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My typical meeting with founders…

My job is to meet as many founders as possible to see whether their startup matches our mandate to invest. Any meeting of startups, where, there was no pre-qualification (say at an event or a conference or at a friend’s place etc), most of these meetings go this way:

Founder: I am the founder of the startup …. I started this journey… My cofounders are ….. We want to build a large company to do ….
Me:Who is your customer?
Founder: My product has extraordinary features, it can do magic… Customers login through … If you click this menu we see these features….. Great product… Our UX is awesome….. iOS, Android, Our CTO is from …. Built-for-scale……We have been working for 18 months…. Just now launched…. We need money to scale sales….
Me:But, who is your customer?
Founder:Hmm, anyone with a PC or Phone. It is very easy. They just have to download our app, press this button and they start discovering these features…. We can be a large company if we get funding….

We would have spent 15 min or so in discussion. Founders think why am I asking such a simple question instead of asking about their architecture, technology, scale of their work and in general their might in technology.

I think as human beings, we tend to do what we know best. Since most of the startups in India are started by engineers they start doing what they know best – write code. I usually close such meetings with some philosophical statement – “Please don’t do what you know. Focus your energy on things you don’t know about making your startup successful…” Some of them understand it, but, ignore as this is hard thing to do for all of us.

Post such meetings, I get into my eco-system mode and call my friends at iSPIRT and discuss “what can we do? We are not doing enough. We are trying to help those who have already have an idea of the game. But, more folks are getting into the system without understanding even the basic rules of the game, ….”. We discuss and typically console ourselves saying “new founders will figure out over time by seeing other successful founders. We as volunteers have limited bandwidth. Let us focus our energy on those for whom we can materially help. Can we think of a program for some of our companies that are starting to scale….”

I get convinced until I go to one more conference and meet few more founders. Again, I call my friends at iSPIRT. Applying my own philosophy, I need to work on things that I don’t know – “how to educate at scale the first-time founders?”.

Thanks.

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There is no such thing as a startup culture

As of April 20th, 2016, Exotel is four years and 10 months old as an organisation. In the start-up investor jargon, Exotel is a VC-funded, high-growth start-up. Our home-grown on-demand cloud telephony services, powers over 1000 businesses of all sizes and shapes.

Now, if that’s a lot to take in in one go, welcome to the startup world. This sense of overwhelm is the reason employees and entrepreneurs alike find it fascinating.

The la-la-land of startups

Entrepreneurs are storytellers of the modern age. They know that the most famous stories are simple. The story’s appeal is founded on fundamental human emotions. There is always a hero and a villain. Surprising twists are always around the corner. They succeed because they’re able to captivate their investors and the initial set of employees with their story.

The early employees in any startup make or break it. Given this, it is essential that startups work with the best people they can find. But today, the world is filled with folks who want to join a start-up but have no idea why. They are replete with myths about start-ups. The biggest one being – there’s something called a startup culture.

The two main points that get listed under startup culture are

  1. one would learn the most in a start-up
  2. success is proportional to the funds raised.

A quick search on the interwebs would list dozens more.

Where then is the disconnect?

In the scramble to stick coloured labels and putting them on various axes to make life easy for themselves and their investors, most entrepreneurs forget the employee side of the story. What should people expect when they join a start-up?

I’ll try and answer that with a number-driven story, backed by the experience of a founder and the HR person.

The story I’m going to recount now is from my personal experience. It’s one of my company and its employees.

chart

Looking at the graph, you can see three distinct phases – Jun 2011 to August 2013, Aug 2013 to September 2014, September 2015 and later.

The myth of the mono-narrative start-up

Can there be a single unifying employee story across the three phases? Was there a single start-up culture. Every founder sets out to create a fantastic place to work. They assume that their company is a great place to work in; the pay, culture, freedom and so on, is on par with the rest of the ecosystem. And this assumption is a result of the founders’ perception of the truth rather than malice.

From the vantage point of a co-founder and the HR person, I have a unique perspective. And this is what I want to tell the people who are eager to work in a start-up. An untainted version of all other versions.

Multiple narratives

Here’s the twist right at the beginning. There isn’t one story. There are three stories. As a person who wants to work in a start-up, it’s important that you understand which stage the company is in, and what you can expect.

The early days

Perks: ESOPs, beer, and camaraderie

The first phase from June 2011 to August 2013 was the soul-searching phase – Product-Market fit, in entrepreneur parlance. The company was trying to find out if there was a market in the real world, and that they’re willing to pay for it.

Note how the average experience of employees in the graph increases steadily. Also, note how there are very few new hires. There was a good problem to solve, and there was light at the end of the tunnel. The problem was so challenging that none of us left. We all put our heads together to solve the problem.  Long work hours and a salary that ran out by the 10th of the month.

You should not join in this phase if you’re looking for:

  1. a safety net
  2. a specialised role
  3. a lucrative health insurance policy, again

You get the idea.

If you are a generalist who has ambitions of running your company in the future, this is your chance. Grab the opportunity by its tail.

The most professionally satisfying phase

Perks: steady paycheque, ESOPs

The second phase was from Aug 2013 to Sep 2014 – the repeatability phase, in entrepreneur parlance.

Having achieved the Product-Market fit, some of the old bunch left us to start their companies. Establishing repeatability for a company that wasn’t founded by them wasn’t an exciting prospect. On the other hand, a new bunch of people joined us – great entrepreneurs, the ones who could take responsibility of one vertical, bringing in fresh blood and new ideas.

You take home a steady pay cheque that’s not your market salary, compensated handsomely with stock options. You get to sell to, and talk to the movers and shakers of the industry – entrepreneurs, established industries, and build your circle of influence. You will get your hands dirty in various aspects of the business and find one best suited for you and the company. You get to participate and define what eventually becomes the startup’s culture.

You need to have the ability to imagine and set your goals. There’s no such thing as a  KRA/KPI that comes to you from the management, and that’s a double-edged sword.

You shouldn’t join in this phase if you’re looking for:

  1. someone to hand you down micro directions
  2. only success and no failure
  3. somebody else to define these successes and failures

The sexy phase

Perks: Everything you’ll get in a corporate job

The third stage from Oct 2014 to now is the scale stage.

The employees who’ve been able to carve out a niche for themselves hit a jackpot, and those that can’t move on. The earlier key employees who can’t think and breathe scale, leave. The company hires a whole lot of specialists – tech, sales, support, operations. You are in a stage where people join you every day/week. You can no longer recall everyone’s names leave alone their hobbies and passion.

At this stage, processes and policies become paramount. You are expected to participate, embrace and adapt them. You are supposed to live up to the numbers and culture that you’ve defined. This stage is the most comfortable stage for most people to join a startup. Of course, you’d be missing the whole multi-tasking phase, which is most exciting.

Advice to the founders and HR

While interviewing potential employees, clearly define what stage you are in and what you expect from them. It is also important to understand what they expect from the company. Do not hire people who won’t fit it.

Advice to people who look to work in start-ups

Startups are not monolithic beasts. They cover the spectrum – all the way from a pigeon to a blue whale. Understand the stage the start-up is in, what you can expect. Do not wait for things to come to you. Keep challenging the management and actively participate in defining the policies and culture.

If you think this is not your cup of tea, join a corporate and live happily ever after.

Guest Post by Ishwar Sridharan, COO & Co-Founder of Exotel

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What it truly means to be a full stack company

There are several different types of organizations out there, and the ones that are the leanest in terms of size are mostly product companies. Within the product companies as well, there is a lot of variety in the approach that they take for delivering the desired consumer experience. Some opt for just 1 tool and focus on that (Desktop downloadable products— like early days of Norton antivirus), while others go for emphasis on the consumer touch point rather on the device choice.

We @Mypoolin perceive our product company as a growing tree which can deliver the desired fruits (experiences and outputs) to the customer through its numerous branches. Some of the branches appear to be similar in nature while other vary wildly in size and distribution. The things that bind them in common are the huge trunk as well as the root at the bottom level. The trunk of which we talk about actually refers to the main base (or the core of the application from software standpoint) and the root refers to the stack on which everything gets built from ground up (Sorry, we don’t believe in outsourcing :)). These two unifying factors are what make sure that the multiple touch points are aligned by a common sense of purpose

In line with the approach, it is important to highlight the reasons why we perceive and develop the company in this manner. Every consumer has its own preferred of looking at the product from the outside. And at the same time, the customers fall across various age groups, not to forget, they have even different choices and preferences among the same age group as well. Let us take a look at the end points of the branches, shall we?

1. Native Mobile Apps

I think it is a plain enough truth that nothing beats mobile as a device in today’s age both in terms of the time spent as well as the utility value. The type of person who goes for this device as a major investment of his time can be described in general as — curious, young (at least in his state of mind), likes to follow at least some topics around the world, and likes to be in the midst of the society.

As is evident, this covers a lot of the people out there and hence, the rate of increase of mobile adoption has surpassed all tech inventions to date. And mobile apps are making sure that this will continue to happen at least for the next couple of decades (typical growth cycle of any new technology in the ongoing century). Don’t forget there are players like Samsung and others who are trying to make headway for their own operating systems as well. That will make the play even more interesting.

2. Websites and Micro-sites

Even though the majority of the generation has adopted mobile as their go to devices, yet there are a LOT of people out there who simply can’t or won’t adopt it. In some cases, they do come on board but perform rudimentary tasks like calling and texting, while in some cases, they are simply not too excited as they don’t see value in investing time on a new device! I am sure we all know a few in our own circle and once you add up the numbers, you can see how large it becomes on its own.

Our policy goes in line with Apple’s in this regard, which is to never fear cannibalization. Of course, there might be some people who would keep transacting on the web initially, however we need to ensure that the product being used for that particular use case is ours. The idea needs to be to drive the users gradually to the native app (obviously for a more omni-present and better experience) rather than completely obliterating the web presence.

Since the overall goal is to serve the customer at the right place and the right time, hence micro-sites and embedded plugins (in our case, split payment options present on multiple partners like MakeMyTrip and more) become quite an important factor. As a customer who is in the process of transacting anywhere needs to see his intent transform into action in the most simple and direct way possible.

3. Bots, Watches, Glasses and more!

While the above two end points are absolute necessities (the way we believe), this one falls in the more fantastic range of product delivery as of now. Notably, while still nascent in the present stage, these technologies end points will achieve their full blown growth cycle towards the end of this decade.

This is the precise reason why we are launching two of our bots on Messenger and telegram platforms respectively. These bots will of course be quite naive to begin with, but will be learning along the way, ensuring that our goal of making ‘Payments’ fun and social reaches its pinnacle. For those of you who are keen to explore how peer to peer payments and group payments can happen simply with a text command, welcome to the future!

Remember, this is just the beginning in this category and we will continue to ensure that these end points converge in the purest and simplest form into our goal of making ‘Payments’ fun and social.

Wish to work with some of the best hackers, programmers and designers in the country? Wish to join one of the fastest growing ventures in the intricate, growing and powerful domain of fin-tech? Look no further. Ping us directly at [email protected]. Guest blog post by Rohit Taneja

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Testing Time for a Bootstrapped Entrepreneur: 7 Practical Lessons for Software Product Testing

What’s a bootstrapped entrepreneur’s favorite three alphabets?

The answer is DIY and there are no prizes for guessing!

One of the things every bootstrapped entrepreneur should do is to take ownership for testing their product and not leave it to the engineering team. Wondering why this is important? Here are four great reasons why you should get your hands dirty!

  1. Keep the working product aligned with your product vision

You are the custodian of the vision for your product and only you (along with your co-founder(s), if you are lucky) know what you wanted to build in the first place. Everybody else is subject to what I call the “idea transmission and distribution” (ID&T) loss.

  1. Wear the customer hat

Hands on testing is the best way to understand how your customers will perceive your product and interact with it. This is especially true if you are not a technical co-founder.

  1. Do you have a great product feature or a giant face palm?

Testing your product is a great way to find out if the key features you defined in the product specifications is actually worth all the hype you created.

  1. You don’t have the money, so…

You probably cannot afford to hire an independent QA team when you are a bootstrapped entrepreneur.

I learnt these lessons when testing my product

Let me share with you some of the practical lessons I learnt the hard way when I launched the beta version of Jodi Logik  Just to make it clear, I am no QA expert and I am also not a hardware guy. My experiences are all about software product testing.

Lesson #1 Are there errors in error messages?

Seemingly simple products have astonishingly a large number of scenarios where the user has to be shown an error message. It is your job to review all these error messages as well as all messages thrown up by the application when it encounters exceptions. I bet my last Rupee that if you have not looked into it yourself, you are screwing up customer experience and missing out on an opportunity to impress your customers.

Look for spelling mistakes, inconsistent language style, grammar mistakes and make sure your customer can understand what the problem is. Use these error messages to set a tone and give your product a personality.

JodiCheck out the message in the screen above. The error message not only has a “personality” but also nudges the user to complete the required task before performing an action.

Use error messages and notifications to create a personality for your product and make sure they are reviewed thoroughly.

Lesson #2 Use simple English that everybody understands

Avoid writing the error notifications like Agent Smith from The Matrix (aka machine). Example: Phrases like “Connection timed out”, “Server error” may be easy to understand if you are already exposed to the IT industry. However, it may not make any sense to the average customer who is already doing you a favor by trying your product. Make your customer’s life easier by using simple phrases that the average Joe or Kumar can understand.

In the case of Jodi Logik, when the Internet goes down, the error message is something along the lines of “It appears your Internet connection is down. Please check your Internet connectivity and try again.” As you can see the application handles this issue elegantly and communicates clearly what the issue is in a simple language.

Use simple and easy to understand language when communicating with your users. Avoid jargons and industry terminologies.

Lesson #3 Test for use cases that’s applicable to your target market

If you are launching a consumer product in India, one of the use cases you should watch out for is what happens to your software product when the Internet goes down. Reliable Internet, along with reliable power continues to be a challenge in most parts of India. Other use cases that’s applicable for markets like India include, low bandwidth performance of your application and support for mobile browsers. Just make sure your application is tested for real world scenarios using devices that your customers use.

Here is a tip – Google Analytics will tell you how your customers use your product (browser / location / operating system) Make sure your test cases takes this data into consideration.

Lesson #4 Banish “Cannot reproduce the error” excuse

Early in the days of testing Jodi Logik, I encountered a strange phenomenon with my engineers. They will outright deny the existence of an issue! Later on, I realized that they are probably overworked and believe in the philosophy – “If you can’t see it, it doesn’t exist”. This is very much like driving in India.

To counter this behavior, I started documenting the issues in a Word document and made it a point to include a screenshot. If a screenshot was not included, I made a note of the date and time when the issue was recorded. This allowed my team to check the server logs and unearth issues that seem to have a habit of disappearing when you actually want them to show up! If you are adventurous, use GitHub or any other open source bug tracking tool.

Document everything you do when you are testing the application.

Lesson #5 Don’t use an issue to introduce scope creep

Every issue or bug you identify during testing can give you ideas for improving the product. This is good and bad. It is good because you know how to improve your product (duh!) and it is really bad because you may go overboard to solve it and end up delaying the launch of the product!

Here is an example. One of the features we have in Jodi Logik is the option to upload the horoscope of the user when creating a marriage biodata. One of the issues I Identified was the inability of the application to handle a scenario where the user uploads a blank horoscope document. It was an easy fix as far as Word documents are concerned but the JavaScript we used did not provide for making sure PDF files and image files aren’t blank. We chose to tackle this issue later and did not attempt to fix it as we felt fixing this issue can is probably time consuming with no commensurate returns. We asked ourselves, “How many times a user will actually upload a blank document?” and then concluded that this will be a rare occurance.

Moral of the story – Don’t fix an issue for the sake for fixing it. Always consider time, costs and returns.

Lesson #6 Catch me if you can…

It doesn’t matter if you are testing your product on your own or if you have an accomplished QA team (highly unlikely), your product will have bugs and you will never catch them. All the bugs that slipped through your fine-toothed reviews will show up when a customer uses your product and that’s how the world works. The reason is simple – What is obvious to you is not obvious to a customer.

One of my customers wrote to me saying that a text field where she writes about herself is not working properly as the text appears spaced out. After some serious head-scratching and suppressing the urge to say, “I cannot reproduce the error”, I figured out that she copied the content into the application directly from a Word document. This introduced the formatting associated with the Word document into our application and completely messed up the interface! This is a scenario we never tested!

Find every opportunity you can to help a customer. You will be surprised with what you will discover.

Lesson #7: Are you looking in the right place?

A man lost a ring when walking in a dark alley. He was found searching for the ring under a lamp far away from where he lost the ring. His excuse was that it was dark! Sounds elementary, but I did just that for the first few product releases.

Here is my sorry tale. Jodi Logik runs on a Linux environment and I did all the testing on a Windows box before moving the code to the Linux server. I quickly realized that not having a staging platform that’s a mirror of the production servers only adds to our misery every time we wanted to ship code. I also realized that the development instances should also have been on Linux to begin with.

Get your staging platform up and running along with your production servers. This is one expense that you should always find a way to pay for.

Conclusion

Testing your product before going live is similar to a chef tasting the dishes he cooked before serving it. It demonstrates your ownership and a commitment to delivering only the best experience for your customers. The lessons I have shared are by no means comprehensive but I will be mighty pleased if you even get a single takeaway from this article. Please share your experiences and any other lesson you may have learned testing your product.

Guest Post by Srinivas K, JodiLogik 

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6 traits that define successful entrepreneurs

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:

  1. 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.

  1. 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.

  1. Foresight

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.

  1. 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.

  1. Resilience

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!

  1. Attitude

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.

Conclusion

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.

 

VU-Picture

 

Author

Vikram Upadhyaya

Chief Mentor & Accelerator Evangelist at GHV Accelerator

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5 Types of People Every Startup Should Hire

It takes passion to start up and convert your idea into a moneymaking business. However, passion alone is never sufficient to succeed in a business. It is people that make business happen; the ‘right’ kind of people.

The core team plays a key role in shaping the future of a startup. It is the moot point that sets the course for the future. Hence, it is imperative that the founding team comprises of people with the right credentials, zest and attitude since they serve as role models for the rest of the team to follow.

The founder or the core team should ideally have the following qualities:

Visionaries

They know how to think long term and can develop a rock solid vision for the company. They have a clear objective with regard to growth and how to take the company forward. They are able enough to provide insights with a panoramic view of the business and know how to meticulously plan long term. They are innovative and have a diverse view with regard to business and its growth.

When starting up, you most certainly need a visionary to provide direction to the team at every stage.

Money specialists

Their key attribute is that they are good with money. They know how to strategically invest and will help the startups keep expenses under control. The right people who specialize in money management can help straighten up your sales strategy and attract money from various sources. They know their numbers and know how to play well with them. Having a golden goose in the company certainly multiplies the chances of success manifold.

People’s persons

Such people have the knack of knowing just what it takes to bring the best out of everyone. They have great interpersonal skills and understanding of what motivates others and can put their influencing skills and tact to good use in the best interest of the business. Be it managing a team to deliver the desired results, to influencing a prospective client or accomplishing some liaising work, they are the go-to people.

The all-rounders

These people have probably been on the other side and handled all aspects of running a business, either as an entrepreneur themselves or as a manager. This is a definite advantage because not many first time entrepreneurs know how a small decision can impact the entire business. Their insights can, therefore, be really handy for a startup.

The connector strategists

The mind of the strategist can create what is important and destroy what is hampering the progress. They bring growth by analyzing every process and tweaking it to it optimum levels. They are capable of creating new processes and strategic goals of the business that help you leapfrog. Without a strategist, your business will lose its sense of direction to proceed in the chosen path. You will get a stepwise heads up on how to go about implementing your business goals. Whether it comes to product launch or sales strategy, these people specialize in how to make a business goal effective and see to its end. They are the geniuses that know to get to the bottom of things and choose the right method to achieve a business goal. They are the experienced insiders who understand the landscape of marketing and sales. They are communicators and connectors who know how to connect you to diverse people to help your business grow.

The core team forms the foundation on which the startup rests. A mix of people with the right expertise, energy and attitude is what is needed to ensure that things fall in place as planned in order to make the vision come alive.

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Guest Post by Vikram Upadhyaya, Chief Mentor & Accelerator Evangelist at GHV Accelerator

 

 

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Write up the Business Plan !

Most of us have read the famous story about Jeff Bezos’s cross country trip from New  York to Seattle. Bezos founded Amazon.com in 1994, writing up the  Amazon business plan on the way. Jeff’s important advise for startup company or any   company is to write up the business plan.

CrossCountryJeffBezosadvise

Now if Jeff Bezos has done it, and become one of the most successful entrepreneur in the internet era, why not just do it ? By writing it down, you will certainly get a lot of clarity and reference point for what you want to achieve….

Here are some thoughts of what and how should this business plan be written to become a continuous reference point for your startup and growth story. The examples and references of this is more on Software Products in B2B (Enterprise) based on my own experience of writing business plans and working with startups whom I have mentored, however many of this can be relevant for Software Product in B2C (consumer) as well. Also this business plan should be ideally written by founder or a product manager…

What it is and some guidelines?

  • It’s an internal and confidential write-up – Don’t confuse it with presentations and business plans to be shared with people who will fund this – that should just be a subset of this
  • Is reference plan, and should be revisited frequently to change
  • Prepare it in word /excel, bit free form with text (power points constraints you)
  • Prepare atleast 3 scenarios – aggressive, best estimate, conservative plans
  • Do it for 1 year (short term – in greater detail), 3 years (medium – bit higher level) and 5-10 years (long – very high level) – Remember Bill Gates quote “Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
  • Write it free form, and then organize it later, go through several iterations, review, review and review

Start with a summary:

Like an executive summary, this is the place you start jotting down the highlights of your road ahead – covering Introduction of yourself and the team, your idea, product space, history and market definition (presuming you have researched it), clear USP & value, challenges & risks, and overall KPIs that will come out of the rest of the business plan. The summary is most likely to change once you have written the rest of the plan.

Customers & Personas:

Who are the users, what are their current problems and how does your solution solve this problems.

Who pays for the software, what are their challenges and what are their company /career goals that the software would help solve

What are the financial/non financial benefits for the customer based on using this product or the cost reduction using the software, measured by productivity etc. Can there be a customer ROI estimated

Market:

Define the market category and market size ie today, and in the future that you want to focus. Try to break down into 2 – 3 levels of hierarchy and in a multi dimensional way by Business type /Geography / Revenue potential of customer/Size of the customer or any other business context.

Define the share of the market you would like to achieve of the market size, on key market segments in 1/3/5 years. What’s the customer IT spends planned for solving such problems

Market is the most key aspect that is going to drive you to successful product, so understand the potential market, research and put it in there

Product:

Now on to the product – write up about the product, to cater to the above market opportunity, with lot of details and value propositions, differentiations and what problem it solves.

Whether the product you are planning is a pain killer, vitamin or vaccine…

Product priorities and use cases – focus is the key, focus on the key market, focus on the design and so on and so forth…

Product Roadmap – at level 1 (vision), at level 2 (product category ) , at level 3 (feature /function level). Product roadmap is your product in the growth face

Competitors and other players in the market, and what they have today, in their roadmap or what they are trying to do. Your differentiation against each of them,plans to differentiate. If you don’t know it, some tips for this are here

When will your product be available , the minimum viable product and is there enough time to get the baby out ?

Monetization:

How do you plan to monetize your product, don’t build a plan that ignores monetization.

Revenue and Customer Goals – Quarterly, yearly and medium/long term goals, subscription revenue including projection of drop offs etc.

Pricing model description – different options to be considered, domestic vs international, subscription based vs fixed etc

Risks , probability and dependencies to achieve these goals

Technology:

Explain the technology used for the product, how it would scale, Ux differentiations, clear differentiations due to tech architecture, performance, simplicity, implementation effort. Important this is not technical architecture , so keep this high level.

Talent:

What the skills required to sustain the business – development, design, sales, customer support, channels marketing etc. Challenges & risks associated with this.

Identify gap in availability of talent.

Layout if its important for you to relocate to be successful, due to availability of talent. Place is super important for success – what are the options – what are the pros and cons.

Customer support & feedback:

What is the strategy around customer support & feedback, how product roadmaps are affected by feedback. Level of engagement required initially and as the product matures.

Past learning’s from customers, what went right and what went wrong. How was it addressed?

Challenges of remote support and how it was addressed /planned to be addressed

Draw your effort, cost and cash flows:

You don’t have be finance person – its like putting forth your personal finances, or just google for templates  – put together your estimate of people cost, server /cloud Operating costs, sales & marketing costs, other infrastructure cost – space/communication/support/software etc,  any other expenses required to do scale the product. Link this with your monetization plan, to ascertain your overall profit or loss over the years.

As you see above, there is a lot that can be written up – as you write up in detail, your thoughts on what you are setting forth gets clearer….

But don’t worry if what you plan is not exactly how it’s all turning out to be in reality…..but its important to have a plan, adjust it for reality…

NYCtoSeattle

So now pack up and start off on your cross country trip from Mumbai to Bangalore, to write your Business Plan in Bezos style  !!!

 

 

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5 Social Media Tips for Startups

Social Media. We’ve heard this before. We’ve all been there, been awed by its presence, laughed at the funny cat pictures and marveled at the brilliant campaigns run by Businesses like Star Sports (#MaukaMauka?).

As a startup, we all know and understand the power of Social Media. We would all also like to get in on the action and have our own pages roaring with likes and User Engagement. We want our videos to go viral and we want people to talk about us in their networks.

At this point however, it makes sense to think about the First Moon Landing. Neil Armstrong did not just build a ship out of scrap aluminum, fill it with Kerosene, light a fuse and land on the moon. There were endless hours of trainings, practice landings (first of which required him to parachute out of his ship) and design refinements prior to eventual launch.

Similarly, there is a structured approach to building and maintaining a vivid presence on Social Media. We at Inquirly have been in this space for almost 2 years and after managing Social Media Presence of almost 200 brands, we’ve decided to share some tips that helped our clients grow.

Tip #1: Create a Social Media Strategy before creating your profiles.

The first step would be thinking about what you want to achieve from Social Media. Brand Awareness, Lead Generation, Driving hits on your website, Customer Engagement there are a large number of things Social Media can do for you. We usually prefer to host brainstorming sessions with Startup founders to decide what their strategies should be. We remove the clutter and present simple, workable ideas that founders can then choose.

SocialMedia1Tip #2 – Identify your target group

This is important. More-so because each target group responds to a different type of messaging on Social Media. Take the example of SpaceX. SpaceX knows its target group and a large number of its followers will be people who love…wait for it…Space!! It’s target group is mostly comprised of tech-savvy adults, people who like Science and geeks/nerds (just like us). SpaceX therefore tailors its tweets to appeal to its target audience. Building content that appeals to target groups is usually handled by the founders at very early stage startups, however some founders do prefer to stick to what they’re best at, be it Product design, sales or hunting down investors.

Social-media2Tip #3 – How much do you post?

One point commonly noticed by us during our interactions with various startups is that they have created a presence on Social Media but eventually stopped posting because they decided to focus on other, more important things. This should be avoided at all costs. An inactive presence on Social Media gives your followers and customers the impression that you are unreliable and sloppy. These negative aspects are automatically attributed to your product or service and voila, you suddenly have a negative brand perception in the mind of your customer.

Here’s the solution – If you cannot actively engage on Social Media, DON’T POST ON SOCIAL MEDIA. We understand start-ups don’t have time to look beyond daily operations, cannot afford expensive agencies but brand creation through social channels is one of the most important aspects in your Go to Market strategy. There are several tools available for a DIY model which can be leveraged for saving time. For example we have reduced the time required to manage all the different channels by creating an omni channel platform with industry specific templates and images.

Tip #4 – Types of Posts

In an ideal world, we would like to post content, have visitors engage with the post and then have these same visitors BUY our product or service. The real world works a little differently. At Inquirly, one of the first things we tell our customers is that before trotting out their lovely campaigns with Incredibly Creative calls-to-action (BUY NOW! CLAIM COUPON NOW!), they need to engage with their audience, build a place in their minds, show them a solution and then sell them the solution. Customer engagement has a value all of its own and sometimes that value rivals that of a closed sale. By engaging with your customers, you are not just interacting with them, but you’re also visible to their immediate network. Suddenly, your reach is multiples greater than the page-likes or followers that you have!

Tip #5 – Measure, Measure and Measure some more

You absolutely need to keep track of how your posts are doing. Which ones are performing the best and which ones get absolutely no engagement. A/B testing is essential for your Social Media campaigns. It is the job of a Great Digital Marketing Strategist to run these tests and identify ways of improving your campaigns. There needs to be a keen belief in your team or your partner agency that things can always be improved upon. Forming good habits at an early stage helps any startup manage its growth in a more effective manner.

Fun Fact – For some of our more “complex” clients, at Inquirly, we have in-fact deputed a team (not One or Two) of strategists to brainstorm, create and execute amazing campaigns

Once you’ve incorporated a few of the tips mentioned above, you’ll be on your way to setting up a great Social Media presence. We are working with a lot of start-ups and in fact planning to open start up specific cells in key co-working spaces as with a combination of one of a kind technology, data-driven expertise and a world class team, our goal is to save time for the start-ups through a unique ‘we do it for you’ model and enable start-ups to build relationships to drive customer satisfaction, increase revenues and manage their Sales and Marketing workflows. And we do it all at a price that’s just right. You can learn more about us on www.inquirly.com

Guest Post by Anjan Choudhary, Inquirly

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5 Questions You Should Ask Before Launching A Product Startup

The number of startups launching every month is growing at a fast pace. Some entrepreneurs opt for a service based model, while others like me go the product model way. Although, there is no clear winner in terms of which model is the best, right or a deal breaker, there are many factors that contribute to the success or failure of startups.

However, when I launched my startup Sainergie, an IT products and services provider, I realized that running a product startup is fundamentally different from a service startup. Apart from a few other steps, you need to take care of idea generation, design, prototype, development, testing and iterations, before you actually launch it. A sizeable amount of resources such as capital, time and energy has to be spent, believing that you are really developing an amazing product that will sell itself. Well, if it was only that easy!

There are several factors you need to bear in mind while launching a product startup. I am listing them here based on my experience.

Is there a market?

You have developed a great product. At least you think so. But, is it good enough for anyone to buy? Does there exist even a little or a niche market for your product? According to an article published in Fortune, the ‘lack of market need’ was the top reason due to which most startups fail! It may even happen that you are ahead of the market curve, that is, customers do not require your product at the time which you think is right. Or maybe, the need is there, but there isn’t an appropriate supporting technology.

For instance, Pebble, Apple and Samsung are among a few leading brands in smartwatches today. But, it was Microsoft who launched it about a decade ago, only that it failed because it was as much a matter of bad timing as that of a poor design.

So, don’t jump to the product development stage straightaway. Put efforts in conducting in-depth market research, studies or surveys to see if the time is right to bring your product in the market.

Are you trying to innovate or reinventing the wheel?

The debate regarding which is better – innovation and reinvention of the wheel, isn’t new. Every product entrepreneur delves on this question before going to the drawing board. But, let’s first understand the difference between the both.

Innovation is building a product that brings a paradigm shift in the customer behaviour. It provides a novel solution in addressing the customer’s pain point. For example, FusionCharts, the provider of interactive JavaScript charts, is one of the most innovative technology companies that disrupted the data visualization industry. Reinventing the wheel is about coming up with a new or a creative idea to change or improve a product that already exists. Here, we can take the example of TATA, which designed the cheapest and smallest car Nano to disrupt the car segment and gain 17% market share.

In my opinion, you shouldn’t be afraid of either innovating or reinventing the wheel as long as it could help your product to become a game changer. The only thing you should ensure is to keep your product simple and useful.

Do you have a sales strategy in place?

So, now you have ensured that there is a market for your product and you have a product ready to hit the shelves. Here comes the tough part – selling it. You need to have a well-thought sales strategy in place. This involves:

  • Setting deliverables (how much you want to sell in what time frame, market price, profit margins)
  • Identifying the sales territories (where you want to sell)
  • Creating marketing collateral (mailers, white papers, brochures, blogs, PowerPoint presentations, etc.)
  • Finding methods to sell (direct, retail, online, word of mouth)
  • Training the sales team (product features, sales pitch, sales targets, customer relationship)

A robust sales strategy will be your road map to positioning your product correctly and gain a competitive advantage.

 Do you have the right sales team?

A sales strategy alone wouldn’t suffice. You need talent that can sell your product with the same passion as you i.e a killer sales team that doesn’t let you and your product down.

Ideally, there is no better salesman than the entrepreneur himself. So, think about how you would sell your product if you were the salesman. Or, if you were the customer, what you would want to hear or experience during the sale. Once you learn to sell the product to yourself, you would know the right kind of people to hire. When building a sales team, ensure that:

  • You don’t sacrifice quality and fit for a quick on-boarding process.
  • Salespersons understand that selling is a pre-cursor to relationship building with customers.
  • They want to climb up the ladder, are patient with customers and are open to constructive feedback or criticism from customers.

How flexible is your product?

The customers may love or hate your product. Even if they love it, they may still give inputs on what else could make your product better. If they hate it, perhaps you haven’t done your homework well and need to iterate or redesign your product. Ideally, try to push your first iteration in the market to study what works and what doesn’t. Either way, your product should be flexible enough to change or evolve to meet customers’ expectations. Be open to customer feedback and adjust your product accordingly.

Product startups have their own share of challenges. But, with a right set of mind and determination to do the things the right way, it shouldn’t be difficult to overcome these challenges.

This article was originally published in Inc42.

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Going From Negative To Cashflow Positive

This is not a new story. At least, not the first part of it.

About two months ago, the company I had founded, Synup had grown 4000% in a year but, we were still burning money like crazy.

It was really bugging me that we were growing so fast, adding so much more revenue, but still had to depend on external sources for growth capital. This is not how truly strong businesses are built, at least not in B2B SaaS.

We had two options — give up on trying to get profitable and raise more money. Or, do the logical thing, get cash-flow positive.

I needed to break the news

On a Friday, I brought the entire team in for a meeting and told them what had to be told. We were not going to be raising money any time soon, not because we couldn’t, because it wasn’t the right thing to do.

We needed to be cash-flow positive, otherwise, we’re yet another struggling startup dependent on handouts for survival.

I needed to take responsibility

Being unprofitable is really a founder responsibility. More so, the CEO’s responsibility. I have the title; now, I needed to play the part.

I told my team that I wouldn’t take a salary, even though I had practically zero savings and would tough it out until we got to a point where the company could afford to pay me.

Call this a moral high, taking responsibility or cliched, but this needed to be done.

There needed to be a physical reminder

It wasn’t enough to just make an announcement. There needed to be a physical reminder that drove the point into everyone’s head that we were still not where we needed to be. It had to be something that people couldn’t miss.

So, I offered not to shave. At least until we reached the point of breakeven.

It was so friggin hard

Everyone had to make sacrifices, work 2x harder and we had to cut costs. But, we did it.

We could no longer afford “breathing room”; we had to be shipping, selling and busting balls everyday. This wasn’t the kiddie pool anymore, it was the real deal. I’m sure everyone who worked with me had to push themselves to the limit, but they still did, because they believed in what we’re doing and for that I will be forever indebted.

On a personal front, I realized that I couldn’t grow much of a beard and had to bum food off my employees. Nothing, I repeat, nothing can be as bad as not shaving when you obviously can’t grow a proper beard.

There were times when I just wanted to give up and take the money

There were still people willing to give us money, not a lot, but enough to make the pain stop. The entire startup ecosystem in our country, unfortunately, encourages you to take as much money as frequently as possible. It’s almost like we’ve become a society that actually celebrates raising more venture capital.

But, I resisted. I knew in my heart that taking more money when were so close to getting there wasn’t the right thing to do. Nothing can really be accomplished in life without a little pain.

We became cash-flow positive this month and doubled revenue

It was the greatest feeling in the world. To have a goal, something that drove everyone in the organization, something that seemed impossible; and, actually make it happen. We had actually grown 100% in two months to make this happen.

We are now in control of our own destiny, in a small way. We don’t need external capital to pay the bills. Any capital we take will be from the right people and for the right reasons.

My advise to fellow entrepreneurs

Try getting profitable. Even if you don’t have to or need to, just try doing it once. It’s one of the best feelings in the world. Do it as an exercise in restrain and a test of your grit.

You will realize that nothing brings your team together as much as this will. I never thought we could do this as quickly as we did, but I underestimated how much more motivated everyone gets when there’s a common cause.

Guest Post by Ashwin Ramesh, A (s)crappy entrepreneur who runs http://synup.com and tweets @ashwin_ramesh

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Timing is key, entrepreneurs should be resilient!

Setting up a new business venture is driven by passion, determination, intimidation and is a lot of fun. The idea of getting your solution to the market is so thrilling that it almost matches the excitement of sighting your first crush in college! Unfortunately, sometimes the market isn’t ready yet, and convincing consumers of the value proposition can dry you up.

But if you believe you are ‘solving a problem’, you must wait for the market to align. Sticking to your guns will keep you focused and will prove to be beneficial in the long run. As market dynamics begin to fall into place and the problem becomes self-evident, the same solution starts to look more relevant, picking up business and scale.

Never Stop Hustling

It’s highly likely that there exists a market somewhere else, that is feeling the pain you are trying to solve. And when it comes to technology products per say, the internet has flattened the world so much, that reaching remote of markets is just couple of pixels away. Keep hustling!

Speaking from my experience

To set the context right, Hotelogix identified a basic problem in the industry that it could solve. Imagine, If you book a room online(read it as ‘product’) on any travel portal (read it as a ‘store’), there is still no guarantee that you will get that the room, when you reach the hotel. Isn’t this a fundamental issue? Isn’t the customer buying a product, entitled to get the product he paid for? and without any hassle? Now, when comes to smaller hotels, this problem is encountered on a regular basis. What’s more, it is a problem that exists globally. This is what we set out to solve…

When Hotelogix launched its product in 2010, the budget hotel segment in Asia was still a growing sector. However, USA seemed to be a ready market. In USA, when it comes to customer satisfaction – they will go the extra mile to ensure good experience. We entered the market there, and hoteliers loved the product. When we started, we knew India was not a ready market. And in any case, Vertical SaaS market here is not as big. As budget accommodation began to escalate in popularity across South-East Asia, Africa & South America, Hotelogix continued to spread its presence. Today, we have hotels in over 100 countries using our services! We had been resilient through all these years and always kept ourselves going – seeking out the right way to scale.

In the last couple of years, ‘Budget Accommodations’ have witnessed increased popularity in India, South-East Asia and globally as well. The sudden focus on this segment has made all the solutions addressing this sector appear more relevant. Hotelogix – always focused on the small and mid-segment hospitality businesses – began to gain lot more traction and with its years of experience in the international market, we are now easily the most mature solution out there available.

So what’s different? Has Hotelogix suddenly changed? Or have these budget hotels changed? Neither, I should say. Only the market forces have changed. Consumer demands have shifted, and budget hotel brands are now in the news & social media, albeit not always for the right reasons!

In essence, market dynamics have been growing in our favor, and it is time now for some action. Becoming a market leader here, seems to be in our line of sight now, but It’s taken us 6 years to see the light at the end of the tunnel!

The fire that ‘Oyo rooms’ started in India, has changed the face of budget accommodations. Multiple businesses have formed around the same model and more importantly, the budget hotel industry has gained prominence. Existing hotel groups that were running on outdated legacy technology have now woken up and are reassessing their strategy. There are several businesses in Thailand, Indonesia, Malaysia, Philippines and so on, operating on a model similar to ‘Oyo Rooms’. They are mushrooming and now beginning to observe us. The budget hotel industry is going through a similar transition on a global basis, a transition that is redefining the experience and cost of booking travel accommodation.

So whats the learning? We had strong belief in the problem we were solving – that’s what kept us going. We are glad to now finally have the opportunity to serve our own country. Before 2015, India accounted for barely 7% of our revenue. Now, this figure is upwards of 17%.

When you’re in good form, score as many runs as you can

We’ve all heard the phrase, ‘when the going gets tough, the tough get going’. This is of primary importance and is related to the resilience. But it’s equally important to remember that ‘when the going is good, the good ones run as fast as they can’. This is where I think focus is really important and getting a firm grip on your position in this entire ecosystem is the key. This is also when you can maximize the true value of investor money. This is when you should invest on multiplying! These spurts happen when companies shift from one stage to the other, and it is important that entrepreneurs show aggression at the right time. Very interestingly, I find that most good entrepreneurs practice some form of meditation or the other. This prevents them from getting burnt out and helps them identify the opportunity when it comes knocking. Meditation to me, is anything that can keep your mind away from your regular routine. It could be regular evenings with people who do not remind you of your work day, or it could be any hobby – like music, running and so on. For me, it has been a mix of a few things. Mandatory weekends with friends; my first love – ‘Table Tennis’; my second love, ‘Ballroom Dancing’; my third love… I could go on and on but I’ll stop here before I end up divorced!

So my friends, timing is very key to your business and if you believe in the problem you are solving, just be on the hunt for the right timing in the right markets!

My next article will be on the relationship between my sports life, entrepreneurship and professional life. And yes, you may have guessed right – I was a state level ‘Table Tennis’ player!

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Hook for Enterprise Businesses – Webkul Software

Webkul Software Pvt. Ltd. found place in the 2015 Technology Fast 500 APAC Ranking. The co-founders, Vipin Sahu and Vinay Yadav started Webkul in 2010. Vipin Sahu comes from the small town of Fatehpur. He and his then roommate Vinay Yadav actively built software tools since their early days in college. Even thought they had no exposure to computers before college, open source excited their creativity to develop APIs for the then prevalent platforms like Zoomla, WordPress, and plugins for Orkut. After college they decided to ditch their jobs and make software tools which would be commercially viable.

“It is easy for companies with VC funds to invest in growing their web shops. So we decided to power merchants how don’t have a lot of money and technical expertise, so that they can just plug and play tools to create their websites and add advanced functionalities to it. Today we have a team of over 140 people, of which over 110 are developers”, shares Vipin.

Here are some excerpts from a conversation with the co-founder, Vipin Sahu:

What does it take to run a team this big?

VS: “We are a bootstrapped company. We work in small independent teams. As founders, our task is to motivate the teams and provide them with the funds they need. So it’s like 11-12 small startup teams working to create profits. The emphasis is on creating small tools that have huge demand and make each of them work individually.”

What are your aspirations for the company?

VS: “We are building tools for post-commerce and target small and medium scale companies. We want to provide the tools so that the owners can run their web shop like ebay, while we take care of the technology. When their commerce grows, their needs increase. We are thinking on how to empower those requirements.”

directorsWhat are your 3 suggestions for budding entrepreneurs?

VS: “First, if you have an exit plan in your mindset, then don’t startup. If you think you want to create a company that you want to run for over 50 years, only then it makes sense.

Second, I think the people need to be bottleneck breakers. As an entrepreneur you will face new issues every day. If you can crack them and have fun doing them, then you will go a long way.

Third, with time you will have to hire specialists. Initially we ourselves worked like all-rounder, but when you grow you need to hire more entrepreneurs. When you hire, the vision of the people and the founders need to be aligned.

Also, every company needs to start keeping in mind that they are bootstrapped. It is important to think how you will generate money to get the resources you need, from the first day. The bootstrapping way of thinking will eventually ensure that you become sustainable.”

What were the 3 mistakes you wish you did not make?

VS: “If you are heading a company you need to be a good listener. You need to inspire people, otherwise they will not stay. You need to ensure that you listen to what they think, what their aspirations are, and align them with your own vision. We took time to understand this.

Hire people who are at least as good as you. When you are just starting off, you may not have the resources to train and hope that people will turn out good. So it is important to hire right.

Also, never outsource the core business. If you are building tools, then you should be involved in building them. You cannot expect to be a marketing or sales person and outsource the development.”

Vinay and his team are a determined lot. We wish them the best for their journey ahead.

 

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#StartupIndia Little Action Plan

There was palpable excitement all around on June 16th as the much awaited Startup India policy was to be unveiled. Scores of intrepid, passionate, dedicated, knowledgeable volunteers from multiple groups had worked tirelessly for very many months advocating the need for the administration to recognise startups as legitimate 21st century vehicles for creating jobs and wealth in society. For this to happen, multiple sessions were held to educate, illustrate and showcase what startups had done for other economies and are beginning to do in India.


One of the great accomplishments has been to get the word “startup” accepted within the administration. Acknowledging that an educated highly talented set of individuals could come together to start an entity based on innovation and driven by technology and intellectual property was a major achievement. Because till then, the visual metaphor was of a safari suited micro and small business owner – much maligned in various soaps and movies – obsequiously dealing with multiple government agencies and not averse to bending the law and greasing the machinery!

It is said that the beginning of wisdom starts with definitions. Section A of the Action Plan details the definition of a startup which is quite acceptable. However, what is important is to see how language gets transferred into official government notifications and the law.

However, for a startup to get government tax benefits it has to receive a certification from an Inter-Ministerial Board that will be set up for such purposes! When such a Board will be set up, the composition of the Board, the frequency of their meetings, the discretion powers vested with this Board are all yet to be made known. Why not have An online self-certification mechanism for this with severe penalties for those misusing or misrepresenting their case?

A mobile app will be made available from April 1st of this year for the purposes of registering, filing, tracking, applying for schemes, by startups. Interestingly, though the hope is that it will be within a day, the Action Plan document doesn’t specify how long it will take for a startup company to be registered! And what the pre-requisites are eg does the Inter-Ministerial Board or the DIPP or any other approved 3rd party have to certify the startup?

Self-certification of compliance, via the mobile app, with 9 Labour and 3 Environment laws is a welcome move with a 3 year moratorium on labour inspection. But why not include simple self-certification compliance for all other laws too, eg secretarial and governance matters? And why not for say, 5 years? Especially when the definition of a startup talks of an entity that is less than 5years old?

The Action Plan aims to allow a startup to wind-down its operations in 90days after it appoints a liquidator/insolvency professional and pays off all creditors and sells the assets. This is a very welcome move as anyone who has attempted to shut a company down in India can attest that it is an almost impossible task. The Insolvency and Bankruptcy Bill 2015 (IBB) that’s pending in Parliament will detail the provisions of the fast-track and voluntary closure of a business. Till the IBB is passed and the details known, celebrations will have to wait. The PM even exhorted the audience to use social media to rally support for IBB!

Since April 2015, central and state governments and PSUs have to mandatorily procure 20% from micro, small and medium enterprises (MSMEs). This has been extended now to include startups. But only startups only in the manufacturing sector are eligible! Why not all startups? And in place of “prior experience/criterion” startups have to demonstrate “requisite capability to execute the project as per the requirements”. Whatever that means! With fears of the CAG audit, one can see how this will be implemented in practice.

Startups don’t have to pay Income Tax for 3 years. Well, am not sure if there are any startups that generate taxable income in the first 3years! Why not make startups exempt from all taxes for 5 years?

There is an exemption for investors with capital gains to invest in the government “Fund of Funds” and for investments in manufacturing MSMEs. This is just an extension of an existing provision. But is this exemption applicable to entrepreneurs (not just investors) who say, sell their house and invest in a startup? If not, why not?

Angel investors cannot claim the FMV certification exemption that now, thanks to this policy, includes incubators in addition to venture capital funds.

A clear liberal stock option policy, taxation policy, onerous compliance requirements for startups raising capital – either domestic or overseas – are other areas that will have to wait another day or the budget.

A Rs 10,000crore Fund of Funds, setting up a Rs 500cr annual venture debt scheme, encouraging the setting up of research parks, incubators and a country wide programme to spread the awareness of startups in schools and colleges showcase what the government does best, namely creating large national schemes with a grandiose hopeful vision. Clarity on how these will be implemented and more importantly managed and monitored and what kind of outcomes are planned will however have to await another day!

This Startup Action Policy flatters only to deceive. The reluctance of the state to disengage from the culture of command and control shines through. India jumped 12 places to 130 from 142 in the Ease of Doing Business Index 2015 thanks in large part to the improved power situation and not due to any radical change in procedures and laws!

The good news is that entrepreneurs are unstoppable and have, in spite of the best efforts of India’s crushing bureaucracy, demonstrated their abilities and established India as a global startup hotspot. The steps outlined in the Action Plan will only nudge them along faster. And that can’t be bad. India remains the country with enormous potential!

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of iSPIRT.)

This article was first published on YourStory

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Making SMEs loans a breeze with Capital Float

Typically, choosing to finance the SMEs looking for working capital loans, is not easy. First, the SMEs have smaller ticket size. Then they expect quick service and have high operational costs associated with it. ProductNation interviewed Shashank Rijyasringa and Gaurav Hinduja who started Capital Float in early 2013, a digital finance company that serves the loan requirements of SMEs in India.

Shashank having worked with McKinsey and Bain, has a background in creating, and packaging financial instruments. Gaurav on the other hand had grown and sold his family business before they met at Stanford as classmates.

“We were looking to address financial inclusion. We observed how the fin-tech space was being disrupted in US and China, and saw the huge opportunity in India. With 48 million SMEs, second just to China, with 50 million, India needed lenders who would tailor their offering to the needs of the customers. The rate of interest by the banks was much higher than expected. Also, the loan disbursement ate up a lot of time. So this need was largely catered to by the informal sector”, says Gaurav.

Registered as an NBFC with RBI, they started with an instrument for invoice financing (building loan product against invoice of blue-chip companies). The duo gradually evolved their products to provide working capital loans for SMEs. They developed underwriting models which address the specific scenarios of the SMEs.

“There are 2 broad categories of sellers coming up on eCommerce portals. First are those who sell on platforms like Zovi and Myntra, where the sellers are also the manufacturers. Other category includes retailers who sell on sites like Snapdeal and Paytm. They generate a huge demand for loans available at short notice periods with minimum hassle. That is where we found our sweet spot”, shares Shashank.

Here are some excerpts from the interview:

How did you overcome the problems of traditional lending?

SR: “Firstly, our experience came in handy. My in-depth knowldge of micro-financing, packaging and selling loan instrument meant we could build the right services. Gaurav with his experience of running a business out of India, knew how to deliver the services we wanted to build.

Secondly, we met with our customers to understand what their problems really were. To a small business owner, every hour spent off the floor is an hour wasted. We came up with innovative methods like allowing same day approvals and providing loan facility over phone and laptop. These businesses needed greater accessibility and straight-forward procedures. They wanted someone who could understand the value of their time.

Third, and definitely the most crucial point was that we adopted trial and error method. Like any startup, we didn’t know exactly how things would work. We were building our instruments in-house. So we had to fail fast and experiment quickly. With agile methodology, today, we can deliver new loan products in 2 weeks. A bank would take about an year to do the same.”

How is the policy environment evolving in India, with respect to your industry?

GH:  “The Mudra banks for refinancing are a welcome move. With 950 million Aadhar numbers issued, allowing eKYC, is it much easier to issue loans. The Digital India initiative to create better internet connectivity will help us reach a much larger customer base.”

They are leveraging the Indian stack to refine their instruments and are growing with it.

How difficult is it to get payback of loans?

SR: “SMEs are the most financially aware and responsible segment, since they always manage their finances tightly. Also, our screening process mitigates high risk customers, allowing us to cater to the needs in minimum possible time frame. So that’s not much of an hassle.”

What would be the 3 lessons you have learned from your journey?

GH: “1. Perseverance – One needs to believe that the idea would work, when no one else knows if it will. It is important to stick to that optimism and keep trying to find the exact fit.

  1. Strong fundamentals – From the first day, the business needs to know where its money will come from. The cash flow should not be dependent on where one is, in the funding cycle.
  2. Rounded team – Build a great team if you want to build a great product. A strong team stands by you to make it possible.”

What would you say to the entrepreneurs starting up fresh out of college? 

SR: “There is no right time to startup. Whenever you get passionate about a problem and see a large market for it, go for it. Here are my 3 tips:

  1. Address a big problem. If you go after a problem which is not so big, it may not be worth all the effort. India provides huge opportunities with really major problems that need to be addressed.
  2. Maintain discipline. Whatever you do, think big and build for the long term.
  3. Understand your responsibility. As you grow your team, you need to realise that families of your employees are getting dependent on you. It is essential that you take your decisions wisely.”

What are the mistakes you wish you did not make?

GH: “We were too slow in the start. We should have been aggressive, and believed in ourselves more. We thought people might not accept a technological solution. We have realized however, that technology has to lead the change in society. Invest in constantly being disruptive and you will definitely make a difference.”

We thank Shashank and Varun for sharing their insights on the FinTech sector and wish them the best for their journey.