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In the last two months of 2010, I participated in a number of meetings with founders of startups – as an adviser, reviewer or investor. Interestingly in nearly every one of these meetings the same questions kept coming up.

In particular four different companies  -  two nascent startups and a couple in their early tweens – were facing eerily similar issues. Despite the startups being in very different spaces,  the varying ages of their endeavors and having  smart and motivated founders – they were all trying to come to grips with the lack of market traction. This despite a great deal of time spent talking to prospective customers, partners, building and launching working prototypes.

I must admit after the first couple of meetings it appeared they were having different problems. In one, a marketplace that was not getting suppliers nor buyers off the starting block, in another focusing on the technology to the exclusion of all else, and yet another having a solution looking for a problem. However by the time the fourth meeting rolled around it was plenty clear, that all of them required a sharp focus on answering the question

“Who is your target customer?”

and more importantly,

“What pain are you trying to solve for them?”

Two years into our own start up, we find ourselves returning to this question with reasonable – some would say troubling – frequency. When we got started on dog-earz, the newsletter tool for the rest of us, we defined our target customers as “marketing & sales folks in SMBs” and the pain we were trying to solve for them was How to keep in meaningful touch with everyone in your Rolodex, even if there wasn’t a deal on the horizon.

Of course it helps, if your target customers actually exist (ours did) and are accessible (a little more difficult) and truly felt this as a problem (not clear). Our solution seemed more a nice-to-have vitamin rather than make-my-pain-go-away Aspirin. We hung in there, as we felt we were target users ourselves. With time it was clear that we’d better solve their pain rather than imagine that they will behave the way we’d. Seems obvious in hindsight, doesn’t it?

Things are not always as evident as we’d like them.  I once had an opportunity to talk to Phanindra Sama, founder of redBus.in about his understanding of what pain they are solving for their customers.  Phanindra shared his view that the pain his customers felt was not in purchasing bus tickets – as I’d have thought. In fact it might still be more convenient for a traveler to call someone to hold a ticket and pay for it at time of boarding – only one phone call needed, but it is the absence of reliable information – as in how many buses, when and at what price or location will leave from Bangalore to Chennai (or better yet from Jalandhar to New Delhi?) that was the customers’ pain point.

Ask yourself these two questions, repeatedly and validate them by getting out of the office and asking your target customers about their pain points. Once you nail this down it makes, at the very least, decision making a whole lot easier. Knowing this is of course only a good start, but not knowing can kill your business.

“Son, businesses can succeed or fail. Because your business fails doesn’t mean you have failed!”

My father said this to me, one evening as the two of us sat down to discuss how the startup I headed was doing.

For a little over four years I had been running my startup. Months after we got started, the dot-com bubble peaked and burst. We had also chosen a technology, that everyone felt would not take off despite the initial hype. Our two nearest competitors where both American companies – one, also a startup, that had raised about 100 times more money than we had and the other a listed company with well over a 1000 customers. We’d over committed to the first three customers we’d acquired – miraculously in three different continents – and ultimately failed to deliver outright or were so late as to be not useful for the customers.

We had borrowed money from the bank (another of my father’s favorite piece of advice – debt is a good thing) and from family including my father. Just the previous year, we had to cut back on a rather ambitious – and poorly thought out – plan to design chips and keep our focus on software. We also had to let go nearly fifteen people, whom we’d hired in a burst, without much attention to culture fit, while persuading the people who remained to take 10-20% pay cuts with no commitments on when these cuts would be reversed.

This was also a time when I was commuting – spending two weeks every other six weeks in Bangalore, whilst my family lived in California. So between hotel rooms and my sister’s house, I spent many a night tossing and turning, worrying how we were going to make payroll that month and not sure if we’d ever turn the corner.

To add to the pressure, the senior staff, who’d been putting in 10-12 hours a day were buying first cars or homes incurring debt, getting married and now had spouses who now wondered what they really did. Once when we had to send a key engineer to a customer site overseas, we packed his new bride with him – so that they are not separated within weeks of their wedding! We’d had actually celebrated with a cake, when the company made its first million in revenue but ten minutes later had to dash off to dampen new fires.

This story did have a good ending. Despite ourselves we turned a small profit in year five and a real one in year six. We sharpened our business focus and were gaining traction.  Newer challenges emerged as pricing pressures drove deal sizes down, competitors were gobbled up by customers in some instances and the market adoption was slower than we anticipated, and the payroll bill continued to grow each year. Whilst my partners and our immensely committed employees along with some luck, brought us to a successful and profitable M&A conclusion, it was my father’s words that kept me going.

“Son, the failure of your company doesn’t mean you have failed.”

Image by Ravages via Flickr

Entrepreneurship 2.0

What should all of us who care about entrepreneurship and helping it thrive in the Indian milieu do? There are three simple steps I believe we can take.

• Story telling Collect and disseminate stories of entrepreneurial success at every forum and opportunity. Blog about it, write it up in a newspaper, share it at meetings. Just as the story of Dhirubhai or Karsenbhai inspires, stories such as Girish’s or Balan’s can ignite others to follow them. We need more stories of success, small and big, to make entrepreneurial success a realizable dream for more Indians. Every time we read a story of someone who’s made it big, we better find and tell stories of five others who have made it small. Demand that our newspapers and magazines celebrate the little guy as much as they do the big guy.

• Encourage During and just after the Kargil war, there was a spurt of public appreciation for soldiers and the men (and women) in uniform. Even today when I travel in the USA, I see strangers walk up to soldiers in uniform, in airports or shopping malls, and thank them for doing their job. When was the last time we did that with any entrepreneur or business owner? The gentleman who runs the tyre shop with its six employees may well be tomorrow’s Kishore Biyani with the right breaks. Ask how their business is doing, listen to their story and appreciate them openly and explicitly.

• Educate Each of us has skills that if we share with entrepreneurs will help them get ahead. It could be teaching them how to raise capital, hire senior staff, make better presentations, manage their cash flow or land major accounts. This education is best accomplished by doing. “Show – not tell!” as good writing coaches say. We can do this even by creating forums for bringing entrepreneurs together. Just by sharing each others experiences they can learn from one another and most importantly gain the insight that they are not alone.

Now as three of us embark on our latest entrepreneurial journey at Zebu, we are once again those little guys starting out (though not in a garage but in a small house). I know we could certainly use all the encouragement, education and story telling to stay the course.

Image by laurenfarmer via Flickr

“We’d like you to come on board as a founder.” After the first few seconds of excitement and dare I say, exhilaration, reality sets in. “Can you explain to me what being a founder means?” Does being a founder mean, like a parent, being present when conceived? And will it seem much like a parent, largely thankless, picking up things behind your offspring and acting as a source of funding for them? Sure you feel good about that first finger-painting up on the refrigerator, or the #1 Dad doodad on your office wall. But when you are up mopping their vomit or worse and staying up all night hoping the fever will subside is it worth the trouble?

My answer is a resounding yes!

And its always better to found a company with others than by yourself. With that said, it’s worth keeping in mind, your co-founders are likely where you will get grief when you least expect it. In almost every startup I have been part of, founders falling by the wayside has been a feature. Before you conclude the problem was me, I am in good company. When Paul Graham spoke at the recent Startup School 09 – he pointed that all the entrepreneurs he spoke to felt picking the right (or rather not picking the wrong) co-founder was the most important lesson they learned.

The toughest lessons I learnt about co-founders, was there can be so many unstated expectations, particularly when it comes to issues around your own evolving roles. Founder, partner, core team member, executive management – words that initially are used interchangeably and seem just so many words. Yet they have so many different meanings and nuances, as I learnt the hard way. Having been a part of five start ups, two as founder and three as early-to-late senior staff or management member, I have been at all ends of this expectation spectrum.

I’ve loved being a founder and will share the ways I have found to deal with the finding, keeping and savouring co-founders in my upcoming post. Share with me your experience with being a founder, what it meant to you and why you would or wouldn’t do it again!

“Stop worrying about who’s President, what the market did and FOCUS on your business & brand.”

Yep, focus – say it again – FOCUS is the one thing you need to succeed as an entrepreneur. If you thought you needed it before, the recession has made it a burning need as the economy totters, markets tumble and Cassandras abound. You’d think it would be easy to keep this one word in mind and hence stay focused.

Entire books have been written on the subject – most notably the eponymously titled one by Al Ries. The history of business is littered with not merely individuals or departments but entire companies losing focus. So this is harder than it appears.

It’s easy to understand why we lose focus, particularly in entrepreneurial setups. The passion and dynamism of being entrepreneurial is the first cause for the loss of focus. There’s always some new problems to be solved, a new customer to be served or more cash to be brought in. This makes it hard to say NO to a lot of things.  So one YES at at a time, you get another ball in the air, and soon there’s no time to do things as well as they need to be done. Worse yet, you keep falling behind and losing ground.

Staying focused requires us to master just one word and that is “No” Doesn’t have to be NO, screamed at the top of your voice, or even a “Hell no!” hissed out the corner of your mouth. Just a plain and polite no would suffice. Everything else that lead you to be an entrepreneur in the first place will kick in, once you focus. So take Gary’s advice and quit worrying about anything other than staying focused on your business goals!

For the two of you who may have not heard of Gary Vaynerchuk – here’s a quick blurb. Gary, who by age 30 had grown his family’s small wine business into a $50M dollar business, knows a thing or two about building successful businesses. And that was before before he started “Wine Library TV” that has nearly 100,000 daily viewers.  Gary has become a much sought after speaker on the matter of personal branding — patience and passion, he exhorts are critical elements to building your brand and business. But that’s matter for a whole another post.

Talking of early stage funding I finally managed to get off my duff and to the NSRCEL (NS Raghavan Center for Entrepreneurial Learning) at the Indian Institute of Management in Bangalore. My erstwhile partners in entrepreneurship, Baskar, KAS and Vidhya had just moved their new startup Amagi Technologies into the incubator at NSRCEL. Never one to pass up on a free meal, I dropped in on them during lunch time to catch up on what’s happening with their startup and their recent whirlwind tour of all the major VCs in India. I hope to have Baskar on here as a guest soon and will let him share his insights and learnings in his own voice.

The realization that dawned on me in the meeting with him, was the sheer number of bootstrapped startups that our friends and acquaintances have launched. These include:

Amagi Technologies – local ad syndication for digital TV;
Baskar, KAS, Vidhya; bootstrapped – looking to raise a round

diMobili – [in stealth mode]
Ganesh, Rajesh, Michael; bootstrapped – looking for angel funding

HealthcareMagic – consumer medical portal bringing doctors & consumers together
Kunal Shah; bootstrapped looking to raise a round

loconomy - finding, using & rating of local (neighborhood) services
Sanjay, Gaurav, Pallavi; bootstrapped

RightFields – business automation & ERP solutions around Microsoft AX
Raghu; bootstrapped, has revenue and looking to raise capital

Most of these are first time entrepreneurs and a couple including Amagi and HealthcareMagic are going around the entrepreneurial whirl for the second time – all of them have been India based, as elsewhere people wondered if it is foreign returned Indians who are doing a whole lot of bootstrapped startups. Only diMobili is still in stealth mode, with others having at least a website if not actually operational or a couple actually making revenue. I hope to get the founders of these startups visit us in this blog, sharing their thoughts and journey in the near future.