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India’s Earliest Product Entrepreneur: FACT CEO Arvind Agarwalla (Part 3)

Posted on Wednesday, Oct 16th 2013

Sramana: How did you deal with the piracy situation? It was pretty bad in the 1980s and 1990s.

Arvind Agarwalla: The first thing we decided to do was implement copy protection on our software. Of course a lock can be broken, but we had to copy protect it or we would not be able to make revenue. Our software to this date is copy protected. The second thing is that we released regular upgrades. When people paid our maintenance fees, they got the new versions free of charge as well as support.

Accounting is mission and time critical. Once you have moved onto computerized accounting, if the software goes down, your entire operation goes down. Our pitch was that you are paying a small insurance fee to us to make sure your accounting operations will always be up.

Sramana: How were your revenues ramping up when you were starting this business in the late 1980s?

Arvind Agarwalla: The first five years were a huge struggle. Every month was a nightmare. We would somehow meet payroll. Beyond the initial investment we made in the company I never borrowed any additional money. I was the only son and in the traditional Indian family the father’s money is the son’s money, and the son’s money is the father’s money. Except for the initial investment, I did not put in any more of the family money, and I actually started paying dividends.

Sramana: How much money did you use to get the business started?

Arvind Agarwalla: We spent 2 million rupees, and a beta capital investment of 600,000 rupees. I also had a shareholders loan of approximately 1.2 million rupees. We also spent money on the property.

Sramana: Your father probably thought that the property was a safe investment.

Arvind Agarwalla: The building was constructed by my grandfather in 1959 and the lease expired in 1980. The tenants did not vacate, but we had the entire fourth floor. I got that floor vacated through legal means. I could have sold the property, but didn’t so that was an investment from the family. In 1987 the investments that we put into the business were pretty substantial. Everything fell into place.

Sramana: What were some of the milestones that brought you to the next level of growth?

Arvind Agarwalla: In 1991 we established our first office in Nepal. The inflection point for us was 1993. We established a branch in New Delhi and one in Mumbai. We went to Nepal first because they were landlocked. Every company there would import through the airports in Kolkata. Their subsidiaries in Kolkata would always have updated accounting records because they were using our software, and the home offices in Nepal did not have the updated records. They would come to Kolkata and asked for us to support them locally in Nepal. We upped our price by 25% when we opened that branch.

The way business works in Nepal is if you sell to company A, then all the businesses in Nepal come to know about it. It is a small community of entrepreneurs. They meet every evening. They may be fierce competitors, but they are also friends and family. We were quickly introduced throughout that community.

This segment is part 3 in the series : India's Earliest Product Entrepreneur: FACT CEO Arvind Agarwalla
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