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#Seattle and #Bangalore: an Early Comparison of #Startup Cities

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Comparison of Startup Cities

I spent a good few weeks in Seattle meeting entrepreneurs, investors (VC’s and a few angels) and visiting local accelerators.

While, still early, I formed some opinions based on my interactions and impressions. I initially thought I’d make a very comprehensive post on the pros and cons of both cities, their entrepreneurial talent, their support for startups and their investor biases. I felt though, that I had not given myself enough time to understand the Seattle area, so I will look at the two startup hubs more objectively in this post.

My impression though right now is that Bangalore is WAY ahead in all metrics and by a wide margin.

I am not comparing the Indian ecosystem to the NorthWest, just Seattle to Bangalore.

There are 7 categories of data points I want to highlight.

1. Events, meetups, support groups and inclusiveness of entrepreneurs. Support for entrepreneurial success stories with startup media will also feature in this category.
2. Support for early stage (seed) funding with angel investors and accelerators
3. Ability for entrepreneurs to attract talent to their ventures – both availability of talent and their willingness to join early stage ventures, access to good local universities who can keep providing great talent for startups
4. Growth support with Venture capital
5. Availability of mentors – entrepreneurs who have been there, done that and later stage company CEO’s who can guide new entrepreneurs
6. Early adopters – small businesses, consumers and larger businesses who are willing to try and then pay for new products
7. The X-factor – things that attract smart folks to be here – quality of life, infrastructure, food options, night life, commute, weather, etc.

1. Events & Meetups. It is no secret that I attend many events. Most on the weekends – Hackathons, meetups, technical review sessions, show and tells. Anything that’s remotely entrepreneurial attracts my attention. From Design Day (hosted at the Accelerator) to Construkt and from NASSCOM Product conclave to The Fifth Elephant. I love meeting entrepreneurs and learning about technology of all forms.

In this area, Bangalore is way ahead by a mile, primarily because of the grassroots efforts by some . I am very impressed with Kiran Jonnalagadda and the Has Geek, Shubhendu and VentureSity, Prashant and the folks at Startup Saturday and the multiple daily events for startup entrepreneurs.

The Seattle ecosystem has its share of events, most are technical as well, with visiting folks from the Bay area and other locations meeting every week and many adhoc meetups for entrepreneurs both on the east side of Lake Washington and the West side (Seattle city).

Bangalore though, has over 54 hackathons each year and the Seattle area has fewer than 30. Seattle has Startup Weekend though, which does a great job locally. Bangalore just has way too many entities helping organize Hackathons.

Startup press in Bangalore used to be dominated by online publications like YourStory and Pluggd.In, but I see the Economic Times, Times of India, Business Standard, Live Mint and Financial Express increasingly doing at least 2-3 stories daily on startups.

Seattle has Geek Wire and a few local publications, but the number aside, (which would be less than 1/2 the total blogs and press in Bangalore), the ecosystem at the earliest stages is just small.

Since Seattle has a population of about 3.5 Million people, compared to 8.5 Million in Bangalore, it is expected to be much smaller. If you look at the technical talent, Seattle has around 500,000 folks in the tech area, compared to close to 1 – 1.5 Million in Bangalore.

2. Early stage funding. Talk to any entrepreneur in Seattle (I met with over 30 in 2 events) and the familiar concern you hear is – there are too few risk-takers, few early stage investors willing to fund pre-revenue companies and a dearth of high net worth investors in tech.

That’s the same story you hear in Bangalore as well, but there’s a huge difference. I am sure the entrepreneurs in Bangalore dont realize how good they have it here, until they look at other ecosystems (the familiar comparison is to Silicon Valley).

It is very surprising to hear that Seattle has few risk takers, since over 50,000 millionaires are in the Seattle area – ex-employees of Microsoft, Amazon, Isilon, F5 networks, Expedia, Starbucks, and others. The only challenge is that most of them are fairly conservative and have stayed away from investments in early stage startups.

Bangalore has about 10,000 $ millionaires in contrast from Infosys, Wipro, etc., but many more from old school businesses. They tend to be largely conservative as well.

If you look at the angel groups, Indian Angel Network and Bangalore Angels, although folks that move slowly and demand a lot of entrepreneurs, both in terms of milestones and % of the company, they do get deals done, and dont charge entrepreneurs to pitch their ideas.

In contrast of the 11 angel groups in Seattle, 8 of them seek payments between $200 to $800 to pitch, with no guarantees of funding.

The interesting thing is that having been in a few funding presentations at Bangalore, I get a sense that folks are interested in funding companies, but in Seattle I got a sense (from the 1 meeting that I attended, so take it with a grain of salt), that there was lots of skepticism.

The accelerator scene is pretty comparable. We have the Microsoft Accelerator, Kyron and the Target accelerators in Bangalore, and the Bootstrap center (J P Nagar) as well helps entrepreneurs. I went to 2 accelerators of the 3 in Seattle – TechStars Seattle, 9 Mile Labs and Eastside Accelerator.

I would still (I am biased) rate the type and maturity of entrepreneurs in Bangalore that come to the accelerator as higher than those in Seattle. I should do a more detailed fact based, data driven comparison on this later.

Finally the co-working space in Seattle run by We Work is awesome. I loved the space and its location is excellent. It is fairly central in the city and has easy access to investors, media and other potential partners as well.

Comparably The NASSCOM Warehouse with its one location is smaller and less fancy, but it has currently more startups than WeWork in Seattle. I know that the NASSCOM 10K program is looking to expand with another accelerator, and that will place Bangalore further ahead again.

3. Type and accessibility to talent. The talent pool in both places is fairly good, but both have their own challenges. Similar to Bangalore, most folks prefer to work for Amazon or Microsoft and any number of larger companies in Seattle and value their work-life balance.

Of the 17 entrepreneurs I spoke with, most of them claimed that getting talent from places outside Seattle was impossible, but I know most Bangalore entrepreneurs can easily attract great talent from Delhi, Mumbai and other cities in India.

In terms of educational institutions, the largest University in the Seattle area (UW – or Univ of Washington, uDub) is a hotbed of some great research in the areas of IoT, big data and other nano technologies. Bangalore does have IISc, IIM Bangalore and many (over 50) local great engineering colleges, but entrepreneurs still have a hard time recruiting talent for startups.

4. Venture Capital Scene: I had a chance to meet folks from Voyager Capital, Madrona and Silicon Valley Bank. Ingnition is another well known local venture capital firm in Seattle. The investors were smart, very plugged in and very keen to get Seattle up and running among top startup capitals in the world.

Local to Bangalore, I rate Sequoia, Accel, Kalaari and Helion higher than their Seattle counterparts. I know there are more VC’s in Bangalore including Nexus, SeedFund and Inventus, but they have a  larger presence in other cities where most of their partners are.

The investor community in Bangalore is a lot more accessible, and frequently is spotted at events, looking to meet and learn from entrepreneurs. Seattle entrepreneurs love their VC’s as well, but they have smaller teams for sure, so meeting them is rare and most likely in panels at local events.

5. Availability of Mentors: There are between 10-25 names of entrepreneurs and founders whose names kept popping up at my meetings in Seattle and the number of “well known” mentors and startup founders were the usual suspects after my 5th meeting. Local favorites include ICanHazCheeseBurger, SeoMOZ, Apptio and others.

The mentors (as expected) are very widely sought after and have very little time as well. They are mostly the role models for entrepreneurs in Seattle and so they are held in reasonable reverence.

In Bangalore as well, you will get the same 25-30 names, including folks a Flipkart, InMobi, and other successful entrepreneurs, but the depth here of the ecosystem and the diversity of activity is larger is my sense.

There is large abuse of the advisory relationship and there are many “fake” mentors, but there are enough awesome folks like Ravi Gururaj, Sharad Sharma, Sanjay Anandram and others who are willing and able to help.

6. Early Adopters. I did not have enough time to observe the consumer part of the early adopters, but I think both ecosystems need a lot of work in this area. While most Seattle folks have a smartphone and they probably adopt new technology sooner than Bangalore folks, I think the very early adopters in both communities are limited and far-and-few between.

7. X Factor elements: This is a tough one. Lets peel the layers a little. I am sure I will miss a few categories, but lets try anyway.

1. Climate: Bangalore wins by a wide margin. Except for 3 months of the year, it is sunny, cool and wonderful. Except for 3 months of the year Seattle is raining all the time.

2. Food, Nightlife and Entertainment: Cant say. I dont know actually. I am not a big Nightlife kind of person, so I could not say. Suffice to say that local attractions in Seattle are a LOT better than Bangalore. With its many parks, hiking trails, lakes, etc. it is an outdoor person’s paradise.

Bangalore has limited options for world cuisine compared to Seattle for sure. There are better attractions in the city of Seattle as well, with a great football club, a good basketball club and a decent soccer team. Bangalore has Royal Challengers and that’s pretty much it.

3. Infrastructure: Commutes are shorter in Seattle, Options for public transport are better and quality of life for most people is better than Bangalore. But the biggest challenge is Seattle is competing with Silicon Valley and New York / Boston and Bangalore competes with Delhi and Mumbai. Seattle cannot compete as well, but Bangalore is a much better attraction for folks who are not from this region.

So, there you have it. Comparing the two cities, I can confidently say the startup scene in Bangalore is at least 2-3 years ahead of Seattle.

Look at it another way: I believe Bangalore is about 10 years behind Silicon Valley (at the minimum) and Seattle is about 12-13 years behind, so practically speaking, we should not be comparing the two cities at all, because they are both way behind the leader by a wide margin.

I just wanted to do it because I got many questions from entrepreneurs from both locations wanting to know which city is further ahead.

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Creating Artificial Constraints as a Means to Innovation

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Artificial Constraints

Many of the entrepreneurs I know have created new innovative startups thanks to real constraints they had. For example, I was hearing AirBnB’s Brian Chesky, on the Corner Office podcast and he mentioned that when he and his cofounder were trying to get some money to get started and the only way to keep afloat was to “rent” their air bed they had in their room. That, then led to Air Bed and Breakfast, which is now AirBnB.

This was a real constraint they had – no money to “eat” so they had to make it happen somehow.

I have heard of many stories of innovation where in the protagonists had real constraints of either financial, technology, supply, demand, economic, social or any number of other characteristics.

The interesting story that I have also recently heard of how Facebook has “pivoted” from being a desktop offering to getting a significant part of their revenue from mobile is how they were given the arbitrary constraint of only accessing Facebook via the mobile phone.

So there are ways that you can create “artificial” constraints to force innovation to happen.

Most larger companies and some smaller ones as well, have to constantly find ways to create artificial constraints – to find a way to innovate and be more be a pioneer.

While some constraints are good – lack of funds at the early stage for example and lack of resources, there are entrepreneurs that are stymied by these constraints and those that will find  a way to seek a path to go forward.

I think this is a great way for you to think about innovating in a new space. If you have constraints, find a way to use it to your advantage.

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The Great Mobile App Migration of March 2020

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Mobile App Migration

Over the last few weeks as many in the world have been in lockdown, there has been a temporary “mobile app migration” happening. There are new apps downloaded and they replaced existing apps on the “home screen”.

While some of these apps are likely temporary use, for e.g. I have 6 “conferencing apps” – Zoom, Uber Conference, Webex, Google Hangouts, Blue Jeans and Goto Meeting. That is because of the many people I have conference calls with – each company seems to have chosen a different web conference solution.

Other apps seem like they will have staying power – Houseparty, for e.g. which has games, networking and video conferencing all built into one app to keep in touch with friends and relatives.

Houseparty

The apps that have moved away from my “home” screen, which I expect will come back once the crisis will be behind us include – Uber, Lyft and all the airline apps from Delta, Alaska and United.

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Perseverance with the Ability to Pivot on Data: 21 Traits We Look for in Entrepreneurs

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Perseverance with the Ability to Pivot

There are 5 key inflection points I have noticed which makes founders question their startup, to either make a call to continue working on their startup, pivot to a new problem or quit their startup altogether.

It is at these points that you really get to know the startup founder and their hunger and drive to be successful. I don’t think I can characterize those that choose to quit as “losers” or “quitters” because of many extraneous circumstances, but there is a lot of value that most investors see in entrepreneurs who face an uphill part of their journey to come out on the other side more confident and stronger.

These five inflection points are:

  1. When you have to get the first customers to use and pay for the product you have built after you have “shipped” an alpha / beta / first version. Entrepreneurs quit because they have not found the product-market-fit – because the customer don’t care about the product, there is no market need, or the product is really poorly built, or a host of other reasons.
  2. When you have to start to raise the first external round of financing from people you are not familiar with at all. Entrepreneurs quit because while it is hard to get customers and hire people, it is much more harder to get a smaller set of investors to part with their money, if you do not have “traction”, or “the right management team” or a “killer product”.
  3. When you have to push to break even (financially) and sustain the company to path of being self sufficient. Entrepreneurs quit at this stage because they have now the ability to do multiple things at the same time – grow revenues and manage costs, and many of them like to do one but realize it is hard to do that without affecting the other. So, rather than feel stuck they decide to quit.
  4. When you have to scale and grow faster that the competition – which might mean to hire faster, to get more customers, to drive more sales, or to completely rethink their problem statement and devise new ways to grow faster. Entrepreneurs quit at this point because they are consumed by the magnitude of the problem. They overassess the impact the competition will have on their company, give them too much credit or focus way too much on the competitors, thereby driving their company to the ground.
  5. At any point in the journey, when the founders lose the passion, vision or the drive to succeed. Entrepreneurs quit a these points because they have challenges with their co founder, they don’t agree with the direction they have to take, or encounter the “grass is greener on the other side” syndrome.

While I have observed many entrepreneurs at these stages at  discrete points in time, I have also had the opportunity to observe some entrepreneurs in the continuum, and I am going to give you my observations on 3 of the many folks I have known, who, have quit.

Perseverance separates great entrepreneurs from good ones
Perseverance separates great entrepreneurs from good ones

One went back to college to finish his MBA after getting a running business to a point of near breakeven, another found the business much harder than he originally thought he would and got a job at a larger company and the third was just unable to have the drive to go past 11 “no’s”‘ from angel investors.

Over the last 8 years, if I look at my deeper interactions with over 90 entrepreneurs, who I would have spent at least 100+ hours each, I would say that of the 24 people that are not longer in their startup, the one thing that stands out among the ones that persevere is that it is not “passion” or “vision” at all.

It is the inherent belief that they are solving a problem that they believe is their “calling”. They also don’t believe that there is any other problem that’s worth solving as much, even though there may be easier ways to make money.

So most of my questions of entrepreneurs to test whether they will pivot or quit are around why they want to solve this problem (which I am looking to see if they know enough about in the first place) versus any other one.

The answer to that question is the best indicator I have found to be the difference between the pivots, the leavers and the rest.

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