1 Hour Business Lesson from A Street Hawker | What My MBA Didn’t Teach in 3 Years!!!

Hi Friends! How many of us have heard the quote :

“Never Judge The Book By It’s Cover”

I bet many of you would have heard this line atleast once in your life time. But how many of us follow it in real life.

I can confess that I did the mistake of forgetting this line and learnt it through personal life experience, which has now embedded this phrase in my DNA.

Talking about me, I was brought up in a middle class family in Mumbai, India. Both my parents were government bankers and we led a normal middle class life. I graduated with good scores and started working at 21. Like my parents, my first option was banking and so, as you can imagine, I joined a Multinational Bank in Mumbai at the lowest rank.

Over the next 17 years, I completed my MBA in Finance from a reputed institute and worked hard to make my way through corporate ladder, to become a mid management employee, with a 6 figure salary. I have a great family consisting of my wife and a year old son. I own a 3 room apartment in midst of Mumbai, which is outside the reach of middle class at this point of time and own a car for my commute.

By all means I was happy about my achievements and was proud of where I am at this stage of my life. I thought I knew how to achieve success and often gave advice to the new comers, on how to be successful in life, quoting my example.

Twice or Thrice every year, I visit the Shirdi Sai Baba temple, which is around 500 kms outside of Mumbai, to pray to lord for bestowing his blessings on me and thank him for all the good he has given me in life.

On one such trip in August of 2019, I was on my way back to Mumbai, when I saw a street hawker carrying some cotton candy packets. He was standing on the side of the road, trying to stop vehicles for a lift. With a muddy tarnished shirt and shorts, along with a old pair of slippers, he almost looked like a beggar. Looking at his condition, no vehicle was stopping on the highway.

As I had just folded my hands in a temple, my mind was still in a spiritual mode, and with a heart full of sympathy for this poor chap , I pulled my vehicle to the side of the road and signaled him to come over.

Watching me stop, he came running towards the vehicle and stood near the passenger side. I pulled down my window and asked him, where he wanted to go. To this, he mentioned the name of his village which was 100kms from the spot. As the destination was on my way, I told him to get in, but made it clear that I would only drop him on the highway and would not be able to get inside the village, as I was getting late and it was getting dark. He agreed and got in.

Now the journey started and so did my enlightenment.

Looking at him up close, I felt sorry for him. In my mind I prayed to god, as to why so many people suffer so much in life. I pulled my water bottle and asked him if he wanted to have some water. He accepted, and gulped some and tried to return the bottle back. I told him to keep it, as he would require it for his journey from highway to his village, as the weather was hot and humid. Also, how can a polished person like me take back the bottle which was in muddy and bacteria full hand. He thanked me and kept the bottle by his side.

The journey to his drop point was nearly 1.5 hrs away and since I was getting bored, I thought of starting a conversation with him.

Me: So what do you do for a living?

Hawker : I sell cotton candies at banquets and marriage halls in this city.

Me : So you travel all the way just to sell cotton candies. How much do they cost?

Hawker : Each one is Rs. 10 (approx 14 cents as 1 $ is Rs. 72)

Me : How much do you sell in a day

Hawker : 200 on a bad day and 300 on a good.

Listening to the numbers, my banker mind started to subconsciously calculate (Average 250 pieces * 10 pp = Rs. 2500 per day). Not bad for a hawker.

I asked him whether he takes any holiday, to which he replied in negative. So now the calculation was Rs. 2500 * 30 days = Rs. 75000 a month. My oh my, the person I was thinking to be like a beggar was actually having a 5 figure salary. Better than most of graduate newbies in my industry, who are busy flaunting their newly earned income with expensive clothes and gadgets, while the saving is zero.

By now, I had started to gain interest in this guy. Why not, he was unknowingly challenging the forecasting and number crunching ability of a 17 year experienced banker like me.

I started to dig deeper. I asked him what his cost for making this goods was. To which he replied, the only ingredient is Sugar, which is Rs. 32 per kg in market, but since he buys it in bulk from the wholesaler, he gets it at Rs. 28. I require 1 kg sugar for 300 candies and the only other cost is small plastic bag and electricity for running the machinery, which cost another Rs. 1 average, per cotton candy.

This man was a pro, he knew the entire costing of his business. So again, my mind started the calculation. So his cost was Rs. (1 * 300) + 28 = 328 per day and Rs. 9.8k per month against a sale of Rs. 75000. Which is a whooping 665% ROI. My eyes started to pop. I was not earning that much return even in my stocks after taking all the market risk and here this guys was earning it with not even half my risk. The entire economics that I had learnt in my MBA, started to fall apart.

Now, if you think you had heard it all, read on!!

I continued this interesting conversation. I asked him how he knew which banquet or marriage hall to visit, as there might not be an event every day and he might waste time in finding the right one.

He said, he pays the banquet manager Rs. 100 weekly to inform him about an upcoming event and also the crowd expected in that event. This helped him to arrange for the supplies and also ensured that he was in the right place at the right time, with the right inventory. “Now I wondered, who could have thought this supply change management to this uneducated guy”

My next question to him, “my friend there are so many banquets and halls, you mean you pay each one of them?”

He calmly replied, I cover 2–3 villages, they have around 50 such venues, so I pay Rs. 5000 each week to these managers.

On this reply, I tried to take my opportunity, just to show my knowledge. I suggested, why do you want to pay so many guys, you are only 1 person, you can’t be at multiple places as the same time, so why can’t you just shortlist the most profitable ones’ and reduce your cost. I felt, atleast I could teach this guys some lessons from my management experience. I felt some pride once again.

But wait, his reply stunned me and shattered all the halo I had of my achievements.

He said; “Sir I have around 25 people from my village who work for me. Most of them are young guys who attend night college and work with me in the morning till the evening for some money to support their family and paying their college fees. I pay each one of them Rs. 15000 per month. I have a small truck, which I hire to transport them from my village to the event halls and back, and pay the transport guy Rs. 5000 per month. Some of these guys are not from the village, so I have rented 2 rooms for them to stay. I also stay with them.”

Till now, my brain was dead and hence the calculation had stopped. The destination was also going to arrive in 10 mins. So I asked him the final question, “Where is your family and where do you invest the money you earn”?

The answer was the final nail in my coffin which was enough to shut me up.

He said, I am not from this place. I am from the north of India. I just travelled here to work. All the money that I earn, is sent back to my family in my native place.

We have invested in 50 acres of farm land and built 3 -2 storey buildings in my native place. My family stays in one and the other 2 buildings are rented to college kids as paying guests. I earn around Rs. 150k per month from rent. The farm produce is sold for which I earn around Rs. 2 million a year. I also have 3 SUV vehicles, of which 1 is for my family and 2 are rented to travel agents, which bring in about Rs. 50k a month after paying my 2 drivers Rs. 15000 per month salary.

Listening to all this, my mind went blank. While it was registering everything, the calculation had stopped long back. I asked him, if you are so well to do, why do you wear such clothes and hich rides on the highway.

His final answer as I stopped and he was ready to get down, “Sir, this is my business. People buy from me for sympathy the same way you stopped for me. If I wear expensive clothes, do you think people will be interested in buying from me. This is my business and I am dressed up for it. Also, I dont always ask for a ride, unfortunately today my truck broke down and it was getting late, as I also have to prepare for tomorrow. So I had to ask for a ride. God bless you for helping me and Thank you Sirji”. He opened the door, got down and vanished in the woods.

But my thoughts kept revolving in my mind, I was quiet. I reached home, had my food and tried to go to bed. But no, I was not able to sleep. My mind was in a state of shock.

I got up, pulled out a paper and started to put down all the numbers that guy quoted. How can a banker leave the calculation midway. I had to see what his true income was. I stared to put down whatever he had told me and guess what, the final number was $300k p.a. (if interest, I have put the calculation at the end of the story for reference). This guys was a super rich by any Indian standards, earning much more than some of the small time businessmen.

I was in a state of Aww! My heart was filed with respect for this humble guy that I had just met a few hours back. And why not, he had just taught me the biggest business lesson of my life.

This guy was not a hawker he was an entrepreneur in disguise. I guess god had sent him to me, just to give me a lesson.

My Learnings which are my takeaway from this entire conversation :

1. You don’t always need a good brand or product, what you need is a great strategy. This guy was selling a unbranded cotton candy.
2. You don’t need big degrees to understand normal business. He was applying every business rule without any education, be it supply chain management, cost control, lead building and even CSR (remember he help children to support family and pay school fees)
3. Experience is a biggest teacher than education. My MBA mind was nothing compared to his experienced uneducated mind.
4. From where I started this story, “Never Judge Too Early”. Perception can sometimes be wrong.
5. And finally, “brand perception”. He was rich but never showed it to anyone as he knew that perception gained him sympathy and sympathy gained him his business.

Thank you for your patience. I hope you learnt something for this story today.

Stay Healthy!! Stay Safe!!

The Street Hawker/ Enterprenuers Income Calculation