Learning from a successful business

The interesting thing is that this business was not started by any of the people whose traditional occupation it is in our country to deal with rubbish. In fact, the business was started by baniyas. Why didn’t a bhangi or other Dalits think of such a thing

Dear Dadu,

Your letters are very interesting and have lots of useful tips. But it all seems a million miles from where I am. Could you please give me an example of a business which has been started?

Love,

Daulat

Dear Daulat,

Actually, all businesses start with someone observing a need which is not fulfilled.

For example, we have around us a huge amount of “rubbish”. This breeds pests and disease and should be got rid of. However, it contains some valuable things that can be utilised. These include the organic part of the rubbish, from which fertiliser can be produced for agriculture, at the same time as biogas can be generated in order to provide energy for lighting, heating, and other purposes. The non-organic part of the rubbish often includes valuable chemicals.

In recent years, there have been lots of disused computers and electronic components. I don’t have the figures for Delhi, but I am told that Bangalore generates 18,000 metric tons of such “e-waste” a year — which is, moreover, actually growing at 20 per cent a year! Further, tens of thousands of tons of e-waste is illegally imported into India (India banned import of e-waste in 2010).

From”rubbish” to riches

In this situation, a chemical engineering graduate wanted to throw out a laptop and discovered that there was no way to do that which is environmentally friendly. The question that came to his mind was, what technology is available for the purpose anywhere in the world, and how to create an entire business around this opportunity? He and his brother drew up a business plan in 2007. They discovered that they needed a huge amount of money, so they went around presenting their business plan to venture capitalists, such as Draper Fisher Jurvetson and NEA-IndoUS Ventures. A year later, they had secured more than $6 million, and Attero Recycling was born.

Now, only five years later, Attero is collecting and processing about 1,000 metric tons of e-waste a month from over 500 cities in India. From this “rubbish”, Attero extracts precious metals like platinum, gold and selenium. By March 2013, the company had made its first profit, and its annual revenues had grown to $15 million. As there is so much rubbish in the world, Attero has attracted the world’s attention, and has secured the funding necessary to build processing plants in Mexico and Ireland.

The key to the success of Attero is that the two brothers analysed the best technology for the purpose which is used by the global giants of the industry, and invented a way to do the same thing with much smaller quantities. The plants of the global giants need 100,000 metric tons of waste per year in order to operate efficiently, and they cost $100 million to build. The brothers found a way of making a plant that can process only 2,000 metric tons of waste a year, and costs just $2 million to build. No wonder their business plan was attractive.

By the way, I hope you noticed that building their 100,000-square-foot plant in Roorkee would cost only $2 million, but they went out to get $6 million. Why get that much more money? First, because running the plant also costs money. Naturally, the raw material needs to be bought and transported to Roorkee. You need some money for staff costs, office costs, etc. Most important, you need money to market your products. And then in this sort of business, where the prices of commodities go up and down quite unpredictably, you must always have some money in hand, so that you are not under pressure to sell your products at a time when the market price is low.

Use your imagination

The interesting thing is that this business was not started by any of the people whose traditional occupation it is in our country to deal with rubbish. In fact, the business was started by baniyas. Why didn’t a bhangi or other Dalits think of such a thing? Of course, many of us don’t have the necessary education, and many of us don’t dare to dream so big. But the main reason is we are usually too close to our own realities.

It takes a certain mental distance from daily drudgery to see a business opportunity. That is why it is important to think and pray and use one’s imagination. But never jump with the first business idea that comes into your head. Think around that idea, preferably with others, to see if even that first business idea can be improved. You also need to think of alternative business ideas so that you pick the best idea. But quite often you can simply execute an existing business better than the people who are involved in that sort of business right now. There is nothing shameful about imitation if you can improve on it.

I hope that provides a practical example from our own country. Probably, you need to only lift your eyes to see loads of other examples of successful businesses around you.

Love ,  Dadu

Published in the January 2014 issue of the Forward Press magazine


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