Category Archives: business

Why Web Startups Need To Think small

I’ve been a fan of 37signals ever since I first used Basecamp during my stint at Slideshare in 2007 and later while working on Kwippy. What’s also special about 37signals is that not only they build great products that make money, they are also doing a fabulous job at sharing their experiences and learnings with the community using Social Media long before it was a buzz word. If you haven’t done it already, you should checkout their blog where they talk about design, business and other things.

Sometime back I happened to listen to this talk given by DHH on ‘Making money online’. Despite a cheesy sounding title the talk is a great primer for web entrepreneurs  starting up or thinking of starting up. DHH touches upon a great point when he says

The odds of you in here making the next Facebook or YouTube or MySpace are tiny, the odds of you just actually just creating a product that few people will like and pay more for, not that shabby.

It’s kinda like reverse terror alerts, the probability of something like this happening, like the probability of you being crashed in the plane, tiny, but the fear you have of it or the desire you have to be the next Facebook, Huge, because it’s been broadcasted over and over again, you are being brainwashed

DHH further goes down to put forward the maths behind making a million dollars in an year by having  2000 customers and charging them 40$/month. Adding decent  conversion rate(5%) to the equation it would take about 40,000 signed up users to get 2000 paid customers. Taking it down one more level to make 200,000$ a year you would need just 400 customers at 40$/month.

The number of problems/niches one can attack trying to get this many customers are a lot, but not surprisingly we still find most web start-ups aiming at building the next Facebook or YouTube. Its not uncommon to find entrepreneurs by the dozen running after VCs and Angels to raise money for the next big thing on the internet despite the fact that most of them can get their venture started without too much money. One of the primary reason for this is the fact that raising million dollars for building(or the mere thought of) a global product that might be used by millions is SEXY however building a web product that’s being used by a few hundred or thousand users while making you some money isn’t.
This frenzy is fueled by media and consumers alike and the entrepreneurs(esp first timers) get unknowingly drawn into this trap and the next thing you know is everyone trying to make it big without even trying to taste success in building a smaller yet useful product.

While I won’t discourage anyone from taking big shots right from the start, I strongly feel its a lot better(and practical) to solve a small problem first before going for the bigger one.

Are you holding your business too tightly to let it grow?

chimaki

Building a brand, product or an idea is like raising a child. You need to nurture and protect it during its early days and slowly set it free to grow. Sounds simple and obvious? Trust it me it’s not, at least for most people.

I’ve seen numerous cases of product(primarily web) founders, small businessmen and more falling into the trap of holding their product/business/idea too close to their hearts to let it grow, grow beyond them. Things are quite easy (in this context) during the initial stages with people putting their blood and sweat into their business and helping it stand on its feet and start walking. The real problem occurs in the next stage in which the business needs to start running not just walking.This is the stage where all sorts of conscious and unconscious forces come into play that tend to prevent the owner(s) to from letting their business/idea take the leap.

During the initial phases the business/idea is known more by the people behind it, both are synonymous with each other and that’s all that there is to it because the business is mostly driven by it’s promoters/founders, it’s known mostly in the promoters’ circle of friends  and is yet to grow and have an independent existence of it’s own. Once the business has firm grounding and more people start nurturing it directly or indirectly the pace and scope of its growth depends on how the core group of promoters loosen their strong ties with it.

Essentially it’s all about loosing the tight control and dependency that once the business had on its promoters because these factors now become the limiting force in its growth. The conflict that thus arises is a peculiar one in which the promoters still want to be involved as much as they were some time back in almost everything related to the business, while the business itself strives to outgrow its promoters. This is the stage where like a growing child the business needs to venture out, meet new people, develop new relationships, try new and different things not necessarily within the scope of its founders, in short this is the stage where the business needs to start getting a life of his own.

For some businesses it might mean raising funds, for some it might mean getting more people on board (not necessarily as employees who merely execute the promoters plans/ideas) and outsourcing a part of your business to someone else. The idea of loosing control is what troubles most promoters but the hard fact is that in order to make your business grow beyond you, you need to loose some control and this is what smart people realize.

The goal rather than trying to have your business as integrated as possible with its founders should be to let it loose as early as possible as only then the business can have a life of its own and it can grow into something big, much bigger than its promoters.

Block your calenders for TiEcon Delhi 2009

If you are an aspiring entrepreneur dabbling with questions like

What exactly is entrepreneurship all about?
What is the right time to start up your own venture?

or if you’ve already started up your venture and want to know

How to scale your business?,
How do really go about the whole funding business ? etc then TiEcon Delhi 2009 is the place for you to be.

tiecon

TiEcon is one of the biggest conferences in India on entrepreneurship and is aimed at inspring and educating entrepreneurs on various aspects of entrepreneurship and the relevant growth opportunities.

TiE (The Indus Entrepreneurs), the organization behind TiEcon Delhi 2009 is a global not-for-profit organization dedicated to the advancement of entrepreneurship. With 53 chapters across 12 countries TiE’s mission is to foster entrepreneurship globally through mentoring, networking, and education. Dedicated to the virtuous cycle of wealth creation and giving back to the community, TiE’s focus is on generating and nurturing the next generation of entrepreneurs.

What differentiates TiEcon from other conferernces/events aimed at entrepreneurs is the fact that

1) TiEcon is at a much bigger level:

Some Numbers for Tie:

  • 2,500 experienced entrepreneurs and business executives as charter members.
  • 11,000 aspiring entrepreneurs and professionals as members.
  • More than 500 events with over 70,000 attendees worldwide.

Given the scale at which TiE operates and the fact that the Shri P Chidambaram(Home Minister) would deliver the inaugural address for Tiecon Delhi 2009 it’s easy to imagine the scale of the event. The scale is also wide as unlike most other conferences aimed at entrepreneurs there aren’t really any restrictions on the size or kind of startups. For ex: There will be sessions on security and renewable sources of energy

2) Platform to meet the policy makers:

Another aspect that puts TiEcon in a different league is the fact here you can get a chance to interact with the policy makers for your segment/industry of interest.  This in itself is a great opportunity for entrepreneurs to interact and connect with people who decide various policies. For ex: A couple of speakers from government include Mr. Dinesh Rai, Secretary, Ministry of Micro Small & Medium Enterprises (MSME) and Mr. Deepak Gupta, Secretary, Ministry of New & Renewable Energy.

3) Exposure to other sectors/industries:

While the most an attendee can get to learn at a typical startup event is within the realm of that industry(tech mostly) but in an event like TiEcon one gets a great chance to learn more about other segments like Energy, CleanTech and Education.

4) Attendees:

Here’s a screenshot of some of the attendees/delegates.

Delegate TiEcon

You can find the complete list here

While I’ve shared just four reasons I am sure there will be a many more reasons for you to attend TiEcon Delhi 2009. Here are the details for TiEcon Delhi 2009

Dates: 18th and 19th September 2009
Venue: Hotel Taj Palace, New Delhi
Agenda: http://www.tiecon-delhi.org/agenda.asp
Registration:  http://www.tiecon-delhi.org/registration-group1.asp

The folks at TiE invited us(bloggers) to share more about TiE and TiEcon for a pre-event round table yesterday and were kind enough to offer free invites to attend the event

You can connect with TiEDelhi (Delhi chapter of TiE)

Equals in Business ?

Most people start their businesses in partnernships/collaboration with some one they know. It could be a family member, friend, relative or just a known too. Trust is the first thing that people look for before getting into a venture with other things being what the other person brings to the table; money, connections, skill set etc. It’s commonplace to find businesses being run in a fashion where one or more partners put the money(or maybe contacts) and other(s) put skills and effort(or maybe contacts).

Due to inherent nature of the factors in place(time, effort etc), things get a bit difficult at times as contributions start to vary from what they were initially agreed upon. For example: If two people start a business with one person putting the funds and infrastructure and the other bringing in clients and contacts needed to get the job done. Now in this case it’s easy to quantify the funds spent on infrastructure and other activities but it’s a bit difficult to quantify other inputs like efforts, time spent etc. What further makes the puzzle difficult is when both partners feel they are doing their share of the job as initally agreed upon.

A situation like this can easy reach a deadlock with both parties proclaiming to be doing their bit of the business. What further makes matter worse is if both the partners have agreed upon equal share in the profits. The matter gets really complex if  say the guy who was supposed to get business and contacts with his effort isn’t doing his part efficiently but believes he is doing it right and thus deserves and equal share in the profit(which they make due to the efforts of the other partner who was just supposed to put funds for infrastruce etc) as mutually agreed upon initially.

Human Ego is another factor in play in situations like these as even though a person might know that he isn’t putting in the required effort in the job but his ego will prevent him from accepting it and agreeing to get an unequal share in the profits. I’ve had a few direct and indirect experiences in this regard which have forced me to think of a way to reduce the possibility of such situations.

A couple possible solutions that I could think of  are

1) To partner with someone who is as equal as you are

If both partners are equal in most respects like finances, contacts etc then I think the scope of running into situations where  one feels the other isn’t doing enough is reduced. By quantifying one’s contribution in terms of money, contacts or other resources, the factors which could cause confusion/dissatisfaction are reduced. Also, I feel with equal partners it’s a bit easy to find out and accept if one isn’t doing his bit properly

So it’s a good idea to find out in the start what the other person is bringing to the table and ensure that it’s not too high or too low for your contribution.

2)  Decide on a profit sharing model based on one’s contribution:

In case of partners with unequal inputs, it’s a good idea to decide on different profit sharing models based on situations with varying contributions. For ex:

a) For every deal where person X does this and this and person Y does this, X gets 66% of the profit and Y gets 33%
b) For every deal where person X does this and person Y does this and this, Y gets 66%  of the profit and X gets 33%.
c) For every deal where person X does this and this and this and Person Y doesn’t do anything, X gets all the profit and vice-e-versa.

I feel predeciding things like revenue/profit sharing in various situations where there’s a possibility of unequal contributions will serve as a base and reduce the number of potential conflicts.

What do you think?

Social Media in India: Bigger me or Bigger WE ?

This post is a reply/comment to Gaurav Mishra’s post .

Before starting I must admit that Gaurav has done a great job in compiling and categorizing the list. I mean what are the odds that any individual or company/agency mentioned in that post knew about all others ?

All it takes now for any web company to become a social media company is just adding “social media marketing(smm)”  in their list of services offered or probably opening a Twitter account and following everyone mindlessly, but this is just the beginning. These are truely interesting times as we are not only observing but also shaping the growth curve for social media industry(If I can call that) in India. Our approach towards the core domain as well the business and social aspects of it will determine how things take shape.

By observing the figures(25-30 agenices in 2008 and 35-60 in 2009) it’s easy to slip into “The Pie Fallacy“, but as Gaurav rightly points “we haven’t even scraped the surface yet”. Social Media is yet to percolate into the way our organizations work.

While most Indian brands are still apprehensive/unsure about social media, those who’ve taken the plunge are still experimenting and trying to figure out what to make of it. Non Profits and Government are largely untouched by the social media wave. It is quite some time before Corporates start realizing what’s at stake if a social media disaster happens or individuals/govt etc learn how to handle social media with care.

What we face now is a classic “Whether or Which Dilemma”  and we need to pause for a minute and ask ourselves

“Are we trying to make the market bigger, or just grow our share?”

There are two ways to it.

1) Everyone just thinks about themselves and if their share is getting bigger or not(which’ll eventually lead to crab mentality)
2) Everyone tries to make the market bigger and in-effect making every/deserving one’s share bigger.

What’s interesting in the case of Social Media is that it’s about YOU or We and not ME.

The Scope of both individuality and cooperation in this space is immense. All that needs to be figured out is if,

You want to work towards a bigger ME or a bigger WE ?

because  “He who has a strong enough why can bear almost any how.”

Are layoffs the latest fad ?

Citigroup’s layoff of 52,000 makes history
TiVo To Layoff Workers
SAP Trimming Head Count, “Can’t Rule Out” Layoffs

Invariably I come across some news or other about companies laying off employees daily. The latest one being Citi’s historic layoff spree. Its not just the biggies like Citi and Sun that are laying off people, even small startups aren’t spared. Layoff is getting so commonplace and regular that people have started trackers just to keep a count of how many people are being laid off and where.The way things are going it won’t be surprising if each one of us has a person around whose been laid off or worse one of us bites the dust.

Though I am not a HR person and have not owned or managed a big firm with employees either but I still can’t accept the fact that laying people(performers or non performers) during bad times like these is the only way around. Sure showing pink slips to employees mainly from down the ladder is easy and in some weird sense shows that management is taking measures, I refuse to believe that layoff is the only option when it comes to balancing out things. I remember reading how HP avoided layoffs during the recession of the late 1970s by ordering an across-the-board 10 percent pay cut and requiring employees to take every other Friday off. People across the board taking a salary cut is just one of the possible options and am sure there will be lots of options that can either avoid layoffs or at least cut them to size. Take Toyota for example and how are they handling tough times without laying off people. It’s a brilliant strategy IMHO. Investing in people with long term goals should work well for them. Lastly as Mr Bagchi rightly suggests “Communicate transparently, involve everybody, explore other cost cuts, ask people to do alternate things, consult your customers and suppliers, and retrain people.”

What do you think?

Is CCD the new McDonald’s ?

Yes, the title of this post might sound a bit weird but I coudn’t think of anything to better describe what I mean.

Cafe Coffee Day is a leading chain of coffee shops in India which started operations way back in 1996. As per wiki it has about 650 outlets spread over 110 cities, which by no count is less and as per this news item here they plan to have about 900 outlets by end of FY09 i.e 73% growth (at the beginning of FY08 they had 520 outlets). The article also mentions that the 80% of CCD’s consumers are in the 15-29 age group.

In the last year or so CCD outlets have mushroomed all over the country especially Delhi, there are at least eight outlets in C.P itself and at least three within walking distance of five minutes from where I stay.There will hardly be a mall/shopping complex where there isn’t a CCD. The way CCD outlets are sprouting I am reminded of the way McDonald’s became a household brand in India. For majority of Indians Burger == McDonald’s and the shift from Nirula’s and Wimpy’s to McDonald’s has been rather fast and interesting.

Each Brand tends to be associated with some feelings/emotions/thoughts etc and that’s what helps brand become more or less popular depending on weather the associations are positive or not and with what audience can it strike a chord. Lets take McDonald’s for example, One can easily notice that majority of its customers would be from middle/lower middle class(and lower class) and of the age group less than 30. It fits nicely with their pricing model too but there’s something about the brand image and way the brand is perceived by people that leads to a particular segment of society more attracted towards a brand than others. Maybe this image( for McDonald’s) of an outlet “that serves cheapest burgers/snacks with a decent enough quality and taste) that does the trick of making them the most popular in their segment and helps sustaining this popularity as living up to this image is not probably as difficult as living up to the image of being a hi-fi/elite burger shop.

The way I see it, CCD is more or less on the same road. It projects that sort of image(of being cheap, of decent quality and a bit stylish) and has managed to strike a chord with a particular(and populous) segment. I feel if you ask any McDonald’s customer about his/her choice when it comes to coffee outlets most will say CCD against Barista or Costa. Thinking more about the brand images/perceptions Barista(launched in 1997)  which was more popular initially than it is now offers a more classy experience. It was the first cafe(that I knew) to have a guitar which customers can play other than few board games. Barista however projects a different image, maybe a slightly sophisticated one at that and thus has its appeal limited to a particular segment(which might be small sized).

Given the way CCD is growing in popularity it will be interesting to see how they expand. Will they have different types of cafes for different people/places ? Will they diversify or stick to their existing offerings ?

It might have helped if CCD had a working website, http://www.cafecoffeeday.com/

The power of Communication

“Over communication is better than under communication”.
I heard this for the first time during my initial days with Fidelity and its something that has been with me since then. The thing with simple statements is that while they appear ridiculously simple and obvious they are really hard to implement/follow.

Communication of all sorts is very critical as it can make or break lots of situations and institutions. From boardrooms to bedrooms its a common observation that those who are high on C.Q (communication quotient) are better placed as compared to those who are bad or not good at it.Needless to say while communication is extremely important it is not the only constituent of progress and success.

From companies and organizations point of view communication is even more crucial because their the stakes are really high and its impact can be felt on a huge number of people/employees. Their are various aspects of communication like

1) Direction:
Flow of communication both internal and external can be in various directions namely bottom to top, top to bottom and horizontal. In most cases the stress is laid(if at all) on the top to bottom flow of communication and that too it in a “just listen/obey to it” sort of way, for ex: emails from founders, managers giving employees directions/instructions. But those who understand the importance of communication lay emphasis on bottom-up and horizontal communication as well because the 360 degree flow of communication can really do wonders, to name a few things, the management would be more aware of the needs/demands/expectations of the employees and a lot of feedback/innovation can come to the surface if this channel is properly established.

Speaking of web startups: Despite the fact that its utterly easy to communicate with their users by means of blogs etc most startups suck at it and communicate only as a last resort. Be it informing users about scheduled downtimes, sharing details of new features  or seeking feedback,  more often then not its not done. I think not only should they communicate via their blogs much more but also they should keep an eye or establish channels for incoming communication by their users(ex: blogs, microblogs, forums).

2) Frequency:
What do you prefer, getting newspapers daily or weekly ? Its that simple but then again following it isn’t.

Be it communication within big organizations or small teams or with your site/blog audience. The frequency and regularity of communication is also important. Important because there needs to some basic level of communication that needs to be attained before things start to change and something substantial comes out from the other side. Obviously it won’t make any sense if someone from management asks his employees about the things they’d want to change in the company and then comes back to the same question after an year and expect a genuine answer.

Speaking of web startups: One of the easiest things that can be done is to update their blogs as frequently as possible not only about the good things but also the bad ones. I hate it when while visiting a site i find its under scheduled maintenance for 1.5 hours but there isn’t even a small mention of it on their blog. Core thought being be proactive and inform the users before them finding out and coming to you.

3) Content
Content of communication is extremely important. In the sense that the content if explicit/comprehensive  it won’t leave any scope for confusions n illusions. There a lot of cases in which communication within the organization and outside isn’t really fruitful because it does not show the full/clear picture and thus limits the vision and perception of the intended audience about the thing/issue in question. Whenever in doubt whether a thing is good/big enough to be communicated, just do it, because it might be big/good or important for someone else.


Speaking of web startups
: My advice would be to share as many things as you can with your users. Users just love to hear and know more about the services/sites they like and use. Share more things big or small about your product, your company and if possible even a bit about yourself.

Twitter breakdown is bad or is it ?

In times when is twitter down & “is twitter fully functional ?” is all we get to
hear not many think of this as an opportunity. Yes “Opportunity”.
This Opportunity is for pretty much who is in some way or other connected to
twitter. Not only its an opportunity for some addicted twitterers to realize that
there is life beyond twitter but also for developers, entrepreneurs and more.

The way things stand at the time of writing this post twitter’s “IM and
pagination are not working” other than some apps like “TwitterSync”.
This has been the case for the last few days and it might last for next days
or worse re-occur. What this means is

1) Incoming channels blocked:
A cursory look at the twitter home page will tell you that most of the
tweets show their source as web which clearly wasn’t the case before twitter’s
db crash. Also, twitter’s IM client is down which I think was the biggest
incoming channel as a result of which people have either stopped tweeting
or tweet very less.

2) Ability to surf/receive Tweets handicapped:
Since they’ve disabled pagination for all pages and the IM is down along
with it went people’s ability to surf tweets(either missed or otherwise)
and receive tweets as they are being sent.

3) Some twitter apps are down:
Send tweets via your facebook status aka TwitterSync is one that’s not
working.

So this makes perfect sense for people to either replicate the
things/functionalities/apps that are not working or come up with an
innovative way to solve the problem in a different or better way.

What do you guys think ?

Barcamp Delhi 4

After a painfully long wait and being postponed atleast a couple of times
Barcamp is finally back in town for Delhities respite. Delhi is not particularly
known for its Barcamp culture but seems things are in for a change starting this
time around.

For the uninitiated Barcamp is an unconference where all sorts of people come
in for all sorts of reasons (freebies, free wifi included) . Those who are willing
to present/speak on a topic simply add their names in the wiki and they are
allocated a time slot to present. Though most attendees are related to
software/internet the event is just not restricted to it, barcamp bangalore 6(BCB6)
being the perfect example which had participation from all sorts of people from
Internet Junkies to Social Activists.

If you are either a geek, blogger, internet junkie, entrepreneur BCD4 is the place
to be.

BarcampDelhi 4 takes place on 17th of may at

Amity Innovation Incubator
Auditorium, Block C, Amity University Campus
Sector 125, Noida

Hoping to see you all there..