In this video, Alok talks about the importance of ‘focus’. Quoting his guru, he says, “The minute you have intention, and you giving your full attention, you’ll achieve its manifestation.” And that in way sums up what ‘focus’ is but there is more…watch the video below:
Alok Kejriwal is one of the mentors onMakeIndiaWork – the startup ecosystem by MonsterIndia.com to support and encourage startups. Here Alok shares seven myths of starting up a business.
Myth 1 – I have a great idea but I can’t share it coz someone will steal it.
Oh man, if that were the case, then dreams would be the most expensive commodity on the planet.
Salvador Dali- the father of Surrealism slept on a couch with a spoon in his mouth. He would start dreaming up crazy ideas and as he would drift into his sleep, the spoon would slip out of his mouth, fall on the floor and wake him up. He would immediately get up, rush to his canvas to paint what he had just dreamt. The million $$ Dalis that exist today are paintings, not dreams.
Truth – An idea is worth nothing. Execute. Execute. Execute to make it valuable.
Myth 2 – When do I approach the investors? Hmmmm… What’s the best ‘timing’?
Huh?? Were you Sleep Walking?
If only investors were like the Black and Yellow Mumbai cabs that you can hail and get into any time you want!
No VC or Investor is waiting with bated breath biting her fingernails for you to call! It’s quite the opposite scene actually. In a booming Economy (like India), investors are deluged with lots of high quality and established business investment options, so you have to fight hard to get into the VC’s visitor’s area to begin with!
Truth – Capital Chases Entrepreneurs, not the other way around. Invest all your energies in building a GREAT business. Everyone will be ringing your doorbell.
Myth 3 – I have no money to start. (Sniff Sniff).
Most new business ideas today really need very little capital. If you are thinking of starting an Internet enabled business, the cloud takes away all the pain of investments. Domains cost less than 20 US$, and the rest of it is almost free. Sites like WordPress and their plugins can get you a fully loaded website up and running in a few thousand rupees spent.
Sure, if you have a more Capital Intensive business idea, then think really hard. Start Ups don’t survive on Love and Fresh Air. They need real hard cash. If you are on the Poverty Line, don’t attempt to start up. There will be better times to be more adventurous.
Truth – Be ready to sacrifice a good couple of years’ earnings into starting up and not looking like someone who lost all her baggage after a 24 hour flight. Once you have the cushion of 2 years’ savings, a lot more confidence will seep into your decision-making and improve your risk taking capabilities. Also Budget your Burn to say last for a year or whatever your test horizon is. That discipline will go a long way even after you get funded.
Myth 4 – Let me Grow First. Revenues can come later.
Oops. That’s the spine breaker.
Unless you have a massive, massive overnight hit like a Twitter or Facebook, tread the ‘growth first, revenue last’ road with caution.
You may be suffering from a deep-seated insecurity to generate revenues and conveniently shoving that fear under the carpet by postponing revenue generation. It’s like hiding a body in the deep freezer and hoping that it will never be found.
Generating revenues is a real PAIN.
And it’s best confronted in parallel to building your business. In fact, so many extra features of your service or enterprise may never be needed if you listen to the fat men with the cheques books early on. Also, as investors, partners, and potential acquirers start noticing your business, they look your Generating Revenue Experience (GRE) scores. If you didn’t apply for the exam, you won’t get in.
Truth – Get that begging bowl out. Try and test (if you want to maintain Facebook like early start up Virginity) what people will pay for – but make sure that you know where the light switches are when the darkness arrives.
Caveat (added on 22.9.2012) – I do not mean that make revenues the ‘focus’ of your business. The focus is Business creation – but a proven revenue model validates that model. As long as you even know ‘where and how’ the revenue will come, I believe that its fine
Myth 5 – I’m a techie – I don’t know anything about business. I am a business guy; I don’t know anything about technology!
The demons of the mind that says you don’t know how ‘business’ works need to be exterminated on day zero of starting up. Look all around you – the greatest geeks in the world – Steve Jobs, Bill Gates, The Google Twins, Marc Z – all have understood the science of business better than anybody else.
Also, for a M.Com dud like myself, today, technology and self -serve platforms have become so easy to understand and implement, they are like those do it yourself Lego Puzzles. All you need is the patience to sit down and assemble the rocket you are trying to build step by step. Read the instructions carefully and you will be set.
Truth – No entrepreneur can be in-complete. This is actually also the first step in becoming an entrepreneur – understanding a domain that you otherwise had no clue of.
Note – I am not suggesting mastering all domains, but rather just understanding them.
Myth 6 – Professionals whom I want are too expensive to hire.
Did you ask them? Did you look into their eyes and explain your invention and what can happen with it?
So many of the ‘been there, done that’ types are so bored and stuck en-cashing salary cheques every month. They are waiting for folks like you to go up to them and redeem them! I meet so many professionals (earning much more than me) ever so often who say ‘Wow Alok, I wish I could be doing the exciting and innovative things you and your Company do’!
Truth – Professionals with big compensation packages may not quit their job in a hurry for your Love Songs, but they can certainly begin associating with you. Start meeting them and burrow into their experiences. Shed a few shares and get them on your board. You may even realize that you never needed them full time!
Myth 7 – I HAVE TO make this work. (Stomping of feet on the floor heard).
Once in a while, when you sample a new restaurant or cuisine, you do risk getting in there, and ordering a meal you have never tasted before. In the first few bites, you know if it is a ‘disastrous’, a ‘will do, let’s get this done with’ or a ‘wow’ meal.
In a startup land, while your dreams may have taken you to heaven in a first class seat, when you actually implement the idea and hit execution, you may land up in rubble, deep under the ground.
Do not deny the ‘badness’ of the idea or the common sensical fact that ‘this was a bet that should not have been played’. Enterprises are built on hypothesis. If even a couple of assumptions or facts (which are crucial to business) don’t turn out the way as per your expectations, ditch the business, kill all engines, sit back and revise the learnings earned.
Truth – Get out, as soon as you see smoke. Don’t put on a mask and enter the fire pretending to be a firefighter. You will not come out alive and your soul will be too charred to boot up again.
Alok Kejriwal is one of the mentors onMakeIndiaWork – the startup ecosystem by MonsterIndia.com to support and encourage startups. Here Alok shares how his family lessons helped him to be a entrepreneur.
On the last day of my ICSE exam (10th standard finals), my Nani (Grandmother) offered me a free seat into the Marwari Business School.
I was 16 and I had the opportunity to go and sit in my Nana’s (Grandfather’s) office.
I took up the offer.
These are the seven subjects I learnt:
M = Monetization Mentality
For Marwari’s, money pretty much means everything.
It’s the ‘currency’ of success – pun intended. People are sized and measured not by their waist sizes but by the width of their balance sheet. A Marwari’s religion is making money and they meditate on it.
What Monetization and its terms means is also unique for Marwari’s.
For instance, I learnt that Revenue was not what you ‘bill’ or ‘pass-thru’ or ‘recognize’. Revenue was always what you ‘net-net’ earned that came in your coffers.
Revenue is bottom line for a Marwari – not top line.
Also, the facets of revenue became very clear to me. Every capital investment (be it land, or machine or even cars and computers) had a ‘monetization expectation’ attached to it.
You could spend on things only if they made money. Hence ordering flowers for office tables in a typical Marwari office would be disallowed (despite the plea that they enhance profitability).
This ‘monetization mentality’ made me create what I believe was the most detailed costing breakup of any socks factory in the world.
I took 3 years to ‘post mortem’ the cost of everything we incurred (whether real or notional in terms of interest lost) and link it back to revenues that were being earned.
So, I could tell you that if you ran extra air-conditioning in the office building, then ‘X’ was the revenue that needed to be generated to make a PROFIT on that extra spend.
Also, I learnt that revenue was something to be always ‘improved’ – not just by price hikes alone. If collecting money from debtors were improved by 3 days, then there would ‘X’ reduction on bank overdrafts and hence extra income to the firm etc.
A = Accounting Archery
All successful Marwaris really know their accounting.
Trial Balances, P&L statements and Balance sheets are the juiciest novels that a Marwari reads. What they clearly understand is the concept of ‘Capital’ & how Capital gets generated at the lowest cost and how that same Capital then needs to be exploited to the fullest.
‘Creativity’ in accounting was the highlight of what I learnt.
I remember when I was 17, an uncle sent me to his Chartered Accountant (CA) to finalize and close my Uncle’s books. Like a good student, I prepared the P&L and presented it to Mr. CA, along with the ‘tax’ liability. He chuckled and then called up my Uncle in my presence on a speakerphone. I expected Mr. CA to tell my Uncle what I had prepared.
Instead Mr. CA asked my Uncle ‘Babu (Sir), how much tax do you feel like paying this year’?
My Uncle grudgingly muttered a number and that was the end of the call. Then Mr. CA took my P&L and completely re-crafted the numbers (and believe me legitimately) to perfectly match the tax outgo my Uncle wanted to pay!
R = Righteous Rigor.
Each month, there would be at least a couple of instances when a very old worker (you know the ones who look like grand dads) would hang out near the factory cashier with a couple of his relatives.
At the right opportunity, the worker would gently knock on my father’s cabin door; enter nimbly; gently walk together my father and then bend down to touch his feet.
The first time this happened I was stunned. I mean it was very demeaning to see such an old man behaving in such a subservient way. My dad of course would immediately stop the old man from bending further, do a ‘Namaste’ (fold hands) and greet the man. I would almost always notice the tears in the old worker’s eyes.
I learnt later that these workers had worked for 30 -35 years in our factory and this was the ‘D’ day they had withdrawn their Provident Fund account (saved in the factory for all those years) to be used for marrying their daughters or for buying a house etc.
The amount they received was largely disproportionate to their monthly salary (lacs of rupees) and they solely relied on our Company to safeguard their moneys, banked safely for an important day.
If you have read how corrupt many companies have been with PF accounting and the fact that some of them have NOT even maintained accurate PF accounts and have squandered what was not their own money, you will realize how damaging this is . Imagine telling this 60-year-old worker on the eve of his daughter’s wedding that his fortune of 30 years will be paid ‘later’ (meaning never).
This taught me a lot. It taught me morals, ethics and righteousness and how to actually live up to others people’s TRUST that they have placed in us.
Most People are naïve and innocent and very trusting. We have to honor their faith in us.
W = Wait, Watch and Win
When I sauntered into my father’s factory on a bright Monday morning on my first day at work, I thought the world would be at my feet.
In my mind I had a desk to myself, lots of papers and files, a huge telephone on my desk with lots of blinking lights (remember the EPABAX) and a constant stream of visitors to meet and greet me.
Quite the reverse of that happened.
When I entered my dad’s cabin, he pointed me to a rather uncomfortable looking ‘corner’ chair, and asked me to SIT.
I remember his words so clearly even today. He said – ‘Alok, learn how to sit. If you can just master sitting, you will have learnt a lot’.
Grrrr…I was exasperated! I mean I was a rock star supposed to gyrate and prance all over the stage. Instead I was being locked inside the backstage changing room?
Slowly, the concept of ‘waiting and watching’ began to sink in. For almost one year I sat like a flower vase on a pedestal in my dad’s cabin just watching him function.
I was not asked for an opinion and was even barely noticed! Being completely ignored became a normal emotion for me, and I spent the hours just learning.
And how I learnt! Everything related to machines to finance to production planning to inventory management.
I guess the biggest lesson I learnt was that winning comes from waiting.
During the first seven years of starting contests2win.com (my first independent business) this ‘waiting’ training bore rich fruit.
I became the expert at waiting outside client’s offices for hours just to meet them for five minutes. Never once did I even feel bad or humiliated. I became best friends with these busybody’s personal assistants and secretaries and learnt a lot about the way their business functioned.
In fact, I even found a long-term partner in Rajiv Hiranandani while waiting for hours in the Shaw Wallace office in Mumbai! Rajiv was the head of sales of Yahoo at that time and after many ‘sofa’ meetings at Shaw Wallace; he agreed to head mobile2win India – a mobile business that I was just starting up then.
All good things in life take time. One has to learn to wait, watch and then win.
A = Attitude Adjustments.
Marwaris generally have little ego issues. We are trained to do business and not to pretend to be the Queen.
In 1994, my father and I traveled to Germany to attend a textile fair. That was one of the busiest fairs in the world, and all the hotel rooms were fully booked. My father and I were sharing one room.
In the hotel lobby, while eating breakfast we met one of the largest textile Barons of Hong Kong – who was a Marwari and had emigrated there many years ago. He was hugely successful and very well-known globally.
While all of us were eating together, a rather disoriented looking man in a crumpled shirt and Hawaii slippers came across and stood next to Mr. Textile Baron.
Mr. Baron smiled at him and excused himself and arranged breakfast etc. for the man. Later he came back and explained that this man was the chief jobber (mechanic) in his Indian factory and had never traveled in a plane before or ever stayed in a hotel.
He did not know how to operate the bathtub shower. However he was the heart of the factory and Mr. Baron was sharing his room with him to make sure he was comfortable!
That trip I learnt a lot about attitudes, and how to adjust them to be a very successful entrepreneur.
R = Risk and Reward
About 4 years into having started the export division of my factory and having executed many successful orders, I was on top of the world. I guess I was enjoying the sweet ‘high’ of success.
Retrospectively put, I think I had become over confident.
As scheduled, I met my buyer from C&A (An erstwhile large European retail clothes store) in my factory showroom and began discussing new orders.
My buyer winked at me, retrieved a bundle of socks from his bag and laid them on the table. The yarn color and texture of the socks caught me my surprise. This was that ‘heather mixture/grey flannel’ type color (like the t-shirts that look like a blended grey).
My buyer said ‘Alok, this new yarn is a rage in the EU. I am happy to give you an order that will be 5 times larger what we have ever done with you – if you can ship your socks in this type of new yarn in various color tones’.
I asked him what this yarn was and he very casually said ‘oh, it’s a cotton mélange. All global socks manufacturers are working with the same yarn in their country; I’m sure you will find suppliers for it in India without a problem’.
I looked at him and the socks and said ‘yeah, I’m doing it’.
What I never realized was that I had taken the biggest risk of my life. I also think that greed had blinded me. I could have agreed for a trial order rather than one that was five times the usual size.
But I also learnt that what entrepreneurs do for a living is to leap without looking.
Once I received the order sheets, I began scouting the market for mélange yarn. None of my regular suppliers made that type of yarn. A couple of the suppliers in Hyderabad (the south of India) were large producers of Mélange, but their yarn composition was synthetic not cotton.
Quickly I began to panic because I could not find a single yarn supplier of that yarn in India. What haunted me was that non-fulfillment of the socks orders meant severe penalties and a black listing to ever work with C&A.
Mélange, Mélange, Mélange!
Added to the problem was that I had accepted the orders in 5 different types of yarns.
The standard colour in Mélange was grey and not ‘sky blue’ and ‘camel’. This order was looking like a train wreck for me.
After an agonizing search and hunt operation, the Hyderabad Company agreed to spin a special Cotton yarn for me in their regular 2/40’s count. (In cotton, the larger is the count, the finer is the yarn – so 40’s is good for garments and 200’s is what we wear in shirts. ‘s’ stands for single yarn). I actually wanted 20’s, which is used for socks.
Now, 2/40 meant that 2 yarns of 40’s would be twisted together to make it as thick as 20’s (which is what I wanted), but the cost was double of what I was paying for 20’s yarn. So buying 2/40’s was a no go.
Finally, I convinced them to spin the yarn in 20’s (20 single count) and they sent me a few spools to test.
When I got the yarn and spun the socks, I had a heart attack.
Because the yarn was mélange and a single thread (20’s), it was ‘twisting’ and ‘turning’ like a top and making the socks look like they were ‘wrung’ to death. The 2/40’s yarn would not have that problem because a ‘S’ twist and a ‘Y’ twist were spun together giving the combined yarn a ‘neutral’ spin – but as explained earlier, I could not afford that yarn!
When I explained my agony to the mill, they asked me to ‘heat’ the yarn via a specific process to ‘kill’ the spin. I did just that and enjoyed my second heart attack – the color of all the 5 yarns dramatically changed when ‘heated’.
In the end, I got a ‘duller’ 20’s custom cotton yarn made, got that yarn heated to kill its twist make it look like the original colour ordered and even ‘washed’ all socks to kill the little spin left behind.
Because the washing was shrinking the socks, I had to redesign all socks specs in a way that after they were washed and shrunk, they came back to the original size the buyer had ordered!
I made my shipment just on time and that execution paved the way to tripling our exports in the next few years. Interestingly, most of the orders that came in those next 7 years were mélange yarn orders.
I had learnt the very difficult lesson by taking on Risk; but more importantly managing risk carefully and with perseverance to make it rewarding.
In 1999, when I walked out of my factory doors to launch contests2win.com – I had no clue about the Internet or promotions or marketing. I just thought of my European socks buyer and chuckled. Intriguingly, that day I was wearing a pair of ‘mélange’ socks!
I = Innovative Ingenuity
When I pitched to my father that there was a massive opportunity to export plain white, navy and black socks to Europe but at ridiculously cheap prices, he took up the challenge and worked back to back with his technical team to ‘refit’ Indian knitting machines bought from Punjab to make socks worthy of European feet.
In essence, he innovated and created a sock that was the same in quality as a European sock, but knit from a machine that cost 1000$ in India vs. 20,000$ in Italy.
The trick that really mattered was treating the ‘Toe’ portion innovatively.
In Italian socks, the toe was knit ‘within’ the machine and very finely, so that it did not cause discomfort to the consumer while wearing. In Indian sock machines, the toe portion came out unstitched; to be manually ‘sown’ over the open ends to close the toe. The process of sewing Indian socks caused a thick seam that always created discomfort while wearing the socks over the consumer’s toes.
Sock toes that are ‘Granny’ finished!
My dad fixed the problem by using an external machine to sew the thread into the Indian sock almost needle on needle (like granny’s knit sweaters) using a slow manual process that yielded a finish that was better than the Italian machine. Labour was cheap in India, and the outcome was perfect!
You can imagine how profitable the business became since we were getting paid for socks priced at EU costs whilst making them with Indian machines, yarn and labour.
This experience embossed the passion to reinvent in my mind.
I have observed that there is a constant drive in all Marwari companies and entrepreneurs to‘re-think’ business processes, concepts and change ‘this is how it is done’ to ‘this is how it can be done profitably’.
In 1998, after spending 7 years in the socks factory, I quit and started contests2win.com. The day I left the factory premises, I think I had graduated with merit from the Marwari Business School.
Alok Kejriwal is one of the mentors on MakeIndiaWork – the startup ecosystem by MonsterIndia.com to support and encourage startups. Here Alok shares things every entrepreneur should take from movie ‘Inception’.
This post is dedicated to my absolute fanaticism to the movie ‘Inception’. If you haven’t seen the movie yet, my humble suggestion would be to see it before you read further.
I was calmed and excited simultaneously when I saw Inception. Calmed by the spirituality of the movie and the way ‘transience’ of life was packaged in it. It just spelt a new rulebook for entrepreneurs.
My point of view:
It’s all about dreams.
Tell me any entrepreneur worth his sleep who hasn’t sold to himself and then to a VC a dream. With poor proof of concept, little or no market data and certainly zero revenue streams, most entrepreneurs make massive leaps of faith when it comes to creating a business. They dream of the future that lies ahead and then dive back into reality to reach there!
In Shanghai around 2001, while pavement pounding for Mobile2win, I had the opportunity to meet the Wall’s (Unilever Ice Cream) marketing team. Walls ran a very large business in China and they were keen to use mobile contesting to ‘activate’ more sales. Since we were the first in China promoting short-code based promotions, we convinced Wall’s that we could motivate Chinese consumers to sms a code that they would find on the lid of a Walls Ice-Cream in return to win a prize. This promotion would be advertised by them on mass media and would create the first of its kind ‘digital mobile’ activation led sales promotion for Wall’s China. They loved the idea, bought the dream and we were on!
Dream 2 within Dream 1:
A few weeks later, I had the opportunity to meet Disney (China). They were keen to reach out to large consumer masses in China via the mobile platform. We already had a massive consumer activation going on with Wall’s and this could be the ideal platform for them. But the question was – why would Wall’s allow Disney to ride on its media and product activation plan? We thought hard and hit on dream 2 within dream 1.
The problem Wall’s was facing was that while lots of folks were sending SMSes hoping to win prizes, only a handful was winning. So it was becoming a typical ‘I keep trying but never win’ disappointment. Adding more prizes was not affordable. Even if we gave away small prizes, the cost of distribution of those prizes was uneconomical. Our Eureka solution was to create ‘digital prizes’ – a la mobile wall papers and screen savers of the most popular Disney characters such as Winnie the Pooh and Mickey Mouse and then send it ‘across the air’ via sms to contesting participants for every right answer!! This way almost everyone would win, lots of Chinese consumers would own a Disney character and Wall’s would be happy that its promotion got additional boost. Both Wall’s and Disney bought the plan and dream 2 within dream 1 came alive.
Dream 3 within Dream 2.
What we realized was that we had pulled off a major coup. This new concept of zero cost digital prizes was creating a new reach and activation model in the consumer goods category (add to that – in the largest consumer market in the world), and this was an opportunity that could have resulted in much more than just one time project fees for ourselves.
We built a close rapport with Disney over the months and dreamt with them on how the combination of their Media (channels) + Assets (character library) + Mobile2win’s platform would be the ultimate solution for them to engage millions of young and upwardly mobile Chinese consumers perpetually.
Walt Disney acquired Mobile2win China in 2006 in an all cash transaction and our Dream 3 was fulfilled!!
Creating layouts (biz plans) as you walk…
As in the movie, most entrepreneurs have to imagine and execute a business simultaneously. It’s like planning a road and paving it at the same time. There is no grand plan or blue print that can be followed by the book. It has to be imagined, and implemented at the same time. If you can’t do that, you can’t be successful entrepreneur.
In so many client pitches I remember my team and I being asked a question by a client in terms of ability to make a campaign or reach a target audience that we have never done before. Almost every time we said ‘yes’ and then on the way back to the office figure out how to do it. Sure there were some cases of bad deals like the ‘paradox staircase’ in the movie, but those stray cases didn’t dent us from growing and creating a business!
Making sure the ‘Kick’ is in place.
One of the biggest dangers of entrepreneurship is that you fall in love with what you are doing and even when events turn ugly, you refuse to ‘wake up’.
So, make sure that before you start dreaming, the ‘kick’ to wake you up is in place.
In Mobile2win, we created lots of mobile games and were the first in India to start featuring our own games on operator decks. Then operators got greedy and competitors became insane. The game teams by then had fallen into a never-ending dream state of just making games coz they loved to, despite the fact that the ROI was negative. As an investor, I ‘kicked’ them and myself and pulled out of that business before the market destroyed us.
Watch out for your Mal – she will destroy herself and you.
Many entrepreneurs I know go into an ‘ever dreaming’ state of almost coma-like zombie survival. They cannot come to terms that they need to move on. Their business gets stuck, the markets turn against them and the world changes permanently, but they ‘Mal’ themselves. They cannot distinguish fact from reality. They sit on the ledges and jump off windows in the hope that they will wake up. They never do.
We went all out importing a Massive Multiplayer Online game from Japan in games2win in 2007. We believed that this was our Nirvana and also brought our Japanese partner into that dream. Yet, 1.5 years later and almost 500k US$ down, we had hardly earned 50k US$ from the business. It was a disaster. Yet the Japanese Company was ‘Malled’. They believed that the market would turn around and this format of game would redeem us in the future. They saw no reason to evacuate. I had to give myself a big kick and wake up. We pulled out of the game in 2008. It was a very tough and emotional meeting in Singapore with the Japanese partner who refused to understand or believe our rational. It was exactly like the ending of the Movie in which Mal is still in the dream. Having said so, I still know 2 companies in India who have sunk over 7 million US$ collectively in this genre of gaming and believe that India will change to make their game successful.
Watch out for Mal, either never let her become who she is and if you cannot avoid that, then know when to ignore her and stay focused.
Alok Kejriwal is one of the mentors on MakeIndiaWork – the startup ecosystem by MonsterIndia.com to support and encourage startups. Here Alok shares the basic of equity,stakes & shares.
The tone is a bit Fictional 🙂 Just to make serious stuff a bit less heavy 🙂
Once upon a time, in a land not so far away, two dynamic entrepreneurs – Bakra and Bakri got together and started up an amazing e-commerce business to sell sheep wool online!
Within a few months their business was rocking; orders were pouring in from all over the world, page views & comScore numbers were soaring and the servers and the site were happily crashing. This was indeed a great start up.
One day, on a midsummer night, they heard a knock on their cottage door, and when they opened it, a dark skinned man in a black suit, black shoes and black umbrella, with gelled black hair, holding a black satchel greeted them.
‘Hi’ he said, ‘My name is VC, and I am here to fund you’.
Over the next few days, VC patiently explained how he would invest his humongous dollars into Bakra and Bakri’s start up, so as to scale it and make it profitable and ‘Nasdaq’able’.
On the final day, VC didn’t meet them, but sent them a terse mail that read ‘Term Sheet attached. Sign and Return’.
Bakra and Bakri were innocent entrepreneurs and decided to forward the same mail to Rodinhood – the Robinhood of Entrepreneurs who lived in the Forest of Enterprise.
When Rodinhood read the term sheet, he found the same 3 clauses embedded inside the document. These if left untreated could damage Bakra and Bakri’s economic progress.
This is what he identified:
The ESOP carve out Clause
In the clause of ‘ESOP’ or employee stock option plan, the term sheet stated that the entrepreneurs (B&B) would carve out 10% of the share of the Company PRIOR to the funding. The weapon was the word PRIOR. It meant that B&B would have to further dilute 10% of their OWN stocks to make way for future employees, (who would work for the Company and actually benefit all the owners).
In his explanation Rodinhood wrote to B&B that carve out of ESOP’s PRIOR to the funding was unfair on two counts:
a) It should come from the share of every owner of the company’s share and hence POST not PRIOR to the funding since the benefit accrues to all owners as the company grows
b) In case of non-allotment of the complete 10%, the Investors would share the residual shares as well! Hence this was an indirect ploy to get more shares of the promoters under the guise of an ESOP plan.
Rodinhood’s final advice was – Try and negotiate esop dilution after funding and limit the commitment to 5% to begin with, since no one knows at the start of a business what really the esop pool requirement will be.
The Liquidation Preference Multiple Clause
The term sheet stated that on liquidation of the Company, the VC would receive 2x of the money invested.
This meant that upon Liquidation (and this interpretation could include an exit), the VC would first take home not just the amount invested in the Business but DOUBLE of the same – so 2x of the investment!
Hence, no matter what the outcome, the VC would enjoy a 100% return on his investment; Bakra and Bakri would be left with what remained if anything at all.
Rodinhood’s comment was that if VC means Venture Capital, it should remain Venture Capital and not Vampire Capital. Hence, the fair multiple was 1x of the principal back and NOT 2x or 3x etc., etc., in favor of the VCs. 1x ensured return of Capital and nothing more if the Company was sold in extraneous circumstances.
The Preferred and Participating Clause
In this Term Sheet, the clause ‘Preferred and participating’ made Rodinhood’s Marwari blood boil. This was the trap aimed at the entrepreneurs.
It meant that in case of a sale, FIRST the VC would take home 2x of his investment. Then, on the remainder, the VC would take his legitimate %.
So, assume that Bakra and Bakri’s Company raised Rs 100 from VC at a 30% dilution.
Also let’s assume that after 4 years, the business would sell at Rs 800.
Logically, VC would take home 30% of Rs 800 or Rs 240? Correct?
Under the preferred and participating this is what would happen: As per the ‘Preferred’ clause, VC would first take home 2*100 (2x liquidation preference) = Rs 200.
As per the ‘Participating’ clause, OF THE MONEY THAT REMAINED – Rs 600, VC would take home 30% or Rs 180.
Hence the total money that the VC would take home would be 200+180 = 380 instead of 240!
In other words, the Equity of VC just became 47.5% rather than the original 30% only because of this particular Clause.
Rodinhood sent his comments back to Bakra and Bakri with the above explanations and the final advice – ‘no matter what anyone tells you, including myself – do what’s right for yourself and your business. Just try and remove or disengage these weapons as best as you can. Always remember –when you have a good thing going, capital chases entrepreneurs and you must negotiate justly and hard’.
Bakra &Bakri (B&B) – two successful entrepreneurs had just started an e-commerce business to sell their sheep wool online and were a happy lot. They had negotiated their term sheet with Mr. VC and were sitting back in their cottage backyard, nursing single malts. They always drank “Ballantine 17 years”.
Bose’s garden speakers were playing ‘don’t stop thinking about tomorrow’ by Fleetwood Mac.
Bakra’s iPhone beeped; a message from the VC read ‘Check mail. SHA attached’.
Even while he was pulling away the wool from his eyes, Bakra forwarded the sms and the mail to Rodinhood who was a friend of all the Bakras and Bakris who guided and consulted entrepreneurs in their start up life.
Rodinhood read the message and immediately got down to work.
As he opened the SHA (shareholders agreement), he took a deep breath. This was the most important document for any entrepreneur and he was determined to be thorough and fair in his perusal and remarks.
First Rodinhood carefully went through the ‘Definitions or ‘Recitals’ – the bullet like descriptions of key terms in the beginning of the agreement and made sure that they were in order. For instance, Rodinhood checked the definition of ‘FMV’ (Fair Market Value) and checked it read fairly. The recitals are important because there are acronyms used multiple times across the agreement and these acronyms are detailed in the recitals.
Rodinhood considered the definition of ‘Control’ and checked if the explanation defined Control as 50% or 51% or was it a loose, under defined meaning. Each interpretation of the definition of control for instance had a different outcome in the long term.
To keep himself relaxed, Rodinhood was sipping Perrier on the rocks, in his favorite rock glass, garnished with a twist of Lime. Beethoven’s Emperor Concerto was playing in the background. The atmosphere was ‘cordial’ enough to come to terms with an SHA.
2) Pre Emptive Rights.
Swiftly, Rodinhood came across ‘Pre Emptive Rights’ (the terms that allowed existing shareholders to participate in a new issue first) – and they seemed fine. But he still went through the section once again.
3) Representations and Warranties.
On Reps and Warranties – Rodinhood made a side note to ask Bakra and Bakri if they had ‘shared’ everything with Mr. VC.
Rodinhood always believed that it was most prudent to reveal everything about the Company to an investor BEFORE taking in their money. If there were secret promoters or other shareholders, they ought to be made public and given shares before the Company was finally structured. Also, if the Company had received some vague legal threat or was under the cloud of potential litigation, it was most important to reveal it all to the VCs. Thinking ‘let me handle this after I get the money in the bank’ is suicidal for entrepreneurs.
In Reps and Warranties, Rodinhood wondered how Bakra and Bakri had reflected their personal loans invested in the Company and what was their agreement with the VC. Rodinhood personally had a view that all ‘moneys’ of entrepreneurs into their own Company be treated as loans and returned gently over a period of time; post funding. Rodinhood felt that his concept was right because the entrepreneurs were putting in their sweat, blood and tears into this startup which was way beyond a few lacs of money. Besides moneys taken from relatives, friends and even piggy bank savings were best returned to entrepreneurs so that they could focus solely on the business.
The rock glass was sweating as the ice and Perrier got acquainted. The lime slice was quickly become the stranger in the mix.
4) Restrictions on Transfer of Shares.
Was the next section that made Rodinhood sit up? This SHA locked 75% of the entrepreneurs’ shares in an escrow to be earned back by the entrepreneurs over a period of 3 years.
While Rodinhood accepted that VCs needed to ‘lock-in’ entrepreneurs by locking in their entrepreneur shares over the next few years in the Company (post it’s funding so as to protect the VC’s from founders just walking away), Rodinhood always had the following tenets for entrepreneurs:
Entrepreneurs could always try and negotiate the maximum number of shares % ‘outside’ the purview of the lock in. The standard was 25% (so 75% got locked in), but negotiating 33% was not difficult. The unlocked % depended on the life cycle of progress at which time the startup was getting funded (the later the time to funding, the higher the unlocked shares %)
The ‘release’ of the locked in shares could be structured ‘monthly’ rather than ‘quarterly’ and at worst ‘yearly’.
The maximum period of lock in could be a maximum of 36 months.
The MOST important aspect was WHAT would happen to locked/escrowed shares in the event that the promoter LEFT the Company. The best outcome would be for the Company/VCs to buy the shares back from the entrepreneur at Fair Market Value and the worse would be that the entrepreneur shares flowed back to the ESOP pool or to the VCs at the price the promoter paid for them (par value).
Rodinhood’s rational on fair pricing for the exit price of the promoter (in such extraneous events) was the logic that a lot could happen in 3 years. The industry could change tremendously – the VC’s and other founders may completely want to take the business in another direction. Hence it was important that the VALUE created at the time of departure of the promoter be captured and handed over to her.
The agreement was now half way reviewed and Rodinhood took a break to stretch his legs. He changed the Emperor Concerto that had just finished playing the second time to Mahler’s Syphony No 1 ‘The Titan’. Rodinhood needed his favorite symphony to give him a natural high at this point.
5) TAG ALONG rights.
In this SHA, the tag along rights read like they always did.
Rodinhood had one very important point on this. In the part where it was clear that the investors could ‘tag along’ with the promoter in the event that the promoter was selling and the investors also wanted to exit, Rodinhood made sure that in the event of less than a 100% exit of all shares, everyone in the Company sold their shares pro-rata.
To explain his point, Rodinhood added this side note to Bakra and Bakri (B&B):
Imagine if after a few years, your business is doing well, and you meet a Company called Goat and Sheep (G&S) of Britain who have a similar business like yours; but their business is much larger and is publicly listed. G&S love what B&B do and the fact that B&B are in India – so offer to buy B&B out. However, they want only 51% of the Company. As per the existing ‘Tag Along’ rights, while you (B&B) make the effort of finding an acquirer and negotiating the best price, the B&B Company investors (who say would own 60% of the Company) will have the rights to TAG ALONG with B&B.
In the present agreement, the investors in B&B had the Tag Along rights to offer their ENTIRE portion of shares first and then allow the rest to be sold by B&B. Given that 51% was being bought out, it would mean that none of Bakra and Bakri’s shares would be acquired by G&S! This will leave B&B stuck with the Goat and Sheep Company who would never offer to buy B&B’s remaining shares out!
So, in the event of a partial sale, it was critical to negotiate ‘pro-rata’ tag along rights so that in case of, say 51% being acquired by Goat and Sheep, EVERYONE in the B&B Company has a right to tag along – thereby benefiting promoters, investors and of course ESOP shareholders. This pro rata tag-along was very important when strategic companies acquired operating firms.
Rodinhood took the last swig of what remained of the Perrier and chewed on the ice cubes that had come along. The twisted lime now looked like a complete stranger in the glass.
6) DRAG ALONG rights.
Come next. Rodinhood thoroughly went through the clauses and they read exactly the way they were supposed to. He sighed. He had no comments to make on the same – despite having fought and won a bitter battle on these same rights. Just to make B&B understand the implications of DRAG ALONG – Rodinhood inserted a hyperlink of his classic blog post (the toughest decisio… relating to this subject for Bakra and Bakri’s reference reading and left it at that.
The rest of the document read fine. Rodinhood made sure to point out that it was nice to keep the Board as small as possible (two from the promoters side and one from the investors), so as to be able to accommodate a larger board with subsequent investments.
Finally, Rodinhood made a footnote for B&B to diligently make sure that the Conversion, Liquidation Preference and ESOP clauses were in accordance with what was negotiated in the term sheet as dealt with in Part 1.
The evening had burst into the night. Rodinhood smiled as he mailed the SHA with his remarks to Bakra and Bakri. He was happiest helping fellow entrepreneurs and this was truly one of those moments.
Alok Kejriwal is one of the mentors on MakeIndiaWork – the startup ecosystem by MonsterIndia.com to support and encourage startups. Here Alok talks about the stumble blocks to look out for professional turning entrepreneurs.
My office manager recently told me that the tally of my visiting cards collection has touched a count of 9000. That means, in the span of 15 years of being a startup entrepreneur, I have met almost 600 people a year or about 3 new people a day (considering holidays)!
Amongst these 9000 people, many of them are blue-blooded “professionals” who have often tried to “start up” – only to fail and go back to their comfortable Ivory Towers (Large Companies). What are the common mistakes these wannabe entrepreneurs make when they try to startup, especially when they come from formal, established organizations?
These are 7 striking reasons I attempt to explain via popular phrases!
Uneasy lies the head that wears the crown
It’s convenient to have a boss. Perfect to hurl abuses at, direct the blame, point fingers at and conveniently blame for all your miseries. But have you tried being your own boss? Many professionals who have worked grumpily for years following instructions of balding men find it very difficult to ‘boss themselves’. A 46 year old silver fox told me, “Since I was 6, I was told what to do – from mother to teacher to boss. As a startup entrepreneur at 46, I cannot instruct myself and am going back to my Nazi boss.”
Missing the woods for the trees. Are you sure?
Many entrepreneurs who come from formal backgrounds miss the woods for trees. What do I mean? In startups, it’s the small things that make big things happen (the woods are the trees; not the other way around). For instance, while launching Hotmail, Sabeer Bhatia realized that there was no way the 7th free e-mail site in the world was going to succeed on its own. So he focused on that one innocuous line at the end of every e-mail sent out that said, “Get your own free e-mail at Hotmail”. That message spread like wildfire and made everyone sign up!
I call it a classic case of focusing on the trivia that delivers grandness.
Something big shots don’t get!
All that glisters is not gold
We are in the midst of an unprecedented startup boom and I have begun coming across a lot of professionals who want to abandon their top class careers and become ‘startup entrepreneurs’. When I ask them why, they refer to lofty valuations (all on paper) and fancy press stories of Mergers & Acquisitions. None of these guys have seen a downturn and not one will survive the crash of the 2000 dot com bust if it repeats itself. They just don’t have that survival stamina.
A startup business takes 10-20 years to become seriously successful. Angry Birds took 8 years just to get their first hit. Nothing comes easy – least of all, riches!
A fool and his money are soon parted
Last week I was speaking to the head of marketing of a well-known MNC, who was about to squander Rs. 75 lacs of his personal money as contribution towards a startup. When I asked him why he was putting his hard earned money at stratospheric premium into an unknown Company, he seemed bewildered to explain the logic to me.
Just because professionals have saved large sums of money doesn’t mean that they invest with the same largesse into small startups. It’s a well-known fact that in 2015, you need the least money and most brains to create a valuable startup and not the other way around.
Professionals don’t seem to get that logic!
Birds of a feather flock together
The Art of Starting Up is as much about execution as it is about meeting people, getting connected, and hanging out with as many diverse people as possible with whom you will be doing business. Older professionals from formal backgrounds, sometimes lack the motivation to go down to the fingernail grime of the business and mix with the ordinary.
In a conversation with an entrepreneur who started a grocery business, he revealed how he spent 2 years going to New Mumbai Grocery Mandi every day at 3.30 am to understand how the business of fruits and vegetables operated. When I asked him why the other startups who were bigger and better funded than him had failed, he said, “Sir, the bosses are too big to come to the market and understand why onion prices fluctuate by 2 rupees. Without that knowledge they cannot succeed”.
Professionals must be able to overcome their comfort zone of hanging out with people of their own circuit if they want to become serious entrepreneurs.
There is no such thing as a free lunch (oh really?)
Well there is, and that’s the secret of starting up! Most of the recent success stories in the digital startup world have been massive businesses that were set up to be given away for free to consumers before being leveraged to generate revenue.
The art of ‘letting go’ and waiting and waiting till the time is right to make money, is a discipline that very few can inculcate – the least of whom are professionals.
One dude I knew, invented online reputation management tools way before the world knew what ORM meant – except that he insisted on charging for it from day one, despite my passionate pleas to let it float free for a while. He said, “From the Fortune 500 Company I come from, if you don’t charge the consumer the first time, they never pay” Bad luck! He closed down before he even started and then had to live with the pain of watching small-inexperienced startups eat his lunch up.
A penny saved is a penny earned
Nothing better than a Marwari background can teach you that! In each business I started, beginning with contests2win.com way back in 1998, I kept snooping around for that one ‘sugar daddy’ that could help me by promoting my business for free. For contests2win it was MTV, for Mobile2win it was Sony TV and for Games2win it was Viacom USA!
Most of the professionals I met along the way always thought I was a fool and recommended that I spend on “marketing and promotions” because that was the “only” way to get noticed. They always asked me to “budget” for this and that. When I told them I was too broke to have a budget, they laughed!
Starting up is probably the worst punishment you can inflict on yourself. But no one will tell you that, because that’s not being “professional”.
Recently, while going back home my daughter told me about her day in school. She happily said that her teacher asked, “What do you want to be, when you grow up?” I asked her for her reply, and she said, “I want to be a business woman just like my mother!” Tears rolled down my eyes, I had always been living in the guilt of not being able to spend enough time with my children due to the work pressures.
Her answer gave me enough confidence to take pride in my entrepreneurial journey. I realized that I am setting an example for my daughter on both personal and professional levels. I am teaching her to be independent and helping her pursue her dreams when she grows up.
Here are some of the key pointers on what can be done to inculcate entrepreneurial skills in children:
Goal setting is vital for future success– The best way is teaching your children to accomplish their goals in a fun and exciting ways. They can write down their top 10 goals and then choose the one goal that would make the greatest positive impact in their life.
Kids must learn to recognize opportunities– Your kids can point out what stresses them or causes them grief. They can give out possible solutions to the problems; this would help them focus on the solutions, rather than the problem itself.
Selling is involved in every part of life– Encourage your kids to start with smaller projects like selling their old toys, having lemonade stand. Let them decide the price and sell it to their customers. This skill will last a lifetime.
Inspiring creativity will build marketing skills– Motivate your kids to start observing marketing materials like billboards, advertisements. Know what catches their attention and what they would do to improve their liked advertisements.
Effective communication improves all relationships– Most important thing is good communication skill. Teach children about using verbal and written communication in the way it is supposed to be.
Independence creates confidence– Next time your kid asks you to buy a new toy for them, ask them various possibilities of creating money through entrepreneurship. Let them find out different ways in which they can buy the toy themselves
One question I get consistently is how I build a team when I can’t afford a full-time salary for someone. This is an excellent question and the best ways to do this are:
When you give to others through mentoring, masterminding, giving referrals, sharing ideas and tools and simply making an effort to assist someone else in their business, the door swings wide open for you to receive the same support. Solo-preneurs wear a lot of hats and the biggest mistake I have made is to do tasks that take up time from me actually receiving the hourly rate that I am worth. I have utilized masterminds and people who can contribute a few hours here and there in exchange for trade, money or simply service.
Always remember there is a win/win.
When you are truly committed to creating something in your business there is always someone who is willing to give you a hand, to a beneficial trade or cut you a break. And never underestimate resources coming into your space so you can make things happen.
Hire an Assistant
Does this freak you out because you aren’t sure how to pay them? What I know is this, when you are willing to commit to what you do best and delegate the tasks that you don’t make money on, the resources come. This often takes a huge leap of trust so take your fear with you and make the jump. Think about it, when you are no longer doing tasks like in my case filing, sending packages, making copies, etc. I have a ton more time every week to do what actually makes me money, which makes it possible to hire an assistant.
When you are secure with your personal assistant, you can upgrade to a virtual assistant, who is usually paid a higher hourly wage and is your partner in your business and can complete higher-level tasks because they know your business, how you work and what needs to be done to add to your bottom line.
Participate in a Regular Mastermind
Having participated in many masterminds, I am continually amazed at the power they bring to my life and business. This is the best way you can create a team without capital!
A mastermind is a group of 3-8 people (I prefer no more than 8 and they may be a little big) that meets on a regular basis and you discuss ideas, challenges about your business. Everyone in the group focuses on your business and provides ideas, feedback and support to break through the barriers holding you back. My preference is to have a mastermind that includes a variety of expertise and people who will be HONEST with their feedback. If you are in a mastermind where everyone thinks just like you, you will NEVER grow. Wouldn’t you rather know sooner than later that a business idea you have needs an adjustment? Having people in your mastermind who will give you honest feedback is ESSENTIAL to making sure you continue to grow.
Ideally masterminds, meet at least monthly and I like to give each person in the group at least 10 minutes to get feedback from the group. The key to having a successful mastermind is you have to meet regularly and consistently. All members get to participate and be committed to attending for a mastermind to be effective.
When you manage your time, you will literally have physical, mental and emotional room for people to join your team. When you don’t make time to come up for air, it will be impossible to manage one other person let alone a team. You have to first make the space in your life before you can add more to it.
This puts me back into control over my time and what I focus on. Separate your tasks into Delegate, Delete, Do It or Defer. Have a file folder that you review regularly with each set of tasks in each category. If something has been in your defer file for two weeks or more, considering just dumping it. One of the reasons entrepreneurs feel so overwhelmed is because everything feels like it’s urgent.
When I feel like everything is important, I ask myself What will make me money today?, What will take me closer to the biggest goal I have right now?
More Time Management Tips:
Schedule your time in 15-30 minute increments if you have to so you can get into a regular pattern of managing your time. Schedule time to do your self-care, eat high-energy meals and take a break.
Categorize your time into Focus, Flex, and Free
Focus Time:plan long-term projects. This is where you work ON your business not IN your business. Get away from your office or home to do this so you can truly focus and plan. When you are in Focus time, turn off your phone, close your email and shut your door. Give yourself allotted time to work on something. Work on a project for 30 minutes and set a timer. Then take a five-minute break and move onto the next project.
Flex Time: This is when you are actually making money, when you are working with clients, making calls, emails, managing your team, etc.
Free Time: This is when you do everything else.
Batch your Time:Run all of your errands at once, make all of your phone calls together, answer emails during specific time throughout the day, rather than having it interrupt you through the day. Do your social media all together and set up Twitter and Facebook on your phone so you can stay active in social media (if you choose to) without having to use the computer. I personally recommend turning off all of the mobile alerts on your phone so you aren’t bombarded with texts or emails when other people interact with you on social media.
Overall, the key to creating a team to support and assist you is you have to first believe in your value of what you are offering. When you work on yourself, you start seeing results in your business, relationships, health and your entire life.
Alok Kejriwal is one of the mentors on MakeIndiaWork – the startup ecosystem by MonsterIndia.com to support and encourage startups. Here Alok shares about what pasta can teach entrepreneurs.
I am obsessed with Pasta. Ever since I traveled to Italy to get trained in the factories there (I used to work in my father’s socks factory), I cannot get Pasta, its permutations, shapes and sizes and of course how it is cooked – out of my mind.
In the context of Pasta, Al Dente in Italian literally means ‘To the tooth’. This refers to that ‘perfect’ moment when the Pasta is firm, strong, crisp and cooked – but not soft and supple. It’s just the way it should be. The best way to get your Pasta to be Al Dente is to keep nibbling on a piece of Penne or the Fettuccini while it is boiling. The very moment you can bite into the pasta and yet feel its firmness, it’s ‘Al Dente’. Immediately drain, add whatever you have to into your Pasta and enjoy (I like it with very little garlic and mushrooms sautéed in olive oil with mixed Italian herbs and top it with grated parmesan cheese). Buona Appetito!
Now, observing the ‘Al Dente’ method has inspired me to think of ‘perfect moments’ as they appear in an Entrepreneur’s life. As they say, you can never time anything to perfection, but just like Pasta, if you know when your best time is near, you can leverage it well.
Some of the instances when an Entrepreneur can enjoy her ‘Al Dente’ or perfect moment:
I can barely cook, but my cooking is better than yours.
Sometimes, knowing little of something absolutely new is better than knowing everything of something very old. To explain – in 2003, when we began working with Sony television in India on Mobile VAS, we were the only Company in India to understand ringtones, sms gateways etc. Just the fact that we could manage ‘mobile stuff’ won us the Indian Idol business in India and 50% revenue sharing across the board. Circa 2009, everybody knew how to do everything and the party was over. But in those 6 years, we managed to fund and exit the business!
Grow the Walnut – Don’t try to eat it if you can’t open it.
In 2006, Mobile2win China was in business since the last 5 years and the operational difficulties in China were increasingly hammering us. We had a great platform, operator connectivity across the length and breadth of the PRC and very scalable technology. With all this, we were still struggling to make money. We had grown and ripened a beautiful walnut but couldn’t understand how to open it and enjoy it. If we waited too long, the fruit inside would rot. As we were wondering, the Walt Disney Company came along. They were keen to have a ready-made mobile platform with operator connectivity in China! They weren’t looking for revenues in a Company but an operation with employees and licenses and the knowhow. They bought out mobile2win from us in an all cash transaction that made us 6x on our original investment. Disney was the squirrel who was destined to eat the nut. We were fortunate to find them at just the perfect time!
Being the first item on the buffet table!
By 2007, lots of VCs who had made money in the MMOG (massive multiplayer online games) business in China and Korea were punting that India would be the next geographical bet for massive valuation businesses using these games. Their thinking was that China and India were similar in many ways, and if Shanda and The9 could become billion dollar plays in China, the same story could repeat itself in India. As part of this punt, VCs began looking at entrepreneurs in India who had gaming experience and my name along with that of my co-founder – Mahesh Khambadkone popped up. A few meetings later, we had co-founded Games2win and were given a cheque of 5 million dollars by Clearstone Venture Partners to start up that business. It’s full credit to Clearstone that they quickly accepted our point that MMOG was not working and allowed us to change our business model to casual snacky browser games. But Games2win was started up because we were the first set of entrepreneurs that the VCs met when they came to the buffet table. I guess we were the right people, in the right place and at the right time.
‘When’ is a matter of personal taste…
If you look at the cases of Yahoo passing Microsoft, Groupon saying no to Google, it’s the chef saying, ‘I don’t want perfect Al Dente. I’m happy to serve the pasta maybe soft, maybe supple but at the time I want to serve it’. Nothing wrong with that! Yahoo and Groupon continue to march on. On the other hand, Sabeer Bhatia sold Hotmail much earlier than the Al Dente moment. Given the way valuations have soared, Hotmail could have fetched 4 Billion, not 400 million? Who knows?
If there was ever a perfect ‘Al Dente’ moment, it was when Steve Case sold AOL to Time Warner. A small fledgling company positioned itself so cleverly to an old media behemoth and the values that it extracted are now historical and soul shattering. Unfortunately, in the case of Time Warner, what they thought was ‘Al Dente’ Internet Pasta turned out to be Al Dente Rotting Garbage. Billions of dollars of value were destroyed cleaning up that horrible stinking kitchen (AOL+Time Warner).
Chef’s tip: Be your own Chef. Taste your Pasta at all times. When you think the time is right, just serve it – ‘Al Dente’ or not.
Alok Kejriwal is one of the mentors on MakeIndiaWork – the startup ecosystem by MonsterIndia.com to support and encourage startups. Here Alok shares metophorical similarities between the movie ‘ The king’s speech’ and an entrepreneur’s life.
Within seconds of watching ‘The King’s Speech’, I was convinced that this amazing movie could have easily been called ‘The Entrepreneur’s Speech’.
There are so much metaphorical similarities between this Oscar winning movie and an Entrepreneur’s life:
Starting up is like Stammering:
Lionel the speech specialist makes a very important point in the early part of the movie when he states that, “no child is born with a stammer”. Various circumstances lead people to stammering after they are born.
I believe that Starting Up and the attempt to become an Entrepreneur is almost like living with perfect speech and then going out of your way to ‘learn’ how to stammer.
Most of the people in the world live regular, typical and if I may add, ‘normal’ lives. Then there comes the Entrepreneur who on the onset behaves and sounds different. She ditches her professional life for a chance at doing something that may never succeed. The cozy ensconces of a Monday-Friday working week are forsaken for a mad all-day, all-year, all-hours working frenzy timetable. Her personal life takes a big hit, where friends and family are sidelined.
If you examine a dedicated entrepreneur closely, you will clearly see the shadow of ‘the odd man out’.
Personally speaking, in family events and while meeting very accomplished career professionals, I feel like a Martian – unable to relate to what is going on. When I speak, others react like I am speaking with a stammer – rambling ideas and words that make no sense to them.
This is not just a King, but also an Entrepreneur talking….
What is the ‘Entrepreneur’s Stammer’?
The business problem she takes up on herself to solve.
Imagine Colin Firth (The King) training to stammer.
That hard but flawless effort won him an Oscar for Best Actor (2011).
In exactly the same way, entrepreneurs struggle and struggle and identify a simple or a complex problem, embrace it and then do all they can to overcome it.
Let’s travel back in time and remember how Telephone numbers in India were ‘discovered’ by consumers like you and me just 10 years back:
The Mumbai telephone directories were 3 large meteor rocks that fell into people’s homes every year. They were bulky, unmanageable, tiny font sized and extremely difficult to navigate. They made good dumbbells for those who couldn’t afford the real ones.
So, if you wanted to make a telephone to call ‘Games2win’ the new startup in town, the process was as torturous as the Spanish Inquisition. Thumbing the ‘meteor’ directory would often yield no results since updates were made once every couple of years (Hence startups were rarely listed). However, if you looked up ‘Rajesh Shah’, you would come across 459 people to choose from. Frustrated, if you called ‘197’ – the State telephone directory service, the quality of help you would receive was amazing. The person on the other line would treat you like you were Osama Bin Laden – someone to get rid of ASAP.
This was a huge problem that desperately needed a solution.
A Colin Firth was badly needed – who would be courageous enough to find a solution to this epic problem.
And, a company called ‘Just Dial’ came along, and voluntarily accepted the role.
In the past decade, Just Dial has mastered the art of ‘discovering’ a telephone contact and the process they have evolved is nothing short of magical. When you call them, they recognize you, search and retrieve your desired number in seconds, sms and e-mail the same to you and also offer many alternatives. In a few months, Just Dial will list itself on the Indian Stock markets and I forecast a Billion $ Company in the making.
Success in solving any universal problem creates massive value – the equivalent of the Oscar Awards for the Entrepreneur.
Now that I stammer, who is my Doctor?
In the movie ‘The King’s Speech’, Prince Albert (Bertie) goes to Lionel – the speech therapist.
Entrepreneurs go to VCs and to Angels.
VCs and Angels are our Lionel’s. They understand entrepreneurs and the problems that we have obsessed ourselves with. They sit with us and help us – not just with their money but also with mentorship, guidance, board connections and creating a broader vision for the business.
In the movie, carefully observe the role that Lionel plays in Prince Albert’s life – it goes way beyond just being a speech therapist.
(Ps – not all VCs are the quality of Lionel. Some of them are horrid – like the quack doctors in the movie who suggest that Prince Albert smokes to ‘relax’ his lungs’).
Stammering can create a King…
Prince Albert was completely obsessed in solving his speech impediment. He dedicated himself fully to doing just that. In his weakness, he found his strength. Unlike his philandering brother, Albert remained rooted to domestic affairs – both personal and that of his Country. His ailment made his sensitive and resolute to handle the threat of the World War and to be able to make difficult decisions and motivate his countrymen to overcome the biggest test of their time.
He was used to pain and in doing everything to overcome it.
Entrepreneurs also become completely captivated by their problems. They live a life of pain – embracing and enjoying a self-inflicted pain. Their struggles and torments become the motivation and inspiration to thousands of other entrepreneurs waiting in the wings.
Like Albert, entrepreneurs who strive hard and give their sweat, toil and blood become kings. Like Albert they contribute not just their country but also to the world at large. And like Albert they remain historically etched in the minds of generations to come.