Dear All: For those of you who may not already know, I am leaving Amadeus at the end of eight long years – of what has been an amazingly rich and educative experience.
I am leaving to spend more time in (and on) India and a few personal passions.
I will continue to scout for interesting seed and very early-stage investment opportunities in India but expect to spend less time on Venture Capital in general.
I have been very fortunate to experience, first-hand, the boom and the bust in this industry…
It has been a true learning experience – and a humbling one too.
I expect to spend progressively less time on this blog…so do not be surprised if you don’t hear from me over long stretches of time. If you are really curious to know what I am up to (or just want to email a “Hello”), pl. leave a comment here and I shall try and get back to you.
Here is wishing all of you the very best in your endeavours – now and in the future.
Fellow blogger Swaroop recently wrote a post on a dosa seller in Bengaluru that had me thinking.
Swaroop’s dosa-seller is someone whom I would call a micro-entrepreneur. A micro-entrepreneur is usually involved in an activity that manages to support his/her family’s basic needs.
A good micro-enterprise will generate profits that would be larger than most average jobs.
Needless to say, these profits are more “riskier” than a regular monthly income (salary) – especially if your regular monthly income comes from the government.
So who exactly is a micro-entrepreneur and what qualifies as a micro-enterprise?
Before I attempt an answer to this question, an important caveat: I am talking about India, not USA.
Another caveat…Not everyone who we think is a “micro-entrepreneur” may be so out of choice…Some of them may be forced entrepreneurs – forced to eke out a living doing what they are doing, either because they could not find a job they liked OR because what they are doing seemed to be the most natural thing to do (e.g. managing your parents’ micro-enterprise).
Note that micro-enterprises typically lack scalability (that elusive trait which VCs seek) and may not be particularly “innovative”. Having said that, their contribution cannot be dismissed. At the very least they provide an alternative to unemployment (and the consequent frustration and disillusionment that accompanies it); At best, they have the capacity to transform a family’s fortunes (think of all the famous “halwais” who started small…)
Back to the main point: who exactly is a micro-entrepreneur and what qualifies as a micro-enterprise?
Here is my (proposed) definition:
A micro-entrepreneur is anyone who manages a micro-enterprise.
A micro-enterprise is any business that:
- has start-up costs of less than Rs 50,000/-
- employs less than 5 people (typically in a single location)
- has annual revenues of less than Rs 12 Lakhs (or monthly revenues of less than Rs 1 Lakh)
…and has uneven cash-flow, problems in employee retention and suffers from bureaucratic burdens (but these are hardly unique to micro-enterprises!)
What do you think? Comments/ thoughts very welcome.
Next post in the series: Why this sudden interest in micro-entrepreneurs?
Related Post: A nation of shopkeepers?…or entrepreneurs?
Courtesy Gerhard Fasol of Eurotechnology Japan, a fascinating comparison between Sony, Apple and Nintendo
…On October 22 APPLE announced spectacular full-year results with a year-on-year net income increase of 38%.
…on August 29, 2008 Nintendo revised the forecast for full-year net income upward by +26.2%
…in contrast, on October 23, 2008, SONY said that full-year net income (for the financial year ending March 2009) is expected to be 37.5% lower than previously predicted
Lets look at today’s (Oct 22nd) market caps:
APPLE market cap = US$ 85.6 Billion
NINTENDO market cap = US$ 37.2 Billion
SONY market cap = US$ 19.9 Billion
Why this dramatic difference? We believe its focus. Apple and Nintendo are companies with clear focus.
…In terms of sales, SONY = 3 x APPLE …(and)…SONY = 4 x NINTENDO
In terms of operating income, APPLE = 3 x SONY…(and)…NINTENDO = 3 x SONY
In terms of operating margin, APPLE = 9 x SONY…(and)…NINTENDO = 15 x SONY
Courtesy Paul Kedrosky [ via Bespoke ], this chart that says it all:
Talking of small change…last week I received this cheque in the mail for a single penny.
I had to check it twice just to make sure that it was actually a 1-penny cheque.
I cannot help wondering how many man-hours have been wasted (and are going to be wasted) on issuing and processing this cheque.
My estimate is around 2-man hours (at least) which translates into well over £12 (or $24) at the minimum wage rate in UK.
Any one else cares to venture a guess?
Long live the “traditional” way of doing business!
P.S. Coincidentally came across this BBC report which suggests that “the cost to a bank of processing a cheque was 44p” (Note that this is simply the cost to the bank – it does not include cost to the issuer and the beneficiary – in terms of time).
This site suggests that the cost of “processing paper cheques” may be as much as “between $15 to $25″. Wow.
Over the next few days, I am trying to figure out AdSense (yes, I am a dinosaur when it comes to online advertising)…
Please bear with me if you see strange colours and wierd placements on the site as I get to grips with the brave new world of e-commerce