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In a previous Think BIG article, we talked about the need to draw up your vision (Do you know where you want to be in 2024?), and perhaps more importantly, the need to stay focused on your chosen path and ensure that every significant action you take contributes towards realizing this vision (How is this contest aligned with your vision?).
Articulating a vision is an easy task - staying on course and backing your vision, through good and bad times, is quite a challenge. Not everybody does this successfully, but those who do, achieve scale beyond the ordinary. They Think BIG and grow BIG. One such firm - the worthy winner of the Think BIG Advisor Award 2014 for Strategic Vision, is Trade Net Stock Wealth, Kolhapur, run by Sandeep and Samir Kulkarni. Here is the citation that we carried for their award :
Think BIG Advisor Award for Strategic Vision
Our winner for this year's award for strategic vision started out as a two member team running an equity broking business in Kolhapur, Maharashtra in 1997. Undaunted by the relatively small size of the equity market, they decided to build an equity focused business differently. They created their own set of channel partners, whom they groomed, trained, gave leads, helped make viable, and then got them on their own to expand their franchises in various towns within a 200 km radius of Kolhapur. Today, their firm employs 100 people across 9 branches in Southern Maharashtra, has 22 active franchisees in the region and handles client assets in excess of Rs.800 crores - 200 crs in mutual funds and 600 crs in equities. Their firm serves over 15,000 clients, 5000 of whom own mutual funds.
For their strategic vision of seeing a BIG market opportunity that few believed even existed in and around Kolhapur, and for pursuing the vision and executing it so successfully, the Think BIG Advisor Award for Strategic Vision goes to Samir and Sandeep Kulkarni, TradeNet Wealth, Kolhapur.
Samir Kulkarni (third from left) receiving his Think BIG award from Himanshu Vyapak, Deputy CEO, Reliance Capital AMC and Vijay Venkatram, Wealth Forum. Team RMF applauds Samir's efforts.
We spoke with Sandeep and Samir about what prompted them to think BIG about equities in 1997, when markets were listless and what were the some of the key decisions they took to ensure that they stayed on track to realizing their vision, despite the significant turbulence of equity markets over the last 17 years of their business. There are many factors that have contributed to their huge success, but four factors stand out as great examples of backing their vision and staying committed to the path they had chosen.
Do what it takes to address the investor's pain point
Sandeep and Samir understood that a business of scale can only be built if you satisfactorily address the investors' key pain point. They started out in 1997 as stock brokers - and stock broking in those days meant lack of transparency. Investors never knew whether they are getting a fair price for their trades - more so, when you talk about investors in small towns like Kolhapur. Back in 1997, when tech winds began to sweep metro cities and electronic trading was ushered in, some of the larger brokers in the metros opted for VSAT terminals to enable clients to see live prices and determine exactly what price they are getting for their trades. It was a sea change in investor service, but was still largely confined to big brokers in large cities. Sandeep and Samir were committed to transparency and understood that the foundation to scale lay in differentiating themselves on this front, however costly it may seem in the short run. They took up a VSAT terminal in Kolhapur - the first one in their area - at a cost of Rs.12 lakhs - which in 1997 was a huge investment in technology, and which even today, 17 years later, will appear too huge an investment in technology for a start up financial advisory firm. It was a struggle to fund this costly decision, and the only thing that kept them from backing away was their conviction that this will be a stepping stone towards the scale that they dreamt of.
Sure enough, this decision straight away put them head and shoulders above competition in their market. It brought in new clients, and equally importantly, it brought in channel partners who were keen to leverage the superior infrastructure and client service that TradeNet was able to offer. Investing in solutions that address investor pain points rarely turn out to be bad investments in the long run, however costly they may seem in the short run.
Invest and expand in bad times
Usually entrepreneurs expand their business when they have tailwinds supporting them, and are wary of any form of spending in downturns. Sandeep and Samir did the opposite - and its paid off hugely for them. The years 2001 to 2003 were terrible for the stock broking business - nobody wanted to go within an arms length distance of stocks and shares. This however did not for once deter TradeNet from pursuing its ambitions. These were the years they chose to expand their branch network - Karad in 2002 and Ratnagiri in 2003. These were the years they roped in franchisees, trained them diligently, gave them leads to get some business momentum going, got them on their feet and helped them set up successfully franchise operations in towns around Kolhapur. When equity markets started looking up from 2004, TradeNet was strongly poised to capture the upturn fully and gain market share in an expanding market. It takes conviction in your own vision to invest in your business when the chips are down - but the fruits of such an effort are almost always well worth the risk.
A key factor that boosted their conviction in bad times and gave them the courage to expand when the chips were down was the guidance from the promoters of Motilal Oswal Securities, a firm that TradeNet associated with as a franchisee in 2001 and has remained with ever since. Mr. Motilal Oswal and Mr. Raamdeo Agarwal gave valuable guidance, advice, and innovative business ideas to Sandeep and Samir through the tough times of 2001-2003 and then again through the 2008-2010 period, when markets again were in poor shape.
Lose the battle, but win the war
There are times when you need to take tough decisions which you are convinced will help you achieve the scale you aspire for in the long run, even if it means sacrificing market share in the short run. Backing your conviction in your long term model, and seeing your business lose market share every week, takes tremendous courage. Sandeep and Samir did just that when they opted to set up Kolhapur's first electronic depository participant business in 2003, at a time when demat wasn't compulsory. Pay in of shares in those days was a manual process, and getting every client to sign all papers in time for meeting pay-in obligations meant that you could never really build a scale business. TradeNet introduced a compulsory Power Of Attorney model in 2004 to simplify processing - a decision which was different from market practice in Kolhapur, and which saw some client resistance initially. They tried their best to explain the virtues of the model to clients who were unsure, and stuck to their decision even when they saw some clients walking out as a consequence. But they were very clear about one thing : if you really want scale, you must have scalable processes. Make every effort to take every client with you - but if there are some who won't come, its best to part way rather than compromise your chosen path. They lost market share in the initial months, but more than made up for that loss in subsequent periods as they were able to rapidly scale up, thanks to an efficient and scalable process, while others struggled to build scale with labour intensive processes. Its better to lose a battle, if that helps you win the war.
Follow your clients, and you will automatically build scale
Having built up a large retail stock broking business, TradeNet saw an opportunity to diversify into mutual funds in 2006. Being a highly retail centric player, TradeNet realized the immense benefit that mutual funds offered retail savers and the scalability of a retail advisory and distribution business. In 2008, when mutual funds became a taboo, much like everything connected with stock markets, they began aggressively pitching debt funds to retail savers. Today, their mutual fund AuM stands at an impressive Rs.200 crores, and they are busy making plans to grow this 5 fold in the next 5 years.
Over the last 5 years, Sandeep and Samir saw the huge interest that their clients had in real estate, and the complete lack of transparency in this business. Exactly what prompted them to get into stock broking at the outset, is what they saw in real estate. That was enough to convince them to get into residential construction as a business vertical. They have already successfully completed 4 projects and are now working on the 5th. Their calling card is the same as it originally was : transparency in transactions, integrity in delivery, commitment to investor interests. A captive client base that has seen these qualities in TradeNet have readily lapped up their residential projects, making this diversification a great success. Once you build your business on a sound base of customer centricity, you will find it very easy to follow your clients to whichever investment avenue they choose, as they trust you to do the right thing for them.
To conclude
As we said earlier, articulating a vision is the easiest part - doing everything it takes to make this vision a reality is the really tough one. Sandeep and Samir Kulkarni have shown us exactly what it takes to back your vision, especially in bad times, and stay focused on your chosen path, no matter what.
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