The Union Budget did have something for startups and micro, small and medium enterprises (MSMEs) to rejoice. Finance Minister Arun Jaitley announced the increase of the period of profit-linked deductions available to the startups to seven years from the current five. Tax rate for those companies with an annual turnover of upto Rs 50 crore has gone down by five percent. Also, shareholding pattern norms to carry forward losses of startups have been relaxed. But what kind of startups should we in India try building?
Not long ago, I was in the fields of Narayanpur vilage of Telangana, with my team offering low-cost greenhouses to farmers for vegetable cultivation. Our brochure had two options: a 500sqm unit, which could earn Rs 10,000 monthly profit, or a 100sqm unit, which could give Rs 2,000 monthly profit. We thought our approach would meet the needs of all farmers. We explained ourselves at a meeting of 100 farmers and asked for their feedback. However, we were quite surprised when they said that neither options suited them and that we should make a 240sqm unit, which can get them about Rs 5000 monthly profit, instead.
Based on that feedback, we quickly embarked on making a 240sqm structure and went back to the farmers. We were expecting five farmers to sign up on that day. But to our surprise, 15 of them signed up. For the first time, I experienced the power of listening to the customer. The farmers asked for an option that was perfectly suitable to them because we did not go to them to sell, but to offer a meaningful solution instead. It reminded me that dignity is the key for development.
Our team was able to learn about what farmers wanted because we dealt with each other as equals. I knew that we had to win their trust, which doesn’t happen when a false sense of authority is extended. When I was driving back home that evening and reflecting on the farmers’ suggestion, it suddenly struck me that, as the World Bank reports, a household of five needs Rs 4,800 per month to stay above the poverty line. I realized that the first requirement of any farmer is to earn enough money to avoid poverty and the smaller option (100sqm unit for Rs 2,000 profit per month) wasn’t large enough.
In late October, Niti Aayog, the think tank of the Indian government, proposed some radical changes in the current laws and regulations applicable to the agriculture sector, with the goal of doubling Indian farmers’ incomes by 2022. This is an important goal to keep small farmers—who produce 80 percent of the global food supply—excited about farming. But we need solutions focussed on their problems if we want to reach that goal. If we want to change farming in India in such a significant way, we need a new type of leadership that listens to farmers’ voices, needs, pains and aspirations. It requires the ambition to learn constantly, the wisdom to admit failure, and the courage to start again.
The One Acre Fund in Africa embodies this approach. They value treating farmers as entrepreneurs with their ‘Farmer First’ approach. They provide an end-to-end package for small farmers: they procure high quality seeds and fertilizers, transport them to farmer locations, offer farmers these inputs on credit, train them on best practices and finally help the farmers sell produce after it is harvested. Today, One Acre Fund has more than 3,00,000 farmer ‘bosses’ who’ve increased farm incomes by more than 100 percent.
When designing a startup there are generally two approaches: to be interesting or to be interested. Being interesting is all about doing things that are deemed cool, looking for more valuation for the business, looking for promotion in the job—it’s all about the person designing the startup. Being interested is about being curious about other people and figuring out ways to make their lives better. It is, therefore, so much better to be interested than interesting.
Listening to the voices of consumers is not an act of charity. It is the smartest way to do business. So often, companies that work for the poor and underprivileged get caught up in the assumption that they know it all. By putting our personal biases and prejudices aside, we can listen more to our potential customers. Then we can build products and services with the potential to create gains, increased incomes, relieve pain points, and reduce time, cost and effort in getting something done. Only then will we improve our chance of success, and the ability to scale up and create sustainable businesses.
Whether in Africa, South Asia or Latin America, the small farmers who feed us too often go to sleep hungry. We are living in a world that is driven largely by capitalism and constantly updated technology. If this technology is used to fix the broken systems and driven by those who most need it, farmers who feed us—like those in Narayanpur—can see better days.
Image Credit : Venu Gopal Goundla