Tag: startup

5 Ways to find a lead developer for your startup

This is the person whose creative vision and technical know-how will determine the success of your product

While you should never underestimate a true geek’s creativity, you want your lead developer to be a leader. Someone who’s not a great communicator can take up leadership courses singapore. This will help them with training and development in the desired field of leadership.

But you probably already know that. You’re probably wondering how you’ll ever find the right person to serve as your startup’s lead developer, when the person who excels in interviews and jumps out on paper may not necessarily live up to your expectations.

Those are some valid concerns, and we understand why you’re holding off from doling out the offer. We’re here to provide you with important tips for hiring your top technical talent, to make sure you hire the right visionary to lead your brilliant idea to technical perfection.

1. Look where they hang out

If you were looking for great athletic talent, you would go to a batting cage, a gymnasium or a track. If you want to meet a brilliant developer, check out a local meeting for programmers.

Flatiron School founder Avi Flombaum recommends checking out Meetup.

“You find the right types of people from going to meetups, where those people might be hanging out,” he says. “Programming meetups are great for finding the people with the right experience.”

Flombaum recommends CTO Meetups for a more senior bunch of developers, as well as Agile Development Meetups, and the New York-local NYC on Rails Meetup and NYC.rb Meetup.

2. Avoid quiet geeks

While you should never underestimate a true geek’s creativity, you want your lead developer to be a leader. Someone who’s not a great communicator really should not be considered.

“We look for the ability to speak to humans,” Thrillist CTO Mark O’Neill told Mashable.

“Can you communicate well with non-geeks?”

Flombaum agrees, emphasizing the potential of developers who teach and write. You should think of the people who you’ve heard speak about programming and whose writing has inspired you.

“I think teachers, people who are teaching courses on Skillshare, make great mentors and leaders,” Flombaum says. “I like to look for people who can articulate their thoughts in writing. You should think, ‘Whose blog do I like reading?'”



3. Seek technical experience and expertise

Though it should seem like a no-brainer, all of the hiring experts we spoke with emphasized the need for dazzling technical credentials.

“The first thing we look for are top-notch technical skills backed by the right experience,” Kony CEO Raj Koneru says. “At Kony we put special emphasis on solid leadership skills, because in order for us to scale effectively, the lead has to motivate their developers to go well over and beyond the regular call of duty. In true developer fashion, leads will only be respected if they prove that they’re technical experts.”

Birchbox CTO Liz Crawford echoed the need for technical expertise. “Our ideal candidates are committed to delivering the best possible customer experience, value software engineering practices and never forget about scalability and reusability when designing code.”

However, according to O’Neill, tech know-how doesn’t guarantee an understanding of the Internet.

“We ask, do they understand the web?” he says. “We’ve seen great technical talent have a hard time adjusting if they’ve never worked on the web before.”

4. Look beyond the usual suspects

The right lead developer for your startup may not be someone who’s currently seeking a job, so look beyond job boards and applications submitted.

 ”The right developer might not know they’re in the market for another job,”

Flombaum says. “There are a lot of great programming newsletters that feature sponsored positions, and they’re read by developers who aren’t looking for jobs.”

In addition to going to Meetups where great developers mingle with other great developers, you should make sure your listing is seen by engineers happily employed or working on a project.

5. Ensure a cultural fit

Working in a startup, there’s not room for a bunch of giant egos butting heads. There also isn’t room for people not willing to be scrappy and pick up additional tasks that are beyond the agreed-upon job description.

“We look for non-divas,” O’Neill says. “Yes, they are smart, but we need leaders who are also grounded.”

Crawford agree, noting that Birchbox seeks out engineers who “love to learn and are team players.”

How did you find your startup’s lead dev? Tell us in the comments.

(Image Credit: nextshark.com)



What is the most indispensable trait a startup founder should possess?

The most indispensable trait a startup founder can possess, and should desire to possess, is respect. For their fellow co-founders. For their employees. And most importantly, in my opinion, their competitors.

The most indispensable trait a startup founder can possess, and should desire to possess, is respect. For their fellow co-founders. For their employees. And most importantly, in my opinion, their competitors.

Paul Graham, wrote in one of his recent essays,

So if you’re a founder, here’s a deal you can make with yourself that will both make you happy and make your company successful. Tell yourself you can be as nice as you want, so long as you work hard on your growth rate to compensate.

Adding to this,  it’s safe   for founders to be respectful. And respect towards your competitors the most important of all. While it’s true that fierce competition and pressure-cooker situations almost always get the best of us, it is imperative that founders remain respectful of their competitors. After all, that’s what shows your true character. And you cannot win a war by bad mouthing. Nobody ever has. Wars have been won due to sheer excellence in execution. Exceptions being none.

Respect Enables You To Rise Above Pettiness

Entrepreneurship is definitely not a walk in the park. Behind all the perceived glamour, there is sheer hard work and an emotional roller-coaster that runs all day, everyday. Everyone who has seen early stage startups closely will testify.

It’s important that we remember that our competitors go through, or have gone through, the exact same phase.

Competition might blind us, but it’s a fact nonetheless. Everyone who’s worth being called a competitor by anyone deserves respect. It’s only when we accept this, would we be able to see the struggle, the mistakes, the wins, and learn from it. Pettiness is for small minds.

Respect Enables You Work Harder

It’s when you appreciate someone’s hard work, is when you truly begin to appreciate yours. Among most of the hugely successful companies in the world, you’d hardly see the founders bad-mouth or trash competitors. Smart founders realize if they don’t learn from their environment constantly and improve their craft, the next startup gunning for them in a garage somewhere will definitely take the cake.

Have you ever seen any of the entrepreneur, bad-mouth or trash their competition. Why?

They’re busy building. And growing.

Image credit: www.fastcompany.com



7 Lessons from Ramayana for every entrepreneur

Ramayana is not just a story, but an educational medium used by the ancient sages to espouse the importance of doing your dharma (duty).

Ramayana is one of the greatest epics of Hindu Mythology. Ramayana is not just a story, but an educational medium used by the ancient sages to espouse the importance of doing your dharma (duty).

Out of so many lessons one can learn from Ramayana, we are listing top 7 lessons which entrepreneurs should learn:

1. Don’t over commit like Dasharatha. You may be in trouble later. It’s better to commit low and deliver more.

2. Do your business with all ethics. Consider your business like dharma. Keep your words like Lord Rama.

3. Build a team. Rama was able to win against Ravana just because he was able to make a performing team. Every member of your team is important.



4. Be a decision maker. When Hanuman went to get Sanjivani booti he was not able to identify it. He brought the whole mountain. In running a startup, you need to be a decision maker no matter what.

5. Stay cool and don’t be angry. Laxaman was a short tempered person. He lost his cool many times which put him into trouble. Running a startup means keeping your head cool all the times.

6. Startup is all about making life sacrifices. You will need to work overtime, have to leave your comfort level just like Sita who decided to go with Rama in forest for 14 years exile.

7. Leave your ego. Ravana got destroyed just because of his ego. When you are running a startup, leave your ego’s aside.





Q&A with Samar Singla, founder of Jugnoo

Where other transportation aggregation services struggled to aggregate 3 wheelers, Jugnoo made it possible. Many failed to gain traction in tier-II and tier-III cities, Jugnoo has given a new perspective towards user acquisition.

Where other transportation aggregation services struggled to aggregate three wheelers, Jugnoo made it possible. Where many failed to gain traction in tier-II and tier-III cities, Jugnoo has given a new perspective towards user acquisition. This is an exclusive interview with the founder of auto aggregation app Jugnoo, Samar Singla.

An avid traveler and a photographer who likes to document the mundane and the everyday world. “I am not really fond of the exotic superficialities that the world has to offer but rather love looking for interesting in between the moments of ordinary life,” quotes Samar.

Tell us the story behind Jugnoo. What is your vision?

The auto-rickshaw segment is one of the important public transport system in India because they are inexpensive and easy to move through crowded streets. The turnover of the auto rickshaw segment is close to $26 billion annually but still it is an unorganized and underutilized market due to the inefficiencies prevalent in the conventional hailing procedure. Jugnoo was started with a vision to overcome these roadblocks by bringing structure into this space, aggregating auto-rickshaws via technology, thereby, enabling optimum utilization of resources. The objective at Jugnoo is to provide a convenient auto-rickshaw ride to all the customers across India via single tap that too at affordable rates. Hence, Jugnoo started operations in Chandigarh in November 2014 and is currently rendering its services in more than 30 cities of India.

What struggles did you face in building a startup and scaling it up in a Tier-II city?

Most of the entrepreneurs face similar challenges at the outset ,however, in case of Jugnoo it was a bit different as we were exploring a very different business venture and convincing the auto rickshaw drivers was a big task. Most of our time was invested in educating and training the auto rickshaw drivers about the concept of creating a standard fare model that was relatively less than the base fare and how it could be a viable revenue model for them.

What is the scope of hyperlocal startups – food, grocery, home services etc. in Tier-II & Tier-III cities?

The scope for hyperlocal startups is very promising in Tier-II & Tier-III cities as it has been an untapped market till now. While most of the companies have been focussing only on Tier-I cities as far as this domain is concerned, the potential in Tier-II & Tier-III cities still remains to be explored.



Jugnoo has restarted hyperlocal delivery by launching a service called Fatafat under which the company will be delivering vegetables and fruits at the door step using the company’s’ network of auto-rickshaw. The service was first introduced in March last year and was continued for eight months. The idea is to have a complete end-to-end integration. Jugnoo will buy the product from Mandi and store it at their warehouse. The products will then be delivered by auto-rickshaw drivers who are not taking ride or are sitting idle. The service is currently available in Chandigarh and will be soon be launched in other locations as well.

Does India need so many on-demand startups?

With the advent of mobile internet and non standardized and fragmented services market in India on demand products are an obvious problem to solve for a lot of startups. However, the fact remains that delivering goods and services is, at its core, a low-margin logistics business. Only companies who are extremely frugal in their approach to build the demand and supply platform will survive.

Your company was working in a similar segment and has again started e-grocery services. Why did it not work out for you? & What different do you plan to do this time?

The response during the first phase was quite positive, the demand for e-grocery was more than the supply network we had then and had to suspend the services for interim period to rework on increasing the fleet size and logistics. We have successfully achieved the number of driver partners that we were looking for and hence decided to resume ‘Fatafat’ service in Chandigarh. Our objective is to reduce the down-time of the drivers and keep them engaged by deploying them for grocery delivery services.

What marketing strategies did you use to scale up?

We are investing very cautiously in our marketing activities as operating in tier-II and tier-III cities is a different ball game altogether. We focus on a lot of on-ground activities to create buzz about the brand and the services we offer. We have been growing largely through the word of mouth which is the most reliable and tangible way to know that our offering is sought after. We also encourage our driver partners to reach out to fellow drivers and new customers who ride with them. Beside this we also engage in user referral campaigns and social media promotions for scaling up the demand.

Who would you say is your biggest competitor?

Ours is the only startup in India to focus exclusively on auto-rickshaw space. Hence, our market is different and much bigger than the other players in the industry. We are thought leaders in our domain.



Also, we are an aggregator in true sense. Unlike our competitors, who are building supply and then aggregating it, we are leveraging the existing supply.

Cab companies are dropping their rates, ridesharing/carpooling firms are coming up, why do you think people would prefer on demand autos over an ac cab, especially in summers?

Our target audience is different from the individuals who prefer to use cab services and its only in metro cities where you see on demand cab aggregators. The scenario is different when it comes to tier-II and tier-III cities. The public transport system is not as developed and auto-rickshaws are primary mode of transport besides the public bus services. Hence our strategy is to entrench our services in tier-II and tier-III before we focus on tier-I cities.

What is your opinion about the bike taxis? Is there space for more transportation startups in India?

Bike taxis indeed is a new concept and something that has been talked about a lot off late, however we have to wait and watch the viability of the service it provides. There is definitely space for more transportation startups in India as it’s a huge market with enormous potential.

What are your expansion plans for Jugnoo?

We are currently rendering our services in 33 cities of India and plan to to expand our reach to 100 more cities by the end of next year. We have already rolled out our services in villages and intend to reach the remotest corners of the country by the end of this year.

Apart from this, we are also working to have an international presence over the coming months.

We are expanding our services gradually across tier-III and tier-III cities and are operating in more than 30 cities. We have rolled out our services in villages and will be launching Jugnoo’s on demand service in 3-4 cities on monthly basis.

Do you plan to raise more investment? Are you profitable?

Fundraising is always an ongoing process at Jugnoo. We have recently closed our Series B funding at $10 million. Although there is no immediate need of funds right now, but the preparations for next round of funding have already started. We hope to close it within 3-4 months from now.

We are currently in the growing phase, and our focus is on scalability and sustainability.

With that said, do you think Jugnoo can become a global product?

We have plans to expand at both national and international level. Our vision is to enable optimum utilization of resources globally wherever there is a gap that can be filled by integration of technology. Our business is not limited only to auto-rickshaw aggregation, but to creating a logistics network for the mass market within and outside of India.



5 Reasons to start a business in your 20s and 30s

If you’re in your 20s or 30s, and thought of entrepreneurship has entered your mind, don’t write it off as a pipe dream. Dig into some research, explore your ideas and make the most of your youth by pouring your energy into a business.

Almost all of us think about starting a business at some point. The thought enters our minds when we come up with an ingenious way to stop an ice cream cone from dripping. Or we get a job and realize we want more control over our work. Or we hear about the multi-billionaires of the world and start fantasizing about making our own riches.

Whatever your own motivation, if you’re going to start a business, there’s an ideal time to do it — while you’re still in your 20s and 30s. Why is that?

1. Long-term potential returns

Imagine for a moment that you’ve built a successful business. It’s profitable and stable and generates a nice six-figure salary for you. Assume that this setup can continue indefinitely and that you enjoy the work. Wouldn’t you want to reap the accompanying rewards for as long as possible?

If so, start your business as early as possible. Yes, it’s an optimistic scenario, but an achievable one, even if it takes you two or three tries to build a successful enterprise. The bottom line is, the more time you can spend as an entrepreneur, the better long-term returns you’re going to see.

2. Risk tolerance

Let’s face it: Not all startups are going to make it. You need to be realistic, regardless of your age. Starting a business demands a lot of up-front investment, in both time and money, and you’ll bear significant risk, in both your finances and your current or “backup” career.

Just as happens in the financial markets, the younger you are, the better you’re going to be able to tolerate that risk. You’ll have fewer responsibilities, fewer commitments and much more time to make up any losses you incur. Therefore, starting a business as early as possible mitigates your potential losses.



3. Energy and motivation

It takes a lot of work to run a startup, too. Don’t forget that. Though not written in stone, the general rule is that younger professionals have more energy, motivation and enthusiasm than their elders.

Maybe you’ll be a youthful spirit for the next several decades, but the thing is, you can’t know for sure. What seems like a solid “maybe” idea now may become a “no way” idea in 10 years; and the work you throw yourself into now may be work you’ll avoid at all costs next decade. Every year, your energy and motivation will decline. Take advantage of these personal assets while you have them.

4. Adaptability

Younger people tend to be more adaptable. Part of the reason is that they’ve had a shorter amount of time to be exposed to the norms and rules of the professional world, and are less committed to those entrenched ideals.

An even larger part of the reason is our unique technological age; we face major technological disruptions on a regular basis, and the only way for companies to survive is to adapt and integrate these new technologies.

In your 20s and 30s, you’ll stand a better chance of recognizing and incorporating these new technologies quickly; and as you get older, the rate of development for these technologies will grow even faster. So, start a business while you’re more nimble, and you’ll be able to brave ever-more volatile waters.

5. Serial entrepreneurship

Most entrepreneurs who truly love entrepreneurship end up starting multiple businesses, becoming serial entrepreneurs in their own right. It’s as if they were born to be entrepreneurs. And, for the most part, every new business these young people start is better than the last, thanks to their founders’ previous experience, growing list of contacts and broader perspective.

Also Read: 10 Ways to become a millionaire in your 20s

Starting your first business when you’re in your 20s or 30s sets you up for a longer period of time to start even more businesses; essentially, you’re maximizing the potential experience you can gain, and greatly increasing the number of businesses you can start. Don’t throw away that potential by waiting around. If you need help getting started, grab this eBook.

None of these reasons is meant to imply that you can start a business only when you’re in your 20s and 30s, or that if you’re in your 40s or over, you’ve missed the boat. On the contrary, older entrepreneurs often carry more experience and decision-making abilities and are extremely capable of building effective businesses.

However, the unique blend of advantages that younger adults have makes this phase of life a highly strategic time to start up a business.

If you’re in your 20s or 30s, and the thought of entrepreneurship has entered your mind more than once, don’t write it off as a pipe dream. Dig into some research, explore your ideas and make the most of your youth by pouring your energy into a business. No matter how things turn out, you’ll be glad you did.

This article was originally published in Entrepreneur.com

Image Credits: djtest.bvaccel.com



Flipkart journey: How a modest online bookstore became a multibillion-dollar e-commerce platform

Flipkart is among the first batch of India’s biggest startups to have achieved a billion-dollar valuation today. Its success story has inspired many entrepreneurs to start their own startups.

Flipkart is among the first batch of India’s biggest startups to have achieved a billion-dollar valuation today. Its success story has inspired many entrepreneurs to start their own startups.

Flipkart is India’s biggest e-commerce platform, founded in 2007 by Sachin Bansal and Binny Bansal. Below is the infographics of their complete journey explaining how they started as a small book e-retailer with $6,500 in their pocket and became a $11-billion company.

Below are some highlights from Flipkart’s journey.

Origin of Flipkart:

It all started with two friends Sachin Bansal and Binny Bansal, working at Amazon,brainstorming ideas for a startup, as they found their regular jobs mundane.

They both were techies and wanted to build something where they don’t have to deal with marketing and sales. So they thought of building a comparator search engine for e-commerce. But soon they realised there weren’t enough e-commerce sites to compare and found a better opportunity in opening an e-commerce platform.

Soon after, they left their job at Amazon to give their idea a shape. That was the genesis of Flipkart.

Why the name ‘Flipkart’:

They wanted a name that could speak of more than books, so that it could suit any category of products that they may add in the future. At the same time they wanted the name to be catchy and simple. So they arrived at the name ‘Flipkart’ that in simple terms means,’Flipping things into kart’.

Flipkart’s in-house products:

Flipkart is not only just an e-commerce platform it also has its own in-house products.

July 2014: Flipkart launched its own set of tablets, mobile phones, phablet and networking router, under its own brand name, DigiFlip.

Sep 2014: Flipkart launched a wide range of home appliances and personal healthcare products under brand name ‘Citron’.



Acquisitions that made Flipkart stronger:

2010: Flipkart acquired WeRead, a social book recommendation tool. WeRead already had three million readers and 60 million books at the time of acquisition.

2011: Mime360, a digital content platform company. Flipkart acquired Mime360 to enter the digital distribution domain.

2011: Chakpak.com, a Bollywood news site. Flipkart acquired the rights to Chakpak’s digital catalogue, which includes 40,000 filmographies, 10,000 movies, and close to 50,000 ratings.

2012: Letsbuy.com, an Indian e-retailer in electronics. Flipkart has bought the company for an estimated $25 million.

2014: Acquired Myntra.com for an estimated $300-million deal. The deal was expected to help Flipkart strengthen its apparel portfolio, as Myntra was the leader in fashion e-commerce industry.

2015: Flipkart acquired a mobile marketing startup Appiterate to strengthen its mobile platform.

Today, Flipkart has 75 million registered users and delivers eight million shipments/month. The app is the first Indian app to cross 50 million users. Flipkart has come a long way from where it started and there is a longer journey ahead of it.





How funding works – Splitting the equity pie with investors

The basic idea behind equity is the splitting of a pie. When you start something, your pie is really small. You have a 100% of a really small, bite-size pie. When you take outside investment and your company grows, your pie becomes bigger.

A hypothetical startup will get about $15,000 from family and friends, about $200,000 from an angel investor three months later, and about $2 Million from a VC another six months later. If all goes well. See how funding works in this infographic:



First, let’s figure out why we are talking about funding as something you need to do. This is not a given. The opposite of funding is “bootstrapping,” the process of funding a startup through your own savings. There are a few companies that bootstrapped for a while until taking investment, like MailChimp and AirBnB.

If you know the basics of how funding works, skim to the end. In this article I am giving the easiest to understand explanation of the process. Let’s start with the basics.

Every time you get funding, you give up a piece of your company. The more funding you get, the more company you give up. That ‘piece of company’ is ‘equity.’ Everyone you give it to becomes a co-owner of your company.

Splitting The Pie

The basic idea behind equity is the splitting of a pie. When you start something, your pie is really small. You have a 100% of a really small, bite-size pie. When you take outside investment and your company grows, your pie becomes bigger. Your slice of the bigger pie will be bigger than your initial bite-size pie.

When Google went public, Larry and Sergey had about 15% of the pie, each. But that 15% was a small slice of a really big pie.

Funding Stages

Let’s look at how a hypothetical startup would get funding.

Idea stage

At first it is just you. You are pretty brilliant, and out of the many ideas you have had, you finally decide that this is the one. You start working on it. The moment you started working, you started creating value. That value will translate into equity later, but since you own 100% of it now, and you are the only person in your still unregistered company, you are not even thinking about equity yet.

Co-Founder Stage

As you start to transform your idea into a physical prototype you realize that it is taking you longer (it almost always does.) You know you could really use another person’s skills. So you look for a co-founder. You find someone who is both enthusiastic and smart. You work together for a couple of days on your idea, and you see that she is adding a lot of value. So you offer them to become a co-founder. But you can’t pay her any money (and if you could, she would become an employee, not a co-founder), so you offer equity in exchange for work (sweat equity.) But how much should you give? 20% – too little? 40%? After all it is YOUR idea that even made this startup happen. But then you realize that your startup is worth practically nothing at this point, and your co-founder is taking a huge risk on it. You also realize that since she will do half of the work, she should get the same as you – 50%. Otherwise, she might be less motivated than you. A true partnership is based on respect. Respect is based on fairness. Anything less than fairness will fall apart eventually. And you want this thing to last. So you give your co-founder 50%.

Soon you realize that the two of you have been eating Ramen noodles three times a day. You need funding. You would prefer to go straight to a VC, but so far you don’t think you have enough of a working product to show, so you start looking at other options.



The Family and Friends Round: You think of putting an ad in the newspaper saying, “Startup investment opportunity.” But your lawyer friend tells you that would violate securities laws. Now you are a “private company,” and asking for money from “the public,” that is people you don’t know would be a “public solicitation,” which is illegal for private companies. So who can you take money from?

  1. Accredited investors – People who either have $1 Million in the bank or make $200,000 annually. They are the “sophisticated investors” – that is people who the government thinks are smart enough to decide whether to invest in an ultra-risky company, like yours. What if you don’t know anyone with $1 Million? You are in luck, because there is an exception – friends and family.
  2. Family and Friends – Even if your family and friends are not as rich as an investor, you can still accept their cash. That is what you decide to do, since your co-founder has a rich uncle. You give him 5% of the company in exchange for $15,000 cash. Now you can afford room and ramen for another 6 months while building your prototype.

Registering the Company

To give uncle the 5%, you registered the company, either though an online service like LegalZoom ($400), or through a lawyer friend (0$-$2,000). You issued some common stock, gave 5% to uncle and set aside 20% for your future employees – that is the ‘option pool.’ (You did this because 1. Future investors will want an option pool;, 2. That stock is safe from you and your co-founders doing anything with it.)

The Angel Round

With uncle’s cash in pocket and 6 months before it runs out, you realize that you need to start looking for your next funding source right now. If you run out of money, your startup dies. So you look at the options:

  1. Incubators, accelerators, and “excubators” – these places often provide cash, working space, and advisors. The cash is tight – about $25,000 (for 5 to 10% of the company.) Some advisors are better than cash, like Paul Graham at Y Combinator.
  2. Angels – in 2013 (Q1) the average angel round was $600,000 (from the HALO report). That’s the good news. The bad news is that angels were giving that money to companies that they valued at $2.5 million. So, now you have to ask if you are worth $2.5 million. How do you know? Make your best case. Let’s say it is still early days for you, and your working prototype is not that far along. You find an angel who looks at what you have and thinks that it is worth $1 million. He agrees to invest $200,000.

Now let’s count what percentage of the company you will give to the angel. Not 20%. We have to add the ‘pre-money valuation’ (how much the company is worth before new money comes in) and the investment

$1,000,000 + $200,000= $1,200,000 post-money valuation

(Think of it like this, first you take the money, then you give the shares. If you gave the shares before you added the angel’s investment, you would be dividing what was there before the angel joined. )

Now divide the investment by the post-money valuation $200,000/$1,200,000=1/6= 16.7%

The angel gets 16.7% of the company, or 1/6.

How Funding Works – Cutting the Pie

What about you, your co-founder and uncle? How much do you have left? All of your stakes will be diluted by 1/6. (See the infographic.)

Is dilution bad? No, because your pie is getting bigger with each investment. But, yes, dilution is bad, because you are losing control of your company. So what should you do? Take investment only when it is necessary. Only take money from people you respect. (There are other ways, like buying shares back from employees or the public, but that is further down the road.)



Venture Capital Round

Finally, you have built your first version and you have traction with users. You approach VCs. How much can VCs give you? They invest north of $500,000. Let’s say the VC values what you have now at $4 million. Again, that is your pre-money valuation. He says he wants to invest $2 Million. The math is the same as in the angel round. The VC gets 33.3% of your company. Now it’s his company, too, though.

Your first VC round is your series A. Now you can go on to have series B,C – at some point either of the three things will happen to you. Either you will run out of funding and no one will want to invest, so you die. Or, you get enough funding to build something a bigger company wants to buy, and they acquire you. Or, you do so well that, after many rounds of funding, you decide to go public.

Why Companies Go Public?

There are two basic reasons. Technically an IPO is just another way to raise money, but this time from millions of regular people. Through an IPO a company can sell stocks on the stock market and anyone can buy them. Since anyone can buy you can likely sell a lot of stock right away rather than go to individual investors and ask them to invest. So it sounds like an easier way to get money.

There is another reason to IPO. All those people who have invested in your company so far, including you, are holding the so-called ‘restricted stock’ – basically this is stock that you can’t simply go and sell for cash. Why? Because this is stock of a company that has not been so-to-say “verified by the government,” which is what the IPO process does. Unless the government sees your IPO paperwork, you might as well be selling snake oil, for all people know. So, the government thinks it is not safe to let regular people to invest in such companies. (Of course, that automatically precludes the poor from making high-return investments. But that is another story.) The people who have invested so far want to finally convert or sell their restricted stock and get cash or unrestricted stock, which is almost as good as cash. This is a liquidity event – when what you have becomes easily convertible into cash.

There is another group of people that really want you to IPO. The investment bankers, like Goldman Sachs and Morgan Stanley, to name the most famous ones. They will give you a call and ask to be your lead underwriter – the bank that prepares your IPO paperwork and calls up wealthy clients to sell them your stock. Why are the bankers so eager? Because they get 7% of all the money you raise in the IPO. In this infographic your startup raised $235,000,000 in the IPO – 7% of that is about $16.5 million (for two or three weeks of work for a team of 12 bankers). As you see, it is a win-win for all.

Being an Early Employee at a Startup

Last but not least, some of your “sweat equity” investors were the early employees who took stock in exchange for working at low salaries and living with the risk that your startup might fold. At the IPO it is their cash-out day.

This article was originally published in Funders and Founders

Image credit: saascribe.com



Fundraising 101: Checklist for Entrepreneurs

When raising funds for your entrepreneurial ventures, just follow this easy checklist to ensure you never forget the important steps again.

It’s easy to get lost in the whirlwind of raising funds for your business ventures. There’s so much to learn and process in a short space of time.

But don’t worry.

When raising funds for your entrepreneurial ventures, just follow this easy checklist to ensure you never forget the important steps again.

  • Do your homework.

Learn about the people you want around your business – those you want as business associates, those that can help you in your field and those businesses that rival yours. What can you do that will draw them to your business and you as an entrepreneur before others? Can you size up your competition early on and get ahead of the game?



  • Write your proposals for pitching to investors.

Once you have done your research and you know which people are available to invest in you and your business, you should write your pitch to target them specifically. Know your audience and how to handle them.

  • Build relationships.

Potential investors should know that the business you propose to carry out is a winner – but also that the person carrying it out with their investment money is willing and fully able to do what is necessary to build the business.

  • Reap the benefits.

Now that you’ve done all the grafting, it’s time to actually bring in your hard earned funds from your fundraising!

Whether you’re raising your funds from family and friends, big business investors or even crowd funding, you never have to miss a step again.



10 Inspirational quotes that will help entrepreneurs handle criticism

To help you go easily through rough times, here you can find 10 awesome inspirational quotes that will help you to handle even the toughest critiques.

Getting criticism is difficult – it is unpleasant and can be very discouraging, especially for entrepreneurs, who work under a lot of pressure on daily basis. It is important that you embrace the critique only if it is constructive and can help you to improve your business. Otherwise, you risk to get even more stressed without to have real reason for it.

To help you go easily through rough times, here you can find 10 awesome inspirational quotes that will help you to handle even the toughest critiques.

“Don’t be distracted by criticism. Remember, the only taste of success some people have is when they take a bite out of you.” Zig Ziglar

“The trouble with most of us is that we would rather be ruined by praise than saved by criticism.” Norman Vincent Peale

“The final proof of greatness lies in being able to endure criticism without resentment.” Elbert Hubbard

Also read: 21 inspiring quotes from animated movies for budding entrepreneurs, startups and everyone

“You’re never as good as everyone tells you when you win, and you’re never as bad as they say when you lose.” Lou Holtz

“Every human being is entitled to courtesy and consideration. Constructive criticism is not only to be expected but sought.” Margaret Chase Smith



“One of the criteria for national leadership should therefore be a talent for understanding, encouraging, and making constructive use of vigorous criticism.” Carl Sagan

Also read: The top 10 quotes every entrepreneur should live by

“Criticism is something we can avoid easily by saying nothing, doing nothing, and being nothing.” Aristotle

“You are a glorious, shining sword and criticism is the whetstone. Do not run from the whetstone or you will become dull and useless. Stay sharp.” Duane Alan Hahn

“I like criticism. It makes you strong.” LeBron James

“Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things.” Winston Churchill

Also read: 10 Powerful quotes from Indian entrepreneurs that will empower you

Image credit: www.entrepreneur-ideas.org





How to form the right startup team

Here are some of the things to consider when it comes to choosing the right startup team for your business.

Starting up a business on your own at times tends to be a recipe for disaster. It gets worse if you are on board with the wrong team and even worst when they do not share the same business goals as you. Having the right team is key for anyone venturing into the business world as a first timer.

But what constitutes to the right startup team?

Well, here are some of the things to consider when it comes to choosing the right startup team for your business.

Things to consider:

1. Hire people you know

Familiarity can both be a good and a bad thing when it comes to starting up a business. However if used the right way, it can help you achieve the goals of your company.

What better way than choosing people who you are familiar with?

From your own circle of friends, you know each and every person’s weakness and strength. This attribute will enable you to select people who you think meet your company’s vision. This is based on the fact that you have interacted at some point in your life with each one of them.



2. Partner with resourceful and connected people

Without resources and connections, it is difficult to start a business. Having people on your team who have access to certain resources can make you achieve your business dreams. In the world of today, connections are the determining factor of where your business stands. Having on board people who have access to big shots or people who get things done is an added advantage to you as a business owner. Being able to reach folks who pull the strings in the corporate world will make you move mountains. With these two allies, your company stands unbeaten.

3. Choose Passionate and Visionary People

Everyone has a vision for his or her own business. Getting individuals who share the same vision and are passionate as you are is crucial to every business. Visionary people help you reach your business target. In every business, there are ups and downs. You are going to need people who will stand by you in the stormy weather; these are individuals who are passionate and share the same vision.

4. Search for marketing experience

Experience, what every business owners asks before employing you. As a first timer, it is important to walk with people who have tasted the waters. They will be your guide in knowing the dos and don’ts in this business jungle. They will teach you the steps it takes to starting up your own business company, who exactly is your target market and strategies on how to achieve your goals.

No man is an Island. Get yourself the right startup team for your company today.

Image credit: www.ictmagazine.nl



The true value of Indian unicorns: Investment game

Investments in start-ups come attached with downside protection clauses, which are like a put option written by existing investors in favour of new investors.

A report in Mint earlier this month mentioned that Indian e-commerce firms Flipkart and Snapdeal have hit a “valuation wall”, with prospective investors unwilling to meet their latest headline valuations of $15.2 billion and $6.5 billion, respectively. This followed moves by T Rowe Price and Morgan Stanley in marking down the valuation of Flipkart to $12.75 billion and $11 billion respectively in their investor declarations.

Taken together, this possibly suggests that these e-commerce biggies might be in trouble, and possibly unable to compete with the Indian arm of Amazon.com Inc. While that is a plausible conclusion, there is another factor that might explain both the valuation discount and companies’ unwillingness to raise money at lower valuations—the optionality granted to investors.

When an investor invests Rs.1 crore for a 10% stake in a start-up, it is a common practice to assume that this investment values the start-up at Rs.10 crore. While this is intuitive and arithmetically sound, the problem is that it ignores the optionality that is inherent in any start-up investment.

Given the risks associated with investing in a start-up, investors usually demand some downside protection. While this downside protection comes in various forms, one of the most popular (and simple to understand) structures is called the “full ratchet”. According to this, existing investors in a company (this usually includes the founders) underwrite the new investor’s investment, and agree to fully compensate the new investor in case of a subsequent fall in the company’s valuation.

Let us assume that company XYZ raises Rs.1 crore from an investor, Alpha Partners, in exchange for a 10% stake. This investment gives XYZ a “pre-money” (excluding the fresh investment) valuation of Rs.9 crore, and a “post-money” (including the investment ) valuation of Rs.10 crore. Let’s say that a few months down the line, XYZ hasn’t done as well as expected, but needs fresh funds, which Beta Partners agrees to provide. Beta, however, insists on a pre-money valuation of Rs.8 crore.

Ordinarily, the value of Alpha’s investment would go down from Rs.1 crore to Rs.80 lakh (10% of Rs.8 crore). However, because Alpha had a “full ratchet” clause attached to its investments, the earlier investors (including founders) have to compensate Alpha with shares worth Rs.20 lakh (the difference in valuation). This way, despite the firm having not done too well, Alpha’s investment has remained protected, with older investors bearing the downside risk.



In other words, while the original agreement gave Alpha a tenth of the shares, Beta’s investment at a lower valuation means that Alpha now has an eighth of the remaining shares (though the total value of these shares remains the same). An even lower pre-money valuation by Beta would have resulted in a higher transfer from the original investors to Alpha.

This way, it is not hard to see that the full ratchet that was part of Alpha’s investment agreement is essentially a put option written by the older investors in favour of Alpha. There would be no problem if Beta’s pre-money valuation was higher than Alpha’s post-money valuation.

The lower Beta’s pre-money valuation is, the more the original investors must transfer to Alpha (this is limited by the number of shares the original investors retain. If Beta’s pre-money valuation is lower than Alpha’s investment, the original investors are completely wiped out, and we can assume that the company itself might cease to exist then).

Thus, for the Rs.1 crore that Alpha Partners invested in XYZ, it not only got a 10% stake in the company, but also a put option that protects its investment against a lower valuation in a further round. This put option is written by the existing investors in the company at the time of Alpha’s investment.

This implies that a share of the company held by Alpha partners includes a long put option, while a share of the company held by earlier investors includes a short put option (since they have implicitly written this option). In other words, a share held by the new investors is worth much more than a share held by earlier investors. Alpha might have invested Rs.1 crore for a 10% stake, but the value of the company is far less than Rs.10 crore. In order to determine the precise valuation, we need to value the put option.

Valuing a put option in a start-up is different from valuing one in a publicly traded company. The most important difference is the way in which the price moves—while it is slow and steady for a public company, start-ups either grow fast or die, implying we need a different process for prices or returns. Moreover, opportunities for trading in start-up companies are fewer, and the full ratchets don’t come with an expiry date attached, implying we need a different model to value such options.

With the formula in hand, we can now value the option embedded in investments in start-ups, and what this tells us about the overall valuation of the company. Starting with our example, for a Rs.1 crore investment for a 10% share of the company, the value of the full ratchet option can be derived from this formula as Rs.27.8 lakh. In other words, the Rs.1 crore that Alpha invested pays for both a 10% stake in XYZ as well as an option worth Rs.27.8 lakh. The stake itself thus costs only Rs.72.2 lakh, implying that the full company can be valued at Rs.7.2 crore (compared to the Rs.10 crore headline valuation).



We can now apply the formula to the latest round of venture capital investments in a few popular Indian private companies. It must be noted, though, that these investments need not have come with a full ratchet protection, and the valuation is sensitive to the nature of protection used (sometimes the ratchet can be set at a higher strike price. At other times, a “weighted average” method could be used to determine the transfer of shares, which decreases the option payout).

It is interesting to note that Morgan Stanley’s reported valuation of Flipkart is not very far from the value we have calculated assuming a full ratchet downside protection (along with other assumptions).

An additional feature of downside protection instruments such as ratchets is that they “telescope”. Each round of investors is long an option that comes along with their investment, but short another option that comes with the next round of investment! Thus, with every succeeding round of increasing valuations, investors from the previous round can go from being long a put option to being short an option. And this creates conflicts when it comes to fund raising.

The latest round of investors usually don’t mind a “down round” (an investment round that values the company lower than the preceding round) since their ratchets protect them, but earlier investors are short such ratchets, and don’t want to see their stakes diluted. Thus, when a company is unable to find investors who are willing to meet its current round of valuation, it can lead to conflict between different sets of investors in the company itself. When US-based payments company Square went public in 2015, about $93 million worth of stock had to be paid out to its last round of private investors. These investors had been promised a 20% return on their investments, and when the initial public offering (IPO) had to be priced low, they had to be compensated with additional stocks. It is interesting to note that Goldman Sachs and JPMorgan Chase & Co., who held ratchet options after having invested in the last private round, were also among the underwriters to the IPO.

Image credit: www.alleywatch.com



‘Why trash it, when you can cash it’, say these engineering students from Dehradun

Indians are known for their keen business sense, and for making money even out of small things. Mohneesh and his friend Ashish, both Computer Science students at DIT started a portal that helps people sell their scrap without waiting for the dealer

Indians are known for their keen business sense, and for making money even out of small things. When Mohneesh Bhardwaj was returning home for his summer vacation, he discovered that most people at his college hostel left behind a huge amount of trash (newspapers/old books/used registers and other scrap). This scrap was then being sold by the hostel authorities.

Mohneesh noticed anomalies in the system, such as the lack of distinction between normal and e-waste, and decided to do something about it. He had been wanting to start something for a long time; reading about entrepreneurs online just increased his drive. Around the same time, TVF Pitchers was launched and it further fueled their enthusiasm. Mohneesh and his friend Ashish Yadav, both 2nd year Computer Science students at Dehradun Institute of Technology University (DIT) started Kabaada.com – a portal that helps people sell their scrap without waiting for the dealer.

Users can either log on to the website, call, or use WhatsApp and have their scrap picked up. After a request is logged on Kabaada.com, a local vendor is notified to pick up the scrap. Unlike traditional vendors, Kabaada.com has standardised rates for the garbage. To streamline the whole process, they divided the entire city into smaller areas. Mohneesh says, “We divided the whole city into many territories, with vendors in each territory. When someone submits a request, we forward their request to the vendor in that territory. In this way, one is able to get service as fast as pizza delivery.”

Following the launch, the team left no stone unturned to market themselves to people, whether it was through distribution of pamphlets, or pasting posters in hotels and restaurants, or even targeting schools to spread awareness about their mission. One of the most important things the team took care of was making sure they did not replace the localkabaadiwaalas and take away their income. Instead, they hired them and worked with them on a commission basis.



Though the company provides free door-to-door pick up service to customers, they have been making profits since Day 1. Right now, their main revenue stream is through the commissions they earn on scrap from scrap dealers.
They have gained good traction since they started three months ago. At present, the company has around 8,000+users. They have also got requests from other cities. Talking about the market, Mohneesh says,

“Given India’s still-growing Internet penetration rates, our current target segment includes shopping malls, hotels , households, students, etc. Our in- depth market segmentation analysis revealed that about 42 million tons of scrap is recycled in India every year. The most exciting part is that our market is consistently expanding with the increasing numbers of Internet users, who can now sell all their scrap with just one click. In the future, we expect to become the market leader in recycling all scrap materials across India.”

Coming from a Tier -2 city, and started by 2nd year engineering students, this startup looks promising as it has all the right ingredients and has been making profits since inception. Increasing waste is a huge issue that is clogging landfills and endangering lives at a very rapid pace. Reducing, recycling, and reusing goes a long way. Kabaada.com is efficiently helping with recycling, using technology as a medium. However, there is a clear need for more players in this space given our huge population, and we hope to see more startups bridging this gap.

This story was originally published in yourstory.com



Kishore Biyani, CEO Future Group, reboots for the digital era

As the lines between offline and online retail blur, India’s retail king is tweaking his strategy to stay ahead of the competition.

Fabfurnish.com, the online furniture retailer acquired by Kishore-Biyani-led Future Group, was relaunched with a fresh campaign and a slew of deals. It marks a new chapter in the evolution of the group, which is best known for kicking off the modern retail revolution in India a decade ago.

However, when Biyani, 54, laid his hands on the Rocket-Internet-promoted company last month, it did come as a surprise. The Marwari businessman has been a fierce critic of the e-commerce business model in India, saying it is designed to lure consumers with discounts with little focus on profits.

That moment appears to have arrived. Fabfurnish is his first acquisition but more such deals could be in the offing. “I am not closed to the idea,” he says. “I will do it selectively and ensure our investments make money,” he adds.

It is clear the lines between physical and virtual shopping are blurring for him. He said he plans to merge the group’s home furnishings business under HomeTown with Fabfurnish and subsequently de-merge it from flagship Future Retail.

The goal is to unlock value and make his home furnishings business a stronger enterprise in the face of increased competition. Once the online and offline arms are merged, HomeTown is likely to reach a turnover of Rs 1,000 crore within a year. It closed the last financial year with revenues of around Rs 750 crore.

The driving force

Biyani’s hybrid business model, also called omni-channel retail in industry parlance, is a compulsion, say analysts. With consumers today spread far and wide, brick-and-mortar retailers have been left with no option but to add an online leg to their offline operations in a bid to reach as many customers as possible, and quickly.



Biyani has been at work on an omni-channel presence for a year now, trying to create a seamless and consistent brand experience across his group’s retail channels: bigbazaardirect, futurebazaar.com and offine stores. Other retailers, including Reliance Retail, Aditya Birla Retail and Shoppers Stop, have also been working on creating an omni-channel presence in recent months.

“The endeavour is to reach more consumer touchpoints and ensure you are there while the action is on. The ultimate objective is customer acquisition. That will mean that you have to go where he or she is,” says Devangshu Dutta, chief executive, Third Eyesight, a consultancy firm.

A recent study by the Retailers Association of India and Mumbai-based data analytics firm Hansa Cequity says that nearly 74 per cent Indians shop across all channels including neighbourhood stores, modern trade outlets and online platforms.

The study also notes that a significant number of these consumers still prefer to touch and feel products before buying, implying therefore that an online-only model is not enough.

Domestic e-tailers have picked up this cue. The top three e-commerce majors -Flipkart, Snapdeal and Amazon – have all gone offline in the last six to eight months to ensure the “touch and feel” experience is provided to consumers.

Flipkart, for instance, has tied-up with brick-and-mortar retailer Spice Hotspot to provide access to its exclusive range of phones offline. Its fashion arm Myntra is in advanced talks to acquire brick-and-mortar chain Forever 21, which will allow it to stock its online catalogue offline.

The same goes for rival Snapdeal, which has initiated tie-ups with The Mobile Store and Shoppers Stop for mobiles and apparel, respectively. Amazon, too, is tying up with small retailers across the country in a bid to allow consumers with no internet access to shop online in these outlets. It is also setting up Amazon-branded stores offline.



Additionally, the top three e-tailers have pick-up stores offline where consumers who’ve purchased products online can get delivery of their goods.

Dutta says the online-offline retail marriage follows global trends. “E-tailers abroad such as Amazon, Birchbox and Bonobos in the US, Spartoo in France, Astley Clarke in the UK have all opened physical retail stores in recent years. This completes the picture in a sense and plugs gaps if any,” he says.

Social media to retail

Hybrid business models are not restricted to retail alone. Social media giant Facebook recently entered hyper-local services in India, offering everything from medical and repair to business and personal services. Apart from letting users to browse for these services, the initiative also allows them to leave reviews so that other consumers can make the right choice.

Tech giant Google, too, is on a similar adventure. In recent years, it has ventured into making wearable tech devices, mobile phones and is now piloting driver-less cars. This even as it strengthens its presence online with a suite of services from basic search to online advertising, email, chat, browsing and software for phones.

Harish HV, partner (India leadership team), Grant Thornton India, says that hybrid business models for these companies is a way to ring-fence themselves from competition by marking their presence in virtually every space.

This online-offline merger, he says, will mean that these firms will get stronger as they enter new areas. The world is indeed shrinking.

This article was originally published in Business Standard

Image credit: www.newsx.com



Inspiring stories of Indian women entrepreneur: How they stood against the society and worked against the odds

As these women are succeeding in their ventures, they are also making it clear to the society that hard work, determination, ambition and leadership are not the traits limited only to men

“If You Are Determined, No Hurdle Is Big Enough To Stop You From Achieving What You Want”

After having been kept away from showing their talent to the patriarchal society for generations, women have now started coming out of their homes and no wonder, they are actually taking things to an altogether different level. Be it politics, sports, sciences or even startups, women have won quite a lot of applause and exhibited notable skills everywhere. Burdened with both responsibilities, that of the home and of their startup as well, women are proving themselves efficient, besides, for long, being the caring family members.

As these women are succeeding in their ventures, they are also making it clear to the society that hard work, determination, ambition and leadership are not the traits limited only to men. Shyness, fear or hesitation is not a part of women’s personality anymore. They are confident, intelligent and ready to take on the challenges of the world.

So, sit back, let the femininity flow and read the inspiring stories of these Women Entrepreneurs.

Anisha Singh

With a master’s degree in political communication and an MBA degree in Information Systems from the American university in Washington DC, Anisha started her first job with the Clinton administration where she helped women entrepreneurs raise funding for their ideas. Later, she worked at Centra software in Boston before returning to India.

After working for years, she got into entrepreneurship when she founded mydala.com in 2009. Her idea and her efforts reaped sweet fruits as her startup is now amongst the leading online portals of the country.

The company’s name is derived from the Sanskrit word “dala” which means group. It’s a marketing portal which connects merchants and consumers and allows users to purchase offers from Airtel, Vodafone, Tata Docomo and Aircel via ecommerce. Headquartered in New Delhi, the company which she co-founded with Ashish Bhatnagar and Arjun Basu has already received two rounds of funding i.e. INR 1.1 Cr. from angel investors and in 2011 it raised a total of $6 Mn.

Swati Bhargava

At the age of 16, while other students of her age were still figuring about their school examination preparations, this girl from Ambala had already obtained a scholarship to study in Singapore. A determined Swati later graduated from London School of Economics and for the next 5 years worked with Goldman Sachs in London.

But, soon she realised clocking in and out for others was not what she wanted to do. And then she founded Pouring Pounds with her husband Rohan Bhargava in July 2010. Pouring Pounds is a B2B startup used by the brands to manage cashbacks and vouchers. Continuing her entrepreneurial streak, Swati ventured into the Indian startup ecosystem by launching a cashback website, Cashkaro.com, in November 2012. With over 500 partners including the likes of Myntra, Yatra, Snapdeal, Flipkart and Jet Airways, Cashkaro.com, today, is one of the leading coupon portals of the country. Headquartered in Gurgaon, the company has reportedly received a funding of $750,000 from angel investors. Associated with various startup and tech initiatives such as the Nasscom 10,000 girls in tech, Sheros and TiE, Swati is also amongst the most active entrepreneurs on social media.



Richa Kar

After acquiring her degree in Engineering from BITS Pilani and Master’s from Narsee Monjee Institute of management studies, Richa worked with several global retailers before starting Zivame.com.

Zivame, a web portal which got its name from the Hebrew word, ziva meaning radiant, offers over two thousand lingerie products.

It was founded in 2011 in Bangalore and from six thousand users in the first year, Zivame now caters to over seventeen lakh users, 85% of whom bought lingerie online for the first time.

Richa does seem to have started an all new genre in the online fashion industry.

Priya Maheshwari

Priya got her masters’ degree from University of Pennsylvania and worked as a policy expert in New York before she moved to Bangalore and co-founded Properji.com along with IIT Alumni Guruprasad Bangle, Umesh Rangasamy and Naveen Galithoti.

With the aim of introducing transparency and professionalism in the market of property, the startup was brought to life in August 2013. The startup claims to provide research based facts to guide the buyer to buy the perfect house of their dreams.

The startup had received over 500 sign ups from the users and the total value of the property they have dealt in, sums up to a massive INR 19 Cr.

Radhika Aggarwal

An MBA from Washington University, Radhika has been a part of an executive program at Stanford University. Before co-founding Shopclues.com in 2011 with Sanjay Sethi, Devesh Rai G, Vishal Sharma, and her Husband Sandeep Aggarwal, she ran a fashion blog out of US known as fashionclues.com.

With 14 years of diverse marketing experience, she started one of the highest growing online marketing portals. Shopclues experienced a growth of over 600 percent in the year 2012 alone. Backed by Helion Venture Partners, Nexus Ventures and Netprice’s CEO Teruhide Sato, the startup has recently raised $100 Mn in series D funding. They have close to 33,000 partners and are expanding at a fast rate. Also, reports continue to roll in about a possible acquisition of shopclues.com by flipkart.



Falguni Nayyar

Falguni has a degree in economics from Sydenham College of Commerce and Economics and Post graduate diploma IIM Ahmedabad. A veteran in the field of financial planning with an experience spanning over 25 years, Falguni eventually quit her job to be an entrepreneur. In April 2012, she launched Nykaa, a women centric ecommerce portal providing beauty and wellness products. Focused on providing the best beauty and wellness products, the startup targets the urban women of the modern India. Last year, Nykaa.com raised undisclosed sum through private investors including NRIs and HNIs. They aim to utilize this money for their expansion plans.

Aditi Avasthi

OMG! Its exam time! That’s the reaction of every parent, tutor and teacher when the exams are nearing, and that multiplies manifold if the exam is for entrance to some high level institution with a next to nothing selection ratio. But, in this chaos, everyone joins the rat race and nobody bothers to think about the solution.

After facing similar challenges during her exams back in 1999 and graduating from Thapar University, Aditi got an MBA from the University of Chicago and founded Embibe, in 2012. Embibe focuses on technology and data combination to help students prepare better for the competitive examinations. The startup focuses on creating a personalized preparation routine for the user and it raised $4 Mn from investors Kalaari Capital and venture fund LightBox.

Preeta Sukhtankar

When several years of experience in media and branding was combined along with a desire to start something new, that was when an ecommerce company called The Label Corp was founded. The company focuses on celebrity expertise for suggestions and acts like an “editorial” brand. The genius behind this idea is Preeta Sukhtankar, a graduate from St. Xavier’s College.

Sporting brand tie-ups with celebrities like Suzanne Khan, Malaika Arora Khan and Bipasha Basu, the startup has plans of further expanding its celebrity portfolio and also of creating virtually real-time environment for its users with the expertise of top celebrities in the industry. Label Corp has reportedly raised $1-2 Mn from Kalaari Capital.

Pranshu Bhandari

Available as a website, as well as iOS and Android app, CultureAlley provides audio-visual lessons to help its users learn language from the comfort of their homes. Personalized in real-time to serve to the needs of the user, it can be accessed even while browsing Facebook or Twitter.

Pranshu, a grad from NMIMS, Mumbai, co-founded the startup along with Nishant Patni and a team of six others in December 2012.

CultureAlley has received a total of $345,000 from angel investors in three rounds of funding. The startup has a userbase of over 400 thousand users in 220 countries around the globe.

Rashi Narang

After she checked out local markets for her dog Sara, Rashi found out that they were below par and that was when the idea of found HUFT hit her head.

Launched in 2008, Heads Up For Tails is an initiative which aims to serve to the needs of dog owners who wish to pamper their little source of joy. From dog beds and apparels to healthy food and nutrients, the online pet store provides a wide range of accessories for the pets. Rashi has a masters’ degree in human resource management from the London School of Economics and has also spent several years working in the banking industry.

The company is an all women team and Rashi works along with Shreya and Tanya. Apart from this, they also provide services such as party organizers and planners for your pets.

Sairee Chahal

Due to several reasons like marriage and family extension, many women leave their established careers with a desire to return back later. But, only a handful of them actually return to pursue their career.

Sairee, the founder of Sheroes.in, established the company in January 2014 with a mission to empower women and help them find a suitable job which they might have been deprived of due to several reasons. Sheroes.in by getting the women a job, tries to provide them with an opportunity to get back on their feet again.

Sairee also runs Applied Life, a firm focused at connecting women to their careers. Apart from an entrepreneur, she is also a renowned speaker on workflex, social entrepreneurship, women development, media and branding.

Sakshi Tulsian

Sakshi has an engineering degree from Bharatiya Vidyapeeth College of Engineering, New Delhi and has worked with several software companies including Sapient technologies, Technoapex and Web sanchar before she finally co-founded Posist with her husband, Ashish Tulsian in September 2011.

Posist is an SaaS-based eatery management system for the country’s growing restaurant industry. The main features include customer relationship management, inventory, delivery, take-away and table orders. The web-based service provider had raised approximately INR 3 Cr. via LetsVenture and plans to expand its user base over the country.

Suchi Mukherjee

Limeroad is a well known fashion discovery portal which provides the users with the latest range of products and accessories, 80 percent of which are unique to their own portal. With a product listing of over 200,000 products,

Limeroad was started in 2012 by Suchi along with Manish Saksena, Ankush Mehra and Prashant Malik. Suchi has been named 1 of the 15 ‘Rising Talent, high potential leader under 40’ worldwide. The company has raised a funding of $20 Mn in rounds A and B from Lightspeed venture partners, Matrix partners and Tiger Global.



Upasana Taku

Upasna, after graduating from NIT Jalandhar, pursued her masters’ in management science and engineering from Stanford University before she started a career in payments and financial services which spanned a period over eleven years.

Apart from being Director and CEO at Zaakpay.com, Upasna co-founded MobiKwik with Bipin Singh in 2009 and has reportedly raised $30.3 Mn in 2 rounds of funding.

It is an e-wallet app which allows you to make all the transactions through the wallet itself.

Valerie Wagoner

Valerie, who has earned both her bachelors’ and masters’ degree from Stanford University has been a part of companies like eBay, Ning and SayNow. In 2013, she was also named as the top innovator under 35 for India by MIT.

In 2010, she founded ZipDial which is a leading mobile analytics and marketing platform. It enables global brands to connect to 100 percent of its users and the consumer intelligent platform drives solutions such as offers and couponing.

The company has received an undisclosed amount of funding in three different rounds and before getting acquired by Twitter.

Shubhra Chaddha

Shubhra Chadda co-founded the Bangalore-based startup Chumbak with her husband, Vivek Prabhakar, in the year 2010. The company offers attractive products which include accessories, phone covers and other lifestyle products.

These products are inspired by the everyday things that we see around us. The India-based theme of the company allows a better understanding of the products and also led to innovation.

Initial investment was fulfilled by Shubhra and Vivek after they sold off their house to raise INR 45 Lakh. After receiving funding from seedfund in 2012, the company had also raised money from Matrix partners.

Priyanka Gill

After completing her graduation from Lady Shri Ram College for Women, Priyanka worked as a fashion journalist for several years before getting a Masters’ degree from Kings College, London.

In late 2012, Priyanka met Namrata Bostrom and since both of them were looking for digital content space for women, they co-founded Popxo.com in early 2014, a digital lifestyle magazine for women.

The startup has raised approximately INR 3 Cr to expand its base and speed up operations. Currently a team of 10, this startup is based out of Mumbai and Delhi.

According to the projections, Popxo will have 300 Mn women users by the end of 2020.

Malini Agarwal

Malini is India’s first and well-known celebrity blogger. After graduating from Delhi University, she worked with several media giants which include Radio One and Channel V.

In 2008, she started her own blog missmalini.com, which covered all the gossips from the world of fashion, entertainment and Bollywood. The blog was started as a hobby to fulfill her writing needs which Malini was fond of. But soon, she left her job to concentrate on the blog full time.

The blog reportedly has 500,000 monthly visitors and 2 Mn followers across social media platforms. 60 percent of her readers are Indian while others belong to one of the 120 countries; hence, she is renowned globally. The startup raised an initial angel funding in early 2012 and looks forward to another raise this year.

Neha Behani

In 2011, Neha quit her full time job along with Kumaran Mahendran in order to start a mobile advertising network based on the Concept of SoLoMo (Social, Local and Mobile) but after 2 years of rejection, one day they were at a bar when the idea for Moojic came up and rest is history.

Neha Behani, Co-founder, COO and CMO, Moojic has graduated from Mount Carmel College, Bangalore and has received her MBA from Asian Institute of Management, Phillipines.

After working for several years, the entrepreneurial side of Neha showed up and finally led her to Moojic. The startup had raised an angel round of investment whose investors included Rajan Anandan, MD, Google India. They are also planning a pre-series A round of investment.



Aparna Rao

Aparna Rao, an artist by profession and a TED fellow who has been creating mechanical art with Soren Pors since 2005, started Phantom hands in 2013 along with her husband Deepak Srinath.

Phantom hands is an online store which offers antiques, rare furniture articles and collectibles for sale.

Aparna’s love for art was a major factor in the startup besides her husband’s entrepreneurial skills.

Aditi Gupta

One the most common taboos is Menstruation(oops! I said it), but with time it is getting the attention that is needed for the society to accept the fact and talk openly about it. One such initiative has been taken by Aditi Gupta who is an electronics and instrumentation engineer and also has a post graduate diploma in New Media Design from National Institute of design.

Aditi got her first period when she was 12. But, because of the unpleasant experience and lack of information she had during her puberty, she decided to spread awareness about the same. Along with Tuhin Pal and Rajat Mittal, Aditi launched Menstrupedia and also created a comic which was applauded for its initiative. Aditi has even received offers for the publication of the comic strips and create an interactive environment based app.

Sabina Chopra

With over 16 years of work experience, Sabina Chopra, who headed operations for ebooker (Europe’s largest travel company) in India, launched Yatra.com in 2006 along with Dhruv Shringi and Manish Amin.

Yatra is an online portal to book flight tickets and hotels in India and abroad. The startup by Sabina has raised funds in 4 rounds of funding with a total exceeding $50Mn.

Sabina has a degree in Bachelor of Arts from Delhi University.

Chitra Gurnani Daga

With the vision of bringing in a hub for adventure sports, Chitra Gurnani co-founded Thrillophilia Adventure Tours Pvt. Ltd. with Abhishek Daga in May 2009. Thrillophilia an online marketplace for tours and activities. On the platform, one can discover, compare and book tours and activities.

The startup based in Bangalore was started in 1bhk apartment and they moved into a commercial office seven months later which was a result of unprecedented hard work and determination. The website has more than 1 million visitors every month and is growing at 200% annually. Her startup raised angel round of funds in Sep 2013.

Ashwini Asokan

A bachelor’s degree from MOP Vaishnav College, Madras University and Masters’ in Interaction design wasn’t enough for Ashwini Asokan to pursue her passion for Computer Vision and Artificial Intelligence.

Before she co-founded Mad Street Den with her husband Anand Chandrasekaran, Ashwini worked as a mobile portfolio manager at Intel and at Imprint Colour Graphics.

The company, founded in 2013, focuses on AI and its flagship product is a visual search engine which can be used by fashion based e-commerce websites. The startup has several visions to deliver life changing experiences to its consumer base. The startup recently raised $1.5 Mn from Reservoir Investments’ Exfinity Fund and GrowX Ventures.

Ankita Gaba

Ankita Gaba is an entrepreneur and a specialist in brand management and marketing for businesses and celebrities.

After pursuing her graduation from Wilson College, Mumbai and getting an MBA in marketing from Welingkar Institute of Management she started her first entrepreneurial project called SuperChooha which was a business and celebrity social media management firm. But after trying her hand at several other things including social media consultation and artist and movie marketing, Ankita co-founded SocialSamosa with Aditya Gupta in November 2011. This portal aims to be the one stop shop for all the news.

Neeru Sharma

Neeru Sharma is the head of corporate and business development and co-founder at Infibeam.com partnering with Vishal Mehta, Vijayakumar Subramanian and Sachin Oswal.

The company was founded in 2007. Being an engineer with an MBA degree from Carnegie Melon University, Neeru has worked with Amazon, US in the department of corporate development and media retail and played an important role in $850 Mn Zappos acquisition.

The self-funded startup was initially funded by Vishal Mehta with a sum of INR 10-15 Crore. The firm has done two acquisitions so far which include picsquare.com, a personalized photo printing website in 2008 and odigma, a digital marketing company for $5 Mn in 2014.

Neetu Bhatia

An investment banker turned entrepreneur, Neetu Bhatia who is also a state level cricket player wanted to represent the country in the sport. But, she ended up getting an engineering degree from Govt. College of Engineering, Pune and then went on to pursue her Masters’ at MIT, USA.

In July 2007, she co-founded KyaZoonga.com with her brother Akash Bhatia which is an online ticketing platform mainly focused on sports and entertainment. It provides easy access to tickets for all sporting events with multiple payment options at the ease of the customer.

The startup has been funded by New York based Hedge fund worth over $22 Bn.

Pankhuri Shrivastava

Two years of fellowship at Teach for India along with an engineering degree in Computer scienceis what turned an engineer Pankhuri into a bright and smart entrepreneur.

She is the co-founder of Mumbai-based startup known as Grabhouse.com which is an online portal used to search for roommates with similar requirements and budget.

Prateek Shukla is Pankhuri’s partner and the co-founder of the firm. The startup had initially raised capital from Chetan Bohra and Navin Ranka of RB Partners. Recently, they have reportedly raised an undisclosed amount from India Quotient and MV Krishnan, VP Deutsche Bank.

Rashi Choudhary

The team of Rashi Choudhary, Karan Mehrotra and Amit Naik launched LocalBanya.com in May 2012 which is Mumbai’s first online supermarket store. They aimed at delivering the best quality products with the widest range.

Rashi, an MBA from SP Jain Institute of Management Studies started off her career with Ernst and Young and switched few companies during her professional career until this startup happened to her.

With further expansion plans the company is looking at raising $20 Mn in series B funding after getting an investment of $5 Mn from Karamvir Avant Group and an undisclosed amount from Bennett and Coleman.



Surabhi Dewra

Apart from being an electrical and electronics engineer from BITS, Pilani, she has also been a fellow of the Startup leadership program which is a world class training program.

After working as an engineer at Freescale semiconductors and as a promoter at Catalog Educational Services, she decided to implement the idea of exploring the education sector and providing a better quality of education. But career counseling was missing and this is what inspired her to start Meracareerguide.com in 2009 and in 2011, Love Chopra joined hands.

An undisclosed amount has been invested by Vishal Gondal and Ronnie Screwvala in the venture.

Suruchi Wagh

Suruchi founded Jombay.com in 2010 along with Mohit Gundecha. Jombay is a talent research and analytics company designed by research analysts and data behavioral scientists from Stanford University and University of Southern California, Los Angeles among others.

The company provides data-driven results to the employers based on competency, leadership, engagement and retention along with a 360 degree feedback. Suruchi completed her engineering from College of Engineering, Pune in India and moved to the states to pursue her masters from University of Southern California, Los Angeles.

Her startup Jombay has been listed twice in ‘India’s most promising companies’. Jombay works with companies like Nestle, Kotak Life, Taj Hotels and Tata AIA among others and has analyzed over 1 Mn professionals. Their investors include Nirvana Venture Advisors, a Patni family anchored Venture Capital firm. Apart from the entrepreneurial streak, Suruchi enjoys a passion for Bharatnatyam.

Prukalpa Sankar

The flair of entrepreneurship and a wish to do something for the society pushed Prukalpa to cofound SocialCops, a data technology company that uses technology to turn citizens into key decision makers and to make data driven decisions in public health, education & infrastructure. Currently based out of New Delhi, Prukalpa graduated in Biomolecular Engineering and Entrepreneurship from the Nanyang Technological University of Singapore. She has also worked with Goldman Sachs and Exxon Mobil.

At an early age of 10, Prukalpa coded an HTML website for Harry Potter Fans around the world. During her graduation, she founded the Singapore Entrepreneurship Challenge, an event which sees participation from over 150 startups every year. The flair of entrepreneurship and a wish to do something for the society pushed Prukalpa to cofound Social Cops, which raised $320k in its first round of funding led by 500 Startups, Rajan Anandan (MD, Google India) and Manoj Menon (MD, Frost & Sullivan APAC).





Indian Startup Story – Why are Most Startups Feeling the Heat? What’s Next for them?

It is well documented now that the Great Indian Startup journey is going through a bumpy ride at the moment. Is it the end of the ‘Gold Rush’?

It is well documented now that the Great Indian Startup journey is going through a bumpy ride at the moment. Is it the end of the ‘Gold Rush’? A lot of people have been talking about the doomsday kind of a scenario. We certainly have seen glimpse of it with the ‘Unicorns’ of Indian startup world taking a hit. First it was Flipkart investors de-valuing their investments. Now Zomato, another blue-eyed boy of the new world taking a hit with one of the I-Banks – devaluing its valuation by as much as 50%. Other smaller players have either shut shop or pivoted to new models. We all know about the TinyOwl saga or how Pepper Tap fired most of its staff and pivoted to a pure logistics play.

So why is this happening? What should be done to change the scenario. There is something about companies growing at an unprecedented pace, solving problems of their newly acquired customers while simultaneously addressing 1000s of internal operational challenges. In doing so – they burn cash and sometimes that in turn burns the company down.

However, there are several new-age players out there who are trying to do it the right way. Some of the companies that come to my mind include Big Basket & Satva Kart in the e-grocer space. Then we also have companies like Cardekho – which is not a typical start-up but has established a business model and has used the old business principles to grow sustainably. Another interesting player that has caught my attention is Swiggy – surviving and growing in a segment where a lot of startups have come and gone. Even though – they have been lucky to an extent that Zomato was late in joining the race. Till now they have managed to stay ahead of them.

Related Post: From Uber to Zomato, tech startups struggle to sustain valuations

So what is that they have done well? And is there any holy grail for success? However, during this tough time when funding has dried up and everyone is figuring out ways to extend that runway. There are definitely few things that companies can follow to ensure efficiency is achieved.



These are:

  • Unit economics: Finally, start-ups are waking up to the holy grail of any successful business ever. Your unit economics need to make sense or move increasingly in that direction. Gone are the days when GMV/Customer growth was the key to raising funding. Now you need to show pockets of profitability in your overall business plan. Be it a hub or a product or a service. Use fund capital like you will use your own capital and you will know the answer to most of the questions.

 

  • Marketing ≠ discounting: Most start-ups are guilty of falling for this trap. Instead of marketing the USPs, convenience factor, problem they are solving – most of the communication is directed and focused towards how cheap the offering is. There are multiple issues with this approach:

 

  1. Customer is being trained to expect a discount every time he books a service/buys a product from you.
  2. Internally your employees increasingly get convinced that only way to sell is to discount our offering(s). This also leads of lack of trust in your own employees in your product.
  3. Rising discounts leads to higher burn which forces companies to cut corners on the fulfilment side. This becomes a vicious cycle.

 

This behaviour is well imbibed in today in most Indian start-ups. However, given the market conditions and the fact that funding will be difficult to come by. This will do a world of good to the companies to stop this exercise. Yes, sales might take a hit in the short run.

Related Post: Is Oyo Rooms the startup equivalent of a Ponzi scheme?



This brings me to the next point;

  • Market the right way: If you consistently communicate and deliver on the following – your sales story will get back on track.

 

  • Deliver value consistently.

 

  • Trust your product: If what you have made is solving a real problem and you genuinely believe in the product and others are also trusting you as well (investors, co-founders, employees) – then back your instincts by highlighting the value, USP etc rather than using discounts.

 

  • Identify & focus on your target audience – are you seeking deal seekers? or value seekers?

 

  • Be Agile: Being Dynamic has to be in every start-up’s DNA. However, the biggest challenge is when is the right time to change? If something is not working out – do you change immediately or should you wait? In most cases you should act first and then change things while you doing them. A start-up cannot afford the luxury of second guessing every decision nor can it waste time in contemplating the pros and cons of every action. Key is to back up your instincts and adapt them to market changes.

 

  • Look at the data with a hawk-eye: This should be done irrespective of the upturn or downturn. Data will always tell a story. Be honest with it and you will know what decisions to make.

 

  • Scale or conserve: Given the sluggish economy and funds taking a hard look at all start-ups. It is extremely important to maintain that critical balance of meeting growth targets along with not going over with your spending. Again, the key is to align your investors on what they want right now? If they still ask you to chase growth without being prudent with your spending – Question them back in the current scenario and try to ensure that the next round of funds are also coming from them!!. SUSTAINABLE GROWTH IS THE KEY!!

 

  • Be transparent and over communicate: Most start-ups lag in this aspect. Most employees are left to draw their own conclusions through the unofficial channels and coffee machine discussions. This does more damage to any start-up than anything else, a common streak among all the unicorn start-ups. The founders keep all forms of communication channel open and clear any confusion asap. A good example here is Zomato. Whenever, any confusion/counter productive news starts doing the round – Deepi is the first person to send out a company wide mail to stop the rumour mill from churning out unproductive grape-wine

 

Solving your business/operations problem is equally if not more important to solving customer problem. If you solve the customer problems but your internal problems is making your business nonviable – who should you blame for it? Finally, funding will still be available but folks would have to work a lot harder to get it than they ever did in the past.

Related Post: 7 Things I learned from my first startup failure

Image credit: www.techwire.net



7 Things I learned from my first startup failure

People say ‘Startup is like jumping off the cliff and then building a parachute before you hit the ground’. In our case, we did jump off the cliff but didn’t bring the tools to build the parachute.

We made a lot of mistakes in our first startup which led to its failure. We were like every other undergraduate student. We were motivated to build a business while in college and even skipped our college placements.

People say ‘Startup is like jumping off the cliff and then building a parachute before you hit the ground’. In our case, we did jump off the cliff but didn’t bring the tools to build the parachute. Sigh. 

Here are my learning from my first startup failure:

1. Plan and Validate

Don’t start something because you ‘feel’ it’s right. Go out. Get your hands dirty. Do some market research. Find out the problem that your customer segment is facing and does your solution really alleviate the problem. Get your idea validated.

2. Find a great Co-Founder

It’s certain that you cannot possess all the knowledge of the world. It’s wise to start with a co-founder, but don’t start with any co-founder; your best friend may not be your best co-founder. Find someone with a complementary skill set.

3. Don’t fall in love with your prototype

We are entrepreneurs, we have a tendency to fall in love with our creation. We have to keep in mind that it’s a prototype. Prototypes are meant to be changed. They have to evolve with the customer feedback.



4. Define your end user

We failed to define our end users and built our product without any clear direction. We ‘assumed’ that our users (students) will love this product, they didn’t.

5. Don’t run after revenue

Revenue should always be a by-product of your startup and not a primary goal. Build your product so that your end users love it, ‘like’ is not an option.

6. Advertising is a bad option

We did it. We failed. Word of mouth is all that you need. If your product is amazing, don’t worry about ‘advertising’, your end users will spread the news for you. They will do anything to tell their peers how awesome your product is. Ask these questions before you advertise- ‘what is wrong with our product?’ and ‘why there is no word of mouth?’.

7. Ask why we are doing this?

Your why has to be larger than your what, else, you will lose interest and the startup will fail.





Ratan Tata’s 10 rules for success

He’s Ratan Tata and here are his Top 10 rules for success.

Ratan Tata is an Indian businessman, investor, philanthropist and chairman Emeritus of Tata Sons. He was the chairman of Tata Group, a Mumbai-based conglomerate from 1991–2012. In 2014-15, the revenue of Tata companies, taken together, was $108.78 billion. He began his career in the Tata group in 1961. He initially started on the shop floor of Tata Steel, shovelling limestone and handling the blast furnace.He was instrumental in the development of Tata Nano, largely dubbed as the world’s cheapest passenger car.He is currently the chairman Emeritus of Tata Sons. He continues to serve as the chairman of the main two Tata trusts which hold 66% of shares in the group holding company Tata Sons.

Here are his top 10 rules for success:



1. Communicate with your employees

He began his schooling in Mumbai at the Campion School and finished his secondary education at the Cathedral and John Connon School.

2. Take chances

He completed his B.S. in architecture with structural engineering from Cornell University in 1962, and the Advanced Management Program from Harvard Business School in 1975.

3. Persevere

He began his career in the Tata group in 1961. He initially started on the shop floor of Tata Steel, shovelling limestone and handling the blast furnace.

4. Build trust

In 1991, J. R. D. Tata stepped down as Chairman of Tata Sons, naming Ratan as his successor.

5. Be humble

Under his stewardship, Tata Tea acquired Tetley, Tata Motors acquired Jaguar Land Rover and Tata Steel acquired Corus, which have turned Tata from a largely India-centric company into a global business, with 65% revenues coming from abroad.

6. Have heroes

He was instrumental in the development of Tata Nano, largely dubbed as the world’s cheapest passenger car.

7. Be yourself

He retired from all executive responsibility in the Tata group on 28 December 2012, his 75th birthday, and he was succeeded by Cyrus Mistry.

8. Make a difference

He has retired but he is still seen working. Recently, he invested his personal savings in Snapdeal- one of India’s leading e-commerce website.

9. Be motivated by competition

He is currently the chairman Emeritus of Tata Sons. He continues to serve as the chairman of the main two Tata trusts which hold 66% of shares in the group holding company Tata Sons.

10. Do what can’t be done

He is on the jury panel of Pritzker Architecture Prize – considered to be one of the world’s premier architecture prizes.

Here are some thought provoking Quotes from him:

Do not complain:

“I am, tragically, a man who has frequently said: You put a weapon to my head and draw the trigger or take the firearm away, I won’t move my head.”

On effective individuals:

“I respect individuals who are extremely fruitful. In any case, if that achievement has been accomplished through an excessive amount of mercilessness, then I may appreciate that individual, yet I can’t regard him.”



On initiative:

“It is anything but difficult to end up a number one player, however it is hard to stay number one. Along these lines, we will need to battle with a perspective to stay number one.”

Need to prepare to stun the world:

“We have been. . . thinking little. Furthermore, in the event that we check out us, nations like China have developed such a great amount by preparing to stun the world. I would encourage that we all, in the coming years, plan for an impressive future, consider doing things not in little additions, not in little deltas, but rather apparently incomprehensible things. Be that as it may, nothing is unthinkable in the event that you truly set out to do as such. Furthermore, we act strongly. Since it is this reasoning huge and acting strongly that will move India up in a way not the same as where it is today.”

On Risk:

“Risk is an essential piece of business logic. You can be hazard unwilling and go out on a limb, in which case you will have a sure direction as far as your development. On the other hand you can, while being reasonable, take more serious danger with a specific end goal to become quicker.”

On danger:

“I view hazard as a capacity to be the place nobody has been some time recently. I view danger to be an issue of preparing to stun the world, something we didn’t do beforehand. We did everything in little augmentations so we generally lingered behind. Be that as it may, the essential inquiry is: would we be able to wander putting a man on the moon or hazard billions of rupees on a truly way-out, cutting edge venture in, say, superconductors? Do you confine your danger to something near your heart?”

Image credit: www.huffingtonpost.in





Is Oyo Rooms the startup equivalent of a Ponzi scheme?

Ritesh Agarwal, the CEO of Oyo Rooms, released a statement claiming that this 15X growth implied that the company has delivered 2.3 million booked room-night transactions in the first quarter of 2016 – this translates to more than 766,000 rooms a month.

Last week, SoftBank released its quarterly report that contained an update summarizing the state of state of Oyo Rooms, the Indian startup in which it had famously invested $100m late last year.

The slide contained the following graph claiming that Oyo has grown 15X year-on-year in the last one year.

SoftBank quarterly report May 2016 — Oyo Rooms update

Ritesh Agarwal, the CEO of Oyo Rooms, released a statement claiming that this 15X growth implied that the company has delivered 2.3 million booked room-night transactions in the first quarter of 2016 – this translates to more than 766,000 rooms a month.

All of this would have been fine if not for one little fly in the ointment.

A little less than a year back, Oyo had released a similar statement claiming that it was booking “400,000 rooms a month”!

Clearly, Oyo was either “exaggerating” the numbers then or they are doing so now.

Related Post: Oyo Rooms turns profitable with 15x growth year over year

What makes this even more interesting is a similar graph that SoftBank had inserted in an earlier report where Oyo was said to have grown a mind-boggling 34X times year-on-year with 895,000 rooms per quarter (approximately 10,000 rooms per night) for the Oct-Dec 2015 quarter.

Graph from SoftBank quarterly report — Jan 2016

But this graph is interesting for one more reason — rather than “booked room nights”, it speaks of “used room nights”.

Therein lies the tale of how Oyo is, in all probability, the startup equivalent of a Ponzi scheme!



Let’s take a step back to figure out how this scheme operates.

Related Post: Man behind OYO Rooms : Ritesh Agarwal

What exactly does Oyo Rooms do?

Contrary to this widely-believed notion, Oyo is not a “hotel chain”. Despite Ritesh’s constant attempts to position his company as “India’s largest hotel chain” comparable to the likes of ITC, Oyo is at its essence merely a hotel aggregation platform which delivers customer leads to low/mid-budget hotels. Oyo owns exactly zero hotels. Oyo operates exactly zero hotels on behalf of others. So Oyo is as much a hotel chain as MakeMyTrip is an airline company.

Oyo does do one thing somewhat uniquely — the hotels to which it routes customer leads to are co-branded with the Oyo brand. This ostensibly guarantees customers predictability and standardized room quality.

How does Oyo make money?

Traditionally, this works on the basis of commissions — a MakeMyTrip or ClearTrip kind of agent will walk to a hotel and tell him “I’ll be an agent, give me commission”. Sure, says the hotel owner. If the hotel has a good room booking system, then the agency will set it up so that they can request for room availability at any time, and they will negotiate a rate that they can use for different days. If the hotel does not, the agency will attempt to “block” rooms for certain days, adjusting the blocks on a regular basis so that the hotel can continue to accommodate walk-ins while the agency manages to book their inventory too. The commission for a booking is typically a percentage of the room rate and ranges from 15% to 30% of the total.

One big problem with this model, at least from the perspective of agents like Oyo, is that the hotel owner sees this as a purely commercial/transactional type of arrangement — a hit-or-miss “race to the bottom” business model with progressively tighter margins given the fact that there is zero stickiness and the hotel owner can tie up with any number of agents simultaneously.

To secure an initial mandate from the hotel owners around using the Oyo brand, they offered sweeteners in the form of “soft loans” (ostensibly to refurbish or improve hotel infrastructure — supply new mattresses, equip them with WiFi, new paint jobs etc) but the broad model was still the same.

Enter “Minimum Guarantee”.

To ward off competition and to build a deeper relationship with hotels, Oyo came up with a “minimum guarantee” offer.

The minimum guarantee model involves the agent committing a certain amount of business to the hotel and only taking a cut on the incremental revenue. So let’s say a hotel has 10 rooms. The agent pre-blocks say 5 rooms and guarantees the hotel owner with a certain sum of money per year for those rooms. Let’s say Rs. 4 lakhs. The agent now has to fill this inventory — if he is unable to drive at least Rs. 4 lakhs of revenue for these rooms and say does only Rs. 3 lakhs instead, he has to pay the hotel owner the difference of Rs. 1 lakh out of his pocket. If he is able to generate say Rs. 6 lakhs of revenue for these rooms, the hotel owner gets to first keep Rs. 4 lakhs and the incremental Rs. 2 lakhs is shared between the hotel and agent usually in a 70–30% split or thereabouts. So at the end of all this, the agent gets Rs. 60,000 (30% of Rs. 2 lakhs).

This is a great model for the hotel as it derisks his inventory risk and shifts the burden to the agent.

However, this wasn’t enough for Oyo to win the game.



Competitors soon cottoned on and started offering minimum guarantees to hotels and the market became increasingly crowded and noisy.

That’s when Oyo took the step that took them down the Ponzi rabbit-hole.

Take a look at the note below extracted from Oyo’s financial statement. Do you notice anything unusual?

Extract from Oyo Rooms annual report for FY 2014–15

Minimum guarantee is listed as an operating expense!

Related Post: Top 10 Indian Startups and how they took off

What does this mean?

Well, ideally there should have only been one operating cost item related to minimum guarantees — “Minimum tariff loss” that recognizes the shortfall the Oyo would need to pay out of its own pocket. But the fact that Minimum guarantee itself is an operating expense implies that Oyo was not only offering such guarantees, it was actually paying these amounts up-front!

While this might seem like a harmless thing that buys hotel loyalty, it is in fact a dangerous step that leads to all kinds of perverse incentives and adverse behaviour.

Unraveling the Ponzi

The hotel owners were delighted to get this upfront minimum guarantee — not only were they derisked from unused inventory, they got paid in advance which greatly helped working capital requirements.

But it created two specific types of perverse incentives for hotel owners.

Firstly, now that they were paid in advance, they were under no pressing obligation to maintain the hotel to the standards that Oyo aspired towards — after all, even if they gave poor-quality rooms to Oyo’s customers, what is the worst that Oyo could do? They couldn’t terminate the agreement or even if they did, they wouldn’t get their investment back. So, a cursory search of any of the hotel review sites will show you a great number of complaints from consumers who got stuck with pathetic rooms that they booked through Oyo.

Secondly, the minimum guarantee was an unexpected bonus in another way. Since Oyo rarely picked up the entire inventory of a hotel and because the hotels themselves hardly had any type of dashboard that would show details of walk-ins, hotel owners could give out rooms that Oyo has already paid for to their direct customers! While in theory Oyo monitored inventory usage, in practice, they had close to zero visibility. This would often lead to situations where customers who would book rooms on Oyo finding the hotel refusing to honor the booking by claiming that they were overbooked. Again, one can see numerous examples of customer complaints of this nature on the hotel review sites.

This essentially meant that both the benefits— standardized room quality and predictability — that Oyo touted as its core value propositions were completely frittered away. Oyo had basically shot itself in the foot.

While this was a bad thing, there was something even worse.



Oyo would buy rooms at say Rs. 1,999 per night — the only way it could make any money was if it sold the same room to a customer for Rs.2,000 or more. Not only did Oyo discover that this was easier said than done, especially during lean and off-peak seasons where uptake was very low but they also realized (rather belatedly?) that these rooms have zero inventory value! If a night passed without being used, the entire Rs.1,999 was down the drain with nothing to show for it.

But if they could sell a room even for Rs. 1 per night, they could at least count this as a “used room night”. Of course, this wouldn’t make much of a difference to their revenue figures but what if they could bandy this as a metric that is shown growing up and to the right?

This imperative kicked off the fire sale — not only did Oyo offer rooms at severely discounted prices (losing as much as Rs. 1,000 on each room night as per some estimates), they literally gave away rooms for next to free! There are well-traveled stories that Oyo grew so desperate to shore up this metric that their representatives went out to local colleges and handed out coupons in the parking lot to any student couple who could use the room for as little as one hour for a session of “joint studies”! This one-hour type of booking also meant that they could potentially turn over multiple bookings per day and further boost their used room nights count (of course, some hotels refused to honor such bookings while others weren’t so puritanical).

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Now, if you are thinking that all of this is fine (maybe unethical on multiple fronts but not illegal) but how exactly does it constitute a Ponzi?

Let’s take a step back and revisit what the metric “booked room night” means. It implies a transaction where a hotel room night was booked. But nowhere does this guarantee or explicitly say that the room was booked by an actual customer. So a minimum guarantee paid upfront is also technically a room booking in itself!

So we have a potential situation where Oyo could be selling zero rooms but could still tout a huge count for booked room nights because…they are buying the rooms! This essentially means that they could be touting traction not on the basis of SKUs that they sell but those that they — a bizarre turn of events that gives the phrase “buying traction” a completely new spin! This also means that forget about having negative gross margins, we could potentially be looking at a situation where a product has a negative selling price!

Admittedly, there is no way to know for sure whether the numbers reported by Oyo fall in this hoary category but the point is that Oyo is now reporting vanity metrics that can stage-managed and gamed in any which way they choose and quite easily at that. While vanity metrics are bad for a number of reasons, in most cases, they are at least directionally correct but in this case, there is hardly any correlation.

This article was originally publish in LinkedIn

Image credit: www.couponmytri.com



Life of an entrepreneur in 90 seconds – best motivational video for entrepreneurs

Sometimes it’s what most don’t see that makes a successful entrepreneur but in the end, your success will speak for itself.

Sometimes it’s what most don’t see that makes a successful entrepreneur but in the end, your success will speak for itself.



The top 10 quotes every entrepreneur should live by

Here are the top 10 quotes every entrepreneur should live by. Learn from Steve Jobs, Oprah Winfrey, Tony Robbins, Ted Turner, Anita Roddick, Chris Gardner, Donald Trump, Isadore Sharp, and Trip Hawkins.

Here are the top 10 quotes every entrepreneur should live by. Learn from Steve Jobs, Oprah Winfrey, Tony Robbins, Ted Turner, Anita Roddick, Chris Gardner, Donald Trump, Isadore Sharp, and Trip Hawkins.

1. Steve Jobs, Apple

“Believe that things will work out somehow… follow your intuition and curiosity… trust your heart even when it leads you off the well-worn path… You have to trust that the dots will somehow connect in your future… The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it… Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

2. Oprah Winfrey, Harpo

“What I know for sure is that if you want to have success, you can’t make success your goal. The key is not to worry about being successful, but to instead work toward being significant – and the success will naturally follow… If you do work that you love, and work that fulfills you, the rest will come. And, I truly believe, that the reason I’ve been able to be so financially successful is because my focus has never, ever for one minute been money. Would you do your job and not be paid for it? I would do this job, and take on a second job just to make ends meet if nobody paid me. That’s how you know you are doing the right thing.”

3. Tony Robbins, Anthony Robbins Co.

“A real decision is measured by the fact that you’ve taken a new action. If there’s no action, you haven’t truly decided… The most important thing you can do to achieve your goals is to make sure that as soon as you set them, you immediately begin to create momentum. The most important rules that I ever adopted to help me in achieving my goals were those I learned from a very successful man who taught me to first write down the goal, and then to never leave the site of setting a goal without first taking some form of positive action toward its attainment.”

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4. Ted Turner, Turner Broadcasting

“All my life people have said that I wasn’t going to make it… You can never quit. Winners never quit, and quitters never win.”

5. Anita Roddick, The Body Shop

“Whatever you do, be different – that was the advice my mother gave me, and I can’t think of better advice for an entrepreneur. If you’re different, you will stand out.”

6. Tony Robbins, Anthony Robbins Co.

“For changes to be of any true value, they’ve got to be lasting and consistent. Any time you sincerely want to make a change, the first thing you must do is to raise your standards… If you don’t set a baseline standard for what you’ll accept in life, you’ll find it’s easy to slip into behaviors and attitudes or a quality of life that’s far below what you deserve… Whatever happens, take responsibility… The only thing that’s keeping you from getting what you want is the story you keep telling yourself.”

7. Chris Gardner, Gardner Rich & Co.

“Find something that you love. Something that gets you so excited you can’t wait to get out of bed in the morning. Forget about money. Be happy.”

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8. Donald Trump, The Trump Organization

“I was relentless, even in the face of total lack of encouragement, because much more often than you’d think, sheer persistence is the difference between success and failure.”

9. Isadore Sharp, Four Seasons

“Whatever you do, don’t ever use a crutch, and don’t ever think of having an excuse for not having said, ‘Yeah, I did my best.'”

10. Trip Hawkins, Electronic Arts

“One quality of entrepreneurship is just persistence, not giving up because you have road blocks and also not giving in because other people tell you that you’re nuts. You are nuts and you should be proud of it. Stick with what you believe in.”

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