What every entrepreneur MUST know

After attending the summit for young entrepreneurs at IILM, Gurgaon, last week, I caught up with venture capitalist Alok Mittal, a chairperson at the event. Alok works as partner and executive director with Cannan Partners, which invests in early stage technology companies.

Alok was co-founder of JobsAhead.com and was instrumental in the acquisition of JobsAhead by Monster.com, the global leader in online recruitment. He holds a Bachelor’s degree in Computer Science and Engineering from the Indian Institute of Technology, Delhi, and a Master’s degree in Computer Science from the University of California, Berkeley.

After covering lessons shared among entrepreneurs at the summit in my earlier article, I bring you Alok’s views on entrepreneurship and his advice to young entrepreneurs.

How do you know when you are experienced enough to start your own company? Are there any benchmarks or is it enough to go with your gut feeling and overall confidence?

I think the origin of many large businesses is the ability to spot gaps in the solutions that are currently in the market. You must focus on the ability to build strong teams and your ability to understand the market well. Given those two things, today is as good as any other time to start a business for most entrepreneurs.

What, according to you, are the traits most successful entrepreneurs have in common?

Successful entrepreneurs have the ability to take feedback from the market. They also have a high degree of market understanding.

A good entrepreneur has conviction in his/ her plans and is open to changing strategies based on the market dynamics. He/she also has the ability to build well rounded teams.

Entrepreneurship: What it takes

What are some of the common mistakes that you have seen young Indian entrepreneurs make?

I think India has a weaker ecosystem for entrepreneurs right now. One of the gaps is the lack of advisory bandwidth. Sometimes, entrepreneurs are internally focused and do not keep a close tab on the customers’ need. Entrepreneurs tend to focus more on their solutions than the customer’s problems. Sometimes, they lack a broader perspective of the market. That’s where we, as venture capitalists, add value, but we would rather that start-up teams have that kind of ability and foresight within the team.

What would you advise existing or aspiring entrepreneurs who feel stuck due to the lack of investors? How should they go about securing capital for their business?

I think funding is only one part of building a successful business. There are many entrepreneurs who did not get funding at the start-up stage. One in a hundred ideas gets funded by venture capitalists. Entrepreneurs should be prepared to find alternate ways of bootstrapping their plans.

You can always get back to venture capitalists once you have demonstrated that your business plan has value. You must prove to venture capitalists that your concept is working or that your execution of the idea is superior.

Which are the sectors in which you see maximum scope for entrepreneurship today?

Given that India is on an accelerated growth path, I see opportunities widely in all the sectors. The Internet is fairly under-leveraged. Mobile and telecom technology is a big area. I also see opportunities in software for the small business segment. Other than technology, the retails sector is an obvious high potential industry.

What is your advice to the student community who may be toying with new business ideas? How should they approach entrepreneurship?

Students should go out, spend some time in the real world and explore real problems and real solutions. Our academic framework does not provide that to the students. I have seen students just theorising stuff that may not work in the real market.

Don’t miss: How to become a successful businessman

Entrepreneurship: What it takes

http://www.rediff.com/getahead/2006/oct/18entre.htm

Want to start your own firm? This is the best time for upcoming entrepreneurs in India. “There are huge opportunities now, as the economy is booming,” says Raghav Kher, founder of Seventymm, an online DVD rental company.

With venture capitalists looking for great ideas and start-ups to support, the sky is the limit. So, how can one become a successful entrepreneur? Kher and venture capitalist Sandeep Murthy, Partner, Sherapalo Ventures, have some advice to offer.

The entrepreneur’s advice

According to Raghav, if you have a passion for something, follow it. All you need to do is prioritise your ideas and work hard.
Clarity of thinking and a drive to excel is a must; you may have great ideas, but what is elementary to success is the drive to excel. Don’t be afraid to make mistakes because you are bound to make them. Mistakes are integral to success.

If one start-up has failed, it doesn’t mean you will lose again; it is a great learning experience that one has to go through to emerge successful.

The venture capitalist’s tips

According to Sandeep, an entrepreneur must have a passion for what he is doing. The important thing to remember is that he will hit lows during the process that will make him question his decision. Belief in the idea is important though, and your passion will keep you going.

You need to have domain expertise, for which you need not have years of experience. Expertise is relative. If you are specialising in something no one else has done before, you are the expert.

You should be able to build a competitive edge in the business. It could be in technological processes, marketing relationships or solutions you offer customers.

You should be able to build the business and manage its growth — as the company grows, the number of people will increase.

You should be able to hire the right kind of people and establish a good work culture. You should be able to manage change, retain people and scale with the business. And yes, a handful of luck helps too!

How to become a successful businessman
http://www.rediff.com/getahead/2007/jan/18entre.htm

Last week, a good friend — Ajay Sanghani, the CEO of ITvidya.com — invited me to an idea camp for entrepreneurs at IILM, a business school in Gurgaon. Venture capitalists Alok Mittal and Sanjay Bhargava chaired the camp, which was organised by Sanghani’s company.

At the camp, I asked several entrepreneurs to share their initial struggles and success stories. They spoke with passion, and I learnt a few lessons:

7 daily challenges for every entrepreneur
Believe in yourself

Being an entrepreneur is a lot more risky than the conventional job routine. There is no regular salary; you have to find customers on your own. Marketing your product/service and financing the project are also of concern. I noticed that most entrepreneurs use a combination of due diligence and gut instincts while evaluating their product/service. They are good at spotting a need in the market and then backing themselves up to believe that their idea can fill that void.

Lesson one — Believe in your idea. Never underestimate what you can do. You may surprise yourself.

Entrepreneurship: What it takes
Hire the right people

Most entrepreneurs highlighted this as the toughest aspect of building a business. Sanjay Bhargava, who co-founded Paypal, recommended entrepreneurs to bring in people who are really good at what they do and also to focus on ensuring the team members get along with each other.

Some entrepreneurs confessed they made the initial mistake of hiring friends and people they liked, but soon realised that friends were not always the best employees.
Lesson two — Build your team with people possessing complementary skills, not ‘yes men’ who are always showering praise. You need employees, partners and mentors you trust, who will give you honest feedback and take your company to the next level.

Be money wise

While some entrepreneurs went in for conventional sources of funding from a venture capitalist or banks, etc, quite a few started out with their savings or by borrowing money from friends and family. Most entrepreneurs said they focused on increasing efficiency and optimising costs and overheads. One entrepreneur shared that he consciously stayed away from non-essentials like an extravagant office, equipments, etc. The focus was on superior execution and high quality service.

Lesson three — It’s tempting to dream of a corner office, a pool table and expensive chairs, but give it some time. Start small and start efficient. Being better is more important than being bigger.

Concentrate on the message

“As a small business, most of our marketing is word-of-mouth. Our clients appreciate the kind of work we do and our reputation for delivering results,” said Vidhanshu Bansal, founder of an information-technology company called Pixel Webtech.

Most entrepreneurs said that in the early days, their tendency was to focus on sales activities and as they grew, they started looking at various marketing initiatives, as that is the cement that gels customers, vendors and employees together. Their strategy kept changing, depending on what worked — direct mailers, e-mail marketing, presentations at seminars, etc.

Lesson four — Marketing a start-up business is a 24/7 activity and you need to pay attention to the message you’re sending out to existing and prospective clients. Your message has to be tailored to meet the customer’s expectations.

Keep the team motivated

Do not indulge in fault-finding or blame games. That was a clear message from most entrepreneurs. Pigeonholing a particular member of the team may spread negative vibes within the team and cost you time and quality. Celebrating every small success and appreciating team members will build a sense of camaraderie.
Lesson five — Be a coach, rather than the star player. Appreciate and acknowledge the positive behaviours of team members so that the behaviours turn into consistent practices.

Make mistakes

“If you ain’t a little bit scared, you ain’t driving fast enough,” said Deepak Wadhwa, another entrepreneur. Most entrepreneurs agreed. Give your people the license to fail. It’s ok to make a mistake as long as they are succeeding 9 out of 10 times, and making sure that they don’t repeat those mistakes in the future.

Lesson six — The worst mistake is the one that gets repeated. Create a culture of learning and experimentation right at the start of the business. This will become a powerful value with the growth of the business.

Be passionate

Most entrepreneurs accepted that the rewards of being an entrepreneur can be terrific but they were also of the opinion that there is no ‘secret sauce.’ There are a lot of magazines, self-help books and biographies of successful entrepreneurs that one can read, but at the end of the day, it’s about execution. What you really need is to be passionate about your work.

Lesson seven — If you are doing something and the day flies by, if you are surrounded with people you like to work with, then you have most of the ingredients for entrepreneurial success.

7 daily challenges for every entrepreneur
http://www.rediff.com/getahead/2006/oct/20entre.htm

You had a great idea, a well-drafted business plan, some cash to begin with, a talented team and you managed to rake in more funds. Now, you are running your own business. So far, so good. But, are you equipped for the challenges that lie ahead? I share with you my entrepreneurial experience of six years in the form of seven daily challenges that every entrepreneur-in-action faces, more as a routine than an exception.

1. No rules protecting employers

There are rules, the world over, upholding the interests of employees. But there is little an employer can do, if at the receiving end. For example, if you discover that an employee has secured a job with your company by means of duplicate certificates or fake experience, all you can do is to ask them to leave with full pay. You hired him/her and it is solely your mistake!

Similarly, there are instances where you hire someone at a very handsome package for a crucial position. But, by the time you train him/her to understand the responsibilities, you are gifted with such a beautifully crafted resignation that you wonder why the artist didn’t try a hand at creative writing for Bollywood.

What takes the cake is a situation where, on the second day of the month, you realise a person performing a highly skilled task decides to quit for a better paying job and doesn’t have time for the handover. Be prepared for such situations and ensure there are some multi-taskers in the organisation to come to the rescue.

2. Global competition

You submit a proposal for a requirement to a prospective customer, after taking into account the cost of your employee, his allowance, certain percentage of the money that has gone into building the product and a little margin. You do the best costing possible, as you want to penetrate this account and have a long-term association with the client. You’d think your price would be best, considering the Indian advantage of labour, materials, etc.

Then comes the bid award day and the contract goes to some other company in some part of the world, ready to deliver what you promised, in a similar aggressive timeframe, similar reference customer base, at half the price you quoted. Yes, you heard it right — half the price! This is a reality you have to live with. So, when you submit a proposal to one of your prospects, keep in mind not only your country, but also the rest of the world. After all, the world is a global village now, thanks to the Internet revolution.

3. Changes around the globe

You have made some profit, and plan to use it to fuel your global expansion. You hire the best man, train him and get him stationed in another country to give a local presence and comfort factor to your prospective customers. You are burning a lot of money on a daily basis with a hope that, sooner or later, you will start getting returns. But, something happens and you have to shut shop. No questions asked.

The reasons vary, from political changes in the target country to a failed feasibility study. Now, considering you are not a topnotch multinational able to hire a big consulting company to advise you, be prepared to burn some money here and there. There are similar situations, for example, in my company, which depends heavily on the Middle East market — all our support departments (sales, pre-sales, recruitment, operations, etc) are idle for the entire month of Ramadan every year. Such changes have to be managed with a positive attitude.

4. Balance between projects and personnel

Usually, with startups or in the early stages of expansion, you have a project but no one to execute it. And, if the founders are techies, you have no choice but to burn the midnight oil and finish it somehow. Most likely, if this is the first assignment with the customer, you cannot afford to compromise on quality — after all, you are expecting bigger business from the same customer. Such an experience makes you wise enough to do some advance hiring the next time around and, guess what — this time, the opposite happens.

The project that was supposed to come in yesterday now lingers for months. Every time you pay those salaries, you think, ‘Did I make the right decision? Am I doing justice to my investors’ money?’ Over time, you will learn to balance the two situations by pitching for regular work to help you tide over.

5. Delayed payments

You finished the work as planned and it is now time to collect payment. You have made plenty of plans for that money, from hiring more people in sales, to acquiring another office, to investing in a new idea. But, for no apparent reason, the money is delayed, especially if you are dealing with a large customer. The only thing you hear is ‘Sorry, it is just a procedural delay’, or ‘You will receive your payment soon.’ But nobody knows when.

So, how do you pay your employees and vendors? This, I must confess, is one of the toughest parts of being an entrepreneur. The only option you have is to forego your salary. In fact, pull out all your savings and put them in the company to bridge the gap. If still does not suffice, go to the bank with some ‘tangible’ property. That means, if you have a flat, you mortgage it. In most cases, the family is not even made aware of this, because it is a short-term problem and you do not want to scare them.

6. Return to the investor

So far, you may have heard stories of successful entrepreneurs becoming venture capitalists to help budding entrepreneurs. You may also have been advised not to be ‘sticky’ and to try and have a smaller pie of a bigger cake, rather than a bigger pie of a smaller cake. Sounds great! But, in reality, let’s admit, these ‘mother hen’ entrepreneurs are successful because they are smart. They know how to grow their money and that is precisely the reason why they have so much money under their belt to manage.

So, if you end up taking money from them, be prepared to answer many a difficult question on a daily basis. If you can’t manage that, you are out — of the very own company you built! Remember, a bigger pie of a small cake is any day better.

7. How society perceives you

As an entrepreneur, I remember approaching a leading Indian bank for a home loan, where I was rejected for being “self-employed.” And, believe it or not, a software engineer working in my own company got his loan sanctioned. If you are an Indian, an entrepreneur and unmarried, I give you my best wishes, because there is slim chance that a typical Indian middle-class parent will select you for his or her daughter.

You are perceived as a person without job security, unlike your classmates or ex-colleagues, who are sought after for being placed in well-known multinationals. Surprisingly though, if there is a natural calamity or any other cause needing attention, society expects successful entrepreneurs to donate generously, and they do.

So, if you thought being entrepreneur is fascinating and fun, yes, it is, but it comes with its own set of problems. However, once you learn the ropes, you start enjoying the ride. Once an entrepreneur, always an entrepreneur.

Entrepreneurship: What it takes
http://www.rediff.com/getahead/2006/oct/18entre.htm
Want to start your own firm? This is the best time for upcoming entrepreneurs in India. “There are huge opportunities now, as the economy is booming,” says Raghav Kher, founder of Seventymm, an online DVD rental company.

With venture capitalists looking for great ideas and start-ups to support, the sky is the limit. So, how can one become a successful entrepreneur? Kher and venture capitalist Sandeep Murthy, Partner, Sherapalo Ventures, have some advice to offer.

The entrepreneur’s advice

According to Raghav, if you have a passion for something, follow it. All you need to do is prioritise your ideas and work hard.

Clarity of thinking and a drive to excel is a must; you may have great ideas, but what is elementary to success is the drive to excel. Don’t be afraid to make mistakes because you are bound to make them. Mistakes are integral to success.

If one start-up has failed, it doesn’t mean you will lose again; it is a great learning experience that one has to go through to emerge successful.

The venture capitalist’s tips

According to Sandeep, an entrepreneur must have a passion for what he is doing. The important thing to remember is that he will hit lows during the process that will make him question his decision. Belief in the idea is important though, and your passion will keep you going.

You need to have domain expertise, for which you need not have years of experience. Expertise is relative. If you are specialising in something no one else has done before, you are the expert.

You should be able to build a competitive edge in the business. It could be in technological processes, marketing relationships or solutions you offer customers.

You should be able to build the business and manage its growth — as the company grows, the number of people will increase.

You should be able to hire the right kind of people and establish a good work culture. You should be able to manage change, retain people and scale with the business. And yes, a handful of luck helps too!