Young Entrepeneur Series - III

Vibhor Agarwal (IIM B 2005) quit A T Kearney in Nov 2006 to join his family business in heavy engineering 'Multimax' in Meerut.

Over the phone he told me: Everyone keeps asking,"Why?". When I visit a marriage, relatives will ask - even though I am from a business family. “Why did you leave such a good job. There are so many headaches in business. Excise problems and yeh woh”.

But Vibhor was very clear.

I worked at Deutsche Bank London for summer and then at AT Kearney. So I saw what banking as well as consulting was about neither fit into my long term goals. I made a very informed decision to join my family business.

Last 12 months I have not missed consulting even for a day although I enjoyed that job also.

For me it was not so much of a risk as I was getting into an existing business, not starting from scratch. Hence no financial implications.

My dad started this business 27 years ago after graduating from IIT B but it did not really take off so he went into jewellery retailing and this business was just languishing, not professionally run, v small scale running on auto pilot. My dad was planning to shut it down so I took it over

It's a manufacturing business - hardcore mechanical engineering. I had to relearn all my engineering fundaes in the first 3 months. I am a chemical engineer, incidentally. From working on a laptop 24 hours I had to go to the shopfloor and get my hands dirty.

What have I been doing? Trying to make the company more professional (small things like documenting things in a proper format). Attract people from bigger companies with experience in this field to work here. It's v hard - giving them the right package + job security.

My dad was very hands-on operational, he never thought of getting in experienced people and delegating work to others.

The company right now is small – really small. But Vibhor has big plans. What follows is a longish description of the journey so far. (via email, in his own words). But hang on, coz it's worth reading!

Name: Vibhor Agrawal
Age: 27
Education: IIT Bombay (2003 batch), IIM Bangalore (2005 batch)

THE PERSON
Born in a business class retail jeweller’s family with not much background in academics except for my father who is also an IITian. Family known very well throughout Meerut. Schooling from LKG to Std. XII in St. Mary’s Academy, ICSE, only boys convent school, topped through most classes, passing out as school head boy and best student in school award.

Aspirations as a child, and an adult:
Wanted to be an engineer from starting. Nothing else. As adult, now am aspiring to be a successful businessman who gives back to the society through capitalism.

Would you describe yourself as a ‘regular’ child or a little different from others:
Regular child

I would describe myself as: (in terms of personality traits)
A typical Piecesan, day dreamer, soft spoken, determined, competitive, socialist in the disguise of a capitalist, patriotic, shy, etc.

Any work experience:
pre MBA: none

summer training: Deutsche Bank, London – commodity trading and securitization research desks

post MBA: 18 months with AT Kearney, management consultancy firm

Learnings from this work ex which you can apply in your current project: Several learnings – made me more professional, disciplined, more polished in dealing with people, wide experience of sectors and functions to talk about, good network of people to leverage, improved excel, powerpoint skills greatly.

Even I before IIM was a nerd. The importance of softer aspects I learnt only at IIM

THE DECISION
Did you know you would be an entrepreneur before you joined the MBA program or was the decision taken on campus.
Knew it before joining the MBA, it was only a matter of when to take the plunge.

Was there anything like an 'aha' moment when you 'knew'?
Might not make sense, but going through the Fortune 500 companies. I just knew I had to build one that made it to that list. Otherwise also, everyday in ET when I read about some businessman doing something or read about some entrepreneur making it big, I felt I was wasting time doing consulting.

Was there any course during MBA which helped to at a psychological or practical level to make the decision?
Corporate Finance and Financial Services both taught me all I needed to know about business financing.

People who helped/ hindered your decision
My father – my biggest influence and teacher
My IIT thesis guide, Prof. Shenoy – a very practical businessman prof who runs a very successful net based business while teaching in IIT. He kind of pushed me to take the step sooner than I had thought.

How did your family react and how did you handle it?
Contrary to others, my family was extremely happy considering I was coming back to run the business.

I knew I could not get into my family’s traditional jewellery business as it was not my cup of tea. I liked the little heavy engineering business my father had started 25years ago but was lying dormant. So I chose heavy engineering even though it was not even one-tenth the size of jewellery business.

THE PROJECT
We are manufacturing heat exchangers and pressure vessels (tanks and columns) for chemical plants, power plants, fertilizer plants, sugar plants, etc. Basically plant equipments.

Are you enjoying it?
Yes very much. I liked engineering as a subject and am glad to be back to it.

How is it different from what you would have been doing as an MBA employed by someone.
As a consultant, I was building financial models, powerpoint presentations, process design documents and other analytical work.
As a businessman, I am meeting different people, taking decisions, doing a bit of everything from marketing and sales to IT and operations.
The basic setup was already there. I planned the experienced team of people I needed, the infrastructure improvements and the companies to target for getting orders.

Which MBA models/ fundas, if any, are you using in this project. Or is it a question of unlearning everything :)
The funda of people management which I guess I learnt a bit while doing team projects in MBA and during my job.

What is your business model. Is there anything new or different about it vis a vis the general industry practice?
Our business model is to deliver on quality and time while matching competitor’s price. In general, most small businesses of our size in our industry, try to get by with low quality work.

Any example of how your company is taking a fresh or different approach to the business in terms of strategy/ marketing/ product design etc.
As an educated MBA, I know the worth of having good experienced people in the business, the worth of providing them the right environment to work, of motivating them when they are down and of paying them well for their services. Unlike services sector, manufacturing sector is not that people friendly. My approach has been to apply some of the basic things of services sector to manufacturing such as strong HR, good website and a good working environment.

Is your relative youth and inexperience an asset in some ways?
It helps to be asking basic presumption breaking questions to my employees and my father. I am teaching my company to leverage the computer more greatly while doing design and costing (earlier done on paper), to cooperate with customer rather than fight, to imbibe quality not as a statutory requirement but as a basic need for good business.

THE PRACTICAL STUFF
Was raising funds an issue?
Until now, it hasn’t been as it has been bank rolled by my father, though he is a tough investor making us justify any demands. Next year, we will have to take loans from banks. Might rope in some businessmen friends of father to invest.

Your experience with banks and institutions (negative or positive)
Slightly negative.

Your experience with angel investors/ VC funds.
Not yet approached any, as ours is an old economy business.

THE PROSPECTS
Current turnover is Rs. 1 Cr flat. I expect to reach Rs. 100 Cr. in 5 years.

Key milestones, so far:
Conversion of company from Proprietorship to Pvt. Ltd. This meant an evolved employee policy with all benefits. Also cleaning up, painting and formalizing all the processes in the factory according to ISO 9000 framework.

Are you satisfied with the pace and scale you have achieved so far
Nope. I’ve taken my time to learn our business, to learn customer expectations and employee expectations. I haven’t yet cracked any major order myself.

What is your vision of the business 5 years from now
A national brand name, known for its engineering solutions.

Do you see yourself running this company 10 years from now
No, I hope to give over the operational work to professionals. I also hope to get into other sunrise sectors 5 years later.

Would you actively seek a sell-out before that time?
No, not as of now. Unless I am assured of the benefits of a sell out to the company and its employees and to me, I wont sell-out.

THE LEARNINGS
High points of being on your own
1. Do work at your own pace, sometimes very fast sometimes slowly.
2. Immediately take decisions that have an impact. Not having to do unnecessary long analysis.
3. Being able to put in place systems and procedures that have streamlined the work instead of the daily fire fighting that was going on before me.
4. Most importantly, not feeling as if I am doing work. So there are no work hours. The time in office zips by since there are so many things to do. Every little achievement brings immense satisfaction. Every little challenge pushes my thinking for new ideas.

Low points of being on your own
1. No company of similar aged colleagues to socialize with, to bounce ideas with, to take breaks with. Working alone and aloof in a cabin.
2. No more frequent flyers or stays in 5 star hotels. Not that it matters much.
3. No more multi-crore projects for big clients. No more meeting with rich and famous clients.

At such a time, what kept you going
The dream of seeing my company name in the papers, the dream of recruiting people from IIT/IIM for my company, the motivation that I have to go forward in life rather than go in circles of a job.

Things you wish you'd known when you started:
On a practical level, the whole tax structure such as excise, etc. On a personal level, how to recognize the right and wrong people and how to do business negotiations.

Any particularly tricky areas/ problems. How you overcame or are tackling them.
Business negotiations. Its complex and you have to be really tough. I am still learning the tricks by doing little negotiations and by watching my father and others do it. I was aware of this lacuna in me during my MBA as well hence I took a negotiations course. But that was a bit theoretical and naïve compared to real business situations.

Is the execution of your project going along planned lines, or is reality very different...
eality is very different. Many times I think I’ve achieved success only to return from near end point. This applies to many situations of recruiting key people or getting orders from customers. But with each failure, I am learning and doing it a bit differently next time.

Running a family owned concern – any issues of who is the boss etc?
Generation gap was one of the concerns floated by my AT Kearney superiors as well. However, me and my father have divided work between ourselves nicely. I handle all HR, marketing, development initiatives. He handles all finance and government related statutory issues. While there are debates and differences of opinion sometimes, there is a healthy mutual respect that lets us own our decisions in our domain. Since he too is well educated (IIT Roorkee, IIT Bombay), he understands and appreciates reasoning and logic. I think we compliment well.
Going forward, he plans to pass over his part of the job to me while I find competent people to handle my department. He would then concentrate purely on the jewellery business which he now finds more peaceful to do.

THE PRICE
Any chance you'll go back to corporate life?
Not as of near future. This business has to go down really for me to think about returning to a job.

What happens when you meet batchmates who are I-bankers and consultants? Any regrets?
Absolutely no regrets. Luckily I’ve worked through both I-banking and consulting environments. So I know what I’ve left willingly. It was a well calculated and thought out move and I haven’t regretted it one bit.

If you had to do anything differently what would it be?
One is I would have left consulting after another 6 months of experience by which time I would’ve been promoted to be an associate. Various personal and business factors pushed me into leaving earlier than I had planned.
Second is I left behind several small opportunities to leverage which I would’ve leveraged had I known my own business better that time. For instance, I interned in Toyo Engg during IIT. Today, I know Toyo can be a major customer for us, but I don’t have any personal contacts left in that company to leverage.

What are the factors which you think will be key to your company's success
1. Change in mindset of our shop floor people from a ‘chalta hai’ attitude to ‘chalta nahi hai’ attitude. They need to develop their skills and imbibe quality in their daily lives.
2. An owner’s urgency to business actions and decisions needs to be inculcated in every employee. Once he starts thinking of this company as his company the change will be there to see.
3. Meeting customer’s delivery times. Many big competitors in our field are failing in delivering quality product on time.

Any advice to ppl like you who may be choosing to become entrepreneurs after and MBA.
1. Select courses that you think will help you become better entrepreneurs than better grades for jobs.
2. Know your business better. Have a broad business plan on paper. This will help you spot opportunities early and leverage them better.

Should one go for work ex of 1-2 years and then undertake entrepreneurship?
I seriously think one should work for few years before taking the plunge. It really makes a huge difference once you’ve worked under somebody. Plus it makes you more professional, more responsible, gives you a few initial networks to leverage, etc. etc.

Is what you are doing now your ultimate goal or more an interim learning period
My ultimate goal is not constrained by any sector or type of business. The ultimate goal is to build a sustainable company – one that stays long after I am also gone – managed by professionals and in the process make a name for myself. My goal is also give back to the society by recruiting people, through corporate social responsibility and to contribute towards making India an economically developed nation.
Starting with a running business has saved me atleast two years of entrepreneurship pangs of building basic infrastructure, getting government approvals, getting initial finance, etc.

Living in Meerut after Mumbai and Bangalore. Is it an issue at any level with you?
Only at socializing with my IIT/IIM friends most of whom are in Bombay Delhi or Bangalore. Yeah in addition the traffic sometimes frustrates me. But otherwise, I am so involved in my work that it really doesn’t matter whether my office is in meerut or Mumbai.
In future, yes it will become an issue once I have family and kids. In this regard, I plan and hope that my business will reach a size where I can move my offices to Delhi while still running the work shop in Meerut.

When you speak to Vibhor you get a clear sense of his passion and determination. And you can't help but feel he is going to make a huge success of whatever he decides to take up in life. Meerut ya Manhattan.

We’ll keep track of his progress - watch this space!

Earlier in this series
Young Entrepreneur - I (Prakash Mundhra, Blessingz)
Young Entrepreneur - II (Mom's Kitchen)