All posts by Mukund Mohan

My discipline will beat your intellect

Startup Idea validation: How many people; how long before your idea’s worth pursuing?

Lets say I have an idea. Actually 3 different ideas I want to pursue. My next step is to get validation of that idea. The top 5 questions that I am looking to answer are (not necessarily in order):

1. Is this a real problem? (Pain point validation)

2. Is what I am trying to do solving the problem? (Product – market fit validation)

3. How much of a problem is this for the person who I am providing this solution for? (Customer validation)

4. Will people pay to have this problem solved? If so how much? (Pricing validation)

5. Is the problem big enough that I can make a large company out of solving this problem? (Market size validation)?

So the question is how much do you have to get validation for these questions until you decide to pursue it?

One approach is to actually develop, have customers pay and let the market validate your idea.Which is what was suggested by a user at HN.

The approach I am going to suggest is more measured and less expensive than actually developing the solution before you figure out if that’s the right idea for you to pursue. It involves talking to customers / prospects or even putting together a simple SEM campaign to test the idea out. I think many might say that’s not a new idea, but I dont see over 80% of startups doing this.

That’s way cheaper than time or resources to build your idea to a real product. At some time you have to build a real product and there no denying that.

First I would make a target list of 20 people – 10 who are potential customers who have the same title of the person you believe has the problem you are trying to validate. If you are a consumer startup, that might be the target audience of users who might want the product / service you are building. If you are an B2B company, look for the right title of buyer.

The list should include 5 potential industry experts, who might understand the nuts and bolts better and 5 “laymen”,  or those that have not much of an idea about the intricacies.

Is the number 20 enough? Maybe, not, but its a start.

Then prepare a one paragraph elevator pitch explaining what the problem is, and how you are going to solve it. Email it to your list and track their feedback.

Then try and get prospect validation. This is because people who know you might either a) not want to discourage you, and so give invalid answers, or b) might not understand the solution well enough to provide valid feedback.

I would setup Google adwords campaign for the keywords you think people will most likely click on. If you buy a domain and hosting from Godaddy or some other providers you even get $100 adwords credit, so there’s no excuse.

Create 3 different pages with your multiple campaigns and call to actions, and have a signup sheet (this is your call to action) for each. Track and categorize results. In each of these pages, provide a screenshot of your product / service you are trying to develop.

Wait, you think, wont this give my idea away and attract more competition. Sure, I think it might, but more likely, there’s competition already and you are just not aware of it yet is my answer. Or if there’s no competition, is that not a signal anyway?

The difference between visible and invisible elements of a startup ecosystem

I was on the plane with Dr. Anurava Goswami of Indian Statistical Institute the other day. He is a very well accomplished scientist with a deep background in bio-mathematics and has multiple degrees from Harvard, and other institutions. He mentioned a very interesting remark on the state of “infrastructure” in Indian research organizations and their lack of “invisible” infrastructure.

His point was he could pay money to have big buildings, large labs and a great campus in India – these according to him were “visible” infrastructure. What was still missing was “invisible” infrastructure. The particular example he gave was the Fedex person who delivered at Harvard, samples of live cultures and he would be at the office at 6 am sharp with his package, knowing fully well how important that time was to the scientists. The Fedex delivery person was part of what he called “invisible” infrastructure.

I wanted to draw some parallels to the startup ecosystem.

The startup community and ecosystem in Silicon Valley is extremely well revered. Its speed of innovation, the consistent “hits” and the unparalleled dynamism of ideas is worth applauding. The visible elements of the startup ecosystem – dynamic entrepreneurs, indulgent venture capital and seasoned mentors are what I call “visible infrastructure”. I would definitely include things that make the US extremely easy to do business in such as setting up your company, bank account, labor laws etc. Those are the table stakes and the easy parts that every startup friendly ecosystem in the world is trying to emulate.

Imagine entrepreneurship is a cult and Silicon valley the “Mecca” or the “Holy land”. Something amazing happens to the converted when they visit the holy land. Yes, they are still religious and follow the “rituals” of entrepreneurship elsewhere, but when they meet other converted in the hallowed ground, they get an almost “born again” fervor.

I was at University Cafe a few months ago, waiting for a friend, when I was sitting next to a table of 2 young entrepreneurs talking rather loudly to another individual (you could say I was eavesdropping, but they were so loud I could hear them at the Apple store, a few blocks away, if I was sitting there instead). They were trying to convince the other individual to join them and it was a full on “change the world, ding in the universe, pitch”. Their excitement and enthusiasm for what I gathered was a “mobile application to tag users by keywords instead of social networks” was nothing short of hubris, but to them that was the only thing in the world and they gave it their best shot. I call it  “invisible attitude”.

At Ramona’s a few days later, there was an open “60 second demo” of developers to a group of their peers. I happened to listen to one developer who had a pretty awful time with the mic, then his app crashed two times and the projector resolution sucked so much we couldn’t really see his app at all. But post his “pitch”, he said “please download the app and give me feedback”, with a kinda sad look in his face. Within 10 minutes, during which time most folks were grabbing their beers, his app was apparently downloaded “30 times” and 5 people took time to review drop him a comment on his blog about what features they would like to see on his app. I call this  “invisible encouragement“.

Here’s my point. I know India does not have many great mentors willing to give time, and I am acutely aware of the lack of many early adopters and also the dismal seed capital availability. At the end of the day though, only the converted help other converts.

It is up to us entrepreneurs to help other entrepreneurs.

Forget about the government, venture capitalists, larger companies and experienced mentors.

Forget for a moment that you are competing with multiple other startups and entrepreneurs for your time under the sun.

Go out of your way to help other entrepreneurs.

If its helping figure out scaling php on the cloud OR if you have figured out how to setup your company in the US, with a subsidiary in India OR if you have figured out the best source of organic traffic for your B2B SaaS company OR if its taking 15 min to buy online something you would offline even it costs 5 bucks more, OR if its downloading a new beta app and providing feedback.

Help other entrepreneurs, with no intention of getting anything back. 

I assure you, it will surprise you back with its generosity.

The end of the keyboard, and what it means for software applications

Imagine a future without the keyboard. Imagine we spend 80% of our time on a tablet and the mobile phone. I am sure there are set of functions (developers, finance, etc) that will continue to use the traditional laptop or desktop but imagine that number is stagnant or reducing.

In our current usage paradigm there are creators and the consumers of content. We are all creators at some point and consumers for most of the time. As consumers we dont quite need the keyboard as much. The typical use of consumption is point and click – primarily using the mouse or the touch interface.

I wanted to speculate on what would happen if the keyboard were to go away and what would be the changes would result in the way we build we applications?

1. The text box would mostly go away. I already see lots of companies asking you to login using Facebook or Twitter instead of entering a user name, email and password.

2. If the text box exists, I imagine auto complete would be the default option for all text boxes, which dramatically reduces typos.

3. The text box would be mostly replaced by drop down lists. This makes it relatively easy for users to consume, or input data and reduces errors dramatically.

4. The simple radio box is rather painful in both a mobile form factor and too small for fat fingers on a tablet. I suspect it will just be done with and more designers and developers will stop using it.

5. Replacement of lots of text with “tag cloud” picks. When you have to get users to write a short description about themselves, say their bio, then writing a bunch of stuff is just painful. I imagine the bio will get replaced with large tags which the user can click on to add or a small text box to add a new tag which did not exist.

What a delayed flight told me about newspaper consumption in India

BIAL Airport

Last week I was to head out to Coimbatore on a early 8 am flight from Bangalore. Dense fog and over scheduling of takeoffs meant the flight I was supposed to be on was delayed by 2 hours. That’s a recipe for disaster at Bangalore airport. Its relatively small seating space, fairly crowded food court and non existent power plugs, meant I had to resort to crowd-watching.

The airport (besides hotels I think in India) is probably one of the last places that still offers free newspapers. Tons of them actually. There are about 5 newsstands that offer over 15 dailies, tabloids and financial broadsheets for no price at all. Its a fascinating study in “Say one thing, do another” that’s typical of most of us.

There are 3-4 racks in each stand and each rack displays 5 newspapers – Times of India (TOI), Financial Times, Business Standard, Deccan Herald, DNA (Daily News and Analysis) Deccan Chronicle, Hindu, Hindu Business Line, Mint, Financial Chronicle, Mid-Day, Bangalore Mirror and 2 Kannada dailies were on display at the Bangalore airport last week.

The refined, cultured and educated Indian apparently thinks of TOI as a sensational tabloid at best. At least that’s what the digitarie would have you believe.

The average person picks up 2 newspapers (hey, its free, why not? seemed to be the norm). There were a few that picked up 3 or more, but that’s the “long flight to Delhi, individual.

Older men (over 30+), (who were most of the travelers), invariably took a copy of TOI and Mint, which were the first two that each stand ran out off. DNA and Deccan Chronicle were the next that were finished. Finally Financial Times and Business Standard were no more on the stand, followed by several copies of The Hindu and other newspapers.

Surprisingly many folks who came by the stand after all the copies of TOI ran out, preferred to go and pick up a used copy of the Times than pick up any of the others. Eventually (in about 40 minutes) the whole set of newspapers ran out.

I asked the person that does stock them and he claimed the stand gets refreshed every 1 hour in the morning from 630 am to 930 and relatively less frequently after that.

The Times is the #1 English broadsheet in India & Bangalore, so that’s to be expected, but the Mint and the Hindu surprised me. I expected Financial times to disappear faster than Mint for sure and I also thought the Hindu was fairly popular in the South. Turns out Deccan Chronicle is only popular in Hyderabad and the Hindu in Chennai.

Personally I dont get a physical copy of the newspaper daily and most of my reading is done online with Google news. I have customized it to ignore Politics, Entertainment, Health.

What do you read in the morning daily?

How much time should you give your startup space/industry before you move on?

I had an acquaintance who sent me a note a few days ago. He had built a beta product and we were customers along with a 2 others. After 3-4 months of working to get the product ready, and seeing some traction (limited I presume) he decided that the effort was not going to give him the “ROI” he desired and was not pivoting to a few other ideas that he was considering.

The new ideas were totally unrelated to what he was doing before. So an essential restart.

I see a lot more of these “projects” that developer-entrepreneurs take on, which they term as their idea / space, only to find that either the market they chose is not big enough or the traction they got was limited or they did not really care about the market or the product in the first place. Brings into question the entire passion and desire for the space and area they wanted to spend solving problems.

Side note: First thing that I would highly recommend is to find out why you want to be an entrepreneur and also what you want to do. Just saying I want be an entrepreneur because its fun (its actually not fun most of the time) or because I want to be my own boss does not suffice.

The rest of this post is mostly for those entrepreneurs who dont know a space fairly well or have worked in any industry for a long time. This is for those who decided to build a mobile app because its cool and the new thing to do after working at a medical equipment company (IT organization as a developer) for 5 years. Or the fresh out of college grad who wants to build an eCommerce company as an example.

I dont have a scientific reason to give you a number, just some experience from having done a few startups.

It takes 2 years for you to understand a space well.

That’s the minimum time you have to give it before you can make an impact.

For the first 3 months you are mostly trying to learn the landscape, understand which events to attend, who the key people are in the industry, and what are the white spaces or “major problem areas”. You may have some ideas, but validating them with these and other people takes time. Especially if they are at a big company, since they are mostly travelling and cant give you appointments for 2-3 weeks out.

The next 3-6 months pass by amazingly quickly. You are either building your product, talking to a lot of customers, or meeting suppliers (eCommerce needs a ton of patience BTW with vendors) or showing demos to potential prospects.This is also the time you are trying out how to position the product, trying out your elevator pitch, etc.

The next 3 months all you are doing is trying to make your alpha product a real beta or your beta product a version 1. Getting feedback from customers, acting on them, etc.

Real productivity hits you in year 2. And traction, momentum and impact only hit a year later.

So choose the space and industry carefully before you decided to jump into building a company, because if you decide to change the idea or space, the clock starts again. It will take you two years from that point to understand that new space and make an impact.

This however drops to a year if you already have worked for a company in that space before. E.g. You were at an eCommerce company selling toys online and you decide to start an eCommerce company after 2 years being at that company. Your new company will benefit from that experience, but I would now put the time required for you to get productive as 1 year. After all, it takes a long time to be an overnight success.

Are you celebrating your milestones enough at your startup?

Celebrate
Celebrate all the little things

I had a friend who invited me to his new “office warming” party the other day. Unusual, but fun. It reminded me of our own office “warming” party at Jivity several months ago.

Side note first: If you are like most Indian entrepreneurs, you mom has a big say in the matter (so do most relatives, uncles, aunts and others). First was the date I should sign the agreement (has to add up to 9 was my mom’s advice), then the date I should move in, where I should sit (face East, the sun’s rays should first hit the CEO’s desk! yes, you laugh, but that’s what I was told). Did I really care about all these astrology / numerology and feng shui (Vaastu for us Indians)? Mostly no, but my mom did and mom’s always get their way. Anyway, I digress.

Back to my friend, though, who asked me “How often should we celebrate and what should be celebrate”?

There’s a really simple answer to that – “Very often and anything you believe is something to be proud of”.

That does not mean you break open the champagne every day or take the team out for a 7 course meal each week, but most startups dont celebrate achievements enough.

There are 3 important things celebrations do:

1. They cherish those moments of fun and accomplishment – these are then passed along to all new employees as “folklore”.

2. They help put together shared experiences which helps you tied over the Sine-curve of emotions at your startup.

3. Most importantly though, they reinforce achievement. However small.

Most startups celebrate only the “major” accomplishments – funding, customer wins, new office space,  end of the quarter. Or if you are in India, Diwali, Holi, etc.

The amazing part is there are small milestones you can celebrate daily. I am going to make a short list and please add your own in the comments below.

I put these celebrations into categories: Product, Hiring, Finance, Sales, Customers, Admin (or Operations), Marketing, etc.

Within each of these categories you can have multiple celebrations. For e.g:

1. Product – mockup ready, alpha/beta/version 1 ready, demo ready, etc.

2. Hiring – first employee offer letter, first (or 10th, 20th any number really) employee hired, etc.

3. Finance – funding from angel investor, adding members to the advisory board, etc.

You get the picture.

Here are some more examples!

1. Name resolution from ROC – Yay! The name you wanted for your company is actually available! I suggest going to your local print shop and getting the name typed in gold print & a certificate embossed.

2. Signed up your first advisor – Bring the advisor to meet your team and get everyone lunch. The person who asks the most questions, gets to drink beer. Rest have to drink water.

3. Got your company incorporated. Make 15 copies of you MOA and AOA. You’ll need it! Even the person that serves you tea and coffee in India wants a copy of these in paper!

4. Got your domain registered and website launch page is up! I am told the launch page being up is the most legit you can get early on!

5. Your first mockup created on the back of a napkin. Take multiple photos, get them printed so you can then hopefully sell them on eBay when you get big.

Celebrate more! Have tons of fun and please invite me to the party.

How to decide if you should go for external funding?

The Truth: There’s no easy answer. It all depends on your situation. I dont know the answer, but that does not stop me from offering an opinion 🙂

My bias is always to bootstrap. Bootstrapping helps you get creative, it forces you to validate your idea and execution plan well and it teaches you many intricacies of finance that most entrepreneurs dont bother to learn.

That said I read an interesting post brought to my attention that had me thinking about when one should go to a VC (or angel investor for funding).

Lets assume there are 2 options ahead of you:

1. Stay bootstrapped: Which means (by and large) grow slowly with accruals, be cautious on expenses and grow as you need. The upside is you own the company, the direction and the future. Lets call this the “Vembu way” after Zoho CEO Sridhar.

2. Get funded (either with angels or Venture Capital) and scale really fast and quick. This means you are focusing on growth (initially). Lets call this the “Bahl” way after Snapdeal CEO Kunal.

Neither approach is wrong or “better” fortunately. It all boils down to how you want to answer these questions:

1. How big is your market / idea? Bigger markets require more capital usually (But Zoho’s going after a huge market you say. Yes, he’s a rare breed).  Hypothetically, if you build a company that has $100 Million in revenues in 5 years, and you are valued at say $500 Million (5 times revenue), and at exit (due to dilution) you own 15% of the company, you will be worth $75 Million. If however you bootstrap, and your company does $25 million in revenue in the same time, is valued at $75 Million (3 times revenue) , you potentially are worth the same if you took venture funding.

Generally VC’s dont invest in companies that address small markets (i.e less than $1 Billion) because the time and effort to help build a company is the same, they might as well go after a large market and have the potential to have a huge return.

2. How quickly do you think the market will develop? If you believe the market for your product or service is going to be large very quickly, then you’ll need external funding.

3. How quickly do you need to scale? If the market demands that you need to scale quickly and need to invest money before to meet the potential demand, then you’ll need financing to help you invest before (or just before) the demand.

Unfortunately, there are only 1 in 20-50 (depending on VC firm) companies that meet all the criteria for VC investment – a) addressing large market, b) quick growth & fast to scale, and c) exit in 5-7 years. Most VC firms invest in not more than 10-15 companies a year out of over 200-500 (or more) they look at. So even if you believe you need the funds, if you dont meet the a, b and c, together, you’ll likely not get funded by a VC.

P.S. I admire Sridhar, so I may be biased on this one, and I really respect Kunal too, so I really mean it when I say there’s not a right or wrong way. They are different guys with different ambitions. Who do you guys admire?

Update: a relevant article and a pertinent quote:

” At the end of the day, there is a fairly narrow band in the total spectrum of business opportunities that are venture fundable (though that band still represents infinite opportunities). If through whatever process of filtering, coaching and pivoting, the resulting companies don’t represent an opportunity for plausible venture returns, then by definition those companies will not get funded.”

What’s the most difficult part of a pivot? The internal communication

tldr: When the problem you set out to solve has changed, first focus on getting the internal communication right to your own team, before investors, customers or anyone else. That’s the first step towards your pivot.

“Why is our customer clicking on these links that lead to other what they most recently said on twitter instead of their contact info?”.

“I thought you said the primary difference was that the heart of our system was the individual, not the social media post?”

“We just moved from a tab based UI to tiles and you want us to move again to a news feed UI? Do we even know what the customer wants?”

All these were the questions that I got within the first 4 minutes of talking to my team about changing our product direction (it was not fashionable to call it a pivot at that time).

We were cruising towards alpha in Sep after a few glitches when I scheduled a call with 5 of our early customers, most of whom were on the East coast. The call and demo was scheduled at 7 pm IST and about 930 am Eastern. I was going to go over the demo with Paul Dunay, who at that time was at Bearing Point. Paul was one of our early champions and a very astute guy who understood what we were trying to build. I was at the office with my CTO and friend Giridhar who was listening intently to what Paul had to say about the product. It was as much his sweat and tears as mine so he was hanging on every word. It took us about 3 minutes to finish the demo. The product was in its alpha so there wasn’t much to show I thought. After what seemed like a really long pause, Paul said “Well its good to see the progress guys, but I think you’re a little ways off from when we can use it for Bearing Point”.

That set off a series of questions to understand why we missed the mark. Even before the days MVP (Minimum viable product) was a sexy term, we thought that’s what we had. Turns out the problem that we were initially thinking we had to solve had changed.

Dramatically.

In less than 3 months.

The new problem required a solution that had to first have us change our data model, our user interface (new wireframes, too) and finally required access to data sources which we had not planned on acquiring. So basically a “total rewrite” as Giridhar put it.

Problems change. The perception of the problem changes. The customer’s needs change. When you are on the cutting edge of an unsolved problem you ought to expect that.

So what did we do?

We had to get buy-in first from our engineering team. There’s one way that worked and 3 ways that did not work.

The things that I tried that did not work:

1. Showed them a few competitors applications and told them about what the new problem is – big fail. Most engineers I worked with really did not care much about the competition. They were convinced no one was solving the problem the way we defined it.

2. Put together a wireframe, complete user interaction scenarios and use case description. Interesting, but they were not convinced we had the “new” problem nailed, since they felt we were grasping the last available straw.

3. Took them all out to lunch to detail why all the 5 beta customers were logging in, clicking on all the “wrong links” and then logging out within 50-58 seconds.They felt the customers still did not know where to click.

What worked:

We scheduled a call with our beta customers – Ross Mayfield, Paul Dunay, Mike Prosceno and did a remote record as each user went through the application one screen at a time. We made sure all of our 3 engineers were both on the call and also looked at the entire 9-10 min video recording of each customer’s interaction with our application.

Its an old adage – “Seeing is believing”.

When you have your engineers hear and see customers struggling and clicking on the wrong part of the application looking to find what they were hoping to, they get religion.

 

Why mentos is now legal tender in India

I really enjoy writing about the intricacies that make up India. Here’s another of those “stories”.

Obtaining “correct change” is an absolute pain here in India. Everyone from the bus conductor to the auto driver to the restaurant wants exact “change”. Most of them would refuse a customer if they dont provide them with the right coinage.

Take the Bangalore bus system, for example. The bus fare (for where I travel to and from) is usually an odd number between INR 10 and 20. The conductor (who gets money from 100’s of commuters every hour and still apparently gets no change) always demands exact change, even if he has a plethora of coins in his bag.

For most parts its so you can take the easy option and just pay him cash (a lower INR 5) for no ticket and hence goes into his pocket, than hunt around for the exact change. In case you refuse to do so, he’ll write the amount he owes you on the back of the ticket, and its up to you to ensure that you hunt him down for the change before you get off the bus. That in itself is an amazing feat, given that he’s always in the other end of the bus from where you are at the point you want to get off. In 50% of the cases you may not be able to hunt him down, which means he gets to pocket the difference.

But giving and providing change has been a problem at retail outlets too, which have come up with a “creative solution”, involving giving you a mentos for denominations less than INR 5. So if you are buying something for INR 14 and give him a INR 20 note, he’ll likely give you INR 5 and one mentos to make up for the INR 1 he owes you.

I experienced this several months ago (as did a friend last week) when I was taking the toll road out of the city. The attendant at the toll (when the charge was INR 19) did not have change for INR 50, so he gave us INR 30 back and a mentos. I was obviously peeved at the mentos, but since I did not have an option, kept it at the dash of the car.

Returning the same day, and passing by the same toll booth, I paid INR 18 in cash and gave back the mentos to the toll attendant to account for the INR 19 in toll charges. He did make a fuss about it, but I said that’s the choice he has, since they other attendant provided that to me last time around. He did accept it, but that opens a whole new area of currency arbitrage.

I suggest you go to the friendly neighborhood supermarket, and buy a box of mentos at INR 70 for 100. Then hand them out back to the retailer, each time to cover for the lack of small change. You are in the gain for INR 30!

2012: A year to dial back

I started this week thinking about what I wont do in 2012. 2011 was a very eventful year for me and my family. We bought a house, sold a house, bought another home, started a new company (Jivity, and Vinita started Social Hues), invested in several startups and also committed significant capital to specific projects. All this coupled with a hectic travel schedule of speaking engagements, which saw me out of the office for 84 days out of 250 working days and 25 days on leisure travel.

There are multiple things I would love to do but dont have time for at all. The focus of my time is being spread too thin to get enough value from my own company sufficiently.

So, here’s a list of things I am not doing to do in 2012.

1. Reduce speaking engagements dramatically to less than 1 a quarter. In Q1 I have committed to being at Kolkata to help friend Aninda Das at NASSCOM, and one more at Coimbatore which I committed to in late Nov last month. That’s it, and I dont plan to either attend or speak at more engagements until March. Just to compare that to 2011, I was committed to 41 speaking engagements throughout the year. This also means that I am going to reduce the number of entrepreneur networking events, dramatically.

2. Less mentoring and advising startup entrepreneurs. This is something I really enjoy and like, but I have to give up, since I just dont have the time.

3. Definitely not writing a book. I was toying with the idea to write a book on sales & selling to help entrepreneurs, but the commitment of time is tremendous, so I have to pass on that also. I would really enjoy this project, especially since I love writing.

4. Not work on any more new “ideas”. Like most of you, I get multiple ideas each day / week / month. Some I pursue and many I drop. The ones I do follow up on, I have done a fairly shoddy job, since there are too many competing priorities I am juggling.

5. No more startup investing. Having committed money to several startups in the last 2 years, I have much to learn still and more to digest. 2012 is my year to digest and step back and watch on the sidelines. I will no doubt miss several promising entrepreneurs and some important trends, but this too will have to be passed for lack of time.

Why this strict regime, is a question I got asked by a good friend over lunch last week?

The biggest reason is focus.

I was doing too many multiple things that I enjoyed, without a clear focus on the one thing that would get me the best return. I was not practicing what I preached to most folks – Focus on doing one thing very well, instead of multiple things poorly.

So what am I going to focus on for 2012. Just to take Jivity to the next level and focus on maintaining good physical health – primarily by reducing my intake of junk food.

I will you all an awesome 2012!