Over the last week, I had an opportunity to meet with over 300 entrepreneurs at the Microsoft BizSpark event and the VCCircle investment event in Bangalore. There's one thing that strikes me as uniquely 'Indian.' It's the equivalent to the American dream of a house, two kids and 'writing a bestseller.'
Every person in India I meet (entrepreneur or not) has something 'going on the side.' It is their 'side biijness' (business). My friend Alok Mittal of Canaan Partners calls this the 'neighbour's wife' syndrome.
From a public relations professional who started an adventure tours company (now run by his wife) to a peon at a large public sector bank, who has a used mobile phone reselling store, the side business crosses all echelons of society. I met a software entrepreneur who has a passion for dance and while the regular day job at a start-up pays the bills, the side business of managing and hosting 'Arangetram' is where she's getting the 'good money.'
You notice this at multiple events, meet-ups and parties where, after the cursory 2-3 minutes of small talk, the person does get comfortable with you. Usually, when they hear that I invest in small start-ups, they pull out a 'second business card' of their side business and that's when the juices get flowing.
There are three characteristics that I have noticed about all side businesses that are unique.
1. They operate mostly in cash. No credit cards, no cheques, no bank transfers, no IOU. Just plain cash. I presume that's to save or avoid taxes, but I may be biased in my view.
2. They are easily run by family. Rarely by friends. The entrepreneur would start this business, get some minimal momentum and then turn it either to his/her sibling (mostly younger) or spouse/parents.
3. If the side business becomes fairly large (speaking in relative scale, when it's larger than their paycheques from their full-time gigs), it spawns off a new side business. It's never a full-time business; now they have 'a group of side businesses.'
So what is it about Indians and side-businesses? I presume there are many other nationalities which have the same connection, but I have noticed it primarily in India.
Is it that we are very entrepreneurial? Is it that there are so many opportunities during this 'golden period' that are too good to pass up? Is it that the full-time gig does not pay enough? Is it that the side business is the passion which the full-time job will never be? Is it that the side business is a risk-mitigated way to dip your toe into a new area of work? Or is it that we just can do multiple things at the same time?
I am also curious as to what the thought process is for most of these entrepreneurs who start these businesses in terms of growth or funding. I suspect that most of them just want to generate cash on the side for multiple reasons.
This brings me to another topic for a different post on a later day.
What they do with the cash generated from these side businesses: Invest in real estate to generate a yield income.