Categories
Entrepreneurship

Learning

There was a time (however brief) when Mozart did not know how to play the Piano (he started playing it at the ripe age of TWO!). There was a time before Picasso knew how to paint. There was a time before Einstein knew how to calculate. They learnt.

I often come across Entrepreneurs who will tell me they do not know how to do something. I do not know how to code. I do not know to sell. I can’t understand the numbers. 

Well, then learn! 

There is no choice in the matter. All of us were delivered on this planet, a blank slate. We go on to learn things and apply them. Nobody was born knowing something. So not knowing is not an excuse. If you don’t know something and its important to know it in order to take your venture ahead; LEARN IT.

I know you must be thinking – is that not what the co-founder is for?

Yes. But in the event that you do not have one, you can’t stand paralysed, you need to move ahead. The moment they see the journey moving forward, their willingness to get on-board with your vision increases.

Always move forward.

Never be averse to learning.

Categories
Entrepreneurship

Why drop-outs succeed in business

Our entire existence in this world hinges on survival. As we survive, we learn.

We pass on what we have learned, in the form of education.

Our education system is structured in a manner where we need to pass tests to prove our proficiency. Unfortunately, it is fairly simple to game the system. In a test all you need is for the examiner to believe that you have learnt.

Since we use examples to teach, we use examples to test. It is rather easy to learn up the examples and ace the test. You do not need to be a genius. (I am not saying that the same questions are used, but the same structures are used)

Coming from the background of having gamed tests, it is only obvious to seek to game the business as well. Take the best example that fits what you seek to do and solve the puzzle in much the same manner. We feel that if we are able to looking at sufficient examples, we would find a solution that fits. In the real world, this does not work.

When your maths teacher puts together the problems, he/she limits the number of variables that you need to deal with. The real world unfortunately has far more variables; some visible and some invisible. When one tries to study another business as an example they figure out the visible variables but for obvious reasons miss out the invisible variable.

This is what they mean when they say – “Don’t look at the success of another person; their story is different from yours”.

Customers seek value for their money. It is far and away the ONLY thing that the customer is seeking. That value may be delivered in the form of a better product, service, packing, feeling, etc. This is where the story of each startup differs from that of the other and gaming the system becomes extremely hard. It is the hardest test to pass.

A customer will not consistently put money in your hands unless he/she feels value delivery is actually taking place. The variables which lead to the perception of value are very complex to understand. Hence, it is dangerous to look at someone else’s success and use that as a template for your own.

There is no gaming the customer here. No examples. No shortcut. No optimum solution (which is part of the reason disruption occurs).

As Paul Graham puts it – The customer is like a shark, there is either meat or there isn’t.

The only gauge is to see, if the customer is happy after having paid for the product or service. That should be the only focus at the initial stages. Do people love using what my business offers? What do they love? What don’t they love? How to improve?

Drop-outs are usually not burdened with the baggage of learning how to ace the test. They respond to the movement of the market, they are more flexible and look to solve problems in their own way. They do not seek to do the things that others did to be successful, they just do their own thing. They do not know how to study examples, they only know how to respond to a given situation.

They trust their intuition, spend a lot of time understanding their customers and do the best that they can; which is the best way to run any business.

Categories
General Thinking

What makes a business, a ‘Startup’?

All too often I come across young entrepreneurs, who are just starting a business through which they intend to hawk their skills. Starting a business does not necessarily make it a startup. It makes you an entrepreneur certainly, but not a startup.

Anybody, who engages in any kind of business is an entrepreneur but only a few among them can be deemed startups. I can’t go around saying, I have a startup just because I setup a Dhaba on NH7!

Unless… the business meets certain conditions; I shall list them below.

 

Attack a problem that has not already been solved

When you attack a problem that has not already been solved, you are creating a market for yourself. The kind of solution that you offer cannot be bought off the shelf and hence it makes the offering compelling.

I know web development and hence I started a web development company. Well, sure you did! But the problem with that is, you are not solving anything new, you are invariably going to compete with the many thousands of web development agencies that are out there already. You lack experience and most certainly the manpower that some of the more established peers have. From that point forward, it is an uphill climb. Besides, since this is a well-worn path, many entrepreneurs have tested and tried all kinds of permutations and combinations of selling the product or service. I do not deem such a business a startup.

Unless… you have found a way of doing the business differently.

 

Building a business model which breaks convention

Take a company like Uber; it is able to get into a business that is as old as the motor vehicle and able to find scale like no other business has been able to, till date. Many companies have tried  running a taxi business. Invariably the biggest problem with running the business successfully has been that the incentive of the owners and the drivers has been misaligned. This has meant that there is no global taxi business; until, Uber.

Uber used a mix of technology coupled with a business model, which is unlike any that existed till then. Most importantly, the company does not own any inventory of vehicles unlike every other cab business prior to it. They own the platform through which they are able to generate demand and they manage to match that with individual taxi owners who are able to deliver a standard product quality.

Uber is just one of the examples of how an old world business has found a new avatar through an innovative business model.

Examples of such companies include Airbnb, HotelsTonight, Google, Spotify, Pandora

The success of each of these businesses hinges on the fact that they did things differently. They changed the way the business was done in the past. Before Google, all search engines used to push the sponsored listing up on the search results without informing the users; precisely why the ‘Don’t be evil’ motto was coined. Spotify and Pandora changed how music was consumed and thereby changed how users pay for them as well. Airbnb changed the ad-hoc renting market forever; not only for home-owners who wished to rent out their houses/rooms as holiday accommodation but also for travellers who seek for cheaper stay options. Each of them have been able to change the way business used to be done, which brought them leadership role in the market and helped them get recognised.

 

Ability to grow across geographies and scale, providing exponential returns

Most of the businesses established prior to the onset of computers usually consisted of certain assets, which cost a lot to replicate across countries, which in turn slowed down the growth of the business. In the case of most startups, one of the defining features is that they are easy to replicate in different geographies and hence lead to rapid expansion across not only domestic but also international geographies. [Caveat: Certain problems are country specific and therefore cannot be scaled in a similar manner internationally]

In all of the cases mentioned above the companies were able to quickly spread the same model across boundaries and ensure rapid growth of their businesses. The increase in scale means exponential returns for any investment that has been made in such businesses.

Despite being restricted by copyrights, companies like Spotify and Pandora have been able to expand to tens of countries resulting in very high turnovers for them.

Scale is by far the greatest defining attribute of a startup. Companies that can cater to a relatively large market can scale continuously and therefore generate greater value for the investors in the long run by unlocking value in untapped markets. Squeezing more money out of the same set of customers often proves challenging and also results in companies acting in a manner which is seem to be contrary to the interests of the consumer.

 

These three attributes are by far, the most important for the business to be classified as a startup.

Categories
General Thinking

Failure

“One often meets his destiny on the road he takes to avoid it.”

I love this quote from ‘Kung Fu Panda’. I have seen this quote to be true on so many levels and in so many situations.

Nobody likes to fail and failure is not a very pleasant experience. But some of the best learnings come only out of failure. Despite this we all fear failure, it is imbibed in us by society and years of being told not fail. I would like to know one person who went back from school and said, ‘Mom, I failed the test today’ and received a response which went like, ‘Great! So what did you learn from it’.

It often happens that the fear of failure is on top of an entrepreneurs mind and it causes them to make decisions in order to NOT fail. They do things that seem safe and not risky because failure would come at a cost.

Instead, as an entrepreneur it is important to make decisions to succeed.

What is the difference??

Take coding for example; if you are looking to succeed you will make all the mistakes and break the code as many times as possible till you succeed.

If you are coding not to fail, you will only do the most obvious things that you are sure would compile. You will never want your code to fail. In the process, you may never find the more optimised and brilliant solution that was always there within you.

As you keep writing code, which keeps failing, you understand the issue at a more fundamental level, you understand what works and what does not. You understand interdependencies better, which may not be described like an equation, but your mind is clear about it. This insight allows you to do things that others cannot.

Failure is merely experience that helps perfect you!

But you need to fall before you learn to walk and it is only then that you learn to run.

Categories
General Thinking

Asking for a favour

Today morning, Salma told me about a conversation which she had last week. I just had to put it out in public domain because; well, I just had to.

Diplomatic Woman: Hi Salma, my daughter did not get into ABC School, can you help me out.

Salma: Right now is probably not the right time. My brother just died!

Diplomatic Woman: Ummm. I am sorry for your loss. Can you help me out with my daughter?

Salma: #DaFuck !!

If you are trying to extract a favour from someone there are few things that you must keep in mind.

Rarely does a favour require ‘NO’ effort on the part of the person doing it. But often it depends on the extent to which they are willing to push themselves (the person doing the favour).

If someone is going to put themselves on the line for you, it is important that they LIKE you. Likability and being convinced about somebody being genuine are the factors that determine if someone would be willing to do the favour or not.

What is likeable and what one perceives as genuine are questionable and need to be determined on a case to case basis. The above Diplomatic Woman is neither likeable nor genuine in my opinion!

Categories
General Thinking

The Big G – Growth

I work with startups and businesses which are trying to scale up, hence, soon or later, the question of ‘Growth’ arrives. 

When do we begin to scale up? How do we grow? What is the best way to grow? How much growth in manageable? How to manage during growth?

But every now and then, the most important question arrives. Do we need to grow?

Due to the success of tech startups and their ability to scale up, it has become a false assumption that every business must grow and if it does not grow, it must be doing something wrong with it!

Nothing could be farther from the truth. In fact, growth is a very personal question for every entrepreneur. Growth brings increased income, but along with that, it brings a new set of troubles as well. A greater demand on the entrepreneur’s time, greater management challenges, etc. From the point of view of an investor, growth means more returns on investment (or at least a higher valuation! Not all growth is good!) and hence they always prefer growth but from the perspective of an entrepreneur, it is up to the entrepreneur to set growth targets.

If, as an entrepreneur, one is satisfied with being able to meet his/her family demands and afford a good lifestyle, there is no need to grow any further. Any further growth will probably rob the entrepreneur of the extra time that he/she has at present.

There are those who open a grocery store in a neighbourhood and are satisfied with the income that they are able to generate from it. Then there are those who need to come up with the next big dotcom sensation; the next Million dollar App or a nation-wide yogurt chain. Each of them are right in their own place and addressing their respective needs.

The entrepreneur should know his/her appetite for growth. Knowing this allows them to plan accordingly and prepare for what is to come.