The motivation for entrepreneurship

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Sitting at my window desk on a rainy day, as I was thinking about why I should be an entrepreneur, I spotted the vegetable vendor who visits our street everyday.

I have been seeing him since 2008.

He sold vegetables to our neighbour and took shelter from rain in their verandah for a while. Our neighbour spoke to him and then disappeared inside. Few minutes later, she came back with a tiffin box wrapped in a cover. I guess she gave him his lunch.

That gesture shows how much she reciprocates the goodwill he has created.

The guy is fairly reasonable, has a pleasant demeanour and is a hard working chap. People in our street depend on him and trust his arrival, even on rainy days.

On a day like today, it is easy for him to stay at home in warmth. That would mean few families have to go out in rain shopping for vegetables or make do with whatever they have at home.

Or he could apply a rain-induced surge pricing model and charge 2x on his vegetables. Profit maximisation by the MBA book. He doesn’t. In the process, he has earned the trust of his customers.

These guys are the real heroes of business who carry the society beyond their weight and get very little credit for it. They give me the inspiration that you can do a good job in any business irrespective of size.

As the rain subsided, he walked away pushing his cart. I came back to my thoughts and the motivations for why I am an entrepreneur.

Profit as a side-effect:

I have to admit that profit is one of the reasons we do business for. There’s nothing wrong about being profit-oriented.

Great businesses have profit as a side-effect of doing something profoundly good, not as a reason for doing business. Of course, keeping costs and cashflow under control is very important. People have to be paid good salaries and expenses have to be met. Or else, the business will soon be history. Profit ensures business continuity and hence, is important. But profit and money alone cannot be motivations for being in business. There have to be stronger reasons.

After spending some time thinking on it, being inspired by various people including the vegetable vendor, here are my reasons.

Pride in performance:

Doing a meaningful job and having pride in your work is very important. Ensuring high quality service, continual improvement, doing the right thing, not taking short cuts,  paying employees good salaries, contributing to the society in a positive manner, etc are worth more than just pure pursuit of profits.

The need to build something of high quality has to be our core motivation.

Autonomy:

Our capitalistic society is designed such that people with money have more power. However, money follows the law of diminishing returns above a certain limit. For example, if you think you need 3 crores to live a comfortable life, having 30 crores is not going to improve your life by 10 times.

More than the pursuit of money, I will be optimising my work for autonomy.

To walk to my own beat and to chart my own path. To venture into places my heart takes me without being constrained by the lack of money. For that reason alone, I want money. Having enough money is good because it gives you autonomy to a good extent.

Optimising for autonomy means

  • significant ownership to control the company
  • mostly bootstrapping, but being open to taking selective strategic shareholders when need for money arises without diluting voting power
  • be conscious of where I spend my time

Long term value creation:

I am not talking about valuations here, but good old simple value! Value creation for employees, customers, society and finally, shareholders. It is not about moving fast and breaking things, but about caring for customers and going about business at a speed that is right for you and the business. It is not about bootstrapping or funding, but about taking the right kind of money from the right kind of people (who understand you and your business) with right expectations.

It is not about baiting customers with cash back and discount programs (and later surge-pricing them), it is about serving them well at a mutually beneficial price. It is not about being lazy about your cost structure that you try to pass on to your customer, but about being efficient, frugal and lean so that you can afford to charge lower and still create value for yourself and your company.

It’s not about being focused on value creation itself, but about being focused on the right things and let value be created as a side effect.

It’s a journey and never a destination, and hopefully, I’ll be at it for very long.

4 years hence

It’s been exactly 4 years since I quit from my last job. This morning, kept pondering over the years gone by.

4 years is a long time. I’ve had my share of ups and downs. Here’s a short long note on how things have been so far.

tapprs
The 1st Tapprs office, Basavangudi

My idea behind quitting the job was to explore an entrepreneurial opportunity. To see if I had it in me to be an entrepreneur, if I could learn the ropes, if I could build a business, make it sustainable and possibly scale it up.

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Never play the Russian roulette

Charlie Munger often says, “tell me where I’m going to die, so I will never go there”. Avoidance of terminal risk is of great importance to him (and to Warren Buffett).

That is a very important thing to follow in life.

A Russian roulette is one game that is simply not worth playing at any price, even though the odds are in your favor. (There is a 5/6th chance that you will survive and there is a 1/6th chance that you’ll get the bullet, if the chamber is reset every time.)

Source: Wikipedia
Image Source / credit: Wikipedia

Any game that can get you killed is just not worth it! Even if there is a good chance that you might survive and win a hefty prize.

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True financial freedom

A friend and I were discussing money and financial freedom, amongst other things in life.

“How much is enough money to be financially free? How do you decide?” I asked my friend.

Is it a fixed number? The ability to not work for money and have enough of it to pay all your bills through your lifetime? Is it 30 times your annual expense? 50 times? Having a good part of it in inflation beating investments? Or having a business that has good free cashflow and longevity?

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Bootstrapped & being incremental

After I quit my job in 2011 (March), I had little idea about what to do next. I thought I will experiment a bit and see whats in store for me.

I knew I was done with working for someone and wanted to see if I had any capability in building a business – any business, size or industry didn’t matter much.

Things were hazy. I had several half-baked ideas. Tapprs is one that worked out okay.

Tapprs:

Tapprs was never really my primary idea – since it is capital intensive, I kept resisting it. But all my other ideas failed to gain traction and I kept getting deeper into Tapprs and it started doing significant revenues. Natural course took over, esp after some inspiration by Lensrentals.com CEO Roger Cicala.

At Tapprs, things weren’t based on rocket-science. We simply paid attention to:

  1. taking care of customer well
  2. being fair and honest with employees and other stake holders
  3. putting business interests ahead of personal interest
  4. not taking short-cuts
  5. being fanatic about processes, systems, inventory & money management

That shows on the dashboard below, at least a bit.

metrics

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Polarity-of-opinion trap

We all have opinions.

But – many of us fall into the trap of thinking that what we believe in is the CORRECT side of the equation and that the other needs to be WRONG.

Many of us fight tooth-and-nail to hold our opinion against other.

Isn’t that a trap?

Why should our opinion on one thing make the opposite of it false?

For eg, take focus vs multi-tasking.

In my circle, I see people having strong opinion on one or other (mostly in favor of focus). That is fine and reflects our belief. But, should that mean the other is wrong? If you are a focused person, is multi-tasking an evil to avoid? Not necessarily, right?

I am trying to follow this principle these days – earlier I used to defend my stance strongly. Now a days, I see both of us could be right in our own ways and hence, let it be. At least, try to.

Letters from a self-made merchant to his son – 2

This is the 2nd part of my notes from the book “Letters from a self-made merchant to his son”. You could read the first part here.

Graham on the art of selling:

A salesman has to talk, but before that he ought to know when to talk.

A real salesman is one-part talk and nine-parts judgment; and he uses the nine-parts of judgment to tell when to use the one-part of talk.”

Never badmouth competition, never give up your dignity. Yet, be humble enough to sell.

Never run down your competitor’s brand to them, and never let them run down yours. Don’t get on your knees for business, but don’t hold your nose so high in the air that an order can travel under it without your seeing it. You’ll meet a good many people on the road that you won’t like, but the house needs their business.”

3 steps to making it big in sales.

First—Send us Orders. Second—More Orders. Third—Big Orders.

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Letters from a self-made merchant to his son – 1

Recently, I casually picked up a free Kindle copy of “Letters from a Self-Made Merchant to His Son” when I was feeling bored. Boy, I kept it down only after I finished it.

It’s a brilliant book – witty, simple, wordly advice from a wealthy father (Howard Graham of Graham & co, a meat packing company) to his son Pierrepont. It covers nearly everything that a man goes through in his life – management, business, money, education, college, women, love, work, speculation, etc. Most of it is solid advice applicable even today.

I realized late that this was actually written by George Horace Lorimer and there never was any Howard Graham. Still, every page is realistic and on the money.

Must read!

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Search

I went to find the pot of gold

That’s waiting where the rainbow ends.

I searched and searched and searched and searched

And searched and searched, and then—

There it was, deep in the grass,

Under an old and twisty bough.

It’s mine, it’s mine, it’s mine at last….

What do I search for now?

— Shel Silverstein, Where the Sidewalk Ends