[Ask Vijay] When should a Student Startup?

Posted by

Look at it from the perspective that the entrepreneur is the product. And one of the things that will hold you back as you build a fast growing company is how fast the entrepreneur can adapt, and deliver. The one point when you know its time for you to step down and let someone take over, is when the demands of the startup overtake the learning capability of the founders – and trust me, it happens faster than you think. Too soon, and the startup dies.

Startup as early as you can, and it doesnt have to be the thing that scales. It doesnt even have to be an differentiated idea. But it should be something that teaches you something in every step. As a student, sometimes the basic equation you are trying to learn is a way to balance revenue and cost so that you take home something.

Almost every amazing entrepreneur that you hear of, has done that at some stage – be it a Richard Branson who ran a student magazine, and was trying to balance between generating revenue and keep costs down, or a Tony Hsieh building an earth worm business growing up.

Was that the empire that they finally built? Nope. But i bet they’ll tell you that the key lessons they took home on entrepreneurship, and the style they developed over the years, all pegged on the experience they started off with.

The Startup Thumb-rule

Posted by

Some stats that I’ve been hearing (surprisingly from a few accountants), and seems to ring true:

Start two years before you actually start off. Build networks, relationships, and the means to grow a business. In six months you’d know whether you have a business. It will however take 1000 days to see that you have a business. Factor it all in, and starting up is a five year gig, at the least.

[Ask Vijay] What does Ethics Mean in the Context of Startups?

Posted by

You have to be super specific. There are certain businesses, where I am told, its impossible to run it by the book. A hotel for example – if the health inspector decides its cockroach infested (even if its not) you have to end up paying him. Sure you can say you wont bribe etc, but then you need to figure where your definition of ethics kick in.

There is a far deeper meaning for it as well – ethics when it comes to governance? or is it just better employee benefits (and taking care of them)? or is it towards the environment? At some point the sad point about india is that you will have to make some tradeoffs, whether you call it “business as usual” or ethics is a different story.

I remember a case where we were trying to involve a large workforce from Rural India and govt rule states that the minute you have any number of employees beyond 19 you have to provide for PF (Provident Fund). The truth is that, folks from rural areas dont look at this as compensation at all, they think its some form of tax, so you cannot take it from their salary, it becomes an additional expense on the company. In thin margin markets, that could make the difference between making or breaking it. (They circumvented the situation by forming self-help groups and contracting them rather than having all of them as employees)

Now there are certain things that are an absolute No No, like swindling money from the accounts into personal account – evading taxes etc. But its absolutely upto you to set those boundaries and live up to it.

There is a reason why the tata group is better reputed than the reliance group – what differentiates them is their threshold for ethics – both are absolutely legal businesses though.

How to be a Super Associate

Posted by

Dear Associate / Analyst,

I know I took a big stab at you and went public with it. I know you are trying to do your job, but the way you are going about it right now sucks big time. If you are wasting the time of an entrepreneur – and especially one in my fold and care – well, you can expect more coming your way.

That said, I know its pointless to be critical instead of being helpful. So here are some tips to be awesome in what you do:

8055968-businessman-opening-his-shirt-wearing-a-blue-t-shirt-undernith

1. Introduce yourself with your title

You represent the firm, but what you do there will set expectations right with the entrepreneurs. Most Firms have a lousy habit of not even updating their current website, so an Introduction saying “Hi, I am So-and-so, an Associate with XYZ firm and I work closely with Partner Mr. X on Deals related to a,b,c sectors” would make it a better intro.

2. Be Clear

Please do not make claims about funding and all. We know the power you have is only to get names in a pipeline. Not even the principals have power to make that claim, so be very clear why you are reaching out to a startup. “To get the startup in your list of startups to watch” aka the dealflow. Entrepreneurs are racing against all the odds set against them, letting them know that this is a relationship building excercise, not a funding excercise, will also give them the opportunity to prioritize accordingly.

3. Think twice, thrice before asking teams to work on a document

I have met startups who sit and slog making market projections and research – well, thats kinda your job, isnt it? – and in trying to make business plans with five year projections. Hint: the startup still doesn’t have a product, they don’t have a customer and they dont know who might pay for it. That’s a hell of a lot of variables, and what you are asking them to produce is nothing short of writing fiction. Let us do more realism and less fiction, please?

4. Be hands on.

And by that we mean, be useful. If you love tech, what we really really lack in India are guys who can look at a product and give feedback. If you sign up, give the product a try, recommend it to a few users, get them to try and send the team an email with genuine usability, functionality and customer feedback, guess what? its two birds in one stone – you don’t have to ask questions about who uses the product anymore because tada! you yourself know, and you also get on the good side of startups and the advisors / accelerators who are helping them.

5. Can you get them customers?

If you are talking to a startup that has its beta / product launched, can you push it internally within your team and your portfolio and get them to adopt it? You might have to build a system where your portfolio entrepreneurs get a single point/vote in the companies you are looking at (Tell them Y Combinator does stuff like that, internally to sell it)  - which helps in two ways, a) You get an entrepreneur’s perspective that can really help startups and b) if they are solving a real problem, they might get paying customers.

6. Add Meaningful Value.

You know that there are only four layers in a VC firm, and you are at a dead end job if you are not an entrepreneur because its not easy becoming a partner, climbing up the associate route. You know what will put you up there? Proving that you can work with entrepreneurs, can be a second head, and have a mind to do that. So be selfish. I have been blown away by the value add some of the associates and principals like Anshoo of Lightspeed, Anand Daniel of Accel do for companies – so much so that I ask teams to talk to them. See, how it works?

All of this gets you on the good books of entrepreneurs, startups and folks like me. If you are an awesome associate/analyst, I’d love to meet you sometime and lets do this work together. We are all on the same side of the table.

Do Entrepreneurs really Care? Here’s a requote of a quote from Kris Nair’s blogpost, of Sampad from Instamojo:

I hardly see an investor saying that: 

Hey, I used your product and it’s awesome / awful / sucked etc and I think you can do this or that from his/her experience which can help the founder achieve little bit more on reach, retention or revenue metric of the company.

You know where to start to build moat – almost always its starts with doing what most others wouldn’t care doing or looking at. Be an awesome associate – don’t suck.