The Journey -- What it is to be an entrepreneur

[Based on interaction with Ph.D. Students at IIT-Monash Research Academy, April 2018]

I never considered myself to be a good speaker or a good entrepreneur to “speak” on being an “entrepreneur”. My first thought was “what aspect of entrepreneurship should I talk about”. As we go on you will see that there are several aspects to it, like the business plan, finance, marketing, HR, technology, QC, competition, changing world scenarios, etc. I also realized that (1) you people are all of different backgrounds (not just chemistry) and (2) you need not hear from me about what is involved in being an entrepreneur. There are any number of books and the internet is full of stories and articles on the subject. We have seen many success stories globally and also in India on entrepreneurship. Starting from Alibaba and Amazon, we have Dr. Reddy’s, Reliance, Infosys and Biocon in India and, of course, the all-pervading Google and the infamous Facebook. They were all started by individuals or a small group of people who worked to make them to what we see them as today, that is, “big”. I say they were “made” big because none of these was big to start with; each of these required a lot of effort by the entrepreneur and it certainly did not happen just like that or by reading books or listening to somebody; Tata, Birla or Ambani certainly did not do that. Each enterprise had to be and has been dealt with differently as appropriate to the activity and the circumstances. So, the entrepreneur’s ability to foresee and change with the circumstances is very important. The individual’s effort, vision, perseverance and above all hard work have a lot to do with the success. My own work in starting and running Bharavi Laboratories is not considered a success as it did not make money as the world sees it. From my point of view, of course, it did as well as it could under the circumstances, having developed technologies and QC methods for hundreds of products for the first time in India and mostly exported, if that is what you mean by proof of concept . On completing 70 years of my age and when I wanted to let go of Bharavi, a lot of people considered taking it over (including the Tatas) but none would come forward to buy it because, I guess, (1) it did not make any money, (2) it was too small to attract attention, (3) the CEO is already 70+ and cannot be expected to contribute much and (4) the subject is too unusual and complicated to expect someone to take it up and continue. An enterprise to be recognized as success, it has to make money – there are no two words about it -- and the entrepreneur has to have, what they call the “killer’s instinct”, to make money and obviously I did not have that. Without the drive to make money becoming an entrepreneur requires some other circumstantial driving force, like, as in my case, being pushed to the corner with no other option. But for an academic researcher with no money or experience to start a global business venture and sustain it for 20 years against all odds should make an interesting storey – how you develop the vision, what kind of problems you face day-to-day and how you solve them -- they are not normally found in books (particularly when they are not success stories) -- and that is what I am going to talk about; please bear with me if it sounds more like an autobiography.

Anyway, standing here now to speak to you people makes me feel really ancient. You may be surprised to know that I was a student of this great institution more than half a century ago, in 1965 to be precise. My father used to be a small Government officer in Mumbai and after completing B.Sc. at Andhra University, I had come to visit my parents during summer holidays. IIT was conducting entrance examinations for B.Sc. graduates for 3-yr B.Tech chemical engineering and 2-yr M.Sc. Chemistry. I casually appeared for the exam and passed! But Andhra University, where I studied B.Sc. (Hons), declared that I got second class and the minimum qualification for chemical engineering was I class in B.Sc. So I could only opt for M.Sc. Chemistry. Later on, Andhra University corrected my result to I class and I rank, but that was too late. I joined M.Sc. Chemistry program here, probably that was the first batch. There were only 15 students, 5 in each of the branches, organic, inorganic and physical chemistries. Two students from each branch would get a scholarship to cover the tuition and accommodation in the hostel, but I was third in the merit list. To my misfortune, the two, first and second rankers chose organic chemistry and they got scholarship too. So, I had the choice of organic chemistry without a scholarship or physical or inorganic chemistry with a scholarship and I chose to join organic chemistry out of my own fascination for the subject, even without the scholarship. Dull headed as I was, only later I realized that my father, a small Government officer with 5 children, could not support my education in Mumbai, and IIT insisted that the students have to be in the Hostel and so I returned to Andhra University in my home town, that is, Visakhapatnam.

After M.Sc. too, I got admission to Ph.D. program in Delhi University under Prof. T. R. Seshadri and at the National Chemical Laboratory, Pune. But Prof. Seshadri was a well-known name in Andhra University where he was a Professor and HOD for a long time. I chose to go to Delhi University to work with Prof. Seshadri than to a totally unknown place that was NCL, Pune. Only later, I realized starting the career at NCL probably would have been a better option like IIT would have been compared to Andhra U. After this and several other mistakes in my life, I concluded that we are all born with the potential to reach the pinnacle in our chosen areas except for the mistakes we make at different points of time in our lives and I made several of them. I finished Ph.D. work at the Delhi University rather fast, in about 1.5 years and the University required me to spend at least 2 years. So,Prof. Seshadri asked me to take up the structural problem of santalin, the pigment of red sandalwood, which remained unsolved for 250 years and considered one of the remaining legacies of classical organic chemistry. I was so excited that I refused to go for a Post-doc position (a routine for Prof. Seshadri’s students at that time) and when I stayed back and solved it in 2 years time, I thought I deserved to go to a really frontline laboratory but, on a friend’s advice, I ended up in a lab in University of Florida and it was not exciting at all, particularly after cracking the santalin structure. So, I returned to India without a job and joined Indian Institute of Science as a Pool Officer, which was much like an unemployment allowance for foreign-returned Ph.D.s. There I met this 21 year old Tamilian girl, Vijayalakshmi, who came to work for Ph.D. in organic chemistry at IISc. But within 3 weeks, I proposed to marry her; when she wondered how we could live when we did not have a job or money I convinced her that with a good education, intelligence and willingness to work, we could survive, even if the families did not support the idea of an Andhra marrying at Tamilian, that is. I fortunately got a job as a senior scientist at CFTRI and we moved to Mysore. I can be proud that I sort of recognized her capabilities then itself; though with a poor pedigree of M.Sc. Andhra University and Ph.D. Mysore she did so well later in her career that she is now a member of IIT council and also a Governor on the Board of IIT, Mumbai. So, even though I left Mumbai IIT over half a century ago, IIT would not leave me and my life took a full circle and here I am, back after 53 years.

Well, working at CFTRI, where there was no history of organic chemistry, I developed this concept that food industry byproducts could be renewable raw materials for value-added chemicals and in a way stuck to that theme throughout my career. While working on those lines, we developed some new and useful reactions in synthetic organic chemistry and made a variety of value-added chemicals from citrus peel oils which was considered a waste product at that time. And then, I wanted to develop some HPLC methods for food analysis (to justify my place in CFTRI, where synthetic organic chemistry was considered vulgar) and bought an HPLC. No one knew anything about HPLC in CFTRI then. So I read enough to write a well reviewed 500 pp textbook on Chromatography published in England by John Wiley (in 1985, more than 33 years ago). Learning chromatography, considered a part of analytical chemistry, helped me later to develop the various analytical QC methods we needed for the products we were to make at Bharavi Laboratories. Then I got an offer to head the Chemical Research at the newly established VMSRF in Bangalore. It was just that I was getting bored at the slow pace of work at CFTRI and I left a senior permanent Govt. job and chose a rather uncertain future with a now infamous liquor company. So, risk-taking (an essential trait of entrepreneurship) was there in my veins, obviously. On hindsight, it was a blunder. As it happened at CFTRI, I lost about 4 years again during a prime age as there was no lab. Here again, things started to get better; we got a number of papers, patents and Ph.D.s, all that but due to some differences with the management, I had to leave and was again jobless when I was 50! I thought it was rather late in life to look for a job or, maybe I was too proud to apply for jobs and I thought I would start on my own, not with the idea of becoming a big entrepreneur but to be able to do something in a kind of a lab I could put together, as I knew nothing else to do. That is how I started off and for the next 20 years, nothing mattered except that I run my lab as well as possible – to survive if not thrive.

When I started Bharavi Laboratories 20 years ago I had no business experience nor enough money and did not even know how much money was needed and how to raise money for the business. A lot of “experts” told me that there is a lot of money floating around and all that you need is a good idea and money will pour in. I found that it was not true in real life, or maybe, I did not know how to approach. But, whenever I approached anyone for money, they would ask a number of questions like the extent of business, projected turnover numbers, expected growth rate, return on investment, proof of concept, the balance sheets, etc. (sort of a business plan) and I had no idea on how to generate the information and nor the patience to answer all their questions. In any futuristic projection, particularly in a new and unknown area of the kind I set out to do, I thought the numbers may not be realized even if you have an attractive business plan. And then the numbers and projections have to be really attractive for someone to put their money in your company than a blue chip company shares or mutual funds. And to realize those attractive numbers is a tall order particularly when you have no business experience. And presenting what I myself thought were unrealistic numbers was very uncomfortable to me; I was not being true to myself.

I was out and out an academic researcher, happily publishing papers, patents, books and guiding Ph.D. students. But, my advantage was that, unlike most researchers, I did not stick to one area of research that could have probably given me more fame and recognition as a scientist. I took research as entirely a problem-solving activity. I truly believed that any problem in chemistry can be solved by just thinking about it carefully because chemistry is such a rational subject. Fortunately, I got to work on and solve a variety of problems like structure determination of different kinds of natural products, developing new synthetic organic reactions, reaction mechanisms, spectroscopy, chromatography, etc. on one side, and removal of bitterness in orange juice and trapping diacetyl in beer, ultrasound assisted maturation of malt whiskey, large-scale isolation of the pesticide, azadirachtin (one of over 400 closely related components) from neem, the popular nutraceutical, hydroxycitric acid from Garcinia and so on, on the other.

But all this did not prepare me a for a career in business though it helped me to have the confidence to start the current line of activity which you all know is unknown in India even today, after 20 years. But, to be an entrepreneur, it is not enough if you are an idea generator; you should be able to make money. But novelty of an idea has always been more exciting to me than the money the idea could make. No wonder that the living was always hand-to-mouth at Bharavi. But the lab survived for 20 years though and we exported as many as 1500 products (over 300 new entities, excluding repeat orders) all made for the first time in India and our clients were several Fortune 500 companies like Pfizer, Eli Lilly, Dupont, Novartis, Bayer, Aldrich, Acros, etc. While we were so excitedly developing new products and their QC methods, we did not realize that each new product required so much of expenditure on technology development and time and, most of all, development of QC methods (each product being very different from the other) or the product will be mercilessly rejected. Anyway, I was in a hurry to start the business and as I did not know how to raise money, I started with whatever money I had as savings; fortunately, my wife and son were doing very well and did not need my support. Now I think that was a bad idea. A novel new idea can attract funding too but once you start the business, the financiers look only at the turnover and profit numbers. They do not buy the argument that you spent off all the money on development of technology and QC methods. They do not know you; they can only see your cash flow, turnover and profit numbers.

As I said, I also did not have an idea of the kind of investment needed. Looking back, for this kind of research-intensive business like Bharavi, I should have started with about Rs. 10 or 25 cr in those days, but I had only about Rs. 10 lakhs, just enough rent this place for the lab and put some rudimentary things in place. Of course, there was no library, or internet at that time and I had to depend completely on what I could think of. Actually, during much of my career, at CFTRI, VMSRF or Bharavi, I never had access to a good chemistry library nor a peer group with whom I could discuss chemistry. I had to develop the skill to think chemistry than read chemistry. Now, of course, all that you need is a computer with internet access; that is the beauty of information technology. But, still, lack of interaction with peer groups the world over, of the kind one could look forward to in a frontline educational institution is an irreparable handicap.

Anyway, with this meager facility and investment, making large volumes of any chemical (like the APIs, for which there was proof of concept) was out of question. I needed to choose an area that had very high value addition and preferably no competition because I was never knew if I could compete and not sure of how much time is needed to develop the technologies and QC methodologies to make salable products. We did not even know where to get the raw materials; China had not started as yet and I had to buy even some lab reagents from the USA and Europe at a high cost. In that scenario, we could not expect to survive making small volumes of low cost products. That was how we got to hit upon the resins for peptide synthesis, where the raw material (mainly, polystyrene) was cheap and the products were very expensive because SPPS was a new field and nobody was making the resins for SPPS at that time in India and very few in the rest of the world too. Only when we started we realized why not many people ventured into the area. The resins are cross-linked porous polymers that swell and shrink in different solvents and trap all sorts of things, making their reactivity unpredictable and for washing and purifying the resins, you need to alternatively choose compatible swelling and shrinking solvents in order to push out the unwanted. And the products could not be analyzed by the traditional solution methods of organic analysis as the resins are insoluble. And a certificate of analysis was a prerequisite to sell a chemical in the world.

But, when I said we could offer the resins for peptide synthesis, orders started pouring in. We really did not know how to make those resins because we never made any at that time, but when we got the orders, we had to rise to the occasion for survival, and we could quickly develop the technologies for several peptide resins and make Rs. 1 Cr (10 million) with an expenditure of Rs. 50 lakhs (5 million) in the very first year of operations! 100% profit! Looking back, that was the time to spin off the company and make some money for myself and find something else to do. But the activity was too exciting for me to let go. Another exciting area we touched upon was amino acid chemistry. Again raw materials were cheap, thanks to the developments in Biotechnology and they could lead to wonderful high-valued products, limited only by your own ingenuity. That led us directly into the area of specialty chemical intermediates for pharmaceutical development where there is unlimited requirement of a variety of high-valued chemicals. And supplying advanced pharmaceutical chemicals on demand from the drug companies became our USP.

But for all that, we also needed good chemists. But how to get good chemists when you have no money to pay? And we could not attract any from the IITs and the better known Central Universities. So I had to start with fresh graduates from local colleges and universities at low wages, train them and devise remuneration programs that would reward capable and productive chemists through incentives. That is, the chemists’ salary is closely linked to their capability and the company’s productivity. I thought, to get the best out of the chemists, they needed attractive incentives. So, when Bharavi made 100% profit, I increased every body’s salary by 100% (doubled). But only later, I realized that what you give to everybody is not considered an incentive but an entitlement. To work, any incentive should be tough to get and worth working for. I thought they needed individualized incentives and I promised end-of the year, productivity-linked payment to the chemists in addition to the Company performance-linked increments. But it did not work because the company was not making money and they did not know what they would get and had no patience to wait for the whole year with no guarantee that I would have money to pay at the end of the year.

So I made it end-of-the-month lump sum payment which was calculated as a percentage of the figure A – B where A is the money we get for the product made by the chemist in the given month and B was the cost of raw materials. This helped to increase the yield to the maximum possible by the chemist and decreased the wastage of raw materials, solvents and even time. And everybody would try to finish before the end of a month to get the next month’s incentive bonus. But then when we made a high value product and a chemist got some Rs. 12,000 as an incentive bonus in a particular month (a huge amount in those days), he took the money and disappeared. Thus, I lost the person and also the advantage of giving that kind of an incentive to a capable chemist and I had to devise a way of retaining the capable chemists and at the same time make the chemist feel rewarded.

So, the one-time incentive bonus (say, 12000) was divided by 12 and given as the monthly increment of Rs. 1000 to the salary, starting from the month the project was completed and that increased salary would continue as long as he was with the company, not just that year. If the chemist made more products in the subsequent months, the incentive payment would continue to be added further to the salary with the same formula. So the chemists got increments from both the company performance and their own performance and that worked to some extent because we could thus align the Company’s interest with that of the employees. And, it also helped the cash flow as I did not have to shell out all the money immediately.

We also started a Ph.D. program for the chemists and got Bharavi recognized by Bangalore University and JNTU, Hyderabad. But nobody except Sandhya stayed with Bharavi long enough to get a Ph.D. We continued to lose people because the salaries were still much lower than what companies like Syngene could pay and the joke was that new and inexperienced chemists could join Bharavi, get trained to be hired by Syngene or Jubilant at double the salary in 6 months. We lost almost all our employees to Syngene and other companies in Bangalore. We also realized that not only money but employees also look for security and identity of working for a big company like Syngene, Jubilant etc. instead of Bharavi. This is another aspect of running a company – not only the money, but your own employees’ perception of their own future and identity is important and you have to cater to the individual’s goals and ambitions. They, like everybody else, are with you only as long as they do not see a better option.

Of course, I was also always disappointed with the quality of chemists we could get. Each state University has its own way of evaluation and the standards were very different. Most chemistry graduates and even post-graduates had not seen a lab. So, I had designed a 40-question test in elementary chemistry which I thought any B.Sc. chemist should be able to answer (say, density or water or composition of air or conversion of mg to kg and vice versa). I used to be upset in the beginning that not one (M.Sc. or Ph.D.) could answer even 50% of the questions but as the time passed by the number of questions they could answer has been coming down steeply and lately, it became a common practice for the chemists with I class M.Sc. degrees to return blank papers which meant they could not answer even one question. But then, ours was a global business (100% Export Unit) with clients like Aldrich, Novartis, Eli Lilly, Pfizer, BASF, Bayer, etc. and how could we hope to compete with China and the whole world if this is the standard of chemists we could get? So, given the quality of education and training in an average university In India, in-house training is inescapable. I even thought of starting a Bharavi Academy for Chemical Education. The idea is that what Bharavi faced is faced by other companies in India too and it will be hard for Indian University system to rise to the occasion and prepare chemists for the jobs in the fast-changing environment. Bharavi Academy’s clients therefore may not be the individuals who want to know chemistry but companies who want to upgrade their employee’s employability and effectiveness.

And then, midway through our journey, there was a fire accident and the whole lab burnt down. But we did not give up. We rebuilt the lab again from the ashes and started operations within a year or so; we took the occasion to redesign the lab to somewhat like the way it looks now – relatively more modern. I was fortunate that some people remained with me even after this disaster. But then it coincided with the Chinese onslaught world’s chemical and pharmaceutical industry which brought down the prices of our products steeply. The expensive 2-CT resin for which we could get $20,000 per kg came down to $2000/kg and now, less than $1000/kg.

I could see the writing on the wall that I could not run the company unless we increased our output steeply which required a fresh and huge infusion of funds (to cover the facility and manpower costs), but who would invest in a company run by a nearly 70-year old person who could not make money? They do not buy your plea that you spent off all the accruals on development of technologies and QC methods. So, I decided age was not on my side and I should let go of Bharavi. About 2 years ago, fortunately, USV of Mumbai offered to come in and take over the Company. Fortunately, again, they asked me to continue for some time with the same office and everything. Indeed USV treated me very well both during the take over and after and I am grateful to them for that. But that could also not go on forever and I retired last year.

Now, I would like to share some ideas that developed during the course of this long journey. Take it from me that there is always a lot to do; that is, if you want to do something more than just making money and enjoying it. There is really no limit to what a capable chemist can do and it is all upto the individual. As I said, willingness to work purposefully is the key; that will keep you ahead of others anytime. When I started, I had Aldrich model in mind but now I think it should be like Bachem or Senn, who deal with and offer the whole range of products for peptide synthesis, including amino acid derivatives, reagents and the resins with which these companies are identified but not all chemicals in their catalogs are made by them (Bharavi supplied most of them). And there is no reason to stick to peptide synthesis chemicals. There is a much larger and lucrative business out there, waiting to be milked. Most major companies in drug discovery area need to make thousands of chemicals from mg to kg of varying chemistries. When I started, I could not determine what sells and so I was trying to offer every product I got an enquiry for. But both resources and time were limited and customers wanted it yesterday. So I thoght of this restaurant model. When you sit in a restaurant and order for the dish of your choice, the restaurant has to quickly make your order and supply within, say, 10-15 min. That could happen because they had a kitchen, the cooks, ingredients, spices, and to the extent possible the “advanced intermediates” in place. Here, you need the facility to make the chemicals (kitchen!), chemists (cooks!) with capability of making the chemicals, raw materials and other ingredients (solvents, chemicals, reagents). Of course, you also need marketing, material management, and all that. It worked to some extent but you need a large inventory of chemicals with the associated cost and safety aspects.

Over the past two decades China has emerged as a global supplier of specialty chemicals. The prices are competitive, the quantities are unlimited and almost every chemical is offered ex-stock with high purity specifications, even on Ton scale, and at very low prices! How do they do it? Even a restaurant approach cannot handle this. Given the fact that most of the responses to quote requests are from traders (and not usually the manufacturers) and they always ask for the money in advance, this scenario can be understood in terms of a virtual warehouse (or database or just a computer) where the manufacturers deposit their products (or only information about the products, that is, specifications, CoAs, quantities and prices) with a central repository. Registered traders should be able to access the information and quote appropriately (as competitively as possible). When they get the order, they could procure (and the computer knows where it is available), possibly purchase it against payment and supply to the customer. Though China is well ahead of others as a global supplier of specialty chemicals, it should be possible to compete, as it happened with the APIs. Understandably (due to Western pressure, China is getting stricter with the environmental issues and trading practices and the Chinese work force is also demanding higher wages. And so, there is scope for Indian entrepreneurs to rise to the occasion and fill the gap. My best wishes to anybody who wants to do that.

If you permit, I would like to share some thoughts on “Principle-centred business” practices.

1.    Discipline, work culture, punctuality and merit. It is difficult to overemphasize the importance of these matters. Remember unless you are on time, your colleagues would not be.

2.    Be prepared for the worst-case scenario; if you can handle the worst case scenario you can handle any other situation.

3.    Be ready to face disasters, accidents, wars, famine, changing Govt. policies, world economic scenarios, Forex problems, technological obsolescence

4.    Don’t be greedy or cheat – remember Satyam, Sahara, Mallya… All the glory is gone in a day.

5.    Don’t worry about making money for yourself but do for the company; when the company survives and thrives you also succeed. It is like a soldier fighting in the front to save the country than oneself.

Again, take it from me; with all the problems you may face, entrepreneurship is challenging, exciting and fulfilling (rewarding). Thank you.