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Conversations with Umesh Malhotra - an IIT alum pursuing a unique passion in social entrepreneurship. He runs Hippocampus - a company that promotes reading amongst children.
ďYou're the same today as you'll be in five years except for the people you meet and the books you read.Ē
- Charlie "Tremendous" Jones
ďThe habit of reading is the only enjoyment in which there is no alloy; it lasts when all other pleasures fade.Ē
- Anthony Trollope
Umesh Malhotra is a person who knows how to put his finger on an idea he believes in. His choice has usually been a successful one. Years ago, as a young engineer out of IIT, Umesh shocked people when he chose to join a small firm called Infosys in 1990. By the time he left Infy nine years later, there werenít too many who thought it to be a terrible decision after all. In the time he spent there, he saw the young company grow at a furious pace and also learnt a lot about how change happens and how it translates into decisive impact upon people.
He did well at Infosys. In 1995, Infosys instituted higher bonuses and ESOPs for high performers, and Umesh made the list each year till 1999. Says Umesh: "The only stock I knew was Infosys." With some stock options and a growing career, the growth path at Infosys was a visible, secure one. However, Umesh grew impatient and wanted to do more. In an assignment as a project manager during that period, he discovered he was more of a Ďpeopleís personí than an archetypal techie.
Sometime later, Umesh was posted to the US for an assignment in the Bay Area. There, he and his wife discovered the effective yet wonderful manner in which schools taught children the joys of reading. It was then that the idea of a having a similar model in India first blossomed in his mind. Umesh was keen, however, about starting his own business venture - an idea that found fruition in 1999, when he left Infosys to start Bangalore Labs with funding from ICICI Ventures.
After three years, Bangalore Labs was sold off to a Singapore firm. The promoters were offered an exit option, which was 25 times their initial investment, an option that Umesh chose. He took a sabbatical and began thinking seriously of giving shape to his dream of creating a childrenís library. Umesh worked ways of breathing life into an idea he thought was the need of the hour.
Finally, in 2002, at the age of 34, Umesh quit the corporate rat race to pursue his passion. He and his wife Vimala set up Hippocampus Ė a project to promote reading amongst children using both for-profit and not-for-profit models. The first library under Hippocampus was started in Koramangala with 6,000 books, multimedia kits and computers.
At Hippocampus, along with books Umesh introduced 5/6 PCs, a TV and DVD that plays educational CDs. Umesh believes that the children of today need to use the entire gamut of multimedia to understand newer concepts. In terms of both business and the larger social goal, Umesh has been driven by a combination of passion, pragmatism and a complete personal involvement. He knew that "from the start, Hippocampus was designed to be a profit-generating venture." Today, the profits go to a reading foundation - an allied organization that sets up libraries for underprivileged children. There are already nine libraries under the foundationís banner, and there are likely to be 50 more in place by June this year.
For Umesh, it has been about believing in the sapling and then growing it. Whether it be Infosys, in some phenomenal cases, or Bangalore Labs, in another pioneering one, he has been a part of a small, fledgling idea that grew big. They were also decisions he believed in. With Hippocampus, he has discovered that his passion lies in bringing in a culture of reading amongst children. Itís yet another idea he believes in. Given his past record of identifying an original thought, Hippocampus has a bright potential. It represents a concept and its initiator with the tools and self belief to make a profound impact. Itís an idea whose time is already due.
6bridges- Tell us about your journey and Hippocampus
Umesh - I spent 9 years in Infosys, after which decided to branch off with my own venture. I started a company called Bangalore Labs with funding from ICICI ventures. Later Bangalore Labs was sold to a Singapore based company.
In 1999, when I was in the US on a business visit, I happened to visit the public libraries in that country and that was a turning point. You know we talk about India being a knowledge economy etc, and yet we donít do the basic things like promoting reading amongst kids. And then we talk about big things like changing the world.
So, for a few years this was the thought that occupied my mind. I had been thinking kuchh karna hai, kuchh karna hai. And this library thing happened to be at the back of my mind for a while. I have a small son who had started going to school in the US and I saw how much effort they take in making kids read. Upon returning to India, he has been going to a reasonably good school and yet I realized they donít take as much effort to make children read. Thatís the time I said we need to start a library here.
6bridges - Were you stationed in the US?
Umesh - Yes, I was. And the idea came up in 1998-99 when I was still with Infosys. The idea of doing something like this had stayed with me for a while though. After I sold my company I was jobless. I had taken a sabbatical, thinking around and wondering whether I should go back to the corporate world or not. That was the time this idea started taking momentum and shape. I was dabbling with the way we should start it as a project. And in March 2003, we launched our first project - the first library was called Hippocampus.
Six months preceding that, when I talked of opening a library on a for-profit basis, people would make various weird remarks like Ďthis guyís lost ití or Ďwhat is he doing in lifeí etc! There were two sides to it. On one side there were those who felt it was great to do such a thing and on the other, there were those who thought I was out of my mind.
I decided that I have to make this work. I would wonder why we canít make a for-profit library for children. We didnít have models in the world to copy from. We were the first for profit childrenís library though there have been examples of circulation libraries and government run libraries.
We were 4-5 months into our first project when we began to understand the concept of billing in this area. One of the things we were clear about was that we, as an organization, didnít want to get into franchises. We were studying the concept of reading for children and wanted to get to the root of the problem. We decided to target the upper middle class, for instance people like me and also check out the requirements of the poorer classes. We started going to government schools and institutions and begun looking at the way education was being imparted there and how we could help. We started doing small, pilot projects to figure out what was happening and what was required.
We all know why reading is important - it opens up our mind, gives us information etc. But when we went to these government schools we realized that these children had inadequate aids and opportunities.
6bridges - Can you give us an example?
Umesh - Yes. For example, we saw that they could not read more text beyond the alphabets. A child who hasnít been taught to read beyond a few sentences, has to then undergo the trauma of reading harder text and topics like science, volcanoes etc when he goes to the fifth standard.
The trauma that he faces is enormous. In that regard the education system fails miserably to come up with a level that is commensurate with what is expected of his class. This gap increases as he moves into higher classes. You have reports of people like Pratham who say that children from class 5 are only able to read text of class 3. The idea is to generate interest for reading. If that is done a child will read more, and by doing that he will improve his reading and comprehension. In this manner he will move to higher levels without much interference from the teaching staff.
Interventions too arenít successful unless they can be sustained. How much money can you keep putting in to drive change? Thus we knew that if we had to drive change successfully we had to think of models of partnership, models of cost and implementation that will support our long-term initiatives. Therefore we thought of working with NGOs who are already working at the ground level. One, this helps bring down the implementation costs tremendously since there were other people who implement them. Two, since we were giving away the implementation responsibilities to someone else, we needed to be sure that we tie up with those people who had enough funds to sustain. In that way, you are assured of their commitment too.
Then we thought that there should be a program to make library handling easier. We did some R&D and came up with a program that we thought should work. That was a Eureka Moment, we had figured out a process which makes handling a library that much easier, and ensures that the program does most of the work. We have spent three years in developing, sharing and implementing the program.
6bridges - Tell us about the initiatives taking this program forward.
Umesh Ė In the first year it was about developing and making sure the program codes worked, then in the second year it was shared and in the third year it has been applied. We are already working with 150 schools on this. And in many of these cases, we are making people pay for the services. Basically the program has created a customer base. We are also hoping that we will be able to reach out to over 400 schools soon. In a few years, we hope to have implemented our model across these schools. Then we can go to the government and also implement these programs in the government libraries - convince them to spend on the public libraries. Thatís the vision we have in mind and towards which we intend to work. We are looking at books worth Rs 1 lakh for each library. We have also started the concept of for-profit village library from this year. It takes Rs 5000 to start one such library and itís an investment as good as any.
6bridges Ė There seem to be multiple models - a for-profit model for the upper middle class and a not-for-profit model for the underprivileged class.
Umesh - We feel different parts of India need specific solutions and you have to look closely to address each segment.
6bridges - How have perceptions changed from the time that you started - in terms of acceptance by the people and by the government with whom you have also worked.
Umesh - India at large has been making some positive moves. However, to answer your question, one thing I would say about acceptance is that it is a guarded yes. There has been a change in the middle class but not as fast. The government sector wants to move forward and there has been a lot of talk on the knowledge forums etc. There are lots of NGOs who have been showing interest. Now we have worked out a model where we are getting new partners and adding libraries.
6bridges - Do you see action on the implementation part.
Umesh - Yes, there has been some action on the part of the government and there has been no lack of ideas as far as they are concerned. They look at the whole concept in different ways. However they have traditionally been short on implementation. It is different in the corporate world where the focus is to generate revenues. As far as the government is concerned, their method of working is such that they get carried away with ideas at times. Like for instance, they would have a great idea about starting a school, but will lag behind on the running of the school. Implementation and execution of an idea is a weakness they still have to overcome. The government is making the right noises though, as of now, and we are trying to tell them how libraries can actually work.
6bridges - You started Bangalore Labs, a start-up venture and then sold it to start Hippocampus. Whatís the difference between a business start-up and something like this?
Umesh - In my experience with Hippocampus I realized you can do a lot of stuff with a very limited amount of money. Itís not similar to the way a corporate entity thinks or works. How money can go a long way in adding value is something that I learnt at Hippocampus.
I have also learnt that change does take time. The corporate world wants to solve the problem faster. Here you are not talking about change in terms of building bridges but about changing peopleís mindsets. Now that is something which takes a lot of time. Some concepts can take off like wild fire but most do take time. Things like having computers, telephones, power and water in villages have also taken time.
6bridges - How did you handle the incubation period between ideation and execution? What were the frustrations and the positives that came out?
Umesh - There are lots of challenges that we have had to encounter. Working with government employees is one which can be sometimes beyond my control. There are times our employees complain about it. We realized we had to make a choice - either frustrate ourselves to death or look at resolving the problem. The challenge has been to change attitudes in the government and setting expectations.
Changing peopleís attitudes, as I was saying earlier, is a huge challenge. Itís like creating changes in a childís response by adopting different means. You have to give that time necessary for change and put in that extra effort to make it happen. Suppose you have to make the children eat at the dining table, you have to have patience and come up with different techniques to make him do that. You have to be able to appeal to his mindset to convince him. Similar is the case here.
6bridges - You could have followed such a path as part-time work. What were the factors behind taking this activity up full time?
Umesh - Well, I am not the right person to answer this particular question - for the simple reason that right now I am also doing multiple things. Besides Hippocampus, I run a restaurant too. Itís like this - the restaurant supports me and I support Hippocampus!
6bridges - Did you start the restaurant at the same time that you started Hippocampus?
Umesh - It started much later. Long back, I ran the canteen in IIT. Later an opportunity came along and we thought of starting a restaurant. Thatís how the restaurant happened. Iíll tell you a little story here. Till 2 years ago, if anyone were to ask me what I was doing, I would reply we were doing something with Hippocampus. Then one day, the Ashoka Foundation guys walked into office and asked us what we were doing with Hippocampus. When we told them what we did, they were thrilled that we addressed the entire spectrum from the rich to the poor. Then the Ashoka Fellowship came along.
In the last 15 months or so, we realized the reach that we had had. We have actually started taking this entire thing much more seriously now. My involvement in the entire project has also gone up substantially.
6bridges - Would you have done it if you had not had the cushion of experience, a premier degree and financial savings behind you?
Umesh - I would think that before you begin anything like an entrepreneurship or social entrepreneurship, you must spend some time working. Like how doing an MBA with work experience helps you understand the nuances better. Of course there are some extremely smart people like Bill Gates and Steve Jobs who donít need work experience, but most of us do. Fundamentally, you need to have worked to understand how it is done. If you donít have work experience before a venture that you have started, you might end up being carried away by the idea, without giving it a strategic thought of what is the best way of doing it.
In the social space there is no clear measure of how much success your work has had. If you look at the number of children impacted in a period of time, it still doesnít mean that such an impact is sustainable. Some of things make you wonder what the impact of an action is, its fallout etc. these are the kind of things that you take into account here in the social space. An idea can be very attractive but a person without experience will not know how to sustain the idea.
There is also that important question of how to keep oneself motivated and motivate people around you once the honeymoon period of dreams and ideas is over. Because of my experience of working with people, doing project management, making proposals, dealing with customers, measuring impact etc it helped when taking on operational aspects as well as challenges.
6bridges Ė So, you think that because you had been in a start up it helped you more rather than if you had continued in a job and then started this venture.
Umesh - 100 percent! Yes, my first 3 years in a start-up were a valuable learning experience. However, let me start with Infosys. Spending 9 years in Infosys was a huge learning process in the formative stage of the industry and at an early age of my career. It was in that period that Infosys jumped from being a Rs 1 crore company to a 500 crore company in just 9 years and now itís a 25000 crore company. The industry was a start up then. The kind of change I saw in that period involved managing changes of various kinds at a rapid pace - process changes, people changes. When we joined Infosys, a lot of people thought we had joined a small, cheap company but it changed rapidly. To give you a small example, we graduated from negotiating auto fares to business class fares for travel in a short period!
Despite all that, running a start up was such a fantastic experience that all else appeared much lesser. Thatís the reason why I would recommend a start-up experience if anyone plans to start a social venture, just for the experience you get out of it.
6bridges - In Bangalore Labs you had 4 co-promoters and here you have your wife with you. What type of personalities would you suggest one chooses to work with as partners?
Umesh - Bangalore Labs was like a corporate start up where you work on motivators based on money. ESOPs, salary etc are motivators relating to money. So the kinds of people were different from the ones here.
Here, in Hippocampus there are either those kind of people who have worked with me for 3 / 4 months and donít fit in and therefore move on, or there are those kinds who have been with me for a number of years. My wife and the six member founding team have been pretty much intact. Guys who joined from day one have stayed on. I have had the opportunity to meet a variety of people in this field of work. They can be very different from the corporate friends I have. The kind of people that you recruit for an organization like this and the kind of grooming and mentoring that you do here are so very different. There are dissimilar benchmarks that exist in choosing people in the two areas, so the kind of people can be different. One, driven by money and goals as motivators and the other, driven more by compatibility with people and goals.
6bridges - What was the kind of time frame that you set yourself? Were there any moments of worry or doubt?
Umesh -Fundamentally, there has been a small change in the mindset the more I have trodden this path. Many people in the corporate world are driven by the quarter to quarter approach and thatís because the world wants you to adopt it. At Hippocampus, we are here to create change, we have to keep pushing but we are not going to get measured by the number of libraries we open but by how many people and mindsets we have impacted. Thatís the model we work on. Itís not about trying to put targets and building pressure upon us. If we are able to interact with people, share ideas and change more mindsets, I think we are doing a good job. Thatís how I look at it.
As for worrying, I tell myself, ďletís not worry about the end goal, but letís worry about how we are doing our job.Ē In this regard I take inspiration from the Bhagwad Gita.
6bridges - Do you encourage a professional to switch from a regular job to social entrepreneurship? What do they need to keep in mind before making a switch?
Umesh - I have a completely different take on this. One, I would encourage more and more people to get into entrepreneurship. Two, I think I am going to talk about one very classical difference between entrepreneurship and running a business. I donít think starting a business is entrepreneurship. An entrepreneur is someone who has managed to create something which changes some way in which the world behaves.
There could be entrepreneurs who are immensely successful who have created large scale change and inspired others to follow and copy them. The pioneers set the original trend. Years ago, when Dadababhai Naoroji started the Taj Hotel in 1907, it was entrepreneurship. Today anyone starting a 5 start hotel next door isnít entrepreneurship, its business.
I would talk about one more aspect - that of defining social entrepreneurship. I believe that Henry Ford, one of the foremost capitalists in the world was a social entrepreneur. He dreamt of making personalized, far cheaper means of transportation available to all people. He realized that he had to go into mass manufacturing and thus pioneered that concept. Henry Ford in 1909 wouldnít have expected in his wildest imagination that the car industry in 2009 would have 1 trillion dollar revenue.
Thatís my take on social entrepreneurship which is, doing something to create a change. Thatís why I believe that most forms of entrepreneurship have some kind of an impact like that. And it means to keep your main goal in focus as you are doing work, and you continue being a social entrepreneur. But over time if you are influenced by monetary goals, then you move out of being a social entrepreneur to becoming a businessman.
That has happened to everyone - Ford, Tatas, Infosys or Karsanbhai of Nirma.
Then it becomes ďI am not changing lives, I am selling carsÖ.Ē Infosys now doesnít have a tagline that says that they are creating a forum for India to realize its potential. They are now less concerned whether their solutions now save money for the client, they are more concerned in getting more customers and business. They have moved from being an entrepreneur to being a businessman.
Most ideas that sustain and catch the imagination are typical social entrepreneurship ideas.
6bridges - Leading from the question, what are the factors that differentiate people who take the leap to entrepreneurship from those who donít?
Umesh - There are those who want to start on their own and perhaps havenít yet gone ahead with it for want of a suitable opportunity. However, the people who finally get into entrepreneurship are those who have the passion for it.
6bridges - Peers, family and people in the close circle, especially in India, sometimes feel that pursuing oneís passion or being an entrepreneur means going out of the conventional loop and is therefore insecure. Does that prevent people?
Umesh - Iíll tell you the kind of people that are out there. Mostly there are people who work 5 days, go to discos on Friday and play golf on Saturdays. Majority of the people prefer to live life this way. Then there are those who have an axe to grind. As a person if you have a passion or a dream, I think you should follow it, come what may.
6bridges -What is it that has given you the most satisfaction from Hippocampus?
Umesh - Itís the impact that you see - the result of the efforts that you put in. When I get to see a child coming to the library to read or a teacher or a librarian enthusiastic about working there: these are some of the joys that I get from Hippocampus. Itís damn cool. When you see 100 kids come, take books and read them and have people trained to run the place well - thatís the biggest satisfaction.
6bridges - Tell us of a few incidents that capture the essence of what you refer to as the Ďimpactí.
Umesh - I will give you examples. A girl was hired by an NGO to run an NGO library in a slum. In the initial few months we called these volunteers/teachers for a review meeting to our office. We also called her for one such meeting. We asked the volunteers about what was happening in the library. This Muslim girl, who was around 18-20 years old, had come in a burkha, was sitting on the floor and hesitating with her answers. I told her to prepare and come for future meetings. At this she started crying and walked out of the room.
I realized that with her background she was not used to talking to men like this and therefore might have been petrified. Four months later I went to her library for checking on how things were progressing. This time she appeared very enthusiastic and excited about the library and she wanted to show that she and the library were doing very well. In fact, she wanted to 'show off' in a good way. She had also called her mother to meet me. There was such a transformation in her. These are some of the personal moments of joy that I derive from this venture.
There was another time when we helped this lady in a village set up a for-profit library. She was in a lot of tension as she was not being able to pay a loan of a small amount of Rs. 200/month. We told her not to worry and that we would help her. This happened in September. Thereafter when we met her again in November, we were overwhelmed. She said the Panchayat leader of her village was very happy with what she was doing and the Panchayat had decided to give some space to her in the village. He told her, aap ke liye kuch karenge. Such incidents give me immense joy.
It is very satisfying to see confidence building up amongst these volunteers and they in turn transferring this confidence back to the children. Such things I did not see in 12 years in the corporate world - such incidents of making an impact and of personal satisfaction.
6bridges: What are your future plans for Hippocampus? What are the larger goals?
Umesh: Over the next few years we wish to achieve multiple things -
ē Promote better books for children - some original writing in local languages - if we donít do it, we will soon start losing our languages.
ē More concepts of village libraries - all over India
ē We want to build reading as a movement. We want to start doing more things to promote reading amongst children.
6bridges: What do you do for work-life balance?
Umesh: Over the last 7-8 months I have been suffering from a bad back. Prior to that, on every alternative weekend I would go either trekking or cycling with my kids. I also enjoy playing with my dogs. I have a set of dogs. There are times when I come home in the evening and say I am not going out, Iíll just play with the dogs.
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