The term angel investment is getting skewed everyday. I was talking to a person the other day who was raising $500K (~2.2C INR) as an “angel investment”, seriously? I think the word angel is dying slowly and currently refers to super angel. However, I believe there are still companies that would want to raise somewhere around 30-40L to move to the next stage (after bootstrapping). We were (are?) at this position and generally startups write a plan on how to proceed with the money. We too did it and here are some of the things we missed out in the calculation.

• CTC vs cash-in-hand
  When you want your engineer to take home 30K, you put up this value in the plan. However there are a bunch of things like HRA, DA, Gross salary, etc. (referred to as CTC). If you would need the guy to take home 30K, the CTC would be anywhere between 36-42K, that’s an extra 10K value you need to fill up.
• Auditor fee + filing taxes, etc.
  Someone to manage your accounts / file taxes, maintain your bills, and an auditor to look through it at the end of the financial year – this is going to cost somewhere around 30-40K / year.
• Legal fee
  This is a killer! Generally, lawyers charge on an hourly basis and back & forth of the termsheet, etc would mean more hours spent. Budget around 60-70K for the legal fee, I would say this is an average amount.
• Office space
  Add a buffer – even if the rent you’re paying is going to be xK per month, something is going to crop up – new chairs / table, etc.
• US Trip
  What if you get an invite for Techstars ? or need to go to US on a business trip ? If you would need to stay there for a month it would easily cost 1L for stay / month + tickets.
• Extra force
  You’re definitely going to need 1 more engineer / sales person sooner than you actually plan. Accommodate for his/her salary.

I’m writing this blog post specially targeted to the guys who raise somewhere around 30-35L as a Series-A. Include these expenses beforehand so that you’re well prepared for the small amount you’re raising.

This has been a thought that’s been troubling my mind for sometime – what does greatness mean and how do people get to that point ? Is greatness measured relative to oneself (how much you can possibly achieve) or with respect to the outside world ? I believe it’s the former one. You keep bettering yourself, and at every point, the limit to which you can stretch keeps increasing, you continue chasing that limit and there you see an endless pursuit. This would obviously make you grow higher and at some stage you would be relatively higher than rest of the world.

I think there are only 2 questions to answer

[1]What does grow higher refer to ?

Grow higher can refer to optimizing the growth for any parameter – money / fame / power , etc. It’s a very personal choice

[2]How to keep growing higher?

To keep growing higher, I believe you need to walk alone and give leeway to some randomness or chaos in your life

Crowded path

You somehow always get a choice at every stage ^[1] in life – to pick a path, one which is crowded (tried and tested) or to walk alone. When you pick up the path which is crowded, immediately the term average creeps in. This means a lot (most?) of them would be happy to be above 50 percentile. This indirectly implies your limit is decided by the surroundings and not by your true potential. If 90% of the class fail in an exam and you are a part of it, you might not be happy but you might not be sad either since you are doing okay with respect to the average parameter. Even if you are at the top, your performance is judged purely based on the crowd and this imposes a false limit on you.

Walking Alone

Here’s the other case – choosing a path that’s rarely traveled. You are alone and you need to create a path to get to the destination. This means none set your limits, you work hard, you manage your own performance and you increase your limits as you go.In turn implies, you would constantly work somewhere near your peak point which gives birth to something great. Consider the class example above, if you were to write the exam alone and failed, you would just be downright upset (no consolation). The brighter side is, you would push yourself to the limits next time, here the limits are set by you. As you walk further, you work as close as possible to your real peak.

Failure (which is again defined by you!) is pretty common in this path, but the good news is, as you keep taking this path, the odds of you doing the right stuff to grow higher increases ^[2].

Worst case: you would keep failing continuously and want to walk with the crowd, frustrated. This event is rare but even if it does happen, you would be happy that at some point you worked at your peak and your true potential.

How to walk alone?

If you have already charted a path of what you would be doing for the next 5 years, it’s impossible to walk alone. You know what you want to do at every stage. You have already considered the different possibilities and made your choices well ahead. I’m not saying it’s wrong, maybe you will end up getting what you want but it would just be a feeling of achieving something good when you had the chance to do something great.
Here’s a wonderful article by ZenHabits on living a goalless life. I’m not advocating a truly goalless life, have a short term goal, say for 6 months. This gives you the flexibility to change paths / look for bigger opportunities at every stage.

If someone asks me how would interviewstreet be in 2 years
time ?,  what would I do when I am 30? , etc. – I truly don’t have an answer. Even my potential investors asked me for a 90-day & a 180-day plan only!

This is got nothing to do with a startup scenario, the choices are present for everyone from engineers who wants to switch to a managerial role ^[3] to a student who wants to choose a course.

Induce some randomness / chaos and see the results.

——————————

[1] stage can refer to every day / every month, etc. depending on your current lifestyle
[2] Indian captain MS Dhoni is a great example. He failed in the match against SA by giving last over to Nehra.Much to everyone’s anger dropped Ashwin from semi-finals & finals, but he optimized for success (read win the World cup). Don’t go with a fixed plan, give leeway to randomness.
[3] I would be happy if they genuinely wanted to take up the role as opposed to sticking to the normal route

I don’t remember reading any kind of books apart from textbooks after my 8th std. The last book I read (before this book activity spree) would most probably be Nancy Drew / Hardy Boys. Surprising that I have read 7 books in the last 6 months! I would highly recommend these books for any entrepreneur.

High Performance Entrepreneur

Rework

Inbound Marketing

Delivering Happiness

Linchpin

Viral Loop

Unposted Letters

Heads-up: This post deals with early stage startups looking to extend their clientele

I have been busy as ever at work, but the last month is easily the *busiest* ever in my 23 years, have never worked or traveled so much. In the quest, we got some amazing customers and more importantly learnt an important lesson. We have heard this a zillion times – “An idea is not important, it’s the execution that matters”, but what exactly does execution comprise of? Apart from having a good team, I think there are only 2 things a startup should focus on

a. Usability
What looks good to you is most likely not going to be okay for the customers. Build a version-0, put it out, get feedback and ensure it’s really intuitive! A few examples..

• There is a company X who is using our product over an existing tool not because our product is priced cheaper or has more features, but ours has a clean interface for candidates.
• My dad uses Cleartrip over irctc even though he needs to pay a little more, primarily because of the neat UI
• I remember reading about what happened when Drew Houston approached an angel / VC.

  Angel / VC: ‘There are a lot of apps on the cloud that does the same thing as Dropbox, what’s new in yours?’
  Drew: ‘How many of them do you use?’
  Angel / VC: ‘None!’

  And you know the result! The primary reason why Dropbox scores is because of it’s simplistic nature to use the product.

Simplicity & good design sells, it’s a great investment.

b. Customer service

People underestimate it’s power, but this is such a great differentiator! Flipkart is not the 1st e-commerce entrant but the impact they have created is because their wonderful customer service! You can see hundreds of tweets praising their prompt delivery.

We received an e-mail from company Y introducing us to company Z:
“The tool is good, more than that their turnaround time is terrific! Would definitely recommend them”

Customers love quick responses to their e-mails and immediate answers to their queries over phone. I think this is where a startup can beat a big player. To file a complaint in a big company, you need to go through to a lot of people, calling customer care (who provides standard answers), raising support request, etc. In a startup, you file the bug directly to the guy who coded it, it’s fixed immediately and shipped soon wowing the customer.

At the same time, we lost (yeah? not sure) a customer because we couldn’t get back them for a reasonably longer timeline. I can definitely sense a really good product in this space. We broke as much ice we could, but it’s a black mark. They might not really refer us to their network.

Anyways, it’s a good lesson we learnt and our focus is just on these two to build a great product!

Photo courtesy: http://www.flickr.com/photos/keithaustell/2644625791/sizes/m/in/photostream/

Heads up: This post deals with the Indian startup space

There is a lot of buzz going on in the Indian startup space – exciting startups coming up, lot of events,discussions, etc. but how much are you contributing ? I am not talking about any kind of funding or an angel investment, something much simpler than that.

An entrepreneur’s life is a fast paced one, sit on a Sunday and look back at the amount of things you have learnt/done, you would know what I am talking about. But what really happens to all those learnings? – it’s either stuck in his head or maybe propagates a little to his co-founder. Bottom-line, it adds little value to the startup ecosystem.

The longevity of a startup depends on the founder’s emotional capacity to continue and not reasons like not enough salary for a long time / I need to get married soon, etc. as perceived by the outside world. This means that before he/she is drained out, at least some of the nice things he wished for in the startup journey should happen to boost the morale – in turn implies he/she needs to make less number of mistakes in execution. How can you reduce the number of mistakes? The best way is to learn from other entrepreneurs. SHARE your learnings! Blog about it, talk it out in conferences / barcamps!

Let’s say there are 100 active startups in India with an average of 2 founders / startup. If each founder writes 2 articles / month, we would have 400 *real* experiences in the startup journey every month! While building a product / website might be a common thing across the world, selling it surely has it’s own geographic limitations and techniques. And obviously everyone wants to sell

Won’t you love to see a blog by the Bansals? They have been hugely successful in the e-commerce space and their insights would surely help upcoming e-commerce websites. We started off with a platform for mock interviews, things didn’t go too well and we had to stop doing it and switch. There are / were other websites which operate in the same domain, maybe we could have shared, learnt the mistakes and corrected them earlier ? There’s a YC startup hirehive which has switched domains so fast because they didn’t find it working well, while PG would have really helped them make the decision, it’s also the learnings from others that helped them identify their mistake.

I should probably give some equity to Dharmesh Shah, most of the stuff on Inbound Marketing / SEO strategies I learnt from him (we cracked 10K visits last week!). I had an e-mail exchange with the grexit team on sharing our learnings last week, should definitely benefit both of us, but it’s still stuck in our inbox – lets get it out!

I can really go on & on. But you get the point right ? Fail fast, identify the product which works and most importantly learn how to sell. From the stories I have read, this is the typical cycle followed by many successful startups and you could definitely contribute your 2 cents to it.

This is more like a wake up call to me. We talk a lot on things like ‘10 things not to do before pitching to a VC‘, ‘How to raise angel investment?‘ but rarely talk about the selling stories. If you are game, leave your blog URL in the comments, I would setup a moonmoon instance (I need at least 20 founders to come forward), we could subscribe to this feed and get insightful content!

Thanks!

The hyphen in “start-up” is on purpose since it acts as a verb here. I get slightly worked up when people refer startup, the company as “start-up”. There is no hyphen in it, refer wikipedia if you don’t believe me. So what’s the best time to start-up a startup?

I have been interacting with a lot of “to-be-entrepreneurs“, majority of them being either college students (or) 1-2 years experience in an MNC. I could easily relate to what they would be going through and here’s my 2 cents on what to do before jumping in.

The best path before starting up is to work in a startup and understand the environment. However, the term “startup” has become a fancy word these days (just like how “entrepreneur” is) and some companies which have grown past 1000 employees still claim themselves to be a startup, nothing wrong in it, but that’s not the kind I am referring to. The ideal one would be…

• Product: An innovative product and a potential to disrupt the existing scheme of things. You should believe in it and have a sense of passion to work on it.
• Work: Be the 3rd (or) 4th employee in the company and work on your forte – if you are primarily a programmer, work on building the framework and not get hired into marketing / sales. There is a common notion that startup is just for marketing / sales, it’s not true. The joy of building a framework from scratch and seeing people use it is unparalleled. In the process you learn a LOT on how to build things.
• Rockstar CEO / founding team: Often this factor, influences the journey & life of the startup. The CEO should have a good domain knowledge and must have done something really impressive in the past. The ideal CEO is one whom you are a big fan of – For eg: if I had received an offer from Joel Spolsky for a tech startup, I would have closed my eyes and grabbed it.
• Cup of coffee: The culture should be transparent with hierarchies,etc. taking the back seat. You should be able to talk to the CEO / CTO over a cup of coffee once/twice a week to understand the plans, the metrics they track,etc.. and understand the business
• Networking & Sales: Accompany the CEO on his sales talks and understand the “how to sell” part in the business. Get to know more people, increase the size of your linkedin connections and network with a lot of top level people.

Well there aren’t any rules to start a startup, but working in one which follows such a culture helps in reducing the number of mistakes (both in technology & sales) you would do when you start off on your own. As Drew Houston once said in a presentation – “Work and try on someone else’s dime initially” – this is not verbatim but pretty much the crux of what he said.

Photo Courtesy: Flickr

Apart from having a rock-star team and a great business model, personally the emotional turmoil that a bootstrapping entrepreneur undergoes is pretty high. The founding team is definitely an important criteria for growing the business, but that’s on a professional level, on a personal front I think there are factors more important than the team.

My article on this has been published on DARE Blogs and you can view it here [ http://bit.ly/emotionalride ].

Thank you so much DARE for accepting the post.

Heads-up! This post is largely biased towards web startups.

Spoken enough but still, the value of just an idea is zilch, it’s just a new combination of existing things.

The way startups grow (or) become successful is in it’s tendency to adapt to market changes and build something that customers really want. Hence it boils down to the team and how effectively they can adapt and build things. Investors / mentors / advisors bet on the team more than the idea.

Let’s start with the size of the team – 2 / 3 / 4 / 5 ? In my view 2 is okay, 4 is too big (you already lose 75 % of the company ), 5 is disastrous – to me 3 appears to be the ideal number. What are the characteristics of these 3 members ? (hope you remember the heads-up!)

P1: Builder. If you know Hari well, you can skip this paragraph. This guy should be a real hacker in terms of getting things done. He should be easily able to transform logic into code and constantly keep a tab on issues like security / scalability, etc. There’s never a feature that can’t be done – it either can be done better (or) figure out a quick hack to get it working, that’s the attitude. Bottom-line, you can sleep well if you know the server is under his control.
Remember this guy is not any of those programmers you might find at a top MNC, he is a solid hacker, done a lot of things apart from his normal work, contributions on the web, etc.

P2: Marketer. No I definitely don’t mean an MBA, in fact he shouldn’t be an MBA. This guy should have a very strong knowledge of Computer Science (yes, you read it right!) coupled with ability to communicate stuff clearly to people. In an era where we don’t read advertisements, attend phone calls from unknown numbers, outbound marketing is almost dead. Added to that in a startup, there is always a resource constraint and is definitely not scalable to sell in the traditional way, remember you are just a 2-3 member team and the traditional marketing / sales rules wouldn’t be applicable to you.

The primary role of this guy is to focus on inbound marketing – getting the startup found and tracking user behavior ensuring the percentage conversion at each step of the funnel gets better. If you want to know what it is and how to go about doing it, hubspot is the hub! Blogging , Google analytics, e-mail , networking (online & offline) , pitching at various events would be the primary role.

P1 & P2 would be the guys responsible to code and get the initial MVP out with the help of P3. They must also be able to iterate with feedback and get some ‘real’ customers. Only after getting some customers (preferably paid), should P2′s focus moves from code to sell, till then keep iterating on the product.

P3:Designer. Enough and more times said but not sure if it’s a programmer’s ego that makes him thing he could design webpages. A thumb rule – 9 out of 10 programmers / hackers suck at designing. This guy should be the Photoshop / GIMP / Dreamweaver expert. Anything that has got to do with designing web 2.0 buttons to providing an aesthetic look to the website should fall under his task list. Web startups need designers alongside, they are a *huge* resource to help convert visitors -> signups -> customers. It’s a big plus, if he can fix CSS bugs in IE!

This is my point-of-view on building a solid startup team which is into web products. We are progressing smoothly at interviewstreet and our new product seems to get a lot of love from people. This is just yet another lesson added to me, hope it’s useful.

PS: Somehow I start using the words “he” , “guy” , etc. in my blog posts and I have got comments (in a lighter way I suppose) that I am being a sexist. This is to clarify I am not and I am just lazy to write “He / she” , “guy / girl” every time I make a reference, you could replace the genders however you like!

Entrepreneurial dreams take time – both to conceive and to achieve the goal. A typical path chosen by a lot of entrepreneurs is working in a well-paying job for a few years and taking that jump. Some of them take that jump pretty early (1-2 years of experience) and this post is mostly targeted at them.
PS: This is not a serious sounding post, take whatever applies.

There are a few things we get at our workplace which we take for granted and only after quitting that job we realize how essential they are. I am listing down 5 things that I wish I had bought before I left that amazing job!

• iPhone
  Are you donning the marketing cap in your startup ? this would be such a time saver! Be it replying to e-mails on the go, reading blogs & books (Kindle app is just too good!) on the travel, jotting down notes / ideas that come into your head, appointments syncing – okay, why am I marketing iPhone here ? This is seriously a great way to stay connected especially for someone who travels and in the selling mode.

 

• Vehicle – Car / Bike
  Okay, now that you travel a lot, the mode of travel becomes a concern. I primarily commute by bus and it kills my time! It almost takes twice as much time as I would if I had driven a car / bike. It’s not only the time that’s wasted,you are tired coming back home after a long bus travel resulting in lesser productivity at night.

 

• Laptop
  My netbook works well, but still when I spend weeks travelling, I am guilty of not writing code and it’s very difficult to code on a netbook. In fact, I came out of my office space only because I couldn’t code well on a netbook.
   

• US Visa
  Sometimes I feel like taking a flight and landing at the valley to sell my product. We are pretty seriously working towards getting customers from the US and if you get an opportunity to be there ( TC Disrupt, YCombinator selects you, for sales,etc. ) the last thing you don’t want to happen is not being able to get a VISA. Usually the MNC you work for provides a VISA that’s valid for 10 years!
   

• Credit Card
  Where’s the money in bank account ? After a certain point, all transactions happen via credit cards. Like an idiot, I refused credit card when I was working at Amazon thinking it would have very little use.

If you had noticed, all the above are pretty essential but come ‘free’ when we work at a MNC. It’s only when you jump into your startup, their worth is felt. So, when you have the money, buy them – I find all of them pretty essential for a startupper!

Sleeping under the chair, working long hours are almost common traits of a programmer – it has become so common that you wouldn’t be accepted into the geek community if you haven’t done the above. But I asked the geek I am close to, on whether it’s actually essential and found an interesting answer/method that I have begun to follow. The credit to the following points goes to him who is lazy to write a blog post.

So, how do you estimate programming tasks at work ? A simple answer – DON’T ESTIMATE .

Lets say you have a task at hand – Build a codechecker which would evaluate a code snippet against a test case and return the result.

Phase 1: Study

• Break down the task into atomic sub-tasks. There is absolutely no coding involved here. It’s simply breaking down tasks, viz. designing table structure for code submissions, desired prototypes of the function, communication should be done over XML/SOAP/JSON,etc.
• Get down to the research mode to identify which protocol/database-type (couch/mongo/MySQL) would be ideal for your component
• Just as a website/page can’t be designed without a wire-frame, similarly the structure or a pseudo-code would go a long way in clearing out the blockers you might face later. Get the structure and pseudo-code ready.

You still can’t tell your manager how long it would take for you to complete the task, you just completed your research .

Phase 2: Code

Now that your pseudo-code is ready and you have done enough research, get down to programming 1 sub-task in the list. Lets say it takes x days. As said, the best way to estimate the task is by doing it!

By definition of our sub-task, each one is atomic and is indivisible. Hence the total time that would be required to complete the task = n * x where n is the number of sub-tasks present.

That’s just the 70% of the total time required ,T days (i.e) 0.7 * T = n * x. The remaining 30% goes for bug-fixing, “unexpected errors”, etc. And hence, you arrive at the total time required to complete the task.

In workplaces you would be required to take ownership of an entire component and this helps a lot in arriving at a good estimate of the time required. Whatever role I play, I think programming would definitely be a part of me and happy to have learnt a way to estimate them. Let me know your thoughts/feedback and how it worked for you.

Image src: http://farm3.static.flickr.com/2416/2522802875_f095c0a40d_m.jpg