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

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. 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. 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. Currently Better known as ….
IT enabled
Annachee !!!
Weekend
beachside IIT
Sabjeewallah ;-)
Organic
Carbazaar
guy

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. 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. 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. What’s in a name ? A Logo ?
•A conversation starter
•Memory recall
•Matches the company’s objectives and vision

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. 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. 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. 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. 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. 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. 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. Can we replicate this system in the agri
supply chain ?
Fix the process
first
And THEN
Implement
technology
Otherwise will be
a failure …..

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. 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. Setting up the pilot
eFarm office
and godown
at Mylapore
, Chennai
Upgraded
vending carts ,
standardised
weights and
measures
Distribution
centre at
Chennai
(godown)

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. 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. 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. 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. MIS / Data warehouse
Drill down to
details
Highlight
Dashboard summary potential
For senior management problems
and issues for
immediate
action

25. Start Small – Grow Big
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Often large organizations fail in rapid
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expansion phase – too fast , too soon
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eFarm would expand in a sustained
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
controlled manner as shown
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xt  Create 1 fully functional, fully sustainable
unit (eg could be a collection centre , or a
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distribution centre or even a store)
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 Replicate the successful model into two
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unit
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Continue to ‘divide and expand’
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
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. 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. 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. 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. 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. 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. 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