Innovator - Journey of a Lion-Cub

Innovator - Journey of a Lion-Cub

INTRODUCTION

Feel elated to be in your company as I walked in as a stranger and going back home with fifty great relationship. IIGP is the first innovative platform in India as a start-up ecosystem. IIGP 2.0 is an amazing platform as we all are the chosen one who have been the choice of Government of India’s umbrella organisation of research, that is, Department of Science and Technology. To add feathers to this beautiful programme “Honorable President of India” directly got involved in shaping the second generation phase of IIGP after completing ten years time.

As an innovator in the start-up ecosystem I have travelled the road less travelled by. With this journey I share the same experience and climate of the beaten path. After being on few innovative platform I am sharing some probing thoughts which may bind all of us with the same thread. My expression will be little rough in few places as I want to be in my natural state which I find is necessary to ground my own self. If  these situations is not tackled at the earliest by me then I will be in a state of self-pity which will make me to wait for every opportunity to blame others for my own failure. I will start my side of story from here.

Business is jungle and weak is eaten by strong overnight. I must remember that I have chosen this path all by myself and I am totally responsible for it. So I am a lion-cub left alone in the midst of jungle. No one is going to come to rescue me. Don’t expect I am going to be funded just like that. It is a business world and out here here, there are no free lunches. So it is necessary to show as an innovator how I have more devouring feature than the rest. It is totally left to my capacities to substantiate to the external world that I am a lion-cub and not a kitten. I am aware that out there many lions ready to pick me up if I am spotted with there breed. As I am an orphan cub it is necessary for me to chase the lion for a far distance without giving up my stamina. It is also necessary for me to know whether we are interacting with lions or a wolf under a lion skin. It is very necessary to learn with whom I am interacting as no one can hide their true reality for long because it is all about sharing of meat.

One more dilemma I overcame was that sub-consciously I involved by looking at other innovators how soon they were picked up for a higher value. It is very important for me to drop this comparison as I learnt that I have chosen in the beginning my train which goes to my desired destination. So it is irrelevant for me to compare with others as neither the distance is same nor the destination. Therefore, I must know what I share in common is that we all are travellers sharing the same experience on different paths. The only thing which I must feel proud is with our usage of product (neither the quantum nor value) because our creation as an innovator is definitely bringing some progress in our society by adding some employment, value along with the process of change.

The next dilemma of relates to entering into a competition and not making into the final list. I have entered into a competition by by my own free will. There are going to be winners and losers as selected by others which can be subjective, objective or mix of both. Winners get medals and loser gets nothing. So when I got selected I did not have the problem so when I do not get selected I should not have a problem too. I have experienced that winner always need not be translating into a successful business and loser have also become amazing businesses. So platforms are great opportunities and a means but not an end in itself. I will definitely share my thoughts in later part of letter suggesting how to be a successful business instead of winning some medals.

Dear friends, after going through several rounds of competitions, I have strong connect with my fellow-mates who are also teachers beside the organisers of the programmes and the mentors who bring amazing experience along with them. This is how I have been expanding my SOCIAL CAPITAL in order to translate into a successful business.

RAISING FUNDS

I first did a reality check to know where I am and where I have to be. I had two product in commercial kitchen which has many application besides cooking. The introspection led me to know my gaps. I wanted to stay alive for next two years but had vision to become a global brand. Hence striking a balance between two was an amazing experience. The vision made me to decide easily which segment should be my immediate customer and what should be my related business model. After assessing what it takes, I evaluated how much money I will need.

By this time I had taken small amount reluctantly from an opposite door neighbour who offered taking ten percent equity. I took portion of money with clear terms that the monies which brought will be a debt with FD interest payable at the time of converting into equity after two years. I also placed a responsibility that incumbent to handle and head finance as he was a Chartered Accountant. 

Beside my neighbour, many of my friends who were coincidentally Chartered Accountants were excited with my project and were keen to invest. I made the same proposal of convertible debt for raising funds which everyone agreed. But on the date of real negotiation my friend said why don’t I value the entity today. I shared that the investors may not accept my value so I do not want to create any disturbance with my partners with whom I will travel for a long time. I want everyone to get the right value for investing. My friend still shared that you express whatever you have in mind, it will give an incumbent and option to choose equity route or convertible debt route.

The valuation of our entity was arrived by taking five years projected sales based on current sale or fifteen years of profits on average profits, whichever was less. The valuation proposed was accepted by discounting it by 10% and the new group entered with that valuation. The neighbour investor found himself too tight as he could not bring the monies for his proposed equity nor accepted for convertible debt in future. When the picture became very clear I settled the matter amicably by giving him an exit route at the rate of eighteen percent for the monies utilised.

As the purpose of dilution of funds was clear the mandate started to achieve the milestones. Becoming debt free, expanding new products and business expansion was immediately on cards. What is going to come now is the most important aspect of business.

TEAM BUILDING

Team, team and team is only we need for translating into a successful business. Mostly start-up are bootstrapped for funds who may end up borrowing from friends and relatives, where the group not only become part of the team but are assured with unwritten expectations. If the arrangement works cross-purpose, then it should be considered as the first fault in the team building process. Innovator need to be ruthless here as it is the foundation for efficiency and effectiveness for eternity. In my case I am working with friends who are three decades old relationship. I have clear business engagement relationship with milestones. I have made it clear if business and friendship comes between I am going to sacrifice the business relationship with them.

As an innovator, despite being a finance professional it was necessary for me  to relinquish finance, marketing and HR which I was holding onto. As no one had any technical knowledge on core competency of R&D,  I decided firmly to create products by expanding the team. At the top every member chosen was after thorough efforts. It was a slow and very tight process especially keeping the long term vision in mind. Though slow it was a time consuming process, the revenue generation platform got little delayed, but it was compensated by creating more number of products on the table for sale by R&D team. Every innovator however talented one may be have to do this reality check and move firmly without ego to place where one belongs. I reiterate to every innovator without a strong team no business can become successful.

CRUCIAL KNOWLEDGE

Every innovator in order to become successful has to have the following financial knowledge. For the proposed knowledge the innovator relies on a professional and that’s where the problem starts, as the handle is in somebody’s hand than oneself. So it’s a suggestion to every lion-cub that complete knowledge is not possible but functional knowledge is a must and there is no shortcut for anyone. 

At the end of each day the innovator must know the closing value of items of 1.Inventory (Raw Material/ Semi-Finished/ Finished Goods) 2. Purchase/Sale 3. Creditors/ Debtors 4. Cash/Bank

Business is nothing but rotation of inventory. Every rupee is converted into exponential times to become a sale. Say like one rupee inventory transforms to five rupee in sale value. So loss of one rupee is equal to loss of potential five rupee which is further added by one more rupee as fresh inventory need to be acquired again. Hence knowing inventory and its cycle time of rotation is the heart of knowing a business. The inventory knowledge will empower us that all purchase and sale whether cash or credit is accounted for as your team has to necessarily update book on daily basis.

I will now ensure that necessary inventory is available and the unnecessary material does not pile up. By knowing the right inventory I can keep my working capital exactly under control as the working capital is mostly exposed to bank finance. Updated inventory will enable me to immediately raise the final invoice to the customer leading to earlier realization of funds. Treat every sale as NPA till it make your pocket jingle. This move will make the team to be on toes and will not get lethargic when the sale is made.

The daily balance of creditors and debtors balance will enable us to know how much cash is needed or how much free cash flow is available. The real time cash and bank balance will enable every person the diligence of payments made and income earned. It is the knowledge of this area financial drain/accumulation is known. By knowing all the above items business is under my control though other items of financial management will slowly start moving into my mind over a period of time. 

Another great lesson is on managing criticism which disturbs every innovator. I have experience that sustained enthusiasm is constantly needed in my blood stream to stay alive. It becomes more a challenge when I am surrounded by energies which points more my mistakes than highlighting and appreciating the good work. It is here I say it again that it is my journey and it continues as long as I keep walking on this path. 

I learnt that it is natural to any psyche to get attracted to any great work. Once attracted to great work I found that people instead of appreciating will attempt only to bring me down by identifying my faults. So here it’s the good news that criticism by a person is the first sign that I have done something amazing. Next by criticism I am getting an amazing opportunity to improve it further by chiseling. So people criticizing are not my enemy but my master as they are enhancing my capacities. This is what is my side of story.

Before I leave let me say it again that Innovators are greatest at creation whereas execution needs totally different set of skills. Very rarely in the world of creation, actor-director are same person. Therefore, as long as the skills are not acquired, my request to all innovator is to only focus on their zone to prevent oneself from burnout by doing everything by themselves. 

Every step I make is leaving a footprint of a cub which is not the same again. It is not that I will realize it now but sooner or later when my roar with a final punch will bring down my challenger it is then one will realise that it was the biggest mistake that I was treated like a cat than a LION.

Good Luck to all Innovators 

The article is dedicated to all the participants of  IIGP 2017 at IIM-Ahmedabad while Bootcamp from 25th-27th June 2017. A special mention about Hilmi Qureshi, innovator, who shared exactly the same thoughts.