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 …….

Startup Fair’09: Hire talent

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Image via Wikipedia

The Entrepreneurship Development Cell (EDC), IIT Roorkee is organising a Startup Fair’09, in association with CSI, NSIT Delhi, to facilitate Startups to recruit.

Date:      Saturday, 25th April’09
Venue: Netaji Subhas Institute of Technology (NSIT), Delhi

The  Startup Fair will be a platform for established startups, looking  to expand their team, to hire interested talent from IIT Roorkee and NSIT Delhi as fresh recruits (final yr students) and internees (pre-final yr students).

An excellent opportunity for Startups to reach out to the active student community. 15 startups and 150 student candidates are expected to participate in the event.
Spread the word!

RSVP:

Sudhir Manchanda
Entrepreneurship Development Cell,
IIT Roorkee
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Participating in IIT Roorkee E-summit

I am looking forward to participate in IIT Roorkee E-Summit @ 18-19 April 2009.  I am not taking my laptop, it will be a good break from my regular schedule, campuses are always good places to spend time at, students are so full of energy.

I am doing quite a few things as part of the event:

  • Giving a talk  on “Accelerating your Startup“,
  • Participating in a panel discussion  “What investors want?
  • Mentoring startups in the “Mentoring Clinic
  • And judging finals of the B-plan competition – ARTH

If you are planning to attend the summit, lets catch up this weekend @ IIT R.

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Here are my notes for the talk on Accelerating your Startup, would love to get your inputs as well.

  • Get out of planning and discussion phase
  • Commit to deadlines
  • Make decisions
  • Execute, execute , execute
  • Translating dreams to idea
  • The art of zooming in: entrepreneurs always start with a grand vision, the art is to zoom into a small part of the vision and start by doing it well.
  • Cost management,  Time management  (use tools like : spread sheets , desksway , white boards)
  • Force yourself to release / launch fast
  • Go get real users ->improve their life
  • Start efforts to monetize the users
  • Its possible to apply agile techniques to all parts of your business ( 2 week release cycles)
  • Ensure Quality, quality comes with care. Build products that are dream come true for your customers.
  • While building your products, go around with your laptop, show it people in in cafe – get feedback, talk about it
  • Measure, Measure, Measure – what can be measured can be managed
  • The winning formula: 10L and 12 months
    • Upfront capital expense : 2 L
    • One year running expense @ 50 k / month = 6 L
    • Buffer: 2 L
    • Ensure revenues of company are higher than 50 k / month before the end of 12 months
    • You are cash flow positive, no dependencies on investors
    • You have got people to pay for your service / product – you are in good company (All of the long lasting tech companies figured the monetization very early : apple , google, ebay, paypal, MS, amazon , skype)
    • You have survied 1 year – you are on your way to success

First time entrepreneurs (FTEs) – Building businesses in India

Just read the couple of articles written by Paul Graham : Y Combinator (answers what exactly does YC do?  or  Seedcamp, Techstars, MVP etc ) and Equity (explains why should you give 5-6% equity to a program like YC)

The thoughts expressed got me thinking about how should First Time Entrepreneurs (FTEs) go about building businesses in India. While a lot is in common between the approaches of YC, SC and MVP there are a bunch of things unique to the Indian Ecosystem which FTEs should consider.

Uniqueness of India

First things first, only during the last 10 years India has started seeing bootstrapped or garage startups by talented, educated, experienced and passionate folks who dont have access to a lot of capital but have the skills, will to solve problems and the staying power. The number of successes out of these have been limited and have not been really publicized for folks to get inspired by or learn from.

The VC industry is just about 8-10 years old in India as compared to 50-60 years in US and Europe; among them majority of the funds in India are under 5 years old. VC being a long gestation industry we are a good 5-10 years away from seeing major VC success in India. Most of the firms are focusing on the existing pipeline deals in the market and there are quite of few of these available – companies by serial entrepreneurs, companies started by Executives (CXO, VPs) from large companies, some of FTE companies where the traction is fairly significant, also since PE sector has performed very well and the bigger funds are shifting time and money to PE  deals. Clearly all of the above are the right things to do for the Indian VC firms, since the firms need to perform for their investors. None of this directly supports the FTEs, which is where the gap that needs to be filled in.  We need to create new pipeline of deals that will become successful startups and will feed into the VC pipeline 1-2 years later. That’s the role folks like MVP, iAccelerator, Upstart.in and others are attempting to play.

Another dimension of difference is IT / internet. The penetration of Internet and PCs in India is quite limited (9 computer for every 1000 people, as compared to 700 for every 1000 in USA). On the other hand the awareness and usage of IT in companies, specially SMEs is limited as well. There are a lot of other fundamental needs to be fulfilled in India (remember we are a developing country).

FTEs in India: What to focus on ?

First thing to ensure is to build a cash flow positive business within the initial capital that you have managed to raise (self, friends, family, fools). Keep lowest possible costs and create early revenues. Expenses should ideally be below 50,000 INR and in no circumstances higher than 1,00,000 INR a month.

Dont think of funding as a validation for your venture. Be prepared to wait longer, to build your business to the 50-100 crore revenues in 7-10 years, with VC funding coming after 2-3 years of being in business or no VC funding at all. If this does not appeal – don’t do a startup.

Internet only business models targetting indian market are not going to viable for atleast 2 years ( or more). View internet as a cheap way to build products and get the initial users with zero marketing budgets. From day one build alternate channels : mobile, call center, SMS, kiosks , shops , sales team into your model. Use technology as a enabler to drive costs down and to drive quaity upwards, but do not depend on customers using it directly via internet.

If your idea only lends itself to internet, think about doing it for developed markets like US and Europe.  India still has lower costs and we are very bullish on build here – sell to the developed world model.

So while you take into consideration the universal wisdom of building businesses, paying attention to the uniqueness of India can make an big impact on the outcome of your venture.

Run lola run!

Few days ago I stumbled onto this presentation by Mike Cassidy on “Speed as a primary business strategy”.  I guess all entrepreneurs do know this somewhere inside. But the presentation captures this message in a brilliant manner. Enjoy it! Also check out the mp3 here pieced together by venture hacks.

The Process

Ankit shared this excellent post by Seth Godin. Seth makes a very subtle but extremely powerful point about “The Process”.

  • of understanding people
  • of getting things done
  • of knowing that “leaders are servants”, the more people you lead the more you are serving
  • of understanding that “no idea is so good that it can not be improved upon”
  • of practicing humility and understanding that “humility disarms”
  • of looking at fundamentals while solving problems
  • of breaking a complex problem into simpler, smaller pieces
  • of not second guessing everyone who works with you
  • of making small checking list of things and crossing them one by one

(These are points that came to my mind about “The Process”)

Launching “Start-up Evenings”

The MVP gang is launching “Start-up Evenings” with the support of a few firms who are involved with start-ups and a lot of friends in the community.

The First edition of Start-up Evenings will take place on 20 Jan-09, Tuesday in Mumbai.

Concept

The idea behind “Start-up Evenings” is to facilitate “close interaction” between founders of young companies and experienced folks, allowing the founders to learn from the champions (the tricks and hiccups of the trade), and to network.

The event will be monthly, with one edition each in Mumbai, Delhi and Bangalore.

We did some sessions as part of our founders meet and saw that it was extremely useful for the founders and hence by popular demand decided to conduct regular “Start-up Evenings“.

Format

  • Event will be attended by 10-15 founders of start-ups from the MVP portfolio, partners portfolios and other founders
  • There will be one guest of the evening who will share his / her experiences and interact with the start-ups in an informal manner
  • The guest will typically be an experienced entrepreneur / investor / a person from the start-up ecosystem
  • There is no fee for attending but participation will be only by invitation
  • No more than 15 participants will be allowed to keep the focus of the event
  • Typical timings: 0700 pm – 0900 pm

This is a non-profit initiative and we would love to hear from you if you would like to collaborate on it. There is no requirement of any sponsorship for these events, since we are going to keep them quite bootstrapped. Some of things which can be help would be:

  • A conference room / venue at your office for these events once a month (Mumbai, Delhi, Bangalore)
  • Arranging / suggesting speakers
  • Spreading the word amongst start-up founders
  • Anything else

Feel free to share your thoughts / feedback on the initiative. If you are interested in helping / contributing in any way, write to nandini AT morpheusventure DOT com

MVP founders meet : First Edition

I am looking forward to participating in the First Edition of MVP Founder’s meet. Its a full day event being held at  Fortune Select JP Cosmos, Bengaluru (Off cunnigham road) on 17 December, 2008.

Participants include our portfolio founders from Delhi, Mumbai and Bangalore, a couple of other startup friends of MVP and a few well known folks like:

  • Subrata Mitra from Accel . A very active and succesful early and growth stage VC firm working with startups in India, USA, China and London
  • Sharda balaji from Novojuris - a legal firm with special focus on working with Startups
  • Indus Kaitan, Chief Plumbr of Sezwho. Indus has spent 10+ years in building startups in silicon valley . SezWho is a universal profile service for the social web – a popular startup in Silicom valley.
  • Harish Gandhi Alok Mittal from Cannan. A leading VC Firm working with startups in India, US and Isarael. (Update: Harish came in place of Alok and we had a great session with him)
  • Ananya Majoomdar from Times Private Treaties

Agenda:

  • Internal Sessions with MVP companies
    • Duration: 30-40 minutes each
    • Format : Interactive sessions
    • Goal:
      • Give the presenting company founders LIVE access to brains, thoughts and ideas of 10-15 peers.
      • They can gather a lot of fodder for thoughts and get inputs on some key business problems
    • Part 1 : Presenting company talks about their Business (5-8 minutes)

      • Whats the product
      • Whats the market
      • Whats the team
      • Present status
      • Plans going forward
      • Key Challenges / important business problems they are working on
    • Part 2: Other company founders will provide (25-30 minutes)

      • feedback
      • ideas
      • views
      • potential solution to the mentioned business problems
      • ask questions
      • point out risks etc
  • External Sessions with Investors / Entrepreneurs etc
    • Format: Informal interaction, Q & A, discussions, know each other etc
    • Number: 2-3 Sessions
    • Duration : 60 minutes each