Community, India, Learning

What makes a great conference? Thoughts on NASSCOM product conclave

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Fresh from the recently concluded NASSCOM product conclave, I was giving some thought to what makes a great conference. Having been at many over the years both at the US and India, there’s just one word that differentiates the approach and type of conference.

Production.

American conferences are produced.

Indian conferences (and events) are curated.

What is production?

The ability to define a delegate, speaker and sponsor experience that seeks to maximize the benefit to them all by defining a purpose of how they should feel post the event.

What is curation?

Putting together good content with great speakers, having enough attendees that are interested in the topic with sponsors that are willing to pay for their logo to be attached to the event.

NPC 2012 was a good event by most measures. Top notch ratings for over 50% of the session (80%+ Net promoter score), great camaraderie and networking and finally a packed set of sessions that were curated by a dedicated set of volunteers.

We need more produced events.

1. Production means getting speakers to have rehearsals before the event. If Steve Jobs can rehearse a presentation, everyone else can. No exceptions.

No rehearsals means people that take 45 minutes when they were allotted 15, non-engaging & dry content.

2. Production means understanding & setting aside enough time for both ad hoc and managed networking and fostering a “we’re all in this together” feeling.

No networking focus means many people trying to get some time with key speakers after and before the event, only to find that they (speakers) had allocated only 2 hours to be at the event.

3. Production means ensuring sponsors are actively adding value by looking to build content and engaging demos which benefits the attendees.

No engaging experiences means a 2 minute ad at the beginning of the event that 90% of people forget after day 1 of the session.

I think we need production quality experience so people feel wowed, get energized, learn lots, network to grow their business. Here’s looking forward to more produced events in India.

Angel investing, Entrepreneurship, Mentors, Venture Capital

Commitment delivery percentage – an indicator of future success of startups?

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Here’s an interesting new term for entrepreneurs to be aware of – Commitment delivery percentage. I dont know for sure but I think in a year from now, most startups will start to follow this metric more seriously than others. Some investors are already claiming this metric to be the #1 indicator of future success of startups.

At the Microsoft Accelerator in Bangalore, there are 11 companies in our current batch (Sep to Dec). Every week I send our reports to all our mentors with the weekly commitments that startups have signed up for and how many of them have met their commitments.

Since startup discipline is something I am very passionate about, it goes without saying that I track everything at the accelerator.

Commitments fall into 2 buckets – product and customer. Overall we focus on 3 areas in the accelerator – Product development, Customer development and Revenue development, but initially revenue development is largely ignored since most folks are building MVP and getting early adopters.

Each of these 2 buckets of commitments is not something the startup comes up with alone in a vacuum.  I typically discuss the commitments at our weekly all hands and it is a fairly public affair. While some teams try to lower the bar for their commitments, most are aggressive with what they commit to.

Product commitments are delivery of new set of features, versions or changes per a customer / early adopters requirement. Since many companies have mobile or web applications, most startups at the accelerator become customers of other startups so the feedback loop is quick and immediate.

Customer commitments are a combination of # downloads (if mobile app), or active users, engaged users or user feedback. Since I fundamentally believe that nothing’s possible without customer’s (who have a problem) at a startup, most companies have customer commitments from the first week. During the early days it was mostly meeting customers to get feedback and showing mockups, wireframes, etc.

The weekly report I send out to all mentors (currently over 70 folks) are to people who are committed to helping these startups and are engaged with them every week, either making introductions or reviewing progress and trying their product.

As with most reports, I can tell quickly who has read the report and who has not. On average 30 mentors (less than 50%) read the reports each week. They dont take more than 5 min to read and review.

Most of the investor mentors were reading the reports (of the 13 investor mentors, 8 were diligent and even asking questions every week to clarify certain points).

Over breakfast and a few lunch meetings I had a chance to get & give some feedback to some of our mentors. One question most people asked me was:

What % of commitments were being met and which companies were best at meeting commitments?

The answer is a surprising 70% of commitments were being met consistently and 63% of companies were consistently (with 1-2 exceptions per company max) exceeding their commitments on both product and customer traction.

Most seed-stage investors in India have a revenue requirement (not all, but most) so I was surprised they were the most aggressive in asking me questions about commitments. Seems to me, thanks to the early visibility, investors, were willing to make earlier bets, but needed some sense of the team’s performance.

What better way to judge performance than see the team making commitments weekly and delivering on them?

Investors have mentioned to me the in their experience the #1 indicator of a venture funded startups’ success is crisp execution and if they are going after a large market, then fantastic execution makes a good team great.

So how can we help more companies get on this instead of just Microsoft Accelerator companies?

We plan to release a version of our startup connection system (internally called The Borg) to all Indian companies by mid January 2013. With this solution all companies (who opt to do so) can make their commitments and report them to over 250 seed and early stage investors, mentors and advisers. And yes, its free to all startups.

The next experiment is to see in June of 2013 if the improved visibility into a startup’s execution increases the chances of funding for entrepreneurs. We are currently tracking that as well, and will be able to report in an automated fashion.

Marketing, Review

Book review: The curious digital marketer

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Last week Kapil from AFAQS campus gave me a copy of his book “The curious digital marketer” at Shangri La in Delhi at an event.

Curious Digital Marketer
Curious Digital Marketer

I had a chance to read it on my flight back from Delhi to Bangalore for about 1-2 hours. Breezy in style and fairly simple, the book tries to provide curated answers to multiple questions about digital marketing. From what is CPM? to Why should you select CPC as a method to buy ads vs. CPA? etc.

The book itself has about 100+ frequently asked questions in 4 sections of facebook, digital, mobile and search advertising.

I liked Jack Welch’s approach to converting frequently asked questions into a book, “Winning”, so I am a fan of the Q&A book style.

While this one has its good parts, I was not sure it would help educate a newbie into digital marketing. It feels like its more aimed at marketing (traditional) arms of large companies which have fear of “all things digital”. For the marketer who still likes radio, print and Television, this is a great starting point.

For first-time entrepreneurs (which is the reason Kapil gave me the book to review) it seems a little advanced, but if you are responsible for marketing as part of being a cofounder, and you have been doing some reading up and still have questions, this book is worth a read.

The part that would make it great for the first-time entrepreneur is some overview of the basic terms before the Q&A. Rather than just the Q&A (which is curated from over 15+ contributors), if there was a synopsis to each chapter, I felt it would be a good guide to digital marketing 101.

While nothing in the book is a new concept, the value of not having to google multiple terms and read multiple pages is certainly worth the INR 250 it sells for online.

I left the book on my flight, the way back, so I am unfortunately not able to give it to you like I do after reviewing books.

Entrepreneurship, Hiring

What constitutes a “Rock star startup team” ?

19 Comments

Here’s another question I have been pondering over the last few weeks.

I am personally not very fond of the word “rock star”, but have heard it from several investors in particular. They all claim to have invested in rock star teams.

So it begs the question – What is a Rockstar startup team?

It would be impossible to list all skills, qualities, attributes and traits of the individuals in that team because the list would be endless.

Let me first write down a set of things I’d like to think that its not, but I am open to be challenged on these.

1. Bunch of guys who have all graduated from the same “top schools and colleges”.

2. A team of people who had CXO title’s at large companies and have never worked together.

3. A set of high IQ mensa-type individual contributors who dont work well in teams.

If I were to put a set of things I believe they should have before with the attempt to put a 1 line definition before it would be:

1. They have spent time together and understand each other well.

2. They have previously solved a similar type of problem before.

3. They have great communication among themselves.

4. They have a very good understanding of the market they are looking to operate in.

5. They execute crisply and meet their deadlines consistently.

If I were to simplify the definition of a rock star team, I’d say a team that’s worked together and solved the same type of problem a startup would face at their current stage before in their career.

Or people that have been there and done that – together.

But this definition does not cover a team of co founders who were fresh out of college.They may have certainly worked together, but not have solved the same type of problem before.

I am open to a more crisp definition.

Here are some others that I reached out to who have defined it in their own words.

Shekhar Kirani from Accel

“Deep insights, exceptional performance in their previous jobs, pedigree as an indicator of competitive spirit, and commitment not to give up.”

Ashish Gupta from Helion,

Customer focused, Iterative, Nimble

Sameer V from Nexus,

Scrappy, Hyper-efficient (multi-taskers) with a solid focus on customer needs

Abhijeet M from BVP,

Somebody who knows the market quality, competition, his product, and its value proposition inside out and backwards.

Kiran B Nag from Saama Capital,

Experienced, Synergestic, Adaptive

Raj Chinai from Kalaari,

Exceptional track record, passionate, creative and execution oriented

Gautam B from Ojas,

Energetic, Honest, Complimentary skills, Go-getters, Though not necessary, would help to have relevant backgrounds, Good understanding between themselves

Ashwin R of India Innovation Fund.

Driven, Make things happen, Visionary, And of course the cliched term X factor comes to mind

Mukul Arora from Saif partners,

Super passionate about the idea, ideally with relevant and complementary skills/expertise, and capable of hiring high quality talent.

Rahul Khanna from Canaaan,

Bejul Somiah from Lightspeed,

Passionate, Force of will, Outliers, Unusual

Shailendra S from Sequoia

Bharati J from SeedFund

Rock star team – that finds unique idea and executes brilliantly

have also been asked to contribute to this definition.

I will update this post as they provide me their answers.

Other

The problem of “marketing spend” with Indian technology startups

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I have a question which I am trying to get answers for from multiple people, but I am not sure I have the answer yet.

The average US technology startup raises a seed round of about $150K which lasts them 12-18 months. Most Indian startups look to raise a seed round of $250K which lasts them 12 months or less. Why is that?

Let me give you more clarity on both numbers.

The average YC company gets $25K from YC and a no cap convertible for another $125K. Most (>39% in the latest batch apparently) raise money before 18 months of graduating from YC, but many still have the money last 18 months. The average company has 2-3 people in 12-18 months until they have product-market-fit in the US.

The average Indian company gets by further along by bootstrapping and is not much further along (in terms of product-market fit) than the US counterpart. They raise $250K (per pocha below) $200K (1 CR) and that money they claim will last them 12 months. The average Indian product startup has 6-10 people in 12 months.

The money that’s spent is primarily on acquiring customers and payroll.

Even though we have more people in the Indian product startup, we have more-or-less the same payroll costs.

But most startup plans (business plan or execution plan) I see keep aside 40% of their raised capital for “marketing” costs. For customer acquisition – SEO, events, or “viral campaigns”, etc.

So here’s my hypothesis:

1. We need more money because paying customers are *much* harder to get in India than US. Most US startups spend ZERO in marketing (out of pocket costs) for the first 18-36 months from my personal experience.

2. We need more people because most of our startup founders are “generalists” not “specialist and generalists” who cant really code or run a digital marketing campaign or close a sale. They have to “hire” a CTO, CMO and Sales head to do that.

3. We need more money because cost of doing business in India is a lot more than US.

I dont know the answers, but I am very curious what entrepreneurs in India think is the reason product startups need almost twice as much money which lasts 2/3 as less than US counterparts.

Other

The pre-revenue conundrum among startups

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I took 11 active seed and early stage funds (Accel, Blume Ventures,Venture East, India Innovation Fund, Ojas, Seed Fund, India Internet Fund, Nexus, Helion and IUVP/Kalaari) and 4 top angel networks (Mumbai Angels, Indian Angel Network, HBS angels and Hyderabad Angels) in India to understand their pattern of investing in pre-revenue startups.

Of the VC funds, the norm is about 10% of their portfolio over the last 2 years (typically 3-6 companies) that were funded were pre-revenue.There are exceptions such as Seed Fund (30%-40% pre-revenue, because of their incubator Seed Farm, Nexus (over 50% pre-revenue fundings) but they are truly exceptions and India Internet Fund (very few investments so their % are skewed to 40% and they incubate companies).

Pre-revenue companies getting funded by VC’s in India is the exception not the norm.

Of the angel networks, only MA and IAN funded more than 10 companies over the last 2 years. Both funded less than 3 companies each year that were pre-revenue.

Pre-revenue companies getting funded by angel networks in India is also the exception not the norm.

Then I took the 10 active seed and early stage funds in US (First Round, Khosla, KPCB, Sequoia, Accel, Benchmark, Emergence, Google Ventures, Founders fund, Union Square) and the 4 most active angel networks (Band of Angels, Investors Circle, Golden Seeds and Alliance of Angels).

Of the VC funds, the norm is about 20% of their portfolio over the last 2 years (typically 6-10 companies) that were funded were pre-revenue. Higher than their Indian counterparts but still an exception not the norm.

Pre-revenue companies getting funded by VC’s in Silicon Valley is also the exception not the norm.

Of the angel networks, Band of angels is the exception at nearly 30% pre-revenue. Others are higher than India, but at the 15-20% mark.

Pre-revenue companies getting funded by angel networks in Silicon Valley is not high, but better than India.

I had a chance to talk to at least 1 investor in a phone conversation from each company above, so these are not just website observations.

So who’s funding pre-revenue companies in India and US.

Accelerators and Seed-funds such as YC, Tech Starts, 500 startups.

So if you are pre-revenue, dont waste your time going to angel networks or VC’s. Spend time building your product.

India, Learning

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

7 Comments

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.

The personal blog of Mukund Mohan