Category Archives: Community

What criteria should you use to judge a hackathon?

I was on the jury panel at the Angel Hack event over the weekend with others.  Over 150 attendees were at the event, and 50+ hacks were presented on the final day (Sunday). They ranged from the sublime to the trivial. The best part was there were attendees from over 10 different cities including a few that came from over 1000 kms away. Each team was given 2 minutes to present their hack and 1 min to answer questions.

The first  thing that struck me was most of the attendees were awake to present their hacks. In previous hackathons most of the presenters have been rather tired or sleepy so they tended to gloss over their work.

This is the 5th hackathon I have judged and I dont think I have a clear idea on what the criteria should be to judge a hackathon.

This time the winner was a product that’s been in the works for a few months, and the developers made some changes / modifications to their product over the weekend. So, really it was not a “new” hack over the weekend, but something they have been working on for a while.  The runners up (not announced) was a company that’s been in the works for a while. They were well thought-out ideas, fleshed-out products and good implementations.

That obviously ticked off a few developers who had built a new hack from scratch over the weekend (and it showed that their idea was a one weekend project), and I got 3-4 angry emails on why we chose to declare the mature product as a winner.

Did we know that the winners were “mature” and not “weekend hacks”? – we did and did not. Did, because we could make out that the products were well thought out, which is hard to do in one weekend. Did not, because we were not told that we had to only look at weekend hacks.

So what does a weekend hackathon really accomplish?

I think it provides an ability for developers to learn something new, try an idea and experiment. That’s it. Globally, according to Startup Weekend, fewer than 2% of these weekend hacks actually turn into a company, but many (dont know the %) of the developers get hired because of these events, many ideas are added to an existing product and many products are enhanced post the hackathon.

There will always be folks that keep working on their idea over several hackathons so their ideas will mature quite a bit and so will their products. The good part of this hackathon was I did not see a single team that had presented the product / idea before at any of the other hackathons. There were many rehashed ideas, but largely new teams.

I think the top 3 criteria for judging hackathons should be a) how unique & interesting is the idea given the constraints of the hackathon, b) how close to “product” has the hack been over the weekend and c) how creative have the developers been in their implementation

I think the key thing that hackathon organizers should do is to form a jury of 3 hackers / developers and maybe 1-2 other folks from the startup world (VC’s or generalists like me).

Our panel on Sunday was comprised of 1 designer and 1 developer. The rest were generalists (3). So it was obvious that we were going to be biased and look for how “big” the idea was, how well thought out the implementation was etc. If the goal of the hackathon was to look to turn weekend ideas into startups, then an even mix of generalists and hackers as jury members would make sense, else they should be weighted towards developers as jury panelists.

Do you think we should even have generalists as jury members? I think that 1 might be sufficient for most parts, but if they are not developers, what’s the point of having them on the  jury?

The step function of #changes that are happening in the #Indian #startup scene

Most everyone believes that startup growth happens in step functions. You work for ages on something and it seems like there is little progress, but as an entrepreneur you are plugging away at it and suddenly one day, the growth is dramatic. Then it plateaus for a while and grows again. That’s the same for startup ecosystems is my opinion (not researched).

Step Function Growth

Step Function Growth

I am starting to see the next step function of growth in the Indian technology startup scene. There are a lot of people (entrepreneurs, investors, etc.) contributing to this growth and its hard to point to why it happened except in hindsight.

First, what metrics should we track so we can really know if there’s a step function or no progress?

Here are a few that we track at the Accelerator.

1. # of startups: How many startups are getting formed, where are they getting started, etc.

2. # of funded startups: Time taken to fund startups, amount of investment into startups, stage the companies are in at the point of angel investment etc.

3. Pace of growth: How quickly are they signing customers, how quickly are they getting VC investment, how quickly is their revenue growing, etc.

The NASSCOM 10K startups initiative is one such forcing function contributing to the growth.

Yesterday in partnership with NextBigWhat they organized the first of several #startuproots event.

A big part of that event was the #sharktank, which had 4 companies out of 200 that applied, that were going to pitch to investors and they had to make a decision on the spot.

For those of you who are not familiar with the sharktank format, the startups get 5-10 minutes to pitch, the investors get 5-10 min to ask questions and 2-5 min to make an offer. The entrepreneurs can then take some time to make their decision and then make a counter offer.

All offers are binding, save for legal and financial due diligence. Which means if and investor gets cold feet later, they cannot back out.

Yesterday, 4 companies presented. I had heard about 2 of those companies before (but did not know they were chosen) and the other two companies were fresh and new.

There were 8 investors who were part of the sharktank, but only 6 were serious. The other 2 seemed more there to critique and provide theoretical knowledge about startups.

Pankaj Jain from 500 startups, Ravi Gururaj from HBS, Ranjan Anandan from Google, Anirudh Suri from India Internet Fund and RK Shah from HBS were on the investors side.

Tookitaki (ad-tech space), Moojic (retail music hardware), Credii (Mid-market IT decision support) and Lumos (solar panels for backpacks to charge your phone), were the presenting companies.

All four got funded at the end of the event. I personally thought 2 of them would definitely get funded, but all 4 getting offers was truly a step function change.

I was personally pleased that Lumos got funded. They are doing something new and innovative that most Indian entrepreneurs wont do – Working on a non-software, difficult to scale hardware business, because of their passion.

I have to call out a special mention to RK Shah. RK is not a technology entrepreneur, (he runs a textile unit) neither is he a professional institutional investor. He wrote 2 checks himself yesterday. We need more RK Shah’s in India.

Finally big kudos to Jaivir, Brijesh and the rest of the NASSCOM 10K startup team. In less than 1 week, they got 850 signups for the event, and 500+ people attending.

Why do investors use boilerplate emails instead of telling you the plain truth?

Most every day I get 2-3 requests to review companies for investment in the seed stage as an individual investor. Since I keep a fairly open network on both LinkedIn and Twitter, I get many folks sending me an email to review their plans. While I do read all of their emails, and send them a response, only 1 in 10 get me to open their plans.

It tends to be fairly easy to decided not to pursue based on their description of the problem or their background. Although I have put my criteria for investment on my blog, rarely do people read it.

I dont think entrepreneurs have internalized the changed landscape for funding of all types.

I do send a quick email to everyone of the people who I dont intend to invest in with a short 1-2 sentence reason. Either its because I dont like the market, the idea or dont believe it will work.

I used to be brutually honest initially (a few years ago) and have mellowed down over the last year. These days if I say I dont have time, it really is the truth. Its not because I dont like the plan or the entrepreneur or the idea. Its just because I dont have the time to evaluate the company.

The main reason I mellowed down was the feedback I heard from many entrepreneurs who had not developed a thick skin that my response was really disheartening and counter productive.

I read today, Paul Graham’s piece on VC boilerplate that Harj Taggar wrote and was amused initially, but the reality is most entrepreneurs prefer to read emails from investors that have some boiler plate stuff rather than the honest truth. I mention most, not all.

Its hard to find know which entrepreneurs prefer the straight up honest truth versus the ones that prefer to get a pat on the back with some encouragement to keep going.

Practically speaking the email from Harj, has 25 sentences too many. If all the email said was “it’s currently a little early for us to step in here.”, that would suffice. If there was more detail, i.e. the number of users, or too few customers, etc. it might help, but really it rarely does.

Why?

Primarily because you get into a shouting match about why the entrepreneur thinks you should be investing at this stage and why you are not an “angel investor” if you wait longer or that you (as an investor) are very risk averse. See comments on my post earlier on what you should have ready before you approach me to get a sense for that.

I invest in very few deals every year (most likely 2) and so do most VC’s. Like most of us we are all pressed for time. Short email responses with quick no should help, but realistically most entrepreneurs dont like that.

2013 tablet adoption to drive startups

This piece appeared at the Times of India Business section yesterday.

About 407 technology companies were started in 2012, which was a decrease of 19% from 2011. For 2013 we expect the number to increase
thanks to many startup accelerators, going to about 460+ startups.

The most number of new companies will be in mobile applications, cloud computing, software as a service, and education. Since many ecommerce infrastructure companies in payments, logistics and distribution were formed and funded, I expect a second coming of e-commerce only in 2015.

There are three major trends that are shaping the startup world. First, lower costs of tablet computers, causing rapid adoption. Second, dramatically lower 3G prices and rapid WiFi rollout, allowing most tablets to enable cloud computing. Finally, lower costs of simple biomechanical arms will see early signs of consumer robotics companies.

More than rapid adoption of smartphones, the tablet adoption will help bring disruptive changes to entertainment, education and communication in the next year. The upcoming general election in 2014 will ensure that the ruling political party will give free tablets to each low-income family that has at least one child. The primary use of this device initially will be for education and communication, but will quickly replace the television as the entertainment device of choice for the younger generation. We will see many startups provide education content and many crowd-sourced applications for test preparation.

While 4G and LTE networks might surface in India by 2013, 3G prices will lower sharply and many carriers will offer them bundled with DTH options. Thanks to smartphones, the urban youth will quickly start to create niche content in the form of short movies and music and upload them online, helping create startups that assist users to discover new entertainment choices. I also see an increase in gaming companies that offer in-app purchases and virtual goods.

Business application startups targeting small and medium businesses will continue to grow, but many will target global markets instead of India in 2013.

Finally I see the start of primitive consumer-robotics companies which are simple extensions of bio-mechanical arms aiding in specific tasks such as replacing the large water jug or cutting vegetables based on camera sensors.

Availability of seed capital will continue to increase, but later stage companies will increasingly look outside India to raise capital.

Microsoft Accelerator Research on Starts and Closures in Indian tech startups

We are planning to release research findings every month week as part of our startup support program at the Microsoft Accelerator in India. There are about 50 different topics that we are curious about and are consistently doing research to find out ways to help our accelerator companies perform market research, target early adopters and focus on getting more customer traction.

This series is part of our accelerator database on engagement with startups, investors, mentors & entrepreneurship. Last week we did a report on Smartphone usage in India.

This week our focus is on the rate of companies starting and closing in the technology product space. Over the last few years Microsoft has been tracking new companies as part of its Bizspark program. Besides this we have access to several databases from multiple sources which has allowed us to consolidate all these into a single system to track startup activity. While we currently track over 73 different elements including founders, starts, closures, funding, etc. our focus is on trying to find patterns that can give us more clues to remove the roadblocks that reduce entrepreneurial failure early in the system.

We track over 6200+ entities – which includes services companies with a “product” they are building and also many viable side-projects, where the founder is generating some traction or revenue and 3900+ companies that are solely focused on building products (includes SaaS, eCommerce, traditional software, consumer Internet, etc.) in India.

On average there are about 450+ starts annually over the last 3 years, which has grown dramatically thanks to eCommerce.

While Bangalore has the most number of technology product startups overall, at neary 40%, Delhi/NCR came a close second in 2011, only to return to normalcy in 2012.

In terms of closure, 26% of companies still close within a year of them starting (either the founders giving up and moving on, or the company going dormant).

The biggest issue for closure (given that nearly 80%+ of all companies are bootstrapped) is collecting money from customers who have committed to paying for their usage of the product.

While not being able to raise funds is really #1, that seems to be a generic reason enough and a motherhood-and-apple-pie situation.

Unlike the valley (anecdotal information alone) most failed entrepreneurs dont go on to start another company or join a startup, but instead go to work at a much larger company (over 60%). Most reasons given were because of loans to payoff or pressure from parents (surprisingly not from any others).

Our recommendations are for new entrepreneurs to have a “cushion” of nearly 18 months in funds in their personal capacity before they delve into a new venture as opposed to 6 months.

We also recommend asking new customers for an advance in payment as part of the Proof of Concept instead of payment after the fact to aid in managing cash-flow more effectively.

How to lose friends and anger people: Learn from my experience

I am prone to opening my mouth and putting my foot in it. I did it a few days ago with a reporter from Reuters who was covering The Startup Village in Kochi. Not particularly sure of what the background was regarding the Startup Village, its goal or its focus, I went ahead to trash it even without understanding.

It was a) unprofessional b) stupid of me to do it and c) an uninformed opinion of an ignorant person.

What the Startup Village is trying to do is admirable. They are trying to change the face of entrepreneurship in Kerala. They have been able to do what most cities and states around the world would love to do. Get engagement from the political system to support startup entrepreneurship.

And I rained on their parade. I am so embarrassed to even link to the article.

I got a call this morning from Sony Joy who I have known for years. He was so nice, that his first question was “Were you misquoted”?

Sadly I was not. I cannot blame the media or the reporter.

I cant even say I was having a brain seizure.

I was just plain dumb.

So I have to own up and apologize.

Sorry guys. As I promised, I will be in Cochin soon to learn more about the Startup Village and do my part to ensure you guys are successful.

What makes a great conference? Thoughts on NASSCOM product conclave

Fresh from the recently concluded NASSCOM product conclave, I was giving some thought to what makes a great conference. Having been at many over the years both at the US and India, there’s just one word that differentiates the approach and type of conference.

Production.

American conferences are produced.

Indian conferences (and events) are curated.

What is production?

The ability to define a delegate, speaker and sponsor experience that seeks to maximize the benefit to them all by defining a purpose of how they should feel post the event.

What is curation?

Putting together good content with great speakers, having enough attendees that are interested in the topic with sponsors that are willing to pay for their logo to be attached to the event.

NPC 2012 was a good event by most measures. Top notch ratings for over 50% of the session (80%+ Net promoter score), great camaraderie and networking and finally a packed set of sessions that were curated by a dedicated set of volunteers.

We need more produced events.

1. Production means getting speakers to have rehearsals before the event. If Steve Jobs can rehearse a presentation, everyone else can. No exceptions.

No rehearsals means people that take 45 minutes when they were allotted 15, non-engaging & dry content.

2. Production means understanding & setting aside enough time for both ad hoc and managed networking and fostering a “we’re all in this together” feeling.

No networking focus means many people trying to get some time with key speakers after and before the event, only to find that they (speakers) had allocated only 2 hours to be at the event.

3. Production means ensuring sponsors are actively adding value by looking to build content and engaging demos which benefits the attendees.

No engaging experiences means a 2 minute ad at the beginning of the event that 90% of people forget after day 1 of the session.

I think we need production quality experience so people feel wowed, get energized, learn lots, network to grow their business. Here’s looking forward to more produced events in India.

Technology product startups, angel and venture market comparisons – US and India

There is a lot of activity and interest in technology product companies in India, as there is in the US. I spent some time reviewing numbers from NVCA, VCCircle and pulled some numbers specifically in the areas of Internet, software, technology products and eliminated services companies. Here is a simple table to keep things in perspective. All sources are at the bottom.

USA

India

Total number of technology (Product & services) companies formed annually (average)

24,169

412

# of companies that secured angel funding

15,233 (1)

65

# of companies that secured seed / early stage from VC

1,682

58

# of companies that secured late stage funding from VC

658

31

I am yet to do any “analysis”. Right now the data validation process is what I am going to embark upon.

What is your analysis.

Relevant Links:

1. Crash Dev – eye of the needle

2. UNH center for angel investment research.

3. NAV Fund John Backus

4. Product Startup Landscape in India from Zinnov . (Thanks Pari!)

5. NVCA National aggregate data for US investments (Excel spreadsheet)

Givers and takers – a post on being a parallel entrepreneur

I often hear from many entrepreneurs about their desire to “give back”. Only after they have “made it”. What’s “making it” I ask? Usually its some form of monetary success or company milestone.

Here’s what I have learned – there’s no right time to start giving back. The right time is always. Right now. Today. This hour.

You may have heard of the term serial entrepreneur. Also the term parallel entrepreneur. I dont particularly like either term, but to me, a parallel entrepreneur is one that gives as much or as as quickly as she takes.

There are lots of takers, everywhere. Enough people seek out mentors, advisors, connectors and investors.

Not enough people are givers. Not enough people are coordinators, organizers, connectors and volunteers.

This has to change. You dont have to get enough to start giving. You can give a lot initially and trust me, the getting part happens extremely quickly.

We need more Avinash Raghava’s to help organize volunteer driven organizations.

We need more Subhendhu’s to help bring together Reverse pitch.

We need more Kiran’s to organize hasgeek forums.

We need more Chidambar’s to help bring Statup weekend’s to us.

I am missing many more. They are the unsung heros. They are really the parallel entrepreneurs.

I think they all deserve more of an applause than we give them. They should be an inspiration for us all to become parallel entrepreneurs.

Above all, be a force of good.

Solve meaningful problems as a startup

Back in the 90’s and better part of last decade, most of the smartest folks from the top colleges would go and work at Wall Street. Lured by high salaries and fat bonus checks, they used their wizardry to create CDO’s, asset backed securities and derivatives to create billions for hedge funds, investment banks and trading desks of large financial organizations.

We all know where that ended up – the subprime mortgage crisis.

We thought there was a turn of events when one of them started to build a meaningful startup.

That prompted Bill Gates to say

“I’d say we’ve moved about 160 IQ points from the hedge fund category to the teaching-many-people-in-a-leveraged-way category. It was a good day his wife let him quit his job”

I get a sense that, “founding an Internet startup” is the new “joining a hedge fund” in the 90’s.

We are getting an amazing number of very smart people who are joining these startups in droves and applying for incubators, accelerators, hackathons and startup weekends.

There is a massive movement of high level IQ points from old-school consulting and “IT services backend for a large Indian outsourcer” to startups. That’s awesome news.

I have attended and judged 3 startup hackathons and prototype creation sessions over the last 1 month. I am absolutely thrilled that there are so many people turning out for these events in India. Over 650 attended the Yahoo Open Hack day. It was amazing to see such a diverse group of young talented developers and programmers solve some very interesting problems.

The part we have to work on is why the brightest minds are solving the most trivial of problems.

Startup IQ

Startup IQ

I think the problem with Indian startups is they think we are in the US.

There are rich people problems (The pictures from my mobile phone dont look good, can we build a “pimp my photo” app”) and there are real world problems (how can I make sure new grads from college learn to develope real apps, so they can get a job and reduce the jobless rate).

My humble request to Indian entrepreneurs is ‘Please dont build any more “I’m bored” apps’.

I am not trivializing the need for “fun” apps.

All I am requesting is that the highest IQ folks should be working on the highest impact problem areas to aid most humankind.