An evening with Mr Madan Padaki
On Friday, June 30, we had a very important session by the well-known entrepreneur, Mr Madan Padaki.
About Mr Madan Padaki
Mr Madan Padaki is a prominent entrepreneur and social advocate based in Bangalore. With a passion for empowering individuals and fostering entrepreneurship, he has launched several impactful ventures and initiatives.
Mr Padaki is the Founder and CEO of 1Bridge, an assisted-commerce platform. The platform has been named a winner of the National Start-up Awards 2021 by the Government of India. IBridge also received praise from Prime Minister Narendra Modi during his Mann ki Baat address to the nation.
As the Managing Trustee of Head Held High Foundation, Mr Padaki works tirelessly to bring dignity and abundance to ultra-poor households.
Mr Padaki is a driving force behind the Global Alliance for Mass Entrepreneurship (GAME), that aims to ignite a mass entrepreneurship movement and generate large-scale job creation.
Prior to his current endeavours, Mr Padaki co-founded MeritTrac in 2000, one of the largest skills assessment organizations. The company was later acquired by Manipal Education.
In addition to his entrepreneurial ventures, Mr Padaki is actively involved in the education sector. He is a Co-founder and Director of Sylvant Advisors, an organization that invests in and supports education entrepreneurs.
Mr Padaki has delivered talks at prestigious forums such as TEDx IIM Bangalore, TEDx Gateway, and the INK Conference. He is a faculty member at the LBS National Academy of Administration, where he trains Indian Civil Service officers on livelihood and entrepreneurship.
Mr Padaki actively contributes to government committees in the Ministry of Rural Development, particularly focusing on women entrepreneurship. He also holds a co-chair position in the Karnataka Skills & Entrepreneurship Taskforce.
Mr Padaki received the Social Entrepreneur of the Year Award from India CSR Network in January 2021.
Mr Padaki serves as a Strategic Advisor and Board Member of YuWaah/UNICEF. He is also the Honorary President of TiE Bangalore, a prominent global network of entrepreneurs.
Mr Padaki holds a Mechanical Engineering degree from NIE, University of Mysore, and a Post-graduate Diploma in Management from SPJIMR, Mumbai. He resides in Bangalore's Basavanagudi area with his wife and two children, remaining deeply connected to the city's entrepreneurial ecosystem.
Introduction
When Mr Padaki sold MeritTrac to Manipal Education in 2013 he decided he could create opportunities for young people in the hinterlands. Many young people were moving from rural to urban areas. But often, they could not afford to live in the big cities. After spending some time there, they would give up and return to their villages.
Mr Padaki launched a venture for rural transformation. He felt unemployability was a myth and everyone could be trained. He had a firm belief in the immense potential of everyone. Mr Padaki recalled Mohammad Younus once saying: A lot of us die without realising our potential.
Mr Padaki’s Head Held High foundation works towards transforming youth, empowering women, and supporting marginalized communities in rural India so that they can realize their full potential. The belief is that transformed individuals, when given access to viable economic pathways, can lead their families out of poverty. The foundation transforms low-educated youth, particularly girls, into confident English-speaking entrepreneurs, empowering them to create better livelihoods. The organization has trained 25,000 people. Mr Padaki believes that every transformed youth in the rural area can become an entrepreneur driving social change.
Using technology as an enabler Mr Padaki has brought several jobs to the rural areas, capitalizing on the emerging opportunities in ecommerce. As mentioned earlier, 1Bridge is a village commerce network for products and digital services that bridges access, choice and convenience gaps for rural consumers, a shared sales, financing and delivery network for corporate partners. This is enabled through a network of village entrepreneurs operating an assisted commerce tech platform. Village entrepreneurs can earn additional income by delivering to village consumers. The network enables a variety of transactions in the districts and villages – from product to digital payments/collections. The network also provides its partners access to information, insights, and micro-market trends.
MSMEs in India
World over, the large companies do not create many jobs. The organized sector in fact employs less than 10% of the total labour force in India. Indeed, in most developed economies, MSMEs (Micro, Small and Medium Enterprises) are the engine of employment. However, India has not utilized this lever effectively.
In India, entrepreneurship is dominated by necessity-driven self-employment. 94% of all enterprises and 78% of all workers are self-employed or have 2 -3 employees.
This problem is exacerbated for women in India. Only 14% of all enterprises are owned by women. Within the MSME sector, women own less than 2.5% of small and less than 0.01% of medium businesses.
The missing middle
India has been focussed on self-employment and fast growth startups, ignoring the high-potential job creation possibilities of Mass Entrepreneurs. During the Q&A, Mr Padki added that we have been overhyping the tech startups and unicorns in the cites. On the other hand, in the rural areas, people aspire for a government job. The entrepreneurial culture is missing.
The answer lies in the middle. We need people to aspire to set up small businesses to solve local problems and create jobs in the process. We need more opportunity driven entrepreneurs who employ on an average 5-20 people. They can use local inputs to solve local problems. These entrepreneurs make up only 11% compared to the global average of 30-40%.
During the Q&A, Mr Padaki provided an outstanding example of an opportunity driven entrepreneur. Daniel Muthuswamy started off as a tea cart vendor. Today, his Sharon Tea Stall serves a variety of teas and refreshments. He has six flourishing outlets, employing 30 people (supporting 20 families) and generating a profit of Rs 60 lakhs per year. On the advice of his mother, he stopped selling cigarettes. He was initially worried as many of his customers would come to buy a cigarette, drinking tea being a secondary objective. But he went ahead and stopped selling cigarettes. Daniel Muthuswamy illustrates the importance of passion for the work, a purpose to create jobs and always do the right things.
Driving change
There are five levers to unlock:
- We must make entrepreneurship aspirational.
- We must cultivate the entrepreneurial mindset at a young age in schools and colleges.
- We must prevent young people from falling into the trap of self-employment.
- We must enable small entrepreneurs to think of growth.
- We must enable women.
What GAME does
Mr Padaki, along with Mr Ravi Venkatesan and Mr Mekin Maheshwari, started GAME (Global Alliance for Mass Entrepreneurship) in August 2018 to align the ecosystem and mobilize action to address the systemic challenges in creating jobs in India. GAME brings together a cross-section of alliances, partners, funders, and other players to inspire an entrepreneurial movement across the country. GAME fosters collaboration between governments, businesses, and civil society organizations.
Many agencies have been set up to promote entrepreneurship. But there are no coordinated efforts among the different agencies.
It is also important to shape the policy environment. In Punjab, for example, till recently, there were 1100 rules which could lead to the imprisonment of entrepreneurs. No one was imprisoned but the threat of imprisonment was enough to scare people. If entrepreneurs are freed from this regulatory burden, they can focus on growing their business.
What will success look like?
Today, many Indian companies employ less than 2 people. If we succeed, our workforce will resemble that of mature economies. Productivity and wages will grow. Women and rural workers will get a better deal. MSMEs will become the mainstay of the economy making a 2X contribution to GDP and generating more than 150 million jobs. Is this not something to aspire for?
Financial linkages are important. We must build the capacity of NBFCs to provide funding to the MSMEs.
The action must shift to the districts and not remain in the big cities. It is important to develop district level clusters such as Ludhiana and Tiruppur. Mr Padaki has signed an MOU with the government of Maharashtra to trigger entrepreneurship in 6 districts.
We must provide social security to entrepreneurs.
Concluding remarks
There is a lot that needs to be done. We need an army to deal with the looming job crisis in the country. Let us work together to create the conditions necessary for entrepreneurship to thrive.
Q&A
India is a diverse country. Each district is different. There is no single silver bullet we can fire. Local context matters. We must accelerate entrepreneurship in high intensity districts and move the needle in low intensity districts. We must get better at story telling in both cases. We must look around, find successful entrepreneurs, and make them heroes. If we say nothing is happening, it will become a self-fulfilling prophecy. Local academic institutions, industry associations and banks can play a role here. All of them will benefit if entrepreneurship thrives in their locality.
Mr Padaki shared an interesting story. One mayor in Mexico would ring the town bell when someone had set up a business and employ someone. Initially, this happened a few times a month. But as the stories spread, the bell started to ring many times during a day. That is how entrepreneurship accelerated in that town.
Mr Padaki felt that the time is ripe for entrepreneurship. Digital public goods will play an important role here. UPI, ONDC and Open Credit will help entrepreneurs to access finance and markets and do trade more easily.
Successful entrepreneurs must share their experiences with academic institutions. But the way to teach entrepreneurship is not the same way as other courses are taught. One college in Tumkur approached Mr Padaki to take a course on entrepreneurship. Instead of teaching them in the traditional way, Mr Padaki requested the principal to spare the students for one hour per day for 10 days.
On the first day, the students were asked to name their role model entrepreneurs. On the second day, they were asked to identify the characteristics of these role models. On the third day, they were asked: If someone sitting next to them on the bus, claimed to be an entrepreneur, how would you validate the claim?
Over the next 5 days, the students were asked to interview entrepreneurs in their locality and nominate the best entrepreneur. As an example, one group identified a Punjabi Dhaba owner who had learnt Kannada and adjusted quickly to the local customs.
Over the next 5 days, the students were asked to come up with ideas to grow the business. In the case of the Dhaba, the suggestions which came included: studying the traffic patterns, location of the sign board, pricing of the menu, etc. These entrepreneurs later visited the college.
The course completely changed the mindset of students. They realized that entrepreneurship was thriving in their own locality. They could also become entrepreneurs and make decent money. It was not necessary to get a salaried job. The faculty become fascinated by what had happened. The lesson is that colleges must go beyond the incubators and look at the local ecosystem.
Technology as a force is unstoppable. It improves life. During his days at Infosys, when Banks 2000 was being implemented, unions of the commercial banks went on strike due to the fear of job losses. Since then, the banking sector has exploded and created many more jobs. This growth would not have happened if banks had stuck to their manual ways of operation. We must use technology in a way that is beneficial for the country or more specifically for job creation. Technology should also not be elitist. It should be democratized and made accessible to the common man.
Incidentally, Mr Padaki has co-founded 1verse, a visionary venture focused on seamlessly connecting the physical and meta worlds. This unique platform aims to revolutionize the consumer experience and purchase journey within the metaverse. The kind of success achieved by the platform in Mandya village has not been seen anywhere else in the world.
The freedom movement became a mass movement and captured the imagination of the public after Mahatma Gandhi’s Dandi March. We must find the salt satyagraha equivalent for the entrepreneurship movement. Incidentally, demonetization is a good example. It triggered a sudden growth in digital payments. However, we have still not found the tipping point. It is important we do so quickly. There are 10 million unemployed youth. Awareness of their plight is high due to the social media. If we do not find opportunities for them, there will be unrest on the streets.
The curriculum has gone through a major change in recent years. There is a one week orientation program to remove prejudices in the minds of the young officers. Mr Padaki teaches the officers using a case study on uneducated, rural youth. The officers are encouraged to come up with escape paths. The responses are positive, and the young officers are full of energy and ideas.
THub has become an exemplar institution. THub has become visible through the scale at which it operates to promote entrepreneurship. THub has successfully put Hyderabad on the country’s entrepreneurial map. Going forward, THub may have to focus on shaping the ecosystem so that there is no excessive dependence on one organization.
The primary focus of Edtech should be on education and not technology. Great education calls for motivated learners, inspired teachers, and good learning tools/aids. Unfortunately, EdTech has got carried away by the tools. EdTech companies should ask themselves how technology can be used to inspire teachers and motivate learners. Today, there is no conversation about learning outcomes, only about scale.
Prof Prasad added that ICFAI has been sanctioned a strength of 10,000 in the online MBA program. But scale can compromise learning outcomes. So, a decision has been made to go slow on increasing the numbers to ensure that learning outcomes are achieved. Prof Prasad added that assessments are an important part of achieving the learning outcome. The curriculum is also being tweaked to suit the needs of the learners. Prof Prasad felt that a one size fits approach will not work. The methodology must be tweaked depending on the segment being catered to.
Mr Padaki has developed a four stage approach:
- Inspire: Shape inspiring stories about entrepreneurs
- Aspire: Enkindle the spirit to become an entrepreneur
- Respire: Get started. (Responding to another question, Mr Padaki added that we will never have all the information we need before we start a venture. Only when we get started, we will become aware of the opportunities and challenges. We will also be able to generate new possibilities.)
- Perspire: Work hard and put sweat and toil on the idea.
Finance is not easy to get. For example, the Mudra scheme that offers loans without collateral, is available on paper. But actually getting a loan is difficult. Access to finance, local mentors and peer support groups are needed to support young people who want to become entrepreneurs. We can put in place a safety net to reduce the perception of risk. In any venture, risk cannot be completely eliminated. Otherwise, it would no longer be entrepreneurship. However, risk can be reduced. SP Jain for example once offered a stipend of Rs 30,000 per month to budding entrepreneurs who dropped out of placement. The B School even provided space in its premises for 2 years, without charging rent to students wanting to launch their ventures. If things did not work out, the students could take part in placements organized by the B School, in a subsequent year.
For the last 100 years or so, entrepreneurship has been defined in capitalistic terms. Should we copy this model created in the west? Most examples of entrepreneurial success are drawn from the west. There are few Indian case studies.
We should reinvent entrepreneurial thinking based on our own ethos. Mr Padaki has drawn inspiration from the Bhagavad Gita to create a new model. He has even penned articles in this regard. We should embrace Karma Yoga. We must not get attached to the results. We should stay the course and not get swayed by external events. We should surrender ourselves to the journey and embrace it. We must do the right things. We must not allow ego to get the better of us.