Author Archives: Mukund Mohan

About Mukund Mohan

My discipline will beat your intellect

The ultimate list of questions about “market research” for a #startup asked by 30+ Venture capitalists

I had a chance over the last 3 weeks to talk to many colleagues and associates in the Venture industry. Most were smaller, seed funds, with the largest fund size at $35 Million and the smallest at $8 Million.

They have between them about 210 companies they have invested seed capital in, with the average check size being about $315K. Over 70% were in the Silicon Valley.

The most important insight I gathered from my discussions was that if an entrepreneur was not looking to raise a follow on round after raising a seed round from a Micro VC, they were likely to be a much smaller company and hence not interesting enough for the seed investors.

If you are going after a small market, or slow growth one, your chances of getting funded by a Micro VC were negligible.

Which makes sense, but I think most entrepreneurs I speak to have the incorrect perception that Micro VC’s or seed funds as those that invest in smaller opportunities.

That cannot be further from the truth.

Micro VC’s or seed funds write earlier stage, smaller checks, but they are looking for the large, unicorns, as well, only earlier.

The number one question then that all the seed investors had was about the market.

It was not a simple question about market size alone.

So I set out to ask them about all the questions they had about a “startup’s market” and have documented them below.

As an entrepreneur, you need to review as many of these questions, but dont expect to be asked all these questions. It is likely a subset of these that your investor will likely ask you. It serves you best to review all these questions though.

Some of them may be redundant, but the fact that you can get the same question asked multiple times in different ways indicates that your potential investors will want to triage and understand the market a lot better before they make the bet.

  1. Is the market clearly identifiable (e.g. are there users who are willing to pay)?
  2. What is the size of the market (bottom up and top down)?
  3. How fast is the market growing (current growth trends)?
  4. How quickly will the market grow (potential for growth)?
  5. By what methods will the startup be able to reach it (are there high costs to get capture the market)?
  6. Can the market be segmented (are there lower hanging fruits to be had)?
  7. What types of people (demographic profile of buyers) buy this product/service in this market?
  8. Does the product/service have appeal based on geography (is this a first world solution)?
  9. What do potential or existing customers like about curren products/services?
  10. How quickly are other products (competitive growth) in the market growing?
  11. What makes the product/service unique relative to others in the marketplace (is there a chance the startup can grow quicker)?
  12. Do we have expertise (knowledge, expertise, etc.) in this market to help?
  13. Do we have connections in this market so make a difference?
  14. What are current buyers paying for comparable products/services?
  15. What is required to succeed in this market?
  16. How many competitors will the startup be competing against?
  17. Are there big incumbents in this market?
  18. How quickly are the incumbents growing?
  19. Has there been innovation in this market over the last few years / decades?
  20. Can the market support another player?
  21. How do competitors reach the market?
  22. What does the competitive landscape look like?
  23. Can this company achieve more than their fair share of market?
  24. Is the industry growing in size?
  25. What are other current trends within the industry?
  26. Who are the existing market leaders within the industry, and why are they successful?
  27. What type of marketing strategies are prevalent (Is the cost of acquiring customers high) within the industry?
  28. Is the industry seasonal (e.g. more food is catered during holidays)?
  29. Are there regulations (e.g. Uber and local taxi medallions) that affect the industry?
  30. Is there customer loyalty (e.g. it is hard to unseat ADP from payroll) within the industry?
  31. Is the industry sensitive to economic fluctuations (e.g. Match.com decreases matching during recessions)?
  32. Are there technological changes happening (e.g. Obamacare and patient records) or required in the industry?
  33. What are the financial characteristics (average selling price of products, average inventory turn, etc) of the industry?

When do you know that it is time to fold your #startup?

Honestly you never will know. There is always a “what if”.

There are many times during your startup journey, when you get a sense that things are not worth it. When your cofounder leaves. When your customer bails. When you cannot articulate success.

The simplest situation is when you run out of money.

The biggest challenge is knowing when way before your run out of money if something’s not working out quite right.

You get a nagging feeling that the same time and energy you have can be spent on other things to get a better return – whether it is on the next startup or another job.

The constraints that most entrepreneurs face tend to be masked by their bravado.

I hypothesize that the only time you know when it is time to shutdown and move on is when you no longer have a desire for the end state.

When you lose your passion.

That’s it.

If you still have the desire for the space you are in, and the problem you have chosen to solve, then overcoming all other odds is easier, because you still believe there is a wrong to be righted.

Most founders, though dont realize they have lost the desire for the space or the problem until much later. They are taught that persistence is the key to success, so the slog through the early warning signals.

How do you find out if you have lost passion for the space, earlier?

“Going through the motions” is one way to find out.

“Not getting excited to get up and go at it” is another way.

“Inability to acknowledge the small wins” is a third.

I can list many more.

The next part of the question is how do you know if this is “temporary loss of passion” or “permanent lack of desire” for your startup.

It is a permanent problem when your opportunity cost of doing something else is more than your current situation.

A framework for how to take advice – for #entrepreneurs

There is no shortage of advice or number of advisers and the time you are given advice as an entrepreneur.

It can be overwhelming for an entrepreneur, especially when they hear from conflicting advice from trusted sources.

The 3 most important factors that should go into the decision making process for taking advice is a) Who should you take advice from b) What advice should you take and c) When should you seek that advice.

There are 2 kinds of people you take advice from – those you consider as “experts” in the field and those who have “experience” with the specific problem you set are seeking the advice from. Everyone else is rather a big waste of time. So, if you are an entrepreneur and seek advice from someone at a much larger company on what you should do with your product direction, when they are not an expert in the field, then be prepared to be given useless advice. Well, you asked for it so there.

Expertise is easy to ascertain since, it has a factual basis. If someone is a certified legal professional, then they know the aspect of law they practice. They won’t necessarily be the best at litigation or immigration if they are a corporate attorney, but they would be the best at company legalese.

Experience is best couched with situational awareness. If the person giving the advice is smart, they will tell you the specific conditions, background and environment that the course of action worked. From that, you can at least determine if it might work for you in your specific situation.

The worst people to take advice from are those that pattern match. In my experience, most investors, general practitioners and enthusiasts understand a situation by talking to many people and offering their generic opinion couched as “experience”.

If you seek advice from those whose experiences don’t match your current situation, then you will get suboptimal advice. People who are confident may tell you they don’t know, but it is more likely you will get opinions from 3rd party reading couched as experience.

You need actually both expertise and experiential advice for most situations, which is why understanding the contours of the problem will help you explain it to the person you are seeking advice from.

What you need advice on falls into 2 buckets as well. Easy questions and hard questions. Easy questions have a binary outcome. These are fairly rare. Most difficult questions tend to have a range of answers, with complicated if-then-else statements around the answer.

Easy questions are those that can be answered by experts alone. Can you hire someone from your ex-employer is fairly easy to answer if you look at your exit interview or contract and have a legal person review it.

Hard questions typically will give you multiple choices, not just two. Should I raise money is an easy question to answer if you are running out of cash, but the harder question of who to raise money from and how much to raise are harder questions that can run the gamut based on your situation.

Finally, when you seek advice is also fairly binary. You can either seek advice when you need it, or way before you encounter your specific situation. Seeking it after is just a waste of time – it reaffirms your position and makes your feel nice, or it will make you regret the decision since the advice you get is contrary to the decision you already took.

If you seek advice just when you need it, prepare to be rushed and expect to miss out on key details that tend to be nuances and shades of grey. For example, trying to decide what type of company (C corp or S corp) you should incorporate is best done when you don’t need it done yesterday. It will give you time to think about the options if you learn about the options way before you need them and keep the notes handy.

Seeking advice way before you need it is useful in situations when the impact is longer term. When the decision to be made cannot be reversed very easily (for example who you want as a cofounder), you are better off getting advice on the type of cofounder you need.

The biggest challenge is always the conflicting nature of the advice. What do you do when two people, both of who you trust, offer very different advice or in fact the exact opposite advice.

The relative scale of their expertise and experience does not count, so most people go with what they feel “more comfortable” with. Or they get more opinions and do a “vote count”. Either way it tends to be sub-optimal only in hindsight.

What has changed for developers in the last 20 years

I asked this question on Hacker News last week to understand the shifts in software development over the last 20 years. From 1995 to 2015, there has been a dramatic change in the developer ecosystem. I thought I’d summarize all the changes and try to make sense of the trends. In this post I am only going to focus on the identification of the trends, as opposed to the analysis. I would love your thoughts on trends I may have missed.

1. The rise of open source options: In 1995, there were about 5 open source languages for the web including Perl. Now there are over 100 languages including Ruby, PhP and Javascript.

2. Plethora of libraries and frameworks: From < 10 libraries and frameworks to over 200 (Bootstrap, Javascript frameworks, etc.) The only libraries available in 1995 were those for Javascript. Today, there are over 100 libraries and frameworks for Php alone.

3. From waterfall approach to development to Agile: Most early software development was based on Requirements -> Design -> Architecture -> Development -> Testing -> Release. Now with agile methodologies being followed by many development teams, we are seeing a rise of faster release and in many cases daily releases.

4. Client-server application development to Web apps to Mobile apps: The overall changes are from PC (dekstop / laptop) client software to web applications and now to mobile applications. We have gone from native clients to browser based apps back to native mobile apps all over again.

5. Phenomenal rise of consumer apps, thanks to mobile : Personal finance (Intuit), to 1+ Million consumer apps thanks to mobile. PC’s were largely (90%) used for “work” with few consumers having home PC’s. The home PC’s rose thanks to the web, but now everyone has a mobile phone. Which has led to a phenomenal increase in # of consumer apps, not just business or productivity apps.

6. Increased availability of application level API’s: From providers such as Facebook, Twitter, and others on programmable web. The abstraction of core API’s from just Operating system SDK’s to application level API’s has made the move for apps to be built on the next level of the application stack.

7. Ease of looking up coding examples, tutorials and sample code: Thanks to Stack Overflow and Github, there are many more samples, code snippets and examples that developers can use to be more productive quicker.

8. Rise of coding / hacking schools: From no programming skills to employed developer in less than 6 months. Most developers, 20 years ago, needed to have an education in Computer science, before they could code. With the rise of frameworks and libraries, along with higher level languages, there has been a significant rise in number of coding schools and bootcamps to get anyone with any degree be a developer in less than 6 months.

9. Increase in the number of indie developer (solo): With the rise of consumer mobile apps and mobile games, there has been a significant rise in # of solo developers who are able to make a living based on building applications for niche audiences.

10. The change in market share of complied versus interpreted languages: 20 years ago, most programs and applications were compiled (C, C++) and the share of interpreted languages was small. Now, with Javascript Ruby and Php taking the forefront, most applications are interpreted not compiled. The only exception is mobile apps – which are still compiled.

11. The rise of DevOps: Developers are now being asked to not just build and architect, but also release and push their apps to production. Roles that were previously performed by specialized system administrators and release engineers are now performed by the software developers themselves.

12. The fall of software testing: More developers are also being asked to test their own code and software applications, instead of handing off the testing to a separate team.

13. The changes in app distribution – App Stores: Discovering, installing and using apps is a much more smoother and easier process now than before thanks to App stores.

14. The availability of Cloud infrastructure for app development: The biggest change for developers over the last 10 years has been the rise of AWS and other cloud services, which allow developers to provision, build and deploy instances and machines much faster than 20 years ago.

I’d love your feedback on the relative ranking of these trends and if I have missed any trends I’d love your feedback on those as well.

Top 5 tips on how to come up with milestones that are measurable for your startup

Most founders will come up with following variations of milestones when they get started with their company.

1. Ship beta version of the product by Dec

2. Raise $XXXK in funding

3. Get to $YY in revenue.

Unless there is a team that’s large enough to have each person take on ownership for each of the milestones, the founders are the ones that are responsible for them.

This means that there is little else you can do other than focus on these milestones.

Lets assume you have a cofounder and you split the roles into technical and business.

The technical person takes responsibility for the beta version and the business person for the funding and revenues.

Now a few months in, a new set of responsibilities come forward including managing your board, your mentors, talking to potential partners and others.

Your team has not expanded to take on the executive level challenges, so you still have the 2 cofounders taking on more.

Some of these new tasks are enjoyable – having conversations with partners or mentors for example, so you get “distracted” and the top 3 goals no longer get enough time. That’s when you realize you need a to-dont list.

A few weeks go by and you hopefully realize you are behind and try to catch up, this time removing the new tasks on your list and replacing them with items on the top 3 milestones.

The problem is getting to the new items is tough until you have enough folks on the team who can take on the high level, cross functional priorities.

Here are the top 5 tips I have learned to come up with milestones that you can manage. You may have heard about SMART goals, so I am going to skip that portion and assume you already do that.

1.One person per milestone. You cannot have joint owners for a milestone. Even if you and your co founder are “two peas in a pod” and “complete each others sentences”, have only one person assigned to each milestone. You will achieve greater accountability that way.

2. One milestone per person. If you have more than one milestone assigned to a person, reduce the number of milestones. Obviously if you are a solo founder, that means work on one thing at a time until you have a management team to help you take tasks off the plate.

3.  Milestones cannot be overloaded. Milestones need to be specific enough for one area of work. If your milestone reads “raise a seed round and ship version 1 of the product”, that’s 2 different milestones with responsibilities for 2 different people.

4. Milestones need to have a specific date, and be reviewed weekly. To track your progress, I have found that a weekly review works better than daily or monthly. During the weekly review, you need to understand the tasks and projects that make up the milestone and understand where the blockers are with an “plan B” for any blocker.

5. The owner of the milestone needs to have cross-functional authority. You may have silo functional ownership of roles but most milestones, if they are important have cross- functional impact. So if you need to ship a beta version of the product, the owner of the milestone may need to get customer access from another person and market data from a 3rd person. Even if they are peer’s for the success of the milestone, the owner needs to have full authority to help get the resources to get the milestone done on time. This ensures that even if you have to transition from a role of control to a role of influence, you still have the ability to execute on the milestone.

Everything I learned about entrepreneurship, my mother knew already

My mom

Happy mother’s day. I still miss my mom. She passed away a couple of years ago. Most everything I learned about entrepreneurship over the year’s she knew already and tried to tell me but, I had to learn it on my own, making my own mistakes. Here are the 5 things I learned from her.

1. Have a bias for action: My mom was not one who would talk too much when you needed help or if you needed to get something done. She’d lead by action and focus on “doing” not saying. Her actions truly spoke much louder than her words. When you are working on your startup, it is likely you will have advisers, board members, investors and mentors who will provide you will all the advice you need. The best advisers have a bias for action.

2. Be helpful and give generously: Before “Pay it forward” was a big deal, my mom would practice it. I follow a similar but more selfish approach to paying it forward – Dig your well before you are thirsty. My mom would help others, without expecting anything in return. Do that before you start your company and it helps you when you build your startup. Take as many chances to help others as you build your startup – if you have some time to help, dont pass up the opportunity. Whether it is to help a fellow entrepreneur recruit, critique their website or help the trouble shoot a problem with their technology. It will come back twice as fast and return you twice as much.

3. Your attitude matters more than your state of being: My mom’s attitude was “always sunny”. She would carry the weather with her. Not in a way that made you think things were not difficult, but she’d never get you down because she was in a troubled spot. Her attitude was one where she’d focus her energy, when she was down towards making others feel better. She’d remind me that most people will remember how you helped them feel when they were down.

“I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” - May Angelou

 

4. Focus on things under your control: My mom would obsess over the salt in the sambar, the right sized cuts on the okra and the temperature of the rice before she served it. She would focus on things she felt were under her control and many times the little things. As an entrepreneur, I have found that even if you set the vision and mission, the strategy and plan right, if you dont execute the small things well, you will do poorly. If you worry more about the competition than your own product direction, you will do badly.

5. Turn your biggest challenges into opportunities: My mom’s attitude towards adversity was enlightening. Although her first instinct was to run from it, she would tell herself that it was going to be better because of her bias towards action. She could find ways to optimize the way to make the biggest challenges into her opportunity to make a difference. As an entrepreneur, you will find customer development challenges, hiring challenges, fund raising challenges, etc. The best way to overcome these is to find a way to accept the challenge and brainstorm to execute the plans you lay out toward eliminating them.

If you have a mom, you should call her today (as often as you can every day) and tell her how much you love her, and thank her for bringing you to this world. I did not do that enough, hopefully you can learn from my mistake.

The power of the “to dont” list and why you should keep one

I tend to get distracted easily. I have the shiny new object syndrome disease. I tend to take time to understand what made me master a task or a skill and so I tend to make a lot of mistakes.

Which is why I have a tool in my box called the “To Dont” list. It is not my idea or a new one, but I have benefited from it a lot.

It is a list I keep of things I am not going to do.

I have a list of 3 things I want to do each week and 1 thing I want to get done daily.

I have close to 45 items on my To Dont list. Examples – writing a book, learning Mandarin, learning awesome photography skills.

Every startup CEO and entrepreneur needs a To Dont list actually. Why?

1. Limited resources. When you are small you dont have an army of direct reports who can each own an initiative and “run with it”. If you, as the CEO, are not spending time managing projects and helping remove obstacles for people, you are not getting further ahead. I know a CEO who keeps blaming all the people she hired on her team for “not stepping up” to take responsibility for the top 3 items that the company must achieve. All along while she is working on priorities outside the core priorities she identified for the team.

2. Limited energy. If you are not spending time on your top 3 priorities for the day / week / month / quarter, and dreaming, eating, sleeping, brainstorming and executing those priorities, then your energy and brain power is being consumed by 100 other “shiny” non priorities. It tends to be the “death by a thousand cuts” problem where 7 to 9 things take up your time, and before you know it, it has been over 4-8 weeks and you have not made any progress towards the top 3 things you need to achieve as a company to get to the next milestone.

3. Limited time. If you work 10 hours a day, god bless you. If you work 15 hours a day, you are fooling yourself into believing that you are “working and productive”. I dont know the exact capacity and stamina that different people have for work, but everyone needs some time to rest their brain, their body and their mind. If, for example, you believe you should spend 8 hours on your top 3 priorities and only 2 hours a day on your bottom 7 priorities, I still would question your ability to focus.

The main reason is that it is not time alone that you are spending – you are spending your energy, which is another thing you have in limited supply.

I know that Google has said you have the 20% time where you can work on things that you enjoy doing, outside your core priorities, but you are not Google.

You are a startup, with very limited resources and time.

If you want to work for 12 hours, daily, by all means do so.

Just make sure that your top 3 priorities get the all of your attention – until they are completed.

There are some tasks that you might believe “you cant make progress” on, until there’s something else that happens outside your control.

Bring more things back into your control by spending time and energy on alternative paths.

For example, if you believe the “customer” will take 1 month to get approvals in place for you to get the POC ready, try to get another customer on board, or work the org chart of the customer to get other approvals in place. Dont spend time trying to talk to a new integration partner since that’s not on your priority list.

That should belong on your to-dont list, until it is important enough to belong on your To Do list.

The To dont list should be as sacred as your to do list. Put everything in there that catches your attention until it is worthy enough to make it to your to do list.