June 16, 2014
Marc Andreessen (Photo credit: jdlasica)
I have been meeting a lot of people about my new project, the feedback has been extremely positive. What is key in this new project is the fact that we are going to invest in People and Teams with potential. I have written a lot about this. I believe very strongly that investing in people with courage and genius works and it is not new. Marc Andreessen with a16z constantly writes about it. I just finished reading a blog post by Trent Griffin titled “A Dozen things that I’ve learnt from Marc Andreessen“, here is the quote from that post
5/ Venture capitalists “spend a lot of time talking about markets and technology…. and we have lots of opinions. …but the decision should be around people…. about 90% of the decision [is people].”… “We are looking for a magic combination of courage and genius .… Courage [“not giving up in the face of adversity”] is the one people can learn.” When you have a team of strong people in a startup, their ability to adapt and innovate gives the company and the investors optionality. Weak teams which can’t adapt to changing environments usually fail. Identifying the right people is all about pattern recognition.
I could not put it any better. We do this constantly as a community, however when you meet Venture Investor especially in markets where venture investing has not evolved you see the investors talking a lot about their knowledge of markets, technology and what they know, what baloney! No-one knows, the best strategy is always to invest in strong teams, be their resource and help them win. I draw an analogy to being a Coach to a Basketball team. The fund we are putting together will play the role of a coach, be there in every practise session, see what the team is unable to see, tell the star player that he needs to straighten her shoulder and elbow before shooting, watching winning games and adopting best practices in building the team and be in every game on the sidelines but the team takes the shot and makes the plays. The fund team is a resource for the team on the floor. I believe this model works. I believe very strongly that VC business is a “Service” Business. Here is a quote from that post
11/ “You spend most of your time actually dealing with your companies who are struggling and trying to help them. Because it’s the companies that are struggling or failing that actually need the most help. The companies that are succeeding are generally doing just fine without you. The companies that are failing are really the ones that need help and support. And so a lot of what you end up doing at the job is supporting struggling entrepreneurs. It’s kind of continuously humbling. You are a trouble shooter. There’s always something going wrong. Psychologically–we talk about this with our partners–you have to be psychologically prepared for the opposite. It seems like it’s going to be a life of glamor and excitement. It’s more of a life of struggle and misery. And if you are okay with that–because it’s part of the package–then the overall deal is pretty good.” Bill Gurley likes to say that venture capital “is a service business”. Venture capital isn’t sitting in expensive chairs “picking winners” and speaking at conferences, but rather day in and day out work in the trenches helping entrepreneurs succeed. An effective VC spends time on things like trying to recruit engineers for portfolio companies. This is not glamorous work for a venture capitalist, but it is essential work.
The above two more or less outlines the strategy for the venture fund that I am putting together. I think it works, I have enough data points to show that I have walked the path to see this through. The trick in this is to be humble and be open minded about what you don’t know. So if you have the courage, genius and doing something with Software on top of networks please email me. I would love to meet and learn.
June 14, 2014
Cover via Amazon
I have been listening to Clay Christensen and Michael E. Raynor‘s book “The Innovator’s Solution: Creating and Sustaining Successful Growth“. Really impressed with the systematic approach to innovation and why innovation can be categorized and built within existing companies or even in Startups. I believe this book is one of those classics that outlines how anyone from Venture Capitalist to Startup Founders to Managers of Businesses or CEO’s can bring a culture of innovation into any organization. This is clearly important given the changes that we are starting to see. I believe this way of thinking can really help entrepreneurs as well, there are some theoretical and empirical frameworks that suggest that Sustaining innovation is rarely the realm of startups and Disruptive Innovation is rarely the realm of incumbent businesses. One of the first question that I ask a startup founder or entrepreneur is if his idea or business is disruptive, if it is not then I suggest they do hypothesis testings to make it disruptive otherwise it is a fools errand trying to beat an existing business with a 10% or 15% improvement in the startup’s offering. For a startup to really disruptive it needs to be good enough but has dramatically different pricing, convenience or value being delivered to the customer.
The internet itself is a sustaining innovation, whereas Cloud Computing is a disruptive innovation. I believe what Elon Musk has done with Electric Car technology is also very disruptive. I think it will be not long before Electric cars become a main fixture of our culture.
I highly recommend the book and I think VCs, Entrepreneurs and Angel investors who are serious about investing should really read the book and try to understand the solution for the Innovator’s dilemma presented in this book. It has opened my eyes to transformational views of startups and investing in startups.
June 13, 2014
John is funny and says it as he sees it. Here is a story of John working on a book with a publisher and then working on another book by himself. The talk highlights whats wrong with the publishing business. I think it outlines the challenges most established businesses have with the advent of the new networked model of connected consumers, businesses and value drivers. I think we are on the verge of a break out in rethinking business models and the ways we do things.
To give more data to support the notion that the publishing business is broken, read this post by Brad Feld on why he launched a brand new publishing company called FG Press
May 25, 2014
I spent the last friday and saturday in Reykjavik University, participating in an event organized by SI – The Federation of Icelandic Industries. There was a number of startups, established companies and service providers and general public in Iceland participating, cheering and recognizing the efforts of the Icelandic companies. There were winners announced and it was really nice for me to see the recognition given to even those companies that have no revenue but were doing some incredible things. This was in the heel of a major announcement by the Government of Iceland as it relates to the Science and Technology Policy of Iceland.
The Government of Iceland approved an action plan designed to support and enhance business competitiveness and transparent use of public funds as it relates to Research and Development, Science and Technology and Innovation. Funding will be increased for science, technology and innovation, so that by 2016 it will reach 3.0% of gross domestic product ( GDP) and comparability among the highest in the OECD . The action is also designed to attract greater business investment in R&D, science and innovation. Here is the link to the Strategy and Action Plan of Science and Technology Policy of 2014 – 2016 (icelandic).
This is a big deal, when public policy aligns with the overall sentiment of the broader community which aligns with the market change this combination can really change the landscape for Startups and Entrepreneurs. For those who have been reading this blog and indulge me in discussions, understand why I am so excited about this. Almost all research and development, scientific process and innovation has something to do with Software. Thereby investing in Software based companies that leverage the new platforms of Social Networks and other forms of networks really catapult analysis and scaling.
I have been meeting with a number of companies, institutions and organizations to sell tickets for Startup Iceland (have you bought yours yet?) and across the board the collective sentiment is positive towards Startups and Entrepreneurs and supporting initiatives that creates new businesses and value. These are exciting times and I hope we build a sustainable startup ecosystem and community in Iceland.
May 21, 2014
Hubris according to Merriam Webster is a great or foolish amount of pride or confidence. I meet and talk to a number of entrepreneurs and investors, I am always on the lookout for characteristics of Hubris. I am not being judgemental, but what hubris does is it gets in the way of learning. If you are super confident about yourself or pride yourself about what you know you are eager to learn. I see it mostly in those who have money, they act like they know it all, unfortunately nobody does. I have seen it even more when I used to work in the bank and when I walked into the trading room and when the market was going up, you could feel the pride and self confidence swelling in the room. Oh, yes, I have smoked this feeling too but I never inhaled (famous words spoken!).
I always remind myself to de-link my identity or my pride from the success or failure that I face. Believe me I have faced plenty of both, failure used to hurt me and success used to make me feel like I am the king of the world. I have been doing a lot of thinking and practising flipping the switch on these feelings, i.e be humble when I see success and become extremely curious, open minded and in a positive learning state of mind when I see failure, just like a scientist or explorer should. I think I am onto something here…
I have written about being humble, humble is the word that I would like to remind myself when I see entrepreneurial hubris. I find that I don’t learn when I am feeling hubris, I tend to think I know it and guess what? the Universe has a way of knocking me on my back. I have tried to learn from it but it is hard. Your ego is hurt, you start to look for escape clauses to lick your pride and start pointing fingers at everything else to absolve all responsibility. I think that is a wrong but normal human reaction. There are too many instances to write about and I will just stick to writing about my radical self inquiry around these events.
Startups or being an Entrepreneur is to be a problem solver. You cannot get every problem right, you screw up sometimes. The learnings that you get out of those screw ups is what I want to focus on. Most startup founders struggle with the 3 big milestones of starting a business and building a team. The 3 big milestones that every entrepreneur needs to focus on are:
- Product or Service to Market fit – the question you need to ask to achieve this milestone are, do you know the size of your market? do you know how to get in front of the market? do you have something unique, different or valuable to offer this market? Does the market value it the same way as you do? Are you able to make the market choose your offering? what is the cost of making the market to choose your offering? How long would it take to get in front of the market and in what quantity would it cover the cost of the offering? You would be surprised how many entrepreneurs that I meet who have not thought through this. The expectation is not that you have thought through everything but you need to have a clue on how to get in front of the market to experiment and find answers to the other questions.
- Revenue scaling – Do you know how to scale your revenue, given you have solved the first milestone problem? What rate can you grow the revenue? What is the cost of growing the revenue? How long will it take to pay for the cost of achieving revenue scaling?
- Internationalization – Most of the startups and entrepreneurs that I see understand the need to build products and services for the global market because you can. I have written about how cost effective it has become to start companies, but that is it… it is easy to start something but it takes considerable resources to build a company. Most entrepreneurs underestimate the capital requirement to scale businesses. I think the smart way is to know what market you are going after and what it would cost to become global. You don’t have to know all the numbers but a ballpark would help. For example, if you are building a Software As A Service (SaaS) business then it is relatively easy to estimate the cost of each of the above three milestones. And today every software business needs to be SaaS business otherwise you are doing something wrong or you are in a very specialised business which is going to take you much longer to achieve the first 2 milestones. Internationalization requires a huge amount of time invested in cultural understanding, communication and allowing international teams to absorb and volunteer their hearts and their minds to what you are doing. I have seen so many investors get so impatient with internationalization. They believe it is magic. I can assure you there are no miracles and magic in building teams. It is hard work, experimentation and building trust.
I am usually dumbstruck when I meet Investors who invest in Startups who have absolutely no clue on how to get Startups and Entrepreneurs whom they invest in to achieve the above 3 things. They just expect magic to happen. Building a business is hard work, it takes effort, skills, perseverance and talent. I have seen investors throw the baby with the bathwater because an experiment failed. In addition, I also find Investors who are from one industry apply the principles or what worked in that industry to work in another industry that is totally different. Again it is not going to work. If there was a cookie cutter methodology to build businesses we would have figured it out and everyone would know it. The classic mistake that I see with Investors is to think that they know the business better than the entrepreneur. The truth could not be far from it. An investor needs to be a mentor, a guide, someone with experience willing to help the entrepreneur or startup founder along the way and to bring connections and networks that the startup founder or entrepreneur does not have. I have seen very few investors who fit this bill and the ones who fit the bill are usually the ones who have survived the test of time.
April 14, 2014
As an entrepreneur you are constantly fighting the grips of Fear, Doubt and Failure. It is a natural part of being on a journey that is low on data and high on uncertainty. I wanted to share the learnings from the CEO Bootcamp, the first day we discussed the 5 mistakes CEOs make and how to deal with them. We were made to deal with our Fear and Failure thoughts during the second day of the CEO bootcamp. I have written about being Fearless, and my role model there was my Father. God I miss him! He was always fearless in everything he did sometimes foolishly so but never ruthless or mean. So the fundamental question that you should ask yourself is why are you fearful, Entrepreneurs and Startup Founders are typically impatient with the status quo, pathologically optimistic and the ones who challenge and inspire because they want to make the world better. That is a pretty lofty goal to go after and we wonder why are we scared? I think being scared is natural part of the journey of an entrepreneur. The next logical question is ok, how do we deal with it? There were 3 questions that were posted to all the participants:
What are you afraid of?
What are you afraid of?
What are you afraid of?
it is not a trick, you have to dig deep to find out what you are really afraid of, the superficial narrative that is on the top of your head is not the only answer, there are layers of fear. We fear failure and therefore we fear uncertainty. Uncertainty is painful, uncertainty undermines our sense of safety, uncertainty fuels our expectations of infallibility and luck exacerbates the uncertainty. Did you see that? getting lucky actually makes the problem worse.
read more »
March 15, 2014
As I wrote in my previous blog post, I have been glued to the book “The Hard Thing about Hard Things” and watched the following video where Mark Suster interviews Ben Horowitz in Startup Grind. It is a great interview and I would highly encourage everyone who is a startup founder, CEO or investor to watch it.
One of the things that Ben talks about which I very strongly subscribe to in Startup Founders is the ability of Leadership and Courage. It seems a little touchy feely thing but IMHO this is the most important trait, technical skills you can learn, management skills again can be learnt, leadership skills not that obvious and it takes a lot of practice and mentoring and the more you get to do it the more it demands of you. I have written a lot about Leadership because I believe very strongly that Leadership is the X Factor of Entrepreneurship and if you can couple that with Courage to take bold decision and “Go where no-one has gone before” you have Captain Kirk like leadership. Remember that Courage is not absence of fear, but it is action to do the right thing despite fear. I have walked the path of startup founders in the last 5 years, I seen a lot of challenges that faces a startup and the teams that comprise a startup. The one single thread that keeps everything together is the trait of Leadership and Courage. Cultivate those traits, become obsessed with it and learn everything there is to learn about it, if you are an Entrepreneur or a Startup Founder.
Many of us included yours truly believed that courage is going into battle, but it is far from it. Courage is having the self awareness to ask for input from your friends and co-founder and your team. Courage is being vulnerable to the team with the notion that you don’t have all the answers. Courage is confronting your co-founder or Startup founder when she is going off the rails to give feedback and bring her back to reality. Courage is raising a red flag when whole team is telling lies and courage is raising the mirror and showing the entire team when politics starts trumping hard work, diligence and doing the right thing. These are hard things to do in a team environment. You need to factor the maturity, experience and the leadership capacity within the team to really push the agenda. Once again, I feel validated that my emphasis on leadership around building a leadership culture at all levels in the teams that I work with is the right principle. It may not seem obvious but it always pays rich dividends.
I am starting to watch the entire Star Trek Series starting from the first episode, as I believe Captain Kirk personifies a certain aspect of leadership and courage that is needed in a Startup Founder and Entrepreneur.
February 27, 2014
Photo by Natalie Behring (Photo credit: Wikipedia)
Entrepreneurship is life and life is entrepreneurship. I have been thinking long and hard about what is the one quality that I really admire with all the Entrepreneurs that I work with. And I always come back to Tenacity… despite all odds, they trudge another day and live to tell the tale. I am really inspired by that attribute. I was reading an article about Jack Ma, the founder of Alibaba Group in China and there were some quotes in that article from Jack Ma…
Jack Ma: The 4 main questions the young generation must ponder on
What is failure: Giving up is the greatest failure.
What is resilience: Once you have been through hardships, grievances and disappointments, only then will you understand what is resilience.
What your duties are: To be more diligent, hardworking, and ambitious than others.
Only fools use their mouth to speak. A smart man uses his brain, and a wise man uses his heart.
The first one really stuck with me hence the title of the blog post. Life and Entrepreneurship throws a number of curve balls at you, the best you can do is ask “Is that the best you got?” and keep moving forward. Most times you get bruised, some times you are on your knees and other times you get lucky and it misses you. The more life experiences one goes through one gets more antifragile i.e you get stronger because of the event if you have the right attitude. Here are some thoughts on Entrepreneurship from Jack:
Jack Ma’s advice to entrepreneurs
- The opportunities that everyone cannot see are the real opportunities.
- Always let your employees come to work with a smile.
- Customers should be number 1, Employees number 2, and then only your Shareholders come at number 3.
- Adopt and change before any major trends or changes.
- Forget the money; Forget about earning money.
- Rather than having small smart tricks to get by, focus on holding on and persevering.
- Your attitude determines your altitude.
Jack Ma on entrepreneurship
- A great opportunity is often hard to be explained clearly; things that can be explained clearly are often not the best opportunities.
- You should find someone who has complementary skills to start a company with. You shouldn’t necessarily look for someone successful. Find the right people, not the best people.
- The most unreliable thing in this world is human relationships.
- “Free” is the most expensive word.
- Today is cruel, tomorrow will be worse, but the day after tomorrow will be beautiful.
I struggle with all the challenges every Entrepreneur goes through every day. It is a struggle and it never gets easier. A wise mentor of mine advised me to handle life gracefully and learn from every event and the attitude to learn from events is a powerful one. I hope we are all learning everyday and better ourselves in the process and maybe, maybe make the world a better place along the way.
February 12, 2014
I have mentioned it before I am rookie CEO. The leadership challenges of creating, building and scaling a company are not easy things to do. There is a reason majority of the startups fail, the reasons for failure are plenty. I have learnt in the last 6 years that success or failure of a startup has got a lot to do with the Leadership and the Team. Remember things don’t give up, people give up. The biggest challenge of a Leader is to see the path when everything is not that obvious and the whole environment looks like it is going to crumble and fall. A Leaders role is to serve, show and believe in the potential of his team so they start believing it in themselves that they will ride through the challenges. A lot of these things are easier said than done, so I believe everyone should invest in themselves to learn everyday on how to be a Leader. When Jerry Colona, one of my favorite blogger, executive coach and former VC announced last year that he was planning an exclusive CEO event called Leadership Reboot, I jumped on it to apply and I got selected but due to some personal matters I could not make it. The organizing team was generous to roll over my application to this year and I got the news last night that I have been selected as one of the CEOs who will participate in the event… I could not help but scream out with excitement. It is a fantastic learning opportunity and to connect with people who are walking the same road as I have been the past 18 months.
The role of a CEO is hard, lonely and creates a lot of monsters in your head. I cannot imagine how many times that I have tried to figure this out myself. I wrote about Leadership and being a CEO, based on the blog posts by Ben Horowitz, reading about it is one thing but actually sharing, listening and understanding from your peers without the distractions of the day to day minutia is a valuable investment. I plan to blog this week about the role of CEO, I have learnt a bunch of lessons and I also found out from the organizing team of Leadership Reboot that they are planning an event in June this year in Tuscany, Italy… watch this space for more details of the event. I am really excited to get this opportunity to learn. Rest assured I will blog about the experience and share any and all learnings from this experience.
I encourage any and every CEO to take time to invest in yourself, it is a valuable life lesson of Sharpening the Saw.