THE MAKING OF

MATCHBOX SOLUTIONS

VENKATA SUBRAMANIAN

FOUNDER, MD

LIBA Insight’09 National Management SymposiumNov 5th , 2009

Chennai

Emerging Business Models : Social Entrepreneurship

Who am I ?

Why I became an entrepreneur ?

Why ‘BOP’ ? Why a ‘social’ business ?

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

The story line

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

Currently Better known as ….

IIT

Sabjeewallah ;-)

IT enabled

Annachee !!!

Weekend

beachside

Organic

Carbazaar

guy

Why I Became An Entrepreneur ?

Coming from

a typical

‘Tam-Bram ‘

family , It

took me 12

years of

preparation

to feel I am

‘ready’ to be

an

entrepreneur

.

An ‘empty’ feeling within that ‘I have

not accomplished anything with my life’

Motivated by other entrepreneurs

The ‘India Inc’ rising stories in press

Movies – Swades !!!

Growing support structure for startups –

mentors, incubators, forums, magazines

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

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

What’s in a name ? A Logo ?

•A conversation starter

•Memory recall

•Matches the company’s objectives and vision

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 !

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

The Indian Agri Supply Chain Current State : Too Many Steps , Too Little Value

Wholesalers to Retailers

Terminal markets to neighborhood wholesalers

Regional mandi to Terminal markets near

large cities

Harvesting of Vegetables

A local mandi auctioning

Local to Regional mandis for Auction

• Unorganized, unregulated, unprofessional & unprofitable

• Lack of demand/supply data

• No reliable sales, distribution, marketing channels

• Poor logistics and storage

• A Middlemen’ dominated market

•No IT/ERP usage – decisions are adhoc and arbitrary

1

2

3

4

5

6

Retailers to Dining Table

7

Loss in transit

40%

Price hike

End to end

> 400%

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

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

Farmers

Cooperatives

Collection centers

Village ICT kiosks

Phone booths

Mobile operators

Storage

Warehouses

Value added resellers

Sorting , Grading , Processing, Packing

Small Independent transporters

Intra-city small tempos

Kiranas

Self Help

Groups

Hawkers

Bulk buyers

Exporters

Logistics Fleet

operators

The BIG idea: Connecting the dots

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

Can we replicate this system in the agri

supply chain ?

Fix the process first

And THEN

Implement

technology

Otherwise will be

a failure …..

Development of ModelStudy of existing supply chain

Visits to farms

across Tamilnadu

A Roadside farmers

auction in a village

Govt. farmers

direct sales market

,

Theni & Hosur

Developing the model

Discussions with

Agri experts ,

Supply chain

managers, existing

models , industry

veterans

Discussions with

NGOs ,

Microfinance , Rural

banks & self help

group members

(centre)

Forming pilot focus

group with

representative

members across the

chain

Setting up the piloteFarm office

and godown

at Mylapore

, Chennai

Upgraded

vending carts ,

standardised

weights and

measures

Distribution

centre at

Chennai

(godown)

Why a co-founder ?

Complementary skills

Technology skills v/s People skills

Bring in different perspective /

balance

Women element – To reach out

to target segments

Srivalli

Co-founder

MD

Life partner

Social Impact : BOP segmentMurugesan, c

oconut

farmer, with

graded

coconuts

Small

tempos for

local

deliveries –

powered by

eFarm

Only a

phone call

away … a

vegetable

vendor

enquiring

prices

Panjali picking up vegetables from our Mylapore centre

eFarm

mobile store

at an old

age home

DisABILITY : Working with their strengths

Cut

vegetables

Peeled

onions

and garlic

Agri waste

collection and

composting

Over 60% of our staff have some physical or mental disability

Sorting

Grading

&

Natural

Ripening

Of fruits

ICT in Agri marketing :

Market Analysis and Decision Support

Koyambedu

nadu tomato (data courtesy : TNAU-INDG market

information portal)

Ottanchatram

nadu tomato

Where to sell ?

At what price ?

Head to head comparisons

across

Markets

Insight - Support level prices and

inflection points

High / Low variations

Identifying ‘hoarding’ and

‘cartelisation’

MIS / Data warehouse

Drill down to

details

Dashboard summary

For senior management

Highlight

potential

problems

and issues for

immediate

action

Start Small – Grow Big

Often large organizations fail in rapid expansion phase – too fast , too soon

eFarm would expand in a sustained controlled manner as shown

Create 1 fully functional, fully sustainable unit (eg could be a collection centre , or a distribution centre or even a store)

Replicate the successful model into two

Ensure continued viability of this expanded unit

Continue to ‘divide and expand’

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

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1 -> 2 -> 4 -> 8 -> 16

…

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

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

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

• Pay full price for new models , talk timeeFarm Interface points

• Voice call centres / BPOs (local language )

• Natural language IVRS ( 2 way –automated messages)

• SMS

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

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 !!

Oppurtunities in the Agri Supply Chain

Farmers

Rural Produce

Collection Centres

Quality

Inspection/ Grading

Cleaning / Packing

Routing

Long haul

Transportation

Urban area

Distribution centre

Small retailersLocal vendors

Food Processing

units

Exports

Bulk buyers

(Hotels / Caterers /

Retailers)

Compost/Manure

from waste

eFarm Common Services

Planning &

CoordinationResearch

Call centre /

CommunicationTechnology

Training &

Support

Local

Distribution

Business Potential

An untapped , niche market with very few organized, entities

Revenue generation through better optimization, value addition across the chain

Reduced wastage in transit = more revenue

Has potential to jumpstart other agri-dependent ventures

A professional ly managed supply chain is vital for tapping international markets

Potential to scale across India as core problem is wide spread

‘Pull factor’ from rural India for other services and products

Social Impact

Organizing the large unorganized agri sector of India – bottom of pyramid

More income to farmers , truck operators and small vendors owing to profit sharing across the network

Support to traditional , eco friendly farm practices , organic farming through better marketing

Convert waste to compost , providing low cost manure back to farmers.

Revival of agriculture dependent livelihoods , empowering villagers

Under privileged/Disabled and urban poor get employment opportunities