Category Archives: Entrepreneurship

The 5 emotions you go through as a #startup founder

I love tinkering and trying to do new stuff. It helps me figure out what entrepreneurs are going though. Whether it is learning a new language (Javascript again), a framework (Angular.JS) or new technique to get customers (Instagram FTW). Some of these projects take a few months and others a year.

For e.g. we are trying to build a periscope camera to help you take photos when you are a concert and are not tall enough or have arms that are not long enough to take them. This will be connected to your smartphone so you can look at the lens from your phone before you take the photo.

This project was my attempt to launch and manage a kickstarter campaign. We have 2 college students who have the capability to build the Raspberry Pi  based controller and I was the marketing and kickstarter campaign guy.

There’s a point in time when you fantasize about these side-projects becoming your “$19 Billion exit”. Then reality hits you daily every hour. Even if you have cofounders, you will realize quickly that being an entrepreneur is a long and lonely journey. That means you will have several conversations with yourself.

I tried to capture my own “self-conversations” or “selfies” over the last few projects to understand the moments of doubt, fear, exhilaration, stress, joy.

Lets start with the idea. Most people get exhilaration, but I get doubt as well. It seems to me that having listened to 1000’s of ideas as a judge, VC and investor, there are no new great ideas any more. Then again, if you are unable to sleep at night and want to write down, code or document all your thoughts, this is the best stage of emotion.

Then you get to joy – for me that comes from a shipped product (call it MVP, beta, alpha, anything). Not necessarily the point when customers or users are using the product, but just when you get it “out there”. The time when you can declare on your FB profile or on your Twitter stream that “Product X is live” or “Launched Product X”, followed by a call for people to try it out.

Fear hits next when you either a) get a lot of users and many complain on Twitter or a Blog post you have written that they dont “get it”. Most people rarely get version 1 of anything. You as a founder tend to then worry about whether all the time and energy you spent over the last few weeks / months / years was even worth it.

Stress comes after that when you try to pivot and change multiple times to figure out “product market fit”. The stress comes from your own internal battles to tune, fix, change and modify your project in a race against time to keep your “self funded” project from dying.

Finally this stage ends with doubt – on funding, market, customer validation, hiring, investments, a whole entire host of self critical analysis and paranoia that results in hopefully a finish that comes back to exhilaration – of the funding round, the customer traction or a new, smart hire.

Going by the numbers in my own entrepreneurial network, I’d say exhilaration post these 5 emotions is on the rise. That’s a good thing. A very good thing.

Is it a bubble? I have been asked. I usually reply – Who cares.

There’s an “orgy” going on next door (Silicon Valley) we are busy arguing the size of “condom” we are trying on. Dive in, the water is warm.

The rise of student entrepreneurship in India #tatafirstdot and NEN

Today I had the opportunity to hang out with 1000+ student entrepreneurs from over 60+ cities and all states in India at the NEN #tatafirstdot event in RV College of engineering. The twitter buzz gives you an indication of the event’s energy.

NEN has been promoting student entrepreneurship for over a decade now and this was my 3rd event. They do a terrific job of turning the raw energy and talent of students into some great startups. The first dot event had 500+ students applications. Students from Srinagar (Jammu and Kashmir) to Kanyakumari (Tamil Nadu) participated and this time they had to present fully formed products / prototypes, not just business plans.

To set some context, in 2008, less than 1% of startups in all ventures were founded by students straight out of college. This year, that number is close to 3%. The number of startups has risen 3-fold during this period. We have over 20 Microsoft Innovation Center’s at various colleges in India that focus their effort on supporting great student entrepreneurs as well. These center’s serve to host hackathons, conduct entrepreneurship classes and encourage students and faculty to pursue building companies instead of “getting a job”.

I had a few questions from NDTV (Bala) at the sidelines of the event. One question stood out as something that needs more explanation and commentary.

“Why is it important for us to have more student entrepreneurs as a startup ecosystem”?

There are 3 main reasons why I am so passionate about student entrepreneurs:

1. Their “lack of experience” is a HUGE advantage. Most folks tend to think that experience is a good thing in entrepreneurship. I am a contrarian. I believe that experience (other than the experience being an entrepreneur) holds you back as an entrepreneur. Older and more experienced entrepreneurs are more in number, they are more successful, but they do not create disruptive companies. (p.s. I dont have data to prove this, just anecdotes) They see a problem, they solve the problem and become successful. Student entrepreneurs see something and are willing to question why? They refuse to look at the “current lay of the land” and find ways to operate within the constraints.

2. Their ability to take risk is much greater. When you are young, single and unattached, your ability to take risk is much larger, than when you have a mortgage, kids, hospital bills etc. The worst thing that happens is that you fail and get acquired by a larger company.

3. Time is on their side. Most mid-career executives wanting to start a company are fighting the lack of time on their side. It is NEVER too late to start a company, but if you measure the number of mistakes per unit time you make, then student entrepreneurs clearly have more chances to fail and finally succeed.

I truly believe that students are going to be the largest part of entrepreneurs in India in a few decades. Until then we have Microsoft Innovation centers and NEN to show us how to get them motivated, excited and focused on building their venture.

Shout out to my friend, advisor, guide and awesome student entrepreneurship champion Sri Krishna of NEN. He is the person to connect with in India for all things student startups related.

Some exciting startups in the HealthTech Space #health2india

James Matthews, a good friend and entrepreneur invited me to attend the Health 2.0 Conference for entrepreneurs and healthcare professionals today and speak about Health Tech investments. About 80 to 100 folks were in attendance, featuring about 30 entrepreneurs, 25 investors and the others were from Pharma companies, Hospitals and diagnostics chains.

Our panel featured an entrepreneur (Poonacha), a healthcare product company (GE) VP (Partha) and Ravi from Zanec.

There were 4 startups that were allowed to pitch the investors, and while there was no commitment from the investors, the startups were not looking to raise immediately either. This was a session for them to get some feedback from potential investors.

There are 3 high level observations that relate to investing and entrepreneurship in the space that I want to highlight first and then talk about the interesting companies.

1. Older Indians overall have little respect for preventive healthcare or do not value it at all. If you are in the wellness space or “be healthy” space, the market will be relatively small is what I gathered. I hear many entrepreneurs say their target market is 25-40 year olds. I think the real market for wellness products, services and solutions is 25-30 year old’s. How can I prove that? Look at gym membership in India. There are 70K members for the 300+ gyms and the prices are fairly high. Why? Because gyms are a luxury item in India. The average cost of a membership is between INR 500 per month (non chain) to about INR 4000 (Gold’s gym). It is not that older Indians dont want to live healthy. They think that paying for “wellness” is overrated.

2. Going after solutions for doctors, clinics or hospitals is a curse from hell for startups. Most smart entrepreneurs are focusing on the patient (consumer) via the influencer (doctor). Which means that for healthtech startups, distribution and sales are less of an issue, but consumer adoption and more importantly usage is more critical. Most consumers in India dont have the discipline to master wellness and focus on preventive health choices, and the ones that do are far and few between.

3. Indian doctors see almost 2-3 times the number of patients a day as American doctors do, and still make 1/3 as much them. Solutions to make doctors more productive by educating patients, transferring more work to nurses, etc. will likely do well.

Here are the 7 interesting companies I met at the conference today, and here is a summary, in the order of when I met them.

1. Diabeto: is a diabetes management analytics application and device. It transfers your glucose readings from your Glucometer into your smartphone and cloud so your caregiver can monitor it. Rather than do a lot of automation, which will force the company to get an FDA approval, they do just enough. Very interesting company and a neat product and they have many inquiries from distributors from other countries. The global diabetes care market is fairly large so I think they are on their way to raise some amount of early seed funding.

2. Zest.MD: is an online clinic for nutritionists. The SaaS solution helps bring any nutritionists services online so consumers can review and purchase via the web. Longer term the company is looking to be a curated marketplace for people wanting to make healthy choices. I thought this was fairly good, but I am still skeptical of the size of this market.

3. Praxify: is a connected patient records management for doctors and patients. They were positioned as an EMR (Electronic Medical Records) but the market for that is long gone and dead. The average doctor hates using the EMR product and the patients dont understand its benefit enough. Good team and product, so this is a company to watch. Disclosure: they are a Microsoft Ventures company.

4. Fitternity: is a directory, content website, ecommerce platform and database for people wanting to be healthy. The product is aimed at people who care about being fit, by offering advice, products and service referrals. I have seen many such offerings, so I am not sure what their differentiation is.

5. Care Companion: is a education tool for care-givers: nurses, wives, parents, etc. Since doctors dont have time to explain the same things to each patient’s care givers, this product aims to provide the standard advice my means of videos. E.g. Assume that your child, after a doctor’s visit has to to avoid certain foods, take pills in the morning and night, but not afternoon, etc. this product will provide those simple instructions by disease or symptom.

6. Cyber Liver: They provide a breathalyzer which nudges you to avoid drinking too much alcohol. This is a extension (hardware) to your iPhone or Android phone that you breath into every time you drink. It keeps track of how much you drink each week and uploads that to the cloud, ensuring that you know if you had too much to drink. Very interesting idea, but users have to remember to breath into the device after they consume alcohol each time, and I don think they will do this often enough to make a difference.

7. mTatva: is a prescription transcription and alerting tool. Your prescription is scanned at the hospital to the cloud and your dosage and medicines are sent by SMS. Then it also send the prescription to your favorite pharmacist via SMS and will alert you each day and time with the dosage information. I liked the idea, but adoption is currently sparse.

There were a few other companies, measuring (using multiple sensors) the weight of your pill box to intelligently alert you when you dont take your medicines, etc.

Overall the signal to noise ratio at this event was VERY high. James has curated an excellent set of entrepreneurs and I was pleased to see such a diverse set of folks innovating in Heath Tech.

Surveys or open questions – What works better for initial product validation

Over the last few weeks, the new batch (fourth) of 16 companies at the Microsoft accelerator has been getting started with customer development. Some companies are fairly advanced, doing hundreds of thousands of dollars in revenue, but most are early stage. Last week our CEO-in-residence from the Israel accelerator, Hanan Lavy, came by to lead them through our customer development framework. The first thing I gathered from many entrepreneurs after that session, was that they were surprised at how it helped them revisit some of the assumptions they had made when they had the first idea about their product.

There’s an old saying that good sales folks are used to quoting “Always be Qualifying” (as opposed to the more popular ABC – Always be closing”, which never quite works, but is popular). The “lean startup” generation has its own version of that at the early stages of the startup – Always be validating – your assumptions, your plan, your pricing, your offering, etc.

Customer validations, early on, start by asking questions of customers, mostly in face-to-face meetings and then “graduate degenerate” to emails and phone conversations when entrepreneurs are unable to scale. I dont think there’s only one way to validate though – a good product manager uses all techniques to get in front of her customers / users as often as possible.

There are pros and cons to each of the techniques to validate your idea and assumptions, so rather than focus on all of them and their efficacy, I thought I’d take some time to share what I learned from 5 of the startup founders who have been trying 2 techniques over the last week with both Indian and US customers to validate their problem statements, ideas and positioning.

Think of this as A/B testing the format of communication as opposed to the medium or the message.

The medium most of them chose was email, given that they had to provide a quick turnaround back to Hanan (they were given 2 days to speak / connect with at least 10 customers. They could have chosen face-to-face meetings or focus groups using Webex / Skype, in app questions or real-time in-app chat, but they all chose to email their potential and few existing customers.

Now that most chose email, the next question I asked them was how many of the sent customers open-ended questions versus an objective survey with 3/4 choices for answers.

Turns out 2 of them used an online survey tool with 5 questions and 3/4 choices per question and 3 of them chose to send and email with 4-5 open-ended questions. Response rates varied from 40% to 60% I was told (fairly high given that their potential customers had only 24 hours to response). The survey’s got more responses than open questions.

What I did learn was that for companies that were earlier (had started building product, but did not have a prototype) the survey format worked better since they were able to get specific answers to questions and make decisions on 3 features they had to drop so they could ship quicker and gain more feedback quickly.

The open questions format worked for those that had worked longer with their customers and prospects since they got good qualitative feedback and a suggestion or two, which they had not considered before.

I have a personal bias against survey questions, since the choices are predetermined. Survey’s tend to be much better when you want a quick pulse to make feature decisions, not direction decisions. Surveys also work when you have a large pool of responses. Open questions on the other hand work just as well with 5 people as 50 – but at 50 people you have a hard time collating the responses. Open questions also requires you have a better relationship with the folks responding since their commitment of time is more.

What I also learned was that while there are pro’s and cons to both mechanisms, the decision you are trying should guide your choice of format, not the speed of the responses.

There are many types of decisions one takes at the early stages of the startup. Product direction decisions are rarely going to be resolved with surveys or email. Those are the type that many people leave to gut, data and lots of soul searching.

On the other hand, validating assumptions is always better with open questions is what I have learned.

Why I dont invest in non tech startups #IIT #entrepreneurs

I was at the IIT Mumbai eCell event on Sunday and had a chance to meet students from various colleges all over India. The event was an eye-opener for me, given how many students were interested in entrepreneurship. This event had over 1200 people this year, and that was a 25% increase from the previous year. It is exciting to see the uptick in interest from students on becoming entrepreneurs in India.

I was on a panel with Suvir of Nexus Venture Partners and Bharat of Aditya Birla PE fund. A quick poll of the audience indicated that over 70% of the students were interested in starting their own venture and a similar percent were keen to build a non-software, or Internet / Mobile venture.

I clearly disappointed the audience when I said I would never invest in a non software / technology venture, and I had over 20 students come to me after the event to express their dismay. They were also very upset that I would be so categorical about my position both on a personal level and also as an investor at Microsoft Ventures. While they understood that Microsoft would not be interested in a non software company, they were curious as to why I would, on a personal basis, avoid these companies.

This post is primarily me addressing the question as a seed investor in the early stages of a company.

There are 3 parts to my answer.

1. Expertise: I dont have any knowledge, connections and value to add in a non-tech company. I invest primarily small amounts of money in an individual capacity so I can help the entrepreneur grow their business, besides just give them money. I dont have the background and intrinsic know-how of domains such as healthcare (if you want to run a specialty hospital) , education (if you want to start a school) or a restaurant.

2. Growth: My personal experience has been with about 30+ companies that I have invested in over the last 15+ years. I had invested in a Sports bar (restaurant) and also a real estate company. Both companies were started by entrepreneurs who I knew well for over 10 years. They both returned about 12% in interest each year for 3 years. Which is great, but does not move needle. Software and technology companies, grow much faster and in a short period of time. As an example if you look at the 39 companies that are “Unicorns” with over $1 Billion in valuation over the last few years, on average they have taken 5.7 years to achieve the $billion valuation. For non technology companies that have gone public over the same period and have a valuation over $billion, the time period has been 9.7 years. Almost twice the time.

3. Capital efficient in the early days: Do a simple analysis of the need for capital among the companies until year 3 and you will realize most of need very little money in the early (<1 year) and tend to be fairly capital efficient until year 3. After that they take a lot of money to get to $1 Billion. Since most of the companies end up failing, I’d rather put less money early in more companies than more in fewer ventures.

The transition year of 2014 – from developers to customer acquisition specialists #startups

Here’s a prediction for the year 2014 based on talking to over 1400 startup entrepreneurs in 2013.

2014 is going to be the every entrepreneur will start to focus on hiring a “customer acquisition” specialist. This could be someone who can be called a hustler, a growth hacker, a marketing developer or any other title.

What I have realized after looking at over 2800 applications at the Microsoft accelerator and interviewing over 300 entrepreneurs is that they have little idea about how to acquire customers that pay for their solution.

They can do the first 10 customers, but after that, it is a slog or a stall.

They dont have a way to scale their customer growth.

Many developers who stall in their careers will take up growth hacking courses and classes. The reason they will do well is because developers will make the best digital marketers in the next decade.

The #1, #2 and #3 questions I get from entrepreneurs, is trying to find a way to get paying customers.

The #1 question last 2 years was around funding.

That has dropped dramatically this year.

The years prior to 2011 I got most questions around hiring good quality engineers and finding and hiring good engineering talent for startups.

Maybe it is the maturity of the ecosystem, but this is the transition I am seeing.

Tip on being a good manager – Saying the same thing differently #startup #entrepreneur

One of the things I have figured out that I am not good at is being a great manager. I am largely bad at managing people. People that work for me like “hanging out with me” as a friend or a colleague, or even working on projects with me. Most people like working with me, but working for me as a direct report is a pain. I go between the two extremes of being a micro-manager to completely hands-off.

This is an extension of my personality. I am a known control freak, I prefer to be direct and am less of a consensus builder. I really value high intellect and have little patience (that’s is the biggest drawback in India as a manager) for people that dont articulate well or speak up. I do listen, (I am told) but I rarely acknowledge that I have listened.

This works in specific situations (running a sales team) or being a product manager (when the engineers report to another person), but works very little elsewhere.

I realize that most entrepreneurs with a technical and product background face a fairly similar situation. Not have too much experience in being a “manager” hurts your in retaining good people. Here is a rule of thumb if you will that I was taught early in my career at Cisco and then at HP, that have shaped my management “style” Ed. It is a joke I call it management style, when there’s no real style at all.

You have to adapt your communication style to the different people in your team. This was the biggest problem for me. I dont like the effort it takes to change my communication style. I am very direct, brutally honest and dont mince words. That does not work for most people. You cant change as a person much (I think) so you have to work hard at communicating the same thing differently to different people in your team. Let me give you an example.

In 2009, after 4 months of working on our product and getting feedback from customers that the product was not quite there, we knew we had to pivot. Communicating that pivot to the team was a bigger challenge.

One of the folks in my team is very numbers driven and a “give me the facts, so I can form my own opinions” . For her, I had to give the basic facts of our user engagement and customer feedback before I could convince her to pivot.

The tech lead was a young developer (with about 3+ years of experience) and had worked on the product from the start. He was a lot more emotional about the product being “his baby”. Giving him the facts only made him defensive. So the approach I had to take with him was to get him on a trip to meet 13 customers in 5 days to listen to the feedback for himself. More expensive, but worth it.

There was yet another person on our team who tended to be the group’s excitement barometer. When she was in a good mood, everyone’s spirits lifted and when she was cross, most people wont answer even the most basic of questions. It was pretty surprising given that she had no one reporting to her, but she was the team mascot. With her we had to make her feel “involved” with the process and the decision.

For her I had to take a dramatically different approach. I knew if we communicated the pivot incorrectly, there would be a week of unproductive nonsense at the office. Done right, I knew we could get a superhuman effort from the team.

To involve her, we put her in charge gathering feedback from all our customers. She had to put together the survey, let customers know, collate the responses and then come up with her recommendations to communicate to the team. Worked like a charm. She suggested that we “pivot” but did not use that word.

As an entrepreneur, one of the big challenges you will face is hiring people. The next big challenge is to keep them motivated and focused.

Communicating differently to each of your direct reports is one way to do that effectively.