Energy of Startup Teams

You have heard me talk about how I love the energy of Startup teams.

I want to share some thoughts about how to cultivate and grow the startup team energy.

Everyone who has been with a startup as an entrepreneur or an employee in early stages knows how the speed of the environment and limitlessness of the air, sometimes frustrates with too many directions.

As startup founders, we all go about alone or huddling with co-founders in rounds proving the viability of our concept, building prototype and raising money, then the fun begins as you start scaling the team.

Its amazing every time how the dynamics changes with each new person brought on board - new ideas, new energy, lot of chaos with communication and direction.

There is a growing up for startups which has to be done with awareness to let the startup energy burst open. I see 3 areas particularly:

1. Founders get used to being every employee for the startup doing all work and when new employees come on board, its hard to transition work to let go efficiently. I go back to my favorite advice of making a milestone chart for different functional areas so you can scale each separately and let go as you find the resources for each.

2. Founders and initial employees are used to be internal focused, pitching their vision, focusing on building product to showcase the concept that when the time is right to switch to a market facing mode, it is hard on everyone. A startup that operates in stealth mode and opens up with a friends and family beta and launches formally gets time to grow organically out of the internal to the external phase.

3. The real energy of the teams come through when they face a common goal, not an internal date, but one with feedback from outside, be it users or customers, so commit a date to your investors proactively.

It is so immensely beautiful when the team starts acting like a team when they meet a common goal and start responding to the real market. This phase is usually preceeded by a lot of friction, obvious and not so obvious ones, about direction, about the speed of the company, specific areas of scaling responsibilities, formal and informal communication styles.

If this phase is handled with patience and the common goal to make the startup successful, it will bloom with the full energy of the startup team, which will take care of these and all other growing pains to achieve amazing results breaking barriers with utter creativity and great respect for each other to a great nurturing environment and the startup will truly grow beyond the original entrepreneur to its own living entity.

Web 2.O Community Roundtable (Web2Open)

I am at the community roundtable of Web2Open, the barcamp inside Web2.0 led by Tara Hunt all day.

Very smart, open people, including Eric of bloglog.

I can't do justice to the whole event as its been going on from 10 am till 5pm.

What defines a comunity's success?
Scale, about being awesome, keeping community happy.

Nice disussion about Citizen participation community, NGO model. Real metric is how many times we are pushing people into real world.

Summary by everyone is about
- how great it is to have an open honest discussion about community building online,
- re-affirmed about their belief about trusting your community,
- been part of online communities and now world is open to it, challenge how all communities can co-exist and open source where its going
- learning the difference between what B-school taught about market and community and real communities by today's discussions
- Cool thought! Imagine a s set of tools that would enable a community to form + move across the net (Community registration by scott).
- Comparison of geek community (barcamp LA compared to Miami)
- a user walked in by accident, wowed! compared to bloggercon
- passionate person from LA inviting people to LA, will host a geek event. (The Purple Tornado)
- glad people are still talking about it and making it better.
- a user watched the community roundtable online, knowledgeaspower.com
- involved mac, tech and sports communities.
- Dave winer scripting news summarized the keynote for us.

Venture Capital 2.0 Panel by Mike Arrington At web 2.0 Expo

I am sitting at a panel at Web 2.0 at SFO.

Mike Arrington is the moderator, panel is full of VCs, Jeff Clavier of SofTech, Mike Eisenberg of Benchmark, Josh Koplman of First Round Capital, David Hornik of August Capital and Chris Moore of Redpoint Ventures.

This is one of the very select panels I decided to attend trusting Mike Arrington and he has not let me down :-))

I've sat thru VC panels at so many panels in past conferences and THIS IS THE BEST!!!


Updated: Video of the panel is here. Its a here and we are riding high with more web.20 ideas not bubble 2.0 yet!



Mike Arrington has nailed it well that startups are able to start and grow with little money (200 to 500K) which is led by smaller fund of $300Mil and the rest of larger VCs have to scramble to get into the deal for companies in second rounds.

The VCs are talking about value-add, and saying everything is hunky dory.

I am impressed that Mike Arrington has lived up to his self-earned special space in Web 2.0 world, as the absolute subject expert on the web 2.0 startup world, bringing in good data to substantiate his questions.

An interesting point I heard from Dave Hornick is that VCs are avoiding Bubble 2.0 by building incentive to build real businessed. Hmm! Would love to learn more about this an check this out!

I'll post a video of select portions of this panel later.

Barcamp at Web 2.0 Conference called Web2.0Open

web 2.0 conference in SFO has decided to include a barcamp model piece called Web2.0open
where an attendee can create a real-time conference by posting a topic and speaking on it like a Barcamp.

I've been thrilled to be part of the Barcamp community at Boston, was pleasantly surprised at the real-time comments on blogs and podcast on my talk "Technology Commercialization - Concept to Business"

At Web2.0Open, I am debating on what topic to speak, so please help me out with your feedback.

The buring Web2.0 topics dear to my hear are the following, so help me pick one of them with feedback, questions . . .

1. Building a Web 2.0 community site - tools and techniques, more like success or horror stories focusing on good CED process/tools, using Open source CMS like Joomla with Community Builder vs building custom.

My main take on a web 2.0 site is not about just using AJAX, but how live the site it - showcasing users acceptance and live updates like scraps on orkut, or list of communities growing on mybloglog.

2. Web 2.0 Community Models - The user is incharge in a web 2.0 site. What makes different types of user communities online and what are the tools and best practices available to build, market, engage, grow and monetize different types of web 2.0 communities.

This is a topic I've been researching and playing with several pet projects. I'll start by sharing my Google spreadsheet comparing web 2.0 community sites, will focus on different marketing and revenue models from real life experience of my experiments and from entrepreneurs I have interviewed for my other blog Startupstories.com

3. My ever favorite - building startups from concept to launch. I loved the energy of the audience at BarCamp Boston when I presented this. I would like to expand this with more current experiences observed from the startups I advice and from those I mentor at MIT Venture Mentor Services.

If you are going to be at Web2.0Open, say hi, I'd love to meet you. Let me know your comments or questions on these topics. Look forward to it :-))

Geek Entrepreneurs at BarCamp Boston

I helped organize BarCamp Boston2 by finding space at MIT and then moved to Bay Area!

I love the entrepreneurial energy of all the smart Boston Geeks at Barcamp. Wish I were there!

Thanks for simon of Isabont.com, the jobseekers CRM site who led me to this video of the programming contest that happened in BarCamp Bostob 2 Mar 17-18, 2007.

Silicon Valley's Favorite F-word by Guy Kawasaki - Part1

Guy is awesome, so authentic a person.

I took his talk at Stanford "Silicon Valley's Favorite F-word- Failure on Mar 1 at Stanford "as a several part video.

Part 1 - he says not trying is the biggest failure.



He said, silicon valley is used to so many successes its forgetful and forgiving of failures, so just do it!

I've tried to zoom onto the audience as Guy was amazing at making us laugh and connect with all audience 180 I think, all around him and above in a gallery too.

I'll upload more videos soon.

Failure - Silicon Valley's Favorite F-Word

The best part of my moving to Silicon Valley is that I can hear Guy Kawasaki talk this evening at Stanford. His topic is Silicon Valley’s Favorite F-Word — Failure

Guy's provocative honesty has been my inspiration in this blog. I hope to record and bring you some piece of the event.

You know my F-word story

I meet so many people daily in my exploration to find my place in the valley and recall several options I had to close Coola gracefully. As I had a good advisory and investors everyone presented options when we were close to closing. It was trying to evaluate them to understand the core of what was my company - my team and I decided I'll take any option that would keep jobs for my team and keep Coola technology alive for my customers.

Most options were trying to buy me personally for my success in getting GE Medical account for such a small company, there was even an option from an Asian firm that wanted to buy us for the loss we showed in our books, but the rate at which these options came and from people 3 degrees of separation away who wanted to help us to do favors to one of our advisors or investors was mind-blowing.

So thinking of failure, I think its important to understand how one can lose a piece of their soul in losing integrity by choosing what I call as "declaring victory" options to close, which you select knowing you are actually failing but think the world won't be able to see it.

I took a longer path as we auctioned out our office desks and everything and moved out to share offices with another fellow startup to buy time to decide if closing was the only viable option. When you fall from a height, it softens your landing if you take multiple steps.

In the end, what matters to me is that I can talk about this fondly and know the taste of success upto a point and am back tasting the joy of building a great startup with a great team.

SV Web Builders Event - World Premier of Opera with builtin video support

Attended SVWebBuilder meeting tonight at Yahoo offices in Sunnyvale. Great group, great energy, the tech group I've been looking for in the valley. Bess Ho is definitely a great organizer, dedicated volunteer like Navdeep Jhimb took care of all details.

It was called Browser War: Episode II - Attack of the DOMs .

It featured a panel by Chris Wilson Group Manager of IE from Microsoft, Mike Shave founder of Firefox and Hakon Wium Lie founder of Opera and CSS.

Mike and Chris were very personable and presented a pleasant evening while we waited for Hakon Wium Lie to reach after 22 hrs of flight from Europe.

I'll write again as I have lot of videos and the whole discussion is worth sharing.

Hakon dazzled us with an alpha preview of Opera showcasing his proposal to include videos in web browsers natively.

He also showed Opera on a coola $1K PC.

Moved to Silicon Valley

I have a request for feedback from users of this blog:

After 14 yrs in Boston, building Internet groups for large companies and my own startup Coola, I have embarked on a new entrepreneurial exercise - I decided to pretend I am a kid out of school and just packed up and moved to Bay Area.

I plan to blog my exploration of silicon valley here.

In Boston, Boston Computer Society welcomed me and offered me a chance to start the Web Group in 1996. I write the Startup Diary Column for India New England, I network and meet so many friends at several groups, I am a Venture Mentor at MIT.

Everything seems larger and crowded in order of magnitude in the valley.

The exercise to find my place here seems very much like when I started Coola and found my place in the startup ecosystem.

I visited Vineet Buch, a VC from BlueRun Ventures, who I met at a local event called "Plug and Play Web 2.0" to get a feel for where to start checking out the valley. Vineet is an investor at Riya and Like.com and thinks like an entrepreneur. More on that visit soon.

I have a dilemma now and need your feedback users!
I updated this blog template to include mybloglog to show recent readers and also for every post I make to this blog, blogger (of Google, who hosts this blog) which has changed to a new version seems to email the entire blog (not just my recent post) to all feedburner subscribers.

I'll contact blogger and hopefully they should fix it soon. So my question to you is whether I should continue here or move this blog to wordpress.org . Please email or comment here, appreciate your time.

If we transition, I want to make it as easy as possible for you readers! Thanks and Regards :-) Sudha

The birth of a startup

The birth of a startup is a fun but painful state to be for the entrepreneur.

I am a mentor at MIT's Venture Mentor Service, and I also hear from lot of you from this blog, so I do think about a lot about startups.

I came into that state recently when I interviewed Tony Conrad of Sphere for StartupStories. It was about an early stage startup from a passionate entrepreneur, whose passion for his startup just lingers on and I cannot stop thinking about it, I dream about the growth of that startup, think about challenges and fun options and begin analyzing that startup as if I were part of it. Would they take up this idea, what are some of the execution challenges, is this a real direction, can they monetize this way .. Oh the crazy mind of an entrepreneur!

I went through that with Coola, my first startup. My co-founder had another finance idea better developed, and we took it to Fidelity. Its still a viable idea even today, which we thought we were not well equipped to scale then and did not pursue. More important, I did not feel the passion to give me the adrenal required for the crazy hours.

Entrepreneurs can go through a lot of cycles to find that new idea.

The funny thing is that this stage is the awakening of the entrepreneur in you! You would do this if you woke up with an idea and went to check it out. There are two simultaneous path to pursue, one is to validate the idea, the technology behind it and find people who know the technology or space to bounce off the size of the idea. Other is to check frantically whether someone else if solving the same problem. I heard an investor say that if its a real problem, chances are that 2 more people are trying to solve it in the world and its validation of the idea.

Life gets crazy when the entrepreneur in you is woken up and you don't own one idea but have several new ideas. The challenge is to focus, its easier said than done. You still have to chase multiple paths and check the viability and find the team that can help scale the idea, but figure out which is the one for you and own it, dream it and nurture it with your whole heart, mind and soul.

Personally for me, I iterate between these modes, but my real startup is born when I have a team, then its real for me. Its a commitment of my time and my partner. That makes me look at all the ideas on the table in different stages to focus and put my entire energy into one. If you have done it before you know its people not ideas that matter.

Its scary to see many new entrepreneurs today, with lot of tech ideas, but wasting their energy by dissipating it among a bunch of ideas. None get to the next level. Worse is if they muddle up all the ideas and try to bring them to one startup. I am not kidding, I've myself attempted it once. In some sense I see that as an early stage of the growth of an entrepreneur.

We can dream up ideas, can try to figure out what is viable, chat with friends and dream up options. Some take it further to validate an idea with who they believe are customers or market experts. Many loop at this stage because they ask too many questions too soon and theorize on having all answers.

Real entrepreneurs grow up to the next level when they learn to focus, and push their execution plans to their limits and dare to find people who can complement their skills and make the plunge to execute and find the real answers - thats when viable startups are born.

StartupStories - Real Stories. Real Inspiration.

I have been writing my own startup experience here. I am amazed by the number of brilliant smart entrepreneurs who contact me and wish there were more honest information out there for people starting up.

The biggest challenge new entrepreneurs face is to insert themselves into the startup ecosystem. If is no different from moving to a new school, job, church or city, you have to be in it to become part of it.

I've talking to some of you about how to expand this to bring in real experience of more entreprenuers beyond me.

I've partnered with a friend and begun writing real, inspiring stories of entrepreneurs at StartupStories.com Our real success would be when people get inspired and become entrepreneurs. We decided to keep it a clean layout and not even ask users to post it on reddit or digg. We want real market feedback.

I've been an Internet geek and entrepreneur since the early boom of the web. I've worked in Marketing in large companies and have used the latest tools and techniques for reaching customers and users.

Still, it never ever ceases to amaze me when I sense a new user's excitement on the net, accepting value that I've worked to build for them!

On thursday, a user posted our first story from StartupStories.com to Reddit.com.Today's consumers know their power and quickly users voted up our article to 238 points and we were on the front page and got tons of users, comments and lots of subscriptions with the hope that we'll offer more such stories.

We've built a pipeline of more stories and I am having fun meeting interesting people. We are focusing on real stories of people on how they got started from an idea and their values in growing their startups, finding business models and their exits and on the early funding cycle.

Is there any person's story or specific startup topic you'd like to see from someone's experience? You know, I'd be sure to get it for you.

Web Innovators - Energy of entrepreneurs

I attended Web innovators group in Cambridge, MA last night along with 150 other entrepreneurs, couple VCs and a leverage buyout firm person.

David Beisel of Masthead Ventures heads the group and is organically growing it like an entrepreneur. It was good to see David after so many years as I last saw him during my second round funding cycle for Coola in 2001.

What I like about Web Innovators Group:

• Well planned, name tags ready from the wiki RSVP.
• Structure of the evening was 2 startups get 6 min each, and there wer e5 or 6 other startups (called side dish) with their tables on either side of the room.
• Rest of the evening was open for networking, and the energy of the room was amazing.
• No vendors peddling any ware.
• No one asking you to signup or pick any brochures.
• The presentations were real people, honest comments. Where else would you hear an entrepreneur say to a crowd that they have maybe 4 business models.
• Quality of crowd was good, everyone as eager to network and moved around a lot, which offered better randomness of meeting an interesting new person within 5 minutes.

What can be improved:

• People can write what they are looking for specifically in the wiki during RSVP or in a separate section. Some were looking for a specific type of developers, there were developers looking for cool startups.
• Could promote more Q&A of each presentation to help the presenting company and also to help us understand the company/market evolution of players better.

Summary of presentations:

Grazr - Mike Kowalchik - real honest conversation, has cool potential. Was honest about their options for different business model. Company worth watching.

Calabash Music - Brad Powell - very canned presentation, maybe he was tense. But wonderful product and site. It surely has potential to become the next big music site.

“Side Dish” companies, who gave informal demos during the socializing portion following the structured presentations:
FineTune - Mykel Ruvola
Startup Business School - Richard Banfield - I believe that entrepreneurs are all brilliant in their areas of ideas and many need help in building out the business. Richard seems to mean well, but I heard from many in the room wondering why an entrepreneur would trust and pay for canned startup knowledge.
radeo.net - Paul Cosway (founder) and Darryl Pomicter (bizdev guy)- Cool URL. Web 2.0 has some trends and some anti-trends. They were clear not to call it an audio search engine. Worth checking out.
Citysquares - Ben Saren, our local search engine building all of local stores info for us. They have the usual users vs business customers, need one to get other dilemma. The team seemed upbeat and may attract some investor soon.
Offertrax - Ron Pruett and Ben Carcio


Some interesting new people/startups I met:
Dharmesh Shah of Onstartups.com, an amazing mind, he articulates ideas as well as he writes his blog.
Coach Wei founder of Nexaweb, an amazing entrepreneur who survived the bust of 2000 and has built a beautiful enterprise web 2.0 company.
Josh Schanker of Sconex, the high school online site.
Anna Denton of "Boston Where" with a cool new startup idea.

It was flattering to meet couple readers of this blog. Thanks folks :-))

All in all, an evening well spent. It validates my belief that there are growing number of entrepreneurs looking to find each other for support and all entrepreneur networking is not to raise money.

New Entrepreneurs lead markets by making them

I came across an old web entrepreneur who is doing all the right things, is passionate about his idea, has tons of experience but somehow sounds boring compared to a young web 2.0 company who is in his space. I feel sorry for him, but got the Aha about something fundamental about being an entrepreneur.

Real entrepreneurs are not the ones who use the latest jargons but ones who personify the latest trends in their thinking and execution plans.

What is fundamental for any startup is the passion of an entrepreneur. If the passion can be left raw, and the entrepreneur allowed to take risks to follow their heart, assuming the basics of a smart team are in place, we can see a successful startup evolve.

The passion sadly get skewed as the 30 sec pitch is practised multiple times by the time it gets in front of people it matter. When you talk in detail to an entrepreneur, their fundamental belief systems and way of operation comes through no-matter how much it is camaflouged in the latest trends and jargons.

All startups operate in an ecosystem of other entrepreneurs, existing companies in their space, investors, influencers and media folks. Media chases the latest big thing. Investors huddle in trusted circles and look for new trends to understand where innovation may happen next.

I am not for force-fitting your startup into the latest trend. I want to go deeper to tune to market trends to build your operational plan around it. Being an entrepreneur is about adapting change and enjoying and capitalizing opportunity it presents.

For example, when we hosted Coola, we paid $700 to Digex, which merged into Worldcom and collapsed and we moved to a hosting company at $175 ( we hosted 1 million users) and thought we got a deal, while today hosting costs start at $10 monthly and the variables of the options are also different. With my last startup Moomli, we build a whole ecommerce platform and store front with opensource software.

More important is the trend change with relation to hiring, retaining talent and marketing.
There are so many sources online to build your logo, to outsource components of work, to find smart people not by looking at resumes but by looking at their work and their place on the web.

As for marketing, I hate to admit new entrepreneurs carry less baggage if they did not know about linkexchanges from the past, or even focused too much on Search Engine Optimizations because history has told us that real brands on the web including the latest big brand of Google was build by passion with lot of PR and not real marketing dollars. So marketers need to understand how to generate loyalty in their customers and tie their brands with the passion of the startups and let it fly, for which they need to know the navigation in today's web and brands.

The best way, or the only way I know to do it is immersion, just start a site or get deeply involved into startups and be critical of your own experience that you are doing the right thing for the scenario involved, and not because it worked for you in the past.

Enjoy the ride, the fun is in the change and how we adapt and stay young in it.

BarCamp Manchester - review of event June 18th 2006

I attended BarCamp Manchester at the incubator ABI along with 60 other people.

True to its adhoc nature, we could post stickies on what topic we wanted to talk about and pick one of the 4 available meeting rooms.

Attendees: Loved the quality of the crowd, wish I had more time to chat with few people in smaller breakout sessions - Lots of entrepreneurial geeks, real people who love technology, a VC who offered funding for people who can develop the local economy of Mt.Washington valley, lots of open honest conversations.

Talks:
10.30am: I spoke on "building the business side of a business". The google spreadsheet of the business components I discussed is here. I enjoyed the audience and the followups. Its amazing to see how many entrepreneurs are around us all.

11.15am: I attended "3D Animation in a Small Studio" by Kelly Muir. This was a presentation by their company "Hatchling". It was interesting to hear their down to earth story of how they are growing, finding customers and the challenge of the rigid market structure of how broadcast videos are done by ad agencies and web videos are done by new players and customers find it hard to understand the same company can offer both preserving the style of content. They do sales videos for Reebok and I am curious to see their Charmin ads at their NY sponsored bathrooms. Talk of a revolutionary medium to reach people :-)

I liked the real people, the real startup story and learnt something about animation industry, cost of making an animation on the web etc and left inspired by the optimism of the Hatchling team.

Lunch: Thanks to the sponsor ABI who did not pedal any ware and were supportive to the spirit of BarCamp. Thanks to Ian and Kelly Nuir for the painstaking details of all food including veg and vegan food and all the soda and candies. Can't ask for more!

12.45pm: Open Source for Public Radio by Brendan Greeley, Blogger-in-chied of Public Radio. Interesting request, he wants to request public radio supporters to donate time and build open source software that he needs. Will write more about this later. Honest coversations.

12.45pm: Blogging 101 by Ian Muir, I couldn't attend as I thought I knew the topic, but talked to Ian later about Blogging tools to stitch a blog into the blogosphere. Hi susggestion is to use just a few - Flickr plugin, magnolia, digg or reddit and delicious, not clutter with a lot of options.
He has promised to post his slides on the wiki.

1.30: Second Life by Jason Rand. This was an awesome presentation. Jason started out saying he had not planned to present this, maybe there will be interest. I'll write a review of this in detail. But I just loved it! It was interesting to see so many people from the audience talk about their second lives. There was agirl who hung around in a star trek group practising swords. Jason told us the technology of second life, the scripting optins available and we discussed how American Apparels must have gone about building their site in second life. Jason's avatar is "raybock" and he is part of the Giveme Liberty Bar. I enjoyed the discussions about how to build audio (concerts) and video on second life.

2.15 Drop your pants by Ian and Kelly Muir was a session where everyone got 1 min to share their idea and the crowd gave feedback for 3 minutes. I'll write again in detail about the ideas and comments. Worth every minute!

3pm: Ruby on Rails - had rave reviews, I missed it but attended "Startup Strategies" by Ray Deck which was my favorite. He gave us a framework to work for startups to find their real paying customers. I plan to write a separate review on this one. Ray has this magic to bring some interesting audience discussions.

3.45pm: Am Empire of Geeks by Shimon Rura and Aaron Amstel
Nothing like what I expected, a very interactive, interesting discussion about whether geeks can get together and coolaborate and build a company diversifying seevral tech ideas to make money for the group. It had some idealism about openness and fairness, but brought very smart honest discussions about the feasibility of such a group. In this world of open source successfully run by geeks, it should be very possible, so we planned to continue the discussion further later past BarCamp.
For me personally, I keep remembering the conversations as I see news of some early stage web 2.0 companies folding (like irows) and others (like kiko) selling on ebay. There seems a need for some collaboration among geeks, hope Shimon and Aaron can make it happen.

We drove back to Boston, pondering lot of ideas. Since then, I've had interesting followups and can't wait for the next BarCamp.

Business side of a business - preview of presentation due at BarCamp Manchester

Yeah, I hear it myself, the title sounds funny! But I've heard from two different startups, one from east and one from west coast, both with initial funding, asking for me to help build the business side of their business. Yeah, both calls came from their investors.

So, what is the business side of a business? Here is my summary, I plan to present this at BarCamp Manchester June 18th.

Lets sync up on fundamentals. A business is a set of people with a great product that solves the problem for some set of people or companies who are willing and able to pay for it.

Realistically, in the startup world, its simply a product being built by a team targeting customers who will pay for it. Since I operate in the world of tech startups, this means a tech idea thats funded to being built out for some customer.

I am writing this because I had two different experience with each startup. Both are technology companies with some tech software engine in different areas, with no real customer. The founder was a technologist or a creative content person and thought business side was marketing. One simplified marketing to PR and buzz. The investors each had a vision of a larger than life segment of customer who would pay, but no one had talked to the customer or knew how to get there. One of them dreams of a consumer play with lot of jargons, all sounding cool, unless your money is in it.

As perfect timing, I attended the Sales and Marketing breakfast meeting of Boston Startup Meetup organized by Ray Deck of Element 55 and met a bunch of grounded entreprenuers, with one thing in common - all are focused on their customers and cared to learn and share how to better reach their customers and scale their business.

I see three building blocks to building the business side of the business.

One: Business Operations

Legal, Development environment, Office setup, Accounting, payroll

Two: Marketing

Real marketing is all about communicating to different constituencies of your business in a measurable fashion and based on the metrics revise your communication.

The basic assumption is that you know your customer.
(more on this piece later)

Three: Sales Infrastructure

I've put together a spreadsheet (it keeps growing each day) online at google spreadsheets of all the business components.

Dancing with Giants

I have written about how I had a deal from Intuit (offer) and Infospace (revenue partnership deal) before I closed my first round of funding.

I had two advisors who had both sold their companys to large companies and adviced that it was a better strategy for a first-time entrepreneur to partner with some large player who could become a potential buyer, but I did not listen. Ok, I hadn't got started fully and wanted the taste of building the company, scaling team, building customer base ...
We later worked with large companies on strategic alliances - TIBCO, Palm, GE, New York Times ..

I want to write about two things here - Decisions points about going into such an alliance with a large player and more important the reality of what competencies need to be developed to make it happen.

I hear many entreprenuers talk about some big player "interested" in them. With Infospace, VCs loved us because we had the signed deal. So, interest needs to be built into a deal agreement for entreprenuers to really dream on it.

Decisions points of building strategic alliance with big companies:

We hear media stories of some large company buying some startup and its painted cool, mostly by the dollar value of the deal. ( I don't want to talk about the purchase path, which is a totally different dance).

1. A big name partner can become a buyer later down the road. This means you build relationship, understand the internal landscape and demonstrate clear value of your startup to the company.
2. A big name company can serve as validation to the VCs about the viability of your startup.
3. Its definitely helpful in building brand, getting media stories and in attracting future customers.
4. Its important to remember a big name company deal should make economic sense for your startup, only then it can scale into all your dreams.
5. A startup culture is so different from any large company department, so opposites attract easily, but they do not neccessarily operate in the same frequency. So its important to make sure your team stays excited about the value of your business and not get carried away into empty noises.

Competencies to build a large company partnership

Many founders think of this as a business development skill to be hired. Its a dance at multiple levels of the large firm to be played by same or different people in the startup.

One of my famous statements from my early Coola days are "We are big, we happen to be small right now". I cannot believe I actually said it but I believed it, so, it didn't seem hard then.

1. Its a very unique competency to build a large company partnership from a small company. The founders with their passion can do this best and can look for people who have done it before.
I had done partnership deals for clients from BBN and Harcourt, and believed I knew how this was done. But when you set out as a startup, all bets are on YOU! I was surprised that I had to prove that my startup will stay viable well past the deal and we were here to stay. Later I learnt that all that can be satisfied by some contract clauses, but the most important thing is to convince the people of the large company that your company was worth betting their career on.

In our case, people got excited about our technology and it helped to build irrational trust on us.

2. It takes time, so the important thing is to stay engaged.
A big company is several departments, so it takes time. But everytime, its a relationship game involving clear communication of what value we add.
Startups typically have people who want to get results and work their tail off for it. So, remember, it is better to test the waters with the first intro meeting. Gather information about the company, their language, culture, people and adapt your presentation to them with subsequent meetings. I remember many times where we went into meetings with a plan and walked out with no results, with the door almost closing on us. Just remember, you can negotiate and find a common ground only as long as you keep the negotitation process alive. So, it is better to pretend that you are not at the negotiation table, but exploring options and validating it with buy-ins from different stakeholders and keep the process alive till you really see a deal materializing.

3. Be prepared for the intimidation factor.
I took a friend entrepreneur to a large financial firm in Boston and he presented his tech idea and he came home and closed his shop. This is a real story.
Most large companies look at new technologies and usually say, we have something like that in the works in a different department. If their pain was real, it was possible they discussed some high level solutions that may sound like yours, but remember big companies need startups for the execution. If you go back to them after 6 months, it may still be in the same stage.
I also think, it will help not to go in with the attitude that you are small and they are big. If there is a real deal in the end, it means that both party have value to offer to each other.

4. Money speaks better than words.
Its common for a large company to say lets try it for free and you may walk out of a deal with some integration work but no real money. I see many entreprenuers float happily at the prospect of a big brand name partner and dream of future money. I have been one of them. If you give in, large companies will say, free for us, charge others using us as reference.
Remember, everything costs you money - your time, your team efforts, the delay of starting over with another partner. So, be polite but firm and bring in a paid deal.
You can agree to give the core product for free as a pilot for 3 months and charge a setup fee that will cover your costs, making it sound reasonable and fair. Your team will be excited at the real validation of their product and work.

5. Know when to pull back, but keep the engagement

I had a big company who said, you have something really cool here, so you are going to offer it for cheap for us and grow at our expense and later we'll be dependent on you. Its possible. All relationship power structure change over time. But make sure you communicate your intent to treat your customers as partners. Walk away from the deal as it could be a matter of some particular person, but keep the relationship alive. I walked away from one such deal who refused us a branded play but updated them and brought them into our folds after we had partners they respected.

6. Scaling of your company is morphed by the partners demands

Many of us do not foresee how the first big customer/partner changes our startup. You'll need more people to manage that account and may have to hire fast. Some in your team may start identifying their jobs with this partner and bring in biases towards them.

Once you sign the first large customer/partner, your startup is in very dynamic turf. It is better not to fight it but accept change and do the right thing for your company. Its possible that you may have to keep the person who worked on this deal dedicated to that account and it maybe good to scale revenues off that account. Or its possible you may want to pull the main person out to scale more of such accounts. You have to decide and take the change in attitude and demands that come with it.

Unfortunately for some founders, I find that their excitement of their startup goes down as they lack operational experience to scale the team around executing on a partner or scaling business development teams. This may be the right time for them to bring in some experienced person who brings this competency.

Just remember, the beauty of a startup environment is that its never static -- first the uncertainity of the concept validation, raising money, finding the right team, and this signing the first customer is more profound where you execute on your promise to your investors, team and the promise of your concept.

Remember, you chose to dance with giants, keep your pace to the big steps, as you are now on your path to become big.

Tune to the market to find your exit options

I am part of the unconfernece movement, which brings tech entreprenuers together at BarCamps.

I spoke on"Business to Concept"at BarCamp Boston in June 2006. It was about taking a business concept and how to validate your idea and build in into a business with market development and money . Thanks to Chris Penn of Financial Aid Network for the podcast.

I am so excited today to hear the news of one of our Boston BarCamp companies Reddit's successful exit by its aquisition into Wired Digital.

Reddit is a great product, was always second fiddle to Digg from a brand perspective. So, apart from my personal feelings, I think there is a lesson to entreprenuers here.

- They raised just $100K in summer 2005.
- They executed on their product, site, launched, offered a clean user experience online
- They formed an optimistic team and networked like crazy.
- They exited into a bigger company where they can execute on their vision accepting market conditions, instead of fighting a marketing game and losing focus to raise more money for the same.

The last part excites me because they tuned to the market to understand their exit options. They focused on what their core competency was in the team and enjoyed executing on it (It showed when you met any of the team members).

So entreprenuers can have great exit plans which they tout when they raise money. The reality is to be aware of your options and decide based on what your team really enjoys and wants to continue to do as part of the passion of the business.

BTW, BarCamp Manchester is round the corner on November 18th. I plan to go. Hope to see you there.

Learning your way up the business through networking

I have chased lot of my well-meant advisors in my early days and thinking back I am thankful for their time and patience with me. Do we need to meet new advisors after early stage money?

The singlemost success factor of a startup I believe is the ability of the founder to discern the good people from the rest - be it team, investors, advisors, customers. Who is really good for your business, and how to take what they can offer to really build your business?

I come across several new entreprenuers, with passionate ideas. I see a typical cycle for this early entreprenuer, that I was in once. They network like crazy and clean up their pitch and raise their first angel money in the range of $250 to $500K. The angels mean well and offer a bunch of contacts. The entreprenuer visits all of them. They offer more contacts and he meets more of them. Every meeting is about planning and strategizing and enjoying how great this idea is. Some teams build some validation of their technology in this time, but stop short of productizing or contacting particular customers.

It scares me to see the cozy comfort nest the entreprenuer operates inside the network of these advisors which blind sights them from seeing the real market.

Most entreprenuers think money is the most valuable component needed to build their business. Thats not true! Its time. You will have passion for only so long if you do not build to the next stage. The market will wait only for so long even if you are way ahead of competition.

This spinning wheel comes from lack of execution focus. They collect advice and more advice. What makes an entrepreneur is their passion, which I would like to define as the ability to take risk with a smile. So, don't forget who you were before your raised that money. Your risk appetite is more than that of your angel, thats why you are the one building the company.

In my early days, I knew how to build out a web division inside a company, but did not know how it was done as a stand-alone business. I went networking but maintained a list called "what I know that I don't know". The famous management cliche "what you cannot manage you cannot measure" holds good for entreprenuers in early years more than anyone else. One piece of advice from my advisor Piyush Patel, then chairman and CEO of Cabletron was "stay paranoid" and "keep a tentative timeline with milestones for yourself".

So, when you meet advisors or their contacts, heres what you can do:

1. Check their background and see where they can help and ask for it.

2. Respect your time. Make sure your meeting gets you something. In the web world, I found fellow web company entreprenuers met often and did partnership deals with each other. But in the end it didn't get anything for either parties, except some garnish for their web sites, partners section. It mislead the team to work towards some integration and referrals that did not get customers.

3. Make a list of all that your business needs - people to fill certain positions, money, contact into customers, processes to scale business, etc. and update this list often. Make sure you take some action item out of each new person you meet.

4. Learn to say 'No" to well-meant people who would like to meet you and just chat about your business when you think its not the right time or because they came from your angels or best friend's referral.

5. Most entreprenuers say they want to start on their own to be their own bosses. "Be your own boss!". It takes clear conviction. Do not go about meeting people or trying all ideas to prove your capabilties to your investors. Do it only when you believe it will build your business.

6. Don't be afraid to fail. You hear a great idea, say a new channel for your business. Validate it by calling up some potentials. Or better still see if you can get this advisor to help you validate it. Then decide if it makes business sense or drop it.

Making new people work for you is an aquired skill and this maybe the best time to practise building it. People will work for you, meaning do stuff to help you if you motivate them by sheer excitement (sometimes) or sell whats in it for them.

It truly pains me to see entreprenuers change their pitch and expand their dreams into more markets without executing on a single product with focus, or signing a single vertical of customers, just talking and dreaming more and more.

7. Lead your team to focus. Focus clearly on your goals, centered on your customers and let all your actions speak towards it.

In both my startups I started with a consumer focus and soon found business customers up the food chain. At Coola, we had a typical startup office with a LED sign showing the number of users we signedup. That was exciting for the team to track and communicated to them that was the most important metric. We got close to 1Million Palm users, who did not pay us. It took me time to realize that I was not communicating the urgency of number of customers launched, as the key metric for success.

I've written about how the early days are unstructured. Its beautiful chaos like random walk, with lot of room for creativity to build what you want, like a puzzle, but if you don't focus your time and energy towards one short-term goal at a time, it will disintegrate into real disorder.

So, next time you decide to meet someone for advice, make a list, and come back from the meeting and build one more block towards building your customer base and execute on it.

Are failures really stepping stones to success?

A reader asked me this question: “I have failed in my first startup and worked for another startup and that too failed. I know in my heart that perhaps I can really make it but luck has not smiled on me as yet. How can I regain the confidence to start again? How do I know if I have got the entrepreneurial skills to succeed? When is it time to give up and get a job?”

It promoted me to write my Oct Startup Diary column- full article here

We hear about the "learning" from failures, should it not really be from successes? Is it because the winners are busy celebrating, that we don't hear their learnings? I went through a lot of introspection before I dared to start again!

I hung on to my startup as my dear life, before I would accept defeat which I would like to believe is out of sheer will power; when I was in the moods of the reader who asked me about daring to start again, I thought I had stayed on out of denial. Maybe it was a combination of both :-)

I have written earlier how we started Coola as a service company offering hosted solution for mobility to Web companies and written about our upward growth, supported by Palm User groups and customers.

Now you want to hear the gory details of how we actually changed direction to an enterprise software and hung on as the dot coms crashed around us?

We had boston.com, cio.com, IDG (conference division), mostly publishers as customers and what we saw as a promising list of B level sales pipeline. Our customers payed a monthly fee to use our hosted solution co-branded with their look and feel, based on a tiered pricing based on number of users. Those were the days when web deals were made based on sharing eye-balls between players, saying it increased stickyness and user loyalty.

Before the dot com crash, we faced companies like cityspace, infospace, which were big branded web properties who could not tell us a clear story of their own revenues for us to show justification of how they would earn real money out of our sales by extending their services to mobile users using Coola. Ok, I had a smart team. We realized that the web world had lots of free eyeballs, but no real money. So we decided we would move to the enterprise market as pure software play.

I would be lying if I said that my team just rolled up their sleeve and went to work packaging our server as a software. There was lot of work to do - find the new market, identify who was the customer, rebuild the software product, productize it with sales support documents etc. It sounds a lot like the early days of starting up before the funding.

Yeah, the only difference is that I was a running company of 30 people and that meant real people, their dreams, agendas, fears and inertia to change. Added to that, we were in the middle of our second round funding cycle and bulk of my time was spent visiting VCs and then the dot com crash began - slowly at first. So, we had work like early stages and very less money, but with a running payroll to pay.

The first thing I did was to communicate to my team. We reduced salaries and made a plan to work to build the new software product. I raised a bridge round of $500K and we plugged along. Then the crash deepened around us and VCs started stalling deals.

I decided to focus on my new customers. We looked into the 1 million users we had as consumers of our software and found people from large companies. My current sales VP was great for web companies, but he had not done enterprise sales. Neither had I. But it was my company, so I cold-called and found GE medical as my first customer.

We shipped our first CD to them. Then we got NIH, Albany Medical etc. They setup Coola as a server inside their firewall and loved the idea of sending their mobile workforce out into the field with a palm pilot and a small application that can access their inventory, update their workorders and connect back to their backend systems.

A real business is happy with two things - customers and their money to keep paying bills. We now had a pipeline of positive customers. Still the energy in the team was mixed. We had set out to raise money and customer money was not cash flow. A simple accounting lesson, I learnt the hard way.

I got a VC term sheet for $5mil and that VC began visiting us and ate a lot of our time. I started a bridge round contingent on closing this round and started getting some checks. But as VCs started stalling deals with the dot com crash and with the announcement (we were built upon the Palm economy) that Palm would split as hardware and software company, the VC decided to stall and added more horrendous terms. I decided the VC deal didn't make sense for my team and that we won't close it. I cannot tell who was more scare at that meeting - the VC or me. I called my bridging angels and returned their checks.

I spent 3 months looking for buyers and found dummy deals or honest comments that in the crashing market, nobody was going to announce an aquisition and attract attention to their shares. That was the time to close and exit.

We had a cool office in Woburn, with a ping-pong table for reception and great gizmos and a LED sign tracking the number of Coola users. I decided my first layoffs and called fellow enterprenuer friends who had large office leases and were stuck with them after layoffs. Couple offered to share their space and give us a ready setup for the couple people I would bring. We auctioned our furnitures and ping pong table, and raised whatever money we could and moved in to our new shared office space.

I called my customers and found that their budgets were shrinking for wireless space. I decided to keep Coola alive till my core team could find jobs. Then I would hang in there with the trickling customer monies and scale back when market went up again.
If I had a real business, customers would have to pay for it and I was going to put my best fight and try it out. Try I did for a year! I got amazing advice "to declare victory" - lots of dummy deals to sell the company.

Then, at my investors request, I took the hardest path to close the firm - not declaring bankruptcy, but paying all my suppliers and selling all assets and closing my company. I will have to write about the one-year of my survival separately. Its touching to hear your customers cry.

I thought it was one journey, but later realized its the beginning. We all have some passion, we execute any idea that comes our way in certain ways based on our passion built upong our experience base.

Coola was my passion to give mobility to everyone for all kinds of information with a dream to seamlessly integrate a mobile experience with existing systems - web sites, enterprise systems, all making life easy for people on the go. Its cool when people can use the power of the web from a small mobile device, without stopping to think about the technology behind it with clean user experience. Businesses can save a lot of money from the increased productivity of integrating systems and accessing them on the go.

As I started my second startup, I realized I had a core passion to solve problems and a clear execution style, that was my success from my first startup. I believe we were too early for our times, but we faced real customer scenarios we could not have envisioned without executing what we did.

I love building out innovative products and getting them to customers and the energy of building teams to make it happen and thats what I'll keep doing as long as I can find problems I can solve and customers waiting for my marketing to reach them :-)

To ask a girl out, just ask her!

I began writing today's blog because I want to share some learnings for entreprenuers today to develop their bizdev plans more efficiently than I did :-)

We have experienced and heard horror stories from the dot com bust about how large companies did dummy deals. With my startup Coola, we started with Web businesses as our customers.

I market validated and found the first few potentials even before raising money. Then we signed our first few customers and I hired a VP Sales from the Web world, who was great to get us to such customers. But, before the web world started tanking, we realized something was wrong because for large $$$ deals, we had to justify how the customer would recover the cost paid to us and we found that the large web businesses themselves did not have clear revenues. We switched to Enterprise customers with a clean software lisencing fee, which is a separate story.

All our meetings were around increasing stickyness or increasing customer loyalty, while the site customers (consumers mainly) did not pay.

Web business with consumers as customer:
ok, targeting consumers and building web businesses is in vogue again today after the success of social networking sites. I agree fundamentally there are several problems waiting to be solved for consumers so we need those sites. But remember, web consumers are spoilt- Web consumers don't pay. For any product, you can give away some freebies and get a set of early adopters to pay, that cannot build out your business.

I have two options for consumer businesses -
a) Look up the food chain. Find some existing business targeting the same consumer and make them your customer. Own all of them. For example, if you want to sell to Moms, goto P&G. Its like going to the parents to sell stuff to kids.

b) Find non-web channels to the same customers. Once you reach them, supplement with web revenues.

Web Business Targeting other businesses:
If you are all about going to Google to entice them to buy you, you don't have a b-model. I don't want to talk to you.

If you have some technology that will help large businesses, I suggest starting with validating your dreams TODAY! Is there a real need? Will they pay for it? Once you meet them, they may require your product to be built fundamentally differently because they cater to their customers who they know best.

I cannot list the number of times, I find smart, really smart entreprenuers painting beautiful scenarios about how specific companies will buy their technologies and postponing actually contacting them. They think its like asking out a girl you really like and worrying about what if she rejects. ok, its a little like that. But, with large companies, it takes a looooooong time, even if they are interested.

I think the fundamental problem is entreprenuers like to stay in their comfort zones, so the tech guys build technologies, the operations guys focus on production and operations, so customers are out there not knowing you have a solution for them.

I recently heard from an entreprenuer talking about a potential big client and how he heard they had problems *exactly* in the area he is working and he will have his solution for them in a year. Today is the time to present them your solution. Maybe they will build something else, however inferior to yours and you will have a whol team of morons to fight once you contact them with the perfect solution.

Another problem is thoerizing about all aspects of a potential deal with this large potential customer. All deals start with building relationships, which can start because you are ready to understand their problem, listen to their suggestions and have a smart team to work with them. Nitty gritty of the deals will be worked out during the contract stage, which may happen 1 year down the line if you start now, or never if you postpone contacting the customer today.

So, you want a cool date, just ask and ask now!