What I'm going to share with you today is actually very different from everything that you've been hearing so far. It's a different school of entrepreneurship and I think we should pay a little bit of attention to this school also. I'll introduce you to this school of entrepreneurship which I think is one of the most vibrant schools and unfortunately probably one of the most ignored ones.
So let me take you to this school, I'll show you a small video of the businesses which are happening all around us. But unfortunately, very often we don't think of them as businesses, we don't think of them as entrepreneurs. So let me walk you through this. What you just saw in this 30 second clipping is probably one of the biggest business environments in the world.
Unfortunately the organized businesses the Sensexes, the Asochems, the Fikis, the various other bodies classify them as marginalized, unorganized and informal sectors. I want to take you through about 10-15 minutes and show you how much of injustice we do to this this entire business world and how much of bewkufi we do in thinking that they are unorganized, informal or marginalized. Let me take you step by step and show you that in every metric of business any metric of business you want to apply They are exponentially better than many of the businesses that are out there in Nasdaq or Sensex or the top blue chips.
Let me walk you through each one of those metrics and I first begin with the pure necessity and what this business delivers to India. 50% of India's GDP comes from the unorganized sector. The unorganized sector provides employment to more than 90% of our workforce.
And most importantly, in every metric, they beat the so-called organized sector hands down. And let me show you. one metric at a time.
We begin with the return of investment per square feet. If you actually calculate any payment business that you see and compare it with the return of investment that comes from this big big malls, these shopping complexes and all that, you will realize that at the payment, the return of investment, even after paying the fees to the municipal corporation or whatever, their return of investment is exponentially higher. You must have seen these bookstalls in Bombay whenever you have been going around and you must have also seen some vendors who transport these books by hand.
You would have seen that. Now many of you who have studied marketing and sales know that in the marketing jargon, fight for shelf space to put your product in there, especially in the FMCG business. To take shelf space, how much of design and strategy is done and how fiercely that space is bought. I want you to equate that with this old man who has to design his product mix because he is carrying that three to four kilos of weight.
From morning till evening and when you carry two or three kilos for more than two to three hours it doesn't feel like two to three kilos. So as I was telling Savi here in the afternoon that when your book reaches this stack then it's a bestseller. Because it is being testified by the sweat equity of that old man who has to carry it in his hand and he'll only carry a book which he knows is a bestseller.
The second metric is equitable distribution of profits. When you have a plate of idli in a street where you pay 12 rupees or 15 rupees for it, the owner, the vendor gets to keep only 2 to 3 rupees. The remaining 15 rupees or remaining 12 rupees, goes to the entire supply chain. The people who wash the utensils, the people who grind it, the auto rickshaw guy who brings it, all of them get an equitable distribution. But when you have the same plate of idli in a five-star hotel where you pay 400 rupees for it, bulk of the money is kept by the establishment and only a small percentage of that money is given to the entire supply chain.
The third is the degree of empowerment of decision making. This boy sells these roses for 10 rupees. His cost, his kharidi is 7 rupees, which means 30% profit per rose. And he can give you a 50% discount if he likes your face. To get a 5% discount from a large conglomerate, and there are many large conglomerates here, and you will testify it, sir.
To get that 5% discount, that marketing head will have to take the decision all the way to the board, and by the time the decision comes, the opportunity would have been gone. There is more fluidity in the street markets than any one of the businesses that you have seen. You see the street vendor here. Any guesses what he is selling? He is selling for a festival.
Which festival is that? Holi. So this person and... millions of street vendors like him he can't sell holy products throughout the year he will sell it for about two to three weeks then he has to change to Ganpati then he has to change for Christmas then he has to change for some other festival he has to change his entire supply line he has to change his pitch he has to change his product mix he has to change every market segmentation each one of those things changes and it changes more than 15 to 16 times in one year You must have also heard big corporates trying to do change management. Typically I am given to understand by management gurus that it takes them anywhere between 5 to 7 years to do a change management from one product line to another product line.
There is more entrepreneurship per square feet in the unorganized market. What you are seeing over here which looks like a big mess. Do you remember when you are traveling in Bombay especially and I am sure in Nasik also, suddenly you will see in the... streets in every street corner new product will come it may be a car cleaning pitch curry it may be a head massager it may be a toy it will be Christmas hats before Christmas it will be that by the national flag which will come out in the next two or three weeks just before 26 Jan. Can you visualize the amount of planning, infrastructure, supply chain, bringing that equipment, the planning of when that particular product will be released and it will be released simultaneously.
Unsold stock has to be taken back, cash flow has to be managed, all of this is and certain slots are reserved. So before Christmas you can't launch anything else. Before the 15th August and 26th January you can't launch anything else. Those slots are fixed for those products.
And all of this is happening without SAP, ERP, Microsoft Outlook, regulatory bodies, planning divisions, committees, none of that. And we call them unorganized sector. We call the government organized.
We have to understand that how much of disservice we do to this entire industry by not even looking at them from the metrics that they deliver literally on a daily basis. The time your day starts in the morning, the newspaper coming, flower coming into your house, coconut water, each and every one of those things is being managed seamlessly and you do not have a single point of failure on a daily basis. Tell me how many of you have missed a newspaper in the morning or missed the flower in the morning and compare that with tier one companies where your call drops, your signal drops.
All of this is being done by people who don't have MBAs, haven't been to Harvard, haven't been to all none of that places. This market is an equal opportunity market. Let me show you the next slide where I'll demonstrate this to you.
Whether you're old, young, illiterate, disabled, transfer site, male, female, that's the place where you get employment. I would challenge people who work in corporates to raise their hands and say we employ more than five transfer sites. Anybody sitting over here. All these marginalized people, the only place where they can go to earn a living is the unorganized market.
If you want to see the... synergy which happens look at the guy in the middle in the morning he sells this snacks in front of Shivaji Park catering to the joggers and walkers who go in the evening he sells the same snacks with a little bit of mixed change in front of liquor shops for a completely different demography This last man who is standing here, he is from a shop in Fashion Street in Bombay. Some of you may have heard about it.
Many of you may have seen it also. Do you realize that there are more than 300 shops in Fashion Street who sell exactly the same product at the same price with no competitive differentiation between each other except the relationship he has with that customer who comes to him. And remember one thing.
90% of the customers who come to Fashion Street will come there only once. Because most of them are people who are coming from out of town. They will do their shopping and go.
So he can't even have the same customer coming again and again. In that two minutes time, he has to take out that product which will fit the person. He or she, mostly she, will give it one trial. And in that one trial, if it doesn't fit, she will move to the next shop. He has to manage that customer in that 180 seconds and deliver the product.
Otherwise, he stops. There is more management lessons per square feet in the streets and I'll tell you a very interesting story which illustrates this beautifully. I mean there are millions of stories but this is very close to my heart and I'll tell you the reason why. So some years ago I was working with the Mahindra group and I had gone to Pragati Medan in Delhi.
Many of you may know Pragati Medan where a lot of exhibitions are held and I was invited to give a talk there very similar to this one. So I had gone there with a friend of mine who was a CEO of another company. company that company was called Office Smart India and since this CEO had come to Delhi he was using that opportunity to brief his team and we were standing outside Prakriti Medan we still had time for our session so we were standing out there and he was briefing his team there were about 10 minutes.
eight nine people whom he was talking to you know reviewing the performance and all of that and since it was none of my business i was standing a little to the side suddenly i noticed a small street kid a street urchin a beggar basically who came up to my friend and stood in front of him and started appealing to him so my friend was very busy so he was irritated by this chap he tried to show him away two three times but the kid didn't go away he'd go back a couple of steps and then again come back so finally my friend got so irritated that he started looking in his pocket for some change and of course that that was a cue for this entire team to find change they immediately took out change and put out their hands three four of those you know everyone tries to be a keen Kumar in front of the CEO keen Kumaris also so the CEO picked out one coin from that and gave it to the kid and that happened to be a five rupee coin those days five rupee coin was a big deal and for that kid which were very big deal so he looked at the coin he put it in his hand and he ran and a couple of other kids tried to snatch it away from him but he prevented them and then he went to a corner and I was noticing that in the corner he was sitting with another kid who was most likely his younger brother and he told that kid he edged him and told him you go to these people and you will get now I want to share four management lessons with you here the first lesson is persistent space this kid knew that even if he was shooed away he had to stand over there until he got the money the second very important lesson he knew intuitively he knew talk to the decision-maker Thank you. Even if it is not the decision maker who actually gave the money, money came from someone else but he knew intuitively to talk to the decision maker. Once he got the deal he did not talk about it, he did not announce it in the market, he did not say party chahiye mereko Goa mein, none of that stuff.
He went back to that corner and what better example of customer relationship management do you want where he tells his younger brother there is more money to be taken from them, go back and take it. It takes us in corporates roughly about three to four years to teach this to management graduate trainees whom we get. Because they will go to some fancy title, vice president photocopier, uske paas chale jayega. That guy will tell him we don't have a budget right now.
come back next year he'll come back and report said no budget this year but next year he's called us the same management lessons which these kids have to learn and they have to learn you know why because if they don't learn it they'll sleep hungry that night that's the luxury that our education gives us which they don't have they have no margin of of there is no margin that this quarter we have lost some you know market share we'll make it up in the next quarter doesn't work in their world if this day they didn't make a deal they will go to hungary they will go to bed hungry that night and i think they teach us a very very important lesson and i want you to pay very particular attention to this one slide this gentleman his name is sandeep kotari and he sits uh he's he's he puts up his stall. How many of you have been to Worli Sea Face in Bombay? So if you go in the morning, some of you may have been going in the evening also. Evening is a different set of activity.
In the morning... When you go, you will find a lot of people running and jogging and walking around. This person sits right at the corner where the ceiling turns left. And he sells wheatgrass juice.
Now, if you ask him for a cup of wheatgrass, he'll grind it, he'll give it to you. He charges 20 rupees for it. And if you ask, you notice there is another stainless steel, you know, sort of patila next to it. If you ask him what is in it, He will say neem juice.
If you ask him what is it for, he will tell you it purifies the blood, cleans your blood and all of those stories he will give you. And if you ask him for a cup, he will give you a cup. You ask for another one, he will give you that.
Then if you ask him how much does this cost, he says this is free. Then I asked him why do you give this free? He says sir I have to buy that wheat grass. I break Neem's name and give it to him. And for me there is no cost to it.
So I give this free. He is a CEO who does 50% CSR. Not the 2% mandated by the government. Actually 50% CSR and the most important lesson you can learn from the CEO is the lesson of having enough. The only way you can define your appetite for enough is to have another source of revenue and not choosing to exercise it.
That is the definition of enough. Now you might be wondering as a former soldier and somebody who's been in the security field and supposedly looking at security at a national level and more now at a corporate level, why am I telling you these stories? I'll tell you why I'm telling you these stories.
This is India's biggest strategic risk. We are pumping out close to a million young people into the job market every month. They are coming in, they're not finding the jobs, they're not finding the aspirational jobs and this is not going to come from India Inc.
Let me assure you that. India Inc is actually cutting jobs. They are growing but with all these terms that you spoke about, artificial intelligence, robotics, automation, they are reducing jobs.
They may be growing your Sensex but jobs are not being created. The only avenue for job creation now in the scale that is required is India Anic. It is only they who can provide these jobs and if we don't create that, if we don't pay attention to them in a formalized way, this youth dividend that we talk about will start becoming a youth nightmare as indeed in many many areas you are seeing these starting signs of that happening so this is not an anecdotal story I'm telling you which you clap about and go back and tell it to people at home this is an existential reality for India for a population which is young a population that is aspirational and by aspirational let me tell you today you know that you know that your driver's son doesn't want to be a driver of a bigger car he wants to own a car And rightfully so.
Now, if we do not create those job opportunities for them, we can't keep building these ghettos. We can't build these gated colonies with fences and smart cities and hope to keep the other side out. I think it's high time that we don't just start looking at building cities that are smart.
I think we have to start building cities that have heart. It's a very big difference. Frankly I believe India doesn't need unicorns. We don't need two or three five thousand crore companies.
What we need is five thousand two or three crore companies. That's a complete difference in the way of thinking. we make this difference how can we sitting over here make this difference we can do that by creating a vc fund now what do i mean by that vc fund this is a different kind of a vc fund it is vc when i see that that I can make a difference, I start making a difference there.
Difference doesn't have to be just with money. It can be with sweat equity. It can be with passion.
It can be with ideas. It can just be by giving a leg up to somebody and create an orbit shift. I'll give you four or five examples which demonstrate how it can be done. And this is actually happening.
So these are actual experiments which are succeeding brilliantly. Let me start with this example which is very close. You've got one of the architects of that example sitting over here. This is an old lady who sells khakra and Manish is sitting here who will testify. She is on the way to Tadoba.
When you go to this Tadoba forest reserve, she has this stall over there and Manish Pandey who spoke in the morning to you, social media evangelist. He on one of his travels there tasted this khakra and he told the lady she was selling it for 15 rupees a plate. She told him, He told the lady that you can sell this for 30 rupees easily.
People will pay happily. This is one of the best khakharas that I have eaten. And people who come from Bombay on the way to Tadoba, they will pay 50, 100 rupees for it.
You can easily charge them twice the money. And he said, also you should put up a board. Otherwise, how do people know that this shack sells khakharas?
So she said, what is a board? I don't know what a board is. So he drew that on a piece of paper.
And the next time when he went over there, he found that there was a board that was put up. Not only did they find this board over there with the mobile number, what he also found was a long line of cars. Her income had, the revenue, top line had increased and obviously because of doubling of the price, the bottom line had also increased. anecdote to it and that anecdote is he also suggested to her ki khakre ke saath aap chai ke bhi business why don't you sell tea also and then that old woman pointed to a tea stall next door and said phir wo kya karega what will he say It is not that predatory, you know, let me take this also, let me occupy brand extension, laterally, horizontally. They know that to coexist, you need to fill everybody's plate.
You don't need to pile everyone's food on your plate. This is another experiment which I don't know why we cannot do. Why can't we get our young kids who are in their adolescent ages and give them a VC fund? And tell them, go to the local Istriwala, Give him a capex of 20,000 rupees, let him get a good iron, let him get a steam iron, teach him how to press silk sarees, train him so that he has a fighting chance against these laundromats which are coming in and killing these industries.
They are just exterminating them. All of these small shops, mom and dad shops who existed for 60 years, 70 years, not all of them are able to make the break like we saw some of the entrepreneurs. Most of them are dying, they are being eaten away by these organized sectors and they are turning into daily wage laborers and that job is also now reducing. Similarly, I live in Prabhadevi in Bombay and I have this too, you know.
two worlds right in front of me. One is a world of a tier one multinational which sells sandwiches and their tagline is we bake our own bread. Suleiman kaka has been doing it for 48 years.
Why can't we send our kids over there, do up the hygiene of that place, teach him how to make this whole grain bread, and of course he can make it, he can make it in half a day, he's been doing it for 48 years. Why can't we teach him how to make those special cakes, why can't we... have our kids acting as marketing consultants, sales consultants, ownership and actually give these people a fighting chance, it will also teach our kids a lot of things. It will teach them how to handle a PNL. It will teach them how to trust people with money.
once in a while they lose money they will learn also that they will learn that you can't always keep winning sometimes you will lose and the most important lesson they will learn is how people can survive with even ten thousand rupees a month and live happily And frankly I believe there are more miracles per square feet in India and ink than in India ink and let me give you this story it's a amazing story and those of you want to learn more about it you should go to wellingkar college which is where this experiment happened You see this kid over there, his name is Pratimesh. Ten years ago, we did a very bold experiment in Vellinkar. We decided that we are going to take two office boys, regular office boys who serve you tea, coffee, bring your, you know, newspapers move files around in the office both of the kids were 12th class pass from a night school and we put them in welling car college along with other MBA students we assigned 14 mentors to them and the task given to these 14 mentors was that you have to train these kids in everything that they need to know to be able to pass the MBA with you No subsidy will be given, no punches will be pulled back, their marking will be done exactly the same way as everyone else's marking is done. They had to learn English, they had to learn MS Word, Excel, they had to learn Michael Potter's five forces in Vada Pav language.
They had to understand that. And they did it in two years'time. And I kid you not, when they passed out, in that 16 students, 14 mentors and these two kids, they came 11th and 13th in merit. They beat their own mentors. And a lot of you might be thinking that these kids are the ones who learned from the mentors.
The answer couldn't be further from the truth. When I was studying in Delhi, I studied in a government-aided school and as part of government aid even those days you had at certain quota which was kept for the underprivileged children, poor children. And one of my best friends, actually my best friend, he came from a very, very poor family. He was so poor that even in the Delhi winter, he didn't have a sweater and he pretended that he was not cold.
He never brought lunch and he pretended he was not hungry. Of course, he would take from other people because he was hungry. This boy, once we had gone like good school kids should do, we bunked. school and we went to watch a movie.
So when we went to watch a movie, by the time we reached the theater, the theater was houseful. Those days theaters used to go houseful. So when we reached there and some of the older generation here will know that when movies go houseful, full then tickets are sold in black so there was this five rupee ticket being sold at ten rupees and by the time we reached there I saw house full I said buddy hell yeah we would miss the movie I started we caught my hand wait one minute let the movie begin the movie began now this ten rupee ticket started getting sold for eight rupees then for five rupees now when the movie is started it was being sold for three rupees two rupees finally the guys were getting rid of the ticket for one rupee each my friend taught me some incredible lessons firstly he taught me the value of perishable item second he taught me when it says houseful there are always tickets when it says no vacancy there is always vacancy when it says no budget there is always a budget So, these two office boys taught the remaining MBA graduates, they taught them a very, very valuable lesson.
So, suppose these remaining MBA graduates wanted to meet those days Mr. Anand Mahindra, they would get... calendar date maybe two years in advance but these boys knew that if you talk to the secretary of Anand Mahindra and convince her if you need five minutes with Anand Mahindra he also has to travel from ground floor to the 19th floor She can put you in the lift with him. If you need 5 minutes, 10 minutes of face time with him, she can organize that. If you need 45 minutes with him, then Mr. Anand Mahendra also has to travel from his house to the airport.
It takes him 45 minutes. If she puts you in the car with him, you will get that 45 minutes. You need to be nice to the secretary.
And that's a lesson that these kids learned. Because in the corporate world, nobody teaches them that. Nobody. They'll send a nice mail to Mr. Mahendra and they'll get a date in 2022. And they'll be happy with that. There is a reason why I'm telling you this story.
The reason I'm telling you this story is if you go to the US or UK, any one of these developed countries, and you go to a McDonald's, the person serving you behind the McDonald's could be doing her P. In India, a person who is behind that tray serving you tea, coffee or whatever will continue to be behind that tray. The tray size may keep increasing, they may go from the tray to a 5 star hotel but they will be on the other side of the tray.
the biggest leap, most difficult leap in India is from that side of the tray to this side of the tray. And that leap was made by these two kids. The kids who used to serve coffee to Mr. Anand Mahindra had coffee with Anand Mahindra. And that is the greatest achievement. And the miracle doesn't finish there.
Because when these two kids came up for their passing out, they were selected from the campus by ICICI Bank. Before, when they were office boys, their monthly salary was 5,000 rupees. at per annum salary of 60,000 rupees, they were not a customer for ICICI, HDFC, automotive loans, no.
But the moment they started getting 6 lakhs, they became customers for HDFC housing loan, they became customers for automotive loans, they actually became customers. you actually created a customer base and what was the cost of doing that? The cost was zero because though the college paid them 5000 rupees stipend because they had to give the money at home, the home survived on that 5000 rupees salary that they would get as soon as they got their first job not only did they return that money but they gave another 60,000 so that another kid could be funded and brought in over there. Those of you who are in Thane should visit one of the bank branches there. I'll tell you the name of the branch offline and you will see Pratimesh sitting over there.
He manages a close to 200 crore business today in that branch. He's a branch manager. that bank and he was a office boy on whom you took a punt and if you take a punt on them you will see that their delivery will be exponentially higher not incrementally higher exponentially higher you create true value I used to tell B schools also most of these tier 1 B schools they have a ...process which gets the people who are 98 percentile life to them.
95 to 98 percentile that's the cutoff these days right after two years 100 so after two years they pass out value add is two percent the value add of that huge institution which is funded by the government subsidized by who charge a arm and a leg for an mba the value add is two percent but when you take a kid who is down below and bring him up the value add is 80 percent and more importantly more importantly the The 14 kids who were mentors, nine of them went on to head NGOs. Because they realized that this is where real value lay. They did not go to become some management trainee in a big MNC.
They actually decided that if I can do this, we taught them that with any troops you give them, they can turn them into stars. They did not look for CVs which had Ivy League colleges or experience. They said, give me anybody and I'll turn a rough stone into a diamond. Actually, we can build.
So we have choices. We have choices, there are many young kids here and we all have young kids and we have choices of telling them to go and join the MNCs, these famous brands. And they'll go there and I'm sure as management trainees they'll work there, they'll get a good salary or whatever.
But what is their contribution in that entire ecosystem? So if you're working for a software company, let's say you're working for Microsoft. and you can proudly tell your parents you see this microsoft word you see this icon here this icons image i made that's my contribution there is another way to work and that way to work is to work with these these small companies where you will be interacting directly with the ceo the cfo the chief technology officer the chief marketing is the same guy by the way right and you will have to sell him your idea because that idea costs money You will have to convince that person and if your idea succeeds you will see an orbit shift happening right there in front of you in a matter of weeks. You don't have to wait for 7 years deployment cycle to see the result of your work.
So I think increasingly we We have to start training our next generation to look at these jobs as dignified jobs, as learning jobs, as learning schools. Right now, they all keep looking towards the upside, and that upside is crowded. There's only 2 to 3 percent of India which can go over there.
The remaining 98 percent has to be absorbed somewhere else. And if we don't start teaching our young generation there, it is not about increasing wealth. It's about existential crisis. Last slide I want to share with you.
with you and that is I owe everything I am I believe to my to my alma mater which is the Armed Forces and I genuinely believe that this is one of the most under leveraged talent pools in India you may not know this but close to 40 to 50 thousand ex-servicemen come out from the Armed Forces every year I'm not that concerned about the officers, the officers managed to do well. But think about a Jawan who joins the army at the age of 19 and for 20 to 22 years, 25 years in some cases, serves in some of the most harsh places. Let's forget about that.
That's part of what they signed up for. But let me tell you another dimension of their life. If an army Javan is lucky, he will get two months of annual leave per year.
If he is lucky. Usually they don't get it because of op deployment, but he'll get two months of leave every year. Do the math. For 20 years, he will see his family two months into 20. And for 10 months of the year, he doesn't even have the privacy of a room.
He will be in a barrack. And he will do that until the age of 40. And at 40, the government of India will chuck him out into the city street. And the only job we give them is opening doors, closing doors, checking the bottom of the car.
That's the job we give them. But these are the same soldiers who build bridges for you when engineering companies... can't build it, who build communication networks when communication networks have failed, they are the ones who reach out there and in every disaster, in every place, they operate foreign equipment. I was part of a mechanized infantry battalion and our entire equipment was in Russian. Labels were in Russian, the manuals were in Russian and 10th class pass Javans can operate third generation missiles.
They can fire third generation missiles and our country. Thank you. Our country trusts them during national disasters. We trust them when we send them to United Nations to represent us in peacekeeping.
We trust them to rehabilitate entire communities which have been flattened by earthquakes in Latur or floods in Punjab. or landslide in Himachal Pradesh but somehow a corporate India doesn't seem to be able to trust them with even a small business role or a small entrepreneurship role. I think it's one of the most stupid things that we do that we take this extremely highly trained and by the way By the way, you have to remember that our defense budget, if you calculate the entire, you know, the training, the manpower, all of that is an academy for which you pay. It comes from your taxpayer money.
And these alumni of the academy, you're under-leveraging them by just making them guards out there. We need to exploit their capability and leverage them as well. Thank you very much. Thank you very much.
Thank you.