technology entrepreneurship - making business sense

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Presentation prepared and delivered by Mr. Sohan Babu Khatri to finalists of Pivot Nepal on April 13, 2013 in one of the coaching classes.

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Technology Entrepreneurship

Making Business Sense

By: Sohan Babu KhatriCEOThree H Management

Sohan Babu Khatri - Introduction

Professional Engagements: • CEO – Three H Management Pvt. Ltd• Director of Board – Grand Bank Nepal Ltd , Just-One-Nepal, SCDRR-Nepal

Adjunct Faculty:

• Ace Insititute of Management• Kathmandu College of Management• London Chamber of Commerce and Industries – International Qualification

Background: • Bachelor’s of Civil Engineering (BE Civil) - Pulchowk Campus, Institute of

Engineering, Nepal• Masters of Business Administration (MBA - Finance and Marketing), Bangalore

University, India• Certified Financial Manager (CFM), Centre of Financial Management, Bangalore• Licensed International Financial Analyst (LIFA) - Charter Holder – International

Research Association, Cambridge, Massachusetts

Technology + Business

BUSINESS SENSE

+

TECHNICAL SENSE =

COMMON SENSE

COMMON SENSE =

6

On Ideas

If a man makes a better mousetrap than his neighbor, though he builds his house in the woods, the world

will make a beaten path to his door.

Ralph Waldo Emerson

7

Business Concept

The manufacturer who waits for the world to beat a path to his door is a

great optimist. But the manufacturer who shows this

“mousetrap” (and its value) to the world, keeps the smoke coming out

his chimney.

O.B. Winters

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Mother of IDEA ?

OPPORTUNITY

10

Opportunity Recognition & Business Concept

Paying attention to both the external world and your internal mind set.

11

An opportunity is not an idea nor is it a business concept.

OPPORTUNITY RECOGNITION

12

An Opportunity is External

• It is in the environment• It is a need to be fulfilled• It is a want to be addressed• It is a fear to be relieved• It is time limited (window of opportunity)• It is not a technology, service, or product

but an application to situation

13

Ideas vs. Concepts

• Ideas are often seeing a need, want or fear and saying, “Lets meet that”

• Ideas are sometimes a technology hunting for an application or “opportunity”

• Concepts are when you put a technology together with the customer/market perspective and understand the business and revenue models that lead to sales.

14

• Good ideas are not always good opportunities nor viable concepts.

• Concepts are built using ideas & entrepreneurial creativity in real time & address real problems.

• Opportunities are attractive, durable, timely, and anchored in a product or service which creates real value for its buyer and end user.

• Concepts provide Need or Want Satisfaction, Pain and/or Suffering Relief.

• Opportunities yield measurable net benefits to the entrepreneur and to society.

Opportunity, Ideas & Concepts

15

• Opportunities are also situational– The Window of Opportunity

• Opportunities take form in real world conditions– Changing conditions– Leads and lags– Knowledge gaps– Chaos and/or confusion– Inconsistencies– Uncertainties

Opportunity Recognition

The Window of Opportunity

I was seldom able to see an opportunity until it ceased to be

one.

17

The Window of Opportunity

Market Size(RevenuePotential)

Time (Years)

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Recognizing OpportunitySeek it Actively

19

Watch Trends

• Social• Political• Economic• Technological• Demographic• Global• Local

20

The External Environment

FIRM

Competition

SuppliersCustomers

SubstitutesSocial

Political/LegalTechnological

Global

DemographicsIndustry

EnvironmentEconomic

Macro-Environment

AND DON’T FORGET

COUNTER-TRENDS

22

Questions to Answer

• Can we convert this opportunity into some profitable business concept ?

• Is this really an adequate business opportunity and concept?

• Is this one I/we want to pursue?• What resources are required to exploit it?• How do I/we acquire them?• How do I/we manage the operation?• How and when do I/we harvest?

23

Differentiating Between Opportunities

Revenue Potential

Concepts

Small Big

Obvious

Not Obvious

Most small businesses

Highlycompetitive

Black holesHigh

potentialventures

24

The Ideal Growth Market (Example)

1. Over 50 million in total size, 100 million derivable

2. Growing at a rate significantly greater than real GNP, 25-50% reasonable

3. Sufficiently fragmented or non-competitive to allow a new entry to grow to 25-50 million or more in sales within 5 years

4. Amiable to profit making by a new entry at the rate of at least 10% after tax on sales within 2 to 3 years after start up– High technology requires very high contribution margin

5. Politically and socially acceptable to traditional sources of finance once established– Bank loans– IPO or sale to larger corporation

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An adequate top line is fundamental to a modest

bottom line.

26

Market Realities Impact Opportunities

Supply

Demand

$/UnitPrice Cost

Quantity/Time Period

27

• Profitability• Positive Cash flow• ROI on Required I• Investor Demands/Expectations• Value at exit• Life style issues

–Personal wants–Family issues

• Sustainability • Social Value Added• Environmental Value Added

Harvest Issues (Bottom Line)

28

• Technology

• Service

• Team, talent, fit

• Channels of distribution and marketing

• Pricing

• Opportunistic, adaptive

Differentiation Issues

29

Principles of Opportunity Seeking

• Systematically analyze all sources• Go out:

– look, – ask, & – listen

• Keep it simple, stay focused• Start small (specific) • Aim for leadership• Be market focused, be market driven• Don’t do too much at once• Innovate for future• Focus on Opportunity rather than Risk

Keep all your five senses active

Don’t forget your sixth Sense

32

Concept Feasibility

• Compelling Interest • Customer Opportunities• Customers• Venture Concepts• Financial Resources• Entrepreneurial Team• Venture Evaluation

33

Compelling Interest

“Choose a job you love, and you will never have to work a day in

your life.”

–Confucius

34

Customer Opportunities

“The secret of life is to be ready for the opportunity when it

comes.”

–Benjamin Disraeli

35

Customers

“I cannot give you the formula for success, but I can give you the

formula for failure...which is: try to please everyone.”

–Herbert Bayard Swope

36

Venture Concepts

"Vision is the art of seeing things invisible.”

–Jonathan Swift

37

Financial Resources

"Happiness is a positive cash flow.”

–Fred Adler

38

Entrepreneurial Team

"The true entrepreneur acknowledges that he or she

cannot succeed alone."

–Dr. An Wang

39

Reality Check

"Never tell me the odds."

–Han Solo in "Star Wars"

40

Venture Evaluation

"Confidence is what you feel before you comprehend the

situation."

–Old Proverb

41

Success

"Success, as I see it, is a result, not a goal."

–Gustavae Flaubert

42

SUCCESS CRITERIAIT IS NOT ONLY MONEY!!!

• Growth• Profitability• Technological Innovation• Market Impact• Institutionalization of Success

43

Conclusion

Be Realistic, butDemand the Possible

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Some more about opportunity and business concept

45

Identifying Opportunities

Analyzing the Product- (Service-) Market Scope

improve market penetration; gain market share

develop new products; product diversification

market diversification; extend market scope (e.g. go international)

simultaneous product- and market diversification

existing (developed) new

Market

existing

new

Product (Service)

46

Key Business Concepts

What is the basic principle behind the business?

How do you plan to make money? What are your sources of income? How do you plan create value? What is the commercial proposition? What is the customer going to pay for?

Businessmodel

Revenuemodel

Valueproposition

47

Developing The Concept Statement

• What customer needs and wants are presently going unsatisfied?

• How will the requirements of present customers change?

• What new end-use applications are likely to emerge?

• What new technologies will be used to meet which needs of customer groups?

48

Developing The Concept

• What will competitors do and what difference will this make?

• What customer needs, wants, and fears are being addressed

• What customer groups should the organization be getting in position to serve?

• Is it going to be satisfy the bottom line ? For how long ?

• How do we grow ? How do we change ?

49

Checklist For The Concept Presentation

1. Important and Distinct Features

2. Who are the target users/customers ?

3. Why will they consume it ?

4. Innovation Involved

5. Role the concept plays in the industry

6. What is the business model ?

7. What is the revenue model ?

8. How will the customer know you exist ?

9. What are the bottom line achievements ?

10. Why will your business run sustainably ?

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Whom to Target ?Know your customers better than yourself

51

Market Segmentation: Consumer Markets

Grouping customers is a more practical way of meeting needs than thinking of customers either as individuals or as one large mass. Groups should comprise those customers that respond to your products and services in similar ways. By planning a business around these customer groups, needs can be served effectively.

GeographicGeographic DemographicDemographic PsychographicPsychographic BehavioralBehavioral

52

Consumer Markets: Product Adoption

Late majorit

y

Early majority

Early adopter

s

Innovators

Rate

of

ad

op

tion

Laggards

2.5%

13.5%

34% 34%

16%

53

Market Segmentation: Business Markets

Business markets can be segmented with many ofthe same variables employed in consumer market segmentation, such as geography, benefits sought,and usage rate. Yet business marketers also use several other variables.

Demographicvariables

Demographicvariables

Operating variablesOperating variables

Purchasing approachesPurchasing approaches

Situational factors

Situational factors

Personal characteristi

cs

Personal characteristi

cs

54

Development of New Product / Customers/Markets

Customers or Markets

Old New

Nature of Technology

Old

New

“No Brainer”

Promising

Great Potential

Risky

55

Sustainability - Growth

56

Basic Product Life Cycle

Risky

Great

Bad

Good

57

Problem B Problem C

Venturing into the Unknown

Problem A

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Technology Products/ServicesFunctional Capabilities Vs. Benefits

59

Technology Assessment

TechnologyFunctional Capabilities

Benefits

60

Example: Portable PCs

►Functional Capabilities– Weight– Size/Volume– Processor speed

Mhz– Battery life

►Benefits– Portablity– Effective compute

power– Maximum time

without power connection

61

Example: Fiberoptic Cable

►Functional Capabilities– Low weight/size/cable– Less signal attenuation– High message volume

capacity– Fast transmission– Immune to cross talk, RFI

and EMI

►Benefits– Easier to install; lower cost – Fewer re-transmission

amplifiers– More clear signals– Easier to trouble shoot &

maintain

62

Example: DSL Line

►Functional Capabilities– Uses existing

twisted pair telephone line

– 15-20 times faster than 56kbps dial up modem

►Benefits– No new line

installation required

– Enables service operators to sell more broadband services

63

Example: Email

►Functional Capabilities– Multiple addressees– Instantaneous, electronic

transmission– One click reply & forward– Stored addresses– Electronic message storage

►Benefits– Easy mass mailing– No delay– Quick & easy response– Minimal– No paper, no postage, no

envelopes, no storage cabinets

64

The Value Triad – Be Clear

Customer

Product Application

ValueProposition

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Value is what customers buy

Lifetime Value = Current Value + Potential Value

ExampleExample

►Customer: Owner of Bed & Breakfast Inn►Product: A $350 Hobart table top mixer►Application: Making pancakes for 10 guests

every day►Value Proposition:

– “The Hobart mixer is a faster, more efficient mixer that is sturdier, reliable, and suitable for significant daily use”.

Another VersionAnother Version

►Customer/Buyer: U.S. Army ►User : Military cook/baker►Application: Baking 500 cakes/day►Product: $3,500 Large capacity,

heavy duty, floor mounted industrial mixer►Value proposition:

– “This industrial mixer provides high capacity, high performance and very long term reliability”.

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Technology and Business

Getting the right balance between technological

innovation and business acumen is critical for successful product

development.

BUSINESS SENSE

+

TECHNICAL SENSE =

COMMON SENSE

• Don’t fall for one more than the other one.• Don’t fall into Analysis Paralysis.• Don’t be a better maker and poor seller• Don’t be a better seller and poor maker• Have a right balance between both• Understand their complimentary relationship• Business and Technology needs to interact

with each other better.

Value – ITC - Example

A. Strategic Benefits• A1. Competitive Advantage

A2. AlignmentA3. Customer Relations

B. Informational Benefits• B1. Information access

B2. Information qualityB3. Information flexibility

C. Transactional Benefits• C1. Communications Efficiency

C2. Systems Development EfficiencyC3. Business Efficiency

Innovation Value Chain and Business

Idea Generation

Idea Conversion

Idea Diffusion

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Mobile Apps and Business SenseSome Issues and Cases

VIRALITY

VIRALITY

Mobile Apps and Business

• Consumer app developers have used to efficiently acquire large user bases and why business app developers cannot leverage the same techniques.

• Cross-promotional advertising on consumer apps can be a very effective and efficient user-acquisition technique.

Example

• Dropbox is the quintessential paradigm of designing virality into a product. Users are incentivized to refer Dropbox because they receive free additional storage for doing so.

• Additionally, the act of sharing a file with a friend inherently exposes Dropbox to new potential users and serves as a trigger for customers to talk about the service.

THERE ARE THREE TECHNIQUES THAT EMERGING MOBILE-FIRST BUSINESS

APP DEVELOPERS ARE USING TO BUILD VIRALITY INTO THEIR

PRODUCTS.

TRIGGERS

• Triggers are events that spur an action. • In this particular context, triggers are actions that an

app user takes that provide for an opportunity to discuss the application. 

• Expensify, a mobile app for business users to submit expense reports, has built in two word-of-mouth referral triggers: – 1) every time a user takes a picture of a receipt for

expense reporting, they are triggered to talk about the app with the coworkers or clients present;

– 2) the act of submitting an expense report triggers an explanation of the product to the person approving the report.

INCENTIVES

• Incentives play on the concept that users are much more likely to actively refer a product if they receive some practical value for doing so. 

• Plangrid, an iPad app for managing construction-site blueprints, uses incentives to spread among the different companies that collaborate on construction sites.

• Plangrid’s value to each site user increases with each additional company and user that joins and adds to the project.

• Thus, users have a practical incentive to refer the product to new target users.

VIRALITY INTO WORKFLOW

• Lastly, building virality directly into the workflow of how a customer uses an app is a very effective way to expose the app to new potential users. 

• Doximity, a mobile professional network for physicians, has built virality into its product workflow through its secure messaging capability.

• Doctors use Doximity to send HIPAA-compliant messages to other doctors.

• Every message sent from a user to a doctor not yet on the platform exposes a new potential user to the product, because the message recipient must install Doximity to read the message.

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ENTERPRISE/BUSINESS APP

KEY FOR ENTERPRISE APPS

• Mobile-first business apps have to follow different rules for customer acquisition in order to achieve the scale and marketing efficiency of their consumer-focused brethren.

• The key for enterprise apps is to focus on building virality into the product so users directly or indirectly spread the app within their target audience.

• The mobile-first business apps that emerge victorious will be the ones that leverage triggers, incentives and workflow to kick their user acquisition flywheel into overdrive.

MOBILE APPS FOR BUSINESS AND ITS VALUE TO THEM

• Recession proof business: You can make real money now: 1 in 5 sales is currently made using a mobile application. Despite the current difficult economic trading conditions, 50% of mobile searches result in a sale, and it’s set to grow exponentially

• Rising market: The mobile apps market is set to grow to $119 Billion by 2015. Imagine how much money you will be making when the market improves. When the time comes, you’ll be able to command a substantial share of the market as an established player

……………

• Low cost/low risk investment – it’s the easiest way to start a business and get selling, requires little or no technical knowledge with our intuitive, user-friendly mobile app template interface

• Quick wins – get up and running within 24 hours and start making money instantly with little effort – build a demo mobile app in minutes to show your clients

…………….

• Make money while you sleep – Mobile App Reseller accounts get paid by their customers monthly so you can earn money automatically while you are not even working.  Once you have a customer they stay a customer.

• Secure income now! – get paid by selling repeat monthly mobile applications so you can build your monthly income on a regular basis

• Extends your sales opportunity: Spreads the business risk as it’s possible to attack virtually any vertical sector so if one market is slow you’ll find another easily that will pick up the slack

• Future-proof your business – you’ll be able to build a loyal client base. Mobile apps for business will help your clients sell more of their products and services, they can quickly see the return on investment, and will come back for more and more

…………..

• Provides opportunity to up-sell and cross-sell – giving you the confidence that you will be able to generate a future income stream for yourself. The full complement of marketing tools provides ample opportunity to sell clients additional services on a continuous basis such as exhibitions, print and display, customer promotions with our  “write once, send to all” technology

• Peace of mind – fully backed up service by world-leading mobile apps development company Instant App Wizard, means you can roll out products with complete confidence as all IT functions, tutorials, and back-up marketing and support services are provided for you and your clients, now and in the future.

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VALUE – EXAMPLES

Understand others business if its your business to sell them your product

1. Geo-Targeted Push Notifications

• A band on tour could notify fans in a particular city that tickets there are nearly sold out or remind concert-goers to show up early so they don’t miss the opening act

• A national chain could easily send city- or region-specific notifications about special offers based on what users in that area are interested in

• A restaurant could boost loyalty by sending a special offer to customers who had been in the past year but not in the last two months

• A store could announce a sale on umbrellas coupled with a weather alert to nearby users when it’s predicted to rain soon

2. Additional Sales Opportunities

• One of the single biggest opportunities for businesses to leverage mobile apps is that smartphones have opened a whole new world of shopping and engagement opportunities. Interactions between customers and businesses have grown to become geo-agnostic. The morning commute, waiting in line for movie tickets and sitting in a doctor's office are all places people could be using their smartphones to shop your store or engage with your brand.

• These pockets of free time that were previously biased toward reading, can now be used by consumers for so much more. A mobile app maximizes opportunities for reaching users in these new pockets of time. A push notification might remind users of a nearly abandoned shopping cart, bringing them back into the shopping experience.

3. Geo-Targeted Advertising

• The classic targeted ad story goes something like this: A potential homeowner is stuck in traffic on his daily commute home and looks out his window to read a sign on a new housing development that says, “If you lived here, you’d be home by now.”

• Now multiply that times a billion and you’ve got the power of modern, smartphone-powered targeted advertising. These smart ads can target users by their specific location, displaying ads that are geographic and contextually optimized.

• Businesses can make on-the-fly tweaks to campaigns based on what works in a particular geographic location. They can also display coupons to potential users nearby or help users find the business by advertising directly on a map.

4. Dynamic Offers

• When you tie in technologies like push notifications and geotargeting, magical things start to happen. Businesses can use data collected through geotracking and ad campaigns to deliver just-in-time offers. .

• For example, movie theaters and very time-sensitive inventory that goes to waste at a particular time and can’t be recovered. The theater could track and send a coupon to users who are nearby and looked up information about showtimes but didn’t make a purchase.

• A bar with a slow night could offer an impromptu extended happy hour to past patrons who are nearby.

5. Pushing Through the Funnel

• Ever walked into a store, shopped around a bit, and then walked out without making a purchase? That’s called a "bounce." Online, users bounce for a variety of reasons and on mobile the reasons are even greater. Users might not have a credit card handy, typing in account information is considered too tedious or they simply get distracted and put their phone back in their pocket.

• Fortunately, one way to combat transaction abandonment is through automatic address fill-in. Using a phone’s GPS, transactional apps can detect a user’s location and automatically fill in address data. 

• Seamless, the leading online food delivery service, has been aggressively marketing its mobile apps that automatically detects a user’s location to fill in a delivery address and display restaurants able to deliver there.

6. Data Gathering

• One of the really powerful tools available to online businesses is that they can easily track every move customers make from the moment a user lands on the site. What engaged users and what turned them off?

• Where, exactly, in the online store did a user go and what did they do when they got there?

• These are really easy questions for webmasters to answer, but good luck figuring that out in brick-and-mortar store.

• That is, unless you’re using the Wi-Fi signals emitted from smartphones in your customers pockets and purses. Tracking signals from mobile devices is opening a whole new world of analytics and data-gathering opportunities for retailers stuck in the physical world.

7. Compete Anywhere

• Many brick-and-mortar retailers complain about showrooming, the practice whereby shoppers visit a physical store to inspect the goods in person all the while intending to ultimately make their purchase online, where prices are usually cheaper.

• While the traditional retailer might be on the losing end of that transaction, the customer and online retailer are winning.

• Price comparison tools are helping etailers drive additional traffic and sales. Amazon, for example, even went so far as to offer a $5 discount to shoppers who scanned items using their price comparison tool.

……………

• Mobile apps are helping businesses increase revenue largely by increasing efficiency.

• Instead of advertising to broad spectrum, users can be narrowly targeted.

• Businesses can lure back customers who haven’t been in a while but are nearby.

• Customers can shop during small pockets of time that would have previously gone to waste.

• Businesses can precision-discount inventory in the last moments before it would have gone to waste.

• And all these little efficiencies are resulting in more revenue for businesses while, by and large, enhancing the overall experience for users.

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For Social AppsSocial Entrepreneurship

And Sustainability of Business

Triple Bottom Line

Triple Target

Triple Achievements

Triple Destinations

The Social Enterprise Spectrum

Motives, Methods & Goals

Purely philanthropic

Purely commercial

Appeal to goodwill

Mission driven

Social value

Mixed motives

Mission driven & market driven

Social & economic value

Appeal to self-interest

Market driven

Economic value

Key s

take

hold

ers

beneficiaries

capital

workforces

suppliers

Pay nothing

Subsidised rates or mix of full of payers & those who pay nothing

Market-rate prices

Donations & grants

Below-market capital, or mix of donations & market-rate capital

Market-rate capital

VolunteersBelow-market wages, or mix of volunteers and fully paid staff

Market-rate compensation

Make in-kind donations

Special discounts, or mix of in-kind & full price donations

Market-rate prices

Why Create Social Value?

• Businesses are motivated by profit-creation whereas social projects have to be driven towards social value creation.

• As a result most successful social entrepreneurs that face various challenges share the same philosophy or a strategic service vision, that is, a set of ideas and actions that maximizes the leverage of results over efforts directed toward well-defined targets and supported with highly-focused operating strategies.

• It is necessary for Social entrepreneurs not only to create social value for its ‘customers’ i.e. its target group but also its ‘investors’ i.e. its donors.

• Social entrepreneurs generate social capital when they create channels in which individuals can contribute to their communities and to the welfare of others

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COMPETITION IS EVERYWHEREBUSINESS SENSE SHOULD BE EVERYWHERE

A Short Story

• Two boys walking in a forest• Come across a ferocious grizzly bear

charging towards them• The first boy calculated that the bear will

overtake them in 17.3 seconds and have no chance of escape

The story continues

• The second boy puts on his running shoes

• The first says, you are crazy, you cannot outrun the bear

• The second says, true, but all I have to do is outrun you.

What it takes to be entrepreneurial in a not-for-profit setting?

HAVE THAT

OR

FACE THE BEAR

Non-Profit View

• Pursuit of Opportunity• Rapid Commitment • Ability to Change & Adapt• Multistage Decision Making• Using Other People’s Resources• Managing Networks & Relationships• Value Creation

For social service and arts organizations remember innovation and being

entrepreneurial is as important to you as a technology based business.

The alternative is the BEAR.

Learn | Consult | Research

FINALLY

117

The Entrepreneurial Success (ES) Formula

ES = [ Idea + (Men x Management x Markets)] x Passion

leadership effective teambuilding/teamwork motivation and incentives efficient decision making structure appropriate management systems conductive organizational culture

(climate)

Paagal – Laxmi Pd. Devkota

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…………..

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………….

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……………

कितैम� पा�51 इझिन्Nयल� का�म गछO,म छ�टPल� !कितैम्रो� किगदQ छ सा�थी� !म�र� म�ट� ।कितैम� ग�ल�फूल�ई ग�ल�फू लिसाव�य द�ख्ना साक्तै� नाH,म उसाम� हा�ल�ना र पाणिSना� पा�उ5छ� ,कितैम� बालिलय� गद्य छH !म तैरल पाद्य छ� !कितैम� जम्दछH जबा म पाग्लन्छ� ,कितैम� सा5ग्लन्छH जबा म धमिमल� बान्छ� ,र ठ्Yका त्यसा�का� उ?ट� !

…………….

कितैम्रो� सा!सा�र ठ्�सा छ ।म�र� बा�फू !कितैम्रो� बा�क्ल�, म�र� पा�तैल� !कितैम� ढु�ङ्गा�ल�ई वस्तै� ठ्�न्दछH,ठ्�सा काठ्�रतै� कितैम्रो� यथी�थी6 छ ।म सापाना�ल�ई साम�त्ना E�ज्दछ� ,जस्तै� कितैम�, त्य� लि1सा�, म�ठ्� अक्षर का�ट�का�पा�न्ढुQका7का� बा�ट�ल� सात्यल�ई !

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म�र� छ व�ग का�5डा�का� सा�थी� !कितैम्रो� सा�नाका� र हा�र�का� !कितैम� पाहा�डाल�ई ल�ट� भन्दछH,म भन्छ� व�1�ल ।जरुर सा�थी� ।म�र� एका नाश� ढिढुल� छ ।यस्तै� छ म�र� हा�ल !

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Conceive IT !Believe IT !

Do IT !

For that, you need to be MAD enough to the world which is

NORMAL enough

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Best of Luck !!

By: Sohan Babu KhatriCEOThree H ManagementSohan.khatri@gmail.com

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