Screen test

There was no original DVD rental service in the country. This made Sameer start one.

He still wants to be a filmmaker. And at 30, his own life might make the perfect script. For Sameer Guglani’s journey to entrepreneurship has been full of the odd twists, turns and quirks of fate that make a gripping tale. “Life as a software professional meant good pay but no creative satisfaction,” he says. It was cinema that pulled him. Having attended workshops and lectures on film direction, he had almost made up his mind to make the switch when destiny intervened. A chance visa rejection by the US embassy forced him to stay back in India. While fretting over the delay, Guglani hunted around for original DVDs to continue with his homework on filmmaking. But he found none. And this was when the idea of Madhouse Media struck—a DVD rental service where customers could order movies over phone, SMS or e-mail.

Start-up Strategy: The primary concern was the viability of the idea. While it looked exciting on paper, was there a market for renting original DVDs in India? Guglani and his wife, Nandini (who also had a passion for cinema) conducted a small survey in Chandigarh interviewing 150-200 people about the concept, features of the service, rent per DVD, etc. Not only did this establish that a demand for such a service existed, the survey also helped the couple finalise prices and value additions. Guglani is aware that pirated DVDs, digital television services and claims of a hardware major to produce DVDs for less than Rs 50 are major threats to his market. But he is gunning for customers who are too busy and quality conscious. Convenience is his trump card. Capital Challenges: Though the couple had some savings, they were hesitant in commitmake a business plan and sell the idea to venture capitalists. “That was how it happened in movies and we thought that once we convinced the investor, the rest would be child’s play,” Guglani says. But getting the estimated Rs 1 crore as seed funding proved to be difficult. The few venture capitalists he did manage to meet in Mumbai were not interested in investing such a small amount. Others were sceptical of the project as it had yet to be tested in the market. But though he failed to raise funds, meeting the right people helped him sound off the idea and get valuable inputs on how the plan could be improved. Guglani realised that a prototype of the model was indispensable to convincing investors. The couple went back to Chandigarh to start operations in a small way. They struggled to keep costs low by constantly innovating in all aspects of business. But purchasing 1,000 VCDs, acquiring licences and renting a small store meant that about Rs 5 lakh were spent anyway.

Business Basics: Madhouse Media was formally launched in May 2005 in a tiny basement store of a commercial building that attracted heavy footfalls. The transaction format was simple. Customers were required to pay Rs 35-40 as rent per DVD along with a refundable deposit depending on the number of days they wanted to keep it with them.

While he scouted around for the best deals for computers, telephone connections for the call centre, etc, Nandini designed the company logo, catch line, packaging, trivia like Tshirts, pamphlets, posters and even the decor of the store. With the help of a friend who ran a book rental store in Chandigarh, Guglani set up a simple spreadsheet software to track orders, delivery and payments. This was later customised when Ankur Agarwal, a former customer of Madhouse, teamed up with the Guglanis in 2006. Initially there was no budget for hiring employees. Family and friends volunteered to man the call centre as well as deliver the DVDs.

Marketing Mechanism: Given the paucity of funds, Guglani never had enough to advertise the service. So he continuously improvised to create cost-effective marketing techniques. For instance, Madhouse got their first clients by people responding to telephone numbers on huge boards that Guglani placed at strategic points around the building of their upcoming store. “This proved to be a very smart move because about 50 potential clients called up for details about the srevice and when we would launch,” says Guglani. He doubled membership by putting up a small stall in the only mall of the city. With a good dose of networking, he managed to find the right people to help him in every aspect of business including journalists who gave him space in city pages within a week of opening. Realisimg the importance of business networking, Guglani attended the TiE conference in October 2005 in Delhi. It is through connections in TiE and BOA that Guglani raised about Rs 1 crore as angel investment besides meeting mentor and investor Sanjay Bhargava.

Future Forays: In October 2006, Madhouse began operations in Delhi by first serving offices in Gurgaon and Noida. This proved to be another innovative measure, which was also cost effective, of reaching the target customers. Today, the company has opened its office in Noida while the customer care centre operates out of Chandigarh serving its 2,000-plus members with a stock of about 7,000 original DVDs. There are a number of schemes and packages for the customers to choose from.

Guglani plans to expand his business to Mumbai in the next few months. Meanwhile, he is concentrating on value additions to his service. Madhouse is likely to sign deals with a couple of pizza houses and offer discounted meal coupons among others.

And what about his own film? “That dream is still there. After all it was interest in films that put me on the road to entrepreneurship,” he says.