Tag Archives: Entrepreneurship

Not another diaper-selling app please!

This is the golden age of entrepreneurship, and I think humanity is fortunate that so many bright people have decided to solve some really hard problems of our times. Even when we know that history – and statistics – are not on their side and that more than 90% of the will eventually fail, their efforts need to be saluted, for they are giving up a cushy comfortable job and the opportunity to be with their friends and family or generally pursue their hobbies and interest, and instead have chosen to purse the hard path of experimentation, failures, more failures, frustration, many more frustrations….and hopefully some light at the end of the day!

When all apps start to lookalike, you know that innovation is all dead!

However, a good number of us are getting it totally wrong.

No, we don’t 59th app to order groceries at home.

No, we don’t need 134th app to buy diapers from the net.

And we most certainly don’t need yet another mobile wallet, yet another taxi booking app, yet another bookshop app, yet another food-ordering app, yet another househunt app, yet another app to sell undies on the net, yet another…..

What we do need is something a bit more simple. For example:

  • Help millions of educated unemployed create opportunities to develop our nation
  • Find a way to save millions of tons of food that rots in our godowns
  • Prevent farmers from committing suicide
  • Find a way to raise people’s standard of living by creating opportunities for them
  • Send every child to school
  • Let no child die of preventable diseases
  • Let there be running water in every household
  • Let there be a computer in every home
  • Decongest the cities and redistribute the economic activities back to villages and small towns
  • Clean up nature, air, water and land
  • Make better roads
  • Reduce crimes
  • Improve governance
  • Remove (or at least reduce) corruption
  • Reduce lead time (and preventable delays) in public projects
  • Help people become better people
  • Clean up our nation
  • Make neighborhoods safe
  • Speed up justice

I know there are a few of us who are working on some of these hard problems, away from the limelight, painstakingly changing the world…literally in inhuman conditions. They need to be applauded and supported. More talent needs to go there rather than using their advanced computer science degree and machine learning knowledge to find a way to make more users view online ads and click on the lead-generation links. More funding needs to be made available to solving these important problems that serve the humanity at large.

Selling diapers online is sexy. Saving a child from preventable death isn’t.

No, not another diaper-selling app please! 

Next…!

Stop ‘teaching’ students about entrepreneurship…!

Last weekend, I was at one of the youngest IIMsIIM Udaipur to be a mentor at their annual event Prarambh where students and young entrepreneurs slog for 32 non-stop hours to build a ‘startup’. No, not just a cool code hack but a (near-real) startup. The event ends with the teams pitching to real VCs. And who knows what can happen there…

Looking at the organizations and sponsors associated with the event, I was keen to get there. Clearly, for a young institution hosting its second annual event, getting such an impressive list of supports was never an easy task.

Now I don’t need any special invite to ever go to Udaipur. I grew up in this wonderful city of lakes. So, any visit, and especially an opportunity to pay forward is always welcome. When my old friend Atul at IIM Udaipur asked my availability to spend a weekend mentoring these student-entrepreneurs, despite having a back to back commitment both before and after the weekend, I just couldn’t say no.

So, after twelve hours of travel and waiting at two airports and inside aircrafts, here I was finally at Udaipur, saturday evening 8:30pm. I simple headed to the arena where students were working to solve some really interesting problems. One team was working on a solution for shopping malls to increase conversions from footfalls to real dollars. One team had this unusual idea to build a business around people carrying shopping list items while travelling overseas. One team had this cool way to make notifications form ‘temporal’ to ‘spatial’ and so on. The one that won was all about smart chat/messaging and they also had an interesting implementation on a safe encryption that utilizes doodles rather than alphanumeric passwords. One team had an idea owner coming from mom-and-pop store background and he understood how to build a solution for that ‘enterprise’ – including there issues and challenges. One team from Mumbai wanted to radically change the entire home buying process – much beyond what some of the best ones offer today. We all mentors spent time with them helping in whatever meaningful manner we could.

Most of the 8 or 9 teams (of 4-5 idea owners and techies each) at the event were very tech savvy, and despite being in a rather ‘non-tech’ place like Udaipur, were reasonably aware of people’s needs and wants. In fact, if anything, I felt they understood it as well or even better than say someone from Bangalore where sometimes we sort of take things for granted. When I finally called the day at 2am, I was tired but the teams went on till 5am.

Those who didn’t have answers, were simply reaching to their online friends and peers across cities and continents and getting whatever help they needed. Having been involved with several hackathons before, including organizing similar events where we got up to 700+ folks and would run on a budget that would need robbing a small bank, here there was no live band, no midnight laserman show, no red bull on the tap (beer was out of question in the college), and definitely not even decent cappuccino – which goes on to show that creativity can flourish under natural conditions :). And if you ask my brutally honest opinion (unfortunately, I don’t have it in sugarcoated flavor), the creativity only flourishes when you take away all these man-made distractions. But that’s for another day…

Next day by 10am, most teams were back doing what they came there for. Most of them had a reasonably good problem statement, some of these did listen to us mentors and took to talking to real humans despite being in a 32-hour timebox. They worked the whole sunday (despite India-South Africa historical world cup match going on without any live broadcast happening inside the work area!) and by 5pm, they had to stop work, and by 6pm, they started making their pitches – 7min for pitch and 3min for Q&A per team. I was quite impressed by what I heard. Their passion and confidence was palpable, and their story was getting better time they would tell it to someone. Many of these teams worked hard to demonstrate the MVP, even if that was a very multi-device use-case and rather clumsy to use. Of course, the ‘poor’ UI didn’t matter 🙂 at that point.

I had to leave halfway to catch my last flight out of town before the final winners were announced. However, from my viewpoint, they were all already winners. In a matter of 32 hours, they all came to the event as individuals and strangers from different cities, but got together to build something of value as they learnt to trust and respect each other and channelise their talent and passion to something creative and innovative. Most importantly, they mastered the entrepreneurial mindset rather than the entrepreneurial curriculum. And that’s my point – we should stop ‘teaching’ entrepreneurship and start learning by doing:

  • Let them think big,
  • Let them ‘discover’ problems,
  • Let them make mistakes,
  • Let them build pie in the sky,
  • Let them learn to lead as peers,
  • Let them figure things out on their own,
  • Let them sell their dreams and inspire others to join them,
  • Let them learn all the ‘101s’ by stumbling upon them rather than sitting in boring classroom sessions,
  • Let them break rules in the safety of an event and learn more about entrepreneurship than they will ever learn by learning and following them!
  • Let them build something and let them teach us back what they’ve learnt…

At the end of the day, I believe if you want to teach them swimming, the last place to teach that is a classroom. Get them into a pool, or a lake and get them started.

Even better…just follow this great advise from Antoine de Saint Exupery:

“If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”

(Originally published on https://www.linkedin.com/pulse/article/stop-teaching-students-entrepreneurship-tathagat-varma/edit and republished on http://yourstory.com/2015/03/stop-teaching-entrepreneurship/) 

Week 1 of my Lean Consulting Startup

(Originally published on LinkedIn at https://www.linkedin.com/pulse/article/20141102072554-3616140-week-1-of-my-lean-consulting-startup)

TL;DR: I started my consulting startup earlier this week after seven years of groundwork in a Lean Startup fashion. Here’s the story that led to week one.

Seven years ago, I decided I am going to have my own coaching and consulting company some day. I knew what interested me, and I knew that I was a natural ‘teacher’ (last three generations of teachers in my family was a reasonable hypothesis that I could do it!) and I will want to do it, but I was not sure of several things, most notably:

  • What is my ‘market’?
  • Do I know who are my ‘customers’?
  • Do I understand the ‘problem’?
  • Do I know the ‘solution’?
  • Do I know what ‘customers’ want? and why?
  • Do I have the credibility in my market?
  • What is my unique value proposition?
  • How do I validate if people will accept me?
  • Do I have the passion, knowledge, skills and abilities to convert my interest into a viable and sustainable business?
  • Will I enjoy doing it? Especially, doing it alone? For rest of my professional life?
  • Last, and never the least, what is the revenue model?

Entrepreneurship is all about believing in your vision, and pursuing it against all odds

 

During the next seven years, I embarked on a series of activities to basically examine, and hopefully validate these questions first-hand. I had a day job, first as running the country operations at NetScout, then heading the business operations at Yahoo! and finally being a global change leader at [24]7 Innovation Labs during those seven years. However, I invested my personal time, effort and money to expand my thinking, and did things that helped me find answers to those questions:

  • I started blogging on my blog “ManageWell” at http://managewell.net and wrote over 150+ blog posts on various topics that were of interest to me. The idea was to test whether I have the flair to express my ideas and thoughts that resonate with people, and to discover what is my sustainable pace of writing.
  • I signed up as a visiting faculty for an Exec MBA and taught topics such as Project Management and Business Ethics. In addition to delivering a very practitioner-led thinking, I also did a few unconventional things. I decided to put up my entire courseware in public domain on my slideshare account (http://slideshare.net/managewell). Surely, many people do it nowadays though it was kind of rare in 2008-09, but unfortunately, a large number of us still don’t do it even today.
  • I got active in community of practitioners. After having delivered over 100+ talks, papers and workshops in various conferences and companies on a pro bono basis, I was discovering myself. I knew people wanted me to talk at their event, perhaps because of a few key reasons – I knew some stuff, I spoke reasonably well, I was ready to speak and I didn’t charge money. I didn’t worry about the last piece because I was already in a salaried job (and will always remain grateful to those three employers for all their support!). Speaking at so many places meant I delivered some ~30 talks every year for the last 3+ years (partial list available at http://managewell.net/?page_id=2). I never said no to anyone asking me to deliver a talk, how so much ‘unknown’ their event was, as long as I could spare time for it and there was something new I could talk on. And yes, sometimes I took PTO and even bought my own flight tickets to travel out of town just to deliver talks. Once I was in an event where we were seven speakers and just five attendees. We still went on with the ‘conference’. In short, I treated every opportunity and setback as a learning experience, and I am so glad I did that!
  • Every talk I delivered, had to be on a ‘new’ topic. I took the opportunity to learn new things. My mantra was – if you know some ~30% about the topic, take that up and sign up for a talk on it. Then spend some 30, 40 or 50 hours learning about it and deliver the talk. I know some talks of mine were not so good, but by and large, the strategy worked for me. There is no way one can be 100% ready anyway!
  • Last year, I signed up with a training company to deliver a training in Sri Lanka alongside a conference. They paid for the tickets and accommodation and I did the training free of cost. That experience allowed me to prepare the training material that I was able to later use at work for some 250+ trainings I did in my US and India offices. People talk about taking away training material from workplace, here I was building training material on my personal time and effort, delivering and testing them as a hobby and passion, and bringing it to the workplace! It reinforced my belief that knowledge must stay free (free as in zero-cost to the consumer and free as in freely available) while there should be value for the expertize, wisdom, facilitation, coaching and consulting. This realisation led to the next point.
  • After every talk, I made sure the deck was promptly loaded on my slideshare account and enough viral loop was created on social channels, but not so much in the face that people threw me out of their networks :). Over time, my slideshare account became a lead generation engine. People started reaching out to me based on what they had seen on the deck, and wanted me to deliver a talk at their upcoming event. Last year, I got invited to speak at innovation conference organized by University of St Gellen, Switzerland based on my previous work that I had put up on slideshare.

By this time, I was very clear that I will start out by summer of 2015 because that timeframe was tied to an important personal milestone. However, in mid 2014, I started getting approached by ‘customers’ even though I was still not in business. I had to then decide if I should wait until my arbitrary timeline of 2015 or grab the opportunity now. I decided to explore the waters. I had validated most of the hypotheses around my business models except for the revenue part of equation Though it was a critical factor, and a true lean startup thinking might not be complete without actually charging for the services offered, I decided to make that as leap of faith hypothesis. There were several other professionals offering services in this space, and my rationale was if I could do it better, revenue hypothesis was not an unknown-unknown par se, but at best a known-unknown that I could figure out on the fly.

All this time, I was having regular dialogues with my wife who was not in favor of me starting out, given other family priorities and upcoming commitments. I was trying to woo her with all my data points, but I was still far away from convincing her. Finally sometime in Aug, I was able to convince her. I promptly put down my papers and started working on launching my startup.

I identified some 10 or 11 business models that I started exploring. Some of them were extremely promising, while some of them fizzled out in just a phone call. All that prep work helped me validate the key hypotheses around my upcoming startup. I realized that all the work I did in preceding seven years, I had actually paid a lot of dues already. Most people want to ‘withdraw’ first and then maybe make ‘deposits’ maybe as a guilty conscious. I had already been depositing for over seven years, and people knew me. More importantly, they were willing to work with me.

Finally earlier this week I officially went live with my brand new consulting startup “Thought Leadership” – with three great paying customers. I couldn’t have asked for a better dream launch, and I believe rest of the journey will be as interesting as last seven years working towards it have been. The MVP of my startup is alive and kicking, and in a lean startup fashion, ideas and hypotheses are being tried and tested as I go about bravely showcasing my offerings. All this in the first week while:

  • I have no idea what the future has in store, but I am enjoying the present
  • Learning the joys and challenges of working from the dining table!
  • The domain name has been taken, though the web site is still not up 🙂
  • The business cards have been printed though they are as rudimentary as they can be.
  • New revenue streams are being evaluated while serving my early adopters
  • I don’t know where and how I get my future business, but I spent most part of last week as a volunteer helping organize an outplacement event for 150+ ex-colleagues.
  • Spent two days designing training program at a customer site, and freezing plans with other customers for next couple of weeks.
  • and, of course, focusing back on some badly needed exercise 🙂

My biggest learning is that the best time to start your lean consulting startup was seven years ago, and the next best time is now…or never!

Dude, where’s my customer?

I am delivering this talk at the Lean India Summit, Bangalore, Nov 15-16. Ahead of my talk, this Q&A captures some of the key ideas behind the talk.

Abstract of the talk: Startups that operate under a stealth mode achieve over 90% failure rates. While they might have bright ideas, access to top talent, adequate funding, etc., they typically fail to accomplish their original objectives. A key reason behind such spectacular failure rates is premature scaling at each stage of the startup. In this talk, we will examine the mistakes that startups make, and what we can learn from the Customer Development model proposed by Steve Blank to improve better chances of survival and growth.

Q1. You mention that premature scaling at each stage of the startup leads to failure. What is the right time to start scaling for the startup? How can the startup course correct if they realize that they have started scaling prematurely?

A:   As Steve Blank says, a startup exists to search for its business model and not to execute it, I think the right time to scale is when you have ‘discovered’ the ‘business model’. What that means is that unless you have gone through Customer Discovery and Customer Validation process and turned your hypothesis into facts based on actual market feedback, you don’t really have any need (and hence the justification) to scale up.

Why Startups Fail

If you have started scaling prematurely, I think you should stop and introspect. Ideally, stop all other marketing and sales and other activities of scaling up the product development organization, and just focus on validating your initial hypothesis. One important point to remember is that sometimes having excess cash could force one to scale up, so avoid getting more cash than you really need!

Q2. There are couple of questions we asked one of our other speakers Wes Williams, which we think is relevant to your topic as well. Would like to hear your thoughts on this – a) How does the size of an organization impact its scalability? Would you need to think of a different scalable model for large sized organizations?

A: Large organizations have typically been cash-rich and hence were more eager to scale-up in the past. However, the harsh realities of today’s economic environment have forced them to be more conservative. I believe even the largest, most cash-rich organizations are thinking twice before scaling up prematurely. I know how hard it is in most product companies to get an additional resource even, so clearly, the old rules don’t apply so well anymore.

I would build a much shorter runway where I can demonstrate tangible results in terms of customer discovery and customer validation that allow me to pitch my case for incremental funding that is backed by solid data from the market. That way, my expenses and promised revenues are growing in tandem rather than making a wild promise about the revenue without a scientific basis and piling up a large expense plan in anticipation of revenues.

Q2. b)What do you see as the difference between scalability, flexibility and agility?

A: Agility is the ability to achieve (or exceed) the set goals by being flexible about how to accomplish them. Flexibility is the means to accomplish agility as an end-goal. Even there, let me correct myself – agility is not an end-goal. It is once again a means to accomplish the next higher-order goal, viz., create a successful business.

Scalability is very different, though an effective scalability might require them both. In traditional manufacturing, it was all about building something at a large-scale so that economics of manufacturing or production could become much more affordable. The problem is that accomplishing scalability invariably requires lots of sunk costs and irreversible decisions and might be fraught with risks if the underlying assumptions turn out to be false. Henry Ford was able to reduce car prices by creating a process that eliminated user customization (“you can have any color of car as long as it is black”) to create a standard one-size-fit-all car that could be mass produced to achieve unprecedented economics of scale. However to achieve such economics of scale, he had to pump in millions of dollars in manufacturing plant and a car design that might hopefully sell in the market. So, in manufacturing, mass production brings down prices, and hence, scaling up is good, but one needs to make sure they have the product that the market wants, lest they be stuck with deadwood!

In software, scalability needs to be understood differently from manufacturing. Presently, there are two key manifestations of scalability – one is scaling-up product development process across the organization, e.g., going outside a single scrum team and aligning to the strategic portfolio, etc. One such framework that attempts to integrate all organizational functions together is Scaled Agility Framework. The other one is scaling-up your software product or services, e.g., offering the app on all major OS versions of mobile or tablets, or offering the software in all languages, or offering the product in all geographies, etc. The first one is all about being internally efficient and reduce friction and hand-offs across different departments in achieving a seamless supply chain to ‘scale up’ your agility throughout the organization and not just limiting to software teams alone. The second is all about scaling up your product and services from the market coverage or product capability standpoint and is conceptually more akin to traditional notions of scalability. One needs to be pragmatic about market potential before committing to any such expenses that involve sunk costs or are irreversible in nature. To that end, the principles of agility are a must to establish early proof points about the real assessment of market potential.

Q3. The Customer Development Manifesto suggested by Steve Blank mentions that “A Startup Is a Temporary Organization Designed to Search for A Repeatable and Scalable Business Model”. In your experience, how much of scaling is good for the organization? At what point does the startup need to pause and introspect on whether to scale any bigger, or to look for some other way to scale?

A: There is some very good data from Startup Genome Project that captures such data points. While I think such guidance is very comprehensive and highly relevant for all startups, it must not be construed as universally applicable. Take the data as a guidance and question before committing any fixed expense item whether you really need it at this point? To me, it is not any different from how one would commit to such expenses in their home or even as a group manager in a company.

 

Customer Development model provides a framework to systematically validate all hypothesis before going out and scaling up the startup prematurely

I meet so many entrepreneurs who build a large team – VP of Sales, VP of Marketing and even 8-10 developers before they have built a serious product to market! If you follow Steve Blank, he is very unambiguous in his guidance – during customer discovery phase, it should only be the founder of the company to validate the ‘leap of faith’ hypotheses, and no one else! I also find that sometimes getting funding early in the day could make people scale-up prematurely and that’s just as bad.

Is there an alternative to scaling up? Yes, first off, build an MVP and keep your expenses low. A key thing about the MVP is that you must aim for selling the MVP as a means to validate your Business Model – freebies don’t give the proof point that you need to turn your hypothesis into facts. Once you have a reasonable confidence backed by solid data about customer validation, then you might be better-placed scaling up.

Q4. Could you talk a bit more about the Customer Development model proposed by Steve Blank and how you are going to extrapolate from this model in your talk?

A: Traditional startups, for example during dotcom, were known for the so-called ‘stealth mode’ development where they could work for an extended period of time, often away from public glare or any meaningful form of real-world customer feedback. However, we now know such a model is fraught is too many risks. It is the Hail Mary pass of entrepreneurship! On the other hand, Customer Development model is a highly scientific approach to entrepreneurship that recognizes the need to have real-world market data before going out and building the product. In today’s time and age, technology and consumer preferences change at warp-speed, and it is no longer realistic to build a product with a long-lead time. The worst thing that can happen is to build a product that no one wants! This might appear as poetic exaggeration, but the world is literally full of such experiments. Think of McDonalds Pizza or Colgate Breakfast Entrees or Frito-Lay’s lemonade or hundreds of such products – they were all created by highly successful companies that definitely knew what it took to built new products. And yet, they all failed. Why? Because essentially, they built something that the market didn’t need. Surely, they must have done market research throughout the lifecycle, but clearly they missed something much more fundamental – product development is not simply developing a nifty idea but also entails a parallel cycle of customer development, especially in new markets. Customer Development model is one such model that helps figure out what and how to do to do customer development – whether one is a true-blue startup or a brand-new idea in an established company.

Q5. New research by Harvard Business School’s Shikhar Ghosh shows that 75% of all start-ups fail. In your experience, generally what must the remaining 25% be doing right?

A: One thing we could be safely assured they are doing well is that they are listening to early feedback and adapting to it rather than going out and building the complete product or service based on untested hypothesis. And to be able to do such adaption both effectively and efficiently, they are using short iterations where they are able to give functional products in the hands of the customers so that they can get some valuable customer feedback. Popularly known as an MVP (or a Minimum Viable Product), it allows a high degree of prioritization of features from users point of view, and an agile development process that allows creating rapid iterations of high-quality and well-test features.

Q6. If I am part of a start up like organization, operating within a giant organization with its set business models and processes (that are also required to keep the big brother organization up and operational), how does one navigate the plethora of subsidiary business groups like facilities, infrastructure, HR, etc. to enable a lean start up mode for my particular group?

A: No easy answers here! In fact, history has repeatedly shown us that the more successful an organization is, the more it is difficult to get a radically new idea going. No wonder why Sony, the undisputed leader in Trinitron technology, completely missed the Plasma and LCD display bus (before eventually joining the LED display party, even if if a bit late) or the Internet leader Google who has never quite figured out its social strategy (well, some might argue that with Google+, they do have it, but that’s one point of view). So, traditional methods of pitching an idea and expecting the upper management to bless might work in theory, but I wouldn’t rely on them.

Over year, I have found one approach that perhaps works much better compared to anything else – skunkworks. If you are truly passionate about the idea, let that passion help you ‘recruit’ other co-creators (always remember – it takes a village to raise a child) and then put your spare cycles to build a prototype to demonstrate your idea. If you are not willing to take risks and spend days and weeks in even trying the idea, why should you expect that the management will give you budget for it? It’s like going to bank asking for money, whether to buy a house or to build a company – they want you to put down some money first in the form of your contribution or a guarantee, and the logic is same – if you are not willing to take any amount of risk behind your idea, why should others do it?

Java language came out of skunkworks at Sun. And so did the first Apple Macintosh. I have seen several good ideas come out like this in large companies, though I don’t think anyone can guarantee skunkwork projects. However, on a relative basis, it is much better demonstration of the power of your idea (compared to a powerpoint deck) and your passion that might improve your chances of getting the necessary organizational support to take your idea to its next leg of journey.

Q7. Finally when is it the right time for an organization to realize that it has grown too big to be in a startup mode anymore, and might need to revisit its way of working to adapt to its current size?

A: This might be the next million-dollar challenge and I wish I knew the cookbook answer! Unfortunately, we build the bureaucracy one day at at time and before we realize, we have built an impregnable wall of self-preservation that blunts any attack on status-quo. We don’t realize it because it is like slow-boiling the frog. Initially it looks innocuous and we tend to trivialize it, until one day it becomes so huge that we can’t get rid of it even when we try so hard!

I think an organization has stopped being a startup when people stop complaining and simply give up on you, when no one volunteers and there is generally a diffusion of responsibility, when people build territories and silos, when we are intolerant of failures and anything perceived disruptive, when people want to join because of the perks of the company rather than the challenges they can work on and the impact they can create, when more time is spent in waiting for decisions rather than learning from actions following implementing those decisions, and so on…

Q8. Who is the target audience for your talk? Only startup organizations?

A: Anyone who is undertaking a new endeavor under conditions of extreme uncertainty.