SECRETS OF ENTERPRISE
Passion, determination, vision, agility, team play,
fund-raising skills... What exactly defines the DNA of a booming startup?
What do some of the biggest names in the investment community look for in
startups and entrepreneurs? What key factors do successful entrepreneurs
attribute to their triumph?
Samidha Sharma, Shilpa Phadnis and Sujit John capture their thoughts and experiences.
INSIGHTS FROM INVESTORS
1 VINOD KHOSLA
CO-FOUNDED
SUN MICROSYSTEMS, NOW RUNS KHOSLA VENTURES THAT MANAGES FUNDS OF OVER $1
BILLION
We look
for startups ad dressing large, interesting markets. It's important not only
that startups succeed, but that the con succeed, but that the co sequences of
that success are large. Startup investment is based on the premise that you
the premise that you can make ten times your money, and that's not possible
if the markets are small. We look for really good entrepreneurs, those who
can be agile. Since we focus on startups doing things that have generally not
been done before, it's really important that entrepreneurs are agile; they
can change plans rapidly, come up with new ideas, zig and zag wherever the
road leads to. Some people are too traditional and they only do what they
have done before, and those don't make good. We look for really good
technologists and at technical breakthroughs.(We look at) those that cause
disruption and give the startup an advantage. I see too many people in the
investment world chase what is successful. If Amazon is successful, you will
have a lot of people trying to chase ecommerce. I found not enough people
were doing startups for the bottom 3 billion people on the planet. I
understand why people don't do it; it's because the bottom 3 billion people
don't have much money.But I thought that was an opportunity because there is
not much competition there, and it also makes me feel better. It's a personal
indulgence. When you look at the bottom 3 billion people, almost everything
is a problem.
2 SAM ALTMAN
PRESIDENT,
COMBINATOR, ONE OF THE TOP STARTUP ACCELERATORS IN THE US
Determination:
That's the main trait our top founders have in common. Airbnb launched
something like five times before taking off, and at one point, the founders
had maxed out at least our credit cards and were selling collectible cereal
boxes to stay afloat. Adora Cheung, founder of Homejoy , pivoted through 13
deas before hitting the right one; she even slept in her car for a while.
Just last year Homejoy raised over $38 million. Their key is to be a
cockroach to keep going no matter what. Keep your burn low, talk to users,
and just keep building.Intelligence Leadership
Clarity
of vision Domain expertise I remember standing in the kitchen of Paul Graham
(co founder of Y Combinator); I wrote a cheque with no name in the “to“ field
to Patrick Collison because his company didn't have a name yet. It was first
called “devfinance“, and is now called Stripe. Patrick said something like
“I'm going to transform financial services, but I'm not sure exactly how
yet“. Earlier this month, Stripe announced a $70 million financing round at a
$3.5 billion valuation. I gave the cheque to Patrick because he fit all five
of the above categories. Stripe provides a way for individuals and businesses
to accept payments over the internet, started before it was cool for very
young founders to take on very established industries, and the prevailing
thought from people I asked was that it was never going to work because
Patrick knew nothing about the industry . But he really understood the pain
developers face when trying to take payments.
3 VANI KOLA
MD,
KALAARI CAPITAL, WHOSE PORTFOLIO COMPANIES INCLUDED SNAPDEAL, MYNTRA
(ACQUIRED BY FLIPKART), URBAN LADDER, ZIVAME
Listening:
Of all the skills, listening might be the most im portant. You need sharp
antenna to manoeuvre fast-changing markets. Every business continues to
pivot. Data is not a big secret. How you synthesize data drives the decision.
Listening doesn't mean you do what someone tells you to. It means that you
are a good collector of data from many sources and you use this to arrive at
a decision quickly.It's like solving a jigsaw puzzle. Commitment: It is a
long road. How likely are you to stick with ups and downs! L eadership: Can
you create and inspire a team that wants to follow you and accept your
lead.Integrity: Cutting corners cannot offer a long-term value creation.
When
Kunal and Rohit (founders of Snapdeal) reached out to me, it was one of many
such emails. Usually emails offer no reason why I should make time for them.
But , such their email had insight. It made me think about the opportunity in
India to help small businesses create and manage demand. So I was
enthusiastic about meeting them. When I meet, I want to understand the value
proposition and insights fast.How the entrepreneurs answer and keep up with
the pace matters to pursuing further conversations. Their knowledge,
confidence, attention to detail, and vision are all on test for rapid fire
conversation. In this case, I thought they were fantastic. In 2009, while I
saw close to 100 business plans, Snapdeal was the only investment I made.
4 NAREN GUPTA
SILICON VALLEY-BASED CO-FOUNDER OF VENTURE
CAPITAL FIRM NEXUS VENTURE PARTNERS, WHOSE PORTFOLIO COMPANIES INCLUDED OLX
(ACQUIRED BY NASPERS), NETMAGIC (ACQUIRED BY NTT), GLUSTER (ACQUIRED BY RED
HAT)
Exceptional
entrepreneurs are great salesmen, without appearing to be salesmen. Does a
hoodie-wearing Harvard drop-out, a computer science PhD working on
probabilistic algorithms, or a nerdy guy with thick glasses evoke the picture
of a classical salesman? These entrepreneurs reframe their pitch on the fly
depending on the audience. If you reminisce about the elevator pitch, you are
surely a dinosaur. Exceptional entrepreneurs have a sense of urgency and
expect everyone around them to have a sense of urgency . They respond and
decide expeditiously, don't indulge in long rambling meetings, and even hurry
to the bathroom.E xceptional entrepreneurs focus on serving an unmet or
emerging need, not on technology proc ess. Note the use of the singular
“need“. When an entrepreneur pitches how the solution will serve 5 or 10
needs, we tend to run away .W e met Anand Babu Periasamy (founder of cloud
storage company Gluster) about six years ago. He was raised by a widowed
mother, went to a small engineering school and fell in love with open source
before it was clear that open source could be the basis of solid business
models. At our first meeting he was able to explain in 15 minutes why storage
would become software-driven and why open source was the right model
without the use of PowerPoint. He sounded like a kid in a candy store. After
the first meeting we agreed to be investors if everything checked out. Three
years later the company was acquired by Red Hat for over $100 million.
5 SAMEER GANDHI
PARTNER
AT ACCEL PARTNERS, WHOSE PORTFOLIO COMPANIES INCLUDE FACEBOOK, FLIPKART,
DROPBOX AND SPOTIFY
I like
to find a real personal connection between the entrepreneur and the need
being addressed or problem being solved by the startup. It is dif ficult to
find a substitute for ficult to find a substitute for the authenticity of
real world experiences which drive an entrepreneur to start a business to
first solve a problem for themselves, but then fulfills a broader need in the
market.E ntrepreneurs must have something to accomplish or prove beyond just
building a successful company . It's what excited us early on when we met
Sachin and Binny Bansal (of Flipkart) -their unwavering commitment to
bringing the best possible service, price, and selection to all Indians.E
ntrepreneurs need to have conviction, especially in the face of obstacles,
naysayers and doubters.W e have seen great out comes when entrepreneurs are
good at breaking large market problems into smaller experiments and iterate
fast. Mukesh Bansal was able to manoeuvre Myntra through two pivots and make
it India's largest online apparel company .
G reg
Duffy attempted to set up an IP camera for home security and surveillance as
a favour for his father. As an engineer, he thought it would be easy to get
it working. It turns out that none of the existing products was even remote
ly easy to use for Greg, let alone the average person.
Out of
this frustrating ex perience was born Drop cam, which in four short years was
acquired by GoogleNest for over a half billion dollars.
LESSONS FROM ENTREPRENEURS
1 SACHIN BANSAL
CO-FOUNDER
& CEO, FLIPKART, INDIA'S BIGGEST E-COMMERCE COMPANY; FOUNDED IN 2007,
VALUED NOW AT OVER $11 BILLION
Sharpen
your focus. Set tangible, but achievable, milestones. Don't do too many
things at the same time. Carve out your primary goal and then work
single-mindedly towards its success. Spreading your resources too thin will
only result in half-hearted results across the board. When we started
Flipkart, we spent more than two years perfecting the experience in the books
category before moving to consumer electronics.F ail fast. Resources and time
are at a premium, so entrepreneurs must focus on what gets them the best
returns on investment and let go of everything else. We did that with Flyte
(the digital music store).G et the right investors. If you get investors,
make sure they understand your vision and give you the freedom to chalk out
your own path.F ind the right team. Our bar for talent is extremely high. We
learnt early on that it's better not to hire at all than to settle for people
who do not fit into your vision.
W hen we
launched the consumer electronics category and were looking for ways to
increase sales, we met some of our older customers to understand their
sentiment. One vocal cus tomer said even if an electronics product was 20%
cheaper, he wouldn't buy it online since we didn't provide any post-sales
support. That was an eye-opener. And once we dug deeper, we realized there
were many who felt the same way.That's when we came up with the 30-day
replacement policy. It helped us realize that our experience in one category
could never be the blueprint for another.
2 DEEP KALRA
FOUNDER
& CEO, MAKEMYTRIP, TRAVEL BOOKING PORTAL WITH MARKET CAP OF OVER $1
BILLION
Choose a
business you love. You must have passion and belief in what you are doing. Do
not get involved with something just for the sake of jumping onto the
bandwagon. When I decided to venture out on my own, the choices finally
narrowed down to online stock-broking and online travel. I had been an
investment banker but had a real passion for travel. So I knew where my heart
was, and that made all the difference while keeping my faith during early
struggles and hardships.
F ocus
on customer needs. Research, research, research. Many a great idea has not
seen the success it deserved because it was ahead of its time.
P
atience is a virtue...don't give up at the first downturn or the second or
the third...
Hire
better than yourself. Get the team right it is the single most important
determinant for success. Everything else can and will change! Share the
wealth with your employees.
astly,
one should be a karmayogi and not focus too much
Lastly,
one should be a karmayogi and not focus too much on exit ... rather, enjoy
the journey. Following the dot-com meltdown in 2000, our investor eVentures
withdrew from all their investments in the country , including MakeMyTrip.
Saddled with a young business still in the red, the choice was to either wind
down the company and go back to the corporate world or somehow muster further
investment behind a potentially viable business. There was virtually no
appetite for a B2C internet play .I decided to back my instinct and invested
all my personal savings in the business. I right-sized the business and
focused on turning profitable at the soonest. We turned profitable in 2003.
3 V S S MANI
FOUNDER
& CEO, JUSTDIAL, LOCAL SEARCH VENTURE WITH MARKET CAP OF OVER $1.7
BILLION
Innovative
disruption is key . Change is integral to evolution and will always be a
perpetual phenomenon; the key to survival and success is through disruption.
The rule is clear disrupt or be disrupted. At Justdial, we have a track
record of constantly disrupting other business models and, in the same
breath, disrupting our own model several times in order to be relevant and
ahead of the curve for our users. I think successful companies stick with
what they are really good at but also constantly look for points of
inflection. And inflection points are those when you notice that technol ogy
or consumer habits are changing.Focus on your product. We understood our
users expected fast, accurate and relevant results and we concentrated all
our energies therein.Apply insights. Observe the world around and you are
bound to get many insightful cues.Manage money wisely . That's the only way
to ensure cash keeps flowing and bills get paid. My constant advice to a
budding entrepreneur: be frugal.
We have
constantly recognized and capitalized on market transitions before they
happen and adapted the business model. We realized that with constant
connectivity and major behavioural shifts from voice to computers to laptops
and now to smartphones, users would soon want more out of a search engine. So
we made search more relevant by making it more accessible and actionable. Now
users can order food, book a doctor's appointment, get tickets, discover the
best prices and shop online on our portal.
4 SANJEEV BIKHCHANDANI
FOUNDER
& EXECUTIVE VICE CHAIRMAN, INFO EDGE, WHICH OWNS JOB PORTAL NAUKRI.COM,
MARRIAGE PORTAL JEEVANSAATHI.COM, AND PROPERTY PORTAL 99ACRES.COM. IT HAS A
MARKET CAP OF $1.6 BILLION
Find
unsolved problems. Companies succeed because they solve and understand the
unsolved problem and come up with solutions that are very different from what
others do. Put yourself in the customer's position; perhaps you would have
experienced a pain point yourself. You may not fully understand the
difficulty unless you experience it yourself.D evelop deep customer insights.
Consumer insights tell you a lot about the areas you need to focus on when
you don't know what that unsolved problem is. you don't know what that
unsolved problem is.
Be an
early mover in the space you want to be in. Your chance of success never goes
down.
P ick
the right team. The team should be as moti vated and passionate as the
founder. Ensure the size of the opportunity is huge. In our case, we knew the
market was big.T here were no venture capitalists in India when we started
our business. Those were the days of dial-up internet access with poor
connectivity but we could make do with what we had.In those days, we had to
manually upload job listings ourselves and I had a back-end team that was
engaged in manual operations of uploading a few hundred jobs. Six months
after I started, I got my first customer -a mid-sized auto components company
. They wanted to advertise with us for six job positions on our site. I got
paid Rs 350 for every job listing and got my first payment of Rs 2,100. I was
elated that I had a revenue model.
5 DEEPINDER GOYAL
FOUNDER
& CEO, ZOMATO, RESTAURANT DISCOVERY PLATFORM THAT IS NOW PRESENT ACROSS
22 COUNTRIES AND COVERS 1 MILLION RESTAURANTS
Focus on
what you've set out to do. Make sure it's something that you'll be happy
thinking about many years down the line. Fundamentally , building a startup
takes time.It has to be something you are really passionate about and are
committed to day in, day out. Patience is absolutely paramount.C halk off
what you don't want to do. It's a good thing to do this when you're young so
that you have more years to do what you actually want to.F ollow your
intuition, take risks. If you make easy and safe choices, very little worth
remembering will ever happen.U nderstand what people want. What do they see
in your technological innovation and the fundamental problem you are trying
to solve?
G et lucky. Even with a great idea, an amazing team and solid execution, a little bit of luck comes in handy .
L ate
last year, we were in the process of launching in three new markets, and also
raising a large round of fund ing. Meanwhile, I was in the hospital with my
wife who was expecting our first child. But things needed to keep mov things
needed to keep mov ing, so I had colleagues come to the hospital with the
funding papers. Half an hour after our beauti ful daughter was born, I
stepped out, switched on my phone and got back to completing the funding
formalities. In the span of one morning, I became a father and Zomato raised
$37 million. All of this means having to maintain a solid work-life balance.
While I'm extremely passionate about what I do, I also look forward to coming
home and putting my baby girl to bed every night.
TOI
16JAN15
|
Sunday, January 18, 2015
ENTREPRENEUR / INVESTOR SPECIAL............................... SECRETS OF ENTERPRISE
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