Tuesday, May 30, 2006

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.

Friday, May 26, 2006

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.

Saturday, May 06, 2006

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 :-)

Monday, May 01, 2006

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.