Posted on

I have Sold My Startup

I had started InBoundio in Jan 2013. After doing lot of freelancing, services and building casual hobby products, this was my first serious attempt in building a web product and business. This also made me took a dive into core technology as earlier I only had surface knowledge of technology. It did well and got reasonable success. We did plenty of iterations with product feature and pricing and we did got good number of inquiries about white label marketing software.

Since I am building AeroLeads too, it was difficult to focus on 2 products hence after 6 months of talks with many businesses, I have sold my startup InBoundio to an Australian Media company c9.

The last 2 years were fun in terms of learning and experience and now I have both as well as some cash, so now I will be using all this to grow current product much faster.

Learning and Experience

1. It was little tiring since I did all the work of talking and communicating with people. Though it was rewarding too since now I understand complete business cycle as well as understand complete technology and marketing stack of a business. I was also able to understand what are the metrics which a buyer look for. Saying this, I am very sure I am done selling businesses for a long time since it don’t excite me. Building businesses to sell it is also not a good business model.

2. It is not easy to sell your startup sitting in India to someone in other countries. Trust is a major problem as no one know each other. This also means you will only appeal to buyers who are looking to buy in certain price range to minimize risk for them.

3. I have seen many Indian businesses who go under the radar getting sold in 1M USD range through business brokers. If you think you can sell your business in this range, you should look to engage with brokers who have the right network. Do note that you will get valuation in multipliers of 2x-5x range which is the industry standard for web businesses. It can be 10x if the buyer sees real growth potential but don’t expect 20x or such valuation which rarely happens. Being realistic is important.

4. You can get much higher valuation if you are willing to work with the new buyer for few years, do partnerships or take some money now and rest later. At the end of the day, everyone wants to mitigate risk.

I had few such proposals but for me, it wasn’t about money, I knew it could get messy as it is not easy to partner someone in different country so went with outright sale.

5. The whole process is time consuming and can take 3-6 months. Make sure you don’t rush and covers legal aspect of transferring ownership and assets.

6. Prospective buyers will always look for these 3 parameters. If your startup have them, you should be fine, if not, you will find it difficult to make the calls.

i. Growth Potential
ii. Minimum liability
iii. Existing revenue

Where to find buyers for your Startups and Businesses

1. LinkedIn – I contacted lot of businesses founders on linkedIn using inmail and got good response. Few of them showed interest but it was also the issue of “not having enough paying customers”. If you want businesses in similar vertical to acquire you, remember that most of them only look for paying customers and not for technology.

2. Business Brokers – There are plenty of business brokers and firms who help you selling businesses in 500k to 10M range. They take about 10-15% fees and for someone in India, if you think you have the above 3 (growth, minimum liability and revenue), you should talk to them as this reduces risk, cut down your time/effort and speeds up communication.

Feel free to message me If you need some advice or if you think I can help you. I can be reached at “pushkar.gaikwad at gmail dot com” or through linkedIn.

Posted on

How to Build a Startup in India – Complete Guide

In last 4 years, I have built 3 startups and multiple products, some did well, some didn’t. Currently I am building AeroLeads which is a prospect generation software, before this, I built InBoundio and before it WorkMonk (now shut down). In between, I took few short and one long break (of one year). With all this experience, I have learnt a lot about how to build a business, about technology, marketing, sales and finances.

When I was starting, I made lot of mistakes and wasted lot of time in doing things which were counter productive or didn’t align with building and growing a business. I also made lot of mistakes from technology and hiring people too. So I thought to write a Complete Guide on How to Build a Startup in India. I am sharing all what I have seen and learnt from my mistakes and what you can do to avoid them.

1. Idea and What to build

Do what you want to do. I am a firm believer in this as the startups require lot of hard work and if you are not having fun and doing what you find it exciting, you will soon lose motivation.

Ideally you want to start from a pain point and see what solution you can build. It will be good if that is a problem faced by many as this will determine your market size. There is also “sell Antibiotic and Not Vitamins” concept as people only pay for antibiotics, not for vitamins.

Almost all the startups (at least the successful ones) are built around a solution for a problem. Do not create artificial problems as it is easy to have tunnel vision as a startup founder.

Also almost always people start with something else and end up building something else after few failures and iterations.

2. Team

Going solo is stupid and suicidal. I know because I am a single founder. Always have a co-founder who will share pain, expenses, problems and work load. Normally college friends become the best co-founders. Founding team of 2-3 is best. I have seen teams which are too big often split up later and ends up as 2-3 founder company anyway. You can have your brother/spouse as co-founder too but make sure he/she shares the responsibility. Way too many people add directors/co-founders for name sake which creates false illusion of someone being there.

Build your core team based on character and not on skills since skills can be build easily, character can’t. Make sure you like these people and enjoy working with them since you will be spending 50% of your awake time with them.

3. How to start

You are better of starting from your home. Don’t jump taking office, furniture, startup branding material, forming company etc. These things are not important initially. Way too too many startup founders make this mistake and loses focus. When time and money are at scarcity, use it wisely.

Spend all your time and resources on building and selling. Don’t bother about fancy office, furniture, stationery, t-shirts and even registering company. These can be dealt with later.

Whether to register a private limited company or not is your choice. My opinion on it keeps on changing but I feels if there are multiple co-founders and partners, you should register a private limited company. You can get it done for around 20k. Do get proper partnership agreements done too.

Initially you may want to pool some money and keep it in your bank account say 5 lakh which can use to pay bills too. Such buffer amount is needed so you don’t have to keep using your personal funds which will make tracking expenses difficult.

4. Technology

One of the founder has to understand technology. Way too many startups fail because of bad technical decision specially choosing wrong technology stack (I have done it). Ask others what is the best option for you. As few more people. This is one thing which has huge cost of failure involved. Don’t just chose something because this is all you know. You can spend 3 months learning something which will be far more beneficial so be open for it.

Also do not do premature scaling. Don’t buy costly servers and start talking about scaling with you have few hundred records and your product don’t even need that. Don’t use technology just because it is cool. Using AWS, angular, node.js is fine but may be overkill if all you need is $10/month hosting and a web framework which supports crud operation.

Do explore all the options and do keep things like how easy it is to find developers, in what salary range, what kind of support is available, how active is the developer community etc. Never chose a technology stack just because it is cool.

4. How to Hire ?

There is no silver bullet, the best of the best I have seen makes hiring mistakes. Ideally you want to do inbound hiring. Let people come to you by hearing about you and your startup. This often brings ownership and commitment.

I have rarely seen finding your core members from Naukri or Monster working out for any startup. HasJobs, Startup Facebook Groups, LinkedIn/Twitter, Company career page on the hand has worked much better for me and others.

Don’t go for the resume screening too. Just talk to them and look what they can bring now and in future as well. Always prefer character over skill as skill can be build in few months, character can’t. Hiring a wrong person will be a huge liability in terms of time, money and resources invested, not to mention asking someone to leave is never easy for anyone so be very careful in hiring and always keep 3-6 months screening/trial period.

5. How to Raise Funding ?

Back in 2011, I had spent 3 months trying to raise funding. There wasn’t really much to show, there was no product or team and I was extremely hyper. I wasn’t sure how much I wanted to raise and the number kept on fluctuating from $200k to $1M on daily basis.

Needless to say, I couldn’t raise anything but still I did learnt some very valuable lessons by getting rejected from every VC and angel investors of India. DO NOT chase them, let them chase you. There are plenty of associates hanging out on linkedIn and who reads YourStory and NextBigWhat so if you are doing good, they will contact you. Raising Funding is a two sided market and investors values good startups and will quick to jump on to you if they see value.

From what I have seen, do not raise anything below 50 lakh. It is not worth diluting or going through the hassle of issuing stocks for small amounts. Normally with just 6-8 people, your burn rate will be 5 lakh per month at least so 50 lakh is a minimum (this is what I have seen in Bangalore). If you can raise more initially, even better as raising money is a huge pain and sucks time and energy.

Don’t be attached too many feelings and emotions with funding though, some of the biggest and successful tech product companies in India are bootstrapped and there are businesses which are family run. If you are not able to to make things move in 3 months, move on. Raising money is not your primary job, building a business is.

6. Finances

If you are running a private limited company, make sure you keep your finances clean. All the data for private limited companies are publicly available with directors name so you don’t want to default anything as as a director. Your name may get blacklisted if you don’t audit and file returns. Hire a good friendly CA (not a firm, they are only there to make money) who will give you good advice too.

Ideally one of the core founding team member should manage finances as money is oxygen for startups. It is also important if you want to raise funding in future too. I have tried to use various software but somehow never got used to them as I found them clumsy, I anyway don’t run a big company in terms of people so for me netbanking + excel file works. Find the best option for you and stick to it.

7. Sales and Marketing

Make sure you grow organically initially. Nothing is better than growing without sales and marketing teams and zero budget and growing by word of mouth. Lets the users find you as this will validate your business model too.

Avoid hiring too many sales and marketing people initially. Premature hiring specially of sales and marketing team will burn your cash really fast. Also I have seen people being casual in hiring sales and marketing people as compared to developers (often because the founders understand technology so can screen the people better as compared to sales and marketing) which often leads to wrong hiree.

If you don’t understand sales and marketing, it is good to learn by doing things yourself. Sales and Marketing will take more time and resources than technology and is integral part of business growth.

8. Relationship, Health, Life and Fun.

Every startup founder is a dreamer and wants to make it big but it is stupid to do it at the cost of relationship, health, life and fun. I think its OK to work 14 hours a day, living on top ramen and your startup being the center of your life for some time but you can’t do it for years. In fact this means you are making wrong decisions running your startup too as this is why you are not able to find the right work life balance. I can write a lot on this from my past mistakes but I feels if you are reading this, you can easily connect the dots. Take care of your health and relationships (parents, brother/sister, spouse, friends) since you can’t buy it with money, success and fame. Also keep learning and having fun in life and have it today, don’t wait for tomorrow.

I am very sure on this – You will spend your whole life ignoring everything, only working and making 100 million dollars and when you die, Times of India will goof up and miss out printing 2 digits.

If you have any questions or if you think I can help you in some way, feel free to contact me through comments, on linkedIn, twitter, Facebook or through email.

Posted on

How to Bootstrap in India

I am bootstrapping AeroLeads and InBoundio, 2 product based startups and strongly feels before raising money, everyone should bootstrap as you want to learn how to manage resources and money before you actually raise money to have more resources.

Here is what I can suggest from my learning, experience and what I have seen from other bootstrapped startups

1. Start from your own home – some of India’s biggest product startups started from founders bedroom (directi, fusioncharts). Working from your own house gives you huge advantage of working distraction free and without thinking about growth, expenses and profit. Once you takes an office, have few people around you and with hundreds of thing to worry about, you will not be able to think freely and do things fast. Starting from home often gives you extreme leverage to try all what you can and want to.

2. Do as much as you can including coding, sales and marketing – Every successful product startup founder I have met, there was this pattern. They understand technology stack as well as how to get users and customers. Before building a team and raising money, they completed the full cycle of product development and sales.

They know because they did initial programming, user onboarding, marketing, selling and support, something which is very important. I strongly feels even if you are not a great developer (I am also not a really good developer and often copy/paste code) still learn and understand the technology stack as it will help you a lot to make the right decisions. Similarly, understanding sales and marketing is equally important too. If you are bootstrapping, make sure the core team of co-founders do all this by themselves. It doesn’t matter how small and trivial the task is, do it once and then you can delegate to others.

3. Find Free and Cheap Resources instead of Paying full – Before paying, I always try to find if can I get that for free. There are so many startup resources available that there are good chances you can get everything for free (at least for few months). For example, through TheMorpheus and f6s startup site, I got 12 months free rackspace hosting worth $1000 and oLark premium for 3 months.

Search for startup deals and offers in Google and you should be able to find plenty. Do search for coupons and discount too as most of the SaaS companies do extend trials through coupons. I had also hired a freelancer from philippines in 2013 for well below the market price and he helped me a lot in testing the product, so keep using freelancers too if you can get the work done fast and cheap.

4. Look for Free Marketing – Nothing will burn your finances faster then you starting to spend money on marketing when your product is not finished. This I learnt the hard way as i foolishly lost money on marketing when the product sucked and wasn’t even complete. Contrary, by luck I got covered at TheHindu newspaper which eventually got us lot of signups (the product eventually didn’t took off). It was a pretty good experience in importance of free marketing. Even right now, my post How I got 1100+ SaaS user is the most linked and talked about blog post which brings lot of traffic and has helped me to network with lot of startup people.

Posted on

How I built a 1100+ users SaaS business as a Single Founder with Zero Marketing Budget

We formally launched inBoundio last week, I kept it in beta for eight months and kept working on it. It was slow going since I was the only one working on it — sometimes there was no progress for days. There were times when I got stuck and had to wait for people to reply on stackoverflow and answer my questions so I could finish the coding. Lot of things went wrong or didn’t work out. But some did, and in this post I want to share what I have learned. InBoundio is just starting. It is in no way a finished product nor a mature product, but I feel I should share my knowledge and experience right now. If I wait until I’m done, I may forget many of the smaller things. So here is the complete story. If you want the TL;DR version, scroll to the bottom where I have put everything in points.

How I Began

I stopped thinking too much, stopped planning, and just started doing the things I wanted to do and which I loved. I love technology, internet and marketing, so the product I built aligned with all this and I never had to look at where I was going. Failure looked acceptable as I knew I was going to enjoy the process and the final product.

I also didn’t set any deadlines for myself, and didn’t care about making money or setting targets. This took time out of the picture, which made me more comfortable and reduced any anxiety about getting it done. I wanted to be sure I made as few mistakes as possible, and I wanted to fully understand the market and user requirement. I continued to work alone, and it was only last month that I opened an office and hired two awesome developers (who in just five weeks have become a big part of my life).

How I funded inBoundio

Since inBoundio started as a one-man company, the expenses were negligible. I got one year of free hosting from RackSpace , which saved some money. I got the logo done for $3 and the dashboard was a $12 template. That was all the initial expense. I did use freelancers later on, as I wasn’t able to code some features. I paid them primarily from money earned by selling software packages and offering services.

Offering services also helped me understand client needs and wants. Because InBoundio is still in the early stage, I will keep on doing this for at least this year.

The experience with freelancers was hot and cold. Overall, I felt I wasted a lot of time. Many features never got shipped and I probably overpaid on a few, but I have learned my lesson.

Where We are right Now

inBoundio is still in its very early stage, and I am still working on finding the correct business mode. Still, I felt I should write this post now, as I want to share my experience and journey so far (posts like “How we sold our business for 20 million dollars” suck, right?)

Right now I have a small team working from our office, both of which give more structure to the business and make things move fast. For example, we are shipping new features on a daily basis, something which was not possible earlier. We just launched our chrome plugin and waiting for our WordPress plugin to get approved.

My Learning while bootstrapping as a single founder

I am splitting my learning into 2 section. Startup and Business/Life.

Startup Learning

  1. Use freelancers wherever you can, but be careful. I had mixed experience with freelancers. I met some nice people but I felt I also sometimes overpaid. Sometimes the freelancer just wasted time and did nothing. There is a huge cost involved in finding the right freelancer, plus there is a cost involved if something goes wrong. You can use freelancers for small tasks like testing—for example, I hired a freelancer from Vietnam on oDesk for $5/hour who did a great deal of testing and found lots of bugs. I also got the initial logo for $3 and bought the user dashboard template for $12.
  2. Do not hire people unless you need them. Do as much as you can by yourself and understand the technology stack of your product as well as marketing. Find your first paid user by yourself. Find new marketing channels by yourself. Do sales and support by yourself. Take all the phone calls yourself. Do the site support chat by yourself. All these tasks are part of building your business.
  3. SaaS businesses don’t grow fast and there is nothing great about them.  InBoundio is growing 15% month to month, which I think is on “faster” side of growth, although most of the SaaS businesses grow very slow. In fact I don’t even think SaaS are the best business model on the web for making money; the unit economics don’t work and most B2B products don’t spread by word of mouth. This means higher cost of marketing and no viral effect.
  4. The best feedback you will get is from your product users. The best feedback I have ever gotten is from inBoundio users. I have asked questions on various web marketing forums like warriorforum, as well as on Reddit and Hackernews, and received helpful replies. But the best real feedback I got was from current users. Aimee, my first paid user, has replied to many of my emails telling me what was broken.
  5. Building is easy, marketing is not. Marketing will always take more resources and time than building. Most founders put all their energy into building and then run out of steam and ideas. Products fail because they hit the wall of “How to Market and Sell” and the founders have no answer.
  6. Win-Win partnership works on Internet. The best businesses on Internet are the ones where your user also wins. If you are just focusing on yourself and how you can grow and make money, you will find yourself alone. This is not what the Internet is about.
  7. Bootstrapping is not easy, and doing it is as a single founder is even more difficult. Bootstrapping sounds great when you are able to pull it off; when it don’t work out, it can do lot of damage to your personal finances. Being a single founder also means you are taking the risk and will burn out fast. So far, though, things are looking fine for me. I will keep on doing what is working. If I feel I am burning out or need funds for additional growth, I will look at alternatives– though personally, I will always chose Freedom over Money.

Business and Life Learning

  1. Success and Failure are meaningless terms. Don’t waste your time judging yourself from others parameters.
  2. Don’t look at other startups and how they are doing. There are people who started before you, and others have already finished the race before you even started, so it is stupid to compare your startup with others.
  3. Don’t waste too much time thinking about company vision, disruption and denting the universe. You will end up doing what you want to do anyway, no matter what your earlier vision was.
  4. Use your own software. This is the best way to understand the limitations of your software. I only use inBoundio to market inBoundio. Yesterday I sent 1,000 emails and today I made some social media postings. When you use your own software, you can take better action on your user feedback and learn what you want and what you don’t.
  5. There is nothing wrong with doing services to fund your company product. I personally feel a business is a business, so it doesn’t matter if you are doing services or product. The end goal is to build a business.
  6. If you are not enjoying what you are doing, don’t do it. It is just not worth it.
  7. Only do things which make you happy. I don’t think I need to explain this.
  8. Don’t chase money; it will always be the byproduct of your success. If you do well in life, you will make money, anyway. If you start chasing money, you will cut corners, compromise on quality, and become mediocre and unhappy.
  9. How big you get, how big your business becomes, and how much money you make is NOT in your control. It doesn’t matter if you have an amazing team, a great product, big funding and work 18 hours a day, you can – and possibly will — still fail. Don’t waste your time on thinking things which may or may not happen. Live in the present, build your company in the present.
  10. Don’t plan too much. Most of the plans are just wishful thinking.
  11. Money will solve only one problem, money. The rest of the problems of building business have to solved by you only.

Republished from inBoundio blog

Posted on

My Learning while building a Bootstrap Startup in India

I had written a post How I built a 1100+ users SaaS business as a Single Founder with Zero Marketing Budget some time back which got covered at YourStory. Since then I have got lot of mails asking many questions, I did tried my best (and will always be) to answer to everyone but it is not possible to reply to everyone so I thought I should write down a post putting down all my learning.

I feels most of the failed startup owners quietly disappear instead of sharing their learning and unfortunately what all I learnt, learn through failures after paying big price so I thought to share my knowledge and learning to other startup founders and entrepreneur so they can learn from it. I am writing it the way as I feel it, take it with pinch of salt.

  1. There is nothing great about building a startup – You will start a startup with lot of excitement, want to make lot of money, change the world etc but the kicks will be temporary. Starting a startup, running a startup and making money from a startup are three totally different and often separate things.  Fun is in the first part but that has shortest life. Lot of people get sucked into thinking that there is something great about startups, there really isn’t. If you want kicks or wants to make money, there are less risky options available. Startups have very poor success rate, so you better understand the risk/reward and have solid reason behind doing it
  2. India doesn’t have a startup ecosystem – There is lot of noise in India specially in bangalore about startups but really there is very little signal. Way too many people get sucked into this “startup” way of building business losing time and money both. There are plenty of startup trolls, advisors, accelerators, investors, has been wannabes in Balgoare who know nothing about building business and are just there for kicks, greed, ego and entertainment. If you are a startup founder, be careful. you are the only one who is taking risk, never forget this.
  3. It is very difficult to build a good team – Every seasoned entrepreneur can vouch for this, it is extremely difficult to hire and retain good talent, building a strong team is even more difficult. You will not find co-founders from startup events. Indians are also very emotional people, which often causes problem in building strong team and specially between co-founders who don’t know each other before partnering.
  4. Exponential growth is a myth – Very few startups grow exponentially, don’t get fooled by those who are saying they are growing exponentially. Those who say numbers openly have a reason behind it. Most of the startup and startup founders also lies a lot.
  5. Never compare your startup and yourself with anyone – I never read Indian startup blogs, techcrunch, HN etc, as it is waste of time. I am least interested in knowing who has got thousands of users or who got millions of funding, as you will never know the underneath reality. There is way too much going on with every startup and startup founders which you will never know. So don’t waste time following other startups unless you can learn something from them.
  6. Bootstrapping is not easy – I have found bootstrapping to be difficult specially since I am doing it from Bangalore with no local support. I do know what I am doing and understand how to manage money and expenses and have a profitable startup but still, if you are first timer, expect lot of things to go wrong. Your expenses will be 2X-3X then what you think. I have learnt to manage expenses but only by failing and losing lot of money which hurts, or at least it used to.
  7. Deadlines are meaningless – I have missed all my deadlines till now. Earlier it used to bother me, now I just don’t care. I have found it very difficult to set deadlines as there are way too many unknown variables so it makes sense to not set too many deadlines and sleep well in night.
  8. You need help from all corners – This is something which I have seen with all successful startups. They always have some support system in terms of family, friends or some network. There is always brother, father, close friend, spouse etc as well as office space, logistics support system with successful startups. These things often happen at background and people never realizes this or acknowledge this but this local support system plays huge role in success of startups.
  9. Single founders have limited bandwidth and fast burn rate – No one talks about founder burn rate but they have limited bandwidth. There is huge difference between single founder, two founders and three founder teams. A single guy can at max manage 2-3 people, any more and things will start falling apart. I had made a huge mistake earlier when I tried to manage 5 people which I couldn’t and it became ugly. Do not chew more than what you can swallow.
  10. Don’t micromanage or use metrics – using KPIs, metrics, media mentions, traffic and even earnings are often deceptive in early stage startups. As startup founder, you are anyway will always be bias and will only look at things which you want to see so don’t waste too much time on these vanity metrics. They are not as important as you think they are.
  11. People are not making as much money as you think they are – Earlier i used to think all these VC funded companies who have raised millions of dollars and people who are running the startups/companies makes lot of money. In reality, very few are making that kind of money. Founders become employees the moment you form a private limited company and raise funding and are not in full control irrespective of what they say publicly. Things never look what they are anyway, so if you think are thinking that there are tons of people making tons of money doing startups, you are wrong. Contrary, I have seen lot of people doing self owned services/development business or running small online businesses are doing fairly well. So if you can successfully build a small business, do it instead of building a big failed business.
  12. There is nothing great about product companies nor anything bad about services companies – I had met someone in 2012 who proudly said they are a product based company focussing on Indian SaaS B2B market. They had 80 employees and with about 8 lakh rupees in revenue. I don’t think product companies need that many people, unfortunately in India, there is no such thing as product company, every product or services or B2C or B2B company eventually becomes an Operations company. Don’t get sucked into these definitions of product or service company, there is lot of overlapping between them when you are building India focussed business.

Guest Post by Pushkar Gaikwad, InBoundio