The Startup Journey

In an article appearing in StartupJournal, Warren Schulz - who has started and sold two small businesses - provides strong counter points to the "great benefits of being your own boss". An extract from this must read article for all "aspiring entrepreneurs": Let me offer this reality check. If you're employed in corporate America, you've probably got a steady paycheck. If you get sick, your employer's health insurance plan probably will cover most of your doctor's bills. If you want a vacation, you're apt to have paid time off. For the most part, you can do your eight and hit the gate. You've got it made; you just don't know it. Running your own business is hard. But you think you're smart and can take an idea and make it happen. Odds are good that you'll lose half of your start-up cash by making mistakes. They may involve bad leases, employees, records, decisions, ideas or luck. The bottom line: You're bound to mak...

By Arun Natarajan I recently watched an interview with MphasiS-BFL's Chairman & CEO Jerry Rao television ( Udaya TV on February 20, 2004), when he said - quite firmly - that luck plays a huge role in any entrepreneur's success. He said a large part of his success was owed to the fact that he was "at the right place at the right time". Rao gave examples to prove his point about luck being so important. For instance, his highly successful career with Citibank had begun "willy nilly" - via a campus placement at IIM-A. And even his founding of Mphasis Corporation, a California-based software company that subsequently merged with BFL Software to form Mphasis-BFL, was sparked off by a chance meeting with MphasiS' future co-founder during a flight trip. Rao's remarkably candid and humble admission made me think about the role of luck in my own entrepreneurial endeavors as well as that of my friends. And sure enough, I could think of quite a f...

Extract from Infosys Technologies co-founder and CEO Nandan M Nilekani's interview to CIOL: Actually when Infosys was formed, all of us were working with Patni in Mumbai and Narayan Murthy was our boss there, heading the software group. The group strongly felt that there is a need to create a very professional company, one that was based on very strong ethics and values. We also wanted to create a company that really valued people. That is how we started. The fact of the matter is that there were many such companies that started at the same time during early '80s, however, what made us different was that we stuck it out-we realized that it was not a sprint but a marathon and we were long distance runners. We went through difficult times, but none of us digressed from the common vision. All of us believed that Infosys was bigger than any of us and we were willing to subordinate our egos and our desire to larger boats. I think that determination to create a world-class company...

From fighting VCs to funding Hindi films In a new column for BusinessWeek Online, Vivek Wadhwa, Founder, Chairman and former CEO of US-based enterprise software firm Relativity Technologies, talks about how he fought--and won--against his Venture Capital investors while recovering from a massive heart attack, and has now stepped back to do something "less stressful": produce Hindi films. "While still in the Critical Care Unit, I received a phone call saying that my investors felt the need to renegotiate the terms of the current financing. Two days later and still bandaged, I left the hospital and walked, uninvited, into a closed-door meeting, where investors were trying to convince my executive team to accept more money for a revised agreement that would give them majority ownership. I flatly refused, and ended the meeting," he says. "My investors sent me a letter demanding that I step aside and allow the younger brother of a partner in one of their firms...

Do and Don'ts of Networking "Networking is about serendipity...The more places and times you are meeting people, the more likely it is that you'll find what you're looking for," says Kevin Laws, a VC at US-based August Capital, in his posting at VentureBlog. "It's about making your interests and needs widely known (a new job, companies to invest in, people to hire, money to raise) and listening to the interests and needs of others. Because of the FOAF concept ("friend-of-a-friend"), you are likely to run across somebody who needs what somebody else you know is offering. Eventually, that person will be you," he adds Other extracts from this article will is full of useful "how to network" tips: Networking is a process, not a goal, and should be done constantly rather than only when you have a specific need. People at networking events are often there to meet others, plural, not just one person. They want to pay atten...

By Arun Natarajan Here is a posting (quoted verbatim) from the telecom focused India-GII forum at Yahoo Groups (dated Jan 13, 2004): Three months before, I got a connection from my cable operator who had takn a pipe from HTMT (in cable netowrk) Setup charges 3500, monthly Rs. 500 for 400 MB data transfer. When I mentioned it on this list the members advised me that it is not posible to offer such rats. I should have heeded their advice. last month suddenly my connection stopped working. When I enquired, I found that that I had used up my 250 MB limit. I was shocked, asked what is the matter and was given a new rate card of 250 MB for Rs. 500. No intimatin no warnings Just a simple blocking through their software. Reason HTMT has increased their rates. It was a simple marketing technique. Offer reduced rates, once I am hooked on to it, increase rates. Now I am stuck to their rates. They charge Rs. 1000 for single computer for unlimited access but I am not biting this ...

Nasscom proposes fund to help SMEs file patents The National Association of Software & Services Companies (Nasscom) has proposed a special fund, in association with the Indian government, to provide financial assistance to small and medium sized software products firms to file patents, Financial Express reports quoting Nasscom president Kiran Karnik. The quantum of the funds required for each company will be determined by a Nasscom-designated committee based on the importance of the product and the extent of handholding required. The funds will be provided initially as a loan. If the patent application is successful, the amount will be converted into a grant. Click Here to read the full news item.

Govt. announces Rs.10,000-Cr fund to provide soft loans for SMEs On January 09, the finance minister Jaswant Singh announced that the central government is to set up a Rs.10,000 crore fund for providing loans to small and medium enterprises (SMEs). The interest on loans from the new fund will be provided at 2% below the prime lending rate, the minister said. The fund is expected to be operational within four weeks and is to be structured by the the Small Industries Development Bank of India (SIDBI). Click Here to read the PTI news agency report on the announcement.

Be vary of VCs, say ex-Internet entrepreneurs "In 2002, we sold egurucool to NIIT for Rs.14 crore. But that was because we were forced by the venture capitalists (VCs) to do so. I didn’t want to," says Vivek Agrawal, co-founder of online education company egurucool, in a Business Standard article. "VCs are a double-edged sword," he adds in the article featuring interviews with former Internet entrepreneurs and executives. "Set up your venture without external investment," advises Rajiv Vij, co-founder of net2travel. Click Here to read the full article.

Prashanth Dhulipala, a California-based software engineer, writes in response to Arun Natarajan's article, "Where Money for Start-ups Really Comes From": Hi Arun, Just came across this interesting write up on the new avtaar of friends and family in the world of investing. It does make sense that tax concessions be offered to entrepreneurs who are just starting out, and who are being funded by friends and family. The question though is, what is the success rate of these startups? Probably too early to say, but it is too big a risk to wait out the results. While investing in "grey hairs" is probably tending to the extremes, I would not mind a government sponsored regulatory board that would assess the worthiness of such startups that would at least look for diluted forms of the "provens". Thanks Prashanth Dhulipala

Manish Sabharwal's interview to Knowledge@Wharton In a fascinating interview to Knowledge@Wharton, Manish Sabharwal, Founder & Managing Director of pioneering HR BPO firm India Life Hewitt, provides both solid and witty insights into a whole range of industry issues: how he started out, why he sold out, why he focused on India as a market, etc., etc. Some extracts: Business schools as venture incubators I think VCs who started incubators got it wrong; business schools like Wharton are the best incubators in the world. I milked the school's ecosystem. India Life was my final project in six classes. Many professors helped me think things through, and I had a group of first-year students do a field application project. I used the summer between the two years to travel to India and refine the plan, and then moved back to India straight after school. I guess it would make a better story if I said all my professors gave me bad grades for my business plan. But they di...

"Venture Capital is not available for start-ups" "Today, there are no true start-up VCs. Investments are happening in companies which have made cash profits and are looking for funds for the second phase of growth." says venture capitalist Vishal Nevatia of GW Capital in an interview to Economic Times. GW Capital is focussed on mid-sized companies in the media & entertainment, retailing, and BPO sectors. Around 60% of the fund's Rs.150 crore corpus has been invested in these sectors, Nevatia said. Click Here to read the full interview.

Why searching for The Next Big Thing is a waste of time What's going to be "The Next Big Thing" (or its variation the "next killer app")? Reams and reams of newsprint, web pages, conferences, and even oh-so-precious TV air time, is devoted to this topic--especially now that the "Internet wave" has subsided a bit (or rather, become more "mainstream"). Tim Oren, a Silicon Valley veteran (currently Managing Director of VC firm, Pacifica Fund ), has made a great post at his web log explaining why looking out--or listening to the "punditocracy"--for the NBT is a waste of time. "The Next Big Thing is a narrative we lay on top of the events after they happen..... (it generally) sneaks up from behind while you're trying to do your work, kicks your ass, walks over you, and either rifles your pockets or drops gold into your hands," Oren says. "Anyone tells you different, you're talking to a liar." Oren go...

Anurag Jain , Doctoral Student at IIM-Bangalore writes in response to Arun Natarajan's article, "Where Money for Start-ups Really Comes From": I do agree with GEM researchers in their recommendations. However, my reading is that for every 285.981 million booting up with the Fs' support, there are more than double/triple that figure (that exact number would be interesting to know, as that would be a proxy indicator of the potential of economy) who couldn't get off the track due to the non-availability of even basic capital (say 1700$ as mentioned in article). So, yes, we do need to take measures that will enhance the availabilty of financing, more so to enable the wanting to 'cross-over'.

Where Money for Start-ups Really Comes From By Arun Natarajan Here's what the irrepressible Guy Kawasaki--former Apple executive and CEO of Silicon Valley investment bank Garage.com--says in his Forbes.com column in answer to the question "What are Venture Capitalists (VCs) doing these days?": "Mostly VCs are looking for companies with three "provens": Proven teams, proven technology and proven sales. Ideally, they'd like a team that's sold a company to Cisco for $7 billion, won a Nobel Prize with its technology, and is profitably selling $12 million worth of stuff a year. That's an early-stage deal. Unfortunately, using these parameters, no VC would invest in anything. Oops, there goes the next Yahoo!, Google, eBay, Netscape, Apple, or Cisco... In any case, it's tough to get an investment these days." The situation in India is not too different. "Investors like grey hairs now," says a recent Businessworld artic...

Raman Roy on the evolution of India's BPO industry--and his baby, Spectramind In this 2-part interview to Knowledge@Wharton, Ramon Roy, Founder & CEO of pioneering third-party BPO firm Spectramind, talks about the evolution of India's BPO industry. Especially interesting are his thoughts on why third-party BPO firms can succeed in the face of the trend among MNCs to set up captive centers. Here's just one extract from this fascinating interview: K@W : What was the principal objective with which you started Spectramind, and to what extent has this been satisfied? Roy : We had very clear objectives in setting up Spectramind. We wanted to demonstrate what could be done out of India. We were all big believers in the capability of the Indian workforce. I wanted to be able to tell my grandchildren, “Your grandfather played a role in creating this company.” I’m not trying to say we weren’t trying to make money—that was a driver as well. But that was not the main dri...

What VCs look for during "due diligence" According to David Hornik, a partner at August Capital, if a VC is engaged in due diligence on a company, it means that the VC finds something sufficiently compelling about the business proposition that he or she views it as "worthy of further investigation". While the specific business being investigated will dictate where a VC puts emphasis in the diligence process, the information reviewed is generally the same stuff across businesses and among investors, he says in his posting at VentureBlog and goes on describe the typical categories that VCs investigate. Click Here to read the full posting.

Guy Kawasaki's Q&A column in Forbes Guy Kawasaki, the irrepressible founder of technology investment bank Garage.com , now answers start-up related questions in his Forbes column. Couple of Q&A extracts from his latest column: Which comes first, product or market? Should I find a product and then devise a way of selling it. Or should I look for an unexploited market and then find a product to fill it? Call me old fashioned, but you should create the product first. It could be because you want one yourself. Or because the bozo company you work for won't do it. Or because, simply, you can build it, so what the hell (sometimes if you build it, they really will come). My belief is that to be successful, you have to love what you do. I don't care how big and untapped a market is, if you don't love it, forget it. Life is too short to do something you hate. Go with your heart. The money will follow. Even if you fail, at least you failed doing somethin...

Taking the bulldog spirit to the next level A recent Mercury News article provided inspiring profiles of two Silicon Valley entrepreneurs who fought personal adversity to keep their start-ups going. Here's a short description+extract from one of the profiles: In February 2002, when San Francisco-based enterprise software firm Determine Software , was in the process of raising its next round of venture funding, its CEO, Scott Martin, was diagnosed with leukemia. Doctors gave him a 14 percent chance to survive. (Extracts:) But Martin stayed focused. He worked his laptop and phones from his hospital bed as he received treatment... In October, Buck French of JP Morgan Partners went to visit Martin, who was then undergoing chemotherapy to prepare for a bone-marrow transplant. With Martin's immune system compromised, French was forced to put on a mask, a gown and gloves before he could negotiate terms with the sick patient.... French says Martin's passion imp...

Interviews with Engineer Entrepreneurs (The following is an adaptation of a recent blog post by K.Satyanarayan ) In a thought-provoking series of interviews with engineer entrepreneurs , Jonathan Rentzsch provides a fascinating insight into the mind of the software creators who turn entrepreneurs and establish businesses to sell their products. The interview with Peter Sichel , founder of Sustainable Softworks , is particularly interesting. Here are some of the thoughts shared by Sichel: Sustainable Softworks has a very low overhead and responsive software business model that supports a few of us to make a decent living. We sell directly to customers and encourage them to participate in improving our products. As we learn from experience the model will adapt, but our purpose is to serve customers and build mutually beneficial relationships, not to grow for its own sake or maximize shareholder value. I think my most important lesson is don't be afraid to try livin...