Thursday, January 15, 2009

What Entrepreneurs Can Learn from Indian Street Delivery Workers

We are beginning to see a lot of bankruptcies and firings at Internet startups. This is obviously very sad.

However, almost all online businesses and startups which launched in the past 2 years deserve to fail.

Why? Because their only revenue model is VC funding, and their only long term strategy is to get bought out or go public before it runs out of money. Sadly enough this idiotic formula has proven successful during economic boom times, and as a result it has brainwashed a whole generation of so-called "entrepreneurs" who unfortunately can put up a website but could not run a real business if their life depended on it.

What type of real business do I mean? Take the dabbawalas, for example, of Mumbai ... street delivery workers. As Sagar Gubbi writes: "Take a stroll on one of Mumbai’s busy streets and you are likely to meet men clad in white attire and Gandhi topis (caps), scurrying past with cartloads of lunch boxes. They are Dabbawalas of Mumbai, well known for their six sigma-rated service quality. A dabbawala (a Hindi word that translates into ‘a person with a box’) is someone who delivers home-cooked lunch to office-goers and businessmen in Mumbai, at a nominal monthly fee.

A dabbawala’s service might involve only delivering cooked food from the client’s home or both cooking and delivering the food, based on the client’s preference. Sounds simple, eh? What’s stunning is the fact that dabbawalas deliver nearly 200,000 dabbas (lunch boxes) everyday, with six sigma quality, which means that there is only one mistake in every 6,000,000 deliveries!

The dabbawalas have existed for more than a century and have become an essential part of Mumbai’s social fabric. They travel either by foot or bicycles or suburban trains and barely use any technology. Their service is uninterrupted, even during Mumbai’s dreaded monsoon rains.

There are an estimated 5000 dabbawalas in Mumbai, most of whom are illiterates and come from very poor backgrounds. They are all shareholders of Nutan Mumbai Tiffin Box Supply Trust which has a turnover of nearly 450 million rupees (approximately $11.25 million) per annum. Dabbawalas have never gone on strike and four years ago, they allotted just 20 minutes to Prince Charles to meet them so that their customers are not kept waiting.

Their excellent teamwork and time management system has been featured as a case study by Harvard Business Review and they have presented their business model to various corporate houses such as Tata, Coca Cola, Daimler Chrysler and Reliance Industries. Riding on this success, the Dabbawalas are now planning to start a Supply Chain Consulting business.

The dabbawala story is an inspiring success story and demonstrates that simple ideas, when executed with discipline and dedication, can bring amazing results at the base of the pyramid."

The dabbawalas are profitable, have never taken external funding, provide incredible value to their customers, and they make only 1 mistakefor every 6,000,000 deliveries. How much better the world would be if every web 2.0 "company" could do the same?