Ask most people who they think is innovative, they will likely name Apple, Amazon or Google. Some many even mention Facebook.
True innovations though have been coming from industries outside of technology for years. In the area of healthcare, medicine, drug delivery, education and mining for example, creating great outcomes to help improve the lives of humans.
The credit card for example is one of the innovations I value the most. Not having to carry cash and yet pay for practically anything and “actually” pay for it many days later. What’s not to like? Very innovative.
There are a few observations about innovation that I wanted to put forth.
First, most innovative ideas which have a lot of impact rarely seem to be so early on. I still remember many years ago when a friend, Mike Walsh mentioned Uber to me and I did not think it was very innovative. I actually thought it was an app for taxi drivers to get fares. Turns out it is an innovative way to avoid car ownership.
Second, you need help from many others to bring your innovation to the market. Almost always those people who you need help from are pretty busy or very tied up, so they will likely not have time to give you. Being persistent, taking any chance you get and keeping at it helps.
Finally being disciplined and meeting people from other backgrounds and experiences helps a lot. Getting ideas that worked in other fields and trying to solve problems you have with a different perspective helps make your idea stronger and more innovative.
I heard about Innofest from my friends Sharad and Avinash this week. The 1 day un-conference is an event to be held in 2 weeks (22nd Aug) at IISc Bangalore.
The event is an un-conference so you will have a chance to meet with folks and discuss ideas instead of just listening and leaning back to hear “speakers” talk. Also, the part that’s most useful is that you will get 10 min to talk to the awesome lineup of speakers – people like Alok from Saif partners and Bhavish from Ola Cabs among others. These folks have been through it before and will be there to help guide you through your problems and formulating your idea.
I think if I were in Bangalore, this would be a must attend event. #IndiaCanInnovate
Yesterday I met an entrepreneur who has built his company in a suburb of Seattle, completely bootstrapped and without any outside investors. He is growing 30% YoY and the most amazing thing he taught me was that he gets all his questions answered on Quora.
This led me to take another look at Quora to understand where any entrepreneur could use it. Turns out there are a lot of use cases. Most people use it to get specific questions answered, but I know that Jason from Storm ventures has used it to build the SaasTr brand, another entrepreneur uses it for lead generation, etc.
One of the first places I got to these days to get an understanding of any market is Quora. It turns out many of the questions, competitive information and relevant market numbers are largely available on the Q&A site.
In fact here is a list of things you can use Quora for, but it is such a good waste of time as well, so I still recommend you Google your question and get to Quora than search Quora alone. When you do get to your question, browsing relevant questions within that topic are really valuable.
1. To understand what problems need to be solved that people face
2. To validate key features that are needed.
3. To understand competitive products
4. To learn about the key influencers in the space.
5. To keep up to date with strategies for growth hacking
6. To look for new people to hire (especially non developers)
In 2008 (before Angel List) there were roughly 1000 technology startups in India starting each year. of these about 50+ got funded by VC each year according to Thomson Reuters.
The percentage of services (consulting, IT enabled services, BPO, outsourcing) companies was about 29% – those that started and 33% of those that got funded.
The number of eCommerce companies was about 3% of the total.
Fast forward to 2014 and those number of companies starting at 22% of the total for services and 5% of the total for eCommerce.
The structural changes of the services companies have changed as well. We have gone from 8% of the companies in IT Services to 5% from 2008 to 2014.
While Thomson Reuters does not break out the data, anecdotal evidence suggest that there are a lot more digital marketing & design outsourcing companies now than before.
The number of eCommerce companies has been steadily increasing as a % of companies started, but has increased significantly as a % of funded companies and a % of total funding.
The only other category, which has grown (for which I dont have a breakout again) is software as a service (SaaS).
Over the last 7 years, the number of Micro Venture Capital firms has also grown. We have gone from none in 2008 to 5 in 2014, and I think we will end up at about 10 Micro Venture Capital firms (those that have less than $25 Million in capital to invest) in 2015. These include Angel Prime, Oris, India Innovation Fund, Blume Ventures, and others.
I have talked to about 5-10 angel investors and industry veterans who are all looking to start their own Micro VC, seed fund and combination accelerator or incubator in India over the last 3-4 months.
In 2008, the average amount of time it took to raise a fund (regardless of size) was about 9 – 12 months. That number is lower for Micro VC funds, obviously, but we have no way to know how long it would have taken.
In 2011 of the 3 funds that raised, the average was about 7 months.
This year, I am hearing funds that are < $25 Million close their raise in less than 4 months.
That means the time taken to raise their fund has dropped. It is easier for fund managers to raise their capital, they can do it in shorter periods of time and they can raise more than they initially desired.
The challenge for the fund managers seems to be no longer raising capital, but efficiently deploying it.
The gold standard for VC investing has been proprietary deal flow (startups that come to the investor for funding exclusively and go to no other investors). That’s becoming harder for all VC’s now.
If the number of companies starting up has grown significantly (as from the graph above) and the % of non services companies have grown as well, then there is a real democratization of founding startups.
So the problem has now moved to sourcing, building a brand for your Micro VC firm and convincing entrepreneurs that you are the “smartest” capital available.
The challenge for Micro Venture firms with no brand visibility or “magnet” founders is that their deal flow is largely limited.
From our own data, I can confidently tell you the “best” deals are usually referrals, but 3 in every 5 companies we get into our program are non referrals. Speaking to Accel and Helion last week, I confirmed that 25% of their funded opportunities were cold (unsolicited).
So while the Micro VC fund manager may have a decent network, their biggest challenge is going to be that they will not be able to attract at least a quarter of deals which come because of having a good brand in the startup ecosystem.
The problem for a lot of the Micro VC’s is going to be that they have poor quality deal flow or deal flow that’s not proprietary.
While they will still go to many events, and review Angel List startups, I suspect they will have a tougher time getting good quality companies to apply.
The bottom line is that now it is as hard for the investors to get good companies as it is for the entrepreneurs to get good investors.
“Every morning in Africa, a gazelle wakes up, it knows it must outrun the fastest lion or it will be killed. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It doesn’t matter whether you’re the lion or a gazelle-when the sun comes up, you’d better be running.”
― Christopher McDougall, Born to Run: A Hidden Tribe, Superathletes, and the Greatest Race the World Has Never Seen
I was on the jury panel at the Angel Hack event over the weekend with others. Over 150 attendees were at the event, and 50+ hacks were presented on the final day (Sunday). They ranged from the sublime to the trivial. The best part was there were attendees from over 10 different cities including a few that came from over 1000 kms away. Each team was given 2 minutes to present their hack and 1 min to answer questions.
The first thing that struck me was most of the attendees were awake to present their hacks. In previous hackathons most of the presenters have been rather tired or sleepy so they tended to gloss over their work.
This is the 5th hackathon I have judged and I dont think I have a clear idea on what the criteria should be to judge a hackathon.
This time the winner was a product that’s been in the works for a few months, and the developers made some changes / modifications to their product over the weekend. So, really it was not a “new” hack over the weekend, but something they have been working on for a while. The runners up (not announced) was a company that’s been in the works for a while. They were well thought-out ideas, fleshed-out products and good implementations.
That obviously ticked off a few developers who had built a new hack from scratch over the weekend (and it showed that their idea was a one weekend project), and I got 3-4 angry emails on why we chose to declare the mature product as a winner.
Did we know that the winners were “mature” and not “weekend hacks”? – we did and did not. Did, because we could make out that the products were well thought out, which is hard to do in one weekend. Did not, because we were not told that we had to only look at weekend hacks.
So what does a weekend hackathon really accomplish?
I think it provides an ability for developers to learn something new, try an idea and experiment. That’s it. Globally, according to Startup Weekend, fewer than 2% of these weekend hacks actually turn into a company, but many (dont know the %) of the developers get hired because of these events, many ideas are added to an existing product and many products are enhanced post the hackathon.
There will always be folks that keep working on their idea over several hackathons so their ideas will mature quite a bit and so will their products. The good part of this hackathon was I did not see a single team that had presented the product / idea before at any of the other hackathons. There were many rehashed ideas, but largely new teams.
I think the top 3 criteria for judging hackathons should be a) how unique & interesting is the idea given the constraints of the hackathon, b) how close to “product” has the hack been over the weekend and c) how creative have the developers been in their implementation
I think the key thing that hackathon organizers should do is to form a jury of 3 hackers / developers and maybe 1-2 other folks from the startup world (VC’s or generalists like me).
Our panel on Sunday was comprised of 1 designer and 1 developer. The rest were generalists (3). So it was obvious that we were going to be biased and look for how “big” the idea was, how well thought out the implementation was etc. If the goal of the hackathon was to look to turn weekend ideas into startups, then an even mix of generalists and hackers as jury members would make sense, else they should be weighted towards developers as jury panelists.
Do you think we should even have generalists as jury members? I think that 1 might be sufficient for most parts, but if they are not developers, what’s the point of having them on the jury?
Most everyone believes that startup growth happens in step functions. You work for ages on something and it seems like there is little progress, but as an entrepreneur you are plugging away at it and suddenly one day, the growth is dramatic. Then it plateaus for a while and grows again. That’s the same for startup ecosystems is my opinion (not researched).
I am starting to see the next step function of growth in the Indian technology startup scene. There are a lot of people (entrepreneurs, investors, etc.) contributing to this growth and its hard to point to why it happened except in hindsight.
First, what metrics should we track so we can really know if there’s a step function or no progress?
Yesterday in partnership with NextBigWhat they organized the first of several #startuproots event.
A big part of that event was the #sharktank, which had 4 companies out of 200 that applied, that were going to pitch to investors and they had to make a decision on the spot.
For those of you who are not familiar with the sharktank format, the startups get 5-10 minutes to pitch, the investors get 5-10 min to ask questions and 2-5 min to make an offer. The entrepreneurs can then take some time to make their decision and then make a counter offer.
All offers are binding, save for legal and financial due diligence. Which means if and investor gets cold feet later, they cannot back out.
Yesterday, 4 companies presented. I had heard about 2 of those companies before (but did not know they were chosen) and the other two companies were fresh and new.
There were 8 investors who were part of the sharktank, but only 6 were serious. The other 2 seemed more there to critique and provide theoretical knowledge about startups.
Pankaj Jain from 500 startups, Ravi Gururaj from HBS, Ranjan Anandan from Google, Anirudh Suri from India Internet Fund and RK Shah from HBS were on the investors side.
Tookitaki (ad-tech space), Moojic (retail music hardware), Credii (Mid-market IT decision support) and Lumos (solar panels for backpacks to charge your phone), were the presenting companies.
All four got funded at the end of the event. I personally thought 2 of them would definitely get funded, but all 4 getting offers was truly a step function change.
I was personally pleased that Lumos got funded. They are doing something new and innovative that most Indian entrepreneurs wont do – Working on a non-software, difficult to scale hardware business, because of their passion.
I have to call out a special mention to RK Shah. RK is not a technology entrepreneur, (he runs a textile unit) neither is he a professional institutional investor. He wrote 2 checks himself yesterday. We need more RK Shah’s in India.
Finally big kudos to Jaivir, Brijesh and the rest of the NASSCOM 10K startup team. In less than 1 week, they got 850 signups for the event, and 500+ people attending.
Most every day I get 2-3 requests to review companies for investment in the seed stage as an individual investor. Since I keep a fairly open network on both LinkedIn and Twitter, I get many folks sending me an email to review their plans. While I do read all of their emails, and send them a response, only 1 in 10 get me to open their plans.
It tends to be fairly easy to decided not to pursue based on their description of the problem or their background. Although I have put my criteria for investment on my blog, rarely do people read it.
I do send a quick email to everyone of the people who I dont intend to invest in with a short 1-2 sentence reason. Either its because I dont like the market, the idea or dont believe it will work.
I used to be brutually honest initially (a few years ago) and have mellowed down over the last year. These days if I say I dont have time, it really is the truth. Its not because I dont like the plan or the entrepreneur or the idea. Its just because I dont have the time to evaluate the company.
The main reason I mellowed down was the feedback I heard from many entrepreneurs who had not developed a thick skin that my response was really disheartening and counter productive.
I read today, Paul Graham’s piece on VC boilerplate that Harj Taggar wrote and was amused initially, but the reality is most entrepreneurs prefer to read emails from investors that have some boiler plate stuff rather than the honest truth. I mention most, not all.
Its hard to find know which entrepreneurs prefer the straight up honest truth versus the ones that prefer to get a pat on the back with some encouragement to keep going.
Practically speaking the email from Harj, has 25 sentences too many. If all the email said was “it’s currently a little early for us to step in here.”, that would suffice. If there was more detail, i.e. the number of users, or too few customers, etc. it might help, but really it rarely does.
Primarily because you get into a shouting match about why the entrepreneur thinks you should be investing at this stage and why you are not an “angel investor” if you wait longer or that you (as an investor) are very risk averse. See comments on my post earlier on what you should have ready before you approach me to get a sense for that.
I invest in very few deals every year (most likely 2) and so do most VC’s. Like most of us we are all pressed for time. Short email responses with quick no should help, but realistically most entrepreneurs dont like that.
About 407 technology companies were started in 2012, which was a decrease of 19% from 2011. For 2013 we expect the number to increase
thanks to many startup accelerators, going to about 460+ startups.
The most number of new companies will be in mobile applications, cloud computing, software as a service, and education. Since many ecommerce infrastructure companies in payments, logistics and distribution were formed and funded, I expect a second coming of e-commerce only in 2015.
There are three major trends that are shaping the startup world. First, lower costs of tablet computers, causing rapid adoption. Second, dramatically lower 3G prices and rapid WiFi rollout, allowing most tablets to enable cloud computing. Finally, lower costs of simple biomechanical arms will see early signs of consumer robotics companies.
More than rapid adoption of smartphones, the tablet adoption will help bring disruptive changes to entertainment, education and communication in the next year. The upcoming general election in 2014 will ensure that the ruling political party will give free tablets to each low-income family that has at least one child. The primary use of this device initially will be for education and communication, but will quickly replace the television as the entertainment device of choice for the younger generation. We will see many startups provide education content and many crowd-sourced applications for test preparation.
While 4G and LTE networks might surface in India by 2013, 3G prices will lower sharply and many carriers will offer them bundled with DTH options. Thanks to smartphones, the urban youth will quickly start to create niche content in the form of short movies and music and upload them online, helping create startups that assist users to discover new entertainment choices. I also see an increase in gaming companies that offer in-app purchases and virtual goods.
Business application startups targeting small and medium businesses will continue to grow, but many will target global markets instead of India in 2013.
Finally I see the start of primitive consumer-robotics companies which are simple extensions of bio-mechanical arms aiding in specific tasks such as replacing the large water jug or cutting vegetables based on camera sensors.
Availability of seed capital will continue to increase, but later stage companies will increasingly look outside India to raise capital.
We are planning to release research findings every month week as part of our startup support program at the Microsoft Accelerator in India. There are about 50 different topics that we are curious about and are consistently doing research to find out ways to help our accelerator companies perform market research, target early adopters and focus on getting more customer traction.
This series is part of our accelerator database on engagement with startups, investors, mentors & entrepreneurship. Last week we did a report on Smartphone usage in India.
This week our focus is on the rate of companies starting and closing in the technology product space. Over the last few years Microsoft has been tracking new companies as part of its Bizspark program. Besides this we have access to several databases from multiple sources which has allowed us to consolidate all these into a single system to track startup activity. While we currently track over 73 different elements including founders, starts, closures, funding, etc. our focus is on trying to find patterns that can give us more clues to remove the roadblocks that reduce entrepreneurial failure early in the system.
We track over 6200+ entities – which includes services companies with a “product” they are building and also many viable side-projects, where the founder is generating some traction or revenue and 3900+ companies that are solely focused on building products (includes SaaS, eCommerce, traditional software, consumer Internet, etc.) in India.
On average there are about 450+ starts annually over the last 3 years, which has grown dramatically thanks to eCommerce.
While Bangalore has the most number of technology product startups overall, at neary 40%, Delhi/NCR came a close second in 2011, only to return to normalcy in 2012.
In terms of closure, 26% of companies still close within a year of them starting (either the founders giving up and moving on, or the company going dormant).
The biggest issue for closure (given that nearly 80%+ of all companies are bootstrapped) is collecting money from customers who have committed to paying for their usage of the product.
While not being able to raise funds is really #1, that seems to be a generic reason enough and a motherhood-and-apple-pie situation.
Unlike the valley (anecdotal information alone) most failed entrepreneurs dont go on to start another company or join a startup, but instead go to work at a much larger company (over 60%). Most reasons given were because of loans to payoff or pressure from parents (surprisingly not from any others).
Our recommendations are for new entrepreneurs to have a “cushion” of nearly 18 months in funds in their personal capacity before they delve into a new venture as opposed to 6 months.
We also recommend asking new customers for an advance in payment as part of the Proof of Concept instead of payment after the fact to aid in managing cash-flow more effectively.
I am prone to opening my mouth and putting my foot in it. I did it a few days ago with a reporter from Reuters who was covering The Startup Village in Kochi. Not particularly sure of what the background was regarding the Startup Village, its goal or its focus, I went ahead to trash it even without understanding.
It was a) unprofessional b) stupid of me to do it and c) an uninformed opinion of an ignorant person.
What the Startup Village is trying to do is admirable. They are trying to change the face of entrepreneurship in Kerala. They have been able to do what most cities and states around the world would love to do. Get engagement from the political system to support startup entrepreneurship.
And I rained on their parade. I am so embarrassed to even link to the article.
I got a call this morning from Sony Joy who I have known for years. He was so nice, that his first question was “Were you misquoted”?
Sadly I was not. I cannot blame the media or the reporter.
I cant even say I was having a brain seizure.
I was just plain dumb.
So I have to own up and apologize.
Sorry guys. As I promised, I will be in Cochin soon to learn more about the Startup Village and do my part to ensure you guys are successful.
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.
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.