Indian Institute of Management Indore

The Entrepreneurs Dilemma: Nursery Live

Dot Com1

Nandu Singh was meeting his school friend Gupta after many years. Just before dinner they

were sitting in the balcony reminiscing their school days. While in school their dream was to

be employed as engineers in a top Indian company. However their present occupation had

nothing to do with engineering as Gupta was presently pursuing a doctoral program in a

premier business school and Nandu was an entrepreneur having started Nursery Live Dot

com (NLC) in 2013. Over dinner Gupta observed that Nandu was pre-occupied and asked

him if his business was doing well. This triggered a discussion on the dilemma Nandu was

facing in his business. Though NLC was doing well and growing, he was worried about the

potential threat from new entrants, particularly those with deep pockets. In his opinion, the

market for NLC was huge and he had only scratched the surface. He feared that unless he

expanded rapidly and consolidated his position in the market he could lose his first movers

advantage. His dilemma was how to fund growth without having to give away control over

his firm, to which Gupta remarked “this is a typical entrepreneur’s dilemma of growth v/s.

control”.

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This case is prepared by Mr. Pankaj Gupta (Fellow, IIM Indore) and Prof. D.L Sunder for teaching
purpose. It was written as a basis for class discussion rather than to illustrate effective or ineffective
handling of a situation. Copyright © 2017, Indian Institute of Management (IIM), Indore, M.P., India.
The authors have disguised some names to maintain confidentiality.

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A techie turned entrepreneur:

Nandu Singh completed his engineering from AIT Pune and joined Infosys in 2005 as a

software engineer. At Infosys, he displayed the same enthusiasm for new ideas and methods

that he showed in school. At school his friends used to fondly call him the “Juggad man”

because he would come up with interesting and creative ideas for school projects. Even in

those days, Nandu displayed an entrepreneurial streak. On one occasion when they needed

money for a project, he collected old comics and magazines from friends and generated funds

by renting them out. On completion of the project he sold the comics and magazines for a

neat profit. After two years in Infosys Nandu was frustrated. He had written two white papers

and made a number of suggestions to his bosses, but none of them were taken up for

execution. While he did get increments and a pat on the back, the fact that his ideas were not

acted upon left him highly frustrated and he decided to change jobs. He moved to a company

called Amdocs which offered a more interesting profile. A few years down the line, he was

back to square one. Though his ideas were appreciated and he was given token rewards he

did not see any of his ideas being implemented. He was convinced that if his ideas were to

see the light of the day, he would have to implement them himself.

Nandu belonged to a middle class family where jobs were preferred to business as a career.

For most of his family members the ultimate goal was to land a government job. Nandu’s

father had retired and it was now his responsibility to take care of his parents and two

younger brothers. When he joined Infosys at Pune, his family moved with him from Mathura

to Pune. Though he wanted to start his own business, his family commitments held him back.

However, in 2007, he was bitten by the entrepreneurial bug. As there was considerable buzz

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about e-commerce, he considered entering the online retailing space and studied companies

like Bigbasket and Peppertap. He decided to start an online grocery store that would cater to

the residents of Pune. As no one in his family had any background in business, he decided to

continue in his job and run the business with the help of his family members. His virtual store

“Ghartak” offered 22 general use products for online purchase. The value proposition was

delivery the products to the customer’s door within an hour. He divided Pune city into 60

zones and hired a delivery person for each zone. He also identified vendors in each zone who

was willing to sell to him at a discount. The modus operandi was simple, customers could

book their orders online and these would be communicated to the delivery person on phone.

The delivery person would pick up the goods from the vendors and delivery it to customer.

The overall operation was overseen by 3 customer service executives in the office. After 8

months, he was forced to shut it down due to the following reasons,

1. High cost of customer acquisition.

2. Difficulty in ensuring delivery within an hour.

3. Disruptions in the delivery due to absenteeism of delivery persons.

4. Inconsistency in the quality of products supplied by the vendors.

In 2008, Nandu married Nidhi a working software professional and he again started thinking

of starting his own venture. His next idea in 2009 was to start a portal where one could search

for all the deals and promotions offered in Pune. Though he studied the market extensively

and wanted to go ahead, he put the idea on hold when Rediff, Snapedeal and Carrydeal

entered the market. He was hesitant to compete with big players as his financial position was

not so strong. When his son was born in 2010 and Nidhi decided to quit her job to take care

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of their child, it increased his responsibilities and dependence on the job. Learning that Rediff

(their coupon division) and Carrydeal shut down their operations he reviewed his plan in light

of his increased family responsibilities and decided not to pursue it.

A NEW BEGINNING

By 2012, his brothers had completed their engineering degrees and were employed as

software engineers. His child was now going to school and his wife suggested that she could

start working again. Nandu felt this was probably the right time to start a new venture.

Analysing the reasons for his earlier failures he realized they were due to inadequate market

research, lack of focus and commitment to the business, insufficient fundingand poor product

selection.

Therefore he decided to change his approach and pursue new business opportunities in a

planned and systematic manner. He would first:

1. Research the markets thoroughly to understand the demand, customer pain points

and their buying behaviour.

2. Identify a minimum viable product and test the offerings on a limited scale.

3. Quit his job at the earliest and get fully involved in the start-up

Nursery Live Dot Com (NLC) was the new venture he launched in 2013. It is an online

shopping platform for nursery items like plants, avenue trees, seeds and gardening

accessories. The idea came one evening, a year earlier, when his wife wanted some plants for

the garden. Despite both of them spending the whole day going around Pune (to various

nurseries), they could not find the plants. His wife was a gardening enthusiast and her

common complaint was that it is difficult to get all the plants she wanted in Pune. She

complained that the nurseries within the city and even those on the outskirts did not have

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much to offer. Most of the plants were seasonal and of low quality. An online search did not

bear any fruit. As he continued his online /offline search, he discovered that while some of

the nurseries exported plants and supplied plants in bulk, their range was limited. He

discussed the problem with his friends and gathered information on nurseries in different

cities. Based on his research, found that,

i) Most cities had only a few nurseries and many of them were on the outskirts.

ii) Plant storage need space and this limited the range of products offered by them.

iii) Depending on the climatic conditions of their location, nurseries in a town /city could
only stock few varieties of plants.

iv) Customers found it is time consuming to visit a number of nurseries to purchase the
plants they wanted.

v) Transportation of plants to home was cumbersome and expensive.

vi) Many items essential for a home garden like coloured pebbles, seeds, flowers,
bamboo tree etc. are not readily available in all the nurseries.

In short, gardening needs of many remained largely unfulfilled. This realization set him

thinking of the potential an online business offered – one that could meet gardening needs

effectively.

Having recognized the opportunity he continued researching the market to be sure that it

wascommercially viable. He then spent a few weeks designing an online shopping portal

where a gardening enthusiast could shop. This time he did not jump in immediately but spent

months painstakingly identifying nurseries where he could source plants and other products.

While doing so, he realized that gardening is an addiction and most enthusiasts regularly

make changes in their garden to make them look more beautiful. He also realized that the

enthusiasts were willing to spend good money for the convenience of getting the plants and

other items delivered at their doorstep. Most importantly, there was no competition in the

online format and in the brick & mortar format the industry was fragmented with no

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dominant player.

Excited with the prospect, he prepared a road map for his foray into this untapped market. His

initial idea was to setup a virtual inventory or nursery products through agreements with a

number of nurseries and tie up with courier agencies who would pick up the products from

the nursery and deliver them to the customers. To estimate the market size, Nandu did a

keyword search using Google, Wikipedia and the social media. He used google analytics to

find out how many persons searched for plants and gardening related products daily. He

found that the numbers were increasing month by month. The analysis revealed that 60

percent of users were from the top 9 cities, 76 percent were college educated, and 92 percent

users were in the age group of 18-54 years. He estimated that 20-25 million active garden

lovers were present in the market. Even if he were to just tap into 2% of the market, he could

become a huge success. As he moved forward in a phased manner, he realized that his biggest

challenge would be transportation of the plants from the nursery to the customer. As he went

ahead with his plans, he realized that an online platform that facilitated the direct shipping of

plants from the nursery to the customer would not work. This is because the plants would

have to be specially packed if they were to survive 5-7 days of transportation and it would not

be possible to ensure this at the nurseries that supplied the plants. He therefore modified his

plan to set up a warehouse in Pune and get the plants delivered to his warehouse where they

could be specially packed before being despatched to the customers. He also realized that all

varieties of plants were not available in Pune. So he identified locations that had the climatic

conditions to support different varieties of plants that were not available in Pune. For

example some varieties could be grown only in and around Hyderabad, some only along the

border of Tamil Nadu and Kerala and others in the eastern region (Kolkata and Shillong).

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Nandu identified nurseries in these locations who were willing to tie up with him for supplies.

Once he had identified reliable suppliers of plants and other items needed for home gardens,

he identified courier companies who were willing to commit quick deliveries to Pune.

Though the plants could survive for 7 to 10 days after being specially packed, he insisted on

the courier companies committing to a 5 day deadline for delivery from Pune to various

locations in the country. This would ensure that the plants would be in a good condition even

if delivery was delayed by a day or two.

As he had realized quite early that the plants would have to be specially packed to ensure

their survival for 7 to 10 days of transportation before being planted in the customer’s garden,

he continued his research on how to extend this period. He found that using a special type of

soil while packaging the plants would help. This particular soil was available only in Europe

and left with no option he decided to import it. He also found ways to keep the leaves moist

for long periods so that the plants remain intact during transportation.

He started testing his online platform in June 2013 after tying up with a number of nurseries

and courier companies. His initial investment was INR 2,00,000/- and he did not anticipate

any cash flow problems as his business model saw customers paying online in advance while

he enjoyed 45 days credit from the nurseries and courier companies. Initially NLC was

registered as Greenworks Commerce (LLP) which, was later changed to an Experttag

Ecommerce (LLP). Nandu and his wife Nidhi were partners in this entity.

His operations strategy was to list the plants and other gardening accessories available at his

partner nurseries on his website. On receiving an order, the items would be sourced from the

nurseries, specially packed and despatched to the customer from the warehouse in Pune. On a

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typical day you could see a large number of plants arriving at the warehouse during the day.

By evening they would be packed and ready for collection by the courier companies. While

he maintained reasonable stock of non-perishable items, stock of plants were kept to the

minimum.

A few months into the business, Nandu realized that he would have to restrict the delivery to

large cities and towns (locations that could be reached within 7 days). This was because he

found delivery to some parts of the country (e.g. eastern Uttar Pradesh) took more than 7

days. To play it safe, he was presently accepting orders from large cities towns where the

courier companies guaranteed delivery within 5 days (for a list of cities/ towns see Exhibit-

11).

In January 2014 Nandu estimated that it would take two years for his firm to make profits. He

therefore decided to continue in his job till the end of 2015 with his wife in charge of the day

to day activities of NLC. However, the market response was very encouraging, and by the

end of 2014 he decided to fully commit to NLC. In January 2015 he resigned his job and

become involved in NLC from February 2015. As of November 2016, he had tied up with 40

nurseries and 8 courier companies. Recently he started importing flower bulbs from Europe

through an intermediary to add them to his product range. NLC directly and indirectly

employed 25 persons which was expect to go up to 35 during the next year.

Growth Pains:

Though, the performance of NLC was better than expected, Nandu realized that he was just

scratching the surface. NLC received some good publicity from Business Standard whose

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online version had an article “Tackling air pollution: This start-up helps you grow fresh air at

home”. A number of other sites and blogs also wrote about NLC. While Nandu was happy

with the publicity his firm received, he was worried that the publicity would also attract new

players. He presently enjoyed a monopoly position in this market and things could become

difficult with competition. While he had the advantage of being the first mover, he was not

sure if it would give him a competitive edge as he was not present in all the markets and had

not consolidated his position. If big players with deep pockets entered the market, he could

easily loose out to them. If he were to benefit from the lead he currently enjoyed he would

have to rapidly expand and establish a dominant position in the market. His plan was to take

his firm from being a small player to being the dominant player in the industry. The biggest

obstacle to executing the plan was funds. If he were to depend on internal accruals only, it

would take him 5 to 10 years to execute his plan. If in the meanwhile a large company were

to enter this market, his profits and growth plans would be affected. Presently his margins

were good and he dared not think of the consequences of a price war which a large company

could easily start and sustain till he was pushed out of business. He had a good reason to be

worried because a few months earlier, a leading mining company approached Nandu with an

offer to partner with NLC. After three rounds of discussion and a meeting with their top

executives, Nandu realized they were more interested in acquiring NLC. Their offer was

actually an exit option for the partners of NLC with the deal amount payable partly in cash

and partly in stock.

He estimated he would need anywhere between INR 3 to 5 crores to scale up rapidly. His

plan was to establish warehouses in three to four different locations across India that would

operate as delivery centres for customers in that region. This would speed up the delivery and

also reduce cost as he could despatch products to his customers from nearby locations

optimizing cost of transportation. For example he found Delhi was a big market, but the

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variety of plants available at the nurseries in Delhi was limited. If he could set up a

warehouse in Delhi, he could easily meet all the requirements of the gardening enthusiasts in

Delhi from the warehouse in Delhi. Another opportunity he recognized was the need for

gardening services by many homes. To begin with, he was planning to offer this service in

large cities like Delhi, Mumbai, Chennai and Bangalore. NLC would send a gardener once a

week to its customer’s homes and they would work in the gardens for a specified time to take

care of needs that could not be handled by the residents. Once this proved successful, he

would expand the service to other cities. He also planned to aggressively acquire customers

and build a dominant position in the market.

He approached Mr. Sadgunan (name changed), the Vice President of an investment bank and

explored the possibility of their funding his expansion plans. The banker listened to him

carefully and appreciated his venture and his growth plan. He also visited Pune and had

numerous rounds of discussions with Nandu. He was very positive and requested Nandu to be

patient till their bank completed their due diligence process. During their previous meeting,

Mr. Sadgunan asked him if he would be interested in selling NLC to a large agricultural

group the bank represented. He indicated a figure that was quite attractive. If he was not

interested in selling, Mr. Sadgunan wanted to know what he was willing to offer (percentage

of his firm) for the investment he was seeking. Nandu indicated that he was not interested in

selling his firm and asked Mr. Sadgunan to give him some’ time to answer his second

question. , A few days later Nandu called Mr. Sadgunan and informed him that he was

willing to offer 20 to 30 percent for the investment sought. The banker’s response, however

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was lukewarm and he said that his higher ups felt NLC is in a premature industry and they

were hesitant to invest in it at this point in time. It appeared that they decided to adopt a

policy of wait and watch till the online business for nursery products reached 200 crores or

NLC was able to quadruple its revenues. He assured Nandu of his personal interest in NLC

and wished him good luck. Nandu started exploring other avenues to fund his growth plan.

He first went to his family and friends and with their help, raised INR 16 Lakhs. With this

money he kick started his expansion plan. Though Nandu approached two other bankers and

a VC, he was not successful in getting them to invest INR 2 to 3 crores in NLC. He was in a

dilemma. Should he continue his quest for funding or should he continue to grow at a slow

pace using internally generated funds. He was also mulling over the third option of selling his

venture?

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Exhibit 1: Firm Information

Mission “To develop an easy-to-use, affordable & quality driven platform that fulfils
all gardening related needs across India”
Vision “To make spaces around us green & healthy place to live”
Parent Firm Expert tag eCommerce LLP
Logo of the
Brand

Contact Sananenagar, Hadapsar Pune Maharashtra 411028 India

Details Mail: nandu@nurserylive.com
care@nurserylive.com;
Mobile No: (+91) 9595 419 429
Partner Partner 1: Mr. Nandu Singh, (B.E, M.B.A); Work experience – 9 Years in
Details software industry
Partner 2: Mrs. Nidhi Singh (MCA); Work experience -2.5 Years in
software industry

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Exhibit 2: Sales and order growth

Monthly Sale in INR

1,200,000
1,000,000
800,000
600,000
400,000
200,000
0

Monthly Orders in numbers

1000
800
600
400

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Exhibit 3: Financial Information

Details Feb-2016 Mar-2016

Total Sale 1603000 20,46,000
Salary & Office 740000 740000
Including partners
remuneration
(Fixed expenses)
Variable Expenses
Promotion 288540 368280
Courier 240450 306900
Packing box 96180 122760
Plants and other Products 288540 368280

Total Variable Expenses 913710 1166220

Total Expenses 1653710 1906220

Profit -50710 139780

Average value of an order in 2015 and expected in 2020

Details FY-2015 FY-2020

Average order amount (in Rupees) 1000 1000

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Exhibit 4: Financial projections for the period 2017 to 2022 in millions of INR

Details \Year 2017 2018 2019 2020 2021 2022

Total Revenues 40 71 150 259 400 600
Salary & Office 13 18 36 60 90 125
Including partners
remuneration

Variable Expenses
Promotion 5 9 12 15 25 35
Courier 4 7,5 10 13 20 30
Packing box 1.5 3 5 8 12 17
Plants and other 5 8 19 40 55 75
Products

Total Variable Expenses 15.5 25.5 46 76 112 157

Total Expenses 28.5 43.5 82 136 202 282

Profit before tax 13 27,5 68 123 198 318

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 Exhibit 5: Potential Entrants /Competitors

At present NLC Live dot Com does not have any competitor in the online space. It however
competes with the local nurseries in various cities. The advantage the local nurseries have
over NLC is their lower prices. NLC offers convenience due to delivery of plants and
accessories at the customer’s doorstep and the wide range of products available compared to
the local nurseries.

The large agricultural group that Mr. Sadgunan’s bank represented is a potential new entrant
because they have expressed interest in buying out NLC. Similarly the large mining group
who made a bid for NLC can also be seen as a potential entrant. Any nursery which does not
have an online presence can also become a competitor.

Exhibit 6: Different online forums for the gardening enthusiast.

Forum
www.nurserylive.com
GreenTv.nurserylive.com
Ask.nurserylive.com
Wiki.nurserylive.com
Blog.nurserylive.com
Purpose
This is the main website where you can order plants,
seeds, bulbs, pebbles, pots and other related items.
For sharing gardening related information as in video
form.
To address customer’s queries, concerns and daily
challenges.
For sharing gardening related information.
For customers and gardening enthusiastic blogger to
sharing their gardening related experiences &
recommendations.

Exhibit 7: Links where NLC got attention via News agencies:

1. https://www.techinasia.com/nurserylive-takes-gardening-to-your-doorstep
2. http://www.business-standard.com/article/companies/tackling-air-pollution-this-startup-
helps-you-grow-fresh-air-at-home-116110400970_1.html
3. http://newsdog.today/a/article/58308f53129071512243dac2/
4. https://www.entrepreneur.com/article/284786
5. http://techcircle.vccircle.com/2016/11/10/startups-that-help-combat-air-pollution/
6. http://knowstartup.com/2016/11/startups-for-air-quality/

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Exhibit 8: Some examples of Products offered

Tulip Bulb Lily Bulb Curcuma Bulb

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 Exhibit 8 Cont….

Planters and accessories

Nutrient rich soil Natural dried moss Perlite

Watering Can Solar Stick Bird house

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Exhibit 9: Range of Products offered

Plants Aquatic Plants / Avenue Trees / Bamboos / Bonsai
Plants / Cactus n Succulents / Climbers n
Creepers / Flowering
Creepers / Ferns / Ficus / Flowering Plants / Fruit
plants / Fruit Plants ( Grafted
) / Lawns / Herbs / Landscape Plants / Palms n
Cycads / Shrubs / Spices n edible Herbs / Heliconia,
Gingers n like plants
Low Maintenance Plants / Nakshtra
Plants / Plants Good for
Containers / Plants to Attracts Birds
n Butterflies / Drought Tolerant
Plants / Aromatic Plants / Ground
Cover / Lucky Bamboo / Lucky
Plants / Medicinal Plants / Money
Spinning Trees / Vastu n
Religious / Fruit Plants in
pot / Hedges / Boundary
Plants / Insect Repellent Plants

Seeds Vegetable Seeds: All Vegetable Seeds / English Forestry Seeds: Lawn Grass
Vegetable Seeds / Herb Seeds / Indian Vegetable
Seeds / Pot Vegetable Seeds / Fall Vegetable Seeds Seeds / Medicinal Plant
(20°C to 30°C) / Rainy Vegetable Seeds (20°C to Seeds / Flowering Tree
30°C) / Summer Vegetable Seeds (25°C to Seeds / Forestry Seeds / Bamboo
30°C) / Winter Vegetable Seeds (20°C to
25°C) / Vegetable Seeds Packages Seeds / Conifer Seeds / Green
Manuring Seeds / Palm Seeds / Fruit
Flower Seeds: All Flower Seeds / Fall Flower Seeds
Seeds / Special Seed Package / Other
(20°C to 30°C) / Rainy Flower Seeds (20°C to
Special Seeds / Special Seed
30°C) / Summer Flower Seeds (25°C to 30°C) / Winter
Packages / Magical
Flower Seeds (20°C to 25°C) / Year Round Flower
Beans / Gardening Kits / Magical
Seeds / Special Flower Seeds / Seeds for Flower
Seeds
bed / Flower Seeds Packages

Bulbs Flower Bulbs: All Flower Bulbs / Summer Flower

Bulbs / Winter Flower Bulbs / Daffodil Flower
Bulbs / Gladiolus Flower Bulbs / Zephyranthes Lily
Bulbs / Hyacinth Flower Bulbs / Fressia Flower
Bulbs / Anemone Flower Bulbs / Irish Flower
Bulbs / Tulip Flower Bulbs / Ranunculus Flower
Bulbs / Lily Flower Bulbs / Other Winter Flower
Bulbs / Year Round Bulbs / Flower Bulb Packages

Pots Colorful Plastic Pots / Standard Plastic Pots / Fiber Planter Accessories
/Planters Glass Planters / Tyre Planters / Flower Hanging Pots Brackets/ Pot's Plastic
Tower / Germination Tray / Metal Planters / Reversible
Planters / Bonsai Planters / Self Watering Hanger/ Planter Cover/ Pot
Planters / Railing Pots / Rotomolded Planters / Vertical Stand/ Pot's Plates / Trays/ Pot's
Garden Pots / Hanging Basket Pots / Wall Mounted Plates
Planters

Pebbles All Pebbles/ Big Pebbles/ Medium Pebbles/ Small

Pebbles/ Aquarium Pebbles/ Mini Aquarium
Pebbles/ Chips Pebbles/ Solid Pebbles/ Onex Simple
Pebbles/ Onex Super Pebbles/ Granite / Marble Pebbles

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Exhibit 10: Delivery destinations offered by NLC as of Nov 2016.

Ahmedabad, Bangalore, Baroda, Chandigarh, Chennai, Gurgaon, Hyderabad, Indore,

Kolkata, Mumbai, Nasik, New Delhi, Noida, Patna, Pimpri, Puducherry, Pune, Raipur,
Ranchi, Trivandrum, Nellore, Vijayawada, Visakhapatnam, Warangal, Guwahati, Dhanbad,
Jamshedpur, Jamnagar, Rajkot, Surat, Faridabad, Srinagar, Belgaum, Mangalore, Mysore,
Kochi, Kozhikode, Aurangabad, Kolhapur, Nagpur, Siliguri, Bokaro, Durgapur,
Bardhhaman, Cuttack, Rourkela, Bhilai, Rajahmundry, Kakinada, Brahmaputra, Guntur,
Tirupati, Tirunelveli, Kollam, Thrissur, Tiruchirappalli, Salem, Anantapur, Kurnool, Bellary.

All the data presented in the exhibits are sourced from the firm and the entrepreneur.

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