SM: I think there are opportunities in both developing economies and in Western economies. I am working on a forward-looking book about India right now.
RK: Perhaps. I see energy as a good example. If India can resolve their unique energy issues in a way that only India can do it, then they would have a big advantage over how we think of addressing those issues here in the United States.
SM: Absolutely. There are people there working on rural electrification now.
RK: We did a social event at a hamlet and they were using solar lanterns. We invested in that and eventually sold to a for-profit business in India. We were trying to get ahead of the electrification issue to make sure there was light for studying and simple manufacturing. Things that would help the economy get ahead.
SM: That is exactly what Selco is doing. They have been able to scale quite a bit with that model. It is a very inspirational story and something that definitely showcases what can be.
RK: Aside from IT, are another example is Pantaloon [Retail India Ltd]. It is a fascinating story. I love that company. Kishore [Biyani] did an amazing job of taking the best from Western companies, understanding how the big box operates from the back end, and marrying that with the messy Indian front end.
What I love about Pantaloon is that they had a plan A, which was to make a nice clean straight aisle, fluorescent lit, front end to match the beautiful backend. Essentially they were taking exactly what Walmart and Costco and others had done. They found that Indians did not like the front end. It did not make them feel as though they were in the marketplace. It did not reward them for finding that one deal or bargain in the pile. He quickly corrected to a plan B, where he kept his back end, an incredibly efficient supply chain which is beautiful, and married it with a messy, bizarre, zig-zagging route through the store. That route gets people into the hunt for the product.
SM: What about China?
RK: China is a little different than India. We have an investment group there. The Chinese market has found itself to have an explosion of entrepreneurs in large part because there was not a long legacy of family-run bootstrapped businesses. In that way it is the opposite of India. When the entrepreneurship gun went off and capital started coming into China, it was an open playing field. There were no constraints of existing family businesses or methodologies to be concerned with. There was an absolute rush.
That has created market chaos. The rush is very short term. You do not have generations of entrepreneurs that understand the value creation process. For them it is more of a transaction process; build something solid and move on. That is evolving, but right now it is still very much the Wild West, with the experience level of the entrepreneurs being of particular concern.
SM: Do you think, given your book’s and other people’s attempts to address the entrepreneurship education problem, that we are teaching the process of entrepreneurship? Silicon Valley is a close- knit place and we learn from each other. This falls apart as soon as you leave this 35-mile radius. Other entrepreneurs are hungry and foolish. Is there a case for an online education platform play that could train a very large number of entrepreneurs?
RK: I have been teaching entrepreneurship at Stanford for the past eight years. A question we always ask ourselves is whether or not you can teach entrepreneurship or if entrepreneurs are simply born. I think the answer is a little of both. I do think we can turn on the entrepreneurial gene in those who do not know they have it and reinforce it in those that do. The reason we wrote “Getting to Plan B” was to create a simple, clear, process that would help both inexperienced and experienced entrepreneurs to more methodically and efficiently address the innovation process.
People confuse innovation and entrepreneurship. They are two very different things. Innovation is well distributed wherever the human race is. It is the creative process. Entrepreneurship is the profession of marrying innovation and commerce. That is a skill set. Much of that can be taught.