Transition to Startup Life

I find more people dreaming to be enterpreneurs not taking the plunge as they are worried about the transition.

I had worked in large companies for 10 years before my first startup, Coola. I believe I was enterprenurial in my jobs as I worked to bring in web technology and created web organizations in companies I worked. Still it was a job with its own structure and it requires a different competency to evangelize and get buy-ins across different groups working with a team of corporate people hired into a company. I was worried if I could survive on my own as an enterprenuer.

I got a great advice from my best mentor when I was fretting about it, almost ready but not sure whether I could do it. He said "Take a week of vacation, pretend you are already on your own, get up in the morning and do what you would as an enteprenuer, see if you like it, otherwise, forget about it and get back to work in a week". I did just that.

I started planning for this week, began thinking about what I would do during the week and scheduled my time to attend some networking events (ok ok, I thought it was all about networking only and didn't know about the rest of execution), then I took the week off. By the end of the week, I had a taste for what life would be to be on my own.

During the course, I have learnt that you need discipline and planning to manage your time.

All this applies to the very early stages. Once you have your team in place and are building your startup, its a fast pace ride. To quote Jerry Kaplan from Startup "Its like a fast ride on a car down the hill without any brakes on your car".

Its funny, I have driven up I93 into Boston or 101 in CA, rushing to meeting investors and clients and always remember this quote, and can validate the feeling is true whether things are looking up or down.

Entrepreneurs self managed online community

I am a big fan of online communities.

I founded Web-net, a user group with monthly meetings at Sloan school in 96, in the early days of the web where we invited startups to market validate their ideas. I've been part of an online chat community along with Richard Seltzer with weekly online chats to understand business trends of the web. We've resurrected this as a blogchat with the same interactive netizens.

I talk to about 10 people per month about startup ideas and help make the next step as a followup to this blog. In most cases, I am not the expert, I just think creatively and find the source or contact to help them move ahead.

I am wondering what do people think of building an entreprenuer community online, one that can help each other based on past experience. I recently discovered Gobignetwork.com which is an online community of registered users who can post any question or article.

There are several mailing lists I am part of like Harvard startups, which are very active and have a wealth of accumulated knowledge from the past which is called upon and shared on a daily basis. Like that for entreprenuers, but an online presence!

I am thinking more in the lines of a wiki where its a self managed community.
Let me know your thoughts on this and if you'd like to participate in such a community online.

Finding the right business model for your technology business

I love this aspect of the early formation stage of any business - finding the right market and b-model for your business.

Is there any steps we can followup?

First, there are lot people who are stragtegists who can come with lot of possibilities. Its a kind of thinking, also coupled with years of experience looking at different business models that worked or failed for other companies in the past. VCs usually do this well, mostly in pointing a parallel business and how a particular b-model failed for someone.

My friend Richard Seltzer is a genius in this, he was an Internet Evangelist (actually that was his title) at Digital when they came up with Altavista. He later wrote the book on "The Altavista Search Revolution". He gets charged about any web idea and can brainstorm wild possibilities.

I've come across many strategists during my early startup days, who were all consultants.

If you look closer, you'll find most of these consultants have certain type of business and b-models that they deep down believe, maybe because it worked for some other client or because of their background.

For example, when we came up with Coola technology as being capable of allowing mobility of granular information between a web based system (over HTTP) and any application on the Palm, coming from a software background, building web applications, I first thought of web businesses as our customers and the optimum deployment as a hosted ASP solution. My partner and CTO has extensive experience in databases and loves integration with different systems in a corporate world. So he build a robust server with its own APIs to integrate into several different type of technologies on the backend.

We came across a VC who had experience in emails who suggested that we offer Coola over email so one can add a Coola signature and get addresses synced into a Palm over Coola. We were driven on an execution spree and managed to implement all of it.

I strongly believe that any business should insert itself into the existing eco-system of players to build some sustainability. So, we partnered with every possible player in the mobile space. We launched an API for our Palm client and worked with every single player to integrate it with their Palm application, eg Palm readers, Palm image viewers, Palm Database Apps all could talk to Coola client on the Palm.

On a sad note, when we closed Coola after 3 years, everyone of them had to release a new version of their software removing Coola client calls :-(

I have seen several clients from BBN Planet/GTE Internetworking where we used to brainstorm with every player who wants to build a web site for their business like Time Warner's American Lawyer Media, Starwood Hotel group, Cabletron etc. Then we built the site, launched, measured results and adviced on keeping on changing the b-model.

So, I have come to appreciate a new way of coming up with business models for new idea which marries strategy with execution.

Here is my first attempt at building a list of consideration to find business models for tech ideas.

1. Ask yourself "what is my fixed and what is my variable" in my business. This will help to understand what is the core part of your business that you want to build as your core IP and competitive advantage in the long run.
For example, if we look at a photo site like shutterfly.com, is their fixed the technology for sharing, operations of printing quality pictures, or the community they built with loyalty to come back as repeat customers.
If they decide the community is their fixed, that will help decide to be a destination site, add the burden of customer aquisitions, and help plan activities around building loyalty to such a community (this part shutterfly hasn't done). If on the other hand they decide their technology and fulfillment is their fixed, they'd work on the UI to lock in visitors (which they've done a beautiful job) and can go about signing partnerships with the portals to do co-branded deals to bring in customers and can even partner with Google groups to allow existing groups to use their site for sharing photos within their community etc.

2. Insert yourself into the existing eco-system. Find partnerships, technology integrations, co-marketing deals, but make sure its all revenue generating for both parties, otherwise it won't stay for long.

If you look closely at the news, you can see how Google became famous because Yahoo chose them as their search engine when Yahoo didn't have one. Today Yahoo and Google are competing for AOL and every other key players partnership to tie themselves some sustainability into the web eco-system.

Beware of revenue sharing deals when you cannot clearly calculate where the revenue is coming from. We had signed for Coola with Boston.com and spent a lot of time with web business who wanted to do rev-share deals when either couldn't see where real money came from.

Its easy to get carried away by examples of large players and how they have grown with revenue share deals, but think critically about the customer paying you, for your small business to you or your partner and why.

3. Every idea given to different teams will make different businesses. It depends on what core competencies exist in your team. Where is your strength? Are you server or client side people? Do you have competency in awesome content play? You can always hire people with other skills, but where is the core of the top guy who is going to drive all this?

4. VCs always ask for a rounded team and beam if you have team and advisors from the vertical you are targeting.
You will have to know the nuances of the vertical you are targeting, so experience in that segment will go a long way. So, even if several verticals are possible when you brainstorm and do a blue-sky scenarios, focus on the one where you have real experience in your team and can execute.

5. If you know your fixed, its great to dream, don't let it hamper your fast executon in the near past.

I love this quote:
" Every morning in the jungle a lion and a gazzelle wake up and start running. The lion will survive only when it runs faster than the slowest gazzelle,a gazzelle will survive only when it can run faster than the fastest lion"

In the startup world, its not the greatest idea that wins, its the one who runs the fastest.

My partner Shirish likes to add puns and extends the quote "Every morning a vulture sleeps late knowing whether the lion or gazzelle survives, it will have some food to eat".

I am yet to see a startup example to see where a business can become a sleeping vulture :-)

Selling startups - who can help

Selling a startup is a HUGE topic. Lets talk about initial planning steps for selling a startup.

I volunteer as an expert at allexperts.com and answer questions in the VC and Entrepreneur section. Since I answered this same question twice in different context this week, I'd thought I'd share some broker companies I know.

These are companies who have brokers with relationship with buyers and can sell your startup for a fee.

1. CA based Business Team
2. Boston based Boutique firm, specializing in Internet businesses ebizbroker

I recently spoke to a passionate entrepreneur who has a cool startup. He was so focused in his space that, what I saw as potential buyers were not in his radar and he valued his firm much lesser thinking of potential buyers from his industry only.

I'd suggest talking to one of these firms just to check the exit option of your startup. Some can sell technologies from as less as $100K to couple millions $$$.

It may help to see the perspective of some potential buyers. You may be able to get strategic directions to scale your company to increase your valuation by talking to some of these brokers.

Like everything in the startup world, its about relationships. So, meeting a broker before you need one will make them call you with lucrative options when you are not looking, which puts you in the best position to negotiate and get the best offer when you are ready.

Corporate entreprenuership vs starting your company

It seems a coincidence that I've been faced with this topic multiple times in the past week.
I am part of a Boston University Entreprenuership Management Committee. Here I heard some discussion about including separate corporate entreprenuership panels additional to entreprenuership for company founders.

I always think of myself an entreprenuer, and a big company person, worked for 10 yrs in large companies, then been a startup CEO for 5 yrs.

Y'day I had a discussion with my co-founder of my last startup who currently works in a large corporation that startup life was not different from a large company if you are truly entrerprenuerial.

So, here's my comparion of the two - life as a startup founder vs corporate life as a successful corporate entreprenuer.

1. Its a myth that you don't work for a boss in a startup. In fact you have several bosses. Your investors, your board, the customers you court for acceptance of something new, your employees. Everyone has different interests and you have to constantly keep them sold on your common vision. Its the same as working for a boss in a company and managing expectations of several internal groups to achieve results.

2. Its another myth that you do only fun work you want in a startup. If you are a founder you do more crap work when you get started (before funding). Then, whatever you think of fun - product development, marketing, sales, customer interaction ..., you have to do lot more different work. I'd compare my corporate meetings (thrust upon us) with VC meetings (several rounds) and cannot tell you which was worst.

3. Now coming to the fun part, hiring people, and building your team, one at a time is beautiful and the same in both cases. It may appear that you have lots of perks to offer a corporate employee to lure them in or your stock options may seem lucrative in a flourishing startup. But, the reality is that the real job is understanding the motivation of the employee and selling them on your vision to build and deliver something beautiful and its the same.

4. I hear of several entreprenuers who get started with a startup saying that you can get things done in a startup. Its true that starting afresh as a company has its advantage of size. But, in my experience, when you get past the initial product development and go-to-market launch, working with real customers is the same. It involves lot of meetings, understanding human nature, test of real understanding of the market and how quickly you can adapt to make that one customer happy. I have seen entire large organizations bend over and change rules to meet customer needs in large companies on the last day before closing a quarter to meet the sales numbers. Startups do this for the initial customers with glee.

5. People are very optimistic in a well growing startup, that energy is amazing. I've strived to get it in organizations I've built in large compaies, but it takes special managers to achieve it.

6. In both cases, you are part of a large ecosystem. I worked in large companies interacting with several organizations doing what I call "corporate evangelism" as I introduced web solutions as the web evolved. I did not realize its a developed competency as I worked with different groups across the company, understanding their vested interests in the my proposals and learning to appreciate input from people smarter than me.

When I started my own startup, I suddenly realized that I was part of a different ecosystem, but it operated in a similar way. There are VCs who operate in trusted groups, analysts who influence the positioning of your product in the marketplace, customers again influenced by other similar customes and media, media which has key players, large companies who could be your partner or investor , all inflencing the survival and success of your company. Again you are an evangelist of your vision and you need to know whose inputs are smart input.

7. Thanks for my Coola co-founder for this insight. In a successful corporate role as in a startup, when you are responsible for creating something new and executing on it, its the same cycle - you work very very hard, on lot of things in parallel, always trying to find whats your strategy and who is your real customer, what partnership is going to turn into your winning partnership, all along working on several projects, more than the one fun job you want to always do.

I appreciate comments if you see similaries or differences. Pl don't post comments to sell irrelevant stuff, thats a waste of everyones time and I'd be sure to block it soon :-))

Good Time to Start a Company

I came across this blog posting, which is sound advice for an entreprenuer who is fretting about the timing to start a company - Anytime is the Right Time to Start a Company - Blue Flavor

Every entreprenuer starting up has heard these set of reasons atleast once in life.

My only piece of advice would you to start a company when you are ready, but market validate your idea because some ideas may be too radical for the market to catchup soon, some may be ahead of their times. Market validating will help set your own expectation about your companies pace of growth.

Let the customer lead

I am very proud of the fact that we had Palm users who helped us understand market needs.

Thinking back, its hard to say what we built in the company culture that fostered this relationship with our users.

When I used to read my B-school material "let the customer lead" used to sound good, but I could not wrap my arms around it. It seemed idealistic that a company can know who the real customer who was paying for the product and establish communictaion with them to let them tell us what they want us to improve or offer next and just listen.

With Coola, we started out as a dot com business, free download for Palm users, and free for smaller web sites to put Coolets (the Coola buttons) that a user can click to get that information into her Palm Apps later. Thinking back the real promise was in the product. Users loved it. We got 50 sites to put coolets in 3 months and went to larger web sites to signup as paid customers.

We were lucky that our user base was a vocal crowd that told us what they liked and did not like.

I think, inside the company, the product managers and engineers alike, loved to hear the feedback. So they responded and listened and adapted.

The more our users had ownership in what we built the more they supported us and helped promote us and our brand and the rest of product extensions were built in Internet time.

I owe it to users like this, for when we had to change direction from the web to focus on Enteprise customers and launched our Servers as "Coola Interchange", the users stuck with us.

They wrote our stories, our dreams and who in product marketing would not love for their customer to write the product spec sheets for them!

Where to start market validation -leave some futuristics ideas for the future

Every Technology Enterprenuer goes this question sooner or later. We come with a grand idea, assuming we are making life easy for some constituency. When you start thinking about who could be your potential paying customer, the fun begins.

Pure consumer play sites are returning nowadays. I am glad the phase when enterprenuers were force-fitting a consumer idea to a corporate market for funding pitches are over :-))

Well, with Coola since the idea was about making information mobile between a web server/site to a Palm device it was very horizontal. I have written about my experience market validating with real customers to understand certain markets for certain type of datatypes.

I remember the days before that! We painted blue-sky scenarios of all possible market segments.

One interesting experience comes to mind. We thought! Hey, we could get coupons from web sites and allow users to take them in a palm instead of carrying coupons on paper and allow them to be scanned at the stores. That too, grocery stores seemed a natural as stop-and-shop etc were marketing for their cards to understand our purchase behaviour to give us appropriate coupons.

We actually downloaded a bar-code of a coupon on the palm using our software as a prototype and took it to the grocery store. Amist funny stares we got the lady at checkout to point the bar code reader at our palm screen (yeah really) and it read and gave us the discount.

Our dream was that one day we'll be able to collect bar codes from the stores and can send it to some web service to do comparison shopping for consumers, or track inventory or order parts for an enteprise. This was in end 1999, and even today this is open territory, waiting for an innovative company to execute, maybe it will take birth as local search.

Again, in the early stages, a company needs to focus, take one tiny step at a time and market validate what is the best place to start execution.

My subsequent attempts next week, to find coupon sites to partner with us or find favorable response from stores was not positive. All this was before our funding rounds. Our learning was that we needed an early adopter segment who would love technology innovations and grocery companies were not exactly in that category so we dropped it.

Launching a startup - market validating with early customers

Its surprising for me to hear from new enterprenuers repeating the same cycle of I have great technology, built a prototype, just need money to launch the startup.

What is lauching a company? Most think its about opening a web site with some product and content. Those who have marketing background in their team, go to the extent of planning marketing plans and come up with how much more money can help them market better.

These days, with the new Web 2.0 frenzy, there is the added rationale that building a cool technology is enough for some deep-pocket player to buy the company soon.

What are we missing here?

Isn't building a company really about making money for the investors, which includes the founding team. Isn't it about making money by solving a customer problem?

When I started out with Coola, I spent sometime visiting who I thought were my potential customers and market validated the idea. I had started out with a simple idea to make information mobile by clicking on a button on a web site and syncing that information to different applications on the palm.

In my earlier corporate life, we spent a lot of money on traditional market research to understand what our customers wanted. I am a believer of emprical data. But with my startup, I wanted to do talk to real customers and short-list potential market segments first.

I spoke to the GM of Comdex, the large conference company. He loved the idea of using Coola to offer conference schedules to people's Palm saving lot of hassles and money during each conference updating people about changing schedules. His support served as an amunition to plan an event Coolet (the Coola button on sites) to sync into Calendars. Then I went to TVguide, Tvgrid (local competition to tvgrid, owned by student.com) . Slowly this forced us to build a working prototype and start planning a core team and early designs. It also gave an idea about the amount of money required in the first round of funding.

I met switchboard.com to see how Coola can help with taking their yellow pages address mobile into the Palm address book. Very early on we ran into issues of whether Coola should be branded or a non-branded player paid by Switchboard. Its fun each day, it makes us think each day on issues which we cannot decide just by our heart. We decided not to accept the Switchboard deal as we decided we could grow better with a branded play.

Later on we could build a branded Coola button with the support of Palm user groups and early sites which adopted our buttons such that when we went to Boston.com (part of NY times) branding was not part of our discussions. Of course, we had matured in our thinking and offered them a co-branded offer hosted by Coola.

When Switchboard did not work for us, we went to their competition Infospace.com, which was much larger than them. They accepted a branded Coola button but offered a complex deal which involved sharing some equity with them for sharing the space in their web property.

We also met with Intuit who was in the process of aquisition of a small company called onebase which made it easier to create web based databases dynamically, which later became their product quickbase. There we found an interesting offer to use Coola technology for Intuits applications starting with onebase to sync databases from the web to Palm database applications.

All these were just as I offically starting the funding rounds. I had made contact with some investors to get early feedback on my idea. I was amazed at couple responses from the VCs.

a) Infospace was a wall street darling with Navin Jain heralded as someone who made money out of everyone. This was before they moved to wireless and Navin Jain left. So, I heard from VCs saying they would invest if I close the infospace deal. Infospace deal was not giving us money and committing us to pay them. I didn't see any strategic advantage as they were not willing to offer this exclusive to us, saying they would put anyone's buttons on the site if and when we got competition. This means that we spend our initial energy on an infospace launch with no money, pay infospace and help jumpstart any competition when they come with a button next to Coola button. It seems crazy, we didn't do that deal.

It was hard to believe that we could get a large VC backing with infospace deal, but when things turned south 2 years later, we were thankful we did not have the infospace deal holding us hostage to pay equity.

b) Intuit's deal was a good one. They wanted to invest in us to help jumpstart our product development where they will get to use Coola software for their own application and we will go to all markets except theirs. This was a good deal. Only caveat was that we believed in the huge promise of Coola as an horizontal platform and this intial development would limit our design and initial energies. The market supported our hope for 3 years so it may not have been a bad decision. We got a great Intuit support on our board and did not pursue to close this offer.
I wonder, if we could have survived if we had taken the Intuit deal afterall.
I have advisors who believe that corporate money is good if there is a real strategic fit. They can help build confidence in VCs and also serve as a potential exit it things work well for the corporate investor but not in our other option. Again there were VCs who wanted to come in if Intuit would invest.

We did not take the infospace not Intuit deal but were over subscribed for $2million with great VCs who became our friend, guide and partners in a journey that lasted the next 3 years building a great company.

Every day presents decision points, each decision takes us to different directions, so we'll never know, but we have to explore options, open as many doors, make open decisions and keep moving.

An Enterprenuer's Day in Early Stages of a Startup

I am focusing here, on the uncertainity of a typical day at the very early stages of a startup. Some of my posts here are also influenced by the enterprenuers I come across in the startups I am involved as an advisor.

We all know tactical ways to get our job done, whatever our job functions, pick what applies to you as you read this:

- Engg and Product Development - Designing the scope, specs,development cycle, assigning and measuring the right resources for the job, getting the development environment setup ..
- Marketing -Developing a marketing plan, understanding the key customer, what problem we solve, coming with brands and brand extensions, making product marketing material - sites, collatrals,planning a marketing a launch, decisions on the products mix, PR, ads,market research, working with agencies,hiring the key resources, metrics of progress, communication to different constituencies ...
-Sales and Support - Developing a Sales plan, understanding who the real customer is, why they buy, building out the sales forces, managing sales people, tracking A, B and C level of prospects and making projections for each quarter, contracts, negotitions, networking events ...
-Business Operations - Finance, Accounting, Making plans, hiring right people, tracking the right metrics, keeping books clean, tracking real costs and revenues, ...

For a startup theres the added function of Venture Financial Cycles, and the Communication aspect of interacting with investors and market influencers. I'll write about that seperately.

Given all this, a typical day should be straight forward.Yes? Not really.
Thats the fun of a startup or an enterprenurial company environment. I have experiened that in Coola, my startup and also every time I started out building a new Internet product organization in different large companies I worked.

The exciting and challenging part of a typical day is where to start, what to do.
Its more glaring in a startup or enterprenurial environment as we avoid redundant or unproductive tasks and seek out activities that lead to our goals be it raising money, launching product, or scaling team or expanding customer base or staring at all of them at once.

My advisor Piyush Patel, who was then CEO of Cabletron, told me once piece of advice. It worked well for me as I am a planning person.
He said, make a plan with some timelines right from the start, even before you raise money, or actually build the company. I followed that in Coola and do till today.

The plan can be high-level but with real dates. Making the plan will help us think through how to get there. The dates wil help us feel good about what progress we have made. I have looked back at some crazy ambitious plans of early Coola days and laughed at them at my own naivete. But the important thing its that helped as steps of a ladder to help us take the next step.

I am a big believer of networking, again with integrity, respecting the other person's boundaries. So, I have had days when I started my Coola plan before funding saying "Find who can help in understanding funding", "Learn to do ...". I adpated it as time went on to say "Build a prototype", "Get a joining promise from core team" etc as I started my investor rounds.

The point I want to make is about how unstructured our days can be. It can give us lot of room for creativity, or let us go through a day scrambling for a success point to feel good about. Realistically, I've had most days start with the challenge and end up with one small success giving hope for the next day.

In my case with Coola, we moved from a Web Service company to a Software company targeting different set of customers. So this uncertainity was not only in early days, it stayed with me and helped us identify our Enterprise product "mobile EAI Server" and the first of paying customers. So I see this as a typical day of an enterprenuer with different set of options to choose from as the startup grows through stages of getting funded, launching product, scaling management team, expanding to next level etc.

Execution is Everything

Execution is everything seems like a cliche I heard from many VC many times during the funding rounds. I learnt what it meant as soon as I got the Series A money.

Earlier in my 15 years of corporate life, we had management offsites to brainstorm strategy. Strategy was cool and execution seemed tactical. I didn't understand then as I loved the operational side of getting results.

Once you have a startup, execution means getting the job done. Delivering on what you promise your investors, employees, partners, the promise of what your vision is all about. Vision sounds again beautiful when you paint a dream. Execution seems like hard word.

I went to the bank to open a bank account with checks for $1million. Then I had the urgency to find office space and get our team into productive mode. We already had a core team in place, we used to meet at Tufts university in the cafeteria and designed the basic Coola system. Thanks for ASP servers, we even had basic tech infrastructure in place to start work.

I found that those people who rolled up their sleeves and were ready to do all the dirty work were the real startup people. They were the ones who learnt and grew. They were ready to adapt to change, but were execution people.

As founder/CEO (I use this term interchangablly as it all means the main work horse in the early days), I found I had to do more dirty work that I could not find the people to do or wasn't able to delegate.

So, thats what the VCs meant by execution is everything. They were using years of experience to spot the team capable of surviving the startup ephuohoria to hire, build a good team who could break the job to what needs to be done and do it happily because they really believed in the vision they were pitching.

I digress for a minute as I have to share with you my set of jokers who showed up to help with all sorts of consulting jobs that seems trivial, boring or just not-fun to do.

One was offering to get the office space and all logistics and get up up and running.
We all have moved in America. We know its not fun to call the phone company, electric company, Internet Access provider (even if its one the same companies), research options and get the best one and not to mention the office furniture, computers etc. He wanted a chunk of the company. No joke!

This was 1999 end, with all office space taken. Internet access took 3 months to get. I have intervied people for jobs with looming deadlines at work, but not for one like this. Well, I found he was not making any promise of delivery on time.

I got a sub-leased space from a company who had sold to a mid-west company and got the lease transferred to us and made that company leave behind the deposit to pickup later after we moved out so all was well within days.

I think if you plan ahead its good thing, but planning for hiring your team and technology and your first customer will be more important before you raise money.
So, if you work on this logistics remembering its your first exercise in managing your cash flow and remember how hard you worked to raise the money, it will get you into proper execution mode. And remember execution is everything.

I love Product Development Startup Style

My career has been shaped by my at-sight love of the Web and its potential. I have introduced the first Web applications at several firms I worked at. Each time it has been a new product development effort along with an evangelist role getting buy-in from several constituencies.

At Harcourt, I built out the product catalog integrating 27 divisional products of a $2billion company into harcourt.com, with a great team of people.

So, I came into my own startup thinking I know the tactical steps to make it all happen!

At Coola, we started with building a server software (ASP hosted server) and a client piece sitting on a Palm pilot. We launched this with a Press release saying "World's fastest way to Palm enable your web-site" and signed up 500 sites to put a button, which we called "Coolets" which encoded the information that the site owner wanted their users to take mobile, like an address, event, recepies, maps, documents etc. A user could click on any coolet from a site and the information will wait for them on Coola's site. Then when the user synched their Palm from anywhere (home or work or wirelessly), Coola would put the information onto the Palm into the right application for the type of information. For example, a Comdex Coolet will goto a calendar entry, while a map will go into an image reader on the palm and a document would go into one of 21 Doc readers on the Palm.

It was a chicken and Egg game to get people to put Coolets on their sites and users to download Coola clients to their Palms.

The fun and unexpected part of this ride for me was that the Product Development cycle was full of options to innovate. We signed Palm User Groups all around the country. Then we formed a product advisory of key Palm user group leaders to beta test each release of Coola, and give us feedback and new product requirements and iteratively built Coola and released each feature with a positive review from the Palm User Groups. They helped communicate product features and were a market extension of Coola team. I had a stellar team at Coola who worked with so much energy and synced with the market feedback.

I am so thankful to the Palm User Groups for Competitive analysis and helping us communicate our positioning to the world.

We started with a core server and client and added so many new products like "Send to a Friend" where one could click on a Coolet on a site and sent the information to the Palm of a trusted list of friends.

We added "1-Click"to add an entire site content to a Palm document reader.
We added "Coola's right-click" to scrape pieces of content from a site when a coolet was no present. We added "Doc Coolets" to sync Web content into 7 Document Reader softwares on the Palm and signed partnerships with all the Doc reader companies.

With each review and fan page giving direct market feedback, it was so easy for Engineering to work in the Product Developmentt Cycle with Extreme Programming, which usually takes tact on the part of Product Managers.

Of course, we kept our goals on getting market support to sign paying customers in Publishing sites like Boston.com (or New York Times), CIO.com, Coldwell Bankers etc.

The market feedback and support of earlier partnerships with Palm Software players helped us as we moved out to Enterprise market packaging Coola Server as a Mobile EAI Server for companies to integrate their corporate databases to sync into their own Applications into the Palm for clients including NIH, GE Medical, Wharton and Albany Medical. This was a new product, but a brand extension of Coola with a published APIs on both the server (J2EE) and client(on Palm OS. The Palm software players integrated Coola's Palm APIs into their Apps making it easy to establish credibility into the new Enterprise market.

Now, I cannot go back to old style Product development. I have such a hunger for listening to the market and executing in an interative style, which I believe suits any new company well, and oh! its soo much fun!

Inspiring Leaders and Great Advices

I have written about Advisors and my experience with them and the great people who helped me find the enterprenuer in me.

The more I think about it, I find humble leaders more inspiring. These are amazingly successful people who have achieved amazing feats but are very modest and well grounded.

My advisor Piyush Patel, sold his first startup Yago to Cabletron, became its CEO and scaled it and spun it into 4 public companies. He has taught me many business basics like focusing on your core team, setting goals for yourself and staying focused.

Desh Deshpande, serial enteprenuer, tech visionary and great startup metor is one such person. When I got started with my startup Coola ready to leave 10 years of Corporate management job, he helped me see where I stand in the middle of my career and my startup zeal. The best advice he gave is very useful for all enterprenuers getting started. Set a time limit and jump into raising money knowing you can go back to your job if you do not succeed. That way you are not dragging on in the early stages without getting started, also it will help you get out your best and get started in a timely fashion. I owe it to Desh's advice that I raised my first $1million Venture money on 40 days. As his advice, I set a 3 months limit to raise money and the first VC I contacted said, "you are so naive, even I want to signup today, the paperwork will take 3 months". That made me run like crazy to find a fast paced VC, meet 120 people, build my own draft Series A document and close in 40 days.


Jay Sidhu, currently CEO of Sovereign Bank is another such humble leader I admire. No, he was not my advisor at Coola but is someone I would like to meet.

Funding - Terminologies

A friend of mine was building a cap table for his first startup without knowing the term, so I thought its a good idea to link this glossory of terms from VC experts.

Company Valuations

There are some standard valuation method like discounted cash flow valuation, projected future valuation, or relative valuation against a company's history or against its competitors.
Please refer to Sterns University Prof. Damadaran's site, its an amazing collection of the lessons and spreadsheets to try it out too. Especially don't miss his Google Valuation spreadsheet.

I love the aritcle by Motley Fool on valuation. Here goes.

Also look at my startup valuation from last week

Startup Advisor

I serve as an advisor to couple startups and get calls asking about advisors -who should be one, how to compensate them, what to expect of them, how to go about finding an advisor etc etc etc.

My advisors:
First, I had an amazing set of advisors for my first startup Coola, without whom I could not have taken off. They helped me find the enterprenuer in me. I am so thankful for them.
I cannot even list all of them here. Three people who helped me from start to finish were Paul English(then GM of Intuit Boston), Piyush Patel (CEO of Cabletron) and Ashish Gupta(VP of Amazon).
All of them were enterprenuers who built companies and sold to a large company.
All of them were very busy people who cared and found the time for me, who did not intimidate me for my dumb questions and set a high threshold for me to strive for, most important they have set role models for being an enterprenuer and a startup advisor.
Who were not my advisors:
I had my share of people who were patronizing. I met 120 people within 40 days when I raised my first $1MM venture money, when I met all kinds of people. There were people who asked me to pay a chunk of my company to come raise money for me and do all kinds of jobs they thought I could not do.

The key to being a successful enterprenuer is to learn to differentiate good people from not just bad, but mediocre people - for advisors, investors and employees.

Why do you need advisors:
They are like your sounding board, the can guide you, they can give you different point of views. This is needed when you try new things which is always in a startup and you want direction, help, validation. Then you decide and make decisions on the right course and execute on it.
From my experience of advisors, I find you need them for different purposes:
1. Advisors as your mentors
2. Advisors as industry experts
3.Advisors as sounding boards
4.Advisors as future potential team.
This is particularly important if you have a huge potential and want to scale your management team and someone you respect can come as an advisor and can get the confidence and synergy and come on board as your management team or future CEO.

How not to select advisors:
I have made my mistakes too. Here we go!
1. Don't go after someone just because they have a brand name in your industry. You can try someone with a brand name, but the variable should always be trust, respect and compatability.
2.Don't go after someone for his or her network
This always fails. My advisors all had great networks and made great intros, but that was not the reason to ask them to be your adviosr in the first place.
I found someone as my advisor for his association with a potential customer (large one) and wasted a lot of time as the underlying trust and respect was not built and he did not understand my company nor share my passion.

Advisor compensation:
I never paid my advisors. I do feel bad about it. They would not take any percentage of the company, which would have been trivial for them anyways. Writing this blog and helping other enterprenuers is my way of givig back what I got from my advisors.
The industry norm is 1/4 of 1 percent for advisor. Don't start by offering it. See if the relationship works both sides and then make the offer.
I offered all my advisors a choice to invest in my company early on and many took it. This way they get to participate in the upside of your growth when you exit.


Getting started with advisors:
This is the most common dilemma startup founders have. Do I just go ask someone to be my advisor? What would they say?
I would suggest that you make sure you like, trust and respect this person first. Then you can approach them and see if they get excited about you and your company.
Please start with a compensation plan. Advisors who start with asking for one and a startup founder starting offering one are not focusing on the trust in the relationship.
Some people are very structured and may ask the demands on their time and what you expect. Have an open honest discussion and it will help build the relationship or to decide if this person will not workout as your advisor.

Interesting Advisor Attempts of mine that failed to make by Advisory:
In the initial Coola days, since we were building out a horizontal software platform, we had no focus. I thought of it as a standard setting game. So I went to W3C and tried to get an advisor to help me out. Obviously, I found a great person, but there are no synergy in our passion towards mobile technology and Coola and it did not work out. The lesson was to wait before declaring some one as your advisors.

Similarly, I had a VC who was a great advisor. I decided to keep him as a friend and informal advisor than pitch to him for money as our styles were different, but he was a great sceptic and sounding board. I did not get an advisor, but got a friend.

Interesting Advisors and Rare Sources:

One of my investors wanted to get someone on my board when I was not quite ready instead that person became a friend and advisor and eventually invested his money too.

Startup Valuation - For an Enterprenuer raising venture money

This is a huge topic. My experience comes from couple areas - raising money for Coola and my work from Harcourt evaluating tech companies for aquisition during the dot com boom.

Most important point I learnt about Startup Valuation is that its different based on perception of who you are, what is in it for you and of course changing market around the startup.

We'll revisit this topic again, for now lets focus on the basics.

Here I am going to focus on the Enterprenuer raising money!

Your startup valuation depends on
a) primarily on you and your core team. Its your word about the promise of how you will build what your promise to the projects your list in your bplan. So, if this is your second or third startup, your previous history talks for you. In my personal experience, I think a first time Enterprenuer can display a higher degree of passion and dream higher (in my case it was because of the ignorance of several difficulties of the business world).

b)Your product (or service). VCs may ask to see a prototype and send you to work on technology, which may take time away from company building and raising money. In all fairness it helps them to understand your product better and if you do it right, you can use this to build your core team and scope your product right.

My only advice is not to build a scaled down version of the product without real customer input.
During my early Coola days, I went to several prospective customers to validate the market and their input helped.

So, if yours if a complex tech product that needs money to build you can build a prototype that shows some functionality visually for the investors to see what the customer will potentially see.

c) Customer and Revenues Yeah, right! How do we get them before the product and team for which we need the money in the first place.
Didn't I tell you in the beginning this is a chicken and egg game :-))
You can take your idea (in powerpoint or GUI of product screen as prototype) and show to potential customers and see if you can get some interest.

This can help immensely with scoping the product, especially not going down the road of adding features without considering usability from the customer perspective. More important is that it will help tryout diffferent ideas for your real business model.
If its a software product, what kind of lisencing arrangement may work for your market?
Its easy to start as an ASP instead of a lisenced software for a startup, but enterprise customers won't like it.

Did I tell this is was one of the advices I got in the early Coola days and since Web businesses were booming, I chose the ASP route and went to Web businesses to put Coola Buttons to get their site content to Palm Pilots via Coola. We had 500 sites signup ad go live, including Boston.com, CIO.com, Wharton, even Palm.com, but very few very revenue customers. Then 1 year later we moved to enterprise market with a lisence of Cool Servers, then we got real customers and money!
d) Your market What market are you operating in? There are some valuation range for businesses operating in Financial markets vs Manufacturing market. This can be arrived a logically by looking at your market size, and potential estimates of how big your company can grow.

So, its common for enterprenuers to go about describing their business as "Google of blah blah space". It has an additional advantage. It helps the investor understand your business model and dream of how big you want to be.

Thats the basic list for first round investor perceptions of valuation.

e) Competition This is more applicable for second and further rounds of funding. The valuation of your competition in public markets or in their rounds of funding helps set the range for yours for the same reason of market size. It also serves as a comparable metric for what your company can achieve.
The trick in the early stages is to try and position yourself uniquely so such comparisons are not easy. Of course all Enterpreneurs would swear that their idea is very unqiue and as no competition. I did too :-)) I still do ;-))

f) Geography I don't know how much logical reasoning is behind this one. I heard repeatedly from investors that I would get a higher valuation from West coast than east coast. I had my lead investor from east coast and closed my Series A at $5Million pre money and was happy with it.

ok, See you next time, I'll write about valuation from the corporate buyer perspective then.

Start of a Startup - How to focus and move ahead in the early days

I have a new passion called Moomli (http://www.moomli.com) meaning "My Only One Moment to Liberate India". Its a social enterpreneurship venture to help grassroot charities in India.

Moomli (http://www.moomli.com/) helps Indians abroad send charity greeting cards to their family in India and gives the proceeds to the charities. The cards are all real cards with a real story behind it.

Today I want to share a dilemma every enterpreneur faces everytime with a new startup.

It is "Where to start and what to focus on?".

The beauty of a startup is that you can run very very fast and work beyond your known limits and its so much fun. I have written many times about Team Building . So, assuming you have a great team, there are going to be lots of ideas, real good ones.

So, every startup team faces this sooner or later - what to focus on.

I believe, the same idea given to different teams with the same initial resources can lead to totally different companies because its the team that executes that is going to run faster and set directions based on the team culture.

So, it would be a good idea early on to start a process by which you decide to focus your energies collectively. It could be a discussion forum or friday get togethers whatever works for your team.

During my startup, Coola, thanks to the advice of Piyush Patel, I had a working plan with some target dates even before I raised venture capital. We kept updating this and it gave us a sense of accomlishment as we reached some goals, made us look back laugh at our own naiveté for some others. We updated them as we had major direction changes. I also got a similar plan from my different teams - CTO, Marketing, Sales etc as we grew, and this helped sync up their efforts towards a common goal.

Please note, this does not have to be a beauracratic process, but putting a plan in writing helps.

The problem is in the very early days when team boundaries are not set and everyone is full of ideas. I could't find any other way around this, you the founder have to be the bad cop and hear it out and make decisions so that in the short term you can go after the low hanging fruits and have some synergy towards where the company is headed long term.

Accounting Software and CPA

Keeping your books clean saves a lot of time during the year end tax period. It is a good habit to keep your books uptodate and check on your cash flows so you can see how you are growing and pla your capital needs.

Yeah, I agree its not the fun part of startup.

It makes sense to invest in an accounting software right away.
Here is a comparison of the different accounting softwares and their costs.
http://www.entrepreneur.com/features/softguide/detail/1,5804,,00.htmlsCat=Accounting/Financial

I do my banking online, so I find it easier to pay all my bills online. That way I can get a report of the months activity. So I prefer my bank to sync into my accounting software. That may not be everyone's needs.

If you have an ecommerce business, it may save costs to find a merchant account who may also serve as your bank for writing checks so you have one less account to manage. Of course, you have to weigh this with the additional costs involved.

At the end of the year, I always hire a CPA who helps close my books, audit and help pay my franchise taxes and submit my annual report for state and federal. My favorite CPA is Theresa Dave in Boston area.

Team - finding partners

I have written about the core team couple times, still I learn something new everyday, so here I am! My advisor Paul English used to have such emphasis on the team that I recall everyday

Your team is important because it defines the success of your company. Since a typical startup does not work 9 to 5, you are likely to see/interact with your team mates a lot, so your overall happiness about your startup depends on your trust and comfort level with your team partners.

When you start with a core team, you all have the excitement about the promise of the product/company. For a set of people to work successfully as a team, you need

(a) a common vision.
This sounds mighty, but you cannot dream and stick together when things pick up speed and offer several options to go in all directions (good or bad) unless you all share the same dream. So you need to have the same vision about your product/service and the joy of solving a customer problem. You may even want to think of a similar timeline and exit.

(b) respect for the team
The whole team should have respect for each other in what the other person brings. This helps the team in the early forming stages to settle down productively with areas of responsibilities, but it may not always be possible to find people with complimentary skills and who know and understand what the next person brings. More important is the appreciation for the team that together you can achieve more than each person alone.