I love the new Facebook Ticker on the right side. I think this is more a take on twitter real time feed and a response to G+

Since I got a lot of comments on the How to start and grow your eCommerce side “biijness”, I thought I’d take some time to outline the costs of starting a small eCommerce business in India.

Say you are a stay-at-home-dad who wants to sell your own neat apparel designs online, or a creative mom who can make some excellent handicrafts at home. Now you are interested in setting up a storefront on the web so you can “get in on this eCommerce thing” or “make money on the side” or “make some extra revenue when you sleep”. Here’s what you need to get going.

This first appeared in Pluggd.in on Aug 23rd.

A friend called me the other day to tell me about his new side project (Biijness). He was looking at an untapped space in the market and wanted to start an eCommerce venture. He knows and understands technology but has not been developing for years. His plan was to get a committed individual who he could fund who is more of a “domain expert” and knows the supply chain elements of that space.

This got us into a discussion about what a typical consumer eCommerce company’s organization chart looks like and when you hire out the team. Most companies tend to hire based on “milestones” or by “revenue metrics”. I thought I’d come up with some key milestones for an eCommerce company and break them into the team and type of people needed. They typical company is not so simple (many make a big foray into logistics; others focus on building warehouses and many others on partnering with offline vendors for demand generation. The milestones below are a case study (textbook style) example:

1. Get eCommerce site up to take transactions (Typically 3-6 months since start)
1. Get website ready (either build from scratch or use a hosted shopping cart)
2. Setup payment gateway
3. Setup a shipping partner
4. Upload and manage initial list of products
5. Setup and manage initial supplier list for products to be drop shipped (or ship from own simple warehouse)

Team needed: Business (customer service, supply chain, operations, legal, etc) + Engineering (1-2 folks should suffice)

2. Get to 100 transactions / day & unit profitability (Typically 9 months to 1.5 years since start)
1. Optimize website for SEO, put an affiliate marketing program, pay for SEM, social media
2. Expand product list and supplier list
3. Setup small warehouse (if customization is required) and manage inventory costs

Team added: Digital marketing, Procurement manager, Supply Chain and Logistics Managers and Customer Service, Increase engineering (User experience, Scalability experts, etc.)

3. Get to 500 transactions / day & scale (Typically 2-4 years from start)
1. Include brand marketing efforts including TV, print and billboard advertising
2. Expand into adjacent vertical products spaces, add new suppliers
3. Keep refining website to include up sell, cross sell and analytics efforts

Team added: Head of brand marketing, Category manager (Merchandise Manager) for each category, Catalog manager (write product descriptions, take product photos, etc.)

4. Show gross profitability and scale beyond 1000 transactions
1. Manage inventory and costs and ensure optimization of logistics and warehousing
2. Recruit and manage team for growth
3. Look for non-linear sources of traffic to the website, possibly add corporate sales

Team added: Finance & HR, Complete Marketing hires, Business Development

So after starting with a small team of do-it-all experts, you should at 1000 TX/day have about 200-300 people.

This post first appeared at Track.in on Aug 8th.

I had the opportunity to survey (in person, one-on-one) about 60+ entrepreneurs in India, who were founders and chief executives at leading eCommerce companies at the BVP cocktails & drinks last week at Delhi. I asked them to identify who they thought were the leaders in product (technology) innovation. Not surprisingly, Amazon, Google and Apple were top of mind. Most opinion polls would point to the same “winners”, in no particular order. Each of these companies, I believe, innovates very differently though. Their approach, the kind of people that need to be hired and the systems and processes to support the innovation to be brought to market are vastly different. The cultures at these innovation monsters are now widely known, but in parts. I formulated a broad conceptual model of their fundamental different approaches towards innovation and thought I’d outline that to spark debate.

I believe that to successfully innovate you need 3 (I know this is obvious, but bear with me) qualities: Vision, Strategy and Execution. The Vision tells you where to go, Strategy; how to get there, and Execution takes you there. The question is whether these qualities are in one individual or you need 3 different people performing these functions

Before this misleads you, let me clarify that this is not a Google v/s Apple v/s Amazon showdown. I’m not going to announce a winner at the end of this. Apple, Amazon and Google have established the 3 broad, modern approaches to product innovation:

Structured (Apple)

At Apple, innovation looks like a structured and methodical process. It starts top-down. Their model is repeated in their journey from iPod to the iPhone to the iPad. They have a single (arguable, but not defendable) visionary, few strategists and several focused people who execute. The kinds of people that Apple hires consistently are those that execute well. Only one or two of the people (visionaries, strategists) know all aspects of the thrilling project. With this kind of model, communication tends to be controlled. The important part of their story is that they have not strayed too far away from their core markets of consumer electronics & computer systems.

Unstructured (Amazon)

At Amazon I believe, innovation starts with a few individuals beyond the C suite. This type of company begins by taking look at large green-field areas where disruption is possible and has multiple visionaries in each field. One could argue that there’s a single visionary (Jeff Bezos), but I counter that they have many more visionaries than Apple does based on the sheer number of new areas they pursue for innovation. The responsibility of vision is more shared among multiple leaders than the structured approach at Apple. There’s more breadth in their market approach and they tend to look at disruptions with the approach to take systematic experiments. Typically companies who like the unstructured approach towards innovation will hire many visionaries and strategists in each field and empower them to pursue their vision backed by good (but not extraordinary) execution focused professionals.

Open (Google)

At Google, the approach is much more open (or chaotic). They have a plethora of projects starting every single day, and they’re all out in the open. This is why when they hire, Google looks for natural innovators – people who can be visionaries, strategists and executors all in one. This model is the toughest to hire for in any company. Getting these “rock stars” is not only difficult, it’s impossible to keep them working towards the vision within a larger framework whose vision is not necessarily aligned with the overall objective of that company. This approach produces the most number of experiments, and the sheer quantity of innovation is tremendous, hence the number of failures is also significant.

Which approach is best suited for technology startups?

Most startups (90%) tend to have both their visionary and strategic thinker be the same and focus on hiring people that execute brilliantly. Hence, you’ll find the requests for “rock star” programmers, or “kickass” marketing folks. Since most startups tend to have a single guiding vision at the beginning of their venture, I believe the Apple approach is best suited at the early stages of the startup, followed by a maturity towards either the Google or the Amazon model eventually if they wish to expand to multiple markets.

This post first appeared at Todd Defren’s blog PR Squared on Aug 3rd.

I was at a wonderful session with over 60 high energy entrepreneurs at Goa over the weekend. About 20-30 of them had recently launched their product or web service and were actively seeking early adopters. The discussions were about how to identify, interact with, engage and nurture early adopters.

A big part of the challenge, I believe is that most entrepreneurs are not clear and specific in the plan to target early adopters. They simply believe a blog post on TechCrunch, a launch at a startup event or a press article will get them all the initial customers they need.

Instead what’s needed is a disciplined approach towards the 3 steps in getting early adopters.

1)      Profiling and Identification: If you are a B2B startup, there are 4 important characteristics to profile and identify your early adopters. This step is usually termed as “persona” creation.

1. Location (Early adopters in India tend to be from Delhi, Mumbai and Bangalore, or from the West coast (Northern California) and East coast (New York) in the USA.
2. Title of buyer: Revenue producing and customer facing titles at companies tend to be early adopters since they would like any edge over the competition to help them gain / retain customers. So, target a VP of Sales, Marketing, etc. instead of VP of HR or Admin / Facilities who are typically cost centers.
3. Vertical industry: Technology, telecom and finance tend to be early adopters, whereas Government and Utilities tend to be laggards.
4. Size of company: Mid-sized companies and a few large companies (in the above stated verticals) tend adopt new innovations faster compared to smaller companies.

For BuzzGain, we had put together a list of over 1023 people who fit that profile. We targeted mid-sized Public Relations firms in New York, Silicon Valley and focused on account executives who needed to spend more time with clients instead of building custom reports. We got a PR companies list from ODweyer to kick things off and spent about 12 work days researching the company’s websites, their customer list, their twitter handles and any information we could get about them.

If you are however running a B2C startup, there are 7 different characteristics to consider including age (younger people generally tend to be early adopters), location, gender, their monthly income among others.

2)      Interaction and Introduction:  The goal of this step is to make an initial connect with your early adopter so they are made “aware of your presence”. Usually one of three mechanisms work to get their attention:

1. Engagement online: Following them and posting thoughtful (real human) comments (not spam or robot messages) on twitter or their blog.
2. Events: Instead of presenting at a booth when your startup is not ready, demo your mockup or early version to them at events (as an attendee) to get feedback.
3. Introductions from other early adopters. Early adopters know each other well and tend to be connected to each other well. They are usually open to sharing new, innovative ideas with other early adopters.

At BuzzGain, based on the identified list of people, it was relatively easy to find events that they would attend. Most of the interaction I did initially was via twitter, where I would follow them, read their background tweets and comment on their blogs. This process was done manually and not outsourced, so I could understand them better.

It usually took about 2-3 weeks to build a reasonable rapport so we could then offer to show them a 15 min demo to get their feedback. Our response rate was about 37%. For every successful connection with an early adopter, we would request them to connect us to 2 others whose input we would benefit from.

3)      Nurturing and Engagement: A big part of what drives early adopters is the ability to offer feedback and influence product direction. They also want to be the “coolest and hippest” among their peers. The goal of this step is to segment early adopters into 3 categories and focus on making your champions successful with your product.

1. Champions: They like your product, think it solves a problem and are willing to provide feedback on what they would like, to make it better. Your goal should be to make these users the most happy with your service, be very responsive and introduce features they desire quickly. You can find them by looking at the # of times they return to use your service after the launch day.
2. Bangwaggoners: They typically join since some other early adopter has joined who mentioned the product. They will come if the product is free, test it for an initial period, then will usually never show up until it is “more mainstream” or “many bugs have been worked out”.
3. Naysayers: They have something negative to say about every new product, so while its best to ignore them, be thoughtful and respond to their feedback, but don’t focus on them a lot. They will highlight many features that you currently don’t have or plan to have. They are most likely to compare it to other solutions and in a negative light.

At BuzzGain, we had the 11% of customers, who were “champions” and they converted to being paying customers in 2 months, and about 7% Naysayers. The rest we tackled after the beta period, which lasted 3 months. We also provided extra features for the champions and profiled them on our website (we put their photo, published their testimonial and also did a case study on them). This early adopter customers approach BuzzGain, raised our revenue by 415% Y-o-Y, ultimately serving over 275 customers and selling to Meltwater in Jan 2010.

Hello my friend (yes, we are in this together),

Since you took some time to think about what makes an ideal investor I thought I’d do the same to outline what makes an ideal entrepreneur. I think we both have similar agendas – that is to see great companies get built from India.

Here’s some background about me:

You may think I was born with a silver spoon in my mouth, but really, a decade ago, most of us were entrepreneurs, much like you. While I can’t say I understand your position exactly, I have been in your shoes some time back. Just so you are aware, in my business, we raise money from other investors (in our business they call them Limited Partners) to who I have to provide returns to. Since venture capital is a risky investment, they expect far better returns than real estate or the stock market. Enough about me, let’s talk about you:

Here’s what I would like in an ideal entrepreneur:

1. Please spend time to get to know me before you need my money. There’s more to me than just money. If all your business needs is just money to make it successful, you can get it from multiple places. VC business is very people driven, and it’s hard to write a check to people we don’t know too well. Ideally 6 months to a year before you need the money, you should get introduced via a friend or colleague to me and we should chat about your background, mine, and our views on the market. There are many topics that interest me and the more we know each other, the better we appreciate our perspectives.
2. Please take time to do your homework. Most of us have an area of focus, a size of investment and stage of company we prefer. If you don’t fit into those criteria, it will waste your time and ours to pursue the opportunity. Our website is one source but speaking to other entrepreneurs who we have funded is another great option.
3. Realize I have investors who I have to answer to and who have demanding ROI requirements. Please acknowledge that not all companies are “fundable” by VC money. Most funds we raise have a 5, 7 or 10 year horizon of investment (time for us to invest the fund raised and possibly return investments). Unless your company can grow dramatically, scale fast and get an exit (preferably) in that time horizon, it will be very difficult for us to invest. In India typically we look for companies to get to $100 to $150 Million in 5-7 years. While these numbers vary dramatically by segment and are not absolute, it’s a ballpark for you to consider.
4. Please understand that saying no does not mean I “don’t get it” or that “I don’t have the risk appetite”. There are several factors that go into my decision making including management team, ability to execute, entry barriers for other companies, unique competitive advantage, valuations, market growth, etc. Some investments that may make sense for another firm may not make sense for us.
5. Please take due diligence seriously. VC’s will always know less about the market and your space than you. So, it’s in your best interest to educate us. After our initial meeting if I do introduce you to a few people to understand the space, your idea, etc. I am doing it with the intent to help you (and me) understand the space better. If you don’t follow up with them or don’t follow up with me, I get the impression that you are not really serious about working with us.

I think there’s a great growth opportunity for both of us to do business together, so let’s keep talking.

Hello my friend (can I call you a friend?),

I meet you at several conferences, events and other meetings, where we have informal discussions around this topic. I thought I’d gather my thoughts and share some ideas I have on how we can work well together. Mostly though this is about what my ideal investor would be like.

Here’s some background about me:

I am a first-time entrepreneur. I don’t come from a “business family”. Neither do I have a lot of friends and family who are rich. I am only the 1 of about 80 students that finished from my college who wanted to be an entrepreneur. The rest of them got a great job at a large company. So frankly I am the “odd one”. I have ideas, ambition and lots of chutzpah, but besides that I have some skills and an idea. I know you believe that ideas don’t matter, but right now, that and my skills are all I have got.

Here’s my request:

1. Please be approachable.  I know you are a very busy person. I can imagine you have 100’s of people wanting to talk to you. When you come to an event where you are speaker, please do take some time to “surf the crowd” and introduce yourself. Please don’t rush right-away to your meeting or have the same discussions with the 3-4 members of the panel you know already. I know you’d like us to build a relationship with you, so please do give us an opportunity to do so.
2. Please be responsive. I understand that you get many emails daily.  Would it be possible to use your downtime (while you are waiting for your coffee or if you are standing in line at the airport security checkpoint) to connect me to someone who can help? If my area of work is not in your investment profile or we are too early stage, can you please point me to someone who would be? It is also okay for you to tell me that this is not something you will invest in, and here are people (angel investors perhaps) who you know that might.
3. Please be consistent: I like doing my homework, but your website tells me something entirely different from what you actually do. E.g. I went to this VC website that tells me they will consider “pre-revenue” companies but at my first meeting, when I share that I have no paying customers, you tell me to come back when I have revenues. Please be respectful of my time as much as I am of your time. If I don’t fit your criteria, fair enough, but don’t put it on your website and then change your mind.
4. Please share your thoughts on the trends that you see in the industry & from companies that are pitching to you. I understand confidentiality does not permit you to share all the details, but I’d love to hear major trends you are seeing that you like or don’t like. Since you meet hundreds of entrepreneurs monthly, I’d like to get a snapshot of what you are hearing and seeing. It helps me formulate ideas. Might I suggest a monthly newsletter that I can subscribe to?
5. Please be open to taking one big risk (each year if you can). Product companies are hard and risky. We as entrepreneurs also want to build the first big product company from India. You realize though that product companies take more time and more effort than services companies. I understand you cannot fund all product companies, but can you please look at companies that require more time and money that will go into research and development for a few years, without significant revenues.

Please feel free to let me know what the ideal entrepreneur would be for you.

It was about 65 F, when we walked into the large auditorium at the west end of the college campus. Since it was late autumn, the leaves were turning yellow and evening was turning dark earlier. You could see the street lights from the top end of the glass enclosures of the room. It was the start of our winter quarter.

He shuffled slightly first, then picked up his pace as he made his way to the lectern. It was not the fleece that he wore over his pale yellow shirt that struck me as odd, it was more his shoes, or lack of them. They seem out-of-place in the nippy air, I thought.

As Dr. Lomanoco made his way to the podium, it was clear that he intended to waste little time introducing either himself or the course to 29 eager computer science graduates. After distributing the course schedule, his office hours (times and days) and grading system, he proceeded to outline the homework for next week. What, I thought, homework? Before we were even taught anything? What kind of a system is that?

It was the “learn on your own” system aka “figure it out yourself”.

Having finished my undergrad from India, I thought it would be customary for specific topics to be covered in the class by the professor, and then we’d proceed to review the same at home, do a homework piece, and finally prepare for exams. Rinse. Lather. Repeat.

Nope. That was not the case either for us at UMBC at the Master’s, or for the undergrads in the Bachelor of Sciences, program.

You were to read and learn on your own. If you had questions, you’d either ask them during the professors “office hours” or ask the teaching assistant during their sessions.

The thing that it teaches is the “way to learn” on your own. By searching for it on your own, or researching with your study group. By digging for more information either online or hitting the books at the library.

So when I joined Cisco after graduating it was second nature to research practically everything yourself to get things done. Sometimes we’d RTFM. Most times we’d try, fail and learn. I never went to a “Perl aprogramming course”, neither did I attend an Apache configuration class. We just tried stuff, broke stuff, learned stuff.

That’s not what I find with the folks being hired from many good colleges and schools though in India. It is mandatory to go through 3-6 months of training. What? I thought they did just that for the last 4 years. I had 5 candidates who we interviewed a year ago who wanted to know what our startups “training program for PHP and Java” were.  Code and learn was my answer. They looked at me with disbelief. One young lady’s parents (who came for the interview to ensure we are a legitimate company) asked us how we can expect fresh graduates to do any work without training them. If we wanted to train graduates, we’d be running a college, was my reply. Wrong answer. She did not join us.

I am hoping there are colleges that are trying to teach students how to learn, where to find stuff to learn and how to research topics. I would love to think this style of learning is limited to engineering programs. No. My Chartered Accountant spends 2-3 hours daily with her intern teaching him some of the most basic things in accounting. He’s a commerce graduate from a very good college.

There has to be a better approach than the hand-holding we do in most undergraduate programs. Even if we undertake a single class on teaching folks “how to learn” we’d be doing an enormous service to them.  So, this is an appeal to college professors in any college. Please teach your students “how to learn”.

So how do people “learn to learn”?

1. By example: I believe this is the number 1 way to learn anything. Looking at lots of examples. Sample code. Example blueprints. Creating balance sheets of real companies without looking at their details.
2. By trying: Sharad Sharma calls is “being a hobbyist”. Try stuff. Break stuff. That’s when you learn stuff.
3. By teaching: If you learn something, I would encourage you to share it with your team in a small lunch-and-learn session. It is not for them to learn. It is for you to reinforce your learning.

How did you figure out how to learn?

P.S. As you can see from the first paragraph, I was hoping I’d be a bestselling novelist. I’m glad I took up working with technology instead.

Over the last week, I had an opportunity to meet with over 300 entrepreneurs at the Microsoft BizSpark event and the VCCircle investment event in Bangalore. There’s one thing that strikes me as uniquely ‘Indian.’ It’s the equivalent to the American dream of a house, two kids and ‘writing a bestseller.’

Every person in India I meet (entrepreneur or not) has something ‘going on the side.’ It is their ‘side biijness’ (business). My friend Alok Mittal of Canaan Partners calls this the ‘neighbour’s wife’ syndrome.

From a public relations professional who started an adventure tours company (now run by his wife) to a peon at a large public sector bank, who has a used mobile phone reselling store, the side business crosses all echelons of society. I met a software entrepreneur who has a passion for dance and while the regular day job at a start-up pays the bills, the side business of managing and hosting ‘Arangetram’ is where she’s getting the ‘good money.’

You notice this at multiple events, meet-ups and parties where, after the cursory 2-3 minutes of small talk, the person does get comfortable with you. Usually, when they hear that I invest in small start-ups, they pull out a ‘second business card’ of their side business and that’s when the juices get flowing.

There are three characteristics that I have noticed about all side businesses that are unique.
1. They operate mostly in cash. No credit cards, no cheques, no bank transfers, no IOU. Just plain cash. I presume that’s to save or avoid taxes, but I may be biased in my view.

2. They are easily run by family. Rarely by friends. The entrepreneur would start this business, get some minimal momentum and then turn it either to his/her sibling (mostly younger) or spouse/parents.

3. If the side business becomes fairly large (speaking in relative scale, when it’s larger than their paycheques from their full-time gigs), it spawns off a new side business. It’s never a full-time business; now they have ‘a group of side businesses.’
So what is it about Indians and side-businesses? I presume there are many other nationalities which have the same connection, but I have noticed it primarily in India.

Is it that we are very entrepreneurial? Is it that there are so many opportunities during this ‘golden period’ that are too good to pass up? Is it that the full-time gig does not pay enough? Is it that the side business is the passion which the full-time job will never be? Is it that the side business is a risk-mitigated way to dip your toe into a new area of work? Or is it that we just can do multiple things at the same time?

I am also curious as to what the thought process is for most of these entrepreneurs who start these businesses in terms of growth or funding. I suspect that most of them just want to generate cash on the side for multiple reasons.

This brings me to another topic for a different post on a later day.

What they do with the cash generated from these side businesses: Invest in real estate to generate a yield income.

I typically try to learn something from everyone I know reasonably well. That’s something I picked up from my mom. She’d always ask me to find something good about the person and try to emulate that goodness.