Lessons from My First Venture
Date: Sunday , March 04, 2012
Krishnan Ganesh, the Founder and CEO of TutorVista, and the CEO of SMARTHINKING, shares his experiences and the lessons he learnt from his first venture.TutorVista is an online tutoring company which was founded in 2005. Both these companies are part of the Pearson Group (NYSE:PSO, UK: PSON), a global leader in education, teacher training, education technology and school solutions.
It provides online tutoring at affordable prices, and has a tutor base of over 2,000 teachers across India, U.S., UK, Australia, China, and South East Asia. Apart from online tutoring, it also provides Test Prep Help, Homework help, Supplemental Tutoring, and gives assistance to the students before their tests and exams.
Prior to founding TutorVista, Ganesh had founded IT&T (acquired by iGate) and CustomerAsset (acquired by ICICI and now publicly listed in India as FirstSource Solutions). He was also Chairman, investor and advisor in the Data Analytics BPO firm Marketics till March 2007, when the company was acquired by the NYSE listed WNS for $63 million.
Apart from founding and successfully growing the four ventures, Ganesh has worked as the CEO of Wipro/Bharti British Telecom - a British Telecom JV in India, and held senior management position in HCL Ltd. In a candid chat with siliconindia, Ganesh shares his experiences and the lessons learnt from his first venture.
First stint as an Entrepreneur
My first venture was IT&T. During the initial years of my career in the hardware industry, I came across customers who faced issues with the maintenance of their computer. This gave me the idea to start IT&T. I think my biggest learning from this was managing the cash flow successfully. The company’s inception happened during a period when neither venture capital nor angel funding was popular, neither was the services industry (which was our business model). It was also a period when only manufacturing businesses were mushrooming and their requirements were different from the services sector. At that point we did not think about monetization or raising money. The whole focus was on paying employee salaries at the end of the month. IT&T taught me that for an entrepreneur it is not about EBIDTA (Earnings Before Interest, Depreciation, Tax and Amortization), EPS (Earnings Per Share), or profit margins, but about having a positive cash flow. If at the end of the month, I have cash to pay all my expenses, then I have a successful business; if I delay salaries or vendor payments, then it is an unsuccessful business.
What I Learnt
My first venture taught me that besides managing cash flows successfully, one also needs to select the right co-founders and partners. At IT&T, I had five partners with different backgrounds. But over time, we had to buy the shares of a couple of partners, as there were differences. That taught me the need to choose partners carefully and also to build a strong team, right at the beginning. In my subsequent ventures, I took care in selecting the co-founders and partners, and it was a great experience as I partnered with the right people. I realized that it is important to have co-founders with diverse skill sets who can meaningfully challenge each other, rather than always being agreement.
I also learnt the importance of having a sound business strategy. Usually when you start a venture, you always start with passion and excitement. But it is equally important to build a business towards an objective. Without that objective, it is difficult to exit, scale or monetize any business. I did not do that in my first venture, but in all my subsequent ventures, I had one eye on the goal and we progressed towards it.
Turning the Constraints to Advantages
When you are an entrepreneur, you learn very fast about handling unexpected situations. During IT&T days, in the initial months we were scouting for our first corporate customer. As a startup, companies were unwilling shift their computer maintenance from established names like Wipro and HCL to a new company. One of the top Indian companies wanted to visit our office as a part of their evaluation and due diligence. During the visit, the fact that we have just a one room office and one telephone line came up. But we positioned it as saying that we offer just single point of contact, one phone number for all their problems, will never put their call on hold (there was no facility for call holding), and we will not transfer their calls (there was no intercom system to transfer the call to). This became a major differentiator, since none of the other companies could promise or claim this and we won the contract. This, in a light hearted way, demonstrated how you can turn your constraints to your advantage.