Electric Vehicles: Opportunities in this Growth Driver of the Automobile Space

Electric Vehicles are poised to grow exponentially in the coming years. With environment becoming a core point of debate and concern, EVs are set to disrupt the Automobile Industry of the World. With the US & Europe leading the way, this is a space which has and will continue to offer a host of opportunities for budding entrepreneurs.

Opportunities in any space can be derived primarily from the benefits and concerns which exist in that space. From what I understand of it, I will list these below.

BENEFITS OF EVs

Low Carbon Footprint: Global Warming and Pollution are becoming serious issues, repercussions of which we can see even today. With awareness of these issues growing amongst the people, controlling carbon emissions is the major driver in the growth of EVs.

Money Savings: Running costs of vehicles will go down with electricity replacing gasoline. Thought and investment is being put in to identify the best, most cost efficient ways of generating electricity to feed EVs.

CONCERNS of EVs

Low Range Per Charge: A lower driving range for every full charge of electricity limits the usage of the car. Tesla & the others are working on increasing this range.

High Cost: This involves reducing the cost of batteries installed in cars. Also with the use of new age Li-ion batteries, the dissipation of energy is lower and hence making the car more efficient cost wise.

EVSE: Electric Vehicle Service Equipment refers to the charging infrastructure for EVs. This infrastructure is key in the success of EVs in the future. Tesla has come with Supercharging stations for it’s cars. Imagine running a car with very few petrol pumps in the vicinity L.

Safety & Trust: These are concerns customers have in purchasing EVs. EV companies are constantly working on building trust in the safety of their cars. ‘Tesla Model S Achieved Best Safety Rating of Any Car Ever Tested by the NHTSA’.

These are some characteristics of this space which you as an entrepreneur can look at. Enhancing a benefit or addressing a concern can give you an opportunity that you may be looking for.

Role of the Government in Promoting Entrepreneurship

A Govt. has an important role to play in the development of the startup ecosystem of a country. From hand holding to monetary support, a lot of measures need to be taken by the regulators to encourage Entrepreneurship.

Let’s break up the startup process and I will try to give my opinion as to what the Govt. can do in each step.

Idea Generation & Team Formation: Workshops/Seminars/Events to encourage Entrepreneurship; Incentivise Schools, Colleges etc. to set up Entrepreneurship Cells; Promote setting up of Institutes teaching Entrepreneurship

Business Set Up & Closure: Processes like setting up a company, getting licenses, registrations etc. should be easy and fast. Also winding down procedures and bankruptcy laws should be strengthened; The focus of the entrepreneur should be solely on the business idea and execution.

Fundraising: Ensure enough allocation of funds for Entrepreneurship; Grants to be given to different Entrepreneurship Cells; Angel Investors/VCs to be incentivized with tax breaks etc.

As mentioned above as well, the Entrepreneur should be allowed to focus on building on his/her idea. All support and hand holding around it should be made as easy as possible. When an ecosystem such as this comes up, Entrepreneurship & Business will flourish.

Startup Idea Feedback

'We all need people who will give us feedback. That's how we improve.' ...Bill Gates

If any budding entrepreneurs have any idea they want feedback for, please fill up this FEEDBACK FORM. I hope to share with you my understanding, feedback and suggestions, which may be able to assist you, in whichever small way, in these early days of your journey.

Note: Be rest assured, your idea is safe and will not be shared with anyone. 

Learn During Lean Periods

A Lean period can be defined as one where there are reduced work opportunities for a business. This may be due to weak market conditions, some policy issue or general sentiment of customers. What should an entrepreneur do during such a period? Learn.

Look Internally: See if you business is running efficiently and can be improved upon. Since you have a lot of time at hand, use this time to improve systems, processes and efficiency in your operations.

Read: Read up on the latest developments in your Industry and know what’s happening all over the world. Try to identify any opportunities to maneuver your business.

Plan: Plan for when the conditions and sentiment becomes optimistic again. Have a solid plan based on your previous experiences. Start building up resources and systems to be able to capitalize on the better periods ahead.

How to hire if I have no money?

Hiring is about making someone part of the team in exchange for giving that person something he/she is happy with. Generally, it is money you give. For startups, money is limited. So what can you give in this case?

A Dream: You are in this to follow a dream. You need to share the dream with the new hire to generate interest in the latter.

An Interest: With the dream, you need to give the hire a vested interest in the growth. This can be done through equity or a promise to give equity at a later date (stock options). Equity is the instrument depicting the growth and development of the startup and contains the value which a startup is able to generate.

You should be able to transmit your dream, your passion, your vision and a stake in all this with a potential hire to close the recruitment.

Why a Bigger Startup will buy your Startup?

A lot of entrepreneurs start up with a vision of getting bought out by a leader in that space. So why would these leaders want to buy a smaller player when they can probably do the same themselves? 

Here are some reasons which I perceive would be important for them.

Scale: If your startup has scaled up enough and a bigger player feels it will be most cost and time effective to buy rather than build, you may get lucky.

Good Fit for Business: If your business acts as a potential forward/backward integration for a bigger player and adds substantial value for the latter, you may end up getting an offer.

Good Model Fit: The models of your startup and the bigger company should be similar to ensure smoother integration. For example, a horizontal marketplace may not be very keen in buying an inventory model based vertical player.

Intellectual Property Rights: If you have a patent or any other IPR for an interesting product, the bigger players may get interested in you.

Good Team: Sometimes bigger players want to buy a startup to acquire their team in the process.

If you are looking to selling your startup in the future, look at building something which can attract bigger players in the space.

Marketing Skills for a Startup

A product cannot create value until marketed well. Marketing forms the backbone of value creation in a startup. New age marketers, also called Growth Hackers now, need to keep evolving over time, in order to propel the startup.

The role of the marketer has changed from someone merely analyzing different advertisement options to one who takes care of much more. From working closely in product development, to putting it into the market, analysing the result and going back to the drawing board is what a new age marketer is expected to do. Growth has become a marketer’s major focus and responsibility and working independently is not value additive in this competitive environment.

SYNERGY in your Startup Team

I have written a lot about the importance of a good team. Also how a team should be structured with regards to domain skills, business skills, tech skills and so on. There is another important way to look at the composition of a startup team.

An ideal startup team should consist of 2 people.

The Systematic Guy: One who is organized and is able to channelize the energy around in the right direction. He is generally involved in planning and the business planning decisions.

The Energy Guy: He is the guy who brings in the energy into the startup. He is constantly thinking 

of new ideas, innovating and bringing the zest into running the startup.

Together they are able to create SYstematic + eNERGY – SYNERGY. This synergy is value additive and is the force which drives the startup.

Interesting Startup: Cars24 – Making Car Selling Hassle Free

Cars24 is an interesting startup which is making car selling a hassle free and easy experience for customers. From getting an instant quote to completing the entire process within 30 minutes (as they claim), car selling has never been this easy for Indian car users. Cars24 basically earns a spread between it’s purchase and sale prices (it sells the car further to Dealers, Owners, OEMs etc.).  

Why I like this?

Great UI: The portal is very easy to use and the entire usage flow of the website is great. Starting with getting a quote, booking a free inspection and then getting the money instantly at the inspection center is amazing for any car seller.

Service Business: These guys are actually providing a service and are not competing in the ‘online platform for everything cars’ space.

My Concerns

Trust: They will need to build trust as car selling is a high value sale for any customer. Getting the right price and fraud are feelings we generally attach with this process

Competitive: You have trade in schemes, offline dealers, online car marketplaces who are already competing in this space. The ease of use and services provided by Cars24 should give it a reasonable differentiator to create a space for itself.

Overall, I really like this startup and the way there are doing things, I feel it can do very well.

How Should a Startup Approach a Bank for Funding?

Here is a step by step process for the startup.

The first step is to prepare a pitch (usually called a Detailed Project Report). This should all details about the startup – the business model, the promoters’ background, revenue model, sales figures, traction so far, growth rate, market size and other estimates. Return on Investment is the key factor considered here.

Then you should identify bank having schemes for startup. Know which banks lend for which purpose. For instance, some banks fund to build products, some based on receivables, some for growth, some for R&D etc. Analyse which bank will be suitable for your needs.

Finally, you can fill in the forms and present your pitch.

Give Royalty to Offload Less Stake to Investors

I was watching Shark Tank yesterday and came across this. Some investments were done where the investor took less equity in the company and asked for a royalty instead. For example, an entrepreneur was wanting to raise a $100,000 investment and was willing to offload upto 15% in his company. The investor instead asked for 10% royalty on sales till the investment of 100K was received back and then a 1% royalty till perpetuity.

The benefits of investors taking a royalty are for both sides.

For Entrepreneurs: They don’t need to offload equity, and at the same time get support and  mentoring by the investor. Also royalties are generally structured keeping gross margins in mind, so that the business and it’s growth does not suffer because of it. The only downside is that royalties are generally till perpetuity and hence act as a permanent part of your cost structure.

For Investors: Rather than looking for a one time repayment (through a stake sale), royalties ensure that the investment put into a startup keeps coming back in small amounts, thereby reducing the risk. Also if the startup grows, the royalties will grow as well.

Royalties is an option we should consider, especially for a sales oriented startup, when we are dealing with investors.

The IRR for Starting Up

In the world of startups, a different IRR is what budding entrepreneurs should be more concerned about.

IRR = Idea, Research, Responsibility

Idea: The first step is to get an idea.

Research: The second step is to research the idea thoroughly and make a solid plan around it.

Responsibility: If I feel I have a good idea, even after researching about it, it is my responsibility to ensure that the idea gets it’s share of planning, hardwork and diligence.

Startup Success is more about Good Execution

Raising Debt for your Startup

A good alternate to raising equity investment is raising debt for your startup. Raising debt has a lot to offer to startups.

Cheaper: If you calculate the return expected, debt will prove cheaper in the long run. Equity investors look for a higher IRR on their investment.

Full Control: The entrepreneur retains full control of the equity and the management of his startup. Any increase in your startup’s valuation is completely yours and not shared by equity investors.

Tax Saving: Interest payments are deducted before calculating taxable profit.

Limited Term: Debt will be paid off in a certain definite term.

These are some advantages of raising debt. However, the biggest disadvantage is that a startup may not be generating much cash flow initially and hence paying off the debt is a problem. On the other hand, equity has no actual re-payments to be made till you start making good money.

Debt is an instrument which clearly has some significant advantages and should not be overlooked when you think about raising money for your startup.

Follow Up With Investors

Once you meet an investor, it is important to keep in touch. Since investors are bombarded with so many startups today, getting him/her aware and interested is difficult.

Sending Updates about the following via email or social media is the best way.

New Features or Enhancements in the Product.

Latest Coverage on Various Media

Any Goals Reached (such as reaching a usage or revenue target)

Upcoming Events or Presentations of your Startup

A follow up will ensure that the investor is aware and part of your growth story. You never know when you might get that mail or call :))).

How do I Create a Revenue Model for my Startup?

A model through which your startup will earn money is called a Revenue Model. The Revenue model forms an important part of your Business Model. Bad revenue models can result in startup failure.

While creating a Revenue Model, the following should be kept in mind.

Who to Generate Revenue from: An entrepreneur needs to assess who the main beneficiary of the business is and the revenue should ideally be generated from it.

When Revenue is Collected: Analyse when you want to collect revenue. For example a hiring agent can charge a company upfront on signing up or each time someone is employed in that company. Bad collection timing can affect the efficacy of the model. For example, in Bitequest, we used to collect revenue for every customer we sent to a restaurant. Revenue was collected post sending customers and was collected at the end of the month. Because of this, a lot restaurants tended to delay/default on the payments. Our cash flow took a beating.

How Much to Charge: This can be based on current market data or based on some logic or reasoning. Charging low will mean a loss of revenue and charging high may not be able to attract paying customers.

Getting this mix right will make your Revenue Model robust and the chances of your startup generating revenues higher.

Social Skills on an Entrepreneur

A good entrepreneur should possess good social skills. One can learn a lot from interacting with people around. Some cases where interactions can be useful -

Recruiting Good People

Generating Interest from Investors, Customers

Getting Tips, Advice & Skills

Getting Feedback & Suggestions

The more you interact, the more you get to learn. Entrepreneurship is more about being street smart than being academically equipped (a personal thought!).

The Business of Networking

Networking has become a popular business model to adopt for new startups in the past decade or so. With the advent of big startups such as Facebook, Twitter, Linkedin etc., networking has established itself as a popular model to look for budding entrepreneurs.

To start off, what is Networking about? Networking is basically connecting people around something in particular.

Social Networks: These networks help people connect to other people for friendship and to enhance their social networks. Popular examples are Facebook, Orkut etc.

Professional Networks: Here people can connect to others for work and to enhance their professional networks. Linkedin is the prime example.

Interest Based Networks: Here people connect to each other with a particular interest in mind. Some examples include startup networking to raise investment, people networking to get married, find love and so on. Some examples include Angel-list, Tinder etc.

So why has Networking become so big? Networking’s success as a business is dependent on one tendency of humans – ‘Humans want to connect’. Connections create value and hence, a combination of a tendency with value creation has to be sustainable.

Now, how do these guys make money? The Networking service for users is free in most website.

Some typical revenue models are mentioned below.

Advertisements: This is the most common and significant revenue model for a lot of businesses. Promoting your account or content through banner ads, featured listings etc. is done by users of the network. A lot of businesses use these sites to connect to existing and potential customers and hence they are the ones who tend to advertise the most.

Freemium: Basic services are free. For enhancing your account features, you need to pay. For example in some matrimony portals, you can view up to a certain number of listings free. For viewing more, you need to pay.

Affiliate: These websites have the database. Brands wanting to market to this database pay these websites a charge for sending out their emailers etc.

Subscription: Some websites, to keep the network closely knit and very relevant, charges subscription from users. The thought process is that only those users will pay up who are genuinely interested and can add value, thereby acting as a filter.

Networking has emerged as a strong business model and in this era of constant innovation, knowledge and competition, the benefits of networking are bound to grow.

Tips on Starting a School

A K-12 school is a venture which seems all hunky dory from the outside and has interested entrepreneurs young and old, fresh or experienced, here in India. Having worked in a School in Gurgaon, I feel the situation is not as glorified as it is made out to be. I would like to share my thoughts on starting and running a school.

Starting and running a School is a lot about doing the following things well.

Setting a Vision: A clear vision needs to be set at the onset itself. We need to define the purpose of our school and what it aims to be.

Making a Solid Plan: We need to clearly identify our target market. We should know what type of parents we are targeting (as the real ’customers’ are parents and not students), what they expect and how we intend to match these expectations. Our fee and facilities should be set in accordance with the above.

Doing the Paperwork: Most schools in India are run under a Trust/Society. We need get the same registered and getting the necessary affiliation from the Board of choice.

Buying Land & Giving the Building Contract: Since this is the bulk of the investment, finding and analyzing different options is a must. Know which location would be better for your target market. Hiring a good Architect and Builder are key to getting a good facility up.

Hire a Good Team: The Principal is generally the CEO of the school. Hiring a good Principal and then building a great team around him/her is of prime importance. Since most founders do not possess teaching skills, the team is what drives a good school.

Make a Marketing Plan: Try to be specific in marketing to your TG. This will help lower your spends and give you a better return.

Starting a school has some advantages as a business opportunity.

Recession Less: Schools tend to grow at a regular pace, notwithstanding economic conditions around. Parents do not tend to compromise on their children’s education.

Self Sustaining: Once set and running, schools can sustain themselves and do not require much participation from the management on a regular basis.

Despite these, I do feel there are some downsides as well.

Low Returns on Investment: Since the capital expenditure is very high in starting a school, the returns are relatively low as compared to other businesses. Also the gestation period tends to be high.

Lower Growth Rates: Some reasons for this are that admissions happen only once a year and capex needs to be done to take in new students above the capacity. With regards to greenfield expansions, some models such as Franchising have proven to be a boon for schools looking to scale. 

Steps to Start an Ecommerce Site from Scratch

Ecommerce refers to selling product or services online. The following are the steps to start an ecommerce site from scratch.

Finalising the Idea – Know what you want to sell.

Finalising the Model – How will go about structuring your backend? Will you stock inventory or not? How will delivery and logistics work? What is the payment mechanism?

Building a Team – You should ideally have domain skills, marketing skills and tech skills within your team.

Registering a Company – You can start with a partnership instead of a company.

Getting Licenses – These include tax registration numbers.

Building a Web Store – Can be outsourced initially.

Marketing your Website – Since the store is online, marketing online will prove best for you.

The AAS (as a service) Model

I really like this model. It basically means that a system/product is developed centrally and a user can buy a right to use it rather than having to buy it.

There are some obvious benefits to this.

Cheaper for Users: Since they do not have to buy the product, it proves cheaper.

Easier to Maintain: Since the product is hosted at one place, enhancement and maintenance is easier to do and the cycle times are lower.

Easier Customisation: Most products developed are module wise, which makes it easier for the seller to customize the product for a user based on it’s requirements.

If you look at the overall picture, it makes sense to not waste time and resources in duplication.Creating, hosting and maintaining centrally creates economic value.

Starting Up in Education

Having worked for 3+ years in the business development of a K-12 school, I learnt a lot. I was able to understand exactly how a school/local business runs. From my experience, I feel that this is one sector which has still not advanced or evolved at the same pace as other sectors. For budding entrepreneurs, there is still a lot of opportunity which  can be tapped.

I have tried to classify the opportunities I could see in broad categories.

Function Outsourcing: One can look at some function which the school is performing and which we can do better. For instance, in my experience, most schools are losing money or barely breaking even in their transport function. Schools would be willing to outsource transport to a third party, given the basic safety and quality guidelines are adhered to.

Selling to Schools: Selling new products/services is good way to startup. In an increasingly competitive environment, schools are looking to provide a better experience to their parents. Educomp (an Indian company selling tech products) was able to successfully do this and has shown immense growth. The only downside here is that the number of schools are limited and their payment cycles are bad and irregular.

Around Teachers: Recruitment services, networking, knowledge sharing between teachers are some examples of opportunities which one can look into.

Around Students: The number of students is good. A big concern is since school children are young in age, reaching them directly is difficult. Mostly they don’t have phones or tabs and parents tend to play a key role.

Around Parents: Parents are the influencers in most decisions around school children. Providing a service to them looks good to me as the numbers are great and a parent wants to give the best to his/her child. Classifieds, Marketplaces, Networking etc. can be looked at. An idea I had in particular was to start an Online School Tiffin Service (like a Faasos for School Tiffins).

Education is an exciting space and Edtech has immense scope according to me. 

Should I Start a Tech Business?

With technology and the internet being the major hunting grounds for new startup ideas, this question comes up time and again. Budding entrepreneurs deciding they want to start an e-commerce company or a tech company without knowing what to do or sell is quite common. I am not too sure if this is the right way to approach things.

Technology for me is just an enabler, i.e. a way to do things. What has to be done has to be decided first. For example, I felt that there should be a place where tea lovers can come, read about and buy their favourite teas. I felt e-commerce was the right model which could be used to reach wider audience. Hence came about Beveragewala.com.

So to sum it up, I feel that right question should be –

‘I want to start a ??? business. Will using tech create value in this?’

First-Hand Learnings of an Entrepreneur

Entrepreneurship teaches one a lot. The learning is first hand and very diverse.

Learning is broadly from the following 2 things.

Experiences: Whatever you do teaches you something. If what you do goes right, your learning is good. If is goes wrong, your learning is great.

People: An entrepreneur should keep learning from people around him/her. The more skilled or experienced the people around you are, the better the learning is. From picking up core domain skills to learning how to build a team, there is a lot which can be learnt.

A good entrepreneur will keep learning from his/her surroundings and activities. We should always 

keep our eyes and ears open and should develop an interest in learning as much as we can. Besides these first hand learnings, reading is also a great way to learn from other’s experiences.

Should I Disclose my Idea?

You feel you have a great idea and are scared to tell it to anyone fearing that the person might copy it. What should you do?

This is not the right way approach. Hiding your idea may not be appropriate because of a lot of factors.

It may not be Unique: You may feel your idea is unique. They say that if you have this feeling, there would atleast 10 other teams working on the exact same idea.

An Idea without Good Execution is Worthless: Most startups fail because of bad execution.

Investors are in the Business of Investing: A lot of entrepreneurs wonder if they should send their pitch to investors without knowing them before hand or interacting with them first. I strongly believe that investors are in the business of investing and not executing.

Feedback makes a Product Better: Without exposing the idea, you cannot get feedback on it. Feedback is the biggest tool to make your idea better and more marketable.

Anyone can anyways Copy once you are Live: A player with more resources can anyways copy and implement the idea once you live.

To summarise, just focus on your idea and your plan to execute it in the best possible way. If you are really concerned, you can resort to ways like signing NDAs, patenting the business model (or some part of it) etc.