Category Archives: India

The 99-0.9-0.1 rule for Indian Startups

Jakob Nielsen is given credit for the 90-9-1 rule of Internet participation.

The “90–9–1″ version of this rule states that 1% of people create content, 9% edit or modify that content, and 90% view the content without contributing.

In the last 6 months, I have gotten 21 Indian web and mobile consumer applications data on visitors, engagement and contribution.

In India the numbers are closer to the 99%, 0.9% and 0.1% in terms of lurkers, participants and contributors of any consumer application.

This explains a lot of things, including the 2-speed nature of Indian market adoption.

Its not that we don’t have early adopters, its that most people (99%) are really laggard adopters.

The difference between 1% and 0.1% is dramatic for startups who need the early contributors to get the community going.

To give you an example. Lets take a mobile application which has 3 competitors in India. Each of the 3 products has been in the market for about 6 months and still they total about 140K total downloads.

In the 1% scenario they would total 1.4 Million downloads. This assumes 140M total Internet users for both mobile and web. In reality there are only about 50-80 Million real broadband users.

Is it cultural? I have heard many folks blame (yet again) our Indian culture & education system which values listening to others than voicing our opinions. I don’t quite agree with that though.

I don’t know why exactly we have only 0.1% of people contributing.

This however has dramatic implications for “traction” among startups.

If you are going to show traction and have between 20K to 50K users or downloads, then you should realize that the 99, 0.9 and 0.1 % rule applies again to your users.

Only 0.1% of those who download will actually be contributors (such as check-in to locations if you are Location based service).

So the engagement metrics will be consistent but woefully low compared to what our US counterparts are seeing.

Traction among Indian consumer startups is not really “traction” in other markets.

P.S. I am still trying to see if this is the same for ecommerce startups. I am hesitant to think it will be the same, but among new and smaller (lesser known) ecommerce companies, these numbers are in the range. However, among established companies, the US engagement (or purchase) numbers are probably more valid.

What’s getting funded by Indian seed investors? Winter 2012 edition

I am going to write some quick posts each quarter (let me know in the comments if it needs to be more frequent) on the patterns I am noticing on companies / ideas getting funded in the seed stage. These are particular to India, and are based on a) interactions with entrepreneurs b) discussions with investors (angels, angel networks and seed stage investors) and c) database of investments from all types of companies.

How can you use it? My first reaction is ignore it.

Businesses are built not with financing alone, but with passionate entrepreneurs and eager customers.

Then why am I writing it you ask?

This might help you position your company differently with investors if you are seeking funding. The same company focused on a B2B market vs. B2C market comes out looking dramatically different even though the core “idea” might be the same. If you are a company that’s in the “not getting funded right now” list, take heart, sometimes it may be good to swim against the tide.

So here’s what getting funded or moved along in the funding stages with investors.

1. SaaS companies focused on marketing & targeting the US market. The mega trend is Marketing automation is going to be a large market.

2. Payments & payment enablers that help reduce costs for eCommerce companies in India. The mega trend is reducing costs for over 60+ eCommerce companies that have been funded over the last 3 years.

3. Software companies that build apps to help consumers take control of their health. The mega trend is the slow ageing population the world over and especially the unhealthy lifestyles creeping into India as well.

So whats taking longer to get funding or getting passed quickly?

1. eCommerce companies for physical delivery of products or niche eCommerce companies. Most (or all) are running into strong headwinds in trying to raise their Series B.

2. Consumer Internet companies focused on the India market with limited downloads or traction.

3. All kinds of education software companies – there’s a general pause I hear from investors since they are trying to figure out where in the value chain of education will there be money made.

P.S. I would love to name companies as examples for each, but I get so much hate mail from company founders I have funded myself on why they dont want the “unwanted” attention to their companies or their fund raising efforts.

Always be an individual contributor as well

Most of the entrepreneurs I meet and share thoughts with, tend not to be engineers. Or at least not practicing developers, marketers, sales people or business development individuals. This is consistent with the anatomy of the Indian technology entrepreneur, who is typically male, between the ages of 29 and 40, has about 2-10+ years of experience and had been an individual contributor “several years ago”.

I read the quotes by multiple folks in the piece shelf life of an engineer in technology . They consistent theme is one of constant learning, which most of us are probably aware of. Ignore the age bias that’s blatantly obvious in the piece for a few minutes, which is what most of the 250+ comments are focused on.

Two things stand out: (1) Ferose’s quote on “I can’t be just a manager, I have to be technically hands-on.” and

Ravi “ In the first five years, the employee is a technical contributor. In the next five, he or she moves on to become a team leader or an architect , understanding the P&L (profit & loss) requirements of the company. Subsequently , the employee takes on much stronger leadership responsibilities”.

From what I have learned, there’ no choice but for every level of individual to be “hands-on” and play the role of an individual contributor as well at a startup.

If you are an engineer, you cant just be focused on hiring and managing your engineering team (however small or large it is). You have to pick up a few pieces of the puzzle and solve them yourself. Which might mean deploying, developing and shipping parts of your software.

If you are a marketer, then not copy writing or doing your own SEO, or running your ad campaigns is a disaster in the making.

If you are a sales person, and if you are not doing cold calls or opening new doors to customers each week, you will find it extremely hard to direct and motivate the team.

Most founders who come from larger companies have not been been doing any individual contributor roles for several years. So the reorientation is very hard on them. They find it hard to do things they did a few years ago and since in most every area the specifics have changed so dramatically over the last few years, the adjustments are hard.

The best way to do this is to keep 30% of your time each week to have a personal accomplishment.

What I have found is the the FIRST thing I do each Monday on my weekly to-do list is to identify one deliverable that I will work on to complete without anyone else’s help.

Over the last few weeks  it was working on website copy and mockups for the new design. Over the next few weeks it is cold calling multiple prospects for making some inroads for a few of our startups. The weeks of Dec 15-30 is mostly going to be spent on writing new pieces of our Borg’s UI using Twitter bootstrap (which is surprisingly easy to pickup).

So on your quest to be a leader and entrepreneur dont forget to be a doer as well.

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.

Why me? Or why every Indian startup founder thinks they are the only ones with “bad luck”?

Its very hard to explain to an entrepreneur why another company got funded and they did not.

Or why they might not, even though they have “many boxes checked”.

It might seem fairly random. Correction – it is probably fairly random.

Raise your hand if you have read a techcrunch post that mentions a startup that raised an obscene amount of money and after reading the post 3 times you are still not sure why they got that much money?

Raise your other hand if you have read about a startup in the US Silicon Valley that is working on “pretty much” the “same idea” as your company is and you are schlepping code for 18 months and they have 45K daily users in less than 6 months (and funding to boot).

Now clap both your hands above your head. <Whatever>.

Most Indian entrepreneurs (in the technology space) consider themselves fairly unlucky.

They are baffled that Indian angel investors ask for revenue and monetization plans when the company is 3-6 months old.

The only comfort I have to offer is that its the same deal outside the valley.

Ask the Boston entrepreneur, or the New York entrepreneur. They also claim that companies there “suffocate” because the local investor ecosystem is fairly risk averse.

The second piece of knowledge I will share is that for every techcrunch post that mentions a funding for a startup, there are at least 25 failed funding stories that do not get published in the same space and general “idea”.

What then separates the funded versus the ones that did not get funded?

This is the point in the discussion when the entrepreneur blames their “luck”.

There are a few things I’d say that are easy to spot among the funded companies versus ones that dont get funding in the same “space”.

1. They usually tell a story dramatically different from that mentioned on TechCrunch or Pluggd.In or any other startup blog. The story the media publishes about dropbox is file sync across multiple devices. The story the VC’s bought is document virtualization.

“That’s just positioning” is your claim. I agree. It is. Storytelling is an art. Learn it well.

2. The founders are very credible, have a lot of background in the space and understand their customers / users very well.

3. They product shows the most amount of traction in the shortest period of time.

Thanks to angel list you can now target and get funded by Silicon Valley investors in India. If you have the same 3 elements – credibility, a great story and traction, you dont need to depend on luck any more.

One person can change the world – How Dave McClure being in US is disrupting Indian early stage investing

Last week over dinner with 4 top Venture Capitalists in India, the thoughts turned to early stage funding in India. As most entrepreneurs will tell you, seed stage investments in India are hit or miss. Entrepreneurs struggle to get angel and seed stage investors to move quickly. Most AA rounds take 3-4 months to close. Early stage (Series A) takes 6 months. There are angel networks that take longer.

I have been privy to several discussions that entrepreneurs have with their investors and its hard to help them close faster because many Indian angel networks and investors believe they want risk-free investments.

That all is about to change to a large extent.

The VC’s initially told me they were thrilled Dave was making these $50-$100K bets in Indian companies, since it gives them a bigger pool of good startups to fund.

Little do they know that most of the Indian entrepreneurs have different ideas.

Over the last week 500 has announced over 10 investments in the India (in less than 6 months), have hired Pankaj Jain full time to invest in Indian entrepreneurs and have publicly declared their intent to invest in 50 startups in 2013.

Just so we can all understand the magnitude of this commitment:

In all of 2011 angel and early stage investments went to 52 companies in India in the technology sector.

500 will match that in less than 1 year and will possibly do more than all other “angel networks” and individual angel investors in India – COMBINED.

I have talked to all the 19 company founders, who have received money from 500, yCombinator, TechStars, Startup Chile.

They have no intent to come to Indian VC’s to raise their series A.

They have access to US investors who move quickly, respect their time and are willing to make decisions with very little information.

Does that mean Indian VC’s are done for?

No.

It means a big chunk of the best and brightest who want to build global, scale-ready and capital efficient companies in Cloud, SaaS, Mobile and consumer Internet will go abroad and get money from investors in the US.

And Boom – just like that, Dave, Paul and Pankaj have changed the equation for Indian startups.

Sitting largely in the US.

Yes, that Pankaj is in Delhi is not lost on me.

One person can change the world – Believe you can do it and get it done.

Should we aim for quantity or quality in Indian startups?

I had a very good discussion with 2 folks over the last week about the current state of technology entrepreneurship in India. The rough estimates from multiple sources indicate a varied number from 250 (low estimate) to 1000 (high estimate) technology product startups each year in India. Compared to that, the US produces tens of thousands and even Israel beats India by having 3-4 times that number.

There are a few folks in the ecosystem that suggest that we should focus on fewer but better quality startups in the technology space. They have some strong points in their argument which include a) the total amount of funding available in the system will only support 50-100 companies annually b) if more companies were to be started, more will fail, which will deter more folks from becoming entrepreneurs and c) there are not too many experienced entrepreneurs & seasoned executives who can tackle issues of scale yet.

I fall on the other camp and my focus is to get more people to buy into the religion. I agree with the premise that most startups fail and that’s the nature of the beast. That has not changed much (or at all) with the number of accelerators or incubators in the last few years. Startups die for multiple reasons and many of them are not easy to fix.

The main reason I think we should focus on quantity first is so we can increase the pool of risk-takers in India. Entrepreneurs take the most amount of risk in the ecosystem. We need more of them, in fact more than the system can really handle. So how do we address the arguments from the “Quality first” side?

1. Most product entrepreneurs I meet in India (I meet a new batch of 5 EVERY week) dont really want to build a company to exit. They would prefer to build strong profitable companies and run time for a long time. They do need some funding initially when they are ready to test a few of their hypothesis. Many build products that take a few pivots to get right and most operate in markets that take long to mature. So what if the ecosystem can only support 50-100 currently? We should be able to find ways to get the not so successful ones to pick up, dust-off and get on the horse again. The other point I make that we really have a lot of money sitting on the sidelines in India, with a fairly immature angel investment ecosystem. Each week I meet one new person interested in investing in technology companies, usually a technology executive at a large software company like Microsoft, SAP or VMware. They are enough to get our entrepreneurs started and build good companies.

2. If the percentage of startups that succeed is fairly constant, then the argument for more startups is even stronger. If we increase the pool of startups and the failure rate is still a constant, we should get more successful startups. The failure rate has not dramatically increased or decreased over the last 5 years, so if we have 2000 startups and a 99% failure rate we will still have 20 successes vs. 250 startups and 95% failure rate.

3. The best way to have “serial” entrepreneurs is to have more people go through the experience once. Regardless of whether they failed at their first startup, the success rate of a repeat entrepreneur is dramatically higher. They are more experienced, seasoned and more willing to understand the importance of persistence.

I believe that we need more, not less technology startups overall to help our ecosystem grow dramatically.

What I learned in my first month of running a startup accelerator

I have been the CEO of the Microsoft Accelerator for the past month. There are 11 companies as part of the batch and it has been an exciting ride. One of the things I focused on is trying to make the program a lot more structured than YCombinator and modeled it around a finishing school that I always wanted. Here are the top things I learned.

1. Dont try to change an entrepreneur’s idea. They have to come up with something they like themselves. This seems fairly trivial. There are many incubators and seed funds that believe if you dont have an idea, but are great entrepreneur material, they will “give you ideas”. That rarely works. Entrepreneurs have ownership and pride only for things they believe “they came up with on their own”. Anything borrowed (even if its a clone or knock-off idea from a US startup) is theirs. They will put more wood behind their idea than anything you ever propose.

2. Indian entrepreneurs have varied expectations from accelerators. One entrepreneur wanted “execution” help in actually doing the design (preferably a full time designer and user experience person for a few weeks to do it) and another wanted better quality food at the cafeteria. Some think the biggest value proposition of an accelerator is the “quality of the space” (i.e the physical location), while another thought the value was the other startups who would egg them to get better.

3. Regardless of what you offer, there’s always someone offering more or better, which I think is the “grass is greener on the other side syndrome”. If I had a penny for every time someone said “I have heard YCombinator founders get XYZ” or “500 startups gives more ABC”, I’d have enough money to fund all the startups for a year.

4. Indian companies need a lot more user experience and design help than any US company. I have invested in over 20+ companies in the US and about 11 here in India. Its extremely hard to find good user experience talent in India. This is a different person from someone that just does Photoshop and illustration. We interviewed 23 “highly recommended” designers and user experience professionals in India. Most were average and were still charging rates from $20 / hour to $100 / hour. No negotiation.

5. The Go-to-market challenge is largely under-appreciated in India among founders. Many need more help here than any other area, but tend to relegate the problem to “lets hire someone to do that”. Unless one founder is deeply involved in the customer development process, we largely build technology for the sake of it.

Startups and mentors: How to look for a great marketing mentor? & A list of top marketing mentors in India

After the first post on technology mentors in India, the next person who can help the most as a mentor to startups < 2 years old is someone that can help with product & customer knowledge (or understanding user / customer behavior if its a consumer startup).

There are 3 primary categories of “marketing” mentors I’d recommend you think about. You dont need them all, just be clear who you need for what kind of mentorship.

Product mentors are people who can distill what customers would need and say into what you need to build in your product. There’s a big difference between a product manager and a business analyst. The latter, typically found in many Indian services companies, tries to give the customer exactly what they want, and end up building largely a custom piece of work for that client. Product experts on the other hand, observe customers, ask them tough questions and direct the technology team to build what the customer really wants.

Sales mentors are people carrying a quota (target). They are pounding the street or directing teams that are selling every day. They understand targets, compensation, lead nurturing, managing deals and sales opportunities. There are many types of sales people but largely they are either “farmers” or “hunters”. Farmers end up expanding your current opportunity and Hunters get new business from new clients. They both have their place. Mostly, I have found sales people dont make very good mentors because they are largely unavailable, but there are a few good guys around. Ideally they would help you understand and grow your sales team from “CEO is the sales guy” to building a repeatable, growth-oriented team.

Marketing mentors would help you with positioning, building awareness, lead generation and digital marketing. They can typically help you at the stage when you need to launch (largely after product-market-fit). Most marketing people tend to talk lots and do little, so if you get someone that can give you practical tips on how to build your funnel and grow your customer base by spending as little money as possible, then you have the right person.

The question usually is why do you need so many mentors. The answer is you dont. It all depends on the team you have and if they need advice, help and mentorship. I have seen startups with 5 mentors and many with none. Most have 2-3 mentors to complement the team. You can get as much value from mentors as much time you put into the relationship. I typically recommend most entrepreneurs to setup 1 hour every other week during the initial days (<6 months) and then 1 hour every month and finally 1-2 hours every other month.

Some recommended Product mentors:

1. Amit Somani (Make my trip)

2.  Varun Shoor (Kayako)

3. Vijay Anand (The Startup Center)

4. Girish Mathrubootham (Fresh Desk)

5. Sridhar Ranganathan (InMobi)

6. Amit Gupta (InMobi)

8. Preetham VV (InMobi)

9. Dhimant Parekh (Hoopos)

Some recommended Sales mentors:

1. Madhu Lakshmanan (ex Photon)

2. Abhay Singhal (Inmobi)

Some recommended Marketing / Online customer acquisition mentors:

1. Pankaj Jain (Startup Weekend)

2. Ravi Vora (Flipkart)

3. Karthik Srinivasan (Flipkart)

4. Sanjeev Gadre (Consultant)

Early access: Quick review of BoxTV.COM

A good friend Abhishek from Tlabs gave me a preview access 2 weeks ago to BoxTv.com. Its dubbed as “Hulu for India”.

I am not a big TV or movie watcher (We dont have a TV at home, have not had it for many years now), so take this review with a grain (or more) of salt. I have only watched 1-2 partial movies. They dont have any TV shows yet.

The top things I liked:

1. Content selection (especially Hindi and English) is excellent. There are hundreds of movies that I have not seen at all (again that’s not saying much). The old hindi movie selection is particularly good.

2. Streaming is instantaneous and quick. The overall experience was pretty good and there were no glitches. I did have a problem the first time I logged in, post which there have been no bumps.

3. Connecting with facebook allows me to see other movies my friends watch, which was interesting, but not very useful. I realize I dont watch enough movies and TV to even know which of my friends have similar likes and interests.

4. Very easy to skip to certain parts of the movie quickly. Yes, I only watch the songs and skip most of the movie (grin)

5. Below each movie page there are important clips (between 2 and 3 min each) which are like the highlights reel. Loved that feature the most.

BoxTV.com

BoxTV.com

Things I did not like:

1. No support for mobile phone. Most of my work is now on my phone. Its a fairly large screen device, so I am not using my notebook for much. Since BoxTV is based on flash, support for mobile phones is non existent.

2. No sports and limited content for kids. If there was ever a reason to watch TV I’d buy it for NFL, tennis and cricket. Everything else is a waste of time at our home. Kids love many of the cartoon shows, and there were very few of them on BoxTV.

3. The filters dont work too well. If all I wanted to see was the list of latest movies, it shows me a bunch of clips (scenes) instead. What I thought it would show me is a list of the top recent movies.

4. Not enough integration with movie reviews. I’d love to find out from IMDB or rottentomatoes, which movies I should watch based on the popular list.

5. Not easy to search by actor / actress, etc. I tend to watch primarily by who’s in the movie, so this was still “in the works”.

Have you used Boxtv? What did you think?