Sougata Mitra’s talent in identifying ‘sneezers’ helped him grow his business.
Sougata was inspired to turn an entrepreneur
after hearing management guru C.K. Prahalad’s lecture on ‘Bottom of the Pyramid Entrepreneurs’
in Ahmedabad. Sougata realised that one does not require too large a capital or
contacts to start a business.
After quitting his job in 2005, he zeroed down on two options: start a recruitment consultancy or a financial services firm. However, a close friend suggested to him to look into the business of financial advisory. Sougata figured there was a great opportunity in it which was untapped as yet.
In 2006 after acquiring an ARN code, he began with his first-ever client: his brother. He slowly spread his business through referrals. During this phase, he read ‘The Tipping Point’ – a book by Malcolm Gladwell, which helped him turn around his business. Through the book, he came across the concept of ‘sneezers’ – people who are likely to spread your idea and create a positive word of mouth.
He sent SMSes to people he thought were ‘sneezers’ suggesting them to start a Rs. 1000 SIP. In a year’s time due to the prevailing bull conditions, the SIPs showed good returns and they started promoting Sougata’s business. Out of every ten ‘sneezers', seven turned to be correct as they generated a lot of referrals. Sougata’s reach spread this way. His client base spiralled from one to a hundred in a year’s time and 600 in six years’ time.
Another factor which boosted Sougata’s business was his focus on investing through SIPs. The suggestion came from a well-wisher who managed a broking firm, as most of the advisors did not promote it. Sougata could not understand the importance of investing through SIPs because the market was at a high. But later on, he realised that most of his contacts were salaried employees and setting aside a certain sum every month was easy for them.
Currently, Sougata manages over 2000 SIPs, mostly from a retail base. The ticket-size of most of SIPs of his clients is not more than Rs. 2000. When asked about a memorable experience during his journey, he recalled an incident when a 1000 rupee-SIP client led him to a big corporate client. Now, Sougata handles crores of investment for that client.
His dedication towards his work has helped him to build a trust among his clients. While the ban of entry load had negatively affected his business, he took advantage of the vacuum created by his colleagues who no more found the business lucrative. He started approaching clients who were looking for free advisory service. As he did not charge his clients, lot of them referred him to others as he delivered good service for free.
He has an AUM of Rs. 9 crore and wishes to double it within the next four years. Currently, he advises his clients to invest through SIPs only in equity funds. Going forward, he is planning to promote FMP as a good source of fixed return. Further, to expand his business, his strategy is to convert his clients’ bank FD investment to mutual funds.