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Entrepreneurship&

GrowthGeorge Molakal : CEOALCOR Fund - Chicago

Nov 21 2016

ENTREPRENEURSHIP AND GROWTH

Index

Entrepreneurship leap

Two key features of successful Entrepreneurs

How to sustain growth

Entrepreneur leadership

Growing through M&A tools

Success Measure – Do we ever plan to fail

Summary

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ENTREPRENEURAL LEAP

Idea looks Awesome and so the dream flows to the final success with Euphoria and High Energy

Take the Entrepreneurial leap and reality strikes and you have a hard fall. In 99%, this is the case.

Focus and Tenacity will help you start your upward climb, which is slow, painful and needs determination. You don’t quit.

You climb and keep climbing with support of others.

Finally you reach Success and you fly High..and this repeats again !!

Adapted from HBS Article

TWO TRAITS ENTREPRENEURS NEED Logo

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FOCUSTENACITY

Albert Einstein said : Insanity is doing the same thing over and over gain and expecting different results.

Ross Perot said : “No doesn’t mean No- just “not now”.

INTRALINKS – 8 months, 215 presentations, $50 million. 214 meetings were “No”. Were they insane ?

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SUSTAIN YOUR STARUP TO A GREAT COMPANY?

Hire specialists in functions such as sales, HR, marketing, R&D, and manufacturing. This lets them tackle work more efficiently and catalyzes future growth by creating slack in the rest of the organization.

Add management structure. A few people at the top can’t effectively supervise everyone’s increasingly specialized daily work—and it’s hard for employees to stay focused and engaged without guidance and processes.

Establish a framework of plans and goals. Otherwise, improvisation may amount to aimless riffing.

Sustain the culture. Articulate the founding values in mission statements and job descriptions, and hire and reward for cultural fit.

Micromax -2010-2015

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ENTREPRENEUR LEADERSHIP

King Henry V – Shakespeare

The political situation in England is tense: Several bitter civil wars have left the people of England restless and dissatisfied. Towns and villages lived in fear of the French raiders.

Prince Henry lives a adolescent past, consort with thieves and drunkards. Prince Henry lives among the low lives (vagabonds, villains, village rowdies and rascals) and people wonder, if he ever becomes King, what will happen.

On a Friday, King Henry IV has died, and his son, the young King Henry V, has just assumed the throne on Monday.

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ENTREPRENEUR LEADERSHIP

Shrewd old man

Mercenary

A NerdTimid old ladyPeacemaker Realistic

Creator

A good King Able Warrior

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ENTREPRENEURS SALES MISTAKES

Start Earlier• Company founders would have cut development time, or exhaustive product

investment, if they started earlier. They get to know the details and flaws of their products, systems, models. Cousins, Friends don’t count

• The transactions yield revenue early, but when purchases are motivated by love, obligation rather than market demand results in wrong customer feedbacks and delayed sales. Be choosy for strategic buyer

• Companies try to generate revenue through a wide bucket and often miss the real customer and then go on the wrong path.

Avoid Discounting• This sets a pattern, diminishing value in the long term and hurt cashflow.

EARLY HANDS FREE DEVICES

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GROWING COMPANIES – M&A• License fee (Territorial marketing rights)

• Growing business through selling products/services for a specific region or territory• Royalty Agreements

• Growing business by paying a royalty fees and then manufacturing/selling the services in a region/territory

• Strategic Alliances• Growing business through direct sales relationships for outsourcing, contract manufacturing,

customer servicing and the like• Joint Ventures

• Jointly serving customers with a direct equity relationship in either an greenfield or brownfield (integrated model) : Tata Motors for Indica had 24 integrated Joint Ventures

• Mergers• Selling minority or majority equity to another firm and merging with the larger firm.

• Acquisition• Acquiring companies who can add tremendous shareholder value, creating at least 3X to 4X net

wealth gain over five years.

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MEASURE OF SUCCESS

• Blackberry (market leader in 2000) • Did the CEO of BB in 2001 tell the Board – In 2013, we will plan to

declare bankruptcy ?• Nokia

• Did the CEO of Nokia in 2004 tell the Board – In 2013, we will have a strategy that will make us bankrupt ??

• Japan• Did the Prime Minister of Japan in 1985 plan from a leading economy to a

fragile economy over two decades ??• A successful CEO of a Indian listed company

• Did he plan to have his children drop out of college, off marriage, etc in 20 years?

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DO WE PLAN FOR FAILURE?

• Governments, Companies, People, all of us – do we plan for failure, if not, why do we fail ?

• Life is made up of Nested Units• Nations• National governments• State governments• Companies• Departments• Teams• People

Is it poor investment into the future or poor investment into the present ?

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INVEST SHORT TERM & LONG TERM

• Our focus is always short term.• We work, plan and live for today, this month, this quarter, this year. • Stock market pressure makes us managing global corporations sacrifice long term investment for

real short term investments returns, else the CEO’s will be replaced. • The same goes on for our lives. We invest, plan and live for the next few quarters or a year ahead.

• We fail to plan a decade ahead or two decade ahead.• Because the investment today for a decade ahead, will not help us, get social approval, get stock

market approval or family approval, as we live in a social, fast paced society. • Only those companies, those people, those families who invest for two decades ahead, can see

fantastic results over time.

• Reflection in personal lives :• What joy will a parent have, even if he is a super success, if his does not spend enough time with

his children, that his children grow below expectations in schooling, marriage or worse…get diverted into drugs etc. If only the parent had invested enough time in the early years, to build character and vision for the children, they will be a super success 20 years later. So, for continuous rewards two decades later, take time to invest now in things that will yield results two decades later. !!! – Same goes with companies, to avoid BB situation.

Adapted from Prof. Clay Christensen- HBS

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IN SUMMARY

• Be focused and tenacious• Build the right business strategy for the company, starting with

geographical growth, product growth and value chain integration• Use the right models for global growth (M&A Tools).• Secure adequate funding for the company to grow. (Angel, VC,

PE)• Focus to develop the right leadership in the company. • Focus to set priorities right by investing in long term as well as

short term, keeping the balance right.

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• Success is not Final and • Failure is not Fatal.

So be bold and take risks, lead

with courage and you will succeed.

Questions ?