"What do Startups need" is the Question asked these days.

Seems like that’s the kind of question a lot of companies which are looking to support, nurture and grow alongside Startups are asking themselves these days.

I’m invited to be part of a fairly small panel that is to discuss on this very topic tomorrow in Bangalore in a short meetup that Sun Microsystems is putting together.

The more I think about it, I think the sheer number of pages where business opportunities, support systems, efficiencies can be made all seem to just go on and on and on.

I think the key element that it comes down to is not “selling”, but “enabling”. Really, if you think about it and put all the power law distribution to  a graph of economy (financial status and revenues) versus size of the company, it’d be quite easy to see the bigger corporates easily contributing to 80% of the economic wealth that is being garnered. That’s almost a no brainer.

I think the insight is this: An average startup entrepreneur is young, imaginative and full of ambitions and dreams. The key is to enable them. Not sell to them, but help them achieve their dreams. Its going to be pretty much the same way that you would want to support artists to come out with more creativity.

Someone wise once said that the role of a supporting organization to a startup should help startups make truck loads of money and make a small slice out of it. We need to tie in our success with that of the startup. Everyone wins in the end.

So now, most organizations are not gonna want this headache. Go after all the small companies, give them that additional support and handholding, just for 20% of the revenue. But isnt 20% quite a lot? I dont think it would ever make sense for a company to focus on just this 20%, but if they were already saturated with the market share in the corporate world, a 20% extra market share will give these companies a lot of footing, wouldnt it?

Now obviously, the number of companies very much increases. The queue of companies to support would almost be as long as the infinitely long tail itself. Thats when shared resources make a lot of sense. Technology helps to scale. Thats what it does beautifully. And if a technology company says that it cannot cater to this group,.. they woe.. something is truly terribly wrong.

Related Posts from Before:

Selling to the Unaffordable – Part I

Selling to the Unaffordable – Part II

During a recent flight trip, I was mulling over what it would possibly take to build a company that lasts. I donno, call me weird or plan simple narcissistic, but I’d like to build a company that is around till I am, or even beyond. I meet plenty of folks, especially within the entrepreneurial community who keep saying that they bootstrapped three, four, five ventures and all and if you do ask them what their last ventures are upto, there is the two second silence that follows.

I am not blaming them.

It seems to be the case even with Skype. They made the sale, and though Skype as a service goes on (atleast as long as ebay goes on), there is nothing dramatic or new that I’m hearing from that camp. Its almost sad, given how they had captured people’s imaginations and support by the storm.

Now given the Deccan-Kingfisher deal as a backdrop, most would argue that once a company is sold, there is nothing much the promoter can do. That is something I said about the Deccan Brand issue that was coming up. But if your company is built with values and notions that are inherently the brand, and its so engrossed in its operations, I don’t think you’d be able to separate it out – not out of the founder, not out of the people who work for the company, nor out of the minds of the people who are customers. I don’t think Deccan had much of values, or notion, apart from the Low Cost affordability – which kingfisher is more than providing and at much better service. Suddenly no one has a reason to complain.

So here are some pointers which I had jotted down, and I hope to put to practice someday.

Building a Business the Old fashioned way Strategies:

Seems pretty basic so far. But most of it translates into pretty complex and a anti-trend to what is happening with startups around. Try it. See if you can genuinely qualify for building a business that is going to last.

Venture Capitalists and Entrepreneurs call it Business Models. Economists call it as Game theories. They are such fabulously mind-stimulating equations. The equation which essentially makes someone give up hard, liquid cash in order to avail a service, and enable you to make a profit. It’s really quite as simple as that.

How do you get to that, is usually the question. If you do understand game theory, then valuations and how they are raised, along with expectations, become a wee bit simpler to comprehend. If not, its time to hit the books and look into what “Game theory” is all about.

Sometimes, the valuation game that the so-called MBA founders of startups are playing, start to get simply ridiculous that its good to return to the math and make one and one add up to bring back some sanity. Here’s the basis of how companies survive. If you don’t have one of these, you are very strongly advised the drop the high valuation game, and think of a way to claim one of these.

Strategy #1: Build Long Lasting Technology Claims.
I really don’t care what you think about Microsoft, but from a perspective of Intellectual property, and strategy, Microsoft is a company to learn from. Microsoft, Intel, IBM, all thrive on creation of Intellectual Property. Microsoft is infact quite a fabulous case study to follow, as its one of the longest running companies which still claims dominance. Given the sheer amount of grasp that they have – everything from the platform underneath your feet, the diversification of devices, and especially in how standards are dictated, they have a sure footing for sometime to come. I’d even dare say that Wikia (or some such guy) might put google out of business, but Microsoft will remain.

Strategy #2: Enter a very conservative market and dominate it.
The trick is that the entry barrier is high. Atleast it is conceived to be. it is a sector that folks are scared to get in. Case in Point: Durex condoms. How many folks do you know who want to get into the condom business? How many people do you know who want to make lingerie in India? They are all very fabulous businesses, for people with guts, and pretty much an open field for them to exploit.

Strategy #3: Scarcity is a goldmine.
Look at the headlines that India is making. There is almost a civil riot that is at the verge of breaking out because of the prices of commodities going up, and there are insinuations that there are governments who are hoarding these grains so that the prices go up. More demand, raises the price. it’s quite as simple as that. To lets get to the topic. Anything that is scarce, will demand higher price. If you hold one of the three operating licenses for the 3G spectrum, yep,that will be worth a pretty penny. If you hold land in an area that is quickly running out of space, yep, thats pretty much a gold mine. I’m sure you get the idea. It has to finite, and limited. If that is the case, pricing and survival is pretty much guaranteed.

Strategy #4: Control Standards.
Be part of every consortium which chews out standards and have a say in it.

Strategy # 5. Insider Info.
Imagine standing in an open view of the market and you alone know something that others dont. It could be simple as a technology trend (look at Ray Kurzweil), or something of very minute knowledge that adds to your efficiency to play your cards right.

Strategy #6: Build a reputable Brand.
Brands take ages to build, and ages to die.

Strategy #7: Superior Expertise.
This is most often the most common reason than any other for a startup. You might have heard this question a little differently as “So why do you think you are the right person to execute this idea?”. The answer to that question is essentially to figure out if you do understand something that others dont and have total grasp on the subject. This is the reason why when some senior personnel of a well established company goes out and bootstraps a startup, the valuation and expectation of the market is tuned to expect something fabulous – if nothing atleast a fabulous disaster. This is why teams make for the greatest assets and liabilities of a company.

In short, this is how things work. Lets say you have a startup and your shares are valued at INR 100, and you have enough shares allocated to put you at a valuation of One Crore. The simple math is that, whatever your current revenue is, be it six or seven paise or maybe even in the negative, people value you higher and put money into you hoping that in the long term you will benefit. It’s really the basis behind valuations. It’s all “In the long run”. But there is ofcourse a finite length to that, and people are going to constantly keep comparing their returns to the interest rates they can get from banks, ROIs on other assets and comparable other investments. You are going to have to measure up.

“In the long run” never happens, if you dont even exist. And the only way to ensure that you are there in the long run is find yourself a slot in one of these categories. If you havent, or cant, i wouldnt be too surprised to see someone sideline you and get ahead not too far in the near future.

Do you know how much India spends on Advertisement budgeting at the moment? a Whopping 400 crores. Did you know that the Times Group makes a heck of a lot of money in their outdoor advertisement business? I am quoted numbers as high as 60% of all outdoor billboards in Mumbai belonging to the Times Group. And I am also hearing that there is plenty of prime locations near the new Bangalore airport that is bought by the Times Group to expand and make sure that this revenue stream doesn’t dry up anytime soon.

So if I may come to the point, advertisements and the ad market is quite huge. The good news, its nascent and has just started and will only grow to be bigger from here.

That said, we do have a small problem. I have friends who work with online portals and in running content who basically have this complaint: “We scrap content at times, simply because we don’t have a good supporting image to go with it”. Images are plenty and dime a dozen across the web. What they are talking about is an image that fits the context – the context here being, the audience, and the characters of the story being Indian.

Let me zero in on the issue: Have you seen all the billboards that are up there around the city? In every bill board, in every Spread of newspaper, in every online banner, in every pamphlet and brochure, in every marketing material that is used by corporates, in every image that the media uses – be it print, broadcast or for advertising, wherever there is a boy or gal to be presented there, be it contemporary, skimpily clad or in the next new saree model there is, all of them are commissioned photos. Which means, each of those pictures probably cost more than a pretty penny for the advertisers who are running it. Could we do it for cheap? We could, if there was a way to get stock images with Indian folks on them – something that is quite as rare as the tiger population.

There is a business opportunity for a team of artists, creative and enthusiastic photographers to put together a studio and create this portfolio and effectively tap the market, very similar to what Istockphoto did. Any takers?

The legendary duel between a technologist and a marketer is a well known one. Most would claim that they are the extremes and one that cannot be subdued. In every company, especially one that specializes in building products, everyone has a tough time balancing the interactions that go on between these two sets of people. How well you do the balancing act will have a lot to say about the processes that you have in place, the kind of openness and interactive atmosphere that you inculcate – which all bundled together does have say as to whether your product, and inevitably your company will make it past the trials of survival or not.

There is a third angle and element to it. The Designers. If you are even daring to whisper “As if life wasn’t already complicated enough”, you seriously don’t understand what lies ahead.

Let me take a few steps back and come again.

Every time I end up somewhere for a speaking engagement, the person who is introducing me has a moment where they somewhere or the other mention how there are very few people with a deadly mix of business and technology. Considering that I do have a backdrop in technology and can also dabble in business, entrepreneurship and trends, most consider that it must be quite something. But I seriously think that its the third mix that adds to the punch – and without that third mix you don’t amount to much.

Technology. Design. Business – These are the three crucial aspects of a product company. The process flow runs along the lines from left to right and right to left a few times before the specs of the product are frozen and approved. Without the design element in between, you usually end up with a very complex technology platform which solves everything for everyone, and nothing for anyone. I will tie up this loose end in a bit.

So as I said, it is not easy to tie in a technology and a business fella together and the usual genre who compose of both are product managers. One of the very rare assets that are yet to be found here in India. Product management is a skill, an art or perhaps the only true gem in a product based company. If they are a rare breed, everything in the indian ecosystem is pretty much self- explanatory, I’d say.

That said, it is still crucial to have the third element. Unfortunately, I havent been able to meet someone who is part of a firm where all three elements come from different places. There is probably a reason for that. I have a “design report” by an NID graduate lying on my desk for the past six months and I do swear that I make an attempt to interpret it whenever I find the time, and the guts to go through that process. I still can’t for heaven’s sake comprehend what it all means. I know that designers do bring in that dash of craziness, but this one was craziness absolute. And sometimes it is very hard to distinguish the uber creative ones, from the pseudo-ones.

So what really is the answer? I’d say that there are cases to prove that if there are two founders in a firm, and atleast one of them has two of the three qualities, then there is an interesting chance at success. There are cases for a mix of business and design, and there are cases for technology and design. The missing element is always something that is fairly easy to complement.

If you still don’t believe me that Steve jobs is obsessed with design, if that ever was an argument, think of this quote by Alan kay who worked with him: “Steve Jobs understands desire”. Anyone who has understood business will quote you the Maslow’s hierarchy of needs, and everyone who builds products would want to position their offering from that of a “need” (commodity) to that of “want” (Premium). The secret is in the hands of a designer.

The Relevance of Design:

Source: Josh Spear

So what really is this non-sense about design being crucial? Are we talking about the User-interface? If that is the case, doesn’t hiring the snazziest graphic designer, do the task? Probably, yes and maybe not. There is a recent article [PDF] that I was pointed to, and something that might help answer this question. Listen these few lines out.

Start with the idea that people shape technologies and technologies shape society.

Then get comfortable with the idea that social relations are also always material relations.

And finally, consider agency – or the ability to act – as something within the domain of both humans and non-humans.

Credit: Anne Galloway

That’s a sample as to how designers think. I have a friend of mine Mahesh Radhakrishnan, who is possibly one of the most creative guys I’ve met. I have met with him to discuss things, all the way from how to “brand” something (he has some pretty interesting ideas on how to alternatively create a brand), to how a cultural or community building exercise could possibly be drafted. Whenever I know that my thinking is getting a bit muddled or stale, I know that its time to meet a few designers to get my thinking right. And I know that that is something I’ve learnt right out of experience.

I’ll tell you why a designer is crucial. Designers are not the guys who build those boxes or choose the colors for your layout. They are actually the architects who define how an idea conceived as an object is interacted with. A product is never a piece of technology that just caters a solution – It is something that creates a connection to the solution and “interacts” with the user. To make it even simpler: A designer is the one who defines how a product is used. And unless you define how something could be used, and the only way how it could be used, there are going to be a million ways to use it and its going to end up turning into a sandbox or a platform, but never a product.

If you were to ask me, whats the difference between MacOS and the Linux Desktop, I couldn’t care less and let the whole world spear me to the wall if they want to, but one has had a designer at its helm who has defined what all it can do and what it cannot do, and the other one is open to just about everything, which is what makes it complicated, difficult to use and stands in the way of adoption.

To Quote Anne’s own words on the matter, “We [Designers] are engaged in creating possibilities and impossibilities”

Get me a team which can play all these three roles, build a product and still prove that it doesn’t fly. Going by trends, I’d say that’s an impossibility.

The world is in one of those stages where the more bottomlines you use, the more favourable you turn into. Yep, its true.

People in Europe and the west have a way of throwing around jargons. In India, we execute our revenge using abbreviations, it seems. But all said and done, using jargons and terminologies are part of being acceptable and the first sign of someone who knows the trade. So I thought I’d start a series with some of the popular jargons.

Today, its on Bottomlines.

A corporate can have upto three bottomlines – as far as I am aware of. The first is that you are running a company that makes revenue and profit. It’s essentially the self-sustainability and return on investment perspective of a business, and the very reason for the existence of an enterprise.

The second is if the venture had any social impact, and hopefully a positive one at that.

The third bottomline kicks in, if the venture is self-sustainable, is eco-friendly and does not pollute and even better actually is environment friendly.

Whilst every business hopefully conquers the first bottom line, the second and third are increasingly receiving favor in board rooms and executive meetings as there is concern for economic stability and long term environmental implications in this planet.

Think about it. IF it applies to what you do, you might want to use it… sparingly, but when moments warrant it.

“Every act of creation is first of all an act of destruction.” — Pablo Picasso

What is it that makes a great startup? It’s a question that I have been pondering over for sometime now actually and I thought I’d start a conversation around the same. So What makes a startup great? Is it It’s rate of growth? The team? The market? or the amount of funds that its able to raise? Hmm.. Possibly none of the above.

Let me cite you a couple of great examples and let’s draw the parallels from there.

Case #1: The telecom world has been known for skimming the market. While technically the cost of landing a call across the globe was quite insignificant, most operators have charged ridiculous prices for one simple reason – there were no other options. With having no options came the fact that they can price calls at the tags that they want to, and the public innocently was willing to pay for it. All went on as normal till the internet boomed and high speed internet became a reality, and Voice over IP (VoIP) was born. As much as there were a lot of initial attempts (even microsoft and yahoo tried internet telephony and discontinued), the fact that most of the world was yet not on broadband didn’t help the cause at all. Then along came skype with its compression codec which worked on narrowband connections, the way they democratized (decentralized) access and limitations, and the rules of the game were forever changed.

As the story goes, the founders didn’t start with skype, but with Kazaa, which did the same thing for internet file sharing. Kazzaa did for file sharing what Napster started with for music sharing within intranets

Case #2: Before the telecom revolution happened in India, the cost of a telephone line was close to Rs. 10,000. There was a man who had the vision, the drive and the determination to make sure that that cost was sub Rs. 500. Sounds very crazy doesnt it? But it happened, and thats how the TeNeT Group was formed, and thats one of the greatest momentum on which it rides till this day.

Case #3: There was once a time when searching for anything on the internet meant a lot of pain. The closest you will get to anything will be loads and loads of adult websites, which had covered just about every meta tag under the sun and were the default results no matter what you were looking for. Search for your mother’s favorite dessert recipe and you know what you’d get. Then came dogpile, and within the undercurrents came a company which just blew your mind away with the accuracy of information it got to you. Just when most of us, had given up hope of digging out anything useful out of the internet, Google helped make sense of the oodles of information that the cyberworld was churning up.

Case #4: There was once a time when people thought that four wheeler drives were meant only for the highly rich. Ratan Tata took to new levels what Henry Ford started off, with his vision and in delivering on his word, the Tata Nano.

I think we have enough to start with. Can you see the commonality that runs between all these cases. If I have to pick a word for it, I’d choose “controversy”. These are all essentially and rightly so, companies, teams and ideas that challenged the norm.

There was once a wise man who advised me that it was okay to be considered controversial. It’s not a crime, actually a compliment and a pride for an entrepreneur to be controversial. If you are an entrepreneur and you are not controversial, it just means you are just another one of the same – nothing more than wasting everyone’s breathe in the ecosystem. In other words, there is a remote chance that you are actually breaking new ground, when you are controversial.

There is also another reason why I think this makes a lot of sense. When you are starting off with a new company, and with a revolutionary mission in mind (assuming that you do want to break some new ground), it is absolutely essential that you polarize people. There will always be people who will love you and those who hate you no matter what. But the only choice you have is to ensure that there are not many people who are indifferent about what you do. You want to make sure that people choose a side, whether loving or hating your idea for whatever reason it is, and from time to time even swing sides. That’s what a “Buzz” really is all about. If you have that going for you, you are going to have no problems in having people spinning around you, in your new world.

So coming back to our original question, What makes a great Startup? I think it starts off with the vision itself. And the vision of course is something that is grown on the fertile soil of the founders’ imaginations. A great startup is one that changes the rules of the game – and what most refer to as disrupting markets. Not all technology disruptions necessarily disrupt markets and lifestyle as well. But there’s the magic that an entrepreneur brings in and one that differentiates him from a pure scientist.

As per the new economy, free is no longer controversial. It’s actually the norm these days. Discounts and free are words that people have heard and demand for no apparent reason. “Free” has cheapened a lot of services. It is also made possible by the various other laws and economic conditions that make it happen, but might not be something that will go on for long. The “Free” marketing strategy (started off by Gillette) is one of the several marketing strategies, not THE only marketing strategy.

Let me ask. If there is something that everybody keeps saying cant be done, there is probably a good chance that it can be proven otherwise. Does it come close to the where you are standing and aiming for right now?

It all occured to me when I was invited for a panel in an engineering college here in Chennai and the drive seemed to last longer than the allocated time for my talk. The college is 40kms away from the heart of the city and needless to say right in the middle of developmental regions. Which essentially means, absolutely no easy access to stationaries or food, let alone refreshments for any of these students. To me that screams out as an opportunity.

I did a quick search on google, and just in chennai there are close to 50 engineering colleges. I haven’t even factored in any of the arts and science and other universities yet. Even if one starts off with just the engineeering colleges by setting up a chain of food chains (fastfood or Deli), my guess is that it would take off quite well. We are essentially targeting a group of people who are perennially hungry (thanks to the growing boy/girl stage), do need something to keep them hydrated during this season, and there is a attribute of peer spending.

I’ve always believed that the next sector to get organized would be the Pan wallas. You dont believe me? Well, think about it. Go to the beach sometime and observe all the guys who are selling icecreams on their mobile carts. Each and everyone of them is carrying branded icecreams these days. Five or six years ago, these same guys were selling no-name, home-bade ice on sticks. Whether they are making more money now, or was it before is a question that is altogether different, but it will essentially be how it starts moving. I am sure the same with happen with Pan wallas as well.

But coming back to the topic, lets see if anyone picks this up and runs with it.

The last time i heard such statements too frequently was when I was bootstrapping my first company, was verging on entrepreneurship as a lifestyle and all, and i was sixteen. It’s been more than a decade, and I am still hearing those voices in my life.

This is not a post where we talk about what is happening in the ecosystem, or what companies are doing, but part of being an entrepreneurship is about taking a route very few people do – or even see for that matter. In the immortal words, that leads to “wars within and without” – meaning that there is a battle that we fight within our own selves, of choices that could have been simpler, and a battle that we fight with the world in proving them wrong – age doesn’t matter. experience counts, but not everything. what is only in your head as an idea can indeed make an impact and change lives. And india is not just an outsourcing destination.

There are four kinds of fears that our lives start off with, starts the book, The Alchemist. The fear that we need to conquer that the world infuses within us that we will never do anything significant. The fear that we will have to make some changes to our lives in chasing our dreams – perhaps things that our loved ones will not understand. The fear that we will stand halfway through our vision and wonder if we made the wrong choice somewhere – the thought of standing halfway in the middle of the desert wanting to turn back only to be mocked by people who warned us against this choice in the first place. The fear of victory – what does winning mean. A farmer going after his dream and perhaps becoming a wealthy sultan would mean bearing a new identify. All that of the past is gone, and a new life begins. Not everyone is cut out for that.

Why do we still keep doing this then? Because, there is no other choice. It this only in this journey that we find our heart truly beating to its life. Life is too slow or too dull otherwise. Life simply cant be otherwise. We, as entrepreneurs, keep chasing this mirage, because this is what we are wired to do. We are the reason the economy of countries are driven, technologies evolve, societies develop, and nations are built… invariably wars break and destruction and havoc is caused as well. But from destruction, creation takes on a new shape. Both are in its complexity intertwined.

So why am i writing this? I am actually writing this as a reminder to myself, that people have said this in the past. And the words that echo though my head wondering if it was by fluke or chance that the past has been good to me… well, its meant to be that way. Everybody walks through this passage and its only those who dare the impossible that are rewarded. It’s the reason why ancient mysteries are coded, so that its only those with persistence that even have the faint chance of achieving and unlocking its mysteries.

Let me ground myself and this argument in a little bit of reality and clarity. It took Infosys 25 years to be grown into a company that is sustainable, scalable and before they went IPO as a publicly traded company. It takes companies less than five years – in the valley, and a condition that is soon going to become a reality in India, to achieve the same stage what took Infosys 25 years.
This is what they call a collapsing of the years, where time goes through a compression to enable ridiculously and extensible fast growth. Whether you believe it or not, India is going through that, and that too with just a minor percentage of folks contributing. This growth is going to continue till people keep chasing their dreams. And thats why you and I are important. That’s where you and I find our individual roles to play.

“You are still twenty something” they say. The words echo through my head. But the last time i heard someone mention something of my age and implying that grey hair and living through the years somehow equates to knowledge, I knew i had that smirk on my face. Not of pride – that would be in vain, but one that knew that ‘working hard and working smart’ are two different things and when you do go after what you want, the universe conspires to be on your side and help you achieve it.

They say, once a decade you need to stop and re-evaluate all your principles afresh. I am wondering if its time for that. I know the values that i am going to keep, and the ones that i am going to rewrite. There are many more in this journey than just me. That’s something i have come to understand quite closely recently. I am not alone as i used to think I am – though our paths are all our own, and our struggles individual. But there are some age old values that i am not about to let go. Not now, not ever. Never give up. Stand up to what challenges you. And age.. is just a number that you can challenge right at its face, if you do have good people around you and wise counsel. Discouragement is not wise counsel. It’s cowardism stealthed as wisdom. It will make you bury your treasures and your wisdom deep within the desert through which no man will pass by.

I’ve made my decision. I look at my the lines on my palm as if i do truly believe that its these lines that dictate my destiny. As if fate is already drawn and is as stern as the dark lines that my palm carries. And at an instant, i see a faint flash and a line slowly emerges strenghthening the line that makes ’solomon’s ring’ stronger. It represents fame and riches, a friend said. Perhaps it does, I say to myself. Fortune does favour the daring – That I am certain about.