Lessons in
Starting Up
In recent months, the Indian startup industry
has, for the most part, been riveted by the spectacle of the chief executive
officer of one of its most watched startups -Housing.com's Rahul Yadav -stumble
from one controversy to another. The saga which ended with the ouster of Yadav
from his post holds several lessons for young entrepreneurs said Ravi Gururaj,
chairman of Nasscom Product Council, and cofounder of the India chapter of
Harvard Business School Alumni Angels Association.
FIVE TAKEAWAYS
Founder Independence vs Investor Control:
Founders who want 100% control should plan to bootstrap themselves to
success.The incoming investor will seek a controlling interest in the decision
making, the management team, exit decision and timeline. Those unwilling to
live with this should think twice before they take funds from external
investors.
Managing Your Board:
Managing Your Board: The founder must learn to
“manage his board“ effectively -to provide full visibility at all times to any
substantive decisions, data and events.Startups live in a VUCA (volatility,
uncertainty, complexity and ambiguity) world building consensus among the
stakeholders is a critical responsibility of the founder.They need to learn to
orchestrate a board meeting effectively, take time to pre-brief all members to
unearth issues ahead of discussions and to avoid surprises at board meetings.
Disagree but do not turn disagreeable
Great founders are strong willed, they rarely
capitulate on their core vision, and they often seek out constructive debate
and disagreement to help refine their thinking.
All of that can be achieved without turning
disagreeable and airing dirty laundry out in public.
Avoid Extreme Founder Dilution:
This occurs due to either having too many
founders injected into a poor structured initial cap table or by giving away
too much equity too early by raising too much money too fast from too many
investors. Massive dilution of a founder only encourages irresponsible
behaviour as they continue to sink to the point of irrelevance within their cap
table.
Talented Engineer does not equate to Effective
Leader:
Engineering founders are often charismatic
personalities. But that does not guarantee they will turn into effective
leaders of larger scaled out ventures. Founder should introspect if they truly
want to be the general managers or if they are best suited to being the
visionary on the larger team. Founders should always act with great business
chutzpah but while retaining personal humility.
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RAVI GURURAJ Chairman, Nasscom
Product Council
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ET2JUL15
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