Vijay Anand | The Startup Guy.

Posts Tagged ‘India

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.

Its not a rarity these days to hear talks about turning entrepreneurship into a lifestyle. As a matter of fact, we – everyone of us who are involved in shaping the startup space in India – are quite glad that thats happening, because it just shows that things are changing, very much for the better.

Even as Barcamps, Open Coffee Clubs, Startup Saturdays and several forms of informal support groups are emerging in this country, one of the biggest problem that we seem to be facing is the fact that we are still very urban-centric. All these meets happen in four or five of the major metros in the country – whereas we probably should be a bit more inclusive about it. There are issues such as the lack of experienced entrepreneurs to share from their life’s tale and help out emerging and aspiring entrepreneurs that seem to be stiffling some of the productivity in some of these informal meets.

Well, technology can solve that problem in some aspect, and we are going to give it our best shot.

We are opening up this Chat Application that we’ve had built, and testing in some occassions to see how we can spin this to solve this issue. Every Saturday between 9am and 5pm – and without fail, every week, we are planning to keep the Proto.in Chat [Link here] open and anyone can visit the site, and interact with entrepreneurs from across the country. We understand that Startup Saturdays happen on the same dates, so if possible we will get someone who is attending the sessions to live chat in the sessions so that the wisdom share can be spread to a larger audience if possible.

So, we’ve done and are doing our part to solve this problem. Now the request is that you be a part of this, to be there, spend sometime in the channel, interacting with, and helping out one entrepreneur to another, and in truly making entrepreneurship a lifestyle choice for those who wish for it – even beyond the metros.

Looking forward to seeing you there. And spread the word.

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I grew up with a poster in my room saying “The size of your world is as big as your dreams”. It was always there when you woke up to remind you to think beyond the box. It still hangs there in my room at my parents place. It’s the thought that came into my mind when I was browsing through the net, listening to some of the folk’s interpretation of Entrepreneurship.

It seems  to me as if there are a couple of theories floating around these past few weeks.

a) Entrepreneurship is overrated. Entrepreneurship is romanticized, and the often tweeted and retweeted phrase seems to be “My son is without a job, ah! he is an entrepreneur”. Well, That’s probably pushing it far, and yep, perhaps we are breaking the elitism that was once associated with being an “entrepreneur”, but isn’t this what we wanted with all the publicizing that we did and urging one another to chase their dreams? I do see that this could dampen the ones that pride in elitism, but as far as things go, there will always be a gulf between those who can dream, ideate and implement, and those who just wear the badge and do nothing. And really, the more the merrier in this party.

b) There is also this other camp, that seems to think that, Entrepreneurship is too Web 2.0-ised. I can emphatize with this camp.¬† I dont think entrepreneurship in India is equated with a venture in the web 2.0 world, but most of us derive our first impression from the media that we consume and web 2.0 is essentially Media and new age consumption of those content. You get hit by it in the face over and over again, till you find something interesting. That doesn’t mean that there arent other sort of ventures going on out there. Manufacturing is still one of our strongest sectors and there are plenty of neat things cooking up in that camp. So for those of you freaking out with the thought of drowning in Web 2.0 Gyaan, take heeed, there is a bigger world out there – you just need to step out more.

c) There is a third theory out there that there are a lot of NRIs returning home. And Rajiv Gandhi is rightly quoted that whatever happened a few decades ago was not brain drain, but brain banking. Along with those returning is returning a renewed sense of nationalism, pride, and a whole lot of global interaction practices, that really help us get our quality of work a notch higher to match global capabilities. The complaint is that, along with them comes the baggage to convert the cities of India, into New York and Boston, or London. They do have a point. But sooner or later as these fresh entrepreneurs hit the Registrar of Companies to get their incorporation work done, they will know that things work slightly in a different order in this country.

So, really gentlemen (and ladies), there is not much to fret. You can relax and enjoy the process as our landscape changes before our eyes.

We Really Don’t Dream Big Enough.

What I want to talk about really is not the concerns, but my own concern as to how we aren’t dreaming big Read the rest of this entry »

This is a wonderful time to be starting up. You will come across very few people who will give comparisons to all the benefits they get working for big corporates. Its one such time. Hiring will be slightly easier, and retaining them will be even more easier.

Even in the midst of all that, it does seem that a lot of the Startup Companies are hardpressed for resources here in India. Here’s a solution.

A few of us have been talking about putting together a centre that trains people (as blank slated as freshers) on the common technologies that people use while building products – the usual PHP, Python, AJAX, MySQL, etc etc and getting them upto speed on mashups, APIs, documentation, and moving forward. That is the level of skill that most of the startup community folks are looking for it seems. Or am I wrong here?

If I am right, then there is a simple way around it. Every chapter of OCC in the country is doing quite well. I heard from Santhosh that Pune is a 300 people group now (though I do suspect that the turn out ratio would be still less), but who knew Pune had 300 people who would be open to being part of a community right? And the same case has gone on with Bangalore, Kolkatta, Hyderabad, Chennai, Delhi, and even now and then with Mumbai.

Here’s the thought. What if in one of the OCCs a dozen of the startup companies, especially the folks who can code and code really well, commit that they will run a two month training program for people in these languages? It is going to take a bit of time and commitment, but there are a lot of resources already on the web, and with a couple of screencasts, and proper documentation, you could essentially also use it as training material for the next batch of people that you hire in your company later on.

What I am proposing is that a batch of technology entrepreneurs, each taking a week to cover different aspects of the course, could put their hands together to collaboratively solve an issue which is haunting a great many of them. Read the rest of this entry »

You must know by now that we get involved in quite a bit of work related to the city. I believe that a city is a representation, collection and expression of the people living in it. If you walk into a city and cannot hear the voices, and expressions of its people, the city … aint quite alive. And I love having cities which are alive.

Mahesh Radhakrishnan, a friend of mine who is behind MOAD and is one really talented architect and I often meet to discuss about something we can do to solve these issues.

One latest such initiative is to setup something like this in Chennai. We are going to need some hands on this, but if and when it comes out, it will be quite something to boast about. What do you think?

This is an installation done in (Helsinski) Europe. We are planning to build the same at a fraction of the cost.

This is an installation done in (Helsinski) Europe. We are planning to build the same at a fraction of the cost.

Youtube Link of the Wall in Action.

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

I love the weekends. Especially the ones where you pretty much meet people after people, and get to see the world through a different set of eyes and perspectives. Always loved that.

So there goes the past weekend, which has just about been the most amazing weekend ever – after a really really long time, and partly thanks to meeting some of the folks from the startup scene in bangalore.

So here’s a thought that’s been on my mind. How many kinds of entrepreneurs are there? Well, it seems there are two kinds. The Incremental ones and the Iterative ones.

The incremental one is that guy who wants to be an entrepreneur, is very calculative, and goes on and takes up a job in that large firm, and after years of carefully planning his networks, funds and contigencies makes a leap to build one product, putting together a company with his colleagues. You could almost say that Mindtree was one such firm. The firm immediately attracts investors, because the experience of the founders talks volumes, the contacts are well established and the product/idea is usually something that is closely related to the domain that they have been working in.

This is pretty much your typical VC fundable business.

But there is this other kind. The kind that starts off young, comes up with an idea and grows the idea. The idea is usually nothing significant, but an improvement none the less. The grow the idea, and make an exit – small, okay or in most cases nothing at all, move on to the next idea, and with each new ideation and execution grow exponentially in terms of thinking, visions and execution style. These are your radical mavericks.

But you know what? In most cases the incremental ones, as great as they are, will only become what they are, if they are not funded. If they learn lessons the hard way. If they learn to bootstrap, learn to live in the trenches, and they grow from there.

I strongly believe, and there are quite a few others who agree, that we are destroying these genre of entrepreneurs by either cushioning them with hopes of investments, in the name of incubation centres (totally taking away their risk appetite)and by simply not letting that first idea fail.

If statistics are true, then its usually the third venture of an incremental entrepreneur that will or should get funded. Anything before that is all premature, and just part of the process.

So I am trying to validate this theory and it kinda starts to make sense. They say that for any product to be built, it takes roughly about 2.4 iterations before it can hit the market and scale. With an iterative entrepreneur, I really believe that the entrepreneur himself is the product – really think about it. Every icon that you can imagine is one of those. Do you really think they made it in their first shot?

The first step really doesn’t have to be that big idea. And i’ll repeat that over and over again. With Michael dell it was the idea of buying stamps for cheap and selling them. He writes in his book that he learnt things in that first venture which helped him put together Dell. It’s also the reason that I strongly believe that they should start as early as possible – right in High school or college if possible. It could be just about anything from running a local canteen to trying your hand with home made jewellery. What you understand about working and interacting with people will go a long way.

Trust me, it wont be easy. And as a audience in OCC Bangalore noted during discussions, it is a terrible experience when your first idea bombs when asked for feedback from peers. But you know what… its all part of building you as the product. It’s an excercise to shed that extra weight that you have in you – that air of confidence and assumptions sometimes. Really, for an iterative entrepreneur, its all about falling nine times and getting up ten times. It really is.

So if you are one that falls into the first category, well You probably wont be reading this cause you’ll be busy trying to keep those investors and partners in bay. As for the iterative kind, unless you are in your third or fourth venture, dont waste your time trying to raise money and all. Be smart, save some money here and there, be frugal and stick it out. See how far you can build and take a product without having to raise money – its very much like holding your breathe to see how far you can control yourself from now having to depend on oxygen. But when you do attain that balance – or even control in it, thats when you know you are ready for the olympics to show the world what you really got.