the making of match box solutions & e farm liba
TRANSCRIPT
THE MAKING OF
MATCHBOX SOLUTIONS
VENKATA SUBRAMANIAN
FOUNDER, MD
LIBA Insight’09 National Management SymposiumNov 5th , 2009
Chennai
Emerging Business Models : Social Entrepreneurship
Who am I ?
Why I became an entrepreneur ?
Why ‘BOP’ ? Why a ‘social’ business ?
What’s in a name ?
What’s the BIG idea ?
Do you need a co-founder ?
Why eFarm ?
What we learnt from the street ?
Where we stand today , and the road ahead ?
Technology for BOP – What works and what doesn’t ?
The ‘F’ word : Funding – Friends, Family, Fools & Father-In-Law
The story line
Who Am I ?
Venkata Subramanian Founder & Managing Director, Matchbox Solutions &
eFarm, Chennai
Brief profile :MS (Computer Science), 2003,University at
Albany, NY ,
B.Arch , IIT Kharagpur ,1995 , India
12 years of experience in IT industry in both
technology & commercial roles (7+ years in US)
Head of key outsourcing & consulting accounts in
Insurance, Capital Markets & Banking
Currently Better known as ….
IIT
Sabjeewallah ;-)
IT enabled
Annachee !!!
Weekend
beachside
Organic
Carbazaar
guy
Why I Became An Entrepreneur ?
Coming from
a typical
‘Tam-Bram ‘
family , It
took me 12
years of
preparation
to feel I am
‘ready’ to be
an
entrepreneur
.
An ‘empty’ feeling within that ‘I have
not accomplished anything with my life’
Motivated by other entrepreneurs
The ‘India Inc’ rising stories in press
Movies – Swades !!!
Growing support structure for startups –
mentors, incubators, forums, magazines
Why a ‘Social’ Business ?
NGOs – driven by passion & cause ,
very fulfilling but lack sustainability,
funds to operate
Corporates – Driven by financial
profitability as success, but no
commitment to social upliftment
Social business : Best of both worlds
Why ‘Bottom of Pyramid’ ?
Poverty is relative – an analogy : Bill
gates v/s Azim Premji v/s ME v/s
Muniyamma v/s Unemployed MBA (?)
Poor people Pay MORE for LESS
CK Prahlad and the BOP mirage – BOP
as a ‘buyer’ v/s BOP as a ‘seller’
Farmer BUYING cellphone or insurance
v/s
Farmer SELLING rice
What’s in a name ? A Logo ?
•A conversation starter
•Memory recall
•Matches the company’s objectives and vision
What’s the BIG idea ?
A critical pain area = BIG business idea
Social sector is FULL of critical needs,
unmet demands and urgent solutions
It is not just a NICHE area, it is a
VACUUM owing to very little players
100 people can have the same ‘idea’ – it
is how you implement it that matters !
Why
• Was Not our idea – we just worked on
a ‘crisis’ situation which was being seen
as somebody else’s problem
• Was not ‘our’ business model – it is an
amalgamation of several paradigms
and practices from other industries
applied to the agri sector
• We saw – “Elephant and six blind men
“ situation with agriculture crisis
The Indian Agri Supply Chain Current State : Too Many Steps , Too Little Value
Wholesalers to Retailers
Terminal markets to neighborhood wholesalers
Regional mandi to Terminal markets near
large cities
Harvesting of Vegetables
A local mandi auctioning
Local to Regional mandis for Auction
• Unorganized, unregulated, unprofessional & unprofitable
• Lack of demand/supply data
• No reliable sales, distribution, marketing channels
• Poor logistics and storage
• A Middlemen’ dominated market
•No IT/ERP usage – decisions are adhoc and arbitrary
1
2
3
4
5
6
Retailers to Dining Table
7
Loss in transit
40%
Price hike
End to end
> 400%
Farmer’s Crisis : Fact from Fiction
Farmer’s REAL needs – Not money but Marketing !!
Break even price – Not even profit !!
Labour crisis
Land is plenty – but water is scarce
Rural – Rich , Urban – Poor
Migration to city
Rapid urbanisation , Loss of prime land
Need to shift from Supply driven to Market
driven agriculture
Why
• We had NO background or
Knowledge in agriculture
• gave fresh perspective to the problem
• The ‘REAL’ need from farmers was
‘Marketing & Planning’ support
• Which was our key strength area
• Food is a basic necessity
• supply is dwindling, demand is rising
• The entire supply chain needed fixing
, not JUST production
Farmers
Cooperatives
Collection centers
Village ICT kiosks
Phone booths
Mobile operators
Storage
Warehouses
Value added resellers
Sorting , Grading , Processing, Packing
Small Independent transporters
Intra-city small tempos
Kiranas
Self Help
Groups
Hawkers
Bulk buyers
Exporters
Logistics Fleet
operators
The BIG idea: Connecting the dots
The BEST example of supply chain
management system ???
•IT Systems usage : NIL
•Management team : Illiterate and average age of 55
•Age of company : Over 150 years
•Customer Segment : From slumdwellers to crorepathis
•Operational efficiency : Six sigma !!!
The Mumbai Dubbawallahs !!!
•Key success factors : (video English Hindi)
•Highly decentralized operations – agile, flexible , scalable
•Use of low cost transport medium – trains
•Use of human power for last mile delivery – No Fuel related hikes
•Strong customer relationship – personal , localised
•Simple coding, routing, labelling system – operates even without electricity !
•Delivery excellance – fixed time , professionalism
Can we replicate this system in the agri
supply chain ?
Fix the process first
And THEN
Implement
technology
Otherwise will be
a failure …..
Development of ModelStudy of existing supply chain
Visits to farms
across Tamilnadu
A Roadside farmers
auction in a village
Govt. farmers
direct sales market
,
Theni & Hosur
Developing the model
Discussions with
Agri experts ,
Supply chain
managers, existing
models , industry
veterans
Discussions with
NGOs ,
Microfinance , Rural
banks & self help
group members
(centre)
Forming pilot focus
group with
representative
members across the
chain
Setting up the piloteFarm office
and godown
at Mylapore
, Chennai
Upgraded
vending carts ,
standardised
weights and
measures
Distribution
centre at
Chennai
(godown)
Why a co-founder ?
Complementary skills
Technology skills v/s People skills
Bring in different perspective /
balance
Women element – To reach out
to target segments
Srivalli
Co-founder
MD
Life partner
Social Impact : BOP segmentMurugesan, c
oconut
farmer, with
graded
coconuts
Small
tempos for
local
deliveries –
powered by
eFarm
Only a
phone call
away … a
vegetable
vendor
enquiring
prices
Panjali picking up vegetables from our Mylapore centre
eFarm
mobile store
at an old
age home
DisABILITY : Working with their strengths
Cut
vegetables
Peeled
onions
and garlic
Agri waste
collection and
composting
Over 60% of our staff have some physical or mental disability
Sorting
Grading
&
Natural
Ripening
Of fruits
ICT in Agri marketing :
Market Analysis and Decision Support
Koyambedu
nadu tomato (data courtesy : TNAU-INDG market
information portal)
Ottanchatram
nadu tomato
Where to sell ?
At what price ?
Head to head comparisons
across
Markets
Insight - Support level prices and
inflection points
High / Low variations
Identifying ‘hoarding’ and
‘cartelisation’
MIS / Data warehouse
Drill down to
details
Dashboard summary
For senior management
Highlight
potential
problems
and issues for
immediate
action
Start Small – Grow Big
Often large organizations fail in rapid expansion phase – too fast , too soon
eFarm would expand in a sustained controlled manner as shown
Create 1 fully functional, fully sustainable unit (eg could be a collection centre , or a distribution centre or even a store)
Replicate the successful model into two
Ensure continued viability of this expanded unit
Continue to ‘divide and expand’
In case of any issues, we only need to take one step back to prior state and rebuild
At a given time, number of units would be a measure of 2n where n is time taken to replicate 1 step
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1 -> 2 -> 4 -> 8 -> 16
…
What we learnt from the street
Humility : We know very little about
the poor – their aspirations / needs
/ desires
Poverty is not a career choice : They
do not want their children to suffer
their fate
Building Trust :Relationship is built
over time by direct interactions – not
virtual
What we learnt from the street
They do not want subsidy or
‘free money’ because it doesn’t
last – they need stability, self
respect
Self help groups need HELP–
lack of support, cohesion, family
tension
Voice / Mobile technology : Bridge between
ICT and India’s rural farmers
ICT Technology and the BOP segment : Challenges
• High illiteracy
• Even amongst educated – Mostly local language skills only
• Low computer skills , Low internet penetration Technology Adoption amongst BOP segment
• Highest and fastest penetration : The mobile phone
• Self taught the phone interfaces , usage
• Pay full price for new models , talk timeeFarm Interface points
• Voice call centres / BPOs (local language )
• Natural language IVRS ( 2 way –automated messages)
• SMS
Tips to Social Entrepreneurs
The biggest threat to your
business is right inside your
home ;-)
Walking a thin line between
emotional judgments and
business objectives
Tips to Social Entrepreneurs
Technology
If the only tool you have is a hammer, you tend to see every problem as a nail- Abraham Maslow
Voice is STILL the killer app for Indian masses
Go for the ‘pull’ factor from your target audience
Seed Funding
The 4 Fs : Friends , Family , Fools & F-I-L
Angels , VCs – More tech centric
The government – Lack speed
Customers & Suppliers – Best bet !!
Oppurtunities in the Agri Supply Chain
Farmers
Rural Produce
Collection Centres
Quality
Inspection/ Grading
Cleaning / Packing
Routing
Long haul
Transportation
Urban area
Distribution centre
Small retailersLocal vendors
Food Processing
units
Exports
Bulk buyers
(Hotels / Caterers /
Retailers)
Compost/Manure
from waste
eFarm Common Services
Planning &
CoordinationResearch
Call centre /
CommunicationTechnology
Training &
Support
Local
Distribution
Business Potential
An untapped , niche market with very few organized, entities
Revenue generation through better optimization, value addition across the chain
Reduced wastage in transit = more revenue
Has potential to jumpstart other agri-dependent ventures
A professional ly managed supply chain is vital for tapping international markets
Potential to scale across India as core problem is wide spread
‘Pull factor’ from rural India for other services and products
Social Impact
Organizing the large unorganized agri sector of India – bottom of pyramid
More income to farmers , truck operators and small vendors owing to profit sharing across the network
Support to traditional , eco friendly farm practices , organic farming through better marketing
Convert waste to compost , providing low cost manure back to farmers.
Revival of agriculture dependent livelihoods , empowering villagers
Under privileged/Disabled and urban poor get employment opportunities