Author Archives: Mukund Mohan

The rise and rise of coding schools – a tale of #entrepreneur opportunity

Over the last 5 years, nearly 100 coding schools – both offline and online have sprung up in various locations around the world. Most of the students that attend coding schools are from one of 3 backgrounds:

1. They have been involved with technology – as a marketing manager or a designer or a customer service rep, and see the opportunities in their company and others to get a higher paying job by doing development

2. They are from a completely different career – pizza delivery, real estate, stay-at-home-mom, and want to get into coding and technology.

3. School students with majors outside computer science who realize that the jobs in their field of study are no longer paying well and are moving to studying coding.

A typical coding school in the US charges about $8000 (average) and promises 16-20 weeks of intense bootcamp style practice and work to get you placed at a job in a company that needs “junior developers”. Starting salaries are usually $50K to about $75K.

Who are the ideal companies that hire these hacker school graduates?

It used to be startups were the prime target, but increasingly folks like Facebook and larger companies as well who are looking for junior developers are making up a good part of the hiring – 30% vs. smaller startups – 50% and rest go to non technology companies requiring developers.

Right now we are in one of the biggest booms of technology startups so coding schools are able to guarantee 80% placements or above. When the tide turns (which I cannot predict) then I suspect that the winner-take-all approach returns, which means coding schools will take in fewer candidates since the demand for developers will become lesser.

The coding schools themselves are a great case study in entrepreneurs solving entrepreneurs problems. Which is the microcosm of an industry with its own “microclimate”.

The first few coding schools started to solve the “hiring” problem of many startups who were unable to hire good talent and were instead competing with the larger companies to hire the best. Then folks like General Assembly, Coding Dojo and others started. At about the same time, folks like Udemy, Code Academy also did to help new entrants to learn how to code.

Unlike offline schools, the online academy’s were seeing a significant drop-off in students – most folks were just not completing their courses (90% drop offs were typical).

Now, however having been to 10 coworking spaces which all have a coding school attached to them, I can see the natural fit for these spaces to want a school in their facility.

Over the last 5 years, the number of graduates from coding schools has gone from 500 per year to over 20,000 annually. As far as I can see the demand for developers will not slow down for the next 5 years. Even if there is a slow down in the startups hiring coders, the larger companies will pick up the experienced coders from failed startups, and that means new (maybe fewer) startups will end up having to hire from a hacker school.

So what type of a person actually is a good “coding school candidate”?

I think the only thing coding schools are looking for are motivated individuals who have some sort of inclination towards programming. That’s it.

Everything else is secondary.

In attending a coding school last week and speaking to the students, I found that most were excited about learning the trade, but were solely focused on getting a job, not necessarily learning programming for passion.

So, that means when the economy for “other areas” picks up I suspect many will go back to a higher paying job which they are passionate about, leaving more room for newer candidates who want to join the programming revolution.

Which is why for the next 5 years as well, I can see a constant growth curve for most coding schools and I suspect they would be a good investment as a franchise or a business if you are so inclined.

What ingredients do you need to run a successful school – a good pool of potential companies “looking to hire local junior developers”, a set of part time developers “who are passionate about teaching the craft of programming” and a large pool of talented candidates from other fields willing to learn programming and raise their salaries from their current jobs.

Kickstarter is the new “beta” customer, “social proof” and “friends and family” round all rolled into 1 for #entrepreneurs

I had a chance to meet an amazing entrepreneur on Tuesday at Utah, Tammy Bowers, who the founder of LionHeart Innovations. They provide a mobile platform to help caregivers of kids with chronic conditions. Think of it like a coordinated platform that everyone who cares for the kids needs to ensure they are all in sync – the mom, the dad, nurse, doctor, nanny, etc.

Their son has a health condition so their startup was born from that experience. Now, after many months of working with health organizations and other care givers, they are ready to launch their mobile app.

A decade ago, options for Tammy would have been to talk to a lot of potential customers, then raise a small “friends and family” round and then look to get some marquee investors / advisors agree to be associated with the company – to provide social proof.

Now there’s indegogo and kickstarter. Tammy put together an early funding campaign on the tool to see there were many other parents who were also interested in the tool to keep their folks in the know. Word of mouth, thanks to the indegogo campaign also got her a lot of press among bloggers, media and news outlets.

For entrepreneurs in smaller cities, getting the attention of Silicon Valley angels or investors is very difficult if not impossible. Many local investors are willing to help, but they lack the ability to validate the problem, the need and hence tend to invest in “things they know very well” or “those things that generate revenues quickly.

Enter crowd funding. If you thought it was for hardware programs alone or for creative ideas, then you need to look at indegogo and other platforms again. 7 of the 10 companies in the accelerator program at Seattle raised money on these platforms. Some of them raised $50K and others more than $350K.

There are 3 things a successful crowdfunding campaign gives you:

1. Customer validation: People (real customers, though largely early adopters) put their money where the mouth is. Not just “likes on facebook”, they commit dollars to your program.

2. Funding: If you can put a little money into your campaign, typically the crowdfunding dollars can help you generate more money to ship your product.

3. Social proof: I would highly recommend you talk to a few “influencers” who can back your campaign on these platforms, but if they dont and still notice it, then the campaign can help you generate some press, which is good social proof if you can get folks to share the press.

I am a huge fan of these programs not just for creative movies, music and hardware “maker” type products, but also for software products that are niche initially.

There are 3 important elements of a successful crowdfunding campaign, which other folks can tell you more about:

1. Create great content assets – video is usually essential.

2. Engage with potential influencers before your campaign so they can back you when the campaign launches.

3. Provide quick and constant updates to your backer so they can help champion and be evangelists for your startup.

A #contrarian view on how the customer validation phase should fine tune your #startup business model

The trend from users (businesses and consumers) wanting to buy services – software enabled services, instead of software is accelerating more than ever in my observation. Previously things that most folks would sell as software is now being packaged and sold as a service that solves a problem and is a solution than a packaged piece of software.

In the 90’s and 00’s the solution to a business problem was to develop, deliver and sell software, which was either sold as a license or an annuity. SaaS then came about to provide a change in both the pricing model and the deployment model.

The trend is more pronounced in the consumer portion of the business. Let me give you a few examples and then go into detail of one case study that I discussed with some entrepreneurs Utah.

Take the case of Uber. A decade or two ago, the prevailing model would have been for Uber founders to build the software and then try to sell it to taxi companies and help them service their customers more efficiently. They instead chose to be a “full stack” company and own the consumer experience and recruit drivers to their program.

Another example is Zillow. Instead of providing software to real estate brokerages or individual brokers, they turned the model on its head to go direct to consumers and be a lead generation engine for brokers.

Finally on the enterprise side, HackerRank is a product as an example that a decade ago, would have sold software to companies that helps them manage, deliver and attract software developers with challenges. They prefer to directly attract software developers to their platform and then engage with potential recruiters to help match the top puzzle solvers with companies that are looking to hire them.

Note that in all these cases, the companies are purely software companies, but their business model is predicated not on selling packaged software, but a set of services to end consumers.

I speak to entrepreneurs worldwide, who have heard the phrase “software is eating the world” and then immediately assume that the only way to deliver software and build their business is to sell either a subscription business to the hosted solution or to sell packaged software (yes, there are still folks that think this is the way to go). That is no longer the case and you will find in most instances, investors will prefer full stack companies to software business models in the next decade.

Only hosting your product and providing a SaaS solution does not make your business model different.

That begs the question, how does one go about creating and building a service business instead of a purely software business?

I think the most important phase of your startup journey to figure this out, is when you do your customer development and validation.

During the customer validation phase you will find many potential customers not willing to buy what you sell them (software). That’s usually because they don’t have the problem you articulated.

There are two types of problem articulation strategies. One set of folks articulate the problem they think customers have and another set share examples of the questions potential prospects have.

Let me give you an example of a company I met yesterday.

They are folks that run a theme park who had built software to better manage their park and generate better profits and returns. They were keen to sell software that helps manage a theme park to other owners of theme parks.

When they spoke to potential customers and said they had ERP software to help with theme park management, most potential customers did not care. Their customers did not have a problem that required software.  When we got talking, and drilling down to the real problem, it turns out that 20% of a theme parks budget annually was spent on renewing customers.

So, most park owners had a marketing and a renewal problem not a software problem. When they went to the customers with an end to end solution to help streamline renewals and still had software at the back-end to manage the renewals their message seemed more appealing to theme park owners. Suddenly the problem was not software for automating the theme park but a solution to help remove a key headache and a solution to one of their key problems – Renewals.

The startup still wanted to only be a software company so they were not too keen to take on all the hassles of renewal processes, so I suggested they outsource the other aspects of the renewal process to other companies.

Having control of the end to end renewal process, now gives the company the data and analytics to build another stream of revenue to help end customers get discounts on other services they would like and give the theme park owner a cut of that revenue.

That’s the future. Software enabled services will be the primary business model for the next decade or so. Instead of selling it as a software product (either SaaS or otherwise), I encourage entrepreneurs to look at business models in more depth during their customer validation phase.

To raise funds for your startup use a fishing pole not a fishing net: A #contrarian view

Most early stage find raising advice around fund raising is about casting a net as wide as possible to speak to 100’s of potential funding sources to land one investor.

Actually that’s pretty bad advice according to the data I gathered from Pitch Book.

New Investor Additions Each Year- CRM, SaaS and   Home Automation

New Investor Additions Each Year- CRM, SaaS and Home Automation

Within your category or market there are far fewer relevant and willing investors than you can imagine. So casting a wide net is a big waste of time for most entrepreneurs.

Of course the larger the market (e.g. SaaS or Consumer internet) the more are the number of investors in each stage but it is still a small, finite number.

Most venture investors will share broad themes of their investment thesis so they don’t “miss” out on deals, but that does more disservice than good. So, when an investor says we invest in “consumer internet” – that purposely broad so they don’t “miss out” on any hot deals. As an entrepreneur, you need to ask more pointed questions about the sub categories within that theme.

Investors should follow the same advice they give entrepreneurs. Be niche, narrow and focused. Here’s the thing though. They are following that advice but only they don’t message or position it that way.

So the best indicator of if an investor will fund your startup is to look at what they do not what they say. Talk is really cheap I guess.

To prove this I looked at 3 segments. One older theme, one middle aged and one relatively new theme. They were CRM, SaaS and home automation. These are themes I know better than others. For CRM I looked at data from 1996 to 2002, SaaS from 2006 in home automation from 2008. Data does not exist for home automation for 8 years obviously.

I looked at total dollars invested over time  and the number of investors over time as well. Then I plotted the graph over time to look at year over year growth as opposed to cumulative growth.

Here is what the data says. There are a about of 130+ unique investors in CRM over the 8 years, 47 in SaaS and about 15 in home automation. That’s is on the venture side.

So if you have talked to one or more of these and they said no, you will be better of rethinking your business or do without going to other investors. Going to other investors who have not invested in a theme will very likely result in you wasting time. Note that the rate of addition of new investors to a theme is slow. Even in a large market such as CRM.

This also explains two other memes. One that there’s a herd mentality among us and second that venture investing also follows the Geoffrey Moore tech adoption curve.

Once one or two “innovative” VC’s finds a new space then the herd follows but slowly. This explains the fact that new VC additions to a theme rarely exceed 10% YoY even on “hot” themes.

After the innovators, the early adopters and then finally the majority follow.

I suspect, but don’t have the data yet, but a VC innovator in one theme rarely is an innovator in many other. They like to stick to their knitting. Unless they hire a new partner with expertise in a new theme. Which is rare.

So, bottom line for you as an entrepreneur is this.

There is a very short list of VC’s who will invest in your area.

Going after hundreds of potential investors is a big waste of time.

Setup a google alert for funding keyword within your category for 4-6 months before you are looking to raise money and also for “new fund” in your category. Those are your best bets.

If you have exhausted the list of potentials then you are highly unlikely to raise investment. Go back to your positioning and business model and see if you can change something to try again in 6 months with the same set of investors.

Of course there are exceptions to this rule of thumb but they are rare.

A #contrarians viewpoint on personal goal setting and new year’s resolutions

Most people will have several goals for the new year. They will want to have a better relationship with their loved ones and publish a book, or travel to a far away place and get a promotion at work, or start a business, and quit smoking etc. It is the dream to “have it all”.

Then there are the folks who pick one for each – work and life for each year. That’s more realistic but still tremendously ambitious.

I have expressed my views on work-life balance for entrepreneurs before. If you think you can achieve it, then you are delusional. A startup consumes all your time.

If you have a new baby or have a close friend who has one, you’d know the feeling. They are always overwhelmed. They are planning the kids meals, nap time, play time, etc. There’s almost no “time” at all. That’s how a startup is. If you are not thinking about product, then it is funding, else it is sales or customer support. There’s always more stuff to do than there’s time.

Over the last 6 months I have been focused on one project – losing weight. I over-achieved my goal with a month to spare in fact.

Over the last 6 months I have written fewer than 15 blog posts. Compare that to the previous 6 months, I had written 82.

Over the last 6 months I had shared 78 items that I found interesting to read. Compare that to the previous 6 months, I had shared 431.

Over the last 6 months I have averaged running 13 miles every day. Compare that to the previous 6 months, I barely managed 2.

Over the last 6 months, I had 21 calls with entrepreneurs to understand their business and help them find investors, talent or be a friend and a guide. Compare that to the previous 6 months, I had the opportunity to work with 67.

Over the last 6 months I had 5 parties at home with my close friends over lunches, dinners, gatherings, etc. Compare that to the previous 6 months, I had 18. 

Over the last 6 months, I obsessed over my only goal – losing weight and getting my fitness back. It will be obvious to you that I did little else.

I only had time to go to work, do my job and come back to work on losing weight so I can suffer less from my plantar fasciitis.

We moved from Bangalore to Seattle so I was learning a lot about the way startups in America have changed over the last few years I was away. That would take up all my working hours.

In fact if you track my posts since March 2014 to Dec 2014, you will see the pattern. When I had a moment, I was working out or researching food options or focused on my job at Microsoft.

Here’s the thing:

I dont think anyone can do more than one thing very well, at any time.

Either it is work, OR home. Either it is business or personal. There’s only goal you can set for the new year and do a good job to over-achieve your goal.

So, my learning is this.

If you are looking to start your own company and start preparing for GMAT this year, you will do neither well.

If you are looking to lose weight and find a new girlfriend/boyfriend/significant other, you will achieve neither.

If you are trying to do one more thing than the most important thing in your life, you will not succeed.

So, do yourself a favor. Put one goal and remove all other “distractions” from your life. You will over-achieve, even if you are not motivated and lose some energy.

The reason is that if you are going to do only that one thing, then there’s nothing else to distract you.

How to solve the immigration problem for startups and income inequality problem for older Americans with one solution

Americans have 2 problems that are high on the list right now. Income inequality and Immigration.

So there are two alternative solutions:

1. Every year, Forbes publishes the best places for Americans to retire.

This is for the many folks who have made okay money but are not wealthy or ultra high net worth individuals.

So, in effect America is trying to export its retirees.

This is a small number right now, in the thousands. This solves the problem of healthcare for the old and also helps the older folk’s money go farther.

2. For the immigration problem we have solutions as well.

This is a slightly larger number, 65,000 each year. This solves the problem of new talent for companies and also helps young aspirants get a better shot at a better life.

Every year, America also imports new fresh talent.

Think of this like a balance sheet. Immigration imbalance occurs constantly. Right now America does not export as many retirees as it imports immigrants.

Which is why many folks are up in arms about raising the # of allocated H1B visas to foreign legal immigrants.

The reason we get so many immigrants is because it is attractive to be in America.

The reason many retirees don’t leave is because it is not attractive yet to live outside America.

Why is not so attractive to live outside the United States right now?

First, there’s a standard of living issue – access to quality services is just not as good abroad as it is in America,

Second, there is living away from friends and family, and finally

Third, there’s fear of the unknown.

Most older Americans move to Florida or a state in the south so they can get better weather and pay fewer taxes anyway. So, the living away from family is something they are quite used to and they actually end up making new friends.

If we help some of the countries in the “top places to retire” help to build better services, such as transport, healthcare and support, then they become more attractive.

To solve the fear of the unknown, I think the best solution is to educate older Americans on these countries and their culture, unique offerings, weather, etc.

Finally if we eliminate double taxation for Americans going abroad or “suspend” tax filing and payment when they spend, say, more than 80% of their time in their “retirement” country, then you make retiring abroad, more attractive.

That should increase the number of people leaving annually to say about 50K from the current 5K and help “keep the distribution even in the people import/export balance sheet”.

What do you think?

A contrarian view : Is weight loss a sprint or a marathon? Weight loss is a #sprint to start

There are two types of weight-loss theories in the world.

The first kind believe that weight-loss project is very defined and is for a fixed period of time. They are called “Sprint“.

The second kind believe that weight-loss project is an ongoing labor of love and is a “life-time choice”. They call the project a “Marathon“.

I think of weight-loss as a Sprints“. I dont think there’s anything wrong with sprints at all contrary to popular belief. You know the goal, it is short, you can visualize it and you can see yourself winning.

The other kind involves a lifestyle change or a “Marathon” weight-loss project.

Understanding that it is the “Sprint” type you like will help you understand if you will be successful in your goal or if you may be destined to achieve moderate success or failure to reach your original objectives.

Weight loss is a sprint to start. 

You need to have a deadline.

It is the new year resolution, a wedding, a reunion or a doctor’s annual checkup that triggers this project. Some people think of weight loss as a long term goal. I disagree though since I believe there’s no long term without a short term.

If there’s no forcing function, then 99% of people dont achieve success in their project.

There are those that argue that living healthy is a lifestyle choice and you need to be constantly working at it. They consider weight loss as a “Marathon” project. Here’s the thing: most people wont be motivated enough when they know that there in it for the “long haul”.

Research backs me up on that.

Start and finish “Sprint” weight-loss projects have a greater chance of success.

The problem with the marathon approach is that your mind tends to groan and creak at the dramatic change it needs to undertake in a short period of time. I know there are ways for you to “ease” into a marathon by training your mind and your body to help lose weight, but I have tried 5-7 weight loss projects and coached other folks on losing weight as well.

The best approach to losing weight is to have a clear deadline and a measurable weight you want to hit. Then you can optimize around muscle-building, etc. Those are good to have. If your must have is weight loss, I’d highly recommend you optimize for it and think of your project as a “Sprint.

So what happens after you hit the “Sprint” finish? My goal was to lose 50 Lbs in 25 weeks. Now, my “short term” next sprint is to hit my FFM (Fat free mass) towards an athlete’s level. Right now I am at 15% FFM and I want to get to 12%. The best athlete’s in the wold at at between 8% and 10%.

The thing is that’s my next sprint. Then I’ll get a new sprint. Each sprint for me lasts 6 months. Some may call this a marathon comprised of multiple sprints and that I am splitting hair, but I think there’s more to this than just long term life-style changing vs. short-term motivating project.

I am curious to know how many of you have a weight-loss goal this year in 2015 and how are you viewing your project.

I’d highly recommend you sprint your way to that goal.