Recruitment: A risk

Though this is not the first time I had been into recruitment of resources but this time I am recruiting for my startup. The risk doubles when you recruit for a startup because we lack in remuneration, facilities but only thing that is guaranteed is challenging work. If a person passionate about the work, the project then definitely he would be interested to join. Unfortunately finding such resources is not easy at all and a wrong choice or two will derail the whole project, efforts and noble intention behind startup. And then there is google, which tries to be master of everything, you just need to know how to search intelligently. Here is one answer from a candidate, who has less experience in python but s/he has good confidence

I consider myself as an intermediate in Python knowledge but I am very comfortable with it as long as I can access google.
Thank you
Look at her confidence, I decided to give her a chance. But this is not the solution to knowledge, experience, capability or learning. Searching google and getting your job done will work as long as you understand the problem and you know how to write programs in any language to solve it. But blindly using search will not yield any result. It will give short term solution to get recruited but in long run, you will be thrown away unless you learn and show your capability.
Its my nature to not to give more importance in face to face interview, rather I give a task and ask the candidate to solve it within stipulated period. I expect honesty on solving, though completion of task is not the priority, rather I look at the approach of the solution. But honesty is very expensive and some time its not available so cheaply. I had such experience where I waited 8 months for two resources to be productive, gave lots of chances to show result. Finally, there is a limit to it. And I had to take tough decision, though it was not easy. In a startup if you are recruiting then please focus on problem solving in front of you and face to face interview. Otherwise you have to suffer a lot.

Startup shutdowns in India

Startup Shutdowns In India: 8 Startups That Called It Quits In 2017

Today, there was a news that 8 startups closed their office in 2017. This is not a good news for startup industry and it must have impacted everybody associated with these startups. I wish they will again rise with a new beginning.

Last year, between January and August 2016, reportedly 29 startup shutdowns in India took place. Hyperlocal startups were the hardest hit. As compared to 2015, reported 15 startup shutdowns that were reported in media.

If you further analyze these startups and their business model, then you can find that most of these startups are some kind of copy or replica of an existing successful startup or solution. Copying another business idea is permissible as long as there is some kind of innovation added into it and market is yet to get saturation in terms of competitions. But blindly copying an existing business model will be a disastrous. In the travel space, there were some unsuccessful startups like travelgenie, travelchacha, etc. Its not that their product is bad but they simply failed to attract customer. Most of the impacted startups are in hotel bookings and aggregation, hyperlocal, niche ecommerce and foodtech.

In reality, making small changes to things that already exist and successful might lead to a local maximum but it wont help in getting into global success. FlipKart is still a Indian retail giant, with almost no global presence. You could build a best version of iPhone app to order toilet papers but iteration without a bold plan wont take it to 0 to 1. A company is the strangest place for all for an indefinite optimism i.e. why should you expect your business to succeed without a plan to make it happen? Darwinism idea of evolution maybe fine for other context but in startup, intelligent design works best.

The Secret to Funding: How Many Customers You Need Before Contacting VCs

Getting funding is the first milestone of any startups and some succeed in early stages and some struggle to get funded. Irrespective of whether a startup is funded or not, everybody tries to attract investors and invest in their Ventures. On the otherhand,  “Investor” is someone putting money into something in hopes of getting more than that back in the future. That’s what investors do in hedge funds, on Wall Street, and in investing in companies. Investors are not banks, they aren’t credit cards, they expect a future greater return than is possible today, by investing in what’s being done.

So what do customers (and by that I presume you mean people paying for what you’re doing – customers give you money – revenue), what do customers have to do with INVESTORS’ potential return on investment?

Very little in and of itself.

Don’t misunderstand that point, without customers and revenue you very likely don’t have anything (though we know from Twitter and Medium that’s not accurate) BUT just customers and revenue are meaningless to an actual investor – go get a loan and you can pay it back from revenues.

So what do customers help investors today understand about your business?

  1. Depending on how you acquired them, that you know what you’re doing and that people want it
  2. That there is a market for it, and depending on how you found that market, how competitive it is, and what it cost to acquire those customers, that there is an opportunity
  3. That the company has a more clearly measurable way to establish a value (multiple of revenue; that multiple being dependent on what you’re doing)

Source : the secrets of funding

his is wherein your startup is actually validated, are you accomplishing the things that actually matter, evident in some customers proving that?  Customers are merely evidence of your validation, not the validation itself and how many you need depends on all of your shortcomings as an investment opportunity.  Shortcomings in areas such as:

  • Do you have an experienced team in place capable of building a bigger business?
  • Are there many competitors in the market, competitors that will arrest your growth at some point, or make it very difficult to achieve the size (value) they’d need?
  • Is there brand, IP, or other risk in what you’re doing?
  • Are those genuinely acquired customers or friends, family, and referrals?
  • Have you shown that you can reduce the cost of acquisition and improve the performance of the business?
  • Is the business scalable, how much so, or the likes of which is just measured growth? (Sales oriented and service based businesses generally aren’t scalable)

Funding is the result of such shortcomings being overcome by points of validation (growth, attention, revenue, etc.) sufficiently to substantiate an opportunity.  How much of that do you need?  It depends.

JCI Chanakya 2016

I just attended JCI Chanakya Bizz 2016, this is the first time I attended such program to pitch my startup. I have mix of experience from my participation. The whole volunteers of this event are very supportive, especially Mr. Karan. I was bit scared of facing in stage with host of high profile investors. I did not attend to get funding but to get experience. There are couple of feedbacks that I received will be remembered for long and will be my guiding force

  • Focus on one item and pitch for that idea. Dont mix too many ideas
  • This is very early stage to look for funding and its better to “GO-TO-MARKETING” and experience the real world
  • Entrepreneurship is always a path of difficulties and high chance of getting injured but dont lose the track and keep your head up.
  • There is always uncertainty and your passion will make it success

It was really a nice learning and will remember it.

Should you share your ideas?

  1. Ideas get better with feedback, and the only way to get loads of feedback is to tell the idea to others, over and over and over.
  2. You do not have a finite number of ideas, the number is infinite, your subsequent ideas get better and better, so a stolen idea will never be your “best idea ever”.
  3. Don’t be such a narcissist; most ideas were thought of by someone else before, there are very few ideas that are “your” ideas. You may have arrived at them independently, but it infrequently means that you were the first person on the planet to think of them.
  4. People are very emotionally attached to their own ideas, most folks cannot see the brilliance of an idea from someone else, and will prefer to work on their own than steal that of another.
  5. You may be surprised, but most people are decent and do not steal ideas.
  6. Most ideas are crap, but are the crap bricks on a road to a really good idea; so do not assume that “this version” of the idea is so good that it must not be stolen. If someone steals your crappy idea, chances are they will make it better, and you can then build on their version after stealing it back.
  7. Ideas need support, and if you do not share them folks cannot feel “partial ownership” and hence start to support them. Don’t confuse someone who wants partial ownership with someone who is going to steal the entire thing outright. Partial owners are supporters, and you need them.
  8. Execution matters, very few folks execute, stealing an idea and executing on it to make billions is rare, stealing an idea to temporarily feel good about yourself is what happens most of the time.
  9. People who steal ideas, will eventually owe you because the guilt inside will erode at them. And just like that, you will have eventual leverage over and around them.
  10. Have a digital trail of your idea a blog post, a slide share, or something to start with. When you “have something to show” it significantly reduces the likelihood that someone will permanently steal your idea. If you are just “talking” about it and have nothing to show, it more likely to be stolen.

So stop being such an idea hog, the world needs you and your ideas, share them.

Source: inc42

Mark cuban’s 12 rules for startup

In his book How to Win at the Sport of Business, the billionaire Shark Tank investor shares his top tips for startup founders.

Over the past 30 years, billionaire “Shark Tank” investor and Dallas Mavericks owner Mark Cuban has not only built his own companies but invested in over 120 others.

In his book “How to Win at the Sport of Business,” he breaks down a checklist for new entrepreneurs. We explain the “Twelve Cuban Rules for Startups” below.

1. Don’t start a company unless your heart is in it.

Large sums of money and strong connections won’t matter for the success of a business if its founder does not have the desire to crush the competition.

2. Don’t obsess over an exit strategy.

It’s fine if you plan on one day selling your company for a large sum of money, but that goal cannot distort your judgment in scaling the company, Cuban says.

3. Hire people who fit your company’s culture.

When hiring, you should look to build a team with diverse backgrounds and perspectives, but it’s necessary that they share core values so that they can work together for a common purpose.

As Virgin chairman Richard Branson writes in his book “The Virgin Way“: “As important as it is to look at what a candidate has achieved elsewhere, I have always believed that the single most important thing to consider is ‘personality fit.’ By that I mean, is this someone whose way of being, sense of humour, and general demeanour will dovetail easily with your company’s culture?”

4. Understand that “sales cure all.”

Cuban tells Business Insider that the greatest lesson he learned in his 30s is that any company, regardless of management issues, can be made to scale if they’ve developed an audience.”

“If you can generate sales you can have a successful company,” he says.

5. Spend liberally on recruiting employees who will play an essential role.

“Know your core competencies and focus on being great at them,” Cuban writes. “Pay up for people in your core competencies. Get the best. Outside the core competencies, hire people that fit your culture but are cheap.”

6. Don’t worry about perks from the outset.

It’s great that Google provides its employees with high-quality food, massage therapists, and scooters, but your company isn’t Google. When you’re building a business from the ground up, stock some drinks and maybe some coffee and snacks in the office, but spend your dollars on what actually matters.

7. Use open offices.

Don’t cramp your employees into cubicles and shut yourself off from them in a private office.

“Open offices keep everyone in tune with what is going on and keep the energy up,” Cuban writes.

8. Use technology you’re comfortable with.

When it’s just you and a few employees in the trenches, don’t worry about the software and hardware everyone else in your industry is using. Stick with what you know and move onto better products and company-wide standards once you’ve established your footing.

9. Keep the organization flat.

“If you have managers reporting to managers in a startup, you will fail,” Cuban writes.

A nascent company is better off without complicated office politics.

10. Don’t waste money on swag.

If you want to create a few T-shirts with your company’s logo for you and your team, that’s fine, but don’t think anyone else will want one.

“If your people are at shows and in public, it’s okay to buy for your own folks, but if you really think someone is going to wear your YoBaby.com polo when they’re out and about, you are mistaken and have no idea how to spend your money,” Cuban writes.

11. Don’t hire a PR firm.

Cuban is adamant about his belief that a PR firm can’t help a startup in a way that justifies paying them.

Startup India Initiative : Key challenges

India’s startup space is now talk of the world with startups now have easier access to capital, mentors, and there is lesser taboo associated with starting a new venture. This has brought lot of challenges too – lot of crowding in ‘upcoming sectors’, founders unable to grow their ventures beyond a certain point, administrative red tape etc. Only a small percentage of startups are able to sustain themselves and grow and expand.

The recent #startupindia program by Modi govt is a great initiative and it should have been started longtime back as mentioned by our hon’ble President. The active engagement of PM Modi with key CEOs has given a fillip to the startup ecosystem. At the startup event in California, he said, “When I shifted to Delhi last year, I thought of my government as a startup. So, I also saw some of the bumps you face on the road. I understand your challenges, but also the wonderful feeling of creating something new.” There are lots of ideas put forth in this program and some of them key points  are

Startup India Key Points

1. One-day incorporation via a mobile app

2. The exemption of startups from labour inspections for the first 3 years

3. 3 year tax holiday for startups

4. Faster exits for startups

5. Capital gains exemption on startups

6. Credit Guarantee Fund for loans to startups

7. Fund of Funds that invests in startups

Currently starting a company is not that rosy and there are lots of administrative challenges associated. The key issues are

Angel Tax: This was introduced in the Finance Act, 2012, mandated that if an unlisted company raise capital from any individual against an issue of shares in excess of the fair market value, then it will have to pay 33 per cent tax under Sec 56 (2) of the Income Tax Act.  The government has made no attempt to recognize the fact that angel money by private investors is a big part of the ecosystem and the current tax regime is a big disincentive. This has meant startups are now shifting base to countries like Singapore.

Administrative Bottlenecks: Unfriendly regulations and policy paralysis have led many startups in India to set up ventures in other developing countries. Currently, most of the startups fail to compete with the large firms as public procurement rules are tailored towards larger firms, mostly PSUs and MNCs.

Harshad Lahoti, Founder of Ah Ventures, says, “In India, a same level of compliance is required for a private company valued at Rs 20 lakh or Rs 20,000 crore and the New Companies Act has made matters worse. Delayed justice due to over-burdened judiciary is also a huge deterrence for investors, both domestic and international.”

Lack of infrastructure: Good roads, lower polluted environment, high speed Internet, corruption free business environment are very crucial to draw the interest of overseas startups in India.

However, due to rapidly-rising population, Inadequate infrastructure, A politician-realtor nexus and rising pollution. most of the metro cities in India are lacking the basic charm to attract talents. Bangalore is called silicon valley of India and recently Capgemini threatened to leave city.

These are the points, Modi govt should concentrate to make India a startup destination of the world.

  • Favorable infrastructure with less traffic, less pollution, high speed broadband
  • To create a favorable environment for small-ticket co-investments which can help early-stage entrepreneurs raise between Rs 25 lakh and Rs 2 crore.
  • To encourage the vast diaspora of innovative, educated, and smart Indians to move back to India and start up.
    Encourage the US tech majors to set up operations/support startups in India.
  • Cost of capital needs to be brought down through disruptive technologies like P2P lending marketplaces. FinTech innovations like P2P lending and crowdfunding need an impetus and clarity from the government.
  • Law like US’ JOBS Act should be enacted in India to open alternative avenues of raising capital for SMEs and startups.
  • Persuade the US tech majors to play a bigger role in Digital India without diluting net neutrality.
    Get universities and research Institutes to set up hubs in India.
  • Allow moratoriums for student loans for those pursuing entrepreneurship.
  • Consider matching investments for seed investments by central funding agencies.
  • Legal centres to help startups in understanding the legal framework surrounding various businesses in India.
  • Simplify regulations for companies for first three years of operations including incorporation, annual filings and closure.