All posts by Mukund Mohan

My discipline will beat your intellect

Angel investing, Entrepreneurship, Tips, Venture Capital

What should a series A funding process look like? Step 1: The introduction

August 20, 2012 Mukund Mohan 21 Comments

Once you have a series A funding plan and strategy the next step is to have a defined process to make it easy to scale.

Most developer CEO’s dont quite like the word “process” – which usually means repetitive and bureaucratic. In this post I’ll try and outline how you can use process to scale and not lose your mind when dealing with investors.

There are 5 important parts of a series A funding process:

1. The introduction and initial call. Since your plan has already given you a spreadsheet with the target investors and possible connections, this step in the process is to either email (or call as appropriate) your connections with a request to introduce you to the investor.

I recommend that you do a quick 15 min brief to your connection about your company so they know what your company is doing and why the connection you are requesting is a good fit as an investor. I would recommend a short 40-100 word email with your elevator pitch, which can be forwarded to their investor connection.

I would recommend not more than 10 firms in your list (5-7 is ideal). 3 of them which are your top targets, 3 that have not an investment in the space, but have expressed an interest, and finally 4 who are likely to be move slowly.

Usually in India, most investors respond in 3 days and in the US, the top investors in 1-2 days after you have been introduced via a warm contact. Of course there are exceptions, and it might take longer. If they respond faster, you have a connection that’s very highly regarded by the investor.

Ideally you should email all connections in a day or two and get introductions within 3 days from start.

After your connection has sent and email (ideally she has copied you on the introduction), expect a couple of days to get an email back. Usually the response to your email will be an note to you (with their admin copied) to schedule time to meet. Dont ignore the admin, because she will be a big help in steps 3 and 4 when things get slow or responses are delayed.

Elizabeth’s approach was to get meetings to completely book her schedule in 2-3 weeks, which might work for the US, but for India, I’d recommend spacing meetings out a bit so you can a) iterate your deck and positioning based on the feedback you receive, b) get some time to think and follow up with investors and c) give yourself time for traffic and travel (unlike US where most investors in the bay area are in Sand Hill road, in India, they are all over the map).

Spacing things out a bit also ensures you’ll get time to work on the action items they give you. Example: please go meet this person who I know is an expert in the space, or please send an email so I can connect you to a potential customer who is in our portfolio.

Nothing pleases investors more than you taking their advice, acting on it, and showing that you are diligent and value their input. Its the best way to build a relationship.

Setup the follow up meeting, ideally on Wed or Thur – why? Mondays are partner meetings so most people are busy all day. If you meet on Thursday or Friday there’s more chance of your deal being brought to the “partner radar” fresh the next Monday.

What might go wrong and how to fix it?

1. Your connection might not respond to your email. Follow up with a gentle reminder via email (if your connection is a good friend, call her)

2. The connection may take 4-5 days to send your email and may sent it to a influencer (associate) but not a partner. That’s okay, just make sure you meet the associate and try and see if you can get the partner to join – “Hey I met <partner> at <this event> and I’d love to follow up with him on my company”, might work.

3. The connection sends an email but the investor does not respond. Try twitter (most US VC’s are on twitter, but a few Indian VC’s are as well). Best approach is to get a second connection who can also put a word in for you. Calls rarely work if email did not, so try another connection.Try your legal firm’s partner as a person to connect you as well.

4. The investor says they are not investing in the space or they dont like market you are working on. Try and get an alternate investor who they think might be a better fit. “I understand <investor>, would it be possible to suggest someone who might be a fit?”

5. The investor says they are busy for the next few weeks / months (either because of their board meeting schedule or they are raising their own fund). See if you can meet them at the airport when they have a little down time. Dont laugh, this has worked for me several times in SFO. In India, investors attend many events, so suggest you meet there.

If you like this post, please consider submitting to Hacker News.

——

In the next set of posts I will cover the next 4 steps in the process including:

2. The first meeting & followup.

3. The presentation to the “partnership”.

4. The negotiations and legal discussions.

5. The due diligence and transfer of money to the bank.

Angel investing, Entrepreneurship, India, Learning, Tips, Venture Capital

What does a series A funding strategy and plan look like?

August 18, 2012 Mukund Mohan 15 Comments

This post is the first in a series that I am planning to do on fund raising. I have successfully raised money 3 times (to a total of $29 Million – series A, B and C) and failed twice (once trying to raise $2 Million series A and second time $3-$5 Million series B).

As a background please read Elizabeth’s great post on “Behind the scenes of a seed round”.

Fund raising is one of the most difficult parts of a founder’s job. Getting money from investors of any type is hard. Dont be fooled by stories of entrepreneurs talking to investors and getting checks in 10 minutes. Those are truly black swan events.

The first thing you have to realize is that you need to develop an comprehensive plan and strategy to raise your series A. Think of it as an effort that’s similar to the launch your product. For purposes of this discussion lets call series A, as your first institutional round. I am also making the assumption that you have a working product, paying customers and are targeting a very large market (>$1 B for US, >$250M in India). If any of those criteria are not met, dont bother trying to raise money in this environment.

What are the 3 most important elements of your funding plan?

1. The pitch deck – a 15 slide PowerPoint presentation which summarizes the market, problem, traction and investment requirements. This is needed only for the face-to-face meetings.

2. The target list of potential investors – a Excel spreadsheet which has investor’s firm, name of partner, list of 2-3 recent investments (in the same general space as yours), email addresses, phone numbers, admin assistant’s name & email address, investor connection (people who can give you warm introductions to the investors), status and notes fields. You could use a CRM tool like Zoho if you like, but its overkill for this purpose is what my experience tells me.

3. An email introduction (40 – 100 words) and a one page summary. A simple text file with no images or graphs (something that the investor can read on their mobile phone (most have blackberry, although that’s changing). This can be sent to your connections to introduce you to investors or directly to known investors.

What should your strategy be?

1. Who should you target by role?: Investment firms have partners (decision makers) and associate / principals (decision enablers). Partners make decisions so if you can, get a introduction to a partner. If you cant, its not all doom and gloom, since many partners rely on their associates and principals to source deals for them.

2. Who should you target by investment thesis: Every investment firm has an investment thesis (how they will deploy funds to get best returns for their investors). This should guide you as to whether you’d be a good fit for the firm. Example: An investment firm might say we believe India’s broadband access and huge number of consumers with high disposable incomes is a great target for Indian eCommerce companies. So, they will deploy a certain % of their funds in eCommerce companies. Similar theses exists for big data, SaaS, etc.

Example: if you are an education startup focusing on India, Lightspeed (thanks to their success with TutorVista) should be on the top of your list. If you are a SaaS firm targeting US, Accel (thanks to Freshdesk) should be on your list. If you are a travel technology startup, Helion & Saif (thanks to Make My Trip) should be obvious targets.

A word of caution: If a firm has invested in a company in your sector, they will very likely ask you to speak to the CEO of their portfolio company to perform cursory due diligence. You may decide that company might be competitive and likely to execute your idea better since they have more resources. So proceed with caution and dont reveal any thing during your due diligence that might hurt you later.

Many investors invest in a sector because they “need one of those in their portfolio”. Example: Every firm has a baby products eCommerce company. So, I also recommend the “herd rule”. Which means, you should talk to other investors if your competitor has been funded by your first choice investor.

3. Who should you target by investment stage: Although every Indian investor claims to be sector agnostic and stage agnostic, there are a few early adopter VC’s. If you are the “first” in a new space, then consider an early adopter investor, else any investor who has not made an investment in the sector will suffice.

In a next post I will outline what the series A funding process should look like. This post will include information about whether you should follow a “back-to-back” process, or do a “listen and tweak” process.

If you like this post, please consider submitting to Hacker News.

Humor, Marketing

A new type of agency will be born – Klout Score Optimization (KSO) agency

August 17, 2012 Mukund Mohan 6 Comments

<Disclosure: Joe F (Klout cofounder) is a friend I was one of the early beta adopters of the Klout API at BuzzGain. We benefited greatly from his product>.

I dont claim to understand Klout. I mean I do, but I really dont. I dont understand what its trying to measure. Michael has a post on how he changed his mind.

I had a friend who recently told me that he was looking at his Klout score and wanted some help to figure out how to make it go higher. I was shocked. What? Why? Who cares about your Klout score?

Turns out his potential employer did.

Maybe its because deep down I hate these numeric ranking lists, given my own low score.

Maybe its because in India there’s still a VVIP list for *everything*. Even to buy groceries, which really is very irritating.

Maybe it because I believe in a more egalitarian society.

Maybe its just because I dont have influence or “Klout”.

So what Klout really measure?

1. How many followers you have on twitter? Which you can apparently buy at $18/thousand followers?

2. How many people Retweet you? Which I think is more a measure of the content than the fact that you tweeted it?

3. How influential (their Klout score) are your followers? Which can be gamed.

Any many other such inane metrics.

Michael says its like Google’s pagerank, which has many (over 200+) signals and is an indication of “authority” of the page.

Hence my prediction:

In a year from now, there will be multiple KSO (Klout Score Optimization) agencies which will help you grow your Klout score.

They will help authors, politicians, musicians, artists and many other vain folk who will use these agencies to “pump” up their Klout score.

And we will all live happily ever after.

<No really I am not being sarcastic>.

For those who care, my Klout score is 78. Which means you need to bow down before me and genuflect when you see my cape.

Focus, Learning, Tips

The power of active observation for entrepreneurs

August 16, 2012 Mukund Mohan 3 Comments

There’s an awesome stand up act that Jerry Seinfeld does in his “I’m telling you for the last time”. In that he tells the audience a secret about men.

The question on many women’s mind is “What are men thinking about?” is his premise. He goes on to say “Let me clue you on to the secret women. Here’s what men are thinking.”

Nothing.

We are just walking around, looking at stuff.

Its pretty funny and mostly true. Its also true of most people, not just men. Most of our “thinking time” is spent thinking about nothing.

Nothing.

That’s such a waste of time.

What I think it really means is its not worth sharing what we are thinking about.

We are “constant dreaming” about mundane useless stuff and our thoughts wander to more useless stuff.

While we go about some daily routines, we are still thinking and less “observing”.

Most successful entrepreneurs I know have a heightened sense of observation.

They watch everything. I mean they observe at least 50-80% more than the average person.

Most non-entrepreneurs people see the same things an entrepreneur does, but they dont observe.

A technique I use is active observation. It is seeing, then asking questions. As you know, questions are the root of solving interesting problems.

To discipline yourself to constantly keep observing, you have to train your mind to look, then ask. Not keep looking and neither keep thinking.

There is a downside to active observation. Its that you are not in the “present”. Critics will point to the mind-rest that your brain needs which helps it recuperate and rejuvenate. They might also say you should go with the flow to generate great results.

I prefer active observation when I am thinking about ideas and problems to come up with which need solving.

P.S. Post a few comments on facebook, I wanted to clarify that active observation is observing then doing. By default I assume most entrepreneurs are doers. Many though confuse doing (action) for progress.

Angel investing, Community, Entrepreneurship, Focus, India

Solve meaningful problems as a startup

August 14, 2012 Mukund Mohan 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.

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

August 4, 2012 Mukund Mohan 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

August 3, 2012 Mukund Mohan 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?

August 3, 2012 Mukund Mohan 3 Comments

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

July 31, 2012 Mukund Mohan 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.

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.

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.

Facebook

1) Focus on Impact

2) Move Fast

3) Be Bold

4) Be Open

5) Build Social Value

Zynga

1) Love to play

2) Level Up (Meritocracy)

3) Be CEO

4) Zynga Speed

5) Zynga first

6) Innovate

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

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

Microsoft

1) Integrity

2) Honesty

3) Openness

4) Personal excellence

5) Constructive self-criticism

6) Continual self-improvement

7) Mutual respect

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

Netflix

1) Judgment

2) Communication

3) Impact

4) Curiosity

5) Innovation

6) Courage

7) Passion

8) Honesty

9) Selflessness

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

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

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.

LinkedIn

1) Demand excellence

2) Take intelligent risks

3) Act like an owner

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

Cisco

1) Customer focus

2) Corporate citizenship

Entrepreneurship, India, Learning

The frustration of “lack of progress” with your product

July 31, 2012 Mukund Mohan 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”.

The personal blog of Mukund Mohan