5 ms·

The unstructured billion rupees firms of India

68 points by ashwin_krish 14y ago

raheemm 14y ago
This story has an underlying theme shared by another story here on HN a few days ago about a mobile app that reached a million users in a year without any viral marketing (http://news.ycombinator.com/item?id=4205571 http://news.ycombinator.com/item?id=4205571). And that underlying similarity is this - a relentless focus on customers can make up for low marketing spend.
- ashwin_krish 14y ago
  @ raheemm : Very true, lots of businesses in south india do work on that basis. Word of mouth. No online presence, or social media presence, yet they gather millions of customers. reply
kshatrea 14y ago
I can unequivocally state that the conclusion you reach for many corporations or companies in India may be true. But not for these two. The first company is a family/friend owned company of the Karunannidhi empire, often called the first family of Tamil Nadu. The second is owned by a very famous and politically connected man in Tamil Nadu, and now in New Delhi. In India, Bharti Airtel, Reliance, Bajaj and these are among the many companies that are strictly profitable because of state capitalism, or as is more commonly known: Crony Capitalism. I am not going to write an entire political discourse here, and of course, just because they got the permits does not mean they would do extremely well; but it is a significant hurdle. For a restaurant to operate in any city of any state in India, you need 180 licenses, with 105 of them renewed on a yearly basis. Do you know how many bribes that entails? For an FM radio station to operate, as a public welfare concern, you MUST pay 65% of your operating profit BEFORE tax to the government for the 'privilege'. These crony capitalists pay over some money to the politicians, but these extreme barriers to competitive entry in many fields allow them to rake in the profits. Rahul Bajaj is one: any traveler to India must have seen ubiquity in the autorickshaw. Ask the owners of Piaggio how quickly they were decimated when trying to introduce a bigger and better auto, by the so-called authorities, simply by having to get a bunch of licenses and also not being allowed to compete in key markets because of union rules. The only area in India where you can run an honest company without having to fork over bribes incessantly is the internet.
- ashwin_krish 14y ago
  @kshatrea : Very true. I cant agree on that more. The angle I was looking for was more on how one can achieve heavy success rate without the modern corporate structure or the contemporary methods of marketing. reply
- aniket_ray 14y ago
  I completely agree. Just to add to your last statement about internet companies being relatively bribe free, I've heard pieces (rumours) from well places influential people in the government that this is changing fast too. Allegedly, the recent court cases against Google and Facebook asking them to block content was an attempt to get them to fork over some money. Also, the recent banning of websites of companies like dailymotion and vimeo was our not so clean judicial system at work.
- shrikant 14y ago
  > The first company is a family/friend owned company of the Karunannidhi empire, often called the first family of Tamil Nadu. While you make a good point, I have to that guy and ask for some sort of a citation on this. I've lived in Chennai for 5 years and never heard anything of the sort. (that Saravana Stores is part of the Karunanidhi empire)
deleted 14y ago
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deleted 14y ago
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irahul 14y ago
> cleanliness, serving speed and courteous behavior. The author's definition of courtesy is very different from mine. When I am dining out, here are my expectations: 1. Let me settle down. Do not shove the menu in my face as soon as I put my behind on the chair. 2. Do not hover around my table after you have handed me the menu. It's not rocket science to watch from a distance and see if I am ready to place an order. 3. Bring food in proper order. Do I need to tell you that you don't bring the soup, appetizer, main course and dessert all at once? 4. In between the meal, if you feel the need to interrupt me to ask "do you need something else", do not just barge in. Wait for a pause in conversation, and approach from where I can see you coming. If I am in midst of the conversation, and you teleport behind me, and all of a sudden I hear "do you need something else", that's bad customer service. These aren't the things you can expect from Sarvana Bhavan. My experience is you get in, there is a huge crowd most of the times, you try to get the attention of a roaming wait staff to get a seat, the seating is too compact and all expectations of reasonable privacy are null and void, the wait staff will hand you the menu as soon as you sit down and many a times just wait there while you go through the menu. Most of the times, you get your appetizers and main course together(speedy service, eh). Once you are done with the meal, the check magically appears - the restaurant is eager to get rid of you. Bottomline - visit if you are hungry and looking for someplace to stuff something in your face and get out, or you have heard a lot about the place and want to try it. Any other expectations won't be met. Disclaimer: I was in Chennai for 4 years, and left about 5 years back. Things might have changed since I left, though I won't bet on it.
- idiot900 14y ago
  The staff at the NYC location of Saravana Bhavan is also not particularly friendly or accommodating. The food is decent but the poor service has kept me from returning.
  - mayukh 14y ago
    And you are not the target customer (neither am I). They know who their repeat customer is and serve that segment well.
Zenst 14y ago
If india had complete structure then it would not recieve or indeed need aid from other countries. It would also be hard to bribe anybody as it would be very hard to hide said bribes. That all said it gets down to the old issues - does it work then why change it. If you have a process that works then however unstructured it is nomatter how you define structure it stilll works. Could it work better, maybe, maybe not. Also saying something is unstructured is a viewpoint maybe not shared by those in such a company. For them that would be the normal way of doing business so for some it may be unstructured and for others closer to home it is the culture. If every country looked at a problem the same, it would be rather boring though peacful. One mans idea of structure is another mans idea of extra uneeded overheads and work. Bottom line if there happy or in business fiscaly sound then nomatter how they work, if there happy then so be it.
imjk 14y ago
FYI: One Billion Rupees is $18 Million Dollars. Edited to include source: http://www.wolframalpha.com/input/?i=1+billion+rupees+to+dollars http://www.wolframalpha.com/input/?i=1+billion+rupees+to+dol...
guard-of-terra 14y ago
Any country have quite a few supermarket and fast food chains. And they never seem to be the topic on hacker news. I think it ought to be that way unless the businesses in question do something extraordinarily innovative. Or else, we're headed towards calling some random car wash a start-up.
- imjk 14y ago
  If there's an important lesson from that car wash/fast food chain/whatever that can be applied to start-ups, then I'd encourage posting about it here.
  - guard-of-terra 14y ago
    I miss on the important lessons. Those two chains grew because they cared about their customers above all else, we are told. But what about thousands of chains all over the world that grow despite having no special focus on the customer? Save marketing pitches. What makes these two chains stand out? Do they, really? How would one prove their success isn't random or fueled by some other factor?
    - imjk 14y ago
      All valid points that could make for great discussion. Perhaps this story isn't the greatest example, but I've seen much less related submissions that have made for great discussion and applicable contributions to startups/technology.
    - ashwin_krish 14y ago
      The reason they stand out most is their consistency over the decade. The consistency they have as they expand. India is a lot different scenario than the rest of the world. Tackling innovation alone won't get you far. There are so many factors starting from purchase of license, regular bribing the police, rogues etc etc. Besides, this is a story of an uneducated person raising this big a company. Gathering customers without use of a computer or internet. I believe this is an important lesson for all startups for this reason. It shows going beating the usual, taking the untrodden path can take you miles.
gangadhargs 14y ago
This news about the founder of Saravana Bhavan is also relevant (he is serving time in prison for murder): http://articles.timesofindia.indiatimes.com/2009-03-20/india/28000359_1_saravana-bhavan-life-imprisonment-life-term http://articles.timesofindia.indiatimes.com/2009-03-20/india...
senthil_rajasek 14y ago
This article is devoid of any content except mentioning 2 companies which are "successful". Why is this article on the front page of HN? These are privately owned companies. The author does not even quote sources for the billion rupee "turnover".
- ashwin_krish 14y ago
  Hey senthil, I think you are missing out an important point here. It is not abt two successful companies, it is about how they got successful and their success is an outlier,by not following the usual path. And how the current so called corporate structure need not necessarily guaranty success. It is abt how, sans marketing, they have managed to gather million customer base.
  - senthil_rajasek 14y ago
    Are you sure these companies have no structure? Where did the size estimate even come from?

68 points by ashwin_krish 14y ago

This story has an underlying theme shared by another story here on HN a few days ago about a mobile app that reached a million users in a year without any viral marketing (http://news.ycombinator.com/item?id=4205571 http://news.ycombinator.com/item?id=4205571). And that underlying similarity is this - a relentless focus on customers can make up for low marketing spend.

ashwin_krish 14y ago
@ raheemm : Very true, lots of businesses in south india do work on that basis. Word of mouth. No online presence, or social media presence, yet they gather millions of customers. reply

kshatrea 14y ago

I can unequivocally state that the conclusion you reach for many corporations or companies in India may be true. But not for these two. The first company is a family/friend owned company of the Karunannidhi empire, often called the first family of Tamil Nadu. The second is owned by a very famous and politically connected man in Tamil Nadu, and now in New Delhi. In India, Bharti Airtel, Reliance, Bajaj and these are among the many companies that are strictly profitable because of state capitalism, or as is more commonly known: Crony Capitalism. I am not going to write an entire political discourse here, and of course, just because they got the permits does not mean they would do extremely well; but it is a significant hurdle. For a restaurant to operate in any city of any state in India, you need 180 licenses, with 105 of them renewed on a yearly basis. Do you know how many bribes that entails? For an FM radio station to operate, as a public welfare concern, you MUST pay 65% of your operating profit BEFORE tax to the government for the 'privilege'. These crony capitalists pay over some money to the politicians, but these extreme barriers to competitive entry in many fields allow them to rake in the profits. Rahul Bajaj is one: any traveler to India must have seen ubiquity in the autorickshaw. Ask the owners of Piaggio how quickly they were decimated when trying to introduce a bigger and better auto, by the so-called authorities, simply by having to get a bunch of licenses and also not being allowed to compete in key markets because of union rules. The only area in India where you can run an honest company without having to fork over bribes incessantly is the internet.

ashwin_krish 14y ago
@kshatrea : Very true. I cant agree on that more. The angle I was looking for was more on how one can achieve heavy success rate without the modern corporate structure or the contemporary methods of marketing. reply
aniket_ray 14y ago
I completely agree. Just to add to your last statement about internet companies being relatively bribe free, I've heard pieces (rumours) from well places influential people in the government that this is changing fast too. Allegedly, the recent court cases against Google and Facebook asking them to block content was an attempt to get them to fork over some money. Also, the recent banning of websites of companies like dailymotion and vimeo was our not so clean judicial system at work.
shrikant 14y ago
> The first company is a family/friend owned company of the Karunannidhi empire, often called the first family of Tamil Nadu. While you make a good point, I have to that guy and ask for some sort of a citation on this. I've lived in Chennai for 5 years and never heard anything of the sort. (that Saravana Stores is part of the Karunanidhi empire)

deleted 14y ago

[deleted]

deleted 14y ago

[deleted]

irahul 14y ago

> cleanliness, serving speed and courteous behavior. The author's definition of courtesy is very different from mine. When I am dining out, here are my expectations: 1. Let me settle down. Do not shove the menu in my face as soon as I put my behind on the chair. 2. Do not hover around my table after you have handed me the menu. It's not rocket science to watch from a distance and see if I am ready to place an order. 3. Bring food in proper order. Do I need to tell you that you don't bring the soup, appetizer, main course and dessert all at once? 4. In between the meal, if you feel the need to interrupt me to ask "do you need something else", do not just barge in. Wait for a pause in conversation, and approach from where I can see you coming. If I am in midst of the conversation, and you teleport behind me, and all of a sudden I hear "do you need something else", that's bad customer service. These aren't the things you can expect from Sarvana Bhavan. My experience is you get in, there is a huge crowd most of the times, you try to get the attention of a roaming wait staff to get a seat, the seating is too compact and all expectations of reasonable privacy are null and void, the wait staff will hand you the menu as soon as you sit down and many a times just wait there while you go through the menu. Most of the times, you get your appetizers and main course together(speedy service, eh). Once you are done with the meal, the check magically appears - the restaurant is eager to get rid of you. Bottomline - visit if you are hungry and looking for someplace to stuff something in your face and get out, or you have heard a lot about the place and want to try it. Any other expectations won't be met. Disclaimer: I was in Chennai for 4 years, and left about 5 years back. Things might have changed since I left, though I won't bet on it.

idiot900 14y ago
The staff at the NYC location of Saravana Bhavan is also not particularly friendly or accommodating. The food is decent but the poor service has kept me from returning.
- mayukh 14y ago
  And you are not the target customer (neither am I). They know who their repeat customer is and serve that segment well.

Zenst 14y ago

If india had complete structure then it would not recieve or indeed need aid from other countries. It would also be hard to bribe anybody as it would be very hard to hide said bribes. That all said it gets down to the old issues - does it work then why change it. If you have a process that works then however unstructured it is nomatter how you define structure it stilll works. Could it work better, maybe, maybe not. Also saying something is unstructured is a viewpoint maybe not shared by those in such a company. For them that would be the normal way of doing business so for some it may be unstructured and for others closer to home it is the culture. If every country looked at a problem the same, it would be rather boring though peacful. One mans idea of structure is another mans idea of extra uneeded overheads and work. Bottom line if there happy or in business fiscaly sound then nomatter how they work, if there happy then so be it.

imjk 14y ago

FYI: One Billion Rupees is $18 Million Dollars. Edited to include source: http://www.wolframalpha.com/input/?i=1+billion+rupees+to+dollars http://www.wolframalpha.com/input/?i=1+billion+rupees+to+dol...

guard-of-terra 14y ago

Any country have quite a few supermarket and fast food chains. And they never seem to be the topic on hacker news. I think it ought to be that way unless the businesses in question do something extraordinarily innovative. Or else, we're headed towards calling some random car wash a start-up.

imjk 14y ago
If there's an important lesson from that car wash/fast food chain/whatever that can be applied to start-ups, then I'd encourage posting about it here.
- guard-of-terra 14y ago
  I miss on the important lessons. Those two chains grew because they cared about their customers above all else, we are told. But what about thousands of chains all over the world that grow despite having no special focus on the customer? Save marketing pitches. What makes these two chains stand out? Do they, really? How would one prove their success isn't random or fueled by some other factor?
  - imjk 14y ago
    All valid points that could make for great discussion. Perhaps this story isn't the greatest example, but I've seen much less related submissions that have made for great discussion and applicable contributions to startups/technology.
  - ashwin_krish 14y ago
    The reason they stand out most is their consistency over the decade. The consistency they have as they expand. India is a lot different scenario than the rest of the world. Tackling innovation alone won't get you far. There are so many factors starting from purchase of license, regular bribing the police, rogues etc etc. Besides, this is a story of an uneducated person raising this big a company. Gathering customers without use of a computer or internet. I believe this is an important lesson for all startups for this reason. It shows going beating the usual, taking the untrodden path can take you miles.

gangadhargs 14y ago

This news about the founder of Saravana Bhavan is also relevant (he is serving time in prison for murder): http://articles.timesofindia.indiatimes.com/2009-03-20/india/28000359_1_saravana-bhavan-life-imprisonment-life-term http://articles.timesofindia.indiatimes.com/2009-03-20/india...

senthil_rajasek 14y ago

This article is devoid of any content except mentioning 2 companies which are "successful". Why is this article on the front page of HN? These are privately owned companies. The author does not even quote sources for the billion rupee "turnover".

ashwin_krish 14y ago
Hey senthil, I think you are missing out an important point here. It is not abt two successful companies, it is about how they got successful and their success is an outlier,by not following the usual path. And how the current so called corporate structure need not necessarily guaranty success. It is abt how, sans marketing, they have managed to gather million customer base.
- senthil_rajasek 14y ago
  Are you sure these companies have no structure? Where did the size estimate even come from?