Start-up stories: Arvind Rao
- 18 April 2011
- From the section Business
Arvind Rao believes there are two forces that must drive every entrepreneur: hunger and passion.
Indeed the co-founder of OnMobile says it's what drove him to leave his "very comfortable job" working in the financial services sector in New York to start his own business developing value-added services for mobile phones.
Now in its eleventh year, the company produces a wide range of "add-ons" for mobiles, such as ringtones, wallpapers and mobile apps.
He says he was compelled to become an entrepreneur when life became too staid.
"There was no need to sort of go out and take a big risk with your life and your career," he remembers. "But something just bit me where I wanted to work for myself."
According to Arvind Rao there is one thing they cannot teach you in business school.
"You have to listen to your heart… a lot of it is based on intuition, on gut," he says. "I have done an MBA from the US from one of the best schools… it's fine but it didn't help me become an entrepreneur," he adds.
Mr Rao believes part of being enterprising is the ability to spot opportunities in setbacks.
The entrepreneur says he originally tried to launch OnMobile's services in the USA but was turned down because "nobody wanted to be guinea pigs and be the first customer".
He refused to be defeated and approached telephone operators in India with his ideas. They turned out to be more sympathetic.
"They actually gave us our first break… once we launched with a first customer, we launched with a second customer." All that was left to do was "ride the wave" he says.
'Riding a tiger'
Arvind Rao says he was lucky to witness the explosion of India's mobile phone industry when he launched his business there.
He believes there were just 15 million mobile subscribers when he started out. Now he puts the figure at around 600 million.
"It's like riding a tiger, just don't get off," he says of the boom.
In little more than a decade the company has grown to more than 1,200 employees with offices in London, Paris, the USA and South America.
But Mr Rao doesn't believe that success is defined by the size of a company.
"That happens by chance or luck," he says. "Entrepreneurs feel passionate about their products; they don't feel passionate about building up a large business."
It is this passion and this constant drive to innovate that Mr Rao believes strikes at the heart of entrepreneurship and ensures a company's longevity.
"We never plan for revenues, we plan for products and we plan for product enhancements," he says. "We believe that if you do that well, the revenues will happen."
It is also necessary to keep up the flow of new ideas: "So long as you keep coming up with new products, people will… take them, will consume them, and you will make money."
It is a business model he has centred his company around. "We come up with almost 10 to 12 new products every year," he reveals.
Everyone in the company has an incentive to innovate. "Even me - part of my variable compensation is the percentage of revenues from new products," he says.
For Arvind Rao, a mobile phone offers possibilities beyond speech-based communication. He says the device offers a versatile platform to offer web-based services in places where the internet is not widely accessible.
"You can get the latest cricket scores, you can even talk and find out the score, you can play contests, you can do jokes," he says.
Mr Rao believes that in an age where mobile phones have become an extension of people's lives - from a stall vendor to an engineer - the impact of these value-added services has plenty of potential.
He explains how a mobile application they developed allows users to learn English by ringing a number to listen to English language stories and phrases.
"You can imagine people in the rural villages who are far away who can never hope to go to school... can actually learn how to speak English," he elaborates.
Despite basing the headquarters of his company in Bangalore, Arvind Rao takes a very hands on approach to managing his international company.
Day trips to London, Tokyo, and Johannesburg from his home in Mumbai are a regular occurrence.
"The impact is unbelievable," he says. "What would normally have taken six months can be closed in a week."
Still, he acknowledges there are inherent problems when a business expands and becomes international. Turnaround time, as well as the nimbleness and flexibility of a company, can easily be swamped by its increasing size.
"Today I don't know people," he says. "We have gone and set up 15 offices in Latin America in the last one and a half years, and I haven't even been there."
But the entrepreneur believes the benefits of the company's location outweigh the risks. "Because we are based in India, we can be more cost effective in our pricing, when we compete in Latin America or the United States or the UK or Europe against local incumbents."
Yet Mr Rao confesses he did struggle when he first relocated his company to India. Having spent his entire working life in the United States, he says it was difficult to adapt to the different expectations required of managers.
"They are more emotional so you have to spend more time… talking to employees, enquiring about their families, going out and having lunch and dinner," he says. It's a personal commitment that is not needed in the US and Europe he believes.
"It's tough, even today, I'm trying to understand the psyche of Indians, how to work with them," he admits.
But the CEO declares that is one of the reasons he went into entrepreneurship.
"Unless you push yourself to the limit, you never know what you are not capable of and what you are."
It's a philosophy he encourages other hopeful entrepreneurs to adopt once they identify their "hunger and passion".
"There will be minefields," he warns. "Just blast through them, it doesn't matter. Go without salary and your sleep… in the end if you persevere, you will succeed."
Has he ever suffered from crises of doubt?
"Absolutely," he says emphatically.
"There was a lot of soul searching but I've never deviated. I've always come back to those two things."