All posts by Mukund Mohan

My discipline will beat your intellect
Angel investing, Community, Entrepreneurship, Focus, India

Solve meaningful problems as a startup

5 Comments

Back in the 90’s and better part of last decade, most of the smartest folks from the top colleges would go and work at Wall Street. Lured by high salaries and fat bonus checks, they used their wizardry to create CDO’s, asset backed securities and derivatives to create billions for hedge funds, investment banks and trading desks of large financial organizations.

We all know where that ended up – the subprime mortgage crisis.

We thought there was a turn of events when one of them started to build a meaningful startup.

That prompted Bill Gates to say

“I’d say we’ve moved about 160 IQ points from the hedge fund category to the teaching-many-people-in-a-leveraged-way category. It was a good day his wife let him quit his job”

I get a sense that, “founding an Internet startup” is the new “joining a hedge fund” in the 90’s.

We are getting an amazing number of very smart people who are joining these startups in droves and applying for incubators, accelerators, hackathons and startup weekends.

There is a massive movement of high level IQ points from old-school consulting and “IT services backend for a large Indian outsourcer” to startups. That’s awesome news.

I have attended and judged 3 startup hackathons and prototype creation sessions over the last 1 month. I am absolutely thrilled that there are so many people turning out for these events in India. Over 650 attended the Yahoo Open Hack day. It was amazing to see such a diverse group of young talented developers and programmers solve some very interesting problems.

The part we have to work on is why the brightest minds are solving the most trivial of problems.

Startup IQ
Startup IQ

I think the problem with Indian startups is they think we are in the US.

There are rich people problems (The pictures from my mobile phone dont look good, can we build a “pimp my photo” app”) and there are real world problems (how can I make sure new grads from college learn to develope real apps, so they can get a job and reduce the jobless rate).

My humble request to Indian entrepreneurs is ‘Please dont build any more “I’m bored” apps’.

I am not trivializing the need for “fun” apps.

All I am requesting is that the highest IQ folks should be working on the highest impact problem areas to aid most humankind.

Angel investing, Community, Entrepreneurship

Why I am reducing my face-to-face mentoring & advisory sessions

8 Comments

I have many friends and acquaintances who have been reaching out to get some face time with me for brainstorming and advice. Usually its about their company or their career. I love these sessions and used to keep my 2pm to 3pm slot only for these meetings. It was like an office hours to meet people who reached out and would like to chat and meet.

Lately though, I have been declining those meetings. The issue is time.

I have 4 kids and a patient wife, and I am trying to prioritize family over work or business. This means I have limited time slotted to meet folks outside of the work environment.

Its a lot easier to find time to blog, email, discuss on Hackerstreet or be on the phone. The face-to-face meeting is very time consuming.

It starts out mostly with good intentions. Most emails I get ask for 15 – 30 min, but I feel guilty to give them that little amount of time after they have made the hike all the way from where they work / live to come and meet me. So its invariably a 1 hour meeting.

I also have some great folks working with me as part of our team. I have to prioritize time with them first. So the average 8-9 hours at work goes towards running projects, talking to customers, working on my to-do list and mentoring my direct reports.

I started initially with the intention to make a contribution to startups in India. I would meet and actively participate at many conferences, events and sessions. I am still doing that, but my focus is to spend more time with few people, instead of doing a quick meet-and-greet at those events.

So if you wish to catch up face-to-face, please meet me at one of the conferences / speaking engagements.

I usually meet / speak at 1-2 events each month. I promise to stay later and come early to these so I can devote time to learning from you and giving you my opinions.

I know this is not ideal for most entrepreneurs, but I would prefer to set expectations to not meet at all and make meeting face-to-face the exception than the rule.

I am always available via email (mukund @ thrisha.com) or phone: +91 998 054 2748.

Thanks for understanding.

Humor

Apple to announce iEar – Babel fish earpiece for realtime language translation

2 Comments

Spoiler alert – Title is link bait.

I have 4 kids, one who’s learning French at school, another who’s learning Hindi and 2 others who only speak Kannada. Parents keep asking me if they should be teaching their kids Mandarin or French, or any other “spoken language”.

I dont quite understand why they would do that. I mean, I do but I dont really.

Teach your kids Javascript or some other programming language instead is my answer.

In my lifetime for sure, the Babel fish is going to happen. Imagine a bluetooth like headset that fits into your ear and does a real time translation of every spoken language. Google glass is almost here.

I imagine Apple “iEar” is not far away.

iEar works with Nuance on the cloud and translates every spoken language into a language of your choice. It has a small mic, so you can hear the other person’s spoken words and a ear headset for it to translate it into your language of choice.

So why Javascript? (Or really any other programming language)?

iEar is a piece of hardware no doubt, but its mostly software and on the cloud.

French wont go away, but it dealing with it will become easy thanks to Apple iEar.

Entrepreneurship, Management

Do you really need a “board of directors” when your company is 6-12 months old?

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I had a few questions on “Board of directors” at a startup from Manish Taneja. This it a post on the first question – Do you really need a “Board of directors” when your company is 6-12 months old?

You always need a board of directors, even if its just one person. A board primarily is responsible to the shareholders and looks out for their interests.It also advises the management (mostly the CEO) on company direction.

A board of directors (BoD) is not the same as an advisory board. The BoD has a fiduciary responsibility, whereas the advisory board has none.

Obviously when you are single founder, you will be “the board”. Since you are the only shareholder. There are a few procedural (statutory?) items that need to be completed (annually or more frequently) which are performed by the board.

Now on to the larger question: When and how should you expand the Board to a larger set of people?

The simple answer is when you believe your company needs Operational discipline, Financial discipline and “Discipline in your strategy“.

That could happen in 3 months, 6 or even later.

The most important thing I have personally experienced with board meetings is the need for reporting & tracking your company’s key metrics. Hence the discipline that sets in.

The company’s key metrics may not be revenue, customers or any other metric in the first few months. It could be as simple as status of the product development effort, customer development status, etc.

What I have found is the simple act of having to report that on a frequent basis is a bias for action and progress.

This is the biggest advantage of having a board of directors (especially for those entrepreneurs who tend to be “loosey-goosey” about most things.

Initially it might be okay to add one more person to the BoD, who you trust, can bounce ideas off and someone who will give you honest feedback to help keep things on track.

Most institutional investors (VC’s and some advanced angels) will however request a board seat to protect their (as a shareholder’s) interests.

In the next set of posts, I will detail – how many board members should you have, how often should they meet, what are board committees, how to manage your board and other board questions. If you have a specific question about the board,, feel free to email me or leave a comment.

Entrepreneurship

A sample of the “values and culture” of leading technology companies

4 Comments

As part of the culture and values post I looked at what were the values & culture statements of the top technology companies. From Amazon to Zynga, the key things that they believe makes their company unique and successful. Some observations:

1. The older the company is the more “traditional” its values are, like integrity, customer focus, etc.

2. If you had to allocate a % to the categories of values, hiring people features in almost all of them.

3. Customer (or User) features next in 70% of them.

4. Innovation (or the commitment to it) features in less than 50%.

5. Interestingly only Apple talks about products.

  1. Google

1)       Focus on the user and all else will follow.

2)       It’s best to do one thing really, really well.

3)       Fast is better than slow.

4)       Democracy on the web works.

5)       You don’t need to be at your desk to need an answer.

6)       You can make money without doing evil.

7)       There’s always more information out there

8)       The need for information crosses all borders

9)       You can be serious without a suit

10)   Great just isn’t good enough.

  1. Apple

1)       We believe that we’re on the face of the Earth to make great products.

2)       We believe in the simple, not the complex.

3)       We believe that we need to own and control the primary technologies behind the products we make.

4)       We participate only in markets where we can make a significant contribution.

5)       We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us.

6)       We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.

7)     We don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.

  1. Facebook

1)       Focus on Impact

2)       Move Fast

3)       Be Bold

4)       Be Open

5)       Build Social Value

  1. Zynga

1)       Love to play

2)       Level Up (Meritocracy)

3)       Be CEO

4)       Zynga Speed

5)       Zynga first

6)       Innovate

  1. Salesforce.COM

1)    Get Your Aspirations Right

2)    Field Your Best Possible Team

3)    Focus on Your Best Customer Segments

4)    Create Your Competitive Advantage

5)    Build Your Sales and Marketing Factory

  1. Amazon

1)       Customer Obsession

2)       Ownership

3)       Invent and Simplify

4)       Are Right, A Lot

5)       Hire and Develop the Best

6)       Insist on the Highest Standards

7)       Think Big

8)       Bias for Action

9)       Frugality

10)   Vocally Self Critical

11)   Earn Trust of Others

12)   Dive Deep

13)   Have Backbone; Disagree and Commit

14)   Deliver Results

  1. Microsoft

1)    Integrity

2)    Honesty

3)    Openness

4)    Personal excellence

5)    Constructive self-criticism

6)    Continual self-improvement

7)    Mutual respect

  1. IBM

1)       Dedication to every client’s success

2)       Innovation that matters, for our company and for the world

3)    Trust and personal responsibility in all relationships

  1. Netflix

1)       Judgment

2)       Communication

3)       Impact

4)       Curiosity

5)       Innovation

6)       Courage

7)       Passion

8)       Honesty

9)       Selflessness

  1. HP

1)       Passion for customers

2)       Trust and respect for individuals

3)       Achievement and contribution

4)       Results through teamwork

5)       Speed and agility

6)       Meaningful innovation

7)       Uncompromising integrity

  1. Zappos

1)       Deliver WOW Through Service

2)       Embrace and Drive Change

3)       Create Fun and A Little Weirdness

4)       Be Adventurous, Creative, and Open-Minded

5)       Pursue Growth and Learning

6)       Build Open and Honest Relationships With Communication

7)       Build a Positive Team and Family Spirit

8)       Do More With Less

9)       Be Passionate and Determined

10)   Be Humble

  1. Twitter

1)       Grow our business in a way that makes us proud.

2)       Recognize that passion and personality matter.

3)       Communicate fearlessly to build trust.

4)       Defend and respect the user’s voice.

5)       Reach every person on the planet.

6)       Innovate through experimentation.

7)       Seek diverse perspectives.

8)       Be rigorous. Get it right.

9)       Simplify.

10)    ___ it.

  1. LinkedIn

1)       Demand excellence

2)       Take intelligent risks

3)      Act like an owner

  1. SAS

1)       Passion for excellence

2)       Enthusiasm and initiative

3)       Responsibility

4)       Focus on customer

5)       Emphasis on Competence building

6)       Cost consciousness

7)       Team work

8)       Integrity and loyalty

9)       Organizational pride

10)   Knowledge sharing

  1. Cisco

1)       Customer focus

2)       Corporate citizenship

Entrepreneurship, India, Learning

The frustration of “lack of progress” with your product

7 Comments

On the outside looking in, its extremely frustrating to hear of product teams shipping product multiple times a day.

I tend to often question: “What in devil’s name am I doing wrong”?

  • Is it that I have not defined the product requirements right?
  • Have we hired the wrong people? Does our team not have enough experience?
  • Is our culture not supportive of mistakes?
  • Are we not focusing on the right things?
  • Do we not have the capability to get stuff done quickly?

Experience with multiple startups has taught me that its ignorant to compare your company with others (who might have stated at the same time) who have more “visible progress” than yours does.

But I hate that experience.

Its hard not to compare and question why is someone else doing so well with a smaller team than you have.

Experience has also taught me that startups for most parts (like kids) have a step function in progress. Its rarely a smooth “up and to the right”.

I hate that experience as well.

Should all that experience not make the next go around a lot smoother?

So the question – “What the value of all that experience”?

There’s only one answer – Its overvalued.

There’s one solution to most of these questions and although it is a cliche and often repeated, the answer is “Hire right” – whether its consultants or contractors or full-time employees, you need to constantly evaluate and hire the right people.

So, how do you hire right? And how do you define “right”?

So lets start with not the job description, but with your culture and values. Hire the right person that fits your culture and can align with your values.

If you culture is defined by moving fast, hire and attract people that can do that.

How do you determine if someone “fits” your culture if all you can do is interview them for 1 hour or so?

Write down questions to situations where you feel your culture will make them act one way versus the other. Ask those questions during the interview.

Depending on the answer to those questions you can determine if they can align.

What I have learned is people rarely change. So its hopeless to expect someone who is not a good cultural fit, to come in and get “religion”.

Entrepreneurship, Venture Capital

Comment from Rohit, converted into a post

Rohit Sharma, angel investor and technology maven, left a very relevant comment that gives more color to the post on Should I pay my lawyer or advisor in stock?

I thought it was relevant enough to post it as a complete post by itself. The comment.

Here you go.

Despite equity being seen as the ‘right’ reward, my experience has been that the startups i know in india had a very hard time (compared to silicon valley) attracting people to the mission+equity at 25% or more cut from market salary. In the valley, it is common to see early core employees work at 50% of market even. If you can get the *right* employee in india for mostly equity – great but be prepared to fish with cash. This is not inherently an attribute of us Indians – I dont think India has seen many (any?) virtuous venture cycles where an independent founder raises seed or bootstraps, then raises A/B/C/.. grows + returns money to common + preferred in a profitable and large exit. Once several of these cycles complete, there would be ‘existence proof’ of common equity == much higher value than cash.

Also, “quality” advisors are rare in India at this point – there are several that promise “intros” to VCs or customers. Carefully evaluate their resume + past successes + references *before* you sign up any advisors. If they claim they connected XYZ company to potential customers, call them and confirm – not just the top level details but some working level truth to the claim.

If you find the right person for your startup – sign them up and just like signing up early stage core employees, do not optimize for lower-dilution – offer what you have to. A thinner slice of a bigger pie goes the thinking vs. hoarding a whole lotta equity for nothing.

Carefully consider the ‘term’ of the relationship. Does the advisor want the equity to vest immediately? Or over 1 year? or over 2/3 years? In the valley, common to have 1 year terms and equity vests monthly. Remember it would be hard (impossible?) for you to gracefully fire your advisor in the event things are not what they were promised to be. So 1 year terms may be best.

And just like hiring a key employee, try before you buy – spend as much time as possible *prior* to committing to figure out if this is someone who will be genuinely helpful. Establish some bounds – # of hours per week/month + get in to detail of the promised “intro”. i.e. will it be an email ? a phone number? an in-person meeting with advisor present? if things dont move forward (to a POC/trial/contract) with the customer in question, would the advisor try and open alternative channels for you? How well do they know their contacts – do they just know them (socially – weak for business) or did they work together (strong / trusted axis) or did business together (separate companies – may or may not be strong). The more specifics you can get out of them, the more ‘data’ you will have to back up your instincts.

No lawyer I know in India (From Amarchand to local firms) has taken equity as compensation. Vague claims of “not being allowed” by firm etc abound. Not sure where the truth lies. If you succeed in getting good legal work for equity – let me know ! In the valley, good lawyers will often defer fees till financing (very common), or give you an implicit discount (vs. hourly billing) and would often offer to invest to get some preferred as well as take some common. All equity goes in to an arms length Partners Fund for most law firms. Individuals are known to work for common just like advisors.

Entrepreneurship, Hiring, India

Should I pay my lawyer or advisor in stock?

13 Comments

I had 3 founders who had questions about compensation in Indian startups last week. One founder is building a mobile application for social TV, another a SaaS marketing application and the third a retail loyalty program using mobile phones.

They had multiple variants to the same question:

1. One was trying to figure out what percentage of stock to give an “active” advisor who was promising connections and a deal with a top customer.

2. Another was trying to see if she should pay for legal fees with stock (this is a US entrepreneur). Indian lawyers rarely accept stock as payment.

3. The third had a MySQL consultant who wanted to be paid only in cash.
Startup Compensation FrameworkTo address these questions and more I am sharing a “compensation framework”, that I have used consistently for figuring out “how do I pay” for startups.

On the x-axis I put part-time and full time commitment. On the y-axis I put the payment methods – stock and cash.

For most parts, before getting funded, founders of the company get “paid” only in stock. So if your company is not making money or is making “not sufficient” money to pay the founders full salaries, then stock is the only compensation for founders. Usually most founders will get their stock vested over 4 years, or they may own  the company outright. On funding (institutional or seed), most founders still tend to take a small amount of money (not full opportunity cost salary) since their motivation should be to grow the company and use the investment towards growing the company’s value instead of growing their own bank accounts.

Full time employees get paid mostly in cash (and some stock). The Silicon Valley model is to pay 20-25% less than market rate for key full time hires, and “make them whole” with stock options which will have more value than current cash, if there was an exit in 2-5 years. Most Indian employees however do not like stock options and view them as “gravy”. I agree with their view for most parts, since exits are far and few between in Indian startups. Since key engineers, marketing professionals in India expect full pay or close-to-full-pay (some actually expect a pay hike with a startup because of the perceived risk), I am of the opinion that you dont give everyone stock options until you have proven that the company has market momentum. You can always accelerate their vesting pro-rata based on their tenure with the company when you believe there’s a strong potential for an exit for the company (i.e after 2-3 years).

Consultants of every kind (sales, lawyers, accountants, UI experts, marketing consultants) who work part-time should get paid only in cash is my perspective. They dont add long term value to any startup and while they are valuable in the short-to-medium term, their commitments are rarely with the startup alone. If you cant afford to pay the consultant market rate, I would offer the deferred compensation, or “true up” compensation on growth, but not stock.

Finally advisors and mentors, should only be paid in stock. How much equity you pay the advisor in a startup depends on a) the quality and market-worthiness of the advisors b) the amount of time they spend with the company and c) the expected objective you get them on board as advisors. E.g. If you are getting a mentor to open doors to potential customers, they would be given stock corresponding to the type and number of doors they open for your or the number of customers you close because of their help. Usually advisory positions are awarded stock vesting over a 18 or 24 month period (tenure of their position with the company). I know most entrepreneurs in India use US metrics (0.25-1% of stock in the seed stage, less in follow on stages) for percentage of stock to give advisors, but that’s not going to get you quality advisors in India. Since exits are fairly rare, you have to double the US (Valley) advisor stock options percentages and motivate good, high quality advisors to help you get achieve your goals.

Love to hear if you guys think differently.

P.S. Friend and investor Rohit has some datapoints around active angel investors data points.

 

Advisor stock compensation

 

Entrepreneurship, Learning

The most constructive way to give feedback

7 Comments

I had an extremely smart manager at Mercury / HP who could hold his own on both the strategic side with the CEO and also on technical topics with engineers. Robin was one of the earliest to help me get a polished side (I am not saying I’ve mastered it, he just put me on a path to “try” to be more diplomatic and refined) to  my brash and in-yer-face “talk to the hand, cos the face ain’t listening” approach. I had been known to give the Heisman (see the image on wikipedia to understand why) to many of my colleagues and while that was fine with the Israeli culture, there was a lot to be desired with most other folks.

He ordered a book for me that I’d highly recommend called “Crucial conversations” (link) to all entrepreneurs.

The book helps in dealing with confrontations at home, at work, and even with friends.How to Notice When Safety Is at Risk, How to Speak Persuasively Not Abrasively, How to Turn Crucial Conversations, and How to Stay Focused on What You Really Want.

There one really neat trick I picked up, which was worth the cost of the book.

Every time you want to argue or have a debate about a point, or provide (negative) feedback but do it in a nice way, turn your statement into a question.

For example, if you want to tell the designer that the UI he built does not help conversion and its actually more work for users to scroll down, your normal approach would be to show him the analytics and tell her that she’d designed it poorly. That’s when you realize the designer gets defensive and she’d take the extreme position because she gets a sense you are “attacking” her knowledge or turf.

Instead ask the question “What would help us get more conversions?”. Then try to have everyone come up with an answer together.

For example, if you want to talk to your engineers and you know using AWS is better than maybe hosting your own server, your approach might be to show him multiple blog posts and other articles about why his position is wrong. Again, you’d get a engineer who’s being challenged and now believes its best to defend his position regardless of how wrong he might have been. Rare is the person that would easily take this feedback and admit they were wrong.

Instead present your hypothesis as a question. “What if …”? “What would”, “How can we”?, etc.

Then focus everyone on helping answer that question, making them part of the decision instead of being the ones to only implement it.

Try it tomorrow and the day after and let me know if you notice a difference.

Always ask questions instead of making statements of fact (even if you believe you are right).

It makes you come off as humble and truth seeking not the “know-it-all”. It also helps you focus on what you want as the end goal, instead of the minutiae.

India, Sales, Tips

In India, a customer does not buy a product, they buy a phone number

15 Comments

There are over 800 products listed in the productsmade.in database (out of 2149) that cater to the SMB market in India. Many of them sell only to the Indian market, and a few also try to target International markets.

The amazing part of selling in India is the ease of access to founders (promoters, they are called here) and Managing directors (CEO). Most have their cell phones listed on their website and many may have it listed on their ads.

Throughout the last few years when I ran relatively small (<20) person sales team, targeting companies with less than $2 Million revenue we found that getting appointments with CEO’s at small companies was extremely easy. A conversion rate of 50% from cold call to face-to-face appointment was not unheard of.

At a price-point which was less than a full-time resource to manage marketing, they found our solution relatively easy to adopt, but they were focused on quick ROI – meaning if they put $1 now, they expected $5 within the first month and an increase every month.

During the first few months, we spent an inordinate amount of time trying to simplify our product. We realized most decision makers & users at these companies were the CEO’s so we wanted to make sure they found our product easy to use. We did 4 sets of focus groups and removed a lot of features from the product, making it so that just one of two options were provided on each page. Navigation was made simple as well, with large buttons and primary colors.

After 2 months, we had an interesting problem. None of the CEO’s actually used the product. Every time they wanted data from our system, they’d just call the sales rep and ask him for information. We showed them how easy it was for them to look up the information on their cell phone, but they’d still call and “chat up” the rep, share more information about their business, their issues, etc.

We then provided a customer service team who would answer these questions so our sales person would be more productive. The sales person still got calls. One sales person left to join an MBA program. Even a year after he’d left, the CEO’s he sold to would call him to ask him for information.

That’s when we realized that Indian customers dont buy a product or a service. They just buy a phone number – a person’s mobile phone which is their user interface to the product.

Then I got to know about a central number system. Basically its a number that you can give and you can change it to any set of numbers by “routing” the call based on the number. We did not implement it fully, but the first few weeks of using it were a lifesaver for our sales productivity.