Category Archives: Entrepreneurship

The counter intuitive approach to achieving your goals (AKA Opposite of Zynga)

I have an confession. I really did care a lot about the number of comments on my blog, the number of my twitter followers, facebook friends etc. I say I did because a year ago I gave that all up. I even dont review the google analytics dashboard for my blog any more.

Why?

I found that when I did that they went nowhere. Meaning I would target 1500 views per post and found I was consistently below 1000. It was frustrating.

So I gave up (meaning admitted failure) and found out that it was the most liberating thing that I could even have done.

I changed my outlook for a self defined “happiness index” for myself. If I was / am happy writing a post then I am satisfied. No longer was I looking to get multiple comments, get it RT on twitter etc.

That’s very counter intuitive to the Zynga approach. They measure everything and no decisions are made unless there’s data to back it up.

I wonder if that’s the way to run a company? I know that the Amazon long term approach is widely criticized, but it seems like it works for a certain set of people. I am sure they measure everything as well since “if you cant measure it, you cant manage it”.

I am not talking about the chase excellence vs. chasing success approach.

I am talking about liberating yourself from the daily metrics that are “head fake”. They tell you go one way, but you’re not really sure if after you keep doing what they tell you, the position you end up at is the right place for you.

Try it, and see if it works. First, you’ll probably stress a lot less. Second, you’ll be happy (which is different from being successful) and finally you might end up overachieving anyway.

Dig your well before you are thirsty

I was introduced to this book by Mark Tonneson, my first manager at Cisco. Fresh out of college, I was an eager whip-snapper who would soak up any piece of advice on “getting ahead”. I didn’t read the book, although  Mark bought it for me. It still is in my ‘library”. But the phrase “Dig your well before you are thirsty” has been with me since that day.

Most of us tend to ask for help when needed. Its the “on Demand” way of doing work. I’ll learn something when I need it, until that point of time, learning it is useless. I agree with that principle for knowledge.

For relationships, though, I have always tried to build them way before I’d ever need them. In fact building relationships without the intent of ever using them is a sport of mine. It comes from being interested in people and wanting to know as many people as possible.

As an entrepreneur that principle has helped me more than anything else I have done.

This however, is a story of how I acquired my first customer at my first company. It began 3 years before the customer signed up though. So effectively my sales cycle was “3 years”.

Circa 1995, Rational was hosting an event on Object oriented modelling. It was a free event, sufficient enough excuse for me to show up. The event was to start at 830 am and was scheduled for 2 hours. The venue was the Double Tree hotel in San Jose. I showed up at 815, and was negotiating with the automatic gate (which I felt was unreasonably placed in a position which required you to get down from the car to reach for the button that would give you a printed ticket), which would trigger the proximity sensor to open the gate.

I had to get down. Damm, I hate these poorly designed machines, which don’t really help serve the purpose that they were intended for.

It took me a few minutes to park and make my way back to the entrance. In the meanwhile a few other cars were backed up at the gate, facing the same problem. I was not  “smartly dressed”,  and had on a t-shirt and slacks. I noticed a few more folks struggling with the sensor gate, so I made my way across to that gate, and helped push the button and get the ticket for the first car. The gentleman in the car was in a beige suit and seemed preoccupied with something on his dashboard. He did though, look at me and murmured “thanks”. I was just about to make my way to the entrance when I stopped and realized every one of the cars in the queue would have the same problem.

For the next 3 minutes I pushed the button for 5 or 6 cars and diligently gave them the ticket so the drivers did not have to get down from the car. Noticing it was 825, I decided to make my way to the registration.

The “beige suit” was just behind me at the registration desk. He did a quick double take and asked me if this was the Rational rose event.

I replied in the affirmative and said it was and I was registered for the same event. He introduced himself as Steve and said “I really have to say thanks again, since I did not realize you were helping me even though it was not really your job”. I realized then that he thought I was an attendant whose job it was to “push the button and give the ticket”.

I laughed pretty hard for the next few minutes and we both got talking about my job at Cisco and his. We agreed to keep in touch after the event and “catch up over lunch sometime”. Over the next few months, I would email Steve off and on, sharing some articles and such, and we’d have some email “debates”, that but never really met him for lunch.

3 years later, I left Cisco to start my first company. Steve emailed me a few months earlier saying he had joined Netscape (Actra).

I sent an email to my contact list 2 months after my beta product release, letting them know our product was available for companies to install and try.

The first email response I got back was from Steve. He asked me to come by and give his team a demo.

A month later we started working with the Actra team (Netscape) as part of BuyerXpert product.

You can call it luck. I also call it luck.

I am actually known to be the luckiest guy on this planet.

The only thing I do to get lucky is dig my well before I am thirsty.

The 3 biggest causes of stress for entrepreneurs and how to deal with them

An entrepreneur’s life is fairly stressful. Most of it (in my perspective) is self induced, so the best advice I have ever received is “take a deep breath”. That said the first step to reduce stress is to pinpoint the sources of stress.

1. The stress of “expectations”. This causes serious heartburn and is the biggest cause of all stress. Most entrepreneurs believe they can be successful in their own right and when their own “expectations” of self defined success dont match with the progress of their startup, they tend to go into a vicious circle of blame, guilt and introspection.

Expectations from family – parents thought you’d be making good money by now, as opposed to eating Ramen noodles (they fed you much better) and guzzling oodles of Red Bull (drink milk instead).

Expectations from friends – many of whom got a good job at a larger company with a steady paycheck, (mostly) defined hours of work, a “life” after work and health insurance, while you sleep on the bean bag under your desk.

The expectations from friends and family can mostly can be ignored.

The expectations that you set for yourself, comparing your progress to Airbnb for e.g., either in terms of your product, traction, funding or hiring will cause you more sleepless nights. I have seen many folks couch this under the category of “benchmark against the best”, but its hugely unproductive.

“There will be people much better than you and those that will be much worse than you. Deal with it”.

2. The stress of “competition”. I worked at Mercury Interactive (bought by HP) for the longest stint of my professional career in one company (side note, my dad worked at two companies for 20+ years and he claims I worked at 20+ companies in two years). At Mercury, I got to work with an immensely talented bunch of engineers based in Israel. After their mandatory 2 years at the armed forces, they were so “battle hardened” that they LOVED competition. They (David Reichman & Boaz Chalamish) taught me how to really compete in hugely competitive markets. Here is the secret of their teachings condensed in 1 line. You ought to pay me for this in gold, BTW (Feel free to send me a beta invite to your product instead).

Rule #1 – Dont care what they do. Rule #2 – There are no other rules. Rule #3 – What? Are you still looking for more rules? Go back and read Rule #1.

My suggestion, the stress from what competitors could do, would do, will do, should be the least of your worries. I am not suggesting you ignore competition – just dont get stressed about them, because you can largely not control what they do. You can only control your own actions, strategy and plan. Focus on that.

3. The stress of “closure”. We have all been in this position. You email that certain angel investor, advisor, customer, potential key hire, then call them, drop them a voice mail, send them a LinkedIn invite, stalk them on twittter, only to get largely ignored. I send so many emails and get so few responses that if I had a penny for every email sent and 2 pennies taken away for every email I received back, I’d still be super rich.

The best way to counter this stress is to keep going. Develop “Temporary Forgetfulness” – which my wife can attest I am awesome at.

Most of all – “take a deep breath”.

What all does a non-technical co founder do in a SaaS / Mobile application startup?

If you are non-technical co founder at a startup that’s primarily a consumer web / SaaS or Mobile application company, there’s only ONE thing you should be focused on:

A plan to acquire, nurture and grow users (customers) with as little money as possible.

With a caveat – you should not use any of your technical cofounder’s time (once a week update / meeting to discuss progress is okay) to achieve your goal. If you do that, it takes away from building the product.

Dont waste your time on “legal paperwork”, “office space hunting”, “attending networking events” or “talking to lots of people to get advice”.

User acquisition involves multiple steps that you need to do in a disciplined fashion:

1. Understand, document and verify your user segments / audience / customers (demographics, usage patterns, usage behavior, etc.)

2. Put a plan to create awareness with as little budget as possible. Make the assumption that as a startup you will have some time but no money.

3. Document who are the key influencers (bloggers, reporters, analysts, etc.) you need to get in front of and when / where you plan to meet them to talk about your product.

4. Plan a content marketing strategy (blog posts, infographics, surveys, slide share presentations, videos, etc.) that will consistently help you build lots of content to help grow your organic traffic from search results.

5. Learn how to build, manage and grow a community of users to help build a great fan following for your company.

You can call this anything you please – Marketing, Hustling, Selling, Community building, User acquisition, etc.

Each of these are very measurable.

1. How many visitors came to your site?
2. What were the sources of your visitor traffic – blogs, organic search etc.
3. How many are repeat visitors, versus first time?

Nothing else matters. In fact if you do a great job at this, you will be as valuable as your technical co founder.

An early trend that I am noticing in B2B startups in India

Something interesting is starting to happen among the B2B companies that are starting / getting funded in India. Companies that have a larger price point (> $1000 per month for e.g.) are all either a) moving to the US (company founder, key employee) or b) they are hiring larger inside sales (telesales) teams and teaching them how to sell outside India. There are exceptions (Visual Website Optimizer) but I am seeing more companies moving to US to seek faster adoption in the early stages.

By B2B (Business to Business) I mean companies that sell to other businesses, either small or large. There are enough documented issues selling in India to businesses, some of which include:

1. An extreme focus on cost by Indian businesses, which results in much lower (or non-existent) profit margins.

2. The inability to find good, trained sales professionals

3. The “request” by many “decision makers” to be paid a kickback, which if not paid, results in unpredictable sales cycles

There have been many company founders (OrangeScape, InterviewStreet, Mobstac, etc.), who all started in India, sold to their first few business customers here in India, but have now either moved to the US or are focusing on the US market alone.

Besides the fact that early adopter companies are largely there in the US, many or all of the issues listed above tend to go away bringing mostly issues of upfront investment on sales resources as the primary barrier to a US only distribution strategy.

So what does this mean for new entrepreneurs looking to start B2B ventures in India?

1. Dont. Seriously. Find easier and more fun things to do than sell to Indian businesses (This is a personal opinion alone).

2. If you still insist on doing that, get an awesome sales director / manager from a kick-ass company to head up your sales efforts sooner rather than later and help create a detailed training plan to hire, train and manage new sales professionals.

3. Look to partner and ride an existing distribution channel that exists. Tally has an excellent list of re-sellers / partners who you might want to talk with.

One last thought – Entrepreneurship is hard. Dont make it harder by choosing a distribution strategy that’s even harder.

 

How to choose the right incubator to fuel your entrepreneurship goals?

A big trend I have noticed in the last few months is that almost every Venture Capital (VC) company in India is looking to either invest in or build an “incubator”, which can help early stage entrepreneurs. There are already several of them in India, including Morpheus, The Startup Center, CIIE at Ahmedabad and others. I would imagine that by December of 2012, we will have at least 10 very well funded incubators all looking to guide, mentor and help young entrepreneurs through their initial stages.  This will go a long way to help the startup ecosystem in India.

The flip side to this is the amount of choice that startup entrepreneurs will now have. I can easily see many entrepreneurs spending days and months trying to figure out which incubator is the best for them. The answer to the “right one” depends on multiple criteria including your background, what space you wish to build a company in, how big do you wish to build your company into and other related factors. Outside of these criteria, there are others that are dependent on the incubator itself.

Most Indian incubators offer a combination of some cash and mentorship in exchange for 8%- 12% of your company. Some incubators require you go to their office location and spend 3-6 months with them, yet others will prefer you stay at your own office / location. Some do offer design talent, technical resources, and others offer a bevy of informal advisors.

So how does an entrepreneur evaluate incubators? I decided to put together a simple (not comprehensive, initial cut) spreadsheet of the list of things to consider before you decide on your incubator. I would imagine an entrepreneur would use this sheet to write down things that are important to them in an incubator by and then rank their choices by their evaluation of each incubator.

While I personally believe the top 3 criteria are (a) ability for the incubator to help your company gain momentum (customers, hiring, resources, etc), (b) ability for the incubator to help you raise money and (c) quality of the network the incubator possesses which provides you access to other entrepreneurs, venture capitalists and resources that you might need to scale.

Here is a simple spreadsheet I put together and if you believe you need to add more criteria, feel free to drop me a comment on my blog.

 

# Criteria Notes Importance Incubator 1

1

Background of the incubator founders This is the most critical factor. If you have incubator founders, who have not successfully built and sold companies before, then it’s a warning signal.
Do they have an entrepreneurial background that’s proven?

2

Amount of capital the incubator has raised Not very relevant, but it gives you a sense of how many companies they might fund

3

Number of companies in each batch Fewer companies in each batch is usually better because each company gets more mentorship and time with the incubator executives

4

How many companies have they funded so far? This gives you a sense of their track record as an incubator.

5

How many of their companies got follow on investment? This is another critical metric for most founders. You are going to an incubator for experience and help with funding. If most of their companies do not get follow on funding, that’s not a good sign

6

How deep is their network of venture and angel investors? You want to understand the relationships the incubator has with follow-on investors so it makes it easy for you to raise the next round

7

How good is their existing portfolio of companies and their founders? The existing cofounders of their portfolio company will be great resources to network and advice

8

How much time do they provide to each company per batch At the early stage you need a lot of time with the mentors on all aspects of the business. If their time is unavailable then the value of the incubation is limited

9

Have they successfully helped a company grow in your space? Its important to see if they have a portfolio company in the same broad space as yours. For e.g if you are an eCommerce company, look for others they have funded so they know the issues and can help you early to avoid obvious mistakes

10

What is the deal offered? How much money will they give you, what % of your company will they take from you are important parts of the structure

11

How long is the program? Most incubators have 3-6 month programs, which should give you enough time to get your company to a seed / series A stage of investment

12

Can you work out of your office or do you have to relocate to the incubator’s city / office? Some of the incubators require that you move to the city where they HQ are located so you have access to their resources, others will let you work from your own office

 

How hard can it be? Underestimating the problems your startup really solves

I had a good friend who was deploring the state of payment gateways in India. As someone that has dealt with Times of Money (DirecPay), EBS, CCAvenue, HDFC Bank, ICICI, Citibank and Axis Bank, I can attest to that pain. Its amazing that the state of payment processing is so arcane and filled with issues.

The issue is not just one of payments BTW. I constantly hear people complain about lack of a very good “X” in India. X could be a angel investors, incubators, bloggers, engineers, <fill-the-blanks>.

Problem is most people actually underestimate the effort required to build quality and consistency. What you see in the payment gateway is a simple set of forms that accept a number, check if its valid, authorize it and return an accept / reject status message.

The “behind the scenes” is painful. The multiple layers of the onion that you have to peel are the ones that really  are painful. So most superficial jingoism that starts at the front-end of the startup fades when the real pains come to the front. Which happens in the first few months.

Which is the main reason most startups fail within the first year.