“How can you help me with funding”

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I am starting to get a lot of emails where the summary is pretty much the title of this blog post, that I thought writing this post would help.

Short answer: I can’t.

Let me explain. Startups are now finally mainstream. And yes there are a lot of more individual investors (aka Angels) and Institutional investors (VCs etc) who are looking for opportunities to invest in. Notice how I said “opportunities”. It means they are looking to invest in a startup where they have a chance of getting their money back – atleast principle, with some obnoxious multiples of the return if things go well.

So when your assumption is that someone is standing in the corner doling out cheques to everyone to passes by and pitches an idea (like a political party rallying up votes), well, I cant help, cause that’s not true. And that’s not how the world works – ever.

The key to raising capital is to present an opportunity. And an opportunity is one where there is a plan, makes business sense and has some sense of exclusivity to it. More than anything you need to learn to respect capital. Yes it is the least scarce resource on the planet, but if that is what you require to get things off the ground, then respect it. It is in our culture to do so.

Thanks to a certain Yadav, investors are weary of entrepreneurs who play fast and loose and I am thankful for that. They expect maturity, clarity on the business they are getting into and enough commitment to show that they are serious about it. If you are waiting for someone to invest in you, so that you can quit your job and then come over and take similar or more salary, well, you have the wrong idea about starting up.

I can’t do a thing for you if your goal is to get funding. But we do know a thing or two about building businesses. And if thats the agenda and capital is a requirement along the way, well then, please write to me.

 
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The Chennai Tricolor Initiative

The #ChennaiTricolor Initiative

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If you ask any economist, what the secret weapon to accelerating the growth of a country is, they will tell you it is Entrepreneurs.

A decade or so ago, it happened. The wildfire enthusiasm and relentless of Indian entrepreneurs caught up steam. And that is phenomenal, but there is a BUT.

Entrepreneurship is a great tool to accelerate growth. But it also has the power to burn down the house. What is perhaps happening in Maharastra with the drought is an indication of it.

I do not believe that we need the government to regulate everything. But self governance also requires us all to align to a common cause – a simple cause would be to keep the interests of the nation ahead of our business interests. If its good for business, but it hurts the country in the long run, simply say NO.

I am not talking about nationalism here (where someone is forcing us to pay respect, pay taxes and using force to subjucate), but Patriotism where we really do want to leave a better “home” for our kids, and the kids of their kids, a place where they can always come back to and know that they belong here.

As a precursor to this, a bunch of volunteers are driving an initiative to put up a monumental national flag – in a public space, and so large and visible that you cant ignore and as a reminder that there is a bigger purpose for all of us to look upto. The initiative is going to be crowdfunded and truly one by the people.

I’d nudge for you to be part of it. This is in Chennai, but you can start a movement like this in your own city, town or village too.

Here’s how you can support:
======================

1. Be a Volunteer

2. Sign the petition that we are sending to the govt

3. You can contribute towards the crowdfunding initiative to cover the cost of the flag.

4. Spread the word.

More details are at http://www.chennaitricolor.in

Drop a note if you have any questions or comments. Also check on the FAQs on the website

 
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Dear Startup: Don’t try to Change User Behaviour.

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When I am talking to a startup team and they tell me that they are going to “change behaviour”, it sends red signals all the way.

I didn’t know how to explain it till i thought about it a bit. Truth is, a young startup (a fledgling and not the flipkart types calling itself a startup) has ridiculously limited resources. Assume you don’t have bucket loads of funding, don’t come from a filthy rich background, or have a pedigree and reputation that people will throw money at (I am talking about you 98 percentile population), then by defacto you have to go after the low hanging fruits.

The minute i say low hanging to anyone, they immediately assume two keywords – ecommerce, and hyperlocal. Shocking. But neither of those two spaces are low hanging.

While trends come and go, a good way to define low hanging would be, any opportunity where resources are least spent convincing your target audience that they need your solution.

There are three fundamental costs to a business – getting customers, delivering on what you promised and delivering on support. (2) and (3) are hard, but they are covered by the revenue that you receive. If you have to spend an awful lot of work on (1), that usually doesn’t end well. I’m being nice. It almost always never ends well.

So you want to find opportunities where all you have to do is show up and let people know that you understand the problem they have (and it better be as essential as their pants being on fire) and let them know you have the solution ( a fire extinguisher). They’ll do the rest – they’ll run over you to grab it with both hands.

So technically speaking, if you find a problem statement, that is really a problem and can solve it. Voila, you should be good to go.

The second aspect that you need to keep in mind is margins. If your target customer is all about pinching pennies and saving etc etc you wont be able to hang on to them for too long. One time solutions – Yes. But recurring, perhaps not. So the key would be to find out opportunities where there is a healthy (i didn’t say obnoxious) operating margin.

If you don’t know what that word means, its time to drop everything and go google on it and read up on some related words. Because all said and done, as my uncle taught me – if you decide to run a business, you really cant outrun the fundamental logic of every business – that revenue minus cost has to add up to profitability.

If you find spotting problems difficult, take a look at this platform that we’ve put together called Ideaspace. We are building a platform and a framework to build startups that solve real problems.

Disclaimer: It is only for the 98% of you.

 
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Opensourcing your core, as a strategy

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Open-sourcing your core is such a powerful move.

Years ago when Reddit was getting way too much competition all around – Digg was reinventing, Stack overflow was trying to build something similar etc – they did a radical thing and open sourced their code base.

It sounds like a dumb strategy, but is a brilliant way to stagnate the competition in the market. For one, for a short period you spawn 10x more copycats, and everyone starts verticals that they have a interest over, and have social influence in – but they are teaching the audience how to use your tool. Suddenly all those guys who are attempting to capture the same market with new UIs or a different take are fighting an uphill battle.

Give it a year or two, and when the new spawns die out, the newly created audience, finds its way back to you – for one simple reason, familiarity.

Tesla is playing that same card. Commoditizing the stack means, you kill differentiation very quickly (you realize if you want to “borrow” one part of the technology stack, there is a dependence on the other and so-on and so-forth) and he who built the stack can command leadership for a long time to come.

The lethargy to reinvent the stack is what will kill most competitors who even want to attempt disrupting that play.

PS: You need to lead in atleast one vertical / niche before you do this, or don’t be surprised if someone takes your own code and beats you at it. That’d be ouch!

 
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