Posts Tagged ‘entrepreneurship’

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Bootstrapping a startup via consulting gigs

Monday, August 16th, 2010

Every startup requires cash. It’s not built on thin air as early stage investors think. Money for paying the lawyer, government fees, hiring developers and more importantly paying your rent, food, fuel, etc. An entrepreneur starts with a calculated risk of investing (or burning through) his savings for that 6 months period with an assumption that either a customer would start paying or an investor would bet on it.

In reality, a startup takes longer than the original time frame in most cases. If you planned for 6 months, you’ll take 12 before anything comes out of it. A PPT or a paper napkin plans writes you cheque when you already have money in the bank or sold two startups in the past.

So what do you do? You start doing consulting gigs! Smart entrepreneurs do it all the time. Some short gigs here and there. A lot of entrepreneurs I have known do it to get started after quitting their job. Paul, Bill & Co. did the same in their formative years. The most famous of the consulting stories is how Evan Williams consulted for a year at HP while building Pyra Labs which eventually got acquired by Google. Muziboo is a good example in India where the founders did consulting to bootstrap it.

As an entrepreneur, how do you manage it; where do you draw the line as to not getting distracted completely. There is a chance that consulting gig’s sweet money just takes over your primary passion.

I have compiled a list. Also, including some interesting nuggets from a thread on Hacker News (yeah, I love reading it. More gyaan than a single post anywhere!).

  • Do a high impact consulting where a gig of 3 months can cover you for 9 months. The math is 3x.
  • Try to do a gig at a stretch instead of a 2 days in a week stint. It kills the output of your startup but then when you are done, it is easy to just do a complete switchover rather than continuous context switches
  • If you are doing consulting, treat your own startup like a client, as there may be other people working on this
  • Throttle your rates, depending on the project and desperation for moolah
  • Know your deliverable. Pick up hourly rates or visits per month Remember, you have your venture, you do not want to get caught in fixing a bug for days and goes beyond your original estimate.
  • If you know something and you want to learn more which may help your startup, maybe charge a little less. A counter thesis is that pick up a gig which you are a rockstar at and you can do in your sleep and get paid as well.
  • If you are doing couple of days in a week, then restrict it to only certain days
  • Make sure you show up at client’s desk for the work and not really do the consulting gig from your home or wherever your startup is located. This helps you keep it clean and juggle them well
  • Keep the IP clean. Good idea to let the recruiting manager know that you have other gigs. Of course, sign an NDA as required
  • Do combined gigs with other friends with complimentary skills
  • Keep your other team members informed or at least they know that you are not available certain days in a week
  • It’s easier to do technology consulting than “strategy consulting”

India is a tough place to raise money for your venture — though it gets better by the day; the number of ‘pre-series A’ venture deals are still in double digits every year. Consulting is one way to bootstrap it.

Have you done consulting gig while bootstrapping your startup? What are the things you did to keep it clean? What else?

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Your 1st venture? Are you waiting for the right idea/team/conditions?

Thursday, July 22nd, 2010

In the 5th grade of my Hindi class, I learned this:

जिन खोजा तिन पाइया, गहरे पानी पैठ

जौ बौरां डूबन डरा, रहा किनारे बैठ

It’s a popular saying recited by many and written originally by the famous Indian poet, Kabir. My own translation reads:

Unless you jump, the oysters are found deep.

Continue to wait on the sidelines, busy counting sheep.

Entrepreneurship is risk free, as Sameer wrote in a popular post a while ago. No point waiting for the right idea or the right time, or the right set of market conditions. The ideal time is for analysts to conjure the future which already exists in an entrepreneur’s eyes. Bike rusting on the shore Unless you write a manuscript and revise it multiple times and get rejected by at least 5 publishers–how can you write one of India’s best-selling book? Unless 20 VCs label your ideas as stupid, how can the 21st get it funded?

Unless you take the plunge, you would never know, what you are doing is right. Planning is required–Accumulating a small buffer to support your personal life is a good idea. But, being a wannabe entrepreneur forever kills your self-esteem slowly.

A lot of entrepreneurs wait for the right team, right set of market conditions and getting validated by the investors before starting them. If you are an ecommerce upstart in India, would you start right now and run a few experiments or wait until the big guys have already muscled into the market.

Team is you, when you start; people follow you when you have jumped. Unless you put your everything into chopping block, no body else would. Product is what you create the demand for, idea is the seed, consumers often do not know what they want. Of course, market conditions are never right. If it were right, you’ll have to worry about competition rather than creating products.

Unless you fail in your first venture, how would you do the second one which may turn out be OK and then the third one which may turn out be a success. You don’t have to give it much of a thought if this is your 1st venture. You learn from the mistakes and plan better in the next one. For this one, you just have one option–Jump and try collecting the oysters, at least you’ll find fish.

The pic is of a bicycle rusting on a sea shore.

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How to become a millionaire in 3 years?

Monday, June 28th, 2010

Axis: Bold as Love cover Jimi_HendrixI was reading an interesting thread on Hacker News where the poster wanted to find out how he can become a millionaire in 3 years. One of the commenter has replied beautifully sharing his pearls of wisdom. Blatantly copying / pasting the bullets I liked (ignore this and go straight to the source, otherwise), here’s what the commenter said you need to have / look for to become a “success” and not necessarily a millionaire:

  • Market opportunity – a million dollars isn’t a lot in the grand scheme of things, but it certainly is a lot if the market opportunity is not large enough. Even if you put Bill Gates and Steve Jobs as founders in a new venture with a total market size of 10 million, there is no way they could become too wealthy without completely changing the business
  • Inequality of information – find a place where you know something that many undervalue. Having this inequality of information can give you, your first piece of leverage
  • Leverage skills you know- You can go into new fields such as say Finance, but make sure you’re leveraging something you already know such as technology and/or product.
  • Look in obscure places- We’re often fascinated with the shiny things in the internet industry. Many overlook the obscure and unsexy. Don’t make that mistake. If your goal has primarily monetary motivations, look at the unsexy.
  • Surround yourself with smart people- smart people whom are successful usually got there by doing the same and have an innate desire to help those do the same.
  • Charge for something- Building a consumer property dependent upon advertising has easily made many millionaires, but it isn’t the surest path. Build something that you can charge for.
  • Go with your gut and do not care about fameballing- Go with what your gut says, regardless of how it might look to the rest of the world.
  • Be an unrelenting machine- Brick walls are there to show you how bad you want something. Commit to your goals and do not waver from them a one bit regardless of what else is there. I took this approach to losing weight and fitness. I have not missed a single 5k run in over a year. It did not matter if I had not slept for two days, traveling across the country, or whatever else. If your goals is to become a millionaire, you need to be an unrelenting machine that does not let emotions make you give up / stop. You either get it done with 100% commitment or you don’t. Be a machine.
  • If it’s a “trend”, it’s too late
  • Be a master of information- Many think it might be wasteful that I spent so much time on newsyc or read so many tech information sites. It’s not, it’s what gives me an edge. I feel engulfed.
  • Get out and be social- Even if you’re an introvert, being around people will give you energy.

When I first saw the cover (probably in my 8th grade) of Jimi Hendrix’s album ‘Axis: Bold as love’, I was like WTF, how can he do it to the deities? Hendrix is depicted as two Vedic deities, with the multiple hands of Durga and as avatars of Vishnu.

As a startup entrepreneur one has to embody multiple incarnations in one single lifeycle and that pic above is very relevant. What the commenter mentioned above is a lot of things to be done in a short span, but yeah, not every startup gets there, unless you have multiple hands and heads.

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The cycle of Business and the importance of Team

Monday, June 7th, 2010

On Saturday, I did a presentation to the Jain International Trade Organization (JITO) at their Annual Growth Summit. I spoke on the topic of ‘Building Winning Team’ (presentation to be uploaded). The following was part of the talk.

While internalizing the topic, a wonderful chart depicting the ‘cycle of business’ got scribbled in the notebook, the final version of which came out as shown below.  The importance of a team in a business can be visualized by looking at the chart.

The cycle of businessThe chart shows four tangible entities which are the main constituents of a business. Each constituent is in it’s own quadrant.The inbound arrow depicts movement or  utilization of a resource. As owner/CEO, you create the business. The Team which you hire creates the product or service. This is consumed by a Customer which brings Money to the business. The Money in turn funds the Team.  If the Team is weak or inefficient it would impact the product or service. Even more, an incompetent team may consume the money unwisely thus hampering the overall cycle of the business. Though the business revolves around the presence of the Owner/Founder/CEO, the continuum of the business is maintained by the efficiency of the team.

The upper right quadrant is the most important one — more than customers, if you build a great team, great products would come out with efficient use of capital. So, build a great team, manage them well and sometime later you probably don’t need to “actively manage” the business no more.

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As a CEO have you immersed yourself (including showing that you are an idiot)?

Monday, May 31st, 2010

Bragging alert: This post talks about a recent personal experience to prove a point.

I was offline for the whole of last week attending a marriage in my exetnded family.  While attending the event, I’d put myself out for stardom, popping my neck M2out wherever/whenever possible and making an ass out of myself at other times.  From participating in mindless discussions to taking split-second leadership roles; to managing wherever required and at times staying out of the loop sipping beer at the poolside … and of course flirting occasionally (Don’t worry, my better half never reads this blog).

I was able to enjoy the 7 days as I did not hold myself or the attitude and without worrying that I may look like an idiot in front of others for certain acts — On the contrary whenever the idiocy was on the rise (or the attitude was it’s natural best), the guffaws of laughter were at their zenith. I told my story to everybody, to strangers and even to the staff of the hotel I was staying.

Result…connected with a lot of family members with whom I had lost touch, made some new connections and solidified the existing ones…came back home, happy.

No holds barred immersion into your business is one quality which IMO keeps people at sidelines. If you don’t engross, how can you tell the story, if you don’t act foolish, how can you break the ice and win nay-sayers? If you don’t keep showing your face, how would people feel your presence.

You may have a product, you may have a team but are you engaging yourself with customers. Are you telling the story of the product even if there is only one person listening? Are you flirting with other investors when you already have a term sheet from your existing Series A dude. Are you exposing your gullible side to your mentors? Are you ready to experiment with your idea when people are ready to call you an idiot? Or you want to wait for a perfect product?

Are you ready to start dancing with 10 unknown people in the middle of the traffic with your best suit down? Or you are waiting for people to pull you in? You want to ignite rather than add logs later.

Picture taken while doing the ‘hands-up-in-the-air’ dance on the streets of Jaipur and later cropped on the boundaries to anonymize the identities.

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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)

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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?

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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

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Is it possible to do a venture when you do not have money?

Monday, January 18th, 2010

… that was the question from a IXth grader after a talk I gave to the students of IX-XII grade at a recently held event called Disha 2010. The event is an initiative to apprise the students of the potential in alternate career streams. Engineer, MBA, MBBS, LLB are typically the first choice and “viable” (read, monetizable) options for a “normal” career.

After I did my sales pitch of becoming an entrepreneur (slides below); another student asked about finding the information related to venture funding, grants, incentives, seed capital! (Wow, I thought we already talk a lot!) So much so there is a chatter around all of these things, they are mostly targeted around the “grads” and above. We at Morpheus Venture Partners are thinking to do something about it (if you wanna join hands, drop me a note).

So what do you tell a 9th grader to do when he is eager to start and doesn’t have money? “Take the Plunge!”, I said.

Disha 2010 Presentation on Entrepreneurship Jan’10 — Indus Khaitan

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Laptop to Loadbalancer: Is your LAMP hardware infrastructure growing like this?

Wednesday, January 13th, 2010
Lamp Growth Plan

Lamp Growth Plan

The visual image conveys the thoughts. The data legends represent a hypothetical configuration using Webservers, Database Master and/or slave or DRBD, Memcached nodes, etc. The size of the circle represents the relative amount of money spent on monthly hardware lease.

How did your web presence grow?

Disclaimer: The above does not include security, disaster recovery, backup and other attachments which are a must.

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