Madhur Singhal is Managing Partner and CEO at Praxis Global Alliance, Praxis Global Alliance is the next-gen management consulting firm revolutionising how consulting projects are delivered.

In February 2024, Enmasse and Praxis released the ‘Entrepreneurial Households: A Multi-Trillion Dollar EPIC Opportunity’ report. The report draws on extensive field research with 3000 households in 100 districts across India, comprehensive macroeconomic research and modelling, proprietary Praxis analysis, and Elevar Equity’s frameworks in understanding the customer segment. Shortly after the launch of the report Team Enmasse spoke to Madhur about the genesis of the report, and the enduring relevance of the report’s key concepts and learnings such as CTV.

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Team Enmasse: Madhur, when we initially approached you with the concept of Entrepreneurial Households, we were exploring households that leverage multiple income sources into varied short-term, high-priority investments. Could you share how this project aligned with your previous experience and work in the field?

Madhur Singhal: Absolutely. The idea of Entrepreneurial Households that all of you spoke about, resonated deeply with me and my colleagues at Praxis, because it mirrors the complexities we've encountered in our consulting work. Our engagements often require a robust research component to grasp ground-level realities. We have consistently seen that traditional metrics, especially those that are income-based, fall short when it comes to capturing the nuanced economic activities of these households. The idea of looking at the entrepreneurial potential of households - which has formed the basis of Elevar’s investment work and Enmasse’s mission - resonated strongly. 

For instance, agricultural income not being taxed in India presents a challenge in understanding real income levels through conventional data sources that depend on taxation data to approximate incomes. Similarly, the distinction between passive and active income adds layers of complexity in accurately defining a household's economic profile.

In previous efforts at Praxis to define the target customer for various products and services, we've had to rely on surrogate measures—like the prevalence of organised pizza outlets in a city—to gauge prosperity. This approach underscored gaps in existing data and the need for a better mapping methodology. 

The shift we made at Praxis from socio-economic classifications to recognising asset ownership was a step in the right direction and allows us to better quantify the number of Entrepreneurial Households, and then go a step further to estimate their economic activity.

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Team Enmasse: Diving deeper into the challenges of data and definition, how does the EPIC report's approach help overcome these obstacles?

Madhur: For us, the introduction of Entrepreneurial Households, and their multiple incomes, as a concept made a fundamental difference. In terms of how we as a firm analyse the market, it is a breakthrough. It provides a framework for understanding a household not just as a static economic unit but as a dynamic entity engaging in a spectrum of economic activities earning multiple incomes, activities that range from investing in assets to diversifying income sources. This approach allows us to peel back the layers of traditional economic indicators and delve into the behaviours, aspirations, and strategies that define these households. It's a more holistic view that captures the essence of their economic life, offering richer insights for tailoring products and services.

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Team Enmasse: The report places significant emphasis on viewing households from a cash flow perspective. Could you expand on the importance of this shift and its implications for understanding economic behaviour?

Madhur: Viewing households from the perspective of their economic activity recognises them as income-producing units that actively invest in cash flow generating assets, which also means that there are multiple incomes. In addition, the lines between personal and business incomes are often blurred. The clarity with which this report articulates this perspective is unprecedented and powerful, even if I am saying so.

For instance, we highlight how education and housing are not merely expenses but investments that yield returns over time, contributing to the household's asset base and future income potential. This reframing challenges us to reconsider how we evaluate economic health and potential, moving beyond transient income flows to a more stable and telling indicator of wealth and economic activity. 

I totally agree that it underscores the strategic, forward-looking nature of these households, actively working to improve their economic standing and that of the next generation. While the idea of looking at a household as an economic unit may not be new to everyone, in the world of business, capital and investment, it does demonstrate a paradigm shift. 

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Team Enmasse: When we talked to you about Core Transaction Value (CTV), you immediately saw the potential in the concept, and the report heralds it as a pivotal metric. Can you discuss its development and why you believe it is an exciting advancement in economic analysis?

Madhur: CTV is a cornerstone of the report and it was wonderful to leverage the conceptual work that all of you have done on this front. It encapsulates the totality of a household's economic engagements—encompassing all income, inflows which would include curated borrowings, and prioritised outflows. This metric shifts the narrative from mere income assessment to a comprehensive view of a household's economic footprint, including investments, borrowings, and high-priority expenditures.

Our job at Praxis was to see if we could measure CTV, and this was both challenging and exhilarating - and yet played to our strengths. It required us to synthesise diverse income streams and spending priorities coherently. Each element of CTV required careful modelling and measurement. One thing you will see in the report is the extent to which we triangulated various estimates in order to check and double-check the results. As data improves, our ability to triangulate this number will only increase. 

CTV is clearly a powerful metric and a versatile tool for the world of business and capital - as it demonstrates that there are multiple points of entry when it comes to business models that can drive the growth of Entrepreneurial Households. At Praxis, we are really excited about using CTV in our work going forward.

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Team Enmasse: Reflecting on the sheer magnitude of the economic opportunity revealed by acknowledging the EH segment, how should this insight reshape the strategies of entrepreneurs, investors, and businesses?

Madhur: The revelation of an $8.8 Trillion Core Transaction Value within the Entrepreneurial Household segment is nothing short of a paradigm shift. It highlights a vibrant, dynamic segment of the economy that has been underrepresented in traditional economic analyses and business strategies. 

For entrepreneurs and investors, this signals a vast landscape of opportunities awaiting exploration whether in housing, education, financial services, or technology. The Entrepreneurial Households represent a fertile ground for innovative products and services tailored to their unique needs and aspirations.

Businesses and capital allocators, particularly those accustomed to segmenting markets purely on income or consumption patterns, must recalibrate their strategies to account for the nuanced economic behaviours of these households. Recognising them as economic powerhouses with diverse needs and significant transactional activity can unlock new growth avenues and drive more targeted, effective engagement strategies.

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Team Enmasse: As we conclude, could you share your thoughts on how these findings challenge conventional wisdom about rural and urban economic growth and what this means for the future?

Madhur: This analysis argues that the rural-urban divide is an increasingly obsolete lens through which to view economic activity. Entrepreneurial Households thrive across this divide, engaging in sophisticated economic behaviours that drive growth and prosperity in their communities.

This report underscores the dynamism of Entrepreneurial Households including those where most members of the household are in smaller towns and rural areas. This suggests that businesses and capital allocators need to look beyond traditional urban centres for growth opportunities. Entrepreneurial potential and vibrancy  is not confined by geography but is a widespread phenomenon that, if nurtured, can significantly accelerate the country's economic future.

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Team Enmasse: Thank you so much for taking the time to speak with us. 

Madhur: Actually I have a question for you. Why did Enmasse decide to engage with Praxis on this report and to quantify the number of Entrepreneurial Households, and CTV? 

Team Enmasse: Like with all things at our end, we value time in the field, in conversations with Entrepreneurial Households. When we learned that you personally go into the field and do that regularly, we knew we had to work with you.

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Read about the $8.8 trillion EPIC Opportunity HERE.