Entrepreneurship, Learning

The difficulty in giving honest feedback to entrepreneurs

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I met a cofounder-team last week at the Microsoft BizSpark event. They were fairly young, and were working on their first startup, after 5+ years of working in a large corporate environment. They were both a year into their startup and were looking to raise funds (seed round). They were focused on the consumer Internet space (are now considering pivoting to B2B instead) and have been building a version of their webservice.

They definitely caught me at a “not so opportune time”. Actually, a friend pulled me in adhoc after a bad call (bugs in our software, customers complaining, etc. you get the point) to introduce me to them and ask me for feedback.

The next 30 min was painful for us all is the best way to say it. After the 5th time of me asking what problem they were trying to solve and if that was a real problem, I think I had a breakdown.

I tore into them for the next 15 min with both my friend and another individual sitting next to them. I claimed they had no idea what problem they were trying to solve, who their target audience was, what their product actually did that any of 20 other startups did not do already and why I would not use the product even though it was meant for folks like me.

They were patient, gave me a hearing, but I you could cut the tension with a knife. I felt awful 2 hours later. I had forgotten the cardinal sin I kept repeating to others they should avoid doing.

If you cant give constructive feedback, you are a moron, not an investor. If an “investor” does not help you with a next step, he is a moron. Period.

I had become a moron. The very thing I had detested in many other investors (not all, there are several exceptions).

You know the type. They kill every idea and suck your soul dry. They dont think your idea is good, they dont think you can pull it of, they dont believe you have what it takes.

I used to believe this was necessary tough love. It is absolute B.S.

What I did was inexcusable. It bordered on killing the spirit of another individual, which no person has the right to do. Even if they are an investor.

So, what should you as an entrepreneur do when you meet this type of investor?

First off, try some mind-relaxation techniques.

Second, give them the benefit of doubt. You probably got them on a bad day/week/month.

Third, ask the question:

“How would you go about trying to solve this”?

Put the ball on their court to give you a SINGLE next step that they (the smarter ones) would take to get you further along on your path.

One last point. Being an investor, you meet many smart, talented individuals daily and its difficult to not do some form of “pattern matching”. So, if anyone tears into your idea, remember at that back of your mind, you are likely doing something (either right or wrong) and its worth doing some more digging.

The worst feedback to get when you are pitching your idea/product/startup is no feedback.

P.S. I did meet the team this week and offered some (my version of the story) constructive ideas they could possibly work on, and was trying to help as much as I could. That does not make me feel better about what I did last week, but its good karma to erase the bad.

Entrepreneurship

How to deal with startup failure. A personal story

38 Comments

I have failed in as many startups as I have been successful.

Since I tend to tinker a lot, I have also failed at many of my side projects. In fact I have the distinction of not having succeeded in any of my side projects in the last 4 years (4 side projects).

If however, you count the lessons learned, I have been enriched.

The first project was an idea that was going to provide “price transparency”. The site was registered as pricearoo.com. I had a team of 2 build it, got a prototype ready, did a lot of leg work to understand the products the site should give your pricing information about. But I never launched it. I realized that building stuff is rather easy, but I feared it was too small a feature for people to take notice. 6 months later Priceonomics was launched. I am not privy to how they are doing but its a good start.

Ship early. Your product will have a lot of bugs. Ship early. It wont be perfect. Just ship the product. You will feel miserable about the fact that its not “quite ready”. Ship it already. Get people to use it or at least give you feedback. Ship.

I also failed at an eCommerce company. Technically it is still going, but I was a miserable failure at it. I just was not prepared for the rough and tumble of both managing real “inventory” or lots of blue collar suppliers. I hired too quick, did not manage expectations well, and had negotiated a very poor deal with the investors. The capitalization table was so messed up, that no new investor was willing to fork up money for the company. There were way too many lessons I learned but the most important was work with people you like and trust.

These are recent (last 1 year). Let me tell you about my first failure.

I left Univ of Maryland, (Baltimore County) in 1994 to head to California for a startup. Fresh out of college, I was not quite a rockstar programmer that I thought I was. The first project required me to get up to speed on a language (Visual C++) that I was unfamiliar with and a functional area (procurement) which I did not comprehend. 4 months into a “delivered” prototype, the client kicked us out. The entire project had to be rewritten because we built a very buggy prototype. The company failed. I was not even sure what I learned at that point. Except maybe I needed more experience and I needed to be a better developer. That experience colored my judgment on services companies though. I never wanted to build a consulting company after that.

For all the young, newly minted graduates who are going down the entrepreneurial journey – Celebrate your first failure. Take your friends out for a lunch or drinks. Share what you learned. After that dinner / lunch forget about that failure but write down what you learned. Email it to yourself but leave it unread. Archive it. Open it after 2 years. If you dont laugh at that email you sent to yourself, I will send you a free t-shirt. Get a job at a startup where you can learn from someone else making mistakes.

If I could tell you one thing I wish I knew now that I did not know when I failed at those things, it would be: I am happier I failed. Not when I failed, but much later. I felt awful after each failure, but moved on.

Nobody cares that you failed. Except you.

Think about the last time anyone at an interview asked you if you got an F in school.

Other

A closed letter to all open letter writers

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After seeing many open letters, I have a few questions of open letter writers (including me).

1. If you did not publish it on your blog, was your intent to send your communication via a handwritten Inland letter?

2. Has anyone ever responded to the open letter? If so, has anyone ever sent a closed reply to an open letter?

3. At what point did you decide to name the title “An open letter to …”? Before or after you wrote the letter?

4. When did you come to the realization that its was harder to come up with a more catchy title?

5. If closed letter’s became a meme would you jump on that bandwagon as well?

Links.

1. one

2. two

3. three

Before the usual flame throwers barge in, yes this is my attempt at humor.

Entrepreneurship, Learning

Are incubators really necessary?

ReadwriteWeb had a relevant post about incubators.

As the infrastructure costs of “starting up” become lower, the barrier to get “funded” gets higher. Used to be you could get away with prototype. These days every investor wants traction. Traction is easier when you have help from an incubator.

You need not go to college to get a job, but there’s a correlation between higher degrees and higher pay. Similarly in 5-10 years

I can totally see a situation where 70% or greater of startups go through an incubator rather than go it alone.

It will increase the chances of getting funded and highly increase the chances of success.

I do think most companies will go through an incubator even if the founders are experienced folks in a few years. The current batch of incubators favor (either by design or natural fit) younger, fresh out of college grads.

The key part of this equation is that not all incubators are equal. If your incubator does not provide value (raising funding, getting customers or helping hire key employees), then its not worth wasting your time with them.

Angel investing

Notes from the BCG Global Wealth report 2011

The BCG report on Global wealth came out a few days ago. This report (along with another from KPMG) usually gives you an early indicator of what’s to come in the HNI and is an early indicator to the angel investor market. Some highlights:

1. # of millionaire households (worldwide) is 12.5 million (increased 12.5%). The million is invest-able income not including home.

2. Top 5 countries with millionaires – US, Japan, China, UK and Germany.

a) US 5.2 Million households

b) Japan 1.5 M

c) China 1.1 M

d) UK 570K

e) Germany 400K

India is #11 at 190K households (seems low, since the number of businesses doing more than INR 10,000,000 in annual revenue in India itself is  about 150K). Add politicians (local & state), film and sports personalities and you might easily get a 250K – 350K number.

The Ultra High Net Worth households (over $100 Million in invested assets) is about 12,000 worldwide, with the US leading at 2600+ households.

Of these the number of investors willing to fund risky technology startups is a very small 500-1000 number. Its obvious that most HNI in the non-technology space invest mostly in real estate and offshore investment vehicles. The real fun starts when the number of technology investors goes up to about 5000 (10 times the current number).

Learning, Mobile

The Internet trends report by Mary Meeker – some key insights

I enjoy Mary Meeker’s annual trends  reports, which summarize key mobile and Internet stats and puts them in context to tell a compelling story. Below is a link to the report, which makes for a great iPad reading late in the day.

KPCB Internet Trends 2012http://www.scribd.com/embeds/95259089/content?start_page=1&view_mode=list

Some key takeaways for me.

1. Even though India is ranked #2 in the Internet users added in 2012 metric, (most of whom are thanks to the mobile phone) it “feels” like a comparison of apples to oranges. Most Indian users with mobile Internet access dont use it is my gut feeling.

2. 3G is dramatically changing the landscape. 1.1B subscribers is more than critical mass.

3. Smartphones are at little less than 1B. Again an amazing stat, but considering the number of feature phones is at 5 B, there’s a lot of room for growth. Most interesting is that this might happen in the next 5 years. Imagine every person (or most everyone) having a phone that has a camera, GPS and Internet. It has the potential to *change* the news media industry dramatically. The #1 thing people do (besides email and call) on the phone is get news and information (weather, stock, sports, news) and #2 is play games – this is by # of minutes spent.

4. Mobile traffic is 10% of all Internet traffic. For some websites its close to 30% of their visits. Mobile first seems like a very smart strategy for consumer apps / sites.

5. Mobile monetization is driven (71%) by app purchases, and very little <30% by ads.

6. India Internet traffic from mobile is reaching the same number as desktop Internet traffic (April 2012). Not surprisingly CPM’s are lower on mobile than notebooks.

7. Newspaper ad revenues was surpassed by Internet in 2012 and the trend is heading towards digital at a very fast clip.

Absolutely awesome read on the before and after pictures.

Other

Zig when everyone else Zags. Some thoughts on eCommerce in India

3 Comments

I dont buy into the prevailing wisdom that eCommerce in India is dying (dead). For venture investors the eCommerce category might be “been there, done that”, but smart entrepreneurs always see opportunity in being contrarian.

There are some very interesting eCommerce companies doing good work (growing revenues, making margin and excelling in service)  in India. While the mainstream companies are spending money on advertising, acquiring customers expensively and offering deep discounts, many niche sites are building their reputations with an excessive focus on service and unique (relatively) products.

While there are 1.4 million Internet retailers in the US, there are about 2000 in India (ones that are doing more than 5 transactions daily). Most of the smaller ones that are doing a good job in the US are focused on either niche segments or markets. That I believe is a key trick that most niche eCommerce sites in India are executing the best on.

I wanted to highlight a few that I consider are doing a good job.

1. Shopo: I wanted to invest in this company before they took a seed round from a few investors. They are a good example of focus on fairly unique products and a good team executing well.

2. Allthingscustomized Another fairly crowded market, but the marketing techniques have been tweaked to make a margin on every customer order in this very competitive market segment.

3. Greendust: Looks and feels like yet another ecommerce site, but sells refurbished goods, with a good markup.

If you have an eCommerce site and are doing well, your best strategy is to keep your head down, focus on metrics and operations and ignore all the news and pundit’s opinions.

Zig, when everyone else Zags.

Other

Why is there no data only cell carrier

5 Comments

If facebook, Amazon and Barnes and Nobel are building their own tablets and “cell” phones, why is there not a cell carrier who only offers a data plan?

What about all those internet devices that are going to come on the grid in a few years. The Internet of things only need data, not voice.

No minutes for talking.

No SMS plan to send unlimited text messages.

Just a data plan.

Apparently I am not the only one who thought of this.

There’s a operator in Bangladesh who only offers a data plan. But besides that the market is wide open.

There’s a huge market potential for this I believe. Okay, maybe a large one. Or a relatively smaller one, but there’s one for sure.

Mobile

I’d buy a facebook phone today

1 Comment

What if?

1. Every time someone called me on my phone I get all their details, some specific reminders of their recent interests, likes and dislikes and what they are thinking.

2. I get their photo, recent images and where they had recently been on vacation, so my conversations are more engaging.

3. I dont have to pay for Text messaging (SMS) fees to chat with them and instead use the phone’s messaging function and only pay for data (not voice).

P.S. I am still trying to figure out why so many folks like voice calls instead of text messages or email.

4. I can only share my photos with my existing friends and family (automatically), with no need to manually upload, sync, tag etc.

5. I only get calls from pre-selected folks in my friend list (who I have authorized) or from companies I have confirmed a liking or intention to work with. Others need to send me a “message” so I can add them to my list if desired.

That’s something I’d pick over a “regular” android or iPhone.

That’s possibly the facebook mobile phone.

I believe, (if it comes), facebook wont focus on a hardware device. Just a software OS (fBOS sounds good) that is manufactured by HTC, Samsung, Nokia and others.

Entrepreneurship, Focus, Tips

The art of disciplined experimentation

6 Comments

Being a hobbyist is an awesome way to keep learning and test “theories” you have. Most cases, when I have a theory I’d like to prove or disprove, I’ve found the best way is to just try it out. That applies to a new product idea, new marketing technique or a new sales strategy that I have either a hunch for or have overheard from someone else.

The key part that I have learned from my experiments, is that you need a framework (or a model) to clearly outline what you intend to learn from it, what assumptions you made, what steps you took and what you learned from the experiment.

If you dont have a framework, you end up with a lot of experiments whose results might suit you at a later date, but you “forget” about those experiments.

The thing about experiments is you have to understand clearly why they succeeded or failed. 

If you do that and internalize the learning, it becomes a part of your decision making for the future. Experiments without learning is just wasting time – which is also a valid reason to experiment in itself, but you have to be clear about that upfront.

To be disciplined in my experimenting, I have found that doing one at a time suits me best. I found out from a expert in SEO about a much simpler way to track the keywords you want to rank for and a quicker ethical way (than the usual 2-3 months) to appear on the first search engine results page.

My immediate thought process was “that’s just not right” and “wont work all the time”. But it was right and it works, and the only way I would be convinced of it, was if I did it myself.

I also put a time frame for my experiment, to determine if its worth the result. Many of these experiments take several months, so doing nothing but that one experiment during that time, is hard. The results from that learning better make up for more than the time and effort.

Which is why I developed for myself a list of questions so I can be disciplined about my experimenting. These questions are fairly straightforward, but my lens for the questions is based on three criteria:

a) Will it be fun?

b) Will I learn something I dont already know?

c) What new things will I learn and where can I use the learning from the experiment?

The personal blog of Mukund Mohan