The Startup Guy

Once in a blue moon, this situation repeats itself. The board of a company along with the stake holders and investors are pushing the entrepreneur towards a direction and he/she is really not liking it, and tries the ownership card. “This is my company, and I do have the best in mind for it”. Nobody usually reacts to those words, but technically one could throw you out for making statements like that. I’ll start with who doesnt own a company – Its the entrepreneur.

Whoever sold you the romanticism that being an entrepreneur meant being your own boss, was clearly lying. You really never escape the chain of command and reporting structure so easily – not in a civilized society. So Its no wonder that things don’t span out as they say. As an employee you might be accountable to your boss, but as an entrepreneur you are accountable to all of your clients, stakeholders and employees. And every one of them holds you responsible to have the answers and do your best – that’s no different from being an employee times ten. Think about it.

So here’s two things you must know. It is crucial to understand this because this sets the context to understand a whole lot of things that happen through the course of the company.

1. The day you incorporate your company, you no longer own it. You want to own something, keep it a proprietory firm or under a partnership (wouldn’t recommend it, as the stats are as high as 99% of partnerships ending in breakups). It might not be a bad idea to keep it as a family business, but there as well its joint ownership.

2. The Day you agreed on a termsheet and took money from your investors, you made up your mind that you were going to sell your company for a good price someday. Investors invest looking for returns and that returns are never going to happen without an exit; And an exit means a sale. Read that line a few times, it helps to get it into your head. You have in all means sold your company when you take investment. Period.

So the obvious question arises. Why on earth would anyone want to be an entrepreneur despite all these gory truths. Well, a couple of reasons. a) You still do have the capacity and capability to build something from scratch, scale it and make money in the process – You are still one of the major stakeholders in the firm. and b) What you want to do to create this value (be it money or impact or fame) is all left to you – atleast in the beginning.

The intent for writing this article is for one thing. I see and come across enough entrepreneurs who want to own more than 50% of the company. Thats almost the sure way to kill the company and strangle some relationships, because it shows that you haven’t gotten the first thing about a corporation right – you cant own it. And the only way to scale it is to give up control, bring in the right people, and yet have enough of a leeway to make a decent exit – note how the stake you hold is towards a better return, rather than control.

And in all this does the obvious question remain. Who does own a corporate? They say it becomes an entity of its own, can own assets, can incur liabilities, can attract investments and is a being of its own shielding its board and management from most liabilities. Who then owns it? The answer to that is probably the most shocking. The Government. The Government is what owns a corporate – actually every corporate. The rules of the land, enable and provide the space for passionate, enthusiastic and enterprising individuals to spot an opportunity, exploit it, create jobs, add value, attract investment, grow the company, expand, create a board to make their own decisions and directions for the entity, make an exit, or even take it public. But at the end of the day, when and if it does shut down and incurs a loss, the losses go away with the fading memory of the company. And thats the shield that a government provides towards the entrepreneur – probably the best of freedom for an individual to create wealth and value the fast track way.

As far as the govt is concerned, creating jobs is one of its prime mandates. And corporations are instruments towards that cause.

In the light of that, look at the bailouts. You might see a slightly different picture.

Its rare, but now and then you do find someone who is equally passionate about that idea thats stuck in your head. You know you often struggle to comprehend, let alone verbalize and explain what you are going after, but these rare mentors do get you. Really they do. They’d pitch in when you are ideating, would love to throw in their two cents to make your idea/product better, and more than anything, they’ll spend every network and contact that they got to help you succeed.

And thats where you usually make the mistake. You take them for a friend, or even worse as a coach.

Do you know the difference between a mentor and a coach? A coach usually brings out the best in you, helps find answers within yourself and more often than not is that silent reinforcer to help you believe in yourself. If you are short on active imagination, remember every movie that you know of where the “Coach” is giving that inspirational talk before a big game as to why they can do it.

A mentor doesnt do that.

A Mentor is usually never there to guide you when you are down with your personal issues. Thats exactly where a mentor is better than a coach, because that mentor of yours in most cases is also someone who has walked the path you are walking, and knows that to become strong, you MUST fight your demons yourself. That’s the only way you’ll succeed, and can face a client, customer or worse yet, an Investor. And the mentor is not going to be there to get you on your high horse everytime you enter a board meeting saying “You can make it”.

Mentors at best are like eagles, who will sit with you, make elaborate plans, know your full potential and then once your wings are out and ready to fly, will break the nest and throw you off the cliff. if you die, you die trying, but if you would just flutter your wings, you’ll be what it takes to be.

So here’s a lesson. If you have a mentor, and I presume you had your reasons for picking that person to mentor/advise you? Well, remember those reasons over and over again. You’ll love him at first, and then will hate him and call him names. But the one that truly cares, will push you to better heights and make you the entrepreneur that the world is ready for. And the only way you’ll notice this type is when you see the quality that resonates with you. Sheer passion, and there is never a moment of indifference.

Dont make the mistake of wanting a Coach, where you actually need a mentor.

Working with startups, you realize that you are not responsible for just their financials and execution plan, but much more than that. You also have to build the entrepreneur up in the value system and most of all steer the company towards building its core values.

There is a rule that some of the folks in the previous generation held fast to. Whenever they cook, they always cook for atleast one extra person. The justification? it was for that unexpected visitor who might drop by. And if a visitor did drop by, they always stay for lunch. I still remember that when we were younger, my parents used to ensure that we dont drop by anytime after 11 and before 3pm – just to ensure that we werent being inconvenient on anyone.

Gone are those days.

We get a lot of visitors as startups – and possibly since we are associated with IITM, but one of the thing that caught my attention a few days ago was how some of the startups neglect to ask the basic questions to our visitors. They drop in by lunch time, and nobody asks if they’d had lunch.

Startups are busy. The ecosystem is not very supportive and with this climate (economically and literally), it is an extra effort for the entrepreneur to care, go out of his/her way and make someone comfortable. Most folks give an excuse that they simply cant afford to do that right now, and perhaps once they grow they will.

Couldnt be more wrong. You will always be busy. You’ll always have a thing or two to do in a time frame that is impossible. And most of all, if you cant do it right now, you’ll never do it. Even scarier, if you dont care to build that differentiation, and that compassion and the core value to go beyond yourself to take care of someone else’s comfort, you will simply never get there.

And that’s scary.

In an ideal world, just about anyone can create. But is that really an ideal world?

About two years ago, while blogs were being touted as the biggest thing to ever hit the planet, apart from all those mystery meteors in the sci-fi movies, what was interesting was to note the number of readers that blogs usually have. Its perhaps the reason why I never took too much interest in this blog – as I created it as a corner for my own thoughts than to make a living out of it. That made a difference.

In the world of unlimited creativity, the problem is the matching up with the respective constraints. Take the matter of politicians, Blogs, Television Shows, a New Product, Opinions and Perspectives All of them – if they are in a democratic context – dont have an entry barrrier to come into this world. But once they do, they need to fight for survival.

Election times are up, and the curious side of me always is after the number of “independent politicians” who usually get a vote. I wonder who that one vote was – was it himself, his wife, or someone in his family? If that is the case, was he so lonely with his ideologies that he couldnt garner more than a vote? Then think about it, its not so different from keeping a blog and never seeing that counter go more than one. The situation is pretty much the same.

I believe, this is the fundamental reason for terrorism. And I believe terrorism is more prone to happen in a democratic scenario than in any other form of government, cause democracy demands that you make your way to the top, that you fight to have your voice heard, and do whatever stunts you need to pull to make that happen. If there is someone who unfortunately is in a minority and doesnt have the patience and forebearance to tolerate time, she ends up become a terrorist to make a statement – all to simply catch that attention.

I dont have any answers here, but a lot of questions, and the hope of this post was to get you to think and perhaps discuss this – please refrain from “Life is like that” comments. Its crucial to understand this, because there is a lesson in strategy and marketing here. How DO underdogs really take on the golliaths, if people would never pay attention to little Davids? Perhaps the answer is in the question itself. Do we really need miracles and just the sheer luck of having the right timing to make it happen?

The experts in Marketing would usually say that, marketing, pricing, the sales process, and the customer satisfaction that follows that can all be related with a simple equation.

Satisfaction = Reality – Expectations. (Thanks!)

And they would be right.

I remember a call from my dad’s friend about a year ago, to come over to his house to check out his new computer that his Son had gotten for him. His children live in the US and they had gotten their parents a computer so as to take advantage of Skype, Webcams and all those cost effective ways of communicating, which would mean more long hours and detailed conversations amongst themselves. His complaint was that the computer sales guy sold him a slower computer when he marketed it as the fastest computer available in the market.

A little bit of clicking around, and lo and behold, it was a duo core, bloated with RAM, hard disk space and a nifty 19″ monitor, bundled with the entire multi-media suite. All was right here except for the expectations.

When I did mention that, this does seem like a fast computer, his simple question was as to why it takes so long to “turn on”. His comparison: “I push the button on my TV and its on, in about five seconds max. I doubt its as fast as they claim these computers are”

This certainly is a serious case of expectations set wrong, but I believe is also an insight. If we are serious about the next one billion, then we need to address this. The reason why India has more cellphone users than computer users, is also because mobile phones in a way did give people the “instant on” reaction that they were expecting – which might not last for long, now that we are getting more complicated OSes into mobile phones and also taking it down the same route as PCs.

Technologists often quote that the mobile phone is the New PC. I think that entire ideology is wrong. PCs have to become what Mobile phones were, and hopefully are still. We are still far away from computing becoming a utility. If it has to evade every household, it has to become what the television is. Thats the expectation we need to satisfy.

If you are one who has traded in the Stock Market and had anyone sensible enough to teach you the ropes, the first rule is that when everything starts to drop, its a good time to buy. The rule is simple. When everyone is heading one direction, there is probably – and with very high probability – a chance to make money if you head the other direction.

Given the economic climate, the first thing every country out there seems to be intend on doing is to plug their capital leakages, and in most cases seems to be shutting down outsourcing, closing borders to immigrants and workers, and the usual shabang. Close the doors, lock it tight and throw away the keys till we figure this thing out seems to be the attitude.

This is all just so wrong.

The US is such a fabulous country for one reason. Because the land gave opportunity for entrepreneurs to succeed. It was a fresh soil, they got rid of all the natives and with no prior baggage in terms of history, it was all open to those who arrived to build the nation. And building almost always came with perks – of becoming rich.

We need to do the same here in India.

Its election time in India, and not sure if anyone is reading blogs and listening to the voices that go on here, but if there is someone listening, they should seriously consider opening the boundaries of this country for any national from anywhere in the world to come here, and setup shop. We should even go as far as providing these startups with space and some financial support to get them on their feet.

We have very little to lose, and so much to gain if we do this. We would;

a) Have more entrepreneurs coming here, looking at everyday problems of ours and trying to fix them effectively, essentially building this country. And Making money.

b) Bringing a fresh and radical outside perspective which doesnt carry the cynical attitude that we carry towards change.

c) Will leapfrog India into an International zone, creating various modes of expression and lifestyle services, that will make us unique and original, rather than imitations of the west.

d) Entrepreneurship is the fastest way to create most jobs.

As I said, if anyone out there is listening, You make this part of your mandate, and You have my vote and support.

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.

Once life starts picking up the biggest problem for me seems to be managing time, and most of all trying to avoid the moments when I end up cross booking the time slot for two people – yep, that isnt an easy situation to get out of.

When I am at home, and during weekends, I manage my Calendar on my Nokia Handset with an hour reminder. When I am in Office, I use Outlook’s calendar to manage schedules. The biggest issue is the first few meetings on Monday mornings – there are times when something comes up and there is no way for me to check my schedule.

So here’s the solution I’ve gone with.

Using Google calendar exclusively to manage my entire data. I found to my pleasant surprise that Google has a small app that can syncronize your outlook calendars with Gcalendar.

Secondly, after trying a host of free, opensource and cant-seem-to-get-it-to-work apps, I found CalSyncS60 which works like a charm with my Nokia Phone to do a two-way sync with my schedule in Google Calendar.

As of now, life seems to be in order. The fine line between, work and personal line is blurred forever, but it should atleast save me from breaking people’s hearts by forgetting scheduled meets and keep me on time. That’s a fair tradeoff.

There are quite a bit of people that I come across, good and very good people who sometimes have this fear of not being in the ladder. They are great with startups, but are afraid of being left behind in the startup world and constantly keep looking over the shoulder to move up to becoming a corporate and then join the old boys club of retired entrepreneurs.

i have almost come to believe that that is one of the primary reasons why once someone is fairly successful in this country as an entrepreneur, they run off to become a VC, and then become directors in a few companies and are never heard from again in the startup circles. Apparently they “graduate”. And this is somehow seen as the norm.

There is a certain thrill, passion, grit and energy in working with Startups. And if you do fall addicted to it, there is also more than enough means and ways to create wealth in this phase of creativity and corporate development.

But you are going to have to make a decision about staying put, sinking your heels deeper and committing to this space. As someone rightly said “My life never makes sense in the windshield. It only makes sense in the rear view”. Working with Entrepreneurs, working with Startups, and being an entrepreneur is also a lifestyle choice.

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.