MAINTAINING FOCUS, MANAGING PRIORITIES & CUSTOMER NEEDS, AND OTHER LESSONS
It takes a mix of heady opportunism, incredible self-belief, persistence and a resourceful leadership skillset to even begin to achieve entrepreneurial success. At a glance, however, it may appear that more younger Sri Lankans than ever before have the self-confidence to believe that they are capable of building the next digitally-led product that can disrupt incumbents. Nowhere is this new spirit more self evident than at a crop of new startup accelerators and co-working places in Colombo. Recently, Hatch, one such startup accelerator, hosted a discussion with three Sri Lankan entrepreneurs – Founder and former Chief Executive of Odel Otara Gunawardene, Expolanka Holdings Co-Founder and Chief Executive Hanif Yusoof, and one half of the founding team at Spa Ceylon Shalin Balasuriya. They discussed the trials and tribulations of being an entrepreneur in Sri Lanka.
Founder and former Chief Executive, Odel
Year of founding: 1990
Valuation at which Otara sold the company: Rs5.7 billion
Odel, a Sri Lankan department store, was founded and expanded during a period when conflict raged in the country. After creating a company that offered a shoppers’ experience unlike any other in Sri Lanka, Founder Otara Gunawardene took the company public in 2010 to fund its growth. In 2014, 24 years after founding the business, she sold her shares in the company to Softlogic Holdings.
What did you learn from your father?
Gunawardene: My father is the one who registered the company, Odel. The brand is a hybrid of my names, Otara and Del. Even though he wanted me to start a company, he never gave me money. Eventually, I obtained a Rs150,000 bank loan and that was the beginning of Odel. The investors in my company were my mother and my brother, who put in $50 each.
Your father and brothers are successful in their own right. Did you have an opportunity to learn from each other and contribute to each other’s success?
Gunawardene: I had no experience, no business education, and I knew nothing about finance, marketing or branding. Ajith (a bother) used to advise me a lot on finance. That was my weakest side, until I learnt enough of it. I think it’s important to tap people, who may or may not be your family, who know more than you do. In this case, it happened to be my bothers. My mother and brother were directors of my company. After I listed, a brother was the chairman of the company for a few years until I sold.
Does your success put a lot of pressure on your kids because of the expectation it creates?
Gunawardene: My children are 18 and 24. They are totally disinterested in what I do. They are doing their own thing, and it’s a whole different way of life for them.
You have been a women entrepreneur since the 90s’. What were the challenges then, and what’s different today?
Gunawardene: I was 23 when I started. Women and entrepreneurship wasn’t a topic when I was building Odel. Maybe that helped as well because it wasn’t on my mind. As a young girl, I used to go to factories to buy stock-lots, but the gender angle never occurred to me. No matter your gender, there will always be challenges. The main thing is not to be intimidated by these and to find your center, your balance and your strength.
What’s the one mistake you would want to go back and fix in your entrepreneurial journey?
Gunawardene: There were many mistakes, but I wouldn’t change anything because you learn from every one. Those are risks you have to take, and the main thing is to handle the risk well. I opened a chain of stores in Singapore, which was a huge failure and a major drain on the company. That was a challenging time. I made this mistake maybe 10 years ago. I learnt that the focus must be Sri Lanka, and that was when I decided to start the big store expansion here.
Co-Founder and Chief Executive, Expolanka Holdings
Year of founding: 1982
Market valuation as at Jan ‘19: Rs8.2 billion
Business-unfriendly policy and regulations have stymied the emergence of large companies that have benefited from Sri Lanka being a regional transshipment hub for decades. While many small businesses have emerged, none have scaled as successfully as Expolanka Holdings. Co-founded by Hanif Yusoof in 1982, the company quickly mastered doing business in a difficult climate.
What were some of your early challenges, and how did you motivate yourself?
Yusoof: It was a scary time for many, but a time of opportunity for me. We started the company with Rs25,000 that I had borrowed. It took many years to make a profit. The whole drive was to win, I always wanted to acquire customers.
The really scary time came in 1989 with the JVP crisis when no logistics company was allowed to take goods to the port. There were death threats. That didn’t stop me, because I had nothing to lose, I thought. Many entrepreneurs challenging conventions are frustrated by government regulations. Your industry is a regulated one.
What advice do you have for them?
Yusoof: I have spent many hours at the import and export department to get things done. Things have changed and evolved, and maybe they are better now, but certainly not the best. Our regulations are still archaic. As I grew the business during a civil war when bureaucratic bottlenecks were aplenty, I resolved not to wait for policies to change but to find a way around fines, jumping over the wall or going around the wall to continue. That experience has helped me enter difficult markets like Madagascar and Kenya. I have used that skill and ability to handle different situations. I’m immune to these challenges. Am I happy? No. Because I see that it’s easier to expand my business in countries like Vietnam. You get used to it, and there is no point getting frustrated. My advice to young entrepreneurs is not to panic in the face of challenges.
What advice would you give entrepreneurs who are chasing revenue and spreading their businesses very wide?
Yusoof: I was always chasing revenue. The mistake I made was to go too wide and to areas unrelated to the core business. Maybe I was a little too successful and imagined I could do all these other things. Some of these businesses are too embarrassing to mention here.
If I could reflect back on my 38-year journey and correct one thing, it would be to pick a couple of things and to do them very well. When I turned 50, I decided that I will not invest any more in non-related businesses. But I did. I’m 60 now, and I said the same thing to myself again. Now I’ve promised myself that I will not go wide, but go narrow and deep. So my journey has just begun.
What’s the one mistake you would want to go back in time and fix in your entrepreneurial journey?
Yusoof: The one thing I would change now is the struggle to find someone to replace me. That’s a real struggle.
Co-Founder and Director, Spa Ceylon
Year of founding: 2009
Spa Ceylon isn’t the first brand that Shalin Balasuriya tried to take global. ‘Janet’, a mass market brand that his mother – a beautician and cosmetician – founded, failed in its ambition because global growth where margins are thin requires a volume strategy. That brought the founders back to the drawing board.
What did you learn from your mother?
Balasuriya: For as long as I can remember, she was an entrepreneur. She had already started her salons. There was a salon in the house. She started a beauty school in the house. As I got older, she started the first Sri Lankan-made cosmetic brand, in the house. Not just me but my siblings too saw the determination and work it took and the number of hours she put in. The other learning was how she treated people. Her students and staff were always in our house and it was just like a family. She treated them so well. She built a cosmetic brand called ‘Janet’ and a personal brand for Janet Balasuriya as well. Back then, there was no social media to build a brand, so she used what was available. She used to write articles in the newspapers and, in response, received sacks of mail. She would answer every single one of them.
What gives you the confidence to challenge global players?
Balasuriya: Spa Ceylon was started to go international. When we conceptualized this, my brother, who is the other co-founder, and I were working in my mom’s company and we were trying to grow. At that time, growth in the country was limited. We realised that we had to go international for decent growth. We realised that to address an existing need in a unique way would be key.
You have grown wide, now selling cosmetics as well. How is that strategy working out?
Balasuriya: The first step is to understand your consumer. Every area we go into starts from the consumer and works backwards, to how do we serve the consumer. We’ve gone wide with our products because of our distribution model. We only sell though branded stores and have a captive audience. So we thought, how can we meet their other needs? It’s fairly logical, and given our distribution model, it has worked well. We started as an Ayurveda personal care brand and we’ve grown into a wellness lifestyle brand. We’ve gone from cosmetics to body, bath & beauty products, and then added clothing, music and tea. But everything is very consistent with our brand identity and what our consumers would find meaningful.
What’s the one mistake you would want to go back in time and fix in your entrepreneurial journey?
Balasuriya: An important learning is to ensure that you have time to do what you are best at. If you are the entrepreneur, you are the idea guy and you are the one bringing the special quality that makes the business work. In a startup, you have to get involved in so many other things. Be very careful to not get caught up in that to the point that it takes too much of your key time. That could be a huge waste, and it happened to us to an extent.