The Startup Journey

A German-Croatian friend narrated this incident earlier this morning. On a recent trip to India and upon checking into his hotel (a grand and most well known Indian hotel around the world), he tweeted “checked in and am now at the restaurant waiting for my chicken biryani.” A few hours later, he got a message from the hotel not only enquiring about his experience with the chicken biryani but also informing him (via a message on Facebook) about the various restaurants at the hotel, the chefs and their particular specialities. Needless to say, he was completely floored. The hotel was tracking the responses and explicit experiences of its guests, almost in real time, and making serious efforts to reach out to its guests making the most of new technologies. And this hotel is part of a century plus old staid corporate group. Contrast this with another experience. Some years ago, I had a series of horrible experiences (including being let into a room late at night that was already occupie...

Originally published in the WSJ Blog. Reproduced with author's permission. Early stage venture capital investing in India appears to be the flavour of season. There are funds being set up from $5m to $30m in size. Some are proposed to be set up by angel investors, some by former executives and investment bankers while others by successful entrepreneurs. Some are likely to be supported by government linked institutions, some by international investors and high net worth individuals. I recently had occasion to meet with some fund managers of these proposed funds. Clearly, they had done their homework: on the state of the Indian private equity and VC market, the various participants had been mapped out, the state of the Indian economy, the performance of existing venture backed companies, the valuations, the exit opportunities, the pluses and minuses of existing funds had all been analysed and the inevitable gaps/spaces/blue oceans (choose your favourite jargon!) had been identified. ...

This article appeared originally in The Financial Express July 2010 Issue. Reproduced with permission from the author. The long and detailed presentations were going well. The young CEO was passionately outlining the company’s plans to the board. The rest of the management team was also present and there were several interjections and contributions by them on their functional areas and areas of expertise: Process improvements, employee training and retention, product design, engineering, customer support were earnestly discussed. Terms like efficiency, productivity and growth rates were thrown around. Everything seemed to be going as well as possible till someone asked “All this is fine, but where’s the customer in all of this?” None of the presentations talked of how the customer would be better served by the elaborate discussions on processes and systems. All too often, companies become obsessed with themselves and become inward looking. Are the planned proc...

This article appeared originally in The Wall Street Journal May 2010 Issue. Reproduced with permission from the author. A recent news report ( http://bit.ly/cjChhM ) indicates that the Government is keen on allowing 74% Foreign Direct Investment (FDI) in defence production to enable technology transfer and the bringing in of funds. Let us take a look at some data. India’s defence budget for 2010-11 is over $30billion; India is currently the 2nd largest arms importer (2005-09) behind China. However, according to the SIPRI report, China is well on its way to becoming self-reliant and saw its imports decline to $0.6billion in 2009 from $3.5billion in 2005. During the same period, India increased its defence imports from $1.04billion to $2.1billion. India’s defence imports are currently estimated to be over $8billion. The role of the Indian entrepreneur, thus far, in catering to this huge market is less than negligible. Isn’t there therefore a terrific case for catalyzing entrepreneurship ...

This article appeared originally in The Wall Street Journal. Reproduced with permission from the author. There’s an exercise I sometimes ask students, especially those in business school, to do. On a blank piece of paper, the size of a business card, I ask each of them to first write their name and then their “dream title” in their “dream company” that they’d like to see themselves in. Being business school students, it is no surprise that “Chairman,” “Managing Partner” and “CEO” is the typical dream title they’ve ascribed to themselves in their dream companies, usually the globally most well recognized companies from the worlds of consulting, investment banking and investments. This exercise is usually completed in under a minute. They’re then each asked to turn the paper around and again, write their name on it. This time however, there is no “dream company”. They simply have to give themselves a title, one that describes them to another person. Now this suddenly takes time to comple...

At Venture Intelligence, we recently had a great experience interviewing Hemu Ramaiah, founder of the Landmark bookstore chain (in which the Tatas acquired a majority stake in 2005). For me, the interview (which is part our Entrepreneur Podcast series "Entrevista") served as a confirmation that a customer facing role is the best start to an entrepreneurial career. Other key takeaways from the podcast: * “Make Your Own Mistakes” o Trust Your Gut (based on your understanding of customer needs) o “Don’t let Accountants take over your business” o Examples: Deciding to get software designed by a start-up firm (which made the effort to understand her requirements better), deciding not to charge extra for courier delivery for Internet orders, deciding to buy (rather than rent) space for the stores, etc. * Importance of Growing the Market vs. worrying overly about competition o Amazing story of how she decides overnight to start supplying books to he...

This article appeared originally in Businessworld. Reproduced with permission from the author. A conversation I had late last year with a leading investment banker was telling as it testified to the rise of entrepreneurs from middle India –the India that lives in Tier 2 and Tier 3 towns inhabited by close to 70% of middle class India. He said, “We’re seeing an increasing number of deals outside the metros and we believe growth will come from those places. We’re therefore looking to hire people who can speak local languages fluently, have relationships in smaller towns, aren’t averse to traveling by train and bus and staying in non-5 star hotels!’ He was making an important point – wearing branded suits, speaking in clipped accents and doing business in the lobbies and coffee shops of 5-star hotels in metro India wasn’t where all the action was going to be! India’s secular growth trajectory is being propelled more by domestic consumption than by anything else. In turn, domestic consumpt...

Article appeared originally in Financial Express. Reproduced with permission from the author. A Professor from an international business school writes a book. The book is published by a highly regarded publisher. The book has examples from the US, Europe and India. Then gets the book written about by giving interviews to bloggers, journalists from well known international publications and the like. Naturally, lecture tours are the next step. Local industry associations are then contacted (subtly and not so subtly) to invite him for talking about the book. Soon the India chapters of these industry associations too are asked to invite him for talks. As a gesture of goodwill, he says he will waive his usual speaking fees but he’d be glad to have the publishers bring in copies of the book that people could buy, perhaps at a discount. Helpfully, he explains that the book has sold tens of thousands in India already since it has many Indian examples. And he’d be glad to sign the books, at no...

The CEO of the startup was conducting due diligence on a potential acquisition target. The Board (including him) had prepared a list of questions they wanted detailed responses to. These answers would then need to be cross-verified by the appropriate experts, lawyers and accountants. The founders of the potential acquisition target were known to the CEO for several years and they had done business together as well. The CEO believed that the acquisition would benefit his company and desperately wanted to make the acquisition happen as he believed it would double the size of his company, enhance offerings and customers and of course, provide some bragging rights since an acquisition tends to (at least initially) be an ego-booster. As the diligence process began, it started becoming apparent that the financial position of the target company wasn’t as healthy as had been conveyed or imagined. In addition, the customer base and sales pipeline too didn’t look as attractive. The Board started...

The startup was in a tizzy. One of its largest partners who sourced the startup’s products, bundled them with other offerings and sold them to customers had decided to make the products itself. The partner was much larger than the startup, had more money and reach. About 10% of the startup’s revenues came from this large partner, albeit at a lower margin than if the startup sold products directly. On the other hand, it did not have to incur additional sales and marketing costs. For the partner, the revenues from the startup were a tiny fraction of its current revenues but the market opportunity was large and fast growing. It was quite possible that the startup would be in direct competition with its partner before long. The startup was therefore understandably nervous – should it continue to supply the partner or should it stop supplying products? Should it aggressively cultivate other comparably large partners while continuing to do business with this partner? All too often in busi...

Subroto Bagchi has published an interview with Rajeev Mecheri, Co-founder of building security technology firm iMetrex, in Forbes India magazine. In time, they became the go-to organisation for every high-rise in town that required compliance with safety, security and energy management norms. In 2007, Siemens noticed their work. And Siemens also noticed that their building solution software was comparable and in some ways, actually ahead of what Siemens offered. It wanted to buy them out but with a condition: The brothers came with the business. Rajeev came on board as the managing director of Siemens’ Building Technology business for an agreed period of five years. This year, the business having fully integrated, Rajeev has decided to move on and brother Anand has stayed on as the chief marketing officer of the Building Technology business, located out of Switzerland. The acquisition is valued at a whopping $100 million. If you have not heard about it, it is because in Chennai, folks...

The following was narrated to me over the weekend by a Professor of Finance and a former finance industry executive with experience in well known multinationals. Upon asking his supervisor about his not being promoted even after performing well at his job and being recognized for it as well, he was told that he was asking the wrong question! His supervisor told him “You’re asking the wrong question! You should ask – what should I do to get promoted?” Quite naturally, this confused the finance executive and now Professor all the more. Upon enquiring, he was told by his supervisor that he was undoubtedly very good at his job but hadn’t demonstrated leadership by developing a competent second rung of leadership. “You should make yourself redundant by growing out of your job to be promoted” was the message from the supervisor; else, upon promotion, who would do the executive’s job at least as well as it was being done?! The executive took the message to heart. In the next 2 years, he was p...

At some point in their existence, many startups have to confront certain existential questions – about themselves and their future. Some of these typical questions: “Are we on the right track? Are we likely to reach where we wanted to? We need to grow fast but how? Should we acquire and grow? Should we be acquired”? Three real life situations from my experience: There was a term sheet on the table from the large well known public company to acquire the young VC funded startup. The price seemed right, the company was respectful of the startup, the products were complementary and the cultures seemed to match. The deal didn’t go through because the CEO of the startup couldn’t be accommodated in any worthwhile role in the large well known public company though all the other startup employees would’ve been absorbed. So the startup CEO rejected the offer. The CEO of a startup that had raised venture capital financing was under severe pressure. He had aggressively promoted his company’s offer...

I received a letter by courier yet again last week from a well known financial institution. It took me a while to reach the letter since the envelope in which the letter was enclosed had been fortified by no less than 9 staple pins. In addition, the envelope was tightly sealed with gum and two strips of sticky tape. I finally retrieved the letter but not after some cursing and a bruised finger. This was the nth such letter I had received from the company, complaints notwithstanding! Why did this company deem it fit to send me a letter that was so cumbersome (not to speak of, painful!) to retrieve? Clearly, security for their letter was a high priority but was it necessary? Did they pause and think about their customer’s experience at all? Am not sure they did because then they might have considered emailing me the letter. Or were they simply following an age-old practice mandated in response to a case where someone’s letter was pilfered? In all probability, a ritual that had come into ...

We are delighted to announce a stellar list of speakers for APEX '10, the annual conclave of the Indian Private Equity / Venture Capital industry, scheduled for February 4 at Mumbai. This edition of APEX will have a special focus on Education, Healthcare & Life Sciences, Telecom and Financial Services (especially financial inclusion). Speakers at the Summit include: Varun Sood, Capvent Ashish Dhawan, ChrysCapital* Raja Kumar, UTI Ventures* Vani Kola, NEA-IndoUS Ventures Manik Arora, IDG Ventures India Anand Sudarshan, Manipal Education K. Ganaesh, TutorVista Rajesh Bhatia, Tree House Education Sunil Kanoria, Quippo Telecom Mahesh Choudhary, Microqual Techno Dr. Bala Manian, ReaMetrix Swapan Bhattacharya, TCG Lifesciences Chetan Tamhankar, SIRO Clinpharm S. Nandakumar, Perfint Healthcare Padmaja Reddy, Spandana India V.P Nandakumar, Manappuram General Finance Madhusudan Menon, Micro Housing Finance For Participation details, email info@ventureintelligence.in or c...

1991 was when India achieved its second independence – that of economic liberalization. But, in retrospect, one has to say that it has been far more than just economic liberalization. It also liberated the mind of the baggage of self-doubt, low confidence and ignorance. It has therefore been my belief that those born around or after 1991 would be the change agents of India. Entrepreneurship and entrepreneurial thinking would be the vehicles of change. In the first column of Indipreneur published August 25th, 2006, I wrote: “For the first time, an entire generation of young people cutting across class lines is acutely aware of the opportunity ahead of them. They also recognize the inscription on the other side of the coin: RISK. And it’s not a four letter word anymore. While earlier generations were defensive and inward looking, this generation is aggressive, outward looking and not given to the self-doubts of the past. This is the “why not?” generation. This generation has the potentia...

A CEO’s job, like any leader’s, is a lonely one. The CEO of a startup is especially lonely. He’s expected to manage finances and investors, the board, motivate employees while dealing with recalcitrant ones, engage with, influence and grow relationships with key customers, partners, suppliers and industry players. The CEO needs to be emotionally strong to deal with all the pulls and pushes. And has to always present a sunny disposition even when times are difficult. It is a job that requires enormous confidence and humility. Confidence to keep executing towards the goals of the company and humility to keep learning and unlearning. Not surprisingly, these are uncommon traits that only the more successful CEOs have. Rarer too is the desire to know one’s weaknesses and the willingness to work on improving oneself. I was therefore delighted when I recently received an email from a CEO saying he wanted an honest appraisal from me of his leadership. He had commissioned a 360degree appraisa...

Forbes India has an interesting profile of Vikram Bakshi, the JV partner of McDonald’s in India. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. Click here to learn about Venture Intelligence's products and services for entrepreneurs.

DARE magazine has an article on the various government-related agencies that provide funding for technology start-ups. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. Click here to learn about Venture Intelligence's products and services for entrepreneurs.

The TV channel had headlined the story “Education or Business?” The story was about how students had been taken for a ride by the administrators of a couple of educational institutes that had taken large sums of money as fees and then not provided admission to the students. The police, the students’ families and even the local MLA were all interviewed. The administrators of the institute were not available for comment. The headline “Education or Business?” was troubling. Was it implying that education and business were mutually exclusive? Or, was it, even more so, implying that cheating students with false promises was unacceptable behaviour in education but, and here’s the rub, understandable and even acceptable if it were yet another business? Is business assumed to be corrupt and unethical? And therefore is it perfectly legitimate to indulge in practices that might not be considered ethical as long as it benefits the company? What then does it mean for entrepreneurs starting out to ...