All posts by Mukund Mohan

My discipline will beat your intellect
India, Learning

Why me? Or why every Indian startup founder thinks they are the only ones with “bad luck”?

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Its very hard to explain to an entrepreneur why another company got funded and they did not.

Or why they might not, even though they have “many boxes checked”.

It might seem fairly random. Correction – it is probably fairly random.

Raise your hand if you have read a techcrunch post that mentions a startup that raised an obscene amount of money and after reading the post 3 times you are still not sure why they got that much money?

Raise your other hand if you have read about a startup in the US Silicon Valley that is working on “pretty much” the “same idea” as your company is and you are schlepping code for 18 months and they have 45K daily users in less than 6 months (and funding to boot).

Now clap both your hands above your head. <Whatever>.

Most Indian entrepreneurs (in the technology space) consider themselves fairly unlucky.

They are baffled that Indian angel investors ask for revenue and monetization plans when the company is 3-6 months old.

The only comfort I have to offer is that its the same deal outside the valley.

Ask the Boston entrepreneur, or the New York entrepreneur. They also claim that companies there “suffocate” because the local investor ecosystem is fairly risk averse.

The second piece of knowledge I will share is that for every techcrunch post that mentions a funding for a startup, there are at least 25 failed funding stories that do not get published in the same space and general “idea”.

What then separates the funded versus the ones that did not get funded?

This is the point in the discussion when the entrepreneur blames their “luck”.

There are a few things I’d say that are easy to spot among the funded companies versus ones that dont get funding in the same “space”.

1. They usually tell a story dramatically different from that mentioned on TechCrunch or Pluggd.In or any other startup blog. The story the media publishes about dropbox is file sync across multiple devices. The story the VC’s bought is document virtualization.

“That’s just positioning” is your claim. I agree. It is. Storytelling is an art. Learn it well.

2. The founders are very credible, have a lot of background in the space and understand their customers / users very well.

3. They product shows the most amount of traction in the shortest period of time.

Thanks to angel list you can now target and get funded by Silicon Valley investors in India. If you have the same 3 elements – credibility, a great story and traction, you dont need to depend on luck any more.

Other

Survival is my Unique Value Proposition

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On Wed I was at the NASSCOM Emerge 50 jury panel. Out of 360+ technology companies in Startup, Innovation and Growth areas, the team had selected 50 who they felt were awesome. Our job as the jury panel was to select 10 from the 50.

There’s one part of about the Indian entrepreneur that struck me as their unique value proposition.

Survival.

That’s it.

You survive after starting your company, beyond the first year, you deserve an achievement award.

The mortality rate of technology startups in India (based on actual data from our Microsoft Accelerator database of 3918 companies, all startups including services and products) is a whopping 49% within the first year.

That number blows my mind.

Nearly half of the companies fold within 1 year.

Nearly 20-30% are walking dead.

Closing companies in India is an absolute pain as we all know.

So when I heard company after company saying their revenues after 2-4 years of existence were between $100K and $250K per year, one part of me was sad.

Growth was literally non-existent.

The other side of me was thrilled. They survived to tell the tale.

Survival among Indian technology companies is a Unique value proposition.

Imagine that.

Angel investing, Entrepreneurship, India

One person can change the world – How Dave McClure being in US is disrupting Indian early stage investing

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Last week over dinner with 4 top Venture Capitalists in India, the thoughts turned to early stage funding in India. As most entrepreneurs will tell you, seed stage investments in India are hit or miss. Entrepreneurs struggle to get angel and seed stage investors to move quickly. Most AA rounds take 3-4 months to close. Early stage (Series A) takes 6 months. There are angel networks that take longer.

I have been privy to several discussions that entrepreneurs have with their investors and its hard to help them close faster because many Indian angel networks and investors believe they want risk-free investments.

That all is about to change to a large extent.

The VC’s initially told me they were thrilled Dave was making these $50-$100K bets in Indian companies, since it gives them a bigger pool of good startups to fund.

Little do they know that most of the Indian entrepreneurs have different ideas.

Over the last week 500 has announced over 10 investments in the India (in less than 6 months), have hired Pankaj Jain full time to invest in Indian entrepreneurs and have publicly declared their intent to invest in 50 startups in 2013.

Just so we can all understand the magnitude of this commitment:

In all of 2011 angel and early stage investments went to 52 companies in India in the technology sector.

500 will match that in less than 1 year and will possibly do more than all other “angel networks” and individual angel investors in India – COMBINED.

I have talked to all the 19 company founders, who have received money from 500, yCombinator, TechStars, Startup Chile.

They have no intent to come to Indian VC’s to raise their series A.

They have access to US investors who move quickly, respect their time and are willing to make decisions with very little information.

Does that mean Indian VC’s are done for?

No.

It means a big chunk of the best and brightest who want to build global, scale-ready and capital efficient companies in Cloud, SaaS, Mobile and consumer Internet will go abroad and get money from investors in the US.

And Boom – just like that, Dave, Paul and Pankaj have changed the equation for Indian startups.

Sitting largely in the US.

Yes, that Pankaj is in Delhi is not lost on me.

One person can change the world – Believe you can do it and get it done.

Entrepreneurship, Focus, Learning, Management, Marketing

My discipline will beat your intellect

21 Comments

I meet 4-5 new entrepreneurs every week as part of my office hours on Go-to-market help for young startups. Most are based in Bangalore, but surprisingly some are from other parts of the world (Chennai, Singapore and Estonia, even, via Skype).

I have an observation about work ethic that I wanted to highlight among startup entrepreneurs from various parts of the world.

Most every entrepreneur will tell you they work extremely long hours. That’s par for the course. Some “older” entrepreneurs (usually over 35 years of age) will share their ability to “strike a balance” between work and life. Practically speaking (I hate to break this to them) that does not exist in a startup. If you have that balance, you are not serious enough about your startup.

I understand they have families and kids, but I have come to the realization that both smart work and hard work are necessary (but not sufficient) to run a successful startup.

For purposes of this post lets define success as a company that’s growing significantly and rapidly, but does not have an exit yet.

The difference between a rapidly growing startup and one that’s growing “well” is productive (smart) hard work, not just long hours.

If you mistake activity (# of lines of code, # of code check-ins, # of customer discussions) with progress (shipping product, usable and must-have features, or # of active users) then you are just doing long hours.

If you mistake milestones (funding secured, new employee hired) for achievement (# of paying customers, churn rate of existing customers) then you are just doing smart hours.

What then makes smart and hard work such a potent combination? And what really is “smart work”? And how many hours make up “hard work”?

I define “smart work” as a combination of 3 things – asking the “right questions“, having a plan and maximizing the number of experiments in unit time.

I define “hard work” as the most amount of productive work time, with limited to no distractions and ability to do it consistently, for years (not bursts of weeks, not months and certainly not just for a few hours).

Lets look at both smart and hard in detail. Smart, first.

The smartest people I know have learned the art and science of asking the right questions. They usually start with asking a lot of questions, and having literally, no or very few answers. Each answer leads them to more questions. Asking the “right questions” is what they derive from experience.They have assumptions that need validation, hypothesis that need testing and results that need to be measured.

They are also willing to conduct a maximum of 2-3 experiments and have a DIY (Do it yourself) approach towards conducting those experiments to see if their assumptions and hypothesis were valid.

Finally they have a plan to approach their experiments. Not just a “lets try this and if not lets try that”. They rarely “wing it”.

Its very easy to spot smart teams. They have a sense and measurement of what “Continuous Visible Productivity” is. They come to me with a list of 2-3 questions that they want to address in a meeting. They dont just come to the meeting and pick up the whiteboard and start to “brainstorm”.

Now lets look at teams that work hard.

Hard working teams dont ever mention “how many hours they did put in last week or yesterday or that they hardly got “any sleep”. They realize and are aware of their physical limitations and are usually well within those limitations. Rarely do I hear from them “We work the hardest of all the teams” or “We have not slept for 2 days”. They keep looking for time they can cut away from unproductive work to do more questioning, experimenting and planning. In other words they dont brag about their long hours. They assume its a given.

Hardworking teams also tend to compartmentalize very well. Some people call this “bucketing” or “chunking”. Just because they work hard, does not mean they dont give their brains a rest and goof off for a while. Rather, they “compartmentalize” their goofing off or exercising to derive the benefits of a relaxed mind and body.

Finally hardworking teams are consistent. They show up day after day, week after week and go through questioning, experimenting and planning with rigor and consistency.

I realize a that being smart at work and working hard as I have laid out is extremely difficult. In fact its rare. That’s why successful startups are rare.

The combination is what I call startup discipline. Which is why I firmly believe one startups discipline will beat another’s pure intellect (given that hard work is assumed) any day.

Entrepreneurship, India

Should we aim for quantity or quality in Indian startups?

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I had a very good discussion with 2 folks over the last week about the current state of technology entrepreneurship in India. The rough estimates from multiple sources indicate a varied number from 250 (low estimate) to 1000 (high estimate) technology product startups each year in India. Compared to that, the US produces tens of thousands and even Israel beats India by having 3-4 times that number.

There are a few folks in the ecosystem that suggest that we should focus on fewer but better quality startups in the technology space. They have some strong points in their argument which include a) the total amount of funding available in the system will only support 50-100 companies annually b) if more companies were to be started, more will fail, which will deter more folks from becoming entrepreneurs and c) there are not too many experienced entrepreneurs & seasoned executives who can tackle issues of scale yet.

I fall on the other camp and my focus is to get more people to buy into the religion. I agree with the premise that most startups fail and that’s the nature of the beast. That has not changed much (or at all) with the number of accelerators or incubators in the last few years. Startups die for multiple reasons and many of them are not easy to fix.

The main reason I think we should focus on quantity first is so we can increase the pool of risk-takers in India. Entrepreneurs take the most amount of risk in the ecosystem. We need more of them, in fact more than the system can really handle. So how do we address the arguments from the “Quality first” side?

1. Most product entrepreneurs I meet in India (I meet a new batch of 5 EVERY week) dont really want to build a company to exit. They would prefer to build strong profitable companies and run time for a long time. They do need some funding initially when they are ready to test a few of their hypothesis. Many build products that take a few pivots to get right and most operate in markets that take long to mature. So what if the ecosystem can only support 50-100 currently? We should be able to find ways to get the not so successful ones to pick up, dust-off and get on the horse again. The other point I make that we really have a lot of money sitting on the sidelines in India, with a fairly immature angel investment ecosystem. Each week I meet one new person interested in investing in technology companies, usually a technology executive at a large software company like Microsoft, SAP or VMware. They are enough to get our entrepreneurs started and build good companies.

2. If the percentage of startups that succeed is fairly constant, then the argument for more startups is even stronger. If we increase the pool of startups and the failure rate is still a constant, we should get more successful startups. The failure rate has not dramatically increased or decreased over the last 5 years, so if we have 2000 startups and a 99% failure rate we will still have 20 successes vs. 250 startups and 95% failure rate.

3. The best way to have “serial” entrepreneurs is to have more people go through the experience once. Regardless of whether they failed at their first startup, the success rate of a repeat entrepreneur is dramatically higher. They are more experienced, seasoned and more willing to understand the importance of persistence.

I believe that we need more, not less technology startups overall to help our ecosystem grow dramatically.

Entrepreneurship

The early adopter customer database & connections for startup entrepreneurs

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As a startup entrepreneur one of the first things we need is customer validation. It is the one thing that takes the most amount of time in India. Most young entrepreneurs dont have enough connections with  potential customers (both on the B2B or B2C side) and neither do they have the resources to acquire customers initially.

As part of the Microsoft accelerator, we realized this problem for most of our startups. So we are building connections to 100+ early adopters among large companies (we currently have 63), over 70+ SMB companies and about 15,000 early consumer adopters (our goal is to have over 100,000) in India. This is not just a database. We are actually building connections into these early adopters using our network so every person in this private connection network will answer calls and respond to emails from our startups.

Our goal is to setup meetings with top executives & customers within 3 days for entrepreneurs.

In the large enterprise side, these are companies like Microsoft, Times of India, Nokia, etc. which have over 5000+ employees and have problems that startups can address. If an entrepreneur wants an introduction to the head of marketing to discuss a new campaign solution, or an introduction to the head of HR to possibly demo a new recruitment offering we can make that connection.

The companies in the early adopter list have made commitment to try any new technology to give it due process quickly and provide feedback very fast. The benefit to them is the ability to see and try new technologies before anyone of their peers do. The current list of companies are from primarily technology, telecom, retail, financial services (banks and insurance companies), education (colleges) and healthcare (hospitals and pharma companies).

Our next step is to have a demo day exclusively for the top executives of these companies so they can see all these in 1 day rather than setup one-one meetings with each. That will probably happen in the next quarter.

In the SMB early adopter side these are CEO’s of companies that are between 1 CR ($250K) to 10 CR ($2 MM) in revenues. Currently we are focused primarily on the manufacturing and education spaces, besides smaller and mid-sized technology companies. Since most SMB decision makers in India tend to be the managing directors themselves, we are also thinking about using the connections to educate them about the advantages of being an early adopter.

Finally for consumer Internet startups, (who sadly have the toughest time in India) our goal is to have 100,000 early adopters in the mobile (Android phone owners, Windows phone 8 owners and iPad/iPhone) and most with 3G connections. These users are across demographic segments of age (many are college students, and most are in technology companies & financial services) and gender (currently 8% are women). Most are in the large metros (Delhi tops the list, followed by Bangalore, then Mumbai and Pune, Chennai and Hyderabad). We are maintaining a list of their email address, phone number and facebook, twitter accounts. This is a dual opt-in, invite only list. The obvious benefits to them are the bragging rights to be part of any new product and get it to try it before anyone else does.

As the number of startups in India grow, these are the things I believe that will really make a huge difference in helping companies move as quick as our Silicon Valley counterparts and encourage more people to join & start new companies.

India, Learning

What I learned in my first month of running a startup accelerator

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I have been the CEO of the Microsoft Accelerator for the past month. There are 11 companies as part of the batch and it has been an exciting ride. One of the things I focused on is trying to make the program a lot more structured than YCombinator and modeled it around a finishing school that I always wanted. Here are the top things I learned.

1. Dont try to change an entrepreneur’s idea. They have to come up with something they like themselves. This seems fairly trivial. There are many incubators and seed funds that believe if you dont have an idea, but are great entrepreneur material, they will “give you ideas”. That rarely works. Entrepreneurs have ownership and pride only for things they believe “they came up with on their own”. Anything borrowed (even if its a clone or knock-off idea from a US startup) is theirs. They will put more wood behind their idea than anything you ever propose.

2. Indian entrepreneurs have varied expectations from accelerators. One entrepreneur wanted “execution” help in actually doing the design (preferably a full time designer and user experience person for a few weeks to do it) and another wanted better quality food at the cafeteria. Some think the biggest value proposition of an accelerator is the “quality of the space” (i.e the physical location), while another thought the value was the other startups who would egg them to get better.

3. Regardless of what you offer, there’s always someone offering more or better, which I think is the “grass is greener on the other side syndrome”. If I had a penny for every time someone said “I have heard YCombinator founders get XYZ” or “500 startups gives more ABC”, I’d have enough money to fund all the startups for a year.

4. Indian companies need a lot more user experience and design help than any US company. I have invested in over 20+ companies in the US and about 11 here in India. Its extremely hard to find good user experience talent in India. This is a different person from someone that just does Photoshop and illustration. We interviewed 23 “highly recommended” designers and user experience professionals in India. Most were average and were still charging rates from $20 / hour to $100 / hour. No negotiation.

5. The Go-to-market challenge is largely under-appreciated in India among founders. Many need more help here than any other area, but tend to relegate the problem to “lets hire someone to do that”. Unless one founder is deeply involved in the customer development process, we largely build technology for the sake of it.

Entrepreneurship, India, Marketing, Mentors

Startups and mentors: How to look for a great marketing mentor? & A list of top marketing mentors in India

5 Comments

After the first post on technology mentors in India, the next person who can help the most as a mentor to startups < 2 years old is someone that can help with product & customer knowledge (or understanding user / customer behavior if its a consumer startup).

There are 3 primary categories of “marketing” mentors I’d recommend you think about. You dont need them all, just be clear who you need for what kind of mentorship.

Product mentors are people who can distill what customers would need and say into what you need to build in your product. There’s a big difference between a product manager and a business analyst. The latter, typically found in many Indian services companies, tries to give the customer exactly what they want, and end up building largely a custom piece of work for that client. Product experts on the other hand, observe customers, ask them tough questions and direct the technology team to build what the customer really wants.

Sales mentors are people carrying a quota (target). They are pounding the street or directing teams that are selling every day. They understand targets, compensation, lead nurturing, managing deals and sales opportunities. There are many types of sales people but largely they are either “farmers” or “hunters”. Farmers end up expanding your current opportunity and Hunters get new business from new clients. They both have their place. Mostly, I have found sales people dont make very good mentors because they are largely unavailable, but there are a few good guys around. Ideally they would help you understand and grow your sales team from “CEO is the sales guy” to building a repeatable, growth-oriented team.

Marketing mentors would help you with positioning, building awareness, lead generation and digital marketing. They can typically help you at the stage when you need to launch (largely after product-market-fit). Most marketing people tend to talk lots and do little, so if you get someone that can give you practical tips on how to build your funnel and grow your customer base by spending as little money as possible, then you have the right person.

The question usually is why do you need so many mentors. The answer is you dont. It all depends on the team you have and if they need advice, help and mentorship. I have seen startups with 5 mentors and many with none. Most have 2-3 mentors to complement the team. You can get as much value from mentors as much time you put into the relationship. I typically recommend most entrepreneurs to setup 1 hour every other week during the initial days (<6 months) and then 1 hour every month and finally 1-2 hours every other month.

Some recommended Product mentors:

1. Amit Somani (Make my trip)

2.  Varun Shoor (Kayako)

3. Vijay Anand (The Startup Center)

4. Girish Mathrubootham (Fresh Desk)

5. Sridhar Ranganathan (InMobi)

6. Amit Gupta (InMobi)

8. Preetham VV (InMobi)

9. Dhimant Parekh (Hoopos)

Some recommended Sales mentors:

1. Madhu Lakshmanan (ex Photon)

2. Abhay Singhal (Inmobi)

Some recommended Marketing / Online customer acquisition mentors:

1. Pankaj Jain (Startup Weekend)

2. Ravi Vora (Flipkart)

3. Karthik Srinivasan (Flipkart)

4. Sanjeev Gadre (Consultant)

Angel investing, Community, Entrepreneurship

Technology product startups, angel and venture market comparisons – US and India

12 Comments

There is a lot of activity and interest in technology product companies in India, as there is in the US. I spent some time reviewing numbers from NVCA, VCCircle and pulled some numbers specifically in the areas of Internet, software, technology products and eliminated services companies. Here is a simple table to keep things in perspective. All sources are at the bottom.

USA

India
Total number of technology (Product & services) companies formed annually (average)

24,169

412
# of companies that secured angel funding

15,233 (1)

65
# of companies that secured seed / early stage from VC

1,682

58
# of companies that secured late stage funding from VC

658

31

I am yet to do any “analysis”. Right now the data validation process is what I am going to embark upon.

What is your analysis.

Relevant Links:

1. Crash Dev – eye of the needle

2. UNH center for angel investment research.

3. NAV Fund John Backus

4. Product Startup Landscape in India from Zinnov . (Thanks Pari!)

5. NVCA National aggregate data for US investments (Excel spreadsheet)

India, Review

Early access: Quick review of BoxTV.COM

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A good friend Abhishek from Tlabs gave me a preview access 2 weeks ago to BoxTv.com. Its dubbed as “Hulu for India”.

I am not a big TV or movie watcher (We dont have a TV at home, have not had it for many years now), so take this review with a grain (or more) of salt. I have only watched 1-2 partial movies. They dont have any TV shows yet.

The top things I liked:

1. Content selection (especially Hindi and English) is excellent. There are hundreds of movies that I have not seen at all (again that’s not saying much). The old hindi movie selection is particularly good.

2. Streaming is instantaneous and quick. The overall experience was pretty good and there were no glitches. I did have a problem the first time I logged in, post which there have been no bumps.

3. Connecting with facebook allows me to see other movies my friends watch, which was interesting, but not very useful. I realize I dont watch enough movies and TV to even know which of my friends have similar likes and interests.

4. Very easy to skip to certain parts of the movie quickly. Yes, I only watch the songs and skip most of the movie (grin)

5. Below each movie page there are important clips (between 2 and 3 min each) which are like the highlights reel. Loved that feature the most.

BoxTV.com
BoxTV.com

Things I did not like:

1. No support for mobile phone. Most of my work is now on my phone. Its a fairly large screen device, so I am not using my notebook for much. Since BoxTV is based on flash, support for mobile phones is non existent.

2. No sports and limited content for kids. If there was ever a reason to watch TV I’d buy it for NFL, tennis and cricket. Everything else is a waste of time at our home. Kids love many of the cartoon shows, and there were very few of them on BoxTV.

3. The filters dont work too well. If all I wanted to see was the list of latest movies, it shows me a bunch of clips (scenes) instead. What I thought it would show me is a list of the top recent movies.

4. Not enough integration with movie reviews. I’d love to find out from IMDB or rottentomatoes, which movies I should watch based on the popular list.

5. Not easy to search by actor / actress, etc. I tend to watch primarily by who’s in the movie, so this was still “in the works”.

Have you used Boxtv? What did you think?