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.

#Biotech park in Bangalore

Quick note. I was invited to the Biotech park launch in Bangalore yesterday. This is a 56 acre piece of land to help Biotech startups in Bangalore. There is significant money being spent by both the state and central governments (approx $8 Million) to help startups in Bangalore.

The talent pool from BioGen, NCBS, Instem and others in Bangalore is large enough to support 20-30 startups each year is the thinking in Bangalore.

The space walk through was a 3D video. It was really cool. Loved it. Photos coming soon.

The #Kolkata startup ecosystem as seen through the eyes of #tiecon 2014

I had the opportunity to visit Kolkata and judge the #TieCon Kolkata startup pitches last month. As a background, I have been visiting Kolkata for the last 5 years, every year, during January, for various entrepreneur events, at times running a day long workshop on Sales and other times trying to motivate promising startups to apply to the Microsoft Ventures accelerator.

The Kolkata startup ecosystem gets largely ignored since larger and younger cities are making the right moves, quicker, but there are some very interesting companies that come from the city and the greater part of Eastern India. One of our accelerator companies, TookiTaki, is from Kolkata as well.

The city has a very vibrant ad-tech, marketing technology and digital agency market. Over 20 digital agencies and technology companies are based in Kolkata and some of them are doing over $5 Million in revenue each year for the last 5 years. A strong creative, design and literary talent pool contributes to the local startup scene. Check out IndusNet, A1 Future technology, Exactlly and Arun Agarwal for more about the local ecosystem.

The TIECon Kolkata, though surprised me with its turnout. To give you some context, most entrepreneur events in Kolkata, over the last few years, have featured about 80 to 100 attendees. This conference had over 550 paid registrations and nearly 100+ volunteers. I think it is time to start taking them a little more seriously than before. While I did not get the deep technology companies there, I got many interesting companies that investors might want to take a closer look.

The TIECon event had a startup pitch session the day before the event and there were 15 companies shortlisted of about 50 applicants. About half of them were not technology companies with the likes of a speech and hearing clinic, a aloe vera lotion and beauty company and also a women’s high street fashion company, Miss Chase,  founded by Ananya, who previously founded SoSasta (sold to GroupOn a few years ago).

Here were the most interesting companies you should look out for in the next few years, in no particular order.

1. Betaglide: The winner of the IIT KGP startup pitch, this company is fairly similar to Little eye labs, which was acquired by facebook recently. They provide mobile app developers analytics and data from their users and their usage to help get your mobile app ready beyond beta. Good team, little early traction, but I think they need more time to get their product to MVP.

2. FlyMyFood: An interesting eCommerce company, which has already reached INR 20K in revenue per day after 2 months in business. They offer delectable food from various locations – think Hyderabadi biryani from Paradise Food Court and fruit biscuit from Karachi bakery, from the comfort of your home, the same day. Since they feature top brands from various cities, those brands that have a following will help them grow, but this company is a logistics nightmare. Interesting to see if they end up focusing on snacks instead of lunch / dinner though, which was my suggestion.

3. KarmYog: They help bring education to the masses with music, arts and media. They have a partnership with Indian Idol and others as well, to help students and older adults learn via music and arts. Interesting idea, but still a long way to go to prove there’s a business here.

4. Zostel: They are a hostel for backpackers. They have 2 locations in Jaipur and Jodhpur where you can get dorm style rooms for young backpackers who want to travel on a budget. Overnight stay begins at INR 400 per day, for which you get a bed and breakfast with a cool eclectic ambiance and decor. This was too much of an “offline” company for me to get interested, but there are 7 founders from IIM Cal who have all committed to this venture.

5. Quikvisor: Think of this like Uber, but for doctors. If you are in need of a general physician referral or need a pediatrician quickly you go to this mobile app and based on your insurance, location, etc. they will connect you with a consulting physician for $X / 15 minutes, using facetime, instead of a physical appointment. Interesting idea, focused on the US market, but I think the market is possibly bigger for a second opinion platform, than a referral.

6. Chitkara University: Blind-assist glove. This was the most intriguing. This student startup makes a glove (hand glove) which has multiple sensors that helps the blind, using haptic technology to provide sensor based information on whether they are coming close to a stair, are the stairs going up or down, if there is movement around them, etc. The sensors (5, one for each finger) are connected to an Ardunino platform, which is their primary processing engine as well. I saw a video demo, of the product, not a live one and if the video does half as much as the entrepreneur says it does, this one will be a clear winner.

7. SakRobotix: They offer online education and kits to help students and young kids learn to build robots. Not a company that will possibly scale, but I LOVE anyone that teaches something meaningful to young minds to help them appreciate technology.

Overall, I loved being in Kolkata, primarily because I have many good friends there. They are the most hospitable people and they love it when anyone from other ecosystems comes there to meet and learn from their startups. As an added bonus I had a traditional breakfast at my friend Abhishek Rungta‘s home. If you ever go to Kolkata, and want to meet startups give him a holler.

The InMobi #freedomhack had 200+ registrations and some amazing ideas

On Sunday I had an opportunity to judge the InMobi #freedomhack. Mohit Saxena, who cofounded InMobi, invited me to be a part of the event which attracted over 200 teams to hack for Aaron Swartz.

I think they had not anticipated such a large crowd to show up, so only 47 teams were chosen among the 200+ teams that submitted their hack ideas.

As an aside, I love hackathons. There’s something about a) hanging out with developers, b) hearing some really raw interesting ideas and c) building something from scratch that makes me happy.

I only had about 2 hours to be there since I had to go to judge another hackathon, but here are 7 ideas that I enjoyed learning about. I wish these hacks would go on to become some very interesting products. These were not the “winners”, but are the ones that I liked the most. In no particular order, here they are:

1. Socket_Timeout: This idea involved an integration with your calendar to look for “downtimes”, during key long weekends, etc. and suggest trips that you can take. It will then curate the best pictures from Flickr and Instagram in the key locations and “motivate” you to go there. They also help you with the entire planning (when to book tickets, when to book hotel, etc.) by looking, at your calendar for periods of “downtime” to help you get these tasks done.

2. WiseViz. There’s loads of data and many ways to represent the data with charts and graphs. Folks like me though, never know what the best way to show some piece of data is. This app will integrate with your data source and suggest the best way to visualize that data.

3. Lazy: Email platform with an appstore. Email products such as Gmail and Outlook have extensions and add-ins, but imagine an very simple email client (web or mobile) which has an appstore where you can add any number of “apps” as you please. If you dont like the “compose” feature that comes standard, you can choose from any number of “compose apps”. Another e.g. If FedEx sends you an email saying here is your tracking number and a link to their website, their app, instead, can directly show you the status of our package without you leaving your email client or clicking on the URL. I love the concept of email app store actually.

4. Miners: All Street Journal curates news and assigns latitude and longitude to each of them (where possible) to help you get a sense of what’s happening where. A map interface shows all the news (instead of a stream of news, which is currently the norm) with pins to show you the “hyper” location of the news. You can have filters such as crime news and create a heatmap of where specific categories of news are more prevalent. Great view of hyperlocal news.

5. Alpha-Devs: A mobile app, which will check the status of the person you are trying to call (who you have to know and connect with in the app), and suggest the best time to call based on their calendar, status message, location, etc.

6. Xteenz Hack: A hackathon voting app. It allows you to review all the hack abstracts and upvote / downvote ideas submitted and continue to refine half-baked ideas.

7. Finzo: a Peer-to-peer bitttorrent-enabled device that takes all the “free” data on the web – Khan Academy and Wikipedia for example and makes them available offline for people in rural / remote areas without constant Internet access.

The top 3 winners for the #freedom hack were – Power Train - a hyper local security for women / children app, Loners - allows you to connect with other lonely people near you to play games or chat online and Miners.

P.S. If you get a chance to go visit the InMobi offices, you should. They have the coolest office I have seen in Bangalore by a wide margin. Photos of the space on Facebook.

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.