Corp Fin - Prof. Prabhala, Maryland
Entrepreneurship - Prof. Atul Nerkar, Kenan Flagger
Prof. Rama Velamuri
Managerial Accounting - Prof. Swaminathan Sridharan, Kellogg
- Prof. Sunil Dutta, Haas
Operations - Prof. Aditya Jain
Prof. Prabhala took term 3 as well as corporate finance to a different level. He was just too good and the climax in all the lectures would be his one liners to the queries.
Prof. Nerkar and Prof. Velamuri taught a pretty vague subject like Entrepreneurship in a great structured method. There was a lot to learn and the online quizzes before the class were the best part for Prof. Nerkar's lecture.
People were settled in term 3. Though we heard that term 3 is the toughest term at ISB, not many of us felt so. In fact many were of the view that the previous 2 terms were more demanding than this one. Not sure of the reason why this difference of opinion by our batch vs. our seniors.
Managerial Accounting was a repetition of cost accounting. Operations was a new subject for me and Little's Law and PK formula were an addition to my formula library, but not sure when would I use the same.
Saturday 30 August 2008
Nuclear Deal
I am curious to read the Hyde Act and the 123 agreement of nuclear deal, but unfortunately time does not permit me to do so. All of us have been following the latest happening for this deal very closely. I am not an expert to comment whether it is good for India or no, but i was disturbed with the way this was evaluated.
Right from the day this started between the ruling party and left, I have not heard any fact based reason from either parties as to why it is good or bad. Isn't this s simple capital budgeting exercise that we are taught in basic finance. Someone should have simply calculated the NPV and if it is positive than it makes sense to go ahead else abandon.
Neither any news paper nor any news channel covered this aspect. People do criticise saying that decisions are not made basis spreadsheet. However I never say that decisions should be based on spreadsheet, I am only saying that decisions cannot be made without spreadsheet. There is a big difference in both the statements.
During the parliament session I was expecting someone to raise the point on the profit or loss that the country will make due to this. But to my surprise there was mention of kalawati, prabhawati, etc. but no one said the gains or loss we would make.
Its surprising! We have moved away from basics...
Right from the day this started between the ruling party and left, I have not heard any fact based reason from either parties as to why it is good or bad. Isn't this s simple capital budgeting exercise that we are taught in basic finance. Someone should have simply calculated the NPV and if it is positive than it makes sense to go ahead else abandon.
Neither any news paper nor any news channel covered this aspect. People do criticise saying that decisions are not made basis spreadsheet. However I never say that decisions should be based on spreadsheet, I am only saying that decisions cannot be made without spreadsheet. There is a big difference in both the statements.
During the parliament session I was expecting someone to raise the point on the profit or loss that the country will make due to this. But to my surprise there was mention of kalawati, prabhawati, etc. but no one said the gains or loss we would make.
Its surprising! We have moved away from basics...
Wednesday 13 August 2008
Ms. Vani Kola, Managing Director, NEA Indo US Venture
Date: August 13, 2008 Venue: AC3 Time: 1900 - 2100
Session content
Breaking the myth about what drives you to entrepreneurship?
Independence (It might not be true. In a job there are limits to your job and responsibility, here you will have multiple bosses. Your investors, shareholders, board of directors, suppliers, customers, etc).
Seeing something come to life, etc
Create jobs
Create wealth
Most people were hesitant to answer this question. We should spend some time to understand our real motivation to be an entrepreneur.
Qualities of entrepreneur
Risk taking is not necessarily an entrepreneurial attitude. When Harvard did a study to identify the DNA of successful entrepreneurs, they expected them all to be highly risk-taking. What they discovered that most entrepreneurs when they were going through the process of starting their ventures never saw something as risky. In fact they were very confident of its success. No human being wants to take risks.
Each person does what they are most comfortable with. Therefore it is important to choose an area you are most familiar with. Some of the ventures like GPS, Satellites took several years (12-15) to become commercial successes. It was strong conviction about the idea along with relevant background that allowed the pioneers to look differently that everybody else
Conviction + Confidence
Positive thinking (there is 10 mins of sunshine max in an entrepreneurs’ journey)
Observation skills along with action orientation and a strong instinct
Humility to listen to people and learn.
Ability to work with people in a team setting
Flexibility (might not be always good. An entre needs to stick to the course long enough to give it sufficient chance) Also a person who gives himself too much flexibility in thought might keep second guessing whether his venture will work and so is not necessarily a good idea)
VC Funding
When VCs fund ventures they look at the scale, size and scope. They are not interested in small ventures. They will not fund a venture which has a potential of just 30-40 crores. Whether you should go for a VC fund or not depends on your aspirations. How far do you want to go? How much control are you willing to give up.
Before you go to VCs, you should have your fundamental research in place. You should have thought of the exit options realistically. If you have not thought of the fit of the investor, it can lead to sizeable frustration with both parties.
VCs fund companies based on following criteria:
How big is the market size? How far can the idea go?
Quality of the idea in the context of the scope of the market
Competitive barriers (it can be something as simple as basic knowledge, deep customer insight)
Team- Comfort, chemistry between Management team and the VCs
Leadership qualities
Listen
Be willing to be wrong, willing to learn, accept you are wrong and move on
No false sense of control. People take risk with you, you need execution. You will need to give up control and stake. A good venture is 10% idea and 90% perspiration. If you want others to take risks with you, you have to be generous in giving rewards to them.
No sense of control through position. Security comes from performance and not position. Do not become victim of your visiting card.
Ventures she funded
Travel portal: Already a lot of travel portals. Too fragmented market. Indian customer not willing to shop online. However, this portal acted as a technology and information provider to around 20000 travel agents. They spend 1/5th money spend by any other typical portal. They were very capital efficient. Also they were operationally very efficient.
MedPlus: 2 wharton guys, wrote it as a business plan in their MBA. They came to India. Bootstrapped and opened 40 stores. Basic idea was to understand they had to minimize real estate cost. Took smaller shops of around 150-250 Sq. feet when rivals were investing in bigger showrooms. However, they realized they still need to carry all SKUs (around 10000). So they invested in a good backend supply chain management system. It will refill their stores 3 times a day. It kept tracked of inventory getting sold and knew at any point of time how many units are present on shelf. In 3 years they are close to 550 Stores.
Ventures not funded
Fail of trust: Interesting idea in mobile content management space about bypassing operator, had unique content, VC convinced about idea and the IP. Very senior people in the team with good track record. But on the 11th hour, the VCs found out that one co-founder had given business a 8 Crore loan and planned to take out once he gets the money from VCs. VCs perceived it as a corporate governance lapse. Argument of the entrep.. was that the VCs never asked. VC’s argument was.. they are like shareholders and so all corporate governance principle applies. VCs lost trust on the person. Chemistry gone wrong.
Bringing a dad/uncle/relative to negotiate the business plan/percentages, etc. VCs are investing in the individual and he has to trust his own negotiation skills
Govt policy: Brilliant idea. Liked the team. Spoke with lawyers. It was dependant on a yet to be announced government policy. If govt makes favorable policy,VC can make a lot of money. However if govt rules against entrepreneur’s idea, it can mean the company has to be shut down. Though VCs take risks, they will never enter such suicidal venture.
VC relationship is like marriage. VCs typically invest for 3-7 years and so they demand complete trust, confidence and faith. There should be no skeletons in the closet. VC relationship once established cannot be broken.
Session content
Breaking the myth about what drives you to entrepreneurship?
Independence (It might not be true. In a job there are limits to your job and responsibility, here you will have multiple bosses. Your investors, shareholders, board of directors, suppliers, customers, etc).
Seeing something come to life, etc
Create jobs
Create wealth
Most people were hesitant to answer this question. We should spend some time to understand our real motivation to be an entrepreneur.
Qualities of entrepreneur
Risk taking is not necessarily an entrepreneurial attitude. When Harvard did a study to identify the DNA of successful entrepreneurs, they expected them all to be highly risk-taking. What they discovered that most entrepreneurs when they were going through the process of starting their ventures never saw something as risky. In fact they were very confident of its success. No human being wants to take risks.
Each person does what they are most comfortable with. Therefore it is important to choose an area you are most familiar with. Some of the ventures like GPS, Satellites took several years (12-15) to become commercial successes. It was strong conviction about the idea along with relevant background that allowed the pioneers to look differently that everybody else
Conviction + Confidence
Positive thinking (there is 10 mins of sunshine max in an entrepreneurs’ journey)
Observation skills along with action orientation and a strong instinct
Humility to listen to people and learn.
Ability to work with people in a team setting
Flexibility (might not be always good. An entre needs to stick to the course long enough to give it sufficient chance) Also a person who gives himself too much flexibility in thought might keep second guessing whether his venture will work and so is not necessarily a good idea)
VC Funding
When VCs fund ventures they look at the scale, size and scope. They are not interested in small ventures. They will not fund a venture which has a potential of just 30-40 crores. Whether you should go for a VC fund or not depends on your aspirations. How far do you want to go? How much control are you willing to give up.
Before you go to VCs, you should have your fundamental research in place. You should have thought of the exit options realistically. If you have not thought of the fit of the investor, it can lead to sizeable frustration with both parties.
VCs fund companies based on following criteria:
How big is the market size? How far can the idea go?
Quality of the idea in the context of the scope of the market
Competitive barriers (it can be something as simple as basic knowledge, deep customer insight)
Team- Comfort, chemistry between Management team and the VCs
Leadership qualities
Listen
Be willing to be wrong, willing to learn, accept you are wrong and move on
No false sense of control. People take risk with you, you need execution. You will need to give up control and stake. A good venture is 10% idea and 90% perspiration. If you want others to take risks with you, you have to be generous in giving rewards to them.
No sense of control through position. Security comes from performance and not position. Do not become victim of your visiting card.
Ventures she funded
Travel portal: Already a lot of travel portals. Too fragmented market. Indian customer not willing to shop online. However, this portal acted as a technology and information provider to around 20000 travel agents. They spend 1/5th money spend by any other typical portal. They were very capital efficient. Also they were operationally very efficient.
MedPlus: 2 wharton guys, wrote it as a business plan in their MBA. They came to India. Bootstrapped and opened 40 stores. Basic idea was to understand they had to minimize real estate cost. Took smaller shops of around 150-250 Sq. feet when rivals were investing in bigger showrooms. However, they realized they still need to carry all SKUs (around 10000). So they invested in a good backend supply chain management system. It will refill their stores 3 times a day. It kept tracked of inventory getting sold and knew at any point of time how many units are present on shelf. In 3 years they are close to 550 Stores.
Ventures not funded
Fail of trust: Interesting idea in mobile content management space about bypassing operator, had unique content, VC convinced about idea and the IP. Very senior people in the team with good track record. But on the 11th hour, the VCs found out that one co-founder had given business a 8 Crore loan and planned to take out once he gets the money from VCs. VCs perceived it as a corporate governance lapse. Argument of the entrep.. was that the VCs never asked. VC’s argument was.. they are like shareholders and so all corporate governance principle applies. VCs lost trust on the person. Chemistry gone wrong.
Bringing a dad/uncle/relative to negotiate the business plan/percentages, etc. VCs are investing in the individual and he has to trust his own negotiation skills
Govt policy: Brilliant idea. Liked the team. Spoke with lawyers. It was dependant on a yet to be announced government policy. If govt makes favorable policy,VC can make a lot of money. However if govt rules against entrepreneur’s idea, it can mean the company has to be shut down. Though VCs take risks, they will never enter such suicidal venture.
VC relationship is like marriage. VCs typically invest for 3-7 years and so they demand complete trust, confidence and faith. There should be no skeletons in the closet. VC relationship once established cannot be broken.
Tuesday 5 August 2008
Mr. Sanjeev Bhikchandani, Founder and CEO, InfoEdge India Limited
Date: Aug 5, 2008 Time: 1900 - 2100 Venue: AC 3 LT
Key Learnings:
Entrepreneurship is not a money making business, do not get into entrepreneurship with sole objective of making money. Money is a by product and it will follow.
Entrepreneurship is beyond money, it is for those who want to be the master of their own priority and they want to create something that will last forever.
Be prepared to struggle financially whenever you get into your own venture as real ideas are not conceived in office cubical. It is the power of observation that gives birth to any idea.
Also be clear with all your business partners. In case you feel that you are not getting along well it is always better to sit, discuss and arrive at a conclusion rather then stretching it and hoping for the relations to improve.
Ideas always evolve over a period of time and you should be flexible to evolve your idea. Also great ideas are those that are scalable.
Do not take VC funding for the sake of it. Invest some of your personal money in your idea. VCs like ideas which have gone through bootstrap financing. If a VC is ready to fund just based on idea, then it sends 2 signal:
There is a bubble building in process.
You have a proven track record in past.
Usefulness of MBA cannot be measured based on your performance with someone else who has not done MBA, it is always measured by your performance that would have been if you were not MBA with that you have achieved after doing MBA. It brings in focus, helps structure the thought process and open new doors.
Aspects those were impressive:
Observation is very important. Maybe in the corridor of IIM (A) during placement or the Pragati Maidan IT Fair, ideas come to those who are keen observer.
Bootstrap financing is important to bring seriousness to your idea and also provides confidence to other partners.
Persistence is also important especially during tough time. His persistency paid during the 2000 recession and IT bust.
Also he is one of the few entrepreneurs who are advocate of think small and conservatism. He was very conservative but cutting costs but not corners. He was also happy doing a small business but competition forced him to become big.
Entrepreneurship is not a money making business, do not get into entrepreneurship with sole objective of making money. Money is a by product and it will follow.
Entrepreneurship is beyond money, it is for those who want to be the master of their own priority and they want to create something that will last forever.
Be prepared to struggle financially whenever you get into your own venture as real ideas are not conceived in office cubical. It is the power of observation that gives birth to any idea.
Also be clear with all your business partners. In case you feel that you are not getting along well it is always better to sit, discuss and arrive at a conclusion rather then stretching it and hoping for the relations to improve.
Ideas always evolve over a period of time and you should be flexible to evolve your idea. Also great ideas are those that are scalable.
Do not take VC funding for the sake of it. Invest some of your personal money in your idea. VCs like ideas which have gone through bootstrap financing. If a VC is ready to fund just based on idea, then it sends 2 signal:
There is a bubble building in process.
You have a proven track record in past.
Usefulness of MBA cannot be measured based on your performance with someone else who has not done MBA, it is always measured by your performance that would have been if you were not MBA with that you have achieved after doing MBA. It brings in focus, helps structure the thought process and open new doors.
Aspects those were impressive:
Observation is very important. Maybe in the corridor of IIM (A) during placement or the Pragati Maidan IT Fair, ideas come to those who are keen observer.
Bootstrap financing is important to bring seriousness to your idea and also provides confidence to other partners.
Persistence is also important especially during tough time. His persistency paid during the 2000 recession and IT bust.
Also he is one of the few entrepreneurs who are advocate of think small and conservatism. He was very conservative but cutting costs but not corners. He was also happy doing a small business but competition forced him to become big.
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