All posts by Mukund Mohan

My discipline will beat your intellect
Angel investing, Entrepreneurship

The irrational fear of missing out (FOMO) #startups

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I know an entrepreneur who attends every event that happens in Bangalore. Provided its free. He also organizes many events. I used to wonder where he has the time to run his company or do his job. I have yet to ask him why he attends all these events.

I could hazard a guess. It could be the free food, or the chance to meet other people that might help his company or a chance to make serendipity happen.

Then I overheard a conversation he was having with his mind. Turns out he suffers from “Fear of Missing Out” syndrome, or FOMO.

To be fair, those “rare connections” do happen. That’s the whole point of serendipity. And also the point of never giving up. You just keep plugging away at it until you get to the promised land.

I am that person.

I realize that I have the irrational fear of missing out.

The trouble is , every time I meet an entrepreneur, I learn. I learn a small little thing that I did not know before. It always happens. Without fail.

I have learnt one trick about how to get more views per post with a single character added to my posts. I have learnt the perfect Subject line you can write to get a better open rate in your email newsletter.

So the question is always one of the value of the time spent. I fear that I might miss out on learning something, but at the same time I fear my time is worth a lot more than the lesson learnt.

It is the fear of missing out and it is an irrational fear, but I am curious as to how you overcome that fear. Thoughts welcome.

Personal, Research

Insights into the anatomy of the Indian entrepreneur – Work-hobby and Work-life balance

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Friends at Scibler came to me the other day to tell me about their customer development efforts. This is by far the one team I have encountered with the highest IQ across the board and the commitment to learning about their customers *while* they develop their product. Their rigor, analysis, consistency and dedication to understanding their target customer, the relevant messaging and positioning before launch is unparalleled among Indian startups.

They found 3 personas of people who would be their customers – Work-work, Work-hobby and Work-life.

The Work-work persona is a rarity anywhere in the world, but more so in India. Among those who work for a big company or at a government agency, this person is an absolute “blue moon“. This kind of person loves their work. They live, breath, eat, sleep their work. From when they were kids they dreamed about doing something in the area of their work. I find few Indian entrepreneurs in this bucket as well, but they are as rare in India as they are in the US.

The Work-hobby persona is someone that does their “day job” to keep the lights on. This is a finance person who does accounting at a large company to earn 2,000,000 (20L or $40K) per year to maintain her EMI, drive a foreign import to work and send her kids to a “good school”. But the passion, desire and fun is Bharatanatyam. I actually know a person who does this exact same thing. She devotes her waking hours outside of work to Bharatanatyam. She’s also a realist and knows that it wont put the food on the table in India. So she continues to slave away at the large company, doing mindless work just so she can make enough money or save enough to pursue her hobby full time.

The Work-life persona is someone that has a job, but he has a life as well. Meaning, he enjoys food, friends, art, culture, movies, books, music, and a whole host of endless options that “living” gives you. He’s not committed to the one “hobby” or is not passionate about that “one thing”. He’s yet to find that one thing that matters to him the most. If you ask him about the one hobby, he’ll likely say “cricket”, “family”, “kids”, “shopping” or “sleeping”. He is not too particular about the type of work as long as it gives him enough money to “live”.

I often meet all 3 of these types of folks becoming entrepreneurs. I have been known to go on record stating that very few of the work-life or the work-hobby will actually succeed. In fact if they do, I’d consider that an exception. For an entrepreneur, work and their startup’s work in particular has to be the thing they breath, dream, eat and sleep.

As an entrepreneur if you are not doing something you like, have a passion for and enjoy, I’d highly recommend you dont do it. You will likely be in two minds at the first obstacle and trust me there are many obstacles for startup entrepreneurs in India.

The big difference between Indian entrepreneurs I meet and those I meet in the valley is that most work-hobby folks in the US end up making their hobby their work. So they also become work-work personas.

They can do this and succeed since there is a market for unique, new, interesting hobby “stuff” given how rich the nation is and how advanced their markets are.

In India the best you can do if you want to make your hobby a big part of your life is to make it  a “side bijiness“. I meet at least 20-30% of employees at a large or small company in India, having a side-bijiness.

The question I get asked by entrepreneurs a lot is what persona type should I hire?

I see most entrepreneurs looking to hire that elusive work-work persona. There are so many Indian entrepreneurs, who claim to have a culture that attracts the work-work persona, and those folks that are passionate employees. I hate to tell them they are being fooled and really if I talked to their employees, they’d tell me they’d rather start their own company, but dont have the risk profile to do so.

Here’s the real truth.

The work-work folks will not be working for you in India. They would rather be entrepreneurs themselves, since they live their work.

So the best you can do as an entrepreneurs is to hire a work-hobby or work-life persona. I’d highly recommend you dont get frustrated if they dont give you a 100%, because really their mind is elsewhere.

As long as they give you what they commit to, be happy, move on.

Above all be a force of good.

India, Mobile, Research

A discussion with Rajan Anandan on #startup trends and the 2020 outlook

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Prolific angel investor, MD of Google India and all around nice guy, Rajan Anandan was at the accelerator yesterday to meet our startups and other investors. He mentioned a few very interesting stats and trends that he gets to view at a macro level from his vantage point.

Along with Sandeep Singhal and Aarti Kapoor we had a chance to talk about key trends that will affect startups in India over lunch.

  1.  Android is growing very rapidly in India and smartphone growth has hit an inflection point (across all brands). The estimate for Indian smartphone growth is there will be 40+ Million new smartphones (of all types) overall this year sold and that compares to an existing base of 25 Million smart phones. So, 65 Million smartphones out of a total of 600 Million unique phone users in India. By 2020, over 350 Million phones will be smartphones in India and most of them will be connected (Compared to only 25M connected smartphones in 2012).
  2. Large brands (not digital companies like eCommerce and others) are now beginning to bring their brand campaigns online and digital is complementing TV and print in a significant way. Over the next 3 years brand spending will move to digital in a meaningful way.
  3. SMB spend online accounts for a small 10% of advertising spend online, but is growing dramatically. Given that some estimates put the # of SMB in India to be 45 Million, even 20-30% of them going online in the next 7 years is a dramatic increase in # of SMB  websites in India.
  4. Video will be a key driver of brand advertising in India. While search is a very powerful performance medium, YouTube has grown by leaps and bounds in India and is also strong growth engine.

What does this mean for startups?

  1. Companies focused on getting SMB’s online with a simple and easy to use product will do well he said.
  2. Since the number of English speaking Indians is much smaller than Indic languages, indic language focused startups will have a very bright future
  3. He also was bullish on the Indian eCommerce market, given that FDI in retail will be addressed at some point of time. Companies that have the wherewithal to last the next few years and grow profitably will be ripe for acquisition in a few years.
Funding

What 4 Indian investors with $2 billion under management are looking to fund now

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This post will be a random stream of thoughts, rather than a well constructed thoughtful essay. Apologies.

4 technology venture investors were at the accelerator today to listen to 7 corporate development and M&A teams on what they were looking for in an acquisition. The 4 investors together have over $2 Billion invested in India in the technology companies alone.

Exits are critically important to their (and hence entrepreneur’s) success. Exits with good premiums are even more important to them, but I am getting ahead of myself.

There are many reasons why a company acquires another company, but the 2 most important we talked about were a) Access to markets – in our case, India and b) Access to Intellectual capital.

Local acquisitions (Indian companies buying Indian startups) are fairly rare since many of the larger technology companies in India (services companies) dont believe they need IP based offerings and have the access to the market already.

Thanks to the FDI issues, eCommerce companies, which would have been a acquisition target for many companies are not longer on the shopping list of many acquirers.

So if you are looking to get investment from these venture investors, you will have to really follow the money trail, which starts at where companies are getting bought (since IPO’s are fairly rare).

For many of the larger technology companies, access to Indian markets is not a huge issue, (there are exceptions, IFlex and Oracle being one) and a few others might still happen, but the large source of exits will still be companies who need Intellectual property and those that need access to markets.

While many Indian entrepreneurs still hate the word “exit” and believe it is an unnatural act, they still do need to provide returns for their investors.

So to raise money now, you better have a clear idea about how you can plug a “white space” that exists among the larger companies from an Intellectual Property standpoint.

Some areas that we discussed were a) Payments b) Indic language technology c) On boarding SMB on the Internet d) cloud infrastructure and e) Software defined networking (SDN).

Tips

Startup trends: China: The “hunt and peck” has given way to the “touch and tap”

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I have been spending a lot of time with startups from China the last few months. Reading about them, meeting them and learning from investors, partners and startup entrepreneurs. My intent was to understand what’s happening there that might most likely happen in India in a few years, based on market trends.

Without doubt the area that’s immensely competitive and hotly contested is mobile applications. With a large number of Internet enabled smartphones and a ARPU that’s nearly 2-3 times that of Indian consumers, it is a ripe area for innovation. I had a chance to talk to over 300+ entrepreneurs at GMIC in Bejing.

There are 3 major trends that I found particularly fascinating that I think will have some impact in the Indian ecosystem as well.

1. Messaging. Similar to Indians, the Chinese use a lot of messaging. SMS and text messaging have largely given way to messaging applications like What’s app clones in China. I was surprised to learn that the average Chinese user has a minimum of 4 messaging applications and most have close to 10. That struck me as overkill. Then I looked at my own phone and I was surprised that I had a lot of “inboxes” on my phone. Skype, What’s app, SMS, Lync, Yahoo messenger (to chat with my sis and brother-in-law, who are die-hard Yahoo users), Google talk and finally Facebook messenger.

2. Twists on messaging: There was one app that I saw that only had 2 icons and a Send button. The 2 icons revealed 20 to 30 standard messages but with icons instead of writing. Imagine they are “shortcut icons” to “How are you”? or “I am happy” or “I am late”. That’s it. The entire app was built on top of simple messages represented by icons.

It struck me that the hunt and peck of the laptop / notebook has given way to to the touch and tap of the mobile.

The amazing part of this app was that it supported folks that were not “literate”. Which is a large problem in India, given that only 20% or less of us are multi-lingual.

So an icon for “What’s up” is the same in Gujarati, Hindi, Bhojpuri or Tamil. Language barriers solved. Awesome.

3. Purpose built messaging instead of one size fits all. Tom wrote about unbundling of social networks and I think that’s what’s going to happen to messaging as well. Right now we are all happy with What’s app, but its ripe for disruption. I can imagine a couple just using a I love you messaging app to send sweet nothings to each other in 100 different ways during the day. Or two college buddies swearing at each other all day on their Galli De messaging app, just for fun. There’s another Chinese messaging app that’s just a blank canvas screen for people to message drawings to each other.

I’d love to get your perspective on if you have more than 1 messaging app on your phone and if you’d download and use multiple purpose built messaging apps.

Entrepreneurship, India, Learning

The “meaning” metric for your #startup is more important than any other #entrepreneur

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I often get questions from startups around the metrics they should track. While I am of the belief that many are immaterial, it is good to gather as many as you can, but only focus on ones that you believe will truly make an impact to your business. Which is hard, because it keeps changing.

Sometimes I do get an enlightened entrepreneur who asks me more existential questions – Why do you think we should exist? Which is the toughest question to ask and answer. It is not that they dont know the answer to that question. They are asking me so they can get a sense of their business and if they are focusing on the right things.

I spent all of yesterday, with 4 tremendous entrepreneurs who are shining examples of social entrepreneurship. I was at the Ashoka Innovators panel trying to see how we can help them scale their organizations.

I used to think that most social entrepreneurs were tree-hugging, not-for-profit, mission-over-business folks. I was also ignorant enough to think that they were all NGO’s.

One young entrepreneur in particular impressed me much.

Shashank, is the cofounder of FarmsnFarmers, a very impressive young entrepreneur, enough to put 90% of the technology startups that I work with to shame with his excellent metrics.

His revenue growth, maturity and the deep understanding of his business impressed me tremendously. I can confidently say he was in the top 5 of the list of entrepreneurs I have met this year, and I have met over 2000 this year alone, in the US, China and India.

In 2 years the business has gone from 0 to over 5 CR ($1 Million) in revenue and will do 15 CR ($3 Million) this year. He and his cofounders are both IIT alums and they are both under 27 years of age.

While the revenue metric is impressive in and of itself, the meaning metric is more mind-blowing.

Their goal is to try and get as many marginalized farmers from the “poverty” line to the “lower middle class” line. A difference of nearly Rs. 5000  – Rs. 8000 ($100 – $150) per month in rural Bihar, which arguably is among the poorest of states.

That metric – the # of farmers they bring out of poverty is their meaning metric. If they do that, then their business succeeds and their revenues will grow as well.

That’s something every startup should focus on, not just those who are social entrepreneurs.

The meaning metric answers the ultimate question – “So What”?

How have people’s lives changed because of what your are building?

Even if you are building a social network or an eCommerce site, I would highly encourage you to find and communicate your meaning metric.

P.S. The # of farmers Shashank & his team bring out of poverty directly correlates to their revenues. Just so you get a sense of ambition, if he tracks on his 3 year operating plan, or even misses by 30%, he will be in the top 50 of Indian startups in 3 years, by revenue growth, in any field, including eCommerce.

Above all, he is a force of good.

Funding

My lead investor experience – a very humbling self realization

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If you are trying to raise a seed or angel round for your startup, one of the most important things you need to do is to find a lead investor. The lead investor is a person who a) trusts you and your team b) believes in your vision and c) is vested in your success and shows that by putting her money and time towards your startup.

Lets talk about me as an example in particular.

I have done a few investments in India, but never have been a lead investor. It is not because I have not tried. When I see a good team and a great market, I have reached out to other investors I know to let them know that the startup is worth investing in. Not one of the companies I have tried to invest in has been able to raise money from the folks I put them in touch with. I have always been a part of a syndicate, where the founder has brought other investors together.

That’s very humbling.

So, if you think I have some “influence” you are off the mark.

My “influence” stops at getting people to take a meeting with you. In India, that’s not worth a lot. Most folks will give you time to setup a meeting and get to know entrepreneurs.

There has not been a single case when I have led an investment and found other investors willing to co-invest because of me.

In many cases I have followed.

So I have stopped referring companies to other angel or seed investors. It is very humbling to know that I am unable to help get companies funded. I can put my money in, but that’s about it.

So I have been giving excuses (some of it is true) that I dont have time for due diligence, or dont have market knowledge in certain areas. They are excuses unfortunately.

So I tried to do some analysis as to why I am unable to get others to rally behind my investment thesis. The answer is simple and complicated at the same time.

The simple answer is I have not made money for anyone other than myself. Once you make money for someone they are more willing to invest in you since you are “proven”. I am only proven to myself.

The complicated answer is that its hard to understand Indian investors and I have not understood the motivations of Indian angel and seed investors yet. Its difficult since I have been here for only 5 years and even though I have a lot of friends, I dont have enough deep relationships built on a consistent theme of doing business and making money.

What’s the takeaway for you?

1. I personally dont think there are more than 5-10 real lead investors in India who are the “taste makers” or the “Pied piper’s” of India. Get them on your side first and then try to have them help you round your angel or seed round.

2. Else be prepared to meet 40-50 “investors” and convince them individually and try to land 3-5 investors to co-invest. This also means you should expect to take 2-3 months to raise a small $100K to $250 round.

3. The alternate strategy is to get one investor who can lead and fill out the round. There are a few folks who can do that, but they are rare and they will be able to write you a check $100 – $250K

Entrepreneurship, Funding, India

Should accelerators in India help entrepreneurs “fail fast”?

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I was at Delhi for the TIE India Internet Day, last Friday. Over 400 entrepreneurs, investors and startup enthusiasts gathered at the Sheraton in Saket for a day long session. There were 8 startups chosen to pitch at the event and there was an investor connect session as well.

Alok Mittal chaired a panel with 4 of us including 2 VC’s (Shekhar Kirani from Accel and Sanjay Nath from Blume) and 2 Accelerators (Sameer Gugalani from Morpheus and myself).

There were 3 slides that Alok presented about the maturity of the Indian startup scene, which were to serve as a backdrop for our discussions.

One particular slide generated a lot of discussion. The slide showed that 20+% of companies went from one accelerator to another and from one seed round to another without progressing, which indicated that they were “surviving” but were “living dead”.

Alok’s question was if we were not helping our entrepreneurs “fail fast”?

First off, let me state my bias – “I dont like the concept of fail fast”. Absolutely detest it. Whether its in the valley or India, failing fast is way overrated is my opinion and an excuse for folks not willing to spend more time learning about markets and drilling deeper into the problems faced by customers.

I think there are multiple reasons and subtleties to  the question, specifically in India.

First, Indian entrepreneurs dont take (or dont get) enough money in each round at the very early (angel, seed) stages, since the cost of money is too high. If you are giving up 10%+ at the angel and 25-30% at the seed stage, that money is ridiculously expensive. So entrepreneurs tend to think they can get liftoff with very little funds, and that ends up hurting them in the long run since they go back and dip into the same set of investors for another round, when they realize they are not ready for a significant up round.

Second, Indian entrepreneurs pay a lot more for talent, since startups are perceived to be risky  and so it is not uncommon to see talent getting 110% of their salary with some stock options, since the options are considered “worthless” in India. I know there are some folks that are the exception.

Thirdly, the cost of startup failure is fairly high in India already. Failed startup entrepreneurs rarely start again in India. According to our own research, over 50% of failed entrepreneurs, head back to a bigger company after their venture to pay of debts, “settle down” or bow to social pressure and get a fat paycheck.

Given these 3 arguments, I think it is absolutely important that we nurture our entrepreneurs and ensure they stay very lean until they find the product-market fit or liftoff. That takes a long time in India, thanks to fewer early adopters or paying customers.

Bottomline, “failing fast” is not a mantra we should support or promote among Indian startups, is my perspective.

Entrepreneurship, Tips

What culture in any company is and is not? #startup

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Until a few years ago when I used to hear a few very well respected startup experts on the importance of culture or what it was, I would ignore the remainder of their speech. Culture is nebulous, ephemeral and arbitrary thing I thought. After a closer reading of many startup’s  culture, documented in a series by a website, I would think that it was about being friendly, flexibility at work etc.

It was plain to me that when you get a few reporters who have never run a startup or been an entrepreneur, all you get is pithy statements – open culture, flexible work environment, with no digging deeper to help you build a framework for the topic.

I have a new theory about culture and not just startup culture in particular.

Culture defines how your company respond to situations.

When you are just one person culture is how you respond to certain situations – it is your personal ethos. When you have a cofounder, then it is how both of you decide to respond to situations. When you grow larger, it is the set of guidelines for your team on how to respond to situations. I dont know if that’s sufficient, so I’d like your feedback.

Let me give you an example.

I had a good friend and entrepreneur who came to see me yesterday.  He and his cofounder have been going through some tough times lately. Their team had significant performance issues which they were unable to turn around.

They were a small team of 10 folks so every team members performance would affect the company in a significant way. One of the team members, who was a good contributor had gone through some personal challenges and that affected his performance. He was well regarded, so his lackadaisical approach post his challenges, resulted in problems for the entire team. They all got more lax at work. Deadlines slipped and this “virus” soon spread to the entire team including their 2 sales people.

The founders realized the cause of the problem, but since he was an early employee, were loathe to let him go. They still wanted to “solve the problem” but were not sure on how to.

Take a few moments now to think about how you would handle this issue in your company if this happened. The simple response – “We would talk to the person and tell them to pull up their socks”, wont suffice. This is way past that stage. You have to take some action. The time for talking has passed is the assumption you have to make.

Yesterday I outlined 2 examples of how they could respond. I am going to call it the Zynga approach and the SAS approach. Having so many friends at both places, I feel they are poles apart in their culture .

The SAS approach is an “all hands on deck” approach. When a problem is noticed, such as customers not buying quickly enough, then the entire team rallies behind the problem and tries to solve it together. The pros of this approach it that it builds camaraderie and good-will, which leads to both higher performance in the short term and better morale in the long term. The cons of this approach is that there’s a lot of work for everyone in the short term to make up for the person that’s the slacker, which results in some bitterness among team members towards the “guilty” party.

The Zynga approach is “set the bar very high for performance”. If an individual is not performing to the level set by the objectives and metrics, they would replace that person after 1 or 2 warnings. The pros of this approach is that there’s a high bar for individual and team performance and everyone feels that they are accountable and responsible. The cons is that this environment tends to be rather detrimental to the team dynamics in the longer term.

Which road you take determines your culture.

Angel investing, Community, Funding

The step function of #changes that are happening in the #Indian #startup scene

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Most everyone believes that startup growth happens in step functions. You work for ages on something and it seems like there is little progress, but as an entrepreneur you are plugging away at it and suddenly one day, the growth is dramatic. Then it plateaus for a while and grows again. That’s the same for startup ecosystems is my opinion (not researched).

Step Function Growth
Step Function Growth

I am starting to see the next step function of growth in the Indian technology startup scene. There are a lot of people (entrepreneurs, investors, etc.) contributing to this growth and its hard to point to why it happened except in hindsight.

First, what metrics should we track so we can really know if there’s a step function or no progress?

Here are a few that we track at the Accelerator.

1. # of startups: How many startups are getting formed, where are they getting started, etc.

2. # of funded startups: Time taken to fund startups, amount of investment into startups, stage the companies are in at the point of angel investment etc.

3. Pace of growth: How quickly are they signing customers, how quickly are they getting VC investment, how quickly is their revenue growing, etc.

The NASSCOM 10K startups initiative is one such forcing function contributing to the growth.

Yesterday in partnership with NextBigWhat they organized the first of several #startuproots event.

A big part of that event was the #sharktank, which had 4 companies out of 200 that applied, that were going to pitch to investors and they had to make a decision on the spot.

For those of you who are not familiar with the sharktank format, the startups get 5-10 minutes to pitch, the investors get 5-10 min to ask questions and 2-5 min to make an offer. The entrepreneurs can then take some time to make their decision and then make a counter offer.

All offers are binding, save for legal and financial due diligence. Which means if and investor gets cold feet later, they cannot back out.

Yesterday, 4 companies presented. I had heard about 2 of those companies before (but did not know they were chosen) and the other two companies were fresh and new.

There were 8 investors who were part of the sharktank, but only 6 were serious. The other 2 seemed more there to critique and provide theoretical knowledge about startups.

Pankaj Jain from 500 startups, Ravi Gururaj from HBS, Ranjan Anandan from Google, Anirudh Suri from India Internet Fund and RK Shah from HBS were on the investors side.

Tookitaki (ad-tech space), Moojic (retail music hardware), Credii (Mid-market IT decision support) and Lumos (solar panels for backpacks to charge your phone), were the presenting companies.

All four got funded at the end of the event. I personally thought 2 of them would definitely get funded, but all 4 getting offers was truly a step function change.

I was personally pleased that Lumos got funded. They are doing something new and innovative that most Indian entrepreneurs wont do – Working on a non-software, difficult to scale hardware business, because of their passion.

I have to call out a special mention to RK Shah. RK is not a technology entrepreneur, (he runs a textile unit) neither is he a professional institutional investor. He wrote 2 checks himself yesterday. We need more RK Shah’s in India.

Finally big kudos to Jaivir, Brijesh and the rest of the NASSCOM 10K startup team. In less than 1 week, they got 850 signups for the event, and 500+ people attending.