DARE - Because Entrepreneurs Do

Attending an international business school with fellow students from around the world was the experience that launched Parikshat Laxminarayan’s entrepreneurial journey in 2004. A former amateur tennis star once ranked number 108 in the International Junior World Rankings, Laxminarayan grew up in India, earned an undergraduate degree in the United States, and worked as a consultant in Washington DC before returning to Bangalore in 2003 to spend a few months with his family’s media distribution firm.

In September 2003, he entered INSEAD’s one-year MBA program, like most of his classmates spending terms on both campuses, in Singapore and in Fontainebleau, France.

In INSEAD’s international environment, students work every day with classmates from dozens of nationalities, and wanting to be a good host, he brought some of his international friends from INSEAD home with him during his first term break. When one said that India was so different from what he thought it would be like, the seed of an idea lodged itself in Laxminarayan’s imagination: he thought to himself, “There ought to be a business opportunity around traveling through the most beautiful parts of the country.”

In the first few weeks of his studies, Laxminarayan befriended Alex Metzler, a German classmate who shared his determination to sign up for every elective course in entrepreneurship. One professor suggested the pair consider helping three Indian entrepreneurs write a business plan. Laxminarayan relates:

“Many travelers have a poor perception of India because they know people whose travel experience here was not delivered well. Few companies control the process end-to-end, understanding the customer’s need, then selling in a professional way and delivering what tourists are looking for. We decided to control the experience and enhance quality at every step.” — PARIKSHAT LAXMINARAYAN

We were working in a cubicle when I asked Alex if he’d really start a business, given a good idea. We spent the whole night brainstorming something we thought we could pull off. I said “How about a travel company?” and one concept that we came up with was high-end travel to exotic destinations. Being a thorough German, he had a one-page summary of the idea done the next morning. When we talked with our professor, he said, “You don’t know anything about travel, do you?” Nonetheless, we wrote a business plan and stopped applying for jobs.

Most good business plans start with an insight into a latent customer need or problem that is not being met well. The two classmates’ point of departure was the observation that foreigners travel to India much less than one should expect. Laxminarayan comments, “India is an amazing destination; there is no reason why Thailand has 7% of the world travel market while India has less than 1%.” Careful investigation suggested that the fundamental problem was quality assurance and trust building which required an unusual business model. Laxminarayan summarizes:

Many travelers have a poor perception of India because they know people whose travel experience here was not delivered well. There is a big disconnect in the US and Europe between the value expected and what is delivered, while the people in the Indian tourist sector who are doing a good job couldn’t sell well outside India. Few companies control the process end-to-end, understanding the customer’s need, then selling in a professional way and delivering what tourists are looking for. We decided to control the experience and enhance quality at every step.

The only way to do that, the partners felt, was to own sales and marketing while partnering with carefully certified service providers in India and thus control every step of the value chain. Thus “Enchanting India” was born to provide a reliable travel experience at world-class standards for an international audience willing to pay a premium for good service, high-quality and unique activities. The company booked hotels, planned transport and activities, and trained the local tour guides it chose to use. Says Laxminarayan, “The average travel company outsources to a tour operator in India; we partner and negotiate directly with external service providers on the ground including all our hotel partners. We have stayed personally at or visited every hotel we use, tested every car company to ensure the drivers are good, and certified every person who interacts with customers on the ground.”

Based on Metzler’s experience, the partners decided the initial market segment to target would be Germans who want individualized, high-quality vacations. Germany, the largest international travel market in the world, seemed under-served, especially because it has a relatively large population of discerning travelers who enjoy exotic destinations. Further research validated their analysis, so the two classmates began raising funds, and found their school connections invaluable. Laxminarayan amplifies:

It was our strategy to avoid venture capitalists, because we were too small for them and we wanted to maintain control. One professor saw us struggling and said he would be our first investor. The fact that an INSEAD professor has backed us helped a lot to get other investors. Our first round raised €150,000 from private investors around the globe, half of them from the INSEAD alumni network. We put up a notice on INSEAD’s VentureNet web site for alumni, and several alumni contacted us through that before investing. Five classmates also were investors, and the rest of our backers came from our personal networks.

The pair of co-founders graduated from business school on July 1, 2004, and reached Bangalore ten days later. For Laxminarayan, it was a return home; for Metzler, it was a growth experience. Metzler recalls:

Germans are about as different from Indians as is possible. To do business in India if you come in as a foreigner, you have to understand the culture. You can be very successful, but there are some key points you have to get right. Relationship building is vital. As a German, if I ask for something in a week and someone says yes, that’s what I expect. This is a very polite culture, so people will not say no, even if they know a week is impossible. Now I get to know a person, spend time understanding him, build common ground. People here will work really hard if they like and respect you. It’s a warm culture with a lot of good, smart people.

One strength of the enterprise was that each partner brought complementary knowledge to the venture, as well as a personal commitment to his friend, forged through long weeks of shared hardship from launching a company while completing a demanding MBA program. Laxminarayan understood better how to work with Indian employees and partners, while Metzler was familiar with the German market. However, neither was steeped in technology, which turned out to be crucial for the company. Most ventures end up doing things that are quite different from what the business plan spelled out, and Enchanting India was no exception.

< Prev		Next >