Role of Venture Capital in the World Today

When you think of Venture Capital, you think of investors simply putting money into businesses to generate a higher than normal return. Yes, profit is definitely the primary motive of a Venture Capitalist, however Venture Capital as such has a much bigger role in the world order today.

Creating a Level Playing Field – If it wasn’t for Venture Capital, the balance in the world would further get skewed. The rich would get richer as they would be the only ones who could build big businesses. People with great ideas but no money would not be able to create businesses to compete with the bigger companies.

Creating Businesses & Jobs – Without risk capital, business growth would be limited and hence job creation would be much slower than what we see today.

Improving Human Life – A sustainable business is one which helps solve a problem. Venture capital tries to identify such businesses and helps them grow, thereby solving real life problems faced by us and hence improving overall human life.

The Web Based Startup

Most budding entrepreneurs look towards the web to build a business. So why is this? Is it because it’s a fad or is it because the web is going through a very high growth phase? Maybe a bit of both, but the main reasons are different and listed below.

Low Initial Investment – One of the advantages the web has is that the initial investment to launch your business is very low as compared to more asset heavy businesses. Entrepreneurs can invest a little bit of money, go live, get market feedback and decide the fate of the business, which is very difficult to do in non-web based businesses.

Reach – Being on the web means that you instantly have a global reach. This is probably the biggest advantage of the web. Though you will be required to promote your business on the web as well, a customer sitting in any part of the world can use your service (though this depends on the business model of the startup). Note: This might actually also work against the business at times as the web is one big, uniform space where all businesses compete. Hence a new startup will end up competing with the bigger players in the same space from day 1 itself.

Human Behavior – Slowly people are moving to the web for all their needs. This trend favors businesses which are web based.

Startup Model – The User Recommendation Engine

THE MODEL: A platform where users can search for and read about the best places to go, best things to do and experience to enjoy. Users can share and read reviews and recommendations of local establishments like restaurants, bars, plays etc.

STARTUP: ScoutDat (Indian startup)

WHAT I LIKE

Core Idea – A discovery cum recommendation tool for local restaurants, venues and experiences. With social proofing emerging as an important tool in the buying process, getting recommendations are increasingly becoming important for businesses.

Gamification – Users are incentivized for actions on the app. This is the key challenge any customer review based startup. Users will need to be given the right incentives to be able to interest them to engage with the app.

CONCERNS

Competition – Though there might not be too many players in this space in India at the moment, the startup will need to compete with sector specific portals offering reviews and more to users. For example, a Zomato gives customers an option to discover, book and read about restaurants. This might prove to be very challenging for ScoutDat.

Speak At The Right Time!

A Million Dollar Idea Always Needs a Billion Dollar Market!

'A Weird Business Idea'

A lot of times budding entrepreneurs ask me how a weird business idea was able to become successful. Initially even I used to start thinking how this happens. One day, I realized that defining what weird means may have the answer to this dilemma.

An idea can be weird in the following 2 ways.

Addressing a Weird Need – So in most cases, weird startups are actually ones which are addressing a weird need. The business model used might actually be very standard and successful in other spaces. Users may actually this inherent need which such startups are able to target and fulfill. I feel Snapchat, when it started, would fall under this category.

Delivery of Product/Service – The other case is when the need is a standard one but the delivery of the product or service is innovative or weird. Courier companies offering free travel for users just to send their parcels along was a weird but successful concept.

From my understanding, weird is actually a more crude way of saying innovative. These ‘weird startups’ have actually created a niche which did not exist before and were able to scale extremely well, just like an innovative company would do. And once these scale up, the weirdness of the idea is actually re-addressed as a ‘new normal” :).

The Online Review Business Model

A lot of entrepreneurs have tried to start online review websites but have failed more often than not. As customers, we all would like to read genuine reviews before making any purchase decision. So why are startups not able to sustain themselves?

Some points I can think of are listed below.

Gamification – This, or the lack of it, is the primary reason for online review startups not being able to generate user traction. Getting a user to write a review without offering an incentive is a far-fetched idea. Users need to be given the right incentives to come onto the website and write a review.

Revenue Visibility – Getting user traction through incentives tends to burn a lot of money. On the other hand, building a revenue model if difficult and revenue would generally take a lot of time to start rolling in. For this reason, a lot of investors are vary of investing in pure online review websites.

Competition – The biggest competition such websites face are from different websites selling products and services or offering users different services in different niches. These competitors provide some greater value to the user (such as ecommerce, bookings, information discovery etc.) along with user reviews. Hence a pure play review service finds it very difficult to get users to use it and get hooked onto it.

Raipur – The Capital of Chattisgarh

My wife is from Raipur, Chattisgarh, and I have personally been there a few times in the last couple of years. I have seen the city growing every time I go there and with a population of 4+ million, the opportunities for entrepreneurs are growing as well.

Education – Though there are now a lot of top schools in Raipur, there is a gap in the private college space there. Most students leave for other cities (Pune, Delhi etc.) to pursue higher studies and end up getting jobs there and settling there.

Retail – The purchasing power of people is going up and retail probably holds the biggest potential. All majors brands are slowly establishing their presence in this fast growing market. Even premium brands are now getting attracted towards the city.

The Services Sector  - Raipur and nearby areas are known predominantly for the Iron & Steel & Rice Industries. I feel that with a young and upwardly mobile population, private companies offering services are required to keep the youth from moving out. For this, probably a better education system will need to develop first so that trained youth can be hired by companies who wish to set up in the city.

Entertainment & Wellness – The city needs more outlets like gyms, restaurants, bars etc. catering to its young population.

Your Business Card

Your business card is important since it is responsible for creating an early impression on people who you give it to. Though a lot of us consider it be trivial and unimportant, a ‘good’ business card can go a long way in starting the relationship you wish to build with the other person.

Design – The design and layout tend to suggest a lot about your approach towards things in life. Also if you are representing a company, the business card speaks about the culture of the company. Too much text can suggest a diligent culture, a lot of designing a creative culture and very little of both can suggest a to the point culture with a focus on direction.

Content – Content also speaks a lot about you. The amount of content and the way of expressing it are key.

So now that we know why a business card is important, how do we design one for ourselves. I feel there are 2 factors we should consider before designing one.

The Target Receiver – A business card is given to all the people we meet and hence we might think there is not specific target receiver. However, there is. If you are a B2B business, clients are. If you are a B2C startup, probably investors and mentors are. Try to identify who your prioritized receivers are and make a card which would appeal to them.

Goal – Once you know the target receiver for the card, you should know what the card should do for you. For instance, if you are approaching clients, your card should speak about things they would value. Maybe things like year established in or number of clients served etc. can be mentioned without cluttering it too much.

Have Belief in Your Goals

Use-Case Marketing

Since a customer is exposed to innumerable marketing messages today, it becomes very important for a marketer to send out a message which can attract the attention of the customer and retain it for some time. A good way to do this is through ‘Use-Case Marketing’.

Using different use-cases in marketing messages has the following impact:

Grabs Attention – Some use cases might be relevant for the customer and he/she might have a similar need at that point in time. Once this happens, the customer tends to read more about the product and how it can be used to satisfy the need.

Creates Startup’s Utility – Now since the customer has read the use case he/she might be interested in and how the startup can help, the customer knows what the startup can be used for.

In ever increasing competition for customer eyeballs, I feel Use-Case Marketing should be part of the marketing strategy of every business.

In fact, for Halllp, I am relying heavily on it. I have tried to develop several potential use cases for the startup and will be pushing these through different channels like Email, Social Media etc.

Some sample use-cases are given below:

Manish Hada - The Brand

Time and again, it is a good exercise to self introspect and know what you are doing, where you stand and where you see yourself potentially moving in the future. The idea is to assess and analyse ‘Your Personal Brand’.

I did such an exercise yesterday and the following is what I could come up with.

MY QUALITIES

Bubbling with ideas – I tend to see potential business ideas all around me.

Serious when working – I am a serious guy when it comes to work. However I truly believe that all work and no pay makes one dull and burn out faster.

Motivated through people around – I am a people’s person and need people around me to get the best out of me.

Look for long term solutions – I only believe in looking for long term solutions and projects. The shorter term for me is just an intermediate period which we need to cross to reach the longer term vision.

Take responsibilities – I like taking responsibility.

The smartest should lead – I believe that the smartest person in the room should lead a business and everyone should learn from everyone around.

Can’t see a wrong decision being implemented – I just cannot see a decision being implemented which I believe is detrimental. I believe that the onus should be on the person suggesting this decision to prove clearly how it would be beneficial before proceeding.

MY STRENGTHS

Strong startup experience – I have started up a couple of times and feel that the learning I have got from these is amazing and immense.

Bootstrapping experience – Since both my startups were bootstrapped for a long period, I have learnt how to stretch my money to get the maximum return from it.

Managed teams – Maybe not big teams but I have gotten opportunities to manage smaller teams mainly focusing on operations.

Idea Generation & Modeling – I see ideas around me and can build models for converting them into businesses. I have experience of modeling startups in the e-retail and e-advertisement spaces.

Growth hacking – I believe that it is very crucial for every business, no matter what stage, to get the best return on any spending.

Worked across industries – I have experience of working in Hospitality, Education & Retail.

MY WEAKNESSES

Jack of all trades – This is a problem entrepreneurs face. They tend to be jack of all trades and masters of none. This tends to affect their employability.

MY ACHIEVEMENTS

Start ups –

Bitequest: scaled well; became market leader; good idea

Beveragewala: scaled well; good sales in short period; idea not sustainable

Other experience –

Meenakshi Group of Schools: set up systems; built a brand

MY GOALS

Be it my own startup or any other company I work for, my goals are consistent. And I genuinely mean this. I believe doing ‘good work’ is important with good people around you and it doesn’t really matter whether the company is owned by you or not.

Good work would include the following for me

-     : Scaling a business

-     : Creating a market leadership position

-     : Creating a cohesive, young and vibrant team

: Creating value in and enjoying whatever I do

This may not be very comprehensive but gives an idea about who I am, what I've done so far and what I am looking to do going forward in life. Building your brand is a continuous process and hence if you guys have any feedback, would love to get it. Please mail me on manishhada@gmail.com.

Leaving Your Country & Starting All Over in a New One

Just a month left before I move to the Netherlands for my MBA. I am very excited but at the same time am nervous as well. The thought of leaving the space where you have grown up and learnt whatever you have to move to a totally new place where you will need to establish everything from scratch is a scary one.

Moving to Netherlands really excites me for the following reasons.

A New Start – I have tried a lot of things in the past decade and have been experimenting with various things. Now I seek a new start and a new approach to me life. I am very excited to go to a new place, meet new people and start building my life and career from scratch.

Better Lifestyle – I am really forward to living in a place with less pollution, traffic and one where I can live a better and fitter lifestyle.

More Developed Country – Since Netherlands is at a more advanced stage as far as economic and social development is concerned, I feel the learning I can get living and working in such a country will be more. I am hoping to get exposed to better processes and systems I can learn from.

On the flip side, there are various anxieties I have about moving to a new country.

The ‘Outsider’ Effect – I feel that for a long time in the immediate future, I might face this. Being an immigrant, getting accepted into the local society might be a challenge.

Biases – People tend to brand other people based on their country of origin. Having an existing bias tends to affect and distort any new relationship.

Expensive – Expenses will be a big concern for me, especially till I am not engaged professionally.

Learning – Though I am excited about experiencing life there, this will be a challenge for me and will require me to learn and grasp the lifestyle and policies of a new country as fast as I can.

Key Metrics in an Ecommerce Business

Having started up in ecommerce, I feel that it is a very complex business which requires a lot of effort, resources and patience to become sustainable.

The business is a lot about tracking key metrics and how they evolve with the growth of the business.

Customer Acquisition Cost – The CAC is a key metric to check whether the business is spending more on acquiring customers than what it is making from them. This involves minimizing the cost of acquiring website traffic and optimizing conversion rates.

Ticket Size – Since most ecommerce businesses lose money on smaller orders, increasing ticket size is a strategy used by most ecommerce players to become profitable.

Operating Profit – This is the key metric which is tracked to see when and how the business will become profitable and sustainable. Ecommerce in India has matured from an Industry which is focused on growth to one which is now focused on sustainable growth.

The Startup Reproduction Cycle

The Startup Reproduction Cycle is similar to the Human Reproduction Cycle. It may not necessarily last 9 months but has 9 phases which require the founders to mentally strong and physically active.

Phase 1 – The Seed Stage (happens instantly)

This when a person comes across a gap or a problem in a market which he/she starts thinking about. This problem may not be necessarily faced by that person.

Phase 2 – Idea Finalization (takes between 1-2 weeks)

Research is done to validate whether the idea is strong enough, the market is big enough and to judge how much competition exists.

Phase 3 – Building a Team (can happen soon or take forever)

The search for people having the passion and skill sets begins. This is very crucial as the founding team has a big role in a startup’s success or failure.

Phase 4 – Build Prototype (can take between 2-4 months based on the product’s complexity)

If a prototype can be built in house, great. Else vendors are sought to help with this stage.

Phase 5 – Register a Company & Get Other Licenses (in India, it can take up to 1 month currently)

Phase 6 – Make a Business Plan (can take between 1-3 months)

This is the deck which shows the long term vision of the startup. It is comprehensive and can be used to show to any big stakeholders or investors who might be interested in it. Tips on building a deck can be found here.

Phase 7 – Make a Short Term Plan for Launch (takes up to 2 weeks)

This is a detailed plan for launch where all operations and marketing strategies are laid out for a short time period (generally 6 months).

Phase 8 – Hire Resources & People for Launch (can take up to 1 month)

Based on the launch strategy, the necessary arrangements and hiring is done.

Phase 9 – Launch!

A lot of the phases above are carried out simultaneously. Generally the entire process takes between 3-6 months before a startup is born :).

Tackling a Problem in Life & in Business

We are faced with problems in life and in our work on a regular basis. I have a framework which I use to tackle problems which I face in my life. Having a framework is important as it gives you a way to approach the problem at hand.

Step 1: Identify the problem very clearly. It should be defined concisely in 1 sentence. For example, a problem for a business can be “Low customer conversions”.

Step 2: Define clearly all keywords in your problem statement. Here targets are also defined. Taking the above example, state what low means, i.e. what the current rate is. Define your target for the same. After this, define customers very clearly and comprehensively. Who your customers are, the demographics, the source etc. Lastly, define what conversion means. This could be a sale, a sign up, a subscription etc.

Step 3: Work out a solution. Using tools like surveys, feedback and opinions, try to identify why this problem exists and what can be done to overcome it. For example, a business can try a free trial business model to make customers try out the service before purchasing. This creates customer trust and could lead to higher conversions.

Step 4: Implement the change you think can solve the problem. Try to highlight the same so that is clear and visible.

Step 5: Assess the developments. This is the step most of us tend to ignore/forget. It is crucial to assess and identify without any bias whether the problem has been solved. If yes, congratulations, if no, go back to Step 3 and keep reiterating till it does.

Setting a Price in Advertisement-Based Business Models

I was asked this on Quora and it got me thinking. How should one set a price in advertisement based business models?

I figure that the following factors should be considered to arrive at a pricing level.

Traffic Demographics & Engagement – The business must analyse the traffic it gets; whether it is premium or mass, male or female, coming from bigger cities or smaller ones etc. Since a customer’s demographics can be used to assess the average spending of the customer, pricing should adjusted based on it.

Relevance – If the startup caters to a niche or a very limited audience based on an interest, demographic etc., the pricing tends to go up as an advertiser can reach out to a more focused audience.

Comparables – As the market for advertisements is very competitive, every business must keep an eye on competition before setting their pricing levels. An advertiser’s budget is limited. Hence a business has to assess all possible options the advertiser has and must not restrict to only competitors which directly compete with it.

The Female Entrepreneur

Women pursuing full time professional careers is very common now, even in developing countries like India. They are emerging as equal contenders to men and are even preffered in a lot of career paths today. Entrepreneurship is one path where I feel more women need to enter owing to the advantages they have over men.

Emotional Connect – Women have a higher emotional quotient than men. Hence startups run by women will probably be able to establish a better emotional connect with their customers.

Decision Makers – In a lot of purchasing decisions, especially for B2C startups, women tend to be have more say than men. Hence a woman entrepreneur would be able to understand the customer better on average.

Better Communication – Based on my experience, women tend to be better at communication than men. Good communication within the organization and with customers is a must for building a healthy and growth oriented atmosphere.

On thinking about it further, I feel the reasons which have limited the growth of female entrepreneurs are the following.

Family Responsibility – After marriage and especially after having children, the responsibilities on a woman makes it difficult for her to commit to a career as much as she needs to.

Emotions vs. Practicality – Having a stronger EQ can work against you as well. In business decisions, relying too much on emotions can prove detrimental for the business.

Fair Chance – No matter how far we have come, in a lot of cultures and countries, women are supposed to only look after their families and children. A fair chance has not been given to women to pursue careers of their choice.

Entrepreneurs Don't Think, They Do

(source: https://www.pinterest.com/iebusiness/entrepreneurship/)

Failure is the Best Teacher!

Options After A Failed Startup

So if a startup fails, what are the options available for its founders? The answer to this question depends on a couple of factors like their monetary situation, their mindset, a cost benefit analysis of the different options available and so on.

I was in a similar situation recently and after pondering about it, I arrived at the following options.

Join a Startup – The biggest earning from a startup is the experience you get. This is highly valued and will most definitely help you get a job in the same Industry you were operating in. Since the experience of a startup teaches a lot of general management as well, you can look at working in startups operating in different spaces.

Do a Course – This is what I chose and is an option if you are searching for stability. Doing a course is a strategy which in most cases has one motive – getting a corporate job after. Some entrepreneurs do look at honing their skills which may help them in their future startups. I chose to do an MBA (my second) so that I could get a regular corporate job.

Startup Again – The startup journey, though very exhausting physically and mentally, is a very exciting one. A lot of entrepreneurs, like myself, get ‘addicted’ and tend to start searching for the next idea. However, your monetary situation has a role to play. Only if you have some money in the bank to sustain yourself can you look at this option.

What Makes a Startup Investable?

Not all startups get funded. Different investors have different focus areas and points they consider before making an investment.

That said, I feel that entrepreneurs definitely need to figure out the following before approaching investors.

Proof of Concept – Has the business done enough to prove that the market is big enough and customers are adopting the product/service. Generally startups go in for a beta launch to do this. A limited number of people from the target market are exposed to the product and their behavior is analysed and recorded.

Scalability – Investors want to invest in big markets. Very few investors get excited by a business operating in a very small niche. Entrepreneurs must identify how big the potential market is and must ensure that it is big enough for an investor to potentially get a good return.

Barrier to Entry – This is important and often a reason for unsuccessful pitches. Investors prefer that the business model of the startup cannot be replicated easily by existing players in the market. For example, during my previous startup Beveragewala where we were selling teas and coffees online, investors felt that players like Amazon could enter this space and hence we did not stand a chance in the longer term. It is crucial for an entrepreneur to work out why his/her startup has an advantage which is sustainable. This can be a first mover advantage, an IP, a location advantage etc.

Team – The startup must have a strong team which is capable to execute the business. A perfect team is one which has all requisite skills which are required to run and grow the business.

Free Ways to Promote Your Startup

There are a lot of ways to get free promotion, especially in the early days of your startup. I have used the following for my previous startups.

Blogs - You can write to bloggers who write about stuff which is relevant. If your story is compelling enough, you might get a free publish.

Social Media - Great way to reach out to new people and build visibility.

Emails - You can send limited emails through your email account. You may have some data with you which you can use for this. Also various online email services exist which allow you to send upto a particular number of emails totally free of charge.

Classifieds - The basic posting service on most classifieds sites is free.

Videos - Make some videos explaining about your product. Posting on video hosting sites is free and tends to help in building visibility and also in getting better search engine rankings.

Entrepreneurship Sees No Age or Qualifications

Unlike a lot of other career paths, entrepreneurship is one which sees no age or qualification. No matter what your age is, your stage in life is or what you have done previously, if you get an idea, are passionate about it and feel you can execute it well, you jump right in.

A lot of school and college students feel anxious about starting a business. Starting out early has its advantages.

No Responsibilities: At an early age, you responsibilities tend to be lower. You can focus more on your business without having to worry about other things.

Energy Levels: The younger you are, the higher the energy levels and zest.

No Experience: Experience is the most important asset of a person. However, having experience has a flip side as well. Having experience can tend to slow you down at times as you become very cautious of not repeating mistakes you may have made in the past.

Team Building: At an early age, you can convince your friends, especially, to join as they themselves are deciding what to do and may have finalised a career path for themselves.

At the other end, starting out late in life is also advisable and has many advantages.

Experience: As mentioned above as well, experience is the biggest asset of a person. It helps you avoid mistakes you have made earlier and helps in finding the best ways of doing different things.

Network: Older people have stronger networks which they can use in their business. This network can consist of social and professional contacts they have made in their lifetime. This helps them organize things faster, get more people together in a shorter time, get introductions to investors, CEOs etc. and so on.

Lower Responsibilities: Again as you become older, your responsibilities tend to become lower as your children are grown up, your basics tend to be sorted and hence you can spend more time and energy on your business.

#FOCCEPT – The Key to Good Life