I am Vishwas Patel, an entrepreneur in multiple fields from real estate, legal, internet as well as into fashion! This is a long post but I assure all budding entrepreneurs that there are lots of pieces of advices below that will really help in your ventures.
Stage 1 : Constructions / Real Estate
Life for me was good. Dad was in construction business in Mumbai from the 1960’s. Graduated in Commerce stream from Mithibai college and joined Dad’s business in 1992 at age 21. It was a set business. Nothing to do much but keep buying properties between Bandra and Andheri in Mumbai and building residential and commercial buildings. Was getting bored, hence got married at age 22 and had a son and a daughter by age 25! Guess, if my daughter marries at 20, I can become a grandpa by age 45!
Learnings from Constructions business: There is no fun in joining a set business. Change is inevitable if you want to make your life interesting!
Since Dad was into real estate /properties business, we had over 1000 tenants. I was pushed to look after litigation and my life revolved around the Small Causes Court at Kalbadevi and then Bandra, Mumbai.
These courts were really crowded and it was always a challenge to get a seat to sit, as cases took hours to be called out and I had to carry a load of case papers every day. On one such sunny, hot day, I was dead tired and desperately looked for a seat but the court was overflowing with litigants. However, I saw a lawyer, who was sitting in the last row of lawyers seating area, get up and I quickly grabbed the seat. After about 5 minutes, a rather rude lawyer (definitely from northern india) snapped at me and told me to F*** OFF. That really hit me and thought that what the hell does he have and I don’t have…to sit on that pathetic, government owned, worn down wooden chair…a bloody inconsequential LLB degree?
The very next academic year, I enrolled myself for LLB at Mithibai college (Jitendra Chauhan college of law) and later Government Law college, Churchgate, Mumbai. The course changed my life and way of thinking. Everything started making sense and I was really enjoying my new found nirvana. After finishing the law course, I was still not internally satisfied and wanted to continuethis further and actually put everything I learnt, in practice. Dad had lots of lawyer friends but one counsel, I was always had great respect as a lawyer and person was Senior Counsel Veerendra Tulzapurkar who practiced on the Original
Side of the Bombay High Court. He was and still is the most sought after counsel in Western India and is the authority on various laws. It took a lot of effort and cajoling, to get him to accept me as a junior.
He was a true guru, I learnt a hell lot of him. Despite being the son of Supreme Court Chief Justice and earning in lakhs everyday, he was the most modest counsel, who lives in a 3 BHK flat in Dadar and travelled by train, everyday. Modesty as a virtue is the best thing I learnt from him. In those two years practicing with him, I had a lifetime of legal experience handling political cases for Shiv Sena’s Manohar Joshi and the PIL against his Son in Law (the case that forced him to resign as CM), to the Andheri Flyover PIL (Jog Constructions-Mall below Flyover controversy) to arguing before Sri Krishna commission (Mumbai Riots) to arguing days together against P Chidambaram (Current Home Minister) for the always feuding Malhotra Brothers of Topaz Blades fame. Being my senior’s junior, I started getting a lot of second briefs ( meaning to assist senior counsels and to argue cases in worst case scenario situations when the senior counsels are on their legs before other Hon’ble judges) from a lot of soliciting firms (Some I didn’t even knew). I was on my way and thought that I found my home ground!
Learnings from Law: 1) Be Modest and down to earth. 2) I Am now Grateful to that advocate who told me to vacate the seat and to just F*** Off!
Stage 3 : Fashion
After about two years of practicing law, on a fine sunny morning, my dad called me and questioned me that wont in be better If I earned and fought for my own crores then fight hard and earn peanuts fighting for saving somebody else’s crores?
I replied” Ok Dad, you are right but what are you getting at?” He seized the opportunity and brainwashed me that law is applied at two stages in business…one before it reaches the court of law i.e. when the legal incident is happening in a business cycle and second…when it actually reaches the court of law. He glorified me saying that I was in a ’unique’ position to take such brilliant actions in the first step itself that in any case the battle is won before it reaches the second step. He then shared that though the construction business is going good, we need to expand into other businesses so as to generate everyday cash income.
Apparently Dad’s friend Raheja Uncle had at that time taken over a theatre in Andheri called Amber/Oscar/Minor and launched the first Shoppers Stop Mall and it had opened to a huge crowd and it was doing business of Rs. 50 lakhs per day!
Dad said that the onus is on me (Being the eldest Son) and my younger brother Kalpesh to launch our retail foray. I was convinced! And I quit law from that week itself and handed back all the briefs back to the solicitors.
Since we had about 2500 sq feet retail space at one of Dad’s Santa Cruz (W) commercial complex, we decided to go into Indian Ethnic Garment ‘Line’ as it had huge potential and cant be penetrated by Big funded retailers as these garments cant be mass produced by machines in factories as it required intricate human hand done jari work and embroidery. My brother and me looked into a lot of so called designers and ‘attended’ a lot of funky fashion shows.
For branding our retail initiative, we saw that most fashion collections were
summer …autumn…fall….winter collections…we decided we would call our retail brand “Seasons”. With this we went about doing up our retail outlet as well as went about purchasing garments from designers in Mumbai, Delhi and Jaipur. However we found that the ‘Kutchhi” community had formed a cartel and the good manufactures refused to deal with us as these kutchhi retailers had a monopoly for the Mumbai Market. We however found a wholesaler who was ready sell these happening manufactures creations with a slight markup. We planned a grand opening and went about inviting all our friends and relatives.
My Grandfather from my mothers side was an old economy farmer cum vegetable retailer, who resided in a village called Rander near Surat, Gujarat. He would spend the days in his fields and evenings at these small, ‘illegal fruit juice stalls’ that he owned all over Surat.
He was always an amusing good man and I went all the way to Rander to invite him. On seeing the invitation card, he said he was very happy for us that we are entering retail and asked us that have we thought about the “gutter line” for our Seasons Business. He said without Gutter line, no retail business could survive. Before starting this retail venture, I had read up books by a lot of Management Gurus and I did not recall anybody talking about any gutter line!
I laughed out and said Ok and made some excuse to get out of there
(as I had give out many more invitation cards) and fled thinking what would my ‘rural’ grandpa know about Urban Fashion? We had a grand opening but after three to four months into business, we realized that we have been dumped with a lot of thakela garments and we cant buy more garments because these thakela items were occupying a lot of precious retail counter space. Since they were expensive stuff (Rs. 8,000 to 80,000 per garment), We just cant fold it and dump it in the gutter. ….”gutter”…
And suddenly my GrandPa’s advice started taking over my thoughts. I couldn’t sleep the whole night and I took my car and just drove down to his village the next morning. On seeing me, he started laughing and said that he was expecting me. He then gave me his retail fundas as to why gutter lines as so important to retail business. He asked that If I ever wondered why he, a farmer is owning stalls in both the Surat’s main vegetable markets as well fruit juice stalls at all happening public places in Surat. He said that the stalls in Surat’s main vegetable markets were his gutter line, if direct wholesalers failed to pick up his farms produce.
And the juice stalls were the gutter line for his vegetable/fruit stalls so that if fruits are not sold then they are send to these fruit stalls to be consumed by end consumers as fruit juices. Now everything seemed so simple. I came home, so much in awe of my grandfather and decided I will apply his learning’s in our retail business. In Mumbai, there were these two great talented manufacturers, whose garments ALWAYS sells.
My younger brother made a proposition to both of them… That we take over monopoly of all their products (what ever they can produce), we will buy it blindly and we will then resell them. They already had country wide network of retailers but they had a great pain in the entire billing, delivery and funds collections(60 to 90 day credit is the norm) from these hundreds of these small retailers. We told them we will give them 30 day payment and takeover all the headache so that they can focus on their core competency i.e. of creating great garment designer wear and improving their daily production.
Fortunately both of them said yes and we then focused full time on creating our wholesale selling office in the 5000 sq feet basement just below our retail outlet and started connecting to hundreds of their retailers contacts. Fortunately the retailers like idea of getting great clothes of two well known designers from one place and the orders started flowing in. We slowly added other good manufactures’ from Delhi, Jaipur and Kolkatta.
Then we started focusing on our retail brand and we started retailing all the best designs of these manufacturers, first at our store and then distribute them country wide. Slowly, we started the practice that if any garment is not sold in 20 days at our retail counter, we would ‘dump’ it in any of our retail network. Finally we found our ‘Gutter Line”!.
From 1998, the ‘Seasons’ Brand took off and today the retail store has expanded to 15,000 square feet space at Santa Cruz (West), Mumbai and its clothes are worn by some of the Top international celebrities like Madonna, Cherie Blair, Goldie Hawn to Top Indian Celebrities like Kajol, Jaya Bachchan, Tina Ambani, Katrina Kaif etc. The wholesale division has also been rebranded as Seasons and it today has a network of 1500 retail outlets in over 100 cities and town across the world. Seasons, today is the Top Brand in the Indian Ethnic Garment Industry.
Learnings from Fashion: Every retailer has to have a “gutter line” or else they will get jammed!
Stage 4: Information Technology
2000 SeasonsIndia.com launch: By 2000, Seasons and the construction business was doing great. Dad had now started pushing me to get in “Restaurant” business as his philosophy in life was that there are three basic requirements of all human beings i.e. “Roti, Kapada aur Makaan”!!
Since Seasons and our construction business took care of his Kapada Aur Makaan Philosophy, he was really nudging me on to launch a restaurant chain. I detested the idea of feeding people till 1 AM in the night and then run at 5 AM to buy fresh vegetables!! Instead, I took up the challenge of retailing our ethnic garments online to our global NRI customers, which was a Huge Big Spending community, which had to be tapped 365 days a year and just not during Christmas time when most of these NRI’s would make their annual pilgrimage to our shores and to our store! I tied with a friend’s friend web development company and launched www.SeasonsIndia.com .
2001 Avenues / CCAvenue.com launch: For My SeasonsIndia website, I needed a robust Payment Gateway. But I soon realized that the banks’ existing payment gateways did not meet the needs of an Indian businessman. I wanted a low cost, simple to use, and quick to market payment gateway solution. But what I got in bargain was an expensive, complicated solution for which I had to spend lot of time and effort to acquire it.
And then I had to hire expensive IT professionals to run it. There were three payment gateways in those days, HDFC Bank, Citibank and ICICI Bank and all of them were charging 2 lakhs as set up fee and 5 lakhs as security deposit and 4% as transaction rates. For a brick and Mortar retailer that I was, I just could not digest the rates and the treatment.
For installing their POS terminals at my Seasons Counter, there would be no setup charges and only 1.1% as rates and all the bankers were ready to sell their back side to get their POS machines on my counter! And when we wanted to go online, we were getting such horrendous treatment. I then happened to attend a Tie Summit at Nehru Centre, Worli, Mumbai and found indigestible, Impossible Indian ecommerce numbers mentioned by most of the panelist on stage.
One of the panelist said that India’s e-commerce will be worth USD 5 billion by 2004 and USD 20 billion by 2006. I came back from that event and called up all the three Indian acquiring banks and found that none of the three banks had more than 25 merchants live on their online PG system and most of these already online merchants were VC funded duds like Indya.com, Chaitime.com etc which did not have any product knowledge or logistics and were all relying on advertising revenue by assembling a community of phukatias on their portals! And I shuddered to think that these were the portals that were expected to billions of dollars of business by the panelist at the tie summit!
So I decided why not build my own payment gateway solution that meets the need of businessmen like me. I took the whole concept one step further and decided to create a series of ‘Avenues’ that makes it easy for various businesses to do business online. That’s how my company called Avenues was founded in 2001 and we launched CCAvenue, India’s first third party payment gateway solution for India’s web merchants.
There was no net banking solution those days. Customers were skeptical of using credit cards online for web transactions. Credit card penetration was low and awareness about e-commerce was not there. Banks scoffed at the idea of third party aggregators providing payment gateway services but I was able to convince HDFC Bank of my company’s credentials (leveraging our POS relationship at the Seasons counter) and launched CCAvenue payment gateway solution on 1st September, 2001.
However, after 10 days of the launch, HDFC Bank closed their online payment gateway business on 10th September 2001 because of the disputes with their technology providers based out of Singapore. To add salt to our injuries, 9/11 terror attacks in USA on the very next day, severely affected the global markets including India.
We had 35-35 merchants and no gateway to process. We took 100% liability for payment to banks and acted as a guarantor on behalf of the merchants. Soon we tied-up with ICICI Bank and Citibank and, a team of 15-20 people worked hard for next two months to get business on track. We were in a business where everybody speculated about the growth potential but there was no existing business model for e-commerce available in the market.
We worked hard on various fronts such as risk management for security and safety of e-transactions, developing software and back-end support for storage of data and cross-checking of each transaction, and structuring a legal framework to deal with them etc.
We had daily cyber battles with Nigeria based hackers and fraudsters, who were hell bent on perpetuating fraud on us and were demanding thousands of Dollars as protection money against “Denial Of Service” attacks on our servers. Above all, we also had to work on developing awareness and trust among business community to encourage them to do business online.
And the businessmen repaid our trust in kind. In the year 2002, 500 merchants took to CC Avenue as payment gateway for their online business. Every transaction henceforth cemented our credibility in the market. By 2003, CCAvenue had became the biggest direct debit engine with 14 banks availing CCAvenue platform. As of today, CCAvenue connects to more than 40 Indian banks, 24 Chinese Banks and 3 Singapore Banks and is the only PG to process AmEx and JCB transactions in the Indian region.
It is South Asia’s biggest payment gateway and more than 90% of India’s web merchants use the CCAvenue payment gateway solution to process their online payments. It is already launched in Singapore and shortly entering the Chinese and the USA market.
2004 ResAvenue.com launch: Despite offering a robust payment gateway, there were many verticals that were not doing business online. We started probing into the reasons. We found out that 55% of global e-commerce was travel related, which was not surprising since selling air tickets and hotel rooms on the internet was very easy, vis-Ã -vis other products where there is an element of touch and feel aspect to it.
I also got to know that most of the existing online travel websites at that time were charging exorbitant commission- up to 30%- from hotels for each online booking and exploiting them. (Those were days of economic downturn and SARS epidemic). The hoteliers were not too happy being at the mercy of the OTA’s and wholesalers.
At the same time they all knew that in order to increase their average room rates, they have to utilize the internet platform to reach out directly to their patrons and offer the perishable room inventory. However they did not have the technology competence to build and manage the systems in house.
In 2004, we launched ResAvenue.com, a fully hosted, plug-and-play booking engine that integrates directly into the hotel’s branded website, thereby enabling the hoteliers to save big money on recurring high-end hardware costs, software licenses, and expensive technical manpower. It was a cutting edge, fully hosted, SAAS based reservation engine which allowed the hotelier to accept reservations in 15 international languages and accept real time payments in multiple currencies.
We also tied-up with Pegasus, an American company to get linked to all the four Global Distribution Systems i.e. Galelio, Sabre, Amadeus and WorldSpan, thereby enabling a ResAvenue hotelier to distribute their perishable room inventory to millions of IATA agents worldwide.
Today, more than 1000 hotel properties in India, Bali, Singapore, Malaysia, Egypt and UAE are using the ResAvenue reservation and distribution system and payment gateway on their branded hotel website to reach out directly to their customers as well as distribute their room inventory to millions of agents worldwide. We are today, the single-largest customized hotel reservation engine in South Asia.
2007 EventAvenue.com Launch: Constant search for better avenues for merchants to do business online led me to one of the biggest travel conference in 2006 called Eye for Travel at Mumbai. However, I faced a tough time in getting the online registration for the event. Event organizers are more worried about the arrangement, booking of the hall, decoration and putting up of stalls; selling the stall space and member registration comes much later- at times the confirmation of the participant reaches after the event is over.
I came up with EventAvenue in 2007, a comprehensive web application to create, publish, and advertise events and offer real time online registration and booking with real time payments right from the organisers own website. EventAvenue is today, industry’s leading online registration and payment gateway software that is used by event organisers, corporations, schools, universities, associations, temples, non-profit and government organizations, and more, for conferences, trade shows, sporting events, class admission registrations & fees collection, donation collection, webinars and other event managements.
It is a flexible, affordable, 24-hour online registration and payment collection solution that provides merchants with total data management, control and insight over every aspect of their online registartions that happens on their branded website. In 2010 alone, EventAvenue has powered more than 500 conferences, exhibitions, concerts etc. Its ticketing systems was launched during the first IPL season and Deccan Chargers (Hyderabad), one of the IPL teams, was the first to use Event Avenue’s ticketing system, which sold more than 90,000 tickets online. The Standard Chartered Mumbai Marathon, which is amongst the
Top ten marathons in the world, is also powered by EventAvenue.
2010 HotelsAvenue.com launch: Thanks to the success of the ResAvenue product, we had live, bookable inventory of over a thousand hotels in India and this inventory was updated and managed by the Hotels Front office staff on our servers.
Indian Hotel inventory is very difficult to get as its spread out and there is no cartelization of hotels under franchisee brands like the way it is in the west. Also, Unlike other OTA’s, who had to have huge telephone based contracting team to source recurring live inventory for their portals, here we were sitting with live room inventory of thousand Indian hotels updated on our servers.
We further contracted with some big chains like the Mariotts, Hiltons, Hyatts etc. and some Big distrubuters like Gullivers travels in Uk etc., at travel trade fairs in London and Berlin and connected them via XML links into our systems and launched HotelsAvenue in 2010. HotelsAvenue is a customisable booking engine for the travel agents. Travel agents across India can use HotelsAvenue to build their brand online and offer more than 1, 00,000 hotels real time room inventory to their customers.
Agents earn 7% commission for each booking processed through the HotelsAvenue system and they do not have to pay a single rupee for setting up their own branded portal online or any kind of recurring charges for the systems maintenance. A lot of brick and mortar travel agents are in peril because of the airline companies moving to a zero commission structure.
And they are not able to compete with big VC funded online travel portals like MakeMyTrip, Yatra, Clear Trip etc. These brick n mortar agents can’t afford to sink crores of rupees into technology nor do they have the reach and financial strength to have contracts with Indian and International Hotels for good rates and get confirmed room inventory. HotelsAvenue provides these agents with the technology and confirmed room inventory of global hotels at best rates, thus giving them a level playing field to compete with the best in business without investing a single rupee.
In the last two months, we have signed up with all the affiliate networks of ITZ cash, OxiCash, Done Card, One Stop Shop, Suvidhaa, Multilink thereby getting access to more than 1 lakh travel agents, retail shops and stalls etc accross India (basically the small time stall guys available at every railway station and nook and corner of the country, who mostly offer Railway ticket booking/Bill Payments etc.).
We have launched an initiative with Yes Bank, whereby Yes Bank sales guys will be marketing across the country our HotelsAvenue to the members of Travel Agents Association Of India (TAAI) (Brick N Mortar, Mid level focused travel agents ). So with this we are now able to kick start the eco-system wherein on one side we have 1,00,000 hotels and on the other side we have 1,00,000 agents and in the centre we have our ResAvenue and HotelsAvenue System.
2011 and beyond: The Avenues India snowball will continue to roll next year as we plan to launch TrustAvenue.com and MembersAvenue by the end of next year.
With Trust Avenue, we will be offering our robust risk management expertise to other companies engaged in e-commerce. Through its comprehensive fraud screening system, merchants can accurately detect and automatically flag attempted fraud from card transactions.
All we ask for is five basic parameters of each e-transaction and we will deliver with 141 parameters including a fraud score that authenticates the validity of the user. We have a negative database of thousands of cardnumbers, name, addresses, phone numbers, IP Addresses etc of frauds that have taken place of 90% of Indian websites (who process payments through our CCAvenue payment gateway solution) over the last 10 years. We will be leveraging that negative database through TrustAvenue.
With MembersAvenue, we plan to provide a hosted membership management solution with built in payment gateway to clubs, gymkhanas, associations, housing societies, cable companies, non-profits, and other organizations with the most comprehensive web based membership management technology available anywhere. It will help increase member involvement, recruitment, and retention.
Learnings from IT: 1) An average Indian businessman doesn’t understand technology; he wants technology to understand his business and do wonders. The businessman just wants a simple, idiot proof solution that saves him time, effort and money.
2) Business is like an inverted triangle. You start from a small dot at the bottom and as you grow your business upwards, the opportunities keep on increasing. This is because you get experience, knowledge, access to funds etc., thats why you find the Ambanis, Tatas, Birlas, Mahindras. etc dabbling in all kinds of diverse businesses (Oil, telecoms, Insurance etc.) and are mostly successful in all their ventures.
They build huge capital intensive scalable businesses that it becomes difficult to beat them on price and the way they scale their businesses in double quick time. Now if you don’t become an entrepreneur and are under employment, then your graph is like a straight triangle where you start off at the bottom, there are lots of options but as you specialize in one as you grow upwards in the triangle then your opportunities become lesser and lesser. You start living your lives within your salary earnings and always become ultra sensitive in taking new responsibilities which has any recurring financial bearings.
3) You have to be blessed with a good team, who understand you and share your aspirations and believe in your vision. You have to have the knack of spotting good people (often more smarter than you) and work hard to gain their respect not by throwing attitudes but doing sheer hard work and showing respect to them. A company is as good as the team behind it.
4) Today Avenues is a debt-free and investment-free company as it today generates enough revenues from its various ‘Avenues’ to take care of its financial needs. Avenues has offices in Singapore, China and USA, from where it will launch and market all its SaaS, multilingual solutions in those markets and service it out from its Mumbai office. We have always grown through internal accruals; we have always been cash-flow positive and highly profitable company.
All our growth is funded out of internal reserves and hence we don’t have to borrow or sell equity to outside investors thereby giving us time to focus full time on building long term sustainable profitable business without being answerable to anyone or working on somebody else’s game plan. In the current financial year, Avenues is on track to business of Rs 1,200 crores and shall plan to have an IPO by 2014 without any external funding or Debt.
(Please note that I keep stressing on the words No external funding or debt!)
First Published on: Nov 7, 2010