Why did you decide to become an entrepreneur? Why did you not pursue a regular job?
I was working with P&G as the Finance Manager of Gillette. Though quite satisfied with my job and scope of responsibilities, after achieving a particular level of professional success,
I started to face a mid-life crisis (laughs). I had all the material luxuries one would dream of, but somehow it was not very exciting going to office.
That was when I started asking myself the so-called philosophical questions, "What do I really want to do in life?", "What is my larger contribution to the world?" This feeling was accentuated by my belief that I was capable of much more, but this job will not get me there fast enough.
The very first answers that struck me were: join Politics, work with an NGO or become an Entrepreneur. However, I believed myself to be a total misfit for politics. Joining an NGO would mean choosing "ORs", while I wanted to go for "AND" (financial returns and contribution to the society). I wanted my long term material comforts and I also wanted to make a difference. Entrepreneurship seemed to be the obvious choice.
Teaching had always been a passion (previously taught at IIM Bangalore, National University of Singapore and SP Jain Dubai), and education sounded like a brilliant idea. The idea would also fit my definition of social entrepreneurship - pursuing personal interest in a way that leads to value addition for the society as well.
In India, only 13% of the population is employed in the organized sector. Rest remain either un- or under- employed, despite a booming service sector that has been growing at 22%. It presents a peculiar national challenge and also a great business opportunity, that can help in the developmental needs of the society. This led to the build-up of the "0x10" Vision of Elements Akademia (EA): "Making 10,000+ Indians employable by 2010" leading to $10 Mn revenues for the organization.
Can you tell us something about the initial years- what kind of challenges, struggles did you face?
(1) Initially, as I started, I was living off a suitcase for 6 months. I arrived in India in September and till April, I had not rented a house; I was traveling continuously. Working hours were long - 16 hours, 18 hours, even 24 hours at a stretch at times.
February and March were especially bad, which was a direct result of fast growth leading to expansion and scale-up. I was working extremely hard, but results did not seem to be coming. We were facing financial crisis coupled with operational crisis.
But then I managed to get some really competent people onboard. One of them is Vinay, a 1996 IIM-C alumnus and formerly the BU Head of Marketing in Airtel. Investing in people was probably the best decision I ever made.
(2) The most difficult situation was faced when one of India's largest BPO offered to buy a 20% stake in the company for Rs6 Cr. We signed the term sheet but then there was delay from their end. My CFO kept reminding me that we were running out of working capital. But I kept telling myself that the deal was almost closed and that we will be getting money very soon. But the dates kept pushing, and finally the deal fell through!
We reached a situation where we had no money to pay salaries to our employees. Those 8 days were the most horrendous days of my life. Even raising money within such a short span was not feasible. The fact that 90% of the companies collapse for the same reason (running out of working capital), kept haunting me.
That was when Mr. Rusi Brij (CEO, Hexaware), who has been a mentor to me, came as an angel. I happened to mention the problem to him during one of the conversations. The next morning I was surprised to find an Rs15 lakh cheque on my office desk.
(3) On a more personal side, living in India after 10 years of luxury abroad was slightly difficult. Especially for the spouse, there is no incentive; they are not driven by the dreams like the entrepreneur does and they generally suffer more. Here, right expectation setting and balancing becomes very important.
In such situations, it helps to try to find something that can engage your spouse. In my case, my wife is very fond of cooking. I could manage to get her in touch with Sanjeev Kapoor, to get a chance to work with him on one of the TV shows. She was really excited about the opportunity and it surely helped keep her busy for some time.
What was the turning point in your business?The real turning point to the business came when we were able to open five new centers in a matter of four months. We were also lucky that education sector was booming in India.
We went for a second angel round of funding, and, within six months of starting the firm, the valuation reached $5 mn. There was a big line of people who wanted to invest in the company, but we did not want to sell off.
Did you at any point feel like giving up and getting back to a regular job?
(Laughs) A lot of times. Thankfully all momentary thoughts. The most recent one being when I received an offer from a very big man in India to potentially buy my 80% stake in the company, while I can continue to run the company as its CEO. Definitely very tempting - sometimes, after months of hard work, you feel like relaxing! But then, our board and I felt it was too early to sell.
What drives you?
Just one thought, "I don't want to die a might-have-been; I want to leave a legacy behind me".
Who do you consider as your Inspiration / Role Model?
I have always been inspired by Gandhian ideology. In fact, as a kid, I also started a Gandhian society in the colony. I admire him for the fact that he believed in something that no one else did, and still was able to mobilize the whole nation by sheer power of conviction.
Could you please elaborate on business - the operating model, the differentiators of your business, plans to scale up etc?
Elements Akademia is India's first national chain of finishing schools aimed at bridging the gap between academic theory and industry requirements, thereby making "Graduates Employable".
India's Service Sector is booming (60% of GDP, up from less than 40% in 1970; 17mn new jobs by 2010) but faces an acute skilled manpower shortage, despite the presence of a large graduate pool (15mn+, 2.5mn new graduates every year). A part of the malady is perhaps in our university education system which offers degrees but often fails to make graduates "employable"- which is why organized Sector employment in India is still a pathetic 13%!
Elements Akademia aims to bridge that gap by offering a 6 month part-time vocational course designed with the help of our corporate partners, who are leading players in various service sectors like Insurance (Max New York Life, HDFC Standard Life), BPO/KPO (Genpact, WNS, Accenture), Retail (Reliance Retail, Mobile Store), Banking (Kotak Mahindra Bank. Bank of America Continnum) etc. The content covers the entire hiring requirement in these companies, so students have a 20X greater chance to get selected versus applying without doing this course. It includes Business communication, Personality Development/ Grooming, Managerial Effectiveness, Basic IT and Domain knowledge in areas of KPO/BPO, Retail, Insurance and Banking/Accounting.
We have a bold "10x10" vision... Making 10,000+ Indians Employable by 2010 - reaching out to 20 non-metro cities to attract students, train them, and then help them get placed in our partners and beyond. We focus mainly on Tier II cities where "employability" is a major challenge.
The academic rigour of the programme has been very well received by existing students with 91% students rating the course Excellent (in a biweekly confidential survey). The first few batches have graduated with an 80%+ placement, mostly at starting salary of Rs. 10,000 CTC per month.
The course fee is approx. Rs. 20,000 for the six month course. There is also a merit-cum-means scholarship upto 50% - sponsored by IIM Alumni - for students with monthly family income of less than Rs. 6000. Some corporate partners also return the fees to the students after few months in job, so effectively the students do the course free.
In the past 8 months, we have scaled upto 5 cities (NCR, Bhopal, Lucknow, Jaipur, Kanpur) with plans to open 5 more offices within 08/09. We have more than 1000 students already registered with us, and are attracting 200 new students every month.
We were recently selected by Nasscom as 1 of 8 companies in India for personal mentoring. We are also 1 of 4 high impact entrepreneurs selected by Endeavor (final round in Dec 08). We have had more than 70 articles on us in all the leading newspapers of the country (refer website). NEN recently nominated us as one of the Coolest Startups of the Year.
Key Differentiators of Elements Akademia
Elements Akademia has a unique tie-up with KJ Somaiya Business School (one of the Top 20 MBA programmes in India) to collaborate on course content and all students receive certificates formally endorsed by the latter. This ensures life-long resume value for students of Elements.
Elements Akademia is already cash positive, i.e. generating cash profits month-on-month in the first full financial year already. The company is on track to deliver 50% Return on Equity in Year 2 itself (i.e. FY Surplus Cash will be more than 50% of initial capital raised). The company is wholly owned by its angel investors and management team.
We are the first in India to offer 4 specific performance Guarantees (30% financial penalty to us if these guarantees not met):
- 70% of students will rate the Training Good or Excellent (so far our record is 90%+).
- 70% of students (who have 85%+ attendance) will show minimum 50% improvement in a scientific Employability assessment (including on Nasscom English scale).
- In Professional colleges, 25% of Training will be delivered by IIT/IIM Alumni (we have 50 part-time consultants in our network).
- 25% placements.
What are the growth drivers / vision for your enterprise?
Growth will come mainly from three areas:
(1) By opening more centers
(2) By offering more courses
(3) By pricing the courses higher as we move up the value chain
We currently have just five branches, while NIIT has 200 branches. There is a clear-cut scope for at least 40 times growth.
Tips for budding entrepreneurs
- Get clarity on business plan. You would be in love with it, but show it to unbiased people. Ensure it stands an objective scrutiny.
- Follow your passion, and not just money. Money will follow (and it is fair to be motivated by it), but let that not be the only reason to start a firm.
- Be prepared for the long years of hard work. Success will take time and will have low chance (only 5% startups survive the first 24 months). Be patient.
- Make your financial plans and then raise 5X of it. Things will keep changing as you learn the business.
- Go deep, be detailed, lead from the front. You need to personally be delivering business AND guiding rest of the team to deliver.
Enjoy! When the show ends, these will be the moments you will most relish.
An Update on Nishant's Entrepreneurial Journey
Since we profiled Nishant, Elements Akademia has been voted India's #1 Social Enterprise: http://www.financialexpress.com/news/elements-akademia-wins-indias-first-sankalp-award/457361/
Elements Profiled on Economic Times Business Channel ET Now: http://www.elementsakademia.com/
Elements profiled in Mint (WSJ India JV): http://www.livemint.com/Articles/2009/02/26223757/Training-with-patience-Elemen.html