Episode 62 / April 26, 2020

Mekin Maheshwari on Impact of COVID-19 on Small & Medium Enterprises and Startups

hr min

Episode 62 / April 26, 2020

Mekin Maheshwari on Impact of COVID-19 on Small & Medium Enterprises and Startups

hr min
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Coming from a Tech-background Mekin spent his early career at Yahoo, Ugenie,, and Flipkart. Since 2016, he has also been an Angel Investor investor and exited a few startups such as – UrbanClap, Vaahan, Tapchief, Quizziz & mGaadi. In 2017 he started Udhyam, it focuses on nurturing and guiding students to become future entrepreneurs at the school level.

In 2018, he parallelly started Global Alliance for Mass Entrepreneurship, referred to as GAME. As the name suggests, it aims to create 10M entrepreneurs (50% of women), who will create 50M jobs by 2030.

In this podcast, Mekin shares his opinions regarding the current situation of MSMEs and how Udhyam & GAME are moving towards their goals amid Covid-19 crisis.

Notes –

00:48 – Joining Flipkart and founding Udhyam

02:52 – How does Udhyam stimulates and encourages young entrepreneurs?

04:34 – How was GAME founded and what problem does it solve?

06:14 – Enabling entrepreneurs who run a small business and employ 5-20 people

12:53 – How are MSMEs affected by Covid-19?

18:21 – Behavioural changes after the crisis

20:45 – Opportunities which might emerge from the current scenario

27:30 – How is Udhyam leveraging the current lockdown?

36:02 – Advice to entrepreneurs to navigate through this crisis


Read the full transcript here:

Siddhartha 0:02

Today, we have with us Mekin Maheshwari. Mekin is the co-founder of Global Alliance for Mass Entrepreneurship and Udhyam Learning Foundation. He was also the Chief People Officer at Flipkart till 2016. Mekin, welcome to the podcast.


Mekin 0:44

Thank you so much for having me here.


Siddhartha 0:46

Mekin, would love to know more about your journey. How did you join Flipkart, GAME, and Udhyam recently?


Mekin 0:54

Sure, I think joining Flipkart was against conventional wisdom. eCommerce back then in 2009 was not something that India could do. But I like the founders, as well as how they were thinking about the problems specifically, I love their customer-centricity. And this bias for action and willingness to do stuff. And the added benefit was that the Flipkart office was 500 meters from my home. So I was hoping to be able to come back home and spend more time at home, which never happened. And, I think we started out in 2009. And, as people say, rest is history. We never imagined it could be as big as it eventually became. But we were focused on building the company with the right principles. In 2015 August, September, I started thinking about what gives me more joy, what gives me satisfaction. And that introspection led me to questions like who I am. And it finally helped me decide that I should move on from Flipkart and explore myself as well as what I’m really passionate about doing. I still don’t know myself fully. But what I did realize is that I get joy out of people succeeding. And in the quest of enabling more and more people to succeed, it is why I ventured about education, and livelihoods and entrepreneurship. And that’s what led me to start Udhyam in early 2017.


Siddhartha 2:50

We would love to know how did GAME happen, and are both Udhyam and GAME nonprofit or how does it work?


Mekin 3:02

Yeah. So, Udhyam is a nonprofit. Udhyam is centered on doing two things. One is to work with state governments to help our education system enabling young people to be more entrepreneurial. So we worked with Delhi and Haryana state governments, and now working with both Maharashtra and Assam, to be part of the education system itself. So in Delhi, we’ve helped the current government create the first period every day for Grade 9 to 12 Students. About seven and a half lakh students experience this. One of the larger differences from regular education is that this education also allows entrepreneurs to interact with students. So, about 1500 entrepreneurs have gone and interacted with students in government school classrooms, and the government has budgeted money for students to try something entrepreneurial. So, those are examples of the kinds of things that Udhyam Shiksha does. Udhyam Vyapar works with small business entrepreneurs like your street, Chai shop, as well as the person who irons your clothes on a Thela. Those are the people that Udhyam Vyapar works with, with the intention of enabling them to grow. Udhyam is a nonprofit work primarily on philanthropic money from myself and some friends.


Siddhartha 4:32

And what about GAME?


Mekin 4:33

So GAME got started when Ravi, Madan, and I were all discussing entrepreneurship. And I had been doing Udhyam for some time and focused on it. Madan had been running One Bridge, and Ravi had been building Social Venture Partners SVP in India and had been enabling a large number of entrepreneurs and we were all three very clear that if India does not build an equal system where a large number of our people start to create healthy enterprises, enterprises that can create jobs for five-plus people. We will be facing a very large challenge both economically but more importantly, socially, as we will have a large, young workforce, but not having enough jobs and not having the direction of how could they be productive in our society? So that’s what led to GAME happening. Initially, this was this discussion that led to research happening. We worked with Dalberg for the research and then the research threw up very interesting ideas. And we decided to convene a small group of 20-30 people but ended up becoming 85 people gathering. And we realized that the time for this seemed right that a lot more people were actually thinking about the problem, but people hadn’t taken steps. Which was when we decided to formalize GAME as a nonprofit. And since then, it’s been about a year and a half. And it’s been a fantastic journey of figuring out, how do you deal with a complex problem like this.


Siddhartha 6:12

Can you tell us more in detail about the problem Game is solving, how’s the traction right now, and how the model is built? Is it again a nonprofit or for-profit? What kind of enterprise is this?


Mekin 6:25

So, the core problem statement is that if you compare our non-farm, non-agriculture employment data only, about 21% of it is employed by what you would call small and medium enterprises. Most of the people are running what you would call single entrepreneurship or what I call Solopreneur. And then there is some employment at the large enterprise level. We have the problem of a missing middle that in the Middle, people who might be employing 5-20 or 20 plus people, that is extremely small. And when you compare this globally, in China, for example, 85% of the workforce is employed by this middle. Even in Bangladesh, close to 60% of the workforce is employed by this middle. So, without actually having this strong middle of entrepreneurs who are able to employ about five people, and hoping that large enterprises will create jobs for most of the young people in India, I feel it’s a large challenge. And we have to shift away all thinking from just large enterprises creating jobs, to enable entrepreneurs to grow to a scale where they can happily employ five-plus people and create both employment and wealth. Gaming, structured as a nonprofit, again, runs primarily on philanthropy money. We’ve been fortunate to have folks like Rockefelle, Bill and Melinda Gates Foundation contribute to us along with IKEA foundation. Those are the largest funders. There are a bunch of others, but they are the largest contributors to GAME.


Siddhartha 8:11

And what are the recent activities on the ground which GAME has done to facilitate the goal?


Mekin 8:16

Yeah, so we came one of the design principles we took is that we will be an alliance as the name suggests. And a large reason for it is that this problem is very hard to understand. It is like a challenge with five blind men and an elephant. Every individual if you’re a bank, you see the problem differently. If you’re an entrepreneur, you see the problem differently. If you’re the government, you see the problem differently. Society sees it differently. So, our first role is to actually get a lot of these people together in alliances and what we have formalized as task forces to both understand the process and then given it’s an action-oriented task force to start working on ideas that can start impacting the problem. So we formalize task forces both at the national level like the finance task force, which is led by Mrs. Anjali Duggal, who was the ex-finance secretary of the country, has nonprofits like SEWA, which runs amongst the largest women self-help group in the world, as well as has FinTech companies that are experimenting with ways of understanding data to be able to give loans much better, rather than traditional ways. It has bankers it has. It has people who’ve been working in the development sector, to start thinking about what might be the challenges together and then start actioning on some of the things that may be urgent. So that’s an example. Similarly, we have task forces around market linkages, around skills, and mindsets for the entrepreneur. Then we also have local task forces. So one in Bangalore, one focused in Meghalaya and another one in Punjab, which is focused on specific sectors and enabling impact on the ground. So those are the key recent activities that GAME has been engaged


Siddhartha 10:16

Mekin, we are in April 2020 right now, the world is seeing an unprecedented situation for the first time I think in the last 50 or a hundred years. Such an impact on global health and the economy is happening. Who’s the most impacted in India If you think economic life and all across the scale if we about business specifically?


Mekin 10:45

Unfortunately, the ones who are most impacted are the ones who are most vulnerable. These are people who do not have those who are in the informal sector would not necessarily have savings to ride them through tough times. People who are Like daily wage earners, possibly the ones who are most impacted, migrant workers who do not have savings that can last them for a period of lockdown. People whose bread and butter is based on a business that is shut down for these 21 days and those who do not have enough resources to actually write them through are amongst the ones who are most impacted. So I would say daily wage earners, labor, as well as small business owners, and specifically, the informal business owners are the ones most impacted. But I think the economy is shutting down across most of the sectors. In fact, everyone in the economy and specifically impacts young and small enterprises. Both of them get impacted seriously in a crisis like this.


Siddhartha 11:57

With all the sectors and businesses reeling from this global disruption, micro, small and medium enterprises that is MSMEs and small-medium enterprises SMEs have proved, you know, among the business identified most vulnerable, according to reports, 22% over the 75 million MSMEs units in India will be shut in the lockdown in India goes beyond four weeks and 43% will be closed permanently if this extends beyond eight weeks. This is like how much GDP impact will it have overall because, you know, even every layer of the economy will be severely derailed if this shuts down, and can you throw some more light on it?


Mekin 12:50

Yeah. So one is the economic impact, that as in close to 30% of the GDP comes from the MSME sector and it employs about over 100 million people. And a large part of our workforce is self-employed and 95% of the workers, people who are employed are in the unorganized sector. And these sectors will see the kind of damage that you just talked about, right, like almost 20 to 40% of them facing very dire situations, and surviving itself might be a large issue. So, I think it is going to be a large challenge for us as a country to figure ways of how do we enable these entrepreneurs to survive through this and to bounce back as quickly as possible as economic activity starts.


Siddhartha 13:49

And any measures, which government bodies or GAME or Bill and Melinda Gates are taking specifically to address this sector and for the people impacted by it?


Mekin 14:02

I think the government has taken measures to impact the economy overall. I do think that the government can think more about this sector, both the informal sector as well as the MSME sector. I think some of the things in terms of loan repayments and tax filings and GST filings the government has already done. And that’s a huge relief. But I think we need to do far, far more. When I compare our relief packages compared to the rest of the countries globally, I think, as a percentage of GDP we need to do a lot. The economic crisis, as a result of COVID, is significant. And the government would need to step up a lot to be able to aid this bounce back. We need to bail out small businesses like we need to lower interest rates, figure out tax incentives, we have to provide some way of short term financial aid that can allow businesses to bounce back because businesses like without demand, so it’s both a demand-side shock and a supply-side shock, because raw materials are having challenges to get transported because of the lockdown. Manpower is unable to get to their workplaces because of the lockdown and, and because of health risks. So all of these challenges will take some time from the supply side to be overcome. And then on the demand side, a large number of needs would be pushed out. So for the entrepreneur stuck in the middle of a very, very tough place and dealing with both of these challenges of low or no demand or inability to operate their business during the lockdown and very, very poor supply. So even if demand were to come back very sharply after the lockdown, creating supply back is going to be a challenge and measures that government can take to ease those to enable people, to enable transport to work very well raw material to be available, but also financing for that working capital of raw material to be available easily for entrepreneurs at this stage would be very important.


Siddhartha 16:33

Thanks, Mekin. We discussed migrant workers who have relocated to their hometown? Do you have any approximate number of how many millions of these workers have migrated to their hometowns?


Mekin 16:46

I do not have data around it. I do think that the number is significant based on some of the reports I saw around telcos and others. The number is in millions. I don’t know how many.


Siddhartha 17:02

And do you think this migration is reversible hundred percent? Or will we see a significant labor impact crisis, once economic tries to gain back to normal?


Mekin 17:14

I think like I said, at least in the short term, this is going to be a large challenge for people to leave the safety of their homes. And in business situations where the business is unpredictable, this is going to be a large challenge. It’s not going to be easy to solve. And I think we will need to come together as a country, both financially and socially, to be able to meet this crisis. It will need a lot of effort around what I would call Corona literacy and awareness post-Corona period, around where the demand might be, and allow people to move swiftly to be able to gain livelihoods that otherwise might be hard. Is it reversible? I think it is reversible. Will it take time? I do think it might take time. And that is actually the area where we need to put efforts to ensure that it takes less and less time.


Siddhartha 18:15

Mekin, what was a behavior that you think have been changed permanently because of the lockdown because of COVID because of the health crisis we face today?


Mekin 18:27

I think, in the short term, a lot has changed. But human memory, in the long run, is not so deep. So if you think about it, what changed after the 2008 financial crisis in behaviors in the long run? Probably very little. Right? So, and right now this may feel awkward because we are in the middle of the crisis. And it feels like the entire world has changed. But I think in the long run, human behavior changes far more slowly. So, I would expect some things to change, I would expect people to value insurance and health care a lot more. But at least that’s my hope that government and citizens start valuing things like insurance, things like health care a lot more, savings become a lot more populous. And, some of it is about that, hey, we as a generation did not face these hardships our previous generation, so I can talk from my own parents who would take a lot of care in ensuring that they saved enough. So the financial prudence levels, because they had seen a significant number of crises, India went through wars, etc. And those kinds of challenges do push people to think a lot more about a tough situation. And now that you’ve been through it yourself, I would expect behaviors around savings, insurance, and health to hopefully change quite a bit. Besides that, I think it’s going to be hard to imagine changes that will last


Siddhartha 20:10

Because every crisis breed opportunity, Airbnb was born because of a crisis in 2008 because people didn’t have money to rent hotels, they were looking for a cheaper option. And thereafter home rentals was the right market with Brian Chesky and the co-founders disrupted. What do you think would be opportunities created during this time for entrepreneurs, especially digital entrepreneurs and startups who are listening to the podcast?


Mekin 20:43

Yeah, I think in the digital and tech entrepreneurship space, there is already a lot that’s happening. So what is possible to do remotely is being challenged, questioned, and accelerated. It is possible to like people working from home and there are companies who are realizing that actually, they can be as productive or sometimes even more productive than they are when they were visiting offices. So it is entirely possible that in the tech entrepreneurship space, behaviors about remote working, remote teams get accelerated significantly and a lot more people experiment with those. I think remote education is another one that we’re all going through right now. And it’s possible that it starts becoming a larger share of how young people learn. I think education is hard as a space to disrupt. So, I think startups would probably move much more rapidly in the remote working space than education overall would move towards remote learning. But I think even there can be a significant acceleration of this shift. That happens. I think it’s very hard for me to predict how spaces like travel would work but in general, eCommerce, and spaces around online delivery, are already seeing a significant amount of traction and customer acquisition that would have been much slower in general. So I would think that those behaviors would continue to grow.


Siddhartha 22:20

You witnessed the Flipkart journey almost from the seed plus one after just the founders Sachin and Binny. When you joined in 2009 and the economy was just reeling from the after-effects of 2008. Did you expect such a surge in demand and what are the factors that led to such a huge surge in demand, which even the founding team and you didn’t expect and the sector didn’t expect?


Mekin 22:49

I think the impact of macro factors on very small enterprises and very small and new Innovative enterprises is reasonably small to start with. Right? While the economic situation was probably not very amenable, macro factors like Internet penetration in India were very positive. So, macroeconomics may not necessarily determine a whole lot about startup success, as you talked about Airbnb and Flipkart. But macro factors like rentals rising up in Airbnb’s case or in Flipkart’s case, Internet access being available, and there were other things that happened that enabled mobile penetration in India to increase significantly and mobile broadband to be available to a very large population in India. And I think those accelerations enabled Flipkart to grow rapidly. There is obviously a whole lot that the company had to do to win the trust of Indian customers. Because the VCs and advisors I had spoken to Before joining Flipkart, and 75% of them had advised against it, believe that Indian consumers would probably not be able to trust online commerce. And I think that’s like the eCommerce surge has been able to prove that wrong. And that behavior shift is possible. There are ways to be able to figure out and build that trust as long as you deliver on time, you’re trustworthy, your customer support is good. And what you’re selling is quality products. I think it is possible to change that. So I think those macro factors and the boom of mobile and telephony and data were the ones that really enabled Flipkart and e-commerce in general in India to scale up.


Siddhartha 24:46

Coming for the opportunity for digital entrepreneurs especially work in a tech space. Do you think if the lockdown for schools, let’s say the economic lock now opens up after 21 days or 30 days or 45 days, but the schools don’t open up or colleges don’t know for the next three months or six months, there’s a significant behavior change will result in new schools, which are completely online?


Mekin 25:08

There are completely online schools that already exist but they are, they are the exception, not the norm. And I think the number of those exceptions will increase. But for schooling to be replaced is a long, long way off. The school serves many, many purposes. The school serves the key needs of the social interaction of young people being with each other. The school also serves a huge need for parents needing time, right that parents not having to be at home, taking care of young people. The school enables parents to be able to work and I think those needs are hard to go away. So, I won’t expect that in one or two years, the education system is completely overcalled and we don’t have schools but we have more online schools and offline schools. That’s not something I would expect. But I would expect that a lot of the existing schools start using online as a medium, to communicate more with students to work together to figure out what else could happen at home and at school in newer ways that have probably not been tried. So I expect innovation within schools. I don’t expect the replacement of schools at large scale.


Siddhartha 26:39

Because you are working with as you said, 7.5 lakh students through Udhyam learning foundation?


Mekin 26:45

That’s in Delhi, there are more that we work within Haryana and then should, once the lockdowns are lifted, then a lot more with Maharashtra and Assam as well.


Siddhartha 26:53

So, is any part of Udhyam online also or the curriculum is completely offline right now?


Mekin 26:59

So this is a great time for us to be experimenting. So, we are running multiple experiments online. We haven’t necessarily been focused a lot online because of the economic segment that we work with do not all have digital access. As an orphan, there is one device and that devices with one person in the family, and that person often leave in the morning and comes back only late evening and that the student or the child having access to the device and connectivity is low. So we haven’t necessarily been able to leverage that too much. That has changed in this period of lockdown so we are able to engage with students. We are running video conference sessions. Students are participating in competitions and submitting entries online etc. that they can do at home whether it’s art and craft or something more entrepreneurial. So there is a lot that we are experimenting with, I would say this is a great time for us to discover and experiment what may work.


Siddhartha 28:04

It’s estimated that 20% of the startups will not be able to survive, you know, 2020 I have been an entrepreneur, you have been an entrepreneur multiple times and an intrapreneur inside Flipkart, what are those types of people that will be able to survive and benefit from them the most because you studied human behavior very closely, Mekin through your both the programs, any things which entrepreneur need to adapt to because, in this lockdown, it is also a great learning period for those of us who are addressed.


Mekin 28:40

Yeah, I think it’s a great question. I want to that but I also first want to just talk about that. Besides an entrepreneur’s capabilities, the surroundings also do play a role, right? We are in very, very tough situations and if the business you are in a was a business that has a very low likelihood of survival, then it’s much much harder compared to a business that is already in high demand. So the macro factors aside, the entrepreneurs who are able to look at new and change times as times of opportunity, people who have transformed their businesses from apparel to producing masks to be able to meet both national crises as well as keep their operations going. Right. There are entrepreneurs who are taking up jobs for this short term period, which both helped them to sustain economically but also gives them exposure. So the big basket has been offering jobs to people because they have a far higher demand than they have a supply of people. I know a bunch of entrepreneurs who’ve taken those on from a short term point of view. And I think the exposure that the entrepreneur is getting the customer interaction that the entrepreneurs in a job is getting to do is phenomenal. So, people who look at this time of difficulty as an opportunity as a time to build capacity, whether it is to learn themselves or it is to like figure out ways in which they can bounce back faster, I think are the people who are going to be able to survive back that said it is going to need them to do well financially, to have the basic finances in place so that when the situation is right, they are able to bounce back. And I think that is where there may be like at least at GAME, what we are doing is creating a package for small entrepreneurs. We call it a small business Stabilization Fund which will allow entrepreneurs who have already borrowed money from existing borrowers from existing lenders like MFIs and banks and NBFCs to be able to get money easily. Right. So that this can happen quickly and it is not new businesses that you are financing but existing businesses getting financed, which allows them to have the opportunity of bouncing back as soon as the lockdown seizes.


Siddhartha 31:31

And you are, I believe, an investor in 20 plus startups as of today. So what’s the feedback you’re getting from your portfolio companies? What are you advising them right now at this stage?


Mekin 31:47

Yeah, it is a tough time. I think it’s exemplary some of the larger ones to actually be able to take highly thoughtful and empathetic steps like Urban Company has been able to do in terms of taking care of both their staff as well as the professionals who work with them. But there are companies for whom the next paycheck may be very difficult. There are companies who were in the middle of a fundraise. And now the fundraising may not happen, or we don’t know. So, the uncertainty that this creates, might be very, very large for some of the companies to survive. And there are they’re trying testing measures of figuring out cost reductions from founders taking zero salary, which a whole bunch of companies have done to senior folks taking larger cuts, and eventually getting to figuring out like, Hey, is retrenchment, the only possibility. My advice to people is that this is a time to back people. So, let retrenchment or firing people will be the absolute last option because this is not a market where anybody is going to be be able to go out and find a job. So figure out other ways and other means of both reducing costs, and exploring new opportunities and realignment of your business, in terms of organization, to be able to go after those new opportunities. Those have been my largest pieces of advice.


Siddhartha 33:20

So any entrepreneurs in your portfolio or the companies you advise, undergoing pivots also because of the opportunities in the changes created in the corner current environment? And would you advise any entrepreneur to seek let’s say, opportunity from travel to Adtech because that is a sector that will be growing from here on?


Mekin 33:39

Yeah, I think pivots are non-trivial. You are an entrepreneur in a space because often you understand the customer and the problem statement fairly deeply. If I think a crisis like this can precipitate a pivot, and I wouldn’t advise against it like if you are very clear that the business you are in has no hope for the next one to two years. Then I would recommend that you explore a pivot. But that said, I don’t think pivots are easy. So the smaller the organization is, the easier it is to pivot. But for larger organizations, it becomes harder and harder to pivot. I think, like opportunities like ad tech, and others, there are enough people already trying things. So it’s not just about the space. It’s also about finding what new value will you add that are BYJU’s or Simply Learn and Coursera not able to add? How will you solve this problem differently? And how can you be sure that the value you are adding to the customer is new and it’s different? So if you have good answers for the value that you will bring to the customer, and the overall market being large enough, then I think initiating a new business or pivoting are good ideas.


Siddhartha 34:54

But again, being in the business right now, are Consumer businesses really looking for new revenue spending, even if it adds value in the next three to six months?


Mekin 35:09

I think a good question. Right. But I don’t think, for example, any of us have spent as much on sanitizers in our lives as we have spent in the last one.


Siddhartha 35:17

Absolutely. Both sanitizers and masks.


Mekin 35:20

Yeah. So, there are clear, new consumptions that are happening. And these are the obvious ones, I am sure there are others, that as soon as the lockdown ends will be there. And for the insightful entrepreneurs, they may be able to spot some of those changes and actually build businesses around it, though I would expect that to be a fairly small percentage, so I wouldn’t advise everybody to go about pivoting to making masks. It’s very likely that we may like China, we may have a lot of masks in a few weeks from now.


Siddhartha 36:01

Any final parting message from your side to entrepreneurs working in MSME, and mass entrepreneurs?


Mekin 36:11

I think, focus on the basics, figure out your customer needs, and see what are new ways that you can serve them, even if the needs are slightly different from the needs that you were serving initially. Second, focus on costs. Survival is important, figure out ways of reducing cost and managing your cost really, really well. Right through this difficult period, there will be things will get better. So find ways of riding through this difficult period as much as possible without damaging your long term aspirations and things will eventually get better. I think that the third piece of advice is to take care of themselves and their families in this a tough time for both from a health and a mental health point of view. We are not we are social beings. We are not used to be secluded like this to be locked down like this. Please take care of yourself and the stress that an entrepreneur goes through in addition to all of this and not have people to be able to talk to might be a large risk. So do reach out to your investors, angel investors, other friends, and talk to them.


Siddhartha 37:20

Thank you so much Mekin. It was wonderful to have you on the podcast.


Mekin 37:24

Thanks so much. Happy to be here and hope we are all able to sail through this journey soon and quickly.


Siddhartha 37:32



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