From Ideas to Wealth thru Entrepreneurship

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From Ideas to Wealth thru Entrepreneurship
U. B. Desai SPANN Lab Dept. of Electrical
Engineering IIT-Bombay www.ee.iitb.ac.in/ubdesai
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Entrepreneurship and Wealth Generation

• General belief that for economic growth
• Need to generate wealth
• You can think of this in terms of
• increase GDP
• increase in ease (comfort) in personal life
• Whatever the measure
• Money plays an important role
• Entrepreneurship is business of making money
• To some, this may sound crass
• But this is the bottom line

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Magic Wand?

• What is involved in becoming an entrepreneur? OR
• What is involved in generating wealth?
• No formula
• Guidelines thru
• Case studies
• Experience
• Burning ones fingers
• In short It is tough

• You have to be
• at the right place
• at the right time
• with the right idea
• a marathon runner (perseverance)
• Adaptable (may need to change things mid course)
• Never fall in love with your idea be open to
  change

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Modern Day Entrepreneurship

• Complete faith in technology
• Innovation as the key driver
• You have to be on the lookout for a void, for
  example
• iPOD
• 1 lakh rupee car by Tata
• Always keep looking at your environ for a
  problem euphemistically called opportunity
• A good understanding of what different segments
  of the populace can afford is important
• simply understanding wants is not enough

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Different approaches
You take on a giant

• In the 70s researchers at Fairchild (a giant in
  semiconductor tech.) came up with CMOS
  (complementary metal oxide semiconductor)
  technology
• Upper Management at Fairchild refused to accept
  it as future prospect were happy with PNP
  (bi-polar junction) technology
• Researchers with CMOS technology separated and
  started Intel as they say rest is history
• Fairchild today is almost non-existent
• Juniper took on Cisco and is giving tough
  competition in the core router segment

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Disruptive Technology

• What is disruptive technology?
• Working Definition
• Technology which creates a major (positive)
  disruption in the way society functions
• Best explicated thru examples

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Examples of Disruptive Tech.

• Sun Microsystems Workstations disrupted the
  market for main frame computers.
• PCs disrupted the market for workstations
• Wireless telephony (GSM, CDMA) disrupted the
  market for wire-line telephony.
• Xerox plain paper copier disrupted the market
  for offset printing.
• Cannons desktop photocopiers disrupted Xeroxs
  high speed photo copying market.

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Disruptive Technology

• Honda motorcycle of 60s
• Japanese cars of 70s
• Korean Cars of late 80s
• Smart Phones will disrupt the market occupied by
  desktops / laptops

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Impacting Technologies

• Impacting technologies are disruptive
• Disruptive innovations are products and services
  that initially aren't as good as those that
  historically have been used by customers in
  mainstream markets, and therefore can take root
  only in new or less-demanding applications,
  amongst non-traditional customers
• Stuart Hart and Clayton Christensen
• Watch out for China

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Almost always ..

• Major waves of growth
• thru forays at the bottom
• of the developed markets
• (DM)
• Very rarely you can
• attack a Mercedes
• directly

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Knowledge Economy

• Economic growth and wealth generation are driven
  by the acquisition and use of knowledge
• Knowledge
• research skills
• information assessment skills
• ability to innovate
• ability to implement
• capacity to continuously learn
• Knowledge Economy is different than the
  Industrial Economy
• This is the great edge that India has
• We have small window of opportunity and a chance
  to become world leaders in this domain

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Service Industry

• Service industry is a corner stone of knowledge
  economy
• Do not scorn at service industry
• In India service industry can be the driver for
  other industries
• Service Industry Sectors
• Banking, insurance, education, finance,
  marketing, entertainment, leisure and so on.
• Today ITES (IT enabled services) is a
  multibillion dollar industry

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Indian GDP

• GDP 650 billion
• Rural GDP 160 billlion
• GDP from IT industry is
• 20 billion
• Per Capita income
• 534
• Indias economy ranked
• 120 w.r.t. per capita GDP
• But ranked 4 if one
• considers PPP (purchasing
• power parity) after US,
• China and Japan

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Product Industry

• Very vital for the growth of Indian economy
• Govt. policies are not favorable for product
  industries
• Example of China you can buy latest
• FPGAs, DSPs, LCD display screens like chocolates
• Oscilloscopes like TVs

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Entrepreneurship is Interdisciplinary

• Take the case of iPOD
• Audio encoders-decoders
• User interface
• File management
• Search engine
• Data base management
• Display screen technology
• Microphones and small footprint HiFi audio
  amplifier
• Sever management, including security, for
  downloading songs (from millions of songs)
• Could a startup have developed an iPOD?

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En-ship in Electrical Engineering??

• Semiconductor technology
• Wireless technology
• Innovative Applications of Wireless and
  Semiconductor technologies
• At the end, VCs want a chip
• Software is typically not considered a product by
  VCs

• Low cost PCs
• VIA chipset (Taiwan)
• Given a new meaning to embedded systems
• New handheld devices
• Smart homes Wirelessly controlled homes
• In general smart devices

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Need Money to Make Money

• This is Catch 22
• During the boom time (1998-2001)
• Get funding based on ppts
• Today one needs a prototype (bare minimum)
• Endorsement from potential buyer
• Preferably a first sale
• Where do you get money for this
• Angles, friends, family, soft loan, ??

• What todays VCs wants
• Biz unit in US
• R and D unit in India
• American CEO
• American Marketing personnel
• You can be a CTO
• Indian market is too small for VCs
• They want a product which can take on giants in
  the US

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Business models and all that

• Innovations in Biz model is a must
• iPOD is a case in point
• Down load a song for 99 cents
• This can add up to billions
• Recall, ring tone market is a billion dollar
  industry
• Innovative marketing approach
• Innovative supply chain
• Dell computers
• Very little inventory
• Technology contributes 15 to 20 in a business
  rest all is the other stuff which engineers ignore

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How many agree?

• Entrepreneurship can be a driver for social
  change
• Ethical entrepreneurship is important
• Environmentally caring entrepreneurship is
  important
• ???

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Finally
It is not our abilities that tell us what we
truly are. it is our choices. Dumbledore
Harry Potter and the Chamber of Secrets
Would you refer to Bunty and Babli as
entrepreneurs?