Xtreme Startups @ IIM Bangalore

NSRCEL hosted Xtreme Startups - an event where entrepreneurs share experiences and discuss issues that could affect us all - last Sunday. It was a very candid, open discussion and fortunately, the discussion was much better than the usual level at which it ensues at BarCamps etc. Khaitan (representing MVP) did a great job of keeping a lively discussion going. He can also blow a whistle like he could in college!

The founders from Muziboo, LifeMojo and RedBus shared their diverse experiences - the great thing was that all three were as different from each other as possible:

Muziboo is done by a couple - Prateek and Nithya - working out of home over the last two years. They did little market research, but had a very strong sense of how online communities might work - and music was an area they thought would attract a passionate enough crowd and one which was a need not met online yet. They've done some consulting on the side (No end to end projects, low end stuff that keeps the cash flowing and lets them experiment with stuff they can then use on their site as well!), kept costs low, the team small and growth plans flexible enough to not need to go to a VC yet. They've tracked and cracked - through some trial, error and insights developed first-hand - a lot about what different segments of their traffic means in terms of value - what behaviour they want to encourage, and what will get their users to talk more about them. They seriously think SEOing, "buying CPCs" and beating your own drum about the product is best avoided early until such time as you attain critical mass, and its best to keep working on the product till it gets users to talk to others about it ("People try something when they hear about it from at least three others").

I loved the courage they've demonstrated to do things differently from the regular startup-VC-conveyor-belt approach. I liked the fact that understanding the market happened as a process (which is the real truth anyhow) and not as some upfront spreadsheet and search-engine derived wisdom. Their apparent willingness to experiment, learn, rinse, repeat and total honesty about it was heartening, and I think this will grow into a very successful business over time. They have a very healthy percentage of prosumers already - and I wish them godspeed.

LifeMojo's Namit went next, and his motivation was the clearest from the word go! He got very serious about pursuing a dietary plan to lose weight, and spotted the market and acted on it, along with his friends. They managed to rope in professionals to both advise them, and be their reference customer. Their learning curve for both the B2B space as well as the foray into the B2C story has been quite steep, and they seem to be evolving quickly. Again, the market research was informal and intuitive, and they were sure they wanted to have a positive impact on personal healthcare management much before they'd figured out the exact ideas and form those would take. Business and product development have become two separate focus areas quite early, and its good to see the revenue focus right upfront though the exact models are still on the evolutionary treadmill. Their enthusiasm and the proactiveness in engaging various stakeholders of their industry is something that should stand them in good stead.

RedBus and Phani are well known as are their stories. What was surprising was his attributing a lot of their success to mentors whom he's consulted each time they had a dilemma, and whose advice he always goes with. His focus on, and efforts to rope in seriously big names as mentors were awe-inspiring.

RedBus was born of an opportunity spotted when Phani missed a bus. He then spent months traveling (in buses that I guess he did not miss) and understanding his market, and months again convincing the first few operators of the need for and value in making inventory available to them. To me, this was the most critical differentiator of the business that depends on relationships and efficient operations. RedBus has been pessimistic in its projections, efficient in its operations and has consistently beaten its projected numbers. The investors have reposed their faith multiple times already, and Phani seems to be thinking big, while being very focused on building a business which can sustain growth. Decision making is not a CEO-only thing at RedBus, and the fact that 170 families depend on the business makes him avoid whimsical decision-making completely.

It was a great session - and nice to see that entrepreneurs have varied motivations, and paths to and even definitions of success. Its important to "not just read blogs" and latch on to someone else's agenda as your own. Phani will learn from everyone because he's looking out to doing that. Prateek/Nithya can easily question conventional wisdom because of a deep understanding on how his users behave and what they're looking for. Namit is likely to brave any storm cause he's pretty sure there's so many folks out there whom he can help and that they understand that better than most.

Its the optimism, the focus on the goal (though those vary a lot) and the willingness to learn along the way that were common across all of them.

You really want to do that ?

The last few days have seen a lot of mental, psychological and emotional acrobatics towards answering a question : what do I want to do ? I mean really want to do.

Of course, what I really really want to do is travel a lot, meet tons of people, write a few books, share experiences. I also really would love to be able to impact Urban Planning positively, and help drive the right goals for the city.

But then as an entrepreneur, how do you decide whether you want to dive into that exciting sounding idea ? I've written about "passion" earlier - but how do you even figure out whether you're really passionate about something, or what exactly is it in a story that you're passionate about ?

One thought thats emerged - in discussions with fellow truth-seekers - so you can evaluate something like this more meaningfully is:

Imagine what you'll be doing, and see if you like it...

This involves a fair bit of homework.

For starters, you need to understand the various aspects of your venture/job.

Initiation:

How do you get it off the ground ? How do you validate the technology, and the business parts of it ? What does it take to get all the "unknowns" answered - contacts/travel/interviews/research. Is there a brick-and-mortar part to it that'll need observation from close-up? Do you need to learn a new language to get it running ? And I mean Kannada/French, not Ruby :)

Up, running:

Lotsa coding ? Setting up operations ? Simultaneously ? You probably need to start pursuing the stakeholders for a buy-in, not just information. Thats a lot of pitch-creation along with collateral for that.That could involve a lot of sucking up, travel, deal-making. Is it time to hire some folks already ? How much cost cutting are you starting to do on the personal front already ?

What are the reactions/strategies when you hear a bunch of people saying "no" ? What happens when you encounter muscle ? Who handles that, and how ?

Grow! Awesome.

Operations : manpower, processes, glitches abound. This takes up a lot of effort. What are the day to day challenges ?

Sales : Finding new leads as you expand becomes a huge challenge. And since you're not "reacting" to a few reference/early customers or consumers, it becomes tougher to come back and change stuff too easily and the focus shifts to packaging/messaging things so that you can get the point across. Hit rates could drop, so you need a wide audience. A full time job, again. Deal cutting with the big guys becomes nastier, and there's some competition you start to become aware of that you knew nothing about earlier.

Development : Its kinda on auto pilot, since you're focused on the ops and sales. But hey, there's lots more inputs flowing in, and then you're suddenly scaling, and quality glitches are starting to show up.

Stable State:

What makes or breaks the company now ? What drives growth ? Is the primary focus managing relationships ? Deal-making ? Financial jugglery to keep costs/margins healthy ? Is operational efficiency what your business depends on ? Is an ever-widening network of contacts the mainstay of growth or even sustenance ?


In each of the above states, identify what tasks are important. Don't just pick stuff thats sexy, or that you would like to do.

Identify the important external stakeholders in each. They'll need to be cultivated, managed, engaged. Thats a job! Irrespective of what the venture is. (Or even in a job)

What are the likely problems that might arise in each phase ? Which are the human issues, or technological, or marketing related, or financial ? You'll be fixing all of those whether you like it or not :D

List down the important tasks in each phase that will need doing to answer the above, and more questions if you have them in your venture's context. See if between all the founders, you're ok doing all of those. Sorry - make that enjoy doing all of those.

What do those tasks involve ? Coding ? Travel ? Negotiating ? Groveling ? Financial skills ? Language skills ? Marketing ? Creativity ? Talking ? Documentation ? Elevator and other pitches ? Collaborations ? Mild lying ? Hiring from tons of fluff ? Convincing and managing people with lots of attitude ? Being "available" all the time ? Dressing up and attending parties ? Getting your hands dirty and legs dusty "on the street" ? What ?

Cause when the chips are down, just being "ok" with those task will not be enough. You'll tire of things, or get bored, or distracted by other stuff that really interests you. The early challenge of exciting problems to solve, or a fuzzy dream of pots of gold at the end - these fade quite easy but for a very very very few souls. Each little task that you do owith some sense of resentment builds up stress, and fatigue - especially when the going is tough.

For most of us, the love of the underlying space will see you through the troughs. The goals and even the ideas might continue to change, but none of those tasks will seem too painful if you're in a happy place vis-a-vis what really interests you.

So go ahead and write it all out - and see if its a happy picture that emerges when you draw it in detail.

Smart Idea Vs What-You-Love Vs Will-it-get-funded?

Its a similar theme to what I've written about on this blog earlier.

Essentially (from a tweet I'd made yesterday) :

Betwn a "smart idea that has major potential" and "a nice idea which you'd love to execute" which would you pick? #entrepreneur #philosophy

Some responses -

@zenx I'd go for the latter. The 1st one is pure business potential, but does not address skills or liking - both critical to keep u going. @raodyboy

@zenx "A nice idea you would love to execute " any day it's about you at the end of the day and not abt the idea itself @lalitgbhise

@zenx Most ideas in startups change, even the 'smart' ones. If you love working on a problem, you'll hit upon an idea that has potential. @avinashatreya

@zenx I must admit it's a hacker's perspective. From a biz PoV, if something has potential, and others consider it a PITA, nothing like it! @avinashatreya

@zenx @avinashatreya by no means am I disregarding the need for a good biz model. The "love" is needed to stay driven at all times. @raodyboy

@zenx it should be a bit of both. Else you stand to lose either your money or your passion or both @biggfoot

@zenx Agree with @avinashatreya ; There needs to be a fine balance though & a lot of "common sense" :) @m_mekin

@zenx Depends on how interested you are in the first. Is passion inherent to an idea or is it part of execution? #entrepreneur #philosophy @sids

@zenx "a nice idea which you'd love to execute" for me @randombrick

Most folks instinctively went for the "love to execute" part - yet on reconsidering it some wanted to ensure it made business sense, and even had a business plan.

Now a lot of startups I've known about did not really have a clue to what revenue models they could realistically go after. Amazingly, a lot many of these were not even things the folks doing them were totally into, or believed in deep inside. They were essentially of the nature of being "great opportunities" from a cool-sounding technology point of view, and something that might attract investors. The ones who were more in love with the thing they started out doing did not write up formal business plans, or have fixed time-frames vs. returns targets, or want to attract a million dollar fund.

As an example - a lot many travel companies which want to, like so many before them, help search tickets across airlines. Surely there's more to travel? Were the founders real travelers themselves ? Did they truly want to make a difference to how travel related planning/execution happened ? Of course there's success to be grabbed in this model itself, though no way thats ever getting as sticky as an IndiaMike. Or even GetOffUrAss. The former thrives on operational, technological efficiency and deal-making capabilities. The latter - both in the commercial format and otherwise - live and grow off their enthusiasm for travel/India and the creativity and interest to go-deeper.

Numerous real estate sites are essentially listings of properties, like the last one and the one before. I do remember one which took a shot at playing concierge for buyers and tried hand-holding them through the process. But most are about a cooler website, or a better interface. The nuts and bolts of the industry the startup enters seem to not be appealing, or even factors in the startups plans. Thats a "will somehow get past that".

Perhaps thats the part that needs the "passion" - the word that's gotten a little overused in every venture's context. Not the passion to overcome an operational challenge, or create an engineering solution, or other such meta goals - but the passion for the core of the business.

Questions to ask: Do I love this space ? Understand it so well I can make a real difference to the consumer ? Am I building gloss and UI, or value that will be appreciated irrespective of the gloss ? Do I enjoy the attributes I'm trying to make a difference to ? Can I empathize with the consumer ?

Of course, I'm sure there are people who live for ensuring every opportunity is made use of, and build great businesses targeting those specific opportunities, on top of their team building, marketing and operational skills. A majority of businesses in India are not necessarily driven by people's love for what they do - its not a love for fashion that drives the average textile retailer, or passion for music that makes a successful label.

But for those who translate their deep interest in an area into a venture, the chances of overcoming the lack of skills in marketing, or team creation, or the lack of contacts, etc, are good. For this kind of an entrepreneur, being totally into the space you're getting into helps. The specific idea can change, but it helps if you totally love the area you're into - you'll overcome hurdles that much more enthusiastically.

Your love of reading, understanding of books, authors and genres will help a lot if you're getting into publishing, or starting a library. The Premier Book Shop off Church Street - a small outlet compared to some of the big guys - had a kind of repeat clientèle few bookstores would see. The guy knew his books, and his customers. Sure he did not have (or probably want) scale, and new-age inventory management, a snazzy web interface, multiple delivery and billing option, etc, might've helped. But his customers - who went to him ever so often - did not go for those attributes - but for the connect he created with books. It was the deep love and knowledge of the books, not the technology or operations that catalogued, or sold, or delivered them, that kept people hooked.

This depth of the "intangibles" is what a truly devoted enthusiast can bring to the venture. Its provides a differentiator that is rock solid, becuase its not dependent on this feature or that, or a fleeting advantage in price points or suchlike. The "love for the cause" brings a certain authority, flexibility and even respect and friendships that customers gravitate towards.

So what kind of an entrypreneur are you ? Think hard and you'll know which ideas will sustain, and which will get "boring" or fade with the reduced relevance of the current idea.

The Passion of the Entrypreneur

There are businesses, and there are businesses. Some become big brands, some get into franchising, some are huge enterprise-driven cash cows.

My favourite kind of business is a little more romantic though - the kind where the passion of it rules - its size is almost guaranteed to be single-store or small otherwise because the energy and keenness it needs pretty much cannot be replicated. Its rarely the most profitable (in cash terms) but usually extremely loved and respected, and sustains. The brand is huge in its own niche, and its amazingly satisfying in its own way.

I'd place some of these in that category:

BOTS : Bums On The Saddle

Nikhil and Rohan are regular software guys who are passionate about bicycles, and dared to try and change the cycling scene in Bangalore on their own! They rented "space" on the terrace and built (by hand!) their showroom. They've got a lot many customers over the few hours every weekend that BOTS opens, and even more friends because of the amazing community they're helping create. They participate in biking forums as riders, enthusiasts and also as people who sell Treks if you need those. The DIY workshops at BOTS, the biker-movie-nights, the wiki/FAQ for rentals, what bike etc, and the readiness and enthusiasm with which every question - even from non-Trek owners such as myself - is answered - is what differentiates their approach to business as compared to the Firefox Stations which also carry Treks. I would not say they know everything about bikes (though the fundaes collected and worked upon has grown to a formidable volume over time) - but they're the most willing to learn quickly and even better, share widely.

Auto Service

Venkat Shyam's love for all things mechanical, especially bikes, and his never-say-die attitude when it comes to analyzing issues makes him a pleasant surprise in the otherwise murky two wheeler service space. Add to that his willingness to help anyone and everyone on the fora he's a member of, and his amazing innovativeness in running the service station be it customer friendly initiatives, employee benefits, or even helping out the parent brand with field level R&D, and to me he's a great case study for biz schools - how to think like a world class org even at a small family owned business level.

He's probably got more brand value than most big Auto Sales/Service chains in Bangalore or perhaps across India, and people have sometimes ridden down from Pune to get a decent job done :)

Rainwater Club

This is now part of Biome - which includes Chitra Vishwanath's efforts towards energy friendly, yet aesthetic architecture and construction.

I had interacted with Vishwanath about 6-7 years ago when we were considering inplementing RWH for our apartment complex. Recently have gotten to know more about him and the others who're part of this when my wife started working with the Rainwater Club. His determination to make a difference one little bit at a time, and the perseverance which has sustained the effort over years amazes me. Its not a not-for-profit venture, yet its focus is not profit. The impact, organizing the sector and its players, and defining a path for better water management is their agenda and given how critical water and energy management will become, its a great business to be in without being all "business-like" about it - if you know what I mean :)

GettOffUrAss

Santosh is more of a traveller and dreamer, but unlike the rest of us, has had the conviction and guts to follow up on these, and over the years, have seen him establish himself as a specialized, niche player in the travel space. He probably has more repeat customers (and even repeat non-customers like yours truly ;)) that most travel portals. He's also having lots of fun, probably making decent money and growing business while keeping it really really close to his vision of what it should be. I would be surprised if any large travel outfit can even come close. You need to be a traveller/biker/dreamer to get this far, and the average cometravelwithus.com just does not cut it! No VC, no IPO plans, no projections. Just does what he loves, and thats to get people off their asses and out there :)


MapUnity

Ashwin has a very very different approach to startups. While I will not claim to understand it, its probably not about VC funding in the classical sense, 10x returns and exit options. He's dared to create a very different model, build brand equity amongst the players that matter in the mapping space, learned how to work with governments and large organization without monetary transactions alone driving the relationship.



I cannot imagine how large orgs - an Oracle or a Reliance or an AirTel could ever hope to do anything like this. This is surely a beautiful form of entrepreneurship, and I hope to keep running into more of these examples. Keeps the enthusiasm going like little else. Their passion, their dive-into-it attitudes and their honesty is very refreshing. Its not unsurprising that bums and ass are part of the names of two of the businesses I've covered :) These guys are serious about what they do, but not everything is immediate RoI alone.

O perhaps their definition of "Returns" encompasses more than what shows up in the next quarter's balance sheets, and therein lies the "differentiator".

Edit : Some that I forgot to mention

Starc Audio

Rajesh Nair has a passion for music - and understands his valves and crossovers. Years ago, based on a reference, I'd prodded him to make me a home theater system from a scratch - and was very happy with the results. Rajesh has since embarked on a fantastic journey thats taken him to explore new heights of the high end audio market - stuff I cannot afford or even begin to understand, but for which there's a strong niche market of affinciados. Again, Rajesh has followed his dreams and lived them.

EasyLib

A lending library thats more than just that. They were small and fledgling when I first heard of them, and now are a business thats positively impacting the reading habits of many. They organize reading/storytelling sessions for kids too! No funding, projections etc, again.