My Startup Experience – Part 2


In my earlier blog on “My startup experience…. Part 1”, I had shared my first experience in a start-up. The story seemingly ended very well for all concerned. Not for me though. For reasons beyond my control, I was transferred to the music company HMV (now called Saregama) in Calcutta. 

HMV was a century old company and was going through serious distress. I was told that the ONLY important thing in the music business is A&R. Not knowing what A&R was, I dutifully nodded my head and landed in Calcutta. 



I am not sure. In a startup there is only an idea and everything else need to be put together. In a century-old company in high distress, there is a need to recreate the idea, dismantle things not working and re-assemble afresh. Probably this is as difficult as a startup if not more difficult. A lot of what happened in the next three years proved this.

The company was the market leader and had built over time a huge repertoire (now the meaning of A&R – “Artists & Repertoire”) across various languages and type of music. What ailed the company at that time were the following:

  1. No cash – net result of everything described below.
  2. Delay in adopting new media – still in LP record mode when the market had moved to cassettes and CDs.
  3. Rampant piracy by new “Music companies” and ineffective law enforcement in the country; this was perhaps the single most important factor
  4. Laid back culture in the organization 
  5. Due to paucity of cash, assets were being sold, all regional music markets vacated and presence reduced in Hindi film market
  6. There was no pride left in what was being done in the company
  7. A very large work force coupled with communist union in Calcutta
  8. The company had seen 4 CEOs in 6 years
  9. Rampant politics within the organization

I still had a good equity in the telecom market; my early thoughts were to look around for a nice opening and move on instead of the struggle. But it was not destined to be as the events unfolded. 



I was curious about the business model. We were buying rights for film music or recording our own albums with artists. We were also releasing compilations of old popular songs. The second was extremely profitable while the first one was close to gambling. The first call was not to disturb the existing set up and assess the attitude and capability that existed. In a turnaround situation, it is not always necessary to remove the existing set up – this is glamorous and send strong signals to the organization but you lose out on knowledge gathered over time.

I decided to do nothing in the first three months except to go around the markets, visit key producers and artists to understand the business well. I now understood the importance of “A&R”. There were a few people in the organizations who “knew” the artists & producers and were familiar with the repertoire. What they did or didn’t do determined the outcome. 

This led to a very high dependence on individuals and became a limiting factor for business expansion. This also meant huge business risk that remained unmitigated – attrition of any such employee directly impacted company’s ability to bring out new products and hence affected revenue.

This had to be broken and the process institutionalized.



Compilations are selected songs put together of an artist or a mood or a theme – “Best of Kishore Kumar”, Sad songs from “Tamil Films” and “Gharanas” etc. We had a separate team working on these compilations for the international market and one for the domestic market. I Couldn’t understand why the same thing wasn’t released in both the markets. This was purely human dynamics.

The company engaged the services of a prima donna, the son of a famous music director for its compilation products – this was unreasonably expensive and time consuming. Suggestion to use technology was scoffed at. We pushed ahead as this important area had to be freed up from “individuals”. Institutionalization is key to long term profitable growth.

The only way to achieve this was to analyze data. We took out past compilations and mapped songs from each album and collected key data points such as composer, film, singers, music director, mood, theme etc. It was a time consuming and painful effort but by the end of it, we had profiled most of the songs used in past compilations and hence rehashing them required much less individual expertise. 

This was my first experience in solving a problem using mass data & analysis. Future experience showed there is no substitute for this. For example, when I worked in Airtel in the broad band and data business, the network creation itself was based on mass of primary data collected as to where the high value customers resided; similarly segment wise market and our penetration analysis helped us to acquire customers through sales effort and customized products to enhance share off corporates, SMB and PCOs where revenue per user was significantly higher. Such examples are plenty.

Focus then shifted to make the compilation rich with more recognizable and liked songs, bring out packs and with wonderful cassettes and CD inlay covers. Our compilation sales went up by over 50%, cost of creating negligible and process institutionalized. Data is a powerful management tool; developing ability to read data and bring out insights is key to success. Once this process was successfully introduced in old Hindi film songs, it was quickly adopted in other areas with similar success. 



Loss of sales due to stock-out situation was a major problem. The Hindi film music compilation itself had close to 2,000 SKUs. Whenever there was sales pressure to increase volume of compilations, the sales team used to dump stocks in the market leading to receivables issue and loss of sales in future months. When we analyzed the sales data, the following emerged:

  1. There were no basic stocking norms – min, max and reorder levels, geography wise sales forecast was not done, the orders on factory were random and sometimes based on past trends – if we didn’t sell in the past we won’t sell in the future.
  2. Orders from wholesalers were in units on 1, 2 and 3 pieces. 
  3. The sales guy didn’t have stock status, past sales pattern and what sold in that geography in the past; the entire order taking was random. Most sales guys were part of the system for long and hence “knew” what would sell. 

An interesting change was suggested by one of the trainees – we introduced a simple pack containing 10 pieces (instead of single pieces) in a wrap and that became the unit of sale – the result was amazing – sales volume more than doubled. Practical ideas are plenty with frontline workers and many lead to amazing results. This was one example; I will narrate two others in my association with Airtel:

  1. The base plan of a landline phone was Rs.250 rental and every three minutes of use was charged at Rs.1.80. Data was charged additionally. Most customers’ bills were a little over rental. We introduced a plan with Rs.499 as minimum charges but up to value of Rs.499 we gave usage fully either for voice or data. In itself it was an excellent product and delivered much higher revenue per customer. But the problem was perception of minimum payout of Rs.499 instead of Rs.250 leading to a lot of internal resistance. One smart sales executive found a way to sell the plan as “RENT FREE” plan. This one simple changed everything and this plan delivered most of our future sales.
  2. When a customer doesn’t pay his bills within a certain time, his outgoing calls are barred. Many pay immediately and expect the line to be restored immediately but company waited for the cheque clearance and delay caused anguish. One of the front-line boys suggested that we ‘trust’ the customer and restore once he gives cheque details and re-bar only if the cheque doesn’t get cleared. Risk was low – just two days calls. The customer satisfaction level went up significantly with just this one tweak.

These two initiatives drove up the compilation sales so much that, suddenly profitability position changed – very low variable cost, no risk of not selling as these are regularly consumed items and increased sales directly drove up the profits. This led to – more cash on hand & hence more ability to take risks in new films and introducing new artists. 



When you enter a stressed organization, there will be temptation to change people at least at the senior level. The organization had two completely different cultures:

  1. A maverick filmy culture amongst those in Bombay, dealing with big artists and film producers and actors – mostly new joinees 
  2. The other, an easy-going & simple but laid-back culture in Calcutta and the rest of the organization – mostly old timers. 

Two things were clear – over staffing and secondly two different paces at which the organization moved. 

The recording studio was part of the Calcutta plant. Most people working there had been in the company for decades and had a very genuine and simple connect with artists visiting the studio for recording. This set up was not very professional and efficient, but it was beautiful. I am referring to a bunch of people who did not have the primary responsibility to deal with artists but had a far deeper understanding of the importance of the relationship. 

Though the company was not doing financially very well, the DNA of the organization was artists centric. The last thing I wanted was to disturb this core. HMV is probably one of the few turnarounds which was achieved over time by many including a little contribution from me without touching the existing employees – not one changed. 

The same team when the company started getting profitable, re-entered various markets, created a lot of new music and ultimately became the darling of the stock market, contributed to all its successes. What employees need is a connect to a common goal and want to be a part of a winning team. 



Six months after I joined HMV a very interesting meeting happened. My office was in Duncan House in Calcutta and my cabin was in the middle of the main hall – once you go inside it is like some kind of solitary confinement with rest of the world cut off. Referred by the Chairman, a gentleman walked in and introduced himself. His first question was “Do you know what is happening in the market”. Not being exposed to the stock market, I misunderstood his question and said it Is responding very well to some of our new releases and so on. 

Apparently, the market he referred to was more important and wanted to know whether I was aware why our stock prices were going up. He was a Calcutta based stock broker and my investment and risk-taking capability then didn’t go beyond fixed deposits. I was naturally clueless. I was educated in the next few minutes – face value of HMV share was Rs.10 (I knew this much), had traded around Rs.16 for most part of its existence was now trading close to Rs.300 and wanted to know the reason. With a smile I said probably the market is beginning to factor in the arrival of the new CEO. Apparently, there ought to have been more serious reasons. It was one of the many things about the company for which I didn’t have an answer. 

This was the glorious period of ICE stocks – I – Information Technology, C – Communication and E – Entertainment. Market continued to push up the stock price and it started growing rapidly in unrealistic range. Company was still struggling to make profits, there was no cash, we have barely turned around, why then this hype?

By now, a lot of funds, share brokers etc started engaging actively. For all of us this was new. We made sure only three people from the company talked to them and ensure we only shared “FACTS”. It was a crucial call as the stock was going up wildly, we didn’t understand the logic and stayed very careful not to mislead even inadvertently. 

I remember the analysts’ community seeking frequent interactions and monthly meetings became a common practice. I was very nervous dealing with this as I had no prior experience. My first informal exposure to coaching happened when my immediate boss was handholding me to deal with this till, I got comfortable. Those were days when you coached someone because you were genuinely interested in the person and hence did not outsource.

Suddenly, there was a lot of interest amongst investment bankers, trying to persuade us to raise funds. This was tempting as the company continued to live hand to mouth despite all the hype in the market, didn’t have adequate cash for expansion. We raised a fairly larger sum at a price discounted to the then market price of Rs.1,950. The price did go up to Rs.2,250 but over the next two years settled at around Rs.550. I am still living with this guilt – I didn’t push up the market price, funds raised were at rates discounted to the market price but still I couldn’t see the value. 

An interesting meeting happened as the fund-raising process was closing. The head of a very large fund, a well-respected, successful person met me at our factory near the airport. He was going to invest in the issue and wanted to meet the CEO and CFO of the company. After talking about the performance, plan for utilization of funds etc, I asked him as to why he is investing at such a high price. 

He belongs to a community that takes a very high-level view of things and generally one or two compelling factors help them make up their mind. His view was – QUOTE “the company had rights to over 200,000 songs collected over decades and when exploited fully, the company’s performance will go through the roof” UNQUOTE. This was a case of building the narrative and weaving the facts (?) around it!



Initiative 1 was sourcing missing masters – Though I did not concur with the views of the fund manager on valuation, I got curious about the 200,000 songs being in our copyright. We did a deep dive and realized that for a large part of this, either we didn’t have the agreement copy to prove title or where agreement existed, there was no “master” to produce the music. While tracing the legal title was a time-consuming task, we set about getting our hands on the songs. 

A little background and learning – to make LP records the masters were always kept in copper plates as originals. During the cash-starved days the company sold a lot of them by weight. This is the result of lack of sustainable profitability and poor management of cash. 

We looked all over the country for access to these songs from collectors and managed to get a fair amount over three years. A lot of compilations released during the early 2000 was from this venture.

Initiative 2 was enhancing copyright income – Music is creative and many are involved in the process – artists, music director, lyricists and film producer. These rights are bought with adequate compensation to all involved. Typically, the music company like buy the perpetual right. Under law, the music company is entitled to get compensation if the music is used in anyway – reproduction by way of cassette, CD or digital, public performance, broadcast in radio stations and TV etc. In India, the rights were protected by law but due to very poor understanding its enforcement was poor. HMV took the leadership for this in the industry in early 2000’s. Result was a trickle of revenue in early years but runs in to crores now given the extent of caller tunes, better enforcement etc. 

These two initiatives were long term impact creators – significant revenue flow much after most of us involved with these initiatives have long retired. As a CEO, it is important to do what is good in the long run and not chase quarterly results alone. 



This was the time when internet was getting popular and it was becoming increasingly clear that days were not far off when music and films would get delivered digitally (experience in telecom helped). We were the pioneers in bringing music digitally though our venture ‘Hamara CD’ on a website you can listen to clippings of a song and if you liked them, you select them to create your own CD. On getting the order, the company ‘burnt’ the CD and delivered it to you. These were early days of digital music! We had digitally clean and remastered select songs. Our data analysis discussed earlier helped in choosing the songs that were most popular.



HMV continued to go through changes and the company kept pace with the changing environment – its initiatives on digital music ( has taken thousands of fantastic collections of songs globally – easy to collect your own songs through digital download or in pen drives or in the form of juke box. This and efforts on copy right areas continue to provide robust revenues even today. 

Though the HMV sounds like a turnaround story (which it was), there were a lot of elements in this which made it resemble a startup.  There are a lot of good learnings relevant for a start-up. 

In the next part of this series, I will share the best part of my career – a stint of 7 years in Airtel.


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