Category: Venture Capital

Common Problems Startups Face – A design thinking outlook

Common problems startups face – A Design thinking outlook

I have been directly associated with startups since 2006. That’s when I started my career as a member of a venture capital investment team. All the way to my recent years consulting them and young businesses, I have heard a multitude of problems that startups face. Problems that can largely be categorized under two main causes.

The first one of course, being investments.
The second, being the lack of traction, or growth in business.

With regard the problem of funds, you could further break it up in to funds you must have, and funds that are good to have.

Literally all of us are, more often than not, influenced by awe-inspiring startup stories. About those startups in the world that seem to be on a blistering growth path. With people and funds literally queuing up for an opportunity to invest in them.

Watched the movie ‘The Incredible Hulk’? The Hulk and the Abomination in that are like those few startups that receive disproportionately high amounts of funding.

Everyone is not like them. And even in their case, of the two, only Hulk was relatively stable with the superpower. The Abomination, as the name goes, became that way because of his lust for super-strength to beat the Hulk.

Similarly, even if all startups could be funded like that, or like Uber and PayTM and Zomato and others have been, there is no guarantee they will succeed. Because making a business stable takes managing a lot more variables than merely the investment one.

Which brings us back to the other alternative – funds you must have.

This is the basic minimum investment that you would need to get your startup rolling. It isn’t too tough to calculate it. Just make sure you have sufficient buffer. And keep checking those levels so you don’t realize it’s bad only once you’re broke. The advantage of this mindset, is that even if external investments never come, your startup will be built on a solid foundation and a sound business model. That, as opposed to one of hyper-experimenting, as is sometimes the case with super-funded startups. Take the case of TinyOwl hiring and almost immediately firing hundreds of enthusiastic freshers back in the day. Or Ola paying USD 31.7 million for FoodPanda a year and a half ago, only to fire a lot of the staff and suspend its operations recently.

While such news pieces might be good to hear, they are often not something to be proud of.

A bootstrapped startup will have its share of proud moments too. And they will be far more grounded and not the kind that could be easily taken away, unlike the case with some over-funded ventures.

Now let’s look at the other main problem area of startups. The lack of traction or growth.

In my book, Design the Future, I mention what is to me, a wonderful example from both an investment angle and a strategic one that depended solely on the understanding of customer needs.

One portfolio company whose growth my boss and I used to oversee, was in the car rental space. Around 2009, it was on its way to be the largest player in India, right on the heels of Meru. Meru was then leading the pack in terms of size of fleet.

However, what was interesting, was that Meru’s business had been built largely on debt. Ours had been built on equity. Which meant we were profitable sooner, and could scale much faster. Meru had just turned profitable around 2009-10, if I remember correctly.

And back then, our portfolio company was already onto the model of partnered fleet. That is what Uber is all about now. Our company was collaborating with small tourist vehicle operators to add their fleet and drivers to their own, in a revenue-sharing model.

Now think about this. A company founded in 2006, which was already employing a model that we in recent times popularly know of as Uber, what as of today, has a market capitalization of USD 69 Billion! And Uber was founded only in March of 2009 (conceptualized in 2008).

So what prevented our portfolio company from being the one valued at USD 69 billion?

In hindsight, a lack of better understanding of the stakeholders in the ecosystem, is my guess.

Our portfolio company and other players back then were perhaps used to a certain customer price level and profitability that they enjoyed in a tried-and-tested pan-India market.

However, perhaps we failed to see that we could considerably reduce the margins and incentivize the partner ecosystem, in an effort to gain massive scale.

And with customers, it is only in very select areas that if we offer something at a lower price, they won’t take it. But certainly not with transport.

So, Uber carpeted several countries with the initial attractive pricing, and more than encouraging partner revenue-sharing and incentives.

And companies like ours, that didn’t think huge enough, shrunk into insignificance in that particular space at least, which they had ruled for some years till then.

Putting investments and a better understanding of the stakeholder ecosystem together, it is not necessary that every business and every idea has to be Uber-sized!

You can as well remain small, exclusive and yet thriving in a small or select few areas or geographies, if that is your business vision. Or, as is the case with Uber, you can be the most recognized brand in ground transport.

What is most important, is to first decide where on that spectrum you want to be. Then you need to find out (not in meeting rooms, but by spending time with stakeholders), what their likes and dislikes are. What drives them, what their profit expectations are? And how flexible are they on pricing; or, is there a better way you can offer them what you do? Something that might completely be poles apart from how you offer it right now.

Scenarios in the startup ecosystem are limitless. And so are the possibilities.

Originally written for NODD app and posted here: link

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If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.

And you might find my book, ‘Design the Future’ interesting. It demystifies the mindset of Design Thinking. Ebook’s on Amazon, and paperbacks at leading online bookstores including Amazon & Flipkart.

Venture Realty Capital

Venture Realty Capital

Back when I worked in the venture capital space, startups always came seeking a lot of investment. Often far more than they needed. We would sit with ventures we thought had some potential, and during the process, break down the investment needs. Eventually, we would arrive at a number that was close to what we felt they really needed. And that amount would often be far smaller than what they initially sought. In pre-dot-com Silicon valley terms, we removed the Ferrari and frills from the investment sought.

In my current consulting practice, founders sometimes tell me how investors nowadays really shred the business off of anything heavy. How they like to invest only in the brand if that’s possible. Even pushing the business owners to hive manufacturing or anything else even moderately heavy to another business entity. To an entity they don’t invest in, but which might eventually compete with other companies to supply to this brand.

Obviously logical. Except when it’s not. Sometimes, investors might lose clarity and hive off functions that might be critical to the eventual success (or failure) of the venture. And while restricting investment into a lean venture makes financial sense, it often seems greedy from a founder’s point of view.

Investors, even the most aggressive of them, look for anchors. Anything that will help them measure (or value) and hopefully de-risk the investment with reference to their firm’s or internal reference scale. Basically to give them a level of comfort or confidence in the investment opportunity. That’s of course, when they haven’t let blind optimism cloud their decision. Anchors could be anything from it being a venture floated by a seasoned serial entrepreneur, or the founding team bringing in a lot of relevant experience, big name clients already buying from this startup, a patented product in a big emerging market, etc. It could even be a model that has proven itself in another market.

However, in recent times, given the inclination of venture capitalists to invest in startups that are extremely lean, it is a little surprising to find ridiculous amounts of money being pumped in by investors into co-working spaces.

According to Wikipedia, WeWork (now The We Company) managed 10,000,000 square feet (930,000 m2) of office space globally. US-based Industrious has raised $142 million to date. Of that amount, it raised $80 million last year to double its co-working sites in the US to 60. In October last year, India-based Innov8 raised $4 million. It boasted of 4000 seats across 13 centres in domestic cities. The We Company has raised a heart-stopping $12.8 billion till date.

Even if these firms have artificial intelligence doing matchmaking and improving the quality of business networking that happens, which they don’t – it would still not justify the quantum of funding. And certainly not so if they don’t own any of the real estate that they sublet to businesses and solopreneurs.

I just hope all the investors are aware of that before investing. Because without any underlying realty, the investment is all about creating fun work spaces, events and workshops. In some ways, that could be comparable to a nice bar that organizes regular gigs, has a familiar crowd, and, and that is it!
Sure that’s worth a lot, but worth investing $12.8 billion dollars?

In many ways, it feels like a Facebook. Initially fun for users, but as the founders got ridiculously rich, all it served users beyond a reducing benefit of keeping pace with the lives or events family and friends, is be an advanced, high-tech, time-killer.

Is that what WeWork might be too? While giving members a wonderful feel-good environment, is it really serving that purpose well? Even offering a support ecosystem to businesses via these ventures seems like a complicated (and probably not very effective) way to add value.

VC’s have moved away from investing in core assets. Even to the point of stripping the business of anything non-core, including manufacturing. But they are alright with investing boatloads into tech-using real estate companies.

Venture capitalists seem to have traded the “venture” in their names by betting on owned or rented real estate as opposed to their fundamental objective of funding new age ventures. Sounds messy.

If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.

And you might find my book, ‘Design the Future’ interesting. It demystifies the mindset of Design Thinking. Ebook’s on Amazon, and paperbacks at leading online bookstores including Amazon & Flipkart.

Venture Capital Elevator Pitches

Venture Capital Elevator Pitches

I left my job at a venture capital (VC) firm in 2010. After freelancing for a bit I then worked with a high-technology company in the robotics space. I then started my own strategy consulting practice, which over the years has matured into an interesting blend of design thinking, management strategy and human behaviour. Three fields I am keenly interested in, and which I use to help companies. I help them understand their customers and customer needs better. I also help companies tackle complex problems or pursue opportunities and grow.

VC funding, business plans and elevator pitches however, are areas a lot of clients associate me with. My initial list of consulting services didn’t even factor business plans or elevator pitches. However, along the way, by heavy demand, it became a prominent service. I continue to get a lot of inquiries for elevator pitches. There probably will never be a shortage of companies aspiring to get their entrepreneurial dreams equity funded.

However, I have observed one common aspect across a lot of clients and prospective clients. It is in their view of what an elevator pitch is. Or should be. Given the overly enthusiastic, almost orgasmic effect that venture capitalists have on a lot of business folk and new entrepreneurs, they tend to assume that that’s what an elevator pitch is about too. That the brief time the pitch gets in front of the investor, with or without the entrepreneur actually being present, should blow their mind. And to achieve this, they start thinking like advertisers. They think loud. Or blingy. Or just outright abstract.

They assume the pitch needs to be all glitsy and filled with high quality images, video, and graphs! That’s it! And on occasion, it has been tough convincing them otherwise. Reasoning with them that having been an investor, I might probably have a better sense of what might bring out the core essence of a venture. And what might be outright distracting, or worse, confusing. But it doesn’t work often. They are so enamoured by a faceless and nameless investor who probably frequents their dreams, to reason.

Sometime last year, someone made Uber’s first elevator pitch public. For those working on their elevator pitches to seek investment, and if you haven’t seen this already, UberCab – Dec 2008. How many captivating images do you see? They seem to me like just random pictures pulled off a Google search. A few phones, a few cars. No plot, no sub-plot, no theme, nothing. Just a vision and a compelling business proposition and a plan on how to make it happen! Nothing else matters.

I have been quite blunt with clients when it comes to delivering a no-nonsense pitch. However, I have had my pitches go to design folk, artists, and even sent to experts in digital and web design to give them a ‘makeover’. And I’ve had others turn my pitches upside down to present what they believe is a better way to ‘pitch’. Only to then come back and use one previously made by me.

The reason being, at the end of the day, even if some people don’t agree, venture capitalists are humans too. They have similar attention spans. They aren’t fools not to spot a great opportunity, even if it is scribbled clearly on a restaurant napkin. And they certainly aren’t fools to accept a mediocre vision or action plan just because it was in a ‘beautified pitch’.

This is the third of a series I’ve written regarding entrepreneurs and VCs. In case you missed the first two, they’re here: 1. What’s Your Profession and 2. The Entrepreneur in a Venture Capital World

Hope you found these useful.

My attempt at sketching a puzzled investor.

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The Entrepreneur in a Venture Capital World

 

The Entrepreneur in a Venture Capital World

Imagine a food connoisseur has a vision of opening a restaurant. Selling a carefully crafted list of delicacies, whose preparation has taken years to refine. This aficionado has thought of everything. The cutlery that would highlight the preparations, what the entrance to the restaurant would be like, the kind of chefs he or should would need. Everything.

Now imagine, you, as a customer, visit that restaurant. No guarantees you’ll like the food there. Or you might have preferred a better selection on the food menu. Now let’s say you, and your friends or family who have accompanied you, get to have a say in what the menu should be. Just because you’ll be paying the bill. Or simply because a local bank or relative bankrolled the entrepreneur’s dreams, they want to have a say in what food should be served.

Isn’t this the case with the venture capital investment ecosystem? They take a seemingly great idea, imagined by a dreamer. And after some funding, in an urge to “scale” it, they put it on steroids. Often at the cost of the original dream and vision. And with the VC community, their return timelines are shrinking, so their portfolio mutation is growing rapidly. They don’t care about profits. As long as there is sufficient sales and buzz, they’re on track. As opposed to keeping fund and investment choices a little more practical. So as to build a more, bottom-heavy business. On a steady foundation.

In a way, it would compare with a risk in the investment ecosystem called Maturity Mismatch Risk. This is a capital management situation that can disrupt business cash flows. It’s seen when assets held to meet future liabilities are not well aligned from a maturity time point of view. Short term assets should deployed for projects with quick returns. Otherwise, they could cause a financial crunch in the short term. ‘Entrepreneur-Investor’ relationship could be looked at in a similar way. Where an investor who is only there for a few years, sometimes changes the entrepreneurs long term strategy to suit their investment goals.

Now this might seem to contradict my VC related post from earlier this week. One where I said that the VC space seems to have more left-brained, finance, cold-numbers people, and less right-brained, creative ones who would appreciate a good, world-changing vision and back it up in a way that it really changes the world permanently. However, they are two sides of the same coin. Business models do take the world forward. But that doesn’t mean every other potential idea must first blow up with over-funding and investor control, and then explode! And all the while, the disinterested, minority stake-holding promoter is busy with other startups he or she has invested in.

Imagine a great idea and promoter being backed by an investor who actually sees the impact of the idea from the promoter’s perspective. That means, not just scaling an idea, but rather, letting it grow to have the impact it was intended to. Then maybe some of the great entrepreneurs wouldn’t actively shun investors and patiently bootstrap their way to world-change.

It isn’t just about the idea. The entrepreneur’s vision of how the idea pans out matters just as much.

I happened to see this post on LinkedIn when I was writing this post. While decisions like come on one end of the world-change spectrum, a lot of venture funded companies aspire to be on the other. In that they would like to achieve a strong global presence with the least marketing spend. And most importantly, make astronomical stakeholder returns. For the VC community, the ideal place lies somewhere between the two ends of this spectrum. Because in many cases, the entrepreneur sets out on a well-intentioned mission to fix a huge problem for a customer base.

Image source: link

Again, it isn’t just about the idea. The entrepreneur’s vision of how the idea pans out matters just as much.

The title image is that of a vulture. When I worked in the venture capital space, people sometimes referred to the community as ‘vulture capital’. Nowadays, looking at some investment decisions and entrepreneurs who focus more on personal investments rather than their own ventures, looks like vulture capital is contagious.

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What’s Your Profession? Did You Bring More Soldiers?

What’s Your Profession? Did You Bring More Soldiers?

In 1970s, according to the TV series Mindhunter at least, the FBI was filled with accountants & lawyers instead of more relevant experts in areas that mattered. That is, in place of behavioral analysts.

That seems to have been the case with the Indian Venture Capital industry too for some time now. They’ve strangely been recruiting a concerningly high number of Finance and CA folk. Instead of hiring more right-brained folk who can understand customer needs, likes, dislikes, and the customer experience. Those who can appreciate an entrepreneur’s vision and passion, and perhaps the grueling journey she or he has been through to get there.

Numbers don’t build businesses. They’re the result of it.

If the venture capital sector doesn’t have enough people who can understand a customer’s journey, an entrepreneur drive and vision, among other non-numerical things, just processing numbers will only make so much of a superficial impact. And bring so much of a multiple-x return on investment.

Look at the Indian funded startup space for instance. It even makes one wonder if many of our entrepreneurs possess the vision and passion. Perhaps how Flipkart is try to go after numbers, while Amazon is increasingly trying to improve the customer experience. Or how and why Uber might have logically entered the food delivery space? And more importantly, why did Ola (I hope I’m wrong!) seem to acquire Foodpanda in a knee-jerk reaction to Uber? Or how, while in India we still get mobile phones and media content literally on the same day as any developed country. When it comes to business inclination to improve the customer experience though, we get by with the bare minimum. Why?

Why can’t investors identify truly driven entrepreneurs and be able to align with the entrepreneur’s vision to create an impact? Does pushing an entrepreneur into super minority stake keep them sufficiently invested in the big plan? And is it possible for the overpaid founder of a funded startup with multiple investments of his or her own in other startups, early in his or her own startup journey, to create what people call a unicorn?

Focus! Focus! You need the right people, adequately motivated, to do one job! And to do it right!

Reminds me of a scene from the movie 300. When Daxos and his army meets Leonidas and his brave 300. Have a look!

Maybe there’s a difference between saying ‘customer service’ and doing what is necessary to delight?

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Venture Capital – Between Returns & Fund Sizes

Interesting article by Jason Rowley on the lack of a correlation b/w venture capital fund sizes & fund returns.

https://mattermark.com/venture-capital-just-another-boring-asset-class/

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Startup Service Aggregators

Startup Service Aggregators
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Image: source

Startups with business models revolving around aggregating services might have their days numbered. Unless they offer a significant additional benefit (than the underlying services they aggregate) to end consumers. Because without it, they’re just tech-backed middlemen looking for their share of the pie for connecting parties. This might be a steadily tough ask in an increasingly connected world.

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Think A-Team: For the Design & Strategy needs of Young Businesses

Think A-Team: For the Design & Strategy needs of Young Businesses

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Image: link

Hi, all you enterprising entrepreneurs,

I am pleased to give to you, ‘Think A-Team’, a growth partnering service for all your business strategy needs.

The intention behind it, is to help you make your business challenges a little less challenging. And to work with you on growing your business faster & better.

The services I have selected to offer, are a result of nearly a decade of close working with entrepreneurs and young businesses. While the portfolio of services will evolve with time, what will remain constant is reliability, effectiveness, accessibility and affordability to young businesses that have had few, if any options as far as growth partners go.

–Think A-Team–

Give it a try today! And I’ll look forward to working with some of you enterprising folks on building your businesses for you.
Have an awesome weekend!!

R,
Shrutin

Look forward to connecting with y’all on LinkedIn and/or on Twitter.

Bubble Telescope

Bubble Telescope

Is there a bubble forming in the Indian startup scene?

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The Hubble Space Telescope

Is the Indian startup space fast becoming a bubble? Let’s take a closer look and find out.

At the Goldman Sachs technology conference earlier this year, leading venture capitalist of Benchmark, Bill Gurley expressed concerns to attendees, of a possible bubble, caused by some over-valued startups in the US. His concerns were directed at the young companies that had almost magically reached over a billion dollars in valuation, which according to him, was largely fueled by investor fear of missing out (or FOMO, as the VC community knows it). He said that investors were making investments of sizes previously reserved for listed companies. Aptly, he said “a founder pursuing a $40 million IPO offering takes the process more seriously today than a founder raising $400 million in private capital.”

Another reason for his concern, was the presence of public market investors like hedge funds, etc., investing in the space earlier catered to only by venture capitalists. Bill isn’t wrong in saying that hedge funds, mutual funds, etc., have traditionally had a different investment appetite and strategy. FOMO, clubbed with this new blend of different investor classes and styles of investing, is perhaps what is fueling his growing anxiety of a possible bubble. Benchmark has funded numerous industry-altering young companies since 1995, including Twitter, Instagram, Snapchat, and Uber, and around 250 other startups.

The Wall Street Journal’s Billion Dollar Startup Club saw at least 73 young private companies valued over USD $1 billion this year, compared to only 41 last year. Nearly half the investors in some of the most invested startups too, were institutional and strategic investors, with Tiger Global (TG is an international firm that manages hedge and private equity funds) leading the pack with 12 investments in private billion-dollar companies. TG also raised the most money last year, $4 billion to be more specific, amounting to nearly 12% of all venture capital raised in 2014. (source)

Coming back to India, should this over-investing and over-valuing in US startups be of any concern to our booming Indian startup scene that is currently fueled by online travel, e-commerce retail and logistics, classifieds, online food ordering, radio taxis, etc.? Let’s find out.

Firstly, one of those aggressive investors that Bill Gurley mentioned, Tiger Global to be specific, is also the most aggressive investor in Indian startups. In 2015 alone, TG disclosed investments in over 17 companies, investing in rounds totaling to about $1 billion. Some of its investments include a $150 million round (series H round!) with other investors in Quikr, India’s largest online and mobile classifieds portal. Then there was a series D round of $ 100 million in Shopclues, an e-commerce portal. We could argue that the exact investment exposure by Tiger Global is not known, and could be somewhat small. Or that perhaps these startups are actually worth the millions or billions they are said to be worth.

Tiger Global, among others, may have helped inflate a startup bubble in the US. But that is a significantly different market than India, with a more mature and aggressive investor community. Therefore, a race to get a piece of what is hopefully the next Google or Uber in the US might have led investors to try and outbid each other with sweeter deals to promising startups. But is TG’s strategy or tendency to overvalue being carried to India too?

In February,  a reasonably well funded ‘mom and baby’ products portal, BabyOye, also a Tiger Global funded company, was acquired by Mahindra Retail for an undisclosed sum; in the hope of boosting their own brands Mom & Me, and Beanstalk, that have not been too strong online. BabyOye raised $12 million in 2013 from investors, partly used to acquire another company (Hoopos.com). After an earlier round of funding in 2011, BabyOye spent extravagantly on TV advertising using a former movie star in the ads.

Mahindra’s acquisition to gain online strength seemed concerning, given that such a large group felt the need to acquire a small company with only 1500 followers on Twitter (now up at 2003 followers), to bring in the capability of selling online, even if the acquisition didn’t cost them much. And at a time when a lot, if not most of those products were already available on Amazon and Flipkart. Did that make good business sense, or is e-commerce happening so fast that even the heavyweights of Indian industry are feeling the pressure to jump on this bullet train?

US’s popular classifieds service, Craigslist, only had one known investor ever; eBay. And that too not for too long. And was Craigslist popular enough? More than it perhaps ever expected. In comparison, a similar service in India, Quikr, has raised upwards of $350 million so far, and we can only wonder why. To buy and sell other companies, maybe?

And just then, in comes news of a possible acquisition of the nearing-a-billion-in-valuation Housing.com, by none other than Quikr. If the acquisition does happen, it might be a progressive step for Quikr. But it also leaves me wondering about the vision of these startup promoters. With growth strategies and business direction that seems to be going all over the place. In many ways, this startup mania is turning out to be more of an exit ground for investors, rather than an effort to give the world the next great company that’s made in India.

Looking at the magnitude of investments themselves, a layman could argue that ‘the more the funding, the better’; after all, is there anything like too much money? Or for that matter, even a sky- higher valuation. Imagine the pride and respect in your social circles when they read in bold, the value of your young company. But venture capital and investing isn’t as simple. If one funding round happens at a significantly high valuation, the next round becomes that much tougher to raise, as does getting a suitable exit for your existing investors. Of the $51 billion worth of private equity deals in India from 2000 to 2008, there have been only around 30% exits, according to a McKinsey and Co. report.

Over-investing in companies brings with it, the tendency to spend it, whether it makes perfect business sense or not. As the world, and more importantly India, is getting increasingly interconnected online and socially, it is worrying to see the amount of money young online businesses are investing into expensive traditional media, with the likes of Amazon’s catchy ad, or Flipkart’s loud and confusing one, everyone’s on TV and on billboards, trying to push their way into the heads of prospective customers.

About 5-8 years ago, it was comparatively tougher for companies to scale. Building capacities, adding servers, fleet, manufacturing capacity, manpower, etc., took a lot more time and more money.

So, while salaries are much higher today, many services and business functions can also be outsourced efficiently. This allows companies to focus on core activities and scale faster. There is the evolution of analytics, contractual manpower, hired CXO’s and everything in-between available. Basically, the seemingly impossible tasks that earlier needed a small army, can now be pulled off with a small team.

All this brings us back to “how do we make sense of the heavy investments into these, still nascent startups?”  And more importantly, will such heavy spends only on marketing guarantee a successful future for these young ventures? And, is any funding being spent on better listening and understanding of customer needs? Or on empathizing with problems customers are currently facing?

The notorious, multi-billion dollar Uber for instance, has an extremely light operating model, asset-light, limited overheads, and is highly scalable. But has it done anything to address woman passenger safety in countries where it operates? Not so far. Even Indian taxi aggregator Meru (2 years older than Uber) had a panic button on the app long before Uber decided to put one there. Uber waited till after unfortunate incidents occurred, before putting a feature that was so logical and obvious. All that funding seemed to be spent on technology and marketing. Then why do customers still shower so much love on services that don’t feel the same way about them?

Between aggressive promoters and aggressive investors, focus has gradually shifted from the customers’ best interest. It now seems to be more about startup and investor’s best interest. Online food ordering businesses too, for example, have built strong websites and apps. And they have been advertising like there’s no tomorrow. But their internal processes remain shockingly primitive. Back in 2008, I had toyed with the idea of starting an online food ordering service, and had listed some concern areas that needed figuring out, in an effort to shape the idea better. While I eventually didn’t pursue it, online food ordering startups today, surprisingly still live with those same problems, despite the advancements that have happened in the interim.

The possible risks of overvalued and over-invested startups are many. From VC firms going bust, to startups not being able to raise the next round of funding. Or for that matter, those being made redundant by other startups. And with every startup that shuts shop, it also affects a large number of other individuals and businesses. Everyone from logistics businesses to small suppliers to even home businesses and employees. Anyone who has come to serve these super-valued startups.

And finally, in an effort to boost entrepreneurship, India has considerably relaxed rules for listing startups in the recent past. But this bold step will take its time to see benefits, especially since there is poor liquidity in this space. And the experience in valuing new age businesses isn’t anywhere near accurate.

The sky-high valuations of startups would make for interesting conversations with friends and a few rounds of beer. However, lack of clarity in funding and growth strategy in these heavyweight startups could be a matter of concern. For young stars of a new and emerging India. And India’s big startup contributions to the world would hopefully be those that are highly profitable and scalable. And most importantly, solely focused on delighting its customers.

Originally posted here: http://yourstory.com/2015/07/startup-bubble/

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Funny Side Up

Funny Side Up

All those moments that left you speechless… (No, not like when you saw Claudia Lynx or  Mila Kunis on TV). More like the dumbfounded speechless. I was just thinking about it today, and thought I’d share some such situations that I have been lucky (and sometimes not so lucky) to be stuck in the middle of.

  • About two months back, I called my credit card company to tell them that I hadn’t received my estatement, and to ask them to mail it to me. The charming voice at the other end asked me some random questions just to make sure I was the actual holder of the card, and then proceeded to say that she’ll have the statement emailed to me. Then, as what I assume to be a part of the ‘procedure’, she thought of “confirming” my cell number, mail id, landline number, address (hey, don’t look at me, am still wondering about the logic behind it). Anyway, so when she read out my address, I realized that she’d got one alphabet wrong in the name, so I asked her to correct it. After that, again, as part of the procedure, she proceeded to fire a series of questions, about practically everything, just to (again) make sure I was me. The second last question, ‘what was the last amount billed to your card?’ Thankfully, since I had received a message when the transaction happened, I remembered and told her the amount. Last question, ‘where was that transaction made?’ How the hell would I remember, it was over 12 days ago. ‘No problem’, she said, cheerfully, ‘you can check on it, I’ll call you back tomorrow’. I completely forgot, so the next day, she called up as planned, but I didn’t have the info. ‘Not a problem’ she said again,  suggesting the same deal of me checking after I get back from work, and that she’d call the next day. Anyway, I checked that evening, but missed her call the next day. Next thing I know, I receive a letter from the credit card folks (the address on which, by the way, still happened to have the minor spelling mistake). The letter stated that “this is the last correspondence to your old address, and all further correspondence would be made to your new address.” Whoa. When did I change my address? And, if that wasn’t enough to leave anyone wondering, I received another similar letter the next day (with the spelling mistake rectified), informing me that my new address has been updated in their records and from then on, all correspondence would be to the new address.
  • Back in 2008, I got myself a Vodafone USB internet card after paying for a limited usage for the year (1GB free/ month). The little software which installs on your laptop, helps you connect/ disconnect, and also shows you the usage. So I’d keep the usage within limits, so as not to have to pay at crazy rates/MB beyond the free usage. And then, about 4 months down, I received a bill for Rs.200 for excess usage. As I saw the statement only on the due date, I thought I’d rather pay it and then look into the matter. So, I paid, but then didn’t bother check with Vodafone. Next month, I made sure I kept checking my usage. I’d used about 3/4th of my free limit for the next month, but I received a bill for Rs.1400. Ok, now things were getting serious. I went to Vodafone to find out about the screw-up. After the usual ‘Happy to help’ chat, they assured me it was probably a billing mistake. That it happened sometimes. The issue was that while my Vodafone software was showing my usage at 3/4 of the limit, on the company system it was registering a usage 40% or so more above the limit. Few days down, my connection was blocked. Next visit to Vodafone, the same exec apologized profusely. He said he had forgotten to log the complaint, which is why it got blocked. I told him to take care of it, n went my way. Next month’s bill was over Rs.1500 (Rs.1400 + late charges, service tax, the works). What followed was 2.5 months of constant comms with Vodafone, at the store, on the helpline, and to with every email id I could find on their site. They kept insisting that they’ve checked and rechecked, and that I would have to pay up. At the end of that time, I had pretty much had it, and so I went and settled the bill, so as not to let them torment me anymore, even though they still hadn’t realized that there was something wrong with their systems. Next thing you know, I receive a letter from Vodafone’s legal guys threatening to go to court if I didn’t pay. The @#$#.! I called the lady at Vodafone whom I’d been in touch with regarding this matter. She was, I think, some mid-level manager. She told me that they’d received the payment, and that I could ignore the letter. Then I happened to just discuss the problem one last time with that lady. Just to let her know the hell they’d all put me through for some mistake on the part of Vodafone. And when I, for the nth time, told her about the Vodafone software that installs on the laptop, I said, ‘you know, the little window that shows the level of usage, and other info’. Her reply was priceless. The Customer service something Manager told me she had never seen the actual software before. And she didn’t know what it did. So, I was arguing with about 12 different people at Vodafone for well over three months, had to shell out money for no reason at all, and all along, this lady, who was definitely at a fairly high up position, didn’t even know what she was arguing about or defending. No better way to kill customer care, eh? I guess all along, all they meant was ‘Happy to Help (ourselves to your money)’.
  • Several years back, my dad had applied for a car loan. So, as part of the process, the bank executive dropped by home one afternoon, to get some papers filled, and to collect the post-dated  cheques. While dad was signing the 59 odd cheques (5 year loan), the executive, with a concerned look, asks dad, ‘Sir, I hope you have the total amount (the loan amount) in this bank account?’ Dad, already a little irritated with all that signing, suddenly was at a loss for words. He tried his best not to show his disbelief at the question, which of course, didn’t work too well. He looked at the executive and said, ‘if I had that kind of money in the bank, do you think I’d be applying for a loan?’ It then struck the executive, who then tried his best to hide his embarrassment with ‘of course sir, well, I was just asking’.
  • As a kid, I used to frequent the Croissants‘ outlet near my granny’s place. I had many favourites on their menu. And we sometimes used to parcel plain croissants. A slightly microwaved plain croissant tastes great with tea, especially in the mornings. So one evening, mom sent me to pick up about 15 plain croissants. I walked in, to find that I was the only customer in the huge place. Anyway, so I paid at the cash counter, and then walked up to the counter for plain croissants and gave the attendant the little order slip. He looks at it, and then asks me, “Will you be having them here?” I looked around, and then asked him, does it look like I’ll be eating 15 plain croissants here, alone?” Talk about being stuck with your foot in your mouth =O
  • My job in Venture Capital too, made sure I got a regular dose of such situations. Like a few times when I’d get calls or even random visits from aspiring entrepreneurs. They’d go, “I’m planning to venture out on my own. How can your Venture firm help me?”, they’d ask, with a straight, I-mean-business sort of face. That would get me all thrilled, every single time. I mean, it takes a lot of guts and conviction for anyone to start a business on their own. And I admire that. So then I’d ask them about what the venture is all about. How much money they’d need, and all that. Then comes the priceless answer. Something that normally sounds like, “I have a few different types of businesses that I could possibly get into. Depending on which one, the venture funding I’d want would vary. However, I haven’t really worked out the exact funding that might be required. You see, I could either start with one of the businesses in one state, or cover like, half of India. So accordingly, the funding I’d need would vary. I wanted to know how your fund could help me out.” Huh.! I could’ve sworn the board outside my office didn’t read ‘Charity Venture’ or something to that effect. Then why.?

Lemme know bout your ‘at a loss for words’ moments…

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