Wrote a guest post on NextBigWhat opining that bootstrapping is just a foundation stone for building a large business.
Archive for the ‘entrepreneurship’ Category
Prologue: This post may not connect to folks who are born networkers, aka extroverts. Meet an introvert, who talks less, then you’d know how difficult it is to break the ice, forget exchanging cards.
I remember the days when I was a sissy in networking, utter failure. I would come back from events, meetings, gatherings with not much accomplished, maybe meeting an equally gullible 1-2 people.
Then someone (Don’t remember who or maybe I read in a book) educated me about the 3-second rule when entering a gathering. The 3-second rule is simple:
Connect with someone in the first 3-seconds of entering a gathering or a crowd or a room.
Why the first 3-seconds are important?
It’s psychological. The more you delay making the first contact, the harder it becomes. The moment you overcome the first contact, more of them would follow easily.
This rule has done wonders for me in networking even during the days when I was just thinking of starting up and tried penetrating into a room full of “been-there-done-it” folks.
Pro Version: I use a slightly advanced version of this 3-second rule now-a-days. I call it a ridiculously named, “Deep-6-second” rule. Instead, of 3 seconds, I give 6-seconds and try to move as deep into the crowd as possible and make the contact as soon as the time expires. Why? Most people whom I wanna connect to are not near the door, but they are nearer to the center of the room.
Networking and connecting with people is important and it’s an art you keep honing.
This is an extract from the keynote I gave at TieSmashup 2.0 last Saturday on 8th Sept, 2012 at IIT Mumbai. The goal was to highlight the importance of business apps and why there is an opportunity. The excerpt has been modified to remove the ramblings. The keynote followed a panel discussion with Narayan of Dexetra and Deepak Ravindran of Innoz. The learnings from the panel would be in a future post.
Information Technology has bestowed us a 10-year pro-creation cycle. Every 10 years comes an opportunity to innovate and recreate things from scratch. We learn from the wisdom of the previous cycle and attempt to make things 10x better than the previous one. Each cycle gives an immense opportunity of wealth creation and to make the world a happier place to live by making us more connected. How do you as an entrepreneur in the audience benefit from this?
Before lunch time, I heard entrepreneurs talk about website, web-presence, social media, etc. To you as an entrepreneur, anything web related is a thing of past. There are too many people solving problems around the web. The freshness is no longer there. You should be looking three years ahead of everybody. Internet is for the connectivity backbone and the web as yet any other channel. Instead, you should be doing things on mobile. When I say mobile, I don’t mean, yet another app for social, local, news.
Going back to the 10 year pro-creation cycle of IT, this started with:
- 1980s – Gave us mainframe.
- 1990s – Gave us Personal computers.
- 2000s – Gave us Internet.
- 2010s – Now, the Mobile boom beckons.
Each cycle gives us opportunities which were 10x beyond what it was earlier. For example, the number of consumers for mainframes were not more than a million, followed by 100 million units for PCs, followed by 1 billion internet users. Guess what–10 billion mobile phones would be shipped by 2016. The current IT spend combined across hardware, software, mobile, PC, whatever, is around $1.6 trillion worldwide out of which 18% is for mobile.
I think Mobile is huge, much bigger than what Web was. As an entrepreneur, I believe that mobility is going to fundamentally change how people connect with machines and humans. In a small way it is already happening at home. A progressive doctor in a clinic at Bangalore, uses an app on his smartphone for appointments of a day before his day begins and carries an iPad to keep himself in the loop of patients and peers.
Why Enterprise apps or apps for businesses? You as an entrepreneur should be building things where money is made in every transaction and provides utility to the masses. There are close to one million apps on the appstore. However, 50% of them do not have any ratings nor any significant downloads. Why? Because, 100s of similar apps already exist. Instead of focusing on the usual mix of photo sharing, news aggregation, location, social, games, etc. I feel that you should be building apps for businesses. This is a large opportunity and few are paying attention.
That’s the path I chose at Bitzer. We at Bitzer are building some necessary infrastructure which businesses of tomorrow would need. We are building a secure remote access product which enables an enterprise to become mobile. It’s like VPN but much more done for mobile from the ground-up. Right from accessing the business applications in the intranet, files & folders, intranet websites, e-mail and more. I feel that connectivity is the missing piece in employee productivity. What we are attempting is akin to creating some of the well known Internet infrastructure companies during the internet boom of late-90s/early-2000s, which created the back-bone of the internet, gave the necessary tools to large companies to run their business.
To give you some example of how businesses are rapidly moving onto mobile, esp. adopting tablets, one of the largest domestic carriers in US called Alaska Airlines, removed 11kgs of flight manuals from it’s planes and swapped it with a 700 gram iPad with apps on it. Soon other airlines followed. Thanks to the introduction of iPad now the uber-important flight plan is being sent digitally. Another example is–how mobile apps are changing agriculture in America. There are apps which help increase the produce and predict the harvest time, pest infestation, etc. by analyzing the pictures of the farm. A few other apps exist for farming. There is a separate industry being born for connecting the mobile to the real-world in terms of accessories for such businesses.
Another big area for business apps is healthcare. There are apps which check your pulse followed by helping you communicate with a doctor remotely. The day is not far when your diagnosis will start before you reach the doctor’s clinic. In future, a specialized app will be capable of analyzing your ailments based on pulse, temperature and heartbeat. The apps fundamentally change how people would communicate with each other.
Don’t look at building apps which make our lives incrementally better, rather take on things which are orthogonal to the current trend. I urge you to build apps for business, which look unsexy but these are much bigger opportunities.
Updated Sep 17. Edited and many fixes.
FlipKart is acquiring LetsBuy.in. But, there is way too much negativity and cynicism floating around. Let’s balance it out with some positive spin. The genesis of this post was this tweet:
There is too much cynicism in this eco-system and frankly makes me feel quite sick.
— Mayank Sharma (@mayanks) February 9, 2012
People who have done it, never done it, have no plans of doing a startup, all together are calling a wolf in this deal.
This is the venture eco-system, this is how it is played. Companies are built, bought and sometimes brought down. Tejit, my previous startup went through two two (sic.) successive acquisitions in less than three years…and I’m still working. I am still below my quota of Fuck You money. Irrespective of what the end-game is, which seldom is a stalemate, the Silicon valley eco-system is built on two simple things:
- Every startup is a success
- No startup is a failure
This is exactly what needs to happen to India and this deal is one of the threads in arriving at that goal.
After the previous exits, I was able to raise my hand and fill a gap in the Indian startup ecosystem because of the startup experience. The shenanigans of doing one gave me enough confidence to do another one, though Morpheus was on the other side of the fence and helping people getting started.
The current consolidation of Flipkart buying Letsbuy, irrespective of the dilapidated state of the latter is a good thing. Why?
- It gives a necessary boost to the eco-system that bets can be paid off, when the vision is right but the markets are tough. If VCs are forced to write these deals off, it brings a black mark in their report card to their investors (LPs or Limited Partners). However, we as entrepreneurs need to keep the funding cycle alive and rotating every few years.
- Venture Capital is an between food chain of money flowing from people who have it. Why have a spock mark when you can avoid it? While getting a degree, it’s okay to get a summer (or suppli) as long as you come out in that 4 years. Some of the startups are like that failed exam but the venture eco-system allows for “exits”. Would you want the annotation of “suppli” in your degree? Nor do they.
- Entrepreneurs who did “okay” in the current startup become capable of taking even bolder bets. If the start-up simply fails, not that there are no learnings from the same, but parking an almost out of gas car securely is much better than leaving it in the middle of the road.
- For the uninitiated who do not understand the intricacies of the deals, it’s a positive story and brings more people to take the plunge and start their own venture.
Yes, it’s a good PR. Can be written in bold in the resume and can even make you a VC, irrespective of the nature of the exit. That’s how sweet these exits are.
Off-topic: The most worry-some part of the current cynicism is not just the angst against the deals but the so called keepers of the ecosystem advising entrepreneurs to keep away from investors and also advising them to bootstrap their startups to death. They are at total loss to understand that these are venture startups and not a “baniya ki dukaan.”
I’m mostly a spectator investor since last 8 months, with less than two personal deals post Morpheus. Writing this as someone who knows a thing or two about investing in India.
Only 15? That’s how reacted when I saw Pluggd.in’s list of the most promising consumer Internet startups out of India. Why not 50 to watch? or even 25! India has plenty of raw talent, desire to not fail and kick-butts. What’s lacking is a light which shows them that entrepreneurship is yet another career option.
A quick analysis of VCCircle puts the count of angel deals this year to less than twenty-five. Let’s double the number to account for un-announced deals, that brings this to fifty. Freaking 50. That’s it. I’m sure Indian Angel Network alone has more than 100 members!
That’s my wish to Santa for India’s tech venture entrepreneur ecosystem–We need more angels who are ballsy and do ballsy deals. Another wish, we need more investors who really are worthy of being called angels. For me an angel is someone who does a) at least 5-6 deals every year or at least $100K in investments and b) Leads at least 25% of his investments. Hopefully, Indian angels who interacted with Geeks On a Plane travellers, follow up on their word and start closing. Rest are investors looking to double/triple the money in 18 months.
Those are the three words you will find in a restaurant bill. Errors & Omissions Expected. Good acronym for trivia buffs.
E.O.E. These 3 words were uttered to me by an entrepreneur, whom I bought a cup of coffee. He was apologetic when I told him that’s not the way to do things and he should be building a company to scale and reach milestones–not built to flip. I narrated some tid-bits of the cover story done by Fast Company magazine which was prophetic and foretold the dot com meltdown which happened months after that article was published.
Agreed that there is more money than ever flowing in India in certain sectors and raising angel money is easier than before. However, chasing the sectors which are attracting a lot of attention is wrong way to bet things (His logic for betting on those sectors–It may be easier to raise money).
Unfortunately, a lot of entrepreneurs in India are reading too much into the Silicon Valley funding & exit fire hose, which makes sense only in the valley because of the reasons we know. India is still a parched land in terms of high-tech early stage money; only 5% of total PE/VC is in Angel + Series A + Series B. Furthermore, of that pool a very small percentage is for Pre-Series A deals. India’s early-stage money is FFI (Funnel funnily inverted or Fully f**** inside-out). Think about it. Do you still want to be an Exit Oriented Entrepreneur?
The moment I made up my mind to come out from the “other side”; the next-second got busy into what’s the next thing. Several ideas, and several discussions with friends, ex-colleagues and advisors. A lot of times, things went into, “Let’s do something big, yaar”. The “big-ness” got defined by the size of consumers who could potentially use the product, as in “Let’s do something big on facebook (as a platform)” or “Let’s do the next big thing in mobile” instead of the size of the impact the solution could have on the customers.
In an effort to rationalize, tweeted the title of this post and bang came some great replies:
@1ndus you are on the crease. playing. that’s usually enough. Take a proper stance and cover your assets with a nice AD guard!
Another one by @zenx:
@1ndus Test match hai dude. Think sessions, not overs, even as you capitalize on the loose deliveries!
Finally, @riteshagar suggested:
@1ndus Simple think. Do as @sachin_rt does. Care only for the next ball; not for overs, innings or sessions !
There is a shift happening, although the day dreams of creating an 800-pound gorilla still persist, but the execution has become very pragmatic. This recent Techcrunch post by @petersims further nails it:
Don’t Bet Big. Little Bets Are The Ones That Turn Into Billion-Dollar Ideas
RIP, Sixer in every over. Welcome, six runs on six well-played balls.
No, I’m not hanging up the boots. Just polishing it again for a yet another trek.
On one side, I was having way too much fun talking to young entrepreneurs, speaking at events, giving gyaan, moderating panels, doing Friday sessions at Leela, etc etc. Then I was getting rusted. The brain was getting claustrophobic, not getting into action. Hence decided to take the plunge again. I wanted to come out and write some code, do a few apps here and there, before figuring out what to do next.
It has been an awesome ride at Morpheus. We recently did the 2nd demo day (and the 1st Open Gurukul) at Bangalore, which was attended by 35 investors and 100+ entrepreneurs. Unforgettable, how the 2 years quickly passed. Portfolio swelled to 33, companies got funded, another half-a-dozen raised subsequent angel rounds (a lot of them not disclosed, yet). Even chased chickens at the Morpheus Gurukul last year.
So It begins again for me. What I’m doing next? Honestly, dunno 100%. I have some ideas what to do next, but don’t ask Jyoti (my wife), she knows what should I do next!
If you are an entrepreneur and if I have ever bought you a tea/coffee, c’mon pay me back with a beer now 🙂
This blog post was not suppose to happen for another 15-20 days, but the news of the transition got picked up by VCCircle/Techcircle.
Companies have become easier to build. There are fewer breakout companies with the size of JustDial, Via, One97, etc. Should the entrepreneur build a company to cover the expenses and have a good supporting income? Or build a business which is large enough to be venture-funded with an exit the size of MakeMyTrip?
This is classic entrepreneurs dilemma when starting out. The choice a founder makes and the venture he is building would determine the outcome. I was at recently concluded unpluggd2 event where someone asked the same question.
A very interesting blog post is doing the rounds and was shared by Shashank, Sameer and others. Quoting the bullet #41 & #42:
41. Know what kind of company you are trying to build. There are very few Googles and Facebooks. A good outcome for your business might be a $10M exit or a $20M exit or a $100M exit or no exit at all. Plan for the business you want to build. Don’t just shoot for the moon. From a money-in-your-pocket and return on time spent standpoint, owning 20% of a $20M exit in 2 years is much better than owning 3% of a $100M business in 5 years.
42. Related to #41, understand whether your business is a VC business or not. A VC business is expected to deliver 10x returns to investors. That means if you’re taking money with a $5M post-money valuation, the expectation is that you are building for a minimum $50M exit. $10M post-money valuation = $100M target. That’s not to say that you might not sell the company for less and everyone involved might be happy with that outcome, but that’s not what you are signing up for when you take VC money with such a valuation. Know what the implications of taking VC money are and what it means for expectations on you.
I don’t have to add any thing–the bullets say it all. You can overcome this dilemma by answering the following:
- If I take Rs. 1 crore from an investor, can I return Rs. 10 crores back in 5 years or so?
- Can the business double it’s revenues every year without adding a lot of people to it?
- If my neighbor finds out about my business, can he also build it?
- Am I building something which very few people have built?
- If there is a list of top 100 innovative businesses, would the business qualify?
It’s totally fine, if your business is not a venture fundable business. A lot of businesses are like that.