Archive for February, 2010

How much money do you need to get started?

Tuesday, February 23rd, 2010

… You want to raise just enough money to solve a small problem for even a smaller set of customers to start with.

A lot of ventures start with a dream, a vision; to solve a problem in a specific Ruby Throated Hummingbirdway. The dream could be a INR 100 crore product or something as complex as an ERP on the web to a even more complicated, a Hospital Information Systems (.. search engines? they are easier to build these days).

The vision cannot be achieved in 6 months or even 2 years — Takes 5-7 years on an average to build an INR 100 crore company. So you want to start now, and want to start small, chiseling your idea, refining as you go, adding feathers in your cap and changing gears and accelerating as you move.

First, zero in on a handful of customers and a specific problem the customer may have. Do not worry if others mock you for building a feature & not a product. You know your destiny. You know where you want to reach. Validate what you have built. Give the customer something useful so that he can pay for what you have built. Iterate on your product.

There are a lot of examples where the companies started small and began by solving just one small problem and then morphed into gorillas; from companies selling PCs — to cloth merchants now with fully backward integrated perto-products chain.

A large amount of money spoils you, ties you up with your own experiments and forces you to deliver a product which does not have any takers outside your laboratory — You are forced to linger with the experiment because now you have a large amount of an external investor’s money and do not have guts to tell him that it is not working out. There are numerous examples. There are only a few brave entrepreneurs who took $5m only to tell the board in less than a month about change in the business model.

When you are starting out, you are building something and proving your hypothesis. The moment someone starts paying for what you are building, a part of the hypothesis gets proved. You continue to iterate.

Think 6 months, 3 people’s expenses.

Think 6 months, 2 people’s expenses.

Think the amount of first tranche you need to deliver to your first customer.

Think about knowing the sales process yourself before hiring a sales expert.

Think doing zero dollar marketing before doing SEM campaigns.

Think writing the code yourself before hiring a developer.

… start thinking about raising big money after your customer trusts you with his money.

(The thumbnail is of a Ruby-throated hummingbird. These are solitary. Have one of the highest metabolism, and as part of their migration, they fly non-stop across the Gulf of Mexico, a distance of at least 500 miles. Pic courtesy)

My List of Top 25 .com honorees

Saturday, February 13th, 2010

Verisign announced the 25 years of .com awards. They announced a shortlist of 75. Here’s my Top 25 list of honorees. Surprisingly, ICQ is not listed in the shortlist. I have added ICQ to this at #26.

  1. Tim Bernes-Lee
  2. Netscape
  3. Amazon.com
  4. Vint Cerf
  5. Craigslist
  6. AOL
  7. Cisco
  8. eBay
  9. James Gosling
  10. CNet
  11. Yahoo
  12. Google
  13. eTrade.com
  14. Skype
  15. CNN.com
  16. Paypal
  17. Napster
  18. Netflix
  19. IAC
  20. Monster.com
  21. Flickr
  22. Mapquest
  23. Facebook
  24. Expedia
  25. YouTube
  26. ICQ

Indian judiciary needs to allow the class action lawsuit

Saturday, February 6th, 2010

In the last 12 months after moving back from the Bay Area — I got cheated several times, small firms, doctors, big companies, public sector enterprises. Services not delivered, money not refunded, products not living upto warranties, the list is endless.

I followed up with some, called up some, emailed up some. A failed piece of furniture from Home Town (a unit of Kishore Biyani’s Future Group) gets dead_tree_arizonafixed after 15 phone calls only to be broken again. A non-delivery of 1Mbps Internet connection from Tata Indicom leads to only 75% of the subscription amount after several phone calls and 8 months of delays. God knows how much the cellular operators are cheating in billing for short minutes and dropped calls. Every month I get charged for roaming even when I haven’t left the home cellular network. The biggest grief is against some of the large public sector companies operating as corporations who do not even have a ‘tangible’ customer service line. The so called mega retail stores have the shoddiest of services without any accountability from the local Food & Drug or health departments/administration.

Where does the hapless customer go? As usual, there is no recourse except knock the local forums and show frustration at the process. The government of India has left it’s consumers to figure everything out on their own. It burns at least an effort of at least 100 man hours to get things resolved at the local consumer forum. If the amount is few hundred rupees, it is too much a chase.

There is corruption on one side where the government does not provide the service for which the officials are paid for and then there are systemic issues in corporations who dupe the customers.

At the minimum, the government should allow class action lawsuits and give an opportunity to service-deprived individuals to take action against companies and get compensated. The judiciary already has public interest litigation against the inaction of government. Now is the time to litigate against large corporations who do the business on their own terms.

I’m not alone when I get frustrated on inactions from the companies. If you troll through the forums, there are plenty with similar problems — They are fighting for the cause individually, to get their own money back. This needs to be fixed at a much bigger level.

The thumbnail is pic of a tree taken in 1972, wilting due to water and air pollution in Utah.

Poet Kabir on mentorship

Tuesday, February 2nd, 2010

I was reading some Hindi literature over the weekend. Found this doha (a kind of verse) from the great Indian poet Kabir on mentorship.

Kabirdas-ji says:

तारा मंडल वैसि करि, चंद बड़ाई खाई |

उदए भया जब सूर का, स्यूं तारां छिपि जाई ||

Shall update with the translation sometime later. Why don’t you attempt translating this in the comment section?

Your sales 101 begins with an email

Monday, February 1st, 2010

Downy WoodpeckerAs a Founder, CEO, whatever of the startup — one thing you would be doing in your journey would be Selling. Selling to customers, employees, partners, investors, family members, competitors. And selling 24×7. Pestering. Following up. Closing. The code you write, the product you build, the team you hire is given. People worry about the actual tangible later, but you need to sell it first. Sell the concept. Sell the features. Sell your vision.

The Sales 1:1 101 begins with an email you send to someone — be it the pitch about the company, a proposal for partnership, or looking for some help.

So you send an email and then … days pass and the email silently gets buried down under. As an entrepreneur what do you do? You have two choices (a) Assume the recipient is not interested and never follow up and move on (b) Do a soft reminder and follow up.

People are distracted. Your customers are distracted. Your potential investors are distracted. There is an overdose. Marketing messages. Sales pitches. Attention is short. It is okay to remind. It is okay to do 2-3 follow ups before getting an answer or giving it up (for 6 months!). You double the interval between each follow up. 1st contact –> 7 days –> 14 days –> 28 days.

Which option you choose makes the kind of entrepreneur you will become! (a) The entrepreneur who follows up; who tries to get his attention and makes an attempt to close the deal OR (b) someone who makes an assumption that customer is not interested in “buying”.

Update: Updated the title…dunno why I wrote 101 as 1:1. Ha.

Like everybody else, I also get a fair share of daily dose in our inbox; some get labelled, others get instant attention, some are read/unread. I wish if emails followed the sentence strategy. This is the reality of information overload and the reason for change in our normal behavior of answering the phone on few rings.

The bird is the Downy woodpecker. Pic courtesy