Subbu Murugan
I am an Entrepreneur based out of Chennai, India. My startup, Ventuno.in, is working on building new media video solutions.
After my engineering degree in India, I took the usual route that many in my time did, went to the US to do my masters degree. After that I worked for couple of companies - Creatus Inc for 2 years and TIBCO Software Inc for 6 years - in the Bay Area before packing my bags and coming back home.
This blog is not aimed at anything in particular, but most probably would end up providing an insight in to what my world looks like.
Raising capital - equity and/or debt - for a startup from either strategic or institutional investor(s) is a sad day for the startup in my books. The sadness is compounded if you are a first time entreprenuer.
* Usually capital finds its way to places where its not needed.
* Terms are usually peddled to one as industry norm or as fund requirement.
* Your board, which controls the company, which you controlled is no longer in your control. When you are doing good you will have the illussion of full control and when you are doing bad it cant get any more blatant.
* Your exit just got a whole lot harder and most likely never in sight.
* Its just a time sink before, during and after the capital raise.
Does that mean one should not raise capital? Not really. Raise only if you have to. This seems like common sense; however, most raise for the wrong reasons. As a first time entrepreneur you should not and usually will not start a capital heavy business. Your initial employees are all working on options and hope rather than money. You are mostly working out of your home or coffee shops. Your initial capital is generally from your savings, friends, family and fools. This mode usually takes you to minimum viable product and couple of customers. Your main focus usually at this time is identifying a business model, unit economics, cost of customer acquistion, and how to hit break even. Thanks to all the startup media out there enough material is out there to support you through this process. Also, getting your PR done and getting credibility is not that difficult through the same startup media. Usually getting good advisiors and mentors on some equity and vesting is also not that difficult. You should not get outside funding especially - institutional and strategic money - till you reach this point, if you are a first time entreprenuer.
Now are you still making losses? Is your market large and getting large faster than you can grow? Is there competition with deep pockets? If the answer to more than one of these is yes then you should consider investing in the business for growth through institutional or strategic capital. Else focus on cash flow, customer advances, bill discounting, vendor financing, state grants, and more fools to help with the funding gap.
My thoughts on evolving content marketing space in new media published on NextBigWhat.com
Facebook Home launches today! I think its brilliant that Facebook did this and Android is open enough to allow it. I expect to see many more ‘home’ solutions from leading platforms in the coming days.
Off late there seems to be a slew of incubators opening up around in India. Yesterday, I met with someone who said there are close to 80 of them here! I agree, that we need to have even more than this to help create more entrepreneurs, but I am seeing a new alarming trend; “Incubator Hopping”. I am seeing people jump from one incubator to the other hoping to build a business. This is just as bad as raising money for the sake of raising, or attending another meet/conference just for the sake of attending.
Focus on your product. Focus on your customers. Focus on your team. Anything else is a distraction. If you want to join an incubator; understand what you need, analyze what each incubator has to offer and get into one that gets you to the next milestone.
Yesterday someone who knows what I am going through as a startup entrepreneur asked me a basic question. ‘You are taking all the risk, how do you make sure that the others are doing what they are supposed to do as they don’t have skin in the game’. Told him it’s a marathon; lots of people participate, few make the finish line and get recognized. Similarly as a company we constantly engage with lots of stakeholders; to survive, they have to contribute otherwise they get left behind.
If you break it down there are 3 things you should keep in mind.
1/ No one will care more than you will. Stop worrying about what others are screwing up on and make a transparent organization and clearly allocate roles and responsibilities. Continuously monitor and don’t step in into what they do. If they fail, let them know what they did wrong and make them acknowledge and correct the same. If it’s repeated, make it transparent to the group and, if still repeated, then other groups and stakeholders should become aware. This forces them to correct their ways or they drop of the system and move on.
2/ You are not going to get an ‘A’ player for all roles in your organization. Frankly you don’t need it either, so what if they take 4 hrs to do a 1 hr task. If you have a smart manager and have a ‘B’ player in a particular role, its okay as long as it does not affect output/revenue. Some scale up to become an ‘A’ player or as noted above will eventually drop of the system.
3/ Rewards match directly with Risk and performance. The earlier someone joins your team during the life of your company the more the risk they are taking. If these stakeholders continue to perform and grow with the organization they must be performing. If not they fall off the journey. So don’t dwell on what they are going away with, when they drop of the system - especially if they hold options - thank them for taking you to next level and focus on the finish line and what value you and other performers are creating; there is more reward for this group.
So, as Bobby McFerrin put it, Don’t Worry, Be Happy!
If you are contemplating raising venture capital or just plain interested in the process, you must read this book. Simply the definitive guide on funding that keeps you in the light about the whole experience.
Who will be the next-gen Murthy?
The Start-up Centre is an effort by a very good friend, Vijay Anand. As a board member I try to help him in whatever little way I can.
Everyone tells you how they are going to be “special”, but few do the work to get there. Do the work.
- Mark Cuban
Startups are like swiss cheese, full of holes with an appetizing flavor. As the company grows and starts hitting the market you end up meeting a lots of professionals; Freshly minted MBA VCs with no operational experience, large company executives who you engage with for selling/marketing your products and services, established company executives who you are building potential partnerships with and your first few professional employees. Typically they end up looking at the holes and not the flavor - potential.
Simply explain to them that ‘we do the best we can with what we have’. If they get it, you are in luck, if not, don’t waste your time; they will never get it.
