DARE - Because Entrepreneurs Do

Abhinav Bindra finally became one in a billion by winning an individual Olympic gold medal for India. Great!

But the more important question is how to continue winning at this level?

Enough has been written about how this country of a billion plus has failed to produce even a single Olympic gold medalist and about the few who almost made it. And I am sure that complete careers will now be made out of writing about Bindra.

One look at the past record of our various sports associations and the sorry state of our various stadia and training infrastructure, no one in their right minds would expect the government to do what has been impossible for them so far.

That brings to my mind a simple question: Can a profitable business be made out of winning Olympic medals?

 My guess is, it can be done. You only have to look at the business success of the IPL (Indian Premier League - cricket) t0 see a possible business model for this.

Let me explain how.

The next summer Olympics will have competitions in 28 disciplines. 

 Lets choose four of these  (other than Hockeya and shooting for obvious reasons) to concentrate on. My choices are fencing, volleyball, archery and boxing. Why these four? Two reasons. First, they are spectator sports and two, barring fencing they are all areas where India has done reletively better on the Asian stage and with fencing, I am hoping to draw on our tradition of martial arts.

Let me take fending as the eample to explain the plan. Much like the IPL, we need to build a series of televised tournaments around the country that will pay the players well and also keep the sport top of mind amongst the people. But unlike the IPL, the teams will be on long term contract and significant investmenst will be made in their training and in the stadia to hold tournaments,  with the 2012 2016 and even 2020 (for which Delhi wants to bid) Olympics as targets.

Income sources? Sponsorship for the teams and individual players, gate collections from the tournaments, sponsorships for the tournaments, share from TV income, merchandising... in short, all the income sources that the IPL so effectively used.

If each of these businesses can generate  even a 100 crores a year,  compared to the 1200 crores the IPL is expected to make, these four sports will "earn" almost as much the government spends on all sports every year.

On a 3 Olympics  horizon that is 1200 crores per sport and if 75% of this is ploughed back into the sport, I am sure that we will have a few more Indians as Olympic champions.

PS: If you take up this idea, do remember my all expenses paid trip to the three olympics.

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The Hyderabad seminar was an interesting experience. For starters, it rained cats and dogs. The rains that started half an hour before the seminar had not stopped by the time I was boarding the flight back the next day. My thanks to all the CEOs and MD's who braved the rains and made it to the seminar.

We had a very interesting panel discussion, that invarialy kept on coming back to China.

In his earlier piece in DARE, Phil Anderson argues that you cannot have a high growth venture without having a presence in China. Almost all our participants seemed to share a similar feeling and wanted to engage with that country. But there were questions; and there were fears. There were those who wanted to figure out how to find opportunities in China and there were those who were being contected with orders, but wanted a mechanism to verify the antecedents of the companies placing those orders.

There were a couple of horror stories also that were shared; of cancelled orders and of shipments that were empty boxes.

 Since a Sr. VP from HSBC Bank was on the panel, it was only natural that there were many questions on foreign currency hedging, LCs and the like.

We will be carrying a detailed report on the event in the September issue. Meanwhile, here is a quick summrary of the key conclusions.

1. Exercise caution in engaging with new foreign trade partners. A visit and face to face meeting is best. If that is not possible, try to verify their antecedents through chambers of  commerce, Industry associations, your bank or ask for references.

2.  Try to route your engagement through an established intermediary in India or abroad (Honkong for China, as the rules arebased on English laws) and reduce risks.

3. Small and medium businesses should not look at currency hedging as a source of profit. Rather, they should look at hedging as a way fo protecting their rates.

4.  Try and include the cost of export insurance in your costs so as to reduce export related risks

 5. For imports from a new party, will they accept Bank Guarantee instead of LC (letter of credit) for the initial shipments?

Our next seminar is at Indore on the 13th.

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Yesterday evening I had a meeting in south Delhi, about 25 km away from our office in Gurgaon. The trip to Delhi, starting at 3 pm took exactly an hour.

I remember looking at the clock when getting into my car for the return trip. It was 5.01  pm. I should be reaching back by about 6.30, accounting fo rush hour traffic I thought.

But it turns out that I had not really accounted for rush hour traffice and evening rains. I crossed the toll paza near Ambience mall just after 6 pm. And the rest of the journey on a very good day was about twenty minutes. Only it was not a good day. Turning left off the highway to take the CyberGreens road, I promptly got struck along with a few thousand others.

To cut a long story short, I reached home at 7.50;  in other words, it took almost two hours to cover the distance that is otherwise covered in twenty minutes!

Today's times of India has an estimate of the fuel consumed in Delhi by cars idling like this - 1000 crores every year!

Another example of the power of aggregation I wrote about earlier.

This amount incidentally does not include lost productivity with all these people crawling along for hours on end.

On another note, I will be in Hyderabad, tomorrow,  moderating a CEO panel discussion on global opportnities in the current economic scenario.

It would be interesting to see what ideas and issues come up from the audience.

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Couple of days back, US Senator Barack Obama, the persumptive Democratic nominee for the US presidential electioncaused something of a minor internet strom by asking Americans to inflate their tyres to the right pressure.

Derision and scon soon flew in from all corners of the western blogosphere,  and from politicians opposed to him.

But really, is this an idea to be derided? Lets do the math.

According to the US bureau of Transportation statistics, they had 135,399,945 cars in 2006.

The government also claims that properly inflated tyres can improve mileage by upto 3.3 %

Now, given that the average milage of US cars is 17.2 miles / gallon,  and that an average car travels 12400 miles per year,  what do you get?

No of passenger cars in the US (2006)                              135,399,945
Average mileage                                                                           17.2 MPG
Average distance travelled per year per car                    12400 miles
Fuel consumed per car per year                                            721 gallons
Fuel economy increase from correct pressure               3%
Mileage from correcting pressure                                        17.716
Fuel required per car for one year                                        700 gallons
Fuel savings per car per year 21 gallons

Assume 25% of cars are under pressured 
Fuel savings in correcting tyre pressure                           710780926 gallons
                                                                                                         = 0.7 billion gallons
Fuel price                                                                             USD 3.9 per gallon
Annual savings for the country                                            2772 million dollars
                                                                                                         = 2.8 billion dollars

Now, 2.8 billion dollars a year is surely not small change. That is more than a fourth of Exxon Mobil's latest quarterly profit.

By increasing mileage from 17.2 to 17.716 or by just .516 miles per car, but by adding up all such carswe reach an annual saving sof 2.8 billion dollars! This is the power of aggregation.

It  is almost as powerful as compounding. Only, while compounding works for the individual, aggregation works for groups like societies, states, countries or even continents and the globe.

Thrift schemes work in a similar model, as do businesses that produce small value items on a large scale. Micro finance businesses work the reverse - taking a large sum o fmoney and breaking it inot very small parts to benefit a large number of individuals (while reducing the risk).

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An ever increasing number of startups are again focusing on Internet based business models.  If you are working on an Internet based  B2C (Busines to consumer) busniess model, then it is important that you understand the demographics of that audience.

Comscore has a study out on the Indian internet user and there are some interesting points there.

The average Indian Internet user visited the Internet 25 times during the month and was online for 28 minutes per visit.

Those between the ages of 15-24 were the heaviest Internet users among all age segments, spending nearly 12 hours online per month on average.

Some of the fastest growing Web site categories during the past year included Maps (up 64 percent), Sports (up 60 percent), Entertainment - Movies (up 55 percent), and Finance - News/Research (up 52 percent).

The total audience is estimated at 28 millions above te age of 15 years, up 27% from a ayear ago.

From the same report, Rediff. com was the most visited "Indian" website (ranked 5th overall) with 92,46,000 unique visitors in the month of May 2008. The fastest growing in the top 15 was Naukri.com with a 55% growth (51,05,000 visitors).

Interestingly, the  study does not count access from cyber cafes and mobile phones. Given that a substantial number of Indians access the net from Cyber cafes, I wonder how much the numbers will change if we were to add that number also.

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