends.

This is a disorganised sector and consolidation is happening in various sectors of retail, we being an organised player would like to make the best use of the opportunity.

How many start-ups have you launched so far and how was the experience?

I started three companies in six years. I started a company called Rendition Networks before this. It was a software technology firm with an elite clientele. Last year, Opsware acquired it for $40 million. Prior to that, I founded iMandi, an Internet marketplace to serve households in the United States.

Suppose if you want to get your house cleaned, or want a lawn moving service, you could get it done with our service. It's like the next version of yellow pages. We had over 300 categories in house cleaning and tied up with 200,000 merchants in the US and had about 1 million users. It was a great experience.

How was the experience working at Microsoft? Did you get to interact with Bill Gates?

It is very exciting. Microsoft was a great experience. When I joined Microsoft there were only 6,000 people. I spend 8 years in Microsoft, when I left MS it had 30,000 people and it had become bureaucratic.

I loved working at Microsoft, it's an awesome company but as more people joined, it was a totally different feeling. I left Microsoft in 1998. MS was one of the hottest companies to work with. The last two years I was in the finance group.

I was part of the Hotmail acquisition; I used to interact with him (Microsoft boss Bill Gates) on a project basis. He is a shrewd businessman and you have to prepare really well before you go for a meeting with him. You have to back up what you are saying.

The best thing about MS is they have hired very smart people. They have done an exemplary job in hiring the right talent. People are very passionate about their ideas, and even get confrontational! But the best way is to win and do well.

How important is education for an entrepreneur?

Education is important for an entrepreneur. In my case, the masters in mechanical engineering did not help. A bachelor's degree in engineering helps as it gives a good base, but if I can redo my education, I will not opt for MTech. A degree in computer science has been very helpful, I can understand technology very well.

The business school taught me a structured way of thinking and analyse market opportunities. My family also had a business in Karnataka but my father can't think of big deals and diversifying business. He cannot think about evaluating risks. they only think about what coming in and what is going out than about the large picture of business and how you can grow further.
A B-school teaches you to understand opportunities and risks. It also teaches you to grow big, create customer value and think about the competition.

What would be your advice to budding entrepreneurs in India?

· Go after your passion, if you have a passion for anything you will be very successful, I tell my kids also if you want a be a rock star, pursue it!

· There are huge opportunities in India. All you need to do is prioritise your ideas and work hard.

· Don't be afraid to make any mistakes because you are bound to make mistakes.

· If one start-up fails, it doesn't mean that you will also lose, it is a great learning experience.

What are the reasons for your success?

The drive to succeed is very important. Clarity of thought and ability to focus on the right things have helped me. I have been able to focus on making changes and have the ability to solve unstructured problems.I also believe prioritising and execution. I believe that strategy is 20 per cent and execution is 80 per cent.

What are the challenges you face in India?

The biggest challenge in India is hiring. I spend 90 per cent of my time on hiring people. Attrition rate and salaries are very high. And when people come for interviews, they are not keen on finding out how challenging and interesting their job would be, they straightway ask, "What's my package?"

Indians historically are very conservative and don't want to work with a start-up. It's because we did not grow up in a society with many start-ups. In Bangalore, people want to work only for IT companies or BPOs (business process outsourcing units).

We have solid team in place. We have a staff of 70 in our Bangalore office and will hire about 50 in Delhi.

Why do Indians lag behind in product innovation?

Ten years ago, Indians who were in Silicon Valley were engineers. After 1995, many company CEOs were Indians. Now, 50 per cent of Silicon Valley companies are run by Indians.

We have climbed the ladder to leadership positions. We have shown the world we can run companies. We started with business process outsourcing, started with small projects and are now getting bigger deals. We have done value addition to the existing projects.

Next step will be in product innovation. Small companies and start-ups are already making products. It is true that Indians who have gone to US have become good product developers but in India they are not as creative. I still can't figure out the reason.

What are your future plans?

We plan to launch operations in Mumbai by the end of this year. We will also be launching in Chennai, Hyderabad and Kolkata by the first quarter of next year. We plan to have 1 million users in 5 years generating revenue of $100 million. Every month about 1 million DVD players and 1 million VCD players are sold.

So 24 million players will be sold every year. In 5 years, this will grow to 60-80 million. When you have 80 million players what good is it if you can't watch your favourite movies? So rental schemes will do very well!

SUCCESS STORY :CavinKare

C K Ranganathan, chairman and managing director of CavinKare, has shown the world it is possible to beat the multinationals even in the most difficult market of fast moving consumer goods.

Ranganathan's journey, which started from a small town of Cuddalore in Tamil Nadu, has been an amazing one. A business which he started with only with Rs 15,000 is now worth Rs 500 crore (Rs 5 billion).

He learnt the first entrepreneurial lessons from his father, Chinni Krishnan, who started a small-scale pharmaceutical packaging unit, before moving on to manufacture pharmaceutical products and cosmetics. In an interview with rediff.com, the CavinKare chief speaks about his inspiring journey.

His father, his inspiration

My father, Chinni Krishnan, an agriculturist, was also into pharmaceutical business. As I was poor in academics, he wanted me to either do agriculture or start a business. My siblings were good in studies -- two of them became doctors and another a lawyer. I was the odd one out. While my siblings studied in English medium schools, I was put in a Tamil medium school. I used to suffer from an inferiority complex because of my poor academic record.

Studies did not interest me, but rearing pets did. When I was in the fifth standard, I had a lot of pets -- more than 500 pigeons, a lot of fish and a large variety of birds. I used to earn my pocket money out of pet business at that time. Perhaps, the entrepreneurial spirit in me showed its first streak.

The origin of the concept of sachets

My father died as I entered college. He had come out with the sachet concept a couple of years prior to his demise. He felt liquid can be packed in sachets as well. When talcum powder was sold only in tin containers, he was the one who sold it in 100 gm, 50 gm and 20 gm packs. When Epsom salt came in 100 gm packets, my father brought out salt sachets of as low as 5 gm. 'Whatever I make, I want the coolies and the rickshawpullers to use. I want to make my products affordable to them,' he used to say.

Selling things in sachets was his motto as he said, 'this is going to be the product of the future.' But my father could not market the concept well. He moved from one innovation to another but never thought of marketing strategies. He was a great innovator, but a poor marketer.

Joining the family business

After my father's death, my brothers took charge of the family business. In 1982, when I joined them after my studies, they had launched Velvette Shampoo. Within eight to nine months, I left the business because my ideas clashed with theirs.

As I was in the manufacturing unit, I did not know anything about marketing or finance. But, my inferiority complex notwithstanding, I was somehow confident of doing business better.

Starting his own business with Rs 15,000

I had left my brothers saying that I did not want any stake in the property or business. That was a defining moment for me. I had saved Rs 15,000 from my salary and that was all I had. Yet I was confident of achieving success. I did not feel anything about riding a bicycle after having got used to cars.

For a week, I could not make up my mind as to what business to do. I knew only two things; making shampoo and rearing pets. I didn't want to venture into the shampoo business as it would initate a fight with my brothers. However, I decided to do the same later as I could only make shampoo.

I rented a house-cum-office for Rs 250 a month against an advance of Rs 1,000. I took another place for the factory for a rent of Rs 300 a month and against an advance of Rs 1,200. I bought a shampoo-packing machine for Rs 3,000.

How Chik Shampoo was born

I named it Chik Shampoo after my father. The product did not succeed immediately; we learnt many things during the process. In the first month, we could sell 20,000 sachets and from the second year, we started making profits.

I moved to Chennai in 1989 but our manufacturing unit continued to be in Cuddalore. It took me three years to get the first loan because banks asked for collateral. I did not have any. But one particular bank gave me a loan of Rs 25,000 which we rotated and later upgraded to Rs 400,000, Rs 15 lakh (Rs 1.5 million), etc.

You know what the bank manager wrote in our loan application? 'This person does not have any collateral to offer but there is something interesting about this SSI unit. Unlike others, this company pays income tax!' I must say my business never looked back because I was very particular about paying income tax.

Strategies that made Chik Shampoo No. 1 in South India

When Chik entered the market, Velvette Shampoo was being marketed aggressively by Godrej. But a scheme of ours became extremely successful -- we exchanged five sachets of any shampoo for a Chik Shampoo sachet, free.

Later, we altered the scheme -- we started giving one free Chik Shampoo sachet in lieu of five Chik Shampoo sachets only. Soon, consumers started asking for Chik sachets only. The sales went up from Rs 35,000 to Rs 12 lakh (Rs 1.2 million) a month.

When we introduced jasmine and rose fragrances, our sales went up to Rs 30 lakh (Rs 3 million) per month and with actor Amala as our model, our sales rose to Rs 1 crore (Rs 10 million) a month! Each idea of ours was rewarded by our customers. There has been no looking back since then. Our market share increased and in 1992, we became the numero uno in South India. It took nine years for me to overtake my brothers' business.

How Chik Shampoo conquered the rural market

Multinational companies sold products in big bottles and not in sachets and they sold only from fancy stores. They did not look at the small kirana stores, nor did they look at the rural market.

We went to the rural areas of South India where people hardly used shampoo. We showed them how to use it. We did live demonstration on a young boy. We asked those assembled to feel and smell his hair.

Next we planned Chik Shampoo-sponsored shows of Rajniknath's films. We showed our advertisements in between, followed by live demonstrations. We also distributed free sachets among the audience after these shows. This worked wonders in rural Tamil Nadu and Andhra Pradesh. After every show, our shampoo sales went up three to four times. Today, the Indian rural market is growing at a pace double than that of the urban market.

Launching Meera Herbal powder
We continued with Chik Shampoo for seven years before venturing into anything else.

Meera Herbal powder was actually not our idea. Shaw Wallace already had a herbal product but it was marketed very poorly. We felt there was a demand for herbal products and we made a good product. I felt we should be the leader if ours was a good product. And guess what? In the third month itself, we topped the market. In six months, we had 95 per cent market share, while Shaw Wallace had only 4-5 per cent.

How Beauty Cosmetics became CavinKare

As we planned to expand to new products, we thought the name Beauty Cosmetics would be restrictive. In 1998, we ran a contest among our employees for a name and one of them suggested CavinKare; with C and K spelt in capitals. CK, my father's initials. Cavin in Tamil means beauty and grace.

Perfumes for the poor

We wanted to cater to those who cannot afford (high priced) perfumes. Good perfumes came at a huge price -- they were beyond the means of ordinary people. We decided to come out with a Rs 10 pack Spinz. We were successful in that too.

Shampoo market share

In the last two to three years, our market share has come down though we are growing. It is mainly because of the anti-dandruff shampoos in the market. We do not have an anti-dandruff shampoo yet. From 0 per cent, the anti-dandruff shampoos have taken over 25 per cent of the market.

Only 75 per cent of the market, therefore, constitutes ordinary shampoos. We hold 20 per cent of the market share. But we are the largest brand in rural Uttar Pradesh, Andhra Pradesh, etc.
and we are the number one in many other states as well.

On the decision to launch a fairness cream

We decided to launch Fairever in 1997 as we saw a huge demand fairness cream. We are the second largest player in the market in this. Research states that when a product is good, consumers do not shift to a new brand. Our team told me not to venture into the fairness cream market as the consumers were quite satisfied with the existing products. But we went to launch
our product containing saffron -- which is traditionally used to get a fair complexion. In six months, our sales galloped. This was followed by Indica hair dye.

Two and a half years ago, we launched Ruchi pickles in sachets and we became number one there too. We sell close to 5,000 tonne of pickles per annum. We hope to double this in two to three years. Food is a huge market: we have understood that. Our target is to be a Rs 1,500 crore (Rs 15 billion) company in another three years.

Reasons behind his success

Teamwork is the main reason for our success. We have good professionals who work really hard. The second reason of our success is innovation. We have executed innovative ideas as well.

CavinKare Ability Award

I stayed as a tenant at Jayashree Ravindran's place (the woman who started the Ability Foundation). Once, she said she wanted to start a magazine for the disabled. Though she did not ask for sponsorship, I gave her a cheque of Rs 25,000. I also became one of the Foundation's founder members.

Once we came to know about the disabled who have climbed the ladder of success, we -- Ability Foundation and CavinKare -- decided to institute an award for them. I feel each of us has to give something back to the society. I have great admiration for those who fight against all odds and attain success. When I started my career, I only faced shortage of funds but these people tide over graver difficulties. We must applaud their fighting spirit.

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