Bricks and Mortar!

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Pyare Khan from Nagpur!

4G then 5G! One TB storage space and 100Mbps speed. VCs and Angel funding! Till very recently G was about gravity, Storage space Cubic Meters and speed was 100 kmph! The numbers have remained the same but suffixes, if I may call them, have changed. Yes and VCs were Vice Chancellors and the Angels you generally met after death!

In the sexy world of IT, VC, Angel funding the Ooomph is there. The real-life talks about loans, mortgages, illnesses, loss of jobs, and what have you. But we all forget one crucial thing, this is real life; the sexy side of life is more of a service industry. These services make bricks and mortar functions efficient, they create services which at some stage were not even thought possible. For example, Uber, Air BNB. Who would give his or her own house on rent to people unknown? The beauty is even after these people used the home, you never came in touch with them, ever. For that period your home was converted into a service apartment. There is one product which the IT industry has created which is not brick and mortar, the computer games. To add to this, unfortunately, there are virtual frieships instead of real ones.

https://indianexpress.com/article/india/auto-driver-to-iim-case-study-his-journey-on-uncharted-highway-5807065/

The story of Pyare Khan from Nagpur is shared in the above article. His brick and mortar story must be shared with all. He was born into a low-income family and started working at the age of eighteen by buying a bus. His business failed, and he sold the bus. Then he started driving an autorickshaw at the age of 21. He went to a bank and asked for a loan to buy a truck. The loan amount was Rs Eleven lacs. The amount was way above his level, with no way of providing any other collateral. But somehow the bank manager was convinced in the end and the rest, as they say, is history! Khan’s company’s current turnover is Rs 400 crores (or four billion Rupees). He uses his 125 trucks, plus 3000 other trucks ply under his company. A financial institution from Dubai is now offering him a loan of Rs. Eighty crores (Eight hundred million Rupees). As usual, when he had no money, getting a loan was extremely difficult, but now that his company is doing good, people on their own are offering the money. The funny part is that IIM, Ahemdabad selected his case and gave him first prize! It was chosen over all the other fancy startups funded by, who else, venture capitalists! Other participants were from all over the world. The beauty of the whole thing was that Khan was not even aware of what is IIM!

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Old Amrut Tulya Tea Vendor!

There is a similar story happening in Pune on a smaller scale. It started with a family called Yevale. They branded of all the things, ready to drink tea! In Pune, there has been a tradition of selling tea in shops called Amrut Tulya tea! (It means as good as nectar from heaven) Such tea houses are a conventionally low-cost shops which could be equivalent to Pubs, where people meet to gossip. Tea houses also serve select bakery items. Yevale family turned this business on its head. They started probably with a similar inexpensive shop but created a different business model. They kicked off with their first modern shop on 1st June 2017, and as on 17th October, 2018 have opened 30 th branch in Pune and around. All they serve is tea! They have their recipe perfected. They give franchises. Their monthly sales are now Rs twelve lacs or 1.2 million. Annual turnover is 14.4 million Rupees. They sell their tea in elegant small cups. The quantity they serve can be finished in about three large slurps — the same as the Expresso, which is even less quantity. I have paid Euros 2.25 for an Expresso in Turin! Look at the maths. They charge Rs ten for each cup and sell 120,000 cups of tea a month. Wow and wow!

New Yevale Amrut Tulya Outlet!

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Such businesses or enterprises are what can be called as Unofficial India Inc! Not many people know about them. The promoters have the zest and the verve to succeed. They don’t use laptops, generally don’t change their lifestyle! Such people simply start a business and keep on successfully running them. I do not know the percentages of success and failure in such enterprises. But the percentage is more than the “Startup” model of business, where the success rate is less than 1 %, but the hype is more than 100%!

How many examples can we discuss now? These are mostly in the so-called parallel economy! They don’t pay taxes; Oh come on, how many organised sector companies cheat on taxes. How many ditch the banks on loan repayment? No point in blaming smaller businesses on this matter. It will be a good idea to bring smaller establishments into GST and Income Tax net. Now with the computerisation, this linking is simple and easy to track.

I will share a few more such examples briefly. Near my home, there used to be one Vada-Pav vendor (Potato patty Sandwich). I used to buy a couple of these items once a while. So I got to know him. On asking him how many plates he sold, he was initially hesitant. But then he said that he sold 600 to 700 plates a day, and up to 1000 plates in a day on busy days. Each dish would cost Rs.12/. To eat two of them were mini-meals, and one was a snack or breakfast! One family ran a Kachori business in Kanpur, I think. Father, two sons and two employees ran the business. They could barely stand in the hole which they called their shop. Income tax department tracked them and found out that during the peak time of the day it took forty-five minutes to serve you, in regular times about twelve minutes, and in quiet phase about two minutes. After fifteen days they found out that their yearly income was about Rs eighty lacs. (Eight millions)

My point is, why are these so-called family businesses more successful. They do not know much about the business aspect; they do not get funding. They have no guidance. Whereas the Startups get financing, the folks are educated and polished. They are funded based on a rational business plan. I assume this because the VCs have their own experts to whet the plans. Based on the study, startups are funded. But most of these businesses don’t talk about brick and mortar stuff. The world runs on brick and mortar things. The IT stuff makes brick and mortar businesses better, more efficient. The Kachori Wala and Wada-Pav wala have good knowledge about the product they are making. If these businesses are run inefficiently, the profitability will be less; there can be more headaches and many businesses fail too! But businesses still run. So my question is why these types of companies are not funded by angel funders? Is it because it is not very attractive to discuss in parties? When the success rate in IT areas is so low, why not finance “Real” business? The only answer I can visualise is God Only Knows!

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