Forbes India October 14, 2016

the glaxo turnaround
Price rs. 110. october 14, 2016
Cloud
100
the
Coolest
Companies
in teChs
hottest
area
pawan munjal
Chairman,
MD & CEO
Hero Motocorp
sPecial
rePort
tiMePieces
of 2016
northern giants
heros
second act
THE CHALLENGES OF THE PAST FIVE YEARS ARE BEHIND IT.

PAWAN MUNJAL IS NOW PREPARING HERO MOTOCORP, THE
WORLDS LARGEST TWO-WHEELER MAkER, FOR THE FUTURE
plus
apollo tyres l Dabur inDia l pvr
www.forbesindia.com
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editors note
North India may not top the investment charts but is home to some of the countrys biggest companies
Titans of the North
best,
Sourav MajuMdar
editor, Forbes India
sourav.majumdar@network18publishing.com
@TheSouravM
4 | forbes india october 14, 2016
hile western and southern India have been

at the centre of discussion relating to Indias
business ecosystem, northern India, some
may say, needs to claim its rightful place in the
countrys economic landscape. While there are pockets where
economic activity has been well below potential, some states and
regions are now gearing up to take advantage of the enormous
opportunities they have at their disposal, making a serious bid
to attract investments. Venture Intelligences Indian Private
Equity Trend Report 2016, on private equity and venture capital
investments, shows companies based in Western India accounted
for almost 40 percent of PE investments in value terms in 2015,
while South India companies came next with a 32 percent share
and those from North India finished third with 22 percent.
But rankings aside, NCR and the rest of northern India
do boast of some of the biggest names in corporate India
companies with pedigree, heft and serious clout. This issue of
Forbes India presents a selection of a few of the biggest names
from the north, and takes a look at how they are preparing
for the next stage of growth. Take the Pawan Munjal-led
Hero MotoCorp. The worlds largest two-wheeler maker
has demonstrated the resolve to retain hard-earned market
leadership despite its break-up with its joint venture partner of
26 years, Honda Motor Company. After an initially challenging
five years following the split, where Hero saw an erosion in
market share, todays Hero MotoCorp is future-ready, with
plans to launch a slew of models to dominate the market. Apollo
Tyres of the Kanwars is another example of how an Indian
thoroughbred has faced setbacks in its attempts to go global but
has stuck to its game plan and is now giving shape to a strategy
to tap new markets, having learnt from experience. Ajay Bijlis
multiplex company PVR, on the other hand, is drawing up
new initiatives to remain ahead of the curve as the world of
entertainment presents several options for the consumer and,
consequently, new challenges for the movie exhibition business.
FMCG major Dabur, another company in this selection, is
confident of a pick-up in consumption demand, and isnt too
worried about Patanjali Ayurved emerging as a disruptor.
Elsewhere in this issue, we also bring you a fascinating story
of how Andrew Witty, the CEO of GlaxoSmithKline, has been
putting in place a turnaround plan for the drugmaker brick by
brick which may well make the task of his successor much easier.
Theres also the exclusive Forbes ranking of the hottest private
companies in the cloud where Sridhar Vembus Zoho, which we
featured on the cover in our June 10 issue, figures at number 66.
Contents
/ OctOber 14, 2016
VOlume 8 Issue 21
on the Cover
NortherN
Giants
46 | Past tense, Present
PerfeCt, future ready
In 2011, obituaries were written

after Hero MotoCorp split with
Honda, its partner of 26 years.
Five years on, the company has
proved its detractors wrong and
continues to be the largest player
in the two-wheeler segment
Pawan Munjal, chairman, MD

and CEO of Hero MotoCorp,
has always wanted to
build a strong Indian
brand and succeed
WE valuE yOur fEEDbaCk.
Write to us at: forbes.india@
network18online.com
letters may be edited for brevity.
read us online at www.forbesindia.com
On the cover & this page: Amit Verma
Digital Imaging by: sushil mhatre
OctOber 14, 2016

uPfront
24
Column
22 | Culture and suCCess

A bamboo ceiling or a culture
of shyness among Asians?
features
northern Giants
32 | on a Growth Path,
But miles to Go
Investor-friendly policies are being rolled

out, but global standards are still a far cry,
writes Ajay S Shriram
36 | GettinG a GloBal GriP
Apollo Tyres has emerged stronger from

its trials and is straddling international
and Indian markets with elan
linkedIn CEO Jeff Weiner says India is a unique market for the company
36
42 | foreiGners dont Question

Consumer firm valuations
Dabur India CEO Sunil Duggal on what

it takes to be a professional manager
in a family-owned firm
54 | the next show
How PVR, Indias largest multiplex chain,

is planning to consolidate its position
startuPs
72 | mother lode
Mumbai-based startup BabyChakra aims

to build a one-stop ecosystem for baby care
interview
24 | we are foCussed on made in india,

for india, By india
LinkedIn CEO Jeff Weiner reveals why India is such

an important market for the company
Cross Border
36: AmIt VermA; 24: srI mAnIkAndAn fOr fOrbes IndIA
28 | the two-wheeled Commuter Car?
Onkar kanwar, chairman of apollo Tyres, is not afraid of competition
76
Will an MIT engineers electric bikes

win over city dwellers in the US?
60 | veGan veterans
Loss of top client and internal

dispute hasnt stopped Follow Your Heart
from growing over 40 years
62 | the wizard of aPPs
The hottest stock in America, Twilio,

is a company youve never heard of
76 | Glaxo takes its mediCines

Andrew Witty inherited a drugmaker
sick with scandal and spent eight years
patching up his patient
8 | forbes india OctOber 14, 2016
andrew Witty, chief executive of british drug giant GlaxoSmithkline
OctOber 14, 2016

82
Walking the line: Three years into their journey, ariel Nelson (left) and lane Gerson say sales of their Jack Erwin brand of shoes are brisk.
revenue more than doubled in 2015, to $5 million, though direct-to-consumer competitors are already nipping at the companys heels
life
reCliner
88 | ChanGinG times
Why India is the new market to watch out for
84
82 | a steP aBove
tOP: JAmel tOPPIn fOr fOrbes
Jack Erwin disrupted the footwear market by cutting

out middlemen. Can it take the next leap forward?
84 | time to hit the BeaCh?
Flush from a run at the Asian VIP casino take, Aussie

operators gird for a wider resorts battle
reGulars
14 | letters
88
22 | leaderBoard
104 | thouGhts
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letters to the editor
Readers Say
Call from the wild
Refer to Journey To The End Of The

World (Issue dated September 30, 2016).
Human beings are playing with nature
and creating imbalance in the world.
As human population increases, forests
decrease, pushing the animals out. Also,
people slaughter animals to make money
by selling their hide or body parts. The
local and state authorities are often
involved in the poaching of animals.
Awareness programmes in villages and
small towns about the necessity to save
our wildlife are the need of the hour.
Mahesh Kumar, via email
twitter.com/Forbes_India
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Wealth of talent
Refer to India Is A Place For Low Cost

And High Brains (Issue dated September
30, 2016). We have world-class software
companies like Wipro, TCS and HCL here.
Besides, our government is encouraging
startups. It is nice to know that former GE

CEO Jack Welch respects Indian talent.
Chander Bhushan Vashishat, on the web
Friend of the poor
Refer to Janalakshmi Financial Services:

Lets get physital (Issue dated September
16, 2016). This is a model company in
micro lending. With a bank licence, it
could set up a model on the lines of the
Grameen Bank for the urban poor.
Timmana Gouda D, via email
Corrections & Clarifications

Issue dated September 16, 2016
On page 18 In
The Highest-Paid
Authors, a picture was
incorrectly identified
as that of John
Grisham (right). The
error is regretted.
Northern giants
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GSTA game changer for

the Indian economy
It is the appropriate time for
industries to gear up and strategise the
integration of GST into their operations
Is China being taken for a ride?
Didi Chuxing taking over Uber reassures us that the world is not
going to be dominated by a small number of Western brands
GST: The Global Synergy Tax

The passage of the GST Bill is a step in the right direction
and provides India the opportunity to reinforce itself
as a strong economy accelerating towards growth
The conversation clients

need to have with their
wealth managers
When wealthy clients engage professionals
to work with them, they broadly have
one demand above everything else:
Preserve what they have made and do
better than the prevalent risk free rate
LeaderBoard
aperture
US President Barack Obama shakes hands with

UN Secretary General Ban Ki-moon (left) after
addressing the annual session of the UN General
Assembly in New York on September 20. The terms
of both statesmen will end in a few months and
reminding Obama that they would soon be jobless,
Ban quipped: Mr. President, we need to find
something to do. I challenge you to a round of golf.
But dont challenge me to a game of basketball!
Carlo allegri / reuters
Two Swan Songs
$17.5 bln
value of all m&a deals in h1 of 2016 in

indiadown 4% yoyaccording to a
mergermarket report. business cards
were swapped in 162 transactions in
the period, down 26.7% yoy
LeaderBoard
Seal the Deal
On the Case
Protect your good name with a stylish business-card holder

for such an analogue anachronism in a
digital age, the business card still makes
a great first impression. And in some cultures,
theres important etiquette to consider. In
Japan, for instance, a business card (or meishi)
has its own ritual, including presenting the
card with two hands and with your name
facing the recipient. Upon receiving a card, one
takes a moment to read the name and offer a

slight bow. Its also considered rude to offer a
card that isnt pristine. Thats where the card
case comes in. A stylish card holderideally
with a pocket for giving and receivingsends
an important message to anyone you meet:
Your name matters.
miChael Solomon
PhotograPh by DaviD arky; Creative Style DireCtor: JoSePh DeaCetiS; Style aSSoCiate: Juan benSon; toP: ShutterStoCk.Com
2
5
1
6
1.
2.
3.
4.
5.
6.
7.
leather bmW 7 Series

card holder by
montblanc ($205).
honeycomb calf card
holder by a. testoni
($155).
Calfskin card holder by
valextra ($295).
Damier check pocket
organiser by louis
vuitton ($410).
Sport calf-leather card
holder by Coach ($75).
alligator-skin card holder
by ghurka ($750).
Calfskin card holder by
Fratelli rossetti ($190).
Rs 47,700 cr
the amount vodafone

is pumping into its
india operation as
competition heats up in
the country
LeaderBoard
RCom-AiRCel meRgeR
Will Debt Hobble Growth Run?
The merger will create Indias fourth largest telco, with the secondlargest spectrum portfolio
consolidation has been

imminent in the Indian
telecom sector for the last
few years, and the first
steps have been taken by
Reliance Communications
Ltd (RCom), the Rs
22,000 crore-telecom
services company of
the Anil Ambani-led
Reliance Group.
This March, RCom
shareholders approved
plans to merge the
wireless telecom services
operations of Sistema
Shyam Teleservices Ltd
with the company in an
all-stock deal valued at
Rs 4,500 crore. Then, on
September 14, RCom and
Aircel Ltd, another Indian
telco owned by Malaysias
Maxis Communications
Berhad, said they were
hiving off their respective
wireless businesses into a
separate, new entity, as an
equal joint venture between
the two companies.
The merger will create
Indias fourth largest telco
in terms of subscriber
base and revenue market
share (RMS), with the
second-largest spectrum
portfolio, assets worth
Rs 65,000 crore and a net
worth of Rs 35,000 crore.
A September 14 IDFC
Securities report says
the new entity will have
an RMS of 11.3 percent
and subscriber market
share of 15.4 percent; it
is expected to have an
Ebitda (earnings before
interest, tax, depreciation
and amortisation)
between Rs 4,600 crore
and Rs 6,000 crore. The
combined entity will enjoy
substantial benefits of
scale driving significant
revenue growth, and capex
and opex synergies with
a net present value of
around Rs 20,000 crore,
an RCom statement said.
The other ostensible
motive behind the move
was to reduce debt, a
chronic challenge for
RCom. As on June 30,
RCom had a net debt of

Rs 42,071 crore; in FY16,
its net debt-to-Ebitda
ratio stood at 5.5 times.
According to the plan,
RCom and Aircel will each
transfer Rs 14,000 crore of
debt to the new company
in addition to a liability of
Rs 7,000 crore of deferred
spectrum payments
obligation, making the
new telcos immediate
net debt Rs 35,000 crore.
RCom said the transaction
will help it reduce its debt
by Rs 20,000 crore. But
half of the new entitys
debt should still show up
on RComs consolidated
balance sheet by virtue of
its 50 percent stake in it.
The leverage of the
new company is cause for
concern among analysts.
The deal generates scale
for both RCom and Aircel
to compete effectively with
RCom-AiRCel
Key StAtS
Assets
Rs 65,000 crore
Net Worth
Rs 35,000 crore
Revenue market Share*
11.3%
Subscriber market Share*
15.4%
Rank^
4th
*Estimated by IDFC
^Rank based on Revenue Market Share

and Subscriber Market Share
Source: Company, IDFC Report
larger players, the IDFC

report states. However,
sub-optimal quality of
subscribers, skewed
operations with limited
share in fast growing
category A and B circles,
complexities of three-way
merger, establishment of a
new brand and debt burden
would remain challenges
for the merged entity.
If the new entity has to
efficiently compete with
incumbents, and new
entrants like Reliance
Jiocontrolled by Mukesh
Ambanis Reliance
Industries Ltd, it has
announced free voice calls
and rock-bottom data prices
on its 4G network; it has
also deposited Rs 6,500
crore in earnest money
with the department of
telecom for an upcoming
spectrum auctionit will
have to invest substantially
to upgrade its infrastructure
and expand operations.
And a leveraged balance
sheet may not give it the
financial leeway to do so.
These concerns reflect in
RComs stock performance
since it announced the deal.
Between September 14 and
19, its share price fell 4.3
percent on the BSE, while
the bourses benchmark
index gained 0.92 percent.
- Aveek DAttA
(Disclaimer: Reliance Industries

is the owner of Network 18,
publisher of Forbes India)
OctOber 14, 2016
forbes india | 17
Amit DAve/ ReUteRS; top: SHAileSH ANDRADe / ReUteRS
New entity will have benefits of scale, but existing debt can hinder required investments
Rs 2.37 cr
The average pay of MDs
and CEOs of NSE-listed
companies in 2015-16,
according to PrimeDatabase
LeaderBoard
STaTE Of MiND
solutions
Insights From
the Corner Office
93
KPMG polled 125 Indian ceos as part of

the India ceo outlook 2016 to understand their
confidence and concerns. Heres what they said
Innovation
is the need
of the hour
46
ConCerns
All figures in percent
92
92
The loyalty of their

customers due to
multiple choices in
the market
Regulations
inhibiting business
growth
89
84
82
Recognise
cyber risk
as a key
management
responsibility
51
Undertake
M&A in the
next three
years
Organisational
restructuring
is critical
and their
company will
be a different
entity in the
next
three years
28
Looking
at data
analytics
as a leading
investment
area in their
organisation
FaCtors impeding
growth oF Companies
6
11
Cost of
doing
business
The quality of data they

rely on for decison-making
77
Others
Access to
talent
The relevance of
their products/
services three years
from now
Losing pace to new

technologies
12
Current
competitors
Disruptors
81
New entrants
disrupting their
business model
Domestic
economic
factors
10
Reputation risk
18
Technology
21
Global
economic
factors
Compiled by N Madhavan
LeaderBoard
cash kings
Decade of Dre
over the ten years forbes has tracked

the top 20 Hip-Hop Cash Kings, the
highest-earning rap stars have pulled in an
average of $22.5 million per act per yearor
a combined total of $4.5 billion pretax. The
king of kings is rapper-producer Andre Dr.
Dre Young, who has accounted for roughly
a quarter of that three-comma haulalmost
none of which came from his music. The
NWA cofounder launched Beats by Dr. Dre
in 2006 and took home $620 million when
Apple acquired the company in 2014 for
$3 billion. Further proof that rhyme pays.
2009
youNg jeeZys
hit album The Recession

pays offwith irony. He
lands on the list
for the first time (at
No. 20 with $6 million)
while the economic
downturn depletes his
peers earnings.
becomes the first

and still onlyCash
Queen (No. 15,
$6.5 million) thanks
to mammoth Pink
Friday album sales.
2010
Drake makes his
-zack omalley greenburg and natalie robehmed
2007
Coca-Cola buys
Glacau, maker of
Vitaminwater, for
$4.1 billionand
50 ceNt cashes
out $100 million from
his stake, captured in
his 2008 total.
2011
Nicki MiNaj
Cash Kings debut (No.

11, $10 million) from
ad deals with Sprite
and Virginplus a
chart-topping album,
Thank Me Later.
2008
jay Z signs a
ten-year, $150 million

music and touring
deal with Live Nation,
creating his label
and management
company, Roc Nation.
1. 50 Cent
$150 million
2. Jay Z
$82 million
3. Diddy
$35 million
4. Kanye West
$30 million
5. Timbaland
$22 million
1. Jay Z
$34 million
1. Jay Z
2. 50 cent
$35 million
$32 million
3. Diddy
$63 million
3. Kanye West
$30 million
4. Akon
$21 million
$30 million
$28 million
4. Timbaland
$25 million
$21 million
5. Dr. Dre
$20 million
$20 million
4. 50 Cent
totaL
earNiNgs
froM the
top 20
1. Jay Z
2. Diddy
$20 million
2. Diddy
$37 million
4. Lil Wayne
$35 million
$20 million
5. Dr. Dre
$17 million
2007
$20 MLN
2. Diddy
3. Kanye West
$16 million
4. Birdman
$15 million
4. Lil Wayne
Dr. Dres
earNiNgs
$351 MLN
1. Jay Z
3. Akon
$15 million
2008
$515 MLN
$15 MLN
2009
2010
2011
$314 MLN
$307 MLN
$265 MLN
$13 MLN
$17 MLN
$14 MLN
Hip-Hop
Cash Kings, 2016
HIP-HOP HALL OF FAME
(200716 earnings)
1. Dr. Dre
1. Diddy
$620 million
$62 million
2. Diddy
2. Jay Z
$60 million
$53.5 million
2. Jay Z
3. Dr. Dre
$60 million
$41 million
4. Drake
1. Dr. Dre
2. Jay Z
3. Diddy
Young black
Rockefeller
getting money like
a bank teller.
Im not a
businessman
Im a business,
man!
Dont worry
if I write
rhymes, I write
cheques.
$923m
$501.5m
4. Drake
$33 million
$38.5 million
5. Macklemore &
Ryan Lewis
5. Wiz Khalifa
$32 million
$435m
WUWHO?
pharma bad boy martin

shkreli bought the Wu-Tang
clans secret album for a
reported $2 million in 2015
not nearly enough for the
hip-hop collective to land
on the list.
2014
$24 million
6. Nicki Minaj
$20.5 million
7. Pitbull
$20 million
8. Pharrell Williams
$19.5 million
9. Kendrick Lamar
$18.5 million
10. Birdman
$18 million
11. Kanye West

$17.5 million
Apple buys Beats

for $3 billion;
Dr. Dre gets
$620 million
pretax.
12. DJ Khaled
$15 million
13. A$AP Rocky

$14.5 million
14. J Cole
$14 million
2012
14. Lil Wayne
Dr. Dre gets

first nine-figure
payday after HTC
buys half of Beats
for $300 million.
$14 million
2014
14. Macklemore
& Ryan Lewis
$1.047 BLN
$14 million
17. Snoop Dogg

$12.5 million
$11 million
2015
Drake inks an
eight-figure deal to
premiere his new
releases exclusively
on Apple Music.
2013
1. Dr. Dre
$110 million
2. Diddy
$45 million
3. Jay Z
jay Zs Magna
Carta Holy Grail
goes platinum
before its launch
when Samsung
pays $5 million for
1 million copies.
2. Jay Z
$10 million
2016
5. Pharrell Williams
More at
forbes.coM/hip-hop
$39.5 million
4. Kanye West
2. Jay Z
$33 million
$43 million
swiZZ BeatZ
4. Dr. Dre
3. Drake
1. Diddy
$27 million
$10 million
20. Ludacris
gets a multi-year,
multi-million dollar
deal to become
Bacardis global
creative director.
$56 million
$50 million
5. Lil Wayne
$10.5 million
20. Rick Ross
1. Diddy
$60 million
$38 million
$35 million
19. Swizz Beatz
$32 million
3. Dr. Dre
$40 million
4. Nicki Minaj
$29 million
5. Birdman
$21 million
2012
$427 MLN
2013
$366.5 MLN
$110 MLN
$40 MLN
2015
$620 MLN
2016
$436 MLN
$458.5 MLN
$33 MLN
$41 MLN
october 14, 2016
forbes india | 21
Bryan chrisTie Design; porTraiTs By Brian Taylor Jim cooper / ap; Bruce glikas / geTTy images;
prince Williams / geTTy images; scoTT legaTo / Filmmagic / geTTy images; kevin maZur / Wireimage / geTTy
images; Tim mosenFelDer / geTTy images; Jamel Toppin (2)
18. Eminem
thought leaders
rICh Karlgaard
thomas KuhlenbeCK for forbes
culture and success

on a recent steamy saturday
morning in Hong Kong I made the
very slow ten-minute walk from the
Hyatt Regency to the campus of the
Chinese University of Hong Kong.
The walk was slow because my
northern California bones found the
heat and humidity oppressive and
I didnt want to arrive in a sweatsoaked shirt. But there was another
oppressive factor to my day. I was
scheduled to appear on campus on a
panel hosted by HPAIRthe Harvard
Project for Asian & International
Relations. My panels topic: The
Bamboo Ceiling. What could I, a Caucasian son of
the American Midwest living in Californias Silicon
Valley, credibly say about the bamboo ceiling?
I resolved to stick to the facts. Google search had
armed me with manyand they were damning. In
Silicon Valley, nearly all of the large employers are
tech companiesApple, Intel, Google, Facebook, etc.
Between 25 percent and 30 percent of professional
tech employees are Asian-Americans, mostly first- and
second-generation, yet only 14 percent of the corporate
hierarchythe C-suiteis Asian-American. The most
successful company in the worldApplehad precisely
zero Asian-Americans on its list of corporate leaders.
I came to my panel armed with these embarrassing
facts. My intent was to relay them and shut up. No opinion
of mine was going to have any credibility with a Hong
Kong moderator and a panel made up of Hong Kong
Asians, an Asian-American working for a Vietnamese
venture capital firm and a corporate executive from
Jordan who lived in Singapore. The audience of 150
students were mostly from Hong Kong, mainland China,
India and other Asian and Middle Eastern countries.
When the moderator had finished asking her rather
predictable questions, she invited the students to ask
any questions they had. Bang! The first one was from a
young Chinese mainlander. What about Asian shyness?
None of you talked about that! Its a bamboo ceiling.
Suddenly, there it wasthe cultural elephant in the
room. All of the panelists had professional reputations
to protect, so we hadnt broached that very personal
topic. Though once terribly shy myself, mine had been
a Norwegian-American-Midwestern kindOle loved
Lena so much he almost told her so goes the joke. I
22 | forbes IndIa OctOber 14, 2016
had plenty to say about shyness, its

roots and how it creates barriers
to opportunity. But say it here?
The young womans question turned
the panel upside down. During the
remaining time it was all anyone on
the panel or in the audience wanted
to talk about. Shyness is a common
affliction among people everywhere
but acutely felt among Asians.
Entire books have been written on the
bamboo ceiling and the roles of shyness
and introversion. It must be said that
introversion and shyness are not the
same thing. Introverts arent necessarily
shy. They simply prefer to restore themselves through
solitude and a good book. Extroverts feel energised by other
people. The worst thing to be, however, is an extrovert
who is shy, admitted an Asian HR manager on my panel.
You are energised by people, but fear holds you back.
What Is Your Culture?
Everyone brings baggagegood and badfrom his or her

culture. A surprise bestseller this summer was Hillbilly
Elegy: A Memoir of a Family and Culture in Crisis (Harper,
$27.99) by JD Vance. The author is a San Francisco venture
capitalist and Yale Law School grad who was born in a
small Ohio town. While growing up, Vance split his time
between there and another small town in Kentucky. His
mother was married and divorced several times, with
numerous boyfriends filling in the gaps. Vances only
role model was his chain-smoking, swearing-like-asailor grandmother, who held Vance to high standards.
Vances memoir is about Americas white underclass,
specifically the Scots-Irish who populate Appalachia.
Central to this culture is honour. But, writes Vance, as
economic prospects fell, the honour became perverted into
a binary fight-or-flight response to lifes challenges. The
fights were physical and fuelled by alcohol; the flights were
people not showing up for work and fathers skipping town.
In these politically correct times, it seems rude to
talk about culture. But succeeding in a hyperconnected
economy depends on our ability to leverage the best
and transcend the worst of our cultural heritages.
What is your heritage? How has it helped
you in your career? What have you had to
leave behind? Write and tell me.
Rich Karlgaard is the publisher at Forbes
interview
jeff weiner
We are focussed
on Made in India,
for India, by India
With a user base of over 37 million, India is a market LinkedIn cannot
ignore. With its recent India-specific product launches, the platform
has firmly set its sights on the long term, says CEO Jeff Weiner
By DeBojyoti Ghosh
Sri Manikandan for forbeS india
n June this year, technology

giant Microsoft corp
announced the acquisition
of professional networking
platform LinkedIn in an all-cash
deal valued at $26.2 billion (around
rs 175,000 crore), which is
expected to close by the end of this
calendar year. While analysts feel
the acquisition is a smart move by
Microsoft to ramp up its enterprise
business, LinkedIn views it as an
opportunity to expand its platform to
over a billion Microsoft customers.
In an interview with Forbes India,
Jeff Weiner, ceo, LinkedIn, says he
is confident about product integration
between the two companies and that
each can leverage the others core
strengths. During a recent visit to
IndiaLinkedIns fastest growing
market since it began its journey
in the country in November 2009
with over 3.4 million members
Weiner talked about the synergies
with Microsoft, LinkedIns plans
for India and what makes the
country one of its key research and
development (r&D) bases driving
innovation globally. edited excerpts:
Q LinkedIn launched three new
products in September [LinkedIn

Lite for mobile browsing,
LinkedIn Placements to help
students find job placements and
the LinkedIn Starter Pack for
startups and small- and midsized businesses], for the Indian
market. What made you develop
such country-specific products?
India is one of the

two markets, outside
the US, where we do
local development [the
other being china]. In
India, right now, we are
focussed on Made in
India, for India, by India.
this is something we are
increasingly investing
in and it is evident from
the products that we
have launched. We
have increased our
focus on making our
platform more relevant
by creating localised
products and solutions.
India continues to be one
of our most important
markets as our business
continues to grow.
I think there is a big
opportunity here for learning and

development, which is going to
be one of our largest businesses
going forward. there are a lot of
opportunities for us in this country.
Q How important is India as a
market for LinkedIn? Give us
some idea in terms of business
growth and user base.
profile
Age: 46
Designation: Ceo,
Linkedin
education: bS in
economics from the
wharton School of
the University of
Pennsylvania
Career: Spent over 20
years in the internet
space spanning roles
across corporate and
product development,
business operations and
strategy. Prior to Linkedin, he was an executive
in residence at venture
capital firms accel
Partners and Greylock
Partners. He served as
executive vice president,
network division, Yahoo!,
and was the founding
partner of windsor
Media and vice president,
online, warner bros
India is the second

largest market [behind
the US] in the world
for LinkedIn, with a
membership base of
over 37 million [the US
has 130 million-plus
members]. We are seeing
some of our fastest
growth rates in terms of
adding new members,
engaged feeds sessions,
unique job applicants and
job applications here.
India is also one of our
fastest growing markets
in terms of messages
sent through our newly
redesigned messaging
capability. India is one
of our best-performing
markets globally across
Linkedin Ceo jeff

Weiner says the kind of
talent that the company
recruits in india is
similar to what it does
in the silicon Valley
a whole host of important consumer

metrics. It is a unique market and of
strategic importance to us. In 2011,
we set up our first technology centre
outside the US [Mountain View,
california] in bengaluru. We have
more than 650 employees in India.
Q The R&D team in India
has been among the major
contributors to LinkedIns
global initiatives. What

kind of work does the R&D
team undertake here?
the work has been evolving over

time. When we built our bengaluru
office, we started to recruit some
people to our engineering team
and they were focussed on quality
assurance. that evolved into network
operations support; so, we had 24x7
support that was extremely valuable.
but over the last several years, we

have started to invest aggressively in
our software engineering capability
in our bengaluru centre. And that
has enabled us to develop products
in India for the Indian market that
can potentially be leveraged globally.
It has been an important evolution
for us. the kind of talent that we
recruit here is similar to what we do
in Silicon Valley. the bar is set very
october 14, 2016 forbes india | 25
interview
jeff weiner
high and bengaluru has an incredibly

capable, high-quality pool of talent;
and that is going to grow further.
Q Could you share some specific
examples of work done at
the R&D centre in Bengaluru
for the global platform?
We do a lot of work here with

regard to ensuring that the feed on
our platform provides great quality
experience. And that includes
filtering out irrelevant content that
members have been flagging off. our
team in India does an amazing job of
ensuring that the feed continues to
be of the highest quality. And then
of course there is the work that we
have been doing here on LinkedIn
Placements and LinkedIn Lite
[which the company claims provides
a faster browsing experience even
in areas of patchy connectivity].
Initially, LinkedIn Lite will be
available only in India but, with
success, we are looking forward to
taking it to other emerging markets.
Q Apart from India, LinkedIn
also has country-specific
initiatives in China. Give us
some details about that.
the motivation behind local

innovation efforts is the sameto
become even more responsive to
opportunities to meet the needs
of our members. LinkedIns chitu
app in china (in simplified chinese
language) was made in china, for
china. the chitu app was launched
in 2015 to better serve the needs of
broader segments of professionals
living and working in tier 1 to tier
4 cities in china. these include
career starters or young professionals
who may be more comfortable
communicating in chinese, and
prefer a more casual approach to
professional networking and learning.
Q Currently, India is seen as
one of the burgeoning startup
markets in the world. How do
you see LinkedIn tapping into
this rapidly growing space?
one of the products that we launched

recently for the Indian market
is the LinkedIn Starter Package,
which is customised for startups
to facilitate the way in which they
hire and brand themselves. We will
continue to figure out ways in which
we can package the right content
for startups cost-effectively.
Q It is now three months
since the acquisition [by
Microsoft] was announced.
Tell us about the integration
and some of the things that
youre looking to do together.
With regard to Microsoft, one of

the things that we are most excited
about is the ability to expand our
India is one
of our bestperforming
markets globally
across a whole
host of important
consumer
metrics.
platform to over a billion Microsoft
customers. there is a lot that can be
achieved through product integration
with Microsoft office, Windows
and their other platforms. And
the way in which we can leverage
some of Microsofts infrastructure
and advanced technologies such as
Artificial Intelligence, conversational
computing, etc. We can also
leverage on the work Microsoft is
doing with voice recognition, video
infrastructure and the cloud.
Q In the long term, how
aligned is LinkedIns
mission with Microsofts?
When I first sat down with Satya

[Nadella, Microsoft ceo], we
were struck by the alignment and
sheer sense of purpose and how
similar our missions were. And,
I think that makes a very strong
foundation as we go forward. the
next thing that caught my attention
was the possibilities in terms of
product integration. there were a
lot of things that we talked about
even in our first meeting. And ever
since we signed that definitive
agreement, we continue to build on
all those ideas. We are even more
excited today than we were then.
Q You met Prime Minister
Narendra Modi during your
recent visit to India. What are the
key takeaways from the meeting?
theres a lot of alignment in our

vision in terms of stimulating
and reinforcing the spirit of
entrepreneurship, skills development
and creating economic opportunities
at scale. We particularly talked
about developing skills that can help
professionals get the jobs of today
and the future. We also discussed
areas like skills matching and
certification where we can work
together. Prime Minister Modi also
discussed an interesting idea about
connecting people in the rural areas
with entrepreneurs that can help
them further their professional goals.
Q What advice would you
give to Indias new breed of
startup entrepreneurs?
My first advice is to be specific in

terms of what you are trying to
accomplish. Have a clearly defined
sense of purpose and focus. Keep an
eye on the competitive landscape,
but dont get too consumed with the
competition and start playing their
game as opposed to playing your own
game. Stay focussed. Always come
back to the question: If you could
do only one thing, what would it
be? And make sure that you execute
and scale that extremely well.
CROSS BORDER
FaRaDay
The
Two-Wheeled
Commuter Car?
Already massive in China and popular in Europe,
electric bikes are making inroads in the US. An
MIT engineer thinks his throwback design will
win over city dwellers
easy rider: Faraday

founder adam Vollmer
and his electric
porteur glide up a hill
in San Francisco
ts 75 degrees, a warm day

in San Francisco, but Adam
Vollmer isnt sweating as
he mounts a steady grade
toward Mission Dolores Park.
I used to hate biking to work,
he says as he pedals along. Theres
this hill by my house that just
pitches straight up a wall. Now
its not so bad. Thats because
Vollmer, 36, a mechanical engineer
with the trim build of an endurance
athlete, can always get a boost
from his bikes hidden motor.
As the CEO and founder of
Faraday, a four-year-old electric-bike
company, he believes he can carve
out a profitable slice of the nascent
US market for e-bikes. The target
customer for his $2,500 machines:
People who want to get from point A to
point B in a dense urban environment
where driving and parking can be a
nightmare. Many commuters favour
e-bikes over manual models because
they allow you to zip to work at speeds
of up to 20 mph without breaking a
sweat. Others simply think theyre fun.
And ageing boomers, who may have
given up riding because of arthritic
knees or poor fitness, find that e-bikes
are getting them back on the road.
Faraday riders have options.

If they dont push the blue power
button on the back of the controller,
a rectangular box the size of a large
wallet that sits below the seat, the
Faraday works like a regular bike.
Once the motor, which is embedded
in the bikes front hub, is turned on,
the head- and tail-lights illuminate
and a thumb switch on the left
handlebar can select medium or high
power. Start pedalling and a sensor
in the crank activates the motor.
The harder the rider pumps, the
greater the motorised help, making
San Franciscos hills feel like flats.
Last year, e-bike sales in the US
came to $400 million, up from $100
million in 2012, according to figures
compiled by Edward Benjamin,
chairman of the Light Electric Vehicle
Association, an e-bike trade group.
Thats tiny compared with Europes
2015 sales of $5 billion and Chinas
sales of $10.8 billion. But Chinese
commuters use e-bikes because of
economic necessity and choking
pollution. Europeans have long
accepted bikes, including electronic
models, as a way of commuting. In
the US, where car culture prevails
and cycling has traditionally been
OctOber 14, 2016
forbes india | 29
TimOThy aRChiBalD FOR FORBES
By ShelBy Carpenter & SuSan adamS
CROSS BORDER FaRaDay
Bike Peddlers
The global e-bike market is big, but the USs share is small and fragmented
among many players
$10.8 bln
FARADAY 1%
EASY MOTION (BH) 3%
GREEN POWER 3%
SPECIALISED 5%
TREK 5%
OTHER 43%
$5 bln
JETSON 5%
SONDERS 6%
PEDEGO 7%
ACCELL 9%
$400 mln
CHINA
EUROPE
USA
viewed as recreation, e-bikes are

just now catching on. The US is
roughly ten years behind Europe,
says Benjamin. Even so, more than 150
e-bike brands crowd the American
market (see graphic). The two
biggest US-based e-bike makers, both
eight years old: Pedego, in Fountain
Valley, California, and ProdecoTech,
in Oakland Park, Florida.
Even carmakers have signalled
an interest in e-bikes. Back in 1997,
Lee Iacocca tried to start an e-bike
company, EV Global Motors, but he
wanted to sell the bikes through car
dealers. It flopped within three years.
Last October, at GMs global business
conference in Milford, Michigan,
the company showed a rendering of
a concept e-bike. As we look at the
trend in urbanisation, says a GM
spokesman, we want to make sure
we are exploring all the possibilities
to help people move around.
Likewise in 2015, Ford developed
prototypes for three foldable e-bikes.
What sets Faraday e-bikes
apart is their elegant design. While
competitors tend toward the clunky
and utilitarian, Faradays two models,
the Porteur and the Cortland, echo
British touring bikes from the 1960s.
Both sport steam-bent lacquered
bamboo fenders and brown leather
handgrips. Helped by improving
infrastructure, including dedicated
PRODECOTECH 13%
bike lanes and paths in cities like

New York, Minneapolis, Miami and
even Los Angeles, Vollmers sales
are popping, from $1 million in 2014,
the first year Faraday shipped bikes,
to $2 million in 2015. He expects
revenue of $4 million this year and
projects hell turn a profit in 2017.
In 2008, with mechanical
engineering degrees from Stanford
and MIT, Vollmer landed at IDEO,
the Palo Alto design firm famous for
crafting Apples first mouse. When
a group called the Oregon Manifest
invited IDEO to enter a contest to
reinvent the modern bicycle in 2011,
he assembled a team and got to work,
putting in extra hours on nights and
weekends. We were aware of electric
bikes as an emerging fringe category,
he says. We went out and tried a
lot of electric bikes and found them
really uninspiring. His goal was to
design a bike that was efficient, fun
to ride and beautiful. Driving past
the Tesla showroom one day, the
team settled on the name Faraday,
for the 19th-century British pioneer
of electromagnetic technology.
Faraday won the contest, and in
exchange for a small equity stake,
IDEO agreed to supply initial funding
and design services to help Vollmer
get the company off the ground.
He has since run two Kickstarter
campaigns that together brought in
another $365,000 and has raised funds

from angel investors such as Twitter
co-founder Biz Stone and former Tesla
sales VP Matt Eggers. Vollmer and his
six employees work in a 1,500-squarefoot office tucked into an alley
between the headquarters of Airbnb
and Pinterest in San Franciscos
SoMa neighbourhood. Vollmer
explored producing the bikes in the
US, but he quickly learnt that almost
all the worlds bike manufacturing
has moved to Asia. Faraday staffers
design the frames and electronics,
the parts are sourced in Asia and the
bikes are assembled in Taiwan.
Most Chinese e-bikes, which cost
around $300, use heavy, cheap leadacid batteries that run out of charge
in 20 miles. Since 2003, virtually all
European and American e-bikes rely
on lightweight lithium-ion battery
packs that can go up to 100 miles and
that fit inside a slightly enlarged down
tube (the piece that slopes from the
handlebars to the pedals). Faraday
bikes use front-hub motors, but many
e-bikes, like those made by Stromer,
the Swiss company that sells the most
expensive ones on the market at a top
price of $9,500, house the motor in
the rear hub. Treks ten US models
use motors mounted next to the
crank; the companys offerings include
$3,000 mountain bikes popular with
older riders who dont have the pep
for the strenuous sport but find they
can keep going under motor power.
Faraday, like most US e-bike
brands, uses so-called pedal-assist
technology, meaning the motor kicks
in only after the rider starts pedalling.
People want the sensation of riding a
bike, and they want exercise, Vollmer
says. They just dont want to work up
a terrific sweat. His market: People
who have an appreciation for bikes,
who ride a little already. Thats
Vollmer, who concedes he still takes
out his dusty 2006 Mazda if he wants
to head to the Napa Valley for the
weekend. But from Monday through
Friday, he says, I do everything I
can to avoid driving my car.
NortherN
Giants
The NorTh may have The poliTical

clouT of housiNg The NaTioNal
capiTal buT iT also has iTs share
of iNdusTry heavyweighTs who
have builT busiNesses ThaT are
besT-iN-class. Forbes IndIa
preseNTs a few sNapshoTs
NortherN Giants
By Invitation
On a grOwth
path, but
miles tO gO
While northern states
like Rajasthan and
UP have stepped
up investor-friendly
policies, much more
needs to be done to
attain global standards
of doing business
AjAy S ShrirAm
Chairman & senior managing director,
DCm Shriram Ltd
he diversity of the land and

the size of the populace
make Indias northern
region one of the most
sought-after destinations for certain
businesses. The unique geographical
setting (with many states being larger
than some European nations, both
in population and size) makes it
challenging, yet opens the doors to a
plethora of business opportunities.
While some common traits run across
the states, every region has its own
unique challenges and opportunities.
And I have seen the setting change
over the last quarter of a century.
DCM Shriram is a pan-India
company with a strong manufacturing
presence in Rajasthan and Uttar
Pradesh. For us, North India is
both a market and a supply source.
We have been running various
businesses successfully and seen
the industrial environment evolve
over the last 25 years. The dynamic
business environment in some
states has given us the much-needed
push, while some others have made
us struggle on various counts.
Let me begin on a brighter
note. With a conducive industrial
environment and a supportive state
government in Rajasthan, there have
been continuous investments for
both expansion and modernisation.
Rajasthan, with its investor-friendly
policies, focus on digitisation of
correspondence with the state
government, industry-friendly labour
reforms and infrastructure has made
itself a better business destination
A farmer sits outside a sugar

factory in Uttar Pradesh.
Deregulation of the sector
by the centre and the states
stable sugarcane pricing
policy, has resulted in the
predictability of the business
in the last two years
OctOber 14, 2016
forbes india | 33
ILLuStratIon: Sameer pawar; praShanth VIShwanathan / BLoomBerg VIa getty ImageS
NortherN Giants
By Invitation
than other states in the region. The

state governments initiative to
allocate resources and raw materials,
such as coal, through transparent
processes like auctions and online
bidding, can be an example for others.
Our presence in the state through
our integrated fertiliser and chemicals
complex in Kota has given us positive
growth over the last decade. Initiatives
such as Resurgent Rajasthan, which
facilitates speedy approvals and
follows up on large projects across
the state, are helping in creating a
favourable climate for industry.
Another major presence in the
northern region is through our four
modern sugar mills in central UP that
have resulted in a significant increase
in crop yields as well as farm incomes.
Deregulation of the sugar sector
by the central government, followed
by a more stable sugarcane pricing
policy by the state government, has
resulted in predictability of business
in the last two years. We hope this
approach will continue for the
ultimate benefit of the farmer.
The economy of UP is led by
the services sector; its the secondlargest sector contributing to the
Gross State Domestic Product
(GSDP). The agriculture sub-sector
contributes the largest share to the
GSDP, closely followed by trade,
hotels and restaurants. The emerging
sub-sector in this field is IT and
IT-enabled services. UP has started
promoting this industry in the Special
Economic Zone (SEZ) clusters of
Noida and Greater Noida through
incentives such as interest-free loans.
Recently, the World Bank ranked
UP tenth among 32 states and union
territories with regard to reforms in
improving the business environment.
Reflecting the true spirit and
nature of the Indian agrarian
economy, the share of agriculture
in the GSDP of the northern states
(excluding Delhi) continues to be
as high as 25 percent, as against the
national average of 16 percent.
However, the biggest change
that I have observed over the years

has been the growth in the share of
industry in the GSDP of some of the
northern states. Haryana, Himachal
Pradesh and Uttarakhand, which
were traditionally agricultural states,
have the highest share of GSDP from
industry. This dramatic change is an
outcome of incentives offered during
the last several years. Sustaining
this growth will require increasing
investments, constant government
support, easing out the land
acquisition process, simplification
and use of automation in processes
to begin a business, rationalisation
of tax regimes and efficient and
effective enforcement of contracts.
push FOr Change
Despite this sea change, the journey

has miles to go before global
standards can be attained. While
the country is trying to break into
the top 100 in the ease of doing
population can be put to work.

With its strong social and
infrastructure linkages, Delhi, along
with the National Capital Region
(NCR), is the obvious nerve-centre of
North India. However, it is unrealistic
to expect the NCR to provide support
to the entire economy of the northern
region. Therefore, decentralisation
is an essential prerequisite for
development to percolate to remote
parts, as well as keep a check on
the environmental challenges
facing the overburdened Delhi.
Lack of sufficient infrastructure
needs to be improved upon. Allweather rural roads and 24X7
electricity will help create jobs in
towns and villages. The proposed
Delhi-Mumbai Industrial Corridor
and the Amritsar-Delhi-Kolkata
Industrial Corridor offer huge job
potential for the north and need an
extra push. The construction sector
has a huge multiplier effect: It creates
the prOpOsed delhi-mumbai

industrial COrridOr and
the amritsar-delhi-KOlKata
industrial COrridOr OFFer
huge pOtential and need a push
business ranking (currently its at
130), all states, except Rajasthan, have
fared poorly on various parameters.
There should be a timetable for
improving performance and it should
be done in close cooperation with
industry, so that its meaningful
enough to attract investments.
While every state in the northern
region would need a different
growth strategy based on the local
conditions, the common factor that
can change the course of action
is skills development and job
creation. The time has come for us
to put job creation at the centre of
policy-making. Skilling is critical
to ensure that the large young
employment, as well as national

assets. What can also help to alleviate
poverty is the renewed focus on
agriculture to aid job creation with
adequate emphasis on value addition
to increase farmers incomes.
There is always scope for
improvement, and as long as the state
governments can ensure that statespecific action points are aggressively
pursued, investments will happen
and jobs will be created. History
will judge us on how we utilised the
demographic dividend. This window
is there for the next twenty years.
Let us take the necessary steps in
employment generation, reduction
in poverty and nation building.
Amit VermA
NortherN Giants
Apollo tyres
Onkar Kanwar,
chairman of Apollo
Tyres, is betting big on
the European market
at a time when most
Western companies
are looking East
I
GETTING
A GLOBAL
GRIP
Despite initial missteps in its pursuit
of international stature, Apollo Tyres is
still in the game. Along the way,
it has not lost sight of the Indian market
By SAmAr SrivASTAvA
n 2005, the Onkar Kanwar-led

Apollo Tyres was at a crossroads.
The tyre manufacturer had
just pulled out of its twoyear joint venture with French peer
Michelin. The partnership that was
forged to make radial tyres for trucks
and buses never took off because
the Indian market was not adopting
radial tyres at the projected rate.
Hence, for the first time in its 29-year
history, Apollo Tyres was without
a partner and, more ominously,
without a technological tie-up.
Kanwars younger son Neeraj, who
took over the day-to-day operations of
the Gurugram-based company from
his father in 2002, knew it was time to
sharpen its focus. The junior Kanwar
decided to take his 18-member
management team to Wildflower
Hall in Mashobra near Shimla for a
strategy session chaired by the Boston
Consulting Group. Three themes
emerged at the meeting. We had to
de-risk our business from the Indian
market by going global, become
self-reliant in technology and also
train our personnel, recalls Neeraj,
45, who is the managing director.
Measured against these objectives,
Apollo Tyres journey is still a work
in progress. Neeraj has tried his hand,
and in a manner of speaking, burnt
it, at taking the company global. (The
company sold its first acquisition
and the second is an unfinished
project. A third deal fell through.)
Apollo Tyres, and the tyre industry
in general, has also had a stroke
of bad luck in recent times. Cheap
Chinese imports and global woes
have impacted topline. For the year
ended March 2016, revenues were
down to Rs 11,793 crore from Rs
12,815 crore in the previous year as
the rupee appreciated by 6.25 percent
against the euro in the period.
pollo Tyres global

designs began to take
shape in 2006 with the Rs
OctOber 14, 2016
forbes india | 37
Courtesy: Apollo tyres
NortherN Giants
Apollo tyres
290-crore acquisition of Dunlop

Tyres Internationals South Africa
operations. Besides helping it go
global, the purchase would give
Apollo Tyres access to the technology
behind radial tyres, which it lost
after the tie-up with Michelin was
severed. (Apollo Tyres was able to
start a Rs 2,500 crore radial tyre plant
in Sriperumbudur near Chennai in
2007.) The deal came through Robert
Steinmetz, an Apollo board member
who had worked with the German
automotive company Continental
AG for most of his career, and not
through any traditional investment
banking channel. The company was
funding the all-cash deal through
internal accruals and, on the face of it,
there was little that could go wrong.
And yet, as Suman Sarkar,
president and chief business officer,
Apollo Tyres, explains, things soon
started to head south. Post the 2010
Fifa World Cup in South Africa,
there was a lot of industrial unrest.
Electricity rates rose rapidly and the
entire tyre industry went on strike
for a month. Cheap Chinese imports
to South Africa also caused a lot of
pain to domestic tyre manufacturers.
Moreover, labour costs in South
Africa rose rapidly to 28 percent of
the cost of making a tyre, compared
with 16 percent in Europe, 6 percent
in India and 3 percent in China.
This was clearly a risk the company
could not take. To make matters
worse, Apollo Tyres had the rights to
the Dunlop brand only in South Africa.
Why invest in building a brand
when you can only go so far with it?
asks Neeraj. Ultimately, the business
was sold to Japans Sumitomo
Rubber Industries in 2013, which
had the global rights to the brand.
Meanwhile, Apollo Tyres forayed
into Europe in 2009 with the purchase
of the Dutch brand Vredestein Banden
for an undisclosed sum. Again, in
2013, eyeing the lucrative US market,
the company made an aggressive
$2.5-billion bid for the Ohio-based
Cooper Tire & Rubber Company.
Apollo Tyres mD Neeraj Kanwar has relocated to London to focus on the European market
The deal could have catapulted

Apollo Tyres into the league of the
top ten tyre manufacturers globally
(the US market has shown a healthy
4-5 percent growth in the last two
years and there has been a big
decline in rubber prices), but it was
called off after opposition from the
American companys Chinese unit.
Currently, the Kanwars are making
a couple of big bets and, if it plays out
as planned, will place the company
in a different orbit. At a time when

most Western companies are looking
East, we are going to Europe,
explains Onkar Kanwar, 74, who
serves as chairman of Apollo Tyres.
(The Indian market is expected to
expand at 7-8 percent a year while the
European at 1.5-2 percent a year.)
The company is investing 475
million euros (around Rs 3,500 crore)
in a greenfield plant in Hungary and
also for a research and development
(R&D) centre in Frankfurt. It is

also investing Rs 2,500 crore in its
Sriperumbudur plant to double radial
tyre capacity to 12,000 tyres a day.
In line with the global stature
that he aspires for, Neeraj has
relocated to a London office to
ensure that his plans to capture
the European market with the
Vredestein acquisition materialise.
One of the main reasons why
we did this deal [with Vredestein]
is that the European market is far
more technologically advanced [than
India], says Kanwar. Sarkar and
Neeraj had visited the plant way
back in 2002 and were impressed
with its technology. When the
company came up for sale, they
jumped at the opportunity.
What the missteps with Dunlop
taught Neeraj was that acquiring an
international business is as much
about cultural integration, brand
building and technology transfer as
it is about making the economics
of the business work. A slip-up on
any of these counts would make the
acquisition a millstone. It is these
learnings that the company is making
good use of in managing Vredestein.
In the first 100 days itself, a plan
was made to utilise Vredesteins
best talent. A global R&D centre
was set up in The Netherlands.
The centre has developed a tyre
that can withstand speeds of 320
kmph besides snow tyres for Europe
and tyres for the Indian market
that last 100,000 kilometres.
Keeping with the Wildflower
Hall sessions resolve to train its
personnel, Vredestein employees
have been sent to Apollo Tyres
plants in India to showcase to them
what Indian values mean. Neeraj
proudly states that there has been
no significant loss of talent in the
Dutch company since the takeover.
Breaking into the European market
for after-market tyres (or replacement
tyres) has proven to be harder.
Here, Apollo has worked on a twopronged approach. Brand building
has been done through a tie-up with

English football club Manchester
United. Theyve also worked with
trade magazines to get Vredestein
Tyres reviewed. In Europe, these
reviews are taken seriously, says
Neeraj. In 2015, Apollo acquired
Reifencom, a German multi-brand
distributor of tyres, for Rs 322 crore.
This will help us significantly
scale distribution both online and
offline, says Kanwar. Currently,
the company has a 3 percent share
of the European after-market.
The last leg of the strategy is tying
up with carmakers to use Vredestein
tyres in cars as they roll out of
factories. Starting next year, some
models of Audi and Mercedes will
come with Vredestein tyres marking
a significant breakthrough for the
company. This should also help after-
and tyres are sold very differently.

There one dealer stocks everything
from truck tyres to car tyres and
two-wheeler tyres to tractor tyres.
Apollo Tyres knew that if it had
to get the dealers to push its brand,
it would have to be in all segments.
The company says it has started
selling 150,000 two-wheeler tyres
a month and hopes to take this up
to 350,000 a month by the end of
the year. (The total size for aftermarket two-wheeler tyres in India
is around 2.5 million a month).
The company made a late entry
into the passenger vehicle segment
in 2000 and was primarily known
as a manufacturer of commercial
vehicle tyres. Today, in the car tyre
space, the top spot is rotated among
MRF, Bridgestone and Apollo Tyres.
Apollo Tyres other big success has
SINcE 2004, ThE APOLLO TyRES

STOck hAS cLOckEd A cOmPOuNdEd
ANNuAL GROwTh RATE Of 19%,
TRANSLATING TO AN OvER 10-fOLd
jumP IN mARkET cAPITALISATION
market sales as 70 percent of buyers
continue with the same brand when
they replace tyres. With margins that
are 300-400 basis points higher than
the Indian market, Apollo Tyres hopes
to make Europe a significant engine
of growth in the years to come.
longside its global play, the

company has not lost sight
of its home turf. In March
this year, Apollo decided to plug the
last significant gap in its product
portfolio and enter the market for
two-wheeler tyres. This was the
companys fourth attempt in doing
so. Satish Sharma, president, AsiaPacific, Middle East and Africa, says,
We could get far better support from
the dealers if we are in all segments
of the market. Step outside cities
been in rolling out radial truck tyres

in India with the help of Dunlops
technology. It helped the company
garner a leading share of the market
although some industry watchers say
MRF has a better brand perception.
In recent times, the dumping of
cheap radial tyresat prices below
the cost of manufacturing of Indian
tyresby Chinese manufacturers
has dented its India business. In
the past year, two tyre plants
belonging to JK Tyres and Birla
Tyreshave shut down and the
industry fears this could happen
to other manufacturers as well.
Chinese radials have taken away
as much as a third of the market.
They first gained entry into India
as truck makers wanted radials and
there wasnt enough manufacturing
OctOber 14, 2016
forbes india | 39
NortherN Giants
Apollo tyres
were set up in Bangkok, Dubai and

Kuala Lumpur. They understood the
peculiarities of each market and went
about supplying them. For instance
pick-ups in Thailand were regularly
overloaded and needed stronger tyres.
Currently, 66 percent of Apollo
Tyres revenue comes from India
and 24 percent from Europe.
Courtesy: Apollo tyres
Apart from manufacturing car and radial tyres, Apollo has entered the market for two-wheeler
tyres. The company claims that it sells 150,000 two-wheeler tyres a month at present
capacity in India. (OEMs have since

discontinued using Chinese tyres due
to poor quality). They then went to the
after-market and have served costconscious buyers and severely dented
the profitability of Indian tyre makers.
This is an issue I feel very
strongly about, says Kanwar. We
have no problem with anyone
coming to India and setting up a
factory and competing. But the
industry cannot compete with
the Chinese cost structure and is
working with the government in
imposing an anti-dumping duty.
Some of the excess capacity at
Apollos plantsthe company has
plants in Thrissur (Kerala), and
Halol, Gujarat, besides the one in
Sriperumbudurhas been converted
to manufacture off-highway tyres.
Apollo already has a leading presence

in the tractor tyre market but it now
also makes tyres for mining vehicles
(through a tie-up with Bharat Earth
Movers Limited) and other vehicles
like tippers, forklifts and so on.
This is a far more lucrative
segment with higher margins
and one reason why companies
like Ceat have also entered this
market. Our learning here is that
the off-highway tyre segment is
more than a mere extension of
our business, says Sharma. A new
team has been formed to tap the
opportunity more systematically.
Sharma has, in the last decade,
also built a large exports business
for Apollo. We thought of ourselves
as local players in the markets we
entered, says Sharma. Local offices
APOLLO TyRES IS INvESTING 475

mILLION EuROS (AROuNd Rs 3,500
cRORE) IN A GREENfIELd PLANT IN
huNGARy ANd ALSO fOR AN R&d
cENTRE IN fRANkfuRT
eve taken huge risks over

the years but they have
been calculated risks, says
Neeraj. While Apollos work with the
Vredestein acquisition is, at best, a
work in progress, there is little doubt
that the company has come a long
way since the split with Michelin.
The technology aspect is no longer
in doubt and while brand building
will take time, there is little to
suggest the company doesnt
have what it takes to do it.
Vredestein provided them with
a platform for growth in Europe.
Apollo Tyres domestic capacity
expansion proves that they can now
smoothly implement the next step
in Europe. We were truly impressed
when we visited their Sriperumbudur
plant, says Knut Harald, portfolio
manager at SKAGEN Kon-Tiki,
which has invested in the company.
We increased our investment in
Apollo Tyres after the shares fell
sharply following the failed attempt to
acquire Cooper Tire. [The companys]
long term theses are intact.
Since 2004, the Apollo Tyres
stock has clocked a compounded
annual growth rate of 19 percent,
translating to an over 10-fold jump
in its market capitalisation from Rs
1,000 crore to Rs 11,000 crore. The
stock has, however, lagged behind
domestic rivals MRF and Ceat Ltd
particularly after 2013, when the
Cooper Tire deal was called off.
For the time being, though,
Kanwar agrees that most of the
growth in the years to come
would be organic and not through
acquisitions. Plus, with Verdestein,
hes already got his work cut out.
NortherN Giants
interview: Sunil Duggal
Foreigners dont
question consumer
Firm valuations
Sunil Duggal, CEO of Dabur, talks about his experience at the helm
of a family-owned but professionally-run company, revival in
consumer sentiment, and Patanjalis peripheral damage
amit verma
By samar srivastava
ver the last 16 years, Dabur

CEO Sunil Duggal has
steered the organisation
to become the countrys
fourth largest consumer company
by market cap after ITC, Hindustan
Unilever and Godrej Consumer
Products. In the last decade, Daburs
topline has compounded at 16 percent
a year to Rs 5,970 crore while the
bottomline has risen by 17 percent a
year to Rs 939 crore. The transition
from being a family-owned enterprise
to a professionally-managed company
saw some turbulence initially, but
Dabur is now considered to be a case
Dabur india CEO sunil
Duggal says the company
is now hardwired to be
run by a professional
management
study on how families can step back

and let professionals take over. At a
time when valuations of consumer
companies have shot through the
roof despite slow growth, Duggal tells
Forbes India why he does not believe
these companies are overvalued and
how he sees categories evolving as
per capita income moves up in India
and in other emerging markets that
Dabur operates in. Edited excerpts:
Q What has been your experience
as a professional manager in a
family-owned company? there
is the part about balancing
the owners expectations
with what you need to do.
It has been a transition from joining

a company that was family-owned
and family-run in the mid 1990sthe
transition started happening about
five years after I joined. It took a
while for the whole thing to happen
and there were some bumps along
the road. Once the company started
performing, the promoters withdrew;
and they withdrew pretty abruptly.
The performance since then has been
in line [with expectations] and so they
have shown no interest in coming
back. Once the family distances itself
from the day-to-day operations, it
becomes more and more difficult for it
to return. The current promoters have
a good feel of the company but not
so good so as to run it. The company
is therefore now hardwired to be
run by a professional management.
Q Have you had to answer
to the family instead of
only to the board?
Within the family, we have our

own relationships. It is not that we
talk to them only via the board.
Q Would mr anand Burman,
chairman for dabur india,
for instance, call you once
a quarter for a chat?
Absolutely. We meet over dinner

or a drink. He wants to know what
is going on. That is more to keep
himself informed. His level of
information need is higher than
that of the other board members.
Q Fast-moving consumer
goods (Fmcg) category growth
rates have been coming
down since late 2013
That is correct. And it more or less

converged with the coming of the
present government as they moved
more towards creating infrastructure
and away from consumption growth.
Q When do you see a pick-up
or is this the new normal?
My own opinion, and this is a contrary

opinion, is that by October, we should
see some visible uptake in terms of
consumption but not a dramatic one.
So, if a category is growing by 1-2
percent, it would grow by 4-5 percent.
These are volume growth numbers.
The rationale being a good monsoon
and some fiscal stimuli. The UPAtype growth numbers will probably
be seen in 2017-end or 2018 because
that is when the government will
prime the stimulus pump for the next
election. No one has won an election
in india, We Have Been on tHe

proWl For companies to Buy.
notHing oF value is availaBle.
tHese could Be Big Brands, But
tHe asking price is too HigH.
october 14, 2016
forbes india | 43
NortherN Giants
interview: Sunil Duggal
by talking about infrastructure

building and not about consumption.
That is what happened to NDA-1 as
they did the right things, but still lost,
and I dont think this government
would want a repeat of that. A lot of
people feel there is an uptick around
the corner, but I dont think there
is any meaningful uptick in the near
future. That will take some time.
Q How is rural growth faring?
They [the figures] are down in the

dumps. Growth rates have fallen from
14-15 percent to 1-2 percent. In urban
areas, they have come down from
8-10 percent growth to 1-2 percent
growth. So the drop has been sharper
accepting of the valuations. This

is the only sector where investors
pay as much attention to topline
and volume growth as they pay to
bottomline growth. The margins
are almost taken as a given.
cruelty-free, etc. These will be the

future drivers of growth. The whole
consumer health care space will be
a high area of investment. We will
be investing disproportionately in
over-the-counter (OTC) health care.
Q are companies like dabur

attracting more long-term
money, like from pension
funds and so on?
Q dabur has made four

acquisitions since you took
over. are you always looking
out for companies to buy?
Yes. Our domestic institutional

investor component is quite low25
percent of all the institutional
investment is domestic and the rest
is foreign. Among the foreigners,
it is typically more sticky. There
are some hedge funds, but they
tHe WHole consumer HealtH

care space Will Be a HigH area oF
investment. many more types oF
products Will kick in... tHeyll Be
tHe Future drivers oF groWtH.
in the rural segment. If we are to
have any meaningful rise in growth
rates, rural has to perform. I suspect
the stimulus will be more aimed
at rural voters and hence, I expect
them to come back more sharply.
Q How are investors looking at
Fmcg valuations? the private
equity expansion has already
happened and so further growth
will have to be in line with
volume and profit growth.
Every domestic investor questions

FMCG valuations. But no foreign
investor questions them. The two
have a very different perception of
valuation. Foreign investors see 2-3
percent dividend yields from the
consumer sector because of high
predictability of earnings. For them
this is a bonanza because they come
from a negative yield environment.
Lets say the foreigners are far more
prefer to deal with stocks that are

larger in size and more liquid. The
domestics are not very long term.
They book profits quickly. They
buy cheap and sell when valuations
are stretched. The foreigners buy
and hold even through periods
when valuations are stretched.
Q india is now at $3,000
per capita income. How will
the consumption story be
different when india moves
to a $5,000 or $7,000 per
capita income level?
Its difficult to paint a picture

except that there would be a lot
more premiumisation and a sharp
fall in low unit packs (LUPs). The
discount brands will come down
dramatically. And people will look
for more value in the product.
Many more types of products will
kick in like herbal, natural, organic,
Yes.
Q Will a lot of the growth in

future come from acquisitions
or will it be organic growth?
In India, we have always been on the

prowl for companies to buy. Nothing
of value is available. These could
be big brands, but the asking price
is too high and whenever you do
the spreadsheets, unless you factor
in crazy assumptions of growth,
the numbers dont work. Overseas,
our two acquisitions took time to
integrate and we had a lot of learning
to do as we were not familiar with
those markets. Now we are looking
at acquisitions again, but with the
learnings of the past. First, factor in
currency volatility and the inevitable
devaluation of emerging market
currencies against our currency.
We didnt factor that in as we
didnt realise that currencies could
devalue so quickly and so suddenly.
Q What do you make of
the patanjali entry?
Ive been asked this ad nauseam. A

business of that size does peripheral
damage wherever it goes and the
damage is magnified because the
categories are not growing. The
category growth is so slow that
whatever little share it takes further
adds to the growth stress. He [founder
and yoga guru Baba Ramdev] has
come at an inopportune time for the
sector as a whole. It is a disruptive
model and that is why he can scale
from zero to Rs 2,500 crore in no time.
But whether he can scale to Rs 20,000
crore is the million dollar question.
Pawan Munjal, chairman, MD

and CEO of Hero MotoCorp,
is glad that he has proved
the naysayers wrong and is
proud that hes building a
truly global organisation
NortherN Giants
hero motoCorp
Past tense,
Present Perfect,
future
ready
Over the last five years, Hero MotoCorp and its
chief Pawan Munjal have put the Honda split behind
them and built R&D capabilities to consolidate the
companys position as a two-wheeler behemoth
photographs: amit Verma
By N MaDHavaN
NortherN Giants
hero motoCorp
n September 7 this year,

29 Hero MotoCorp
executivesall members of
the top management team,
including a few handpicked future
leaderswere at Harvard University
on a five-day immersion programme.
The course focussed on two areas:
How the mobility space will shape
up in the future and, in that context,
how they should revisit their present
business. The team also met a variety
of stakeholders deeply involved in
new techthe Internet of Things,
self-driving cars, for instanceand
visited world-class laboratories and
incubators in and around Boston.
Though the company has
previously undertaken scenario
planningthat is, infusing flexibility
in long-term plansthis was the first
time that such an elaborate exercise
was attempted. The reason, Pawan
Munjal, chairman, managing director
(MD) and CEO of Hero MotoCorp,
tells Forbes India, is quite simply to
not be taken by surprise in the future.
Hero MotoCorp is a mobility
company and it [mobility] is one of
the top three disrupted sectors in
the world today, he says during a
two-hour-long interview in early
September. We need to be very

mindful and aware of what is going
on in that spacewhich way the
world is moving and the kind of things
that are happeningto stay ahead of
the curve. We met the industrialist
at his South Delhi Panchsheel
residence, heavily populated with
paintings, sculptures and figurines
that cut across multiple cultures.
During the course of the
conversation, it became clear that
the 61-year-old Munjals focus is the
road ahead. And it is also evident
that he is able to look forward
because Hero MotoCorps present
is secure and under control.
This stability is a far cry from
five years ago when, on January
1, 2011, Hero and its Japanese
partner Honda Motor Company
parted ways after an extremely
successful joint ventureHero
Hondathat lasted 26 long years.
This association had transformed
India into a motorcycle market, and,
in the process, consigned geared
scooters into the annals of history.
With almost no product development
capability post-separation and
Indias two-wheeler market evolving
rapidly, many had predicted the
downfall of Hero MotoCorp (the

name taken on by the company after
the split). People gave up on the
company, recalls Munjal. But we
have proved everyone wrong.
Having retained its dominant
position in the motorcycle segment,
Hero MotoCorp continues to be the
largest two-wheeler player in the
country with a 39 percent market
share; this is despite an onslaught in
the scooter category by its erstwhile
partner Honda through its whollyowned subsidiary Honda Motorcycle
and Scooter India (HMSI).
Hero MotoCorp sold 66.32 lakh
units (including motorcycles and
scooters) in FY16, posting sales worth
Rs 28,990 crore; it generated a profit
of Rs 3,132 crore, 31 percent higher
than the previous year. The markets
acknowledged this performance,
with the market capitalisation
rising by 12 percent to Rs 58,823
crore. Meanwhile, the share price,
which was Rs 1,986 on December 31,
2010, had touched Rs 3,500-levels
as of mid-September this year.
The numbers aside, even more
important is the fact that the company
has managed to build critical product
development capabilities in this
period: One, by investing in the right
people and, two, by establishing the
Centre of Innovation and Technology
(CIT) at Jaipur. Splendor iSmart 110,
the first product developed end-toend at CIT, hit the market in July this
year and has been well received.
None of these successes,
however, has bred complacency.
After all, the company has motored
through several highs and lows
in its decades-long journey.
The parTnership
Rajat Bhargava, head of strategy and performance transformation at Hero MotoCorp,

wants the company to think like a startup
When Hero Group and Honda Motor

Company came together for a joint
venture (JV) in 1984 to produce and
sell motorcycles in India, not many
expected them to achieve the success
they did. After all, India was then a
predominantly scooter market. But
Hero Honda Motors, as the JV was
christened, thanks to its fuel efficient

and technologically superior bikes,
changed the Indian market and soon
grew to become not just the biggest
player in the country but also the
largest two-wheeler manufacturer
in the world. Hero and Honda were
ideal partners. Hero had in-depth
knowledge of the Indian market
while Honda was a technology leader.
Both learnt a lot from each other
and worked together effectively by
complementing their skills, says
Raamdeo Agrawal, co-founder
and MD, Motilal Oswal Financial
Services, whose investment in the
company and the returns he made is
legendary, but more on that later.
The problem started when the
learning stopped. By the turn of the
century, Hero Honda was a force
in the Indian automotive space. As
a market leader, we were expected
to lead the industry in every forum
but the reality was that we had no
engineering capability. It hurt [us]
badly, says Munjal. As per the joint
venture agreement, Honda developed
the products and gave us the drawings
which we used to produce the
bike. We were not allowed to make
any modifications. But Hondas
research and development (R&D)
facility in Japan catered to over 40
markets worldwide and the lead
time to develop a product for India
was frustratingly longthree to
four years, typically. For instance,
Karizma, its premium bike, took 42
months. Even variants with minimum
changes took nine to 12 months.
Soon other irritants emerged.
Around 2005, the global markets
opened up and competitors like
Bajaj Auto began to export in
large numbers. The JV agreement
restricted Hero Hondas exports to
just four marketsSri Lanka, Nepal,
Bangladesh and Colombia. We
asked Honda to allow us to export
to more markets but our request
was turned down, says Ravi Sud,
senior vice president and CFO, who
joined the company in 1998 when
Markus Braunsperger,
Hero MotoCorp CTO,
is striving to enhance
the companys
R&D capabilities
herO MOTOCOrp COnTinues TO

be The largesT TwO-wheeler
player in The COunTry wiTh
a 39% MarkeT share
its volumes were just 4 lakh units.
In the meantime, the royalty payout
began to increase substantially as
volumes rose and so did the product
range. It amounted to as much
as 3.68 percent of sales or Rs 500
crore a year in 2010, says Sud.
What further complicated the
relationship was HMSI. Honda
started its subsidiary in 1999 after
taking a no-objection certificate (NoC)
from Hero Group. The agreement
entailed that, for a period of five years,
HMSI would not launch motorcycles
and Hero Honda would not enter
the scooter segment. Many people
asked us why we gave the NoC.
But we had little choice. We were
completely dependent on them for
technology, says Sud. At the end of

the five-year period, HMSI began
to launch motorcyclesfirst 150 cc,
then 125 cc and lower. That did not
go down well with Hero Honda as
they did not have access to the R&D
to launch scooters immediately. The
JVs first scooter, Pleasure, only came
out in 2006 but by then, HMSI had
taken leadership in that segment.
The separaTiOn
Not surprisingly, Hero Groups cup

of frustration overflowed. Towards
the end of 2010, it approached its
partner with a proposition: Rework
the JV agreement to include transfer
of technology and a global play for
Hero Honda or part ways amicably.
OctOber 14, 2016
forbes india | 49
NortherN Giants
hero motoCorp
But Hondas HMSI had by then built

up a 50 percent market share in the
scooter segment and the Japanese
partner chose the second option. On
December 16, 2010, the board of Hero
Honda took the call and the Hero
Group agreed to buy out Hondas 26
percent stake in the JV; the split came
into effect from January 1, 2011.
As a country, the government
promotes JVs hoping that technology
will come in and so will product
development capabilities. But, in
reality, you are left high and dry.
Either the Indian partner sells out
or remains a junior partner, says
Munjal. We wanted to succeed
and build a strong Indian brand.
On August 9, 2011within nine
months of the separationbrand
The scooters overall share in the

two-wheeler segment shot up from
just 10 percent to 30 percent. Hero
MotoCorp launched Maestro (which
was under development at Honda
R&D at the time of the separation), its
second scooter offering after Pleasure,
but that failed to make an impact. The
companys market share in the scooter
segment remained flat at 16 percent
in this period. Around the same time,
the demand for premium bikes (150
cc and above costing over Rs 1 lakh)
began to surge led by Bajajs Pulsar.
Hero MotoCorp, which at one point
had a 25 percent share in the premium
bikes segment, had no product to offer.
After the split we focussed on the
commuter segment [100/110 cc] as
we had to prioritise our resources,
resTriCTiOns On parTiCipaTing
in glObal MarkeTs was a MajOr
Trigger fOr herO grOups spliT
wiTh hOnda MOTOr COMpany
Hero MotoCorp was launched in
London and music director AR
Rahmans theme song Hum Mein
Hai Hero (There is a hero within us)
began to flood the airwaves. We had
time till June 2014 to use the Hero
Honda brand but we chose to move
on, says Munjal. It was not easy to
give up the brand as it had become
a household name in the country.
The branding blitzkrieg that
followed helped the company keep up
the sales of its existing products. But
challenges inevitably emerged. In the
last five years, the Indian two-wheeler
market changed radically, points out
Malo Le Masson, headglobal product
strategy at Hero MotoCorp. The
major change he refers to is the rapid
acceleration in demand for gearless
scooters. Between 2010-11 and 201516, the volume of scooters sold rose
from 90,000 units to 6 lakh units.
says Masson. This hurt the company

as its market share in the motorcycle
segment declined from 55 percent
in 2010-11 to 52 percent in 2015-16.
It managed to hold its sway in the
commuter motorbike segment with
products such as Glamour registering
a strong demand. However, a poor
presence in the scooter (which saw
significant growth in volumes) and
premium bike segments saw Hero
MotoCorps overall two-wheeler
market share decline from 45
percent in 2010-11 to 39 percent in
2015-16. HMSI in the same period
doubled its overall market share
from 13 percent to 26 percent.
Despite the dip, Hero MotoCorp
managed to retain its leadership. It
is amazing how Hero MotoCorp even
managed to remain a dominant player
after the JV ended. Though it was
unable to develop new products, it
managed to bring in periodic variants

to keep the commuter motorcycle
product portfolio fresh, says Markus
Braunsperger, chief technical
officer (CTO) of the company.
building r&d CapabiliTy
Munjal realised early that he had to

build product development capability
at Hero MotoCorp in a calibrated
manner. As a first step, he identified
the partners they would work with.
Hero MotoCorp tied up with AVL
Austria for engine development.
Italian company Engines Engineering
was brought in for end-to-end product
development. US company Erik
Buell Racing was roped in to upgrade
existing products and also develop
high-end bikes250 cc and above (this
company declared bankruptcy in 2015
and has since shut down). Initially, the
partners helped the company launch
minor refreshes and slowly the work
deepened to include major upgrades.
To do bigger projects, even with
external partners, you need a certain
product development capability
within the company. After all, we
need to give the right direction to
the partners, says Braunsperger.
He was one of the first hires that
Munjal made towards building the
companys R&D capacity. A 25-year
BMW veteran, he took up the offer
for the challenge it posed. BMW just
completed 100 years of operation. But
here at Hero MotoCorp the challenge
is very differenthow to create a
companys product development
capability from scratch, he says.
The companys R&D strength
when the JV split was 170 people who
spent most of their time coordinating
with Honda R&D. When I came
on board, the R&D function was a
Honda legacy and was not suitable
to build in-house capability, says
Braunsperger. He began hunting for
talent all over the world. For instance,
Masson, a former Nissan executive,
was brought in to chart the global
product strategy. Today, expats from
about 10 countries work on various
A Heros Journey
The past five years have been tough for Hero MotoCorp,
but it has managed to handle the split with Honda well
Market share in motorcycles
Market share in scooters
Overall market share
The company has retained its dominance

in the segment
It lost the opportunity to take advantage

of the boom and surging demand
Consequently, its overall market share across

the two-wheeler segment has seen a steady dip
60
60
50
50
40
40
50
40
30
30
30
20
20
10
10
20
2010-11
11-12
hero motoCorp
12-13
13-14
14-15
15-16
10
2010-11
11-12
12-13
13-14
14-15
15-16
2010-11 11-12 12-13 13-14 14-15 15-16
hmsi
All figures represent market share in %
Source: SIAM
aspects of product development.

We are creating a truly global
organisation, says Munjal proudly.
Next on Braunspergers agenda was
setting up dedicated infrastructure
for product development. Thus
far, whatever little expertise that
rested within Hero MotoCorp
had been scattered across various
manufacturing facilities. CIT began to
take shape and was officially unveiled
in March this year. Costing Rs 850
crore, CIT houses new product
design, prototype manufacturing,
testing and validation facilities,
says Braunsperger who heads the
facility. It also has a 16-km test
track with 42 different surfaces
that simulate road conditions in
different parts of the world.
At CIT, we do not have a pool
of people, each with 25 years of
experience. Experienced people tend
to be stubborn. We have a whole
lot of talented youngsters who are
open to new approaches, think out
of the box and are eager to learn,
he says. We have seasoned experts
to guide and offer leadership skills
to the youngsters. Munjal too is

happy with the way CIT has shaped
up. In terms of hardware and
infrastructure, we are set. We are
building the team. We still have some
way to go, he says. The amount of
work that is being done is huge.
Engineers at CIT are currently
working on 30 new products
apart from a wide range of new
technologies, including electric bikes,
power trains that run on alternate
fuel, flexi-fuel and hybrid technology.
The challenge before us is to develop
the right product, at the right cost, in
a minimum lead time and deliver it in
a manner that it can be mass produced
at one bike every 17 seconds, says
Braunsperger. Add to that product
reliability that survives the fiveyear warranty Hero MotoCorp
offers for all its bikes. Under Indian
conditions, it is quite a promise.
prOOf Of The pudding
In September 2015, Hero MotoCorp

launched two new scootersMaestro
Edge and Duet. Both these products
were developed in-house. They were
the first significant launches in the

last five years. For us, this is the
first step. The scooter segment will
continue to grow and we will launch
more products, says Masson. This
was quickly followed by the launch
of Splendor iSmart 110 in July this
year. This was the first product/bike
to be entirely developed at CIT and
features Hero MotoCorps patented
i3S technology which switches off
the engine when it is idle and turns it
back on when the clutch is pressed.
This helps improve fuel efficiency.
He also reveals that the company
has a very aggressive strategy for
the premium bike segment. The
new Achiever will be launched soon
and we are also planning to launch
the Xtreme200 Sport bike for those
who like to race, adds Masson.
These steps will push Hero
MotoCorp in the right direction.
Take this report from HSBC
Research, which suggests that Hero
MotoCorp needs to replicate what
Maruti has achieved in the fourwheeler market. Both Hero and
Maruti have similar strengths. Both
OctOber 14, 2016
forbes india | 51
NortherN Giants
hero motoCorp
enjoy strong distribution reach

and brand recall due to low cost of
ownership and resale value. Both
enjoy being a preferred choice of
first-time buyers. However, with
multiple strong product launches
and the new NEXA distribution
channel, Maruti has successfully
moved into the premium segment
which has significantly improved
the long-term outlook for Maruti,
the report says. Hero MotoCorps
penetration in the premium market
should eventually drive the longterm value of the stock. Currently,
Hero has less than 2 percent of its
volumes from the premium segment.
And Hero MotoCorp is trying hard
to make up for lost time. It plans to
launch 15 new bikes between now and
March 2017. In the next 2-3 years,
our portfolio would have changed
the cost of production; also, inflation

in the country rose sharply as did
interest rates. Its market for bikes
shrunk from 700,000 units to 660,000
units in 2015 and is expected further
fall to 600,000 units this year. Hero
MotoCorps other big markets such as
Nigeria and Argentina are also in deep
crisis. Most markets have crashed.
Their recovery is unpredictable. We
are, however, ready with products
for these markets, says Masson.
The other significant challenge
looming large for the company is
the shift to Bharat Stage VI emission
norms in 2020. It has already entered
into a JV with Fiat subsidiary
Magneti Marelli for fuel injection
technology. Now that it has been
mandated by the government, we
have taken it up as a challenge. The
industry would have ideally liked
bOOsTing iTs inTernaTiOnal sales

and shifTing TO bharaT sTage Vi
eMissiOn nOrMs in 2020 are MajOr
Challenges fOr The COMpany
significantly, Masson adds. Among
the new launches will be products
that are specifically developed for
export markets, one aspect of the
business that has not gone as per
the script for Hero MotoCorp.
Considering that restrictions on
participating in the global play was
one of the triggers for the JV split,
Hero MotoCorp is yet to crack its
international sales. Its exports in FY11
were 1.33 lakh units and 2.10 lakh
units in FY16 (when, in comparison,
Bajaj Auto exported 14.59 lakh units).
Global economic conditions are
partly to blame. The company had
set up two JVs in promising markets
Colombia and Bangladesh (where
the manufacturing facility is under
construction). But the Colombian peso
depreciated by 60 percent pushing up
more time. The entire ecosystem has

to change, says Munjal. Will the
government be ready with the fuel?
TOp gear fOr TOMOrrOw
Munjal, on his part, is ensuring

Hero MotoCorp is future ready. He
has handpicked Rajat Bhargava
who was senior partner, heading
the industrial practice in India, at
McKinseysas head of strategy and
performance transformation. The
role, says Bhargava, means I have
to ensure that the company is not
surprised by any development. We
should surprise others and that is real
victory. His strategy is bi-focal: To
study how changes impact existing
business and how the company can
take advantage of the disruption
and prepare for the future.
To that end, Bhargava also wants

the organisation to absorb certain
beliefs. For instance, only those who
cause change will lead, to cause that
change you need to innovate; and,
while Hero MotoCorp may not be
able to act or be as nimble as a startup,
it can think like one; and one idea
isnt enough to set you up for life. In
essence, we want to combine the
experience and strength of Hero
MotoCorp with the nimbleness and
passion of a startup, Bhargava says. It
helps that they have begun to engage
with startups too. Munjal, in his
personal capacity, has already invested
in Bengaluru-based two-wheeler
taxi startup Rapido. We are open to
investing in startups, says Munjal. We
are opening two of the 11 floors at CIT
for innovation not necessarily linked
to mobility. The most pragmatic way
to innovate, he points out, is to tap
external innovation. So the company
has held idea contests and is working
with incubators and startups. We
have already got some ideas. They are
not about any new technology but new
solutions. We will deploy them in the
next six to 12 months, says Bhargava.
These concerted efforts to prepare
for whats next are what make Hero
MotoCorp an investor favourite.
Lets circle back to Motilal Oswals
Agrawal who bought five lakh shares
in Hero Honda at Rs 30 in 1995-96
and held on to them even after the JV
broke up and pessimism held sway.
Hero MotoCorp has a committed
management. Also, it has always
been a zero-debt company which
has mastered the art of working on
negative capital employed. When
business makes money without
deploying capital, the valuations
typically go through the roof, he says.
His faith was validated. Agrawal
sold his shares (for corporate
governance reasons as his firm had
started a mutual fund) in 2015 at
Rs 2,600 per share. He regrets not
being able to hold on to the stock.
And that is a hat-tip to the future
Hero MotoCorp is promising.
NortherN Giants
pVr
photographs: amit Verma
Upping the
game: Ajay Bijli,
managing director,
PVR Cinemas
The NexT Show

Indias largest multiplex chain PVR has adopted
a customer-first approach to retain loyalists and
grab a larger share of out-of-home entertainment
By N MAdhAVAN
f trailers of Christopher
Nolans upcoming film Dunkirk
(based on the famous Dunkirk
evacuation during World War
II) have whetted your appetite for
more war movies, you could take your
pick from the likes of The Guns of
Navarone, Where Eagles Dare or Saving
Private Ryan. But, as any film buff will
tell you, watching these classics on
DVD or TV is no match for a theatre
experience, where roaring enemy
jets swooping down on the Allies can
send you ducking for cover too.
PVR Ltd is set to change that. Come
October, and it will bring screens
to the beck-and-call of moviegoers,
allowing them to schedule a show
of their favourite film at a screen
of their choice and a time of their
convenience. Welcome to Vakaoo,
a new platform that the company is
beta-testing. While a show can be
scheduled only if a minimum threshold
of tickets is sold, Vakaoo also helps
a user reach out to others through
social media and tie up with those who
are interested in the movie. People
today want to consume content when
they want, at their convenience and

at a place of their choice, says Kamal
Gianchandani, chief of strategy, PVR.
With Vakaoo, we are offering them
such an option. For this purpose,
the company is offering its library
of over 1,000 films (Hollywood,
Bollywood, and regional movies).
Vakaoo is just one element in
the large-scale transformation that
Indias biggest multiplex chain is
undergoing. Rapid growth (it tripled
its screens in the last four years)
is no more its sole objective. It is
deploying latest technology, data
analytics (to understand customers
better) and unique food and beverages
(F&B) options to offer customers an
unmatched movie experience. In
doing so, PVR has flipped a switch not
just to beat competition from other
multiplex chains like Inox, Cinepolis or
Carnival, but also from all other forms
of out of home entertainment that
the rising ranks of aspirational Indians
are warming up to. Says CEO Gautam
Dutta, How do I go beyond my
content to attract someone for a threehour break at PVR is the challenge.
OctOber 14, 2016
forbes india | 55
NortherN Giants
pVr
house full: (Standing, from left) Gautam dutta, Nitin Sood, Kamal Gianchandani and Renaud Palliere; (seated, from left) Sanjeev Kumar Bijli
and Ajay Bijli
GRowTh MAChINe
PVR Chairman and Managing

Director Ajay Bijlis father, Kishan
Mohan Bijli, who was running a
trucking business, acquired Priya
Cinema in the 1970s. In 1995, Ajay
exited the trucking business and
launched PVR, which set up its
first multiplex in Delhi in 1997. Its
initial growth was sedate. It took the
company a decade-and-a-half to reach
213 screens in 2012. Then it exploded.
It acquired Cinemax (138 screens) in
2012, and DT Cinemas (29) earlier
this fiscal for a combined cost of Rs
1,000 crore. By the first quarter of the
current fiscal, PVR had 557 screens
across 121 properties in 48 cities.
Inox, its nearest competitor, had 430
screens, while Carnival and Cinepolis
had 300 and 265, respectively.
In just four years, PVRs annual
footfalls have risen from 25 million
(in 2011-12) to 70 million (read Heady
Growth, P67). In the same period, its
revenues have more than tripled, from
Rs 529.80 crore to Rs 1,897.10 crore.
Earlier, we focussed on build, build

and grow. Now we have got scale. In
the next 12 to 18 months, our focus is
in retaining existing customers, says
Chief Financial Officer Nitin Sood.
While PVR has pushed back its
target of reaching 1,000 screens from
2018 to 2020, Ajay is quick to clarify
that their appetite for growth has not
diminished. We are joined at the hip
with real estate development. The
slowdown in that sector is delaying
our organic growth a bit, he tells
Forbes India at his office in Gurugram.
His brother Sanjeev Kumar Bijli, joint
MD, agrees. India is a heavily underscreened and hugely untapped market.
If we compromise on growth we will
be left behind, he says. We will be
adding 50 to 60 screens this year.
India ranks fifth among the top
10 international box office markets,
with an annual collection of $1.6
billion (the US is the largest at $11.10
billion). But the number of screens in
India is paltry compared to the global
powerhouses: At 9,600 screens for 1.3
billion people, India has 6.5 screens

per million people, against Chinas 23,
Spains 84 and USs 123. The extent of
under-screening can be gauged from
the fact that Germany, whose box
office collections are at $1.3 billion
(lower than Indias) has 58 screens per
million people. The UK, with slightly
higher collections ($1.9 billion), boasts
of even more screens60 per million.
PVRs customer-centric approach
comes at a time when the industry
is rapidly evolving. Today,
competition for multiplexes comes
from multiple fronts. When it comes
to entertainment and content, the
competition is from TV and ontap demand (OTD) platforms such
as Netflix, Hotstar, iTunes, says
Jehil Thakkar, head, media and
entertainment, KPMG. Then, there
are other outdoor entertainment
activities like a stroll in the park, a visit
to the beach, shopping or eating out.
Agrees Kiran Reddy, MD, SPI
Cinemas, the largest multiplex
chain in Chennai (PVR was recently
in acquisition talks with SPI

Cinemas but the deal fell through).
We are competing for peoples
time and money, he says. It is
important for theatre chains to
be relevant to occupy a sufficient
part of peoples leisure time.
PVR has adopted a multi-pronged
approach to achieve this. And
technology is top priority. Almost a
decade ago, it shifted to the digital
projection system. Today, it has
fitted 4K projectors, which offer
better resolution than the earlier 2K
versions. When it comes to sound,
technology has evolved from 5.1
Surround Sound to 7.1 to 11.1 and now
Dolby Atmos (strategically placed
speakers make viewers feel that the
sound is flowing around them). Most
of the PVR properties have Atmos
as well as second-generation 3D
systems. Its Noida property offers
the 4DX technology (where all five
senses are stimulated). Cinema has
been around for the last 100 years,
but it is only in the last decade or
more that we have seen massive
development on the technology
front, especially after the advent of
digital cinema, says Sanjeev. We
are taking full advantage of this.
The company is testing futuristic
technologies with top-of-the-line
Barco laser cinema projectors and
screens in Bengaluru, which could
well be the precursor to virtual reality
in cinema. We want to ensure that
when it comes to watching a film,
the theatre experience we offer
is unmatched, adds Sanjeev.
beyoNd CINeMA
For the urbane crowd, going to the
we ARe CoMpeTING foR peopleS

TIMe ANd MoNey, SAyS KIRAN
Reddy. IT IS IMpoRTANT foR
TheATRe ChAINS To be RelevANT.
movies is not just about whats on
screen, but a cinema-plus experience.
For this, PVR has created five theatre
formatsDirectors Cut, Gold Class,
Premiere, PVR Cinemas and PVR
Talkies. No two properties are
similar when it comes to design. Our
investment cost per screen is much
higher than our competitions, says
Sanjeev. PVRs experiment with
its Luxury CollectionPVR Gold
Class and Directors Cuthas seen
some success. It has rolled out PVR
Gold Class (these 28 screens have
reclining seats, gourmet menu with
live kitchen, and top-end projection
and audio systems) where the
average ticket price is Rs 1,800 on a
blockbuster weekend. Customers
here are a pampered lot, says
Renaud Palliere, who handles the
Luxury Collection and International
Development for the company.
PVR Directors Cut, at Ambience
Mall in New Delhis Vasant Kunj, is a
notch above Gold Class. People come
to Directors Cut for the experience.
It is a seven-star movie experience
with fine dining, says Palliere.
Employees here have been hired from
five-star hotels and the ticket price
on a blockbuster weekend can go up
to Rs 2,400. But that hardly seems
to matter as the average footfall is
similar to other formats. Directors
Heady GRowtH
PVR has roughly grown 3X in the last five years

Screens (units)
Footfalls (in millions)
Revenues (in Rs crore)
Profits (in Rs crore)
Source: PVR
2011-12
166
25
529.80
25.20
2012-13
351
37
815.40
44.30
2013-14
421
60
1358.80
50.40
2014-15
464
59
1485.90
11.60
2015-16
516
70
1897.10
119.30
Cut spoils you. After experiencing it,

I do not go to any other cinema, says
Vir Sanghvi, journalist and food critic.
Not just the theatre, but Sanghvi has
another reason to love the formatthe
food. The sushi bar called Simply
Sushi is very good. Sushi is an idea
whose time has come, he says. And
the choice of chef Yutaka Saito is the
best thing that could have happened
to PVR, which had been struggling
with F&B options at Directors Cut.
CFO Sood is happy too. PVRs
Luxury Collection is helping the
company increase its average ticket
price and F&B spend per head.
Elsewhere in the world, luxury
cinemas lose money as costs are very
high. We have been able to crack the
code and generate margins that are
similar to other formats, says Sood.
F&B is a focus area not just at
Directors Cut but across all formats.
There are good reasons for this. Says
Palliere, We have no control over
the film. Its quality is subjective.
Good F&B options will ensure that
customers still have a good overall
experience even if the movie is not up
to their expectation. The company
invests a lot to identify what sells
where and tries to push out unique
products in different locations. Its
F&B spend per patron has risen from
Rs 40 in 2011-12 to Rs 72 in 201516, and it even acquired gourmet
popcorn brand 4700BC last year.
The formula seems to have worked
as F&B spend as a percentage of
average ticket price has increased
from 25 percent in 2010-11 to 38
percent in 2015-16. At 25 percent, it
is also the second-biggest revenue
earner for the company after tickets
(64 percent) and way ahead of
OctOber 14, 2016
forbes india | 57
NortherN Giants
pVr
Food FoR tHouGHt
F&B revenue helps PVR recover its costs and post good margins
200
150
100
50
Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17
Average ticket prices
F&B spend per head
Source: PVR
advertisements (11 percent).

Sood admits that F&B sold at PVR
theatres are expensive. We do not
recover ours costs from tickets. It is
only from F&B that we recover them
fully, he says. We want to grow F&B
faster in the next five years. We want
to get it to 50 percent of the average
ticket price. (Internationally it is
as high as 59 percent.) In its August
2016 research report, Edelweiss has
said that it remains enthused by
PVRs pricing power with regard
to average ticket price, F&B and
advertising. We expect the company
to be a key beneficiary of a possible
uptick in urban consumption.
CUSToM-MAde
PVRs biggest initiative yet is in the

digital space. In 2015-16, 34 percent
of the 70 million tickets were sold
online through its website, app
and in partnership with Paytm,
BookMyShow and Justdial. This year
that is expected to rise to 50 percent.
It also gives them an opportunity to
track customer behaviour and tweak
their offerings. Since the customers
are buying from us online, there
All figures in rupees
is a whole lot of data that we can

analyse to understand them better.
What genre of movies they like, their
language and food preferences [if
they book the same online] can be
mined from the data, says Ajay.
If a high-value customer
books a show, the theatre manager
concerned is alerted about the
customers preferences. We also
want to individually reach out
to customers and offer them a
unique experience, says Chief
Information Officer Rajat Tyagi.
PVR has also deployed data
analytics to make its back-end
efficient. Algorithms tell the
management what the optimum
pricing of a ticket for a particular
show should be, when a movie should
be scheduled for best occupancy,
how many shows should a particular
genre have in a day and so on. The
top management at PVR have an app
called Insights that provides real-time
data on footfalls, F&B sales, occupancy
levels and movie-wise collection.
Dutta attributes these
developments to the innovation
mindset that has been created within
PVR. We try to find out enough and

more as to what will kill PVR. If we
do that, no one will disrupt us. This
is a routine exercise, he says. Four
months ago, the top team did a recce
of the market in South Korea to get
customer insights. Dutta is just back
from London and if you ask him what
he did there, he opens his laptop to
show pictures of the uniforms that
workers at the upscale Hakkasan
Restaurant wore, how biscuits were
packaged (in a rotating box with
chiming music) at Fortnum & Mason,
an iconic department store. We
want to see if our gourmet popcorn
can be packaged this way with
Bollywood music, he says. He even
visited a hologram maker to see if the
hologram of a top star can be created
to receive customers at the theatre.
Ideas come from everywhere. Not
all these ideas will work out but we
are constantly learning, says Dutta.
But the fear of disruption remains.
Technology is evolving so fast that
people can increasingly watch high
quality content at home. Constant
innovation is critical, says Reddy.
A movie buff, Ajay knows what
the customers want and has his ears
to the ground to understand where
disruption could come from. He
travels a lot and independently walks
various markets. He has been regularly
meeting studios and exhibitors across
the world. Over 60 percent of the
overall revenue a film gets is through
theatres. Any effort to bypass this
will not work, he says. Big studios
have shown their commitment by
producing large, blockbuster films,
which are more suited for theatre
viewing. He is confident that PVR
will stay ahead of the curve.
Ask him why then there was a
media report of him selling out to
international cinema chain Dalian
Wanda Group, and his expression
changes dramatically. That is wrong
news. We are focussed on making
PVR the first choice when it comes to
out of home entertainment, he says.
Nothing will come in its way.
CROSS BORDER
FOLLOW YOUR HEART
Vegan
Veterans
For more than 40 years

Follow Your Heart has
been quietly selling
health-conscious
foods. Now VCs are
backing fast-growing
competitors
By Larissa ZimBeroff
ROBERT GALLAGHER FOR FORBES
he founders of Follow
Your Heart are now in
their 70s. Their first
product, in the 1970s, was
Vegenaise, an eggless mayo. Since
then, the company has survived a
bitter partnership dispute and the
loss of its biggest client, Trader Joes.
The company owns a 104,000-squarefeet, solar-powered headquarters and
production facility in California and
expects $50 million in revenue this
yearbut its world has changed.
Suddenly, vegan products are hot,
and venture-backed competitors
have surfaced. The largest, Hampton
Creek, has raised $120 million and
claims to have 500 products in its
pipeline. Sir Kensington has raised
$8.5 million and has its own eggless
mayo. The competitors have increased
awareness of the product category,
but they also have the potential to
leave Follow Your Heart in the dust.
Hampton Creek has been effective
at promoting their products and they
have put a lot of money into that, says
Bob Goldberg, co-founder and CEO
of Follow Your Heart. We wanted to
grow in a way that we could handle.
Goldberg was an Indiana
University music major who had
founders Bob Goldberg (left)

and Paul Lewin: We get
approached every day, mostly
by venture capitalists.
moved to California at the prompting

of his Army buddies, fellow musicians
with whom hed played trumpet
at officers clubs. Between West
Coast gigs he started hanging out
at a Canoga Park natural food store
endorsed by Johnny Weissmuller, the
Olympic-medal-winning swimmer
and star of Tarzan movies. Goldberg
was soon joined in California by
Paul Lewin, a college buddy.
Goldberg became a vegetarian,
and Lewin followed. When the
health food store went up for sale
in 1973, they pooled their money
with Michael Besanon and Spencer
Windbiel, who worked in the stores
cafe, and bought it for $15,000. Soon
after, the four partners learned that
the Food and Drug Administration
(FDA) had shuttered the company
that supplied the stores eggless
mayo, so Goldberg was sent to the
kitchen to develop a replacement.
It took until 1976 to find a suitable
tofu-based concoction. And it took
a few years to get the formulation
good enough that they could partner
with Natures Best, a southern US
distributor, to sell it in supermarkets.
Along the way, the founders
began to disagree about how quickly
to expand. Besanon dreamed of
building a national chain of health
food stores. When a Santa Barbara
store came up for sale, Goldberg
agreed to buy it, hoping the second
location would appease Besanon.
Instead, Besanon filed a lawsuit
seeking the involuntary dissolution
of the corporation. Its almost
like being in a marriage, Goldberg
says. Youre fighting, but you dont
expect to get hit with an action for a
divorce. You expect some warning.
The legal battle involved bitter
disputes over the valuation of the
company. In 1985, a judge told the
founders he could render a verdict
that no one would like or they could
compromise. The founders went
to lunch and wrote valuations on a
piece of paper, passing it back and

forth until they agreed. Goldberg
and Lewin ended up buying the
company for more than $250,000.
For the next 15 years, the
combatants hardly spoke. Besanon
eventually fulfilled his dream of
helping build a national chainWhole
Foods, where he spent 18 years.
Weve come to grips with itthat
nobody was right and nobody was
wrong, he says. Today they are
friends again, speaking often and
even vacationing together. Besanons
son manages the Follow Your Heart
store where the partnership began.
During the litigation, Goldberg
had come up with a Plan B. Sensing
that competition would limit the
I can see it [VC

money] making us
a bigger company,
but not a better
company.
Bob Goldberg
potential of vegetarian and vegan

stores, he concluded that the best way
to deal with retail competitors was
to supply them. Vegenaise became
the companys anchor product. In
the mid-90s Trader Joes started
selling four of Follow Your Hearts
products, including eggless egg
salad and cottage tofu. Over the
next two decades, the chain became
the companys biggest customer,
accounting for 18 percent of its
business. Then, late on a Friday in
2010, a supplier alerted Follow Your
Heart to a salmonella outbreak
linked to its products. Follow Your
Heart informed the FDA that it
was voluntarily recalling several
of its dressings, including at least
one carried by Trader Joes. (The
chain declined to comment.)

When an FDA press release
mentioned Trader Joes, the chain
was angry, Goldberg says, because it
hadnt been informed early enough to
try to keep its name out of the press.
Trader Joes ultimately terminated
all contracts with Follow Your Heart.
They went overboard, Goldberg
says. I think we did the right thing,
and I think we got punished for it.
We had a 22-year relationship that
was flawless. The split forced Follow
Your Heart to focus on its branded
items, which left the company better
able to respond to the changing
tastes of American consumers.
Lewin and Goldberg have been
watching the rise of companies like
Hampton Creek, whose Just Mayo
sales reportedly more than doubled
to over $10 million in the past year,
with keen interest. Every time a
competitor comes to market, theyre
going to get some of the business
thats yours, Goldberg says. I think
its a mistake to react to that and
much more important to make the
best products we can. (Hampton
Creek meanwhile has recently been
accused in news reports of buying
large amounts of Just Mayo back
from supermarkets to inflate its sales
figures. The company denies it.)
Follow Your Heart has captured
some of the excitement with several
new products, including algae-based
VeganEgg, which was introduced
last fall. We had just set it up and
started to scramble it when a food
scientist took a snapshot and posted
it to Twitter, Goldberg says. An
hour later our site crashed.
As the company has grown,
Follow Your Heart has been getting
calls from would-be investors.
We get approached every day,
mostly by venture capitalists, says
Goldberg, who tells them hes not
interested. I can see it making
us a bigger company, he says,
but not a better company.
OctOber 14, 2016
forbes india | 61
Jeff Lawson, cofounder and CEO

of Twilio, is helping
everyone from
Airbnb to Salesforce
to Uber connect
with their customers
CROSS BORDER
TWILIO
The Wizard of Apps

The hottest stock in America, Twilio, is a company youve never heard of.
It uses the cloud to put communications everywhere
ack in October of 2011,

when Uber was still a tiny
company beginning to
expand beyond the San
Francisco area, it sent an email to
its customers to alert them about
a problem. Ubers SMS provider,
Air2Web, was going to have a
scheduled outage, which meant
some Uber features, like notifications
and SMS ride requests, would be
temporarily unusable. If you text in
and dont receive a prompt response
from us, its not because we dont
want to, its because we cant! said
the snarky Uber note, its irritation
at Air2Web poorly concealed.
The email landed in the inbox of Jeff Lawson, the CEO of a
crosstown startup named Twilio,
which specialises in cloud-based text
and voice communications. Short,
stocky and balding, with a round
face framed by rectangular glasses,
Lawson could double for George
Costanza, only without the bumbling,
neurotic personality. Lawson is
low-key and personable, and what
he lacks in the swagger and bombast
associated with startup founders
he offsets in engineering intensity
and entrepreneurial discipline.
Lawson knew just what to do with
the Uber email, forwarding it to his
friend Rob Hayes, an Uber board
member at the time, along with a
brief sentence: For the love of god,
they should be using Twilio. Hayes
then introduced Lawson to Uber
CEO Travis Kalanick, and within a
month, Twilio was powering Ubers

SMS. It was mutual love, Hayes
says. Little by little the relationship
expanded, and Twilio now runs texts,
alerts and voice calls on the Uber app
in most parts of the world. When a
driver and passenger call each other,
they do so through a Twilio number
that keeps their own phone numbers
private. We didnt know Uber was
going to be what it is, says Patrick
Malatack, Twilios head of product.
But it was great to see Jeffs hustle.
Twilio, as a company, reflects its
chief executives personality. Be
humble and be frugal, says Lawson,
a 39-year-old father of two. That
aw-shucks credo has translated
into 30,000 customersfrom small
developers to large enterpriseswho
use Twilio to power some 75 billion
annual connections that reach 1
billion devices. Match.com pairs
potential lovebirds without revealing
The idea that

someone with
no telecom
engineering
experience could
build a call-centre
flow by dragging
and dropping was
amazing.
phone numbers, Airbnb sends rental

notifications and the American
Red Cross deploys volunteers, all
through Twilio. ING, the European
banking giant, recently announced
it was yanking out 17 hardware and
software systems across its global call
centres and replacing all of it with
Twilio. Its largest customer, WhatsApp, uses Twilio to verify customer
accounts and logins. Apps from
Lyft, Expedia, Netflix, Coca-Cola,
Salesforce and the New York Times
all have Twilio inside. Hes built a
fantastic business, says Salesforce
CEO Marc Benioff. This is something
that every company will build into
their applications, like we have.
The latest group that seems
to have noticed Twilios behindthe-scenes success: Wall Street.
Defying the all-but-dead market
for tech issues, Twilio, which still
isnt profitable, went public in June,
raising $150 million at a $1.2 billion
valuation. Shares of Twilio, which
would have ranked high on our
inaugural list of the 100 hottest cloud
companies had it stayed private,
nearly doubled the first day. And
within two months, fuelled by 70
percent sales growth in its most recent
quarter, it doubled again. Its recent
$4.6 billion market capitalisation
dwarfs better-known tech names
like Box ($1.7 billion), Fitbit ($3.1
billion) and Yelp ($3 billion).
Twilios coming-out party sends
a multibillion-dollar signal that
building communications functions
OCTOBER 14, 2016
FORBES INDIA | 63
TIM PANNELL FOR FORBES
BY MIGUEL HELFT
CROSS BORDER TWILIO
into apps is both vital and easier

than ever, which in turn promises
to make every smartphone in the
world even smarter. Lawson is aware
of the potential. As part of the IPO
celebrations, he gave each of his
more than 650 employees a T-shirt
with a simple message: Day 1.
PATRICK WELSH FOR FORBES
bout a year after Lawson

and two friends founded
Twilio in 2008, Lawson was
invited to introduce it at a popular
networking mixer called the SF
New Tech Meetup. Rather than talk
about an inherently difficult-toexplain technology, Lawson decided
to let the Twilio software speak for
itself. In front of a thousand people
Lawson began telling his story while
simultaneously coding a Twilio appa
simple conference line. In just a few
minutes he opened an account and
secured a phone number, and after
writing a handful of lines of code
that everyone in the room could
understand, his conference line was
up and running. Lawson then asked
everyone to phone in, and just like that
a mob of developers was on a giant
conference call. Lawson then added
some more code, and his app called
everyone back to thank them for
participating. As phones throughout
the room began buzzing, the crowd
went wild with enthusiasm. He is
the let-me-show-you-what-we-cando type of exec, says Byron Deeter,
of Bessemer Venture Partners, an
early backer who has become Twilios
largest shareholder. Theres no
bravado and no ego, and that gives him
a special charisma and authenticity.
Lawsons parlour trick did more
than generate industry buzz. It
epitomised a developer-centric
business strategy that has fuelled its
growth. Twilio is exceedingly simple
to use and charges no upfront fees,
so programmers often use it to test
an idea or product. Pretty soon that
product scales and turns into a six- or
seven-figure account that required
no traditional sales process. We
64 | FORBES INDIA OCTOBER 14, 2016
onboard developers like consumers

and let them spend like enterprises,
Lawson says. Like others that
have embraced developer-driven
marketingAmazon for computing
services, Stripe for payments, New
Relic for analyticsTwilio benefits
as companies increasingly turn to
software for differentiation. As that
happens, and companies hire more
developers, they come in with Twilio
in their tool belt, Lawson adds.
Given this ethos, all new Twilions,
as the companys employees call
themselves, endure a rite of passage:
They have to create a Twilio app and
present it to the whole company.
(And, no, the assistants and marketers
and lawyers arent exempt: Nonengineers learn the ABCs of coding a
Twilio app as part of an onboarding
boot camp.) On a recent Wednesday
evening, a few dozen staffers, hunched
over catered Vietnamese pho in the
companys cafeteria-cum-kitchen
in San Franciscos South of Market
tech hub, cheer a handful of newbies
as they unveil their handiwork.
Most of the apps are goofy. One
answers text queries with a Simpsons
GIF. Another allows users to text a
math problem and promptly delivers
TWILIO INSIDE
Twilio turned voice, text and video
capabilities into programmable
building blocks that developers can
plug into their apps
TWILIOS SUPER-NETWORK CONNECTS

APPS WITH THEIR CUSTOMERS ACROSS
THE GLOBE
an answer from Wolfram Alpha, a

web-based knowledge engine that
does computations. The takeaway,
however, is serious: Anyone can
build a Twilio app. After each
presentation, Lawson, dressed in
his usual jeans, sneakers and a dark
fleece vest over a button-down shirt,
officially turns them into Twilios
version of a varsity letterman: Heres
your traaaaack jacket! Lawson
also hands them a Kindle, which
comes with $30 in monthly credit.
We want to encourage people to
invest in themselves, he says.
The CEO has been investing in
himself from a young age. Growing up
outside Detroit, he started a business
in middle school, filming and editing
event videos, mostly bar mitzvahs. By
the time he graduated high school,
hed moved up to black-tie weddings,
pulling in as much as $5,000 on some
weekends. Lawson began coding in
college, at the University of Michigan,
and got his first paid programming
gig while still a freshman.
Soon after, Lawson launched
his first internet startup, Versity.
com, which published notes from
the biggest courses on campus. As
Versity gained traction and pulled
in advertising revenue, Lawson
dropped out of school, raised
money from venture capitalists
(VCs), moved the company to
Silicon Valley and expanded the
business to about 200 campuses.
In 2000, as the dotcom wave was
cresting, Versity was acquired by a
competitor, CollegeClub.com, which
had filed for an IPO. Unfortunately,
the crash hit before the company
could go public, and it collapsed soon
after. Since Versity had been acquired
for stock, Lawson ended up emptyhanded. No one looked at their
burn rate or their cash balance, he
says. I learnt a lot and became very
cognisant of spending money wisely.
Bitten by the entrepreneurial bug,
Lawson teamed up with a friend, Jeff
Fluhr, who had recently co-founded
StubHub. As the companys first CTO,
Lawson developed the original version

of the ticket-reselling site in just six
weeks. He architected the whole
thing and recruited a couple of people
to help build it, says Fluhr. But sports
wasnt his thing, and Lawson left the
company after a few months, dabbling
in a brick-and-mortar retail venture
and finishing his college degree.
Hungry for some big-company
experience to round out his skills,
Lawson interviewed at Amazon in
2004. He got an offer from a tiny team
that couldnt tell him what it was up
to until after he accepted. It was the
beginning of what would become
Amazon Web Services (AWS), and
Lawson helped build the technology
that Amazon launched publicly in
2006. This whole idea that you can
offer infrastructure as a service was
kind of mind-blowing, he says.
His 15 months at Amazon proved
to be formative. Selling the building
blocks of computing as a service was a
brand-new idea, and Lawson was at its
epicentre. The model gained traction
with the advent of mobile apps,
which over time prompted scores
of businesses to turn to software as
a way to interact with customers.
As he began to think about where
he could apply the Amazon Web
Services model, Lawson homed in on
communications, which had proved
essential to every business he had
started. Along with two friends, Evan
Cooke, who now works in technology
at the White House, and John
Wolthuis, who remains at Twilio, they
developed a prototype and put it up
where else?on AWS. Initial reaction
from developers was enthusiastic,
and Twilio got its first customer, a
service called PhoneMyPhone.com,
which allowed people to type their
number into a website to ring their
own cellphone (handy when its
stuck between the couch pillows).
Twilios reception on Sand Hill
Road was more muted. Many VCs told
Lawson that targeting developers,
who dont control budgets of any
significance, was a bad strategy. And
his timing was lousy: One meeting

with a prominent early-stage firm
was interrupted by news of Lehman
Bros collapse. Eventually, Lawson
received some encouragement and
capital from angels Mitch Kapor,
who had developed the first popular
spreadsheet and founded Lotus,
and Dave McClure, who had run a
developer programme at PayPal. Chris
Sacca, a former Googler who made
his fortune backing Twitter and Uber,
and Bessemers Deeter also invested.
Deeter later secured Bessemers
position as lead financier of the
companys Series B round with a
Twilian stunt: He used Twilio to
programme a conference line and
When an Uber
driver and
passenger call
each other, they
do so through a
Twilio number
that keeps their
own phone
numbers private
asked Lawson to call in at a set time.
Instead of a conference, Lawson was
greeted by a message: Thank you
for calling the term-sheet hotline for
Bessemer Venture Partners. We value
your business. The robotic voice
told Lawson to Press 1 for a $15
million term sheet, 2 for $20 million
and so on in $5 million increments
to $30 million. There were also
options for hearing Katy Perrys Last
Friday Night and for connecting
with a psychic. Lawson ended up
choosing to raise just $12 million.
Twilio began by offering a
simple set of basic programmable
communications functionsthings
like dial, play, and record
which developers could bolt onto

their apps. Underneath those,
Twilio handled the messy task of
plugging into the telecommunications
infrastructure across a multitude
of carriers in various countries.
The service allowed any developer
to easily add voice and text
messaging to web and mobile
applications. As Twilios capabilities
expandedit now offers more
than 50 building blocks, or APIs,
up from the initial 5customers
began programming increasingly
complex functions and gaining
access to analytics, routing data,
pricing and other features, across
not only voice and text but also
video communications.
Today customers can build a
call centre entirely out of software
building blocks rather than having
to purchase expensive equipment
or pre-packaged communications
solutions. What once required
pulling copper wires into a data
centre and costly investments in
carrier contracts and infrastructure
can now be done by a small team of
programmers with no upfront cost.
Twilio charges only for usage.
The things they made possible
were crazy, says Sacca, who worked
on various telecommunications
projects at Google. The idea that
someone with no telecom engineering
experience could build a call-centre
flow by dragging and dropping
was amazing. Today Twilio connects
to the global telecommunications
network through 22 data centres
in seven regions and has agreements
with most of the major carriers
that allow it to deliver a message
to pretty much any phone on the
planet. Lawson calls this Twilios
super-network. As our business
grows, the super-network becomes
more difficult to replicate over
time, he recently told investors.
Many analysts agree. Twilio is a
company that is light-years ahead of
their competitive field, says Mark
Murphy, an analyst at JPMorgan.
OCTOBER 14, 2016
FORBES INDIA | 65
CROSS BORDER TWILIO
t a recent all-hands meeting

at Twilios headquarters,
Lawson plays MC in front
of a hundred or so Twilions, most of
whom sit on the cement floor. Hes
framed by large monitors that show
colleagues from offices in Mountain
View, New York, London, Dublin and
Tallinn. Lawson introduces a handful
of new employees and, to make sure
everyone remembers their names,
leads the group in a boisterous camp
counsellor call-and-response routine.
He then sits down for one of the
mainstays of the weekly meetings: A
customer Q&A. Gene Schriver, the
CEO of Globo, a translation-services
company, joins him, and the two
embrace. Im hugging him because
I bought Twilio at $26, Schriver
quips. No one in the audience needs a
reminder that shares are above $50.
Lawson listens intently as Schriver
explains how he essentially built
Globo on top of Twilio. Globo
connects customers with translators
around the world over the telephone.
The calls could be coming from a
call centre serving a customer who
doesnt speak English or a hospital
in Bangkok where a doctor needs to
talk to a French-speaking tourist.
Globo, which also offers email,
text and document translations,
connects the calls through Twilio
and routes them to the appropriate
translator, not only by language but
also by expertise, be it medical, legal,
technological or other. Twilio was
a blank canvas upon which we could
make anything happen, Schriver
says. The capabilities and reliability
of Twilios platform, he adds, are
what allowed Globo, which has just
40 employees, to beat far larger rivals
for a federal government contract
to offer translation for Medicare
recipients and people signing up for
ObamaCare at government exchanges.
Schriver calls his choice of Twilio
critical. Its the most important
bet that we made, he says.
Amid the lovefest, Lawson wants
to know whats not working and what
his team could do better. Schriver

lists a few: Some services could work
faster; analytics on voice quality
could be improved; it would be nice
to know what new features Twilio is
planning. This kind of feedback is an
integral part of how Twilio develops
its products. Not long ago, Malatack,
the VP of product, found out that
two large Twilio customers were
parking callers they couldnt handle
immediately on a conference line
and muting them. He instructed his
team to build a capability to queue
calls. We look at what customers
are doing and try to make it easier,
says Malatack, a developer himself,
who used Twilio to connect the
buzzer of his Seattle apartment to his
I wanted to
make sure our
customers knew
we were not
some fly-bynight unicorn.
cellphone before joining the company.
Twilios approach is resonating
with all types of customers. When
Yelp built a restaurant-reservation
system to compete with OpenTable,
it used Twilio to automate the
confirmation process. Rather than
have a host call customers the day
before to make sure theyre still
planning to come, the interchange
happens automatically via SMS, and
restaurants see a confirmation on
their dashboard. Similarly, Zendesk,
a cloud-based provider of customerservice software, has used Twilio
to offer call centres to small and
medium-size businessessay, a
mom-and-pop limousine dispatcher.
Twilio has also brought its simple
programmable communications
capabilities to countless non-profit
organisations through its Twilio.
org arm. Modelled after Salesforces

1-1-1 commitment to donate 1 percent
of employees time, technology
and resources to charitable causes,
Twilio.org has been seeded with
nearly 800,000 company shares
and has a goal of delivering a
billion messages for good. Its
currently at 10 percent of that goal
because of organisations like Trek
Medics, which gives people access
to emergency services in countries
where 911 doesnt exist, like Haiti, the
Dominican Republic and Tanzania.
In the US, the Crisis Text Line
used Twilio to build a service that
connects some 1,600 volunteers with
people who are contemplating suicide
or face a threat of domestic violence.
As Twilio integrates with services
like Facebook Messenger, the Crisis
Text Line is taking advantage of
those connections. We want to reach
people where they are, says Chris
Johnson, Crisis Text Lines CTO.
Sizing the opportunity in front
of Twilio, which did $167 million
in sales last year, is not easy. At
its current growth, Twilio would
hit a $1 billion annual run rate in
the second half of 2018. Lawson
calls telecommunications services
a trillion-dollar market, with big
portions of it poised to migrate from
hardware to software. But legacy
competitors like Avaya, Genesys and
others are determined to defend their
turf. And a crew of smaller startups,
with the next generation of Lawsons,
are also courting software developers.
For now, none of the new players
has the scale, features or reliability
of Twilio. The bigger risk for the
company is its overreliance on a
handful of big customers, such as
Facebooks WhatsApp, which account
for about 13 percent of its revenue. But
with most of the growth still coming
from smaller accounts, Wall Street
appears unconcerned. It is very
possible that Twilio will compound
its growth nicely for many years to
come, says JPMorgans Murphy.
For Lawson, success is about
not only growth but also financial

discipline. Profitability is within
reach in no small part because,
by tech startup standards,
Twilio is downright frugal.
Its headquarters south of Market
Street are in a modest, revamped
industrial building. Twilio occupies
the third floor and parts of the second
floor. Free lunches, that tech company
staple, are catered only a couple of

times a week. The combination of
thriftiness and rapid growth paved
the way for Twilio to conduct its IPO
on its own terms. Lawson says the
company had more than $100 million
left in the bank and didnt need to
go public. I wanted to make sure
our customers knew we were not
some fly-by-night unicorn, he says.
Lawson, whose stake in Twilio

gives him a fortune that approaches
$500 million, is halfway to personal
unicorn status. If Twilios stock
doubles yet again, Lawson will
be a billionaire. As the world
gets increasingly mobile and
cloud-based, that seems entirely
possible. Says Lawson: We are
absolutely just getting started.
The Cloud 1OO
Our exclusive ranking of the hottest private companies in the cloud factored in revenue
growth, financing, market share and buzz. The list was compiled with the assistance
of Bessemer Venture Partners and 20 of their public CEO peers
1 Slack
7 MailChimp
San Francisco
Stewart Butterfield
EMPLOYEES: 600
FUNDING RAISED: $540 MLN1
Atlanta
Ben Chestnut
EMPLOYEES: 540
FUNDING RAISED:
BOOTSTRAPPED
TEAM MESSAGING APP
EMAIL MARKETING
2 Dropbox
8 Squarespace
San Francisco
Drew Houston
EMPLOYEES: 1,500
FUNDING RAISED: $600 MLN
New York City

Anthony Casalena
EMPLOYEES: 563
DOCUMENT SHARING
WEBSITE BUILDER
3 DocuSign
9 AppDynamics
San Francisco
Keith Krach
EMPLOYEES: 1,800
San Francisco
David Wadhwani
EMPLOYEES: 1,000
ELECTRONIC SIGNATURE
MANAGER
APP MANAGER
10 Adyen
4 Stripe
San Francisco and

Amsterdam, The Netherlands
Peter van der Does
EMPLOYEES: 400
San Francisco
Patrick Collison
EMPLOYEES: 505
5 Cloudera
Palo Alto, California

Tom Reilly
EMPLOYEES: 1,0432
FUNDING RAISED: $1,040 MLN2
DATA STORAGE
6 SurveyMonkey

Zander Lurie
EMPLOYEES: 618
FUNDING RAISED: $1.2 BLN
ONLINE SURVEY MANAGER
ONLINE PAYMENTS
SLACK: THE END OF EMAIL

STEWART BUTTERFIELD, CEO, CO-FOUNDER
11 CloudFlare
As CEO of one of the hottest companies in tech, Stewart Butterfield can

barely keep up with his messages. Every freaking app on my phone has
a backlog, he says. It could be a lot worse. Butterfields company, Slack,
has taken a big bite of the email deluge now commonplace in offices. Each
day 3 million people take to Slack on their computers and phones to send
co-workers everything from routine messages to goofy cat pics. People
are creating expense reports or time-off requests with just a button, says
Slacks chief.
San Francisco
Matthew Prince
EMPLOYEES: 311
WEB SECURITY
12 Qualtrics
Provo, Utah
Ryan Smith
EMPLOYEES: 1,243
Butterfield believes the market for his software is as large as several

hundred million people. Slack is already ubiquitous in some industries (media and tech), and theyre working on a new product geared to the needs
of large businesses; Harvard University and the State Department already
use Slacks current version. The scale of this opportunity is to build something that lasts for decades or even longer, he says.
1
Total publicly-disclosed venture financing
ONLINE SURVEY MANAGER
Estimate courtesy of PitchBook
OCTOBER 14, 2016
FORBES INDIA | 67
CARLO RICCI FOR FORBES
ONLINE PAYMENTS
CROSS BORDER TWILIO
25 Zscaler
DIGITALOCEAN:
A SEA OF DROPLETS
San Jose, California

Jay Chaudhry
EMPLOYEES: 609
BEN URETSKY, CEO,

CO-FOUNDER
DigitalOcean is an upstart
looking to carve out a
long-term place in the biggest battle in tech: The war
between Amazon, Microsoft,
Google and IBM to be the
hosts and facilitators of the
swelling wave of businesses
moving onto the cloud.
IT SECURITY
26 Carbon Black
Waltham, Massachusetts
Patrick Morley
EMPLOYEES: 700
IT SECURITY
DigitalOceans secret
weapon, according to its
CEO, Ben Uretsky, is its focus
on developers. What coders
need, DigitalOcean found:
Ultrasimple, quick-to-use
virtual private servers for
building their applications
and sites. DigitalOcean calls
them Droplets, and 750,000
programmers are using them
today. Customers get what
theyre looking for with us; its
simple and easy to use, he
says. Thats different from
what the other providers are
known for. In June, Uretsky
convinced Harvard Business
School teacher and industry
veteran Julia Austin to sign on
as CTO, and over the summer,
DigitalOcean launched block
storage, a cheap way to store
data. Next on the agenda: Machine learning and analytics.
Its expensive to build out
DigitalOceans borrowed at
least $180 million to datebut
Uretsky says DigitalOcean now
turns a profit on each unit it
sells and is no longer in danger
of drowning in a sea of red ink.
13 Tanium
Emeryville, California
Orion Hindawi
EMPLOYEES: 251
Santa Barbara, California

Anant Yardi
EMPLOYEES: 5,014
FUNDING RAISED:
BOOTSTRAPPED
REAL ESTATE SOFTWARE
28 Anaplan
San Francisco
No current CEO
EMPLOYEES: 600
BUSINESS PLANNING
29 Avalara
Bainbridge Island, Washington

Scott McFarlane
EMPLOYEES: 1,0002
AUTOMATED TAX SOFTWARE
30 AppDirect
San Francisco
Nicolas Desmarais and Daniel Saks

EMPLOYEES: 550
APP MARKETPLACE
17 Coupa Software
San Mateo, California

Rob Bernshteyn
EMPLOYEES: 500
IT SECURITY
INVOICE AND PROCUREMENT MANAGER
14 GitHub
18 Domo
21 AppNexus
New York City

Brian OKelley
EMPLOYEES: 1,000
22 Medallia
American Fork, Utah

Josh James
EMPLOYEES: 800

Borge Hald
EMPLOYEES: 1,000
15 Okta
19 Fuze
23 Cylance
San Francisco
Todd McKinnon
EMPLOYEES: 804
BUSINESS INTELLIGENCE
Cambridge, Massachusetts
Steve Kokinos
EMPLOYEES: 750
Irvine, California
Stuart McClure
EMPLOYEES: 600
ONLINE VOICE AND VIDEO PLATFORM
IT SECURITY
16 Apptio
20 MuleSoft
24 Alteryx
IT INVESTMENT MANAGER
San Francisco
Greg Schott
EMPLOYEES: 700
APP INTEGRATOR
Boston
Thomas Erikson
EMPLOYEES: 720
WEB PLATFORM DEVELOPER
32 SMS Assist
Chicago
Michael Rothman
EMPLOYEES: 565
MULTI-SITE PROPERTY MANAGER
CUSTOMER FEEDBACK
APP SECURITY
Bellevue, Washington
Sunny Gupta
EMPLOYEES: 694
31 Acquia
ADVERTISING TECH
San Francisco
Chris Wanstrath
EMPLOYEES: 603
ONLINE CODE REPOSITORY
BRANDON SCHULMAN FOR FORBES
27 Yardi Systems
Irvine, California
Dean Stoecker
EMPLOYEES: 400
DATA ANALYTICS
33 Sprinklr
New York City

Ragy Thomas
EMPLOYEES: 1,200
SOCIAL MEDIA MANAGER
34 BlackLine
Los Angeles
Therese Tucker
EMPLOYEES: 500
FUNDING RAISED: PRIVATE
EQUITY
ACCOUNTING SOFTWARE
35 ForeScout
45 Eventbrite

Michael DeCesare
EMPLOYEES: 721
San Francisco
Julia Hartz
EMPLOYEES: 500
36 Pluralsight
46 ABILITY Network
ONLINE DEVELOPER TRAINING
HEALTH CARE SOFTWARE
NETWORK SECURITY
ONLINE TICKETING
Minneapolis
Mark Pulido
EMPLOYEES: 500
Salt Lake City

Aaron Skonnard
EMPLOYEES: 500
47 PointClickCare
37 MapR
Mississauga, Ontario
Mike Wessinger
EMPLOYEES: 1,208
EQUITY

John Schroeder
EMPLOYEES: 450
OPEN-SOURCE BIG DATA
HEALTH CARE SOFTWARE
38 Hootsuite
48 Intercom
Vancouver
Ryan Holmes
EMPLOYEES: 1,000
San Francisco
Eoghan McCabe
EMPLOYEES: 399
CUSTOMER COMMUNICATION
SOFTWARE
39 InsideSales
49 DatadogHQ
Provo, Utah
Dave Elkington
EMPLOYEES: 500
SALES LEAD MANAGER
New York City

Olivier Pomel
EMPLOYEES: 230
40 Procore
Technologies
50 Flatiron Health
CLOUD MONITORING
New York City

Nat Turner
EMPLOYEES: 303
Carpinteria, California
Tooey Courtemanche
EMPLOYEES: 600
HEALTH CARE ANALYTICS
CONSTRUCTION PROJECT
SOFTWARE
51 Gusto
41 BlueJeans Network
San Francisco
Joshua Reeves
EMPLOYEES: 300
Mountain View, California

Krish Ramakrishnan
EMPLOYEES: 500
PAYROLL SOFTWARE
VIDEOCONFERENCING
52 Sisense
New York City

Ben Uretsky
EMPLOYEES: 300
CLOUD INFRASTRUCTURE
43 Automattic
San Francisco
Matt Mullenweg
EMPLOYEES: 490
WEB PLATFORM DEVELOPER
44 ServiceMax
Pleasanton, California
Dave Yarnold
EMPLOYEES: 430
FIELD SERVICE SOFTWARE
EVENTBRITE:
ORGANISING ORGANISERS
JULIA HARTZ, CEO, CO-FOUNDER
When Julia Hartz and her husband, Kevin, set out to democratise event
ticketing a decade ago, they didnt expect to end up building one of the
largest ticket platforms in the world. At first the duo ignored the sexy and
lucrative world of music and sporting events, where Ticketmaster and
StubHub had a virtual stranglehold. Instead they focussed on helping
organisers plan, promote and (in some cases) sell tickets for small
gatherings like industry confabs or fan meet-ups. Were making the
unsexy sexy, says Hartz. It took many years to show valuable it was.
Now Eventbrite works with large-size customers in nearly every
category. Music, long the purview of the big-ticket brokers, is Eventbrites
fastest-growing category in its leading market, New York. But where
things could get really interesting, its CEO believes, is when the company
can start offering more services to attendees as well as event hosts. This
summer Eventbrite tested smart wristbands at seven major music
festivals that could be used for both entry and to quickly tap and pay for
concessions. Hartz formally took over as CEO from Kevin (who remains
chairman) in April.
New York City

Amir Orad
EMPLOYEES: 250
BUSINESS INTELLIGENCE
SOFTWARE
53 Veeam
Baar, Switzerland
William H Largent
EMPLOYEES: 2,225
FUNDING RAISED:
BOOTSTRAPPED
DATA BACKUP AND RECOVERY
54 AlienVault

Barmak Meftah
EMPLOYEES: 278
CLOUD SECURITY
OCTOBER 14, 2016
FORBES INDIA | 69
TIMOTHY ARCHIBALD FOR FORBES
42 DigitalOcean
CROSS BORDER TWILIO
55 PagerDuty
65 Adaptive Insights
IT INCIDENT RESOLUTION
FINANCIAL PLANNING SOFTWARE
San Francisco
Jennifer Tejada
EMPLOYEES: 220

Tom Bogan
EMPLOYEES: 475
66 Zoho
56 Gainsight
Chennai, India
Sridhar Vembu
EMPLOYEES: 4,000
FUNDING RAISED:
BOOTSTRAPPED
Redwood City, California

Nick Mehta
EMPLOYEES: 385
CUSTOMER SUCCESS SOFTWARE
ONLINE PRODUCTIVITY SUITE
57 Evernote
67 Apttus

Chris ONeill
EMPLOYEES: 300

Kirk Krappe
EMPLOYEES: 1,300
NOTE CAPTURE AND SYNC
QUOTE-TO-CASH SOFTWARE
68 Greenhouse
Software
58 Duo Security
Ann Arbor, Michigan

Dug Song
EMPLOYEES: 300
New York City

Daniel Chait
EMPLOYEES: 208
APP SECURITY
RECRUITING SOFTWARE
59 Health Catalyst
69 Optimizely
Salt Lake City

Dan Burton
EMPLOYEES: 460
San Francisco
Dan Siroker
EMPLOYEES: 350
APP OPTIMISATION
60 Fastly
70 iCIMS
San Francisco
Artur Bergman
EMPLOYEES: 2002
Matawan, New Jersey

Colin Day
EMPLOYEES: 550
EQUITY
CONTENT DELIVERY NETWORK
RECRUITING SOFTWARE
61 DataStax
71 Workfront
Santa Clara, California

Billy Bosworth
EMPLOYEES: 425
Lehi, Utah
Alex Shootman
EMPLOYEES: 671
DATABASE SOFTWARE
PROJECT MANAGER
62 Asana
San Francisco
Dustin Moskovitz
EMPLOYEES: 215
PROJECT MANAGER
BRANDON SCHULMAN FOR FORBES
63 Zuora
Foster City, California

Tien Tzuo
EMPLOYEES: 630
SUBSCRIPTION MANAGER
64 Veracode
Burlington, Massachusetts
Bob Brennan
EMPLOYEES: 4652
APP SECURITY
72 Turbonomic
DATADOG: COST HOUND

OLIVIER POMEL, CEO, CO-FOUNDER
As more and more companies look to Amazon, Microsoft and others to
store and manage the data and computing that makes their businesses
work, no companys better positioned to track it all than New York-based
startup Datadog. The company monitors the cloud usage of companies
ranging from Twilio and Zendesk to a top-tier retailer, telco and bank. CEO
Olivier Pomels pitch is simple: Many IT teams are now mixing and matching cloud services from many companies; by tracking it all through Datadog, engineers can anticipate when usage (and costs) with one may spike.
One irony for Pomel: When Datadog works best, you wont hear about
it. Thats the tragedy of heroes of the office. You remember the guy who
fixed the disaster, but not the guy who avoided it, he says. But privacy
nerds may find Datadogs chief something of a hero. Datadog possesses
a data set thats in high demand from hedge funds and others looking to
trade on its insights. But out of respect for the privacy of his clients, Pomel
refuses to sell to third parties: Were drawing the line thereour focus is
on helping our customers directly.
Boston
Benjamin Nye
EMPLOYEES: 4342
VIRTUALISATION SOFTWARE
73 NewVoiceMedia
Basingstoke, UK
Jonathan Gale
EMPLOYEES: 372
CALL CENTRE SOFTWARE
74 InVision
New York City

Clark Valberg
EMPLOYEES: 220
DESIGN SOFTWARE
75 Smartsheet
GAINSIGHT: UPSELLING INSIGHTS
Bellevue, Washington
Mark Mader
EMPLOYEES: 389
NICK MEHTA, CEO

A happy customer is one that will spend
more, and Gainsights software helps companies boost their sales by proactively analysing existing accounts. The question is how
you keep [your existing customers] coming
back for more, says CEO Nick Mehta. When
Gainsight adds ten points to revenue growth,
its software has already more than paid for
itself. Given Gainsights business, its only
fitting that the startup publicly share its own
numbers. Mehta says revenue has jumped
by 110 percent over the past year on top of a
62 percent increase in its average contract
size, with retention rates of 96 percent and
113 percent, when you account for upselling
within existing customers.
PROJECT MANAGER
76 Segment
San Francisco
Peter Reinhardt
EMPLOYEES: 100
ANALYTICS APIS
77 Talkdesk
San Francisco
Tiago Paiva
EMPLOYEES: 201
Salesforce is both a partner and investor

today, but it could be a competitor tomorrow. One area where Gainsight is developing new tools that sound awfully similar to
what Salesforce, Microsoft and others are
building: Recommended, or predictive
emails and video messages that reps can
easily send to accounts theyve lost, or are
worried they may lose. Explains Mehta:
Part of customer success is understanding
customer health, but then its about making
your team more effective.
CALL CENTRE SOFTWARE
78 SendGrid
Denver
Sameer Dholakia
EMPLOYEES: 300
EMAIL MARKETING
79 Illumio
CLOUD SECURITY
80 AvidXchange
Charlotte, North Carolina

Michael Praeger
EMPLOYEES: 800
ACCOUNTING SOFTWARE
81 Infor
New York City

Charles Phillips
EMPLOYEES: 15,000
EQUITY
BUSINESS APP BUILDER
82 Mixpanel
San Francisco
Suhail Doshi
EMPLOYEES: 230
APP ANALYTICS
83 Lookout
San Francisco
Jim Dolce
EMPLOYEES: 330
85 Sumo Logic

Ramin Sayar
EMPLOYEES: 250
IT ANALYTICS
86 Expensify
92 App Annie
San Francisco
Bertrand Schmitt
EMPLOYEES: 450
87 Namely
93 Netskope
EXPENSE REPORT SOFTWARE
APP ANALYTICS
97 MedeAnalytics
Emeryville, California
Andre Hurd
EMPLOYEES: 369
EQUITY
98 Skyhigh Networks
Campbell, California
Rajiv Gupta
EMPLOYEES: 305
CLOUD SECURITY
New York City

Matt Straz
EMPLOYEES: 324
Los Altos, California

Sanjay Beri
EMPLOYEES: 350
88 ZipRecruiter
94 WalkMe
HR SOFTWARE
Santa Monica, California

Ian Siegel
EMPLOYEES: 400
JOB SEARCH PLATFORM
89 Intacct
MOBILE SECURITY
84 Zoom Video
Communications
90 Campaign
Monitor
VIDEOCONFERENCING
CRM SOFTWARE
San Francisco
David Barrett
EMPLOYEES: 101

Robert Reid
EMPLOYEES: 400

Eric S Yuan
EMPLOYEES: 390
91 SugarCRM
Cupertino, California
Larry Augustin
EMPLOYEES: 475
ACCOUNTING SOFTWARE
San Francisco
Alex Bard
EMPLOYEES: 250
EMAIL MARKETING
CLOUD SECURITY
San Francisco
Dan Adika
EMPLOYEES: 300
USER EXPERIENCE
95 BigCommerce
Austin, Texas
Brent Bellm
EMPLOYEES: 420
ONLINE COMMERCE
96 Lithium
Technologies
99 Extreme Reach
Needham, Massachusetts
John Roland
EMPLOYEES: 850
AD TECH
100 Dynatrace
Waltham, Mass.
John Van Siclen
EMPLOYEES: 1,500
EQUITY
APP MANAGER
Edited by Alex Konrad

Methodology: Twenty-five industry
experts considered hundreds of
private cloud companies based
on a blend of valuation, revenue,
growth, burn rate and mind share
San Francisco
Rob Tarkoff
EMPLOYEES: 400
OCTOBER 14, 2016
FORBES INDIA | 71
TIMOTHY ARCHIBALD FOR FORBES
Sunnyvale, California
Andrew Rubin
EMPLOYEES: 160
startups
babychakra
Mother Lode
Integrating community, content and commerce, Mumbai-based startup

BabyChakra aims to build a one-stop ecosystem for baby care
By Shruti VenkateSh
mexy xavier
ne thing a new mother

is short on is time, and
one thing she values is
trust. These were the
primary insights Naiyya Saggi decided
to work with when she turned
entrepreneur. Saggi, 32, had worked in
the healthcare space at management
consulting firm McKinsey & Company
from 2007 to 2009 in Mumbai. Around
the same time, she saw her friends
struggle to find services and guidance
during their pregnancy and postdelivery. And though she went on
to graduate from Harvard Business
School in 2010 (on two scholarships
the JN Tata Endowment and the
Fulbright Scholar Program), the germ
of an idea had already been sown.
It all finally came together in
BabyChakra, a website she and
her childhood friend Mitesh Karia
launched in 2014. The website is
a one-stop communication and
discovery platform for new mothers.
Fathers are also welcome, but we
are currently focussed on pregnant
women and mothers with children
up to the age of five, as this is a
period of maximum obsession and
information asymmetry, Saggi says
with a smile as she sits back with a
cup of coffee in a caf in Mumbais
Lower Parel. While 70 percent of
Indians live in nuclear families and
85 percent of decisions are taken by
mothers in these families, they have
no one to turn to for advice, she adds.
While some startupslike
mycity4kids, ZenParent, Parentune
and IndiaParentingdo exist in the
baby and child care industry, offering

services ranging from reminders for
vaccination to information about kids
entertainment, BabyChakras basic
premise is to create a community of
mothers who can offer each other
advice, recommendations and support.
Unlike other platforms, we are
building an ecosystem of care for
mothers, Saggi says explaining that
once a mother is on BabyChakra,
she is plugged into a personal
platform where she can connect
with other mothers, experts and
care providers best suited for her.
The size of the baby care
industry in India as of 2015, both
online and offline put together, is
$15-17 billion [around Rs 1 lakh
crore]. This is expected to exceed
$20-22 billion by the end of 2017,
says Aditya Pathak, business analyst
at Bengaluru-based research and
advisory firm RedSeer Consulting.
And Saggi believes there is a
massive opportunity to disrupt this
market, which, although fragmented
and disaggregated, is growing at a
compounded annual growth rate
of 15-20 percent. BabyChakra itself
has been growing steadily. Since its
The size of Indias

baby care industry
is expected to
grow to $20-22
billion by 2017-end
launch, the website has seen nearly

3 million mothers use its services
and it has built a community of over
3,000 mothers, which is growing
10 percent month-on-month.
The user base is also growing at
40 percent month-on-month.
BabyChakra has a 35-member
team that works out of an office in
Kala Ghoda in Mumbai and plans to
increase staff strength to 55-60 by
the end of this year when it shifts to
its new office in the Kurla suburb.
The startup raised funds from
Mumbai Angels, Singapore Angel
Network and the Patni Family Office
in 2015. (While Saggi declined to
disclose the funding amount, media
reports peg it at $600,000. The startup
did not share revenue numbers).
It was 30 percent the space
and 70 percent Naiyya [Saggi] the
entrepreneur that brought the Patni
Family Office to the investment,
says Arihant Patni, managing
director of Patni Financial Advisors.
I met her at the Wharton India
Economic Forum in Philadelphia
where she was presenting.
The market wasnt crowded,
but it was occupied when Naiyya
entered, adds Karan Maheshwari,
managing director of Maheshwari
Investors Private Limited and had
previously worked with Saggi at
McKinsey. But we are a country of
1.2 billion people and even today you
have people starting companies in
power and fashion. One just needs
to focus on ones offering, product
and business. Maheshwari, who
naiyya Saggi,
founder and
CeO, BabyChakra
believes there
is a massive
opportunity to
disrupt indias
baby care market
startups babychakra
was the deal lead for Mumbai Angels
when it invested in BabyChakra,
adds, I invested in BabyChakra
because it is a wide open space and
has a clear target market and need.
Prior to the launch, Saggi and
Karia spoke to over 1,200 mothers to
understand the missing gaps in the
maternity and child care space and
what services they could recommend
to make child care easierlike advice
in choosing the right maternity
hospital or finding a good daycare.
We launched the alpha and early beta
[versions of the website] in January
2015 with the services that came in
being only mom-recommended. For
us, its about solving a real problem
and making an impact, Saggi says.
Users can sign in with their
social media profilesFacebook or
Googleon the website and app for
free to start using the service. There
is also a closed community called the
MomStar programme that actively
contributes articles, writes reviews
of products and services related to
maternity and child care, organises
meets and answers queries raised
by other parents. In addition, the
platform has a panel of 20 experts
including paediatricians, baby
weaning specialists, prenatal and
lactation consultants and special
needs educators. Our experts
contribute articles, respond to
questions on the app and engage
in Live Chats on the website and
app, all for free, says Saggi.
A lot of mothers are struggling
to change or choose doctors,
some like me never knew we have
lactation consultants and that theres
something called a developmental
paediatrician as well. A lot of
information about our options is
present on the site, says Prisha
Lalwani, 31, who is a part of MomStar.
Now, before visiting a new
restaurant with my kid, I ensure I read
its review on BabyChakra to know
how child-friendly it is. The same
goes with visiting a new doctor or a
hospital, adds Charu Sareen Gujjal,
28, a teacher. All the services provided

on the site, from child specialists to
playschools, are put through a set of
verifications by BabyChakra before
being listed. Mothers, too, write
reviews based on their experience.
The challenge now, Pathak points
out, is to scale up, start focusing
on the rural areas, be available in
more languages and test the revenue
model. Maheshwari, too, adds that
it needs to start experimenting with
revenue models a year from now.
That, Saggi is already working
on. I believe in making money, she
says. The website has no banner ads,
but brands like BabyOye, Cloud 9,
LifeCell, Hamleys and MamyPoko
While it is well
capitalised for the
next two years,
BabyChakra is
exploring various
revenue streams
Pants engage with the users through
contextual marketing, i.e., sponsored
posts and targeted advertising. But
we highlight such content and make it
clear that it is paid for, she clarifies.
And while it is well capitalised
for the next two years, BabyChakra
has also begun exploring
other revenue streams.
It has onboarded services like party
stores, bakeries, doctors, play areas,
maid agencies and diagnostic centres
in Mumbai, Delhi and Bengaluru.
It is essentially productising these
services and enabling people to
buy them through BabyChakra,
says Saggi. Since these services are
hyperlocal in nature, they have a
better reach on BabyChakra compared
to generic Facebook Pages, claims
Saggi who also plans to enable
users to do online chats with these
services. In the next three months, the
startup is looking to bring on board

over 10,000 more services across
Mumbai and the adjoining areas of
Navi Mumbai and Thane and then
move on to Delhi and Bengaluru
before gradually expanding to more
cities. The startup plans to charge a
commission on each transaction made.
The idea is to facilitate helpful
conversations between parents,
especially mothers, experts, service
providers and even larger brands,
in a way that creates value for all
stakeholders, says Mohit Kumar, 24,
chief product officer, BabyChakra.
Brands too seem happy with the
results. Working with BabyChakra
allows us to access discerning mothers
who are both knowledgeable and want
to understand the difference between
products available in X, Y, and Z
places brands like us and brands like
BabyChakra are a refreshing way of
building the category, says Prakash
Wakankar, CEO, Mahindra Retail.
When it comes to her own
marketing, Saggi is a tad conservative,
as she feels BabyChakra is a very
strong referral-based product
that speaks for itself. Most of the
marketing activity is digital and
done in-house. Instead, BabyChakra
invests in offline events, the most
recent being Breast is Best, held in
August in Mumbai, where mothers
were invited to share their stories.
One of them shared a story about
donating milk to another mother
and that sparked off a new idea for
Saggi. It got us obsessed as a team,
of how we could create that network,
where donor mothers can register and
mothers in need can contact them.
Another idea playing out in Saggis
mind is in the nanny space. There are
a lot of Facebook pages or WhatsApp
groups that share photographs like
this nanny ill-treated my child and
stole my money or she is good and I
can vouch for her. Saggi is considering
building a user-generated database
that shares information about nannies.
Ultimately, it is all about making
lives easier for mothers, she says.
LEVON BISS FOR FORBES
CROSS BORDER
GLAXOSMITHKLINE
GLAXO
TAKES ITS
MEDICINE
Andrew Witty inherited a drugmaker sick with scandal
and spent the next eight years patching up his patient.
GlaxoSmithKline may finally be well again.
BY MATTHEW HERPER
CROSS BORDER GLAXOSMITHKLINE
eres how Sir Andrew

Witty, who is due to end
an eight-year tenure as
the chief executive of
British drug giant GlaxoSmithKline,
would like to be remembered: In his
shirtsleeves, in sub-Saharan Africa,
meeting with impoverished villagers
and then persuading first-world
politicians of the need for drugs in
the developing world. As the chief
executive whose company developed
a malaria vaccine and was first to
test a vaccine for the Ebola virus. As
the ethical exec who stopped paying
doctors what were essentially bribes
to talk up drugs. As the pharma boss
who managed to stabilise a drug giant
without a big, destructive merger.
Honestly, I dont regret a single
decision, says Witty, 52. Someone
smarter than me probably could
have done it better. But I think it was
the right direction for us to go in.
History might remember a
different Glaxo: The company
whose revenues are flat since Witty
took over and whose shares have
underperformed its peers. The
company accused of bribery in
half-a-dozen countries. The firm
that, in July 2012, pleaded guilty
to civil and criminal charges in the
US for marketing in illegal ways
drugs like Paxil for depression and
Avandia for diabetes, and agreed to
pay $3 billion in fines, the largest
such settlement ever. After that
bruising Witty did something pharma
chief executives almost never do.
He apologised. On behalf of GSK,
I want to express our regret and
reiterate that we have learnt from
the mistakes that were made, he
said in a prepared statement.
What kind of mistakes? For one,
prosecutors alleged that a decade
before Witty took command Glaxo
paid Drew Pinsky, who parlayed
a radio show giving teenagers sex
advice into the celebrity persona of
Dr Drew, $275,000 for two months
to talk about antidepressants and sex.
Dr Drew gave an interview where he
segued from talking about a woman

who said she had 60 orgasms in a row
to saying how Glaxos Wellbutrin
was better for the libido than other
antidepressants. Pinsky didnt disclose
at the time that Glaxo was paying
him; no charges were brought against
Pinsky. Similar shenanigans occurred
with Avandia and Paxil, which
were marketed to adolescents even
though it wasnt approved for them.
The maddening problem for
pharmaceutical chief executives is
that their tenures will be judged on
the results of decisions made decades
before they took command. Most of
the scandals of Wittys term predated
him, but so did many successes:
Glaxos malaria vaccine has been
The maddening
problem for
a pharma CEO
is that he will
be judged on
decisions made
decades earlier
in the works for 30 years. These
immutable links to the past, and to
the future, weigh heavily on Witty as
he looks to help choose his successor.
To have an industry with a 20year product life cycle, but only to
think one year ahead, is destined for
disaster, Witty says. Your strategy
needs to be consistent with that time
frame. Thats what we tried to do.
Witty has made some big moves
of his own that will help determine
whether future Glaxo chiefs succeed.
In 2014 he made a deal with Novartis
that traded GlaxoSmithKlines
marketed cancer drugs for Novartis
vaccine and consumer businesses
and a $16 billion cash payment. Most
other big pharma companies are
depending heavily on new cancer
treatments, which cost $100,000 and

up for a course of treatment. Witty
thinks the future of such drugs is at
risk because society will not continue
to pay for them. In the short run that
has hurt him, as insurers in the US
have been willing to pony up. He has
also focussed on countries in Asia
and Africa whose pharmaceutical
markets are just emerging.
The share price certainly doesnt
reflect a turnaround. But profits are
up, and in the second quarter of this
year new-product sales doubled to
$1.5 billion, 17 percent of revenue.
Glaxo is forecasting earnings growth
of at least 11 percent for the year.
His predecessor left an awful lot
of issues for him to deal with, an awful
lot of settlements that they just kicked
into the long grass, says Richard
Buxton, the chief executive of Old
Mutual Global Investors, the mutual
fund. I think whoever succeeds
him will preside over a better set
of outcomes for shareholders.
laxoSmithKline, which is
based in London, was formed
on January 1, 2001 by the $76
billion merger of Glaxo Wellcome, the
maker of Wellbutrin (depression) and
Imitrex (migraines), and SmithKline
Beecham, which made Avandia
(diabetes) and Paxil (depression).
Both companies had storied histories
that involved breakthrough drugs,
including AIDS drugs and antibiotics.
But they were having trouble
coming up with enough new hits.
Soon after the merger closed,
the controversies began. Critics
alleged that SmithKline had failed
to publish studies that showed Paxil
might increase the risk of suicidal
thoughts in adolescents, while
publishing studies that showed
there was no danger. In 2004 New
York attorney general Eliot Spitzer
sued the company; the suit was
eventually settled when Glaxo agreed
to publish on the Internet summary
results of its future drug studies.
Then came Avandia. In 2007
Steven Nissen, chairman of

cardiology at the Cleveland Clinic,
published a paper in the New
England Journal of Medicine arguing
that Avandia, GlaxoSmithKlines
blockbuster diabetes drug, caused
heart attacks. The FDA eventually
said no new patients should start
taking the drug, ultimately erasing
$3 billion of annual sales.
The response from Wittys
predecessor, JP Garnier, was
tone-deaf at best. My wish for the
media is to be more sophisticated
when they report scientific news,
he said in 2008. He predicted
that he would be vindicated by
the FDA. Later that year, when a
BBC interviewer repeatedly asked
him about the Paxil controversy,
he hung up while on the air.
Witty became chief executive in
May 2008. He was a 23-year Glaxo
lifer, a marketer who had done stints
running part of Glaxos African
businesses before taking over as
president of European operations.
His first goal, it seemed, was to
rehabilitate Glaxos image. A series of
profiles in newspapers and magazines
presented him as concerned about
the developing world. In 2009 the
Daily Telegraph called him the
friendly face of big pharma.
But Witty had problems that
couldnt be solved with good
press or a friendly face. Patents on
GlaxoSmithKlines top drugs were
expiring, meaning that generic
competition was going to eat
away at sales. Between 2006 and
2009 medicines such as Lamictal
for bipolar disorder, Zofran for
nausea, Valtrex for herpes and
Flonase for allergies went generic,
removing billions of dollars from
Glaxos top line. With the loss of
Avandia it all added up to roughly
a quarter of the companys sales.
One way to replace those sales
would have been to invent new
drugs. Glaxo spends $4.5 billion a
year on research and development.
Witty doubled down on a strategy
UNDERACHIEVER
Total return to shareholders of the worlds top pure-play pharma
giants since Andrew Witty took command of Glaxo in May 2008.
300
30/05/08=100
200
PFIZER
MERCK
NOVARTIS
GLAXOSMITHKLINE
SANOFI
100
90
80
70
60
2008
2009
2010
2011
put in place by his predecessors:

Splitting the companys 10,000-plus
R&D staffers into dozens of largely
autonomous units that theoretically
could function with the agility
of biotechnology companies.
Back in 2010 Witty was excited
about three potential hits. One was a
vaccine to prevent lung cancer from
recurring. It failed in 2014. Another
was a new type of drug to prevent
heart attacks. That medicine failed,
too, in 2014. Even if it had succeeded,
medical journals revealed a side
effect that might have torpedoed
the drug: It made an unpleasant
scent emanate from many patients
bodies. The third was a diabetes
GSK got 13 drugs

through the FDA
during Wittys
tenure, more than
any company
except Johnson
& Johnson
2012
2013
2014
2015
2016
medicine, Tanzeum, that did reach

the market, but behind rival meds
from AstraZeneca and Novo Nordisk.
Despite those failures
GlaxoSmithKline has gotten 13 drugs
through the FDA during Wittys
tenure, more than any company
except Johnson & Johnson, according
to the InnoThink Center for Research
in Biomedical Innovation. But
many didnt amount to much.
Analysts had expected Benlysta,
a lupus drug approved in 2011, to
generate as much as $5 billion in sales,
and in 2012 GlaxoSmithKline spent
$3 billion to buy Human Genome
Sciences, which had invented the
drug. Yet the market just wasnt there.
Sales in 2015 were $350 million,
though they grew at a 33 percent clip.
Cervarix, a vaccine, targeted two
strains of the human papilloma virus
(HPV), which causes cervical cancer.
Mercks rival Gardasil targeted four
HPV strains, including two strains
that cause genital warts. Sales of
Cervarix were $135 million, compared
with $1.9 billion for Gardasil.
Five of Glaxos new drugs were
for cancer. In 2014 the companys
cancer-drug sales rose 20 percent to
nearly $2 billion. But Witty struck an
OCTOBER 14, 2016
FORBES INDIA | 79
CROSS BORDER GLAXOSMITHKLINE
offer with Joseph Jimenez, the chief

executive of Novartis, to sell these
marketed drugs, though he made
sure to keep the early-stage cancer
medicines Glaxo was developing.
In return he got Novartiss vaccine
division, including three promising
meningitis vaccines, and created a
joint venture in consumer health,
which included brands like Sensodyne
toothpaste and Theraflu for flu
symptoms. Many investors thought
he was crazy to get out of cancer. But
Witty also negotiated a $16 billion
cash payment from Novartis, which
he says was more than his internal
estimates said the cancer drugs would
ever be worth. He still insists that
by being willing to be unfashionable
he got the better part of the deal.
MICHAEL BIRT
hile Witty was trying to

make up for lost sales
from patent expirations,
he was busy with another task:
Trying to get past the ethical messes
that had gotten GlaxoSmithKline
in trouble before he took over.
One problem, he decided, was the
way the drug industry traditionally
paid sales representatives: It
incentivised them to push the ethical
and legal envelope. The reps were
paid based on whether they could
get doctors in their territories to
prescribe more of a given drug.
These incentives, Witty decided,
led representatives to do things
like pay doctors to speak when
they werent experts, give away
free trips and meals, and use sales
pitches that were not in line with
language approved by the Food &
Drug Administration. Now the reps,
Witty says, are measured on technical
knowledge and customer service.
He considers this change one of the
proudest achievements of his career.
But Glaxo is a huge company with
100,000 employees, and its ethical
problems didnt end just because
Witty was trying to fix things. In 2013
the Chinese government announced
that it was investigating Glaxo for
Witty in 2010.
I dont regret
a single decision.
Someone smarter
probably could
have done it
better. But it was
the right direction
to go in.
bribery, saying the company had
funneled illegal payments to doctors
and government officials in order
to boost sales. Witty remembers
realising over a period of days how
serious the allegations were. It
was distressing, he says. It was
so counter to everything we were
trying to do. A year later Glaxo was
found guilty of bribery in China and
ordered to pay nearly $500 million.

In 2013 Witty announced that
Glaxo would no longer offer any
payments to physicians for speaking
or other services. He denies the
decision had anything to do with
China. At the time, Glaxo, like other
companies, was routinely offering
US physicians large sums of money
sometimes in the six figuresto
give speeches promoting its drugs.
Sometimes the practice bordered
on institutionalised bribery, as drug
reps paid doctors to give speeches as
a reward for prescribing medicine.
In other cases drug companies
would pick only doctors who liked
their products, creating an echo
chamber in which it seemed like
physicians were unanimous in
supporting a particular drug.
Witty claims that getting rid of this
tried-and-true practice has caused a
complete transformation of Glaxos
marketing. Wed say, Thursday night
would you please come to the Holiday
Inn, have a chicken dinner, listen to
a doctor talking about something?
Witty says. Great. What if that
Thursday night wasnt convenient
for you? What if youve got kids?
Now, he says, digital tools mean
that Glaxo can engage physicians
with questions on their own terms.
If you want to talk to us at 3 am,
he says, were there at 3 am.
Witty also embraced the idea that
Glaxo should publish all its data.
Drug companies typically publish
only their most positive studies,
making medicines seem safer and
more effective than they actually are.
One analysis of clinical trials for 12
different antidepressants found that
only one of 38 positive studies wasnt
published; of 36 negative studies, 3
were published in a way that was
accurate, 22 were not published and
11 were published in a misleading
way that made the results appear
positive when they were not.
Witty insisted Glaxo make public
the results of all 1,700 studies the
company had conducted since 2000.
Potential contenders for GlaxoSmithKlines top job
EMMA WALMSLEY
CEO, GSK CONSUMER HEALTHCARE

INSIDER RUNS GLAXOS CONSUMER HEALTH DIVISION
ABBAS HUSSAIN
PRESIDENT, GLOBAL PHARMACEUTICALS, GSK

ALREADY IN CHARGE OF GLAXOS BIGGEST BUSINESS
SIMON DINGEMANS
CHIEF FINANCIAL OFFICER, GSK

HE KNOWS THE BOOKS
DAVID EPSTEIN
FORMER HEAD, NOVARTIS PHARMACEUTICALS

LONG CONSIDERED A CANDIDATE FOR A CEO JOB
CHRISTOPHER VIEHBACHER
FORMER CEO, SANOFI

LOST OUT TO WITTY FOR GSK JOB LAST TIME AROUND
DANIEL ODAY
CEO, ROCHE PHARMACEUTICALS

SKILLED MARKETER AT WORLDS BIGGEST CANCER-DRUG MAKER
This was well above and beyond

what Glaxos settlement with Eliot
Spitzer forced it to do. In 2013 he
signed a pledge with a group called
AllTrials, which required further
promises to make data public, to try
to push the rest of the industry to
follow. The man behind AllTrials, a
UK doctor and newspaper columnist
named Ben Goldacre, had written a
book called Bad Pharma: How Drug
Companies Mislead Doctors and
Harm Patients and had been sceptical
about Wittys previous attempts at
transparency. But the day Glaxo
took the pledge he was gushing,
blogging that Glaxos commitment
was excellent and amazing.
In 2014 Glaxo started its Ebola
trial. The next year it received
European approval for Mosquirix,

the malaria vaccine it had developed
with funding from the Bill &
Melinda Gates Foundation.
Next, the malaria vaccine will
be evaluated by the World Health
Organization. Witty, who spent
years in malaria-ridden subSaharan Africa, says one of the most
emotional moments of his career
happened when he got initial data
that showed the vaccine could cut
infection rates by nearly half (a
number since revised downward).
t would be nice if Wittys focus

on improving the world were also
making Glaxo run on all cylinders.
But its not that simple, and right
now there is one big question facing
the company: What will happen as

generic competition emerges for
its top-selling product, Advair, an
inhaler for asthma and COPD?
In 2013 Advair generated more
than $4 billion, but sales have already
fallen 30 percent as US insurers
have switched to other products and
managed to negotiate lower prices.
Next year the first generic competitor
should emerge in the US. As more
generics are approved, analysts at
Jefferies estimate, sales will fall
by 90 percent by 2020. The better
Wittys successor can do at slowing
this declineperhaps by competing
with the generics on pricethe less
nervous shareholders will be.
Glaxos heirs to Advairnew
inhalers called Breo Ellipta and Anoro
Elliptacould generate $2 billion
in sales by 2020, Jefferies says. But
ultimately growth will depend on
new drugs. One promising entrant is
Tivicay, an HIV drug that competes
with Isentress, Mercks $1.5 billion
pill. Jefferies forecasts Tivicay will
be at least as big within five years.
Another promising product is
Shingrix, a shingles vaccine that is
more effective than Mercks Zostavax,
which has annual sales of $749
million. Glaxos consumer health
business, Jefferies forecasts, could
increase 25 percent to $12 billion
over the next four-and-a-half years.
Of course, managing all of this
will fall not to Witty but to his
replacement. Internal candidates
include Emma Walmsley, the head
of consumer business, and Abbas
Hussain, who is in charge of Glaxos
global pharmaceutical division.
The board could want an outsider.
Whoever gets the job, Witty seems
more than ready to pass the baton.
Is everything right? he asks.
No. Did we make mistakes? Yes.
Did things go wrong? Yes. But it
hasnt put us off trying to improve.
And I hope whoever takes over
will continue trying to improve.
Because theres still plenty of
things to keep improving.
OCTOBER 14, 2016
FORBES INDIA | 81
WALMSLEY, HUSSAIN, DINGEMANS: COURTESY: GLAXOSMITHKLINE; EPSTEIN: ARND WIEGMANN / REUTERS;

VIEHBACHER: JESSICA RINALDI / REUTERS; ODAY: COURTESY: GARY WAGNER/ ROCHE
RSUM STACK
CROSS BORDER
JACK ERWIN
A Step Above
Three-year-old shoemaker Jack Erwin disrupted the footwear market
by cutting out the middleman. Can it make the next leap forward?
BY SUSAN ADAMS
riel Nelsons decision

to get a buzz cut in the
middle of a sweltering
New York summer four
years ago was a turning point in his
career. After a frustrating May 2012
shopping expedition for dress shoes,
he and his friend Lane Gerson, then
29 and 30 years old, had decided to
start a direct-to-consumer footwear
company. The European brands they
loved, such as John Lobb and Edward

Green, retailed for $1,000 or more.
Why not make the kind of shoes they
wanted to buy but couldnt afford?
The idea was, lets make beautiful
mens dress shoes for $100 and sell
them for $200, Gerson says. They
named their nonexistent company
Jack Erwin, the first names of their
fathers, who wouldnt pay more
than $200 for a pair of shoes. But
Gerson, then a controller at CAD

BLU, a 3D printing firm, and Nelson,
who was a manager at Beyer Farms, a
beverage distribution company, knew
nothing about the shoe business. It
Walking the line: Three years into their
journey, Ariel Nelson (left) and Lane Gerson
say sales of their Jack Erwin brand of shoes
are brisk. Revenue more than doubled
in 2015, to $5 million, though direct-toconsumer competitors are already nipping
at the companys heels
In December 2012, Nelson lost

his day job when his company went
under. The two started scrambling for
cash. After family, friends and friends
of friends enthusiastically invested
$650,000 in startup costs, Gerson quit
his job. Once we took other peoples
money, he explains, it was all or
nothing. To drive initial sales, Nelson
and Gerson sent an email blast to more
than 3,000 contacts, offering a lifetime
discount of 10 percent on purchases.
The first few thousand Jack Erwins
debuted online in October 2013. They
sold out in two months. (By 2014-end,
first-year revenue came to $2 million.)
In early 2014, Guillaume, who had
been moonlighting in exchange for
a small stake in the company, joined
Though Nelson
and Gerson had
the millennials
in mind, their
brand has been
discovered by
older men too
full-time. He guided a move from
Portugal to four factories in Almansa,
Spain, where the craftsmanship is a
step above and the factories accept
independent sourcing of materials
like laces and insoles. Independent
sourcing meant smaller markups
and more savings. From an initial
cost of $90 per pair of $195 lace-ups,
theyve brought the cost below $80.
Still, to expand, the company
needed more cash. An email from
the original blast had landed in the
inbox of Adam Levin, a venture
capitalist at Crosslink Capital in
San Francisco. A fellow millennial,
who wanted nice shoes, he loved
the Jack Erwin concept. In 2014,
together with two other California

VCs, Crosslink invested $2 million.
Then Jack Erwin got an enquiry
that startled the team. Caleres, the
publicly traded shoe company that
owns Dr. Scholls and Naturalizer,
among other brands, and has sales
of $2.6 billion, wanted to invest.
By September 2014, Caleres led a
financing round totalling $9 million.
Still, the partners kept operations
lean, working in a 1,200-square-feet,
two-bedroom New York apartment
where Nelson and Gerson lived as
roommates. Earlier this year they
upgraded to a 5,000-square-feet loft in
Manhattans Tribeca neighbourhood
with raw wood floors, exposed brick
and an Australian shepherd named
Pancake, who belongs to Molly, a
customer service representative.
Aside from a midtown pop-up store
that ran for five months last year,
the brands only brick-and-mortar
presence is a 400-square-feet
Tribeca space where customers can
try on samples and order online.
Three years into their journey,
Nelson and Gerson say sales are
brisk. Revenue more than doubled in
2015, to $5 million, and the staff has
expanded to 20. Gerson says he and
Nelson are electing to fund growth
rather than turn a profit. Though the
plan is to keep the selection small, this
summer they introduced two casual
offerings, a $125 boat shoe and a $115
suede driving loafer in eight colours.
How big can Jack Erwin get?
Direct-to-consumer competitors are
already nipping at its heels. Bostonbased M.Gemi, which launched
last year, offers Italian-made laceups for $278. Paul Evans, based in
New York, also sells Italian-made
dress shoes, starting at $399. But
no one has yet tried to muscle in on
Jack Erwins $200 niche. I believe
there are hundreds of millions
of dollars in opportunity here,
Nelson says, and we are poised
to become the big player.
OCTOBER 14, 2016
FORBES INDIA | 83
JAMEL TOPPIN FOR FORBES
was a completely naive and totally

simplistic plan, Gerson admits.
After three months of research, all
the duo had learned was that they
had no idea how to take the first
step in this would-be venture.
But then, Nelson found himself
sitting next to a Frenchman named
Bertrand Guillaume in a cramped
barber shop on Manhattans West
26th Street. The 42-year-old
Guillaume was venting about his job
as the senior manager of product
development in the shoe division of
Ralph Lauren. He accepted Nelsons
invitation for drinks, where he told
the friends that their idea wasnt
nuts. At Ralph, shoes would land in
the warehouse for around $90, the
wholesaler would sell to Barneys
for $225 and the shoes would
sell at retail for more than $600,
Guillaume says. I knew they could
sell a shoe with great craftsmanship
for $200. It was a brilliant idea.
At a time when sellers of
everything from eyeglasses (Warby
Parker) to mattresses (Casper and
Tuft & Needle) are undercutting
traditional retail channels by excising
middlemen, Jack Erwin fills a gap in
the market for handcrafted, European
shoes. Though the partners say
they had their contemporaries in
mindstyle-conscious millennials
who prefer penny loafers and
cap-toed lace-ups to Converse
or Niketheyre pleased that the
brand has also been discovered by
older men looking for a bargain.
Before production could begin, the
team needed to come up with designs
for their last (the mould around
which the shoe is constructed). They
agreed that Jack Erwins should have
sturdy leather soles and a slightly
elongated shape that tapers to a subtle
curve. Guillaume recommended
they work with a factory in So
Joo da Madeira, Portugal, which
would source materials for the
initial run of 3,000 shoes.
CROSS BORDER
gamBling
Time To Hit
The Beach?
Flush from a run at the Asian VIP casino take,

Aussie operators gird for a wider resorts battle
By MuhaMMad Cohen
Tim WimBORnE / REUTERS
betting volumeto $92 billion

ustralian casinos are
by fiscal year 2015, which ended
all-in on Chinese. Last
that June. Morgan Stanley
year, for the first time, the
estimates that by then Australia
Lucky Country welcomed
had 8 percent of the worlds VIP
more than 1 million Chinese visitors,
gambling revenue, or casino win.
many eager to try their luck on trips
Players from all Asia regions,
for business, visiting relatives or
particularly Chinese players,
sightseeing. The Chinese, particularly
have provided the growth in the
high rollers, have buoyed Australian
market and made up for any falls
casinos even as Macaus VIP
from local players in whats been
gambling revenue has been cut in half.
a tough Australian economy in
President Xi Jinpings antirecent years, says Global Market
corruption crackdown thats
Advisors partner Shaun McCamley,
devastated Macau may have initially
formerly a senior casino executive
helped Australia, but the game
in Australia and east Asia.
is changing. Now, as elsewhere,
Australias Chinese visitor count
its shifting to resort attractions
doubled between 2011 and 2015 and
for a wider market, with two big
is still risingup 23 percent in June
domestic rivals leading the chase.
from the year-ago month. In the 12
Those would be Crown Resorts,
53 percent owned by billionaire James months to June, China surpassed
neighbouring New Zealand as
Packer, and The Star Entertainment
Australias leading source of visitors,
Group, formerly Echo Entertainment,
though it is at least five flying hours
which grew out of the old Tabcorp
more distant. China also leads in
state gambling franchise. A distant
visitor spending, up 38 percent last
third player in most counts of the
year to A$8.9 billion.
Aussie action is SkyCity,
Growing ties are
with properties in
a factor: Chinese
Adelaide and Darwin and
immigration and
three in New Zealand.
students in Australian
The groundwork for
universities, property
this battle was laid in a
purchases and closer
three-year run during
business links bolstered
which the key Aussie
by a bilateral free trade
casino operators racked
agreement in force
up 58 percent gains
since December. And
in their international
James Packer, majority
tourist-friendly policies
commission business
owner of Crown Resorts
include easing visa rules and choosing

China for a trial programme allowing
travellers to purchase expedited
entry processing at airports.
So the stage is set for a renewed
battle for gambling revenues as

part of a wider integrated resorts
competition. The image of a safe place
with outdoor beauty, good food and
wine and plenty of water sports is
powerful in China. In other parts

of the world, destinations talk about
building non-gaming attractions.
In Australia, we have them in place
naturally, a Star spokesman says.
Crown leads Australias casino

market, in part because it actively
pursued Asian gamblers from the
launch of Crown Melbourne in
1993. It says more than a third of
october 14, 2016
forbes india | 85
JaSOn REED / REUTERS
Players from all asia

regions, in particular,
Chinese players, have
provided the growth
in the market.
CROSS BORDER gamBling
its Australian revenue comes from

international visitors, including a
significant proportion from China.
Marketing consultant Sudhir Kale,
also a professor at the Gold Coasts
Bond University, says 60 percent
of players at Crown Melbourne
are Asian, predominantly ethnic
Chinesethough this can include
domestic residentsand among its
top 200 players, only one is not Asian.
Following Macaus gambling
liberalisation in 2002, Crown and
Melco International, controlled
by Lawrence Ho, formed Melco
Crown, building three Macau casino
properties, plus City of Dreams
Manila. Crown announced in May
that it would reduce its Melco
Crown stake from 34 percent to
27 percentbut it is finding plenty
of Chinese action at home.
Crown is investing $2.8 billion in
its Australian properties, including a
six-star hotel opening later this year
at Crown Perth. Crown Melbourne,
currently with 1,600 rooms, plans to
add 400 rooms to meet future visitor
demand, particularly from China, the
company tells Forbes Asia. In June,
Crown received final government
approval for a $2.8-billion resort
on Sydney Harbour at Barangaroo,
expected to open in 2021 with
frontline staff who speak Mandarin.
Crown Sydney will end the
local monopoly of Stars flagship
property. Star made notable inroads
into the Asian VIP market after the
elevation of insider Matt Bekier
to CEO in early 2014, with former
Macau executive Greg Hawkins
becoming Stars general manager in
Sydney. Last year Star beat Crown
in a contest to redevelop Brisbanes
Queens Wharf district, home to Stars
Treasury Casino, located in a historic
building that restricts expansion
and hospitality options. The A$3
billion project includes moving
the casino to a curved waterfront
complex that evokes comparisons
with Singapores iconic Marina Bay
Sands. Perhaps as important, Stars
VIP VIgorIsh
Down Under has more high-roller
action than the Las Vegas strip . . .
OTHERS
13%
LAS VEGAS
AUSTRALIA &
NEW ZEALAND
SINGAPORE
6%
8%
MACAU
65%
8%
% of 2015
global VIP
revenue
Source: Morgan Stanley
. . . . and two players dominated

the business there
VIP BeTTIng VoLuMe (a$ BLn)

Crown Resorts
35.7
Star Entertainment
23.6
SkyCity Entertainment
2.6
Figures are for first half of 2016
Source: Company reports
Brisbane partners are Hong Kong

billionaire Cheng Yu-tungs Chow Tai
Fook Enterprisesa private arm of
the family conglomerate that includes
the eponymous jewellery retailer and
hotelsand Far East Consortium,
also of Hong Kong and a property
developer with a Chinese wallet
strategy thats very active in Australia.
The Chinese partnership is of
enormous import for Star, not only for
access to capital but for networks in
China, consultant Kale says. Thanks
to Far Easts links to leading mainland
tour agency China Travel Service
(CTS), Star is negotiating travel deals
with CTS and seeking its advice on
hotel branding for upcoming projects.
Stars Jupiters Gold Coast, 70km
south of Brisbane, is undergoing
an A$345 million face-lift that
includes refurbishing its nearly
600 rooms and building an allsuite hotel to open in 2018, aimed
at raising Jupiters international
appeal. That investment plan came
as Queenslands government offered
new casino licences for multi-billion
dollar integrated resort projects. In

2014, Queensland selected Chinas
state-linked ASF Groups A$7.5
billion Broadwater, centered on a
cruise ship terminal in Gold Coast,
and Aquis, an A$8.2 billion project
near Cairns and the Great Barrier
Reef in far northern Queensland.
Aquis is the brainchild of Tony
Fung, former chairman of Hong
Kongs Sun Hung Kai Securities
and scion of another propertydevelopment fortune. Both resort
proposals have faced environmental
and other challenges, including the
recent slowdown in VIP revenue
on which they would depend.
Australias Chinese-VIP-player
market has definitely contracted over
the last eight to 12 months as a direct
result of Chinas anti-corruption
drive, consultant McCamley reports
after chairing the Gaming, Racing
& Wagering Australia conference
in Sydney in August. For fiscal year
2016, Crown reported a 7 percent
fall in VIP revenue. Morgan Stanley
says Australias VIP revenue
declined in the last six months of
2015 and expects no better than
mid-single-digit growth this year.
But that just inspires companies to
reach for a wider Chinese clientele.
While evaluating its Cairns options,
including a downsized resort sans
casino, Aquis Entertainment, listed
in Australia, gave its Casino Canberra
an A$14 million makeover and has
proposed an A$307 million gambling
resort for the Australian capital. Asia
is a key market for that project, Aquis
executive director Jessica Mellor says.
ASF has removed the cruise
terminal and relocated its proposed
gambling resort site. Reportedly,
advised that a local partner could
help win regulatory approval, ASF
opened talks with Crown about
operating the casino, a 15-minute
drive from rival Stars Jupiters.
You might say that Australias high
stakes contest for Chinese money
is moving away from the tight VIP
quarters and heading for the beach.
Life
High Fashion
The Tough Ones
A selection of watches as a sign of the times
Life recLiner
Changing Times
The luxury watch market for 2016-17
By Salil Panchal
this year, swiss watchmakers

continued to feel the effect
of slowing economic growth,
with exports to traditionally
lucrative markets falling. Data
from the Federation of the
Swiss Watch Industry show
that exports this July have
declined to 1.64 billion francs,
a 14.2 percent year-on-year
decline (in value). This fall
has been led primarily by the
slump in demand from Hong
Kongexports to Hong Kong
were down 32.7 percent
year-on-yearwhich has now
been displaced by the United
States (10.9 percent market
share) as the largest market
for luxury watches. Hong
Kong now has a 10.7 percent
market share, from 11.3 percent in June. The data also
show that exports to the US,
France, Germany and Japan
continue to drop.
In this rather bleak global
landscape, Indiawith its
rapidly expanding, and aspirational, middle-class and
entrepreneursis beginning
to be seen as a meaningful market. Over the past
decade, almost every luxury
brandfrom Rolex and
Jaeger-LeCoultre to independent makers like MB&Fhave
created a presence in the
country.
But even while the number
of rich Indians continues to
grow, the local market has its
own set of dampeners. Indian
buyers are extremely price
conscious and do not hesitate to go shopping in Dubai
or Hong Kong where luxury
sometimes costs less. Also,
government taxation policiesa mandatory ruling for
buyers to reveal their permanent account number for all
transactions of more than Rs
2 lakhhave dented enthusiasm among manufacturers
and customers alike.
The mood, however, at
the two Swiss watch mega
eventsSIHH (Salon International de la Haute Horlogerie
Genve) and Baselworld

was, as always, upbeat.
Brands have expanded on
current lines, bringing in
newer versions and interpretations of earlier best-sellers.
Some fashion and jewellery
houses, too, have extended
their brands by launching
timepieces. It was noted,
though, that there were no
mega launches or radically
new lines.
It seems Swiss watch makers have had a reality check
of sorts, and are sticking to
what they do best.
In the following pages, we
feature a selection of watches
from SIHH and Baselworld
that highlights existing and
emerging trends, quirky creations and over-the-top bling.
In India, some of these timepieces are already being sold
through authorised showrooms or dealerships. Others
are expected to be launched
in India towards the end of
the year or early 2017.
The Tough
Ones
These are rugged

and innovative
Victorinox
i.n.o.x
Professional
DiVer
Very much for the

adventurous and
outdoor person, this
watch is water resistant for up to 200
metres and tough
enough to withstand
a 10-metre drop.
The I.N.O.X. Profes-
sional Diver, from the

makers of the famed
Swiss army knife,
includes a rotating
bezel, a count-up
scale, and comes in
bright colour options
(yellow and red) that
ensure high visibility.
Ulysse narDin
GranD Deck
Marine toUrbillon
Ulysse Nardin celebrates
200 years as makers of
ship chronometers with
this watch, whose most
striking feature is the
handcrafted wood plank
effect on the dial, to
capture the essence of a
ships deck. The display,
through a blue aluminium
minutes hand, represents
a boom (pole), which is
used to control the shape
of a boats sail.
OctOber 14, 2016 forbes india | 89
Life recLiner
High
Fashion
From fashion
houses &
jewellery
designers
GuCCI
GG2570
ColleCtIon
The Italian fashion brand
has introduced the
GG2570 collection in
homage to its creative
director Alessandro
Micheles lucky number,
25, and the 1970s, when
it probably prospered
the most. The collection bears the typical,
slightly square, slightly
round design. The ones
featured here are from
the mens collection,
which have the option of
nato-style nylon straps
in blue-and-red.
Chopard
ImperIale
JoaIllerIe
A Chopard special, the Imperiale Joaillerie might be

too much bling for some,
but it could mean art and
stunning aesthetics for
others. The watch showcases the whole range
of the rainbow, being set
with graded shades of 581
straight-cut sapphires.
The watch maker claims it
took 1,012 hours to select,
cut, sort and set the
stones. The mechanical,
28.8-mm diameter, rosegold watch, has a crown
and lug-covers adorned
with amethysts.
Life recLiner
For
Women
Timepieces for
the modern
woman
Chopards LUC
Xp Esprit dE
FLEUriEr pEony
2016 marks the 20th anniversary for Chopards
LU line of watches. The
LUC XP Esprit de Fleurier
Peony comes in an eightpiece limited edition, and
features a peony flower
motif, and a brushed pink
canvas strap. The watchs
main feature is the rare
ancestral technique of
Fleurisanne engraving.
This 18-carat rose gold
case (35-mm diameter)
has a diamond-set bezel
and flanks, and glareproof sapphire crystal.
BLanCpain LadyBird
(60th annivErsary
Edition)
harry Winston
EmEraLd
CoLLECtion
CaLvin
KLEin
K5n2m1Z6
In 2016, veteran Swiss

watchmaker Blancpain
marked 60 years of the
Ladybird with a limited
edition (60 pieces) of
the watch that was first
launched in 1956. The
bezel is set with 32 diamonds, with eight on the
dial. The watch has dropshaped hands to indicate
quarterly time, framed by
a 21.5 mm-diameter case
of white gold.
The New York-based diamond and jewellery house

has launched a distinctive
new emerald-cut timepiece
in an 18-carat white gold
case. This quartz watch
bears classic features: An
intense blue (featured
here) or a rose gold dial,
diamonds, and the double
wrap-around strap. The bezel, crown, lugs and Ardillon
buckle have been set with
67 cut diamonds.
Part of its core Senses

collection, this two-tone
bracelet watch tries to
bring all the features that
the American fashion
house tries to bring into
its fashion jewellery:
Simple sophistication
and sleek design lines.
This 27-mm diameter
watch, with an 8-mm
thick case, uses a polished stainless steel and
pink gold PVD bracelet.
Bigger
the Better
Watches, for men and
women, have been growing
in diameter over the years
the verdict may repeatedly get
challengedand even bluntly

refutedbut from all the product
lines and brands showcased,
its clear that watchmakers are
manufacturing watches with
larger diameters for women.
And women are buying them.
The diameters have gone up

from about 28 mm a decade ago
to about 36 mm now. earlier, elegance and style mattered most,
with watch manufacturers paying
more attention to the bracelets
and jewellery components. The
safe colours, however, continue to
be blue, brown and red.

Mens watches have also
been getting larger, with 42- to
45-mm diameter watches being regular. Larger watches, of
course, also mean there is more
space to display the aesthetics
of the timepiece.
Life recLiner
Traditions
and
Innovations
New avatars
to bolster
features, sales
Breguet tradition
rptition Minutes
tourBillon 7087
In 2015, Breguet had put in
enough time and research
into the field of acoustics
with its Tradition Rptition
Minutes Tourbillon 7087. This
year, the watch returned in a
newer version, with chimes
that have been fine-tuned
further to improve sound
and performance. The gong
springspart of minute
repeater mechanismshave
been reworked. The watch
has a 44-mm diameter, and
comes in an 18-carat rose
gold case with a sapphirecrystal caseback. It is likely
to hit markets by year end.
The
New Old
Favourites return
in fresh avataars
products , which
longines
Heritage
1918
Breguet
Classique Hora
Mundi 5727
The Longines Heritage

1918 reissue attempts
to capture the style
of the first braceletchronographs created
by Longines. The dial, in
white-lacquered polish
and honey-coloured
Arabic numerals, carries
a distinct pocketwatchlook, along with a cushion
crown. It is available in
two sizes (38.5 mm and
41 mm), and comes with
an automatic winding
mechanical calibre.
This year, Breguet re-interpreted their 2011 timepiece,

the Classique Hora Mundi
5727. The globe and moonphase have been done away
with in the dial of the 2016
edition. The newer version,
however, continues to provide the option of an instant
jump to a different time zone
display with date, day/night
and city indications. Travellers can opt for the home or
local time being displayed,
depending on the city they
choose, with the help of a
tracking calendar.
have stood the

test of time, can
just not go wrong.
This is what brands
such as Longines
and Breguet seem
to indicate with
their collections.
Longines paid homage to its heritage,
and launched
recreations of
watches from its
equestrian, railroad,
and heritage collections from nearly
100 years ago.
Vacheron constantin introduced retro
watches as part of
its Harmony collection to mark its
260th anniversary,
which was in September 2015.
recreations such
as these make
sense for collectors as well as new
users: The pieces
reinforce the core
qualities of the
brand, as well as
offer a modern
look from a vintage
collection that is no
longer available.
Other watchmakers, such as Breguet, Louis Vuitton
and Bvlgari, took
some of their recent
collections and
brought in further
innovations, either
through more intricate movements,
better designs, or
reimaginations.
Breguet brought
in more fine-tuning
to its Tradition
rptition, Louis
Vuittons escale
Worldtime added
a minute repeater,
while Bvlgari
brought in a fresh
look through designs for their Serpenti collections.
Life recLiner
Super-Slim
Watches
Lower on buzz,
but still special
radO true
thinline
A watch that cannot

get more minimalistic,
the Rado True Thinline
is a detail-free backto-basics watch. It has
no indices, sub-dials or
even a seconds hand.
It is also the thinnest
ceramic watch from
Rado, with a case that
measures just 4.9
mm in thickness. The
piece is scratch-free
and lightweight, and
comes in pure white,
pure black, or lustrous
plasma versions.
Bvlgari
OctO
FinissimO
This is part of Bvlgaris

line of ultra-thin
watches. The company
claims they have manufactured the worlds
thinnest flying tourbillon. The in-house
developed and produced movement

measures just 3.12 mm
in thickness, and the titanium case is only 6.85
mm thick. The watch is
limited to 50 pieces.
The
Unusual
Marvels of
manufacturing
Jaeger-lecOultre
reversO triBute
gyrOtOurBillOn
(85th anniversary)
Jaeger-LeCoultre celebrates the 85th anniversary of the Reverso with

this dual-sided watch. The
gyrotourbillon is an elaborate construction, where
the tourbillon rotates not
only in a 2-dimensional
plane, but also spherically,
in a 3-dimensional plane.
This watch is much lighter
than the 2008 Reverso
Gyrotourbillon 2, the case
being 30 percent trimmer
in width and thickness.
huBlOt
mP-07
The inspiration behind

the design of the Hublot
MP collection was
originally attributed to
the Ferrari car engine
block. This year, Hublot
introduced the MP-07
(limited to 50 pieces),
a long-power (42 days)
reserve watch, which
the company would like

to position as the more
affordable version of the
MP-05. The watch includes nine barrels and a
vertical movement; large
sapphire glass openings
on the case front and
back allow the wearer to
read time while driving.
Life recLiner
Limited
Editions
These are the

few and far
between
Aerofusion
2016 iCC World
TWenTy20
Hublot has partnered with
the International Cricket
Council (ICC) as the official timekeeper for the
ICC World Twenty20 2016.
The watchmaker now
brings a limited edition automatic chronograph, with
features related to cricket:
The two hands are shaped
like cricket bats, while
the dial features three
stumps. The watch comes
with a blue calfskin strap
stitched onto black rubber
to look like the seam of
a cricket ball.
Niche,
Super Niche
For the obsessive
collectors
TissoT T-TouCh
experT solAr nbA
speCiAl ediTion
Tissot T-Touch Expert Solar
NBA special edition is a result of the USs professional
basketball league finally
getting its own dedicated
timekeeper. The watch
comes with a gold- or silvercoloured case, with the NBA
logo engraved on the caseback. The 45-mm watch has
a quartz movement, and includes 20 functions such as
a backlight, two time zones,
perpetual calendar, logbook,
day and week indicators.
ZeniTh ACAdemy
ChrisTophe
ColombTribuTe To
The rolling sTones
Zenith paid tribute to the
legendary British rock
band Rolling Stones when
they played their first ever
concert in Cuba earlier
this year. The watch has
the famous Rolling Stones
licking tongue logo
enamelled on the dial,
which also features the
British flag. Its 45-mm
diameter rose gold case
is topped by a sapphire
crystal dome. Just five
pieces of this watch has
been made.
limited edition
watches continue
to be in vogue. At
last years SiHH,
there were iWcs
75th anniversary
Portugieser, and
Finnish independent watchmaker
Stepan Sarpanevas
northern Lights.
Usually these
watches are superexpensive and are
put out by the big
brands to either
mark anniversaries
in their company or
the nations history,
and are tracked
by collectors and
completists.
Brands such as
chopard, Breitling,
Ulysse nardin,
Greubel Forsey
and Seiko have
introduced limited
editions in some of
their lines, which,
we believe, will
continue to attract
attention.
even in niche segments like skeleton
watches, limited
editions have been
introduced (Arnold & Son UTTe
Skeleton). Omega,
timekeeper for the
2016 rio Olympics,
has launched three
limited edition
watches in its Seamaster and Speedmaster series.
Life recLiner
Contemporary
Masterpieces
New
versions of
best-selling lines
Rolex oysteR
PeRPetual
CosmogRaPh
Daytona
Rolexs iconic Oyster

Perpetual Cosmograph Daytona
comes in a low carbon and highly polished stainless steel,
with a black ceramic
bezel that holds the
scratch-resistant
sapphire crystal
firmly in place; it
is waterproof and
corrosion resistant.
This is a 40-mm
diameter white gold
watch and bracelet.
Time Tested
Watchmakers are playing
it safe with trusted lines
in rough weather, you tend
BReitling
foR
Bentley
iWC Pilots
timezoneR
ChRonogRaPh
Breitling and Bentleyin

a relationship of almost
15 yearspresented
the Bentley GMT B04 S
chronograph. This limited
edition250 pieces of this
watch will be madewith a
dual time zone movement
has a carbon dial and case.
The bezel offers a choice
of 24 cities and shows the
time at a glance in each time
zone, compared to the time
of the hands. The 45-mm
diameter watch comes with
a GMT rubber strap.
IWC Schaffhausen has

expanded its existing
range of pilots watches
with the Pilots Watch Timezoner Chronograph,
which allows the wearer
to set the time zone
through the bezel, and
also offers names of cities in a ring around the
bezel. The watch has an
anti-reflective coating
on both sides, and the
glass is secured against
being displaced from a
drop in air pressure.
omega sPeeDmasteR
moonPhase
Co-axial masteR
ChRonometeR
The moon has never

looked more realistic
on a timepiece. (It is
probably befitting, because when American
astronaut Buzz Aldrin
stepped onto the lunar surface in 1969 he
was wearing a Speed-
to take out your most

trusted umbrella. it is not
much different in the world
of watches. At a time when
global exports of Swiss
watches have slowed,
manufacturers have turned
prudent by investing in
lines they know have
worked in the past. Omega
(Speedmaster), TAG Heuer
(carrera), Grand Seiko,
Breitling (for Bentley), Bvlgari (Serpenti) and rolex
(Oyster Perpetual Daytona)
are among the few that
launched newer versions
of their well-established
series. Others like Longines
showcased their heritage
and equestrian collections,
while iWc Schaffhausen
launched its range of new
pilots watches. even several limited editions have
been announced in lines
with a strong loyalty.
The rationale for most
watchmakers this year was
to offer newer products,
without attempting something radically different.
master Professional.)
This 44.25-mm watch
is water resistant up
to 100 metres. The
dial comes in black,
blue, brown or grey,
in a case of diamondpolished 18-carat
Sedna gold.
gRanD
seiko
This specific line (Grand Seiko)
comes in five variations. The
green dialed model has been
inspired by the Onbashira festival
held every six years in Suwa (Japan) and the forests of Shinshu.
The 46.4-mm diameter watch is
16.1 mm thick, and has a crocodile strap with three-fold clasp.
Life recLiner
Novelties
For connoisseurs
and the
curious alike
Greubel
Forsey
siGnature 1
For the first time in
Greubel Forseys history,
a manually wound watch
has been made with
just three hands. The
hours and minutes are
displayed on the dial, but
slightly off-centre, while
the seconds hand is on a
separate dial. This watch
is being released in a limited edition of 33 pieces
in gold and platinum.
Not so
Smart?
Connected
technology is no
longer hot property
at baselworld
audemars
PiGuet royal
oak PerPetual
Calendar
This new version of the

iconic Royal Oak collection includes the Royal
Oak Perpetual Calendar,
which has an 18-carat
yellow gold case and
bracelet, with an antiglare sapphire crystal.
Other features include the
week (displayed on the
dials ring wall), and a leap
year indication.
taG Heuer
Carrera
Heuer 02t
This is a watch that
should appeal to both
connoisseurs and those
new to this brand. This
watch is an automatic
chronograph combined
with a titanium and carbon flying tourbillon.
2015, smart
watches had been
the buzzword, with
brands like Breitling, TAG Heuer
and Frederique
constant beginning
to embrace connected technology.
come 2016, and
that buzzword has
faded somewhat.
Swiss watchmakers
are no longer keen
to devote too much
energy towards this
segment and are,
instead, focusing
more on traditional
watches.
Fact is, the smart
watch is always
a second or third
watch; almost a
supplement. And
it stays that way.
According to
the international
Data corporation
(iDc) Worldwide
Quarterly Wearable
Device Tracker,
20.1 million units of
smart watches will
be shipped in 2016,
up 3.9 percent from
19.4 million units
shipped in 2015.
Although interest
in the Apple Watch
2, announced
in September,
ignited interest
in wearables and
connected watches,
we will have to wait
and see if demand
for these devices
wanes after the
initial pent-up demand is met.
Time abides long

enough for those who
make use of it.
leonarDo Da vinci
thoughts
on tiME
It is strange that
the years teach
us patience; that
the shorter our
time, the greater
our capacity
for waiting.
elizaBeTH Taylor
Time moves in one direction,

memory in another.
William giBson
Vinci, EinstEin, MEir,: gEtty iMagEs; Franklin: shuttErstock.coM; hawthornE: courtEsy library
oF congrEss; williaMs: Jack MitchEll / gEtty iMagEs; gibson: ulF andErsEn / gEtty iMagEs
Theres never
enough time to
do all the nothing
you want.
Bill WaTTerson
I must govern the clock,

not be governed by it.
Golda Meir
Time is what
we want most,
but what we
use worst.
William Penn
Time changes everything
except something within
us which is always
surprised by change.
THomas HarDy
Time goes, you say?

Ah, no! Alas, time
stays, we go.
Henry ausTin
DoBson
Time flies over us,

but leaves its shadow
behind.
naTHaniel
HaWTHorne
Time sometimes flies like a bird,

sometimes crawls like a snail;
but a man is happiest when he
does not even notice whether
it passes swiftly or slowly.
ivan Turgenev
Time is the
longest
distance
between
two places.
Tennessee
Williams
Time is an illusion.
alBerT einsTein
You may
delay, but
time will not.
Benjamin
Franklin
Time is the most

valuable thing a
man can spend.
We must use
time as a tool,
not as a couch.
THeoPHrasTus
joHn F kenneDy
104 | forbes IndIa OcTOber 14, 2016
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the glaxo turnaround

Price rs. 110. october 14, 2016

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