Archive for the ‘Ask Vijay’ Category
Getting to the Heart of it.
Posted on: April 8, 2009
I am reading the transcript of the conversations held by the Union Square Ventures, and reading a quote by Sir Ken Robinson (who is now fairly well known in the education circles for his TED Talk). In the talk, he quotes a note from the book “The Empty Space” by Peter Brooke. In a way of not breaking what he said, Let me quote him.
There was a fantastic booklet a few years ago by a
guy called Peter Brooke. He’s a theater director,
if you ever come across it. He wrote a book called
“The Empty Space.” And he asked himself this
question. He was concerned most theater and is —
loose entertainment — it’s not invigorating. It’s
like a passing time.His thing is theater as a vibrant,
social and cultural force. So, he also analyzed
what goes wrong with the theater. So, he asked
himself this question. He said, What is the heart
of the theater? What is it? What is this thing we
are talking about? And to get to it, he started
the process of subtraction. He said, “What can you
take away from it and still have it?”
And he said, well, you can take away
the stage. Take away the script. You can take
away the lighting. See what’s going on, you take
away the curtains, and you can take away the
building. You can take away all the crew, and you
can certainly take away the director. All of that
is very easy. Take it all out.
The only thing you cannot remove from
theater is an actor in a space and somebody
watching. That’s the heart of it. And if either
of those parts is missing, there is no theater.
You need a performer and an audience. Theater is
that relationship.
And he said you should never add
anything to that relationship unless it improves
it. If it gets in the way, if it encumbers it, if
it makes it more difficult, you shouldn’t have it.
And that’s his problem with theater. Everything is
a distraction from the main business.
More than once, and whenever you do find yourself trying to redefine an industry, change the way a system works, or maybe even build an ecosystem, these words are good to turn to. Define the basics of what makes that system work, and see how it can be re-tuned, rebuilt and made to work better. You have to go back to the basics, if you want to redefine.
Making That Halo Glow – Part I
Posted on: March 28, 2009
- In: Ask Vijay | Business | Entrepreneurship | India
- 4 Comments
Even as the current economic situation hasnt seem to have harmed the Early Stage Investment scene by much, there is some major misunderstanding by First Time Entrepreneurs, starting off in India, who are looking to raise funds. This series hopes to shine some light on some of them
LESSON: MAKE THAT SACRIFICE. GROW WITH THE ORGANIZATION
Scenario: In the last three business plans that I have had the priviledge to look at and to give feedbacks on, it seems that the average entrepreneur wants a salary of around 2 Lakhs a month, seems to be hiring an office attendant or a secretary in the first year, is travelling extensively, starts a marketing budget even before the product is ready, claims a steady income stream, is absolutely immune to market changes, and can solidly break even in 3 years. And oh, they give a 4x return in the fourth year.
You cannot demand a salary that runs in the lakhs. You cant because If I were investing, I wouldn’t know if there is even an incentive for the entrepreneur to slog to make this company succeed anymore. Given the current employment situation, I would even have a slight doubt as to whether the guy lost his job and is getting self-employed with a raise. But I do understand if you would want to live comfortably. This is what I would suggest.
Take a pay cut in the first two years – till your product development is ready. Just so you get a number, You get paid at the same level as your Indian Lead Software Engineer (I have to specific about the indian part, since some folks also have high paid outsourced engineers). That should put you at around 40K a month. Once that is set, and once your product development is done, and your marketing and sales efforts start, align your salary so that a base of 40K and a incentive component from the sales defines what your take home package is. That will assure me as an investor that you are willing to take a paycut to keep costs low and burn things slowly to get through the initial phases and even as the company makes money you arent raising costs, but defining your salary from what is coming in. If you are a company that sells products that sells in the millions, or have several product packages, it would be wise to even define slabs, that define the percentage.
You do that, and all of a sudden I see a real entrepreneur, who could really use with some financial support, and the halo over the head glows and a lot more people just might be willing to seriously consider your financial proposition.
Numbers. Monetization. Values and Compensation Mechanisms. Its essentially the building blocks of most systems and what keeps the wheels of most systems churning. That’s what should be driving everyone crazy. Isnt it? I don’t know about you, but it sure does drive me crazy.
Metrics. They are the easiest way to measure performance and to know that you are moving. Most of the times, as you are working with early and extremely early stage ventures, the only way to ensure that the focus of the team is on what is essential, is to set down a basic set of metrics that we can track and use to align ourselves as we go. It might seem like an extremely simple thing, but what you measure has to lot to say about what you value most. And when you make that decision in prioritizing, focus comes as a bi-product – a beautiful bi-product.
There is a danger to this. If you don’t think wide enough, then the easiest metric will be imposed on you, and in most cases its the rate at which your bank balance is depleting or increasing. Unfortunately, money is in most cases several levels down the chain in terms of processes, and measuring it directly might not give you much insight nor control to manage where you are heading.
So what am I getting at? As a startup, you need to measure, and measure everything.
I dont believe that currency is the only value system that exists. At the end of the day, even currencies are nothing more than a few numbers which give some standing among an audience. Find an alternate means to provide that and you would have created a different value system altogether.
How often do you check to ensure that you are on track? Atleast once every month. And when you do that, do keep someone who can guide you for better around. It will help, when you do notice you are not on track and need to scream out the words “Help!”
Technorati Tags: startup, entrepreneur, vijay+anand, metrics, progress, performance, evaluation
When We Know What We Want.
Posted on: December 2, 2008
- In: Ask Vijay | Business | Entrepreneurship | tips | Web 2.0
- 3 Comments
This world is supposed to be full of systems, and systems that carry inefficiencies. Entrepreneurs are in my dictionary, those that can look at those systems – ticking and clicking, and notice where and how the systems can be improved. Some are driven by their hearts and start NGOs, and others get all logical and while at it, also make some money.
In my book, entrepreneurs are those unsung heroes who get set to transform the way – hopefully for the better.
That’s quite a long topic, if we step into that world, and let me narrow it down to the aspect of understanding your end users. Time and time again, we hear phrases such as “Understand your customer” “The Customer is always right” “User-centric design” which in most cases is defined as keeping the customer, and his demands at the centre of the equation and coming up with solutions around them. Do Customers, and users… and most of all humans know of what they really need?
I think this is a crucial question to ask, because analyzing needs and the capacity for a user to pay for a service defines sustainability and in some cases survival for companies – and in this economic situation, for a whole lot of them. So what do users want? Men or Women, as they might be.
I think we have kind of oversimplified the equation at most times asking direct questions about a product. If you get into the details of a product asking questions such as “Imagine if you had an ipod, but better and cheaper, would you get it?”, the obvious answer would be a yes. What one needs to understand, especially an innovator or an entrepreneur is to understand the intangibles. How would buying that product do in terms of the pride, and show-off calibre of that person. A lot usually tends to matter. Long story short, I’d strongly recommend not to ask direct questions. The answers are always in-between the lines. If you interpret it right, you win, otherwise not. But you get better at it over time. Thats the good part.
There is a reason why I am writing this. There was a recent study that I came across that was asked to a group of single men and women as to what is it that they look for in potential spouses. The answers were all tabulated, and then they were observed over a couple of sessions of speed dates. Most of the time, the kind of people that we are “attracted” to, arent the ones that we define as our perfect spouses. And the eerie thing is that, when they did the same survey right after a date, depending of whether a candidate liked a person who didnt match their previous opinion, the answers would sway totally on the other direction. Come back to them after four more weeks and you’d get their old answers back – as the infactuation wears off.
In Summary, we arent capable of knowing what we want. Thats why B2C businesses have such a hard time understanding what their customers are looking for, what ticks, what doesnt, and what makes it all worse.
B2B businesses in that sense are slightly easier, since businesses do tend to have measured and analyzed every process in terms of metrics – either as costs, expenditures, manpower, transactions, or revenue and its all about making a number rise and one go down, and thats easier to measure and deal with.
Do keep that in the back of your head, if you are ideating. As much as customers are king, and their word is final, in most times they also don’t know what they want. You would have to do a little match-making on their behalf. And with time, you’ll get really good at it, if you like doing such things – and that’s the thrill of building a product that clicks.
- In: Ask Vijay | Business | Ideas to Toss | India | Open Source Innovation | Technology | tips | Web 2.0
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So I know that there are a gazillion guys out there in the whole wide world, who have given “open” advise to Yahoo as to what they should do. I am neither an expert, nor am vested into the company to have such generosity towards them 🙂
A friend of mine and I, over some conversations were discussing about some of the bigger brands that we see around us and something along the topics of Return on Equity. Not sure if you are aware of, but Microsoft has a 52% return on equity. Yahoo has roughly about 7% and falling drastically and Google has one which stands at around 26% – and growing steadily. Whatever you may say, Microsoft has played this game with a whole new set of balls and one most people simply won’t understand. And if you ask me, they are a much better company in terms of strategy and products compared to Google, anyday.
Yahoo could emerge with an edge, if they leapfrog into other verticals following the same web-based advertisement network.
But that’s not the focus of this post.
The conversation was that, if a company has Advertisement as its core strength and has built a competence in it, then its going to be very hard for the company to drop that and adapt the advertising network of its partner/rival. Well, for the case of survival they might, but since they do have the core competence, the resources and the minds that can think in that direction, what could they possibly do, was the question.
Fact: Yahoo makes most of its money via advertisement, and that too on banner ads.
This becomes an issue when you have so much internet portals and properties, but just simply have to fill them with advertisements in order to make them viable. And in this day and age of APIs, nobody might even come visit the site to get hit by the advertisement. You are forced to rethink in terms of strategically placing the advertisement within the content, but thats a very very hard thing.
My Take: I think this is probably the same route as making fiber out of rocks. There might be some way to do it, but whatever it is, its one rare, long process.
I’d say, flip the coin, and lets look out to the horizon. Go after other streams, television and Radio… to be precise.
- In: Ask Vijay | Entrepreneurship | India | Technology | tips
- 4 Comments
Startup Entrepreneurs are oodles of Fun to work with. Perhaps its that drive within them to change things, and the paranoia of taking on a bigger industry which adds to all that. As hectic as it could be, its nothing short of exhilarating – I seem to be gasping for breathe during the slow times for sure.
So the point is speed. Its a crucial element. I think its the first criteria anyone looks at to evaluate and measure the strength of an entrepreneur. “Fire in the belly” “passion”, are all just variables of the same thing being described, I’d say.
I think the second most crucial aspect when it comes to that is the accuracy – The quality of implementation so to speak.
I wanted to briefly write about this, for a couple of reasons. There are quite a bit of early stage ventures out there – almost 2000 of them at any given point in time, and the truth of the matter is that less than 10% of them survive the first two years. That’s a lot of enterprises dying out. And if you really look at it, what stands as foremost in the list of reasons is the lack of guidance in terms of implementation and execution that counts towards it.
There are this couple of folks who are in the back of my mind (Who are part of the incubator) while I am writing this, and I am wondering if they would survive out there in the world, if not for day to day guidance. Probably not is what i’d say.
In a recent discussion with some investors, the enlightening moment was when someone made the statement that ‘investment is pretty much rocket fuel. It’ll help you go faster, dont know where though”. And I think there is more than an ounce of truth in that matter. Investments, especially money will accelerate the direction that you are aiming for – and God help you if you are aimed at the wrong direction looking at the wall, because the thud will just be that much louder. And as much as everyone claims that they will provide support, guidance and all that, ping me whenever that really does happen.
The truth of the matter is that early stage ventures require almost a weekly review meet. That’s essentially the time period when the company is accelerating and the strategy starts to fall in place. In three months (between board meetings), the company would have gone so off the tracks that it would take years before you can bring it back on track – and dont complain if that window of opportunity you were chasing, isnt there.
So if you are an early stage venture and someone promises you guidance, demand that the minimum guidance you require is one where he/she is available to you any time of the day, and will meet with you for atleast an hour once in a week or fortnight. Its crucial to be accurate when you are racing like a cheetah to take down the elephants.
If you are an advisor, I would suggest sitting with the team in the beginning and doing a brainstorm of all the possibilities in terms of directions, products, market trends and potential exits (its good to think of that distant tunnels). If a company has no scope of going IPO on its own, but will just create a whirlwind of an opportunity and spin to be part of another company, I dont think there is anything wrong with that – and having that clarity will make a lot of difference, because you start focusing on strategic partnerships much more intently.
So coming back to the advisor. Do one elaborate meeting – which you can continue to hold during every three months, and in the meantime meet every two weeks or so and talk about everything that goes towards that. Revenues, Morale, productivity, Team, partners – everything. Jot down all the questions, and start working out possible solutions. The percentage of solution creation is what should shift slowly – starting off with the mentor contributing the most, to a half and half to a point where the mentor just listens and corrects if something goes terribly wrong, and letting the entrepreneur take the helm. You gotta teach them to fish at somepoint Mister!
So Run, as fast as you could. Also make sure you are running in the right direction and doubly make sure that there is infact a door on that wall, and its open.
- In: Ask Vijay | Entrepreneurship | India | tips
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Question: I am interested in starting my own venture and have been doing the groundwork for it. I currently work for a company, but would like to do the pilot run while still holding my day job and as the venture stabilizes, take the plunge fulltime. What would you suggest?
Dear X,
There are a couple of ways to do this and a few things to keep in mind.
1. Usually all job offers have this clause that you have to solely focused on the job you are hired for at your primary workplace. Hence usually taking up another offer or even a consultancy (even if the employer may never find out) is done by getting a letter of permission allowing the employee to be involved with other things.
a) Though this is not required, it gets you a lot of brownie points with your employer, just for the sheer honesty. As much as Proto.in does not interfere with any of the activities of what I do here in the incubation centre – but only enhances it – I still wrote a mail asking for permission and to let folks know that i am involved in something. They go easy on me whenever proto.in is around the corner.
The point: Keep everyone informed so that they can give their support in whatever manner that they could.
2. If you are going to do this as a proprietary thing, then even step 1 wont help, cause its assumed that you are fulltime with the venture – when you are the 100% shareholder and the guy running operations. So what some folks do is register the company in the name of the spouse – if she is not employed, or if her employment contract is not so stringent.
3. One thing to keep in mind is something called the corporate veil. When a company becomes a ‘corporation’ it becomes an entity by itself, that even the founder is nothing more than an employee in it. Because of that structure, if the company goes down under, it still doesnt take the founders along with it – nor their assets, since they were just employees. But there are cases when they consider the corporate veil to be broken, which would be when the personal assets of the founder are mixed up with the assets of the company and in such cases, the founder can be sued – if in the future the venture gets funded and things go awry.
I don’t mean to scare you, but just giving you a heads up on all the things involved.
I would suggest:
1. Go ahead and register the company – if you are sure you want to do this venture.
2. This would be the time to bring onboard some advisors and get them involved in the venture – since there has to be a minimum of two directors to incorporate the firm
3. Get the permission from your current job to be involved.
4. Keep going with that setup, till you are comfortable making the flip – hopefully which wont be too far away.
5. During the process of step 4, at some point your venture will possibly take enough time out of you as your day job. Do talk to the management to perhaps transition into a part-time role if possible. Its good to stay clear with your conscience.
I hope that helps.
Vijay
Question: How do I deal with it, if my team member suddenly comes up to me and asks for a long leave since she is expecting and also wouldnt be able to put in regular hours like the others?
It seems to be a baby boom season. Quite a lot of people in circles I know are expecting and shuddering as to how to tell their immediate bosses, the news and the fact that they will be taking a slighter long period in the near future.
There is a team that I am personally mentoring where the team lead is a lady, and she is expecting a baby. I am actually a little stuck as to how to deal with this situation – partly cause I haven’t dealt with a situation like this before. Atleast a month ago, I was.
When you are bootstrapping a company, especially one where there are a total of five people, one not being able to give a total 100% usually translates to 20% of your company underperforming – When its your lead, there are a whole lot of other complications that come into the picture.
Don’t get me wrong. Motherhood is an amazing thing and I am thankful to my mom for all the things she went through to bring me into this world. My mom, I believe also managed to work through the pregnancy and took very few days off – apart from the maternity leave that was granted. My mom isn’t the only example. There are countless number of women, and quite a few of them that I quite admire who have managed parenthood, and a professional life – but its quite a balancing act, and have no doubt about it.
This post is not about them though. I am so very not qualified to handle that topic. I should take on a guest blogger to write about that, but instead, this topic is about how a startup should be prepared.
A startup team is small, precious and very fragile. That said, it is also under a lot of stress to deliver. A startup team is also extremely friendly, more family-oriented than big businesses can be, and are also very supportive of the individualistic needs and passions.
With that set, the advice to plan for a scenario like this is quite simple. What if one of the folks working for you fell sick, broke a bone or caught chicken pox and disappeared for two months? You should look at this as something similar, except here you know exactly when the person would be taking off.
That is probably one of the most simplest and realistic ways to drop it. All panic and initial hysteria aside, the beauty about situations like this is that there is time ahead to plan for the temporary replacement or work shuffling with someone in the organization. I am expecting that the staff is more open about it, and can give you a heads up much ahead of time, but if and when it does happen, don’t panic. You can always plan your way around it.
Start off with this:
1. Sit down with the person and have a chat. Acknowledge the situation and tell her that its okay. Let her calm down a bit.
2. Take a realistic and last week account of how and when she’s been able to come to work and if the new state of things is affecting her performance. You will notice that she has been coming to late in the mornings, but that is expected. Prepare for it.
3. When setting up meetings with clients or partners and if her presence is going to be required, do ask for her approval, and no matter what she says dont setup an early morning meeting. Even she doesnt know how she’ll feel on the morning of the said date.
4. Break the news to her as to how the team is going to stay on top of things when she would be gone. If you are going to be bringing in a temporary replacement, assure her that the replacement is just a temporary one and her job will be waiting for her when she comes back – whenever she is ready.
5. Give her the option as to how she wants to move forward with the plan. Different folks take different timelines to recover and get back to work. If she is going to be gone for sometime, do check with your leave policies and reconcile with her if she will be granted materinity leave, or if it will be on loss of pay. Startups cant afford to keep both a temporary replacement and a full-time staff on payroll for the same job at the sametime. But clarifying it with her would really help and relieve some stress.
6. Dont panic. Be supportive, and if there is someone in the office, preferably a female staff who can interface with her on any needs she might have, that’s a lot of good deed that you could do.
I have always said that its better to hire folks from the opposite gender when it comes to bootstrapping a company. They take much better ownership of their tasks, and their loyalty levels are much higher compared to most men. That said, once a while when momentous occassions as such do happen in the life of the team members who do contribute the most, we also need to turn back and return the gratitude, with a courteous “We’ll be here for you”.
- In: Ask Vijay | Business | Proto.in | Technology
- 5 Comments
I get a lot of mails from folks looking for answers to various things. For the consumption and benefit of the masses, I’ll post some of them here – ofcourse after protecting the identity of the person
Dear Vijay,
As a quick intro i am senior IT professional at Pune and i have been trying to find my way through the India startup scene and i am currently based in Pune still in a full-time job. While i have been trying to bootstrap my idea to be able to sustain the model and step into the startup world gradually through self funding it tends to drag and takes too much time. I have realized the only way is to be able to try and secure some external funding and step out full time with all the risks etc.
What are your thoughts on the Internet Learning space, and who are the right people to get in touch with in the VC/Angel circle who would be interested to hear me out on this 🙂 .. I have been trying to get in touch with IAN, Seedfund.in as well. I know that Proto.in is for startups who are established and running.
Appreciate your inputs, at the same time no issues if you cannot respond on this. Will catch you on the internet chat on Saturday with some other questions.
Thanks,
K.
————————————————————————————————
K,
It’s a pleasure to hear from you. There is always time for a conversation 🙂
Contrary to popular belief, Proto.in is not for “established” businesses, but teams and companies which have figured out what they want to do, have a prototype, and are ready to launch and get into the world of business. Proto.in is, in most cases a launch platform to attract the attention of people who matter most in that context.
Coming back to your point, there are a lot of skeletons of people who have touched the “learning’ space. Pricing, content, delivery models, all of which are quite complex issues to solve. Apart from Heymath, I cant think of any successful e-learning initiative that has been launched.
Now, coming back to your question, unless a team is already formed, a company is in place, and a prototype is built, and can be tried on atleast a sample market, no one is usually keen to fund – unless you know the investor personally for a long time, but that seems to be rarely the case (we wouldn’t be having this conversation otherwise). Everybody will give you the time for that first meeting, but nothing much will come out of it. Your choices get limited to either, personal money, or bank loans to start with.
Another option is to try incubation centers. They will help keep your other cash burns low, bring the risk on matters such as validating your idea, the market, hiring people etc, and you just have to manage to live with a “lower” salary, that is usually given as stipend. It’s an option to consider, especially in a complex problem as education.
If you need some suggestions on this front, I could help. I hope this answer was of some benefit.
Vijay
Vijay Anand | The Startup Guy. 