Note: This is a long form article. It will take time if you want to read it through the end. If you’re heady about entrepreneurship, you may be offended by a lot that’s in here. Also, if you’re looking for a listicle or an article to skim through, this isn’t it. So be warned before you start 🙂
Over the last few years, literature around entrepreneurship has increased manifold. Sadly, much of it is prosaic; some puerile.
I’m a demanding reader. Like most, I read a lot on the internet. I look for articles that engage my curiosity, amuse me, educate me or inspire me. I relish stories well told. I love articles that challenge my thinking and alter my world view. They make me realize that between the oft-cited ends of black and white positions lie not just drab shades of gray, but the entire vivid color spectrum. (Don’t trust me? Ask Photoshop!)
There have been articles and books on entrepreneurship that have done all of these. Books like ‘The Everything Store’ on Jeff Bezos offer a glimpse into how complicated setting up a new age business is. Others like ‘The Startup of You’ by Reid Hoffman and Ben Casanocha help pre-empt many mistakes first-time entrepreneurs make. Websites like www.avc.com offer sound reasoning on financing and share holdership. Many articles by the likes of Vivek Wadhwa explore what’s happening around the world and exciting new fields where people setup business. The common thread across the good articles is how grounded and truthful they are. Literature of this kind enriches your view of the world of entrepreneurship.
Then there is the other kind. This is the frothy tabloid variety: exultant about projected valuations for businesses that on close scrutiny appear exorbitant; breathless in dissecting every short term trend as if it will change the world; and forever in search of the next big thing.
Bad entrepreneurial literature largely follows one of three threads.
Firstly, there’s the variety that announces every funding statistic with ecstasy and tries outdoing others in spotting ‘trends’.
Every article here veers to the extreme — laudatory about the new startup on receiving funding, and eager to predict how success in the category will pan out. Witness the innumerable articles about Big Data, sharing economy, e-commerce and others today.
This narrative is invariably presented as a ‘Breaking News’ story — quick to predict trends, build heroes, present abstract reasoning on why this trend would make billions of dollars, and invariably in a few years, write obituaries dismissing their chances of success. Need examples? Read past literature on NFC or QR codes.
In the initial hype time, many more entrepreneurs and investors are drawn to explore the area. Driven by euphoria, money flows in as VCs and angels look to cash in to the trend, leading to more ‘Breaking news’ of new companies and investments. Other companies are accused as laggards, leading them to start their own initiatives in the area to tell their shareholders that they have a foot in the door.
Every company is highlighted as a potential Google or Facebook, every new founder eulogized.
Business models are given a miss in the coverage. Founders get away with talking scale, attempting growth-hacking, and if all fails, pivoting to something as ostensibly world-changing. Posturing is taken for substance; intent for achievement.
It’s one big party till the basics come undone.
The risk with this set of articles is they distort what entrepreneurs need to be prepared for when they start off in this new domain.
Entrepreneurs are led to believe that if they pick one of the new age ideas and get funded, they are well on their way to success. No one mentions that when the basics of business are not well understood, investors bet on various companies to spread their risk. They know it is a long shot and are willing to bet on few successes from many outlays. For the entrepreneur, it is not an option. It will consume his life and effort and often come to naught.
Don’t get me wrong. I’m not in any means undermining the courage it takes to start something anew. But I think we need to take a more balanced look at new ‘trends’ and explore longer-term merits before committing to it.
I wonder why so many people put themselves through needless struggle due to misinformation. In our rush to be successful and well-known, do we realize that we could avoid much of our future woes with some initial planning?
The fundamentals of business do not change. You need a market that values your product, sound planning to take things from a concept to a viable product, a good team to support you, and most importantly, a business model.
Throwing together an app and expecting people to discover it, love it, and click on ads does not make you a millionaire. Planning a business model, in contrast, could.
Packaging known wisdom
Secondly, there is the variety of entrepreneurial literature that potters around important issues but never gets specific.
Most articles tell you about why ‘wow’ user experience is a must, the importance of having a good co-founder, lessons entrepreneurs can learn from a variety of contexts in their lives and the like. Once you’ve read a few, you realize that these are the tabloid variety of articles. There’s never something that you can take away and work on, but there’s just enough to entice you to read. Be light on specifics is the mantra. After all, if you don’t give specifics, you can’t go wrong. You can always say that your opinions were shortchanged by shoddy implementation.
The offline version of these are panel discussions at startup events.
Go to a few and you realize that mostly everyone repeats the same advice and statistics. People use generic examples like Apple’s focus on design, how companies like Nokia missed the boat on this and other well-known illustrations. This makes the speaker or writer look smart without actually saying anything of importance.
All wisdom is distilled into simple homilies.
But do not make the mistake of asking questions about details. These articles or talks are never meant to be about them, as the speaker glosses over real world difficulties to spin an interesting tale.
As readers, we often realize that much of this is trite — witness the innumerable number of articles of how people have learned entrepreneurial lessons from watching babies, dogs, pets and what not. You would think people are in a heightened state of awareness, teasing insights from every interaction of the day.
Given the rise of ‘growth hacking’ strategies, this variety is unlikely to die and will make the signal to noise ratio for good insights tougher to find.soon, and will make the signal to noise ratio for good insights tougher to find.
The promised life
The third variety is like an advertisement without a disclaimer. This variety markets a life that’s lived on ‘one’s own terms’, a promise of a life of guts and glory. Whatever happens, do it your way!
Much of this paints the picture of heroic struggle. This kind is aimed at first-time entrepreneurs, or those looking to start off. Anyone who has started something off, irrespective of how successful it has been, is allowed to proffer advice. Every story is incomplete without a triumph, even if it is in the coming. People never fail, they ‘pivot’. In case things go wrong, they ‘exit’. Just don’t ask about terms of the exit.
In this world, ambition is the ultimate seductress; struggle the ultimate romance.
The trouble with this thread is that it is, like the first variety, misleading and dangerous. It goads people on without outlining the risks.
Literature of this kind should be more nuanced and truthful. It should ideally present different stories of those who tried and failed and analyze why so. I do not mean the well marketed ‘failure events’, where people celebrate failure and gloss it over as an achievement. I mean real stories that let people know what’s at stake. Every opportunity has a cost behind it; every success a sacrifice. Entrepreneurship is a considered choice, not taken on because it is cool to be in the ‘club’.
Don’t get me wrong. I am not suggesting that people do not become entrepreneurs.
I think entrepreneurship is definitely an idea everyone should examine at some point in their lives.
But I find it unsettling that many of the entrepreneurs whom I meet seem enveloped by the idea that success as a natural outcome.
They have risked it all on an idea. They rarely pause to examine if their idea or product has merit. Or understand the effort it would take to make it successful. They have taken a leap, and now the universe has to pay them back.
Not many evaluate what their key strengths are as individuals, what are real market opportunities and whether they have a shot at success. Many quit their jobs based on fads of the moment, just because the urge to be an entrepreneur is strong.
You have multiple folks trying to build software, games and utilities that have odds stacked against them. They don’t think through whether it is the right time in the market for an idea, what factors can determine success and how many of these they can control.games and utilities that have odds stacked against them.
Much of the available literature of this kind is about how successful people got to where they were, often presented with the fanboy worship of the writer. So you get a laundry list of instructions asking you to be paranoid about your business, choosing the right co-founder, running teams effectively, pitching yourself, etc. There are a bunch of tips from others’ lives as if urging us to apply them to our own lives for definite success — the ‘how I did it’ and ‘how I live my life’ tales.Sadly, they don’t highlight that the journey is uncharted, and there are no milestones to mark progress. What works for one does not work for another. You cannot borrow tips from someone’s life and apply them to your own to achieve success.
We find advice against the grain of logic — don’t worry about profitability, there’s a ton of money waiting for the right idea.
It could be your idea that VCs smack down on as the winner. One day, people will talk about the tremendous odds you faced to push their vision through and finally, in a moment of triumph at a product launch that drives the world into a tizzy (or a funding round that’s publicized), punch the air to show that you did it your way.
Armed with vision, tenacity and hubris, we are told, we will definitely succeed against all odds. Life will be tough, but why dither? Struggle makes you stronger.
This appeals to our inner emotional self rather than a rational calculative mind. It promises a chance to burnish your name amongst those-who-count in the world.
Literature of this kind indirectly rails against being a salaried employee. There are many presumptions about this role: one does not have control over one’s destiny, has to do work that’s mundane, is not able to reach one’s potential and will ultimately regret taking up the Hobbesian choice: give up a life of glory for a one for steady accumulation of wealth and comforts.
But take note of why people jump ship into entrepreneurship, and you’ll see many who have been seduced by the idea of being an entrepreneur rather than the idea of building a business or solving a market problem.
What we need are more articles that present a firmer picture. Articles that advice on how to assess market opportunity and see if it is viable, questions to ponder on whether you feel deep within that you should be the one to fix it and a more balanced view of what you will be giving up. We need articles that make you question beliefs that you strongly hold true, for that is when you will be open to the possibility of being wrong, and hence be willing to learn. We need articles that force people to think about worthwhile problems to solve on which they can build a business rather than just the fad of the month.
Till then, as Bertrand Russell says, “A wise man will enjoy the goods of which there is a plentiful supply, and of intellectual rubbish he will find an abundant diet, in our own age as in every other. “
Note: This is a revised version of an article I had written two years ago. I know that there may be many who’s views differ from mine. I’d love to hear what you think about this in the comments section.
The contribution of entrepreneurs to boosting the global economy is undeniable. Right from the Graham Bell to modern day Steve Jobs, their journey of innovation has greatly benefitted their countries and the world in general.
For sure, entrepreneurs are cut from a different cloth, though one cannot really pin down a particular type that defines them. They are driven, creative individuals with a great capacity to overcome hurdles and adverse conditions in order to realise their ‘big dream’. It’s commendable how they manage to fulfil a gap in the market or create a new demand altogether with their disruptive ideas.
Here are some of the most consistent six qualities that define a successful entrepreneur and make them tick in a highly competitive environment:
- Risk Taking
They have to have nerves of steel to branch out on their own, do something new, with a dream in their head and little in their pocket. “To win big, you sometimes have to take big risks” in the words of Bill Gates, aptly defines their attitude. It also indicates an acceptance of failure as apart of that risk. Successful entrepreneurs usually chalk out all the aspects of failure and keep resources, plans and bandwidth for dealing with them as a standby before taking the plunge. It is the challenge of making a winner out of nothing which gives them the adrenaline push to make them take the plunge.
- Ability to influence others
Entrepreneurs are no less than a firebrand idealist, politician, military strategist and actor rolled into one. They have to be able to sell their dream to their employees, customers, investors, shareholders and other stakeholders. Entrepreneurs possess a very high social intelligence and an ability to build relationships that help in their company’s growth. As a result they are able to get the help of mentors for valuable advice, garner support from fellow entrepreneurs for networking and build a loyal and capable team for the firm as well a loyal customer base. It is this emotional instinct and empathy with others which helps them strike the right cord with others and get things moving in the right direction.
Foresight is perhaps what sets the best entrepreneurs apart from the rest. After all, entrepreneurship is all about identifying the right opportunities and seizing them at the right time in order to stay ahead of competitors and conquer a larger share of the pie. The key is to be able to spot the opportunities long before others do. For instance, Steve Jobs was always known to be steps ahead of competitors when it came to technology, and hence was able to launch one iconic product after another while he was at the helm at Apple.
- An eye on the ‘Big Picture’
Entrepreneurs are visionaries and always have an eye on the big picture when taking any decision. They understand the implication that the smallest of decisions can have on the organization, and hence, know exactly whether or not it is in its the best interest to implement it. The entrepreneur’s true value is in creating the path to the vision and guiding the company towards it, making sure they never lose focus. In fact, it is very easy to stray as the daily struggles and challenges tend become the biggest distractions. It is during such times that they not to hold fort and lead the way for others to follow, inching closer to the goal with every step. It is best to leave the details and day to day workings to the staff and managers.
There are very few guarantees on the path of a start up and an entrepreneur is well aware of that. A few rough knocks and road blocks are treated like learning grounds for the future. Instead of agonising over the wrongs, they analyse what went wrong, and take corrective and preventive steps to correct themselves. Above all, they don’t shame failure, but celebrate it, because with every failure you learn something new that you can use to propel yourself and the startup into ‘something bigger’. Mr. Sunil Mittal, is a great example of this quality. Even after two failed entrepreneurship attempts at a cycle parts business and a capsule making business, he didn’t give up. He started again with a new enterprise of manufacturing push button telephones, and ever since then, there’s been no looking back!
More than anything, it is the attitude that sets an entrepreneur apart from others. Real entrepreneurs are never afraid of failure. They are driven by the desire to accomplish their mission, no matter what and have a ‘never say die’ spirit that keeps that going even under the toughest of circumstances. No amount of pressure can make them crumble. Rather, they see every problem as an opportunity to come up with new and unique solutions that’ll work.
It takes a lot more than a great idea to become a successful entrepreneur. Aspiring entrepreneurs can take a cue from these points and imbibe some of the aforementioned qualities, if they plan to prove their mettle and are here to stay and make a difference.
Chief Mentor & Accelerator Evangelist at GHV Accelerator
The life of an entrepreneur is really interesting and very challenging. It is interesting because they are trying radical ideas and something which has possibly been never tried before. Challenging because they are walking along unchartered territories and there is joy, disappointment, surprise, shock, failure and success lurking around every corner. It really tests your persistence, patience and steadfastness as you keep discovering your path amidst this uncertainty.
The question is – what keeps him/her going? What is that single most important trait which gives strength to the individual to beat all odds and deliver something which is valued manifolds as time progresses?
I think that the single most important talent is to use every challenge he faces to his advantage, by resolving to fix it for the betterment of the product, team and overall venture.
Now contrast this to the corporate world. When majority of the employees in a corporate run into a problem which they couldn’t foresee or have no clue about, they usually resort to one of these standard options (i) find an excuse which can convince their manager (ii) present data or polish a ppt in a manner that the problem is under wraps (iii) find a scapegoat to take the blame. In the end, when faced with a challenge which has disrupted all their planning, the recourse is to save their skin one way or the other. Nothing wrong here; as this is the inane tendency of all living beings!
The entrepreneurs also do exactly that, i.e. save their skin in the startup game. It’s just that they know that the only way to do this is to get a handle on the problem and find a fix or a workaround so that the venture can still make progress. Actually, they have no other option. There is no boss to think of a convincing excuse, no scapegoats to take the blame and any data-dressing to swipe the problem under the carpet will tantamount to fooling no one else but themselves!
So, the entrepreneur does what they must – take the bull by his horns! Roll-up their sleeves and get down to fixing the problem. What could it be – is it because the customer does not understand the true value proposition of the offering? Is the UI confusing and not good enough? Are people gaming the system? Or is he targeting the wrong segment altogether. Could it be that their go-to-market is not really helping him to reach their target group? This analysis starts and one by one, every single proposition is ruled out with the data available at hand; and accordingly the solutions are deciphered. By the time they have fixed the problem, either the product has improved or the go-to-market strategy has become more laser-focused. Whatever the case may be, the venture has moved one step closer to success!!
But then the dawn of the very next day brings with it new challenges and the entrepreneur gets into this never ending problem-solving mode. With every fix you rise, create a new set of challenges and fail a little, solve them and then rise again. The cycle just keeps going…
Entrepreneurship is the buzz word right now. Everyone seems to have that next disruptive idea which will create the next unicorn. Now, if you are the founder of a startup, you are looked upon as a role model and the society, in general, puts you on a high pedestal. It is amazing how things have changed in the last decade or so. When I completed my engineering and joined Philips as a graduate apprentice, my family and folks felt I had made it big in life. Working in a prestigious MNC, the expectation was that I would have a steady and secure job and retire from the same company. Not any more. Neither are there any MNCs (or for that matter any company) which can promise you a steady secure job till retirement, and nor the youth has the temperament, patience and attitude to grow steadily along the origanizational hierarchy. So, everyone must try their hands at entrepreneurship and make it rather big very very quickly.
This is great… as there is no harm in being ambitious (can we say the same for over-ambitious?) but you better know what it takes to be an entrepreneur and whether you will enjoy the startup journey or not. I would like to make one thing crystal clear – running a startup is 99% hardwork and 1% luck. Apart from hardwork, there is no magic sauce to success. And If you get de-motivated and stop enjoying swimming against the current mid-stream, well…you know well that you are destined to sink.
So here are some traits you must either have, or inculcate if you want to be a successful entrepreneur:
Your brain doesn’t need time off from work!
Don’t get me wrong. I am not suggesting that you need to be a workaholic working 16-18 hours a day. What I am saying is that when you run into a problem, you can’t switch off your brain from thinking about it unless you have found a way out. This is a 24×7 thing.. and it doesn’t matter what environment you operate in. Subconsciously, you are always observing and picking clues to find a way out. If you are the kind who usually switches off while trying to solve a problem after some time, you will not enjoy the startup journey.
You live in neither the past, nor the future but the present and only the present!
While every startup has a goal and a grandiose vision that they are working towards, the founding team is deep rooted in the present. The entrepreneur has to have the mindset of “this is where I am now and this is what needs to be done next.”
Often entrepreneurs, especially the ones who have spent a lot of time in the corporate world, start to compare their lifestyle before and after doing the startup. All the corporate highs of delegation, power, influence, travel and meetings are suddenly gone. If you are the kind who can’t let go of the past, you will not enjoy the startup journey.
Then there is another breed of people who spend more time in dreaming about large funding, valuations, million $ buyouts, front page news and a glorified future; instead of focusing to solve the problem at hand. If you like day dreaming about the future more than the action, you will not enjoy a startup journey.
You like to dirty your hands, each and every time!
In the initial phase of a startup, the founding team has to get their hands dirty in tackling every problem faced -take the bull by its horns. There is no one to delegate to and even if you find someone to delegate, the results can be disastrous. If you delegate too soon, you will never experience the challenges of your own business and just forget about guiding someone else to fix them. You’ll be taken for a ride.
Now there are some among us who don’t like to get their hands dirty. They prefer delegating instead of tackling or look for some god-sent help to fix the issue. This could be due to multiple reasons but the most common being an over-protected upbringing where you had your parents fix every problem for you instead of them encouraging you to find your own solutions. Whatever is the reason, if you don’t relish “jumping right-in and I’ll find a way to swim”, then you will not enjoy entrepreneurship.
As you live life, you are looking beyond money!
Entrepreneurship is possibly the highest risk career you can endow upon yourself. 90% of the startups fail due to one or the other reason. Also, I fundamentally believe that money is always incidental . Money has its own ways to meander and criss-cross your life. Sometimes, it comes out of no-where and other times you lose it for reasons totally beyond your control. Mankind has still not found the algorithm which can guarantee you assured returns in all times, throughout the span of your lifetime.
So if you are someone obsessed with money, you will not enjoy the startup journey because you have set a goal for your venture which is beyond its limits to deliver consistently. You will stay motivated till the going is good. The instant you hit the first valley, which is a given thing during the startup journey, your interest will start to wane out.
You need to be obsessed.
Carrie Layne – “Entrepreneurship is not a part-time job, its not even a half-time one… It is a lifestyle.”
This article was originally published in Inc42.
Open Innovation has lead to the creation of priceless resources like Wikipedia, and Free and Open Source Software (FOSS) that form the foundations of our digital society. The freedoms enjoyed by hundreds of thousands of young people around the world, hacking on laptops, hacking on servers, hacking on general purpose hardware is the primary source of the innovation which drove much of the world’s great economic expansion in the past ten years. This freedom to hack has enabled innovation and entrepreneurship, and made it possible for innovation to occur where it can occur without friction, which is at the bottom of the pyramid of capital.
As India witnesses one of the greatest entrepreneurial spurts in its history, much of it based on technologies built through collaboration and openness, it is important to understand the forces that drive the Open Innovation ecosystem. In this session, some of the brightest minds in the Open Innovation ecosystem, and the world of FOSS, will discuss:
- 1) Why Open Innovation is important for India’s digital future
- 2) Why Open Innovation and entrepreneurship are deeply interconnected
- 3) How India can become one the leaders of this entrepreneurship
- 4) What India needs to do to protect and nurture Open Innovation
The speakers are:
Prof. Eben Moglen: Prof. Eben Moglen is Professor of Law and Legal History at Columbia University Law School. Professor Moglen is the founder of the Software Freedom Law Center, which has represented many of the world’s leading free software developers. Professor Moglen earned his PhD in History and law degree at Yale University. He has taught at Columbia Law School since 1987 and has held visiting appointments at Harvard University, Tel Aviv University and the University of Virginia. In 2003 he was given the Electronic Frontier Foundation’s Pioneer Award for efforts on behalf of freedom in the electronic society.
Keith Bergelt: Keith Bergelt is the chief executive officer of Open Invention Network (OIN), a collaborative enterprise that enables innovation in open source and an increasingly vibrant ecosystem around Linux. In this capacity he is directly responsible for enabling, influencing and defending the integrity of the Linux ecosystem. Central to the achievement of his goals is the acquisition and transfer of patent rights designed to permit members of the Linux ecosystem to operate free of the threat of assertion and litigation from those whose business models are antithetical to innovation and global economic growth in information technology and computing.
I’ve seen all sides. I’ve lived in big companies. I’ve been a technology entrepreneur. I’ve also lived inside dozens of startups as a proxy entrepreneur, aka an angel investor. And I’ve seen hundreds of software product startups as a grass-roots ecosystem builder in the past eight years. My conclusion is that in the end it comes down to just two things: Mindset and Conduct.
Entrepreneurship is a state of mind
Entrepreneurship is not just about having the greatest of ideas, knowing the best sales pitch, crafting the best marketing strategy, building the coolest products, or any of that sort of things.
Entrepreneurship is, in its unalloyed form, a state of mind. It is how you think, the way you think, and how you act. It is a state of mind that needs to be cultivated. It needs personal mastery.
Four mindset elements that really matter
Are you comfortable being the underdog? It’s only by seeing yourself as an outsider can you change the rules of the game.
Can you hold a contrarian point of view? This is what gives you a big spirit even when you are small in size.
Can you step outside your comfort zone? Having an internal, not external, driver for excellence is necessary to be world’s best at what you do.
Can you influence without control? Unless you can motivate an army of knowledge workers through empathy, storytelling and meaning-making, there is no revolution that’ll take place.
Personal code of conduct matters more than skills
Entrepreneurship is a team sport. Your rules of engagement with others matter. They determine if people will stick with you when things don’t work out.
Believe me, in the long run a personal code of conduct matters more than skills. Here is quick checklist:
Do you make things up, and make them happen? It’s all about outcome and action. It’s about producing results, not reasons. Do you keep your promises? Saying what you mean, and doing what you say is surprisingly uncommon. So making clear commitments – I’ll do my best effort or I’ll do what it takes – is often enough to stand out.
Do you give more than you get? Paying forward creates trust. Trust delivers speed and amplifies the power of collaboration. In today’s world, it’s a gamechanger.
Do you set people for success even though their definition of success is not yours? This is how you get loyalty.
You’ll find hundreds of books and websites telling you how to think, act and invest like Warren Buffett. Many people try out his investment formula but very few succeed. Why is this the case? Because, while the blueprint is pretty easy to understand, it’s really difficult to implement. Entrepreneurship is like investing and dieting–at its core it is simple, but not easy!
This blog post was written for The Economic Times.
“The Why” :
This blog is a very hard one to write and is almost equivalent to capturing what Po felt at the end of KungFu Panda (for uninitiated don’t worry next few paragraphs will make it clear). Therefore I am not going to attempt to explain the methodology in its entirety. There is lot of information online on Wikipedia and Effectuation. However I am going to provide crux of the learning (memorable one liners wherever possible) that I took away and urge readers to explore more. The questions from current entrepreneurs at the end also should help one to think of it in an applied context.
The concept is extremely powerful and yet very simple; but to truly get the gist one needs to have attempted at least one startup. In spite of this I recommend or even mandate reading this before anyone attempts Entrepreneurship. If you don’t believe me, see Mr Vinod Khosla’s handwritten notes and remarks of this paper written by Prof Saras (first good paper I have seen titled – What makes entrepreneurs entrepreneurial?
Prof Saras arrived at this insight after interviewing 45 successful entrepreneurial CEOs from varied backgrounds and industries. Success in this context is defined as Entrepreneurs who have been doing companies for over 15 years with multiple startups and at least one IPO. The interviews and the analyses focused on the decision making process and the personal convictions of the entrepreneurs apart from the business models and the numbers.
One of the strongest common traits that emerged out of this is the lack of belief in market predictions and trends. Instead these focused on what is tangibly available to them at that point in time. Basically work with whatever already is in your control and not predict the future. This obviously generated a lot of heated discussion amongst the early stage entrepreneurs present, as the first step of any business plan is market projection. It’s a very difficult concept to wrap the head around as most of us come from managerial background and have been conditioned to project a goal.
The second strongest common trait is “Co-Creation of future”. This is a phenomenal concept much different than prevalent thinking of co-founder, investor, and customer equations.
The method is called “Effectuation” (as opposed to causal) is ruled by few first principles explained below. (For folks clued into this whole thing there are some overlap/comparison with Lean movement as well as Theory of constraints. )
Bird in Hand:
Do not start with the result. An actual sale is the only form of market prediction that one should rely on.
Affordable Loss principles:
Invest only as much as one can afford to loose. In extreme ideal case it is zero. The affordability is not just about material aspects.
Crazy Quilt principle
Build a network of self-selected stakeholders. No competitive analyses.
Embrace and Leverage surprises (Not avoid them)
Pilot in the Plane
So if you can’t predict how do you operate? This viewpoint is, future is neither known nor predicted, it is made.
The two by two matrix below gives a categorization various perspectives on thinking about the future. Corporates and VC tend to go for first quadrant. While the most successful entrepreneurs operate in quadrant 3.
In action the effectuation process looks like this. The great emphasis is on really knowing who one is and defining the affordable loss (Box 2) from left. From then on it is really finding the co-creators and moving ahead.
The session concluded with many real life situations of the entrepreneurs present who shared their problems and an effectual way of solving them. Some of them with crux of the advise by Prof Saras are described in brief here.
1) If one is not focusing on market research, how do you know which market segments to go after? (Adarsh of Aindra)
- The first principles stress on doing what is in your control and getting a committed co-creator. So selection of the target segments should be dictated by these factors. (Bird in Hand) Affordable loss principle dictates how much are you willing to lose in search of markets and that will also play into decision on markets.
2) How do you decide when to expand on another geography? (Mukesh of MediaAnt)
- Base it again on the co-creation and bird in hand principles. Expand when it makes sense from the control perspective and when you have a committed co-creator.
3) What happens when effectuation ‘s first step (what we know, who we are) leads you to too small a niche? (Natwar, Around.io)
- Sometimes it is great way to cut the loss and attempt something else. However many successful entrepreneurs have found a general aspect that can be scaled into larger markets (Ex IceHotel niche realized that it can export iceglasses to major high end hotels, also curtain blinds company realizing it is in the business of light control and expanding into lamp shades.)
The crazy quilt and lemonade (Embrace the surprise) may lead the extended team and sometime co-founders to feel that founders are disoriented. How do you deal with such situations? (Avi, Levitum)
- People management no matter what way you go is a tough challenge. It is good to take the next level into the mindset and make sure their affordable losse’s are aligned with the change in direction.
Effectiveness of such methods in Indian eco system where trust factor is low and getting committed co-creator is not easy. (Manjula of IronSense, Vikram of BookBuzzer)
- While there may be some truth in this as traditionally Indian businesses are family/community owned, the situation is not very different in developed countries. Commitments are hard and going back on the word does happen sometimes.
What does it mean when a stakeholder is following up but not giving money? Also specific question by Zimply about how make publisher commit to the discussed pricing ? (Roxna of Zimply, Anjan of Inquirly).
- Both of these require ability to peel the layers and get to the root cause of stakeholders (co-creators) commitment phobia. Finally it is better to move on and find a new co-creator to make sure you are within your affordable loss.
To conclude, I feel at the center of it all is a very crucial “people and communication skills” that would help people to find co-creators. Hopefully we can collectively build the techniques tools and use cases needed for these amongst our eco system.
If today a survey in done in schools across India and students are asked some questions like,
- What are your favorite hobbies or pastime?
- What do you do after going back home from school?
- What do you do during holidays?
You’ll get all sorts of answers but ‘Entrepreneurship’. Even worse, if the following question is also included,
Have you heard about the word “Entrepreneurship”?
I am guessing a depressingly low percentage would answer ‘yes’. That’s because the concept of ‘entrepreneurship being taught as a subject or an extra-curricular’ is non-existent in Indian schools.
Schools play critical role in defining and determining a child’s way of thinking, perception about the world, mental and physical development and so forth. Schools shape children’s goals and aspirations. Children have an amazing ability to pick things up very quickly. The adoption of a concept is much easier in case of a child than an adult. We cannot expect India to produce a huge army of young home grown entrepreneurs when we don’t introduce this concept to them early on. It’s like expecting a country to have successful scientists or doctors without introducing science in schools. We benchmark Indian startup ecosystem against that of US based total annual VC funding, number of technology startups emanating, number of successful exits, etc., but forget that beneath all those facts and figures, there lays a very fundamental difference in the philosophy these two societies and, thus, their education systems have been built. Success of America has a lot to do with their education system which promotes entrepreneurial and excogitative attitude. Indian education system, on the contrary, is more conservative and inclined towards rote learning.
Trust me when I say that planting the idea of entrepreneurship in a child’s brain can do wonders!!
That’s because, it will ensure,
- Smarter kids (child’s development wont be restricted by bulky books)
- Better leadership qualities (entrepreneurship is all about leadership)
- Better problem solving and analytical thinking (child would explore innovative solutions as no book would have written answers)
- Better sales/marketing skills (something which Indians are always criticized of!)
- Better programmers (I guess in many cases the next logical step after ideating something is learn programming)
- Increased employability of Indian engineers (Isn’t above mentioned skillset what every employer wants!)
- Better understanding and acceptance of entrepreneurship by parents and society at large, since schools would push the concept (again a major problem area, especially for young entrepreneurs)
- More experienced and more successful entrepreneurs (Serial entrepreneurs tend to succeed more than first timers)
In short, a win-win situation for entrepreneurs, employers and employees.
Entrepreneurship may not be popular in Indian schools, but it is increasingly focused on by under graduate and graduate schools. Almost every good B-school has incubation cells and courses focused on entrepreneurship. Also the companies hiring from B-Schools love to hire ex-entrepreneurs (not necessarily successful ones but also failed ones). That’s because in the fast changing times, it has become imperative for companies to innovate and evolve in order to stay relevant and flourish. In this context, entrepreneurs bring in a refreshing thinking and ‘challenging the status quo’ culture to the table.
Today both schools and children are becoming more and more technology savvy. While Internet is within the reach of many, others are joining in. In that context, there is not much schools need to do, to ignite the spirit of entrepreneurship among students. All they need to do is realize its importance and try to build some very basic subject matter expertise of entrepreneurship in the form of a subject, extra-curricular, summer holiday project, workshops, etc. Tying this to overall grade of the child would ensure parents’ buy in. The government and other stakeholders of startup ecosystem (investors, entrepreneurs, enablers, incubators, etc.) can also pitch in and organize competitions and events to promote the concept. Just as we have Science or Maths Olympiad, we can have similar Olympiad for business ideas as well. NEN is doing an amazing job in replicating this model in undergraduate schools across India. It is time that we move a step prior in the value chain and introduce entrepreneurship in secondary schools in some form.
Think about this, the secondary education dropout ratio in schools in rural India is almost 50%. The major cause – as child reaches the employability age of 12-14 years, he is expected to add an extra shoulder to support household income. Mid-day meal, the driving factor behind sending child to school, becomes irrelevant. But if students are encouraged and supported (finance, mentorship, subject matter knowledge, etc.) to become entrepreneurs and thus, support his family by generating some monthly income, the school dropout rate can be brought down significantly. Needless to talk about the employment opportunities created! Here the definition of enterprise can be totally different – it may not be a technology focused one. A person procuring purified water from somewhere and selling it in villages is also an entrepreneur in one way.
P.S. : When thought about earnestly, this can be a billion $ idea !! J
I sincerely hope in coming years we hear success stories like Yahoo acquiring Summly (a teen startup out of London) from India, in addition to a 12 years old cracking JEE or an Indian kid winning Spelling Bee.
This article first appeared on NextBigWhat
I love Israel. Having been there 7-8 times over 5 years when I worked for a company (Mercury Interactive, acquired by HP) that had its development center there, I believe they have some of the best developers, product thinkers and execution oriented folks.
They are also amazing at marketing. They have successfully convinced the world that they are the “startup nation“.
Never mind that they have 1/3 as many product startups as India produces annually and never mind that Indian companies acquire or get acquired twice as much as Israeli companies.Indians also make up 52% of Silicon valley startup founders, whereas Israelis make up less than 8%.
Take a look at those 3 data points and tell me they are not facts. The PWC report is for 2012, so its relatively recent. The # of companies we track in India versus Israel startups in our database is three times as well. The # of companies on Angel list or Crunchbase reveals a similar statistic.
What are the arguments I have heard against India being the startup nation?
1. Quantity not quality: We produce numbers, but not quality. Many of our startups are clones of Silicon Valley companies featured on Tech Crunch 3 months post launch. I looked at the 3 top Israel incubators and found that over 60% of the companies they were helping were clones as well.
2. Exits: We dont have a significant number of $billion or hundreds of million $ exits. I have found that while we do not have those exits, the number of companies listed on the stock market in the US for both Israel and India are comparable.
3. Market access: Israel has excellent knowledge, insights and know-how about US markets. Since Israel itself is a fairly small market, most Israeli entrepreneurs focus on US markets solely, even though they are geographically closer to Europe. Technically the # of people with market knowledge of the US in India far exceeds that of Israel, but they are not in product startups but at large companies.
4. Services mindset & positioning: Thanks to the ginormous success of Indian services companies who helped position India as the “world’s backend” (comparable to China being positioned as the world’s manufacturer) we have been already positioned as low value, low margin, consulting providers.
5. Late start: Even though Israel is 60 years old and India as a nation is a little older, we had a late (2001 or so) start to technology startups. Compared to Israel which had some interesting companies (need references here, what I have heard is mostly anecdotal) in the late 90′s as well.
Why do I still say Indian startups should look at Israel as a role model?
1. They champion their startups very well. They are very well vested in their startups success. They are constantly talking about how good their startups are, how they are possibly better than the valley and why they have the best talent in the world focused on startups.
2. They take significant risky bets. The # of investors in Israel (seed, angel and institutional) is comparable to those in India even though the number of startups is a third.
3. They look out for each other. The community is so well connected with each other that they genuinely look out and help each other. I dont know of any other place that supports their own as much as Israel does.
If you have been to Israel or have lived / worked with Israeli’s please tell me in the comments if there are a few data points I missed.
If you have any good data (not anecdotes, I have enough of those) to counter any of my arguments, feel free to call those out as well.
Many People keep wondering about the kid who rarely talks at home and not good to get grades in school but went on to become an amazing start-up genius.
Celebrated Lawyer of his time Moti lal Nehru was neither happy with the grades his son got in graduation in England nor with his career as Lawyer. But Jawahar Lal went on to become one of the most celebrated politicians of Independent India.
So, life is not about having a packaged education and career but entrepreneurship which is more about living one’s passion and conviction in life. Passion is the fuel that drives the creation of dreams and conviction is needed to realize those dreams.
This inborn commitment gets you out of bed every day. The aim should excite you to the core and channeling of passion becomes key to success.
Sometimes the idea may give the nay-sayer dizzying nausea due to its grandness and chances of failure.
Successful entrepreneurs know that failure is part of the journey, and that without failure, there is no success. Only in dictionary “success” comes before “failure” not in real life.
Passion without conviction may make a young entrepreneur shooting star in the harsh realities of the world. Conviction streamlines your passion into a steady flow. After all, most people have innovative ideas at some point in their lives.
It is conviction that determines what you do with your ideas.
Do you let it die? Or do you go for it?
Let`s face it: Those who have achieved extreme success had some extra mettle and more importantly commitment to their goal.
It takes strong will power for never want to quit and believing in something that defines you. It is this conviction that takes you to a state of euphoria in which give you confidence to think that you can tackle get to the unachievable which others.
Gandhi successfully took to the fasting for ‘self-penance’ to use his moral force against violence which became surmountable in certain periods before and after independence.
So believe in yourself and at the end of the day, everyone who told you no will deserves some credit for making you more committed towards the coveted goal of your life.
If you are able to relate with this, congratulations!
You`re ready to be an entrepreneur. Your quiver is ready with the right arrows – set of virtues, to yield big things in life. You were born to make a difference. Get on with your idea if you believe you have something special. Challenge the paradigms that bind you, and go change the world.
Everyone knows that India is a tough place to start a business. India is at #132 among 183 countries in the ease of doing business index. A lot has been said about the disadvantages of starting a business in India. I’m not here to talk about that. Pick up any newspaper and you will spend an entire day reading about what’s wrong about India.
I’m going to talk about the advantages of being a desi entrepreneur. Here are certain things that worked well for me, and I guess they will work well for others as well. I call them the 3Cs – Cost, Convenience and Culture
- Cost – The #1 reason startups fail is because they run out of money. The most important goal of a startup is making sure it tries various products and markets before running out of money. In India, it is way cheaper to build something as compared to other countries. The proponents of Lean Startup Movement say that the initial days of a company are spent in validated learning and discovering your customers. If you burn money slowly, your get more runway to learn and discover. Simple.
- Convenience – The extended family culture in India is a blessing for wannabe entrepreneurs. In western cultures, you are expected to leave your parents as soon as you become an adult. There is no pressure for young Indians to leave their parents. This could be huge. The first few years of a startup are extremely stressful. You end up working 80 hours a week and having your basic support systems taken care of is godsend. You don’t need to worry about paying your rent, preparing your meals, etc. What could be better that having a home-cooked, healthy and delicious meal after pulling out an all-nighter?
- Culture – Startups and entrepreneurship have become hip lately, but a vast number of Indians are already entrepreneurs. Every kirana (independent grocery store) shop is an example of entrepreneurship. Look around yourself. You will find numerous friends and relatives who are entrepreneurs. It is more natural career choice than most other parts of the world. The mental block of starting something of your own is lower in India compared to other parts of the world.
So what are the other advantages for being an Internet entrepreneur from India? Leave your thoughts in the comments below.