Purani jeans aur guitar


Purani jeans aur guitar
Mohalle ki vo chhat
Aur mere yaar
Vo raaton ko jaagna
Subah ghar jaan
Kood ke deewar
Vo cigaretee peena
Gali mein jaake
Wo karna daanton ko
Ghadi ghadi saaf

A group of startup founders sang this college time favorite song during the starry, drunk, passionate and bindaas late night sessions, that went on till 0300 am every night, during Morpheus’ Startup Gurukul. Gurukul was organized with the purpose of bringing together the gang of morpheus founders at one place for 4 days of immersive experience. Away from the normal world, away from their hectic day-to-day schedules – just to hang out, share learnings and to know each other. The sheer energy in the atmosphere was intoxicating.  People were - talking, dancing, asking questions, listening intently, showing demos, discussing stuff , giving/ taking feedbacks, taking pictures, fooling around, jumping into the pool. But with all this as a backdrop they were all starting lifelong friendships – with folks who are also weird like themselves, those who have chosen the uncertain path of entrepreneurship - leaving behind the certainty & security of jobs. Because nature has cursed (or gifted them) them with the “entrepreneurial gene”. Be an Entrepreneur or Die – thats their calling. Just can’t do anything else. Gurukul is a world in which everyone is an entrepreneur – everyone inspires you, everyone believes in your audacious vision and the non-believers are totally absent.

I still remember the day we started the journey in Jan 2008 – 2.5 years back. Coming out of our 3 yrs as the founders of madhouse, we realized that this was badly needed in India and we had a kind of stupid confidence in our ability to figure this out. Most of the folks around said you guys can’t do this / this cant be done in India or some variation of a negative comment. Like all entrepreneurs - every time someone said that it increased our determination to crack this.

From the Starting point to the Startup Gurukul – the ride has been a lot of fun but at the same time quite rough, things have moved a very rapid pace, there was always so much to do, so much to figure out, so many moving pieces, we just kept working 12-14 hrs everyday.  I never got a chance to step back and look at the overall picture. So at the Gurukul when I saw, at one place, all portfolio companies, all founders, our investors – and I saw people from outside morpheus who came to spend time with us, said nice things about what they saw. I had this realization that we are on to something important, we are starting to have a small impact on Indian Startup Ecosystem, our efforts are paying off. This has given me a lot of energy to keep doing this for many more years to come.

Thanks

On behalf all partners @ Morpheus I would like to give a big Thank You to all the founders in the morpheus gang – for making us part of their teams, their dreams and their families. Thanks guys for believing in us – for taking the chance. Together we can and we will change many things in the world around us.

Also a very big thanks to guys @ Sequoia Capital for supporting and sponsoring Startup Gurukul.


Enjoy the gurukul pics

Should a startup be Ramen Profitable?

An interesting question was popped by Mayank in context of PG’s essay – Ramen Profitable
  • How does/should one take call between growing without being profitable or being profitable and then growing (Ramen Profitable)?

At the minimum once every 2-3 months this question pops in the head of  a startup founder. Should we invest in growth or try to become/stay profitable? If one thinks long-term: investing in growth seems to be the call.  From short-term perspective becoming profitable seems important.  What is the right answer?

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  • Every startup’s journey is made up of many “startup phases”
  • Each “startup phase” is on an average 18-24 months long
    • Phase duration could be different for different startups
    • Different phases for the same startup could be of different duration
    • Typically initial phases are of smaller durations (9-12 months) and the phase duration grows longer with each phase and finally settles at 18-24 months

All phases will typically have 3 different parts to it and i’ve detailed them below:

  • Part 1 (6-8 months)
    • You have certain amount of cash, certain goals  & growth targets that you want to achieve
    • The approach should be to invest in growth & towards achieving the planned goals
    • This is the non-profitable time that will include investing in
      • Development of the next (or first) version of the product
      • Team building
      • Building additional capacity
      • More office space (as required)
      • Customer acquisition efforts
      • New branches / New sales channels / Trying new revenue streams (not applicable for startups in the first phase )
      • And other similar activities
    • The startup will use 40-50% of the expense budget for this phase during Part 1
  • Part 2 (6-8 months)
    • Focus on reducing the gap between monthly expenses and monthly revenues and move towards cash-flow positive
    • No more major investments and laser sharp focus on increasing revenues while keeping costs the same or lower
  • Part 3 (6-8 months)
    • Somewhere in the beginning of Part 3 you should hit cash-flow positive state and become – Ramen Profitable – where your revenues are just above your expenses
    • Post that you need to continue to ensure that the gap between the two increases steadily and as a result start building some cash reserves
    • Couple of months after you hit cash-flow positive (for this phase) you can start considering fund raising options
    • To have high probability of raising funds you need both:
      • Significant growth in this phase
      • Cash-flow positive business operations
    • The above two are positives signs for the investor
      • It shows that you are capable of achieving growth as well as capable of managing your cash flow / profitability
      • Also it puts you in a position where you can continue to exist & grow organically without an dependency on any new investors
    • And every investor wants to invest in a team that can succeed without them
    • Once you raise funds or build adequate cash reserves from internal accruals you can start the next phase and repeat the same cycle

Life cycle of a “startup phase”

  • Part 1:
    • Start the phase with certain cash reserves, growth targets & goals
    • Invest in growth
  • Part 2:
    • Focus on building  revenues and reduce the burn rate
    • Start achieving the growth targets
  • Part 3:
    • Become – Ramen profitable / Cash flow positive.
    • Build cash reserves / Raise capital
    • Move to next phase & repeat the cycle

Do we need physical startup incubators?

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Abheek raised this question a few days ago about “the viability of a business like common office building esp for startup companies. Something similar to a physical incubator”.  I thought it may be a good idea to share my thoughts via a post and also find out what the community thinks about this topic.  Please do share your views in comments.

From a property owner’s perspective

  • Startups are always looking to pay as less as possible
  • Startups need very less space in the initial months / years and also use less space per person
  • Startups are risky in the sense that continuity of payments is not ensured
  • Startups may not be in a position to commit to long term leases
  • Hence overall renting space to SMEs / Big companies / MNCs etc is always preferred by property owners
  • Only owners who could be open to this are
    • Folks who are not able to get other tenants
    • Folks who have special soft corner for startups
    • Educational institutes who are subsidizing it
    • Other businesses around startups where giving space is just a small part of overall business
  • Net-Net this explains lack of “dedicated buildings / spaces” for startups
  • There are some spaces which claim to be startup friendly & all; but end of the day ask for too much money
From a startup’s point of view
  • I am personally not convinced that a startup needs to work out of a proper office type space
  • Startups should work out of non-office places like : apartments, garages, basements, left over spaces etc, for a few reasons
    • It costs less
    • You can create your own interiors and your own culture instead of fitting into a office environment where you sit in 4 seats out of the total 10-20 around you
    • Setting up your space gives you a lot more homely / personal feeling
    • Being in a different type of environment also makes it more creative and off-beat
    • This environment attracts the right kind of employees and rejects the  wrong kind who want to work in a normal environment
  • An ideal startup work space is very creative / disorganized / informal and comes at rates that are suited for startups
  • Working & living out of the same apartment saves you the time & money  that would be spent otherwise on office rent & commuting
  • Working in someone else office can make founders feel like employees and put pressure on them to dress in a particular manner and stuff like that – where as they should work in their undies if that helps them write better code

Conclusion

Process of building a startup is very creative, highly immersive,  and totally unique for every startup and this process is best executed in a personal / small / off-beat setting – a setting of your choice, a place that makes you feel comfortable.

Eyes closed, head shaking

Eyes closed, head shaking;
My girl-my girl, don’t lie to me, tell me where did you sleep last night – cobain coming into me frm iphne;
Feeling bodies all around pressing against me;
Feeling the heat, Feeling the sweat under my Scopial tee;
Feeling the sweat under my beard;
Cobain Shuffles – You’re face to face the man who sold the word – tenetenu tenetu – teneeeeee, teneneeeee, drum rolls;
Pressing of bodies increasing like thy want to crush me;
Aaah I love my life;
Borivilli to Churchgate;
Startup to Startup, Founder to Founder;
This is my Nirvana;
Cobain Shuffles – my girl my girl, don’t lie to me, tell me where did u sleep last night …….

Practical advice for your VC meeting

Important: Don’t mistake this post as set of fixed rules, these are just some possible combinations to enable you to create your own scenarios

Some top level things

  • “Before you think of raising big money, make sure your customers trust you with their money” (from Indus’s post : How much money do you need to get started?)
  • Be humble, honest, friendly and upfront
  • Speak the truth
  • Be passionate / energetic about your business
  • Listen Listen Listen
  • Share examples and stories from real experiences
  • Before the meeting – learn about the VC firm and the folks you are meeting via Google/twitter. E.g –  firm background, current portfolio, good investments, info about the guy you are going to meet
  • VC’s job is to punch holes on your business model / ask tough questions. Don’t get offended, don’t become defensive
  • Appreciate and acknowledge good suggestions / good feedback.
  • If you don’t know answer to some questions – DONT BS – Just say “I don’t know. I can get back to you on this”
  • Let it go. Never get into back & forth arguments for proving your point – even if you are right.
  • Show respect for other’s time (a surprisingly big number of founders don’t get it)
    • Note down all action items from the meeting and ensure that you get back on or before promised dates
    • Be on time for all calls & meetings. This is one of the biggest turn-offs
  • Be you. Dress like yourself (but be clean), talk like yourself. Good folks want to meet the real you, so point being someone else to impr

Have your questions

#LeaveTheVcThinking: they have done the homework , they have good knowledge of  the VC industry, i can not fool them

  • Have a set of questions that you would like to ask the VC.
  • It will be great if  you can get in your questions first and garner some useful insight. If not make sure you get some time for you questions at the end
  • Don’t be afraid to ask questions that you will offend the VC.  Good guys will appreciate it  and those who dont even have enough respect for you to answer your questions don’t deserve to fund you anyways
  • What is the background of the firm?
  • What is the background of folks who are meeting you?
  • What investments have they made so far? Any in your geography domain?
  • What is typical range in the size their investments?
  • Which sectors do they normally invest in?
  • At which stage do they normally invest in?
  • What do they look for in a team / company?
  • What value do they bring to the table?

The Team and You

#LeaveTheVcThinking: the team has a lot of passion/fire/determination, they are doing it for the right reasons, they will last & never give up, they will make it happen even without us

  • Don’t rush through your intro, good folks want to know you and your story, so that  they can see inside you and get some key insights
  • Don’t start with talking about your venture – talk about u
  • Start with where did you grow up, schooling, college, work-ex, how did to decide to do a startup, story so far, what makes you tick and all the interesting stories
  • Focus on things, items, incidents, experiences, stories that directly / indirectly relate to you as entrepreneur and your startup. Dont spend time on other things
  • Give timelines of your story. Eg: which year did you graduate in, from when to when you worked at MS
  • Every founder should personally talk about themselves

What does your startup make for customers? What problem are you solving?

#LeaveTheVcThinking: your are solving a real problem that is important enough to potential customers, this product – if done well – can get customers to spend dollars, there are no good alternatives, you really care about your customers, your approach to product development is extremely bootstrapped and iterative

  • Take them on a journey with you, make them see your passion
  • Share the story of how did you get this idea and how was it developed from an idea to a real solution.
  • What do the customers want and how are you giving that
  • Will always be compared to some companies – be prepared. How is Deskaway different than Basecamp? How can madhouse compete with Reliance? How will flipkart compete with Brick & Motar book stores?
  • Respect the competition. Don’t focus on telling why your product is better than competition or what competition is doing wrong.
  • Focus on what you are doing. Tell them how your approach to the problem is well thought off and different as compared to the solutions available in market?
    • You are creating a blue ocean, instead of getting to a red ocean
    • You are going beyond the customer expectation and delivering over and above it
  • Talk about your experience of making & selling the product
  • How are people reacting to it? How are they using it?
  • Talk about real customer stories – how your product is improving people’s lives and giving them an amazing experience

How large is the market of this service?

#LeaveTheVcThinking:  Market is very very large, customer are/ very likely to spend dollars on the kind of problem you are solving, market is no where near saturation / commoditization , if a company can take 5-10% market share the top line will be very attractive

  • Share your understanding of the market both from from top down and from bottom up
  • Top down:
    • Use some obvious data, facts, trends which are available in a public to establish the market size.
    • Share your sources of data
  • Bottom up:
    • Share your supporting hypothesis,  base it on your experience with usage of product and selling the product
    • What will it take to reach annual revenues of 10 L, 1 Cr, 10 Cr?
      • No of customers
      • ARPU (avg rev per user)
      • No of employees
      • Amount of capital
      • Time required
      • No of markets
      • Market penetration level

Product Development / Operations / Delivery: How will you continue to make and deliver quality product / experience at scale ?

#LeaveTheVcThinking: the way delivering & building can be scaled to levels of delivering service to customer when rev is 100 crore,  tech/product is playing the main anchor, it will be possible to find required human resources, business is not dependent on too many human resources

  • Talk about how are you currently building and delivering  (its ok if some of it is mannual / non-scalable today)
  • Talk about about your road map for continuing to improve technology /  operations / processes / automation  at every stage of the company
  • Talk about team which develops the product. What kind of team do you have? Are they competent enough to build the product?
  • How do you find / recruit people?
  • How do you measure / track operations / product usage?
  • How do  you plan projects and track progress?
  • What is your product development methodology? Eg: agile

What are the unit economics?

#LeaveTheVcThinking: you are the master in economics of you business, you are mad about keeping this costs low, the product can be build / sold /  delivered at reasonably good margins , the bottom line will improve rapidly with scale

  • What is the current cost of serving a customer for each type?
  • What is gross margin, expected net margin? (its ok if you are loosing money right now)
  • What are important drivers of costs / margins? How well you know them?
  • How will these costs move as you scale the business
  • What are you doing to improve the economics?

How do you acquire customers?

#LeaveTheVcThinking:  you understand the dynamics of customer acquisition, Customer acquisition can be scaled,  Customer lifetime in months * avg revenue per month > customer lifetime in months * avg cost of serving a customer + customer acquisition cost

  • What are various marketing activities you do for generating good qulity leads?
  • How do you validate leads?
  • Also talk about some of the activities that you tried but they did not work out
  • Talk about your sales process that works on converting that lead
  • Talk about factors of how a customer makes buying decision
  • What are qualities needed for someone to be a likely customer?
  • Economics of your marketing channels (cost vs sales generated)
  • Economics of your sales  channels (cost vs sales generated)
  • Economics of a sales person (cost vs sales generated)

Are you looking to raise money? How much money are you looking to raise?

#LeaveTheVcThinking : you don’t need money but whenever you are ready talk – we want to be the first guys to look at the deal , they will use money well, they can make money for us, they can give us 10x or more returns on investment

  • Show that you are are cash flow positive and are generating enough cash to support our growth (this is also a requirement for doing fund raising)
  • Your preference is continue to spend time building and growing the business, since normally fund raising is a very time consuming process
  • If this meeting is not setup specifically for fund raising – tell them your are not looking to raise money and will probably look at raising 2-3 millions in 4-6 months time frame once you have hit so and so milestones as a business (fill in your timeline and numbers)
  • If the meeting is about fund raising – talk about the amount your are looking how you can use it to really grow the product, expand sales, expand operation , build solid management team and essentially achieve the hockey stick growth
  • How much total money will you need to raise during life of the venture?

Revenues (Current & projected)

#LeaveTheVcThinking : revenues are at good level, growth in revenue is good, revenues can be scaled with funding

  • Share the revenue numbers for last 3 months, have numbers of previous months also handy
  • Monthly growth in revenues
  • Projected revenues for 3 months , 6 months , 12 months
  • Projections beyond 12 months
    • If you dont have them say we haven’t done those numbers but will be happy to get back and share them
    • If you have them handy, share them but point out that beyond 12 months its really difficult to make accurate predictions since things change quite rapidly for a startup

Competition

#LeaveTheVcThinking :  market is large and can support multiple companies, if you continue to deliver high quality service and manage your costs well you will do well, you are well aware of our competition and respect  them

  • Be honest about competition. Never try to show that you don’t have competition – that’s one of the worst things to say, competition validates what you are doing.
  • How are people solving the same problem without our product?
  • Who are our direct competitors? How well do we understand them?
  • Who are our indirect competitors? How well do we understand them?
  • Who are the potential competitors?

How to value your startup?

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View the image in a new window for better readability.

Notes:

1. This post is written keeping the market conditions of India in mind and may not apply to other geographies.

2. The table shows somewhat ideal scenarios just for understanding, in real world there are many more variations.

3. Don’t mistake table as set of fixed rules, these are just some possible combinations to enable you to create your own scenarios

4. Most of the times these things are function of the main investors subjective opinion, competition for the deal

5. This is not description of what my firm The Morpheus follows. Methods followed by The Morpheus could be different depending on the exact scenario

Update: (answers to the questions that have come on the post)

What percent of equity that will be diluted to the investors at each step?

This can be calculated fairly easily

  • Equity given to the investors =  Total money invested / Post-money valuation of the company
  • Post money valuation = Pre-money valuation + Total money invested
  • Pre-money valution = Valution of your company before taking the investment
  • Example:

    • Pre-money valuation = 1 Cr
    • Money being invested = 15 L
    • Post-money valuation = 1Cr + 15 L = 1.15 Cr
    • Equity given to the investors = 15 L / 1.15 Cr = 13.04 %

How did you come up with the pre-money calculations?

  • Startup valuations are essentially an art, end of the day valuation of a company  on which both the startup and the investor agree on
  • I have based these numbers on my observations and understanding of the preferences of Indian startups and Indian investors operating at different stages
    • I have been directly / indirectly involved in a good number of funding deals  / discussions
    • Also there are deals in which I was not involved but i have the information about them
  • I have a personal bias towards revenue generating / cash flow positive startups

Ready to endure and enjoy the startup-pain?

Most founders start companies to achieve things like : financial freedom, creative freedom, change the world, make a difference, do something different, be the master of their own fate, be known for their work, be respected by friends & family, lead people, create jobs and the list goes on.

A surprisingly a large number of folks who start companies expect these glamorous  things to start happening automatically the day they leave their job and become entrepreneurs. And since the reality is very different, very soon they start complaining and eventually quit. Here is a little secret you should know:

“Things don’t happen automatically, u have to make them happen. You have to endure and enjoy the pain. Successful entrepreneurs know it instinctively & that’s what makes them tick.”

First 2 years (or more) of a startup are extremely demanding on you as the founder of the startup. You have to endure a lot of pain before you can even get a glimpse of some of these nice things. And there is always a high probability of not making it. Its kind of being pregnant for 2 years while knowing that probability of giving birth to a healthy child at the end of it is a mere 10-15%.  People who go through this period of pregnancy and deliver successfully are the ones who enjoy the journey and the pain more than the outcomes; ones who are prepared to do what ever it takes. You should ask the same question of yourself – are you ready to endure the pain? Or are you better off in your job?

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Here is the list of some the things that you should be prepared to go through at a personal/ emotional level during your entrepreneurial journey.

  • Unless you plan to live with  your parents, be prepared to move out of your comfortable flat in Versova  with rent of 20k a month and  move to Dahisar to maintain the size of the flat but reduce the rental bill to 10k a month.
  • Flights won’t be the default mode of travel between cities (surely not kingfisher).  Every time you’ll travel you will evaluate train vs flight, usually the trains win and mostly sleeper class fare.
  • Cabs are no more allowed for travel within the cities. You gotta be using auto rickshaws,  ride buses / trains / metros or even hop on the shared cabs (yeah I have done that)
  • No staying in hotels, not even budget hotels. Make a list of friends / relatives in all cities and starting piling on. Or checkout  www.couchsurfing.org
  • Can not eat in any fancy restaurant – get a list of affordable but clean food joints – McD is a great option. Cooking at home is even better.
  • No more drinking out in pubs. If you wanna drink bring it home.
  • No movies in multiplexes. In fact no time to watch TV.
  • No phone upgrades / No laptop upgrades. Manage with what ever you have.
  • No bank will give you loan. Not even a credit card.
  • When we were doing our first venture madhouse – did not buy new clothes for 3 years. Only bought when an investor asked me come to the next meeting in formals.
  • There is nothing called a work-life balance in first 2 years of a startup. It’s only work, work and more work. So get used to it and tell your family also.
  • You are doing to work (or should I say slog) 18-20 hrs a day everyday for the whole 2 years. And in your 4-6 hrs sleep you will keep dreaming about work anyways
  • And a lot of your work time will be spent doing small things, which are not exactly intellectually stimulating  - kinda stuff you always took for granted – cleaning the loo, mopping the floor, making tea, opening your office, buying food, going to banks, dealing with govt officials, starting the generator
  • You won’t have much time with family or friends. You will regularly face – angry parents, angry wife, angry kids and angry girlfriends/ boy friends.
  • No going to family functions or weddings. Even if they drag you to the function – you will be sitting a corner on your laptop or iPhone and that would leave your relatives angry with you.
  • No holidays. No weekends. And if you really want a vacation - Use Google earth to enjoy your imaginary vacations. Feel happy when google earth has higher resolution imagery for your vacation spots. They have recently added high imagery for Kashmir region, especially gulmarg and Amarnath.
  • No time to take care of your health. Running, exercises, gyms – all go for a toss
  • Don’t expect any recognition for your efforts from friends and relatives – they wont get it – for them you are still a moron – who quit his fancy job with a big company and fat paycheck to do some thing as mundane as SELLING DVDS
  • Be prepared to a lot negative talk – all most all people around you will keeping tell you how big a looser you are and many more things.
  • Totally get used to failing. Infact failing is not bad – that’s the way to make progress. If you are building anything from scratch – you have to fail 20-50-100 times before you get it right. That’s how evolution works. That’s what happens when you try to solve hard problems.
  • Be ready, most people will reject you : customers, investors, employees you try to hire, organizers of startup showcases. You have to keep looking for the ones who will accept you.
  • Employee retention will be a pain. You will spend a lot of time finding and training freshers to find they have been poached by biggies with just 1.5x or 2x the salary as soon as training is completed.
  • Your girlfriend’s / boyfriend’s parents may tell you that they are not too keen to marry their son/ daughter to an entrepreneur
  • And if you plan to close an arrange marriage deal you can forget about it. Entrepreneurs are a total flop in arranged marriage scenarios
  • Your co-founder will chicken out and will create a bitter scene. People who seem super committed and ready to give their life for the cause would suddenly find out reality and bail on you.
  • Be ready to max your cards / pledge your Personal Assets/Share certificates to give fuel to your Business.

Lot of startups fail / shutdown, just because founders were expecting too much too soon and were not prepared for some of the hard things. I believe being aware of what is in store; can help you prepare for it. If you are prepared for the pain, it will not come as a surprise and I promise at the end of it – all the nice things that you started out for are eagerly awaiting you.

Thanks to Ashutosh Upadhyay , Ankit Maheshwari, Robin Moses, Indus Khaitan, Pankaj Guglani, Sahil Parikh and Nandini Hirianniah for reviewing the draft of the article.

Invited to follow – Friends of Morpheus on twitter

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We have started a twitter account called “Friends of Morpheus (@fom_morpheus). This is a community of folks who are either working with us formally or have a good informal friendship with Morpheus or are just interested in startups. The idea is to share / discuss / publish – news, articles, wisdom and thoughts about startups,  more engagement activities will be added overtime.  Sometimes we will also share updates from Morpheus and from portfolio companies :-)

If you have something to share please tweet it with @fom_morpheus and we can further share it with all the fom_morpheus followers.

Click here to follow Friends of Morpheus –  http://twitter.com/fom_morpheus

Don’t forget to spread the word and feel free to send us suggestions on what more can be done or should be changed.

Entrepreneurship is risk free: Heads I win, tails I don’t lose much

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Recently I met with parents of the founder of one of our portfolio companies. They asked me about their son’s venture , how do I think its doing and what will be  the outcome etc. Here was my answer to them:

  • Your son worked for 1 year as a SW engineer with a big company before starting his venture
  • Now the venture is 4 months old and is already seeing some good traction
  • Lets say he works on this venture for 2-3 years, at the end of it one of the two outcomes will be seen
    • Good case outcome: He continues with the venture. It has become successful – not necessarily an IPO but at the minimum its growing steadily and makes enough money to sustain itself and pay him a salary
    • Worst case outcome: The venture shuts down
  • When your son started this venture he auto promoted himself from SW engineer to the CEO / CXO
    • A level he may have never achieved or achieved after a very long time period in a regular career with big SW companies
  • Since he is  CEO / CXO – he would need to work  & network  with CEOs / Founders / Owners / Senior management folks of other companies
    • As a matter of fact this person I am talking about has already met CEOs / owners of more than 10 established / funded companies which are from the similar domain as his own company
  • In case of shutdown of his venture it is certain that with the right efforts your son will:
    • Find a senior management position – VP / AVP / Director / Head of department with a company in the same domain
    • Get very good salary to go with these positions
    • And he would have switched from writing code to a domain of his choice
    • And if he has another venture in him, he can save enough to start it
  • This will happen because 2-3 years as an entrepreneur will give the two things needed to get a senior position:
    • Network of decision makers at good companies who have seen him run his own company
    • 3 years of intense learning you get as as a start up founder, is worth more than 10 – 12 years in regular job
  • These days people in the industry are very happy to hire X-entrepreneurs, since they know these guys can get work done
  • Not all companies would be open to hiring him. But there are lot of funded, growing, young, dynamic companies who would be happy to consider him seriously
  • Your son will be way ahead, both in salary and position, as compared to most of his classmates / colleagues who will never go out of the SW industry and become Senior SW engineer or at best a team lead in these 2-3 years. Some of these guys may have gone to top B-Schools to do MBAs and after 2 years will be doing entry level jobs in companies
  • So if in the worst case spending two years passionately working on your startup can him chance to switch his job profile and domain, a very good jump in both and salary, and in good case he may be running a successful venture – doing a start up is a great investment in career, and not at all a risk
  • They understood my point since it was quite logical, but still did not seem fully convinced . I don’t blame them. They are from a different generation

I also shared with them my personal example:

  • In August 2004, when I left my job to start madhouse, I was Principal SW engineer in a telecom startup in California, two levels below a manager
  • I started madhouse and promoted myself to be the CEO
  • During my three years with madhouse I worked and networked with lot of other CEOs / VPs / Owners / Partners of other companies
  • After three years madhouse was acquired by Seventymm and I joined as Vice President – Corporate Strategy
  • So in three years I went from being two level below manager to the topmost layer of a well known company and with quite a good salary package
  • Now while I was at Seventymm I had access to senior management jobs across domains like retail, consumer products, media. I had an offer to join as president of strategy at one of the leading public entertainment companies in India and the annual package was more than 50L
  • But I turned that offer down and decided to start the next stint of entrepreneurship – MVP
  • Other two founders of madhouse (Ankur and Nandini) saw a similar result as well. Nandini became AVP @ Seventymm and Ankur joined as VP @ Travelguru
  • I am aware of many more similar cases

Business Ideas may fail, but Entrepreneurship is risk free

No opportunity comes with surety.  Even an MBA from a top B-School might not get the best returns. There are lots of bright ideas which never reap fruits. What is important is that you should be able to separate failure of your idea from your personal failure. Its very clear, if you choose to become an entrepreneur for the right reasons, have the right approach and are determined to give it your best shot for 2-3 years and create value in your venture, chances of failure are near zero. You will learn so much and get to know so many people that even in case of the worst outcome, you will come out way ahead and will be a much wanted resource.h

The journey of entrepreneurship is the real value add for the entrepreneur. The result is a by product.

So where is the risk in entrepreneurship?

Note: Thanks for Robin Moses, AshutoshUpadhyay, Ankit Maheswari, Nandini Hirianniah and Sunil for reviewing the post.