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Happy New Year! May this year bring tremendous amount of positive energy, massive success, massive peace, massive prosperity to all of you! This article was published in Janurary 2013 issue of SiliconIndia.
Date: Friday , January 04, 2013 It’s the start of the New Year! This brings new hopes, new dreams, new resolutions and a new beginning. Wishing you all entrepreneurs, whether you are an aspiring entrepreneur or already on your entrepreneurial journey in this planet, a very Happy New Year and a massive success this year. This is an opportune time to focus on a critical and important ingredient of entrepreneurship. I call it the Entrepreneur’s Mindset. Mindset refers to a fixed mental attitude or disposition that predetermines a person's responses to and interpretations of situations. How does this apply to entrepreneurs? Here are four key take away (4KTA) points on this important ingredient. 1. Passion As an entrepreneur, one thing I have learnt is to be really passionate about what I try to do and deliver results once I make a commitment. It’s important that you are absolutely passionate about your idea, product or service. You really believe that it is a gigantic opportunity for you to do good for your customers and for humanity in general. It sounds like a big and bold statement. However, if you look at all the highly successful entrepreneurs, they are driven by bold and big visions. Not only their passion and excitement for their products and services is amazing but also, it can excite and inspire their teams to deliver incredible results beyond their imaginations. For instance, Bill Gates visualized having one computer in every home over thirty years ago, when there was not even one computer in anyone’s home. Today, we frequently find more than one computer in people’s homes. Similarly, Mark Zuckerberg, Larry Page and Sergey Brin have big visions for their respective companies to make society a better place. More passionate you are, stronger your desire is to realize your vision into a reality. As they say, visualize where you want to go and then charge ahead by making it happen, no matter what it takes. One simple exercise that you may want to try is to sit down and shut your eyes for four minutes. Now, visualize what you really want to accomplish, feel it and experience having accomplished it fully. Upon realization of your idea into a full-fledged and highly successful company, now continue to visualize how you would use your success to do greater good for humanity. At the end of this exercise, write down how you feel about what you visualized. Does it make you even more committed? Does it make you even more driven towards achieving it? Does it make you feel happier? 2.Patience Having extreme patience is as significant as having the passion. Any entrepreneurial endeavor requires being comfortable with experimentation. The ability to experiment with out of the box approaches, products, features, processes and outcomes, no matter what the results may lead, is the key element of being patient, creative and open minded. For entrepreneurs bringing new and innovative products to the market, experimentation is really about trial and error since the outcome can’t be predicted. Having zero expectation and let the data driven results guide you in a new direction leading to a highly successful venture can be a significant attribute that marks a truly entrepreneurial and creative mind. Ask successful entrepreneurs and you will hear them doing three or four product iterations before figuring out the real market need and a product to fill that need. In my own experience with Ukiah Software and Nayna Networks, it took us iterations before delivering the final product. The patience needs to be combined with extreme humility. It’s important to not get stuck in your own egos of dictating outcomes or conforming to a preconceived notion or to a past experience. Egos can destroy the very best ideas. Entrepreneurs with previously failed ventures can be stuck in their past – a baggage full of negativity, doom and gloom. Take their advice carefully. You can always learn something from their mistakes but don’t get sucked into their past. The smartest entrepreneurs think creatively and act collaboratively with their team and leverage the best out of them while pushing them to attain impossible. 3. Persistence Entrepreneurship is filled with doubts and uncertainties all the time. As a result, we start doubting everything including ourselves, our team, our prospect customers, our partners and market. Thoughts like I do not think that this is going to work or I am unsure if I can do it, intrude our susceptible mind all the time. For instance, during my first startup Ukiah Software, I felt completely down and depressed many times. It would take longer to get new customers, longer to convince investors to invest and longer to get the strategic partners signed up. Many times, I felt like giving up and moving on. However, I had to remind myself that there is no way that I could let the company fail for all the faith that my team and investors had put in me and my co-founder. Also, this being my first startup, if it failed, I will not be able to start another company or get investors to invest. With this relentless attitude of accepting no failure, we ultimately succeeded by selling the company to Novell within three years of our founding. The bottom-line is whatever it is that keeps you going, keep at it. Do not give up at any cost. Remind yourself of all the entrepreneurs who felt like failures many times before overcoming all the obstacles and hence, succeeding big time. Keep an eternally positive attitude and persist relentlessly. 4.Celebration Every small success or milestone needs to be celebrated big time by you and your team. Go out and have a drink with them. Meditate or work out or go cruising or do whatever you like to do to enjoy yourself. We entrepreneurs get caught up in accomplishing next big thing or next milestone as soon as one is achieved. Take a moment to reflect and celebrate that you and team creatively accomplished a milestone. Celebrate that how you and your team were able to find a hole in the marketplace and fill it with innovation. Celebrate that you all are on your way to creating the next successful company. In summary, having a strong Entrepreneur’s Mindset consists of being passionate, being patient, being persistent, celebrating and enjoying every step of your success in your entrepreneurial journey. Naveen Bisht is Co-Founder of Auriss Technologies, Inc, a serial entrepreneur and Board Member, Chair- Programs, The Indus Entrepreneur(TiE) and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in December 2012 issue of SiliconIndia. Date: Tuesday , December 04, 2012 I believe that entrepreneurs and networking go hand in hand. Ask anyone why they attend an industry conference. The most common answer will be to meet new people, network with industry experts, meet new customers, vendors, partners, investors or even future employees. The bottom-line is that networking can help you grow your business and make you aware of upcoming trends and opportunities in the industry. These days with all the social networking tools such as Facebook, Linkedin, Google+ and Twitter, it has become easier to meet and interact with smart, like minded and fellow entrepreneurs for building your network. For an entrepreneur, the art of networking should be a way of life. The effective networking is about making meaningful and genuine connections with people, who can help you not only grow your business but also as an entrepreneur, thereby turning this skill into a long term competitive advantage for you. Now the question is, “what are the right ways for networking for an entrepreneur?” Here are the four key take away (4KTA) points on this topic. 1. Create Blueprint: First and foremost advice that entrepreneurs get is to write a business plan. So, it can help them articulate their vision and thought process clearly in writing for further review and analysis, its execution and course correction, if any. Similarly, in order to be an effective networker, why not start with a networking plan or a networking blueprint. Most of the times, most of us just show up at conferences, talk sessions, or industry mixers without any planning. Next time, when you attend one of these events, ask yourself few questions. Why should I attend this event? Who would I need to connect with to be highly successful? Which industry groups shall I join? Who could be my mentor and help me grow as an entrepreneur? How can I reach out to them? This can help you create a blueprint for your networking that can result in long term success. I still remember when I was looking to raise capital for my first startup; I always looked for events with venture capitalists in the panel, so I could meet them. If I was looking to form a strategic partnership with a particular company, I would similarly look for industry events with the executives from that company. 2. Expect Nothing: Having right expectations is a key element for being successful in networking. My belief is that you just have to give and go extra mile without expecting anything in return. Creating trust and friendship are part of any good networking approach. When going for networking events, my advice is to go there with an open mind to meet people, share ideas and have some fun conversations. Finally, when you show up at an event, you must be proactive in walking up to a person or a small group and gracefully introducing yourself. You will be amazed how you will make everyone feel comfortable and yourself with this mindset. In the process, you meet some interesting people. Follow up with an email thanking them for a fun conversation and invite them for lunch or coffee whatever is convenient for them. Make sure to pick up the tab if you can. I would highly suggest you rather do that. Again, same rule of no expectation applies here for picking up the tab as well. In scenarios, when looking for strategic partners or for investment for your company at an industry event, how do you go about meeting the right people? If your prospects are participating in a panel, I would approach them right after the panel discussion is over and ask for their contact information. Then, follow up promptly requesting a meeting. The chances are that lots of folks will be trying to talk to them; you will have to be really proactive to get their attention. 3. Do Good: There is a saying when you do well for others, good things will happen to you from the universe. I really believe in it. So just do it and then forget about it. Let’s say you meet someone at an event, the person asked you for some help or advice or requested connecting with someone you know. I will leave it to you to decide if you should make the connection or when to make the connection. My suggestion is to try to help as much as you can since good karma will never go waste in the long run. You may be wondering why I am suggesting to help people you meet rather than get the most out from them. Remember what our parents taught us - first you help others, then they help you. Keep this ancient wisdom in mind. You will only be successful as you help others to be successful, help others to achieve or by introducing them to potential customers without expecting anything in return. 4. Build Trust: After having gone to a number of events, you feel awesome that you have made hundreds of high profile contacts and connections. This is awesome but these are not relationships. A relationship is what helps sustain a business for the long term. To develop a personal relationship with these newly made contacts, you must continue with face to face communication, nurturing and spending time at it. This is what will build trust in the long run and will eventually help you create a quality network with strong relationships. This is the kind of network you want that can help you grow as an entrepreneur and can be potentially fulfilling in the long run. In summary, the four key take away (4KTA) points – Create Blueprint, Expect Nothing, Do Good and Build Trust can be highly effective in creating a quality network with strong relationships for an entrepreneur. Naveen Bisht is Co-Founder of Auriss Technologies, Inc, a serial entrepreneur and Board Member, Chair- Programs, The Indus Entrepreneur(TiE) and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in October 2012 issue of SiliconIndia. Date: Monday , October 01, 2012 Most startups begin with one or two founders – an idea, shared dream, a plan sketch and determination to make it happen. Now to succeed and build a scalable business, the founders need to complement them with a much broader skill sets and experience. If you plan to get professional money, then you need to build a world-class team that will not only get the job done but also, attract the money man. Now the question is what is the right team and when is the right time. If you build the team earlier than you should, you may end up burning a lot of cash with no real results and drive the company into a dire situation. Here are the four key take away (4KTA) points on this topic. 1. Ideation and Product Building - This is the starting point when you have an idea. You and your co-founder are getting some early feedback, validating it and continue to refine it. There are number of theories on how companies with two co-founders or more succeed using examples of Microsoft, Yahoo, Google, Cisco, Oracle and others. The key benefits of having two co-founders are that you get to brainstorm and discuss your assumptions and findings from early research into the market, technology and customer feedback. Secondly, the other person can complement your skill sets. My preference is to have a technical and a business co-founder. The technical co-founder focuses on the technology aspects, architecture, design and initial prototyping of the idea. The business cofounder focuses on how the revenue could be generated. This person needs to have extensive contacts in the industry, VC community and prospective partners. Both the product companies Ukiah Software and Nayna Networks, I founded had one or more technical co-founders. I focus on who my customer is. How I will get to that customer. What problem that we are solving. How big this customer base could be and hence, the overall market opportunity. Is this market opportunity huge enough for a venture investment or is it a life style business? During the ideation and product building phase, the team needs to be small and focused – mostly technical and one business person. The business person is essentially doing the functions of both product management and business development. 2. Product Launch and Building Sales Team - Many startups make the mistake of building up a sales team as soon as the product is ready to launch in its first version release. For launching your product, you need a startup savvy marketing person. Someone who has done it and is ideally from your industry. This person knows how to launch a startup, create tons of buzz with a well-crafted message and communicates articulately to the analyst, blogger, partner and customer communities. When do you start building a sales team for scaling? Startups need more time than founders expect before it can be scaled systematically to accelerate growth with confidence that team and resources put in place will yield awesome and measurable results. My view is that in the first year after the product is launched, lots of evangelical work and business development work is required in selling the benefits of the product to the customers about the pain point that you are solving for them. Your key sales team during this period is CEO and VP of Marketing. This can help you really understand what the real use case is. It may turn out that customers are using the product for solving some problem different than you had anticipated. This can help you in fine tuning the sales strategy for scaling at the right time. Do not make the mistake of hiring full-fledged sales teams from get go. You may want to bring a VP of Sales first, who is hands on, has extensive contacts in the industry and has been successful in selling startup products. Build your team slowly one geography or one vertical at a time or any other criteria until you get the complete confidence to scale. Be wary of hiring professionals from large companies with no startup experience as they may end up being a failure in a startup environment since there is no established and well known brand, no support infrastructure and resources available for them. Spend a lot of time in recruiting the right team members and setting up the right expectations. 3. Management Processes - How do you figure out when the right time is to put processes in place. My suggestion is to have bare minimum processes in early stages, more in the form of guidelines than pages of documents as no one will read them. You must protect your intellectual property and assets, so file for patents, trademarks and copyrights. Apply keep it simple strategy (KISS) in forming guidelines and processes. As the company grows and as you expand your management team to scale the business, you will need to define your processes clearly in various areas. Most of the companies these days advocate flat layer of management as new generation of employees expect that, so make sure to create a respectful and fun environment. Since this topic in itself can be filled in books, you can find tons of useful resources and books on it if you would like to delve deeper into it. 4. Lean Start up Mentality - The idea is to follow a lean startup mentality. Add to your team slowly by ensuring the right people for real need. Scale only after you have figured out the customer segment, use case, person in the company you will be selling to and can replicate it systematically and accelerate the growth across a number of customers. If you want to delve more in this methodology, there is an excellent book, “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Business,” by Eric Ries that you may want to refer. In summary, the four key take away (4KTA) points – ideation and product building, product launch and building Sales Team, management processes and a lean startup mentality can be useful in determining the right team at the right time for your startup. Naveen Bisht is a serial entrepreneur and Board Member, Chair- Programs, The Indus Entrepreneur (TiE) and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in September 2012 issue of SiliconIndia. Date: Wednesday , September 05, 2012 The difference between an idea and a successful business is its flawless execution. There are many insightful articles by a number of successful entrepreneurs. I would recommend reading Steve Blank's article, "The New Internet Bubble and the New Rules for Startup Success" that appeared on The Huffington Post blog in March 2011. My focus in this article is to outline, in my view, four key take away (4KTA) points that could improve your chances for your startup’s success. I have also included some points from my discussion with Preetish Nijhawan, Managing Director of Cervin Ventures, an early stage venture capital firm. 1. Be Passionate – The word passion can go both ways. It can bring tons of positive energy. It can make you inflexible and rigid in your approach. As an entrepreneur, you have got to be really passionate about your idea, your startup, your purpose and the problem that you are solving. At the same time, you need to be careful about falling in love with your idea and approach ignoring the real customer need. For all you know, the actual customer need may turn out to be a variation of the original idea. Make sure that you maintain agility, flexibility and promptness in adapting to the actual customer need and the changes occurring in the market place. Most successful entrepreneurs and venture capitalists tell you to dream big and focus on a huge market opportunity. Here are some of the reasons. When you solve a big problem, it can make a tremendous impact for your customers and marketplace. Secondly, you have room for making errors in case the approach needs to be tweaked for the market. Thirdly, you and your team will be highly energized and attract smart people for a disruptive idea. 2. Execute Flawlessly – The execution of your idea is of paramount importance and involves having a holistic view. This starts with an awesome team with complementary skills in business, product, design and development. The team needs to have absolute trust, be in harmony with one another, and have a fearless and positive attitude to make it happen no matter what it takes. A clear definition of your idea with customer requirement and design document is a must for your team to execute effectively. You need to ensure that the first release of your application or your mobile application or your ecommerce website is launched rapidly. The post launch activities must be planned in advance for supporting and resolving the customer feedback and availability of operational infrastructure for scaling up in case millions of customers download and start using your application. Thanks to cloud compute and storage services from Amazon, Rackspace, Google and host of other service providers these days that your company does not need to build your own operational infrastructure. Have a process for rapid re-iteration to keep your innovation engine running to stay ahead of competitors while meeting customer requirements. The scaling issues and timing them in startups are immensely critical. By not scaling at the right time, startup can burn a lot of cash. By hiring and investing in resources prematurely such as building a sales team before the business model and market demands are fully understood, you can waste a lot of capital. Similarly, setting up a production line while the proto is still being developed and the processes are not fully optimized can burn cash. Other points to keep in mind are like waiting for a 100 percent perfect product before launching it only to find out that customer needs are different. You could avoid it by creating an ongoing customer interaction and feedback loop while product is being developed. Similarly, raising too little or too much money has its pros and cons. Having too little money always keeps you constrained in what all you can do and having too much capital lets you spend more freely. 3. Delight Your Customer - Your customer needs to feel loved and have a delightful experience. The online retailer, Amazon's mission is to be the earth's most customer centric company. In executive meetings, they have an empty chair that represents "the customer", so executives would include the customer in their thought process and the implications of their decisions. If you are an ecommerce startup, you need to keep in mind that the person buying your product or service on the other side is a human being. Create an awesome experience for your customer to feel appreciated and loved. For instance, you should try Flipboard app on iPad. It gives you an awesome experience as if you are reading the print version of a magazine. I have shared this delightful experience with so many friends. The point is if you create a delightful experience for your customers, you will end up acquiring more customers by them voluntarily sharing the experience with others. Ease of use is an overblown buzz word that everyone touts. However, nowadays companies need to live up to it. For instance, Google has kept their search page simple and clean from day one. Apple with its iPhone changed the dynamics of the smart phone market worldwide and set the standard for other companies to emulate. 4. 100% Commitment – Nothing but absolute 100 percent commitment is a must from an entrepreneur for his startup to have a better chance for success. My belief is that if you persist, you will find a way to succeed. If you are putting your heart and soul into it by thinking, breathing and dreaming about it all the time, and continuing to persevere, then you will eventually find success. You must be fearless. There is an unforgettable video by Buddy Media CEO, Michael Lazerow on living your life without fear that he made after acquisition of his company by Salesforce.com. Make sure to check it out on YouTube. Here is a quote by him, "If you live without fear, anything is possible," "Is fear holding you back?" In summary, my four 4KTA points to improve your chances for your startup's success are be passionate, execute flawlessly, delight your customer, and have 100 percent commitment. The final KTA, not mentioned above, is that you've got to be lucky, so take all the luck that you can. Naveen Bisht is Co-Founder of Auriss Technologies, Inc, a serial entrepreneur and Board Member, Chair- Programs, The Indus Entrepreneur(TiE) and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in August 2012 issue of SiliconIndia. Date: Wednesday , August 01, 2012 Once a great opportunity has been identified by the entrepreneur and he is well on his way pursuing this opportunity, one of the daily challenges is to identify, understand and optimize the key resources for its successful accomplishment. For those seeking to learn further on the topic of opportunity identification, there is an excellent framework called the Blue Ocean Strategy Framework by W. Chan Kim and Renée Mauborgne that defines the first fours levers used for opportunity identification - eliminate, reduce, create, and raise. You can get this book from any bookstore. For every entrepreneur, it is critical to analyze and then decide how and how much time, talent and resources to invest in any task, activity, project, or a customer prospect. My focus in this article is to outline, in my view, the scarcest resources for an entrepreneur. Here are my four key take away (4KTA) points on this topic based on my experiences. 1.Time - Assuming that you already have a world-class and brilliant technology and business team in your startup. This team is highly passionate and wants to ensure that company will succeed big time. With a smart team like this, it is apparent that not only they would come up with many clever ideas but they would want to implement all of them. These could be new features, new projects, new marketing tactics and on and on. And, it's really tempting to take these on. Each idea sounds like the next great idea since the slice of bread. However, regardless of how much venture capital you have raised and how many developers you have, it’s impractical to pursue too many ideas at the same time. It becomes critical for team to define clearly what they will spend time on and what they will choose not to pursue. For instance, if you add one extra feature than was planned that serves a narrow set of customers, you end up supporting it in future releases adding complexity to next version of development with all sorts of testing whether it be usability or regression testing or something else. You and your team need to be laser focused on core mission of your company and hence, your team’s time is one of the scarcest resources. You need to prioritize, allocate and spend it wisely. Keep your team focused on the items most relevant to the company’s success in the short and long term. 2.People - In high technology industry especially for doing a startup, as they say that skilled developers are one of the scarcest resources. In my view, the entire team consisting of developers, product manager and business managers are scarcest resources. All of them need to be highly skilled. In early stages, the core initial team forms the DNA of the company charting the course for company’s future and ultimately, the grand success. Be ultra-selective in bringing team members that are ultra-smart, highly passionate, high energy, full of positive attitude, open minded and very flexible. These members serve as attractors for bringing new members with the similar or even higher caliber on board. They need to solve problems rapidly or find alternative strategies or solutions. An entrepreneur needs to recognize these members in the team early on and treat them with respect, understand what drives them to excel, what motivates them and ensure that an environment is created that will keep them charged up and motivated. 3.Focus - I touched upon it briefly in the Time section above. A recent highly successful and timely example of this scarcest resource called Focus is the Instagram app. Instagram only focused on Apple’s iOS devices. They were truly excellent at what they did namely photos and did not do video. Also, they did not release their app on Android platform until recently around the same time as their acquisition by Facebook. The key question to ask yourself and your team is what your company wants to excel at. By working on multiple initiatives, will that distract you and your team’s focus from your core mission? Since entrepreneurs are overly optimistic class of species, we tend to believe that we can finish this new feature, new idea, and new concept off in one weekend or in few days. However, the reality is far from it. Not only it ends up taking your team’s time, resources, and laser focus from the core mission but it ends up coming back and haunting you later due to diversion it creates. Make sure that your team is laser focused on the core mission of the company. 4.Cash - You may have heard this saying. Always remember that for startups "Cash is King". It’s so true. Having cash and access to money is another scarcest resource for entrepreneurs. What good it is that you have developed the product and you run out of money. Around the same time, some external unanticipated market factors have created public and private investors to turn bearish and hence, no venture capitalist or investor wants to invest in your company. It's like in early 2001 after the dotcom crash; raising capital for a startup used to be compared to being in a nuclear winter. Treat each dollar in your company as the last dollar. Create a scalable business model. Make sure that you have a repeatable and scalable sales model first. Be aware that as entrepreneur CEO, you need to ensure that you understand when your cash may run out; what milestones need to be achieved before you can go back to new investors to raise the capital and have the right plan of execution in place to achieve those milestones. More importantly, if market seems hot and investment activity in startups is on rise, investors are calling you to make investment in your company, consider it seriously and take the capital despite still having enough cash in the bank from last financing to reach your next milestone. In summary, my four 4KTA points in identifying scarcest resources for an entrepreneur are Time, People, Focus and Cash. Naveen Bisht is a serial entrepreneur and Board Member, Chair – Programs, The Indus Entrepreneur (TiE )and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in July 2012 issue of SiliconIndia.
Date: Tuesday , July 03, 2012 As an entrepreneur and advisor to startup companies, I have learnt a lot from more mistakes than I can write about them in an article here. A number of these lessons shape my thinking on advising and working on new ideas and startups. I believe that you need to keep trying and keep trying until you succeed. It's better to fail than not try at all. When you are feeling down as an entrepreneur, remember the quote from Vinod Khosla, Founder of Khosla Ventures, "Our willingness to fail gives us the ability and opportunity to succeed where others may fear to tread". Like most of the topics these days, you can find lots of information on this topic on internet. In order to assess funding a company, venture capitalists (VC) assess risk factors using founders and management's background, market opportunity, competitive advantage, barriers to entry and possible exit strategy. Now for assessing business models, it will depend upon the market focus of the company. The metrics are so different for a consumer internet company vs. Software as a Service company (SaaS) vs. network infrastructure vs. mobile vs. a consulting services company. I will attempt to provide here a different perspective with my four key takeaways (4KTA) to help you through the business model that VCs are more likely to be interested in. These could be useful in most of the scenarios. A number of points are also based upon discussions with one of my VC friends Raj Gollamudi, Investment Director at Omidyar Network and co-founder of BlueStream Ventures. 1. Unit Economics – What it means is that you need to determine the life time value of customer against the cost of customer acquisition. The revenue generated from a customer needs to be more than the acquisition cost for the customer. One of the most common causes of failure in startups is that entrepreneurs are too optimistic about acquiring customers easily once they have built their website, product or some service. The cost of customer acquisition analysis needs to be done thoroughly and understood. Essentially, you need to answer these questions. Can you find a scalable way to acquire customers? Can you monetize these customers at a significantly higher level than cost of acquisition? Are you focusing on cost scale or revenue scale? Are you helping your customer drive more revenue or enable cost savings? VCs tend to like revenue enhancing value propositions. It is easier to make a return on investment (ROI) case and also, public markets typically reward growth. 2. Scale – What it means is whether your business can scale. If so, is it a linear scale or a non-linear scale? The scale affects the balance between cost of customer acquisition and monetization of the customer. The factors that drive this balance need to be considered. Some of these factors are viral or network effects, free or freemium, inbound marketing, open source, free trials, inside sales, channels, partnerships, field sales, upsell, cross-sell, scalable pricing, high churn rate, and low customer satisfaction. For instance, in case of people intensive services companies, revenues are proportional to the number of people servicing the customers. These are not scalable business models especially in developed countries since people costs are quite high. Some of these models have worked well in early stages of developing economies like China, India and others. However, as these countries continue to grow at a high GDP rate, the people costs keep creeping up and hence, these models become non-sustainable. VCs like business models where the company can scale non-linearly in a friction-less manner with high velocity. For instance, for consumer internet companies, could you leverage the power of Facebook, Pinterest and Twitter's massive user base and platforms? Could you use Facebook Opengraph APIs to create network effects for your application with millons of users? In addition, could you use the power of these platforms to find interesting ways to monetize the users? 3. Focused Application Launch – You need to target the market segment with a focused application and it needs to be the best in the market with an underlying architecture that could extend into a platform as company grows and succeeds with the entry product. There are so many successful examples of this strategy such as Microsoft starting with operating system for personal computers and then expanding into office productivity and other applications. Similarly, most recently Facebook starting with closed campus social network and building a stronghold there before opening the platform to outside applications such as gaming as popularized by Zynga and others. 4. Leveraging Existing Platforms and Infrastructure – The compatibility with existing infrastructure or platforms already in an enterprise is quite important otherwise the customer is not going to try your product. The companies have already invested lots of capital in the current solutions and are not going to rip them off for a completely unproven solution from a startup. You need to provide a solution that will fit into the existing infrastructure seamlessly and provide a path to the future with the newer technologies and emerging industry standards with a magnitude of order value addition to existing solutions. Do not expect the customer behavior to change with your solution, no matter how revolutionary it is. Finally, educating a customer with a completely new solution can be an expensive affair. In summary, my four 4KTAs to keep in mind are unit cost, scale, focused application launch and leveraging existing platforms and infrastructure while building business models for your startup. Naveen Bisht is a serial entrepreneur and Board Member, Chair – Programs, The Indus Entrepreneur (TiE ) and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in June 2012 issue of SiliconIndia.
Date: Friday , June 01, 2012 Pitching to a venture capitalist (VC) is a key step in the process of raising capital for your startup. If you do Google search for pitching to a VC, you will get thousands of links. Lots of them may be useless, but a number of them can cover tactical steps you need to take. I would encourage you to read a blog by David Cowan of Bessemer Venture Partners, focusing on many topics for entrepreneurs, and an article "A VC's Advice on how to pitch VCs" by Raj Kapoor of Mayfield Fund. They provide tons of useful information on how to prepare for your pitch. All the important information that you will need is there: keeping number of slides to less than 10 or 12, the team's background, product, market opportunity, competitive differentiation, business model, and financial projections. My focus, however, on this article is to provide you a different perspective with my four key takeaways (4KTA) to help you through your funding process. It is based upon a number of important points from my discussion with Armando Pauker, General Partner at Apex Venture Partners, an early stage VC firm focused on high technology investments. 1. Establish Trust, Confidence and Build a Relationship– There is an old saying that in money matters, the first and most important thing is the trust between two parties. In order to establish trust, you need to establish a solid relationship first. How do you establish a relationship with a VC? If you are already one of the sought after startup companies, then VC financing may work rapidly in your favor. However, if your company is still in its infancy, then you will need to go through this process. The process starts with having several meetings with the VC and his team over the course of a few months. First, find someone who knows the VC to introduce you. It will improve your chances of getting a meeting quickly. For your meeting, be prepared. Know your product and numbers very well. For instance, if a VC asks you what your revenue projection is or how much revenue you did last year, you should be able to answer it right away without consulting your CFO or looking at slides or papers. If asked to demo the product, you as CEO should be able to do it without seeking help from your product manager or another team member. The reason is simple. The CEO of a startup is the Chief Sales Officer of the company. He needs to know what he is selling and the revenues for last year, this year and future years. Knowing these by heart and articulating them clearly shows confidence in your abilities. 2. Excellence in Execution – In order to continue to build trust and confidence and hence, your relationship with the VC, you need to show progress on the business or the product development in your subsequent meetings. For example, if you committed to some milestones in your prior meeting, then show that you have accomplished those milestones. If there were changes, then have clear reasons for the changes in terms of what, why and how. What changed in your milestones? Why did it happen? How did you do go about solving issues or finding an alternative strategy? VCs know that plans change and they are looking to see how fast you learn and how you deal with changes. 3. Voice of the Customer – When you are asked by the VC how your product compares to competitors or to other approaches that are solving the similar pain point, you need to be fully prepared to answer this from a customer’s perspective. This is what I call the voice of the customer. Why would a customer buy your product? Why would he put his job at risk by buying from a startup? He would rather stay on the safe side by buying from one of the large vendors or waiting for them to come out with a product even if it is late by a year. Articulate your company's advantages clearly and crisply - whether it is a delightful customer experience that your product provides such as ease to use, install, configure, and manage or 10X performance advantage or 10X lower cost. Whatever the secret sauce is, make sure it reflects the real voice of the customer, not just a technology benefit that customer may not care about. 4. 4. Clear Expectations – As first time entrepreneurs, we assume that after our first meeting, we will leave the meeting with a check in hand. However, the reality is far from that. Consider it just like selling a product. It may require many meetings with a customer to close a sale. It starts with an initial meeting to describe benefits of your solution, the pain points it’s going to solve and showing a product demo. It is then followed by customer doing a product trial before he is ready to buy. Similarly, a first meeting with a VC is your entry point and your objective is to get a follow up meeting. A follow up meeting shows VC interest for a more detailed presentation followed by further meetings including due diligence with customers before having a full-fledged meeting with other members of the VC firm. If you have gone this far, the chances are that you are moving in the right direction. The final step is that the VC and his partners are fully excited and ready to negotiate terms of the deal. It's essential to have a clear expectation for the steps and the timeline of this entire process. Make sure that you clarify the timeline with the VC in your first meeting. Also, make sure that you are transparent in your dealing with the VC and providing correct information to them. If you build trust and confidence in your abilities and vision, then you might be on your way to getting your company funded by this VC firm. The steps outlined are as essential as the tactical steps in pitching to a VC and hence, it will establish trust. In summary, my four 4KTAs are to establish trust, confidence and build a relationship, excel in execution, focus on the voice of the customer, and have clear expectations. Naveen Bisht is a serial entrepreneur and Board Member, Chair – Programs, The Indus Entrepreneur (TiE ) and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in May 2012 issue of SiliconIndia.
Date: Thursday , May 03, 2012 Since my last article in April issue on Launching your Startup, one of the companies Instagram mentioned in it has already been acquired for one billion dollars by Facebook. Now the question is how Instagram was able to accomplish it. Well, I am not dissecting all the reasons for Instagram's acquisition here. You can easily read them in various articles on internet. Here my focus is on few things for creating a sound exit strategy for your startup. Those, who have read, Stephen Covey's book, The Seven Habits of Highly Effective People, may recall that one of the habits is, "Begin with the end in mind". I really believe that habit is key for any entrepreneur. You may wonder why I am saying it. After all, startup is your dream, so why worry about an exit when you are just starting. It's going to be hugely successful, fun and profitable. Surprisingly, there are two real and practical reasons why you need an exit strategy. First, outside venture investors may want return on their investment and secondly, you may lose interest after company has reached a certain size. Here are my four key take away (4KTA) points on this topic based on my experiences. 1. Begin with the End in Mind – Always begin with the end in mind and ask yourselves some hard questions. What is your ultimate goal here? What is your real motivation behind doing this startup? Is your long term goal with this company to make a huge difference in the world? Are you just trying to bring out a product that is not in the market today and sell the company to a larger vendor? Do you want to grow the company and then take it public? These questions should be answered before commencing your startup journey. It will help you create a road map and an execution plan. Remember that the time is relative in any business. I think of business ownership cycle in the form of a bell curve with various phases. These are startup, growth, slow growth, decline, and then decay phases. So ask yourself, what phase or phases of business cycle you enjoy the most. Is it the creative part of coming up with an idea and turning it into a product, then bringing it out to the market, or is it the part of growing it all the way to several million dollars revenue? By asking these questions early on, you can assess what you enjoy the most and love doing and accordingly, plan your exit or your company's exit strategy. 2. Plan of Execution – With a clearly defined end goal in your mind, the next step is to develop an execution plan. This will consist of strategy, positioning and negotiation. The strategy will help you identify large vendors with a need and gap in their product portfolio. You then create a compelling story with differentiated value add and position your company. The negotiation part involves whether you and your Board would like to engage a third party mergers and acquisitions advisory firm to help with the execution plan or pursue directly. You need to absolutely make sure that you are in alignment with investors and Board on your plan. 3. Possible Outcomes – There are typically three outcomes – selling your company, taking company public and closing the company. In first scenario, your startup is acquired by a larger company bringing possibly huge returns for shareholders depending upon timing, strategic value add and positioning in the market, and other factors relevant to both parties. The larger companies acquire for strategic reasons such as need to own the intellectual property, to fill a product gap due to being late to the market or in internal development, or to grow their revenue quickly. The other possible reason could be that they would like to prevent you from being acquired by a competitor. Nowadays, a number of private equity firms also buy out majority shareholders providing liquidity to founders and early investors and then put together an operational team to grow the company to take it public or sell to a larger company realizing return on their investment. The second scenario of initial public offering (IPO) used to be the preferred mode but since dot com burst and due to stringent financial regulations, the IPO rate has significantly declined. There are also significant expenses and liability concerns once company is public. Last situation and hopefully, you don’t get into that, is realizing that you need to make a hard decision with your Board to shut down, close and liquidate the company. It could be due to number of reasons such as company is running out of money, being early in the market, not getting much traction, product development taking longer than expected or competitors already selling similar products. I believe if you begin with a plan early on, are open minded, flexible and swift in adjusting your strategy as you develop your product and continue to gather market data from customer prospects, you could avoid the last option. 4. Be Happy! – Planning for your exit strategy may sound counter intuitive when you are just starting. However, the reason for it is to plan how to optimize a good situation, rather than get out of a bad one. This helps you focus your and team's efforts on things that make it more appealing and compelling to your target acquirers. For instance, at Ukiah Software, we came to the conclusion that we should find a larger partner to sell our products. Hence, we started exploring partnership opportunities with possible vendors and sold the company to Novell. Once you have decided upon an outcome and executed it, congratulate yourself and your team and move on rather than thinking that you could have done better or sold to another vendor. Remember the grass always looks greener on other side. So be happy that it was the best decision that you and your Board made at that particular time in the life of your startup. Reflect upon lessons learned and make sure to use those lessons when you embark upon your next venture. In summary, my four 4KTA points for exit strategy for your startup are Begin With the End in Mind, Plan of Execution, Possible Outcomes, and Be Happy. Naveen Bisht is a serial entrepreneur and Board Member, Chair – Programs, The Indus Entrepreneur (TiE ) and member of TiE Angels Steering Committee, based in Silicon Valley, California. This article was published in April 2012 issue of SiliconIndia.
The time has come for you to launch your start-up after months of hard work. Your product or your website services have been tested with early adopters. They seem quite happy and have given you feedback that has been incorporated into the product. You can’t wait to launch, make a big splash and hope that customers will flock like bees to honey to get their hands on your product or sign up for your web service. It’s every entrepreneur’s dream for their startup to take off and grow rapidly like Pinterest has grown with more than 12 million users and is rapidly growing every day, Photo App sharing Instagram with 27 million users and growing, OMGPOP’s Draw Something with 35 million downloads and 15 million daily users, which is now part of Zynga. Here are my four key take away (4KTA) points on this topic based on my experiences. 1. Launch Plan – Like anything else, it all begins with a plan. A plan to come out of stealth mode and tell the world about your company, your technology and solution, how it’s already successfully solving real pain points and being used by select and happy customers. Standard product launch plans can be obtained from any basic marketing book and articles. In your case, however, it's not only a product launch but also, a launch of your company. You should already have a VP or Director of Product marketing on your team to lead and manage the launch plan. He should have domain expertise and has been through this process previously in other startups. If you are a VC funded company, your investors may have already asked you to have one on your team. Having an experienced marketing person on your team already knows what needs to be done. It's very different when launching a startup and its product compared to someone launching a product for a well known company like Google or Cisco. They have resources, known brand, capital and relationships with analysts, media, and blogger community. In your scenario, this person needs to be highly creative, has relationships with media and analysts and can do it with little amount of capital and resources. 2. Launch Team – Your launch team will consist of your vice president of marketing, product manager, market communications and public relations firm (PR), chief technology officer (CTO) and chief executive officer (CEO). In many startups, marketing person is also the product manager and leads the launch process. The role of CTO during launch is to lend credibility to company’s technology claims with his past technical accomplishments, if any, his role as key architect and developer of your breakthrough technology. The analysts prefer to learn and validate about your technology from your CTO. Similarly, CEO’s role is to lend credibility to overall company with his past role either as CEO of startups or a key executive in the industry. The marketing team with PR firm reaches out to media, analysts such as Gartner Group, Dataquest, and Forrester Group, industry pundits, bloggers, and industry magazines in your market segment and articulates company’s messaging and competitive positioning combined with a compelling value proposition. 3. Launch Strategy and Positioning – The main elements of your launch strategy are readiness of marketing assets, Media communication schedule, and launch date. The marketing assets include company overview, product data sheets, FAQs, white papers, customer use cases, press releases, Team Bio, company and product presentation slides, competitive landscape, any related industry articles or analyst white papers, company website and blog sections. The marketing team with PR firm will confirm communication schedule with media, analysts, and blogger community. For the launch date, a number of companies like to launch products during trade shows. My preference is to launch either before or after any major trade show. The reason being big companies dominate trade shows due to huge marketing budgets for big booths, lots of freebies, and parties. Hence, to rise above all this noise could be challenging. Instead, rent an inexpensive hospitality suite and invite your customers, prospects, analysts, and media folks to showcase your product demo. We used the similar strategy during Ukiah Software’s NetRoad FireWALL and TrafficWARE product launches. Now to launch your social media company, you develop your web service and invite few friends to test it. Hope they like it and if they do, they will invite their friends and hope someone in the blogging community may notice it and blog about it. You hope that this viral effect will turn into an exponential user growth. For positioning, it’s important to learn about the industry, the market and the players, market climate, user trends, technology innovation and even the economy that can affect how your startup does and the competitive threats and opportunities it may attract. So positioning is key and it needs to be crisp, clear and has to stand out. 4. Launch Communication and Continued Execution – Complete your interviews per your communication schedule, do a press release on launch date and make sure your website is updated with all the material, press release, product information and a news section to post any articles linking to the original articles that will appear in industry magazines, online blogs. This can help you create the buzz and get your cash register going. Review your launch strategy and tactics after few weeks to see how you did against what you had expected. If some tactics worked better, amplify them and invest more in those messages for improving results. Being in front of market is an on-going process. So submit your product and services for industry awards and tout it in your blog and issue press releases. We used similar strategy in Ukiah Software and received awards such as Top 10 companies to watch in 1999 by Network World and Top 25 Hot Startups of 1998 by Data Communications Magazine, 1999 and 1998 Hot Product Awards by Data Communications Magazine, 1999 Product of the Month Award by Telecommunications Magazine and Network World’s Blue Ribbon Award. In summary, my four 4KTA points for launching your startup are Launch Plan, Launch Team, Launch Strategy and Positioning, and Launch Communication and Continued Execution. Naveen Bisht is a serial entrepreneur and Board Member, Chair – Programs, The Indus Entrepreneur (TiE ) and member of TiE Angels Steering Committee, based in Silicon Valley, California. |
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