Recently I’ve been having several debates about how clear an indicator of social impact purchase is. It is with these debates in mind that I read chapter 7 of Simply Fly. Although the debate is quite a nuanced one, I’m going to make it somewhat simplistic in order to bring the issues into focus.
At one end of the debate is the argument that regardless of our economic status, all of us frequently buy things that are not good for us. This makes purchase quite an unreliable indicator of social impact. At the other end is the position that almost everything we buy improves our lives in some way, and therefore purchase is quite a strong indicator of social impact. From those who hold the latter view, I have heard the argument made that even fairness creams increase the self-esteem of those who use them, and therefore improve their lives.
An extension to the argument that almost everything we buy improves our lives in some way is that all entrepreneurship is social entrepreneurship. Yet in this post I am going to highlight two ways in which I believe social entrepreneurship should differ from other forms of entrepreneurship, using examples from chapter 7 of Simply Fly.
The first way in which I believe social entrepreneurship should differ from other forms of entrepreneurship is that it should prioritize improvements to peoples’ lives that are long-term, over short-term improvements. For example, while smokers may feel in the short-term that their lives are improved by being able to smoke, cigarettes are certainly detrimental to their health in the long-term.
In chapter 7 Gopinath secures all the licenses and clearances he needs and launches his helicopter business. He describes one of his customers as a small-time trader who moves between weekly village bazaars buying and selling chilies, who decides to spend all his savings on his sister’s wedding. He wants to rent the helicopter so that his sister can get married in it, reviving or reinventing the family tradition of getting married on elephant-back. Gopinath offers to do it at a 50 percent discount for Rs.75,000, and the man agrees. Gopinath describes it as, “a great human impact story,” and loses no time in alerting the media. However, in the process of gifting his sister a helicopter wedding, the small-time trader spent all his savings. If Gopinath were a social entrepreneur, would he still find this a story to celebrate, or would he see it as an ethical dilemma?
The second way in which I believe social entrepreneurship should differ from other forms of entrepreneurship is in the length of the chain from the enterprise to benefiting the disadvantaged. Gopinath’s customers range from the trader described above to visitors to India. For visitors he offers one or two day sightseeing packages by helicopter, and quotes travel writers Hugh and Colleen Gantzer describing him as having had the biggest impact on tourism in India. However, I could not help thinking that if Gopinath was not in the helicopter business, and had promoted eco-tourism instead, he could have benefited the people living near the river resorts and wildlife safaris he praises much more directly. Instead, as an entrepreneur, while generating employment, stimulating consumption, paying taxes and donating a portion of his profits are all ways to contribute to society, the length of the chain from these actions to benefiting the disadvantaged can often be quite long.
Nevertheless, as in other chapters, in chapter 7 too there are lessons from Gopinath’s experiences for social entrepreneurs. Gopinath devotes a considerable portion of this chapter to the issue of how to advertise effectively. He advises against expensive press conferences and instead suggests getting the media to write about your enterprise by offering them a good story. While his examples of good stories, like that of the small-time trader who rents a helicopter for his sister’s wedding, may be questionable, the general advice holds. In his attitude towards the media Gopinath expresses what I have come to recognize as his characteristic optimism, when he says that, “to a considerable degree we have an honest press,” as we have honest businessmen and politicians (barring exceptions). Another advertising strategy he describes is to offer to advertise the resorts he flies tourists to, in exchange for them advertising his helicopter service.
Sunday, April 17, 2011
Sunday, March 13, 2011
Villgro Blog: Simply Fly Chapter 6
In the last chapter, Gopinath obtained funding for a hangar, and had a company agree to lease him a helicopter. Yet he still has no funding for a helicopter. He goes to banks and VC firms but they won’t lend to him.
What is ironic is that it is also in this chapter that Gopinath is invited to join a highly prestigious MBA program. Despite this recognition he is not able to get funds. This made me think that funding is a problem for all enterprises in India, not just SMEs, or those serving the poor. In fact, Gopinath was able to get a bank loan for his farm, but not for his helicopter business.
Gopinath finally gets a loan/equity investment from a Sindhi (Gopinath describes them as some of the most astute businessmen in the country) and some others. The Sindhi “rate of interest” is usually quite high, although Gopinath says that this particular business charges less. He finds him through his financial advisor.
While loans from Sindhi businessmen may not be an appropriate source of finance for Villgro’s enterprises because of the high rates of interest they charge, it made me wonder whether Villgro should be giving greater emphasis to informal sources of finance in its mentoring of incubates. The Amazing Secrets of Millionaire Inventors talks about giving both debt and equity to your family and friends. However, I know that when I was at Villgro, the capacity building sessions for innovators seemed to downplay those sources of finance in favor of venture capital.
In this chapter Gopinath also sets a date for the launch of his helicopter business when he still has several licenses and clearances to secure. The date is particularly ambitious because he does not allow more than two to three days for the clearances from the Directorate General of Civil Aviation (DGCA), when normally these clearances take two to three months. Gopinath feels compelled to do it because he knows that as soon as the helicopter is transferred to his business, he will have to start paying interest and lease rental. Therefore, it will be suicidal for his business if he does not start earning money the moment the helicopter is transferred to them. The way in which Gopinath pursues this goal shows his ability to be strategic. He invites the chief minister and other ministers to join the civil aviation minister for the inaugural flight, assuming that the DGCA will do their bit and oblige with the necessary clearances because their bosses would be the chief guests.
What is ironic is that it is also in this chapter that Gopinath is invited to join a highly prestigious MBA program. Despite this recognition he is not able to get funds. This made me think that funding is a problem for all enterprises in India, not just SMEs, or those serving the poor. In fact, Gopinath was able to get a bank loan for his farm, but not for his helicopter business.
Gopinath finally gets a loan/equity investment from a Sindhi (Gopinath describes them as some of the most astute businessmen in the country) and some others. The Sindhi “rate of interest” is usually quite high, although Gopinath says that this particular business charges less. He finds him through his financial advisor.
While loans from Sindhi businessmen may not be an appropriate source of finance for Villgro’s enterprises because of the high rates of interest they charge, it made me wonder whether Villgro should be giving greater emphasis to informal sources of finance in its mentoring of incubates. The Amazing Secrets of Millionaire Inventors talks about giving both debt and equity to your family and friends. However, I know that when I was at Villgro, the capacity building sessions for innovators seemed to downplay those sources of finance in favor of venture capital.
In this chapter Gopinath also sets a date for the launch of his helicopter business when he still has several licenses and clearances to secure. The date is particularly ambitious because he does not allow more than two to three days for the clearances from the Directorate General of Civil Aviation (DGCA), when normally these clearances take two to three months. Gopinath feels compelled to do it because he knows that as soon as the helicopter is transferred to his business, he will have to start paying interest and lease rental. Therefore, it will be suicidal for his business if he does not start earning money the moment the helicopter is transferred to them. The way in which Gopinath pursues this goal shows his ability to be strategic. He invites the chief minister and other ministers to join the civil aviation minister for the inaugural flight, assuming that the DGCA will do their bit and oblige with the necessary clearances because their bosses would be the chief guests.
Villgro Blog: Simply Fly Chapter 5
This chapter furthered some of the impressions that I have gained of Gopinath in earlier chapters, namely that the way in which he chooses opportunities to pursue seems haphazard, and that there is a contradiction between his love of nature and the environment, and his venture into aviation.
Gopinath visits China in 1995-1996, and he emphasizes the importance of this visit in taking him, “on a course that would not have otherwise been taken”. Gopinath’s observations of China are that:
…Destroying the topsoil to create buildings would ultimately mean destroying the world. In China I could sense disaster waiting to unfold. The picture was the same everywhere: in the countryside, in district towns, in sleepy hamlets, and in busy cities. On the positive side, the frenetic, relentless pace of industrialization had taken China 20 years ahead of us.
While in China, Gopinath reads a newspaper article about a Vietnamese helicopter pilot who flies investors and aid workers to different parts of the country. Later on in the chapter, Gopinath quotes Peter Drucker saying that entrepreneurs, “…create something new, something different; they change and transmute values; and, on a size and scale that will impact society”. Gopinath emphasizes that entrepreneurs must impact society for the better, and suggests that the helicopter business he decides to start will do so.
Yet, the uses that Gopinath sees for the helicopter business are for VIP visits, industrial surveys, mapping, tourism, aerial photography and videography, film shoots and medical evacuation. This point seems important because it is often argued that, “all enterprises are social enterprises, and create social impact”. However, of all the uses that Gopinath envisions for the helicopter, it is only medical evacuation that I see as having the potential to create significant social impact. Gopinath is certainly an ethical entrepreneur, for example in his refusal to pay bribes. However, I would not consider him a social entrepreneur.
Nevertheless, this chapter contains useful insights on how the helicopter business was started. Gopinath emphasizes the importance of having a great team, and describes in detail his efforts to recruit his partner, Captain K.J. Samuel (Sam), a financial advisor, Mohan Kumar, a pilot, Col. Jayanth Poovaiah, a helicopter engineer, Vidya Babu, and the board. In the case of Sam, Gopinath is only willing to accept him once he is so taken with the idea of a helicopter business that he leaves his job, even though he has three children to support in Bengaluru on a pension of only Rs.7,000. Gopinath justifies this by saying that only if you are unable to sleep because your business may go bankrupt, will your business succeed. However, in this particular instance, Gopinath had his farm and agricultural consultancy to depend on, while Sam had nothing.
Gopinath and Sam incorporate the company as Deccan Aviation, but then spend two tormenting years obtaining a No Objection Certificate (NOC) from the government. This episode is clearly an example of Gopinath’s persistence, as he visits the office of the joint secretary (the officer who deals with the initial stages of the application) fifteen times! Gopinath compares both his visits to the joint secretary’s office for the NOC, and to banks for a loan, with his experiences making similar visits as a farmer. After several rejections, the Karnataka State Industrial Investment Development Corporation gives them a loan of Rs.43,00,000 for spare parts and a hangar. They were then able to convince the Chief Minister of Karnataka state to give them land for the hangar.
Even as the company was getting established, they received free publicity through several newspaper articles. They hired Tata Consultancy Services to prepare a business plan. They prepared training and engineering manuals to comply with the requirements of the civil aviation ministry. Gopinath emphasizes the importance of having funding, people, and the government license before buying or leasing a helicopter.
However, obtaining the helicopter is not easy either. A leasing company, ITC Leasing, decides to offer Deccan a helicopter, then withdraws their offer because of India’s hung parliament in 1997, but then agrees once again when the political situation stabilizes.
This chapter also contains several digressions, such as generalizations made by the president of ITC Leasing, on the differences between Chinese and Western women. These could have been edited.
Gopinath visits China in 1995-1996, and he emphasizes the importance of this visit in taking him, “on a course that would not have otherwise been taken”. Gopinath’s observations of China are that:
…Destroying the topsoil to create buildings would ultimately mean destroying the world. In China I could sense disaster waiting to unfold. The picture was the same everywhere: in the countryside, in district towns, in sleepy hamlets, and in busy cities. On the positive side, the frenetic, relentless pace of industrialization had taken China 20 years ahead of us.
While in China, Gopinath reads a newspaper article about a Vietnamese helicopter pilot who flies investors and aid workers to different parts of the country. Later on in the chapter, Gopinath quotes Peter Drucker saying that entrepreneurs, “…create something new, something different; they change and transmute values; and, on a size and scale that will impact society”. Gopinath emphasizes that entrepreneurs must impact society for the better, and suggests that the helicopter business he decides to start will do so.
Yet, the uses that Gopinath sees for the helicopter business are for VIP visits, industrial surveys, mapping, tourism, aerial photography and videography, film shoots and medical evacuation. This point seems important because it is often argued that, “all enterprises are social enterprises, and create social impact”. However, of all the uses that Gopinath envisions for the helicopter, it is only medical evacuation that I see as having the potential to create significant social impact. Gopinath is certainly an ethical entrepreneur, for example in his refusal to pay bribes. However, I would not consider him a social entrepreneur.
Nevertheless, this chapter contains useful insights on how the helicopter business was started. Gopinath emphasizes the importance of having a great team, and describes in detail his efforts to recruit his partner, Captain K.J. Samuel (Sam), a financial advisor, Mohan Kumar, a pilot, Col. Jayanth Poovaiah, a helicopter engineer, Vidya Babu, and the board. In the case of Sam, Gopinath is only willing to accept him once he is so taken with the idea of a helicopter business that he leaves his job, even though he has three children to support in Bengaluru on a pension of only Rs.7,000. Gopinath justifies this by saying that only if you are unable to sleep because your business may go bankrupt, will your business succeed. However, in this particular instance, Gopinath had his farm and agricultural consultancy to depend on, while Sam had nothing.
Gopinath and Sam incorporate the company as Deccan Aviation, but then spend two tormenting years obtaining a No Objection Certificate (NOC) from the government. This episode is clearly an example of Gopinath’s persistence, as he visits the office of the joint secretary (the officer who deals with the initial stages of the application) fifteen times! Gopinath compares both his visits to the joint secretary’s office for the NOC, and to banks for a loan, with his experiences making similar visits as a farmer. After several rejections, the Karnataka State Industrial Investment Development Corporation gives them a loan of Rs.43,00,000 for spare parts and a hangar. They were then able to convince the Chief Minister of Karnataka state to give them land for the hangar.
Even as the company was getting established, they received free publicity through several newspaper articles. They hired Tata Consultancy Services to prepare a business plan. They prepared training and engineering manuals to comply with the requirements of the civil aviation ministry. Gopinath emphasizes the importance of having funding, people, and the government license before buying or leasing a helicopter.
However, obtaining the helicopter is not easy either. A leasing company, ITC Leasing, decides to offer Deccan a helicopter, then withdraws their offer because of India’s hung parliament in 1997, but then agrees once again when the political situation stabilizes.
This chapter also contains several digressions, such as generalizations made by the president of ITC Leasing, on the differences between Chinese and Western women. These could have been edited.
Friday, January 28, 2011
Villgro Blog: Simply Fly Chapter 4
In this chapter, Gopinath dabbles in politics by running for the position of MLA (Member of the Legislative Assembly). This development is in some ways consistent with what the reader learns of Gopinath in previous chapters.
Firstly, in Chapter 3, Gopinath mentions that he is becoming increasingly well-known, both because of his silkworm and other businesses, and because he wins the Rolex Award for Enterprise. Therefore, it is not surprising that the Bharatiya Janata Party (BJP) asks him to be the president of the party in Hassan.
Secondly, in my post on Chapter 3 I mentioned an incident when Gopinath offers help even to those who ransack his farm. In this incident, Gopinath displays an ability to stand up to people when he looks the marauders in the eye, raising his voice but nevertheless reasoning with them. In this chapter Gopinath both argues with Vajpayee at a dinner attended by leaders of the state BJP, and with Deve Gowda, a powerful politician. In the latter incident, Deve Gowda violates the election code of conduct by arriving to speak around 20 minutes early, with a procession and drums. Gopinath, incensed at Deve Gowda cutting into his time, refuses to call off or even temporarily stop his meeting. Gopinath eventually prevails.
As early as Chapter 2, Gopinath also displays his skill in fundraising. He starts farming on 30 acres of land, 20 of which belong to his uncles. He tells his uncles that he will pay them a much higher amount than they would get by selling the land, and higher interest than that offered by the banks, but from the sale of his crop (in the future). In this chapter, Gopinath faces a much larger fundraising challenge when he has to organize a rally for the visiting BJP leader, Atal Bihari Vajpayee. He realizes that if he organizes the rally using his own funds he will become bankrupt, and decides instead to publicize the function through local artists, traders and contractors. Yet the reader can question the ethicality of this decision, as it is likely that many of the traders and contractors invested in Gopinath in the hope that if he came to power, he would “reward” them later with development contracts.
Gopinath says that he did not have time at that moment to consider the ethicality of his decision. However, another ethical decision that he struggles with in this chapter and resolves somewhat more satisfactorily, is over whether to represent a party with communal overtones. Gopinath joins the BJP only when he is assured by the party that they are a separate and independent identity from the communal RSS, and that there will be no interference in his functioning.
Gopinath’s strong sense of equality, instilled in him both by his father and his experience in the army, is evident in this chapter not only in his statement that, “…there is only one caste, one community, and one religion: of being an Indian,” but also in his decision to contest from the agrarian constituency of Gadsi, rather than from the cities of Bengaluru or Hassan where he would win votes on the basis of his caste. There is also an incident where party workers and leaders gather on his farm, and refuse to eat the food cooked by Raju because he belongs to the scheduled castes. Gopinath asks Raju to serve him first, and everyone else follows.
Nevertheless, at this point in the book, it is difficult to discern a clear progression in the opportunities that Gopinath chooses to pursue. Although he loses the election, it seems just as feasible that had he won, he would have become a politician as the founder of Air Deccan. This led me to think about entrepreneurship education, and the theories behind it. One theory could be that some people are “born entrepreneurs”, and that entrepreneurship education will uncover these “hidden” entrepreneurs. Another theory could be that entrepreneurship education exists to educate everyone on entrepreneurship as a possible career option. For people like Gopinath, who seem to be interested in several career paths, entrepreneurship education could steer them in the direction, or at least make them aware, of entrepreneurship as one amongst these options.
Firstly, in Chapter 3, Gopinath mentions that he is becoming increasingly well-known, both because of his silkworm and other businesses, and because he wins the Rolex Award for Enterprise. Therefore, it is not surprising that the Bharatiya Janata Party (BJP) asks him to be the president of the party in Hassan.
Secondly, in my post on Chapter 3 I mentioned an incident when Gopinath offers help even to those who ransack his farm. In this incident, Gopinath displays an ability to stand up to people when he looks the marauders in the eye, raising his voice but nevertheless reasoning with them. In this chapter Gopinath both argues with Vajpayee at a dinner attended by leaders of the state BJP, and with Deve Gowda, a powerful politician. In the latter incident, Deve Gowda violates the election code of conduct by arriving to speak around 20 minutes early, with a procession and drums. Gopinath, incensed at Deve Gowda cutting into his time, refuses to call off or even temporarily stop his meeting. Gopinath eventually prevails.
As early as Chapter 2, Gopinath also displays his skill in fundraising. He starts farming on 30 acres of land, 20 of which belong to his uncles. He tells his uncles that he will pay them a much higher amount than they would get by selling the land, and higher interest than that offered by the banks, but from the sale of his crop (in the future). In this chapter, Gopinath faces a much larger fundraising challenge when he has to organize a rally for the visiting BJP leader, Atal Bihari Vajpayee. He realizes that if he organizes the rally using his own funds he will become bankrupt, and decides instead to publicize the function through local artists, traders and contractors. Yet the reader can question the ethicality of this decision, as it is likely that many of the traders and contractors invested in Gopinath in the hope that if he came to power, he would “reward” them later with development contracts.
Gopinath says that he did not have time at that moment to consider the ethicality of his decision. However, another ethical decision that he struggles with in this chapter and resolves somewhat more satisfactorily, is over whether to represent a party with communal overtones. Gopinath joins the BJP only when he is assured by the party that they are a separate and independent identity from the communal RSS, and that there will be no interference in his functioning.
Gopinath’s strong sense of equality, instilled in him both by his father and his experience in the army, is evident in this chapter not only in his statement that, “…there is only one caste, one community, and one religion: of being an Indian,” but also in his decision to contest from the agrarian constituency of Gadsi, rather than from the cities of Bengaluru or Hassan where he would win votes on the basis of his caste. There is also an incident where party workers and leaders gather on his farm, and refuse to eat the food cooked by Raju because he belongs to the scheduled castes. Gopinath asks Raju to serve him first, and everyone else follows.
Nevertheless, at this point in the book, it is difficult to discern a clear progression in the opportunities that Gopinath chooses to pursue. Although he loses the election, it seems just as feasible that had he won, he would have become a politician as the founder of Air Deccan. This led me to think about entrepreneurship education, and the theories behind it. One theory could be that some people are “born entrepreneurs”, and that entrepreneurship education will uncover these “hidden” entrepreneurs. Another theory could be that entrepreneurship education exists to educate everyone on entrepreneurship as a possible career option. For people like Gopinath, who seem to be interested in several career paths, entrepreneurship education could steer them in the direction, or at least make them aware, of entrepreneurship as one amongst these options.
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