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Monday, December 8, 2008

Make way for the Royal Bengal Entrepreneurs

Remember McGyver? Or Oshin? Or Bionic Woman, Six Million Dollar Man, Fall Guy, Manimal, Raven, A-Team, Knight Rider and all those English thrillers, serials that many of us used to religiously follow in the then only state-run television BTV? Since we didn’t have much option in terms of TV channels, so we had to be satisfied with whatever was shown there. But still, we had grown a habit of following certain shows in the TV isn’t it? Also, don’t forget the extremely popular Bangla drama serials such as Oyomoy, Ei Shob Din Ratri, Bohubrihi and the like. Well gone are the days of the monopoly of BTV, scores of other satellite channels have made me a serial remote switcher, nearly suffering from chronic button pressing and channel switching syndromes. I also realized that I have grown out of following any particular TV program in the TV these days, firstly I don’t have much time, secondly internet has taken over my life and thirdly and most importantly, there are just too many TV channels, making it difficult or confusing for me to settle with any particular show, with which I could associate myself.


In the flurry of all the painfully similar drama serials, talk shows and music programs, I was wondering if its ever possible to have a show pretty much like Dragons’ Den, where interested venture capitalists used to hire or fire potential entrepreneurs or executives who they thought could do the talk and walk the mile. It’s a known fact that there are many potential entrepreneurs across Bangladesh who are bubbling with their nascent business ideas, but they just can’t get the headstart due to lack of exposure and/or patronizing. Not everyone needs to be a BBA graduate from IBA or NSU to be a skilled manager, I believe management is more a mental frame of mind, an aptitude and attitude, rather than paper certificates from top-ranked B-schools. Those who have it, can do it, with some initial hand-holding. And they don’t necessary need to be enrolled in a private university or the best business schools. Pretty much like the singing talent shows where wanna-be song birds display their singing talents, similarly, a budding entrepreneur might come up to face a judge panel and/or audience vote to evaluate his/her business idea.

I am not very clear about how the Battle of the Minds operates, something executed by the tobacco producer in Bangladesh…how the participants are selected and why. Similarly, HSBC Young Entrepreneur Award also seems to have a regional appeal and popularity. Bangladeshi students have already shown evidence of merit and potential. But what is not clear is what happens to them afterwards? How many of them have truly been successful in realizing their initial business ideas? If they have succeeded, are we tracking it? If their ventures have failed, do we know why? How many of them genuinely chase their dreams and turn the dreams into reality? Or is it just that they are good in academics which produced a great business plan and landed them with the award? But in reality, they had no intentions to start such businesses?



So the point is, these entrepreneurship awards and close door competitions sponsored by any particular company should graduate itself to the public domain. General people can sometimes be a better judge and powered with technology such as SMS, they can vote out or vote in their preferred entrepreneurs. Finally, the one who wins, shall actually start the business with the seed capital provided by one or many of the venture capitalists sitting in the judges panel.

So I think its time to say au revoir to airy talks in classrooms and seminars on entrepreneurship, and limiting the activities to giving away micro and macro awards to budding Royal Bengal Entrepreneurs with nominal monetary aid. Rather its high time that the movers, shakers and thinkers of entrepreneurship start taking shares in the business ideas or projects which they think can reap great benefits. Actions are louder than words and than this blog post too. So how about a TV program like this to bring me back in front of the TV sets once again, without switching channels this time?



Image courtesy:
http://entrepreneurship.rit.edu/images/entrepreneurship.jpg
http://www.genuinememorabilia.co.uk/images/uploads/Dragons_Den_book.jpg

15 comments:

the_skywalker said...

Fostering entrepreneurial activities in Bangladesh is a key issue. Because only though rapid development of successful small and medium scale enterprises, there can be substantial generation of jobs in Bangladesh where every year millions of young ones are getting added to the working population pool. This is why, it is said that 9-10 % of population are required to be in successful entrepreneurial ventures for a country to grow over break even GDP level above which there can be fruitful distribution of wealth to most segments of the society in a highly populated and resource hungry country such as Bangladesh. Hence, venture capitalists and venture competition can play a great role in Bangladesh to promote entrepreneurship. In fact , in modern day history most ventures took flight from their inception/conception stages through government support or intervention from private venture capitalists/angel investors or help from friends and families. Why so? Because entrepreneurs with great ideas generally neither have access to traditional source of finance such as Banks nor have capacity to meet Banks’ stringent requirements such as collaterals etc.

In this vein, mass level entrepreneurial competition could be a good idea. More important is structured follow up and support for the successful ideas coming out of the competition or class room projects. In west private venture capitalists are more than happy to participate, fund and mentor young participants successful in a venture competition. For example, my business school class room venture idea got US$ 10 M funding by a French investor group. Venture capitalists put greater emphasis on good jockeys (entrepreneurs) than the horse (business idea). This is why venture competitions are great sources of jockeys for them. But Bangladesh hardly offers anything attractive to a private venture capitalist to get involved so intensely. Frankly, Bangladesh is yet to become a good market for venture capitalists. Traditionally venture capitalists look for few parameters before getting involved actively in a new market. A few important ones are minority investor’s protection, exit opportunities (through IPO in stock market or sale of the business to other big businesses), entrepreneurial ecosystem (how the entrepreneurial mechanism works including government policies and supports), availability of skilled workforce, depth of R&D (Research and Development), and of course overall business environment. A year back, I have been exploring the potential to start a venture capital wing in BD backed by an US based venture capital group. But my study of the BD market for venture capital operation has been nothing but hopeless at least for the time being. I am afraid that if some venture capitalists (may be a non filthy rich Bangladeshi) agree to burn cash of their own pocket to develop the entrepreneurship in Bangladesh venture capitalism won’t take a good start in Bangladesh.

We also have to think about social acceptability of entrepreneurship in Bangladesh. Societal attitude towards entrepreneurship does make a difference. Let me given an example. Why USA is more entrepreneurial society than EUROPE. Because in USA going bankrupt is not social stigma but in EUROPE going bankrupt is social stigma. Hence, in USA people take far more risks. Yes there has been destruction also. But that is called creative destruction. This is why we get internet, computers, air-craft, Google, I-pod from USA not from any other places. I am afraid that in BD entrepreneurship still takes the second seat after a well paid job.

So, what are the alternatives? One idea is to start up business incubators backed by government money or big international aid agencies money. IFC long back has tried to do something in this line in Bangladesh but that effort ultimately evolved into a leasing business not a real venture capital/private equity type. In many countries government business incubators have been playing great role in shaping the whole entrepreneurial/business landscape in those countries. Some of the countries that got highly benefitted from business incubators are Finland and Israel. In Australia also there are quite a few incubators. So, before going for national venture competition or something like that let’s create a pressure group or non-profit group to develop the entrepreneurial ecosystem through proper government policies and active government /aid agencies participation through business incubators. This local non-profit effort could be assisted by some leading organization from West. Fortunately, I have some access to such resources. So, I can be of some assistance if anybody is interested to take the leadership and initiative. One may ask why I don’t take the initiative myself. One simple answer, some other market is more attractive to me than Bangladesh. I am yet to be in a position to burn my cash as Mr. Warren Buffet or Mr. Gates is doing. Hence, like any other venture capitalists I will only go to places where I get optimum combination of risk and return. So, it is the responsibilities of the government and leading think tank of Bangladesh to come up with strategy to develop effective entrepreneurial system. Just having a mass level venture competition will not much impact.

Murshed from ABC Radio FM 89.2 said...

I think we should think of starting the show about entrepreneur motivation. The show will discover the potential entrepreneur of Bangladesh.so the Bangladesh will develop accordingly.Big corporate houses should take immediate steps for it.

the_skywalker said...

As I mentioned earlier, starting an entrepreneurial show won't create much impact without proper system/resources to follow up on the venture ideas till fruition as well as to mentor/nurture the entrepreneurs. The entrepreneurial landscape is so much underdeveloped in BD that private venture capitalists will hardly feel interested to work on BD market until and unless somebody is having the grandiose will to burn cash for years.

I did mention earlier what is required to make the entrepreneurial landscape of Bangladesh fertile. I do wish to write up a bigger article on this later. I do think that the call of the hour is state funded or international aid agency funded business incubators. Our policy makers should actively think about this.

Anonymous said...

Mr.skywalker distracts himself from the main topic and made it so SELF CENTRED(about his plan only).yes red& green and Mr. morshed were talking about the show which will be centred about venture capitalism.with due respect to the BOOKISH funda of venture capitalism by the sky walker combined with his own plan of venture capitalism,i would state state its very easy to blame the system of any country.to change the system ,one has to get involved and engaged himself/herself with the system.And as you rightly said that why USA gives us computers,google,Ipod etc because of its tendency to take risk in business,therefore i would reccomend you why DONT U TAKE RISK TO BURN UR CASH on ur own motherland.What can be teh best idea on teh eve of the great INDEPENCE DAY! think about it skywalker and think out of the box!!!

Anonymous said...

The idea given by Red&Green is something to genuinely look forward to as it would be the first and foremost in the context of Bangladesh.

I was just wondering why The skywalker distracts himself from the main topic and strated sounding so self-centred(about HIS plan for investment).The idea of teh show should have been appreciated in the very first place and the essentials for such show should have been recommended by the commenters here.But as i have experienced through the commnet of The skywalker that he rather went on stating all the BOOKISH jargons of venture capitalism and in the later part he kept on mentioning how and why he would not lik eto burn his cash on bangladesh.As rightly said by you,The skywalker,that USA has the tendency to take risk in busness and therefore we get computers,ipods,aircrafts etc from them.Thus,why DON'T YOU take RISK and invest on your own motherland.Which can be the best day/time to give it a thought other than on the INDEPENDENCE DAY???

Last but certainly not the least,it is very easy to criticize teh system from distance. To change the system of any country one has to engage himself/herslf into it else digest it the way it is! The right of criticism/appreciation requires your involvemnet in teh system but not in your avoidance of it.

the_skywalker said...

My dear Anonymous practical Gentleman,

Thanks for your comments. I am very much happy for my bookish knowledge because of this knowledge at the age of 28, I became COO of an US$ 50 M MNC business in BD only, because of this knowledge I am one of the founding partner of an US$ 10 M( still growing at 15% CAGR) manufacturing business in Dhaka, Bangladesh, because of this bookish knowledge I am often approached by (so far it is 5 NRBs) to manage their money and help them build/grow business in Bangladesh. In another comment, I mentioned more about my credentials and also expressed my interest to give my references to check about me though in BD context it is not safe and secure.

The business venture incubator is not an idea I would like pursue. I do not intend to build and run a private business incubator anywhere in the world. I have proposed it more as a structured medium to nurture the venture ideas until fruition. I also mentioned that it needs to be government or International Aid Agency supported because only those entities can afford to spend money for this kind of cause. It has happened in many countries. Please do a little bit of research my practical friend. If you read the original post of RED & GREEN, you understand that he himself mentioned that entrepreneurs are not able to grow because of lack of support/patron. The writer has talked about HSBC’s Young Entrepreneur Award. And he has rightly expressed his concern whether these successful venture ideas are realizing the potentials or not. He has raised questions about mechanism of tracking of those ideas till success/failure? As a solution to this problem he opined for nation wide venture competition. This is a noble and good idea. But does it solve the issues he raised in his article? If so how? I have failed to get any connection between his idea of the SHOW and the concerns he pointed out. Can you or anybody help me on this? As I could not find the solution, I expressed my view that without proper structure/resources to follow up on the ideas and/or to mentor the entrepreneurs such plan of nation wide competition may only bring out the same result which HSBC Award or other Venture competition is bringing. I never told that the show is a BAD IDEA. But it needs to be accompanied by some structure to follow up the successful ideas post competition. I will be happy to know if somebody can give a better idea.

Let me drift from the discussion and talk little bit about the TV shows. It seems that people are thinking the TV show could be a panacea for lack of entrepreneurial venture. Do you know why and how the live shows for talent scouting came up? The history is long. But to tell it in short, such shows have been popularized by American Idol though original one was something else. In earlier days, Music companies such as BMG used to have a separate division( called Arts & Repertoire) with experts to search for music talents in bars, in streets , radio stations and other places. But that was costly for several reasons. First the whole process is long and cumbersome. Second, you do not know whether a talent identified will be successful until and unless the records are into the market. It is a risky game because you loose all your investment if the first or second album is not hit. There comes the concept of talent scouting through reality show such as American Idol. Here you are getting the feel of the consumer as potential consumers are voting. This is called using Wisdom of Crowd. Here, you do not have to go through dispersed talent finding activities. This is why music talent scouting shows are so successful. In the same vein Dragon’s Den is successful because there are potential customers (VCs) for incumbents of that show. Tell me how many such customers are here in BD and who are they? Remember Dragon’s Den is not using the wisdom of crowd for the right reasons.

Many BD Professionals think that practical world has to be something totally different from theories. This is one of the major problem for BD development not enough talent to apply the theoretical knowledge in the practical world. My friend theories do not stand the test of time if theories cannot be applied on actual situations day in and day out. Oh ya in my first posting I talked about some criteria for attracting VCs to enter a market. Fortunately or unfortunately, those are the criteria used by VCs whenever they want to enter a new market. I worked for a while with AGF( Alliaz) VC/PE equity arm in France, hence, I exactly know how VCs operate.

First I never told that I will not burn my cash in BD for anything. I will burn cash in BD, if there is anything lucrative. It has to have right promise of return for the associated risks. I said that I won’t burn my cash to build and run a business incubator. You should understand this point. Moreover, you have asked me that I should be burning my cash and get involved into the system. So let me tell you my humble involvement with BD system, my efforts to change some changes in BD society and my experience. Oh this is a real story that will also explain a nice entrepreneurial concept called Boot Strapping. I am not sure whether you are acquainted with this concept.

After becoming the COO of a leading MNC( abt US$ 50 MN company) operating in BD at an age of 28/29, I got bored after a while. Then , I and my friend from BAT (British American Tobacco) thought of a business idea while talking over a cup of coffee at the terrace of his Banani house. Both of us were doing quite good which most young professionals at that age in BD cannot think of. But we discovered that there is no meaning of going up the ladder because after a while you face the dead end. So, we thought of starting up a business in manufacturing because that’s our strength area. The project cost itself was coming around 1 Croe excluding land. We could only put Tk. 15 lac at that time as both of us wanted to keep some money aside to support ourselves and also for your rainy days (This is rule number #1 before you start your own venture). Then we went to one of our friend to rent his idle shed in Savar. By that time, we had numerous meetings with our potential clients which were some leading MNCs operating in BD. Most people without any factory or anything will hardly get any access to these MNCs to discuss as a potential supplier. We could do because of our past track record as professionals for top companies in BD and also for our network. But still they were reluctant to give us orders because we were not having anything but a 40 page detailed business. Finally our patience paid off. They agreed to give us some trial orders.

Then came the question about how to buy raw materials. We went to Bank to get credit facilities/LTR etc to buy raw materials and all. Again meetings after meetings but no result, till we could get to meet the chairman. Fortunately we could go up to the chairman of the bank through our contacts which many budding entrepreneurs cannot do in BD. We got the credit facilities/LTR facilities approved. Here, I would like to mention that one big issue was that banks wanted personal guarantee. In BD even owners of big companies often have to give personal guarantee to get loans from Banks. But we did not want to do that and ultimately managed to get the loans without any personal guarantee. This is rule #2 for an entrepreneur . Never give personal guarantee. You just cannot afford to loose everything on earth. I cannot tell more than that. Still money for the machinery and equipment could not be arranged on the other hand our potential clients were after us to submit trial products. In fact we also did not want to invest in own machinery right away. Fortunately we could find a sick company with similar machinery we required. We rented the machinery from that company for 6 months (this rental was extended to 2 years later) and brought those machinery in the rented place of ours and started production and delivery.

In between we had to resolve the issue of sourcing raw materials from some big international suppliers. Again the suppliers were not willing to supply us because we could not show any balance sheet. Normally, any international supplier would like to see your balance sheet to see your capacity to pay off. You should understand that we were yet to start our venture, how could we have a balance sheet that would convince them. So it was like a question of CHICKEN and EGG. Here, we had to use some of our contacts in Singapore and found some contacts in the supplier companies and then got their commitment to supply materials to us. After starting production in the rented place with rented machineries, we found that we were into negative cash flow because we had to pay for wages, bank payments, electricity, VAT, or rentals for machine and factory shed and our capacity was not fully utilized. Added to this problem were fluctuations, in raw material price, in international market, which hammered us. At times we had to inject money from our rainy days funds also though that was a dangerous thing to do.. Oh ya there were so many other issues. Police catching our delivery trucks though we paid full VATs… Income tax officials harassed us though we were using clean accounting …Mastans wanted chanda instead threatened to burn our factory…bank scolded every other month as we failed to pay some EMIs…workers revolted as we could not pay on time on a few occasions…and of course we burned our own cash to support ourselves because our company was having negative cash flow. In this way we ran the company for almost one year and thought every night that next morning we would wind up the business. You wont understand how distressful that experience was. There were at times fight between I and my partner.

After a year or so, we could turn the situation as we proved to our customers and suppliers. Here I would like to mention that from day one in our plant we diligently applied the concept of Lean Manufacturing/TQM in true sense not like other companies doing in BD. Again we resorted to theory . These activities have given our stakeholders confidence on our abilities and business models. Order quantities increased. Even international suppliers started to give us 90 to 180 days credit terms. All these made our cash flow positive. Then only we could get some lease financing to buy own machines. There after everything were smooth. Today we have a revenue base of almost US$ 10M with two big factories and with more than US$ 3 M worth plant and equipment. Today even top MNC banks are after us to give loans with favorable conditions us because they think that we are in the making of a big company in future. I am sure we are in the making of history in the entrepreneurial landscape of Bangladesh. But in our earlier days it was almost night mare. We were about to loose our shirt and pants but luckily escaped. I am sure that most people would loose or would give up in the middle. We did not because we had some bit of luck along with our tenacity, credentials, passion and right theoretical knowledge. I hope this will help some young aspiring entrepreneurs.

I have talked in length to share my experience and pitfalls we faced in Bangladesh my dear friend. This is truer if somebody wants to do business in honest and decent manner without screwing the system or without using so called political/muscle power. That is why I have opined that we need government intervention in the form of Business Incubators which will help genuine entrepreneurs to avoid the pitfalls and pains we went through. And yes I and my partner have some other plans pertaining to BD which we are pursuing in the right course and I won’t discuss those here for confidentiality issues.

Anonymous said...

well seeing some very long comments here. couldnt go through fr time constraint. i was a participant of the 1st HSBC YEA competetion in BD. frm our perspective HSBC YEA is only a way of proving our capability till now as there is no such system fr financing such new ideas. may b there is but not in our knowledge. BOM is also same.

when we went to hongkong in YEA regional competetion, venture capitalists frm HK talked to us to invest in the winning idea. but no one frm BD took interest in the winning idea.it is not same fr other participating countries. they get interest from the very begining of the winning in their national round. n many of their ideas r implemented in their countries. but the system is not present in BD. n we at last busy ourself in study n stuff.so ideas die n we again prepare only to win the next competetion.

but the details we go through are realistic n definitely implementable in BD context.well, jst wrote in hurry n may b confusing. anyway, tc.

Anonymous said...

the skywalker still talks about himself n only himself--d 1st para of his comment atleast suggest that and why on earth u think that PRACTICAL ANONYMOUS FRIEND here has to be a gentleman?and rest is toooooooooooo long to read as comment!get a life man!

the_skywalker said...
This comment has been removed by the author.
the_skywalker said...
This comment has been removed by the author.
the_skywalker said...

Ya, I have to write a long one because you thought that I have been writing all these while sitting in my cozy bin counter in some city of a western country. I wanted to share what is success all about and how to achieve it in the rough waters of BD. I have been into it and I know how it works out. See, we all have freedom to express our thoughts. It does not mean that somebody writes things without proper/enough research, with just some plain observation and without knowing the underlying facts or presents half truths and any other guy/gal who knows the correct stuffs, should not correct or present the correct stuffs. That’s how knowledge disseminates. In west it’s called Socratic style of discussion. Now, without offense to anyone, sometimes some people talk in such a fashion that creates enough doubts about their understanding of the real world. So, in a few cases, I had to go at lengths and provide lot of base information which I could have avoided. If you do not like it, I am sorry.

One humble question…will you please let us know what are you doing to bring some changes to BD system or society? At least I have been into the system and took efforts that have changed lives of few hundreds people.

the_skywalker said...
This comment has been removed by the author.
the_skywalker said...

To HSBC YEA competition Participant,

I really sympathize with your pain and frustrations because I have been into it. This is what I have been trying to put forth with so many words. There are no private/government resources to finance, mentor, guide and support entrepreneurs who have good ideas as well as team but no money to burn. The write of the original post and others think that doing just a nation wide show (Dragon’s Den type with some elements of American Idol) will resolve the problem. But no body is trying to look deeper into the core issues. For example, RED & GREEN mentioned that VCs (who will also be judge as per his writing) will fund winners of the Nation wide venture competition show. But from where the VCs will come? Do we have any idea how many VC firms operating in BD? Yes some people such as IFTY Bhai of Asian tiger capital is burning their cash and trying to do something to shape the PE/VC landscape in BD. Here is a word of caution, what IFTY Bhai is trying to do is more of PE/Hedge Fund not exactly VC. There is another lady who has been trying to do something similar but so far I know she is leaving BD soon. If anybody is following the activities of the handful of PE/VCs operating in BD today, he or she will come to know that these firms are more into deals with bigger established companies rather than looking to finance real new ventures as the ones which won in the HSBC YEA competition. This is a sad situation. Why are these firms doing so? I have to write some long comments to explain this which I do not wish to do. If anybody is really interested to know about this please write to me. I will answer personally.

I must appreciate that the quality of venture ideas from BD is of very high quality. Sometime back, I was lucky to be invited to act as a judge for a class room venture competition at IBA and I was really impressed by the quality of the ideas. So far I know one of the idea presented there also won a competition in Said Business School of Oxford.

Anyway my young friend, if you are passionate to pursue your idea genuinely you may contact me. I will try to put you in contact with some people who can help you and may even finance you. I can be reached at theskywalker750903@gmail.com.

jesus said...

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mashrafi9 said...

Very informative blog on Bangladesh