I was born and brought up in a Marwari family where breakfast, lunch and dinner conversations (granny included) were about deals struck and money made. I guess that’s where I inherited my ‘entrepreneurial dna’.
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It’s after working in my father’s socks factory for almost 10 years and then taking the ultimate roller coaster plunge into the world of dot coms and mobile tech that I really learnt some heavy-duty entrepreneur lessons.
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Post 4 companies, 7 Venture raises across my various companies and 2 successful exits (mobile2win china was acquired by the Walt Disney Co), let me share some insightful confessions with you:
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Solve a BIG problem for a few folks or a small problem for lots of folks – but nothing ‘in-between’.
In early 2000 in China, we cracked the elusive dual operator ‘sms connectivity’ [ There were only 2 operators in China & both were govt. owned and hated each other. At that time they would refuse to give a single common sms ‘short-code’ to any private company. So, if China Mobile allotted you 7007 as your short-code, China Unicom would purposely give you 8008.
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Now, if you needed to communicate that short-code on say, a TV Ad (to get people to respond to you), you would have to mention 2 short-codes, who to send what to etc which was painful. We cracked a short-code ‘8558’ that worked on both operators by presenting the potential of brand sms promotions and sms revenue to the 2 operators and they agreed! Only Nokia China had succeeded before us. So, when Disney started sniffing at China and figuring out how to buy a simple communication platform, we were the acquisition of choice. To come to the core point – we had solved a small problem but the one that applied to 400 million mobile users (the mobile population of in China)!
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Don’t try and grow a Rose Garden in 1 month – it will take years.
Most new age entrepreneurs I meet (and some of the VCs who fund them) believe that growth and market share is a function of stepping on some magic accelerator of hiring people and throwing marketing and business development money around. Forget it. Look at the companies you admire – they grew slowly and steadily. During the phase they went berserk, they went broke. Tell yourself and your VC that creating real value is a 7-10 year grind – if you can live with each other for that long, set sail on that long world trip. You may be god’s gift to mankind, but mankind takes its own sweet time in unwrapping gifts. In 1998 when I started the concept of contesting online, people thought I was mad. Folks at TV companies used to make me sit in the sofa (with the courier folks) for hours and then refuse to meet. In 2003, we created history with Indian Idol voting and contesting via mobile and landlines.
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Hire folks who love what you do – not the bribe you offer them.
When I meet senior candidates for job interviews, I test them by asking if they are willing to take a haircut (small reduction) on their existing salaries – in return for the experience, small equity and a brand new learning I would give them. Their body language and reaction tell me what they came to me for – if it were that 10-30% salary jump they came to me for, I will not be the lucky person to ‘bribe’ them to join. All our key hires and my co-founders live with lower than market salaries for the kick of the job and the equity upside they may earn.
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VC money comes when you need it the least and never when you want it the most – so say YES whenever it appears!
I refused a General Electric term sheet in 2000 for a few points of valuation wrangling. I regret that now coz it set us back in terms of an entry into the USA markets by at least 5 years. Not to mention wearing the badge of being a GE funded company. As a rule, always remain engaged with VCs – updating them on milestones, new ideas, advice requests etc even if you have nothing to do with them. Just be on their radar at all times.
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Don’t fight wars about dilution and valuation – it’s a wealth destroyer!
So many entrepreneurs I meet ask about how much they should dilute and if they will lose control of their company. I always remember Naresh Goyal of Jet Airways in these cases – he owns more that 100 airplanes but doesn’t fly any! The VCs is investing in you – not in some hijack plan to oust you and run your business. New age businesses are about people and their intellect combining with venture capital to create massive wealth. Those VC's want to slog you to make the 100x return for them – not do it themselves!
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The world is your market – not the market you began in
Our big success stories have come when we created business models that reached just about break even in India but really exploded outside of the country. As an entrepreneur – be ready to be in a market that needs you – not in a market that you may need.
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Being a founder doesn’t always mean being a CEO or COO
As start ups, the founder/s take complete charge of the business and fire it up with the one priceless fuel called passion. However, as the business matures and processes and best practices are required, you must be able to give way to let the ‘been there, done that’ folks come in and take over. As the founder, take pride in the creation not the operations. My biggest achievement so far have been getting folks more capable than myself into my companies and giving them ownership roles to execute!
Earn like an American – Spend like a Marwari.
Get tuned to charging customers handsome fees for what you give them. Think American. Charge confidently and early on so that your business becomes something that the market gets used to paying for. At the same time, spend like a Marwari – tight and conservative. And if your VC asks you to go on a spending spree – ask them to give me a call.
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Sell when the going is good – not when the time is right.
There is a big distinction in the point above. Lots of folks wait for the ‘right time’. That’s a big mirage. As an entrepreneur, you will know when the curve of value creation is flattening – hey it may not be a curve at all (which means it’s a dud) . So sell and give the baton to the next runner to take over and run the next lap of your business. In 2006 we made a conscious decision to exit the VAS space in India and got 3x on our return (not the 10x we wanted) – that business would sell at 0.03x if we wanted to exit it now.
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