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Startups!! Do You Know Your Customers Well?

A business exists only till the time it has paying customers. The day your customers cease to exist, or have no reason to pay you for your products or services, your business is in deep trouble. So, if we consider all the stake holders in a corporate, an i.e. employee, executive management, investors and customers, the customer is the most important. Now the chances are that you know all other stake holders reasonably well due to daily interactions in the office or board meetings. The question is that do you know your customer well? If not, what can you do to know them well?

Especially important for a startup to know, as his starting up, sustainability and scaling up are directly dependant on the customer !

There are several stages of knowing one’s customer. What business they are in and which industry they belong to are the easier ones. The more challenging aspects are:

  • Who are your customer’s competitors in the industry? What are the competitor’s differentiators vis-a-vis what your customer is offering?
  • What is their vision of the industry that they are a part of? Where do they think the industry will be in 2 years and 5 years from now?
  • What is preventing your customer to secure a larger market share in their industry?
  • Who is your customer selling to, i.e. your customer’s customer. (By the way, this is the end customer from your perspective). What is his ask? In which industry is he sitting and how’s that evolving?
  • How is your customer’s roadmap evolving with respect to the developments in the end customer’s industry? Are the two aligned or are they diverging? If they are aligned, you are in good shape but if they are diverging, you may go out of business because your customer will go out of business.

To summarize, knowing your customer is a three-tier process: I) knowing the immediate (paying) customer, II) knowing your customer’s industry and its trends and III) knowing the end customer’s (your customer’s customer) industry and how it is evolving?

The problem is that in most of the organizations sales owns the customer and acts as a heavy-handed gatekeeper for any and all customer interactions. Since sales is transactional by its very nature, knowing the customer stops at the very first step of knowing who is making the purchase decision, who will issue the purchase order and release payment. Mostly knowing the customer stops here! Unfortunately, none of these guys can give you long term visibility into the customer’s business which is so essential for long term sustainability of your own organization.

What you need is a three-tier customer relationship, each focusing on one aspect of knowing the customer.

Starts with sales at step (I) where a relationship is built around a transaction and customer organization is mapped.

Then your product manager (for products) or domain expert (for services) has to focus on step (II), i.e. reach-out to its peer at customer’s end and engage him on a product and industry-centric discussion.

The common pitfall here is that product managers tend to get far more engineering (inside) focused in delivery. Their external interaction is mostly limited conferences and exhibitions to collect generic inputs about the industry. They really don’t spend enough face time with their customers directly to get to know customer’s industry, competitors and the customers’ customer industry. Most of the time they depend upon sales to provide the inputs against questions (a)-(c) above, but that’s a wrong expectation. It will never happen.

Now coming to step (III), i.e. knowing your customers’ customer industry. This is where a free exchange of ideas at the executive level starts to matter. The CTO/CEO of your company has to engage his peers at the customer’s end (could be CTO/CEO or BU head) and understand the industry trends. Your executive management needs to collect this information from threads picked across all of their key customers and then make a sound call on how they expect the very end customer (customers’ customer) to evolve. It has to be more than a gut feeling or some internet-based research. Their assessment has to be based on hard data collected from discussions done with your customers.

Once you have a sense of changes in end customer’s industry, address the question (e) above, i.e. is your customer helping to shape the industry or is he trying hard to catch-up? Once you know which customer is sitting in which bucket, you know what to do for your own long term growth and survivability.

Unfortunately, what happens in CXO-CXO meetings is that it gets limited to resolution of tactical issues which couldn’t be resolved at lower levels like price, contract legality, delivery issues etc. It rarely goes outside of this sphere, of never-ending business issues and any discussion to get a deep understanding of their future gets sidelined. In turn, your future gets compromised as it is directly dependent on your customer’s future!

Everything starts with the customer – June Martin

Gues post by Suresh Kabra – Founder, PriceMap

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Announcing the 5th and final batch of 10 companies @InTech50 2015

Happy to announce the final and last batch of finalists (out of a total of 50) of InTech50 2015, a flagship event of iSPIRT and Terenne Global.

Congratulations to them all!

The first, second, third and fourth batch of finalists has already been announced in our previous blogs.

Here is the final list –

  • Crayon –  MAYA is a personal concierge, powered by Crayon’s SimplerChoices™ platform. SimplerChoices™ maps affinities based on taste (from review sites, social networks), influence (from social networks), context (from public data, location-based data), and behavior (from internal enterprise data) to build a massive cross-category taste graph.
  • Datonis – Altizon helps the industrial world create smart, connected products within a very short span of time and with minimum investment in infrastructure. Altizon’s flagship product the Datonis™ platform is offered in PaaS and on-premise models and is built to handle a Billion events a day from a million devices.
  • Druva in Sync – Druva’s inSync endpoint data protection and governance suite UNIQUELY integrates secure, scalable, high-performance endpoint backup, file sync across all user endpoints, remote file access, data loss prevention, IT-managed file sharing, and governance – including eDiscovery enablement – in a single platform.
  • Nifty Window – Nifty Window is a hyper-local marketing based new customer acquisition platform that helps offline brands and businesses attract consumers online. The platform uses content marketing and distribution to help brick & mortar businesses drive in-store sales across search, social media and mobile channels.
  • Nowfloats – NowFloats enables local businesses to get online, generate relevant content, and be highly discovered for online users to consumer this information in a meaningful way.Using the NowFloats platform, any enterprise whose channel is a small business, can bring the entire local channel online and drive local consumers towards that business.
  • RateGain – RevGain is an ultra sophisticated price recommendation engine for hotels. It continuously tracks over 11 big-data, environmental factors such as market supply, competitor prices, inventory levels and more to tell hotels how much they should price their rooms at.
  • RippleHire – RippleHire is a technology product that gamifies employee referrals and enables social recruiting. By empowering the best way you hire (Employee Referrals), we reduce your hiring costs & efforts. Game mechanics make the process fun, engaging and drives great results.
  • RobusTest – RobusTest is providing SAAS based Automation Solution for Web/Native/Hybrid applications. Its does not require any pre-configuration or setup. User can automate any mobile application from their browser without any scripting/coding knowledge.RobusTest also provides detailed Automation Test reports (including CPU, Memory, network and battery usage).
  • Vymo – Our vision is to help sales teams make a Million Smarter Decisions every minute. Our marquee product is a mobile first Lead Management System. Our operational analytics help in better lead prioritisation, smarter allocation, better pitches, quicker conversions and higher frontline productivity.
  • Zing HR – ZingHR is an End-to-End INTEGRATED Hire-to-Retire Management Cloud platform. You name any process, right from the time a potential talent is called for an interview, through the employee’s entire lifecycle with the organisation, till the employee moves on. Talent Acquisition, eRecruitment, Onboarding, Leave, Time & Attendance, Claims, Payroll, Compliance, Performance Management…more.

There will be no greater joy for us than to see our finalists leverage the associations they’ve built and emerge as truly global companies over the next few years, further validating the credibility of India as a ‘product nation’. That is exactly what we had set out to achieve in the first place.

Looking forward to meeting the ‘Fanastic Fifty’ at InTech50 in Bangalore.

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It’s time to open the gates wider

There is a growing nervousness among foreign investors putting their money in India. The Global Entrepreneurship and Development Index 2012 revealed that India, Asia’s third-largest economy, ranked 74th out of 79 countries, making it an unviable country to start a business. There is a growing nervousness among foreign investors putting their money in India.

Fewer than 150 start-ups are promoted by venture capital or angel investors annually in India compared to over 60,000 angel investments in the US. In 2011, Indian angels, constrained by regulations that make both investing and exits cumbersome, invested only about Rs.100 crore in around 50 deals compared with Rs.2,000 crore angels invested in Canada.

These figures don’t surprise Indian product software start-ups. India has produced few of the world’s leading software products, has 3,400 software product start-ups, and adds 400 every year. But it needs the right environment and incentives to build a world-leading industry.

For several decades, the Indian ownership laws and the investment and business environment have not allowed a conducive setting for the brightest of minds, many of whom have migrated to California. The new Indian entrepreneurs spend significant time on product development to build patentable products with a global market. However, as soon as the product gains traction, venture investors and professionals advise entrepreneurs to move the holding structure, if not the entire business, outside India. The main reasons are as follows:

Financing:

In today’s world talent and ideas are mobile. Singapore, Hong Kong, Chile and the UK are offering attractive financing (debt and equity) to Indian companies to relocate their business. They are also offering tax benefits. This is starting to result in real migration of promising companies out of India.

Maze of rules:

In India, we have foreign direct investment, VCI (venture capital investment), foreign institutional investors, Reserve Bank of India, fair valuations and draconian consequences for inadvertent slip-ups, while in most major economies there are no restrictions.

Taxation:

Capital gains (20%) as well as dividends (dividend distribution tax of 12.5%) even for foreign investors. In most major economies, foreign investors are not taxed on their capital gains and dividend income on their investments and owned businesses. India’s tax policy does not help a product business to attract the right kind of investors and acquirers, and is a hurdle for those interested in foreign acquisition in a stock deal as Indian paper is not an attractive currency. In the UK, for example, investors can write off any investment losses against income, and this significantly reduces their cost of failures.

Open economy:

India does not treat foreign investors on par with local investors, unlike the US, the UK, Europe, Singapore and Hong Kong, which have no restriction on ownership and company structures, and for the most part, regulatory filings (except some strategic and security related issues).

India needs to build an attractive regime to retain the software products business and its intellectual property, which is highly mobile. Incentives and special regimes for businesses that create IP and file for patents will give the industry a big boost. Among the solutions are the liberalized ownership rules with exemptions from regulatory filings and specific regimes (FDI/VCI/FII, etc.), specific exemptions from capital gains and dividend taxes for investors and tax exemption on foreign income of Indian software product companies. Why not go even further and build a fully liberalized virtual special economic zone for ownership and operation of software product companies, with India signing an iron-clad double-taxation avoidance agreement the virtual SEZ.

India needs to proactively grab opportunities, or risk driving the whole industry abroad. We have the potential to create multi-billion dollar global product companies every year, and the benefits could run into trillions of dollars over a decade or two.

This article first appeared in the LiveMint

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The Indian startup ecosystem should look at Israel as a role model

I love Israel. Having been there 7-8 times over 5 years when I worked for a company (Mercury Interactive, acquired by HP) that had its development center there, I believe they have some of the best developers, product thinkers and execution oriented folks.

They are also amazing at marketing. They have successfully convinced the world that they are the “startup nation“.

Never mind that they have 1/3 as many product startups as India produces annually and never mind that Indian companies acquire or get acquired twice as much as Israeli companies.Indians also make up 52% of Silicon valley startup founders, whereas Israelis make up less than 8%.

Take a look at those 3 data points and tell me they are not facts. The PWC report is for 2012, so its relatively recent. The # of companies we track in India versus Israel startups in our database is three times as well. The # of companies on Angel list or Crunchbase reveals a similar statistic.

Still its Tel Aviv that creeps up on Silicon Valley as the top startup center. If you read the startup genome report, you’ll be convinced of the same based on their methodology.

What are the arguments I have heard against India being the startup nation?

1. Quantity not quality:  We produce numbers, but not quality. Many of our startups are clones of Silicon Valley companies featured on Tech Crunch 3 months post launch. I looked at the 3 top Israel incubators and found that over 60% of the companies they were helping were clones as well.

2. Exits: We dont have a significant number of $billion or hundreds of million $ exits. I have found that while we do not have those exits, the number of companies listed on the stock market in the US for both Israel and India are comparable.

3. Market access: Israel has excellent knowledge, insights and know-how about US markets. Since Israel itself is a fairly small market, most Israeli entrepreneurs focus on US markets solely, even though they are geographically closer to Europe. Technically the # of people with market knowledge of the US in India far exceeds that of Israel, but they are not in product startups but at large companies.

4. Services mindset & positioning: Thanks to the ginormous success of Indian services companies who helped position India as the “world’s backend” (comparable to China being positioned as the world’s manufacturer) we have been already positioned as low value, low margin, consulting providers.

5. Late start: Even though Israel is 60 years old and India as a nation is a little older, we had a late (2001 or so) start to technology startups. Compared to Israel which had some interesting companies (need references here, what I have heard is mostly anecdotal) in the late 90′s as well.

Why do I still say Indian startups should look at Israel as a role model?

1. They champion their startups very well. They are very well vested in their startups success. They are constantly talking about how good their startups are, how they are possibly better than the valley and why they have the best talent in the world focused on startups.

2. They take significant risky bets. The # of investors in Israel (seed, angel and institutional) is comparable to those in India even though the number of startups is a third.

3. They look out for each other. The community is so well connected with each other that they genuinely look out and help each other. I dont know of any other place that supports their own as much as Israel does.

If you have been to Israel or have lived / worked with Israeli’s please tell me in the comments if there are a few data points I missed.

If you have any good data (not anecdotes, I have enough of those) to counter any of my arguments, feel free to call those out as well.

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Enterprise customers Vs Startup customers

When you are selling a product to a customer, you will have to understand the characteristics of the customer. This is especially true if your product solves the problems of both Enterprises and Startups. Both are unique in the way they buy products. Enterprises have a process in place and hence you need to be very very patient(sometimes, it may take an year for an Enterprise to decide to go with your product). Startups are more willing to experiment and will try out your product more willingly if they think that will help them gain an advantage. The selling points are also different. For Enterprises, you have to be able to convince them that your product is very stable and has already been tested in a production environment. They will give more weightage to existing customer references. Startups are more interested in the feature set. They want the latest bleeding edge feature set which will help them in getting an advantage over the competition.
Based on my experiences, I have listed down the happy and sad characteristics of Enterprise and Startup customers.
Enterprises
Startups
 
So, to put it in a nutshell, Startups decide fast and are willing to take the risk with you, whereas Enterprises are more slow in decision making, but once they decide, they stick with you and pay well.
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Startups and mentors: How to look for a great technology mentor? & A list of top tech mentors in India

I am going to write a 3 part series on mentorship and technology startups. Rather than write about why you need a mentor or how to engage with a mentor (next series) I thought the first step for most entrepreneurs would be to seek out great mentors.

As an additional bonus, I thought I’d list some good mentors in India so there’s a starting point (not comprehensive). Please feel free to add people who deserve to be on this list via comments (you cannot add yourself, someone has to recommend you, preferably 2 people).

We will focus primarily on technology startup mentors, which are < 2 years old. I believe there are 3 types of mentors you need at this stage: Technology, Marketing & Industry specific ones – that’s it. Everyone else is a nice to have waste of time.

Why?

Early in your startup, you should be focused on solving a problem and building your product, while at the same time, talking to customers and understanding their pain points. So if you are spending time doing anything else, its a waste. Mentors should help you do these things alone.

So, if you are thinking of getting that CEO of a 3-4 year old company which is doing well, as a mentor, he should fit in one of these buckets, else he a) does not have enough time to give you or b) does not have enough practical knowledge to share.

This post is about technology mentors. The next two posts are on marketing and industry mentors.

Technology mentors should help you think about the solution architecture, build & recruit a great engineering team and understand how to solve complex engineering problems.

I define technology mentors as people who are engineering managers, UX designers, architects & hands-on senior technical staff members in their day jobs. No one else qualifies. I would not put ex-engineering manager (now consultants at large, etc.) on this list. The reason is simple:

If you are not practicing, in the trenches, you don’t know the specifics and tend to give “Gyan” at a high level.

ps. US folks, I am trying to introduce some cool Indian lingo into your vocabulary, so please click on that Wikipedia link about gyan. :)

So how do you look for a great technology mentor?

1. Social proof – GitHub, Hacker News, Hackerstreet.in, HackerRank and Stack Overflow are great places to start. Also seek out folks at offline events such as Startup Weekend, Yahoo Hack Day and other such developer events. Dont look for technology mentors at generic industry or startup events. You dont find good technology mentors there.

2. Look at some awesome product companies – Cleartrip, Flipkart, Komli Media, Yahoo, Google (Map Maker), Microsoft Surface, InMobi, Facebook, etc. Get to know who runs their engineering and technology teams. Find out who their good senior, hands-on, architects and engineering managers are.

3. Reach out through your technical network: E.g. I am trying to solve this complex engineering problem, and we have a few areas where we’re stuck and would love some help. Can you please recommend someone who is a <machine learning expert> who is working on this area at <company name>?

Most good technology mentors I know like to work on really hard engineering problems, so the harder & more unique your problem the more likely you are going to attract a great mentor. Its a self selecting list (which is good) so if someone believes the problem you are trying to solve is not in their interest area, you dont want them anyway.

So now, on to a short list (soon to get long thanks to you all).

<EM> This list is biased right now. These are people I know, like and admire. Please feel free to help other entrepreneurs by recommending good people I dont know to this list. </EM>

Some recommended Engineering manager mentors:

1. Sachin Desai (Ericsson)

2. Mekin Maheshwari (Flipkart)

3. Hari Shankaran (Interview Street)

4. Jayanth Vijayaraghavan (Yahoo)

4. Indus Khaitan (Bitzer)

5. Bharat Vijay (ex Yahoo, Amazon)

6. Amod Malviya (Flipkart)

7. Srinivasan Seshadri (ex Kosmix)

Some recommended Architect / CTO mentors:

1. Dorai Thodla (iMorph)

2. Prateek Dayal (Support Bee)

3. Shivkumar Ganesan (Exotel)

4. Avlesh Singh (Webengage)

Some recommended Cloud (AWS, Google App Engine, Azure):

1. Ravi Pratap (MobStac)

2. Perrraju Bendapudi (Microsoft)

Some recommended design mentors:

1. Sunit Singh (Cleartrip)

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Be There or You Will regret it – Product Conclave 2012

NASSCOM Product Conclave (NPC) 2012 is an exclusive forum for product entrepreneurs looking to get actionable takeaways and learn from experts, peers and practitioners on their Go-to-market strategy. NPC 2012 promises to motivate, inspire and educate. An all star cast of product entrepreneurs, including Ram Shriram (Sherpalo Ventures), Sajiv Sidhu (i2 technologies) will share their proven techniques for product success. Over 60+ hours of goal oriented track sessions in the areas of product management, marketing, sales and business development will help you learn from people who have previously built, are currently building or are looking to build global product organizations.