Why do you want to do a Startup?

Bear with me it is not such an obvious answer. Building a business is a hard job, creating products and services, selling your vision, convincing others to join your journey, convincing your customers that you add value, raising money…the list goes on. Given all the challenges and pitfalls, why do we consistently keep wanting to do this? The motivations are all as different as we are all different. Let me say it, most of us start because we get desperate after we get laid off or being fired from a job or getting out of school. I would say for 99% of us it starts off as an economic driver. I remember why I started on this journey, I was fired yes I had never been fired from doing anything but here I was fired, that too from my dream job. Something that I really enjoyed doing and I was actually quite good at it too. My mind was racing what am I going to do? How am I going to pay the bills? I had seen poverty, I know what it is be hungry, I know what it is to be crammed into a public train or bus with a million other passengers. I know how it feels to be broke. My saving grace was something in the pit of my stomach that kept telling me that there should be a higher purpose or motive that should drive my actions.

I have written about being Fearless (I read that again, it was probably one of favorite blog posts), fear is a great motivator but it can lead one to the dark side of the force. As Yoda, said “Fear leads to anger, anger leads to hate and hate leads to suffering…” so I could not use fear as a motivator. I wanted to do something that would make me excited about the next day, the next hour, the next minute that I am alive. That is what led to Startup Iceland and every other step that I have been taking in the last 5 years. I can say without a doubt in my mind I have found my voice and my purpose. When you are that clear then all things become easy. That is why I encourage every entrepreneur or startup founder that I meet to dig deep and find your calling, find that purpose and if you are lucky to be able to align that calling to your job or your startup or your business then the motivation is no longer a problem. In addition, doing the right thing becomes much easier too. I see so many people struggling with this. Doing the right thing is not always easy, but once your purpose is set then there is no way you can do the wrong thing. There are no compromises. So, what is your motivation to do what you are doing?

Data, Design and Network is the Value and Growth

As I have been investing in companies and startups primarily in the Software cohort, it is time to clarify the investment thesis. I am big believer that as long as the startup focuses on the value and scaling, and is making sufficient progress towards those two major goals the startup is doing the right thing. I usually get questions from most of the startup founder that I work with how can we grow faster, should we hire a growth hacker and so on and so forth. I am not big into jargon or taxonomy, as long as it is in plain english and every stakeholder involved understands the meaning why waste time on fads?

My belief is that Software itself is a commodity more so like a tool, think a hammer, the real value in any startup is in the Data, Design and Network that it is connected to and how many hops it can do. Let me clarify with examples, when we invested in CLARA the investment thesis was that communities are forming around a number of interests and people with the same interests would like to connect, meetup and discuss online. Nothing new in that but what we focused on was the idea that what everyone says in those water holes is important and how can we make that easier to understand, take action and simply the community management function. Because every person in the online community is a node and every node is value and especially what each node writes about is valuable. We executed on that idea to a point where we are doing it better than those software companies that enabled online communities to interact. The value of CLARA was in the data that we sucked out of online forums, analyzed it, presented it in a format a community manager or anyone could see the sentiments, troubles and discussion topics in a beautiful dashboard. I think we aggregated the Data, Design and Network into a solution which was better than anything else in the market. CLARA was not the first Community Analytics company but we did it better than most out there. That was the value Jive Software saw in CLARA and acquired them last year.

Example #2 Buuteeq, the value that Priceline saw in Buuteeq was all the Mom and Pop hotels that never had a presence on the web, suddenly starting to have a presence, but none of those hotels would ever use Priceline or Expedia or Travelocity because it is too much to pay a % of their revenue to the aggregator sites. What that hotel cohort wanted was a simple yet powerful and beautiful web presence that enabled them to leverage Social Media, SEO and all things that online travel sites promised to deliver. The Buuteeq team did an excellent job of on-boarding over 7000 hotels onto the Buuteeq platform. Yes, you guessed it right Priceline obviously saw value in getting those listings and aggregating their hold.

So what is the lesson to be learnt for a startup? if you are building a company, focus on the where your value is, is it the number of listings of Summer Houses, like Bungalo.com? then the value comes when the rate of increasing the listing goes up exponentially. What strategies should you employ to increase the listings? If your website is a marketplace of tourism related products like say Guidetoiceland.is (they have a new website, check it out… it is awesome! disclaimer: I am an advisor and investor in that team), the value of Guidetoiceland.is goes up with the number of vendors using that platform. It is growing at a really fast pace and the team is doing a kickass job of executing. Really proud of their achievements so far.

Focus on the data, design and the network you are building in your startup, watch the rate of growth of all of them, there in lies your problem and solution. The more nodes you have connecting to you, more valuable you become. It is easy to measure and show. I strongly believe in the notion that Startups = Growth, made popular by Paul Graham of Y Combinator and now there is more data put out by Mattermark on the startups that they track. Here is a blog post with the title “Startup Success Indicators“.

Founders Dilemma – A Book Review

TheFoundersDilemmas_I have been listening to “Founder’s Dilemma – Anticipating and Avoiding the Pitfalls That Can Sink a Startup” by Noam Wasserman. I am 2/3rd done… it is very factual with examples and recommendations from startup founders going through a couple of case studies, more specifically the story of Ev Williams the founder of Blogger, Odeo and Twitter. It also has quotes and experiences from Dick Costelo, the current CEO of Twitter and serial entrepreneur. The book is written based on a data set the author created by running surveys on startup founders. The book’s narrative is sobering if anything, tells you how founders basically fall into a number of pitfalls despite the best of intentions. What was the saying again? The road to hell was paved with a lot of good intentions.

The author more or less documents categorically all the pitfalls, like founder’s background, the stage in their life when they found the company, what kind of co-founder relationships work and how that influences the equity split and how that is so detrimental to the success of the relationship or the startup. The main contention point in a startup always comes due to the two headed hydra, Economics vs Control. Who gets to run the company and what is the monetary compensation split between the original founding team. The data is sobering, friends do crazy things when money is involved. It even gets crazier when the Ego of the founding team is considered, who gets to be CEO and why that matters etc. I recommend the book, just to make sure every founder understands the pitfalls of splitting equity early in the game and how that dictates where the startup goes.

The following is the description of the book in Amazon:

Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin. The Founder’s Dilemmasis the first book to examine the early decisions by entrepreneurs that can make or break a startup and its team.

Drawing on a decade of research, Noam Wasserman reveals the common pitfalls founders face and how to avoid them. He looks at whether it is a good idea to cofound with friends or relatives, how and when to split the equity within the founding team, and how to recognize when a successful founder-CEO should exit or be fired. Wasserman explains how to anticipate, avoid, or recover from disastrous mistakes that can splinter a founding team, strip founders of control, and leave founders without a financial payoff for their hard work and innovative ideas. He highlights the need at each step to strike a careful balance between controlling the startup and attracting the best resources to grow it, and demonstrates why the easy short-term choice is often the most perilous in the long term.

The Founder’s Dilemmas draws on the inside stories of founders like Evan Williams of Twitter and Tim Westergren of Pandora, while mining quantitative data on almost ten thousand founders.

People problems are the leading cause of failure in startups. This book offers solutions.

It is not surprising to see that People problems are the leading causes of failure in startups. The solutions offered in the book so far are not earth shattering but could possibly work. One thing that I thought was interesting was the fact that people who have worked together in a professional setting tend to be much better founders than friends or family or strangers. Another lesson is to make sure there is a good open discussion about how the equity is split upfront and who gets to lead the team. In most cases a simple handshake and quick decision is not the solution, the author recommends a more ponderous road and says it increases the odds of the startup founding team sticking together and resolving challenges as a team.

Bottom line, I recommend the book. It is not inspiring but factual, data driven and to a certain extent impersonal although the author uses the case study of people, it felt cold to me. Maybe one needs to be cold when dealing with starting a company completely opposite to what you hear in the mainstream media, passion, camaraderie and everything is fine stories.

Automation is inevitable

I wrote a post titled “Are we the horse?“a while back based on a talk given by Albert Wenger, if you have not read his work or blog I highly recommend that you do.

The video above clearly explains the path we are on. The conclusion IMHO is that Automation is inevitable. It is going to happen whether we like it or not. Given that these things are already in front of us, what is one to do? I can say without any doubt in my mind that I will invest to make this possible. What about you?

Inspiration is Perishable

I meet people. I enjoy meeting people, learning about them, their background and why do they do what they are doing. I am student of body language, language, attitudes, bias and perceptions of everyone I meet. I learn a lot about myself when I become a student of other people’s behavior. I try very hard to be empathetic, helpful, inspirational and positive in my conversations. I always greet people with a big smile, ask them how they are doing and when they reciprocate I always respond back saying I am always doing great. Another classic question I often get is how is life? I always respond saying that Life is Wonderful/Great. Sometime those I meet get disappointed that I don’t tell them what they want to hear. My tagline is that I am an investor, so I should just solve everyone’s problem by investing money on them. My first response is always, lack of money is never the problem. Everyone wants a quick fix, if only this Bala guy invests in me my problem will go away. Really? Are you that entitled? why do you believe it should be that easy? is it that simple? believe me raising money is hard. If you have been reading my blog for sometime you know that I have written a lot about it, I struggle with it everyday. I raise money all the time, I invest all the time but expecting anyone to invest in your idea is just so Silicon Valley-ish, even there you need to show something before anyone throws money at you.

When I meet “Wantapreneurs” – my definition of people who want to build a business but have made no effort to take the first step – they think that I should just invest in them because I agreed to meet with them. I really wish we could move past raising money part, focus on building a business, focus on getting your idea to reality, focus on helping your customers, focus on scratching your own itch etc. If you are not willing to invest in making something with all the tools and technologies that are out there already, why do you believe money is going to make any difference. I try to help every entrepreneur and startup founder I meet, it is in my nature to help. I believe very strongly in the “Give” and “Service above Self” philosophies. I really get disappointed when I get feedback that our meeting did not uplift the “Wantapreneur”‘s spirits. Is that my responsibility? to uplift your spirit? Really? Staying positive and doing things to make progress towards your goal is your responsibility, yes a lot of people can help you along the way. There was a great post by Dave McClure about this title “Engineering Minimum Viable Inspiration“, with a classic Dave’s twist aka: do you give a Shit + can you get others to give a Shit.

Inspiration is perishable, it only gets you to get a little motivated the rest is hard work, dedication and focus. I have written a lot about Focus and Perception. All the tools, mentoring, advice, strategies, tactics etc are only sounds bites, it is the responsibility of the entrepreneur to launch, sell and build a business. Raising money makes things difficult, I have written about this before I have seen too many entrepreneurs and startup founders prematurely raise money from the wrong sources and then regret the rest of the time why they did that. Believe me I wish there was an easy answer but it is not easy. My advice is always delay raising money as much as possible, hustle, bootstrap and do what it takes. It is your dream, now go make it real!

What Startups Can Learn from Iceland’s Strong Brand Identity

Strategic planning and branding are integral to establishing a company’s identity and reputation in the marketplace it is targeting. Startups often neglect this extremely important area, focusing instead on more immediate needs such as getting their idea off the ground and securing enough funding to afford staff, gear and materials—completely valid.

Experienced entrepreneurs will tell you, however, that establishing a brand identity early can help create significant opportunities for a startup, from seed and growth funding to customer acquisition and retention to positioning for a future merger or acquisition.

noah and mel_2Noah Ross and Mel Weinberger specialize in helping startups that are looking to establish a brand identity and major brands in transition looking for a refresh.

“Iceland is the perfect venue to talk about branding because it’s a country with such a strong brand and a strong sense of identity,” said Noah, who is a Partner and Executive Creative Director at Launchpad Advertising, which was recently acknowledged as one of INC. magazine’s fastest growing companies.

While it is true Iceland’s identity is very clear, the startup community in Iceland often laments the struggles with establishing their brand voice and launching brand and marketing initiatives, particularly when attempting to reach foreign markets. However, the Startup community is rich with local experts and marketing entrepreneurs like Thoranna Jonsdottir and Runa Magnusdotir who are making marketing consulting accessible to startups on both a small business and personal/executive brand level. Startups and entrepreneurs within Iceland can lean on these local resources to help determine their core message, identify their target customers and create an emotional connection to the startup’s product and service.

“Iceland, by and large, is a very unique, very special place,” Noah said. “At the end of the day, people are going to relate from what they feel, and for me, I’ve traveled to a lot of places where you feel different things, but few that inspire with the strong sense of pride and fierce independence of Iceland – a country that produces music, literature, fashion, and even landscapes like no other place on earth. Also, the puffin is delicious,” he added.

It’s this same confluence of creativity, independence, resourcefulness and exceptional ideas that can propel Icelandic startups and entrepreneurs to success as we’ve seen in recent months with Plain Vanilla, CLARA, FAFU, Mobilitus and others.

“The reality is that every startup is fragile. Having a community of likeminded peers who support you makes you/ it stronger,” said Mel. “That driving force and individual expertise, when pulled together across teams, is unstoppable. It might be as tangible as getting coffee and guidance once a month, or going to a perspective-changing conference, but it’s also the intangible thread those events that leave behind that is so necessary–and that’s the most enriching, invisible part. I think Startup Iceland is helping to create a rallying point and backboard for the community that is invaluable,” said Mel.

Mel, who is active in the startup scenes of Austin, Texas and New York City knows brand both from the agency and entrepreneur perspective, as the founder and CEO of Fit Steady, a startup in the health and fitness sector whose tagline is “Finally, an easier way to get fit” and who won first place during Startup Weekend Austin in 2012.

“[Fit Steady] started from a passion for fitness that led me to become a personal trainer,” said Mel. “From that vantage point, I became a sounding board for my friends about all of their insecurities and how challenging it was for them to find the right path. How many times have you walked into a gym only to stare in longing confusion at all the machines and hop on the treadmill again? How many different diets have you tried? Why is it so hard to navigate our personal paths to health & fitness? So I set out to make it easier. I’m trying to make things better by making personal fitness more accessible to the average person.”

Mel reinforces the easy fitness message throughout the Fit Steady brand experience, from searching for a coach to incorporating easy-to-implement fitness tips in the company blog. The company’s mission and passion is very clear.

Noah and Mel will make a joint presentation centered around brand identity with the Startup Iceland audience on June 4th  at Harpa and will participate in Unconference  as well as hold “Office Hours” at Háskólinn Reykjavík on June 3.

 

 

 

Rework – Book Reveiw

Cover of "Rework"

Cover of Rework

I finished listening to ReWork, the book written by Jason Fried and David Heinemeier Hansson the founders of 37Signals. A software company. I think the no-bullshit prose and their approach is refreshing. No wonder the book has been on the New York Times bestseller list and the authors and the company have gained much respect. I think a lot of what they say in the book is common sense, however common sense is never common practise. I see the book in a number of company shelfs and I ask myself are they following what they read in that book? Is it difficult to follow? I have recommended many books, strategies and philosophies related to building startups and being entrepreneurial, these are learnings and teachings that I want to live by and follow myself. You know the saying if you want to learn something, you should teach it and that is the best way to learn. I love the teaching part of what I do, that is where the learning happens for me. Most of the time it is me asking questions, about why an entrepreneur thinks and does things a certain way. I learn a great deal. I try to read as many books and blogs as I can to see if there are learnings that I can apply and share everyday. I think this book made that real for me. The author recommend teaching as a way to be genuine and authentic, because you cannot posture when you are doing that. In addition, having a higher purpose and having a really long term goal of building sustainable businesses is a hard job, the authors force the reader to think that way, I think that is powerful. I highly recommend the book if you have not read it or listened to it. I know I will listen to it again. There are so many strategies and ideas that I consistently share with every entrepreneur and startup founder I meet, especially about Marketing and building an audience. Here is a classic summary of the book:

  • ASAP is poison
  • Under-do the competition
  • Meetings are toxic
  • Fire the workaholics
  • Emulate drug dealers
  • Pick a fight
  • Planning is guessing
  • Inspiration is perishable

Get the book you will not regret it.