The Making Of Match Box Solutions & E Farm Liba


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presentation made by Venkat at LIBA national management symposium Insight09 explaining the 'making of matchbox solutions' .


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The Making Of Match Box Solutions & E Farm Liba

  1. 1. Emerging Business Models : Social Entrepreneurship THE MAKING OF MATCHBOX SOLUTIONS VENKATA SUBRAMANIAN FOUNDER, MD Nov 5th , 2009 Chennai LIBA Insight’09 National Management Symposium
  2. 2. Who am I ? Why I became an entrepreneur ? Why ‘BOP’ ? Why a ‘social’ business ? The story line What’s in a name ? What’s the BIG idea ? Do you need a co-founder ? Why eFarm ? What we learnt from the street ? Where we stand today , and the road ahead ? Technology for BOP – What works and what doesn’t ? The ‘F’ word : Funding – Friends, Family, Fools & Father-In-Law
  3. 3. Who Am I ?  Venkata Subramanian  Founder & Managing Director, Matchbox Solutions & eFarm, Chennai Brief profile : MS (Computer Science), 2003,University at Albany, NY , B.Arch , IIT Kharagpur ,1995 , India 12 years of experience in IT industry in both technology & commercial roles (7+ years in US) Head of key outsourcing & consulting accounts in Insurance, Capital Markets & Banking
  4. 4. Currently Better known as …. IT enabled Annachee !!! Weekend beachside IIT Sabjeewallah ;-) Organic Carbazaar guy
  5. 5. Why I Became An Entrepreneur ? Coming from  An ‘empty’ feeling within that ‘I have a typical not accomplished anything with my life’ ‘Tam-Bram ‘ family , It  Motivated by other entrepreneurs took me 12 years of  The ‘India Inc’ rising stories in press preparation to feel I am  Movies – Swades !!! ‘ready’ to be  Growing support structure for startups – an entrepreneur mentors, incubators, forums, magazines .
  6. 6. Why a ‘Social’ Business ?  NGOs – driven by passion & cause , very fulfilling but lack sustainability, funds to operate  Corporates – Driven by financial profitability as success, but no commitment to social upliftment  Social business : Best of both worlds
  7. 7. Why ‘Bottom of Pyramid’ ?  Poverty is relative – an analogy : Bill gates v/s Azim Premji v/s ME v/s Muniyamma v/s Unemployed MBA (?)  Poor people Pay MORE for LESS  CK Prahlad and the BOP mirage – BOP as a ‘buyer’ v/s BOP as a ‘seller’  Farmer BUYING cellphone or insurance  v/s  Farmer SELLING rice
  8. 8. What’s in a name ? A Logo ? •A conversation starter •Memory recall •Matches the company’s objectives and vision
  9. 9. What’s the BIG idea ?  A critical pain area = BIG business idea  Social sector is FULL of critical needs, unmet demands and urgent solutions  It is not just a NICHE area, it is a VACUUM owing to very little players  100 people can have the same ‘idea’ – it is how you implement it that matters !
  10. 10. Why • Was Not our idea – we just worked on a ‘crisis’ situation which was being seen as somebody else’s problem • Was not ‘our’ business model – it is an amalgamation of several paradigms and practices from other industries applied to the agri sector • We saw – “Elephant and six blind men “ situation with agriculture crisis
  11. 11. The Indian Agri Supply Chain Current State : Too Many Steps , Too Little Value Harvesting of Terminal markets to Vegetables • Unorganized, unregulated, unprofessional & unprofitable neighborhood wholesalers • Lack of demand/supply data • No reliable sales, distribution, marketing channels 1 • Poor logistics and storage • A Middlemen’ dominated market •No IT/ERP usage – decisions are adhoc and arbitrary 5 Regional mandi to Wholesalers to Retailers 4 Terminal markets near A local mandi large cities auctioning 2 Local to Regional mandis for Auction 6 Loss in transit 40% Price hike Retailers to Dining Table 3 End to end > 400% 7
  12. 12. Farmer’s Crisis : Fact from Fiction  Farmer’s REAL needs – Not money but Marketing !!  Break even price – Not even profit !!  Labour crisis  Land is plenty – but water is scarce  Rural – Rich , Urban – Poor  Migration to city  Rapid urbanisation , Loss of prime land  Need to shift from Supply driven to Market driven agriculture
  13. 13. Why • We had NO background or Knowledge in agriculture • gave fresh perspective to the problem • The ‘REAL’ need from farmers was ‘Marketing & Planning’ support • Which was our key strength area • Food is a basic necessity • supply is dwindling, demand is rising • The entire supply chain needed fixing , not JUST production
  14. 14. The BIG idea: Connecting the dots Value added resellers Sorting , Grading , Processing, Packing Storage Warehouses Bulk buyers Exporters Farmers Cooperatives Collection centers Kiranas Self Help Groups Hawkers Village ICT kiosks Phone booths Logistics Fleet Small Independent transporters Mobile operators operators Intra-city small tempos
  15. 15. The BEST example of supply chain management system ??? •IT Systems usage : NIL •Management team : Illiterate and average age of 55 •Age of company : Over 150 years •Customer Segment : From slumdwellers to crorepathis •Operational efficiency : Six sigma !!! The Mumbai Dubbawallahs !!! •Key success factors : (video English Hindi) •Highly decentralized operations – agile, flexible , scalable •Use of low cost transport medium – trains •Use of human power for last mile delivery – No Fuel related hikes •Strong customer relationship – personal , localised •Simple coding, routing, labelling system – operates even without electricity ! •Delivery excellance – fixed time , professionalism
  16. 16. Can we replicate this system in the agri supply chain ? Fix the process first And THEN Implement technology Otherwise will be a failure …..
  17. 17. Development of Model Study of existing supply chain Visits to farms across Tamilnadu A Roadside farmers auction in a village Govt. farmers direct sales market , Theni & Hosur
  18. 18. Developing the model Discussions with Agri experts , Supply chain managers, existing models , industry veterans (centre) Forming pilot focus group with representative members across the chain Discussions with NGOs , Microfinance , Rural banks & self help group members
  19. 19. Setting up the pilot eFarm office and godown at Mylapore , Chennai Upgraded vending carts , standardised weights and measures Distribution centre at Chennai (godown)
  20. 20. Why a co-founder ?  Complementary skills  Technology skills v/s People skills  Bring in different perspective / balance Srivalli  Women element – To reach out Co-founder to target segments MD Life partner
  21. 21. Social Impact : BOP segment Murugesan, c oconut farmer, with graded coconuts Small tempos for local deliveries – powered by eFarm Panjali picking up vegetables from our Mylapore centre Only a eFarm phone call mobile store away … a at an old vegetable age home vendor enquiring prices
  22. 22. DisABILITY : Working with their strengths Cut vegetables Peeled onions and garlic Sorting Grading Over 60% of our staff have some physical or mental disability & Natural Agri waste Ripening collection and Of fruits composting
  23. 23. ICT in Agri marketing : Market Analysis and Decision Support Koyambedu nadu tomato (data courtesy : TNAU-INDG market information portal) Where to sell ? At what price ? Head to head comparisons across Markets Ottanchatram nadu tomato Insight - Support level prices and inflection points High / Low variations Identifying ‘hoarding’ and ‘cartelisation’
  24. 24. MIS / Data warehouse Drill down to details Highlight Dashboard summary potential For senior management problems and issues for immediate action
  25. 25. Start Small – Grow Big te Often large organizations fail in rapid xt  text te text xt expansion phase – too fast , too soon te xt text te xt eFarm would expand in a sustained text  controlled manner as shown te xt text te text xt te xt text te xt  Create 1 fully functional, fully sustainable unit (eg could be a collection centre , or a text te xt text text te xt te xt distribution centre or even a store) text text te xt  Replicate the successful model into two te xt  Ensure continued viability of this expanded unit text te text xt te xt text Continue to ‘divide and expand’ te xt  1 -> 2 -> 4 -> 8 -> 16  In case of any issues, we only need to take … one step back to prior state and rebuild  At a given time, number of units would be a measure of 2n where n is time taken to replicate 1 step
  26. 26. What we learnt from the street  Humility : We know very little about the poor – their aspirations / needs / desires  Poverty is not a career choice : They do not want their children to suffer their fate  Building Trust :Relationship is built over time by direct interactions – not virtual
  27. 27. What we learnt from the street  They do not want subsidy or ‘free money’ because it doesn’t last – they need stability, self respect  Self help groups need HELP– lack of support, cohesion, family tension
  28. 28. Voice / Mobile technology : Bridge between ICT and India’s rural farmers ICT Technology and the BOP segment : Challenges • High illiteracy • Even amongst educated – Mostly local language skills only • Low computer skills , Low internet penetration Technology Adoption amongst BOP segment • Highest and fastest penetration : The mobile phone • Self taught the phone interfaces , usage eFarm Interface points • Pay full price for new models , talk time • Voice call centres / BPOs (local language ) • Natural language IVRS ( 2 way – automated messages) • SMS
  29. 29. Tips to Social Entrepreneurs  The biggest threat to your business is right inside your home ;-)  Walking a thin line between emotional judgments and business objectives
  30. 30. Tips to Social Entrepreneurs  Technology  If the only tool you have is a hammer, you tend to see every problem as a nail- Abraham Maslow  Voice is STILL the killer app for Indian masses  Go for the ‘pull’ factor from your target audience  Seed Funding  The 4 Fs : Friends , Family , Fools & F-I-L  Angels , VCs – More tech centric  The government – Lack speed  Customers & Suppliers – Best bet !!
  31. 31. Oppurtunities in the Agri Supply Chain Cleaning / Packing Business Potential Social Impact Quality Routing An untapped , niche market Inspection/ Grading Organizing the large with very few organized, Long haul unorganized agri sector of entities Transportation India – bottom of pyramid Revenue generation through More income to farmers better optimization, value , truck operators and small addition across the chain Rural Produce vendors owing to profit Collection Centres Small retailers Local vendors sharing across the network Reduced wastage in transit = more revenue Support to traditional , eco Farmers friendly farm practices Has potential to jumpstart Urban area , organic farming through other agri-dependent Local Distribution Distribution centre better marketing ventures Convert waste to compost A professional ly managed , providing low cost manure supply chain is vital for Compost/Manure Food Processing back to farmers. tapping international from waste units markets Revival of agriculture Bulk buyers dependent livelihoods Potential to scale across (Hotels / Caterers / Retailers) Exports , empowering villagers India as core problem is wide spread eFarm Common Services Under privileged/Disabled Planning & Coordination Research Call centre / Communication Technology Training & Support and urban poor get ‘Pull factor’ from rural India employment opportunities for other services and products